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A GOLD STANDARD: GR,
INTERNATIONAL AGREEMENT,
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N»Sítí*(ir ocouftnrion wich rcuMHuihh r"n<í>«iit
rkets with fair ¡trices, with lïo'h]'>^>ivh'én,^dh''oT^kiifffIô}i
uige- «.ml the seeurity which h jiifiup^ls. tlmi Ittouey-a
^ieh Ííe hiis'fakón tôr rtfnnëv, freo/Jàin fhom ûhirrtt 'tatfP'
tues Hiid uo fmr oiidip(}rJ§f;:or violence]/these thivgff fif^in-
^ the elements of 'géiíernl nnâ enilnriñ^ptcisperitv ninong '
f imhistrious and ¡troducing classes of the coninninitjf-l
' / —Daniel Webster in Iti44.
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ÍO /9[j- -en ;^rt- .;rt. j
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i GEOkiíK B. CURTISS. ESQ.,
• ' i 'BïNtiH.ûvreoN, N. Y; ■ " " '
jj*. Author oí ■'PRftTEi-iKfN a;3ô Pâ'os'i'felrTfY.'' ' ' '
. ' ' ■ . ' - 4
Copyrighted by George K. Curtiss, Esq.
1896.
The Call: Iíinohamtov. N.T.
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A
D&FINITIONS.
MONEY; Money is a commodity which because of its general accept^
ability and conMtipiy ^lK»\^val\» c(^munity to i
h^a.measnrerf^pcudt^ttii'ih/didmvßf.vc^X^^^eS'^*^^'^^
BULLION : Odd or silver in mass, or in the form of ingots, plate, or
the like^mf cri|th*uiKMdLfrbtai/toinI AI«t,4i|a3qrr^t'ttotó "^Wliold
foreign loih iüE, iáteXs Wre4fe|^^^ T ■ - 7Î .Tl ...
COINAGE The making of coin for use as money, or the money so
made. Also, the ystem of coins used in the country.
SEIGNIOR .GE: (i). A 'Chafge made by a government for coining
bullion brought for that purpose. (2). The difference between the cost of
bullion purchased by a govermnent fur coining and nominal, or face value
of the same c^en •^^iôcd.
GOTN- A fSVcVoffWètàl oV-AIló'y of prescTibeÖi weight dnd ^composition
stainpetl,liy Rdoli^^^ufhoirjlff.for ipRpey.;
FREE COINAGE: TÍie permissic
'■■ovvi, .. .. • cvr\
permission granted by a government that
any^^^àon rtnay'tírlng hlS g^M onsilver buHfofi'. tjr'fotbign oofn'ttifts tnint\>''
and have- ijt .C9ineí|, and rçtprped tohip^ in sljnnd^d freppf charge ,
excepting seigniorage.
'LIMITED OOI^^GB':' 'Cófasisti'ñíg^ in pMhibitin^ the ctHtlage Of \
money on indiyl.d,ual account j.estfictsy çbjpagç .Jp^^ijc|í am^^t^ as ^
thé government rnay ítom time to time buy and coin as directed bv
by
thé government
Congrefcf.. >r\v ii\
ld0i^OMETAL^SM^^,,A,financ4al theory or system of a single metallic
standard of value in coinage.
BIMETALISM; The concurrent use of gold and silver, as standard
money at a fixed relative value established by law.
SINGLE STANDARD: The use offonly one metal, as gold or silver,
as a standard of value and money of ultimate redemption.
DÜL BLE STANDARD' The use of two metals, as both gold and
silver, as standard money and money of ultimate redemption, at a ratio
fixed bylaw. ' : : . ,1 , • -.r ,
PARITY The condition of being ecjiinl ...rioiuivalent in value.
STATCTORV \'ALUE: The value at which monyy is received in
payment of debts, according to a standard fi.xed by law.
COMMERCIAL VALUE: l^e yalue at which coin will sell in the
market as a commodity.
. . ^ Iv: /...
1
• a
The Issue DefímS:
CHAPTER I. •
Tbe Issue Defined.
The political campaign of i8g6 opens with a clearly defined and square
issue on the money question. A controversy which has grown in import¬
ance and interest for nearly twenty years, has finely culminated and found
expression in the platforms of the two great political parties of the nation,
in terms which cannot be misunderstood.
In 1873 the United States, following the leading commercial nations of
the world, abandoned the use of silver as a standard measurer and money of
ultimate rede7nption. A double standard consisting of both gold and silver
was abandoned, and gold coin adopted as our value measurer and money
of ultimate redemption. This has been the policy of our government for
more than twenty-three years. The Republican party assembled in
National Convention at St. Louis, on the i6th of June, 1896, and as a
declaration of its principles adopted the following platform :
"Money."
"The Republican party is unreservedly for sound money. It caused the
enactment of the law providing for the resumption of specie payments in
1879. Since then every dollar has been as good as gold.
"We are unalterably opposed to every measure calculated to debase our
currency or impair the credit of our country. We are, therefore, opposed
to the iree coinage of silver except by international agreement with the
leading commercial nations of the world, which we pledge ourselves to pro¬
mote. and until such agreement can be obtained the existing gold standard
must be preserved. All our silver and paper currency must be maintained
at parity with gold, and we favor all measures designed to maintain invio¬
lably the obligations of the United States, and all of our money, whether
coin or paper, at the present standard of the most enlightened nations of the
earth."
