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diff --git a/16320.txt b/16320.txt new file mode 100644 index 0000000..9def69f --- /dev/null +++ b/16320.txt @@ -0,0 +1,3174 @@ +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: ASCII + +*** 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 + + + + + + +IF NOT SILVER, WHAT? + + +by + + +JOHN W. BOOKWALTER + + +SPRINGFIELD, OHIO + +1896 + + + + "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."--_Speech of the RIGHT HON. A. J. BALFOUR, at Manchester, + England, October 27, 1892._ + + + +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. + +JOHN W. BOOKWALTER. + +SPRINGFIELD, OHIO, August 5, 1896. + + + + +CONTENTS. + + +OBJECTIONS TO SILVER, AND COMMENTS THEREON + +DEMONETIZATION OF GOLD + +RELATIVE PRODUCTION OF GOLD AND SILVER + +IS BIMETALLISM PRACTICABLE? + +BIMETALLISM ABROAD + +THE "DUMP" OF SILVER + +ASIA'S DEMAND FOR THE PRECIOUS METALS + + + + +IF NOT SILVER, WHAT? + + + + +OBJECTIONS TO SILVER, AND COMMENTS THEREON. + + +=Silver is too bulky for use in large sums.= + +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. + + +=But silver certificates would not remain at par.= + +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. + + +=Gold would go out of circulation.= + +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. + + +=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.= + +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?" + + +=But are not bankers and other men who handle money as a business better +qualified than other people to judge of the proper metal?= + +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. + +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? + + +=But as the bankers and great capitalists have no faith in it, the free +coinage of silver would certainly precipitate a panic.= + +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? + + +=You admit, then, that the immediate adoption of free coinage would, for +a while at least, drive gold abroad?= + +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. + +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? + + +=In the meantime, however, all the other nations would dump their silver +upon us and we should be overloaded with it.= + +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. + + +=Government cannot create values, in silver or anything else.= + +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 preemption 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? + +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. + + +=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.= + +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. + +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. + +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? + +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. + +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? + + +=Gold ought to be the standard metal, because, apart from its use as +money, it has a fixed intrinsic value.= + +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? + + +=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.= + +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. + + +=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?= + +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: + +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. + +"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 _Tribune_. 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. + +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. + +Will it take anymore bars to-day at $6.90 each? + +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. + +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? + + +=We certainly do want to pay our debts in honest money.= + +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 to-day 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. + +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. + + +=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.= + +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 2-1/2 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. + +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. + +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 +2-1/2 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. + + +=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.= + +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. + +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. + +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? + + +=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.= + +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. + +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. + + +=This nation should have the best money in the world.= + +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." + + +=But we don't want 50-cent dollars.= + +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. + + +=We want money that is equally good all over the world.= + +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. + + +=What I mean is that the silver dollar is worth only 50 cents in gold.= + +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? + +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? + + +=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.= + +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. + +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. + +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. + + + + +DEMONETIZATION OF GOLD. + + +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. + +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? + +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. + +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. + +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. + +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. + +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. + +The history of gold demonetization is full of instruction and is here +given in detail. + +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. + +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? + +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. + +And what was the real fact? The ratio, which in 1849 was 15-78/100 of +silver to 1 of gold in the London market, and the same in 1850, never sank +below 15-19/100 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. + +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. + +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. + +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. + +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. + +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. + +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. + +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. + +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. + +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. + + + + +RELATIVE PRODUCTION OF GOLD AND SILVER. + + +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 +_Times_ as the most terse and catchy for popular reading, and likewise +most ludicrously absurd: + + "=Why Silver is Cheap.= + + "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. + + "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. + + "In 1894 the potato crop of the United States was, in round + numbers, 170,000,000 bushels, and the average price 53c. + + "In 1895 the estimated potato crop was 400,000,000 bushels, and + the average price was 26c. + + "The fall in both cases was due to the same cause." + +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. + +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 2-3/4 to 1 in twenty-two years reduced its +value one-half, will the _Times_ 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. + +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. + +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. + +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. + +[Illustration: 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.] + +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. + +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 _a priori_ +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 mediaeval 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." + +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. + +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 mediaeval 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. + +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. + +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. + +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 _Times_ 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. + +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. + +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? + +[Illustration: The above diagram shows the relative annual production of +gold and silver from 1870 to 1893, and ratio of values.] + +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. + +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: + + YEARS. GOLD. SILVER. RATIO. + + 1493-1520........ $3,855,000 $1,953,000 + 1521-1544........ 4,759,000 3,749,000 + 1545-1560........ 5,657,000 12,950,000 + 1561-1580........ 4,546,000 12,447,000 + 1581-1600........ 4,905,000 17,409,000 + 1601-1620........ 5,662,000 17,538,000 + 1621-1640........ 5,516,000 16,358,000 + 1641-1660........ 5,829,000 15,223,000 + 1661-1680........ 6,154,000 14,006,000 + 1681-1700........ 7,154,000 14,209,000 14.81-15.20 + 1701-1720........ 8,520,000 14,779,000 15.04-15.52 + 1721-1740........ 12,681,000 17,921,000 14.81-15.41 + 1741-1760........ 16,356,000 22,158,000 14.14-15.26 + 1761-1780........ 13,761,000 27,128,000 14.52-15.27 + 1781-1800........ 11,823,000 36,534,000 14.42-15.74 + 1801-1810........ 11,815,000 37,161,000 15.26-16.08 + 1811-1820........ 7,606,000 22,474,000 15.04-16.25 + 1821-1830........ 9,448,000 19,141,000 15.70-15.95 + 1831-1840........ 13,484,000 24,788,000 15.62-15.93 + 1841-1850........ 36,393,000 32,434,000 15.70-15.93 + 1851-1855........ 131,268,000 36,827,000 15.33-15.59 + 1856-1860........ 136,946,000 37,611,000 15.19-15.38 + 1861-1865........ 131,728,000 45,764,000 15.26-15.44 + 1866-1870........ 127,537,000 55,652,000 15.43-15.60 + 1871-1872........ 113,431,000 81,849,000 15.57-15.65 + 1873............. 96,200,000 81,800,000 + 1874............. 90,750,000 71,500,000 + 1875............. 97,500,000 80,500,000 + 1876............. 103,700,000 87,600,000 + 1877............. 114,000,000 81,000,000 + 1878............. 