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diff --git a/.gitattributes b/.gitattributes new file mode 100644 index 0000000..6833f05 --- /dev/null +++ b/.gitattributes @@ -0,0 +1,3 @@ +* text=auto +*.txt text +*.md text diff --git a/39003-8.txt b/39003-8.txt new file mode 100644 index 0000000..d876ad1 --- /dev/null +++ b/39003-8.txt @@ -0,0 +1,8265 @@ +The Project Gutenberg EBook of Money, by John P. Jones + +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: Money + Speech of Hon. John P. Jones, of Nevada, On the Free Coinage + of Silver; in the United States Senate, May 12 and 13, 1890 + +Author: John P. Jones + +Release Date: February 28, 2012 [EBook #39003] + +Language: English + +Character set encoding: ISO-8859-1 + +*** START OF THIS PROJECT GUTENBERG EBOOK MONEY *** + + + + +Produced by K Nordquist, Dave Morgan and the Online +Distributed Proofreading Team at https://www.pgdp.net (This +file was produced from images generously made available +by The Internet Archive/American Libraries.) + + + + + + + + + + MONEY. + + + "Gold is a wonderful clearer of the understanding; it dissipates + every doubt and scruple in an instant, accommodates itself to the + meanest capacities, silences the loud and clamorous and brings + over the most obstinate and inflexible. Philip of Macedon refuted + by it all the wisdom of Athens, confounded their statesmen, struck + their orators dumb, and at length argued them out of their + liberties." + --ADDISON. + + + SPEECH + OF + HON. JOHN P. JONES, + OF NEVADA, + ON THE FREE COINAGE OF SILVER; + IN THE + UNITED STATES SENATE, + MAY 12 AND 13, 1890. + + WASHINGTON. + 1890. + + + + + SPEECH + OF + HON. JOHN P. JONES, + OF NEVADA. + + On the bill (S. 2350) authorizing the issue of Treasury notes on + deposits of silver bullion. + + +Mr. JONES, of Nevada, said: + +Mr. PRESIDENT: The question now about to be discussed by this body is in +my judgment the most important that has attracted the attention of +Congress or the country since the formation of the Constitution. It +affects every interest, great and small, from the slightest concern of +the individual to the largest and most comprehensive interest of the +nation. + +The measure under consideration was reported by me from the Committee on +Finance. It is hardly necessary for me to say, however, that it does not +fully reflect my individual views regarding the relation which silver +should bear to the monetary circulation of the country or of the world. +I am, at all times and in all places, a firm and unwavering advocate of +the free and unlimited coinage of silver, not merely for the reason that +silver is as ancient and honorable a money metal as gold, and equally +well adapted for the money use, but for the further reason that, looking +at the annual yield from the mines, the entire supply that can come to +the mints will at no time be more than is needed to maintain at a steady +level the prices of commodities among a constantly increasing +population. + +In view, however, of the great divergency of views prevailing on the +subject, the length of time which it was believed might be consumed in +the endeavor to secure that full and rightful measure of legislation to +which the people are entitled, and the possibility that this session of +Congress might terminate without affording the country some measure of +substantial relief, I was willing, rather than have the country longer +subjected to the baleful and benumbing influences set in motion by the +demonetization act of 1873, to join with other members of the Finance +Committee in reporting the bill now under consideration. + +Under the circumstances I wish at the outset of the discussion to say +that I hold myself free to vote for any amendment that may be offered +that may tend to make the bill a more perfect measure of relief, and +that may be more in consonance with my individual views. + + +THE CONDITION OF THE COUNTRY. + +The condition of this country to-day, Mr. President, is well calculated +to awaken the interest and arouse the attention of thinking men. It can +be safely asserted that no period of the world's history can exhibit a +people at once so numerous and homogeneous, living under one form of +government, speaking a common language, enjoying the same degree of +personal and political liberty, and sharing, in so equal a degree, the +same civilization as the population of the United States. Eminently +practical and ingenious, of indomitable will, untiring energy, and +unfailing hope; favored by nature with a domain of imperial expanse, +with soil and climate of unequaled variety and beneficence, with every +natural condition that can conduce to individual prosperity and national +glory, it might well be expected that among such a people industry, +agriculture, commerce, art, and science would reach an extent and +perfection of development surpassing anything ever known in the history +of mankind. + +In some respects this expectation would appear to have been well +founded. For several years past our farmers have produced an annual +average of 400,000,000 bushels of wheat. Our oat crop for 1888 was +700,000,000 bushels, our corn crop 2,000,000,000 bushels, our cotton +crop 7,000,000 bales. In that year our coal mines yielded 170,000,000 +tons of coal, our furnaces produced 6,500,000 tons of pig iron and +3,000,000 tons of steel. Our gold and silver mines add more than +$100,000,000 a year to the world's stock of the precious metals. We +print 16,000 newspapers and periodicals, have in operation 154,000 miles +of railroad and 250,000 miles of telegraph. The value of our +manufactured products at the date of the last census was $5,400,000,000. +Our farm lands at the same time were estimated at $10,000,000,000, our +cattle at $2,000,000,000, our railroads at $6,000,000,000, our houses at +$14,000,000,000. It is not too much to say that there has been an +increase of fully 50 per cent. in those values since the taking of the +census of 1880. Our national wealth to-day is reasonably estimated at +over $60,000,000,000. + +Figures and facts such as these in the history of a young nation bespeak +the presence not merely of great natural opportunities, but of a people +marvelously apt and forceful. From such results should be anticipated +the highest attainable prosperity and happiness. Our population is +alert, aspiring, and buoyant, not given to needless repining or aimless +endeavor, but, with fixity of purpose, presses ever eagerly on, +utilizing every conception of the brain to supplement and multiply the +possibilities of the hand, and at every turn subordinating the subtle +forces of nature to the best and wisest purposes of man. No equal number +of persons on the globe better deserve success, or are better adapted +for its enjoyment. + +But instead of finding, as we should find, happiness and contentment +broadcast throughout our great domain, there are heard from all +directions, even in this Republic, resounding cries of distress and +dissatisfaction. Every trade and occupation exhibits symptoms of +uneasiness and distrust. The farmer, the artisan, the merchant,--all +share in the general complaint that times are hard, that business is +"dull." The farmer is in debt, and is not realizing, on the products of +his labor, the wherewithal to meet either his deferred or his current +obligations; the artisan, when at work, finds himself compelled to share +his earnings with some relative or friend who is out of employment; the +merchant who buys his goods on time finds little profit in sales, and +difficulty in making his payments. + + +WHAT IS THE DIFFICULTY? + +What can it be, Mr. President, that has thus brought to naught all the +careful estimates and painstaking computations, not of thousands, nor of +hundreds of thousands, but of millions, of keen, shrewd, and far-seeing +men? Our people take an intelligent interest in their business; they +look ahead; they endeavor, as far as possible, to estimate correctly +their assets and liabilities, so that on the day of reckoning they may +be found ready. Why this universal failure of all classes to compute +correctly in advance their situation on the coming pay-day? What potent +and sinister drug has been secretly introduced into the veins of +commerce that has caused the blood to flow so sluggishly--that has +narcotized the commercial and industrial world? + +All have been looking for the cause, and many think they have discovered +it. With some it is "over-production," with others either a "high +tariff" or a "tariff not sufficiently high." Some think it due to trusts +and combinations, others to improved methods of production, or because +the crops are overabundant or not abundant enough. Some ascribe the +difficulty to speculation; others, to "strikes." All sorts of +insufficient and contradictory causes are assigned for the same general +and universal complaint. However inadequate in themselves, they serve to +emphasize the universal recognition of a difficulty whose cause without +close inquiry is likely to elude detection. But the evil is of such +magnitude, it is so widespread and pervasive, that, without a knowledge +of its cause, all effort at mitigation of its effects can but add to the +confusion and intensify the difficulty. + +It behooves us, therefore, as we value the prosperity and happiness of +our people, to set ourselves diligently to the inquiry: What is the +cause of the unrest and discontent now universally prevailing? + + +ONE SYMPTOM COMMON TO ALL INDUSTRIES. + +In surveying the question broadly, to discover whether there is anything +that affects the situation in common from the standpoint of varying +occupations, we find one, and only one, uniform and unfailing +characteristic; the prices of all commodities and of all property, +except in money centers, have fallen, and continue falling. Such a +phenomenon as a constant and progressive fall in the general range of +prices has always exercised so baleful an influence on the prosperity of +mankind that it never fails to arrest attention. + +History gives evidence of no more prolific source of human misery than a +persistent and long continued fall in the general range of prices. But, +although exercising so pernicious an influence, it is not itself a +cause, but an effect. + +When a fall of prices is found operating, not on one article or class of +articles alone, but on the products of all industries; when found to be +not confined to any one climate, country, or race of people, but to +diffuse itself over the civilized world; when it is found not to be a +characteristic of any one year, but to go on progressively for a series +of years, it becomes manifest that it does not and can not arise from +local, temporary or subordinate causes, but must have its genesis and +development in some principle of universal application. + + +WHAT PRODUCES A GENERAL FALL OF PRICES? + +What, then, is it that produces a general decline of prices in any +country? It is produced by a shrinkage in the volume of money relatively +to population and business, which has never yet failed to cause an +increase in the value of the money unit, and a consequent decrease in +the price of the commodities for which such unit is exchanged. If the +volume of money in circulation be made to bear a direct and steady ratio +to population and business, prices will be maintained at a steady level, +and, what is of supreme importance, money will be kept of unchanging +value. With an advancing civilization, in which a large volume of +business is conducted on a basis of credit extending over long periods, +it is of the uttermost importance that money, which is the measure of +all equities, should be kept unchanging in value through time. + + +EFFECT OF A REDUCTION IN THE MONEY-VOLUME. + +A reduction in the volume of money relatively to population and +business, or, (to state the proposition in another form) a volume which +remains stationary while population and business are increasing, has the +effect of increasing the value of each unit of money, by increasing its +purchasing power. + +It is only within a comparatively recent period that an increasing value +in the money unit could produce such widespread disturbance of industry +as it produces to-day. In the rude periods of society commerce was by +barter; and even for thousands of years after the introduction of money, +credit, where known at all, was extremely limited. Under such +circumstances changes in the volume and in the value of money, while +operating to the disadvantage of society as a whole, could not instantly +or seriously affect any one individual. An increase of 25 per cent. in +one year in the value of the money unit--a change which now, by reason +of existing contracts or debts, would entail universal bankruptcy and +ruin--would not be seriously felt by a community in which no such +contracts or debts existed, in which payments were immediate or at short +intervals, and each individual parted with his money almost as soon as +he received it. + +Such proportion of the annual increase in the value of the money unit as +could attach to any one month, week, or day would be wholly +insignificant, and as most transactions were closed on the spot, no +appreciable loss could accrue to any individual. Such loss as did accrue +was shared in and averaged among the whole community, making it the +veriest trifle upon any individual. But how is it in our day? + + +THAT EFFECT INTENSIFIED AS CIVILIZATION ADVANCES. + +The inventions of the past one hundred years have established a new +order of the ages. The revolution of industry and commerce, effected by +the adaptation of steam and other forces of nature to the uses of man, +have given to civilization an impetus exceeding anything known in the +former experience of mankind. Under the operation of the new system, the +rapidity and intensity with which, within that period, civilization has +developed, is due in great part to an economic feature unknown to +ancient civilization and practically unknown even to civilized society +until the present century. That feature is the time-contract, by which +alone leading minds are enabled to project in advance enterprises of +magnitude and moment. It is only through intelligent and far-seeing +plans and projections that in a complex and minutely classified system +of industry great bodies of men can be kept in uninterrupted employment. + +We have 22,000,000 workmen in this country. In order that they may be +kept uninterruptedly employed it is absolutely necessary that business +contracts and obligations be made long in advance. Accordingly, we read +almost daily of the inception of industrial undertakings requiring years +to fulfill. It is not too much to say that the suspension for one season +of the making of time-contracts would close the factories, furnaces, and +machine shops of all civilized countries. + +The natural concomitant of such a system of industry is the elaborate +system of debt and credit which has grown up with it, and is +indispensable to it. Any serious enhancement in the value of the unit of +money between the time of making a contract or incurring a debt and the +date of fulfillment or maturity always works hardship and frequently +ruin to the contractor or debtor. + +Three-fourths of the business enterprises of this country are conducted +on borrowed capital. Three-fourths of the homes and farms that stand in +the name of the actual occupants have been bought on time, and a very +large proportion of them are mortgaged for the payment of some part of +the purchase-money. + +Under the operation of a shrinkage in the volume of money this enormous +mass of borrowers, at the maturity of their respective debts, though +nominally paying no more than the amount borrowed, with interest, are, +in reality, in the amount of the principal alone, returning a percentage +of value greater than they received--more than in equity they contracted +to pay and oftentimes more, in substance, than they profited by the +loan. To the man of business this percentage in many cases constitutes +the difference between success and failure. Thus a shrinkage in the +volume of money is the prolific source of bankruptcy and ruin. It is the +canker that, unperceived and unsuspected, is eating out the prosperity +of our people. By reason of the almost universal inattention to the +nature and functions of money this evil is permitted, unobserved, to +work widespread ruin and disaster. So subtle is it in its operations +that it eludes the vigilance of the most acute. It baffles all foresight +and calculation; it sets at naught all industry, all energy, all +enterprise. + + +CONTRAST OF EFFECTS PRODUCED BY AN INCREASING AND A DECREASING +MONEY-VOLUME. + +The difference in the effects produced by an increasing and a +decreasing money-volume has not escaped the attention of observant +writers. + +David Hume, in his Essay on Money, says: + + It is certain that since the discovery of the mines in America + industry has increased in all the nations of Europe. * * We find + that in every kingdom into which money begins to flow in greater + abundance than formerly, everything takes a new face; labor and + industry gain life; the merchant becomes more enterprising, the + manufacturer more diligent and skillful, and even the farmer + follows his plow with greater alacrity and attention. * * * It is + of no manner of consequence with regard to the domestic happiness + of a state whether money be in a greater or less quantity. The + good policy of the magistrate consists only in keeping it, if + possible, still increasing; because by that means he keeps alive + a spirit of industry in the nation and increases the stock of + labor, in which consists all real power and riches. A nation + whose money decreases is actually at that time weaker and more + miserable than another nation which possesses no more money, but + is on the increasing hand. + +William H. Crawford, Secretary of the Treasury, in a report to Congress, +dated 12th February, 1820, says: + + All intelligent writers on currency agree that when it is + decreasing in amount poverty and misery must prevail. + +Mr. R. M. T. Hunter, in a report to the United States Senate in 1852, +says: + + Of all the great effects produced upon human society by the + discovery of America, there were probably none so marked as those + brought about by the great influx of the precious metals from the + New World to the Old. European industry had been declining under + the decreasing stock of the precious metals and an appreciating + standard of values; human ingenuity grew dull under the + paralyzing influences of declining profits, and capital absorbed + nearly all that should have been divided between it and labor. + But an increase of the precious metals, in such quantity as to + check this tendency, operated as a new motive power to the + machinery of commerce. Production was stimulated by finding the + advantages of a change in the standard on its side. Instead of + being repressed by having to pay more than it had stipulated for + the use of capital, it was stimulated by paying less. Capital, + too, was benefited, for new demands were created for it by the + new uses which a general movement in industrial pursuits had + developed; so that if it lost a little by a change in the + standard, it gained much more in the greater demand for its use, + which added to its capacity for reproduction, and to its real + value. + + The mischief would be great, indeed, if all the world were to + adopt but one of the precious metals as the standard of value. + To adopt gold alone would diminish the specie currency more than + one-half; and the reduction the other way, should silver be taken + as the only standard, would be large enough to prove highly + disastrous to the human race. + +The Encyclopędia Britannica, 1859 (article Precious Metals, by J. R. +McCulloch), says: + + A fall in the value of the precious metals, caused by the greater + facility of their production, or by the discovery of new sources + of supply, depends in no degree on theories of philosophers or + the decision of statesmen or legislators, but is the result of + circumstances beyond human control; and although, like a fall of + rain after a long course of dry weather, it may be prejudicial to + certain classes, it is beneficial to an incomparably greater + number, including all who are engaged in industrial pursuits, and + is, speaking generally, of great public or national advantage. + +Ernest Seyd, 1868 (Bullion, page 613), says: + + Upon this one point all authorities on the subject are agreed, to + wit, that the large increase in the supply of gold has given a + universal impetus to trade, commerce, and industry, and to + general social development and progress. + +The American Review (1876) says: + + Diminishing money and falling prices are not only oppressive upon + debtors, of whom, in modern times, states are the greatest, but + they cause stagnation in business, reduced production, and + enforced idleness. Falling markets annihilate profits, and as it + is only the expectation of gain which stimulates the investment + of capital in operations, inadequate employment is found for + labor, and those who are employed can only be so upon the + condition of diminished wages. An increasing amount of money, and + consequently augmenting prices, are attended by results precisely + the contrary. Production is stimulated by the profits resulting + from advancing prices; labor is consequently in demand and better + paid, and the general activity and buoyancy insure to capital a + wider demand and higher remuneration. + + +PRICE THE INDEX OF THE VALUE OF MONEY. + +There can be no truer index of the value of money than the general range +of prices. Price is the mercury by the rise and fall of which the heat +and struggle of industrial and business life are daily measured and made +plain. Where the tendency of this indicator continues downward, there is +no more certain sign that money is increasing in value. + +During a period of falling prices the fear of impending calamity hangs +like a pall over the business of the country. Notwithstanding +unremitting efforts, men feel themselves constantly on the edge of +disaster. Gloomy foreboding and timidity take the place of confidence +and courage. + +A shrinking volume of money is the most insidious foe with which +civilization has to contend. + +It is my firm conviction that the inexpressible miseries inflicted upon +mankind by war, pestilence, and famine have been less cruel, unpitying, +and unrelenting than the persistent and remorseless exactions which this +inexorable enemy has made upon society. As the volume of money contracts +prices decline, and with the decline of prices comes stagnation of +industry, and the relegation to idleness of thousands of willing +workmen. Capitalists become unwilling to invest their money in +enterprises that employ labor while the products of that labor are +constantly decreasing in price. During all periods of falling prices +therefore money capital is withdrawn from active industry and seeks +investment in bonds and other forms of money-futures yielding fixed +incomes. For although the rate of interest in many such cases may be +low, the capitalist is compensated for this by the enhancement in the +purchasing power of each dollar of the principal and by the necessarily +greater command it secures over the products of labor. + +Avoiding the very purpose for which it was devised, money at such times +seeks seclusion and declines to circulate. Its owner finds that he can +better afford to leave it idle in a vault or bury it in the earth, than +subject it to the probability of diminution by investing it in business +on a constantly falling market. Thus, contrary to all principles of +progress and of natural justice, the man who keeps his money idle, and +deprives society of its use, is rewarded by an unearned increment, while +he who puts his money into active business, where industry and labor may +profit by it is punished by unmerited loss. + +Under such conditions it is impossible for a community to reach that +degree of material progress which, under proper circumstances, it would +readily attain. At every turn distress and discouragement stare the +people in the face. In every town and village men, willing to work, +stand idle. Even their misfortune does not end with themselves, for not +only are they a tax upon their friends, lessening to some extent the +meager income of those who give them temporary assistance, but their +necessary and eager competition for the little work that offers, tends +to reduce the compensation of those to whom they are thus indebted. +Stores, workshops, and factories, unoccupied and unused, are found in +every direction. Crime increases, bankruptcies multiply, and even though +the aggregate of wealth augments, it is unjustly distributed, and +consequently barren of beneficent results. + + +A GLANCE AT THE HISTORY OF MONEY. + +The system of relying upon the precious metals as money has long been +known as the Automatic system. Accurately, it should be called the +_Accidental_ system. It has been called "automatic" because, so long as +money was made to depend solely upon the yield of the mines, the supply +regulated itself by what was believed to be a natural method, namely, by +the expenditure of labor in its production, and was limited only by the +rude obstacles which nature opposes to the production of the metals. The +necessity of expending this labor placed the money volume of any country +beyond the control of the kings and conquerors who, in the primitive +periods of society, exercised despotic sway over their subjects. It was +undoubtedly better for the people of those early times to risk the +accidents of production than the follies and sinister designs of rulers. + +This automatic system grew out of barter. It is a survival from the +period when articles were exchanged directly, not for gold and silver as +money, but for gold and silver as commodities--on the basis of their +cost of production--as in the case of the articles for which they were +exchanged. + +There have been the same evolutions of progress in money as in all other +things. In the rude original of society no kind of money was possible. +The first trade was by barter, after which, some one or more commodities +attainable in the vicinage, and in general use and demand were selected +as the common media through which all exchanges were filtered. The use +for that purpose of various metals by weight followed next, and, at a +succeeding stage, gold, silver, and copper by weight, and after this +their use in the form of coins, the value of which coincided with the +bullion-value, which must necessarily be the case when free coinage is +permitted. + +It may be not uninteresting in this connection to have a general view of +the materials which, at different epochs of the world's history, have +been used as money. I therefore present a tabular statement giving those +particulars in chronological order. + + _Table showing some of the substances which have, at various periods + and in various countries, been used as money._ + + ---------+-----------------+--------------------------+--------------- + Period. | Country. | Substance used as money. | Authority. + ---------+-----------------+--------------------------+--------------- + B. C. | | | + 1900 |Palestine |Cattle, and gold and |The Scriptures. + | | sliver, by weight. | + |Arabia |Gold and silver coins |Jacob. + |Phoenicia |Gold, silver, and copper |Anonymous. + | | coins | + |Phoenician colony|Same (some still extant) |Carter. + | in Spain. | | + 1200 |Phrygia |Coins, by Queen of Pelops |Julius Pollux. + 1184 |Greece |Brass coins |Homer. + 862 |Argos |Gold and silver coins, by |Dictionary of + | | Phidon. | Dates. + 70-500 |Rome |Brass, by weight |Jacob. + 578 |Rome |Copper coins |Ibid. + Uncertain|Carthage |Leather or parchment |Socrates, Dial. + | | money, first "paper | on Riches, + | | bills" known. | Journal des + | | | Economistes, + | | | 1874, p. 354. + B. C. 491|Sicily |Gold coins, by Gelo (some |Jacob. + | | still extant). | + 480 |Persia |Gold coin, by Darius (two |Ibid. + | | still extant). | + 478 |Sicily |Gold coin, by Hiero (some |Ibid. + | | still extant). | + 407 |Athena. |Debased gold coins, |MacLeod, 476. + | | foreign | + 400 |Sparta. |Iron, overvalued |Boeckh. + 360 |Macedonia |First gold coins coined |Jacob. + | | in Greece, by Philip. | + 266 |Rome |First silver coins coined |Ibid. + | | in Rome. | + 54 |Britain |Pieces of iron |Ibid. + 50 |Rome |Tin and brass coin |Dic. of Dates. + Uncertain|Arabia. |Glass coins |N. Y. Tribune. + | | | July 2, 1872. + ---------+-----------------+--------------------------+--------------- + + _Period following the failure of the ancient mines._ + + ---------+-----------------+--------------------------+--------------- + A.D. |Rome. |Lead coins silvered, and |Anonymous. + 212 | (Caracalla.) | copper coins gilded. | + 1066 |Britain |Living money, or human |Henry's History + | | being made a legal | of Great + | | tender for debts at | Britain, vol. + | | about £2 16_s._ 3_d._, | iv, p. 243. + | | per capita. | + 1160 |Italy |Paper invented; bills of |Anderson. + | | exchange introduced by | + | | the Jews. | + 1240 |Milan, Italy |Paper bills a legal tender|Arthur Young. + 1275 |China |Paper bills a legal tender|Marco Polo. + |Africa, part of |"Machutes" (ideal money; |Montesquieu. + | | this view doubted.) | + 1470 |Granada, Spain |Paper bills a legal tender|Irving. + 1574 |Holland |Pasteboard bills, |Dic. of Dates. + | | representative. | + Uncertain|Iceland |Dried fish |Anonymous. + Uncertain|Newfoundland |Codfish, dried |Anonymous. + Uncertain|Norway and |Seal skins and blubber |Anonymous. + | Greenland. | | + Uncertain|Hindostan and |Cowry shells |Jacob, 372. + | parts of | | + | Africa. | | + Uncertain|North America |Agate, carnelian, jasper, |Anonymous. + | Indian tribes | lead, copper, gold, | + | | silver, terra-cotta, | + | | mica, pearl, lignite, | + | | coal, bone, shells, | + | | chalcedony, wampumpeag, | + | | etc. | + Uncertain|Oriental pastoral|Cattle, grain, etc. |Anonymous. + | tribes | | + Uncertain|Abyssinia |Salt |Anonymous. + Uncertain|China and India |Rice |Anonymous. + Uncertain|India |Paper bills |Patterson, + | | | p. 13. + Uncertain|China |Pieces of silk cloth |Ibid. + Uncertain|Africa |Strips of cotton cloth |Ibid. + |Not stated |Wooden tallies or checks |Ibid. + ---------+-----------------+--------------------------+--------------- + + _Period following the discovery of the American mines._ + + ---------+-----------------+--------------------------+--------------- + A.D. | | | + 1631|Massachusetts |Corn a legal-tender at |Macgreggor. + | | market prices | + 1635|Massachusetts |Musket-balls |Anonymous. + 1690|Massachusetts |Paper bills, colonial |Macgreggor. + | | notes | + 1694|England |Bank-notes |McCulloch. + 1700|Sweden |Copper and iron coins |Voltaire's + | | | Charles XII. + 1702|South Carolina |Colonial notes |Macgreggor. + 1712|South Carolina |Bank notes |Ibid. + 1716|France |Interconvertible paper |Murray. + | | bills a legal-tender | + 1723|Pennsylvania |Paper bills, colonial |Macgreggor. + | | notes | + 1732|Maryland |Indian corn a legal-tender|Anonymous. + | | at 23d. per bushel | + 1732|Maryland |Tobacco a legal-tender at |Anonymous. + | | 1d. per pound | + 1776|Scotland |Tenpenny nails for small |Adam Smith. + | | change | + 1785|Frankland, State |Linen at 3s. 6d. per yard,|Wheeler's + | of (now part of| whisky at 2s. 6d. per | History of + | North Carolina)| gallon, and peltry as | North + | | legal-tender | Carolina, 94. + 1810-1840|All commercial |Great era of bank-paper | + | countries | bills | + 1826|Russia |Platinum coins |App. Encyc. + | | (discontinued in 1845) | + 1847|Mexico, parts of |Cocoa beans; and at Castle|Anonymous. + | | of Perote, soap. | + ---------+-----------------+--------------------------+--------------- + + _Period following the openings of California and Australia._ + + ---------+-----------------+--------------------------+--------------- + 1849 |California |Gold dust by weight, also | + | | minute gold coins for | + | | small change, coined in | + | | private mints. | + 1855 |Australia |Gold dust by weight | + 185- |Communist |Paper bills, each |Private + | settlement in | representing "one | information. + | Ohio, called | hour's labor." | + | "Utopia." | | + 1862 |United States |Paper bills a legal tender|Act of Feb. 25. + 1863 |North Carolina |Tenpenny nails, at 5 cents|Anonymous. + | | each, for small change. | + 1863 |Camp at Florence,|Potatoes for small change |Yorkville + | S. C. | | Enquirer. + 1863 |United States |Postage-stamps for small | + | | change, temporary. | + 1865 |Philadelphia, Pa.|Turnips for small change, |Philadelphia + | | temporary and local. | Ledger, April. + 1865 |United States |Nickel coins for small |Act of March 3. + | | change, overvalued. | + ---------+-----------------+--------------------------+--------------- + +An analysis of this table will show how carefully even the most +primitive communities guarded against a too restricted money volume. + +The materials chosen to serve the purpose of money in each country +during the early history of society were, it will be observed, such as +at the time and place would be of sufficient quantity or volume to +insure against any sudden deprivation of supply. In countries where the +chase was common, the skins of wild animals were used as money; in +maritime communities, shells; in pastoral countries, cattle; in the +early history of agriculture, grain; in early mining periods, base +metal; in primitive manufacturing ages, nails, glass, musket-balls, +strips of cotton, etc. + +As communities developed, and commerce between them began, substances +somewhat common to all countries, portable and indestructible, such as +the precious metals, came to be more, and other substances less, +resorted to. By reason of their great beauty those metals were always in +demand, even among barbarous peoples, for purposes of ornament and +decoration. Because of their universal use for such purposes they came +to be recognized as things for which anything else could with safety be +exchanged, and as society advanced, and it came to be recognized that +some medium should be adopted in which to make all exchanges, those +metals were naturally selected for the purpose, so that, together, they +became, as it were, a common denominator of value. Their selection +proved a convenient method of storing away wealth in a form that +commanded at all times every other form of wealth. They had always +passed by weight wherever used, but as society became better organized, +and its methods more complex, it became necessary, in order to insure +against fraud, to form them into pieces convenient for handling, and to +invest them distinctly with the function of money, so that, by law, they +became a universal solvent for debts and demands, the stamp of the +government placed on the coin testifying to its weight and fineness. + +Both metals, as shown by the table, have been concurrently used as money +for thousands of years--not only since the dawn of history, but from a +period anterior to any historical records. The oldest annals show that +they had already been employed as circulating media and that their +relative values, or the ratio of their exchange for one another, had +already been established. Gold and silver were used as money in +Palestine as early as the year 1900 B. C. We read in the Bible that +Abraham weighed to Ephron the Hittite 400 shekels of silver, "current +money with the merchant." An inscription on the temple of Karnak, of the +date of 1600 B. C. mentions those metals as materials in which tribute +was paid. + +But long anterior even to these dates, both metals had been used, as, +among the relics of the bronze age of the prehistoric era, ornaments of +both gold and silver have been found. Gold, being the less abundant of +the two metals, has had the higher value; but the ratio between the two +has been marvelously steady, taking into account the great sweep of +ages during which they have been used as money. This will be seen by +reference to the following tables of ratios. I will first take their +relative values during ancient times. + + _Table showing the ratio of gold and silver in various countries of + the world up to the Christian era._ + + ---------------------------------------------------------------------- + B. C. | Ratio. | Authorities. + ---------------------------------------------------------------------- + 1600 | 1 to 13.33 | Inscriptions at Karnak; tribute lists of + | | Thutmosis. (Brandis.) + 708 | 1 to 13.33 | Cuneiform inscriptions on plates found in + | | foundation of Khorsabad. + | 1 to 13.33 | Ancient Persian coins; gold darics at + | | 8.3 grams = 20 silver siglos, at 5.5 grams. + 500 | 1 to 13.00 | Persia. Darius. Egyptian tribute. Herod. + | | III,.95. (Boeckh, page 12.) + 490 | 1 to 12.50 | Sicily. Time of Gelon. "At least" 12.50. + | | (Boeckh, page 44.) + 470 | 1 to 10.00 | Doubtful. Asia Minor. Xerxes's treasure. + | | (Boeckh, page 11.) + 440 | 1 to 13.00 | Herodotus's account of Indian tributes. + | | 360 gold talents = 4,680 silver. + 420 | 1 to 10.00 | Asia Minor. Pay of Xenophon's troops in silver + | | darics. (Anab.; Boeckh, page 34.) + 407 | 1 to ---- | Spurious and debased gold coins at Athens. + | | (MacLeod, Polit. Econ., page 476; Boeckh, + | | page 35.) + 400 | 1 to 13.33 | Standard in Asia, according to Xenophon. + 400 | 1 to 12.00 | Standard in Greece according to "Hipparchus"; + | | attributed to Plato. + 400 | 1 to 12.00} | Various authorities adduced by Boeckh. + 400 | 1 to 13.50} | + | | + | {12.00}| Values in Greece from the Peloponnesian war to + 404-336 | 1 to {13.00}| the time of Alexander, according to hints in + | {13.33}| Greek writers. There were variations under + | | special contracts--unit, the silver drachma. + | | + 340 | 1 to 14.00 | Greece. Time of Demosthenese. (Boeckh, + | | page 44.) + 338-326 | 1 to 11.50 | Special contracts in Greece. + 343-323 | 1 to 12.50 | Egypt under the Ptolemies. + 300 | 1 to 10.00 | Greece. Continued depression of gold, caused + | | by great influx under Alexander. + 207 | 1 to 13.70 | Rome. (Boeckh, page 44.) Gold scriptulum + | | arbitrarily fixed at 17.143 for 1. + 100 | 1 to 11.91 | Rome. General rate of gold pound to silver + | | sesterces to date. + 58-49 | 1 to 8.93 | Rome. Continued depression of gold, caused + | | by influx of Cęsar's spoil from Gaul. + | | [N. B.--Cęsar's headquarters were at + | | Aquileia, at the head of the Adriatic, + | | where there was also a gold mine, which + | | at this period became very prolific.] + 50 | 1 to 11.90 | Rome. "About the year U. C. 700," the rate + | | was 11 19-21. (Boeckh, page 44.) + 29 | 1 to 12.00 | Rome. Normal rate in the last days of the + | | republic. + ---------------------------------------------------------------------- + +By reference to the foregoing table it will be observed that the +increase in the supply of gold in Europe, consisting of the spoils of +the Orient, gathered by Alexander the Great, and brought by him to +Greece, had the effect of decreasing the value of that metal so that +instead of being exchangeable at the ratio of 1 to about 13-1/2 of +silver, as formerly, gold became depressed, 1 ounce of it exchanging for +only 10 ounces of silver. Later, when Julius Cęsar extended his +conquering arms into Gaul, and sent to Rome the accumulations of +treasure amassed by him, the value of gold by reason of the increased +supply was again depressed, so that an ounce of it was exchangeable for +only 8.93 ounces of silver. With these exceptions it may be said that +the relation of silver to gold for sixteen hundred years before the time +of Christ had varied only from the ratio of 1 to 12 to that of 1 to +13.33. Silver at no time during all this period fell below 13.50 to 1 of +gold. + +Looking, now, at the relative values of gold and silver from the time of +Christ to the discovery of America, we find the ratio between the two +metals to be as follows: + +Table showing the ratio of gold and silver in various countries of the +world from the opening of the Christian era to the discovery of America: + + ---------------------------------------------------------------------- + A. D. | Ratio. | Authorities. + ---------------------------------------------------------------------- + 1-37 | 1 to 10.97 | Rome. Rate under Augustus and Tiberius. + 37-41 | 1 to 12.17 | Rome. Reign of } + | | Caligula. } The silver coinage + 54-68 | 1 to 11.80 | Rome. Reign of Nero. } much debased, + 69-79 | 1 to 11.54 | Rome. Reign of } consequently the + | | Vespasian. } ratio of the + 81-96 | 1 to 11.30 | Rome. Reign of } metals pure was + | | Domitian. } about 1 to 11. + 138-161 | 1 to 11.98 | Rome. Reign of } + | | Antoninus. } + 312 | 1 to 14.40 | Byzantium. Reign of Constantine. Arbitrary. + 438 | 1 to 14.40 | Byzantium and Rome. Theodosian code. + | | Arbitrary. + 864 | 1 to 12.00 | Probable ratio, as shown by the Edictum + | | Pistense, under the Carlovingian dynasty. + 1260 | 1 to 10.50 | Average ratio in the commercial cities of + | | Italy. Local or doubtful. + 1344-1660 | 1 to ---- | England. Numerous mint indentures given in + | | McLeod's Political Economy, page 475. The + | | ratio, except when fixed arbitrarily and + | | in violation of market price, varied + | | between about 1.12 and 1.14 during the + | | two hundred and fifty-seven years + | | included in this period. + 1351 | 1 to 12.30 } | + 1375 | 1 to 12.40 } | Ratio in North Germany as shown by the + 1403 | 1 to 12.80 } | very accurate rules of the Lubeck mint, + 1411 | 1 to 12.00 } | corroborated in the main by the accounts + 1451 | 1 to 11.70 } | of the Teutonic Order of Knights, + 1463 | 1 to 11.60 } | averaged in periods of forty years. + 1453-1494 | 1 to 10.50 | Ratio according to the accounts of the + | | Teutonic knights. As the ratio fixed in + | | England by numerous mint indentures from + | | 1465 to 1509 was about 1.12 this German + | | ratio is considered local or doubtful. + ---------------------------------------------------------------------- + +It will thus be observed that during the one thousand four hundred and +ninety-two years from the coming of Christ to the discovery of America, +silver never went below the ratio of 14.40 to one of gold. + +The relations which the metals have borne to each other since the +discovery of the New World will appear from the following: + + _Table showing the relative values of gold and silver in the various + countries of the world from the discovery of America to 1680._ + + ---------------------------------------------------------------------- + A. D.| Ratio. | Authorities. + ---------------------------------------------------------------------- + | | + 1497 | 1 to 10.70 | Spain. Reign of Isabella. Edict of Medina. Local. + 1500 | 1 to 10.50 | Germany. Adam Riese's Arithmetic. Local or + | | doubtful. + 1551 | 1 to 11.17 | Germany. Imperial mint regulations. Arbitrary or + | | local. + 1559 | 1 to 11.44 | German Imperial mint regulations. + 1561 | 1 to 11.70} | France. Mint regulations. + 1575 | 1 to 11.68} | + 1623 | 1 to 11.74 | Upper Germany. Mint regulations. + 1640 | 1 to 13.51 | France. Mint regulations. Transition period. + 1665 | 1 to 15.10 | France. Mint regulations. + 1667 | 1 to 14.15 | Upper Germany. Mint regulations. Doubtful. + 1669 | 1 to 15.11 | Upper Germany. Mint regulations. + 1679 | 1 to 15.00} | France. Mint regulations. + 1680 | 1 to 15.40} | + | | + ---------------------------------------------------------------------- + +Table showing the ratio of silver to 1 of gold from 1687 to the +demonetization of silver by Germany and the United States and the +closing of the Mints to its free coinage. + +[From the Report (1890) of the Director of the U. S. Mint on the +Production of the Precious Metals in the United States.] + +[NOTE.--From 1687 to 1832 the ratios are taken from Dr. A. Soetbeer; +from 1833 to 1878 from Pixley and Abell's tables; and from 1879 to 1889 +from daily cable-grams from London to the Bureau of the Mint.] + + ---------------------------------------------------------------------- + Year. | Ratio.|| Year. | Ratio.|| Year. | Ratio.|| Year. | Ratio. + -------+--------++-------+--------++-------+--------++-------+-------- + 1687 | 14.94 || 1721 | 15.05 || 1755 | 14.68 || 1789 | 14.75 + 1688 | 14.94 || 1722 | 15.17 || 1756 | 14.94 || 1790 | 15.04 + 1689 | 15.02 || 1723 | 15.20 || 1757 | 14.87 || 1791 | 15.05 + 1690 | 15.02 || 1724 | 15.11 || 1758 | 14.85 || 1792 | 15.17 + 1691 | 14.98 || 1725 | 15.11 || 1759 | 14.15 || 1793 | 15.00 + 1692 | 14.92 || 1726 | 15.15 || 1760 | 14.14 || 1794 | 15.37 + 1693 | 14.83 || 1727 | 15.24 || 1761 | 14.54 || 1795 | 15.55 + 1694 | 14.87 || 1728 | 15.11 || 1762 | 15.27 || 1796 | 15.65 + 1695 | 15.02 || 1729 | 14.92 || 1763 | 14.99 || 1797 | 15.41 + 1696 | 15.00 || 1730 | 14.81 || 1764 | 14.70 || 1798 | 15.59 + 1697 | 15.20 || 1731 | 14.94 || 1765 | 14.83 || 1799 | 15.74 + 1698 | 15.07 || 1732 | 15.09 || 1766 | 14.80 || 1800 | 15.68 + 1699 | 14.94 || 1733 | 15.18 || 1767 | 14.85 || 1801 | 15.46 + 1700 | 14.81 || 1734 | 15.39 || 1768 | 14.80 || 1802 | 15.26 + 1701 | 15.07 || 1735 | 15.41 || 1769 | 14.72 || 1803 | 15.41 + 1702 | 15.52 || 1736 | 15.18 || 1770 | 14.62 || 1804 | 15.41 + 1703 | 15.17 || 1737 | 15.02 || 1771 | 14.66 || 1805 | 15.79 + 1704 | 15.22 || 1738 | 14.91 || 1772 | 14.52 || 1806 | 15.52 + 1705 | 15.11 || 1739 | 14.91 || 1773 | 14.62 || 1807 | 15.43 + 1706 | 15.27 || 1740 | 14.94 || 1774 | 14.62 || 1808 | 16.08 + 1707 | 15.44 || 1741 | 14.92 || 1775 | 14.72 || 1809 | 15.96 + 1708 | 15.41 || 1742 | 14.85 || 1776 | 14.55 || 1810 | 15.77 + 1709 | 15.31 || 1743 | 14.85 || 1777 | 14.54 || 1811 | 15.53 + 1710 | 15.22 || 1744 | 14.87 || 1778 | 14.68 || 1812 | 16.11 + 1711 | 15.29 || 1745 | 14.98 || 1779 | 14.80 || 1813 | 16.25 + 1712 | 15.31 || 1746 | 15.13 || 1780 | 14.72 || 1814 | 15.04 + 1713 | 15.24 || 1747 | 15.26 || 1781 | 14.78 || 1815 | 15.26 + 1714 | 15.13 || 1748 | 15.11 || 1782 | 14.42 || 1816 | 15.28 + 1715 | 15.11 || 1749 | 14.80 || 1783 | 14.48 || 1817 | 15.11 + 1716 | 15.09 || 1750 | 14.55 || 1784 | 14.70 || 1818 | 15.35 + 1717 | 15.13 || 1751 | 14.39 || 1785 | 14.92 || 1819 | 15.33 + 1718 | 15.11 || 1752 | 14.54 || 1786 | 14.96 || 1820 | 15.62 + 1719 | 15.09 || 1753 | 14.54 || 1787 | 14.92 || 1821 | 15.95 + 1720 | 15.04 || 1754 | 14.48 || 1788 | 14.65 || 1822 | 15.80 + ---------------------------------------------------------------------- + Year. | Ratio. || Year. | Ratio. || Year. | Ratio. || Year. | Ratio. + -------+--------++-------+--------++-------+--------++-------+-------- + 1823 | 15.84 || 1836 | 15.72 || 1849 | 15.78 || 1861 | 15.50 + 1824 | 15.82 || 1837 | 15.83 || 1850 | 15.70 || 1862 | 15.35 + 1825 | 15.70 || 1838 | 15.85 || 1851 | 15.46 || 1863 | 15.37 + 1826 | 15.76 || 1839 | 15.62 || 1852 | 15.59 || 1864 | 15.37 + 1827 | 15.74 || 1840 | 15.62 || 1853 | 15.33 || 1865 | 15.44 + 1828 | 15.78 || 1841 | 15.70 || 1854 | 15.33 || 1866 | 15.43 + 1829 | 15.78 || 1842 | 15.87 || 1855 | 15.38 || 1867 | 15.57 + 1830 | 15.82 || 1843 | 15.93 || 1856 | 15.38 || 1868 | 15.59 + 1831 | 15.72 || 1844 | 15.85 || 1857 | 15.27 || 1869 | 15.60 + 1832 | 15.73 || 1845 | 15.92 || 1858 | 15.38 || 1870 | 15.57 + 1833 | 15.93 || 1846 | 15.90 || 1859 | 15.19 || 1871 | 15.57 + 1834 | 15.73 || 1847 | 15.80 || 1860 | 15.29 || 1872 | 15.63 + 1835 | 15.80 || 1848 | 15.85 || | || | + -------+--------++-------+--------++-------+--------++-------+-------- + +By the foregoing table it will be seen that in the three hundred and +seventy-five years from 1497 to 1872 the maximum separation of the +metals was only as 1 to 16.25--notwithstanding the widest divergencies +during that long period in the yield of the two metals from the mines. +It will be observed that all the later quotations are from the London +market, but it is a significant fact that in France, where, by the law +of 7 Germinal, _An_ XI, (1803,) free coinage was permitted to both +metals, at the ratio of 15-1/2 of silver to 1 of gold, for a period of +seventy years, and until the coinage of silver was limited, there was at +no time the slightest variance from that relation. + +When silver was deprived of the full money function, and all the +money-work of society was placed on gold, the metals began to separate. +The following table shows the degree of that separation from year to +year: + +Table showing the ratio of silver to 1 of gold since the demonetization +of silver by Germany and the United States, and the closing of all mints +of the western world to its free coinage: + + 1873 15.92 | 1882 18.19 + 1874 16.17 | 1883 18.64 + 1875 16.59 | 1884 18.57 + 1876 17.88 | 1885 19.41 + 1877 17.22 | 1886 20.78 + 1878 17.94 | 1887 21.13 + 1879 18.40 | 1888 21.99 + 1880 18.05 | 1889 22.10 + 1881 18.16 | + +The foregoing figures show that it is only since the legislative +proscription of silver by Germany and the United States, and the closing +of all the European mints to its coinage, that any material change took +place in the ratio between the two metals, which conclusively +demonstrates that the present divergence in the relative values of the +two metals is directly due to the legal outlawry of silver and not to +natural causes. + +Not only has the concurrent use of the two metals as money had the +sanction of all time, but the approval of the greatest minds of history, +and, when not blinded by self-interest, the approval of practical and +experienced financial minds. So well recognized is this fact that I need +only cite a few instances of such approval. + +Alexander Hamilton said: + + To annul the use of either of the metals as money is _to abridge + the quantity of circulating medium_, and is liable to all the + objections which arise from a comparison of the _benefits of a + full with the evils of a scanty circulation_. (Report to + Congress, 1791.) + +Thomas Jefferson, in a letter to Hamilton, indorsed this view, saying: + + I return you the report on the mint. I concur with you that the + unit _must stand on both metals_. (Letter to Hamilton, February, + 1792.) + +In his "Recherches sur l'or et sur l'argent," 1843, Léon Fanchet said: + + If all the nations of Europe adopted the system of Great Britain, + the price of gold would be raised beyond measure, and we should + see produced in Europe a most lamentable result. The Government + can not decree that legal tender shall be only gold, in place of + silver, for that would be to decree a revolution, and the most + dangerous of all, because it would be a revolution leading to + unknown results (_qui marcherait vers l'inconnu_). + +In a memoir read before the French Institute in 1868, M. Wolowski said: + + The suppression of silver would bring on a veritable revolution. + Gold would augment in value with a rapid and constant progress, + which would break the faith of contracts and aggravate the + situation of all debtors, including the nation. It would add at + one stroke of the pen at least three milliards to the twelve + milliards of the public debt. + +In a debate in the French Senate on January 28, 1870, Senator Dumas +eloquently pleaded for caution in dealing with a subject of such +farreaching importance as the demonetization of one of the money metals. +He said: + + Those who approach these questions for the first time decide them + at once. Those who study them with care hesitate. Those who are + obliged practically to decide doubt and stop, overwhelmed with + the weight of the enormous responsibility. + + The quantities of the precious metals which are now sufficient + may become insufficient, and we should proceed with great + prudence before we diminish that which constitutes a part of the + riches of the human race. Sometimes gold takes the place of + silver. Sometimes silver takes the place of gold. _This keeps up + the general equilibrium._ Nobody can guaranty that the present + vast production of gold will continue. The _placers_ are found on + the surface of the earth, and may be exhausted by the very + facility of working them. Silver presents itself in the form of + subterranean veins. Science may contribute to accelerate its + extraction. In presence of the unknown, which dominates the + future, we should practice a prudent reserve. + +Before a French monetary convention in 1869 testimony was given by M. +Wolowski, by Baron Rothschild, and by M. Rouland, governor of the Bank +of France. + +M. Wolowski said: + + The sum total of the precious metals is reckoned at fifty + milliards, one-half gold and one-half silver. If, by a stroke of + the pen, they suppress one of these metals in the monetary + service, they double the demand for the other metal, to the ruin + of all debtors. + +M. Rouland, governor of the Bank of France, said: + + We have not to do with ideal theories. The two moneys have + actually co-existed since the origin of human society. They + co-exist because the two together are necessary, by their + quantity, to meet the needs of circulation. This necessity of the + two metals, has it ceased to exist? Is it established that the + quantity of actual and prospective gold is such that we can now + renounce the use of silver without disaster? + +Baron Rothschild said: + + The simultaneous employment of the two precious metals is + satisfactory and gives rise to no complaint. Whether gold or + silver dominates for the time being, it is always true that the + two metals concur together in forming the monetary circulation of + the world, and it is the general mass of the two metals combined + which serves as the measure of the value of things. The + suppression of silver would amount to a veritable destruction of + values without any compensation. + +At the session (October 30, 1873) of the Belgian Monetary Commission, +Professor Laveleye, one of the most luminous writers on economic +subjects, said: + + Debtors, and among them the state, have the right to pay in gold + or silver, and this right can not be taken away without + disturbing the relation of debtors and creditors, to the + prejudice of debtors, to the extent of perhaps one-half, + certainly of one-third. To increase all debts at a blow + (_brusquement_) is a measure so violent, so revolutionary, that I + can not believe that the Government will propose it or that the + Chambers will vote it. + + +WHY WAS THE AUTOMATIC SYSTEM INTERFERED WITH? + +Some thirteen years ago, as Chairman of the Monetary Commission +appointed by Congress to investigate the causes of the changes in the +relative values of the precious metals, I submitted to this body a +report, in which I took occasion to refer to the motives which evidently +influenced the creditor classes of the western world in destroying the +automatic system of money. From that Report I quote as follows: + + The world has generally favored, theoretically if not + practically, the automatic metallic system, and adjusted its + business to it. Some nations adopted one metal as their standard, + and some the other, and some adopted both. Those that adopted + both metals served as a balance-wheel to steady with exactness + their relative value. The practical effect of all of this was the + same as if all nations had adopted both, because it secured the + entire stock of both at a fixed equivalency for the transaction + of the business of the world. While some nations have changed + their money metal, or, having had paper money, have resumed + specie payments in one metal, the policy of a general + demonetization of one of the metals was first broached only about + twenty years ago. About ten years later a formidable propaganda + was organized to fasten that policy upon the commercial world. + + This new school of financial theorists advocate the retention of + metal as the material of money, but favor its subjection to + governmental interference in every respect. Whenever new mines + are discovered, or old ones yield or promise to yield more + abundantly, instead of freely accepting their product in + accordance with the automatic theory, they advocate its rejection + through the restriction or the absolute prohibition of the + coinage of either or both metals, or through the limitation or + the abolition of the legal-tender function of one of them. + Whenever the interests of the creditor and income classes seem to + be in danger of being impaired by an increase in the volume and + decrease in the value of money, or in other words, by a general + rise in prices, these modern theorists are clamorous in + double-standard countries for the demonetization of one of the + money metals, and in single-standard countries for the shifting + of the money function from the metal which promises the most to + the one that promises the least abundant supply. They are + extremely anxious for the retention of the _material_ of which + the money-standard is composed when such material is rising in + value and prices are falling, and exceedingly apprehensive of the + evil and inconvenience which they predict as sure to result from + changing it. + + Whenever a fall in prices occurs, through either a natural or + artificial contraction in the volume of money, they maintain that + it is due to antecedent inflation and extravagance, or to + overproduction through persistent and reckless industry; if the + contraction be natural, that it can not be helped, and if + artificial, that though it may inflict great temporary losses on + the masses of the people, it will be sure to result in their + ultimate benefit, and they console the sufferers with the + comforting assurance that such contraction is necessary in order + to reach the lowest depths of that "_hard pan_" whose foundations + they have previously undermined by demonetizing one of the + metals, and upon which alone they claim that money, capital, and + labor can securely and harmoniously rest. But when the material + composing the standard is falling in value and prices are rising, + they immediately discover that the maintenance of the value of + the standard is the all-important consideration, and that its + material is of no importance whatever and should be at once + changed to "_redress the situation_." After having reduced one of + the metals to a commodity by depriving it of the money function, + these theorists complacently point to the resulting fluctuations + in the value as a justification of the act producing them, and as + a conclusive proof of the unfitness for money of the demonetized + metal. * * * + + Metallic money, on this theory, is no longer automatic, but is as + completely subjected to governmental control for all injurious + purposes as paper money. But, unlike paper money, the control + over this kind of metallic money can only be exercised in the + baneful direction of decreasing its volume, and thereby making + property cheaper and money scarcer and dearer. + + This is a one-sided system, which can operate only in the + interest of the security creditor, the usurer, and pawnbroker, + whom it enables, through the falling prices which itself + occasions, to swallow up the shrunken resources of the debtor, + but is impotent to protect the interests of the unsecured + business creditor, the debtor, or society, when, from any cause, + the supply of the money metals becomes deficient. + + The world has expended a vast amount of labor in the production + of the precious metals, and has made great sacrifices in + upholding the automatic metallic system of money, and has a right + to insist that it shall be consistently let alone to work out its + own conclusions, or that it be abandoned. + +The history of the subsequent struggle to remonetize silver only serves +to illustrate and emphasize the correctness of that statement of the +case. + +Between 1810 and 1849, according to Tooke and Newmarch (recognized +authorities on the subject), gold increased in value 145 per cent. which +is equivalent to a fall in the general range of prices of 59 per cent. +No movement was then made or suggestion offered by the debtors, or by +any class of the community, to add any new money-metal to the metals +already in use, with the view of increasing the volume of money, so that +the equity of time contracts might be maintained, and the value of the +unit of money kept at a steady and unchanging level. + +But as soon as the discoveries of gold were made in the alluvial +deposits of California and Australia, or rather as soon as it was +suspected that money would thereby become considerably increased in +volume, the annuitants and income classes, the creditors everywhere, +took steps to avert what they characterized as a great calamity. They +openly declared their purpose, by every means in their power, to prevent +a decline in the value of money, so that the purchasing power of their +incomes might not be reduced. They determined to go to any length in +order to prevent the rise of prices which their aggressive instincts led +them to fear would follow the additions to the money volume of the world +by the natural and much needed yield of the mines. + +The fiat therefore went forth that one of the metals must be discarded. + + +THE PROPOSITION FIRST MADE TO DEMONETIZE GOLD. + +If anything were needed to demonstrate that the reason for the +demonetization of silver was the cupidity of the creditor classes--the +money-lenders, annuitants, and those in receipt of fixed incomes--and +that it was not any defect inhering in the metal silver, nor any change +in its adaptability to subserve the purposes of money, it is to be found +in the significant fact that the metal first selected for demonetization +was not silver but gold--that metal which has since become the idol of +the money-changers, and which is now declared to be the only "natural" +money. The openly-avowed determination was to increase the value of +money, and in order to accomplish that purpose the metal which promised +the largest yield was to be condemned and stripped of its ancient +monetary function. So strongly was this determination set forth, so +earnestly was it presented, and so urgently pressed on the ground of +duty that its achievement came to be regarded as the fulfillment of a +high moral purpose. + +It was with gold then as it came to be with silver afterward, and as it +always is with whatever interferes with the interests of privileged +classes, intrenched in power and prerogative,--the determination to +destroy it being arrived at, measures were taken to prove that the +public good required its destruction. While the purpose was to discard +the metal, whether gold or silver, which threatened most immediately and +seriously to reduce the purchasing power of money, the argument was +that a decrease in the purchasing power of money was a calamity against +the happening of which every energy should be directed. + +The privileged classes found then, as they find now, able and ingenious +advocates and defenders among the literary and educated guilds of the +period. The celebrated De Quincy, in England, attempted to prove, and to +his own satisfaction did prove upon figures drawn from his fears and a +brilliant imagination, that the least yield of gold to be expected from +the mines of California and Australia for an indefinite period in the +future, was the yearly sum of $350,000,000. + +M. Chevalier, in France, vehemently proclaimed the necessity of +discarding one of the money metals, and that one not silver but gold. In +his work upon the "Fall of Gold" M. Chevalier, in 1856, said: + + The quantity of gold annually thrown on the general market + approaches in round numbers a milliard of francs ($200,000,000). + Those two countries (California and Australia) must yet for a + long series of years produce gold in such quantities and on such + conditions as to render a marked decline in its value inevitable. + + It is absolutely certain that so vast a production should be + accompanied with a great reduction in value. + + In no direction can a new outlet be seen sufficiently large to + absorb the extraordinary production of gold which we are now + witnessing, so as to prevent a fall in its value. + + Unless, then, we possess a very robust faith in the immobility of + human affairs, we must regard the fall in the value of gold as an + event for which we should prepare without loss of time. + +The "preparation" which Chevalier advocated was the discarding of that +metal which gave promise of the greatest abundance. He did not attempt +to hide his purpose. He boldly stated that his object was to enhance the +value of money. This object was also clearly expressed on a later +occasion by another distinguished advocate of dear money, Mr. Victor +Bonnet, of France, in the Journal des Economistes. He said: + + The world is now saturated with the precious metals, and if there + is any danger against which it is necessary to guard, it is that + this saturation should become greater. * * * + + If the annual production of gold is now reduced to 500,000,000 + francs, let us thank Heaven for it, and let us wish that it may + not be too rapidly increased, whereby we should be embarrassed. + It is the too great abundance and not the scarcity of metallic + money which is to be apprehended. + + +GOLD DEMONETIZED. + +In 1857 the German states and Austria demonetized gold; and had it not +been for the opposition of France, which insisted on retaining the +double standard, the movement might have become general on the +continent. With England, however, nothing could be done. More than a +generation had passed since it had declared for the single standard of +gold, and its creditors and income classes--the shrewdest, most adept, +and watchful of financiers--did not believe that the large yields of +gold would long continue. + +The creditor classes of the continent, finding England immovable and +realizing that the object sought by the English creditors was identical +with their own, namely, the increase in the value of money and the +depression of prices, concluded that the common purpose could be as well +served by the demonetization of one as by that of the other. This +conclusion was emphasized by developments on the Comstock lode whose +bountiful and beneficent yield of silver was the fitting supplement to +the great discoveries of gold on the Pacific coast. The danger of a +decline in the value of money was more imminent than ever. The +annuitants became alarmed. Commissions were sent from Europe to the +Pacific coast to investigate the subject. The United States, too, sent +a commissioner to examine into the condition and prospects of the +Comstock, and, imbued with many of the characteristics of De Quincey and +Chevalier, the United States commissioner, in 1868, reported that if all +other mines were worked with the machinery used on the Comstock "their +yield would flood the world." + +Like many of the present opponents of silver he was endowed with the +gift of prophecy, and accordingly we find him confidently predicting +that other and innumerable rich lodes of silver would be found on the +Pacific coast which would be worked with great profit. The attack on +gold was immediately changed to a combined attack on silver. From that +period till the present no means have been left untried to belittle and +degrade that metal, and also to disparage those who are in favor of +continuing it as one of the money metals of the world. + +It was then announced with all the dogmatism of authority that silver +was unfit to be used as money. Defects were suddenly discovered in it +that the scrutiny of three thousand years had failed to disclose. Its +weight and bulk were found to be insuperable obstacles to its use as +money. Yet the specific gravity of silver is no greater now than it has +been for all the ages during which it has been used as money by all +mankind, nor is it any heavier or more bulky than it was in 1851 or +1857, when Belgium, Germany, and Austria demonetized gold and made the +"heavy," "bulky," and "inconvenient" metal, silver, their only money +metal. Silver can now be transported from place to place with less risk +and at no greater expense than gold, and at much less cost than at any +previous period in the history of the world. + +The objection that silver is too heavy for the pocket is an objection +common to all metallic money. We see hardly any gold in circulation in +this country--infinitely less than of silver. When our people have a +choice as to the form in which they will take money they prefer paper +representatives as being the most convenient. The extraordinary +perfection to which the arts of the engraver and paper maker have been +brought gives paper money a security against counterfeiting and +imitation far superior to any immunity which can be claimed for the +metals. The marvellous inventions of modern times in the form of safes +and vault-locks render it a matter of practically no risk to store the +metals, both silver and gold, so that paper representatives of them may +be issued. These representatives are preferred by the general mass of +the people, and have almost entirely occupied the channels of +circulation to the exclusion of both metals. A silver certificate for +$1,000 weighs no more than a gold certificate for the same amount. + + +THE MOTIVE FOR DEMONETIZING SILVER. + +The motive for the demonetization of silver was precisely the same that +had previously inspired the demonetization of gold. The object was to +demonetize one of the metals--that metal which promised the greatest +abundance, and which would contribute most largely to maintaining at an +equitable level the general range of prices. The motive in both cases +was to aggrandize the privileged classes--the income and the creditor +classes of the world--and by means of a subtle and sinister manipulation +of the money volume, whose effects it is not always easy to trace to +their true cause, to practically confiscate the reward of the hard toil +of the masses. To all intent and purpose the design was to establish a +new system of slavery for the western world, of which the debtor +classes among the white races should be the victims. + +When demonetization was determined on there was no pretense that there +was any difficulty in maintaining a parity between the two metals at the +established ratio. + +In the official résumé of the doings of the French monetary commission +of 1869 the arguments upon both sides were summed up. + +In behalf of the gold standard it was said: + + The rise in price which has taken place within twenty years in a + great number of articles of merchandise is evidently due to many + causes, such as war, bad harvests, and increase in consumption; + but it is very probable that the depreciation of the precious + metals has contributed to it, since there has been a striking + coincidence between the rise of prices and the production of the + new mines of gold and silver. The annual production of the two + metals, which was only $80,000,000 in 1847, exceeds now + $200,000,000. It has nearly tripled, and it is easy to see that + the real value of the metals has diminished. It is difficult to + estimate exactly what the diminution is, but whatever it may be + it demands the attention of governments, because it affects + unfavorably all that portion of the population whose income, + remaining nominally the same, undergoes a yearly diminution of + purchasing power. As governments control the weight and standard + of money, they ought so far as possible to assure its value. And + as it is admitted that the tendency of the metals is to + depreciate, this tendency should be arrested by demonetizing one + of them. + +In behalf of the double standard it was replied as follows: + + Many economists argue that the precious metals, having become + very abundant, have lost 10 or 15 per cent. of their value, and + that the situation must be redressed by making money scarcer by + demonetizing silver. To this it may be answered that the great + discoveries of gold of the last twenty years have injured nobody. + The new mass of gold, spreading over the whole world, has found + employment in stimulating all forms of business, and, as a + consequence, the value of gold has fallen very little. According + to Mr. Newmarch, the mass of gold and silver has augmented 3 per + cent. per annum, while the mass of exchanges has augmented more + than 3 per cent. per annum, so that the equilibrium has been + maintained. And the present is an especially inopportune time to + demonetize silver, because the annual production of gold has been + falling off for several years. It was $200,000,000 in 1853, and + it is now not more than $140,000,000. What will happen to the + civilized world if silver is demonetized and if gold shall then + fail? + + +THE MOTIVE OF ENGLAND. + +England did not adopt the gold standard until she was in a position to +become the principal creditor nation. When her forges, furnaces, +spindles, and looms were ready to supply manufactured goods to all the +world, she saw that all countries and peoples would be compelled to pour +their treasures into her lap. Her insular position and great navy +guarantied her against external assault. Released from the anxieties and +labors incident to the Napoleonic wars, with a sturdy population of +trained mechanics, and with fields of coal and iron in abundance, she +was well adapted to become the "workshop of the world." With colonial +possessions in every sea, and with Continental Europe in ceaseless +unrest, England could rely on customers who could themselves produce +nothing but raw material and would be obliged to buy her finished +products. + +The field of industry had been recently broadened by basic inventions of +unparalleled importance--the steam-engine, the power loom, the +spinning-jenny, and a multiplicity of other devices that increased a +hundred fold the efficiency of artisan labor. England knew that her +trade would in the main be a foreign trade and her financial dealings +largely with foreign governments. She knew that from the people of the +continent, impoverished by years of struggle for existence against the +attacks of Napoleon, she could not expect immediate payments in cash, or +in commodities. Time bonds and other deferred obligations were the media +in which for the most part she received pay, she made interest and +principal payable in gold alone, and if before the date of payment the +value of money should increase it would not be to the disadvantage of +the creditor. Whatever we may think of the _ethics_ of this policy, we +can have no difficulty in understanding its _motive_. + + +ACKNOWLEDGMENT OF THE MOTIVE. + +As to the object which England had in view in demonetizing silver we are +left in no sort of doubt. It has been candidly admitted by many of her +financiers and publicists. The reason for her stolid adherence to the +gold standard now is the same for which she originally demonetized +silver. Her income and creditor classes are daily in receipt of an +unearned increment to their wealth by reason of that demonetization. +More candid than the advocates in this country of the single gold +standard, the writers and press of Great Britain openly avow the object. +No better testimony to the fact can be adduced than that supplied by the +royal commission appointed in 1886 to inquire into the changes in the +relative values of the precious metals. + +At page 90, Part II, of the final report of that body, section 128, the +commission say: + + It must be remembered, too, that this country is largely a + creditor country, of debts payable in gold, and any change which + entails a rise in the price of commodities generally; that is to + say, a diminution of the purchasing power of gold would be to our + disadvantage. + +Before the British Royal Commission of 1868 on International Coinage, +Mr. Jacob Behren, an eminent British merchant and member of the +Associated Chambers of Commerce, after answering special and technical +questions, was asked, in conclusion, "if there was anything else he +wished to state." His reply was (p. 13): + + I would only state that, in my opinion, the general introduction + of gold all over the world has been one of the greatest possible + blessings to England. I believe that England would be now the + very poorest country in the world if the silver standard abroad + had been kept up, and gold had not been generally introduced. + Gold would otherwise have been very much reduced in value, and we + should have had all the gold poured into England. All the debts + owing to us would have been paid in the depreciated currency; + and, therefore, I believe that England ought to have taken the + lead in the introduction of a gold currency abroad. We ought to + be very thankful that it has been introduced, and we ought to + give every facility to its circulation. + +Sir Lyon Playfair, in a speech delivered in the English Parliament on +April 18, 1890, according to the report in the London Times of the day +following, said that-- + + The true policy of England as the chief creditor nation of + the world was to keep perfect independence, and to refuse + participation in any entangling conference on our monetary + system. + +And, according to the same report, Sir Lyon Playfair, referring to the +holding of the metals together by law, said that-- + + It was quite true that, if you yoked a cart-horse to a racer, the + strength of both would be increased but the speed of the racer + would be sacrificed. + +Gold is the "racer" whose "speed" must not be sacrificed, no matter how +much injury may be effected by its tendency to greater and greater gain. + +The weight of the enormous burden which is imposed on gold can not be +better illustrated than by a statement of this same Sir Lyon Playfair, +made in the same speech. According to the London Times of April 19, he +said that-- + + The liabilities of the banks of Great Britain to the public + amounted to £621,000,000, or about the amount of the national + debt of England; but the amount of coin or bullion to meet this + liability was only £35,000,000; or, deducting from each side of + the account £8,000,000 locked up in the Notes Department of the + Bank of England, it was £27,000,000; or only 4-1/2 per cent. of + liabilities. + +On the same occasion Mr. Goschen, Chancellor of the Exchequer, delivered +an able speech, in which he gave his facts, his eloquence, and his logic +to the struggling masses of his countrymen by maintaining the wisdom of +remonetization of silver, but gave his conclusions and his policy to the +creditor classes by recommending no disturbance of present conditions. + + I have contended-- + +said the Chancellor of the Exchequer-- + + and am prepared still to contend, that I should prefer the + currency of the world to depend upon two metals rather than upon + one metal. To those views I gave expression in 1878. * * * I have + always looked upon silver and gold not as antagonistic to each + other; not as being metals the price of one of which would + necessarily fall when the other rose, but I have looked upon them + as partners who together were doing the work of the currency of + the world. + +The English creditor classes have not been without able coadjutors in +this country. We have noticed for the last twelve or fourteen years that +zealous advocates of the gold standard, the advantages of which are not +confined to Great Britain, are to be found among the creditor classes of +the United States. + +If the toilers of this country, from the proceeds of whose labor these +exactions have to be paid, had as little influence on the legislation of +the United States as the toilers of England have on the legislation of +that country, the creditor classes and financiers of the United States +might be as frank as those of Great Britain in admitting the object of +maintaining the single gold standard. + +How graphically, though unintentionally, does the English poet, Waller, +in the following verse, express the advantage which the gold standard +gives to creditors everywhere, and the self-satisfaction with which they +contemplate life: + + The taste of hot Arabia's spice we know, + Free from the scorching sun that makes it grow. + Without the worm, in Persia's silk we shine, + And, without planting, drink of every vine. + To dig for wealth we weary not our limbs, + Gold, though the heaviest metal, hither swims. + Ours is the harvest where the Indians mow. + We plow the deep, and reap what others sow. + + +THE MOTIVE OF GERMANY. + +When Germany, intoxicated by her victory over France, and in order to +further cripple a fallen foe from whom she had exacted $1,000,000,000 in +gold, demonetized silver, she inflicted on her people by the fall of +prices consequent on the increase in the value of money, more misery +than all her armies of horse and foot had been able to inflict on +France. France, on the contrary, notwithstanding this unprecedented war +tribute, by keeping a sufficient volume of money in circulation to +maintain, and even advance, her range of prices, emerged in a few years +from the consequences of the greatest disaster in her history, conscious +of a triumph more complete than Germany had achieved by all the military +splendor of the war. The ransom exacted of France was received back by +her almost as soon as paid, in exchange for the products of her +industry. It is not a sign of prosperity, Mr. President, when hundreds +of thousands of people, the best bone and sinew of a nation, are found +annually emigrating; and it is a coincidence which I merely mention, in +passing, that as soon as the effects of demonetization of silver had had +time to make themselves felt in Germany, a veritable hegira of its +people took place. + +From 1873 to 1889, the emigration from Germany numbered 1,546,000 +persons. + +Students of social science everywhere recognize the statistics of +illegitimacy and of suicides as among the most powerful evidences of +monetary distress. By reference to those statistics we find that +notwithstanding the large emigration during that period the number of +illegitimate births in Germany increased from 161,294 in 1883 to 169,645 +in 1888. The suicides in Prussia, Bavaria, Saxony, and Baden--the +leading states of the German Empire--increased from 179 for each million +of population in 1868 to 196 for each million of the population in 1876 +and to 218 for each million of the population in 1882. In Prussia alone +the number of suicides in 1876 was 151 per million, while in 1882 it was +191 per million. + +This is part of the price which the toiling masses of Germany are paying +for the gold standard experiment, which, without their consent their +imperial government foisted upon them. + +Bismarck made the mistake that many able men in all countries of the +western world have made and continue to make, namely, that of +attributing the commanding position of Great Britain in the commercial +and industrial world to her adoption of the gold standard. Bismarck +mistook for cause and effect what was a mere coincidence, the result of +exceptional conditions, as did those of our legislators in 1873, who +happened to know anything whatever of the nature of the act demonetizing +silver. The belief of some of the most far-sighted statesmen of Great +Britain has been that she secured her position, not by reason of the +gold standard, but in spite of it. + +In a speech delivered at Glasgow, in November, 1873, after the +alteration by Germany in her monetary standard, Mr. Disraeli said: + + The monetary disturbance which has occurred, and is now to a + certain extent acting very injuriously upon trade, I attribute to + the great changes which the Governments of Europe are making in + reference to their standard of value. Our gold standard is not + the cause of our commercial prosperity, but the consequence of + that prosperity. It is quite evident that we must prepare + ourselves for great convulsions in the money market, not + occasioned by speculation or any of the old causes which have + been alleged, but by a new cause with which we are not + sufficiently acquainted. + +And again in March, 1879, when the effects of the decreasing volume of +money were making themselves more and more felt, Mr. Disraeli, then Lord +Beaconsfield, said: + + All this time the produce of the gold mines of Australia and + California has been regularly diminishing, and the consequence is + that, while these great alterations on the continent in favor of + a gold currency have been made, notwithstanding that increase of + population which alone requires a considerable increase of + currency to carry on its transactions, the amount of the currency + itself is yearly diminishing, until a state of affairs has been + brought about by gold production exactly the reverse of that + which it produced at first. Gold is every day appreciating in + value, and as it appreciates the lower become prices. It is not + impossible that, as affairs develop, the country may require that + some formal investigation should be made of the causes which are + affecting the value of the precious metals, and the effect which + the change in the value of the precious metals has upon the + industries of the country, and upon the continual fall of prices. + +In reaching their conclusions, Bismarck and others ignored the +fundamental principle that a gold supply that might be sufficient for +one country with a gold standard, and might even result in a measure of +prosperity to that country, would be wholly insufficient if other +countries should adopt the same standard and should enter upon a keen +competition and rivalry for the acquisition of gold. + +The adoption of that standard by Germany and France was therefore not +only destructive of their own prosperity, but was a stunning blow at the +prosperity of England and all other gold-using countries. In taking +England for his model, Bismarck had not the condition of the toiling +masses before his mind, but the glamour of prosperity which surrounded +the creditor-barons. + +The unprejudiced observer can not fail to perceive that the $370,000,000 +coined under the Limited Coinage Act of the United States of 1878, +supplementing the gold stock of the western world, postponed great +industrial and financial crises. But the elements of these crises are +gathering, and, unless relief be soon forthcoming, will burst upon the +world with crushing severity. + + +DEMONETIZATION IN THE UNITED STATES. + +If we are surprised that the sordid selfishness of the privileged +classes of Europe should have induced them to perpetrate so gross an act +of injustice, we are reminded that the legislation of monarchical +countries has usually been controlled in the interest of the privileged +classes. But what shall be said in defense of the demonetization of +silver by the United States? No such stupendous act of folly and +injustice was ever before perpetrated by the representatives of a free +people. + +Our position differed materially from that of Great Britain. This was +not a creditor nation. Our people did not, and do not, own thousands of +millions of dollars of foreign bonds, on which to receive semi-annual +interest in a constantly appreciating money, which would have to be paid +from the current earnings of foreign labor. Instead, therefore, of our +demonetization unjustly enriching our creditor-classes at the expense of +foreigners, it enabled the creditors at home here to rob and despoil the +debtors among their own countrymen. Instead of despoiling the Canadian, +the Australian, the East Indian, the Egyptian, or the Turk, the +spoliation arranged for by our adoption of the gold standard was a +spoliation of the debtors in our own communities. In so far, however, as +our debt was held abroad, it provided for a spoliation of our citizens +by the foreign bondholders also. And as nearly all our public debt was +so held, we had presented to us in 1873 the extraordinary spectacle of +representatives, sent here to enact laws for the welfare and advancement +of our own people, devoting all their energies, whether aware of it or +not, to the upbuilding of the fortunes of the moneyed aristocracies of +other countries, at the expense of the producers of the United States. + + +CONDITION OF THE COUNTRY AT THE TIME. + +Consider for a moment the condition of this country at the time when +this amazing piece of legislation was enacted. + +The Republic was but just recovering from an exhausting war, which +loaded it with a national debt approaching $3,000,000,000. There were +also State, county, city, and town debts aggregating many more thousands +of millions, with railroad and other corporate bonds and debts +aggregating yet other thousands of millions and private debts of +indefinite and unascertainable amount, represented largely by mortgages +on real estate. This constituted an aggregate whose burden might +naturally be presumed to be sufficient to tax all the resources of the +people. Although some portion of those debts has been liquidated and the +national bonds have been refunded at lower rates of interest, yet we all +know that in this age all municipal and corporate debts, if not national +debts, are practically perpetual. No sooner is one form of bond +liquidated than another takes its place; no sooner is one public +improvement completed than another is begun. + +At the time silver was demonetized it might well have been supposed +that a sufficiently large unearned increment had already been realized +by the foreign and domestic holders of United States bonds. The greater +portion of the debt of the Government was, when incurred, made payable +simply in "lawful money"--the interest alone being payable in coin. Yet +in March, 1869, the bond-holders secured the passage of an act of +Congress, entitled "An act to strengthen the public credit," containing +a pledge to pay in coin or its equivalent not merely the interest, but +the principal of all national obligations not specially provided to be +paid otherwise. + + +THE COURSE OF THE CREDITORS. + +And again, when in 1870 Congress was about to provide for a refunding of +the public debt, these clamorous creditors, not satisfied with having +got the bonds at rates much below their face value, and not satisfied +with the pledge to pay in coin--a pledge made long after the contract +was made and the debt incurred--insisted that not only should the new +bonds be payable in coin, but in order to guard against any possible +interpretation which might work to their detriment they did what has +rarely been done in the history of monetary legislation, insisted that +even the very _standard_ of that coin should be fixed and nominated in +the bond. They were willing to take no chances. They were not willing to +place confidence in the sense of equity and fair dealing of the people +of the United States. They held before Congress the covert threat that +if the new issue of bonds did not provide for payment in "coin," instead +of "lawful money," and did not prescribe the precise standard of coin in +which they were to be payable, it would be difficult if not impossible +to place the bonds on the market. + +So, by the refunding act of July 14, 1870, Congress provided for the +payment in "coin of the present standard value," that is to say, in +either gold dollars of 25.8 grains of gold, nine-tenths fine, or in +silver dollars of 412-1/2 grains of silver, nine-tenths fine, at the +option of the United States. But even this extreme advantage to the +creditors over payment in "lawful money" of the United States, in which +the bonds were bought, and in which they were legally payable, was +insufficient. All but the most ingenious would imagine that having thus +provided for payment in coin then bearing a considerable premium over +the current money of the Republic, and having the very standard of that +coin fixed in the act, the highest point of vantage had been reached. +One device, however, and only one, remained by which the money of the +payment could be still further increased in value, and this device did +not escape the watchful eye or cunning hand of the public creditors. + +They clearly saw that if by legislative enactment they could secure the +rejection of one of the money-metals they would succeed in enormously +increasing the value of the metal retained. This they accomplished by +the demonetization of silver, and thus by striking down one-half the +automatic money of the world and devolving the money function +exclusively on the other half, added thousands of millions of dollars to +the burden of the debt. + + +THE PRETENSE TO "STRENGTHEN THE PUBLIC CREDIT." + +It will be observed that this anxiety to strengthen the public credit +was evinced by the bondholders _after_ and not before the bonds were in +their possession. No anxiety for the public credit was manifested by +them at a time when the Government might be able to reap advantage from +it. The Government having parted with the bonds at a heavy discount, +their selling price in the market became a matter of no direct pecuniary +importance to the people of the United States. + +The "strengthening of the public credit" that was to be effected by the +act of March 16, 1869, consisted of a rise in the price of the bonds for +the benefit of the holder, at a time when they were no longer the +property of the Government but of private individuals. The real effect +of the act, therefore, was not in any way to benefit the Government but +greatly to enrich, by an increment unearned and unbargained for, a few +men who had already been greatly enriched by their dealings with the +United States. The title of the act should have read "An act to +strengthen the bank account and credit of the holders of United States +bonds." + +The excuse and apology for the act was that by its passage the refunding +process then contemplated, and afterward provided for by the refunding +act of 1870 might be rendered more certain of success; but if any +advantage accrued from that cause, it was lost, and much more with it, +by the increase which the act of 1869 effected in the burden of the +bonded obligation, by pledging the nation to a payment in a medium much +more valuable than the medium provided for in the contract. And, again, +in 1873 when all the bonds provided for by the refunding act of 1870 had +been sold and had passed out of the hands of the Government, another act +was passed, intended by the money-lenders again to strengthen the public +credit, and again to the disadvantage of the people and to the exclusive +and enormous advantage of the bondholders. It bore the innocent title of +"An act revising and amending the laws relative to the mints, assay +offices, and coinage of the United States." This act, bearing on its +face no suggestion of any change more serious than that of regulating +the petty details of mint management, has proved to be an act of +momentous consequence to the people of this country. This is the act +that demonetized the silver dollar, which it did by merely omitting that +coin from the enumeration of the coins of the United States. + + +DEMONETIZATION WHOLLY UNJUSTIFIABLE. + +Among all the explanations that have been made to account for that +demonetization by a Congress of the United States, I have never heard +any reason advanced which constituted a justification for it. To my +mind, in view of all the circumstances--in the face of the herculean +difficulties by which the nation was surrounded, in the face of the +sacrifices which our citizens had made to preserve the Republic, and in +the face of all that had already been done by an over-generous people, +proud of their national strength, and jealous of their national honor, +to satisfy the rapacious demands of the money-lenders--in view, I say, +of all these facts, the demonetization of silver by the United States +must be regarded as one of those historic blunders that are worse than +crimes. It was the child of Ignorance and Avarice, and is already the +prolific parent of enforced idleness, poverty, and misery. + +It is to undo as far as possible the effects of the blunder of 1873 that +new legislation is now imperatively demanded by the people. While the +past can not be recalled, the present is ours, and the pressing duty of +to-day is to provide for the future. The demand comes from all sections +of the country that a remedy for the depressed industrial conditions +caused by the legislation of 1873, be applied at the earliest moment. +And what better remedy could be applied than absolutely to reverse that +legislation and to put the monetary position of this country back to +exactly where it was when that wrong was committed? + +Some twelve years ago an attempt was made to apply a remedy, but the +attempt was only partially successful. Instead of resulting in free +coinage, it resulted in the passage of the bill which authorized the +coinage of not less than two nor more than four million dollars' worth +of silver per month. On that occasion a financial debate of great +interest and importance was had in this Chamber and in the other House +of Congress. The proposition to remonetize silver or to increase the +silver coinage was vigorously opposed, but the arguments then presented +by the advocates of remonetization never have been, and never can be, +refuted. + +In fact, but rarely has there been any attempt made to answer those +arguments. Puerile attempts at wit, and diatribes of abuse are all that +the silver men have heard in sixteen years in answer to the contentions +they have made in favor of the remonetization of silver. + + +EDUCATIONAL EFFECT OF DISCUSSION. + +With that debate, Mr. President, long pending and eagerly maintained on +both sides, there began in this country an educational movement among +the masses, that is destined to have far-reaching consequence. The +public attention was fastened, as it had never been fastened before, on +the subject of money, and on the forces which govern its value, and up +to this time that attention has never flagged. As a result we find the +great body of our people to-day--the farmers and artisans of the +country--after years of reflection and discussion in their lyceums and +trade organizations, adopting to a large extent the views then presented +by the advocates of an increased money volume--views which at the time +were contemptuously derided by the advocates of contraction and of gold. + +The cry for relief appropriately now comes from the farmers, the +artisans, and the laboring classes, as well as from the young, the +enterprising, the thoughtful, of all classes, who have not inherited +wealth, but are hewing out for themselves the rugged path to success. It +is they who have had to bear the exactions of the system which has +prevailed. It is from the proceeds of their labor that the extortions +have been paid. If objection be made that the character of relief +proposed is not indorsed in financial circles, or by the literary guild +or professional political economists that surround them, the sufficient +reply is that the world can not wait for the correction of abuses by +those who are profiting by them. In the nature of things, all movements +for reform must be initiated by those who can not lose by the +installation of justice. + +But there are others besides the laboring masses who are working in the +cause of humanity. There are noble, unselfish, and altruistic men in all +the countries of civilization, who see the wrong and are indefatigable +in their efforts to set it right. + +I will read a cable dispatch recently addressed to me by Mr. Henry H. +Gibbs, formerly governor of the Bank of England, and now president of +the Bimetallic League of Great Britain: + + LONDON, _May 6_.--The friends of silver deeply regret the death + of Senator Beck, whose services in the cause of monetary reform + are warmly appreciated on this side of the Atlantic. The + bimetallist party of the United Kingdom, now including over one + hundred members of the House of Commons, attach the greatest + value to the debate about to commence in your illustrious + chamber. We fully recognize not only that the support afforded to + silver by your legislation during the last twelve years has + helped the protect the industrial world from an acute monetary + crisis, but also that the debates in Congress have served more + than all else to educate our people to recognition of the + important issues involved. We believe also that the increase and + coinage of silver contemplated by Congress will restore, wholly + or considerably, your coinage rates, and will thus make + international settlement of this complex question comparatively + easy. We anticipate further and with much confidence, that the + advance in the price of silver which must follow your action will + stimulate both the export and the other trades of your country, + and, while tending to the prosperity of your agricultural + classes, will also assist the manufacturing industries of the + United Kingdom and the whole body of our wage-earners. + +Mr. Moreton Frewen, of London, an able writer on economic subjects, +whose recent work on the "The Economic Crisis" I commend to the careful +perusal of Senators, says: + + It may, indeed, be affirmed, without fear of contradiction, that + legislation arranged in the interest of a certain class, first by + Lord Liverpool in this country, and again by Sir Robert Peel at + the instigation of Mr. Jones Loyd and other wealthy bankers, + which was supplemented recently by simultaneous anti-silver + legislation in Berlin and Washington at the instance of the great + financial houses--this legislation has about doubled the burden + of all national debts by an artificial enhancement of the value + of money. + + The fall of all prices induced by this cause has been on such a + scale that while in twenty years the National debt of the United + States quoted in dollars has been reduced by nearly two-thirds, + yet the value of the remaining one-third, measured in wheat, in + bar iron, or bales of cotton, is considerably greater--is a + greater demand draft on the labor and industry of the nation than + was the whole debt at the time it was contracted. The aggravation + of the burdens of taxation induced by this so-called + "appreciation of gold," which is no natural appreciation, but has + been brought about by class legislation to increase the value of + the gold which is in a few hands, requires but to be explained to + an enfranchised democracy, which will know how to protect itself + against further attempts to contract the currency and to force + down prices to the confusion of every existing contract. + + Of all classes of middle-men, bankers have been by far the most + successful in intercepting and appropriating an undue share of + produced wealth. While the modern system of banking and credit + may be said to be even yet in its infancy, that portion of the + assets of the community which is to-day in the strong boxes of + the bankers would, if declared, be an astounding revelation of + the recent profits of this particular business; and not only has + the business itself become a most profitable monopoly, but its + interests in a very few hands are diametrically opposed to the + general interests of the majority. By legislation intended to + contract the currency and force down all prices, including wages, + the price paid for labor, the money owner has been able to + increase the purchase power of his sovereign or dollar by the + direct diminution of the price of every kind of property measured + in money. + + +UNFULFILLED PROPHECIES. + +During the debate on the limited coinage bill, not content with abuse of +the advocates of the measure; with flimsy criticism of it and specious +arguments against it, its opponents in and out of Congress indulged in +diverse prophecies and predictions. They pictured forth the lamentable +results that would follow its passage, and the direful consequences that +would ensue from an increase of the circulating medium of the country. +Among the results confidently predicted were the following: that the +silver would not circulate at all, and again that it would circulate to +the exclusion of gold, which metal, we were informed, would flow out of +this country with a velocity and in a volume theretofore unknown; that +we should be unable to redeem our paper money in gold; that we should be +precipitated into a silver vortex; that an inflation of the currency +would follow, which would ruinously raise prices of all commodities and +that this inflation would result in an unprecedented contraction. We +were charged with forcing upon the public creditors a dollar worth only +ninety cents. We were warned that the passage of the bill would +indefinitely postpone the refunding of the public debt, and would lower +the price and impair the value of our national securities. It was +charged that we were setting on foot a new and irrepressible conflict +between two great sections of the country--the East and the West. We +were charged with uttering a debased coin; with lowering the standard +of American credit; with tarnishing the integrity and honor of our +country before foreign nations, and with unprecedented moral turpitude +in setting an example of flagrant and shameless national dishonesty. + +The men of the far West, and of the Pacific slope especially, were the +particular targets of this abuse. They were denounced by some as +"lunatics," by others as dangerous and unworthy demagogues, because, as +was charged, their constituents, if not themselves, were directly +interested in the restoration of the ancient right of silver to full +recognition as one of the money metals. For their benefit resort was had +to every epithet which the English language afforded. In holding them up +to public scorn the rich and varied vocabulary of odium and opprobrium +was exhausted. + +These prophecies of disaster were united in by the professors of +political economy in all the Eastern colleges, by the President of the +United States, by the Secretary of the Treasury, by the leading American +newspapers, by the principal public men and journals of Great Britain, +if not of all Europe; and, of course, by all bankers, money-lenders, and +professional financiers the world over. + +And now, Mr. President, how many of all those alarming prognostications +by all these distinguished prophets have been fulfilled? Not one! On the +contrary, it is not too much to say that the public credit of the United +States is to-day the highest in the world. It does not stand merely in +line with that of other first-rate powers; it stands at the head. Our +gold, silver, and paper money stand at a parity with each other. If a +full measure of relief was not realized by the passage of that bill it +is because the coinage of $4,000,000 a month was left optional with the +Secretary of the Treasury, instead of being made mandatory on him. + +But it is hardly necessary to assert that the predicted inflation of +prices has not been observed as a consequence of the coinage of +$2,000,000 a month. While the issuance of that amount has not, with our +rapidly increasing population and wealth, been sufficient to arrest the +downward tendency of prices, it has undoubtedly prevented them from +falling much lower. Without that coinage, we should have had industrial +depression, chronic and somber, with consequences of untold disaster. + +But the result which gave most apprehension to those who advocated the +gold standard, the evil which they regarded as on the whole the most +threatening and direful of all the evils that were to result from even +so small an increase in the money volume as that bill provided for, was +the outflow of gold. They ridiculously under-estimated the tremendous +money-absorbing power of this great country. And as if to emphasize to +all the world the complete absurdity of their alleged fears--this +apprehension has been conspicuously and notoriously set at naught by the +constant inflow of gold. On the 30th of June, 1878, the amount of gold +coin and bullion in the Treasury and in monetary circulation in this +country is officially reported to have been $213,199,977, and this +amount is probably much over-estimated. On November 1, 1889, we had more +than three times as much--the amount of gold in circulation and in the +Treasury being reported as $689,000,000. + +"Experience," says Dr. Johnson, "is the great test of truth, and is +perpetually contradicting the theories of men," and the last experience, +Mr. President, is the best. + +If the professors of political economy, the Eastern newspaper editors, +and the professional financiers were then so seriously mistaken ought +they not to be a little modest now in making predictions, especially in +renewing predictions that have been already discredited? They can not +point to a single instance in which their prophesy has not been +falsified by the event. So humiliating a failure on the part of the +professors, in a realm of which they boastfully claimed to be masters, +so complete an overthrow of these "experts" by men who were ridiculed +and derided as rural financiers and crazy theorists, ought to put the +advocates of the gold standard on their guard against a like defeat on +this occasion. They are pressed for reasons to account for the utter +miscarriage of their prophecies. They are left without a shadow of +consolation except that the coinage of $2,000,000 worth of silver +bullion each month has not succeeded in placing silver at a par with +gold. They affect to believe that the advocates of silver in 1878 +expected that that metal, under the very limited demand of $2,000,000 a +month, would be brought to a level with gold, which, owing to the +demonetization of silver, had risen abnormally and ruinously in value. + +No such belief was ever entertained or expressed. On the contrary it was +repeatedly asserted by the advocates of silver that so long as the +entire yield of gold from all the mines of the world (in 1878, +$119,000,000) was invested with the full money function and had free +access to all mints to be transmuted into coin, it could not be expected +that the conferring of the legal-tender function upon a sum so +comparatively trifling as one-fourth the yield of silver (the yield in +1878 being $99,000,000) would have the effect of placing it on a level +with gold. + +It is, however, a significant fact that every silver dollar that has +been coined under that act is at a parity with gold, and will to-day buy +as much of all the objects of human desire as will the gold dollar. Nay, +more, silver bullion--disparaged and discredited as it is by being shorn +of the money function, and denied access to the mints, instead of +decreasing in purchasing power, has maintained so steady a relation to +commodities that 412-1/2 grains of uncoined silver will exchange for as +much to-day as would the coined dollar, whether of silver or gold, in +1873, when the full money function attached equally to both metals. If +this be true--and I shall presently demonstrate it beyond +refutation--what an utter perversion of terms it is to say that silver +has fallen in value! + + +WILL REMONETIZATION PLACE US ALONGSIDE INDIA. + +We are solemnly warned that the full remonetization of silver in the +United States would place us alongside India and the other barbarous +countries of the world. This brilliant piece of reasoning is advanced +with great confidence, and is intended to be conclusive of the argument +against silver. But, Mr. President, India is no more barbarous now than +it was in 1873--before our silver dollar was demonetized. India is no +more barbarous now than it was in 1857, when Germany demonetized gold +and placed herself "alongside" India. Neither is Germany any more +civilized now than then. We did not at that time hear any complaint, +either in the United States or Europe, that the use of silver as money +placed any one nation more than any other in dangerous affiliation with +the civilization of India. We have never heard it charged against France +that its civilization was brought any nearer that of India by the +immense quantity of silver money in France. Neither did we hear it +charged against the United States up to 1873 that we were "alongside," +or dangerously close to the barbarous nations by our use of silver as +money. + +Up to 1834 we had no metallic money other than silver in our +circulation, and up to 1850 we had much more silver in circulation than +gold. Were we "alongside" India then? Where were the wise and patriotic +men of our country at those periods? History fails to record any protest +on their part that we were placing ourselves "alongside" India or any +other of the barbarous nations of the world by our use of silver and our +recognition of its full money power. All the nations of the earth used +silver and accorded it full recognition as money equally with gold up to +1819. Was all Christendom at that time "alongside" India? When, in that +year, Great Britain sundered the silver link that from time immemorial +had kept her "alongside" India and the other barbarous nations and, for +selfish reasons of her own, arising from her position as a creditor of +all other nations, decided to recognize gold only as money, was any +evidence afforded of a sudden advance in the civilization of Great +Britain? Was the emergence of that nation from the benumbing +companionship of India and the other barbaric countries into the +glittering and refulgent light of the gold dispensation signalized, as +would be expected, by a corresponding improvement in the condition of +the people? + +On the contrary, the history of the time informs us that as a +consequence of the passage of the bill by Parliament in 1819, compelling +payments in gold, prices rapidly fell, cotton in particular sinking in +the short space of three months to one-half its former level. Within six +months all prices had fallen one-half, and showed no signs of +improvement for the next three years. By reason of the contraction of +the currency the industry of the nation was congealed, as is a flowing +stream by the severity of an arctic winter. Alarm became universal; +confidence and activity ceased. Bankruptcies increased in 1819 more than +50 per cent. over the number of the previous year. Meetings were held +throughout England in which the people called on the government to +devise some means of redressing the situation. So universal was the +distress that the owners of land in England, who in 1819 numbered +160,000 were in seven years, by forced sales and foreclosure of +mortgages on the smaller farms, reduced to 30,000, and one in every +seven of the population lived on organized charity. All this was but a +part of the price which the people of England paid for a policy imposed +on them by the creditor classes among their own number. The condition of +industry and disorganization of labor led to frequent and serious +conflicts between the people and the military. They also led to +commercial crises without number, and England, by demonetizing silver +and thus ceasing to be "alongside" India, became the seat of panics, as +Egypt had long been of the plague and India of the cholera. + +As a contrast to this I will merely cite the change in the condition of +India within the past seventeen years. When the Western world discarded +silver as money and, as a consequence, India received a larger supply of +it than ever before, that barbarous nation, as is universally admitted, +made progress by leaps and bounds. No country on earth has in the same +time made such advances in material prosperity and in all the elements +that conduce to the comfort and happiness of a people. Notwithstanding +the alleged debasement of silver, no sooner had its increased inflow +into India begun than the industries of a vast continent were +established and set in motion, and a substantial part of the activity +and prosperity that were wont to pervade some of the industries of the +United States has, by that demonetization, been transferred to fields +of wheat, and fields and factories of cotton 10,000 miles distant. + +What really placed us alongside such barbarous countries as India was +the demonetization of silver. It was by that demonetization that the +people of Europe were enabled, with gold, to buy silver at 30 per cent. +discount, which, when shipped to India and coined into rupees, would buy +as much wheat as could ever have been bought with that coin. There has +been no decrease whatever in the purchasing power of the rupee in India. +This was equivalent to buying wheat at 30 per cent. below the price +theretofore paid for it, and thus the farmers of the United States were +by demonetization placed "alongside" the barbarous people of India. +Their wheat had to compete in the European markets with the wheat of +India, and it is this competition that placed them "alongside" India. +The farmer of this country, therefore, by demonetization of silver, was +compelled to compete with under-paid and half-starved ryots. And so it +was that our cotton planters, by the demonetization of silver, were +placed alongside the barbarous people of India. It is this degrading +competition that places a highly civilized people alongside a barbarous +one. + +The advocates of the single gold standard deem even silver money much +better money than greenbacks. Does it then follow that when greenbacks +were our only money--good enough money to carry the nation through the +greatest war in all history--we were "alongside" or underneath the +barbarous nations of the world? It is not the form, or the material of a +nation's money that fixes its status relatively to other nations. That +is accomplished by the vitality, the energy, the intellectuality and +effective force of its people. The United States can never be placed +"alongside" any barbarous nation, except by compelling our people to +compete with barbarous peoples--compelling them to sell the products of +American labor at prices regulated by the cost of labor and manner of +living in barbarous countries. As well might it be said that we are +alongside the barbarous people of India because we continue to produce +wheat and cotton. + +The distinguishing feature of all barbarous nations is the squalor of +their working classes. The reward of their hard toil is barely enough to +maintain animal existence. A civilized people are placed alongside a +barbarous one when, in their means of livelihood, the foundation of +their civilization, they are made to compete with the barbarians. That +was the result accomplished for the farmers and planters of the United +States when silver was demonetized. + + +CREDITORS AND DEBTORS.--A COMPARISON OF MOTIVES. + +All movements for the increase of the monetary circulation are ascribed +by the money-lenders and creditor classes to the unworthy desire on the +part of the debtors to escape their just obligations. But if motives are +to be brought in question, the rule should work both ways. No note is +taken of the motive of the creditor classes in securing a contraction of +the circulation. Whatever the apparent purpose of contraction, and +however specious the arguments advanced in its justification, the real +object has always been to increase the purchasing power of money. In all +countries, and throughout all time, it is the cupidity of the creditor +classes and annuitants, and their desire to increase the value of the +money unit that has brought about a shrinkage in the money volume. +Unlike the great masses of the people, who were ignorant of the effects +to be naturally expected from such a shrinkage, the annuitants and +moneyed men very well understood that the value of every pound or dollar +depended on the number of pounds or dollars that were in circulation; +the larger the total number out, the smaller the purchasing power of +each; the smaller the total number out, the greater the purchasing power +of each. + +Loaners of capital are not usually those who entertain further hope of +personal achievement. When men realize fortunes it is rarely that they +conserve the faculty of initiative; they find no special delight in +novelty; they look so carefully to security in the use of money that the +spirit of adventure is restrained. The realization of a fortune is +usually the labor of a life-time, and few men who reach the goal care to +retrace their steps to enter again upon a struggle that demands all the +strength, the momentum, and the intrepidity of youth. Men of assured +incomes therefore are disposed to take their ease, and society must +look, for its material progress and development, to those who have a +career to make, with the ambition and the power to make it. + +It is a remarkable circumstance, Mr. President, that throughout the +entire range of economic discussion in gold-standard circles, it seems +to be taken for granted that a change in the value of the money unit is +a matter of no significance, and imports no mischief to society, so long +as the change is in one direction. Who has ever heard from an Eastern +journal any complaint against a contraction of our money volume; any +admonition that in a shrinking volume of money lurk evils of the utmost +magnitude? On the other hand we have been treated to lengthy homilies on +the evils of "inflation," whenever the slightest prospect presented +itself of a decrease in the value of money--not with the view of giving +the debtor an advantage over the lender of money, but of preventing the +unconscionable injustice of a further increasing value in the dollars +which the debtor contracted to pay. Loud and resounding protests have +been entered against the "dishonesty" of making payments in "depreciated +dollars." The debtors are characterized as dishonest for desiring to +keep money at a steady and unwavering value. If that object could be +secured, it would undoubtedly be to the interest of the debtor, and +could not possibly work any injustice to the creditor. It would simply +assure to both debtor and creditor the exact measure for which they +bargained. It would enable the debtor to pay his debt with exactly the +amount of sacrifice to which, on the making of the debt, he undertook to +submit, in order to pay it. + + +WHO ARE THE DEBTORS? + +In all discussions of the subject the creditors attempt to brush aside +the equities involved by sneering at the debtors. But, Mr. President, +debt is the distinguishing characteristic of modern society. It is +through debt that the marvelous developments of nineteenth century +civilization have been effected. Who are the debtors in this country? +Who are the borrowers of money? The men of enterprise, of energy, of +skill, the men of industry, of foresight, of calculation, of daring. In +the ranks of the debtors will be found a large preponderance of the +constructive energy of every country. The debtors are the upbuilders of +the national wealth and prosperity; they are the men of initiative, the +men who conceive plans and set on foot enterprises. They are those who +by borrowing money enrich the community. They are the dynamic force +among the people. They are the busy, restless, moving throng whom you +find in all walks of life in this country--the active, the vigorous, the +strong, the undaunted. + +These men are sustained in their efforts by the hope and belief that +their labors will be crowned with success. Destroy that hope and you +take away from society the most powerful of all the incentives to +material development; you place in the pathway of progress an obstacle +which it is impossible to surmount. + +The men of whom I have spoken are undoubtedly the first who are likely +to be affected by a shrinkage in the volume of money. + +The highest prosperity of a nation is attained only when all its people +are employed in avocations suited to their individual aptitudes, and +when a just money system insures an equitable distribution of the +products of their industry. With our present complex civilization, in +order that men may have constant employment, it is indispensable that +work be planned and undertakings projected years in advance. Without an +intelligent forecast of enterprises large numbers of workmen must +periodically be relegated to idleness. Enterprises that take years to +complete must be contracted for in advance, and payments provided for. + +A constant but unperceived rise in the value of the dollar with which +those payments must be made, baffles all plans, thwarts all calculation, +and destroys all equities between debtor and creditor. If we can not +intelligently regulate our money volume so as to maintain unchanging the +value of the money unit, if we can not preserve our people from the +blighting effects which an increase in the measuring power of the money +unit entails upon all industry, to what purpose is our boasted +civilization? + +By the increase of that measuring power all hopes are disappointed, all +purposes baffled, all efforts thwarted, all calculations defied. This +subtle enlargement in the measuring power of the unit of money (the +dollar) affects every class of the working community. Like a poisonous +drug in the human body, it permeates every vein, every artery, every +fiber and filament of the industrial structure. The debtor is fighting +for his life against an enemy he does not see, against an influence he +does not understand. For, while his calculations were well and +intelligently made, and the amount of his debts and the terms of his +contracts remain the same, the weight of all his obligations has been +increased by an insidious increase in the value of the money unit. + + +EFFECTS OF A SHRINKING VOLUME OF MONEY. + +As to the benumbing consequences following a shrinkage in the volume of +money, the testimony of history is briefly reviewed in the report of the +Monetary Commission to which I have already referred, and from which I +read the following: + + At the Christian era the metallic money of the Roman Empire + amounted to $1,800,000,000. By the end of the fifteenth century + it had shrunk to less than $200,000,000. During this period a + most extraordinary and baleful change took place in the condition + of the world. Population dwindled and commerce, arts, wealth, and + freedom all disappeared. The people were reduced by poverty and + misery to the most degraded conditions of serfdom and slavery. + The disintegration of society was almost complete. The conditions + of life were so hard that individual selfishness was the only + thing consistent with the instinct of self-preservation. All + public spirit, all generous emotions, all the noble aspirations + of man shriveled and disappeared as the volume of money shrunk + and as prices fell. + + History records no such disastrous transition as that from the + Roman Empire to the Dark Ages. Various explanations have been + given of this entire breaking down of the frame-work of society, + but it was certainly coincident with a shrinkage in the volume of + money, which was also without historical parallel. The crumbling + of institutions kept even step and pace with the shrinkage in the + stock of money and the falling of prices. All other attendant + circumstances than these last have occurred in other historical + periods unaccompanied and unfollowed by any such mighty + disasters. It is a suggestive coincidence that the first glimmer + of light only came with the invention of bills of exchange and + paper substitutes, through which the scanty stock of the precious + metals was increased in efficiency. But not less than the + energizing influence of Potosi and all the argosies of treasure + from the New World were needed to arouse the Old World from its + comatose sleep, to quicken the torpid limbs of industry, and to + plume the leaden wings of commerce. It needed the heroic + treatment of rising prices to enable society to reunite its + shattered links, to shake off the shackles of feudalism, to + relight and uplift the almost extinguished torch of civilization. + That the disasters of the Dark Ages were caused by decreasing + money and falling prices, and that the recovery therefrom and the + comparative prosperity which followed the discovery of America + were due to an increasing supply of the precious metals and + rising prices, will not seem surprising or unreasonable when the + noble functions of money are considered. Money is the great + instrument of association, the very fiber of social organism, the + vitalizing force of industry, the protoplasm of civilization, and + as essential to its existence as oxygen is to animal life. + Without money civilization could not have had a beginning; with a + diminishing supply it must languish, and, unless relieved, + finally perish. + + Symptoms of disasters similar to those which befell society + during the Dark Ages were observable on every hand during the + first half of this century. In 1809 the revolutionary troubles + between Spain and her American colonies broke out. These troubles + resulted in a great diminution in the production of the precious + metals, which was quickly indicated by a fall in general prices. + As already stated in this report, it is estimated that the + purchasing power of the precious metals increased between 1809 + and 1848 fully 145 per cent., or, in other words, that the + general range of prices was 60 per cent. lower in 1848 than it + was in 1809. During this period there was no general + demonetization of either metal and no important fluctuation in + the relative value of the metals, and the supply was sufficient + to keep their stock good against losses by accident and abrasion. + But it was insufficient to keep the stock up to the proper + correspondence with the increasing demand of advancing + populations. + + The world has rarely passed through a more gloomy period than + this one. Again do we find falling prices and misery and + destitution inseparable companions. The poverty and distress of + the industrial masses were intense and universal, and, since the + discovery of the mines of America, without a parallel. In England + the suffering of the people found expression in demands upon + Parliament for relief, in bread riots, and in immense Chartist + demonstrations. The military arm of the nation had to be + strengthened to prevent the all-pervading discontent from + ripening into open revolt. On the Continent the fires of + revolution smoldered everywhere, and blazed out at many points, + threatening the overthrow of states and the subversion of social + institutions. + + Whenever and wherever the mutterings of discontent were hushed by + the fear of increased standing armies, the foundations of society + were honey-combed by powerful secret political associations. The + cause at work to produce this state of things was so subtle, and + its advance so silent, that the masses were entirely ignorant of + its nature. They had come to regard money as an institution fixed + and immovable in value, and when the price of property and the + wages of labor fell, they charged the fault, not to the money, + but to the property and the employer. They were taught that the + mischief was the result of overproduction. Never having observed + that overproduction was complained of only when the money stock + was decreasing, their prejudices were aroused against + labor-saving machinery. They were angered at capital, because it + either declined altogether to embark in industrial enterprises or + would only embark in them upon the condition of employing labor + at the most scanty remuneration. They forgot that falling prices + compelled capital to avoid such enterprises on any other + condition, and for the most part to avoid them entirely. They did + not comprehend that money in shrinking volume was the prolific + parent of enforced idleness and poverty, and that falling prices + divorced money capital, from labor, but they none the less felt + the paralyzing pressure of the shrinking metallic shroud that was + closing around industry. + + The increased yield of the Russian gold fields in 1846 gave some + relief and served as a parachute to the fall in prices, which + might otherwise have resulted in a great catastrophe. But the + enormous metallic supplies of California and Australia were all + needed to give substantial and adequate relief. Great as these + supplies were, their influence in raising prices was moderate and + soon entirely arrested by the increasing populations and commerce + which followed them. In the twenty-five years between 1850 and + 1876 the money stock of the world was more than doubled, and yet + at no time during this period was the general level of prices + raised more than 18 per cent. above the general level of 1848. + + A comparison of this effect of an increasing volume of money + after 1848 with the effect of a decreasing volume between 1809 + and 1848 strikingly illustrates how largely different in degree + is the influence upon prices of an increasing or decreasing + volume of money. The decrease of the yield of the mines since + about 1865, while population and commerce have been advancing, + has already produced unmistakable symptoms of the same general + distrust, non-employment of labor, and political and social + disquiet, which have characterized all former periods of + shrinking money. + +The time that has elapsed since that report was written has but served +to verify and emphasize its statements. + + +THE FALL OF PRICES SINCE 1873. + +It is a fact not disputed anywhere but universally admitted, that for +many years past the prices of all articles entering into general +consumption among the people have been steadily falling. It is obvious +that the industrial conditions prevailing since 1873 are but a +repetition of those above described as following 1809--with falling +prices, constant unrest, and universal discontent. + +The following table, compiled from figures published by the Bureau of +Statistics of the Treasury Department, shows the average range of export +prices of the articles named for each year since 1873: + + _Annual average export prices of commodities of domestic production + for each year from 1873 to 1889, inclusive._ + + ------+----------+----------+----------+--------+--------+-------- + Year | Corn | Wheat | Wheat | Cotton | Leather| Illumi- + ending| per | per | flour |(upland)| per | nating + June,| bushel. | bushel. | per | per | pound. | oils, + 30-- | | | barrel. | pound. | |refined, + | | | | | | per + | | | | | | gallon. + ------+----------+----------+----------+--------+--------+-------- + |_Dollars._|_Dollars._|_Dollars._|_Cents._|_Cents._|_Cents._ + 1873 | .618 | 1.312 | 7.565 | 18.8 | 25.3 | 23.5 + 1874 | .719 | 1.428 | 7.144 | 15.4 | 25.2 | 17.3 + 1875 | .848 | 1.124 | 5.968 | 15.0 | 26.0 | 14.1 + 1876 | .672 | 1.242 | 6.216 | 12.9 | 26.2 | 14.0 + 1877 | .587 | 1.169 | 6.488 | 11.8 | 23.9 | 21.1 + 1878 | .562 | 1.338 | 6.358 | 11.1 | 21.8 | 14.4 + 1879 | .471 | 1.068 | 5.252 | 9.9 | 20.4 | 10.8 + 1880 | .543 | 1.245 | 5.878 | 11.5 | 23.3 | 8.6 + 1881 | .552 | 1.114 | 5.668 | 11.4 | 22.6 | 10.3 + 1882 | .668 | 1.185 | 6.149 | 11.4 | 20.9 | 9.1 + 1883 | .684 | 1.127 | 5.955 | 10.8 | 21.1 | 8.8 + 1884 | .611 | 1.066 | 5.588 | 10.5 | 20.6 | 9.2 + 1885 | .540 | .862 | 4.897 | 10.6 | 19.8 | 8.7 + 1886 | .498 | .870 | 4.699 | 9.9 | 19.9 | 8.7 + 1887 | .479 | .890 | 4.510 | 9.5 | 18.7 | 7.8 + 1888 | .550 | .853 | 4.579 | 9.8 | 17.3 | 7.9 + 1889 | .474 | .897 | 4.832 | 9.9 | 16.6 | 7.8 + ============================================================ + Year | Bacon | Lard | Pork, | Beef, | Butter + ending| and hams | per | salted, | salted, | per + June,| per | pound. | per | per | pound. + 30-- | pound. | | pound. | pound. | + ------+----------+----------+----------+----------+--------- + | _Cents._ | _Cents._ | _Cents._ | _Cents._ | _Cents._ + 1873 | 8.8 | 9.2 | 7.8 | 7.7 | 21.1 + 1874 | 9.6 | 9.4 | 8.2 | 8.2 | 25.0 + 1875 | 11.4 | 13.8 | 10.1 | 8.7 | 23.7 + 1876 | 12.1 | 13.3 | 10.6 | 8.7 | 23.9 + 1877 | 10.8 | 10.9 | 9.0 | 7.5 | 20.6 + 1878 | 8.7 | 8.8 | 6.8 | 7.7 | 18.0 + 1879 | 6.9 | 7.0 | 5.7 | 6.3 | 14.2 + 1880 | 6.7 | 7.4 | 6.1 | 6.4 | 17.1 + 1881 | 8.2 | 9.3 | 7.7 | 6.5 | 19.8 + 1882 | 9.9 | 11.6 | 9.0 | 8.5 | 19.3 + 1883 | 11.2 | 11.9 | 9.9 | 8.9 | 18.6 + 1884 | 10.2 | 9.5 | 7.9 | 7.6 | 18.2 + 1885 | 9.2 | 7.9 | 7.2 | 7.5 | 16.8 + 1886 | 7.5 | 6.9 | 5.9 | 6.0 | 15.6 + 1887 | 7.9 | 7.1 | 6.6 | 5.4 | 15.8 + 1888 | 8.6 | 7.7 | 7.4 | 5.3 | 18.3 + 1889 | 8.6 | 8.6 | 7.4 | 5.5 | 16.5 + ============================================================ + Year | Cheese | Eggs | Starch | Sugar, | Tobacco, + ending| per | per | per | refined, | leaf, + June,| pound. | dozen. | pound. | per | per + 30-- | | | | pound. | pound. + ------+----------+----------+----------+----------+--------- + | _Cents._ | _Cents._ | _Cents._ | _Cents._ | _Cents._ + 1873 | 13.1 | 26.6 | 5.3 | 11.6 | 10.7 + 1874 | 13.1 | 22.1 | 5.7 | 10.5 | 9.6 + 1875 | 13.5 | 25.6 | 6.0 | 10.8 | 11.3 + 1876 | 12.6 | 28.0 | 5.4 | 10.7 | 10.4 + 1877 | 11.8 | 25.9 | 5.2 | 11.6 | 10.2 + 1878 | 11.4 | 15.8 | 4.7 | 10.2 | 8.7 + 1879 | 8.9 | 15.5 | 4.2 | 8.5 | 7.8 + 1880 | 9.5 | 16.5 | 4.3 | 9.0 | 7.7 + 1881 | 11.1 | 17.2 | 4.7 | 9.2 | 8.3 + 1882 | 11.0 | 19.2 | 4.8 | 9.7 | 8.5 + 1883 | 11.2 | 20.9 | 4.6 | 9.2 | 8.6 + 1884 | 10.3 | 21.2 | 4.5 | 7.1 | 9.1 + 1885 | 9.3 | 21.5 | 4.0 | 6.4 | 9.9 + 1886 | 8.2 | 18.3 | 4.1 | 6.7 | 7.8 + 1887 | 9.3 | 16.3 | 3.8 | 6.0 | 8.7 + 1888 | 9.9 | 15.9 | 3.5 | 6.3 | 8.3 + 1889 | 9.3 | 13.9 | 3.8 | 7.6 | 8.8 + ------+----------+----------+----------+----------+--------- + +To show from another source the same general fact of the decline of +prices, I quote from an article published in the New York Tribune early +in 1886. + +The New York Tribune is pretty good authority. These figures are +undoubtedly from the calculations and from the pen of Mr. Grosvenor, of +the editorial staff of that able journal, formerly editor and proprietor +of the "Public," whose estimates of prices have, in my judgment, been +more correctly made than those of any other statistician in the world. +The article is as follows: + + Quotations of about two hundred articles are compared since 1860, + and the amount of money is ascertained which would purchase, + at different dates, of these various articles, quantities + corresponding as closely as possible to their ascertained + consumption in 1880, the date of the last census. Among the + articles compared are wheat, corn, oats, rye, barley, beans and + pease, mess pork, bacon, ham, live hogs, lard, fresh beef, tallow, + live sheep, poultry, butter, cheese, eggs, milk, hay, potatoes, + turnips, cabbage, onions, apples, raisins, sugar, brown and + crushed; molasses, coffee, tea, tobacco, whisky, malt and hops, + mackerel, codfish, salt, rice, nutmegs, cloves, pepper, cotton, + print-cloths and standard sheeting, wool of different qualities, + blankets, carpets, flannels, leather, boots, shoes, hides, silk, + India rubber, iron (pig and bar), nails, steel rails, coal, oil + (crude and refined), tin and tin plates, copper, lead, hemp, + lumber, spruce and pine, oak, ash, walnut, and white wood, lath, + brick, lime, turpentine, linseed oil, soap, glass, paper, white + lead, and twelve other kinds of paints, fertilizers, and over + fifty kinds of drugs and chemicals. + + _Cost of products at different dates._ + + ---------------------+-----------+----------+--------- + Dates. | Cost in | Price of | Cost in + | currency. | gold. | gold. + ---------------------+-----------+----------+--------- + 1860, May 1 | $100.00 | $100.00 | $100.00 + 1865, November 1 | 174.77 | 145.87 | 119.81 + 1866, May 1 | 157.60 | 125.12 | 126.04 + 1866, November 1 | 170.31 | 146.25 | 117.82 + 1871, November 1 | 122.03 | 112.00 | 108.95 + 1872, May 1 | 137.13 | 112.50 | 121.81 + 1873, November 1 | 115.14 | 108.50 | 106.01 + 1874, May 1 | 122.77 | 112.87 | 108.77 + 1875, January 1 | 113.01 | 112.37 | 100.37 + 1876, October 1 | 97.30 | 110.00 | 88.45 + 1877, May 1 | 99.29 | 106.75 | 93.01 + 1878, May 1 | 82.09 | 100.37 | 81.81 + 1878, October 18 | 77.94 | 100.37 | 77.65 + 1879, November 1 | 93.48 | -- | -- + 1880, January 1 | 103.42 | -- | -- + 1881, January 1 | 95.98 | -- | -- + 1882, May 16 | 106.59 | -- | -- + 1883, March 13 | 97.82 | -- | -- + 1883, November 1 | 88.71 | -- | -- + 1884, January 1 | 88.37 | -- | -- + 1884, November 21 | 78.47 | -- | -- + 1885, January 1 | 79.66 | -- | -- + 1885, May 9 | 80.22 | -- | -- + 1885, August 22 | 74.56 | -- | -- + 1885, November 1 | 75.35 | -- | -- + 1885, Close | 78.53 | -- | -- + ---------------------+-----------+----------+--------- + + It is not only clear from this comparison that the prices of 1885 + have been the lowest in our history for twenty-five years, but + that there has been a general tendency toward lower prices. From + 1866 to 1871, and again from 1872 until 1885, prices fell quite + steadily. Indeed, had not the short crop of 1881 caused a + temporary advance in the spring of 1882, the range of January, + 1880, would have been the highest of the later period, and it + might have been said that the present era of declining prices had + continued with little intermission for six years. None will fail + to observe how swift and sharp the advances have been--about 12 + per cent. from November, 1871, to May, 1872, and 25-1/2 per cent. + from October, 1878, to January, 1880. But these spasmodic + advances, by which the general tendency downward is interrupted, + only serve to make it more clear that prices have been tending + irresistibly toward a lower level than that of 1860, not only + during the period of paper depreciation, but since gold has been + the measure of value. + +In order to show that the United States are not alone in their complaint +of falling prices, but that the complaint is universal, and in order +that we may have before us a broad view of the field of general prices, +I submit a table showing the relation to each other of the range of +prices from 1809 to 1849, by decades, based on the prices of fifty +leading articles of commerce, prepared by the distinguished Professor +Jevons and published in the London Economist for May 8, 1869. + +Taking the range of prices of 1849 as a datum line (the range for that +year being the lowest of the century) Mr. Jevons works backward to 1809, +when the revolt of the South American colonies against the authority of +Spain shut off at a blow the supplies of the precious metals, and set on +foot a money famine from which the world knew no relief till the +discovery of the mines of California and Australia. + +Professor Jevons's figures are as follows, the prices of 1849 being +represented by 100: + + _Relation of prices, 1809 to 1849, by decades, those for 1849 being + rated at 100._ + + 1809 245 + 1819 175 + 1829 124 + 1839 144 + 1849 100 + +From these figures it will be observed that the fall from 1809 to 1849, +a period of forty years, was as 245 to 100, or 59 per cent. + +By the next table which I submit, that of Dr. Soetbeer, it will be seen +that the general range of prices rose gradually from 1849 to 1873, in +the last of which years the figures bore to those of 1849 the relation +of 138 to 100. It has never been denied that this rise was due to the +increase in the world's money supply by the yield of the precious metals +from the mines of California and Australia, the effects of which, +however, as will be seen by the table, were not felt on prices till +1853--five years after John Marshall's discovery of the yellow metal in +the tail-race at Sutter's mills. Yet, because it interferes with the +pecuniary interests of a large and influential class, it is vehemently +denied that the fall of prices since 1873 is due to a decrease in the +volume of the money caused by the demonetization of silver in that year +throughout the western world. + +From and after that year, as will be perceived by an examination of the +figures; in other words, from the year when one-half the world's money +supply was deprived of the money function, we find an almost +uninterrupted decline of prices. The figures of 1873 and 1885 will be +seen to bear to one another the relation of 138 to 108, or a fall of 22 +per cent. in twelve years. Should the fall continue at that rate without +interruption--and there is no reason apparent why it should not, we +shall in forty years have witnessed a decline of 72 per cent. in the +general range of prices--a decline considerably greater than that from +1809 to 1849. And these are not the figures of bimetallists or silver +"theorists," but of pronounced advocates of the single standard of gold. +Where, I would inquire, is the fall of prices to stop? + +Dr. Soetbeer's table represents the general average price of one-hundred +leading articles of commerce each year for a period of nearly forty +years. He takes as a basis the general range of gold prices prevailing +between 1847 and 1850, and calling that range 100, shows the relative +standing toward it of the general range of prices for subsequent years, +up to 1885. + + _Relation of prices by years from 1849 to 1885, the general range of + prices of 1849 being rated at 100._ + + 1849 100.00 + 1851 100.21 + 1852 101.69 + 1853 113.69 + 1854 121.25 + 1855 124.23 + 1856 123.27 + 1857 130.11 + 1858 113.52 + 1859 116.34 + 1860 120.98 + 1861 118.10 + 1862 122.65 + 1863 125.49 + 1864 129.28 + 1865 122.63 + 1866 125.85 + 1867 124.44 + 1868 121.99 + 1869 123.38 + 1870 122.87 + 1871 127.03 + 1872 135.62 + + 1873 138.28 + + 1874 136.20 + 1875 129.85 + 1876 128.33 + 1877 127.70 + 1878 120.60 + 1879 117.10 + 1880 121.89 + 1881 121.07 + 1882 122.14 + 1883 122.24 + 1884 114.25 + 1885 108.27 + +Mr. Sauerbeck, also an advocate of the gold standard, and whose work has +the approval of the Statistical Society, takes as a datum line the +prices ruling from 1867 to 1870. Rating those at 100 he finds that by +1873 prices had risen to 111, by 1886 they had fallen to 69, and by +September, 1887, to 68.7. He declares the average prices for the first +nine months of 1887 to have been the lowest reached for a hundred years. + + +BOTH GOLD AND SILVER VARIABLE IN VALUE. + +The fact that the metals have separated considerably since 1873, and +that silver bullion now sells at less than par value of $1.29 per ounce, +is taken to signify that silver has fallen--not that gold has risen. +This proceeds from the assumption that whenever a change takes place in +the relation between gold and any other article the change must +necessarily be in the other article. This assumption, in turn, is based +on the absurd idea that calling gold a "standard" will insure it against +change. + +Among political economists it is a well-recognized principle that +neither gold or silver is exempt from the universal application of the +law of supply and demand. That law governs gold and silver, not only as +commodities, but as money, and governs as well all other kinds of money +that may be used. And while the advocate of the single gold standard is +at all times ready to concede the truth of this assertion as to silver, +he is confident that it does not and can not apply to gold; that the +economic law which makes supply and demand a regulator of value is +suspended as to gold. + +That a metallic money, whether of gold or silver, is very far from being +stable is admitted by innumerable authorities, of whom I will cite only +a few. + +Dr. Adam Smith, in his "Wealth of Nations," book 1, chapter 5, says: + + Gold and silver, like every other commodity, vary in their value. + The discovery of the abundant mines of America reduced in the + sixteenth century the value of gold and silver in Europe to about + a third of what it had been before. This revolution in their + value, though perhaps the greatest, is by no means the only one + of which history gives some account. + +And again: + + Increase the scarcity of gold to a certain degree and the + smallest bit of it may be more precious than a diamond. + +John Locke, "Considerations, etc., in relation to money" (published in +1691), says: + + The greater scarcity of money enhances its price and increases + the scramble; there being nothing that does supply the want of + it; the lessening of its quantity, therefore, always increases + its price and makes an equal portion of it exchange for a greater + of any other thing. + +Prof. Francis A. Walker, "Money," etc., page 210, says: + + Gold and silver do, over long periods, undergo great changes of + value and become in a high degree deceptive as a measure of the + obligation of the debtor of the claim of the creditor. Thus + Professor Jevons estimates that the value of gold fell between + 1789 and 1809, 46 per cent., that from 1809 to 1849 it rose 145 + per cent., while in twenty years after 1849 it fell again at + least 20 per cent. + +Jevons, "Money and Exchange," chapter 6, says: + + In respect to steadiness of value the metals are probably less + satisfactory, regarded as a standard of value, than many other + commodities, such as corn. + +And again, in chapter 24 of the same work, he says: + + We are too much accustomed to look upon the value of gold as + a fixed datum line in commerce; but in reality it is a very + variable thing. + +Sir Archibald Alison (England, in 1815 and 1845), says: + + The coining of gold and silver, which is universal in all + civilised nations, and affixing to them one definite and + permanent value by authority of law, has no effect whatever in + preventing the fluctuations in the real value of the current coin + of the realm. + +Professor Laughlin, of Harvard, in his work on Political Economy (page +72), says: + + It is quite evident that the name dollar does not always have the + same value, although people often think it does. We get into the + habit of using names without thinking what they really mean. The + 23.22 grains in a gold dollar may be exchanged sometimes for + more, sometimes for less, of other commodities. When it is + exchanged for less, its value has fallen relatively to all other + commodities, and, even if the name dollar remains the same, its + value has fallen. One must then offer more dollars than before + for the same commodities. That is, when money falls in value, + prices rise; when money rises in value, prices fall. + + Now, we shall say a few words in regard to another function, a + means of paying long contracts, or debts which run over a long + term of years. + + Suppose that I loaned you in 1880, $1,000 for twenty years. In + that year the $1,000 bought a certain quantity of corn, wheat, + sugar, salt, wood, hats, and shoes. In 1900, when you are to pay + me back the $1,000 in money, if prices have changed, you may give + me back the same amount of money, but you will not return to me + the same purchasing power over other things. If for some reason + prices have fallen between 1880 and 1900, it will take less money + to buy the same quantity as before of corn, wheat, etc. If so, + the $1,000 you return me in 1900 will be of more value than the + $1,000 I gave you, and it would be unjust to oblige you to give + me more than you borrowed. If, on the other hand, prices have + risen, then the $1,000 in money would buy me less than before, so + that I should lose. * * * Hence, the value of money (gold or + silver) does not remain the same for any length of time; and the + precious metals, while they are very satisfactory for exchanges + which do not take very long to complete, can not serve as a + proper measure of value during a long term or years. + +Ricardo, the greatest authority on the gold standard, the financial +writer, more highly regarded throughout the world than any other that +has ever appeared in Great Britain, whose logical utterances have never +failed to attract the attention of mankind, stated the true condition of +things in 1810, and advocated the true policy for Great Britain. + +In his "Proposals for an Economical and Secure Currency," Ricardo makes +the following statement, which I commend to the careful attention of the +advocates of the single gold standard: + + While a standard is used, we are subject to only such a variation + in the value of money as the standard itself is subject to; but + against such variation there is no possible remedy, and late + events have proved that, during periods of war, when gold and + silver are used for the payment of large armies distant from + home, those variations are much more considerable than has been + generally allowed. This admission only proves that gold and + silver are not so good a standard as they have been hitherto + supposed--that they are themselves subject to greater variations + than it is desirable a standard should be subject to. They are, + however, the best with which we acquainted. + + If any other commodity less variable could be found, it might + very properly be adopted as the future standard of our money, + provided it had all the other qualities which fitted it for that + purpose; but while these metals are the standard the currency + should conform in value to them, and whenever it does not, and + the market price of bullion is above the mint price, the currency + is depreciated. This proposition is unanswered and is + unanswerable. Much inconvenience arises from using two metals as + a standard of our money; and it has long been a disputed point + whether gold or silver should by law be made the principal or + sole standard of money. In favor of gold it may be said, that its + greater value under a small bulk eminently qualifies for a + standard in an opulent country. + +And I may here remark that it requires an opulent country to maintain +the single gold standard, and the country does maintain it at very great +expense. I do not wonder that he thought an opulent country, a creditor +country, the only one that ought to adopt it, for no other country can +afford to adopt it. But, like many people who in attempting to improve +their condition in society attempt luxuries and extravagances which they +can not maintain and which force them back into the ranks from which +they came, so nations in attempting to establish the gold standard may +find themselves reduced from opulence to poverty. + +Ricardo continues: + + But this very quality subjects to greater variations of value + during periods of war or extensive commercial discredit, when it + is often collected and hoarded, and may be urged as an argument + against its use. The only objection to the use of silver as the + standard is its bulk, which renders it unfit for the large + payments required in a wealthy country; but this objection is + entirely removed by the substituting of paper money as the + general circulation medium of the country. Silver, too, is much + more steady in its value in consequence of its demand and supply + being more regular; and, as all foreign countries regulate the + value of their money by the value of silver, there can be no + doubt that on the whole silver is preferable to gold as a + standard, and should be permanently adopted for that purpose. + +Innumerable additional citations from authors of repute could be adduced +to fortify this position. + +It will thus be seen that the fluctuations in the value or purchasing +power of both gold and silver have always been admitted by scientific +writers. They were so well understood three centuries ago that in Queen +Elizabeth's reign (1576) the British Parliament directed that the rents +reserved in the long leases of certain college lands should be payable, +not in money, but in wheat. And at various times during the past seventy +years propositions have been formulated to substitute for gold and +silver as a standard of value for deferred payments, a tabular statement +of the prices of the principal articles of commerce, to be made by +official authority and published from time to time, by the average of +which the fluctuations of gold could be ascertained and proper allowance +made for them in the settlement of time transactions. Professor Jevons, +Prof. Francis A. Walker, and other political economists of note have +expressed approval of such a tabular standard for long-time contracts, +as securing greater equity than would gold as a measure of values. + +Those who now assert that silver has fallen and that gold has not risen +in value arrive at this conclusion by a very safe process of reasoning. +First, to show that silver has fallen they measure it by gold alone, +without reference to the general range of prices; and then to prove that +gold has not risen they make it the measure of itself. An increase or +decrease of the value of either can not be ascertained by reference to +the other, and certainly not by constituting either of them a standard +by which to judge itself. It would of course be forever impossible to +show any change in the value of gold or silver, or of anything else, +measuring it by itself. It is only by looking at the relations which +both metals bear respectively to a considerable range of commodities +generally dealt in as well as to each other, that it can be ascertained +with certainty what has happened. + +Not only upon consideration of all the facts I have given, but upon the +logic of the situation, it must be obvious that gold has risen and will +continue to rise in value as long as its volume decreases and the demand +for it increases. Since 1860, when 77 per cent. of the combined yield of +the two metals, it has diminished not only in relative proportion to the +yield of silver, but it has diminished absolutely. For the five years +ending with 1860 the yield of gold throughout the world was $137,000,000 +a year; for the five years ending 1889 the yield was but $110,000,000 a +year. If, as claimed by the advocates of the single gold standard, an +increase in the yield of silver decreases the value of silver, by what +system of logic can they deny that a decrease in the supply of gold +increases the value of gold? + +In a late issue of the London Economist, that of April 26, 1890, I find +an editorial article relating to the recent discussion on bimetallism in +the British House of Commons. That article comments somewhat sharply on +Mr. Smith's assertion that "a conspiracy had been formed among the +financial class in Europe and America to get rid of silver as +full-valued money in order to increase the value of gold, in which their +revenues are paid." In the course of his comments the editor, by +"confession and avoidance," admits our whole contention as to the rise +of gold and the fall, as a natural consequence, of the prices of +commodities. He says: + + It may not be amiss, however, to point out that the increase in + the exchangeable value of gold has been by no means such a gain + to the financial class as he in common with many others suppose; + for advantage has been very largely taken of it to cut down the + return upon the capital which the financial classes have + invested. It has favored debt conversion schemes, and it has been + one of the influences that have caused the rate of interest in + general to decline so decidedly, that, all round, the yield of + investments is now very appreciably lower than it was fifteen + years ago. The idea that the creditor class have realized unmixed + gains and the debtor class have suffered unmitigated losses by + the alteration in the purchasing power of gold is thus altogether + fallacious. There has in their case, as in all others, been a + species of compulsory give and take. Each has gained and each has + lost something, and now that the process of readjustment has been + carried so far it would be unwise to the last degree to unsettle + everything again by such legislation as the bimetallists propose. + +The editor of the Economist is to be commended for at least one thing. +He does not quibble as to the most important point in the bimetallic +controversy. He frankly admits that gold has risen, and does not, as +some others do, attribute the fall of prices to improvements in methods +of production. + +He also admits that coincidently with and caused by the rise in gold +there has been a great decline in the rates of interest, and, strangely, +claims that the debtor is compensated for the rise in the value of money +by the ability to convert the debt into one bearing a lower rate of +interest, or, as he calls it, resorting to "debt-conversion schemes." + +He does not inform us how any compensation can be made to the the debtor +for the time the debt has been running, as to which it can not be +converted, nor for the enhanced amount exacted from the current earnings +of labor by the rise in the value of money to pay taxes and the expenses +of Government, nor for the loss entailed on the debtor whose property is +mortgaged on long time, where the holder of the mortgage refuses to +convert it into an obligation bearing a lower rate of interest than +originally contracted for. He suggests no method by which to make whole +those who have lost their property through sheriff's sale by reason of +falling prices and the rise in the value of money. Neither does he state +how long it will be before the next confiscation is to take place, by +reason of the continued operation of the cause that produced the first. +But he has been frank enough to concede (what is never disputed except +when the money question is under discussion) that there has been a rise +in the exchangeable value of gold, and conceded its natural sequence, a +fall in the rates of interest. + + +IMPROVED METHODS OF PRODUCTION. + +In order to justify their position it becomes necessary for the +advocates of continued demonetization of silver to insist that the fall +of prices is not due to the rise in the value of gold but to improved +methods of production. + +Whatever the cause to which it is to be ascribed, the undoubted fact is +that a fall of prices throughout the western world set in concurrently +with the reduction of the world's money volume by the demonetization of +silver. It was well understood at the time by those who had given +consideration to the subject that demonetization alone would effect that +result. This is manifest from an article in the London Daily News, a +paper of exceedingly large circulation, quoted in the Journal of the +Statistical Society of England for 1873, page 395. Referring to the +adoption of the single gold standard by Germany the Daily News said: + + As the annual new supply of gold throughout the world is reckoned + at little more than £20,000,000 ($100,000,000), and the usual + demand for miscellaneous purposes is very large, it follows that, + if the German Government perseveres in its policy, the strain upon + the existing stocks and currencies of gold will be most severe. + For a time, at least, unless the annual production of gold should + suddenly increase, the money markets of the world are likely to be + perturbed by this bullion scarcity, and the fall in the value of + gold---- + +which means the rise in prices that for some time had prevailed; + + of which so much has been heard, will be checked or reversed. + +The yield of gold did not "suddenly increase," and the intelligent +prophecy of the Daily News was fully realized, not merely to the extent +of a check to the rising prices; (or, as it is styled by the Daily News, +a check to the "fall in the value of gold,") but to the extent of an +immediate rise in the value of that metal, and a persistent and +deplorable fall in the general range of prices. + +This prophecy that the "fall in the value of gold" would be checked by +the demonetization of silver; or, better, reversed by it, was welcome +reading to the creditor and income classes of England and of the world. + +That it was "reversed," and the value of gold appreciated, is as plain +as that; one being subtracted from two, there is but one for a +remainder. + +The immediate fall in prices of commodities was the natural, the +anticipated, and the deliberately intended result of that movement. + +But we are now assured that this fall is not due to any monetary cause, +but to the greater efficiency of machinery in the production of +commodities. + +No advocate of an increased volume of money denies that in a few +departments of manufacture there have since 1873 been improvements +tending to economize labor and cheapen products; but they emphatically +deny and challenge proof that improvements of mere detail in the +manufacture of some articles will account for the extraordinary fall of +price since that time in almost every product of industry. We are also +told that the development of the system of transportation, both by land +and sea, have tended to lower the price of commodities to the consumers. +I grant it. But we had those improvements before 1873. + +The inventions made between 1873 and 1890, the period of falling prices, +were no more important or radical in their effect on industry,--tended +no more to cheapen commodities, than did those from 1850 to 1873, the +period of rising prices. Indeed the inventions which preceded 1873 were +as a whole much greater in scope, more far-reaching in result, and more +revolutionary in their effects on industry, than those of the later +period. All the great basic improvements had been invented, and had been +incorporated with the industrial system of all civilized countries long +before 1873, if we except the electric light and the telephone. We have +had the steam engine, the cotton gin, and the spinning-jenny since the +last century; the railroad and the steam-ship since the '30's; the +telegraph, the mechanical reaper, steam-plow, and other agricultural +labor-saving devices since the '40's; the sewing machine since 1854, and +the Bessemer process and steel rail since 1857. + +The forced construction into which their position drives the