MONEY.

"Gold is a wonderful clearer of the understanding; it dissipates every doubt and scruple in an instant, accommodates itself to the meanest capacities, silences the loud and clamorous and brings over the most obstinate and inflexible. Philip of Macedon refuted by it all the wisdom of Athens, confounded their statesmen, struck their orators dumb, and at length argued them out of their liberties."

—Addison.

SPEECH

OF

HON. JOHN P. JONES,

OF NEVADA,

ON THE FREE COINAGE OF SILVER;

IN THE

UNITED STATES SENATE,

May 12 and 13, 1890.

WASHINGTON.
1890.

SPEECH

OF

HON. JOHN P. JONES,

OF NEVADA.

On the bill (S. 2350) authorizing the issue of Treasury notes on deposits of silver bullion.

Mr. JONES, of Nevada, said:

Mr. President: The question now about to be discussed by this body is in my judgment the most important that has attracted the attention of Congress or the country since the formation of the Constitution. It affects every interest, great and small, from the slightest concern of the individual to the largest and most comprehensive interest of the nation.

The measure under consideration was reported by me from the Committee on Finance. It is hardly necessary for me to say, however, that it does not fully reflect my individual views regarding the relation which silver should bear to the monetary circulation of the country or of the world. I am, at all times and in all places, a firm and unwavering advocate of the free and unlimited coinage of silver, not merely for the reason that silver is as ancient and honorable a money metal as gold, and equally well adapted for the money use, but for the further reason that, looking at the annual yield from the mines, the entire supply that can come to the mints will at no time be more than is needed to maintain at a steady level the prices of commodities among a constantly increasing population.

In view, however, of the great divergency of views prevailing on the subject, the length of time which it was believed might be consumed in the endeavor to secure that full and rightful measure of legislation to which the people are entitled, and the possibility that this session of Congress might terminate without affording the country some measure of substantial relief, I was willing, rather than have the country longer subjected to the baleful and benumbing influences set in motion by the demonetization act of 1873, to join with other members of the Finance Committee in reporting the bill now under consideration.

Under the circumstances I wish at the outset of the discussion to say that I hold myself free to vote for any amendment that may be offered that may tend to make the bill a more perfect measure of relief, and that may be more in consonance with my individual views.

THE CONDITION OF THE COUNTRY.

The condition of this country to-day, Mr. President, is well calculated to awaken the interest and arouse the attention of thinking men. It can be safely asserted that no period of the world's history can exhibit a people at once so numerous and homogeneous, living under one form of government, speaking a common language, enjoying the same degree of personal and political liberty, and sharing, in so equal a degree, the same civilization as the population of the United States. Eminently practical and ingenious, of indomitable will, untiring energy, and unfailing hope; favored by nature with a domain of imperial expanse, with soil and climate of unequaled variety and beneficence, with every natural condition that can conduce to individual prosperity and national glory, it might well be expected that among such a people industry, agriculture, commerce, art, and science would reach an extent and perfection of development surpassing anything ever known in the history of mankind.

In some respects this expectation would appear to have been well founded. For several years past our farmers have produced an annual average of 400,000,000 bushels of wheat. Our oat crop for 1888 was 700,000,000 bushels, our corn crop 2,000,000,000 bushels, our cotton crop 7,000,000 bales. In that year our coal mines yielded 170,000,000 tons of coal, our furnaces produced 6,500,000 tons of pig iron and 3,000,000 tons of steel. Our gold and silver mines add more than $100,000,000 a year to the world's stock of the precious metals. We print 16,000 newspapers and periodicals, have in operation 154,000 miles of railroad and 250,000 miles of telegraph. The value of our manufactured products at the date of the last census was $5,400,000,000. Our farm lands at the same time were estimated at $10,000,000,000, our cattle at $2,000,000,000, our railroads at $6,000,000,000, our houses at $14,000,000,000. It is not too much to say that there has been an increase of fully 50 per cent. in those values since the taking of the census of 1880. Our national wealth to-day is reasonably estimated at over $60,000,000,000.

Figures and facts such as these in the history of a young nation bespeak the presence not merely of great natural opportunities, but of a people marvelously apt and forceful. From such results should be anticipated the highest attainable prosperity and happiness. Our population is alert, aspiring, and buoyant, not given to needless repining or aimless endeavor, but, with fixity of purpose, presses ever eagerly on, utilizing every conception of the brain to supplement and multiply the possibilities of the hand, and at every turn subordinating the subtle forces of nature to the best and wisest purposes of man. No equal number of persons on the globe better deserve success, or are better adapted for its enjoyment.

But instead of finding, as we should find, happiness and contentment broadcast throughout our great domain, there are heard from all directions, even in this Republic, resounding cries of distress and dissatisfaction. Every trade and occupation exhibits symptoms of uneasiness and distrust. The farmer, the artisan, the merchant,—all share in the general complaint that times are hard, that business is "dull." The farmer is in debt, and is not realizing, on the products of his labor, the wherewithal to meet either his deferred or his current obligations; the artisan, when at work, finds himself compelled to share his earnings with some relative or friend who is out of employment; the merchant who buys his goods on time finds little profit in sales, and difficulty in making his payments.

WHAT IS THE DIFFICULTY?

What can it be, Mr. President, that has thus brought to naught all the careful estimates and painstaking computations, not of thousands, nor of hundreds of thousands, but of millions, of keen, shrewd, and far-seeing men? Our people take an intelligent interest in their business; they look ahead; they endeavor, as far as possible, to estimate correctly their assets and liabilities, so that on the day of reckoning they may be found ready. Why this universal failure of all classes to compute correctly in advance their situation on the coming pay-day? What potent and sinister drug has been secretly introduced into the veins of commerce that has caused the blood to flow so sluggishly—that has narcotized the commercial and industrial world?

All have been looking for the cause, and many think they have discovered it. With some it is "over-production," with others either a "high tariff" or a "tariff not sufficiently high." Some think it due to trusts and combinations, others to improved methods of production, or because the crops are overabundant or not abundant enough. Some ascribe the difficulty to speculation; others, to "strikes." All sorts of insufficient and contradictory causes are assigned for the same general and universal complaint. However inadequate in themselves, they serve to emphasize the universal recognition of a difficulty whose cause without close inquiry is likely to elude detection. But the evil is of such magnitude, it is so widespread and pervasive, that, without a knowledge of its cause, all effort at mitigation of its effects can but add to the confusion and intensify the difficulty.

It behooves us, therefore, as we value the prosperity and happiness of our people, to set ourselves diligently to the inquiry: What is the cause of the unrest and discontent now universally prevailing?

ONE SYMPTOM COMMON TO ALL INDUSTRIES.

In surveying the question broadly, to discover whether there is anything that affects the situation in common from the standpoint of varying occupations, we find one, and only one, uniform and unfailing characteristic; the prices of all commodities and of all property, except in money centers, have fallen, and continue falling. Such a phenomenon as a constant and progressive fall in the general range of prices has always exercised so baleful an influence on the prosperity of mankind that it never fails to arrest attention.

History gives evidence of no more prolific source of human misery than a persistent and long continued fall in the general range of prices. But, although exercising so pernicious an influence, it is not itself a cause, but an effect.

When a fall of prices is found operating, not on one article or class of articles alone, but on the products of all industries; when found to be not confined to any one climate, country, or race of people, but to diffuse itself over the civilized world; when it is found not to be a characteristic of any one year, but to go on progressively for a series of years, it becomes manifest that it does not and can not arise from local, temporary or subordinate causes, but must have its genesis and development in some principle of universal application.

WHAT PRODUCES A GENERAL FALL OF PRICES?

What, then, is it that produces a general decline of prices in any country? It is produced by a shrinkage in the volume of money relatively to population and business, which has never yet failed to cause an increase in the value of the money unit, and a consequent decrease in the price of the commodities for which such unit is exchanged. If the volume of money in circulation be made to bear a direct and steady ratio to population and business, prices will be maintained at a steady level, and, what is of supreme importance, money will be kept of unchanging value. With an advancing civilization, in which a large volume of business is conducted on a basis of credit extending over long periods, it is of the uttermost importance that money, which is the measure of all equities, should be kept unchanging in value through time.

EFFECT OF A REDUCTION IN THE MONEY-VOLUME.

A reduction in the volume of money relatively to population and business, or, (to state the proposition in another form) a volume which remains stationary while population and business are increasing, has the effect of increasing the value of each unit of money, by increasing its purchasing power.

It is only within a comparatively recent period that an increasing value in the money unit could produce such widespread disturbance of industry as it produces to-day. In the rude periods of society commerce was by barter; and even for thousands of years after the introduction of money, credit, where known at all, was extremely limited. Under such circumstances changes in the volume and in the value of money, while operating to the disadvantage of society as a whole, could not instantly or seriously affect any one individual. An increase of 25 per cent. in one year in the value of the money unit—a change which now, by reason of existing contracts or debts, would entail universal bankruptcy and ruin—would not be seriously felt by a community in which no such contracts or debts existed, in which payments were immediate or at short intervals, and each individual parted with his money almost as soon as he received it.

Such proportion of the annual increase in the value of the money unit as could attach to any one month, week, or day would be wholly insignificant, and as most transactions were closed on the spot, no appreciable loss could accrue to any individual. Such loss as did accrue was shared in and averaged among the whole community, making it the veriest trifle upon any individual. But how is it in our day?

THAT EFFECT INTENSIFIED AS CIVILIZATION ADVANCES.

The inventions of the past one hundred years have established a new order of the ages. The revolution of industry and commerce, effected by the adaptation of steam and other forces of nature to the uses of man, have given to civilization an impetus exceeding anything known in the former experience of mankind. Under the operation of the new system, the rapidity and intensity with which, within that period, civilization has developed, is due in great part to an economic feature unknown to ancient civilization and practically unknown even to civilized society until the present century. That feature is the time-contract, by which alone leading minds are enabled to project in advance enterprises of magnitude and moment. It is only through intelligent and far-seeing plans and projections that in a complex and minutely classified system of industry great bodies of men can be kept in uninterrupted employment.

We have 22,000,000 workmen in this country. In order that they may be kept uninterruptedly employed it is absolutely necessary that business contracts and obligations be made long in advance. Accordingly, we read almost daily of the inception of industrial undertakings requiring years to fulfill. It is not too much to say that the suspension for one season of the making of time-contracts would close the factories, furnaces, and machine shops of all civilized countries.

The natural concomitant of such a system of industry is the elaborate system of debt and credit which has grown up with it, and is indispensable to it. Any serious enhancement in the value of the unit of money between the time of making a contract or incurring a debt and the date of fulfillment or maturity always works hardship and frequently ruin to the contractor or debtor.

Three-fourths of the business enterprises of this country are conducted on borrowed capital. Three-fourths of the homes and farms that stand in the name of the actual occupants have been bought on time, and a very large proportion of them are mortgaged for the payment of some part of the purchase-money.

