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Why 16 to 1?
What is Meant by Free Silver at 16 to 1.
The platform adopted at Chicago by the Democratic Convention contains the following sentence: "We demand the free and unlimited coinage of both gold and silver at the present legal ratio of 16 to 1, without waiting for the aid or consent of any other nation."
Our silver dollar contains 371ź grains of silver. The proposed legislation would allow any individual to take 371ź grains of silver bullion to the mint and to obtain a silver dollar in its place.
Three hundred and seventy-one and a quarter grains of pure silver are to-day worth about 53 cents.
So that unless some rise took place in the price of silver this legislation would allow any one to take 53 cents of silver to the mint and obtain silver dollars in exchange.
As the amount of silver bullion in the world is enormous, and the annual production even at present prices amounts to over $100,000,000 worth, the demand required to replace our gold coinage in actual circulation of three or four hundred millions would have a very slight effect on the price and the value of the silver bullion in the new dollar would not probably exceed sixty cents.
The necessary result will be that all the silver dollars in circulation would fall to a price between fifty-three to sixty cents in gold.
The ratio of sixteen to one was adopted in 1837.
Sixteen ounces of silver were then worth about the same as one ounce of gold.
It was therefore provided that both should be coined at a ratio of sixteen to one, that is, the silver dollar was to contain sixteen times as much silver as the gold dollar contained gold.
The gold dollar contained as now 23.22 grains of gold and the silver dollar 371Ë grains of silver.
An ounce of silver in 1837 sold for about one dollar and twenty-nine cents. To-day it sells for sixty-nine cents on account of the enormous increase of production and cheaper process of treatment.
While the ratio of sixteen to one was perfectly honest in 1837 it is not so to-day, for the price of silver is so greatly depressed that an ounce of gold sells now for more than thirty ounces of silver.
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A silver dollar to-day, therefore, to be an honest dollar, should be thirty times as heavy as the gold dollar instead of sixteen times as heavy That is, the ratio should be thirty to one.
At the ratio of thirty to one the bullion in the silver dollar would be of nearly as great a value as the bullion in the gold dollar.
When the Government stamps any less amount of silver than a dollar's worth "One Dollar" it commits a fraud on the people.
Had the Populists who controlled the Democratic Convention asked for the free and unlimited coinage of silver and gold at the present commercial ratio of thirty one there would be no general uprising by the conservative element of the party.
This platform, however, does not ask for an honest dollar. It requires the United States Government to accept from any one 371ź grains, which are now only worth fifty-three cents and stamp on it "One Dollar."
Such a law as is here demanded would permit any individual in the world, whether American, Mexican, Englishman, Chinaman or Japanese, to send less than sixty cents worth of silver bullion to the mint of the United States, and to have the same stamped "One Dollar."
This coin is to be legal tender to Americans in payment for all purchases, and is to be legal tender for all debts, public and private. It can be used by employers to pay wages, by banks to pay their depositors, by life insurance companies to pay death claims and by the Government to pay pensions and salaries.
There is plenty of silver ready to be shipped here.
It is well known that England would like very much to substitute a gold currency for a silver currency in India because silver shows every sign of depreciating in price and she would like to replace it with gold, the value of which is not likely to decrease greatly.
It is estimated that in India there is 956 millions of dollars worth of coined silver, not to speak of untold amounts of silver bullion.
It is estimated that China has 725 millions of dollars worth of silver coin, besides vast amounts of silver bullion, a large part of which she would gladly exchange for gold, extracted from the Rocky Mountains.
In the year 1894 the United States produced $28,721,014 worth of silver, Mexico produced $29,634,180 worth, and the total amount produced in the world was worth $105,684,085.
The amount produced weighed 167,752,517 ounces and is about as as great an amount as has ever been produced. This production occurred in a year in which the price never exceeded seventy cents an ounce.
In 1895 the production was 165,500,00 according to the estimate of the Director of the Mint.
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During this last year we exported more than $24,000,000 dollars worth of silver over and above our imports of the metal, and with this paid to some extent for the coffee, sugar, india rubber and other products which we needed.
There is a great supply of silver now in the market at 69 cents an ounce, and it is hardly to be expected that an increased demand can materially affect the price, for there are inexhaustible supplies of silver ore which can be treated when a small increase of price occurs.
But, assuming that in fact the price is raised, what utter folly it is to load ourselves down with a metal which other nations are trying their best to get rid of!
From 1873 to 1893 the Government purchased 489,388,102 ounces of silver at a cost of $516,470,765. (World Almanac, p. 204.)
The value of that silver to-day at the prevailing market rate is $333,777,790; that is, there has been a loss on the purchase of over $150,000,000.
There is only one way to raise the price of an article, and that is to corner the market by extensive purchases.
These purchases of silver must be paid for by issues of bonds or by the sacrifice of other products of the country — wheat, corn, cotton, hogs, meats, et cetera, at panic prices.
There is now stored in the Treasury vaults $512,000,000 of silver coin and bullion, most of which is absolutely useless. Further additions to this useless hoard are to be made at great sacrifices by the people of this country and without any prospect of benefit of any kind.
It is not surprising that we find that Most, who is not supposed to sympathize much with capitalists, says in the "Freiheit"
"In a nutshell the situation is, In the far West an unusually large amount of silver has been found during the past twenty-five years, so that the market value has been reduced 50 per cent. This of course, did not suit the owners of the silver mines and therefore they forced the Government to coin a large number of silver dollars. The Government was compelled to put a stop to all this in order to maintain the gold standard. The result was a regular uproar among the silverites and because the people in this country are the biggest fools in the world, they took up the cry of the mine owners for the unlimited coinage of silver."
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Why Is the Silver Dollar At the Present Time Current At the Price Of the Gold Dollar?
This is because the issue is limited in amount, and the Government holds itself ready to redeem its various forms of paper money in gold coin and to receive the silver dollar as equivalent to that gold coin.
I have before me three coins.
One is a gold dollar of the United States containing 23.22 grains of gold.
A second is a silver dollar of Mexico containing 406.39 grains of silver.
A third is a silver dollar of the United States containing 371ź grains of silver.
This gold dollar can be melted in any part of the world and gold bullion equal in value, together with a little copper in the coin, to a dollar can be obtained from it.
As this gold has the same value in every part of the world the gold coin of the United States can be sold everywhere for its full nominal value.
It is the coin used in settling all our trade balances, for the foreigner who accepts it in payment of the coffee, sugar, wool and other products which we import, knows that it contains 23.22 grains of gold and that he can have it turned into the money of his own country by sending it to the mint. Many millions have been so converted within the last four years.
The second coin is a silver dollar of Mexico.
That contains more silver than is contained in the silver dollar of the United States.
That coin is worth in the markets of the world about 54 cents. The market value of the bullion contained in it is about fifty-three cents. People of foreign countries accept it at 54 cents because they know they can sell the coin as bullion. It can be bought in New York for that price at the present time.
The silver dollar of the United States passes in this country as equivalent to a gold dollar, although it only contains fifty-three cents worth of silver.
This is because the government has pledged itself to maintain the dollar at a parity with the gold dollar, has shown a willingness to issue bonds to maintain it on a par with gold and receives it as equivalent to a gold dollar in payment of customs and taxes.
That is, the silver dollar is substantially a promise by the Government to pay a gold dollar.
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Its value does not depend on its own intrinsic worth, but on the promise of the Government to maintain it at par with gold.
