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Letter to the Werner Company

Letter to the Werner Company


A Coin Catechism.

1. What are coins?

Pieces of metals, usually disks, stamped by the government issuing them for circulation as money.

2. What metals are used for this purpose?

Mainly silver or gold, but each metal, when used, has with it a fixed amount of a baser metal known as alloy, not to depreciate its value but to toughen and harden it that the coins made therefrom may be better adapted to circulation.

3. Why are the coins stamped?

To certify that they contained when minted the weight and fineness


required by law for pieces of that denomination.

4. Why are they issued by the government instead of by private parties?

Experience has shown that only in this way can a uniformity in weight and design of the coin be maintained — properties essential to check the issue of spurious pieces.

5. Are coins the only forms of money?

Yes, of so called primary money, but bank bills, Treasury notes, checks, drafts, etc., fulfill all the functions of money. They represent, however, rather than possess value and are only more convenient and less expensive methods of effecting exchanges than the metallic money which they represent.


6. What is meant by "method of effecting exchanges"?

The method employed to enable the possessor of a commodity he does not need and is willing to part with to exchange it for one that he does need and is willing to accept in exchange.

7. How does money do this?

In the morning you find you must have a breakfast, and you go to the butcher's and get from him a beefsteak, paying him therefor a dollar of money. The butcher wants a knife and he gets one of the cutler, giving him in exchange the dollar you paid him for the steak. The cutler needs a hat and he gets one of the hatter, parting with this dollar therefor, and the hatter wanting some straw comes to you, a farmer, and gets it, paying you therefor with


the same dollar. Thus in effect you have exchanged some straw which you did not need for a steak which you did need, and the dollar which brought this about without inconvenience to you is again in your pocket ready for similar duty tomorrow.

8. Could not this exchange have been effected without the intervention of money?

Perhaps, in the fullness of time you might have found somebody who had a beefsteak he was willing to part with for your straw, but in hunting for him you would probably have lost a day's work, become very weary and probably hungry through delay, but by the use of money all these expensive and disagreeable incidents were averted.

9. Has money any other function than to facilitate exchanges?


Incidentally it becomes a standard by which the value of all commodities is measured and in the terms of which all values are expressed. Thus we measure the value of wheat at so much money per bushel, lumber so much per square foot, land so much per acre, all in the terms of one standard, and we can then easily reckon at what rate one product or holding can be exchanged for another.

10. Is this rate uniform from day to day?

No, it is continually changing.

11. Who determines this rate?

The holders of the articles to be exchanged.

12. Then the government has nothing to do with it?

Nothing whatever. It fixes the weight of metal in the coin, but it


cannot say to the holder of wheat, "You shall part with it for a certain amount of such coin." Such a scheme has been tried but always without the desired effect. In this country nobody today desires that the exchange rate of money for commodities be determined by the government even if such a plan were possible.

13. By what is the holder guided in fixing the rate?

His necessities, mainly, but to a limited extent by his judgment or caprice.

14. Then if the government has nothing to do with fixing the rate at which products shall be exchanged, what further action need it take in reference to money?

None at all. Money once established and issued should be let alone


if its work is to be done fairly and without hindrance.

15. But the government does interfere with its operations sometimes, does it not?

Yes, frequently, but always with detriment to somebody.

16. In what way does it interfere?

It steps in and says that coins shall have an increase or decrease in weight or fineness, but shall still be received in payment of a debt the same as the coins in existence when the contract was made, and some times it goes so far as to say that something else entirely different shall be accepted in satisfaction of a debt whether the creditor is willing or not.

17. Have such interferences ever occurred in this country?

Yes. In colonial days a Spanish


silver coin known as a dollar came largely into circulation. The British mint ascertained and declared that the piece contained the same amount of silver as did 54 pence, or 4s 6d of English money. Yet the Virginia colony declared by law that the piece contained 6 shillings. So did the Massachusetts colony. The New York and Maryland colonies declared that the piece contained 8s; Pennsylvania 7s 6d; South Carolina alone declared that the piece contained just what it did, 4s 6d.

18. What was the object of such false declarations?

Among the more northern colonies there were many loans and other obligations existing calling for "shillings." By making the dollar pay more debt than the weight of the metal would warrant the creditor


was deprived of the difference — in New York and Maryland about 45 per cent of the obligation.

19. That might happen in a community imperfectly organized into a government, but could it occur under our constitution?

Well, in 1862 the government of the United States authorized paper promises in the form of notes, silent as to the time of their redemption, to be equal in debt paying power to the metallic money they represented, though at time; the promises were worth in current exchange less than one half as much as the coin itself.

20. Did the courts sanction such an infringement upon private rights?

Yes, the Supreme Court of the United States held that the national government by its inherent power of sovereignty had a right to change


the terms of all contracts whenever the law making power deemed such a change necessary for the welfare of the country. The law making power, however, would probably hesitate in taking any steps of this kind except the nation was in dire distress or its existence was threatened.

21. Does such a change of standard affect prices?

Yes. If the standard is reduced prices will have a corresponding rise; if increased, prices will be correspondingly lower, so that in current transactions, after prices have become adjusted to the new standard, there is no marked loss or gain to either party to the exchange through a change in the value standard. It is only when the change applies to contracts already existing that a wrong is made possible. It is in


making money of a new and different standard a legal tender by law for preexisting debts that the mischief chiefly occurs. If the law would give no function to money that it did not naturally possess in the world of trade where it belongs there would be no monetary evils to remedy, no money question to discuss in congress or to be considered in convention.

22. How much money should there be in circulation?

Just enough to meet the demands, of trade; no more and no less.

23. How can that amount be ascertained?

By leaving its circulation to be fixed by the demand therefor just as the supply of provisions, fuel or clothing is determined and not by arbitrary law.


24. What is meant by cheap money?

There can be no such thing, strictly speaking, as cheap money. As the term is generally used it means an abundance of money in circulation, but that abundance depends not upon the amount of money available but upon the demand for it that any community can create by stimulating trade. It may mean a low loaning rate, the abundance or "plenty" of money arising, not from an increase of circulation, but from unemployed capital for which the owner is willing to accept a lower rate of interest rather than have it entirely unremunerative, but the amount of money in circulation has little if anything to do in bringing about such a condition.


25. Then simply increasing the money supply does not make money easy?

Not at all. An accumulation to wealth and a confidence in the ability of the borrower to repay his loans at maturity are the principal elements of an "easy" money market. In England, which has a per capita of circulation 30 per cent less than we have, the borrowing rate is only 1 1/2 per cent per year, while here it is double that amount; but in England there is relatively a greater amount of unemployed capital seeking investment, and consequently interest rates are lower or money cheaper. Evidently the amount of circulating medium has nothing to do with bringing about such a condition.

