CHART NO. 14

[Chart.]

Chart XIV. Wholesale prices of iron, kerosene, etc., New York, 1867-1896.

Page 106.

_Prices of iron, kerosene, etc., 1867 to 1896_

_Description and Explanation._-This chart gives the prices from year to year for steel rails, bar iron, pig iron and nails in the New York market, each dot indicating the average for the year. The average prices for the corresponding years for refined kerosene are also shown. No. 1 gives prices per ton of steel rails, into which enters all the influence of the improved methods of manufacture. No. 2 represents the prices of bar iron per ton, less affected by improvements but influenced by the subst.i.tution of steel. No. 3 gives the prices of nails per thousand pounds. For comparison with the other prices of iron, the prices of nails must be doubled. All will realize the immense improvements made in the manufacture of nails. No. 4 gives the prices per ton of pig iron. It is evident that all these forms of iron and steel have stood in the market under the same general influences, with slight modifications from special characteristics of production or use. No. 5 gives the average price in each year for one hundred gallons of refined kerosene oil. The price per gallon can be found by reading the figures as cents instead of dollars. In the same way the price of ten pounds of nails can be found. It should be said, however, that all these prices are the wholesale prices, retail prices being subject to local influences, sometimes even to custom, which prevents their adhering closely to the prices in larger markets.

_Even monopoly affected._-These articles have been chosen as ill.u.s.trating the essential law of prices even under the advance of combination of capital upon an enormous scale. The iron industries and the Standard Oil Company come nearest, perhaps, to fulfilling the conditions of monopoly found anywhere. Yet the actual effect of improved methods in great combinations is seen to have reached the ma.s.s of the people in spite of any tendency to sustain prices by combination. A line, No. 6, indicating the general trend of wages for farm hands in the North, is added to more clearly indicate the distribution of welfare through such improvements in method. For still other purposes, the fluctuating price of silver bullion is shown in line No. 7.

Chapter X. Exchange-Its Machinery.

_Free communication._-From what has been said in the preceding chapter as to the nature of value and price, it will appear that the most fundamental condition for ready exchange is perfectly free communication between individuals as to wants and abilities to meet wants. There is implied, also, an absolute protection of property rights and of equity in dealing through the laws and customs of the community. No one acquires property for the purpose of exchange unless he can foresee the possibility of carrying out the exchange at any future time. He must also feel that he is protected by surrounding circ.u.mstances from misinformation as to values.

In short, any community is ready for free exchange among its members only when it maintains the conditions for fair compet.i.tion. To this fairness of compet.i.tion many things contribute, aside from the governmental machinery.

There can be little trade without a common language, and the full advantages of common speech are reached through every facility for ready communication between all the individuals of the community. An universal press, postal facilities, telegraph and telephone systems have all grown up in meeting this need.

The same is true of established market places, boards of trade and produce exchanges. Not only does the mult.i.tude of exchanges in one place lessen the cost of such exchanges, but these make it possible for mult.i.tudes to reach a fair understanding of what is wanted and what is offered in any line of production. This need accounts for the tendency so frequently noticed to establish great centers of trade in particular commodities. The world wants a fair understanding of what the world contains, and these methods of bringing together buyers and sellers are the natural outgrowth of this need.

_Full statistics._-The same end is served still more fully by frequent publication of price-lists, and a daily record of the transactions in any market gives information which every dealer can use to advantage. Public statistics, carefully and honestly prepared, serve both buyers and sellers of any article of commerce. The farmer needs as much as anybody the fullest information as to what his fellow farmers have to sell, whether they are immediate neighbors or in distant parts of the world. The price of wheat on any farm ought, if perfect understanding is reached, to conform to the general law of supply and demand throughout the world, and the yield of wheat in Russia, India and South America affects the value of every bushel raised in our country.

Every advance in the perfection of statistics and the rapidity of collection makes more certain the bargain of every producer and consumer.

People have sometimes opposed the gathering of statistics for fear that large dealers and speculators may take unfair advantage from such information. But a careful consideration will show that managing of the market depends chiefly upon want of information on one side of the bargain. If farmers were as thoroughly informed as to the crops of the world as carefully collected statistics might make them, no false rumors could mislead them in selling their produce. The evident tendency toward more stable markets, as shown by the records of the last twenty years, is accounted for partially, at least, by the more perfect information available. If farmers themselves would take interest in furnishing accurate estimates of the extent and condition of every product held for sale, they would in the long run reap the highest advantages of clearly understanding the supply and demand in the markets of the world. This would do more to destroy the demoralizing force of mere speculation than any possible legal enactment.