advocates +of the gold standard is well illustrated in a recent number of a +magazine of high standing in this country, in which I find the +following: + + But if it be demurred, does not a debt incurred, say, ten years + ago require to-day more wheat or iron for its satisfaction than + the sum could have bought when first borrowed? Certainly, but the + wheat or iron represents no more labor now then it did ten years + ago, and its increase in quantity stands for the new efficiency + which applied science has bestowed on toil. + +Observe how deftly the writer places iron, in the manufacture of which +there have admittedly been some improvements, in the same category with +wheat, in the production of which the improvements within any recent +period have been of the most trifling character. It will be exceedingly +difficult to convince the farmers of this country, whose mortgages are +eating up the proceeds of their labor, that the enormous decrease in the +debt-paying power of their products is made up to them in "the new +efficiency which applied science has bestowed on toil." + +As well might it be maintained that the rise of prices and the +concurrent wave of universal prosperity, experienced after 1849, was not +due to the increase of the world's money stock from the mines of +California and Australia, but to some sudden, unaccountable, and +complete loss of all improvements theretofore attained in the arts and +industries of the world. + + +EFFECT OF CHECKS AND CLEARING-HOUSES. + +But it is said that checks, notes, drafts, bills of exchange, and the +facilities afforded by clearing-houses effect such economy in the use of +money that it goes farther now than formerly, and that therefore so +large a volume of money as was formerly needed is not needed at present. +It is sought thus to escape the conclusion that the fall of prices is +the result of a shrinkage of the volume of money, or at least to imply +that if the money volume has been shrinking the agencies mentioned have +served to mitigate, if not entirely to counteract, the effects of such +shrinkage. This is in substance to claim that however contracted the +money volume of a country may become, the system of checks and +clearing-houses--on the principle of the compensating balance--will +expand in a proportion directly corresponding to the contraction of the +currency; that the greater the reduction of the volume of money in the +country the greater the increase in the transactions of the +clearing-house. + +Nothing more absurd could be conceived. If this view were correct, it +would make no difference whether the amount of money in circulation were +large or small; a million dollars would be as efficacious as +$100,000,000, and even one dollar as effective as a million dollars; and +if we suppose the last dollar to have disappeared from circulation, +then, according to the sweeping and pretentious claims set up for the +clearing-house system, we could dispense altogether with the use of +money and rely exclusively on checks, drafts, and bills of exchange. + +That checks and clearing-houses are a great convenience to commerce is +not denied. They serve to a certain extent to make more effective the +money volume of a country. By the clearing house system of off-setting +the demands of the several banks, one against the other, and requiring +payment in cash of the balances only, large amounts of loans may remain +undisturbed and greater stability of industrial conditions be secured. + +Clearing-houses, however, were not established primarily for the +convenience of commerce, but for the profit of bankers. Whatever amounts +of money are economized by means of those institutions bring +compensation, by way of interest, to the banks. We may, therefore, rely +upon their being utilized to the utmost under all circumstances. + +But, however much checks and clearing-houses may economize the use of +money, they are no novel devices. They are not some untried and +newly-invented instrumentalities. Checks have been in use ever since the +invention of banks. The clearing-house system was established in this +country in 1853. Contributing, as it does contribute, to the pecuniary +profit of the banks by making possible an economy in the use of invested +money, which the banks have loaned out, and on which they are drawing +interest, the system has grown with the growth of the business of the +country. It will undoubtedly continue to grow, but with no greater +acceleration than population and business will warrant. + +As it has been a part of the banking machinery of the country for nearly +forty years, and during that period has been utilized to the utmost, the +conditions of its existence and utilization have long since become +static conditions. The demands for currency have borne relation to the +needs of business, with clearing-house facilities in full sight and +operation; and at all seasons, in the adjustment of prices, those +facilities have had full force and effect. Assuming that at any given +period the business of the country were conducted with a given volume of +money, _plus_ a certain volume of clearing house exchanges, then, at a +later period, an increase of business would demand an increase in the +volume of money, _plus_ a proportionate increase in the volume of +clearing-house exchanges; having had this system in full and effective +use for forty years, it is as absurd to ascribe the _fall_ of prices in +the last half of that period to any economy in the use of money +effected by the clearing-house system as it would be to ascribe to the +same cause the directly opposite effect--the _rise_ of prices--that took +place in the first half of the same period. + + +THE PROOF AFFORDED BY THE FALL OF INTEREST. + +If further proof were needed that gold has risen in value, it is, as I +maintain, to be found in the coincident fact of a decrease of rates of +interest on first-class securities. That decrease has kept even step and +pace with the rise in the value of money. + +The rise in the value of gold, as shown by comparison with large numbers +of articles of commerce, has been between 35 and 40 per cent. The rate +of interest on gilt-edged securities shows a corresponding decline. But +unfortunately for the struggling people of the country, the fall in the +rate of interest on farm mortgages and on property remote from money +centers has been nothing like so great, nor has it been so great as the +fall in the price of agricultural lands, and in the products of labor. + +I hold, therefore, that a new axiom should be added to the science of +political economy; namely, that as the purchasing power of money +increases, its income producing power decreases, and in about the same +ratio; and conversely, when the purchasing power of money decreases, its +income-producing power increases. In other words, when prices rise +interest rises; when prices fall interest falls. When money is +increasing in volume and decreasing in value, prices rise, and its +investment in productive enterprises becomes more profitable, and as a +consequence interest rises. When it is decreasing in volume and +consequently increasing in value, prices fall, investment in property +and productive enterprises become precarious and unprofitable, and, as a +consequence, it avoids them, and seeks investment in bonds and +gilt-edged securities, aptly termed "money-futures," which for years +have been increasing and continue to increase. + +Some thirteen years ago I indulged in a little prophecy concerning the +rates of interest. I take no great credit to myself for it, but in +1877--four years after the demonetization of silver--before the rates of +interest had materially fallen, and when the same contention was made +that is made now, namely, that money was cheap because interest was low, +and that the policies of the country were wise because our credit stood +on such a high plane, I submitted to Congress the report of the Monetary +Commission, from which I quote: + + Money can be borrowed readily only upon such securities as bonds + which are based on the unlimited tax-levying power of the + Government, or upon the bonds and stocks of first-class + trunk-lines of railroad corporations, whose freight and fare rates + are practically a tax upon the entire population and resources of + the regions which they traverse and supply. The competition among + capitalists to loan money on these more ample securities has + become very keen, and such securities command money at + unprecedentedly low rates. These low and lowering rates of + interest, instead of denoting financial strength and industrial + prosperity, are a gauge of increasing prostration. Large + accumulations of money in financial centers, instead of being + caused by the overflow of a healthful circulation, or even a proof + of a sufficient circulation, are unmistakable evidence of a + congested condition caused by a decreasing and insufficient + circulation. The readiness with which Government bonds bearing a + very low rate of interest are taken, instead of showing that the + credit of the Government has improved, is melancholy evidence of + the prostrated condition to which industry and trade have been + reduced. + + There need be no haste in refunding the public debt at the rates + now proposed and considered low. Unless the progress of the + commercial world in the policy of contracting money by + demonetizing silver is checked, bonds bearing a much lower rate of + interest than any yet offered will be gladly accepted by + capitalists here and in Europe. When the money stock is + diminishing and prices are falling, the lender not only receives + interest, but finds a profit in the greatly increased value of the + principal when it is returned to him. A loan of money made in + 1809, if repaid in 1848, would have been repaid with an addition + of 145 per cent. in the purchasing power of principal and + interest, besides all the interest paid. Those who have loaned + money to this Government since 1861 have already received nearly + as much in the increased value of their principal as in interest, + and all the probabilities are, in respect to the four per cent. + thirty-year national bonds now being negotiated, if they are + redeemed in gold, that more profit will be made by the + augmentation in the value of principal through interest. Indeed + the signs of the times are, that the bonds of a country possessing + the unbounded resources and stable institutions of the United + States, payable in gold at the end of thirty years without any + interest whatever, would, through the increase of the value of + that metal, prove a most profitable investment. + +All the facts of the situation to-day fully bear out the statements I +then made. + +So determined are the advocates of the single gold standard in defending +the wisdom of its maintenance that facts whose existence would at +ordinary times be readily admitted, are, during a discussion of the +money question, pointedly denied. For example, within the past few weeks +we have seen in various eastern newspaper contributions from prominent +writers taking direct issue with the advocates of silver as to the +prevalence of general distress throughout the country. They declare that +there is no such distress, assert that they have looked for it in vain, +and derisively inquire where it is. + +Perhaps the best authority I can cite in response to this inquiry is the +principal commercial daily journal of the east, the New York Journal of +Commerce, itself one of the most ardent and uncompromising advocates of +the gold standard. In an editorial article in its issue of January 11, +1890, that journal said: + + FAILURES IN BUSINESS. + + The public have been startled by the announcement that during the + year 1889 there were 11,719 business failures in the United + States, against 10,587 in 1888 and 9,740 in 1887. The estimated + liabilities of last year's insolvents were $140,359,000 and the + assets were $70,599,000, against $120,242,000 liabilities and + $61,999,000 assets for the failures of the previous year. Thus the + failures in 1889 were more in number and far greater in + liabilities than for 1888, and the proportion of assets to the + obligations shows that the total insolvency was more disastrous. + Why in a season of profound peace, with no blighting frosts or + withering droughts, and the most abundant yield from the field, + forest, and mine so many in business have gone to the wall, no one + seems able to answer. Many have tried their hand at a solution of + the problem, and not one, as far as we can discover, has satisfied + even himself with the result of his investigations. + + +HAS SILVER FALLEN? + +In order to ascertain whether silver really has or has not fallen in +value, it is necessary that all the facts be taken into account and the +situation looked at from a correct point of view. If a person be seated +in a boat that is headed to the stream and wishes to test whether or not +he is making headway he must keep in view not the stream, but the shore. +The occupant of a railroad car who observes a moving train on a +contiguous and parallel track, frequently thinks his own train at a +stand-still, when in fact it may be in motion. + +Whenever a rise or fall appears to take place in the price of any one +article or commodity, that is to say whenever a difference takes place +in the relation which that article bears to money--all other commodities +remaining unchanged--such difference must naturally and properly be +attributed to changed conditions affecting the commodity, and not to a +change in the value of money. But wherever there is a fall in prices +throughout the whole range of commodities then it is clear that this +change is mainly due to a change in the value of money. Such however is +the force of education and habit that the masses of the people are slow +to suspect any change in the standard by which they have been accustomed +to gauge or measure all values. Indeed they find it difficult to +understand how under any circumstances any change can take place in it. +Having their eyes fixed on the standard, and on that alone, they +naturally attribute to the articles measured, and not to the standard, +any difference that may seem to arise in the relation they bear to each +other. + +But the apparent is not always the real. Nothing seems more warranted by +the evidence of our senses than that the earth is a stationary object, +while the sun revolves around it. For thousands of years the world was +convinced of the truth of the geocentric theory of the universe, and +millions of men have lived and died in the confident belief that this +planet was immovably fixed in space, while the sun was a rolling and +ever-shifting body. Even yet, among the mass of mankind, so ever-present +is this impression, derived from ocular demonstration, that in spite of +the declarations of science, the world continues in common use the +phrases which originally described the process that took place, as men +understood it; hence we speak of the "rising" and the "setting" of the +sun. In the same way we speak of the rise or fall in the value of +commodities, without being particular to note whether the change that +has taken place is strictly a change in the value of the article itself +or a change in the money with which its value is measured. Perhaps I can +best illustrate my meaning by an allegory: + + +THE BATTLE OF THE STANDARDS. THE ALLEGORY OF THE CLOCKS. + +In an ancient village there once stood a gold clock, which, ever since +the invention of clocks had been the measure of time for the people of +that village. They were proud of its beauty, its workmanship, its +musical stroke, and the unfailing regularity with which it heralded the +passing hours. This clock had been endeared to all the inhabitants of +the village by the hallowed associations with which it was identified. +Generation after generation it had called the children from far and wide +to attend the village school, its fresh morning peal had set the honest +villagers to labor; its noon-day notes had called them to refreshment; +its welcome evening chime had summoned them to rest. From time +immemorial, on all festive occasions, it had rung out its merry tones to +assemble the young people on the green; and on the Sabbath it had +advertised to all the countryside the hour of worship in the village +church. So perfect was its mechanism that it never needed repair. So +proud were the people of this wonderful clock that it became the +standard for all the country round about, and the time which it kept +came to be known as the gold standard of time, which was universally +admitted to be correct and unchanging. + +In the course of time there wandered that way a queer character, a +clockmaker, who being fully instructed in the inner workings of +time-tellers, and not having inherited the traditions of that village, +did not regard this clock with the veneration accorded to it by the +natives. To their astonishment he denied that there was really any such +thing as a gold standard of time; and in order to prove that the +material, gold, did not monopolize all the qualities characteristic of +clocks, he placed alongside the gold clock, another clock, of silver, +and set both clocks at 12 noon. For a long time the clocks ran along in +almost perfect accord, their only disagreement being that of an +occasional second or two, and even that disagreement only at rare +intervals, such as might naturally occur with the best of clocks. But +the Council of the village, in their admiration for the gold clock, +passed an ordinance requiring that all the weights (the motive power) of +the silver clock, except one, be removed from it, and attached to those +of the gold clock. Instantly the clocks began to fall apart, and one +day, as the sun was passing the meridian, the hands of the gold clock +were observed to indicate the hour of 1, while those of the silver clock +indicated 12.15. At this everybody in the village ridiculed the silver +clock, derided the silver standard, and hurled epithets at the +individual who had had the temerity to doubt the infallibility of the +gold standard. + +Finally, the divergence between the clocks went so far that it was noon +by the gold standard when it was only 6 a. m. by the silver standard, so +that those who were guided by the gold standard, not withstanding that +it was yet the gray of the morning, insisted on eating their mid-day +meal, because the gold standard indicated that it must be noon. And when +the sun was high in the heavens, and its light was shining warm and +refulgent on the dusty streets of the village, those who observed the +gold standard had already eaten supper and were preparing for bed. + +But this state of things could not last. It was clear that the +difference between the standards must be reconciled, or all industry +would be disarranged and the village ruined. + +Discussion was rife among the villagers as to the cause of the +difference. Some said the silver clock had lost time; others that both +clocks had lost time, but the silver clock more than the gold; while +others again asserted that both clocks had gained time, but that the +gold clock had gained more than the silver clock. + +While this discussion was at its height a philosopher came along and +observing the excitement on the subject remarked, "By measuring two +things, one against the other, you can never arrive at any determination +as to which has changed. Instead of disputing as to whether one clock +has lost or another gained would it not be well to consult the sun and +the stars and ascertain exactly what has happened." + +Some demurred to this because, as they asserted, the gold standard was +unchanging and was always right no matter how much it might seem to be +wrong; others agreed that the philosopher's advice should be taken. Upon +consulting the sun and the stars it was discovered that what had +happened was that both clocks had gained in time but that the gain of +the silver clock had been very slight, while that of the gold clock had +been so great as to disturb all industry and destroy all correct sense +of time. + +Notwithstanding this demonstration, there were many who adhered to the +belief that the gold standard was correct and unchanging, and insisted +that what appeared to be its aberrations were not in reality due to any +fault of the gold clock, but to some convulsion of nature by which the +solar system had been disarranged and the planets made to move +irregularly in their orbits. + +Some of the people also remembered having heard at the village inn, from +travellers returning from the East, that silver clocks were the standard +of time in India and other barbarous countries, while in countries of a +more advanced civilization gold clocks were the standard. They therefore +feared that the use of the silver clock might have the effect of +degrading the civilization of the village by placing it alongside India +and other barbarous countries. And although the great mass of the people +really believed, from the demonstration made, that the silver standard +of time was the better one, yet this objection was so momentous that +they were puzzled what course to pursue, and at last advices were +consulting the manufacturers of gold clocks as to what was best to be +done. + +Now our gold standard men are in the position of those who first refuse +to look at anything beyond the two things, gold and silver, to see what +has happened, and who, when it is finally demonstrated that all other +things retain their former relations to silver, still persist that the +law which makes gold an unchanging standard of measure is more immutable +than that which holds the stars in their courses. If they will compare +gold and silver with commodities in general, to see how the metals have +maintained their relations, not to one another but to all other things, +they will find that instead of a fall having taken place in the value of +silver, the change that has really taken place is a rise in the value of +both gold and silver, the rise in silver being relatively slight while +that of gold has been ruinously great. And those who do not shut their +eyes to the truth must see that the change of relation between the +metals has been effected by depriving silver of its legal-tender +function, as the want of accord between the clocks was brought about by +depriving the silver clock of a portion of its motive power--the +weights. The only thing that has prevented a greater divergency between +the metals is the limited coinage by the United States--the single +weight that, withheld from the gold clock, prevented its more ruinous +gain. + + +THE PURCHASING POWER OF SILVER IN 1873 AND 1889. + +If I can show that for a period of seventeen years, since its +demonetization in 1873, silver has lost none of its purchasing power, +none of its command over commodities; that is to say, if I can show +that 412-1/2 grains of silver to-day, uncoined, and shorn by hostile +legislation of its principal element of value--the money use--will buy +as much as would 412-1/2 grains of silver in 1873 (when our silver +dollar bore a premium over gold) of all the articles that enter into the +daily consumption of the people, it must be manifest that silver has not +fallen in value. + +I present a table which I shall ask to have inserted in the RECORD as +part of my remarks, showing the purchasing power of 412-1/2 grains of +silver, nine-tenths fine, in 1873 and 1890, respectively, so far as +concerns several leading articles of daily consumption. + +The table is as follows: + + _Comparative purchasing power of 412-1/2 grains silver, + nine-tenths fine, in 1873 and 1890, respectively._ + + -----------------------------------+-------+------- + 412-1/2 grains silver would buy-- | 1873. | 1890. + -----------------------------------+-------+------- + Wheat bushels | 0.87 | 0.88 + Corn do | 1.84 | 1.97 + Cotton pounds | 5.32 | 6.71 + Beef, mess barrels | 0.05 | 0.05 + Pork, mess do | 0.07 | 0.06 + Lard pounds | 12.89 | 11.75 + Butter do | 5.40 | 4.63 + Cheese do | 8.69 | 6.94 + Sugar do | 9.80 | 10.34 + Eggs dozen | 4.27 | 5.38 + -----------------------------------+-------+------- + +From this table it conclusively appears that while in 1873 the standard +silver dollar of 412-1/2 grains, which then bore a premium over the gold +dollar, would purchase four-fifths of a bushel of wheat; to-day the same +quantity of silver, without the advantage of coinage and merely as +bullion, will also buy four-fifths of a bushel of wheat--the only +difference between the figures for the two years being that at the +present time 412-1/2 grains of silver bullion, as will be seen by the +table, will buy a fraction of a bushel more than would 412-1/2 grains of +coined silver in 1873. + +If, then, silver has fallen, it is manifestly not in its relation to +wheat. + +By the same table it is shown that the silver dollar of 1873, containing +412-1/2 grains of silver, nine-tenths fine, would purchase one and +eight-tenths bushels of corn; in 1890, a like number of grains of +silver, uncoined and estimated at its gold value, will purchase one and +nine-tenths bushels of corn. Here again the advantage is slightly in +favor of the 412-1/2 grains of silver bullion of 1890. This shows +conclusively that silver has not fallen in its relation to corn. + +The figures of the same table show that in 1873 a coined silver dollar +of 412-1/2 grains would buy 5-1/3 pounds of cotton; to-day 412-1/2 +grains of uncoined silver will buy 6-3/4 pounds of cotton. From this it +appears that silver has not fallen relatively to cotton, the great +staple of universal use, but that, on the contrary, it has advanced +somewhat in its purchasing power when compared with that article. + +In order to present the question from another point of view I submit +another table showing the number of grains of silver that are required +in 1890 and the number which were required in 1873 to buy a bushel of +wheat, a bushel of corn, &c., by which it will even more clearly appear +that silver has not fallen in value in respect to commodities. + + _Comparative purchasing power of silver bullion, in grains nine-tenths + fine, in 1873 and 1890, respectively._ + + ----------------------------+-----------+----------- + | 1873. | 1890. + Articles. | Legal | Commodity. + | tender. | + ----------------------------+-----------+----------- + | _Grains | _Grains + | silver._ | silver._ + Wheat per bushel | 474.3 | 468 + Corn do | 223.9 | 209.25 + Cotton per pound | 77.55 | 61.42 + Beef, mess per barrel | 8,662.5 | 7,560 + Pork, mess do | 5,465.62 | 6,750 + Lard per pound | 31.97 | 35.1 + Butter do | 76.31 | 89.1 + Cheese do | 47.44 | 59.4 + Sugar, refined do | 42.07 | 39.82 + Eggs per dozen | 96.52 | 76.68 + ----------------------------+-----------+----------- + +From this table it will be seen that in 1873 it required 474 grains of +standard silver, in the form of coined dollars, to buy one bushel of +wheat; in 1890, only 468 grains of standard silver (and that merely in +bullion form, or in other words, at its market value) are required to +buy a bushel of wheat. This does not show that silver has fallen in +value, in its relation to wheat, but, on the contrary, that it has risen +in value. + +In 1873 it required 224 grains of silver to buy a bushel of corn; to-day +only 209 grains of silver are required to buy the same quantity. These +figures fail to prove that silver has fallen in value, in its relation +to corn. On the contrary, again, it has risen. + +In 1873 a pound of cotton could not be had for less than 77-1/2 grains +of silver; to-day the same pound of cotton can be bought for 61 grains +of silver. Silver, therefore, has not fallen, but risen in value in its +relation to cotton. + +In 1873 96 grains of silver were required to buy one dozen eggs; to-day +only 76 grains of silver are required to buy the same quantity of eggs. +Silver therefore has not fallen but risen in value, in its relation to +eggs. + +These comparisons might be continued with the same results as to a great +majority of the articles entering into general use. + +These figures demonstrate that in its relation to all commodities that +enter into the daily consumption, silver has not fallen in value, but, +as is clearly seen, while holding a remarkably steady ratio to +commodities, has slightly increased in value, as is shown by the fact +that a less number of grains of the metal are to-day required to +purchase the same quantity of the commodities mentioned than were +required in 1873. + +In relation to what, then, is it that silver has fallen? As it has not +fallen in relation to commodities, there remains but one thing in +relation to which it can be said to have fallen, and that one thing is +gold. The phrase "the fall of silver" is the ingenious and cunning +invention by which it is sought to cast on that metal the discredit of +depreciation rather than subject gold to the suspicion of any change +whatever. The term to correctly describe what has taken place would be +"the rise of gold;" but that term is scrupulously avoided, as implying +that gold does not remain immovably fixed. That gold has risen, however, +admits of no doubt, except to those who willfully shut their eyes to +facts of common observation. The true test of the increasing or +decreasing value of any one thing is not to compare it with any other +one thing, but with a large range of commodities generally dealt in. It +is not of so much importance to know how much gold can be bought with a +given amount of silver, as it is to know how much bread, how much meat, +and how much clothing can be bought, and how much of all the things that +are necessary to the comfort and well-being of the people can be bought +with that amount of silver. + + +PROOF THAT GOLD HAS RISEN. + +In order to demonstrate that gold has risen, I will bring side by side +the gold prices of a number of leading commodities of commerce in 1873 +and 1889, respectively, and the amount in silver bullion that in 1889 +would purchase an equal quantity of the same commodities, by a table +prepared at my request by the Bureau of Statistics of the Treasury +Department. + + _Average export prices of the following named domestic commodities + for the years ending June 30, 1873 and 1889._ + + -------------------+----------+--------------------------------------- + | | Average price of the year ending + | | June 30-- + | +--------------------+------------------ + Commodities. | Unit of | 1873. | 1889. + | quantity.+-----------+--------+--------+--------- + | | | | | In + | | In | In | In | silver + | | currency. | gold. | gold. | bullion. + -------------------+----------+-----------+--------+--------+--------- + Bacon and hams | Pounds | $0.088 | $0.077 | $0.084 | $0.108 + Butter | do | .211 | .184 | .166 | .212 + Cheese | do | .130 | .113 | .092 | .118 + Corn | Bushels | .617 | .539 | .508 | .650 + Cotton: | | | | | + Unmanufactured, | Pounds | .188 | .164 | .099 | .127 + not sea Island | | | | | + Cloth, colored | Yards | .166 | .145 | .065 | .083 + Cloth, uncolored | do | .162 | .142 | .068 | .087 + Iron and steel: | | | | | + Bar-iron | Cwt | 5.480 | 4.784 | 3.183 | 4.074 + Pig-iron | do | 2.498 | 2.181 | .953 | 1.220 + Railroad-bars | do | 4.114 | 3.592 | 2.169 | 2.776 + Lard | Pounds | .092 | .080 | .076 | .097 + Leather | do | .253 | .221 | .185 | .237 + Rice | do | .071 | .062 | .055 | .070 + Sugar: | | | | | + Brown | Pounds | .092 | .080 | .056 | .072 + Refined | do | .116 | .101 | .066 | .084 + Wheat | Bushels | 1.312 | 1.145 | .874 | 1.119 + Wheat-flour | Barrels | 7.565 | 6.604 | 4.703 | 6.020 + -------------------+----------+-----------+--------+--------+--------- + +What does an examination of this table show? It shows beyond dispute +that gold has risen in value. + +A bushel of wheat that, according to the figures of the Bureau of +Statistics cost $1.14 in gold or silver in 1873, and which, as will be +seen by the table, still commands $1.12 in silver bullion, will to-day +bring only 87 cents in gold. + +A pound of cotton that in 1873 cost the purchaser, in gold or silver, 16 +cents, and which still commands 13 cents in silver bullion, will bring +only 10 cents in gold. + +A pound of cheese that in 1873 cost the purchaser 11-1/3 cents in gold +or silver, and which now brings 12 cents in silver bullion, will bring +only 9 cents in gold. + +A barrel of flour which in 1873 cost the purchaser $6.60 in gold or +silver, and which to-day commands $6.02 in silver bullion, will bring +but $4.70 in gold. + +A pound of butter that in 1873 brought 18.4 cents in gold or silver, and +now commands 20.8 cents in silver bullion, will bring but 16.6 cents in +gold. + +Notwithstanding that 412-1/2 grains of uncoined silver will to-day buy +as much of the leading articles of commerce as the coined gold dollar +would buy in 1873, yet the advocates of the gold standard characterize +it as a 72-cent dollar. Then the gold dollar of 1873 was a 72-cent +dollar. If the gold dollar of to-day be an honest and equitable dollar, +that of 1873, which was worth much less, was a swindling and dishonest +one; and if gold continues to advance as it has been advancing, and with +the declining output of that metal there is no reason why it should +not, it will be but a short time before any other kind of dollar whose +value may be equal to that of the present gold dollar will be +stigmatized as a swindling 72-cent dollar. There never was a dollar +coined that did not legally and practically contain 100 cents. But the +creditors stigmatize a dollar of the value of the gold and silver dollar +of 1873 as a 72-cent dollar. May not the debtors, with much more +propriety, denounce the gold dollar of to-day as a 140-cent dollar? + +According to the admissions of the royal commission of England, the gold +dollar of to-day is to the producers of this country, measured by their +products, already at a premium of between 30 and 40 per cent. over the +gold dollar of 1873. The advocates of the gold standard have no sympathy +with our farmers and manufacturers who have to pay, in commodities, a +premium of 30 to 40 per cent. on gold, to meet their engagements, but +express extreme anxiety at the bare possibility that a few importers +might have to pay even a small premium in any form. They insist that the +money system of a population of 65,000,000, shall, like an inverted +pyramid, be made to rest upon its apex in order to enable a few +importers, most of whom are residents of foreign countries, to make +their payments abroad in gold. + +Verily, Mr. President, the single gold standard is an expensive luxury +for our people to maintain. + +Those who deride silver as a money-metal indulge in feeble attempts at +sarcasm by inquiring why we do not advocate the use of tin and brass as +money. They speak and write as though the idea of using silver as money +were a recent discovery or invention of people engaged in silver mining. +They also ignore the fact that the standard silver dollar of the United +States, which, with much satisfaction, they stigmatize as a 72-cent +dollar, requires a gold dollar to obtain it. It is worth a gold dollar +in London, in Berlin, in Vienna, in Saint Petersburg, in Madrid, in +Havana, and in all countries having commercial relations with the United +States. It can at once be exchanged into the money of any country with +only the slight deduction of cost of shipment to this country--as is the +case in the United States with notes of the Bank of England, which are +redeemable in gold. + +Our silver dollar is not money in foreign countries--and it is to our +advantage that it is not--for were it money anywhere else than in this +country, we could not rely on its remaining here to maintain that +steadiness of prices indispensable to prosperity. But if any of our +silver dollars are found abroad, let no one suppose he can get them by +tendering 412-1/2 grains of silver bullion for each dollar. He will find +it will cost him precisely as much gold as it passes for in the United +States. + + +SOME EFFECTS OF THE RISE OF GOLD. + +If a cotton planter in 1873 owed $10,000 he could then have paid it with +60,975 pounds of cotton. To-day, by reason of the increased command +which gold has over commodities, it would take 101,010 pounds of cotton +to pay that $10,000; not withstanding that the money in which the debtor +has paid the interest has each year become more valuable than it was at +the time he contracted to pay it. + +The cotton manufacturer of the East who in 1873 owed $10,000 could then +have paid it with 70,422 yards of uncolored cotton cloth; to-day owing +to the rise in the value of gold it would require 147,059 yards to pay +that debt, without taking into account the amount lost by the debtor in +the greater sacrifice he had year by year to make to pay the interest. + +The farmer of the North and West who in 1873 owed $10,000 could then +have paid it with 8,733 bushels of wheat; to-day it would require 11,446 +bushels of wheat to liquidate that debt, though he, too, has year by +year been "cinched" through the progressive increase in the value of the +money in which the interest has been paid. Or he could, in 1873, have +paid his debt with 1,514 barrels of flour; to-day it would take 2,126 +barrels of flour to pay the same debt. + +The property of the country is fast passing into the hands of the +creditors, and if the iniquitous system is not reversed the condition +of our American farmers will be that of the farmers of gold-standard +countries. Instead of owning their farms they will be tenants and +rent-payers--a condition but little in advance of that which prevailed +in feudal days. + +Machiavelli, describing a turbulent period in the history of Florence, +said: + + The people perished, but the brigands throve. + +The brigandage of the Middle Ages, whether in Italy or elsewhere, was a +criminal defiance of law, but it was pursued at some risk, and under +manifest disadvantages. The brigand took his life in his hands. He knew +that his calling was unlawful; and, although ruthless in his work, the +method by which he exacted ransom of his occasional victim was less +destructive to the prosperity of the community than the legalized +brigandage of to-day by which, through a vicious system of money, the +great mass of the people are despoiled of their property. The +distinguishing characteristic of the brigandage of the nineteenth +century is that it scrupulously observes all legal forms, and is +conducted in the name of honor, honesty, good morals and "sound +finance." Mortgages are foreclosed only in accordance with law, and the +unearned increment which results from the increased and increasing value +of the money is transferred from the debtor to the creditor, with +punctilious regard for the statutes. + +The demands of the brigand were enforced with guns and pistols; those of +the creditor are enforced with bonds and mortgages; both exactions cruel +and unjust, one by violence, the other by law. But, in the latter case, +so indirect is the method of operation that many of those who are +benefited by it are unaware of the perpetration of any wrong. So subtle +is the process that the change seems to be only a change in the price of +commodities, and thousands of men who would scorn consciously to exact +from any one more than a just return for money loaned are beneficiaries +of this vicious and ruinous system. + +With regard to the great body of the working masses it is sometimes said +they have no cause for complaint, that their condition now is better +than ever before. + +But, Mr. President, it is not enough that men are better off than they +have been. When we reflect that nine-tenths of the inventions and +improvements constituting all the material features of the civilization +of this century have been made by working men, it is manifest that they +are entitled to much more of the comforts and convenience of life than +are now accessible to them. By watchful, repeated, and aggressive +efforts through their trade organizations, the working men in many +branches have been enabled to keep wages from sinking, and occasionally +to secure an advance; but, during a period of falling prices, what is +gained in this way by those who are kept at work is lost to the working +class as a whole by the remission to idleness of part of their number. + +The statisticians who seem to be employed by some propaganda to prove +by figures that prosperity prevails, point exultantly to the fact that +the wages of the working people seem constantly to have increased while +prices are falling, and they cite this to prove that low prices are +consistent with prosperity. They leave entirely out of the account the +large numbers of workmen who of necessity are relegated to idleness on +account of the lack of profit in business. + +If you go into the workshops of any large manufacturing enterprise, +while prices are low and lowering, and ask the managers what they now do +when a strike occurs among the workmen, they will tell you they find it +impossible to shut down, because they have contracts extending through +time that they must fill, but, they add, "We pay the wages demanded and +we reduce the number of the employed." + +If there are a thousand workmen employed, getting $2 each per day, that +would be a wage fund of $2,000 a day. If, when prices fall and business +becomes dull, the employer should want to reduce the pay of each workman +to $1.50 a day, and if the workmen, by striking, should prevent that +decrease, and if, then, 25 per cent. of their number should be +discharged, the loss to the working class, as a body, and to the +community at large, would be the same as though the wages were reduced +to $1.50 a day. Until these people who present statistics can show us +how many laborers are left out of employment there is no possibility of +arriving at any correct conclusion as to what the wage fund is and how +much wages are paid. + +The loss to society is much greater when 25 per cent. of the people are +unemployed than if all continued at work upon a 25 per cent. reduction +of wages, because the relegation to idleness of 25 per cent. of the +workmen reduces the producing force, and lessens correspondingly the +aggregate annual production. + + +THE INTEREST OF THE MINING STATES IN THE REMONETIZATION OF SILVER. + +Those who in the Senate and in the other House of Congress, represent +mining constituencies are taunted with the selfish purpose of advancing +the interests of their own States at the expense of those of the +country. It is sought to discredit the State which I have the honor in +part to represent on this floor, on the ground that the people, being +largely silver miners, have a personal interest in the remonetization of +silver. + +The silver miners, Mr. President, need no defense here or elsewhere. +They have asked no favors from the Government, and ask none now. They +are bold, adventurous, and self-reliant men, who have wandered across +alkaline deserts, and over pathless mountains, braved the assaults of +hostile savages, the miasma of the Isthmus and the storms of the Cape, +and have planted the flag of a high civilization on the western confines +of this Republic. No more patriotic or public-spirited class of citizens +can be found within the borders of the Union. Their business is an +honorable one. When they entered upon it they, in common with other +citizens, had the warrant of time, and the authority of all writers and +thinkers on political economy, for the belief that silver was, and would +ever be, a money metal, entitled to that full credit which from time +immemorial had been accorded to it. Silver, equally with gold, had been +consecrated by all the ages to the money use, and was dedicated to such +use by the Constitution of the United States. + +When the Constitution declared that Congress should have power "to coin +money and regulate the value thereof" and that "no State shall * * * +make anything but gold and silver coin a tender in payment of debts," it +warranted the belief on the part of all who adopted the calling and +undertook the business of mining, that gold and silver would continue +to be money metals in the sense in which they had been for thousands of +years in the past. The silver miners were warranted in presuming that +when the Constitution esteemed so highly the legal-tender function in +the two metals, gold and silver, as that it prohibited the States from +making anything a legal tender except coin of those two metals, it would +not warrant the Congress of the United States in taking from one of +those metals the power of legal tender and conferring that imperial +function exclusively on the other. Silver mining is a business requiring +for its successful prosecution skill, experience, and energy, while +nine-tenths of the gold of the world has come from placers; requiring +neither organization, capital, nor skilled labor. + +The production of gold is much more a matter of accident and much more +liable to fluctuation than is the case with silver. The silver miners +therefore had a right to believe that so long as 23.22 grains of pure +gold should be entitled to recognition as one dollar, 371.25 grains of +pure silver would continue to be entitled to like recognition as one +dollar, and would possess the legal-tender function as such, for the +liquidation of all debts, public and private. On the strength of this +warranty of the Constitution, and of the unbroken experience of the +ages, large sums of money were invested in mining property and in the +employment of labor to develop the mines of the country. On the strength +of this belief and conviction, shared in by all the people of the United +States, that gold and silver would both remain the money metals of the +world, debts to an enormous extent were incurred, and it was confidently +believed that both metals would for all time be available for the +payment of those debts. + +The silver-miners had learned from the history of mining, as well as +from hard and bitter experience, that the mines might at any moment +cease to yield, in which case their occupation would be gone and the +capital invested would be a total loss. But they did not suppose that +the verdict of all time would be reversed, or that the implied warranty +of the Constitution of the United States would be disregarded. They did +not believe that either one of the money metals would ever be +demonetized. And if a doubt had entered their minds on that subject, +they would naturally suppose that gold rather than silver would be +demonetized, gold being too limited in quantity to answer alone the +purposes of money in a rapidly advancing civilization; its yield being +uncertain and capricious and the prospect of a continued and sufficient +supply becoming less from year to year. + +But, Mr. President, the degree of special interest which the mining +States have in this measure is not to be compared with that of the other +States of the Union. + +According to the report of the Director of the Mint, the total quantity +of silver produced in the United States in the eleven years from 1878 to +1888 inclusive was 406,210,000 fine ounces. According to the same +authority the commercial value of that silver was $436,260,000, and the +coinage value $525,145,000. A very simple process of arithmetic shows +that the difference between the commercial and the coinage value of that +silver was $88,885,000, or an average of $8,080,544 each year. Assuming +that amount to have been the annual difference between the coinage and +commercial value of silver for the five years preceding 1878, we must +add to the $88,885,000 the sum of $40,402,220, making a total of +$129,287,220 as the amount which the silver miners, not of Nevada but of +the whole United States in the seventeen years ending 1889, lost by the +demonetization of silver. + +Having thus demonstrated in dollars and cents the degree of selfishness +which, as is charged, is the motive of the miners in advocating the +remonetization of silver, let us glance at the degree of selfishness +which may be said to impel other classes of the community to advocate +the same cause. + + +THE INTEREST OF THE NON-MINING STATES IN REMONETIZATION. + +The price of cotton for the year 1873, in gold or silver (then of equal +power), was 16.4 cents per pound. The price in 1889 was 9.9 cents. + +The yield of cotton for 1889 was 7,000,000 bales, or 3,500,000,000 +pounds. + +Had not silver been demonetized that cotton would have brought as good a +price to-day as it did in 1873. At the price of 1873 the account would +have stood 3,500,000,000 pounds, at 16.4 cents, $574,000,000. At the +price of 1889 the account stands 3,500,000,000 pounds, at 9.9 cents, +$345,500,000, showing a loss in debt-paying and tax-paying power on +cotton alone (only one article of merchandise) in the single year 1889, +by reason of the fall in prices caused by the demonetization of silver, +of $227,500,000. + +Having shown that the loss to the silver miners by the discount on +silver for the seventeen years from 1873 to 1889 was less than +$130,000,000, it will be seen that the loss in one single year to the +cotton planters of the United States is greater by $90,000,000 than the +total loss for the entire seventeen years to the silver miners of the +country. + +But inasmuch as the cotton crop of 1889 was exceptionally large, I will, +for the purpose of my computation, discard it, and assume instead that +an average yield for the years between 1873 and 1889 would be 5,000,000 +bales per annum--which is a fair average and by no means high--5,000,000 +bales, of 500 pounds each, are equal to 2,500,000,000 pounds. + +At the price of 1873 the result of each year would be 2,500,000,000 +pounds, at 16.4 cents, $410,000,000. + +According to the figures given by the Bureau of Statistics the average +price received each year of the seventeen was 13.1 cents per pound; +2,500,000,000 pounds, at 13.1 cents per pound, equal $327,000,000, +showing a difference of $83,000,000; that being the average each +separate year for seventeen years, or a total sum for the entire period +of $1,411,000,000, which represents the loss in debt- and tax-paying +power suffered by the cotton planters by reason of the demonetization of +silver. + +This is the enormous tribute which has been exacted of the cotton +industry of this country in behalf of the gold "standard," and of those +who, for their own pecuniary advantage, cunningly induced the Congress +of the United States to demonetize silver. This is the sum which the +planters of this country have lost in debt-paying and tax-paying power +by that mad act of folly. As will be seen at a glance, it is a loss +vastly in excess of that suffered by the silver States in the discount +on the price of silver bullion. + +So that, if the silver miners are taunted with having a personal +interest in the success of the movement for the full remonetization of +silver, the cotton planter must be placed in the same category, and with +ten-fold more reason. + +A like computation with regard to wheat will show a loss in debt-paying +and tax-paying power of not less than $100,000,000 a year to the farmers +of the North and West, by reason of the demonetization of silver--a +total of $1,700,000,000 in the article of wheat alone in seventeen +years. + +Thus a loss, wholly unnecessary, of more than $3,000,000,000 in +debt-paying and tax-paying power is shown to have been inflicted on the +farmers and cotton planters of this country. + +In comparison with this enormous loss to farmers and planters, how +paltry is the loss of $8,000,000 a year suffered by the silver miners. + +But, however large the direct loss to the debtors and to the country by +reason of falling prices, the losses that are indirect are of infinitely +greater magnitude, and stand out like a great mountain of wrong +superimposed upon the most deserving class in the community, whose +interests it should be the paramount duty of Government to protect, a +wrong more calamitous in its consequences than any of the multitudinous +wrongs which a shrinking volume of money inflicts upon society. + + +THE ENORMOUS LOSS OF POTENTIAL WEALTH THROUGH INVOLUNTARY IDLENESS. + +The political economist, Mr. President, deals with property _in esse_, +and producers employed. I propose for a moment to deal with property _in +posse_ and producers unemployed. The wealth which the political +economist discusses is realized wealth; that to which I now briefly +invite your serious consideration is the wealth that might be, and would +be, brought into existence were the energies of all the people utilized. +For, while it has attracted but little attention from writers on +economic science, it will be found upon examination that the +non-employment of its members is incomparably the greatest loss which an +increase in the value of money and the consequent disorganization of +industry inflicts on society. + +The great writers and thinkers on economic subjects discuss with care +the elements that enter into the production and distribution of wealth. +They follow in detail the manufactured article through all its stages, +from the crude material to the finished product; and, when completed, +they conduct it through the intricate channels by which it reaches the +hands of the consumer. The greatest consideration is bestowed upon the +labor employed and the wealth resulting therefrom, but scarcely any +thought is given to the immeasurable mass of potential wealth not +produced, but lying latent in the brains and hands of the millions who +are condemned to involuntary idleness. + +While no mere sum in arithmetic can represent the enormous loss suffered +by a nation through this cause, let us see whether we can arrive by +figures at an approximate conception, at least, of the loss of wages +which it entails upon the working masses, and the corresponding loss of +wealth to the country. + +The most thorough and painstaking investigation into the conditions of +labor in this country has been that which for many years has been +conducted by the Massachusetts Bureau of Labor. Its work has been +universally admitted to be free from bias, and devoid of all attempt to +establish any special hobby, or to force, by figures, the proof of any +preconceived theory. + + +SOME STATISTICS OF THE UNEMPLOYED. + +An examination of the work of that bureau shows that, in 1887, there +were 816,470 persons engaged in wage earning in the State of +Massachusetts. Of those, 241,589, or nearly 30 per cent., were idle +during some part of the year--ranging from one to six or more months. +The average of their unemployed time was about four months, or one-third +of the year. + +Now, 240,000 people idle for one-third of their whole time is +equivalent, in money loss, to the total idleness of one-third of that +number, or 80,000 people, for the entire year. The whole number of +persons enrolled for labor in the State being 816,470, this is +equivalent to the total idleness of one-tenth of the people engaged in +all occupations. + +If a number equivalent to one-tenth of the people in all occupations are +idle twelve months in the year in a State like Massachusetts, where +labor is better organized, better classified, and more efficiently +ordered than elsewhere in this country, it can not be presumed that any +other State of the Union will exhibit a smaller proportion of unemployed +laborers. + +The Census Report of 1880 states the number of persons employed in all +occupations as 17,392,099, out of a population of 50,155,783, or a +percentage of 34.68 of the entire population. Our present population +being not less than 65,000,000, if we assume, as we are warranted in +doing, that a like proportion of the population is engaged in +occupations of all sorts, it is clear that we have to-day a working +population of 22,254,000 persons. + +Accepting as correct the careful deductions from the Reports of the +Massachusetts Bureau of Labor that a number equivalent to ten per cent. +of the people are always out of employment we find that at the present +time there are 2,250,000 persons involuntarily idle in this country. How +faintly does the term "the army of the unemployed" describe this vast +number of eager and willing men seeking in vain the opportunity to earn +a livelihood for themselves and families. + +Were the business of the country in the active condition in which it +could not avoid being if our money system were perfectly adjusted to +industry, and if employers were competing for laborers with the same +degree of eagerness that laborers are competing for employment, the +average wage of a day for a working man would not be less than $2. This +would make but the moderate sum of $50 a month for each workman, which, +under the most thrifty system of household economy, can not be +considered more than enough for the support of an American family. + + +THE WAGE LOSS FROM INVOLUNTARY IDLENESS. + +By multiplying the number of persons thus shown to be idle, by this +moderate average wage, we arrive at the amount of $4,500,000 as the +daily sum which is lost to the wage earners of the United States by the +non-employment of labor. This is a money loss of $27,000,000 a week, +$117,000,000 a month, or the amazing sum of $1,404,000,000 a year. A +saving of this sum for a year and three months would pay our entire +national debt. This being the loss in a single year, we can imagine +(making due allowance for difference in the numbers of the population) +how stupendous has been the loss to the nation during the past seventeen +years, a loss exceeding incomparably all other losses whatsoever. + +If a crop of wheat be lost, it is appropriately noted as a public +misfortune; if a city be burned down, or swept away by flood, it is +properly regarded as a great national calamity, and the sympathies of +all the people go out in unstinted measure to the sufferers. But here is +a loss as real and as deplorable as any ever caused by flood or fire--a +loss whose consequences, while not so apparent, are as destructive to +national prosperity as the burning of ten cities, or the occurrence of +one hundred and forty Johnstown disasters every year, and always to the +people who can least afford it. Yet it passes almost wholly unheeded +except by the sufferers. + +A war that would take a million of men from industry and deprive the +country of the production which would result from their labors, would +be regarded as a calamity of unsurpassable magnitude, yet a shrinkage in +the volume of money relatively to population withdraws much more than +that number from productive pursuits, and without the salutary +discipline and restraints of military life, subjects them to conditions +of which the unavoidable results are poverty and crime. + +Imagine, Mr. President, the unhappiness, discontent, and even despair +implied in the mere statement that 2,000,000 men are constantly out of +employment; (or, what amounts to the same thing, that three times that +number are idle for four months in the year!) Imagine, what it means to +the working people of this country to be deprived of the enormous sum of +$1,400,000,000 a year. + +But, aside from the effect on the individual, what benumbing +consequences are entailed upon the nation by the idleness of so large a +number of its people. The loss of the wealth which the labor of those +men might have created is a loss never to be retrieved. When the money +volume of a country is sufficient to keep prices from falling, and thus +to encourage capital to seek productive enterprises, in which labor is +employed, every willing man is kept at work, and no country can enjoy +any higher degree of prosperity than when all its people are employed, +and the products of their labor equitably distributed. + +Much, I believe, of the prejudice against silver money arises from an +idea, conscientiously entertained, by many, that gold money has the +greater "intrinsic value." I shall, therefore, Mr. President, at the +risk of being a little abstruse, discuss that point. + + +THE MEANING OF VALUE. + +No discussion of the subject of money can be intelligently conducted +without a correct conception of the meanings attaching to the terms +employed. For a misconception of those meanings is the root of much of +the confusion and difficulty by which the subject is surrounded. + +"Value" is a word which, of necessity, is more frequently used--and, I +will add, more frequently misused and misunderstood--than any other +employed in the discussion of economic science. Volumes have been +written upon it, and yet, from the daily misapplication of the word in +leading magazines and newspapers, it is evident that its meaning is very +imperfectly understood. + +The idea involved in the word "Value" is so broad and pervasive that +within the limits of a speech it would be impossible to discuss it in +all its bearings. I shall not, therefore, at this time, do more than +present what I conceive to be a basic definition of it. + +Value is human estimation placed upon desirable objects whose quantity +is limited, and whose acquisition involves sacrifice. In order that an +object may have value it must not only be the subject of human desire, +but there must be a limitation of its quantity, and its acquisition must +demand a sacrifice from him who would obtain it. The term "intrinsic +value" is used by many writers with a total disregard of the idea +involved in the word _value_. An article may have estimable qualities +that are intrinsic, but no article whatever can have intrinsic value. +Its "value" is the mental estimation of its qualities, as modified by +the limitations of its quantity and the amount of sacrifice necessary to +obtain it. In other words, value is subjective, not objective. In +economic discussion, however, value is treated as though it resided in +the object, rather than in the mind, and while, for convenience, I may +occasionally use it in that sense, it is important to bear in mind the +distinction. + +In that acceptation, value is usually divided into value-in-use, and +value-in-exchange. Certain esteemed qualities of an object may make it +of great value-in-use; but unless its acquisition demand sacrifice, it +can have no value-in-exchange. It is only with this class of value that +economists deal. No matter how important the intrinsic qualities of any +article may be, if there be no limitation of its quantity and its +acquisition requires no sacrifice, it can have no value in the sense in +which the word "value" is used in political economy. The air has +qualities inestimable to mankind; it must be regarded as incomparably +the most useful of all the objects of human desire; yet it has no value +because there is no limitation of its quantity. By reason of its +universality and accessibility, air requires no sacrifice to get it. If, +however, circumstances should render air limited in quantity it is +conceivable that it might become of surpassing value. A man confined in +the "Black Hole" of Calcutta would give a fortune for free access to +air. So water, where freely obtainable, without sacrifice, although +indispensable to life, has no value in the economic sense--no value in +exchange. But when not so obtainable, as in populous cities, where +sacrifice of time and labor would be necessary to obtain it from river, +lake, or spring, people pay for the convenience of having it in their +homes. The indispensable prerequisites of value in all objects are +utility--either actual or attributed--combined with limitation of +quantity and the sacrifice necessary to be made in order to obtain it. + +But value is not a property inhering in any article itself. It is not +intrinsic. If the value were inherent or intrinsic it could not be taken +away. + +To illustrate: A generation ago the cradle with which wheat was +harvested was said to possess intrinsic value. It was undoubtedly one of +the most useful of all the articles needed by man. All that was then in +that machine is in it still, yet the value is gone. Had the value been +something that was intrinsic, had it resided in the object, and not in +the mind, that cradle would still be worth all that it ever was. So, on +the other hand, an article may possess most estimable qualities, but if +those qualities are not known or recognized by the human mind the +article will have no value. + +A few years ago cotton seed had no value as an article of general +commerce. To-day it is exceedingly valuable, because it has been found +to possess estimable qualities not before suspected. + +Indeed so strongly does the idea of value rest upon the estimation of +the mind that it is not even necessary for an article to possess in +reality any desirable quality whatever in order to have value. It will +be sufficient if such quality is popularly attributed to it. Numbers of +instances could be cited in which there was present no element of value +except limitation of quantity, added to a mere belief, or conception of +the mind, that the article had desirable qualities. Many will remember +that a few years ago a herb called "Cundurango" was introduced into this +country from Central America. It was generally believed to possess +healing qualities in cases of cancer, and so came to have great value. +As soon as this popular illusion was dispelled the article ceased to +have even the slightest value. + +Land being indestructible and irremovable, is believed to be the +embodiment of the idea of intrinsic value. Take, then, a lot on Madison +Avenue, New York; it is worth perhaps a thousand times as much as a lot +of equal size in a village remote from the city. What proportion of its +high price is derived from what is called its greater "intrinsic" +value? A lot on that fashionable thoroughfare has no intrinsic +attribute, or quality, that is not equally the attribute or quality of +the village lot. The difference in its value, or, more correctly, the +difference in the estimation in which it is held, as compared with that +attaching to the village lot, is derived wholly from circumstances that +are extrinsic, not from qualities that are intrinsic. + +The action of society in utilizing land in the neighborhood of the city +lot by building up around it gives that lot a value greater than one of +equal size elsewhere. + +But in order that a thing may subserve a useful or beneficent purpose it +is not necessary that the quality which enables it to subserve that +purpose should be intrinsic or inherent in the thing itself. + +To apply this reasoning to the subject under discussion--whatever +intrinsic qualities the metal, gold, may possess, they confer no force +whatever on gold-money. + + +WHAT IS MONEY? + +The money of a country is that thing, whatever it may be, which is +commonly accepted in exchange for labor or property and in payment of +debts, whether so accepted by force of law, or by universal consent. Its +value does not arise from the intrinsic qualities which the material of +which it is made may possess, but depends entirely on the extrinsic +qualities which law, or general consent, may confer. + +Money is of transcendent importance to civilization. It is the physical +agency to which society has assigned the function of measuring all +equities, and it is the sole agency upon which that incomparable +function has been conferred. It is in terms of money that society +computes the material value of all human sacrifice, alike the highest +effort of genius and the daily toil and sweat of the millions who labor. + +In order to measure equitably the natural and inevitable mutations in +the value of other things, money should itself be of unchanging value. +That is to say, any given amount of money should, so far as human +foresight can regulate it, require at all times an equal amount of +sacrifice for its acquisition. Thus, in the case of a contract made +to-day, requiring the payment of a dollar twelve months hence, that +dollar when due should exact from the debtor precisely that amount of +sacrifice, and no more, which would be required had he paid the debt the +day after contracting it. + +No one will deny that the most important quality that money can possess +is that it shall truthfully measure and state equities. + +As I have shown by the figures heretofore cited, gold has risen in value +between 30 and 40 per cent. since the demonetization of silver. It is +not therefore so faithful a measure of value as is silver, which as +illustrated by a variety of examples, has maintained almost undisturbed +its relation to commodities. + + +THE VALUE OF MONEY, AS SUCH, NOT IN THE MATERIAL BUT IN THE STAMP. MONEY +IS AN ORDER FOR PROPERTY AND SERVICES. + +The logic of the situation, and the reasoning of all the leading +authorities on money, lead irresistibly to the conclusion that its value +does not reside in the material, but in the stamp; in other words, on +the legal-tender function impressed on that material. It is an order for +property and services. + +Aristotle, writing of money, says: + + Money by itself * * * has value only by law, and not by nature; + so that a change of convention between those who use it is + sufficient to deprive it of all its value and power to satisfy + all our wants. + +And again he says: + + But with regard to a future exchange (if we want nothing at + present) money is, as it were, our security that it may take + place when we do want something. + +John Locke, in "Considerations," etc., regarding money, published in +1691, says: + + Mankind, having covenanted to put an imaginary value upon gold + and silver, by reason of their durableness scarcity, and not + being very liable to be counterfeited, have made them, by general + consent, the common pledges, whereby men are assured, in exchange + for them, to receive equally valuable things to those they parted + with, for any quantity of those metals; by which means it comes + to pass that the intrinsic value regard in those metals, made the + common barter, is nothing but the quantity which men give or + receive of them; they having, as money, no other value but as + pledges to procure what one wants or desires. + +Baudeau, reputed one of the most eminent of an early school of French +economists, says: + + Coined money in circulation is nothing, as I have said elsewhere, + but effective titles on the general mass of useful and agreeable + enjoyment which cause the well-being and propagation of the human + race. + + It is a kind of a bill of exchange, or order payable at the will + of the bearer. + +Adam Smith says: + + A guinea may be considered as a bill for a certain quantity + of necessaries and conveniences upon all the tradesmen in the + neighborhood. + +Jevons's "Money and Exchanges," chapter 8, says: + + Those who use coins in ordinary business need never inquire how + much metal they contain. Probably not one person in two thousand + in this kingdom knows, or need know, that a sovereign should + contain 123.27447 grains of standard gold. + + Money is made to go. People want coin, not to keep in their own + pockets, but to pass it off into their neighbors' pockets. + +Henry Thornton, in his work on Paper Credit, says: + + Money of every kind is an order for goods. It is so considered by + the laborer, when he receives it, and it is almost instantly + turned into money's worth. It is merely in instrument by which + the purchasable stock of the country is distributed with + convenience and advantage among the several members of the + community. + +John Stuart Mill says: + + The pounds or shillings which a person receives are a sort of + ticket or order which he can present for payment at any shop he + pleases, and which entitle him to receive a certain value of any + commodity that he makes choice. + +McLeod, Elements of Banking, Chapter I, says: + + When persons take a piece of money in exchange for services, or + products, they can neither eat it, nor drink it, nor clothe + themselves with it. The only reason why they take it is, because + they believe they can exchange it away whenever they please for + other things which they require. + +On that view of money McLeod feels justified in styling it credit, and +he quotes in support of such a use of the term credit, Burke's +description of gold and silver as "the two great recognized species that +represent the lasting conventional credit of mankind." + +Prof. Francis A. Walker, Money, Trade, etc., page 25, speaking of carved +pebbles, glass beads, shells and red feathers, used as money in certain +countries at certain times, says: + + They were good money, though serving no purpose but ornament and + decoration. They were desired by the community in general; men + would give for them the fruits of their labor, knowing that with + them they could obtain most conveniently in time, in form, and in + amount, the fruits of the labor of others. + +On page 30 he says: + + Men take money with the expectation of parting with it; this is + the use to which they mean to put it. + +Again, Mr. Walker says: + + Money is that which passes freely from hand to hand throughout + the community, in final discharge of debts and full payment for + commodities, being accepted equally without reference to the + character or credit of the person who offers it, and without the + intention of the person who receives it to consume it, or enjoy + it, or apply it to any other use than, in turn, to tender it to + others in discharge of debts or payment for commodities. + +Even Bonamy Price, who is wedded to the gold standard, in his Principles +of Currency, says: + + Gold, in the form of money or coin, is not sought for its own + sake, as an article of consumption. It must never be regarded as + valuable except for the work it performs, so long as it remains + in the state of coin. It can be converted at pleasure into an + end, into an article of consumption, by being sold; till then it + is a mere tool. + +How many people ever so "convert" it that earn it? + +The great philosopher, Bishop Berkeley, one of the most acute reasoners, +in my judgment, that modern times have produced, in the "Querist," +published in 1710, propounds the following pertinent and suggestive +questions: + + Whether the terms "crown," "livre," "pound sterling," etc., are + not to be considered as exponents, or denominations? And whether + gold, silver, and paper are not tickets or counters for + reckoning, recording, or transferring such denominations? + Whether, the denominations being retained, although the bullion + were gone, things might not nevertheless be rated, bought, and + sold, industry promoted and a circulation of commerce obtained? + +Dugald Stewart, professor of moral philosophy in the University of +Edinburgh, in his Lectures on Political Economy (Part I, Book II), said: + + When gold is converted into coin, its possessor never thinks of + anything but its exchangeable value, or supposes a coffer of + guineas to be more valuable because they are capable of being + transferred into a service of plate for his own use. Why then + should we suppose that, if the intrinsic value of gold and silver + were completely annihilated, they might not still perform, as + well as now, all the functions of money, supposing them to retain + all those recommendations (durability, divisibility, etc.) + formerly stated, which give them so decided a superiority over + everything else which could be employed for the same purpose. + + Supposing the supply of the precious metals at present afforded + by the mines to fail entirely the world over, there can be little + doubt that all the plate now in existence would be gradually + converted into money, and gold and silver would soon cease to be + employed in the ornamental arts. In this case a few years would + obliterate entirely all trace of the intrinsic value of these + metals, while their value would be understood to arise from those + characteristical qualities (divisibility, durability, etc.) which + recommend them as media of exchange. I see no reason why gold and + silver should not have maintained their value as money, if they + had been applicable to no other purposes than to serve as money. + I am therefore disposed to think, with Bishop Berkeley, whether + the true idea of money, as such, be not altogether that of a + ticket or counter. + +Appleton's Cyclopedia, defining money, says: + + Anything which freely circulates from hand to hand, as a common + acceptable medium of exchange in any country, is in such country + money, even though it ceases to be such, or to possess any value + in passing into another country. In a word, an article is + determined to be money by reason of the performance by it of + certain functions, without regard to its form or substance. + + +BASTIAT'S DESCRIPTION OF THE CROWN PIECE. + +Bastiat, in his "Harmonies Economiques," describing money, used the +following illustration: + + You have a crown piece. What does it mean in your hands? If you + can read with the eye of the mind the inscription it bears, you + can distinctly see these words: Pay to the bearer a service + equivalent to that which he has rendered to society. Value + received and stated, proved and measured by that which in on me. + +No words could more correctly describe the unit in a properly regulated +system of money. And notwithstanding the attempt to discredit silver +coinage, no piece of money, as I have already shown, would better +answer, by its steadiness of value, this description of Bastiat's than +would the American silver dollar if silver were remonetized. + +So far as it applied to gold Bastiat's description was much nearer +accuracy in his day than it is in ours. In his life-time the mints of +France and of the Continent were open for the coinage of silver equally +with gold, and the money supply of the world was not constantly +narrowing by being limited to the yield of a single metal whose annual +output would hardly more than meet the demand for the arts. + +Were Bastiat alive at this time he would reform his description so as to +make it read as follows: "You have an American gold piece. You have had +it hoarded in a bank vault for fifteen years. What does it mean in your +hands? If you can read with the eye of the mind the inscription it +bears, you can distinctly see these words: 'Pay to the bearer 50 per +cent. more service than he has rendered to society; value not received +or stated on me, but resulting from a cunning manipulation of the law of +legal tender, through the influence of the holders of gold and of +obligations payable therein, and as a reward to the bearer for having +had this money hid away and for depriving society of its use for +seventeen years.'" + +When people are found everywhere working for money and not for the +things which they really need, it is clear that they are working for +money, not because of the material of which it is composed, but because +it is an order for property which they can at any time obtain by parting +with the money. To modify and elaborate Bastiat's description of the +crown piece, it might be said of the Money Unit of the United States +under a properly regulated system: + +"You have a dollar. What does it mean in your hands? If you can read +with the eye of the mind the inscription it bears, you can distinctly +see these words: To all to whom this may come: Greeting. This is a +dollar--a unit of money--part of the great instrumentality created by +society to effect the multitudinous exchanges of property and services +among men. The amount of its command is constant, because the increase +in the volume of money is regulated by the sovereign authority of the +nation, with strict regard to the increase of population and +demand--hence the value of this unit remains unchanging through time. It +is an order for all property on sale, and all services for hire; the +proportionate amount of such property and service to which its possessor +is entitled being fixed by the universal competition to get it." + + +GRESHAM'S LAW. + +Many persons fear an outflow of gold from the operation of what is known +as "Gresham's law," namely, that "bad money will expel good." Sir Thomas +Gresham, a financier of Elizabeth's time, stated that if a number of +the gold or silver coins of any given denomination were deprived of part +of their pure metal, and so made cheaper than the remainder, a +successful circulation of the coins thus deprived would result in the +melting up or exportation of the coins of standard weight. Writing of +this, Mr. Jevons ("Money and the Mechanism of Exchange," American +edition, page 84) says: + + Gresham's remarks concerning the inability of good money to drive + out bad only referred to moneys of one kind of metal. * * * The + people, as a general rule, do not reject the better, but pass from + hand to hand indifferently the heavy and the light coins, because + their only use for the coin is as a medium of exchange. It is + those who are going to melt, export, hoard, or dissolve the coins + of the realm, or convert them into jewelry and gold leaf, who + carefully select for their purposes the new heavy coins-- + +and avoid the light or abraded coins. + +There is, however, a theorem which applies to all money, but which was +recognized long before Gresham's time--although it has been erroneously +called an "extension" of the law or theorem of Gresham. + +That theorem is this: If, in any country, there are two forms of money, +each of which is a full legal tender, and one of which can be obtained +with less sacrifice than the other, the one requiring the least +sacrifice will be the cheaper, and if the unit of that cheaper money +will perform in every respect the same function in the payment of debts +and settlement of all obligations that can be performed by the dearer +money, then, for obvious reasons, the cheaper money will come into +universal use, and the dearer money will disappear. But it does not +follow that the cheaper money is bad money nor the dearer money good +money. + +The best money is always the money of the contract, that is to say a +money whose dollar, whatever it may be made of, is equal in value to the +dollar of the contract. If the money of the contract is the cheapest +money, then that is the best money, that is the honest money, and that +is the only tolerable money. + +If that be the sort of "cheap" money that drives out the dear money, +then manifestly the dear money is bad money. + +A distinguished official of the Government, who was before a committee +of this body the other day, insisted that the proposed Treasury notes +should be redeemed in the "best money." I asked him what was the "best +money." "Why," he said, "the money that is worth the most." Now, it +strikes me, Mr. President, that if you have borrowed a dollar, and, +through a badly regulated money-system, are made to pay a dollar worth +25 per cent. more than the dollar you borrowed, you are not paying the +best money, but the worst money; not an honest dollar, but a swindling +and dishonest dollar. + + +THE CREDITORS' DEMAND FOR THE "BEST MONEY." + +The creditors tell us that all they want is "good money." They and their +friends glibly insist that all obligations must be paid in "the best +money." This is the delicate and plausible euphemism resorted to in +order to gloss over and, if possible, hide from the world the odious and +repulsive fact that what the creditors always want is the _dearest_ +money--the money that costs the people the most sweat and toil to obtain +and which, as time passes, grows dearer and dearer. + +This cry for "the best money" is at last beginning to be recognized for +what it is--the cunning device of creditors to "catch the conscience" of +the people and play upon the sense of fairness that characterizes the +great mass of mankind. These interested parties affect to believe that +gold is, by nature, the only money metal, ignoring the fact that until +silver was displaced by hostile legislation it was, and for four +thousand years had been, the principal money metal of the world. But +they will no longer be permitted to hide their sinister purpose under +the cloak of a demand for the "best money." The masses of the people are +aroused on this subject and are beginning to understand it. + +According to all fair canons of construction the best money should be +and is a money of unchanging value, a money that exacts from the debtor +the same amount of sacrifice that he bargained for, and which is all +that the creditor is equitably entitled to receive. In other words, the +money of the contract, not a money whose exactions are increasing at the +rate of 2 per cent. per annum. As McCulloch says, debts being stated in +dollars and cents, it is not possible for the creditor openly to augment +his debtor's obligation by changing the figures of the debt. + +But, Mr. President, while they can not change the figures of the debt, +they are enabled, by a crafty manipulation of the money-volume, to do +that which, to the debtor, means the same thing; as the following story +will illustrate: + +A usurer of the coarser type had lent $10,000 on a neighboring farm, for +which amount he took the farmer's note, secured by a mortgage on the +property. He coveted the farm, and in his anxiety to secure it took his +banker into his confidence. He informed the banker that he wanted to get +possession of this farm, but it would bring $15,000 under the hammer, +and he did not care to pay so much for it. "I have a subtle chemical," +said he, "by which I can obliterate from the note and mortgage all trace +of the rightful amount ($10,000), and that done, I can insert $15,000. +Then, with the genuine signatures on the note and mortgage I can bring +suit, and as the farm will not bring more than the face of the note, I +shall succeed to the property." + +His friend, the banker, however, advised against this course, which he +characterized as not only dishonest, but vulgar, and as subjecting the +perpetrator of the act to serious penalties. "Honesty" said the banker, +"is the best policy." "But," he continued, "I can suggest a plan by +which you may accomplish the same end without running counter to law, or +the views of society. Why not join our propaganda in advocacy of 'honest +money.' Gold is decreasing in quantity, and as the world has been +ransacked for it in vain, it is likely to continue decreasing. If we can +strike down the twin metal, silver, and devolve the entire money +function on gold, it will double the purchasing power of money. Then the +foreclosure of your mortgage will be sure to take your neighbor's farm, +and probably leave him in your debt besides. Instead of being punished +for this, you will receive the plaudits of the 'best society' for the +_finesse_ you have displayed and the firm stand you have taken in favor +of honest money, and you will take high rank among 'the wisest and most +conservative of our financiers.' If your neighbor makes any objection to +your action, you may be able to secure his incarceration as a lunatic, +but if not, he will come to be regarded in the community as a dishonest +'crank' who wishes to pay his debts in a depreciated money; for it is +the constant and assiduous care of our guild to teach that only the +dearest money, that which is the most difficult for the laborer, the +farmer, and the mechanic to get, is honest money, and the dearer it is +the more honest it is." + + +ALL MONEY SHOULD BE LEGAL TENDER. + +To be of the fullest service to civilization whatever medium is used to +do the work of money should have full money power; that is to say, it +should be a legal tender. It is not sufficient that it will satisfy the +demands of the Government for taxes. + +Whatever is given out by the Government in payment for services rendered +(and there is no other way by which payments can be made from the +Treasury) should carry with it to him who has rendered the service and +receives the payment, the absolute assurance that in any need, or in any +contingency, it will serve him as money. There is no other means by +which society can be saved from the effects of panics and monetary +crises. + +With a watchful and intelligent regulation of the money volume, and with +the legal tender function attached to everything that is in use as +money, and doing the money work, so that it will serve as a universal +solvent, panics will be impossible. Under present conditions when panics +come, credit money--money not endowed with the legal-tender function, +which, under ordinary circumstances, has always been accepted, is +refused, and thousands of millions of dollars' worth of property have +been confiscated by creditors, because of the scarcity of legal-tender +money. As time advances and the method of doing business on credit +becomes more and more extended, the more palpable it becomes that +society can preserve itself from these periodical convulsions only by +broadening, under proper regulation, the legal-tender basis on which, in +the ultimate analysis, all business rests. + + +MONEY A MEASURE OF VALUE. + +There is nothing upon which the prosperity and happiness of a people so +much depend as on the integrity of their measure of values. + +It is universally admitted that after the making of a contract requiring +future delivery of a specified number of pounds, bushels, or yards of +any commodity, it would be subversive of all equity and justice to +change the capacity of the measure constituting the foundation of the +contract. These measures, to be just, must remain unchanged. But how +infinitely more important is it that money, which is the measurer of all +other measures, should itself be unchanged? Of what avail is it that the +subordinate measures remain intact while this, the supreme measure, into +which all others are finally resolved, is constantly changing? Its +"value" is but another name for its purchasing or measuring power. In +the case of all time contracts, therefore, any change in the value of +money works a destruction of equity, and one of the first objects of +society should be to maintain and enforce equities at all times and in +all places. This, so far as money can effect it, can only be done by an +intelligent regulation of the volume in circulation. + +In a note to his edition of Adam Smith's "Wealth of Nations," (page 502) +Mr. J. R. McCulloch says: + + Money is not a mere commodity, it is also the standard or the + measure by which to estimate and compare the value of everything + else that is bought and sold, and if it be, as it undoubtedly is, + the duty of Government to adopt every practicable means for + rendering all foot-rules of the same length, and all bushels of + the same capacity, it is still more incumbent upon it to omit + nothing that may serve to render money, or the measure of value--a + measure which is undoubtedly of the greatest importance--uniform + or steady in its value. + +Though a measure of value, money is a much more complicated instrument +than a yard-stick, pound weight, or bushel. Were it not so, a child +could fix value with the same precision as an adult. + +As value resides in human estimation, it will frequently vary as to the +same object. An intending purchaser may have one notion of the value of +an article, an intending seller another. Money, therefore, is a measure +of value in the sense that it is a measure of the average human +judgment--from which results price. As Mr. McCulloch says, no means +known to science or art should be left untried to keep the value of +money unchanging. + +When a man promises to deliver money or makes any time contract, he +makes a mental calculation as to what amount of property, or of the +product of his labor, will enable him to meet his engagement. If he be a +farmer, raising wheat, there passes through his mind the sacrifice and +toil necessary to raise it, and the quantity he can raise; if a cotton +manufacturer the cost of spindles, of looms, and steam-engines; the +wages of labor and interest on plant. + +I knew a cotton manufacturer who wanted $10,000. His business was good. +He was sober, honest, and industrious; had a thorough knowledge of his +trade; managed his employés himself, and took the greatest pains to +conduct his business on the strictest business principles. He wanted the +money to make some improvements in his factory. He knew how many +spindles and looms he had; how much could be done with a pound of +cotton, how much it cost, and how much each spindle and loom would do. +He said to a capitalist, "I know all about cotton spinning and weaving, +and do not know anything about this thing called money, but I want +$10,000 of it." Said he, "My cloth is worth 10 cents a yard; it sells at +that rate in unlimited quantities by wholesale; nobody can make it any +cheaper; but I am not working a gold mine; I am not manufacturing +legal-tender paper money, and the only way I can get money is to swap my +cotton cloth for it. I will give you my note for 100,000 yards of cotton +cloth, which will be equal to $10,000, and will pay 2 inches a yard each +year as interest." + +This was satisfactory to the capitalist, and the note was made, signed, +and delivered accordingly, and the improvements were made in the +factory. + +During the year everything went smoothly; the spindles and looms worked +well, repairs to machinery were light; cotton had been bought at proper +rates; and no improved processes had been discovered or applied in the +production of cotton-cloth. There was no hitch in any direction. + +At the appointed time, the creditor called for his cloth. "I am ready," +said the debtor, "to pay the hundred thousand yards of cotton cloth, +with interest." When he came to measure it off, however, he was +astounded to find he was short. Some painful suspicions crossed his +mind. It seemed as though somebody had either robbed him of cloth, or +else he had not manufactured as much of it as he had supposed. There did +not seem to be so many yards of the cloth as there ought to be. He knew +he had used the same number of pounds of cotton that it had been his +custom to use for 100,000 yards of cloth and for 200,000 inches of cloth +in addition; still, there was no denying the fact of the shortage. + +He measured it again and again, and had finally to admit that he was +unable to keep his engagement. This was a source of great distress to +him. He could not sleep that night. But, the creditor being importunate, +the cotton manufacturer next morning borrowed enough cloth from the +proprietor of a neighboring factory and paid his obligation. But, not +understanding how his carefully made plans had failed, and in order to +avoid similar mistakes in the future, he had an examination made of the +yard-stick and found that instead of being 36 inches long the yard-stick +he had used was 40 inches. + +In talking the matter over with his neighbor, the cotton manufacturer +said: "I have been swindled; they 'rung in' on me a lengthened +yard-stick, by the measurement of which I have paid my debt, and I have +therefore paid in reality more than I contracted to pay." + +"Well," said the friend, "I do not see that you are any worse off than I +am. I borrowed as much as you did, and at the same time; but I agreed to +pay my debt in money, and gave my note for $10,000 with interest. The +increased command over cloth acquired by the dollars I have had to pay, +caused by the demonetization of silver, has juggled me out of as much +cloth as you have been juggled out of by the lengthened yard-stick. But +you have one recourse; you can put into the penitentiary the man who +'rung in' the lengthened yard-stick on you, while the increase in the +value of the dollar which I have paid has been effected in the name of +the gold standard and honest money, and leaves me without recourse." + +In its ultimate analysis, money is the yard-stick, the bushel and the +pound weight of commerce. + +When you shrink the volume of money, and so increase the measuring power +of the dollar, you lengthen the yard-stick, enlarge the specific gravity +of the pound and the cubical content of the bushel, in violation of all +equities. + +It is utterly impossible to secure a proper regulation of the money +volume with gold alone, the yield of which has declined from an average +of $130,000,000 a year between 1851 and 1873 to $105,000,000 a year +between 1873 and 1889. + + +THE VALUE OF MONEY FIXED BY THE COMPETITION TO GET IT. + +Everybody admits that the value of all other things is regulated by the +play against each other of the forces of supply and demand. No reason +has been or can be given why the value of the unit of money is not +subject to this law. + + +WHAT IS THE DEMAND FOR MONEY? + +The demand for money is equivalent to the sum of the demands for all +other things whatsoever, for it is through a demand first made on money +that all the wants of man are satisfied. The demand for money is +instant, constant, and unceasing and is always at a maximum. If any man +wants a pair of shoes, or a suit of clothes, he does not make his demand +first on the shoemaker, or clothier. No man except a beggar makes a +demand directly for food, clothes, or any other article. Whether it be +to obtain clothing, food, or shelter--whether the simplest necessity or +the greatest luxury of life--it is on money that the demand is first +made. As this rule operates throughout the entire range of commodities +it is manifest that the demand for money equals at least the united +demands for all other things. + +While population remains stationary, the demand for money will remain +the same. As the demand for one article becomes less, the demand for +some other which shall take its place becomes greater. The demand for +money therefore must ever be as pressing and urgent as the needs of man +are varied, incessant, and importunate. + + +WHAT IS THE SUPPLY OF MONEY? + +Such being the demand for money, what is the supply? It is the total +number of units of money in circulation (actual or potential) in any +country. + +The force of the demand for money operating against the supply is +represented by the earnest, incessant struggle to obtain it. All men, in +all trades and occupations, are offering either property or services for +money. Each shoemaker in each locality is in competition with every +other shoemaker in the same locality, each hatter is in competition with +every other hatter, each clothier with every other clothier, all +offering their wares for units of money. In this universal and perpetual +competition for money, that number of shoemakers that can supply the +demand for shoes at the smallest average price (excellence of quality +being taken into account) will fix the market value of shoes in money; +and conversely, will fix the value of money in shoes. So with the +hatters as to hats, so with the tailors as to clothes, and so with those +engaged in all other occupations as to the products respectively of +their labor. + + +NO ALTERNATIVE FOR MONEY. + +The transcendant importance of money, and the constant pressure of the +demand for it may be realized by comparing its utility with that of any +other force that contributes to human welfare. + +In all the broad range of articles that, in a state of civilization, are +needed by man, the only absolutely indispensable thing is money. For +everything else there is some substitute--some alternative; for money +there is none. Among articles of food, if beef rise in price, the demand +for it will diminish, as a certain proportion of the people will resort +to other forms of food. If, by reason of its continued scarcity, beef +continue to rise, the demand will further diminish, until finally it may +altogether cease and center on something else. So in the matter of +clothing. If any one fabric become scarce, and consequently dear, the +demand will diminish, and, if the price continue rising, it is only a +question of time for the demand to cease and be transferred to some +alternative. + +But this can not be the case with money. It can never be driven out of +use. There is not, and there never can be, any substitute for it. It may +become so scarce that one dollar at the end of a decade may buy ten +times as much as at the beginning; that is to say, it may cost in labor +or commodities ten times as much to get it, but at whatever cost, the +people must have it. Without money the demands of civilization could not +be supplied. + +Money was the most potent instrumentality in the evolution of society +from a low to a high plane of civilization. It is valueless to man in +isolation. It is indispensable to man in organized society. It is as +necessary for the proprietary distribution of wealth as railroads and +steamships are to its physical distribution. The aggregate force of the +demand for money in any country depends upon the numbers of the +population; with a stationary population the demand is steady, with an +increasing population the demand increases, and in order to maintain +undisturbed the equation of supply and demand the volume of money should +be increased in at least a ratio corresponding to that of the increase +of population. + +There are certain circumstances that to some extent disturb the +relations between population and money supply, such as the broadening of +the areas of population, and the multiplication of money centers. These +circumstances might render necessary a larger percentage of increase in +the money volume than would be indicated by the increase of the +population. + +But under any circumstances the smallest money-increase that will +suffice to maintain the equity of time contracts is an increase +corresponding to the increase of numbers of the population. + +Under conditions of unvarying demand and unvarying supply the value of +the unit of money would be unvarying. If as population and demand +increase the supply of money be proportionately increased, there is no +possibility of a change in the value of the unit of money. + +The constant and unceasing effort to exchange services and all forms of +property, which have but limited command over the objects of human +desire, for money, that sole instrumentality that has unlimited command +over such objects, is, and ever will be, eager, intense, and unwavering. + +With population and consequent demand rapidly increasing how do the +advocates of the gold standard expect to increase the money volume of +the country in this proportion, while the yield of gold, instead of +increasing in proportion to demand, is every day becoming less and less +capable of meeting the requirements of the arts alone? + + +THE QUANTITY OF MONEY IN CIRCULATION SHOULD INCREASE IN A RATIO NOT LESS +THAN THE RATIO OF INCREASE OF POPULATION. + +It will be admitted that if the population of a country be increased by +any given percentage there will be a proportionate increase in the +demand for all articles that supply human needs. If the population +increases by 3 per cent., there will be needed 3 per cent. more +house-room, 3 per cent. more furniture, 3 per cent. more food, 3 per +cent. more of all things that enter into consumption. These things can +only be got by a demand first made on money. Then why not 3 per cent. +more money? + +The present monetary circulation of this country including gold, silver, +and paper, is represented to be $1,700,000,000. As our population +doubles in thirty years, the rate of increase is 3-1/3 per cent. + +If the money volume be not increased by a proportion at least as great +as this, the true relation between the supply of money and the demand +for it will not be maintained. The demand increasing as the population +increases, while the supply either does not increase at all or increases +in a degree incommensurate with the demand, the money volume shrinks and +the purchasing power of the unit becomes greater by reason of the +increased keenness of competition to get it. This is but another mode of +stating that the prices of all products of human labor decline. Prices +falling, business ceases to be profitable, stores and work-shops close, +and men are relegated to idleness. + + +THE QUANTITATIVE THEORY OF MONEY--THE VALUE OF EACH DOLLAR DEPENDS ON +THE NUMBER OF DOLLARS OUT. + +Thus by the universal competition to get it the value of the dollar is +made to depend upon the number of dollars that are out. This is a +principle that lies at the very foundation of the science of money. The +law, stated broadly, is that the value of each unit of money in any +country at any given time depends on the whole number of units in +circulation in that country. The larger the number of units out, +population remaining the same, the less must be the value of each unit; +the smaller the number of units out, population remaining the same, the +greater the value of each. + +Notwithstanding the variance sometimes found between the premises and +the conclusions of economic writers, there is no economist of repute who +does not admit this to be a fundamental principle. + +On the theory I have propounded therefore 3-1/3 per cent. of +$1,700,000,000, or $56,000,000, is the minimum amount of money that +should be added to the currency of this country during the present +year. + +Assuming the population of to-day to be 65,000,000 and the ratio of its +annual increase 3-1/3 per cent., the population of next year will be +67,166,600. The percentage of monetary increase to be provided for that +year should therefore be baaed on the increased number. And so on for +each succeeding year. + +I have thought best to collate a variety of citations from the most +distinguished authorities on financial economy to support my contention +that, _ceteris paribus_, the value of each dollar depends on the number +of dollars in circulation. + +John Locke, in his "Considerations," etc., published in 1690, said: + + Money, while the same quantity of it is passing up and down the + kingdom in trade, is really a standing measure of the falling and + rising value of other things in reference to one another, and the + alteration in price is truly in them only. But if you increase or + lessen the quantity of money current in traffic in any place, + then the alteration of value is in the money. + +Locke further said: + + The value of money in any one country, is the present quantity of + the current money in that country, in proportion to the present + trade. + +The historian, Hume, says: + + It is not difficult to perceive that it is the total quantity of + the money in circulation, in any country, which determines what + portion of that quantity shall exchange for a certain portion of + the goods or commodities of that country. + + It is the proportion between the circulating money and the + commodities in the market which determines the price. + +Fichte says: + + The amount of money current in a state represents everything that + is purchasable on the surface of the state. If the quantity of + purchasable articles increases while the quantity of money + remains the same, the value of the money increases in the same + ratio; if the quantity of money increases, while the quantity of + purchasable articles remains the same, the value of money + decreases in the same ratio. + +James Mill, in his treatise on political economy, says: + + And again, in whatever degree, therefore, the quantity of money + is increased or diminished, other things remaining the same, in + that same proportion the value of the whole, and of every part, + is reciprocally diminished or increased. + +John Stuart Mill (Political Economy) says: + + The value of money, other things being the same, varies inversely + as its quantity; every increase of quantity lowering the value, + and every diminution raising it in a ratio exactly equivalent. + +And again: + + Alterations in the cost of the production of the precious metals + do not act upon the value of money, except just in proportion as + they increase or diminish its quantity. + +Ricardo (reply to Bosanquet) says: + + The value of money in any country is determined by the amount + existing. * * * + + That commodities would rise or fall in price in proportion to the + increase or diminution of money, I assume as a fact that is + incontrovertible. * * * + +Ricardo further says: + + There can exist no depreciation in money but from excess; however + debased a coinage may become, it will preserve its mint value; + that is to say, it will pass in circulation for the intrinsic + value of the bullion which it ought to contain, provided it be + not in too great abundance. + +In this case Ricardo's illustration is the supposed case of a country +actually using one million gold pieces each containing 100 grains. He +maintains that they would be of the same purchasing power, if the +Government took out 1 grain, or even 50 grains, the quantity remaining +the same, but that if, from the grains so deducted, an additional +number of pieces were struck, a corresponding depreciation would result. + +William Huskisson ("The Depreciation of the Currency," 1819), says: + + If the quantity of gold in a country whose currency consists of + gold should be increased in any given proportion, the quantity of + other articles and the demand for them remaining the same, the + value of any given commodity measured in the coin of that country + would be increased in the same proportion. + +Sir James Graham says: + + The value of money is in the inverse ratio of its quantity; the + supply of commodities remaining the same. + +Torrens, in his work on Political Economy, says: + + Gold is a commodity governed, as all other commodities are + governed, by the law of supply and demand. If the value of all + other commodities, in relation to gold, rises and falls as their + quantities diminish or increase, the value of gold in relation to + commodities must rise and fall as its quantity is diminished or + increased. + +Wolowski says: + + The sum total of the precious metals is reckoned at 50 milliards, + one-half gold and one-half silver. If, by a stroke of the pen, + they suppress one of these metals in the monetary service, they + double the demand for the other metal, to the ruin of all + debtors. + +Cernuschi says: + + The purchasing power of money is in direct proportion to the + volume of money existing. + +Prof. Francis A. Walker, in his work on "Money" (page 57), says: + + The value of money in any country is determined by the amount + existing. + + Its [money's] power of acquisition depends not on its substance, + but on its quantity. [Paulus, author of the Pandects, sixth + century.] + +Professor De Colange, in the American Cyclopedia of Commerce, article on +"Money," says: + + The rate at which money exchanges for other things is determined + by its quantity. * * * + + Supposing the amount of trade and mode of circulation to remain + stationary, if the quantity of money be increased, its value will + fall, and the price of other commodities will proportionally + rise, as the latter will then exchange against a greater amount + of money; if, on the other hand, the quantity of money be + reduced, its value will be raised, and prices in a corresponding + degree diminished, as commodities will then have to be exchanged + for a less amount of money. * * * + + In whatever degree, therefore, the quantity of money is increased + or diminished, other things remaining the same, in that same + proportion the value of the whole and of every part is + reciprocally diminished or increased. + +A curtailment of the volume of money in a country will, _ceteris +paribus_, increase the value of the money of that country. All the +authorities agree that this law applies to all forms of money, whatever +the material; so that it applies to paper money with precisely the same +force that it applies to metallic money. + +Mr. Stanley Jevons, in his work on "Money and the Mechanism of +Exchange," says: + + There is plenty of evidence to prove that an inconvertible paper + money, if carefully limited in quantity, can retain its full + value. Such was the case with the Bank of England notes for + several years after the suspension of specie payments in 1797, + and such is the case with the present notes of the Bank of + France. + +Mr. Gallatin said: + + If in a country which wants and possesses a metallic currency of + seventy millions of dollars, a paper currency to the same amount + should be substituted, the seventy millions in gold and silver, + being no longer wanted for that purpose, will be exported, and + the returns may be converted into a productive capital, and add + an equal amount to the wealth of the country. + +In his Proposal for an Economic and Secure Currency Ricardo says: + + A well regulated paper currency is so great an improvement in + commerce, that I should greatly regret if prejudice should induce + us to return to a system of less utility. The introduction of the + precious metals for the purposes of money may with truth be + considered as one or the most important steps toward the + improvement of commerce and the arts of civilized life; but it is + no less true, that with the advancement of knowledge and science, + we discover that it would be another improvement to banish them + again from the employment to which, during a less enlightened + period, they had been so advantageously applied. + +Mr. J. R. McCulloch, in commenting on the principles of money laid down +by Ricardo, says: + + He examined the circumstances which determine the value of money + * * * and be showed that * * * its value will depend on the + extent to which it may be issued compared with the demand. This + is a principle of great importance; for, it shows that intrinsic + worth is not necessary to a currency, and that provided the + supply of paper notes, declared to be a legal tender, be + sufficiently limited, their value may be maintained on a par with + the value of gold, or raised to any higher level. If, therefore, + it were practicable to devise a plan for preserving the value of + paper on a level with that of gold, without making it convertible + into coin at the pleasure of the holder, the heavy expense of a + metallic currency would be saved. + + It appears, therefore, that if there were perfect security that + the power of issuing paper money would not be abused; that is, if + there were perfect security for its being issued in such + quantities, as to preserve its value relatively to the mass of + circulating commodities nearly equal, the precious metals might + be entirely dispensed with, not only as a circulating medium, but + also as a standard to which to refer the value of paper. + + In adopting a paper circulation-- + +Says Lord Overstone-- + + we must unavoidably depend for a maintenance of its due value + upon the adoption of a strict and judicious rule for the + regulation of its amount. + +Lord Overstone further declared that: + + The value of the paper currency results from its being kept at + the same amount the metallic currency would have been. + +Alexander Baring, in his evidence before the secret committee of the +House of Lords in 1819, said: + + The reduction of paper would produce all those effects which + arise from the reduction in the amount of money in any country. + +Prof. F. A. Walker says: + + Let me repeat, money is to be known by its doing a certain work. + Money is not gold, though gold may be money; sometimes gold is + money, and sometimes it is not. Money is no one thing, no group + of many things having any material property in common. On the + contrary, anything may be money; and anything, in a given time + and place, is money which then and there performs a certain + function. Always and everywhere that which does the money-work + is the money-thing. + +Sir Archibald Alison says: + + The suspension of specie payment in 1797, making bank notes a + legal tender receivable for taxes by providing Great Britain with + an adequate internal currency, averted the catastrophe then so + general upon the Continent, and gave it at the same time an + extraordinary degree of prosperity. Such was the commencement of + the paper system in Great Britain, which ultimately produced such + astonishing effects, and brought the struggle [of the Napoleonic + wars] to a triumphant close. + + +THE TRUE MONEY STANDARD. + +The true money standard of any country is not the material of which the +money is made. The standard is not a concrete object, but a numerical +relation. It is the relation between the number of units composing the +monetary circulation of the country and the numbers of the population. + +It is the legal-tender function that constitutes money. It is the power +which the law imparts to any material to pay debts and liquidate +obligations. It can not for a moment be doubted that the money function, +being conferred by the supreme authority, is the all-sufficient +guarantee of the money value. There is no necessity for re-enforcing +that value with any inferior value that may attach to the material on +which the money stamp is placed. The money function is immeasurably the +most important that can be conferred by society upon any material, and +it is absurd to urge that that function is not of itself sufficient for +the maintenance of the value of money. All the value that money can +possibly have--the totality of value that can exist in the shape of +money in any country--will attach to anything upon which the sovereign +authority stamps it, whether the material on which the stamp is placed +be gold, silver, paper, or anything else. Legislators or executive +officers of the Government, by increasing or decreasing the volume of +money, correspondingly decrease or increase the value of each unit of +that money. For no matter how many or how few the units may be, the +total value of the money of the country will be comprised within the +total number of those units. A change in the number of the units effects +a proportionate change in the value of each unit, and whatever the value +of the unit may be, it is of the utmost importance that that value +should remain undisturbed. + +It is absurd to maintain that a gold unit, which, as time goes on, is +constantly increasing in purchasing power; is a better unit than a unit +of any other material that maintains unchanging value through time. + +Whenever the business of the country accommodates itself to a given +number of units, the only question for the Government to deal with is to +maintain that value as free from disturbance as possible; and according +to all authorities on political economy that can only be done by +increasing or decreasing the number of units in circulation in +accordance with the demands of increasing or decreasing population. + +If it be admitted that one of the most important offices of government +is to see that the equities are preserved between its citizens (and if +this be not so, to what purpose are our courts of equity instituted?), +then it can not be denied that it is one of the highest offices of +government to see that money, which measures all equities, and which +must for all time continue to be the principal measure in the service of +civilized society, shall be of unchanging value. It is impossible to +secure this characteristic of uniformity in the value of money if we are +to select as the only material on which to stamp the money function a +substance whose yearly production is becoming more and more limited, and +the prospect of whose sufficient yield becomes less and less +encouraging. + + +IF SILVER REMAIN DEMONETIZED AND GOLD CONTINUE DECREASING, WHERE IS THE +WORLD'S FUTURE MONEY SUPPLY TO COME FROM? + +If the distinguished authorities I have quoted are correct, that a +diminution of the volume of money increases the value of the money +unit--which is but another form of stating that it lowers prices and +produces stagnation, distress, and discontent,--what good reason can be +offered by the advocates of the gold standard for confining the business +of this rapidly growing country to a basis of gold, when it is well +known that the entire stocks of gold and silver together are now +insufficient to serve the purpose of the world's money, and have to be +supplemented and re-enforced by large issues of paper notes? Do they not +reflect that the production of gold is constantly diminishing and is +likely to continue to diminish? And do they not know that our population +is growing at the rate of over 3 per cent. per annum and will double in +thirty years? Do they mean that the money volume which serves a +population of 65,000,000, and is far below the needs of that population, +will suffice for the 130,000,000 of the next generation? To be sure, if +we are to take no note of prices, the question is a simple one. + +But prices must be taken into account. The entire money question is one +of prices. When it is said that money is scarce, what is meant is that +business is depressed and that money is difficult to get, at the present +range of prices. Should prices fall 25 per cent. money would be found +plentiful enough to conduct exchange at the lower range. But when prices +fall, goods sell below cost, business is unprofitable, workshops are +closed, and men are thrown into idleness. If lowering prices do not +affect injuriously either the business or the prosperity of the country, +then it makes no difference what the volume of money may be; a small +amount will meet the requirements as well as a large amount. In that +case, the gold standard is as good as any. + +But if gold alone is sufficient to bear all the enormous monetary +burdens of the Western world, why do the advocates of the gold standard +admit the necessity for any more circulation? To be logical, instead of +favoring an increase of credit money, which has always lurking within it +an element of danger to the business of the community, they should +demand the retirement of the $347,000,000 of greenbacks and the +$350,000,000 of coined silver, and base the business of the country +exclusively on what they call "honest money." If that should be done all +that could happen would be a fall in prices. Judging by the experience +of the past it would not be surprising if the next move of the +gold-standard men would be an agitation for the retirement and +cancellation of the greenbacks. Such a movement is fully in harmony with +the opinions of the gold-standard advocates for the past twenty years. +Indeed, the Secretary of the Treasury who took charge of the finances at +the opening of the last Administration, himself a banker, recommended +the demonetization of the greenbacks almost as vigorously as he opposed +silver. + + +MONEY VALUABLE ONLY FOR THE IMPORTANT SERVICE IT PERFORMS. + +Money is valuable rather for the service which it performs than for the +material of which it is composed. + +When we consider the transcendantly important character of the service +which money performs--when we reflect that, without it, the achievement +of an advanced civilization would be impossible, we can not escape the +conclusion that, compared with the value of that service, the commodity +value of any material on which the money function may be stamped is too +trifling to merit serious attention. + +This will be made clear by reflection on the necessities of the +situation. + +So long as society chooses to maintain the automatic or metallic +money-system, it must be obvious that to escape the evils that would +result from a sudden and overwhelming increase in the supply of the +money-material as compared with the entire stock in existence, and the +infinitely more serious evils that would result from a wholly +insufficient yearly addition to that stock, it must have on hand an +enormous accumulation of the metals on which the stamp is placed. It +must be manifest that no material would be fit for universal acceptance +for so important a function as money unless there were available so +great a quantity of it that no sudden shock could be inflicted on +society by ordinary fluctuations in the current yield, or in the current +consumption in the arts. + +But, in the nature of things, a supply sufficient to effect that result +would be so enormous as practically to destroy the market value of the +material as a mere commodity if the money function and use were +withdrawn from it. + + +THE MONEY DEMAND, NOT THE COMMODITY DEMAND, THAT GIVES GOLD ITS VALUE. + +Mr. Giffen the statistician of the London Board of Trade, in an article +recently published in an English magazine, berating and deriding the +bi-metallists, maintains that it is not the demand for gold as money, +but for gold as a commodity, to be used in the arts, that determines its +value. + +To prove his case, Mr. Giffen states that the supply of gold is about +$95,000,000 per annum, the annual demand for the arts $60,000,000, or +about two-thirds of the annual supply; while the demand for money is +only $35,000,000, or about one-third that supply. He therefore argues +that the art demand, being the greater of the two, contributes more +largely to the maintenance of the value of gold than does the demand for +that article as money. It is hardly necessary to point out the absurdity +of this claim. + +The commodity demand in any one year is not made upon the current year's +supply, but upon the entire amount in existence, which, is estimated to +be about $4,000,000,000. If the demand for the arts entirely ceased, +would the addition, to the money volume, of the $60,000,000 now used in +the arts produce any appreciable effect on the value of the +$4,000,000,000 in existence? + +On the other hand, what is the demand on gold for the money use? All the +labor and all the salable property of the western world are constantly +offered in exchange for it. It is a moderate estimate to assume that +each dollar is earned, demanded, and paid once a week, or fifty times in +each year. This constitutes a total annual money demand of +$200,000,000,000, compared with which colossal sum how inconsequential +is the commodity demand of $60,000,000 in maintaining the value of gold. + +The amount of gold annually used in the arts is not very definitely +ascertained, but in 1886 it was estimated by the then Director of the +United States Mint to be $46,000,000 per annum. Mr. Giffen estimated it +at $60,000,000. It is my opinion that the arts forage on the money-stock +of gold to the extent of about the entire annual yield. The bullion or +commodity value of that metal being determined by its money value, +whoever desires to use it for any purpose other than money, takes the +bullion at its coinage value, or else melts up the coin. + +Were gold demonetized and deprived of its money function, and its demand +confined solely to that arising from its adaptability for various other +purposes, the present stock of that metal on hand and in use as money +would, according to the estimates of the director of the mint, supply +the art demand for more than seventy-five years to come. But, assuming +that the estimate of the Director of the Mint is too low, and that my +own is nearer the truth, there is at least fifty years' supply on hand. +Were there fifty or seventy-five years' supply of any other commodity on +hand in the market, what would be the commercial value of that +commodity? What would be the value of copper, of brass, or of iron, if +there were fifty or seventy-five years' supply of either of those metals +in the market for disposal at one time? Nobody can pretend that any +commodity of which there is an available supply on hand equivalent to +the whole demand for fifty or seventy-five years can have any but the +most trifling value. + +Contrary, therefore, to the generally received conviction that the +commodity demand is the dominating force in fixing the value of gold I +maintain and insist that the commodity demand, if entering into the +account at all, is insignificant. It is the supremely important +_money_-demand, as correlated to the supply, that fixes the value of all +money of every description whatsoever. + +The demand for gold as a commodity is limited and fluctuating, but when +that metal is invested by law with the higher function of money, and +thus constituted a common denominator of all values, that limited and +fluctuating demand is changed to an unlimited and constant one, which +fixes its value for other and inferior uses. If the commodity-demand for +gold were, as many believe it to be, essential to its acceptance as +money, it would be a great misfortune to society. The happiness and +prosperity of the world, if not wholly dependent upon, are largely +influenced by, steadiness in the value of money, and this can not exist +without steadiness in its volume. Whatever demand exists for gold as a +commodity can only affect the volume of money injuriously--that is to +say, by decreasing it. The admonition of history is that a deficiency in +the money-supply is more probable, and infinitely more to be feared than +an excess, and this deficiency is, in great measure, caused by the +insidious and constant encroachment, upon the precious metals, of +demands for them for other than the money use. When we contrast the +magnitude of the world's interests and equities, which rest on +steadiness in the value of money, with the comparative unimportance of +the uses of the metals as commodities, it becomes apparent that the +subjection of the value of money to disturbance from the demands for +gilded signs, looking-glasses, bangles and breast-pins, is an evil for +which society is but poorly compensated by the benefits derived from +such uses. + +Whatever other quality gold may posses than as the bearer of the money +function is inconsistent with the healthful and proper exercise of the +task assigned it as such. Whenever any portion of the metal is used for +any other purpose than money it destroys the money and thus changes the +value of every unit of money in circulation, for, at already +stated--other things remaining unchanged--the value of each dollar +depends on the number of dollars that are out. Without forewarning, and +with out knowledge on the part of the people, large amounts of the money +volume, on which so infinite a number of equities rest, and on the basis +of which all debts and time contracts have been entered into, are, as it +were, surreptitiously abstracted and appropriated to other and always +inferior uses, for by far the highest and noblest use of any material +upon which the money function has been conferred, is the money use. No +other use can possibly be so high or so noble as that of maintaining all +equities undisturbed. + +It seems unworthy a highly developed civilization which, as to all +subjects other than money, regulates its affairs by the application of +intelligence, and bases its policies upon exact data, scientifically +ascertained and correctly applied, to depend for its money system upon +the accidents, make-shifts, and expedients to which primitive society, +by reason of the limitation of its powers and the undeveloped condition +of the human mind and hand, was compelled to resort. If the quantitative +theory of money be correct--if the money standard be, as I insist it is, +a steady and duly proportioned numerical relation existing between the +units of population and units of money--it is the duty of society and +government to see that as far as practicable that principle is put into +operation. + +The history of the production of the precious metals from the remotest +ages demonstrates that under the automatic system of money this can only +be effected by the unrestricted coinage of, and conferring the full +legal-tender function on, both metals. + + +THE PROPOSITION THAT THE GOVERNMENT SHOULD LEND MONEY ON THE SECURITY +OF REAL ESTATE. + +If a change in the whole number of money units in circulation relatively +to population and business do not affect the value of each unit, then no +objection can be found to the proposition recently presented in the +Senate by the distinguished Senator from California, which created some +surprise among Senators. The resolution of that Senator contemplates a +loan by the Government to holders of real estate based upon the security +of the property; and the issue of a large amount of Treasury notes for +that purpose. Certainly, if a dollar, in order to perform properly the +money function, must have in it or back of it a dollar's worth of +material, there can be no safer security found than that suggested by +the Senator from California, namely, the arable land of the United +States. + +It is the most absolutely secure of all securities; it can neither run +away nor be stolen, it can not be burnt up, lost, or destroyed. + +Arable land is, in and of itself, capable of supplying all basic wants, +and must be always in demand, while gold, so far as concerns any use to +which it is, or can be applied, might be dispensed with altogether, with +scarcely any inconvenience to society. + +Certainly money based on land would seem to be better than money based +on gold. Senators who are sticklers for so-called "intrinsic value" +money, and "full-value" money, should be found supporting that +proposition. But it must, on reflection, be obvious that, other things +remaining unchanged, whenever the total number of units of money (or +dollars) in the circulation of a country increases, the value of each +unit will decrease. It is an axiom of political economy that no amount +of increase in the number of units of money in a country increases the +aggregate value of the money of that country. + +The aggregate value of the money in circulation in a country, can, +_ceteris paribus_, be increased only by an increase of population and +business, that is to say, by an increase in the demand for it. + +If, without increase of population, the money of a country be increased +from, say, $1,000,000,000 to $2,000,000,000, the effect would be not to +add to the aggregate value of the money of the country, but to decrease +the value or purchasing power of each unit of the money, so that it +would take ten dollars to buy what had before cost but five. + + +GOLD A FETICH--DEMAND FOR A STANDARD OF JUSTICE. + +The history of the world affords no example of a money system regulated +by human prescience and intelligent calculation. It is not too much to +say that the money system of the world--the most important associative +instrumentality of civilization, in so far as it is not controlled for +their own advantage by the creditor classes--is practically the result +of accident. We are even less logical than the ancients, for they +availed themselves of the entire supply of money possible to their +civilization and development. They used the full yield of both silver +and gold, while we, in order to line the pockets of a privileged caste +of money-lenders, reduce the money volume to the lowest possible minimum +by discarding one of those metals and making all debts payable in the +other. + +Gold has been erected into a fetich by methods familiar to the pagan +priesthood, who forbade investigation of the claims of their idol to the +superstitious veneration of their followers. The quality of a universal +standard claimed for gold has been set up by the classes which, like +that priesthood, had interests to be served by the superstition. All +things else may be subjected to the test of reason and argument, but the +slightest approach to a scrutiny of the claims of gold as a much-vaunted +universal standard of valuation has been repelled by interested casuists +and sophists who constitute the sacred guard of the temple of the idol. + +The people of this country, Mr. President, begin very seriously to doubt +the sacredness of a so-called standard by which they have been robbed of +thousands of millions of dollars--a standard that despoils and +impoverishes the toiling masses, in order to swell the plethoric pockets +of the privileged few. From all parts of the Republic we learn that the +people have become aroused on this subject, that they have discovered +gold to be a standard, not of valuation, but of spoliation and +confiscation. + +The world at large shares to a great extent in the doubts entertained by +the people of this country as to the orthodoxy of the continuing worship +of gold. Throughout all Europe the suspicion is beginning to make itself +felt, among those who have no personal interest at stake, that the +constantly appreciating value of this metal bodes no good to society, +however advantageous it may be to the moneyed classes, and especially +the money lenders. It begins to be feared that there may be too long a +persistence in this artificial standard, and that the pressure upon the +people, in the fall of prices and the increase of the burden of debt and +of taxes, which multiply with time, may have serious consequences upon +public order. The stock of gold, never half enough to meet the wants of +the people anywhere, is year by year being drawn upon more and more for +use in the arts, while the yield from the mines is decreasing, and +giving no promise of any material increase from any quarter. + +The pressing need of the time, the standard for which the people are +calling, is a standard of equity, a standard of justice, a standard that +shall measure fairly and impartially the rights of both parties to a +contract, that will not wrongfully and stealthily add to the burden of +the obligation on either side, that will not, under the guise of fair +dealing, rob one of the parties for the benefit of the other. The first +indispensable step to a realization of that standard is the full +restoration of silver to its rightful position as a part of the money of +the world. + +In any discussion of the question, it would be uncharitable not to make +allowance for the force, on many conscientious minds, of what, to the +free and unprejudiced inquirer, can only be regarded as an absurd and +meaningless superstition, which, notwithstanding the advance of thought +in other directions, still persists in disarranging the industries and +vexing the civilization of an enlightened age. It is to the strength of +this obdurate superstition that we must ascribe the horror with which +many minds contemplate the possible loss to the country of a part of its +gold. + + +FEAR OF THE OUTFLOW OF GOLD. + +Any prospect of the outflow of gold is regarded as the opening of a +veritable Pandora's box, from which must issue forth all the evils that +can afflict mankind. + +It is to this fear, no doubt conscientiously entertained, that we must +attribute the declaration of the President of the United States that we +do not dare to tread on the edge of so dangerous a peril. It is not +difficult to make the statement, but it will be very difficult to prove +that we stand on the edge of any peril whatever, if most or even all our +gold should go. + +We heard this same apprehension expressed, and with equal, if not +greater, force twelve years ago, when the silver question was before +this body. We were then assured by the ablest of our so-called +"financiers" that the country would be denuded of its gold and that all +manner of dreadful catastrophies would result. The prospect was +represented to be appalling, although I do not remember that any reasons +were given to show how or why gold should leave the country, nor that +any statement was made as to exactly how this country would suffer if it +did leave. + +For my own part, Mr. President, I regard it as a matter of very little +consequence whether gold goes out or not. Certainly if, in order to +retain gold, we must sacrifice justice, then I say let gold go. + +It is not of so much consequence that we should retain gold for the +benefit of a small coterie of importers as that we should preserve the +equity of time contracts between the millions of our own people who +import no foreign goods. It is monstrous to think of violating all +equities in time transactions--and nine out of every ten of our domestic +business transactions are of that character--for the absurd and +inconsequent purpose of keeping in this country some particular +commodity, whether it be designated as money or otherwise. + +The hoarding or the outflow of gold is a hardship when, under the law, +somebody is obliged to have it, as was the case during the war, when +gold alone would pay duties on imports. Combinations to hoard gold at +that time frequently involved great loss to the importer. But thanks to +the silver legislation of 1878 and other legislation making our Treasury +notes receivable for customs dues, no damage could now result from any +attempted corner in gold. + +The creditors of this country never can convince the enterprising and +energetic people who form the debtor class that it is to our interest +that a certain material shall be kept in the country as money, if the +expense of keeping it is that the debtors shall continue to be despoiled +as they have been for the past fifteen years. + +If we can only retain gold at the expense of steady and unwavering +prices, and at the expense of a steady and unchanging value in money, +then the quicker gold goes out the better. The constantly increasing +value of gold by reason of its increasing scarcity means the constantly +increasing burden of all debt, and involves the final absorption of all +the property of the country by the creditor classes. Under the operation +of the present system, by which prices are constantly falling and money +is constantly increasing in value, the surplus earnings of the people +are flowing in a steady stream into the vaults of money-lending +institutions, and into the pockets of creditors. + +In a very intelligent article published in a late number of an +influential magazine--the Political Science Quarterly--there is the +significant statement, apparently derived from the best sources, that +in the year 1879-'80, one-half of all the mortgages in the State of +Indiana were foreclosed. + +It were better for society that property should at once be confiscated +than that the great masses of the people in every community should have +to struggle through years of painful and exhausting effort in the face +of constantly falling prices and then in a large percentage of cases to +lose their property at last. But this can not be avoided so long as we +attempt to keep up what is called the gold standard. It is a necessary +consequence of the gold standard that we shall have the scale of prices +that obtains in gold standard countries If the presence of gold in this +country is to destroy our people, who doubts that it should go? If its +presence is to result in the destruction of equity and justice, who +doubts that it should go? + +Nearly every witness who testified before the secret committee of the +House of Commons in 1857 agreed that gold could only be held by +paralysing the business of the country. It is estimated by witnesses who +testified before that committee, that in the panic of 1847, in Great +Britain, the property of the country, by reason of the measures rendered +necessary to maintain the single gold standard, was depreciated +$1,500,000,000. I commend that report to the careful and serious perusal +of the advocates of the single gold standard in this country. + +Among the witnesses before the committee were John Stuart Mill, Lord +Overstone, and many other men distinguished in the world of letters and +finance. I am informed by the Librarian of Congress that there is but +one copy of the work in the United States. It would be well worth while +for Congress to order a number of copies of it printed, for there is no +work with which I am acquainted that contains so much practical +information as to the working of the single gold standard. According to +the testimony taken before that committee, the experience of Great +Britain since 1819 shows that gold alone, even when re-enforced by paper +money convertible exclusively into gold, instead of being a beneficent +instrument of valuation, has proved a cruel instrument of injustice. + +A brief consideration of the causes which affect the movement of gold +will not be out of place in this connection. + + +RATIONALE OF THE MOVEMENT OF GOLD. + +Why is it that gold leaves country and goes to another? For one reason +only--the advantage of its owner. Whenever he can make a profit by +sending it out, the gold goes; and the period when that profit can be +made is indicated when the prices of goods that are internationally +dealt in are either rising in the country which it leaves or falling in +the country to which it goes. It is only to pay for importable goods +that gold ever leaves the country in which the owner resides. Being an +international money, and receivable everywhere at its full face value, +gold loses nothing by transfer; hence it is sent wherever it will for +the time being have the greatest purchasing power. + +Whenever the general range of prices in this country of commodities +internationally dealt in becomes than higher than the general range of +the same commodities abroad, it is manifest that then gold can used to +advantage by purchasing those articles abroad and selling them here. If +the gold that goes out goes from stock that has been hoarded here, the +outflow has no immediate or direct effect upon prices in this country, +although, by increasing or "inflating" the volume of money abroad it +assists in raising prices there, and thus tends to secure for our +exported products a better price in the foreign market. But if the gold +goes from the amount that is in active circulation here, and if the void +created by this outflow is not filled with other forms of money, such as +silver, or paper, it results in a reduction of the volume of money in +actual use in this country, while at the same time increasing the volume +of money abroad. + +This increase in the foreign money stock causes a rise of prices abroad, +while the corresponding reduction of our currency causes a proportionate +fall of prices here, hence there is a constant tendency to an +equilibrium of prices of all articles of international commerce. + +No outflow of gold would follow a rise of prices here except in so far +as that rise affected articles internationally dealt in. No rise of +prices of such articles as we do not import would tend in any way to +drive out gold. If, for example, raw cotton should increase in price in +this country, that fact would not tend to drive out gold, because we do +not import raw cotton. But should the prices of articles of manufactured +cotton rise here above what those same articles could be bought for in +any foreign country our merchants would send abroad for them, provided +that, after paying the freight charges and customs dues, they could make +a profit on them. + +So, also, if crockery-ware were made in this country, and its price +should rise to, say, double the present price, then, instead of buying +the American, or home-made article, our crockery merchants, finding that +they could buy in England, France, or Germany cheaper than they could +buy in this country, would decline to buy the American crockery, and +would send abroad for any article, provided that, after paying freight +charges and customs dues, they could sell it here at a profit. That +would tend to increase the shipments of gold to foreign countries. + +That an outflow of gold does not follow from a rise of general prices, +but only of prices of articles of international trade, is manifest from +the fact that if land becomes cheap in other countries, gold does not +leave this country to buy it. When real estate is cheap in Brazil, or +Australia, or in Germany, France, or even England, the owners of gold in +this country do not send it abroad to make purchases of real estate. + +So wages of labor may rise in this country, or compensation for all +manner of services that must be performed here, and gold would not leave +as a consequence. But if cloth were cheaper--quality considered,--in +England, France, or Germany, or at the remotest ends of the earth,--than +in this country, our merchants would send gold for it in order to sell +it here at a profit. + +Altogether too much importance is attached to the possession of a large +stock of gold, unless that stock form part of the active circulation of +the country. So long as it remains in circulation it sustains prices and +develops industry and internal commerce. But the tendency of gold being +to find the most profitable field for operation, its continued presence +in the country can never be relied upon. + +When we take gold from other countries prices in those countries fall, +owing to the reduction of the volume of money there; and owing also to +the action of the foreign banks in immediately raising their rates of +discount on commercial paper and suddenly calling loans. As there is +less money left in such country with which to pay for commodities, we +are obliged to accept lower prices for the products we ship to it. + +The larger the stock of gold, therefore, accumulated by us the lower, +necessarily, must be the price which we can receive for our surplus +agricultural products. + +In order to maintain parity between the metals, it is not necessary for +us to have all the gold we now have; $200,000,000, or even $100,000,000 +of gold, would maintain that parity. The parity between the metals can +never be broken until all the gold leaves, and provided we retain one or +two hundred million, the rest can not be placed more advantageously than +where our languishing surplus products must be sold. + +When gold leaves this country it is because prices here are rising. +Prices are now lower than they have been since 1847. Must they continue +declining in order that we may be able to retain all our gold? It is +manifestly impossible for the people of this country to prosper with a +constantly lowering range of prices. It is equally impossible for the +present level of prices to be maintained with a constantly increasing +demand for, and as constantly diminishing a supply of, gold. It is +universally admitted that an increase in the money circulation of this +country at the present time is an exigent necessity. The advocates of +the single gold standard, while admitting that we must increase our +money volume, the effect of which must be to maintain, if it does not +raise, the level of prices here, insist that we shall let none of our +gold go in order that prices abroad may rise. + +Mr. BLAIR. May I ask the Senator a question? + +Mr. JONES, of Nevada. Certainly. + +Mr. BLAIR. Does the Senator mean to be understood that the falling of +prices is an absolute demonstration of the increased value of the money +without limitation? + +Mr. JONES, of Nevada. I have already, in the early portion of my +remarks, had occasion to state that when a fall in prices was brought +about by a larger subordination of the forces of nature to the uses of +man, as where the comforts and conveniences of life could be produced +with less sacrifice than before, it was not an injury to society, but in +advantage. In other words, if, by a certain amount of sacrifice +seventeen year ago, only one pair of shoes could be produced, and if by +the same sacrifice two pairs could be now produced, there would be a +lowering of the price of shoes to about one-half of what it was +seventeen years ago, which would be a very great benefaction to mankind. + +But, as I then stated, there is one certain sign that that is not, +except to the slightest extent, the cause of the present universal fall +of prices. When prices fall owing to improvements in manufacture, +business revives, the masses of the people are at work, those who toil +find themselves possessed of more of the comforts, of the conveniences, +and even of the luxuries of life than before. They are better contented +with their condition, and more buoyant and hopeful than before. On such +occasions money becomes more and more in demand than it was before, and +instead of being hoarded is put into active and productive business +where it will make a profit. But when interest falls, pari passu, with +the fall of prices, it shows that the fall of prices is not due, except +in the smallest degree, to improved methods of production, but to the +increased value of money. + +Mr. BLAIR. I was not controverting the Senator's theory as to the +existing facts in this country, but I understood him to be laying down +an absolute principle, applicable under all circumstances and in all +times, that the fall of prices is a demonstration of the increased value +of money. I supposed that the fall in prices resulting from a +protective tariff was beneficial, and not an indication of an increase +in the value of money, and that that fall of price was not owing to the +increased value of money, but was by improved machinery and all that. So +it is possible that some of the fall in prices in this country may be +owing to increased facility in the matter of production and to the +beneficial operations of the protective tariff. + +Mr. JONES of Nevada. Mr. President---- + +Mr. REAGAN. If the Senator from Nevada will permit me, I wish to ask the +Senator from New Hampshire if he means to be understood as assuming that +a protective tariff reduces the value of the commodities produced? + +Mr. BLAIR. I was simply asking for information of the Senator from +Nevada, and he can answer that question much better than I; but the +Senator from Texas understands very well that I do believe a protective +tariff reduces prices. + +Mr. JONES, of Nevada. Mr. President, so far as a tariff has the effect +of reducing prices in any country, it is not by reason of the levying of +any certain percentage of duty on the imported goods. The first effect +of the tariff certainly always must be to raise prices. The fundamental +theory of the tariff is--whether it be correct or not I am not now +discussing--that by that tariff you place the price of manufactured +goods up to a range at which they can be produced in the country in +which the tariff is levied, and upon the level of the range of wages and +manner of living which obtain in that country. By so doing, if you have +a proper volume of money, you set all your people at work, and keep them +at work at a variety of occupations. In such case every forge, furnace, +and factory becomes a school, every machine-shop an academy, and every +cunning device and invention becomes a lesson, teaching the people how +to deal with the subtle forces of the universe. So far as this country +is concerned the theory of the tariff is that 65,000,000 people should +have a varied and complete system of manufactures, which should supply +practically all their own wants, instead of an abnormal proportion of +them being driven into the single occupation of farming and relying on +foreign manufacturers to supply such finished products as they need. To +draw out and develop the aptitudes of a people a large variety of +occupations is indispensable. When all men are employed at their +aptitudes new inventions multiply, progress is accelerated, and the +secrets of nature are more rapidly unfolded. Hence the McCormick reaper; +hence the sewing-machine, that great instrument which clothes the world, +because of the discovery that the eye of the needle should be at the +point; hence the air-brake, the telegraph, the electric light, and +thousands of other inventions that a protected people originate and +develop, which would perhaps not have been originated or might have been +long delayed if it had not been for the discouragement to imports caused +by the tariff, and the encouragement to our people to go into +manufactures by which their varied talents are drawn out and cultivated. + +There is no doubt that eventually as our conditions improve, increasing +numbers of our people will by degrees emerge from agricultural and enter +manufacturing pursuits. A tariff, by stimulating the organization and +development of industries, trains men to greater skill and perfection of +workmanship in a variety of departments, and with greater skill comes +greater efficiency of labor, and so greater economy of time. In that way +the prices of certain products are in time reduced; but that is not a +reduction of which any one complains. + +The true cause of the present discontent will not be found in the +protective tariff, but in the exactions of the single gold standard. + +Fifteen years ago England was on the gold standard. It is on the gold +standard to-day; yet prices in England are 35 per cent. lower than they +were fifteen years ago. There being no reason why there should be any +change in the trend of prices, so long as a fierce contest for the +possession of gold shall be waged between England, France, Germany, and +the United States, we are justified in assuming that a proportionate +decline of prices will continue. That means a further decline of 30 or +35 per cent. in prices during the next fifteen years. Where is this +tendency to stop? and if it does not stop, how long will it be before +the masses of the people become the bond slaves of the creditors? It is +shocking to the moral sense of mankind that a few money-lenders and +bondholders should thus be able, silently and insidiously, to wreck the +business of every country in the world by constantly increasing the +value of the money unit. + +While admitting the necessity of more monetary circulation, our gold +standard friends fail to show us how it is possible for an increase in +the volume of money to benefit our merchants, farmers, or mechanics if +the prices that prevail in gold standard countries are to prevail here; +for that is what the gold standard means for us, Mr. President. It means +that the prices that rule in gold standard countries are to rule here. + +The extreme indefiniteness with which the term "gold standard" is used +has so befogged the relation which gold money bears to industry and +commerce that people lose sight of the essential feature of that +relation. It is impossible to have a clear conception of the gold +standard without keeping in view exactly what is implied by the term. +What men must mean in this country by "the gold standard" is not the +touch of the metal, for they never touch it, and rarely, if ever, see +it. The maintenance of the gold standard here simply means the +maintenance here of the range of prices that prevail in gold-using +countries; that is to say, that low and lowering range of prices +rendered necessary by the attempt to measure the value of the constantly +increasing mass of the products of industry in all the western world by +the constantly diminishing volume of gold. No relief can come to the +toiling masses of this country until we can lift our prices above those +that now prevail in gold-using countries. + +Even if our prices remain as they are and do not increase, gold will +eventually leave the country if it continue to increase in value as it +has been increasing during the past fifteen years. We have been enabled +to maintain the gold standard here for the past twelve years +notwithstanding a considerable addition of money other than gold to our +currency, but we have been able to do so only because other countries +have been using an equal or greater amount of money other than gold. We +have been using no greater proportion of silver or paper money than +other countries having the gold standard are using, hence we have been +able to maintain their level of prices and still keep the metals +together. But whenever we shall attempt to prevent a further fall or +prices in this country, it will be impossible for us to retain our gold +so long as prices in gold-using countries continue to decline as they +have been declining. Gold will leave as quickly because of contraction +abroad as of inflation here, if by "inflation" is meant a coinage of +money sufficient to maintain prices at a steady level. + +Should gold leave the country, then, in order to supply its place, in +order to maintain the _status quo_ in prices, and prevent a further fall +from the present low range, we should need to have as many dollars of +silver in circulation as there are now dollars of gold. Gold would go +out only because our prices were rising, and as it went prices would +cease to rise. That process might continue until three or four hundred +million dollars of gold had gone. In all this, where would be the +disadvantage to our people? + +Considering the rapidly increasing population and wealth of this +country, all the silver that can be procured from the mines will be +necessary to maintain the level of prices and to keep pace with the +increasing demands for money. If, however, it slightly exceeds--and it +could not at the utmost more than slightly exceed--the amount actually +demanded by increasing population and business, the over-plus of each +year would take a great many years to drive gold out of the country, +dollar for dollar. For, when prices here, of things internationally +dealt in, are at an equilibrium with prices of the same articles abroad, +gold can not go any faster than silver comes in. + + +IF $2,500,000 SILVER PER MONTH HAS NOT DRIVEN OUT GOLD, HOW MUCH WILL +DO SO? + +For twelve years past we have had a silver coinage of nearly $2,500,000 +a month, yet no gold has been driven out. Having tested the capacity of +that quantity of silver to drive out gold, we find that instead of +driving it out its coinage has resulted rather in bringing gold in. For, +to whatever cause the influx of gold may be ascribed, it is +unquestionable that the gold has come, and it has needed all that gold, +and all the silver that we have coined, to maintain international prices +here. + +It is admitted by all that gold can not go out except by reason of a +rise in this country of the prices of articles of international commerce +beyond the prices of the same articles prevailing abroad. It is only +then that it becomes more profitable to send out gold in payment for our +foreign purchases than to send out commodities--the products of our own +country. Commodities will always be sent out in payment for other +commodities so long as it is more profitable to send them than gold, and +when, by reason of low prices prevailing abroad and high prices here, it +is no longer profitable to send out commodities, purchasers send out +gold, but only because it is to their advantage to do so. + +Now, having seen that the coinage of $2,500,000 of silver each month was +insufficient to so raise prices in this country as to induce gold to go +abroad, but that on the contrary it resulted in an influx and +accumulation of a large amount of gold, we may safely assume that only +so much of the amount of silver which Congress shall now provide for as +exceeds $2,500,000 a month will have any influence in raising prices in +this country above international prices, and so providing a stimulus for +gold to go abroad in payment for commodities imported into this country. + +If the amount of silver which shall be now provided should be, say, +$5,000,000 a month, the excess over the present coinage would be +$2,500,000 a month. This, then, would be the amount that would drive out +gold. As one dollar of silver would drive out no more than one dollar in +gold, no more than $2,500,000 could go out monthly. That would leave in +circulation the same amount of money that is in circulation now. There +would still be no increase in the money volume of the country, and, with +no increase in the volume of money, prices here would not rise above +international prices. At the rate of $2,500,000 a month, it would take +twenty years to drive out $600,000,000 of the $700,000,000 of gold now +in this country. It would take even longer than that, because the +$600,000,000 driven out would tend to raise international prices abroad, +and so check the outflow of gold from here. + +Mr. McPHERSON. Will the Senator yield to me for a question, or does he +prefer to go on? + +Mr. JONES, of Nevada. I am always ready to answer a question. + +Mr. McPHERSON. I do not want to interfere with the Senator's line of +argument, or with his speech in any form, but it does seem to me that +there is something fallacious about the Senator's argument, or else my +judgment and the experience of the world is all wrong. I wanted to ask +the Senator this question: If it be known that the Government of the +United States, if you please, by such an increase of the silver coinage +in this country as will be produced by the free coinage of silver, to +which theory, as I understand, the Senator is fully committed--if that +be the theory of the Government hereafter by the command of Congress, I +want to ask the Senator if he broadly and boldly asserts that no gold +can be driven out of the country to a greater extent than dollar for +dollar for the silver that comes in? + +Mr. JONES, of Nevada. Absolutely; I say so. + +Mr. McPHERSON. Then I want to ask the Senator another question, which +seems to be pertinent. Does the Senator assert that if a 72-cent dollar, +the value in bullion of a silver dollar during the year 1889, as has +been furnished us by the Director of the Mint and the Secretary of the +Treasury, were coined without limit (I say without limit, the limit +being, of course, the amount of bullion that is brought to the Treasury +to coined), and the people of this country who have been in favor of a +safe and honest currency, a currency either gold or as good as gold, +which the Treasury has been able to maintain, having forced no silver +upon the people if they did not wish it, and in that way the silver +dollar having been maintained equal to the gold dollar, I want to know, +with the people of this country to-day the holders of $500,000,000 of +gold, how it is possible for the Senator to believe that with a 72-cent +dollar to take its place the gold coin would circulate for a single +week, or a single day, or a single hour? If they have the gold will they +not hold it? + +Mr. JONES, of Nevada. The Senator has so involved his question with his +argument that I can scarcely get at what he wants me to answer. + +Mr. McPHERSON. The question I want the Senator to answer is this: Will +the people of this country, the financiers of this country, the banks, +the moneyed men holding $500,000,000 of gold, with a certainty of the +free coinage of silver and going to a silver basis, for that is what it +means, put their gold in circulation, or will they hoard it? Will it +disappear? + +Mr. JONES, of Nevada. I scarcely know what the Senator means by a +"silver basis." He talks about a 72-cent dollar. We have never seen a +72-cent dollar. The papers in the East have told us that the silver +dollar was worth 72 cents. I recollect talking on that subject once with +some Senators in the cloak-room. During the conversation one of the +Senate pages brought me a telegram, on which he said the telegraph +messenger had told him there were 50 cents due. I give the page a silver +dollar and said to him: "I have been informed by some very respectable +and intellectual gentlemen in here, some of them now candidates for the +Presidency even, that this dollar is worth only 75 cents. I do not want +to cheat a little boy. Take this out, and if the boy thinks it worth +only 75 cents he can send me back 25 cents, and if he thinks it is worth +a dollar he can send me back 50 cents. I will leave it to him." The page +brought back 50 cents and said the telegraph boy told him he did not +know what those old "duffers" in there might say, but it was as good a +dollar as he wanted and was very hard to get. [Laughter.] + +The Senator talks about the bullion value as though that had anything +whatever to do with the value of the dollar. I have attempted to +demonstrate that the material that was in the dollar has nothing +whatever to do with it. Let me illustrate. Suppose the entire supply of +silver of the world to-day were $60,000,000. Suppose the law limited the +coinage of it to $58,000,000, and every dollar coined was at par with +gold. Suppose there were a demand for half a million dollars of silver, +to be used in the arts, and that the remainder ($1,500,000) of uncoined +silver were barred from the imperial money use. That supposes a supply +of $2,000,000 left after satisfying the requirements for coinage, and +supposes only half a million dollars' demand for use in all the arts. In +that case there would be a $2,000,000 supply bearing down a half million +dollars' art demand, or a proportion between supply and demand of 4 +to 1. Suppose that under those circumstances silver bullion went to 50 +cents an ounce. Would the Senator then say that 50 cents an ounce was +the value of the $58,000,000, and all the rest of the coined silver of +the western world, while by coining another million and a half, which +would be nothing to a country like this, all the silver would be at par +with gold? Every ounce of silver coined in Europe and the United States +is at par with gold, a thousand or twelve hundred million dollars of it +to-day in France, $200,000,000 in Germany, $370,000,000 of it here. We +are not dealing with the price of silver bullion, that portion of silver +that is deprived of its immemorial use as money. We do not say what the +commodity demand for silver may make that worth. Such a consideration +has no bearing whatever on the value of money. + +I will suppose that in some one county of the United States a law were +passed that the wheat grown in that particular county should have no +right to go through the grist-mill, and that that wheat, as it might +very naturally do, being deprived of use, fell to one-half the price of +the wheat grown elsewhere in the country. Would the price of the wheat +of that one county thus under interdiction and denied the grist be a +fair gauge by which to measure the value of the entire wheat crop of the +country? Manifestly not. All we have to do is to take up the little +"slack" of silver, and all of it will at once be at par with gold; then +we shall hear no more about the "commodity value" of silver. That is the +contention that the bimetallists make. + +Mr. HEARST. It will be $1.29. + +Mr. JONES, of Nevada. It will be $1.29 an ounce in one week--in three +days--in fact the very moment you give it back its ancient right of +coinage and restore to it its full money power. You coin of gold all +that is brought to the mint, and you deny to a certain portion of silver +that same long-established privilege, and then you measure the value of +the whole supply of silver by that of the little fraction that is not +coined, and which therefore has to find a market as a commodity. + +Mr. McPHERSON. Then, if the Senator will permit me, he necessarily +proposes that the Government of the United States shall take up all this +"slack," as he calls it, in the surplus quantity of silver and shall +use it in the coinage. The mints of Europe being closed against the +coinage of silver, there is no other place where it will be coined. Now, +if the Government of the United States should use all the surplus silver +in the country, which has simply forced the price down since we +remonetized silver in 1878 more than 20 per cent.