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.