119,000,000 95,000,000 + 1879............. 109,000,000 96,000,000 + 1880............. 106,500,000 96,700,000 + 1881............. 103,000,000 102,000,000 + 1882............. 102,000,000 111,800,000 + 1883............. 95,400,000 115,300,000 + 1884............. 101,700,000 105,500,000 + 1885............. 108,400,000 118,500,000 + 1886............. 106,000,000 120,600,000 + 1887............. 105,000,000 124,366,000 + 1888............. 109,900,000 142,107,000 + 1889............. 118,800,000 162,690,000 + 1890............. 118,848,700 172,234,500 + 1891............. 126,183,500 186,446,880 + 1892............. 138,861,000 196,458,800 + +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 +2-1/2 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 +2-1/2 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: + + "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 + 15-1/2 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." + +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: + + Silver produced 1792-1850............ $1,690,217,000 + Gold produced........................ 848,186,000 + Excess of silver production.......... 842,031,000 + + Gold produced 1850-73................ $2,724,825,000 + Silver produced...................... 1,150,025,000 + Excess of gold....................... 1,574,800,000 + + Gold produced 1873-92, inclusive..... $2,060,897,000 + Silver produced...................... 2,264,419,000 + Excess of silver..................... 203,522,000 + + Gold produced 1850-92, inclusive..... $4,785,722,000 + Silver produced...................... 3,414,444,000 + Excess of gold....................... 1,371,278,000 + + Gold produced 1792-1892, inclusive... $5,633,908,000 + Silver produced...................... 5,104,961,000 + Excess of gold....................... 528,947,000 + +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 16-3/10 ounces of silver +to one of gold! + +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. + + + + +IS BIMETALLISM PRACTICABLE? + + +Can this great nation coin silver and gold on the same terms, at the ratio +of 16 to 1, and maintain a substantial parity? + +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. + +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. + +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. + +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 15-1/2 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. + +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 15-80/100 +to 1. In 1831-40 the production was 29 ounces to 1 and the average ratio +15-75/100 to 1. In 1841-50 the production was 14-9/10 ounces to 1 and the +average ratio 15-83/100 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. + +[Illustration: 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.] + +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. + +It is further to be noted that, whether gold or silver was the dearer +metal at the ratio of 15-1/2 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. + +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. + +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. + +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. + +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. + +[Illustration: 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.] + +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. + +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. + +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: + +During seventy years of bimetallism she gained steadily and rapidly in +wealth, her exports increasing much faster than her population. + +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. + +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. + +Let us turn for a moment and trace the effects of monometallism in England +as compared with bimetallism in France during the same period. + +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 2-1/5 +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. + +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. + +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. + +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. + +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. + +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. + +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. + +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. + + + + +BIMETALLISM ABROAD. + + +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. + + "Mistaken souls that dream of heaven." + +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. + +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. + +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: + + For Great Britain and Ireland........ $8,000,000,000 + For Germany.......................... 8,500,000,000 + For France........................... 3,850,000,000 + For Russia........................... 3,250,000,000 + For Austria.......................... 1,500,000,000 + For Italy............................ 2,675,000,000 + And for all other European countries. 3,050,000,000 + +A total of nearly $31,000,000,000. + +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. + +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. + +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." + +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." + +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." + +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: + + "SECTION 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." + +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. + +Mr. Courtney says, in his article in the _Nineteenth Century_, 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." + +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 _Statist_, 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." + +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. + +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." + +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." + +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. + +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. + +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." + +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." + +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." + +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 +2-3/4 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. + +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! + +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." + +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." + +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 L400,000,000 on +their property, agreeing to pay, let us say, L16,000,000 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." + +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. + +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: + + "The gold production, which for some years exceeded L30,000,000 + 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. + + "It may, therefore, be reckoned that since 1873 only some + 10,000,000 on the average has been available for currency + purposes. + + "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. + + "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. + + "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. + + "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 L19,000,000 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. + + "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. + + "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. + + "As Bismarck has well said, two men were struggling to lie under a + blanket only big enough for one." + +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. + +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: + + "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." + +Again, referring to the importance of some remedy, possibly that which +bimetallism might provide, he says: + + "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." + +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: + + "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." + +And again: + + "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." + +In discussing the question of variability in the purchasing power of gold, +he says: + + "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. + + "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." + +Under this head he says again: + + "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." + +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: + + "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." + + + + +THE "DUMP" OF SILVER. + + +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. + +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. + +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 15-1/2 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? + +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. + +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." + +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. + +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? + +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. + +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? + + + + +ASIA'S DEMAND FOR THE PRECIOUS METALS. + + +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. + +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. + +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. + +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. + +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. + +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. + +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: + + "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." + +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. + +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. + +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. + +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. + +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. + +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. + +How enormous, then, will be their absorption of western capital and gold. + +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. + +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. + +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. + +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? + + + + + +End of Project Gutenberg's If Not Silver, What?, by John W. 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