OF OHIO. (BORN 1823.)
ON SILVER COINAGE AND TREASURY NOTES; UNITED STATES SENATE, JUNE 5, 1890.
I approach the discussion of this bill and the kindred bills and amendments pending in the two Houses with unaffected diffidence. No problem is submitted to us of equal importance and difficulty. Our action will affect the value of all the property of the people of the United States, and the wages of labor of every kind, and our trade and commerce with all the world. In the consideration of such a question we should not be controlled by previous opinions or bound by local interests, but with the lights of experience and full knowledge of all the complicated facts involved, give to the subject the best judgment which imperfect human nature allows. With the wide diversity of opinion that prevails, each of us must make concessions in order to secure such a measure as will accomplish the objects sought for without impairing the public credit or the general interests of our people. This is no time for visionary theories of political economy. We must deal with facts as we find them and not as we wish them. We must aim at results based upon practical experience, for what has been probably will be. The best prophet of the future is the past.
To know what measures ought to be adopted we should have a clear conception of what we wish to accomplish. I believe a majority of the Senate desire, first, to provide an increase of money to meet the increasing wants of our rapidly growing country and population, and to supply the reduction in our circulation caused by the retiring of national-bank notes; second, to increase the market value of silver not only in the United States but in the world, in the belief that this is essential to the success of any measure proposed, and in the hope that our efforts will advance silver to its legal ratio with gold, and induce the great commercial nations to join with us in maintaining the legal parity of the two metals, or in agreeing with us in a new ratio of their relative value; and third, to secure a genuine bimetallic standard, one that will not demonetize gold or cause it to be hoarded or exported, but that will establish both gold and silver as standards of value not only in the United States, but among all the civilized nations of the world.
Believing that these are the chief objects aimed at by us all, and that we differ only as to the best means to obtain them, I will discuss the pending propositions to test how far they tend, in my opinion, to promote or defeat these obtects.
And, first, as to the amount of currency necessary to meet the wants of the people.
It is a fact that there has been a constant increase of currency. It is a fact which must be constantly borne in mind. If any evils now exist such as have been so often stated, such as falling prices, increased mortgages, contentions between capital and labor, decreasing value of silver, increased relative value of gold, they must be attributed to some other cause than our insufficient supply of circulation, for not only has the circulation increased in these twelve years 80 per cent., while our population has only increased 36 per cent., but it has all been maintained at the gold standard, which, it is plain, has been greatly advanced in purchasing power. If the value of money is tested by its amount, by numerals, according to the favorite theory of the Senator from Nevada (Mr. Jones), then surely we ought to be on the high road of prosperity, for these numerals have increased in twelve years from $805,000,-000 to $1,405,000,000 in October last, and to $1,420,000,000 on the 1st of this month. This single fact disposes of the claim that insufficient currency is the cause of the woes, real and imaginary, that have been depicted, and compel us to look to other causes for the evils complained of.
I admit that prices for agricultural productions have been abnormally low, and that the farmers of the United States have suffered greatly from this cause. But this depression of prices is easily accounted for by the greatly increased amount of agricultural production, the wonderful development of agricultural implements, the opening of vast regions of new and fertile fields in the West, the reduced cost of transportation, the doubling of the miles of railroads, and the quadrupling capacity of railroads and steamboats for transportation, and the new-fangled forms of trusts and combinations which monopolize nearly all the productions of the farms and workshops of our country, reducing the price to the producer and in some cases increasing the cost to the consumer. All these causes cooperate to reduce prices of farm products. No one of them can be traced to an insufficient currency, now larger in amount in proportion to population than ever before in our history.
But to these causes of a domestic character must be added others, over which we have no control. The same wonderful development of industry has been going on in other parts of the globe. In Russia, especially in Southern Russia, vast regions have been opened to the commerce of the world. Railroads have been built, mines have been opened, exhaustless supplies of petroleum have been found, and all these are competitors with us in supplying the wants of Europe for food, metals, heat, and light. India, with its teeming millions of poorly paid laborers, is competing with our farmers, and their products are transported to market over thousands of miles of railroads constructed by English capital, or by swift steamers through the Red Sea and the Suez Canal, reaching directly the people of Europe whom we formerly supplied with food. No wonder, then, that our agriculture is depressed by low prices, caused by competition with new rivals and agencies.
Any one who can overlook these causes and attribute low prices to a want of domestic currency, that has increased and is increasing continually, must be blind to the great forces that in recent times throughout the world are tending by improved methods and modern inventions to lessen the prices of all commodities.
These fluctuations depend upon the law of supply and demand, involving facts too numerous to state, but rarely depending on the volume of money in circulation. An increase of currency can have no effect to advance prices unless we cheapen and degrade it by making it less valuable; and if that is the intention now, the direct and honest way is to put fewer grains of gold or silver in our dollar. This was the old way, by clipping the coin, adding base metal.