Under the operation of a shrinkage in the volume of money this enormous mass of borrowers, at the maturity of their respective debts, though nominally paying no more than the amount borrowed, with interest, are, in reality, in the amount of the principal alone, returning a percentage of value greater than they received—more than in equity they contracted to pay and oftentimes more, in substance, than they profited by the loan. To the man of business this percentage in many cases constitutes the difference between success and failure. Thus a shrinkage in the volume of money is the prolific source of bankruptcy and ruin. It is the canker that, unperceived and unsuspected, is eating out the prosperity of our people. By reason of the almost universal inattention to the nature and functions of money this evil is permitted, unobserved, to work widespread ruin and disaster. So subtle is it in its operations that it eludes the vigilance of the most acute. It baffles all foresight and calculation; it sets at naught all industry, all energy, all enterprise.

CONTRAST OF EFFECTS PRODUCED BY AN INCREASING AND A DECREASING MONEY-VOLUME.

The difference in the effects produced by an increasing and a decreasing money-volume has not escaped the attention of observant writers.

David Hume, in his Essay on Money, says:

It is certain that since the discovery of the mines in America industry has increased in all the nations of Europe. * * We find that in every kingdom into which money begins to flow in greater abundance than formerly, everything takes a new face; labor and industry gain life; the merchant becomes more enterprising, the manufacturer more diligent and skillful, and even the farmer follows his plow with greater alacrity and attention. * * * It is of no manner of consequence with regard to the domestic happiness of a state whether money be in a greater or less quantity. The good policy of the magistrate consists only in keeping it, if possible, still increasing; because by that means he keeps alive a spirit of industry in the nation and increases the stock of labor, in which consists all real power and riches. A nation whose money decreases is actually at that time weaker and more miserable than another nation which possesses no more money, but is on the increasing hand.

William H. Crawford, Secretary of the Treasury, in a report to Congress, dated 12th February, 1820, says:

All intelligent writers on currency agree that when it is decreasing in amount poverty and misery must prevail.

Mr. R. M. T. Hunter, in a report to the United States Senate in 1852, says:

Of all the great effects produced upon human society by the discovery of America, there were probably none so marked as those brought about by the great influx of the precious metals from the New World to the Old. European industry had been declining under the decreasing stock of the precious metals and an appreciating standard of values; human ingenuity grew dull under the paralyzing influences of declining profits, and capital absorbed nearly all that should have been divided between it and labor. But an increase of the precious metals, in such quantity as to check this tendency, operated as a new motive power to the machinery of commerce. Production was stimulated by finding the advantages of a change in the standard on its side. Instead of being repressed by having to pay more than it had stipulated for the use of capital, it was stimulated by paying less. Capital, too, was benefited, for new demands were created for it by the new uses which a general movement in industrial pursuits had developed; so that if it lost a little by a change in the standard, it gained much more in the greater demand for its use, which added to its capacity for reproduction, and to its real value.

The mischief would be great, indeed, if all the world were to adopt but one of the precious metals as the standard of value. To adopt gold alone would diminish the specie currency more than one-half; and the reduction the other way, should silver be taken as the only standard, would be large enough to prove highly disastrous to the human race.

The Encyclopædia Britannica, 1859 (article Precious Metals, by J. R. McCulloch), says:

A fall in the value of the precious metals, caused by the greater facility of their production, or by the discovery of new sources of supply, depends in no degree on theories of philosophers or the decision of statesmen or legislators, but is the result of circumstances beyond human control; and although, like a fall of rain after a long course of dry weather, it may be prejudicial to certain classes, it is beneficial to an incomparably greater number, including all who are engaged in industrial pursuits, and is, speaking generally, of great public or national advantage.

Ernest Seyd, 1868 (Bullion, page 613), says:

Upon this one point all authorities on the subject are agreed, to wit, that the large increase in the supply of gold has given a universal impetus to trade, commerce, and industry, and to general social development and progress.

The American Review (1876) says:

Diminishing money and falling prices are not only oppressive upon debtors, of whom, in modern times, states are the greatest, but they cause stagnation in business, reduced production, and enforced idleness. Falling markets annihilate profits, and as it is only the expectation of gain which stimulates the investment of capital in operations, inadequate employment is found for labor, and those who are employed can only be so upon the condition of diminished wages. An increasing amount of money, and consequently augmenting prices, are attended by results precisely the contrary. Production is stimulated by the profits resulting from advancing prices; labor is consequently in demand and better paid, and the general activity and buoyancy insure to capital a wider demand and higher remuneration.

PRICE THE INDEX OF THE VALUE OF MONEY.

There can be no truer index of the value of money than the general range of prices. Price is the mercury by the rise and fall of which the heat and struggle of industrial and business life are daily measured and made plain. Where the tendency of this indicator continues downward, there is no more certain sign that money is increasing in value.

During a period of falling prices the fear of impending calamity hangs like a pall over the business of the country. Notwithstanding unremitting efforts, men feel themselves constantly on the edge of disaster. Gloomy foreboding and timidity take the place of confidence and courage.

A shrinking volume of money is the most insidious foe with which civilization has to contend.

It is my firm conviction that the inexpressible miseries inflicted upon mankind by war, pestilence, and famine have been less cruel, unpitying, and unrelenting than the persistent and remorseless exactions which this inexorable enemy has made upon society. As the volume of money contracts prices decline, and with the decline of prices comes stagnation of industry, and the relegation to idleness of thousands of willing workmen. Capitalists become unwilling to invest their money in enterprises that employ labor while the products of that labor are constantly decreasing in price. During all periods of falling prices therefore money capital is withdrawn from active industry and seeks investment in bonds and other forms of money-futures yielding fixed incomes. For although the rate of interest in many such cases may be low, the capitalist is compensated for this by the enhancement in the purchasing power of each dollar of the principal and by the necessarily greater command it secures over the products of labor.

Avoiding the very purpose for which it was devised, money at such times seeks seclusion and declines to circulate. Its owner finds that he can better afford to leave it idle in a vault or bury it in the earth, than subject it to the probability of diminution by investing it in business on a constantly falling market. Thus, contrary to all principles of progress and of natural justice, the man who keeps his money idle, and deprives society of its use, is rewarded by an unearned increment, while he who puts his money into active business, where industry and labor may profit by it is punished by unmerited loss.

Under such conditions it is impossible for a community to reach that degree of material progress which, under proper circumstances, it would readily attain. At every turn distress and discouragement stare the people in the face. In every town and village men, willing to work, stand idle. Even their misfortune does not end with themselves, for not only are they a tax upon their friends, lessening to some extent the meager income of those who give them temporary assistance, but their necessary and eager competition for the little work that offers, tends to reduce the compensation of those to whom they are thus indebted. Stores, workshops, and factories, unoccupied and unused, are found in every direction. Crime increases, bankruptcies multiply, and even though the aggregate of wealth augments, it is unjustly distributed, and consequently barren of beneficent results.

A GLANCE AT THE HISTORY OF MONEY.

The system of relying upon the precious metals as money has long been known as the Automatic system. Accurately, it should be called the Accidental system. It has been called "automatic" because, so long as money was made to depend solely upon the yield of the mines, the supply regulated itself by what was believed to be a natural method, namely, by the expenditure of labor in its production, and was limited only by the rude obstacles which nature opposes to the production of the metals. The necessity of expending this labor placed the money volume of any country beyond the control of the kings and conquerors who, in the primitive periods of society, exercised despotic sway over their subjects. It was undoubtedly better for the people of those early times to risk the accidents of production than the follies and sinister designs of rulers.

This automatic system grew out of barter. It is a survival from the period when articles were exchanged directly, not for gold and silver as money, but for gold and silver as commodities—on the basis of their cost of production—as in the case of the articles for which they were exchanged.

There have been the same evolutions of progress in money as in all other things. In the rude original of society no kind of money was possible. The first trade was by barter, after which, some one or more commodities attainable in the vicinage, and in general use and demand were selected as the common media through which all exchanges were filtered. The use for that purpose of various metals by weight followed next, and, at a succeeding stage, gold, silver, and copper by weight, and after this their use in the form of coins, the value of which coincided with the bullion-value, which must necessarily be the case when free coinage is permitted.

It may be not uninteresting in this connection to have a general view of the materials which, at different epochs of the world's history, have been used as money. I therefore present a tabular statement giving those particulars in chronological order.

Table showing some of the substances which have, at various periods and in various countries, been used as money.

Period following the failure of the ancient mines.

Period following the discovery of the American mines.

Period following the openings of California and Australia.

An analysis of this table will show how carefully even the most primitive communities guarded against a too restricted money volume.

The materials chosen to serve the purpose of money in each country during the early history of society were, it will be observed, such as at the time and place would be of sufficient quantity or volume to insure against any sudden deprivation of supply. In countries where the chase was common, the skins of wild animals were used as money; in maritime communities, shells; in pastoral countries, cattle; in the early history of agriculture, grain; in early mining periods, base metal; in primitive manufacturing ages, nails, glass, musket-balls, strips of cotton, etc.

As communities developed, and commerce between them began, substances somewhat common to all countries, portable and indestructible, such as the precious metals, came to be more, and other substances less, resorted to. By reason of their great beauty those metals were always in demand, even among barbarous peoples, for purposes of ornament and decoration. Because of their universal use for such purposes they came to be recognized as things for which anything else could with safety be exchanged, and as society advanced, and it came to be recognized that some medium should be adopted in which to make all exchanges, those metals were naturally selected for the purpose, so that, together, they became, as it were, a common denominator of value. Their selection proved a convenient method of storing away wealth in a form that commanded at all times every other form of wealth. They had always passed by weight wherever used, but as society became better organized, and its methods more complex, it became necessary, in order to insure against fraud, to form them into pieces convenient for handling, and to invest them distinctly with the function of money, so that, by law, they became a universal solvent for debts and demands, the stamp of the government placed on the coin testifying to its weight and fineness.

Both metals, as shown by the table, have been concurrently used as money for thousands of years—not only since the dawn of history, but from a period anterior to any historical records. The oldest annals show that they had already been employed as circulating media and that their relative values, or the ratio of their exchange for one another, had already been established. Gold and silver were used as money in Palestine as early as the year 1900 B. C. We read in the Bible that Abraham weighed to Ephron the Hittite 400 shekels of silver, "current money with the merchant." An inscription on the temple of Karnak, of the date of 1600 B. C. mentions those metals as materials in which tribute was paid.

But long anterior even to these dates, both metals had been used, as, among the relics of the bronze age of the prehistoric era, ornaments of both gold and silver have been found. Gold, being the less abundant of the two metals, has had the higher value; but the ratio between the two has been marvelously steady, taking into account the great sweep of ages during which they have been used as money. This will be seen by reference to the following tables of ratios. I will first take their relative values during ancient times.

Table showing the ratio of gold and silver in various countries of the world up to the Christian era.

By reference to the foregoing table it will be observed that the increase in the supply of gold in Europe, consisting of the spoils of the Orient, gathered by Alexander the Great, and brought by him to Greece, had the effect of decreasing the value of that metal so that instead of being exchangeable at the ratio of 1 to about 13½ of silver, as formerly, gold became depressed, 1 ounce of it exchanging for only 10 ounces of silver. Later, when Julius Cæsar extended his conquering arms into Gaul, and sent to Rome the accumulations of treasure amassed by him, the value of gold by reason of the increased supply was again depressed, so that an ounce of it was exchangeable for only 8.93 ounces of silver. With these exceptions it may be said that the relation of silver to gold for sixteen hundred years before the time of Christ had varied only from the ratio of 1 to 12 to that of 1 to 13.33. Silver at no time during all this period fell below 13.50 to 1 of gold.

