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diff --git a/16320-h/16320-h.htm b/16320-h/16320-h.htm new file mode 100644 index 0000000..bcf302a --- /dev/null +++ b/16320-h/16320-h.htm @@ -0,0 +1,3569 @@ +<!DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" + "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd"> +<html xmlns="http://www.w3.org/1999/xhtml" xml:lang="en" lang="en"> +<head> +<meta name="generator" content= +"HTML Tidy for Mac OS X (vers 1st December 2004), see www.w3.org" /> +<meta http-equiv="content-type" content= +"text/html; charset=us-ascii" /> +<title>If Not Silver, What? by John W. Bookwalter.</title> + +<style type="text/css"> +/*<![CDATA[*/ + <!-- + body {font-family:Georgia,serif;margin-left: 15%; margin-right: 15%;} + p {text-align: justify;} + h1,h2,h3,h4,h5,h6 {text-align: center;font-variant:small-caps;margin:1.2em;} + pre {font-family:Courier,monospaced;font-size: 0.8em;} + sup {font-size:0.7em;} + hr {width: 50%;} + hr.full {width: 100%;} + hr.short {width:25%;} + + ul {list-style-type:none;margin-left:10%;font-variant:small-caps;} + .returnTOC {text-align:right;font-size:.7em;} + span.sc {font-variant:small-caps;} + .quote {text-align:justify;text-indent:0em;margin-left:10%;margin-right:10%;font-size:95%;} + .cen {text-align:center;} + .rgt {text-align:right;} + .poem {margin-left:10%; margin-right:10%; margin-bottom: 1em; text-align: left;} + .poem .stanza {margin: 1em 0em 1em 0em;} + .poem p {margin: 0; padding-left: 3em; text-indent: -3em;} + .poem p.i2 {margin-left: 1em;} + .figcenter {width:80%;margin:auto;padding:1em;border:none;text-align:center;} + .figcenter>p {font-size:0.8em;text-align:justify;} + table {margin:0 10%; font-size:90%;text-align:right;font-family:monospace;} + + + a:link {color:blue; text-decoration:none} + a:visited {color:blue; text-decoration:none} + a:hover {color:red} + --> +/*]]>*/ +</style> +</head> +<body> + + +<pre> + +The Project Gutenberg EBook of If Not Silver, What?, by John W. Bookwalter + +This eBook is for the use of anyone anywhere at no cost and with +almost no restrictions whatsoever. You may copy it, give it away or +re-use it under the terms of the Project Gutenberg License included +with this eBook or online at www.gutenberg.org + + +Title: If Not Silver, What? + +Author: John W. Bookwalter + +Release Date: July 17, 2005 [EBook #16320] + +Language: English + +Character set encoding: ISO-8859-1 + +*** START OF THIS PROJECT GUTENBERG EBOOK IF NOT SILVER, WHAT? *** + + + + +Produced by Bill Tozier, Barbara Tozier and the Online +Distributed Proofreading Team at https://www.pgdp.net + + + + + + +</pre> + +<hr class="full" /> +<h1>If Not Silver, What?</h1> +<h4>by</h4> +<h2>John W. Bookwalter</h2> +<h3>Springfield, Ohio</h3> +<h3>1896</h3> +<hr /> +<div class="quote"> +<p>“If you will show me a system which gives absolute +permanence, I will take it in preference to any other. But of all +conceivable systems of currency, that system is assuredly the worst +which gives you a standard steadily, continuously, indefinitely +appreciating, and which, by that very fact, throws a burden upon +every man of enterprise, upon every man who desires to promote the +agricultural or the industrial resources of the country, and +benefits no human being whatever but the owner of fixed debts in +gold.”—<em>Speech of the</em> <span class="sc">Right +Hon. A. J. Balfour</span>, <em>at Manchester, England, October</em> +27, 1892.</p> +</div> +<p>As a manufacturer and somewhat extensive land owner I have a +great personal interest in the money question. As a traveller I +have studied the situation in other nations, and thus, I may +modestly say, have enjoyed the great advantage of getting a view in +no wise disturbed by partisan politics. As one whose prosperity +depends almost entirely upon that of the farmers, I have naturally +thought most of the effect monometallism has had, and will continue +to have, upon them. I have, in a sense, been compelled to think +much on this great issue. These facts are my apology, if any +apology is needed, for giving my thoughts to the public. But is any +apology needed? Providence has granted to a few the leisure and the +opportunity to study these economic problems, on the correct +solution of which the welfare of millions, whose toil leaves them +little leisure for study, depends. Is it not the supreme moral duty +of those few to give their conclusions to the public? I have always +thought so, and in that spirit I present this little work, and ask +the laboring producers to give a candid consideration to the views +herein presented. It may be that some of these views will be +successfully controverted, but the duty remains the same. If they +should aid in arriving at a correct solution of the great problem, +though the solution be different from that I have indicated, I +shall be many times repaid for my labor.</p> +<p class="rgt"><span class="sc">John W. Bookwalter</span>.</p> +<p><span class="sc">Springfield, Ohio</span>, <em>August</em> 5, +1896.</p> +<hr /> +<h2><a id="Contents" name="Contents"></a>Contents.</h2> +<ul title="Table of Contents"> +<li><a href="#Ch_1" title="Go to Chapter">Objections to Silver, and +Comments Thereon</a></li> +<li><a href="#Ch_2" title="Go to Chapter">Demonetization of +Gold</a></li> +<li><a href="#Ch_3" title="Go to Chapter">Relative Production of +Gold and Silver</a></li> +<li><a href="#Ch_4" title="Go to Chapter">Is Bimetallism +Practicable?</a></li> +<li><a href="#Ch_5" title="Go to Chapter">Bimetallism +Abroad</a></li> +<li><a href="#Ch_6" title="Go to Chapter">The “Dump” of +Silver</a></li> +<li><a href="#Ch_7" title="Go to Chapter">Asia’s Demand for +the Precious Metals</a></li> +</ul> +<hr /> +<h2><a name="Ch_1" id="Ch_1"></a>Objections to Silver, and Comments +Thereon.</h2> +<p class="returnTOC"><a href="#Contents">Return to Table of +Contents</a></p> +<p><strong>Silver is too bulky for use in large sums.</strong></p> +<p>That objection is obsolete. We do not now carry coin; we carry +its paper representatives, those issued by government being +absolutely secured. This combines all the advantage of coin, bank +paper, and the proposed fiat money. A silver certificate for $500 +weighs less than a gold dollar. In that denomination the Jay Gould +estate could be carried by one man.</p> +<p><strong>But silver certificates would not remain at +par.</strong></p> +<p>At par with what? Everything in the universe is at par with +itself. The volume of certificates issued by the government would +be exactly the amount of the metal deposited, and that amount could +never be suddenly increased or diminished, for the product of the +mines in any one year is very seldom more than three per cent. of +the stock already on hand, and half of that is used in the arts. It +is self-evident, therefore, that such certificates would be many +times more stable in value than any form of bank paper yet +devised.</p> +<p><strong>Gold would go out of circulation.</strong></p> +<p>It has already gone out. Under the present policy of the +government we have all the disadvantages of both systems and the +advantages of neither, with the added element of chronic +uncertainty and an artificial scare gotten up for political +purposes.</p> +<p><strong>And that very scare shows an important fact which you +silverites ought to heed—that nearly all the bankers and +heavy moneyed men are opposed to free coinage.</strong></p> +<p>Nearly all the slaveholders were opposed to emancipation. All +the landlords in Great Britain were opposed to the abolition of the +Corn Laws, and all the silversmiths of Ephesus were violently +opposed to the “agitation” started by St. Paul. And +what of it? The silversmiths were honest enough to admit the cause +of their opposition (Acts xix. 24, 28), but these fellows are not. +The Ephesians got up a riot; these fellows get up panics. +“Have ye not read that when the devil goeth out of a man then +it teareth him?”</p> +<p><strong>But are not bankers and other men who handle money as a +business better qualified than other people to judge of the proper +metal?</strong></p> +<p>Certainly not. On the contrary, they are for many reasons much +less competent, as experience has repeatedly shown. All students of +social science know, indeed all close observers know, that those +who do the routine work in any vocation seldom form comprehensive +views of it, and those who manage the details of a business are +very rarely indeed able to master the higher philosophy thereof. +This is a general truth applicable to all vocations except those, +like law, in which a mastery of the science is a necessity for +conducting the details. Experts in details often make the worst +blunders in general management. Nearly all the inventions of +perpetual motion come from practical mechanics. Nearly all the +crazy designs in motors come from engineers. The educational +schemes of truly colossal absurdity come mostly from teachers; all +the quack nostrums and elixirs to “restore lost +manhood” are invented by doctors, and nearly all the crazy +religions are started by preachers.</p> +<p>On the other hand, three-fourths of the great inventions have +been by men who did not work at the business they improved. The +world’s great financiers have not been bankers. Alexander +Hamilton was not a banker. Neither was Albert Gallatin, nor Robert +J. Walker, nor James Guthrie, nor Salmon P. Chase. William +Patterson, who founded the Bank of England, was a sailor and +trader; and of the British Chancellors of the Exchequer whose names +shine in history, scarcely one was a banker. One of Christ’s +disciples was a banker, and the end of his scientific financiering +is reported in Acts i. 18. John Law also, whose very name is a +synonym for foolish financial schemes, was a banker, and a very +successful one. Where was there ever a crazier scheme than the +so-called “Baltimore Plan,” exclusively the work of +bankers?</p> +<p><strong>But as the bankers and great capitalists have no faith +in it, the free coinage of silver would certainly precipitate a +panic.</strong></p> +<p>The gold basis has already precipitated several panics. Even in +so conservative a country as England they have, since adopting +monometallism, had a severe currency panic every four years, and a +great industrial depression on an average once in seven years. The +only reason we have not done worse is that the rapid development of +the natural resources of the country saves us from the consequences +of our folly. We draw on the future, and in no long time it honors +our drafts. Nevertheless, in the twenty-three years since silver +was demonetized we have had two grand panics, several minor +currency panics, hundreds of thousands of bankruptcies with +liabilities of billions, and five labor wars in which 900 persons +were killed and $230,000,000 worth of property destroyed. Could a +silver basis do worse?</p> +<p><strong>You admit, then, that the immediate adoption of free +coinage would, for a while at least, drive gold +abroad?</strong></p> +<p>And what then? Why do the gold men always stop with that +statement and so carefully avoid inquiry into what would follow? +Let us look into it. We may have in this country $500,000,000 in +gold, though no one can tell where it is. Assuming that free +coinage would send it all abroad, the inevitable result would be a +gold inflation in Europe, which would cause a rise in prices. I +observe that of late the gold organs have been denying +this—denying, in fact, the quantitative principle in finance, +something never denied before this discussion arose. It is too +true, as some philosopher has said, that if a property interest +depended on it, there would soon be plenty of able men to deny the +law of gravitation. But as the men who deny it in one breath admit +it in the next by assuring us that we shall soon have a great +increase in the production of gold, and that prices will therefore +rise, we may with confidence adhere to the established truth of +political economy.</p> +<p>Sending our gold to Europe, then, would raise prices there, +which would raise the price of our staple exports, such as wheat, +meat, and cotton; the great rise in the price of these would, of +course, stimulate exports, and thus aid us in maintaining a +favorable balance, would restore to the farmers that income which +they have lost by the decline of prices, would thus put into their +hands the power to buy manufactured goods and to pay our annual +interest debt to Europe by commodities instead of gold. In short, +if the gold went abroad, it would necessarily be but a short time +till much of it would come back to pay for our agricultural +exports, and at the same time our farmers would get the benefit of +higher prices by both operations. If any man doubts that an +increased gold supply in Europe would increase the selling price of +our farm surplus, I ask him to examine the figures for the twelve +years following the discovery of gold in California, or the history +of prices in the century following the discovery of +America—an era described by all economists as one of +inflation. Is there any reason why a like cause should not now +produce like effects?</p> +<p><strong>In the meantime, however, all the other nations would +dump their silver upon us and we should be overloaded with +it.</strong></p> +<p>Where would the silver come from? The best authorities agree +that there is not enough free silver in the world to even fill the +place of our gold, which, you say, would be expelled. And right +here is where the advocates of the gold standard contradict every +well-established principle of political economy, and every lesson +of experience, by declaring that the transfer of all our gold to +Europe would not cheapen it there, and that free coinage would not +increase the value of silver. They insist that we should still have +“50-cent dollars.” Stripped of all its fine garniture +of rhetoric, their proposition simply amounts to this: The sudden +addition of 20 per cent. to Europe’s supply of gold would not +cheapen it, and making a market here for all the free silver in the +world would not raise its value; laying the burden of sustaining an +enormous mass of credit currency on one metal instead of two has +added nothing to the value of that metal; a thirty years’ war +on the other metal was not the cause of its depreciation in terms +of gold, and if the conditions were reversed, greatly increasing +the demand for silver and decreasing the demand for gold, they +would remain in relative values just the same. If those +propositions are true, all political economy is false.</p> +<p><strong>Government cannot create values, in silver or anything +else.</strong></p> +<p>You have seen it done fifty times if you are as old as I. During +the war, government once raised the price of horses $20 per head in +a single day. On a certain day the land in the Platte Valley, for +perhaps one hundred miles west of Omaha, was worth preëmption +price; the next day it was worth much more, and in a year three or +four times as much. Government had authorized the construction of +the Union Pacific Railroad, and before a single spade of earth was +turned, millions of dollars in value had been added to the land. It +had created a new use for the land. Value inheres in use when the +thing used can be bought and sold. Whatever creates a use creates +value, and a great increase in use forces an increase in value, +provided that the supply does not increase equally fast; and with +silver that is an impossibility. If you think government cannot add +value to a metal, consider this conundrum: “What would be the +present value of gold if all nations should demonetize it? It can +be calculated approximately. There is on hand enough gold to supply +the arts for forty years at the present rate of consumption. What, +then, is the present value of a commodity of which the world has +forty years’ supply on hand and all prepared for immediate +use?</p> +<p>Take notice, also, that in the decade 1850-60 Germany, Austria, +and Belgium completely demonetized gold, and Holland and Portugal +partially did so, thus depriving it of its legal tender quality +among 70,000,000 people, and that this added very greatly to its +then depression.</p> +<p><strong>Free coinage would bring us to a silver basis, and that +would take us out of the list of superior nations, and put us on +the grade of the low-civilization countries.</strong></p> +<p>That is, I presume, we should become as dirty as the Chinese, +and as unprogressive as the Central Americans, agnostics like the +Japanese, and revolutionary like the Peruvians. And, by a parity of +reasoning, the gold standard will make us as fanatical as the +Turks, as superstitious as the Spaniards, and as hot-tempered and +revengeful as the Moors. If not, why not? They all have the gold +standard. You may say that this answer is foolish, and I +don’t think much of it myself, but it is strictly according +to Scripture (Proverbs xxv. 5). The retort is on a par with the +proposition, and both are claptrap. The progress of nations and +their rank in civilization depend on causes quite aside from the +metal basis of their money.</p> +<p>We must remember that for many years after the establishment of +the Mint we had in this country little or no coin in circulation +except silver, and were just as much on a silver basis then as +Mexico is now. Were our forefathers, then, inferior to us, or on a +par with the Mexicans and Chinamen of the present day? Even down to +1840 the silver in circulation greatly exceeded the gold in +amount.</p> +<p>By the way, where do you goldites get the figures to justify you +in creating the impression on the public mind that Mexico and the +Central and South American States are overloaded with silver, +having a big surplus which we are in danger of having +“dumped” on us? Didn’t you know that they are +really suffering from a scarcity of silver? that altogether they +have not a sixth of what we have? One who judged from goldite talk +only, would conclude that silver is a burden in those countries, +that they have to carry it about in hods. Now what are the +facts?</p> +<p>In all the Spanish American States there are 60,000,000 people, +and they have a little less than $100,000,000 in silver. Not $2 per +capita! This is a startling statement, I know, but it is official, +and you will find it in the last report of the Director of the Mint +(1895). The South American States have but 83 cents per capita in +silver, and Mexico has but $4.50. With a population nearly twice +that of Great Britain, they have much less silver, and less than +half of that of Germany, though having a much larger population. In +fact, to give the Spanish American nations as large a silver +circulation per capita as the average of England, France and +Germany, they must needs have nearly $300,000,000 more, or nearly +three times as much as they now have. It looks very much as if the +“dump” would have to be the other way.</p> +<p>From these figures it would seem that the trouble, if +monometallists are right in saying there is trouble there, is due +not to their having too much silver, but that they do not have +enough. Not having enough, they have followed the usual course of +nations lacking a sufficient coin basis, and have issued a great +volume of irredeemable paper money. By reference to the authority +above cited, you will find that they have in circulation +$560,000,000 in paper money. One fourth of all the uncovered paper +in the world is in those countries, though their total population +is less than that of the United States. Who will say that it will +be a calamity to them to coin $200,000,000 more in silver and +retire that much of their uncovered paper?,</p> +<p><strong>Gold ought to be the standard metal, because, apart from +its use as money, it has a fixed intrinsic value.</strong></p> +<p>There is no such thing as intrinsic value. Qualities are +intrinsic; value is a relation between exchangeable commodities, +and, in the eternal nature of things, never can be invariable. +Value is of the mind; it is the estimate placed upon a salable +article by those able and willing to buy it. I have seen water sell +on the Sahara at two francs a bucketful. Was that its intrinsic +value? If so, what is its intrinsic value on Lake Superior?</p> +<p><strong>Well, if what you say be true, there is no intrinsic +value in any of the precious metals, and we cannot have an +invariable standard of value at all.</strong></p> +<p>No more than an invariable standard of friendship or love. Value +is, in fact, a purely ideal relation. All this talk about an +invariable dollar which shall be like the bushel measure or the +yard stick is the merest claptrap. The fact that gold men stoop to +such language goes far to prove that their contention is wrong. The +argument violates the very first principle of mental philosophy, in +that it applies the fixed relations of space, weight, and time to +the operations of the mind. Would you say a bushel of discontent or +eighteen inches of friendship? Men who compare the dollar to the +pound weight or yard stick are talking just that unscientifically. +Invariable value being an impossibility, and an invariable standard +of value a correlative impossibility, all we can do is to select +those commodities which vary the least and use them as a measure +for other things; but you will not find in any economic writer that +any metal is a fixed standard. And this brings me to consider that +singular piece of folly which furnishes the basis of so much +monometallist literature, namely, that gold is less variable in +value than silver, and that one metal as a basis varies less than +two. Some of our statesmen have got themselves into such a +condition of mind on this point as to really believe that, while +all other products of human labor are changing in value, gold alone +is gifted with the great attribute of God—immutability. It is +sheer blasphemy. It is conclusively proved, and by many different +lines of reasoning, that silver is many times more stable in value +than gold.