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

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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

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*** START OF THE PROJECT GUTENBERG EBOOK 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 ***

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 following the failure of the ancient mines._

_Period following the discovery of the American mines._

_Period following the openings of California and Australia._

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 th

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