Looking, now, at the relative values of gold and silver from the time of Christ to the discovery of America, we find the ratio between the two metals to be as follows:

Table showing the ratio of gold and silver in various countries of the world from the opening of the Christian era to the discovery of America:

It will thus be observed that during the one thousand four hundred and ninety-two years from the coming of Christ to the discovery of America, silver never went below the ratio of 14.40 to one of gold.

The relations which the metals have borne to each other since the discovery of the New World will appear from the following:

Table showing the relative values of gold and silver in the various countries of the world from the discovery of America to 1680.

Table showing the ratio of silver to 1 of gold from 1687 to the demonetization of silver by Germany and the United States and the closing of the Mints to its free coinage.

[From the Report (1890) of the Director of the U. S. Mint on the Production of the Precious Metals in the United States.]

[Note.—From 1687 to 1832 the ratios are taken from Dr. A. Soetbeer; from 1833 to 1878 from Pixley and Abell's tables; and from 1879 to 1889 from daily cable-grams from London to the Bureau of the Mint.]

By the foregoing table it will be seen that in the three hundred and seventy-five years from 1497 to 1872 the maximum separation of the metals was only as 1 to 16.25—notwithstanding the widest divergencies during that long period in the yield of the two metals from the mines. It will be observed that all the later quotations are from the London market, but it is a significant fact that in France, where, by the law of 7 Germinal, An XI, (1803,) free coinage was permitted to both metals, at the ratio of 15½ of silver to 1 of gold, for a period of seventy years, and until the coinage of silver was limited, there was at no time the slightest variance from that relation.

When silver was deprived of the full money function, and all the money-work of society was placed on gold, the metals began to separate. The following table shows the degree of that separation from year to year:

Table showing the ratio of silver to 1 of gold since the demonetization of silver by Germany and the United States, and the closing of all mints of the western world to its free coinage:

The foregoing figures show that it is only since the legislative proscription of silver by Germany and the United States, and the closing of all the European mints to its coinage, that any material change took place in the ratio between the two metals, which conclusively demonstrates that the present divergence in the relative values of the two metals is directly due to the legal outlawry of silver and not to natural causes.

Not only has the concurrent use of the two metals as money had the sanction of all time, but the approval of the greatest minds of history, and, when not blinded by self-interest, the approval of practical and experienced financial minds. So well recognized is this fact that I need only cite a few instances of such approval.

Alexander Hamilton said:

To annul the use of either of the metals as money is to abridge the quantity of circulating medium, and is liable to all the objections which arise from a comparison of the benefits of a full with the evils of a scanty circulation. (Report to Congress, 1791.)

Thomas Jefferson, in a letter to Hamilton, indorsed this view, saying:

I return you the report on the mint. I concur with you that the unit must stand on both metals. (Letter to Hamilton, February, 1792.)

In his "Recherches sur l'or et sur l'argent," 1843, Léon Fanchet said:

If all the nations of Europe adopted the system of Great Britain, the price of gold would be raised beyond measure, and we should see produced in Europe a most lamentable result. The Government can not decree that legal tender shall be only gold, in place of silver, for that would be to decree a revolution, and the most dangerous of all, because it would be a revolution leading to unknown results (qui marcherait vers l'inconnu).

In a memoir read before the French Institute in 1868, M. Wolowski said:

The suppression of silver would bring on a veritable revolution. Gold would augment in value with a rapid and constant progress, which would break the faith of contracts and aggravate the situation of all debtors, including the nation. It would add at one stroke of the pen at least three milliards to the twelve milliards of the public debt.

In a debate in the French Senate on January 28, 1870, Senator Dumas eloquently pleaded for caution in dealing with a subject of such farreaching importance as the demonetization of one of the money metals. He said:

Those who approach these questions for the first time decide them at once. Those who study them with care hesitate. Those who are obliged practically to decide doubt and stop, overwhelmed with the weight of the enormous responsibility.

The quantities of the precious metals which are now sufficient may become insufficient, and we should proceed with great prudence before we diminish that which constitutes a part of the riches of the human race. Sometimes gold takes the place of silver. Sometimes silver takes the place of gold. This keeps up the general equilibrium. Nobody can guaranty that the present vast production of gold will continue. The placers are found on the surface of the earth, and may be exhausted by the very facility of working them. Silver presents itself in the form of subterranean veins. Science may contribute to accelerate its extraction. In presence of the unknown, which dominates the future, we should practice a prudent reserve.

Before a French monetary convention in 1869 testimony was given by M. Wolowski, by Baron Rothschild, and by M. Rouland, governor of the Bank of France.

M. Wolowski said:

The sum total of the precious metals is reckoned at fifty milliards, one-half gold and one-half silver. If, by a stroke of the pen, they suppress one of these metals in the monetary service, they double the demand for the other metal, to the ruin of all debtors.

M. Rouland, governor of the Bank of France, said:

We have not to do with ideal theories. The two moneys have actually co-existed since the origin of human society. They co-exist because the two together are necessary, by their quantity, to meet the needs of circulation. This necessity of the two metals, has it ceased to exist? Is it established that the quantity of actual and prospective gold is such that we can now renounce the use of silver without disaster?

Baron Rothschild said:

The simultaneous employment of the two precious metals is satisfactory and gives rise to no complaint. Whether gold or silver dominates for the time being, it is always true that the two metals concur together in forming the monetary circulation of the world, and it is the general mass of the two metals combined which serves as the measure of the value of things. The suppression of silver would amount to a veritable destruction of values without any compensation.

At the session (October 30, 1873) of the Belgian Monetary Commission, Professor Laveleye, one of the most luminous writers on economic subjects, said:

Debtors, and among them the state, have the right to pay in gold or silver, and this right can not be taken away without disturbing the relation of debtors and creditors, to the prejudice of debtors, to the extent of perhaps one-half, certainly of one-third. To increase all debts at a blow (brusquement) is a measure so violent, so revolutionary, that I can not believe that the Government will propose it or that the Chambers will vote it.

WHY WAS THE AUTOMATIC SYSTEM INTERFERED WITH?

Some thirteen years ago, as Chairman of the Monetary Commission appointed by Congress to investigate the causes of the changes in the relative values of the precious metals, I submitted to this body a report, in which I took occasion to refer to the motives which evidently influenced the creditor classes of the western world in destroying the automatic system of money. From that Report I quote as follows:

The world has generally favored, theoretically if not practically, the automatic metallic system, and adjusted its business to it. Some nations adopted one metal as their standard, and some the other, and some adopted both. Those that adopted both metals served as a balance-wheel to steady with exactness their relative value. The practical effect of all of this was the same as if all nations had adopted both, because it secured the entire stock of both at a fixed equivalency for the transaction of the business of the world. While some nations have changed their money metal, or, having had paper money, have resumed specie payments in one metal, the policy of a general demonetization of one of the metals was first broached only about twenty years ago. About ten years later a formidable propaganda was organized to fasten that policy upon the commercial world.

This new school of financial theorists advocate the retention of metal as the material of money, but favor its subjection to governmental interference in every respect. Whenever new mines are discovered, or old ones yield or promise to yield more abundantly, instead of freely accepting their product in accordance with the automatic theory, they advocate its rejection through the restriction or the absolute prohibition of the coinage of either or both metals, or through the limitation or the abolition of the legal-tender function of one of them. Whenever the interests of the creditor and income classes seem to be in danger of being impaired by an increase in the volume and decrease in the value of money, or in other words, by a general rise in prices, these modern theorists are clamorous in double-standard countries for the demonetization of one of the money metals, and in single-standard countries for the shifting of the money function from the metal which promises the most to the one that promises the least abundant supply. They are extremely anxious for the retention of the material of which the money-standard is composed when such material is rising in value and prices are falling, and exceedingly apprehensive of the evil and inconvenience which they predict as sure to result from changing it.

Whenever a fall in prices occurs, through either a natural or artificial contraction in the volume of money, they maintain that it is due to antecedent inflation and extravagance, or to overproduction through persistent and reckless industry; if the contraction be natural, that it can not be helped, and if artificial, that though it may inflict great temporary losses on the masses of the people, it will be sure to result in their ultimate benefit, and they console the sufferers with the comforting assurance that such contraction is necessary in order to reach the lowest depths of that "hard pan" whose foundations they have previously undermined by demonetizing one of the metals, and upon which alone they claim that money, capital, and labor can securely and harmoniously rest. But when the material composing the standard is falling in value and prices are rising, they immediately discover that the maintenance of the value of the standard is the all-important consideration, and that its material is of no importance whatever and should be at once changed to "redress the situation." After having reduced one of the metals to a commodity by depriving it of the money function, these theorists complacently point to the resulting fluctuations in the value as a justification of the act producing them, and as a conclusive proof of the unfitness for money of the demonetized metal. * * *

Metallic money, on this theory, is no longer automatic, but is as completely subjected to governmental control for all injurious purposes as paper money. But, unlike paper money, the control over this kind of metallic money can only be exercised in the baneful direction of decreasing its volume, and thereby making property cheaper and money scarcer and dearer.

This is a one-sided system, which can operate only in the interest of the security creditor, the usurer, and pawnbroker, whom it enables, through the falling prices which itself occasions, to swallow up the shrunken resources of the debtor, but is impotent to protect the interests of the unsecured business creditor, the debtor, or society, when, from any cause, the supply of the money metals becomes deficient.

The world has expended a vast amount of labor in the production of the precious metals, and has made great sacrifices in upholding the automatic metallic system of money, and has a right to insist that it shall be consistently let alone to work out its own conclusions, or that it be abandoned.

The history of the subsequent struggle to remonetize silver only serves to illustrate and emphasize the correctness of that statement of the case.

Between 1810 and 1849, according to Tooke and Newmarch (recognized authorities on the subject), gold increased in value 145 per cent. which is equivalent to a fall in the general range of prices of 59 per cent. No movement was then made or suggestion offered by the debtors, or by any class of the community, to add any new money-metal to the metals already in use, with the view of increasing the volume of money, so that the equity of time contracts might be maintained, and the value of the unit of money kept at a steady and unchanging level.

But as soon as the discoveries of gold were made in the alluvial deposits of California and Australia, or rather as soon as it was suspected that money would thereby become considerably increased in volume, the annuitants and income classes, the creditors everywhere, took steps to avert what they characterized as a great calamity. They openly declared their purpose, by every means in their power, to prevent a decline in the value of money, so that the purchasing power of their incomes might not be reduced. They determined to go to any length in order to prevent the rise of prices which their aggressive instincts led them to fear would follow the additions to the money volume of the world by the natural and much needed yield of the mines.

The fiat therefore went forth that one of the metals must be discarded.

THE PROPOSITION FIRST MADE TO DEMONETIZE GOLD.

