fej^fe -^ '' it""' "V N «*** l^llSS SI i' .,™vv..y.-- %^i|#fe #|^- 3 * iisJSl .- 'ShfS'*'*:* ■s'r /&"*' -,-.4 -T: 1 '-& wm :|v-ji^!^^^2^J^Si;^ i' '■., J< v ft., u «il2Hw - '"|gf*V" :-. if/"'-' : - M00& ■' ^ «# ^Sss^ ^B*l L .ana? *S*i2 „f jjgB&0k~J!fijf3i * aSsi&S ■ ^^^^Pfc '/" 'it *^ : i3^' I^^P&Jt -u ;/■"■ ~3££*>i-jj JP* 8 ,4 HG 297.W5 rne " UniVersi,y Library T ™8Jf" •J^teEyte* il«mw in «o the w 3 1924 013 858 ■i-iiiammir aas-DATE DUE M$lf IT QAYLORD PRINTED IN USA The Gold Standard. <*=a HOW IT GAME INTO THE WORLD AND WHY IT WILL STAY. A HISTORICAL SKETCH WITH SOME PRACTICAL - REFLECTIONS THHREON. BY- Horace White. AN ADDRESS BEFORE THE CONGRESS -OF BANKERS AND. I • •-"-'■ -■■:'-■ ■ " " FINANCIERS AT CHICAGO, JUNE no, 1893. The Evening Post Publishing Co., NEW YORK CITY. >:. .-'j-Vr'C'—"'^ ■• o?V \ - ■/ ■ •- • " ■ 'i.' ^ / ;*•■'" LIBRARY JO* 16 194/ AGRIC. ECON • & farm mgt: <£L AS' r 3/!fCi THE GOLD STANDARD. The most impressive fact in the world of finance is the dominance of the gold standard. A year or two ago Rumania passed under its sway, to-day it is Austria, next year or soon it will be Russia, by and by it will be India, and meanwhile it has lost no ground that it has ever held. Three international conferences have been assembled to stay this conquer- ing march, while none has been called to promote or assist it. Yet the movement has been as little im- peded as that of an ocean steamer would be by the action of a debating society in its own cabin. Is all this due to human perversity, or has it a rational cause founded in the needs of mankind ? THE EXPERIENCE OF ENGLAND. The first nation to adopt the single gold standard by law was England. This was really done in 1798, although the date usually assigned to it is 1816. The pound sterling was originally a pound weight of silver, divided into twenty parts called shillings, and each of these into twelve parts called pennies, or pennyweights. Gold made its first appearance in the coinage of England in the reign of Edward III. (A. D. 1345). The ratio of gold to silver fixed by royal de- cree in this coinage was about 12^ to 1. From this period to the forty-third year of the reign of Elizabeth there were nine debasements of the silver coinage accompanied by changes in the gold 2 The Gold Standard. coinage, but as these were arbitrary acts of the reign- ing sovereigns they possess no scientific interest. In the forty-third of Elizabeth (1601) the last debasement was made. The pound weight of silver was then coined into sixty-two shillings, and the pound of gold into thirty-three and one-half sovereigns of seven pennyweights and four grains each, the ratio of gold to silver being 11 to 1. The silver coinage being henceforth unchanged, it becomes possible to trace the commercial variations of the two metals and to observe the ineffectual struggles of society and gov- ernment to keep both of them in use as legal-tender money. Queen Elizabeth died two years later. Before her successor, James I., had been on the throne three years, gold had risen in value as compared with sil- ver, and the gold coins were exported to such an extent that it was necessary to diminish their weight about 1 1 per cent. The ratio now established was a little more than 12 to 1. In the ninth year of the same reign the gold coin began to be exported again, so that it was necessary to make a new change of ratio. This time the ratio was fixed at 13 to 1. But this was too great an ad- vance in the rating of gold. An exportation of silver set in which caused great inconvenience in the king- dom. Instead of readjusting the ratio the King, in the year 1614, issued a proclamation prohibiting the exportation of the precious metals. The proclamation had no effect. So another one was issued in 1618 re- affirming the first one and forbidding the melting of coin for the purpose of making plate, although a cer- tain amount might be used for repairing old plate and keeping it up to its original standard. As the evil continued a third proclamation was issued in 1622 The Gold Standard. 3 and a fourth in 1624. None of these had any effect except to make an historical record of the futility of attempts to enforce a legal ratio which is different even in a slight degree from the market ratio. It was customary during this period to pay a premium of two pence for silver change to the amount of 20 shil- ings. Soon after Charles I. began his reign he issued a proclamation on the same subject, reciting the pre- vious ones of his father and acknowledging that they had been disregarded. In 1636 seven persons accused of melting and exporting coin were arrested and fined ^8,500 and imprisoned till the fines were paid, but even this example did not put a stop to the practice. Silver was worth two or three pence per ounce more than . the mint valuation, and this fact dominated society from the King on the throne to the beggar on the dunghill. But what could not be prevented by royal proclamation and star chamber was stopped by an unseen force. The price of gold was slowly rising, so that about the beginning of the Commonwealth the ratio that King James had established was identi- cal, or nearly so, with the market ratio. The exporta- tion of the precious metals ceased until the reign of Charles II. In 1663 gold had risen in value so that it was neces- sary to change the ratio to 14^ to 1. This was an advance of about 8 per cent, since James I. Each time that a change was made in the gold coinage a new name was given to the coin so pro- duced, in order to distinguish it from its predeces- sors. The coin that Charles II. now introduced was called the guinea. It was ordered that this coin should pass for twenty shillings, but it immediately became current in trade at a higher rate, passing for 4 The Gold Standard. twenty-one to twenty-two shillings. No attempt was made to enforce the mint valuation or to prevent melting or exporting. Consequently silver became in practice the only legal-tender money. Nobody would offer a guinea to pay a debt of 20 shil- lings when it was worth 21 shillings. The guineas passed for what they were worth as bullion. That was a time when the clipping of coin was much practised, but it was no advantage to clip a gold coin, since it was taken only at nts bullion value. The silver coins, however, passed by tale. Con- sequently they alone were subjected to the clip- ping process. The evil became so great that a re- coinage "of silver was necessary and was undertaken in the reign of William III. This was a celebrated event in many ways. Both Sir Isaac Newtofi and John Locke were concerned in it. In the year 1717 the guinea was made current by royal proclamation at 21 shillings in silver, at which figure the ratio was about 15 1-7 to 1. This was in the third year of the reign of George I. It was about this time, says Lord Liverpool, that a marked preference was shown by the people for gold money rather than silver, on account of its convenience in making large payments. This he ascribes to the increase in the commerce of the country. As gold was slightly overrated at the ratio of 15 1-7 to 1, there was a tendency to export silver. Only £584,000 of the latter metal was brought to the mint for a period of eighty-three years down to the end of the century, and most of this came from Spanish treasure ships captured in war. The only silver coin retained in circulation was that which had been much worn. As these light-weight pieces varied among themselves, the lightest ones were selected to make payments, a The Gold Standard. 