</p> +<p><strong>I never heard such a proposition in my life! How on +earth can it be proved that silver, as things now stand, has not +changed in value more than gold?</strong></p> +<p>By the simplest of all processes. If we were in a mining +country, I could easily prove it to you by the observed facts of +geology, mineralogy, and metallurgy; but that is perhaps too remote +and scientific, so we will take the range of prices since silver +was demonetized. Of course you have seen the various tables, such +as Soetbeer’s and Mulhall’s. Take their figures, or, +better still, take those of the United States Statistical Abstract, +and you will find the following facts demonstrated:</p> +<p>In February, 1873, a ten-ounce bar of uncoined silver sold in +New York city for $13 in gold, or $14.82 in greenbacks. To-day the +ten-ounce bar sells there for $6.90.</p> +<p>“Awful depreciation,” isn’t it? “Debased +money,” and all that sort of thing. But hold on. Let us see +how it is with other things. For prices in the first half of 1873 +we will take the United States Abstract, and for present prices +to-day’s issue of the New York <em>Tribune</em>. Wheat then +was $1.40 in New York city, so our silver bar would have brought +ten and four-sevenths bushels; to-day wheat is +“unsteady” in the near neighborhood of 64 cents, and +our silver bar would buy ten and five-sixths bushels. No. 2 red is +the standard in both cases.</p> +<p>Going through a long list in the same manner, we find that the +ten-ounce bar of uncoined silver would buy in ’73, in New +York city, twenty-three and a half bushels of corn, to-day +twenty-four bushels; of cotton then eighty pounds, to-day +eighty-six pounds—and there is “a great speculative +boom in cotton,” and has been for some time, but on the +average price of this year silver would buy much more. Of rye, then +about fifteen bushels (grading not well settled), to-day thirteen +bushels; of bar iron then 310 pounds, to-day 460 pounds, and so on +through the market. In the Central West in 1873 it would have taken +ten such silver bars to buy a standard farm horse, Clydesdale or +Percheron-Norman.</p> +<p>Will it take anymore bars to-day at $6.90 each?</p> +<p>There is another way to calculate the decline, and that is by +taking the average farm value instead of the export or New York +city price, and including all roots and garden products not +exported, and this makes the showing far more favorable to silver. +The Agricultural Department at Washington has recently issued a +pamphlet showing the crops of every year since 1870, and the +average home or farm price, together with the total for which the +whole crop was sold. Send for it and contrast the prices given in +it with those known to you to-day, and you will find that in rye, +barley, oats, potatoes, and many other things the decline has been +very much greater than is given above. In short, it takes more farm +produce to buy an ounce of silver than it did in 1873, and twice as +much to buy an ounce of gold. Of Ohio medium scoured wool, for +instance—and that is the standard wool of the market—it +would have taken in 1873 two and a half pounds to have bought an +ounce of silver, while to-day it will take considerably over three +pounds. The monometallists habitually talk, and have talked it so +long that they believe it themselves, as if silver had become so +cheap that the farmer ought to rank it with tin, lead, or spelter; +but if the farmer will try the experiment he will find that it +takes a good deal more of his product to buy a given amount of +silver than it did in 1873.</p> +<p>The plain truth of the matter is that the time has come for both +gold and silver to increase in purchasing power; but by reason of +demonetization almost the entire increase has been concentrated in +gold, leaving silver almost stationary as to commodities in +general, but somewhat enhanced as to farm products. In the name of +common, honesty, is it not a high-handed outrage to make the old +debts of that period payable in the rapidly appreciating metal, +instead of one that has merely retained its value? and is it not +hypocrisy to speak of such a system as “honest money,” +and affect to deplore the dishonesty of those who insist upon their +right to pay in the least variable metal, which was constitutional +and the unit of our money from the very start?</p> +<p><strong>We certainly do want to pay our debts in honest +money.</strong></p> +<p>Gospel truth! And there is but one kind of perfectly honest +money—that which will give the creditor an equivalent in +commodities for what he could have bought with the money he loaned. +Surely no honest man will pretend that gold today does that. At +this point we must admit the painful truth that, in that sense, +there is no perfectly honest money, that is, no money that does not +change somewhat in purchasing power; and how to remedy this has +been the great problem with the greatest minds among +financiers—with all financiers, in fact, who are more anxious +for justice than greedy of gain. But surely there should not be +added to an innate variability that much greater variability due to +the mischievous interference of interested parties, through the +power of the government. And herein is made manifest the reckless +folly of the gold men in fighting against the soundest conclusions +of science and honesty, in striving for a standard of one metal +allowing the greatest variation, instead of two which by varying in +different directions might counteract each other.</p> +<p>Gold alone has varied in production in this century from +$15,000,000 to $150,000,000 per year, or tenfold; but gold and +silver combined have never varied more than sixfold. It is self +evident, therefore, that the two combined form a much more stable +mass than gold alone, and it cannot be too often repeated that the +great desideratum in money, the one quality more important than all +others, is stability in value, to the end that a dollar or pound or +franc may command as nearly as possible the same amount of +commodities when a contract is completed as when it is made. +Economists dispute about almost everything else, but they are +unanimous in this: That a money which changes rapidly in purchasing +power is destructive of all stability and even of commercial +morality. Will anybody pretend that gold has not changed rapidly in +purchasing power within the last twenty years? Has not the +universal experience shown that the variation has been very much +greater in one metal than it ever was when the two metals were +treated equally at the mint? The very least that could be asked on +the score of honesty would be free coinage of both, with a proviso +that debts should be paid with one-half of each. Back of all that, +however, comes in the great principle of compensatory action, the +variation of one metal counteracting that of the other; and from +the standpoint of pure science and honesty it is greatly to be +regretted that, instead of two precious metals, we have not at +least five.</p> +<p><strong>The market reports do indeed show an unprecedented +decline in the prices of farm products, except in a few articles +such as butter, eggs, and poultry, in places where increased +population counteracts the tendency to greater cheapness; but this +decline is due to increased invention, and the great cheapening in +transportation.</strong></p> +<p>How much of it? The records of the Patent Office show, and the +experience of farmers confirms it, that all the improvements in +farm machinery since 1870 have not reduced the labor cost of farm +produce on the general average more than 2½ per cent. Here +is a little paradox for you to study. In the twenty-five years from +1845 to 1870 the progress of invention in farm machinery was +greater than in all the previous history of the world, marvellously +rapid, in fact, and during those years the farm price of the +produce steadily increased; but in the ensuing twenty-five years to +1895 there were very few improvements, and the price has declined +with steadily increasing speed. This fact is either ignorantly or +skilfully evaded by Edward Atkinson and David A. Wells in their +elaborate articles on the subject; so I will present some facts and +figures which were obtained early this year in the Patent Office, +and carefully verified by members of Congress from every portion of +the farming regions.</p> +<p>Since 1795 there have been granted 6,700 patents for plows, but +since 1870 there have been but three really valuable improvements. +Farmers are divided in opinion as to whether the riding plow +reduces the labor cost. The lister, recently patented, throws the +earth into a ridge and enables the farmer to plant without +previously breaking the soil. It is valuable in the dry regions of +the West, but useless where the rainfall is great, as the soil must +there be broken up anyhow. There have been 920 corn gatherers +patented, of which only one is considered a success, and most +farmers reject it on account of the waste. The general verdict is +that the labor of producing corn has been reduced very little, if +any. In the labor of producing potatoes there has been no reduction +whatever, nor in the finer garden products, nor in fruits. It takes +the same labor to produce a fat hog or a fat ox, a sheep, horse, or +mule, as in 1870. In wool growing many patents have been taken out +for shearers, and three of them are said to be savers of labor, +provided the wool grower is so situated that he can attach the +shearer to a horse or steam power.</p> +<p>There have been since the opening of the Office 6,620 patents +for harvesters, of which the only great improvement since 1870 is +the twine binder, for which over 900 patents have been taken out. +The beheader is used in California, as it was before 1870, and in +the prairie regions the sheaf-carrier has recently been introduced, +holding the sheaves until enough are collected to make a shock. +Counting the labor of the men who did the binding after the +original McCormick reaper at $2 per day, the total saving by all +these improvements since 1870 is estimated at 6 cents per bushel +for wheat, rye, and oats. Much of this saving in labor is +neutralized by cost of machines, interest, and repairs. There have +been nearly 3,000 patents in fences, over 5,000 in the making of +boots and shoes, and in stoves and heaters 8,240, none affecting +farm labor except the first. In cotton growing exactly the same +processes are used, from planting to picking, as in 1850; but out +of many hundred attempts to invent a cotton picker it is now +claimed that one is a success, though it has not yet got into use. +The cost of ginning the cotton has been reduced about two-fifths of +a cent per pound. There have been 176 patents for saw gins, 63 for +roller gins, and 47 for feeders to gins, out of all of which there +has been a new gin evolved which will be in use hereafter. I might +thus go around the list, but enough has been said to show that +nearly all our farm machinery was in use before 1870, and that +since that date, as I said, the reduction of labor cost has not +upon the whole field exceeded 2½ per cent. The assertion +that reduced transportation lowers the farm price is in flat +contradiction of political economy, as, according to that, the +benefits should be divided between producer and consumer, the farm +price rising and the city or export price declining.</p> +<p><strong>The price of what the farmer has to buy has declined in +equal if not greater ratio, and so his margin is as great as +ever.</strong></p> +<p>It is evident that you are not a practical farmer. However, your +non-acquaintance with the figures is not to be wondered at when we +consider what has been said by great scholars and statesmen. I +recently heard a politician, and one of perfectly Himalayan +greatness, say in debate that a day’s work on an Illinois +farm would now produce more than twice as much as in 1870, and +another clinched it by adding that a man could pay for a good farm +by his surplus from five years’ crops. Now go to some +practical farmer and get him to make the calculation, and you will +find that what he has saved by reduced prices is less than +one-fifth of what he has lost from the same cause. The average farm +family in the central West consists of five persons, and their +greatest saving has been on clothing. You may set that at $30 per +year. The next is in sugar, for which they pay but half the price +of 1873. There is no other item that will reach $5, not even +including all the iron or steel they have to buy in a year. The +largest estimate of gains, unless they go into luxuries, does not +exceed $90 per year. At least a third of this gain is offset by +increased taxes.</p> +<p>Now let us see what this farm family has lost, counting only the +price of the surplus it sells and taking our average from the +official reports. On 500 bushels of wheat, at least $250; on 600 +bushels of corn, $120; on ten tons of hay, $30; on rye, oats, +potatoes, and so forth, $50; on three horses and mules sold per +year, $100. Total, $550, being more than ten times the net gain +over taxes.</p> +<p>The Agricultural Department figures indicate that, taking the +United States as a whole, including even the intensive farming near +the cities, the reduction of annual income is a few cents over $6 +per acre. Thus something like $1,800,000,000 has been taken from +the farmers’ annual income, and the farmer being just like +any other man, in that he cannot spend money that he does not get, +this withdraws $1,800,000,000 from the manufacturers’ and +general market. In view of these figures—and if anything I +have understated them—what conceivable good would a raise in +the tariff do the manufacturers so long as our farmers must sell on +a gold basis and be subject at the same time to the rapidly +increasing competition of silver basis countries? I have said +nothing of fixed charges which do not decline, or of the cost of +the federal government, which steadily and rapidly increases. Have +you heard of any decline in official salaries, taxes, debts, bonds, +or mortgages?</p> +<p><strong>That is plausible at first view, but it cannot be true +as to the country generally, because wages have risen; or at least +they had risen continuously till 1892, as is clearly shown in the +Aldrich Report.</strong></p> +<p>The Aldrich Report is a miserable fraud. It does not so much as +mention farmers and planters or any of the laboring classes +immediately dependent on farmers. It gives only the wages of the +highest class of skilled laborers and in those trades only where +the men are organized in ironbound trades unions which force up the +wages of their members. Take the lists and census and add the +numbers employed in every trade mentioned in that report, and you +will find that all together they only amount to one fourth the +number of farmers, or about 12 per cent. of the labor of the +country. Furthermore, it takes no account whatever of the immense +percentage of men in each trade who are out of employment. One who +didn’t know better would conclude from it that our coal +miners worked 300 days in the year, and that stone masons, +plasterers, and the like worked all the year in the latitude of New +York and Chicago. And these are but a few of the tricks and +absurdities of the report.</p> +<p>Wages are labor’s share of its own product. The claim that +wages generally can rise on a declining market involves a flat +contradiction of arithmetic; it assumes that the separate factors +can increase while the sum total is decreasing, and that the +operator can pay more while he is every day getting less. The whole +philosophy of the subject was admirably summed up by a Southern +negro with whom I recently talked. “If wages be up, how come +’em up? We all’s gittin’ but half what we useter +git for our cotton, and how kin five cents a pound pay me like ten +cents a pound, and me a pickin’ out no mo’ +cotton?” His philosophy applies to 60 per cent. of all the +working people in the United States, for that proportion do not +work for money wages. They produce, and what they sell the product +for is their wages. Viewed in this, the only true light, the wages +of 60 per cent. of our laborers have declined nearly one half, +making the average decline for all laborers nearly a third. How, +indeed, could it be otherwise? Will any sensible man believe that a +farmer could pay men as much to produce wheat at $.50 as at $1.50? +Or take the case of the cotton grower. It takes a talented negro to +make and save 3,000 pounds of lint cotton; when he sold it at $.10 +he got $300, and when he sells it at $.05 he gets $150, and all the +tricks of all the goldbugs in the world cannot make it otherwise. +To tell such men that their wages have increased, in the face of +what they know to be the facts, is arrogant and insulting +nonsense.</p> +<p><strong>This nation should have the best money in the +world.</strong></p> +<p>Very true. And the question of what is the best can only be +determined by science and experience. It is certain that gold +standing alone is not; for its fluctuations in purchasing power +have been so tremendous as again and again to throw the commercial +world into jimjams. History shows that it has varied 100 per cent. +in a century, and we have seen in this country that its value +declined about 25 per cent. from 1848 to 1857, and that it has +increased something like 60 per cent. since 1873. Without desiring +to be ill-natured, I must say it seems to me that a man has a +queerly constituted mind who insists that that is the only +“honest money.”</p> +<p><strong>But we don’t want 50-cent dollars.</strong></p> +<p>And you can’t have ’em, my dear sir. A dollar +consists of 100 cents. The phrase “50-cent dollar” and +that other phrase “honest money” remind me of what I +used to hear in my boyhood when the slavery question was debated +with such heat: “What! Would you want your sister to marry a +nigger? Whoosh!” It was assumed, if a man denounced slavery, +that he wanted the colored man for a brother-in-law. Men who employ +such phrases show a secret consciousness of having a weak cause. +And while I am about it I may as well add that I do not admire the +way some of our fellows have of denouncing gold as “British +money.” Great fools, indeed, the British would be if they did +not fight for a gold basis, for by reason of it they get twice as +much of our wheat, meat, and cotton for the $200,000,000 per year +we have to pay them in interest. According to the Chancellor of the +Exchequer, the world owes England $12,000,000,000, on which she +realizes a little over four and a half per cent., or pretty nearly +$600,000,000 per year. Fully that, if we add income from property +her citizens own in this and other countries. On the day we +demonetized silver, that $600,000,000 could have been paid in gold +in the port of New York with 450,000,000 bushels of wheat; to-day +it would take 900,000,000 bushels. In short, the amount of grain +England has made clear because of the rest of the world adopting +monometallism would bread all her people, feed all her live stock, +and make three gallons of whiskey for every person on the island. +Why shouldn’t they take what the world willingly gives them? +I have my opinion, however, of the common sense of a world which +does things that way.</p> +<p><strong>We want money that is equally good all over the +world.</strong></p> +<p>There is no such money. The coin we send abroad is only bullion +when it gets there, and most dealers prefer government bars. The +exchange must be calculated exactly the same whether we use gold, +silver, or paper in our domestic trade; and this notion that we +“should be at a disadvantage in the exchange” is a +delusion. The variations in the value of the greenback during our +war era were calculated daily, and prices in this country rose or +fell to correspond. It must, I say, be calculated just the same in +gold or silver, and any smart schoolboy can do it in a minute on +any transaction.</p> +<p><strong>What I mean is that the silver dollar is worth only 50 +cents in gold.</strong></p> +<p>And by the same token the gold dollar is worth 200 cents in +silver. The answer is as logical as the quip, and neither is worth +notice. Such a process merely assumes an arbitrary standard and +measures all other things by it, as the drunkard in a certain stage +of intoxication thinks that his company is drunk while he is duly +sober. And, by the way, where do you get your moral right to say +that a dollar which will buy two bushels of wheat or twenty pounds +of cotton is any more honest than one which will buy one bushel or +ten pounds? Is it because with the dear dollar the farmer must work +twice as long to pay off a mortgage, that the interest paid on the +great debts of the world will buy twice as much, and the debtor +nations are put at a terrible disadvantage as to the creditor +nations personally? Is that honest?</p> +<p>A very safe test of any theory is to follow it to its logical +conclusion. Take your “honest” money argument, on the +basis of twenty years’ experience, and see where it will take +you in the near future. The dollar which buys two bushels of wheat +or sixteen pounds of cotton is “honest,” you say, and a +dollar which buys but one bushel or eight pounds is not. By and by, +if your fallacy prevails, the dollar will buy three bushels of +wheat or twenty-five pounds of cotton, and will then, by your +reasoning, be much more “honest” than now. Is that your +idea? How much lower must prices go before you will admit that gold +has gained in purchasing power?</p> +<p><strong>But it cannot be that prices have fallen because of the +scarcity of money, for the low rate of interest now prevailing +proves that money is abundant and cheap.