If anything were needed to demonstrate that the reason for the demonetization of silver was the cupidity of the creditor classes—the money-lenders, annuitants, and those in receipt of fixed incomes—and that it was not any defect inhering in the metal silver, nor any change in its adaptability to subserve the purposes of money, it is to be found in the significant fact that the metal first selected for demonetization was not silver but gold—that metal which has since become the idol of the money-changers, and which is now declared to be the only "natural" money. The openly-avowed determination was to increase the value of money, and in order to accomplish that purpose the metal which promised the largest yield was to be condemned and stripped of its ancient monetary function. So strongly was this determination set forth, so earnestly was it presented, and so urgently pressed on the ground of duty that its achievement came to be regarded as the fulfillment of a high moral purpose.

It was with gold then as it came to be with silver afterward, and as it always is with whatever interferes with the interests of privileged classes, intrenched in power and prerogative,—the determination to destroy it being arrived at, measures were taken to prove that the public good required its destruction. While the purpose was to discard the metal, whether gold or silver, which threatened most immediately and seriously to reduce the purchasing power of money, the argument was that a decrease in the purchasing power of money was a calamity against the happening of which every energy should be directed.

The privileged classes found then, as they find now, able and ingenious advocates and defenders among the literary and educated guilds of the period. The celebrated De Quincy, in England, attempted to prove, and to his own satisfaction did prove upon figures drawn from his fears and a brilliant imagination, that the least yield of gold to be expected from the mines of California and Australia for an indefinite period in the future, was the yearly sum of $350,000,000.

M. Chevalier, in France, vehemently proclaimed the necessity of discarding one of the money metals, and that one not silver but gold. In his work upon the "Fall of Gold" M. Chevalier, in 1856, said:

The quantity of gold annually thrown on the general market approaches in round numbers a milliard of francs ($200,000,000). Those two countries (California and Australia) must yet for a long series of years produce gold in such quantities and on such conditions as to render a marked decline in its value inevitable.

It is absolutely certain that so vast a production should be accompanied with a great reduction in value.

In no direction can a new outlet be seen sufficiently large to absorb the extraordinary production of gold which we are now witnessing, so as to prevent a fall in its value.

Unless, then, we possess a very robust faith in the immobility of human affairs, we must regard the fall in the value of gold as an event for which we should prepare without loss of time.

The "preparation" which Chevalier advocated was the discarding of that metal which gave promise of the greatest abundance. He did not attempt to hide his purpose. He boldly stated that his object was to enhance the value of money. This object was also clearly expressed on a later occasion by another distinguished advocate of dear money, Mr. Victor Bonnet, of France, in the Journal des Economistes. He said:

The world is now saturated with the precious metals, and if there is any danger against which it is necessary to guard, it is that this saturation should become greater. * * *

If the annual production of gold is now reduced to 500,000,000 francs, let us thank Heaven for it, and let us wish that it may not be too rapidly increased, whereby we should be embarrassed. It is the too great abundance and not the scarcity of metallic money which is to be apprehended.

GOLD DEMONETIZED.

In 1857 the German states and Austria demonetized gold; and had it not been for the opposition of France, which insisted on retaining the double standard, the movement might have become general on the continent. With England, however, nothing could be done. More than a generation had passed since it had declared for the single standard of gold, and its creditors and income classes—the shrewdest, most adept, and watchful of financiers—did not believe that the large yields of gold would long continue.

The creditor classes of the continent, finding England immovable and realizing that the object sought by the English creditors was identical with their own, namely, the increase in the value of money and the depression of prices, concluded that the common purpose could be as well served by the demonetization of one as by that of the other. This conclusion was emphasized by developments on the Comstock lode whose bountiful and beneficent yield of silver was the fitting supplement to the great discoveries of gold on the Pacific coast. The danger of a decline in the value of money was more imminent than ever. The annuitants became alarmed. Commissions were sent from Europe to the Pacific coast to investigate the subject. The United States, too, sent a commissioner to examine into the condition and prospects of the Comstock, and, imbued with many of the characteristics of De Quincey and Chevalier, the United States commissioner, in 1868, reported that if all other mines were worked with the machinery used on the Comstock "their yield would flood the world."

Like many of the present opponents of silver he was endowed with the gift of prophecy, and accordingly we find him confidently predicting that other and innumerable rich lodes of silver would be found on the Pacific coast which would be worked with great profit. The attack on gold was immediately changed to a combined attack on silver. From that period till the present no means have been left untried to belittle and degrade that metal, and also to disparage those who are in favor of continuing it as one of the money metals of the world.

It was then announced with all the dogmatism of authority that silver was unfit to be used as money. Defects were suddenly discovered in it that the scrutiny of three thousand years had failed to disclose. Its weight and bulk were found to be insuperable obstacles to its use as money. Yet the specific gravity of silver is no greater now than it has been for all the ages during which it has been used as money by all mankind, nor is it any heavier or more bulky than it was in 1851 or 1857, when Belgium, Germany, and Austria demonetized gold and made the "heavy," "bulky," and "inconvenient" metal, silver, their only money metal. Silver can now be transported from place to place with less risk and at no greater expense than gold, and at much less cost than at any previous period in the history of the world.

The objection that silver is too heavy for the pocket is an objection common to all metallic money. We see hardly any gold in circulation in this country—infinitely less than of silver. When our people have a choice as to the form in which they will take money they prefer paper representatives as being the most convenient. The extraordinary perfection to which the arts of the engraver and paper maker have been brought gives paper money a security against counterfeiting and imitation far superior to any immunity which can be claimed for the metals. The marvellous inventions of modern times in the form of safes and vault-locks render it a matter of practically no risk to store the metals, both silver and gold, so that paper representatives of them may be issued. These representatives are preferred by the general mass of the people, and have almost entirely occupied the channels of circulation to the exclusion of both metals. A silver certificate for $1,000 weighs no more than a gold certificate for the same amount.

THE MOTIVE FOR DEMONETIZING SILVER.

The motive for the demonetization of silver was precisely the same that had previously inspired the demonetization of gold. The object was to demonetize one of the metals—that metal which promised the greatest abundance, and which would contribute most largely to maintaining at an equitable level the general range of prices. The motive in both cases was to aggrandize the privileged classes—the income and the creditor classes of the world—and by means of a subtle and sinister manipulation of the money volume, whose effects it is not always easy to trace to their true cause, to practically confiscate the reward of the hard toil of the masses. To all intent and purpose the design was to establish a new system of slavery for the western world, of which the debtor classes among the white races should be the victims.

When demonetization was determined on there was no pretense that there was any difficulty in maintaining a parity between the two metals at the established ratio.

In the official résumé of the doings of the French monetary commission of 1869 the arguments upon both sides were summed up.

In behalf of the gold standard it was said:

The rise in price which has taken place within twenty years in a great number of articles of merchandise is evidently due to many causes, such as war, bad harvests, and increase in consumption; but it is very probable that the depreciation of the precious metals has contributed to it, since there has been a striking coincidence between the rise of prices and the production of the new mines of gold and silver. The annual production of the two metals, which was only $80,000,000 in 1847, exceeds now $200,000,000. It has nearly tripled, and it is easy to see that the real value of the metals has diminished. It is difficult to estimate exactly what the diminution is, but whatever it may be it demands the attention of governments, because it affects unfavorably all that portion of the population whose income, remaining nominally the same, undergoes a yearly diminution of purchasing power. As governments control the weight and standard of money, they ought so far as possible to assure its value. And as it is admitted that the tendency of the metals is to depreciate, this tendency should be arrested by demonetizing one of them.

In behalf of the double standard it was replied as follows:

Many economists argue that the precious metals, having become very abundant, have lost 10 or 15 per cent. of their value, and that the situation must be redressed by making money scarcer by demonetizing silver. To this it may be answered that the great discoveries of gold of the last twenty years have injured nobody. The new mass of gold, spreading over the whole world, has found employment in stimulating all forms of business, and, as a consequence, the value of gold has fallen very little. According to Mr. Newmarch, the mass of gold and silver has augmented 3 per cent. per annum, while the mass of exchanges has augmented more than 3 per cent. per annum, so that the equilibrium has been maintained. And the present is an especially inopportune time to demonetize silver, because the annual production of gold has been falling off for several years. It was $200,000,000 in 1853, and it is now not more than $140,000,000. What will happen to the civilized world if silver is demonetized and if gold shall then fail?

THE MOTIVE OF ENGLAND.

England did not adopt the gold standard until she was in a position to become the principal creditor nation. When her forges, furnaces, spindles, and looms were ready to supply manufactured goods to all the world, she saw that all countries and peoples would be compelled to pour their treasures into her lap. Her insular position and great navy guarantied her against external assault. Released from the anxieties and labors incident to the Napoleonic wars, with a sturdy population of trained mechanics, and with fields of coal and iron in abundance, she was well adapted to become the "workshop of the world." With colonial possessions in every sea, and with Continental Europe in ceaseless unrest, England could rely on customers who could themselves produce nothing but raw material and would be obliged to buy her finished products.

The field of industry had been recently broadened by basic inventions of unparalleled importance—the steam-engine, the power loom, the spinning-jenny, and a multiplicity of other devices that increased a hundred fold the efficiency of artisan labor. England knew that her trade would in the main be a foreign trade and her financial dealings largely with foreign governments. She knew that from the people of the continent, impoverished by years of struggle for existence against the attacks of Napoleon, she could not expect immediate payments in cash, or in commodities. Time bonds and other deferred obligations were the media in which for the most part she received pay, she made interest and principal payable in gold alone, and if before the date of payment the value of money should increase it would not be to the disadvantage of the creditor. Whatever we may think of the ethics of this policy, we can have no difficulty in understanding its motive.

ACKNOWLEDGMENT OF THE MOTIVE.

As to the object which England had in view in demonetizing silver we are left in no sort of doubt. It has been candidly admitted by many of her financiers and publicists. The reason for her stolid adherence to the gold standard now is the same for which she originally demonetized silver. Her income and creditor classes are daily in receipt of an unearned increment to their wealth by reason of that demonetization. More candid than the advocates in this country of the single gold standard, the writers and press of Great Britain openly avow the object. No better testimony to the fact can be adduced than that supplied by the royal commission appointed in 1886 to inquire into the changes in the relative values of the precious metals.

At page 90, Part II, of the final report of that body, section 128, the commission say:

It must be remembered, too, that this country is largely a creditor country, of debts payable in gold, and any change which entails a rise in the price of commodities generally; that is to say, a diminution of the purchasing power of gold would be to our disadvantage.

Before the British Royal Commission of 1868 on International Coinage, Mr. Jacob Behren, an eminent British merchant and member of the Associated Chambers of Commerce, after answering special and technical questions, was asked, in conclusion, "if there was anything else he wished to state." His reply was (p. 13):

I would only state that, in my opinion, the general introduction of gold all over the world has been one of the greatest possible blessings to England. I believe that England would be now the very poorest country in the world if the silver standard abroad had been kept up, and gold had not been generally introduced. Gold would otherwise have been very much reduced in value, and we should have had all the gold poured into England. All the debts owing to us would have been paid in the depreciated currency; and, therefore, I believe that England ought to have taken the lead in the introduction of a gold currency abroad. We ought to be very thankful that it has been introduced, and we ought to give every facility to its circulation.