5 condition which became worse and worse until Par- liament in 1774 passed an act limiting the legal tender of silver coins to £25 in tale. For any sum above £25 they could be paid by weight only. This act was to continue in force only two years, the expectation being that some other remedy for the evil would shortly be found. It was re-enacted from time to time till 1798, when another clause was added providing that no more silver should be coined at the mint, nor should any be delivered that had been coined, but that the owners of such silver should be paid for it. In the following year (1799) a brief act was passed making the act of 1774 perpetual. In 1816 the character of the British monetary system was formulated by an act of Parliament on its present basis, the essential part of this act being in the following words : " XI. And whereas at various times heretofore the coins of this realm of gold and silver have been equally a legal tender for payments to any amount, and great inconvenience has arisen from both those precious metals being concurrently the standard measure of value and equivalent for property ; and it is expedient that the gold coin made according to the indentures of the Mint should henceforth be the sole standard measure of value and legal tender for payment, without any limitation of amount, and that the silver coin should be a legal tender to a limited amount only, for the facility of exchange and commerce ; " Be it therefore enacted, That from and after the passing of this act, the gold coin of this realm shall be and shall be considered and is hereby declared to be the only legal tender for payments, except as herein- after provided, * * * and no tender of payment of money made in the silver coin of this realm of any sum exceeding the sum of forty shillings at any one time shall be reputed a tender in law, etc." 6 The Gold Standard. This is a brief resume of the experience and legis- lation of Great Britain. It is important as showing that the single gold standard was adopted on account of the "great inconvenience " of the double standard, which had been in vogue previously. Of course, this " inconvenience " had attracted the attention of learned men before 1798. John Locke had shown that a double standard composed of two things of varying value was an impossibility. He favored the single standard of silver, as did the learned men who considered the same question in France a century later. It appears that the gold standard was adopted without any particular design on the part of those who brought it about. They found, as a matter of fact, that the monetary evils existing in 1774 could be cured most readily by limiting the legal tender of silver. So they did it for two years, and then for two years more, and so on, till 1798-99, when they had become satisfied by the experience of twenty-five years that the single gold standard was the right thing to put an end to the " inconvenience." Seven- teen years later, the experiment having continued to be successful, they passed the law which I have quoted. That law, in substance, remains in force to the present time, and we may be sure that it would not have lasted so long if it were not a good thing per se. THE GOLD STANDARD IN THE UNITED STATES. We will next consider the experience of the United States. At the beginning of our career as a nation we adopted the double standard of gold and silver. This was in 1792. Our statesmen followed in this matter the example of the older countries of Europe. The Gold Standard. 7 Alexander Hamilton was the Secretary of the Treas- ury and the ruling spirit. At his instance the ratio of 15 was adopted, and there is no room to doubt that this was very close to the true market ratio at the time. The English ratio of 15 1-7 ceased to be operative, as we have seen, because it was too high. France was at that time under the regime of irre- deemable paper. Consequently nothing could be learned from her. The discussions and writings of the period show that there was an honest and earnest effort to adopt the market ratio as the legal ratio, and that the result reached was as nearly true as possible. Nevertheless, gold began to grow scarce in our circu- lation as early as 1810, and had wholly disappeared in 1 8 17. One ounce of gold had come to be worth as metal something more than fifteen ounces of silver. It was worth while for bullion brokers to collect gold coins and export them. The testimony is emphatic and is not disputed, that after 18 17 and until 1834 our metallic money consisted of silver exclusively. THE LAW OF 1834. In 1834 people had become tired of lugging silver around. They had by this time found out what was the matter. They determined • to have some gold in their pockets, but it cannot be affirmed that Congress had reached a scientific conclusion in favor of the single gold standard. What is certain is that Con- gress adopted the ratio of 16 to 1 in 1834 by very large majorities in spite of proofs urgently presented that this ratio would drive silver out of circulation altogether, as it did. This bill was called the "Gold Bill " in the discussions of the time. As reported by the special committee, it provided for a ratio of 15.60 to 1, but when it came up for discussion, Mr. Camp- 8 The Gold Standard. bell P White, the Chairman of the Committee, who was himself in favor of the single gold standard, moved to amend by making the ratio 16 to i, and his amendment was adopted without a division. On the main question the debate was long and animated. An amendment to the amendment was offered, making the ratio 15.625 to 1, and it was supported on the ground 1;hat this was the true market ratio, and that it would enable the country to keep both silver and gold in concurrent circulation. This amendment was voted down — yeas 52, nays 127. The bill was then passed in the House by 145 to 36 and in the Sen- ate by 35 to 7. There was a variety of motives leading to the pass- age of the Gold Bill, but among these the desire of having gold in place of silver was the most influential. Thomas H. Benton, one of the strongest advocates of the measure, declared that the object of his endeavors was: " To enable the friends of gold to go to work at the right place to effect the recovery of that precious metal which their fathers once possessed, which the subjects of European kings now possess, which the citizens of the young republics to the south all possess, which even the free negroes of San Domingo possess, but which the yeomanry of this America have been de- prived for more than twenty years, and will be de- prived for ever unless they discover the cause of the evil and apply the remedy to its root. — [Speech of Senator Benton of Missouri, quoted by Louis R. Ehrich in his ' Question of Silver.'] " The effect that was predicted was abundantly realized. Silver did go out of circulation. The minor coins, being of proportional weight and fineness with the dollar, were melted and exported, and their The Gold Standard. 9 place in the circulation was taken by light-weight foreign coins, principally Spanish and Mexican six- pences, shillings, quarters, and halves. Those coins, when of full weight, were almost identical with our own fractional coins. If our own would not circulate the foreign ones of course would not. But if there was a certain proportion of these coins, whether foreign or domestic, that had been worn down by long use so that they really represented the market ratio or something less, such coins would circulate concurrently with gold. To illustrate : two halves, four quarters, or ten dimes, if new and of full weight, were worth about one cent and a half more than a gold dollar. Consequently they would be collected by brokers, melted and exported. But two halves, four quarters, or ten dimes, that had lost one and a half cents' worth of silver by abrasion, would circulate, be- cause there would be no motive to melt or export them. There would be no profit in it. When I was a boy the silver money of this country consisted exclusively of foreign coins, mostly Spanish and Mexican, but with a considerable sprinkling of English, French, German and Scandinavian pieces. Every merchant kept a coin chart manual for handy reference to deter- mine the value of these pieces as they were offered in trade. I have also seen Spanish quarters cut in half, each piece circulating as a shilling. There was nothing remarkable about this, since all these foreign coins were circulating at their bullion value. The two halves of a Spanish quarter were therefore worth as much as they would have been if joined in a single piece. It became apparent to everybody that if full-weight silver coins would not circulate on the ratio of 16 to 1, while those of light-weight would circulate, then it io The Gold Standard. would be safe to make minor coins (halves, quarters, etc.), designedly of light weight on Government ac- count, of limited legal fender. There would be no profit in exporting such coins, because they would not sell as bullion for as much as it would cost to col- lect them. In 1853 an act of this kind was passed. From 1837 onward the country had gold money and the gold basis. Silver dollars were hardly ever seen. There was not an hour in the whole period of forty years to 1873 when the silver dollar was not worth more than the gold dollar. With the exception of a very few years