</strong></p> +<p>That is a very old fallacy, and a singularly tenacious one, as +it seems that no amount of experience drives it from the minds of +men. Look over the history of our panics and you will find that +after the first convulsion is past the banks are soon crowded with +idle money, and the rate of interest falls. Take notice, however, +that the money lenders always declare that they must have +“gilt-edged paper.” Interest on first-class securities +is never lower than in the hardest times which follow a +particularly severe panic, and the reason is obvious: all +far-seeing business men know that prices are likely to fall, and, +consequently, investments become unprofitable: therefore they do +not invest; therefore they do not want money; therefore they do not +borrow, and idle money accumulates. This is a phenomenon always +observed in hard times. In good times, on the contrary, when +investments are reasonably sure to be profitable, there is +naturally an increased demand for money, and so the rate of +interest rises. As a matter of fact, however, interest rates, when +properly estimated, have been for several years past very much +higher than previously—that is, the borrower has, in actual +value, paid very much more; so rapid has been the increase of the +purchasing power of money, that the six per cent. now paid on a +loan will buy more than the ten per cent. paid a few years ago. In +addition to that, the value of the loan has been steadily +increasing. Make a calculation for either of the years since 1890, +and you will find it to be something like this: the six per cent. +paid as interest has the purchasing power of at least ten per cent. +a few years ago, and the lender has gained at least two per cent. a +year, if not twice that, by the increased value of his money; so +the borrower will have paid, at the maturity of his obligation, at +least twelve per cent. per annum, and probably much more.</p> +<p>The silent and insidious increase of their obligations, by +reason of the enhanced and steadily enhancing value of gold, has +ruined many thousands of business men who are even now unconscious +of the real cause or of the power that has destroyed them.</p> +<p>I may add in this connection that the three per cent. now paid +on a United States bond is worth about as much in commodities as +the six per cent. paid previous to 1870, and at the same time the +bond has doubled in value for the same reason; thus, calculated on +the basis of twenty-five years, the bondholder is really receiving, +or has received, the equivalent of ten per cent. interest.</p> +<h2><a id="Ch_2" name="Ch_2"></a>Demonetization of Gold.</h2> +<p class="returnTOC"><a href="#Contents">Return to Table of +Contents</a></p> +<p>Gold has an intrinsic value, says the monometallist, which makes +it the money of the world. It is sound and stable, while silver +fluctuates. See how much more silver an ounce of gold will buy than +in 1873, but the gold dollar remains the same, worth its face as +bullion anywhere in the world.</p> +<p>But suppose there had been a general demonetization of gold +instead of silver, how would the ratio have stood then? Would not +the same reasoning prove silver unchangeable, and gold the +fluctuating metal?</p> +<p>Oh, nonsense! it is impossible to demonetize gold, because the +civilized world recognizes it as an invariable standard by which +all commodities are measured in value. The supposition is absurd. +It would be very much like deoxygenizing the air.</p> +<p>But, my dear sir, gold has been demonetized, and not very long +ago, either, and very extensively, too. It was deprived of its +legal tender quality by four great nations, comprising some seventy +million people; demonetized because it was cheap and because the +world’s creditors believed it was going to be cheaper; the +demonetization, so far as it went, produced enormous evils, and +nothing but the firmness of France and the far-seeing wisdom of her +financiers prevented the demonetization becoming general on the +continent of Europe, which would have reversed the present position +of the two metals in the public mind.</p> +<p>Of the many singular features in the present overheated +controversy, probably the most singular is the fact that +comparatively few bimetallists know of, or, at any rate, say much +about, this demonetization of gold, while the monometallists ignore +it entirely, and many of them, who ought to know better, absolutely +deny it.</p> +<p>So extensive was this demonetization of gold, and so +far-reaching were its consequences, that it may easily be believed +that it was the beginning of all our misfortunes, and that the +crime of the century, instead of being the demonetization of silver +in 1873, was really the demonetization of gold in 1857; for that +was the first general or preconcerted international action to +destroy the monetary functions of one of the metals and throw the +burden upon the other, and it first familiarized the minds of +financiers, and especially of the creditor classes, with the fact +that the thing might easily be done and that it would work +enormously to their advantage.</p> +<p>It may also be said that it led logically to the action of 1867, +which was but the beginning of a general demonetization of +silver.</p> +<p>The history of gold demonetization is full of instruction and is +here given in detail.</p> +<p>In 1840-45 the world was hungering for gold. All the leading +nations had just passed through financial convulsions which shook +the very foundations of society. Several American states had either +repudiated their debts outright or scaled them in ways that to the +English mind looked dishonest, and there was a general uneasiness +among the creditor classes of the world. A universal fall of prices +had produced the same results with which we are now so painfully +familiar. In the half century terminating with 1840 the world had +produced but $529,942,000 in gold, coinage value, and +$1,364,697,000 in silver, or some forty ounces of silver to one of +gold; yet their ratio of values had varied but little, and the +variation was not increasing. Why? Monometallists have raked the +world in vain for an answer. Bimetallists point to the only one +that is satisfactory, namely, the persistence of France in treating +both metals equally at her mints. But there were grave +apprehensions that France alone could not maintain the parity, and +so, as aforesaid, all the world was hungry for gold.</p> +<p>And in all the world there was not one observer who dreamed that +this hunger would soon be far more than satiated, and the +philosopher who should have predicted half of what was soon to come +would have been jeered at as a crazy optimist. In 1848 gold was +discovered in California, and three years later in Australia. The +supply from Africa and the sands of the Ural Mountains had +previously increased, so that in 1847-8 it was equal to that of +silver. But how trifling was this increase to what followed. In +1849 there was still a slight excess of silver production, and in +1850 the proportion was but $44,450,000 of gold to $39,000,000 in +silver. Then gold production went forward by great leaps and +bounds. How much was produced?</p> +<p>Well, the estimates vary greatly. Soetbeer places the amount at +$1,407,000,000 by the close of 1860; but Tooke and Newmarche have +put it about $100,000,000 less. In the same era the production of +silver varied but a trifle from $40,000,000 a year. A committee of +the United States Senate, appointed for investigating the facts, +reported that in the twelve years ending with 1860 the gold +produced was $1,339,400,000; and in the next thirteen years, ending +with 1873, it was $1,411,825,000. Thus, in the thirteen years +following the California discovery the stock of gold in the world +was doubled, and in the twenty-five years ending with 1873 it was +more than tripled. Several economic writers have made the statement +very much stronger than this, and M. Chevalier, in his famous +argument for the demonetization of gold, written in 1857, declares +that the production of gold as compared with silver had increased +fivefold in six years and fifteenfold in forty years, and that, +owing to the export of silver to Asia and its use in the arts, +there would, in a very little while, be no possible method of +maintaining the parity of the two metals in money at any ratio +which would be honest and profitable.</p> +<p>And what was the real fact? The ratio, which in 1849 was +15<sup>78</sup>/<sub>100</sub> of silver to 1 of gold in the London +market, and the same in 1850, never sank below +15<sup>19</sup>/<sub>100</sub> to 1, and never rose above the ratio +of 1849 till after silver was demonetized. Why this wonderful +steadiness? The answer is easy. In the eight years of 1853-60 +France imported gold to the value of 3,082,000,000 f., or +$616,000,000, and exported silver to the value of $293,000,000; in +short, her bullion operations amounted to $909,000,000. She stood +it without a quiver; she grew and prospered as never before. She +resolutely refused to change her ratio. Her mints stood open to all +the gold and silver of the world, and thus did she save the world +from a great calamity.</p> +<p>Scarcely, however, had the golden flood begun when the moneyed +classes and those with fixed incomes raised a loud cry. From the +laboring producers no complaint was heard. They never complain of +increased coinage. In the United States we knew nothing of this +clamor, for we then had no large creditor class, no great amount of +bonds, and very few people interested more in the value of money +than in the rewards of labor. In Europe, however, all the leading +writers on finance and industries took part. In 1852 M. Leon +Faucher wrote: “Every one was frightened ten years ago at the +prospect of the depreciation of silver; during the last eighteen +months it is the diminution in the price of gold that has been +alarming the public.” In England, the philosopher DeQuincey +wrote that California and Australia might be relied upon to furnish +the world $350,000,000 in gold per year for many years, thus +rendering the metal practically worthless for monetary purposes, +and another Englishman, as if resolved to go one better, declared +that gold would soon be fit only for the dust pan. M. Chevalier +took up the task of convincing the nations that gold should be +demonetized as too cheap for a currency, and of course the +interested classes soon organized for action.</p> +<p>Holland had already begun the process in 1847, but had managed +it so awkwardly that her condition is not easily understood or +described as it was in 1857. The estimated amount to be thrown out +of use was only half the real amount, and in the attempt to avoid a +small evil they produced a very great one.</p> +<p>Austria was at that time involved in trouble with her paper +money system, and thought the cheapening of gold offered a fair +opportunity to come to a metallic basis. The reasoning of her +statesmen was singularly like that of General Grant in 1874, when +he pointed to the great silver discoveries in Nevada as a +providential aid to the restoration of specie payments, being at +the time in sublime ignorance that he had long before signed an act +demonetizing silver, and thereby depriving this country of the +benefit of such providential aid. But the strength of the creditor +classes was entirely too much for Austria and Prussia, and the +German States allied with them almost unanimously declared for +throwing gold out of circulation. A convention had been held at +Dresden in 1838, with the view to unifying the coinage, but little +had been accomplished, and now a convention was called at Vienna, +which was attended by authorized representatives of Prussia, +Austria, and the South German States. It was there stated that, +besides various minor coins, there were three great competing +systems in Germany, namely, those of Austria, Prussia, and Bavaria. +It is needless to go into details of this once famous convention, +but suffice it to say that the following points were agreed upon: +(1) The Prussian thaler was to be the standard for Prussia and the +South German States, and was to be a silver standard exclusively. +(2) The Austrian silver standard was to prevail throughout that +empire. (3) The contracting powers could coin trade coins in gold, +but none others, except Austria, which retained the right of +coining ducats, and these gold coins were to have their value fixed +entirely by the relation of the supply to the demand. “They +were not therefore to be considered as mediums of payments in the +same nature as the legal silver currency, and nobody was legally +bound to receive them as such;” in short, none of the gold +coins permitted by the convention were to be legal tender, but all +were to be mere trade coins precisely for the same purpose as the +trade dollar once so famous in the United States. The result, of +course, was to make silver the standard and gold the fluctuating +money or token money. The effects of this convention remained with +but little change till 1871.</p> +<p>Of course, gold at once became “dishonest money.” It +was worth less than silver, and a regular gold panic set in. +Holland had already demonetized most of her gold coinage, that is, +had deprived it of the legal tender quality, and Portugal now +practically prohibited any gold from having current value, except +English sovereigns. Belgium demonetized all its gold at one sweep, +and Russia prohibited the export of silver. Thus, in an alarmingly +short space of time five nations had practically demonetized gold, +and others were threatening to do so, and the world was rapidly +being taught that gold was the discredited metal, while silver was +the stable and sound money.</p> +<p>Some curious and a few amusing results followed. Among a certain +class in England a regular panic broke out, and in Holland and +Belgium even the masses of the people became suspicious of gold and +disliked to take it in payment. In the latter country a few traders +hung out signs to attract customers, to this effect, +“L’or est recu sans perte,” meaning that gold +money would be taken there without a discount. It is probably not +known to one American in a thousand that the practice of inserting +a silver clause in contracts became at that time so common in +Europe that it was actually transferred to the United States, and +in England life insurance companies were established on a silver +basis. Several American corporations stipulated for payment in +silver, especially of rents, and to this day a New England +establishment is receiving a certain number of ounces of fine +silver yearly under leases then drawn up.</p> +<p>It is equally interesting to note in the literature of that +period arguments against gold almost word for word like those now +used against silver. The financial managers threw gold out of use +and then urged its non-use as a reason for its demonetization. +“None in circulation,” “variation shows +impossibility of bimetallism”—such were the phrases +then applied to gold, as we now find them applied to silver. An +artificial disturbance was created, and then pleaded as a reason +for further disturbance.</p> +<p>All this while the financiers of England were bombarded with +arguments and prophecies of evil, but her geologists pointed out +clearly that Australian and Californian products were almost +entirely from the washing of alluvial sands and consequently must +be very temporary. Her statesmen believed the geologists rather +than the panic-stricken financiers, and so she held for gold +monometallism.</p> +<p>But it is to France that the world is indebted for maintaining +the parity through those years of alarm and panic. M. Chevalier +urged upon French statesmen the importance of returning to the +system which had been in force previous to 1785, when silver was +the standard and gold was rated to it by a law or proclamation. The +proposition was actually brought forward in Council and urged upon +the Emperor that silver should be made the standard and gold +re-rated in proportion to it every six months. The net result was, +by France taking in gold and letting out silver, that in 1865 that +country had a larger stock of gold than any other in Europe. +Suffice it to repeat that several nations, including seventy +million people, actually demonetized gold, deprived it of its legal +tender, and treated it as a ratable commodity; while France, +single-handed and alone upon the continent of Europe, was able to +absorb the enormous surplus of gold and maintain the parity by the +simple process of keeping her mints open to both at the ancient +ratio.</p> +<p>Thus ended the scheme to drive gold out of circulation and base +the business of the world upon one metal, and that the dearer +metal, silver. But suppose the scheme had succeeded; suppose France +had been less firm; what a wonderful flood of wisdom on the virtues +of silver we should have had from the monometallists! How +arrogantly they would have denounced us—who should, I trust, +in that case have been laboring to restore gold to free +coinage—how arrogantly they would have denounced us as the +advocates of cheap money, dishonest tricksters, repudiators! How +they would have rung the changes on “dishonest money,” +“fifty-cent gold dollars!” What long, long columns of +figures should we have had to prove the stability of silver, the +fluctuating nature of gold! What denunciations, what sneers, what +gibes, what slurs would have filled the New York city papers in +regard to those Western fellows who want to degrade the standard! +How glib would have been the tongues of their orators in denouncing +all who advocated the remonetization of gold as cranks, socialists, +populists, anarchists, ne’er-do-wells, and Adullamites, +kickers, visionaries, and frauds! Is there any practical doubt that +we should have witnessed all this? None whatever; in fact, +something of the same sort was heard in Europe at the time of the +demonetization of gold. It all goes to show that self-interest +blinds the intellects of the best of men so that they readily +believe that which is to their interest is honest, but that the +farmer who seeks to raise the price of what he has to sell thereby +throws himself down as dishonest. Of course, the successful +demonetization of gold would have brought about an enormous +appreciation of the value of silver, since it would have thrown the +whole burden of maintaining the business of the world upon one +metal, and equally, of course, we should have had the same attacks +upon the owners of gold mines that we now have upon the owners of +silver mines. As the withdrawal of silver from its place as primary +money and its reduction to the level of token money has thrown the +burden of sustaining prices upon gold, so unquestionably would the +reverse process have occurred had gold been reduced to token money +in place of silver. All this we know would have taken place from +what actually did take place, and this makes important the history +of the demonetization of gold.</p> +<h2><a id="Ch_3" name="Ch_3"></a>Relative Production of Gold and +Silver.</h2> +<p class="returnTOC"><a href="#Contents">Return to Table of +Contents</a></p> +<p>Among the many plausible pleas of the monometallists, the most +plausible, perhaps, is the plea that the great divergence between +the metals since 1873 has been due entirely to the increased +production of silver. A very brief examination, I think, will show +its falsity, and that it is equally false in fact and fallacious in +logic; for, first, there has been no great +“depreciation” in silver, that metal having almost the +same power to command commodities, excepting gold, that it had in +1873; and, second, the claim that the increased production of ten +or twenty years would alone greatly cheapen silver is flatly +contradicted by all previous experience. Of many statements of the +fallacy, I take a recent one from the New York <em>Times</em> as +the most terse and catchy for popular reading, and likewise most +ludicrously absurd:</p> +<div class="quote"> +<p><strong>“Why Silver is Cheap.</strong></p> +<p>“In 1873 the total product of silver in the world was +61,100,000 ounces, and the silver in a dollar was worth $1.04 in +gold.</p> +<p>“Last year the world’s product of silver was +165,000,000 ounces, and the silver in a dollar was worth only 50.7 +cents.</p> +<p>“In 1894 the potato crop of the United States was, in +round numbers, 170,000,000 bushels, and the average price 53c.</p> +<p>“In 1895 the estimated potato crop was 400,000,000 +bushels, and the average price was 26c.</p> +<p>“The fall in both cases was due to the same +cause.”</p> +</div> +<p>Observe the assumptions: 1. That the output of one year +determined the value of silver as the crop of potatoes does their +price for that year! The schoolboy who does not know better +deserves the rattan. If the theory were correct, gold in 1856 +should have been worth but a fourth what it was in 1848, whereas +the largest estimate of its decline in value puts it at 25 per +cent.</p> +<p>2. That the increased silver production of twenty-two years +would reduce its value in the exact mathematical proportions of the +increase. This theory ignores the two most important facts +determining the value of money: that the silver or gold mined in +any one year is added to the existing stock, to which it is but a +minute increase; and that wealth, population, and production are +also increasing rapidly, relative to which the increase of silver +is but a trifle indeed. The yield of the Monte Real a thousand +years ago may have cost five times as much labor per ounce, and +that of Laurium ten or even twenty times as much; but all of both +which is not lost goes with the last ounce mined into the general +stock, which is now about $4,000,000,000 in coin alone. The +greatest annual production has in but a very few cases added so +much as 3 per cent. to the stock on hand, and about half of it is +consumed in the arts. If the increase of the annual production of +silver by 2¾ to 1 in twenty-two years reduced its value +one-half, will the <em>Times</em> tell us what should have been the +reduction in the value of gold when this product increased by +fivefold in eight years? It should further be noted that the +discovery of a “Big Bonanza” is an event so rare that +it has not happened, on an average, more than once in three +centuries since the dawn of history, and that since 1873 the growth +in the world’s production and trade has been, relative to +former times, even greater than the increase in the production of +silver.