That is, it is token money, the international money of exchange and of final redemption being gold.
It is a mistake to suppose that a government stamp that a coin or a niece of paper is worth a dollar, makes the article worth a dollar. The error of such a supposition was shown in the War of the Rebellion when Government notes for two dollars often sold for a dollar in gold.
A Government stamp cannot make fifty-three cents worth of silver a dollar any more than it can make a bushel of wheat worth a dollar when the market price is sixty cents.
But a government can issue its notes to a limited extent and maintain them at par with gold, if it promises to redeem them in gold and shows its ability to do so by keeping an adequate gold reserve.
To-day the Government maintains the silver dollar at par with gold only by agreeing to accept it as equivalent to the gold dollar and by the pledge contained in the act of 1893: "It is hereby declared to be the policy of the United States to coin both gold and silver into money of equal intrinsic and exchangeable value, such equality to be secured through international agreement, or by such safeguards of legislation as will insure the maintenance of the parity in value of the coins of the two metals," coupled with the maintenance of an adequate gold reserve.
But to do this it is essential that the issue of notes or silver dollars be limited.
Otherwise the money will not be maintained at par. When the issue of paper money during the War of the Rebellion became excessive there arose a premium on gold which continued long after the end of the war and until the paper money had been greatly contracted. A Government stamp of "One Dollar" on fifty-three cents of silver does not make the silver piece actually worth a dollar intrinsically any more than a Government stamp on every horse with white legs "One Hundred dollars" would make the horse worth a hundred dollars. But if the Government says that it will give a hundred dollars for horses with white legs, and the number of such horses is limited so that confidence is felt in the ability of the Government to buy them, they will sell for that.
So of silver; while the quantity of dollars coined is limited and the pledge of the Government is believed in that they will be maintained at a parity with gold, they will be received as equivalent in
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value to gold dollars, but they remain mere promises that they will be accepted as equivalent to gold dollars and will be maintained at a parity with gold, and in themselves have no value beyond their bullion value.The people of this country have so little gold coin in their hands and have been so long accustomed to look at the paper money, which are mere promises to pay money, as having a value in itself, that it is not extraordinary that we often find foreign born citizens with more correct ideas of financial questions than the native born, and that it takes some time to make clear to them that the final basis of valuation of the money of any country in the markets of the world is the value of the metal contained in the coin of that country.
The crucible or melting pot is the final test of value.
Where the coinage is unlimited the value is determined by the value of the cheapest coin of the country for the more valuable coin is quickly grabbed by foreigners or hoarded.
If we had unlimited coinage of gold and silver, foreigners would immediately send their silver here, obtain silver dollars, and so long as they could, would exchange the silver dollars for gold coin, take the gold coin to Europe and have it turned into their own coinage.
The Englishman, for instance, could even afford to pay a handsome premium in the purchase of gold coins when he had the silver ones, for his silver dollars would cost him only 26Ë pence in English money, while the gold coin he obtained in exchange would bring him in 50 pence.
It is no wonder that the craze for silver coinage at 16 to 1 is not thought by the world at large to argue well for the shrewdness of the American people, and that the "Journal" of New York, which supports the cause of silver, says in an editorial of July 13, 1896: "There are many thousands of Democratic voters who believe in the demonetization of silver, who regard the setting of an arbitrary ratio that opposes a commercial ratio as idiotic."
Why Is Free Coinage At Sixteen To One Inexpedient?
First.
The silverites are divided into two camps as to the effect of free coinage.
Some maintain that the enactment of a free coinage law by the United States will raise the price from 69 cents an ounce to one dollar and twenty-nine cents an ounce, and that the silver dollar will become as good a dollar as the gold dollar.
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Others concede that the result will be to reduce the silver dollars of the United States to the value of fifty-three cents.
Assuming that the price of silver is raised, as suggested, it is manifest that it can only be increased by enormous purchases by the people of the United States.
When the people of England, China, Japan and South America are willing to sell silver at 69 cents an ounce, it seems simply idiotic to offer them one dollar and twenty-nine cents.
It is manifest that the only way to raise the price of wheat, corn, cotton, silver or bicycles, is to corner the market, that is, to buy so much that people who must have it are obliged to pay your price. Why the United States should corner the price of silver more than that of any other products it is impossible to understand.
This great amount of silver can only be acquired by a startling increase of indebtedness — which will greatly raise the interest rate, or by a great sacrifice of other products.
Wind, with which the silver orators are so liberally supplied, does not buy anything.
There are now in the Treasury vaults over 500,000,000 of silver dollars and bullion, at the coinage value, which no one wants, preferring paper money, and it should be clear to any unprejudiced person that it is inexpedient to increase the amount. It is not valuable as a reserve because it is not in a marketable condition.
The United States Government commenced buying silver in 1878. The price then was one dollar and seventeen cents per ounce. It bought in all about 500,000,000 ounces, and the price fell gradually till 1893, when it was worth about 63 cents an ounce. Now it is worth 69 cents about an ounce.
Over $100,000,000 has been lost by the purchases already made, and the fall in the price of silver was not stayed.
Why should this loss be increased?
Several nations are about to adopt the gold standard. Russia has collected $400,000,000 of gold for the purpose. Austria and Chile have just completed their stores of gold with the same object in view.
Even little Costa Rica has the shrewdness to see the advantage of filling the Government vaults with a metal which is not depreciating and proposes to have a gold standard, and to appeal to lenders of capital by a promise to repay in good money.
England is anxious to substitute gold for silver in India. Why should the United States seek to buy great quantities of a metal which we see all other nations wish to get rid of, and which is, therefore, likely to fall in price? Why should we pull other people's chestnuts out of the fire? Such lack of common sense will shake our credit to its foundation.
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If, by these purchases, the price of silver is raised to $1.29 per ounce, it is impossible to see what benefit the debtor will derive from the change, for the dollar will be worth as much as now, and there will not exist the cheap dollar which the silver politicians promise him.
Second.
But men of judgment do not believe that the enactment of such a law will raise the price of silver from 69 cents to 129 cents an ounce, and, as the coinage is to be unlimited, the silver dollar will, within a year or two after the passage of a free coinage measure, be worth less than the Mexican dollar, to wit, less than sixty cents in gold, for they will contain nine per cent, less bullion. The fact that a number of nations united kept silver and gold at a commercial ratio of 15Ë to one prior to 1893, when the production was one-third of what it is now, is no argument to prove that the United States can do so by itself now when the production has nearly trebled.
If this is to be the result, the measure would not only be inexpedient but disastrous to every man in the community depending on his work for his living.
Every silver dollar and every silver certificate and legal tender note will then be worth only a little over half of the value of the gold dollar, which is the present standard of value, and all half dollars will fall in value to the same extent.
The Government has bought the silver in the dollars it has coined at the market price, which has always been less than the coinage price; and, in 1893, at a price about 60 per cent, of the coinage price, but the citizens of the United States have received silver coins from the Government at par with gold.
To have them reduced in value to fifty-three cents each would be robbery by the Government from every citizen who holds its paper or silver money.
In effect the Government would rob every one who held a paper or silver dollar of over 40 cents on each dollar.
The amount of paper and silver dollars outstanding on July 1, 1896, in the hands of the people was $735,944,226. Besides, there was outstanding subsidiary silver and National Bank notes which are maintained at par with gold, the total of all kinds being over $1,000,000,000.
If this reduction were 40 cents the robbery would be one of $400,000,000.
