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Show Gives Interesting Address to Business Men at the Commercial Com-mercial Club. MENACE OK INDUSTRIAL DEVELOPMENT OF ORIENT Currency and Exchange Are the Urgent Issues of tiie Hour. Those bankers, business and commercial commer-cial men who assembled at the Commercial Commer-cial Hub Tuesday night. io hear More-ton More-ton Frewon, the noted English economist, econo-mist, discuss the currency question and its relation to trade in the Orient were treated to an illuminative exposition of the issue aud went ava3f with their minds stored with many facts and much food for thought. It was a most successful suc-cessful meeting and representative in every sense of all the activities and industries of tho city. Among those in tho audience- were Samuel Newhouse, David Keith, Col. K." A. Walk W. .1. Ilalloran, AV. S, McCorniok, John Bern, Heber M. Wells and other notables. Mr. Frewen is a forceful speaker aud is in thorough command of his subject, sub-ject, this aftor n study of thirty-five-years of its mnnifold intricacies. To the minutest detail ho is versed in the history of finance and economics aud outlines lucidly his remedy, or rather the remedy of the Royal commission now known as the Goschen plan of issuing is-suing notes in small denominations secured se-cured by silver coin or bullion. His description de-scription of tho f'hinpso and the natives of India in industrial development, is a revelation; and it. together with Hip currency evil, may rightly be designated a menace. W. J. Hnlloran, president of the Commercial Com-mercial club, introduced .ludgp C. '. Goodwin as chairman. Judgo Goodwin said that many present know Mr. Frew-en Frew-en pcronal1y and many bv reputation. Twenty years ago Iip wrote letters to Tho Tribune showing what the trouble would bo if Hie warfare on silver wa kept up, so that he caino now and could truly sav, "1 told you so " Many had studied this question, but Mr. Krewon was a past master. At tho conclusion of the address Col. Wall moved a vole of thanks to Mr. Frownn. which was hearlilv nccovded. Mr. Frewen 's address follows: Mr. Frcvren's Address. .Iiidc Goodwin nnd Gentlemen 1 know, .lurise Goodwin, that you will acovill mo f any mere commotiplnep sneli :ia It Is i-ustomarv to pay llie'chiiir on lliejac occasion!;; oc-casion!;; if 1 y.iy tlmf ihfic e no on In America whoso presence in lids clinic would ho morn welcome to mo tonight. To you, jndpe. ;ik nleo to me. (his ex-clinngo ex-clinngo problem lins been, and alwnys will he nn mere (rhiio of controversial economies, but it (b for its a profound and a far-reaching- philosophy. U has for a quarter of a century now boon the subject sub-ject of frequent correspondence between uf. Tho iiucstlon us wo sec It. Is not a question as between the yellow numey anil the whlto money, but ,ik between (lie yellow iucck nnd the white nioes. Wi- have always believed thnt while men. white flnaii'-lor:. while M,itc.smcn, Continued on Pago Three. fygQRETON fREWEN POSNTS OUT DANGER Continued from Page One. were digging the graves of their race hy llifil western legislation which has reduced re-duced hy nearly two-thirds the rates of silver exchange with Son.OQO.ftnrj of Asiatics. Asi-atics. wo have, consistently maintained Ihnl as the exchange value of silver, fulls, the power of Asia, to huy our goods has In Ih.iL-proportion diminished. and'lliaL as factories closed their doors here, those factories reopened In Asia. In the state-ment state-ment I shall make tonight, wc invite I lie consideration of this friendly hut Judicial gathering, as to whether those "reasons for alarm which you, Judge Goodwin, have- held up to your community in days past, havejiocn el I her visionary or premature. pre-mature. Had I wanted a text for a sermon. I Ond one In the latest report of your director di-rector of the mint at Washington. The American consul at Clm-foo writes !n May last of the effect of exchange: on trade. What Consul Says. He says: "The present rate of ex-idningc. ex-idningc. Is a check to American-Asiatic trade so far as exports from the United States arc concerned. Commercial agents tell mi' that they can import nothing. American Pour lias stopped coining. 1 am told that many American exports have never heen cheaper to the foreign hujer than at present, and that therefore there-fore our exports ought to he increasing; hut a comparison of the rate of exclwingtt. for last year and now shows that in order to equalize 'lie cost to the foreign huyer of 5100 (gold) worth of goods, they must now he sold for $S0 gold. 