---- + +Mr. JONES, of Nevada. Gold has risen 35 per cent. + +Mr. McPHERSON. Then I think the Senator's argument is upon this idea and +upon this plan, that after we are upon a silver basis, as we should be +most assuredly, there would be no inequality in the money, because it +would be all silver. + +Mr. JONES, of Nevada. And no inequality between it and gold. + +Mr. McPHERSON. Certainly not, because there would be no gold in +circulation. But let me ask the Senator another question. While he can +use his short-legged silver dollar for the payment of debts, when he +comes to make a new obligation would not the price of the goods assume a +price equal to the difference between gold and silver? In other words, +while you can use a debased currency for the payment of debts, if a +legislative decree requires that you shall accept it, you can not use it +for any other purpose. + +Mr. JONES, of Nevada. I can not understand the Senator. We have not +provided any "short-legged" dollar. The Senator is assuming a good many +facts and attempting to adjust me to them. I ask the Senator to wait +until he has heard my argument, and I invite the Senator then to make +reply to it. + +Mr. McPHERSON. I am sorry that I interfered with the Senator. + +Mr. JONES, of Nevada. It was no interference on the part of the Senator, +except that I can not separate the Senator's questions from the argument +and assumptions that he makes. As to the outflow of gold, as I have +said, it would take a long time for even $400,000,000 of it go. The +amount of gold driven out would tend to raise prices abroad by making +money more plentiful there, and so check the outflow of gold from here. +When Senators speak about $600,000,000 of gold being withdrawn from +circulation here a question that is a little curious arises. What are +these people who own it going to do with that gold after they have +withdrawn it from circulation? Are they going to invest it in Great +Britain? Are they going to invest it in France? Are they going to the +Cape of Good Hope to invest it? If they are they will reverse the policy +that English capitalists are pursuing now and have been pursuing for +years--bringing their gold over here for investment. The Senator tells +us that gold is to disappear from circulation. What will the owners do +with it? Where and in what are they going to invest it? + +Mr. McPHERSON. It will be held for a premium. + +Mr. JONES, of Nevada. But who will buy it at a premium? Who needs it at +all? For what purpose is it needed? Who is going to pay any premium for +it? Nobody is "short" on it, and there is no law which forces anybody to +have it. + +Mr. President, nobody wants it enough to give a premium for it. It is +only worth what is daily paid in the markets of the world and nobody is +going to pay a premium for it. It is a bogie with which to frighten the +people who demand reform in the currency of this country. Let them +withdraw their gold. + +I tell the Senator it is not the men who hoard the gold in vaults who +maintain or promote the prosperity of this country, but the toilers in +the wheat-fields and on the farms of the country, the men who work in +the planing mills, the forges, the furnaces, the factories, and in all +our institutions of industry. It is they that bring us our prosperity, +and not these people who are gambling for premiums on gold. + +Let them gamble among themselves; let who lose and let who win, the +people care nothing. The people of the United States are going to +institute a money that shall install and maintain justice as between the +citizens of this country, and they will not be impeded. I can tell the +Senator that neither his party nor the Republican party will ever impede +the march that this great country is about to make--the first in the +world, I am glad to say--in adjusting to the demands of industry and +commerce, that great instrument, money, the non-adjustment of which, as +I have already stated, has, in my belief, caused more misery than was +ever caused by war, pestilence, and famine. + +But to resume at the point where I was interrupted: + +The gold going out would tend constantly to restore the equilibrium +between our prices and those of the gold-using countries, making the +proportion of the gold outflow each year less than that of the year +before. If there be included in this computation the remaining +$100,000,000 of gold, which would remain after the outflow of the +$600,000,000, we shall be compelled to come to the conclusion that the +time when our stock of gold can be driven out will be almost +indefinitely postponed. + +But even should all our gold go by reason of the remonetization of +silver, it will not be to the injury of the gold standard, but to its +great advantage, and to the equally great advantage of the masses of the +people, as well of this country, which the gold may leave, as of all +countries to which it may go. It will make the "gold standard" +consistent with the prosperity of the countries maintaining it. But +instead of preserving the gold standard of to-day, which is a standard +of wrong, it will inaugurate a gold standard that will approximate to a +standard of justice. + +The new "gold standard" that would be established by the outflow of our +gold would be a standard of prices resulting from the influx into +England, France, and Germany, the principal gold-using countries of +Europe, of more than $600,000,000 of money. + +So considerable an addition to their money-stock would raise prices in +those countries, and by remaining there, would, with the current +production, which we could spare to them, tend to maintain prices at a +steady level. Such a condition would be an inestimable boon to the +overburdened masses of Europe, and their prosperity would not be +attained at the expense of the people of the United States. We could +well afford to let gold go, since, by the coinage of silver, our own +money volume would not be reduced. The rise of prices which it would +effect in Europe would not only, as I have stated, secure better prices +for our exported goods, but would undoubtedly enable us to maintain +prices here at a substantial parity with those of Europe--that is to +say, with those of the new, more rational and more beneficent gold +standard which would be established by the full remonetization of silver +in this country. + + +PRACTICALLY NO GOLD MONEY IN THE UNITED STATES. + +But, aside altogether from this consideration, the gold that we already +have is really a surplus--it is practically a dead and useless article. +Gold, Mr. President, can not with entire truth be said at the present +time to form any part of the money of this country. Who but a bank clerk +ever sees a gold piece? With the exception of a few million dollars on +the Pacific coast, gold is not really in circulation in this country. +It is performing no useful function whatsoever. While I am engaged in +delivering these remarks I venture to say no Senator within the sound of +my voice has in his pocket a single gold coin of any denomination +whatever, or any paper representative of one. + +This is the answer to the fear expressed by some Senators that when +those who hold gold shall observe the enlargement of the money +circulation by the issue of the proposed Treasury notes they will be +likely to hoard it. They are already hoarding it. Every body knows that +that is about all that gold is used for in this country. It is hardly +possible for it to be hoarded to any greater extent than it is at the +present time. So little is this metal in circulation that I do not deem +it any exaggeration to say that there are millions of people in the +United States, "native here, and to the manner born," who have never in +all their lives seen a gold coin. + +How absurd, then, is the claim that any loss is to be suffered by the +alleged future hoarding of gold, or that any calamity can occur to +65,000,000 people by the disappearance of that which has long since +disappeared. + + +THE ARGUMENT BASED ON OUR BALANCE OF TRADE. + +One of the staple arguments of the advocates of the single gold standard +is, that if our stock of gold were greatly reduced we should be unable +to make payments to foreign countries in case the balance of trade +turned against us. It is only through an excess of imports over exports +that gold could go, and this country now produces of nearly all articles +almost all that it consumes. With the exception of two years there has +not been a balance of trade against us for fourteen years, as the +following table will show: + + _Value of merchandise imported into, and exported from, the United + States, from 1876 to 1889, inclusive; also annual excess of imports + or of exports--specie values._ + + ------+------------+------------+--------------+-----------+---------- + Year | | | | Excess of |Excess of + ending| Total | Total |Total exports | exports | imports + June | exports. | imports. | and imports. | over | over + 30-- | | | | imports. | exports. + ------+------------+------------+--------------+-----------+---------- + | _Dollars._ | _Dollars._ | _Dollars._ |_Dollars._ |_Dollars._ + 1876 |540,384,671 |460,741,190 |1,001,125,861 | 79,643,481| -- + 1877 |602,475,220 |451,823,126 |1,053,798,346 |151,152,094| -- + 1878 |694,865,766 |437,051,532 |1,131,917,298 |257,814,234| -- + 1879 |710,439,441 |445,777,775 |1,156,217,216 |264,661,666| -- + 1880 |835,638,658 |667,954,746 |1,503,593,404 |167,683,912| -- + 1881 |903,377,346 |642,664,628 |1,545,041,974 |259,712,718| -- + 1882 |750,542,257 |724,639,574 |1,476,181.831 | 25,902,683| -- + 1883 |823,839,402 |723,180,914 |1,547,020,316 |100,658,488| -- + 1884 |740,513,609 |667,697,693 |1,408,211,302 | 72,815,916| -- + 1885 |742,189,755 |577,527,329 |1,319,717,084 |164,662,426| -- + 1886 |679,524,830 |635,436,136 |1,314,960,966 | 44,088,694| -- + 1887 |716,183,211 |692,319,768 |1,408,502,977 | 23,863,443| -- + 1888 |695,954,507 |723,957,114 |1,419,911,621 | -- |28,002,607 + 1890 |742,401,375 |745,131,652 |1,487,533,027 | -- | 2,730,277 + ------+------------+------------+--------------+-----------+---------- + +This table shows that while for last year there was a balance against us +of $2,730,277, and the year before of $28,002,607, for all former years +from 1887 back to 1874 the balances were in our favor--all the way from +$23,000,000 in 1887 to $265,000,000 in 1881. But the total want of +significance so far as the movement of gold is concerned attaching to +any figures showing a balance of trade against the United States will be +seen by an analysis of the figures for any one year. Let us take for +example the imports and exports for 1889 and analyze them by countries. + +I now present a table in which I place in one group the gold-using +countries, and in another the silver and paper-using countries. + + _Exports and imports of the United States to and from the various + gold-using and silver-using or paper-using countries of the world + for the fiscal year ending June 30, 1889._ + + ------------------------------------+---------------+--------------- + Countries. | Exports. | Imports. + ------------------------------------+---------------+--------------- + Gold-using countries: | | + Canada | $42,141,156 | $43,009,473 + Belgium | 23,345,219 | 9,816,435 + Denmark | 3,903,937 | 846,904 + France | 46,120,041 | 69,566,618 + Germany | 68,002,594 | 81,742,546 + Great Britain | 382,981,674 | 178,269,067 + Greece | 165,079 | 988,923 + Italy | 12,604,848 | 17,992,149 + Netherlands | 15,062,939 | 10,950,843 + Portugal and its possessions | 3,266,814 | 1,282,556 + Spain | 11,946,348 | 4,636,661 + Sweden and Norway | 2,615,569 | 2,983,319 + Turkey | -- | 4,687,731 + British possessions in Africa | 2,936,213 | 895,344 + British possessions in Australia | 12,321,980 | 5,998,211 + | | + Silver and paper using countries: | | + Austria-Hungary | 726,156 | 7,642,297 + Russia | 8,364,545 | 2,985,631 + Mexico | 11,486,896 | 21,253,601 + Central America | 4,325,923 | 8,414,019 + Hawaii | 3,375,661 | 12,847,740 + Argentine Republic | 9,293,856 | 5,454,618 + Brazil | 9,351,081 | 60,403,804 + Chili | 2,972,794 | 2,622,625 + Peru | 780,835 | 314,032 + Colombia | 3,821,017 | 4,263,519 + Uruguay | 2,192,848 | 2,986,964 + Venezuela | 3,738,961 | 10,392,569 + Cuba | 11,691,311 | 52,130,623 + Hayti | 5,340,270 | 5,211,704 + Porto Rico | 2,224,931 | 3,707,373 + British West Indies | 10,453,973 | 20,723,268 + Dutch West Indies | 887,778 | 654,320 + China | 6,477,512 | 18,508,678 + India, British | 4,330,413 | 20,029,601 + India, Dutch | 2,249,604 | 5,207,254 + Japan | 4,619,985 | 16,687,992 + ------------------------------------+---------------+--------------- + +By this table it is seen that the only gold-using countries having a +balance of trade against us are Canada, $868,317; France, $23,446,577; +Greece, $823,824; Germany, $13,739,952; Italy, $5,387,301; Sweden and +Norway, $367,850; Turkey, $4,687,731--making a total balance against us +in gold-using countries, $49,321,452--against which we have a balance in +our favor with Great Britain alone of over $200,000,000. + +The balance against us in favor of all the silver using countries could +of course be readily settled in silver; and by carefully noting the +figures of the table last given it will be seen that it is in the last +degree improbable that there will ever be a balance of trade against us +in the gold using countries, taken as a whole. + +Hence it is clear that if we had no gold at all we could readily settle +all foreign balances that might be against us. + +Nations, however, ultimately, and on the whole, square their accounts +with commodities. Every nation must buy what it wants with its own +products. In this country especially have we nothing to fear, because +any temporary balance against us could always be met by the yield from +our own mines. No country has any difficulty by reason of my difference +in money systems in buying what any other nation has to sell. + +This view is supported by all writers on political economy. I need +quote but one. Professor Cairnes, professor of political economy in +the University College of London, in his able work on "Some unsettled +questions in political economy" (1874), says: + + It appears to me that the influence attributed by many able + writers in the United States to the depreciation of the paper + currency as regards its effects on the foreign trade of the + country is, in a great degree, purely imaginary. An advance in the + scale of prices, _measured in gold_, in a country, if not shared + by other countries, will at once affect its foreign trade, giving + an impulse to importations and checking the exportation of all + commodities other than gold. A similar effect is very generally + attributed by American writers to the action on prices of the + greenback inconvertible currency. + + But it may easily be shown that this is a complete illusion. + Foreigners do not send their products to the United States to take + back greenbacks in exchange. The return which they look for is + either gold or the commodities of the country; and if these have + risen in price in proportion as the paper money has been + depreciated, how should the advance in paper prices constitute an + inducement for them to send their goods thither? The nominal gain + in greenbacks on the importation is exactly balanced by the + nominal loss when those greenbacks came to be converted into gold + or commodities. The gain may, in particular cases, exceed the + loss, but, if it does, the loss will also, in other cases, exceed + the gain. On the whole, and on an average, they can not but be the + equivalents of each other. + +Mr. President, the best place in the world where we can have gold is not +in the Treasury of the United States, not in any sub-treasury, but in +circulation, if not in our own country, then, in the foreign countries +where our surplus products are sold. That is where gold would do us the +most good by making money plentiful and prices correspondingly high. It +does us no good here whatever, locked up as it always is, and doing none +of the work of money, but simply reduces to the minimum the tax-paying +and debt-paying power of our wheat- and cotton-growing communities. + +An unjust money should not be tolerated, whatever the material of which +it may be composed, and the people of this country will not tolerate it. +They do not fear the outflow of gold. If, in order to retain it, they +must continue to lose as they have been losing for the past fifteen +years, they will favor its going, and raise a shout of joy when it does +go. With a perfect money system in our own country the range of our +domestic prices would continue stable and equitable without regard to +the prices of foreign countries. Our foreign trade would take care of +itself, and whatever the balances might be, they would be much oftener +in our favor than against us, and in reality concern only the importing +merchant and not the Government or the people of the United States. The +difficulty of gold-using countries to get our money, in which to pay us +the balances they would owe us, would be much greater than our +difficulty in getting their money, in which to pay them the occasional +balances we might owe them. + +Much the more serious question, (if it be a serious question at all, +which I deny) is how they shall get our money, not how we shall get +theirs. As the balances would be for the most part in our favor, it is +for them to take such steps as may be necessary in order to pay us. But +there is no just reason to apprehend difficulty in either case. A great +country like the United States will have no trouble in buying the money +of any other country at equitable rates--at rates regulated by the +purchasing powers of the moneys of the two countries, respectively. + +No country in the history of the world, having a money local to itself, +has ever found the slightest difficulty in buying, upon ratios +determined by the relative purchasing powers of the two kinds of money, +a sufficient amount of foreign exchange (which simply means the money of +another country) to meet all adverse balances of trade. + +While earnestly advocating the full remonetization of silver and the +maintenance in this country of a money volume sufficient to insure a +steady level of prices and an unchanging value in the money unit, I +entirely disclaim any desire for an inflation of the currency. My +contention is that without silver we can not keep prices from further +decline, and can not have enough money to serve the growing needs of +population, industry, and commerce. + +At the same time I can not refrain from expressing the conviction that, +as between inflation and contraction, no careful student of history and +of economic science can for a moment hesitate in deciding that the evils +inflicted on society by contraction have been longer in duration and +infinitely greater in degree than any that have ever resulted from +inflation. During all periods in which there has been a generous +increase in the money-volume of a country or of the world, activity and +prosperity have been its accompaniment. I challenge the citation of an +instance to the contrary. + +With a volume of money increasing at a rate sufficient to meet the +demands of a growing population, and especially if the money be such as +will not leave the country, but, under all circumstances, will remain in +it, to sustain prices, preserve equities, and reward labor, no country +with a proper coördination of its industries can be otherwise than +prosperous. + +The property of mobility--of fluidity--which is so much lauded in gold, +is precisely the property least to be desired in the money of a country, +if that property of mobility or fluidity is to keep alternately bringing +money into and taking it out of the country, disturbing prices and +disarranging equities. When it comes, if it enters into circulation, +prices rise; when it goes, prices fall, and thus, instead of having a +steady and level platform of prices on which the trade and industry of +the Republic may rest, like the firm and level platform of liberty upon +which all our citizens stand, we whose business it is to "see that the +Republic take no harm," furnish our people with an "inclined plane" of +finance on which all their business must be conducted. Men buying this +month at the elevated end of the platform find themselves selling next +month at the depressed end. + +Whenever in the history of a country there has been least reliance on +international money (gold) and more reliance on merely national money +(even of paper when reasonable limits were placed upon its quantity), +prosperity has been everywhere present. I need not recall to the minds +of Senators the wave of prosperity that swept over this country when it +was without any international money and resorted to the "greenback" +currency. + +When, as a result of the Franco-German war, France was deprived of +international money, suspended specie payments, and resorted to a +properly limited paper currency, her progress was unbounded. + +No period in the history of Great Britain can compare for activity, +prosperity, or achievement, with the twenty years preceding 1816, when +specie payments were suspended, and during which period, as testified to +by witnesses before the secret committee of Parliament, the discount +rate of the Bank of England did not buffer a single change; whereas from +that period to 1847 the rate was changed sixteen times, and from 1847 to +1874 as many as 274 times, the fluctuations being sometime of the most +violent character. + +When gold threatens to leave Great Britain the rate of discount at the +Bank of England is raised, with the view of discouraging, if not +preventing, the outflow. Raising the rate of discount is like putting +the brakes on a railroad train; lowering the rate is like letting off +the brakes. + +These changes were not due to any greater demand for money but to the +movements of gold. There was frequently, in the condition of business, +no warrant whatever for a rise in the rate of discount. The only reason +for it was to prevent gold from performing what "our most conservative +financiers" denominate its "noble" function of "mobility"--of +"fluidity"--namely, the function of going "where it was wanted." This +function of going "where it is wanted" is described as the great +"mission" of gold, and it is assumed that it will never be wanted at +more than one place at a time. Yet hear what the chancellor of the +exchequer of Great Britain said a few days ago in the House of Commons: + + I admit that, as interested in the commerce and monetary system + of this country I feel a kind of shame that on the occasion of + £2,000,000 or £3,000,000 of gold being taken from this country + to Brazil, or any other country, it should immediately have the + effect of causing a monetary alarm throughout the country. (Speech + of the chancellor of the exchequer in the House of Commons, April + 18, 1890.) + +This is a suggestive admission, from so well-informed a source, as to +the operation of the single gold standard. I commend it to those who +would circumscribe and hamper the prosperity of this country by making +gold alone the standard of all values. + +I have thought it necessary, Mr. President, to state what I conceive to +be the true principles of the science of money, the principles that, +with the progress of time and growth of intelligence, must prevail the +world over; because, without a clear understanding of the relation which +the quantity of money in a country bears to the prosperity and happiness +of its people, there would be no justification for an addition of either +silver, gold, or any other form of money to the quantity already in +circulation. If the value of money depends on quantity, then, as long as +the world adheres to the automatic theory of money, my contention is +that all the silver produced from all the mines of the world should be +transmuted into coin; and even then, if the wants of the world continue +to increase as they have been increasing, it is only a question of time, +and that not far distant, when the combined supply of both metals will +be insufficient to maintain the equities in time transactions. + +The world having decreed to stand by the automatic system we are now +dealing with the question as a practical one. + +The only relief that can be had is to adhere strictly to that system, +and give it full scope. Remove all legislative restrictions and let the +world have the full benefit of all the precious metals that are yielded +by the mines. + + +THE WORLD'S SUPPLY OF GOLD AND SILVER. + +Since for thousands of years the world recognized both silver and gold +as money, can anybody tell what has happened to render one of them +unfitted for the money use? + +No argument based on fluctuations in the current supplies of either of +the metals can militate against the use of both as money. The +fluctuation in the annual yield of both, taken together, is much less +violent and less frequent than the fluctuation of either taken +separately. By the use of both, society has much greater security +against the evil of an insufficient money volume. While a large yield, +now of one, and again of the other, has taken place, there is no +instance in the history of the world of an extraordinary yield of both +occurring simultaneously, except in the single instance of the first +discovery of the mines of America. When the gold mines have been +yielding largely, there has been no special increase of silver, and +during the period when silver has been produced in comparatively large +quantities the gold mines have been less productive. + +This will be illustrated by the following table showing the yield of +both gold and silver, from the discovery of America to the present time. + + _Annual average production of the precious metals throughout the + world from the discovery of America to 1872._ + + [From Director of United States Mint.] + + -----------------------------------+-------------+-------------- + Periods. | Gold. | Silver. + -----------------------------------+-------------+-------------- + 1493-1520, average for each year | $3,855,000 | $1,953,000 + 1521-1544 do | 4,759,000 | 3,749,000 + 1545-1560 do | 5,657,000 | 12,950,000 + 1561-1580 do | 4,546,000 | 12,447,000 + 1581-1600 do | 4,905,000 | 17,409,000 + 1601-1620 do | 5,662,000 | 17,538,000 + 1621-1640 do | 5,516,000 | 16,358,000 + 1641-1660 do | 5,829,000 | 15,223,000 + 1661-1680 do | 6,154,000 | 14,006,000 + 1681-1700 do | 7,154,000 | 14,209,000 + 1701-1720, average for each year | 8,520,000 | 14,779,000 + 1721-1740 do | 12,681,000 | 17,921,000 + 1741-1760 do | 16,356,000 | 22,158,000 + 1761-1780 do | 13,761,000 | 27,128,000 + 1781-1800 do | 11,823,000 | 36,534,000 + 1801-1810 do | 11,815,000 | 37,161,000 + 1811-1820 do | 7,606,000 | 22,474,000 + 1821-1830 do | 9,448,000 | 19,141,000 + 1831-1840 do | 13,484,000 | 24,788,000 + 1841-1850 do | 36,393,000 | 32,434,000 + 1851-1855 do | 131,268,000 | 36,827,000 + 1856-1860 do | 136,946,000 | 37,611,000 + 1861-1865 do | 131,728,000 | 45,764,000 + 1866-1870 do | 127,537,000 | 55,652,000 + 1871-1872 do | 113,431,000 | 81,849,000 + -----------------------------------+-------------+-------------- + + _World's production of gold and silver for the calendar years + 1873 to 1889, inclusive._ + + ----------+---------------+------------------------------------------- + | Gold. | Silver. + Calendar +---------------+--------------+--------------+------------- + years. | | Fine | Market | Coining + | Value. | ounces. | value. | value. + ----------+---------------+--------------+--------------+------------- + 1873 | $96,200,000 | 63,267,000 | $82,120,000 | $81,800,000 + 1874 | 90,750,000 | 55,300,000 | 70,673,000 | 71,500,000 + 1875 | 97,500,000 | 62,263,000 | 77,578,000 | 80,500,000 + 1876 | 103,700 000 | 67,753,000 | 78,322,000 | 87,600,000 + 1877 | 114,000,000 | 62,648,000 | 75,240,000 | 81,000,000 + 1878 | 119,000,000 | 73,476,000 | 84,644,000 | 95,000,000 + 1879 | 109,000,000 | 74,250,000 | 83,383,000 | 96,000,000 + 1880 | 106,500,000 | 74,791,000 | 85,636,000 | 96,700,000 + 1881 | 103,000,000 | 78,890,000 | 89,777,000 | 102,000,000 + 1882 | 102,000,000 | 86,470,000 | 98,230,000 | 111,800,000 + 1883 | 95,400,000 | 89,177,000 | 98,986,000 | 115,300,000 + 1884 | 101,700,000 | 81,597,000 | 90,817,000 | 105,500,000 + 1885 | 108,400,000 | 91,652,000 | 97,564,000 | 118,500,000 + 1886 | 106,000,000 | 93,276,000 | 92,772,000 | 120,600,000 + 1887 | 105,300,000 | 96,189,000 | 94,265,000 | 124,366,000 + 1888 | 109,900,000 | 109,911,000 | 103,316,000 | 142,107,000 + 1889 | 118,800,000 | 125,830,000 | 117,651,000 | 162,690,000 + ----------+---------------+--------------+--------------+------------- + +From this table it will be seen that from 1801 to 1820 the average +yearly yield of gold was $9,710,500; of silver, $36,847,500--four of +silver to one of gold. + +From 1821 to 1840 the average yearly yield of gold was $11,466,000; of +silver, $21,964,000--two of silver to one of gold. + +From 1841 to 1860 the average yearly yield of gold was $85,150,000; of +silver, $34,826,500--two and a half of gold to one of silver. + +From 1861 to 1880 the yearly average yield of gold was $117,991,850; of +silver, $68,043,900--nearly two of gold for one of silver. + +From 1881 to 1889 the yearly average yield of gold was $105,500,000: of +silver, $122,540,388--one-sixth more silver than gold. + +From those figures it is plain that no continuous, extraordinary yield +of silver, such as might warrant the slightest fear of an unnecessary +addition to the money volume, is to be expected. On the other hand the +continuous drain of gold for use in the arts, as dentistry, gold plate, +jewelry, gilding, and articles of decoration generally, is seriously +encroaching upon the annual supply. + +Both metals possess in common, and neither in any different degree from +the other, all the qualities which are recognized as necessary in a +commodity money. Silver enjoys in an equal degree with gold the quality +of indestructibility, of divisibility, of malleability, and of +resistance to chemical changes. The stock of both existing in the world +(the product of all time) is estimated to be about equal, the production +of the past 500 years being set down as-- + + Gold $7,240,000,000 + Silver 7,435,000,000 + +That silver mining has not proved exceptionally profitable in this +country is proved by the comparatively small number that have engaged in +the business. This country has been thoroughly explored in the search +for additional mines without any of great value being discovered. The +allurements of the business lie in its uncertainty; and for the +occasional prize that is drawn thousands of blanks are found. There is +always enough hope of results to induce continued effort, but there is +also sufficient doubt and discouragement to deter an undue number from +engaging in the business. + +The mines of Mexico have been worked for hundreds of years; and up to +1873 the business of silver mining in that country had all the stimulus +that a parity at 15-1/2 to 1 could give to it. It is not, therefore, +probable that any material increase of output can be expected from that +quarter. + +Conceding, for the sake of the argument, the eventual possibility of so +superabundant a yield of silver as to work injury and inequity to the +interests of creditors, is it not manifest that it is in the power of +society at all times to remedy the evil by a limitation of the coinage? +And on the other hand, is it not equally manifest that for an +insufficient supply there is no remedy? + +If great mountains of silver should be discovered, does not Congress +meet constantly? If there should seem to be too much, could not the +coinage be readily limited to prevent depreciation? But, on the other +hand, when we dedicate the monetary function solely to one metal, of +which there is manifestly and admittedly the world over an insufficient +supply, where is the remedy? What can Congress do to enlarge that +supply? Absolutely nothing. + + +THE GOLD USED IN THE ARTS. + +The Director of the United States Mint a few years ago estimated that of +the $100,000,000 gold annually produced from the mines of the world +$46,000,000 are consumed in the manufacture of jewelry, gold plate, +plated ware, gold-leaf, etc., and in various processes of dentistry. + +The single standard of gold, therefore, is maintained by the creditor +nations in the face of the admitted fact that but $50,000,000 of that +metal are annually added to the money stocks. + +Not only is this encroachment of the commodity demand on the money +supply becoming greater year by year, with the growth of population, but +the supply of gold from the mines is itself becoming less, having +declined from an average of $137,000,000 between 1856 and 1860 (the +period of greatest yield from California and Australia), to an average +of $107,000,000 for the past ten years. Of the entire gold supply of the +world, nine-tenths of it have come from placer mines, readily +discoverable and easily worked, because requiring little or no capital. +All known fields of those are practically exhausted, and there is no +reasonable prospect of the discovery of others. Hardy, adventurous, and +skillful miners from the United States, and capitalists from all +countries, have ransacked the world in vain for new fields of gold. Why, +then, with the knowledge of those facts before us, should we discard +from the full money use and function the only metal that gives to the +world any prospect of relief from the money famine from which +civilization is now suffering and from which, if silver be not speedily +restored to its ancient use and function, the world is destined to +suffer much more? + +If it be conceivable that the demonetization of either metal were +necessary, why demonetize that which promises the greater and more +steady yield? If for any reason society should decide that one of the +metals should be discarded, should it not rather be that one which +promises the smaller future yield, than that which promises the larger? + +Silver is the money-metal best suited to the mass of the people, and to +the variety and character of transactions that constitute the +interchanges of daily life. The supplies of both metals if united by +law, in the full money function, would have a steadiness of value which +can not be attained by either separately. + + +TREASURY NOTES SHOULD NOT BE REDEEMED IN BULLION + +The proposition to redeem the proposed treasury notes in silver bullion +or in anything but lawful money of the United States will never meet the +approval of the people. + +What the people of this country want is money, and what they should have +is money. These notes will represent full value received, the evidence +of which is the bullion in possession of the Government. When issued, +they will enter into circulation. They will have to do the work of money +among the people. They will go to make up the volume of the currency. On +the basis of that volume each dollar acquires a certain value, and +represents a given amount of sacrifice. On that volume, and on those +conditions, bargains will be made, prices established, debts contracted, +values adjusted, and equities created. If any portion of that money be +withdrawn from circulation (for that is what "redemption" means) without +an equivalent amount of money in some other form being issued to take +its place, the circulation will to that extent be contracted, every +dollar in circulation will increase in value, prices will fall, +property-values established on the basis of the larger circulation will +shrink, and equities will be destroyed. + +The redemption of any number of those notes in silver bullion means the +withdrawal of many dollars of money from circulation and the destruction +of so much of the money of the country. Money is not a thing that can be +destroyed with impunity. It should be kept in use among the people. It +is to industry what the blood is to the human body; it is the +life-giving and life-sustaining medium. The money volume of a country +should not be subject to frequent and violent changes. In a new and +growing country, it should be characterized by that steady accretion +that characterizes the increase in the quantity of blood in the human +body as it progresses from infancy to maturity. It is no more +unreasoning, empirical, or unscientific to be alternately withdrawing +blood from, and injecting blood into, a human body than to be constantly +contracting and expanding the money volume of the country. And as +activity of circulation of the blood is essential to the health of the +body, so activity of circulation in money is indispensable to the +well-being of society. The possession of no mere commodity, whatever its +value, will compensate a country for the destruction of any considerable +portion of its money, upon the entire volume of which vast equities +rest. + + +MONEY SHOULD BE REDEEMABLE IN ALL THINGS. + +Money should be redeemed in all things; not in one thing alone. The +peculiar characteristic of true money, that which distinguishes it from +all other things whatsoever and constitutes it a prime factor in +civilization, is that it is at all times redeemable in any thing that is +on sale. Being an order for property, it should be redeemed in any form +of disposable property which the holder may desire. + + A guinea-- + +said Adam Smith-- + + may be considered as a bill for a certain quantity of necessaries + and conveniences upon all the tradesmen in the neighborhood. + +Any form of money, the condition of whose existence depends on +redeemability in one thing alone, can not be money in the full sense, +and whenever an urgent demand for real money springs up the other ceases +altogether to be money. + +The redemption of money should be reciprocal between the Government and +the people and between and among all individuals in the community. It +should not only be redeemable by the Government by acceptance for taxes +but also redeemable by and among the people for all property for sale +and services for hire. Its quantity should be so regulated as that its +unit (the dollar) should neither increase nor diminish in value, and it +should be kept constantly in circulation, and not be permitted to lie +uselessly in the Treasury. Any other money than this is to a certain +extent counterfeit; it is false money, because when most needed it fails +to be money and has to be "redeemed" in something else (gold) which can +not be got except at ruinous sacrifice. + +It is of the very essence of money--its pith and marrow and +protoplasm--that it should be a legal tender, a universal solvent, the +ultimate of payment, and redeemable, at the prices ruling, in everything +that is on sale. If the volume of such money be properly regulated, +while there may from time to time be variations in the prices of +particular articles, the general range of prices will be maintained +practically undisturbed. + +What an absurdity it is for the Government to put its stamp on one thing +in order to make it redeemable in another thing imprinted with the same +stamp, but which nobody wants except for the purpose of getting a third +thing that could have been got just as well without the intervention of +the second. As well might he who, wanting water, is given a silver cup +wherewith to get it, but on going to the spring is forbidden to drink +until he exchanges his silver cup for a gold one. + +The real reason why it is insisted that all other things than gold shall +be exchangeable into gold is that gold is getting dearer by reason of +decreasing supply and increasing populations. The necessity for +convertibility into gold implies that, in ordinary times, a range of +prices higher than the gold range will prevail, and when, by reason +perhaps of increased activity of business, redemption comes to be +demanded prices are at once precipitated to those of the gold standard +and below, to the great advantage of the creditor classes, who, as +owners of bonds, may be considered in the language of the stock exchange +"long" on money, and to the equally great injury of the producing class, +who, being in debt, may be considered as having sold money "short." + +The supreme consideration is that the money of a country shall be so +regulated as that prices may not fall from any cause inhering in the +money system. The value of money--in other words, the sacrifice +necessary to obtain it--should be no greater at one time than at +another. In order to effect that object of prime consequence, to +maintain the value of money unchanging, there should be no hesitancy +whatever in changing the material of which it is made. + +Nobody who has reflected on the subject for a moment doubts that what +gave "value" or exchangeable power to the greenback was not the promise +made on its face, without date, to pay a dollar, but the inscription on +its back which declared it a legal tender for all dues and demands, +public and private, except duties on imports. It was a misfortune to +mankind that the words "promise to pay" were printed on it, because by +it millions were led to believe that the "value" or exchangeable power +resided in the promise instead of in the legal-tender power conferred +upon it. + +There is no object in redeeming in gold, except to maintain gold prices, +that is to say, the range of prices prevailing in gold-using countries, +and as those prices are constantly trending downward, any country that +insists on maintaining the gold standard must accept the consequences in +a corresponding fall of prices. The advocates of the gold standard, in +effect, maintain that no matter to what extreme prices may fall, we must +be content--we must bow in humble submission to the inevitable, since, +in their view, it is more necessary to maintain the sacredness of the +gold standard than to establish justice, promote prosperity, or to +maintain equity in all time transactions. + +It is in no way necessary, on account of any intrinsic or inherent +quality of gold, that should have that particular metal, and that alone, +for money. + +It is boasted that gold is a universal measure. Why is it universal? Why +is gold accepted in every country of the world? Not because the gold is +wanted for any quality inherent in the metal, but because it is an order +for property in gold-using countries, such as England, France, and +Germany, whose trade is largely a foreign trade. At whatever rate gold +will exchange in England, it will exchange in all countries having trade +relations with England, because it is an order for goods in a country +with which they are dealing. Will not the money of this country equally, +and for like reasons, whether gold or silver, have acceptability in +every country with which the United States have trade relations? Not for +any quality inherent in the metal, but because it is an order for +property in the United States. Will it not be willingly accepted by +those who wish to buy in this country? + + +POSSIBLE EFFECT OF REDEMPTION IN BULLION. + +In order to see the effect of the redemption of these Treasury notes in +bullion, we have but to look at the possibilities of the situation. +Suppose there were in the Treasury $300,000,000 worth of that bullion, +which, by the taking up, little by little, and month by month, of the +amount not used in the arts, would be taken by the Treasury at or about +par. Then, suppose that for any reason, such as fear of approaching +panic or otherwise, $100,000,000 of the Treasury notes were suddenly +presented for redemption, and canceled, and the bullion as suddenly put +on the market, what would it be worth? What would gold bullion be worth +if it had not the privilege of coinage, and if $100,000,000 of it, +deprived of the money use, was suddenly put on the market? Can there be +a doubt that the abrupt output of so large a quantity would have the +effect of immediately and enormously depreciating its value? In the case +under consideration, the result would be that the silver remaining in +the Treasury would not bring one-fourth the sum necessary to redeem the +outstanding Treasury notes, so that not only would a heavy loss result +to the Government, but, by reason of the sudden and serious contraction +of the money volume, an infinitely greater loss would result to all the +people. + +But if it be deemed a remote contingency that any extraordinary amount +would in that manner be suddenly taken from the Treasury, there is +another danger which can not be put aside as improbable, but which, on +the contrary, is to be looked for with almost absolute certainty, and to +my mind, constitutes an irremovable and insurmountable objection to any +system of bullion redemption. + +A large number of merchants in London need, monthly, millions of dollars +worth of silver to make payments in India. They will naturally want +to get it at the lowest price, and it is not to their advantage to +intensify the competition for it. On the contrary, it is to their +direct advantage to depress the price to the lowest possible point. + +As the Treasury of the United States would buy silver at the lowest +price, the London merchants would refuse to enter the open market in +competition with our Government for its purchase. But no sooner could +the silver be stored in the vaults of the Treasury, than the agents of +the London merchants would appear, and before any opportunity had +offered for a favorable change in the price of the bullion, could +present as many millions of these notes as might suit their purpose, and +receive bullion therefor. A Secretary of the Treasury who +conscientiously believed that it was his duty to maintain the gold +standard at all hazards, would naturally feel compelled--certainly it +would be in his power--to put out whatever amount of bullion he might +deem necessary to accomplish that purpose, even if it all had to go. + +Thus the United States Treasury would become the convenient and +capacious conduit through which silver should immediately flow from this +country to England, depriving our people, notwithstanding the +legislative measures for their relief, of practically all use of silver +as money, inasmuch as the four and a half-million dollars of Treasury +notes would be withdrawn and canceled about as soon as issued. + +Thus would our Treasury Department be made practically the purchasing +agent in this country of any syndicate or combination of English +merchants who might desire silver for the East India trade. + +If it be said that no Secretary of the Treasury would attempt thus to +defeat the will of the people as expressed in the law, the sufficient +reply is that a conscientious man who believes that the honor of the +United States is pledged to the maintenance of the gold standard, and +that it is indispensable to the prosperity of the people, will exercise +all the power vested in him by law to prevent a departure from that +standard, and will regard himself as for the time being the savior of +the Republic by keeping it from "the edge of so dangerous a peril" as +the execution of the people's will. + +Certainly no man will deny to the present Secretary of the Treasury +entire rectitude of motive in all his conduct. From the well-known fact +that since the passage of the limited coinage act of 1878 all our +Secretaries have refrained from purchasing more silver than they were +compelled to do by the mandatory provision of that law, it is reasonable +to infer that none of them, if called upon to execute a law containing a +silver bullion redemption clause, such as is suggested, would feel +called upon to make a net purchase of more than $2,000,000 worth in each +month; and that none of them would hesitate to exchange for Treasury +notes all the monthly purchases of bullion in excess of that amount. + + +A PLANK FROM THE REPUBLICAN PLATFORM. + +I must be pardoned for directing the attention of Senators on this +side of the Chamber to a short declaration of the last Republican +National Convention: + + The Republican party is in favor of the use of both gold and + silver as money. + +If party platforms mean anything that clause meant that the Republican +party went before the country pledged to the use and to the equal and +non-discriminating use of both silver and gold as money. It was well +known that throughout the entire West the question of the +remonetization of silver was deemed of vital importance, and party +orators and the party press, throughout that entire section were severe +in their denunciation of the prior administration of its unfriendly +attitude toward silver. + +I wish in all solicitude and sincerity to advise my Republican friends +of the East that this plank in the party platform was construed by the +Republicans of the West to mean precisely what it says. They are looking +with confidence to this Congress for such action as will fittingly +embody in the statutes the principle laid down by the party now in the +responsible direction of the Government. + + +SHALL WE BE FLOODED WITH SILVER? + +We are told that if silver is given free access to the mints we shall be +flooded with it from all parts of the world. Does anybody show where the +flood of silver is to come from? Where are the reservoirs that contain +it? Not in England, where it is difficult for the people even to get a +sufficiency of it for small change to transact the business of the +country: not in Germany, where the scarcity of money was so pressing +that the government had to abandon the idea of selling silver. Though +the stock in France is large her people will never give it up. Silver +has been the "shield and buckler" of the French Republic. All she has is +coined at the ratio of 15-1/2 ounces of silver to 1 of gold, and its +shipment to this country would involve a loss to France, not only of the +3 per cent. difference between the French relation (15-1/2 to 1) and +ours (which is 16 to 1), but of 3 per cent. additional in the cost of +gathering and shipping it. And after that could only exchange them for +Treasury notes. The silver stock in India and the Orient is performing +indispensable duty as money, and no "flood" of it can be expected from +that quarter. From time immemorial India has been absorbing all the +surplus silver of the world. She has never got so much as to appease her +appetite for more. So insatiable is her desire for that metal that she +has long been known as the "Sink of Silver." China has not a piece of +the metal that she can dispose of. Mexico has no stock whatever of +silver on hand, except the limited number of coined pieces forming her +moderate money circulation, and not a dollar of it can be spared. No +country of Central or South America has any surplus silver. Every piece +of coined silver in every country in the world is part of the monetary +circulation of that country, and even when of short weight and +classified as a mere "token" is passing at par as full valued money. No +gain could possibly accrue, therefore, to the owners of coined silver +anywhere by shipping it to this country for any purpose, and there is no +surplus stock of bullion anywhere. + +If anybody doubts this statement let him make the attempt in all the +money centers of the world to buy from accumulated stock even $5,000,000 +worth of it. He will fail to get it in London, Paris, Berlin, Calcutta, +New York, or San Francisco, or in all combined. There is no source from +which to get silver except the current supply from the mines, and +whatever that is now it is not likely ever greatly to increase. The +occupation of mining is not attractive to many, and in the nature of the +case the number who follow it will always be comparatively few. The +Argonauts of old were but a small band of hardy adventurers; those of +the new era are destined to bear no larger proportion to the population. +But even were this not so, nature herself draws the line. To the eye of +the experienced prospector silver mines are as discernible on the +surface of the earth as are mountains, and the world has been explored +in vain for further "finds." Those who talk, therefore, of "floods" of +silver coming here for coinage simply show their ignorance of existing +conditions. + +I may add that of all the shafts that have been sunk for silver mines in +the world where they have found silver croppings on top in ninety-nine +out of every hundred, and I think I am stating it moderately, the veins +have not penetrated the earth, mineralized, fertilized, to the depth of +50 feet, rarely have they penetrated the earth to a depth exceeding +1,200 feet, and the most prolific yield of silver mines has been from a +depth not exceeding 800 feet. + +The very fact, Mr. President, that, with all the world searching for +gold and silver mines--a search that has continued throughout all +history--the amount of the two metals yielded by the mines is about +equal, shows that the historical relation existing between them is the +relation at which they can be profitably produced. + +It is apparent that if there were a great advantage in the production of +silver over gold, at the relation of 15-1/2 to 1, that advantage would +be seen in the largely preponderant production of silver; but instead we +find that the result of thousands of years of mining has given us about +equal quantities of both metals. + + +CAN THE UNITED STATES ALONE HOLD THE METALS AT A PARITY? + +We are told that the United States, unaided, can not, if it would, +restore silver to a parity with gold--that no one nation acting alone +can achieve so difficult a feat. But it is incapable of denial that +throughout all vicissitudes of production of gold and silver from 1803 +to 1873 the law of France--one nation alone--accomplished it. + +As I have shown in greater detail elsewhere, by reference to the table +of annual production of the metals, it will be observed that from 1803 +to 1820, the production was in the proportion of four dollars of silver +to one of gold; from 1821 to 1840 two of silver to one of gold, from +1841 to 1850 one dollar of silver, to one of gold, from 1851 to 1860 +four dollars of gold to one of silver, from 1861 to 1865 three of gold +to one of silver, from 1866 to 1870 two of gold to one of silver, in +1871 and 1872 one-and-a-half of gold to one of silver. Notwithstanding +these extreme variations in the relative annual production the law of +France constituted a ligature sufficient to hold the metals in line at +the ratio of 15-1/2 to 1, and this not for France alone but for the +whole world. If that period does not offer sufficient proof of the power +of law, under varying conditions of supply, to tie the metals together +and keep them so, no degree of proof will suffice, for the vacillations +of their relative production have been greater during this century than +at any former period in the history of the world. + + +IS AN INTERNATIONAL AGREEMENT NECESSARY? + +If that could be done by a nation with a population of 25,000,000 to +35,000,000, what difficulty could be experienced by a nation of +65,000,000 in accomplishing the same result? Yet we are told that +international agreement is necessary to restore silver to its ancient +right as a full-money metal. Those who suggest such an agreement forget +that while this nation is a borrower of money, the first and principal +nation to demonetize silver is the greatest money lender known to +history. Is it for a moment to be supposed that the shrewd English +creditor classes will enter into any agreement which will deprive them +of the spoils of so delicate and ingenious a system of usury; a system +not only not banned by law, but, on the contrary, having the special +approval and protection of statutes, and the active support and approval +of all the complaisant moralists, philosophers, and financiers of the +age? + +While they are dilligently gathering in the proceeds of this operation a +diversion is kept up for the occupation and amusement of dilettant +financiers and economists, by invoking a discussion of the ratio that +should be maintained between the metals. The ratio is the pretext on +which conference after conference has been called. + +The advocates of the single gold standard contend that hostile +legislation had no influence in effecting the separation of the metals, +and that the reversal of that legislation can not and will not restore +them to a parity unless the principal commercial nations of the western +world join in the work of rehabilitation. As illustrating the force of +law on the relation of the metals I will read a suggestive paragraph +from the report of the Royal Commission of England (1886), Part I, +section 192: + + Now, undoubtedly, the date which forms the dividing line between + an epoch of approximate fixity in the relative value of gold and + silver, and one of marked instability, is the year when the + bimetallic system which had previously been in force in the Latin + Union ceased to be in full operation, and we are irresistibly led + to the conclusion that the operation of that system, established + as it was in countries the population and commerce of which were + considerable, exerted a material influence upon the relative value + of the two metals. + + So long as that system was in force we think that, notwithstanding + the changes in the production and use of the precious metals, it + kept the market price of silver approximately steady at the ratio + fixed by law between them, namely, 15-1/2 to 1. Nor does it appear + to us _a priori_ unreasonable to suppose that the existence in the + Latin Union of a bimetallic system with a ratio of 15-1/2 to 1 + fixed between the two metals should have been capable of keeping + the market price of silver steady at approximately that ratio. + +The paragraph quoted ascribes the effect thus produced to the bimetallic +treaty of the Latin Union, a combination of Italy, Belgium, Switzerland, +and France, entered into in 1865 for the purpose of maintaining similar +conditions of coinage. But it will be observed that, so far as the ratio +was concerned, precisely the same effect had been produced by France +alone during the sixty-two years from the passage of its law of 1803 to +1865. + +Not only did the French law keep the metals together at a time when the +larger annual yield was of silver, but it kept them together when the +larger annual yield was of gold. Had not that law been in operation +during the '50's, when a flood of gold poured from the mines of +California and Australia, gold would have fallen, as in early times it +more than once fell, to the ratio of 1 to 10, at which but 10 ounces of +silver (instead of 15-1/2) would buy an ounce of gold. Thus the law of +one country alone, a country then of not one-half the present population +of the United States, held the metals together, so that to whatever +extent gold fell in relation to commodities from 1848 to 1865, by reason +of the large output of the mines, silver fell to the same extent, +notwithstanding the enormous decrease in its production relatively to +gold during that period. + +What is claimed for law in this connection is not that it directly +controls the relative values of gold and silver any more than of +anything else, but that on the slightest separation of the metals there +instantly arises, under the law of the double standard, a demand for the +cheaper metal, while the demand for the dearer one is suspended. In this +way the double standard accommodates itself to the law of supply and +demand, which is admitted to be the governing factor in the +determination of value. It is not contended that a small or +insignificant country could keep the metals together, but all experience +goes to show that a great nation like the United States would have no +difficulty whatever in doing so. + +So thoroughly are the advantages of the gold standard to the creditor +classes recognized in England that the English Commissioners, who, for +form's sake, have been sent to the several monetary conferences held on +the continent, have never been invested by their Government with any +power whatever. And it is but a few weeks since the House of Commons +overwhelmingly voted down a proposition made in good faith by Mr. Samuel +Smith, looking to the calling of a new conference, which was supported +by petitions to Parliament signed by 60,000 persons not merely as +individuals, but as representing large organizations of the toilers of +England. + +The ratio is not the difficulty. Those who wanted silver demonetized do +not want it added to the money volume of the world at any ratio. Why +then shall we wait? Macauley, commenting on the impregnability of +intrenched prerogative, observed that if the announcement of the +discovery of the law of gravitation had militated against the personal +interests of any vested or privileged class, its general acceptance +might have been long postponed. Shall we, then, postpone relief to the +suffering industries of this country till we can secure from the +privileged classes, from the money-lenders of the world, an agreement to +cease their exactions? + +No, Mr. President, we need not wait, and we _will_ not wait. All that is +necessary is to _act_, and so far as the rules of order and of +parliamentary procedure will permit, we propose to act, promptly and +decisively. The world can not expect the initiatory movement for any +change to be taken by those whose interests are served by the +continuance of present conditions. Such conditions being consistent with +their own welfare, they find no difficulty in arriving at the conclusion +that they are for the welfare of society at large. + +The dogma that cupidity is a synonym for virtue will never fail to find +ready converts among the beneficiaries. + + * * * Plate sin with gold. + And the strong lance of Justice hurtless breaks. + + +CONCLUSION. + +I predict that the restoration of silver to its birthright, Mr. +President, will mark an epoch in the history of this country. It will +place in circulation an amount of money commensurate with our increasing +population. It will give assurance to our languishing industries that +the volume of our circulating medium is not to continue shrinking, and +that the tendency of prices shall no longer be downward. It will +increase the wages of labor and the prices of the products of labor; it +will reduce the price of bonds and other forms of money futures, it will +lighten, but not inequitably, the burden of mortgages; it will increase +largely, though not unjustly, the debt-paying and tax-paying power of +the people. It will loosen the grasp of the creditor from the throat of +the debtor. + +By the remonetization of silver, money will cease to be the object of +commerce, and will again become its beneficent instrument. Activity will +replace stagnation, movement will supplant inertia, courage will banish +fear; confidence will dispel doubt; hope will supersede despair. + +The lifting up of silver to its rightful plane by the side of gold will +set in motion all the latent energies of the people. It will banish +involuntary idleness, by putting every willing man to work. It will +revive business, and reanimate the heart and hope of the masses. +Capital, no longer fearing a fall in prices, will turn into productive +avenues. The hoards of money lying idle in the bank vaults will come out +to bless and enrich alike their owners and the community at large; +while the millions of dollars now invested at low interest in gilt-edged +securities will seek more profitable investment in the busy field of +industry, where they will be utilized in the payment of wages and the +consequent dissemination of comfort and happiness among the people. + +And this it will accomplish not for the United States alone, but for +civilization. For it is not too much to say, Mr. President, that upon +the decision of this question depend consequences more momentous than +upon that of any other question of public policy within the memory of +this generation. In a broader sense than any other question attracting +the general attention of mankind it is a question of civilization. It +embodies the hopes and aspirations of our race. + +The act of Congress which shall happily solve it will constitute a +decree of emancipation as veritable as any that ever freed serf from +thraldom, but more universal in its application. It will proclaim the +freedom of the white race the world over, it will lift the bowed head of +labor, it will hush the threnody of toil. It will inaugurate the true +renaissance--a renaissance of _prosperity_, without which industry, +learning, science, literature, art, are but as apples of Sodom. +(Applause in the galleries.) + + + + +INDEX. + + + Alison, Sir Archibald, coinage has no effect in preventing + fluctuations in value of coin, 42 + effect of suspension of specie payments in England in 1797, 78 + + Allegory of the clocks, 50 + + American Review, effect of increasing volume of money, 8 + + Automatic system of money, gold and silver, 9 + why interfered with, 18 + + Appleton's Cyclopedia, definition of money, 67 + + Aristotle on Money, 66 + + + Balance of trade, the argument based on, 96 + + Banker's advice to the Usurer, 70 + + Baring, Alexander, a reduction of paper would have the same effect + as of any other money, 78 + + Bastiat, description of the crown piece, 68 + + Baudeau, on Money, 66 + + Behren, Jacob, opinion as to effect of gold standard in England, 23 + + Berkeley, Bishop, queries as to Money, 67 + + Best Money (truthfully so-called), a money of unchanging value in + the unit, 70 + + + Cairnes, Prof. J. E., relations of paper currency to foreign + exchange, 98 + + Cattle, estimate of value in 1880, 4 + + Cernuschi, the purchasing power of money is in direct proportion to + the volume of money existing, 77 + + Checks and clearing houses, their effects in economizing use of money, + considered, 46 + + Chevalier, in France, advocated demonetization of gold, 20 + + Circulation, present monetary, 75 + + Coal, yield for 1888, 4 + + Condition of country at present, 3 + at period of demonetization of silver, 26 + + Competition, the value of money fixed by the competition to get it, + 73 + + Cotton manufacturer, his loan of $10,000, payable, principal and + interest, in cloth, contrasted with loan of same amount + contracted by his neighbor, but payable in dollars, 72 + + Cotton-planters, their loss by demonetization of silver, 60 + + Crawford, William H., opinion as to effect of decreasing volume of + money, 7 + + Creditors, demand for the "Best Money," meaning a money of increasing + value, 69 + their course in Europe to increase value of gold, 19 + their course in United States to increase value of gold, 27 + the pretense in the United States to "strengthen the public + credit", 28 + + Crops for 1888, corn, wheat, oats, and cotton, 4 + + + Debt, a distinguishing characteristic of civilization, 35 + a, of $10,000 contracted in 1873--how much wheat, cotton, etc., + would pay it then and how much now, 57 + + Debtors, who are they, 35 + and creditors, their motives compared, 34 + + De Colange, Professor, the rate at which money exchanges is determined + by its quantity, 77 + + Demand for money, what it is, 73 + + Demonetization of silver, by England, 22 + by Germany, 16 + by United States, 26 + wholly unjustifiable, 28 + + De Quincey, in England, advocated demonetization of gold, 20 + + Difficulty, one symptom common to all industries, 5 + + Discussion, educational effect of, 29 + + Double standard, statement of, before French Commission, 22 + + Dumas, a Senator of France, pleads for caution before demonetization, + 17 + + + Economist (London) admits rise of gold, 44 + + Effects of shrinking volume of money (extract from report of Monetary + Commission), 36 + + Encyclopedia Britannica, effect of fall in the value of money, 8 + + England's position not due to gold standard, 25 + + + Failures in United States, 1887, 1888, and 1889, 49 + + Fall of interest on gilt-edged securities, a proof of rise of gold, 48 + + Farm, how it may be lost by an increasing value in the money unit, 70 + + Farmers, their loss by demonetization of silver, 60 + + Farms, estimate of value in 1880, 4 + proposition that the Government lend money on the security of the + land, 83 + + Fanchet, Léon, probable effect, should all European nations follow + England in discarding silver, 17 + + Fichte, the value of money depends on its quantity, 76 + + Flood of silver, where is it to come from?, 108 + + France, law of 1803 held metals at a parity till 1873, 16 + + Frewen, Moreton, extract from his "Economic Crisis", 30 + + + Gallatin, Albert, a metallic currency not indispensable, 77 + + Germany, emigration from, 25 + + Gibbs, Henry H., cablegram relating to bimetallism, 29 + + Giffen, Robert his reasoning erroneous that the commodity demand fixes + the value of gold, 81 + + Gold and silver, both variable in value, 41 + the world's supply of both, 101 + + Gold, ratio of, to silver at various periods, 13-16 + fall of, during times of Alexander and Cęsar, 14 + fear of fall of, during California excitement, 19 + rise of from 1873 to 1889, 44 + proof that it has risen, 55 + some effects of its rise, 57 + proposition first made to demonetize it, 19 + demonetized in 1857 by German States and Austria, 20 + fear of an outflow of, 85 + rationale of the outflow of, 86 + value as money not derived from commodity use, 81 + + Goschen, George J., chancellor of exchequer of England speaks for, but + decides against, silver, 24 + + Graham, Sir James, the value of money is in the inverse ratio to its + quantity, 77 + + "Greenback", the, what gave it value?, 105 + + Gresham's law, and so-called "extension" of, 68 + + Gold standard, what it implies, 90 + statement in behalf of, before French commission, 22 + of the future, 92 + + Gold used in the arts, 103 + + Gold money, practically none in the United States, 95 + + + Hamilton, Alexander, effect of annulling use of either metal, 16 + + Houses in United States, estimated value in 1880, 4 + + Hume, David, contrast of conditions under increasing and under + deceasing volume of money, 7 + value of money depends on quantity, 76 + + Huskisson, William, if the quantity of money is increased the value of + commodities increase, 77 + + + Improved methods of production, their effects considered, 45 + + India, will remonetization place us "alongside?", 32 + + International agreement: is such agreement necessary to tie the metals + together, 109 + + Involuntary idleness, enormous loss of potential wealth, through, 61 + + Iron, pig: Yield for 1888, 4 + + + Jefferson, Thomas, "the unit must stand on both metals", 17 + + Jevons, Professor: The metals not so steady a standard as corn, 42 + inconvertible paper money, if limited in quantity, can retain its + full value, 77 + + Jevons, on Money, 66 + table of relation of general prices 1809 to 1849, 40 + + + Laughlin, Professor, "the name 'dollar' does not always have the same + value", 42 + + Laveleye, Professor, "Debtors have a right to pay in gold or + silver", 18 + + Law, what is claimed for it, in keeping the metals together, 110 + of France held the metals together from 1803 till + demonetization, 110 + + Legal-tender: All money should have this power, 71 + + Locke, John, both gold and silver variable in value, 42 + on Money, 66, 76 + + + McCulloch, J. R., "Money is a measure of value", 71 + were there perfect security against over-issue of paper money, the + metals might be dispensed with, 78 + + McLeod, on Money, 66 + + Materials used as Money at various epochs, 10 + + Machiavelli's reference to the brigands, 57 + + Massachusetts Bureau of Labor: Deductions from its reports as to + numbers of the unemployed, 61 + + Mill, James, the value of money depends on its quantity, 76 + + Mill, John Stuart, on Money, 66 + the value varies inversely as its quantity, 76 + + Mining States: Their interest in remonetization of silver, 58 + + Monetary Commission Report: Quotations from, as to new school of + financial theorists, 18 + + Money demand, not commodity demand, gives gold its value, 81 + effect of reduction in volume of, 6 + effect intensified as civilization advances, 6 + a glance at the history of, 9 + substances used as, at various epochs, 10 + the money-function the all-sufficient guaranty of the money + value, 79 + where is the future money to come from, if silver remains + demonetized, 79 + --what is it? Its value not in the material but in the stamp--in + the legal-tender power conferred, 65 + should be redeemable in all things, 104 + valuable rather for the important service it performs than for the + material of which made, 80 + question a question of prices, 80 + what is the demand for it? what the supply?, 73 + no alternative for it, 74 + the most potent instrumentality in the evolution of society, 74 + + + National money, as distinguished from international money. Advantages + of national money, 99 + + Newspapers, number published in United States, 4 + + Non-mining States, their interest in remonetization of silver, 60 + + + Overstone, Lord, "The value of a paper currency results from its + being kept at the same amount the metallic currency would + have been", 78 + + + Panics, impossible if all money were legal tender, 71 + + Parity of the metals: Can the United States alone hold them + together?, 109 + + Paulus (author of Pandects): Power of money dependent not on substance + but on quantity, 77 + + Playfair, Sir Lyon, uses the argument that England is a creditor + nation, 23 + + Population, Money should increase in a ratio not less than the ratio + of increase of, 75 + + Price, the index of the value of Money, 8 + + Price, Bonamy, on Money, 67 + + Prices, what produces a general fall of, 5 + fall of, in United States since 1873, 38 + relation of general prices, 1809 to 1849, Jevon's tables, 40 + relation of general prices, 1849 to 1885, Soetbeer's tables, 41 + + Progress, evolutions of, in Money, 9 + + Prophecies of gold advocates unfulfilled, 30 + + Protection, its effect on prices, 88 + + + Quantitative theory of Money, The value of each dollar depends on the + number of dollars out, 75 + + + Railroads, number of miles in United States, 4 + value in 1880, 4 + + Ratio of precious metals from earliest times to Christian Era, 13 + Christian Era to discovery of America, 14 + discovery of America to 1822, 15 + 1823 to 1889, 16 + + Ricardo, use of the metals as a standard, 43 + the value of money in a country depends on the amount existing, 76 + there can be no depreciation of money but from excess of + quantity, 76 + his views as to a "well regulated paper currency", 78 + + Rothschild, Baron, opinion of bimetallism, 17 + + Rouland, M., governor of Bank of France, opposed to demonetization, 17 + + Royal Commission of England, extracts from report of, 23, 110 + + + Sauerbeck on general price (those of 1887 the lowest for one hundred + years), 41 + + Seventy-two cent dollar, the, 92 + + Seyd, Ernest, effect of increasing money volume, 8 + + Silver, ratio of, to gold, at various periods, 13-16 + declared unfit to be used as money, 21 + objections to, considered, 21 + the motive for demonetizing, by England, 21 + the motive for demonetizing, by Germany, 24 + the motive acknowledged, 23 + and gold both variable in value, 41 + --has it fallen?, 49 + purchasing power in 1873 and 1889, 52 + prejudice against it as money arising from the idea that gold money + has greater "intrinsic value." That question considered, 63 + shall we be flooded with it in case of remonetization?, 108 + the world's supply, 101 + If $2,500,000 a month for twelve years has not driven out gold, how + much will do so?, 91 + + Silver miners, their loss by demonetization contrasted with that of + farmers and cotton-planters, 58 + + Smith, Adam: Both gold and silver variable in value, 41 + Definition of a guinea, 66 + + Soetbeer's table, showing relation of general prices 1849 to 1885, 41 + + Standard: The true Money standard not the material of which money is + made, 78 + + Stewart, Dugald, on Money, 67 + + Steel, yield for 1888, 4 + + Suicides in Germany, 25 + + Supply of money, what it is, 73 + + + Tabular standard suggested for time contracts as securing greater + equity than gold, 43 + + Thornton, Henry, on Money, 66 + + Time contracts, their importance to industry, 6 + + Torrens: The value of gold rises or falls as its quantity is + diminished or increased, 77 + + Treasury notes should not be redeemable in bullion, 104 + Possible effect of such redemption, 106 + + Tribune (New York) quoted as to fall of prices, 39 + + + Unemployed, some statistics of the, 61 + + United States, demonetization of silver effected in 1873, 26 + + Usurer's loan on the farm, 70 + + + Waller's verse, 24 + + + Value, the meaning of, 63 + subjective, not objective, 63 + not "intrinsic", 64 + of money not in the material, but in the stamp--in the power of + legal tender, 65 + money a measure of, 71 + + Values, relative, of precious metals from earliest times, 13 + + + Wage-loss from involuntary idleness enormous, 62 + + Walker, Prof. F. A., on Money, 66, 67 + gold and silver both variable in value, 42 + the value of money in a country determined by the amount + existing, 77 + + Wealth, national, estimated, 4 + + Wolowski, M., effect of demonetization, 17 + + Working masses entitled to better conditions, 57 + + + Yardstick, the lengthened, "rung in" on the cotton manufacturer, 73 + + + + +TRANSCRIBER'S NOTES + + +1. Passages in italics are surrounded by _underscores_. + +2. Certain words use "oe" ligature in the original. + +3. Mixed fractions are represented using hyphen and forward slash. For +instance, five and a half is shown as 5-1/2. + +4. Obvious misprints in spelling and punctuation have been silently +corrected. + +5. The original scanned images were not very clear, especially the +tables with numerical values. This may have caused some inadvertent +errors to creep in during the transcription process. + + + + + +End of the Project Gutenberg EBook of Money, by John P. 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John P. Jones. + </title> + <style type="text/css"> + + p { margin-top: .75em; + text-align: justify; + text-indent: 1.25em; + margin-bottom: .75em; + } + h1,h2,h3,h4,h5 { + text-align: center; /* all headings centered */ + clear: both; + } + hr { width: 10%; + margin-top: 2em; + margin-bottom: 2em; + margin-left: auto; + margin-right: auto; + clear: both; + } + + table {margin-left: auto; margin-right: auto;} + + body{margin-left: 10%; + margin-right: 10%; + } + + .pagenum { /* uncomment the next line for invisible page numbers */ + /* visibility: hidden; */ + position: absolute; + left: 92%; + font-size: smaller; + text-align: right; + } /* page numbers */ + + .blockquot{ font-size: 85%; margin-top: 2em; margin-bottom: 2em;} + .pblockquot{ font-size: 85%; margin-left: 20%; margin-right: 20%;} + + .bb {border-bottom: solid 1px;} + .bl {border-left: solid 1px;} + .bt {border-top: solid 1px;} + .br {border-right: solid 1px;} + .bbox {border: solid 1px;} + .bbrace {border-top: solid 2px; border-bottom: solid 2px; border-right: solid 2px; } + + .center {text-align: center; text-indent: 0em;} + .ralign {text-align: right;} + .noidt {text-indent: 0em;} + + .smcap {font-variant: small-caps;} + .u {text-decoration: underline;} + + .caption {font-weight: bold; text-align: center; text-indent: 0em;} + + .notebox {border: solid 2px; padding: 1em; margin-left: 20%; margin-right: 20%; background: #CCCCB2;} + + .poem {margin-left:10%; margin-right:10%; text-align: left; text-indent: 0em;} + + </style> + </head> +<body> + + +<pre> + +The Project Gutenberg EBook of Money, by John P. Jones + +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: Money + Speech of Hon. John P. Jones, of Nevada, On the Free Coinage + of Silver; in the United States Senate, May 12 and 13, 1890 + +Author: John P. Jones + +Release Date: February 28, 2012 [EBook #39003] + +Language: English + +Character set encoding: ISO-8859-1 + +*** START OF THIS PROJECT GUTENBERG EBOOK MONEY *** + + + + +Produced by K Nordquist, Dave Morgan and the Online +Distributed Proofreading Team at https://www.pgdp.net (This +file was produced from images generously made available +by The Internet Archive/American Libraries.) + + + + + + +</pre> + + + + + +<h2>MONEY.</h2> + +<hr /> + +<div class="pblockquot"><p>"Gold is a wonderful clearer of the understanding; it dissipates every doubt +and scruple in an instant, accommodates itself to the meanest capacities, silences +the loud and clamorous and brings over the most obstinate and inflexible. Philip +of Macedon refuted by it all the wisdom of Athens, confounded their statesmen, +struck their orators dumb, and at length argued them out of their liberties."</p> + +<p class="ralign">—<span class="smcap">Addison.</span></p> +</div> + +<hr /> + +<h2>SPEECH</h2> +<h5>OF</h5> +<h1>HON. JOHN P. JONES,</h1> +<h5>OF NEVADA,</h5> +<h4>ON THE FREE COINAGE OF SILVER;</h4> +<h5>IN THE</h5> +<h3>UNITED STATES SENATE,</h3> +<h4><span class="smcap">May 12 and 13, 1890.</span></h4> + +<hr /> +<h5>WASHINGTON.<br /> +1890.</h5> + + +<hr style="width: 100%;" /> +<p><span class='pagenum'><a name="Page_p003" id="Page_p003">[3]</a></span></p> +<h3>SPEECH</h3> + +<h4>OF</h4> + +<h2>HON. JOHN P. JONES,</h2> + +<h4>OF NEVADA.</h4> + +<p class="center">On the bill (S. 2350) authorizing the issue of Treasury notes on deposits of silver +bullion.</p> + + +<p>Mr. JONES, of Nevada, said:</p> + +<p>Mr. <span class="smcap">President</span>: The question now about to be discussed by this +body is in my judgment the most important that has attracted the +attention of Congress or the country since the formation of the Constitution. +It affects every interest, great and small, from the slightest +concern of the individual to the largest and most comprehensive +interest of the nation.</p> + +<p>The measure under consideration was reported by me from the +Committee on Finance. It is hardly necessary for me to say, however, +that it does not fully reflect my individual views regarding +the relation which silver should bear to the monetary circulation of +the country or of the world. I am, at all times and in all places, a +firm and unwavering advocate of the free and unlimited coinage of +silver, not merely for the reason that silver is as ancient and honorable +a money metal as gold, and equally well adapted for the money +use, but for the further reason that, looking at the annual yield +from the mines, the entire supply that can come to the mints will at +no time be more than is needed to maintain at a steady level the +prices of commodities among a constantly increasing population.</p> + +<p>In view, however, of the great divergency of views prevailing on +the subject, the length of time which it was believed might be consumed +in the endeavor to secure that full and rightful measure of legislation +to which the people are entitled, and the possibility that +this session of Congress might terminate without affording the country +some measure of substantial relief, I was willing, rather than +have the country longer subjected to the baleful and benumbing influences +set in motion by the demonetization act of 1873, to join with +other members of the Finance Committee in reporting the bill now +under consideration.</p> + +<p>Under the circumstances I wish at the outset of the discussion to +say that I hold myself free to vote for any amendment that may be +offered that may tend to make the bill a more perfect measure of relief, +and that may be more in consonance with my individual views.</p> + + +<p class="caption">THE CONDITION OF THE COUNTRY.</p> + +<p>The condition of this country to-day, Mr. President, is well calculated +to awaken the interest and arouse the attention of thinking +men. It can be safely asserted that no period of the world's history +can exhibit a people at once so numerous and homogeneous, living +under one form of government, speaking a common language, enjoying +the same degree of personal and political liberty, and sharing, in +<span class='pagenum'><a name="Page_p004" id="Page_p004">[4]</a></span>so equal a degree, the same civilization as the population of the +United States. Eminently practical and ingenious, of indomitable +will, untiring energy, and unfailing hope; favored by nature with a +domain of imperial expanse, with soil and climate of unequaled variety +and beneficence, with every natural condition that can conduce +to individual prosperity and national glory, it might well be expected +that among such a people industry, agriculture, commerce, art, and +science would reach an extent and perfection of development surpassing +anything ever known in the history of mankind.</p> + +<p>In some respects this expectation would appear to have been well +founded. For several years past our farmers have produced an +annual average of 400,000,000 bushels of wheat. Our oat crop for +1888 was 700,000,000 bushels, our corn crop 2,000,000,000 bushels, +our cotton crop 7,000,000 bales. In that year our coal mines yielded +170,000,000 tons of coal, our furnaces produced 6,500,000 tons of pig +iron and 3,000,000 tons of steel. Our gold and silver mines add more +than $100,000,000 a year to the world's stock of the precious metals. +We print 16,000 newspapers and periodicals, have in operation +154,000 miles of railroad and 250,000 miles of telegraph. The value +of our manufactured products at the date of the last census was +$5,400,000,000. Our farm lands at the same time were estimated at +$10,000,000,000, our cattle at $2,000,000,000, our railroads at $6,000,000,000, +our houses at $14,000,000,000. It is not too much to say that +there has been an increase of fully 50 per cent. in those values since +the taking of the census of 1880. Our national wealth to-day is +reasonably estimated at over $60,000,000,000.</p> + +<p>Figures and facts such as these in the history of a young nation +bespeak the presence not merely of great natural opportunities, but +of a people marvelously apt and forceful. From such results should +be anticipated the highest attainable prosperity and happiness. +Our population is alert, aspiring, and buoyant, not given to needless +repining or aimless endeavor, but, with fixity of purpose, presses +ever eagerly on, utilizing every conception of the brain to supplement +and multiply the possibilities of the hand, and at every turn +subordinating the subtle forces of nature to the best and wisest purposes +of man. No equal number of persons on the globe better deserve +success, or are better adapted for its enjoyment.</p> + +<p>But instead of finding, as we should find, happiness and contentment +broadcast throughout our great domain, there are heard from +all directions, even in this Republic, resounding cries of distress and +dissatisfaction. Every trade and occupation exhibits symptoms of +uneasiness and distrust. The farmer, the artisan, the merchant,—all +share in the general complaint that times are hard, that business +is "dull." The farmer is in debt, and is not realizing, on the +products of his labor, the wherewithal to meet either his deferred +or his current obligations; the artisan, when at work, finds himself +compelled to share his earnings with some relative or friend who is +out of employment; the merchant who buys his goods on time finds +little profit in sales, and difficulty in making his payments.</p> + + +<p class="caption">WHAT IS THE DIFFICULTY?</p> + +<p>What can it be, Mr. President, that has thus brought to naught +all the careful estimates and painstaking computations, not of thousands, +nor of hundreds of thousands, but of millions, of keen, shrewd, +and far-seeing men? Our people take an intelligent interest in their +business; they look ahead; they endeavor, as far as possible, to estimate +correctly their assets and liabilities, so that on the day of reckoning +they may be found ready. Why this universal failure of all +classes to compute correctly in advance their situation on the com<span class='pagenum'><a name="Page_p005" id="Page_p005">[5]</a></span>ing +pay-day? What potent and sinister drug has been secretly +introduced into the veins of commerce that has caused the blood to +flow so sluggishly—that has narcotized the commercial and industrial +world?</p> + +<p>All have been looking for the cause, and many think they have +discovered it. With some it is "over-production," with others either +a "high tariff" or a "tariff not sufficiently high." Some think it +due to trusts and combinations, others to improved methods of production, +or because the crops are overabundant or not abundant +enough. Some ascribe the difficulty to speculation; others, to +"strikes." All sorts of insufficient and contradictory causes are +assigned for the same general and universal complaint. However +inadequate in themselves, they serve to emphasize the universal recognition +of a difficulty whose cause without close inquiry is likely +to elude detection. But the evil is of such magnitude, it is so widespread +and pervasive, that, without a knowledge of its cause, all +effort at mitigation of its effects can but add to the confusion and +intensify the difficulty.</p> + +<p>It behooves us, therefore, as we value the prosperity and happiness +of our people, to set ourselves diligently to the inquiry: What +is the cause of the unrest and discontent now universally prevailing?</p> + + +<p class="caption">ONE SYMPTOM COMMON TO ALL INDUSTRIES.</p> + +<p>In surveying the question broadly, to discover whether there is +anything that affects the situation in common from the standpoint +of varying occupations, we find one, and only one, uniform and unfailing +characteristic; the prices of all commodities and of all property, +except in money centers, have fallen, and continue falling. +Such a phenomenon as a constant and progressive fall in the general +range of prices has always exercised so baleful an influence on the +prosperity of mankind that it never fails to arrest attention.</p> + +<p>History gives evidence of no more prolific source of human misery +than a persistent and long continued fall in the general range of +prices. But, although exercising so pernicious an influence, it is not +itself a cause, but an effect.</p> + +<p>When a fall of prices is found operating, not on one article or class +of articles alone, but on the products of all industries; when found +to be not confined to any one climate, country, or race of people, but +to diffuse itself over the civilized world; when it is found not to be +a characteristic of any one year, but to go on progressively for a +series of years, it becomes manifest that it does not and can not arise +from local, temporary or subordinate causes, but must have its genesis +and development in some principle of universal application.</p> + + +<p class="caption">WHAT PRODUCES A GENERAL FALL OF PRICES?</p> + +<p>What, then, is it that produces a general decline of prices in any +country? It is produced by a shrinkage in the volume of money +relatively to population and business, which has never yet failed to +cause an increase in the value of the money unit, and a consequent +decrease in the price of the commodities for which such unit is exchanged. +If the volume of money in circulation be made to bear a direct +and steady ratio to population and business, prices will be maintained +at a steady level, and, what is of supreme importance, money +will be kept of unchanging value. With an advancing civilization, +in which a large volume of business is conducted on a basis of credit +extending over long periods, it is of the uttermost importance that +money, which is the measure of all equities, should be kept unchanging +in value through time.</p> +<p><span class='pagenum'><a name="Page_p006" id="Page_p006">[6]</a></span></p> + +<p class="caption">EFFECT OF A REDUCTION IN THE MONEY-VOLUME.</p> + +<p>A reduction in the volume of money relatively to population and +business, or, (to state the proposition in another form) a volume +which remains stationary while population and business are increasing, +has the effect of increasing the value of each unit of money, by +increasing its purchasing power.</p> + +<p>It is only within a comparatively recent period that an increasing +value in the money unit could produce such widespread disturbance +of industry as it produces to-day. In the rude periods of society +commerce was by barter; and even for thousands of years after the +introduction of money, credit, where known at all, was extremely +limited. Under such circumstances changes in the volume and in +the value of money, while operating to the disadvantage of society +as a whole, could not instantly or seriously affect any one individual. +An increase of 25 per cent. in one year in the value of the money +unit—a change which now, by reason of existing contracts or +debts, would entail universal bankruptcy and ruin—would not be +seriously felt by a community in which no such contracts or debts +existed, in which payments were immediate or at short intervals, +and each individual parted with his money almost as soon as he +received it.</p> + +<p>Such proportion of the annual increase in the value of the money +unit as could attach to any one month, week, or day would be +wholly insignificant, and as most transactions were closed on the +spot, no appreciable loss could accrue to any individual. Such loss +as did accrue was shared in and averaged among the whole community, +making it the veriest trifle upon any individual. But how +is it in our day?</p> + + +<p class="caption">THAT EFFECT INTENSIFIED AS CIVILIZATION ADVANCES.</p> + +<p>The inventions of the past one hundred years have established a +new order of the ages. The revolution of industry and commerce, +effected by the adaptation of steam and other forces of nature to the +uses of man, have given to civilization an impetus exceeding anything +known in the former experience of mankind. Under the operation +of the new system, the rapidity and intensity with which, +within that period, civilization has developed, is due in great part +to an economic feature unknown to ancient civilization and practically +unknown even to civilized society until the present century. +That feature is the time-contract, by which alone leading minds are +enabled to project in advance enterprises of magnitude and moment. +It is only through intelligent and far-seeing plans and projections +that in a complex and minutely classified system of industry great +bodies of men can be kept in uninterrupted employment.</p> + +<p>We have 22,000,000 workmen in this country. In order that they +may be kept uninterruptedly employed it is absolutely necessary +that business contracts and obligations be made long in advance. +Accordingly, we read almost daily of the inception of industrial undertakings +requiring years to fulfill. It is not too much to say that +the suspension for one season of the making of time-contracts would +close the factories, furnaces, and machine shops of all civilized +countries.</p> + +<p>The natural concomitant of such a system of industry is the elaborate +system of debt and credit which has grown up with it, and is +indispensable to it. Any serious enhancement in the value of the +unit of money between the time of making a contract or incurring a +debt and the date of fulfillment or maturity always works hardship +and frequently ruin to the contractor or debtor.<span class='pagenum'><a name="Page_p007" id="Page_p007">[7]</a></span></p> + +<p>Three-fourths of the business enterprises of this country are conducted +on borrowed capital. Three-fourths of the homes and farms +that stand in the name of the actual occupants have been bought +on time, and a very large proportion of them are mortgaged for the +payment of some part of the purchase-money.</p> + +<p>Under the operation of a shrinkage in the volume of money this +enormous mass of borrowers, at the maturity of their respective debts, +though nominally paying no more than the amount borrowed, with +interest, are, in reality, in the amount of the principal alone, returning +a percentage of value greater than they received—more than in +equity they contracted to pay and oftentimes more, in substance, than +they profited by the loan. To the man of business this percentage +in many cases constitutes the difference between success and failure. +Thus a shrinkage in the volume of money is the prolific source of +bankruptcy and ruin. It is the canker that, unperceived and unsuspected, +is eating out the prosperity of our people. By reason of the +almost universal inattention to the nature and functions of money +this evil is permitted, unobserved, to work widespread ruin and disaster. +So subtle is it in its operations that it eludes the vigilance +of the most acute. It baffles all foresight and calculation; it sets at +naught all industry, all energy, all enterprise.</p> + + +<p class="caption">CONTRAST OF EFFECTS PRODUCED BY AN INCREASING AND A DECREASING MONEY-VOLUME.</p> + +<p>The difference in the effects produced by an increasing and a +decreasing money-volume has not escaped the attention of observant +writers.</p> + +<p>David Hume, in his Essay on Money, says:</p> + +<div class="blockquot"><p>It is certain that since the discovery of the mines in America industry has increased +in all the nations of Europe. * * We find that in every kingdom into +which money begins to flow in greater abundance than formerly, everything takes +a new face; labor and industry gain life; the merchant becomes more enterprising, +the manufacturer more diligent and skillful, and even the farmer follows his plow +with greater alacrity and attention. * * * It is of no manner of consequence with +regard to the domestic happiness of a state whether money be in a greater or less +quantity. The good policy of the magistrate consists only in keeping it, if possible, +still increasing; because by that means he keeps alive a spirit of industry in the +nation and increases the stock of labor, in which consists all real power and riches. +A nation whose money decreases is actually at that time weaker and more miserable +than another nation which possesses no more money, but is on the increasing +hand.</p></div> + +<p>William H. Crawford, Secretary of the Treasury, in a report to +Congress, dated 12th February, 1820, says:</p> + +<div class="blockquot"><p>All intelligent writers on currency agree that when it is decreasing in amount +poverty and misery must prevail.</p></div> + +<p>Mr. R. M. T. Hunter, in a report to the United States Senate +in 1852, says:</p> + +<div class="blockquot"><p>Of all the great effects produced upon human society by the discovery of America, +there were probably none so marked as those brought about by the great influx +of the precious metals from the New World to the Old. European industry had +been declining under the decreasing stock of the precious metals and an appreciating +standard of values; human ingenuity grew dull under the paralyzing influences +of declining profits, and capital absorbed nearly all that should have been +divided between it and labor. But an increase of the precious metals, in such +quantity as to check this tendency, operated as a new motive power to the machinery +of commerce. Production was stimulated by finding the advantages of a +change in the standard on its side. Instead of being repressed by having to pay +more than it had stipulated for the use of capital, it was stimulated by paying +less. Capital, too, was benefited, for new demands were created for it by the +new uses which a general movement in industrial pursuits had developed; so +that if it lost a little by a change in the standard, it gained much more in the +greater demand for its use, which added to its capacity for reproduction, and to +its real value.</p> + +<p>The mischief would be great, indeed, if all the world were to adopt but one of<span class='pagenum'><a name="Page_p008" id="Page_p008">[8]</a></span> +the precious metals as the standard of value. To adopt gold alone would diminish +the specie currency more than one-half; and the reduction the other way, should +silver be taken as the only standard, would be large enough to prove highly disastrous +to the human race.</p></div> + +<p>The Encyclopædia Britannica, 1859 (article Precious Metals, by J. +R. McCulloch), says:</p> + +<div class="blockquot"><p>A fall in the value of the precious metals, caused by the greater facility of +their production, or by the discovery of new sources of supply, depends in no degree +on theories of philosophers or the decision of statesmen or legislators, +but is the result of circumstances beyond human control; and although, like a fall +of rain after a long course of dry weather, it may be prejudicial to certain classes, +it is beneficial to an incomparably greater number, including all who are engaged +in industrial pursuits, and is, speaking generally, of great public or national advantage.</p></div> + +<p>Ernest Seyd, 1868 (Bullion, page 613), says:</p> + +<div class="blockquot"><p>Upon this one point all authorities on the subject are agreed, to wit, that the +large increase in the supply of gold has given a universal impetus to trade, commerce, +and industry, and to general social development and progress.</p></div> + +<p>The American Review (1876) says:</p> + +<div class="blockquot"><p>Diminishing money and falling prices are not only oppressive upon debtors, of +whom, in modern times, states are the greatest, but they cause stagnation in business, +reduced production, and enforced idleness. Falling markets annihilate profits, +and as it is only the expectation of gain which stimulates the investment of +capital in operations, inadequate employment is found for labor, and those who are +employed can only be so upon the condition of diminished wages. An increasing +amount of money, and consequently augmenting prices, are attended by results +precisely the contrary. Production is stimulated by the profits resulting from +advancing prices; labor is consequently in demand and better paid, and the general +activity and buoyancy insure to capital a wider demand and higher remuneration.</p></div> + + +<p class="caption">PRICE THE INDEX OF THE VALUE OF MONEY.</p> + +<p>There can be no truer index of the value of money than the general +range of prices. Price is the mercury by the rise and fall of +which the heat and struggle of industrial and business life are daily +measured and made plain. Where the tendency of this indicator +continues downward, there is no more certain sign that money is increasing +in value.</p> + +<p>During a period of falling prices the fear of impending calamity +hangs like a pall over the business of the country. Notwithstanding +unremitting efforts, men feel themselves constantly on the edge +of disaster. Gloomy foreboding and timidity take the place of confidence +and courage.</p> + +<p>A shrinking volume of money is the most insidious foe with which +civilization has to contend.</p> + +<p>It is my firm conviction that the inexpressible miseries inflicted +upon mankind by war, pestilence, and famine have been less cruel, +unpitying, and unrelenting than the persistent and remorseless +exactions which this inexorable enemy has made upon society. As +the volume of money contracts prices decline, and with the decline +of prices comes stagnation of industry, and the relegation to idleness +of thousands of willing workmen. Capitalists become unwilling +to invest their money in enterprises that employ labor while +the products of that labor are constantly decreasing in price. During +all periods of falling prices therefore money capital is withdrawn +from active industry and seeks investment in bonds and other forms +of money-futures yielding fixed incomes. For although the rate of +interest in many such cases may be low, the capitalist is compensated +for this by the enhancement in the purchasing power of each +dollar of the principal and by the necessarily greater command it +secures over the products of labor.<span class='pagenum'><a name="Page_p009" id="Page_p009">[9]</a></span></p> + +<p>Avoiding the very purpose for which it was devised, money at +such times seeks seclusion and declines to circulate. Its owner +finds that he can better afford to leave it idle in a vault or bury it in +the earth, than subject it to the probability of diminution by investing +it in business on a constantly falling market. Thus, contrary +to all principles of progress and of natural justice, the man who +keeps his money idle, and deprives society of its use, is rewarded +by an unearned increment, while he who puts his money into active +business, where industry and labor may profit by it is punished by +unmerited loss.</p> + +<p>Under such conditions it is impossible for a community to reach +that degree of material progress which, under proper circumstances, +it would readily attain. At every turn distress and discouragement +stare the people in the face. In every town and village +men, willing to work, stand idle. Even their misfortune does +not end with themselves, for not only are they a tax upon their +friends, lessening to some extent the meager income of those who +give them temporary assistance, but their necessary and eager competition +for the little work that offers, tends to reduce the compensation +of those to whom they are thus indebted. Stores, workshops, +and factories, unoccupied and unused, are found in every direction. +Crime increases, bankruptcies multiply, and even though the aggregate +of wealth augments, it is unjustly distributed, and consequently +barren of beneficent results.</p> + + +<p class="caption">A GLANCE AT THE HISTORY OF MONEY.</p> + +<p>The system of relying upon the precious metals as money has long +been known as the Automatic system. Accurately, it should be +called the <i>Accidental</i> system. It has been called "automatic" because, +so long as money was made to depend solely upon the yield +of the mines, the supply regulated itself by what was believed to be +a natural method, namely, by the expenditure of labor in its production, +and was limited only by the rude obstacles which nature +opposes to the production of the metals. The necessity of expending +this labor placed the money volume of any country beyond the +control of the kings and conquerors who, in the primitive periods of +society, exercised despotic sway over their subjects. It was undoubtedly +better for the people of those early times to risk the +accidents of production than the follies and sinister designs of rulers.</p> + +<p>This automatic system grew out of barter. It is a survival from +the period when articles were exchanged directly, not for gold and +silver as money, but for gold and silver as commodities—on the basis +of their cost of production—as in the case of the articles for which +they were exchanged.</p> + +<p>There have been the same evolutions of progress in money as in +all other things. In the rude original of society no kind of money +was possible. The first trade was by barter, after which, some one +or more commodities attainable in the vicinage, and in general use +and demand were selected as the common media through which +all exchanges were filtered. The use for that purpose of various +metals by weight followed next, and, at a succeeding stage, gold, +silver, and copper by weight, and after this their use in the form of +coins, the value of which coincided with the bullion-value, which +must necessarily be the case when free coinage is permitted.</p> + +<p>It may be not uninteresting in this connection to have a general +view of the materials which, at different epochs of the world's history, +have been used as money. I therefore present a tabular statement +giving those particulars in chronological order.</p> + + +<p><span class='pagenum'><a name="Page_p010" id="Page_p010">[10]</a></span></p> + +<p class="caption"><i>Table showing some of the substances which have, at various periods and in +various countries, been used as money.</i></p> + +<div class='center'> +<table border="0" cellpadding="4" cellspacing="0" summary="" rules="cols" width="100%"> +<colgroup><col width="10%" /><col width="20%" /><col width="50%" /><col width="20%" /></colgroup> +<tr><th class='bbox'>Period.</th><th class='bbox'>Country.</th><th class='bbox'>Substance used as money.</th><th class='bbox'>Authority.</th></tr> +<tr><td align='right'> B. C. 1900</td><td align='left'>Palestine.</td><td align='left'>Cattle, and gold and sliver, by weight.</td><td align='left'>The Scriptures.</td></tr> +<tr><td align='right'></td><td align='left'>Arabia.</td><td align='left'>Gold and silver coins.</td><td align='left'>Jacob.</td></tr> +<tr><td align='left'></td><td align='left'>Phœnicia.</td><td align='left'>Gold, silver, and copper coins.</td><td align='left'>Anonymous.</td></tr> +<tr><td align='left'></td><td align='left'>Phœnician colony in Spain.</td><td align='left'>Same (some still extant).</td><td align='left'>Carter.</td></tr> +<tr><td align='right'> 1200</td><td align='left'>Phrygia.</td><td align='left'>Coins, by Queen of Pelops.</td><td align='left'>Julius Pollux.</td></tr> +<tr><td align='right'> 1184</td><td align='left'>Greece.</td><td align='left'>Brass coins.</td><td align='left'>Homer.</td></tr> +<tr><td align='right'> 862</td><td align='left'>Argos.</td><td align='left'>Gold and silver coins, by Phidon.</td><td align='left'>Dictionary of Dates.</td></tr> +<tr><td align='right'> 70-500</td><td align='left'>Rome.</td><td align='left'>Brass, by weight.</td><td align='left'>Jacob.</td></tr> +<tr><td align='right'> 578</td><td align='left'>Rome.</td><td align='left'>Copper coins.</td><td align='left'>Ibid.</td></tr> +<tr><td align='right'>Uncertain</td><td align='left'>Carthage.</td><td align='left'>Leather or parchment money, first "paper bills" known.</td><td align='left'>Socrates, Dial. on Riches, Journal des Economistes, 1874, p. 354.</td></tr> +<tr><td align='right'>B. C. 491</td><td align='left'>Sicily.</td><td align='left'>Gold coins, by Gelo some still extant).</td><td align='left'>Jacob.</td></tr> +<tr><td align='right'> 480</td><td align='left'>Persia.</td><td align='left'>Gold coin, by Darius (two still extant).</td><td align='left'>Ibid.</td></tr> +<tr><td align='right'> 478</td><td align='left'>Sicily.</td><td align='left'>Gold coin, by Hiero (some still extant).</td><td align='left'>Ibid.</td></tr> +<tr><td align='right'> 407</td><td align='left'>Athena.</td><td align='left'>Debased gold coins, foreign.</td><td align='left'>MacLeod, 476.</td></tr> +<tr><td align='right'> 400</td><td align='left'>Sparta.</td><td align='left'>Iron, overvalued.</td><td align='left'>Bœckh.</td></tr> +<tr><td align='right'> 360</td><td align='left'>Macedonia.</td><td align='left'>First gold coins coined in Greece, by Philip.</td><td align='left'>Jacob.</td></tr> +<tr><td align='right'> 266</td><td align='left'>Rome.</td><td align='left'>First silver coins coined in Rome.</td><td align='left'>Ibid.</td></tr> +<tr><td align='right'> 54</td><td align='left'>Britain.</td><td align='left'>Pieces of iron.</td><td align='left'>Ibid.</td></tr> +<tr><td align='right'> 50</td><td align='left'>Rome.</td><td align='left'>Tin and brass coin.</td><td align='left'>Dic. of Dates.</td></tr> +<tr><td align='right'>Uncertain</td><td align='left'>Arabia.</td><td align='left'>Glass coins.</td><td align='left'>N. Y. Tribune. July 2, 1872.</td></tr> +<tr><td class="bb"></td><td class="bb"></td><td class="bb"></td><td class="bb"></td></tr> +</table></div> + + +<p class="caption"><i>Period following the failure of the ancient mines.</i></p> + + + +<div class='center'> +<table border="0" cellpadding="4" cellspacing="0" summary="" rules="cols" width="100%"> +<colgroup><col width="10%" /><col width="20%" /><col width="50%" /><col width="20%" /></colgroup> +<tr><th class='bbox'>Period.</th><th class='bbox'>Country.</th><th class='bbox'>Substance used as money.</th><th class='bbox'>Authority.</th></tr> +<tr><td class="bt"></td><td class="bt"></td><td class="bt"></td><td class="bt"></td></tr> +<tr><td align='right'> A.D. 212</td><td align='left'>Rome. (Caracalla.)</td><td align='left'>Lead coins silvered, and copper coins gilded.</td><td align='left'>Anonymous.</td></tr> +<tr><td align='right'> 1066</td><td align='left'>Britain.</td><td align='left'>Living money, or human being made a legal tender for debts at about £2 16<i>s.</i> 3<i>d.</i>, per capita.</td><td align='left'>Henry's History of Great Britain, vol. iv, p. 243.</td></tr> +<tr><td align='right'> 1160</td><td align='left'>Italy.</td><td align='left'>Paper invented; bills of exchange introduced by the Jews.</td><td align='left'>Anderson.</td></tr> +<tr><td align='right'> 1240</td><td align='left'>Milan, Italy.</td><td align='left'>Paper bills a legal tender.</td><td align='left'>Arthur Young.</td></tr> +<tr><td align='right'> 1275</td><td align='left'>China.</td><td align='left'>Paper bills a legal tender.</td><td align='left'>Marco Polo.</td></tr> +<tr><td align='right'></td><td align='left'>Africa, part of.</td><td align='left'>"Machutes" (ideal money; this view doubted.)</td><td align='left'>Montesquieu.</td></tr> +<tr><td align='right'> 1470</td><td align='left'>Granada, Spain.</td><td align='left'>Paper bills a legal tender.</td><td align='left'>Irving.</td></tr> +<tr><td align='right'> 1574</td><td align='left'>Holland.</td><td align='left'>Pasteboard bills, representative.</td><td align='left'> Dic. of Dates.</td></tr> +<tr><td align='right'>Uncertain</td><td align='left'>Iceland.</td><td align='left'>Dried fish.</td><td align='left'>Anonymous.</td></tr> +<tr><td align='right'>Uncertain</td><td align='left'>Newfoundland.</td><td align='left'>Codfish, dried.</td><td align='left'>Anonymous.</td></tr> +<tr><td align='right'>Uncertain</td><td align='left'>Norway and Greenland.</td><td align='left'>Seal skins and blubber.</td><td align='left'>Anonymous.</td></tr> +<tr><td align='right'>Uncertain</td><td align='left'>Hindostan and parts of Africa.</td><td align='left'>Cowry shells.</td><td align='left'>Jacob, 372.<span class='pagenum'><a name="Page_p011" id="Page_p011">[11]</a></span></td></tr> +<tr><td align='right'>Uncertain</td><td align='left'>North America Indian tribes.</td><td align='left'>Agate, carnelian, jasper, lead, copper, gold, silver, terra-cotta, mica, pearl, lignite, coal, bone, shells, chalcedony, wampumpeag, etc.</td><td align='left'>Anonymous.</td></tr> +<tr><td align='right'>Uncertain</td><td align='left'>Oriental pastoral tribes.</td><td align='left'>Cattle, grain, etc.</td><td align='left'>Anonymous.</td></tr> +<tr><td align='right'>Uncertain</td><td align='left'>Abyssinia.</td><td align='left'>Salt.</td><td align='left'>Anonymous.</td></tr> +<tr><td align='right'>Uncertain</td><td align='left'>China and India.</td><td align='left'>Rice.</td><td align='left'>Anonymous.</td></tr> +<tr><td align='right'>Uncertain</td><td align='left'>India.</td><td align='left'>Paper bills.</td><td align='left'>Patterson, p. 13.</td></tr> +<tr><td align='right'>Uncertain</td><td align='left'>China.</td><td align='left'>Pieces of silk cloth.</td><td align='left'>Ibid.</td></tr> +<tr><td align='right'>Uncertain</td><td align='left'>Africa.</td><td align='left'>Strips of cotton cloth.</td><td align='left'>Ibid.</td></tr> +<tr><td align='left'></td><td align='left'>Not stated.</td><td align='left'>Wooden tallies or checks.</td><td align='left'>Ibid.</td></tr> +<tr><td class="bb"></td><td class="bb"></td><td class="bb"></td><td class="bb"></td></tr> +</table></div> + +<p class="caption"><i>Period following the discovery of the American mines.</i></p> + +<div class='center'> +<table border="0" cellpadding="4" cellspacing="0" summary="" rules="cols" width="100%"> +<colgroup><col width="10%" /><col width="20%" /><col width="50%" /><col width="20%" /></colgroup> +<tr><th class='bbox'>Period.</th><th class='bbox'>Country.</th><th class='bbox'>Substance used as money.</th><th class='bbox'>Authority.</th></tr> +<tr><td class="bt"></td><td class="bt"></td><td class="bt"></td><td class="bt"></td></tr> +<tr><td align='right'> A.D. 1631</td><td align='left'>Massachusetts.</td><td align='left'>Corn a legal-tender at market prices.</td><td align='left'>Macgreggor.</td></tr> +<tr><td align='right'> 1635</td><td align='left'>Massachusetts.</td><td align='left'>Musket-balls.</td><td align='left'>Anonymous.</td></tr> +<tr><td align='right'> 1690</td><td align='left'>Massachusetts.</td><td align='left'>Paper bills, colonial notes.</td><td align='left'>Macgreggor.</td></tr> +<tr><td align='right'> 1694</td><td align='left'>England.</td><td align='left'>Bank-notes.</td><td align='left'>McCulloch.</td></tr> +<tr><td align='right'> 1700</td><td align='left'>Sweden.</td><td align='left'>Copper and iron coins.</td><td align='left'>Voltaire's Charles XII.</td></tr> +<tr><td align='right'> 1702</td><td align='left'>South Carolina.</td><td align='left'>Colonial notes.</td><td align='left'>Macgreggor.</td></tr> +<tr><td align='right'> 1712</td><td align='left'>South Carolina.</td><td align='left'>Bank notes.</td><td align='left'>Ibid.</td></tr> +<tr><td align='right'> 1716</td><td align='left'>France.</td><td align='left'>Interconvertible paper bills a legal-tender.</td><td align='left'>Murray.</td></tr> +<tr><td align='right'> 1723</td><td align='left'>Pennsylvania.</td><td align='left'>Paper bills, colonial notes.</td><td align='left'>Macgreggor.</td></tr> +<tr><td align='right'> 1732</td><td align='left'>Maryland.</td><td align='left'>Indian corn a legal-tender at 23<i>d.</i> per bushel.</td><td align='left'>Anonymous.</td></tr> +<tr><td align='right'> 1732</td><td align='left'>Maryland.</td><td align='left'>Tobacco a legal-tender at 1<i>d.</i> per pound.</td><td align='left'>Anonymous.</td></tr> +<tr><td align='right'> 1776</td><td align='left'>Scotland.</td><td align='left'>Tenpenny nails for small change.</td><td align='left'>Adam Smith.</td></tr> +<tr><td align='right'> 1785</td><td align='left'>Frankland, State of (now part of North Carolina).</td><td align='left'>Linen at 3<i>s.</i> 6<i>d.</i> per yard, whisky at 2<i>s.</i> 6<i>d.</i> per gallon, and peltry as legal-tender.</td><td align='left'>Wheeler's History of North Carolina, 94.</td></tr> +<tr><td align='right'>1810-1840</td><td align='left'>All commercial countries.</td><td align='left'>Great era of bank-paper bills.</td><td></td></tr> +<tr><td align='right'> 1826</td><td align='left'>Russia.</td><td align='left'>Platinum coins (discontinued in 1845).</td><td align='left'>App. Encyc.</td></tr> +<tr><td align='right'> 1847</td><td align='left'>Mexico, parts of.</td><td align='left'>Cocoa beans; and at Castle of Perote, soap.</td><td align='left'>Anonymous.</td></tr> +<tr><td class="bb"></td><td class="bb"></td><td class="bb"></td><td class="bb"></td></tr> +</table></div> + +<p class="caption"><i>Period following the openings of California and Australia.</i></p> + +<div class='center'> +<table border="0" cellpadding="4" cellspacing="0" summary="" rules="cols" width="100%"> +<colgroup><col width="10%" /><col width="20%" /><col width="50%" /><col width="20%" /></colgroup> +<tr><th class='bbox'>Period.</th><th class='bbox'>Country.</th><th class='bbox'>Substance used as money.</th><th class='bbox'>Authority.</th></tr> +<tr><td class="bt"></td><td class="bt"></td><td class="bt"></td><td class="bt"></td></tr> +<tr><td align='right'> 1849</td><td align='left'>California.</td><td align='left'>Gold dust by weight, also minute gold coins for small change, coined in private mints.</td><td></td></tr> +<tr><td align='right'> 1855</td><td align='left'>Australia.</td><td align='left'>Gold dust by weight.</td><td></td></tr> +<tr><td align='right'> 185-</td><td align='left'>Communist settlement in Ohio, called "Utopia."</td><td align='left'>Paper bills, each representing "one hour's labor."</td><td align='left'>Private information.<span class='pagenum'><a name="Page_p012" id="Page_p012">[12]</a></span></td></tr> +<tr><td align='right'>1862</td><td align='left'>United States.</td><td align='left'>Paper bills a legal tender.</td><td align='left'>Act of Feb. 25.</td></tr> +<tr><td align='right'>1863</td><td align='left'>North Carolina.</td><td align='left'>Tenpenny nails, at 5 cents each, for small change.</td><td align='left'>Anonymous.</td></tr> +<tr><td align='right'>1863</td><td align='left'>Camp at Florence, S. C.</td><td align='left'>Potatoes for small change.</td><td align='left'>Yorkville Enquirer.</td></tr> +<tr><td align='right'>1863</td><td align='left'>United States.</td><td align='left'>Postage-stamps for small change, temporary.</td><td></td></tr> +<tr><td align='right'>1865</td><td align='left'>Philadelphia, Pa.</td><td align='left'>Turnips for small change, temporary and local.</td><td align='left'>Philadelphia Ledger, April.</td></tr> +<tr><td align='right'>1865</td><td align='left'>United States.</td><td align='left'>Nickel coins for small change, overvalued.</td><td align='left'>Act of March 3.</td></tr> +<tr><td class="bb"></td><td class="bb"></td><td class="bb"></td><td class="bb"></td></tr> +</table></div> + + +<p>An analysis of this table will show how carefully even the most +primitive communities guarded against a too restricted money volume.</p> + +<p>The materials chosen to serve the purpose of money in each country +during the early history of society were, it will be observed, such +as at the time and place would be of sufficient quantity or volume to +insure against any sudden deprivation of supply. In countries where +the chase was common, the skins of wild animals were used as money; +in maritime communities, shells; in pastoral countries, cattle; in the +early history of agriculture, grain; in early mining periods, base +metal; in primitive manufacturing ages, nails, glass, musket-balls, +strips of cotton, etc.</p> + +<p>As communities developed, and commerce between them began, +substances somewhat common to all countries, portable and indestructible, +such as the precious metals, came to be more, and other +substances less, resorted to. By reason of their great beauty those +metals were always in demand, even among barbarous peoples, for +purposes of ornament and decoration. Because of their universal +use for such purposes they came to be recognized as things for which +anything else could with safety be exchanged, and as society advanced, +and it came to be recognized that some medium should be +adopted in which to make all exchanges, those metals were naturally +selected for the purpose, so that, together, they became, as it were, +a common denominator of value. Their selection proved a convenient +method of storing away wealth in a form that commanded at all +times every other form of wealth. They had always passed by weight +wherever used, but as society became better organized, and its methods +more complex, it became necessary, in order to insure against +fraud, to form them into pieces convenient for handling, and to invest +them distinctly with the function of money, so that, by law, +they became a universal solvent for debts and demands, the stamp +of the government placed on the coin testifying to its weight and +fineness.</p> + +<p>Both metals, as shown by the table, have been concurrently used +as money for thousands of years—not only since the dawn of history, +but from a period anterior to any historical records. The oldest +annals show that they had already been employed as circulating +media and that their relative values, or the ratio of their exchange +for one another, had already been established. Gold and silver<span class='pagenum'><a name="Page_p013" id="Page_p013">[13]</a></span> +were used as money in Palestine as early as the year 1900 B. C. We +read in the Bible that Abraham weighed to Ephron the Hittite 400 +shekels of silver, "current money with the merchant." An inscription +on the temple of Karnak, of the date of 1600 B. C. mentions +those metals as materials in which tribute was paid.</p> + +<p>But long anterior even to these dates, both metals had been used, +as, among the relics of the bronze age of the prehistoric era, ornaments +of both gold and silver have been found. Gold, being the +less abundant of the two metals, has had the higher value; but the +ratio between the two has been marvelously steady, taking into +account the great sweep of ages during which they have been used +as money. This will be seen by reference to the following tables of +ratios. I will first take their relative values during ancient times.</p> + +<p class="caption"><i>Table showing the ratio of gold and silver in various countries of the +world up to the Christian era.</i></p> + +<div class='center'> +<table border="0" cellpadding="6" cellspacing="0" summary="" rules="groups" width="100%"> +<colgroup><col width="10%" /></colgroup> +<colgroup><col width="8%" /><col width="1%" /><col width="1%" /></colgroup> +<colgroup><col width="80%" /></colgroup> +<tr><th class='bbox'>B. C.</th><th class='bbox' colspan='3'>Ratio.</th><th class='bbox'>Authorities.</th></tr> +<tr><td align='right'> 1600</td><td align='left' colspan='3'> 1 to 13.33</td><td align='left'> Inscriptions at Karnak; tribute lists of Thutmosis. (Brandis.)</td></tr> +<tr><td align='right'> 708</td><td align='left' colspan='3'> 1 to 13.33</td><td align='left'> Cuneiform inscriptions on plates found in foundation of Khorsabad.</td></tr> +<tr><td align='left'></td><td align='left' colspan='3'> 1 to 13.33</td><td align='left'> Ancient Persian coins; gold darics at 8.3 grams = 20 silver siglos, at 5.5 grams.</td></tr> +<tr><td align='right'> 500</td><td align='left' colspan='3'> 1 to 13.00</td><td align='left'> Persia. Darius. Egyptian tribute. Herod. III,.95. (Bœckh, page 12.)</td></tr> +<tr><td align='right'> 490</td><td align='left' colspan='3'> 1 to 12.50</td><td align='left'> Sicily. Time of Gelon. "At least" 12.50. (Bœckh, page 44.)</td></tr> +<tr><td align='right'> 470</td><td align='left' colspan='3'> 1 to 10.00</td><td align='left'> Doubtful. Asia Minor. Xerxes's treasure. (Bœckh, page 11.)</td></tr> +<tr><td align='right'> 440</td><td align='left' colspan='3'> 1 to 13.00</td><td align='left'> Herodotus's account of Indian tributes. 360 gold talents = 4,680 silver.</td></tr> +<tr><td align='right'> 420</td><td align='left' colspan='3'> 1 to 10.00</td><td align='left'> Asia Minor. Pay of Xenophon's troops in silver darics. (Anab.; Bœckh, page 34.)</td></tr> +<tr><td align='right'> 407</td><td align='left' colspan='3'> 1 to ——</td><td align='left'> Spurious and debased gold coins at Athens. (MacLeod, Polit. Econ., page 476; Bœckh, page 35.)</td></tr> +<tr><td align='right'> 400</td><td align='left' colspan='3'> 1 to 13.33</td><td align='left'> Standard in Asia, according to Xenophon.</td></tr> +<tr><td align='right'> 400</td><td align='left' colspan='3'> 1 to 12.00</td><td align='left'> Standard in Greece according to "Hipparchus"; attributed to Plato.</td></tr> +<tr><td align='right'> 400<br />400</td><td align='left'> 1 to 12.00<br />1 to 13.50 </td><td class="bbrace"> </td><td></td><td align='left'> Various authorities adduced by Bœckh.</td></tr> +<tr><td></td><td align='left' colspan='3'></td><td align='left'></td></tr> +<tr><td align='right'>404-336</td><td align='left'> 12.00<br /> 1 to 13.00<br /> 13.33 </td><td class="bbrace"> </td><td></td><td align='left'> Values in Greece from the Peloponnesian war to the time of Alexander, according to hints in Greek writers. +There were variations under special contracts—unit, the silver drachma.</td></tr> +<tr><td align='right'> 340</td><td align='left' colspan='3'> 1 to 14.00</td><td align='left'> Greece. Time of Demosthenese. (Bœckh, page 44.)</td></tr> +<tr><td align='right'> 338-326</td><td align='left' colspan='3'> 1 to 11.50</td><td align='left'> Special contracts in Greece.</td></tr> +<tr><td align='right'> 343-323</td><td align='left' colspan='3'> 1 to 12.50</td><td align='left'> Egypt under the Ptolemies.</td></tr> +<tr><td align='right'> 300</td><td align='left' colspan='3'> 1 to 10.00</td><td align='left'> Greece. Continued depression of gold, caused by great influx under Alexander.</td></tr> +<tr><td align='right'> 207</td><td align='left' colspan='3'> 1 to 13.70</td><td align='left'> Rome. (Bœckh, page 44.) Gold scriptulum arbitrarily fixed at 17.143 for 1.</td></tr> +<tr><td align='right'> 100</td><td align='left' colspan='3'> 1 to 11.91</td><td align='left'> Rome. General rate of gold pound to silver sesterces to date.</td></tr> +<tr><td align='right'> 58-49</td><td align='left' colspan='3'> 1 to 8.93</td><td align='left'> Rome. Continued depression of gold, caused by influx of Cæsar's spoil from Gaul. [N. B.—Cæsar's headquarters were at Aquileia, at the head of the Adriatic, where there was also a gold mine, which at this period became very prolific.]</td></tr> +<tr><td align='right'> 50</td><td align='left' colspan='3'> 1 to 11.90</td><td align='left'> Rome. "About the year U. C. 700," the rate was 11 19-21. (Bœckh, page 44.)</td></tr> +<tr><td align='right'> 29</td><td align='left' colspan='3'> 1 to 12.00</td><td align='left'> Rome. Normal rate in the last days of the republic.</td></tr> +<tr><td class="bb"></td><td class="bb" colspan='3'></td><td class="bb"></td></tr> +</table></div> + +<p><span class='pagenum'><a name="Page_p014" id="Page_p014">[14]</a></span></p> + +<p>By reference to the foregoing table it will be observed that the increase +in the supply of gold in Europe, consisting of the spoils of the +Orient, gathered by Alexander the Great, and brought by him to +Greece, had the effect of decreasing the value of that metal so that +instead of being exchangeable at the ratio of 1 to about 13½ of silver, +as formerly, gold became depressed, 1 ounce of it exchanging +for only 10 ounces of silver. Later, when Julius Cæsar extended his +conquering arms into Gaul, and sent to Rome the accumulations of +treasure amassed by him, the value of gold by reason of the increased +supply was again depressed, so that an ounce of it was exchangeable +for only 8.93 ounces of silver. With these exceptions it may be said +that the relation of silver to gold for sixteen hundred years before +the time of Christ had varied only from the ratio of 1 to 12 to that of +1 to 13.33. Silver at no time during all this period fell below 13.50 +to 1 of gold.</p> + +<p>Looking, now, at the relative values of gold and silver from the time +of Christ to the discovery of America, we find the ratio between the +two metals to be as follows:</p> + +<p>Table showing the ratio of gold and silver in various countries of +the world from the opening of the Christian era to the discovery of +America:</p> + + +<div class='center'> +<table border="0" cellpadding="4" cellspacing="0" summary="" rules="groups" width="100%"> +<colgroup><col width="9%" /></colgroup> +<colgroup><col width="9%" /><col width="1%" /><col width="1%" /></colgroup> +<colgroup><col width="20%" /><col width="1%" /><col width="59%" /></colgroup> +<tr><th class='bbox'>A. D.</th><th class='bbox' colspan='3'>Ratio.</th><th class='bbox' colspan='3'>Authorities.</th></tr> +<tr><td align='right'> 1-37</td><td align='left' colspan='3'> 1 to 10.97</td><td align='left' colspan='3'> Rome. Rate under Augustus and Tiberius.</td></tr> +<tr><td align='right'> 37-41</td><td align='left' colspan='3'> 1 to 12.17</td><td align='left'> Rome. Reign of Caligula. </td><td class="bbrace" rowspan='5'> </td><td align='left' rowspan='5'>The silver coinage much debased, consequently the ratio of the metals pure was about 1 to 11.</td></tr> +<tr><td align='right'> 54-68</td><td align='left' colspan='3'> 1 to 11.80</td><td align='left'> Rome. Reign of Nero. </td></tr> +<tr><td align='right'> 69-79</td><td align='left' colspan='3'> 1 to 11.54</td><td align='left'> Rome. Reign of Vespasian. </td></tr> +<tr><td align='right'> 81-96</td><td align='left' colspan='3'> 1 to 11.30</td><td align='left'> Rome. Reign of Domitian. </td></tr> +<tr><td align='right'> 138-161</td><td align='left' colspan='3'> 1 to 11.98</td><td align='left'> Rome. Reign of Antoninus. </td></tr> +<tr><td align='right'> 312</td><td align='left' colspan='3'> 1 to 14.40</td><td align='left' colspan='3'> Byzantium. Reign of Constantine. Arbitrary.</td></tr> +<tr><td align='right'> 438</td><td align='left' colspan='3'> 1 to 14.40</td><td align='left' colspan='3'> Byzantium and Rome. Theodosian code. Arbitrary.</td></tr> +<tr><td align='right'> 864</td><td align='left' colspan='3'> 1 to 12.00</td><td align='left' colspan='3'> Probable ratio, as shown by the Edictum Pistense, under the Carlovingian dynasty.</td></tr> +<tr><td align='right'> 1260</td><td align='left' colspan='3'> 1 to 10.50</td><td align='left' colspan='3'> Average ratio in the commercial cities of Italy. Local or doubtful.</td></tr> +<tr><td align='right'>1344-1660</td><td align='left' colspan='3'> 1 to ——</td><td align='left' colspan='3'> England. Numerous mint indentures given in McLeod's +Political Economy, page 475. The ratio, except when +fixed arbitrarily and in violation of market price, varied +between about 1.12 and 1.14 during the two hundred +and fifty-seven years included in this period. +</td></tr> +<tr><td align='right'> 1351</td><td align='left'> 1 to 12.30</td><td align='left' rowspan='6' class="bbrace"> </td><td align='left' rowspan='6'> </td><td align='left' rowspan='6' colspan='3'> +Ratio in North Germany as shown by the very accurate +rules of the Lubeck mint, corroborated in the main by +the accounts of the Teutonic Order of Knights, averaged +in periods of forty years.</td></tr> +<tr><td align='right'> 1375</td><td align='left'> 1 to 12.40</td></tr> +<tr><td align='right'> 1403</td><td align='left'> 1 to 12.80</td></tr> +<tr><td align='right'> 1411</td><td align='left'> 1 to 12.00</td></tr> +<tr><td align='right'> 1451</td><td align='left'> 1 to 11.70</td></tr> +<tr><td align='right'> 1463</td><td align='left'> 1 to 11.60</td></tr> +<tr><td align='right'>1453-1494</td><td align='left' colspan='3'> 1 to 10.50</td><td align='left' colspan='3'> Ratio according to the accounts of the Teutonic knights. +As the ratio fixed in England by numerous mint indentures +from 1465 to 1509 was about 1.12 this German ratio is considered local or doubtful. +</td></tr> +<tr><td class="bb"></td><td class="bb"></td><td class="bb"></td><td class="bb"></td><td class="bb"></td><td class="bb"></td><td class="bb"></td></tr> +</table></div> + + +<p>It will thus be observed that during the one thousand four hundred +and ninety-two years from the coming of Christ to the discovery +of America, silver never went below the ratio of 14.40 to one of +gold.</p> + +<p>The relations which the metals have borne to each other since the +discovery of the New World will appear from the following:<span class='pagenum'><a name="Page_p015" id="Page_p015">[15]</a></span></p> + +<p class="caption"><i>Table showing the relative values of gold and silver in the various countries +of the world from the discovery of America to 1680.</i></p> + + +<div class='center'> +<table border="0" cellpadding="4" cellspacing="0" summary="" rules="groups" width="100%"> +<colgroup><col width="10%" /></colgroup> +<colgroup><col width="8%" /><col width="1%" /><col width="1%" /></colgroup> +<colgroup><col width="80%" /></colgroup> +<tr><th class='bbox'>A. D.</th><th class='bbox' colspan='3'>Ratio.</th><th class='bbox'>Authorities.</th></tr> +<tr><td align='left'>1497</td><td align='left' colspan='3'> 1 to 10.70</td><td align='left'> Spain. Reign of Isabella. Edict of Medina. Local.</td></tr> +<tr><td align='left'>1500</td><td align='left' colspan='3'> 1 to 10.50</td><td align='left'> Germany. Adam Riese's Arithmetic. Local or doubtful.</td></tr> +<tr><td align='left'>1551</td><td align='left' colspan='3'> 1 to 11.17</td><td align='left'> Germany. Imperial mint regulations. Arbitrary or local.</td></tr> +<tr><td align='left'>1559</td><td align='left' colspan='3'> 1 to 11.44</td><td align='left'> German Imperial mint regulations.</td></tr> +<tr><td align='left'>1561</td><td align='left'> 1 to 11.70</td><td class="bbrace" rowspan='2'> </td><td rowspan='2'></td><td align='left' rowspan='2'> France. Mint regulations.</td></tr> +<tr><td align='left'>1575</td><td align='left'> 1 to 11.68</td></tr> +<tr><td align='left'>1623</td><td align='left' colspan='3'> 1 to 11.74</td><td align='left'> Upper Germany. Mint regulations.</td></tr> +<tr><td align='left'>1640</td><td align='left' colspan='3'> 1 to 13.51</td><td align='left'> France. Mint regulations. Transition period.</td></tr> +<tr><td align='left'>1665</td><td align='left' colspan='3'> 1 to 15.10</td><td align='left'> France. Mint regulations.</td></tr> +<tr><td align='left'>1667</td><td align='left' colspan='3'> 1 to 14.15</td><td align='left'> Upper Germany. Mint regulations. Doubtful.</td></tr> +<tr><td align='left'>1669</td><td align='left' colspan='3'> 1 to 15.11</td><td align='left'> Upper Germany. Mint regulations.</td></tr> +<tr><td align='left'>1679</td><td align='left'> 1 to 15.00</td><td class="bbrace" rowspan='2'> </td><td rowspan='2'></td><td align='left' rowspan='2'> France. Mint regulations.</td></tr> +<tr><td align='left'>1680</td><td align='left'> 1 to 15.40</td></tr> +<tr><td class="bb"></td><td class="bb" colspan='3'></td><td class="bb"></td></tr> +</table></div> + +<p>Table showing the ratio of silver to 1 of gold from 1687 to the demonetization +of silver by Germany and the United States and the +closing of the Mints to its free coinage.</p> + +<div class="blockquot"> +<p class="center">[From the Report (1890) of the Director of the U. S. Mint on the Production of the +Precious Metals in the United States.]</p> + +<p>[<span class="smcap">Note.</span>—From 1687 to 1832 the ratios are taken from Dr. A. Soetbeer; from 1833 +to 1878 from Pixley and Abell's tables; and from 1879 to 1889 from daily cable-grams +from London to the Bureau of the Mint.]</p> +</div> + +<div class='center'> +<table border="0" cellpadding="4" cellspacing="0" summary="" rules="cols"> +<tr><th class='bbox'>Year.</th><th class='bbox'>Ratio.</th><th class='bbox'></th><th class='bbox'>Year.</th><th class='bbox'>Ratio.</th><th class='bbox'></th><th class='bbox'>Year.</th><th class='bbox'>Ratio.</th><th class='bbox'></th><th class='bbox'>Year.</th><th class='bbox'>Ratio.</th></tr> +<tr><td align='center'> 1687 </td><td align='center'> 14.94</td><td align='center'></td><td align='center'> 1721</td><td align='center'> 15.05</td><td align='center'></td><td align='center'> 1755</td><td align='center'> 14.68</td><td align='center'></td><td align='center'> 1789</td><td align='center'> 14.75</td></tr> +<tr><td align='center'>1688</td><td align='center'> 14.94 </td><td align='center'></td><td align='center'> 1722</td><td align='center'> 15.17</td><td align='center'></td><td align='center'> 1756</td><td align='center'> 14.94</td><td align='center'></td><td align='center'> 1790</td><td align='center'> 15.04</td></tr> +<tr><td align='center'>1689</td><td align='center'> 15.02</td><td align='center'></td><td align='center'> 1723</td><td align='center'> 15.20</td><td align='center'></td><td align='center'> 1757</td><td align='center'> 14.87</td><td align='center'></td><td align='center'> 1791</td><td align='center'> 15.05</td></tr> +<tr><td align='center'>1690</td><td align='center'> 15.02</td><td align='center'></td><td align='center'> 1724</td><td align='center'> 15.11</td><td align='center'></td><td align='center'> 1758</td><td align='center'> 14.85</td><td align='center'></td><td align='center'> 1792</td><td align='center'> 15.17</td></tr> +<tr><td align='center'>1691</td><td align='center'> 14.98</td><td align='center'></td><td align='center'> 1725 </td><td align='center'> 15.11</td><td align='center'></td><td align='center'> 1759</td><td align='center'> 14.15</td><td align='center'></td><td align='center'> 1793</td><td align='center'> 15.00</td></tr> +<tr><td align='center'>1692</td><td align='center'> 14.92</td><td align='center'></td><td align='center'> 1726</td><td align='center'> 15.15 </td><td align='center'></td><td align='center'> 1760</td><td align='center'> 14.14</td><td align='center'></td><td align='center'> 1794</td><td align='center'> 15.37</td></tr> +<tr><td align='center'>1693</td><td align='center'> 14.83</td><td align='center'></td><td align='center'> 1727</td><td align='center'> 15.24</td><td align='center'></td><td align='center'> 1761</td><td align='center'> 14.54</td><td align='center'></td><td align='center'> 1795</td><td align='center'> 15.55</td></tr> +<tr><td align='center'>1694</td><td align='center'> 14.87</td><td align='center'></td><td align='center'> 1728</td><td align='center'> 15.11</td><td align='center'></td><td align='center'> 1762</td><td align='center'> 15.27</td><td align='center'></td><td align='center'> 1796</td><td align='center'> 15.65</td></tr> +<tr><td align='center'>1695</td><td align='center'> 15.02</td><td align='center'></td><td align='center'> 1729</td><td align='center'> 14.92</td><td align='center'></td><td align='center'> 1763</td><td align='center'> 14.99</td><td align='center'></td><td align='center'> 1797 </td><td align='center'> 15.41 </td></tr> +<tr><td align='center'>1696</td><td align='center'> 15.00</td><td align='center'></td><td align='center'> 1730</td><td align='center'> 14.81</td><td align='center'></td><td align='center'> 1764 </td><td align='center'> 14.70 </td><td align='center'></td><td align='center'> 1798</td><td align='center'> 15.59</td></tr> +<tr><td align='center'>1697</td><td align='center'> 15.20</td><td align='center'></td><td align='center'> 1731</td><td align='center'> 14.94</td><td align='center'></td><td align='center'> 1765</td><td align='center'> 14.83</td><td align='center'></td><td align='center'> 1799</td><td align='center'> 15.74</td></tr> +<tr><td align='center'>1698</td><td align='center'> 15.07</td><td align='center'></td><td align='center'> 1732</td><td align='center'> 15.09</td><td align='center'></td><td align='center'> 1766</td><td align='center'> 14.80</td><td align='center'></td><td align='center'> 1800</td><td align='center'> 15.68</td></tr> +<tr><td align='center'>1699</td><td align='center'> 14.94</td><td align='center'></td><td align='center'> 1733</td><td align='center'> 15.18</td><td align='center'></td><td align='center'> 1767</td><td align='center'> 14.85</td><td align='center'></td><td align='center'> 1801</td><td align='center'> 15.46</td></tr> +<tr><td align='center'>1700</td><td align='center'> 14.81</td><td align='center'></td><td align='center'> 1734</td><td align='center'> 15.39</td><td align='center'></td><td align='center'> 1768</td><td align='center'> 14.80</td><td align='center'></td><td align='center'> 1802</td><td align='center'> 15.26</td></tr> +<tr><td align='center'>1701</td><td align='center'> 15.07</td><td align='center'></td><td align='center'> 1735</td><td align='center'> 15.41</td><td align='center'></td><td align='center'> 1769</td><td align='center'> 14.72</td><td align='center'></td><td align='center'> 1803</td><td align='center'> 15.41</td></tr> +<tr><td align='center'>1702</td><td align='center'> 15.52</td><td align='center'></td><td align='center'> 1736</td><td align='center'> 15.18</td><td align='center'></td><td align='center'> 1770</td><td align='center'> 14.62</td><td align='center'></td><td align='center'> 1804</td><td align='center'> 15.41</td></tr> +<tr><td align='center'>1703</td><td align='center'> 15.17</td><td align='center'></td><td align='center'> 1737</td><td align='center'> 15.02</td><td align='center'></td><td align='center'> 1771</td><td align='center'> 14.66</td><td align='center'></td><td align='center'> 1805</td><td align='center'> 15.79</td></tr> +<tr><td align='center'>1704</td><td align='center'> 15.22</td><td align='center'></td><td align='center'> 1738</td><td align='center'> 14.91</td><td align='center'></td><td align='center'> 1772</td><td align='center'> 14.52</td><td align='center'></td><td align='center'> 1806</td><td align='center'> 15.52</td></tr> +<tr><td align='center'>1705</td><td align='center'> 15.11</td><td align='center'></td><td align='center'> 1739</td><td align='center'> 14.91</td><td align='center'></td><td align='center'> 1773</td><td align='center'> 14.62</td><td align='center'></td><td align='center'> 1807</td><td align='center'> 15.43</td></tr> +<tr><td align='center'>1706</td><td align='center'> 15.27</td><td align='center'></td><td align='center'> 1740</td><td align='center'> 14.94</td><td align='center'></td><td align='center'> 1774</td><td align='center'> 14.62</td><td align='center'></td><td align='center'> 1808</td><td align='center'> 16.08</td></tr> +<tr><td align='center'>1707</td><td align='center'> 15.44</td><td align='center'></td><td align='center'> 1741</td><td align='center'> 14.92</td><td align='center'></td><td align='center'> 1775</td><td align='center'> 14.72</td><td align='center'></td><td align='center'> 1809</td><td align='center'> 15.96</td></tr> +<tr><td align='center'>1708</td><td align='center'> 15.41</td><td align='center'></td><td align='center'> 1742</td><td align='center'> 14.85</td><td align='center'></td><td align='center'> 1776</td><td align='center'> 14.55</td><td align='center'></td><td align='center'> 1810</td><td align='center'> 15.77</td></tr> +<tr><td align='center'>1709</td><td align='center'> 15.31</td><td align='center'></td><td align='center'> 1743</td><td align='center'> 14.85</td><td align='center'></td><td align='center'> 1777</td><td align='center'> 14.54</td><td align='center'></td><td align='center'> 1811</td><td align='center'> 15.53</td></tr> +<tr><td align='center'>1710</td><td align='center'> 15.22</td><td align='center'></td><td align='center'> 1744</td><td align='center'> 14.87</td><td align='center'></td><td align='center'> 1778</td><td align='center'> 14.68</td><td align='center'></td><td align='center'> 1812</td><td align='center'> 16.11</td></tr> +<tr><td align='center'>1711</td><td align='center'> 15.29</td><td align='center'></td><td align='center'> 1745</td><td align='center'> 14.98</td><td align='center'></td><td align='center'> 1779</td><td align='center'> 14.80</td><td align='center'></td><td align='center'> 1813</td><td align='center'> 16.25</td></tr> +<tr><td align='center'>1712</td><td align='center'> 15.31</td><td align='center'></td><td align='center'> 1746</td><td align='center'> 15.13</td><td align='center'></td><td align='center'> 1780</td><td align='center'> 14.72</td><td align='center'></td><td align='center'> 1814</td><td align='center'> 15.04</td></tr> +<tr><td align='center'>1713</td><td align='center'> 15.24</td><td align='center'></td><td align='center'> 1747</td><td align='center'> 15.26</td><td align='center'></td><td align='center'> 1781</td><td align='center'> 14.78</td><td align='center'></td><td align='center'> 1815</td><td align='center'> 15.26</td></tr> +<tr><td align='center'>1714</td><td align='center'> 15.13</td><td align='center'></td><td align='center'> 1748</td><td align='center'> 15.11</td><td align='center'></td><td align='center'> 1782</td><td align='center'> 14.42</td><td align='center'></td><td align='center'> 1816</td><td align='center'> 15.28</td></tr> +<tr><td align='center'>1715</td><td align='center'> 15.11</td><td align='center'></td><td align='center'> 1749</td><td align='center'> 14.80</td><td align='center'></td><td align='center'> 1783</td><td align='center'> 14.48</td><td align='center'></td><td align='center'> 1817</td><td align='center'> 15.11</td></tr> +<tr><td align='center'>1716</td><td align='center'> 15.09</td><td align='center'></td><td align='center'> 1750</td><td align='center'> 14.55</td><td align='center'></td><td align='center'> 1784</td><td align='center'> 14.70</td><td align='center'></td><td align='center'> 1818</td><td align='center'> 15.35</td></tr> +<tr><td align='center'>1717</td><td align='center'> 15.13</td><td align='center'></td><td align='center'> 1751</td><td align='center'> 14.39</td><td align='center'></td><td align='center'> 1785</td><td align='center'> 14.92</td><td align='center'></td><td align='center'> 1819</td><td align='center'> 15.33</td></tr> +<tr><td align='center'>1718</td><td align='center'> 15.11</td><td align='center'></td><td align='center'> 1752</td><td align='center'> 14.54</td><td align='center'></td><td align='center'> 1786</td><td align='center'> 14.96</td><td align='center'></td><td align='center'> 1820</td><td align='center'> 15.62</td></tr> +<tr><td align='center'>1719</td><td align='center'> 15.09</td><td align='center'></td><td align='center'> 1753</td><td align='center'> 14.54</td><td align='center'></td><td align='center'> 1787</td><td align='center'> 14.92</td><td align='center'></td><td align='center'> 1821</td><td align='center'> 15.95</td></tr> +<tr><td align='center'>1720</td><td align='center'> 15.04</td><td align='center'></td><td align='center'> 1754</td><td align='center'> 14.48</td><td align='center'></td><td align='center'> 1788</td><td align='center'> 14.65</td><td align='center'></td><td align='center'> 1822</td><td align='center'> 15.80</td></tr> +<tr><td class='bb'></td><td class='bb'></td><td class='bb'></td><td class='bb'></td><td class='bb'></td><td class='bb'></td><td class='bb'></td><td class='bb'></td><td class='bb'></td><td class='bb'></td><td class='bb'></td></tr> +</table></div> + +<p><span class='pagenum'><a name="Page_p016" id="Page_p016">[16]</a></span></p> + + +<div class='center'> +<table border="0" cellpadding="4" cellspacing="0" summary="" rules="cols"> +<tr><th class='bbox'>Year.</th><th class='bbox'>Ratio.</th><th class='bbox'></th><th class='bbox'>Year.</th><th class='bbox'>Ratio.</th><th class='bbox'></th><th class='bbox'>Year.</th><th class='bbox'>Ratio.</th><th class='bbox'></th><th class='bbox'>Year.</th><th class='bbox'>Ratio.</th></tr> +<tr><td align='center'> 1823 </td><td align='center'> 15.84</td><td align='center'></td><td align='center'> 1836</td><td align='center'> 15.72</td><td align='center'></td><td align='center'> 1849</td><td align='center'> 15.78</td><td align='center'></td><td align='center'> 1861</td><td align='center'> 15.50</td></tr> +<tr><td align='center'> 1824</td><td align='center'> 15.82 </td><td align='center'></td><td align='center'> 1837</td><td align='center'> 15.83</td><td align='center'></td><td align='center'> 1850</td><td align='center'> 15.70</td><td align='center'></td><td align='center'> 1862</td><td align='center'> 15.35</td></tr> +<tr><td align='center'> 1825</td><td align='center'> 15.70</td><td align='center'></td><td align='center'> 1838 </td><td align='center'> 15.85</td><td align='center'></td><td align='center'> 1851</td><td align='center'> 15.46</td><td align='center'></td><td align='center'> 1863</td><td align='center'> 15.37</td></tr> +<tr><td align='center'> 1826</td><td align='center'> 15.76</td><td align='center'></td><td align='center'> 1839</td><td align='center'> 15.62 </td><td align='center'></td><td align='center'> 1852</td><td align='center'> 15.59</td><td align='center'></td><td align='center'> 1864</td><td align='center'> 15.37</td></tr> +<tr><td align='center'> 1827</td><td align='center'> 15.74</td><td align='center'></td><td align='center'> 1840</td><td align='center'> 15.62</td><td align='center'></td><td align='center'> 1853 </td><td align='center'> 15.33</td><td align='center'></td><td align='center'> 1865</td><td align='center'> 15.44</td></tr> +<tr><td align='center'> 1828</td><td align='center'> 15.78</td><td align='center'></td><td align='center'> 1841</td><td align='center'> 15.70</td><td align='center'></td><td align='center'> 1854</td><td align='center'> 15.33 </td><td align='center'></td><td align='center'> 1866</td><td align='center'> 15.43</td></tr> +<tr><td align='center'> 1829</td><td align='center'> 15.78</td><td align='center'></td><td align='center'> 1842</td><td align='center'> 15.87</td><td align='center'></td><td align='center'> 1855</td><td align='center'> 15.38</td><td align='center'></td><td align='center'> 1867</td><td align='center'> 15.57</td></tr> +<tr><td align='center'> 1830</td><td align='center'> 15.82</td><td align='center'></td><td align='center'> 1843</td><td align='center'> 15.93</td><td align='center'></td><td align='center'> 1856</td><td align='center'> 15.38</td><td align='center'></td><td align='center'> 1868 </td><td align='center'> 15.59</td></tr> +<tr><td align='center'> 1831</td><td align='center'> 15.72</td><td align='center'></td><td align='center'> 1844</td><td align='center'> 15.85</td><td align='center'></td><td align='center'> 1857</td><td align='center'> 15.27</td><td align='center'></td><td align='center'> 1869</td><td align='center'> 15.60 </td></tr> +<tr><td align='center'> 1832</td><td align='center'> 15.73</td><td align='center'></td><td align='center'> 1845</td><td align='center'> 15.92</td><td align='center'></td><td align='center'> 1858</td><td align='center'> 15.38</td><td align='center'></td><td align='center'> 1870</td><td align='center'> 15.57</td></tr> +<tr><td align='center'> 1833</td><td align='center'> 15.93</td><td align='center'></td><td align='center'> 1846</td><td align='center'> 15.90</td><td align='center'></td><td align='center'> 1859</td><td align='center'> 15.19</td><td align='center'></td><td align='center'> 1871</td><td align='center'> 15.57</td></tr> +<tr><td align='center'> 1834</td><td align='center'> 15.73</td><td align='center'></td><td align='center'> 1847</td><td align='center'> 15.80</td><td align='center'></td><td align='center'> 1860</td><td align='center'> 15.29</td><td align='center'></td><td align='center'> 1872</td><td align='center'> 15.63</td></tr> +<tr><td align='center'> 1835</td><td align='center'> 15.80</td><td align='center'></td><td align='center'> 1848</td><td align='center'> 15.85</td><td align='center'></td><td align='center'></td><td align='center'></td><td align='center'></td><td align='center'></td><td align='center'></td></tr> +<tr><td class='bb'></td><td class='bb'></td><td class='bb'></td><td class='bb'></td><td class='bb'></td><td class='bb'></td><td class='bb'></td><td class='bb'></td><td class='bb'></td><td class='bb'></td><td class='bb'></td></tr> +</table></div> + +<p>By the foregoing table it will be seen that in the three hundred +and seventy-five years from 1497 to 1872 the maximum separation of +the metals was only as 1 to 16.25—notwithstanding the widest divergencies +during that long period in the yield of the two metals +from the mines. It will be observed that all the later quotations are +from the London market, but it is a significant fact that in France, +where, by the law of 7 Germinal, <i>An</i> XI, (1803,) free coinage was permitted +to both metals, at the ratio of 15½ of silver to 1 of gold, for a +period of seventy years, and until the coinage of silver was limited, +there was at no time the slightest variance from that relation.</p> + +<p>When silver was deprived of the full money function, and all the +money-work of society was placed on gold, the metals began to separate. +The following table shows the degree of that separation from +year to year:</p> + +<p>Table showing the ratio of silver to 1 of gold since the demonetization +of silver by Germany and the United States, and the closing of +all mints of the western world to its free coinage:</p> + + + +<div class='center'> +<table border="0" cellpadding="4" cellspacing="0" summary="" rules="cols" width="50%"> +<tr><td align='center'>1873 15.92</td><td align='center'> 1882 18.19</td></tr> +<tr><td align='center'>1874 16.17</td><td align='center'> 1883 18.64</td></tr> +<tr><td align='center'>1875 16.59</td><td align='center'> 1884 18.57</td></tr> +<tr><td align='center'>1876 17.88</td><td align='center'> 1885 19.41</td></tr> +<tr><td align='center'>1877 17.22</td><td align='center'> 1886 20.78</td></tr> +<tr><td align='center'>1878 17.94</td><td align='center'> 1887 21.13</td></tr> +<tr><td align='center'>1879 18.40</td><td align='center'> 1888 21.99</td></tr> +<tr><td align='center'>1880 18.05</td><td align='center'> 1889 22.10</td></tr> +<tr><td align='center'>1881 18.16</td><td align='center'></td></tr> +</table></div> + +<p>The foregoing figures show that it is only since the legislative proscription +of silver by Germany and the United States, and the closing +of all the European mints to its coinage, that any material +change took place in the ratio between the two metals, which conclusively +demonstrates that the present divergence in the relative +values of the two metals is directly due to the legal outlawry of silver +and not to natural causes.</p> + +<p>Not only has the concurrent use of the two metals as money had the +sanction of all time, but the approval of the greatest minds of history, +and, when not blinded by self-interest, the approval of practical +and experienced financial minds. So well recognized is this +fact that I need only cite a few instances of such approval.</p> + +<p>Alexander Hamilton said:</p> + +<div class="blockquot"><p>To annul the use of either of the metals as money is <i>to abridge the quantity of +circulating medium</i>, and is liable to all the objections which arise from a comparison +of the <i>benefits of a full with the evils of a scanty circulation</i>. (Report to Congress, +1791.)</p></div><p><span class='pagenum'><a name="Page_p017" id="Page_p017">[17]</a></span></p> + +<p>Thomas Jefferson, in a letter to Hamilton, indorsed this view, +saying:</p> + +<div class="blockquot"><p>I return you the report on the mint. I concur with you that the unit <i>must stand +on both metals</i>. (Letter to Hamilton, February, 1792.)</p></div> + +<p>In his "Recherches sur l'or et sur l'argent," 1843, Léon Fanchet +said:</p> + +<div class="blockquot"><p>If all the nations of Europe adopted the system of Great Britain, the price of +gold would be raised beyond measure, and we should see produced in Europe a +most lamentable result. The Government can not decree that legal tender shall +be only gold, in place of silver, for that would be to decree a revolution, and the +most dangerous of all, because it would be a revolution leading to unknown results +(<i>qui marcherait vers l'inconnu</i>).</p></div> + +<p>In a memoir read before the French Institute in 1868, M. Wolowski +said:</p> + +<div class="blockquot"><p>The suppression of silver would bring on a veritable revolution. Gold would +augment in value with a rapid and constant progress, which would break the faith +of contracts and aggravate the situation of all debtors, including the nation. It +would add at one stroke of the pen at least three milliards to the twelve milliards +of the public debt.</p></div> + +<p>In a debate in the French Senate on January 28, 1870, Senator Dumas +eloquently pleaded for caution in dealing with a subject of such +farreaching importance as the demonetization of one of the money +metals. He said:</p> + +<div class="blockquot"><p>Those who approach these questions for the first time decide them at once. +Those who study them with care hesitate. Those who are obliged practically to +decide doubt and stop, overwhelmed with the weight of the enormous responsibility.</p> + +<p>The quantities of the precious metals which are now sufficient may become insufficient, +and we should proceed with great prudence before we diminish that +which constitutes a part of the riches of the human race. Sometimes gold takes +the place of silver. Sometimes silver takes the place of gold. <i>This keeps up the +general equilibrium.</i> Nobody can guaranty that the present vast production of +gold will continue. The <i>placers</i> are found on the surface of the earth, and may +be exhausted by the very facility of working them. Silver presents itself in the +form of subterranean veins. Science may contribute to accelerate its extraction. +In presence of the unknown, which dominates the future, we should practice a +prudent reserve.</p></div> + +<p>Before a French monetary convention in 1869 testimony was given +by M. Wolowski, by Baron Rothschild, and by M. Rouland, governor +of the Bank of France.</p> + +<p>M. Wolowski said:</p> + +<div class="blockquot"><p>The sum total of the precious metals is reckoned at fifty milliards, one-half gold +and one-half silver. If, by a stroke of the pen, they suppress one of these metals +in the monetary service, they double the demand for the other metal, to the ruin +of all debtors.