The true cause of the present discontent will not be found in the protective tariff, but in the exactions of the single gold standard.
Fifteen years ago England was on the gold standard. It is on the gold standard to-day; yet prices in England are 35 per cent. lower than they were fifteen years ago. There being no reason why there should be any change in the trend of prices, so long as a fierce contest for the possession of gold shall be waged between England, France, Germany, and the United States, we are justified in assuming that a proportionate decline of prices will continue. That means a further decline of 30 or 35 per cent. in prices during the next fifteen years. Where is this tendency to stop? and if it does not stop, how long will it be before the masses of the people become the bond slaves of the creditors? It is shocking to the moral sense of mankind that a few money-lenders and bondholders should thus be able, silently and insidiously, to wreck the business of every country in the world by constantly increasing the value of the money unit.
While admitting the necessity of more monetary circulation, our gold standard friends fail to show us how it is possible for an increase in the volume of money to benefit our merchants, farmers, or mechanics if the prices that prevail in gold standard countries are to prevail here; for that is what the gold standard means for us, Mr. President. It means that the prices that rule in gold standard countries are to rule here.
The extreme indefiniteness with which the term "gold standard" is used has so befogged the relation which gold money bears to industry and commerce that people lose sight of the essential feature of that relation. It is impossible to have a clear conception of the gold standard without keeping in view exactly what is implied by the term. What men must mean in this country by "the gold standard" is not the touch of the metal, for they never touch it, and rarely, if ever, see it. The maintenance of the gold standard here simply means the maintenance here of the range of prices that prevail in gold-using countries; that is to say, that low and lowering range of prices rendered necessary by the attempt to measure the value of the constantly increasing mass of the products of industry in all the western world by the constantly diminishing volume of gold. No relief can come to the toiling masses of this country until we can lift our prices above those that now prevail in gold-using countries.
Even if our prices remain as they are and do not increase, gold will eventually leave the country if it continue to increase in value as it has been increasing during the past fifteen years. We have been enabled to maintain the gold standard here for the past twelve years notwithstanding a considerable addition of money other than gold to our currency, but we have been able to do so only because other countries have been using an equal or greater amount of money other than gold. We have been using no greater proportion of silver or paper money than other countries having the gold standard are using, hence we have been able to maintain their level of prices and still keep the metals together. But whenever we shall attempt to prevent a further fall or prices in this country, it will be impossible for us to retain our gold so long as prices in gold-using countries continue to decline as they have been declining. Gold will leave as quickly because of contraction abroad as of inflation here, if by "inflation" is meant a coinage of money sufficient to maintain prices at a steady level.
Should gold leave the country, then, in order to supply its place, in order to maintain the status quo in prices, and prevent a further fall from the present low range, we should need to have as many dollars of silver in circulation as there are now dollars of gold. Gold would go out only because our prices were rising, and as it went prices would cease to rise. That process might continue until three or four hundred million dollars of gold had gone. In all this, where would be the disadvantage to our people?
Considering the rapidly increasing population and wealth of this country, all the silver that can be procured from the mines will be necessary to maintain the level of prices and to keep pace with the increasing demands for money. If, however, it slightly exceeds—and it could not at the utmost more than slightly exceed—the amount actually demanded by increasing population and business, the over-plus of each year would take a great many years to drive gold out of the country, dollar for dollar. For, when prices here, of things internationally dealt in, are at an equilibrium with prices of the same articles abroad, gold can not go any faster than silver comes in.
IF $2,500,000 SILVER PER MONTH HAS NOT DRIVEN OUT GOLD, HOW MUCH WILL DO SO?
For twelve years past we have had a silver coinage of nearly $2,500,000 a month, yet no gold has been driven out. Having tested the capacity of that quantity of silver to drive out gold, we find that instead of driving it out its coinage has resulted rather in bringing gold in. For, to whatever cause the influx of gold may be ascribed, it is unquestionable that the gold has come, and it has needed all that gold, and all the silver that we have coined, to maintain international prices here.
It is admitted by all that gold can not go out except by reason of a rise in this country of the prices of articles of international commerce beyond the prices of the same articles prevailing abroad. It is only then that it becomes more profitable to send out gold in payment for our foreign purchases than to send out commodities—the products of our own country. Commodities will always be sent out in payment for other commodities so long as it is more profitable to send them than gold, and when, by reason of low prices prevailing abroad and high prices here, it is no longer profitable to send out commodities, purchasers send out gold, but only because it is to their advantage to do so.