26. Then legislation cannot, by


attempting to force a circulation, control prices or make money cheaper?

Not in the least. The forced issues of our civil war, in effect, only depreciated the value of the currency outstanding, so that there was little increase in its aggregate value measured by gold; prices were of course correspondingly increased. If for any reason there should be a forced decrease in the amount of currency, what remained of such currency would, without doubt, increase in purchasing power sufficiently to meet the demands of trade in making exchanges, prices being correspondingly depressed. The only thing for the law to do is to leave the amount of money to the demands of trade as before stated, which will take care that it be sufficient and never redundant.


27. Should not the law fix the weight of the standard coins?

It should, just as it fixes the weight of a bushel of wheat, and to the same end that there shall be no misunderstanding of the amount involved between the buyer and the seller.

28. Did the Colonial or Confederate Congress attempt to establish any standard of value for the country?

Only this: The Congress of the Confederation, in 1785, adopted the Spanish silver dollar as the ideal unit of value, which piece had already been accepted as a unit in nearly, if not all the colonies, and the following year, declared that the piece in question contained 375.64 grains of pure silver, and authorized the coinage of the gold eagle to contain


246.268 grains of fine gold, and in both cases fractional pieces of proportional weight, but before a mint could be put into operation the Constitution was adopted and no coins were issued under the act.

29. What standard of value was first established under the Constitution of this country?

The first Congress of the United States provided for the coinage of "silver dollars or units, each to be the value of a Spanish milled dollar as the same is now current, and to contain 371.25 grains of pure silver," and fractional pieces of the same fineness and proportional weight, and gold pieces to contain 24.75 grains of pure gold to a dollar, all of the pieces to be a full legal tender in payment of debts and to be coined at the mint for depositors of


bullion of either metal free of charge. Under the rates established, one dollar in silver, it will be seen, weighed just fifteen times more than one dollar in gold, and such was the ratio, 15 to 1, the law declared should exist in all the coining operations of the mint.

30. Why was the ratio of 15 to 1 established?

Because it was thought that in the market fifteen pounds of silver was worth one pound of gold, and that the plan, if adopted, would secure the use of both metals for circulating purposes.

31. Was 15 to 1 the market rate between the metals in 1792, and did it continue?

It was very near it then and varied a little from it for several years, but the rate or difference slowly increased


so that in twenty years it was 16 to 1, but it subsequently decreased somewhat, though not returning to the original ratio of 15 to 1.

32. What was the effect of this increase?

No gold came to the mint for coinage with a view to circulation. A holder of gold bullion worth to him at the mint $10,000 in gold coin could, while on his way to that institution, trade it off to bullion dealers for silver enough to yield him at the mint $10,200 in silver coins, just as good to pay debts with as the gold coin, and he naturally traded his gold for silver, reaping the benefit of the exchange.

33. But the reports show that the mint coined considerable gold under the ratio in question; why was this?


Owners of gold bullion took it to the mint to ascertain its value, as it cost them nothing to have it converted into coin. There were no private refineries in the United States prior to 1850.

34. How do you know that the gold did not go into circulation?

First, because no man pays his debts in the dearer money when he has the choice in two kinds for the purpose. Secondly, the Director of the Mint in 1833 said there was no demand for gold coins only on the day that some packet was ready to sail for a foreign port, when the coins were put aboard her for shipment. Thirdly, Hon. Thomas H. Benton on the floor of the Senate declared in 1834 that the false valuation put upon gold had rendered the mint, as far as the gold coinage


was concerned, a most ridiculous and absurd, institution. "It has coined," he said, "and that at a large expense to the United States, 2,262,717 pieces of gold worth $11,852,890, and where are these pieces now? Not one of them to be seen; all sold and exported."

35. Did our silver coins furnish the metallic circulation?

To a certain extent. But in 1793 Congress, by law, had made the Spanish dollar referred to, also its eighth pieces or "reals," full legal tender in payment of debt. This Spanish dollar was about 3 grains heavier than our dollar and nothing


bankers also found that among the unwary Spanish Americans our dollars could be exchanged for the Spanish pieces at par, and after the exchange Spanish dollars came to our mint for coinage, thus keeping the mint busy at no little expense to the government, but for the exclusive benefit of bankers.

36. How were these operations broken up?

President Jefferson, in 1806, directed the suspension of the coinage of silver dollars by the following order, issued through the State Department:


"Sir: In consequence of a representation from the director of the Bank of the United States, that considerable purchases have been made of dollars


coined at the mint for the purpose of exporting them, and as it is probable fnrther purchases and exportations will be made, the President directs that all the silver to be coined at the mint shall be of small denomination, so that the value of the largest pieces shall not exceed half a dollar. I am, etc., "JAMES MADISON.

"ROBERT PATTERSON, ESQ., "Director of the Mint."

37. How many dollar pieces had been coined at that time?

Only 1,433,457.

38. Were any more of those pieces coined under the ratio of 15 to 1?

There were not, the coinage of this piece not being resumed until 1836.

39. Did the fractional silver pieces continue to be coined for circulation?


Their coinage continued, but being full weight pieces, only a small portion of them ever came into circulation. Those not exported were largely hoarded by the banks situated at seaport towns where their shipment could promptly be made at any time. The report of the House Committee, which investigated coinage matters in 1832, states that to 1830 there had been a total coinage at the mint of $37,000,000, of which four-fifths had been exported, leaving in circulation only seven or eight millions. Most of this must have been fractional silver and the report of the United States bank shows nearly that amount in its vaults.

40. What is the plan called under which a mint coins for depositors all gold or silver bullion presented


for the purpose upon like terms, but at a fixed relation of weight?

Free coinage or bimetallism.

41. Then am I to understand that under forty years of free coinage or bimetallism in the United States, less than $8,000,000 of coin, and that mainly fractional silver, was in circulation?

That is the net result as shown by the official reports.

42. Was this failure to secure a coin circulation wholly due to the scheme of bimetallism as established in the act of 1792?

The establishing of a ratio of 15 to 1 by that act undervalued gold and consequently kept that metal out of circulation. Our silver coins might have come into use but for the legalizing of the worn out Spanish pieces in 1793. Taking


the two acts together the effort of the country to provide coin for circulation of any kind was a dismal failure.

43. What steps if any were taken by Congress to remedy this condition?

Instead of repealing the act legalizing the circulation of some of the foreign coins by which a supply of our silver would have circulated, the House, upon the recommendation of a special committee, brought forward the proposition to make the legal ratio 15 5-8 to 1 instead of 15 to 1, hoping in this way to catch the market rate and bring both metals into circulation. But in the Senate a bill, supported by the administration, and championed by Senator Benton, fixed the ratio at about 16 to 1, the gold coins to be


reduced in weight about 7 per cent. and it passed with small opposition.

