Mr. Lepper’s paper is a document of the kind described. The general purport of it is this: “People of the United States, I am a physician. I belong to the silver school. I am a graduate of the Bimetallic Institute. This pill which I give you is out of the silver pharmacopœia. It will heal all your diseases perfectly.” But when you examine the pill which he exhibits, you will find it to be a solid bolus of gold, filmed over with tin foil.
Mr. Lepper enters upon the discussion of the subject with the following statement: “The vast stores of silver purchased by the United States under the laws of 1878 and 1890 are a dead asset of the Treasury, and cannot be utilized for purposes of redemption until sixteen ounces of silver shall again be equivalent to one of gold.” Observe what becomes of these propositions under a truthful analysis. In the first place, our “vast stores of silver” are not vast stores. They are not nearly as vast as they ought to be. There are no bursting vaults of silver in the Treasury of the United States and never were. In the next place the stores of silver are not a dead asset of the Treasury. They are just as much a living asset of the Treasury as is the accumulation of gold therein—and in the same sense. These stores cannot be used for purposes of redemption because they do not exist for that purpose. A bimetallist who is not a bimetallist is always strong on redemption; and he knows only one redeemer—gold. The redeeming business in our financial plan of salvation has been altogether overdone. In the name of wonder, what is it we want to redeem? Is it the greenbacks? Is it any of our legal tender? The greenback is already constitutional money. Does Mr. Lepper know that the greenback has been declared constitutional money by the Supreme Court of the United States—this with only a single dissenting vote? Does he know that every national bank bill in the United States is finally redeemable in greenbacks? Does he know that in our scheme of redemption, the people have only a paper redeemer, while the banks, with the connivance of the government, have a redeemer of gold? Our “vast stores of silver” have only to be coined into silver dollars; to be used as primary money, just as gold is used; to be paid out just as gold is paid out in the transaction of national business, and in particular in the payment of the national indebtedness. If this is freely done, the exaggerated purchasing power of the latter metal would at once be reduced to the normal standard. This reduction would immediately express itself, or begin to express itself, in a general rise of prices, in a revival of business, and in a universal restoration of prosperity. Everything would again be well in the great Republic. All this would happen without financial sin and without a redeemer.
Mr. Lepper very properly says that international bimetallism and independent bimetallism “are founded upon the same errors and misconceptions.” He should have said that they are founded upon the same truths and necessities. For “errors,” read truths, and for “misconceptions” read necessities. The writer of “Bimetallism Simplified” next goes on to say that whatever value may be created by monetization is not a commercial value. Well, then, what kind of value is it? Is it a social value, such as a man attributes to his child that is not for sale? Or is it a political value, such as a party manager attributes to a vote that is for sale?
Let us see whether monetization does, or does not, create value. We will not quibble about the phrase “commercial value,” but come directly to the issue of value in general. Take the case upon which the goldites so greatly rely, that of the safe burned in a fire with a bag of gold coin and a bag of silver coin fused within. The triumphant gold sophist says, “The ten gold dollars fused into a lump will still be worth just ten dollars, while the silver dollars fused into a lump will be worth only five dollars.” Of course the lump of fused gold will be worth ten dollars when it is coined and measured by itself! Suppose that the lump of fused silver be coined into dollars again; how much will that be worth? Everybody who has a premonitory symptom of common sense knows that the lump of fused silver will—if coinable again into dollars—be worth just as much as the lump of fused gold. It is because the lump of fused gold is coinable again into dollars that it retains its value. It is because the lump of fused silver is not coinable again, under the present order, that it is not worth ten dollars.
What makes the difference? It is the fact of monetization for one of the metals, and demonetization for the other. Does anybody suppose that ten dollars of silver fused into a lump would not still be worth ten dollars if the lump were re-coinable? Does anybody suppose that ten gold dollars fused into a lump would still be worth ten dollars if the lump were not re-coinable? The fact of monetization not only confirms the value of one metal, but it insures the value of the other also—that is, it would insure it if monetization were not denied. Incidentally, this plain statement of the case utterly confutes the only seemingly valid argument, that is the two-bag argument, with which the goldites have been able to support their theory of “sound” money. Mr. Lepper’s assertion that monetization does not confer commercial value will have to rise through many circles in the spiral of intelligence before it reaches the plane of nonsense.
