The enormous increase in the business of silver mining is evidence that the profits are far in excess of the profits that are gained in other pursuits. The increase in product is likely to be followed by a fall in price. Such are the resources of the earth that an increase in the demand for silver will be followed by an increase in the supply.
Gold mining is obedient to the same law. From 1876 to 1894 the product increased 74 per cent. That ratio of increase is likely to continue. The world is not in peril of a gold famine. Gold as a currency, passing from hand to hand, will be used less and less. Substitutes, for which gold can be obtained, will be preferred. The volume of currency in a country is not limited by the amount of gold that a country may possess. It may increase the amount of subsidiary coin very largely, and it may add to the sum of paper money, provided that that paper money is always redeemable in gold.
Nor does the quantity of gold in a country determine the price of commodities, except as that gold is a part of the total volume of the currency of the country. The volume of currency as a whole is the force by which the salable value of commodities is affected.
In truth, gold plays a small part only in actual business. It is a regulator of business rather than an active instrument for the transaction of business. It is not an exaggeration to say that the use of gold in business is limited to a small fraction of one per cent of the aggregate transactions in countries where gold is the standard.
It is not improbable that in the near future the world is to meet a surfeit of gold, as it is now meeting a surfeit of silver. Yet even then its capacity as a standard will not be affected. History does not carry us to a time when gold was not the recognized standard for the measurement of every other kind of property, and that not by one tribe or people only, but by mankind in every clime and in every stage of savageness or of civilization.
As the Mint Bill and the demonetization of silver have occupied the attention of the country for a third of a century, and as there may be a revival of the controversy at a time in the future I have thought it wise for me to make a record of the facts in the most enduring form at my command.
At the end this is my claim for the Mint Bill of 1873: It established the gold standard for the United States for all time. All the subsequent legislation has rested upon the fact that the Statute of 1873 made the gold dollar the standard of value in the United States.
XXXV BLACK FRIDAY—SEPTEMBER 24, 1869
So much time has passed since September 24, 1869, that there may be a large public who may become interested in a review of the events of the spring and summer of that year which culminated in Wall Street, New York, in the transactions and experiences of the day known as "Black Friday."
When the Forty-first Congress assembled in December of that year, the House of Representatives directed the Committee on Banking and Currency "to investigate the causes that led to the unusual and extraordinary fluctuations of gold in the city of New York, from the 21st to the 27th of September, 1869." The committee made a report which was printed under date of March 1, 1870, and which may be found in a volume entitled "Garfield's Report on the Gold Panic Investigation." From that report it appears that certain persons in the city of New York entered into an arrangement, or understanding, or combination, as early as the month of April, 1869, for the purpose of forcing the price of gold artificially to a rate far beyond what might be called the natural price. The committee, of which General Garfield was chairman, characterized the combination as a conspiracy. Technically and in a legal point of view the parties concerned could not be treated properly as conspirators. It does not appear that they contemplated the violation of any law, but only a policy by which gold might be advanced from time to time, and out of which advance large sums of money might be realized by those who were holders of gold. Upon that theory Jay Gould and James Fisk, Jr., who were the leaders and organizers of the combination, with their associates, made large purchases of gold at prices varying from thirty to thirty-five per cent premium. At the close of the month of April, the price of gold, not then, as far as known, under the influence of any speculative movement, was at a premium of about thirty-four per cent. The indications were that, during the months of May and June, the parties interested in the combination made large purchases. By the 20th of May the price had reached a premium of forty-four per cent. From that time onward, until the last of July, the premium diminished, and at that date the rate was thirty-six per cent.