</p> +<p>Consider the following facts, which I have condensed from +Mulhall: In 1800 the total yearly international commerce of the +world was estimated at $1,510,000,000. Forty years later it had +only increased 90 per cent., amounting in 1840 to $2,865,000,000, +and in that year there were in all the world but 4,315 miles of +railroad and no electric telegraph. The total horse-power of all +the steamships of the world was but 330,000, and the carrying power +of all the shipping but 10,482,000 tons. To-day the international +commerce of the world is almost $20,000,000,000, and increasing at +the rate of $1,000,000,000 per year; there are in the world over +400,000 miles of railway and a very much greater mileage of +magnetic telegraph, including 14 intercontinental cables; the ocean +tonnage of Great Britain alone is very much greater than was that +of the whole world in 1840; and tremendous as this increase of +international trade has been, it is the merest trifle compared with +the increase of the internal trade in several of the greater +nations.</p> +<p>What then has caused the “great depreciation”? +Nothing has caused it. There has been but a trifling depreciation +indeed. It is as clearly proved as anything unseen can be that if +the nations had left silver and gold as they were in 1870, both +would have gained materially in value, that is, in the power to +command commodities, because of the vastly greater relative +increase of the latter; but by demonetization all the increase has +been concentrated in gold, leaving silver almost exactly as it was. +At present, however, I devote myself to the question whether there +has been such an increase in the production as would normally +cheapen it. On this point we have evidence to convince any unbiased +mind, for the relative production of silver and gold has in former +ages varied very much more than in the last twenty-three years, and +the variation has extended over much longer periods, without +causing more than the most trifling divergences in value. And the +explanation is simple: the two metals received equal recognition at +the mint and in legal tender laws; the greatly increased use of the +cheaper maintained its value in coinage, while disuse of the dearer +tended equally to check its appreciation. In this sense government +can “create value” by creating a use.</p> +<p>From 1660 to 1700, for instance, the production of silver +averaged in value much more than twice that of gold, and in +quantity some thirty-three times as much; yet all those years, the +highest mint ratio was 15.20 to 1 and the lowest 14.81—a +variation in money value of but .39 or 2.6 per cent. From 1701 to +1760 inclusive, the proportion of gold produced gradually rose from +a little over a third to 40 per cent. in values, yet the money +ratio remained remarkably constant, the highest being 15.52 of +silver to 1 of gold and the lowest 14.14. In other words, for sixty +years there were produced on an average about 28 ounces of silver +to 1 of gold, yet the widest variation of their money values in all +those years was less than 9 per cent. In the face of such facts as +these, we are asked to believe that while an average of over 30 +ounces to 1 created an average variation of less than 6 per cent., +and a greatest variation of less than 9 per cent., a production of +some 20 ounces to 1 since 1882 has created a variation of 100 per +cent. And that the variation began nine years before the value +production of silver exceeded that of gold! It is an affront to our +common sense.</p> +<div class="figcenter"><a href="images/fig1.png"><img src= +"images/fig1.png" alt= +"A bar chart showing gold production increasing at a faster rate than silver production, but it's value relative to silver didn't change much." +id="fig1" name="fig1" width="100%" /></a> +<p>The above diagram shows the relative annual production of gold +and silver from 1493 to 1870, and also average ratio of values of +the two metals.</p> +</div> +<p>I should say, at this point, that my figures are taken from the +latest, and in my opinion the most scholarly work in favor of +monometallism, “The History of Currency,” by Prof. W. +A. Shaw, Fellow of the Royal Historical and Royal Statistical +Societies. As the ratio between silver and gold varied considerably +in the different marts of Europe, I follow his plan (which is +Soetbeer’s) of taking it as it stood at any particular time +in the city which might then be called the greatest commercial +centre, whether Venice, Hamburg, Antwerp, or London. His history +comprises the entire period from 1252 to 1894. It is only fair that +I should also give his explanation of the stability of the metals, +which is extremely interesting.</p> +<p>He begins his second chapter with the statement that the +discovery of America was “the monetary salvation and +resurrection of the Old World”; that it was a time of +unexampled increase in the precious metals and equally unexampled +rise of prices, but there was also “feverish instability and +want of equilibrium in the monetary systems of Europe.” He +shows how the first great import was of gold, which began to affect +prices in 1520; how this was followed by a very much greater +increase in silver, and how, while prices were rising so rapidly as +to stimulate trade and incidentally do damage by causing great +fluctuations, yet there must have been some great regulator +preventing the evil which we should <em>a priori</em> have +expected. He finds it in the fact that Antwerp had taken the place +of Venice and Florence, and conducted a great trade with the far +East. His language is: “The centre of European +exchanges—Antwerp in the sixteenth century as London +to-day—has always performed one supremest function, that of +regulating the flow of metals from the New World by means of +exporting the overplus to the East. The drain of silver to the +East, discernible from the very birth of European commerce, has +been the salvation of Europe, and in providing for it Antwerp acted +as the safety-valve of the sixteenth century system as London has +done since. The importance of the change of the centre of gravity +and exchange from Venice to Antwerp, therefore, lies in this fact. +Under the old system of overland and limited trade, Venice could +only provide for such puny exchange and flow as the mediæval +system of Europe demanded; she would have been unable to cope with +such a flood of inflowing metal as the sixteenth century witnessed, +and Europe would have been overwhelmed.”</p> +<p>Professor Shaw argues that without the Eastern safety-valve +Europe would have been ruined by an excess of the precious metals, +that India furnished the needed reservoir—did she not take +gold as well as silver?—and that Venice was so far limited to +an overland trade that she could not have performed the function +Antwerp did. Later he sets forth the current monometallist position +that the nations are now as one in trade and the interchange of the +precious metals, and therefore even the partial equilibrium of the +sixteenth and seventeenth centuries could not be maintained. Let +us, then, bring the figures down to the present, and it will be +found, I think, that the farther down we come the weaker does the +monometallist contention appear.</p> +<p>The improved, more extended, and more intimate intercourse of +the nations brought about by the introduction of steam, +electricity, and other agencies tends to minimize the fluctuations +of the two metals, and indicates that the divergences of the metals +in mediæval times was due rather to the want of speedy, easy, +and certain intercourse and communication of the nations than to an +innate commercial tendency of the two metals to diverge. Had the +same intimate and speedy commercial relation existed between the +nations of the world in those times as now exists, the equalizing +tendencies of trade would evidently have prevented not only the +ratio of divergence to which the metals attained at different +periods, but would have prevented a difference of ratio existing +between the different nations at the same period of time.</p> +<p>From 1761 to 1800, inclusive, the relative production of gold +decreased steadily, until it was but 23.4 per cent. of the total +value, to 76.6 per cent. of silver. In other words, there were for +many of the later years over 50 ounces of silver produced to 1 of +gold, and yet the ratio stood long at 15.68 to 1. This is almost +exactly the ratio fixed by Hamilton and Jefferson, fixed because of +its long-continued maintenance in European markets. During these +forty years the production of silver in proportion to gold was +never for even one year as low as the highest proportion of any +year since 1873, and yet the money value only varied from 14.42 to +15.72, or a fraction over 8 per cent. In the face of such figures +as these, the change in relative production since 1873 seems too +trifling to be taken into account, especially since in that year +and some time after the value production of gold at 16 to 1 was +much the greater, nor was it till 1883 that the world’s +silver product exceeded that of gold.</p> +<p>In 1800-10 the annual production of gold was $12,069,000 and of +silver almost exactly $39,000,000, or some 50 ounces to 1; yet the +highest ratio was 16.08, and the lowest 15.26. This relative +production changed very slowly, and in 1831-40 of the total in +values produced 34.5 per cent. was gold and 65.5 per cent. +silver.</p> +<p>That is, there were, for ten years, about thirty times as many +ounces of silver mined as of gold, and during these years the +change in the ratio was so minute that it can only be calculated in +small fractions of 1 per cent. In 1841-50, for the first time since +the middle of the sixteenth century, we find the production of gold +the greater, that metal being 52.1 per cent. of the total product, +and silver but 47.9 per cent. During the decade the lowest value +ratio of silver to gold was 15.70, and the highest 15.93, a +variation of only 1.4 per cent. Then California and Australia +poured out their wonderful golden flood, and all the world was +changed. In 1851-55 the gold yield was 77.6 per cent, of the total, +and the silver yield 22.4, and for the next five years the change +was but .2 of 1 per cent. In other words, during those ten years +the average annual yield of silver was less than 5 ounces to 1 of +gold; so if the “overproduction theory” laid down by +the <em>Times</em> were correct, gold should have lost—well, +at least 70 per cent. of its value in silver. The actual variation +was from a ratio of 15.98 to one of 15.46, or a relative +depreciation of gold of considerably less than 3 per cent. Now, it +is alleged by many who have made a study of prices during that +period, that in actual value gold depreciated 25 per cent.; so it +is plain that it carried down silver with it, and the only logical +explanation is that the mints were equally open to both.</p> +<p>We have seen that in all the century and a half when the mines +were pouring forth silver at the rate of from 20 ounces to 1 of +gold up to 55 ounces to 1, the greatest variation in their value +was less than 9 per cent., and in the twenty years when the silver +production was to that of gold as less than 5 ounces to 1, the +value of gold produced being more than three times that of silver, +their money value varied less than 3 per cent., and yet we are +coolly asked to believe that since 1873 silver is to be rated among +variable commodities like potatoes, the size of the crop each year +determining the value. Monometallists have had much to say about +the relative cheapness of gold during those years, and have laid +much stress upon the fact that it was an era of great prosperity +and rapid development, with rise of wages and the prices of farm +produce. In this argument they admit three things: that we have a +moral and constitutional right to use the cheaper metal at any +time; that we did use gold for all those years simply because it +was easier to pay debts with it, that is, it was cheaper, and that +the use of the cheaper metal aided greatly in making prosperity. +That is all that any bimetallist claims. As the entire burden was +not then thrown upon silver, we claim that it should not now be +thrown upon gold, doubling or trebling the rate of its advancing +value; and as the privilege to use the cheaper metal then checked +the advance of the dearer and enhanced prosperity, we insist that +the system of that time shall be restored.</p> +<p>The subsequent figures are equally convincing. In 1861-65 the +gold products were 72.1 per cent. of the total, the silver 27.9 per +cent., the variation in ratio from 15.26 to 15.44. In 1866-70 the +production stood 69.4 to 30.6, the variation in ratio 15.43 to +15.60. In 1871-75 production was still 58.5 to 41.5, but the +variation in coin value was from 15.57 to 16.62. That something had +happened quite aside in its effects from relative production was +evident, but the people did not find out what it was till late in +1875. At the time the demonetization act was passed, the ratio was +still 15.55 to 1, and one of the reasons given for the act of +February 12,1873, was that the silver dollar was worth $1.03 in +gold; yet before the close of that year, and before it was known +that there was to be any great increase in the product of silver, +its relative value ran down till it was below that of gold. Can any +one doubt the cause? Surely not if he observes the additional fact +that the relative decline of silver continued despite the greater +value production of gold, and that 1882, ten years after +demonetization, was actually the first year since 1849 in which the +world’s production of silver exceeded that of gold. What one +hundred and ninety years of continuous and often enormous relative +overproduction of silver had not done, ten years of demonetization +had accomplished, and that while the relative supply of gold was +still the greater. Is it possible to miss the real cause? Is there +in Euclid a demonstration more conclusive?</p> +<div class="figcenter"><a href="images/fig2.png"><img src= +"images/fig2.png" alt= +"A chart showing gold and silver production remaining roughly constant, while the ratio increases by nearly 60%" +id="fig2" name="fig2" width="100%" /></a> +<p>The above diagram shows the relative annual production of gold +and silver from 1870 to 1893, and ratio of values.</p> +</div> +<p>Monometallists have exhausted the resources of verbal gymnastics +to make these figures fit their theories. Determined not to admit +that demonetization was the cause, they have given so many +explanations that, expressed in the briefest words, they would +cover many pages like this. The first was that the opening of the +“Big Bonanza” on the Comstock lode had given notice +that silver was coming in a flood; but that was only for popular +use in this country. Scientific men knew that to be a rare find +indeed, not likely to occur again for centuries. The next +explanation was that China and India, so long the reservoir into +which the surplus flowed, had ceased to absorb it; and the next, +demonetization of silver by Germany and her throwing her old silver +on the market. And with this the people began to get at the true +reason—the general demonetization by so many nations.</p> +<p>The following table gives the annual production of gold and +silver from the discovery of America to and including the year +1892; and the highest and lowest ratio of silver to gold from 1681 +to and including the year in which silver ceased to be in this +country primary money:</p> +<table summary="Annual Production of Gold and Silver"> +<tr> +<th>YEARS.</th> +<th>GOLD.</th> +<th>SILVER.</th> +<th>RATIO.</th> +</tr> +<tr> +<td>1493-1520</td> +<td>$3,855,000</td> +<td>$1,953,000</td> +</tr> +<tr> +<td>1521-1544</td> +<td>4,759,000</td> +<td>3,749,000</td> +</tr> +<tr> +<td>1545-1560</td> +<td>5,657,000</td> +<td>12,950,000</td> +</tr> +<tr> +<td>1561-1580</td> +<td>4,546,000</td> +<td>12,447,000</td> +</tr> +<tr> +<td>1581-1600</td> +<td>4,905,000</td> +<td>17,409,000</td> +</tr> +<tr> +<td>1601-1620</td> +<td>5,662,000</td> +<td>17,538,000</td> +</tr> +<tr> +<td>1621-1640</td> +<td>5,516,000</td> +<td>16,358,000</td> +</tr> +<tr> +<td>1641-1660</td> +<td>5,829,000</td> +<td>15,223,000</td> +</tr> +<tr> +<td>1661-1680</td> +<td>6,154,000</td> +<td>14,006,000</td> +</tr> +<tr> +<td>1681-1700</td> +<td>7,154,000</td> +<td>14,209,000</td> +<td style="padding-left:1em;">14.81-15.20</td> +</tr> +<tr> +<td>1701-1720</td> +<td>8,520,000</td> +<td>14,779,000</td> +<td>15.04-15.52</td> +</tr> +<tr> +<td>1721-1740</td> +<td>12,681,000</td> +<td>17,921,000</td> +<td>14.81-15.41</td> +</tr> +<tr> +<td>1741-1760</td> +<td>16,356,000</td> +<td>22,158,000</td> +<td>14.14-15.26</td> +</tr> +<tr> +<td>1761-1780</td> +<td>13,761,000</td> +<td>27,128,000</td> +<td>14.52-15.27</td> +</tr> +<tr> +<td>1781-1800</td> +<td>11,823,000</td> +<td>36,534,000</td> +<td>14.42-15.74</td> +</tr> +<tr> +<td>1801-1810</td> +<td>11,815,000</td> +<td>37,161,000</td> +<td>15.26-16.08</td> +</tr> +<tr> +<td>1811-1820</td> +<td>7,606,000</td> +<td>22,474,000</td> +<td>15.04-16.25</td> +</tr> +<tr> +<td>1821-1830</td> +<td>9,448,000</td> +<td>19,141,000</td> +<td>15.70-15.95</td> +</tr> +<tr> +<td>1831-1840</td> +<td>13,484,000</td> +<td>24,788,000</td> +<td>15.62-15.93</td> +</tr> +<tr> +<td>1841-1850</td> +<td>36,393,000</td> +<td>32,434,000</td> +<td>15.70-15.93</td> +</tr> +<tr> +<td>1851-1855</td> +<td>131,268,000</td> +<td>36,827,000</td> +<td>15.33-15.59</td> +</tr> +<tr> +<td>1856-1860</td> +<td>136,946,000</td> +<td>37,611,000</td> +<td>15.19-15.38</td> +</tr> +<tr> +<td>1861-1865</td> +<td>131,728,000</td> +<td>45,764,000</td> +<td>15.26-15.44</td> +</tr> +<tr> +<td>1866-1870</td> +<td>127,537,000</td> +<td>55,652,000</td> +<td>15.43-15.60</td> +</tr> +<tr> +<td>1871-1872</td> +<td>113,431,000</td> +<td>81,849,000</td> +<td>15.57-15.65</td> +</tr> +<tr> +<td>1873</td> +<td>96,200,000</td> +<td>81,800,000</td> +</tr> +<tr> +<td>1874</td> +<td>90,750,000</td> +<td>71,500,000</td> +</tr> +<tr> +<td>1875</td> +<td>97,500,000</td> +<td>80,500,000</td> +</tr> +<tr> +<td>1876</td> +<td>103,700,000</td> +<td>87,600,000</td> +</tr> +<tr> +<td>1877</td> +<td>114,000,000</td> +<td>81,000,000</td> +</tr> +<tr> +<td>1878</td> +<td>119,000,000</td> +<td>95,000,000</td> +</tr> +<tr> +<td>1879</td> +<td>109,000,000</td> +<td>96,000,000</td> +</tr> +<tr> +<td>1880</td> +<td>106,500,000</td> +<td>96,700,000</td> +</tr> +<tr> +<td>1881</td> +<td>103,000,000</td> +<td>102,000,000</td> +</tr> +<tr> +<td>1882</td> +<td>102,000,000</td> +<td>111,800,000</td> +</tr> +<tr> +<td>1883</td> +<td>95,400,000</td> +<td>115,300,000</td> +</tr> +<tr> +<td>1884</td> +<td style="padding-left:1em;">101,700,000</td> +<td style="padding-left:1em;">105,500,000</td> +</tr> +<tr> +<td>1885</td> +<td>108,400,000</td> +<td>118,500,000</td> +</tr> +<tr> +<td>1886</td> +<td>106,000,000</td> +<td>120,600,000</td> +</tr> +<tr> +<td>1887</td> +<td>105,000,000</td> +<td>124,366,000</td> +</tr> +<tr> +<td>1888</td> +<td>109,900,000</td> +<td>142,107,000</td> +</tr> +<tr> +<td>1889</td> +<td>118,800,000</td> +<td>162,690,000</td> +</tr> +<tr> +<td>1890</td> +<td>118,848,700</td> +<td>172,234,500</td> +</tr> +<tr> +<td>1891</td> +<td>126,183,500</td> +<td>186,446,880</td> +</tr> +<tr> +<td>1892</td> +<td>138,861,000</td> +<td>196,458,800</td> +</tr> +</table> +<p>Thus we see that, for twenty-seven years after the discovery of +America, the gold production was double that of silver; for the +next eighty years the production of silver was considerably more +than double that of gold; for the next one hundred years the +production of silver was more than 2½ times that of gold, +and for the next century and a half, to wit, from 1701 to 1850, +inclusive, despite the fact of the tremendous gain of gold in the +last few years, the production of silver fell but little short of +twice that of gold. And yet, the variations in coin value were of +the trifling character previously stated. When taken by shorter +periods, the argument is still more startling. Thus in 1801-20 the +production was almost exactly 4 of silver to 1 of gold; for the +next twenty years a minute fraction less than 2 of silver to 1 of +gold; for the next twenty 2½ of gold for 1 of silver; and +for the next twenty nearly 2 of gold for 1 of silver, while during +these awful years since 1873, in which there has been so much said +about the “flood of silver,” its production has never +once been twice that of gold, and for the entire period has +exceeded it by the merest trifle. Is it any wonder that Dr. Eduard +Suess, the great German authority on the metals, and Professor of +Geology at the University of Vienna, concluded his recent work with +these strong statements:</p> +<div class="quote"> +<p>“Present legislative institutions are at variance with the +conditions established by nature. Even now agriculture and in part +industry in Europe are sorely at a disadvantage against silver +countries such as India and Mexico. The advantage of this situation +accrues in England to the holders of interest-bearing notes, the +productive value of which increases with the growing scarcity of +gold…. As soon as the figure 23.75 shall have been reached, +all gold obligations will have increased in value one-half; but +nothing prevents that figure from rising to 31. [It has since risen +even above that.] … You say a regulation cannot be +international, but you overlook how long the ratio of 1 to +15½ was upheld and worked beneficently. We wish, say the +London bankers, to receive our interest in gold and not in +depreciated silver; but silver would not be depreciated the moment +an agreement went into effect. Why, you ask, shall we cast such +profit into the hands of the owners of silver mines? Remember that +you are now casting the same profit into the hands of the owners of +gold mines and washings. No man would lose by rehabilitation, and +the whole world would be richer…. Europe is laboring under a +grave delusion. The economy of the world cannot be arbitrarily +carried on in the hope that somewhere a new California, and at the +same time a new Australia, will be found whose alluvial lands will +give relief for a decade. … The question is no longer +whether silver will again become a full value coinage metal over +the whole earth, but what are to be the trials through which Europe +is to reach that point.”