Sir Lyon Playfair, in a speech delivered in the English Parliament on April 18, 1890, according to the report in the London Times of the day following, said that—

The true policy of England as the chief creditor nation of the world was to keep perfect independence, and to refuse participation in any entangling conference on our monetary system.

And, according to the same report, Sir Lyon Playfair, referring to the holding of the metals together by law, said that—

It was quite true that, if you yoked a cart-horse to a racer, the strength of both would be increased but the speed of the racer would be sacrificed.

Gold is the "racer" whose "speed" must not be sacrificed, no matter how much injury may be effected by its tendency to greater and greater gain.

The weight of the enormous burden which is imposed on gold can not be better illustrated than by a statement of this same Sir Lyon Playfair, made in the same speech. According to the London Times of April 19, he said that—

The liabilities of the banks of Great Britain to the public amounted to £621,000,000, or about the amount of the national debt of England; but the amount of coin or bullion to meet this liability was only £35,000,000; or, deducting from each side of the account £8,000,000 locked up in the Notes Department of the Bank of England, it was £27,000,000; or only 4½ per cent. of liabilities.

On the same occasion Mr. Goschen, Chancellor of the Exchequer, delivered an able speech, in which he gave his facts, his eloquence, and his logic to the struggling masses of his countrymen by maintaining the wisdom of remonetization of silver, but gave his conclusions and his policy to the creditor classes by recommending no disturbance of present conditions.

I have contended—

said the Chancellor of the Exchequer—

and am prepared still to contend, that I should prefer the currency of the world to depend upon two metals rather than upon one metal. To those views I gave expression in 1878. * * * I have always looked upon silver and gold not as antagonistic to each other; not as being metals the price of one of which would necessarily fall when the other rose, but I have looked upon them as partners who together were doing the work of the currency of the world.

The English creditor classes have not been without able coadjutors in this country. We have noticed for the last twelve or fourteen years that zealous advocates of the gold standard, the advantages of which are not confined to Great Britain, are to be found among the creditor classes of the United States.

If the toilers of this country, from the proceeds of whose labor these exactions have to be paid, had as little influence on the legislation of the United States as the toilers of England have on the legislation of that country, the creditor classes and financiers of the United States might be as frank as those of Great Britain in admitting the object of maintaining the single gold standard.

How graphically, though unintentionally, does the English poet, Waller, in the following verse, express the advantage which the gold standard gives to creditors everywhere, and the self-satisfaction with which they contemplate life:

The taste of hot Arabia's spice we know,
Free from the scorching sun that makes it grow.
Without the worm, in Persia's silk we shine,
And, without planting, drink of every vine.
To dig for wealth we weary not our limbs,
Gold, though the heaviest metal, hither swims.
Ours is the harvest where the Indians mow.
We plow the deep, and reap what others sow.

THE MOTIVE OF GERMANY.

When Germany, intoxicated by her victory over France, and in order to further cripple a fallen foe from whom she had exacted $1,000,000,000 in gold, demonetized silver, she inflicted on her people by the fall of prices consequent on the increase in the value of money, more misery than all her armies of horse and foot had been able to inflict on France. France, on the contrary, notwithstanding this unprecedented war tribute, by keeping a sufficient volume of money in circulation to maintain, and even advance, her range of prices, emerged in a few years from the consequences of the greatest disaster in her history, conscious of a triumph more complete than Germany had achieved by all the military splendor of the war. The ransom exacted of France was received back by her almost as soon as paid, in exchange for the products of her industry. It is not a sign of prosperity, Mr. President, when hundreds of thousands of people, the best bone and sinew of a nation, are found annually emigrating; and it is a coincidence which I merely mention, in passing, that as soon as the effects of demonetization of silver had had time to make themselves felt in Germany, a veritable hegira of its people took place.

From 1873 to 1889, the emigration from Germany numbered 1,546,000 persons.

Students of social science everywhere recognize the statistics of illegitimacy and of suicides as among the most powerful evidences of monetary distress. By reference to those statistics we find that notwithstanding the large emigration during that period the number of illegitimate births in Germany increased from 161,294 in 1883 to 169,645 in 1888. The suicides in Prussia, Bavaria, Saxony, and Baden—the leading states of the German Empire—increased from 179 for each million of population in 1868 to 196 for each million of the population in 1876 and to 218 for each million of the population in 1882. In Prussia alone the number of suicides in 1876 was 151 per million, while in 1882 it was 191 per million.

This is part of the price which the toiling masses of Germany are paying for the gold standard experiment, which, without their consent their imperial government foisted upon them.

Bismarck made the mistake that many able men in all countries of the western world have made and continue to make, namely, that of attributing the commanding position of Great Britain in the commercial and industrial world to her adoption of the gold standard. Bismarck mistook for cause and effect what was a mere coincidence, the result of exceptional conditions, as did those of our legislators in 1873, who happened to know anything whatever of the nature of the act demonetizing silver. The belief of some of the most far-sighted statesmen of Great Britain has been that she secured her position, not by reason of the gold standard, but in spite of it.

In a speech delivered at Glasgow, in November, 1873, after the alteration by Germany in her monetary standard, Mr. Disraeli said:

The monetary disturbance which has occurred, and is now to a certain extent acting very injuriously upon trade, I attribute to the great changes which the Governments of Europe are making in reference to their standard of value. Our gold standard is not the cause of our commercial prosperity, but the consequence of that prosperity. It is quite evident that we must prepare ourselves for great convulsions in the money market, not occasioned by speculation or any of the old causes which have been alleged, but by a new cause with which we are not sufficiently acquainted.

And again in March, 1879, when the effects of the decreasing volume of money were making themselves more and more felt, Mr. Disraeli, then Lord Beaconsfield, said:

All this time the produce of the gold mines of Australia and California has been regularly diminishing, and the consequence is that, while these great alterations on the continent in favor of a gold currency have been made, notwithstanding that increase of population which alone requires a considerable increase of currency to carry on its transactions, the amount of the currency itself is yearly diminishing, until a state of affairs has been brought about by gold production exactly the reverse of that which it produced at first. Gold is every day appreciating in value, and as it appreciates the lower become prices. It is not impossible that, as affairs develop, the country may require that some formal investigation should be made of the causes which are affecting the value of the precious metals, and the effect which the change in the value of the precious metals has upon the industries of the country, and upon the continual fall of prices.

In reaching their conclusions, Bismarck and others ignored the fundamental principle that a gold supply that might be sufficient for one country with a gold standard, and might even result in a measure of prosperity to that country, would be wholly insufficient if other countries should adopt the same standard and should enter upon a keen competition and rivalry for the acquisition of gold.

The adoption of that standard by Germany and France was therefore not only destructive of their own prosperity, but was a stunning blow at the prosperity of England and all other gold-using countries. In taking England for his model, Bismarck had not the condition of the toiling masses before his mind, but the glamour of prosperity which surrounded the creditor-barons.

The unprejudiced observer can not fail to perceive that the $370,000,000 coined under the Limited Coinage Act of the United States of 1878, supplementing the gold stock of the western world, postponed great industrial and financial crises. But the elements of these crises are gathering, and, unless relief be soon forthcoming, will burst upon the world with crushing severity.

DEMONETIZATION IN THE UNITED STATES.

If we are surprised that the sordid selfishness of the privileged classes of Europe should have induced them to perpetrate so gross an act of injustice, we are reminded that the legislation of monarchical countries has usually been controlled in the interest of the privileged classes. But what shall be said in defense of the demonetization of silver by the United States? No such stupendous act of folly and injustice was ever before perpetrated by the representatives of a free people.

Our position differed materially from that of Great Britain. This was not a creditor nation. Our people did not, and do not, own thousands of millions of dollars of foreign bonds, on which to receive semi-annual interest in a constantly appreciating money, which would have to be paid from the current earnings of foreign labor. Instead, therefore, of our demonetization unjustly enriching our creditor-classes at the expense of foreigners, it enabled the creditors at home here to rob and despoil the debtors among their own countrymen. Instead of despoiling the Canadian, the Australian, the East Indian, the Egyptian, or the Turk, the spoliation arranged for by our adoption of the gold standard was a spoliation of the debtors in our own communities. In so far, however, as our debt was held abroad, it provided for a spoliation of our citizens by the foreign bondholders also. And as nearly all our public debt was so held, we had presented to us in 1873 the extraordinary spectacle of representatives, sent here to enact laws for the welfare and advancement of our own people, devoting all their energies, whether aware of it or not, to the upbuilding of the fortunes of the moneyed aristocracies of other countries, at the expense of the producers of the United States.

CONDITION OF THE COUNTRY AT THE TIME.

Consider for a moment the condition of this country at the time when this amazing piece of legislation was enacted.

The Republic was but just recovering from an exhausting war, which loaded it with a national debt approaching $3,000,000,000. There were also State, county, city, and town debts aggregating many more thousands of millions, with railroad and other corporate bonds and debts aggregating yet other thousands of millions and private debts of indefinite and unascertainable amount, represented largely by mortgages on real estate. This constituted an aggregate whose burden might naturally be presumed to be sufficient to tax all the resources of the people. Although some portion of those debts has been liquidated and the national bonds have been refunded at lower rates of interest, yet we all know that in this age all municipal and corporate debts, if not national debts, are practically perpetual. No sooner is one form of bond liquidated than another takes its place; no sooner is one public improvement completed than another is begun.

At the time silver was demonetized it might well have been supposed that a sufficiently large unearned increment had already been realized by the foreign and domestic holders of United States bonds. The greater portion of the debt of the Government was, when incurred, made payable simply in "lawful money"—the interest alone being payable in coin. Yet in March, 1869, the bond-holders secured the passage of an act of Congress, entitled "An act to strengthen the public credit," containing a pledge to pay in coin or its equivalent not merely the interest, but the principal of all national obligations not specially provided to be paid otherwise.

THE COURSE OF THE CREDITORS.

And again, when in 1870 Congress was about to provide for a refunding of the public debt, these clamorous creditors, not satisfied with having got the bonds at rates much below their face value, and not satisfied with the pledge to pay in coin—a pledge made long after the contract was made and the debt incurred—insisted that not only should the new bonds be payable in coin, but in order to guard against any possible interpretation which might work to their detriment they did what has rarely been done in the history of monetary legislation, insisted that even the very standard of that coin should be fixed and nominated in the bond. They were willing to take no chances. They were not willing to place confidence in the sense of equity and fair dealing of the people of the United States. They held before Congress the covert threat that if the new issue of bonds did not provide for payment in "coin," instead of "lawful money," and did not prescribe the precise standard of coin in which they were to be payable, it would be difficult if not impossible to place the bonds on the market.