Further on in his paper, Mr. Lepper says: “The inevitable result of free coinage at a fixed ratio, is to expel the undervalued metal from circulation.” Who taught him that? Perhaps Gresham taught him. If so, he taught him what is not true. It is incredible that intelligent people should be humbugged with such a fallacious proposition as Gresham’s so-called “law.” Suppose that under free coinage, gold be undervalued, and suppose that, being so, it begins to vanish—where will it go to? To the Bank of England? If so, what will be the effect on the price of gold in the Bank of England? Will not the price begin to fall at that point at which the stream of gold pours out? And will it not continue to fall as long as the outflow goes on? What, on the other hand, will be the effect on the money market at that point from which the outflow is established? Will there not be produced a stringency behind the outflow, and will not all kinds of money begin to appreciate at that point from which the flow begins? And will not this stringency become greater and greater as long as the outflow continues? And will not the prices of all kinds of money, silver in particular, begin to rise until the outflow ceases? This is to say that the price of gold, like the price of anything else whatsoever, will fall wherever it accumulates, and the price of silver will rise in every place from which the gold is drained away, until a parity of values between the two money metals shall be inevitably established. This is the real law of two money metals circulating together; and Gresham’s so-called “law” is only the hocus-pocus and ghost of a law that is true to begin with, and is not true to end with.
I now come to the gist of Mr. Lepper’s article, and I invite particular attention to the heart and core of the matter as he presents it. He says (all the while declaring himself to be a bimetallist): “Let us assume that gold only has hitherto been used as money, that 25.8 grains thereof have been taken to be one dollar, and that it is now desired to supplement it with the use of silver.” I had not supposed that any person in the world could be under the influence of a delusion to the extent of propounding three such hypotheses as the foregoing. Mr. Lepper might with equally good reason, in discussing the constitution of nature, have said, “Let us assume that the world is a circular disk of tin,” or rather, “Let us assume that the world has always been regarded as a circular disk of tin. Let us assume that the world, being a circular disk of tin, weighs 3,820 lbs., and that it is now desired to improve its constitution by adding forty pounds to its weight and by converting it into a square block.” These propositions would be just as philosophical, just as useful in argument, and just as well warranted as those which he presents! His assumption is that gold only has been used as money. But it is not true that gold only has been used as money. It is not true that gold principally has been used as money. It is not true that gold has been as widely used as silver. It is not true that it is as universally used to-day as silver. It is not true that it was used at as early a day as was silver. It is not true that it has been used as a standard unit of money and account in the United States as long and as universally as silver has been used. It is therefore absurd to say, “Let us assume that gold only has been used as money.” It is preposterous to offer such a hypothesis. If we should grant the affirmative of such an assertion, we should rush into a region of falsehood and fanaticism identical in all particulars with that station which the goldites now occupy, and from which they send forth their clamor.
Mr. Lepper says further: “Let us assume that 25.8 grains hitherto have been taken to be one dollar.” But it is not true that 25.8 grains of gold have hitherto in our American system been taken to be one dollar. It is true that, according to our fundamental statute, and to all subsequent statutes down to the year 1873, 25.8 grains of gold were taken to be of the value of a dollar; but they were not a dollar. Our gold eagles were of the value of ten dollars; our half eagles were of the value of five dollars; our double eagles were of the value of twenty dollars; our quarter eagles were of the value of two and one-half dollars; our one-dollar gold piece, of 1849, was not one dollar, but was of the value of a dollar! The dollar was first, last, and all the time, defined to be a coin composed of 371 ¼ grains of pure silver. This is the very alphabet of the matter. I have myself set forth these facts so many times that I am ashamed to repeat them; for it implies that there are still people in the United States so lacking in intelligence and information as to require the reiteration of the bottom facts and principles in our American coinage system.
Twenty-five and eight-tenths grains of gold never did compose a dollar in the United States until after the year 1873. Why, therefore, should Mr. Lepper say, “Let us assume that 25.8 grains of gold have been taken to be one dollar”? Then he goes on to say, “Let us assume that it is desired to supplement it [that is the gold dollar] with silver.” Why should he speak of supplementing the use of gold with silver, any more than supplementing the use of silver with gold? There is not as good reason for the proposition to supplement gold with silver as there is to supplement silver with gold. Herein lies the trouble with those gentlemen who are trying to fix up a plan by which not to do it. They begin with a series of false hypotheses. They work along from these false assumptions until they reach some monstrous conclusion, and then show how sound the conclusion is because it is logical!
Genuine bimetallists do no such thing. They claim the coinage of gold and silver on terms of absolute equality. They do not propose to measure the silver by the gold, or the gold by the silver. They propose to have two standard units, and to use the one unit or the other unit at the option of the debtor. They do not propose that the creditor shall decide in which of these money metals a debt shall be paid or a contract made valid—simply for the reason that the two units co-exist, and every contract and engagement made among men is made in the face of this fact, and with the full knowledge of it, and with the understanding of what it implies. That understanding is that at the date of settlement, the debtor, and not the creditor, shall decide in which of the two standard metal-moneys he shall discharge his obligation. The option is his—exclusively his. The transaction is honorable, right, and just. Whoever challenges it is an abettor of the scheme for robbing the debtor by compelling him to transact his business, and in particular to pay his debts, according to a standard unit differing from the dollar of the law and the contract.