It would be the most stupendous robbery ever committed.
The Government will commit a fraud in stamping fifty-three cents worth of silver "One Dollar," as it committed a fraud in stamping "One Dollar" on silver which it purchased for sixty-three cents in 1893.
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The law fixing the amount of silver in the dollar as originally passed in 1878 was not a fraud because the silver bullion in the dollar was then worth about a dollar.
To manufacture a new dollar now out of fifty-three cents of silver would indeed be a monstrous fraud.
The dollar which the wage earner receives will not buy much more than half as much coffee, tea, sugar, meat and other articles as now nor will it go much more than half as far in paying rent,
Every depositor in a savings bank will have his savings reduced nearly one-half. Every beneficiary under a life insurance policy will get less than sixty per cent, of what he is entitled to, and every pensioner under the Government will find his income diminished to the same extent in purchasing power.
Third.
Whatever theory turns out to be correct the result of a silver victory in November will be disastrous.
The people in the community who have money or credit will anticipate a fall in the value of the dollar after the inauguration of a silver candidate on March 4, 1897. Such a fall would be inevitable on his inauguration for he stands pledged not to issue bonds to maintain the gold reserve.
There will be a general hoarding of gold. The immediate result will be a contraction of the currency which will be still further contracted by the payment into the Treasury of $100,000,000 outstanding legal tenders by those who wish to get this gold for export, either to buy silver, to pay debts or to put their money in Europe where it will be safe from depreciation.
Lenders are usually people who have made money by intelligence and thrift, and they will not be caught napping. They will not be such idiots as to incur the risk of being repaid in fifty-three cent dollars and will demand payment of their loans.
Mortgages will be foreclosed, securities held as collateral for loans will be sold and judgments obtained against debtors who have furnished neither.
The creditor will prefer to have land and chattels rather than a promise to pay silver dollars.
Foreigners loaning money here will call their loans and few new business enterprises will be undertaken.
When business enterprise lags, business profits cease and wages fall off. The demands of the people for necessities and luxuries diminish, and every one engaged in trade suffers.
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The result of bad trade and lack of remunerative wages is a diminished demand for the products of the soil and the farmer will suffer in reduced prices with the rest of the community.
In the spring of 1893 we had a panic due to fear as to the possibility of a depreciation of the currency. All classes of the community including the farmers are still suffering from the effects. But that panic which was caused merely by a fear that the currency might be debased would be as child's play compared with the panic which would occur if the certainty of debasement were established.
A contraction of the currency is immaterial in times of confidence, for when confidence prevails every one is much more anxious to lend money than to lock it up, but a contraction taking place at the time of the total destruction of private credit and a total lack of confidence would result in appalling disaster and no one would suffer as the debtor would.
If the silver men carry the Presidency but not Congress, panicky conditions will continue for two years. If they should carry both Legislature and Presidency no law providing for coinage at 16 to 1 could be enacted until April.
The passage of the law will not benefit the man whose indebtedness is payable in gold.
It will not benefit the man whose debt is due before March when the creditor is able to enforce his rights by seizing land or chattels.
It will be most injurious to the wage earner, for he would find it a great struggle when work was slack to raise his nominal wages, while all products which he buys, as has been said, would nearly double in price.
It will not benefit the farmer who is not in debt, for he would find that all his purchases would go up in price faster than his products would.
If a law were enacted providing that two feet instead of three feet should constitute a yard, a man would not get any more calico in exchange for a bushel of wheat though he would get more "yards" numerically.
So if the dollar is cut in half the farmer's wheat, corn, cattle, and so on, will buy him no more coffee, sugar, calico, flour and other articles.
The only people who will flourish will be the lawyer who forecloses mortgages, the Sheriff who sells real estate and personal property on execution, and the owners of silver mines and of silver ore in Asia, Australia, Europe and America, who will dump their product on the American market at fancy prices.
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Why Is It Dishonorable for the Goverment of the Unites States to Coin Silver at the Ratio of 16 to 1
The free coinage of silver dollars was abolished by law in 1873.
From 1878 to 1393 the Government bought silver at various prices and coined most of it into dollars. While the cost of the silver bullion in each dollar varied from sixty-three to ninety-five cents the Government paid out this dollar as equivalent to a gold dollar, which by Statute has been since 1873 the unit of value.
In 1893 a law was passed repealing the law providing for the purchase of silver. The repealing law contained the following pledge
"It is hereby declared to be the policy of the United States to coin both gold and silver into money of equal intrinsic and exchangeable value."
This is a pledge thereafter to coin silver of equal intrinsic value with gold, and only such.
The word "intrinsic" is synonymous with "internal," and is the opposite of "extrinsic." That is, intrinsic value means that the silver in a dollar of itself and in itself shall be worth the same as the gold in the gold dollar.
In order that a silver dollar shall be intrinsically worth the same as a gold dollar it must be thirty times as heavy, and if the United States proposes, after a lapse of twenty-three years, to reopen its mints to the coinage of silver dollars, it is bound by this pledge to require that a full dollar's worth of silver shall be put in the new coin.
The silverites may say that that pledge was not given by them. The answer is that the world at large knows only the Government, and is authorized to rely on the pledges given by the Government. The people of the country act by their representatives in Congress, and the acts of their representatives are as binding as if made by the people themselves.
If the Government cut all its gold dollars in half and required all citizens to accept them as equal to a dollar, the fraudulent character of the act would be sufficiently apparent. Yet, providing for coinage of silver at 16 to 1 is in effect the same thing.
On July 1, 1896, the circulating medium, other than gold, not in the Treasury, was as follows:
| Silver dollars | $52,175,998 |
| Legal tender notes | 225,451,358 |
| Treasury notes | 95,217,361 |
| Currency certificates | 31,840,000 |
| Silver certificates | 331,259,509 |
| Total | $735,944,226 |
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All this is now in effect maintained at par with gold by the Government.
If we have free coinage it must necessarily fall to the value of the silver dollar.
| Besides this, there is subsidiary silver | $52,175,998 |
| National Bank notes | 215,381,927 |
| Making in all | $1,003,402,151 |
All of which will depreciate 40 to 47 per cent, in purchasing power.
The total loss to the holders of this money will be over $400,000,000, which is quite appalling.
In 1895 the deposits in Savings Banks were estimated at $1,810,597,023. (World Almanac, p. 208.)
On May 7, 1896, the deposits in National Banks were $1,712,661, 272.
Depositors in both will have a proportionate loss.
Besides its currency obligations, the United States has outstanding a debt of $847,363,890 in bonds which are payable in dollars.
At the time most of these bonds were issued there were two kinds of money — the paper currency, which was in actual use by the people of the country, and gold coin, which was used in certain transactions in the cities. The paper currency consisted of promises to pay dollars and the only existing dollars were gold dollars. The purchasers of bonds were therefore entitled to count on payment in gold bonds. In 1873 the statute was passed making the gold dollar the unit of value, and subsequent purchasers have relied on that as defining what the dollar is.
The Promised Benefit to the Farmer.
Owners of Silver Mines.
The owners of silver mines will benefit greatly by free silver, but this will not be of much national benefit as the United States produces less than one-third of that produced in the world, and many of the mines in this country are owned by foreigners. There is one mine in Australia which can, it is said, produce as much silver as the United States does to-day if the price is somewhat increased.