The foregoing declaration pledged the Republican party, if entrusted
with the administration of the affairs of the Nation,
First—To maintain and uphold the credit of the Nation by pa3ring its
debts in the best money known to the civilized world.
Second—To maintain and keep all of the currency, whether consisting
of silver or paper, upon a parity with gold. That there shall be no debased
or depreciated currency in circulation, and that every dollar shall be equal
in purchasing and, debt paying power to every other dollar. That the dol¬
lars in the pockets of the people, the dollars which the wage earner receives
for his labor, the dollar which the farmer receives for his produce, shall be
at all times kept as sound and as good as gold.
. Third—The Republican party also declares itself opposed to the free
and unlimited coinage of silver, or in other words, it is opposed to the use
of both gold as measures of value and money oi ultimate redemp-
4 The Financial Problem.
/^'^i.PÏ'lçss-lhà*lèàîîn|»*ccrnmercial nations o£ the world unite with the
JJijit;^ St^bes^^everijment and return to a double standard under an inter-
àati'oçai'.kgr^^^iÎt;,; ! ' ;
' 'The Democratic party equally explicit inits attitude upon this question,
in its National Convention which assembled-in the City of Chicago, July 6,
1896, declared:
" Free Coinage at IS to I."
" We demand the free and unlimited coinage of both gold and silver at
the present legal ratio of to i, without waiting for the aid or consent of
any other nation. We demand that the standard silver dollar shall be full
legal tender, equally with gold, for all debts public and private, and we
favor such legislation as will prevent the demoneti^ation of any kind of
legal tender moöey by private contract."
The foregoing declaration in favor of the free and unlimited coinage of
silver at a ratio of 16 to r, was approved by more than two-thirds of the
delegates to Ihis Convention. A candidate unalterably in favor of such
piolî^ was nominated. To assert that the Democratic party is in favor of
the free and unlimited coinage of silver, even though it should result in
' destroying the credit of the nation, repudiating its obligations and estab¬
lishing a depreciated coin as a measure of values and money of ultimate
redemption, is proven by the action of the Convention. Senator Hill of
New York, in behalf of the sound money minority, offered two arriendments
to the platform, which were rejected by the Convention, as foljows :
First amendment: "But it should be carefully provided by law at the
same time that any change in-the monetary standard should not apply to
existing contracts."
Second amendment: " Our advocacy of the independent free coinage
of silver being based on the belief that such coinage will effect and main¬
tain a parity between gold and silver at the ratio of 16 to i, we declare as a
pledge of our sincerity that if such free coinage shall fail to effect such
parity within one year from its enactment by law, such coinage shall there¬
upon be suspended. "
Hence, we find the Chicago Convention declaring in favor of the free
and unlimited coinage of silver at a ratio of 16 to i, even though it should
destroy the parity between the value of silver and gold. It is in favor of
the free and unlimited coinage of silver, even though it should result in a
50 cent dollar. This is the most pronounced and emphatic declaration in
favor of repudiation and dishonest finances that has ever emanated from a
great political party. In the follo-wing pages the writer will attempt to
prove the -wisdom and soundness of the policy advocated by the Republican
party, and to expose the errors and dangers involved in the Chicago
declaration.
CHAPTER II.
Money Defined.
The most perfect definition which the writer has been able to find,
is the one given by Graham Me Adam in his "Alphabet in Finance," as
follows:
Money Defined.
S
"Money î» a commoditv which, because of Its general accepta¬
bility and commonly known value, has been selected by tbe
community to be a measure of value and medium of exchan^e.*'
This defiaition I believe to be correct. It will be observed that one
element of money is its use as "measure of value." Many things are
used as "mediums of exchange" which do not perform the office of true
money. For instance, our paper currency and silver dollars are used as
mediums of exchange, while our gold dollar is our value measurer or
standard money.
In order to advance beyond a crude state of barter or the direct ex¬
change of goods for goods, money came, into use. As man advanced from
barbarism through the various stages of the development of civilization,
many commodities have been selected and used for money. One after
another however, was rejected as experience demonstrated that something
else was better adapted for that purpose. Cattle weie used by the ancients,
copper nails by the Greeks, wampum and beaver skin by the North American
Indian; in India, tea; China, silk; and even as late as our Colonial times,
cattle and other commodities were used by colonists. " It should be re¬
membered, however, that no goods without a marketable value have ever
been used as a value measurer.
"Many primitive nations,'' says Hake in 'Free Trade in Capital.' pages
35 and 36, "have used awkward value-measurers which must have given
them a great deal of trouble, especially in the case of small exchanges.
Thus, for instance, where the unit of the value-measurer was a cow or a
reindeer, small exchanges must have been complicated affairs. The desire
to store the value measurer, the necessity of transporting it to considerable
distances, and the occasional demand for very small parts of it, caused our
ancestors to look about for a value-measurer that would not perish easily,
was small in bulk, and could be sub-divided without deterioration in value.