</p> +</div> +<p>At this point it seems to me well to present the figures of +relative production for the last century in a more compact shape, +with a view to bringing out the contrast:</p> +<table summary="Relative Gold and Silver Production"> +<tr> +<td style="text-align:left;">Silver produced 1792-1850</td> +<td>$1,690,217,000</td> +</tr> +<tr> +<td style="text-align:left;">Gold produced</td> +<td>848,186,000</td> +</tr> +<tr> +<td style="text-align:left;">Excess of silver production</td> +<td>842,031,000</td> +</tr> +<tr> +<td style="text-align:left;padding-top:1em;">Gold produced +1850-73</td> +<td style="padding-top:1em;">$2,724,825,000</td> +</tr> +<tr> +<td style="text-align:left;">Silver produced</td> +<td>1,150,025,000</td> +</tr> +<tr> +<td style="text-align:left;">Excess of gold</td> +<td>1,574,800,000</td> +</tr> +<tr> +<td></td> +</tr> +<tr> +<td style="text-align:left;padding-top:1em;">Gold produced 1873-92, +inclusive</td> +<td style="padding-top:1em;">$2,060,897,000</td> +</tr> +<tr> +<td style="text-align:left;">Silver produced</td> +<td>2,264,419,000</td> +</tr> +<tr> +<td style="text-align:left;">Excess of silver</td> +<td>203,522,000</td> +</tr> +<tr> +<td></td> +</tr> +<tr> +<td style="text-align:left;padding-top:1em;">Gold produced 1850-92, +inclusive</td> +<td style="padding-top:1em;">$4,785,722,000</td> +</tr> +<tr> +<td style="text-align:left;">Silver produced</td> +<td>3,414,444,000</td> +</tr> +<tr> +<td style="text-align:left;">Excess of gold</td> +<td>1,371,278,000</td> +</tr> +<tr> +<td></td> +</tr> +<tr> +<td style="text-align:left;padding-top:1em;">Gold produced +1792-1892, inclusive</td> +<td style="padding-top:1em;padding-left:0.5em;">$5,633,908,000</td> +</tr> +<tr> +<td style="text-align:left;">Silver produced</td> +<td>5,104,961,000</td> +</tr> +<tr> +<td style="text-align:left;">Excess of gold</td> +<td>528,947,000</td> +</tr> +</table> +<p>Thus are we confronted with the truly startling paradox that +during all the century and a half when the production of silver was +nearly twice that of gold, and the two centuries back of that when +it was more than twice, the variation in coinage value never rose +to 9 per cent., and for many years at a time corresponded with the +ratio set by the mint; but at the end of a century during which the +gold production was half a billion greater than that of silver, and +at the end of half a century when it was nearly a billion and a +half greater, the really scarcer metal has declined in terms of the +other nearly one-half! And all this, the monometallist tells us, +because there has been an excess of silver produced amounting to +less than a quarter of a billion in twenty-three years. Belief in +such a proposition would indeed be a triumph of faith over figures. +And to add to the trial of our faith, we find, on bringing the +figures down to the close of the year 1895—and we cannot +bring them later on account of official slowness—the amounts +of silver and gold in the world, as presented in values at our +ratio, are almost exactly equal, the greatest divergence claimed by +the most extreme monometallist being 16<sup>3</sup>/<sub>10</sub> +ounces of silver to one of gold!</p> +<p>I do not indulge the hope that the figures herein presented will +affect the opinion of any pronounced monometallist. There seems to +be a mysterious power in gold which blinds the eyes to deductions +from statistics and experience; the internal conviction of the +monometallist that gold stands still while everything else changes +in value resists all logic. In this country, that is. In England, +where it has not become a political question, and no one is +interested in denying the facts, monometallists almost universally +concede the appreciation of gold and defend monometallism on that +ground. It is to the laboring producers of the United States, still +open to conviction, that I present these figures, which to me seem +absolutely conclusive.</p> +<h2><a id="Ch_4" name="Ch_4"></a>Is Bimetallism Practicable?</h2> +<p class="returnTOC"><a href="#Contents">Return to Table of +Contents</a></p> +<p>Can this great nation coin silver and gold on the same terms, at +the ratio of 16 to 1, and maintain a substantial parity?</p> +<p>This question, like all others in political economy, may he +argued theoretically or on the basis of actual experience. The +monometallists say that one metal or the other always has been and +always will be the cheaper at any ratio; that if both be freely +coined, the dearer will be more valuable as bullion than as money, +and will therefore go out of use. They say that, in spite of all +devices to the contrary, we must have monometallism any how, and +always on the basis of the cheaper metal.</p> +<p>The bimetallist replies that such is, in truth, the natural +tendency; but when the dearer metal is thrown out of use as money +it thereby becomes cheaper, and as the cheaper metal must take its +place, a vastly greater demand for it is created, and so it becomes +dearer; thus an alternating action keeps the two near a parity, +provided that the ratio corresponds nearly with the relative +amounts of the two metals in the world’s stock. They claim +that the world has thus a far less fluctuating standard of value +than it ever can have with one metal alone.</p> +<p>The monometallist rejoins that this is “all theory.” +This brings both parties to the test of experience, and by common +consent the experience of France in the seventy years from 1803 to +1873 is taken as the best practical test. At first view, it would +seem as if the matter could easily be settled, as the time is so +recent that there could be no great obscuration of the history; but +on inquiry a determination of the real facts is found to be no such +simple matter, and as the disturbance of natural law by war and +other causes was almost constant, both sides find enough in the +facts to make a basis for their respective contentions. Let us then +consider this history.</p> +<p>Napoleon Bonaparte became First Consul and practically ruler of +France in 1799, and at once addressed himself, with his usual +energy, to the task of establishing a stable monetary system. He +found that in 1785 Calonne had established the ratio of 15½ +of silver to 1 of gold, and that it had worked reasonably well. He +accepted it, therefore, as justified by experience, and his Finance +Minister carried through the Council of State an act for the free +coinage of both metals at that ratio. For seventy years this law +stood practically unchanged, and it is speaking with great +moderation to say that in those seventy years there occurred more +disturbance of every kind unfavorable to the maintenance of a ratio +than in any other seventy years in monetary history. France was +twice conquered, her soil overrun, and her capital held by the +enemy. She four times changed her form of government. Once she was +subjected to the payment of enormous war expenditures, and again +not only to the payment of still greater expenditures but to a fine +exceeding in amount the largest sum of gold ever held in the United +States. During a large part of this time the world’s +production of silver was in excess of that of gold to an extent +very much greater than it has been in recent years, and then, after +a very brief interval of something like equal production, there was +a sudden and tremendous increase in the production of gold until it +exceeded that of silver more than 3 to 1 in value. During these +years, also, several of the neighboring nations, including seventy +million people, demonetized gold and threw the whole burden of +sustaining its equality on the continent of Europe upon France, and +during another portion of the time there were monetary disturbances +so far-reaching that they shook the foundations of credit in every +civilized country in the world. And yet, through all these +convulsions, France for seventy years maintained a substantial +parity, by welding the two metals together for monetary +purposes.</p> +<p>The contrasted figures are simply amazing. In the decade of +1811-20 there were produced 47 ounces of silver to 1 of gold, and +yet the market ratio outside of France never stood higher than +16.25 to 1. In the decade of 1821-30 the production was 32 ounces +to 1 and the average ratio 15<sup>80</sup>/<sub>100</sub> to 1. In +1831-40 the production was 29 ounces to 1 and the average ratio +15<sup>75</sup>/<sub>100</sub> to 1. In 1841-50 the production was +14<sup>9</sup>/<sub>10</sub> ounces to 1 and the average ratio +15<sup>83</sup>/<sub>100</sub> to 1. The demonstration is as +complete as that of any proposition in Euclid. In spite of the +enormous overproduction of silver, the maintenance of the mint +ratio in France held the two so nearly together that in three years +out of four the difference in other countries only amounted to the +cost of transporting the silver to the French Mint and of +coinage.</p> +<div class="figcenter"><a href="images/fig3.png"><img src= +"images/fig3.png" alt= +"A chart showing gold production quadrupling, while silver production and the value ratio remain roughly constant." +id="fig3" name="fig3" width="100%" /></a> +<p>The above diagram shows the relative annual production of gold +and silver during the bimetallic period in France. The ratio given +is the commercial ratio, that of the mint being 15.50 to 1. Note +the marvellous steadiness of the commercial ratio and contrast it +with the enormous fluctuation in the relative annual production of +the two metals during this period.</p> +</div> +<p>To this should also be added the fact that French coins would +have a slightly less value in other countries than the coins of +those countries, but it is not easy to estimate the sentimental +difference this would make. From the enactment of the law of 1803 +to the limitation of the coinage in 1875 France coined +5,100,000,000 francs of silver and 7,600,000,000 francs of gold, or +$1,020,000,000 of silver and $1,520,000,000 of gold, very nearly, +or 40 per cent. of the total amount of silver and 33 per cent. of +the total amount of gold produced in the world during those +years.</p> +<p>It is further to be noted that, whether gold or silver was the +dearer metal at the ratio of 15½ to 1 at any given time, +France at that time had more of gold and silver per capita than any +country in the world, and that, despite the enormous inflow of the +cheaper metal, she held the dearer and absorbed what now seems an +astonishing amount of the cheaper. Thus, in 1822 the imports of +silver into France exceeded the exports by 125,000,000 francs, and +in 1831 the amount had risen to 181,000,000 francs, and then it +fell off and did not reach the latter sum again until 1848.</p> +<p>On the other hand, in the eight years 1853-60 there was a net +import into France of gold to the value of 3,082,000,000 francs, or +$616,000,000; and in the same years a net export of silver to the +value of 1,465,000,000 francs, or $293,000,000. Thus in the short +space of eight years France had made monetary, or, rather, metallic +transfers amounting to $909,000,000, and that without a quiver of +her financial system, and scarcely a perceptible trace of the +effects of that financial storm which swept America, England, and +Central Europe with such destructive fury in 1857-8. It further +appears that, despite the enormous import of gold, the subsequent +export was comparatively small, and thus, such was the wonderful +absorbing power of the nation under the free coinage law of 1803, +that France came out of each successive financial storm with an +increased stock of the precious metals, and more than once has the +Bank of England been compelled to apply to France for the specie to +arrest a destructive panic growing out of an insufficient amount of +coined money upon a safe basis and an overissue of supplemental or +faith money.</p> +<p>By the year 1860 it was supposed that the danger of the world +being “flooded with gold” was substantially over; and +during that decade France not only sustained the double standard +single-handed and alone, but did it against the tremendous pressure +due to the demonetization of gold in Austria, Germany, and other +countries. It is not possible to say with certainty how far gold +would have cheapened, or, to speak in the current language, how +high the ratio of silver would have become, had France during the +decade abandoned her bimetallic system; but it is certain that the +disproportion would have been enormous, undoubtedly very much +greater than the present disproportion in the market between silver +and gold, resulting from the demonetization of silver. M. Chevalier +gave it as his opinion that the ratio would sink at least as low as +8 to 1, that is, that gold would be worth but half what it was +rated at in relation to silver in the American coinage, and this he +believed would certainly happen, despite the power and willingness +of France to maintain the old ratio. He did not venture to say how +low the ratio would sink if France abandoned her policy, but he +evidently looked forward to a time when gold would be practically +too cheap for money.</p> +<p>Years afterward, in writing as a philosopher rather than an +advocate, he took more rational ground, and compared the action of +France to that of a parachute which retarded the fall of gold. The +maximum effect of the enormous gold inflation of 1848-65 was to +create a disturbance of less than five per cent. in value of the +metals in countries outside of France. During all the years that +the law of 1803 was in practical force the variations as shown by a +diagram seemed but trifling, despite the enormous over-production +of silver for many years and of gold for many other years, and yet, +immediately after 1873, although ten years were yet to elapse +before the world was to produce silver in excess of gold, almost +instantly the diagram shows the downward trend of silver far, far +in excess of any previous experience.</p> +<p>How was it through all these years with the industrial and +financial condition of France? It would indeed be little to the +purpose to prove that she had maintained the metals at a parity by +free coinage, if, in the meantime, her people had suffered loss. +Monometallists tell us that not only is bimetallism impossible, but +that the attempt to maintain it is in every way hurtful, in fact, +disastrous. They point us to the fact that England is the clearing +house of the world; that those whose currency is not assimilated to +that of England are subjected to enormous losses in the exchange, +resulting from fluctuations; that by attempting bimetallism a +nation puts itself in the second or third rank, and that the +results are in every way bad. Well, all those conditions applied to +France. She, like the United States, may be considered as regarding +England in the light of the world’s clearing house, and her +currency may be said to have fluctuated, as they declare ours +would, with bimetallism. What, then, have been the general results +to France? What effect has it had upon her commercial, social, and +industrial development? On this point let us return thanks that the +testimony is universal. No other nation in the world has made such +stupendous progress in the general improvement of her people as +France has made since 1803. No civilized country probably had sunk +to such depths of popular misery as had France at the beginning of +her revolution, and we can hardly believe that the subsequent +fourteen years of war and internal turmoil had greatly improved her +condition when the policy of 1803 was adopted.</p> +<div class="figcenter"><a href="images/fig4.png"><img src= +"images/fig4.png" alt= +"A time-series chart showing a line that falls mainly in a narrow band (from 1803 to 1873) that falls of very quickly after 1873." +id="fig4" name="fig4" width="100%" /></a> +<p>The above diagram shows the course of the commercial ratio of +the values of gold and silver during the bimetallic period of +France. The upper dotted line (A) shows the extreme high limit of +ratio, and the lower dotted line (C) the extreme low limit reached +from the years 1803 to 1873. The central line (B) is the mint ratio +of 15.50 to 1 fixed by the French Government in 1803. The variable +line (D) is the commercial ratio of the values of the two metals +during that period. Note the slight variation in this ratio from +1803 to 1873, during which time the bimetallic action of the French +law was operative, and then contrast it with the sudden and swift +descent of the ratio after the demonetization of silver by the +various nations in 1873 and 1875.</p> +</div> +<p>Bimetallism and a rigid adherence to a specie basis were two of +the means adopted by Bonaparte to restore France, and during all +his wars, with their terrible expenses, he never once departed from +the specie standard. After the Act of 1803 France was still to have +twelve years of war and severe trial. She has subsequently had two +revolutions and a foreign war, singularly destructive in its +course, and ending in her subjugation, the occupation of her +territory, and the loss of two of her wealthiest provinces.</p> +<p>Seventy years of bimetallism had left France saturated with gold +and silver when her Emperor rashly provoked the war with Germany; +her expenses were enormously increased, and she had to pay, in +addition, a fine of nearly $1,000,000,000. She paid it with a +rapidity that amazed the world, but in her hour of weakness she +consented to gold monometallism. She had become a creditor nation, +and could endure the new system better than any other, except Great +Britain; nevertheless, she has suffered. Her exports had steadily +increased during all her years of bimetallism, and never so fast as +during the very years in which she was exporting silver so heavily +because of the influence of cheap gold. The very year of +demonetization her exports began to decline, and but once since +have they reached the old figures.</p> +<p>The statistics are fearfully suggestive. In 1840 her exports +were valued at $202,231,000, and her imports at $210,413,000; in +1873 her exports were $964,465,000, and her imports $915,285,000, +and in only six of the years after she began to be “flooded +with cheap gold” did her imports exceed her exports. In 1874 +her exports began to decline, and ran rapidly down to $822,360,000 +in 1878; and 1890 is the only year since demonetization in which +they reached the figures of 1873, being $968,030,000. On the other +hand, her imports have steadily outrun her exports until the excess +has been as high as $300,000,000 in one year (1880), and has only +once since (1885) been as low as $100,000,000. Here, then, are the +points demonstrated by France’s official figures:</p> +<p>During seventy years of bimetallism she gained steadily and +rapidly in wealth, her exports increasing much faster than her +population.</p> +<p>During the eight years (1853-60) in which she was “ruined +by cheap gold,” importing 3,082,000,000 francs of it and +exporting 1,465,000,000 francs of silver, a bullion operation to +the amount of $909,000,000, she increased her exports most rapidly +and with no corresponding increase in imports.</p> +<p>During the twenty years following demonetization her exports +have been stationary or declining, being $99,000,000 less in 1893 +than in 1873, while her imports have increased.</p> +<p>Let us turn for a moment and trace the effects of monometallism +in England as compared with bimetallism in France during the same +period.</p> +<p>England had in 1816, when she adopted gold monometallism, about +$10,000,000,000 in property and had in 1873 about $40,000,000,000. +In 1816 she had about 18,000,000 people and in 1873 about +32,000,000; her per capita wealth, therefore, in 1816 was $555, and +in 1873 $1,250, or 2<sup>1</sup>/<sub>5</sub> times as much. In +1803 the property of France was valued at $8,000,000,000, and in +1873 at about $40,000,000,000; in the former year she had +29,000,000 people, and in the latter a little over 36,000,000. Her +per capita wealth, therefore, in 1803 was $276, and $1,081 in 1873, +or very nearly four times as much.</p> +<p>Thus, despite the immeasurable advantages which England enjoyed, +political, social, and industrial, her great colonial possessions +from which she drew enormous wealth, and her exemption from +destructive war; despite also the distressing condition of France +and her recent enormous losses, we find that in seventy years of +bimetallism the working Frenchman had gained wealth almost twice as +fast as the working Englishman had in the same number of years of +monometallism.