Their chief charges are directed against gold monometallism as it is at present practised, and may be summarized as follows:-

A. Monometallism causes unnecessarily great fluctuations in prices, because it renders the currency of the gold-standard nations quite independent of that of the silver-standard countries and thus prevents a mitigation or neutralization of the effects of changes in the value of the precious metals through mutual readjustments of the demand for them for monetary purposes. Prices must change in the gold-standard countries whenever any radical change in the value of gold takes place, and the same result must follow in silver-standard countries with every change in the value of silver. In his book on "The Theory of Bimetallism" Mr. D. Barbour illustrates this point by the following hypothetical case: -

Two nations, each with a population of a million souls, increasing at the rate of ten thousand per annum, use for monetary purposes, the one metal A, and the other metal B. The former has a currency of ten and the latter one of one hundred coins per capita, the ratio between the values of the two metals being as one to ten. Reasoning on the basis of the quantity theory, he assumes that, in order to maintain a fixed level of prices in the two countries, one hundred thousand coins of metal A and one million coins of metal B should be added annually to the currency of these nations respectively. Mr. Barbour then proceeds as follows: -

"Let us now suppose that metal A is suddenly found in larger quantities, and that the production rises to 200,000 coins yearly.

"If matters had continued in their old course, there would have been 10,100,000 coins at the end of the first year, and prices would have been exactly the same as before. But there are actually 10,200,000 coins in existence; and as there is no greater demand for coins than before, it follows that the coins will fall in value. This is owing to the invariable law which regulates demand and supply.

"We may assume that the metal A continues to be produced in larger and larger quantities until, when the population reaches 200,0000 the currency, instead of being composed of 20,000,000 coins, is composed of 30,000,000 coins, and three coins are actually doing the work that was formerly done by two. In other words, a coin will only purchase two-thirds of what it formerly would have purchased, and the coins composing the currency have become depreciated to the extent of one-third of their former value.

"In the other nation, on the contrary, the increase of currency has been exactly proportional to the work it had to do, and prices have remained the same. The one country has experienced a rise in prices due to over-supply of the material of the currency; the other has had the benefit of stationary prices.

"Before the increase in rate of production of metal A began, one pound of that metal purchased the same amount of wheat that could be obtained in exchange for ten pounds of metal B, and one pound of metal A was exchangeable for ten pounds of metal B. Under the new conditions ten pounds of metal B will still purchase as much wheat as before, while one pound of metal A will only purchase two-thirds of that amount; it follows that one pound of metal A will now exchange for only 6 2/3 pounds of metal B, instead of for ten pounds.

"The result, therefore, has been that there has been a rise of prices in the first nation, and simultaneously an alteration in the rates at which the two metals exchange.

"If we assume that the production of metal B has been decreasing while that of metal A has been increasing, we get a double effect. Prices will have risen in the country that uses metal A, and fallen in the country that uses metal B. Both countries will have suffered from variations in prices, and there will have been also a variation in the ratio in which the two metals exchange against each other.

"It will readily be understood that prices might rise by one-third in the first country, while they fall by one-third in the second country. The total amount of the two currencies taken together would, in this case, be exactly what it ought to be in order that prices might remain stationary; but one country would have one-third too much, and the other one-third too little, and consequently one country would suffer from a rise and the other from a fall in prices.

"At this stage the question naturally arises whether it would be possible by any means so to arrange matters that the excess in one country should balance the deficit in the other, and that both countries should have the benefit of stationary prices.

"Assuming, as before, that the population in each country has increased from 1,000,000 to 2,000,000, and that there has arisen an excess of one-third of the total currency in one country and a deficiency to the extent of one-third in the other, we find that the country which ought to have had twenty millions of A coins has got 26 2/3 millions; the other country required 200 millions of B coins, but has only got 133 1/3 millions.

" An obvious remedy for the variations in prices in the two countries is that one-third of the population of the second country should give up the use of metal B and use metal A. If this be done, we shall have two and two-thirds millions of people with 26 2/3 millions of A coins, or ten coins per head, and one and one-third millions of people with 133 1/3 millions of B coins, or 100 coins per head. As these are the amounts per head required by our hypothesis to maintain equilibrium, prices will neither rise nor fall in the two countries, and the coins will interchange at the rate of 1 to 10 as before."*

The actual method of remedying this difficulty under the bimetallic system is not that suggested in the last paragraph of this quotation, but amounts to the same thing. Before describing it, however we will mention two other charges against the bimetallic system.

B. For the last thirty years, at least, the appreciation of gold has steadily depressed prices, increased enormously the burdens of debtors, and reduced the average purchasing power of the earnings of wage-workers and the poorer classes generally.

C. Monometallism renders a large amount of our international trade hazardous, since it makes impossible the establishment of a fixed par of exchange between gold- and silver-standard countries.