The metals alone answered these exigencies, and were early selected as
value-measurers by progressing nations."
As man has become more enlightened, and more capable of satisfying his
needs, we find the onward march of civilization indicated by the
demonetization of wampum, cowerie shells, copper nails, cattle, iron,
and every commodity which by experience has been proven to be un-
suited to perform the functions of true money. The choice finally settled
down between gold and silver. Silver held its place after successive
changes in ratio, through centuries, until finally the most highly civilized
nations have discarded its use and chosen gold as the commodity best fitted
for this purpose. For more than 20 years now, none but the most barbar¬
ous, backward and least enlightened nations have continued its use as
standard money.
CHAPTER III.
Money as a Medium of Bxcbange.
Money is used both as a value-measurer and as a medium of exchange.
As a value-measurer it enters into every exchange of property and per¬
forms its office whether bodily present or not ; but as a medium of exchange
e
The Financial Problem.
it may or may not be u.sed. Exchanges may be effected and in most trans¬
actions are effected by the use of substitutes for money.
"It should here be carefully noted that the value-measurer and the
mediums of exchange, though often represented by the same metal and the
same goods, are two distinct conceptions which unfortunately many writers
on economics have hopelessly confounded. A value-measurer used abso¬
lutely in a transaction, but which has not been used bodily and has not
actually changed hands, is not considered as a medium of exchange."
Over 95 per cent, of the exchanges of property and business transac¬
tions of the leading nations of the world, are effected with mediums of
exchange other than coin or true money. What are these mediums of ex¬
change ? Checks, drafts, bills of exchange, promisory notes, book accounts
based on the credit of those engaged in the transactions, and currency.
Space will not permit an historical account showing the rise and growth
of the means now used for making and facilitating exchanges. At first
barter pure and simple, or a direct exchange of goods for goods between
individuals. In the next stage of development we find the introduction of
money, or the selection of some commodity to act as a measure of value
and a medium of exchange. The metals, gold and silver, finally came into
use and gradually superseded the direct trading ot goods. As commerce
and trade extended between merchants residing in different countries, a
more safe and convenient medium of exchange was made necessary. The
imperfect means of communication, the danger of loss from pirates and
robbers, as well as the inconvenience of shipping coin from place to place,
suggested and brought about a system of credit. Book keeping was intro¬
duced, accounts were kept ; instead of shipping coin in payment, it became
the custom of traders to settle their balances through invoices of goods.
In the commerce which arose between the Italian cities and those of central
and western Europe in the Middle Ages, the system of carrying on trade
and effecting exchanges through the use of commercial paper, and holding
coin for the purpose of settling final balances, came into general use. This
system of credit facilitated exchanges between those who were known to
be responsible ; but among those traders of scanty means, between those
unknown to each other, the actual passing of coin was made necessary to
effect exchanges, and continued until more convenient instruments were
devised. A person wishing credit could obtain the endorsement or guar¬
anty from some person well known to the party of whom it was desired to
obtain goods or commodities, or he could borrow at home, by making his
promisoiy note or obligation and procure a draft from an individual to send
abroad. Hence, indirect credit arose. A trader did busine.ss in foreign
parts on another's credit. The money lender appears. Those who had
accumulated coin loaned it at rates of interest to those who desired it,
either for the purpose of settling balances or effecting exchanges. Banks
were established which provided safe places for keeping coin, by individ¬
uals who not only kept their own coin for loan, but received for deposit and
safe keeping the coin of other individuals, to whom they paid interest for
the priijilege of receiving it and again loaning it at advanced rates of inter¬
est to customers. Upon this coin held by individuals and banks, checks,
drafts and promisory notes were given, which circulated from hand to hand
Redemption Money.
7
among traders, effecting numerous exchanges of commodities, until they
finally returned and were cancelled by the coin which had been held in re¬
serve for their payment when presented. The next step in the progress of
banking was the issuing of bank notes, which were promises to pay their
face demand in coin. These bank notes circulated with other commercial
paper, remaining out and performing the office of mediums of exchange
until presented for redemption or so worn that they were returned for re¬
newal. Private banks have been established in all the trading centres,
until every locality has an institution of this kind, not only to receive de¬
posits and make loans, but also to issue their own notes.
The practice of issuing paper and fractional currency by governments
has also increased the volume of mediums of exchange. The fractional
currency, consisting of copper and silver coin, are designed for small trans¬
actions, are of limited legal tender and circulate freely in the channels of
trade, by common consent, although their commercial is much less than
their statutory value. The paper currency of the United States consisting
of'greenbacks and national bank notes, are simply promises on the part of
the government to pay the bearer their face value in standard money (gold)
and are worth their face in gold, because they can at any time be exchanged
by their holder for gold. Although the use of silver dollars has been dis¬
continued as standard money, they are still very largely used by the United
States and all gold .-.tandard countries as mediums of exchange, and are
kept at a parity with gold and equal in purchasing and debt-paying power
to gold, the same as the greenback, because they can be directly or indi¬
rectly exchanged for gold dollars. Hence, the United States governmetst,
the same as private banks with a small gold reserve, sustains and keeps
in circulation a large volume of currency as a medium of exchange, by giv¬
ing gold for them to any person who prefers to make the coin.
