Pennsylvania. Dept. of Internal Affairs Pennsylvania. Bureau of Industrial Statistics.

Annual report of the Secretary of Internal Affairs of the ..., Volume 18 online

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In this way the English government is an enormous seller of silver at
its market or reduced value that is, at the price which buyers of the bills
will pay for them in gold and the amount of these transactions is contained
in the following table. The impoi*ts of silver into India also are given :



YSARS.-


Net imports
of silver.


Amount of

council bills

sold.

•62.760.715
60.294,062
61.784.106
49,319.825
67.880.692
74,271.398
74.163.838
89.004,066
73,584,015


YBAH8.


Net imports
of silver.


Ampunt of

council bills.

sold.


1^74-75

1875-76

187&-77

1877-78

1878-79

1879-80


822.580.560
7.543,075
35.038,800
71,440.220
19.320.006
38,299,855


188:1-84

1884-85

1885-86

1886-87

1887-88,

1888-89

1889-90

Total

Annual arerage. .


31,194.265
•85.282,125
56,500.066
34.844.140
45.807.115
45.000.625
43,796.500


85,649.451
•66,946.731
51.212.687
54,296.577
73.220,790
69.218.337


1880-Sl

1881-82

1882-83


18,930.685
26,181.770
36.401.420


76.890,700


•667,662.625
35.478.914


•1,061,097,700
67,668.606



Therefore, so long as the market value of silver is below its legal value,
and silver rupees can be bought at their market value and exchanged
for their legal value, and this cannot be done with a silver dollar, the
English importer will buy wheat for which he can pay in rupees. On •
the other hand, to the extent that the market value of rupees rises does
the margin of profits of the English importer decline. If they should
appreciate in value and be worth as much as they were once the English
importer's profits springing from their depreciation would cease, f

•The English official year ends March 31.

fFor those who desire a more complete explanation of the nature of the commer-
cial transactions between Great Britain and India the following information is given.
Indian merchants buy the produce of the country, cotton, wheat, tea, etc, and ship it
to, England and draw on banks or bankers, usually in London, for the amount
These bills of exchange are sold to the banks or bankers in India who deal in ex-



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62 A. Depabtmbnt of Internal Affairs. [No. 10,



But the English importer or Indian exporter does not gain all this
difference between the legal and market value of silver. If he did, the
business would have been so remunerative as to attract a large number
of persons into it, and the profits would have melted away. Either the
consumer would have gained the benefits in lower prices, or the larger
demand of purchasers would have stimulated prices. The following table
shows that the producers have gained an advance:



change, and with the money thus obtained, consisting of rupees, the Indian mer-
chants obtain the money to pay for their products. The produce in due time reaches
England and is sold, and with the proceeds, or those from other sources, the bills
above mentioned, which have l>een forwarded to the London banks, are discharged.
It may be added that the London banks receive payment of their bills in gold, for
which they originally gave silver as above described.

But goods are also shipped from England to India, and for these bills are drawn
on India banks or bankers, payable in silver rupees. These bills are sold in London
for gold which the shipper uses to pay for his exports. The bills are duly forwarded
to India and are paid in rupees. It will now be seen that for the produce shipped,
England really sends her own produce. The silver rupees obtained of the India
bank by the India merchant and paid for it fiows back into the India banks in pay-
ment of the English goods t-hat are brought to the country. In like manner the gold
paid to the exporter of English goods in Great Britain by the banks there comes
back to the banks in payment of Indian produce exported to that country.

But the exports from India far exceed in value the imports, and consequently the
bills in favor of England are smaller in amount than those in favor of India. The
produce sent to India will not sell for enough to pay for all the bills of exchange
drawn in London. Or, to put the matter another way, the produce sent to England
is more than enough to pay for the produce sent by England to India, so that England
becomes a debtor country. How can this tjalance be paid ? Seemingly the thing to
do would be to send silver enough to pay the excess of bills. But it so happens that
the India government is a debtor to the English government for a large amount of
taxe& These taxes are payable in gold in London. They are collected in India in
silver. The government draws bills of exchange (or India Council bills as they are
called) payable in tax receipts and sells them to whoever wants to liquidate his in-
debtedness in India. Thus the indebtedness of the Indian government to the home
government is used to pay the private indebtedness of English merchants to those
of India. In short the English merchants pay their Indian debts by making the
Indian government a debtor for the amount and paying a similar sum to the home
government In this manner the commercial transactions are effected between the
two countries without the transfer of a large amount of silver.