'I'lius It is seen that unless a reduction materially over U0 per cent of last year's price Is made. American producers are noL able to hold out any llnanelal Inducement to their China, huycrs. s the extra items of freight and Insurance paid In gold would compel a discount from last year's price of .at least 21 per cent." When Mr. Hoot was secretary of slate lasL May lie sent out a memorandum to all the United Stales consuls in Asia asking whnt consequences had followed from tho great fall in silver during thc- prevlons six months. The quotation which I have read from Che-foo falrlv represents t lie replies of the entire consular con-sular service, and since that time silver has fallen much lower still. The, great Tall in silver exchange, the consuls agree, lias paralyzed trade with China. In Seattle. Seat-tle. Tacoma, Cortland and San Francisco there Is no merchant hut knows it. "What has happened to our exports." said .J. J. 11111 to me lasi autumn In St. Caul. "I had hoped to put a hag of wheat Into tho cottage of every Chinaman; China-man; now not a hag enn he shipped." The exports of your lumber anil Hour to Asia, which had just commenced in so promising a fashion: the ex-ports, too, of steel rails and of ottous. where are thev? The demand of China with three hundred millions of. customers, has suddenly dried up. Problem of the Exchanges. What sort of a mechanism is this exchange ex-change mechanism ". Now, does u break In silver exchange, hold up the movement move-ment of goods to China? It seems to me that it docs, and I must at tempt to explain ex-plain the reason in language Intelligible to you. How iu foreign trade carried on? Let me put it in this way: One of you gentlemen wishes to purchase an English motor ear. You have decided to buy a iNnplcr at tiro price quoted, a thousand sovereigns, and you go to mv friend. Mr. MeCornlck hero and tell him von wish to pay the London llrm a thousand pounds. He looks at the exchange (luotation today, $l.$7 on London, and he - says, 'Very well. Mr. .Smith, give me your cheek for $IS7U and I will give von a bill of exchange on London for a thousand pounds." The. draft is sent and the motor paid for. fjnt suppose a little later Mr. Smith wants a second motor car and he goes tu Mr. McCornick to huv another thousand sovereigns. He now says. "Oh. Mr. Smith, there has been n big fan In exchange ami Instead of 5 Ibid you must give me a check for $7000. because it now lakes not SI.S7. hut ?7 to buy a sovereign." Well. Mr. Smith probably says. "I cannot afford it. Mr. .lones here Is making automobiles and offers me one about as good a? tho London Lon-don .'.-iniei- e.-if fro- tCnlin. I ...III i. from Mr. .tones." Now. thin is ox:n-tl.v wli;i( l; lianponliiK In ttif case of our tr.-Kli- with llio Orient. Thirty years ai;o. if ;i Sli;mi;fil mfiflifiut wanted to linv your win-fit or flour or hi inner, or cot-Ion;;, cot-Ion;;, ho word In Mr, hanker with three tiiels and hniicht a hill on New York or San Kraneisco or London for live j.-nld dollars nr a sovernlKn: hut todnv, ' in-Ktesiil in-Ktesiil of Since laels he must sivo' eKht (nelfi for live sold dollti it. Ami iiK all nulhoritieH ari- agreed that wases and prices in China, are nut scii-sihly scii-sihly higher. It Ik clear thai for the Chinaman our sold exi-hnnge rno clear nut of niclit. and that (ho Orient, having lost nil power to purchase our goods, is helng forced to manufacture a hundred articles which- formerly 8he houghl from us. Cotton and jute factories have sprung up In hmrcdihle numheis all over the far east, and i-aeli fresh fall In eM-hange lrausferi from us to iheni kouj" fresh Industry. Veins ago our cotton and Jute and other textile I notes were he'nn; transferred, chiefly to India, hv the fall In tho rupee exchange. Last ve.