Money of Ultimate Redemption or of Final Account.
Standard money'is necessarily required to settle balances with foreign
countries, to redeem the paper currency issued by governments and banks,
and also to discharge and cancel national obligations, such as the payment
-of bonds by a government. In the settlement of balances between banks
and individuals in domestic trade, standard money may or may not be
used. When balances are struck and settled at the clearing house at New
York, iu the banks generaliv through the country, or between merchants
and individuals, coin is scarcely ever required. Our paper money, green¬
backs, national bank notes, silver and gold certificates, which are circu¬
lating mediums, take its place. Hence, the offije which coin or standard
money plays in business transactions was well expressed by Daniel Web¬
ster in June, 1844, who said:
"If bills of exchange were unknown then coin would exchange hands
from country to country in order to pay debts and settle balances, as the
course of trade should have created such balances, on the one side or the
other. Coin is the universal solvent of such balances, the general pay¬
master, whose office is to tquare accounts arising from the interchange of
commodities. If produce exported becomes debtor to produce imported,
coin must pay the difference, and where exports throw a credit over im-
8
The Financial Problem.
ports, coin returns to adjust the account. All of this is as simple in the
order of things as is the proceeding of a farmer who goes to the market
town with the produce of his farm and with money in his pocket, if he
wishes to buy more than he has to sell, or bringing home more money, if
his sales exceed his purchase."
Limited Use of Coin.
It is most interesting to note that in the development of civilization
man has passed from a period when coin performed all the offices of meas¬
uring values, settling accounts, and facilitating exchanges, to a state in
which its use is confined almost exclusively to measuring values, redeeming
obligations and settling final balances between foreign countries. In the
development of banking and the extension of credit, coin has become
almost wholly superseded as a medium of exchange. The introduction of
railroads, telegraphs, telephones, the establishment of postoffices and the
facilities for carrying mails, the increased use of checks and drafts in small
transactions by the masses, have year by year tended to further restrict its
use. The experience of man has proven that coin is the ynost incon¬
venient medium of exchange. It is too heavy and bulky to carry on one's
person, too expensive to ship, but as a value measurer and as money of
ultimate redemption, it has become more indispensable than ever.
The restricted use of coin in the business transactions of the country
is very ably disclosed by the following quotation from a speech delivered
by Congressman Walker of Massachusetts, in the House of Representatives,
on February 17th, 1894:
Mr. Walker. You can not fairly disclaim it. Every speech you make,
every vote you give here on these questions, does it. Why, the paper
money, or currency, as you call it. doe.s g8.7 per cent, of all the daily trans¬
actions in trade. 1 learn from volume i, page 32, of the Comptroller's Re¬
port for 1892, that in checks, cashier's checks, drafts, bills of exchange, 47
per cent, is done ; in clearing-house certificates, 43 per cent.; telegrams
and miscellaneous, r.67, making 98.7 of the exchanges in this country that
are done with paper, and that we only use 1.2g per cent, in coin. Gentle¬
men, you, in your coinage legislation, you are legislating upon the lines of
barbarism, absolute barbarism. It is only the barbarian who wants the
solid coin in his hand, in his business transaction, and just so far as you
get Christian civilization and get out of a barbaric condition and barbaric
ideas, you want less and less of actual coin.
CHAPTER V.
First Coinase Law Under the Constitution. The Money of the
Cunstitutlon.
The Constitution adopted in 178g conferred upon Congress certain
powers and imposed the performance of certain duties, one of which was
the establishment of a monetary system. Article i. Section 8, of the Con¬
stitution says:
"Congress shall have power to coin money, regulate the value thereof
and of foreign coin, and fix the standards of weights and measures."
Act of 1792.
9
Among the limitations imposed upon the several states of the Union,
Section 10 of Article i of the Constitution reads:
"No State shall * * coin money; emit bills of credit; make anything
but gold and silver coin a tender in payment of debts."
The foregoing are the provisions of the organic law of the United
States upon the subject. While the first quoted confers a specific power
upon Congress; the second is simply a restriction on the States.
The lack of uniformity in the coins of the several colonies, the advan¬
tage which would arise from one universal system for the nation, and the
losses and constant derangement of business which had followed the
attempts at legal tender fiat paper money, had proven the necessity of im¬
posing restrictions on the states and vesting the whole power over coinage
and legal tender in Congress.
Congress then, is not required to make money out of any particular metal
or metals, and there is no such thing as "money of the Constitution" in the
sense that either gold or silver, or that both gold and silver, must be
selected as the commodity out of which our money is made. The fact that
the word "coin" is used, indicates that the people intended that some
metallic substance should be adopted, but left its selection wholly to the dis¬
cretion of Congress.
The action of the first Cong^ress in selecting both gold and silver is not
binding on any subsequent Congress, but may be changed at the will of
the people.