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Off. Doc.]



Statistics—Changes in Farm Values.



A. 63



Quantities, Values, and Average Export Values op Wheat Exported
FROM India since May 1, 1862.









Values.


Averaffe export values—




Quatiubies.














Per cwt.»


Per bushel.


Pertods comprising tbe flacal
year»-


(^tvU.


Winchetter
buaheU.


Rupeet.


DoUarn.


Rupee*.


CenU.


1863-66 (4 years)


280.973


624,488


961,273


444.141


3.42


83


1867-71 (4 years)


226.399


420,746


842.063


?84.062


3.74


91


1872-76 (6 years)


1.274,297


2.878.688


6.267.446


2,295.677


4.13


97


18n-«l (5 years)


4.582,476


8,460,623


19,607.602


7.788.S78


4.30


92


1882-86 (5 years)


18.403.197


34.362.634


76,852,072


28.803,606


4.12


81


Fiscal years—














1882


19.901,006


87.148,643


86,200.618


83,607.036


4.33


90


188:?


14.193,763


26.496,024


60.888.136


23,602.068


4.29


89


1884


21.001.412


39,202.636


88,958.112


33.971.324


4.24


87


188&


16.850.881


29.688,311


63.160,182


23.914,840


3.98


81


1880


21,068,924


39.328.668


80,058.311


28.923.281


3.80


74


1887


22,263,624


41,668,766


86.269.866


29,426,826


3.87


71


1888


13,638,169


26.271,249


66,623.733


18.476.423


4.11


7:i


1889


17,611.408


32,874.628


76,232.794


24,112,110


4.27


73


1880


18,802.209


26,764.123


67.92»;.147


18.798,772


4.20


73



Consequently a slight rise in the market value of silver sweeps away
any profit there may have been in the operation, and this is why im-
porters turned to this country for wheat supplies on the first advance in
the market price of silver. This, then, became a more favorable market
for buying wheat than India.

What, then, would be the eflfect of the free coinage of silver on the
farming interests of the country 1 If the value of silver should appre-
ciate, exports would increase, for the reason above given, that the pro-
fits now reaped by the discount on silver which the English and other-
importers of wheat are able to obtain, would diminish. As the discount
melted away by the general iucreas^ in the value of silver, importers
would turn more and more to this country. That this would be the
effect of enhancing the value of silver can be easily proved. A year
ago congress enacted a law for increasing the quantity of silver coin-
age, and its immediate effect was to enhance the price of silver.

* Cwts. of 112 pounds. Tbe quantities for the first period ( the quadrennlum 1863-66) are officially stated
In Imperial quarters and reduced to Winchester bushels at the rate of 8.26216 bushels per quarter ; but,
for the sake of untformitr. It Is assumed that the bushels so obtained are, like those for the remainder of
the time, comprised in the table, bushels of sixty pounds, and on that basis quarters have for those four
years been reduced to their approximate equivalent in hundred weights. *



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64 A.



Depabtment of Internal Affairs.



LNo. 10,









^


® •*


•"C




M








s


ca


eg




,•








k

M ■


=1


y












^


•3 ®









Months.


i


s




-^s


o ®




0)0

h




1


► «


»2S

ero Qi


%^ii




ti




m


"<


»


<




<


1800.


Pence.


Pence.


Pence.










January,


44}

441


44i

431


44.502
44.042


90.97554
.96545


»4.8612
4.8674


90.97448
.66582


fO. 97510


February,




March


441

48


431
48}


43.906
45.451


.96251
.99684


4.8650
4.8722


.96025
.99747


.96149


April


1.00538


May


47*
49
50*
54i


46
46i
47A
501


46.971
47.727
49.201
52.707


1.02966
1.04628
1.07854
1.15540


4.8666
4.8787
4.8853

4.8718


1.02862
1.04780
1.06367
1.15643


1.04890


June,


1.05750


July


1.08942


August


1.16995


September,


541
61i
49i


50
48*
45


53.128
49.708
47.305


1.16462
1.08966
1.03098


4.8504
4.8509
4.8615


1.15946
1.08821
1.03404


1.16560


October


1.I03I5


November,


1.04022


December


49i


47i


48,135


1.05518


4.8388


1.04989


1.05606






Average,




47!


I.0468H-


4.8631—


1.04647


1.06389-.