-ir Hankow Han-kow comineneer) In export pig Iron' of the hlgheni finality to Portland. This vear Ihe. first Chlne.se mill to roll steel inils has commenced :it Hankow on a scale of fno tons a day. Lumber and Pig Iron. T take, for Instance, good dressed lum-her. lum-her. eosting the Chinese hnv.r ?2n per thouKand In Portland or Ken tile sm- sso delivered In Shanghai. In IflftT Ihls'loin-hcr Ihls'loin-hcr cost, the Chinese hnyei- gr, per I linn - sriiid in Portland or Seattle sav ?H0 de-IKercd de-IKercd In Shanghai' Tiiiity dollars was X Hicu U'.l.f, today $;;u iB is laela. so that the fall in exchange ou Shanghai makes just the, diiiercncc thei! between your lumber on the free list in China in 1H07 and your lumber now paying -I." per cent speciilc duty, a duty of 15 taels a thousand feet. So nnch for your export trade across the Pacillc. Now look at your Import trades; let me take pig iron, because at the preseiu rate of exchange tho import im-port of Chinese pig, already considerable, is certain to lie enormous. A recoil b Knglish commission, the Class commission, commis-sion, has declared That China will presently pres-ently be able to manufacture, pig iron for 5.1 per ton (gold). FJul at present a ton of pig costs f.o.b. at Hankow taels ($!i) gold. In 11)07. I.', taels was over ?in gold, so that had your tariff iu 1907 given you 10 per cent protection against Chinese Chi-nese labor embodied in pig. the fall in exchange since i;07 has Just put Chinese pig iron on your Free List. Nor is lids all; and It is not merely or even chiefly in your direct trade returns wltli China that this complex and Insidious Insidi-ous competition Is to be discovered. Great Britain Is your best trade customer, custom-er, but if her expoit trades are crippled then you must feel Hie ill effects, . If Kngland cannot sell to China and Japan, sho cannot buy as freely from you. Illth-erlo Illth-erlo Japan has bee.n an enormous buyer of Scottish pig Iron, but in the last ten months In place of buying from Scotland. Japan has begun to import' Chinese pig. and on a large scale. Japan has today a gold standard, and Iho same exchange conditions obtain between Japan and China as 1 have oullhicd above between Cortland and Hankow. Now. if the Ihil-ish Ihil-ish export of pig to China is destroyed, clearly Mritlsh Imports from America across the Atlantic must be impaired. Now. gentlemen, you have in the silver problem the clew to that extraordinary collapse hi our trade with eight hundred millions of our customers, which Is the most, distinctive feature of the trade depression de-pression during the past two years. Great Fall in Silver. Those two years have witnessed the gieniest fall in silver that is. Hie great-cut great-cut fall hi eastern exchange, ever known to history. Tim Shanghai merchant who. In July. 1007, bought from Ids banker a bill, for loo sovereigns, or ?.tio, with only ."ill' of his taels, has now to give no less than 800 lacks for a similar bill. We have either got to put down the gold price of our goods fu'ly l!0 per cent to meet lie-fall lie-fall in exchange, or we have to lose our Oriental trade; and how can we put down our prices unless we eul wages heavily? And how, let me ask, can we possibly reduce wages when the prices of uM the necessaries of life, bread and meal and woolens, are rising fast? If, then. 1 am right as to these alternatives, we have now reached the point where, because be-cause of the fall in exchange, we musl abandon our export trade to (he Orient. I know what Is likely to be in the minds of many here; that It is not so much lite fall in silver exchange Hint Is transferring trans-ferring our industries ! Asia as Jhe vast ;int-heap of cheap labor there, now awakening awak-ening because, of the awakening nf China and Japan. 1 am sure that some oik. here Is saying. "Your theories are Interesting, but give us a concrete Instance; show us where a fall in silver has Indisputably removed re-moved an Industry from the west to tin-cast. tin-cast. " Hakodate Water Mains. One such instance occurs to me. ninL one instance is probably as good as, and much less tedious, than a hundred.- This particular case. too. baa all the official trappings you enn desire, for It watt reported- to our foreign office by our consul con-sul general at Hakodate, (lie great northern north-ern island of Japan. In ISO'.' Hakodate advertised for lenders Tor ir.iui tone, of water pipes, anil Iho contract w.