When, as a result of the Franco-German war, France was deprived of international money, suspended specie payments, and resorted to a properly limited paper currency, her progress was unbounded.
No period in the history of Great Britain can compare for activity, prosperity, or achievement, with the twenty years preceding 1816, when specie payments were suspended, and during which period, as testified to by witnesses before the secret committee of Parliament, the discount rate of the Bank of England did not buffer a single change; whereas from that period to 1847 the rate was changed sixteen times, and from 1847 to 1874 as many as 274 times, the fluctuations being sometime of the most violent character.
When gold threatens to leave Great Britain the rate of discount at the Bank of England is raised, with the view of discouraging, if not preventing, the outflow. Raising the rate of discount is like putting the brakes on a railroad train; lowering the rate is like letting off the brakes.
These changes were not due to any greater demand for money but to the movements of gold. There was frequently, in the condition of business, no warrant whatever for a rise in the rate of discount. The only reason for it was to prevent gold from performing what "our most conservative financiers" denominate its "noble" function of "mobility"--of "fluidity"--namely, the function of going "where it was wanted." This function of going "where it is wanted" is described as the great "mission" of gold, and it is assumed that it will never be wanted at more than one place at a time. Yet hear what the chancellor of the exchequer of Great Britain said a few days ago in the House of Commons:
I admit that, as interested in the commerce and monetary system of this country I feel a kind of shame that on the occasion of £2,000,000 or £3,000,000 of gold being taken from this country to Brazil, or any other country, it should immediately have the effect of causing a monetary alarm throughout the country. (Speech of the chancellor of the exchequer in the House of Commons, April 18, 1890.)
This is a suggestive admission, from so well-informed a source, as to the operation of the single gold standard. I commend it to those who would circumscribe and hamper the prosperity of this country by making gold alone the standard of all values.