</p> +<p>France became a creditor nation, and yielded to the general +pressure for a single gold standard; she has lost heavily, as shown +in her table of exports, but she still retains a large part of the +momentum acquired during seventy years of bimetallism. Her wealth +is still rated at something over $40,000,000,000; her people have +accumulated stocks of the precious metals far in excess of those of +any other country; and their business is so solidly founded that +the storm which recently shook the foundations of credit throughout +the British Empire scarcely produced a quiver in France. They have +wisely avoided the excessive issues of faith money (or check money) +which are the ever-present danger of England, America, and other +monometallic countries; and as a result, they have almost entirely +escaped those fearful convulsions have that threatened the +political stability of great nations. In fact, it is no +exaggeration to say that France has only felt the convulsions of +recent years by their reflex action on her from other countries; +and twice within very recent years has the Bank of England been +compelled to go to France for the coin to stay the devastating work +of panics resulting from over-expansion of faith money on an +insufficient metallic basis.</p> +<p>France has an area less than that of Texas by some 60,000 square +miles, yet its aggregate wealth is two-thirds that of the United +States; and on the basis of assessed value her agricultural wealth +is very much greater than ours. Mulhall, the great British +statistician, says of France that she is “the best cultivated +country in Europe.” Her 6,000,000 peasant proprietors are the +owners of nearly all her cultivatable soil, which is worth, on an +average, $160 per acre. She has over 400,000 miles of the finest +common roads in the world, which have cost her, at the ordinary +rate of labor, over $5,000,000,000. Their benefit goes chiefly to +agriculture, binding the farmers of different provinces and farmers +and city dwellers together. She has over 10,000 miles of canals and +canalized rivers; she has 25,000 miles of railways, all in the +highest state of efficiency. She has, during her bimetallic period, +become the second colonial power of the world, and has acquired +foreign territory at such a rate as to excite the jealousy of +England. She has become the second naval power on the globe, and +the second exporting nation, her exports averaging some +$900,000,000 per year, an amount larger than the exports from this +country, which has a population nearly double that of France, +nearly all of it being manufactures; and had the same rate of +growth continued as was maintained before France became +monometallic, it is fair to presume that her exports at this time +would have equalled those of Great Britain. Best of all, the great +increase of wealth is in the hands of those who created it. It is +the universal testimony of all observers that the condition of the +French people and the general aspect of France has steadily +improved throughout this century. It is a country in which +poor-houses are unknown; in her cities a beggar is a curiosity. In +their country’s emergency the common people came forward and +out of their savings paid $1,000,000,000 accumulated during the +bimetallic period. Despite the loss of $240,000,000 in the Panama +Canal and of $1,000,000,000 in the indemnity to Germany, as well as +two of her richest provinces, France has accumulated hundreds of +millions of dollars in the securities of other countries, and has +only recently been able to subscribe twenty-five times over the +Russian loan, and is negotiating a loan to China, the money for +which is to be supplied by her working people.</p> +<p>Be it noted also that the debt of France is held by the people +of France, largely by the industrial class, and especially by the +agricultural class, and the interest thereon paid, instead of being +a foreign drain, is a perpetual renewal of the current +circulation.</p> +<p>One more brief contrast between France and England. No reader of +current literature need be told of the appalling prevalence of +poverty in Great Britain. As France is a country without +poor-houses, so it may be said that England is a land of poor rates +and poor unions. The latest official announcement is that the +agricultural interest is declining more rapidly than ever before; +and in regions where only fifteen years ago the land rented readily +at several pounds per acre, statesmen and economists are appalled +at the sight of that which so alarmed our New England people a few +years ago: the phenomenon of abandoned farms. We are told that +there is a revival of industry because British capitalists have +withdrawn their money from other countries and will put it in +anything rather than have it entirely idle; but the condition of +agriculture steadily grows worse.</p> +<p>And have we anything to boast of in our own happy land in +comparison with France? Our natural resources so far exceed those +of any old country that a comparison would be ridiculous; and the +monometallists tell us, when they are trying to prove that gold is +not enhanced in value, that, by reason of inventions, a day’s +labor will produce at least twice as much as in 1870, and in many +lines a great deal more than twice as much. Why, then, does not the +laborer receive twice as much as he did in 1870? As wages are +labor’s dividend of its own product, and as capital had its +dividend then as now, if a day’s labor does not bring the +laborer twice what it did, he is wronged; and, considering our +resources, if we are not five times as well off as the French +people, the only reason can be that we have slighted our +opportunities, and blundered most fearfully in our management.</p> +<p>The monometallists profess to be great sticklers for experience +and demonstrated fact; to have a horror of “theory.” We +present them the example of France as an unanswerable proof that +one great nation can maintain bimetallism, and that by maintaining +it she escaped the worst evils that have affected the monometallic +countries, and assured for herself an extraordinary progress and +prosperity. We present them, in contrast, the example of England, +and point them especially to the great difference in the progress +of the common people of the two countries. We ask them, with this +experience, to consider the present condition of this country, and +the evils that have affected it since 1873, and seriously to +consider the question as to whether something is not radically +wrong; whether some malign influence has not gone between us and +the reward of our work, and robbed us of that to which we are +honestly entitled.</p> +<h2><a id="Ch_5" name="Ch_5"></a>Bimetallism Abroad.</h2> +<p class="returnTOC"><a href="#Contents">Return to Table of +Contents</a></p> +<p>Many monometallists start with the assumption that what they +call the “silver craze” is a mere fad, temporary and +local; that the advocates of bimetallism are confined chiefly to +the United States, and to the western part of it, and that, if they +are thoroughly defeated at the November election, the discussion +will be at an end.</p> +<div class="poem"> +<div class="stanza"> +<p>“Mistaken souls that dream of heaven.”</p> +</div> +</div> +<p>They do not realize that, although it has not taken the same +popular form, the discussion is quite as serious in monometallic +Germany and England, and in the latter country opinion has so far +advanced that both parties agree on the enormous enhancement in the +value of gold. There is now scarcely a difference of opinion in +England on this point, but there is as to the effect. British +monometallists assert that as England is a great creditor nation, +the world owing her, as estimated, $12,000,000,000, every advance +in the purchasing power of money is greatly to her advantage. In +Mr. Gladstone’s last public speech on the subject he stated +that fact with great frankness, claiming that it was to +England’s interest that money should remain as now in +purchasing power, and that if she should abandon the gold basis, +because gold is worth far more than it was a few years ago, the +world might applaud her generosity, but it would sneer at her +wisdom.</p> +<p>The bimetallists of England, on the other hand, assert that the +enormous losses of traders owing to the dislocation of the par with +silver-using countries, of manufacturers by reason of the rapidly +increasing competition of the same countries, of home debtors and +of many other classes, and especially the loss to agriculture, far +outweigh any gain made by the creditors as such.</p> +<p>The national debts of Europe now amount in round numbers to some +$22,000,000,000. Including all other countries, the total of +national debts exceeds $26,000,000,000, and the growth for many +years averaged $500,000,000 per year. The local public debts of +England and Canada are set at $1,735,000,000. According to the best +authorities, the mortgage indebtedness of the principal European +nations is as follows:</p> +<table summary="Mortgage Indebtedness"> +<tr> +<td style="text-align:left;">For Great Britain and Ireland</td> +<td>$8,000,000,000</td> +</tr> +<tr> +<td style="text-align:left;">For Germany</td> +<td>8,500,000,000</td> +</tr> +<tr> +<td style="text-align:left;">For France</td> +<td>3,850,000,000</td> +</tr> +<tr> +<td style="text-align:left;">For Russia</td> +<td>3,250,000,000</td> +</tr> +<tr> +<td style="text-align:left;">For Austria</td> +<td>1,500,000,000</td> +</tr> +<tr> +<td style="text-align:left;">For Italy</td> +<td>2,675,000,000</td> +</tr> +<tr> +<td style="text-align:left;">And for all other European +countries</td> +<td style="padding-left:0.5em;">3,050,000,000</td> +</tr> +</table> +<p>A total of nearly $31,000,000,000.</p> +<p>Hon. Samuel Smith, M. P., places the mortgages of England at +something over $2,000,000,000, which is more than half the value of +the landed property, and those of Scotland and Ireland (the latter +one of the worst mortgaged countries in the world) make up the +grand total given above.</p> +<p>A highly suggestive fact is that, as experience develops the +enormous evils of the monometallic system, the number of +conversions among prominent men to bimetallism steadily increases, +and they become more outspoken and radical in their views.</p> +<p>At the Paris Monetary Conference of 1867, Mr. Mees, President of +the Bank of the Netherlands, protested against a single gold +standard and foretold literally what has followed. Two years later +Baron Alphonse de Rothschild said: “As a sequel we should +have to demonetize silver completely. That would be to destroy an +enormous part of the world’s capital; that would be +ruin.”</p> +<p>At the conference of 1878, Mr. Henry Hucks Gibbs, director and +former governor of the Bank of England, was an advocate of the +single gold standard; but a few years’ experience so +completely changed his views that he said: “Mr. Goschen and I +were together in the conference in Paris; both of us were sturdy +defenders of gold monometallism; but I have changed my mind. I do +not say Mr. Goschen has changed his mind, but he has somewhat +modified it.”</p> +<p>In the Paris Conference of 1878, Mr. Goschen said: “If +other states were to carry on a propaganda in favor of a gold +standard and of the demonetization of silver, the Indian Government +would be obliged to reconsider its position, and might be forced by +events to take measures similar to those taken elsewhere. In that +case the scramble to get rid of silver might provoke one of the +gravest crises ever undergone by commerce.”</p> +<p>As it is the fashion of our monometallists to sneer at the +possibility of bimetallism, it may be well to quote here the report +of the Royal Commission on gold and silver, made in 1888. This +commission was composed of six monometallists and six bimetallists, +but they assented unanimously to this proposition:</p> +<div class="quote"> +<p>“<span class="sc">Section</span> 107. We think that in any +conditions fairly to be contemplated in the future, so far as we +can forecast them from the experience of the past, a stable ratio +might be maintained if the nations we have alluded to (herein), the +United Kingdom, the United States, and the Latin Union, were to +accept and strictly adhere to bimetallism at the suggested ratio. +We think that if in all these countries gold and silver could be +freely coined and thus become exchangeable against commodities at +the fixed ratio, the market value of silver as measured by gold +would conform to that ratio and not vary to any considerable +extent.”</p> +</div> +<p>Mr. Leonard H. Courtney, one of the monometallist members of +that commission who signed the report, has since become an avowed +bimetallist, as have many other prominent Englishmen. Among them +may be mentioned Professor Alfred Marshall and Professor Sidgwick, +of Cambridge University; Professor Nicholson of Edinburgh; +Professor H. S. Foxwell, Professor of Political Economy in +University College, London; Professor E. G. Gonner, of Liverpool; +Professor J. E. Munro, of Kings College, London; and many +others.</p> +<p>Mr. Courtney says, in his article in the <em>Nineteenth +Century</em>, April, 1893: “Is it true that gold is this +stable standard? I was one of the six members of the Gold and +Silver Commission who could not see their way clear to recommend +bimetallism, and reported: ‘When we look at the character and +power of the fall in the price of commodities, we think that the +sounder view is that the greater part of the fall has resulted from +causes touching the commodities rather than from an appreciation or +increase in value of the standard,’ In the same paragraph we +had said: ‘We are far from denying that there may have been, +and probably has been, some appreciation in gold, though we may +hold it impossible to determine its extent.’” Now, +then, he goes on to say: “Let me make a confession. I +hesitated a little about this paragraph. I thought there was +perhaps more in the suggestion of an appreciation of gold than my +colleagues believed; but while I thus doubted it, I did not +dissent. I am now satisfied that there has been an appreciation of +gold greater than I anticipated when I signed the report, and I +should not be able to concur in that same paragraph again. We have +been passing through a period of an appreciation of gold, and no +one can tell how long it will last. This is a serious matter. The +pressure of all debts, private and public, has increased. The +situation is serious. It is a dream to suppose that gold is stable +in value. It is no more stable than silver. It has undergone a +considerable appreciation in recent years, and industry and +commerce have been more hampered by this movement than they would +have been had silver been our standard. Every step taken towards +the further demonetization of silver must tend to the enhancement +of the value of gold. It is true that much inconvenience is +involved in the use of gold as a standard in some countries, and of +silver as a standard in others, with no link to check their +divergent relations; but the advantage of having the same monetary +standard throughout the world would be counterbalanced if we made +gold that universal basis and tied all the fortunes of the nations +to it.”</p> +<p>The bimetallic sentiment in England is not confined to the mere +theorist and doctrinaire or statesman, but is advocated by some of +the ablest journalists in the kingdom. Thus, the <em>Statist</em>, +which undoubtedly ranks in that country as the highest authority in +financial and economic matters, is quite as pronounced as Mr. +Balfour and others in its views upon the effect the demonetization +of silver has had upon the value of gold. In its issue of July 1, +1893, it says: “The new policy is likely to intensify the +appreciation of gold. One consequence of the further appreciation +of gold will be to intensify the agricultural depression all over +Europe. Most of the charges upon land having been fixed heretofore, +they will weigh more and more heavily upon land-owners as gold +rises in value. So, again, rents will become more onerous, and it +will be found by and by that the settlement of the last few years +was only provisional, and that a further reduction will become +necessary. Also it is evident that the burden of debt, not only +upon individuals, but upon governments, will be much increased. +Everywhere the burden of debt will necessitate increased taxation, +and so will weigh very heavily upon the general +population.”</p> +<p>Hon. Robert Giffen, the well-known chief of the statistical +department of the Board of Trade, London, was long known as the +most determined and uncompromising monometallist in England. In +1888 he read a paper before the Royal Statistical Society, in which +he showed that gold had notably gone up in purchasing power; that +the increase was continuous and likely to continue, and that this +was the true explanation of the fall in the prices of +commodities.</p> +<p>In a former paper read in 1879 he had predicted the rise in the +purchasing power of gold, and in his paper of 1888 he said: +“If the test of prophecy be the effect, there was never +surely a better forecast. The fall of prices in such a general way +as to amount to what is known as rise in purchasing power of gold +is, I might almost say, universally admitted. Measured by any +commodity or group of commodities usually taken as the measure for +such a purpose, gold is undoubtedly possessed of more purchasing +power than was the case fifteen or twenty years ago, and this high +purchasing power has been continued over a long enough period to +allow for all minor oscillations.”</p> +<p>In 1871, when the discussion may be said to have begun, the +French economist Ernest Seyd pointed out very plainly that the +adoption of the gold standard by Europe and the United States would +lead to the destruction of the monetary equilibrium hitherto +existing, and then added this singular prophecy: “The strong +doctrinarianism existing in England as regards the gold valuation +is so blind that when the time of depression sets in the economic +authorities of that country will refuse to listen to the cause here +foreshadowed. Every possible attempt will be made to prove that the +decline of commerce is due to all sorts of causes and +irreconcilable matters. The workman and his strikes will be the +first convenient target; then speculating and over-trading will +have their turn; many other allegations will be made, totally +irrelevant to the real issue, but satisfactory to the moralizing +tendency of financial writers.”</p> +<p>How literally has that been fulfilled in our sight. At this very +time, the monometallists of the United States are pointing to all +sorts of causes and irreconcilable matters to explain the ruinous +fall in prices. They not only allege all the causes here assigned, +but many more peculiar to this country; and, after the fashion of +all who oppose any reform in the interests of producing labor, they +particularly and even savagely deprecate agitation.</p> +<p>By the way, does not every clear-headed American, know that any +system that cannot stand agitation is totally unfitted to this +country? Agitation, investigation, public discussion in the papers +and on the stump, are the very life-blood of our institutions. And +if our finances were as they should be, the more thoroughly they +were discussed, the more warmly would the system be approved, and +the more would investigation be invited.</p> +<p>Hon. G. J. Goschen, former Chancellor of the Exchequer, pointed +out as early as 1883 that the enormous increase in the demand for +gold consequent upon the demonetization of silver was liable to +create great evil. After elaborating this subject, and saying that +the fall in prices had already produced serious evils, he added: +“Some writers have appeared to show something approaching to +irritation at the view of the situation that gold should have +largely influenced prices. I scarcely know why, unless through the +apprehension that the bimetallists may utilize the argument.” +A little later he said: “I must repeat that to my mind the +connection between the additional demand for gold and the fall of +prices seems as sound in principle as I believe it to be sustained +by facts.”</p> +<p>We might multiply at length quotations to show that opinion is +unanimous in England, regardless of party, to the effect that there +has been a great increase in the purchasing power of gold. As to +the effect of this Mr. Giffen says: “The weight of all +permanent burdens is increased…. Our people, in paying +annuities or old debts, have to give sovereigns, which each +represent a greater quantity of the results of human energy. The +debtors pay more than they would otherwise, and the creditors +receive more. It is a most serious matter to those who have debts +to pay.”</p> +<p>Mr. S. Dana Horton says that on the basis of prices “The +national debt, regarded as a principal sum, has increased its +weight upon the shoulders of the British taxpayer between 1875 and +1885 by nearly two hundred millions sterling, an amount nearly +equal to the Franco-German war fine.”</p> +<p>This gives us the explanation of the fact that the consols on +which the interest was reduced by Mr. Goschen, when Chancellor of +the Exchequer, to 2¾ per cent., are now selling at a much +higher premium than formerly; the smaller amount of money paid in +interest will purchase a very much larger amount of commodities +than the former larger interest did.</p> +<p>The matter is very clearly set forth by Hon. Samuel Smith, M. +P.: “If the question of protection is to be introduced into +the discussion, then it will be found to tell more forcibly against +our opponents. What do they seek for, but the protection of gold as +against silver? They wish, as far as lies in their power, to +boycott silver and throw the world upon gold alone, even though +such a course should change the value of gold. In trying to boycott +silver, they are giving protection to the wealthy capital class, +just as truly as the old corn laws did to the landed owners of this +country. The only difference is that the amounts involved are much +larger and the protected class much richer and the confiscation of +the fruits of the toiler much greater than under the old system of +the corn laws. When the masses of this country awake as those of +America have awakened to the magnitude of this question, they will +brush away this idle talk that we are trying to restore +protection.” If Mr. Smith were in Congress instead of +Parliament, what a howl there would be about him as an +anarchist!