Excerpt from Report and Accompanying Documents of the United States Monetary Commission, Organized Under Joint Resolution of August 15, 1876, Vol. 2
This volume completes the publication of all the communications, and all the testimony of witnesses, which accompanied the Report of the United States Monetary Commission, appointed under the joint resolution of August 15, 1876. The publication has been delayed for various and unavoidable reasons, and the Secretary of the Commission has been directed to collect such facts as have become known since the report was made, which throw light upon the extent of the new demands for gold, and especially upon the fact and extent of a supposed increased tendency of gold to be drawn from other parts of the world into Europe, by the higher value which it has recently acquired there in relation both to silver and to the general range of commodities.
The change of the metallic standard of Germany from silver to gold was decreed in December, 1871. The German gold coinage, which commenced in 1872, amounted during that year to $100,000,000, and has been steadily persisted in since. On the 4th of January, 1879, it amounted to $418,554,266. The pressure upon the general gold markets, which was one of the results of the new German policy, became marked and decisive in 1873. The divergence from the previous ratio of the market values of gold and silver, which was another of its results, manifested itself somewhat later, and did not in fact become important until 1875. The maximum which it has so far reached was in 1876, and in July of that year it was attended with some circumstances of panic.
The natural effect of the new value thus given to gold, first in reference to commodities, but very soon in respect to both silver and commodities, would be to attract to the countries using gold as money, not only a larger proportion of the annual product of that metal than they had previously been receiving, but whatever available supplies of it could be reached in other parts of the world.
British India, China, and other countries of which silver is the exclusive money, contain considerably more than half of the population of the globe. However it may appear to others, it appears to them that gold has become dearer. So far as they buy gold for ornamental and consumptive uses, the tendency must be for them to buy less as the article grows dearer. In choosing between gold and silver as the medium of adjusting debts and transactions with foreigners, the tendency must be for them to use more of that metal for which foreigners allow an increased price.
In countries on the double standard, such gold as they may possess will be used exclusively in the discharge of their foreign debts, when it becomes more valuable abroad than silver.
In the countries using as their exclusive money either gold, or paper redeemable in gold, a pressure on the gold market means a pressure on the money market, and is attended by all the circumstances which attend a contracting volume of money.
Gold, which is their money, being the thing most urgently wanted, when its quantity is growing smaller, they will bid for it wherever they can find it, by lowering the prices of what they have to sell.
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