MARKET conditions did not at once respond to this promise; but after the election of Hayes, a sound-money President, in 1876, and the gradual accumulation of gold, under the guiding hand of John Sherman, as Secretary of the Treasury, the same man who had managed the passage of the Resumption Act, it began to be understood that specie resumption was to be actually accomplished. The banks of New York City, which held about $125,000,000 of the $346,000,000 in legal-tender notes outstanding, abolished special gold deposits and agreed with the Treasury to receive and pay balances without discrimination between gold and notes. The news of these arrangements, completed in November, 1878, removed lingering doubts. In the gold-room of the New York Stock Exchange—the scene of so much agitation on “Black Friday” nine years before—a sale of gold was made, on December 17, 1878, at 12:29 P.M., at par. It was the first sale at par in sixteen years, but so quietly was the transaction accomplished that only three or four persons who stood near the registrar’s desk were cognizant of it. When the first of January, 1879, dawned, the banks, which might have presented millions of notes for gold, did not ask for a dollar; and the dull corridors of the New York Sub-Treasury hardly afforded an indication that the United States had reached and passed a crucial point in her history and on that day had reëntered the circle of solvent nations. Truly, the experience of that day, carefully prepared for as it had been, and attained at much cost and suffering, seemed to verify the contention of those who for many years had insisted that “The way to resume is to resume.”
BE SOUND IN MIND AND BODY
UNCLE SAM: “As long as I keep these outstanding notes on my mind, which I am well able to pay, I am violating the laws of my constitution: and how can I expect my body to recover when my mind is not at ease?”
FROM A CARTOON BY THOMAS NAST IN “HARPER’S WEEKLY,” DECEMBER 13, 1879
THE “CROSS OF GOLD”
TWENTY-ONE years were to pass, however, before the country was to be extricated finally and absolutely from the shadow of an uncertain monetary standard. Specie resumption had not been accomplished when a bill was passed over the veto of President Hayes, on February 28, 1878, providing for the infusion of large masses of silver dollars into the circulation. This was followed by the so-called Sherman Silver Law of 1890, further increasing the amount of silver to be absorbed by the Treasury. The underlying motive for an increase in the monetary stock was the steady contraction which had been going on in the effort to restore the paper dollar to its old parity with gold; and for a time the country absorbed without apparent risk the additions made by the silver to the currency of the country. Gold exports set in, however, in heavy volume after the law of 1890; the Treasury began to lose its gold; and soon after the inauguration of President Cleveland, in 1893, the country stood face to face with the destruction of the gold standard. Panic supervened, and only at a special session of Congress in the autumn of 1893 was the further purchase of silver suspended by law.
The country lay prostrate for three years under a variety of ills, from which a young prophet from the West sought to rescue it by raising the standard of the free and unlimited coinage of silver “without the aid or consent of any other nation.” For a moment it seemed that the majority of the voters would respond to the electric thrill conveyed by this young leader, William Jennings Bryan, to the Democratic National Convention of 1896, when he wound up his famous speech with the declaration, “You shall not press down upon the brow of labor this crown of thorns; you shall not crucify mankind upon a cross of gold!”
A REAL CROSS OF GOLD
THE country decided for the continuance of the gold standard, and its decision was crystallized into law by the act of March 14, 1900. This act set aside for the protection of the greenbacks the sum of $150,000,000 in gold, to be kept inviolate from all other uses, and declared the bonds and other obligations of the Government to be redeemable in gold and in gold only. But the causes that were operating prior to 1892 to cause contraction in the monetary stock were reversed after that date by the great outpouring of new gold from the mines of South Africa and the Klondike. New processes of separating gold from low-grade ores made profitable fields that in earlier years would have been considered unavailable. The gold production of the world rose from $113,000,000 in 1890 to $202,251,000 in 1896 and $454,000,000 in 1910. Gold flowed into the Bank of England in the summer of 1896, even while Mr. Bryan was making his canvass for free silver, to an amount never before recorded in monetary history; and the beneficent flood soon overflowed the coffers of the advanced commercial nations and filled up the void in metallic money in such developing countries as Argentina, Brazil, Mexico, and India. In place of the fear of a scarcity of gold, which hung like a pall over some minds at the close of the last century, such a redundancy of the yellow metal arose that swollen bank reserves stimulated loans at low rates, manufacturing plants were extended, and prices of commodities advanced with a rapidity which lessened the purchasing power of wages and threatened to reduce the world to the unfortunate state of Midas, making gold a curse instead of a blessing.