44. What was the market rate at that period?

About the rate fixed by the House bill, 15 5-8 to 1.

45. Then if 16 to 1 should be substituted would not silver be undervalued and not come into circulation as in the case of gold under the ratio of 15 to 1?

Certainly, and the projectors of the measure knew it.

46. What became of the Senate bill?

The House adopted it in lieu of its own bill and on June 28, 1834, it became a law approved by Andrew Jackson, President.

47. Was it the purpose of the friends of this measure to thus demonetize silver?


Ostensibly their purpose was to get rid of the United States bank with its $13,000,000 of circulating notes; in that case other circulating medium to take the place of the bank notes must be devised and gold coin seemed most available for that purpose.

48. Then the change to a gold basis was not especially to get rid of silver?

Probably not, but whatever the purpose, silver was taken out of circulation under the operation of the new ratio as effectually as if its further coinage had been prohibited under the penalty of death, and those voting for the measure understood that such would be the result, and when it came they did not plead ignorance or refer to the act as the crime of 1834.


49. Did silver cease to be coined?

Yes, for circulation, but holders of silver bullion still had it treated at the mint to get it into good form for the market just as holders of gold bullion had done under the ratio of 15 to 1 and that is why the coinage of silver pieces was continued at the mint.

50. Did gold come into use under the new ratio?

Our own gold coins soon came into circulation but not to the exclusion of the much berated bank notes as hoped and apparently anticipated. The gold coins were now so much reduced in weight that even some of the worn foreign silver pieces were worth more in the market than for circulation and only the thinnest of them remained. The heavier ones with our dollars, halves, quarters and


dimes, fresh and plump from the mint, left the country, which became much embarrassed from lack of small coins to meet the demands of trade.

51. What action if any was taken by Congress to grant relief from this stringency?

In 1852 the Finance Committee of the Senate, of which R. M. T. Hunter was Chairman, proposed a measure to that end based upon one which for many years had been in successful operation in England. It provided that the Secretary of the Treasury should purchase silver bullion as needed and should coin it into halves, quarters, dimes and half dimes of such weight that one dollar of them in value should weigh 384 grains of standard silver, whereas their former weight was 412 1/2 grains to a dollar, a reduction


of about 7 per cent., the new coins to be issued, however, only in exchange at their face value for gold coins or silver dollar pieces, the weight of which remained unchanged, and to be a legal tender for not more than $5. In this way it was thought the fractional silver pieces would stay in circulation, and the bill with little opposition became a law February 21,1853.

52. Why would the new pieces remain in circulation better than those of full weight?

Because they had been purposely made light that their face value should be greater than their bullion value, thus preventing their melting or exportation.

53. But if made of less bullion value than the gold coins, dollar for dollar, was there not danger that


they would drive gold from circulation as did the silver coins under the ratio of 15 to 1?

No, because their coinage was not made free to depositors. Only such an amount was issued as could be exchanged at par for the coins of a higher value, and consequently the issue never exceeded the demand for use in making change and in petty payments. Nobody would buy them for exportation as bullion. Shippers could do better with bullion dealers.

54. Were the results satisfactory?

Eminently so, especially when three years later the foreign silver pieces were made redeemable at a rate somewhat above the market value, by which they disappeared from circulation. The country then had for the first time in its history its own gold and silver coins circulating


side by side, ample in amount, throughout the country, neither driving the other from circulation or skulking because foreign coins were treated better in law than they were.

55. Did this act in any way affect the standard of value?

Not in the least. It did not take away the right to coin the silver dollar for depositors, thus retaining the double standard before existing, but it did prohibit the future coinage of fractional silver except on government account.

56. What are pieces thus coined only on government account called?

Subsidiary coins.

57. It is alleged that in 1852 there was in circulation a large amount of foreign silver; is that true?


No, the contrary is shown by the current history of the times, the memory of thousands of men now living, the discussions in Congress, and especially by the petition to Congress of the governor and members of the New Jersey legislature in that year, as follows:

"To the Senate and House of Representatives of the United States in Congress Assembled:
"The memorial of the subscribers respectfully represents, that the greatly increased value of silver compared with that of gold as regulated by law, at the mint of the United States, has almost wholly withdrawn all the silver coins of proper weight from circulation as a currency. They are no longer a standard of value in payment, and are only used as an article of commerce.

"Your honorable bodies are fully aware that the ordinary business of the community, comprising probably


ninetynine hundredths of all individual transactions, cannot be conducted without small coins, or paper tokens, to settle small balances; and however repugnant the use of such paper trash may be to the public opinion, or discreditable to the government and nation, the indispensable necessity for it will, as your memorialists seriously apprehend, soon force it upon the whole country, unless Congress shall, during the present session, provide an efficient remedy.

"Your memorialists believe that such a remedy may be found in the passage of a bill that passed the Senate of the United States at their last session, which proposes a silver coinage about seven per cent lighter than the present coin, comprising all the existing denominations less than one dollar, and making these new coins a legal tender only for payments not exceeding five dollars."

58. What was the total amount and the character of money in circulation in 1860?


According to an estimate of the Secretary of the Treasury the amount was $435,000,000, of which $180,000,000 is known to have been represented by bank notes, leaving $255,000,000 of coin. This coin was admittedly made up of our gold and subsidiary coinage, of which the latter was probably not above $43,000,000. The estimate of aggregate specie circulation and of its division between gold and silver at that time vary somewhat, but in no case does the estimate include any silver dollars as in circulation.

59. How long did the gold standard of 1834 continue?

Practically only until 1862. Congress in that year authorized the issue of legal tender notes, as before stated, and a dollar in that currency immediately became the standard of


value, the unit of account, and the notes the basis of circulation, though depreciated below their face value.

60. What became of the specie circulation?

It was mainly exported. Public sentiment, however, on the Pacific coast was so strong against the employment of the depreciated notes that only specie continued to be used in that locality, and enough remained elsewhere in the country, mainly in New York City, to pay interest on the public debt and customs dues, both of which remained payable only in coin.

61. Did even the subsidiary coins disappear?

Yes; even the public treasury retained of them less than $500,000, their place being taken in circulation by fractional notes.


62. Why were the legal tender notes issued?

Under an alleged necessity arising from the exigencies of the Civil War.

63. How long did they continue as a unit of account and a basis of circulation?

Until January 1, 1879, when they were brought to par in coin by their redemption at sight in gold coin, an event known as the resumption of specie payments.

64. Then for 17 years only depreciated paper furnished the circulation of the country?

Yes, except, as stated, on the Pacific coast and for certain payments.

65. What was the market ratio of silver to gold when this resumption took place in 1879?

About 18 to 1.