</p></div> + +<p>M. Rouland, governor of the Bank of France, said:</p> + +<div class="blockquot"><p>We have not to do with ideal theories. The two moneys have actually co-existed +since the origin of human society. They co-exist because the two together +are necessary, by their quantity, to meet the needs of circulation. This necessity +of the two metals, has it ceased to exist? Is it established that the quantity of +actual and prospective gold is such that we can now renounce the use of silver +without disaster?</p></div> + +<p>Baron Rothschild said:</p> + +<div class="blockquot"><p>The simultaneous employment of the two precious metals is satisfactory and +gives rise to no complaint. Whether gold or silver dominates for the time being, +it is always true that the two metals concur together in forming the monetary circulation +of the world, and it is the general mass of the two metals combined which +serves as the measure of the value of things. The suppression of silver would +amount to a veritable destruction of values without any compensation.</p></div> + +<p><span class='pagenum'><a name="Page_p018" id="Page_p018">[18]</a></span></p> + +<p>At the session (October 30, 1873) of the Belgian Monetary Commission, +Professor Laveleye, one of the most luminous writers on economic +subjects, said:</p> + +<div class="blockquot"><p>Debtors, and among them the state, have the right to pay in gold or silver, and +this right can not be taken away without disturbing the relation of debtors and +creditors, to the prejudice of debtors, to the extent of perhaps one-half, certainly +of one-third. To increase all debts at a blow (<i>brusquement</i>) is a measure so violent, +so revolutionary, that I can not believe that the Government will propose it +or that the Chambers will vote it.</p></div> + + +<p class="caption">WHY WAS THE AUTOMATIC SYSTEM INTERFERED WITH?</p> + +<p>Some thirteen years ago, as Chairman of the Monetary Commission +appointed by Congress to investigate the causes of the changes +in the relative values of the precious metals, I submitted to this +body a report, in which I took occasion to refer to the motives which +evidently influenced the creditor classes of the western world in destroying +the automatic system of money. From that Report I quote +as follows:</p> + +<div class="blockquot"><p>The world has generally favored, theoretically if not practically, the automatic +metallic system, and adjusted its business to it. Some nations adopted one metal +as their standard, and some the other, and some adopted both. Those that adopted +both metals served as a balance-wheel to steady with exactness their relative value. +The practical effect of all of this was the same as if all nations had adopted both, +because it secured the entire stock of both at a fixed equivalency for the transaction +of the business of the world. While some nations have changed their money +metal, or, having had paper money, have resumed specie payments in one metal, +the policy of a general demonetization of one of the metals was first broached only +about twenty years ago. About ten years later a formidable propaganda was organized +to fasten that policy upon the commercial world.</p> + +<p>This new school of financial theorists advocate the retention of metal as the +material of money, but favor its subjection to governmental interference in every +respect. Whenever new mines are discovered, or old ones yield or promise to +yield more abundantly, instead of freely accepting their product in accordance +with the automatic theory, they advocate its rejection through the restriction or +the absolute prohibition of the coinage of either or both metals, or through the +limitation or the abolition of the legal-tender function of one of them. Whenever +the interests of the creditor and income classes seem to be in danger of being impaired +by an increase in the volume and decrease in the value of money, or in +other words, by a general rise in prices, these modern theorists are clamorous in +double-standard countries for the demonetization of one of the money metals, and +in single-standard countries for the shifting of the money function from the metal +which promises the most to the one that promises the least abundant supply. +They are extremely anxious for the retention of the <i>material</i> of which the money-standard +is composed when such material is rising in value and prices are falling, +and exceedingly apprehensive of the evil and inconvenience which they predict +as sure to result from changing it.</p> + +<p>Whenever a fall in prices occurs, through either a natural or artificial contraction +in the volume of money, they maintain that it is due to antecedent inflation +and extravagance, or to overproduction through persistent and reckless industry; +if the contraction be natural, that it can not be helped, and if artificial, that though +it may inflict great temporary losses on the masses of the people, it will be sure to +result in their ultimate benefit, and they console the sufferers with the comforting +assurance that such contraction is necessary in order to reach the lowest depths +of that "<i>hard pan</i>" whose foundations they have previously undermined by demonetizing +one of the metals, and upon which alone they claim that money, capital, +and labor can securely and harmoniously rest. But when the material composing +the standard is falling in value and prices are rising, they immediately +discover that the maintenance of the value of the standard is the all-important +consideration, and that its material is of no importance whatever and should be at +once changed to "<i>redress the situation</i>." After having reduced one of the metals to +a commodity by depriving it of the money function, these theorists complacently +point to the resulting fluctuations in the value as a justification of the act producing +them, and as a conclusive proof of the unfitness for money of the demonetized +metal. * * *</p> + +<p>Metallic money, on this theory, is no longer automatic, but is as completely subjected +to governmental control for all injurious purposes as paper money. But, +unlike paper money, the control over this kind of metallic money can only be exercised +in the baneful direction of decreasing its volume, and thereby making +property cheaper and money scarcer and dearer.</p></div> +<p><span class='pagenum'><a name="Page_p019" id="Page_p019">[19]</a></span></p> + +<div class="blockquot"><p>This is a one-sided system, which can operate only in the interest of the security +creditor, the usurer, and pawnbroker, whom it enables, through the falling prices +which itself occasions, to swallow up the shrunken resources of the debtor, but +is impotent to protect the interests of the unsecured business creditor, the debtor, +or society, when, from any cause, the supply of the money metals becomes deficient.</p> + +<p>The world has expended a vast amount of labor in the production of the precious +metals, and has made great sacrifices in upholding the automatic metallic +system of money, and has a right to insist that it shall be consistently let alone to +work out its own conclusions, or that it be abandoned.</p> +</div> + +<p>The history of the subsequent struggle to remonetize silver only +serves to illustrate and emphasize the correctness of that statement +of the case.</p> + +<p>Between 1810 and 1849, according to Tooke and Newmarch (recognized +authorities on the subject), gold increased in value 145 per +cent. which is equivalent to a fall in the general range of prices of +59 per cent. No movement was then made or suggestion offered by +the debtors, or by any class of the community, to add any new +money-metal to the metals already in use, with the view of increasing +the volume of money, so that the equity of time contracts might +be maintained, and the value of the unit of money kept at a steady +and unchanging level.</p> + +<p>But as soon as the discoveries of gold were made in the alluvial +deposits of California and Australia, or rather as soon as it was suspected +that money would thereby become considerably increased +in volume, the annuitants and income classes, the creditors everywhere, +took steps to avert what they characterized as a great calamity. +They openly declared their purpose, by every means in their +power, to prevent a decline in the value of money, so that the purchasing +power of their incomes might not be reduced. They determined +to go to any length in order to prevent the rise of prices +which their aggressive instincts led them to fear would follow the +additions to the money volume of the world by the natural and much +needed yield of the mines.</p> + +<p>The fiat therefore went forth that one of the metals must be discarded.</p> + + +<p class="caption">THE PROPOSITION FIRST MADE TO DEMONETIZE GOLD.</p> + +<p>If anything were needed to demonstrate that the reason for the demonetization +of silver was the cupidity of the creditor classes—the +money-lenders, annuitants, and those in receipt of fixed incomes—and +that it was not any defect inhering in the metal silver, nor any +change in its adaptability to subserve the purposes of money, it is to +be found in the significant fact that the metal first selected for demonetization +was not silver but gold—that metal which has since +become the idol of the money-changers, and which is now declared +to be the only "natural" money. The openly-avowed determination +was to increase the value of money, and in order to accomplish that +purpose the metal which promised the largest yield was to be condemned +and stripped of its ancient monetary function. So strongly +was this determination set forth, so earnestly was it presented, and +so urgently pressed on the ground of duty that its achievement came +to be regarded as the fulfillment of a high moral purpose.</p> + +<p>It was with gold then as it came to be with silver afterward, +and as it always is with whatever interferes with the interests of +privileged classes, intrenched in power and prerogative,—the determination +to destroy it being arrived at, measures were taken to prove +that the public good required its destruction. While the purpose +was to discard the metal, whether gold or silver, which threatened +most immediately and seriously to reduce the purchasing power of<span class='pagenum'><a name="Page_p020" id="Page_p020">[20]</a></span> +money, the argument was that a decrease in the purchasing power of +money was a calamity against the happening of which every energy +should be directed.</p> + +<p>The privileged classes found then, as they find now, able and ingenious +advocates and defenders among the literary and educated +guilds of the period. The celebrated De Quincy, in England, attempted +to prove, and to his own satisfaction did prove upon figures +drawn from his fears and a brilliant imagination, that the least +yield of gold to be expected from the mines of California and Australia +for an indefinite period in the future, was the yearly sum of +$350,000,000.</p> + +<p>M. Chevalier, in France, vehemently proclaimed the necessity of +discarding one of the money metals, and that one not silver but gold. +In his work upon the "Fall of Gold" M. Chevalier, in 1856, said:</p> + +<div class="blockquot"><p>The quantity of gold annually thrown on the general market approaches in +round numbers a milliard of francs ($200,000,000). Those two countries (California +and Australia) must yet for a long series of years produce gold in such quantities +and on such conditions as to render a marked decline in its value inevitable.</p> + +<p>It is absolutely certain that so vast a production should be accompanied with a +great reduction in value.</p> + +<p>In no direction can a new outlet be seen sufficiently large to absorb the extraordinary +production of gold which we are now witnessing, so as to prevent a fall in +its value.</p> + +<p>Unless, then, we possess a very robust faith in the immobility of human affairs, +we must regard the fall in the value of gold as an event for which we should prepare +without loss of time.</p></div> + +<p>The "preparation" which Chevalier advocated was the discarding +of that metal which gave promise of the greatest abundance. +He did not attempt to hide his purpose. He boldly stated that his +object was to enhance the value of money. This object was also +clearly expressed on a later occasion by another distinguished advocate +of dear money, Mr. Victor Bonnet, of France, in the Journal des +Economistes. He said:</p> + +<div class="blockquot"><p>The world is now saturated with the precious metals, and if there is any danger +against which it is necessary to guard, it is that this saturation should become +greater. * * *</p> + +<p>If the annual production of gold is now reduced to 500,000,000 francs, let us thank +Heaven for it, and let us wish that it may not be too rapidly increased, whereby +we should be embarrassed. It is the too great abundance and not the scarcity of +metallic money which is to be apprehended.</p></div> + + +<p class="caption">GOLD DEMONETIZED.</p> + +<p>In 1857 the German states and Austria demonetized gold; and had +it not been for the opposition of France, which insisted on retaining +the double standard, the movement might have become general on +the continent. With England, however, nothing could be done. +More than a generation had passed since it had declared for the +single standard of gold, and its creditors and income classes—the +shrewdest, most adept, and watchful of financiers—did not believe +that the large yields of gold would long continue.</p> + +<p>The creditor classes of the continent, finding England immovable +and realizing that the object sought by the English creditors was +identical with their own, namely, the increase in the value of money +and the depression of prices, concluded that the common purpose +could be as well served by the demonetization of one as by that of +the other. This conclusion was emphasized by developments on the +Comstock lode whose bountiful and beneficent yield of silver was +the fitting supplement to the great discoveries of gold on the Pacific +coast. The danger of a decline in the value of money was more imminent +than ever. The annuitants became alarmed. Commissions +were sent from Europe to the Pacific coast to investigate the sub<span class='pagenum'><a name="Page_p021" id="Page_p021">[21]</a></span>ject. +The United States, too, sent a commissioner to examine into +the condition and prospects of the Comstock, and, imbued with many +of the characteristics of De Quincey and Chevalier, the United +States commissioner, in 1868, reported that if all other mines were +worked with the machinery used on the Comstock "their yield +would flood the world."</p> + +<p>Like many of the present opponents of silver he was endowed with +the gift of prophecy, and accordingly we find him confidently predicting +that other and innumerable rich lodes of silver would be +found on the Pacific coast which would be worked with great profit. +The attack on gold was immediately changed to a combined attack +on silver. From that period till the present no means have been +left untried to belittle and degrade that metal, and also to disparage +those who are in favor of continuing it as one of the money +metals of the world.</p> + +<p>It was then announced with all the dogmatism of authority that +silver was unfit to be used as money. Defects were suddenly discovered +in it that the scrutiny of three thousand years had failed to +disclose. Its weight and bulk were found to be insuperable obstacles +to its use as money. Yet the specific gravity of silver is no +greater now than it has been for all the ages during which it has +been used as money by all mankind, nor is it any heavier or more +bulky than it was in 1851 or 1857, when Belgium, Germany, and +Austria demonetized gold and made the "heavy," "bulky," and "inconvenient" +metal, silver, their only money metal. Silver can now +be transported from place to place with less risk and at no greater +expense than gold, and at much less cost than at any previous +period in the history of the world.</p> + +<p>The objection that silver is too heavy for the pocket is an objection +common to all metallic money. We see hardly any gold in +circulation in this country—infinitely less than of silver. When our +people have a choice as to the form in which they will take money +they prefer paper representatives as being the most convenient. The +extraordinary perfection to which the arts of the engraver and paper +maker have been brought gives paper money a security against +counterfeiting and imitation far superior to any immunity which +can be claimed for the metals. The marvellous inventions of modern +times in the form of safes and vault-locks render it a matter of +practically no risk to store the metals, both silver and gold, so +that paper representatives of them may be issued. These representatives +are preferred by the general mass of the people, and have +almost entirely occupied the channels of circulation to the exclusion +of both metals. A silver certificate for $1,000 weighs no more +than a gold certificate for the same amount.</p> + + +<p class="caption">THE MOTIVE FOR DEMONETIZING SILVER.</p> + +<p>The motive for the demonetization of silver was precisely the +same that had previously inspired the demonetization of gold. The +object was to demonetize one of the metals—that metal which promised +the greatest abundance, and which would contribute most +largely to maintaining at an equitable level the general range of +prices. The motive in both cases was to aggrandize the privileged +classes—the income and the creditor classes of the world—and by +means of a subtle and sinister manipulation of the money volume, +whose effects it is not always easy to trace to their true cause, to +practically confiscate the reward of the hard toil of the masses. To +all intent and purpose the design was to establish a new system of<span class='pagenum'><a name="Page_p022" id="Page_p022">[22]</a></span> +slavery for the western world, of which the debtor classes among the +white races should be the victims.</p> + +<p>When demonetization was determined on there was no pretense +that there was any difficulty in maintaining a parity between the two +metals at the established ratio.</p> + +<p>In the official résumé of the doings of the French monetary commission +of 1869 the arguments upon both sides were summed up.</p> + +<p>In behalf of the gold standard it was said:</p> + +<div class="blockquot"><p>The rise in price which has taken place within twenty years in a great number +of articles of merchandise is evidently due to many causes, such as war, bad +harvests, and increase in consumption; but it is very probable that the depreciation +of the precious metals has contributed to it, since there has been a striking +coincidence between the rise of prices and the production of the new mines of +gold and silver. The annual production of the two metals, which was only +$80,000,000 in 1847, exceeds now $200,000,000. It has nearly tripled, and it is easy +to see that the real value of the metals has diminished. It is difficult to estimate +exactly what the diminution is, but whatever it may be it demands the attention +of governments, because it affects unfavorably all that portion of the population +whose income, remaining nominally the same, undergoes a yearly diminution +of purchasing power. As governments control the weight and standard of +money, they ought so far as possible to assure its value. And as it is admitted +that the tendency of the metals is to depreciate, this tendency should be arrested +by demonetizing one of them.</p></div> + +<p>In behalf of the double standard it was replied as follows:</p> + +<div class="blockquot"><p>Many economists argue that the precious metals, having become very abundant, +have lost 10 or 15 per cent. of their value, and that the situation must be redressed +by making money scarcer by demonetizing silver. To this it may be answered +that the great discoveries of gold of the last twenty years have injured nobody. +The new mass of gold, spreading over the whole world, has found employment in +stimulating all forms of business, and, as a consequence, the value of gold has +fallen very little. According to Mr. Newmarch, the mass of gold and silver has +augmented 3 per cent. per annum, while the mass of exchanges has augmented +more than 3 per cent. per annum, so that the equilibrium has been maintained. +And the present is an especially inopportune time to demonetize silver, because +the annual production of gold has been falling off for several years. It was +$200,000,000 in 1853, and it is now not more than $140,000,000. What will happen +to the civilized world if silver is demonetized and if gold shall then fail?</p></div> + + +<p class="caption">THE MOTIVE OF ENGLAND.</p> + +<p>England did not adopt the gold standard until she was in a position +to become the principal creditor nation. When her forges, +furnaces, spindles, and looms were ready to supply manufactured +goods to all the world, she saw that all countries and peoples would +be compelled to pour their treasures into her lap. Her insular +position and great navy guarantied her against external assault. +Released from the anxieties and labors incident to the Napoleonic +wars, with a sturdy population of trained mechanics, and with +fields of coal and iron in abundance, she was well adapted to become +the "workshop of the world." With colonial possessions in every +sea, and with Continental Europe in ceaseless unrest, England could +rely on customers who could themselves produce nothing but raw +material and would be obliged to buy her finished products.</p> + +<p>The field of industry had been recently broadened by basic inventions +of unparalleled importance—the steam-engine, the power loom, +the spinning-jenny, and a multiplicity of other devices that increased +a hundred fold the efficiency of artisan labor. England knew that +her trade would in the main be a foreign trade and her financial +dealings largely with foreign governments. She knew that from the +people of the continent, impoverished by years of struggle for existence +against the attacks of Napoleon, she could not expect immediate +payments in cash, or in commodities. Time bonds and other deferred +obligations were the media in which for the most part she +received pay, she made interest and principal payable in gold alone,<span class='pagenum'><a name="Page_p023" id="Page_p023">[23]</a></span> +and if before the date of payment the value of money should increase +it would not be to the disadvantage of the creditor. Whatever +we may think of the <i>ethics</i> of this policy, we can have no difficulty +in understanding its <i>motive</i>.</p> + + +<p class="caption">ACKNOWLEDGMENT OF THE MOTIVE.</p> + +<p>As to the object which England had in view in demonetizing silver +we are left in no sort of doubt. It has been candidly admitted by +many of her financiers and publicists. The reason for her stolid adherence +to the gold standard now is the same for which she originally +demonetized silver. Her income and creditor classes are daily +in receipt of an unearned increment to their wealth by reason of that +demonetization. More candid than the advocates in this country of +the single gold standard, the writers and press of Great Britain openly +avow the object. No better testimony to the fact can be adduced +than that supplied by the royal commission appointed in 1886 to inquire +into the changes in the relative values of the precious metals.</p> + +<p>At page 90, Part II, of the final report of that body, section 128, +the commission say:</p> + +<div class="blockquot"><p>It must be remembered, too, that this country is largely a creditor country, of +debts payable in gold, and any change which entails a rise in the price of commodities +generally; that is to say, a diminution of the purchasing power of gold +would be to our disadvantage.</p></div> + +<p>Before the British Royal Commission of 1868 on International +Coinage, Mr. Jacob Behren, an eminent British merchant and member +of the Associated Chambers of Commerce, after answering special +and technical questions, was asked, in conclusion, "if there was +anything else he wished to state." His reply was (p. 13):</p> + +<div class="blockquot"><p>I would only state that, in my opinion, the general introduction of gold all over +the world has been one of the greatest possible blessings to England. I believe +that England would be now the very poorest country in the world if the silver +standard abroad had been kept up, and gold had not been generally introduced. +Gold would otherwise have been very much reduced in value, and we should have +had all the gold poured into England. All the debts owing to us would have been +paid in the depreciated currency; and, therefore, I believe that England ought to +have taken the lead in the introduction of a gold currency abroad. We ought to +be very thankful that it has been introduced, and we ought to give every facility +to its circulation.</p></div> + +<p>Sir Lyon Playfair, in a speech delivered in the English Parliament +on April 18, 1890, according to the report in the London Times of +the day following, said that—</p> + +<div class="blockquot"><p>The true policy of England as the chief creditor nation of the world was to keep +perfect independence, and to refuse participation in any entangling conference +on our monetary system.</p></div> + +<p>And, according to the same report, Sir Lyon Playfair, referring to +the holding of the metals together by law, said that—</p> + +<div class="blockquot"><p>It was quite true that, if you yoked a cart-horse to a racer, the strength of both +would be increased but the speed of the racer would be sacrificed.</p></div> + +<p>Gold is the "racer" whose "speed" must not be sacrificed, no matter +how much injury may be effected by its tendency to greater and +greater gain.</p> + +<p>The weight of the enormous burden which is imposed on gold can +not be better illustrated than by a statement of this same Sir Lyon +Playfair, made in the same speech. According to the London Times +of April 19, he said that—</p> + +<div class="blockquot"><p>The liabilities of the banks of Great Britain to the public amounted to £621,000,000, +or about the amount of the national debt of England; but the amount of +coin or bullion to meet this liability was only £35,000,000; or, deducting from +each side of the account £8,000,000 locked up in the Notes Department of the +Bank of England, it was £27,000,000; or only 4½ per cent. of liabilities.</p></div><p><span class='pagenum'><a name="Page_p024" id="Page_p024">[24]</a></span></p> + +<p>On the same occasion Mr. Goschen, Chancellor of the Exchequer, +delivered an able speech, in which he gave his facts, his eloquence, +and his logic to the struggling masses of his countrymen by maintaining +the wisdom of remonetization of silver, but gave his conclusions +and his policy to the creditor classes by recommending no +disturbance of present conditions.</p> + +<div class="blockquot"><p>I have contended—</p></div> + +<p class="noidt">said the Chancellor of the Exchequer—</p> + +<div class="blockquot"> +<p class="noidt">and am prepared still to contend, that I should prefer the currency of the world +to depend upon two metals rather than upon one metal. To those views I gave +expression in 1878. * * * I have always looked upon silver and gold not as +antagonistic to each other; not as being metals the price of one of which would +necessarily fall when the other rose, but I have looked upon them as partners who +together were doing the work of the currency of the world.</p></div> + +<p>The English creditor classes have not been without able coadjutors +in this country. We have noticed for the last twelve or fourteen +years that zealous advocates of the gold standard, the advantages of +which are not confined to Great Britain, are to be found among the +creditor classes of the United States.</p> + +<p>If the toilers of this country, from the proceeds of whose labor these +exactions have to be paid, had as little influence on the legislation of +the United States as the toilers of England have on the legislation of +that country, the creditor classes and financiers of the United States +might be as frank as those of Great Britain in admitting the object of +maintaining the single gold standard.</p> + +<p>How graphically, though unintentionally, does the English poet, +Waller, in the following verse, express the advantage which the gold +standard gives to creditors everywhere, and the self-satisfaction with +which they contemplate life:</p> + +<p class="poem"> +The taste of hot Arabia's spice we know,<br /> +Free from the scorching sun that makes it grow.<br /> +Without the worm, in Persia's silk we shine,<br /> +And, without planting, drink of every vine.<br /> +To dig for wealth we weary not our limbs,<br /> +Gold, though the heaviest metal, hither swims.<br /> +Ours is the harvest where the Indians mow.<br /> +We plow the deep, and reap what others sow.<br /> +</p> + + +<p class="caption">THE MOTIVE OF GERMANY.</p> + +<p>When Germany, intoxicated by her victory over France, and in +order to further cripple a fallen foe from whom she had exacted +$1,000,000,000 in gold, demonetized silver, she inflicted on her people +by the fall of prices consequent on the increase in the value of money, +more misery than all her armies of horse and foot had been able to +inflict on France. France, on the contrary, notwithstanding this +unprecedented war tribute, by keeping a sufficient volume of money +in circulation to maintain, and even advance, her range of prices, +emerged in a few years from the consequences of the greatest disaster +in her history, conscious of a triumph more complete than Germany +had achieved by all the military splendor of the war. The ransom +exacted of France was received back by her almost as soon as paid, +in exchange for the products of her industry. It is not a sign of +prosperity, Mr. President, when hundreds of thousands of people, +the best bone and sinew of a nation, are found annually emigrating; +and it is a coincidence which I merely mention, in passing, +that as soon as the effects of demonetization of silver had had time +to make themselves felt in Germany, a veritable hegira of its people +took place.<span class='pagenum'><a name="Page_p025" id="Page_p025">[25]</a></span></p> + +<p>From 1873 to 1889, the emigration from Germany numbered 1,546,000 +persons.</p> + +<p>Students of social science everywhere recognize the statistics of illegitimacy +and of suicides as among the most powerful evidences of +monetary distress. By reference to those statistics we find that notwithstanding +the large emigration during that period the number of +illegitimate births in Germany increased from 161,294 in 1883 to 169,645 +in 1888. The suicides in Prussia, Bavaria, Saxony, and Baden—the +leading states of the German Empire—increased from 179 for each +million of population in 1868 to 196 for each million of the population +in 1876 and to 218 for each million of the population in 1882. In +Prussia alone the number of suicides in 1876 was 151 per million, +while in 1882 it was 191 per million.</p> + +<p>This is part of the price which the toiling masses of Germany are +paying for the gold standard experiment, which, without their consent +their imperial government foisted upon them.</p> + +<p>Bismarck made the mistake that many able men in all countries +of the western world have made and continue to make, namely, that +of attributing the commanding position of Great Britain in the commercial +and industrial world to her adoption of the gold standard. +Bismarck mistook for cause and effect what was a mere coincidence, +the result of exceptional conditions, as did those of our legislators +in 1873, who happened to know anything whatever of the nature of +the act demonetizing silver. The belief of some of the most far-sighted +statesmen of Great Britain has been that she secured her +position, not by reason of the gold standard, but in spite of it.</p> + +<p>In a speech delivered at Glasgow, in November, 1873, after the +alteration by Germany in her monetary standard, Mr. Disraeli said:</p> + +<div class="blockquot"><p>The monetary disturbance which has occurred, and is now to a certain extent +acting very injuriously upon trade, I attribute to the great changes which the +Governments of Europe are making in reference to their standard of value. Our +gold standard is not the cause of our commercial prosperity, but the consequence +of that prosperity. It is quite evident that we must prepare ourselves for great +convulsions in the money market, not occasioned by speculation or any of the old +causes which have been alleged, but by a new cause with which we are not sufficiently +acquainted.</p></div> + +<p>And again in March, 1879, when the effects of the decreasing volume +of money were making themselves more and more felt, Mr. Disraeli, +then Lord Beaconsfield, said:</p> + +<div class="blockquot"><p>All this time the produce of the gold mines of Australia and California has been +regularly diminishing, and the consequence is that, while these great alterations +on the continent in favor of a gold currency have been made, notwithstanding that +increase of population which alone requires a considerable increase of currency to +carry on its transactions, the amount of the currency itself is yearly diminishing, +until a state of affairs has been brought about by gold production exactly the reverse +of that which it produced at first. Gold is every day appreciating in value, +and as it appreciates the lower become prices. It is not impossible that, as affairs +develop, the country may require that some formal investigation should be made +of the causes which are affecting the value of the precious metals, and the effect +which the change in the value of the precious metals has upon the industries of +the country, and upon the continual fall of prices.</p></div> + +<p>In reaching their conclusions, Bismarck and others ignored the +fundamental principle that a gold supply that might be sufficient +for one country with a gold standard, and might even result in a +measure of prosperity to that country, would be wholly insufficient +if other countries should adopt the same standard and should enter +upon a keen competition and rivalry for the acquisition of gold.</p> + +<p>The adoption of that standard by Germany and France was therefore +not only destructive of their own prosperity, but was a stunning +blow at the prosperity of England and all other gold-using +<span class='pagenum'><a name="Page_p026" id="Page_p026">[26]</a></span>countries. In taking England for his model, Bismarck had not the +condition of the toiling masses before his mind, but the glamour of +prosperity which surrounded the creditor-barons.</p> + +<p>The unprejudiced observer can not fail to perceive that the $370,000,000 +coined under the Limited Coinage Act of the United States +of 1878, supplementing the gold stock of the western world, postponed +great industrial and financial crises. But the elements of +these crises are gathering, and, unless relief be soon forthcoming, +will burst upon the world with crushing severity.</p> + + +<p class="caption">DEMONETIZATION IN THE UNITED STATES.</p> + +<p>If we are surprised that the sordid selfishness of the privileged +classes of Europe should have induced them to perpetrate so gross an +act of injustice, we are reminded that the legislation of monarchical +countries has usually been controlled in the interest of the privileged +classes. But what shall be said in defense of the demonetization of +silver by the United States? No such stupendous act of folly and +injustice was ever before perpetrated by the representatives of a +free people.</p> + +<p>Our position differed materially from that of Great Britain. This +was not a creditor nation. Our people did not, and do not, own thousands +of millions of dollars of foreign bonds, on which to receive semi-annual +interest in a constantly appreciating money, which would +have to be paid from the current earnings of foreign labor. Instead, +therefore, of our demonetization unjustly enriching our creditor-classes +at the expense of foreigners, it enabled the creditors at home +here to rob and despoil the debtors among their own countrymen. +Instead of despoiling the Canadian, the Australian, the East Indian, +the Egyptian, or the Turk, the spoliation arranged for by our adoption +of the gold standard was a spoliation of the debtors in our own +communities. In so far, however, as our debt was held abroad, it +provided for a spoliation of our citizens by the foreign bondholders +also. And as nearly all our public debt was so held, we had presented +to us in 1873 the extraordinary spectacle of representatives, +sent here to enact laws for the welfare and advancement of our own +people, devoting all their energies, whether aware of it or not, to +the upbuilding of the fortunes of the moneyed aristocracies of other +countries, at the expense of the producers of the United States.</p> + + +<p class="caption">CONDITION OF THE COUNTRY AT THE TIME.</p> + +<p>Consider for a moment the condition of this country at the time +when this amazing piece of legislation was enacted.</p> + +<p>The Republic was but just recovering from an exhausting war, +which loaded it with a national debt approaching $3,000,000,000. +There were also State, county, city, and town debts aggregating +many more thousands of millions, with railroad and other corporate +bonds and debts aggregating yet other thousands of millions and +private debts of indefinite and unascertainable amount, represented +largely by mortgages on real estate. This constituted an aggregate +whose burden might naturally be presumed to be sufficient to tax +all the resources of the people. Although some portion of those +debts has been liquidated and the national bonds have been refunded +at lower rates of interest, yet we all know that in this age all municipal +and corporate debts, if not national debts, are practically perpetual. +No sooner is one form of bond liquidated than another takes +its place; no sooner is one public improvement completed than another +is begun.</p> + +<p>At the time silver was demonetized it might well have been sup<span class='pagenum'><a name="Page_p027" id="Page_p027">[27]</a></span>posed +that a sufficiently large unearned increment had already been +realized by the foreign and domestic holders of United States bonds. +The greater portion of the debt of the Government was, when incurred, +made payable simply in "lawful money"—the interest alone +being payable in coin. Yet in March, 1869, the bond-holders secured +the passage of an act of Congress, entitled "An act to strengthen the +public credit," containing a pledge to pay in coin or its equivalent +not merely the interest, but the principal of all national obligations +not specially provided to be paid otherwise.</p> + + +<p class="caption">THE COURSE OF THE CREDITORS.</p> + +<p>And again, when in 1870 Congress was about to provide for a refunding +of the public debt, these clamorous creditors, not satisfied +with having got the bonds at rates much below their face value, and +not satisfied with the pledge to pay in coin—a pledge made long +after the contract was made and the debt incurred—insisted that +not only should the new bonds be payable in coin, but in order to +guard against any possible interpretation which might work to their +detriment they did what has rarely been done in the history of monetary +legislation, insisted that even the very <i>standard</i> of that coin +should be fixed and nominated in the bond. They were willing to take +no chances. They were not willing to place confidence in the sense +of equity and fair dealing of the people of the United States. They +held before Congress the covert threat that if the new issue of bonds +did not provide for payment in "coin," instead of "lawful money," +and did not prescribe the precise standard of coin in which they +were to be payable, it would be difficult if not impossible to place +the bonds on the market.</p> + +<p>So, by the refunding act of July 14, 1870, Congress provided for +the payment in "coin of the present standard value," that is to say, +in either gold dollars of 25.8 grains of gold, nine-tenths fine, or in +silver dollars of 412½ grains of silver, nine-tenths fine, at the option +of the United States. But even this extreme advantage to the creditors +over payment in "lawful money" of the United States, in which +the bonds were bought, and in which they were legally payable, was +insufficient. All but the most ingenious would imagine that having +thus provided for payment in coin then bearing a considerable premium +over the current money of the Republic, and having the very +standard of that coin fixed in the act, the highest point of vantage +had been reached. One device, however, and only one, remained by +which the money of the payment could be still further increased in +value, and this device did not escape the watchful eye or cunning +hand of the public creditors.</p> + +<p>They clearly saw that if by legislative enactment they could secure +the rejection of one of the money-metals they would succeed +in enormously increasing the value of the metal retained. This they +accomplished by the demonetization of silver, and thus by striking +down one-half the automatic money of the world and devolving the +money function exclusively on the other half, added thousands of +millions of dollars to the burden of the debt.</p> + + +<p class="caption">THE PRETENSE TO "STRENGTHEN THE PUBLIC CREDIT."</p> + +<p>It will be observed that this anxiety to strengthen the public +credit was evinced by the bondholders <i>after</i> and not before the +bonds were in their possession. No anxiety for the public credit +was manifested by them at a time when the Government might be +able to reap advantage from it. The Government having parted<span class='pagenum'><a name="Page_p028" id="Page_p028">[28]</a></span> +with the bonds at a heavy discount, their selling price in the market +became a matter of no direct pecuniary importance to the people of +the United States.</p> + +<p>The "strengthening of the public credit" that was to be effected +by the act of March 16, 1869, consisted of a rise in the price of the +bonds for the benefit of the holder, at a time when they were no +longer the property of the Government but of private individuals. +The real effect of the act, therefore, was not in any way to benefit +the Government but greatly to enrich, by an increment unearned +and unbargained for, a few men who had already been greatly enriched +by their dealings with the United States. The title of the +act should have read "An act to strengthen the bank account and +credit of the holders of United States bonds."</p> + +<p>The excuse and apology for the act was that by its passage the refunding +process then contemplated, and afterward provided for by +the refunding act of 1870 might be rendered more certain of success; +but if any advantage accrued from that cause, it was lost, and much +more with it, by the increase which the act of 1869 effected in the +burden of the bonded obligation, by pledging the nation to a payment +in a medium much more valuable than the medium provided +for in the contract. And, again, in 1873 when all the bonds provided +for by the refunding act of 1870 had been sold and had passed out of +the hands of the Government, another act was passed, intended by the +money-lenders again to strengthen the public credit, and again to +the disadvantage of the people and to the exclusive and enormous +advantage of the bondholders. It bore the innocent title of "An +act revising and amending the laws relative to the mints, assay offices, +and coinage of the United States." This act, bearing on its face +no suggestion of any change more serious than that of regulating the +petty details of mint management, has proved to be an act of momentous +consequence to the people of this country. This is the act +that demonetized the silver dollar, which it did by merely omitting +that coin from the enumeration of the coins of the United States.</p> + + +<p class="caption">DEMONETIZATION WHOLLY UNJUSTIFIABLE.</p> + +<p>Among all the explanations that have been made to account for +that demonetization by a Congress of the United States, I have +never heard any reason advanced which constituted a justification +for it. To my mind, in view of all the circumstances—in the face of +the herculean difficulties by which the nation was surrounded, in +the face of the sacrifices which our citizens had made to preserve +the Republic, and in the face of all that had already been done by an +over-generous people, proud of their national strength, and jealous +of their national honor, to satisfy the rapacious demands of the +money-lenders—in view, I say, of all these facts, the demonetization +of silver by the United States must be regarded as one of those historic +blunders that are worse than crimes. It was the child of Ignorance +and Avarice, and is already the prolific parent of enforced +idleness, poverty, and misery.</p> + +<p>It is to undo as far as possible the effects of the blunder of 1873 +that new legislation is now imperatively demanded by the people. +While the past can not be recalled, the present is ours, and the +pressing duty of to-day is to provide for the future. The demand +comes from all sections of the country that a remedy for the depressed +industrial conditions caused by the legislation of 1873, be +applied at the earliest moment. And what better remedy could +be applied than absolutely to reverse that legislation and to put the<span class='pagenum'><a name="Page_p029" id="Page_p029">[29]</a></span> +monetary position of this country back to exactly where it was when +that wrong was committed?</p> + +<p>Some twelve years ago an attempt was made to apply a remedy, +but the attempt was only partially successful. Instead of resulting +in free coinage, it resulted in the passage of the bill which authorized +the coinage of not less than two nor more than four million dollars' +worth of silver per month. On that occasion a financial debate +of great interest and importance was had in this Chamber and in the +other House of Congress. The proposition to remonetize silver or +to increase the silver coinage was vigorously opposed, but the arguments +then presented by the advocates of remonetization never have +been, and never can be, refuted.</p> + +<p>In fact, but rarely has there been any attempt made to answer +those arguments. Puerile attempts at wit, and diatribes of abuse are +all that the silver men have heard in sixteen years in answer to the +contentions they have made in favor of the remonetization of silver.</p> + + +<p class="caption">EDUCATIONAL EFFECT OF DISCUSSION.</p> + +<p>With that debate, Mr. President, long pending and eagerly maintained +on both sides, there began in this country an educational +movement among the masses, that is destined to have far-reaching +consequence. The public attention was fastened, as it had never +been fastened before, on the subject of money, and on the forces +which govern its value, and up to this time that attention has never +flagged. As a result we find the great body of our people to-day—the +farmers and artisans of the country—after years of reflection and discussion +in their lyceums and trade organizations, adopting to a large +extent the views then presented by the advocates of an increased +money volume—views which at the time were contemptuously derided +by the advocates of contraction and of gold.</p> + +<p>The cry for relief appropriately now comes from the farmers, the +artisans, and the laboring classes, as well as from the young, the +enterprising, the thoughtful, of all classes, who have not inherited +wealth, but are hewing out for themselves the rugged path to success. +It is they who have had to bear the exactions of the system +which has prevailed. It is from the proceeds of their labor that the +extortions have been paid. If objection be made that the character +of relief proposed is not indorsed in financial circles, or by the literary +guild or professional political economists that surround them, +the sufficient reply is that the world can not wait for the correction +of abuses by those who are profiting by them. In the nature of +things, all movements for reform must be initiated by those who +can not lose by the installation of justice.</p> + +<p>But there are others besides the laboring masses who are working +in the cause of humanity. There are noble, unselfish, and altruistic +men in all the countries of civilization, who see the wrong and are +indefatigable in their efforts to set it right.</p> + +<p>I will read a cable dispatch recently addressed to me by Mr. Henry +H. Gibbs, formerly governor of the Bank of England, and now president +of the Bimetallic League of Great Britain:</p> + +<div class="blockquot"><p><span class="smcap">London</span>, <i>May</i> 6.—The friends of silver deeply regret the death of Senator Beck, +whose services in the cause of monetary reform are warmly appreciated on +this side of the Atlantic. The bimetallist party of the United Kingdom, now +including over one hundred members of the House of Commons, attach the greatest +value to the debate about to commence in your illustrious chamber. We fully +recognize not only that the support afforded to silver by your legislation during +the last twelve years has helped the protect the industrial world from an acute monetary +crisis, but also that the debates in Congress have served more than all else +to educate our people to recognition of the important issues involved. We believe<span class='pagenum'><a name="Page_p030" id="Page_p030">[30]</a></span> +also that the increase and coinage of silver contemplated by Congress will restore, +wholly or considerably, your coinage rates, and will thus make international settlement +of this complex question comparatively easy. We anticipate further and +with much confidence, that the advance in the price of silver which must follow +your action will stimulate both the export and the other trades of your country, +and, while tending to the prosperity of your agricultural classes, will also assist +the manufacturing industries of the United Kingdom and the whole body of our +wage-earners.</p></div> + +<p>Mr. Moreton Frewen, of London, an able writer on economic +subjects, whose recent work on the "The Economic Crisis" I commend +to the careful perusal of Senators, says:</p> + +<div class="blockquot"><p>It may, indeed, be affirmed, without fear of contradiction, that legislation arranged +in the interest of a certain class, first by Lord Liverpool in this country, +and again by Sir Robert Peel at the instigation of Mr. Jones Loyd and other wealthy +bankers, which was supplemented recently by simultaneous anti-silver legislation +in Berlin and Washington at the instance of the great financial houses—this +legislation has about doubled the burden of all national debts by an artificial +enhancement of the value of money.</p> + +<p>The fall of all prices induced by this cause has been on such a scale that while +in twenty years the National debt of the United States quoted in dollars has been +reduced by nearly two-thirds, yet the value of the remaining one-third, measured +in wheat, in bar iron, or bales of cotton, is considerably greater—is a greater +demand draft on the labor and industry of the nation than was the whole debt at +the time it was contracted. The aggravation of the burdens of taxation induced +by this so-called "appreciation of gold," which is no natural appreciation, but has +been brought about by class legislation to increase the value of the gold which is +in a few hands, requires but to be explained to an enfranchised democracy, +which will know how to protect itself against further attempts to contract the +currency and to force down prices to the confusion of every existing contract.</p> + +<p>Of all classes of middle-men, bankers have been by far the most successful in +intercepting and appropriating an undue share of produced wealth. While the +modern system of banking and credit may be said to be even yet in its infancy, +that portion of the assets of the community which is to-day in the strong boxes +of the bankers would, if declared, be an astounding revelation of the recent +profits of this particular business; and not only has the business itself become a +most profitable monopoly, but its interests in a very few hands are diametrically +opposed to the general interests of the majority. By legislation intended to contract +the currency and force down all prices, including wages, the price paid for +labor, the money owner has been able to increase the purchase power of his sovereign +or dollar by the direct diminution of the price of every kind of property +measured in money.</p></div> + + +<p class="caption">UNFULFILLED PROPHECIES.</p> + +<p>During the debate on the limited coinage bill, not content with +abuse of the advocates of the measure; with flimsy criticism of it +and specious arguments against it, its opponents in and out of Congress +indulged in diverse prophecies and predictions. They pictured +forth the lamentable results that would follow its passage, and the +direful consequences that would ensue from an increase of the circulating +medium of the country. Among the results confidently predicted +were the following: that the silver would not circulate at +all, and again that it would circulate to the exclusion of gold, which +metal, we were informed, would flow out of this country with a velocity +and in a volume theretofore unknown; that we should be unable +to redeem our paper money in gold; that we should be precipitated +into a silver vortex; that an inflation of the currency would follow, +which would ruinously raise prices of all commodities and that this +inflation would result in an unprecedented contraction. We were +charged with forcing upon the public creditors a dollar worth only +ninety cents. We were warned that the passage of the bill would +indefinitely postpone the refunding of the public debt, and would +lower the price and impair the value of our national securities. It +was charged that we were setting on foot a new and irrepressible +conflict between two great sections of the country—the East and +the West. We were charged with uttering a debased coin; with<span class='pagenum'><a name="Page_p031" id="Page_p031">[31]</a></span> +lowering the standard of American credit; with tarnishing the +integrity and honor of our country before foreign nations, and with +unprecedented moral turpitude in setting an example of flagrant and +shameless national dishonesty.</p> + +<p>The men of the far West, and of the Pacific slope especially, were +the particular targets of this abuse. They were denounced by some +as "lunatics," by others as dangerous and unworthy demagogues, because, +as was charged, their constituents, if not themselves, were directly +interested in the restoration of the ancient right of silver to full +recognition as one of the money metals. For their benefit resort was +had to every epithet which the English language afforded. In +holding them up to public scorn the rich and varied vocabulary of +odium and opprobrium was exhausted.</p> + +<p>These prophecies of disaster were united in by the professors of political +economy in all the Eastern colleges, by the President of the +United States, by the Secretary of the Treasury, by the leading American +newspapers, by the principal public men and journals of Great +Britain, if not of all Europe; and, of course, by all bankers, money-lenders, +and professional financiers the world over.</p> + +<p>And now, Mr. President, how many of all those alarming prognostications +by all these distinguished prophets have been fulfilled? +Not one! On the contrary, it is not too much to say that the public +credit of the United States is to-day the highest in the world. It +does not stand merely in line with that of other first-rate powers; +it stands at the head. Our gold, silver, and paper money stand at +a parity with each other. If a full measure of relief was not realized +by the passage of that bill it is because the coinage of $4,000,000 a +month was left optional with the Secretary of the Treasury, instead +of being made mandatory on him.</p> + +<p>But it is hardly necessary to assert that the predicted inflation of +prices has not been observed as a consequence of the coinage of $2,000,000 +a month. While the issuance of that amount has not, with our +rapidly increasing population and wealth, been sufficient to arrest +the downward tendency of prices, it has undoubtedly prevented them +from falling much lower. Without that coinage, we should have had +industrial depression, chronic and somber, with consequences of untold +disaster.</p> + +<p>But the result which gave most apprehension to those who advocated +the gold standard, the evil which they regarded as on the whole +the most threatening and direful of all the evils that were to result +from even so small an increase in the money volume as that bill provided +for, was the outflow of gold. They ridiculously under-estimated +the tremendous money-absorbing power of this great country. +And as if to emphasize to all the world the complete absurdity of +their alleged fears—this apprehension has been conspicuously and notoriously +set at naught by the constant inflow of gold. On the 30th +of June, 1878, the amount of gold coin and bullion in the Treasury +and in monetary circulation in this country is officially reported to +have been $213,199,977, and this amount is probably much over-estimated. +On November 1, 1889, we had more than three times as +much—the amount of gold in circulation and in the Treasury being +reported as $689,000,000.</p> + +<p>"Experience," says Dr. Johnson, "is the great test of truth, and +is perpetually contradicting the theories of men," and the last experience, +Mr. President, is the best.</p> + +<p>If the professors of political economy, the Eastern newspaper editors, +and the professional financiers were then so seriously mistaken<span class='pagenum'><a name="Page_p032" id="Page_p032">[32]</a></span> +ought they not to be a little modest now in making predictions, especially +in renewing predictions that have been already discredited? +They can not point to a single instance in which their prophesy has +not been falsified by the event. So humiliating a failure on the part +of the professors, in a realm of which they boastfully claimed to be +masters, so complete an overthrow of these "experts" by men who +were ridiculed and derided as rural financiers and crazy theorists, +ought to put the advocates of the gold standard on their guard +against a like defeat on this occasion. They are pressed for reasons +to account for the utter miscarriage of their prophecies. They are +left without a shadow of consolation except that the coinage of +$2,000,000 worth of silver bullion each month has not succeeded in +placing silver at a par with gold. They affect to believe that the +advocates of silver in 1878 expected that that metal, under the very +limited demand of $2,000,000 a month, would be brought to a level +with gold, which, owing to the demonetization of silver, had risen +abnormally and ruinously in value.</p> + +<p>No such belief was ever entertained or expressed. On the contrary +it was repeatedly asserted by the advocates of silver that so long +as the entire yield of gold from all the mines of the world (in 1878, +$119,000,000) was invested with the full money function and had free +access to all mints to be transmuted into coin, it could not be expected +that the conferring of the legal-tender function upon a sum so comparatively +trifling as one-fourth the yield of silver (the yield in 1878 +being $99,000,000) would have the effect of placing it on a level with +gold.</p> + +<p>It is, however, a significant fact that every silver dollar that has +been coined under that act is at a parity with gold, and will to-day +buy as much of all the objects of human desire as will the gold dollar. +Nay, more, silver bullion—disparaged and discredited as it is by being +shorn of the money function, and denied access to the mints, instead +of decreasing in purchasing power, has maintained so steady a relation +to commodities that 412½ grains of uncoined silver will exchange +for as much to-day as would the coined dollar, whether of silver or +gold, in 1873, when the full money function attached equally to both +metals. If this be true—and I shall presently demonstrate it beyond +refutation—what an utter perversion of terms it is to say that silver +has fallen in value!</p> + + +<p class="caption">WILL REMONETIZATION PLACE US ALONGSIDE INDIA.</p> + +<p>We are solemnly warned that the full remonetization of silver in the +United States would place us alongside India and the other barbarous +countries of the world. This brilliant piece of reasoning is advanced +with great confidence, and is intended to be conclusive of the argument +against silver. But, Mr. President, India is no more barbarous +now than it was in 1873—before our silver dollar was demonetized. +India is no more barbarous now than it was in 1857, when Germany +demonetized gold and placed herself "alongside" India. Neither is +Germany any more civilized now than then. We did not at that +time hear any complaint, either in the United States or Europe, +that the use of silver as money placed any one nation more than any +other in dangerous affiliation with the civilization of India. We +have never heard it charged against France that its civilization was +brought any nearer that of India by the immense quantity of silver +money in France. Neither did we hear it charged against the United +States up to 1873 that we were "alongside," or dangerously close to +the barbarous nations by our use of silver as money.<span class='pagenum'><a name="Page_p033" id="Page_p033">[33]</a></span></p> + +<p>Up to 1834 we had no metallic money other than silver in our circulation, +and up to 1850 we had much more silver in circulation +than gold. Were we "alongside" India then? Where were the wise +and patriotic men of our country at those periods? History fails to +record any protest on their part that we were placing ourselves +"alongside" India or any other of the barbarous nations of the world +by our use of silver and our recognition of its full money power. All +the nations of the earth used silver and accorded it full recognition +as money equally with gold up to 1819. Was all Christendom at +that time "alongside" India? When, in that year, Great Britain +sundered the silver link that from time immemorial had kept her +"alongside" India and the other barbarous nations and, for selfish +reasons of her own, arising from her position as a creditor of all +other nations, decided to recognize gold only as money, was any +evidence afforded of a sudden advance in the civilization of Great +Britain? Was the emergence of that nation from the benumbing +companionship of India and the other barbaric countries into the +glittering and refulgent light of the gold dispensation signalized, as +would be expected, by a corresponding improvement in the condition +of the people?</p> + +<p>On the contrary, the history of the time informs us that as a consequence +of the passage of the bill by Parliament in 1819, compelling +payments in gold, prices rapidly fell, cotton in particular sinking +in the short space of three months to one-half its former level. Within +six months all prices had fallen one-half, and showed no signs of +improvement for the next three years. By reason of the contraction +of the currency the industry of the nation was congealed, as is a +flowing stream by the severity of an arctic winter. Alarm became +universal; confidence and activity ceased. Bankruptcies increased +in 1819 more than 50 per cent. over the number of the previous year. +Meetings were held throughout England in which the people called +on the government to devise some means of redressing the situation. +So universal was the distress that the owners of land in England, +who in 1819 numbered 160,000 were in seven years, by forced sales +and foreclosure of mortgages on the smaller farms, reduced to 30,000, +and one in every seven of the population lived on organized charity. +All this was but a part of the price which the people of England paid +for a policy imposed on them by the creditor classes among their own +number. The condition of industry and disorganization of labor led +to frequent and serious conflicts between the people and the military. +They also led to commercial crises without number, and England, +by demonetizing silver and thus ceasing to be "alongside" +India, became the seat of panics, as Egypt had long been of the +plague and India of the cholera.</p> + +<p>As a contrast to this I will merely cite the change in the condition +of India within the past seventeen years. When the Western world +discarded silver as money and, as a consequence, India received a +larger supply of it than ever before, that barbarous nation, as is universally +admitted, made progress by leaps and bounds. No country +on earth has in the same time made such advances in material prosperity +and in all the elements that conduce to the comfort and happiness +of a people. Notwithstanding the alleged debasement of +silver, no sooner had its increased inflow into India begun than the +industries of a vast continent were established and set in motion, +and a substantial part of the activity and prosperity that were wont +to pervade some of the industries of the United States has, by that<span class='pagenum'><a name="Page_p034" id="Page_p034">[34]</a></span> +demonetization, been transferred to fields of wheat, and fields and +factories of cotton 10,000 miles distant.</p> + +<p>What really placed us alongside such barbarous countries as India +was the demonetization of silver. It was by that demonetization +that the people of Europe were enabled, with gold, to buy silver at +30 per cent. discount, which, when shipped to India and coined into +rupees, would buy as much wheat as could ever have been bought +with that coin. There has been no decrease whatever in the purchasing +power of the rupee in India. This was equivalent to buying +wheat at 30 per cent. below the price theretofore paid for it, and +thus the farmers of the United States were by demonetization placed +"alongside" the barbarous people of India. Their wheat had to +compete in the European markets with the wheat of India, and it +is this competition that placed them "alongside" India. The farmer +of this country, therefore, by demonetization of silver, was compelled +to compete with under-paid and half-starved ryots. And so it was +that our cotton planters, by the demonetization of silver, were +placed alongside the barbarous people of India. It is this degrading +competition that places a highly civilized people alongside a barbarous +one.</p> + +<p>The advocates of the single gold standard deem even silver money +much better money than greenbacks. Does it then follow that when +greenbacks were our only money—good enough money to carry the +nation through the greatest war in all history—we were "alongside" +or underneath the barbarous nations of the world? It is not the +form, or the material of a nation's money that fixes its status relatively +to other nations. That is accomplished by the vitality, the energy, +the intellectuality and effective force of its people. The United +States can never be placed "alongside" any barbarous nation, except +by compelling our people to compete with barbarous peoples—compelling +them to sell the products of American labor at prices regulated +by the cost of labor and manner of living in barbarous countries. +As well might it be said that we are alongside the barbarous +people of India because we continue to produce wheat and cotton.</p> + +<p>The distinguishing feature of all barbarous nations is the squalor +of their working classes. The reward of their hard toil is barely +enough to maintain animal existence. A civilized people are placed +alongside a barbarous one when, in their means of livelihood, the +foundation of their civilization, they are made to compete with the +barbarians. That was the result accomplished for the farmers and +planters of the United States when silver was demonetized.</p> + + +<p class="caption">CREDITORS AND DEBTORS.—A COMPARISON OF MOTIVES.</p> + +<p>All movements for the increase of the monetary circulation are +ascribed by the money-lenders and creditor classes to the unworthy +desire on the part of the debtors to escape their just obligations. +But if motives are to be brought in question, the rule should work +both ways. No note is taken of the motive of the creditor classes in +securing a contraction of the circulation. Whatever the apparent +purpose of contraction, and however specious the arguments advanced +in its justification, the real object has always been to increase +the purchasing power of money. In all countries, and throughout all +time, it is the cupidity of the creditor classes and annuitants, and +their desire to increase the value of the money unit that has brought +about a shrinkage in the money volume. Unlike the great masses of +the people, who were ignorant of the effects to be naturally expected +from such a shrinkage, the annuitants and moneyed men very well +understood that the value of every pound or dollar depended on the<span class='pagenum'><a name="Page_p035" id="Page_p035">[35]</a></span> +number of pounds or dollars that were in circulation; the larger +the total number out, the smaller the purchasing power of each; the +smaller the total number out, the greater the purchasing power of +each.</p> + +<p>Loaners of capital are not usually those who entertain further hope +of personal achievement. When men realize fortunes it is rarely that +they conserve the faculty of initiative; they find no special delight +in novelty; they look so carefully to security in the use of money that +the spirit of adventure is restrained. The realization of a fortune is +usually the labor of a life-time, and few men who reach the goal care +to retrace their steps to enter again upon a struggle that demands all +the strength, the momentum, and the intrepidity of youth. Men of +assured incomes therefore are disposed to take their ease, and society +must look, for its material progress and development, to those who +have a career to make, with the ambition and the power to make it.</p> + +<p>It is a remarkable circumstance, Mr. President, that throughout the +entire range of economic discussion in gold-standard circles, it seems +to be taken for granted that a change in the value of the money +unit is a matter of no significance, and imports no mischief to society, +so long as the change is in one direction. Who has ever +heard from an Eastern journal any complaint against a contraction +of our money volume; any admonition that in a shrinking volume +of money lurk evils of the utmost magnitude? On the other hand +we have been treated to lengthy homilies on the evils of "inflation," +whenever the slightest prospect presented itself of a decrease in the +value of money—not with the view of giving the debtor an advantage +over the lender of money, but of preventing the unconscionable +injustice of a further increasing value in the dollars +which the debtor contracted to pay. Loud and resounding protests +have been entered against the "dishonesty" of making payments +in "depreciated dollars." The debtors are characterized as +dishonest for desiring to keep money at a steady and unwavering +value. If that object could be secured, it would undoubtedly be +to the interest of the debtor, and could not possibly work any injustice +to the creditor. It would simply assure to both debtor and +creditor the exact measure for which they bargained. It would enable +the debtor to pay his debt with exactly the amount of sacrifice +to which, on the making of the debt, he undertook to submit, in +order to pay it.</p> + + +<p class="caption">WHO ARE THE DEBTORS?</p> + +<p>In all discussions of the subject the creditors attempt to brush aside +the equities involved by sneering at the debtors. But, Mr. President, +debt is the distinguishing characteristic of modern society. It is +through debt that the marvelous developments of nineteenth century +civilization have been effected. Who are the debtors in this +country? Who are the borrowers of money? The men of enterprise, +of energy, of skill, the men of industry, of foresight, of calculation, +of daring. In the ranks of the debtors will be found a large +preponderance of the constructive energy of every country. The +debtors are the upbuilders of the national wealth and prosperity; +they are the men of initiative, the men who conceive plans and set +on foot enterprises. They are those who by borrowing money enrich +the community. They are the dynamic force among the people. +They are the busy, restless, moving throng whom you find in all +walks of life in this country—the active, the vigorous, the strong, +the undaunted.</p> + +<p>These men are sustained in their efforts by the hope and belief that +their labors will be crowned with success. Destroy that hope and<span class='pagenum'><a name="Page_p036" id="Page_p036">[36]</a></span> +you take away from society the most powerful of all the incentives to +material development; you place in the pathway of progress an obstacle +which it is impossible to surmount.</p> + +<p>The men of whom I have spoken are undoubtedly the first who are +likely to be affected by a shrinkage in the volume of money.</p> + +<p>The highest prosperity of a nation is attained only when all its +people are employed in avocations suited to their individual aptitudes, +and when a just money system insures an equitable distribution +of the products of their industry. With our present complex +civilization, in order that men may have constant employment, it is +indispensable that work be planned and undertakings projected +years in advance. Without an intelligent forecast of enterprises +large numbers of workmen must periodically be relegated to idleness. +Enterprises that take years to complete must be contracted +for in advance, and payments provided for.</p> + +<p>A constant but unperceived rise in the value of the dollar with +which those payments must be made, baffles all plans, thwarts all +calculation, and destroys all equities between debtor and creditor. +If we can not intelligently regulate our money volume so as to +maintain unchanging the value of the money unit, if we can not +preserve our people from the blighting effects which an increase in +the measuring power of the money unit entails upon all industry, to +what purpose is our boasted civilization?</p> + +<p>By the increase of that measuring power all hopes are disappointed, +all purposes baffled, all efforts thwarted, all calculations +defied. This subtle enlargement in the measuring power of the +unit of money (the dollar) affects every class of the working community. +Like a poisonous drug in the human body, it permeates +every vein, every artery, every fiber and filament of the industrial +structure. The debtor is fighting for his life against an enemy he +does not see, against an influence he does not understand. For, +while his calculations were well and intelligently made, and the +amount of his debts and the terms of his contracts remain the same, +the weight of all his obligations has been increased by an insidious +increase in the value of the money unit.</p> + + +<p class="caption">EFFECTS OF A SHRINKING VOLUME OF MONEY.</p> + +<p>As to the benumbing consequences following a shrinkage in the +volume of money, the testimony of history is briefly reviewed in the +report of the Monetary Commission to which I have already referred, +and from which I read the following:</p> + +<div class="blockquot"><p>At the Christian era the metallic money of the Roman Empire amounted to +$1,800,000,000. By the end of the fifteenth century it had shrunk to less than +$200,000,000. During this period a most extraordinary and baleful change took +place in the condition of the world. Population dwindled and commerce, arts, +wealth, and freedom all disappeared. The people were reduced by poverty and +misery to the most degraded conditions of serfdom and slavery. The disintegration +of society was almost complete. The conditions of life were so hard that +individual selfishness was the only thing consistent with the instinct of self-preservation. +All public spirit, all generous emotions, all the noble aspirations of +man shriveled and disappeared as the volume of money shrunk and as prices +fell.</p> + +<p>History records no such disastrous transition as that from the Roman Empire +to the Dark Ages. Various explanations have been given of this entire breaking +down of the frame-work of society, but it was certainly coincident with a shrinkage +in the volume of money, which was also without historical parallel. The +crumbling of institutions kept even step and pace with the shrinkage in the stock +of money and the falling of prices. All other attendant circumstances than these +last have occurred in other historical periods unaccompanied and unfollowed by +any such mighty disasters. It is a suggestive coincidence that the first glimmer +of light only came with the invention of bills of exchange and paper substitutes, +through which the scanty stock of the precious metals was increased in efficiency. +But not less than the energizing influence of Potosi and all the argosies of +treas<span class='pagenum'><a name="Page_p037" id="Page_p037">[37]</a></span>ure from the New World were needed to arouse the Old World from its comatose +sleep, to quicken the torpid limbs of industry, and to plume the leaden wings of +commerce. It needed the heroic treatment of rising prices to enable society to +reunite its shattered links, to shake off the shackles of feudalism, to relight and +uplift the almost extinguished torch of civilization. That the disasters of the +Dark Ages were caused by decreasing money and falling prices, and that the recovery +therefrom and the comparative prosperity which followed the discovery +of America were due to an increasing supply of the precious metals and rising +prices, will not seem surprising or unreasonable when the noble functions of +money are considered. Money is the great instrument of association, the very +fiber of social organism, the vitalizing force of industry, the protoplasm of civilization, +and as essential to its existence as oxygen is to animal life. Without money +civilization could not have had a beginning; with a diminishing supply it must +languish, and, unless relieved, finally perish.</p> + +<p>Symptoms of disasters similar to those which befell society during the Dark +Ages were observable on every hand during the first half of this century. In 1809 +the revolutionary troubles between Spain and her American colonies broke out. +These troubles resulted in a great diminution in the production of the precious +metals, which was quickly indicated by a fall in general prices. As already stated +in this report, it is estimated that the purchasing power of the precious metals increased +between 1809 and 1848 fully 145 per cent., or, in other words, that the general +range of prices was 60 per cent. lower in 1848 than it was in 1809. During this +period there was no general demonetization of either metal and no important fluctuation +in the relative value of the metals, and the supply was sufficient to keep +their stock good against losses by accident and abrasion. But it was insufficient +to keep the stock up to the proper correspondence with the increasing demand of +advancing populations.</p> + +<p>The world has rarely passed through a more gloomy period than this one. Again +do we find falling prices and misery and destitution inseparable companions. The +poverty and distress of the industrial masses were intense and universal, and, since +the discovery of the mines of America, without a parallel. In England the suffering +of the people found expression in demands upon Parliament for relief, in +bread riots, and in immense Chartist demonstrations. The military arm of the +nation had to be strengthened to prevent the all-pervading discontent from ripening +into open revolt. On the Continent the fires of revolution smoldered everywhere, +and blazed out at many points, threatening the overthrow of states and +the subversion of social institutions.</p> + +<p>Whenever and wherever the mutterings of discontent were hushed by the fear +of increased standing armies, the foundations of society were honey-combed by +powerful secret political associations. The cause at work to produce this state +of things was so subtle, and its advance so silent, that the masses were entirely +ignorant of its nature. They had come to regard money as an institution fixed +and immovable in value, and when the price of property and the wages of labor +fell, they charged the fault, not to the money, but to the property and the employer. +They were taught that the mischief was the result of overproduction. +Never having observed that overproduction was complained of only when the +money stock was decreasing, their prejudices were aroused against labor-saving +machinery. They were angered at capital, because it either declined altogether +to embark in industrial enterprises or would only embark in them upon the condition +of employing labor at the most scanty remuneration. They forgot that +falling prices compelled capital to avoid such enterprises on any other condition, +and for the most part to avoid them entirely. They did not comprehend that +money in shrinking volume was the prolific parent of enforced idleness and poverty, +and that falling prices divorced money capital, from labor, but they none the +less felt the paralyzing pressure of the shrinking metallic shroud that was closing +around industry.</p> + +<p>The increased yield of the Russian gold fields in 1846 gave some relief and served +as a parachute to the fall in prices, which might otherwise have resulted in a great +catastrophe. But the enormous metallic supplies of California and Australia +were all needed to give substantial and adequate relief. Great as these supplies +were, their influence in raising prices was moderate and soon entirely arrested by +the increasing populations and commerce which followed them. In the twenty-five +years between 1850 and 1876 the money stock of the world was more than +doubled, and yet at no time during this period was the general level of prices +raised more than 18 per cent. above the general level of 1848.</p> + +<p>A comparison of this effect of an increasing volume of money after 1848 with +the effect of a decreasing volume between 1809 and 1848 strikingly illustrates how +largely different in degree is the influence upon prices of an increasing or decreasing +volume of money. The decrease of the yield of the mines since about 1865, +while population and commerce have been advancing, has already produced unmistakable +symptoms of the same general distrust, non-employment of labor, and +political and social disquiet, which have characterized all former periods of shrinking +money.</p></div> +<p><span class='pagenum'><a name="Page_p038" id="Page_p038">[38]</a></span></p> + +<p>The time that has elapsed since that report was written has but +served to verify and emphasize its statements.</p> + + +<p class="caption">THE FALL OF PRICES SINCE 1873.</p> + +<p>It is a fact not disputed anywhere but universally admitted, that +for many years past the prices of all articles entering into general +consumption among the people have been steadily falling. It is +obvious that the industrial conditions prevailing since 1873 are but +a repetition of those above described as following 1809—with falling +prices, constant unrest, and universal discontent.</p> + +<p>The following table, compiled from figures published by the Bureau +of Statistics of the Treasury Department, shows the average +range of export prices of the articles named for each year since 1873:</p> + +<p class="caption"><i>Annual average export prices of commodities of domestic production for +each year from 1873 to 1889, inclusive.</i></p> + +<div class='center'> +<table border="0" cellpadding="4" cellspacing="0" summary="" rules="cols"> +<tr> +<th class='bbox'>Year ending<br />June, 30—</th> +<th class='bbox'>Corn per<br />bushel.</th> +<th class='bbox'>Wheat per<br />bushel.</th> +<th class='bbox'>Wheat flour<br />per barrel.</th> +<th class='bbox'>Cotton<br />(upland)<br />per pound.</th> +<th class='bbox'>Leather<br />per pound.</th> +<th class='bbox'>Illuminating<br />oils, refined,<br />per gallon.</th> +<th class='bbox'>Bacon<br />and hams<br />per pound.</th> +<th class='bbox'>Lard<br />per pound.</th> +</tr> +<tr><td align='center'></td><td align='center'><i>Dollars.</i></td><td align='center'><i>Dollars.</i></td><td align='center'><i>Dollars.</i></td><td align='center'><i>Cents.</i></td><td align='center'><i>Cents.</i></td><td align='center'><i>Cents.</i></td><td align='center'><i>Cents.</i></td><td align='center'><i>Cents.</i></td></tr> +<tr><td align='left'>1873</td><td align='right'> .618</td><td align='right'> 1.312</td><td align='right'> 7.565</td><td align='right'> 18.8</td><td align='right'> 25.3</td><td align='right'> 23.5</td><td align='right'> 8.8</td><td align='right'> 9.2</td></tr> +<tr><td align='left'>1874</td><td align='right'> .719</td><td align='right'> 1.428</td><td align='right'> 7.144</td><td align='right'> 15.4</td><td align='right'> 25.2</td><td align='right'> 17.3</td><td align='right'> 9.6</td><td align='right'> 9.4</td></tr> +<tr><td align='left'>1875</td><td align='right'> .848</td><td align='right'> 1.124</td><td align='right'> 5.968</td><td align='right'> 15.0</td><td align='right'> 26.0</td><td align='right'> 14.1</td><td align='right'> 11.4</td><td align='right'> 13.8</td></tr> +<tr><td align='left'>1876</td><td align='right'> .672</td><td align='right'> 1.242</td><td align='right'> 6.216</td><td align='right'> 12.9</td><td align='right'> 26.2</td><td align='right'> 14.0</td><td align='right'> 12.1</td><td align='right'> 13.3</td></tr> +<tr><td align='left'>1877</td><td align='right'> .587</td><td align='right'> 1.169</td><td align='right'> 6.488</td><td align='right'> 11.8</td><td align='right'> 23.9</td><td align='right'> 21.1</td><td align='right'> 10.8</td><td align='right'> 10.9</td></tr> +<tr><td align='left'>1878</td><td align='right'> .562</td><td align='right'> 1.338</td><td align='right'> 6.358</td><td align='right'> 11.1</td><td align='right'> 21.8</td><td align='right'> 14.4</td><td align='right'> 8.7</td><td align='right'> 8.8</td></tr> +<tr><td align='left'>1879</td><td align='right'> .471</td><td align='right'> 1.068</td><td align='right'> 5.252</td><td align='right'> 9.9</td><td align='right'> 20.4</td><td align='right'> 10.8</td><td align='right'> 6.9</td><td align='right'> 7.0</td></tr> +<tr><td align='left'>1880</td><td align='right'> .543</td><td align='right'> 1.245</td><td align='right'> 5.878</td><td align='right'> 11.5</td><td align='right'> 23.3</td><td align='right'> 8.6</td><td align='right'> 6.7</td><td align='right'> 7.4</td></tr> +<tr><td align='left'>1881</td><td align='right'> .552</td><td align='right'> 1.114</td><td align='right'> 5.668</td><td align='right'> 11.4</td><td align='right'> 22.6</td><td align='right'> 10.3</td><td align='right'> 8.2</td><td align='right'> 9.3</td></tr> +<tr><td align='left'>1882</td><td align='right'> .668</td><td align='right'> 1.185</td><td align='right'> 6.149</td><td align='right'> 11.4</td><td align='right'> 20.9</td><td align='right'> 9.1</td><td align='right'> 9.9</td><td align='right'> 11.6</td></tr> +<tr><td align='left'>1883</td><td align='right'> .684</td><td align='right'> 1.127</td><td align='right'> 5.955</td><td align='right'> 10.8</td><td align='right'> 21.1</td><td align='right'> 8.8</td><td align='right'> 11.2</td><td align='right'> 11.9</td></tr> +<tr><td align='left'>1884</td><td align='right'> .611</td><td align='right'> 1.066</td><td align='right'> 5.588</td><td align='right'> 10.5</td><td align='right'> 20.6</td><td align='right'> 9.2</td><td align='right'> 10.2</td><td align='right'> 9.5</td></tr> +<tr><td align='left'>1885</td><td align='right'> .540</td><td align='right'> .862</td><td align='right'> 4.897</td><td align='right'> 10.6</td><td align='right'> 19.8</td><td align='right'> 8.7</td><td align='right'> 9.2</td><td align='right'> 7.9</td></tr> +<tr><td align='left'>1886</td><td align='right'> .498</td><td align='right'> .870</td><td align='right'> 4.699</td><td align='right'> 9.9</td><td align='right'> 19.9</td><td align='right'> 8.7</td><td align='right'> 7.5</td><td align='right'> 6.9</td></tr> +<tr><td align='left'>1887</td><td align='right'> .479</td><td align='right'> .890</td><td align='right'> 4.510</td><td align='right'> 9.5</td><td align='right'> 18.7</td><td align='right'> 7.8</td><td align='right'> 7.9</td><td align='right'> 7.1</td></tr> +<tr><td align='left'>1888</td><td align='right'> .550</td><td align='right'> .853</td><td align='right'> 4.579</td><td align='right'> 9.8</td><td align='right'> 17.3</td><td align='right'> 7.9</td><td align='right'> 8.6</td><td align='right'> 7.7</td></tr> +<tr><td align='left'>1889</td><td align='right'> .474</td><td align='right'> .897</td><td align='right'> 4.832</td><td align='right'> 9.9</td><td align='right'> 16.6</td><td align='right'> 7.8</td><td align='right'> 8.6</td><td align='right'> 8.6</td></tr> +<tr><td class='bb'></td><td class='bb'></td><td class='bb'></td><td class='bb'></td><td class='bb'></td><td class='bb'></td><td class='bb'></td><td class='bb'></td><td class='bb'></td></tr> +<tr><td class='bb'></td><td class='bb'></td><td class='bb'></td><td class='bb'></td><td class='bb'></td><td class='bb'></td><td class='bb'></td><td class='bb'></td><td class='bb'></td></tr> + +<tr> +<th class='bbox'>Year ending<br />June 30—</th> +<th class='bbox'>Pork, salted,<br />per pound.</th> +<th class='bbox'>Beef, salted,<br />per pound.</th> +<th class='bbox'>Butter<br />per pound.</th> +<th class='bbox'>Cheese<br />per pound.</th> +<th class='bbox'>Eggs per<br />dozen.</th> +<th class='bbox'>Starch<br />per pound.</th> +<th class='bbox'>Sugar, refined,<br />per pound.</th> +<th class='bbox'>Tobacco, leaf,<br />per pound.</th> +</tr> +<tr><td align='center'></td><td align='center'> <i>Cents.</i></td><td align='center'> <i>Cents.</i></td><td align='center'> <i>Cents.</i></td><td align='center'><i>Cents.</i></td><td align='center'><i>Cents.</i></td><td align='center'><i>Cents.</i></td><td align='center'><i>Cents.</i></td><td align='center'><i>Cents.</i></td></tr> +<tr><td align='left'>1873</td><td align='right'> 7.8</td><td align='right'> 7.7</td><td align='right'> 21.1</td><td align='right'> 13.1</td><td align='right'> 26.6</td><td align='right'> 5.3</td><td align='right'> 11.6</td><td align='right'> 10.7</td></tr> +<tr><td align='left'>1874</td><td align='right'> 8.2</td><td align='right'> 8.2</td><td align='right'> 25.0</td><td align='right'> 13.1</td><td align='right'> 22.1</td><td align='right'> 5.7</td><td align='right'> 10.5</td><td align='right'> 9.6</td></tr> +<tr><td align='left'>1875</td><td align='right'> 10.1</td><td align='right'> 8.7</td><td align='right'> 23.7</td><td align='right'> 13.5</td><td align='right'> 25.6</td><td align='right'> 6.0</td><td align='right'> 10.8</td><td align='right'> 11.3</td></tr> +<tr><td align='left'>1876</td><td align='right'> 10.6</td><td align='right'> 8.7</td><td align='right'> 23.9</td><td align='right'> 12.6</td><td align='right'> 28.0</td><td align='right'> 5.4</td><td align='right'> 10.7</td><td align='right'> 10.4</td></tr> +<tr><td align='left'>1877</td><td align='right'> 9.0</td><td align='right'> 7.5</td><td align='right'> 20.6</td><td align='right'> 11.8</td><td align='right'> 25.9</td><td align='right'> 5.2</td><td align='right'> 11.6</td><td align='right'> 10.2</td></tr> +<tr><td align='left'>1878</td><td align='right'> 6.8</td><td align='right'> 7.7</td><td align='right'> 18.0</td><td align='right'> 11.4</td><td align='right'> 15.8</td><td align='right'> 4.7</td><td align='right'> 10.2</td><td align='right'> 8.7</td></tr> +<tr><td align='left'>1879</td><td align='right'> 5.7</td><td align='right'> 6.3</td><td align='right'> 14.2</td><td align='right'> 8.9</td><td align='right'> 15.5</td><td align='right'> 4.2</td><td align='right'> 8.5</td><td align='right'> 7.8</td></tr> +<tr><td align='left'>1880</td><td align='right'> 6.1</td><td align='right'> 6.4</td><td align='right'> 17.1</td><td align='right'> 9.5</td><td align='right'> 16.5</td><td align='right'> 4.3</td><td align='right'> 9.0</td><td align='right'> 7.7</td></tr> +<tr><td align='left'>1881</td><td align='right'> 7.7</td><td align='right'> 6.5</td><td align='right'> 19.8</td><td align='right'> 11.1</td><td align='right'> 17.2</td><td align='right'> 4.7</td><td align='right'> 9.2</td><td align='right'> 8.3</td></tr> +<tr><td align='left'>1882</td><td align='right'> 9.0</td><td align='right'> 8.5</td><td align='right'> 19.3</td><td align='right'> 11.0</td><td align='right'> 19.2</td><td align='right'> 4.8</td><td align='right'> 9.7</td><td align='right'> 8.5</td></tr> +<tr><td align='left'>1883</td><td align='right'> 9.9</td><td align='right'> 8.9</td><td align='right'> 18.6</td><td align='right'> 11.2</td><td align='right'> 20.9</td><td align='right'> 4.6</td><td align='right'> 9.2</td><td align='right'> 8.6</td></tr> +<tr><td align='left'>1884</td><td align='right'> 7.9</td><td align='right'> 7.6</td><td align='right'> 18.2</td><td align='right'> 10.3</td><td align='right'> 21.2</td><td align='right'> 4.5</td><td align='right'> 7.1</td><td align='right'> 9.1</td></tr> +<tr><td align='left'>1885</td><td align='right'> 7.2</td><td align='right'> 7.5</td><td align='right'> 16.8</td><td align='right'> 9.3</td><td align='right'> 21.5</td><td align='right'> 4.0</td><td align='right'> 6.4</td><td align='right'> 9.9</td></tr> +<tr><td align='left'>1886</td><td align='right'> 5.9</td><td align='right'> 6.0</td><td align='right'> 15.6</td><td align='right'> 8.2</td><td align='right'> 18.3</td><td align='right'> 4.1</td><td align='right'> 6.7</td><td align='right'> 7.8</td></tr> +<tr><td align='left'>1887</td><td align='right'> 6.6</td><td align='right'> 5.4</td><td align='right'> 15.8</td><td align='right'> 9.3</td><td align='right'> 16.3</td><td align='right'> 3.8</td><td align='right'> 6.0</td><td align='right'> 8.7</td></tr> +<tr><td align='left'>1888</td><td align='right'> 7.4</td><td align='right'> 5.3</td><td align='right'> 18.3</td><td align='right'> 9.9</td><td align='right'> 15.9</td><td align='right'> 3.5</td><td align='right'> 6.3</td><td align='right'> 8.3</td></tr> +<tr><td align='left'>1889</td><td align='right'> 7.4</td><td align='right'> 5.5</td><td align='right'> 16.5</td><td align='right'> 9.3</td><td align='right'> 13.9</td><td align='right'> 3.8</td><td align='right'> 7.6</td><td align='right'> 8.8</td></tr> +<tr><td class='bb'></td><td class='bb'></td><td class='bb'></td><td class='bb'></td><td class='bb'></td><td class='bb'></td><td class='bb'></td><td class='bb'></td><td class='bb'></td></tr> +</table></div> + +<p><span class='pagenum'><a name="Page_p039" id="Page_p039">[39]</a></span></p> + +<p>To show from another source the same general fact of the decline +of prices, I quote from an article published in the New York Tribune +early in 1886.</p> + +<p>The New York Tribune is pretty good authority. These figures +are undoubtedly from the calculations and from the pen of Mr. +Grosvenor, of the editorial staff of that able journal, formerly editor +and proprietor of the "Public," whose estimates of prices have, in my +judgment, been more correctly made than those of any other statistician +in the world. The article is as follows:</p> + +<div class="blockquot"><p>Quotations of about two hundred articles are compared since 1860, and the +amount of money is ascertained which would purchase, at different dates, of these +various articles, quantities corresponding as closely as possible to their ascertained +consumption in 1880, the date of the last census. Among the articles compared +are wheat, corn, oats, rye, barley, beans and pease, mess pork, bacon, ham, live +hogs, lard, fresh beef, tallow, live sheep, poultry, butter, cheese, eggs, milk, hay, +potatoes, turnips, cabbage, onions, apples, raisins, sugar, brown and crushed; molasses, +coffee, tea, tobacco, whisky, malt and hops, mackerel, codfish, salt, rice, +nutmegs, cloves, pepper, cotton, print-cloths and standard sheeting, wool of different +qualities, blankets, carpets, flannels, leather, boots, shoes, hides, silk, India rubber, +iron (pig and bar), nails, steel rails, coal, oil (crude and refined), tin and tin +plates, copper, lead, hemp, lumber, spruce and pine, oak, ash, walnut, and white +wood, lath, brick, lime, turpentine, linseed oil, soap, glass, paper, white lead, and +twelve other kinds of paints, fertilizers, and over fifty kinds of drugs and chemicals.</p> + +<p class="caption"><i>Cost of products at different dates.</i></p> + + +<div class='center'> +<table border="0" cellpadding="2" cellspacing="0" summary="" rules="cols"> +<tr><th class='bbox'>Dates.</th><th class='bbox'>Cost in currency.</th><th class='bbox'>Price of gold.</th><th class='bbox'>Cost in gold.</th></tr> +<tr><td align='left'>1860, May 1</td><td align='right'> $100.00</td><td align='right'> $100.00</td><td align='right'> $100.00</td></tr> +<tr><td align='left'>1865, November 1</td><td align='right'> 174.77</td><td align='right'> 145.87</td><td align='right'> 119.81</td></tr> +<tr><td align='left'>1866, May 1</td><td align='right'> 157.60</td><td align='right'> 125.12</td><td align='right'> 126.04</td></tr> +<tr><td align='left'>1866, November 1</td><td align='right'> 170.31</td><td align='right'> 146.25</td><td align='right'> 117.82</td></tr> +<tr><td align='left'>1871, November 1</td><td align='right'> 122.03</td><td align='right'> 112.00</td><td align='right'> 108.95</td></tr> +<tr><td align='left'>1872, May 1</td><td align='right'> 137.13</td><td align='right'> 112.50</td><td align='right'> 121.81</td></tr> +<tr><td align='left'>1873, November 1</td><td align='right'> 115.14</td><td align='right'> 108.50</td><td align='right'> 106.01</td></tr> +<tr><td align='left'>1874, May 1</td><td align='right'> 122.77</td><td align='right'> 112.87</td><td align='right'> 108.77</td></tr> +<tr><td align='left'>1875, January 1</td><td align='right'> 113.01</td><td align='right'> 112.37</td><td align='right'> 100.37</td></tr> +<tr><td align='left'>1876, October 1</td><td align='right'> 97.30</td><td align='right'> 110.00</td><td align='right'> 88.45</td></tr> +<tr><td align='left'>1877, May 1</td><td align='right'> 99.29</td><td align='right'> 106.75</td><td align='right'> 93.01</td></tr> +<tr><td align='left'>1878, May 1</td><td align='right'> 82.09</td><td align='right'> 100.37</td><td align='right'> 81.81</td></tr> +<tr><td align='left'>1878, October 18</td><td align='right'> 77.94</td><td align='right'> 100.37</td><td align='right'> 77.65</td></tr> +<tr><td align='left'>1879, November 1</td><td align='right'> 93.48</td><td align='right'> —</td><td align='right'> —</td></tr> +<tr><td align='left'>1880, January 1</td><td align='right'> 103.42</td><td align='right'> —</td><td align='right'> —</td></tr> +<tr><td align='left'>1881, January 1</td><td align='right'> 95.98</td><td align='right'> —</td><td align='right'> —</td></tr> +<tr><td align='left'>1882, May 16</td><td align='right'> 106.59</td><td align='right'> —</td><td align='right'> —</td></tr> +<tr><td align='left'>1883, March 13</td><td align='right'> 97.82</td><td align='right'> —</td><td align='right'> —</td></tr> +<tr><td align='left'>1883, November 1</td><td align='right'> 88.71</td><td align='right'> —</td><td align='right'> —</td></tr> +<tr><td align='left'>1884, January 1</td><td align='right'> 88.37</td><td align='right'> —</td><td align='right'> —</td></tr> +<tr><td align='left'>1884, November 21</td><td align='right'> 78.47</td><td align='right'> —</td><td align='right'> —</td></tr> +<tr><td align='left'>1885, January 1</td><td align='right'> 79.66</td><td align='right'> —</td><td align='right'> —</td></tr> +<tr><td align='left'>1885, May 9</td><td align='right'> 80.22</td><td align='right'> —</td><td align='right'> —</td></tr> +<tr><td align='left'>1885, August 22</td><td align='right'> 74.56</td><td align='right'> —</td><td align='right'> —</td></tr> +<tr><td align='left'>1885, November 1</td><td align='right'> 75.35</td><td align='right'> —</td><td align='right'> —</td></tr> +<tr><td align='left'>1885, Close</td><td align='right'> 78.53</td><td align='right'> —</td><td align='right'> —</td></tr> +<tr><td class='bb'></td><td class='bb'></td><td class='bb'></td><td class='bb'></td></tr> +</table></div> + +<p>It is not only clear from this comparison that the prices of 1885 have been the +lowest in our history for twenty-five years, but that there has been a general tendency +toward lower prices. From 1866 to 1871, and again from 1872 until 1885, prices +fell quite steadily. Indeed, had not the short crop of 1881 caused a temporary advance +in the spring of 1882, the range of January, 1880, would have been the highest +of the later period, and it might have been said that the present era of declining +prices had continued with little intermission for six years. None will fail to +observe how swift and sharp the advances have been—about 12 per cent. from +November, 1871, to May, 1872, and 25½ per cent. from October, 1878, to January, 1880. +<span class='pagenum'><a name="Page_p040" id="Page_p040">[40]</a></span> +But these spasmodic advances, by which the general tendency downward is interrupted, +only serve to make it more clear that prices have been tending irresistibly +toward a lower level than that of 1860, not only during the period of paper depreciation, +but since gold has been the measure of value.</p></div> + +<p>In order to show that the United States are not alone in their complaint +of falling prices, but that the complaint is universal, and in +order that we may have before us a broad view of the field of general +prices, I submit a table showing the relation to each other of the +range of prices from 1809 to 1849, by decades, based on the prices of +fifty leading articles of commerce, prepared by the distinguished +Professor Jevons and published in the London Economist for May +8, 1869.</p> + +<p>Taking the range of prices of 1849 as a datum line (the range for +that year being the lowest of the century) Mr. Jevons works backward +to 1809, when the revolt of the South American colonies against +the authority of Spain shut off at a blow the supplies of the precious +metals, and set on foot a money famine from which the world knew +no relief till the discovery of the mines of California and Australia.</p> + +<p>Professor Jevons's figures are as follows, the prices of 1849 being +represented by 100:</p> + +<p class="caption"><i>Relation of prices, 1809 to 1849, by decades, those for 1849 being rated at +100.</i></p> + +<div class='center'> +<table border="0" cellpadding="2" cellspacing="0" summary="" width="40%"> +<tr><td align='center'>1809</td><td align='center'>245</td></tr> +<tr><td align='center'>1819</td><td align='center'>175</td></tr> +<tr><td align='center'>1829</td><td align='center'>124</td></tr> +<tr><td align='center'>1839</td><td align='center'>144</td></tr> +<tr><td align='center'>1849</td><td align='center'>100</td></tr> +</table></div> + +<p>From these figures it will be observed that the fall from 1809 to 1849, +a period of forty years, was as 245 to 100, or 59 per cent.</p> + +<p>By the next table which I submit, that of Dr. Soetbeer, it will be +seen that the general range of prices rose gradually from 1849 to +1873, in the last of which years the figures bore to those of 1849 the +relation of 138 to 100. It has never been denied that this rise was due +to the increase in the world's money supply by the yield of the precious +metals from the mines of California and Australia, the effects of +which, however, as will be seen by the table, were not felt on prices +till 1853—five years after John Marshall's discovery of the yellow +metal in the tail-race at Sutter's mills. Yet, because it interferes with +the pecuniary interests of a large and influential class, it is vehemently +denied that the fall of prices since 1873 is due to a decrease in +the volume of the money caused by the demonetization of silver in +that year throughout the western world.</p> + +<p>From and after that year, as will be perceived by an examination of +the figures; in other words, from the year when one-half the world's +money supply was deprived of the money function, we find an almost +uninterrupted decline of prices. The figures of 1873 and 1885 will be +seen to bear to one another the relation of 138 to 108, or a fall of 22 +per cent. in twelve years. Should the fall continue at that rate without +interruption—and there is no reason apparent why it should not, +we shall in forty years have witnessed a decline of 72 per cent. in +the general range of prices—a decline considerably greater than that +from 1809 to 1849. And these are not the figures of bimetallists or +silver "theorists," but of pronounced advocates of the single standard +of gold. Where, I would inquire, is the fall of prices to stop?</p> + +<p>Dr. Soetbeer's table represents the general average price of one-hundred +leading articles of commerce each year for a period of nearly +forty years. He takes as a basis the general range of gold prices pre<span class='pagenum'><a name="Page_p041" id="Page_p041">[41]</a></span>vailing +between 1847 and 1850, and calling that range 100, shows the +relative standing toward it of the general range of prices for subsequent +years, up to 1885.</p> + +<p class="caption"><i>Relation of prices by years from 1849 to 1885, the general range of +prices of 1849 being rated at 100.</i></p> + + +<div class='center'> +<table border="0" cellpadding="2" cellspacing="0" summary="" width="40%"> +<tr><td align='center'>1849</td><td align='center'>100.00</td></tr> +<tr><td align='center'>1851</td><td align='center'>100.21</td></tr> +<tr><td align='center'>1852</td><td align='center'>101.69</td></tr> +<tr><td align='center'>1853</td><td align='center'>113.69</td></tr> +<tr><td align='center'>1854</td><td align='center'>121.25</td></tr> +<tr><td align='center'>1855</td><td align='center'>124.23</td></tr> +<tr><td align='center'>1856</td><td align='center'>123.27</td></tr> +<tr><td align='center'>1857</td><td align='center'>130.11</td></tr> +<tr><td align='center'>1858</td><td align='center'>113.52</td></tr> +<tr><td align='center'>1859</td><td align='center'>116.34</td></tr> +<tr><td align='center'>1860</td><td align='center'>120.98</td></tr> +<tr><td align='center'>1861</td><td align='center'>118.10</td></tr> +<tr><td align='center'>1862</td><td align='center'>122.65</td></tr> +<tr><td align='center'>1863</td><td align='center'>125.49</td></tr> +<tr><td align='center'>1864</td><td align='center'>129.28</td></tr> +<tr><td align='center'>1865</td><td align='center'>122.63</td></tr> +<tr><td align='center'>1866</td><td align='center'>125.85</td></tr> +<tr><td align='center'>1867</td><td align='center'>124.44</td></tr> +<tr><td align='center'>1868</td><td align='center'>121.99</td></tr> +<tr><td align='center'>1869</td><td align='center'>123.38</td></tr> +<tr><td align='center'>1870</td><td align='center'>122.87</td></tr> +<tr><td align='center'>1871</td><td align='center'>127.03</td></tr> +<tr><td align='center'>1872</td><td align='center'>135.62</td></tr> +<tr><td align='center'><b>1873</b></td><td align='center'><b>138.28</b></td></tr> +<tr><td align='center'>1874</td><td align='center'>136.20</td></tr> +<tr><td align='center'>1875</td><td align='center'>129.85</td></tr> +<tr><td align='center'>1876</td><td align='center'>128.33</td></tr> +<tr><td align='center'>1877</td><td align='center'>127.70</td></tr> +<tr><td align='center'>1878</td><td align='center'>120.60</td></tr> +<tr><td align='center'>1879</td><td align='center'>117.10</td></tr> +<tr><td align='center'>1880</td><td align='center'>121.89</td></tr> +<tr><td align='center'>1881</td><td align='center'>121.07</td></tr> +<tr><td align='center'>1882</td><td align='center'>122.14</td></tr> +<tr><td align='center'>1883</td><td align='center'>122.24</td></tr> +<tr><td align='center'>1884</td><td align='center'>114.25</td></tr> +<tr><td align='center'>1885</td><td align='center'>108.27</td></tr> +</table></div> +<p>Mr. Sauerbeck, also an advocate of the gold standard, and whose +work has the approval of the Statistical Society, takes as a datum +line the prices ruling from 1867 to 1870. Rating those at 100 he +finds that by 1873 prices had risen to 111, by 1886 they had fallen to +69, and by September, 1887, to 68.7. He declares the average prices +for the first nine months of 1887 to have been the lowest reached for +a hundred years.</p> + + +<p class="caption">BOTH GOLD AND SILVER VARIABLE IN VALUE.</p> + +<p>The fact that the metals have separated considerably since 1873, +and that silver bullion now sells at less than par value of $1.29 per +ounce, is taken to signify that silver has fallen—not that gold has +risen. This proceeds from the assumption that whenever a change +takes place in the relation between gold and any other article the +change must necessarily be in the other article. This assumption, +in turn, is based on the absurd idea that calling gold a "standard" +will insure it against change.</p> + +<p>Among political economists it is a well-recognized principle that +neither gold or silver is exempt from the universal application of +the law of supply and demand. That law governs gold and silver, +not only as commodities, but as money, and governs as well all +other kinds of money that may be used. And while the advocate of +the single gold standard is at all times ready to concede the truth of +this assertion as to silver, he is confident that it does not and can +not apply to gold; that the economic law which makes supply and +demand a regulator of value is suspended as to gold.</p> + +<p>That a metallic money, whether of gold or silver, is very far from +being stable is admitted by innumerable authorities, of whom I will +cite only a few.</p> + +<p>Dr. Adam Smith, in his "Wealth of Nations," book 1, chapter 5, +says:</p> + +<div class="blockquot"><p>Gold and silver, like every other commodity, vary in their value. The discovery +of the abundant mines of America reduced in the sixteenth century the +value of gold and silver in Europe to about a third of what it had been before. +This revolution in their value, though perhaps the greatest, is by no means the +only one of which history gives some account.</p></div><p><span class='pagenum'><a name="Page_p042" id="Page_p042">[42]</a></span></p> + +<p>And again:</p> + +<div class="blockquot"><p>Increase the scarcity of gold to a certain degree and the smallest bit of it may +be more precious than a diamond.</p></div> + +<p>John Locke, "Considerations, etc., in relation to money" (published +in 1691), says:</p> + +<div class="blockquot"><p>The greater scarcity of money enhances its price and increases the scramble; +there being nothing that does supply the want of it; the lessening of its quantity, +therefore, always increases its price and makes an equal portion of it exchange +for a greater of any other thing.</p></div> + +<p>Prof. Francis A. Walker, "Money," etc., page 210, says:</p> + +<div class="blockquot"><p>Gold and silver do, over long periods, undergo great changes of value and become +in a high degree deceptive as a measure of the obligation of the debtor of +the claim of the creditor. Thus Professor Jevons estimates that the value of +gold fell between 1789 and 1809, 46 per cent., that from 1809 to 1849 it rose 145 per +cent., while in twenty years after 1849 it fell again at least 20 per cent.</p></div> + +<p>Jevons, "Money and Exchange," chapter 6, says:</p> + +<div class="blockquot"><p>In respect to steadiness of value the metals are probably less satisfactory, regarded +as a standard of value, than many other commodities, such as corn.</p></div> + +<p>And again, in chapter 24 of the same work, he says:</p> + +<div class="blockquot"><p>We are too much accustomed to look upon the value of gold as a fixed datum +line in commerce; but in reality it is a very variable thing.</p></div> + +<p>Sir Archibald Alison (England, in 1815 and 1845), says:</p> + +<div class="blockquot"><p>The coining of gold and silver, which is universal in all civilised nations, and affixing +to them one definite and permanent value by authority of law, has no effect +whatever in preventing the fluctuations in the real value of the current coin of +the realm.</p></div> + +<p>Professor Laughlin, of Harvard, in his work on Political Economy +(page 72), says:</p> + +<div class="blockquot"><p>It is quite evident that the name dollar does not always have the same value, +although people often think it does. We get into the habit of using names without +thinking what they really mean. The 23.22 grains in a gold dollar may be exchanged +sometimes for more, sometimes for less, of other commodities. When it +is exchanged for less, its value has fallen relatively to all other commodities, and, +even if the name dollar remains the same, its value has fallen. One must then +offer more dollars than before for the same commodities. That is, when money +falls in value, prices rise; when money rises in value, prices fall.</p> + +<p>Now, we shall say a few words in regard to another function, a means of paying +long contracts, or debts which run over a long term of years.</p> + +<p>Suppose that I loaned you in 1880, $1,000 for twenty years. In that year the +$1,000 bought a certain quantity of corn, wheat, sugar, salt, wood, hats, and shoes. +In 1900, when you are to pay me back the $1,000 in money, if prices have changed, +you may give me back the same amount of money, but you will not return to me +the same purchasing power over other things. If for some reason prices have +fallen between 1880 and 1900, it will take less money to buy the same quantity as +before of corn, wheat, etc. If so, the $1,000 you return me in 1900 will be of more +value than the $1,000 I gave you, and it would be unjust to oblige you to give me +more than you borrowed. If, on the other hand, prices have risen, then the $1,000 +in money would buy me less than before, so that I should lose. * * * Hence, +the value of money (gold or silver) does not remain the same for any length of +time; and the precious metals, while they are very satisfactory for exchanges +which do not take very long to complete, can not serve as a proper measure of +value during a long term or years.</p></div> + +<p>Ricardo, the greatest authority on the gold standard, the financial +writer, more highly regarded throughout the world than any other +that has ever appeared in Great Britain, whose logical utterances +have never failed to attract the attention of mankind, stated the true +condition of things in 1810, and advocated the true policy for Great +Britain.<span class='pagenum'><a name="Page_p043" id="Page_p043">[43]</a></span></p> + +<p>In his "Proposals for an Economical and Secure Currency," Ricardo +makes the following statement, which I commend to the careful +attention of the advocates of the single gold standard:</p> + +<div class="blockquot"><p>While a standard is used, we are subject to only such a variation in the value +of money as the standard itself is subject to; but against such variation there is +no possible remedy, and late events have proved that, during periods of war, when +gold and silver are used for the payment of large armies distant from home, those +variations are much more considerable than has been generally allowed. This +admission only proves that gold and silver are not so good a standard as they have +been hitherto supposed—that they are themselves subject to greater variations +than it is desirable a standard should be subject to. They are, however, the best +with which we acquainted.</p> + +<p>If any other commodity less variable could be found, it might very properly be +adopted as the future standard of our money, provided it had all the other qualities +which fitted it for that purpose; but while these metals are the standard the +currency should conform in value to them, and whenever it does not, and the market +price of bullion is above the mint price, the currency is depreciated. This +proposition is unanswered and is unanswerable. Much inconvenience arises from +using two metals as a standard of our money; and it has long been a disputed +point whether gold or silver should by law be made the principal or sole standard +of money. In favor of gold it may be said, that its greater value under a small +bulk eminently qualifies for a standard in an opulent country.</p></div> + +<p>And I may here remark that it requires an opulent country to +maintain the single gold standard, and the country does maintain it +at very great expense. I do not wonder that he thought an opulent +country, a creditor country, the only one that ought to adopt it, for +no other country can afford to adopt it. But, like many people who +in attempting to improve their condition in society attempt luxuries +and extravagances which they can not maintain and which force +them back into the ranks from which they came, so nations in attempting +to establish the gold standard may find themselves reduced +from opulence to poverty.</p> + +<p>Ricardo continues:</p> + +<div class="blockquot"><p>But this very quality subjects to greater variations of value during periods of +war or extensive commercial discredit, when it is often collected and hoarded, and +may be urged as an argument against its use. The only objection to the use of +silver as the standard is its bulk, which renders it unfit for the large payments +required in a wealthy country; but this objection is entirely removed by the substituting +of paper money as the general circulation medium of the country. Silver, +too, is much more steady in its value in consequence of its demand and supply +being more regular; and, as all foreign countries regulate the value of their money +by the value of silver, there can be no doubt that on the whole silver is preferable +to gold as a standard, and should be permanently adopted for that purpose.</p></div> + +<p>Innumerable additional citations from authors of repute could be +adduced to fortify this position.</p> + +<p>It will thus be seen that the fluctuations in the value or purchasing +power of both gold and silver have always been admitted by +scientific writers. They were so well understood three centuries +ago that in Queen Elizabeth's reign (1576) the British Parliament +directed that the rents reserved in the long leases of certain college +lands should be payable, not in money, but in wheat. And at various +times during the past seventy years propositions have been +formulated to substitute for gold and silver as a standard of value +for deferred payments, a tabular statement of the prices of the principal +articles of commerce, to be made by official authority and +published from time to time, by the average of which the fluctuations +of gold could be ascertained and proper allowance made for +them in the settlement of time transactions. Professor Jevons, Prof. +Francis A. Walker, and other political economists of note have expressed +approval of such a tabular standard for long-time contracts, +as securing greater equity than would gold as a measure of values.</p> + +<p>Those who now assert that silver has fallen and that gold has not<span class='pagenum'><a name="Page_p044" id="Page_p044">[44]</a></span> +risen in value arrive at this conclusion by a very safe process of +reasoning. First, to show that silver has fallen they measure it by +gold alone, without reference to the general range of prices; and +then to prove that gold has not risen they make it the measure of +itself. An increase or decrease of the value of either can not be ascertained +by reference to the other, and certainly not by constituting +either of them a standard by which to judge itself. It would of +course be forever impossible to show any change in the value of gold +or silver, or of anything else, measuring it by itself. It is only by +looking at the relations which both metals bear respectively to a considerable +range of commodities generally dealt in as well as to each +other, that it can be ascertained with certainty what has happened.</p> + +<p>Not only upon consideration of all the facts I have given, but upon +the logic of the situation, it must be obvious that gold has risen and +will continue to rise in value as long as its volume decreases and the +demand for it increases. Since 1860, when 77 per cent. +of the combined yield of the two metals, it has diminished not only +in relative proportion to the yield of silver, but it has diminished +absolutely. For the five years ending with 1860 the yield of gold +throughout the world was $137,000,000 a year; for the five years +ending 1889 the yield was but $110,000,000 a year. If, as claimed +by the advocates of the single gold standard, an increase in the yield +of silver decreases the value of silver, by what system of logic can +they deny that a decrease in the supply of gold increases the value of +gold?</p> + +<p>In a late issue of the London Economist, that of April 26, 1890, I +find an editorial article relating to the recent discussion on bimetallism +in the British House of Commons. That article comments +somewhat sharply on Mr. Smith's assertion that "a conspiracy had +been formed among the financial class in Europe and America to get +rid of silver as full-valued money in order to increase the value of +gold, in which their revenues are paid." In the course of his comments +the editor, by "confession and avoidance," admits our whole +contention as to the rise of gold and the fall, as a natural consequence, +of the prices of commodities. He says:</p> + +<div class="blockquot"><p>It may not be amiss, however, to point out that the increase in the exchangeable +value of gold has been by no means such a gain to the financial class as he +in common with many others suppose; for advantage has been very largely taken +of it to cut down the return upon the capital which the financial classes have invested. +It has favored debt conversion schemes, and it has been one of the influences +that have caused the rate of interest in general to decline so decidedly, +that, all round, the yield of investments is now very appreciably lower than it was +fifteen years ago. The idea that the creditor class have realized unmixed gains +and the debtor class have suffered unmitigated losses by the alteration in the purchasing +power of gold is thus altogether fallacious. There has in their case, as +in all others, been a species of compulsory give and take. Each has gained and +each has lost something, and now that the process of readjustment has been carried +so far it would be unwise to the last degree to unsettle everything again by +such legislation as the bimetallists propose.</p></div> + +<p>The editor of the Economist is to be commended for at least one +thing. He does not quibble as to the most important point in the +bimetallic controversy. He frankly admits that gold has risen, and +does not, as some others do, attribute the fall of prices to improvements +in methods of production.</p> + +<p>He also admits that coincidently with and caused by the rise in +gold there has been a great decline in the rates of interest, and, +strangely, claims that the debtor is compensated for the rise in the +value of money by the ability to convert the debt into one bearing a +lower rate of interest, or, as he calls it, resorting to "debt-conversion +schemes."<span class='pagenum'><a name="Page_p045" id="Page_p045">[45]</a></span></p> + +<p>He does not inform us how any compensation can be made to the +the debtor for the time the debt has been running, as to which it can +not be converted, nor for the enhanced amount exacted from the current +earnings of labor by the rise in the value of money to pay taxes +and the expenses of Government, nor for the loss entailed on the +debtor whose property is mortgaged on long time, where the holder of +the mortgage refuses to convert it into an obligation bearing a lower +rate of interest than originally contracted for. He suggests no method +by which to make whole those who have lost their property through +sheriff's sale by reason of falling prices and the rise in the value of +money. Neither does he state how long it will be before the next +confiscation is to take place, by reason of the continued operation of +the cause that produced the first. But he has been frank enough +to concede (what is never disputed except when the money question +is under discussion) that there has been a rise in the exchangeable +value of gold, and conceded its natural sequence, a fall in the +rates of interest.</p> + + +<p class="caption">IMPROVED METHODS OF PRODUCTION.</p> + +<p>In order to justify their position it becomes necessary for the advocates +of continued demonetization of silver to insist that the fall +of prices is not due to the rise in the value of gold but to improved +methods of production.</p> + +<p>Whatever the cause to which it is to be ascribed, the undoubted +fact is that a fall of prices throughout the western world set in +concurrently with the reduction of the world's money volume by the +demonetization of silver. It was well understood at the time by +those who had given consideration to the subject that demonetization +alone would effect that result. This is manifest from an article +in the London Daily News, a paper of exceedingly large circulation, +quoted in the Journal of the Statistical Society of England for 1873, +page 395. Referring to the adoption of the single gold standard by +Germany the Daily News said:</p> + +<div class="blockquot"><p>As the annual new supply of gold throughout the world is reckoned at little +more than £20,000,000 ($100,000,000), and the usual demand for miscellaneous purposes +is very large, it follows that, if the German Government perseveres in its +policy, the strain upon the existing stocks and currencies of gold will be most severe. +For a time, at least, unless the annual production of gold should suddenly increase, +the money markets of the world are likely to be perturbed by this bullion scarcity, +and the fall in the value of gold——</p></div> + +<p class="noidt">which means the rise in prices that for some time had prevailed;</p> + +<div class="blockquot"><p class="noidt">of which so much has been heard, will be checked or reversed.</p></div> + +<p>The yield of gold did not "suddenly increase," and the intelligent +prophecy of the Daily News was fully realized, not merely to the +extent of a check to the rising prices; (or, as it is styled by the Daily +News, a check to the "fall in the value of gold,") but to the extent +of an immediate rise in the value of that metal, and a persistent and +deplorable fall in the general range of prices.</p> + +<p>This prophecy that the "fall in the value of gold" would be +checked by the demonetization of silver; or, better, reversed by it, +was welcome reading to the creditor and income classes of England +and of the world.</p> + +<p>That it was "reversed," and the value of gold appreciated, is as +plain as that; one being subtracted from two, there is but one for a +remainder.</p> + +<p>The immediate fall in prices of commodities was the natural, the +anticipated, and the deliberately intended result of that movement.</p> + +<p>But we are now assured that this fall is not due to any monetary<span class='pagenum'><a name="Page_p046" id="Page_p046">[46]</a></span> +cause, but to the greater efficiency of machinery in the production +of commodities.</p> + +<p>No advocate of an increased volume of money denies that in a few +departments of manufacture there have since 1873 been improvements +tending to economize labor and cheapen products; but they +emphatically deny and challenge proof that improvements of mere +detail in the manufacture of some articles will account for the extraordinary +fall of price since that time in almost every product of industry. +We are also told that the development of the system of transportation, +both by land and sea, have tended to lower the price of commodities +to the consumers. I grant it. But we had those improvements +before 1873.</p> + +<p>The inventions made between 1873 and 1890, the period of falling +prices, were no more important or radical in their effect on industry,—tended +no more to cheapen commodities, than did those +from 1850 to 1873, the period of rising prices. Indeed the inventions +which preceded 1873 were as a whole much greater in scope, more +far-reaching in result, and more revolutionary in their effects on industry, +than those of the later period. All the great basic improvements +had been invented, and had been incorporated with the industrial +system of all civilized countries long before 1873, if we +except the electric light and the telephone. We have had the steam +engine, the cotton gin, and the spinning-jenny since the last century; +the railroad and the steam-ship since the '30's; the telegraph, the +mechanical reaper, steam-plow, and other agricultural labor-saving +devices since the '40's; the sewing machine since 1854, and the Bessemer +process and steel rail since 1857.</p> + +<p>The forced construction into which their position drives the advocates +of the gold standard is well illustrated in a recent number of +a magazine of high standing in this country, in which I find the +following:</p> + +<div class="blockquot"><p>But if it be demurred, does not a debt incurred, say, ten years ago require to-day +more wheat or iron for its satisfaction than the sum could have bought when +first borrowed? Certainly, but the wheat or iron represents no more labor now +then it did ten years ago, and its increase in quantity stands for the new efficiency +which applied science has bestowed on toil.</p></div> + +<p>Observe how deftly the writer places iron, in the manufacture of +which there have admittedly been some improvements, in the same +category with wheat, in the production of which the improvements +within any recent period have been of the most trifling character. +It will be exceedingly difficult to convince the farmers of this country, +whose mortgages are eating up the proceeds of their labor, +that the enormous decrease in the debt-paying power of their products +is made up to them in "the new efficiency which applied +science has bestowed on toil."</p> + +<p>As well might it be maintained that the rise of prices and the concurrent +wave of universal prosperity, experienced after 1849, was not +due to the increase of the world's money stock from the mines of California +and Australia, but to some sudden, unaccountable, and complete +loss of all improvements theretofore attained in the arts and +industries of the world.</p> + + +<p class="caption">EFFECT OF CHECKS AND CLEARING-HOUSES.</p> + +<p>But it is said that checks, notes, drafts, bills of exchange, and the +facilities afforded by clearing-houses effect such economy in the use +of money that it goes farther now than formerly, and that therefore +so large a volume of money as was formerly needed is not needed at +present. It is sought thus to escape the conclusion that the fall of<span class='pagenum'><a name="Page_p047" id="Page_p047">[47]</a></span> +prices is the result of a shrinkage of the volume of money, or at least +to imply that if the money volume has been shrinking the agencies +mentioned have served to mitigate, if not entirely to counteract, the +effects of such shrinkage. This is in substance to claim that however +contracted the money volume of a country may become, the +system of checks and clearing-houses—on the principle of the compensating +balance—will expand in a proportion directly corresponding +to the contraction of the currency; that the greater the reduction +of the volume of money in the country the greater the increase in +the transactions of the clearing-house.</p> + +<p>Nothing more absurd could be conceived. If this view were correct, +it would make no difference whether the amount of money in +circulation were large or small; a million dollars would be as efficacious +as $100,000,000, and even one dollar as effective as a million dollars; +and if we suppose the last dollar to have disappeared from circulation, +then, according to the sweeping and pretentious claims set +up for the clearing-house system, we could dispense altogether with +the use of money and rely exclusively on checks, drafts, and bills of +exchange.</p> + +<p>That checks and clearing-houses are a great convenience to commerce +is not denied. They serve to a certain extent to make more +effective the money volume of a country. By the clearing house system +of off-setting the demands of the several banks, one against the +other, and requiring payment in cash of the balances only, large +amounts of loans may remain undisturbed and greater stability of +industrial conditions be secured.</p> + +<p>Clearing-houses, however, were not established primarily for the +convenience of commerce, but for the profit of bankers. Whatever +amounts of money are economized by means of those institutions +bring compensation, by way of interest, to the banks. We may, +therefore, rely upon their being utilized to the utmost under all circumstances.</p> + +<p>But, however much checks and clearing-houses may economize +the use of money, they are no novel devices. They are not some +untried and newly-invented instrumentalities. Checks have been +in use ever since the invention of banks. The clearing-house system +was established in this country in 1853. Contributing, as it does +contribute, to the pecuniary profit of the banks by making possible +an economy in the use of invested money, which the banks have +loaned out, and on which they are drawing interest, the system has +grown with the growth of the business of the country. It will +undoubtedly continue to grow, but with no greater acceleration +than population and business will warrant.</p> + +<p>As it has been a part of the banking machinery of the country for +nearly forty years, and during that period has been utilized to the +utmost, the conditions of its existence and utilization have long since +become static conditions. The demands for currency have borne relation +to the needs of business, with clearing-house facilities in full +sight and operation; and at all seasons, in the adjustment of prices, +those facilities have had full force and effect. Assuming that at any +given period the business of the country were conducted with a given +volume of money, <i>plus</i> a certain volume of clearing house exchanges, +then, at a later period, an increase of business would demand an increase +in the volume of money, <i>plus</i> a proportionate increase in the +volume of clearing-house exchanges; having had this system in +full and effective use for forty years, it is as absurd to ascribe +the <i>fall</i> of prices in the last half of that period to any economy in<span class='pagenum'><a name="Page_p048" id="Page_p048">[48]</a></span> +the use of money effected by the clearing-house system as it would +be to ascribe to the same cause the directly opposite effect—the <i>rise</i> +of prices—that took place in the first half of the same period.</p> + + +<p class="caption">THE PROOF AFFORDED BY THE FALL OF INTEREST.</p> + +<p>If further proof were needed that gold has risen in value, it is, as +I maintain, to be found in the coincident fact of a decrease of rates +of interest on first-class securities. That decrease has kept even +step and pace with the rise in the value of money.</p> + +<p>The rise in the value of gold, as shown by comparison with large +numbers of articles of commerce, has been between 35 and 40 per +cent. The rate of interest on gilt-edged securities shows a corresponding +decline. But unfortunately for the struggling people of the +country, the fall in the rate of interest on farm mortgages and on +property remote from money centers has been nothing like so great, +nor has it been so great as the fall in the price of agricultural lands, +and in the products of labor.</p> + +<p>I hold, therefore, that a new axiom should be added to the science +of political economy; namely, that as the purchasing power of money +increases, its income producing power decreases, and in about the +same ratio; and conversely, when the purchasing power of money +decreases, its income-producing power increases. In other words, +when prices rise interest rises; when prices fall interest falls. When +money is increasing in volume and decreasing in value, prices rise, +and its investment in productive enterprises becomes more profitable, +and as a consequence interest rises. When it is decreasing in volume +and consequently increasing in value, prices fall, investment in +property and productive enterprises become precarious and unprofitable, +and, as a consequence, it avoids them, and seeks investment +in bonds and gilt-edged securities, aptly termed "money-futures," +which for years have been increasing and continue to increase.</p> + +<p>Some thirteen years ago I indulged in a little prophecy concerning +the rates of interest. I take no great credit to myself for it, but +in 1877—four years after the demonetization of silver—before the +rates of interest had materially fallen, and when the same contention +was made that is made now, namely, that money was cheap because +interest was low, and that the policies of the country were +wise because our credit stood on such a high plane, I submitted to +Congress the report of the Monetary Commission, from which I +quote:</p> + +<div class="blockquot"><p>Money can be borrowed readily only upon such securities as bonds which are +based on the unlimited tax-levying power of the Government, or upon the bonds +and stocks of first-class trunk-lines of railroad corporations, whose freight and +fare rates are practically a tax upon the entire population and resources of the +regions which they traverse and supply. The competition among capitalists to +loan money on these more ample securities has become very keen, and such securities +command money at unprecedentedly low rates. These low and lowering rates +of interest, instead of denoting financial strength and industrial prosperity, are a +gauge of increasing prostration. Large accumulations of money in financial centers, +instead of being caused by the overflow of a healthful circulation, or even a +proof of a sufficient circulation, are unmistakable evidence of a congested condition +caused by a decreasing and insufficient circulation. The readiness with +which Government bonds bearing a very low rate of interest are taken, instead of +showing that the credit of the Government has improved, is melancholy evidence +of the prostrated condition to which industry and trade have been reduced.</p> + +<p>There need be no haste in refunding the public debt at the rates now proposed +and considered low. Unless the progress of the commercial world in the policy of +contracting money by demonetizing silver is checked, bonds bearing a much lower +rate of interest than any yet offered will be gladly accepted by capitalists here and +in Europe. When the money stock is diminishing and prices are falling, the lender +not only receives interest, but finds a profit in the greatly increased value of the +principal when it is returned to him. A loan of money made in 1809, if repaid in 1848,<span class='pagenum'><a name="Page_p049" id="Page_p049">[49]</a></span> +would have been repaid with an addition of 145 per cent. in the purchasing power +of principal and interest, besides all the interest paid. Those who have loaned +money to this Government since 1861 have already received nearly as much in the +increased value of their principal as in interest, and all the probabilities are, in +respect to the four per cent. thirty-year national bonds now being negotiated, if +they are redeemed in gold, that more profit will be made by the augmentation in +the value of principal through interest. Indeed the signs of the times are, that +the bonds of a country possessing the unbounded resources and stable institutions +of the United States, payable in gold at the end of thirty years without any interest +whatever, would, through the increase of the value of that metal, prove a most +profitable investment.</p></div> + +<p>All the facts of the situation to-day fully bear out the statements +I then made.</p> + +<p>So determined are the advocates of the single gold standard in +defending the wisdom of its maintenance that facts whose existence +would at ordinary times be readily admitted, are, during a discussion +of the money question, pointedly denied. For example, within +the past few weeks we have seen in various eastern newspaper contributions +from prominent writers taking direct issue with the advocates +of silver as to the prevalence of general distress throughout +the country. They declare that there is no such distress, assert that +they have looked for it in vain, and derisively inquire where it is.</p> + +<p>Perhaps the best authority I can cite in response to this inquiry +is the principal commercial daily journal of the east, the New York +Journal of Commerce, itself one of the most ardent and uncompromising +advocates of the gold standard. In an editorial article in +its issue of January 11, 1890, that journal said:</p> + +<p class="caption">FAILURES IN BUSINESS.</p> +<div class="blockquot"> +<p>The public have been startled by the announcement that during the year 1889 +there were 11,719 business failures in the United States, against 10,587 in 1888 and +9,740 in 1887. The estimated liabilities of last year's insolvents were $140,359,000 +and the assets were $70,599,000, against $120,242,000 liabilities and $61,999,000 assets +for the failures of the previous year. Thus the failures in 1889 were more in number +and far greater in liabilities than for 1888, and the proportion of assets to the +obligations shows that the total insolvency was more disastrous. Why in a season +of profound peace, with no blighting frosts or withering droughts, and the +most abundant yield from the field, forest, and mine so many in business have +gone to the wall, no one seems able to answer. Many have tried their hand at a +solution of the problem, and not one, as far as we can discover, has satisfied even +himself with the result of his investigations.</p></div> + + +<p class="caption">HAS SILVER FALLEN?</p> + +<p>In order to ascertain whether silver really has or has not fallen +in value, it is necessary that all the facts be taken into account +and the situation looked at from a correct point of view. If a person +be seated in a boat that is headed to the stream and wishes to test +whether or not he is making headway he must keep in view not the +stream, but the shore. The occupant of a railroad car who observes +a moving train on a contiguous and parallel track, frequently thinks +his own train at a stand-still, when in fact it may be in motion.</p> + +<p>Whenever a rise or fall appears to take place in the price of any +one article or commodity, that is to say whenever a difference takes +place in the relation which that article bears to money—all other +commodities remaining unchanged—such difference must naturally +and properly be attributed to changed conditions affecting the commodity, +and not to a change in the value of money. But wherever +there is a fall in prices throughout the whole range of commodities +then it is clear that this change is mainly due to a change in the value +of money. Such however is the force of education and habit that +the masses of the people are slow to suspect any change in the +standard by which they have been accustomed to gauge or measure +all values. Indeed they find it difficult to understand how un<span class='pagenum'><a name="Page_p050" id="Page_p050">[50]</a></span>der +any circumstances any change can take place in it. Having +their eyes fixed on the standard, and on that alone, they naturally +attribute to the articles measured, and not to the standard, any +difference that may seem to arise in the relation they bear to each +other.</p> + +<p>But the apparent is not always the real. Nothing seems more +warranted by the evidence of our senses than that the earth is a +stationary object, while the sun revolves around it. For thousands +of years the world was convinced of the truth of the geocentric +theory of the universe, and millions of men have lived and died in +the confident belief that this planet was immovably fixed in space, +while the sun was a rolling and ever-shifting body. Even yet, +among the mass of mankind, so ever-present is this impression, +derived from ocular demonstration, that in spite of the declarations +of science, the world continues in common use the phrases +which originally described the process that took place, as men understood +it; hence we speak of the "rising" and the "setting" +of the sun. In the same way we speak of the rise or fall in the +value of commodities, without being particular to note whether the +change that has taken place is strictly a change in the value of the +article itself or a change in the money with which its value is measured. +Perhaps I can best illustrate my meaning by an allegory:</p> + + +<p class="caption">THE BATTLE OF THE STANDARDS. THE ALLEGORY OF THE CLOCKS.</p> + +<p>In an ancient village there once stood a gold clock, which, ever +since the invention of clocks had been the measure of time for the +people of that village. They were proud of its beauty, its workmanship, +its musical stroke, and the unfailing regularity with which it +heralded the passing hours. This clock had been endeared to all +the inhabitants of the village by the hallowed associations +with which it was identified. Generation after generation it had +called the children from far and wide to attend the village school, +its fresh morning peal had set the honest villagers to labor; its noon-day +notes had called them to refreshment; its welcome evening +chime had summoned them to rest. From time immemorial, on all +festive occasions, it had rung out its merry tones to assemble the +young people on the green; and on the Sabbath it had advertised +to all the countryside the hour of worship in the village church. +So perfect was its mechanism that it never needed repair. So +proud were the people of this wonderful clock that it became the +standard for all the country round about, and the time which it +kept came to be known as the gold standard of time, which was universally +admitted to be correct and unchanging.</p> + +<p>In the course of time there wandered that way a queer character, +a clockmaker, who being fully instructed in the inner workings of +time-tellers, and not having inherited the traditions of that village, +did not regard this clock with the veneration accorded to it by the +natives. To their astonishment he denied that there was really any +such thing as a gold standard of time; and in order to prove that the +material, gold, did not monopolize all the qualities characteristic +of clocks, he placed alongside the gold clock, another clock, of silver, +and set both clocks at 12 noon. For a long time the clocks +ran along in almost perfect accord, their only disagreement being +that of an occasional second or two, and even that disagreement +only at rare intervals, such as might naturally occur with the best +of clocks. But the Council of the village, in their admiration for +the gold clock, passed an ordinance requiring that all the weights +(the motive power) of the silver clock, except one, be removed from<span class='pagenum'><a name="Page_p051" id="Page_p051">[51]</a></span> +it, and attached to those of the gold clock. Instantly the clocks began +to fall apart, and one day, as the sun was passing the meridian, the +hands of the gold clock were observed to indicate the hour of 1, while +those of the silver clock indicated 12.15. At this everybody in the +village ridiculed the silver clock, derided the silver standard, and +hurled epithets at the individual who had had the temerity to +doubt the infallibility of the gold standard.</p> + +<p>Finally, the divergence between the clocks went so far that it +was noon by the gold standard when it was only 6 a. m. by the +silver standard, so that those who were guided by the gold standard, +not withstanding that it was yet the gray of the morning, insisted +on eating their mid-day meal, because the gold standard indicated +that it must be noon. And when the sun was high in the +heavens, and its light was shining warm and refulgent on the dusty +streets of the village, those who observed the gold standard had already +eaten supper and were preparing for bed.</p> + +<p>But this state of things could not last. It was clear that the difference +between the standards must be reconciled, or all industry +would be disarranged and the village ruined.</p> + +<p>Discussion was rife among the villagers as to the cause of the difference. +Some said the silver clock had lost time; others that both +clocks had lost time, but the silver clock more than the gold; while +others again asserted that both clocks had gained time, but that the +gold clock had gained more than the silver clock.</p> + +<p>While this discussion was at its height a philosopher came along +and observing the excitement on the subject remarked, "By measuring +two things, one against the other, you can never arrive at any +determination as to which has changed. Instead of disputing as to +whether one clock has lost or another gained would it not be well to +consult the sun and the stars and ascertain exactly what has happened."</p> + +<p>Some demurred to this because, as they asserted, the gold standard +was unchanging and was always right no matter how much it might +seem to be wrong; others agreed that the philosopher's advice should +be taken. Upon consulting the sun and the stars it was discovered +that what had happened was that both clocks had gained in time +but that the gain of the silver clock had been very slight, while that +of the gold clock had been so great as to disturb all industry and +destroy all correct sense of time.</p> + +<p>Notwithstanding this demonstration, there were many who adhered +to the belief that the gold standard was correct and unchanging, +and insisted that what appeared to be its aberrations were not +in reality due to any fault of the gold clock, but to some convulsion +of nature by which the solar system had been disarranged and the +planets made to move irregularly in their orbits.</p> + +<p>Some of the people also remembered having heard at the village +inn, from travellers returning from the East, that silver clocks were +the standard of time in India and other barbarous countries, while +in countries of a more advanced civilization gold clocks were the +standard. They therefore feared that the use of the silver clock +might have the effect of degrading the civilization of the village by +placing it alongside India and other barbarous countries. And although +the great mass of the people really believed, from the demonstration +made, that the silver standard of time was the better one, +yet this objection was so momentous that they were puzzled what +course to pursue, and at last advices were consulting the manufacturers +of gold clocks as to what was best to be done.<span class='pagenum'><a name="Page_p052" id="Page_p052">[52]</a></span></p> + +<p>Now our gold standard men are in the position of those who first +refuse to look at anything beyond the two things, gold and silver, +to see what has happened, and who, when it is finally demonstrated +that all other things retain their former relations to silver, still persist +that the law which makes gold an unchanging standard of +measure is more immutable than that which holds the stars in their +courses. If they will compare gold and silver with commodities in +general, to see how the metals have maintained their relations, not +to one another but to all other things, they will find that instead of +a fall having taken place in the value of silver, the change that has +really taken place is a rise in the value of both gold and silver, the +rise in silver being relatively slight while that of gold has been +ruinously great. And those who do not shut their eyes to the truth +must see that the change of relation between the metals has been +effected by depriving silver of its legal-tender function, as the want +of accord between the clocks was brought about by depriving the +silver clock of a portion of its motive power—the weights. The +only thing that has prevented a greater divergency between the +metals is the limited coinage by the United States—the single weight +that, withheld from the gold clock, prevented its more ruinous +gain.</p> + + +<p class="caption">THE PURCHASING POWER OF SILVER IN 1873 AND 1889.</p> + +<p>If I can show that for a period of seventeen years, since its demonetization +in 1873, silver has lost none of its purchasing power, none of +its command over commodities; that is to say, if I can show that 412½ +grains of silver to-day, uncoined, and shorn by hostile legislation of +its principal element of value—the money use—will buy as much as +would 412½ grains of silver in 1873 (when our silver dollar bore a premium +over gold) of all the articles that enter into the daily consumption +of the people, it must be manifest that silver has not fallen in +value.</p> + +<p>I present a table which I shall ask to have inserted in the <span class="smcap">Record</span> +as part of my remarks, showing the purchasing power of 412½ grains +of silver, nine-tenths fine, in 1873 and 1890, respectively, so far as +concerns several leading articles of daily consumption.</p> + +<p>The table is as follows:</p> + +<p class="caption"><i>Comparative purchasing power of 412½ grains silver, nine-tenths fine, +in 1873 and 1890, respectively.</i></p> + +<div class='center'> +<table border="0" cellpadding="4" cellspacing="0" summary="" rules="cols"> +<tr><th class="bbox">412½ grains silver would buy—</th><th class="bbox">1873.</th><th class="bbox">1890.</th></tr> +<tr><td align='left'> Wheat bushels</td><td align='center'> 0.87</td><td align='center'> 0.88</td></tr> +<tr><td align='left'> Corn do</td><td align='center'> 1.84</td><td align='center'> 1.97</td></tr> +<tr><td align='left'> Cotton pounds</td><td align='center'> 5.32</td><td align='center'> 6.71</td></tr> +<tr><td align='left'> Beef, mess barrels</td><td align='center'> 0.05</td><td align='center'> 0.05</td></tr> +<tr><td align='left'> Pork, mess do</td><td align='center'> 0.07</td><td align='center'> 0.06</td></tr> +<tr><td align='left'> Lard pounds</td><td align='center'> 12.89</td><td align='center'> 11.75</td></tr> +<tr><td align='left'> Butter do</td><td align='center'> 5.40</td><td align='center'> 4.63</td></tr> +<tr><td align='left'> Cheese do</td><td align='center'> 8.69</td><td align='center'> 6.94</td></tr> +<tr><td align='left'> Sugar do</td><td align='center'> 9.80</td><td align='center'> 10.34</td></tr> +<tr><td align='left'> Eggs dozen</td><td align='center'> 4.27</td><td align='center'> 5.38</td></tr> +<tr><td class="bb"></td><td class="bb"></td><td class="bb"></td></tr> +</table></div> + +<p>From this table it conclusively appears that while in 1873 the standard +silver dollar of 412½ grains, which then bore a premium over +the gold dollar, would purchase four-fifths of a bushel of wheat; to-day +the same quantity of silver, without the advantage of coinage<span class='pagenum'><a name="Page_p053" id="Page_p053">[53]</a></span> +and merely as bullion, will also buy four-fifths of a bushel of wheat—the +only difference between the figures for the two years being that +at the present time 412½ grains of silver bullion, as will be seen by the +table, will buy a fraction of a bushel more than would 412½ grains of +coined silver in 1873.</p> + +<p>If, then, silver has fallen, it is manifestly not in its relation to wheat.</p> + +<p>By the same table it is shown that the silver dollar of 1873, containing +412½ grains of silver, nine-tenths fine, would purchase one +and eight-tenths bushels of corn; in 1890, a like number of grains of +silver, uncoined and estimated at its gold value, will purchase one +and nine-tenths bushels of corn. Here again the advantage is +slightly in favor of the 412½ grains of silver bullion of 1890. This +shows conclusively that silver has not fallen in its relation to corn.</p> + +<p>The figures of the same table show that in 1873 a coined silver dollar +of 412½ grains would buy 5<small><sup>1</sup>⁄<sub>3</sub></small> pounds of cotton; to-day 412½ grains +of uncoined silver will buy 6¾ pounds of cotton. From this it appears +that silver has not fallen relatively to cotton, the great staple +of universal use, but that, on the contrary, it has advanced somewhat +in its purchasing power when compared with that article.</p> + +<p>In order to present the question from another point of view I submit +another table showing the number of grains of silver that are +required in 1890 and the number which were required in 1873 to buy +a bushel of wheat, a bushel of corn, &c., by which it will even more +clearly appear that silver has not fallen in value in respect to commodities.</p> + +<p class="caption"><i>Comparative purchasing power of silver bullion, in grains nine-tenths +fine, in 1873 and 1890, respectively.</i></p> + +<div class='center'> +<table border="0" cellpadding="4" cellspacing="0" summary="" rules="cols"> +<tr><th class='bbox'>Articles.</th><th class='bbox'>1873.<br />Legal tender.</th><th class='bbox'>1890.<br />Commodity.</th></tr> +<tr><td></td><td align='center'><i>Grains silver.</i></td><td align='center'><i>Grains silver.</i></td></tr> +<tr><td align='left'>Wheat per bushel</td><td align='center'> 474.3</td><td align='center'> 468</td></tr> +<tr><td align='left'>Corn do</td><td align='center'> 223.9</td><td align='center'> 209.25</td></tr> +<tr><td align='left'>Cotton per pound</td><td align='center'> 77.55</td><td align='center'> 61.42</td></tr> +<tr><td align='left'>Beef, mess per barrel</td><td align='center'> 8,662.5</td><td align='center'> 7,560</td></tr> +<tr><td align='left'>Pork, mess do</td><td align='center'> 5,465.62</td><td align='center'> 6,750</td></tr> +<tr><td align='left'>Lard per pound</td><td align='center'> 31.97</td><td align='center'> 35.1</td></tr> +<tr><td align='left'>Butter do</td><td align='center'> 76.31</td><td align='center'> 89.1</td></tr> +<tr><td align='left'>Cheese do</td><td align='center'> 47.44</td><td align='center'> 59.4</td></tr> +<tr><td align='left'>Sugar, refined do</td><td align='center'> 42.07</td><td align='center'> 39.82</td></tr> +<tr><td align='left'>Eggs per dozen</td><td align='center'> 96.52</td><td align='center'> 76.68</td></tr> +<tr><td class='bb'></td><td class='bb'></td><td class='bb'></td></tr> +</table></div> + +<p>From this table it will be seen that in 1873 it required 474 grains +of standard silver, in the form of coined dollars, to buy one bushel +of wheat; in 1890, only 468 grains of standard silver (and that merely +in bullion form, or in other words, at its market value) are required +to buy a bushel of wheat. This does not show that silver has fallen +in value, in its relation to wheat, but, on the contrary, that it has +risen in value.</p> + +<p>In 1873 it required 224 grains of silver to buy a bushel of corn; +to-day only 209 grains of silver are required to buy the same quantity. +These figures fail to prove that silver has fallen in value, in +its relation to corn. On the contrary, again, it has risen.</p> + +<p>In 1873 a pound of cotton could not be had for less than 77½ grains +of silver; to-day the same pound of cotton can be bought for 61<span class='pagenum'><a name="Page_p054" id="Page_p054">[54]</a></span> +grains of silver. Silver, therefore, has not fallen, but risen in value +in its relation to cotton.</p> + +<p>In 1873 96 grains of silver were required to buy one dozen eggs; +to-day only 76 grains of silver are required to buy the same quantity +of eggs. Silver therefore has not fallen but risen in value, in its relation +to eggs.</p> + +<p>These comparisons might be continued with the same results as to +a great majority of the articles entering into general use.</p> + +<p>These figures demonstrate that in its relation to all commodities +that enter into the daily consumption, silver has not fallen in +value, but, as is clearly seen, while holding a remarkably steady +ratio to commodities, has slightly increased in value, as is shown +by the fact that a less number of grains of the metal are to-day +required to purchase the same quantity of the commodities mentioned +than were required in 1873.</p> + +<p>In relation to what, then, is it that silver has fallen? As it has +not fallen in relation to commodities, there remains but one thing +in relation to which it can be said to have fallen, and that one thing +is gold. The phrase "the fall of silver" is the ingenious and cunning +invention by which it is sought to cast on that metal the discredit +of depreciation rather than subject gold to the suspicion of +any change whatever. The term to correctly describe what has +taken place would be "the rise of gold;" but that term is scrupulously +avoided, as implying that gold does not remain immovably +fixed. That gold has risen, however, admits of no doubt, except to +those who willfully shut their eyes to facts of common observation. +The true test of the increasing or decreasing value of any one thing +is not to compare it with any other one thing, but with a large range +of commodities generally dealt in. It is not of so much importance +to know how much gold can be bought with a given amount of silver, +as it is to know how much bread, how much meat, and how +much clothing can be bought, and how much of all the things that +are necessary to the comfort and well-being of the people can be +bought with that amount of silver.</p> + + +<p class="caption">PROOF THAT GOLD HAS RISEN.</p> + +<p>In order to demonstrate that gold has risen, I will bring side by +side the gold prices of a number of leading commodities of commerce +in 1873 and 1889, respectively, and the amount in silver bullion +that in 1889 would purchase an equal quantity of the same commodities, +by a table prepared at my request by the Bureau of Statistics +of the Treasury Department.<span class='pagenum'><a name="Page_p055" id="Page_p055">[55]</a></span></p> + +<p class="caption"><i>Average export prices of the following named domestic commodities for the +years ending June 30, 1873 and 1889.</i></p> + +<div class='center'> +<table border="0" cellpadding="4" cellspacing="0" summary="" rules="cols"> +<tr><th class='bbox' rowspan='3'>Commodities.</th><th class='bbox' rowspan='3'>Unit of<br />quantity.</th><th class='bbox' colspan='4'>Average price of the year ending June 30 —</th></tr> +<tr><th class='bbox' colspan='2'>1873.</th><th class='bbox' colspan='2'>1889.</th></tr> +<tr><th class='bbox'>In currency.</th><th class='bbox'>In gold.</th><th class='bbox'>In gold.</th><th class='bbox'>In silver bullion.</th></tr> +<tr><td align='left'>Bacon and hams</td><td align='center'> Pounds</td><td align='right'> $0.088</td><td align='right'> $0.077</td><td align='right'> $0.084</td><td align='right'> $0.108</td></tr> +<tr><td align='left'>Butter</td><td align='center'> do</td><td align='right'> .211</td><td align='right'> .184</td><td align='right'> .166</td><td align='right'> .212</td></tr> +<tr><td align='left'>Cheese</td><td align='center'> do</td><td align='right'> .130</td><td align='right'> .113</td><td align='right'> .092</td><td align='right'> .118</td></tr> +<tr><td align='left'>Corn</td><td align='center'> Bushels</td><td align='right'> .617</td><td align='right'> .539</td><td align='right'> .508</td><td align='right'> .650</td></tr> +<tr><td align='left'>Cotton:</td><td align='center'></td><td align='right'></td><td align='right'></td><td align='right'></td><td align='right'></td></tr> +<tr><td align='left'> Unmanufactured, not sea Island</td><td align='center'> Pounds</td><td align='right'> .188</td><td align='right'> .164</td><td align='right'> .099</td><td align='right'> .127</td></tr> +<tr><td align='left'> Cloth, colored</td><td align='center'> Yards</td><td align='right'> .166</td><td align='right'> .145</td><td align='right'> .065</td><td align='right'> .083</td></tr> +<tr><td align='left'> Cloth, uncolored</td><td align='center'> do</td><td align='right'> .162</td><td align='right'> .142</td><td align='right'> .068</td><td align='right'> .087</td></tr> +<tr><td align='left'>Iron and steel:</td><td align='right'></td><td align='right'></td><td align='right'></td><td align='right'></td><td align='right'></td></tr> +<tr><td align='left'> Bar-iron</td><td align='center'> Cwt</td><td align='right'> 5.480</td><td align='right'> 4.784</td><td align='right'> 3.183</td><td align='right'> 4.074</td></tr> +<tr><td align='left'> Pig-iron</td><td align='center'> do</td><td align='right'> 2.498</td><td align='right'> 2.181</td><td align='right'> .953</td><td align='right'> 1.220</td></tr> +<tr><td align='left'> Railroad-bars</td><td align='center'> do</td><td align='right'> 4.114</td><td align='right'> 3.592</td><td align='right'> 2.169</td><td align='right'> 2.776</td></tr> +<tr><td align='left'>Lard</td><td align='center'> Pounds</td><td align='right'> .092</td><td align='right'> .080</td><td align='right'> .076</td><td align='right'> .097</td></tr> +<tr><td align='left'>Leather</td><td align='center'> do</td><td align='right'> .253</td><td align='right'> .221</td><td align='right'> .185</td><td align='right'> .237</td></tr> +<tr><td align='left'>Rice</td><td align='center'> do</td><td align='right'> .071</td><td align='right'> .062</td><td align='right'> .055</td><td align='right'> .070</td></tr> +<tr><td align='left'>Sugar:</td><td align='right'></td><td align='right'></td><td align='right'></td><td align='right'></td><td align='right'></td></tr> +<tr><td align='left'> Brown</td><td align='center'> Pounds</td><td align='right'> .092</td><td align='right'> .080</td><td align='right'> .056</td><td align='right'> .072</td></tr> +<tr><td align='left'> Refined</td><td align='center'> do</td><td align='right'> .116</td><td align='right'> .101</td><td align='right'> .066</td><td align='right'> .084</td></tr> +<tr><td align='left'>Wheat</td><td align='center'> Bushels</td><td align='right'> 1.312</td><td align='right'> 1.145</td><td align='right'> .874</td><td align='right'> 1.119</td></tr> +<tr><td align='left'>Wheat-flour</td><td align='center'> Barrels</td><td align='right'> 7.565</td><td align='right'> 6.604</td><td align='right'> 4.703</td><td align='right'> 6.020</td></tr> +<tr><td class='bb'></td><td class='bb'></td><td class='bb'></td><td class='bb'></td><td class='bb'></td><td class='bb'></td></tr> +</table></div> + +<p>What does an examination of this table show? It shows beyond +dispute that gold has risen in value.