So, by the refunding act of July 14, 1870, Congress provided for the payment in "coin of the present standard value," that is to say, in either gold dollars of 25.8 grains of gold, nine-tenths fine, or in silver dollars of 412½ grains of silver, nine-tenths fine, at the option of the United States. But even this extreme advantage to the creditors over payment in "lawful money" of the United States, in which the bonds were bought, and in which they were legally payable, was insufficient. All but the most ingenious would imagine that having thus provided for payment in coin then bearing a considerable premium over the current money of the Republic, and having the very standard of that coin fixed in the act, the highest point of vantage had been reached. One device, however, and only one, remained by which the money of the payment could be still further increased in value, and this device did not escape the watchful eye or cunning hand of the public creditors.

They clearly saw that if by legislative enactment they could secure the rejection of one of the money-metals they would succeed in enormously increasing the value of the metal retained. This they accomplished by the demonetization of silver, and thus by striking down one-half the automatic money of the world and devolving the money function exclusively on the other half, added thousands of millions of dollars to the burden of the debt.

THE PRETENSE TO "STRENGTHEN THE PUBLIC CREDIT."

It will be observed that this anxiety to strengthen the public credit was evinced by the bondholders after and not before the bonds were in their possession. No anxiety for the public credit was manifested by them at a time when the Government might be able to reap advantage from it. The Government having parted with the bonds at a heavy discount, their selling price in the market became a matter of no direct pecuniary importance to the people of the United States.

The "strengthening of the public credit" that was to be effected by the act of March 16, 1869, consisted of a rise in the price of the bonds for the benefit of the holder, at a time when they were no longer the property of the Government but of private individuals. The real effect of the act, therefore, was not in any way to benefit the Government but greatly to enrich, by an increment unearned and unbargained for, a few men who had already been greatly enriched by their dealings with the United States. The title of the act should have read "An act to strengthen the bank account and credit of the holders of United States bonds."

The excuse and apology for the act was that by its passage the refunding process then contemplated, and afterward provided for by the refunding act of 1870 might be rendered more certain of success; but if any advantage accrued from that cause, it was lost, and much more with it, by the increase which the act of 1869 effected in the burden of the bonded obligation, by pledging the nation to a payment in a medium much more valuable than the medium provided for in the contract. And, again, in 1873 when all the bonds provided for by the refunding act of 1870 had been sold and had passed out of the hands of the Government, another act was passed, intended by the money-lenders again to strengthen the public credit, and again to the disadvantage of the people and to the exclusive and enormous advantage of the bondholders. It bore the innocent title of "An act revising and amending the laws relative to the mints, assay offices, and coinage of the United States." This act, bearing on its face no suggestion of any change more serious than that of regulating the petty details of mint management, has proved to be an act of momentous consequence to the people of this country. This is the act that demonetized the silver dollar, which it did by merely omitting that coin from the enumeration of the coins of the United States.

DEMONETIZATION WHOLLY UNJUSTIFIABLE.

Among all the explanations that have been made to account for that demonetization by a Congress of the United States, I have never heard any reason advanced which constituted a justification for it. To my mind, in view of all the circumstances—in the face of the herculean difficulties by which the nation was surrounded, in the face of the sacrifices which our citizens had made to preserve the Republic, and in the face of all that had already been done by an over-generous people, proud of their national strength, and jealous of their national honor, to satisfy the rapacious demands of the money-lenders—in view, I say, of all these facts, the demonetization of silver by the United States must be regarded as one of those historic blunders that are worse than crimes. It was the child of Ignorance and Avarice, and is already the prolific parent of enforced idleness, poverty, and misery.

It is to undo as far as possible the effects of the blunder of 1873 that new legislation is now imperatively demanded by the people. While the past can not be recalled, the present is ours, and the pressing duty of to-day is to provide for the future. The demand comes from all sections of the country that a remedy for the depressed industrial conditions caused by the legislation of 1873, be applied at the earliest moment. And what better remedy could be applied than absolutely to reverse that legislation and to put the monetary position of this country back to exactly where it was when that wrong was committed?

Some twelve years ago an attempt was made to apply a remedy, but the attempt was only partially successful. Instead of resulting in free coinage, it resulted in the passage of the bill which authorized the coinage of not less than two nor more than four million dollars' worth of silver per month. On that occasion a financial debate of great interest and importance was had in this Chamber and in the other House of Congress. The proposition to remonetize silver or to increase the silver coinage was vigorously opposed, but the arguments then presented by the advocates of remonetization never have been, and never can be, refuted.

In fact, but rarely has there been any attempt made to answer those arguments. Puerile attempts at wit, and diatribes of abuse are all that the silver men have heard in sixteen years in answer to the contentions they have made in favor of the remonetization of silver.

EDUCATIONAL EFFECT OF DISCUSSION.

With that debate, Mr. President, long pending and eagerly maintained on both sides, there began in this country an educational movement among the masses, that is destined to have far-reaching consequence. The public attention was fastened, as it had never been fastened before, on the subject of money, and on the forces which govern its value, and up to this time that attention has never flagged. As a result we find the great body of our people to-day—the farmers and artisans of the country—after years of reflection and discussion in their lyceums and trade organizations, adopting to a large extent the views then presented by the advocates of an increased money volume—views which at the time were contemptuously derided by the advocates of contraction and of gold.

The cry for relief appropriately now comes from the farmers, the artisans, and the laboring classes, as well as from the young, the enterprising, the thoughtful, of all classes, who have not inherited wealth, but are hewing out for themselves the rugged path to success. It is they who have had to bear the exactions of the system which has prevailed. It is from the proceeds of their labor that the extortions have been paid. If objection be made that the character of relief proposed is not indorsed in financial circles, or by the literary guild or professional political economists that surround them, the sufficient reply is that the world can not wait for the correction of abuses by those who are profiting by them. In the nature of things, all movements for reform must be initiated by those who can not lose by the installation of justice.

But there are others besides the laboring masses who are working in the cause of humanity. There are noble, unselfish, and altruistic men in all the countries of civilization, who see the wrong and are indefatigable in their efforts to set it right.

I will read a cable dispatch recently addressed to me by Mr. Henry H. Gibbs, formerly governor of the Bank of England, and now president of the Bimetallic League of Great Britain:

London, May 6.—The friends of silver deeply regret the death of Senator Beck, whose services in the cause of monetary reform are warmly appreciated on this side of the Atlantic. The bimetallist party of the United Kingdom, now including over one hundred members of the House of Commons, attach the greatest value to the debate about to commence in your illustrious chamber. We fully recognize not only that the support afforded to silver by your legislation during the last twelve years has helped the protect the industrial world from an acute monetary crisis, but also that the debates in Congress have served more than all else to educate our people to recognition of the important issues involved. We believe also that the increase and coinage of silver contemplated by Congress will restore, wholly or considerably, your coinage rates, and will thus make international settlement of this complex question comparatively easy. We anticipate further and with much confidence, that the advance in the price of silver which must follow your action will stimulate both the export and the other trades of your country, and, while tending to the prosperity of your agricultural classes, will also assist the manufacturing industries of the United Kingdom and the whole body of our wage-earners.

Mr. Moreton Frewen, of London, an able writer on economic subjects, whose recent work on the "The Economic Crisis" I commend to the careful perusal of Senators, says:

It may, indeed, be affirmed, without fear of contradiction, that legislation arranged in the interest of a certain class, first by Lord Liverpool in this country, and again by Sir Robert Peel at the instigation of Mr. Jones Loyd and other wealthy bankers, which was supplemented recently by simultaneous anti-silver legislation in Berlin and Washington at the instance of the great financial houses—this legislation has about doubled the burden of all national debts by an artificial enhancement of the value of money.

The fall of all prices induced by this cause has been on such a scale that while in twenty years the National debt of the United States quoted in dollars has been reduced by nearly two-thirds, yet the value of the remaining one-third, measured in wheat, in bar iron, or bales of cotton, is considerably greater—is a greater demand draft on the labor and industry of the nation than was the whole debt at the time it was contracted. The aggravation of the burdens of taxation induced by this so-called "appreciation of gold," which is no natural appreciation, but has been brought about by class legislation to increase the value of the gold which is in a few hands, requires but to be explained to an enfranchised democracy, which will know how to protect itself against further attempts to contract the currency and to force down prices to the confusion of every existing contract.

Of all classes of middle-men, bankers have been by far the most successful in intercepting and appropriating an undue share of produced wealth. While the modern system of banking and credit may be said to be even yet in its infancy, that portion of the assets of the community which is to-day in the strong boxes of the bankers would, if declared, be an astounding revelation of the recent profits of this particular business; and not only has the business itself become a most profitable monopoly, but its interests in a very few hands are diametrically opposed to the general interests of the majority. By legislation intended to contract the currency and force down all prices, including wages, the price paid for labor, the money owner has been able to increase the purchase power of his sovereign or dollar by the direct diminution of the price of every kind of property measured in money.

UNFULFILLED PROPHECIES.

During the debate on the limited coinage bill, not content with abuse of the advocates of the measure; with flimsy criticism of it and specious arguments against it, its opponents in and out of Congress indulged in diverse prophecies and predictions. They pictured forth the lamentable results that would follow its passage, and the direful consequences that would ensue from an increase of the circulating medium of the country. Among the results confidently predicted were the following: that the silver would not circulate at all, and again that it would circulate to the exclusion of gold, which metal, we were informed, would flow out of this country with a velocity and in a volume theretofore unknown; that we should be unable to redeem our paper money in gold; that we should be precipitated into a silver vortex; that an inflation of the currency would follow, which would ruinously raise prices of all commodities and that this inflation would result in an unprecedented contraction. We were charged with forcing upon the public creditors a dollar worth only ninety cents. We were warned that the passage of the bill would indefinitely postpone the refunding of the public debt, and would lower the price and impair the value of our national securities. It was charged that we were setting on foot a new and irrepressible conflict between two great sections of the country—the East and the West. We were charged with uttering a debased coin; with lowering the standard of American credit; with tarnishing the integrity and honor of our country before foreign nations, and with unprecedented moral turpitude in setting an example of flagrant and shameless national dishonesty.

The men of the far West, and of the Pacific slope especially, were the particular targets of this abuse. They were denounced by some as "lunatics," by others as dangerous and unworthy demagogues, because, as was charged, their constituents, if not themselves, were directly interested in the restoration of the ancient right of silver to full recognition as one of the money metals. For their benefit resort was had to every epithet which the English language afforded. In holding them up to public scorn the rich and varied vocabulary of odium and opprobrium was exhausted.

These prophecies of disaster were united in by the professors of political economy in all the Eastern colleges, by the President of the United States, by the Secretary of the Treasury, by the leading American newspapers, by the principal public men and journals of Great Britain, if not of all Europe; and, of course, by all bankers, money-lenders, and professional financiers the world over.

And now, Mr. President, how many of all those alarming prognostications by all these distinguished prophets have been fulfilled? Not one! On the contrary, it is not too much to say that the public credit of the United States is to-day the highest in the world. It does not stand merely in line with that of other first-rate powers; it stands at the head. Our gold, silver, and paper money stand at a parity with each other. If a full measure of relief was not realized by the passage of that bill it is because the coinage of $4,000,000 a month was left optional with the Secretary of the Treasury, instead of being made mandatory on him.