If we want a cheaper dollar we have the clear constitutional right to put in it 15 grains of gold instead of 23, or 300 grains of silver instead of 412 1/2, but you have no power to say how many bushels of wheat the new dollar shall buy. You can, if you choose, cheapen the dollar under your power to coin money, and thus enable a debtor to pay his debts with fewer grains of silver or gold, under the pretext that gold or silver has risen in value, but in this way you would destroy all forms of credit and make it impossible for nations or individuals to borrow money for a period of time. It is a species of repudiation.
The best standard of value is one that measures for the longest period its equivalent in other products. Its relative value may vary from time to time. If it falls, the creditor loses; if it increases, the debtor loses; and these changes are the chances of all trade and commerce and all loaning and borrowing. The duty of the Government is performed when it coins money and provides convenient credit representatives of coin. The purchasing power of money for other commodities depends upon changing conditions over which the Government has no control. Even its power to issue paper money has been denied until recently, but this may be considered as settled by the recent decisions of the Supreme Court in the legal-tender cases. All that Congress ought to do is to provide a sufficient amount of money, either of coin or its equivalent of paper money, to meet the current wants of business. This it has done in the twelve years last passed at a ratio of increase far in excess of any in our previous history.
Under the law of February, 1878, the purchase of $2,000,000 worth of silver bullion a month has by coinage produced annually an average of nearly $3,000,000 a month for a period of twelve years, but this amount, in view of the retirement of the bank notes, will not increase our currency in proportion to our increase in population. If our present currency is estimated at $1,400,000,000, and our population is increasing at the ratio of 3 per cent. per annum, it would require $42,000,000 increased circulation each year to keep pace with the increase of population; but as the increase of population is accompanied by a still greater ratio of increase of wealth and business, it was thought that an immediate increase of circulation might be obtained by larger pur chases of silver bullion to an amount sufficient to make good the retirement of bank notes, and keep pace with the growth of population. Assuming that $54,000,000 a year of additional circulation is needed upon this basis, that amount is provided for in this bill by the issue of Treasury notes in exchange for bullion at the market price. I see no objection to this proposition, but believe that Treasury notes based upon silver bullion purchased in this way will be as safe a foundation for paper money as can be conceived.
Experience shows that silver coin will not circulate to any considerable amount. Only about one silver dollar to each inhabitant is maintained in circulation with all the efforts made by the Treasury Department, but silver certificates, the representatives of this coin, pass current without question, and are maintained at par in gold by being received by the Government for all purposes and redeemed if called for. I do not fear to give to these notes every sanction and value that the United States can confer. I do not object to their being made a legal tender for all debts, public or private. I believe that if they are to be issued they ought to be issued as money, with all the sanction and authority that the Government can possibly confer. While I believe the amount to be issued is greater than is necessary, yet in view of the retirement of bank notes I yielded my objections to the increase beyond $4,000,000. As an expedient to provide increased circulation it is far preferable to free coinage of silver or any proposition that has been made to provide some other security than United States bonds for bank circulation. I believe it will accomplish the first object proposed, a gradual and steady increase of the current money of the country.
What then can we do to arrest the fall of silver and to advance its market value? I know of but two expedients. One is to purchase bullion in large quantities as the basis and security of Treasury notes, as proposed by this bill. The other is to adopt the single standard of silver, and take the chances for its rise or fall in the markets of the world. I have already stated the probable results of the hoarding of bullion. By purchasing in the open market our domestic production of silver and hoarding it in the Treasury we withdraw so much from the supply of the world, and thus maintain or increase the price of the remaining silver production of the world. It is not idle in our vaults, but is represented by certificates in active circulation. Sixteen ounces of silver bullion may not be worth one ounce of gold, still one dollar's worth of silver bullion is worth one dollar of gold.
What will be the effect of the free coinage of silver? It is said that it will at once advance silver to par with gold at the ratio of 16 to 1. I deny it. The attempt will bring us to the single standard of the cheaper metal. When we advertise that we will buy all the silver of the world at that ratio and pay in Treasury notes, our notes will have the precise value of 371 1/2 grains of pure silver, but the silver will have no higher value in the markets of the world. If, now, that amount of silver can be purchased at 80 cents, then gold will be worth $1.25 in the new standard. All labor, property, and commodities will advance in nominal value, but their purchasing power in other commodities will not increase. If you make the yard 30 inches long instead of 36 you must purchase more yards for a coat or a dress, but do not lessen the cost of the coat or the dress. You may by free coinage, by a species of confiscation, reduce the burden of a debt, but you cannot change the relative value of gold or silver, or any object of human desire. The only result is to demonetize gold and to cause it to be hoarded or exported. The cheaper metal fills the channels of circulation and the dearer metal commands a premium.
If experience is needed to prove so plain an axiom we have it in our own history. At the beginning of our National Government we fixed the value of gold and silver as 1 to 15. Gold was undervalued and fled the country to where an ounce of gold was worth 151 ounces of silver. Congress, in 1834, endeavored to rectify this by making the ratio 1 to 16, but by this silver was undervalued. Sixteen ounces of silver were worth more than 1 ounce of gold, and silver disappeared. Congress, in 1853, adopted another expedient to secure the value of both metals as money. By this expedient gold is the standard and silver the subsidiary coin, containing confessedly silver of less value in the market than the gold coin, but maintained at the parity of gold coin by the Government.