</p> + +<p>A bushel of wheat that, according to the figures of the Bureau of +Statistics cost $1.14 in gold or silver in 1873, and which, as will be +seen by the table, still commands $1.12 in silver bullion, will to-day +bring only 87 cents in gold.</p> + +<p>A pound of cotton that in 1873 cost the purchaser, in gold or silver, +16 cents, and which still commands 13 cents in silver bullion, will +bring only 10 cents in gold.</p> + +<p>A pound of cheese that in 1873 cost the purchaser 11<small><sup>1</sup>⁄<sub>3</sub></small> cents in +gold or silver, and which now brings 12 cents in silver bullion, will +bring only 9 cents in gold.</p> + +<p>A barrel of flour which in 1873 cost the purchaser $6.60 in gold or +silver, and which to-day commands $6.02 in silver bullion, will bring +but $4.70 in gold.</p> + +<p>A pound of butter that in 1873 brought 18.4 cents in gold or silver, +and now commands 20.8 cents in silver bullion, will bring but 16.6 +cents in gold.</p> + +<p>Notwithstanding that 412½ grains of uncoined silver will to-day buy +as much of the leading articles of commerce as the coined gold dollar +would buy in 1873, yet the advocates of the gold standard characterize +it as a 72-cent dollar. Then the gold dollar of 1873 was a 72-cent dollar. +If the gold dollar of to-day be an honest and equitable dollar, that of +1873, which was worth much less, was a swindling and dishonest one; +and if gold continues to advance as it has been advancing, and with +the declining output of that metal there is no reason why it should<span class='pagenum'><a name="Page_p056" id="Page_p056">[56]</a></span> +not, it will be but a short time before any other kind of dollar whose +value may be equal to that of the present gold dollar will be stigmatized +as a swindling 72-cent dollar. There never was a dollar +coined that did not legally and practically contain 100 cents. But +the creditors stigmatize a dollar of the value of the gold and silver +dollar of 1873 as a 72-cent dollar. May not the debtors, with much +more propriety, denounce the gold dollar of to-day as a 140-cent +dollar?</p> + +<p>According to the admissions of the royal commission of England, +the gold dollar of to-day is to the producers of this country, measured +by their products, already at a premium of between 30 and 40 per cent. +over the gold dollar of 1873. The advocates of the gold standard have +no sympathy with our farmers and manufacturers who have to pay, in +commodities, a premium of 30 to 40 per cent. on gold, to meet their engagements, +but express extreme anxiety at the bare possibility that a +few importers might have to pay even a small premium in any form. +They insist that the money system of a population of 65,000,000, shall, +like an inverted pyramid, be made to rest upon its apex in order to enable +a few importers, most of whom are residents of foreign countries, +to make their payments abroad in gold.</p> + +<p>Verily, Mr. President, the single gold standard is an expensive +luxury for our people to maintain.</p> + +<p>Those who deride silver as a money-metal indulge in feeble attempts +at sarcasm by inquiring why we do not advocate the use of tin and +brass as money. They speak and write as though the idea of using +silver as money were a recent discovery or invention of people engaged +in silver mining. They also ignore the fact that the standard +silver dollar of the United States, which, with much satisfaction, they +stigmatize as a 72-cent dollar, requires a gold dollar to obtain it. It +is worth a gold dollar in London, in Berlin, in Vienna, in Saint Petersburg, +in Madrid, in Havana, and in all countries having commercial +relations with the United States. It can at once be exchanged into +the money of any country with only the slight deduction of cost of +shipment to this country—as is the case in the United States with +notes of the Bank of England, which are redeemable in gold.</p> + +<p>Our silver dollar is not money in foreign countries—and it is to our +advantage that it is not—for were it money anywhere else than in +this country, we could not rely on its remaining here to maintain that +steadiness of prices indispensable to prosperity. But if any of our +silver dollars are found abroad, let no one suppose he can get them +by tendering 412½ grains of silver bullion for each dollar. He will find +it will cost him precisely as much gold as it passes for in the United +States.</p> + + +<p class="caption">SOME EFFECTS OF THE RISE OF GOLD.</p> + +<p>If a cotton planter in 1873 owed $10,000 he could then have paid it +with 60,975 pounds of cotton. To-day, by reason of the increased +command which gold has over commodities, it would take 101,010 +pounds of cotton to pay that $10,000; not withstanding that the +money in which the debtor has paid the interest has each year become +more valuable than it was at the time he contracted to pay it.</p> + +<p>The cotton manufacturer of the East who in 1873 owed $10,000 +could then have paid it with 70,422 yards of uncolored cotton cloth; +to-day owing to the rise in the value of gold it would require 147,059 +yards to pay that debt, without taking into account the amount lost +by the debtor in the greater sacrifice he had year by year to make to +pay the interest.</p> + +<p>The farmer of the North and West who in 1873 owed $10,000 could<span class='pagenum'><a name="Page_p057" id="Page_p057">[57]</a></span> +then have paid it with 8,733 bushels of wheat; to-day it would require +11,446 bushels of wheat to liquidate that debt, though he, too, has +year by year been "cinched" through the progressive increase in the +value of the money in which the interest has been paid. Or he could, +in 1873, have paid his debt with 1,514 barrels of flour; to-day it would +take 2,126 barrels of flour to pay the same debt.</p> + +<p>The property of the country is fast passing into the hands of the +creditors, and if the iniquitous system is not reversed the condition +of our American farmers will be that of the farmers of gold-standard +countries. Instead of owning their farms they will be tenants +and rent-payers—a condition but little in advance of that which +prevailed in feudal days.</p> + +<p>Machiavelli, describing a turbulent period in the history of Florence, +said:</p> + +<div class="poem"><p>The people perished, but the brigands throve.</p></div> + +<p>The brigandage of the Middle Ages, whether in Italy or elsewhere, +was a criminal defiance of law, but it was pursued at some risk, and +under manifest disadvantages. The brigand took his life in his hands. +He knew that his calling was unlawful; and, although ruthless in his +work, the method by which he exacted ransom of his occasional victim +was less destructive to the prosperity of the community than +the legalized brigandage of to-day by which, through a vicious system +of money, the great mass of the people are despoiled of their +property. The distinguishing characteristic of the brigandage of +the nineteenth century is that it scrupulously observes all legal +forms, and is conducted in the name of honor, honesty, good morals +and "sound finance." Mortgages are foreclosed only in accordance +with law, and the unearned increment which results from the increased +and increasing value of the money is transferred from the +debtor to the creditor, with punctilious regard for the statutes.</p> + +<p>The demands of the brigand were enforced with guns and pistols; +those of the creditor are enforced with bonds and mortgages; both +exactions cruel and unjust, one by violence, the other by law. But, +in the latter case, so indirect is the method of operation that many +of those who are benefited by it are unaware of the perpetration of +any wrong. So subtle is the process that the change seems to be +only a change in the price of commodities, and thousands of men +who would scorn consciously to exact from any one more than a +just return for money loaned are beneficiaries of this vicious and +ruinous system.</p> + +<p>With regard to the great body of the working masses it is sometimes +said they have no cause for complaint, that their condition now +is better than ever before.</p> + +<p>But, Mr. President, it is not enough that men are better off than +they have been. When we reflect that nine-tenths of the inventions +and improvements constituting all the material features of the civilization +of this century have been made by working men, it is manifest +that they are entitled to much more of the comforts and convenience +of life than are now accessible to them. By watchful, repeated, +and aggressive efforts through their trade organizations, the +working men in many branches have been enabled to keep wages from +sinking, and occasionally to secure an advance; but, during a period +of falling prices, what is gained in this way by those who are kept +at work is lost to the working class as a whole by the remission to +idleness of part of their number.</p> + +<p>The statisticians who seem to be employed by some propaganda to<span class='pagenum'><a name="Page_p058" id="Page_p058">[58]</a></span> +prove by figures that prosperity prevails, point exultantly to the +fact that the wages of the working people seem constantly to have +increased while prices are falling, and they cite this to prove that +low prices are consistent with prosperity. They leave entirely out +of the account the large numbers of workmen who of necessity are +relegated to idleness on account of the lack of profit in business.</p> + +<p>If you go into the workshops of any large manufacturing enterprise, +while prices are low and lowering, and ask the managers what +they now do when a strike occurs among the workmen, they will tell +you they find it impossible to shut down, because they have contracts +extending through time that they must fill, but, they add, "We pay +the wages demanded and we reduce the number of the employed."</p> + +<p>If there are a thousand workmen employed, getting $2 each per +day, that would be a wage fund of $2,000 a day. If, when prices +fall and business becomes dull, the employer should want to reduce +the pay of each workman to $1.50 a day, and if the workmen, by +striking, should prevent that decrease, and if, then, 25 per cent. of +their number should be discharged, the loss to the working class, as +a body, and to the community at large, would be the same as though +the wages were reduced to $1.50 a day. Until these people who present +statistics can show us how many laborers are left out of employment +there is no possibility of arriving at any correct conclusion as to +what the wage fund is and how much wages are paid.</p> + +<p>The loss to society is much greater when 25 per cent. of the people +are unemployed than if all continued at work upon a 25 per cent. reduction +of wages, because the relegation to idleness of 25 per cent. +of the workmen reduces the producing force, and lessens correspondingly +the aggregate annual production.</p> + + +<p class="caption">THE INTEREST OF THE MINING STATES IN THE REMONETIZATION OF SILVER.</p> + +<p>Those who in the Senate and in the other House of Congress, represent +mining constituencies are taunted with the selfish purpose +of advancing the interests of their own States at the expense of those +of the country. It is sought to discredit the State which I have the +honor in part to represent on this floor, on the ground that the people, +being largely silver miners, have a personal interest in the remonetization +of silver.</p> + +<p>The silver miners, Mr. President, need no defense here or elsewhere. +They have asked no favors from the Government, and ask none now. +They are bold, adventurous, and self-reliant men, who have wandered +across alkaline deserts, and over pathless mountains, braved +the assaults of hostile savages, the miasma of the Isthmus and the +storms of the Cape, and have planted the flag of a high civilization +on the western confines of this Republic. No more patriotic or public-spirited +class of citizens can be found within the borders of the +Union. Their business is an honorable one. When they entered +upon it they, in common with other citizens, had the warrant of +time, and the authority of all writers and thinkers on political economy, +for the belief that silver was, and would ever be, a money metal, +entitled to that full credit which from time immemorial had been +accorded to it. Silver, equally with gold, had been consecrated by +all the ages to the money use, and was dedicated to such use by the +Constitution of the United States.</p> + +<p>When the Constitution declared that Congress should have power +"to coin money and regulate the value thereof" and that "no State +shall * * * make anything but gold and silver coin a tender in payment +of debts," it warranted the belief on the part of all who adopted +the calling and undertook the business of mining, that gold and silver<span class='pagenum'><a name="Page_p059" id="Page_p059">[59]</a></span> +would continue to be money metals in the sense in which they had +been for thousands of years in the past. The silver miners were warranted +in presuming that when the Constitution esteemed so highly +the legal-tender function in the two metals, gold and silver, as that +it prohibited the States from making anything a legal tender except +coin of those two metals, it would not warrant the Congress of the +United States in taking from one of those metals the power of legal +tender and conferring that imperial function exclusively on the other. +Silver mining is a business requiring for its successful prosecution +skill, experience, and energy, while nine-tenths of the gold of the +world has come from placers; requiring neither organization, capital, +nor skilled labor.</p> + +<p>The production of gold is much more a matter of accident and much +more liable to fluctuation than is the case with silver. The silver +miners therefore had a right to believe that so long as 23.22 grains of +pure gold should be entitled to recognition as one dollar, 371.25 grains +of pure silver would continue to be entitled to like recognition as one +dollar, and would possess the legal-tender function as such, for the +liquidation of all debts, public and private. On the strength of this +warranty of the Constitution, and of the unbroken experience of the +ages, large sums of money were invested in mining property and in +the employment of labor to develop the mines of the country. On the +strength of this belief and conviction, shared in by all the people of +the United States, that gold and silver would both remain the money +metals of the world, debts to an enormous extent were incurred, and +it was confidently believed that both metals would for all time be +available for the payment of those debts.</p> + +<p>The silver-miners had learned from the history of mining, as well as +from hard and bitter experience, that the mines might at any moment +cease to yield, in which case their occupation would be gone and the +capital invested would be a total loss. But they did not suppose that +the verdict of all time would be reversed, or that the implied warranty +of the Constitution of the United States would be disregarded. They +did not believe that either one of the money metals would ever be +demonetized. And if a doubt had entered their minds on that subject, +they would naturally suppose that gold rather than silver would +be demonetized, gold being too limited in quantity to answer alone +the purposes of money in a rapidly advancing civilization; its yield +being uncertain and capricious and the prospect of a continued and +sufficient supply becoming less from year to year.</p> + +<p>But, Mr. President, the degree of special interest which the mining +States have in this measure is not to be compared with that of +the other States of the Union.</p> + +<p>According to the report of the Director of the Mint, the total quantity +of silver produced in the United States in the eleven years from +1878 to 1888 inclusive was 406,210,000 fine ounces. According to the +same authority the commercial value of that silver was $436,260,000, +and the coinage value $525,145,000. A very simple process of arithmetic +shows that the difference between the commercial and the +coinage value of that silver was $88,885,000, or an average of $8,080,544 +each year. Assuming that amount to have been the annual difference +between the coinage and commercial value of silver for the five +years preceding 1878, we must add to the $88,885,000 the sum of +$40,402,220, making a total of $129,287,220 as the amount which the +silver miners, not of Nevada but of the whole United States in the +seventeen years ending 1889, lost by the demonetization of silver.</p> + +<p>Having thus demonstrated in dollars and cents the degree of self<span class='pagenum'><a name="Page_p060" id="Page_p060">[60]</a></span>ishness +which, as is charged, is the motive of the miners in advocating +the remonetization of silver, let us glance at the degree of selfishness +which may be said to impel other classes of the community to advocate +the same cause.</p> + + +<p class="caption">THE INTEREST OF THE NON-MINING STATES IN REMONETIZATION.</p> + +<p>The price of cotton for the year 1873, in gold or silver (then of +equal power), was 16.4 cents per pound. The price in 1889 was 9.9 +cents.</p> + +<p>The yield of cotton for 1889 was 7,000,000 bales, or 3,500,000,000 +pounds.</p> + +<p>Had not silver been demonetized that cotton would have brought +as good a price to-day as it did in 1873. At the price of 1873 the account +would have stood 3,500,000,000 pounds, at 16.4 cents, $574,000,000. +At the price of 1889 the account stands 3,500,000,000 pounds, +at 9.9 cents, $345,500,000, showing a loss in debt-paying and tax-paying +power on cotton alone (only one article of merchandise) in the +single year 1889, by reason of the fall in prices caused by the demonetization +of silver, of $227,500,000.</p> + +<p>Having shown that the loss to the silver miners by the discount +on silver for the seventeen years from 1873 to 1889 was less than +$130,000,000, it will be seen that the loss in one single year to the +cotton planters of the United States is greater by $90,000,000 than +the total loss for the entire seventeen years to the silver miners of +the country.</p> + +<p>But inasmuch as the cotton crop of 1889 was exceptionally large, +I will, for the purpose of my computation, discard it, and assume +instead that an average yield for the years between 1873 and 1889 +would be 5,000,000 bales per annum—which is a fair average and by +no means high—5,000,000 bales, of 500 pounds each, are equal to +2,500,000,000 pounds.</p> + +<p>At the price of 1873 the result of each year would be 2,500,000,000 +pounds, at 16.4 cents, $410,000,000.</p> + +<p>According to the figures given by the Bureau of Statistics the average +price received each year of the seventeen was 13.1 cents per +pound; 2,500,000,000 pounds, at 13.1 cents per pound, equal $327,000,000, +showing a difference of $83,000,000; that being the average each +separate year for seventeen years, or a total sum for the entire period +of $1,411,000,000, which represents the loss in debt- and tax-paying +power suffered by the cotton planters by reason of the demonetization +of silver.</p> + +<p>This is the enormous tribute which has been exacted of the cotton +industry of this country in behalf of the gold "standard," and of +those who, for their own pecuniary advantage, cunningly induced +the Congress of the United States to demonetize silver. This is the +sum which the planters of this country have lost in debt-paying and +tax-paying power by that mad act of folly. As will be seen at a +glance, it is a loss vastly in excess of that suffered by the silver States +in the discount on the price of silver bullion.</p> + +<p>So that, if the silver miners are taunted with having a personal +interest in the success of the movement for the full remonetization +of silver, the cotton planter must be placed in the same category, +and with ten-fold more reason.</p> + +<p>A like computation with regard to wheat will show a loss in debt-paying +and tax-paying power of not less than $100,000,000 a year to +the farmers of the North and West, by reason of the demonetization +of silver—a total of $1,700,000,000 in the article of wheat alone in +seventeen years.<span class='pagenum'><a name="Page_p061" id="Page_p061">[61]</a></span></p> + +<p>Thus a loss, wholly unnecessary, of more than $3,000,000,000 in +debt-paying and tax-paying power is shown to have been inflicted +on the farmers and cotton planters of this country.</p> + +<p>In comparison with this enormous loss to farmers and planters, +how paltry is the loss of $8,000,000 a year suffered by the silver +miners.</p> + +<p>But, however large the direct loss to the debtors and to the country +by reason of falling prices, the losses that are indirect are of infinitely +greater magnitude, and stand out like a great mountain of +wrong superimposed upon the most deserving class in the community, +whose interests it should be the paramount duty of Government +to protect, a wrong more calamitous in its consequences than +any of the multitudinous wrongs which a shrinking volume of money +inflicts upon society.</p> + + +<p class="caption">THE ENORMOUS LOSS OF POTENTIAL WEALTH THROUGH INVOLUNTARY IDLENESS.</p> + +<p>The political economist, Mr. President, deals with property <i>in esse</i>, +and producers employed. I propose for a moment to deal with property +<i>in posse</i> and producers unemployed. The wealth which the political +economist discusses is realized wealth; that to which I now +briefly invite your serious consideration is the wealth that might +be, and would be, brought into existence were the energies of all +the people utilized. For, while it has attracted but little attention +from writers on economic science, it will be found upon examination +that the non-employment of its members is incomparably the greatest +loss which an increase in the value of money and the consequent disorganization +of industry inflicts on society.</p> + +<p>The great writers and thinkers on economic subjects discuss with +care the elements that enter into the production and distribution of +wealth. They follow in detail the manufactured article through +all its stages, from the crude material to the finished product; and, +when completed, they conduct it through the intricate channels by +which it reaches the hands of the consumer. The greatest consideration +is bestowed upon the labor employed and the wealth resulting +therefrom, but scarcely any thought is given to the immeasurable +mass of potential wealth not produced, but lying latent in the brains +and hands of the millions who are condemned to involuntary idleness.</p> + +<p>While no mere sum in arithmetic can represent the enormous loss +suffered by a nation through this cause, let us see whether we can +arrive by figures at an approximate conception, at least, of the loss of +wages which it entails upon the working masses, and the corresponding +loss of wealth to the country.</p> + +<p>The most thorough and painstaking investigation into the conditions +of labor in this country has been that which for many years +has been conducted by the Massachusetts Bureau of Labor. Its work +has been universally admitted to be free from bias, and devoid of all +attempt to establish any special hobby, or to force, by figures, the +proof of any preconceived theory.</p> + + +<p class="caption">SOME STATISTICS OF THE UNEMPLOYED.</p> + +<p>An examination of the work of that bureau shows that, in 1887, +there were 816,470 persons engaged in wage earning in the State of +Massachusetts. Of those, 241,589, or nearly 30 per cent., were idle +during some part of the year—ranging from one to six or more +months. The average of their unemployed time was about four +months, or one-third of the year.</p> + +<p>Now, 240,000 people idle for one-third of their whole time is equivalent, +in money loss, to the total idleness of one-third of that num<span class='pagenum'><a name="Page_p062" id="Page_p062">[62]</a></span>ber, +or 80,000 people, for the entire year. The whole number of +persons enrolled for labor in the State being 816,470, this is equivalent +to the total idleness of one-tenth of the people engaged in all +occupations.</p> + +<p>If a number equivalent to one-tenth of the people in all occupations +are idle twelve months in the year in a State like Massachusetts, +where labor is better organized, better classified, and more efficiently +ordered than elsewhere in this country, it can not be presumed that +any other State of the Union will exhibit a smaller proportion of +unemployed laborers.</p> + +<p>The Census Report of 1880 states the number of persons employed +in all occupations as 17,392,099, out of a population of 50,155,783, or +a percentage of 34.68 of the entire population. Our present population +being not less than 65,000,000, if we assume, as we are warranted +in doing, that a like proportion of the population is engaged in occupations +of all sorts, it is clear that we have to-day a working population +of 22,254,000 persons.</p> + +<p>Accepting as correct the careful deductions from the Reports of +the Massachusetts Bureau of Labor that a number equivalent to ten +per cent. of the people are always out of employment we find that at +the present time there are 2,250,000 persons involuntarily idle in this +country. How faintly does the term "the army of the unemployed" +describe this vast number of eager and willing men seeking in vain +the opportunity to earn a livelihood for themselves and families.</p> + +<p>Were the business of the country in the active condition in which +it could not avoid being if our money system were perfectly adjusted +to industry, and if employers were competing for laborers +with the same degree of eagerness that laborers are competing for +employment, the average wage of a day for a working man would +not be less than $2. This would make but the moderate sum of $50 a +month for each workman, which, under the most thrifty system of +household economy, can not be considered more than enough for +the support of an American family.</p> + + +<p class="caption">THE WAGE LOSS FROM INVOLUNTARY IDLENESS.</p> + +<p>By multiplying the number of persons thus shown to be idle, by +this moderate average wage, we arrive at the amount of $4,500,000 +as the daily sum which is lost to the wage earners of the United +States by the non-employment of labor. This is a money loss of +$27,000,000 a week, $117,000,000 a month, or the amazing sum of +$1,404,000,000 a year. A saving of this sum for a year and three +months would pay our entire national debt. This being the loss in +a single year, we can imagine (making due allowance for difference +in the numbers of the population) how stupendous has been the loss +to the nation during the past seventeen years, a loss exceeding incomparably +all other losses whatsoever.</p> + +<p>If a crop of wheat be lost, it is appropriately noted as a public misfortune; +if a city be burned down, or swept away by flood, it is +properly regarded as a great national calamity, and the sympathies +of all the people go out in unstinted measure to the sufferers. But +here is a loss as real and as deplorable as any ever caused by flood +or fire—a loss whose consequences, while not so apparent, are as destructive +to national prosperity as the burning of ten cities, or the +occurrence of one hundred and forty Johnstown disasters every year, +and always to the people who can least afford it. Yet it passes +almost wholly unheeded except by the sufferers.</p> + +<p>A war that would take a million of men from industry and deprive +the country of the production which would result from their<span class='pagenum'><a name="Page_p063" id="Page_p063">[63]</a></span> +labors, would be regarded as a calamity of unsurpassable magnitude, +yet a shrinkage in the volume of money relatively to population +withdraws much more than that number from productive +pursuits, and without the salutary discipline and restraints of military +life, subjects them to conditions of which the unavoidable results +are poverty and crime.</p> + +<p>Imagine, Mr. President, the unhappiness, discontent, and even despair +implied in the mere statement that 2,000,000 men are constantly +out of employment; (or, what amounts to the same thing, that three +times that number are idle for four months in the year!) Imagine, +what it means to the working people of this country to be deprived +of the enormous sum of $1,400,000,000 a year.</p> + +<p>But, aside from the effect on the individual, what benumbing consequences +are entailed upon the nation by the idleness of so large a +number of its people. The loss of the wealth which the labor of those +men might have created is a loss never to be retrieved. When the +money volume of a country is sufficient to keep prices from falling, +and thus to encourage capital to seek productive enterprises, in +which labor is employed, every willing man is kept at work, and no +country can enjoy any higher degree of prosperity than when all its +people are employed, and the products of their labor equitably distributed.</p> + +<p>Much, I believe, of the prejudice against silver money arises from +an idea, conscientiously entertained, by many, that gold money has +the greater "intrinsic value." I shall, therefore, Mr. President, at +the risk of being a little abstruse, discuss that point.</p> + + +<p class="caption">THE MEANING OF VALUE.</p> + +<p>No discussion of the subject of money can be intelligently conducted +without a correct conception of the meanings attaching to the +terms employed. For a misconception of those meanings is the root +of much of the confusion and difficulty by which the subject is surrounded.</p> + +<p>"Value" is a word which, of necessity, is more frequently used—and, +I will add, more frequently misused and misunderstood—than +any other employed in the discussion of economic science. Volumes +have been written upon it, and yet, from the daily misapplication of +the word in leading magazines and newspapers, it is evident that its +meaning is very imperfectly understood.</p> + +<p>The idea involved in the word "Value" is so broad and pervasive +that within the limits of a speech it would be impossible to discuss +it in all its bearings. I shall not, therefore, at this time, do more +than present what I conceive to be a basic definition of it.</p> + +<p>Value is human estimation placed upon desirable objects whose +quantity is limited, and whose acquisition involves sacrifice. In +order that an object may have value it must not only be the subject +of human desire, but there must be a limitation of its quantity, and +its acquisition must demand a sacrifice from him who would obtain +it. The term "intrinsic value" is used by many writers with a total +disregard of the idea involved in the word <i>value</i>. An article may +have estimable qualities that are intrinsic, but no article whatever +can have intrinsic value. Its "value" is the mental estimation of +its qualities, as modified by the limitations of its quantity and the +amount of sacrifice necessary to obtain it. In other words, value is +subjective, not objective. In economic discussion, however, value +is treated as though it resided in the object, rather than in the mind, +and while, for convenience, I may occasionally use it in that sense, +it is important to bear in mind the distinction.<span class='pagenum'><a name="Page_p064" id="Page_p064">[64]</a></span></p> + +<p>In that acceptation, value is usually divided into value-in-use, +and value-in-exchange. Certain esteemed qualities of an object +may make it of great value-in-use; but unless its acquisition demand +sacrifice, it can have no value-in-exchange. It is only with +this class of value that economists deal. No matter how important +the intrinsic qualities of any article may be, if there be no limitation +of its quantity and its acquisition requires no sacrifice, it can have no +value in the sense in which the word "value" is used in political +economy. The air has qualities inestimable to mankind; it must be +regarded as incomparably the most useful of all the objects of +human desire; yet it has no value because there is no limitation +of its quantity. By reason of its universality and accessibility, air +requires no sacrifice to get it. If, however, circumstances should +render air limited in quantity it is conceivable that it might become +of surpassing value. A man confined in the "Black Hole" of Calcutta +would give a fortune for free access to air. So water, where +freely obtainable, without sacrifice, although indispensable to life, +has no value in the economic sense—no value in exchange. But +when not so obtainable, as in populous cities, where sacrifice of time +and labor would be necessary to obtain it from river, lake, or spring, +people pay for the convenience of having it in their homes. The indispensable +prerequisites of value in all objects are utility—either +actual or attributed—combined with limitation of quantity and the +sacrifice necessary to be made in order to obtain it.</p> + +<p>But value is not a property inhering in any article itself. It is not +intrinsic. If the value were inherent or intrinsic it could not be +taken away.</p> + +<p>To illustrate: A generation ago the cradle with which wheat was +harvested was said to possess intrinsic value. It was undoubtedly +one of the most useful of all the articles needed by man. All that +was then in that machine is in it still, yet the value is gone. Had +the value been something that was intrinsic, had it resided in the +object, and not in the mind, that cradle would still be worth all that +it ever was. So, on the other hand, an article may possess most +estimable qualities, but if those qualities are not known or recognized +by the human mind the article will have no value.</p> + +<p>A few years ago cotton seed had no value as an article of general +commerce. To-day it is exceedingly valuable, because it has been +found to possess estimable qualities not before suspected.</p> + +<p>Indeed so strongly does the idea of value rest upon the estimation +of the mind that it is not even necessary for an article to possess in +reality any desirable quality whatever in order to have value. It +will be sufficient if such quality is popularly attributed to it. Numbers +of instances could be cited in which there was present no element +of value except limitation of quantity, added to a mere belief, +or conception of the mind, that the article had desirable qualities. +Many will remember that a few years ago a herb called "Cundurango" +was introduced into this country from Central America. It +was generally believed to possess healing qualities in cases of cancer, +and so came to have great value. As soon as this popular illusion +was dispelled the article ceased to have even the slightest +value.</p> + +<p>Land being indestructible and irremovable, is believed to be the +embodiment of the idea of intrinsic value. Take, then, a lot on +Madison Avenue, New York; it is worth perhaps a thousand times +as much as a lot of equal size in a village remote from the city. +What proportion of its high price is derived from what is called its<span class='pagenum'><a name="Page_p065" id="Page_p065">[65]</a></span> +greater "intrinsic" value? A lot on that fashionable thoroughfare +has no intrinsic attribute, or quality, that is not equally the attribute +or quality of the village lot. The difference in its value, or, +more correctly, the difference in the estimation in which it is held, +as compared with that attaching to the village lot, is derived wholly +from circumstances that are extrinsic, not from qualities that are +intrinsic.</p> + +<p>The action of society in utilizing land in the neighborhood of the +city lot by building up around it gives that lot a value greater than +one of equal size elsewhere.</p> + +<p>But in order that a thing may subserve a useful or beneficent purpose +it is not necessary that the quality which enables it to subserve +that purpose should be intrinsic or inherent in the thing itself.</p> + +<p>To apply this reasoning to the subject under discussion—whatever +intrinsic qualities the metal, gold, may possess, they confer no force +whatever on gold-money.</p> + + +<p class="caption">WHAT IS MONEY?</p> + +<p>The money of a country is that thing, whatever it may be, which +is commonly accepted in exchange for labor or property and in payment +of debts, whether so accepted by force of law, or by universal +consent. Its value does not arise from the intrinsic qualities which +the material of which it is made may possess, but depends entirely +on the extrinsic qualities which law, or general consent, may +confer.</p> + +<p>Money is of transcendent importance to civilization. It is the +physical agency to which society has assigned the function of measuring +all equities, and it is the sole agency upon which that incomparable +function has been conferred. It is in terms of money that +society computes the material value of all human sacrifice, alike the +highest effort of genius and the daily toil and sweat of the millions +who labor.</p> + +<p>In order to measure equitably the natural and inevitable mutations +in the value of other things, money should itself be of unchanging +value. That is to say, any given amount of money should, so far as +human foresight can regulate it, require at all times an equal amount +of sacrifice for its acquisition. Thus, in the case of a contract +made to-day, requiring the payment of a dollar twelve months hence, +that dollar when due should exact from the debtor precisely that +amount of sacrifice, and no more, which would be required had he +paid the debt the day after contracting it.</p> + +<p>No one will deny that the most important quality that money +can possess is that it shall truthfully measure and state equities.</p> + +<p>As I have shown by the figures heretofore cited, gold has risen in +value between 30 and 40 per cent. since the demonetization of silver. +It is not therefore so faithful a measure of value as is silver, which +as illustrated by a variety of examples, has maintained almost undisturbed +its relation to commodities.</p> + + +<p class="caption">THE VALUE OF MONEY, AS SUCH, NOT IN THE MATERIAL BUT IN THE STAMP. MONEY +IS AN ORDER FOR PROPERTY AND SERVICES.</p> + +<p>The logic of the situation, and the reasoning of all the leading authorities +on money, lead irresistibly to the conclusion that its value +does not reside in the material, but in the stamp; in other words, +on the legal-tender function impressed on that material. It is an +order for property and services.<span class='pagenum'><a name="Page_p066" id="Page_p066">[66]</a></span></p> + +<p>Aristotle, writing of money, says:</p> + +<div class="blockquot"><p>Money by itself * * * has value only by law, and not by nature; so that a +change of convention between those who use it is sufficient to deprive it of all its +value and power to satisfy all our wants.</p></div> + +<p>And again he says:</p> + +<div class="blockquot"><p>But with regard to a future exchange (if we want nothing at present) money +is, as it were, our security that it may take place when we do want something.</p></div> + +<p>John Locke, in "Considerations," etc., regarding money, published in 1691, says:</p> + +<div class="blockquot"><p>Mankind, having covenanted to put an imaginary value upon gold and silver, by +reason of their durableness scarcity, and not being very liable to be counterfeited, +have made them, by general consent, the common pledges, whereby men are assured, +in exchange for them, to receive equally valuable things to those they +parted with, for any quantity of those metals; by which means it comes to pass +that the intrinsic value regard in those metals, made the common barter, is nothing +but the quantity which men give or receive of them; they having, as money, +no other value but as pledges to procure what one wants or desires.</p></div> + +<p>Baudeau, reputed one of the most eminent of an early school of +French economists, says:</p> + +<div class="blockquot"><p>Coined money in circulation is nothing, as I have said elsewhere, but effective +titles on the general mass of useful and agreeable enjoyment which cause the +well-being and propagation of the human race.</p> + +<p>It is a kind of a bill of exchange, or order payable at the will of the bearer.</p></div> + +<p>Adam Smith says:</p> + +<div class="blockquot"><p>A guinea may be considered as a bill for a certain quantity of necessaries and +conveniences upon all the tradesmen in the neighborhood.</p></div> + +<p>Jevons's "Money and Exchanges," chapter 8, says:</p> + +<div class="blockquot"><p>Those who use coins in ordinary business need never inquire how much metal +they contain. Probably not one person in two thousand in this kingdom knows, +or need know, that a sovereign should contain 123.27447 grains of standard gold.</p> + +<p>Money is made to go. People want coin, not to keep in their own pockets, but +to pass it off into their neighbors' pockets.</p></div> + +<p>Henry Thornton, in his work on Paper Credit, says:</p> + +<div class="blockquot"><p>Money of every kind is an order for goods. It is so considered by the laborer, +when he receives it, and it is almost instantly turned into money's worth. It is +merely in instrument by which the purchasable stock of the country is distributed +with convenience and advantage among the several members of the community.</p></div> + +<p>John Stuart Mill says:</p> + +<div class="blockquot"><p>The pounds or shillings which a person receives are a sort of ticket or order +which he can present for payment at any shop he pleases, and which entitle him +to receive a certain value of any commodity that he makes choice.</p></div> + +<p>McLeod, Elements of Banking, Chapter I, says:</p> + +<div class="blockquot"><p>When persons take a piece of money in exchange for services, or products, they +can neither eat it, nor drink it, nor clothe themselves with it. The only reason +why they take it is, because they believe they can exchange it away whenever +they please for other things which they require.</p></div> + +<p>On that view of money McLeod feels justified in styling it credit, +and he quotes in support of such a use of the term credit, Burke's +description of gold and silver as "the two great recognized species +that represent the lasting conventional credit of mankind."</p> + +<p>Prof. Francis A. Walker, Money, Trade, etc., page 25, speaking +of carved pebbles, glass beads, shells and red feathers, used as money +in certain countries at certain times, says:</p> + +<div class="blockquot"><p>They were good money, though serving no purpose but ornament and decoration. +They were desired by the community in general; men would give for +<span class='pagenum'><a name="Page_p067" id="Page_p067">[67]</a></span>them the fruits of their labor, knowing that with them they could obtain most +conveniently in time, in form, and in amount, the fruits of the labor of others.</p></div> + +<p>On page 30 he says:</p> + +<div class="blockquot"><p>Men take money with the expectation of parting with it; this is the use to +which they mean to put it.</p></div> + +<p>Again, Mr. Walker says:</p> + +<div class="blockquot"><p>Money is that which passes freely from hand to hand throughout the community, +in final discharge of debts and full payment for commodities, being accepted +equally without reference to the character or credit of the person who offers it, +and without the intention of the person who receives it to consume it, or enjoy it, +or apply it to any other use than, in turn, to tender it to others in discharge of +debts or payment for commodities.</p></div> + +<p>Even Bonamy Price, who is wedded to the gold standard, in his +Principles of Currency, says:</p> + +<div class="blockquot"><p>Gold, in the form of money or coin, is not sought for its own sake, as an article +of consumption. It must never be regarded as valuable except for the work it +performs, so long as it remains in the state of coin. It can be converted at pleasure +into an end, into an article of consumption, by being sold; till then it is a +mere tool.</p></div> + +<p>How many people ever so "convert" it that earn it?</p> + +<p>The great philosopher, Bishop Berkeley, one of the most acute reasoners, +in my judgment, that modern times have produced, in the +"Querist," published in 1710, propounds the following pertinent and +suggestive questions:</p> + +<div class="blockquot"><p>Whether the terms "crown," "livre," "pound sterling," etc., are not to be considered +as exponents, or denominations? And whether gold, silver, and paper are +not tickets or counters for reckoning, recording, or transferring such denominations? +Whether, the denominations being retained, although the bullion were +gone, things might not nevertheless be rated, bought, and sold, industry promoted +and a circulation of commerce obtained?</p></div> + +<p>Dugald Stewart, professor of moral philosophy in the University +of Edinburgh, in his Lectures on Political Economy (Part I, Book +II), said:</p> + +<div class="blockquot"><p>When gold is converted into coin, its possessor never thinks of anything but its +exchangeable value, or supposes a coffer of guineas to be more valuable because +they are capable of being transferred into a service of plate for his own use. +Why then should we suppose that, if the intrinsic value of gold and silver were +completely annihilated, they might not still perform, as well as now, all the functions +of money, supposing them to retain all those recommendations (durability, +divisibility, etc.) formerly stated, which give them so decided a superiority over +everything else which could be employed for the same purpose.</p> + +<p>Supposing the supply of the precious metals at present afforded by the mines to +fail entirely the world over, there can be little doubt that all the plate now in existence +would be gradually converted into money, and gold and silver would soon +cease to be employed in the ornamental arts. In this case a few years would +obliterate entirely all trace of the intrinsic value of these metals, while their value +would be understood to arise from those characteristical qualities (divisibility, +durability, etc.) which recommend them as media of exchange. I see no reason +why gold and silver should not have maintained their value as money, if they had +been applicable to no other purposes than to serve as money. I am therefore disposed +to think, with Bishop Berkeley, whether the true idea of money, as such, be +not altogether that of a ticket or counter.</p></div> + +<p>Appleton's Cyclopedia, defining money, says:</p> + +<div class="blockquot"><p>Anything which freely circulates from hand to hand, as a common acceptable +medium of exchange in any country, is in such country money, even though it +ceases to be such, or to possess any value in passing into another country. In a +word, an article is determined to be money by reason of the performance by it of +certain functions, without regard to its form or substance.</p></div> +<p><span class='pagenum'><a name="Page_p068" id="Page_p068">[68]</a></span></p> + + +<p class="caption">BASTIAT'S DESCRIPTION OF THE CROWN PIECE.</p> + +<p>Bastiat, in his "Harmonies Economiques," describing money, used +the following illustration:</p> + +<div class="blockquot"><p>You have a crown piece. What does it mean in your hands? If you can read +with the eye of the mind the inscription it bears, you can distinctly see these +words: Pay to the bearer a service equivalent to that which he has rendered to +society. Value received and stated, proved and measured by that which in on +me.</p></div> + +<p>No words could more correctly describe the unit in a properly +regulated system of money. And notwithstanding the attempt to +discredit silver coinage, no piece of money, as I have already shown, +would better answer, by its steadiness of value, this description of +Bastiat's than would the American silver dollar if silver were remonetized.</p> + +<p>So far as it applied to gold Bastiat's description was much nearer +accuracy in his day than it is in ours. In his life-time the mints of +France and of the Continent were open for the coinage of silver +equally with gold, and the money supply of the world was not constantly +narrowing by being limited to the yield of a single metal +whose annual output would hardly more than meet the demand for +the arts.</p> + +<p>Were Bastiat alive at this time he would reform his description so +as to make it read as follows: "You have an American gold piece. +You have had it hoarded in a bank vault for fifteen years. What +does it mean in your hands? If you can read with the eye of the +mind the inscription it bears, you can distinctly see these words: +'Pay to the bearer 50 per cent. more service than he has rendered to +society; value not received or stated on me, but resulting from a cunning +manipulation of the law of legal tender, through the influence +of the holders of gold and of obligations payable therein, and as a +reward to the bearer for having had this money hid away and for depriving +society of its use for seventeen years.'"</p> + +<p>When people are found everywhere working for money and not +for the things which they really need, it is clear that they are working +for money, not because of the material of which it is composed, +but because it is an order for property which they can at any time +obtain by parting with the money. To modify and elaborate Bastiat's +description of the crown piece, it might be said of the Money +Unit of the United States under a properly regulated system:</p> + +<p>"You have a dollar. What does it mean in your hands? If you +can read with the eye of the mind the inscription it bears, you can +distinctly see these words: To all to whom this may come: Greeting. +This is a dollar—a unit of money—part of the great instrumentality +created by society to effect the multitudinous exchanges +of property and services among men. The amount of its command +is constant, because the increase in the volume of money is regulated +by the sovereign authority of the nation, with strict regard to +the increase of population and demand—hence the value of this unit +remains unchanging through time. It is an order for all property +on sale, and all services for hire; the proportionate amount of such +property and service to which its possessor is entitled being fixed +by the universal competition to get it."</p> + + +<p class="caption">GRESHAM'S LAW.</p> + +<p>Many persons fear an outflow of gold from the operation of what +is known as "Gresham's law," namely, that "bad money will expel +good." Sir Thomas Gresham, a financier of Elizabeth's time, stated<span class='pagenum'><a name="Page_p069" id="Page_p069">[69]</a></span> +that if a number of the gold or silver coins of any given denomination +were deprived of part of their pure metal, and so made cheaper +than the remainder, a successful circulation of the coins thus deprived +would result in the melting up or exportation of the coins of +standard weight. Writing of this, Mr. Jevons ("Money and the +Mechanism of Exchange," American edition, page 84) says:</p> + +<div class="blockquot"><p>Gresham's remarks concerning the inability of good money to drive out bad +only referred to moneys of one kind of metal. * * * The people, as a general rule, +do not reject the better, but pass from hand to hand indifferently the heavy and the +light coins, because their only use for the coin is as a medium of exchange. It is +those who are going to melt, export, hoard, or dissolve the coins of the realm, or +convert them into jewelry and gold leaf, who carefully select for their purposes +the new heavy coins—</p></div> + +<p class="noidt">and avoid the light or abraded coins.</p> + +<p>There is, however, a theorem which applies to all money, but +which was recognized long before Gresham's time—although it has +been erroneously called an "extension" of the law or theorem of +Gresham.</p> + +<p>That theorem is this: If, in any country, there are two forms of +money, each of which is a full legal tender, and one of which can be +obtained with less sacrifice than the other, the one requiring the least +sacrifice will be the cheaper, and if the unit of that cheaper money +will perform in every respect the same function in the payment of +debts and settlement of all obligations that can be performed by the +dearer money, then, for obvious reasons, the cheaper money will come +into universal use, and the dearer money will disappear. But it +does not follow that the cheaper money is bad money nor the dearer +money good money.</p> + +<p>The best money is always the money of the contract, that is to say +a money whose dollar, whatever it may be made of, is equal in value +to the dollar of the contract. If the money of the contract is the +cheapest money, then that is the best money, that is the honest +money, and that is the only tolerable money.</p> + +<p>If that be the sort of "cheap" money that drives out the dear +money, then manifestly the dear money is bad money.</p> + +<p>A distinguished official of the Government, who was before a committee +of this body the other day, insisted that the proposed Treasury +notes should be redeemed in the "best money." I asked him what +was the "best money." "Why," he said, "the money that is worth +the most." Now, it strikes me, Mr. President, that if you have borrowed +a dollar, and, through a badly regulated money-system, are +made to pay a dollar worth 25 per cent. more than the dollar you borrowed, +you are not paying the best money, but the worst money; not +an honest dollar, but a swindling and dishonest dollar.</p> + + +<p class="caption">THE CREDITORS' DEMAND FOR THE "BEST MONEY."</p> + +<p>The creditors tell us that all they want is "good money." They +and their friends glibly insist that all obligations must be paid in +"the best money." This is the delicate and plausible euphemism resorted +to in order to gloss over and, if possible, hide from the world +the odious and repulsive fact that what the creditors always want +is the <i>dearest</i> money—the money that costs the people the most sweat +and toil to obtain and which, as time passes, grows dearer and +dearer.</p> + +<p>This cry for "the best money" is at last beginning to be recognized +for what it is—the cunning device of creditors to "catch the +conscience" of the people and play upon the sense of fairness that +characterizes the great mass of mankind. These interested parties<span class='pagenum'><a name="Page_p070" id="Page_p070">[70]</a></span> +affect to believe that gold is, by nature, the only money metal, ignoring +the fact that until silver was displaced by hostile legislation it +was, and for four thousand years had been, the principal money metal +of the world. But they will no longer be permitted to hide their sinister +purpose under the cloak of a demand for the "best money." The +masses of the people are aroused on this subject and are beginning to +understand it.</p> + +<p>According to all fair canons of construction the best money should +be and is a money of unchanging value, a money that exacts from +the debtor the same amount of sacrifice that he bargained for, and +which is all that the creditor is equitably entitled to receive. In +other words, the money of the contract, not a money whose exactions +are increasing at the rate of 2 per cent. per annum. As McCulloch +says, debts being stated in dollars and cents, it is not possible for the +creditor openly to augment his debtor's obligation by changing the +figures of the debt.</p> + +<p>But, Mr. President, while they can not change the figures of the +debt, they are enabled, by a crafty manipulation of the money-volume, +to do that which, to the debtor, means the same thing; as +the following story will illustrate:</p> + +<p>A usurer of the coarser type had lent $10,000 on a neighboring +farm, for which amount he took the farmer's note, secured by a +mortgage on the property. He coveted the farm, and in his anxiety +to secure it took his banker into his confidence. He informed the +banker that he wanted to get possession of this farm, but it would +bring $15,000 under the hammer, and he did not care to pay so much +for it. "I have a subtle chemical," said he, "by which I can obliterate +from the note and mortgage all trace of the rightful amount +($10,000), and that done, I can insert $15,000. Then, with the genuine +signatures on the note and mortgage I can bring suit, and as +the farm will not bring more than the face of the note, I shall succeed +to the property."</p> + +<p>His friend, the banker, however, advised against this course, which +he characterized as not only dishonest, but vulgar, and as subjecting +the perpetrator of the act to serious penalties. "Honesty" said the +banker, "is the best policy." "But," he continued, "I can suggest a +plan by which you may accomplish the same end without running +counter to law, or the views of society. Why not join our propaganda +in advocacy of 'honest money.' Gold is decreasing in quantity, +and as the world has been ransacked for it in vain, it is likely +to continue decreasing. If we can strike down the twin metal, silver, +and devolve the entire money function on gold, it will double +the purchasing power of money. Then the foreclosure of your +mortgage will be sure to take your neighbor's farm, and probably +leave him in your debt besides. Instead of being punished for this, +you will receive the plaudits of the 'best society' for the <i>finesse</i> you +have displayed and the firm stand you have taken in favor of honest +money, and you will take high rank among 'the wisest and most +conservative of our financiers.' If your neighbor makes any objection +to your action, you may be able to secure his incarceration as a +lunatic, but if not, he will come to be regarded in the community as +a dishonest 'crank' who wishes to pay his debts in a depreciated +money; for it is the constant and assiduous care of our guild to teach +that only the dearest money, that which is the most difficult for the +laborer, the farmer, and the mechanic to get, is honest money, and +the dearer it is the more honest it is."</p> +<p><span class='pagenum'><a name="Page_p071" id="Page_p071">[71]</a></span></p> + +<p class="caption">ALL MONEY SHOULD BE LEGAL TENDER.</p> + +<p>To be of the fullest service to civilization whatever medium is used +to do the work of money should have full money power; that is to +say, it should be a legal tender. It is not sufficient that it will satisfy +the demands of the Government for taxes.</p> + +<p>Whatever is given out by the Government in payment for services +rendered (and there is no other way by which payments can be made +from the Treasury) should carry with it to him who has rendered +the service and receives the payment, the absolute assurance that in +any need, or in any contingency, it will serve him as money. There +is no other means by which society can be saved from the effects of +panics and monetary crises.</p> + +<p>With a watchful and intelligent regulation of the money volume, +and with the legal tender function attached to everything that is in +use as money, and doing the money work, so that it will serve as a +universal solvent, panics will be impossible. Under present conditions +when panics come, credit money—money not endowed with +the legal-tender function, which, under ordinary circumstances, has +always been accepted, is refused, and thousands of millions of dollars' +worth of property have been confiscated by creditors, because +of the scarcity of legal-tender money. As time advances and the +method of doing business on credit becomes more and more extended, +the more palpable it becomes that society can preserve itself from +these periodical convulsions only by broadening, under proper regulation, +the legal-tender basis on which, in the ultimate analysis, all +business rests.</p> + + +<p class="caption">MONEY A MEASURE OF VALUE.</p> + +<p>There is nothing upon which the prosperity and happiness of a +people so much depend as on the integrity of their measure of values.</p> + +<p>It is universally admitted that after the making of a contract requiring +future delivery of a specified number of pounds, bushels, or +yards of any commodity, it would be subversive of all equity and +justice to change the capacity of the measure constituting the foundation +of the contract. These measures, to be just, must remain unchanged. +But how infinitely more important is it that money, which +is the measurer of all other measures, should itself be unchanged? +Of what avail is it that the subordinate measures remain intact +while this, the supreme measure, into which all others are finally resolved, +is constantly changing? Its "value" is but another name +for its purchasing or measuring power. In the case of all time contracts, +therefore, any change in the value of money works a destruction +of equity, and one of the first objects of society should be to +maintain and enforce equities at all times and in all places. This, +so far as money can effect it, can only be done by an intelligent regulation +of the volume in circulation.</p> + +<p>In a note to his edition of Adam Smith's "Wealth of Nations," +(page 502) Mr. J. R. McCulloch says:</p> + +<div class="blockquot"><p>Money is not a mere commodity, it is also the standard or the measure by which +to estimate and compare the value of everything else that is bought and sold, and +if it be, as it undoubtedly is, the duty of Government to adopt every practicable +means for rendering all foot-rules of the same length, and all bushels of the same +capacity, it is still more incumbent upon it to omit nothing that may serve to +render money, or the measure of value—a measure which is undoubtedly of the +greatest importance—uniform or steady in its value.</p></div> + +<p>Though a measure of value, money is a much more complicated +instrument than a yard-stick, pound weight, or bushel. Were it +not so, a child could fix value with the same precision as an adult.<span class='pagenum'><a name="Page_p072" id="Page_p072">[72]</a></span></p> + +<p>As value resides in human estimation, it will frequently vary as +to the same object. An intending purchaser may have one notion +of the value of an article, an intending seller another. Money, +therefore, is a measure of value in the sense that it is a measure of +the average human judgment—from which results price. As Mr. +McCulloch says, no means known to science or art should be left untried +to keep the value of money unchanging.</p> + +<p>When a man promises to deliver money or makes any time contract, +he makes a mental calculation as to what amount of property, or of +the product of his labor, will enable him to meet his engagement. +If he be a farmer, raising wheat, there passes through his mind the +sacrifice and toil necessary to raise it, and the quantity he can raise; +if a cotton manufacturer the cost of spindles, of looms, and steam-engines; +the wages of labor and interest on plant.</p> + +<p>I knew a cotton manufacturer who wanted $10,000. His business +was good. He was sober, honest, and industrious; had a thorough +knowledge of his trade; managed his employés himself, and took +the greatest pains to conduct his business on the strictest business +principles. He wanted the money to make some improvements in +his factory. He knew how many spindles and looms he had; how +much could be done with a pound of cotton, how much it cost, and +how much each spindle and loom would do. He said to a capitalist, +"I know all about cotton spinning and weaving, and do not know +anything about this thing called money, but I want $10,000 of it." +Said he, "My cloth is worth 10 cents a yard; it sells at that rate in +unlimited quantities by wholesale; nobody can make it any cheaper; +but I am not working a gold mine; I am not manufacturing legal-tender +paper money, and the only way I can get money is to swap +my cotton cloth for it. I will give you my note for 100,000 yards of +cotton cloth, which will be equal to $10,000, and will pay 2 inches a +yard each year as interest."</p> + +<p>This was satisfactory to the capitalist, and the note was made, +signed, and delivered accordingly, and the improvements were made +in the factory.</p> + +<p>During the year everything went smoothly; the spindles and looms +worked well, repairs to machinery were light; cotton had been +bought at proper rates; and no improved processes had been discovered +or applied in the production of cotton-cloth. There was no +hitch in any direction.</p> + +<p>At the appointed time, the creditor called for his cloth. "I am +ready," said the debtor, "to pay the hundred thousand yards of cotton +cloth, with interest." When he came to measure it off, however, +he was astounded to find he was short. Some painful suspicions +crossed his mind. It seemed as though somebody had either robbed +him of cloth, or else he had not manufactured as much of it as he +had supposed. There did not seem to be so many yards of the cloth +as there ought to be. He knew he had used the same number of +pounds of cotton that it had been his custom to use for 100,000 yards +of cloth and for 200,000 inches of cloth in addition; still, there was +no denying the fact of the shortage.</p> + +<p>He measured it again and again, and had finally to admit that he +was unable to keep his engagement. This was a source of great +distress to him. He could not sleep that night. But, the creditor +being importunate, the cotton manufacturer next morning borrowed +enough cloth from the proprietor of a neighboring factory and paid +his obligation. But, not understanding how his carefully made plans +had failed, and in order to avoid similar mistakes in the future, he<span class='pagenum'><a name="Page_p073" id="Page_p073">[73]</a></span> +had an examination made of the yard-stick and found that instead +of being 36 inches long the yard-stick he had used was 40 inches.</p> + +<p>In talking the matter over with his neighbor, the cotton manufacturer +said: "I have been swindled; they 'rung in' on me a lengthened +yard-stick, by the measurement of which I have paid my debt, +and I have therefore paid in reality more than I contracted to pay."</p> + +<p>"Well," said the friend, "I do not see that you are any worse off +than I am. I borrowed as much as you did, and at the same time; +but I agreed to pay my debt in money, and gave my note for $10,000 +with interest. The increased command over cloth acquired by the +dollars I have had to pay, caused by the demonetization of silver, +has juggled me out of as much cloth as you have been juggled out +of by the lengthened yard-stick. But you have one recourse; you +can put into the penitentiary the man who 'rung in' the lengthened +yard-stick on you, while the increase in the value of the dollar which +I have paid has been effected in the name of the gold standard and +honest money, and leaves me without recourse."</p> + +<p>In its ultimate analysis, money is the yard-stick, the bushel and +the pound weight of commerce.</p> + +<p>When you shrink the volume of money, and so increase the measuring +power of the dollar, you lengthen the yard-stick, enlarge the +specific gravity of the pound and the cubical content of the bushel, +in violation of all equities.</p> + +<p>It is utterly impossible to secure a proper regulation of the money +volume with gold alone, the yield of which has declined from an +average of $130,000,000 a year between 1851 and 1873 to $105,000,000 +a year between 1873 and 1889.</p> + + +<p class="caption">THE VALUE OF MONEY FIXED BY THE COMPETITION TO GET IT.</p> + +<p>Everybody admits that the value of all other things is regulated by +the play against each other of the forces of supply and demand. No +reason has been or can be given why the value of the unit of money +is not subject to this law.</p> + + +<p class="caption">WHAT IS THE DEMAND FOR MONEY?</p> + +<p>The demand for money is equivalent to the sum of the demands +for all other things whatsoever, for it is through a demand first made +on money that all the wants of man are satisfied. The demand for +money is instant, constant, and unceasing and is always at a maximum. +If any man wants a pair of shoes, or a suit of clothes, he does +not make his demand first on the shoemaker, or clothier. No man +except a beggar makes a demand directly for food, clothes, or any +other article. Whether it be to obtain clothing, food, or shelter—whether +the simplest necessity or the greatest luxury of life—it is on +money that the demand is first made. As this rule operates throughout +the entire range of commodities it is manifest that the demand for +money equals at least the united demands for all other things.</p> + +<p>While population remains stationary, the demand for money will +remain the same. As the demand for one article becomes less, the +demand for some other which shall take its place becomes greater. +The demand for money therefore must ever be as pressing and urgent +as the needs of man are varied, incessant, and importunate.</p> + + +<p class="caption">WHAT IS THE SUPPLY OF MONEY?</p> + +<p>Such being the demand for money, what is the supply? It is the +total number of units of money in circulation (actual or potential) +in any country.</p> + +<p>The force of the demand for money operating against the supply<span class='pagenum'><a name="Page_p074" id="Page_p074">[74]</a></span> +is represented by the earnest, incessant struggle to obtain it. All +men, in all trades and occupations, are offering either property or +services for money. Each shoemaker in each locality is in competition +with every other shoemaker in the same locality, each hatter +is in competition with every other hatter, each clothier with every +other clothier, all offering their wares for units of money. In this +universal and perpetual competition for money, that number of +shoemakers that can supply the demand for shoes at the smallest +average price (excellence of quality being taken into account) will +fix the market value of shoes in money; and conversely, will fix the +value of money in shoes. So with the hatters as to hats, so with the +tailors as to clothes, and so with those engaged in all other occupations +as to the products respectively of their labor.</p> + + +<p class="caption">NO ALTERNATIVE FOR MONEY.</p> + +<p>The transcendant importance of money, and the constant pressure +of the demand for it may be realized by comparing its utility with +that of any other force that contributes to human welfare.</p> + +<p>In all the broad range of articles that, in a state of civilization, +are needed by man, the only absolutely indispensable thing is money. +For everything else there is some substitute—some alternative; for +money there is none. Among articles of food, if beef rise in price, +the demand for it will diminish, as a certain proportion of the people +will resort to other forms of food. If, by reason of its continued scarcity, +beef continue to rise, the demand will further diminish, until +finally it may altogether cease and center on something else. So in +the matter of clothing. If any one fabric become scarce, and consequently +dear, the demand will diminish, and, if the price continue +rising, it is only a question of time for the demand to cease and be +transferred to some alternative.</p> + +<p>But this can not be the case with money. It can never be driven +out of use. There is not, and there never can be, any substitute for +it. It may become so scarce that one dollar at the end of a decade +may buy ten times as much as at the beginning; that is to say, it +may cost in labor or commodities ten times as much to get it, but at +whatever cost, the people must have it. Without money the demands +of civilization could not be supplied.</p> + +<p>Money was the most potent instrumentality in the evolution of +society from a low to a high plane of civilization. It is valueless +to man in isolation. It is indispensable to man in organized society. +It is as necessary for the proprietary distribution of wealth +as railroads and steamships are to its physical distribution. The +aggregate force of the demand for money in any country depends +upon the numbers of the population; with a stationary population +the demand is steady, with an increasing population the demand +increases, and in order to maintain undisturbed the equation +of supply and demand the volume of money should be increased in +at least a ratio corresponding to that of the increase of population.</p> + +<p>There are certain circumstances that to some extent disturb +the relations between population and money supply, such as the +broadening of the areas of population, and the multiplication of +money centers. These circumstances might render necessary a larger +percentage of increase in the money volume than would be indicated +by the increase of the population.</p> + +<p>But under any circumstances the smallest money-increase that +will suffice to maintain the equity of time contracts is an increase +corresponding to the increase of numbers of the population.<span class='pagenum'><a name="Page_p075" id="Page_p075">[75]</a></span></p> + +<p>Under conditions of unvarying demand and unvarying supply +the value of the unit of money would be unvarying. If as population +and demand increase the supply of money be proportionately increased, +there is no possibility of a change in the value of the unit +of money.</p> + +<p>The constant and unceasing effort to exchange services and all +forms of property, which have but limited command over the objects +of human desire, for money, that sole instrumentality that has unlimited +command over such objects, is, and ever will be, eager, intense, +and unwavering.</p> + +<p>With population and consequent demand rapidly increasing how +do the advocates of the gold standard expect to increase the money +volume of the country in this proportion, while the yield of gold, instead +of increasing in proportion to demand, is every day becoming +less and less capable of meeting the requirements of the arts alone?</p> + + +<p class="caption">THE QUANTITY OF MONEY IN CIRCULATION SHOULD INCREASE IN A RATIO NOT LESS +THAN THE RATIO OF INCREASE OF POPULATION.</p> + +<p>It will be admitted that if the population of a country be increased +by any given percentage there will be a proportionate increase in the +demand for all articles that supply human needs. If the population +increases by 3 per cent., there will be needed 3 per cent. more house-room, +3 per cent. more furniture, 3 per cent. more food, 3 per cent. +more of all things that enter into consumption. These things can +only be got by a demand first made on money. Then why not 3 per +cent. more money?</p> + +<p>The present monetary circulation of this country including gold, +silver, and paper, is represented to be $1,700,000,000. As our population +doubles in thirty years, the rate of increase is 3<small><sup>1</sup>⁄<sub>3</sub></small> per cent.</p> + +<p>If the money volume be not increased by a proportion at least as +great as this, the true relation between the supply of money and the +demand for it will not be maintained. The demand increasing as +the population increases, while the supply either does not increase +at all or increases in a degree incommensurate with the demand, the +money volume shrinks and the purchasing power of the unit becomes +greater by reason of the increased keenness of competition to +get it. This is but another mode of stating that the prices of all +products of human labor decline. Prices falling, business ceases to +be profitable, stores and work-shops close, and men are relegated to +idleness.</p> + + +<p class="caption">THE QUANTITATIVE THEORY OF MONEY—THE VALUE OF EACH DOLLAR DEPENDS ON +THE NUMBER OF DOLLARS OUT.</p> + +<p>Thus by the universal competition to get it the value of the dollar +is made to depend upon the number of dollars that are out. This +is a principle that lies at the very foundation of the science of money. +The law, stated broadly, is that the value of each unit of money in +any country at any given time depends on the whole number of units +in circulation in that country. The larger the number of units out, +population remaining the same, the less must be the value of each +unit; the smaller the number of units out, population remaining +the same, the greater the value of each.</p> + +<p>Notwithstanding the variance sometimes found between the premises +and the conclusions of economic writers, there is no economist +of repute who does not admit this to be a fundamental principle.</p> + +<p>On the theory I have propounded therefore 3<small><sup>1</sup>⁄<sub>3</sub></small> per cent. of +$1,700,000,000, or $56,000,000, is the minimum amount of money that +should be added to the currency of this country during the present +year.<span class='pagenum'><a name="Page_p076" id="Page_p076">[76]</a></span></p> + +<p>Assuming the population of to-day to be 65,000,000 and the ratio +of its annual increase 3<small><sup>1</sup>⁄<sub>3</sub></small> per cent., the population of next year will +be 67,166,600. The percentage of monetary increase to be provided +for that year should therefore be baaed on the increased number. +And so on for each succeeding year.</p> + +<p>I have thought best to collate a variety of citations from the most +distinguished authorities on financial economy to support my contention +that, <i>ceteris paribus</i>, the value of each dollar depends on the +number of dollars in circulation.</p> + +<p>John Locke, in his "Considerations," etc., published in 1690, said:</p> + +<div class="blockquot"><p>Money, while the same quantity of it is passing up and down the kingdom in +trade, is really a standing measure of the falling and rising value of other things +in reference to one another, and the alteration in price is truly in them only. But +if you increase or lessen the quantity of money current in traffic in any place, then +the alteration of value is in the money.</p></div> + +<p>Locke further said:</p> + +<div class="blockquot"><p>The value of money in any one country, is the present quantity of the current +money in that country, in proportion to the present trade.</p></div> + +<p>The historian, Hume, says:</p> + +<div class="blockquot"><p>It is not difficult to perceive that it is the total quantity of the money in circulation, +in any country, which determines what portion of that quantity shall exchange +for a certain portion of the goods or commodities of that country.</p> + +<p>It is the proportion between the circulating money and the commodities in the +market which determines the price.</p></div> + +<p>Fichte says:</p> + +<div class="blockquot"><p>The amount of money current in a state represents everything that is purchasable +on the surface of the state. If the quantity of purchasable articles increases +while the quantity of money remains the same, the value of the money +increases in the same ratio; if the quantity of money increases, while the quantity +of purchasable articles remains the same, the value of money decreases in the +same ratio.</p></div> + +<p>James Mill, in his treatise on political economy, says:</p> + +<div class="blockquot"><p>And again, in whatever degree, therefore, the quantity of money is increased or +diminished, other things remaining the same, in that same proportion the value +of the whole, and of every part, is reciprocally diminished or increased.</p></div> + +<p>John Stuart Mill (Political Economy) says:</p> + +<div class="blockquot"><p>The value of money, other things being the same, varies inversely as its quantity; +every increase of quantity lowering the value, and every diminution raising +it in a ratio exactly equivalent.</p></div> + +<p>And again:</p> + +<div class="blockquot"><p>Alterations in the cost of the production of the precious metals do not act upon +the value of money, except just in proportion as they increase or diminish its +quantity.</p></div> + +<p>Ricardo (reply to Bosanquet) says:</p> + +<div class="blockquot"><p>The value of money in any country is determined by the amount existing. * * *</p> + +<p>That commodities would rise or fall in price in proportion to the increase or diminution +of money, I assume as a fact that is incontrovertible. * * *</p></div> + +<p>Ricardo further says:</p> + +<div class="blockquot"><p>There can exist no depreciation in money but from excess; however debased a +coinage may become, it will preserve its mint value; that is to say, it will pass in +circulation for the intrinsic value of the bullion which it ought to contain, provided +it be not in too great abundance.</p></div> + +<p>In this case Ricardo's illustration is the supposed case of a country +actually using one million gold pieces each containing 100 grains. +He maintains that they would be of the same purchasing power, if +the Government took out 1 grain, or even 50 grains, the quantity remaining +the same, but that if, from the grains so deducted, an addi<span class='pagenum'><a name="Page_p077" id="Page_p077">[77]</a></span>tional +number of pieces were struck, a corresponding depreciation +would result.</p> + +<p>William Huskisson ("The Depreciation of the Currency," 1819), +says:</p> + +<div class="blockquot"><p>If the quantity of gold in a country whose currency consists of gold should be +increased in any given proportion, the quantity of other articles and the demand +for them remaining the same, the value of any given commodity measured in the +coin of that country would be increased in the same proportion.</p></div> + +<p>Sir James Graham says:</p> + +<div class="blockquot"><p>The value of money is in the inverse ratio of its quantity; the supply of commodities +remaining the same.</p></div> + +<p>Torrens, in his work on Political Economy, says:</p> + +<div class="blockquot"><p>Gold is a commodity governed, as all other commodities are governed, by the +law of supply and demand. If the value of all other commodities, in relation to +gold, rises and falls as their quantities diminish or increase, the value of gold in +relation to commodities must rise and fall as its quantity is diminished or increased.</p></div> + +<p>Wolowski says:</p> + +<div class="blockquot"><p>The sum total of the precious metals is reckoned at 50 milliards, one-half gold +and one-half silver. If, by a stroke of the pen, they suppress one of these metals +in the monetary service, they double the demand for the other metal, to the ruin +of all debtors.</p></div> + +<p>Cernuschi says:</p> + +<div class="blockquot"><p>The purchasing power of money is in direct proportion to the volume of money +existing.</p></div> + +<p>Prof. Francis A. Walker, in his work on "Money" (page 57), +says:</p> + +<div class="blockquot"><p>The value of money in any country is determined by the amount existing.</p> + +<p>Its [money's] power of acquisition depends not on its substance, but on its +quantity. [Paulus, author of the Pandects, sixth century.]</p></div> + +<p>Professor De Colange, in the American Cyclopedia of Commerce, +article on "Money," says:</p> + +<div class="blockquot"><p>The rate at which money exchanges for other things is determined by its quantity. * * *</p> + +<p>Supposing the amount of trade and mode of circulation to remain stationary, if +the quantity of money be increased, its value will fall, and the price of other commodities +will proportionally rise, as the latter will then exchange against a greater +amount of money; if, on the other hand, the quantity of money be reduced, its +value will be raised, and prices in a corresponding degree diminished, as commodities +will then have to be exchanged for a less amount of money. * * *</p> + +<p>In whatever degree, therefore, the quantity of money is increased or diminished, +other things remaining the same, in that same proportion the value of the whole +and of every part is reciprocally diminished or increased.</p></div> + +<p>A curtailment of the volume of money in a country will, <i>ceteris +paribus</i>, increase the value of the money of that country. All the +authorities agree that this law applies to all forms of money, whatever +the material; so that it applies to paper money with precisely +the same force that it applies to metallic money.</p> + +<p>Mr. Stanley Jevons, in his work on "Money and the Mechanism of +Exchange," says:</p> + +<div class="blockquot"><p>There is plenty of evidence to prove that an inconvertible paper money, if carefully +limited in quantity, can retain its full value. Such was the case with the +Bank of England notes for several years after the suspension of specie payments +in 1797, and such is the case with the present notes of the Bank of France.</p></div> + +<p>Mr. Gallatin said:</p> + +<div class="blockquot"><p>If in a country which wants and possesses a metallic currency of seventy millions +of dollars, a paper currency to the same amount should be substituted, the +seventy millions in gold and silver, being no longer wanted for that purpose, will +be exported, and the returns may be converted into a productive capital, and add +an equal amount to the wealth of the country.</p></div><p><span class='pagenum'><a name="Page_p078" id="Page_p078">[78]</a></span></p> + +<p>In his Proposal for an Economic and Secure Currency Ricardo +says:</p> + +<div class="blockquot"><p>A well regulated paper currency is so great an improvement in commerce, that +I should greatly regret if prejudice should induce us to return to a system of less +utility. The introduction of the precious metals for the purposes of money may +with truth be considered as one or the most important steps toward the improvement +of commerce and the arts of civilized life; but it is no less true, that with the +advancement of knowledge and science, we discover that it would be another improvement +to banish them again from the employment to which, during a less enlightened +period, they had been so advantageously applied.</p></div> + +<p>Mr. J. R. McCulloch, in commenting on the principles of money +laid down by Ricardo, says:</p> + +<div class="blockquot"><p>He examined the circumstances which determine the value of money * * * +and be showed that * * * its value will depend on the extent to which it may +be issued compared with the demand. This is a principle of great importance; +for, it shows that intrinsic worth is not necessary to a currency, and that provided +the supply of paper notes, declared to be a legal tender, be sufficiently limited, +their value may be maintained on a par with the value of gold, or raised to any +higher level. If, therefore, it were practicable to devise a plan for preserving the +value of paper on a level with that of gold, without making it convertible into +coin at the pleasure of the holder, the heavy expense of a metallic currency would +be saved.</p> + +<p>It appears, therefore, that if there were perfect security that the power of +issuing paper money would not be abused; that is, if there were perfect security +for its being issued in such quantities, as to preserve its value relatively to the +mass of circulating commodities nearly equal, the precious metals might be +entirely dispensed with, not only as a circulating medium, but also as a standard +to which to refer the value of paper.</p> + +<p>In adopting a paper circulation—</p></div> + +<p class="noidt">Says Lord Overstone—</p> + +<div class="blockquot"><p class="noidt">we must unavoidably depend for a maintenance of its due value upon the +adoption of a strict and judicious rule for the regulation of its amount.</p></div> + +<p>Lord Overstone further declared that:</p> + +<div class="blockquot"><p>The value of the paper currency results from its being kept at the same amount +the metallic currency would have been.</p></div> + +<p>Alexander Baring, in his evidence before the secret committee of +the House of Lords in 1819, said:</p> + +<div class="blockquot"><p>The reduction of paper would produce all those effects which arise from the reduction +in the amount of money in any country.</p></div> + +<p>Prof. F. A. Walker says:</p> + +<div class="blockquot"><p>Let me repeat, money is to be known by its doing a certain work. Money is +not gold, though gold may be money; sometimes gold is money, and sometimes it +is not. Money is no one thing, no group of many things having any material property +in common. On the contrary, anything may be money; and anything, in +a given time and place, is money which then and there performs a certain function. +Always and everywhere that which does the money-work is the money-thing.</p></div> + +<p>Sir Archibald Alison says:</p> + +<div class="blockquot"><p>The suspension of specie payment in 1797, making bank notes a legal tender +receivable for taxes by providing Great Britain with an adequate internal currency, +averted the catastrophe then so general upon the Continent, and gave it +at the same time an extraordinary degree of prosperity. Such was the commencement +of the paper system in Great Britain, which ultimately produced such astonishing +effects, and brought the struggle [of the Napoleonic wars] to a triumphant +close.</p></div> + + +<p class="caption">THE TRUE MONEY STANDARD.</p> + +<p>The true money standard of any country is not the material of +which the money is made. The standard is not a concrete object, +but a numerical relation. It is the relation between the number of<span class='pagenum'><a name="Page_p079" id="Page_p079">[79]</a></span> +units composing the monetary circulation of the country and the +numbers of the population.</p> + +<p>It is the legal-tender function that constitutes money. It is the +power which the law imparts to any material to pay debts and +liquidate obligations. It can not for a moment be doubted that the +money function, being conferred by the supreme authority, is the +all-sufficient guarantee of the money value. There is no necessity +for re-enforcing that value with any inferior value that may attach +to the material on which the money stamp is placed. The money +function is immeasurably the most important that can be conferred +by society upon any material, and it is absurd to urge that that +function is not of itself sufficient for the maintenance of the value +of money. All the value that money can possibly have—the totality +of value that can exist in the shape of money in any country—will +attach to anything upon which the sovereign authority stamps it, +whether the material on which the stamp is placed be gold, silver, +paper, or anything else. Legislators or executive officers of the +Government, by increasing or decreasing the volume of money, correspondingly +decrease or increase the value of each unit of that +money. For no matter how many or how few the units may be, the +total value of the money of the country will be comprised within +the total number of those units. A change in the number of the +units effects a proportionate change in the value of each unit, and +whatever the value of the unit may be, it is of the utmost importance +that that value should remain undisturbed.</p> + +<p>It is absurd to maintain that a gold unit, which, as time goes on, +is constantly increasing in purchasing power; is a better unit than +a unit of any other material that maintains unchanging value +through time.</p> + +<p>Whenever the business of the country accommodates itself to a +given number of units, the only question for the Government to +deal with is to maintain that value as free from disturbance as +possible; and according to all authorities on political economy that +can only be done by increasing or decreasing the number of units in +circulation in accordance with the demands of increasing or decreasing +population.</p> + +<p>If it be admitted that one of the most important offices of government +is to see that the equities are preserved between its citizens +(and if this be not so, to what purpose are our courts of equity +instituted?), then it can not be denied that it is one of the highest +offices of government to see that money, which measures all +equities, and which must for all time continue to be the principal +measure in the service of civilized society, shall be of unchanging +value. It is impossible to secure this characteristic of uniformity +in the value of money if we are to select as the only material on +which to stamp the money function a substance whose yearly production +is becoming more and more limited, and the prospect of +whose sufficient yield becomes less and less encouraging.</p> + + +<p class="caption">IF SILVER REMAIN DEMONETIZED AND GOLD CONTINUE DECREASING, WHERE IS THE +WORLD'S FUTURE MONEY SUPPLY TO COME FROM?</p> + +<p>If the distinguished authorities I have quoted are correct, that a +diminution of the volume of money increases the value of the +money unit—which is but another form of stating that it lowers +prices and produces stagnation, distress, and discontent,—what good +reason can be offered by the advocates of the gold standard for confining +the business of this rapidly growing country to a basis of +gold, when it is well known that the entire stocks of gold and silver<span class='pagenum'><a name="Page_p080" id="Page_p080">[80]</a></span> +together are now insufficient to serve the purpose of the world's +money, and have to be supplemented and re-enforced by large issues +of paper notes? Do they not reflect that the production of gold is +constantly diminishing and is likely to continue to diminish? And +do they not know that our population is growing at the rate of +over 3 per cent. per annum and will double in thirty years? Do +they mean that the money volume which serves a population of +65,000,000, and is far below the needs of that population, will suffice +for the 130,000,000 of the next generation? To be sure, if we are to +take no note of prices, the question is a simple one.</p> + +<p>But prices must be taken into account. The entire money question +is one of prices. When it is said that money is scarce, what is +meant is that business is depressed and that money is difficult to +get, at the present range of prices. Should prices fall 25 per cent. +money would be found plentiful enough to conduct exchange at the +lower range. But when prices fall, goods sell below cost, business +is unprofitable, workshops are closed, and men are thrown into idleness. +If lowering prices do not affect injuriously either the business +or the prosperity of the country, then it makes no difference what +the volume of money may be; a small amount will meet the requirements +as well as a large amount. In that case, the gold standard is +as good as any.</p> + +<p>But if gold alone is sufficient to bear all the enormous monetary +burdens of the Western world, why do the advocates of the gold +standard admit the necessity for any more circulation? To be logical, +instead of favoring an increase of credit money, which has always +lurking within it an element of danger to the business of the +community, they should demand the retirement of the $347,000,000 of +greenbacks and the $350,000,000 of coined silver, and base the business +of the country exclusively on what they call "honest money." +If that should be done all that could happen would be a fall in prices. +Judging by the experience of the past it would not be surprising if +the next move of the gold-standard men would be an agitation for +the retirement and cancellation of the greenbacks. Such a movement +is fully in harmony with the opinions of the gold-standard +advocates for the past twenty years. Indeed, the Secretary of the +Treasury who took charge of the finances at the opening of the last +Administration, himself a banker, recommended the demonetization +of the greenbacks almost as vigorously as he opposed silver.</p> + + +<p class="caption">MONEY VALUABLE ONLY FOR THE IMPORTANT SERVICE IT PERFORMS.</p> + +<p>Money is valuable rather for the service which it performs than +for the material of which it is composed.</p> + +<p>When we consider the transcendantly important character of the +service which money performs—when we reflect that, without it, +the achievement of an advanced civilization would be impossible, +we can not escape the conclusion that, compared with the value of +that service, the commodity value of any material on which the +money function may be stamped is too trifling to merit serious +attention.</p> + +<p>This will be made clear by reflection on the necessities of the situation.</p> + +<p>So long as society chooses to maintain the automatic or metallic +money-system, it must be obvious that to escape the evils that would +result from a sudden and overwhelming increase in the supply of the +money-material as compared with the entire stock in existence, and +the infinitely more serious evils that would result from a wholly insufficient +yearly addition to that stock, it must have on hand an enor<span class='pagenum'><a name="Page_p081" id="Page_p081">[81]</a></span>mous +accumulation of the metals on which the stamp is placed. It +must be manifest that no material would be fit for universal acceptance +for so important a function as money unless there were available +so great a quantity of it that no sudden shock could be inflicted on +society by ordinary fluctuations in the current yield, or in the current +consumption in the arts.</p> + +<p>But, in the nature of things, a supply sufficient to effect that result +would be so enormous as practically to destroy the market value of +the material as a mere commodity if the money function and use +were withdrawn from it.</p> + + +<p class="caption">THE MONEY DEMAND, NOT THE COMMODITY DEMAND, THAT GIVES GOLD ITS VALUE.</p> + +<p>Mr. Giffen the statistician of the London Board of Trade, in an +article recently published in an English magazine, berating and +deriding the bi-metallists, maintains that it is not the demand for gold +as money, but for gold as a commodity, to be used in the arts, that determines +its value.</p> + +<p>To prove his case, Mr. Giffen states that the supply of gold is about +$95,000,000 per annum, the annual demand for the arts $60,000,000, or +about two-thirds of the annual supply; while the demand for money +is only $35,000,000, or about one-third that supply. He therefore +argues that the art demand, being the greater of the two, contributes +more largely to the maintenance of the value of gold than does the +demand for that article as money. It is hardly necessary to point +out the absurdity of this claim.</p> + +<p>The commodity demand in any one year is not made upon the current +year's supply, but upon the entire amount in existence, which, +is estimated to be about $4,000,000,000. If the demand for the arts +entirely ceased, would the addition, to the money volume, of the +$60,000,000 now used in the arts produce any appreciable effect on +the value of the $4,000,000,000 in existence?</p> + +<p>On the other hand, what is the demand on gold for the money use? +All the labor and all the salable property of the western world are +constantly offered in exchange for it. It is a moderate estimate to +assume that each dollar is earned, demanded, and paid once a week, +or fifty times in each year. This constitutes a total annual money +demand of $200,000,000,000, compared with which colossal sum how +inconsequential is the commodity demand of $60,000,000 in maintaining +the value of gold.</p> + +<p>The amount of gold annually used in the arts is not very definitely +ascertained, but in 1886 it was estimated by the then Director of the +United States Mint to be $46,000,000 per annum. Mr. Giffen estimated +it at $60,000,000. It is my opinion that the arts forage on the money-stock +of gold to the extent of about the entire annual yield. The +bullion or commodity value of that metal being determined by its +money value, whoever desires to use it for any purpose other than +money, takes the bullion at its coinage value, or else melts up the +coin.</p> + +<p>Were gold demonetized and deprived of its money function, and +its demand confined solely to that arising from its adaptability for +various other purposes, the present stock of that metal on hand and +in use as money would, according to the estimates of the director of +the mint, supply the art demand for more than seventy-five years to +come. But, assuming that the estimate of the Director of the Mint +is too low, and that my own is nearer the truth, there is at least fifty +years' supply on hand. Were there fifty or seventy-five years' supply +of any other commodity on hand in the market, what would be the<span class='pagenum'><a name="Page_p082" id="Page_p082">[82]</a></span> +commercial value of that commodity? What would be the value of +copper, of brass, or of iron, if there were fifty or seventy-five years' +supply of either of those metals in the market for disposal at one +time? Nobody can pretend that any commodity of which there is +an available supply on hand equivalent to the whole demand for +fifty or seventy-five years can have any but the most trifling value.</p> + +<p>Contrary, therefore, to the generally received conviction that the +commodity demand is the dominating force in fixing the value of +gold I maintain and insist that the commodity demand, if entering +into the account at all, is insignificant. It is the supremely important +<i>money</i>-demand, as correlated to the supply, that fixes the value +of all money of every description whatsoever.</p> + +<p>The demand for gold as a commodity is limited and fluctuating, +but when that metal is invested by law with the higher function of +money, and thus constituted a common denominator of all values, +that limited and fluctuating demand is changed to an unlimited and +constant one, which fixes its value for other and inferior uses. If +the commodity-demand for gold were, as many believe it to be, +essential to its acceptance as money, it would be a great misfortune +to society. The happiness and prosperity of the world, if not wholly +dependent upon, are largely influenced by, steadiness in the value +of money, and this can not exist without steadiness in its volume. +Whatever demand exists for gold as a commodity can only affect the +volume of money injuriously—that is to say, by decreasing it. The +admonition of history is that a deficiency in the money-supply is +more probable, and infinitely more to be feared than an excess, and +this deficiency is, in great measure, caused by the insidious and constant +encroachment, upon the precious metals, of demands for them +for other than the money use. When we contrast the magnitude of +the world's interests and equities, which rest on steadiness in the +value of money, with the comparative unimportance of the uses of +the metals as commodities, it becomes apparent that the subjection +of the value of money to disturbance from the demands for gilded +signs, looking-glasses, bangles and breast-pins, is an evil for which +society is but poorly compensated by the benefits derived from such +uses.</p> + +<p>Whatever other quality gold may posses than as the bearer of the +money function is inconsistent with the healthful and proper exercise +of the task assigned it as such. Whenever any portion of the metal +is used for any other purpose than money it destroys the money and +thus changes the value of every unit of money in circulation, for, +at already stated—other things remaining unchanged—the value +of each dollar depends on the number of dollars that are out. Without +forewarning, and with out knowledge on the part of the people, +large amounts of the money volume, on which so infinite a number of +equities rest, and on the basis of which all debts and time contracts +have been entered into, are, as it were, surreptitiously abstracted +and appropriated to other and always inferior uses, for by far the +highest and noblest use of any material upon which the money function +has been conferred, is the money use. No other use can possibly +be so high or so noble as that of maintaining all equities undisturbed.</p> + +<p>It seems unworthy a highly developed civilization which, as to +all subjects other than money, regulates its affairs by the application +of intelligence, and bases its policies upon exact data, scientifically +ascertained and correctly applied, to depend for its money system +upon the accidents, make-shifts, and expedients to which primitive +society, by reason of the limitation of its powers and the undeveloped<span class='pagenum'><a name="Page_p083" id="Page_p083">[83]</a></span> +condition of the human mind and hand, was compelled to resort. If +the quantitative theory of money be correct—if the money standard +be, as I insist it is, a steady and duly proportioned numerical relation +existing between the units of population and units of money—it +is the duty of society and government to see that as far as practicable +that principle is put into operation.</p> + +<p>The history of the production of the precious metals from the remotest +ages demonstrates that under the automatic system of money +this can only be effected by the unrestricted coinage of, and conferring +the full legal-tender function on, both metals.</p> + + +<p class="caption">THE PROPOSITION THAT THE GOVERNMENT SHOULD LEND MONEY ON THE SECURITY +OF REAL ESTATE.</p> + +<p>If a change in the whole number of money units in circulation +relatively to population and business do not affect the value of each +unit, then no objection can be found to the proposition recently presented +in the Senate by the distinguished Senator from California, +which created some surprise among Senators. The resolution of +that Senator contemplates a loan by the Government to holders of +real estate based upon the security of the property; and the issue +of a large amount of Treasury notes for that purpose. Certainly, if +a dollar, in order to perform properly the money function, must have +in it or back of it a dollar's worth of material, there can be no +safer security found than that suggested by the Senator from California, +namely, the arable land of the United States.</p> + +<p>It is the most absolutely secure of all securities; it can neither +run away nor be stolen, it can not be burnt up, lost, or destroyed.</p> + +<p>Arable land is, in and of itself, capable of supplying all basic wants, +and must be always in demand, while gold, so far as concerns any +use to which it is, or can be applied, might be dispensed with altogether, +with scarcely any inconvenience to society.</p> + +<p>Certainly money based on land would seem to be better than +money based on gold. Senators who are sticklers for so-called "intrinsic +value" money, and "full-value" money, should be found +supporting that proposition. But it must, on reflection, be obvious +that, other things remaining unchanged, whenever the total number +of units of money (or dollars) in the circulation of a country increases, +the value of each unit will decrease. It is an axiom of political economy +that no amount of increase in the number of units of money in a +country increases the aggregate value of the money of that country.</p> + +<p>The aggregate value of the money in circulation in a country, can, +<i>ceteris paribus</i>, be increased only by an increase of population and +business, that is to say, by an increase in the demand for it.</p> + +<p>If, without increase of population, the money of a country be increased +from, say, $1,000,000,000 to $2,000,000,000, the effect would +be not to add to the aggregate value of the money of the country, +but to decrease the value or purchasing power of each unit of the +money, so that it would take ten dollars to buy what had before +cost but five.</p> + + +<p class="caption">GOLD A FETICH—DEMAND FOR A STANDARD OF JUSTICE.</p> + +<p>The history of the world affords no example of a money system regulated +by human prescience and intelligent calculation. It is not too +much to say that the money system of the world—the most important +associative instrumentality of civilization, in so far as it is not +controlled for their own advantage by the creditor classes—is practically +the result of accident. We are even less logical than the ancients, +for they availed themselves of the entire supply of money<span class='pagenum'><a name="Page_p084" id="Page_p084">[84]</a></span> +possible to their civilization and development. They used the full +yield of both silver and gold, while we, in order to line the pockets +of a privileged caste of money-lenders, reduce the money volume to +the lowest possible minimum by discarding one of those metals and +making all debts payable in the other.</p> + +<p>Gold has been erected into a fetich by methods familiar to the +pagan priesthood, who forbade investigation of the claims of their +idol to the superstitious veneration of their followers. The quality +of a universal standard claimed for gold has been set up by the +classes which, like that priesthood, had interests to be served by +the superstition. All things else may be subjected to the test of +reason and argument, but the slightest approach to a scrutiny of +the claims of gold as a much-vaunted universal standard of valuation +has been repelled by interested casuists and sophists who constitute +the sacred guard of the temple of the idol.</p> + +<p>The people of this country, Mr. President, begin very seriously to +doubt the sacredness of a so-called standard by which they have been +robbed of thousands of millions of dollars—a standard that despoils +and impoverishes the toiling masses, in order to swell the plethoric +pockets of the privileged few. From all parts of the Republic we +learn that the people have become aroused on this subject, that they +have discovered gold to be a standard, not of valuation, but of spoliation +and confiscation.</p> + +<p>The world at large shares to a great extent in the doubts entertained +by the people of this country as to the orthodoxy of the continuing +worship of gold. Throughout all Europe the suspicion is +beginning to make itself felt, among those who have no personal +interest at stake, that the constantly appreciating value of this +metal bodes no good to society, however advantageous it may be to +the moneyed classes, and especially the money lenders. It begins +to be feared that there may be too long a persistence in this artificial +standard, and that the pressure upon the people, in the fall of prices +and the increase of the burden of debt and of taxes, which multiply +with time, may have serious consequences upon public order. The +stock of gold, never half enough to meet the wants of the people +anywhere, is year by year being drawn upon more and more for use +in the arts, while the yield from the mines is decreasing, and giving +no promise of any material increase from any quarter.</p> + +<p>The pressing need of the time, the standard for which the people +are calling, is a standard of equity, a standard of justice, a standard +that shall measure fairly and impartially the rights of both parties to +a contract, that will not wrongfully and stealthily add to the burden +of the obligation on either side, that will not, under the guise of fair +dealing, rob one of the parties for the benefit of the other. The first +indispensable step to a realization of that standard is the full restoration +of silver to its rightful position as a part of the money of the +world.</p> + +<p>In any discussion of the question, it would be uncharitable not +to make allowance for the force, on many conscientious minds, of +what, to the free and unprejudiced inquirer, can only be regarded +as an absurd and meaningless superstition, which, notwithstanding +the advance of thought in other directions, still persists in disarranging +the industries and vexing the civilization of an enlightened +age. It is to the strength of this obdurate superstition that we must +ascribe the horror with which many minds contemplate the possible +loss to the country of a part of its gold.</p> +<p><span class='pagenum'><a name="Page_p085" id="Page_p085">[85]</a></span></p> + +<p class="caption">FEAR OF THE OUTFLOW OF GOLD.</p> + +<p>Any prospect of the outflow of gold is regarded as the opening of +a veritable Pandora's box, from which must issue forth all the evils +that can afflict mankind.</p> + +<p>It is to this fear, no doubt conscientiously entertained, that we +must attribute the declaration of the President of the United States +that we do not dare to tread on the edge of so dangerous a peril. It +is not difficult to make the statement, but it will be very difficult to +prove that we stand on the edge of any peril whatever, if most or +even all our gold should go.</p> + +<p>We heard this same apprehension expressed, and with equal, if not +greater, force twelve years ago, when the silver question was before +this body. We were then assured by the ablest of our so-called +"financiers" that the country would be denuded of its gold and that +all manner of dreadful catastrophies would result. The prospect was +represented to be appalling, although I do not remember that any +reasons were given to show how or why gold should leave the country, +nor that any statement was made as to exactly how this country +would suffer if it did leave.</p> + +<p>For my own part, Mr. President, I regard it as a matter of very +little consequence whether gold goes out or not. Certainly if, in +order to retain gold, we must sacrifice justice, then I say let gold go.</p> + +<p>It is not of so much consequence that we should retain gold for the +benefit of a small coterie of importers as that we should preserve +the equity of time contracts between the millions of our own people +who import no foreign goods. It is monstrous to think of violating +all equities in time transactions—and nine out of every ten of our +domestic business transactions are of that character—for the absurd +and inconsequent purpose of keeping in this country some particular +commodity, whether it be designated as money or otherwise.</p> + +<p>The hoarding or the outflow of gold is a hardship when, under the +law, somebody is obliged to have it, as was the case during the war, +when gold alone would pay duties on imports. Combinations to hoard +gold at that time frequently involved great loss to the importer. +But thanks to the silver legislation of 1878 and other legislation making +our Treasury notes receivable for customs dues, no damage could +now result from any attempted corner in gold.</p> + +<p>The creditors of this country never can convince the enterprising +and energetic people who form the debtor class that it is to our interest +that a certain material shall be kept in the country as money, +if the expense of keeping it is that the debtors shall continue to be +despoiled as they have been for the past fifteen years.</p> + +<p>If we can only retain gold at the expense of steady and unwavering +prices, and at the expense of a steady and unchanging value in +money, then the quicker gold goes out the better. The constantly +increasing value of gold by reason of its increasing scarcity means +the constantly increasing burden of all debt, and involves the final +absorption of all the property of the country by the creditor classes. +Under the operation of the present system, by which prices are constantly +falling and money is constantly increasing in value, the +surplus earnings of the people are flowing in a steady stream into +the vaults of money-lending institutions, and into the pockets of +creditors.</p> + +<p>In a very intelligent article published in a late number of an influential +magazine—the Political Science Quarterly—there is the +significant statement, apparently derived from the best sources, that<span class='pagenum'><a name="Page_p086" id="Page_p086">[86]</a></span> +in the year 1879-'80, one-half of all the mortgages in the State of +Indiana were foreclosed.</p> + +<p>It were better for society that property should at once be confiscated +than that the great masses of the people in every community +should have to struggle through years of painful and exhausting effort +in the face of constantly falling prices and then in a large +percentage of cases to lose their property at last. But this can not +be avoided so long as we attempt to keep up what is called the gold +standard. It is a necessary consequence of the gold standard that we +shall have the scale of prices that obtains in gold standard countries +If the presence of gold in this country is to destroy our people, who +doubts that it should go? If its presence is to result in the destruction +of equity and justice, who doubts that it should go?</p> + +<p>Nearly every witness who testified before the secret committee of +the House of Commons in 1857 agreed that gold could only be held +by paralysing the business of the country. It is estimated by witnesses +who testified before that committee, that in the panic of 1847, +in Great Britain, the property of the country, by reason of the measures +rendered necessary to maintain the single gold standard, was depreciated +$1,500,000,000. I commend that report to the careful and +serious perusal of the advocates of the single gold standard in this +country.</p> + +<p>Among the witnesses before the committee were John Stuart Mill, +Lord Overstone, and many other men distinguished in the world of +letters and finance. I am informed by the Librarian of Congress that +there is but one copy of the work in the United States. It would be +well worth while for Congress to order a number of copies of it +printed, for there is no work with which I am acquainted that contains +so much practical information as to the working of the single +gold standard. According to the testimony taken before that committee, +the experience of Great Britain since 1819 shows that gold +alone, even when re-enforced by paper money convertible exclusively +into gold, instead of being a beneficent instrument of valuation, has +proved a cruel instrument of injustice.</p> + +<p>A brief consideration of the causes which affect the movement of +gold will not be out of place in this connection.</p> + + +<p class="caption">RATIONALE OF THE MOVEMENT OF GOLD.</p> + +<p>Why is it that gold leaves country and goes to another? For +one reason only—the advantage of its owner. Whenever he can make +a profit by sending it out, the gold goes; and the period when that +profit can be made is indicated when the prices of goods that are internationally +dealt in are either rising in the country which it leaves +or falling in the country to which it goes. It is only to pay for importable +goods that gold ever leaves the country in which the owner +resides. Being an international money, and receivable everywhere +at its full face value, gold loses nothing by transfer; hence it is +sent wherever it will for the time being have the greatest purchasing +power.</p> + +<p>Whenever the general range of prices in this country of commodities +internationally dealt in becomes than higher than the general range +of the same commodities abroad, it is manifest that then gold can +used to advantage by purchasing those articles abroad and selling +them here. If the gold that goes out goes from stock that has been +hoarded here, the outflow has no immediate or direct effect upon +prices in this country, although, by increasing or "inflating" the +volume of money abroad it assists in raising prices there, and thus +tends to secure for our exported products a better price in the foreign<span class='pagenum'><a name="Page_p087" id="Page_p087">[87]</a></span> +market. But if the gold goes from the amount that is in active circulation +here, and if the void created by this outflow is not filled +with other forms of money, such as silver, or paper, it results in a reduction +of the volume of money in actual use in this country, while +at the same time increasing the volume of money abroad.</p> + +<p>This increase in the foreign money stock causes a rise of prices +abroad, while the corresponding reduction of our currency causes +a proportionate fall of prices here, hence there is a constant tendency +to an equilibrium of prices of all articles of international +commerce.</p> + +<p>No outflow of gold would follow a rise of prices here except in so +far as that rise affected articles internationally dealt in. No rise of +prices of such articles as we do not import would tend in any way +to drive out gold. If, for example, raw cotton should increase in +price in this country, that fact would not tend to drive out gold, because +we do not import raw cotton. But should the prices of articles +of manufactured cotton rise here above what those same articles could +be bought for in any foreign country our merchants would send abroad +for them, provided that, after paying the freight charges and customs +dues, they could make a profit on them.</p> + +<p>So, also, if crockery-ware were made in this country, and its price +should rise to, say, double the present price, then, instead of buying +the American, or home-made article, our crockery merchants, finding +that they could buy in England, France, or Germany cheaper than +they could buy in this country, would decline to buy the American +crockery, and would send abroad for any article, provided that, after +paying freight charges and customs dues, they could sell it here at a +profit. That would tend to increase the shipments of gold to foreign +countries.</p> + +<p>That an outflow of gold does not follow from a rise of general +prices, but only of prices of articles of international trade, is manifest +from the fact that if land becomes cheap in other countries, gold +does not leave this country to buy it. When real estate is cheap in +Brazil, or Australia, or in Germany, France, or even England, the +owners of gold in this country do not send it abroad to make purchases +of real estate.</p> + +<p>So wages of labor may rise in this country, or compensation for all +manner of services that must be performed here, and gold would not +leave as a consequence. But if cloth were cheaper—quality considered,—in +England, France, or Germany, or at the remotest ends of +the earth,—than in this country, our merchants would send gold for it +in order to sell it here at a profit.</p> + +<p>Altogether too much importance is attached to the possession of a +large stock of gold, unless that stock form part of the active circulation +of the country. So long as it remains in circulation it sustains +prices and develops industry and internal commerce. But the +tendency of gold being to find the most profitable field for operation, +its continued presence in the country can never be relied upon.</p> + +<p>When we take gold from other countries prices in those countries +fall, owing to the reduction of the volume of money there; and owing +also to the action of the foreign banks in immediately raising their +rates of discount on commercial paper and suddenly calling loans. As +there is less money left in such country with which to pay for commodities, +we are obliged to accept lower prices for the products we +ship to it.</p> + +<p>The larger the stock of gold, therefore, accumulated by us the lower,<span class='pagenum'><a name="Page_p088" id="Page_p088">[88]</a></span> +necessarily, must be the price which we can receive for our surplus +agricultural products.</p> + +<p>In order to maintain parity between the metals, it is not necessary +for us to have all the gold we now have; $200,000,000, or even +$100,000,000 of gold, would maintain that parity. The parity between +the metals can never be broken until all the gold leaves, and +provided we retain one or two hundred million, the rest can not be +placed more advantageously than where our languishing surplus +products must be sold.</p> + +<p>When gold leaves this country it is because prices here are rising. +Prices are now lower than they have been since 1847. Must they +continue declining in order that we may be able to retain all our +gold? It is manifestly impossible for the people of this country +to prosper with a constantly lowering range of prices. It is equally +impossible for the present level of prices to be maintained with a +constantly increasing demand for, and as constantly diminishing +a supply of, gold. It is universally admitted that an increase in the +money circulation of this country at the present time is an exigent +necessity. The advocates of the single gold standard, while admitting +that we must increase our money volume, the effect of which +must be to maintain, if it does not raise, the level of prices here, +insist that we shall let none of our gold go in order that prices abroad +may rise.</p> + +<p>Mr. BLAIR. May I ask the Senator a question?</p> + +<p>Mr. JONES, of Nevada. Certainly.</p> + +<p>Mr. BLAIR. Does the Senator mean to be understood that the +falling of prices is an absolute demonstration of the increased value +of the money without limitation?</p> + +<p>Mr. JONES, of Nevada. I have already, in the early portion of my +remarks, had occasion to state that when a fall in prices was brought +about by a larger subordination of the forces of nature to the uses of +man, as where the comforts and conveniences of life could be produced +with less sacrifice than before, it was not an injury to society, +but in advantage. In other words, if, by a certain amount of sacrifice +seventeen year ago, only one pair of shoes could be produced, +and if by the same sacrifice two pairs could be now produced, there +would be a lowering of the price of shoes to about one-half of what +it was seventeen years ago, which would be a very great benefaction +to mankind.</p> + +<p>But, as I then stated, there is one certain sign that that is not, except +to the slightest extent, the cause of the present universal fall +of prices. When prices fall owing to improvements in manufacture, +business revives, the masses of the people are at work, those who +toil find themselves possessed of more of the comforts, of the conveniences, +and even of the luxuries of life than before. They are +better contented with their condition, and more buoyant and hopeful +than before. On such occasions money becomes more and more +in demand than it was before, and instead of being hoarded is put +into active and productive business where it will make a profit. But +when interest falls, pari passu, with the fall of prices, it shows that +the fall of prices is not due, except in the smallest degree, to improved +methods of production, but to the increased value of money.</p> + +<p>Mr. BLAIR. I was not controverting the Senator's theory as to +the existing facts in this country, but I understood him to be laying +down an absolute principle, applicable under all circumstances and +in all times, that the fall of prices is a demonstration of the increased +value of money. I supposed that the fall in prices resulting from a<span class='pagenum'><a name="Page_p089" id="Page_p089">[89]</a></span> +protective tariff was beneficial, and not an indication of an increase +in the value of money, and that that fall of price was not owing to +the increased value of money, but was by improved machinery and +all that. So it is possible that some of the fall in prices in this +country may be owing to increased facility in the matter of production +and to the beneficial operations of the protective tariff.</p> + +<p>Mr. JONES of Nevada. Mr. President——</p> + +<p>Mr. REAGAN. If the Senator from Nevada will permit me, I wish +to ask the Senator from New Hampshire if he means to be understood +as assuming that a protective tariff reduces the value of the +commodities produced?</p> + +<p>Mr. BLAIR. I was simply asking for information of the Senator +from Nevada, and he can answer that question much better than I; +but the Senator from Texas understands very well that I do believe +a protective tariff reduces prices.</p> + +<p>Mr. JONES, of Nevada. Mr. President, so far as a tariff has the +effect of reducing prices in any country, it is not by reason of the +levying of any certain percentage of duty on the imported goods. +The first effect of the tariff certainly always must be to raise prices. +The fundamental theory of the tariff is—whether it be correct or not +I am not now discussing—that by that tariff you place the price of +manufactured goods up to a range at which they can be produced in +the country in which the tariff is levied, and upon the level of the +range of wages and manner of living which obtain in that country. +By so doing, if you have a proper volume of money, you set all +your people at work, and keep them at work at a variety of occupations. +In such case every forge, furnace, and factory becomes a +school, every machine-shop an academy, and every cunning device +and invention becomes a lesson, teaching the people how to deal with +the subtle forces of the universe. So far as this country is concerned +the theory of the tariff is that 65,000,000 people should have a varied +and complete system of manufactures, which should supply practically +all their own wants, instead of an abnormal proportion of them +being driven into the single occupation of farming and relying on +foreign manufacturers to supply such finished products as they need. +To draw out and develop the aptitudes of a people a large variety +of occupations is indispensable. When all men are employed at their +aptitudes new inventions multiply, progress is accelerated, and the +secrets of nature are more rapidly unfolded. Hence the McCormick +reaper; hence the sewing-machine, that great instrument which +clothes the world, because of the discovery that the eye of the needle +should be at the point; hence the air-brake, the telegraph, the electric +light, and thousands of other inventions that a protected people +originate and develop, which would perhaps not have been originated +or might have been long delayed if it had not been for the discouragement +to imports caused by the tariff, and the encouragement +to our people to go into manufactures by which their varied talents +are drawn out and cultivated.</p> + +<p>There is no doubt that eventually as our conditions improve, increasing +numbers of our people will by degrees emerge from agricultural +and enter manufacturing pursuits. A tariff, by stimulating the +organization and development of industries, trains men to greater skill +and perfection of workmanship in a variety of departments, and with +greater skill comes greater efficiency of labor, and so greater economy +of time. In that way the prices of certain products are in time reduced; +but that is not a reduction of which any one complains.</p> +<p><span class='pagenum'><a name="Page_p090" id="Page_p090">[90]</a></span></p> +<p>The true cause of the present discontent will not be found in the +protective tariff, but in the exactions of the single gold standard.</p> + +<p>Fifteen years ago England was on the gold standard. It is on +the gold standard to-day; yet prices in England are 35 per cent. +lower than they were fifteen years ago. There being no reason why +there should be any change in the trend of prices, so long as a fierce +contest for the possession of gold shall be waged between England, +France, Germany, and the United States, we are justified in assuming +that a proportionate decline of prices will continue. That means +a further decline of 30 or 35 per cent. in prices during the next fifteen +years. Where is this tendency to stop? and if it does not stop, how +long will it be before the masses of the people become the bond slaves +of the creditors? It is shocking to the moral sense of mankind that a +few money-lenders and bondholders should thus be able, silently and +insidiously, to wreck the business of every country in the world by +constantly increasing the value of the money unit.</p> + +<p>While admitting the necessity of more monetary circulation, our +gold standard friends fail to show us how it is possible for an increase +in the volume of money to benefit our merchants, farmers, or mechanics +if the prices that prevail in gold standard countries are to prevail +here; for that is what the gold standard means for us, Mr. President. +It means that the prices that rule in gold standard countries are to +rule here.</p> + +<p>The extreme indefiniteness with which the term "gold standard" +is used has so befogged the relation which gold money bears to industry +and commerce that people lose sight of the essential feature +of that relation. It is impossible to have a clear conception of the +gold standard without keeping in view exactly what is implied by +the term. What men must mean in this country by "the gold +standard" is not the touch of the metal, for they never touch it, +and rarely, if ever, see it. The maintenance of the gold standard +here simply means the maintenance here of the range of prices that +prevail in gold-using countries; that is to say, that low and lowering +range of prices rendered necessary by the attempt to measure the +value of the constantly increasing mass of the products of industry +in all the western world by the constantly diminishing volume of +gold. No relief can come to the toiling masses of this country until +we can lift our prices above those that now prevail in gold-using +countries.</p> + +<p>Even if our prices remain as they are and do not increase, gold +will eventually leave the country if it continue to increase in value +as it has been increasing during the past fifteen years. We have +been enabled to maintain the gold standard here for the past twelve +years notwithstanding a considerable addition of money other than +gold to our currency, but we have been able to do so only because +other countries have been using an equal or greater amount of money +other than gold. We have been using no greater proportion of silver +or paper money than other countries having the gold standard are +using, hence we have been able to maintain their level of prices and +still keep the metals together. But whenever we shall attempt to +prevent a further fall or prices in this country, it will be impossible +for us to retain our gold so long as prices in gold-using countries continue +to decline as they have been declining. Gold will leave as +quickly because of contraction abroad as of inflation here, if by "inflation" +is meant a coinage of money sufficient to maintain prices at +a steady level.</p> + +<p>Should gold leave the country, then, in order to supply its place,<span class='pagenum'><a name="Page_p091" id="Page_p091">[91]</a></span> +in order to maintain the <i>status quo</i> in prices, and prevent a further +fall from the present low range, we should need to have as many +dollars of silver in circulation as there are now dollars of gold. Gold +would go out only because our prices were rising, and as it went +prices would cease to rise. That process might continue until three +or four hundred million dollars of gold had gone. In all this, where +would be the disadvantage to our people?</p> + +<p>Considering the rapidly increasing population and wealth of this +country, all the silver that can be procured from the mines will be +necessary to maintain the level of prices and to keep pace with the +increasing demands for money. If, however, it slightly exceeds—and +it could not at the utmost more than slightly exceed—the amount +actually demanded by increasing population and business, the over-plus +of each year would take a great many years to drive gold out +of the country, dollar for dollar. For, when prices here, of things +internationally dealt in, are at an equilibrium with prices of the +same articles abroad, gold can not go any faster than silver comes in.</p> + + +<p class="caption">IF $2,500,000 SILVER PER MONTH HAS NOT DRIVEN OUT GOLD, HOW MUCH WILL DO SO?</p> + +<p>For twelve years past we have had a silver coinage of nearly +$2,500,000 a month, yet no gold has been driven out. Having tested +the capacity of that quantity of silver to drive out gold, we find that +instead of driving it out its coinage has resulted rather in bringing +gold in. For, to whatever cause the influx of gold may be ascribed, +it is unquestionable that the gold has come, and it has needed all that +gold, and all the silver that we have coined, to maintain international +prices here.</p> + +<p>It is admitted by all that gold can not go out except by reason of +a rise in this country of the prices of articles of international commerce +beyond the prices of the same articles prevailing abroad. It +is only then that it becomes more profitable to send out gold in payment +for our foreign purchases than to send out commodities—the +products of our own country. Commodities will always be sent out +in payment for other commodities so long as it is more profitable to +send them than gold, and when, by reason of low prices prevailing +abroad and high prices here, it is no longer profitable to send out +commodities, purchasers send out gold, but only because it is to their +advantage to do so.</p> + +<p>Now, having seen that the coinage of $2,500,000 of silver each +month was insufficient to so raise prices in this country as to induce +gold to go abroad, but that on the contrary it resulted in an influx +and accumulation of a large amount of gold, we may safely assume +that only so much of the amount of silver which Congress shall now +provide for as exceeds $2,500,000 a month will have any influence +in raising prices in this country above international prices, and so +providing a stimulus for gold to go abroad in payment for commodities +imported into this country.</p> + +<p>If the amount of silver which shall be now provided should be, +say, $5,000,000 a month, the excess over the present coinage would +be $2,500,000 a month. This, then, would be the amount that would +drive out gold. As one dollar of silver would drive out no more than +one dollar in gold, no more than $2,500,000 could go out monthly. +That would leave in circulation the same amount of money that is +in circulation now. There would still be no increase in the money +volume of the country, and, with no increase in the volume of +money, prices here would not rise above international prices. At +the rate of $2,500,000 a month, it would take twenty years to drive<span class='pagenum'><a name="Page_p092" id="Page_p092">[92]</a></span> +out $600,000,000 of the $700,000,000 of gold now in this country. It +would take even longer than that, because the $600,000,000 driven +out would tend to raise international prices abroad, and so check +the outflow of gold from here.</p> + +<p>Mr. McPHERSON. Will the Senator yield to me for a question, +or does he prefer to go on?</p> + +<p>Mr. JONES, of Nevada. I am always ready to answer a question.</p> + +<p>Mr. McPHERSON. I do not want to interfere with the Senator's +line of argument, or with his speech in any form, but it does seem +to me that there is something fallacious about the Senator's argument, +or else my judgment and the experience of the world is all +wrong. I wanted to ask the Senator this question: If it be known +that the Government of the United States, if you please, by such an +increase of the silver coinage in this country as will be produced by +the free coinage of silver, to which theory, as I understand, the Senator +is fully committed—if that be the theory of the Government +hereafter by the command of Congress, I want to ask the Senator if +he broadly and boldly asserts that no gold can be driven out of the +country to a greater extent than dollar for dollar for the silver that +comes in?</p> + +<p>Mr. JONES, of Nevada. Absolutely; I say so.</p> + +<p>Mr. McPHERSON. Then I want to ask the Senator another question, +which seems to be pertinent. Does the Senator assert that if a +72-cent dollar, the value in bullion of a silver dollar during the year +1889, as has been furnished us by the Director of the Mint and the +Secretary of the Treasury, were coined without limit (I say without +limit, the limit being, of course, the amount of bullion that is brought +to the Treasury to coined), and the people of this country who +have been in favor of a safe and honest currency, a currency either +gold or as good as gold, which the Treasury has been able to maintain, +having forced no silver upon the people if they did not wish it, +and in that way the silver dollar having been maintained equal to +the gold dollar, I want to know, with the people of this country +to-day the holders of $500,000,000 of gold, how it is possible for the +Senator to believe that with a 72-cent dollar to take its place the +gold coin would circulate for a single week, or a single day, or a +single hour? If they have the gold will they not hold it?</p> + +<p>Mr. JONES, of Nevada. The Senator has so involved his question +with his argument that I can scarcely get at what he wants me to +answer.</p> + +<p>Mr. McPHERSON. The question I want the Senator to answer +is this: Will the people of this country, the financiers of this country, +the banks, the moneyed men holding $500,000,000 of gold, with a +certainty of the free coinage of silver and going to a silver basis, for +that is what it means, put their gold in circulation, or will they +hoard it? Will it disappear?</p> + +<p>Mr. JONES, of Nevada. I scarcely know what the Senator means +by a "silver basis." He talks about a 72-cent dollar. We have +never seen a 72-cent dollar. The papers in the East have told +us that the silver dollar was worth 72 cents. I recollect talking +on that subject once with some Senators in the cloak-room. During +the conversation one of the Senate pages brought me a telegram, on +which he said the telegraph messenger had told him there were 50 +cents due. I give the page a silver dollar and said to him: "I have +been informed by some very respectable and intellectual gentlemen +in here, some of them now candidates for the Presidency even, that this dollar +is worth only 75 cents. I do not want to cheat a little boy. Take<span class='pagenum'><a name="Page_p093" id="Page_p093">[93]</a></span> +this out, and if the boy thinks it worth only 75 cents he can send me +back 25 cents, and if he thinks it is worth a dollar he can send me back +50 cents. I will leave it to him." The page brought back 50 cents +and said the telegraph boy told him he did not know what those old +"duffers" in there might say, but it was as good a dollar as he +wanted and was very hard to get. [Laughter.]</p> + +<p>The Senator talks about the bullion value as though that had anything +whatever to do with the value of the dollar. I have attempted +to demonstrate that the material that was in the dollar has nothing +whatever to do with it. Let me illustrate. Suppose the entire supply +of silver of the world to-day were $60,000,000. Suppose the +law limited the coinage of it to $58,000,000, and every dollar coined +was at par with gold. Suppose there were a demand for half a +million dollars of silver, to be used in the arts, and that the remainder +($1,500,000) of uncoined silver were barred from the imperial +money use. That supposes a supply of $2,000,000 left after satisfying +the requirements for coinage, and supposes only half a million +dollars' demand for use in all the arts. In that case there +would be a $2,000,000 supply bearing down a half million dollars' +art demand, or a proportion between supply and demand of 4 +to 1. Suppose that under those circumstances silver bullion went +to 50 cents an ounce. Would the Senator then say that 50 cents an +ounce was the value of the $58,000,000, and all the rest of the coined +silver of the western world, while by coining another million and a +half, which would be nothing to a country like this, all the silver +would be at par with gold? Every ounce of silver coined in Europe +and the United States is at par with gold, a thousand or twelve +hundred million dollars of it to-day in France, $200,000,000 in Germany, +$370,000,000 of it here. We are not dealing with the price of +silver bullion, that portion of silver that is deprived of its immemorial +use as money. We do not say what the commodity demand +for silver may make that worth. Such a consideration has no bearing +whatever on the value of money.</p> + +<p>I will suppose that in some one county of the United States a law +were passed that the wheat grown in that particular county should +have no right to go through the grist-mill, and that that wheat, as +it might very naturally do, being deprived of use, fell to one-half the +price of the wheat grown elsewhere in the country. Would the +price of the wheat of that one county thus under interdiction and +denied the grist be a fair gauge by which to measure the value of +the entire wheat crop of the country? Manifestly not. All we have +to do is to take up the little "slack" of silver, and all of it will at +once be at par with gold; then we shall hear no more about the "commodity +value" of silver. That is the contention that the bimetallists +make.</p> + +<p>Mr. HEARST. It will be $1.29.</p> + +<p>Mr. JONES, of Nevada. It will be $1.29 an ounce in one week—in +three days—in fact the very moment you give it back its ancient +right of coinage and restore to it its full money power. You coin of +gold all that is brought to the mint, and you deny to a certain +portion of silver that same long-established privilege, and then you +measure the value of the whole supply of silver by that of the little +fraction that is not coined, and which therefore has to find a market +as a commodity.</p> + +<p>Mr. McPHERSON. Then, if the Senator will permit me, he necessarily +proposes that the Government of the United States shall take +up all this "slack," as he calls it, in the surplus quantity of silver<span class='pagenum'><a name="Page_p094" id="Page_p094">[94]</a></span> +and shall use it in the coinage. The mints of Europe being closed +against the coinage of silver, there is no other place where it will be +coined. Now, if the Government of the United States should use all +the surplus silver in the country, which has simply forced the price +down since we remonetized silver in 1878 more than 20 per cent.——</p> + +<p>Mr. JONES, of Nevada. Gold has risen 35 per cent.</p> + +<p>Mr. McPHERSON. Then I think the Senator's argument is upon +this idea and upon this plan, that after we are upon a silver basis, +as we should be most assuredly, there would be no inequality in the +money, because it would be all silver.</p> + +<p>Mr. JONES, of Nevada. And no inequality between it and gold.</p> + +<p>Mr. McPHERSON. Certainly not, because there would be no gold +in circulation. But let me ask the Senator another question. While +he can use his short-legged silver dollar for the payment of debts, +when he comes to make a new obligation would not the price of the +goods assume a price equal to the difference between gold and silver? +In other words, while you can use a debased currency for the payment +of debts, if a legislative decree requires that you shall accept +it, you can not use it for any other purpose.</p> + +<p>Mr. JONES, of Nevada. I can not understand the Senator. We +have not provided any "short-legged" dollar. The Senator is assuming +a good many facts and attempting to adjust me to them. I +ask the Senator to wait until he has heard my argument, and I +invite the Senator then to make reply to it.</p> + +<p>Mr. McPHERSON. I am sorry that I interfered with the Senator.</p> + +<p>Mr. JONES, of Nevada. It was no interference on the part of the +Senator, except that I can not separate the Senator's questions from +the argument and assumptions that he makes. As to the outflow of +gold, as I have said, it would take a long time for even $400,000,000 +of it go. The amount of gold driven out would tend to raise prices +abroad by making money more plentiful there, and so check the outflow +of gold from here. When Senators speak about $600,000,000 of +gold being withdrawn from circulation here a question that is a little +curious arises. What are these people who own it going to do with +that gold after they have withdrawn it from circulation? Are they +going to invest it in Great Britain? Are they going to invest it in +France? Are they going to the Cape of Good Hope to invest it? If +they are they will reverse the policy that English capitalists are pursuing +now and have been pursuing for years—bringing their gold +over here for investment. The Senator tells us that gold is to disappear +from circulation. What will the owners do with it? Where +and in what are they going to invest it?</p> + +<p>Mr. McPHERSON. It will be held for a premium.</p> + +<p>Mr. JONES, of Nevada. But who will buy it at a premium? Who +needs it at all? For what purpose is it needed? Who is going to +pay any premium for it? Nobody is "short" on it, and there is no +law which forces anybody to have it.</p> + +<p>Mr. President, nobody wants it enough to give a premium for it. +It is only worth what is daily paid in the markets of the world and +nobody is going to pay a premium for it. It is a bogie with which +to frighten the people who demand reform in the currency of this +country. Let them withdraw their gold.</p> + +<p>I tell the Senator it is not the men who hoard the gold in vaults +who maintain or promote the prosperity of this country, but the +toilers in the wheat-fields and on the farms of the country, the men +who work in the planing mills, the forges, the furnaces, the factories, +and in all our institutions of industry. It is they that bring<span class='pagenum'><a name="Page_p095" id="Page_p095">[95]</a></span> +us our prosperity, and not these people who are gambling for premiums +on gold.</p> + +<p>Let them gamble among themselves; let who lose and let who win, +the people care nothing. The people of the United States are going +to institute a money that shall install and maintain justice as between +the citizens of this country, and they will not be impeded. I can tell +the Senator that neither his party nor the Republican party will ever +impede the march that this great country is about to make—the first +in the world, I am glad to say—in adjusting to the demands of industry +and commerce, that great instrument, money, the non-adjustment +of which, as I have already stated, has, in my belief, +caused more misery than was ever caused by war, pestilence, and +famine.</p> + +<p>But to resume at the point where I was interrupted:</p> + +<p>The gold going out would tend constantly to restore the equilibrium +between our prices and those of the gold-using countries, +making the proportion of the gold outflow each year less than that +of the year before. If there be included in this computation the +remaining $100,000,000 of gold, which would remain after the outflow +of the $600,000,000, we shall be compelled to come to the conclusion +that the time when our stock of gold can be driven out will +be almost indefinitely postponed.</p> + +<p>But even should all our gold go by reason of the remonetization +of silver, it will not be to the injury of the gold standard, but to +its great advantage, and to the equally great advantage of the +masses of the people, as well of this country, which the gold may +leave, as of all countries to which it may go. It will make the +"gold standard" consistent with the prosperity of the countries +maintaining it. But instead of preserving the gold standard of to-day, +which is a standard of wrong, it will inaugurate a gold standard +that will approximate to a standard of justice.</p> + +<p>The new "gold standard" that would be established by the outflow +of our gold would be a standard of prices resulting from the +influx into England, France, and Germany, the principal gold-using +countries of Europe, of more than $600,000,000 of money.</p> + +<p>So considerable an addition to their money-stock would raise +prices in those countries, and by remaining there, would, with the +current production, which we could spare to them, tend to maintain +prices at a steady level. Such a condition would be an inestimable +boon to the overburdened masses of Europe, and their prosperity +would not be attained at the expense of the people of the United +States. We could well afford to let gold go, since, by the coinage +of silver, our own money volume would not be reduced. The rise +of prices which it would effect in Europe would not only, as I +have stated, secure better prices for our exported goods, but would +undoubtedly enable us to maintain prices here at a substantial parity +with those of Europe—that is to say, with those of the new, more +rational and more beneficent gold standard which would be established +by the full remonetization of silver in this country.</p> + + +<p class="caption">PRACTICALLY NO GOLD MONEY IN THE UNITED STATES.</p> + +<p>But, aside altogether from this consideration, the gold that we +already have is really a surplus—it is practically a dead and useless +article. Gold, Mr. President, can not with entire truth be said at +the present time to form any part of the money of this country. +Who but a bank clerk ever sees a gold piece? With the exception +of a few million dollars on the Pacific coast, gold is not really in cir<span class='pagenum'><a name="Page_p096" id="Page_p096">[96]</a></span>culation +in this country. It is performing no useful function whatsoever. +While I am engaged in delivering these remarks I venture +to say no Senator within the sound of my voice has in his pocket a +single gold coin of any denomination whatever, or any paper representative +of one.</p> + +<p>This is the answer to the fear expressed by some Senators that +when those who hold gold shall observe the enlargement of the money +circulation by the issue of the proposed Treasury notes they will +be likely to hoard it. They are already hoarding it. Every body +knows that that is about all that gold is used for in this country. +It is hardly possible for it to be hoarded to any greater extent than +it is at the present time. So little is this metal in circulation that +I do not deem it any exaggeration to say that there are millions of +people in the United States, "native here, and to the manner born," +who have never in all their lives seen a gold coin.</p> + +<p>How absurd, then, is the claim that any loss is to be suffered by +the alleged future hoarding of gold, or that any calamity can occur +to 65,000,000 people by the disappearance of that which has long +since disappeared.</p> + + +<p class="caption">THE ARGUMENT BASED ON OUR BALANCE OF TRADE.</p> + +<p>One of the staple arguments of the advocates of the single gold +standard is, that if our stock of gold were greatly reduced we should +be unable to make payments to foreign countries in case the balance +of trade turned against us. It is only through an excess of imports +over exports that gold could go, and this country now produces of +nearly all articles almost all that it consumes. With the exception +of two years there has not been a balance of trade against us for +fourteen years, as the following table will show:</p> + +<p class="caption"><i>Value of merchandise imported into, and exported from, the United States, +from 1876 to 1889, inclusive; also annual excess of imports or of exports—specie +values.</i></p> + + +<div class='center'> +<table border="0" cellpadding="4" cellspacing="0" summary="" rules="cols"> +<tr> +<th class='bbox'>Year ending<br />June 30—</th> +<th class='bbox'>Total exports.</th> +<th class='bbox'>Total imports.</th> +<th class='bbox'>Total exports<br />and imports.</th> +<th class='bbox'>Excess of exports<br />over imports.</th> +<th class='bbox'>Excess of imports<br />over exports.</th> +</tr> +<tr><td align='right'></td><td align='center'> <i>Dollars.</i></td><td align='center'> <i>Dollars.</i></td><td align='center'> <i>Dollars.</i></td><td align='center'> <i>Dollars.</i></td><td align='center'> <i>Dollars.</i></td></tr> +<tr><td align='right'> 1876</td><td align='right'> 540,384,671</td><td align='right'> 460,741,190</td><td align='right'> 1,001,125,861</td><td align='right'> 79,643,481 </td><td align='right'> —</td></tr> +<tr><td align='right'> 1877</td><td align='right'> 602,475,220</td><td align='right'> 451,823,126</td><td align='right'> 1,053,798,346</td><td align='right'> 151,152,094</td><td align='right'> —</td></tr> +<tr><td align='right'> 1878</td><td align='right'> 694,865,766</td><td align='right'> 437,051,532</td><td align='right'> 1,131,917,298</td><td align='right'> 257,814,234 </td><td align='right'> —</td></tr> +<tr><td align='right'> 1879</td><td align='right'> 710,439,441</td><td align='right'> 445,777,775</td><td align='right'> 1,156,217,216</td><td align='right'> 264,661,666 </td><td align='right'> —</td></tr> +<tr><td align='right'> 1880</td><td align='right'> 835,638,658</td><td align='right'> 667,954,746</td><td align='right'> 1,503,593,404</td><td align='right'> 167,683,912 </td><td align='right'> —</td></tr> +<tr><td align='right'> 1881</td><td align='right'> 903,377,346</td><td align='right'> 642,664,628</td><td align='right'> 1,545,041,974</td><td align='right'> 259,712,718 </td><td align='right'> —</td></tr> +<tr><td align='right'> 1882</td><td align='right'> 750,542,257</td><td align='right'> 724,639,574</td><td align='right'> 1,476,181.831</td><td align='right'> 25,902,683 </td><td align='right'> —</td></tr> +<tr><td align='right'> 1883</td><td align='right'> 823,839,402</td><td align='right'> 723,180,914</td><td align='right'> 1,547,020,316</td><td align='right'> 100,658,488 </td><td align='right'> —</td></tr> +<tr><td align='right'> 1884</td><td align='right'> 740,513,609</td><td align='right'> 667,697,693</td><td align='right'> 1,408,211,302</td><td align='right'> 72,815,916 </td><td align='right'> —</td></tr> +<tr><td align='right'> 1885</td><td align='right'> 742,189,755</td><td align='right'> 577,527,329</td><td align='right'> 1,319,717,084</td><td align='right'> 164,662,426</td><td align='right'> —</td></tr> +<tr><td align='right'> 1886</td><td align='right'> 679,524,830</td><td align='right'> 635,436,136</td><td align='right'> 1,314,960,966</td><td align='right'> 44,088,694</td><td align='right'> —</td></tr> +<tr><td align='right'> 1887</td><td align='right'> 716,183,211</td><td align='right'> 692,319,768</td><td align='right'> 1,408,502,977</td><td align='right'> 23,863,443</td><td align='right'> —</td></tr> +<tr><td align='right'> 1888</td><td align='right'> 695,954,507</td><td align='right'> 723,957,114</td><td align='right'> 1,419,911,621</td><td align='right'> —</td><td align='right'> 28,002,607</td></tr> +<tr><td align='right'> 1890</td><td align='right'> 742,401,375</td><td align='right'> 745,131,652</td><td align='right'> 1,487,533,027</td><td align='right'> —</td><td align='right'> 2,730,277</td></tr> +<tr><td class='bb'></td><td class='bb'></td><td class='bb'></td><td class='bb'></td><td class='bb'></td><td class='bb'></td></tr> +</table></div> + +<p>This table shows that while for last year there was a balance +against us of $2,730,277, and the year before of $28,002,607, for all +former years from 1887 back to 1874 the balances were in our favor—all +the way from $23,000,000 in 1887 to $265,000,000 in 1881. But the +total want of significance so far as the movement of gold is concerned<span class='pagenum'><a name="Page_p097" id="Page_p097">[97]</a></span> +attaching to any figures showing a balance of trade against the +United States will be seen by an analysis of the figures for any one +year. Let us take for example the imports and exports for 1889 and +analyze them by countries.</p> + +<p>I now present a table in which I place in one group the gold-using +countries, and in another the silver and paper-using countries.</p> + +<p class="caption"><i>Exports and imports of the United States to and from the various gold-using +and silver-using or paper-using countries of the world for the +fiscal year ending June 30, 1889.</i></p> + + +<div class='center'> +<table border="0" cellpadding="4" cellspacing="0" summary="" rules="cols"> +<tr><th class='bbox'>Countries.</th><th class='bbox'>Exports.</th><th class='bbox'>Imports.</th></tr> +<tr><td align='left'><b>Gold-using countries:</b></td><td align='right'></td><td align='right'></td></tr> +<tr><td align='left'> Canada</td><td align='right'> $42,141,156</td><td align='right'> $43,009,473</td></tr> +<tr><td align='left'> Belgium</td><td align='right'> 23,345,219</td><td align='right'> 9,816,435</td></tr> +<tr><td align='left'> Denmark</td><td align='right'> 3,903,937</td><td align='right'> 846,904</td></tr> +<tr><td align='left'> France</td><td align='right'> 46,120,041</td><td align='right'> 69,566,618</td></tr> +<tr><td align='left'> Germany</td><td align='right'> 68,002,594</td><td align='right'> 81,742,546</td></tr> +<tr><td align='left'> Great Britain</td><td align='right'> 382,981,674</td><td align='right'> 178,269,067</td></tr> +<tr><td align='left'> Greece</td><td align='right'> 165,079</td><td align='right'> 988,923</td></tr> +<tr><td align='left'> Italy</td><td align='right'> 12,604,848</td><td align='right'> 17,992,149</td></tr> +<tr><td align='left'> Netherlands</td><td align='right'> 15,062,939</td><td align='right'> 10,950,843</td></tr> +<tr><td align='left'> Portugal and its possessions</td><td align='right'> 3,266,814</td><td align='right'> 1,282,556</td></tr> +<tr><td align='left'> Spain</td><td align='right'> 11,946,348</td><td align='right'> 4,636,661</td></tr> +<tr><td align='left'> Sweden and Norway</td><td align='right'> 2,615,569</td><td align='right'> 2,983,319</td></tr> +<tr><td align='left'> Turkey</td><td align='right'> —</td><td align='right'> 4,687,731</td></tr> +<tr><td align='left'> British possessions in Africa</td><td align='right'> 2,936,213</td><td align='right'> 895,344</td></tr> +<tr><td align='left'> British possessions in Australia</td><td align='right'> 12,321,980</td><td align='right'> 5,998,211</td></tr> +<tr><td align='left'><b>Silver and paper using countries:</b></td><td align='right'></td><td align='right'></td></tr> +<tr><td align='left'> Austria-Hungary</td><td align='right'> 726,156</td><td align='right'> 7,642,297</td></tr> +<tr><td align='left'> Russia</td><td align='right'> 8,364,545</td><td align='right'> 2,985,631</td></tr> +<tr><td align='left'> Mexico</td><td align='right'> 11,486,896</td><td align='right'> 21,253,601</td></tr> +<tr><td align='left'> Central America</td><td align='right'> 4,325,923</td><td align='right'> 8,414,019</td></tr> +<tr><td align='left'> Hawaii</td><td align='right'> 3,375,661</td><td align='right'> 12,847,740</td></tr> +<tr><td align='left'> Argentine Republic</td><td align='right'> 9,293,856</td><td align='right'> 5,454,618</td></tr> +<tr><td align='left'> Brazil</td><td align='right'> 9,351,081</td><td align='right'> 60,403,804</td></tr> +<tr><td align='left'> Chili</td><td align='right'> 2,972,794</td><td align='right'> 2,622,625</td></tr> +<tr><td align='left'> Peru</td><td align='right'> 780,835</td><td align='right'> 314,032</td></tr> +<tr><td align='left'> Colombia</td><td align='right'> 3,821,017</td><td align='right'> 4,263,519</td></tr> +<tr><td align='left'> Uruguay</td><td align='right'> 2,192,848</td><td align='right'> 2,986,964</td></tr> +<tr><td align='left'> Venezuela</td><td align='right'> 3,738,961</td><td align='right'> 10,392,569</td></tr> +<tr><td align='left'> Cuba</td><td align='right'> 11,691,311</td><td align='right'> 52,130,623</td></tr> +<tr><td align='left'> Hayti</td><td align='right'> 5,340,270</td><td align='right'> 5,211,704</td></tr> +<tr><td align='left'> Porto Rico</td><td align='right'> 2,224,931</td><td align='right'> 3,707,373</td></tr> +<tr><td align='left'> British West Indies</td><td align='right'> 10,453,973</td><td align='right'> 20,723,268</td></tr> +<tr><td align='left'> Dutch West Indies</td><td align='right'> 887,778</td><td align='right'> 654,320</td></tr> +<tr><td align='left'> China</td><td align='right'> 6,477,512</td><td align='right'> 18,508,678</td></tr> +<tr><td align='left'> India, British</td><td align='right'> 4,330,413</td><td align='right'> 20,029,601</td></tr> +<tr><td align='left'> India, Dutch</td><td align='right'> 2,249,604</td><td align='right'> 5,207,254</td></tr> +<tr><td align='left'> Japan</td><td align='right'> 4,619,985</td><td align='right'> 16,687,992</td></tr> +<tr><td class='bb'></td><td class='bb'></td><td class='bb'></td></tr> +</table></div> + +<p>By this table it is seen that the only gold-using countries having +a balance of trade against us are Canada, $868,317; France, +$23,446,577; Greece, $823,824; Germany, $13,739,952; Italy, +$5,387,301; Sweden and Norway, $367,850; Turkey, $4,687,731—making +a total balance against us in gold-using countries, +$49,321,452—against which we have a balance in our favor with +Great Britain alone of over $200,000,000.