But it is hardly necessary to assert that the predicted inflation of prices has not been observed as a consequence of the coinage of $2,000,000 a month. While the issuance of that amount has not, with our rapidly increasing population and wealth, been sufficient to arrest the downward tendency of prices, it has undoubtedly prevented them from falling much lower. Without that coinage, we should have had industrial depression, chronic and somber, with consequences of untold disaster.

But the result which gave most apprehension to those who advocated the gold standard, the evil which they regarded as on the whole the most threatening and direful of all the evils that were to result from even so small an increase in the money volume as that bill provided for, was the outflow of gold. They ridiculously under-estimated the tremendous money-absorbing power of this great country. And as if to emphasize to all the world the complete absurdity of their alleged fears—this apprehension has been conspicuously and notoriously set at naught by the constant inflow of gold. On the 30th of June, 1878, the amount of gold coin and bullion in the Treasury and in monetary circulation in this country is officially reported to have been $213,199,977, and this amount is probably much over-estimated. On November 1, 1889, we had more than three times as much—the amount of gold in circulation and in the Treasury being reported as $689,000,000.

"Experience," says Dr. Johnson, "is the great test of truth, and is perpetually contradicting the theories of men," and the last experience, Mr. President, is the best.

If the professors of political economy, the Eastern newspaper editors, and the professional financiers were then so seriously mistaken ought they not to be a little modest now in making predictions, especially in renewing predictions that have been already discredited? They can not point to a single instance in which their prophesy has not been falsified by the event. So humiliating a failure on the part of the professors, in a realm of which they boastfully claimed to be masters, so complete an overthrow of these "experts" by men who were ridiculed and derided as rural financiers and crazy theorists, ought to put the advocates of the gold standard on their guard against a like defeat on this occasion. They are pressed for reasons to account for the utter miscarriage of their prophecies. They are left without a shadow of consolation except that the coinage of $2,000,000 worth of silver bullion each month has not succeeded in placing silver at a par with gold. They affect to believe that the advocates of silver in 1878 expected that that metal, under the very limited demand of $2,000,000 a month, would be brought to a level with gold, which, owing to the demonetization of silver, had risen abnormally and ruinously in value.

No such belief was ever entertained or expressed. On the contrary it was repeatedly asserted by the advocates of silver that so long as the entire yield of gold from all the mines of the world (in 1878, $119,000,000) was invested with the full money function and had free access to all mints to be transmuted into coin, it could not be expected that the conferring of the legal-tender function upon a sum so comparatively trifling as one-fourth the yield of silver (the yield in 1878 being $99,000,000) would have the effect of placing it on a level with gold.

It is, however, a significant fact that every silver dollar that has been coined under that act is at a parity with gold, and will to-day buy as much of all the objects of human desire as will the gold dollar. Nay, more, silver bullion—disparaged and discredited as it is by being shorn of the money function, and denied access to the mints, instead of decreasing in purchasing power, has maintained so steady a relation to commodities that 412½ grains of uncoined silver will exchange for as much to-day as would the coined dollar, whether of silver or gold, in 1873, when the full money function attached equally to both metals. If this be true—and I shall presently demonstrate it beyond refutation—what an utter perversion of terms it is to say that silver has fallen in value!

WILL REMONETIZATION PLACE US ALONGSIDE INDIA.

We are solemnly warned that the full remonetization of silver in the United States would place us alongside India and the other barbarous countries of the world. This brilliant piece of reasoning is advanced with great confidence, and is intended to be conclusive of the argument against silver. But, Mr. President, India is no more barbarous now than it was in 1873—before our silver dollar was demonetized. India is no more barbarous now than it was in 1857, when Germany demonetized gold and placed herself "alongside" India. Neither is Germany any more civilized now than then. We did not at that time hear any complaint, either in the United States or Europe, that the use of silver as money placed any one nation more than any other in dangerous affiliation with the civilization of India. We have never heard it charged against France that its civilization was brought any nearer that of India by the immense quantity of silver money in France. Neither did we hear it charged against the United States up to 1873 that we were "alongside," or dangerously close to the barbarous nations by our use of silver as money.

Up to 1834 we had no metallic money other than silver in our circulation, and up to 1850 we had much more silver in circulation than gold. Were we "alongside" India then? Where were the wise and patriotic men of our country at those periods? History fails to record any protest on their part that we were placing ourselves "alongside" India or any other of the barbarous nations of the world by our use of silver and our recognition of its full money power. All the nations of the earth used silver and accorded it full recognition as money equally with gold up to 1819. Was all Christendom at that time "alongside" India? When, in that year, Great Britain sundered the silver link that from time immemorial had kept her "alongside" India and the other barbarous nations and, for selfish reasons of her own, arising from her position as a creditor of all other nations, decided to recognize gold only as money, was any evidence afforded of a sudden advance in the civilization of Great Britain? Was the emergence of that nation from the benumbing companionship of India and the other barbaric countries into the glittering and refulgent light of the gold dispensation signalized, as would be expected, by a corresponding improvement in the condition of the people?

On the contrary, the history of the time informs us that as a consequence of the passage of the bill by Parliament in 1819, compelling payments in gold, prices rapidly fell, cotton in particular sinking in the short space of three months to one-half its former level. Within six months all prices had fallen one-half, and showed no signs of improvement for the next three years. By reason of the contraction of the currency the industry of the nation was congealed, as is a flowing stream by the severity of an arctic winter. Alarm became universal; confidence and activity ceased. Bankruptcies increased in 1819 more than 50 per cent. over the number of the previous year. Meetings were held throughout England in which the people called on the government to devise some means of redressing the situation. So universal was the distress that the owners of land in England, who in 1819 numbered 160,000 were in seven years, by forced sales and foreclosure of mortgages on the smaller farms, reduced to 30,000, and one in every seven of the population lived on organized charity. All this was but a part of the price which the people of England paid for a policy imposed on them by the creditor classes among their own number. The condition of industry and disorganization of labor led to frequent and serious conflicts between the people and the military. They also led to commercial crises without number, and England, by demonetizing silver and thus ceasing to be "alongside" India, became the seat of panics, as Egypt had long been of the plague and India of the cholera.

As a contrast to this I will merely cite the change in the condition of India within the past seventeen years. When the Western world discarded silver as money and, as a consequence, India received a larger supply of it than ever before, that barbarous nation, as is universally admitted, made progress by leaps and bounds. No country on earth has in the same time made such advances in material prosperity and in all the elements that conduce to the comfort and happiness of a people. Notwithstanding the alleged debasement of silver, no sooner had its increased inflow into India begun than the industries of a vast continent were established and set in motion, and a substantial part of the activity and prosperity that were wont to pervade some of the industries of the United States has, by that demonetization, been transferred to fields of wheat, and fields and factories of cotton 10,000 miles distant.

What really placed us alongside such barbarous countries as India was the demonetization of silver. It was by that demonetization that the people of Europe were enabled, with gold, to buy silver at 30 per cent. discount, which, when shipped to India and coined into rupees, would buy as much wheat as could ever have been bought with that coin. There has been no decrease whatever in the purchasing power of the rupee in India. This was equivalent to buying wheat at 30 per cent. below the price theretofore paid for it, and thus the farmers of the United States were by demonetization placed "alongside" the barbarous people of India. Their wheat had to compete in the European markets with the wheat of India, and it is this competition that placed them "alongside" India. The farmer of this country, therefore, by demonetization of silver, was compelled to compete with under-paid and half-starved ryots. And so it was that our cotton planters, by the demonetization of silver, were placed alongside the barbarous people of India. It is this degrading competition that places a highly civilized people alongside a barbarous one.

The advocates of the single gold standard deem even silver money much better money than greenbacks. Does it then follow that when greenbacks were our only money—good enough money to carry the nation through the greatest war in all history—we were "alongside" or underneath the barbarous nations of the world? It is not the form, or the material of a nation's money that fixes its status relatively to other nations. That is accomplished by the vitality, the energy, the intellectuality and effective force of its people. The United States can never be placed "alongside" any barbarous nation, except by compelling our people to compete with barbarous peoples—compelling them to sell the products of American labor at prices regulated by the cost of labor and manner of living in barbarous countries. As well might it be said that we are alongside the barbarous people of India because we continue to produce wheat and cotton.

The distinguishing feature of all barbarous nations is the squalor of their working classes. The reward of their hard toil is barely enough to maintain animal existence. A civilized people are placed alongside a barbarous one when, in their means of livelihood, the foundation of their civilization, they are made to compete with the barbarians. That was the result accomplished for the farmers and planters of the United States when silver was demonetized.

CREDITORS AND DEBTORS.—A COMPARISON OF MOTIVES.

All movements for the increase of the monetary circulation are ascribed by the money-lenders and creditor classes to the unworthy desire on the part of the debtors to escape their just obligations. But if motives are to be brought in question, the rule should work both ways. No note is taken of the motive of the creditor classes in securing a contraction of the circulation. Whatever the apparent purpose of contraction, and however specious the arguments advanced in its justification, the real object has always been to increase the purchasing power of money. In all countries, and throughout all time, it is the cupidity of the creditor classes and annuitants, and their desire to increase the value of the money unit that has brought about a shrinkage in the money volume. Unlike the great masses of the people, who were ignorant of the effects to be naturally expected from such a shrinkage, the annuitants and moneyed men very well understood that the value of every pound or dollar depended on the number of pounds or dollars that were in circulation; the larger the total number out, the smaller the purchasing power of each; the smaller the total number out, the greater the purchasing power of each.

Loaners of capital are not usually those who entertain further hope of personal achievement. When men realize fortunes it is rarely that they conserve the faculty of initiative; they find no special delight in novelty; they look so carefully to security in the use of money that the spirit of adventure is restrained. The realization of a fortune is usually the labor of a life-time, and few men who reach the goal care to retrace their steps to enter again upon a struggle that demands all the strength, the momentum, and the intrepidity of youth. Men of assured incomes therefore are disposed to take their ease, and society must look, for its material progress and development, to those who have a career to make, with the ambition and the power to make it.

It is a remarkable circumstance, Mr. President, that throughout the entire range of economic discussion in gold-standard circles, it seems to be taken for granted that a change in the value of the money unit is a matter of no significance, and imports no mischief to society, so long as the change is in one direction. Who has ever heard from an Eastern journal any complaint against a contraction of our money volume; any admonition that in a shrinking volume of money lurk evils of the utmost magnitude? On the other hand we have been treated to lengthy homilies on the evils of "inflation," whenever the slightest prospect presented itself of a decrease in the value of money—not with the view of giving the debtor an advantage over the lender of money, but of preventing the unconscionable injustice of a further increasing value in the dollars which the debtor contracted to pay. Loud and resounding protests have been entered against the "dishonesty" of making payments in "depreciated dollars." The debtors are characterized as dishonest for desiring to keep money at a steady and unwavering value. If that object could be secured, it would undoubtedly be to the interest of the debtor, and could not possibly work any injustice to the creditor. It would simply assure to both debtor and creditor the exact measure for which they bargained. It would enable the debtor to pay his debt with exactly the amount of sacrifice to which, on the making of the debt, he undertook to submit, in order to pay it.

WHO ARE THE DEBTORS?