66. Has it been less since?

Very little, if any, and it is now (1895) over 30 to 1.

67. Has gold still retained its place as a standard since 1879?

It has.

68. At such increased ratio, why did not silver drive it from circulation?

Because the free coinage of that metal had been prohibited by law.

69. When and how did that occur?

In 1873. Congress in that year, in a revision of the mint laws, left out any authority for the further coinage of the silver dollar for depositors, and made gold alone the monetary standard, 25.8 grains 9/10 fine to a dollar.

70. Was this step taken after mature deliberation?


It was. The bill, which dealt in various matters pertaining to the coinage, was originally prepared at the Treasury Department, and having been submitted to about thirty gentlemen throughout the country conversant with the manipulation of metals, the manufacture of coinage and the execution of existing laws relating thereto, and by them thoroughly revised, it was sent to Congress by Secretary Boutwell, April 25, 1870. It was printed thirteen times by order of Congress; it was considered during five different sessions of the Senate and House, the debates thereon in the Senate occupying 66 and in the House 78 columns of the Congressional Globe, and it was not finally passed until February 12, 1873. At 110 time did the bill contain any provision


for the free coinage of the old silver dollar of 412 1/2 grains, or of any other silver dollar. The bill as it passed the House did provide for the coinage on government account of a subsidiary silver dollar to weigh 384 grains, just the weight of two half dollars, and to be a legal tender for $5.00. This provision was struck out in the Senate upon recommendation of the Committee of Finance, and provision made for the coinage for depositors at their expense, of a silver dollar of 420 grains, to be known as a trade dollar, as desired by the silver producing states. At no time during the three years the bill was under consideration was any proposition made or considered in Congress to authorize the free coinage of a silver dollar of 412 1/2 grains.


71. What effect did this act, so far as it prohibited the further coinage of silver for depositors, have at the time upon the monetary circulation of the country?

None whatever. No coins of any kind were then in general circulation, and as for the silver dollar, none ever had been so far as any record shows today.

72. But has not the passage of the act been termed the "Crime of 1873"?

It has.

73. By whom and for what purpose has it been so called?

By the advocates of free silver coinage who hoped that by stigmatizing the act and leading the public to believe that it was passed through Congress surreptitiously and without proper consideration they could,


create a prejudice in the public mind that would lead to its repeal or modification.

74. Was any interest injured at the time by making gold the standard by law as it was in fact and had been since 1834, excepting, of course, the period of inflated paper?

None whatever. It made no change in existing conditions then, and with the market ratio of silver to gold not less than 16 to 1 no change would ever occur. It in no way reduced the amount of "primary money" in the country — or in the world.

75. When was the alleged mischief discovered?

In 1876, when silver had so fallen in price as against gold that it was the cheaper metal at the ratio of 16 to 1. As resumption of specie


payments had been ordered on and after January 1, 1879, it was seen that silver, if it had not been prohibited, would again be the unit of account, the dollar the principal coin in circulation and gold cease to be employed as a primary money, as silver had been since 1834.

76. Why was this desired?

Mainly that debtors might take advantage of the situation and pay off existing obligations, calling for dollars, in coins shrunk in value below the gold standard.

77. Would not this scheme violate the essential elements of good faith?

Doubtless it would, but there was throughout the country a numerous and noisy class who had advocated the payment of the interest bearing public debt in the depreciated notes


of the government dollar for dollar, with no provision for the redemption of the notes, and this class, defeated at the polls, was only too glad for a plausible opportunity to advocate any scheme which savored of repudiation, public or private.

78. In what section of the country did the advocates of silver find most adherents?

Naturally in the silver producing states where the voters could be made to believe that the legislation had been adverse to their local interests, but in other sections many joined in the advocacy of a restoration of free silver, who were restless and dissatisfied with their party affiliations and were looking for an excuse for leaving their old party.

79. As silver dollars were being coined for exportation at the time


of the passage of the act, did not the silver producing states have some cause of complaint in being debarred from this privilege in the future?

The right of an owner to have his silver bullion treated at the mint so as to be put in merchantable form free of expense to him, was not contemplated in any coinage act. Furthermore, the fact that any man or any class of men had enjoyed for a long period a lucrative privilege never intended to be granted, by which great gain had arisen at the expense of the Government, i. e., of other fellow citizens, affords no just claim for its continuance.

80. Was not the authority for coinage of trade dollars favorable to the silver producers?

It was. Under it the mint was authorized to receive deposits of silver


bullion, to part and refine and coin them, but to coin only in so called "trade dollars" containing 420 grains of silver 9-10 fine instead of 412 1/2 as in the old dollar, the depositors to pay the expenses, and this was all the silver states asked for.

81. In what way was the manufacture of these coins any advantage to the silver producer?

It enabled him at a slight charge to have his bullion assayed and stamped by the government setting forth its weight and fineness, and purchasers would accept the bullion thus stamped without question, thus giving it an advantage over the other forms of bullion.

82. What became of these dollars?

They were mainly exported as intended.


83. How many were coined?

35,965,924 pieces.

84. When did their coinage stop?

Practically in 1879.

85. Why was not their fabrication continued if at no expense to the government?

The unexpected depreciation in the price of silver bullion rendered the value of the piece less than a dollar in gold and depositors took advantage of this condition to place the dollars in circulation instead of exporting them. Consequently the Secretary of the Treasury stopped their coinage as he was authorized by law to do.

86. How many standard silver dollars had been coined for depositors previous to 1873?

Only 8,031,238.

87. Then under one of the provision


of the demonetization act of 1873, more than four times the amount of trade dollars was coined for depositors in six years than had been coined of standard dollars in the 80 years previous under the free coinage acts of 1792 and 1834?

Yes, and that of itself should disprove any charge of intentional illtreatment of the silver producing states. These states asked for the trade dollar in lieu of the standard dollar; they got it, and but for unforeseen conditions would have had it to day.

88. Did they continue to ask for a restoration of the free coinage of silver after the coinage of trade dollars was prohibited?

They did, but the price of silver had so greatly depreciated that their demand was not answered.


89. But the standard silver dollar is now in circulation; how has its coinage been brought about?

By an act passed February 28, 1878, over a veto of the President, the Secretary of the Treasury was authorized and directed to purchase not less than two million nor more than four million dollars worth of silver per month and to coin it into silver dollars of the fineness and weight of those coined previous to 1873.

90. Then silver dollars coined since 1878 are practically only subsidiary coins?

To a certain extent yes, but their issue was compulsory and they were of full legal tender, and certificates for their deposit were also to be issued which the government would accept in payment of any


dues, by which they readily passed as money, qualities not given to subsidiary coins.

91. Were the silver dollars themselves generally acceptable to the public?

They were not. Of the two, the certificates were preferred.