</p> + +<p>The balance against us in favor of all the silver using countries +could of course be readily settled in silver; and by carefully noting +the figures of the table last given it will be seen that it is in the last<span class='pagenum'><a name="Page_p098" id="Page_p098">[98]</a></span> +degree improbable that there will ever be a balance of trade against +us in the gold using countries, taken as a whole.</p> + +<p>Hence it is clear that if we had no gold at all we could readily +settle all foreign balances that might be against us.</p> + +<p>Nations, however, ultimately, and on the whole, square their accounts +with commodities. Every nation must buy what it wants +with its own products. In this country especially have we nothing +to fear, because any temporary balance against us could always be +met by the yield from our own mines. No country has any difficulty +by reason of my difference in money systems in buying what any +other nation has to sell.</p> + +<p>This view is supported by all writers on political economy. I need +quote but one. Professor Cairnes, professor of political economy in +the University College of London, in his able work on "Some unsettled +questions in political economy" (1874), says:</p> + +<div class="blockquot"><p>It appears to me that the influence attributed by many able writers in the United +States to the depreciation of the paper currency as regards its effects on the foreign +trade of the country is, in a great degree, purely imaginary. An advance in +the scale of prices, <i>measured in gold</i>, in a country, if not shared by other countries, +will at once affect its foreign trade, giving an impulse to importations and checking +the exportation of all commodities other than gold. A similar effect is very +generally attributed by American writers to the action on prices of the greenback +inconvertible currency.</p> + +<p>But it may easily be shown that this is a complete illusion. Foreigners do not +send their products to the United States to take back greenbacks in exchange. +The return which they look for is either gold or the commodities of the country; and +if these have risen in price in proportion as the paper money has been depreciated, +how should the advance in paper prices constitute an inducement for them to send +their goods thither? The nominal gain in greenbacks on the importation is exactly +balanced by the nominal loss when those greenbacks came to be converted +into gold or commodities. The gain may, in particular cases, exceed the loss, but, +if it does, the loss will also, in other cases, exceed the gain. On the whole, and on +an average, they can not but be the equivalents of each other.</p></div> + +<p>Mr. President, the best place in the world where we can have gold +is not in the Treasury of the United States, not in any sub-treasury, +but in circulation, if not in our own country, then, in the foreign +countries where our surplus products are sold. That is where gold +would do us the most good by making money plentiful and prices +correspondingly high. It does us no good here whatever, locked up +as it always is, and doing none of the work of money, but simply reduces +to the minimum the tax-paying and debt-paying power of our +wheat- and cotton-growing communities.</p> + +<p>An unjust money should not be tolerated, whatever the material of +which it may be composed, and the people of this country will not +tolerate it. They do not fear the outflow of gold. If, in order to retain +it, they must continue to lose as they have been losing for the +past fifteen years, they will favor its going, and raise a shout of joy +when it does go. With a perfect money system in our own country +the range of our domestic prices would continue stable and equitable +without regard to the prices of foreign countries. Our foreign trade +would take care of itself, and whatever the balances might be, they +would be much oftener in our favor than against us, and in reality +concern only the importing merchant and not the Government or +the people of the United States. The difficulty of gold-using countries +to get our money, in which to pay us the balances they would +owe us, would be much greater than our difficulty in getting their +money, in which to pay them the occasional balances we might owe +them.</p> + +<p>Much the more serious question, (if it be a serious question at +all, which I deny) is how they shall get our money, not how we<span class='pagenum'><a name="Page_p099" id="Page_p099">[99]</a></span> +shall get theirs. As the balances would be for the most part in our +favor, it is for them to take such steps as may be necessary in order +to pay us. But there is no just reason to apprehend difficulty in +either case. A great country like the United States will have no +trouble in buying the money of any other country at equitable +rates—at rates regulated by the purchasing powers of the moneys of +the two countries, respectively.</p> + +<p>No country in the history of the world, having a money local to +itself, has ever found the slightest difficulty in buying, upon ratios +determined by the relative purchasing powers of the two kinds of +money, a sufficient amount of foreign exchange (which simply means +the money of another country) to meet all adverse balances of trade.</p> + +<p>While earnestly advocating the full remonetization of silver and +the maintenance in this country of a money volume sufficient to insure +a steady level of prices and an unchanging value in the money +unit, I entirely disclaim any desire for an inflation of the currency. +My contention is that without silver we can not keep prices from +further decline, and can not have enough money to serve the growing +needs of population, industry, and commerce.</p> + +<p>At the same time I can not refrain from expressing the conviction +that, as between inflation and contraction, no careful student of history +and of economic science can for a moment hesitate in deciding +that the evils inflicted on society by contraction have been longer +in duration and infinitely greater in degree than any that have ever +resulted from inflation. During all periods in which there has been a +generous increase in the money-volume of a country or of the world, +activity and prosperity have been its accompaniment. I challenge +the citation of an instance to the contrary.</p> + +<p>With a volume of money increasing at a rate sufficient to meet the +demands of a growing population, and especially if the money be +such as will not leave the country, but, under all circumstances, +will remain in it, to sustain prices, preserve equities, and reward +labor, no country with a proper coördination of its industries can +be otherwise than prosperous.</p> + +<p>The property of mobility—of fluidity—which is so much lauded in +gold, is precisely the property least to be desired in the money of a +country, if that property of mobility or fluidity is to keep alternately +bringing money into and taking it out of the country, disturbing +prices and disarranging equities. When it comes, if it enters into +circulation, prices rise; when it goes, prices fall, and thus, instead of +having a steady and level platform of prices on which the trade and +industry of the Republic may rest, like the firm and level platform +of liberty upon which all our citizens stand, we whose business it is +to "see that the Republic take no harm," furnish our people with an +"inclined plane" of finance on which all their business must be conducted. +Men buying this month at the elevated end of the platform +find themselves selling next month at the depressed end.</p> + +<p>Whenever in the history of a country there has been least reliance +on international money (gold) and more reliance on merely national +money (even of paper when reasonable limits were placed upon its +quantity), prosperity has been everywhere present. I need not recall +to the minds of Senators the wave of prosperity that swept over +this country when it was without any international money and +resorted to the "greenback" currency.</p> + +<p>When, as a result of the Franco-German war, France was deprived +of international money, suspended specie payments, and resorted to +a properly limited paper currency, her progress was unbounded.<span class='pagenum'><a name="Page_p100" id="Page_p100">[100]</a></span></p> + +<p>No period in the history of Great Britain can compare for activity, +prosperity, or achievement, with the twenty years preceding 1816, +when specie payments were suspended, and during which period, as +testified to by witnesses before the secret committee of Parliament, +the discount rate of the Bank of England did not buffer a single +change; whereas from that period to 1847 the rate was changed +sixteen times, and from 1847 to 1874 as many as 274 times, the fluctuations +being sometime of the most violent character.</p> + +<p>When gold threatens to leave Great Britain the rate of discount +at the Bank of England is raised, with the view of discouraging, if +not preventing, the outflow. Raising the rate of discount is like +putting the brakes on a railroad train; lowering the rate is like +letting off the brakes.</p> + +<p>These changes were not due to any greater demand for money +but to the movements of gold. There was frequently, in the condition +of business, no warrant whatever for a rise in the rate of +discount. The only reason for it was to prevent gold from performing +what "our most conservative financiers" denominate its +"noble" function of "mobility"—of "fluidity"—namely, the +function of going "where it was wanted." This function of going +"where it is wanted" is described as the great "mission" of +gold, and it is assumed that it will never be wanted at more than +one place at a time. Yet hear what the chancellor of the exchequer +of Great Britain said a few days ago in the House of Commons:</p> + +<div class="blockquot"><p>I admit that, as interested in the commerce and monetary system of this country +I feel a kind of shame that on the occasion of £2,000,000 or £3,000,000 of gold being +taken from this country to Brazil, or any other country, it should immediately +have the effect of causing a monetary alarm throughout the country. (Speech of +the chancellor of the exchequer in the House of Commons, April 18, 1890.)</p></div> + +<p>This is a suggestive admission, from so well-informed a source, as +to the operation of the single gold standard. I commend it to those +who would circumscribe and hamper the prosperity of this country +by making gold alone the standard of all values.</p> + +<p>I have thought it necessary, Mr. President, to state what I conceive +to be the true principles of the science of money, the principles that, +with the progress of time and growth of intelligence, must prevail +the world over; because, without a clear understanding of the relation +which the quantity of money in a country bears to the prosperity +and happiness of its people, there would be no justification for an +addition of either silver, gold, or any other form of money to the +quantity already in circulation. If the value of money depends on +quantity, then, as long as the world adheres to the automatic theory +of money, my contention is that all the silver produced from all the +mines of the world should be transmuted into coin; and even then, +if the wants of the world continue to increase as they have been increasing, +it is only a question of time, and that not far distant, when +the combined supply of both metals will be insufficient to maintain +the equities in time transactions.</p> + +<p>The world having decreed to stand by the automatic system we are +now dealing with the question as a practical one.</p> + +<p>The only relief that can be had is to adhere strictly to that system, +and give it full scope. Remove all legislative restrictions and let the +world have the full benefit of all the precious metals that are yielded +by the mines.</p> +<p><span class='pagenum'><a name="Page_p101" id="Page_p101">[101]</a></span></p> + +<p class="caption">THE WORLD'S SUPPLY OF GOLD AND SILVER.</p> + +<p>Since for thousands of years the world recognized both silver and +gold as money, can anybody tell what has happened to render one +of them unfitted for the money use?</p> + +<p>No argument based on fluctuations in the current supplies of either +of the metals can militate against the use of both as money. The +fluctuation in the annual yield of both, taken together, is much less +violent and less frequent than the fluctuation of either taken separately. +By the use of both, society has much greater security against +the evil of an insufficient money volume. While a large yield, now +of one, and again of the other, has taken place, there is no instance +in the history of the world of an extraordinary yield of both occurring +simultaneously, except in the single instance of the first discovery +of the mines of America. When the gold mines have been yielding +largely, there has been no special increase of silver, and during +the period when silver has been produced in comparatively large +quantities the gold mines have been less productive.</p> + +<p>This will be illustrated by the following table showing the yield of +both gold and silver, from the discovery of America to the present +time.</p> + +<p class="caption"><i>Annual average production of the precious metals throughout the world +from the discovery of America to 1872.</i></p> + +<p class="center">[From Director of United States Mint.]</p> + + +<div class='center'> +<table border="0" cellpadding="4" cellspacing="0" summary="" rules="cols"> +<tr><th class='bbox'>Periods.</th><th class='bbox'>Gold.</th><th class='bbox'>Silver.</th></tr> +<tr><td align='left'>1493-1520, average for each year</td><td align='right'> $3,855,000</td><td align='right'> $1,953,000</td></tr> +<tr><td align='left'>1521-1544 do</td><td align='right'> 4,759,000</td><td align='right'> 3,749,000</td></tr> +<tr><td align='left'>1545-1560 do</td><td align='right'> 5,657,000</td><td align='right'> 12,950,000</td></tr> +<tr><td align='left'>1561-1580 do</td><td align='right'> 4,546,000</td><td align='right'> 12,447,000</td></tr> +<tr><td align='left'>1581-1600 do</td><td align='right'> 4,905,000</td><td align='right'> 17,409,000</td></tr> +<tr><td align='left'>1601-1620 do</td><td align='right'> 5,662,000</td><td align='right'> 17,538,000</td></tr> +<tr><td align='left'>1621-1640 do</td><td align='right'> 5,516,000</td><td align='right'> 16,358,000</td></tr> +<tr><td align='left'>1641-1660 do</td><td align='right'> 5,829,000</td><td align='right'> 15,223,000</td></tr> +<tr><td align='left'>1661-1680 do</td><td align='right'> 6,154,000</td><td align='right'> 14,006,000</td></tr> +<tr><td align='left'>1681-1700 do</td><td align='right'> 7,154,000</td><td align='right'> 14,209,000</td></tr> +<tr><td align='left'>1701-1720, average for each year</td><td align='right'> 8,520,000</td><td align='right'> 14,779,000</td></tr> +<tr><td align='left'>1721-1740 do</td><td align='right'> 12,681,000</td><td align='right'> 17,921,000</td></tr> +<tr><td align='left'>1741-1760 do</td><td align='right'> 16,356,000</td><td align='right'> 22,158,000</td></tr> +<tr><td align='left'>1761-1780 do</td><td align='right'> 13,761,000</td><td align='right'> 27,128,000</td></tr> +<tr><td align='left'>1781-1800 do</td><td align='right'> 11,823,000</td><td align='right'> 36,534,000</td></tr> +<tr><td align='left'>1801-1810 do</td><td align='right'> 11,815,000</td><td align='right'> 37,161,000</td></tr> +<tr><td align='left'>1811-1820 do</td><td align='right'> 7,606,000</td><td align='right'> 22,474,000</td></tr> +<tr><td align='left'>1821-1830 do</td><td align='right'> 9,448,000</td><td align='right'> 19,141,000</td></tr> +<tr><td align='left'>1831-1840 do</td><td align='right'> 13,484,000</td><td align='right'> 24,788,000</td></tr> +<tr><td align='left'>1841-1850 do</td><td align='right'> 36,393,000</td><td align='right'> 32,434,000</td></tr> +<tr><td align='left'>1851-1855 do</td><td align='right'> 131,268,000</td><td align='right'> 36,827,000</td></tr> +<tr><td align='left'>1856-1860 do</td><td align='right'> 136,946,000</td><td align='right'> 37,611,000</td></tr> +<tr><td align='left'>1861-1865 do</td><td align='right'> 131,728,000</td><td align='right'> 45,764,000</td></tr> +<tr><td align='left'>1866-1870 do</td><td align='right'> 127,537,000</td><td align='right'> 55,652,000</td></tr> +<tr><td align='left'>1871-1872 do</td><td align='right'> 113,431,000</td><td align='right'> 81,849,000</td></tr> +<tr><td class='bb'></td><td class='bb'></td><td class='bb'></td></tr> +</table></div> +<p><span class='pagenum'><a name="Page_p102" id="Page_p102">[102]</a></span></p> + +<p class="caption"><i>World's production of gold and silver for the calendar years 1873 to +1889, inclusive.</i></p> + + + +<div class='center'> +<table border="0" cellpadding="4" cellspacing="0" summary="" rules="cols"> +<tr><th class='bbox' rowspan='2'>Calendar<br />years.</th><th class='bbox'>Gold.</th><th class='bbox' colspan='3'>Silver.</th></tr> +<tr><th class='bbox'>Value.</th><th class='bbox'>Fine ounces.</th><th class='bbox'>Market value.</th><th class='bbox'>Coining value.</th></tr> +<tr><td align='right'> 1873</td><td align='right'> $96,200,000</td><td align='right'> 63,267,000</td><td align='right'> $82,120,000</td><td align='right'> $81,800,000</td></tr> +<tr><td align='right'> 1874</td><td align='right'> 90,750,000</td><td align='right'> 55,300,000</td><td align='right'> 70,673,000</td><td align='right'> 71,500,000</td></tr> +<tr><td align='right'> 1875</td><td align='right'> 97,500,000</td><td align='right'> 62,263,000</td><td align='right'> 77,578,000</td><td align='right'> 80,500,000</td></tr> +<tr><td align='right'> 1876</td><td align='right'> 103,700 000</td><td align='right'> 67,753,000</td><td align='right'> 78,322,000</td><td align='right'> 87,600,000</td></tr> +<tr><td align='right'> 1877</td><td align='right'> 114,000,000</td><td align='right'> 62,648,000</td><td align='right'> 75,240,000</td><td align='right'> 81,000,000</td></tr> +<tr><td align='right'> 1878</td><td align='right'> 119,000,000</td><td align='right'> 73,476,000</td><td align='right'> 84,644,000</td><td align='right'> 95,000,000</td></tr> +<tr><td align='right'> 1879</td><td align='right'> 109,000,000</td><td align='right'> 74,250,000</td><td align='right'> 83,383,000</td><td align='right'> 96,000,000</td></tr> +<tr><td align='right'> 1880</td><td align='right'> 106,500,000</td><td align='right'> 74,791,000</td><td align='right'> 85,636,000</td><td align='right'> 96,700,000</td></tr> +<tr><td align='right'> 1881</td><td align='right'> 103,000,000</td><td align='right'> 78,890,000</td><td align='right'> 89,777,000</td><td align='right'> 102,000,000</td></tr> +<tr><td align='right'> 1882</td><td align='right'> 102,000,000</td><td align='right'> 86,470,000</td><td align='right'> 98,230,000</td><td align='right'> 111,800,000</td></tr> +<tr><td align='right'> 1883</td><td align='right'> 95,400,000</td><td align='right'> 89,177,000</td><td align='right'> 98,986,000</td><td align='right'> 115,300,000</td></tr> +<tr><td align='right'> 1884</td><td align='right'> 101,700,000</td><td align='right'> 81,597,000</td><td align='right'> 90,817,000</td><td align='right'> 105,500,000</td></tr> +<tr><td align='right'> 1885</td><td align='right'> 108,400,000</td><td align='right'> 91,652,000</td><td align='right'> 97,564,000</td><td align='right'> 118,500,000</td></tr> +<tr><td align='right'> 1886</td><td align='right'> 106,000,000</td><td align='right'> 93,276,000</td><td align='right'> 92,772,000</td><td align='right'> 120,600,000</td></tr> +<tr><td align='right'> 1887</td><td align='right'> 105,300,000</td><td align='right'> 96,189,000</td><td align='right'> 94,265,000</td><td align='right'> 124,366,000</td></tr> +<tr><td align='right'> 1888</td><td align='right'> 109,900,000</td><td align='right'> 109,911,000</td><td align='right'> 103,316,000</td><td align='right'> 142,107,000</td></tr> +<tr><td align='right'> 1889</td><td align='right'> 118,800,000</td><td align='right'> 125,830,000</td><td align='right'> 117,651,000</td><td align='right'> 162,690,000</td></tr> +<tr><td class='bb'></td><td class='bb'></td><td class='bb'></td><td class='bb'></td><td class='bb'></td></tr> +</table></div> + +<p>From this table it will be seen that from 1801 to 1820 the average +yearly yield of gold was $9,710,500; of silver, $36,847,500—four of +silver to one of gold.</p> + +<p>From 1821 to 1840 the average yearly yield of gold was $11,466,000; +of silver, $21,964,000—two of silver to one of gold.</p> + +<p>From 1841 to 1860 the average yearly yield of gold was $85,150,000; +of silver, $34,826,500—two and a half of gold to one of silver.</p> + +<p>From 1861 to 1880 the yearly average yield of gold was $117,991,850; +of silver, $68,043,900—nearly two of gold for one of silver.</p> + +<p>From 1881 to 1889 the yearly average yield of gold was $105,500,000: +of silver, $122,540,388—one-sixth more silver than gold.</p> + +<p>From those figures it is plain that no continuous, extraordinary +yield of silver, such as might warrant the slightest fear of an unnecessary +addition to the money volume, is to be expected. On the other +hand the continuous drain of gold for use in the arts, as dentistry, +gold plate, jewelry, gilding, and articles of decoration generally, is +seriously encroaching upon the annual supply.</p> + +<p>Both metals possess in common, and neither in any different degree +from the other, all the qualities which are recognized as necessary in +a commodity money. Silver enjoys in an equal degree with gold the +quality of indestructibility, of divisibility, of malleability, and of +resistance to chemical changes. The stock of both existing in the +world (the product of all time) is estimated to be about equal, the +production of the past 500 years being set down as—</p> + + +<div class='center'> +<table border="0" cellpadding="2" cellspacing="0" summary=""> +<tr><td align='left'>Gold</td><td align='right'>$7,240,000,000</td></tr> +<tr><td align='left'>Silver</td><td align='right'>7,435,000,000</td></tr> +</table></div> + +<p>That silver mining has not proved exceptionally profitable in this +country is proved by the comparatively small number that have engaged +in the business. This country has been thoroughly explored in +the search for additional mines without any of great value being discovered. +The allurements of the business lie in its uncertainty; and +for the occasional prize that is drawn thousands of blanks are found. +There is always enough hope of results to induce continued effort,<span class='pagenum'><a name="Page_p103" id="Page_p103">[103]</a></span> +but there is also sufficient doubt and discouragement to deter an undue +number from engaging in the business.</p> + +<p>The mines of Mexico have been worked for hundreds of years; and +up to 1873 the business of silver mining in that country had all the +stimulus that a parity at 15½ to 1 could give to it. It is not, therefore, +probable that any material increase of output can be expected +from that quarter.</p> + +<p>Conceding, for the sake of the argument, the eventual possibility of +so superabundant a yield of silver as to work injury and inequity to +the interests of creditors, is it not manifest that it is in the power of +society at all times to remedy the evil by a limitation of the coinage? +And on the other hand, is it not equally manifest that for an +insufficient supply there is no remedy?</p> + +<p>If great mountains of silver should be discovered, does not Congress +meet constantly? If there should seem to be too much, could +not the coinage be readily limited to prevent depreciation? But, +on the other hand, when we dedicate the monetary function solely +to one metal, of which there is manifestly and admittedly the world +over an insufficient supply, where is the remedy? What can Congress +do to enlarge that supply? Absolutely nothing.</p> + + +<p class="caption">THE GOLD USED IN THE ARTS.</p> + +<p>The Director of the United States Mint a few years ago estimated +that of the $100,000,000 gold annually produced from the mines of +the world $46,000,000 are consumed in the manufacture of jewelry, +gold plate, plated ware, gold-leaf, etc., and in various processes of +dentistry.</p> + +<p>The single standard of gold, therefore, is maintained by the creditor +nations in the face of the admitted fact that but $50,000,000 of +that metal are annually added to the money stocks.</p> + +<p>Not only is this encroachment of the commodity demand on the +money supply becoming greater year by year, with the growth of +population, but the supply of gold from the mines is itself becoming +less, having declined from an average of $137,000,000 between +1856 and 1860 (the period of greatest yield from California and +Australia), to an average of $107,000,000 for the past ten years. +Of the entire gold supply of the world, nine-tenths of it have come +from placer mines, readily discoverable and easily worked, because +requiring little or no capital. All known fields of those are practically +exhausted, and there is no reasonable prospect of the discovery +of others. Hardy, adventurous, and skillful miners from the United +States, and capitalists from all countries, have ransacked the world +in vain for new fields of gold. Why, then, with the knowledge of +those facts before us, should we discard from the full money use and +function the only metal that gives to the world any prospect of relief +from the money famine from which civilization is now suffering +and from which, if silver be not speedily restored to its ancient +use and function, the world is destined to suffer much more?</p> + +<p>If it be conceivable that the demonetization of either metal were +necessary, why demonetize that which promises the greater and +more steady yield? If for any reason society should decide that one +of the metals should be discarded, should it not rather be that one +which promises the smaller future yield, than that which promises +the larger?</p> + +<p>Silver is the money-metal best suited to the mass of the people, +and to the variety and character of transactions that constitute the +interchanges of daily life. The supplies of both metals if united by<span class='pagenum'><a name="Page_p104" id="Page_p104">[104]</a></span> +law, in the full money function, would have a steadiness of value +which can not be attained by either separately.</p> + + +<p class="caption">TREASURY NOTES SHOULD NOT BE REDEEMED IN BULLION</p> + +<p>The proposition to redeem the proposed treasury notes in silver +bullion or in anything but lawful money of the United States will +never meet the approval of the people.</p> + +<p>What the people of this country want is money, and what they +should have is money. These notes will represent full value received, +the evidence of which is the bullion in possession of the +Government. When issued, they will enter into circulation. They +will have to do the work of money among the people. They will +go to make up the volume of the currency. On the basis of that +volume each dollar acquires a certain value, and represents a given +amount of sacrifice. On that volume, and on those conditions, bargains +will be made, prices established, debts contracted, values adjusted, +and equities created. If any portion of that money be withdrawn +from circulation (for that is what "redemption" means) +without an equivalent amount of money in some other form being +issued to take its place, the circulation will to that extent be +contracted, every dollar in circulation will increase in value, prices +will fall, property-values established on the basis of the larger circulation +will shrink, and equities will be destroyed.</p> + +<p>The redemption of any number of those notes in silver bullion +means the withdrawal of many dollars of money from circulation +and the destruction of so much of the money of the country. Money +is not a thing that can be destroyed with impunity. It should be +kept in use among the people. It is to industry what the blood is +to the human body; it is the life-giving and life-sustaining medium. +The money volume of a country should not be subject to frequent and +violent changes. In a new and growing country, it should be characterized +by that steady accretion that characterizes the increase in the +quantity of blood in the human body as it progresses from infancy to +maturity. It is no more unreasoning, empirical, or unscientific to be +alternately withdrawing blood from, and injecting blood into, a human +body than to be constantly contracting and expanding the money +volume of the country. And as activity of circulation of the blood +is essential to the health of the body, so activity of circulation in +money is indispensable to the well-being of society. The possession +of no mere commodity, whatever its value, will compensate a +country for the destruction of any considerable portion of its money, +upon the entire volume of which vast equities rest.</p> + + +<p class="caption">MONEY SHOULD BE REDEEMABLE IN ALL THINGS.</p> + +<p>Money should be redeemed in all things; not in one thing alone. +The peculiar characteristic of true money, that which distinguishes +it from all other things whatsoever and constitutes it a prime factor +in civilization, is that it is at all times redeemable in any thing that +is on sale. Being an order for property, it should be redeemed in any +form of disposable property which the holder may desire.</p> + +<div class="blockquot"><p>A guinea—</p></div> + +<p class="noidt">said Adam Smith—</p> + +<div class="blockquot"><p class="noidt">may be considered as a bill for a certain quantity of necessaries and conveniences +upon all the tradesmen in the neighborhood.</p></div> + +<p>Any form of money, the condition of whose existence depends on +redeemability in one thing alone, can not be money in the full sense,<span class='pagenum'><a name="Page_p105" id="Page_p105">[105]</a></span> +and whenever an urgent demand for real money springs up the other +ceases altogether to be money.</p> + +<p>The redemption of money should be reciprocal between the Government +and the people and between and among all individuals in +the community. It should not only be redeemable by the Government +by acceptance for taxes but also redeemable by and among the +people for all property for sale and services for hire. Its quantity +should be so regulated as that its unit (the dollar) should neither +increase nor diminish in value, and it should be kept constantly in +circulation, and not be permitted to lie uselessly in the Treasury. +Any other money than this is to a certain extent counterfeit; it is +false money, because when most needed it fails to be money and has +to be "redeemed" in something else (gold) which can not be got +except at ruinous sacrifice.</p> + +<p>It is of the very essence of money—its pith and marrow and protoplasm—that +it should be a legal tender, a universal solvent, the ultimate +of payment, and redeemable, at the prices ruling, in everything +that is on sale. If the volume of such money be properly regulated, +while there may from time to time be variations in the prices +of particular articles, the general range of prices will be maintained +practically undisturbed.</p> + +<p>What an absurdity it is for the Government to put its stamp on one +thing in order to make it redeemable in another thing imprinted +with the same stamp, but which nobody wants except for the purpose +of getting a third thing that could have been got just as well +without the intervention of the second. As well might he who, +wanting water, is given a silver cup wherewith to get it, but on going +to the spring is forbidden to drink until he exchanges his silver +cup for a gold one.</p> + +<p>The real reason why it is insisted that all other things than gold +shall be exchangeable into gold is that gold is getting dearer by reason +of decreasing supply and increasing populations. The necessity +for convertibility into gold implies that, in ordinary times, a range +of prices higher than the gold range will prevail, and when, by reason +perhaps of increased activity of business, redemption comes to +be demanded prices are at once precipitated to those of the gold +standard and below, to the great advantage of the creditor classes, +who, as owners of bonds, may be considered in the language of the +stock exchange "long" on money, and to the equally great injury +of the producing class, who, being in debt, may be considered as having +sold money "short."</p> + +<p>The supreme consideration is that the money of a country shall be +so regulated as that prices may not fall from any cause inhering in +the money system. The value of money—in other words, the sacrifice +necessary to obtain it—should be no greater at one time than at +another. In order to effect that object of prime consequence, to maintain +the value of money unchanging, there should be no hesitancy +whatever in changing the material of which it is made.</p> + +<p>Nobody who has reflected on the subject for a moment doubts that +what gave "value" or exchangeable power to the greenback was +not the promise made on its face, without date, to pay a dollar, but +the inscription on its back which declared it a legal tender for all +dues and demands, public and private, except duties on imports. It +was a misfortune to mankind that the words "promise to pay" were +printed on it, because by it millions were led to believe that the +"value" or exchangeable power resided in the promise instead of in +the legal-tender power conferred upon it.<span class='pagenum'><a name="Page_p106" id="Page_p106">[106]</a></span></p> + +<p>There is no object in redeeming in gold, except to maintain gold +prices, that is to say, the range of prices prevailing in gold-using +countries, and as those prices are constantly trending downward, any +country that insists on maintaining the gold standard must accept the +consequences in a corresponding fall of prices. The advocates of the +gold standard, in effect, maintain that no matter to what extreme +prices may fall, we must be content—we must bow in humble submission +to the inevitable, since, in their view, it is more necessary to +maintain the sacredness of the gold standard than to establish justice, +promote prosperity, or to maintain equity in all time transactions.</p> + +<p>It is in no way necessary, on account of any intrinsic or inherent +quality of gold, that should have that particular metal, and that +alone, for money.</p> + +<p>It is boasted that gold is a universal measure. Why is it universal? +Why is gold accepted in every country of the world? Not because +the gold is wanted for any quality inherent in the metal, but +because it is an order for property in gold-using countries, such as England, +France, and Germany, whose trade is largely a foreign trade. +At whatever rate gold will exchange in England, it will exchange in +all countries having trade relations with England, because it is an +order for goods in a country with which they are dealing. Will not +the money of this country equally, and for like reasons, whether gold +or silver, have acceptability in every country with which the United +States have trade relations? Not for any quality inherent in the +metal, but because it is an order for property in the United States. +Will it not be willingly accepted by those who wish to buy in this +country?</p> + + +<p class="caption">POSSIBLE EFFECT OF REDEMPTION IN BULLION.</p> + +<p>In order to see the effect of the redemption of these Treasury notes +in bullion, we have but to look at the possibilities of the situation. +Suppose there were in the Treasury $300,000,000 worth of that bullion, +which, by the taking up, little by little, and month by month, +of the amount not used in the arts, would be taken by the Treasury +at or about par. Then, suppose that for any reason, such as fear of +approaching panic or otherwise, $100,000,000 of the Treasury notes +were suddenly presented for redemption, and canceled, and the bullion +as suddenly put on the market, what would it be worth? What +would gold bullion be worth if it had not the privilege of coinage, +and if $100,000,000 of it, deprived of the money use, was suddenly put +on the market? Can there be a doubt that the abrupt output of so +large a quantity would have the effect of immediately and enormously +depreciating its value? In the case under consideration, the +result would be that the silver remaining in the Treasury would +not bring one-fourth the sum necessary to redeem the outstanding +Treasury notes, so that not only would a heavy loss result to the +Government, but, by reason of the sudden and serious contraction +of the money volume, an infinitely greater loss would result to all the +people.</p> + +<p>But if it be deemed a remote contingency that any extraordinary +amount would in that manner be suddenly taken from the Treasury, +there is another danger which can not be put aside as improbable, +but which, on the contrary, is to be looked for with almost absolute +certainty, and to my mind, constitutes an irremovable and insurmountable +objection to any system of bullion redemption.</p> + +<p>A large number of merchants in London need, monthly, millions +of dollars worth of silver to make payments in India. They will<span class='pagenum'><a name="Page_p107" id="Page_p107">[107]</a></span> +naturally want to get it at the lowest price, and it is not to their +advantage to intensify the competition for it. On the contrary, it +is to their direct advantage to depress the price to the lowest possible +point.</p> + +<p>As the Treasury of the United States would buy silver at the lowest +price, the London merchants would refuse to enter the open market +in competition with our Government for its purchase. But no +sooner could the silver be stored in the vaults of the Treasury, than the +agents of the London merchants would appear, and before any opportunity +had offered for a favorable change in the price of the bullion, +could present as many millions of these notes as might suit their purpose, +and receive bullion therefor. A Secretary of the Treasury who +conscientiously believed that it was his duty to maintain the gold +standard at all hazards, would naturally feel compelled—certainly +it would be in his power—to put out whatever amount of bullion he +might deem necessary to accomplish that purpose, even if it all had +to go.</p> + +<p>Thus the United States Treasury would become the convenient +and capacious conduit through which silver should immediately +flow from this country to England, depriving our people, notwithstanding +the legislative measures for their relief, of practically all +use of silver as money, inasmuch as the four and a half-million +dollars of Treasury notes would be withdrawn and canceled about +as soon as issued.</p> + +<p>Thus would our Treasury Department be made practically the purchasing +agent in this country of any syndicate or combination of +English merchants who might desire silver for the East India trade.</p> + +<p>If it be said that no Secretary of the Treasury would attempt thus +to defeat the will of the people as expressed in the law, the sufficient +reply is that a conscientious man who believes that the honor of the +United States is pledged to the maintenance of the gold standard, +and that it is indispensable to the prosperity of the people, will exercise +all the power vested in him by law to prevent a departure +from that standard, and will regard himself as for the time being +the savior of the Republic by keeping it from "the edge of so dangerous +a peril" as the execution of the people's will.</p> + +<p>Certainly no man will deny to the present Secretary of the Treasury +entire rectitude of motive in all his conduct. From the well-known +fact that since the passage of the limited coinage act of 1878 +all our Secretaries have refrained from purchasing more silver than +they were compelled to do by the mandatory provision of that law, +it is reasonable to infer that none of them, if called upon to execute +a law containing a silver bullion redemption clause, such as is suggested, +would feel called upon to make a net purchase of more than +$2,000,000 worth in each month; and that none of them would hesitate +to exchange for Treasury notes all the monthly purchases of +bullion in excess of that amount.</p> + + +<p class="caption">A PLANK FROM THE REPUBLICAN PLATFORM.</p> + +<p>I must be pardoned for directing the attention of Senators on this +side of the Chamber to a short declaration of the last Republican +National Convention:</p> + +<div class="blockquot"><p>The Republican party is in favor of the use of both gold and silver as money.</p></div> + +<p>If party platforms mean anything that clause meant that the Republican +party went before the country pledged to the use and to the +equal and non-discriminating use of both silver and gold as money. +It was well known that throughout the entire West the question<span class='pagenum'><a name="Page_p108" id="Page_p108">[108]</a></span> +of the remonetization of silver was deemed of vital importance, and +party orators and the party press, throughout that entire section +were severe in their denunciation of the prior administration of +its unfriendly attitude toward silver.</p> + +<p>I wish in all solicitude and sincerity to advise my Republican +friends of the East that this plank in the party platform was construed +by the Republicans of the West to mean precisely what it +says. They are looking with confidence to this Congress for such +action as will fittingly embody in the statutes the principle laid down +by the party now in the responsible direction of the Government.</p> + + +<p class="caption">SHALL WE BE FLOODED WITH SILVER?</p> + +<p>We are told that if silver is given free access to the mints we +shall be flooded with it from all parts of the world. Does anybody +show where the flood of silver is to come from? Where are the reservoirs +that contain it? Not in England, where it is difficult for the +people even to get a sufficiency of it for small change to transact the +business of the country: not in Germany, where the scarcity of money +was so pressing that the government had to abandon the idea of selling +silver. Though the stock in France is large her people will never +give it up. Silver has been the "shield and buckler" of the French +Republic. All she has is coined at the ratio of 15½ ounces of silver to +1 of gold, and its shipment to this country would involve a loss to +France, not only of the 3 per cent. difference between the French relation +(15½ to 1) and ours (which is 16 to 1), but of 3 per cent. additional +in the cost of gathering and shipping it. And after that +could only exchange them for Treasury notes. The silver stock in +India and the Orient is performing indispensable duty as money, and +no "flood" of it can be expected from that quarter. From time immemorial +India has been absorbing all the surplus silver of the +world. She has never got so much as to appease her appetite for +more. So insatiable is her desire for that metal that she has long +been known as the "Sink of Silver." China has not a piece of the +metal that she can dispose of. Mexico has no stock whatever of silver +on hand, except the limited number of coined pieces forming her +moderate money circulation, and not a dollar of it can be spared. No +country of Central or South America has any surplus silver. Every +piece of coined silver in every country in the world is part of the monetary +circulation of that country, and even when of short weight and +classified as a mere "token" is passing at par as full valued money. +No gain could possibly accrue, therefore, to the owners of coined silver +anywhere by shipping it to this country for any purpose, and +there is no surplus stock of bullion anywhere.</p> + +<p>If anybody doubts this statement let him make the attempt in all +the money centers of the world to buy from accumulated stock even +$5,000,000 worth of it. He will fail to get it in London, Paris, Berlin, +Calcutta, New York, or San Francisco, or in all combined. There is +no source from which to get silver except the current supply from +the mines, and whatever that is now it is not likely ever greatly to +increase. The occupation of mining is not attractive to many, and +in the nature of the case the number who follow it will always be +comparatively few. The Argonauts of old were but a small band of +hardy adventurers; those of the new era are destined to bear no +larger proportion to the population. But even were this not so, nature +herself draws the line. To the eye of the experienced prospector +silver mines are as discernible on the surface of the earth as +are mountains, and the world has been explored in vain for further +"finds." Those who talk, therefore, of "floods" of silver coming +<span class='pagenum'><a name="Page_p109" id="Page_p109">[109]</a></span>here for coinage simply show their ignorance of existing conditions.</p> + +<p>I may add that of all the shafts that have been sunk for silver +mines in the world where they have found silver croppings on top +in ninety-nine out of every hundred, and I think I am stating it +moderately, the veins have not penetrated the earth, mineralized, +fertilized, to the depth of 50 feet, rarely have they penetrated the earth +to a depth exceeding 1,200 feet, and the most prolific yield of silver +mines has been from a depth not exceeding 800 feet.</p> + +<p>The very fact, Mr. President, that, with all the world searching +for gold and silver mines—a search that has continued throughout +all history—the amount of the two metals yielded by the mines is +about equal, shows that the historical relation existing between them +is the relation at which they can be profitably produced.</p> + +<p>It is apparent that if there were a great advantage in the production +of silver over gold, at the relation of 15½ to 1, that advantage +would be seen in the largely preponderant production of silver; +but instead we find that the result of thousands of years of mining +has given us about equal quantities of both metals.</p> + + +<p class="caption">CAN THE UNITED STATES ALONE HOLD THE METALS AT A PARITY?</p> + +<p>We are told that the United States, unaided, can not, if it would, +restore silver to a parity with gold—that no one nation acting alone +can achieve so difficult a feat. But it is incapable of denial that +throughout all vicissitudes of production of gold and silver from +1803 to 1873 the law of France—one nation alone—accomplished it.</p> + +<p>As I have shown in greater detail elsewhere, by reference to the +table of annual production of the metals, it will be observed that +from 1803 to 1820, the production was in the proportion of four dollars +of silver to one of gold; from 1821 to 1840 two of silver to one +of gold, from 1841 to 1850 one dollar of silver, to one of gold, from 1851 +to 1860 four dollars of gold to one of silver, from 1861 to 1865 three +of gold to one of silver, from 1866 to 1870 two of gold to one of silver, +in 1871 and 1872 one-and-a-half of gold to one of silver. Notwithstanding +these extreme variations in the relative annual production +the law of France constituted a ligature sufficient to hold the metals +in line at the ratio of 15½ to 1, and this not for France alone but +for the whole world. If that period does not offer sufficient proof of +the power of law, under varying conditions of supply, to tie the +metals together and keep them so, no degree of proof will suffice, +for the vacillations of their relative production have been greater +during this century than at any former period in the history of the +world.</p> + + +<p class="caption">IS AN INTERNATIONAL AGREEMENT NECESSARY?</p> + +<p>If that could be done by a nation with a population of 25,000,000 +to 35,000,000, what difficulty could be experienced by a nation of +65,000,000 in accomplishing the same result? Yet we are told that +international agreement is necessary to restore silver to its ancient +right as a full-money metal. Those who suggest such an agreement +forget that while this nation is a borrower of money, the first and +principal nation to demonetize silver is the greatest money lender +known to history. Is it for a moment to be supposed that the shrewd +English creditor classes will enter into any agreement which will +deprive them of the spoils of so delicate and ingenious a system +of usury; a system not only not banned by law, but, on the contrary, +having the special approval and protection of statutes, and the active +support and approval of all the complaisant moralists, philosophers, +and financiers of the age?<span class='pagenum'><a name="Page_p110" id="Page_p110">[110]</a></span></p> + +<p>While they are dilligently gathering in the proceeds of this operation +a diversion is kept up for the occupation and amusement of +dilettant financiers and economists, by invoking a discussion of the +ratio that should be maintained between the metals. The ratio is +the pretext on which conference after conference has been called.</p> + +<p>The advocates of the single gold standard contend that hostile +legislation had no influence in effecting the separation of the metals, +and that the reversal of that legislation can not and will not restore +them to a parity unless the principal commercial nations of the +western world join in the work of rehabilitation. As illustrating +the force of law on the relation of the metals I will read a suggestive +paragraph from the report of the Royal Commission of England +(1886), Part I, section 192:</p> + +<div class="blockquot"><p>Now, undoubtedly, the date which forms the dividing line between an epoch +of approximate fixity in the relative value of gold and silver, and one of marked +instability, is the year when the bimetallic system which had previously been in +force in the Latin Union ceased to be in full operation, and we are irresistibly led +to the conclusion that the operation of that system, established as it was in countries +the population and commerce of which were considerable, exerted a material +influence upon the relative value of the two metals.</p> + +<p>So long as that system was in force we think that, notwithstanding the changes +in the production and use of the precious metals, it kept the market price of silver +approximately steady at the ratio fixed by law between them, namely, 15½ to +1. Nor does it appear to us <i>a priori</i> unreasonable to suppose that the existence +in the Latin Union of a bimetallic system with a ratio of 15½ to 1 fixed between +the two metals should have been capable of keeping the market price of silver +steady at approximately that ratio.</p></div> + +<p>The paragraph quoted ascribes the effect thus produced to the bimetallic +treaty of the Latin Union, a combination of Italy, Belgium, +Switzerland, and France, entered into in 1865 for the purpose of +maintaining similar conditions of coinage. But it will be observed +that, so far as the ratio was concerned, precisely the same effect had +been produced by France alone during the sixty-two years from the +passage of its law of 1803 to 1865.</p> + +<p>Not only did the French law keep the metals together at a time +when the larger annual yield was of silver, but it kept them together +when the larger annual yield was of gold. Had not that law +been in operation during the '50's, when a flood of gold poured from +the mines of California and Australia, gold would have fallen, as in +early times it more than once fell, to the ratio of 1 to 10, at which +but 10 ounces of silver (instead of 15½) would buy an ounce of gold. +Thus the law of one country alone, a country then of not one-half +the present population of the United States, held the metals together, +so that to whatever extent gold fell in relation to commodities +from 1848 to 1865, by reason of the large output of the mines, +silver fell to the same extent, notwithstanding the enormous decrease +in its production relatively to gold during that period.</p> + +<p>What is claimed for law in this connection is not that it directly +controls the relative values of gold and silver any more than of anything +else, but that on the slightest separation of the metals there +instantly arises, under the law of the double standard, a demand for +the cheaper metal, while the demand for the dearer one is suspended. +In this way the double standard accommodates itself to the law of +supply and demand, which is admitted to be the governing factor in +the determination of value. It is not contended that a small or insignificant +country could keep the metals together, but all experience +goes to show that a great nation like the United States would +have no difficulty whatever in doing so.</p> + +<p>So thoroughly are the advantages of the gold standard to the<span class='pagenum'><a name="Page_p111" id="Page_p111">[111]</a></span> +creditor classes recognized in England that the English Commissioners, +who, for form's sake, have been sent to the several monetary +conferences held on the continent, have never been invested by their +Government with any power whatever. And it is but a few weeks +since the House of Commons overwhelmingly voted down a proposition +made in good faith by Mr. Samuel Smith, looking to the calling +of a new conference, which was supported by petitions to Parliament +signed by 60,000 persons not merely as individuals, but as representing +large organizations of the toilers of England.</p> + +<p>The ratio is not the difficulty. Those who wanted silver demonetized +do not want it added to the money volume of the world at any +ratio. Why then shall we wait? Macauley, commenting on the +impregnability of intrenched prerogative, observed that if the +announcement of the discovery of the law of gravitation had militated +against the personal interests of any vested or privileged +class, its general acceptance might have been long postponed. +Shall we, then, postpone relief to the suffering industries of this +country till we can secure from the privileged classes, from the +money-lenders of the world, an agreement to cease their exactions?</p> + +<p>No, Mr. President, we need not wait, and we <i>will</i> not wait. All +that is necessary is to <i>act</i>, and so far as the rules of order and of parliamentary +procedure will permit, we propose to act, promptly and +decisively. The world can not expect the initiatory movement for +any change to be taken by those whose interests are served by the +continuance of present conditions. Such conditions being consistent +with their own welfare, they find no difficulty in arriving at the +conclusion that they are for the welfare of society at large.</p> + +<p>The dogma that cupidity is a synonym for virtue will never fail to +find ready converts among the beneficiaries.</p> + +<p class="poem"> +* * * Plate sin with gold.<br /> +And the strong lance of Justice hurtless breaks.<br /> +</p> + + +<p class="caption">CONCLUSION.</p> + +<p>I predict that the restoration of silver to its birthright, Mr. President, +will mark an epoch in the history of this country. It will +place in circulation an amount of money commensurate with our +increasing population. It will give assurance to our languishing +industries that the volume of our circulating medium is not to continue +shrinking, and that the tendency of prices shall no longer be +downward. It will increase the wages of labor and the prices of +the products of labor; it will reduce the price of bonds and other +forms of money futures, it will lighten, but not inequitably, the +burden of mortgages; it will increase largely, though not unjustly, +the debt-paying and tax-paying power of the people. It will loosen +the grasp of the creditor from the throat of the debtor.</p> + +<p>By the remonetization of silver, money will cease to be the object +of commerce, and will again become its beneficent instrument. Activity +will replace stagnation, movement will supplant inertia, courage +will banish fear; confidence will dispel doubt; hope will supersede +despair.</p> + +<p>The lifting up of silver to its rightful plane by the side of gold +will set in motion all the latent energies of the people. It will banish +involuntary idleness, by putting every willing man to work. It will +revive business, and reanimate the heart and hope of the masses. +Capital, no longer fearing a fall in prices, will turn into productive +avenues. The hoards of money lying idle in the bank vaults will +come out to bless and enrich alike their owners and the community<span class='pagenum'><a name="Page_p112" id="Page_p112">[112]</a></span> +at large; while the millions of dollars now invested at low interest +in gilt-edged securities will seek more profitable investment in the +busy field of industry, where they will be utilized in the payment +of wages and the consequent dissemination of comfort and happiness +among the people.</p> + +<p>And this it will accomplish not for the United States alone, but +for civilization. For it is not too much to say, Mr. President, that +upon the decision of this question depend consequences more momentous +than upon that of any other question of public policy within +the memory of this generation. In a broader sense than any other +question attracting the general attention of mankind it is a question +of civilization. It embodies the hopes and aspirations of our +race.</p> + +<p>The act of Congress which shall happily solve it will constitute +a decree of emancipation as veritable as any that ever freed serf +from thraldom, but more universal in its application. It will proclaim +the freedom of the white race the world over, it will lift the +bowed head of labor, it will hush the threnody of toil. It will inaugurate +the true renaissance—a renaissance of <i>prosperity</i>, without +which industry, learning, science, literature, art, are but as apples +of Sodom. (Applause in the galleries.)</p> + + +<hr style="width: 100%;" /> +<p><span class='pagenum'><a name="Page_p113" id="Page_p113">[113]</a></span></p> +<h2><a name="INDEX" id="INDEX"></a>INDEX.</h2> + +<div class="pblockquot"> +<p class="noidt"> +Alison, Sir Archibald, coinage has no effect in preventing fluctuations in value of coin, <a href="#Page_p042">42</a><br /> +<span style="margin-left: 1em;">effect of suspension of specie payments in England in 1797, <a href="#Page_p078">78</a></span><br /> +<br /> +Allegory of the clocks, <a href="#Page_p050">50</a><br /> +<br /> +American Review, effect of increasing volume of money, <a href="#Page_p008">8</a><br /> +<br /> +Automatic system of money, gold and silver, <a href="#Page_p009">9</a><br /> +<span style="margin-left: 1em;">why interfered with, <a href="#Page_p018">18</a></span><br /> +<br /> +Appleton's Cyclopedia, definition of money, <a href="#Page_p067">67</a><br /> +<br /> +Aristotle on Money, <a href="#Page_p066">66</a><br /> +<br /> +<br /> +Balance of trade, the argument based on, <a href="#Page_p096">96</a><br /> +<br /> +Banker's advice to the Usurer, <a href="#Page_p070">70</a><br /> +<br /> +Baring, Alexander, a reduction of paper would have the same effect as of any other money, <a href="#Page_p078">78</a><br /> +<br /> +Bastiat, description of the crown piece, <a href="#Page_p068">68</a><br /> +<br /> +Baudeau, on Money, <a href="#Page_p066">66</a><br /> +<br /> +Behren, Jacob, opinion as to effect of gold standard in England, <a href="#Page_p023">23</a><br /> +<br /> +Berkeley, Bishop, queries as to Money, <a href="#Page_p067">67</a><br /> +<br /> +Best Money (truthfully so-called), a money of unchanging value in the unit, <a href="#Page_p070">70</a><br /> +<br /> +<br /> +Cairnes, Prof. J. E., relations of paper currency to foreign exchange, <a href="#Page_p098">98</a><br /> +<br /> +Cattle, estimate of value in 1880, <a href="#Page_p004">4</a><br /> +<br /> +Cernuschi, the purchasing power of money is in direct proportion to the volume of money existing, <a href="#Page_p077">77</a><br /> +<br /> +Checks and clearing houses, their effects in economizing use of money, considered, <a href="#Page_p046">46</a><br /> +<br /> +Chevalier, in France, advocated demonetization of gold, <a href="#Page_p020">20</a><br /> +<br /> +Circulation, present monetary, <a href="#Page_p075">75</a><br /> +<br /> +Coal, yield for 1888, <a href="#Page_p004">4</a><br /> +<br /> +Condition of country at present, <a href="#Page_p003">3</a><br /> +<span style="margin-left: 1em;">at period of demonetization of silver, <a href="#Page_p026">26</a></span><br /> +<br /> +Competition, the value of money fixed by the competition to get it, <a href="#Page_p073">73</a><br /> +<br /> +Cotton manufacturer, his loan of $10,000, payable, principal and interest, in cloth, contrasted with loan of same amount contracted by his neighbor, but payable in dollars, <a href="#Page_p072">72</a><br /> +<br /> +Cotton-planters, their loss by demonetization of silver, <a href="#Page_p060">60</a><br /> +<br /> +Crawford, William H., opinion as to effect of decreasing volume of money, <a href="#Page_p007">7</a><br /> +<br /> +Creditors, demand for the "Best Money," meaning a money of increasing value, <a href="#Page_p069">69</a><br /> +<span style="margin-left: 1em;">their course in Europe to increase value of gold, <a href="#Page_p019">19</a></span><br /> +<span style="margin-left: 1em;">their course in United States to increase value of gold, <a href="#Page_p027">27</a></span><br /> +<span style="margin-left: 1em;">the pretense in the United States to "strengthen the public credit", <a href="#Page_p028">28</a></span><br /> +<br /> +Crops for 1888, corn, wheat, oats, and cotton, <a href="#Page_p004">4</a><br /> +<br /> +<br /> +Debt, a distinguishing characteristic of civilization, <a href="#Page_p035">35</a><br /> +<span style="margin-left: 1em;">a, of $10,000 contracted in 1873—how much wheat, cotton, etc., would pay it then and how much now, <a href="#Page_p057">57</a></span><br /> +<br /> +Debtors, who are they, <a href="#Page_p035">35</a><br /> +<span style="margin-left: 1em;">and creditors, their motives compared, <a href="#Page_p034">34</a></span><br /> +<br /> +De Colange, Professor, the rate at which money exchanges is determined by its quantity, <a href="#Page_p077">77</a><br /> +<br /> +Demand for money, what it is, <a href="#Page_p073">73</a><br /> +<br /> +Demonetization of silver, by England, <a href="#Page_p022">22</a><br /> +<span style="margin-left: 1em;">by Germany, <a href="#Page_p016">16</a></span><br /> +<span style="margin-left: 1em;">by United States, <a href="#Page_p026">26</a></span><br /> +<span style="margin-left: 1em;">wholly unjustifiable, <a href="#Page_p028">28</a></span><br /> +<br /> +De Quincey, in England, advocated demonetization of gold, <a href="#Page_p020">20</a><br /> +<br /> +Difficulty, one symptom common to all industries, <a href="#Page_p005">5</a><br /> +<br /> +Discussion, educational effect of, <a href="#Page_p029">29</a><br /> +<br /> +Double standard, statement of, before French Commission, <a href="#Page_p022">22</a><br /> +<span class='pagenum'><a name="Page_p114" id="Page_p114">[114]</a></span><br /> +Dumas, a Senator of France, pleads for caution before demonetization, <a href="#Page_p017">17</a><br /> +<br /> +<br /> +Economist (London) admits rise of gold, <a href="#Page_p044">44</a><br /> +<br /> +Effects of shrinking volume of money (extract from report of Monetary Commission), <a href="#Page_p036">36</a><br /> +<br /> +Encyclopedia Britannica, effect of fall in the value of money, <a href="#Page_p008">8</a><br /> +<br /> +England's position not due to gold standard, <a href="#Page_p025">25</a><br /> +<br /> +<br /> +Failures in United States, 1887, 1888, and 1889, <a href="#Page_p049">49</a><br /> +<br /> +Fall of interest on gilt-edged securities, a proof of rise of gold, <a href="#Page_p048">48</a><br /> +<br /> +Farm, how it may be lost by an increasing value in the money unit, <a href="#Page_p070">70</a><br /> +<br /> +Farmers, their loss by demonetization of silver, <a href="#Page_p060">60</a><br /> +<br /> +Farms, estimate of value in 1880, <a href="#Page_p004">4</a><br /> +<span style="margin-left: 1em;">proposition that the Government lend money on the security of the land, <a href="#Page_p083">83</a></span><br /> +<br /> +Fanchet, Léon, probable effect, should all European nations follow England in discarding silver, <a href="#Page_p017">17</a><br /> +<br /> +Fichte, the value of money depends on its quantity, <a href="#Page_p076">76</a><br /> +<br /> +Flood of silver, where is it to come from?, <a href="#Page_p108">108</a><br /> +<br /> +France, law of 1803 held metals at a parity till 1873, <a href="#Page_p016">16</a><br /> +<br /> +Frewen, Moreton, extract from his "Economic Crisis", <a href="#Page_p030">30</a><br /> +<br /> +<br /> +Gallatin, Albert, a metallic currency not indispensable, <a href="#Page_p077">77</a><br /> +<br /> +Germany, emigration from, <a href="#Page_p025">25</a><br /> +<br /> +Gibbs, Henry H., cablegram relating to bimetallism, <a href="#Page_p029">29</a><br /> +<br /> +Giffen, Robert his reasoning erroneous that the commodity demand fixes the value of gold, <a href="#Page_p081">81</a><br /> +<br /> +Gold and silver, both variable in value, <a href="#Page_p041">41</a><br /> +<span style="margin-left: 1em;">the world's supply of both, <a href="#Page_p101">101</a></span><br /> +<br /> +Gold, ratio of, to silver at various periods, <a href="#Page_p013">13-16</a><br /> +<span style="margin-left: 1em;">fall of, during times of Alexander and Cæsar, <a href="#Page_p014">14</a></span><br /> +<span style="margin-left: 1em;">fear of fall of, during California excitement, <a href="#Page_p019">19</a></span><br /> +<span style="margin-left: 1em;">rise of from 1873 to 1889, <a href="#Page_p044">44</a></span><br /> +<span style="margin-left: 1em;">proof that it has risen, <a href="#Page_p055">55</a></span><br /> +<span style="margin-left: 1em;">some effects of its rise, <a href="#Page_p057">57</a></span><br /> +<span style="margin-left: 1em;">proposition first made to demonetize it, <a href="#Page_p019">19</a></span><br /> +<span style="margin-left: 1em;">demonetized in 1857 by German States and Austria, <a href="#Page_p020">20</a></span><br /> +<span style="margin-left: 1em;">fear of an outflow of, <a href="#Page_p085">85</a></span><br /> +<span style="margin-left: 1em;">rationale of the outflow of, <a href="#Page_p086">86</a></span><br /> +<span style="margin-left: 1em;">value as money not derived from commodity use, <a href="#Page_p081">81</a></span><br /> +<br /> +Goschen, George J., chancellor of exchequer of England speaks for, but decides against, silver, <a href="#Page_p024">24</a><br /> +<br /> +Graham, Sir James, the value of money is in the inverse ratio to its quantity, <a href="#Page_p077">77</a><br /> +<br /> +"Greenback", the, what gave it value?, <a href="#Page_p105">105</a><br /> +<br /> +Gresham's law, and so-called "extension" of, <a href="#Page_p068">68</a><br /> +<br /> +Gold standard, what it implies, <a href="#Page_p090">90</a><br /> +<span style="margin-left: 1em;">statement in behalf of, before French commission, <a href="#Page_p022">22</a></span><br /> +<span style="margin-left: 1em;">of the future, <a href="#Page_p092">92</a></span><br /> +<br /> +Gold used in the arts, <a href="#Page_p103">103</a><br /> +<br /> +Gold money, practically none in the United States, <a href="#Page_p095">95</a><br /> +<br /> +<br /> +Hamilton, Alexander, effect of annulling use of either metal, <a href="#Page_p016">16</a><br /> +<br /> +Houses in United States, estimated value in 1880, <a href="#Page_p004">4</a><br /> +<br /> +Hume, David, contrast of conditions under increasing and under deceasing volume of money, <a href="#Page_p007">7</a><br /> +<span style="margin-left: 1em;">value of money depends on quantity, <a href="#Page_p076">76</a></span><br /> +<br /> +Huskisson, William, if the quantity of money is increased the value of commodities increase, <a href="#Page_p077">77</a><br /> +<br /> +<br /> +Improved methods of production, their effects considered, <a href="#Page_p045">45</a><br /> +<br /> +India, will remonetization place us "alongside?", <a href="#Page_p032">32</a><br /> +<br /> +International agreement: is such agreement necessary to tie the metals together, <a href="#Page_p109">109</a><br /> +<br /> +Involuntary idleness, enormous loss of potential wealth, through, <a href="#Page_p061">61</a><br /> +<br /> +Iron, pig: Yield for 1888, <a href="#Page_p004">4</a><br /> +<br /> +<br /> +Jefferson, Thomas, "the unit must stand on both metals", <a href="#Page_p017">17</a><br /> +<br /> +Jevons, Professor: The metals not so steady a standard as corn, <a href="#Page_p042">42</a><br /> +<span style="margin-left: 1em;">inconvertible paper money, if limited in quantity, can retain its full value, <a href="#Page_p077">77</a></span><br /> +<br /> +Jevons, on Money, <a href="#Page_p066">66</a><br /> +<span style="margin-left: 1em;">table of relation of general prices 1809 to 1849, <a href="#Page_p040">40</a></span><br /> +<br /> +<br /> +Laughlin, Professor, "the name 'dollar' does not always have the same value", <a href="#Page_p042">42</a><br /> +<br /> +Laveleye, Professor, "Debtors have a right to pay in gold or silver", <a href="#Page_p018">18</a><br /> +<br /> +Law, what is claimed for it, in keeping the metals together, <a href="#Page_p110">110</a><br /> +<span style="margin-left: 1em;">of France held the metals together from 1803 till demonetization, <a href="#Page_p110">110</a></span><br /> +<span class='pagenum'><a name="Page_p115" id="Page_p115">[115]</a></span><br /> +Legal-tender: All money should have this power, <a href="#Page_p071">71</a><br /> +<br /> +Locke, John, both gold and silver variable in value, <a href="#Page_p042">42</a><br /> +<span style="margin-left: 1em;">on Money, <a href="#Page_p066">66</a>, <a href="#Page_p076">76</a></span><br /> +<br /> +<br /> +McCulloch, J. R., "Money is a measure of value", <a href="#Page_p071">71</a><br /> +<span style="margin-left: 1em;">were there perfect security against over-issue of paper money, the metals might be dispensed with, <a href="#Page_p078">78</a></span><br /> +<br /> +McLeod, on Money, <a href="#Page_p066">66</a><br /> +<br /> +Materials used as Money at various epochs, <a href="#Page_p010">10</a><br /> +<br /> +Machiavelli's reference to the brigands, <a href="#Page_p057">57</a><br /> +<br /> +Massachusetts Bureau of Labor: Deductions from its reports as to numbers of the unemployed, <a href="#Page_p061">61</a><br /> +<br /> +Mill, James, the value of money depends on its quantity, <a href="#Page_p076">76</a><br /> +<br /> +Mill, John Stuart, on Money, <a href="#Page_p066">66</a><br /> +<span style="margin-left: 1em;">the value varies inversely as its quantity, <a href="#Page_p076">76</a></span><br /> +<br /> +Mining States: Their interest in remonetization of silver, <a href="#Page_p058">58</a><br /> +<br /> +Monetary Commission Report: Quotations from, as to new school of financial theorists, <a href="#Page_p018">18</a><br /> +<br /> +Money demand, not commodity demand, gives gold its value, <a href="#Page_p081">81</a><br /> +<span style="margin-left: 1em;">effect of reduction in volume of, <a href="#Page_p006">6</a></span><br /> +<span style="margin-left: 1em;">effect intensified as civilization advances, <a href="#Page_p006">6</a></span><br /> +<span style="margin-left: 1em;">a glance at the history of, <a href="#Page_p009">9</a></span><br /> +<span style="margin-left: 1em;">substances used as, at various epochs, <a href="#Page_p010">10</a></span><br /> +<span style="margin-left: 1em;">the money-function the all-sufficient guaranty of the money value, <a href="#Page_p079">79</a></span><br /> +<span style="margin-left: 1em;">where is the future money to come from, if silver remains demonetized, <a href="#Page_p079">79</a></span><br /> +<span style="margin-left: 1em;">—what is it? Its value not in the material but in the stamp—in the legal-tender power conferred, <a href="#Page_p065">65</a></span><br /> +<span style="margin-left: 1em;">should be redeemable in all things, <a href="#Page_p104">104</a></span><br /> +<span style="margin-left: 1em;">valuable rather for the important service it performs than for the material of which made, <a href="#Page_p080">80</a></span><br /> +<span style="margin-left: 1em;">question a question of prices, <a href="#Page_p080">80</a></span><br /> +<span style="margin-left: 1em;">what is the demand for it? what the supply?, <a href="#Page_p073">73</a></span><br /> +<span style="margin-left: 1em;">no alternative for it, <a href="#Page_p074">74</a></span><br /> +<span style="margin-left: 1em;">the most potent instrumentality in the evolution of society, <a href="#Page_p074">74</a></span><br /> +<br /> +<br /> +National money, as distinguished from international money. Advantages of national money, <a href="#Page_p099">99</a><br /> +<br /> +Newspapers, number published in United States, <a href="#Page_p004">4</a><br /> +<br /> +Non-mining States, their interest in remonetization of silver, <a href="#Page_p060">60</a><br /> +<br /> +<br /> +Overstone, Lord, "The value of a paper currency results from its being kept at the same amount the metallic currency would have been", <a href="#Page_p078">78</a><br /> +<br /> +<br /> +Panics, impossible if all money were legal tender, <a href="#Page_p071">71</a><br /> +<br /> +Parity of the metals: Can the United States alone hold them together?, <a href="#Page_p109">109</a><br /> +<br /> +Paulus (author of Pandects): Power of money dependent not on substance but on quantity, <a href="#Page_p077">77</a><br /> +<br /> +Playfair, Sir Lyon, uses the argument that England is a creditor nation, <a href="#Page_p023">23</a><br /> +<br /> +Population, Money should increase in a ratio not less than the ratio of increase of, <a href="#Page_p075">75</a><br /> +<br /> +Price, the index of the value of Money, <a href="#Page_p008">8</a><br /> +<br /> +Price, Bonamy, on Money, <a href="#Page_p067">67</a><br /> +<br /> +Prices, what produces a general fall of, <a href="#Page_p005">5</a><br /> +<span style="margin-left: 1em;">fall of, in United States since 1873, <a href="#Page_p038">38</a></span><br /> +<span style="margin-left: 1em;">relation of general prices, 1809 to 1849, Jevon's tables, <a href="#Page_p040">40</a></span><br /> +<span style="margin-left: 1em;">relation of general prices, 1849 to 1885, Soetbeer's tables, <a href="#Page_p041">41</a></span><br /> +<br /> +Progress, evolutions of, in Money, <a href="#Page_p009">9</a><br /> +<br /> +Prophecies of gold advocates unfulfilled, <a href="#Page_p030">30</a><br /> +<br /> +Protection, its effect on prices, <a href="#Page_p088">88</a><br /> +<br /> +<br /> +Quantitative theory of Money, The value of each dollar depends on the number of dollars out, <a href="#Page_p075">75</a><br /> +<br /> +<br /> +Railroads, number of miles in United States, <a href="#Page_p004">4</a><br /> +<span style="margin-left: 1em;">value in 1880, <a href="#Page_p004">4</a></span><br /> +<br /> +Ratio of precious metals from earliest times to Christian Era, <a href="#Page_p013">13</a><br /> +<span style="margin-left: 1em;">Christian Era to discovery of America, <a href="#Page_p014">14</a></span><br /> +<span style="margin-left: 1em;">discovery of America to 1822, <a href="#Page_p015">15</a></span><br /> +<span style="margin-left: 1em;">1823 to 1889, <a href="#Page_p016">16</a></span><br /> +<br /> +Ricardo, use of the metals as a standard, <a href="#Page_p043">43</a><br /> +<span style="margin-left: 1em;">the value of money in a country depends on the amount existing, <a href="#Page_p076">76</a></span><br /> +<span style="margin-left: 1em;">there can be no depreciation of money but from excess of quantity, <a href="#Page_p076">76</a></span><br /> +<span style="margin-left: 1em;">his views as to a "well regulated paper currency", <a href="#Page_p078">78</a></span><br /> +<br /> +Rothschild, Baron, opinion of bimetallism, <a href="#Page_p017">17</a><br /> +<br /> +Rouland, M., governor of Bank of France, opposed to demonetization, <a href="#Page_p017">17</a><br /> +<span class='pagenum'><a name="Page_p116" id="Page_p116">[116]</a></span><br /> +Royal Commission of England, extracts from report of, <a href="#Page_p023">23</a>, <a href="#Page_p110">110</a><br /> +<br /> +<br /> +Sauerbeck on general price (those of 1887 the lowest for one hundred years), <a href="#Page_p041">41</a><br /> +<br /> +Seventy-two cent dollar, the, <a href="#Page_p092">92</a><br /> +<br /> +Seyd, Ernest, effect of increasing money volume, <a href="#Page_p008">8</a><br /> +<br /> +Silver, ratio of, to gold, at various periods, <a href="#Page_p013">13-16</a><br /> +<span style="margin-left: 1em;">declared unfit to be used as money, <a href="#Page_p021">21</a></span><br /> +<span style="margin-left: 1em;">objections to, considered, <a href="#Page_p021">21</a></span><br /> +<span style="margin-left: 1em;">the motive for demonetizing, by England, <a href="#Page_p021">21</a></span><br /> +<span style="margin-left: 1em;">the motive for demonetizing, by Germany, <a href="#Page_p024">24</a></span><br /> +<span style="margin-left: 1em;">the motive acknowledged, <a href="#Page_p023">23</a></span><br /> +<span style="margin-left: 1em;">and gold both variable in value, <a href="#Page_p041">41</a></span><br /> +<span style="margin-left: 1em;">—has it fallen?, <a href="#Page_p049">49</a></span><br /> +<span style="margin-left: 1em;">purchasing power in 1873 and 1889, <a href="#Page_p052">52</a></span><br /> +<span style="margin-left: 1em;">prejudice against it as money arising from the idea that gold money has greater "intrinsic value." That question considered, <a href="#Page_p063">63</a></span><br /> +<span style="margin-left: 1em;">shall we be flooded with it in case of remonetization?, <a href="#Page_p108">108</a></span><br /> +<span style="margin-left: 1em;">the world's supply, <a href="#Page_p101">101</a></span><br /> +<span style="margin-left: 1em;">If $2,500,000 a month for twelve years has not driven out gold, how much will do so?, <a href="#Page_p091">91</a></span><br /> +<br /> +Silver miners, their loss by demonetization contrasted with that of farmers and cotton-planters, <a href="#Page_p058">58</a><br /> +<br /> +Smith, Adam: Both gold and silver variable in value, <a href="#Page_p041">41</a><br /> +<span style="margin-left: 1em;">Definition of a guinea, <a href="#Page_p066">66</a></span><br /> +<br /> +Soetbeer's table, showing relation of general prices 1849 to 1885, <a href="#Page_p041">41</a><br /> +<br /> +Standard: The true Money standard not the material of which money is made, <a href="#Page_p078">78</a><br /> +<br /> +Stewart, Dugald, on Money, <a href="#Page_p067">67</a><br /> +<br /> +Steel, yield for 1888, <a href="#Page_p004">4</a><br /> +<br /> +Suicides in Germany, <a href="#Page_p025">25</a><br /> +<br /> +Supply of money, what it is, <a href="#Page_p073">73</a><br /> +<br /> +<br /> +Tabular standard suggested for time contracts as securing greater equity than gold, <a href="#Page_p043">43</a><br /> +<br /> +Thornton, Henry, on Money, <a href="#Page_p066">66</a><br /> +<br /> +Time contracts, their importance to industry, <a href="#Page_p006">6</a><br /> +<br /> +Torrens: The value of gold rises or falls as its quantity is diminished or increased, <a href="#Page_p077">77</a><br /> +<br /> +Treasury notes should not be redeemable in bullion, <a href="#Page_p104">104</a><br /> +<span style="margin-left: 1em;">Possible effect of such redemption, <a href="#Page_p106">106</a></span><br /> +<br /> +Tribune (New York) quoted as to fall of prices, <a href="#Page_p039">39</a><br /> +<br /> +<br /> +Unemployed, some statistics of the, <a href="#Page_p061">61</a><br /> +<br /> +United States, demonetization of silver effected in 1873, <a href="#Page_p026">26</a><br /> +<br /> +Usurer's loan on the farm, <a href="#Page_p070">70</a><br /> +<br /> +<br /> +Waller's verse, <a href="#Page_p024">24</a><br /> +<br /> +<br /> +Value, the meaning of, <a href="#Page_p063">63</a><br /> +<span style="margin-left: 1em;">subjective, not objective, <a href="#Page_p063">63</a></span><br /> +<span style="margin-left: 1em;">not "intrinsic", <a href="#Page_p064">64</a></span><br /> +<span style="margin-left: 1em;">of money not in the material, but in the stamp—in the power of legal tender, <a href="#Page_p065">65</a></span><br /> +<span style="margin-left: 1em;">money a measure of, <a href="#Page_p071">71</a></span><br /> +<br /> +Values, relative, of precious metals from earliest times, <a href="#Page_p013">13</a><br /> +<br /> +<br /> +Wage-loss from involuntary idleness enormous, <a href="#Page_p062">62</a><br /> +<br /> +Walker, Prof. F. A., on Money, <a href="#Page_p066">66</a>, <a href="#Page_p067">67</a><br /> +<span style="margin-left: 1em;">gold and silver both variable in value, <a href="#Page_p042">42</a></span><br /> +<span style="margin-left: 1em;">the value of money in a country determined by the amount existing, <a href="#Page_p077">77</a></span><br /> +<br /> +Wealth, national, estimated, <a href="#Page_p004">4</a><br /> +<br /> +Wolowski, M., effect of demonetization, <a href="#Page_p017">17</a><br /> +<br /> +Working masses entitled to better conditions, <a href="#Page_p057">57</a><br /> +<br /> +<br /> +Yardstick, the lengthened, "rung in" on the cotton manufacturer, <a href="#Page_p073">73</a><br /> +</p> +</div> + +<p> </p> + +<div class="notebox"> +<p class="noidt"><b>Transcriber's Note:</b> Obvious misprints in spelling and punctuation have been silently +corrected.</p> + +<p class="noidt">The original scanned images were not very clear, especially the tables with numerical values. +This may have caused some inadvertent errors to creep in during the transcription process.</p> +</div> + + + + + + + + +<pre> + + + + + +End of the Project Gutenberg EBook of Money, by John P. 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Jones, of Nevada, On the Free Coinage + of Silver; in the United States Senate, May 12 and 13, 1890 + +Author: John P. Jones + +Release Date: February 28, 2012 [EBook #39003] + +Language: English + +Character set encoding: ASCII + +*** START OF THIS PROJECT GUTENBERG EBOOK MONEY *** + + + + +Produced by K Nordquist, Dave Morgan and the Online +Distributed Proofreading Team at https://www.pgdp.net (This +file was produced from images generously made available +by The Internet Archive/American Libraries.) + + + + + + + + + + MONEY. + + + "Gold is a wonderful clearer of the understanding; it dissipates + every doubt and scruple in an instant, accommodates itself to the + meanest capacities, silences the loud and clamorous and brings + over the most obstinate and inflexible. Philip of Macedon refuted + by it all the wisdom of Athens, confounded their statesmen, struck + their orators dumb, and at length argued them out of their + liberties." + --ADDISON. + + + SPEECH + OF + HON. JOHN P. JONES, + OF NEVADA, + ON THE FREE COINAGE OF SILVER; + IN THE + UNITED STATES SENATE, + MAY 12 AND 13, 1890. + + WASHINGTON. + 1890. + + + + + SPEECH + OF + HON. JOHN P. JONES, + OF NEVADA. + + On the bill (S. 2350) authorizing the issue of Treasury notes on + deposits of silver bullion. + + +Mr. JONES, of Nevada, said: + +Mr. PRESIDENT: The question now about to be discussed by this body is in +my judgment the most important that has attracted the attention of +Congress or the country since the formation of the Constitution. It +affects every interest, great and small, from the slightest concern of +the individual to the largest and most comprehensive interest of the +nation. + +The measure under consideration was reported by me from the Committee on +Finance. It is hardly necessary for me to say, however, that it does not +fully reflect my individual views regarding the relation which silver +should bear to the monetary circulation of the country or of the world. +I am, at all times and in all places, a firm and unwavering advocate of +the free and unlimited coinage of silver, not merely for the reason that +silver is as ancient and honorable a money metal as gold, and equally +well adapted for the money use, but for the further reason that, looking +at the annual yield from the mines, the entire supply that can come to +the mints will at no time be more than is needed to maintain at a steady +level the prices of commodities among a constantly increasing +population. + +In view, however, of the great divergency of views prevailing on the +subject, the length of time which it was believed might be consumed in +the endeavor to secure that full and rightful measure of legislation to +which the people are entitled, and the possibility that this session of +Congress might terminate without affording the country some measure of +substantial relief, I was willing, rather than have the country longer +subjected to the baleful and benumbing influences set in motion by the +demonetization act of 1873, to join with other members of the Finance +Committee in reporting the bill now under consideration. + +Under the circumstances I wish at the outset of the discussion to say +that I hold myself free to vote for any amendment that may be offered +that may tend to make the bill a more perfect measure of relief, and +that may be more in consonance with my individual views. + + +THE CONDITION OF THE COUNTRY. + +The condition of this country to-day, Mr. President, is well calculated +to awaken the interest and arouse the attention of thinking men. It can +be safely asserted that no period of the world's history can exhibit a +people at once so numerous and homogeneous, living under one form of +government, speaking a common language, enjoying the same degree of +personal and political liberty, and sharing, in so equal a degree, the +same civilization as the population of the United States. Eminently +practical and ingenious, of indomitable will, untiring energy, and +unfailing hope; favored by nature with a domain of imperial expanse, +with soil and climate of unequaled variety and beneficence, with every +natural condition that can conduce to individual prosperity and national +glory, it might well be expected that among such a people industry, +agriculture, commerce, art, and science would reach an extent and +perfection of development surpassing anything ever known in the history +of mankind. + +In some respects this expectation would appear to have been well +founded. For several years past our farmers have produced an annual +average of 400,000,000 bushels of wheat. Our oat crop for 1888 was +700,000,000 bushels, our corn crop 2,000,000,000 bushels, our cotton +crop 7,000,000 bales. In that year our coal mines yielded 170,000,000 +tons of coal, our furnaces produced 6,500,000 tons of pig iron and +3,000,000 tons of steel. Our gold and silver mines add more than +$100,000,000 a year to the world's stock of the precious metals. We +print 16,000 newspapers and periodicals, have in operation 154,000 miles +of railroad and 250,000 miles of telegraph. The value of our +manufactured products at the date of the last census was $5,400,000,000. +Our farm lands at the same time were estimated at $10,000,000,000, our +cattle at $2,000,000,000, our railroads at $6,000,000,000, our houses at +$14,000,000,000. It is not too much to say that there has been an +increase of fully 50 per cent. in those values since the taking of the +census of 1880. Our national wealth to-day is reasonably estimated at +over $60,000,000,000. + +Figures and facts such as these in the history of a young nation bespeak +the presence not merely of great natural opportunities, but of a people +marvelously apt and forceful. From such results should be anticipated +the highest attainable prosperity and happiness. Our population is +alert, aspiring, and buoyant, not given to needless repining or aimless +endeavor, but, with fixity of purpose, presses ever eagerly on, +utilizing every conception of the brain to supplement and multiply the +possibilities of the hand, and at every turn subordinating the subtle +forces of nature to the best and wisest purposes of man. No equal number +of persons on the globe better deserve success, or are better adapted +for its enjoyment. + +But instead of finding, as we should find, happiness and contentment +broadcast throughout our great domain, there are heard from all +directions, even in this Republic, resounding cries of distress and +dissatisfaction. Every trade and occupation exhibits symptoms of +uneasiness and distrust. The farmer, the artisan, the merchant,--all +share in the general complaint that times are hard, that business is +"dull." The farmer is in debt, and is not realizing, on the products of +his labor, the wherewithal to meet either his deferred or his current +obligations; the artisan, when at work, finds himself compelled to share +his earnings with some relative or friend who is out of employment; the +merchant who buys his goods on time finds little profit in sales, and +difficulty in making his payments. + + +WHAT IS THE DIFFICULTY? + +What can it be, Mr. President, that has thus brought to naught all the +careful estimates and painstaking computations, not of thousands, nor of +hundreds of thousands, but of millions, of keen, shrewd, and far-seeing +men? Our people take an intelligent interest in their business; they +look ahead; they endeavor, as far as possible, to estimate correctly +their assets and liabilities, so that on the day of reckoning they may +be found ready. Why this universal failure of all classes to compute +correctly in advance their situation on the coming pay-day? What potent +and sinister drug has been secretly introduced into the veins of +commerce that has caused the blood to flow so sluggishly--that has +narcotized the commercial and industrial world? + +All have been looking for the cause, and many think they have discovered +it. With some it is "over-production," with others either a "high +tariff" or a "tariff not sufficiently high." Some think it due to trusts +and combinations, others to improved methods of production, or because +the crops are overabundant or not abundant enough. Some ascribe the +difficulty to speculation; others, to "strikes." All sorts of +insufficient and contradictory causes are assigned for the same general +and universal complaint. However inadequate in themselves, they serve to +emphasize the universal recognition of a difficulty whose cause without +close inquiry is likely to elude detection. But the evil is of such +magnitude, it is so widespread and pervasive, that, without a knowledge +of its cause, all effort at mitigation of its effects can but add to the +confusion and intensify the difficulty. + +It behooves us, therefore, as we value the prosperity and happiness of +our people, to set ourselves diligently to the inquiry: What is the +cause of the unrest and discontent now universally prevailing? + + +ONE SYMPTOM COMMON TO ALL INDUSTRIES. + +In surveying the question broadly, to discover whether there is anything +that affects the situation in common from the standpoint of varying +occupations, we find one, and only one, uniform and unfailing +characteristic; the prices of all commodities and of all property, +except in money centers, have fallen, and continue falling. Such a +phenomenon as a constant and progressive fall in the general range of +prices has always exercised so baleful an influence on the prosperity of +mankind that it never fails to arrest attention. + +History gives evidence of no more prolific source of human misery than a +persistent and long continued fall in the general range of prices. But, +although exercising so pernicious an influence, it is not itself a +cause, but an effect. + +When a fall of prices is found operating, not on one article or class of +articles alone, but on the products of all industries; when found to be +not confined to any one climate, country, or race of people, but to +diffuse itself over the civilized world; when it is found not to be a +characteristic of any one year, but to go on progressively for a series +of years, it becomes manifest that it does not and can not arise from +local, temporary or subordinate causes, but must have its genesis and +development in some principle of universal application. + + +WHAT PRODUCES A GENERAL FALL OF PRICES? + +What, then, is it that produces a general decline of prices in any +country? It is produced by a shrinkage in the volume of money relatively +to population and business, which has never yet failed to cause an +increase in the value of the money unit, and a consequent decrease in +the price of the commodities for which such unit is exchanged. If the +volume of money in circulation be made to bear a direct and steady ratio +to population and business, prices will be maintained at a steady level, +and, what is of supreme importance, money will be kept of unchanging +value. With an advancing civilization, in which a large volume of +business is conducted on a basis of credit extending over long periods, +it is of the uttermost importance that money, which is the measure of +all equities, should be kept unchanging in value through time. + + +EFFECT OF A REDUCTION IN THE MONEY-VOLUME. + +A reduction in the volume of money relatively to population and +business, or, (to state the proposition in another form) a volume which +remains stationary while population and business are increasing, has the +effect of increasing the value of each unit of money, by increasing its +purchasing power. + +It is only within a comparatively recent period that an increasing value +in the money unit could produce such widespread disturbance of industry +as it produces to-day. In the rude periods of society commerce was by +barter; and even for thousands of years after the introduction of money, +credit, where known at all, was extremely limited. Under such +circumstances changes in the volume and in the value of money, while +operating to the disadvantage of society as a whole, could not instantly +or seriously affect any one individual. An increase of 25 per cent. in +one year in the value of the money unit--a change which now, by reason +of existing contracts or debts, would entail universal bankruptcy and +ruin--would not be seriously felt by a community in which no such +contracts or debts existed, in which payments were immediate or at short +intervals, and each individual parted with his money almost as soon as +he received it. + +Such proportion of the annual increase in the value of the money unit as +could attach to any one month, week, or day would be wholly +insignificant, and as most transactions were closed on the spot, no +appreciable loss could accrue to any individual. Such loss as did accrue +was shared in and averaged among the whole community, making it the +veriest trifle upon any individual. But how is it in our day? + + +THAT EFFECT INTENSIFIED AS CIVILIZATION ADVANCES. + +The inventions of the past one hundred years have established a new +order of the ages. The revolution of industry and commerce, effected by +the adaptation of steam and other forces of nature to the uses of man, +have given to civilization an impetus exceeding anything known in the +former experience of mankind. Under the operation of the new system, the +rapidity and intensity with which, within that period, civilization has +developed, is due in great part to an economic feature unknown to +ancient civilization and practically unknown even to civilized society +until the present century. That feature is the time-contract, by which +alone leading minds are enabled to project in advance enterprises of +magnitude and moment. It is only through intelligent and far-seeing +plans and projections that in a complex and minutely classified system +of industry great bodies of men can be kept in uninterrupted employment. + +We have 22,000,000 workmen in this country. In order that they may be +kept uninterruptedly employed it is absolutely necessary that business +contracts and obligations be made long in advance. Accordingly, we read +almost daily of the inception of industrial undertakings requiring years +to fulfill. It is not too much to say that the suspension for one season +of the making of time-contracts would close the factories, furnaces, and +machine shops of all civilized countries. + +The natural concomitant of such a system of industry is the elaborate +system of debt and credit which has grown up with it, and is +indispensable to it. Any serious enhancement in the value of the unit of +money between the time of making a contract or incurring a debt and the +date of fulfillment or maturity always works hardship and frequently +ruin to the contractor or debtor. + +Three-fourths of the business enterprises of this country are conducted +on borrowed capital. Three-fourths of the homes and farms that stand in +the name of the actual occupants have been bought on time, and a very +large proportion of them are mortgaged for the payment of some part of +the purchase-money. + +Under the operation of a shrinkage in the volume of money this enormous +mass of borrowers, at the maturity of their respective debts, though +nominally paying no more than the amount borrowed, with interest, are, +in reality, in the amount of the principal alone, returning a percentage +of value greater than they received--more than in equity they contracted +to pay and oftentimes more, in substance, than they profited by the +loan. To the man of business this percentage in many cases constitutes +the difference between success and failure. Thus a shrinkage in the +volume of money is the prolific source of bankruptcy and ruin. It is the +canker that, unperceived and unsuspected, is eating out the prosperity +of our people. By reason of the almost universal inattention to the +nature and functions of money this evil is permitted, unobserved, to +work widespread ruin and disaster. So subtle is it in its operations +that it eludes the vigilance of the most acute. It baffles all foresight +and calculation; it sets at naught all industry, all energy, all +enterprise. + + +CONTRAST OF EFFECTS PRODUCED BY AN INCREASING AND A DECREASING +MONEY-VOLUME. + +The difference in the effects produced by an increasing and a +decreasing money-volume has not escaped the attention of observant +writers. + +David Hume, in his Essay on Money, says: + + It is certain that since the discovery of the mines in America + industry has increased in all the nations of Europe. * * We find + that in every kingdom into which money begins to flow in greater + abundance than formerly, everything takes a new face; labor and + industry gain life; the merchant becomes more enterprising, the + manufacturer more diligent and skillful, and even the farmer + follows his plow with greater alacrity and attention. * * * It is + of no manner of consequence with regard to the domestic happiness + of a state whether money be in a greater or less quantity. The + good policy of the magistrate consists only in keeping it, if + possible, still increasing; because by that means he keeps alive + a spirit of industry in the nation and increases the stock of + labor, in which consists all real power and riches. A nation + whose money decreases is actually at that time weaker and more + miserable than another nation which possesses no more money, but + is on the increasing hand. + +William H. Crawford, Secretary of the Treasury, in a report to Congress, +dated 12th February, 1820, says: + + All intelligent writers on currency agree that when it is + decreasing in amount poverty and misery must prevail. + +Mr. R. M. T. Hunter, in a report to the United States Senate in 1852, +says: + + Of all the great effects produced upon human society by the + discovery of America, there were probably none so marked as those + brought about by the great influx of the precious metals from the + New World to the Old. European industry had been declining under + the decreasing stock of the precious metals and an appreciating + standard of values; human ingenuity grew dull under the + paralyzing influences of declining profits, and capital absorbed + nearly all that should have been divided between it and labor. + But an increase of the precious metals, in such quantity as to + check this tendency, operated as a new motive power to the + machinery of commerce. Production was stimulated by finding the + advantages of a change in the standard on its side. Instead of + being repressed by having to pay more than it had stipulated for + the use of capital, it was stimulated by paying less. Capital, + too, was benefited, for new demands were created for it by the + new uses which a general movement in industrial pursuits had + developed; so that if it lost a little by a change in the + standard, it gained much more in the greater demand for its use, + which added to its capacity for reproduction, and to its real + value. + + The mischief would be great, indeed, if all the world were to + adopt but one of the precious metals as the standard of value. + To adopt gold alone would diminish the specie currency more than + one-half; and the reduction the other way, should silver be taken + as the only standard, would be large enough to prove highly + disastrous to the human race. + +The Encyclopaedia Britannica, 1859 (article Precious Metals, by J. R. +McCulloch), says: + + A fall in the value of the precious metals, caused by the greater + facility of their production, or by the discovery of new sources + of supply, depends in no degree on theories of philosophers or + the decision of statesmen or legislators, but is the result of + circumstances beyond human control; and although, like a fall of + rain after a long course of dry weather, it may be prejudicial to + certain classes, it is beneficial to an incomparably greater + number, including all who are engaged in industrial pursuits, and + is, speaking generally, of great public or national advantage. + +Ernest Seyd, 1868 (Bullion, page 613), says: + + Upon this one point all authorities on the subject are agreed, to + wit, that the large increase in the supply of gold has given a + universal impetus to trade, commerce, and industry, and to + general social development and progress. + +The American Review (1876) says: + + Diminishing money and falling prices are not only oppressive upon + debtors, of whom, in modern times, states are the greatest, but + they cause stagnation in business, reduced production, and + enforced idleness. Falling markets annihilate profits, and as it + is only the expectation of gain which stimulates the investment + of capital in operations, inadequate employment is found for + labor, and those who are employed can only be so upon the + condition of diminished wages. An increasing amount of money, and + consequently augmenting prices, are attended by results precisely + the contrary. Production is stimulated by the profits resulting + from advancing prices; labor is consequently in demand and better + paid, and the general activity and buoyancy insure to capital a + wider demand and higher remuneration. + + +PRICE THE INDEX OF THE VALUE OF MONEY. + +There can be no truer index of the value of money than the general range +of prices. Price is the mercury by the rise and fall of which the heat +and struggle of industrial and business life are daily measured and made +plain. Where the tendency of this indicator continues downward, there is +no more certain sign that money is increasing in value. + +During a period of falling prices the fear of impending calamity hangs +like a pall over the business of the country. Notwithstanding +unremitting efforts, men feel themselves constantly on the edge of +disaster. Gloomy foreboding and timidity take the place of confidence +and courage. + +A shrinking volume of money is the most insidious foe with which +civilization has to contend. + +It is my firm conviction that the inexpressible miseries inflicted upon +mankind by war, pestilence, and famine have been less cruel, unpitying, +and unrelenting than the persistent and remorseless exactions which this +inexorable enemy has made upon society. As the volume of money contracts +prices decline, and with the decline of prices comes stagnation of +industry, and the relegation to idleness of thousands of willing +workmen. Capitalists become unwilling to invest their money in +enterprises that employ labor while the products of that labor are +constantly decreasing in price. During all periods of falling prices +therefore money capital is withdrawn from active industry and seeks +investment in bonds and other forms of money-futures yielding fixed +incomes. For although the rate of interest in many such cases may be +low, the capitalist is compensated for this by the enhancement in the +purchasing power of each dollar of the principal and by the necessarily +greater command it secures over the products of labor. + +Avoiding the very purpose for which it was devised, money at such times +seeks seclusion and declines to circulate. Its owner finds that he can +better afford to leave it idle in a vault or bury it in the earth, than +subject it to the probability of diminution by investing it in business +on a constantly falling market. Thus, contrary to all principles of +progress and of natural justice, the man who keeps his money idle, and +deprives society of its use, is rewarded by an unearned increment, while +he who puts his money into active business, where industry and labor may +profit by it is punished by unmerited loss. + +Under such conditions it is impossible for a community to reach that +degree of material progress which, under proper circumstances, it would +readily attain. At every turn distress and discouragement stare the +people in the face. In every town and village men, willing to work, +stand idle. Even their misfortune does not end with themselves, for not +only are they a tax upon their friends, lessening to some extent the +meager income of those who give them temporary assistance, but their +necessary and eager competition for the little work that offers, tends +to reduce the compensation of those to whom they are thus indebted. +Stores, workshops, and factories, unoccupied and unused, are found in +every direction. Crime increases, bankruptcies multiply, and even though +the aggregate of wealth augments, it is unjustly distributed, and +consequently barren of beneficent results. + + +A GLANCE AT THE HISTORY OF MONEY. + +The system of relying upon the precious metals as money has long been +known as the Automatic system. Accurately, it should be called the +_Accidental_ system. It has been called "automatic" because, so long as +money was made to depend solely upon the yield of the mines, the supply +regulated itself by what was believed to be a natural method, namely, by +the expenditure of labor in its production, and was limited only by the +rude obstacles which nature opposes to the production of the metals. The +necessity of expending this labor placed the money volume of any country +beyond the control of the kings and conquerors who, in the primitive +periods of society, exercised despotic sway over their subjects. It was +undoubtedly better for the people of those early times to risk the +accidents of production than the follies and sinister designs of rulers. + +This automatic system grew out of barter. It is a survival from the +period when articles were exchanged directly, not for gold and silver as +money, but for gold and silver as commodities--on the basis of their +cost of production--as in the case of the articles for which they were +exchanged. + +There have been the same evolutions of progress in money as in all other +things. In the rude original of society no kind of money was possible. +The first trade was by barter, after which, some one or more commodities +attainable in the vicinage, and in general use and demand were selected +as the common media through which all exchanges were filtered. The use +for that purpose of various metals by weight followed next, and, at a +succeeding stage, gold, silver, and copper by weight, and after this +their use in the form of coins, the value of which coincided with the +bullion-value, which must necessarily be the case when free coinage is +permitted. + +It may be not uninteresting in this connection to have a general view of +the materials which, at different epochs of the world's history, have +been used as money. I therefore present a tabular statement giving those +particulars in chronological order. + + _Table showing some of the substances which have, at various periods + and in various countries, been used as money._ + + ---------+-----------------+--------------------------+--------------- + Period. | Country. | Substance used as money. | Authority. + ---------+-----------------+--------------------------+--------------- + B. C. | | | + 1900 |Palestine |Cattle, and gold and |The Scriptures. + | | sliver, by weight. | + |Arabia |Gold and silver coins |Jacob. + |Phoenicia |Gold, silver, and copper |Anonymous. + | | coins | + |Phoenician colony|Same (some still extant) |Carter. + | in Spain. | | + 1200 |Phrygia |Coins, by Queen of Pelops |Julius Pollux. + 1184 |Greece |Brass coins |Homer. + 862 |Argos |Gold and silver coins, by |Dictionary of + | | Phidon. | Dates. + 70-500 |Rome |Brass, by weight |Jacob. + 578 |Rome |Copper coins |Ibid. + Uncertain|Carthage |Leather or parchment |Socrates, Dial. + | | money, first "paper | on Riches, + | | bills" known. | Journal des + | | | Economistes, + | | | 1874, p. 354. + B. C. 491|Sicily |Gold coins, by Gelo (some |Jacob. + | | still extant). | + 480 |Persia |Gold coin, by Darius (two |Ibid. + | | still extant). | + 478 |Sicily |Gold coin, by Hiero (some |Ibid. + | | still extant). | + 407 |Athena. |Debased gold coins, |MacLeod, 476. + | | foreign | + 400 |Sparta. |Iron, overvalued |Boeckh. + 360 |Macedonia |First gold coins coined |Jacob. + | | in Greece, by Philip. | + 266 |Rome |First silver coins coined |Ibid. + | | in Rome. | + 54 |Britain |Pieces of iron |Ibid. + 50 |Rome |Tin and brass coin |Dic. of Dates. + Uncertain|Arabia. |Glass coins |N. Y. Tribune. + | | | July 2, 1872. + ---------+-----------------+--------------------------+--------------- + + _Period following the failure of the ancient mines._ + + ---------+-----------------+--------------------------+--------------- + A.D. |Rome. |Lead coins silvered, and |Anonymous. + 212 | (Caracalla.) | copper coins gilded. | + 1066 |Britain |Living money, or human |Henry's History + | | being made a legal | of Great + | | tender for debts at | Britain, vol. + | | about L2 16_s._ 3_d._, | iv, p. 243. + | | per capita. | + 1160 |Italy |Paper invented; bills of |Anderson. + | | exchange introduced by | + | | the Jews. | + 1240 |Milan, Italy |Paper bills a legal tender|Arthur Young. + 1275 |China |Paper bills a legal tender|Marco Polo. + |Africa, part of |"Machutes" (ideal money; |Montesquieu. + | | this view doubted.) | + 1470 |Granada, Spain |Paper bills a legal tender|Irving. + 1574 |Holland |Pasteboard bills, |Dic. of Dates. + | | representative. | + Uncertain|Iceland |Dried fish |Anonymous. + Uncertain|Newfoundland |Codfish, dried |Anonymous. + Uncertain|Norway and |Seal skins and blubber |Anonymous. + | Greenland. | | + Uncertain|Hindostan and |Cowry shells |Jacob, 372. + | parts of | | + | Africa. | | + Uncertain|North America |Agate, carnelian, jasper, |Anonymous. + | Indian tribes | lead, copper, gold, | + | | silver, terra-cotta, | + | | mica, pearl, lignite, | + | | coal, bone, shells, | + | | chalcedony, wampumpeag, | + | | etc. | + Uncertain|Oriental pastoral|Cattle, grain, etc. |Anonymous. + | tribes | | + Uncertain|Abyssinia |Salt |Anonymous. + Uncertain|China and India |Rice |Anonymous. + Uncertain|India |Paper bills |Patterson, + | | | p. 13. + Uncertain|China |Pieces of silk cloth |Ibid. + Uncertain|Africa |Strips of cotton cloth |Ibid. + |Not stated |Wooden tallies or checks |Ibid. + ---------+-----------------+--------------------------+--------------- + + _Period following the discovery of the American mines._ + + ---------+-----------------+--------------------------+--------------- + A.D. | | | + 1631|Massachusetts |Corn a legal-tender at |Macgreggor. + | | market prices | + 1635|Massachusetts |Musket-balls |Anonymous. + 1690|Massachusetts |Paper bills, colonial |Macgreggor. + | | notes | + 1694|England |Bank-notes |McCulloch. + 1700|Sweden |Copper and iron coins |Voltaire's + | | | Charles XII. + 1702|South Carolina |Colonial notes |Macgreggor. + 1712|South Carolina |Bank notes |Ibid. + 1716|France |Interconvertible paper |Murray. + | | bills a legal-tender | + 1723|Pennsylvania |Paper bills, colonial |Macgreggor. + | | notes | + 1732|Maryland |Indian corn a legal-tender|Anonymous. + | | at 23d. per bushel | + 1732|Maryland |Tobacco a legal-tender at |Anonymous. + | | 1d. per pound | + 1776|Scotland |Tenpenny nails for small |Adam Smith. + | | change | + 1785|Frankland, State |Linen at 3s. 6d. per yard,|Wheeler's + | of (now part of| whisky at 2s. 6d. per | History of + | North Carolina)| gallon, and peltry as | North + | | legal-tender | Carolina, 94. + 1810-1840|All commercial |Great era of bank-paper | + | countries | bills | + 1826|Russia |Platinum coins |App. Encyc. + | | (discontinued in 1845) | + 1847|Mexico, parts of |Cocoa beans; and at Castle|Anonymous. + | | of Perote, soap. | + ---------+-----------------+--------------------------+--------------- + + _Period following the openings of California and Australia._ + + ---------+-----------------+--------------------------+--------------- + 1849 |California |Gold dust by weight, also | + | | minute gold coins for | + | | small change, coined in | + | | private mints. | + 1855 |Australia |Gold dust by weight | + 185- |Communist |Paper bills, each |Private + | settlement in | representing "one | information. + | Ohio, called | hour's labor." | + | "Utopia." | | + 1862 |United States |Paper bills a legal tender|Act of Feb. 25. + 1863 |North Carolina |Tenpenny nails, at 5 cents|Anonymous. + | | each, for small change. | + 1863 |Camp at Florence,|Potatoes for small change |Yorkville + | S. C. | | Enquirer. + 1863 |United States |Postage-stamps for small | + | | change, temporary. | + 1865 |Philadelphia, Pa.|Turnips for small change, |Philadelphia + | | temporary and local. | Ledger, April. + 1865 |United States |Nickel coins for small |Act of March 3. + | | change, overvalued. | + ---------+-----------------+--------------------------+--------------- + +An analysis of this table will show how carefully even the most +primitive communities guarded against a too restricted money volume. + +The materials chosen to serve the purpose of money in each country +during the early history of society were, it will be observed, such as +at the time and place would be of sufficient quantity or volume to +insure against any sudden deprivation of supply. In countries where the +chase was common, the skins of wild animals were used as money; in +maritime communities, shells; in pastoral countries, cattle; in the +early history of agriculture, grain; in early mining periods, base +metal; in primitive manufacturing ages, nails, glass, musket-balls, +strips of cotton, etc. + +As communities developed, and commerce between them began, substances +somewhat common to all countries, portable and indestructible, such as +the precious metals, came to be more, and other substances less, +resorted to. By reason of their great beauty those metals were always in +demand, even among barbarous peoples, for purposes of ornament and +decoration. Because of their universal use for such purposes they came +to be recognized as things for which anything else could with safety be +exchanged, and as society advanced, and it came to be recognized that +some medium should be adopted in which to make all exchanges, those +metals were naturally selected for the purpose, so that, together, they +became, as it were, a common denominator of value. Their selection +proved a convenient method of storing away wealth in a form that +commanded at all times every other form of wealth. They had always +passed by weight wherever used, but as society became better organized, +and its methods more complex, it became necessary, in order to insure +against fraud, to form them into pieces convenient for handling, and to +invest them distinctly with the function of money, so that, by law, they +became a universal solvent for debts and demands, the stamp of the +government placed on the coin testifying to its weight and fineness. + +Both metals, as shown by the table, have been concurrently used as money +for thousands of years--not only since the dawn of history, but from a +period anterior to any historical records. The oldest annals show that +they had already been employed as circulating media and that their +relative values, or the ratio of their exchange for one another, had +already been established. Gold and silver were used as money in +Palestine as early as the year 1900 B. C. We read in the Bible that +Abraham weighed to Ephron the Hittite 400 shekels of silver, "current +money with the merchant." An inscription on the temple of Karnak, of the +date of 1600 B. C. mentions those metals as materials in which tribute +was paid. + +But long anterior even to these dates, both metals had been used, as, +among the relics of the bronze age of the prehistoric era, ornaments of +both gold and silver have been found. Gold, being the less abundant of +the two metals, has had the higher value; but the ratio between the two +has been marvelously steady, taking into account the great sweep of +ages during which they have been used as money. This will be seen by +reference to the following tables of ratios. I will first take their +relative values during ancient times. + + _Table showing the ratio of gold and silver in various countries of + the world up to the Christian era._ + + ---------------------------------------------------------------------- + B. C. | Ratio. | Authorities. + ---------------------------------------------------------------------- + 1600 | 1 to 13.33 | Inscriptions at Karnak; tribute lists of + | | Thutmosis. (Brandis.) + 708 | 1 to 13.33 | Cuneiform inscriptions on plates found in + | | foundation of Khorsabad. + | 1 to 13.33 | Ancient Persian coins; gold darics at + | | 8.3 grams = 20 silver siglos, at 5.5 grams. + 500 | 1 to 13.00 | Persia. Darius. Egyptian tribute. Herod. + | | III,.95. (Boeckh, page 12.) + 490 | 1 to 12.50 | Sicily. Time of Gelon. "At least" 12.50. + | | (Boeckh, page 44.) + 470 | 1 to 10.00 | Doubtful. Asia Minor. Xerxes's treasure. + | | (Boeckh, page 11.) + 440 | 1 to 13.00 | Herodotus's account of Indian tributes. + | | 360 gold talents = 4,680 silver. + 420 | 1 to 10.00 | Asia Minor. Pay of Xenophon's troops in silver + | | darics. (Anab.; Boeckh, page 34.) + 407 | 1 to ---- | Spurious and debased gold coins at Athens. + | | (MacLeod, Polit. Econ., page 476; Boeckh, + | | page 35.) + 400 | 1 to 13.33 | Standard in Asia, according to Xenophon. + 400 | 1 to 12.00 | Standard in Greece according to "Hipparchus"; + | | attributed to Plato. + 400 | 1 to 12.00} | Various authorities adduced by Boeckh. + 400 | 1 to 13.50} | + | | + | {12.00}| Values in Greece from the Peloponnesian war to + 404-336 | 1 to {13.00}| the time of Alexander, according to hints in + | {13.33}| Greek writers. There were variations under + | | special contracts--unit, the silver drachma. + | | + 340 | 1 to 14.00 | Greece. Time of Demosthenese. (Boeckh, + | | page 44.) + 338-326 | 1 to 11.50 | Special contracts in Greece. + 343-323 | 1 to 12.50 | Egypt under the Ptolemies. + 300 | 1 to 10.00 | Greece. Continued depression of gold, caused + | | by great influx under Alexander. + 207 | 1 to 13.70 | Rome. (Boeckh, page 44.) Gold scriptulum + | | arbitrarily fixed at 17.143 for 1. + 100 | 1 to 11.91 | Rome. General rate of gold pound to silver + | | sesterces to date. + 58-49 | 1 to 8.93 | Rome. Continued depression of gold, caused + | | by influx of Caesar's spoil from Gaul. + | | [N. B.--Caesar's headquarters were at + | | Aquileia, at the head of the Adriatic, + | | where there was also a gold mine, which + | | at this period became very prolific.] + 50 | 1 to 11.90 | Rome. "About the year U. C. 700," the rate + | | was 11 19-21. (Boeckh, page 44.) + 29 | 1 to 12.00 | Rome. Normal rate in the last days of the + | | republic. + ---------------------------------------------------------------------- + +By reference to the foregoing table it will be observed that the +increase in the supply of gold in Europe, consisting of the spoils of +the Orient, gathered by Alexander the Great, and brought by him to +Greece, had the effect of decreasing the value of that metal so that +instead of being exchangeable at the ratio of 1 to about 13-1/2 of +silver, as formerly, gold became depressed, 1 ounce of it exchanging for +only 10 ounces of silver. Later, when Julius Caesar extended his +conquering arms into Gaul, and sent to Rome the accumulations of +treasure amassed by him, the value of gold by reason of the increased +supply was again depressed, so that an ounce of it was exchangeable for +only 8.93 ounces of silver. With these exceptions it may be said that +the relation of silver to gold for sixteen hundred years before the time +of Christ had varied only from the ratio of 1 to 12 to that of 1 to +13.33. Silver at no time during all this period fell below 13.50 to 1 of +gold. + +Looking, now, at the relative values of gold and silver from the time of +Christ to the discovery of America, we find the ratio between the two +metals to be as follows: + +Table showing the ratio of gold and silver in various countries of the +world from the opening of the Christian era to the discovery of America: + + ---------------------------------------------------------------------- + A. D. | Ratio. | Authorities. + ---------------------------------------------------------------------- + 1-37 | 1 to 10.97 | Rome. Rate under Augustus and Tiberius. + 37-41 | 1 to 12.17 | Rome. Reign of } + | | Caligula. } The silver coinage + 54-68 | 1 to 11.80 | Rome. Reign of Nero. } much debased, + 69-79 | 1 to 11.54 | Rome. Reign of } consequently the + | | Vespasian. } ratio of the + 81-96 | 1 to 11.30 | Rome. Reign of } metals pure was + | | Domitian. } about 1 to 11. + 138-161 | 1 to 11.98 | Rome. Reign of } + | | Antoninus. } + 312 | 1 to 14.40 | Byzantium. Reign of Constantine. Arbitrary. + 438 | 1 to 14.40 | Byzantium and Rome. Theodosian code. + | | Arbitrary. + 864 | 1 to 12.00 | Probable ratio, as shown by the Edictum + | | Pistense, under the Carlovingian dynasty. + 1260 | 1 to 10.50 | Average ratio in the commercial cities of + | | Italy. Local or doubtful. + 1344-1660 | 1 to ---- | England. Numerous mint indentures given in + | | McLeod's Political Economy, page 475. The + | | ratio, except when fixed arbitrarily and + | | in violation of market price, varied + | | between about 1.12 and 1.14 during the + | | two hundred and fifty-seven years + | | included in this period. + 1351 | 1 to 12.30 } | + 1375 | 1 to 12.40 } | Ratio in North Germany as shown by the + 1403 | 1 to 12.80 } | very accurate rules of the Lubeck mint, + 1411 | 1 to 12.00 } | corroborated in the main by the accounts + 1451 | 1 to 11.70 } | of the Teutonic Order of Knights, + 1463 | 1 to 11.60 } | averaged in periods of forty years. + 1453-1494 | 1 to 10.50 | Ratio according to the accounts of the + | | Teutonic knights. As the ratio fixed in + | | England by numerous mint indentures from + | | 1465 to 1509 was about 1.12 this German + | | ratio is considered local or doubtful. + ---------------------------------------------------------------------- + +It will thus be observed that during the one thousand four hundred and +ninety-two years from the coming of Christ to the discovery of America, +silver never went below the ratio of 14.40 to one of gold. + +The relations which the metals have borne to each other since the +discovery of the New World will appear from the following: + + _Table showing the relative values of gold and silver in the various + countries of the world from the discovery of America to 1680._ + + ---------------------------------------------------------------------- + A. D.| Ratio. | Authorities. + ---------------------------------------------------------------------- + | | + 1497 | 1 to 10.70 | Spain. Reign of Isabella. Edict of Medina. Local. + 1500 | 1 to 10.50 | Germany. Adam Riese's Arithmetic. Local or + | | doubtful. + 1551 | 1 to 11.17 | Germany. Imperial mint regulations. Arbitrary or + | | local. + 1559 | 1 to 11.44 | German Imperial mint regulations. + 1561 | 1 to 11.70} | France. Mint regulations. + 1575 | 1 to 11.68} | + 1623 | 1 to 11.74 | Upper Germany. Mint regulations. + 1640 | 1 to 13.51 | France. Mint regulations. Transition period. + 1665 | 1 to 15.10 | France. Mint regulations. + 1667 | 1 to 14.15 | Upper Germany. Mint regulations. Doubtful. + 1669 | 1 to 15.11 | Upper Germany. Mint regulations. + 1679 | 1 to 15.00} | France. Mint regulations. + 1680 | 1 to 15.40} | + | | + ---------------------------------------------------------------------- + +Table showing the ratio of silver to 1 of gold from 1687 to the +demonetization of silver by Germany and the United States and the +closing of the Mints to its free coinage. + +[From the Report (1890) of the Director of the U. S. Mint on the +Production of the Precious Metals in the United States.] + +[NOTE.--From 1687 to 1832 the ratios are taken from Dr. A. Soetbeer; +from 1833 to 1878 from Pixley and Abell's tables; and from 1879 to 1889 +from daily cable-grams from London to the Bureau of the Mint.] + + ---------------------------------------------------------------------- + Year. | Ratio.|| Year. | Ratio.|| Year. | Ratio.|| Year. | Ratio. + -------+--------++-------+--------++-------+--------++-------+-------- + 1687 | 14.94 || 1721 | 15.05 || 1755 | 14.68 || 1789 | 14.75 + 1688 | 14.94 || 1722 | 15.17 || 1756 | 14.94 || 1790 | 15.04 + 1689 | 15.02 || 1723 | 15.20 || 1757 | 14.87 || 1791 | 15.05 + 1690 | 15.02 || 1724 | 15.11 || 1758 | 14.85 || 1792 | 15.17 + 1691 | 14.98 || 1725 | 15.11 || 1759 | 14.15 || 1793 | 15.00 + 1692 | 14.92 || 1726 | 15.15 || 1760 | 14.14 || 1794 | 15.37 + 1693 | 14.83 || 1727 | 15.24 || 1761 | 14.54 || 1795 | 15.55 + 1694 | 14.87 || 1728 | 15.11 || 1762 | 15.27 || 1796 | 15.65 + 1695 | 15.02 || 1729 | 14.92 || 1763 | 14.99 || 1797 | 15.41 + 1696 | 15.00 || 1730 | 14.81 || 1764 | 14.70 || 1798 | 15.59 + 1697 | 15.20 || 1731 | 14.94 || 1765 | 14.83 || 1799 | 15.74 + 1698 | 15.07 || 1732 | 15.09 || 1766 | 14.80 || 1800 | 15.68 + 1699 | 14.94 || 1733 | 15.18 || 1767 | 14.85 || 1801 | 15.46 + 1700 | 14.81 || 1734 | 15.39 || 1768 | 14.80 || 1802 | 15.26 + 1701 | 15.07 || 1735 | 15.41 || 1769 | 14.72 || 1803 | 15.41 + 1702 | 15.52 || 1736 | 15.18 || 1770 | 14.62 || 1804 | 15.41 + 1703 | 15.17 || 1737 | 15.02 || 1771 | 14.66 || 1805 | 15.79 + 1704 | 15.22 || 1738 | 14.91 || 1772 | 14.52 || 1806 | 15.52 + 1705 | 15.11 || 1739 | 14.91 || 1773 | 14.62 || 1807 | 15.43 + 1706 | 15.27 || 1740 | 14.94 || 1774 | 14.62 || 1808 | 16.08 + 1707 | 15.44 || 1741 | 14.92 || 1775 | 14.72 || 1809 | 15.96 + 1708 | 15.41 || 1742 | 14.85 || 1776 | 14.55 || 1810 | 15.77 + 1709 | 15.31 || 1743 | 14.85 || 1777 | 14.54 || 1811 | 15.53 + 1710 | 15.22 || 1744 | 14.87 || 1778 | 14.68 || 1812 | 16.11 + 1711 | 15.29 || 1745 | 14.98 || 1779 | 14.80 || 1813 | 16.25 + 1712 | 15.31 || 1746 | 15.13 || 1780 | 14.72 || 1814 | 15.04 + 1713 | 15.24 || 1747 | 15.26 || 1781 | 14.78 || 1815 | 15.26 + 1714 | 15.13 || 1748 | 15.11 || 1782 | 14.42 || 1816 | 15.28 + 1715 | 15.11 || 1749 | 14.80 || 1783 | 14.48 || 1817 | 15.11 + 1716 | 15.09 || 1750 | 14.55 || 1784 | 14.70 || 1818 | 15.35 + 1717 | 15.13 || 1751 | 14.39 || 1785 | 14.92 || 1819 | 15.33 + 1718 | 15.11 || 1752 | 14.54 || 1786 | 14.96 || 1820 | 15.62 + 1719 | 15.09 || 1753 | 14.54 || 1787 | 14.92 || 1821 | 15.95 + 1720 | 15.04 || 1754 | 14.48 || 1788 | 14.65 || 1822 | 15.80 + ---------------------------------------------------------------------- + Year. | Ratio. || Year. | Ratio. || Year. | Ratio. || Year. | Ratio. + -------+--------++-------+--------++-------+--------++-------+-------- + 1823 | 15.84 || 1836 | 15.72 || 1849 | 15.78 || 1861 | 15.50 + 1824 | 15.82 || 1837 | 15.83 || 1850 | 15.70 || 1862 | 15.35 + 1825 | 15.70 || 1838 | 15.85 || 1851 | 15.46 || 1863 | 15.37 + 1826 | 15.76 || 1839 | 15.62 || 1852 | 15.59 || 1864 | 15.37 + 1827 | 15.74 || 1840 | 15.62 || 1853 | 15.33 || 1865 | 15.44 + 1828 | 15.78 || 1841 | 15.70 || 1854 | 15.33 || 1866 | 15.43 + 1829 | 15.78 || 1842 | 15.87 || 1855 | 15.38 || 1867 | 15.57 + 1830 | 15.82 || 1843 | 15.93 || 1856 | 15.38 || 1868 | 15.59 + 1831 | 15.72 || 1844 | 15.85 || 1857 | 15.27 || 1869 | 15.60 + 1832 | 15.73 || 1845 | 15.92 || 1858 | 15.38 || 1870 | 15.57 + 1833 | 15.93 || 1846 | 15.90 || 1859 | 15.19 || 1871 | 15.57 + 1834 | 15.73 || 1847 | 15.80 || 1860 | 15.29 || 1872 | 15.63 + 1835 | 15.80 || 1848 | 15.85 || | || | + -------+--------++-------+--------++-------+--------++-------+-------- + +By the foregoing table it will be seen that in the three hundred and +seventy-five years from 1497 to 1872 the maximum separation of the +metals was only as 1 to 16.25--notwithstanding the widest divergencies +during that long period in the yield of the two metals from the mines. +It will be observed that all the later quotations are from the London +market, but it is a significant fact that in France, where, by the law +of 7 Germinal, _An_ XI, (1803,) free coinage was permitted to both +metals, at the ratio of 15-1/2 of silver to 1 of gold, for a period of +seventy years, and until the coinage of silver was limited, there was at +no time the slightest variance from that relation. + +When silver was deprived of the full money function, and all the +money-work of society was placed on gold, the metals began to separate. +The following table shows the degree of that separation from year to +year: + +Table showing the ratio of silver to 1 of gold since the demonetization +of silver by Germany and the United States, and the closing of all mints +of the western world to its free coinage: + + 1873 15.92 | 1882 18.19 + 1874 16.17 | 1883 18.64 + 1875 16.59 | 1884 18.57 + 1876 17.88 | 1885 19.41 + 1877 17.22 | 1886 20.78 + 1878 17.94 | 1887 21.13 + 1879 18.40 | 1888 21.99 + 1880 18.05 | 1889 22.10 + 1881 18.16 | + +The foregoing figures show that it is only since the legislative +proscription of silver by Germany and the United States, and the closing +of all the European mints to its coinage, that any material change took +place in the ratio between the two metals, which conclusively +demonstrates that the present divergence in the relative values of the +two metals is directly due to the legal outlawry of silver and not to +natural causes. + +Not only has the concurrent use of the two metals as money had the +sanction of all time, but the approval of the greatest minds of history, +and, when not blinded by self-interest, the approval of practical and +experienced financial minds. So well recognized is this fact that I need +only cite a few instances of such approval. + +Alexander Hamilton said: + + To annul the use of either of the metals as money is _to abridge + the quantity of circulating medium_, and is liable to all the + objections which arise from a comparison of the _benefits of a + full with the evils of a scanty circulation_. (Report to + Congress, 1791.) + +Thomas Jefferson, in a letter to Hamilton, indorsed this view, saying: + + I return you the report on the mint. I concur with you that the + unit _must stand on both metals_. (Letter to Hamilton, February, + 1792.) + +In his "Recherches sur l'or et sur l'argent," 1843, Leon Fanchet said: + + If all the nations of Europe adopted the system of Great Britain, + the price of gold would be raised beyond measure, and we should + see produced in Europe a most lamentable result. The Government + can not decree that legal tender shall be only gold, in place of + silver, for that would be to decree a revolution, and the most + dangerous of all, because it would be a revolution leading to + unknown results (_qui marcherait vers l'inconnu_). + +In a memoir read before the French Institute in 1868, M. Wolowski said: + + The suppression of silver would bring on a veritable revolution. + Gold would augment in value with a rapid and constant progress, + which would break the faith of contracts and aggravate the + situation of all debtors, including the nation. It would add at + one stroke of the pen at least three milliards to the twelve + milliards of the public debt. + +In a debate in the French Senate on January 28, 1870, Senator Dumas +eloquently pleaded for caution in dealing with a subject of such +farreaching importance as the demonetization of one of the money metals. +He said: + + Those who approach these questions for the first time decide them + at once. Those who study them with care hesitate. Those who are + obliged practically to decide doubt and stop, overwhelmed with + the weight of the enormous responsibility. + + The quantities of the precious metals which are now sufficient + may become insufficient, and we should proceed with great + prudence before we diminish that which constitutes a part of the + riches of the human race. Sometimes gold takes the place of + silver. Sometimes silver takes the place of gold. _This keeps up + the general equilibrium._ Nobody can guaranty that the present + vast production of gold will continue. The _placers_ are found on + the surface of the earth, and may be exhausted by the very + facility of working them. Silver presents itself in the form of + subterranean veins. Science may contribute to accelerate its + extraction. In presence of the unknown, which dominates the + future, we should practice a prudent reserve. + +Before a French monetary convention in 1869 testimony was given by M. +Wolowski, by Baron Rothschild, and by M. Rouland, governor of the Bank +of France. + +M. Wolowski said: + + The sum total of the precious metals is reckoned at fifty + milliards, one-half gold and one-half silver. If, by a stroke of + the pen, they suppress one of these metals in the monetary + service, they double the demand for the other metal, to the ruin + of all debtors. + +M. Rouland, governor of the Bank of France, said: + + We have not to do with ideal theories. The two moneys have + actually co-existed since the origin of human society. They + co-exist because the two together are necessary, by their + quantity, to meet the needs of circulation. This necessity of the + two metals, has it ceased to exist? Is it established that the + quantity of actual and prospective gold is such that we can now + renounce the use of silver without disaster? + +Baron Rothschild said: + + The simultaneous employment of the two precious metals is + satisfactory and gives rise to no complaint. Whether gold or + silver dominates for the time being, it is always true that the + two metals concur together in forming the monetary circulation of + the world, and it is the general mass of the two metals combined + which serves as the measure of the value of things. The + suppression of silver would amount to a veritable destruction of + values without any compensation. + +At the session (October 30, 1873) of the Belgian Monetary Commission, +Professor Laveleye, one of the most luminous writers on economic +subjects, said: + + Debtors, and among them the state, have the right to pay in gold + or silver, and this right can not be taken away without + disturbing the relation of debtors and creditors, to the + prejudice of debtors, to the extent of perhaps one-half, + certainly of one-third. To increase all debts at a blow + (_brusquement_) is a measure so violent, so revolutionary, that I + can not believe that the Government will propose it or that the + Chambers will vote it. + + +WHY WAS THE AUTOMATIC SYSTEM INTERFERED WITH? + +Some thirteen years ago, as Chairman of the Monetary Commission +appointed by Congress to investigate the causes of the changes in the +relative values of the precious metals, I submitted to this body a +report, in which I took occasion to refer to the motives which evidently +influenced the creditor classes of the western world in destroying the +automatic system of money. From that Report I quote as follows: + + The world has generally favored, theoretically if not + practically, the automatic metallic system, and adjusted its + business to it. Some nations adopted one metal as their standard, + and some the other, and some adopted both. Those that adopted + both metals served as a balance-wheel to steady with exactness + their relative value. The practical effect of all of this was the + same as if all nations had adopted both, because it secured the + entire stock of both at a fixed equivalency for the transaction + of the business of the world. While some nations have changed + their money metal, or, having had paper money, have resumed + specie payments in one metal, the policy of a general + demonetization of one of the metals was first broached only about + twenty years ago. About ten years later a formidable propaganda + was organized to fasten that policy upon the commercial world. + + This new school of financial theorists advocate the retention of + metal as the material of money, but favor its subjection to + governmental interference in every respect. Whenever new mines + are discovered, or old ones yield or promise to yield more + abundantly, instead of freely accepting their product in + accordance with the automatic theory, they advocate its rejection + through the restriction or the absolute prohibition of the + coinage of either or both metals, or through the limitation or + the abolition of the legal-tender function of one of them. + Whenever the interests of the creditor and income classes seem to + be in danger of being impaired by an increase in the volume and + decrease in the value of money, or in other words, by a general + rise in prices, these modern theorists are clamorous in + double-standard countries for the demonetization of one of the + money metals, and in single-standard countries for the shifting + of the money function from the metal which promises the most to + the one that promises the least abundant supply. They are + extremely anxious for the retention of the _material_ of which + the money-standard is composed when such material is rising in + value and prices are falling, and exceedingly apprehensive of the + evil and inconvenience which they predict as sure to result from + changing it. + + Whenever a fall in prices occurs, through either a natural or + artificial contraction in the volume of money, they maintain that + it is due to antecedent inflation and extravagance, or to + overproduction through persistent and reckless industry; if the + contraction be natural, that it can not be helped, and if + artificial, that though it may inflict great temporary losses on + the masses of the people, it will be sure to result in their + ultimate benefit, and they console the sufferers with the + comforting assurance that such contraction is necessary in order + to reach the lowest depths of that "_hard pan_" whose foundations + they have previously undermined by demonetizing one of the + metals, and upon which alone they claim that money, capital, and + labor can securely and harmoniously rest. But when the material + composing the standard is falling in value and prices are rising, + they immediately discover that the maintenance of the value of + the standard is the all-important consideration, and that its + material is of no importance whatever and should be at once + changed to "_redress the situation_." After having reduced one of + the metals to a commodity by depriving it of the money function, + these theorists complacently point to the resulting fluctuations + in the value as a justification of the act producing them, and as + a conclusive proof of the unfitness for money of the demonetized + metal. * * * + + Metallic money, on this theory, is no longer automatic, but is as + completely subjected to governmental control for all injurious + purposes as paper money. But, unlike paper money, the control + over this kind of metallic money can only be exercised in the + baneful direction of decreasing its volume, and thereby making + property cheaper and money scarcer and dearer. + + This is a one-sided system, which can operate only in the + interest of the security creditor, the usurer, and pawnbroker, + whom it enables, through the falling prices which itself + occasions, to swallow up the shrunken resources of the debtor, + but is impotent to protect the interests of the unsecured + business creditor, the debtor, or society, when, from any cause, + the supply of the money metals becomes deficient. + + The world has expended a vast amount of labor in the production + of the precious metals, and has made great sacrifices in + upholding the automatic metallic system of money, and has a right + to insist that it shall be consistently let alone to work out its + own conclusions, or that it be abandoned. + +The history of the subsequent struggle to remonetize silver only serves +to illustrate and emphasize the correctness of that statement of the +case. + +Between 1810 and 1849, according to Tooke and Newmarch (recognized +authorities on the subject), gold increased in value 145 per cent. which +is equivalent to a fall in the general range of prices of 59 per cent. +No movement was then made or suggestion offered by the debtors, or by +any class of the community, to add any new money-metal to the metals +already in use, with the view of increasing the volume of money, so that +the equity of time contracts might be maintained, and the value of the +unit of money kept at a steady and unchanging level. + +But as soon as the discoveries of gold were made in the alluvial +deposits of California and Australia, or rather as soon as it was +suspected that money would thereby become considerably increased in +volume, the annuitants and income classes, the creditors everywhere, +took steps to avert what they characterized as a great calamity. They +openly declared their purpose, by every means in their power, to prevent +a decline in the value of money, so that the purchasing power of their +incomes might not be reduced. They determined to go to any length in +order to prevent the rise of prices which their aggressive instincts led +them to fear would follow the additions to the money volume of the world +by the natural and much needed yield of the mines. + +The fiat therefore went forth that one of the metals must be discarded. + + +THE PROPOSITION FIRST MADE TO DEMONETIZE GOLD. + +If anything were needed to demonstrate that the reason for the +demonetization of silver was the cupidity of the creditor classes--the +money-lenders, annuitants, and those in receipt of fixed incomes--and +that it was not any defect inhering in the metal silver, nor any change +in its adaptability to subserve the purposes of money, it is to be found +in the significant fact that the metal first selected for demonetization +was not silver but gold--that metal which has since become the idol of +the money-changers, and which is now declared to be the only "natural" +money. The openly-avowed determination was to increase the value of +money, and in order to accomplish that purpose the metal which promised +the largest yield was to be condemned and stripped of its ancient +monetary function. So strongly was this determination set forth, so +earnestly was it presented, and so urgently pressed on the ground of +duty that its achievement came to be regarded as the fulfillment of a +high moral purpose. + +It was with gold then as it came to be with silver afterward, and as it +always is with whatever interferes with the interests of privileged +classes, intrenched in power and prerogative,--the determination to +destroy it being arrived at, measures were taken to prove that the +public good required its destruction. While the purpose was to discard +the metal, whether gold or silver, which threatened most immediately and +seriously to reduce the purchasing power of money, the argument was +that a decrease in the purchasing power of money was a calamity against +the happening of which every energy should be directed. + +The privileged classes found then, as they find now, able and ingenious +advocates and defenders among the literary and educated guilds of the +period. The celebrated De Quincy, in England, attempted to prove, and to +his own satisfaction did prove upon figures drawn from his fears and a +brilliant imagination, that the least yield of gold to be expected from +the mines of California and Australia for an indefinite period in the +future, was the yearly sum of $350,000,000. + +M. Chevalier, in France, vehemently proclaimed the necessity of +discarding one of the money metals, and that one not silver but gold. In +his work upon the "Fall of Gold" M. Chevalier, in 1856, said: + + The quantity of gold annually thrown on the general market + approaches in round numbers a milliard of francs ($200,000,000). + Those two countries (California and Australia) must yet for a + long series of years produce gold in such quantities and on such + conditions as to render a marked decline in its value inevitable. + + It is absolutely certain that so vast a production should be + accompanied with a great reduction in value. + + In no direction can a new outlet be seen sufficiently large to + absorb the extraordinary production of gold which we are now + witnessing, so as to prevent a fall in its value. + + Unless, then, we possess a very robust faith in the immobility of + human affairs, we must regard the fall in the value of gold as an + event for which we should prepare without loss of time. + +The "preparation" which Chevalier advocated was the discarding of that +metal which gave promise of the greatest abundance. He did not attempt +to hide his purpose. He boldly stated that his object was to enhance the +value of money. This object was also clearly expressed on a later +occasion by another distinguished advocate of dear money, Mr. Victor +Bonnet, of France, in the Journal des Economistes. He said: + + The world is now saturated with the precious metals, and if there + is any danger against which it is necessary to guard, it is that + this saturation should become greater. * * * + + If the annual production of gold is now reduced to 500,000,000 + francs, let us thank Heaven for it, and let us wish that it may + not be too rapidly increased, whereby we should be embarrassed. + It is the too great abundance and not the scarcity of metallic + money which is to be apprehended. + + +GOLD DEMONETIZED. + +In 1857 the German states and Austria demonetized gold; and had it not +been for the opposition of France, which insisted on retaining the +double standard, the movement might have become general on the +continent. With England, however, nothing could be done. More than a +generation had passed since it had declared for the single standard of +gold, and its creditors and income classes--the shrewdest, most adept, +and watchful of financiers--did not believe that the large yields of +gold would long continue. + +The creditor classes of the continent, finding England immovable and +realizing that the object sought by the English creditors was identical +with their own, namely, the increase in the value of money and the +depression of prices, concluded that the common purpose could be as well +served by the demonetization of one as by that of the other. This +conclusion was emphasized by developments on the Comstock lode whose +bountiful and beneficent yield of silver was the fitting supplement to +the great discoveries of gold on the Pacific coast. The danger of a +decline in the value of money was more imminent than ever. The +annuitants became alarmed. Commissions were sent from Europe to the +Pacific coast to investigate the subject. The United States, too, sent +a commissioner to examine into the condition and prospects of the +Comstock, and, imbued with many of the characteristics of De Quincey and +Chevalier, the United States commissioner, in 1868, reported that if all +other mines were worked with the machinery used on the Comstock "their +yield would flood the world." + +Like many of the present opponents of silver he was endowed with the +gift of prophecy, and accordingly we find him confidently predicting +that other and innumerable rich lodes of silver would be found on the +Pacific coast which would be worked with great profit. The attack on +gold was immediately changed to a combined attack on silver. From that +period till the present no means have been left untried to belittle and +degrade that metal, and also to disparage those who are in favor of +continuing it as one of the money metals of the world. + +It was then announced with all the dogmatism of authority that silver +was unfit to be used as money. Defects were suddenly discovered in it +that the scrutiny of three thousand years had failed to disclose. Its +weight and bulk were found to be insuperable obstacles to its use as +money. Yet the specific gravity of silver is no greater now than it has +been for all the ages during which it has been used as money by all +mankind, nor is it any heavier or more bulky than it was in 1851 or +1857, when Belgium, Germany, and Austria demonetized gold and made the +"heavy," "bulky," and "inconvenient" metal, silver, their only money +metal. Silver can now be transported from place to place with less risk +and at no greater expense than gold, and at much less cost than at any +previous period in the history of the world. + +The objection that silver is too heavy for the pocket is an objection +common to all metallic money. We see hardly any gold in circulation in +this country--infinitely less than of silver. When our people have a +choice as to the form in which they will take money they prefer paper +representatives as being the most convenient. The extraordinary +perfection to which the arts of the engraver and paper maker have been +brought gives paper money a security against counterfeiting and +imitation far superior to any immunity which can be claimed for the +metals. The marvellous inventions of modern times in the form of safes +and vault-locks render it a matter of practically no risk to store the +metals, both silver and gold, so that paper representatives of them may +be issued. These representatives are preferred by the general mass of +the people, and have almost entirely occupied the channels of +circulation to the exclusion of both metals. A silver certificate for +$1,000 weighs no more than a gold certificate for the same amount. + + +THE MOTIVE FOR DEMONETIZING SILVER. + +The motive for the demonetization of silver was precisely the same that +had previously inspired the demonetization of gold. The object was to +demonetize one of the metals--that metal which promised the greatest +abundance, and which would contribute most largely to maintaining at an +equitable level the general range of prices. The motive in both cases +was to aggrandize the privileged classes--the income and the creditor +classes of the world--and by means of a subtle and sinister manipulation +of the money volume, whose effects it is not always easy to trace to +their true cause, to practically confiscate the reward of the hard toil +of the masses. To all intent and purpose the design was to establish a +new system of slavery for the western world, of which the debtor +classes among the white races should be the victims. + +When demonetization was determined on there was no pretense that there +was any difficulty in maintaining a parity between the two metals at the +established ratio. + +In the official resume of the doings of the French monetary commission +of 1869 the arguments upon both sides were summed up. + +In behalf of the gold standard it was said: + + The rise in price which has taken place within twenty years in a + great number of articles of merchandise is evidently due to many + causes, such as war, bad harvests, and increase in consumption; + but it is very probable that the depreciation of the precious + metals has contributed to it, since there has been a striking + coincidence between the rise of prices and the production of the + new mines of gold and silver. The annual production of the two + metals, which was only $80,000,000 in 1847, exceeds now + $200,000,000. It has nearly tripled, and it is easy to see that + the real value of the metals has diminished. It is difficult to + estimate exactly what the diminution is, but whatever it may be + it demands the attention of governments, because it affects + unfavorably all that portion of the population whose income, + remaining nominally the same, undergoes a yearly diminution of + purchasing power. As governments control the weight and standard + of money, they ought so far as possible to assure its value. And + as it is admitted that the tendency of the metals is to + depreciate, this tendency should be arrested by demonetizing one + of them. + +In behalf of the double standard it was replied as follows: + + Many economists argue that the precious metals, having become + very abundant, have lost 10 or 15 per cent. of their value, and + that the situation must be redressed by making money scarcer by + demonetizing silver. To this it may be answered that the great + discoveries of gold of the last twenty years have injured nobody. + The new mass of gold, spreading over the whole world, has found + employment in stimulating all forms of business, and, as a + consequence, the value of gold has fallen very little. According + to Mr. Newmarch, the mass of gold and silver has augmented 3 per + cent. per annum, while the mass of exchanges has augmented more + than 3 per cent. per annum, so that the equilibrium has been + maintained. And the present is an especially inopportune time to + demonetize silver, because the annual production of gold has been + falling off for several years. It was $200,000,000 in 1853, and + it is now not more than $140,000,000. What will happen to the + civilized world if silver is demonetized and if gold shall then + fail? + + +THE MOTIVE OF ENGLAND. + +England did not adopt the gold standard until she was in a position to +become the principal creditor nation. When her forges, furnaces, +spindles, and looms were ready to supply manufactured goods to all the +world, she saw that all countries and peoples would be compelled to pour +their treasures into her lap. Her insular position and great navy +guarantied her against external assault. Released from the anxieties and +labors incident to the Napoleonic wars, with a sturdy population of +trained mechanics, and with fields of coal and iron in abundance, she +was well adapted to become the "workshop of the world." With colonial +possessions in every sea, and with Continental Europe in ceaseless +unrest, England could rely on customers who could themselves produce +nothing but raw material and would be obliged to buy her finished +products. + +The field of industry had been recently broadened by basic inventions of +unparalleled importance--the steam-engine, the power loom, the +spinning-jenny, and a multiplicity of other devices that increased a +hundred fold the efficiency of artisan labor. England knew that her +trade would in the main be a foreign trade and her financial dealings +largely with foreign governments. She knew that from the people of the +continent, impoverished by years of struggle for existence against the +attacks of Napoleon, she could not expect immediate payments in cash, or +in commodities. Time bonds and other deferred obligations were the media +in which for the most part she received pay, she made interest and +principal payable in gold alone, and if before the date of payment the +value of money should increase it would not be to the disadvantage of +the creditor. Whatever we may think of the _ethics_ of this policy, we +can have no difficulty in understanding its _motive_. + + +ACKNOWLEDGMENT OF THE MOTIVE. + +As to the object which England had in view in demonetizing silver we are +left in no sort of doubt. It has been candidly admitted by many of her +financiers and publicists. The reason for her stolid adherence to the +gold standard now is the same for which she originally demonetized +silver. Her income and creditor classes are daily in receipt of an +unearned increment to their wealth by reason of that demonetization. +More candid than the advocates in this country of the single gold +standard, the writers and press of Great Britain openly avow the object. +No better testimony to the fact can be adduced than that supplied by the +royal commission appointed in 1886 to inquire into the changes in the +relative values of the precious metals. + +At page 90, Part II, of the final report of that body, section 128, the +commission say: + + It must be remembered, too, that this country is largely a + creditor country, of debts payable in gold, and any change which + entails a rise in the price of commodities generally; that is to + say, a diminution of the purchasing power of gold would be to our + disadvantage. + +Before the British Royal Commission of 1868 on International Coinage, +Mr. Jacob Behren, an eminent British merchant and member of the +Associated Chambers of Commerce, after answering special and technical +questions, was asked, in conclusion, "if there was anything else he +wished to state." His reply was (p. 13): + + I would only state that, in my opinion, the general introduction + of gold all over the world has been one of the greatest possible + blessings to England. I believe that England would be now the + very poorest country in the world if the silver standard abroad + had been kept up, and gold had not been generally introduced. + Gold would otherwise have been very much reduced in value, and we + should have had all the gold poured into England. All the debts + owing to us would have been paid in the depreciated currency; + and, therefore, I believe that England ought to have taken the + lead in the introduction of a gold currency abroad. We ought to + be very thankful that it has been introduced, and we ought to + give every facility to its circulation. + +Sir Lyon Playfair, in a speech delivered in the English Parliament on +April 18, 1890, according to the report in the London Times of the day +following, said that-- + + The true policy of England as the chief creditor nation of + the world was to keep perfect independence, and to refuse + participation in any entangling conference on our monetary + system. + +And, according to the same report, Sir Lyon Playfair, referring to the +holding of the metals together by law, said that-- + + It was quite true that, if you yoked a cart-horse to a racer, the + strength of both would be increased but the speed of the racer + would be sacrificed. + +Gold is the "racer" whose "speed" must not be sacrificed, no matter how +much injury may be effected by its tendency to greater and greater gain. + +The weight of the enormous burden which is imposed on gold can not be +better illustrated than by a statement of this same Sir Lyon Playfair, +made in the same speech. According to the London Times of April 19, he +said that-- + + The liabilities of the banks of Great Britain to the public + amounted to L621,000,000, or about the amount of the national + debt of England; but the amount of coin or bullion to meet this + liability was only L35,000,000; or, deducting from each side of + the account L8,000,000 locked up in the Notes Department of the + Bank of England, it was L27,000,000; or only 4-1/2 per cent. of + liabilities. + +On the same occasion Mr. Goschen, Chancellor of the Exchequer, delivered +an able speech, in which he gave his facts, his eloquence, and his logic +to the struggling masses of his countrymen by maintaining the wisdom of +remonetization of silver, but gave his conclusions and his policy to the +creditor classes by recommending no disturbance of present conditions. + + I have contended-- + +said the Chancellor of the Exchequer-- + + and am prepared still to contend, that I should prefer the + currency of the world to depend upon two metals rather than upon + one metal. To those views I gave expression in 1878. * * * I have + always looked upon silver and gold not as antagonistic to each + other; not as being metals the price of one of which would + necessarily fall when the other rose, but I have looked upon them + as partners who together were doing the work of the currency of + the world. + +The English creditor classes have not been without able coadjutors in +this country. We have noticed for the last twelve or fourteen years that +zealous advocates of the gold standard, the advantages of which are not +confined to Great Britain, are to be found among the creditor classes of +the United States. + +If the toilers of this country, from the proceeds of whose labor these +exactions have to be paid, had as little influence on the legislation of +the United States as the toilers of England have on the legislation of +that country, the creditor classes and financiers of the United States +might be as frank as those of Great Britain in admitting the object of +maintaining the single gold standard. + +How graphically, though unintentionally, does the English poet, Waller, +in the following verse, express the advantage which the gold standard +gives to creditors everywhere, and the self-satisfaction with which they +contemplate life: + + The taste of hot Arabia's spice we know, + Free from the scorching sun that makes it grow. + Without the worm, in Persia's silk we shine, + And, without planting, drink of every vine. + To dig for wealth we weary not our limbs, + Gold, though the heaviest metal, hither swims. + Ours is the harvest where the Indians mow. + We plow the deep, and reap what others sow. + + +THE MOTIVE OF GERMANY. + +When Germany, intoxicated by her victory over France, and in order to +further cripple a fallen foe from whom she had exacted $1,000,000,000 in +gold, demonetized silver, she inflicted on her people by the fall of +prices consequent on the increase in the value of money, more misery +than all her armies of horse and foot had been able to inflict on +France. France, on the contrary, notwithstanding this unprecedented war +tribute, by keeping a sufficient volume of money in circulation to +maintain, and even advance, her range of prices, emerged in a few years +from the consequences of the greatest disaster in her history, conscious +of a triumph more complete than Germany had achieved by all the military +splendor of the war. The ransom exacted of France was received back by +her almost as soon as paid, in exchange for the products of her +industry. It is not a sign of prosperity, Mr. President, when hundreds +of thousands of people, the best bone and sinew of a nation, are found +annually emigrating; and it is a coincidence which I merely mention, in +passing, that as soon as the effects of demonetization of silver had had +time to make themselves felt in Germany, a veritable hegira of its +people took place. + +From 1873 to 1889, the emigration from Germany numbered 1,546,000 +persons. + +Students of social science everywhere recognize the statistics of +illegitimacy and of suicides as among the most powerful evidences of +monetary distress. By reference to those statistics we find that +notwithstanding the large emigration during that period the number of +illegitimate births in Germany increased from 161,294 in 1883 to 169,645 +in 1888. The suicides in Prussia, Bavaria, Saxony, and Baden--the +leading states of the German Empire--increased from 179 for each million +of population in 1868 to 196 for each million of the population in 1876 +and to 218 for each million of the population in 1882. In Prussia alone +the number of suicides in 1876 was 151 per million, while in 1882 it was +191 per million. + +This is part of the price which the toiling masses of Germany are paying +for the gold standard experiment, which, without their consent their +imperial government foisted upon them. + +Bismarck made the mistake that many able men in all countries of the +western world have made and continue to make, namely, that of +attributing the commanding position of Great Britain in the commercial +and industrial world to her adoption of the gold standard. Bismarck +mistook for cause and effect what was a mere coincidence, the result of +exceptional conditions, as did those of our legislators in 1873, who +happened to know anything whatever of the nature of the act demonetizing +silver. The belief of some of the most far-sighted statesmen of Great +Britain has been that she secured her position, not by reason of the +gold standard, but in spite of it. + +In a speech delivered at Glasgow, in November, 1873, after the +alteration by Germany in her monetary standard, Mr. Disraeli said: + + The monetary disturbance which has occurred, and is now to a + certain extent acting very injuriously upon trade, I attribute to + the great changes which the Governments of Europe are making in + reference to their standard of value. Our gold standard is not + the cause of our commercial prosperity, but the consequence of + that prosperity. It is quite evident that we must prepare + ourselves for great convulsions in the money market, not + occasioned by speculation or any of the old causes which have + been alleged, but by a new cause with which we are not + sufficiently acquainted. + +And again in March, 1879, when the effects of the decreasing volume of +money were making themselves more and more felt, Mr. Disraeli, then Lord +Beaconsfield, said: + + All this time the produce of the gold mines of Australia and + California has been regularly diminishing, and the consequence is + that, while these great alterations on the continent in favor of + a gold currency have been made, notwithstanding that increase of + population which alone requires a considerable increase of + currency to carry on its transactions, the amount of the currency + itself is yearly diminishing, until a state of affairs has been + brought about by gold production exactly the reverse of that + which it produced at first. Gold is every day appreciating in + value, and as it appreciates the lower become prices. It is not + impossible that, as affairs develop, the country may require that + some formal investigation should be made of the causes which are + affecting the value of the precious metals, and the effect which + the change in the value of the precious metals has upon the + industries of the country, and upon the continual fall of prices. + +In reaching their conclusions, Bismarck and others ignored the +fundamental principle that a gold supply that might be sufficient for +one country with a gold standard, and might even result in a measure of +prosperity to that country, would be wholly insufficient if other +countries should adopt the same standard and should enter upon a keen +competition and rivalry for the acquisition of gold. + +The adoption of that standard by Germany and France was therefore not +only destructive of their own prosperity, but was a stunning blow at the +prosperity of England and all other gold-using countries. In taking +England for his model, Bismarck had not the condition of the toiling +masses before his mind, but the glamour of prosperity which surrounded +the creditor-barons. + +The unprejudiced observer can not fail to perceive that the $370,000,000 +coined under the Limited Coinage Act of the United States of 1878, +supplementing the gold stock of the western world, postponed great +industrial and financial crises. But the elements of these crises are +gathering, and, unless relief be soon forthcoming, will burst upon the +world with crushing severity. + + +DEMONETIZATION IN THE UNITED STATES. + +If we are surprised that the sordid selfishness of the privileged +classes of Europe should have induced them to perpetrate so gross an act +of injustice, we are reminded that the legislation of monarchical +countries has usually been controlled in the interest of the privileged +classes. But what shall be said in defense of the demonetization of +silver by the United States? No such stupendous act of folly and +injustice was ever before perpetrated by the representatives of a free +people. + +Our position differed materially from that of Great Britain. This was +not a creditor nation. Our people did not, and do not, own thousands of +millions of dollars of foreign bonds, on which to receive semi-annual +interest in a constantly appreciating money, which would have to be paid +from the current earnings of foreign labor. Instead, therefore, of our +demonetization unjustly enriching our creditor-classes at the expense of +foreigners, it enabled the creditors at home here to rob and despoil the +debtors among their own countrymen. Instead of despoiling the Canadian, +the Australian, the East Indian, the Egyptian, or the Turk, the +spoliation arranged for by our adoption of the gold standard was a +spoliation of the debtors in our own communities. In so far, however, as +our debt was held abroad, it provided for a spoliation of our citizens +by the foreign bondholders also. And as nearly all our public debt was +so held, we had presented to us in 1873 the extraordinary spectacle of +representatives, sent here to enact laws for the welfare and advancement +of our own people, devoting all their energies, whether aware of it or +not, to the upbuilding of the fortunes of the moneyed aristocracies of +other countries, at the expense of the producers of the United States. + + +CONDITION OF THE COUNTRY AT THE TIME. + +Consider for a moment the condition of this country at the time when +this amazing piece of legislation was enacted. + +The Republic was but just recovering from an exhausting war, which +loaded it with a national debt approaching $3,000,000,000. There were +also State, county, city, and town debts aggregating many more thousands +of millions, with railroad and other corporate bonds and debts +aggregating yet other thousands of millions and private debts of +indefinite and unascertainable amount, represented largely by mortgages +on real estate. This constituted an aggregate whose burden might +naturally be presumed to be sufficient to tax all the resources of the +people. Although some portion of those debts has been liquidated and the +national bonds have been refunded at lower rates of interest, yet we all +know that in this age all municipal and corporate debts, if not national +debts, are practically perpetual. No sooner is one form of bond +liquidated than another takes its place; no sooner is one public +improvement completed than another is begun. + +At the time silver was demonetized it might well have been supposed +that a sufficiently large unearned increment had already been realized +by the foreign and domestic holders of United States bonds. The greater +portion of the debt of the Government was, when incurred, made payable +simply in "lawful money"--the interest alone being payable in coin. Yet +in March, 1869, the bond-holders secured the passage of an act of +Congress, entitled "An act to strengthen the public credit," containing +a pledge to pay in coin or its equivalent not merely the interest, but +the principal of all national obligations not specially provided to be +paid otherwise. + + +THE COURSE OF THE CREDITORS. + +And again, when in 1870 Congress was about to provide for a refunding of +the public debt, these clamorous creditors, not satisfied with having +got the bonds at rates much below their face value, and not satisfied +with the pledge to pay in coin--a pledge made long after the contract +was made and the debt incurred--insisted that not only should the new +bonds be payable in coin, but in order to guard against any possible +interpretation which might work to their detriment they did what has +rarely been done in the history of monetary legislation, insisted that +even the very _standard_ of that coin should be fixed and nominated in +the bond. They were willing to take no chances. They were not willing to +place confidence in the sense of equity and fair dealing of the people +of the United States. They held before Congress the covert threat that +if the new issue of bonds did not provide for payment in "coin," instead +of "lawful money," and did not prescribe the precise standard of coin in +which they were to be payable, it would be difficult if not impossible +to place the bonds on the market. + +So, by the refunding act of July 14, 1870, Congress provided for the +payment in "coin of the present standard value," that is to say, in +either gold dollars of 25.8 grains of gold, nine-tenths fine, or in +silver dollars of 412-1/2 grains of silver, nine-tenths fine, at the +option of the United States. But even this extreme advantage to the +creditors over payment in "lawful money" of the United States, in which +the bonds were bought, and in which they were legally payable, was +insufficient. All but the most ingenious would imagine that having thus +provided for payment in coin then bearing a considerable premium over +the current money of the Republic, and having the very standard of that +coin fixed in the act, the highest point of vantage had been reached. +One device, however, and only one, remained by which the money of the +payment could be still further increased in value, and this device did +not escape the watchful eye or cunning hand of the public creditors. + +They clearly saw that if by legislative enactment they could secure the +rejection of one of the money-metals they would succeed in enormously +increasing the value of the metal retained. This they accomplished by +the demonetization of silver, and thus by striking down one-half the +automatic money of the world and devolving the money function +exclusively on the other half, added thousands of millions of dollars to +the burden of the debt. + + +THE PRETENSE TO "STRENGTHEN THE PUBLIC CREDIT." + +It will be observed that this anxiety to strengthen the public credit +was evinced by the bondholders _after_ and not before the bonds were in +their possession. No anxiety for the public credit was manifested by +them at a time when the Government might be able to reap advantage from +it. The Government having parted with the bonds at a heavy discount, +their selling price in the market became a matter of no direct pecuniary +importance to the people of the United States. + +The "strengthening of the public credit" that was to be effected by the +act of March 16, 1869, consisted of a rise in the price of the bonds for +the benefit of the holder, at a time when they were no longer the +property of the Government but of private individuals. The real effect +of the act, therefore, was not in any way to benefit the Government but +greatly to enrich, by an increment unearned and unbargained for, a few +men who had already been greatly enriched by their dealings with the +United States. The title of the act should have read "An act to +strengthen the bank account and credit of the holders of United States +bonds." + +The excuse and apology for the act was that by its passage the refunding +process then contemplated, and afterward provided for by the refunding +act of 1870 might be rendered more certain of success; but if any +advantage accrued from that cause, it was lost, and much more with it, +by the increase which the act of 1869 effected in the burden of the +bonded obligation, by pledging the nation to a payment in a medium much +more valuable than the medium provided for in the contract. And, again, +in 1873 when all the bonds provided for by the refunding act of 1870 had +been sold and had passed out of the hands of the Government, another act +was passed, intended by the money-lenders again to strengthen the public +credit, and again to the disadvantage of the people and to the exclusive +and enormous advantage of the bondholders. It bore the innocent title of +"An act revising and amending the laws relative to the mints, assay +offices, and coinage of the United States." This act, bearing on its +face no suggestion of any change more serious than that of regulating +the petty details of mint management, has proved to be an act of +momentous consequence to the people of this country. This is the act +that demonetized the silver dollar, which it did by merely omitting that +coin from the enumeration of the coins of the United States. + + +DEMONETIZATION WHOLLY UNJUSTIFIABLE. + +Among all the explanations that have been made to account for that +demonetization by a Congress of the United States, I have never heard +any reason advanced which constituted a justification for it. To my +mind, in view of all the circumstances--in the face of the herculean +difficulties by which the nation was surrounded, in the face of the +sacrifices which our citizens had made to preserve the Republic, and in +the face of all that had already been done by an over-generous people, +proud of their national strength, and jealous of their national honor, +to satisfy the rapacious demands of the money-lenders--in view, I say, +of all these facts, the demonetization of silver by the United States +must be regarded as one of those historic blunders that are worse than +crimes. It was the child of Ignorance and Avarice, and is already the +prolific parent of enforced idleness, poverty, and misery. + +It is to undo as far as possible the effects of the blunder of 1873 that +new legislation is now imperatively demanded by the people. While the +past can not be recalled, the present is ours, and the pressing duty of +to-day is to provide for the future. The demand comes from all sections +of the country that a remedy for the depressed industrial conditions +caused by the legislation of 1873, be applied at the earliest moment. +And what better remedy could be applied than absolutely to reverse that +legislation and to put the monetary position of this country back to +exactly where it was when that wrong was committed? + +Some twelve years ago an attempt was made to apply a remedy, but the +attempt was only partially successful. Instead of resulting in free +coinage, it resulted in the passage of the bill which authorized the +coinage of not less than two nor more than four million dollars' worth +of silver per month. On that occasion a financial debate of great +interest and importance was had in this Chamber and in the other House +of Congress. The proposition to remonetize silver or to increase the +silver coinage was vigorously opposed, but the arguments then presented +by the advocates of remonetization never have been, and never can be, +refuted. + +In fact, but rarely has there been any attempt made to answer those +arguments. Puerile attempts at wit, and diatribes of abuse are all that +the silver men have heard in sixteen years in answer to the contentions +they have made in favor of the remonetization of silver. + + +EDUCATIONAL EFFECT OF DISCUSSION. + +With that debate, Mr. President, long pending and eagerly maintained on +both sides, there began in this country an educational movement among +the masses, that is destined to have far-reaching consequence. The +public attention was fastened, as it had never been fastened before, on +the subject of money, and on the forces which govern its value, and up +to this time that attention has never flagged. As a result we find the +great body of our people to-day--the farmers and artisans of the +country--after years of reflection and discussion in their lyceums and +trade organizations, adopting to a large extent the views then presented +by the advocates of an increased money volume--views which at the time +were contemptuously derided by the advocates of contraction and of gold. + +The cry for relief appropriately now comes from the farmers, the +artisans, and the laboring classes, as well as from the young, the +enterprising, the thoughtful, of all classes, who have not inherited +wealth, but are hewing out for themselves the rugged path to success. It +is they who have had to bear the exactions of the system which has +prevailed. It is from the proceeds of their labor that the extortions +have been paid. If objection be made that the character of relief +proposed is not indorsed in financial circles, or by the literary guild +or professional political economists that surround them, the sufficient +reply is that the world can not wait for the correction of abuses by +those who are profiting by them. In the nature of things, all movements +for reform must be initiated by those who can not lose by the +installation of justice. + +But there are others besides the laboring masses who are working in the +cause of humanity. There are noble, unselfish, and altruistic men in all +the countries of civilization, who see the wrong and are indefatigable +in their efforts to set it right. + +I will read a cable dispatch recently addressed to me by Mr. Henry H. +Gibbs, formerly governor of the Bank of England, and now president of +the Bimetallic League of Great Britain: + + LONDON, _May 6_.