Fifty years ago a political agitation was started for the annexation of Texas. As the enterprise appeared like a barefaced piece of land-grabbing, it was necessary to invent some historical, political, and moral theories which would give it another color. One such theory was that Texas had properly belonged to us, but that it was given away by Monroe and Adams in 1819. Therefore the project was presented as one for the re-annexation of Texas.
The Re-monetization of Silver.
An attempt is now made to impugn the coinage act of 1873 under various points of view, in order to lay a foundation for the claim that it is only sought now to re-monetize silver. Not a single imputation on the act of 1873 has ever been presented which will stand examination, but, if that were not so, that act was like any other act of Congress which has become the law of the land, and under which we have all been obliged to live for twenty-five years. We cannot go back and undo the law and live the twenty-five years over again. All the mistakes and follies of the past are gone into the past for all classes and all persons amongst us. The men of the past must be assumed to have acted according to their light, and we who inherit the consequences of what they did must make the best of both the good and ill of it, as the case may be, or as we think it is. If now we make a new coinage law it must stand on its own merits, and on the responsibility of the men who make it, now and for the future. All references back to 1873 are idle and irrelevant.
The plain fact, therefore, to be faced without any disguise, is that we are invited to debase the coinage and lower the standard of value, now and for the future, as a free act of political choice, to be deliberately adopted in a time of profound peace, and that this is to be done with the intention and hope that it will perpetrate a bankruptcy at fifty cents on the dollar for all existing debtors. Can this project be executed? It cannot. The scheme and plan of it for a nation of seventy million people is silly and wicked at the same time, and is both, beyond the power of words to express. The projectors of it deal with the economic phenomena of a great nation as if they were talking about a game at cards, and they plan to do this with prices and that with debts, this with exports and that with banks, as if they were planning a program for building a barn. If we try to realize the operation proposed we shall see how childish and absurd it is.
We must distinguish between three classes of debtors: great financial institutions, small mortgagors, and partners in collapsed booms.
Financial Institutions as Debtors.
The great financial institutions are intermediaries between debtors and creditors. They have received capital from some people and lent it to others. They have to recover it and pay it back. If they only recover it at fifty cents on the dollar, they can only repay it in the same way. What this would mean is that the creditors of those institutions would be paid “dollars,” but that when they tried to re-invest them they would find that prices had risen to a greater or less degree in those dollars for the things which they wanted to buy. To this the Populists answer, triumphantly, that now the debtors find that the prices of their products have fallen, so that when they try to sell them they cannot get enough to pay their debts; but the debtors are those who made contracts and undertook enterprises five, ten, fifteen, or twenty years ago, expecting to make gains which they certainly would have kept. As things have turned out they have not made the gains, and their plan is to escape the loss by throwing it on some one else. The institutions in question, however, are bound to protect the interests of either body of their clients, borrowers or depositors, when either is unjustly threatened, and they are by no means destitute of means to do it. A law to forbid specific coin contracts is but one step in the desperate policy of prostituting law and corrupting the administration of justice, which would be necessary in the attempt to force through the plan under discussion. It would fail at last, because the advocates of it would find that, as the popular saying is, it would “fly up and hit them in the face.” It is not possible to throw society and all its most important institutions into confusion without ruining all the interests of everybody, and at last everybody but the tramp or pauper has to ask himself whether it will pay. As for the institutions, many of them would be ruined in the operation. It is not possible for them simply to collect and repay in the debased dollars. The operation would produce snarls and knots at every turn. Lawsuits would multiply on all sides, and would so entangle the affairs of the institution as to ruin it. The proof of this is presented by the difficulties of liquidation in any case, even when there is no question of currency revolution, and when general affairs are in a normal condition, unless there is time and security for all the operations. In this case the demands on the institution would be precipitated at once, so far as the form of contract would allow.
Small Mortgagors.
The small mortgagors are either wages-men or farmers. As to the wages-men, their wages would undoubtedly go up in time as prices went up, but in the paralysis of industry which would be the first distinct effect of the plan, as soon as it was known that the experiment was to be made, immense numbers of wages-men would be thrown out of employment, and all wages would fall on account of this condition of the labor market. Later, when things began to adjust themselves to the new basis, wages would be low with prices high, both in silver. Advance of wages would come, but it would have to be won through strikes and a prolonged industrial war. In the state of things supposed it would be every man for himself. The wages class would be weakest of all under the circumstances, as they are in every case of “hard times.” How would mortgagors of this class traverse such a time and keep up their interest? As to the principal, which is to be halved, it cannot be halved unless it is paid, and the mortgagor has nothing to pay it with except the surplus which he can save from his wages over the cost of living. The project promises woe and ruin to the wages class, with industrial war and class hatred as moral consequences of the most far-reaching importance.