92. In what were the certificates redeemable?

In silver dollars only. The certificate reads: "This certifies that there has been deposited in the Treasury of the United States — silver dollars payable to bearer on demand," but under an act passed July 14, 1890, the Treasury redeems them in gold.

93. What were the provisions of this act?

The Treasury was directed to purchase every month $4,500,000


fine ounces of silver, paying for it in "notes" which notes were made a legal tender for all debts public and private unless otherwise specifically stated in the contract, and were redeemable in either gold or silver at the discretion of the Secretary of the Treasury, Congress declaring it "the established policy of the United States to maintain the two metals on a parity with each other upon the present legal ratio, or such ratio as may be provided by law." So much of the act of 1878 as required the purchase of silver and coining it into dollars was repealed.

94. Is this act still in force?

Its silver purchasing provisions were repealed in 1893.

95. What amount of silver certificates, Treasury notes and silver coin issued under these two acts is


now (1895) outstanding and outside of the Treasury?

Of silver coin $52,812,570, of silver certificates $312,553,171, and of Treasury notes $117,954,807, a total of $492,320,548.

96. How much gold is in circulation outside of the Treasury?

Only $483,770,430.

97. How much silver was purchased under the two acts and at what rate?

The amount will be shown by the following table:

Act Authorizing. Fine Ounces. Cost. Average Cost Per Oz.
Feb. 23, 1878 291,372,019 $308,299,261 $1.058
July 14, 1890 168,674,682 155,931,002 .924
Total 459,946.701 464,230,263 1.009

98. Then under the operation of the two acts more silver is in circulation than gold?


Yes, considerably more, not including $60,000,000 of subsidiary silver.

99. And all this silver is redeemable in gold?

Yes, at the demand of the holder, otherwise the "parity" of the two metals would not be maintained as required by law.

100. What reserve has the law provided from which to meet these redemptions?

None at all.

101. Is no silver ever presented for redemption?

Yes, millions of it, and it is redeemed, too.

102. Where does the Treasury get its gold for this purpose?

It takes gold from the fund of $100,000,000 accumulated by the sale of bonds in 1878 to meet the


redemption of United States notes on and after January 1, 1879.

103. What, then, are the total obligations against this fund?

Of silver as above stated $492,320,548, and of United States notes $346,681,016, a total of $839,001,564, and in addition to that the fund is held liable to be used in current disbursements to an unlimited amount and it has been so used whenever necessary.

104. Is not this a small reserve for so many obligations?

It is and it would be utterly inadequate, but that it can be replenished at any time by the further sale of bonds for gold.

105. Have any bonds been sold for this purpose since 1879?

Yes, about $162,000,000 of 5 and 4 per cent, bonds.


106. If the income of the government should equal or exceed its expenditures would not that remove an important liability against this reserve?

It would, and probably allay any apprehension of the ability of the government to maintain the parity in value between the two metals as required by law.

107. Then is it true that since the alleged demonetization of silver, nearly $500,000,000 of it has been put into circulation and maintained there at a parity of value with gold?

It is, and it is generally admitted that the plan adopted is the only one feasible by which the two metals can be made to circulate together.

108. If nearly 500,000,000 of silver dollars has been put into circulation


within 17 years under a restricted coinage and maintained there as stated, against a total specie circulation of less than $8,000,000 of our own coins after 60 years under free coinage, has not the plan of restricted coinage been more to the interest of producers of silver than was the free coinage system?

It would seem so from the results shown.

109. Should free coinage at the ratio of 16 to 1 be re-established what would become of the gold in circulation?

Doubtless it would be mainly exported.

110. In return for what?

Public and corporation securities of which there is an estimated amount held abroad of more than $2,000,000,000.


111. Why will they be returned?

Because the holders, knowing that the obligations, when due, will be paid in silver, will dispose of them immediately at best rates obtainable in gold.

112. With our $484,000,000 of gold taken from the circulation, by what will it be replaced?

Probably in time by silver, but as the average price of that metal in gold for 1894 was somewhat less than 50 cents for a dollar there will be needed for silver double the amount of silver dollars there was of gold coin to equalize the value, or, say $968,000,000 of silver.

113. How long would it take the mints of the United States working at their full capacity, to coin that amount?

As the maximum capacity of the


mints is only about $45,000,000 per annum (in silver dollars) it would take a little more than 20 years.

114. Would not a change to a silver basis then at a ratio of 16 to 1 cause a violent reduction in the outstanding circulation of money in the country?

It would; not only must the vacuum caused by the disappearance of gold be supplied, but there is at present about $750,000,000 of notes circulating at a gold valuation; these if redeemable only in silver would at once lose one half of their present purchasing power, requiring an increase of like amount in face value to keep the value of our circulation unimpaired.

115. And to put silver coins in their place would require seven or eight years perhaps?


Yes; perhaps, however, the capacity of the mint might be increased or notes be issued upon silver bullion, but at best there would be for awhile a sudden contraction of the currency, disturbing business, checking prosperity, throwing thousands out of employment, thus provoking disturbance the end of which no one can forsee.

116. But would not owners of silver mines reap a profit from an enhanced price of silver consequent upon the new demand of that metal for circulation?

They doubtless expect to, and until the channels of circulation are supplied as needed, and prices shall have become adjusted to the new standard, they would probably reap some advantage, but it must be remembered that no increase of wealth


in the aggregate can accrue from such a source. What the owners of silver mines gain in the confusion, others must lose.

117. Will not foreign exchanges continue to be made in terms of gold?

They will, and the result will be the reestablishment at New York of a Gold Board.

118. What necessity for that?

Because exchanges are effected in this way: A Liverpool cotton merchant telegraphs a New York Commission House: "If you can buy one thousand bales of midland cotton so as not to cost me more than 15 cents gold per pound laid down in Liverpool, you may do so." The commission merchant finds foreign insurance and other charges will be about 2 cents. He wants 1 cent profit and


can therefore afford to give 12 cents gold for the cotton itself. He goes into the cotton market and learns that cotton is quoted only in silver; that the planters of the south pay their laborers and buy their provisions and agricultural implements in silver and they cannot tell what their cotton is worth in gold. In silver cotton can be bought for 24 cents a pound, and the next inquiry is to ascertain the price of silver so as to know how much in that metal he can afford to pay for the cotton that he may fill the order of his Liverpool correspondent as desired. He finds gold selling at a premium in silver of 100 per cent, in other words a dollar in gold is worth $2 in silver. At this rate he can fill the order, twelve cents in gold being equivalent to 24 cents in silver.