The act of Congress passed in 1792, provided for the coinage of both
gold and silver into standard money. The act was as follows:
Section 9 Law of 1792:
"That there shall be, from time to time,struck and coined at said mint,
coins of gold, silver and copper of the following denominations, values and
descriptions, viz: Eagles—each to be the value of ten dollars or units, and
to contain 247 grains and 4-8 of a grain of pure, or 270 grains of standard
gold. (Half-eagles and quarter-eagles of corresponding weight and fineness. )
Dollars or units—each to be of the value of the Spanish mill dollar as the
same is now current, and to contain 371 grains and 4-16 of a grain of pure,
or 416 grains of standard silver."
While there was but one unit of account established, two kinds of
standard money was adopted. One, to be coined from gold, and the other,
to be coined from silver. The act provided for the coinage of gold into ten
unit pieces, five unit pieces and two and one-half unit pieces; and
for the coinage of silver into one unit pieces, half units, and
other fractions of the unit. The dollar containing J7i^ grains of pure
silver was not the unit, but simply represented one unit, as the ten dollar
gold piece represented ten units. If gold had been coined into pieces
representing one unit, it would have required 24 7-10 grains of pure gold.
We would have had the unit for stating accounts and for computing and
counting money, even though no provision had been made for the actual
coinage of the silver or gold dollar. The unit would still have been the
"dollar" composed of 371X grains of pure silver and 24 7-10 grains of pure
gold.
It should be noted in this connection, that but few silver dollars were
10
The Financial Problem.
coined when the mint was first opened. The new full weight sil¬
ver dollars which came from the mint, were heavier and more valuable
than the worn Spanish dollars in circulation. These United States dollars
were sent to the West India Islands and other places and exchanged for the
less valuable Spanish dollars, which were brought into the country and put
out at a profit. To prevent this speculation, in 1806, Madison, Secretary of
the Treasury, made'an order suspending the coinage of the silver dollar
and no more were struck at the mint until 1836. In 1849 the coinage laws
were revised and provision was for the first time made for the coinage of a
gold dollar. It could not be contended with any degree of reason, that
during this period we had no unit of account, even though no dollars were
coined.
By section i of the act of February g, 1793, the foreign coins of gold
and silver were declared to be legal tender in the payment of debts and to
be taken as follows:
"Seciion i. Be it enacted by the Senate and House of Representa¬
tives of the United States of America, in Congress assembled: that from
and after the first da-*- of July next, foreign gold and silver coins shall pass
current as money within the United States, and be a legal tender for all the
debts and demands at the several and respective rates following, and not
otherwise, namely;
"The gold coins of Great Britain and Portugal of their present stand¬
ard, at the rate of 100 cents for every 27 grains of the actual weight
thereof. * * * The gold coins of France. Spain and the dominions of
Spain, of their present standard, at the rate of 100 cents for every 27 grains
and two-fifths of a grain of the actual weight thereof. Spanish mill dollars
at the rate of 100 cents for each dollar, the actual weight whereof shall not
be less than seventeen pennyweights and seven grains, and in proportion
for the parts of a dollar."
(The act further designated the value at which other foreign coins were
to be taken.)
The act of 1792 further provided for the establishment ot the mint, de¬
termined the degree of fineness or the amount of alloy which should be put
into each coin, and also directed the coinage of fractional currency. It
opened the mint to the free and unlimited coinage of gold and silver.
The standard weight, which included the alloy, as compared with the
content of pure metal, was as follows:
standard Weight. Pure Gold.
Eagle 270 Grains, Troy 247)^ Grains, Troy
Half-eagle 135 " " 123^^ " "
Quarter-eagle 67)^ " " 61^ " •'
Standard Weight, • Pare Silver.
Dollar 416 Grains, Troy 37'X Grains, Troy
Half-dollar 208 " " 185X " "
Quarter-dollar 104 " •' 9213-16"
Dime 204-5" " 18 9-16"
Weight of copper cent 264 " "
Weight of half-cent 132 " "
The degree of fineness of the standard coins (which includes the alloy),
was as follows :
Silver coins: 1485 parts pure silver, and 179 parts alloy, the alloy to
consist wholly of copper.
Act of 1792.
II
The gold coins were to be 11 parts gold and i part alloy. The alloy of
the gold coin consist of one-half silver and one-half copper.
Botb Gold and Silver were Made L.e(;al Tender for the Payment
of Debts.
Section It of the act of 1792 provided: "That the proportional value
of gold to silver in all coins which shall bv law be current as money within
'the United States, shall be as 15 to i, according to thè quantity in weight
of pure gold or pure silver; that is to say, every 15 jwunds of weight of pure
silver shall be of equal value in all payments with i pound weight of
pure gold, and so in proportion as to any greater or less quantities of the
respective metals."
Hence, the ratio of the value of the gold and silver coin, was 15 to i.
It should be observed that Congress did not declare that this should be the
commercial value of the metals. It simply declared that "Every 15 pounds
weight of pure silver should be equal in value in all payments of debts
with I pound weight of pure gold."