In all discussions of the subject the creditors attempt to brush aside the equities involved by sneering at the debtors. But, Mr. President, debt is the distinguishing characteristic of modern society. It is through debt that the marvelous developments of nineteenth century civilization have been effected. Who are the debtors in this country? Who are the borrowers of money? The men of enterprise, of energy, of skill, the men of industry, of foresight, of calculation, of daring. In the ranks of the debtors will be found a large preponderance of the constructive energy of every country. The debtors are the upbuilders of the national wealth and prosperity; they are the men of initiative, the men who conceive plans and set on foot enterprises. They are those who by borrowing money enrich the community. They are the dynamic force among the people. They are the busy, restless, moving throng whom you find in all walks of life in this country—the active, the vigorous, the strong, the undaunted.

These men are sustained in their efforts by the hope and belief that their labors will be crowned with success. Destroy that hope and you take away from society the most powerful of all the incentives to material development; you place in the pathway of progress an obstacle which it is impossible to surmount.

The men of whom I have spoken are undoubtedly the first who are likely to be affected by a shrinkage in the volume of money.

The highest prosperity of a nation is attained only when all its people are employed in avocations suited to their individual aptitudes, and when a just money system insures an equitable distribution of the products of their industry. With our present complex civilization, in order that men may have constant employment, it is indispensable that work be planned and undertakings projected years in advance. Without an intelligent forecast of enterprises large numbers of workmen must periodically be relegated to idleness. Enterprises that take years to complete must be contracted for in advance, and payments provided for.

A constant but unperceived rise in the value of the dollar with which those payments must be made, baffles all plans, thwarts all calculation, and destroys all equities between debtor and creditor. If we can not intelligently regulate our money volume so as to maintain unchanging the value of the money unit, if we can not preserve our people from the blighting effects which an increase in the measuring power of the money unit entails upon all industry, to what purpose is our boasted civilization?

By the increase of that measuring power all hopes are disappointed, all purposes baffled, all efforts thwarted, all calculations defied. This subtle enlargement in the measuring power of the unit of money (the dollar) affects every class of the working community. Like a poisonous drug in the human body, it permeates every vein, every artery, every fiber and filament of the industrial structure. The debtor is fighting for his life against an enemy he does not see, against an influence he does not understand. For, while his calculations were well and intelligently made, and the amount of his debts and the terms of his contracts remain the same, the weight of all his obligations has been increased by an insidious increase in the value of the money unit.

EFFECTS OF A SHRINKING VOLUME OF MONEY.

As to the benumbing consequences following a shrinkage in the volume of money, the testimony of history is briefly reviewed in the report of the Monetary Commission to which I have already referred, and from which I read the following:

At the Christian era the metallic money of the Roman Empire amounted to $1,800,000,000. By the end of the fifteenth century it had shrunk to less than $200,000,000. During this period a most extraordinary and baleful change took place in the condition of the world. Population dwindled and commerce, arts, wealth, and freedom all disappeared. The people were reduced by poverty and misery to the most degraded conditions of serfdom and slavery. The disintegration of society was almost complete. The conditions of life were so hard that individual selfishness was the only thing consistent with the instinct of self-preservation. All public spirit, all generous emotions, all the noble aspirations of man shriveled and disappeared as the volume of money shrunk and as prices fell.

History records no such disastrous transition as that from the Roman Empire to the Dark Ages. Various explanations have been given of this entire breaking down of the frame-work of society, but it was certainly coincident with a shrinkage in the volume of money, which was also without historical parallel. The crumbling of institutions kept even step and pace with the shrinkage in the stock of money and the falling of prices. All other attendant circumstances than these last have occurred in other historical periods unaccompanied and unfollowed by any such mighty disasters. It is a suggestive coincidence that the first glimmer of light only came with the invention of bills of exchange and paper substitutes, through which the scanty stock of the precious metals was increased in efficiency. But not less than the energizing influence of Potosi and all the argosies of treasure from the New World were needed to arouse the Old World from its comatose sleep, to quicken the torpid limbs of industry, and to plume the leaden wings of commerce. It needed the heroic treatment of rising prices to enable society to reunite its shattered links, to shake off the shackles of feudalism, to relight and uplift the almost extinguished torch of civilization. That the disasters of the Dark Ages were caused by decreasing money and falling prices, and that the recovery therefrom and the comparative prosperity which followed the discovery of America were due to an increasing supply of the precious metals and rising prices, will not seem surprising or unreasonable when the noble functions of money are considered. Money is the great instrument of association, the very fiber of social organism, the vitalizing force of industry, the protoplasm of civilization, and as essential to its existence as oxygen is to animal life. Without money civilization could not have had a beginning; with a diminishing supply it must languish, and, unless relieved, finally perish.

Symptoms of disasters similar to those which befell society during the Dark Ages were observable on every hand during the first half of this century. In 1809 the revolutionary troubles between Spain and her American colonies broke out. These troubles resulted in a great diminution in the production of the precious metals, which was quickly indicated by a fall in general prices. As already stated in this report, it is estimated that the purchasing power of the precious metals increased between 1809 and 1848 fully 145 per cent., or, in other words, that the general range of prices was 60 per cent. lower in 1848 than it was in 1809. During this period there was no general demonetization of either metal and no important fluctuation in the relative value of the metals, and the supply was sufficient to keep their stock good against losses by accident and abrasion. But it was insufficient to keep the stock up to the proper correspondence with the increasing demand of advancing populations.

The world has rarely passed through a more gloomy period than this one. Again do we find falling prices and misery and destitution inseparable companions. The poverty and distress of the industrial masses were intense and universal, and, since the discovery of the mines of America, without a parallel. In England the suffering of the people found expression in demands upon Parliament for relief, in bread riots, and in immense Chartist demonstrations. The military arm of the nation had to be strengthened to prevent the all-pervading discontent from ripening into open revolt. On the Continent the fires of revolution smoldered everywhere, and blazed out at many points, threatening the overthrow of states and the subversion of social institutions.

Whenever and wherever the mutterings of discontent were hushed by the fear of increased standing armies, the foundations of society were honey-combed by powerful secret political associations. The cause at work to produce this state of things was so subtle, and its advance so silent, that the masses were entirely ignorant of its nature. They had come to regard money as an institution fixed and immovable in value, and when the price of property and the wages of labor fell, they charged the fault, not to the money, but to the property and the employer. They were taught that the mischief was the result of overproduction. Never having observed that overproduction was complained of only when the money stock was decreasing, their prejudices were aroused against labor-saving machinery. They were angered at capital, because it either declined altogether to embark in industrial enterprises or would only embark in them upon the condition of employing labor at the most scanty remuneration. They forgot that falling prices compelled capital to avoid such enterprises on any other condition, and for the most part to avoid them entirely. They did not comprehend that money in shrinking volume was the prolific parent of enforced idleness and poverty, and that falling prices divorced money capital, from labor, but they none the less felt the paralyzing pressure of the shrinking metallic shroud that was closing around industry.

The increased yield of the Russian gold fields in 1846 gave some relief and served as a parachute to the fall in prices, which might otherwise have resulted in a great catastrophe. But the enormous metallic supplies of California and Australia were all needed to give substantial and adequate relief. Great as these supplies were, their influence in raising prices was moderate and soon entirely arrested by the increasing populations and commerce which followed them. In the twenty-five years between 1850 and 1876 the money stock of the world was more than doubled, and yet at no time during this period was the general level of prices raised more than 18 per cent. above the general level of 1848.

A comparison of this effect of an increasing volume of money after 1848 with the effect of a decreasing volume between 1809 and 1848 strikingly illustrates how largely different in degree is the influence upon prices of an increasing or decreasing volume of money. The decrease of the yield of the mines since about 1865, while population and commerce have been advancing, has already produced unmistakable symptoms of the same general distrust, non-employment of labor, and political and social disquiet, which have characterized all former periods of shrinking money.

The time that has elapsed since that report was written has but served to verify and emphasize its statements.

THE FALL OF PRICES SINCE 1873.

It is a fact not disputed anywhere but universally admitted, that for many years past the prices of all articles entering into general consumption among the people have been steadily falling. It is obvious that the industrial conditions prevailing since 1873 are but a repetition of those above described as following 1809—with falling prices, constant unrest, and universal discontent.

The following table, compiled from figures published by the Bureau of Statistics of the Treasury Department, shows the average range of export prices of the articles named for each year since 1873:

Annual average export prices of commodities of domestic production for each year from 1873 to 1889, inclusive.

To show from another source the same general fact of the decline of prices, I quote from an article published in the New York Tribune early in 1886.

The New York Tribune is pretty good authority. These figures are undoubtedly from the calculations and from the pen of Mr. Grosvenor, of the editorial staff of that able journal, formerly editor and proprietor of the "Public," whose estimates of prices have, in my judgment, been more correctly made than those of any other statistician in the world. The article is as follows:

Quotations of about two hundred articles are compared since 1860, and the amount of money is ascertained which would purchase, at different dates, of these various articles, quantities corresponding as closely as possible to their ascertained consumption in 1880, the date of the last census. Among the articles compared are wheat, corn, oats, rye, barley, beans and pease, mess pork, bacon, ham, live hogs, lard, fresh beef, tallow, live sheep, poultry, butter, cheese, eggs, milk, hay, potatoes, turnips, cabbage, onions, apples, raisins, sugar, brown and crushed; molasses, coffee, tea, tobacco, whisky, malt and hops, mackerel, codfish, salt, rice, nutmegs, cloves, pepper, cotton, print-cloths and standard sheeting, wool of different qualities, blankets, carpets, flannels, leather, boots, shoes, hides, silk, India rubber, iron (pig and bar), nails, steel rails, coal, oil (crude and refined), tin and tin plates, copper, lead, hemp, lumber, spruce and pine, oak, ash, walnut, and white wood, lath, brick, lime, turpentine, linseed oil, soap, glass, paper, white lead, and twelve other kinds of paints, fertilizers, and over fifty kinds of drugs and chemicals.

Cost of products at different dates.

It is not only clear from this comparison that the prices of 1885 have been the lowest in our history for twenty-five years, but that there has been a general tendency toward lower prices. From 1866 to 1871, and again from 1872 until 1885, prices fell quite steadily. Indeed, had not the short crop of 1881 caused a temporary advance in the spring of 1882, the range of January, 1880, would have been the highest of the later period, and it might have been said that the present era of declining prices had continued with little intermission for six years. None will fail to observe how swift and sharp the advances have been—about 12 per cent. from November, 1871, to May, 1872, and 25½ per cent. from October, 1878, to January, 1880. But these spasmodic advances, by which the general tendency downward is interrupted, only serve to make it more clear that prices have been tending irresistibly toward a lower level than that of 1860, not only during the period of paper depreciation, but since gold has been the measure of value.

In order to show that the United States are not alone in their complaint of falling prices, but that the complaint is universal, and in order that we may have before us a broad view of the field of general prices, I submit a table showing the relation to each other of the range of prices from 1809 to 1849, by decades, based on the prices of fifty leading articles of commerce, prepared by the distinguished Professor Jevons and published in the London Economist for May 8, 1869.