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no doubt we will, a large amount of gold, namely, from $20,000,000 to $25,000,000 a year, which will be the basis of our gold currency.

Another reason which makes it difficult for Mexico to adopt the gold standard, is that we are very large producers of silver, the United States only being ahead of us; therefore it would be injurious to our interests to depreciate that metal in our own market, such being the financial policy was discarded and gold has become the only circulating medium, poverty and a paralyzation of business seems to have fallen to the lot of many districts that heretofore were very flourishing. There is a noticeable scarcity of circulating medium all over the country, public and private securities have depreciated, and the rate of interest which some years ago was 7 or 8 per cent. is now as high as 12 per cent. Furthermore, since the gold standard was introduced, five banks, with an aggregated capital of $3,300,000, have failed, and three, with capital amounting to $12,300,000 have gone into liquidation. Thus it is said that 25 per cent. of the money invested in banking in that country has been lost, and a similar result has obtained with regard to many mining and industrial enterprises which heretofore had been in a most flourishing condition.

India.-The opinion of many intelligent bankers and merchants of India seems to be favorable to silver. The Indian Spectator, reflecting accurately this opinion, said recently: "The attitude of the government of India is indeed too plainly one of a pronouncedly uncompromising character. They have pinned their faith on the great experiment of 1893, believing too optimistically that the day is come when it will succeed, and we shall have gold brought to our mints at Is. 4d. a rupee, and are delighted at the prospect of having the Indian currency assimilated with the English, which indeed it would do if we had gold sovereigns in India in quantity large enough to make the rupee in reality a mere token coin. We are not at all confident that such a consummation is very near to us now. Nor can we pay exclusive attention to our trade with England alone, and be blind to the fact that the present currency arrangements have told very injuriously upon our growing trade with the silver-using East."

And confirming the views of Chairman Yule of the Bank of Calcutta, one of the ablest advocates of silver-coinage resumption in all India, the Indian Spectator goes on to say: "The unrestricted inflow of silver bullion and the tightness of the money market are other effects of the currency legislation of 1893 which we cannot view with equanimity. We cannot, therefore, approve of the attitude taken by our government or their determination, expressed in their dispatch in so many words, to persist in their policy of introducing a gold standard in the country and not to go back and be a party to any problematic scheme of bi-metallism. Nor can we believe that we would be worse off if, with our mints open, we could by any means raise silver up and be content with a purely silver currency."

The following is an abstract of the opinion of the Anglo-Indian press on the present financial conditions in the second week of February, 1898, published by the London Times:

"Since the closure of the Indian mints the rupee has had an artificial value on an intermediate level between gold and silver. It has been a scarcity rupee, not representing the market value of silver, but the lack of an adequate supply of currency. The Indian government, having large gold payments to make in England every year, has profited by an artificial scarcity of money. If the rupee had been on a par with silver in its downward course the remittances would have been heavily increased. The Indian government, since the closing of the mints to silver, has produced a money

necessary consequence of our accepting the gold standard. Now, it has not been depreciated at home, for it has the same purchasing power that it had when silver was at a par with gold, at a ratio of 16 to ; silver has only depreciated in foreign markets, but should we accept a gold standard we necessarily would depreciate it in our own country, which is our largest and most important market.

famine for the sake of obtaining more favorable rates of exchange in its own transactions with London."

The results of this policy as explained by financial writers in India have been disastrous to all classes. The average rate of interest has risen from 4 in 1895 and 5 in 1896 to 7 in 1897. How high it will go in 1898 no expert ventures to forecast. In Calcutta loans have been negotiated as high as 14 per cent., while in Bombay, according to The Times, of India, even "24 per cent. would not bring out an advance upon the most solid of all securities, namely gold bars." With a bank rate of 10 per cent. merchants have been embarrassed in selling their bills, and commercial enterprise has been paralyzed. This continuous money stringency, while fatal to economic progress, has also affected the capacity of the masses for purchasing food in famine times. Mr. B. M. Malabari, in his pamphlet on India in 1897, discusses the vital question whether the famine results from the absence of foodstuffs or from the want of means of buying food. The London Times makes this weighty summary of financial

opinion in India:

"If the conviction once possesses the Indian mind that the artificial enhancement of the rupee is a contributory cause of famine, it will furnish a common rallying cry for all classes-peasant and townsman, rich and poor-such as has never before been raised. Put in economic terms, the contention is that the government, in order more easily to discharge its own gold obligations, has subjected India to an artificial currency that bears down the producing industries on which the present and the future of the people depend. Thus stated, the question is open to fair argument. But if it passes from the Anglo-Indian to the vernacular press, it will cease to be stated in economic terms, and become a popular cry of the spoliation of the peasant,-that cry for which it has hitherto been our endeavor to avoid giving any just cause."