The leading characters in drafting and formulating this monetary sys¬
tem were Alexander Hamilton, secretary of the treasury, Robert Morris,
the great financier of the Continental Congress, and Thomas Jefferson.
The records show that great care was taken to ascertain the commer¬
cial value of the two metals, that the nominal value should correspond
with the commercial value. Mr. Jefferson says in his notes on the subject:
"The proportion between the values of gold and silver is a mercantile
problem altogether. * » * Just principles will lead us to disregard legal
proportions."
Alexander Hamilton said, in his report to Congress :
"There can hardly be a better rule in any country for the legal than
the market proportions."
This shows that the statesmen of that time did not think (as the silver
men now claim) that Congress by arbitrary laws could fix the value of the
two metals. They at first attempted to discover the true commercial ratio,
and after this was ascertained they conformed the legal ratio to it. They
concluded that one grain of gold was worth as much as fifteen grains of
silver, and fixed the standard accordingly.
Prior to the adoption of a double standard in 17.92, the commercial
value of the two metals had been very uniform for about 100 years. Their
fluctuations had been very .slight. The mints of all countries were open to
the free coinage of both. By the act of 1792, our mint was opened to the
free coinage of both metals, and they were both made a legal tender.
But the dangers and uncertainties attending a double standard were
then understood and considered. It was feared that silver might decline in
value, that no gold would be attracted to our mint, and the cheaper metal
would become the .standard money in use and we would, in fact, have a
single standard. Mr. Hamilton said, in his report upon the subject:
"One consequence of over valuing either metal in respect to the other,
is the banishment of that which is undervalued. « * « it would come
to pass that the greater part of the gold would be collected in the one and
the greater part of silver in the other country,"
12
The Financial Problem.
Failure of the Double Standard.
The ratio which was established, undervalued gold. It was soon dis¬
covered that a mistake had been made. The commercial ratio instead of
being T5 to i, was alxiut 15^ to i. A law in finances announced by Sir
Thomas Gresham in the i6th century, that an inferior and superior coin
will not circulate together, upset the work of Congress and placed the
country on a single silver standard basis.
Gold being worth more to sell as bullion in the markets of the world
than when coined into money, was exported and withheld from circulation.
This left silver to perform the work designed for both. The record of the
United States mint show that from 1792 to 1835 only $; 1,825,890 of gold
was coined; while that of silver reached $36,275,077 of full legal tender;
minor coinage of silver, amounted to $658,691.58.
Pages of proof might be written to sustain this proposition, compiled
from the debates in Congress, reports of Secretaries of the Treasury, and
other reliable authorities of the time. Thomas H. Benton, in his "Thirty
Years View" of the workings of the United States government from 1820 to
1750. gives an authentic account of the facts. His long experience as a
United States Senator, and the unquestioned authority of his writings,
should satisfy every candid reader upon this subject. He said, (page 442,
vol. i.);
"The nth section of the act of April 17, 1792, enacted that every 15
pounds of pure silver, should be ec[ual in value, in all payments, with one
pound of pure gold ; and so in psoportion in less quantities of respective
metals. This act was the death warrant to the gold currency. The dimin¬
ished circulation of that coin soon began to be noticeable ; but it was not
immediately extinguished. « * * The extinction is now complete, and
must remain so until the laws are altered."
Again he says, vol. i, page 443:
" It is not to be supposed that gold will come from these countries to
the United States if the importer is to lose one dollar in every sixteen that
he .brings; or that our gold will remain with us, when an exporter can gain
a dollar upon every 15 which he carries out. Such results would be con¬
trary to the laws of trade ; and therefore we must place the same value upon
gold that other nations do, if we wish to gain any part of theirs, or to regain
any part of our own."
It should be noted in this connection that although the records of the
mint show that some gold was coined during this period, that it was not
coined for, or put into, circulation. Mr. Benton says upon this point, lb.
page 443:
"That the fal.se valuation put upon gold had rendered the mint of the
United States, so far as the gold coinage is concerned, a most ridiculous
and absurd institution. It has coined (up to 1834), and that at a large ex¬
pense to the United States, 2,262,717 pieces of gold, worth $11,852,890; and
where are these pieces now ? Not one of them to be seen. All sold and
exported ; and so regular is this operation that the director of the mint, in
his latest report to Congress, says that the new coined gold frequently re¬
mains in the mint, uncalled for, though ready for delivery, until the day
arrives for a packet tp sail to Europe. He calculates that two millions of
native gold will be coined annually hereafter, the whole of which, without
a reform of the gold standard, will be conducted, like exiles, from the
national mint to the seashore, and transported to foreign regions, to be sold
for the benefit of the bank of the United States,"
Acts of 1834.
13
Here we have the most convincing evidence of the result which fol¬
lowed an attempt at bimetalism under'the free and unlimited coinage of
both gold and silver, at the ratio fixed by Congress in 1792. Instead of
having more money, the people had less than they would have had under
the free coinage of one and the limited coinage of the other.
CHAPTER VI.
Colnaee Laws from 1834 to I860.
act of 1834.