-rt secured by a Hrlllsli linn, the tcinh r being four gulntas a ton, or a Irifk over Al ihc then price of silver four guineas cost Hakodate silver dollars. In lStiS there i.ninn the greatest fall in J he -price of sliver, tho fall of last year only excepted. In IS!) I. Hakodate again advertised for 1500 tons of pipes to complete her water fiyalom. The same Knglish llrm tendered and thlK time at four sovereigns a ton. Hut because of the great, fall In exchange " It now required ?I0 to buy four sovereigns; sover-eigns; or. In other words, It required 10 per cent more of Hakodate':! silver money to buy ii per cent lens of our gold money. Under these altered conditions Hakodate refused ail (he tenders: she erected her own' iron works, and. when lar.t heard from, was busy exporting; her pipes to China and India. Now. my friends, is It si range that, while exchange on Hongkong Hong-kong has shrunk iu a few years from a dollar there worth slightly more limn a gold dollar bore, to a dollar there worth W cents here, factories are now springing spring-ing Into life nil over the far cast, and in England white skilled labor walks our streets and disgraces our civilization? And thin Is -why the most eminent economist econo-mist of our day. I he late Professor Francis Fran-cis "Walker, declared. "I regard thi silver problem as far more than any problem In finance; I believe that with its right settlement Is hound up I he very progress of civilization for the western nations." Ohinene Competition s. Menace. Now. J was ho fortunate when iu San Francisco last week as to meet Robert Dollar the president of the Dollar line of steamships running between Portland, Port-land, San Francisco, and Hankow. Mr. Hollar himself travels frequneily between these points. He told me, jusl as yon would expect, that before the fall In silver sil-ver In the summer of 1P07 Ills ships could always secure full cargoes to China chiefly wheat, lumber, rails and other hardware, and cotton and flour; that until un-til two years ago It was extremely difficult diffi-cult to secure any return freights from ( hlna; but that today the position Is exactly reversed; now. no freights can be secured outward, but his ships come- home loaded wllh Chinese products, but particularly par-ticularly with high-class pig Iron. The rate of wages for Chinese miners Is I" cents a day; the contract price for do-11'ering do-11'ering a ton of iron ore on the cars is 10 cents. Tn the new steel plant at Hnn-knw Hnn-knw the wages are rather higher, being from ltl to 20 cents. The labor cost as compared with white men at Pittsburg is as llftecn Chinamen to one white man. I wish truth w.onld permit me to declare de-clare that the ratio Is as 1G to 1; that would give qulto a novel turn .to your historic slogan. Mr. Dollar told nie that at his recent lsit lo Ibis Hankow rolling mill ho met there Mr. Walson. an Inspector of the United States Slcel corporal Ion, and that In going through the works ho had the adantago of .Mr. Watson's Judgment and experience. Mr. Watson considers that the Hankow mill Is. for efficiency, quite un to the American standard. He told Mr Dollar further that the rails were .i good as possible, and that the .bunds required were not more than 10 per cent In excess of those employed in the Pittsburg Pitts-burg mill. Now., when I recall the amazing amaz-ing developments I have seen In Ihc mlent during tho past thirtv ear.s, how great modern industrial TSnmhny has quung Into existence tin; partition of our lute nnrl leather industries tho murderous murder-ous compel l Ion of tie. Maluy states In tin and oilier minerals, I am Justified in describing as a madness the passive mood m v.bicli we today contemplate tho wholesale whole-sale removal of our steel and Iron and-I and-I on! Industries to China. Look at the remittances of every ( i I no ma n working on this continent who sr mis his savings home. Two years since . If be remitted five gold dollars, he re-I re-I milted live and a half laels; today that 'sum remits for him eight laels. 7t is t ' -U m say Hint had jmi not. passed a f 'llneso exclusion act, the present rates -if evehange would have brought a verv Mongolian exodus lo these shores to iil vnur i-ale of wages and to return to China with the proceeds. But of what use Is It to exclude the pig 0)11 whil you admit. Hie tael-made pig admit not merely free pig iron, but pig Iron bounty-fed bounty-fed by the recent fall In silver. Millu and Factories in Asia. Tn a letter 1 had recently fiom Senator Teller; that senator, who hns devoted the study of a lifetime to this Issue, summed up tho competition engendered by cheap silver very admirably, llu wrote: "Thirty years ago five gold dollars bought three ineis. anu in re taeis paio one days wage to 27 Chinese mill hands, while today to-day five gold dollars buy