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The Commoner
OCTOBER, 192J;
u
en. Lodge and A. J. Balfour in 1896
On Gold and Its Effect Upon Relations Between the United States
arid Great Britain
(Mr. Moreton Frewen, of England, furnishes
the Manufacturers Record the following private
letters, now made pubjic by permission, .and
Borne analysis of world financial conditions at
present. Ed.) r
Senator Lodge and Arthur, James .Balfour of
England in, 1896 wrote two extrernely interest
ing personal letters to Moreton Frewen, of Eng
land, but which we are now .permitted to publish
through thq 'kindness of Mr. Frewen who has se
cured this permission from Senator Lodge and
Mr. Balfour. .
These letters were called forth by one from
Mr. Frewen to Senator Lodge of which unfor
tunately no copy was kept. His letter, however,
related to a panic on the stock exchange in New
York fqllowing what he calls the "stupefying
Venezuelan message of this government to Great
Britain." In reply to that letter Senator Lodge
wrote as follows:
(PERSONAL.)
My dear Frewen. Many (hanks for.your let
ter of the 6th, and. a, happy .'New Year to you.
You need not be worried about our financial, con
dition. We are all right, nor did we "go pit at
half-cock" We acted with the most entire de
liberation. Lord Salisbury's letter made, us feel
a little as ypu felt over the Emperor's despatch
(to Krnger), although, of course, it ,was not ex
pressed so, Violently. We do not meddle with
Africa, or Europe or anything but .in the. Amer
icas; but in the Americas we must l)e let alone,
and I cannot for the life of me understand why
England should always seek to alienate the
United States as she has for a hundred years
when it is, her obvious policy, to be friends With
us; and; sheucan boyfriends, with us more easily
than with any other ination in the world, because
we really like , each; Other better than any other
people. If some, English Ministry would try the
hitherto unheard-of experiment of, treating! :the
United States, pleasantly', and ; ponsiderately . you
have no ideaNiow UUwauld . improve our mutual
relations.. i-. t . i . ..;
I see Balfour comments on the astonishing
outburst of feeling against England liere. The
bottom of it in decent times is England's at
titude on the money question; and the way in
which she has snubbed all our efforts to do any
thing for silver. Do you not see thrit gold, which
you have been fighting for years, is really at the.
bottom :of all ttiis' business? I qufte agree that
we are not going to be made pVoperous by bor
rowing; but we can cheok the outgo of gold by
pruden.tjil.qgislationn'many directions, a.nd .that
legislation is bouud,fto pome, Come out here
and see us, and we vjll clear your ideas and im
prove you generally. '" Sincerely yours,
.,! ::'"': ' , l ' ' , H. C. IJjQDGE.
United States' Senate, Washington', D. C, '
; ..; )u. . ;,;. ;; ; Jan.! 17, 189$.
Mr. Balfour to rwham Senator Lodge's letter
was senbiby Mr. Frewen, ; : wrote thevlatter as' fol'r
lows:;- i. :.-f ".( ' ': ' '
(PRIVATE.)1 '' ,k ;'
My dear Moreton reweji.-r-Thanks much for
letting me see Lodge's 'letter. As regards his
statement 'that "gold is at the bottom of all this
business" I do not at all doubt this is.true. But
then why do not the U. S. A., if they think as
they do (quite rightly in ray opinion) that
bimetallism is for' their .advantage force bime
tallism on the world, whether England likes it
or not? By the aid of the" Latin Union, and, a
fortiori, by the aid of Latin Union and Germany
combined, they would be quite strong enough to
support the weight of a bimetallic system, with
England or without her. As you know, I believe
England would do a very great deal to help such
a combination, and that' large portions of the
British Empire would join it. But however this
niay be, 1 cannot comprehend why all this im
portance is to be attached to the action of Lon
don, which is powerless either to prevent such
an arrangement working or to diminish its sta
bility. .
I am much puzzled as to what- Lodge means
by suggesting that English governments "Beek
to alienate the United States." This most as
suredly has never been their intention, and when
ne complains of Salisbury's despatch, surely it
is not mere national prejudice which makes me
think that this compares favorably in point of
eonciliatoriness with the document to which it
Z?LLleiilV wd0 not argue' of cours. on the
question of substance. Yours very truly
inn ARTHUR JAMES BALFOUR.
10 Downing Street. Feb. 3, 1896.
It is interesting to note that Sonator Lodge
pointed out in 1896 that one of the reasons of
the growing hostility of America at that time to
JSngland was the money question and that at the
bottom of all of this was the gold question and
that Mr. Balfour wrote that he did not at all
doubt the correctness, of Senator Lodge's diag
nosis of the case in his statement that "gold is
at the bottom of all this business." But Mr.
Balfour added to that a suggestion that in his
opinion and that of others bi-metallism would bo
for the world's advantage, whether England
liked it or not. The United States, the Latin
Union and Germany combined he said would hs
strong enough to force a bi-metallic system,
whether England favored it or did not.
Two letters which Mr. Frewen has recently
written the Daily Telegraph of London bearing
on world financial interests are illuminating as
showing how the advance In silver in 1920
enormously increased the prosperity of the
Orient and thus helped to increase the prosperity
of the world, through the heavy purchases bv
the Orient from England and America.
There is great turmoil in India and threatened
attemnt of disruption of that country through a
revolution against Great Britain. The danger is
very great. Primarily, as shown by Mr. Frewen,
this is largely due to the financial system which
England has forced upon India.
If, as Senator Lodge and Mr. Balfour found
In 1896, much of the hostility of this country
to Great Britain was : due to gold, this counlrr
then being a delator nation, may we not look
with some concern upon the possibility that the
debtor nations of the world, which owe billion
to the United Spates, will develop the same spirit
of hostility to thiy country and for exactly the
same reason which Senator Lodgo and Mv. Bui
four' believed was responsible for our hostility to
Great Britain. A board discussion of these com
plicated problems which American people gen
erally do not fully study is most important if we
would understand some of the economic and po
litical movements of the world.
Mr. Frewen sends to us copies of two letters
which he recently wrote for the London Tele
graph in which, he discusses world-wide condi
tions of unemployment and finance. Referring
to the situation in India he calls attention to the
amazing prosperity in 1920 of the cotton mill in
terests of Lancashire, under the enormous de
mand from the Orient, due largely to the high
price of silver then prevailing, and the disas
trous conditions which have since overtaken the
textile and other, trades by reason of the collapse
in .silver during the last twelve months are
pointed out. Had the price of silver continued
at the figures. of fifteen months ago, he said, the
prosperity which would have come to America
and to Great Britain by reason of the enormous
demand from the Orient would have more than
atoned for the losses, due to the depression in
Central Europe, and on this point ho added:
"It falls to the Earl of Reading's lot to oper
ate, in a country of 3,000,000 people, the very
poorest people on earth, that gold standard
which has hopelessly and forever collapsed, even
at its home in the richest country on earth.''
Here is the prediction of Mr. Frewen that the
gold standard has forever collapsed in Great
Britain. Time alone can tell whether he is cor
rect as a prophet or not,
In discussing the relation between .Great
Britain and this country, about which Senator
Lodge and Mr. Arthur Balfour wrote in 1896,
he says of the present situation:
"By what amazing perversity is it then that
the very nations most concerned the .British
Empire and the French and American Republics,
with the countries which make up the Latin
Monetary Union should have all seemed to con
spire together ta debase and depreciate silver,
"the normal money of mankind" as Walter Bage
hot described it but a few years ago? The United
States herself being, as Lord Reading explained
not long ago in his appeal to its congress, the
chief culprit in the melting down of her silver
currency, and India's currency crisis having been
so acute, according to her then Finance Minister,
Sir James Meston, that "it seemed from week to
week an utter Impossibility that the government
of India possibly escape from the supervision 6t
specie payments."