Forthwith the demand for American wheat increased, while the
demand for wheat from India and Bussia fell away. The following table
of exports from the three countries is conclusive proof that the law
operated in this manner :



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Off. Doo.] Statistics— Chakges in Farm Values.



A. 65



Comparative Statement op Wheat Expobts.



TXiiR8.


Russia: Tears ended
January 12.


India: Down to 1866.

rears ended April 80;

after that year, years

ended March 81.


United States: Flsoal

years ended June 80.

(Wheat. Inoladlng flour.)




QuanUtles.


Values.


Quantities


Values.
Dollan.


Quantities.


Values.


1862 . . .


Buthel*.
14.795,597
27,002,006
42.989,886
7.681.250
2.004.867
24.847.497
1.988.688
19.066.297
36,076,886
34,888.804
80,898,646
36,071.706
34.796.978
81.161.947
86.896,948
41.436,566

51,296.401
40,229,616
37,920,756
67.473.780
66.661.262
58.658.729
41.436.869
46.879.801
66.762.240
66.012.701
51.566.608
102.886.962
82.918,717
86.566.668
48.972.597
76.373.632
83.780.060
67,726.689
91.766.992
51.612.111
77.796.106
126,114.640
107,250.883


Dollan.
.9.627,649
17,256,743
82,412,490
7,012,168
2,026,487
28.090,889
2.417.668
18.861,864
26,296.942
26,868,906
80.800,792
26,296.671
22.487,824
24,288.836
27,424,880
29,068,667

40,026,821
31.268,412
39,149,662
67.737.606
74.400,517
65,694.797
62,287.007
67.816,712
66,180,326
68,766,866
64,639.982
100.772.964
90.780.860
46,066,8n
60.700.763
81.182.878
81.424.177
63.580.136
71.027.636
41.880.689
00.620.118
96.831.087
95,116.657


WineluMter

bUSh€l$.


Biuheli.
16,601,236
18,494,781
28.148.506
6,821,664
26,706,007
38.180,686
26.487,041
16,161,186
17.218,188
53,866,887
61,688.787
66.110.668
41.468.447
22.868,862
16,494,363
12.646,941

26,323.014
29,717.201
63.900,780
61.674,111
88,996,755
52,014.715
91.610.896
72,912,817
72.782,936
66,873,104
90.167.960
147.687.649
180.804,181
186,821,614
121.802,389
147,811,816
111.534.182
132.570.367
94.565.794
153.804,970
119.626.344
86.600 748
109.430.476


Dollan.
14.424,362


1863






19,187.797


1854






40,121,616


1856, . .






12,226.164


1866,


682.620
630.663
488.156
411,692

Btuh. ofeo

lb$.

668,852

514,231

146.966

463,906

1.189,251

736,486

8,277,781

2,004.166

4,686,767

10.436.827

11,886.580

1.972,644

4.100.496

13.896.167

37.148,643

36.496,024

89.202,686

29,588,311

39.328,666

41,566.765

25,271.249

32.874.628

25,764,123


803,640
648.148
062.989
641,968
624,829
826.269
676,617
618,774
864.606
606.917
884.264
t868,460

462.829

460,287

149.786

478,852

1.076,497

768,160

8. 676, 564.

2.147.867

3,820.276

7,910,627

11,761,467

2.018,496

4,891.618

13,850.693

83,007,086

28,602,068

33.971.324

23.914,340

28.923,261

29,426,825

18.475,423

24.112.110

18.798.772


44,890.808


1857


48,138,178


1866


88,880,888


1858


17,388,788


1860,


19,686,211


1861


62.068.478


1882,


08,091.018


1888,


66,686.488


1864


37,486,887


1886

1866


23.396.470
19.763,812


1867


16,671.409


1868


89,244,318


1809


83,724.919


1870


67,312.313


1871


62.410.970


1872,


51,415.879


\8TA


• 64.846,187


1874


118,966.888


1876


76,026,691


1876.


88,067.061


1877


66,668,066


WT8.

1879


119,888,978
150,986,030


1860,


836,879,608


1881


212,746,742


1882.


149,804,778


1863.


174,703.800


1864,


136.166.874


1885


126.079.433


1886


88.706.670


1887,


142,666.563


1888,


111,019,178


1889,


86,949,186


1890


102.812.074







tBleren months.