not three but eight taels and eight taels pay one day's wage to GO Chlmse mill hands." I have attempted, necessarily very briefly, to outline the great and growing grow-ing danger lo which white industries aro exposed, because of cheaper and cheaper sliver. The disease Is apparent, appar-ent, and as gold prices advance this disease must become more and moro menacing; but what about the remedy? The remedies we proposed twenty years ago and which required a free "coinage agreement among the western nations these are today hopeless; but Is it possible lo create some fresh demand for silver such as will raise its price? Whnt is it that controls tin sliver market? Not the demand hi the arts, but the monetary demand. Why did silver fall so heavily last year?. Onlv because the demand of one government, that of Indja. fell off. The present yield of silver from the mines Is about lSO.OOO.OOO ounces, of which the world's silversmiths take Iin.iiOO.non ounces. In 1907 the government of India bought over 80.000,000 ounces, which it coined into rupees. Last year because of the failure of the rains in Tndia iu 1007 tlm usual exports of India were cut down, and thus our merchants wanted very much fewer rupees to buy these exports. ex-ports. So thai In UiOS the government of India bought no silver. Hence the great fail in exchange with Asia last year. C4oschen Plan of Currency. Now. I here may conceivably be diseases dis-eases In the body politic, allh'ougli 1 do not for a moment admit It, which, like consumption or sleeping sickness, aro incurable, in-curable, and If any one believes that the great exchange disaster Is of this nature well. 1 cannot help him. Cut I am confident Unit the vast majority of men are not. of that order, and if I pass my neighbor's house after midnight, find it on fire and throw a stone through ills bedroom window true. Ids first emotion is anger and not gratitude but. having rubbed bis eyes, lie awakes to the sense of Ids danger: he tights tho fire and we all help him. If only for motives of self-Intereal. self-Intereal. And this being so. tho only fire-escape fire-escape wo can bring on the scene Just now is tlie plan of Hie late Lord Oosehen. Indeed. It Is hardly fair to father it on Lord Closehen. A royal commission on the currency had sal under tlie presidency of Lord Morsehi'll. and had recommended that small notes should he issued, against sliver bullion, their legal tender limited to two pounds. Now. here we are at least on very sound ground. That nyal commission, com-mission, when T recall its personnel, was perhaps the most distinguished of our lime. The lord chancellor was Us president; presi-dent; there were Mr. Ralfour. destined shortly to be prime minister, and Mr. Chaplin, the Lord George lSeutinelc of our generation, then and now the lender of the country gentlemen In the house of commons: Mr. Courtney, Mr. Montague and Sir Thomas Fairer, all three since elevated to the peerage for distinguished services: Sir William Houldswoit h. one of the most able and industrious representatives repre-sentatives that the great city of Manchester Man-chester ever sent to the house of com- mons; Sir Louis Mallet, an economist of great distinction and a high official of the government of India; Sir Uavld Barbour. India's finance minister, and Sir Charles Fremantle. the master of the mint. Mono-metallists Mono-metallists these men, and bimetallism iu almost equal proportion, but. it was the monometalllsts who In their report advocated advo-cated the "Goschen plan;" tlie bimetal-lists, bimetal-lists, wlille they held that it did not go far enough, ycl accepted it as a portion of their report. This was the proposal accepted two years later by Mr. Goschen, when chancellor of Hie exchequer, ami I say that a plan sponsored by a commission commis-sion of such eminence, accepted by Mr. Goschen. an expert, if we. ever had one. In currency and exchange questions such a plan is surely as the Ark of tho Covenant Coven-ant for any measure of reform. Wo may quote that commission and that chancellor chan-cellor of tho exchequer, and we may go boldly forward, ruling as out of toiler the objections of the .vast horde whose mission mis-sion In life it Is to object to everything; tho horde of those who learn nothing and forget, everything. And what is Hie Goschen plan which we "silver men" at that time killed because be-cause we wanted an addition 10 I lie