it was worth fully three cents more. Did any of you ever see a silver dollar in circulation prior to 1878? I never did. THE LAW OF 1873. Under these circumstances, the gold standard exist- ing de facto, and there being no silver except light- weight subsidiary coins, our mint authorities, the only people who took any interest in the subject, began even before the war to recommend that the single gold standard should be adopted in law as it had been adopted in fact. Ex-Gov. Pollock, Director of the Mint, in his report for 1861 called attention to the in- congruity of a silver dollar that was worth 3.98 cents more than the gold dollar and 8 cents more than two half dollars. He recommended that it should either be dropped from the list of coins or reduced in weight so as to correspond with the subsidiary coins. He considered that gold was de facto the standard of value, and he recommended that the law should con- form to the fact. But the- nation had more exciting topics to discuss in 1861 than those relating to coinage. In 1866, after the war, Mr. John J. Knox, who then had charge of the Mint and coinage matters in the The Gold Standard. i i Treasury Department, recommended a revision of all "the laws relating to the Mint. Secretary Boutwell ap- proved of the suggestion. Mr. Knox and Dr. Linder- N -man were appointed in 1869 a committee to make -such revision. They presented their report with a -draft of a bill in 1870. The report recommended the •discontinuance of the silver dollar, this coin being ■obsolete. The bill and report were transmitted to the Finance -Committee of the Senate on the 25th of April, 1870. The bill passed the Senate on the 10th of January, 1871. It made the gold dollar the unit of value and it dropped the silver dollar from the list of coins. The bill failed in the House for want of time. The Forty-first Congress having expired without final action it came up again in the Forty-second. It ipassed the House May 27, 1872, by yeas no, nays 13. It passed the Senate January 17, 1873, without a dis- senting vote. The metal in the silver dollar at that time was worth three cents more than the gold dollar. No objection to the bill was heard until the price of ■silver had fallen so that the silver dollar, if there had fceen any, would have been worth less than the gold dollar. Then it became fashionable to say that the bill was passed surreptitiously. The truth is, that the bill was before Congress two years and ten months, that it was printed thirteen times by order of Con- gress, that the debates on it occupy sixty-six columns in the Senate proceedings and seventy-eight columns in the House proceedings, and that the discontinuance •of the silver dollar was specially discussed in the House. Any candid person must see that the reason why the discontinuance of the silver dollar attracted so little notice was that this coin had been discon- tinued de facto in 1834, when the ratio of 16 to 1 was 12 The Gold Standard. adopted. I have given reasons for thinking that this ratio was adopted designedly to expel the silver dol- lar from circulation. At all events, it did so, to the satisfaction of the people. It is a great pity that our ancestors in 1834 did not put their intentions into the form of law at that time. If they had done so they would have spared us a Pandora's box, to be opened forty years later. Bimetallism was abolished in the United States by the Act of 1873. It has not been re-established by any subsequent act. The purchase and coinage of a limited amount of silver by the Government is not bimetallism. Still less so is the purchase of bullion which is not coined. Any other metal would answer as well as'silver as a backing for the issue of Treasury notes. Let us imagine for a moment that silver had not fallen in price after 1873. Would anybody ever have missed the silver dollar? Would anybody have doubted that the gold standard was brought about in this country by natural causes operating upon men's minds in the same way as it was in England, the action of Congress in 1873 merely giving the form of law to what had been done practically at an earlier period ? THE EXPERIENCE OF GERMANY.' Prior to 1871 Germany had the single silver stand- ard, but as she could not transact business with silver alone, she used for her international and wholesale trade a heterogeneous assortment of gold coins, partly domestic and partly foreign, including napoleons, pistoles, guineas, eagles, Russian imperials, Fried- richs d'or, ducats, crowns, &c, passing as commercial money. The question of a reform of the currency had been under discussion by the economists and pub- The Gold Standard. 13 licists of Germany for nearly ten years, but until 1868 the question under debate was a question of uniformity of money rather than of the metallic standard. Dr. Soetbeer had indeed published two articles in 1863 and 1864 in the Vierteljahrschrift fur Volkswirthschaft on the gold standard, but it was not until after the. Paris Monetary Conference of 1867 that the commercial classes began to take an active interest in the question. This Conference was held, at the invitation of the French Government, to consider the question of unifor- mity of coinage. Nearly all the governments of Europe were represented. The United States were repre- sented also. One of the earliest questions to be decided was that of a standard. The first vote was on the ques- tion of adopting the single standard of silver. This was rejected unanimously. Then the single standard ot gold was adopted with only one dissenting vote — that of Holland. Nobody proposed bimetallism. The action of this Conference shows that even at a time when the two metals were at an equilibrium accord- ing to the French ratio, France and all her allies of the Latin Union were inclined to adopt the single gold standard, and also that Germany, Austria, Russia, and the Scandinavian countries, all of which at the time had the single silver standard, were of the same mind. After this event a great many publications appeared in Germany showing an unmistakable tendency in the public mind to the gold standard. The most import- ant of these is the report which Soetbeer made at the Ninth Congress of German Economists in the year 1868. This Congress met in Hamburg and pro- nounced in favor of the unification of German money, and of the gold standard. Its action was ratified soon afterward by the united commercial bodies of 14 The Gold Standard. the North German Confederation, and would have- been carried into effect at once but for the war with. France. This event postponed the reform one year.. GERMAN MONETARY LAW OF 1871. On. the 5th of November, 1871, the Finance Min- ister of the new German Empire, Herr Delbrtick, pre- sented to the Imperial Diet a brief report of the- " motives " which had led the Government to propose a measure for the unification of the German coinage.. This measure provided for the coinage of gold pieces- of ten and twenty marks, and it discontinued the coin- age of large silver coins, but did not demonetize those that were in circulation. The report says, first of all,, that it may be considered as beyond doubt that the existing silver standard cannot be maintained. The only gold coins authorized by existing law were Ger: man crowns and half-crowns, but these had no fixeoV relation to the standard silver coins of the nation nor- to those of any other country. Consequently they were not accepted in the domestic circulation. They had never been an integral part of it, nor had theyr acquired any standing in international commerce,, being melted down as soon as they reached the frontier.. Consequently the internal commerce of Germany was- confined to the use of bulky and inconvenient silver coins. " The inconvenience of silver coins," says the report, " led of necessity to a very considerable cir- culation of paper, which, in ordinary times, is taken as a welcome facility, but in critical times con- tains the germs of serious dangers. The arti- ficial demand for paper created by the ex- clusive circulation of silver made it almost impossible to adopt any radical and rational, regulation of the banking system through, laws com,. The Gold Standard. i 5 mon to all Germany." For these reasons — namely, that silver was bulky and inconvenient, and that- it brought about a forced circulation of paper and pre- vented any wise regulation of bank issues — the single gold standard was recommended, with a silver