</p> +<p>It being now the unanimous opinion of English statesmen and +financiers that gold has greatly appreciated, and that such +enhancement has already wrought great evil, the important question +arises, Will this process continue? In the speech already quoted +Mr. Giffen says: “I am bound to say that all the evidence +seems to me to point to a continuance of the appreciation. It is +impossible to suppose that the movement will not extend to other +countries. All these facts point to a continued pressure on gold. +The better probability seems to be, that the increase of the +purchasing power of gold will continue from the present +time.”</p> +<p>The Right Hon. A. J. Balfour, now the head of the British +Cabinet, in a speech delivered at Manchester, October 27, 1892, +said: “We want two things of our currency. We require that it +shall be a convenient medium of exchange between different +countries, and we require of it that it shall be a fair and +permanent record of obligation over long periods of time. In both +of these great and fundamental requirements of a currency, our +existing currency totally and lamentably fails.” After +showing that within fifteen years the money of Great Britain and +Ireland had advanced in purchasing power no less than 30 or 35 per +cent., he went on to say that of its further progressive +appreciation “No living man can prophesy the limit.” A +little later he spoke of it as progressing “steadily, +continuously, indefinitely,” and closed his remarks on that +subject in these words: “If you will show me a system which +gives absolute permanence, I will take it in preference to any +other. But of all conceivable systems of currency, that system is +assuredly the worst which gives you a standard steadily, +continuously, indefinitely appreciating, and which by that very +fact throws a burden on every man of enterprise, upon every man who +desires to promote the agricultural or industrial resources of the +country, and benefits no human being whatever but the owner of +fixed debts in gold.”</p> +<p>In his work “The Bimetallic Question” Hon. Samuel +Smith, M. P., presents as an evidence of the hardships due to the +increasing purchasing power of money these facts: “The +English landlords who borrowed £400,000,000 on their +property, agreeing to pay, let us say, £16,000,000 a year, +interest at 4 per cent., supposing that it represented one-quarter +of their rents, now find, owing to the fall of prices, that it +represents one-third, or even in some cases one-half of their +rent…. The factory owner, the mine owner, the ship owner, +who thought it safe twenty years ago to borrow half the value of +his plant in order to find capital for his business, now finds that +the mortgagee is the virtual owner. Nearly all the profits go to +pay the mortgagee’s claim, and in many cases he has +foreclosed, and sold out the unhappy borrower, ruined through no +fault of his own, but through the extraordinary sinking of prices. +As a matter of fact, I believe that if all the fixed capital +engaged in trade in England could be valued to-day at its real +selling price, it would be found that it would do little more than +pay the mortgages and debts upon it. Trade is very greatly and +injuriously affected by sudden alterations in the standard of +value, especially when the alteration is, as now, towards increased +values. It arises in this way: trade is largely carried on by +borrowed capital, or, in other words, by the use of credit in some +shape or other; the vast banking deposits are mainly loaned to +traders; a very great deal of the invested capital of this country +is lent upon mortgages upon trading property such as ships, +factories, and warehouses. A prudent trader usually considers it +safe to draw considerably beyond his floating capital, and to +borrow say 50 per cent. upon his plant or a fixed capital. Now, the +constant decline in prices within the last few years has virtually +swept away his own portion of the capital, and only left him enough +to pay the loans and mortgages. For instance, a ship or a factory +built at a cost of twenty thousand pounds, of which ten thousand +were borrowed, is now worth only twelve thousand pounds, or 40 per +cent. less; and so the mortgage represents five-sixths of the value +instead of one-half, the trader’s interest having sunk to two +thousand pounds in place of ten thousand. Probably, if trade is +unprofitable, he fails to pay the interest and the mortgage is +foreclosed; the property is forced off at just sufficient to cover +the loan and he is ruined. I have no doubt that this exactly +describes the condition that confronts numbers of traders in this +country and other countries having the gold standard. A great +portion of the commercial capital of the country has passed into +the hands of the mortgagees and bondholders who have neither toiled +or spun. The discouragement this state of things produces is +intense. After it has gone on for several years, a kind of +hopelessness oppresses the commercial community, all enterprise +comes to a standstill, many works are closed, labor is thrown out +of employment, and great distress is felt, both among laborers and +the humbler middle class. Indeed, it strikes higher than this; for +multitudes of people who were once prosperous traders have now +become dependent on charity. I know many such myself.”</p> +<p>How fitly that describes the condition of the United States +to-day. This was written some years ago, and so rapid has been the +subsequent decline in prices that it almost equals the decline he +had estimated for the fifteen or twenty years preceding the date of +his work. And the end is not yet.</p> +<p>In his comments upon Mr. Goschen’s address, delivered in +1883, wherein he pointed out that in the decade from 1873 to 1883 +the annual supply of gold had decreased in a marked degree, and +concurrent with this there was a marked increase in the demands +upon the world’s stock of gold, which was intensified by the +substitution of gold for silver as money in Germany and other +countries, Mr. Smith makes the following observations:</p> +<div class="quote"> +<p>“The gold production, which for some years exceeded +£30,000,000 annually, has fallen to 19,000,000 a year; and +the best continental authorities, such as Soetbeer and Laveleye, +reckon that more than half that amount is consumed in the arts.</p> +<p>“It may, therefore, be reckoned that since 1873 only some +10,000,000 on the average has been available for currency +purposes.</p> +<p>“But Germany during that period has introduced a gold +currency of 80,000,000, the United States has used up 100,000,000, +and Italy has drawn some 20,000,000 for a similar purpose.</p> +<p>“So that 200,000,000 have been drawn for these special +purposes, whereas the whole supply of new gold for coinage has not +exceeded in that time 130,000,000.</p> +<p>“The balance must have been drawn out of existing stocks. +Besides, a steady drain of some 4,000,000 a year has gone to India, +further depleting stock in Europe.</p> +<p>“While trade and population constantly grow and demand +more metallic currency, there is a steadily diminishing quantity to +meet it. If you put the present product of gold at +£19,000,000 a year, and the requirements of the arts at +8,000,000 or 10,000,000 a year, while the India demand is +4,000,000, there is only left 5,000,000 to 7,000,000 a year for +Europe, America, and the British Colonies.</p> +<p>“It will seem to subsequent ages the height of folly that +just at this period, when gold was running short, the chief states +of the world decided to close their mints against silver, and cut +off, so to speak, one-half the money supply of the world from +performing its proper functions.</p> +<p>“Had the world continued to use both metals as freely as +before, the painful crisis we have passed through would have been +much mitigated. But by a suicidal policy silver was cut off at the +very time it was most needed, and a double burden thrown upon gold +just when it was able to bear only half of its former burden.</p> +<p>“As Bismarck has well said, two men were struggling to lie +under a blanket only big enough for one.”</p> +</div> +<p>Bad as have been the effects of monometallism in England, they +have been far worse in Ireland; and dark as is the future of the +former, it is light itself compared with that evidently in store +for the latter. Those familiar with Irish affairs know that after a +long agitation several acts have been passed to enlarge the rights +of tenants and to secure them a larger share of what they produce. +The Act of 1881 reduced the rents and fixed the amount to be paid +at a specific annual sum in money for a long term of years; and the +subsequent Ashbourne Act (so called from Lord Ashbourne, who +introduced it) gave tenants a chance to buy and pay for lands in +fixed yearly installments for forty-nine years. The intent was to +create a peasant ownership somewhat like that of France. It was the +end of a long fight, and was supposed to be a great victory and the +inauguration of a very great reform.</p> +<p>Scarcely, however, was the great victory won and the great +reform inaugurated when it became evident that, owing to the +demonetization of silver and increased purchasing power of gold, +the tenants were, in reality, bound to much heavier payments than +before. Whatever may have been the intent, the tenant, who bound +himself to pay a fixed annual sum as rent for a long term of years, +found himself bound to deliver a much larger share of produce; and +the purchaser under the Ashbourne Act found that what looked so +easy in figures soon became impossible in fact, as the prices of +his produce fell so rapidly that each successive payment became +more oppressive until it finally became impossible. Thus it looks +now as if by the appreciation of gold all that was gained for the +tenant is more than lost, and that in the future his condition may +be worse than in the worst days of rack-renting. In recent years +this has become plain to those who have the good of Ireland at +heart; they have taken the alarm, and are outspoken on the +threatening evils. Among these is the Most Reverend Dr. Walsh, +Archbishop of Dublin. In a recent interview he says, referring to +the rise in the value of gold:</p> +<div class="quote"> +<p>“All this is indisputable; it is now fully in the public +view; yet not even an attempt is being made in Parliament, or even +out of it, to bring about an equitable readjustment of the +conditions which are proving so disastrous in other nations, +conditions too that are imposed under the provisions of statutes +enacted as measures of protection for the tenants. The Irish Land +Acts of 1881, 1885, and 1891 have, nevertheless—as a result +of the increased and increasing value of our present unbalanced and +consequently untrustworthy monetary standard of value—become +fruitful sources of difficulty, and may very soon become fruitful +sources of disaster, to those for whose benefit they were +intended.”</p> +</div> +<p>Again, referring to the importance of some remedy, possibly that +which bimetallism might provide, he says:</p> +<div class="quote"> +<p>“The adoption of bimetallism or of some equivalent remedy, +if there be any equivalent remedy, is, I am convinced, a matter of +imperative necessity; that is, if the agricultural tenants of +Ireland—and I do not limit this to Ireland—are to be +saved from otherwise irretrievable ruin. If things go on as they +are, even the excellent land purchase scheme, which is associated +with the name of Lord Ashbourne, may become, before many years are +over, a source of widespread disaster to the tenants who have +purchased under it.”</p> +</div> +<p>Again, in view of the steady and dangerous increase in the +burdens of the obligations entered into under either of the acts +referred to, by reason of the continued enhancement in the price of +gold, he says:</p> +<div class="quote"> +<p>“The bimetallists may be right or they may be wrong; but, +at all events, if they are right, then it is noticeably plain that +the Irish tenants who have the misfortune to have their rents fixed +for terms of ten or fifteen years under the Act of 1881, and in +much the same way the Irish tenant purchasers who have the +misfortune to have found themselves saddled with the obligation of +making annual payments fixed for forty-nine years, are simply +sliding down an inclined plane with bankruptcy awaiting them at the +bottom of it.”</p> +</div> +<p>And again:</p> +<div class="quote"> +<p>“The point, as I have already stated it, is that so long +as our monetary system remains what it is, every one who is placed +under an obligation to make yearly payments of a fixed amount of +money is thereby placed under a burden which is growing heavier +from year to year.”</p> +</div> +<p>In discussing the question of variability in the purchasing +power of gold, he says:</p> +<div class="quote"> +<p>“The reason of the liability to fluctuation in the +purchasing power of the sovereign is plain: When gold rises in +value a larger quantity of any other commodity, say of corn, of +meat, of butter, or of cloth, will have to be given in exchange for +any given quantity of gold, such, for example, as the quantity +contained in a sovereign. On the other hand, when gold falls in +value a smaller quantity of any other commodity, say of corn, of +meat, of butter, or of cloth, will suffice to obtain in exchange +any given quantity of gold, such as that which is contained in the +sovereign. It is an obvious inference that our gold coinage, +however useful as a medium of exchange, does not furnish us with a +standard of value fixed and unalterable. It does not furnish us, +for example, with such a standard as the yard is of length or as +the pound troy is of weight. The popular notion that the pound +sterling constitutes a fixed standard of value is merely a popular +delusion. The sole foundation for that delusion manifestly is that +in these countries the values of all commodities are commonly +stated in terms of a pound sterling; in other words, in pounds, +shillings, and pence; a shilling being a twentieth part of the +pound, and a penny the twelfth part of that again.</p> +<p>“The natural result of this method of enhancing the value +of commodities other than gold is that when prices rise or fall the +impression is conveyed to a superficial observer that it is the +value of other things that changes, the value of the sovereign +remaining fixed.”</p> +</div> +<p>Under this head he says again:</p> +<div class="quote"> +<p>“The price of things estimated in gold—their gold +price—may change, whilst their price estimated in +silver—their silver price—remains unaltered. This will +occur if the value or purchasing power of gold goes up or down, +while the value or purchasing power of silver remains unaltered. +Suppose, for instance, that gold is in any way scarce in relation +to the demands upon it. Then, in any country where gold is the +standard metal of the currency, those who wish to obtain, a certain +quantity of gold, whether in coin or in bullion, will have to give +a larger quantity of other commodities in exchange for it; or, to +put the matter in another light, those who have only a definite +commodity to part with will receive less gold in return for that; +in other words, there is a fall in gold prices. Suppose, on the +contrary, that gold is abundant in relation to the demands upon it, +then those who wish to obtain a certain quantity of gold, whether +in currency or in bullion, will not have to give so large a +quantity of other commodities to obtain the quantity of gold they +require; or, to put the matter as before in another light, those +who have a definite quantity of other commodities to dispose of +will obtain more gold in return for them; in other words, there is +a rise in gold prices. If in either case there is no change in the +value of silver, then the price of commodities stated in silver, +that is, their silver price, will remain unchanged.”</p> +</div> +<p>In referring to the very prevalent notion, especially among the +uneducated classes, that the gold unit of measure of value does not +vary, he says:</p> +<div class="quote"> +<p>“As for the tenant purchaser, he probably thinks that +after the extra pressure of the first few years he may look forward +to easy times for the rest of his life. He little knows what is +before him. If things go on as they are, it will be harder for him, +ten or fifteen years hence, to pay forty pounds a year than it +would be to pay fifty pounds a year now; but of all this he knows +nothing—how could he? His only idea is that a pound is always +a pound, and a sovereign is always a sovereign; so, in the belief +that the yearly payment, when it is reduced to forty pounds, will +be well within his reach, he puts his head into the +halter.”</p> +</div> +<h2><a id="Ch_6" name="Ch_6"></a>The “Dump” of +Silver.</h2> +<p class="returnTOC"><a href="#Contents">Return to Table of +Contents</a></p> +<p>All the world will dump its silver on us if we adopt free +coinage, says the monometallist. How much, and where will it come +from? asks the bimetallist. Oh, the world has billions of it ready +for us, is the vague general reply; but when we ask for a bill of +particulars we get instead a fine confusion of prophecy.</p> +<p>One answers that it will come from Spanish America. But we have +already shown that all nations from the Rio Grande to Cape Horn +have but $100,000,000 for their 60,000,000 people. The South +Americans have but 83 cents apiece. The Mexicans have $4.54. The +Central Americans have $2.14. And the South Americans have +$550,000,000 in paper money, to bring which to par and maintain it +there will require at least $300,000,000 more in silver than they +now have. No “dump” from there.</p> +<p>From France, says another. Well, France has $487,000,000 in +silver coin, and some bullion; only $12.94 per capita in coin, and +valued at 15½ to 1 of gold. At her ratio an ounce is worth +$1.3336; at ours $1.2929. Will she rob herself of coin, when she +has none too much for business, and sell it to us at a loss of 4 +cents on the dollar and freight charges? Germany has but +$215,000,000 in silver coin, less than half as much as France, +though having 13,000,000 more people, and Great Britain has but +half as much as Germany. All the other Europeans together have much +less than these three nations, and used at a higher valuation than +ours. How then can they “dump” any on us?</p> +<p>From India, say a few. Well, India has a deal of +silver—$950,000,000, according to our Director of the Mint. +But she has 296,000,000 people, so it is but $3.21 apiece. And the +best evidence that she has not too much is found in the fact that +she is importing more. China has but $2.08 per capita; Japan has +but $4, and is importing heavily; Australia but $1.49, and the +black and brown races still less. In short, all the world outside +of the United States has but $3,444,900,000 in silver coin, or +$2.46 per capita. It is a plain case that there will be no +“dump” from the coined silver.</p> +<p>But the bullion, the old silver, the scrap heap, will they not +ship that to us by billions? Well, how much is there, and where is +it? Will the nobility and gentry of Europe melt down their family +plate, the plain people everywhere their silver ornaments, and the +Hindoos their household gods, to send us the silver? If so, why did +they not do it when a cup, a watch, or a silver god would buy twice +as much gold as now? But the supposition is absurd. The +manufactured articles are worth very much more than the metal in +them, to say nothing of the sentimental value. A prize silver cup, +for instance, won in a great race or regatta, could not be bought +for ten times its weight in gold. There remain, then, only the +scrap heap and the stored bullion, and nobody has been able to +locate any great mass of it. Is it reasonable to suppose that +moneyed men have been storing away silver for years, making no +profit on it and losing the interest, and doing it in the face of a +falling market? No, the timid may be reassured; there will be no +“dump.”</p> +<p>Another class threaten us that a great mass of securities will +be “unloaded on us.” Well, Great Britain, Germany, and +Holland, all gold countries, are the nations which hold practically +all the American stock and bonds held abroad. Of course they did +not invest expecting to be paid principal and interest in coin, for +they know that there is not enough in this country to pay it; it is +in commodities that we must pay. So far as these securities are +bad, as we are sorry to say very many are, foreigners having been +badly “plucked” by some of our operators, they will be +returned anyhow. In fact, they are coming back now. As to those +which are good, being held against property capable of earning a +steady and reliable income, they will not be returned. Held in gold +countries, the interest and dividends on them will be paid in our +products measured in the currency of those countries, no matter +what our monetary system may be.