Thus far the transaction is simple enough. He has only to exchange his gold for silver and pay for his cotton. But the Liverpool merchant has not sent the gold. It will be several days before the cotton will be ready for shipment and not until it is aboard the vessel can he receive an advance upon it. Meanwhile the rate of silver may vary adversely to him perhaps wiping out his profits or even incurring for him a new liability. This is a risk he does not wish to take, but it will be taken at the Gold Board, the members of which make it a business to gamble in the price of gold measured by silver. He goes there and finds that he can contract for the delivery of the gold in silver, one for two, for a commission of 1/4 of one per cent in addition to the ordinary exchange


rate, any time within 30 days. This commission he cannot afford to pay so he resumes negotiations with the cotton broker and finally gets him to consent to accept for his cotton that per cent less. He will then have no further trouble in consummating the transaction. But the fact that the New York standard was different from that of Liverpool compelled the producer of cotton to suffer a loss of 1/4 of one per cent to guarantee the gold broker against a depreciation within 30 days of the price of silver.

119. Would this commission amount to any considerable sum?

The total value of our exports for 1894 was $892,140,572, and 1/4 of one per cent of this amount would be $2,230,351, which amount would be paid to New York brokers


by our producers of goods for exportation.

120. But if meanwhile the price of silver should be enhanced would not the New York broker make a profit to the extent of the increase?

He would, and that is what he calculates upon. He charges the percentage to guard against possible loss; he takes for himself all possible gain, for the New York broker has an unearned reputation for money making if in such a deluge of larks his dish is found bottom side up.

121. You assume then that with free coinage of silver, under present conditions, cotton would advance in price from 12 cents per pound as in 1890 to 24 cents?

Yes, there can be no doubt that such would be the relative advance.

122. Is not this just what the advocates


of free silver claim would result?

Yes, but they maintain, or at least some of them do, that silver will circulate with gold at par under the coinage ratio of 16 to 1. Should such be the result there would be no special objection to the free coinage desired, but no such result is possible, as I have already shown and as is now generally admitted, and without it the apparent increase in value would be fictitious.

123. But is not cotton at 24 cents better for the producers than cotton at 12 cents per pound?

Not necessarily. If a farmer sells his wheat for francs, five of them to a dollar, he will get five times as many pieces for it as he would if paid in dollars, but he gets no more in value, and 24 cent cotton in silver


is not necessarily one whit better for the producer than 12 cent cotton in gold. The only way the producer can get an increase for his cotton is to have an advance in the price without a decrease of standard; then he secures an actual advance.

124. But it is alleged that under a gold standard the prices of commodities have depreciated greatly to the injury of producers and that the restoration of free silver with its increase of prices would be only just to that class. Is such the case?

In the matter of depreciation of prices of course we might in any event naturally look for a lowering in those of agricultural products, owing to greatly improved methods and machinery employed. The investigation of the nth census shows that in preparing ground for


cereals one man through new devices can do the former work of two and in gathering the crops one can do the work of nine. This of itself would naturally insure a reduction in prices of farm products. Gold came to be employed as a standard in 1834. It took a few years before its coins furnished the circulation of the country, but under its employment prices of farm products have increased, not diminished, as will be seen by the following table, which shows the prices of the principal agricultural products for 1840 and at the end of each succeeding decade, omitting 1870 when prices were inflated by the civil war and a depreciated currency. The figures of the following table have been taken from a report of the Senate Finance Committee on


Wholesale Prices and Wages, 1893, and their accuracy has never been questioned. It will be seen that notwithstanding the introduction of labor saving appliances there has been an increase in the price of all the principal farm products during the 50 years in question and yet all this time the country was on a gold basis, and the products were in every case measured by gold. Wheat, whose recent depreciation in value has been attributed to the fall in silver, was worth nearly three times as much per bushel in 1890 as it was in 1840, and nearly double what it was in 1850, measured by gold. There is no truth in the allegation that prices of farm products have been depreciated under the employment of a gold standard.

Commodities 1840 1850 1860 1880 1890 or 1891
Barley, pr. bu. (New York) $0.62 $0.65 $0.77 $0.90 $0.95
Corn, pr. bu. (Chicago) .38 .25 .43 .40 .58
Cotton, pr. lb. (New York) .10 .12 .11 .11 .12
Hemp, pr. ton (Cincinnati) 111.00 130.00 143.00 160.00 130.00
Oats, pr. bu. (Chicago) .20 .22 .34 .38 .58
Rye, pr. bu. (New York) .68 .61 .77 .96 .97
Tobacco leaf pr. lb. (New York) .06 .05 .05 .10
Wheat, No. 2, spring (Chicago) .38 .55 1.02 1.14 1.03

125. What change, if any, has


taken place in the price of manufactured articles during the same period?

Prices of such articles have decreased as everybody desired, rendering the cost of living much less in 1890 than it was in 1840. They are shown in the same report for each year since 1840, also the relative average of prices, 1860 being reckoned as 100. The figures of such averages shown below are for the same dates as those in previous table:

Class 1840 1850 1860 1880 1891
Cloths and clothing $111 $91 $100 $91 $81
Fuel and lighting 396 103 100 100 91
Metals and implements 124 115 100 96 74
Drugs and chemicals 146 124 100 113 86
House furnishing goods 116 126 100 85 70
Miscellaneous 147 107 100 109 95

It will be seen that the wage earner, for whose welfare the free silver advocates are so solicitous,


pays 28 per cent less for his cloths and clothing; 80 per cent less for his fuel and lighting; 40 per cent less for metals and implements; 42 per cent less for drugs and chemicals; 40 per cent less for house furnishing goods, and 35 per cent less for miscellaneous items in 1891 than he paid in 1840.

126. Does not labor enter very largely as an element of cost into each manufactured article?

Yes, the cost of labor constitutes nearly one third of the value of manufactured products.

127. Then if these products have been so reduced in price has their reduction not been at the expense of the wage earner — has not his wages been reduced?

O, no; on the contrary they have greatly advanced. The report in


question shows 61 series of wage returns, beginning as early as 1840, and 540 series from 1860 to 1891. These extended back to 1840 are mostly of New York or Boston firms. Below are given a few samples and the general results. The figures are per diem rates for every tenth year, beginning with 1840, except for 1870, which are omitted for reasons before stated.