_Ready transportation._-An equally important part of the machinery of exchange is easy transportation. Every improvement in the transportation of persons or products not only lessens the cost of the article when delivered, but increases the actual stability of price and range of the market.

The pioneer farmers of northern Ohio found absolutely no market for their wheat until the opening of the Erie ca.n.a.l. Farmers upon western prairies found corn their cheapest fuel until railway transportation brought coal mines and corn fields into closer relations. The rural community which takes pains to have good roads not only lessens the cost of hauling grain to market by saving friction and toil, but actually enlarges its market at home. Hard roads enable them to do four times the work they can do on soft roads. In the same way any improvement of railroads, construction of pipe lines for gas and oil, or introduction of pneumatic tubes, for mails and light packages in cities, directly spreads the range of market for the products of every individual laborer and makes more sure the returns for any effort he may give in production. Perhaps this is even more easily seen by considering how the world's markets are opened by improvement in water transportation. Water freight on a bushel of wheat from Chicago to New York from 1865 to 1874 averaged over twenty-two cents; from 1885 to 1894 it was less than seven cents.

The universality of markets for all kinds of products is clearly shown by realizing what we have within reach of every country community today. Such easy transportation adds to the productive abilities of every person. Over ordinary roads the cost of transporting wheat two hundred miles is equal to its value at the end of the journey. Corn will usually pay its way not more than half that distance. So in countries where railroads do not exist the people consume only what they themselves produce, or devote themselves to very few products, and so occupy only a portion of their time. In the best developed regions of our country, every family can reach a steady supply of all kinds of goods, and can know that every article produced has its proper place in the market without waste. The cost of delivering bread in Boston is greater than the cost of carrying the flour in it two thousand miles. This ready transportation leads to more complete and more definite occupation and so to larger returns in the way of satisfaction from all efforts. The extended market gives added value to all permanent or fixed capital. It makes both farms and homes more useful, if full advantage of such improvements is taken. At the same time, values of land tend toward an equality throughout the world.

_Diminishing cost of transportation._-That the cost of transportation keeps diminishing in spite of combinations of capital to prevent it, and in spite of local legislation restricting it, proves that the increasing perfection of machinery and the accession of capital in railroads and waterways are stronger than the purposes of men. That freights are regulated by "what the traffic will bear" is merely another way of saying that transportation comes under the universal law of values-what the service is worth in the market, or what people are willing to give for it.

According to good authority, the net profit of carrying one ton of freight one mile has fallen in twenty-five years from one cent to less than one-ninth of a cent. The same principle fixes a cla.s.sification of freight according to service. We can afford to pay more for carrying valuable produce than for carrying cheaper products. It also leads to special rates for developing traffic, as ill.u.s.trated in rates on baled alfalfa hay from western plains to Chicago.

Wise managers, if not misled by speculation in stocks, care more for enlarging traffic than for immediate returns upon a smaller bulk, because the bulk of profit is greater. A good ill.u.s.tration of development of a special traffic is found in the milk trains running two hundred or three hundred miles to supply the city of New York. The railroads are compelled by the needs of the traffic to carry the milk cheaply enough to prevent its being made into b.u.t.ter and cheese. Laws regulating this charge are effective, because such a necessity exists in the nature of the case.

_Weights and measures._-Another important growth in the machinery of trade is found in standards of quant.i.ty,-weights and measures of every kind. It is scarcely possible to realize the uncertainty of exchange without exact weights and measures. The story of the Indian trader who bought furs by weight, putting his hand upon the scales for one weight and his foot for its double, ill.u.s.trates how uncertain such judgments of quant.i.ty may be without system. The present names of weights and measures indicate their origin in similar ways.

Measures have usually been connected with some part of the body: as "finger," used one way in measuring the load of a gun and another on a stocking; "hand," still used in measuring the height of horses; "span,"

once considered sufficiently definite for any measurement; "foot," now made to conform to an accurate system; and "pace," still used in many communities. Connected with the arm, are "cubit" and "yard." Many ladies still measure their dress goods by arm's lengths. For small measures, "grain" and "barley-corn," still used as names, indicate dependence upon average quant.i.ty in articles of general growth.

