The merchants, too, were not satisfied to do business in the old way. It was too slow; they could not wait for customers. They filled the country with drummers, and these drummers convinced all the country merchants that they needed about twice as many goods as they could possibly sell, and they took their notes on sixty and ninety days, and renewed them whenever desired, provided the parties renewing the notes would take more goods. And these country merchants pressed the goods upon their customers in the same manner. Everybody was selling, everybody was buying, and nearly all was done upon a credit. No one believed the day of settlement ever would or ever could come. Towns must continue to grow, and in the imagination of speculators there were hundreds of cities numbering their millions of inhabitants. Land, miles and miles from the city, was laid out in blocks and squares and parks; land that will not be occupied for residences probably for hundreds of years to come, and these lots were sold, not by the acre, not by the square mile, but by so much per foot. They were sold on credit, with a partial payment down and the balance secured by a mortgage.
These values, of course, existed simply in the imagination; and a deed of trust upon a cloud or a mortgage upon a last year's fog would have been just as valuable. Everybody advertised, and those who were not selling goods and real estate were in the medicine line, and every rock beneath our flag was covered with advice to the unfortunate; and I have often thought that if some sincere Christian had made a pilgrimage to Sinai and climbed its venerable crags, and in a moment of devotion dropped upon his knees and raised his eyes toward heaven, the first thing that would have met his astonished gaze would in all probability have been:
"St. 1860 X Plantation Bitters."
Suddenly there came a crash. Jay Cooke failed, and I have heard thousands of men account for the subsequent hard times from the fact that Cooke did fail. As well might you account for the smallpox by saying that the first pustule was the cause of the disease. The failure of Jay Cooke & Co. was simply a symptom of a disease universal.
No language can describe the agonies that have been endured since 1873. No language can tell the sufferings of the men that have wandered over the dreary and desolate desert of bankruptcy. Thousands and thousands supposed that they had enough, enough for their declining years, enough for wife and children, and suddenly found themselves paupers and vagrants.
During all these years the bankruptcy law was in force, and whoever failed to keep his promise had simply to take the benefit of this law. As a consequence, there could be no real, solid foundation for business. Property commenced to decline; that is to say, it commenced to resume; that is to say, it began to be rated at its real instead of at its speculative value.
Land is worth what it will produce, and no more. It may have speculative value, and, if the prophecy is fulfilled, the man who buys it may become rich, and if the prophecy is not fulfilled, then the land is simply worth what it will produce. Lots worth from five to ten thousand dollars apiece suddenly vanished into farms worth twenty-five dollars per acre. These lots resumed. The farms that before that time had been considered worth one hundred dollars per acre, and are now worth twenty or thirty, have simply resumed. Magnificent residences supposed to be worth one hundred thousand dollars, that can now be purchased for twenty-five thousand, they have simply resumed. The property in the United States has not fallen in value, but its real value has been ascertained. The land will produce as much as it ever would, and is as valuable to-day as it ever was; and every improvement, every invention that adds to the productiveness of the soil or to the facilities for getting that product to market, adds to the wealth of the nation.
As a matter of fact, the property kept pace with what we were pleased to call our money. As the money depreciated, property appreciated; as the money appreciated, property depreciated. The moment property began to fall speculation ceased. There is but little speculation upon a falling market. The stocks and bonds, based simply upon ideas, became worthless, the collaterals became dust and ashes.
At the close of the war, when the Government ceased to be such a vast purchaser and consumer, many of the factories had to stop. When the crash came the men stopped digging ore; they stopped felling the forest; the fires died out in the furnaces; the men who had stood in the glare of the forge were in the gloom of want. There was no employment for them. The employer could not sell his product; business stood still, and then came what we call the hard times. Our wealth was a delusion and illusion, and we simply came back to reality. Too many men were doing nothing, too many men were traders, brokers, speculators. There were not enough producers of the things needed; there were too many producers of the things no one wished. There needed to be a re-distribution of men.
Many remedies have been proposed, and chief among these is the remedy of fiat money. Probably no subject in the world is less generally understood than that of money. So many false definitions have been given, so many strange, conflicting theories have been advanced, that it is not at all surprising that men have come to imagine that money is something that can be created by law. The definitions given by the hard-money men themselves have been used as arguments by those who believe in the power of Congress to create wealth. We are told that gold is an instrumentality or a device to facilitate exchanges. We are told that gold is a measure of value. Let us examine these definitions.