The owners of silver mines have circulated a great deal of literature in which they have not hesitated to make the most outrageous mis-statements of fact in order to induce the farmers of the country to believe that they also would be benefited.
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The conclusion from an examination of the subject will be inevitable that the farmer whose farm is not mortgaged will receive no benefit but on the contrary will be hurt.
Where a mortgage has several years to run and is not payable in gold coin the owner of the mortgaged land will probably be better off with coinage at sixteen to one, but it will be at the expense of the prosperity of the country for the time being and at a loss to himself in the first instance which may be sufficient to prevent his payment of interest and this make his mortgage collectible.
When the mortgage is due at once free coinage will mean ruin to the farmer as to the mechanic.
Immediate Effect.
It needs very little knowledge of human nature to appreciate that if the silver candidates are elected in November every man to whom money is owing will demand payment before the enactment of a free silver law.
The value of the coinage of a country depends on what it will bring in the markets of the world, and lenders appreciate that free coinage means a dollar which will buy little more than half as much coffee, sugar, tea, etc., etc., as our present dollar does.
Foreigners who have loans here will carry off what gold they can and our own people will hoard what is left.
In view of the possibility of such an occurrence, hoarding of gold has already taken place and Americans have been buying bills of exchange on London.
The money now in circulation, excepting small silver, which is not legal tender, for more than $5 was, on July 1, 1896, according to the estimate of the Treasury department $1,457,549,202.
If the gold and gold certificates were withdrawn, there would only remain Government money, silver and
| Currency | $735,944,226 |
| And National Bank notes | 215,331,927 |
| $951,276,153 |
The National Bank notes are not legal tender. There is about $100,000,000 of gold in the Treasury. The outstanding circulation will be reduced by $100,000,000 in legal tenders paid to the Treasury in exchange for this gold.
The whole legal tender circulating medium would then be reduced to $852,000,000 which is not much more than $12 per capita.
This is less for each inhabitant than France, England, Germany, Holland, and many other nations of Europe have.
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When loans are called, the land owners will find all people, having money, unwilling to lend except in gold mortgages, and few will probably be found willing to lend on them for fear of Populistic legislation, attacking gold contracts.
Mortgagees will prefer to have farms and houses rather than promises to pay 53 cent dollars.
Although on account of this contraction of the currency the dollar will not probably fall much below the gold dollar until March, and only be at a moderate discount during the ensuing year,
In view of the difficulty of borrowing money the products of the farm will have to be sent abroad at once to sell for what they bring, as was done in 1893, and will probably go in such quantities as to bring the prices lower than at present.
The immediate result then of the prospect of this legislation in case of a silver victory in November will be the foreclosure of many mortgages on land and chattels and poor prices for the crops of 1896
Subsequent Effect.
The effect of actual legislation in March and April of 1897 is not so clear, but it seems to be unlikely that corn, wheat, pork and cotton will appreciate as the value and purchasing power of the silver dollar falls, for the foreign markets will continue to be glutted with our products.
I. — If we have free coinage, not only will we cease to export silver, but we will import considerable quantities.
To replace the silver we now export and to pay for the amount we will import, we will have to send our farm products in great quantities and sell them in overstocked markets. A continued suspension of credit here will prevent the holding of products and the general sale of agricultural products will produce a glut which will play havoc with prices. The fact that the farmer will pay his men in depreciated currency is not likely to offset this loss.
II. — Another important consideration for him is that we are now on the same standard as the countries to which nearly all his products are exported.
Though we have little gold coin in circulation all prices are fixed by the gold standard. If we go to a silver standard our prices will vary from day to day as compared with European prices as silver goes up or down, just as our paper did during the war. Purchasers of farm products
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will always wish to guard against alteration in exchange between the time of purchase on the farm and its final disposal in Liverpool.As there are many middlemen who will be obliged to charge a commission to guard against this risk, the price in the hands of the farmer will be diminished.
This is one reason why it is so important, for him to have the gold standard which other enlightened nations to which he sells his product have.
III. — But even if the price of his products were to appreciate in nominal dollars as the value of the dollar falls, he will benefit in no respect, because ail the articles which he must buy will appreciate as rapidly as his product does.
Free silver cannot improve the power of the products of the farm in purchasing other articles.
It is true that when the silver dollar has depreciated as expressed in gold to fifty or sixty cents the farmer will get more of these cheap half dollar coins than he got before, but he does not wish to store these silver dollars, and for alt purposes of making purchases they will not be worth fifty to sixty cents. If his mortgage is payable in gold they will not have that value and he will find that his taxes will go up in proportion.
The store keeper will be quicker in marking up the price of his goods than the farmer can-be in increasing the price of his corn.
IV. — The great permanent injury to the farmer, however, as to all business men, will be the great difficulty of borrowing money except at exorbitant rates. There is nothing which pays better than having good credit, for the profits of farming as of other business depend largely on the rate of interest which must be paid on the loan of money.
The man who threatens to repudiate his debts drives off all conservative lenders who ask moderate rates of interest and makes himself the slave of usurers who take his uttermost penny.
There is no known means of compelling a man to lend money to another.
Conservative men prefer to lend in Wisconsin at five per cent to lending in Kansas at eight per cent., due largely to the success of the Populists in the latter State and to the hindrance there of creditors in the enforcement of their legal rights.
The discount rates for notes in New York is often at the rate of 3Ë per cent. a year. In some parts of the country it is several times as much. In England it is about 1Ë per cent. a year.
This rate of interest not only affects the farmer in his own loans but all the business men in his district in their purchases, and the price of all his purchases is affected by the credit of the storekeepers with whom he deals.
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V. — The position of the man whose debt is payable in gold will be a deplorable one.
At present his creditor accepts paper money or silver because the Government has undertaken the job of maintaining all this at par with gold.
But when the coinage of silver becomes unlimited the Government can no longer do this and by the Democratic platform is especially prohibited from doing it by the clause against issuing bonds to buy gold, so the debtor must procure the gold himself to pay the interest and principal of his debt.
VI. — The silver orator tells the farmer he will be better off with more money in the country, without specifying how the farmer is to get into his possession any part of this additional money.
But as a fact, while we will have a great many more nominal dollars, each one will be worth less than sixty cents, so that the money will not have any greater purchasing power unless the farmer and manufacturer sell abroad a great deal more of their products, and they can only do that by selling them more cheaply than other nations are now doing or Government sells bonds which the Populists are pledged not to allow. Either method can be adopted better on a gold standard than on a silver one.
The only way to have more money in the country, as in the pockets of an individual, is by selling more products or by borrowing it. The people of Europe are most anxious to invest in this country at 3Ë to 4 per cent. interest, if they can only be satisfied that they will be repaid in as good money as they lend. The people who are clamoring for more money would not benefit by an increase of the store of money, for they have not the capital with which to draw it into their pockets. No increase in the amount of money in circulation will benefit those who have no means of getting it either by selling their products at better prices or their labor at better wages or by borrowing it on the security of their property.
Money has two uses: First, as a standard of value. Second, as a medium of exchange.
As a medium of exchange, bank credits are as useful as money. What the people who call for money wish is credit. Money in all countries is very small in comparison with the total credits.
Transactions of thousands of millions of dollars are made daily on the $250,000,000 of gold in the Bank of England.
What commerce and manufacturers need is general confidence and general credit. A bank credit is as valuable to a business man as cash.
The condition of credit, resting on general confidence, affects prices
17
many times more than the money in circulation. This is naturally so because the transactions depending on credit, bank credits, manufacturers three months' notes, merchants six months' notes, are many times the currency transactions.A sound money naturally begets credit, for the man who has gold does not wish to hoard it. He only does so for fear he cannot have it when he wants it.
If he is confident he can, he prefers to lend it, and it does work in a dozen ways. He lends it on mortgage. The mortgagor deposits it in a bank. The bank lends it to the merchant. The merchant buys of the manufacturer. The latter pays his employees, who buy Western products. Owing to the marvelous modern system of credit, all this can be done with the same dollars in bank.
The only essential to the existence of liberal credits in this country is confidence in the maintenance of the gold standard.
The amount of money in circulation is a trifling matter.
To put it differently, these people need capital, and they are more likely to acquire that with a sound currency and confidence prevailing than under opposite condition.
Every man who earns more in a year than he spends becomes a capitalist, and he can keep the net gain in money, if he so prefers, under the present standard as well as any other.
That there is plenty of money is shown by the fact that the interest rate for bankers' loans in London has averaged less than ž of 1 per cent. per annum for the last two years, and call loans in New York less than two per cent. There is a lack of confidence and few new enterprises, which make booms. There is no lack of money. No more money is required, but more active and general circulation of what there is. Double the amount will not benefit farmers if it continues to stagnate.
VII. — The silver orator also tells the farmer that it is unjust that he should pay his debts in a dollar which buys much more wheat and cotton than the dollar did when it was loaned to him. It does seem hard on the farmer, but he was loaned dollars equal in value to gold dollars and not wheat or cotton, and his contract was to repay in dollars, not in wheat or cotton.
The United States statutes fixed in 1873 the standard of value and defined what the dollar is. The statute provides that gold dollars shall be "the unit of value" (U. S. Rev. Statutes, § 3511). That gold dollar had been since 1837 in actual practice the standard of value. Nearly all farmers' loans have been made since 1873. The man from whom the money was borrowed does not see it in the same light as the farmer, for he expects to be repaid in dollars, and he finds that all his expenses
18
in the city average about as high as they ever did. In fact, his rent is higher.The fact remains that there stands the promise to pay the money, and the lender is going to insist on prompt payment if he sees any immediate prospect of being paid in fifty-three cent dollars, and the borrower will look in vain for a fresh loan from other parties, when all credit is shattered by the election of a Populistic candidate to the Presidency.
The fact that in a year or two a nominal inflation of the currency by the substitution of fifty-three cent silver dollars for the present paper dollar will send prices up in the new fifty-three cent dollars, will be little consolation to the man who has been brought to bankruptcy. He will regret that he has not waited for the gradual readjustment of production to the demands of the market, when he will find that the farm, which was sold on foreclosure, rents for double the interest he used to pay on the mortgage.
VIII. — It is quite useless to discuss the much mooted point as to whether the fact that many nations have abandoned the free coinage of silver since 1870 has affected prices.
We have no means of compelling them to resume the coinage.
Free coinage of silver by us is not going to diminish the purchasing power of gold in the world unless it increases the gold supply of the world in a marked degree. The gold coin of the world is estimated at $4,000,000,000, and we can only add to it by substituting silver for gold here and shipping the gold to Europe.
We have a certain amount of gold hoarded here. Some $25,000,000 in circulation in California and less than $300,000,000 in the Treasury and National Banks together. This latter is the only part that can be exported and it would be a small addition to the gold supply of about 5 per cent., and is not much more than the annual product.
But the free coinage of silver is not going to do away with the use of gold any more than paper money in the war did away with its use.
On the contrary, more gold will probably be needed.
A great mass of mortgages, bonds and notes are payable in gold. A great mass of transactions must then be carried on with gold coin, and as no banking facilities will be allowed by the Populists for these transactions, they must necessarily be carried on in gold itself, as is done in California to-day, so that it is likely that the country will need even more gold than the $250,000,000 which is now in the National Banks and Government vaults.
No increase of the gold supply of the world will result for we will have none to spare.
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On the contrary if we are on a sound gold basis all hoarded gold will come into circulation.
IX. — The great claim of the bimetallists has been that silver-using countries were likely to undersell gold-using countries, because the laborer in the silver-using countries took his ten to thirty cents daily wages in depreciated silver, not appreciating that its purchasing power had diminished so much in ten years. Such a factitious prosperity here will not benefit the farmer, for lower wages to the working men means lower purchasing power, and the increased gains of the manufacturer will be used in purchasing luxuries, not in purchasing more bacon, flour and corn.
There can be no advantage to the farmer in our being on a common standard with silver-using countries, such as China, Japan and India, for they buy none of the farmer's products and little of any of our products. Our best customers are the gold countries, and they always must be because they are the wealthy countries. In China, India and Japan, ten to fifteen cents in gold are considered liberal wages.
| For the year ending June 30, 1895, of our total exports of | $793,392,699 |
| We exported to Great Britainworth of our goods. | 385,132,970 |
| To Germany we exported. | 90,615,551 |
| To France | 44,009,786 |
| To Canada nearly | 50,000,000 |
While, to the silver countries, our exports were:
| British India | $2,851,830 |
| China | 3,602,741 |
| Japan | 5,164,847 |
| Mexico | 14,582,484 |
The people of the silver countries are too poor to buy of us.
20
The Democratic Platform.
First Misstatment.
It is natural that a platform which demands that the Government shall perpetrate a great fraud on the mass of its citizens by stamping on fifty-three cents of silver "One Dollar" and permitting the owner of the bullion to pass it off as such, should contain many falsehoods.
"The Constitution names silver and gold together as the money metals of the United States."
An examination of the Constitution does not show any requirement that silver and gold shall be the money metals of the United States.
As a fact, we have now more silver than gold in circulation.
The result of unlimited coinage of silver will be to drive all gold out of general circulation, for it is a universal rule that cheap money always drives out the more valuable.
If I am an importer of coffee, and the gold in the gold dollar is worth twice what the silver in the silver dollar is worth, I naturally send abroad the gold dollar to pay for the coffee.
It is for this reason that where a country has coins of two separate metals, the most valuable one disappears and monometalism of the cheaper coin results.
Second Misstatement.
"We declare that the Act of 1873 demonetizing silver without the knowledge or approval of the American people has resulted in the appreciation of gold and a corresponding fall in the prices of commodities produced by the people."
I. — It has been repeatedly shown that the statement as to the Act of 1873 having been passed without the knowledge of the American people, is an absolute falsehood. The change was suggested by the Comptroller of the Treasury in his annual report in April, 1870. The bill was first presented in May of that year. Months elapsed between the time of the first introduction and the final passage of the act. It passed the Senate in January, 1871. It was then sent to the House of Representatives, where it was several times debated and amended, and
21
passed in May, 1872. It was then returned to the Senate and finally became a law in February, 1873.The reason of the passage of the act is very simple.
At no time since 1837 had any considerable number of silver dollars been coined, because the silver bullion contained in a silver dollar was from 1856 to 1873 worth more than the bullion contained in a gold dollar. The silver in the dollar in 1873 was worth $1.32. The coinage value was only $1.29, and an excess of actual value over coinage value had existed for many years. Consequently, no man ever thought of taking silver to the mint and having it coined, and in 1873 most of the silver dollars which had been coined by the Government had been exported or melted over to obtain the silver in them.
It was stated at the time of the passage of the act that it was cheaper for the Government to supply jewelers with bar silver than to go to the expense of coining dollars which were to be melted up at will.