Today all civilized governments settle upon a definite system of measures and weights, all accurately connected with each other and with some precise dimension in nature supposed to be invariable. Our common yard is distinctly a.s.sociated with a pendulum vibrating seconds; and in the great decimal system, adopted by most countries in Europe, and likely to be reached in all countries, the whole is connected with a measured meridian upon the earth's surface. Care is then taken to have standard measures and weights prepared in such a way as to be free from all effects of any change of temperature, and legal enactments distinctly define each measure and weight, actually punishing one for the crime of using false weights or measures. Units of quant.i.ty thus enter into all our calculations and form an essential basis of all exchange. Cheating in measure and weight grows less and less possible with this clear understanding of exact units. The New York Legislature has defined the size of fruit packages, and the Ma.s.sachusetts poultry raisers ask a law requiring eggs to be sold by weight.

_Metrical system._-If the whole world should unite on a single decimal system of measures and weights, like that now used in most of Europe, all would be gainers from the reduction of misunderstandings and miscalculations increasing the cost of exchange. The difficulty of adopting a new system arises chiefly from the absolute importance of any system and the unconscious use of that to which people are already accustomed, together with its application in a thousand unthought of ways to every tool and every rule. That the advantage of a uniform decimal system would more than balance the difficulty of change, no student of the subject now doubts. Some have estimated the saving at nearly one-half of the present clerk hire. Our government has already taken steps for such a change, though years may be required to accomplish it.

_Standards of quality._-The machinery of exchange also involves standard units of quality, but these must vary with every different kind of commodity. Custom has given rise to all sorts of devices for expressing degrees of fineness, strength and hardness, as well as more delicate qualities of flavor and odor. Boards of Trade often establish offices of inspection with brands upon grains, flour, b.u.t.ter, pork, etc., and these become definite parts of a contract which the government rightly enforces.

Private trade-marks and brands, if honestly used, become a prominent element in exchange. These are protected rightly by being filed with the government, which secures to the originator his sole use of such a proof of quality.

In some articles of trade, when a whole community is interested, the government goes further and undertakes inspection and branding by an official. This in most states applies to kerosene oil, first for public safety, but afterwards for protection of exchange. Laws regulating the quality of fertilizers are based upon the necessity of knowledge, that bargains may be fair; and in many parts of our country now the branding of ground feeds, with an a.n.a.lysis of their qualities, is deemed an essential of safe bargaining. The extent to which this effort to establish the certainty of qualities may need to be carried can be estimated by the recent agitation over adulterations of food products. All believe that, as buyers, they have a right to know the quality of what they buy. It is conceivable that markets may some time establish a system of terms, descriptive of qualities, almost as definite as weights and measures. All this contributes to fair compet.i.tion in exchange.

_Standards of value._-More important still in the machinery of exchange is a standard unit of value. We have seen that value in any article of commerce can be fixed in terms of any other article, but prices remain indefinite so long as there is want of universal appreciation or appraisal in essentially the same terms and ideas. The tendency toward definite prices in well understood units of value is as clearly perceptible in the progress of commerce as is the tendency toward definiteness in weights and measures.

In early ages almost any article of common use, so that its qualities might be generally understood, has served as a standard of value, in terms of which all wealth has been estimated. Communities engaged in grazing counted all their wealth by cattle. Homer's heroes wore armor valued in cattle, and early Roman coins bore the images of cattle, while the very name of Roman coins, _pecunia_, is supposed to have been derived from the name of the flock. Communities of fishermen for a long period have estimated wealth in dried fish. More mechanical peoples have used some article of manufacture, like nails in some Scottish villages and the country cloth of western Africa. Sometimes a single prime article of export has served the purpose, like tobacco in the colony of Virginia and dried hides on the plains of South America. In most of pioneer America the hunters' pelts have served the same purpose, the average "c.o.o.nskin" having a value which all could understand. As communities became more wealthy the display of wealth in ornaments made of precious metals and in precious stones has led to the use of these as standards of value. American Indians used their wampum, and African tribes employed peculiar sh.e.l.ls. But as commerce increased, embracing wider regions, gold and silver became the staple article of value everywhere, since these, so easily tested for purity, could have their value estimated definitely by weight. Thus the standard unit of value has been definitely connected with standard weights.

_Coinage._-Gradually these weights, for greater ease of transfer and for clearer understanding of values, became the basis of coinage. The stamp of the coiner became a certificate of quality and quant.i.ty, and finally, as in the case of weights and measures, governments a.s.sumed the whole responsibility for fixing the weight and fineness of coins, and reduced all coinage to system, that every citizen might know the value of the unit in which he estimates any article of commerce.