</p> +<p>But suppose the “prophets” of evil are correct to +this extent that silver and securities will be “dumped” +on us to the amount of a billion or two. Will the foreigners give +us all these good things? Assuredly not. They must all be paid for; +and with what? Manifestly with agricultural products, for there is +little or nothing else. The farmer must furnish the stuff, and he +is ready and willing to do it—yes, anxious. At least +three-fourths of our exports are agricultural, and of the new +exports probably seven-eighths would be. We find, moreover, that in +1891 55,131,948 bushels of wheat exported brought us $51,420,272, +and in 1892, 157,280,351 bushels brought us $161,399,132, while in +1894 the 88,415,230 bushels exported brought us only $59,407,041, +and in 1895, 76,102,704 bushels brought us but $43,805,663. +Similarly it may be shown that our largest cotton exports have +brought us the least money; but this is an old story. It goes +without saying, that to the farmer there are three great factors in +the present situation: a ruinously low price for his products, a +tremendous surplus left over from last year, and an immense crop +for this year now adding to the surplus, with no possible home +consumption to give an adequate outlet. Suppose then the +“dump” should come and the farm produce go—what +then?</p> +<p>First of all there must come as a result a rise in prices. +Farmers receiving much more money would immediately pay their most +pressing debts; the release of idle money would break the deadlock +which now paralyzes trade, and from the farmer the money would at +once be poured into the channels of rural business. The consumptive +demands would be tremendous because of the long and forced +abstinence, and the farmer would supply himself with those things +he has so long wanted. The railroads would have a vastly increased +business, and as a result there would be a greatly increased demand +for labor. Instead of the ruinous “cut in rates” which +we read of almost every day, made in order to stimulate the +movement of crops, we should soon hear of vastly increased +shipments at profitable rates; these of course would soon be +followed by increased net earnings, which would in time create +increased values of securities, which again would check foreign +sales and stimulate purchases. There would be a boom in stocks to +dispel the gloom of Wall Street, and we should do the money-mongers +good in spite of themselves.</p> +<p>Is this all supposition? Well, we are proceeding upon the theory +of the monometallists, that a billion dollars’ worth of +silver and securities would be shipped here. We are showing what +must inevitably result if their predictions should hold +good—more money for the farmers, more business for the +merchants, more transportation for the railroads, and more business +for their correlated industries; and, as a result, more work, +abundant work, for those now idle. And this last would be the +greatest blessing of all. The benefit would be to the farmer, the +handlers of grain and all who serve them, to the retail tradesmen, +the small manufacturers, all the country artisans immediately +dependent upon the farmer, and all those who supply all of these +classes. In short, there would be a general quickening of all +branches of production and trade as a certain result of the +transfer of foreign silver and securities for our agricultural +surplus. Is there anything in all this to alarm Americans?</p> +<h2><a id="Ch_7" name="Ch_7"></a>Asia’s Demand for the +Precious Metals.</h2> +<p class="returnTOC"><a href="#Contents">Return to Table of +Contents</a></p> +<p>Among the many errors which distort men’s opinions on the +so-called “silver question” is the belief that the gold +supply of the present and near future need be considered merely as +it may affect Europe and America. Asia and Africa are in most +men’s minds entirely excluded from the calculations. The +popular belief in the United States may be briefly stated thus: +Asia is and is long to be the land of stagnation. Asiatics are +unprogressive and will remain so. In contact with the higher +civilization of Europe the yellow and brown races are likely to +fade away as did the Maori and the American Indian; or if they +continue to increase, their trade and government will be conducted +chiefly by Europeans.</p> +<p>One finds this belief expressed in many standard works. +“The helpless apathy of Asiatics” is a favorite phrase +of Macaulay. “Man is but a weed in those vast regions,” +says DeQuincey. “In Asia there are no questions, only +affirmations,” says another philosopher. And no amount of +experience seems to shake the popular faith in this notion that +what Asia was she is always to be. And yet enough has occurred +within the memory of men still middle-aged to dissipate it. Only a +few years ago Americans looked upon Russia as an inert mass, +semi-barbarous in large part; and when Kennan pictured the horrors +of Siberia most readers thought the condition only such as might be +expected from such a government and such people as they believed +the Russians to be. But Russia is to-day one of the world’s +greatest powers, with 120,000,000 of people, building the two +longest railways in the world, developing the Siberian and +Transcaspian region with a rapidity only exceeded in our own far +West, and drawing gold from this country and western Europe at a +rate that threatens the stability of our financial system.</p> +<p>It is only forty-one years since our Commodore Perry astonished +the world by securing admission to Japan and proving to the western +people that it was at least worthy of their notice, yet that empire +has undergone a most beneficent revolution in which the Daimios or +local lords consented to a self-sacrifice without a parallel in +history, has been the victor in a great war, has adopted the best +features of the western civilization while sacrificing none of its +own, and is advancing in material development with a rapidity +rarely equalled and perhaps never excelled. Five years ago the +first complete census showed thirty-six cotton factories with +377,970 spindles; three years later the number of factories had +doubled and that of the spindles had much more than quadrupled, and +there is every indication that next year’s tabulation will +show a still more rapid increase. In 1894 there were 17,000 people +employed in that industry.</p> +<p>Hon. Robert P. Porter, who has recently returned from Japan, +after making a thorough study of her progress and resources, tells +us that while her export of textiles of all kinds in 1885 was worth +but $511,990, they were in 1895 worth $22,177,626, the estimate of +both years in silver dollars. Similarly in the same years the +exports of raw silks increased from $14,473,396 to $50,928,440, of +grain and provisions from $4,514,843 to $12,723,771, of matches +from $60,565 to $4,672,861, of porcelain, curios, and sundries from +$2,786,876 to $11,624,701, and several other articles in the like +proportion, while the commerce for 1895 showed an increase of +$30,000,000 over 1894, reaching a total of exports and imports of +$296,000,000, or about $7.50 per capita.</p> +<p>The government granted 2,250,000 yen as a bounty to the first +iron works, begun in 1892, and already the products of those iron +works in hand-made articles are underselling American products on +our Pacific coast. In five years, prior to those covered by Mr. +Porter’s figures above, Japan’s exports rose from +34,800,000 to 68,400,000 yen, and her imports from 27,000,000 yen +to 64,000,000 yen. Nor does there appear any reason to doubt the +confident statement of British experts that development for the +coming years will go on much more rapidly. Politics in the empire +already turns upon fiscal and economic questions; of two bills +urged in the Imperial Parliament by the progressists, one decrees +the nationalization of all railways not yet owned by the state, and +the other asks for an appropriation of 50,000,000 yen for the +building of a new railroad. While this is going through the press +it is announced that Japan has established two new steamship lines, +one running from Yokohama to our own Pacific coast, and the other +from Yokohama to Marseilles, stopping at Shanghai, Hong Kong, +Singapore, and Columbo.</p> +<p>The western mind has long looked upon China as given over to +hopeless inertia and stagnation, but China has awakened at last. In +one year the importation of illuminating oil rose 50 per cent., of +window glass 58 per cent., of matches 23 per cent., and needles 20 +per cent. In six years the tonnage of vessels discharging in +Chinese ports rose by one-third. While these lines are going +through the press Li Hung Chang is in Europe negotiating for a loan +of 400,000,000 francs to be expended in internal improvements, and +he gives the weight of his very high authority to the statement +that China is no longer opposed to the introduction of +railways.</p> +<p>Consul-General Jernigan reports to the Department of State that +the prospectus of a new industry is now before the public at his +station, Shanghai. It is called the Shanghai Oil Mill Company, and +purposes to manufacture oil from cotton seed. It is the logical +result of the cotton mills at Shanghai, and the consequent stimulus +given to the cultivation of cotton in China. Since 1890 there have +been forty-five new manufacturing plants established in Shanghai. +They are all in successful operation, especially the cotton +factories, in which large capital is invested. He adds:</p> +<div class="quote"> +<p>“The area suitable for cultivation of cotton in China is +almost as limitless as the supply of labor, and labor being very +cheap, there can be no doubt that China will soon be one of the +great cotton-producing countries of the world, and that this +product, produced and manufactured in China, will command serious +consideration in all calculations with reference to the cotton +market. It will not be safe to discount the cotton of China because +it now grades low, for it is certain to improve. At present it is +estimated there are 3,000,000 tons of cotton seed, equal to +90,000,000 gallons of oil, now yearly lost to commerce which would +find a ready market. The company will start with a capital of +250,000 Mexican dollars. One company has already ordered its +machinery from the United States.”</p> +</div> +<p>The population of the Chinese Empire is estimated at +400,000,000, but Li Hung Chang declares, and experienced western +observers confirm it, that the country with modern improvements +could sustain more than twice its present population in a very high +state of comfort.</p> +<p>Of all the popular errors, however, the greatest is that of +regarding India as an overpopulated, stagnant, and unprogressive +land. Suffice it to say here that the population has trebled under +British rule, and that the country is abundantly able to sustain in +great comfort twice its present numbers by agriculture alone; that +the extension of the railway system has recently been rapid, and +along with this has gone on a growth of manufactures that is simply +amazing. Only recently Burmah borrowed in London $15,000,000 for +railway construction, a sum that was subscribed in that market five +times over. In these vast fertile regions, which in comparison with +what they are destined to be might be called new and undeveloped, +live 290,000,000 of people, who are increasing at the rate of +something like 2,000,000 per year. And these are but a few of the +facts I might present to show that the early development of the +Orient is the great fact America must take into account, and that +it is almost a certainty that the world’s greatest possible +production of gold in the future may be absorbed in the East, +leaving the West to struggle with an increasing scarcity. Indeed, +Prof. Eduard Suess, the great German authority, after giving +reasons for his belief that the larger part of the gold product is +used in the arts, and that all of it will soon be, points out that +Asia will soon, in all probability, absorb almost the entire silver +product, and that we shall then have a “crisis” +indeed.</p> +<p>In my travels through India and the Orient generally I took +notice of her enormous capacity to export wheat. As a result, I +predicted that the export, then but fairly begun, would soon menace +our supremacy in the British market. I began at the same time to +study the social and industrial condition of Russia, and was soon +satisfied that she was in the dawn of a great day. I predicted the +eastern extension of her enterprises, and increased political +influence, especially with China, and the consequent absorption of +western gold and capital generally. It appears from the latest +summary of the United States Bureau of Statistics that Russia had, +on the first of January, 1892, $324,828,300 in gold in her banks, +and on the last of last May $424,193,700. If she carries out her +present policy, this is less than half of the amount she will +require. On a strictly gold basis we must allow her at least $10 +per capita, which would make for the empire $1,200,000,000. But if +we greatly reduce the per capita, in view of the undeveloped +condition of her subjects, the amount still to be required will be +enormous. During the same four years and five months the Bank of +France has increased its holdings of gold from $260,888,299 to +$391,519,658; the Austrian-Hungarian Bank from $26,634,400 to +$133,006,312, and the Bank of England from $109,342,800 to +$232,791,709, while the Banks of Germany, Belgium, Spain, Italy, +and the Netherlands have also increased their holdings some +$30,000,000. Thus we see that in these few years the leading +nations have added nearly $500,000,000 to their previous hoards of +gold, which shows too plainly that they are looking forward to a +gold famine. How much more will Asia demand? In my opinion, India, +notwithstanding British rule and influence there, has developed +less rapidly than China will when she once comes into as intimate +contact with western nations as has India, for the rigid system of +caste which prevails in India and which does not exist in China has +been and will be the cause of greater immobility. It is not +possible to say how long it will operate as an impediment to a high +industrial development, but from the lessons taught in other +countries where race and religion create similar castes, we may +believe in its long continuance. I take pleasure at this point in +referring to the late able work of Prof. Charles H. Pierson, of +Oxford, who passed twenty years in the Orient. In his +“National Life and Character” he points out that China +in 1844 had doubled her population in eighty years, and there since +has been a great increase; that Russia has doubled since 1849, very +largely by natural increase, the Russian peasant being the most +prolific of human beings; and the Hindoos, who had doubled in +eighty years, have recently gained 20,000,000 in ten years.</p> +<p>Professor Pierson also points out the great error of assuming +that the black and yellow races will fade away before the white, +and shows it to be far more likely that with the increased security +afforded by British and Russian rule they will increase so rapidly +as to industrially force the white race back to the higher +latitudes of the north temperate zone. Industrial commonwealths +will not dispense with great armies—at least not for a long +time—but China has passed the militant age, and reached the +purely industrial. It may be said that work is a pleasure to the +Chinese, as active sports are to Western people. Continuous toil is +looked upon as a matter of course. To them it does not seem a +hardship that men should work. As a measure of the possibilities of +the Orient, consider what has been done in the western world within +half a century, where the population is much less than one-half of +that of the far East. Over four hundred thousand miles of railroad +have been constructed, together with a vast, almost incalculable +system of telegraphs, to say nothing of the great cities and common +roads, or the enormous mass of productive machinery, which has even +outrun the increase of population.</p> +<p>In round numbers, some forty thousand millions in capital have +been absorbed in railroads alone. Add the amount absorbed in +telegraphs, telephones, steamships, and electric plants, and a +thousand and one appliances of civilization, and the total is +beyond comprehension. And all these things have yet to be created +and adopted in the Oriental countries. How rapidly the development +may go on there, and what an enormous mass of capital will be +absorbed, is clearly indicated by what has been done in a very few +recent years. And so far we have left Africa entirely out of the +account, a country with a vast population and richly dowered with +natural resources and with a capacity for rapid development.</p> +<p>Possibly the Orientals will not suddenly become progressive to +the degree here anticipated, though Russia’s eastern march +has fairly rivalled our western march; and it must be borne in mind +that to develop the appliances of western civilization we had all +the experiments to make, all the crude preliminary work to do in +creating the system, which the Orient will receive from us in its +present perfected form, and be able to go on without any mistakes, +and thus enable them to adopt within a very brief time that which +we gave the labors of several generations to discover, develop, and +apply.</p> +<p>How enormous, then, will be their absorption of western capital +and gold.</p> +<p>Is it still maintained that the Orientals lack the capacity for +such development? Then look at their achievements in every country +to which they have emigrated, and especially in this. Their +progress here in the industrial arts, even while they were but a +handful, was so rapid that the government was called on to restrict +them. Even now the papers contain alarming statements to the effect +that Japan is invading our markets with those specialties in the +making of which we, but a little while ago, considered ourselves +superior to all the rest of the world. And no tariff is high enough +to keep them out. It is observed by all travellers in China and +other Oriental countries that there exists in as great a degree as +in the West a desire for indulgence in those things classed as mere +luxuries which, in all nations, absorb so great a share of its +total wealth. Every one who travels through the eastern countries +marvels at the extraordinary richness and delicacy of those things +adopted by them for ornamentation, luxury, and convenience. And +they are of such a character as, far more than in the western +world, involves the consumption of the precious metals. Along with +the national desire to adopt that which is useful and ornamental, a +highly mimetic nature prompts them to seize upon and adapt with +singular readiness that which is brought to their notice as being +useful and constituting a salient feature of western +civilization.</p> +<p>To sum it all up, we have in Asia somewhere near 800,000,000 of +people, who are certainly increasing by 10,000,000 a year, probably +many more, and these people pressed on by Russia on the north and +west, by Great Britain and France on the south, as well as by the +wonderful energy of the Japanese on the east. How much gold will +all these people absorb in the future? And it should not be +forgotten that not only is the present population to be supplied, +but an increase of population is to be allowed for, which at ten +dollars per capita would alone absorb the entire annual gold +production above the amount used in the arts. If any one thinks +this forecast fanciful, I only ask him to consider what has been +done in the last thirty years, and then make his estimate. For what +the possible absorption of the precious metals by the Asiatic +people may be, we need only to refer to what has been done by +India. By reason of the development of her industries and resources +caused by her intercourse with western nations she has imported in +net excess of exports, from the years 1835 to 1893, $750,000,000 of +gold and $1,750,000,000 of silver, or about one-seventh of the +entire world’s output of gold and about one-half of the +world’s output of silver during that time. Professor Shaw is +authority for the statement that her demand for the precious metals +is yet unabated and great as ever. When we remember that the +average population of India during this time was only about +200,000,000, and that there are about three times as many people +yet in Asia who have even greater latent powers to absorb the +precious metals, one can form some feeble estimate of what an +exhaustive drain upon the gold and silver supply of the world will +ensue when these nations awaken and develop their resources and +energies through the stimulating influences of western ideas and +example.</p> +<p>Having considered the possible momentous absorption of the +precious metals by the Asiatics, it may be well to consider what +Europe itself is likely soon to do in the same line. England, +France, and Germany are the three most substantial and commercial +nations of Europe, and their experience may be taken as an index. +We find that these three use on an average $16.40 per capita of +gold. To give the same to the rest of Europe, including Russia and +Turkey, will require, in addition to their present stock, +$3,780,000,000 in gold, or nearly as much as the entire +world’s present stock of gold coin.</p> +<p>If the example of France and the Netherlands—two of the +soundest and most conservative nations in the world—be +similarly taken as an index to the probable use of silver, it +appears that these two nations average $12.50 per capita. To supply +the rest of Europe to the same extent will require an addition of +$3,563,000,000 to her present stock of silver, or about +three-fourths as much as the present coined silver of the world. In +view of these facts, is not the real question, not whether there is +gold enough, but whether there is both gold and silver enough for +the future monetary requirements of the world? Does it not seem +that the nations are soon to be confronted with this dilemma: that +the product of the precious metals must be greatly +increased—and is that possible?—or that for the want of +gold and silver there must be a serious check to the progress of +civilization?</p> +<hr class="full" /> + + + + + + + +<pre> + + + + + +End of Project Gutenberg's If Not Silver, What?, by John W. 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