Occupations. 1840 1850 1860 1880 1893
Building Trades —
Plasterers $1.50 $1.75 $1.75 $2.00 $3.50
Roofers and slaters 1.60 1.50 1.25 2.50 3.50
Blacksmiths 1.50 1.50 1.50 3.00 3.00
Blacksmiths' helpers 0.83 .83 .83 1.75 1.75
Painters 1.25 1.25 1.25 1.75 2.50
Wheelwrights 1.25 1.25 1.25 2.50 2.50
Cotton Goods —
Card grinders .80 .92 .92 1.52 1.52
Card Strippers .50 .79 .75 .93 1.02
Carpenters 1.29 1.41 1.52 1.84 1.94
Drawing hands .041 .45 .50 .67 1.03
Engineers 2.00 2.25 3.00 3.50 4.25
Firemen 1.25 1.37 1.44 1.40 1.65
Laborers .81 1.04 .99 1.16 1.25
Machinists 1.45 1.55 1.76 2.08 2.19
Overseers 2.00 2.00 2.25 3.00 5.00
Watchmen 1.10 1.06 1.00 1.50 1.55
Railroads —
Baggagemen 1.53 1.53 1.91 2.10 2.11
Brakemen, freight 1.00 1.00 1.16 1.75 1.85
Brakemen, passenger 1.15 1.15 1.25 2.00 2.00
Carpenters 1.22 1.33 1.30 1.77 2.00
Conductors, freight 1.66 1.68 1.61 2.58 2.57
Conductors, passenger 2.11 2.30 3.19 3.45 3.84
Engineers, locomotive 2.14 2.15 2.30 3.78 3.79
Firemen, locomotive 1.06 1.15 2.00 2.00 2.00
Foremen, masons 2.50 2.50 2.50 4.00 4.10
Painters 1.50 1.42 1.42 1.87 2.17
Average, according to importance for all occupations — 1860 being reckoned as 100 87.7 92.7 100. 143. 168.6


Commenting upon this result the committee says: "The advance in daily wages which has been here noted, has been accompanied by a decrease in the hours of labor. Compared with 1840, hourly wages in 1891 stood at 209.0 and compared with 1860 at 176.8."

In other words the average wages of all occupations have more than doubled since 1840 and have increased 76.8 per cent since 1860, and that without any change from the gold standard.

128. But it is alleged that recently, say since 1873, there has been a great increase of debt in the


United States thus involving the wealth of the country to the advantage of the creditor class; is that true? There is no record of debts existing in the country previous to 1890 except those incurred by the National, State and local governments. The total and per capita at the end of the three last decades were as follows:

Year. Total. Per Capita.
1870 $3,379,253,997 92.80
1880 3,045,796,011 60.73
1890 2,027,170,546 32.37

Instead of an increase in these debts, there has been such a decrease that the per capita burden in 1890 was only about one third as great as in 1870.

129. It is also alleged that owing to a lack of circulation arising


Character of Wealth or Production. 1850. 1860. 1880. 1890.
Value of farm land (millions) $3,272 $6,646 $10,197 $13,279
Value of live stock (millions) $544 $1,089 $1,500 $2,209
Pounds of wool clipped (millions) 52 60 155 165
Pounds of butter (millions) 313 459 777 1,024
Bushels of Indian corn (millions) 592 838 1,754 2,122
Bushels of wheat (millions) 100 173 459 468
Bushels of oats (millions) 147 172 407 809
Bales of cotton (thousands) 2,460 5,387 5,775 7,473
Tons of hay (thousands) 13,838 19,083 35,151 66,831
Bushels of Irish potatoes (millions) 65,797 111.148 143,327 217,546
Total valuation of all property (millions) $7,135 $16,159 $43,642 $65.037
Per capita valuation of all property $308 $514 $870 $1,036
Deposits in savings banks (millions) $43 $148 $819 $1,438

from the demonetization of silver, the prosperity of the country has been checked. What do the figures show?

The foregoing table will show you at a glance the wealth and production of the United States for each decade since 1850 (1870 excepted as before) as published by the United States Census office, and the amount of savings banks deposits as shown by the Report of the Comptroller of the Currency, at same dates.

It will be seen that production and valuation have increased with every decade since 1840, the per capita of wealth being more than three times greater in 1890 than in 1840.

130. In what way is this increase of wages, decrease in cost of living and greatly increased wealth shown?


It is seen in the piano, the carpet and the silk dress which have come to the homes of the farmer and wage earner; in the increase of books, pictures and tidy surroundings of every home; in the cheapened transportation, by which farm products are brought to markets thousands of miles distant at rates less than from an adjoining county fifty years ago; in the increased facilities for personal travel, by which rates and time have been reduced two thirds and the comfort of a parlor substituted for a seat in a spring less wagon over a rough road; in the reduced hours of labor, by which the wage earner can spend with his family or in rest more than one third of the time he was formerly employed in the factory or field, and yet have 75 per cent more money to spend on comforts or luxuries


which fifty years ago were known only to the wealthy; in the facilities for the education of children, public schools for which purpose of the highest order being now within reach of every child in the country of whatever color or condition; in the better and more abundant food; in the removal of many of the burdens which made life two generations ago heavy and hard to endure. Whatever may be the cause, there is no mistaking the result — the condition of the masses of our people has greatly improved within the last fifty years.

131. What are the principal countries having a silver standard and employing silver coin for circulation?

Mexico, Japan, China and India.

132. Have we any statistics showing rate of wages or price of product


in those countries, and, if so, how do they compare with those of the United States?

Commodities. Prices in Mexico. Prices in the United States, Gold. In favor of United States.
  Mexican Dollar. Equivalent in U. S. Gold.
Flour, per barrel $10.780 $8.080 $5.100 $2.980
Sugar, per pound .190 .140 .050 .090
Coffee, per pound .740 .180 .200 .020
Beans, per pound .500 .380 .500 .120
Rice, per pound .085 .063 .055 .008
Lard, per pound .180 .135 .060 .075
Ham, per pound .300 .225 .114 .111
Cheese, per pound .250 .187 .100 .087

Very little information of the kind is obtainable, but from a publication of the "Bureau of American Republics" I have compiled the table on page 83, showing prices of commodities in Mexico in 1890 compared with the prices of those in the United States at the same time.

It will be seen that, excepting beans and coffee, prices of articles mentioned were higher in Mexico than in the United States, compared with the same standard.

Wages at the same time were, in every occupation, reported much lower, as will be seen by the following table, compiled from the same publication.


Occupations. Wages in Mexico Per Day. Wages in United States Per Day. Gold Coin or its Equivalent. Difference in favor of United States.
  Mexican Silver Dollar. Equivalent in U. S. Gold Coin.
Blacksmiths $2.50 $1.88 $2.50 $0.62
Carpenters 1.50 1.13 2.55 1.42
Quarrytmen .50 .38 1.50 1.12
R. R. Contractors 1.00 .75 3.84 3.09
Stone Cutters 1.25 .94 3.50 2.56
Tinners .875 .66 2.45 1.79
House Painters 1.25 .98 2.28 1.30
Gas Fitters 1.00 .75 1.97 1.22
Printers 2.00 1.50 2.50 1.00
Coach Makers 2.00 1.50 2.50 1.00
Weavers 1.00 .75 1.30 .55
Pattern Makers 1.25 .94 3.24 2.33
Machinists 1.75 1.31 2.44 1.13
Ungine Drivers 1.50 1.13 3.79 2.66
Firemen 1.50 1.13 2.00 .87


There is certainly nothing in these tables to indicate that the laboring man is benefited by an unlimited supply of silver. The same authority states that the "peon," the common farm laborer in Mexico, receives only one-fourth of a Mexican dollar per day for his labor; that he lives in an "adobe" or mud house, and that all the comforts of civilization are to him unknown. As to the condition of the laboring man in China we need no statistics. To prevent the workingman of that country from coming here to improve his condition we have built up a legislative wall higher and stronger than the stone wall raised by China itself to prevent the invasion of the Tartars. Chinese laborers are more than willing to quit a country with a silver standard to seek a home in the United States, notwithstanding it has a gold standard.