5 A— Statistics.



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66 A. Department op Internal Affairs. [No. 10,

If, therefore, the free coma^e of silver would have the eflTect of en-
hanciug its value, or of rendering it more nearly equivalent to gold, we
can with confidence predict, based on past experience, that American
exports of wheat and other products coming into competition with those
of India and Russia would increase, while the demand for them from
these countries would decline.

But suppose the effect of the measure was to lead the owners of gold
to demand a premium therefor, what then? Silver, of course, would be-
come the standard of value, gold would be practically an article of
merchandise, although its circulation, to some extent, would continue.
We do not believe, as some do, that it would entirely disappear, the
owners would not permit it to remain idle long ; either they would ex-
change it for securities, held in this country or abroad, or they would
lend it at a premium. During the suspension of specie payments thei«
was a very considerable quantity of gold in the country which was loaned
' and payable in the same metal ; in fact, no large quantity of gold during
that long period remained peitnanently in disuse. It circulated, but far
more slowly than it had before ; and this is precisely what would hap-
pen if gold should go to a premium again. There would be some con-
traction to the extent of the exchange of our securities in foreign coun-
tries therefor, but no further. The gold remaining would be used, but
its circulation would be slower. This would be injurious to business, for
the effect would be the same as the retirement of a considerable portion
of our circulation. The quantity of circulating medium needed by a
country is of hardly greater importance than the rapidity of its circu-
lation ; when money circulates slowly a much larger sum is needed than
when the opposite conditions exist. This truth has been illustrated
many times ; consequently, if gold should go to a premium and it should
circulate only through the medium of loans, and not in making ordinary
payments, as is the case at the present time, its usefulness would be
greatly diminished.

Silver, then, would be the standard of value. The value of wheat, grain
and all other products would be measured by that metal. If the prices
remained the same as before, then foreign importers of American pro-
ducts would acquire the same advantage in our markets, through their
ability to obtain silver at its market value, that they now have in making'
purchases of the money of India. It will generally be admitted that
wheji gold goes to a premium and the values of the two metals no longer
correspond or remain equivalent to each other, the legal value of silver
will immediately correspond with its market value, and consequently,
the importer, after such a severance between the legal and market values
occurred, could exchange his gold coin for our silver coin at the same
advantage as he could exchange his gold coin for Indian coin. We think,
therefore, that this measure would have the effect of stimulating the ex-
ports of wheat and other products from this country which now are



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Off. Doc.] Statistics— Changes in Farm Values. A. 67

largely kept out of foreign markets by the products of India and
Bussia.

If prices of all kinds of products and other goods increased in value
in this country in consequence of the debasement of silver as compared
with gold then we are unable to say how this effect would retard or di-
minish our exports, inasmuch as the premium that gold would com-
mand would enable importers to buy silver, or to exchange their gold
for silver, at relatively the same advantage as they can at the present
time. What we see, therefore, clearly is this, that if prices advanced in
the event that gold went to a premium, in other words, if the prices of
other things corresponded in some degree at least to the premium on
gold on the adoption of a silver standard, then our imports might not
decline, but they certainly would not be stimulated by the change. Per-
haps the export movement would continue to be as good as it is at the
present time, but surely an advance in the prices of goods here, measured
by a silver standard, would not, in even the slightest degree, facilitate or
stimulate their exportation ; fortunate indeed would we be if the present
export continued.

It becomes important then to inquire whether the prices of anything
would advance in consequence of the advance in the value of gold com-
pared with silver, or whether they would remain on their present level.
If silver was paid for exports the new supply would certainly tend to
enhance prices here by reason of the increasing quantity of silver thus
put into circulation. If silver was not paid for our exports, but chiefly
other products, would the gold price be charged for them or a silver one^
which would include the premium on gold t Let us take an illustration.
Suppose an importer of coffee imports it, paying therefor iwenty cents
per pound in gold. Suppose he should sell it at twenty cents a pound
in silver. When he converted this silver into gold, if the premium thereon
was twenty per cent., he would have only sixteen cents instead of the
twenty he paid in the beginning. It is very evident that, beside charg-
ing something for profits, he must also add the premium which gold
commands in order to escape loss. In like manner on all other imported
products, the importer must add the premium on gold to the price of
them, or he would sustain a loss. Now the quantity of imported com-
modities used by all classes is very large, sugar, tea, coffee, spices, and
many of the most common things which enter into daily consumption.
Indeed, the quantity is so great that the effect of raising the price of
them in order to cover the premium on gold, or the discoimt on silver,
which is another way of stating the same thing, would imdoubtedly re-
sult in a general advance of prices on all commodities. This would be
the effect, therefore, of a premium on gold. Other prices would become
adjusted to the new level ; in the meantime there would be no little suf-
fering and loss while prices were undergoing this readjustment.