After a period of 34 years of experience with a double standard and the
expulsion of gold from circulation, legislation was effected to remedy the
«vils from which the country was suffering. This, in part at least, was
sought to be accomplished by a revision of the coinage laws, aud a change
in the legal rates of gold and silver. Benton and Jackson favored a gold
basis.
Mr. Linderman, director of the United States mint (Money and Legal
Tender, page 27), gives the following account of the legislation of 1S34 and
1837.
" The Monetary Act of 1792 continued in force and without modification
or amendment until June 28, 1834, when an Act was passed prescribing the
following weights for the gold coins respectively ;
standard Weight. Pure Gold.
Eagle, value $10 258 Grains 232 Grains
Half-eagle, value $5 129 " 116 "
Quarter-eagle, vajue $2.50 64" 58 "
This Act further provided that said gold coins should be received in all
payments, when full weight, according to their respective values; and
when of less than full weight, at less value, proportioned to their actual
respective weights.
The standard fineness of the above coins, was 899.225 thousandths, and
was retained until changed to 900 thousandths by the Act of January 18,
1837. The weight of the gold coins were not, however, altered by this last
Act; and all gold coins made after July 31, 1834, are legal tenders accord¬
ing to their nominal values."
Colaatfe Law of 18-19 and 1853.
In 184g, provision was made for the coinage of the twenty dollar,
and one dollar gold pieces. Section i of the Act of March 3, 1849, 'î»
follows :
Be it enacted by the Senate and House of Representatives of America
in Congress assembled. That there shall be, from time to time, struck and
coined at the mint of tbe United States and the branches thereof, conform¬
ably in all respects to law (except that on the reverse of the gold dollar the
figure of the eagle shall be omitted), and conformably in all respects to the
standard for gold coins now established by law, coins of gold of the follow¬
ing denomination and values, viz,, double eagles, each to be of the value of
twenty dollars or units, and gold dollars, each to be of the value of one
dollar, or units."
By the Act of February 21, 1853, the three dollar gold piece was intro¬
duced.
14
The Financial Problem.
These new coins were to contain the following number of grains of
pure and standard gold ;
Dollars 25.8 Grains Standard 23.22 Grains Fine
Double eagle 516.0 " " 465.40 " "
Three-dollar piece 774 " " 69.66 " "
The acts of 1834 and 1837 changed the legal ratio of coinage from 15 to
i to 15.98 to i, which was called 16 to i. Silver was under-valued. The
coinage ratio of the principle European countries was 15)^ to i, which gave
to silver a higher valuation as bullion in the markets of the world than its
coinage value at the United States mint. Hence, the position which the
two metals had occupied for circulation in the United States, was now
reversed.
October 9, 185.1.
Gold was attracted to the mint and passed into circulation. Silver
was now expelled, and in 1853 the coinage laws were amended by suspend¬
ing the free coinage of the fractional coins.
" This act," says the director of the mint, (Report of 1893, page 86),
"withdrew the right from individuals to have silver pieces of less value than
one dollar coined at the mint, and authorized the secretary of the treasury
to buy silver bullion on government account and have it coined into
the fractional silver pieces. The coinage of the silver dollar, however,
remained free to individuals, but a coinage charge of one-half per cent was
imposed for gold and silver. "
The following changes were made in the size of the coins:
Under act of 1837. Underact of 1858
Half-dollar, weight 206}^ Grains 192.0
Quarter-dollars, weight 103)^ " 96.0
Dime, weight 41X " - 38-4
Half-dime, weight 20^ " 19.2
The legal tender quality of these coins which had hitherto existed to
any amount, was by the act of 1853 limited to five dollars. By this act
silver was in part demonetized and the system of limited coinage intro¬
duced. The government within the next ten years, coined on its own
account about $50,000,000 under this act.
By section 3, of the act of February 21, 1857. all laws making foreign
coins a legal tender, were repealed.
The silver dollar as it existed under the laws of 1834 apd 1837, was
not interferred with. Its free coinage and full legel tender quality was
continued until 1873 when it was omitted from the coins which could be
struck at the United States mint, or as the free silver advocates now claim,
it was demonetized.
The purpose of the acts of 1834, 1849, 1853 and 1857, were to put
the government on a gold basis and bring into use the gold dollar as the
sole standard of value, and to dispense with any further efforts at maintain¬
ing a double standard.
In the debate in Congress on the act of 1S53, Mr. Dunham, who
proposed the bill on behalf of the Ways and Means committee says:
"Another objection urged against the proposed change is that it gives us
q standard of gold only. What advantage is to be gained by a standard of
Bent.on's Opinion.
15
two metals which is not as well, if" not much better, obtained by a gold
standard I am unable to perceive, while there are very great disadvantages
resulting from it. as the experience of every nation which has attempted it
has proved. Indeed, it is utterly impossible that you should maintain a
double standard. Gentlemen talk about a double standard of gold and
silver as a thing that exists and that we propose a change.
We have had but a single standard for the last three or four years.
That has been and is now gold. We propose to let it remain so, and to
adapt silver to it, and to regulate it by it."
