IN GIFFEN'S CASE AGAINST BIMETALLISM. I. N the number of the POLITICAL SCIENCE QUARTERLY for September, 1893, there was published a review of Giffen's The Case against Bimetallism, signed by Charles B. Spahr. Mr. Spahr gives Mr. Giffen the credit for sincere and careful study of the question, and acknowledges his general fairness. But, according to Mr. Spahr, there is no real basis of fact to support Mr. Giffen's principal contention, which is, that the alleged bimetallism of France has never been a real bimetallism. Mr. Giffen asserts that there has been in France, during the socalled bimetallic period, no absolute interchangeable equality between gold and silver, at the legal ratio of 15 to 1; and that there have been variations in this ratio, by which the commercial world has been governed. Mr. Giffen gives tables of figures showing these variations. The tables prove Mr. Giffen's statement, and form a solid basis for his argument. The task before Mr. Spahr is to overthrow this argument. I wish to direct attention to the method by which he attempts to do this. He quotes Mr. Giffen's argument as follows: In 1886, in a paper read at the Bankers' Institute, I published the figures of the actual premium on gold in Paris at the first of each month for the years 1820 to 1847,-the greater portion of the period - which placed the fact beyond doubt that gold and silver did not pass in all that time at the ratio, but that gold varied in price usually between one-half per cent and two per cent premium, with not very frequent and not very lengthened lapses below the one-half per cent, and not one date being mentioned on which there was not a premium of some sort. These premiums were quite sufficient to make the practice different from the law. At anything over even one-quarter per cent premium for gold (or even one-hundredth of one per cent) no man alive would pay a debt in gold which he could pay in silver without a premium, and consequently the demand for gold for standard and for unlimited legal tender in France was all this time When the premium was between one and two per cent it Clearly not even for the smallest payment the proportion of £102 for every £100 in suspense. When I wrote the paper for the Bankers' Institute in 1886, I had no figures for the period from 1803 to 1820 before me; but I may now refer to the ratios of Soetbeer, as quoted in the last report of the director of the United States mint (page 162) which gives the following average ratios of silver to gold from 1803 to 1820 inclusive. The sentences in italics are left out by Mr. Spahr; the remainder of the quotation is correct. Then Mr. Spahr proceeds thus: [Here is Here follow portions of Soetbeer's tables, giving the ratio between the average prices of gold and silver bullion in the London market between 1803 and 1873. The French ratio is 1 to 15 and the extreme variations during each decade are as follows. given a table stating a ratio for one year in each decade.] These tables are likewise published by bimetallists to prove that the free coinage of both gold and silver in France did keep the coins of the two metals at par with each other, and thus established a bimetallic standard. The facts then are agreed upon. What about the conclusions? A moment's consideration will show how far afield Mr. Giffen has gone in maintaining that France was mistaken in believing that she had had the concurrent circulation of the two metals under her bimetallic law. The points he fails to consider are these: (1) Soetbeer's prices are London prices; (2) both Soetbeer's prices and his own are the prices of silver bullion and not of coined silver, and coinage in France, though free, was not gratuitous. The first natural inference from this statement of Mr. Spahr's is that the table he gives is taken from Mr. Giffen's book. But this is not the fact. The table given by Mr. Giffen, in connection with the extract quoted, covers each year from 1803 to 1820. Mr. Giffen gives this table, as he states, on the authority of the director of the United States. mint, and for the purpose of adding to his former argument the statistics of the period 1803 to 1820, Mr. Spahr substi tutes for this table another, compiled, apparently, by himself, from the London quotations, and he argues from this substituted table as if it were Mr. Giffen's! But if Mr. Spahr had quoted the actual table printed by Mr. Giffen in connection with the passage quoted, he would still be guilty of ignoring the principal basis of Mr. Giffen's argument. This basis is to be found in the paper read by Mr. Giffen at the Bankers' Institute in 1886. That paper is included in the volume Mr. Spahr was reviewing, is referred to in the quotation he makes, and a foot-note to that quotation gives the page where it is to be found. In this paper, on page 59, is a summary of the table giving the premium on gold in Paris at the beginning of each month for the years 1820 to 1847. The full table is referred to on page 58, and is given in Appendix A. It occupies ten pages, 225 to 234 inclusive. It is entitled: "Statement of the rate of exchange on Paris on the first post day in every month since January, 1820, and of the premium on gold at Paris at the same time." Mr. Giffen thus plainly declares that the figures given by him are for the premium on gold in Paris. When, therefore, Mr. Spahr intimates that Mr. Giffen is working on Soetbeer's prices, which are London prices, he flatly contradicts Mr. Giffen. He contradicts him, and ignores his principal array of facts at the same time. If Mr. Spahr read this Bankers' Institute paper and examined the Appendix A to which it refers, it is difficult to understand how he could suppose that Mr. Giffen was using London prices and not Paris prices. In Mr. Giffen's voluminous table the premium on gold is always set down at so many francs per thousand francs. How is it possible to confuse such a quotation of the premium on gold in Paris with the London price of bar silver? "Francs" would never be used in quoting London prices. The gist of Mr. Giffen's contention is that there has never been in France for any long period an absolute interchange of gold and silver at the legal ratio of 15 to 1. Mr. Giffen proves this by citing the actual premiums paid in Paris for gold during the years 1820 to 1847 inclusive. There was always a premium. Mr. Spahr replies to this argument by giving a table of the relative value of gold and silver compiled from Soetbeer's London prices of silver, as if it were Mr. Giffen's table. Then he says the points Mr. Giffen fails to consider are these: "(1) Soetbeer's prices are London prices; (2) both Soetbeer's prices and his own [Giffen's] are the prices of silver bullion and not of coined silver, and coinage in France, though free, was not gratuitous." The simple statement that Soetbeer's prices are London prices is practically true, though he does give a small table of gold and silver prices in Paris for the years 1876 to 1886 inclusive, compiled by Clément Juglar. His principal table is made up from the London quotations of Pixley and Abell; but the intimation that Mr. Giffen's argument is based on the London price of silver is without foundation. Mr. Spahr's (2) is equally baseless. Mr. Giffen's argument is not founded on the price of bar silver either in Paris or in London. To say, as Mr. Spahr does, that Mr. Giffen's "prices are the prices of silver bullion, and not of coined silver," is to contradict the express statement made by Mr. Giffen, that the table he prints is a record of the premium which was paid at the given dates for the purchase of gold. Nor can there be any juggling between gold ingots and gold coin; there was a premium on both. The premium was paid in silver or equivalent bank notes. The existence of this premium proves that the two metals were not absolutely interchangeable at the legal ratio. It follows that Mr. Spahr has himself traveled "far afield," and has not overthrown Mr. Giffen's argument. As a further aid to the study of the subject, and as a confirmation of Mr. Giffen's conclusions, the following table is valuable. It is taken from Notes et Tableaux pour servir à l'Étude de la Question Monétaire, by H. Costes, deputy-director of the Direction Générale des Caisses d'Amortissements et des Dépôts et Consignations, and formerly deputy-director of the Direction Générale des Monnaies et Médailles. The author is an undoubted authority. The table can be found at page 206 of his work. |