There has been an advancing paralysis of enterprise and arrest of credit ever since the Sherman act of 1890 was passed. The bolters say that “No reason can be found for such an unhappy condition of things save in a vicious monetary system.” The reason for it has been that the cumulative effect of the silver legislation was steadily advancing to a crisis. The efforts by which the effects of that legislation had been put off were no longer effective, and it was evident that the country was on the verge of a cataclysm in which the standard of value would be changed. What man can fail to see the effect of such a fear on credit and enterprise? And with such a fear in the market, how idle it is to try to represent the trouble as caused by the fact that the existing standard was of gold, or of silver, or of anything else! Men will make contracts and go on with business by the use of any medium, the terms of which can be defined, understood, and maintained until the contract is solved, but uncertainty as to the terms, or danger of change in them, makes credit and enterprise impossible. In the whole history of finance no crisis can be found which was so utterly unnecessary, and so distinctly caused by the measures of policy which had gone before it, as that of 1893.
So much being admitted as to “hard times,” it remains true, however, that by far the greatest part of the current declamation about hard times is false. Prosperity and adversity of society are not capable of exact verification. At all times some people, classes, industries, are less prosperous than others. The fashion has grown up among politicians and stump orators of using assertions about prosperity and distress as arguments for their purpose, and parties come before the public with prosperity policies. They have programs for “making the country prosperous.” If this country, with its population, its resources, and its chances, is not prosperous by the intelligence, industry, and thrift of its population, does any sane man suppose that politicians and stump orators have any devices at their control for making it so? The orators of the present day see prosperity where they need to see it for the purposes of their argument. They say that all gold-standard countries in Europe are in distress. Mr. St. John says that Mexico is prosperous. As to Canada, we have seen no statement. According to some discussions which are current, the bicycle rivals the gold standard as a calamity-producer. As the bicycle has certainly gravely affected the distribution of expenditure and the accumulation of capital, its efficiency as a crisis-maker, in its degree, whatever that may be, can be rationally discerned, but nobody has ever been able to show any rational grounds of belief that the gold standard is a crisis-maker.
A crisis will also be produced whenever capital has been invested on a large scale in any unproductive investment, whereby it is not reproduced, but is lost. The enterprises are always made the basis of engagements and contracts. When the enterprises fail, the engagements cannot be met; other engagements based on these also fail, and so on through the whole industrial organization. Such crises are inevitable in a new country. Enterprises run in fashions. At any one time great groups of producers tend to one line of industry. That industry is sure to be overdone and to come to a crisis. In a free country, where every man is at liberty to direct his enterprise as he sees fit, what is the sense, when it turns out that he has made a mistake, of trying to throw the losses on other people? No one would propose it as to an individual or a number, but when there is a great interest it makes itself a political power and produces a platform for the same purpose, generally with inflated principles of humanity, justice, democracy, and Americanism as wind-attachments to make it float.
Mr. St. John says that the farmers are spending ten dollars an acre to get eight or nine dollars an acre. What farmer in the United States can tell how many dollars he spends on an acre? What is the sense of these pretendedly accurate figures? But, if they had sense, what would be the gain of cutting the dollars in two? If the farmer spent twenty silver dollars on an acre and got back sixteen or eighteen, how would he be benefited? The dollars of outlay are of the same kind as the dollars of return in any case. If it is true that the return does not equal the outlay, it must be on account of some facts of production, and it requires but a moment’s reflection to see that changing the currency in which outlay and income are reckoned cannot change the relation between the two.
A dispassionate view of facts will go to prove that the world is reasonably and ordinarily prosperous at the present time, except where particular classes and industries are affected by special circumstances, as some classes and industries are being affected at all times. The land-owners of western Europe are in distress on account of the competition of new land, with cheapened means of transportation, but now we are told that the holders of the other side of the competition, the land-owners of the new soil, are victims of distress. It must be, then, that too much labor and capital are being expended on the soil the world over, and that, too, in spite of all the protective tariffs drawing people to the textile and metal industries. Our silver men say that this is not the correct inference. They say that the people on the new land suffer because the prices are set in coins of gold and the debits and credits are kept in terms of those coins. The prices are fixed in the world’s market in gold. They will be so fixed, whatever we may do with our coinage laws. If the proceeds, in being brought home, are converted into silver value, a new opportunity for brokerage and exchange gambling will be given to the hated bankers and brokers of Wall Street. That is the only difference which will be produced. It would be far more sensible to say that distress is produced by doing the business on the English system of weights and measures, in bushels and pecks, and that prosperity would be produced by doing it on the metric system, in litres and hectolitres, for that charge would at least be harmless. Our distress could all be dispelled in a week by an act of Congress making all contracts, beyond political peradventure, that which they are in law and fact, gold contracts.
There is, however, another cause of hard times for some people which is far more important in our present case than any other. That is the case of the boom which has collapsed. We hear a great deal about “Wall Street gambling.” The gambling in Wall Street is insignificant compared with the gambling in land, buildings, town sites, and crops which goes on all over the country, and which is participated in chiefly by the men who declaim about Wall Street. For three hundred years our history has been marked by the alternations of “prosperity” and “distress” which are produced by the booms and their collapses. When the collapse comes the people who are left long of goods and land always make a great outcry and start a political agitation. Their favorite device always is to try to inflate the currency and raise prices again until they can unload.
It is a very popular thing to tell men that they have a grievance. That most of them find it hard to earn as much money as they need to spend goes without saying. Now comes the wily orator and tells them that this is somebody’s fault. In old times, if a man was sick, it was always assumed that somebody had bewitched him. The witch was to be sought. The medicine-man had to name somebody, and then woe to the one who was named. Our medicine-men say that it is the gold-bugs, Wall Street, England, who are to blame for hard times. Whether there is any rational proof of connection is as immaterial as it always was in witchcraft. It is a case of pain and passion. The “gold standard” has done it! There is something to hate and denounce. All would be well if silver could be coined at four hundred and twelve and a half grains to the dollar. But the assumption is that while the farmers would sell their products for twice as many “dollars” as now, in silver, all the prices of things which they want to buy would remain at the same number of dollars and cents as now, in gold; that is, it is believed that wheat would be at, say, one dollar and fifty cents per bushel in silver, instead of seventy-five cents in gold, but that cloth would remain at fifty cents a yard in silver, if it is now fifty cents a yard in gold. When this assumption is brought out into clear words, every one knows that such can never be the result. The proposed cure is like a witch cure. It lacks rational basis, and cannot command the confidence of men of sense. If the times were ever so bad, such a cure could only make them worse.