Financial writers in Calcutta and Bombay do not hesitate to say that there is imminent danger lest the idea that the famine in food as connected with the famine in money may take hold of the Indian mind.

From some statements made by Lord George Hamilton, Secretary of State for India, in a debate on the Indian currency, which took place in the House of Commons of the British Parliament on March 29, 1898, it appears that in the opinion of the Indian Office it would be impossible to reopen the Indian mints without some international arrangement, which at present is considered out of the question, and that the British Government was so perfectly satisfied with the closing of the Indian mints that the attempt to reopen them was qualified as an act of lunacy. The Liberal element in the House of Commons seemed to be entirely satisfied with Lord George Hamilton's views, as Sir William Vernon Harcourt, Liberal leader in the House, congratulated Lord George Hamilton upon his speech in which he expressed the views just quoted, and the House then adopted Lord George Hamilton's motion, appointing a committee which will have practically all the powers of a royal commission to inquire into the practicability of the Indian Government's proposals for a gold standard. At the same time, during the discussion of the budget debate in the Indian Legislative Council, Sir James Westland, the financial member of the Council, announced that he could declare that a silver standard or the reopening of the Indian mints was now impossible.

It would seem easy for Mexico to overcome all the drawbacks of the silver standard by decreeing the payment in gold of the whole or of a portion of its import duties; but such a scheme would establish two different kinds of currency in Mexico, and, gold being the more valuable, would tend to depreciate within the limits of Mexico our silver currency, with disadvantages to all the interests in the country. There is another serious objection to that plan: our import duties are already so high that they do not admit of any further increase. If we collected them in gold, we should have to reduce them to about fifty per cent. of the present rates, now payable in silver, and then we should have gained nothing, but increased the disadvantage of the fluctuations in the price of silver bullion; while if we should leave the import duties at or about their present rates, and make them payable in gold, we should practically double them, and they would become so burdensome as to afford great encouragement to smuggling, and so reduce very considerably their proceeds, especially considering the high increase in the value of foreign commodities caused by the depreciation of silver.'

In this regard, I think it interesting to insert here a letter from Señor Don Jose Yvés Limantour, the Secretary of the Treasury of Mexico, addressed on August 18, 1897, to Mr. Ottoman Haupt, a well known French currency authority and gold monometallist, who has advocated the adoption of the gold standard in Mexico, and even suggested a practical way to do it, in which letter the policy of the Mexican Government on the subject is clearly outlined, and the difficulties of adopting the gold standard ably presented.

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'D. Ottoman Haupt, Esq., Paris :

"Mexico City, August 18, 1897.

“MY DEAR SIR :-Your esteemed letter of July 21st last came duly to hand, and I answer the same with pleasure, anxious to meet the laudable intentions that have no doubt prompted you to communicate to me your opinions in regard to the monetary question in Mexico.

"Let me begin by assuring you that you made no mistake when you thought that your special studies upon the subject were known to me. In fact, your principal works have a prominent place in my library, and I always read the same with interest and frequently consult them.

**You are furthermore right when you assure me that it is not at present an academical discussion upon the convenience of a single unit or a double unit, but of an essentially practical problem whose solution is every day more urgently needed. Some time has already elapsed since this study was taken up by the Secretaryship under my charge, and, as you can readily understand, the Government follows closely the general phases under which the monetary question presents itself, as well as it tries to follow under its various hues the consequences that are likely to follow.

"There is no doubt that on account of this subject a panic reigns the world over, under which influence many nations, with or without cause, be it for lucrative purposes or on account of an immitative mania, have changed their monetary system and have put silver in the shade.

"It is also true that other nations such as India and China, which were enormous consumers of the white metal, have diminished or stopped buying it, and the fact is

Mexico and the Ratio.-I think it is beyond all question that the main, if not the only, cause of the depreciation of silver is the fact of its having been demonetized, and there can be no doubt that should the mints of the world be again open to the free coinage of silver, as they were before 1872, at the ratio then existing, the market price of that metal would be again as it was then as compared with gold, in the proportion of sixteen to one.