The early coins were definite weights of gold, silver or copper, and in many countries coins still bear the names that indicate their original weight. Yet arbitrary rulers have often sought to cheat their subjects by issuing coins of lighter weight and baser metal. The French livre, now the franc, is one seventy-second of its original value. English coins were debased ten times between the years 1299 and 1601 to exactly one-third of their original value. The loss from such debas.e.m.e.nt falls almost wholly upon the poor, whose wages fail to buy the usual food and clothing. Henry VIII reduced the coins of his realm again and again, until it would have taken five years' revenue of Elizabeth's reign to restore the currency.

Elizabeth chose to take the standards as she found them, but to establish an absolute degree of purity and fix by law the weight of each coin in the system. The standard of purity since maintained in England is 22 carats, or eleven-twelfths fine, and weights have been maintained in spite of several efforts to reduce them. Other nations have taken similar steps with varying standards of purity: .835 in the Latin union, .9 in the United States, and over .96 in most coinage of western Asia. In this way the standard of value for every citizen of a country is as clearly defined as the standard of weight, and every transaction in trade, with every account of such transaction, involves that unit.

_United States coinage._-A brief statement of the system of coinage now established in the United States may ill.u.s.trate the definiteness of the standards of value. The United States mint at Philadelphia and its branches at New Orleans, Denver, San Francisco and Carson have the sole authority for making coins. Any effort at coinage by outside parties is criminal. The mint receives the gold and silver by weight and a.s.say of purity, melts and refines and mixes with alloy, to bring the ma.s.s to required fineness, nine-tenths pure, and casts the metal into bars called bullion. These bars are then most carefully a.s.sayed, and, if found of exact standard purity, are rolled and drawn into plates the thickness of the coins desired. From these plates disks are punched by machinery, each disk being weighed, and if found too light thrown aside, if too heavy reduced by filing, until every disk represents exactly the required weight of the coin desired. The disks then pa.s.s through a milling machine which raises the edges, and when cleaned by dilute acid and carefully dried, are stamped by a steel die with some device covering both surfaces completely.

This effectually gives the seal of the nation to the purity and weight of the coin, and, since it covers the whole surface, prevents the possibility of reducing that weight without marring the coin.

_United States standards._-The system of coinage in the United States since 1873 embraces standard coins of gold, silver, nickel and copper, but gold alone actually furnishes the standards of value, all other coins being at present subsidiary. Gold is coined for individuals free; that is, a certain weight of metal presented at the mint is a.s.sayed, to determine the exact weight of pure gold, and an equal weight of pure gold is returned to the owner in coin. Sometimes a slight charge for the expense of coinage is made and called seigniorage. At present no such charge is made, for the reason that when a nation bears the cost of coinage, foreign coins are kept from circulation, and its own coins are current everywhere.

The standard unit of value for the United States is 25.8 grains of gold nine-tenths fine, and this is called a dollar, although no coin of this weight is at present struck. In actual practice, the standard is shown in the ten-dollar piece, or eagle, weighing 258 grains. The half eagle (five dollars) and the quarter eagle (two dollars and fifty cents) indicate upon their face their relation to the princ.i.p.al coin. The double eagle, or twenty-dollar piece, is coined for greater convenience. These coins connect all the currency of the country directly with the market value of commodities in the world, through gaining their value directly from the market value of gold, where gold is bought and sold. Thus gold furnishes the standard of value with which all other values are compared.

Silver coins of the United States are made from silver purchased by the government. The dollar, adopted from the Spanish rix-dollar, itself derived from the German thaler, is by law a coin of 412- grains of silver nine-tenths fine. This silver dollar has a story of its own, which will be given later, and does not form a part of the system of 1873. The half dollar, the quarter dollar, and the dime, for fractional currency, are proportional parts of 385.8 grains of silver nine-tenths fine. These are about five per cent less in weight than the proportional parts of the silver dollar. The original purpose of this reduced weight was to prevent the consumption of these coins in ordinary uses by making them worth on the face a little more than their bullion value. These fractional coins are legal tender in the courts to the amount of five dollars. In nickel and copper coins no effort has been made for many years to maintain a standard of value, the amount of metal in any of them being far less in value than their face. They are legal tender only to the amount of twenty-five cents.

_Fluctuation of standards._-In the study of the precious metals as the standard of prices, it is necessary to remember that the value of these metals, like that of all products of labor, is subject to considerable fluctuations. The very fact that gold and silver are durable metals, not easily consumed or readily worn away, tends to make the increased product in a series of years less and less valuable. While the ordinary increase in product may be provided for by increased demand through extended exchange, the very improvements in the machinery of exchange, especially the extension of general credit, operate in the opposite direction.