But, it may be asked, does not the experience of India contradict this



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68 A. Department of Internal Affairs. [No. 10,

deduotion? we reply that it sustains it. The goods sent from England
to India are not sold at the same rupee prices as formerly. On the other
hand, the Manchester exporter of cottons demands and receives a suf-
ficiently higher price in the silver money of India to cover the discount
on silver.

The subject must be looked into a little further before concluding this
branch of the inquiry. In consequence of the depreciation of silver in
England, it is evident that the people of India prefer to send wheat,
cotton and other products beside silver in payment of their imports, be-
cause there is not the same depreciation on them.

Is it not plain that if silver is depreciated in England, and India wheat
sells for the old or depreciated price, while a higher price must be paid
for imports, the decline in the value of silver is working injuriously
to the people of India ? Is it not plain that prices of wheat and other
products exported must rise enough to equal the depreciation in the
value to prevent a loss from these exchanges ? On the other hand, if
there is a rise to equal the depreciation then the depreciation may oc-
casion no serious loss. But so long as the rise in India products is below
the depreciation in silver, India is the loser. Her imported products
cost more, those exported do not sell for enough more to cover the de-
preciation, therefore she must lose by these transactions. In like manner
would this country be affected if the market vcJue of silver coin fell
below or parted company with the legal vcJue, in other words, if gold
went to a premium or silver was at a discount compared with gold.

Doubtless the stronger reason among farmers for desiring the free coin-
age of silver is that it will largely increase the supply of money, and this
would have the effect, undoubtedly, of enhancing prices which the farmer
believes would be highly beneficifiJ to him. In the first place it may be
questioned whether the free coinage of silver would largely stimulate
the coining of that metal. It unquestionably would do so if gold did not
go to a premium, and the silver coined would be worth far more than it
would be uncoined. In other language, so long as the legal value of sil-
ver is much greater than its market value, and the legal vcJue can be
obtained for it by simply taking it to the mint and putting silver into
the form of coin, it is certain that this movement would continue so long:
as the legal value exceeded its market value ; but if the effect of this
measure should be immediately to send gold to a premimn, as is con-
fidently predicted, and for which reasons will be speedily given, then
the legal value over the market vcJue would immediately disappear and
there would be no particular reason for taking more silver to the mint to
be coined ; the anticipated profit would immediately vanish and silver
would flow into other channels, or be put to other uses than that of
money. If this reasoning be correct, the great, fear of a flood of silver
to this country in the event of a free coinage law is unfounded. So long:
as the legal value exceeded the market vcJue, and every person was at



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Off. Doc.] Statistics— Changes in Farm Values. A. 69

liberty to take his silver to the mint to be coined this movement would
undoubtedly continue, but if the legal value immediately fell to the mar-
ket vcJue, then those owning silver abroad would gain nothing by bring-
ing it to this country and putting it into the form of coins, and conse-
quently it would stay where it is.

If gold went to a premium, which is the same thing as saying that if
the legal vcJue of silver speedily vanished and descended to its market
value, no quantity of silver would come from abroad and the only increase
in the quantity would be from the mines of our own country, but it may
be questioned whether the silver produced here would all go to the
mints under these conditions. We are at the present time coining nearly
all the silver produced, no considerable supplies would come in any event,
but very likely a smaller quantity even would go to the mint under a
free coinage law so long as its legal value was not greater than its
market value, and, therefore, the anticipated increase of the coinage
would not take place. The farmers, therefore, who favor the measure on
this ground, and which certainly is the more general one for their action
would be disappointed. The increase would not come, and consequently
the prices for their products would remain the same. We believe, there-
fore, that the farmers have nothing to gain from the mectsure, and
possibly harm, unless a general rise in prices enabled those now in debt
to discharge their indebtedness more easily.

The Need of More Money.

Another cause from which the farmers complain is the insufficient



Online LibraryPennsylvania. Dept. of Internal Affairs Pennsylvania. Bureau of Industrial StatisticsAnnual report of the Secretary of Internal Affairs of the ..., Volume 18 → online text (page 7 of 28)