sub- sidiary coinage. The measure was supported by very strong speeches by Minister Delbrlick and by Dr. Bamberger, and it passed on the 23d of November. This measure was provisional only, a second and more detailed one being enacted two years later. It is said by some that Germany, by demonetizing silver in 1871 and by selling it in 1873 and later, drove France and the Latin Union into a suspension of sil- ver coinage, and caused the great decline in the price of that metal. If this were true it might possess an, academic, but hardly a practical interest. Germany is not answerable to us for her tastes. We cannot, call her people to account for liking to have gold in their pockets or sauerkraut on their tables. We can- not go back to 1871 or blot out the intervening years. Nor have we been able to persuade Germany that she has made any mistake in her new monetary system. She declined to take part in the Monetary Conference of 1878. She came with reluctance to that of 1881,. and announced at the outset that she could not join in any movement for the free coinage of silver. She re- peated this declaration at an early stage of the recent Brussels Conference. So I feel warranted in saying that the question whether Germany has been guilty above others in oppressing or depressing silver is of no practical consequence. But such a charge cannot be sustained. Germany had completed her new monetary system and stopped selling silver in 1879, and the Latin Union countries had closed their mints to silver three years earlier,. 1 6 The Gold Standard. whereas silver continued to decline all the same. The London price for 1879 (average) was 5i£d. per ounce. It is now 38d. The decline has been greater since Germany stopped selling than it was before. From 1871 to 1879 the aggregate decline was 9d.; from 1879 to 1893 it has been 13d. The simple truth is that Germany was driven to the gold standard, just as Great Britain and the United States had been previously, by the inconveniences of silver money. These inconveniences manifested themselves with some variations of detail in different countries, but all grew out of the ponderousness of silver, an evil which increased with the growth of commerce. Some persons habitually speak of silver as a twin sister to whom some grievous injustice has been done. All such must admit that she is a very corpulent one. FRANCE BEFORE THE REVOLUTION. We will now look at the course of events in France. Here the livre was originally a pound weight of silver. It was debased by royal authority from time to time, as in England, but much more rapidly. M. Beranger, in his report on the French monetary system in 1802, says that the ratio of gold to silver was changed twenty -six times between 1602 and 1773, and that the livre at the time when he wrote had been reduced to the seventy-sixth part of its original weight. The livre is now called the franc. It is impossible to trace any scientific connec- tion between these recoinages and the metal ratios except that the divergences between the legal and market ratios, whenever they were discovered, were seized upon by the Government as an excuse for fur- ther debasement. They " fell back alternately from The Gold Standard. 17 gold to silver and from silver to gold," says B6ranger, making a profit to the royal treasury each time. M. Calonne, Comptroller-General under Louis XVI., has given us a list of the principal recoinages prior to his time, of which there were four in the reign of Louis XIV. and five in that of Louis XV. It would be a waste of time to recount them. The ratio existing when Louis XVI. came to the throne was I4§ to 1. It had been adopted in 1726. The legal ratio in England at that time, as we have seen, was 15 1-7. Both ratios were, or gradually became, divergent from the market ratio. Silver was exported from England and gold was exported from France. A recoinage in the latter country became necessary, and this was undertaken and executed by Calonne in good faith in the year 1785. Calonne chose the ratio of 15^. This ratio was in force when the celebrated law of 1803 was passed, under the Consulate. It was not exactly conformable to the market ratio at the time. It rated gold too highly, but Calonne said that he had observed that gold had an advancing ten- dency, and he believed that if 15^ was not the true ratio then, it would become so before long. In this he was right, for when the law of 1803 was passed, there was no observable tendency to export either metal, and the Hamburg market ratio, as tabulated by Soetbeer, was very close to 1 5 J. FRENCH MONETARY LAW OF 1803. I have in another place made a study of the docu- . ments and debates which preceded and led up to the French Monetary Law of 1803 (see Political Science Quarterly, June, 1891). The substance is that these learned and patriotic men, without exception, con- sidered a double standard impossible and any attempt 1 8 The Gold Standard. to establish it disastrous. They accordingly deter- mined to establish, and thought that they had es- tablished, the single silver standard by a law, the first paragraph of which reads as follows: " General provision. — Five grams of silver, nine- tenths fine, constitute the monetary unit which re- tains the name of franc." But they were confronted by the fact that gold was an indispensable part of the monetary system. How to retain it in the circulation as a subordinate metal while making silver the sole standard was the great puzzle of the day. No less than eight important papers were drawn up from time to time on this question, and no decision was ever reached except to allow gold to be coined at the French mint at the ratio of 15^ to 1, with the understanding that if the market ratio should change, the gold, but not the sil- ver, should be recoined. Such was the law of 1803. Although it was the in- tention of the lawmakers to establish the single silver standard, the clause which they introduced allowing the coinage of gold was the same thing in effect as re-enacting Calonne's law of 1785. It was in practice, though not in intention, a bimetallic law at the ratio of i$i to 1. Almost immediately after its enactment France plunged into wars which lasted till 1815. Of course, the nation had very little time to think about her coinage laws. Gradually the price of gold rose above the legal ratio, and that metal was exported to such , an extent that Chevalier tells us that " twenty-five years after that date [1803] the circulation consisted of silver only." Abundant proofs can be adduced showing that bimetallism did not exist in practice in The Gold Standard. 19 France between 1820 and 1847. Mr. Giffen has pub- lished a table showing the premium on gold in Paris during every month of that period. This premium was at times as high as two per cent. The contention of the bimetallists that the French law of 1 803 kept the ratio steady at 15^ till 1873 is not supported by facts. THE GREAT INRUSH OF GOLD. From 1850 to i860 there was an enormous increase in the production of gold in Russia, California and Australia, and scarcely any increase in that of silver. The market ratio declined to 15.46 in the year 1851, so, of course, gold could again circulate in France. The ratio continued to decline till 1859, when it reached its lo-west point, viz., 15.19. It remained below 15^ till 1867. During this interval of sixteen years France imported $600,000,000 of" gold and ex- ported about half that amount of silver. Her circu- lation became saturated with the yellow metal to the great delight of her people, who had become tired of carrying sacks of five-franc pieces to and fro in cabs and handcarts. The exportation of silver from France was so ex- tensive at this time that the country was almost denuded of small money. It became necessary to coin gold pieces as small as five francs. In 1857 the scarcity of silver became so great that the Govern- ment appointed a commission to investigate the sub- ject. This commission was bent upon maintaining the silver standard. So, instead of following the ex- ample of the United States and making silver coins of light weight and of limited legal tender, it recom- mended that an export duty be put on silver, that bullion brokers be prosecuted, and that assorting and 20 The Gold Standard. trading in coins be prohibited by law. In other words, this sapient commission went back for inspira- tion to the times of Louis XIV. and of James I. and Charles I. of England. Some