It is certain that the value of gold and silver within one hundred years after the discovery of America, when European nations took possession of acc.u.mulations among the inhabitants of Central and South America, diminished to a little more than one-fourth of the value previous to that discovery. It is estimated that the value of gold since the discovery of 1849, in California, followed by the opening of mines in Australia and South Africa, has been reduced to little more than three-fifths of its value in 1850. This estimate is based upon careful comparisons between what an ounce of gold in 1850 would buy of some hundred staple products, and what the same ounce of gold will buy today of the same hundred products. The test is a somewhat uncertain one, from the fact that many products are much more affected by improved methods of production than others, and changes of habits and customs among the people greatly affect the prices by changing demands. The combination of a large number of products being less likely to be affected than any one, the comparison is worthy of some confidence. Nevertheless, it is possible for two different persons, making different selections for comparison, to arrive at very diverse results. If the selected articles are those of ready manufacture where improved methods have most largely entered, the value of gold will seem to have increased; if, on the other hand, the selected articles are raw materials, in which the law of diminishing returns gives greater cost of production, the value of gold will seem to have diminished.

A test easily applied, though not absolutely correct, is in the amount of labor of the most common sort which an ounce of gold would pay for at the different periods compared. Careful comparisons show that an ounce of gold today buys more of all sorts of manufactured articles and more of most articles of food, though less of the better cla.s.s of meats and less of labor, than ever before. This fluctuation in the value of gold has its chief importance in connection with long extended credits, though its influence is felt in other directions through a common system of accounts, in which the standard unit of some system of coinage is the sole basis of comparisons. If the standard unit is growing less valuable, in a series of years the book-keeper will show a constantly increasing total of wealth; if, on the other hand, it is growing more valuable, the books will show an apparent loss. Were a perfectly uniform standard possible, all interests would be best provided for.

_Ratio of silver to gold._-More directly important in its effect upon exchanges is the unequal fluctuation of gold and silver when both are made the standard of value. That silver and gold are from independent sources, subject to variations of their own in product and processes of extraction, makes it impossible that they should sustain always the same ratio to each other in value.

A careful study of the subject by Professor Rogers shows that early in the thirteenth century one pound of gold was worth ten pounds of silver, at the close of that century would buy twelve and one-half pounds of silver, and in the middle of the fourteenth century bought thirteen and three-fourths pounds; but in the fifteenth and sixteenth centuries, after the new world was pillaged, one pound of gold bought from ten and one-half to twelve pounds of silver. In the seventeenth century fifteen pounds of silver went for one pound of gold, and in the eighteenth, fifteen and one-half pounds. Early in the nineteenth century the ratio was fixed in this country at sixteen of silver to one of gold, and that estimate was a.s.sumed to be essentially correct as late as 1877, when a pound of gold would exchange in the market for three and one-half pounds of platinum, seven pounds of aluminum, sixteen pounds of silver, seventy-one pounds of nickel, 942 pounds of tin, 1,696 pounds of copper. Twenty years have produced great changes in both the total annual products and the relative cost of mining. The estimate of 1877 would now be incorrect for any of the metals named. A pound of gold now buys 1,540 pounds of aluminum, the change being due to an invention for reducing aluminum ore. It now takes about thirty-seven pounds of silver to pay for one pound of gold, a change in part due to new systems of coinage in which silver plays a subordinate part, but chiefly due to the greatly increased product of rich mines and greatly improved methods of reducing ores.

_The cheaper money drives out the good money._-In any system of coinage, employing both silver and gold as standards, it is found by actual experience, repeated hundreds of times, that a change in the ratio between the two metals in open market always leads to h.o.a.rding for speculative purposes of the most costly metal of the two.