133. What countries have only a gold standard?

Austria-Hungary, Brazil, Denmark, Egypt, German Empire, Great Britain and her colonies, Portugal, Roumania, Norway, Netherlands, Servia and Spain; while, in fact, France, Italy, Switzerland, Turkey, Belgium and Greece have absolutely closed their mints to the free coinage of silver and maintain a circulation substantially at par with gold, making the currency of these countries, for all practical purposes, on a gold basis.

134. What countries still attempt to maintain an unrestricted bimetallic system?

Bulgaria,Chili and Russia, but the last named country has had a depreciated paper currency since 1855, which, owing to the belief that it will be redeemed in gold, is quoted


about twenty per cent, above that of the silver rouble, and the two other countries are practically on a silver basis.

135. Which of all these countries, if any, have tried the bimetallic system and abandoned it for a single gold standard?

The German Empire abandoned the bimetallic system which had existed for various periods among the several states, and by the acts of December, 1871, and July, 1873, established a uniform gold monometallic system (for the Empire), coining silver only on government account.

Great Britain tried the bimetallic system for centuries. In 1666 it was enacted that all persons might bring their gold and silver to the mint to be coined free of charge, the gold guineas to be reckoned at


20 shillings in silver, but the guineas passed in circulation for 22 shillings. The latter pieces were reduced from time to time, and so were the guineas somewhat, but in 1718, as a result of its coinage laws, England was to all intents and purposes a gold standard country, though authority for its obsolete bimetallism remained upon its statute books until 1816, when gold was made the standard, silver subsidiary, the system now existing, and which has met with little objection and found much favor.

France also endeavored to maintain bimetalism from 1113 to 1874, and there was no end of effort to make the ratio of value between the two standards the same in law that it was in the market. To that end the mint price of gold was changed 146 times, and that of silver 245


times. In 1726 the ratio was fixed at 14 1/2 of silver to 1 of gold, but this ratio proved too high and silver became the standard of France under the same economic law that made gold the standard in England. In 1785 the ratio was fixed at 15 1/2 to 1 and in 1803 that ratio was reaffirmed with a thorough revision of the mint laws authorizing the existing coins, but even at this ratio gold was undervalued and commanded a premium, and from 1803 to 1850 there was no gold in general circulation throughout the country. Soon after 1850 increased gold supplies came from California and Australia, changingthe ratio of valuein France from 15 3/4 to 15 1/4 to 1. This change, though it may seem slight, was sufficient to displace more than 150,000,000 of silver and to substitute an equal quantity of gold, showing


how a slight change in the market relation of value between the two metals may displace one metal from circulation and establish the other in its place.

In 1865 a great dearth of silver coins had resulted in France and that country entered into a combination with Belgium, Italy, Switzerland and Greece, known as the "Latin Union", by which the double standard at ratio of 15 1/2 to 1 was to be maintained, but the free coinage of silver to be restricted to the five franc piece, the coins of less denomination to be minted only on government account, and at reduced relative weight of pure metal, and all to be redeemable in gold. This brought the desired relief. Owing to the fall in the price of silver, the free coinage of that metal was first restricted; then in 1874 all silver


coinage was absolutely suspended by the contracting parties, leaving France and the other countries in the Union practically with a gold standard. The Bank of France today, however, keeps its gold only by imposing a small charge on large payments of that metal.

Roumania introduced the double standard in 1867, but in 1890 substituted in its place a gold standard, Spain in 1868 introduced the bimetallic system like that of the Latin Union, but since 1878 silver has been coined only on government account, making Spain a gold standard country.

136. If all the nations mentioned and the United States should hereafter continue to employ only gold as a standard of value, is there not a danger that the increased use of that metal will enhance its price?


Not at all. The world's annual production of gold alone for 1894 was $181,510,100, against an average annual production of both gold and silver from 1801 to 1810 of $48,982,900, and from 1831 101840 of only $38,271,000. Then the recent introduction into commerce of a greatly extended use of notes, checks and drafts has limited the need of actual coin in making exchanges, and this use can be extended with safety until coin, except subsidiary silver, need hardly be seen in current transactions.

137. But if one country may not be able of itself to maintain coins of different market value in circulation at the same time, might not all the commercial countries of the world agree upon a common lawful ratio for the two metals and maintain it?


Such an agreement would in effect be an attempt to fix a value for one of the metals as measured by the other to extend throughout the commercial world without regard to the ever changing conditions of production and facilities of transportation. Suppose the ratio should be fixed at 16 to 1. Then every man in the world would want 16 pounds of silver just as much as he would 1 pound of gold, or the ratio would be changed at once. The scheme can not even have a trial were it feasible, for of all the countries of Europe having a single gold standard not one has signified the slightest desire to return to any bimetallic system, though, at the instance of the United States, four international conventions have been held within 20 years, with a view to introducing such an international


ratio. The proposition is of itself chimerical in conception and impracticable in application. Increasing a triangle does not make it a square, and extending the operations of an economic law will not change the result of its adoption. The law by which the poorer money drives the better from circulation is as unchangeable as the law of gravity and coexistive with the universe. Under its operations no matter what laws, treaties or agreements may be made by nations, fixing a common ratio, only that metal which is the cheaper will furnish the standard of value and supply coins for circulation, and this is generally admitted even by the advocates of free silver coinage.

138. Then you do not believe bimetallism possible under any conditions or circumstances?


Not in the sense of a free coinage of the two metals at a ratio fixed by law. Such a scheme, wherever and whenever tried, has invariably resulted in maintaining only the cheaper metal as a standard and the metal to be thus employed may as well be fixed by law at the outset, leaving the other metal to be adapted to it by its use as subsidiary coins, the only way yet devised by which the two metals have ever been made to circulate together to any considerable extent. Not only is such a scheme based upon well known economic laws, but the fact that bimetallism has been tried by nearly every nation of the world and abandoned as impracticable should keep the United States from any such folly as attempting its restoration through any scheme.



1. In favor of Mexico.