attempts were actually- made to carry out these senseless recommendations, but they were soon abandoned. It was about this time that Chevalier, the French economist, who was a stout champion of the silver standard, proposed to solve the difficulty by providing that French gold coins should have a fixed weight, but a variable value, and that the value should be announced by legislative decree at certain short intervals. M. Levasseur, another economist of renown, but with a keener vision, expressed the opinion that gold had made itself the standard in spite of the law, and he sug- gested that the wisest thing for France to do was to make the law conform to the fact. THE LATIN MONETARY UNION. Nothing was done at that time. Events drifted till 1864, when the lack of small change had become so serious that the Government brought a bill before the Corps Legislatif authorizing the lowering of the fine- ness of all the silver coins less than five francs to 835 instead of 900 thousandths. This was in effect the same thing that we had done in 1853, when we con- verted all our silver coins less than one dollar into token money. The proposal was more shocking to the French legislator than to the American, for the reason that the franc was the monetary unit sanctioned by the law of 1803, and this monetary unit was one of the very things to be lowered. The Legislature recoiled, but it sustained the lowering of the pieces smaller than one franc. The difficulty could not be removed by such homoeopathic treatment, and as the The Gold Standard. 21 same difficulty existed in the neighboring countries of Belgium and Switzerland, a convention was called for the purpose of adopting some common steps for re- lief. Italy also was induced to join, and soon after- wards Greece. France considered it admissible to do by treaty what she had not been willing to do by direct act. By treaty dated December 23, 1865, these four countries adopted their present token coinage of silver and limited its legal-tender faculty to fifty francs. This was the origin of the so-called Latin Monetary Union. HOW FRANCE CAME TO THE GOLD STANDARD. In 1867 the price of silver had again declined, so that the French ratio of 15^ was substantially iden- tical with the market ratio. That was the year of the International Monetary Conference, of which mention has already been made, at which France voted in favor of the single gold standard. Nevertheless, the French legislators abandoned the silver standard with extreme reluctance. They were attached to it by custom and tradition. They still desired, like their ancestors of the Revolution, to have the silver stand- ard with gold as a subordinate metal. They allowed events to drift until 1873, when they were startled to find that 154,000,000 francs' worth of silver had been deposited at the mint for coinage in that year, against only 5,000,000 francs' worth in 1871-2. The amount of silver so deposited was more than the mint could coin in a year and a half, if it did nothing else. The market ratio of gold had risen nearly to 15.75. There was a profit of 1% per cent, in sending silver bullion to the mint and using the resulting coin to buy gold for export. The delegates of the Latin Monetary 22 The Gold Standard. Union were hastily assembled and they determined to limit the coinage of silver to 120,000,000 francs per year for all the countries concerned. This was virtu- ally the adoption of the gold standard. At the beginning of 1876 the market ratio had reached nearly seventeen to one. The crisis was be- coming acute. Switzerland had ceased to coin her allotted share -of silver. Belgium had passed a law authorizing the Government to stop coining that metal. M. Leon Say, the French Minister of Finance, sent to the Senate March 21, 1876, a bill of only two lines, in these words, viz.; "The coinage of silver five-franc pieces may be limited or suspended by de- cree." The Senate Committee to which it was re- ferred, under the lead of M. de Parieu, reported a more drastic measure absolutely forbidding the coin- age of any silver money of full legal tender. The legislative body again showed its aversion to change by rejecting the Senate report and adopting, on the 5th of August, the more moderate measure of the Minister of Finance. But it really made no differ- ence which of the two was adopted. The door of the French mint was closed to silver on the following day, and has not been reopened. I think it has been shown that the gold standard made its way in France not only without design on the part of individuals, but in spite of the strenuous resistance of almost all the men who busied them- selves with the subject at all. I have given a good deal of space to the experience of France, because of the great importance which has always been assigned to that country by the advocates of bimetallism. EXPERIENCE OF BELGIUM AND HOLLAND. It is unnecessary to go into details concerning the other members of the Latin Union, but one fact as The Gold Standard. 23 regards Belgium deserves notice. This country was an integral part of France when the law of 1803 was passed. Her monetary system was accordingly identical with that of France until 1832, when she adopted the single silver standard retaining the franc as the monetary unit. In 1861, when the great influx of gold from California and Australia had made such a change in the monetary conditions of France, the people of Belgium began to taste the luxury of gold in the form of French coins. There was straightway a popular demand that French gold should be made legal tender in Belgium. The Finance Minister, Frere Orban, resisted it. He was impressed with the views of Chevalier in favor of silver, to which allusion has already been made. The popular demand grew apace, and Frere Orban, rather than yield to it, re- signed his office. Then the bill was passed, and Bel- gium obtained what her people wanted, that is, the gold standard. The experience of Holland is no less instructive. Prior to 1847 this country had the double standard at the ratio of 15.60 to 1. She had become convinced, however, that a double standard was merely an alter- nate standard, first one thing and then the other. So she decided to have a single standard, and adopted that of silver in 1847. When Germany adopted the gold standard a com- mission was appointed by the King of the Nether- lands to examine the monetary question. It recom- mended that the coinage of silver be suspended for six months, and a bill to that effect was passed in May, 1873. This law was renewed twice for periods of six months each. A second report of the Commission was made, recommending a bill for the adoption of the single gold standard, but this bill was rejected by 24 The Gold Standard. the second Chamber in March, 1874. When the law suspending the coinage of silver expired in May, 1874, immense quantities of silver began to flow to the. mint. Silver florins passed in trade at the old ratio of 15.60 because they were limited in quantity, but it was ob- vious that they would soon fall to the bullion value of silver. So in December, 1874, a new six-months' sus- pension of coinage was ordered by the legislative body — the same one that had refused to adoprthe single gold standard. Before this period had elapsed the Minister of Finance proposed that the silver coin- age be discontinued indefinitely and that gold coin- age be allowed. This bill was passed in June, 1875. Here again the gold standard made its way over the heads of the wise men of the time. THE GOLD STANDARD IN AUSTRIA. The adoption of the gold standard by Austria is now in progress, and there is every assurance that it will be carried into effect. That country had had the single silver standard since 1857, but was under a suspension of specie payments. When it was ascer- tained in 1879 that the decline in silver was likely to be permanent the Government gave orders to the mints in both Austria and Hungary to receive no more of that metal from private individuals for coin- age. The effect of this order was to make Govern- ment paper money the standard, and this paper varied from day to day in comparison with gold, as did our greenbacks before we resumed specie payments. Some silver was coined on Government account, but as a matter of fact that metal was discarded as a standard by the refusal to coin for private persons. Austria had a gold coinage, indeed, but the gold was commercial money only. It had no legal-tender The Gold Standard. 25 faculty, but passed at its quoted value from day to day. Since 1879 the problem of finance in Austria has been two-fold, namely, to resume specie pay- ments (which must, under the circumstances, be gold payments), and to fix a ratio at which all paper money and paper obligations should be redeemable. The ratio decided upon was that of 119 paper to 100 gold, that being the average ratio prevailing in the market during the thirteen years from 1879 to 1892. As the question of standard was really settled by Austria in 1879, when she closed her mints to silver, we are concerned to know how she came to take that step. The report of the special commission of the upper house on this subject, submitted last year, says that it had become clear as long ago as the decade 1860-1870, when Europe was becoming saturated with gold, that this was the only metal fitted to be the standard of nations of advanced civilization. " Gold was dominant and the standard of value," says this report, " in all trade on a great scale as early as the fourteenth and fifteenth centuries, even though silver was then the standard in all domestic ex- changes. * * * In every age there is some metal dominant in the industry of the world which forces its way with elemental strength in the face of any public regulation, and in our day gold is that meml." This is as good a statement as can be made of the reasons why not only Austria but all the other nations whose action we have examined, including the United States, have adopted the single gold standard. While Austria has been collecting her supply of the yellow metal we have heard a great deal about the " scramble for gold." Why is there a scramble for gold ? Merely because gold is universally acceptable. All civilized people are willing to exchange their 26 The Gold Standard. property for it to any extent, and this is the only thing they are willing to accept in that way without limit or reserve. That is a good and sufficient reason why there is a scramble for gold and why there is no similar scramble for silver. A NATURAL EVOLUTION. If we find a movement of civilized mankind going on steadily for a hundred years, working out in dif- ferent countries uniform results which commend themselves to successive generations, the presump- w tions are all in favor of that movement being bene- ficial. At all events, the burden of proof is upon those who think differently. I am so well convinced of the, benefits of the single gold standard that if all power were placed in my hands I would not introduce anything different from it. I should con- sider it presumptuous to attempt to interfere with an obviously natural evolution in human affairs. I should know, moreover, that such an attempt would be futile, because the first step to be taken would be to alter the preferences and likings of individual men. Society consists of aggregations of individuals, who in their private business prefer one ounce of gold to sixteen ounces of silver, or twenty-five ounces, as the case may be. Unless I can change this preference and liking I cannot alter the monetary standard of Christendom. It is this preference which paralyzes all the international monetary conferences. The secret thought of the delegates in the Brussels Con- ference was something like this: " What would hap- pen the day after international bimetallism if the commercial classes should continue to prefer one ounce of gold to sixteen ounces of silver ?" Any re- sponsible minister of finance must recoil before that query. The Gold Standard. 27 I think that the " scramble for gold " would be -worse the day after the bimetallic treaty than it was the ■day before, because everybody would suspect every- body else of gratifying his secret desire for gold at the expense of his neighbors. It should be remarked that the Brussels Conference, as a body, never touched the question of bimetallism, although some of the members improved the opportunity to make speeches on that subject. The Conference went to pieces on a minor question — that of buying a little more silver. The proposal was that the nations should purchase a certain amount of an article that none of them wanted. When the representatives of France and the Latin Union had the intrepidity to say that they would not recommend that policy to their governments, even if it should be adopted, the bottom dropped out of the Conference altogether. Although Mr. Bland has given his attention to this matter as a humorist, in a magazine article, I think that he has come short of exhausting the subject. NO STEPS BACKWARD. If the successive steps that we have described, whereby the nations have arrived one by one at the ■single gold standard, had been the result of a hundred years' conspiracy against the " debtor class," instead of being a natural evolution beneficial to all classes, I ■should still be unable to see any advantage in chang- ing back. Whatever mischief appertains to this evolu- tion has been done and now belongs to the remote past. Those books are closed. To retrace the steps would merely double the wrong, inflicting it upon a new lot. Those who, according to the hypothesis, suffered in the past are mostly dead. If there be any such victims living in France or Germany, in Holland 28 The Gold Standard. or Belgium, or Scandinavia, they are very slow in disclosing themselves to the various international con- ferences held for their benefit. They are very back- ward in coming forward. What is meant by " debtor class " in this discussion ? All men who are not bankrupt are both creditors and debtors. The fact that they are not bankrupt implies that they have more due to them in one way and another than they owe. I am proud to believe that the vast majority of my countrymen are of this class, i. e., of the creditor class. I take it that we are not legislating specially for bankrupts. Certainly it would not be wise to change our standard of value for their accommodation. Such a change would pro- duce a great many new bankrupts and would not save any old ones. What our country needs is more capital. This is especially true of the West and South. There is a great deal of foreign capital that would like to come here, but is deterred by apprehensions of a change in the standard of value. This is not conjecture on my part, but actual knowledge. I do not think there will be a change of standard. I believe in the per- sistence of gold both here and in Europe, but the belief is very strong in Europe that we shall slip off the gold standard, if we do not go off. intentionally. Consequently they keep their money at home or in- vest it here only on call, and they withdraw it in cases where they can do so without loss. This rule oper- ates with our own capitalists more or less. If money is tight, it is because credit is paralyzed. Lenders are afraid lest the continued operation of the Silver Law should bring about a change of the standard, so that they would get back less than they have put out. While this state of mind continues, it is immaterial, so The Gold Standard. 29 far as borrowers are concerned, whether the amount of cash in the country is large or small. We are told that there is not gold enough in the world to do the business of the world. I have been hearing this for seventeen years. How do you know that there is not enough ? If there was not enough seventeen years ago, there may be enough now, seeing that there has been an addition to it of $1,500,000,000 during that interval, after making a liberal deduction for the amount used in the arts. The old stock does not disappear with use. I have a gold coin of the reign of Philip of Macedon, on which the name and face of that monarch are so well preserved as to possess artistic as well as archaeological value. There is no ascertainable relation between the amount of gold in the world and the amount of business done or to be done. The function of gold as a standard of value is increasing while its function as a form of currency is diminishing. The time is surely coming when its currency function in civilized countries will be limited to international payments and to the wants of trav- elers. That time has already been reached in the greater part of the United States and Canada. ALLEGED FALL OF PRICES. We are told that the single gold standard has caused a disastrous fall in the prices of commodities ; also that it has put an unjust burden upon those who have borrowed money on mortgage. I have seen no proof that the adoption of the gold standard by Europe and the United States has caused a decline in prices of commodities, nor can I admit that such a decline would be a bad thing. None of us, when we go to market, complain that prices of food, fuel, clothing, etc., are too low. Mr. David A. Wells has written a 30 The Gold Standard. book entitled "Recent Economic Changes," whicb accounts for the fall in price of all staple articles of commerce which really have fallen during the past twenty years, accounts for it by the increased facilities- for producing and transporting the same. He has. not grouped them all together, as our bimetallist friends commonly do, but has taken each one separ- ately. I commend his example in this particular to< their imitation. As to mortgage debts, I have learned by inquiry of the leading mortgage companies in New York that farm mortgages are generally made for the term of five years, and that about 25 per cent, of them are paid at or before maturity. Consequently, any wrong- which mortgagors are now suffering, in consequence of the gold standard, must have accrued since 1888. To redress their supposed wrongs we are asked to- turn the whole business of the country upside down and change the rating of all other contracts perhaps- 35 per cent. But the average duration of mortgages- is considerably less than five years. The Topeka Commonwealth newspaper a year or two ago made a* special investigation of the records of a number of agricultural counties in Kansas, and found that more mortgages were paid off than were put on within the period covered by the investigation. Hence the pre- sumption is that the average life of the farm mort- gage in Kansas is not more than two and one-half years. I am aware that many mortgages are allowedi to run for indefinite periods after they fall due, but these, after they fall due, are call loans on real estate- security. I am not aware that borrowers on call are complaining of the gold standard. At all events, if they are oppressed by reason of that standard they can relieve themselves at any time by paying up. If. The Gold Standard. 31 they do not pay and are solvent, it must be because they find it to their advantage to endure these so- called oppressions a while longer. It is safe to say that all these mortgages would be called in on the first sign of a change in the monetary standard. The tightness of money in such an event may be imagined, but can hardly be described. NATIONAL DEBTS. It is insisted that national and State debts are en- hanced by the prevalence of the single gold standard. To prove this we are asked to compare the low prices of the present day with prices of past times. Does not that prove that the bondholder gets more value now than he bargained for, and hence that the tax- payer pays more ? No, it does not. Bondholders are entitled to share with others the advantages of low prices of manufac- tured goods resulting from new inventions and facili- ties for production and transportation. As to pro- ducts of the farm, prices were much lower when I was a boy than they are now. Eggs sold then for 4. cents per dozen, butter for 6 to 8 cents per pound, corn for 15 cents per bushel, wood for $1 per cord, etc., etc. If the gold standard has had any lowering effect on prices it has not touched these articles. But why should we shed tears over national and State debts, seeing that ours are nearly all paid ? Let the crocodiles of Europe weep over the enhanced burden of national debts if there be any such enhancement due to the gold standard, which I take leave to deny. Suppose it were true that national and State debts were enhanced in the manner alleged, would that be a reason for changing the standard of value for the countless daily transactions of business? The bank 32 The Gold Standard. clearings of seventy-nine cities in the United States for the week ending May 20 amounted to $1,165,478,- 664, which is about double the interest-bearing debt of the nation. Add to this the payments of wages and the retail transactions that are not embraced in clearing-house returns, and then multiply the whole by the fifty-two weeks of the year and you will see how large a cannon you are loading to kill a mosquito and what a tremendous recoil it must have. THE SILVER LAW OF THE UNITED STATES. Our present Silver Law, commonly called the Sherman Law, is not bimetallism. Anything which comes short of unlimited coinage and unlimited legal tender leaves the gold standard in force in this coun- try. The present law is grounded for the most part upon the idea that the purchase of silver and the issue of Treasury notes against it increases the sup- ply of money in the country, and this notion is based upon the erroneous conception that if the Govern- ment did not supply the people with money they would have none. I do not say that the Congress- men who voted for this bill believed these things. Most of them knew better. They were engaged in political fencing. They were putting themselves in position for the next election. But this law could not exist without a body of public opinion to support it, and that body of public opinion holds that the Silver Law increases the amount of money in the manner I have described, whereas in fact it diminishes the amount of money. It does so by displacing a superior kind of money (gold) and putting an inferior kind in its place, and by creating distrust among investors. So long as the gold standard continues in this coun- The Gold Standard. 33 try the Treasury notes issued against silver derive their value wholly from the Government credit, be- cause not an ounce of that silver can be sold to obtain the means for gold redemption of them. It follows that the purchase of the silver instead of being a help to the notes is a damage to them, because the credit of the Government would be better if the Treasury were not required to make this monthly outlay. If the Government had the right to issue say $4,000,000 of legal-tender notes per month and pay them to its creditors, on condition of redeeming them in gold on demand (which is the present condition), its resources would be greater by reason of its not being obliged to pay out anything for silver, and hence its credit would be better. A FEW WORDS MORE ON THE COINAGE ACT OF 1873. From the N. Y. Evening Post, July 3, 1893. A correspondent for whom we have a good deal of respect writes to us to remonstrate once more against the Silver-Demonetizing Act of 1873. " Just as soon as it was discovered," says this writer, " that bimetal- lism was abolished, and before silver had fallen in price, Mr. Bland, the humorist, as Mr. White is pleased to call him, attempted to restore to the people a right that had been unwittingly taken from them." The record shows that neither Mr. Bland nor any- body else attempted to remonetize silver until after it had fallen in price more than 5d. per ounce. When the Act of 1873 was passed, the London quotation for sil- ver was 59§d. When Mr. Bland introduced his bill 34 The Gold Standard. (November, 1877), the quotation was 54£d. But that is not very important now. The assumption that "the people" had "a right" which was "unwittingly " taken from them embraces a congeries of errors which need to be exposed — all the more because they are honestly entertained. In the first place, who are " the people " who had a right that was unwittingly taken from them ? Of course, they were the people of the United States. How do we know what the people of the United States want at any particular period ? By their action in Con- gress. There is no other way by which their wants can be ascertained. Now, what do we find as to this Act of 1873 demonetizing silver? It was passed by a Congress which was the sole organ of the people as to such matters — passed by a vote unanimous in one branch and nearly unanimous in the other. " But we did not understand it," says somebody who was not a member of Congress. It was not necessary that you should understand it. This would be a queer country if it were necessary that all the people should understand all the laws before they are passed. Neither the Constitution nor common sense required that you should understand it. But neither did they forbid your understanding it if you had wanted to. Your understanding it would not have given it greater validity or higher equity. Your not understanding it took nothing from its validity or its equity. The frame of government under which you live prescribed that your representative in Con- gress should act for you. It did not even require that he should understand it, but as a matter of fact he did understand it, because it was explained to him by public officers and also in public debate. If we could get an impartial jury from another The Gold Standard. 