"There are some financial dangers ahead which can only be avoided by changes in our financial legislation. The most imminent of these dangers, and the only one to which I now ask the attention of Congress, arises from the continued coinage of silver and the increasing representation of it by silver certificates. I believe that the world is not in a condition, and never will be, for the demonetization of one-third of its metallic money; that both gold and silver are absolutely necessary for a circulating medium; and that neither can be disused without materially increasing the burden of debt, nor even temporarily degraded by artificial means without injurious effect upon home and international trade. But I also believe that gold and silver can only be made to maintain their comparative value by the joint action of commercial nations. Not only is there now no joint action taken by these nations to place and keep silver on an equality with gold, according to existing standards, but it has been by the treatment it has received from European nations greatly lessened in commercial value.
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"After giving the subject careful consideration, I have been forced to the conclusion that unless both the coinage of silver dollars and the issue of silver certificates are suspended, there is danger that silver, and not gold, may become our metallic standard. This danger may not be imminent, but it is of so serious a character that there ought not to be delay in providing against it. Not only would the national credit be seriously impaired if the government should be under the necessity of using silver dollars or certificates in payment of gold obligations, but business of all kinds would be greatly disturbed; not only so, but gold would at once cease to be a circulating medium, and severe contraction would be the result."
The first important subject considered by the Senate was the coinage of silver dollars and the consequent issue of silver certificates. The debate was founded upon a resolution offered by Senator Hill, of Colorado, against the views expressed by the President in his message and by Secretary McCulloch in his report.
On the 15th of December I made a speech covering, as I thought, the silver question, not only of the past but of the probable results in the future. The amount of silver dollars then in the treasury was $184,730,829, and of silver certificates outstanding $131,556,531. These certificates were maintained at par in gold by being received for customs duties. They were redeemable in silver dollars, but were in fact never presented for redemption. The silver dollars could only be used in the redemption of certificates or by issue in payment of current liabilities. With the utmost exertions to put the silver dollars in circulation only fifty million could be used in this way. To have forced more into circulation would have excited a doubt whether any of our paper money could be maintained at par with gold.
When urged to express a remedy for this condition I said that if I had the power to dictate a law I would ascertain by the best means the exact market value of the two metals, and then put into each silver dollar as many grains of standard silver as would be equal in market value to 25.8 grains of standard gold. I said that if the price of silver fell the coin would still circulate upon the fiat of the government. If silver advanced in relative value the amount of silver in the coin could, at stated periods, be decreased. Bimetallism could only exist where the market value of the two metals approached the coinage value, or where a strong government, with a good credit, received and paid out coins of each metal at parity with each other. The only way to prevent a variation in the value of the two metals, and the exportation of the dearer metal, would be, by an international agreement between commercial nations, to adopt a common ratio somewhat similar in substance to that of the Latin Union, each nation to receive as current money the coins of the other and each to redeem its own coins in gold.
Mr. Beck replied to my argument, and the debate between us continued during two or three days. The weakness of the silver advocates was that they were not content with the coinage of more silver coin than ever before, but were determined that the holder of silver in any form might deposit it in the mint and have it coined into dollars for his benefit at the ratio of sixteen to one, when its market value had then fallen so that twenty ounces of silver were worth but one ounce in gold, and since has fallen in value so that thirty ounces of silver are worth but one ounce in gold.
With free coinage in these conditions no gold coins would be minted and all the money of the United States would be reduced in value to the sole silver standard, and gold would be hoarded and exported. This debate has been continued from that date to this, not only in Congress, but in every schoolhouse in the United States, and in all the commercial nations of the world. I shall have occasion hereafter to recur to it.
On the 18th of December I reported, from the joint committee on the library, an amendment to an appropriation bill providing for the construction of a statue to the memory of General Lafayette, in the following words:
"That the president pro tempore of the Senate and the speaker of the House of Representative do appoint a joint committee of three Senators and three Representatives, with authority to contract for and erect a statue to the memory of General Lafayette and his compatriots; and said statue shall be placed in a suitable public reservation in the city of Washington, to be designated by said joint committee."