full legal tender currency, and this plan savored sav-ored of subtraction'.' Very briefly, Indeed, In-deed, the plan was this: To call in the half-sovereigns and to Issue a pound per capita more of fractional currency currency cur-rency like the dimes and quarters you carry here, and which, as they are not legal tender, do not at all affect prices, and through prices affect the exchanges. Mut you will a l once say. "Oh. if you to tlie amount of $i per capita, we could never carry It in our pockets; it would be quite useless. "' and that objection Is entirely en-tirely sound. The royal commission and Mr. Goschen anticipated this objection; they agreed that the additional currency should lake the shape of small notes; the silver represented hy these notes, whether coined or uncoined, was to be held in Hie reserves. Such is tlie "Goschen plan." Effect of Asiatic Exchange. Now. if this new form of currency, small, non-legal tender notes, representing represent-ing fractional currency, should bo adopted adopt-ed by one or two or three nations, let us say by Canada, the 1'nited States ami Great Ihitnin, what, will follow? There would bo at once created a new demand for some fioo.ono.unn ounces of silver. At present the production of sliver Is, let us say. roughly. 'Jftii.OuMuu ounces, of which the silversmiths take one-half: that leaves 100,000. 000 ounces: or that sum India, as experience shows, requires annually for additions to her currency, at least :sn,nno.nno (unices. The demand of a number of nations, Germany. Ilus-sia. Ilus-sia. Fiance and the nations which form the Latin union, may be reckoned at another an-other :;o.oon,iioo ounces. There remains still the large but conjectural demands for silver needed by China, the Malay states and Africa Africa, I may say, ' is cor-Inln cor-Inln to become a er.v large customer Indeed. So that, with almost no present surplus of silver and with no silver lo come out of hoards for the greater the value hi the same compass the greater the de?lro to hoard the Goschen plan would create a demand, which, spread over a. quarter of a - century, would go very far to restore the old rates of exchange ex-change with Asia. Jl would give us for s. quarter of a centucy silver at at least a dollar an ounce; this would enable us to sell, and China to buy from us tho rails she needs for a vast railway "svalem. TIih opening up of China by railways will make a new demand for silver currency such as will strain the productive power of every sliver mine in the world. "Dollar "Dol-lar sliver" will give us. by the great expansion ex-pansion of our export trades to Asia, and Africa, an Invaluable object lesson; it will show us to what extent cheap silver ha poisoned our system, both financially and Industrially, in the last thirtv vears. and whether Professor "Walker was correct In regarding cheaper sliver as a inenaeo to western civilizations, ir after a quarter quar-ter of a century of an experiment, so snf.j yet so magnificent, .we let the exchanges again drirt back to their present point" of disaster, we. tlie white races everywhere, will deserve our fate. Other exchangn earthquakes will come, such as those, of IS'.iU and 1007. Old Age Pensions and Silver. So short-sighted are our legislators that a great race peril such as HiIh has often been overlooked. Take for example that i amendment to your constitution which" has Introduced a huge sectional African votp. Wot in Kngland the increasing need for more revenue is certain to secure se-cure the adoption of the Goschen plan by our next administration. That administration admin-istration will find itself burdened with at least eight millions of pounds voarly for old-age pensions. Where Is this vast sum I and our swollen navy estimates to com? from? Tlie chancellor of Hie exchequer will look round; he will see a great profit for some years in the small silver note Issue. At the prr-nent price of silver our shilling, nominally twelve pence, costs only four pence. So that until silver advances, ad-vances, one dollar and a quarter, weekly pensions can bo paJd with a crown not" which cost only forty cents. And when the profit Is reduced by an advance In the price of silver, then also the silver exchanges will have advanced, greatly expanding our export trades to Asia and thus permitting a higher scale of tariffs under the new system of protection about to be Inaugurated In England. |