Thus, in our country previous to 1873, when silver was worth more than one-sixteenth of its weight in gold, uncoined silver was necessarily worth more than coined silver for some purposes, and the coins already struck were worth more in the manufacture of spoons and plate than to circulate as coins. Prior to 1853, when the half dollars, quarter dollars and dimes were coined at the ratio of sixteen to one, such coins could not be kept in circulation, for the reason that they were worth more than their face value. The law of 1853 reduced the weight of these coins so that their market value as silver was sure to remain a trifle less than their face value. The result was no further melting up of these small coins for use in the arts or for bullion. This fact is only one ill.u.s.tration of what is called Gresham's law, formulated in the time of England's base coinage during the sixteenth century, but noticed centuries earlier, that _cheap money always drives out a more costly money_. The principle is as constant as human nature, that n.o.body will give a greater value when a less value will serve the same purpose. For this reason, no country in recent times has been able to keep both gold and silver as the actual standards of value at the same time. Either the ratio must be changed with every fluctuation of either metal, or one of the metals must be undervalued in the system of coinage, as has been done in England for the greater part of this century; or else the total coins of the cheaper metal must be limited in amount, as has been done by the Latin Union in Europe during the last twenty-five years. In either case the tendency is toward a single standard. The commercial world prefers a stable, well understood unit to a changeable one. And while the fluctuations of gold alone affect somewhat the stability of prices, these are thought of less importance than the necessary legal adjustments for new systems of coinage.

_Monometalism and bimetalism._-The discussion has led to two opposing views, distinguished as monometalism and bimetalism. The monometalist holds that since one metal only can, under ordinary circ.u.mstances, set the standard of price, it is wise to choose the one subject to the least fluctuation for the universal standard. The bimetalist holds that a nation, or at any rate a group of nations, can fix by agreement the price of gold and silver in terms of each other, when used as money. Since the use of these metals as money makes the chief demand for them, it is thought possible to make this legal ratio hold upon the total product of both gold and silver. If, then, in any country the supply of gold should be out of due proportion with silver, its overvaluation will at once attract gold from other countries until it becomes no more profitable there than elsewhere. The result is a.s.sumed to be a somewhat ready equalization of values for the territory establishing the standard, so that the actual fluctuations of the standard unit will follow the line of lowest prices for either of the metals. The monometalist feels certain that the actual withdrawal from circulation, and so from use as money, of the higher priced metal causes greater hardship and probably greater fluctuations in values of other commodities than any fluctuation of a single standard can produce.

It is very certain that the commercial world recognizes the tendency toward a single standard, and that the coinage systems of all civilized countries are practically, if not in definite form, based upon a single standard. The countries of wide commerce and extensive credit are using the gold standard. The less developed countries adhere to the silver standard. Many which nominally sustain both have, by some legal restriction in the coinage of silver, become practical supporters of the gold standard. Few, if any, thorough students of the subject believe it possible by statute in the present conditions of mining and commerce to bring the commercial world anywhere back to the ratio of sixteen to one, established in the United States in 1834. Statute law might declare a sheep to be equal to a horse, but no power on earth could make it pull as much. So even agreement among nations, by legal enactments, cannot enforce an unnatural relation between two products.

NATIONAL STANDARDS OF VALUE, 1899

_Gold_ _Gold, with _Gold or _Silver_ silver limited_ silver_ Great Britain, United States, Haiti, Uruguay, Mexico, Central Germany, France, Argentine America, Sweden, Norway, Belgium, Italy, Republic, Columbia, Denmark, Switzerland, Venezuela, Bolivia, Peru, Austro-Hungary, Greece, India. Spain, Servia, Equador, China, Roumania, Bulgaria, Hong Kong and Turkey, Netherlands, Straits, Cochin Portugal, Algeria, Tunis, China.

Brazil, Canada, j.a.pan, Java, Newfoundland, etc., Egypt, Russia, Philippine Chile. Islands, Hawaii.

_Actual bimetalism._-It is necessary to caution against supposing that the use of both gold and silver as currency in any country implies true bimetalism, nor is it at all certain that the making of either gold or silver legal tender at option touches the question of bimetalism. Only the issue by free coinage at the will of the owner of both metals shows a distinct attempt to maintain bimetalism. The actual maintenance of both standards has always been, and always will be, by alternation, when the ratio of the two metals as to value is established at very nearly the market value of the two metals in bullion.

Popular demand for a return to the old ratio in the United States is founded in part upon misconception of commercial principles and largely upon a misunderstanding of current events during a financial crisis. The supposed dangers from a single standard of value are largely exaggerated from confusion of standards with currency in exchange. It is quite conceivable that gold may still serve as a standard unit of value, while 90 per cent of exchanges have no other use for gold beyond its furnishing terms of comparison. We must measure value by value, and the unit of value must be true to its name, just as we measure length by something long. But the number of yardsticks in actual use in a store may have no constant ratio to the number of yards of cloth sold by that measure. The folding of calico in yard folds relieves the yardstick, but does not change the nature of the yard. So gold, or silver, is relieved of many functions in exchange through banking systems without materially affecting its use as a standard unit.