“But, sir, that the panic was not due to the character of the currency is proved by the history of the panic itself.... No, sir, the panic was not attributable to the character of the currency, but to a money famine, and to nothing else. In the very midst of the panic we saw the leading bankers and business men of New York pressing and urging the President and the Secretary of the Treasury to let loose twenty or twenty-five millions more of the same paper for their relief—the very same men who to-day denounce it as a disgrace to our government. It was good enough for them when they were in trouble.
“Why is it that representatives forget the interests of their own section and stand up here as the advocates of the gold-brokers and money-lenders and sharks, the same class of men whose tables Christ turned over, and whom he lashed out of the temple at Jerusalem?... Carry out the theory of the contractionists, and what must be the inevitable result? Every enterprise and industry must be dwarfed in like proportion. The busy hum of the spindle will cease its sound in many a mill which now gives employment to hundreds of active hands and supplies the comforts of life to many a happy home. The bright blaze of many an iron foundry which gives life and cheerfulness to the grand scenery along the streams of Pennsylvania will cease to gild the night with its rays. And the same industry in my own State, and that of the Senator from Missouri, which has been so rapidly increasing of late, will be crippled, and hundreds who now find employment there will be compelled to seek a home elsewhere for want of work. The undeveloped resources of the South and West, which we have just begun to appreciate, will rest in abeyance until a wiser policy shall bring them into use.... Why, sir, the people were never freer from debt in proportion to the business done than in 1865, at the close of the war, when Mr. McCulloch began his system of contraction, and at the very time when eleven million more people were to be supplied. Was it to be supposed that the activity and energy which the adequate supply of money had put in operation, and which was giving prosperity and happiness to the country, would suddenly dwarf itself to suit financial notions without a struggle? The inevitable result was an expedient to meet the consequent want, and credit was expanded. At the very moment above all others when adequate supply was needed, the opposite course was adopted; and right here lies the true cause of the late panic, which resulted from a money famine and not from an excessive supply.... Sir, turn this matter as we will, and look at it from any side whatever, and it does present the appearance of being a stupendous scheme of the money-holders to seize the opportunity of placing under their control the vast industries of the nation. Therefore I warn Senators against pushing too far the great conflict now going on between capital and labor.... Capital rests upon labor; but when it attempts to press too heavily on that which supports it in a free republic, the slumbering volcano, whose mutterings are beginning already to be heard, will burst forth with a fury that no legislation will quell.”
From the foregoing, which is but a small fragment of the immense literature in harmony with the opinions cited, the following conclusions may be digested:
1. A diminished volume of money always causes a proportional diminution in the price of labor and commodities—or, to express it otherwise, money becomes dear and everything else cheap.
2. This redounds to the advantage of the capitalistic class, who are thereby enabled to exact more for their money in services and commodities, to purchase all kinds of stocks and properties at diminished rates, and to foreclose mortgages and collect other forms of debts under such conditions as to make “hard times” a harvest for the creditor class.
3. The debtor class is compelled not only to yield more services and commodities for the money which it receives or has previously received, but suffers the further hardship of languishing business and enforced idleness or diminished wages; and it should be remembered that every producer is a debtor, even though he has no specific obligations outstanding; for he will have to aid those who have such obligations by receiving less prices and wages and by paying relatively increased taxes, salaries, rents and profits to those members of the debtor class who are immediately above him in the social scale, and who will seek to save themselves by shifting the burden of their obligations onto those who are below.
III.
A BIRD’S-EYE VIEW OF AMERICAN FINANCIAL HISTORY.
By Samuel Leavitt,
Author of “Our Money Wars,” “Dictator Grant,” etc.