"Mr. Sisson now gives us the bald statistics
of the prodigious trade boom which was a year
ago revolutionizing the trades of the Far East,
nor is there anything in this article which sug
gests that ho attributes this world-wide boom or
any part of It to the unprecedented advance In
the prico of silvor. In fact the word "exchange"
hardly occurs in his papqr. And yet, If ho
thinks for a moment, ho must rocognise that It
roquired then only threo tacls, instead of as now
eight taels for the Chinoso merchant to buy the
sovereign or flvo gold dollars. It is that ex
change revolution which best explains' why so
many unemployed workmen throng our strtcts
today.. It is entirely safe to prophesy that next
year the overwhelming exchange catastrophe
which is at this moment destroying our exports
to Asia will have becomo toe text for every fi
nancial writer; and yet the exchanges with Asia
could have been with iho utmost ease fixed, and.
fixed for over, had we hero been ready with that
Empire bank which Mr. Darling, Colonel Aniery,
and Sir L. Worthington-Evans and I might
quite safely include Lord Milnor are today urg
ing both within the government and without.
"The day has now come when, the relation of
debtor and creditor be'ng clean, reversod, the
JtHt debt of this country to America presents
tlif? most formidable economic issue our nation
has ever had to face. Unless handled with ex
treme tact and delicacy, our relations may be
come worse strained than In, IS 9.6. I would nsk
Lord Reading whatner, to one of his. knowledge;,
tins is the moment wlwn our financial emissy
to the United States should be a noble lord, the,
meet active amongst the fcsw survivors of the Ill
starred Fowler Commission, of which comma
sion, all those years after, it is better to, say no
mbro than thus: it superseded and utterly
wrecked from Simla, the attempt of President
McKinley to settle the silver problem by Inter
national agreement, and so, deeply discredited
Senator Wolcott, the chairman of the McKinley
c6mmission and one of the President's dearest
friends, that he retired from public life, and, as
his friends know, died heart-broken a little
later. The one man living today whoso quulltlos
of head and heart and whose accumulated
knowledge of this profound subject would rec
ommend him to the new administration on the
Potomac Is Mr. Balfour. The entire civilized'
world would be his beneficiary If ho would 4e
vote himself even for a very few weeks to tlie
completion of Wolcott's life's, work. And taff
Balfour might think that he even owed tlifs'
tribute of affection to Wolcott, whom he der
servedly held in the highest regard, as Grqat
Britain's staunchest friend ,in America. 'C
"The result, of the Fowler experiment has
been what every intelligent economist foretold
that in place of the great eastern drain gf
silver which silver we could well gpare to the
myriad hoards of the east the Indian executive,
has substituted and abetted a "gold drain1'
which menaces the financial equilibrium of ail
Europe, and especially America, which . will
shortly destroy their Federal Bank Act of 191?,
and which, if persisted in,, will effectually settle:
the "gold standard" problem by depriving both
England and the United States pf all the'v gqld
a solution, this, warmly-advocatedjjy fvofcs-i
sor Maynard Keynep, beforp the latest, l'ndian
Commission, its chairman, being Sir Babingtoii.
Smith." ,.'. . 1: '
Further discussing the general situation Mr.. .
Frewen writes: - i ,- x-
"What, then, is going to be Lord Reading's
counsel about this sinister Fowler policy, the
continuation, of which must make any metallic
reserye whatever fort paper money Impossible?
Our relations with Washington re going to turn
largely upon England's answer to this. question.
On the nature of our reply their now tariff der
pends. On that tariff the tone and temper of
our Parlianment, anl also of their congress, turns,
as also the measure of America's financial co
operation. Failing that active and sympathetic
co-operation, our taxation' must inevitably de
stroy us. We shall come to some such a, hatred
of the United States as hevs for us when the
Venezuela message was launched, 'if, on the
other hand, we ally, ourselves with ,thp Unite'd
States, all else follows. Thus Lord Reading's
responsibility Is indeed very great. The grow
ing tension of our relations with Washington,
which two years later culminated with JJie
Venezuela message from the President, can be
read in the Debates Jn Congress on every sched
ule of the new Tariff Bill of 1894. "Anything
to spite the old usurer," was. the slogan of 1894,
The response at the election In October on the
part of their bankrupt farming community pre
pared the Free Silver platform of 189.6. A single,
instance will suffice to show the trend. One
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