“All intelligent writers on currency agree that when it [money] is decreasing in amount poverty and misery must prevail.”
By joint resolution of the United States Congress, August 15th, 1876, a “United States Monetary Commission” was appointed to inquire into the prevailing “hard times.” It consisted of Senators John P. Jones, Lewis V. Bogy and George S. Boutwell, and Congressmen Randall L. Gibson, George Willard and Richard P. Bland; to whom were added Hon. Wm. S. Groesbeck of Ohio, Prof. Francis Bowen of Massachusetts, and Geo. M. Weston of Maine, the three latter acting as secretaries of the commission. On March 2, 1877, the commission reported. The following extracts are taken from the report:
“While the volume of money is decreasing, though very slowly, the value of each unit of money is increasing in a corresponding ratio, and property and wages are decreasing. Those who have contracted to pay money find that it is constantly becoming more difficult to meet their engagements. The margins of securities melt rapidly, and their confiscation by the creditor becomes only a question of time. All productive enterprises are discouraged and stagnate because the cost of producing commodities to-day will not be covered by the price obtainable for them to-morrow. Exchanges become sluggish, because those who have money will not part with it for either property or service, for the obvious reason that money alone is increasing in value while everything else is decreasing in price. This results in the withdrawal of money from the channels of circulation and its deposit in great hordes where it can exert no influence on prices. Money in shrinking volume becomes the paramount object of commerce instead of the beneficent instrument. Instead of mobilizing industry, it poisons and dries up its life currents. It is the fruitful source of political and social disturbance. It foments strife between labor and other forms of capital, while itself, hidden away, gorges on both. It rewards close-fisted lenders and filches from and bankrupts enterprising producers. An increasing value of money and falling prices have been and are more fruitful of human misery than war, pestilence or famine; they have wrought more injustice than all the bad laws ever enacted.”—Report of United States Monetary Commission, vol. I, p. 10 et seq.
Pointing out how a contraction of the money volume increases the debt obligations of the past, R. H. Patterson, especially commended by Gladstone as one of the ablest of English writers on finance, says:
“And what is such a dearth of money and rise in the measure of value but an injustice to the many to the gain of the few—an unfair exaltation of the power of the past over the present, an unfair and undesirable aggravation of the poverty of the poor and the wealth of the rich—a stereotyping of classes according to wealth, until they tend to become permanent? We have seen how powerful and beneficial was the influx of the precious metals from the New World four centuries ago in breaking the social bondage which had settled over Europe during the long night of the Dark Ages, enabling that generation to escape from the heritage of the past and bound forward upon the new career then opening to mankind. Such times come from the hand of Providence, and with an exceeding rarity even in the long career of civilized mankind. But at least let us avoid the opposite and never allow successive generations to be unfairly—nay, most unjustly, though it may not be so meant—handicapped, each in its own race, owing to a growing dearth and dearness of money.”—The New Golden Age, vol. II, p. 500.
President Grant said:
“To increase our exports sufficient money is required to keep all the industries of the country employed. Without this, national as well as individual bankruptcy must ensue.”—Message, December 1, 1873.
Hon. John Sherman, in a speech in the Senate, January 27, 1869, said, in opposition to a bill to contract the currency by retiring the greenbacks:
“It is not possible to take this voyage without the sorest distress. To every person except a capitalist out of debt, or a salaried officer, or annuitant, it is a period of loss, danger, lassitude of trade, fall of wages, suspension of enterprise, bankruptcy and disaster.... It means the ruin of all dealers whose debts are twice their business capital, though one-third less than their actual property. It means the fall of all agricultural productions without any great reduction of taxes. When that day comes every man, as the sailor says, will be close-reefed; all enterprise will be suspended, every bank will have contracted its currency to the lowest limit; and the debtor, compelled to meet in coin a debt contracted in currency, will find the coin hoarded in the treasury, no representative of coin in circulation, his property shrunk not only to the extent of the depreciation of the currency, but still more by the artificial scarcity made by the holders of gold. To attempt this task by a surprise upon our people, by arresting them in the midst of their lawful business and applying a new standard of value to their property without any reduction of their debts, or giving them an opportunity to compound with their creditors, or to distribute their losses, would be an act of folly without an example in evil in modern times.”—Congressional Globe, 1869, p. 629.
In a speech in the United States Senate, March 17, 1874, General John A. Logan pointed out the cause of the panic of 1873 as follows: