THE REIGN OF BIMETALLISM 23 
Further, it has long been observed that the alternate 
import and export of gold and silver in bimetallist coun- 
tries, chiefly France and the United States, usually coin- 
cided with their alternately standing at a premium with 
regard to the legal ratio. 
A kind of application of Gresham’s law has rightly been 
seen in this, and the inevitable flight of a metal with a 
commercial ratio greater than its legal ratio was naturally 
deduced. But in our view the real meaning of this com- 
mercial ratio should be defined by explaining its variations 
in the light of the remarks on foreign exchanges which 
follow ; and, inverting, as it were, the classical proposition, 
it may be added that, if iz is true that one of the two metals 
disappears whenever its commercial price exceeds the legal 
ratio, the rise in the commercial price in itself depends on the 
possibility of having to import it. 
§ 3. Bimetallism in operation (contd.), its efficacy in main- 
taining a stable exchange ratio between gold and silver. 
If the above considerations give an accurate explana- 
tion of variations in the ratio between gold and silver, they 
also show—a much more important matter—why those 
variations were so slight in the period under consideration. 
Between 1833 and 1873 the London rate for silver never 
fell by more than 39%, below French legal par, and never 
rose by more than 29, above it. 
Indeed, during the entire period of what we have called 
Bimetallism, i.e., of the concurrent admission of both 
metals to free coinage in a very large number of countries, 
its import. See, for instance, the “Treasury Report “of the Mint at Wash- 
ington of 1903, p. 244. M. Cauwes (“Cours d’économie politique,” 2nd 
ed. vol. i, p. 497) also shows that between 1860 and 1865 the amount of 
silver exported to the East exceeded the amount produced, whereas during 
the following five years it was only one-third of that amount. Lastly, a 
letter in the Economist in 1872 (23 Nov., p. 133) bears witness that, 
particularly during the War of Secession, English gold was sent to France 
in order to obtain silver for the payment of Indian cotton. In our opinion, 
this explains physically, so to speak, why silver stood at so high a premium 
during this time. (See also #6:d. 1874, 7 Nov., p. 291.)