The total coinage of silver dollars June, 1837 to 1871 was only 4,058,385, which is less than $120,000 a year.
From 1862 to 1879 the current money was paper. There were large transactions in gold coin, and the value of the paper money was fixed in relation to that, but there were no transactions in silver coin except in furnishing supplies to silversmiths.
The silver dollar was obsolete as currency and the Statute merely established by law what custom had established as a fact. The law was openly discussed in the Senate and the House of Representatives, and there was nothing secret about it.
The price of a fine ounce of silver in 1873 was $1.32. and in 1874 it was $1.30, which shows that there was no suspicion then that any practical difference was made by the repeal of the law.
II. — It is not true that this act of demonetization has resulted in the appreciation in the price of gold.
If one accepted all the statements of the silver orators as true without investigation one would conclude that the present reduced circumstances of many farmers was due to an act passed twenty-three years ago.
If this were so it would indeed be marvelous that the country has had to wait so long as it did for the disastrous effect of the law of 1873 to show themselves.
As a fact, the period from 1879, when specie payments were resumed, to 1890, was the most prosperous which this country has ever had. The growth of the country and of the cities and the railroad building was something unexampled on the face of the globe.
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| In 1890 the assessed valuation was | $25,743,173,418 |
| In 1880 the assessed valuation was | 17,139,903,495 |
| Showing an increase of | $8,603,269,923 |
In assessed valuation of property, real and personal, in the United States in ten years. The true value as estimated by the Census Bureau leapt from $43,642,000,000 in 1880 to $65,000,000,000 in 1890.
To look back to 1873 for a cause for the lack of prosperity since 1892 is preposterous.
In 1892 wages and city rents were as high as they had ever been.
To any rational man this is conclusive evidence that our misfortunes are not due to any act passed in 1873.
And how trifling was the demonetization? As has been shown the total coinage of silver dollars from 1837 to 1871 has been only $4,058,385. Yet the country was growing and prospering all the time.
Our lack of prosperity dates only from 1892 and some other cause than the Act passed in 1873 must be found to explain it. Besides if the Act of 1873 had not been passed it is unlikely that the acts providing for the purchases of silver by the Government would have been passed.
Had they not been, when lenders saw the tendency of silver to diminish in price they would have been even more inclined, than they have been, to insist on the gold clause in bonds and notes. A great amount of business involving large transactions would have been conducted on a gold basis.
The obligations payable in gold are, however, sufficiently enormous as it is.
As the paper money of the country would all have been on a silver basis, those transactions would have been carried on largely in gold itself, as is done in California to-day.
To do this business would probably have required a much larger sum than is now held as gold reserve by the Treasury and banks, amounting to less to-day than $300,000,000.
The Act of 1873 has not in fact resulted in any appreciation of gold, but has permitted the substitution for it in a great mass of transactions of silver or paper currency based on the confidence felt that the Government would maintain both silver and paper at a par with gold, and to that extent has diminished the demand for gold coin itself.
III. — It is equally false to say that the demonetization of silver by the Act of 1873 has resulted in a fall of prices of commodities.
As has been shown, the Act of 1873 tended to diminish in this country the use of gold by substituting for it paper money and silver.
That Act, therefore, has had nothing to do with the fall of prices, for it did not increase the demand for gold here. Moreover, it does not
23
seem to be the fact that the fall in the prices of the staples, such as wheat, corn, cotton, oats, is due in any respect to any diminution in the amount of gold. The world's stock of gold coin to-day is estimated to be $4,000,000,000.Gold to the value of $2,600,000 has been produced since 1872.
Besides, since 1872 there has been as much silver coined as in any similar period of the world's history.
But there was no great general depreciation of prices down to 1890.
Comparing the prices of 1890 with those of 1870, we find a fall in the price of cotton because the crop had not in 1870 recovered from the devastation of the war, and of wheat and silver because apparently of the great increase in production; but other articles show a varying scale and no general fall. The following table is taken from Mulhall's Dictionary of Statistics, and gives the prices in England:
| Coffee. | Copper. | Iron. | Leather. | Meat. | Timber. | Wheat. | Wool. | |
| 1870 | 134 | 83 | 88 | 128 | 123 | 99 | 80 | 90 |
| 1890 | 186 | 64 | 109 | 130 | 123 | 115 | 56 | 120 |
The same point is illustrated by the prices for bacon, lard, pork and beef taken also from Mulhall. The prices are on the gold basis.
| Bacon. | Lard. | Pork. | Beef. | Tobacco. | |
| 1872 | 36 | 42 | 30 | 30 | 43 |
| 1873 | 36 | 37 | 32 | 32 | 44 |
| 1879 | 32 | 33 | 27 | 29 | 36 |
| 1881 | 38 | 44 | 35 | 35 | 39 |
| 1882 | 47 | 54 | 42 | 42 | 39 |
| 1883 | 53 | 56 | 46 | 46 | 40 |
| 1884 | 48 | 45 | 37 | 37 | 42Ë |
| 1889 | 39 | 39 | 35 | 35 | 41 |
If the demonetization of silver in 1873 had any effect on prices, it would surely have shown itself by 1890. That demonetization cannot be used to explain a fall which has largely occurred since 1890.
Cotton, wheat and silver were indeed lower in 1890 than in 1870, and have fallen further since 1890, but there was an evident reason for each in the enormous increase of production, to wit: of wheat in the Argentine Republic and Russia, of silver in this country and Mexico, and of cotton in India and Egypt.
In 1870 the cotton crop was 3,154,976 bales, and for the five years, 1866-70, the annual average was 2,480,348 bales.
In 1890 it was 7,313,726 bales, and for the five years, 1891-5, it averaged 8,366,269 bales annually.
In 1870 the wheat crop was 287,745,626 bushels. In 1890 it was 399,262,000, and for the five years, 1890-94, the annual average was 476,678,028
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bushels. It may be added that in 1870 the corn crop was 760,944,549 bushels. In 1889 it was 2,112,892,000; in 1890, 1,489,970,000; in 1891, 1,060,154,000, and for the five years, 1891-5, the annual average was 1,601,170,836 bushels.The importation of wheat into England, our best customer, from Argentina has increased as follows:
| 1892. | 1893. | 1894. | |
| Cwt | 3,466,096 | 7,745,587 | 13,272,152 |
Prior to 1892 the trade returns do not specify how much came from Argentina, but it is lumped with several other countries as follows:
| 1887. | 1888. | 1889. | |
| Other countries | 1,322,237 | 2,513,407 | 1,379,650 |
Argentina in 1894 sent nearly as much wheat to England as was shipped from all our ports east of the Rocky Mountains.
Russia sent last year over 25,000,000 cwts of wheat to England, which is about five times what she sent in 1887.
The importation of cotton into England from Egypt has increased about one-third since 1887.
Increased production seems to be also the cause which has operated to reduce the value of silver as can be seen by this table which shows the annual production in ounces:
| Year. | Silver. ozs. |
| 1873 | 62,572,004 |
| 1874 | 64,360,372 |
| 1875 | 59,802,353 |
| 1876 | 63,537,256 |
| 1877 | 68,270,556 |
| 1878 | 72,648,794 |
| 1879 | 75,205,710 |
| 1880 | 76,472,737 |
| 1881 | 81,268,961 |
| 1882 | 87,619,253 |
| 1883 | 89,350,190 |
| 1884 | 86,218,220 |
| 1885 | 93,448,915 |
| 1886 | 95,511,178 |
| 1887 | 98,115,529 |
| 1888 | 107,696,915 |
| 1889 | 124,199,779 |
| 1890 | 132,028,344 |
| 1891 | 137,965,412 |
| 1892 | 152,939,986 |
| 1893 | 166,100,277 |
| 1994 | 167,752,517 |
| 1895 | 165,500,000 |
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The statistics given show an increase in the production of wheat, corn and cotton, similar to that in silver, and at the same time a fall in the price of each.
