=Source.=--_The Times_, February 19.
_Extract from a Letter by Lord Grey._
Some portion of public attention ought to be given to a subject
of very pressing importance--that of the "scarcity of gold." The
share which the enhancement of the value of gold has probably had
in producing these disastrous strikes seems not to have attracted
sufficient notice. The fall of prices from the growing scarcity
of gold has necessarily made the same wages for labour really
higher than they formerly were, while at the same time this fall
of prices has diminished the total return from labour and capital
employed in production.... Probably this has not been sufficiently
well understood by either masters or men, but the masters have
practically felt that they could no longer afford to pay the same
money wages they used to do, while the men have not understood the
necessity for such a reduction. What I would propose is that £1
notes, payable in silver bullion, should be issued, but only in
exchange for the same bullion after a certain fixed amount of them
had been sent into circulation. But this bullion I should propose
to give or receive in exchange for notes, not at any fixed price
for silver, but at the market price of the metal, which should be
published weekly in the _Gazette_. By this arrangement it will
be perceived that silver would be largely used as an instrument
for carrying on the business of exchange, without incurring the
inconvenience which seems to be inseparable from the scheme of the
bimetallists, who would establish by law a fixed price for silver
and for gold. As the cost of producing these metals is liable to
variation, I cannot understand how the bimetallists can expect
that fixing their comparative prices by law could prevent that
which could at the moment be most cheaply produced from driving
the other out of circulation, since all who had to pay money would
naturally make use of the cheapest money they could get.