I am sure the Mexican Government would accept any ratio that the commercial nations of the world should be willing to agree upon, even in case it differs from the old one. So far as my personal views are concerned I would rather stand by this ratio, because it is the natural ratio, and because it stood for four hundred years with almost no break or difficulty, but serving a good purpose. Should any other ratio, whether eighteen, twenty, or more, to one, be adopted, it would be an artificial one, having to stand upon only the statute books of the commercial nations of the world opening their mints to the free coinage. of silver at such ratio.

Important Papers on Silver Printed by the United States Senate.The Senate of the United States has ordered, on motion of several of its members holding opposite views, the printing of many very interalso true, beyond any doubt, that its production has constantly increased and in a progression most rapid. All of these circumstances combined have tended to, or at least hastened, the depreciation of silver.

"Is this question, however, settled fatally and definitely, or does it not admit of any remedy or relief? You seem to think so, but I, for my part, am not yet convinced of it, and independently of any opinion that may be had on this important subject, many powerful reasons exist why Mexico should not change its silver monetary unit, at least whilst some of its economic peculiarities remain.

"In my answer to Mr. Jacoby, which you read, I brought forward and tried to give in detail the two sorts of difficulties that would beset us in order to exchange the silver for the gold unit. The first of these difficulties involves the means to procure the necessary gold for our circulation, and the second (and evidently the most serious) almost borders on the impossible, for it means no less than the necessity for keeping the gold in the country and suppressing its exportation.

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'Mexico's commercial balance is very unfavorable, its exportations far exceeding its importations, and besides the value of these latter it has to pay in gold the service of its foreign debt, the interest on its bonds, its railroad dividends, and those of many other industrial and mining enterprises, which have been established or are worked with foreign capital. In favorable years this unequilibrium is partially neutralized with the new European capital coming to seek investment in the country, but this compensating factor disappears completely in feverish times, and, moreover, when silver is suffering continual depreciations.

"Well, taking altogether the exportations necessary to pay up these various sums : silver represents from 55 to 60 per cent., and the remaining 45 or 40 per cent. other products; in other words, 65,000,000 of silver against 45,000,000 or 50,000,000 of all other export articles put together.

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Under these conditions, what expedient must we resort to in order to retain the necessary gold bought, and not to suffer the deception, which other nations have had

esting papers bearing on bimetallism and specially on the silver question and on the effects of the depreciation of silver in the Eastern nations, which form now a very instructive collection, containing a great deal of very useful information on that subject. On motion of Senator Chandler, presented on June 6, 1898, a list of such papers has just been published (55th Congress, 2d Session. Senate. Doc. No. 286), and for the benefit of the readers who desire a source of information, I append that list to this paper. Special mention is due to two of these papers, namely: A summary of the results of the injuries which the world has suffered by the depreciation of silver, presented in a very concise manner by Baron de Courcel, French Ambassador at London, at a meeting held at the Foreign Office on July 15, 1897, where the three American commissioners sent to Europe to negotiate an international bimetallic agreement were present, besides Ambassador Hay, Lord Salisbury, and several other members of the British Cabinet, which appears in the Minutes of that meeting, published among the papers presented to Parliament in October, 1897, and which the Senate of the United States ordered to be printed on January 17, 1898, on motion of Senator Chandler (55th Congress, 2d Session. Senate. Doc. No. 69); and an extract from the speech of Monsieur Mêline, President of the Council and Minister of Agriculture, delivered in the French Chamber of Deputies on the 20th of November, 1897, which shows very clearly the evils resulting to the world at large from the depreciation of silver, and that such depreciation is not due to the increased production of that metal (55th Congress, 2d Session. Senate. Doc. No. 26).

The Paper as Published in the North American Review.-After having made the foregoing statements and explanations in this rather lengthy introduction, it is time to insert the paper as it appeared in the North American Review for June, 1895.

that have adopted the gold unit, of seeing, powerless to avoid it, the exodus of their gold to foreign nations?

་་

"Truly, I have been unable to satisfactorily answer to myself this question. As long as silver remains in circulation, it is well known by Gresham's law that gold is invariably exported, and to limit the circulation of silver is not to be thought of in a country that produces it, perhaps, in more abundance than any other in the world.

"To issue gold certificates to keep the metal on hand is not in my opinion practical, because if such certificates are not redeemable at the will of the bearer it entails a very delicate question of credit, and would expose us to unfavorable unforseen disasters and contingencies, and if it were otherwise the certificates would at once be converted into gold and immediately exported.

"I finish this letter assuring you that it will always be a pleasure to me to hear your opinion upon subjects that to you are so familiar and that you cultivate and elucidate with such a recognized ability.

Believe me, yours sincerely.

J. Y. LIMANTOUR."

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