When we come to examine articles where there has been no great increase in production there is no similar fall in price.
Lumber is a good example of a product which has not decreased because there has been no increase of production as compared to the demand
So in meat. The price of prime butchers' meat in England has been as follows:
| 1857. | 1870. | 1880. | 1890. | 1891. | 1892. | 1894. | 1895. |
| 105 | 123 | 119 | 123 | 126 | 139 | 143 | 140 |
The effect of the quantity of production on the price was well illustrated by the price of cotton in 1895.
By reason of an agreement among planters not to use fertilizers the crop was greatly reduced and the price of good ordinary on the New York market in December, 1895, was 7ź cents, while in December, 1894, it had been 4 9/16 cents. If the cotton growers wish permanently to raise the price of cotton let them stop exporting seed. The Egyptian plant dies out in a few years if left to itself, and little would be produced there if the American seed could not be used to grow new plants.
A small corn crop has often brought more money in gross to the farmers than a large one, the increased price per bushel more than compensating for the lessened product per acre.
This is only natural. The man who produces more than he can consume will sell the balance at the best price he can obtain. He would rather sell it than get nothing for it, even if it were ten cents a bushel.
When the amount produced is more than the usual purchasers will consume it must find a market at a lesser price for others who have not been accustomed to buy it.
It is quite evident that the price of the whole crop is fixed by the lowest price paid.
To put it differently, where the amount produced is greater than the country will consume, the surplus must be exported, and it must appeal to consumers there who have not used it before by its cheapness. No one in America will pay more for it than these new consumers will after deducting from the price they pay the cost of freight, so the price of the whole product is fixed by that price, that is, by the lowest price paid.
Even if it were shown that the price of silver fell with that of other articles it would not follow that there was any relation between the two. As a fact, however, the fair deduction is that the decrease in prices of these staples has been brought about by increased production, with no
26
similar increase in the population of the United States and Great Britain, the principal purchasers of our farm products, and not by the Act of 1873.Third Misstatement.
"We are unalterably opposed to monometalism which has locked fast the prosperity of an industrial people in the paralysis of hard times."
There is no monometalism in this country and none is contemplated.
There is more silver in the Government vaults than gold. There is more silver and currency certificates in the banks than gold and gold certificates.
There is more silver and silver certificates in the hands of the people than gold.
Let anyone examine the money that comes into his hands. He will look in vain for gold or gold certificates.
The current money of the country is almost all silver or paper currency.
If any more silver is coined the country will be on a purely silver basis, because it is a well-known rule that cheap money drives good money out of circulation.
If a man can use a gold dollar to pay for coffee or butter in Brazil, wool in Australia, sugar in Cuba and tea in China, he takes that away and leaves the silver dollar.
Times were flourishing down to 1892. The improvement was continuous from 1879, when we resumed specie payments, down to 1890.
The unprejudiced man therefore looks to causes, which commenced to operate then, to explain them, not to something which happened nearly twenty years before.
In 1890 we find that Congress passed the Sherman act, which provided for monthly purchases of $4,500,000 ounces of silver, and the Dependent Pension Bill.
Both operated to deplete the treasury of its gold reserve and thereby to cause a feeling of insecurity as to whether the Government could maintain its paper money and silver at par with gold. We could have stood one without the other but not both combined. In 1890 also occurred the Baring failure, which caused a blow to credit throughout the English-speaking world.
Those seem to be the most natural causes which explain the disastrous panic of 1893, resulting in the present depressed prices of products
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without discussing the question of the effect of the tariff laws. The Sherman act was the most permanent, in its effect, for it caused foreigners to withdraw their capital from this country for fear of being repaid in depreciated money.To this is to be added the fact that there has been a marvelous development of agriculture in the Argentine Republic, and in Russia, which has taken away the market for our great staples. The cure for the latter cause is to produce other articles of export, but the most essential matter is to defeat those who wish to debase the money of the country and to restore confidence in our national integrity.
We will then share in the prosperity Europe is now enjoying after having completely revived from the effects of the Baring failure.
Fourth Misstatement.
"Gold monometallism is a British policy."
It was as much an American policy down to 1878. It is what the most enlightened and prosperous nations, except our own, are aiming at, for it means storing in their vaults and in the pockets of the people a metal which other nations prize and which will be of value when the nation finds itself threatened with a foreign war.
Money forms the sinews of war and money in international relations means gold.
A great store of silver would be of little use, for nations are gradually discarding it.
Gold monometallism would give the Government as fine a credit as any in the world. Before the silver scare appeared, our Government bonds bearing two per cent. interest were selling above par. People who have gold don't wish to hoard it. They prefer to lend it at interest, but they insist on a promise to repay gold, and the borrower is not the one who can fix the terms of a loan.
What harm would come if it were a British policy if it be a good policy? It has made London the banking centre of the world and has had much to do with making Great Britain the richest nation.
Wages are higher in the British dominions in America, Australia and Europe than in any other countries except our own.
They are extremely low in the silver standard countries — China, Japan, India, Mexico, etc.
Fifth Misstatement.
"It is not only un-American, but anti-American."
As a fact, it is more American than any other system. From the foundation of the Government substantially the only current metallic coin down to 1878 for a dollar or more was gold.
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From 1837 to 1873 we chose a coinage ratio of 16 to 1, while European nations had a ratio of 15Ë to 1, in order to draw gold here and we kept gaining all the time.
The total of the silver dollars coined from 1793 to 1877, inclusive was $7,831,138, while the gold coinage of dollars and multiples thereof was between 1837 and 1877 $978,222,869, and between 1793 and 1877 it was over $1,000,000,000.
The silver dollar was, in fact, never in practice "the dollar of our daddies." It was coined only in small quantities in comparison with gold, and was generally sent to the melting pot soon after it was coined because all that time the silver in it was worth more than the gold in the gold dollar.
Who has ever seen a silver dollar, coined prior to 1877, in active circulation?
The only existing coins of a date prior to 1877 are kept as curiosities.
No Longer a Free Country!
The Chicago platform contains the following clause: "We favor such legislation as will prevent for the future the demonetization of any kind of legal tender money by private contract."
The intention seems to be to forbid gold contracts.
The Declaration of Independence is to be ignored. Men are no longer to be free to follow the ordinary pursuits of a trading community. Americans alone among the people of the world will be forbidden to trade in gold, the commodity used by the whole world as the standard of value in international trade.
The Populists in South Carolina invented State distilleries and prohibited individuals from selling liquor. Now they purpose to interfere with all business and require the conduct of our foreign commerce to be carried on in London where gold contracts will continue to be legal.
What It Means By the "Gold Standard"?
A gold standard does not mean that all the paper money of the country is to be replaced by gold.
It means substantially the same condition of affairs as exist now, except that the revenues of the Government must be made to exceed its expenditures, and that gold be substituted for about 100 millions of Government paper.
We have now the gold standard.
