But there has been a very serious effect on the status of the middlemen; that is, the distributing agents between the English manufacturer and the Chinese purchaser. On them has fallen the brunt of the petty and incessant fluctuations in the price of silver. It has forced them into the position of mere commission agents. Much of the business now is done in that way, vi:., by selling to China and buying in Manchester simultaneously, and at the same time settling exchange forward through one of the banks. In this way the merchant runs no risk at all; but, per contra, he gets little profit. As it requires little or no capital to do that sort of business, a crowd of small men have come forward who have cut down commissions almost to vanishing point. Now, some of you manufacturers may say that is all the better for us—the cheaper they do business out there the more will they want to buy. But there is another side to the question, The extension of your business into new fields depends solely on those whom I may term your agents, the merchants out in fore ports. The manufacturer sits at his door till somebody comes to buy. The middleman goes out into the world seeking new outlets for British products. They are the people who conquer the world for you, whose energy and push have made British trade what it is. But they won't do that for nothing. If you starve them they won't work. Now, that is largely the position that the destruction of the par of exchange has brought our merchants to. The uncertainty of the trade has chilled their energies. They ter, hardly venturing to initiate anything new. They hesitate to invest their money in new enterprises not knowing how it will come back to them. This, though it may seem a swnall matter and rather savouring of personality, is, in my opinion, one of brett importance, It is essential to the development of British trade that your merchants, the great distributors, should be men. of wealth and intelligence and energy, and this you can only secure by making it worth their while—in other words, when there is money to be made in it. If circumstances over which they have no control make success impossible, or make it too risky or too hazardous, the best men will take their money elsewhere, and you are left with the second-rate, So, altogether, though it is not perhaps easy to say -just by how much the China trade has been affected, it is beyond question that the general _influence has been adverse. Where commodities are offering for exchange, trade will go on under any circumstances, even if we were reduced to absolute barter. But none the less is it deemed essential for successful commerce that you must have a sound metallic medium of exchange, and equally is it essential that you should have, if possible, a fixed and stable common meeting-ground' between the two metals of the world—gold and silver. The Kastern trade, I have said, has been less affected than might be supposed, because silver prices have been reasonably steady, But that may not be so in future. Suppose the general level of gold prices were to rise while silver kept at its present level, it seems to me_ that might affect the Manchester trade in the Far East very adversely. Given the present low rate of exchange, if Manchester prices rise, so must silver prices in the East. This checks imports from England, and pro tonto encourages local manufacture. Tt is true, exports from China would be encouraged, and some commodities probably would be taken in exchange; but it might not be Manchester goods, and it certainly would not be quirl the old staples.
THE ECONOMIC EFFECT ON PRODUCTION, to the third result which T mentions as Tinust now advert, though very briefly,
following from the fall in prices, and that is the economic effect on production. If all prices, including rents, wages, and taxes, fell or rose uniformly, no one would bea whit the worse. If you receive double or half for everything you sell, and pay double or half for everything you buy, your net profit is just the same as before. You are simply using larger or smaller counters as the case may be. But prices never do thus rise and fall uniformly. Especially is this the case when the change in prices 1s brought about by foreign trade and through causes which are international. These have at first no direct effect on wages or rents, and none at all on fixed charges, such as mortgages, &c. Wages, though quick to rise, are slow to fall and. invariably lay behind a fall in prices. The result is that every fall in silver, disturbing, as it does, the general level of
labour and capital. Given a 5 per cent must disturb the relation between reduction in the price of finished goods, if the manufacturer pays the same for his labour, his profit—other things being equal—must be 5 per cent less, That, of evurse, can't go on. Unless labour can be made 5 per cent more efficient, wages must come down eventually, or else" manufacturers must close their mills. And even greater efficiency of labour, if due to improved machinery, is not enough, because such improved machinery is equally available to foreign competitors. Fluctuations in silver, in short, tend to create the same disturbance in wages as they do in prices. The one necessarily and inevitably follows the other. Silver-using countriesiare similarly affected,
Text read from the printed page and cleaned; old type leaves the occasional error.