35 country or another planet to try this question, that jury would be bound to decide that " the people" passed that Act of 1873 in its entirety, in the only way they ever pass an act applicable to the whole Union. The impartial jury would probably add that since the people had had twenty years in which to remo- netize silver, and had'not done so, but on the contrary had voted down propositions of that kind four times in the popular branch of Congress, the evidence was conclusive that they were not misrepresented by the Congress which passed the Act of 1873. They voted down the remonetization of silver on the 21st of Feb- ruary, 1878, when they substituted the Allison Bill for the Bland Bill by yeas 203, nays 72. They voted it down on the 8th of April, 1886, on Mr. Bland's direct motion for the free coinage of silver, yeas 126, nays 163. They voted it down on the 19th of June, 1890, on a motion to concur in the Senate free-coinage bill, yeas, 135, nays 152. They practically voted it down on the 24th of March, 1892, by voting against a parliamentary motion made by Mr. Bland. The majority against Mr. Bland was only two votes in this case — 150 to 148 — but it was sufficient for the purpose. If the impartial jury, in view of. these facts, should add a word about the danger of overestimating a small squad who make a deal of noise and of mistak- ing them for the whole people, such caution would not come amiss. But we are told that " a right " was taken away from the people when the Act of 1873 was passed, and the implication is that they have been vainly struggling to recover this right for twenty years — a very odd situation indeed for a country where the people can pass any law that they really 36 The Gold Standard. want. It is the fault of some writers that they use important words without explaining, perhaps with- out knowing, their meaning. What is this " right " of which the people were deprived by the Act of 1873? Rights may be legal, or moral, or religious. In which category does this right fall ? If it was a legal right, it was founded upon a law which Con- gress had the same right to repeal as to enact. It is not even affirmed that this was a valuable right, although that is implied. A man may have a legal right to two wives, but it may be an injury to him. He may have a legal right to get drunk, but that can hardly be considered valuable. All this shows the need of defining one's meaning when he talks about rights. Was this right of coinage, of which the people were deprived, a moral right ? Moral rights are matters of opinion and of dispute, but it may be affirmed with confidence that the existence of a moral right of coinage, in the sense here implied, has never been affirmed or imagined in any country or age since the world began. In the early history of California coins were manufactured by private parties and put in circulation, to pass for what they were worth, and this has been done in various parts of the world at various times. Such coins had no legal- tender property. They were small ingots which any- body could accept or refuse, according to his liking. The contention here is that a moral right exists for private persons to make 412J grains of silver legal tender for a dollar in the absence of any law to that effect and in the teeth of any law which forbids it. This is really too absurd for discussion — as absurd as it would be to claim this as a religious right. We may add that if this is a moral right, it belongs to all The Gold Standard. 37 mankind, seeing that they have all had silver money at one time or another. It, is surprising that so few- recognize it as a right or set up any claim to it. Finally we are told that this right had been taken from the people " unwittingly." We repeat that ours would be a very queer country if no law could be passed till everybody understood it. There has been a great deal of talk in the newspapers lately about an act of Congress regulating the seal fisheries in Alaska. How many people knew what that bill was before it was passed ? How many know what it is now? Even the lawyers who are discussing it before the Paris Tribunal do not agree in their understanding of it. Science has not yet devised any means to compel people to know what is going on in Congress. The difficulties of forcing such knowledge upon ten or twelve millions of voters, large numbers of whom do not speak Eng- lish or read and write any language, and still larger numbers of whom know nothing of finance, and never could by any possibility learn anything of it, are simply appalling. Even in the case of those who make some preten- sions to scientific attainment an attempt to make them understand the bills before Congress would be quite herculean. Suppose that our correspondent and the writer of this article were brought to the bar of the House and asked whether they understood the pending measure, so that it might not be passed "unwittingly" as to themselves, and suppose they should reply in the affirmative, what guarantee would Congress have that they really did understand it ? They might think that they understood it when they did not. Something of this kind actually hap- pened in connection with the Coinage Act of 1873. 38 The Gold Standard. The Hon. William D. Kelley of Pennsylvania took part in the debate on the clause dropping the silver dollar from the list of coins, and defended that clause on the ground that the silver dollar was worth three cents more than the gold dollar, and that it was im- possible to have two dollars of different values. He afterwards said that he did not understand this par- ticular part of the bill. What happened in Mr. Kelley's case would be still more likely to happen in the case of talesmen hastily summoned from the body of the people as assistant Congressmen. Our forefathers, anticipating all the difficulties attendant upon the endeavor to force all the people to understand all the bills before Congress at all stages, wisely provided that such antecedent knowledge should be dispensed with, but they took steps to give facilities for such knowledge in all ex- cept a very few cases. If it is a defect of our system that laws are passed " unwittingly," it is a defect which we share with all other governments, and it seems to us to be inherent in the representative system. At all events, we see no present cure for it. It thus appears that our correspondent, for whom, as we have said, we entertain much respect, has, in a single sentence, used three phrases, all of them im- portant, and carrying with them the gist of the de- bate on a momentous question, without any clear idea of their meaning. He has used the word " people " as though it were an entity separate and distinct from the only organ established for the ex- pression of its will, but he has not told us where we can find this entity or how we can interrogate it. He affirms that the people have been deprived of a " right " without telling us whether it is a legal or a moral right, or how it came to exist, or what portion f- .*•?■■ ■; WU- The Gold Standard. 39 of the civilized world regard it as a right, or how we are to know that it is a right, or anything about it. He has affirmed that the people were deprived of this right " unwittingly," implying that no law ought to be passed until all the people understand it. (It is not necessary, according to the hypothesis, that they should approve it, but only that they should under- stand it.) In using these phrases in this way he has " begged the question " completely, but we presume that he was not aware that he was doing so. We have taken some pains to point out his unfounded as- sumptions because we know that he represents a good many people who, like himself, are honestly in error. Copies of this pamphlet may be obtained at 5 cents a copy, postpaid. Address The Evening Post Publishing Company, 206-210 Broadway, New York City. [602E] LIBRARY JUNie 1942 AGRIC. ECON "■%&?'$£. -.-STx 1 "^H Sir - S iftt '^O rf;-r;S 4 > #1 Mi,; - / J 5 f 1 - ^. mi Si? ■ --t ■ fc- Wte ■ iSfe!^ " ; &»k»3l &W- X^^* aSlIIf 1: - I? ^?#^-ft.^. \~ : Iffe /I -.<*=*-^^/. i '*m A.AW-"