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There must be standards by which by common consent articles can be weighed, measured and sold.
A brick of metal was sent over here years ago from England, which was the standard English pound.
When I wish to buy a pound of sugar I do not send to see that it equals in weight that brick which is the standard of weight, but I accept the weights which Mr. Fairbanks sells with his scales.
When I wish to buy a yard of cloth in the same way I accept the usual tape line without comparing the cloth with the legal measure of length. And when the coffee merchant sells the coffee he paid for in English sovereigns he does not require gold dollars, but accepts Government paper kept at the gold standard.
The pound and the yard are two standards, one of weight and one of length. They do not vary, and when I make a purchase I know what I am getting. The essential quality of a standard is absolute stability.
In measuring values nothing has been found which is as stable as the pound and yard are stable, but the commercial nations of the world have as a fact adopted gold as the standard of value.
This has been done for several reasons, among others because it is more desirable, being less bulky and the most durable and stable in value. It is preferred to silver chiefly for two considerations:
First, because the bulk of gold is so much less. It is a common occurrence to find it necessary to transport from one country to another $1,000,000,000. If gold is sent the weight is less than one-fifth of a ton. If silver were sent it would weigh over five and a half tons. In the same way in all rich countries where large payments are made, the weight of the silver coin makes it prohibitory as a suitable medium of exchange.
Second, because from 1870 the production of silver has increased at such a marvelous rate. From 1865 the annual production of gold and silver has averaged as follows:
| Gold. | Silver. | |
| 1866-1870 | 6,270,086 | 43,051,583 |
| 1871-1875 | 5,591,014 | 63,317,014 |
| 1876-1880 | 5,543,110 | 78,775,602 |
| 1881-1885 | 4,794,755 | 92,003,944 |
| 1886-1890 | 3,461,282 | 108,911,431 |
| 1891-1895 | 7,073,993 | 151,357,707 |
In view of the great increase of production, a reduced value for silver seemed to be inevitable, and consequently the intelligent nations, not wishing to be made the dumping ground for a metal which seemed likely to depreciate in their hands, have ceased to allow the free coinage of it.
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It will be seen that the annual average production was twice as great from 1886 to 1890 as prior to 1871, and from 1890 to 1895 has been three times as great.
The silverites never give this table showing the production in ounces, but give tables showing the value of the product.
If the producer of wheat, cotton, corn, wishes the money in order to hoard, he may prefer one metal to the other, but producers do not as a rule wish to hoard. They wish to buy other products with the proceeds of their sale of their products.
The prices of products in relation to each other are fixed by the supply and demand for each, and whether that standard is the present gold dollar or the proposed silver dollar equal to fifty-three cents in the present coinage, the amount which a bushel of wheat will purchase of other articles will be the same.
Whether we have a gold standard or a silver standard, a bushel of wheat would not purchase more than two-thirds as much lumber in 1890 as it would have done in 1870.
If a law was passed to-morrow making a half a yard a yard, a bushel of wheat would purchase as much calico as it does to-day, although the nominal number of yards would be greater.
So if a law were passed making the Mexican silver dollar, worth fifty-four cents, our standard of money, or making one-half of our gold legal tender for a dollar, the bushel of wheat would buy no more yards of calico than it does to-day, although nominally the bushel of wheat and the calico would sell for more cents than they do to-day.
There is no fear as to an inadequate supply of gold. The production has increased greatly. It is as follows, valued in dollars:
| Annual average. | Total for the period. | |
| 1493-1600 | $4,679,000 | $501,640,000 |
| 1601-1700 | 6,063,000 | 606,315,000 |
| 1701-1800 | 12,628,050 | 1,262,805,000 |
| 1801-1850 | 15,749,260 | 787,463,000 |
| 1851-1890 | 120,171,164 | 4,806,865,600 |
| 1891-3 | 144,907,566 | 434,752,700 |
| 1894 | 180,626,100 | |
| 1895 | 203,000,000. |
If the silverites merely wished to guard against an appreciation of gold they would have asked for free coinage at the commercial ratio of 30 to 1, for then if gold appreciated, coinage of silver would protect the country against the evils which they dream will come. What they really wish, however, is a cheap dollar, and that is why the cry is 16 to 1.
The silver talk about national bankruptcy ensuing if legislation in favor of the gold standard is enacted has no support in fact.
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The income of the Governnment for the year ending June 30, 1896, was $326,189,227. The interest paid on bonds was $35,386,488, a little over ten per cent.
There are few nations in Europe of which the Government has so light a burden in proportion to its resources.
The Government expenses were ten times the amount of the interest, and it would take very little exercise of economy to reduce these expenses ten per cent. That farming communities have gone heedlessly into debt at extravagant rates of interest, which are prohibitory of profits to the farmer, no one will deny, but free coinage of silver will not avoid bankruptcy, if it is imminent. There is nothing dishonorable in a man being unable to pay his debts, but an attempt to pay them in depreciated coin is.
The meaning of the word "dollar" was fixed in 1873, when the gold dollar was declared to be the unit of value, and every attempt to pay past debts in less than that is an attempt to pay in depreciated coin.
The Issue.
As to whether gold, monometallism or bimetallism would be better for the world at large, clever men greatly differ.
As to whether the United States would be better off by substituting, for all legal tender notes and National Bank notes, silver coin of full intrinsic value, that is at a rate of 30 to 1, made of silver bought by the Government, men may fairly differ.
As to whether the United States would be better off if we were on a purely silver basis by having free and unlimited coinage of silver at the existing commercial ratio, men may honestly differ.
But no man who has examined into the subject without prejudice can fail to conclude that if the United States stamps "one dollar" on a piece of silver, which, to-day, can be bought for fifty-three cents for every person who brings silver to the mint, the result will be disaster and dishonor.
The issue in this campaign is not monometallism or bimetallism. It is not gold standard or silver standard.
It is national honor or dishonor!
It is one of the most momentous issues which the American people has ever had to face, and, if the verdict is for national dishonor, no American can face people of other nations without a blush of shame for his country.
The demagogic politicians who support the Chicago ticket foreseeing that they have no arguments which can result in the election of their
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eloquent though sacrilegious leader are attempting to make this a campaign of the West against the East, of debtor against creditor, of labor against capital.But there are no such issues. It is as vital to labor to have an honest dollar as it is to capital. It is as much to the interest of the debtor as it is to that of the creditor to have confidence in the stability of the currency maintained. The honor of the American people should be as dear to the West as to the East.
In this matter the interest of the East and of the West, of creditor and debtor and of capital and labor are one.
Capital seeks active business in order to obtain income. Labor seeks active business in order to obtain wages.
The lender wishes prosperous times so that he can be sure of his interest. The borrower wishes prosperous times so that he can satisfy this claim and not incur the risk of the loss of what he has.
The prosperity of the West means prosperity for the East. The prosperity of the East means enlarged markets for the West.
It is to be hoped that the people of the West will on November 3 put the stamp of their disapproval on these new demagogic appeals to sectionalism and class prejudices.
August 1, 1896.
Notes
nts
| 1879. | '81. | '83. | '85. | '87. | '89. | '91. | '93 | '94 | June '95. | |
| corn | 47.1 | 55.2 | 68.4 | 54 | 47.9 | 47.4 | 57.4 | 53 | 46.7 | 52 |
| silver | 51 | 52 | 50.5 | 50 | 45 | 42 | 47 | 38 | 31 | 31 |