The causes that contributed to the enthronement of gold were many. Especially in the latter half of the nineteenth century, the application of science to modern industries was being perfected. The introduction of machinery into almost every department in trade, the advent of steam vessels and the large increase in shipping, besides the extended use of the power plant for manufactures, made it imperative for each nation to extend its commerce as far as possible. England led the way in this as in many other things; especially about the sixties of the last century England occupied a position almost unique in the history of the world. She was the only country in Europe not involved in any serious struggle and able to carry on the peaceful occupations. She was the only country in the world which had over-seas possessions of any magnitude, where she could sell her manufactures. In Europe itself, Russia, in spite of its vastness, did not count as an industrial power. The once powerful kingdom of Poland was already destroyed. Modern Germany, and modern Italy were still in the course of formation and the internecine strifes were sufficient to keep the public away from peaceful industrial development. The kingdom of Austria was powerful; but it had its Hungarian and Slav troubles, besides conflicts with both Prussia and Sardinia. The Pope was a further contributing factor to the disturbance of peace, not only in Italy but also in Germany, France and Austria. France had gone through numerous revolutions and she had still not recovered from the effect of the previous strifes, when the advent of Napoleon III put an end to all hopes of peaceful and industrial progress. Spain was troubled over its succession; the North countries, especially the Scandinavian states, and Turkey were never factors of any note, so far as industrial progress was concerned. It is not necessary to make even the slightest reference to any other country in the world except the United States of America, which was then only consolidating; but even there the slave trouble and the rupture between the North and South put back the clock of progress. Is it any wonder then that England„ from her isolated point of vantage as an island, was able to forge ahead of all other nations in shipping, industries and manufactures? The nation found greater profits in manufactures and hence was giving up agriculture and other occupations that were the chief means of livelihood in other countries, even in Europe. The whole world was being flooded with English goods at a cost at which it would be simply impossible for the importing countries to produce the same stuff. Of course, later on, the European countries and America learned the use of machinery from England and began to compete with her; but for the moment she was supreme. Even as late as 1880, Germany and the United States, which, during recent years, have held almost a complete supremacy in applied science, were indebted to British engineers for the construction of their railways and water-works; their factories were managed by Englishmen, and the latter organized the whole of their industrial life.
The advance in manufactures had only one meaning; that is, that the conversion of the raw materials into the desired fabrics was attended with large profits. In other words, the balance in favour of Great Britain became every year larger and larger. And at that time the situation was unique in that the great majority of the profit was-obtained outside of the country. The profits of the British manufacturers came out of the pockets of people in other parts of the world. It is not generally understood that in those times the principal means of obtaining the surplus from other nations was by taking in precious metals, like gold and silver. Special emphasis should be laid on the surplus, because I want it to be clearly understood that the manufacturers that sent out their cargoes, took in the first place every produce that was available in the shape of cargo, which was needed or which could be marketed in Great Britain. There is a vast difference between the situation to-day and that of, say, the sixties of the last century. England invests large sums of money to-day; foreign relations and adjustments permit of the safe investment of the surplus wealth of the nationals of one country in another. England receives large sums in the shape of freights from foreign countries, as her shipping is practically as much as that of the rest of the world put together. In those days England was the only country having a big over-seas trade; and hence she alone needed ocean carriers. Trade conditions were not quite on all fours with those of to-day. When England traded with China she had to bring actual specie if she wanted to buy tea for a higher value than that of the wool brought by a certain steamer; similarly if the Chinese wanted to buy more goods from England than the tea and silk which they sold they had to pay also in specie. Being mainly a manufacturing country and having the enterprise to venture out to different parts of the world, the result in the case of England was that the situation was always in favour of fresh and fresh importations of the precious metals into England.
In those times silver was the standard of every country in the world although, however, gold and silver circulated on the basis of their intrinsic value. The principle of token coins was only a latter day invention and was not successful even in England, until late in the eighties. Moreover, the supply of the precious metals was then not abundant. The production of gold and silver in the world was very nearly of equal value before the seventies. The ratio between the two metals varied according as there was a scarcity of one or the other. The surplus taken to England was in both silver and gold, especially the latter - as people parted with it quicker because it was then solely a commodity. The accumulation of gold in England thus increased year after year, and it so happened that gold was usable to a very large extent for the payment which England had to make for her purchase of cargo. Silver, including new silver coins, was being exported very heavily even in the reign of William III. Thus the large stocks of gold of the country and the comparatively large prosperity of the nation, as a result of industrial advancement, besides, of course, a certain amount of state compulsion, necessitated by large exports of silver coins and silver bullion, led to the adoption of gold as a standard of value. It is needless for me to state that people - even some famous economists of the period - did not take kindly to this change; and thus even as late as the nineties there were potent voices raised in favour of bi-metallism.