But it is said that those of us who demand the gold standard, or paper money always equal to gold, are the representatives of capital, money-changers, bondholders, Shylocks, who want to grind and oppress the people. This kind of argument I hoped would never find its way into the Senate Chamber. It is the cry of the demagogue, without the slightest foundation. All these classes can take care of themselves. They are the men who make their profits out of the depreciation of money. They can mark up the price of their property to meet changing standards. They can protect themselves by gold contracts. In proportion to their wealth they have less money on hand than any other class. They have already protected themselves to a great extent by converting the great body of the securities in which they deal into gold bonds, and they hold the gold of the country, which you cannot change in value. They are not, as a rule, the creditors of the country.
The great creditors are savings-banks, insurance companies, widows and orphans, and provident farmers, and business men on a small scale. The great operators are the great borrowers and owe more than is due them. Their credit is their capital and they need not have even money enough to pay their rent.
But how will this change affect the great mass of our fellow-citizens who depend upon their daily labor? A dollar to them means so much food, clothing, and rent. If you cheapen the dollar it will buy less of these. You may say they will get more dollars for their labor, but all experience shows that labor and land are the last to feel the change in monetary standards, and the same resistance will be made to an advance of wages on the silver standard as on the gold standard, and when the advance is won it will be found that the purchasing power of the new dollar is less than the old. No principle of political economy is better established than that the producing classes are the first to suffer and the last to gain by monetary changes.
I might apply this argument to the farmer, the merchant, the professional man, and to all classes except the speculator or the debtor who wishes to lessen the burden of his obligations; but it is not necessary.
It is sometimes said that all this is a false alarm, that our demand for silver will absorb all that will be offered and bring it to par with gold at the old ratio. I have no faith in such a miracle. If they really thought so, many would lose their interest in the question. What they want is a cheaper dollar that would pay debts easier. Others do not want either silver or gold, but want numbers, numerals, the fruit of the printing-press, to be fixed every year by Congress as we do an appropriation bill.
Now, sir, I am willing to do all I can with safety even to taking great risks to increase the value of silver to gold at the old ratio, and to supply paper substitutes for both for circulation, but there is one immutable, unchangeable, ever-existing condition, that the paper substitute must always have the same purchasing power as gold and silver coin, maintained at their legal ratio with each other. I feel a conviction, as strong as the human mind can have, that the free coinage of silver now by the United States will be a grave mistake and a misfortune to all classes and conditions of our fellow-citizens. I also have a hope and belief, but far from a certainty, that the measure proposed for the purchase of silver bullion to a limited amount, and the issue of Treasury notes for it, will bring silver and gold to the old ratio, and will lead to an agreement with other commercial nations to maintain the free coinage of both metals.
And now, sir, I want to state in conclusion, without any purpose to bind myself to detail, that I will vote for any measure that will, in my judgment, secure a genuine bimetallic standard—one that will not demonetize gold or cause it to be hoarded or exported, but will establish both silver and gold as common standards and maintain them at a fixed ratio, not only in the United States but among all the nations of the world. The principles adopted by the Acts of 1853 and 1875 have been sustained by experience and should be adhered to. In pursuance of them I would receive into the Treasury of the United States all the gold and silver produced in our country at their market value, not at a speculative or forced value, but at their value in the markets of the world. And for the convenience of our people I would represent them by Treasury notes to an amount not exceeding their cost. I would confer upon these notes all the use, qualities, and attributes that we can confer within our constitutional power, and support and maintain them as money by coining the silver and gold as needed upon the present legal ratios, and by a pledge of all the revenues of the Government and all the wealth and credit of the United States.
And I would proclaim to all our readiness, by international negotiations or treaties, to bring about an agreement among nations for common units of value and of weights and measures for all the productions of the world.
This hope of philosophers and statesmen is now nearer realization than ever before. If we could contribute to this result it would tend to promote commerce and intercourse, trade and travel, peace and harmony among nations. It would be in line with the civilization of our age. It is by such measures statesmen may keep pace with the marvellous inventions, improvements, and discoveries which have quadrupled the capacity of man for production, made lightning subservient to his will, revealed to him new agencies of power hidden in the earth, and opened up to his enterprise all the dark places of the world. The people of the United States boast that they have done their full share in all this development; that they have grown in population, wealth, and strength; that they are the richest of nations, with untarnished credit, a model and example of self-government without kings or princes or lords. Surely this is no time for a radical change of public policy which seems to have no motive except to reduce the burden of obligations freely taken, a change likely to impair our public credit and produce disorder and confusion in all monetary transactions. Others may see reasons for this change, but I prefer to stand by the standards of value that come to us with the approval and sanction of every party that has administered the Government since its beginning.