--The friends of silver deeply regret the death + of Senator Beck, whose services in the cause of monetary reform + are warmly appreciated on this side of the Atlantic. The + bimetallist party of the United Kingdom, now including over one + hundred members of the House of Commons, attach the greatest + value to the debate about to commence in your illustrious + chamber. We fully recognize not only that the support afforded to + silver by your legislation during the last twelve years has + helped the protect the industrial world from an acute monetary + crisis, but also that the debates in Congress have served more + than all else to educate our people to recognition of the + important issues involved. We believe also that the increase and + coinage of silver contemplated by Congress will restore, wholly + or considerably, your coinage rates, and will thus make + international settlement of this complex question comparatively + easy. We anticipate further and with much confidence, that the + advance in the price of silver which must follow your action will + stimulate both the export and the other trades of your country, + and, while tending to the prosperity of your agricultural + classes, will also assist the manufacturing industries of the + United Kingdom and the whole body of our wage-earners. + +Mr. Moreton Frewen, of London, an able writer on economic subjects, +whose recent work on the "The Economic Crisis" I commend to the careful +perusal of Senators, says: + + It may, indeed, be affirmed, without fear of contradiction, that + legislation arranged in the interest of a certain class, first by + Lord Liverpool in this country, and again by Sir Robert Peel at + the instigation of Mr. Jones Loyd and other wealthy bankers, + which was supplemented recently by simultaneous anti-silver + legislation in Berlin and Washington at the instance of the great + financial houses--this legislation has about doubled the burden + of all national debts by an artificial enhancement of the value + of money. + + The fall of all prices induced by this cause has been on such a + scale that while in twenty years the National debt of the United + States quoted in dollars has been reduced by nearly two-thirds, + yet the value of the remaining one-third, measured in wheat, in + bar iron, or bales of cotton, is considerably greater--is a + greater demand draft on the labor and industry of the nation than + was the whole debt at the time it was contracted. The aggravation + of the burdens of taxation induced by this so-called + "appreciation of gold," which is no natural appreciation, but has + been brought about by class legislation to increase the value of + the gold which is in a few hands, requires but to be explained to + an enfranchised democracy, which will know how to protect itself + against further attempts to contract the currency and to force + down prices to the confusion of every existing contract. + + Of all classes of middle-men, bankers have been by far the most + successful in intercepting and appropriating an undue share of + produced wealth. While the modern system of banking and credit + may be said to be even yet in its infancy, that portion of the + assets of the community which is to-day in the strong boxes of + the bankers would, if declared, be an astounding revelation of + the recent profits of this particular business; and not only has + the business itself become a most profitable monopoly, but its + interests in a very few hands are diametrically opposed to the + general interests of the majority. By legislation intended to + contract the currency and force down all prices, including wages, + the price paid for labor, the money owner has been able to + increase the purchase power of his sovereign or dollar by the + direct diminution of the price of every kind of property measured + in money. + + +UNFULFILLED PROPHECIES. + +During the debate on the limited coinage bill, not content with abuse of +the advocates of the measure; with flimsy criticism of it and specious +arguments against it, its opponents in and out of Congress indulged in +diverse prophecies and predictions. They pictured forth the lamentable +results that would follow its passage, and the direful consequences that +would ensue from an increase of the circulating medium of the country. +Among the results confidently predicted were the following: that the +silver would not circulate at all, and again that it would circulate to +the exclusion of gold, which metal, we were informed, would flow out of +this country with a velocity and in a volume theretofore unknown; that +we should be unable to redeem our paper money in gold; that we should be +precipitated into a silver vortex; that an inflation of the currency +would follow, which would ruinously raise prices of all commodities and +that this inflation would result in an unprecedented contraction. We +were charged with forcing upon the public creditors a dollar worth only +ninety cents. We were warned that the passage of the bill would +indefinitely postpone the refunding of the public debt, and would lower +the price and impair the value of our national securities. It was +charged that we were setting on foot a new and irrepressible conflict +between two great sections of the country--the East and the West. We +were charged with uttering a debased coin; with lowering the standard +of American credit; with tarnishing the integrity and honor of our +country before foreign nations, and with unprecedented moral turpitude +in setting an example of flagrant and shameless national dishonesty. + +The men of the far West, and of the Pacific slope especially, were the +particular targets of this abuse. They were denounced by some as +"lunatics," by others as dangerous and unworthy demagogues, because, as +was charged, their constituents, if not themselves, were directly +interested in the restoration of the ancient right of silver to full +recognition as one of the money metals. For their benefit resort was had +to every epithet which the English language afforded. In holding them up +to public scorn the rich and varied vocabulary of odium and opprobrium +was exhausted. + +These prophecies of disaster were united in by the professors of +political economy in all the Eastern colleges, by the President of the +United States, by the Secretary of the Treasury, by the leading American +newspapers, by the principal public men and journals of Great Britain, +if not of all Europe; and, of course, by all bankers, money-lenders, and +professional financiers the world over. + +And now, Mr. President, how many of all those alarming prognostications +by all these distinguished prophets have been fulfilled? Not one! On the +contrary, it is not too much to say that the public credit of the United +States is to-day the highest in the world. It does not stand merely in +line with that of other first-rate powers; it stands at the head. Our +gold, silver, and paper money stand at a parity with each other. If a +full measure of relief was not realized by the passage of that bill it +is because the coinage of $4,000,000 a month was left optional with the +Secretary of the Treasury, instead of being made mandatory on him. + +But it is hardly necessary to assert that the predicted inflation of +prices has not been observed as a consequence of the coinage of +$2,000,000 a month. While the issuance of that amount has not, with our +rapidly increasing population and wealth, been sufficient to arrest the +downward tendency of prices, it has undoubtedly prevented them from +falling much lower. Without that coinage, we should have had industrial +depression, chronic and somber, with consequences of untold disaster. + +But the result which gave most apprehension to those who advocated the +gold standard, the evil which they regarded as on the whole the most +threatening and direful of all the evils that were to result from even +so small an increase in the money volume as that bill provided for, was +the outflow of gold. They ridiculously under-estimated the tremendous +money-absorbing power of this great country. And as if to emphasize to +all the world the complete absurdity of their alleged fears--this +apprehension has been conspicuously and notoriously set at naught by the +constant inflow of gold. On the 30th of June, 1878, the amount of gold +coin and bullion in the Treasury and in monetary circulation in this +country is officially reported to have been $213,199,977, and this +amount is probably much over-estimated. On November 1, 1889, we had more +than three times as much--the amount of gold in circulation and in the +Treasury being reported as $689,000,000. + +"Experience," says Dr. Johnson, "is the great test of truth, and is +perpetually contradicting the theories of men," and the last experience, +Mr. President, is the best. + +If the professors of political economy, the Eastern newspaper editors, +and the professional financiers were then so seriously mistaken ought +they not to be a little modest now in making predictions, especially in +renewing predictions that have been already discredited? They can not +point to a single instance in which their prophesy has not been +falsified by the event. So humiliating a failure on the part of the +professors, in a realm of which they boastfully claimed to be masters, +so complete an overthrow of these "experts" by men who were ridiculed +and derided as rural financiers and crazy theorists, ought to put the +advocates of the gold standard on their guard against a like defeat on +this occasion. They are pressed for reasons to account for the utter +miscarriage of their prophecies. They are left without a shadow of +consolation except that the coinage of $2,000,000 worth of silver +bullion each month has not succeeded in placing silver at a par with +gold. They affect to believe that the advocates of silver in 1878 +expected that that metal, under the very limited demand of $2,000,000 a +month, would be brought to a level with gold, which, owing to the +demonetization of silver, had risen abnormally and ruinously in value. + +No such belief was ever entertained or expressed. On the contrary it was +repeatedly asserted by the advocates of silver that so long as the +entire yield of gold from all the mines of the world (in 1878, +$119,000,000) was invested with the full money function and had free +access to all mints to be transmuted into coin, it could not be expected +that the conferring of the legal-tender function upon a sum so +comparatively trifling as one-fourth the yield of silver (the yield in +1878 being $99,000,000) would have the effect of placing it on a level +with gold. + +It is, however, a significant fact that every silver dollar that has +been coined under that act is at a parity with gold, and will to-day buy +as much of all the objects of human desire as will the gold dollar. Nay, +more, silver bullion--disparaged and discredited as it is by being shorn +of the money function, and denied access to the mints, instead of +decreasing in purchasing power, has maintained so steady a relation to +commodities that 412-1/2 grains of uncoined silver will exchange for as +much to-day as would the coined dollar, whether of silver or gold, in +1873, when the full money function attached equally to both metals. If +this be true--and I shall presently demonstrate it beyond +refutation--what an utter perversion of terms it is to say that silver +has fallen in value! + + +WILL REMONETIZATION PLACE US ALONGSIDE INDIA. + +We are solemnly warned that the full remonetization of silver in the +United States would place us alongside India and the other barbarous +countries of the world. This brilliant piece of reasoning is advanced +with great confidence, and is intended to be conclusive of the argument +against silver. But, Mr. President, India is no more barbarous now than +it was in 1873--before our silver dollar was demonetized. India is no +more barbarous now than it was in 1857, when Germany demonetized gold +and placed herself "alongside" India. Neither is Germany any more +civilized now than then. We did not at that time hear any complaint, +either in the United States or Europe, that the use of silver as money +placed any one nation more than any other in dangerous affiliation with +the civilization of India. We have never heard it charged against France +that its civilization was brought any nearer that of India by the +immense quantity of silver money in France. Neither did we hear it +charged against the United States up to 1873 that we were "alongside," +or dangerously close to the barbarous nations by our use of silver as +money. + +Up to 1834 we had no metallic money other than silver in our +circulation, and up to 1850 we had much more silver in circulation than +gold. Were we "alongside" India then? Where were the wise and patriotic +men of our country at those periods? History fails to record any protest +on their part that we were placing ourselves "alongside" India or any +other of the barbarous nations of the world by our use of silver and our +recognition of its full money power. All the nations of the earth used +silver and accorded it full recognition as money equally with gold up to +1819. Was all Christendom at that time "alongside" India? When, in that +year, Great Britain sundered the silver link that from time immemorial +had kept her "alongside" India and the other barbarous nations and, for +selfish reasons of her own, arising from her position as a creditor of +all other nations, decided to recognize gold only as money, was any +evidence afforded of a sudden advance in the civilization of Great +Britain? Was the emergence of that nation from the benumbing +companionship of India and the other barbaric countries into the +glittering and refulgent light of the gold dispensation signalized, as +would be expected, by a corresponding improvement in the condition of +the people? + +On the contrary, the history of the time informs us that as a +consequence of the passage of the bill by Parliament in 1819, compelling +payments in gold, prices rapidly fell, cotton in particular sinking in +the short space of three months to one-half its former level. Within six +months all prices had fallen one-half, and showed no signs of +improvement for the next three years. By reason of the contraction of +the currency the industry of the nation was congealed, as is a flowing +stream by the severity of an arctic winter. Alarm became universal; +confidence and activity ceased. Bankruptcies increased in 1819 more than +50 per cent. over the number of the previous year. Meetings were held +throughout England in which the people called on the government to +devise some means of redressing the situation. So universal was the +distress that the owners of land in England, who in 1819 numbered +160,000 were in seven years, by forced sales and foreclosure of +mortgages on the smaller farms, reduced to 30,000, and one in every +seven of the population lived on organized charity. All this was but a +part of the price which the people of England paid for a policy imposed +on them by the creditor classes among their own number. The condition of +industry and disorganization of labor led to frequent and serious +conflicts between the people and the military. They also led to +commercial crises without number, and England, by demonetizing silver +and thus ceasing to be "alongside" India, became the seat of panics, as +Egypt had long been of the plague and India of the cholera. + +As a contrast to this I will merely cite the change in the condition of +India within the past seventeen years. When the Western world discarded +silver as money and, as a consequence, India received a larger supply of +it than ever before, that barbarous nation, as is universally admitted, +made progress by leaps and bounds. No country on earth has in the same +time made such advances in material prosperity and in all the elements +that conduce to the comfort and happiness of a people. Notwithstanding +the alleged debasement of silver, no sooner had its increased inflow +into India begun than the industries of a vast continent were +established and set in motion, and a substantial part of the activity +and prosperity that were wont to pervade some of the industries of the +United States has, by that demonetization, been transferred to fields +of wheat, and fields and factories of cotton 10,000 miles distant. + +What really placed us alongside such barbarous countries as India was +the demonetization of silver. It was by that demonetization that the +people of Europe were enabled, with gold, to buy silver at 30 per cent. +discount, which, when shipped to India and coined into rupees, would buy +as much wheat as could ever have been bought with that coin. There has +been no decrease whatever in the purchasing power of the rupee in India. +This was equivalent to buying wheat at 30 per cent. below the price +theretofore paid for it, and thus the farmers of the United States were +by demonetization placed "alongside" the barbarous people of India. +Their wheat had to compete in the European markets with the wheat of +India, and it is this competition that placed them "alongside" India. +The farmer of this country, therefore, by demonetization of silver, was +compelled to compete with under-paid and half-starved ryots. And so it +was that our cotton planters, by the demonetization of silver, were +placed alongside the barbarous people of India. It is this degrading +competition that places a highly civilized people alongside a barbarous +one. + +The advocates of the single gold standard deem even silver money much +better money than greenbacks. Does it then follow that when greenbacks +were our only money--good enough money to carry the nation through the +greatest war in all history--we were "alongside" or underneath the +barbarous nations of the world? It is not the form, or the material of a +nation's money that fixes its status relatively to other nations. That +is accomplished by the vitality, the energy, the intellectuality and +effective force of its people. The United States can never be placed +"alongside" any barbarous nation, except by compelling our people to +compete with barbarous peoples--compelling them to sell the products of +American labor at prices regulated by the cost of labor and manner of +living in barbarous countries. As well might it be said that we are +alongside the barbarous people of India because we continue to produce +wheat and cotton. + +The distinguishing feature of all barbarous nations is the squalor of +their working classes. The reward of their hard toil is barely enough to +maintain animal existence. A civilized people are placed alongside a +barbarous one when, in their means of livelihood, the foundation of +their civilization, they are made to compete with the barbarians. That +was the result accomplished for the farmers and planters of the United +States when silver was demonetized. + + +CREDITORS AND DEBTORS.--A COMPARISON OF MOTIVES. + +All movements for the increase of the monetary circulation are ascribed +by the money-lenders and creditor classes to the unworthy desire on the +part of the debtors to escape their just obligations. But if motives are +to be brought in question, the rule should work both ways. No note is +taken of the motive of the creditor classes in securing a contraction of +the circulation. Whatever the apparent purpose of contraction, and +however specious the arguments advanced in its justification, the real +object has always been to increase the purchasing power of money. In all +countries, and throughout all time, it is the cupidity of the creditor +classes and annuitants, and their desire to increase the value of the +money unit that has brought about a shrinkage in the money volume. +Unlike the great masses of the people, who were ignorant of the effects +to be naturally expected from such a shrinkage, the annuitants and +moneyed men very well understood that the value of every pound or dollar +depended on the number of pounds or dollars that were in circulation; +the larger the total number out, the smaller the purchasing power of +each; the smaller the total number out, the greater the purchasing power +of each. + +Loaners of capital are not usually those who entertain further hope of +personal achievement. When men realize fortunes it is rarely that they +conserve the faculty of initiative; they find no special delight in +novelty; they look so carefully to security in the use of money that the +spirit of adventure is restrained. The realization of a fortune is +usually the labor of a life-time, and few men who reach the goal care to +retrace their steps to enter again upon a struggle that demands all the +strength, the momentum, and the intrepidity of youth. Men of assured +incomes therefore are disposed to take their ease, and society must +look, for its material progress and development, to those who have a +career to make, with the ambition and the power to make it. + +It is a remarkable circumstance, Mr. President, that throughout the +entire range of economic discussion in gold-standard circles, it seems +to be taken for granted that a change in the value of the money unit is +a matter of no significance, and imports no mischief to society, so long +as the change is in one direction. Who has ever heard from an Eastern +journal any complaint against a contraction of our money volume; any +admonition that in a shrinking volume of money lurk evils of the utmost +magnitude? On the other hand we have been treated to lengthy homilies on +the evils of "inflation," whenever the slightest prospect presented +itself of a decrease in the value of money--not with the view of giving +the debtor an advantage over the lender of money, but of preventing the +unconscionable injustice of a further increasing value in the dollars +which the debtor contracted to pay. Loud and resounding protests have +been entered against the "dishonesty" of making payments in "depreciated +dollars." The debtors are characterized as dishonest for desiring to +keep money at a steady and unwavering value. If that object could be +secured, it would undoubtedly be to the interest of the debtor, and +could not possibly work any injustice to the creditor. It would simply +assure to both debtor and creditor the exact measure for which they +bargained. It would enable the debtor to pay his debt with exactly the +amount of sacrifice to which, on the making of the debt, he undertook to +submit, in order to pay it. + + +WHO ARE THE DEBTORS? + +In all discussions of the subject the creditors attempt to brush aside +the equities involved by sneering at the debtors. But, Mr. President, +debt is the distinguishing characteristic of modern society. It is +through debt that the marvelous developments of nineteenth century +civilization have been effected. Who are the debtors in this country? +Who are the borrowers of money? The men of enterprise, of energy, of +skill, the men of industry, of foresight, of calculation, of daring. In +the ranks of the debtors will be found a large preponderance of the +constructive energy of every country. The debtors are the upbuilders of +the national wealth and prosperity; they are the men of initiative, the +men who conceive plans and set on foot enterprises. They are those who +by borrowing money enrich the community. They are the dynamic force +among the people. They are the busy, restless, moving throng whom you +find in all walks of life in this country--the active, the vigorous, the +strong, the undaunted. + +These men are sustained in their efforts by the hope and belief that +their labors will be crowned with success. Destroy that hope and you +take away from society the most powerful of all the incentives to +material development; you place in the pathway of progress an obstacle +which it is impossible to surmount. + +The men of whom I have spoken are undoubtedly the first who are likely +to be affected by a shrinkage in the volume of money. + +The highest prosperity of a nation is attained only when all its people +are employed in avocations suited to their individual aptitudes, and +when a just money system insures an equitable distribution of the +products of their industry. With our present complex civilization, in +order that men may have constant employment, it is indispensable that +work be planned and undertakings projected years in advance. Without an +intelligent forecast of enterprises large numbers of workmen must +periodically be relegated to idleness. Enterprises that take years to +complete must be contracted for in advance, and payments provided for. + +A constant but unperceived rise in the value of the dollar with which +those payments must be made, baffles all plans, thwarts all calculation, +and destroys all equities between debtor and creditor. If we can not +intelligently regulate our money volume so as to maintain unchanging the +value of the money unit, if we can not preserve our people from the +blighting effects which an increase in the measuring power of the money +unit entails upon all industry, to what purpose is our boasted +civilization? + +By the increase of that measuring power all hopes are disappointed, all +purposes baffled, all efforts thwarted, all calculations defied. This +subtle enlargement in the measuring power of the unit of money (the +dollar) affects every class of the working community. Like a poisonous +drug in the human body, it permeates every vein, every artery, every +fiber and filament of the industrial structure. The debtor is fighting +for his life against an enemy he does not see, against an influence he +does not understand. For, while his calculations were well and +intelligently made, and the amount of his debts and the terms of his +contracts remain the same, the weight of all his obligations has been +increased by an insidious increase in the value of the money unit. + + +EFFECTS OF A SHRINKING VOLUME OF MONEY. + +As to the benumbing consequences following a shrinkage in the volume of +money, the testimony of history is briefly reviewed in the report of the +Monetary Commission to which I have already referred, and from which I +read the following: + + At the Christian era the metallic money of the Roman Empire + amounted to $1,800,000,000. By the end of the fifteenth century + it had shrunk to less than $200,000,000. During this period a + most extraordinary and baleful change took place in the condition + of the world. Population dwindled and commerce, arts, wealth, and + freedom all disappeared. The people were reduced by poverty and + misery to the most degraded conditions of serfdom and slavery. + The disintegration of society was almost complete. The conditions + of life were so hard that individual selfishness was the only + thing consistent with the instinct of self-preservation. All + public spirit, all generous emotions, all the noble aspirations + of man shriveled and disappeared as the volume of money shrunk + and as prices fell. + + History records no such disastrous transition as that from the + Roman Empire to the Dark Ages. Various explanations have been + given of this entire breaking down of the frame-work of society, + but it was certainly coincident with a shrinkage in the volume of + money, which was also without historical parallel. The crumbling + of institutions kept even step and pace with the shrinkage in the + stock of money and the falling of prices. All other attendant + circumstances than these last have occurred in other historical + periods unaccompanied and unfollowed by any such mighty + disasters. It is a suggestive coincidence that the first glimmer + of light only came with the invention of bills of exchange and + paper substitutes, through which the scanty stock of the precious + metals was increased in efficiency. But not less than the + energizing influence of Potosi and all the argosies of treasure + from the New World were needed to arouse the Old World from its + comatose sleep, to quicken the torpid limbs of industry, and to + plume the leaden wings of commerce. It needed the heroic + treatment of rising prices to enable society to reunite its + shattered links, to shake off the shackles of feudalism, to + relight and uplift the almost extinguished torch of civilization. + That the disasters of the Dark Ages were caused by decreasing + money and falling prices, and that the recovery therefrom and the + comparative prosperity which followed the discovery of America + were due to an increasing supply of the precious metals and + rising prices, will not seem surprising or unreasonable when the + noble functions of money are considered. Money is the great + instrument of association, the very fiber of social organism, the + vitalizing force of industry, the protoplasm of civilization, and + as essential to its existence as oxygen is to animal life. + Without money civilization could not have had a beginning; with a + diminishing supply it must languish, and, unless relieved, + finally perish. + + Symptoms of disasters similar to those which befell society + during the Dark Ages were observable on every hand during the + first half of this century. In 1809 the revolutionary troubles + between Spain and her American colonies broke out. These troubles + resulted in a great diminution in the production of the precious + metals, which was quickly indicated by a fall in general prices. + As already stated in this report, it is estimated that the + purchasing power of the precious metals increased between 1809 + and 1848 fully 145 per cent., or, in other words, that the + general range of prices was 60 per cent. lower in 1848 than it + was in 1809. During this period there was no general + demonetization of either metal and no important fluctuation in + the relative value of the metals, and the supply was sufficient + to keep their stock good against losses by accident and abrasion. + But it was insufficient to keep the stock up to the proper + correspondence with the increasing demand of advancing + populations. + + The world has rarely passed through a more gloomy period than + this one. Again do we find falling prices and misery and + destitution inseparable companions. The poverty and distress of + the industrial masses were intense and universal, and, since the + discovery of the mines of America, without a parallel. In England + the suffering of the people found expression in demands upon + Parliament for relief, in bread riots, and in immense Chartist + demonstrations. The military arm of the nation had to be + strengthened to prevent the all-pervading discontent from + ripening into open revolt. On the Continent the fires of + revolution smoldered everywhere, and blazed out at many points, + threatening the overthrow of states and the subversion of social + institutions. + + Whenever and wherever the mutterings of discontent were hushed by + the fear of increased standing armies, the foundations of society + were honey-combed by powerful secret political associations. The + cause at work to produce this state of things was so subtle, and + its advance so silent, that the masses were entirely ignorant of + its nature. They had come to regard money as an institution fixed + and immovable in value, and when the price of property and the + wages of labor fell, they charged the fault, not to the money, + but to the property and the employer. They were taught that the + mischief was the result of overproduction. Never having observed + that overproduction was complained of only when the money stock + was decreasing, their prejudices were aroused against + labor-saving machinery. They were angered at capital, because it + either declined altogether to embark in industrial enterprises or + would only embark in them upon the condition of employing labor + at the most scanty remuneration. They forgot that falling prices + compelled capital to avoid such enterprises on any other + condition, and for the most part to avoid them entirely. They did + not comprehend that money in shrinking volume was the prolific + parent of enforced idleness and poverty, and that falling prices + divorced money capital, from labor, but they none the less felt + the paralyzing pressure of the shrinking metallic shroud that was + closing around industry. + + The increased yield of the Russian gold fields in 1846 gave some + relief and served as a parachute to the fall in prices, which + might otherwise have resulted in a great catastrophe. But the + enormous metallic supplies of California and Australia were all + needed to give substantial and adequate relief. Great as these + supplies were, their influence in raising prices was moderate and + soon entirely arrested by the increasing populations and commerce + which followed them. In the twenty-five years between 1850 and + 1876 the money stock of the world was more than doubled, and yet + at no time during this period was the general level of prices + raised more than 18 per cent. above the general level of 1848. + + A comparison of this effect of an increasing volume of money + after 1848 with the effect of a decreasing volume between 1809 + and 1848 strikingly illustrates how largely different in degree + is the influence upon prices of an increasing or decreasing + volume of money. The decrease of the yield of the mines since + about 1865, while population and commerce have been advancing, + has already produced unmistakable symptoms of the same general + distrust, non-employment of labor, and political and social + disquiet, which have characterized all former periods of + shrinking money. + +The time that has elapsed since that report was written has but served +to verify and emphasize its statements. + + +THE FALL OF PRICES SINCE 1873. + +It is a fact not disputed anywhere but universally admitted, that for +many years past the prices of all articles entering into general +consumption among the people have been steadily falling. It is obvious +that the industrial conditions prevailing since 1873 are but a +repetition of those above described as following 1809--with falling +prices, constant unrest, and universal discontent. + +The following table, compiled from figures published by the Bureau of +Statistics of the Treasury Department, shows the average range of export +prices of the articles named for each year since 1873: + + _Annual average export prices of commodities of domestic production + for each year from 1873 to 1889, inclusive._ + + ------+----------+----------+----------+--------+--------+-------- + Year | Corn | Wheat | Wheat | Cotton | Leather| Illumi- + ending| per | per | flour |(upland)| per | nating + June,| bushel. | bushel. | per | per | pound. | oils, + 30-- | | | barrel. | pound. | |refined, + | | | | | | per + | | | | | | gallon. + ------+----------+----------+----------+--------+--------+-------- + |_Dollars._|_Dollars._|_Dollars._|_Cents._|_Cents._|_Cents._ + 1873 | .618 | 1.312 | 7.565 | 18.8 | 25.3 | 23.5 + 1874 | .719 | 1.428 | 7.144 | 15.4 | 25.2 | 17.3 + 1875 | .848 | 1.124 | 5.968 | 15.0 | 26.0 | 14.1 + 1876 | .672 | 1.242 | 6.216 | 12.9 | 26.2 | 14.0 + 1877 | .587 | 1.169 | 6.488 | 11.8 | 23.9 | 21.1 + 1878 | .562 | 1.338 | 6.358 | 11.1 | 21.8 | 14.4 + 1879 | .471 | 1.068 | 5.252 | 9.9 | 20.4 | 10.8 + 1880 | .543 | 1.245 | 5.878 | 11.5 | 23.3 | 8.6 + 1881 | .552 | 1.114 | 5.668 | 11.4 | 22.6 | 10.3 + 1882 | .668 | 1.185 | 6.149 | 11.4 | 20.9 | 9.1 + 1883 | .684 | 1.127 | 5.955 | 10.8 | 21.1 | 8.8 + 1884 | .611 | 1.066 | 5.588 | 10.5 | 20.6 | 9.2 + 1885 | .540 | .862 | 4.897 | 10.6 | 19.8 | 8.7 + 1886 | .498 | .870 | 4.699 | 9.9 | 19.9 | 8.7 + 1887 | .479 | .890 | 4.510 | 9.5 | 18.7 | 7.8 + 1888 | .550 | .853 | 4.579 | 9.8 | 17.3 | 7.9 + 1889 | .474 | .897 | 4.832 | 9.9 | 16.6 | 7.8 + ============================================================ + Year | Bacon | Lard | Pork, | Beef, | Butter + ending| and hams | per | salted, | salted, | per + June,| per | pound. | per | per | pound. + 30-- | pound. | | pound. | pound. | + ------+----------+----------+----------+----------+--------- + | _Cents._ | _Cents._ | _Cents._ | _Cents._ | _Cents._ + 1873 | 8.8 | 9.2 | 7.8 | 7.7 | 21.1 + 1874 | 9.6 | 9.4 | 8.2 | 8.2 | 25.0 + 1875 | 11.4 | 13.8 | 10.1 | 8.7 | 23.7 + 1876 | 12.1 | 13.3 | 10.6 | 8.7 | 23.9 + 1877 | 10.8 | 10.9 | 9.0 | 7.5 | 20.6 + 1878 | 8.7 | 8.8 | 6.8 | 7.7 | 18.0 + 1879 | 6.9 | 7.0 | 5.7 | 6.3 | 14.2 + 1880 | 6.7 | 7.4 | 6.1 | 6.4 | 17.1 + 1881 | 8.2 | 9.3 | 7.7 | 6.5 | 19.8 + 1882 | 9.9 | 11.6 | 9.0 | 8.5 | 19.3 + 1883 | 11.2 | 11.9 | 9.9 | 8.9 | 18.6 + 1884 | 10.2 | 9.5 | 7.9 | 7.6 | 18.2 + 1885 | 9.2 | 7.9 | 7.2 | 7.5 | 16.8 + 1886 | 7.5 | 6.9 | 5.9 | 6.0 | 15.6 + 1887 | 7.9 | 7.1 | 6.6 | 5.4 | 15.8 + 1888 | 8.6 | 7.7 | 7.4 | 5.3 | 18.3 + 1889 | 8.6 | 8.6 | 7.4 | 5.5 | 16.5 + ============================================================ + Year | Cheese | Eggs | Starch | Sugar, | Tobacco, + ending| per | per | per | refined, | leaf, + June,| pound. | dozen. | pound. | per | per + 30-- | | | | pound. | pound. + ------+----------+----------+----------+----------+--------- + | _Cents._ | _Cents._ | _Cents._ | _Cents._ | _Cents._ + 1873 | 13.1 | 26.6 | 5.3 | 11.6 | 10.7 + 1874 | 13.1 | 22.1 | 5.7 | 10.5 | 9.6 + 1875 | 13.5 | 25.6 | 6.0 | 10.8 | 11.3 + 1876 | 12.6 | 28.0 | 5.4 | 10.7 | 10.4 + 1877 | 11.8 | 25.9 | 5.2 | 11.6 | 10.2 + 1878 | 11.4 | 15.8 | 4.7 | 10.2 | 8.7 + 1879 | 8.9 | 15.5 | 4.2 | 8.5 | 7.8 + 1880 | 9.5 | 16.5 | 4.3 | 9.0 | 7.7 + 1881 | 11.1 | 17.2 | 4.7 | 9.2 | 8.3 + 1882 | 11.0 | 19.2 | 4.8 | 9.7 | 8.5 + 1883 | 11.2 | 20.9 | 4.6 | 9.2 | 8.6 + 1884 | 10.3 | 21.2 | 4.5 | 7.1 | 9.1 + 1885 | 9.3 | 21.5 | 4.0 | 6.4 | 9.9 + 1886 | 8.2 | 18.3 | 4.1 | 6.7 | 7.8 + 1887 | 9.3 | 16.3 | 3.8 | 6.0 | 8.7 + 1888 | 9.9 | 15.9 | 3.5 | 6.3 | 8.3 + 1889 | 9.3 | 13.9 | 3.8 | 7.6 | 8.8 + ------+----------+----------+----------+----------+--------- + +To show from another source the same general fact of the decline of +prices, I quote from an article published in the New York Tribune early +in 1886. + +The New York Tribune is pretty good authority. These figures are +undoubtedly from the calculations and from the pen of Mr. Grosvenor, of +the editorial staff of that able journal, formerly editor and proprietor +of the "Public," whose estimates of prices have, in my judgment, been +more correctly made than those of any other statistician in the world. +The article is as follows: + + Quotations of about two hundred articles are compared since 1860, + and the amount of money is ascertained which would purchase, + at different dates, of these various articles, quantities + corresponding as closely as possible to their ascertained + consumption in 1880, the date of the last census. Among the + articles compared are wheat, corn, oats, rye, barley, beans and + pease, mess pork, bacon, ham, live hogs, lard, fresh beef, tallow, + live sheep, poultry, butter, cheese, eggs, milk, hay, potatoes, + turnips, cabbage, onions, apples, raisins, sugar, brown and + crushed; molasses, coffee, tea, tobacco, whisky, malt and hops, + mackerel, codfish, salt, rice, nutmegs, cloves, pepper, cotton, + print-cloths and standard sheeting, wool of different qualities, + blankets, carpets, flannels, leather, boots, shoes, hides, silk, + India rubber, iron (pig and bar), nails, steel rails, coal, oil + (crude and refined), tin and tin plates, copper, lead, hemp, + lumber, spruce and pine, oak, ash, walnut, and white wood, lath, + brick, lime, turpentine, linseed oil, soap, glass, paper, white + lead, and twelve other kinds of paints, fertilizers, and over + fifty kinds of drugs and chemicals. + + _Cost of products at different dates._ + + ---------------------+-----------+----------+--------- + Dates. | Cost in | Price of | Cost in + | currency. | gold. | gold. + ---------------------+-----------+----------+--------- + 1860, May 1 | $100.00 | $100.00 | $100.00 + 1865, November 1 | 174.77 | 145.87 | 119.81 + 1866, May 1 | 157.60 | 125.12 | 126.04 + 1866, November 1 | 170.31 | 146.25 | 117.82 + 1871, November 1 | 122.03 | 112.00 | 108.95 + 1872, May 1 | 137.13 | 112.50 | 121.81 + 1873, November 1 | 115.14 | 108.50 | 106.01 + 1874, May 1 | 122.77 | 112.87 | 108.77 + 1875, January 1 | 113.01 | 112.37 | 100.37 + 1876, October 1 | 97.30 | 110.00 | 88.45 + 1877, May 1 | 99.29 | 106.75 | 93.01 + 1878, May 1 | 82.09 | 100.37 | 81.81 + 1878, October 18 | 77.94 | 100.37 | 77.65 + 1879, November 1 | 93.48 | -- | -- + 1880, January 1 | 103.42 | -- | -- + 1881, January 1 | 95.98 | -- | -- + 1882, May 16 | 106.59 | -- | -- + 1883, March 13 | 97.82 | -- | -- + 1883, November 1 | 88.71 | -- | -- + 1884, January 1 | 88.37 | -- | -- + 1884, November 21 | 78.47 | -- | -- + 1885, January 1 | 79.66 | -- | -- + 1885, May 9 | 80.22 | -- | -- + 1885, August 22 | 74.56 | -- | -- + 1885, November 1 | 75.35 | -- | -- + 1885, Close | 78.53 | -- | -- + ---------------------+-----------+----------+--------- + + It is not only clear from this comparison that the prices of 1885 + have been the lowest in our history for twenty-five years, but + that there has been a general tendency toward lower prices. From + 1866 to 1871, and again from 1872 until 1885, prices fell quite + steadily. Indeed, had not the short crop of 1881 caused a + temporary advance in the spring of 1882, the range of January, + 1880, would have been the highest of the later period, and it + might have been said that the present era of declining prices had + continued with little intermission for six years. None will fail + to observe how swift and sharp the advances have been--about 12 + per cent. from November, 1871, to May, 1872, and 25-1/2 per cent. + from October, 1878, to January, 1880. But these spasmodic + advances, by which the general tendency downward is interrupted, + only serve to make it more clear that prices have been tending + irresistibly toward a lower level than that of 1860, not only + during the period of paper depreciation, but since gold has been + the measure of value. + +In order to show that the United States are not alone in their complaint +of falling prices, but that the complaint is universal, and in order +that we may have before us a broad view of the field of general prices, +I submit a table showing the relation to each other of the range of +prices from 1809 to 1849, by decades, based on the prices of fifty +leading articles of commerce, prepared by the distinguished Professor +Jevons and published in the London Economist for May 8, 1869. + +Taking the range of prices of 1849 as a datum line (the range for that +year being the lowest of the century) Mr. Jevons works backward to 1809, +when the revolt of the South American colonies against the authority of +Spain shut off at a blow the supplies of the precious metals, and set on +foot a money famine from which the world knew no relief till the +discovery of the mines of California and Australia. + +Professor Jevons's figures are as follows, the prices of 1849 being +represented by 100: + + _Relation of prices, 1809 to 1849, by decades, those for 1849 being + rated at 100._ + + 1809 245 + 1819 175 + 1829 124 + 1839 144 + 1849 100 + +From these figures it will be observed that the fall from 1809 to 1849, +a period of forty years, was as 245 to 100, or 59 per cent. + +By the next table which I submit, that of Dr. Soetbeer, it will be seen +that the general range of prices rose gradually from 1849 to 1873, in +the last of which years the figures bore to those of 1849 the relation +of 138 to 100. It has never been denied that this rise was due to the +increase in the world's money supply by the yield of the precious metals +from the mines of California and Australia, the effects of which, +however, as will be seen by the table, were not felt on prices till +1853--five years after John Marshall's discovery of the yellow metal in +the tail-race at Sutter's mills. Yet, because it interferes with the +pecuniary interests of a large and influential class, it is vehemently +denied that the fall of prices since 1873 is due to a decrease in the +volume of the money caused by the demonetization of silver in that year +throughout the western world. + +From and after that year, as will be perceived by an examination of the +figures; in other words, from the year when one-half the world's money +supply was deprived of the money function, we find an almost +uninterrupted decline of prices. The figures of 1873 and 1885 will be +seen to bear to one another the relation of 138 to 108, or a fall of 22 +per cent. in twelve years. Should the fall continue at that rate without +interruption--and there is no reason apparent why it should not, we +shall in forty years have witnessed a decline of 72 per cent. in the +general range of prices--a decline considerably greater than that from +1809 to 1849. And these are not the figures of bimetallists or silver +"theorists," but of pronounced advocates of the single standard of gold. +Where, I would inquire, is the fall of prices to stop? + +Dr. Soetbeer's table represents the general average price of one-hundred +leading articles of commerce each year for a period of nearly forty +years. He takes as a basis the general range of gold prices prevailing +between 1847 and 1850, and calling that range 100, shows the relative +standing toward it of the general range of prices for subsequent years, +up to 1885. + + _Relation of prices by years from 1849 to 1885, the general range of + prices of 1849 being rated at 100._ + + 1849 100.00 + 1851 100.21 + 1852 101.69 + 1853 113.69 + 1854 121.25 + 1855 124.23 + 1856 123.27 + 1857 130.11 + 1858 113.52 + 1859 116.34 + 1860 120.98 + 1861 118.10 + 1862 122.65 + 1863 125.49 + 1864 129.28 + 1865 122.63 + 1866 125.85 + 1867 124.44 + 1868 121.99 + 1869 123.38 + 1870 122.87 + 1871 127.03 + 1872 135.62 + + 1873 138.28 + + 1874 136.20 + 1875 129.85 + 1876 128.33 + 1877 127.70 + 1878 120.60 + 1879 117.10 + 1880 121.89 + 1881 121.07 + 1882 122.14 + 1883 122.24 + 1884 114.25 + 1885 108.27 + +Mr. Sauerbeck, also an advocate of the gold standard, and whose work has +the approval of the Statistical Society, takes as a datum line the +prices ruling from 1867 to 1870. Rating those at 100 he finds that by +1873 prices had risen to 111, by 1886 they had fallen to 69, and by +September, 1887, to 68.7. He declares the average prices for the first +nine months of 1887 to have been the lowest reached for a hundred years. + + +BOTH GOLD AND SILVER VARIABLE IN VALUE. + +The fact that the metals have separated considerably since 1873, and +that silver bullion now sells at less than par value of $1.29 per ounce, +is taken to signify that silver has fallen--not that gold has risen. +This proceeds from the assumption that whenever a change takes place in +the relation between gold and any other article the change must +necessarily be in the other article. This assumption, in turn, is based +on the absurd idea that calling gold a "standard" will insure it against +change. + +Among political economists it is a well-recognized principle that +neither gold or silver is exempt from the universal application of the +law of supply and demand. That law governs gold and silver, not only as +commodities, but as money, and governs as well all other kinds of money +that may be used. And while the advocate of the single gold standard is +at all times ready to concede the truth of this assertion as to silver, +he is confident that it does not and can not apply to gold; that the +economic law which makes supply and demand a regulator of value is +suspended as to gold. + +That a metallic money, whether of gold or silver, is very far from being +stable is admitted by innumerable authorities, of whom I will cite only +a few. + +Dr. Adam Smith, in his "Wealth of Nations," book 1, chapter 5, says: + + Gold and silver, like every other commodity, vary in their value. + The discovery of the abundant mines of America reduced in the + sixteenth century the value of gold and silver in Europe to about + a third of what it had been before. This revolution in their + value, though perhaps the greatest, is by no means the only one + of which history gives some account. + +And again: + + Increase the scarcity of gold to a certain degree and the + smallest bit of it may be more precious than a diamond. + +John Locke, "Considerations, etc., in relation to money" (published in +1691), says: + + The greater scarcity of money enhances its price and increases + the scramble; there being nothing that does supply the want of + it; the lessening of its quantity, therefore, always increases + its price and makes an equal portion of it exchange for a greater + of any other thing. + +Prof. Francis A. Walker, "Money," etc., page 210, says: + + Gold and silver do, over long periods, undergo great changes of + value and become in a high degree deceptive as a measure of the + obligation of the debtor of the claim of the creditor. Thus + Professor Jevons estimates that the value of gold fell between + 1789 and 1809, 46 per cent., that from 1809 to 1849 it rose 145 + per cent., while in twenty years after 1849 it fell again at + least 20 per cent. + +Jevons, "Money and Exchange," chapter 6, says: + + In respect to steadiness of value the metals are probably less + satisfactory, regarded as a standard of value, than many other + commodities, such as corn. + +And again, in chapter 24 of the same work, he says: + + We are too much accustomed to look upon the value of gold as + a fixed datum line in commerce; but in reality it is a very + variable thing. + +Sir Archibald Alison (England, in 1815 and 1845), says: + + The coining of gold and silver, which is universal in all + civilised nations, and affixing to them one definite and + permanent value by authority of law, has no effect whatever in + preventing the fluctuations in the real value of the current coin + of the realm. + +Professor Laughlin, of Harvard, in his work on Political Economy (page +72), says: + + It is quite evident that the name dollar does not always have the + same value, although people often think it does. We get into the + habit of using names without thinking what they really mean. The + 23.22 grains in a gold dollar may be exchanged sometimes for + more, sometimes for less, of other commodities. When it is + exchanged for less, its value has fallen relatively to all other + commodities, and, even if the name dollar remains the same, its + value has fallen. One must then offer more dollars than before + for the same commodities. That is, when money falls in value, + prices rise; when money rises in value, prices fall. + + Now, we shall say a few words in regard to another function, a + means of paying long contracts, or debts which run over a long + term of years. + + Suppose that I loaned you in 1880, $1,000 for twenty years. In + that year the $1,000 bought a certain quantity of corn, wheat, + sugar, salt, wood, hats, and shoes. In 1900, when you are to pay + me back the $1,000 in money, if prices have changed, you may give + me back the same amount of money, but you will not return to me + the same purchasing power over other things. If for some reason + prices have fallen between 1880 and 1900, it will take less money + to buy the same quantity as before of corn, wheat, etc. If so, + the $1,000 you return me in 1900 will be of more value than the + $1,000 I gave you, and it would be unjust to oblige you to give + me more than you borrowed. If, on the other hand, prices have + risen, then the $1,000 in money would buy me less than before, so + that I should lose. * * * Hence, the value of money (gold or + silver) does not remain the same for any length of time; and the + precious metals, while they are very satisfactory for exchanges + which do not take very long to complete, can not serve as a + proper measure of value during a long term or years. + +Ricardo, the greatest authority on the gold standard, the financial +writer, more highly regarded throughout the world than any other that +has ever appeared in Great Britain, whose logical utterances have never +failed to attract the attention of mankind, stated the true condition of +things in 1810, and advocated the true policy for Great Britain. + +In his "Proposals for an Economical and Secure Currency," Ricardo makes +the following statement, which I commend to the careful attention of the +advocates of the single gold standard: + + While a standard is used, we are subject to only such a variation + in the value of money as the standard itself is subject to; but + against such variation there is no possible remedy, and late + events have proved that, during periods of war, when gold and + silver are used for the payment of large armies distant from + home, those variations are much more considerable than has been + generally allowed. This admission only proves that gold and + silver are not so good a standard as they have been hitherto + supposed--that they are themselves subject to greater variations + than it is desirable a standard should be subject to. They are, + however, the best with which we acquainted. + + If any other commodity less variable could be found, it might + very properly be adopted as the future standard of our money, + provided it had all the other qualities which fitted it for that + purpose; but while these metals are the standard the currency + should conform in value to them, and whenever it does not, and + the market price of bullion is above the mint price, the currency + is depreciated. This proposition is unanswered and is + unanswerable. Much inconvenience arises from using two metals as + a standard of our money; and it has long been a disputed point + whether gold or silver should by law be made the principal or + sole standard of money. In favor of gold it may be said, that its + greater value under a small bulk eminently qualifies for a + standard in an opulent country. + +And I may here remark that it requires an opulent country to maintain +the single gold standard, and the country does maintain it at very great +expense. I do not wonder that he thought an opulent country, a creditor +country, the only one that ought to adopt it, for no other country can +afford to adopt it. But, like many people who in attempting to improve +their condition in society attempt luxuries and extravagances which they +can not maintain and which force them back into the ranks from which +they came, so nations in attempting to establish the gold standard may +find themselves reduced from opulence to poverty. + +Ricardo continues: + + But this very quality subjects to greater variations of value + during periods of war or extensive commercial discredit, when it + is often collected and hoarded, and may be urged as an argument + against its use. The only objection to the use of silver as the + standard is its bulk, which renders it unfit for the large + payments required in a wealthy country; but this objection is + entirely removed by the substituting of paper money as the + general circulation medium of the country. Silver, too, is much + more steady in its value in consequence of its demand and supply + being more regular; and, as all foreign countries regulate the + value of their money by the value of silver, there can be no + doubt that on the whole silver is preferable to gold as a + standard, and should be permanently adopted for that purpose. + +Innumerable additional citations from authors of repute could be adduced +to fortify this position. + +It will thus be seen that the fluctuations in the value or purchasing +power of both gold and silver have always been admitted by scientific +writers. They were so well understood three centuries ago that in Queen +Elizabeth's reign (1576) the British Parliament directed that the rents +reserved in the long leases of certain college lands should be payable, +not in money, but in wheat. And at various times during the past seventy +years propositions have been formulated to substitute for gold and +silver as a standard of value for deferred payments, a tabular statement +of the prices of the principal articles of commerce, to be made by +official authority and published from time to time, by the average of +which the fluctuations of gold could be ascertained and proper allowance +made for them in the settlement of time transactions. Professor Jevons, +Prof. Francis A. Walker, and other political economists of note have +expressed approval of such a tabular standard for long-time contracts, +as securing greater equity than would gold as a measure of values. + +Those who now assert that silver has fallen and that gold has not risen +in value arrive at this conclusion by a very safe process of reasoning. +First, to show that silver has fallen they measure it by gold alone, +without reference to the general range of prices; and then to prove that +gold has not risen they make it the measure of itself. An increase or +decrease of the value of either can not be ascertained by reference to +the other, and certainly not by constituting either of them a standard +by which to judge itself. It would of course be forever impossible to +show any change in the value of gold or silver, or of anything else, +measuring it by itself. It is only by looking at the relations which +both metals bear respectively to a considerable range of commodities +generally dealt in as well as to each other, that it can be ascertained +with certainty what has happened. + +Not only upon consideration of all the facts I have given, but upon the +logic of the situation, it must be obvious that gold has risen and will +continue to rise in value as long as its volume decreases and the demand +for it increases. Since 1860, when 77 per cent. of the combined yield of +the two metals, it has diminished not only in relative proportion to the +yield of silver, but it has diminished absolutely. For the five years +ending with 1860 the yield of gold throughout the world was $137,000,000 +a year; for the five years ending 1889 the yield was but $110,000,000 a +year. If, as claimed by the advocates of the single gold standard, an +increase in the yield of silver decreases the value of silver, by what +system of logic can they deny that a decrease in the supply of gold +increases the value of gold? + +In a late issue of the London Economist, that of April 26, 1890, I find +an editorial article relating to the recent discussion on bimetallism in +the British House of Commons. That article comments somewhat sharply on +Mr. Smith's assertion that "a conspiracy had been formed among the +financial class in Europe and America to get rid of silver as +full-valued money in order to increase the value of gold, in which their +revenues are paid." In the course of his comments the editor, by +"confession and avoidance," admits our whole contention as to the rise +of gold and the fall, as a natural consequence, of the prices of +commodities. He says: + + It may not be amiss, however, to point out that the increase in + the exchangeable value of gold has been by no means such a gain + to the financial class as he in common with many others suppose; + for advantage has been very largely taken of it to cut down the + return upon the capital which the financial classes have + invested. It has favored debt conversion schemes, and it has been + one of the influences that have caused the rate of interest in + general to decline so decidedly, that, all round, the yield of + investments is now very appreciably lower than it was fifteen + years ago. The idea that the creditor class have realized unmixed + gains and the debtor class have suffered unmitigated losses by + the alteration in the purchasing power of gold is thus altogether + fallacious. There has in their case, as in all others, been a + species of compulsory give and take. Each has gained and each has + lost something, and now that the process of readjustment has been + carried so far it would be unwise to the last degree to unsettle + everything again by such legislation as the bimetallists propose. + +The editor of the Economist is to be commended for at least one thing. +He does not quibble as to the most important point in the bimetallic +controversy. He frankly admits that gold has risen, and does not, as +some others do, attribute the fall of prices to improvements in methods +of production. + +He also admits that coincidently with and caused by the rise in gold +there has been a great decline in the rates of interest, and, strangely, +claims that the debtor is compensated for the rise in the value of money +by the ability to convert the debt into one bearing a lower rate of +interest, or, as he calls it, resorting to "debt-conversion schemes." + +He does not inform us how any compensation can be made to the the debtor +for the time the debt has been running, as to which it can not be +converted, nor for the enhanced amount exacted from the current earnings +of labor by the rise in the value of money to pay taxes and the expenses +of Government, nor for the loss entailed on the debtor whose property is +mortgaged on long time, where the holder of the mortgage refuses to +convert it into an obligation bearing a lower rate of interest than +originally contracted for. He suggests no method by which to make whole +those who have lost their property through sheriff's sale by reason of +falling prices and the rise in the value of money. Neither does he state +how long it will be before the next confiscation is to take place, by +reason of the continued operation of the cause that produced the first. +But he has been frank enough to concede (what is never disputed except +when the money question is under discussion) that there has been a rise +in the exchangeable value of gold, and conceded its natural sequence, a +fall in the rates of interest. + + +IMPROVED METHODS OF PRODUCTION. + +In order to justify their position it becomes necessary for the +advocates of continued demonetization of silver to insist that the fall +of prices is not due to the rise in the value of gold but to improved +methods of production. + +Whatever the cause to which it is to be ascribed, the undoubted fact is +that a fall of prices throughout the western world set in concurrently +with the reduction of the world's money volume by the demonetization of +silver. It was well understood at the time by those who had given +consideration to the subject that demonetization alone would effect that +result. This is manifest from an article in the London Daily News, a +paper of exceedingly large circulation, quoted in the Journal of the +Statistical Society of England for 1873, page 395. Referring to the +adoption of the single gold standard by Germany the Daily News said: + + As the annual new supply of gold throughout the world is reckoned + at little more than L20,000,000 ($100,000,000), and the usual + demand for miscellaneous purposes is very large, it follows that, + if the German Government perseveres in its policy, the strain upon + the existing stocks and currencies of gold will be most severe. + For a time, at least, unless the annual production of gold should + suddenly increase, the money markets of the world are likely to be + perturbed by this bullion scarcity, and the fall in the value of + gold---- + +which means the rise in prices that for some time had prevailed; + + of which so much has been heard, will be checked or reversed. + +The yield of gold did not "suddenly increase," and the intelligent +prophecy of the Daily News was fully realized, not merely to the extent +of a check to the rising prices; (or, as it is styled by the Daily News, +a check to the "fall in the value of gold,") but to the extent of an +immediate rise in the value of that metal, and a persistent and +deplorable fall in the general range of prices. + +This prophecy that the "fall in the value of gold" would be checked by +the demonetization of silver; or, better, reversed by it, was welcome +reading to the creditor and income classes of England and of the world. + +That it was "reversed," and the value of gold appreciated, is as plain +as that; one being subtracted from two, there is but one for a +remainder. + +The immediate fall in prices of commodities was the natural, the +anticipated, and the deliberately intended result of that movement. + +But we are now assured that this fall is not due to any monetary cause, +but to the greater efficiency of machinery in the production of +commodities. + +No advocate of an increased volume of money denies that in a few +departments of manufacture there have since 1873 been improvements +tending to economize labor and cheapen products; but they emphatically +deny and challenge proof that improvements of mere detail in the +manufacture of some articles will account for the extraordinary fall of +price since that time in almost every product of industry. We are also +told that the development of the system of transportation, both by land +and sea, have tended to lower the price of commodities to the consumers. +I grant it. But we had those improvements before 1873. + +The inventions made between 1873 and 1890, the period of falling prices, +were no more important or radical in their effect on industry,--tended +no more to cheapen commodities, than did those from 1850 to 1873, the +period of rising prices. Indeed the inventions which preceded 1873 were +as a whole much greater in scope, more far-reaching in result, and more +revolutionary in their effects on industry, than those of the later +period. All the great basic improvements had been invented, and had been +incorporated with the industrial system of all civilized countries long +before 1873, if we except the electric light and the telephone. We have +had the steam engine, the cotton gin, and the spinning-jenny since the +last century; the railroad and the steam-ship since the '30's; the +telegraph, the mechanical reaper, steam-plow, and other agricultural +labor-saving devices since the '40's; the sewing machine since 1854, and +the Bessemer process and steel rail since 1857. + +The forced construction into which their position drives the advocates +of the gold standard is well illustrated in a recent number of a +magazine of high standing in this country, in which I find the +following: + + But if it be demurred, does not a debt incurred, say, ten years + ago require to-day more wheat or iron for its satisfaction than + the sum could have bought when first borrowed? Certainly, but the + wheat or iron represents no more labor now then it did ten years + ago, and its increase in quantity stands for the new efficiency + which applied science has bestowed on toil. + +Observe how deftly the writer places iron, in the manufacture of which +there have admittedly been some improvements, in the same category with +wheat, in the production of which the improvements within any recent +period have been of the most trifling character. It will be exceedingly +difficult to convince the farmers of this country, whose mortgages are +eating up the proceeds of their labor, that the enormous decrease in the +debt-paying power of their products is made up to them in "the new +efficiency which applied science has bestowed on toil." + +As well might it be maintained that the rise of prices and the +concurrent wave of universal prosperity, experienced after 1849, was not +due to the increase of the world's money stock from the mines of +California and Australia, but to some sudden, unaccountable, and +complete loss of all improvements theretofore attained in the arts and +industries of the world. + + +EFFECT OF CHECKS AND CLEARING-HOUSES. + +But it is said that checks, notes, drafts, bills of exchange, and the +facilities afforded by clearing-houses effect such economy in the use of +money that it goes farther now than formerly, and that therefore so +large a volume of money as was formerly needed is not needed at present. +It is sought thus to escape the conclusion that the fall of prices is +the result of a shrinkage of the volume of money, or at least to imply +that if the money volume has been shrinking the agencies mentioned have +served to mitigate, if not entirely to counteract, the effects of such +shrinkage. This is in substance to claim that however contracted the +money volume of a country may become, the system of checks and +clearing-houses--on the principle of the compensating balance--will +expand in a proportion directly corresponding to the contraction of the +currency; that the greater the reduction of the volume of money in the +country the greater the increase in the transactions of the +clearing-house. + +Nothing more absurd could be conceived. If this view were correct, it +would make no difference whether the amount of money in circulation were +large or small; a million dollars would be as efficacious as +$100,000,000, and even one dollar as effective as a million dollars; and +if we suppose the last dollar to have disappeared from circulation, +then, according to the sweeping and pretentious claims set up for the +clearing-house system, we could dispense altogether with the use of +money and rely exclusively on checks, drafts, and bills of exchange. + +That checks and clearing-houses are a great convenience to commerce is +not denied. They serve to a certain extent to make more effective the +money volume of a country. By the clearing house system of off-setting +the demands of the several banks, one against the other, and requiring +payment in cash of the balances only, large amounts of loans may remain +undisturbed and greater stability of industrial conditions be secured. + +Clearing-houses, however, were not established primarily for the +convenience of commerce, but for the profit of bankers. Whatever amounts +of money are economized by means of those institutions bring +compensation, by way of interest, to the banks. We may, therefore, rely +upon their being utilized to the utmost under all circumstances. + +But, however much checks and clearing-houses may economize the use of +money, they are no novel devices. They are not some untried and +newly-invented instrumentalities. Checks have been in use ever since the +invention of banks. The clearing-house system was established in this +country in 1853. Contributing, as it does contribute, to the pecuniary +profit of the banks by making possible an economy in the use of invested +money, which the banks have loaned out, and on which they are drawing +interest, the system has grown with the growth of the business of the +country. It will undoubtedly continue to grow, but with no greater +acceleration than population and business will warrant. + +As it has been a part of the banking machinery of the country for nearly +forty years, and during that period has been utilized to the utmost, the +conditions of its existence and utilization have long since become +static conditions. The demands for currency have borne relation to the +needs of business, with clearing-house facilities in full sight and +operation; and at all seasons, in the adjustment of prices, those +facilities have had full force and effect. Assuming that at any given +period the business of the country were conducted with a given volume of +money, _plus_ a certain volume of clearing house exchanges, then, at a +later period, an increase of business would demand an increase in the +volume of money, _plus_ a proportionate increase in the volume of +clearing-house exchanges; having had this system in full and effective +use for forty years, it is as absurd to ascribe the _fall_ of prices in +the last half of that period to any economy in the use of money +effected by the clearing-house system as it would be to ascribe to the +same cause the directly opposite effect--the _rise_ of prices--that took +place in the first half of the same period. + + +THE PROOF AFFORDED BY THE FALL OF INTEREST. + +If further proof were needed that gold has risen in value, it is, as I +maintain, to be found in the coincident fact of a decrease of rates of +interest on first-class securities. That decrease has kept even step and +pace with the rise in the value of money. + +The rise in the value of gold, as shown by comparison with large numbers +of articles of commerce, has been between 35 and 40 per cent. The rate +of interest on gilt-edged securities shows a corresponding decline. But +unfortunately for the struggling people of the country, the fall in the +rate of interest on farm mortgages and on property remote from money +centers has been nothing like so great, nor has it been so great as the +fall in the price of agricultural lands, and in the products of labor. + +I hold, therefore, that a new axiom should be added to the science of +political economy; namely, that as the purchasing power of money +increases, its income producing power decreases, and in about the same +ratio; and conversely, when the purchasing power of money decreases, its +income-producing power increases. In other words, when prices rise +interest rises; when prices fall interest falls. When money is +increasing in volume and decreasing in value, prices rise, and its +investment in productive enterprises becomes more profitable, and as a +consequence interest rises. When it is decreasing in volume and +consequently increasing in value, prices fall, investment in property +and productive enterprises become precarious and unprofitable, and, as a +consequence, it avoids them, and seeks investment in bonds and +gilt-edged securities, aptly termed "money-futures," which for years +have been increasing and continue to increase. + +Some thirteen years ago I indulged in a little prophecy concerning the +rates of interest. I take no great credit to myself for it, but in +1877--four years after the demonetization of silver--before the rates of +interest had materially fallen, and when the same contention was made +that is made now, namely, that money was cheap because interest was low, +and that the policies of the country were wise because our credit stood +on such a high plane, I submitted to Congress the report of the Monetary +Commission, from which I quote: + + Money can be borrowed readily only upon such securities as bonds + which are based on the unlimited tax-levying power of the + Government, or upon the bonds and stocks of first-class + trunk-lines of railroad corporations, whose freight and fare rates + are practically a tax upon the entire population and resources of + the regions which they traverse and supply. The competition among + capitalists to loan money on these more ample securities has + become very keen, and such securities command money at + unprecedentedly low rates. These low and lowering rates of + interest, instead of denoting financial strength and industrial + prosperity, are a gauge of increasing prostration. Large + accumulations of money in financial centers, instead of being + caused by the overflow of a healthful circulation, or even a proof + of a sufficient circulation, are unmistakable evidence of a + congested condition caused by a decreasing and insufficient + circulation. The readiness with which Government bonds bearing a + very low rate of interest are taken, instead of showing that the + credit of the Government has improved, is melancholy evidence of + the prostrated condition to which industry and trade have been + reduced. + + There need be no haste in refunding the public debt at the rates + now proposed and considered low. Unless the progress of the + commercial world in the policy of contracting money by + demonetizing silver is checked, bonds bearing a much lower rate of + interest than any yet offered will be gladly accepted by + capitalists here and in Europe. When the money stock is + diminishing and prices are falling, the lender not only receives + interest, but finds a profit in the greatly increased value of the + principal when it is returned to him. A loan of money made in + 1809, if repaid in 1848, would have been repaid with an addition + of 145 per cent. in the purchasing power of principal and + interest, besides all the interest paid. Those who have loaned + money to this Government since 1861 have already received nearly + as much in the increased value of their principal as in interest, + and all the probabilities are, in respect to the four per cent. + thirty-year national bonds now being negotiated, if they are + redeemed in gold, that more profit will be made by the + augmentation in the value of principal through interest. Indeed + the signs of the times are, that the bonds of a country possessing + the unbounded resources and stable institutions of the United + States, payable in gold at the end of thirty years without any + interest whatever, would, through the increase of the value of + that metal, prove a most profitable investment. + +All the facts of the situation to-day fully bear out the statements I +then made. + +So determined are the advocates of the single gold standard in defending +the wisdom of its maintenance that facts whose existence would at +ordinary times be readily admitted, are, during a discussion of the +money question, pointedly denied. For example, within the past few weeks +we have seen in various eastern newspaper contributions from prominent +writers taking direct issue with the advocates of silver as to the +prevalence of general distress throughout the country. They declare that +there is no such distress, assert that they have looked for it in vain, +and derisively inquire where it is. + +Perhaps the best authority I can cite in response to this inquiry is the +principal commercial daily journal of the east, the New York Journal of +Commerce, itself one of the most ardent and uncompromising advocates of +the gold standard. In an editorial article in its issue of January 11, +1890, that journal said: + + FAILURES IN BUSINESS. + + The public have been startled by the announcement that during the + year 1889 there were 11,719 business failures in the United + States, against 10,587 in 1888 and 9,740 in 1887. The estimated + liabilities of last year's insolvents were $140,359,000 and the + assets were $70,599,000, against $120,242,000 liabilities and + $61,999,000 assets for the failures of the previous year. Thus the + failures in 1889 were more in number and far greater in + liabilities than for 1888, and the proportion of assets to the + obligations shows that the total insolvency was more disastrous. + Why in a season of profound peace, with no blighting frosts or + withering droughts, and the most abundant yield from the field, + forest, and mine so many in business have gone to the wall, no one + seems able to answer. Many have tried their hand at a solution of + the problem, and not one, as far as we can discover, has satisfied + even himself with the result of his investigations. + + +HAS SILVER FALLEN? + +In order to ascertain whether silver really has or has not fallen in +value, it is necessary that all the facts be taken into account and the +situation looked at from a correct point of view. If a person be seated +in a boat that is headed to the stream and wishes to test whether or not +he is making headway he must keep in view not the stream, but the shore. +The occupant of a railroad car who observes a moving train on a +contiguous and parallel track, frequently thinks his own train at a +stand-still, when in fact it may be in motion. + +Whenever a rise or fall appears to take place in the price of any one +article or commodity, that is to say whenever a difference takes place +in the relation which that article bears to money--all other commodities +remaining unchanged--such difference must naturally and properly be +attributed to changed conditions affecting the commodity, and not to a +change in the value of money. But wherever there is a fall in prices +throughout the whole range of commodities then it is clear that this +change is mainly due to a change in the value of money. Such however is +the force of education and habit that the masses of the people are slow +to suspect any change in the standard by which they have been accustomed +to gauge or measure all values. Indeed they find it difficult to +understand how under any circumstances any change can take place in it. +Having their eyes fixed on the standard, and on that alone, they +naturally attribute to the articles measured, and not to the standard, +any difference that may seem to arise in the relation they bear to each +other. + +But the apparent is not always the real. Nothing seems more warranted by +the evidence of our senses than that the earth is a stationary object, +while the sun revolves around it. For thousands of years the world was +convinced of the truth of the geocentric theory of the universe, and +millions of men have lived and died in the confident belief that this +planet was immovably fixed in space, while the sun was a rolling and +ever-shifting body. Even yet, among the mass of mankind, so ever-present +is this impression, derived from ocular demonstration, that in spite of +the declarations of science, the world continues in common use the +phrases which originally described the process that took place, as men +understood it; hence we speak of the "rising" and the "setting" of the +sun. In the same way we speak of the rise or fall in the value of +commodities, without being particular to note whether the change that +has taken place is strictly a change in the value of the article itself +or a change in the money with which its value is measured. Perhaps I can +best illustrate my meaning by an allegory: + + +THE BATTLE OF THE STANDARDS. THE ALLEGORY OF THE CLOCKS. + +In an ancient village there once stood a gold clock, which, ever since +the invention of clocks had been the measure of time for the people of +that village. They were proud of its beauty, its workmanship, its +musical stroke, and the unfailing regularity with which it heralded the +passing hours. This clock had been endeared to all the inhabitants of +the village by the hallowed associations with which it was identified. +Generation after generation it had called the children from far and wide +to attend the village school, its fresh morning peal had set the honest +villagers to labor; its noon-day notes had called them to refreshment; +its welcome evening chime had summoned them to rest. From time +immemorial, on all festive occasions, it had rung out its merry tones to +assemble the young people on the green; and on the Sabbath it had +advertised to all the countryside the hour of worship in the village +church. So perfect was its mechanism that it never needed repair. So +proud were the people of this wonderful clock that it became the +standard for all the country round about, and the time which it kept +came to be known as the gold standard of time, which was universally +admitted to be correct and unchanging. + +In the course of time there wandered that way a queer character, a +clockmaker, who being fully instructed in the inner workings of +time-tellers, and not having inherited the traditions of that village, +did not regard this clock with the veneration accorded to it by the +natives. To their astonishment he denied that there was really any such +thing as a gold standard of time; and in order to prove that the +material, gold, did not monopolize all the qualities characteristic of +clocks, he placed alongside the gold clock, another clock, of silver, +and set both clocks at 12 noon. For a long time the clocks ran along in +almost perfect accord, their only disagreement being that of an +occasional second or two, and even that disagreement only at rare +intervals, such as might naturally occur with the best of clocks. But +the Council of the village, in their admiration for the gold clock, +passed an ordinance requiring that all the weights (the motive power) of +the silver clock, except one, be removed from it, and attached to those +of the gold clock. Instantly the clocks began to fall apart, and one +day, as the sun was passing the meridian, the hands of the gold clock +were observed to indicate the hour of 1, while those of the silver clock +indicated 12.15. At this everybody in the village ridiculed the silver +clock, derided the silver standard, and hurled epithets at the +individual who had had the temerity to doubt the infallibility of the +gold standard. + +Finally, the divergence between the clocks went so far that it was noon +by the gold standard when it was only 6 a. m. by the silver standard, so +that those who were guided by the gold standard, not withstanding that +it was yet the gray of the morning, insisted on eating their mid-day +meal, because the gold standard indicated that it must be noon. And when +the sun was high in the heavens, and its light was shining warm and +refulgent on the dusty streets of the village, those who observed the +gold standard had already eaten supper and were preparing for bed. + +But this state of things could not last. It was clear that the +difference between the standards must be reconciled, or all industry +would be disarranged and the village ruined. + +Discussion was rife among the villagers as to the cause of the +difference. Some said the silver clock had lost time; others that both +clocks had lost time, but the silver clock more than the gold; while +others again asserted that both clocks had gained time, but that the +gold clock had gained more than the silver clock. + +While this discussion was at its height a philosopher came along and +observing the excitement on the subject remarked, "By measuring two +things, one against the other, you can never arrive at any determination +as to which has changed. Instead of disputing as to whether one clock +has lost or another gained would it not be well to consult the sun and +the stars and ascertain exactly what has happened." + +Some demurred to this because, as they asserted, the gold standard was +unchanging and was always right no matter how much it might seem to be +wrong; others agreed that the philosopher's advice should be taken. Upon +consulting the sun and the stars it was discovered that what had +happened was that both clocks had gained in time but that the gain of +the silver clock had been very slight, while that of the gold clock had +been so great as to disturb all industry and destroy all correct sense +of time. + +Notwithstanding this demonstration, there were many who adhered to the +belief that the gold standard was correct and unchanging, and insisted +that what appeared to be its aberrations were not in reality due to any +fault of the gold clock, but to some convulsion of nature by which the +solar system had been disarranged and the planets made to move +irregularly in their orbits. + +Some of the people also remembered having heard at the village inn, from +travellers returning from the East, that silver clocks were the standard +of time in India and other barbarous countries, while in countries of a +more advanced civilization gold clocks were the standard. They therefore +feared that the use of the silver clock might have the effect of +degrading the civilization of the village by placing it alongside India +and other barbarous countries. And although the great mass of the people +really believed, from the demonstration made, that the silver standard +of time was the better one, yet this objection was so momentous that +they were puzzled what course to pursue, and at last advices were +consulting the manufacturers of gold clocks as to what was best to be +done. + +Now our gold standard men are in the position of those who first refuse +to look at anything beyond the two things, gold and silver, to see what +has happened, and who, when it is finally demonstrated that all other +things retain their former relations to silver, still persist that the +law which makes gold an unchanging standard of measure is more immutable +than that which holds the stars in their courses. If they will compare +gold and silver with commodities in general, to see how the metals have +maintained their relations, not to one another but to all other things, +they will find that instead of a fall having taken place in the value of +silver, the change that has really taken place is a rise in the value of +both gold and silver, the rise in silver being relatively slight while +that of gold has been ruinously great. And those who do not shut their +eyes to the truth must see that the change of relation between the +metals has been effected by depriving silver of its legal-tender +function, as the want of accord between the clocks was brought about by +depriving the silver clock of a portion of its motive power--the +weights. The only thing that has prevented a greater divergency between +the metals is the limited coinage by the United States--the single +weight that, withheld from the gold clock, prevented its more ruinous +gain. + + +THE PURCHASING POWER OF SILVER IN 1873 AND 1889. + +If I can show that for a period of seventeen years, since its +demonetization in 1873, silver has lost none of its purchasing power, +none of its command over commodities; that is to say, if I can show +that 412-1/2 grains of silver to-day, uncoined, and shorn by hostile +legislation of its principal element of value--the money use--will buy +as much as would 412-1/2 grains of silver in 1873 (when our silver +dollar bore a premium over gold) of all the articles that enter into the +daily consumption of the people, it must be manifest that silver has not +fallen in value. + +I present a table which I shall ask to have inserted in the RECORD as +part of my remarks, showing the purchasing power of 412-1/2 grains of +silver, nine-tenths fine, in 1873 and 1890, respectively, so far as +concerns several leading articles of daily consumption. + +The table is as follows: + + _Comparative purchasing power of 412-1/2 grains silver, + nine-tenths fine, in 1873 and 1890, respectively._ + + -----------------------------------+-------+------- + 412-1/2 grains silver would buy-- | 1873. | 1890. + -----------------------------------+-------+------- + Wheat bushels | 0.87 | 0.88 + Corn do | 1.84 | 1.97 + Cotton pounds | 5.32 | 6.71 + Beef, mess barrels | 0.05 | 0.05 + Pork, mess do | 0.07 | 0.06 + Lard pounds | 12.89 | 11.75 + Butter do | 5.40 | 4.63 + Cheese do | 8.69 | 6.94 + Sugar do | 9.80 | 10.34 + Eggs dozen | 4.27 | 5.38 + -----------------------------------+-------+------- + +From this table it conclusively appears that while in 1873 the standard +silver dollar of 412-1/2 grains, which then bore a premium over the gold +dollar, would purchase four-fifths of a bushel of wheat; to-day the same +quantity of silver, without the advantage of coinage and merely as +bullion, will also buy four-fifths of a bushel of wheat--the only +difference between the figures for the two years being that at the +present time 412-1/2 grains of silver bullion, as will be seen by the +table, will buy a fraction of a bushel more than would 412-1/2 grains of +coined silver in 1873. + +If, then, silver has fallen, it is manifestly not in its relation to +wheat. + +By the same table it is shown that the silver dollar of 1873, containing +412-1/2 grains of silver, nine-tenths fine, would purchase one and +eight-tenths bushels of corn; in 1890, a like number of grains of +silver, uncoined and estimated at its gold value, will purchase one and +nine-tenths bushels of corn. Here again the advantage is slightly in +favor of the 412-1/2 grains of silver bullion of 1890. This shows +conclusively that silver has not fallen in its relation to corn. + +The figures of the same table show that in 1873 a coined silver dollar +of 412-1/2 grains would buy 5-1/3 pounds of cotton; to-day 412-1/2 +grains of uncoined silver will buy 6-3/4 pounds of cotton. From this it +appears that silver has not fallen relatively to cotton, the great +staple of universal use, but that, on the contrary, it has advanced +somewhat in its purchasing power when compared with that article. + +In order to present the question from another point of view I submit +another table showing the number of grains of silver that are required +in 1890 and the number which were required in 1873 to buy a bushel of +wheat, a bushel of corn, &c., by which it will even more clearly appear +that silver has not fallen in value in respect to commodities. + + _Comparative purchasing power of silver bullion, in grains nine-tenths + fine, in 1873 and 1890, respectively._ + + ----------------------------+-----------+----------- + | 1873. | 1890. + Articles. | Legal | Commodity. + | tender. | + ----------------------------+-----------+----------- + | _Grains | _Grains + | silver._ | silver._ + Wheat per bushel | 474.3 | 468 + Corn do | 223.9 | 209.25 + Cotton per pound | 77.55 | 61.42 + Beef, mess per barrel | 8,662.5 | 7,560 + Pork, mess do | 5,465.62 | 6,750 + Lard per pound | 31.97 | 35.1 + Butter do | 76.31 | 89.1 + Cheese do | 47.44 | 59.4 + Sugar, refined do | 42.07 | 39.82 + Eggs per dozen | 96.52 | 76.68 + ----------------------------+-----------+----------- + +From this table it will be seen that in 1873 it required 474 grains of +standard silver, in the form of coined dollars, to buy one bushel of +wheat; in 1890, only 468 grains of standard silver (and that merely in +bullion form, or in other words, at its market value) are required to +buy a bushel of wheat. This does not show that silver has fallen in +value, in its relation to wheat, but, on the contrary, that it has risen +in value. + +In 1873 it required 224 grains of silver to buy a bushel of corn; to-day +only 209 grains of silver are required to buy the same quantity. These +figures fail to prove that silver has fallen in value, in its relation +to corn. On the contrary, again, it has risen. + +In 1873 a pound of cotton could not be had for less than 77-1/2 grains +of silver; to-day the same pound of cotton can be bought for 61 grains +of silver. Silver, therefore, has not fallen, but risen in value in its +relation to cotton. + +In 1873 96 grains of silver were required to buy one dozen eggs; to-day +only 76 grains of silver are required to buy the same quantity of eggs. +Silver therefore has not fallen but risen in value, in its relation to +eggs. + +These comparisons might be continued with the same results as to a great +majority of the articles entering into general use. + +These figures demonstrate that in its relation to all commodities that +enter into the daily consumption, silver has not fallen in value, but, +as is clearly seen, while holding a remarkably steady ratio to +commodities, has slightly increased in value, as is shown by the fact +that a less number of grains of the metal are to-day required to +purchase the same quantity of the commodities mentioned than were +required in 1873. + +In relation to what, then, is it that silver has fallen? As it has not +fallen in relation to commodities, there remains but one thing in +relation to which it can be said to have fallen, and that one thing is +gold. The phrase "the fall of silver" is the ingenious and cunning +invention by which it is sought to cast on that metal the discredit of +depreciation rather than subject gold to the suspicion of any change +whatever. The term to correctly describe what has taken place would be +"the rise of gold;" but that term is scrupulously avoided, as implying +that gold does not remain immovably fixed. That gold has risen, however, +admits of no doubt, except to those who willfully shut their eyes to +facts of common observation. The true test of the increasing or +decreasing value of any one thing is not to compare it with any other +one thing, but with a large range of commodities generally dealt in. It +is not of so much importance to know how much gold can be bought with a +given amount of silver, as it is to know how much bread, how much meat, +and how much clothing can be bought, and how much of all the things that +are necessary to the comfort and well-being of the people can be bought +with that amount of silver. + + +PROOF THAT GOLD HAS RISEN. + +In order to demonstrate that gold has risen, I will bring side by side +the gold prices of a number of leading commodities of commerce in 1873 +and 1889, respectively, and the amount in silver bullion that in 1889 +would purchase an equal quantity of the same commodities, by a table +prepared at my request by the Bureau of Statistics of the Treasury +Department. + + _Average export prices of the following named domestic commodities + for the years ending June 30, 1873 and 1889._ + + -------------------+----------+--------------------------------------- + | | Average price of the year ending + | | June 30-- + | +--------------------+------------------ + Commodities. | Unit of | 1873. | 1889. + | quantity.+-----------+--------+--------+--------- + | | | | | In + | | In | In | In | silver + | | currency. | gold. | gold. | bullion. + -------------------+----------+-----------+--------+--------+--------- + Bacon and hams | Pounds | $0.088 | $0.077 | $0.084 | $0.108 + Butter | do | .211 | .184 | .166 | .212 + Cheese | do | .130 | .113 | .092 | .118 + Corn | Bushels | .617 | .539 | .508 | .650 + Cotton: | | | | | + Unmanufactured, | Pounds | .188 | .164 | .099 | .127 + not sea Island | | | | | + Cloth, colored | Yards | .166 | .145 | .065 | .083 + Cloth, uncolored | do | .162 | .142 | .068 | .087 + Iron and steel: | | | | | + Bar-iron | Cwt | 5.480 | 4.784 | 3.183 | 4.074 + Pig-iron | do | 2.498 | 2.181 | .953 | 1.220 + Railroad-bars | do | 4.114 | 3.592 | 2.169 | 2.776 + Lard | Pounds | .092 | .080 | .076 | .097 + Leather | do | .253 | .221 | .185 | .237 + Rice | do | .071 | .062 | .055 | .070 + Sugar: | | | | | + Brown | Pounds | .092 | .080 | .056 | .072 + Refined | do | .116 | .101 | .066 | .084 + Wheat | Bushels | 1.312 | 1.145 | .874 | 1.119 + Wheat-flour | Barrels | 7.565 | 6.604 | 4.703 | 6.020 + -------------------+----------+-----------+--------+--------+--------- + +What does an examination of this table show? It shows beyond dispute +that gold has risen in value. + +A bushel of wheat that, according to the figures of the Bureau of +Statistics cost $1.14 in gold or silver in 1873, and which, as will be +seen by the table, still commands $1.12 in silver bullion, will to-day +bring only 87 cents in gold. + +A pound of cotton that in 1873 cost the purchaser, in gold or silver, 16 +cents, and which still commands 13 cents in silver bullion, will bring +only 10 cents in gold. + +A pound of cheese that in 1873 cost the purchaser 11-1/3 cents in gold +or silver, and which now brings 12 cents in silver bullion, will bring +only 9 cents in gold. + +A barrel of flour which in 1873 cost the purchaser $6.60 in gold or +silver, and which to-day commands $6.02 in silver bullion, will bring +but $4.70 in gold. + +A pound of butter that in 1873 brought 18.4 cents in gold or silver, and +now commands 20.8 cents in silver bullion, will bring but 16.6 cents in +gold. + +Notwithstanding that 412-1/2 grains of uncoined silver will to-day buy +as much of the leading articles of commerce as the coined gold dollar +would buy in 1873, yet the advocates of the gold standard characterize +it as a 72-cent dollar. Then the gold dollar of 1873 was a 72-cent +dollar. If the gold dollar of to-day be an honest and equitable dollar, +that of 1873, which was worth much less, was a swindling and dishonest +one; and if gold continues to advance as it has been advancing, and with +the declining output of that metal there is no reason why it should +not, it will be but a short time before any other kind of dollar whose +value may be equal to that of the present gold dollar will be +stigmatized as a swindling 72-cent dollar. There never was a dollar +coined that did not legally and practically contain 100 cents. But the +creditors stigmatize a dollar of the value of the gold and silver dollar +of 1873 as a 72-cent dollar. May not the debtors, with much more +propriety, denounce the gold dollar of to-day as a 140-cent dollar? + +According to the admissions of the royal commission of England, the gold +dollar of to-day is to the producers of this country, measured by their +products, already at a premium of between 30 and 40 per cent. over the +gold dollar of 1873. The advocates of the gold standard have no sympathy +with our farmers and manufacturers who have to pay, in commodities, a +premium of 30 to 40 per cent. on gold, to meet their engagements, but +express extreme anxiety at the bare possibility that a few importers +might have to pay even a small premium in any form. They insist that the +money system of a population of 65,000,000, shall, like an inverted +pyramid, be made to rest upon its apex in order to enable a few +importers, most of whom are residents of foreign countries, to make +their payments abroad in gold. + +Verily, Mr. President, the single gold standard is an expensive luxury +for our people to maintain. + +Those who deride silver as a money-metal indulge in feeble attempts at +sarcasm by inquiring why we do not advocate the use of tin and brass as +money. They speak and write as though the idea of using silver as money +were a recent discovery or invention of people engaged in silver mining. +They also ignore the fact that the standard silver dollar of the United +States, which, with much satisfaction, they stigmatize as a 72-cent +dollar, requires a gold dollar to obtain it. It is worth a gold dollar +in London, in Berlin, in Vienna, in Saint Petersburg, in Madrid, in +Havana, and in all countries having commercial relations with the United +States. It can at once be exchanged into the money of any country with +only the slight deduction of cost of shipment to this country--as is the +case in the United States with notes of the Bank of England, which are +redeemable in gold. + +Our silver dollar is not money in foreign countries--and it is to our +advantage that it is not--for were it money anywhere else than in this +country, we could not rely on its remaining here to maintain that +steadiness of prices indispensable to prosperity. But if any of our +silver dollars are found abroad, let no one suppose he can get them by +tendering 412-1/2 grains of silver bullion for each dollar. He will find +it will cost him precisely as much gold as it passes for in the United +States. + + +SOME EFFECTS OF THE RISE OF GOLD. + +If a cotton planter in 1873 owed $10,000 he could then have paid it with +60,975 pounds of cotton. To-day, by reason of the increased command +which gold has over commodities, it would take 101,010 pounds of cotton +to pay that $10,000; not withstanding that the money in which the debtor +has paid the interest has each year become more valuable than it was at +the time he contracted to pay it. + +The cotton manufacturer of the East who in 1873 owed $10,000 could then +have paid it with 70,422 yards of uncolored cotton cloth; to-day owing +to the rise in the value of gold it would require 147,059 yards to pay +that debt, without taking into account the amount lost by the debtor in +the greater sacrifice he had year by year to make to pay the interest. + +The farmer of the North and West who in 1873 owed $10,000 could then +have paid it with 8,733 bushels of wheat; to-day it would require 11,446 +bushels of wheat to liquidate that debt, though he, too, has year by +year been "cinched" through the progressive increase in the value of the +money in which the interest has been paid. Or he could, in 1873, have +paid his debt with 1,514 barrels of flour; to-day it would take 2,126 +barrels of flour to pay the same debt. + +The property of the country is fast passing into the hands of the +creditors, and if the iniquitous system is not reversed the condition +of our American farmers will be that of the farmers of gold-standard +countries. Instead of owning their farms they will be tenants and +rent-payers--a condition but little in advance of that which prevailed +in feudal days. + +Machiavelli, describing a turbulent period in the history of Florence, +said: + + The people perished, but the brigands throve. + +The brigandage of the Middle Ages, whether in Italy or elsewhere, was a +criminal defiance of law, but it was pursued at some risk, and under +manifest disadvantages. The brigand took his life in his hands. He knew +that his calling was unlawful; and, although ruthless in his work, the +method by which he exacted ransom of his occasional victim was less +destructive to the prosperity of the community than the legalized +brigandage of to-day by which, through a vicious system of money, the +great mass of the people are despoiled of their property. The +distinguishing characteristic of the brigandage of the nineteenth +century is that it scrupulously observes all legal forms, and is +conducted in the name of honor, honesty, good morals and "sound +finance." Mortgages are foreclosed only in accordance with law, and the +unearned increment which results from the increased and increasing value +of the money is transferred from the debtor to the creditor, with +punctilious regard for the statutes. + +The demands of the brigand were enforced with guns and pistols; those of +the creditor are enforced with bonds and mortgages; both exactions cruel +and unjust, one by violence, the other by law. But, in the latter case, +so indirect is the method of operation that many of those who are +benefited by it are unaware of the perpetration of any wrong. So subtle +is the process that the change seems to be only a change in the price of +commodities, and thousands of men who would scorn consciously to exact +from any one more than a just return for money loaned are beneficiaries +of this vicious and ruinous system. + +With regard to the great body of the working masses it is sometimes said +they have no cause for complaint, that their condition now is better +than ever before. + +But, Mr. President, it is not enough that men are better off than they +have been. When we reflect that nine-tenths of the inventions and +improvements constituting all the material features of the civilization +of this century have been made by working men, it is manifest that they +are entitled to much more of the comforts and convenience of life than +are now accessible to them. By watchful, repeated, and aggressive +efforts through their trade organizations, the working men in many +branches have been enabled to keep wages from sinking, and occasionally +to secure an advance; but, during a period of falling prices, what is +gained in this way by those who are kept at work is lost to the working +class as a whole by the remission to idleness of part of their number. + +The statisticians who seem to be employed by some propaganda to prove +by figures that prosperity prevails, point exultantly to the fact that +the wages of the working people seem constantly to have increased while +prices are falling, and they cite this to prove that low prices are +consistent with prosperity. They leave entirely out of the account the +large numbers of workmen who of necessity are relegated to idleness on +account of the lack of profit in business. + +If you go into the workshops of any large manufacturing enterprise, +while prices are low and lowering, and ask the managers what they now do +when a strike occurs among the workmen, they will tell you they find it +impossible to shut down, because they have contracts extending through +time that they must fill, but, they add, "We pay the wages demanded and +we reduce the number of the employed." + +If there are a thousand workmen employed, getting $2 each per day, that +would be a wage fund of $2,000 a day. If, when prices fall and business +becomes dull, the employer should want to reduce the pay of each workman +to $1.50 a day, and if the workmen, by striking, should prevent that +decrease, and if, then, 25 per cent. of their number should be +discharged, the loss to the working class, as a body, and to the +community at large, would be the same as though the wages were reduced +to $1.50 a day. Until these people who present statistics can show us +how many laborers are left out of employment there is no possibility of +arriving at any correct conclusion as to what the wage fund is and how +much wages are paid. + +The loss to society is much greater when 25 per cent. of the people are +unemployed than if all continued at work upon a 25 per cent. reduction +of wages, because the relegation to idleness of 25 per cent. of the +workmen reduces the producing force, and lessens correspondingly the +aggregate annual production. + + +THE INTEREST OF THE MINING STATES IN THE REMONETIZATION OF SILVER. + +Those who in the Senate and in the other House of Congress, represent +mining constituencies are taunted with the selfish purpose of advancing +the interests of their own States at the expense of those of the +country. It is sought to discredit the State which I have the honor in +part to represent on this floor, on the ground that the people, being +largely silver miners, have a personal interest in the remonetization of +silver. + +The silver miners, Mr. President, need no defense here or elsewhere. +They have asked no favors from the Government, and ask none now. They +are bold, adventurous, and self-reliant men, who have wandered across +alkaline deserts, and over pathless mountains, braved the assaults of +hostile savages, the miasma of the Isthmus and the storms of the Cape, +and have planted the flag of a high civilization on the western confines +of this Republic. No more patriotic or public-spirited class of citizens +can be found within the borders of the Union. Their business is an +honorable one. When they entered upon it they, in common with other +citizens, had the warrant of time, and the authority of all writers and +thinkers on political economy, for the belief that silver was, and would +ever be, a money metal, entitled to that full credit which from time +immemorial had been accorded to it. Silver, equally with gold, had been +consecrated by all the ages to the money use, and was dedicated to such +use by the Constitution of the United States. + +When the Constitution declared that Congress should have power "to coin +money and regulate the value thereof" and that "no State shall * * * +make anything but gold and silver coin a tender in payment of debts," it +warranted the belief on the part of all who adopted the calling and +undertook the business of mining, that gold and silver would continue +to be money metals in the sense in which they had been for thousands of +years in the past. The silver miners were warranted in presuming that +when the Constitution esteemed so highly the legal-tender function in +the two metals, gold and silver, as that it prohibited the States from +making anything a legal tender except coin of those two metals, it would +not warrant the Congress of the United States in taking from one of +those metals the power of legal tender and conferring that imperial +function exclusively on the other. Silver mining is a business requiring +for its successful prosecution skill, experience, and energy, while +nine-tenths of the gold of the world has come from placers; requiring +neither organization, capital, nor skilled labor. + +The production of gold is much more a matter of accident and much more +liable to fluctuation than is the case with silver. The silver miners +therefore had a right to believe that so long as 23.22 grains of pure +gold should be entitled to recognition as one dollar, 371.25 grains of +pure silver would continue to be entitled to like recognition as one +dollar, and would possess the legal-tender function as such, for the +liquidation of all debts, public and private. On the strength of this +warranty of the Constitution, and of the unbroken experience of the +ages, large sums of money were invested in mining property and in the +employment of labor to develop the mines of the country. On the strength +of this belief and conviction, shared in by all the people of the United +States, that gold and silver would both remain the money metals of the +world, debts to an enormous extent were incurred, and it was confidently +believed that both metals would for all time be available for the +payment of those debts. + +The silver-miners had learned from the history of mining, as well as +from hard and bitter experience, that the mines might at any moment +cease to yield, in which case their occupation would be gone and the +capital invested would be a total loss. But they did not suppose that +the verdict of all time would be reversed, or that the implied warranty +of the Constitution of the United States would be disregarded. They did +not believe that either one of the money metals would ever be +demonetized. And if a doubt had entered their minds on that subject, +they would naturally suppose that gold rather than silver would be +demonetized, gold being too limited in quantity to answer alone the +purposes of money in a rapidly advancing civilization; its yield being +uncertain and capricious and the prospect of a continued and sufficient +supply becoming less from year to year. + +But, Mr. President, the degree of special interest which the mining +States have in this measure is not to be compared with that of the other +States of the Union. + +According to the report of the Director of the Mint, the total quantity +of silver produced in the United States in the eleven years from 1878 to +1888 inclusive was 406,210,000 fine ounces. According to the same +authority the commercial value of that silver was $436,260,000, and the +coinage value $525,145,000. A very simple process of arithmetic shows +that the difference between the commercial and the coinage value of that +silver was $88,885,000, or an average of $8,080,544 each year. Assuming +that amount to have been the annual difference between the coinage and +commercial value of silver for the five years preceding 1878, we must +add to the $88,885,000 the sum of $40,402,220, making a total of +$129,287,220 as the amount which the silver miners, not of Nevada but of +the whole United States in the seventeen years ending 1889, lost by the +demonetization of silver. + +Having thus demonstrated in dollars and cents the degree of selfishness +which, as is charged, is the motive of the miners in advocating the +remonetization of silver, let us glance at the degree of selfishness +which may be said to impel other classes of the community to advocate +the same cause. + + +THE INTEREST OF THE NON-MINING STATES IN REMONETIZATION. + +The price of cotton for the year 1873, in gold or silver (then of equal +power), was 16.4 cents per pound. The price in 1889 was 9.9 cents. + +The yield of cotton for 1889 was 7,000,000 bales, or 3,500,000,000 +pounds. + +Had not silver been demonetized that cotton would have brought as good a +price to-day as it did in 1873. At the price of 1873 the account would +have stood 3,500,000,000 pounds, at 16.4 cents, $574,000,000. At the +price of 1889 the account stands 3,500,000,000 pounds, at 9.9 cents, +$345,500,000, showing a loss in debt-paying and tax-paying power on +cotton alone (only one article of merchandise) in the single year 1889, +by reason of the fall in prices caused by the demonetization of silver, +of $227,500,000. + +Having shown that the loss to the silver miners by the discount on +silver for the seventeen years from 1873 to 1889 was less than +$130,000,000, it will be seen that the loss in one single year to the +cotton planters of the United States is greater by $90,000,000 than the +total loss for the entire seventeen years to the silver miners of the +country. + +But inasmuch as the cotton crop of 1889 was exceptionally large, I will, +for the purpose of my computation, discard it, and assume instead that +an average yield for the years between 1873 and 1889 would be 5,000,000 +bales per annum--which is a fair average and by no means high--5,000,000 +bales, of 500 pounds each, are equal to 2,500,000,000 pounds. + +At the price of 1873 the result of each year would be 2,500,000,000 +pounds, at 16.4 cents, $410,000,000. + +According to the figures given by the Bureau of Statistics the average +price received each year of the seventeen was 13.1 cents per pound; +2,500,000,000 pounds, at 13.1 cents per pound, equal $327,000,000, +showing a difference of $83,000,000; that being the average each +separate year for seventeen years, or a total sum for the entire period +of $1,411,000,000, which represents the loss in debt- and tax-paying +power suffered by the cotton planters by reason of the demonetization of +silver. + +This is the enormous tribute which has been exacted of the cotton +industry of this country in behalf of the gold "standard," and of those +who, for their own pecuniary advantage, cunningly induced the Congress +of the United States to demonetize silver. This is the sum which the +planters of this country have lost in debt-paying and tax-paying power +by that mad act of folly. As will be seen at a glance, it is a loss +vastly in excess of that suffered by the silver States in the discount +on the price of silver bullion. + +So that, if the silver miners are taunted with having a personal +interest in the success of the movement for the full remonetization of +silver, the cotton planter must be placed in the same category, and with +ten-fold more reason. + +A like computation with regard to wheat will show a loss in debt-paying +and tax-paying power of not less than $100,000,000 a year to the farmers +of the North and West, by reason of the demonetization of silver--a +total of $1,700,000,000 in the article of wheat alone in seventeen +years. + +Thus a loss, wholly unnecessary, of more than $3,000,000,000 in +debt-paying and tax-paying power is shown to have been inflicted on the +farmers and cotton planters of this country. + +In comparison with this enormous loss to farmers and planters, how +paltry is the loss of $8,000,000 a year suffered by the silver miners. + +But, however large the direct loss to the debtors and to the country by +reason of falling prices, the losses that are indirect are of infinitely +greater magnitude, and stand out like a great mountain of wrong +superimposed upon the most deserving class in the community, whose +interests it should be the paramount duty of Government to protect, a +wrong more calamitous in its consequences than any of the multitudinous +wrongs which a shrinking volume of money inflicts upon society. + + +THE ENORMOUS LOSS OF POTENTIAL WEALTH THROUGH INVOLUNTARY IDLENESS. + +The political economist, Mr. President, deals with property _in esse_, +and producers employed. I propose for a moment to deal with property _in +posse_ and producers unemployed. The wealth which the political +economist discusses is realized wealth; that to which I now briefly +invite your serious consideration is the wealth that might be, and would +be, brought into existence were the energies of all the people utilized. +For, while it has attracted but little attention from writers on +economic science, it will be found upon examination that the +non-employment of its members is incomparably the greatest loss which an +increase in the value of money and the consequent disorganization of +industry inflicts on society. + +The great writers and thinkers on economic subjects discuss with care +the elements that enter into the production and distribution of wealth. +They follow in detail the manufactured article through all its stages, +from the crude material to the finished product; and, when completed, +they conduct it through the intricate channels by which it reaches the +hands of the consumer. The greatest consideration is bestowed upon the +labor employed and the wealth resulting therefrom, but scarcely any +thought is given to the immeasurable mass of potential wealth not +produced, but lying latent in the brains and hands of the millions who +are condemned to involuntary idleness. + +While no mere sum in arithmetic can represent the enormous loss suffered +by a nation through this cause, let us see whether we can arrive by +figures at an approximate conception, at least, of the loss of wages +which it entails upon the working masses, and the corresponding loss of +wealth to the country. + +The most thorough and painstaking investigation into the conditions of +labor in this country has been that which for many years has been +conducted by the Massachusetts Bureau of Labor. Its work has been +universally admitted to be free from bias, and devoid of all attempt to +establish any special hobby, or to force, by figures, the proof of any +preconceived theory. + + +SOME STATISTICS OF THE UNEMPLOYED. + +An examination of the work of that bureau shows that, in 1887, there +were 816,470 persons engaged in wage earning in the State of +Massachusetts. Of those, 241,589, or nearly 30 per cent., were idle +during some part of the year--ranging from one to six or more months. +The average of their unemployed time was about four months, or one-third +of the year. + +Now, 240,000 people idle for one-third of their whole time is +equivalent, in money loss, to the total idleness of one-third of that +number, or 80,000 people, for the entire year. The whole number of +persons enrolled for labor in the State being 816,470, this is +equivalent to the total idleness of one-tenth of the people engaged in +all occupations. + +If a number equivalent to one-tenth of the people in all occupations are +idle twelve months in the year in a State like Massachusetts, where +labor is better organized, better classified, and more efficiently +ordered than elsewhere in this country, it can not be presumed that any +other State of the Union will exhibit a smaller proportion of unemployed +laborers. + +The Census Report of 1880 states the number of persons employed in all +occupations as 17,392,099, out of a population of 50,155,783, or a +percentage of 34.68 of the entire population. Our present population +being not less than 65,000,000, if we assume, as we are warranted in +doing, that a like proportion of the population is engaged in +occupations of all sorts, it is clear that we have to-day a working +population of 22,254,000 persons. + +Accepting as correct the careful deductions from the Reports of the +Massachusetts Bureau of Labor that a number equivalent to ten per cent. +of the people are always out of employment we find that at the present +time there are 2,250,000 persons involuntarily idle in this country. How +faintly does the term "the army of the unemployed" describe this vast +number of eager and willing men seeking in vain the opportunity to earn +a livelihood for themselves and families. + +Were the business of the country in the active condition in which it +could not avoid being if our money system were perfectly adjusted to +industry, and if employers were competing for laborers with the same +degree of eagerness that laborers are competing for employment, the +average wage of a day for a working man would not be less than $2. This +would make but the moderate sum of $50 a month for each workman, which, +under the most thrifty system of household economy, can not be +considered more than enough for the support of an American family. + + +THE WAGE LOSS FROM INVOLUNTARY IDLENESS. + +By multiplying the number of persons thus shown to be idle, by this +moderate average wage, we arrive at the amount of $4,500,000 as the +daily sum which is lost to the wage earners of the United States by the +non-employment of labor. This is a money loss of $27,000,000 a week, +$117,000,000 a month, or the amazing sum of $1,404,000,000 a year. A +saving of this sum for a year and three months would pay our entire +national debt. This being the loss in a single year, we can imagine +(making due allowance for difference in the numbers of the population) +how stupendous has been the loss to the nation during the past seventeen +years, a loss exceeding incomparably all other losses whatsoever. + +If a crop of wheat be lost, it is appropriately noted as a public +misfortune; if a city be burned down, or swept away by flood, it is +properly regarded as a great national calamity, and the sympathies of +all the people go out in unstinted measure to the sufferers. But here is +a loss as real and as deplorable as any ever caused by flood or fire--a +loss whose consequences, while not so apparent, are as destructive to +national prosperity as the burning of ten cities, or the occurrence of +one hundred and forty Johnstown disasters every year, and always to the +people who can least afford it. Yet it passes almost wholly unheeded +except by the sufferers. + +A war that would take a million of men from industry and deprive the +country of the production which would result from their labors, would +be regarded as a calamity of unsurpassable magnitude, yet a shrinkage in +the volume of money relatively to population withdraws much more than +that number from productive pursuits, and without the salutary +discipline and restraints of military life, subjects them to conditions +of which the unavoidable results are poverty and crime. + +Imagine, Mr. President, the unhappiness, discontent, and even despair +implied in the mere statement that 2,000,000 men are constantly out of +employment; (or, what amounts to the same thing, that three times that +number are idle for four months in the year!) Imagine, what it means to +the working people of this country to be deprived of the enormous sum of +$1,400,000,000 a year. + +But, aside from the effect on the individual, what benumbing +consequences are entailed upon the nation by the idleness of so large a +number of its people. The loss of the wealth which the labor of those +men might have created is a loss never to be retrieved. When the money +volume of a country is sufficient to keep prices from falling, and thus +to encourage capital to seek productive enterprises, in which labor is +employed, every willing man is kept at work, and no country can enjoy +any higher degree of prosperity than when all its people are employed, +and the products of their labor equitably distributed. + +Much, I believe, of the prejudice against silver money arises from an +idea, conscientiously entertained, by many, that gold money has the +greater "intrinsic value." I shall, therefore, Mr. President, at the +risk of being a little abstruse, discuss that point. + + +THE MEANING OF VALUE. + +No discussion of the subject of money can be intelligently conducted +without a correct conception of the meanings attaching to the terms +employed. For a misconception of those meanings is the root of much of +the confusion and difficulty by which the subject is surrounded. + +"Value" is a word which, of necessity, is more frequently used--and, I +will add, more frequently misused and misunderstood--than any other +employed in the discussion of economic science. Volumes have been +written upon it, and yet, from the daily misapplication of the word in +leading magazines and newspapers, it is evident that its meaning is very +imperfectly understood. + +The idea involved in the word "Value" is so broad and pervasive that +within the limits of a speech it would be impossible to discuss it in +all its bearings. I shall not, therefore, at this time, do more than +present what I conceive to be a basic definition of it. + +Value is human estimation placed upon desirable objects whose quantity +is limited, and whose acquisition involves sacrifice. In order that an +object may have value it must not only be the subject of human desire, +but there must be a limitation of its quantity, and its acquisition must +demand a sacrifice from him who would obtain it. The term "intrinsic +value" is used by many writers with a total disregard of the idea +involved in the word _value_. An article may have estimable qualities +that are intrinsic, but no article whatever can have intrinsic value. +Its "value" is the mental estimation of its qualities, as modified by +the limitations of its quantity and the amount of sacrifice necessary to +obtain it. In other words, value is subjective, not objective. In +economic discussion, however, value is treated as though it resided in +the object, rather than in the mind, and while, for convenience, I may +occasionally use it in that sense, it is important to bear in mind the +distinction. + +In that acceptation, value is usually divided into value-in-use, and +value-in-exchange. Certain esteemed qualities of an object may make it +of great value-in-use; but unless its acquisition demand sacrifice, it +can have no value-in-exchange. It is only with this class of value that +economists deal. No matter how important the intrinsic qualities of any +article may be, if there be no limitation of its quantity and its +acquisition requires no sacrifice, it can have no value in the sense in +which the word "value" is used in political economy. The air has +qualities inestimable to mankind; it must be regarded as incomparably +the most useful of all the objects of human desire; yet it has no value +because there is no limitation of its quantity. By reason of its +universality and accessibility, air requires no sacrifice to get it. If, +however, circumstances should render air limited in quantity it is +conceivable that it might become of surpassing value. A man confined in +the "Black Hole" of Calcutta would give a fortune for free access to +air. So water, where freely obtainable, without sacrifice, although +indispensable to life, has no value in the economic sense--no value in +exchange. But when not so obtainable, as in populous cities, where +sacrifice of time and labor would be necessary to obtain it from river, +lake, or spring, people pay for the convenience of having it in their +homes. The indispensable prerequisites of value in all objects are +utility--either actual or attributed--combined with limitation of +quantity and the sacrifice necessary to be made in order to obtain it. + +But value is not a property inhering in any article itself. It is not +intrinsic. If the value were inherent or intrinsic it could not be taken +away. + +To illustrate: A generation ago the cradle with which wheat was +harvested was said to possess intrinsic value. It was undoubtedly one of +the most useful of all the articles needed by man. All that was then in +that machine is in it still, yet the value is gone. Had the value been +something that was intrinsic, had it resided in the object, and not in +the mind, that cradle would still be worth all that it ever was. So, on +the other hand, an article may possess most estimable qualities, but if +those qualities are not known or recognized by the human mind the +article will have no value. + +A few years ago cotton seed had no value as an article of general +commerce. To-day it is exceedingly valuable, because it has been found +to possess estimable qualities not before suspected. + +Indeed so strongly does the idea of value rest upon the estimation of +the mind that it is not even necessary for an article to possess in +reality any desirable quality whatever in order to have value. It will +be sufficient if such quality is popularly attributed to it. Numbers of +instances could be cited in which there was present no element of value +except limitation of quantity, added to a mere belief, or conception of +the mind, that the article had desirable qualities. Many will remember +that a few years ago a herb called "Cundurango" was introduced into this +country from Central America. It was generally believed to possess +healing qualities in cases of cancer, and so came to have great value. +As soon as this popular illusion was dispelled the article ceased to +have even the slightest value. + +Land being indestructible and irremovable, is believed to be the +embodiment of the idea of intrinsic value. Take, then, a lot on Madison +Avenue, New York; it is worth perhaps a thousand times as much as a lot +of equal size in a village remote from the city. What proportion of its +high price is derived from what is called its greater "intrinsic" +value? A lot on that fashionable thoroughfare has no intrinsic +attribute, or quality, that is not equally the attribute or quality of +the village lot. The difference in its value, or, more correctly, the +difference in the estimation in which it is held, as compared with that +attaching to the village lot, is derived wholly from circumstances that +are extrinsic, not from qualities that are intrinsic. + +The action of society in utilizing land in the neighborhood of the city +lot by building up around it gives that lot a value greater than one of +equal size elsewhere. + +But in order that a thing may subserve a useful or beneficent purpose it +is not necessary that the quality which enables it to subserve that +purpose should be intrinsic or inherent in the thing itself. + +To apply this reasoning to the subject under discussion--whatever +intrinsic qualities the metal, gold, may possess, they confer no force +whatever on gold-money. + + +WHAT IS MONEY? + +The money of a country is that thing, whatever it may be, which is +commonly accepted in exchange for labor or property and in payment of +debts, whether so accepted by force of law, or by universal consent. Its +value does not arise from the intrinsic qualities which the material of +which it is made may possess, but depends entirely on the extrinsic +qualities which law, or general consent, may confer. + +Money is of transcendent importance to civilization. It is the physical +agency to which society has assigned the function of measuring all +equities, and it is the sole agency upon which that incomparable +function has been conferred. It is in terms of money that society +computes the material value of all human sacrifice, alike the highest +effort of genius and the daily toil and sweat of the millions who labor. + +In order to measure equitably the natural and inevitable mutations in +the value of other things, money should itself be of unchanging value. +That is to say, any given amount of money should, so far as human +foresight can regulate it, require at all times an equal amount of +sacrifice for its acquisition. Thus, in the case of a contract made +to-day, requiring the payment of a dollar twelve months hence, that +dollar when due should exact from the debtor precisely that amount of +sacrifice, and no more, which would be required had he paid the debt the +day after contracting it. + +No one will deny that the most important quality that money can possess +is that it shall truthfully measure and state equities. + +As I have shown by the figures heretofore cited, gold has risen in value +between 30 and 40 per cent. since the demonetization of silver. It is +not therefore so faithful a measure of value as is silver, which as +illustrated by a variety of examples, has maintained almost undisturbed +its relation to commodities. + + +THE VALUE OF MONEY, AS SUCH, NOT IN THE MATERIAL BUT IN THE STAMP. MONEY +IS AN ORDER FOR PROPERTY AND SERVICES. + +The logic of the situation, and the reasoning of all the leading +authorities on money, lead irresistibly to the conclusion that its value +does not reside in the material, but in the stamp; in other words, on +the legal-tender function impressed on that material. It is an order for +property and services. + +Aristotle, writing of money, says: + + Money by itself * * * has value only by law, and not by nature; + so that a change of convention between those who use it is + sufficient to deprive it of all its value and power to satisfy + all our wants. + +And again he says: + + But with regard to a future exchange (if we want nothing at + present) money is, as it were, our security that it may take + place when we do want something. + +John Locke, in "Considerations," etc., regarding money, published in +1691, says: + + Mankind, having covenanted to put an imaginary value upon gold + and silver, by reason of their durableness scarcity, and not + being very liable to be counterfeited, have made them, by general + consent, the common pledges, whereby men are assured, in exchange + for them, to receive equally valuable things to those they parted + with, for any quantity of those metals; by which means it comes + to pass that the intrinsic value regard in those metals, made the + common barter, is nothing but the quantity which men give or + receive of them; they having, as money, no other value but as + pledges to procure what one wants or desires. + +Baudeau, reputed one of the most eminent of an early school of French +economists, says: + + Coined money in circulation is nothing, as I have said elsewhere, + but effective titles on the general mass of useful and agreeable + enjoyment which cause the well-being and propagation of the human + race. + + It is a kind of a bill of exchange, or order payable at the will + of the bearer. + +Adam Smith says: + + A guinea may be considered as a bill for a certain quantity + of necessaries and conveniences upon all the tradesmen in the + neighborhood. + +Jevons's "Money and Exchanges," chapter 8, says: + + Those who use coins in ordinary business need never inquire how + much metal they contain. Probably not one person in two thousand + in this kingdom knows, or need know, that a sovereign should + contain 123.27447 grains of standard gold. + + Money is made to go. People want coin, not to keep in their own + pockets, but to pass it off into their neighbors' pockets. + +Henry Thornton, in his work on Paper Credit, says: + + Money of every kind is an order for goods. It is so considered by + the laborer, when he receives it, and it is almost instantly + turned into money's worth. It is merely in instrument by which + the purchasable stock of the country is distributed with + convenience and advantage among the several members of the + community. + +John Stuart Mill says: + + The pounds or shillings which a person receives are a sort of + ticket or order which he can present for payment at any shop he + pleases, and which entitle him to receive a certain value of any + commodity that he makes choice. + +McLeod, Elements of Banking, Chapter I, says: + + When persons take a piece of money in exchange for services, or + products, they can neither eat it, nor drink it, nor clothe + themselves with it. The only reason why they take it is, because + they believe they can exchange it away whenever they please for + other things which they require. + +On that view of money McLeod feels justified in styling it credit, and +he quotes in support of such a use of the term credit, Burke's +description of gold and silver as "the two great recognized species that +represent the lasting conventional credit of mankind." + +Prof. Francis A. Walker, Money, Trade, etc., page 25, speaking of carved +pebbles, glass beads, shells and red feathers, used as money in certain +countries at certain times, says: + + They were good money, though serving no purpose but ornament and + decoration. They were desired by the community in general; men + would give for them the fruits of their labor, knowing that with + them they could obtain most conveniently in time, in form, and in + amount, the fruits of the labor of others. + +On page 30 he says: + + Men take money with the expectation of parting with it; this is + the use to which they mean to put it. + +Again, Mr. Walker says: + + Money is that which passes freely from hand to hand throughout + the community, in final discharge of debts and full payment for + commodities, being accepted equally without reference to the + character or credit of the person who offers it, and without the + intention of the person who receives it to consume it, or enjoy + it, or apply it to any other use than, in turn, to tender it to + others in discharge of debts or payment for commodities. + +Even Bonamy Price, who is wedded to the gold standard, in his Principles +of Currency, says: + + Gold, in the form of money or coin, is not sought for its own + sake, as an article of consumption. It must never be regarded as + valuable except for the work it performs, so long as it remains + in the state of coin. It can be converted at pleasure into an + end, into an article of consumption, by being sold; till then it + is a mere tool. + +How many people ever so "convert" it that earn it? + +The great philosopher, Bishop Berkeley, one of the most acute reasoners, +in my judgment, that modern times have produced, in the "Querist," +published in 1710, propounds the following pertinent and suggestive +questions: + + Whether the terms "crown," "livre," "pound sterling," etc., are + not to be considered as exponents, or denominations? And whether + gold, silver, and paper are not tickets or counters for + reckoning, recording, or transferring such denominations? + Whether, the denominations being retained, although the bullion + were gone, things might not nevertheless be rated, bought, and + sold, industry promoted and a circulation of commerce obtained? + +Dugald Stewart, professor of moral philosophy in the University of +Edinburgh, in his Lectures on Political Economy (Part I, Book II), said: + + When gold is converted into coin, its possessor never thinks of + anything but its exchangeable value, or supposes a coffer of + guineas to be more valuable because they are capable of being + transferred into a service of plate for his own use. Why then + should we suppose that, if the intrinsic value of gold and silver + were completely annihilated, they might not still perform, as + well as now, all the functions of money, supposing them to retain + all those recommendations (durability, divisibility, etc.) + formerly stated, which give them so decided a superiority over + everything else which could be employed for the same purpose. + + Supposing the supply of the precious metals at present afforded + by the mines to fail entirely the world over, there can be little + doubt that all the plate now in existence would be gradually + converted into money, and gold and silver would soon cease to be + employed in the ornamental arts. In this case a few years would + obliterate entirely all trace of the intrinsic value of these + metals, while their value would be understood to arise from those + characteristical qualities (divisibility, durability, etc.) which + recommend them as media of exchange. I see no reason why gold and + silver should not have maintained their value as money, if they + had been applicable to no other purposes than to serve as money. + I am therefore disposed to think, with Bishop Berkeley, whether + the true idea of money, as such, be not altogether that of a + ticket or counter. + +Appleton's Cyclopedia, defining money, says: + + Anything which freely circulates from hand to hand, as a common + acceptable medium of exchange in any country, is in such country + money, even though it ceases to be such, or to possess any value + in passing into another country. In a word, an article is + determined to be money by reason of the performance by it of + certain functions, without regard to its form or substance. + + +BASTIAT'S DESCRIPTION OF THE CROWN PIECE. + +Bastiat, in his "Harmonies Economiques," describing money, used the +following illustration: + + You have a crown piece. What does it mean in your hands? If you + can read with the eye of the mind the inscription it bears, you + can distinctly see these words: Pay to the bearer a service + equivalent to that which he has rendered to society. Value + received and stated, proved and measured by that which in on me. + +No words could more correctly describe the unit in a properly regulated +system of money. And notwithstanding the attempt to discredit silver +coinage, no piece of money, as I have already shown, would better +answer, by its steadiness of value, this description of Bastiat's than +would the American silver dollar if silver were remonetized. + +So far as it applied to gold Bastiat's description was much nearer +accuracy in his day than it is in ours. In his life-time the mints of +France and of the Continent were open for the coinage of silver equally +with gold, and the money supply of the world was not constantly +narrowing by being limited to the yield of a single metal whose annual +output would hardly more than meet the demand for the arts. + +Were Bastiat alive at this time he would reform his description so as to +make it read as follows: "You have an American gold piece. You have had +it hoarded in a bank vault for fifteen years. What does it mean in your +hands? If you can read with the eye of the mind the inscription it +bears, you can distinctly see these words: 'Pay to the bearer 50 per +cent. more service than he has rendered to society; value not received +or stated on me, but resulting from a cunning manipulation of the law of +legal tender, through the influence of the holders of gold and of +obligations payable therein, and as a reward to the bearer for having +had this money hid away and for depriving society of its use for +seventeen years.'" + +When people are found everywhere working for money and not for the +things which they really need, it is clear that they are working for +money, not because of the material of which it is composed, but because +it is an order for property which they can at any time obtain by parting +with the money. To modify and elaborate Bastiat's description of the +crown piece, it might be said of the Money Unit of the United States +under a properly regulated system: + +"You have a dollar. What does it mean in your hands? If you can read +with the eye of the mind the inscription it bears, you can distinctly +see these words: To all to whom this may come: Greeting. This is a +dollar--a unit of money--part of the great instrumentality created by +society to effect the multitudinous exchanges of property and services +among men. The amount of its command is constant, because the increase +in the volume of money is regulated by the sovereign authority of the +nation, with strict regard to the increase of population and +demand--hence the value of this unit remains unchanging through time. It +is an order for all property on sale, and all services for hire; the +proportionate amount of such property and service to which its possessor +is entitled being fixed by the universal competition to get it." + + +GRESHAM'S LAW. + +Many persons fear an outflow of gold from the operation of what is known +as "Gresham's law," namely, that "bad money will expel good." Sir Thomas +Gresham, a financier of Elizabeth's time, stated that if a number of +the gold or silver coins of any given denomination were deprived of part +of their pure metal, and so made cheaper than the remainder, a +successful circulation of the coins thus deprived would result in the +melting up or exportation of the coins of standard weight. Writing of +this, Mr. Jevons ("Money and the Mechanism of Exchange," American +edition, page 84) says: + + Gresham's remarks concerning the inability of good money to drive + out bad only referred to moneys of one kind of metal. * * * The + people, as a general rule, do not reject the better, but pass from + hand to hand indifferently the heavy and the light coins, because + their only use for the coin is as a medium of exchange. It is + those who are going to melt, export, hoard, or dissolve the coins + of the realm, or convert them into jewelry and gold leaf, who + carefully select for their purposes the new heavy coins-- + +and avoid the light or abraded coins. + +There is, however, a theorem which applies to all money, but which was +recognized long before Gresham's time--although it has been erroneously +called an "extension" of the law or theorem of Gresham. + +That theorem is this: If, in any country, there are two forms of money, +each of which is a full legal tender, and one of which can be obtained +with less sacrifice than the other, the one requiring the least +sacrifice will be the cheaper, and if the unit of that cheaper money +will perform in every respect the same function in the payment of debts +and settlement of all obligations that can be performed by the dearer +money, then, for obvious reasons, the cheaper money will come into +universal use, and the dearer money will disappear. But it does not +follow that the cheaper money is bad money nor the dearer money good +money. + +The best money is always the money of the contract, that is to say a +money whose dollar, whatever it may be made of, is equal in value to the +dollar of the contract. If the money of the contract is the cheapest +money, then that is the best money, that is the honest money, and that +is the only tolerable money. + +If that be the sort of "cheap" money that drives out the dear money, +then manifestly the dear money is bad money. + +A distinguished official of the Government, who was before a committee +of this body the other day, insisted that the proposed Treasury notes +should be redeemed in the "best money." I asked him what was the "best +money." "Why," he said, "the money that is worth the most." Now, it +strikes me, Mr. President, that if you have borrowed a dollar, and, +through a badly regulated money-system, are made to pay a dollar worth +25 per cent. more than the dollar you borrowed, you are not paying the +best money, but the worst money; not an honest dollar, but a swindling +and dishonest dollar. + + +THE CREDITORS' DEMAND FOR THE "BEST MONEY." + +The creditors tell us that all they want is "good money." They and their +friends glibly insist that all obligations must be paid in "the best +money." This is the delicate and plausible euphemism resorted to in +order to gloss over and, if possible, hide from the world the odious and +repulsive fact that what the creditors always want is the _dearest_ +money--the money that costs the people the most sweat and toil to obtain +and which, as time passes, grows dearer and dearer. + +This cry for "the best money" is at last beginning to be recognized for +what it is--the cunning device of creditors to "catch the conscience" of +the people and play upon the sense of fairness that characterizes the +great mass of mankind. These interested parties affect to believe that +gold is, by nature, the only money metal, ignoring the fact that until +silver was displaced by hostile legislation it was, and for four +thousand years had been, the principal money metal of the world. But +they will no longer be permitted to hide their sinister purpose under +the cloak of a demand for the "best money." The masses of the people are +aroused on this subject and are beginning to understand it. + +According to all fair canons of construction the best money should be +and is a money of unchanging value, a money that exacts from the debtor +the same amount of sacrifice that he bargained for, and which is all +that the creditor is equitably entitled to receive. In other words, the +money of the contract, not a money whose exactions are increasing at the +rate of 2 per cent. per annum. As McCulloch says, debts being stated in +dollars and cents, it is not possible for the creditor openly to augment +his debtor's obligation by changing the figures of the debt. + +But, Mr. President, while they can not change the figures of the debt, +they are enabled, by a crafty manipulation of the money-volume, to do +that which, to the debtor, means the same thing; as the following story +will illustrate: + +A usurer of the coarser type had lent $10,000 on a neighboring farm, for +which amount he took the farmer's note, secured by a mortgage on the +property. He coveted the farm, and in his anxiety to secure it took his +banker into his confidence. He informed the banker that he wanted to get +possession of this farm, but it would bring $15,000 under the hammer, +and he did not care to pay so much for it. "I have a subtle chemical," +said he, "by which I can obliterate from the note and mortgage all trace +of the rightful amount ($10,000), and that done, I can insert $15,000. +Then, with the genuine signatures on the note and mortgage I can bring +suit, and as the farm will not bring more than the face of the note, I +shall succeed to the property." + +His friend, the banker, however, advised against this course, which he +characterized as not only dishonest, but vulgar, and as subjecting the +perpetrator of the act to serious penalties. "Honesty" said the banker, +"is the best policy." "But," he continued, "I can suggest a plan by +which you may accomplish the same end without running counter to law, or +the views of society. Why not join our propaganda in advocacy of 'honest +money.' Gold is decreasing in quantity, and as the world has been +ransacked for it in vain, it is likely to continue decreasing. If we can +strike down the twin metal, silver, and devolve the entire money +function on gold, it will double the purchasing power of money. Then the +foreclosure of your mortgage will be sure to take your neighbor's farm, +and probably leave him in your debt besides. Instead of being punished +for this, you will receive the plaudits of the 'best society' for the +_finesse_ you have displayed and the firm stand you have taken in favor +of honest money, and you will take high rank among 'the wisest and most +conservative of our financiers.' If your neighbor makes any objection to +your action, you may be able to secure his incarceration as a lunatic, +but if not, he will come to be regarded in the community as a dishonest +'crank' who wishes to pay his debts in a depreciated money; for it is +the constant and assiduous care of our guild to teach that only the +dearest money, that which is the most difficult for the laborer, the +farmer, and the mechanic to get, is honest money, and the dearer it is +the more honest it is." + + +ALL MONEY SHOULD BE LEGAL TENDER. + +To be of the fullest service to civilization whatever medium is used to +do the work of money should have full money power; that is to say, it +should be a legal tender. It is not sufficient that it will satisfy the +demands of the Government for taxes. + +Whatever is given out by the Government in payment for services rendered +(and there is no other way by which payments can be made from the +Treasury) should carry with it to him who has rendered the service and +receives the payment, the absolute assurance that in any need, or in any +contingency, it will serve him as money. There is no other means by +which society can be saved from the effects of panics and monetary +crises. + +With a watchful and intelligent regulation of the money volume, and with +the legal tender function attached to everything that is in use as +money, and doing the money work, so that it will serve as a universal +solvent, panics will be impossible. Under present conditions when panics +come, credit money--money not endowed with the legal-tender function, +which, under ordinary circumstances, has always been accepted, is +refused, and thousands of millions of dollars' worth of property have +been confiscated by creditors, because of the scarcity of legal-tender +money. As time advances and the method of doing business on credit +becomes more and more extended, the more palpable it becomes that +society can preserve itself from these periodical convulsions only by +broadening, under proper regulation, the legal-tender basis on which, in +the ultimate analysis, all business rests. + + +MONEY A MEASURE OF VALUE. + +There is nothing upon which the prosperity and happiness of a people so +much depend as on the integrity of their measure of values. + +It is universally admitted that after the making of a contract requiring +future delivery of a specified number of pounds, bushels, or yards of +any commodity, it would be subversive of all equity and justice to +change the capacity of the measure constituting the foundation of the +contract. These measures, to be just, must remain unchanged. But how +infinitely more important is it that money, which is the measurer of all +other measures, should itself be unchanged? Of what avail is it that the +subordinate measures remain intact while this, the supreme measure, into +which all others are finally resolved, is constantly changing? Its +"value" is but another name for its purchasing or measuring power. In +the case of all time contracts, therefore, any change in the value of +money works a destruction of equity, and one of the first objects of +society should be to maintain and enforce equities at all times and in +all places. This, so far as money can effect it, can only be done by an +intelligent regulation of the volume in circulation. + +In a note to his edition of Adam Smith's "Wealth of Nations," (page 502) +Mr. J. R. McCulloch says: + + Money is not a mere commodity, it is also the standard or the + measure by which to estimate and compare the value of everything + else that is bought and sold, and if it be, as it undoubtedly is, + the duty of Government to adopt every practicable means for + rendering all foot-rules of the same length, and all bushels of + the same capacity, it is still more incumbent upon it to omit + nothing that may serve to render money, or the measure of value--a + measure which is undoubtedly of the greatest importance--uniform + or steady in its value. + +Though a measure of value, money is a much more complicated instrument +than a yard-stick, pound weight, or bushel. Were it not so, a child +could fix value with the same precision as an adult. + +As value resides in human estimation, it will frequently vary as to the +same object. An intending purchaser may have one notion of the value of +an article, an intending seller another. Money, therefore, is a measure +of value in the sense that it is a measure of the average human +judgment--from which results price. As Mr. McCulloch says, no means +known to science or art should be left untried to keep the value of +money unchanging. + +When a man promises to deliver money or makes any time contract, he +makes a mental calculation as to what amount of property, or of the +product of his labor, will enable him to meet his engagement. If he be a +farmer, raising wheat, there passes through his mind the sacrifice and +toil necessary to raise it, and the quantity he can raise; if a cotton +manufacturer the cost of spindles, of looms, and steam-engines; the +wages of labor and interest on plant. + +I knew a cotton manufacturer who wanted $10,000. His business was good. +He was sober, honest, and industrious; had a thorough knowledge of his +trade; managed his employes himself, and took the greatest pains to +conduct his business on the strictest business principles. He wanted the +money to make some improvements in his factory. He knew how many +spindles and looms he had; how much could be done with a pound of +cotton, how much it cost, and how much each spindle and loom would do. +He said to a capitalist, "I know all about cotton spinning and weaving, +and do not know anything about this thing called money, but I want +$10,000 of it." Said he, "My cloth is worth 10 cents a yard; it sells at +that rate in unlimited quantities by wholesale; nobody can make it any +cheaper; but I am not working a gold mine; I am not manufacturing +legal-tender paper money, and the only way I can get money is to swap my +cotton cloth for it. I will give you my note for 100,000 yards of cotton +cloth, which will be equal to $10,000, and will pay 2 inches a yard each +year as interest." + +This was satisfactory to the capitalist, and the note was made, signed, +and delivered accordingly, and the improvements were made in the +factory. + +During the year everything went smoothly; the spindles and looms worked +well, repairs to machinery were light; cotton had been bought at proper +rates; and no improved processes had been discovered or applied in the +production of cotton-cloth. There was no hitch in any direction. + +At the appointed time, the creditor called for his cloth. "I am ready," +said the debtor, "to pay the hundred thousand yards of cotton cloth, +with interest." When he came to measure it off, however, he was +astounded to find he was short. Some painful suspicions crossed his +mind. It seemed as though somebody had either robbed him of cloth, or +else he had not manufactured as much of it as he had supposed. There did +not seem to be so many yards of the cloth as there ought to be. He knew +he had used the same number of pounds of cotton that it had been his +custom to use for 100,000 yards of cloth and for 200,000 inches of cloth +in addition; still, there was no denying the fact of the shortage. + +He measured it again and again, and had finally to admit that he was +unable to keep his engagement. This was a source of great distress to +him. He could not sleep that night. But, the creditor being importunate, +the cotton manufacturer next morning borrowed enough cloth from the +proprietor of a neighboring factory and paid his obligation. But, not +understanding how his carefully made plans had failed, and in order to +avoid similar mistakes in the future, he had an examination made of the +yard-stick and found that instead of being 36 inches long the yard-stick +he had used was 40 inches. + +In talking the matter over with his neighbor, the cotton manufacturer +said: "I have been swindled; they 'rung in' on me a lengthened +yard-stick, by the measurement of which I have paid my debt, and I have +therefore paid in reality more than I contracted to pay." + +"Well," said the friend, "I do not see that you are any worse off than I +am. I borrowed as much as you did, and at the same time; but I agreed to +pay my debt in money, and gave my note for $10,000 with interest. The +increased command over cloth acquired by the dollars I have had to pay, +caused by the demonetization of silver, has juggled me out of as much +cloth as you have been juggled out of by the lengthened yard-stick. But +you have one recourse; you can put into the penitentiary the man who +'rung in' the lengthened yard-stick on you, while the increase in the +value of the dollar which I have paid has been effected in the name of +the gold standard and honest money, and leaves me without recourse." + +In its ultimate analysis, money is the yard-stick, the bushel and the +pound weight of commerce. + +When you shrink the volume of money, and so increase the measuring power +of the dollar, you lengthen the yard-stick, enlarge the specific gravity +of the pound and the cubical content of the bushel, in violation of all +equities. + +It is utterly impossible to secure a proper regulation of the money +volume with gold alone, the yield of which has declined from an average +of $130,000,000 a year between 1851 and 1873 to $105,000,000 a year +between 1873 and 1889. + + +THE VALUE OF MONEY FIXED BY THE COMPETITION TO GET IT. + +Everybody admits that the value of all other things is regulated by the +play against each other of the forces of supply and demand. No reason +has been or can be given why the value of the unit of money is not +subject to this law. + + +WHAT IS THE DEMAND FOR MONEY? + +The demand for money is equivalent to the sum of the demands for all +other things whatsoever, for it is through a demand first made on money +that all the wants of man are satisfied. The demand for money is +instant, constant, and unceasing and is always at a maximum. If any man +wants a pair of shoes, or a suit of clothes, he does not make his demand +first on the shoemaker, or clothier. No man except a beggar makes a +demand directly for food, clothes, or any other article. Whether it be +to obtain clothing, food, or shelter--whether the simplest necessity or +the greatest luxury of life--it is on money that the demand is first +made. As this rule operates throughout the entire range of commodities +it is manifest that the demand for money equals at least the united +demands for all other things. + +While population remains stationary, the demand for money will remain +the same. As the demand for one article becomes less, the demand for +some other which shall take its place becomes greater. The demand for +money therefore must ever be as pressing and urgent as the needs of man +are varied, incessant, and importunate. + + +WHAT IS THE SUPPLY OF MONEY? + +Such being the demand for money, what is the supply? It is the total +number of units of money in circulation (actual or potential) in any +country. + +The force of the demand for money operating against the supply is +represented by the earnest, incessant struggle to obtain it. All men, in +all trades and occupations, are offering either property or services for +money. Each shoemaker in each locality is in competition with every +other shoemaker in the same locality, each hatter is in competition with +every other hatter, each clothier with every other clothier, all +offering their wares for units of money. In this universal and perpetual +competition for money, that number of shoemakers that can supply the +demand for shoes at the smallest average price (excellence of quality +being taken into account) will fix the market value of shoes in money; +and conversely, will fix the value of money in shoes. So with the +hatters as to hats, so with the tailors as to clothes, and so with those +engaged in all other occupations as to the products respectively of +their labor. + + +NO ALTERNATIVE FOR MONEY. + +The transcendant importance of money, and the constant pressure of the +demand for it may be realized by comparing its utility with that of any +other force that contributes to human welfare. + +In all the broad range of articles that, in a state of civilization, are +needed by man, the only absolutely indispensable thing is money. For +everything else there is some substitute--some alternative; for money +there is none. Among articles of food, if beef rise in price, the demand +for it will diminish, as a certain proportion of the people will resort +to other forms of food. If, by reason of its continued scarcity, beef +continue to rise, the demand will further diminish, until finally it may +altogether cease and center on something else. So in the matter of +clothing. If any one fabric become scarce, and consequently dear, the +demand will diminish, and, if the price continue rising, it is only a +question of time for the demand to cease and be transferred to some +alternative. + +But this can not be the case with money. It can never be driven out of +use. There is not, and there never can be, any substitute for it. It may +become so scarce that one dollar at the end of a decade may buy ten +times as much as at the beginning; that is to say, it may cost in labor +or commodities ten times as much to get it, but at whatever cost, the +people must have it. Without money the demands of civilization could not +be supplied. + +Money was the most potent instrumentality in the evolution of society +from a low to a high plane of civilization. It is valueless to man in +isolation. It is indispensable to man in organized society. It is as +necessary for the proprietary distribution of wealth as railroads and +steamships are to its physical distribution. The aggregate force of the +demand for money in any country depends upon the numbers of the +population; with a stationary population the demand is steady, with an +increasing population the demand increases, and in order to maintain +undisturbed the equation of supply and demand the volume of money should +be increased in at least a ratio corresponding to that of the increase +of population. + +There are certain circumstances that to some extent disturb the +relations between population and money supply, such as the broadening of +the areas of population, and the multiplication of money centers. These +circumstances might render necessary a larger percentage of increase in +the money volume than would be indicated by the increase of the +population. + +But under any circumstances the smallest money-increase that will +suffice to maintain the equity of time contracts is an increase +corresponding to the increase of numbers of the population. + +Under conditions of unvarying demand and unvarying supply the value of +the unit of money would be unvarying. If as population and demand +increase the supply of money be proportionately increased, there is no +possibility of a change in the value of the unit of money. + +The constant and unceasing effort to exchange services and all forms of +property, which have but limited command over the objects of human +desire, for money, that sole instrumentality that has unlimited command +over such objects, is, and ever will be, eager, intense, and unwavering. + +With population and consequent demand rapidly increasing how do the +advocates of the gold standard expect to increase the money volume of +the country in this proportion, while the yield of gold, instead of +increasing in proportion to demand, is every day becoming less and less +capable of meeting the requirements of the arts alone? + + +THE QUANTITY OF MONEY IN CIRCULATION SHOULD INCREASE IN A RATIO NOT LESS +THAN THE RATIO OF INCREASE OF POPULATION. + +It will be admitted that if the population of a country be increased by +any given percentage there will be a proportionate increase in the +demand for all articles that supply human needs. If the population +increases by 3 per cent., there will be needed 3 per cent. more +house-room, 3 per cent. more furniture, 3 per cent. more food, 3 per +cent. more of all things that enter into consumption. These things can +only be got by a demand first made on money. Then why not 3 per cent. +more money? + +The present monetary circulation of this country including gold, silver, +and paper, is represented to be $1,700,000,000. As our population +doubles in thirty years, the rate of increase is 3-1/3 per cent. + +If the money volume be not increased by a proportion at least as great +as this, the true relation between the supply of money and the demand +for it will not be maintained. The demand increasing as the population +increases, while the supply either does not increase at all or increases +in a degree incommensurate with the demand, the money volume shrinks and +the purchasing power of the unit becomes greater by reason of the +increased keenness of competition to get it. This is but another mode of +stating that the prices of all products of human labor decline. Prices +falling, business ceases to be profitable, stores and work-shops close, +and men are relegated to idleness. + + +THE QUANTITATIVE THEORY OF MONEY--THE VALUE OF EACH DOLLAR DEPENDS ON +THE NUMBER OF DOLLARS OUT. + +Thus by the universal competition to get it the value of the dollar is +made to depend upon the number of dollars that are out. This is a +principle that lies at the very foundation of the science of money. The +law, stated broadly, is that the value of each unit of money in any +country at any given time depends on the whole number of units in +circulation in that country. The larger the number of units out, +population remaining the same, the less must be the value of each unit; +the smaller the number of units out, population remaining the same, the +greater the value of each. + +Notwithstanding the variance sometimes found between the premises and +the conclusions of economic writers, there is no economist of repute who +does not admit this to be a fundamental principle. + +On the theory I have propounded therefore 3-1/3 per cent. of +$1,700,000,000, or $56,000,000, is the minimum amount of money that +should be added to the currency of this country during the present +year. + +Assuming the population of to-day to be 65,000,000 and the ratio of its +annual increase 3-1/3 per cent., the population of next year will be +67,166,600. The percentage of monetary increase to be provided for that +year should therefore be baaed on the increased number. And so on for +each succeeding year. + +I have thought best to collate a variety of citations from the most +distinguished authorities on financial economy to support my contention +that, _ceteris paribus_, the value of each dollar depends on the number +of dollars in circulation. + +John Locke, in his "Considerations," etc., published in 1690, said: + + Money, while the same quantity of it is passing up and down the + kingdom in trade, is really a standing measure of the falling and + rising value of other things in reference to one another, and the + alteration in price is truly in them only. But if you increase or + lessen the quantity of money current in traffic in any place, + then the alteration of value is in the money. + +Locke further said: + + The value of money in any one country, is the present quantity of + the current money in that country, in proportion to the present + trade. + +The historian, Hume, says: + + It is not difficult to perceive that it is the total quantity of + the money in circulation, in any country, which determines what + portion of that quantity shall exchange for a certain portion of + the goods or commodities of that country. + + It is the proportion between the circulating money and the + commodities in the market which determines the price. + +Fichte says: + + The amount of money current in a state represents everything that + is purchasable on the surface of the state. If the quantity of + purchasable articles increases while the quantity of money + remains the same, the value of the money increases in the same + ratio; if the quantity of money increases, while the quantity of + purchasable articles remains the same, the value of money + decreases in the same ratio. + +James Mill, in his treatise on political economy, says: + + And again, in whatever degree, therefore, the quantity of money + is increased or diminished, other things remaining the same, in + that same proportion the value of the whole, and of every part, + is reciprocally diminished or increased. + +John Stuart Mill (Political Economy) says: + + The value of money, other things being the same, varies inversely + as its quantity; every increase of quantity lowering the value, + and every diminution raising it in a ratio exactly equivalent. + +And again: + + Alterations in the cost of the production of the precious metals + do not act upon the value of money, except just in proportion as + they increase or diminish its quantity. + +Ricardo (reply to Bosanquet) says: + + The value of money in any country is determined by the amount + existing. * * * + + That commodities would rise or fall in price in proportion to the + increase or diminution of money, I assume as a fact that is + incontrovertible. * * * + +Ricardo further says: + + There can exist no depreciation in money but from excess; however + debased a coinage may become, it will preserve its mint value; + that is to say, it will pass in circulation for the intrinsic + value of the bullion which it ought to contain, provided it be + not in too great abundance. + +In this case Ricardo's illustration is the supposed case of a country +actually using one million gold pieces each containing 100 grains. He +maintains that they would be of the same purchasing power, if the +Government took out 1 grain, or even 50 grains, the quantity remaining +the same, but that if, from the grains so deducted, an additional +number of pieces were struck, a corresponding depreciation would result. + +William Huskisson ("The Depreciation of the Currency," 1819), says: + + If the quantity of gold in a country whose currency consists of + gold should be increased in any given proportion, the quantity of + other articles and the demand for them remaining the same, the + value of any given commodity measured in the coin of that country + would be increased in the same proportion. + +Sir James Graham says: + + The value of money is in the inverse ratio of its quantity; the + supply of commodities remaining the same. + +Torrens, in his work on Political Economy, says: + + Gold is a commodity governed, as all other commodities are + governed, by the law of supply and demand. If the value of all + other commodities, in relation to gold, rises and falls as their + quantities diminish or increase, the value of gold in relation to + commodities must rise and fall as its quantity is diminished or + increased. + +Wolowski says: + + The sum total of the precious metals is reckoned at 50 milliards, + one-half gold and one-half silver. If, by a stroke of the pen, + they suppress one of these metals in the monetary service, they + double the demand for the other metal, to the ruin of all + debtors. + +Cernuschi says: + + The purchasing power of money is in direct proportion to the + volume of money existing. + +Prof. Francis A. Walker, in his work on "Money" (page 57), says: + + The value of money in any country is determined by the amount + existing. + + Its [money's] power of acquisition depends not on its substance, + but on its quantity. [Paulus, author of the Pandects, sixth + century.] + +Professor De Colange, in the American Cyclopedia of Commerce, article on +"Money," says: + + The rate at which money exchanges for other things is determined + by its quantity. * * * + + Supposing the amount of trade and mode of circulation to remain + stationary, if the quantity of money be increased, its value will + fall, and the price of other commodities will proportionally + rise, as the latter will then exchange against a greater amount + of money; if, on the other hand, the quantity of money be + reduced, its value will be raised, and prices in a corresponding + degree diminished, as commodities will then have to be exchanged + for a less amount of money. * * * + + In whatever degree, therefore, the quantity of money is increased + or diminished, other things remaining the same, in that same + proportion the value of the whole and of every part is + reciprocally diminished or increased. + +A curtailment of the volume of money in a country will, _ceteris +paribus_, increase the value of the money of that country. All the +authorities agree that this law applies to all forms of money, whatever +the material; so that it applies to paper money with precisely the same +force that it applies to metallic money. + +Mr. Stanley Jevons, in his work on "Money and the Mechanism of +Exchange," says: + + There is plenty of evidence to prove that an inconvertible paper + money, if carefully limited in quantity, can retain its full + value. Such was the case with the Bank of England notes for + several years after the suspension of specie payments in 1797, + and such is the case with the present notes of the Bank of + France. + +Mr. Gallatin said: + + If in a country which wants and possesses a metallic currency of + seventy millions of dollars, a paper currency to the same amount + should be substituted, the seventy millions in gold and silver, + being no longer wanted for that purpose, will be exported, and + the returns may be converted into a productive capital, and add + an equal amount to the wealth of the country. + +In his Proposal for an Economic and Secure Currency Ricardo says: + + A well regulated paper currency is so great an improvement in + commerce, that I should greatly regret if prejudice should induce + us to return to a system of less utility. The introduction of the + precious metals for the purposes of money may with truth be + considered as one or the most important steps toward the + improvement of commerce and the arts of civilized life; but it is + no less true, that with the advancement of knowledge and science, + we discover that it would be another improvement to banish them + again from the employment to which, during a less enlightened + period, they had been so advantageously applied. + +Mr. J. R. McCulloch, in commenting on the principles of money laid down +by Ricardo, says: + + He examined the circumstances which determine the value of money + * * * and be showed that * * * its value will depend on the + extent to which it may be issued compared with the demand. This + is a principle of great importance; for, it shows that intrinsic + worth is not necessary to a currency, and that provided the + supply of paper notes, declared to be a legal tender, be + sufficiently limited, their value may be maintained on a par with + the value of gold, or raised to any higher level. If, therefore, + it were practicable to devise a plan for preserving the value of + paper on a level with that of gold, without making it convertible + into coin at the pleasure of the holder, the heavy expense of a + metallic currency would be saved. + + It appears, therefore, that if there were perfect security that + the power of issuing paper money would not be abused; that is, if + there were perfect security for its being issued in such + quantities, as to preserve its value relatively to the mass of + circulating commodities nearly equal, the precious metals might + be entirely dispensed with, not only as a circulating medium, but + also as a standard to which to refer the value of paper. + + In adopting a paper circulation-- + +Says Lord Overstone-- + + we must unavoidably depend for a maintenance of its due value + upon the adoption of a strict and judicious rule for the + regulation of its amount. + +Lord Overstone further declared that: + + The value of the paper currency results from its being kept at + the same amount the metallic currency would have been. + +Alexander Baring, in his evidence before the secret committee of the +House of Lords in 1819, said: + + The reduction of paper would produce all those effects which + arise from the reduction in the amount of money in any country. + +Prof. F. A. Walker says: + + Let me repeat, money is to be known by its doing a certain work. + Money is not gold, though gold may be money; sometimes gold is + money, and sometimes it is not. Money is no one thing, no group + of many things having any material property in common. On the + contrary, anything may be money; and anything, in a given time + and place, is money which then and there performs a certain + function. Always and everywhere that which does the money-work + is the money-thing. + +Sir Archibald Alison says: + + The suspension of specie payment in 1797, making bank notes a + legal tender receivable for taxes by providing Great Britain with + an adequate internal currency, averted the catastrophe then so + general upon the Continent, and gave it at the same time an + extraordinary degree of prosperity. Such was the commencement of + the paper system in Great Britain, which ultimately produced such + astonishing effects, and brought the struggle [of the Napoleonic + wars] to a triumphant close. + + +THE TRUE MONEY STANDARD. + +The true money standard of any country is not the material of which the +money is made. The standard is not a concrete object, but a numerical +relation. It is the relation between the number of units composing the +monetary circulation of the country and the numbers of the population. + +It is the legal-tender function that constitutes money. It is the power +which the law imparts to any material to pay debts and liquidate +obligations. It can not for a moment be doubted that the money function, +being conferred by the supreme authority, is the all-sufficient +guarantee of the money value. There is no necessity for re-enforcing +that value with any inferior value that may attach to the material on +which the money stamp is placed. The money function is immeasurably the +most important that can be conferred by society upon any material, and +it is absurd to urge that that function is not of itself sufficient for +the maintenance of the value of money. All the value that money can +possibly have--the totality of value that can exist in the shape of +money in any country--will attach to anything upon which the sovereign +authority stamps it, whether the material on which the stamp is placed +be gold, silver, paper, or anything else. Legislators or executive +officers of the Government, by increasing or decreasing the volume of +money, correspondingly decrease or increase the value of each unit of +that money. For no matter how many or how few the units may be, the +total value of the money of the country will be comprised within the +total number of those units. A change in the number of the units effects +a proportionate change in the value of each unit, and whatever the value +of the unit may be, it is of the utmost importance that that value +should remain undisturbed. + +It is absurd to maintain that a gold unit, which, as time goes on, is +constantly increasing in purchasing power; is a better unit than a unit +of any other material that maintains unchanging value through time. + +Whenever the business of the country accommodates itself to a given +number of units, the only question for the Government to deal with is to +maintain that value as free from disturbance as possible; and according +to all authorities on political economy that can only be done by +increasing or decreasing the number of units in circulation in +accordance with the demands of increasing or decreasing population. + +If it be admitted that one of the most important offices of government +is to see that the equities are preserved between its citizens (and if +this be not so, to what purpose are our courts of equity instituted?), +then it can not be denied that it is one of the highest offices of +government to see that money, which measures all equities, and which +must for all time continue to be the principal measure in the service of +civilized society, shall be of unchanging value. It is impossible to +secure this characteristic of uniformity in the value of money if we are +to select as the only material on which to stamp the money function a +substance whose yearly production is becoming more and more limited, and +the prospect of whose sufficient yield becomes less and less +encouraging. + + +IF SILVER REMAIN DEMONETIZED AND GOLD CONTINUE DECREASING, WHERE IS THE +WORLD'S FUTURE MONEY SUPPLY TO COME FROM? + +If the distinguished authorities I have quoted are correct, that a +diminution of the volume of money increases the value of the money +unit--which is but another form of stating that it lowers prices and +produces stagnation, distress, and discontent,--what good reason can be +offered by the advocates of the gold standard for confining the business +of this rapidly growing country to a basis of gold, when it is well +known that the entire stocks of gold and silver together are now +insufficient to serve the purpose of the world's money, and have to be +supplemented and re-enforced by large issues of paper notes? Do they not +reflect that the production of gold is constantly diminishing and is +likely to continue to diminish? And do they not know that our population +is growing at the rate of over 3 per cent. per annum and will double in +thirty years? Do they mean that the money volume which serves a +population of 65,000,000, and is far below the needs of that population, +will suffice for the 130,000,000 of the next generation? To be sure, if +we are to take no note of prices, the question is a simple one. + +But prices must be taken into account. The entire money question is one +of prices. When it is said that money is scarce, what is meant is that +business is depressed and that money is difficult to get, at the present +range of prices. Should prices fall 25 per cent. money would be found +plentiful enough to conduct exchange at the lower range. But when prices +fall, goods sell below cost, business is unprofitable, workshops are +closed, and men are thrown into idleness. If lowering prices do not +affect injuriously either the business or the prosperity of the country, +then it makes no difference what the volume of money may be; a small +amount will meet the requirements as well as a large amount. In that +case, the gold standard is as good as any. + +But if gold alone is sufficient to bear all the enormous monetary +burdens of the Western world, why do the advocates of the gold standard +admit the necessity for any more circulation? To be logical, instead of +favoring an increase of credit money, which has always lurking within it +an element of danger to the business of the community, they should +demand the retirement of the $347,000,000 of greenbacks and the +$350,000,000 of coined silver, and base the business of the country +exclusively on what they call "honest money." If that should be done all +that could happen would be a fall in prices. Judging by the experience +of the past it would not be surprising if the next move of the +gold-standard men would be an agitation for the retirement and +cancellation of the greenbacks. Such a movement is fully in harmony with +the opinions of the gold-standard advocates for the past twenty years. +Indeed, the Secretary of the Treasury who took charge of the finances at +the opening of the last Administration, himself a banker, recommended +the demonetization of the greenbacks almost as vigorously as he opposed +silver. + + +MONEY VALUABLE ONLY FOR THE IMPORTANT SERVICE IT PERFORMS. + +Money is valuable rather for the service which it performs than for the +material of which it is composed. + +When we consider the transcendantly important character of the service +which money performs--when we reflect that, without it, the achievement +of an advanced civilization would be impossible, we can not escape the +conclusion that, compared with the value of that service, the commodity +value of any material on which the money function may be stamped is too +trifling to merit serious attention. + +This will be made clear by reflection on the necessities of the +situation. + +So long as society chooses to maintain the automatic or metallic +money-system, it must be obvious that to escape the evils that would +result from a sudden and overwhelming increase in the supply of the +money-material as compared with the entire stock in existence, and the +infinitely more serious evils that would result from a wholly +insufficient yearly addition to that stock, it must have on hand an +enormous accumulation of the metals on which the stamp is placed. It +must be manifest that no material would be fit for universal acceptance +for so important a function as money unless there were available so +great a quantity of it that no sudden shock could be inflicted on +society by ordinary fluctuations in the current yield, or in the current +consumption in the arts. + +But, in the nature of things, a supply sufficient to effect that result +would be so enormous as practically to destroy the market value of the +material as a mere commodity if the money function and use were +withdrawn from it. + + +THE MONEY DEMAND, NOT THE COMMODITY DEMAND, THAT GIVES GOLD ITS VALUE. + +Mr. Giffen the statistician of the London Board of Trade, in an article +recently published in an English magazine, berating and deriding the +bi-metallists, maintains that it is not the demand for gold as money, +but for gold as a commodity, to be used in the arts, that determines its +value. + +To prove his case, Mr. Giffen states that the supply of gold is about +$95,000,000 per annum, the annual demand for the arts $60,000,000, or +about two-thirds of the annual supply; while the demand for money is +only $35,000,000, or about one-third that supply. He therefore argues +that the art demand, being the greater of the two, contributes more +largely to the maintenance of the value of gold than does the demand for +that article as money. It is hardly necessary to point out the absurdity +of this claim. + +The commodity demand in any one year is not made upon the current year's +supply, but upon the entire amount in existence, which, is estimated to +be about $4,000,000,000. If the demand for the arts entirely ceased, +would the addition, to the money volume, of the $60,000,000 now used in +the arts produce any appreciable effect on the value of the +$4,000,000,000 in existence? + +On the other hand, what is the demand on gold for the money use? All the +labor and all the salable property of the western world are constantly +offered in exchange for it. It is a moderate estimate to assume that +each dollar is earned, demanded, and paid once a week, or fifty times in +each year. This constitutes a total annual money demand of +$200,000,000,000, compared with which colossal sum how inconsequential +is the commodity demand of $60,000,000 in maintaining the value of gold. + +The amount of gold annually used in the arts is not very definitely +ascertained, but in 1886 it was estimated by the then Director of the +United States Mint to be $46,000,000 per annum. Mr. Giffen estimated it +at $60,000,000. It is my opinion that the arts forage on the money-stock +of gold to the extent of about the entire annual yield. The bullion or +commodity value of that metal being determined by its money value, +whoever desires to use it for any purpose other than money, takes the +bullion at its coinage value, or else melts up the coin. + +Were gold demonetized and deprived of its money function, and its demand +confined solely to that arising from its adaptability for various other +purposes, the present stock of that metal on hand and in use as money +would, according to the estimates of the director of the mint, supply +the art demand for more than seventy-five years to come. But, assuming +that the estimate of the Director of the Mint is too low, and that my +own is nearer the truth, there is at least fifty years' supply on hand. +Were there fifty or seventy-five years' supply of any other commodity on +hand in the market, what would be the commercial value of that +commodity? What would be the value of copper, of brass, or of iron, if +there were fifty or seventy-five years' supply of either of those metals +in the market for disposal at one time? Nobody can pretend that any +commodity of which there is an available supply on hand equivalent to +the whole demand for fifty or seventy-five years can have any but the +most trifling value. + +Contrary, therefore, to the generally received conviction that the +commodity demand is the dominating force in fixing the value of gold I +maintain and insist that the commodity demand, if entering into the +account at all, is insignificant. It is the supremely important +_money_-demand, as correlated to the supply, that fixes the value of all +money of every description whatsoever. + +The demand for gold as a commodity is limited and fluctuating, but when +that metal is invested by law with the higher function of money, and +thus constituted a common denominator of all values, that limited and +fluctuating demand is changed to an unlimited and constant one, which +fixes its value for other and inferior uses. If the commodity-demand for +gold were, as many believe it to be, essential to its acceptance as +money, it would be a great misfortune to society. The happiness and +prosperity of the world, if not wholly dependent upon, are largely +influenced by, steadiness in the value of money, and this can not exist +without steadiness in its volume. Whatever demand exists for gold as a +commodity can only affect the volume of money injuriously--that is to +say, by decreasing it. The admonition of history is that a deficiency in +the money-supply is more probable, and infinitely more to be feared than +an excess, and this deficiency is, in great measure, caused by the +insidious and constant encroachment, upon the precious metals, of +demands for them for other than the money use. When we contrast the +magnitude of the world's interests and equities, which rest on +steadiness in the value of money, with the comparative unimportance of +the uses of the metals as commodities, it becomes apparent that the +subjection of the value of money to disturbance from the demands for +gilded signs, looking-glasses, bangles and breast-pins, is an evil for +which society is but poorly compensated by the benefits derived from +such uses. + +Whatever other quality gold may posses than as the bearer of the money +function is inconsistent with the healthful and proper exercise of the +task assigned it as such. Whenever any portion of the metal is used for +any other purpose than money it destroys the money and thus changes the +value of every unit of money in circulation, for, at already +stated--other things remaining unchanged--the value of each dollar +depends on the number of dollars that are out. Without forewarning, and +with out knowledge on the part of the people, large amounts of the money +volume, on which so infinite a number of equities rest, and on the basis +of which all debts and time contracts have been entered into, are, as it +were, surreptitiously abstracted and appropriated to other and always +inferior uses, for by far the highest and noblest use of any material +upon which the money function has been conferred, is the money use. No +other use can possibly be so high or so noble as that of maintaining all +equities undisturbed. + +It seems unworthy a highly developed civilization which, as to all +subjects other than money, regulates its affairs by the application of +intelligence, and bases its policies upon exact data, scientifically +ascertained and correctly applied, to depend for its money system upon +the accidents, make-shifts, and expedients to which primitive society, +by reason of the limitation of its powers and the undeveloped condition +of the human mind and hand, was compelled to resort. If the quantitative +theory of money be correct--if the money standard be, as I insist it is, +a steady and duly proportioned numerical relation existing between the +units of population and units of money--it is the duty of society and +government to see that as far as practicable that principle is put into +operation. + +The history of the production of the precious metals from the remotest +ages demonstrates that under the automatic system of money this can only +be effected by the unrestricted coinage of, and conferring the full +legal-tender function on, both metals. + + +THE PROPOSITION THAT THE GOVERNMENT SHOULD LEND MONEY ON THE SECURITY +OF REAL ESTATE. + +If a change in the whole number of money units in circulation relatively +to population and business do not affect the value of each unit, then no +objection can be found to the proposition recently presented in the +Senate by the distinguished Senator from California, which created some +surprise among Senators. The resolution of that Senator contemplates a +loan by the Government to holders of real estate based upon the security +of the property; and the issue of a large amount of Treasury notes for +that purpose. Certainly, if a dollar, in order to perform properly the +money function, must have in it or back of it a dollar's worth of +material, there can be no safer security found than that suggested by +the Senator from California, namely, the arable land of the United +States. + +It is the most absolutely secure of all securities; it can neither run +away nor be stolen, it can not be burnt up, lost, or destroyed. + +Arable land is, in and of itself, capable of supplying all basic wants, +and must be always in demand, while gold, so far as concerns any use to +which it is, or can be applied, might be dispensed with altogether, with +scarcely any inconvenience to society. + +Certainly money based on land would seem to be better than money based +on gold. Senators who are sticklers for so-called "intrinsic value" +money, and "full-value" money, should be found supporting that +proposition. But it must, on reflection, be obvious that, other things +remaining unchanged, whenever the total number of units of money (or +dollars) in the circulation of a country increases, the value of each +unit will decrease. It is an axiom of political economy that no amount +of increase in the number of units of money in a country increases the +aggregate value of the money of that country. + +The aggregate value of the money in circulation in a country, can, +_ceteris paribus_, be increased only by an increase of population and +business, that is to say, by an increase in the demand for it. + +If, without increase of population, the money of a country be increased +from, say, $1,000,000,000 to $2,000,000,000, the effect would be not to +add to the aggregate value of the money of the country, but to decrease +the value or purchasing power of each unit of the money, so that it +would take ten dollars to buy what had before cost but five. + + +GOLD A FETICH--DEMAND FOR A STANDARD OF JUSTICE. + +The history of the world affords no example of a money system regulated +by human prescience and intelligent calculation. It is not too much to +say that the money system of the world--the most important associative +instrumentality of civilization, in so far as it is not controlled for +their own advantage by the creditor classes--is practically the result +of accident. We are even less logical than the ancients, for they +availed themselves of the entire supply of money possible to their +civilization and development. They used the full yield of both silver +and gold, while we, in order to line the pockets of a privileged caste +of money-lenders, reduce the money volume to the lowest possible minimum +by discarding one of those metals and making all debts payable in the +other. + +Gold has been erected into a fetich by methods familiar to the pagan +priesthood, who forbade investigation of the claims of their idol to the +superstitious veneration of their followers. The quality of a universal +standard claimed for gold has been set up by the classes which, like +that priesthood, had interests to be served by the superstition. All +things else may be subjected to the test of reason and argument, but the +slightest approach to a scrutiny of the claims of gold as a much-vaunted +universal standard of valuation has been repelled by interested casuists +and sophists who constitute the sacred guard of the temple of the idol. + +The people of this country, Mr. President, begin very seriously to doubt +the sacredness of a so-called standard by which they have been robbed of +thousands of millions of dollars--a standard that despoils and +impoverishes the toiling masses, in order to swell the plethoric pockets +of the privileged few. From all parts of the Republic we learn that the +people have become aroused on this subject, that they have discovered +gold to be a standard, not of valuation, but of spoliation and +confiscation. + +The world at large shares to a great extent in the doubts entertained by +the people of this country as to the orthodoxy of the continuing worship +of gold. Throughout all Europe the suspicion is beginning to make itself +felt, among those who have no personal interest at stake, that the +constantly appreciating value of this metal bodes no good to society, +however advantageous it may be to the moneyed classes, and especially +the money lenders. It begins to be feared that there may be too long a +persistence in this artificial standard, and that the pressure upon the +people, in the fall of prices and the increase of the burden of debt and +of taxes, which multiply with time, may have serious consequences upon +public order. The stock of gold, never half enough to meet the wants of +the people anywhere, is year by year being drawn upon more and more for +use in the arts, while the yield from the mines is decreasing, and +giving no promise of any material increase from any quarter. + +The pressing need of the time, the standard for which the people are +calling, is a standard of equity, a standard of justice, a standard that +shall measure fairly and impartially the rights of both parties to a +contract, that will not wrongfully and stealthily add to the burden of +the obligation on either side, that will not, under the guise of fair +dealing, rob one of the parties for the benefit of the other. The first +indispensable step to a realization of that standard is the full +restoration of silver to its rightful position as a part of the money of +the world. + +In any discussion of the question, it would be uncharitable not to make +allowance for the force, on many conscientious minds, of what, to the +free and unprejudiced inquirer, can only be regarded as an absurd and +meaningless superstition, which, notwithstanding the advance of thought +in other directions, still persists in disarranging the industries and +vexing the civilization of an enlightened age. It is to the strength of +this obdurate superstition that we must ascribe the horror with which +many minds contemplate the possible loss to the country of a part of its +gold. + + +FEAR OF THE OUTFLOW OF GOLD. + +Any prospect of the outflow of gold is regarded as the opening of a +veritable Pandora's box, from which must issue forth all the evils that +can afflict mankind. + +It is to this fear, no doubt conscientiously entertained, that we must +attribute the declaration of the President of the United States that we +do not dare to tread on the edge of so dangerous a peril. It is not +difficult to make the statement, but it will be very difficult to prove +that we stand on the edge of any peril whatever, if most or even all our +gold should go. + +We heard this same apprehension expressed, and with equal, if not +greater, force twelve years ago, when the silver question was before +this body. We were then assured by the ablest of our so-called +"financiers" that the country would be denuded of its gold and that all +manner of dreadful catastrophies would result. The prospect was +represented to be appalling, although I do not remember that any reasons +were given to show how or why gold should leave the country, nor that +any statement was made as to exactly how this country would suffer if it +did leave. + +For my own part, Mr. President, I regard it as a matter of very little +consequence whether gold goes out or not. Certainly if, in order to +retain gold, we must sacrifice justice, then I say let gold go. + +It is not of so much consequence that we should retain gold for the +benefit of a small coterie of importers as that we should preserve the +equity of time contracts between the millions of our own people who +import no foreign goods. It is monstrous to think of violating all +equities in time transactions--and nine out of every ten of our domestic +business transactions are of that character--for the absurd and +inconsequent purpose of keeping in this country some particular +commodity, whether it be designated as money or otherwise. + +The hoarding or the outflow of gold is a hardship when, under the law, +somebody is obliged to have it, as was the case during the war, when +gold alone would pay duties on imports. Combinations to hoard gold at +that time frequently involved great loss to the importer. But thanks to +the silver legislation of 1878 and other legislation making our Treasury +notes receivable for customs dues, no damage could now result from any +attempted corner in gold. + +The creditors of this country never can convince the enterprising and +energetic people who form the debtor class that it is to our interest +that a certain material shall be kept in the country as money, if the +expense of keeping it is that the debtors shall continue to be despoiled +as they have been for the past fifteen years. + +If we can only retain gold at the expense of steady and unwavering +prices, and at the expense of a steady and unchanging value in money, +then the quicker gold goes out the better. The constantly increasing +value of gold by reason of its increasing scarcity means the constantly +increasing burden of all debt, and involves the final absorption of all +the property of the country by the creditor classes. Under the operation +of the present system, by which prices are constantly falling and money +is constantly increasing in value, the surplus earnings of the people +are flowing in a steady stream into the vaults of money-lending +institutions, and into the pockets of creditors. + +In a very intelligent article published in a late number of an +influential magazine--the Political Science Quarterly--there is the +significant statement, apparently derived from the best sources, that +in the year 1879-'80, one-half of all the mortgages in the State of +Indiana were foreclosed. + +It were better for society that property should at once be confiscated +than that the great masses of the people in every community should have +to struggle through years of painful and exhausting effort in the face +of constantly falling prices and then in a large percentage of cases to +lose their property at last. But this can not be avoided so long as we +attempt to keep up what is called the gold standard. It is a necessary +consequence of the gold standard that we shall have the scale of prices +that obtains in gold standard countries If the presence of gold in this +country is to destroy our people, who doubts that it should go? If its +presence is to result in the destruction of equity and justice, who +doubts that it should go? + +Nearly every witness who testified before the secret committee of the +House of Commons in 1857 agreed that gold could only be held by +paralysing the business of the country. It is estimated by witnesses who +testified before that committee, that in the panic of 1847, in Great +Britain, the property of the country, by reason of the measures rendered +necessary to maintain the single gold standard, was depreciated +$1,500,000,000. I commend that report to the careful and serious perusal +of the advocates of the single gold standard in this country. + +Among the witnesses before the committee were John Stuart Mill, Lord +Overstone, and many other men distinguished in the world of letters and +finance. I am informed by the Librarian of Congress that there is but +one copy of the work in the United States. It would be well worth while +for Congress to order a number of copies of it printed, for there is no +work with which I am acquainted that contains so much practical +information as to the working of the single gold standard. According to +the testimony taken before that committee, the experience of Great +Britain since 1819 shows that gold alone, even when re-enforced by paper +money convertible exclusively into gold, instead of being a beneficent +instrument of valuation, has proved a cruel instrument of injustice. + +A brief consideration of the causes which affect the movement of gold +will not be out of place in this connection. + + +RATIONALE OF THE MOVEMENT OF GOLD. + +Why is it that gold leaves country and goes to another? For one reason +only--the advantage of its owner. Whenever he can make a profit by +sending it out, the gold goes; and the period when that profit can be +made is indicated when the prices of goods that are internationally +dealt in are either rising in the country which it leaves or falling in +the country to which it goes. It is only to pay for importable goods +that gold ever leaves the country in which the owner resides. Being an +international money, and receivable everywhere at its full face value, +gold loses nothing by transfer; hence it is sent wherever it will for +the time being have the greatest purchasing power. + +Whenever the general range of prices in this country of commodities +internationally dealt in becomes than higher than the general range of +the same commodities abroad, it is manifest that then gold can used to +advantage by purchasing those articles abroad and selling them here. If +the gold that goes out goes from stock that has been hoarded here, the +outflow has no immediate or direct effect upon prices in this country, +although, by increasing or "inflating" the volume of money abroad it +assists in raising prices there, and thus tends to secure for our +exported products a better price in the foreign market. But if the gold +goes from the amount that is in active circulation here, and if the void +created by this outflow is not filled with other forms of money, such as +silver, or paper, it results in a reduction of the volume of money in +actual use in this country, while at the same time increasing the volume +of money abroad. + +This increase in the foreign money stock causes a rise of prices abroad, +while the corresponding reduction of our currency causes a proportionate +fall of prices here, hence there is a constant tendency to an +equilibrium of prices of all articles of international commerce. + +No outflow of gold would follow a rise of prices here except in so far +as that rise affected articles internationally dealt in. No rise of +prices of such articles as we do not import would tend in any way to +drive out gold. If, for example, raw cotton should increase in price in +this country, that fact would not tend to drive out gold, because we do +not import raw cotton. But should the prices of articles of manufactured +cotton rise here above what those same articles could be bought for in +any foreign country our merchants would send abroad for them, provided +that, after paying the freight charges and customs dues, they could make +a profit on them. + +So, also, if crockery-ware were made in this country, and its price +should rise to, say, double the present price, then, instead of buying +the American, or home-made article, our crockery merchants, finding that +they could buy in England, France, or Germany cheaper than they could +buy in this country, would decline to buy the American crockery, and +would send abroad for any article, provided that, after paying freight +charges and customs dues, they could sell it here at a profit. That +would tend to increase the shipments of gold to foreign countries. + +That an outflow of gold does not follow from a rise of general prices, +but only of prices of articles of international trade, is manifest from +the fact that if land becomes cheap in other countries, gold does not +leave this country to buy it. When real estate is cheap in Brazil, or +Australia, or in Germany, France, or even England, the owners of gold in +this country do not send it abroad to make purchases of real estate. + +So wages of labor may rise in this country, or compensation for all +manner of services that must be performed here, and gold would not leave +as a consequence. But if cloth were cheaper--quality considered,--in +England, France, or Germany, or at the remotest ends of the earth,--than +in this country, our merchants would send gold for it in order to sell +it here at a profit. + +Altogether too much importance is attached to the possession of a large +stock of gold, unless that stock form part of the active circulation of +the country. So long as it remains in circulation it sustains prices and +develops industry and internal commerce. But the tendency of gold being +to find the most profitable field for operation, its continued presence +in the country can never be relied upon. + +When we take gold from other countries prices in those countries fall, +owing to the reduction of the volume of money there; and owing also to +the action of the foreign banks in immediately raising their rates of +discount on commercial paper and suddenly calling loans. As there is +less money left in such country with which to pay for commodities, we +are obliged to accept lower prices for the products we ship to it. + +The larger the stock of gold, therefore, accumulated by us the lower, +necessarily, must be the price which we can receive for our surplus +agricultural products. + +In order to maintain parity between the metals, it is not necessary for +us to have all the gold we now have; $200,000,000, or even $100,000,000 +of gold, would maintain that parity. The parity between the metals can +never be broken until all the gold leaves, and provided we retain one or +two hundred million, the rest can not be placed more advantageously than +where our languishing surplus products must be sold. + +When gold leaves this country it is because prices here are rising. +Prices are now lower than they have been since 1847. Must they continue +declining in order that we may be able to retain all our gold? It is +manifestly impossible for the people of this country to prosper with a +constantly lowering range of prices. It is equally impossible for the +present level of prices to be maintained with a constantly increasing +demand for, and as constantly diminishing a supply of, gold. It is +universally admitted that an increase in the money circulation of this +country at the present time is an exigent necessity. The advocates of +the single gold standard, while admitting that we must increase our +money volume, the effect of which must be to maintain, if it does not +raise, the level of prices here, insist that we shall let none of our +gold go in order that prices abroad may rise. + +Mr. BLAIR. May I ask the Senator a question? + +Mr. JONES, of Nevada. Certainly. + +Mr. BLAIR. Does the Senator mean to be understood that the falling of +prices is an absolute demonstration of the increased value of the money +without limitation? + +Mr. JONES, of Nevada. I have already, in the early portion of my +remarks, had occasion to state that when a fall in prices was brought +about by a larger subordination of the forces of nature to the uses of +man, as where the comforts and conveniences of life could be produced +with less sacrifice than before, it was not an injury to society, but in +advantage. In other words, if, by a certain amount of sacrifice +seventeen year ago, only one pair of shoes could be produced, and if by +the same sacrifice two pairs could be now produced, there would be a +lowering of the price of shoes to about one-half of what it was +seventeen years ago, which would be a very great benefaction to mankind. + +But, as I then stated, there is one certain sign that that is not, +except to the slightest extent, the cause of the present universal fall +of prices. When prices fall owing to improvements in manufacture, +business revives, the masses of the people are at work, those who toil +find themselves possessed of more of the comforts, of the conveniences, +and even of the luxuries of life than before. They are better contented +with their condition, and more buoyant and hopeful than before. On such +occasions money becomes more and more in demand than it was before, and +instead of being hoarded is put into active and productive business +where it will make a profit. But when interest falls, pari passu, with +the fall of prices, it shows that the fall of prices is not due, except +in the smallest degree, to improved methods of production, but to the +increased value of money. + +Mr. BLAIR. I was not controverting the Senator's theory as to the +existing facts in this country, but I understood him to be laying down +an absolute principle, applicable under all circumstances and in all +times, that the fall of prices is a demonstration of the increased value +of money. I supposed that the fall in prices resulting from a +protective tariff was beneficial, and not an indication of an increase +in the value of money, and that that fall of price was not owing to the +increased value of money, but was by improved machinery and all that. So +it is possible that some of the fall in prices in this country may be +owing to increased facility in the matter of production and to the +beneficial operations of the protective tariff. + +Mr. JONES of Nevada. Mr. President---- + +Mr. REAGAN. If the Senator from Nevada will permit me, I wish to ask the +Senator from New Hampshire if he means to be understood as assuming that +a protective tariff reduces the value of the commodities produced? + +Mr. BLAIR. I was simply asking for information of the Senator from +Nevada, and he can answer that question much better than I; but the +Senator from Texas understands very well that I do believe a protective +tariff reduces prices. + +Mr. JONES, of Nevada. Mr. President, so far as a tariff has the effect +of reducing prices in any country, it is not by reason of the levying of +any certain percentage of duty on the imported goods. The first effect +of the tariff certainly always must be to raise prices. The fundamental +theory of the tariff is--whether it be correct or not I am not now +discussing--that by that tariff you place the price of manufactured +goods up to a range at which they can be produced in the country in +which the tariff is levied, and upon the level of the range of wages and +manner of living which obtain in that country. By so doing, if you have +a proper volume of money, you set all your people at work, and keep them +at work at a variety of occupations. In such case every forge, furnace, +and factory becomes a school, every machine-shop an academy, and every +cunning device and invention becomes a lesson, teaching the people how +to deal with the subtle forces of the universe. So far as this country +is concerned the theory of the tariff is that 65,000,000 people should +have a varied and complete system of manufactures, which should supply +practically all their own wants, instead of an abnormal proportion of +them being driven into the single occupation of farming and relying on +foreign manufacturers to supply such finished products as they need. To +draw out and develop the aptitudes of a people a large variety of +occupations is indispensable. When all men are employed at their +aptitudes new inventions multiply, progress is accelerated, and the +secrets of nature are more rapidly unfolded. Hence the McCormick reaper; +hence the sewing-machine, that great instrument which clothes the world, +because of the discovery that the eye of the needle should be at the +point; hence the air-brake, the telegraph, the electric light, and +thousands of other inventions that a protected people originate and +develop, which would perhaps not have been originated or might have been +long delayed if it had not been for the discouragement to imports caused +by the tariff, and the encouragement to our people to go into +manufactures by which their varied talents are drawn out and cultivated. + +There is no doubt that eventually as our conditions improve, increasing +numbers of our people will by degrees emerge from agricultural and enter +manufacturing pursuits. A tariff, by stimulating the organization and +development of industries, trains men to greater skill and perfection of +workmanship in a variety of departments, and with greater skill comes +greater efficiency of labor, and so greater economy of time. In that way +the prices of certain products are in time reduced; but that is not a +reduction of which any one complains. + +The true cause of the present discontent will not be found in the +protective tariff, but in the exactions of the single gold standard. + +Fifteen years ago England was on the gold standard. It is on the gold +standard to-day; yet prices in England are 35 per cent. lower than they +were fifteen years ago. There being no reason why there should be any +change in the trend of prices, so long as a fierce contest for the +possession of gold shall be waged between England, France, Germany, and +the United States, we are justified in assuming that a proportionate +decline of prices will continue. That means a further decline of 30 or +35 per cent. in prices during the next fifteen years. Where is this +tendency to stop? and if it does not stop, how long will it be before +the masses of the people become the bond slaves of the creditors? It is +shocking to the moral sense of mankind that a few money-lenders and +bondholders should thus be able, silently and insidiously, to wreck the +business of every country in the world by constantly increasing the +value of the money unit. + +While admitting the necessity of more monetary circulation, our gold +standard friends fail to show us how it is possible for an increase in +the volume of money to benefit our merchants, farmers, or mechanics if +the prices that prevail in gold standard countries are to prevail here; +for that is what the gold standard means for us, Mr. President. It means +that the prices that rule in gold standard countries are to rule here. + +The extreme indefiniteness with which the term "gold standard" is used +has so befogged the relation which gold money bears to industry and +commerce that people lose sight of the essential feature of that +relation. It is impossible to have a clear conception of the gold +standard without keeping in view exactly what is implied by the term. +What men must mean in this country by "the gold standard" is not the +touch of the metal, for they never touch it, and rarely, if ever, see +it. The maintenance of the gold standard here simply means the +maintenance here of the range of prices that prevail in gold-using +countries; that is to say, that low and lowering range of prices +rendered necessary by the attempt to measure the value of the constantly +increasing mass of the products of industry in all the western world by +the constantly diminishing volume of gold. No relief can come to the +toiling masses of this country until we can lift our prices above those +that now prevail in gold-using countries. + +Even if our prices remain as they are and do not increase, gold will +eventually leave the country if it continue to increase in value as it +has been increasing during the past fifteen years. We have been enabled +to maintain the gold standard here for the past twelve years +notwithstanding a considerable addition of money other than gold to our +currency, but we have been able to do so only because other countries +have been using an equal or greater amount of money other than gold. We +have been using no greater proportion of silver or paper money than +other countries having the gold standard are using, hence we have been +able to maintain their level of prices and still keep the metals +together. But whenever we shall attempt to prevent a further fall or +prices in this country, it will be impossible for us to retain our gold +so long as prices in gold-using countries continue to decline as they +have been declining. Gold will leave as quickly because of contraction +abroad as of inflation here, if by "inflation" is meant a coinage of +money sufficient to maintain prices at a steady level. + +Should gold leave the country, then, in order to supply its place, in +order to maintain the _status quo_ in prices, and prevent a further fall +from the present low range, we should need to have as many dollars of +silver in circulation as there are now dollars of gold. Gold would go +out only because our prices were rising, and as it went prices would +cease to rise. That process might continue until three or four hundred +million dollars of gold had gone. In all this, where would be the +disadvantage to our people? + +Considering the rapidly increasing population and wealth of this +country, all the silver that can be procured from the mines will be +necessary to maintain the level of prices and to keep pace with the +increasing demands for money. If, however, it slightly exceeds--and it +could not at the utmost more than slightly exceed--the amount actually +demanded by increasing population and business, the over-plus of each +year would take a great many years to drive gold out of the country, +dollar for dollar. For, when prices here, of things internationally +dealt in, are at an equilibrium with prices of the same articles abroad, +gold can not go any faster than silver comes in. + + +IF $2,500,000 SILVER PER MONTH HAS NOT DRIVEN OUT GOLD, HOW MUCH WILL +DO SO? + +For twelve years past we have had a silver coinage of nearly $2,500,000 +a month, yet no gold has been driven out. Having tested the capacity of +that quantity of silver to drive out gold, we find that instead of +driving it out its coinage has resulted rather in bringing gold in. For, +to whatever cause the influx of gold may be ascribed, it is +unquestionable that the gold has come, and it has needed all that gold, +and all the silver that we have coined, to maintain international prices +here. + +It is admitted by all that gold can not go out except by reason of a +rise in this country of the prices of articles of international commerce +beyond the prices of the same articles prevailing abroad. It is only +then that it becomes more profitable to send out gold in payment for our +foreign purchases than to send out commodities--the products of our own +country. Commodities will always be sent out in payment for other +commodities so long as it is more profitable to send them than gold, and +when, by reason of low prices prevailing abroad and high prices here, it +is no longer profitable to send out commodities, purchasers send out +gold, but only because it is to their advantage to do so. + +Now, having seen that the coinage of $2,500,000 of silver each month was +insufficient to so raise prices in this country as to induce gold to go +abroad, but that on the contrary it resulted in an influx and +accumulation of a large amount of gold, we may safely assume that only +so much of the amount of silver which Congress shall now provide for as +exceeds $2,500,000 a month will have any influence in raising prices in +this country above international prices, and so providing a stimulus for +gold to go abroad in payment for commodities imported into this country. + +If the amount of silver which shall be now provided should be, say, +$5,000,000 a month, the excess over the present coinage would be +$2,500,000 a month. This, then, would be the amount that would drive out +gold. As one dollar of silver would drive out no more than one dollar in +gold, no more than $2,500,000 could go out monthly. That would leave in +circulation the same amount of money that is in circulation now. There +would still be no increase in the money volume of the country, and, with +no increase in the volume of money, prices here would not rise above +international prices. At the rate of $2,500,000 a month, it would take +twenty years to drive out $600,000,000 of the $700,000,000 of gold now +in this country. It would take even longer than that, because the +$600,000,000 driven out would tend to raise international prices abroad, +and so check the outflow of gold from here. + +Mr. McPHERSON. Will the Senator yield to me for a question, or does he +prefer to go on? + +Mr. JONES, of Nevada. I am always ready to answer a question. + +Mr. McPHERSON. I do not want to interfere with the Senator's line of +argument, or with his speech in any form, but it does seem to me that +there is something fallacious about the Senator's argument, or else my +judgment and the experience of the world is all wrong. I wanted to ask +the Senator this question: If it be known that the Government of the +United States, if you please, by such an increase of the silver coinage +in this country as will be produced by the free coinage of silver, to +which theory, as I understand, the Senator is fully committed--if that +be the theory of the Government hereafter by the command of Congress, I +want to ask the Senator if he broadly and boldly asserts that no gold +can be driven out of the country to a greater extent than dollar for +dollar for the silver that comes in? + +Mr. JONES, of Nevada. Absolutely; I say so. + +Mr. McPHERSON. Then I want to ask the Senator another question, which +seems to be pertinent. Does the Senator assert that if a 72-cent dollar, +the value in bullion of a silver dollar during the year 1889, as has +been furnished us by the Director of the Mint and the Secretary of the +Treasury, were coined without limit (I say without limit, the limit +being, of course, the amount of bullion that is brought to the Treasury +to coined), and the people of this country who have been in favor of a +safe and honest currency, a currency either gold or as good as gold, +which the Treasury has been able to maintain, having forced no silver +upon the people if they did not wish it, and in that way the silver +dollar having been maintained equal to the gold dollar, I want to know, +with the people of this country to-day the holders of $500,000,000 of +gold, how it is possible for the Senator to believe that with a 72-cent +dollar to take its place the gold coin would circulate for a single +week, or a single day, or a single hour? If they have the gold will they +not hold it? + +Mr. JONES, of Nevada. The Senator has so involved his question with his +argument that I can scarcely get at what he wants me to answer. + +Mr. McPHERSON. The question I want the Senator to answer is this: Will +the people of this country, the financiers of this country, the banks, +the moneyed men holding $500,000,000 of gold, with a certainty of the +free coinage of silver and going to a silver basis, for that is what it +means, put their gold in circulation, or will they hoard it? Will it +disappear? + +Mr. JONES, of Nevada. I scarcely know what the Senator means by a +"silver basis." He talks about a 72-cent dollar. We have never seen a +72-cent dollar. The papers in the East have told us that the silver +dollar was worth 72 cents. I recollect talking on that subject once with +some Senators in the cloak-room. During the conversation one of the +Senate pages brought me a telegram, on which he said the telegraph +messenger had told him there were 50 cents due. I give the page a silver +dollar and said to him: "I have been informed by some very respectable +and intellectual gentlemen in here, some of them now candidates for the +Presidency even, that this dollar is worth only 75 cents. I do not want +to cheat a little boy. Take this out, and if the boy thinks it worth +only 75 cents he can send me back 25 cents, and if he thinks it is worth +a dollar he can send me back 50 cents. I will leave it to him." The page +brought back 50 cents and said the telegraph boy told him he did not +know what those old "duffers" in there might say, but it was as good a +dollar as he wanted and was very hard to get. [Laughter.] + +The Senator talks about the bullion value as though that had anything +whatever to do with the value of the dollar. I have attempted to +demonstrate that the material that was in the dollar has nothing +whatever to do with it. Let me illustrate. Suppose the entire supply of +silver of the world to-day were $60,000,000. Suppose the law limited the +coinage of it to $58,000,000, and every dollar coined was at par with +gold. Suppose there were a demand for half a million dollars of silver, +to be used in the arts, and that the remainder ($1,500,000) of uncoined +silver were barred from the imperial money use. That supposes a supply +of $2,000,000 left after satisfying the requirements for coinage, and +supposes only half a million dollars' demand for use in all the arts. In +that case there would be a $2,000,000 supply bearing down a half million +dollars' art demand, or a proportion between supply and demand of 4 +to 1. Suppose that under those circumstances silver bullion went to 50 +cents an ounce. Would the Senator then say that 50 cents an ounce was +the value of the $58,000,000, and all the rest of the coined silver of +the western world, while by coining another million and a half, which +would be nothing to a country like this, all the silver would be at par +with gold? Every ounce of silver coined in Europe and the United States +is at par with gold, a thousand or twelve hundred million dollars of it +to-day in France, $200,000,000 in Germany, $370,000,000 of it here. We +are not dealing with the price of silver bullion, that portion of silver +that is deprived of its immemorial use as money. We do not say what the +commodity demand for silver may make that worth. Such a consideration +has no bearing whatever on the value of money. + +I will suppose that in some one county of the United States a law were +passed that the wheat grown in that particular county should have no +right to go through the grist-mill, and that that wheat, as it might +very naturally do, being deprived of use, fell to one-half the price of +the wheat grown elsewhere in the country. Would the price of the wheat +of that one county thus under interdiction and denied the grist be a +fair gauge by which to measure the value of the entire wheat crop of the +country? Manifestly not. All we have to do is to take up the little +"slack" of silver, and all of it will at once be at par with gold; then +we shall hear no more about the "commodity value" of silver. That is the +contention that the bimetallists make. + +Mr. HEARST. It will be $1.29. + +Mr. JONES, of Nevada. It will be $1.29 an ounce in one week--in three +days--in fact the very moment you give it back its ancient right of +coinage and restore to it its full money power. You coin of gold all +that is brought to the mint, and you deny to a certain portion of silver +that same long-established privilege, and then you measure the value of +the whole supply of silver by that of the little fraction that is not +coined, and which therefore has to find a market as a commodity. + +Mr. McPHERSON. Then, if the Senator will permit me, he necessarily +proposes that the Government of the United States shall take up all this +"slack," as he calls it, in the surplus quantity of silver and shall +use it in the coinage. The mints of Europe being closed against the +coinage of silver, there is no other place where it will be coined. Now, +if the Government of the United States should use all the surplus silver +in the country, which has simply forced the price down since we +remonetized silver in 1878 more than 20 per cent.---- + +Mr. JONES, of Nevada. Gold has risen 35 per cent. + +Mr. McPHERSON. Then I think the Senator's argument is upon this idea and +upon this plan, that after we are upon a silver basis, as we should be +most assuredly, there would be no inequality in the money, because it +would be all silver. + +Mr. JONES, of Nevada. And no inequality between it and gold. + +Mr. McPHERSON. Certainly not, because there would be no gold in +circulation. But let me ask the Senator another question. While he can +use his short-legged silver dollar for the payment of debts, when he +comes to make a new obligation would not the price of the goods assume a +price equal to the difference between gold and silver? In other words, +while you can use a debased currency for the payment of debts, if a +legislative decree requires that you shall accept it, you can not use it +for any other purpose. + +Mr. JONES, of Nevada. I can not understand the Senator. We have not +provided any "short-legged" dollar. The Senator is assuming a good many +facts and attempting to adjust me to them. I ask the Senator to wait +until he has heard my argument, and I invite the Senator then to make +reply to it. + +Mr. McPHERSON. I am sorry that I interfered with the Senator. + +Mr. JONES, of Nevada. It was no interference on the part of the Senator, +except that I can not separate the Senator's questions from the argument +and assumptions that he makes. As to the outflow of gold, as I have +said, it would take a long time for even $400,000,000 of it go. The +amount of gold driven out would tend to raise prices abroad by making +money more plentiful there, and so check the outflow of gold from here. +When Senators speak about $600,000,000 of gold being withdrawn from +circulation here a question that is a little curious arises. What are +these people who own it going to do with that gold after they have +withdrawn it from circulation? Are they going to invest it in Great +Britain? Are they going to invest it in France? Are they going to the +Cape of Good Hope to invest it? If they are they will reverse the policy +that English capitalists are pursuing now and have been pursuing for +years--bringing their gold over here for investment. The Senator tells +us that gold is to disappear from circulation. What will the owners do +with it? Where and in what are they going to invest it? + +Mr. McPHERSON. It will be held for a premium. + +Mr. JONES, of Nevada. But who will buy it at a premium? Who needs it at +all? For what purpose is it needed? Who is going to pay any premium for +it? Nobody is "short" on it, and there is no law which forces anybody to +have it. + +Mr. President, nobody wants it enough to give a premium for it. It is +only worth what is daily paid in the markets of the world and nobody is +going to pay a premium for it. It is a bogie with which to frighten the +people who demand reform in the currency of this country. Let them +withdraw their gold. + +I tell the Senator it is not the men who hoard the gold in vaults who +maintain or promote the prosperity of this country, but the toilers in +the wheat-fields and on the farms of the country, the men who work in +the planing mills, the forges, the furnaces, the factories, and in all +our institutions of industry. It is they that bring us our prosperity, +and not these people who are gambling for premiums on gold. + +Let them gamble among themselves; let who lose and let who win, the +people care nothing. The people of the United States are going to +institute a money that shall install and maintain justice as between the +citizens of this country, and they will not be impeded. I can tell the +Senator that neither his party nor the Republican party will ever impede +the march that this great country is about to make--the first in the +world, I am glad to say--in adjusting to the demands of industry and +commerce, that great instrument, money, the non-adjustment of which, as +I have already stated, has, in my belief, caused more misery than was +ever caused by war, pestilence, and famine. + +But to resume at the point where I was interrupted: + +The gold going out would tend constantly to restore the equilibrium +between our prices and those of the gold-using countries, making the +proportion of the gold outflow each year less than that of the year +before. If there be included in this computation the remaining +$100,000,000 of gold, which would remain after the outflow of the +$600,000,000, we shall be compelled to come to the conclusion that the +time when our stock of gold can be driven out will be almost +indefinitely postponed. + +But even should all our gold go by reason of the remonetization of +silver, it will not be to the injury of the gold standard, but to its +great advantage, and to the equally great advantage of the masses of the +people, as well of this country, which the gold may leave, as of all +countries to which it may go. It will make the "gold standard" +consistent with the prosperity of the countries maintaining it. But +instead of preserving the gold standard of to-day, which is a standard +of wrong, it will inaugurate a gold standard that will approximate to a +standard of justice. + +The new "gold standard" that would be established by the outflow of our +gold would be a standard of prices resulting from the influx into +England, France, and Germany, the principal gold-using countries of +Europe, of more than $600,000,000 of money. + +So considerable an addition to their money-stock would raise prices in +those countries, and by remaining there, would, with the current +production, which we could spare to them, tend to maintain prices at a +steady level. Such a condition would be an inestimable boon to the +overburdened masses of Europe, and their prosperity would not be +attained at the expense of the people of the United States. We could +well afford to let gold go, since, by the coinage of silver, our own +money volume would not be reduced. The rise of prices which it would +effect in Europe would not only, as I have stated, secure better prices +for our exported goods, but would undoubtedly enable us to maintain +prices here at a substantial parity with those of Europe--that is to +say, with those of the new, more rational and more beneficent gold +standard which would be established by the full remonetization of silver +in this country. + + +PRACTICALLY NO GOLD MONEY IN THE UNITED STATES. + +But, aside altogether from this consideration, the gold that we already +have is really a surplus--it is practically a dead and useless article. +Gold, Mr. President, can not with entire truth be said at the present +time to form any part of the money of this country. Who but a bank clerk +ever sees a gold piece? With the exception of a few million dollars on +the Pacific coast, gold is not really in circulation in this country. +It is performing no useful function whatsoever. While I am engaged in +delivering these remarks I venture to say no Senator within the sound of +my voice has in his pocket a single gold coin of any denomination +whatever, or any paper representative of one. + +This is the answer to the fear expressed by some Senators that when +those who hold gold shall observe the enlargement of the money +circulation by the issue of the proposed Treasury notes they will be +likely to hoard it. They are already hoarding it. Every body knows that +that is about all that gold is used for in this country. It is hardly +possible for it to be hoarded to any greater extent than it is at the +present time. So little is this metal in circulation that I do not deem +it any exaggeration to say that there are millions of people in the +United States, "native here, and to the manner born," who have never in +all their lives seen a gold coin. + +How absurd, then, is the claim that any loss is to be suffered by the +alleged future hoarding of gold, or that any calamity can occur to +65,000,000 people by the disappearance of that which has long since +disappeared. + + +THE ARGUMENT BASED ON OUR BALANCE OF TRADE. + +One of the staple arguments of the advocates of the single gold standard +is, that if our stock of gold were greatly reduced we should be unable +to make payments to foreign countries in case the balance of trade +turned against us. It is only through an excess of imports over exports +that gold could go, and this country now produces of nearly all articles +almost all that it consumes. With the exception of two years there has +not been a balance of trade against us for fourteen years, as the +following table will show: + + _Value of merchandise imported into, and exported from, the United + States, from 1876 to 1889, inclusive; also annual excess of imports + or of exports--specie values._ + + ------+------------+------------+--------------+-----------+---------- + Year | | | | Excess of |Excess of + ending| Total | Total |Total exports | exports | imports + June | exports. | imports. | and imports. | over | over + 30-- | | | | imports. | exports. + ------+------------+------------+--------------+-----------+---------- + | _Dollars._ | _Dollars._ | _Dollars._ |_Dollars._ |_Dollars._ + 1876 |540,384,671 |460,741,190 |1,001,125,861 | 79,643,481| -- + 1877 |602,475,220 |451,823,126 |1,053,798,346 |151,152,094| -- + 1878 |694,865,766 |437,051,532 |1,131,917,298 |257,814,234| -- + 1879 |710,439,441 |445,777,775 |1,156,217,216 |264,661,666| -- + 1880 |835,638,658 |667,954,746 |1,503,593,404 |167,683,912| -- + 1881 |903,377,346 |642,664,628 |1,545,041,974 |259,712,718| -- + 1882 |750,542,257 |724,639,574 |1,476,181.831 | 25,902,683| -- + 1883 |823,839,402 |723,180,914 |1,547,020,316 |100,658,488| -- + 1884 |740,513,609 |667,697,693 |1,408,211,302 | 72,815,916| -- + 1885 |742,189,755 |577,527,329 |1,319,717,084 |164,662,426| -- + 1886 |679,524,830 |635,436,136 |1,314,960,966 | 44,088,694| -- + 1887 |716,183,211 |692,319,768 |1,408,502,977 | 23,863,443| -- + 1888 |695,954,507 |723,957,114 |1,419,911,621 | -- |28,002,607 + 1890 |742,401,375 |745,131,652 |1,487,533,027 | -- | 2,730,277 + ------+------------+------------+--------------+-----------+---------- + +This table shows that while for last year there was a balance against us +of $2,730,277, and the year before of $28,002,607, for all former years +from 1887 back to 1874 the balances were in our favor--all the way from +$23,000,000 in 1887 to $265,000,000 in 1881. But the total want of +significance so far as the movement of gold is concerned attaching to +any figures showing a balance of trade against the United States will be +seen by an analysis of the figures for any one year. Let us take for +example the imports and exports for 1889 and analyze them by countries. + +I now present a table in which I place in one group the gold-using +countries, and in another the silver and paper-using countries. + + _Exports and imports of the United States to and from the various + gold-using and silver-using or paper-using countries of the world + for the fiscal year ending June 30, 1889._ + + ------------------------------------+---------------+--------------- + Countries. | Exports. | Imports. + ------------------------------------+---------------+--------------- + Gold-using countries: | | + Canada | $42,141,156 | $43,009,473 + Belgium | 23,345,219 | 9,816,435 + Denmark | 3,903,937 | 846,904 + France | 46,120,041 | 69,566,618 + Germany | 68,002,594 | 81,742,546 + Great Britain | 382,981,674 | 178,269,067 + Greece | 165,079 | 988,923 + Italy | 12,604,848 | 17,992,149 + Netherlands | 15,062,939 | 10,950,843 + Portugal and its possessions | 3,266,814 | 1,282,556 + Spain | 11,946,348 | 4,636,661 + Sweden and Norway | 2,615,569 | 2,983,319 + Turkey | -- | 4,687,731 + British possessions in Africa | 2,936,213 | 895,344 + British possessions in Australia | 12,321,980 | 5,998,211 + | | + Silver and paper using countries: | | + Austria-Hungary | 726,156 | 7,642,297 + Russia | 8,364,545 | 2,985,631 + Mexico | 11,486,896 | 21,253,601 + Central America | 4,325,923 | 8,414,019 + Hawaii | 3,375,661 | 12,847,740 + Argentine Republic | 9,293,856 | 5,454,618 + Brazil | 9,351,081 | 60,403,804 + Chili | 2,972,794 | 2,622,625 + Peru | 780,835 | 314,032 + Colombia | 3,821,017 | 4,263,519 + Uruguay | 2,192,848 | 2,986,964 + Venezuela | 3,738,961 | 10,392,569 + Cuba | 11,691,311 | 52,130,623 + Hayti | 5,340,270 | 5,211,704 + Porto Rico | 2,224,931 | 3,707,373 + British West Indies | 10,453,973 | 20,723,268 + Dutch West Indies | 887,778 | 654,320 + China | 6,477,512 | 18,508,678 + India, British | 4,330,413 | 20,029,601 + India, Dutch | 2,249,604 | 5,207,254 + Japan | 4,619,985 | 16,687,992 + ------------------------------------+---------------+--------------- + +By this table it is seen that the only gold-using countries having a +balance of trade against us are Canada, $868,317; France, $23,446,577; +Greece, $823,824; Germany, $13,739,952; Italy, $5,387,301; Sweden and +Norway, $367,850; Turkey, $4,687,731--making a total balance against us +in gold-using countries, $49,321,452--against which we have a balance in +our favor with Great Britain alone of over $200,000,000. + +The balance against us in favor of all the silver using countries could +of course be readily settled in silver; and by carefully noting the +figures of the table last given it will be seen that it is in the last +degree improbable that there will ever be a balance of trade against us +in the gold using countries, taken as a whole. + +Hence it is clear that if we had no gold at all we could readily settle +all foreign balances that might be against us. + +Nations, however, ultimately, and on the whole, square their accounts +with commodities. Every nation must buy what it wants with its own +products. In this country especially have we nothing to fear, because +any temporary balance against us could always be met by the yield from +our own mines. No country has any difficulty by reason of my difference +in money systems in buying what any other nation has to sell. + +This view is supported by all writers on political economy. I need +quote but one. Professor Cairnes, professor of political economy in +the University College of London, in his able work on "Some unsettled +questions in political economy" (1874), says: + + It appears to me that the influence attributed by many able + writers in the United States to the depreciation of the paper + currency as regards its effects on the foreign trade of the + country is, in a great degree, purely imaginary. An advance in the + scale of prices, _measured in gold_, in a country, if not shared + by other countries, will at once affect its foreign trade, giving + an impulse to importations and checking the exportation of all + commodities other than gold. A similar effect is very generally + attributed by American writers to the action on prices of the + greenback inconvertible currency. + + But it may easily be shown that this is a complete illusion. + Foreigners do not send their products to the United States to take + back greenbacks in exchange. The return which they look for is + either gold or the commodities of the country; and if these have + risen in price in proportion as the paper money has been + depreciated, how should the advance in paper prices constitute an + inducement for them to send their goods thither? The nominal gain + in greenbacks on the importation is exactly balanced by the + nominal loss when those greenbacks came to be converted into gold + or commodities. The gain may, in particular cases, exceed the + loss, but, if it does, the loss will also, in other cases, exceed + the gain. On the whole, and on an average, they can not but be the + equivalents of each other. + +Mr. President, the best place in the world where we can have gold is not +in the Treasury of the United States, not in any sub-treasury, but in +circulation, if not in our own country, then, in the foreign countries +where our surplus products are sold. That is where gold would do us the +most good by making money plentiful and prices correspondingly high. It +does us no good here whatever, locked up as it always is, and doing none +of the work of money, but simply reduces to the minimum the tax-paying +and debt-paying power of our wheat- and cotton-growing communities. + +An unjust money should not be tolerated, whatever the material of which +it may be composed, and the people of this country will not tolerate it. +They do not fear the outflow of gold. If, in order to retain it, they +must continue to lose as they have been losing for the past fifteen +years, they will favor its going, and raise a shout of joy when it does +go. With a perfect money system in our own country the range of our +domestic prices would continue stable and equitable without regard to +the prices of foreign countries. Our foreign trade would take care of +itself, and whatever the balances might be, they would be much oftener +in our favor than against us, and in reality concern only the importing +merchant and not the Government or the people of the United States. The +difficulty of gold-using countries to get our money, in which to pay us +the balances they would owe us, would be much greater than our +difficulty in getting their money, in which to pay them the occasional +balances we might owe them. + +Much the more serious question, (if it be a serious question at all, +which I deny) is how they shall get our money, not how we shall get +theirs. As the balances would be for the most part in our favor, it is +for them to take such steps as may be necessary in order to pay us. But +there is no just reason to apprehend difficulty in either case. A great +country like the United States will have no trouble in buying the money +of any other country at equitable rates--at rates regulated by the +purchasing powers of the moneys of the two countries, respectively. + +No country in the history of the world, having a money local to itself, +has ever found the slightest difficulty in buying, upon ratios +determined by the relative purchasing powers of the two kinds of money, +a sufficient amount of foreign exchange (which simply means the money of +another country) to meet all adverse balances of trade. + +While earnestly advocating the full remonetization of silver and the +maintenance in this country of a money volume sufficient to insure a +steady level of prices and an unchanging value in the money unit, I +entirely disclaim any desire for an inflation of the currency. My +contention is that without silver we can not keep prices from further +decline, and can not have enough money to serve the growing needs of +population, industry, and commerce. + +At the same time I can not refrain from expressing the conviction that, +as between inflation and contraction, no careful student of history and +of economic science can for a moment hesitate in deciding that the evils +inflicted on society by contraction have been longer in duration and +infinitely greater in degree than any that have ever resulted from +inflation. During all periods in which there has been a generous +increase in the money-volume of a country or of the world, activity and +prosperity have been its accompaniment. I challenge the citation of an +instance to the contrary. + +With a volume of money increasing at a rate sufficient to meet the +demands of a growing population, and especially if the money be such as +will not leave the country, but, under all circumstances, will remain in +it, to sustain prices, preserve equities, and reward labor, no country +with a proper coordination of its industries can be otherwise than +prosperous. + +The property of mobility--of fluidity--which is so much lauded in gold, +is precisely the property least to be desired in the money of a country, +if that property of mobility or fluidity is to keep alternately bringing +money into and taking it out of the country, disturbing prices and +disarranging equities. When it comes, if it enters into circulation, +prices rise; when it goes, prices fall, and thus, instead of having a +steady and level platform of prices on which the trade and industry of +the Republic may rest, like the firm and level platform of liberty upon +which all our citizens stand, we whose business it is to "see that the +Republic take no harm," furnish our people with an "inclined plane" of +finance on which all their business must be conducted. Men buying this +month at the elevated end of the platform find themselves selling next +month at the depressed end. + +Whenever in the history of a country there has been least reliance on +international money (gold) and more reliance on merely national money +(even of paper when reasonable limits were placed upon its quantity), +prosperity has been everywhere present. I need not recall to the minds +of Senators the wave of prosperity that swept over this country when it +was without any international money and resorted to the "greenback" +currency. + +When, as a result of the Franco-German war, France was deprived of +international money, suspended specie payments, and resorted to a +properly limited paper currency, her progress was unbounded. + +No period in the history of Great Britain can compare for activity, +prosperity, or achievement, with the twenty years preceding 1816, when +specie payments were suspended, and during which period, as testified to +by witnesses before the secret committee of Parliament, the discount +rate of the Bank of England did not buffer a single change; whereas from +that period to 1847 the rate was changed sixteen times, and from 1847 to +1874 as many as 274 times, the fluctuations being sometime of the most +violent character. + +When gold threatens to leave Great Britain the rate of discount at the +Bank of England is raised, with the view of discouraging, if not +preventing, the outflow. Raising the rate of discount is like putting +the brakes on a railroad train; lowering the rate is like letting off +the brakes. + +These changes were not due to any greater demand for money but to the +movements of gold. There was frequently, in the condition of business, +no warrant whatever for a rise in the rate of discount. The only reason +for it was to prevent gold from performing what "our most conservative +financiers" denominate its "noble" function of "mobility"--of +"fluidity"--namely, the function of going "where it was wanted." This +function of going "where it is wanted" is described as the great +"mission" of gold, and it is assumed that it will never be wanted at +more than one place at a time. Yet hear what the chancellor of the +exchequer of Great Britain said a few days ago in the House of Commons: + + I admit that, as interested in the commerce and monetary system + of this country I feel a kind of shame that on the occasion of + L2,000,000 or L3,000,000 of gold being taken from this country + to Brazil, or any other country, it should immediately have the + effect of causing a monetary alarm throughout the country. (Speech + of the chancellor of the exchequer in the House of Commons, April + 18, 1890.) + +This is a suggestive admission, from so well-informed a source, as to +the operation of the single gold standard. I commend it to those who +would circumscribe and hamper the prosperity of this country by making +gold alone the standard of all values. + +I have thought it necessary, Mr. President, to state what I conceive to +be the true principles of the science of money, the principles that, +with the progress of time and growth of intelligence, must prevail the +world over; because, without a clear understanding of the relation which +the quantity of money in a country bears to the prosperity and happiness +of its people, there would be no justification for an addition of either +silver, gold, or any other form of money to the quantity already in +circulation. If the value of money depends on quantity, then, as long as +the world adheres to the automatic theory of money, my contention is +that all the silver produced from all the mines of the world should be +transmuted into coin; and even then, if the wants of the world continue +to increase as they have been increasing, it is only a question of time, +and that not far distant, when the combined supply of both metals will +be insufficient to maintain the equities in time transactions. + +The world having decreed to stand by the automatic system we are now +dealing with the question as a practical one. + +The only relief that can be had is to adhere strictly to that system, +and give it full scope. Remove all legislative restrictions and let the +world have the full benefit of all the precious metals that are yielded +by the mines. + + +THE WORLD'S SUPPLY OF GOLD AND SILVER. + +Since for thousands of years the world recognized both silver and gold +as money, can anybody tell what has happened to render one of them +unfitted for the money use? + +No argument based on fluctuations in the current supplies of either of +the metals can militate against the use of both as money. The +fluctuation in the annual yield of both, taken together, is much less +violent and less frequent than the fluctuation of either taken +separately. By the use of both, society has much greater security +against the evil of an insufficient money volume. While a large yield, +now of one, and again of the other, has taken place, there is no +instance in the history of the world of an extraordinary yield of both +occurring simultaneously, except in the single instance of the first +discovery of the mines of America. When the gold mines have been +yielding largely, there has been no special increase of silver, and +during the period when silver has been produced in comparatively large +quantities the gold mines have been less productive. + +This will be illustrated by the following table showing the yield of +both gold and silver, from the discovery of America to the present time. + + _Annual average production of the precious metals throughout the + world from the discovery of America to 1872._ + + [From Director of United States Mint.] + + -----------------------------------+-------------+-------------- + Periods. | Gold. | Silver. + -----------------------------------+-------------+-------------- + 1493-1520, average for each year | $3,855,000 | $1,953,000 + 1521-1544 do | 4,759,000 | 3,749,000 + 1545-1560 do | 5,657,000 | 12,950,000 + 1561-1580 do | 4,546,000 | 12,447,000 + 1581-1600 do | 4,905,000 | 17,409,000 + 1601-1620 do | 5,662,000 | 17,538,000 + 1621-1640 do | 5,516,000 | 16,358,000 + 1641-1660 do | 5,829,000 | 15,223,000 + 1661-1680 do | 6,154,000 | 14,006,000 + 1681-1700 do | 7,154,000 | 14,209,000 + 1701-1720, average for each year | 8,520,000 | 14,779,000 + 1721-1740 do | 12,681,000 | 17,921,000 + 1741-1760 do | 16,356,000 | 22,158,000 + 1761-1780 do | 13,761,000 | 27,128,000 + 1781-1800 do | 11,823,000 | 36,534,000 + 1801-1810 do | 11,815,000 | 37,161,000 + 1811-1820 do | 7,606,000 | 22,474,000 + 1821-1830 do | 9,448,000 | 19,141,000 + 1831-1840 do | 13,484,000 | 24,788,000 + 1841-1850 do | 36,393,000 | 32,434,000 + 1851-1855 do | 131,268,000 | 36,827,000 + 1856-1860 do | 136,946,000 | 37,611,000 + 1861-1865 do | 131,728,000 | 45,764,000 + 1866-1870 do | 127,537,000 | 55,652,000 + 1871-1872 do | 113,431,000 | 81,849,000 + -----------------------------------+-------------+-------------- + + _World's production of gold and silver for the calendar years + 1873 to 1889, inclusive._ + + ----------+---------------+------------------------------------------- + | Gold. | Silver. + Calendar +---------------+--------------+--------------+------------- + years. | | Fine | Market | Coining + | Value. | ounces. | value. | value. + ----------+---------------+--------------+--------------+------------- + 1873 | $96,200,000 | 63,267,000 | $82,120,000 | $81,800,000 + 1874 | 90,750,000 | 55,300,000 | 70,673,000 | 71,500,000 + 1875 | 97,500,000 | 62,263,000 | 77,578,000 | 80,500,000 + 1876 | 103,700 000 | 67,753,000 | 78,322,000 | 87,600,000 + 1877 | 114,000,000 | 62,648,000 | 75,240,000 | 81,000,000 + 1878 | 119,000,000 | 73,476,000 | 84,644,000 | 95,000,000 + 1879 | 109,000,000 | 74,250,000 | 83,383,000 | 96,000,000 + 1880 | 106,500,000 | 74,791,000 | 85,636,000 | 96,700,000 + 1881 | 103,000,000 | 78,890,000 | 89,777,000 | 102,000,000 + 1882 | 102,000,000 | 86,470,000 | 98,230,000 | 111,800,000 + 1883 | 95,400,000 | 89,177,000 | 98,986,000 | 115,300,000 + 1884 | 101,700,000 | 81,597,000 | 90,817,000 | 105,500,000 + 1885 | 108,400,000 | 91,652,000 | 97,564,000 | 118,500,000 + 1886 | 106,000,000 | 93,276,000 | 92,772,000 | 120,600,000 + 1887 | 105,300,000 | 96,189,000 | 94,265,000 | 124,366,000 + 1888 | 109,900,000 | 109,911,000 | 103,316,000 | 142,107,000 + 1889 | 118,800,000 | 125,830,000 | 117,651,000 | 162,690,000 + ----------+---------------+--------------+--------------+------------- + +From this table it will be seen that from 1801 to 1820 the average +yearly yield of gold was $9,710,500; of silver, $36,847,500--four of +silver to one of gold. + +From 1821 to 1840 the average yearly yield of gold was $11,466,000; of +silver, $21,964,000--two of silver to one of gold. + +From 1841 to 1860 the average yearly yield of gold was $85,150,000; of +silver, $34,826,500--two and a half of gold to one of silver. + +From 1861 to 1880 the yearly average yield of gold was $117,991,850; of +silver, $68,043,900--nearly two of gold for one of silver. + +From 1881 to 1889 the yearly average yield of gold was $105,500,000: of +silver, $122,540,388--one-sixth more silver than gold. + +From those figures it is plain that no continuous, extraordinary yield +of silver, such as might warrant the slightest fear of an unnecessary +addition to the money volume, is to be expected. On the other hand the +continuous drain of gold for use in the arts, as dentistry, gold plate, +jewelry, gilding, and articles of decoration generally, is seriously +encroaching upon the annual supply. + +Both metals possess in common, and neither in any different degree from +the other, all the qualities which are recognized as necessary in a +commodity money. Silver enjoys in an equal degree with gold the quality +of indestructibility, of divisibility, of malleability, and of +resistance to chemical changes. The stock of both existing in the world +(the product of all time) is estimated to be about equal, the production +of the past 500 years being set down as-- + + Gold $7,240,000,000 + Silver 7,435,000,000 + +That silver mining has not proved exceptionally profitable in this +country is proved by the comparatively small number that have engaged in +the business. This country has been thoroughly explored in the search +for additional mines without any of great value being discovered. The +allurements of the business lie in its uncertainty; and for the +occasional prize that is drawn thousands of blanks are found. There is +always enough hope of results to induce continued effort, but there is +also sufficient doubt and discouragement to deter an undue number from +engaging in the business. + +The mines of Mexico have been worked for hundreds of years; and up to +1873 the business of silver mining in that country had all the stimulus +that a parity at 15-1/2 to 1 could give to it. It is not, therefore, +probable that any material increase of output can be expected from that +quarter. + +Conceding, for the sake of the argument, the eventual possibility of so +superabundant a yield of silver as to work injury and inequity to the +interests of creditors, is it not manifest that it is in the power of +society at all times to remedy the evil by a limitation of the coinage? +And on the other hand, is it not equally manifest that for an +insufficient supply there is no remedy? + +If great mountains of silver should be discovered, does not Congress +meet constantly? If there should seem to be too much, could not the +coinage be readily limited to prevent depreciation? But, on the other +hand, when we dedicate the monetary function solely to one metal, of +which there is manifestly and admittedly the world over an insufficient +supply, where is the remedy? What can Congress do to enlarge that +supply? Absolutely nothing. + + +THE GOLD USED IN THE ARTS. + +The Director of the United States Mint a few years ago estimated that of +the $100,000,000 gold annually produced from the mines of the world +$46,000,000 are consumed in the manufacture of jewelry, gold plate, +plated ware, gold-leaf, etc., and in various processes of dentistry. + +The single standard of gold, therefore, is maintained by the creditor +nations in the face of the admitted fact that but $50,000,000 of that +metal are annually added to the money stocks. + +Not only is this encroachment of the commodity demand on the money +supply becoming greater year by year, with the growth of population, but +the supply of gold from the mines is itself becoming less, having +declined from an average of $137,000,000 between 1856 and 1860 (the +period of greatest yield from California and Australia), to an average +of $107,000,000 for the past ten years. Of the entire gold supply of the +world, nine-tenths of it have come from placer mines, readily +discoverable and easily worked, because requiring little or no capital. +All known fields of those are practically exhausted, and there is no +reasonable prospect of the discovery of others. Hardy, adventurous, and +skillful miners from the United States, and capitalists from all +countries, have ransacked the world in vain for new fields of gold. Why, +then, with the knowledge of those facts before us, should we discard +from the full money use and function the only metal that gives to the +world any prospect of relief from the money famine from which +civilization is now suffering and from which, if silver be not speedily +restored to its ancient use and function, the world is destined to +suffer much more? + +If it be conceivable that the demonetization of either metal were +necessary, why demonetize that which promises the greater and more +steady yield? If for any reason society should decide that one of the +metals should be discarded, should it not rather be that one which +promises the smaller future yield, than that which promises the larger? + +Silver is the money-metal best suited to the mass of the people, and to +the variety and character of transactions that constitute the +interchanges of daily life. The supplies of both metals if united by +law, in the full money function, would have a steadiness of value which +can not be attained by either separately. + + +TREASURY NOTES SHOULD NOT BE REDEEMED IN BULLION + +The proposition to redeem the proposed treasury notes in silver bullion +or in anything but lawful money of the United States will never meet the +approval of the people. + +What the people of this country want is money, and what they should have +is money. These notes will represent full value received, the evidence +of which is the bullion in possession of the Government. When issued, +they will enter into circulation. They will have to do the work of money +among the people. They will go to make up the volume of the currency. On +the basis of that volume each dollar acquires a certain value, and +represents a given amount of sacrifice. On that volume, and on those +conditions, bargains will be made, prices established, debts contracted, +values adjusted, and equities created. If any portion of that money be +withdrawn from circulation (for that is what "redemption" means) without +an equivalent amount of money in some other form being issued to take +its place, the circulation will to that extent be contracted, every +dollar in circulation will increase in value, prices will fall, +property-values established on the basis of the larger circulation will +shrink, and equities will be destroyed. + +The redemption of any number of those notes in silver bullion means the +withdrawal of many dollars of money from circulation and the destruction +of so much of the money of the country. Money is not a thing that can be +destroyed with impunity. It should be kept in use among the people. It +is to industry what the blood is to the human body; it is the +life-giving and life-sustaining medium. The money volume of a country +should not be subject to frequent and violent changes. In a new and +growing country, it should be characterized by that steady accretion +that characterizes the increase in the quantity of blood in the human +body as it progresses from infancy to maturity. It is no more +unreasoning, empirical, or unscientific to be alternately withdrawing +blood from, and injecting blood into, a human body than to be constantly +contracting and expanding the money volume of the country. And as +activity of circulation of the blood is essential to the health of the +body, so activity of circulation in money is indispensable to the +well-being of society. The possession of no mere commodity, whatever its +value, will compensate a country for the destruction of any considerable +portion of its money, upon the entire volume of which vast equities +rest. + + +MONEY SHOULD BE REDEEMABLE IN ALL THINGS. + +Money should be redeemed in all things; not in one thing alone. The +peculiar characteristic of true money, that which distinguishes it from +all other things whatsoever and constitutes it a prime factor in +civilization, is that it is at all times redeemable in any thing that is +on sale. Being an order for property, it should be redeemed in any form +of disposable property which the holder may desire. + + A guinea-- + +said Adam Smith-- + + may be considered as a bill for a certain quantity of necessaries + and conveniences upon all the tradesmen in the neighborhood. + +Any form of money, the condition of whose existence depends on +redeemability in one thing alone, can not be money in the full sense, +and whenever an urgent demand for real money springs up the other ceases +altogether to be money. + +The redemption of money should be reciprocal between the Government and +the people and between and among all individuals in the community. It +should not only be redeemable by the Government by acceptance for taxes +but also redeemable by and among the people for all property for sale +and services for hire. Its quantity should be so regulated as that its +unit (the dollar) should neither increase nor diminish in value, and it +should be kept constantly in circulation, and not be permitted to lie +uselessly in the Treasury. Any other money than this is to a certain +extent counterfeit; it is false money, because when most needed it fails +to be money and has to be "redeemed" in something else (gold) which can +not be got except at ruinous sacrifice. + +It is of the very essence of money--its pith and marrow and +protoplasm--that it should be a legal tender, a universal solvent, the +ultimate of payment, and redeemable, at the prices ruling, in everything +that is on sale. If the volume of such money be properly regulated, +while there may from time to time be variations in the prices of +particular articles, the general range of prices will be maintained +practically undisturbed. + +What an absurdity it is for the Government to put its stamp on one thing +in order to make it redeemable in another thing imprinted with the same +stamp, but which nobody wants except for the purpose of getting a third +thing that could have been got just as well without the intervention of +the second. As well might he who, wanting water, is given a silver cup +wherewith to get it, but on going to the spring is forbidden to drink +until he exchanges his silver cup for a gold one. + +The real reason why it is insisted that all other things than gold shall +be exchangeable into gold is that gold is getting dearer by reason of +decreasing supply and increasing populations. The necessity for +convertibility into gold implies that, in ordinary times, a range of +prices higher than the gold range will prevail, and when, by reason +perhaps of increased activity of business, redemption comes to be +demanded prices are at once precipitated to those of the gold standard +and below, to the great advantage of the creditor classes, who, as +owners of bonds, may be considered in the language of the stock exchange +"long" on money, and to the equally great injury of the producing class, +who, being in debt, may be considered as having sold money "short." + +The supreme consideration is that the money of a country shall be so +regulated as that prices may not fall from any cause inhering in the +money system. The value of money--in other words, the sacrifice +necessary to obtain it--should be no greater at one time than at +another. In order to effect that object of prime consequence, to +maintain the value of money unchanging, there should be no hesitancy +whatever in changing the material of which it is made. + +Nobody who has reflected on the subject for a moment doubts that what +gave "value" or exchangeable power to the greenback was not the promise +made on its face, without date, to pay a dollar, but the inscription on +its back which declared it a legal tender for all dues and demands, +public and private, except duties on imports. It was a misfortune to +mankind that the words "promise to pay" were printed on it, because by +it millions were led to believe that the "value" or exchangeable power +resided in the promise instead of in the legal-tender power conferred +upon it. + +There is no object in redeeming in gold, except to maintain gold prices, +that is to say, the range of prices prevailing in gold-using countries, +and as those prices are constantly trending downward, any country that +insists on maintaining the gold standard must accept the consequences in +a corresponding fall of prices. The advocates of the gold standard, in +effect, maintain that no matter to what extreme prices may fall, we must +be content--we must bow in humble submission to the inevitable, since, +in their view, it is more necessary to maintain the sacredness of the +gold standard than to establish justice, promote prosperity, or to +maintain equity in all time transactions. + +It is in no way necessary, on account of any intrinsic or inherent +quality of gold, that should have that particular metal, and that alone, +for money. + +It is boasted that gold is a universal measure. Why is it universal? Why +is gold accepted in every country of the world? Not because the gold is +wanted for any quality inherent in the metal, but because it is an order +for property in gold-using countries, such as England, France, and +Germany, whose trade is largely a foreign trade. At whatever rate gold +will exchange in England, it will exchange in all countries having trade +relations with England, because it is an order for goods in a country +with which they are dealing. Will not the money of this country equally, +and for like reasons, whether gold or silver, have acceptability in +every country with which the United States have trade relations? Not for +any quality inherent in the metal, but because it is an order for +property in the United States. Will it not be willingly accepted by +those who wish to buy in this country? + + +POSSIBLE EFFECT OF REDEMPTION IN BULLION. + +In order to see the effect of the redemption of these Treasury notes in +bullion, we have but to look at the possibilities of the situation. +Suppose there were in the Treasury $300,000,000 worth of that bullion, +which, by the taking up, little by little, and month by month, of the +amount not used in the arts, would be taken by the Treasury at or about +par. Then, suppose that for any reason, such as fear of approaching +panic or otherwise, $100,000,000 of the Treasury notes were suddenly +presented for redemption, and canceled, and the bullion as suddenly put +on the market, what would it be worth? What would gold bullion be worth +if it had not the privilege of coinage, and if $100,000,000 of it, +deprived of the money use, was suddenly put on the market? Can there be +a doubt that the abrupt output of so large a quantity would have the +effect of immediately and enormously depreciating its value? In the case +under consideration, the result would be that the silver remaining in +the Treasury would not bring one-fourth the sum necessary to redeem the +outstanding Treasury notes, so that not only would a heavy loss result +to the Government, but, by reason of the sudden and serious contraction +of the money volume, an infinitely greater loss would result to all the +people. + +But if it be deemed a remote contingency that any extraordinary amount +would in that manner be suddenly taken from the Treasury, there is +another danger which can not be put aside as improbable, but which, on +the contrary, is to be looked for with almost absolute certainty, and to +my mind, constitutes an irremovable and insurmountable objection to any +system of bullion redemption. + +A large number of merchants in London need, monthly, millions of dollars +worth of silver to make payments in India. They will naturally want +to get it at the lowest price, and it is not to their advantage to +intensify the competition for it. On the contrary, it is to their +direct advantage to depress the price to the lowest possible point. + +As the Treasury of the United States would buy silver at the lowest +price, the London merchants would refuse to enter the open market in +competition with our Government for its purchase. But no sooner could +the silver be stored in the vaults of the Treasury, than the agents of +the London merchants would appear, and before any opportunity had +offered for a favorable change in the price of the bullion, could +present as many millions of these notes as might suit their purpose, and +receive bullion therefor. A Secretary of the Treasury who +conscientiously believed that it was his duty to maintain the gold +standard at all hazards, would naturally feel compelled--certainly it +would be in his power--to put out whatever amount of bullion he might +deem necessary to accomplish that purpose, even if it all had to go. + +Thus the United States Treasury would become the convenient and +capacious conduit through which silver should immediately flow from this +country to England, depriving our people, notwithstanding the +legislative measures for their relief, of practically all use of silver +as money, inasmuch as the four and a half-million dollars of Treasury +notes would be withdrawn and canceled about as soon as issued. + +Thus would our Treasury Department be made practically the purchasing +agent in this country of any syndicate or combination of English +merchants who might desire silver for the East India trade. + +If it be said that no Secretary of the Treasury would attempt thus to +defeat the will of the people as expressed in the law, the sufficient +reply is that a conscientious man who believes that the honor of the +United States is pledged to the maintenance of the gold standard, and +that it is indispensable to the prosperity of the people, will exercise +all the power vested in him by law to prevent a departure from that +standard, and will regard himself as for the time being the savior of +the Republic by keeping it from "the edge of so dangerous a peril" as +the execution of the people's will. + +Certainly no man will deny to the present Secretary of the Treasury +entire rectitude of motive in all his conduct. From the well-known fact +that since the passage of the limited coinage act of 1878 all our +Secretaries have refrained from purchasing more silver than they were +compelled to do by the mandatory provision of that law, it is reasonable +to infer that none of them, if called upon to execute a law containing a +silver bullion redemption clause, such as is suggested, would feel +called upon to make a net purchase of more than $2,000,000 worth in each +month; and that none of them would hesitate to exchange for Treasury +notes all the monthly purchases of bullion in excess of that amount. + + +A PLANK FROM THE REPUBLICAN PLATFORM. + +I must be pardoned for directing the attention of Senators on this +side of the Chamber to a short declaration of the last Republican +National Convention: + + The Republican party is in favor of the use of both gold and + silver as money. + +If party platforms mean anything that clause meant that the Republican +party went before the country pledged to the use and to the equal and +non-discriminating use of both silver and gold as money. It was well +known that throughout the entire West the question of the +remonetization of silver was deemed of vital importance, and party +orators and the party press, throughout that entire section were severe +in their denunciation of the prior administration of its unfriendly +attitude toward silver. + +I wish in all solicitude and sincerity to advise my Republican friends +of the East that this plank in the party platform was construed by the +Republicans of the West to mean precisely what it says. They are looking +with confidence to this Congress for such action as will fittingly +embody in the statutes the principle laid down by the party now in the +responsible direction of the Government. + + +SHALL WE BE FLOODED WITH SILVER? + +We are told that if silver is given free access to the mints we shall be +flooded with it from all parts of the world. Does anybody show where the +flood of silver is to come from? Where are the reservoirs that contain +it? Not in England, where it is difficult for the people even to get a +sufficiency of it for small change to transact the business of the +country: not in Germany, where the scarcity of money was so pressing +that the government had to abandon the idea of selling silver. Though +the stock in France is large her people will never give it up. Silver +has been the "shield and buckler" of the French Republic. All she has is +coined at the ratio of 15-1/2 ounces of silver to 1 of gold, and its +shipment to this country would involve a loss to France, not only of the +3 per cent. difference between the French relation (15-1/2 to 1) and +ours (which is 16 to 1), but of 3 per cent. additional in the cost of +gathering and shipping it. And after that could only exchange them for +Treasury notes. The silver stock in India and the Orient is performing +indispensable duty as money, and no "flood" of it can be expected from +that quarter. From time immemorial India has been absorbing all the +surplus silver of the world. She has never got so much as to appease her +appetite for more. So insatiable is her desire for that metal that she +has long been known as the "Sink of Silver." China has not a piece of +the metal that she can dispose of. Mexico has no stock whatever of +silver on hand, except the limited number of coined pieces forming her +moderate money circulation, and not a dollar of it can be spared. No +country of Central or South America has any surplus silver. Every piece +of coined silver in every country in the world is part of the monetary +circulation of that country, and even when of short weight and +classified as a mere "token" is passing at par as full valued money. No +gain could possibly accrue, therefore, to the owners of coined silver +anywhere by shipping it to this country for any purpose, and there is no +surplus stock of bullion anywhere. + +If anybody doubts this statement let him make the attempt in all the +money centers of the world to buy from accumulated stock even $5,000,000 +worth of it. He will fail to get it in London, Paris, Berlin, Calcutta, +New York, or San Francisco, or in all combined. There is no source from +which to get silver except the current supply from the mines, and +whatever that is now it is not likely ever greatly to increase. The +occupation of mining is not attractive to many, and in the nature of the +case the number who follow it will always be comparatively few. The +Argonauts of old were but a small band of hardy adventurers; those of +the new era are destined to bear no larger proportion to the population. +But even were this not so, nature herself draws the line. To the eye of +the experienced prospector silver mines are as discernible on the +surface of the earth as are mountains, and the world has been explored +in vain for further "finds." Those who talk, therefore, of "floods" of +silver coming here for coinage simply show their ignorance of existing +conditions. + +I may add that of all the shafts that have been sunk for silver mines in +the world where they have found silver croppings on top in ninety-nine +out of every hundred, and I think I am stating it moderately, the veins +have not penetrated the earth, mineralized, fertilized, to the depth of +50 feet, rarely have they penetrated the earth to a depth exceeding +1,200 feet, and the most prolific yield of silver mines has been from a +depth not exceeding 800 feet. + +The very fact, Mr. President, that, with all the world searching for +gold and silver mines--a search that has continued throughout all +history--the amount of the two metals yielded by the mines is about +equal, shows that the historical relation existing between them is the +relation at which they can be profitably produced. + +It is apparent that if there were a great advantage in the production of +silver over gold, at the relation of 15-1/2 to 1, that advantage would +be seen in the largely preponderant production of silver; but instead we +find that the result of thousands of years of mining has given us about +equal quantities of both metals. + + +CAN THE UNITED STATES ALONE HOLD THE METALS AT A PARITY? + +We are told that the United States, unaided, can not, if it would, +restore silver to a parity with gold--that no one nation acting alone +can achieve so difficult a feat. But it is incapable of denial that +throughout all vicissitudes of production of gold and silver from 1803 +to 1873 the law of France--one nation alone--accomplished it. + +As I have shown in greater detail elsewhere, by reference to the table +of annual production of the metals, it will be observed that from 1803 +to 1820, the production was in the proportion of four dollars of silver +to one of gold; from 1821 to 1840 two of silver to one of gold, from +1841 to 1850 one dollar of silver, to one of gold, from 1851 to 1860 +four dollars of gold to one of silver, from 1861 to 1865 three of gold +to one of silver, from 1866 to 1870 two of gold to one of silver, in +1871 and 1872 one-and-a-half of gold to one of silver. Notwithstanding +these extreme variations in the relative annual production the law of +France constituted a ligature sufficient to hold the metals in line at +the ratio of 15-1/2 to 1, and this not for France alone but for the +whole world. If that period does not offer sufficient proof of the power +of law, under varying conditions of supply, to tie the metals together +and keep them so, no degree of proof will suffice, for the vacillations +of their relative production have been greater during this century than +at any former period in the history of the world. + + +IS AN INTERNATIONAL AGREEMENT NECESSARY? + +If that could be done by a nation with a population of 25,000,000 to +35,000,000, what difficulty could be experienced by a nation of +65,000,000 in accomplishing the same result? Yet we are told that +international agreement is necessary to restore silver to its ancient +right as a full-money metal. Those who suggest such an agreement forget +that while this nation is a borrower of money, the first and principal +nation to demonetize silver is the greatest money lender known to +history. Is it for a moment to be supposed that the shrewd English +creditor classes will enter into any agreement which will deprive them +of the spoils of so delicate and ingenious a system of usury; a system +not only not banned by law, but, on the contrary, having the special +approval and protection of statutes, and the active support and approval +of all the complaisant moralists, philosophers, and financiers of the +age? + +While they are dilligently gathering in the proceeds of this operation a +diversion is kept up for the occupation and amusement of dilettant +financiers and economists, by invoking a discussion of the ratio that +should be maintained between the metals. The ratio is the pretext on +which conference after conference has been called. + +The advocates of the single gold standard contend that hostile +legislation had no influence in effecting the separation of the metals, +and that the reversal of that legislation can not and will not restore +them to a parity unless the principal commercial nations of the western +world join in the work of rehabilitation. As illustrating the force of +law on the relation of the metals I will read a suggestive paragraph +from the report of the Royal Commission of England (1886), Part I, +section 192: + + Now, undoubtedly, the date which forms the dividing line between + an epoch of approximate fixity in the relative value of gold and + silver, and one of marked instability, is the year when the + bimetallic system which had previously been in force in the Latin + Union ceased to be in full operation, and we are irresistibly led + to the conclusion that the operation of that system, established + as it was in countries the population and commerce of which were + considerable, exerted a material influence upon the relative value + of the two metals. + + So long as that system was in force we think that, notwithstanding + the changes in the production and use of the precious metals, it + kept the market price of silver approximately steady at the ratio + fixed by law between them, namely, 15-1/2 to 1. Nor does it appear + to us _a priori_ unreasonable to suppose that the existence in the + Latin Union of a bimetallic system with a ratio of 15-1/2 to 1 + fixed between the two metals should have been capable of keeping + the market price of silver steady at approximately that ratio. + +The paragraph quoted ascribes the effect thus produced to the bimetallic +treaty of the Latin Union, a combination of Italy, Belgium, Switzerland, +and France, entered into in 1865 for the purpose of maintaining similar +conditions of coinage. But it will be observed that, so far as the ratio +was concerned, precisely the same effect had been produced by France +alone during the sixty-two years from the passage of its law of 1803 to +1865. + +Not only did the French law keep the metals together at a time when the +larger annual yield was of silver, but it kept them together when the +larger annual yield was of gold. Had not that law been in operation +during the '50's, when a flood of gold poured from the mines of +California and Australia, gold would have fallen, as in early times it +more than once fell, to the ratio of 1 to 10, at which but 10 ounces of +silver (instead of 15-1/2) would buy an ounce of gold. Thus the law of +one country alone, a country then of not one-half the present population +of the United States, held the metals together, so that to whatever +extent gold fell in relation to commodities from 1848 to 1865, by reason +of the large output of the mines, silver fell to the same extent, +notwithstanding the enormous decrease in its production relatively to +gold during that period. + +What is claimed for law in this connection is not that it directly +controls the relative values of gold and silver any more than of +anything else, but that on the slightest separation of the metals there +instantly arises, under the law of the double standard, a demand for the +cheaper metal, while the demand for the dearer one is suspended. In this +way the double standard accommodates itself to the law of supply and +demand, which is admitted to be the governing factor in the +determination of value. It is not contended that a small or +insignificant country could keep the metals together, but all experience +goes to show that a great nation like the United States would have no +difficulty whatever in doing so. + +So thoroughly are the advantages of the gold standard to the creditor +classes recognized in England that the English Commissioners, who, for +form's sake, have been sent to the several monetary conferences held on +the continent, have never been invested by their Government with any +power whatever. And it is but a few weeks since the House of Commons +overwhelmingly voted down a proposition made in good faith by Mr. Samuel +Smith, looking to the calling of a new conference, which was supported +by petitions to Parliament signed by 60,000 persons not merely as +individuals, but as representing large organizations of the toilers of +England. + +The ratio is not the difficulty. Those who wanted silver demonetized do +not want it added to the money volume of the world at any ratio. Why +then shall we wait? Macauley, commenting on the impregnability of +intrenched prerogative, observed that if the announcement of the +discovery of the law of gravitation had militated against the personal +interests of any vested or privileged class, its general acceptance +might have been long postponed. Shall we, then, postpone relief to the +suffering industries of this country till we can secure from the +privileged classes, from the money-lenders of the world, an agreement to +cease their exactions? + +No, Mr. President, we need not wait, and we _will_ not wait. All that is +necessary is to _act_, and so far as the rules of order and of +parliamentary procedure will permit, we propose to act, promptly and +decisively. The world can not expect the initiatory movement for any +change to be taken by those whose interests are served by the +continuance of present conditions. Such conditions being consistent with +their own welfare, they find no difficulty in arriving at the conclusion +that they are for the welfare of society at large. + +The dogma that cupidity is a synonym for virtue will never fail to find +ready converts among the beneficiaries. + + * * * Plate sin with gold. + And the strong lance of Justice hurtless breaks. + + +CONCLUSION. + +I predict that the restoration of silver to its birthright, Mr. +President, will mark an epoch in the history of this country. It will +place in circulation an amount of money commensurate with our increasing +population. It will give assurance to our languishing industries that +the volume of our circulating medium is not to continue shrinking, and +that the tendency of prices shall no longer be downward. It will +increase the wages of labor and the prices of the products of labor; it +will reduce the price of bonds and other forms of money futures, it will +lighten, but not inequitably, the burden of mortgages; it will increase +largely, though not unjustly, the debt-paying and tax-paying power of +the people. It will loosen the grasp of the creditor from the throat of +the debtor. + +By the remonetization of silver, money will cease to be the object of +commerce, and will again become its beneficent instrument. Activity will +replace stagnation, movement will supplant inertia, courage will banish +fear; confidence will dispel doubt; hope will supersede despair. + +The lifting up of silver to its rightful plane by the side of gold will +set in motion all the latent energies of the people. It will banish +involuntary idleness, by putting every willing man to work. It will +revive business, and reanimate the heart and hope of the masses. +Capital, no longer fearing a fall in prices, will turn into productive +avenues. The hoards of money lying idle in the bank vaults will come out +to bless and enrich alike their owners and the community at large; +while the millions of dollars now invested at low interest in gilt-edged +securities will seek more profitable investment in the busy field of +industry, where they will be utilized in the payment of wages and the +consequent dissemination of comfort and happiness among the people. + +And this it will accomplish not for the United States alone, but for +civilization. For it is not too much to say, Mr. President, that upon +the decision of this question depend consequences more momentous than +upon that of any other question of public policy within the memory of +this generation. In a broader sense than any other question attracting +the general attention of mankind it is a question of civilization. It +embodies the hopes and aspirations of our race. + +The act of Congress which shall happily solve it will constitute a +decree of emancipation as veritable as any that ever freed serf from +thraldom, but more universal in its application. It will proclaim the +freedom of the white race the world over, it will lift the bowed head of +labor, it will hush the threnody of toil. It will inaugurate the true +renaissance--a renaissance of _prosperity_, without which industry, +learning, science, literature, art, are but as apples of Sodom. +(Applause in the galleries.) + + + + +INDEX. + + + Alison, Sir Archibald, coinage has no effect in preventing + fluctuations in value of coin, 42 + effect of suspension of specie payments in England in 1797, 78 + + Allegory of the clocks, 50 + + American Review, effect of increasing volume of money, 8 + + Automatic system of money, gold and silver, 9 + why interfered with, 18 + + Appleton's Cyclopedia, definition of money, 67 + + Aristotle on Money, 66 + + + Balance of trade, the argument based on, 96 + + Banker's advice to the Usurer, 70 + + Baring, Alexander, a reduction of paper would have the same effect + as of any other money, 78 + + Bastiat, description of the crown piece, 68 + + Baudeau, on Money, 66 + + Behren, Jacob, opinion as to effect of gold standard in England, 23 + + Berkeley, Bishop, queries as to Money, 67 + + Best Money (truthfully so-called), a money of unchanging value in + the unit, 70 + + + Cairnes, Prof. J. E., relations of paper currency to foreign + exchange, 98 + + Cattle, estimate of value in 1880, 4 + + Cernuschi, the purchasing power of money is in direct proportion to + the volume of money existing, 77 + + Checks and clearing houses, their effects in economizing use of money, + considered, 46 + + Chevalier, in France, advocated demonetization of gold, 20 + + Circulation, present monetary, 75 + + Coal, yield for 1888, 4 + + Condition of country at present, 3 + at period of demonetization of silver, 26 + + Competition, the value of money fixed by the competition to get it, + 73 + + Cotton manufacturer, his loan of $10,000, payable, principal and + interest, in cloth, contrasted with loan of same amount + contracted by his neighbor, but payable in dollars, 72 + + Cotton-planters, their loss by demonetization of silver, 60 + + Crawford, William H., opinion as to effect of decreasing volume of + money, 7 + + Creditors, demand for the "Best Money," meaning a money of increasing + value, 69 + their course in Europe to increase value of gold, 19 + their course in United States to increase value of gold, 27 + the pretense in the United States to "strengthen the public + credit", 28 + + Crops for 1888, corn, wheat, oats, and cotton, 4 + + + Debt, a distinguishing characteristic of civilization, 35 + a, of $10,000 contracted in 1873--how much wheat, cotton, etc., + would pay it then and how much now, 57 + + Debtors, who are they, 35 + and creditors, their motives compared, 34 + + De Colange, Professor, the rate at which money exchanges is determined + by its quantity, 77 + + Demand for money, what it is, 73 + + Demonetization of silver, by England, 22 + by Germany, 16 + by United States, 26 + wholly unjustifiable, 28 + + De Quincey, in England, advocated demonetization of gold, 20 + + Difficulty, one symptom common to all industries, 5 + + Discussion, educational effect of, 29 + + Double standard, statement of, before French Commission, 22 + + Dumas, a Senator of France, pleads for caution before demonetization, + 17 + + + Economist (London) admits rise of gold, 44 + + Effects of shrinking volume of money (extract from report of Monetary + Commission), 36 + + Encyclopedia Britannica, effect of fall in the value of money, 8 + + England's position not due to gold standard, 25 + + + Failures in United States, 1887, 1888, and 1889, 49 + + Fall of interest on gilt-edged securities, a proof of rise of gold, 48 + + Farm, how it may be lost by an increasing value in the money unit, 70 + + Farmers, their loss by demonetization of silver, 60 + + Farms, estimate of value in 1880, 4 + proposition that the Government lend money on the security of the + land, 83 + + Fanchet, Leon, probable effect, should all European nations follow + England in discarding silver, 17 + + Fichte, the value of money depends on its quantity, 76 + + Flood of silver, where is it to come from?, 108 + + France, law of 1803 held metals at a parity till 1873, 16 + + Frewen, Moreton, extract from his "Economic Crisis", 30 + + + Gallatin, Albert, a metallic currency not indispensable, 77 + + Germany, emigration from, 25 + + Gibbs, Henry H., cablegram relating to bimetallism, 29 + + Giffen, Robert his reasoning erroneous that the commodity demand fixes + the value of gold, 81 + + Gold and silver, both variable in value, 41 + the world's supply of both, 101 + + Gold, ratio of, to silver at various periods, 13-16 + fall of, during times of Alexander and Caesar, 14 + fear of fall of, during California excitement, 19 + rise of from 1873 to 1889, 44 + proof that it has risen, 55 + some effects of its rise, 57 + proposition first made to demonetize it, 19 + demonetized in 1857 by German States and Austria, 20 + fear of an outflow of, 85 + rationale of the outflow of, 86 + value as money not derived from commodity use, 81 + + Goschen, George J., chancellor of exchequer of England speaks for, but + decides against, silver, 24 + + Graham, Sir James, the value of money is in the inverse ratio to its + quantity, 77 + + "Greenback", the, what gave it value?, 105 + + Gresham's law, and so-called "extension" of, 68 + + Gold standard, what it implies, 90 + statement in behalf of, before French commission, 22 + of the future, 92 + + Gold used in the arts, 103 + + Gold money, practically none in the United States, 95 + + + Hamilton, Alexander, effect of annulling use of either metal, 16 + + Houses in United States, estimated value in 1880, 4 + + Hume, David, contrast of conditions under increasing and under + deceasing volume of money, 7 + value of money depends on quantity, 76 + + Huskisson, William, if the quantity of money is increased the value of + commodities increase, 77 + + + Improved methods of production, their effects considered, 45 + + India, will remonetization place us "alongside?", 32 + + International agreement: is such agreement necessary to tie the metals + together, 109 + + Involuntary idleness, enormous loss of potential wealth, through, 61 + + Iron, pig: Yield for 1888, 4 + + + Jefferson, Thomas, "the unit must stand on both metals", 17 + + Jevons, Professor: The metals not so steady a standard as corn, 42 + inconvertible paper money, if limited in quantity, can retain its + full value, 77 + + Jevons, on Money, 66 + table of relation of general prices 1809 to 1849, 40 + + + Laughlin, Professor, "the name 'dollar' does not always have the same + value", 42 + + Laveleye, Professor, "Debtors have a right to pay in gold or + silver", 18 + + Law, what is claimed for it, in keeping the metals together, 110 + of France held the metals together from 1803 till + demonetization, 110 + + Legal-tender: All money should have this power, 71 + + Locke, John, both gold and silver variable in value, 42 + on Money, 66, 76 + + + McCulloch, J. R., "Money is a measure of value", 71 + were there perfect security against over-issue of paper money, the + metals might be dispensed with, 78 + + McLeod, on Money, 66 + + Materials used as Money at various epochs, 10 + + Machiavelli's reference to the brigands, 57 + + Massachusetts Bureau of Labor: Deductions from its reports as to + numbers of the unemployed, 61 + + Mill, James, the value of money depends on its quantity, 76 + + Mill, John Stuart, on Money, 66 + the value varies inversely as its quantity, 76 + + Mining States: Their interest in remonetization of silver, 58 + + Monetary Commission Report: Quotations from, as to new school of + financial theorists, 18 + + Money demand, not commodity demand, gives gold its value, 81 + effect of reduction in volume of, 6 + effect intensified as civilization advances, 6 + a glance at the history of, 9 + substances used as, at various epochs, 10 + the money-function the all-sufficient guaranty of the money + value, 79 + where is the future money to come from, if silver remains + demonetized, 79 + --what is it? Its value not in the material but in the stamp--in + the legal-tender power conferred, 65 + should be redeemable in all things, 104 + valuable rather for the important service it performs than for the + material of which made, 80 + question a question of prices, 80 + what is the demand for it? what the supply?, 73 + no alternative for it, 74 + the most potent instrumentality in the evolution of society, 74 + + + National money, as distinguished from international money. Advantages + of national money, 99 + + Newspapers, number published in United States, 4 + + Non-mining States, their interest in remonetization of silver, 60 + + + Overstone, Lord, "The value of a paper currency results from its + being kept at the same amount the metallic currency would + have been", 78 + + + Panics, impossible if all money were legal tender, 71 + + Parity of the metals: Can the United States alone hold them + together?, 109 + + Paulus (author of Pandects): Power of money dependent not on substance + but on quantity, 77 + + Playfair, Sir Lyon, uses the argument that England is a creditor + nation, 23 + + Population, Money should increase in a ratio not less than the ratio + of increase of, 75 + + Price, the index of the value of Money, 8 + + Price, Bonamy, on Money, 67 + + Prices, what produces a general fall of, 5 + fall of, in United States since 1873, 38 + relation of general prices, 1809 to 1849, Jevon's tables, 40 + relation of general prices, 1849 to 1885, Soetbeer's tables, 41 + + Progress, evolutions of, in Money, 9 + + Prophecies of gold advocates unfulfilled, 30 + + Protection, its effect on prices, 88 + + + Quantitative theory of Money, The value of each dollar depends on the + number of dollars out, 75 + + + Railroads, number of miles in United States, 4 + value in 1880, 4 + + Ratio of precious metals from earliest times to Christian Era, 13 + Christian Era to discovery of America, 14 + discovery of America to 1822, 15 + 1823 to 1889, 16 + + Ricardo, use of the metals as a standard, 43 + the value of money in a country depends on the amount existing, 76 + there can be no depreciation of money but from excess of + quantity, 76 + his views as to a "well regulated paper currency", 78 + + Rothschild, Baron, opinion of bimetallism, 17 + + Rouland, M., governor of Bank of France, opposed to demonetization, 17 + + Royal Commission of England, extracts from report of, 23, 110 + + + Sauerbeck on general price (those of 1887 the lowest for one hundred + years), 41 + + Seventy-two cent dollar, the, 92 + + Seyd, Ernest, effect of increasing money volume, 8 + + Silver, ratio of, to gold, at various periods, 13-16 + declared unfit to be used as money, 21 + objections to, considered, 21 + the motive for demonetizing, by England, 21 + the motive for demonetizing, by Germany, 24 + the motive acknowledged, 23 + and gold both variable in value, 41 + --has it fallen?, 49 + purchasing power in 1873 and 1889, 52 + prejudice against it as money arising from the idea that gold money + has greater "intrinsic value." That question considered, 63 + shall we be flooded with it in case of remonetization?, 108 + the world's supply, 101 + If $2,500,000 a month for twelve years has not driven out gold, how + much will do so?, 91 + + Silver miners, their loss by demonetization contrasted with that of + farmers and cotton-planters, 58 + + Smith, Adam: Both gold and silver variable in value, 41 + Definition of a guinea, 66 + + Soetbeer's table, showing relation of general prices 1849 to 1885, 41 + + Standard: The true Money standard not the material of which money is + made, 78 + + Stewart, Dugald, on Money, 67 + + Steel, yield for 1888, 4 + + Suicides in Germany, 25 + + Supply of money, what it is, 73 + + + Tabular standard suggested for time contracts as securing greater + equity than gold, 43 + + Thornton, Henry, on Money, 66 + + Time contracts, their importance to industry, 6 + + Torrens: The value of gold rises or falls as its quantity is + diminished or increased, 77 + + Treasury notes should not be redeemable in bullion, 104 + Possible effect of such redemption, 106 + + Tribune (New York) quoted as to fall of prices, 39 + + + Unemployed, some statistics of the, 61 + + United States, demonetization of silver effected in 1873, 26 + + Usurer's loan on the farm, 70 + + + Waller's verse, 24 + + + Value, the meaning of, 63 + subjective, not objective, 63 + not "intrinsic", 64 + of money not in the material, but in the stamp--in the power of + legal tender, 65 + money a measure of, 71 + + Values, relative, of precious metals from earliest times, 13 + + + Wage-loss from involuntary idleness enormous, 62 + + Walker, Prof. F. A., on Money, 66, 67 + gold and silver both variable in value, 42 + the value of money in a country determined by the amount + existing, 77 + + Wealth, national, estimated, 4 + + Wolowski, M., effect of demonetization, 17 + + Working masses entitled to better conditions, 57 + + + Yardstick, the lengthened, "rung in" on the cotton manufacturer, 73 + + + + +TRANSCRIBER'S NOTES + + +1. Passages in italics are surrounded by _underscores_. + +2. Certain words use "oe" ligature in the original. + +3. Mixed fractions are represented using hyphen and forward slash. For +instance, five and a half is shown as 5-1/2. + +4. Obvious misprints in spelling and punctuation have been silently +corrected. + +5. The original scanned images were not very clear, especially the +tables with numerical values. This may have caused some inadvertent +errors to creep in during the transcription process. + + + + + +End of the Project Gutenberg EBook of Money, by John P. 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