While the act of 1834 was pending, Mr. Benton, in urging its passage,
argued in favor of gold as a standard, and pointed out its .fitness, etc.
"Thirty Years View " page 442;
"In making this annunciation, and in thus standing forward to expose
the error, and to demand the reform of the gold currency, he (Mr. Benton)
was not setting up for the honors of a first discoverer or a first inventor.
Far from it. He was treading in the steps of other and abler men, who had
gone before him. Four Secretaries of the Treasury, Gallatin, Dallas,
Crawford, Ingham, had, each in their day, pointed out the error in the gold
standard, and recommended its correction. Repeated reports of committees,
in both Houses of Congress had done the same thing Of these reports he
would name those of the late Mr. Lowndes of So th Carolina; of Mr. San-
ford, late a senator from New York; of Mr. Campbell P. White, now a
representative from the City of New York. Mr. B. took pleasure inrecalling
and presenting to public notice, the names of the eminent men who had
gone before him in the exploration of this path. It was due to them, now
that the good cause seemed to be in the road to success, to yield to them all
the honors of first explorers ; it was due to the cause also, in this hour of
final trial, to give it the high sanction of their names and labors-"
The purpose that this legislation had in view of bringing gold into cir¬
culation, was certainly accomplished. Mr. Benton says, "Thirty Years
View," page 46g:
The good effects of the bill were immediately seen. Gold began to
flow into the country through all the channels of commerce; old chests
gave up their hordes; the mint was busy; and- in a few months, and as if
by magic, a currency banished from the country for thirty years overspread
the land, and gave joy and confidence to all the pursuits of industry.
No further evidence should be required upon this proposition.
From 1834 to 1861 the finances of the United States had moved on the
lines of a single gold standard. It had become by practice the money of
ultimate redemption and the value measurer. Our internal trade, the busi¬
ness of the whole country, and our foreign exchanges, had become adjusted
to a single gold standard. This was the condition at the breaking out of
the great Rebellion in 1861. The attempt to use both gold and silver upon
a legal ratio, as a standard of value, had utterly failed and proven as im¬
possible in practice as the use of two yardsticks differing in length, one at
36 inches and the other at 34. This had not only been demonstrated, but
experience had proven that with the free and unlimited coinage of both
metals, at a ratio fixed by law, the two metals could not be kept in circula¬
tion together. The cheaper would pass into use and expel the dearer.
i6
The FiNANciAit Problem.
CHAPTER VII.
Greenbacks.
Although the government had on several occasions issued interest-
bearing treasury notes, it was not until the Legal Tender Act of February
25th, 1862, that a provision was made for issuing paper currency which was
made a legal tender in payment of debts. Under an act passed February
25th, 1862, known as the Legal Tender Act, $150,000,000 of non-interest
bearing notes were authorized to be issued ; they were made payable to the
bearer and a legal tender for the payment of all debts, public and private,
except duties on imports and interest on the public debt. The government
also agreed to receive them in exchange for six per cent, bonds, and upon
all loans that thereafter might be made by the government. Other acts
were passed providing for further issues of this currency ; the time, how¬
ever, within which they were exchangable for government bonds was lim¬
ited to July ist, 1863. The following table shows the various issues of
greenbacks that were made during the war period :
Authorizing Amount Amount Length of
Act. Authorized. Issued. Loan. Sold at. Rate of Interest.
Feb. 25,1862.$150,000.000 )
July ii, 1862. 150.000,000 $447,300,203 Indefinite Par None
Mar. 3, 1863. 150,000,000)
í 44,520,000 i year Par 5 per cent.
Mar. 3, 1863. 400,000,000 •< 166,480,000 2 years Par 5 per cent.
( 266,595,440 3 years Par 6 per cent, comp'd
Those bearing five per cent, interest, payable in one and two years,
and those of 1863, bearing 6 per cent, interest, were made a legal tender
only for their face value, exclusive of interest, and in a very short time
were withdrawn from circulation.
Silver having totally disappeared from circulation, such a scarcity of
small change arose that Congress met the difficulty by issuing fractional
currency or postal notes in denominations of 5, 10, 25 and 50 cents. The
amounts and dates of the various issues were as follows ;
Act of Congress. Series. Amonnt Issued.
July 17, 1862 First $ 20,215,635.00
Mar. 3, 1863 Second 23,164,483.65
June 30, 1864 Third 86,115,028.80
June 30, 1864 Fourth 176,567,032.0c
June 30, 1864 Fifth 62,661,900.00
Total issue $368,724,079.46
National Banks.
On the ist of January, 1861, there was in circulation $202,000,767 of
State bank paper currency. Of this amount $152,000,000 was of the banks
in loyal States, and $50,000,000 in the Confederate States. There was also
in circulation of specie, including the amount in the United States treasury,
$250,000,000.
The next step in the financial legislation of this time, was effected by
a bill introduced by Senator Sherman^ January 26, 1863, for the incor¬
poration of National Banks. A tax of ten per cent, was levied by the gov-
PuBi.ic Creuit Act.
17
ernment on the circulation of the State Banks, which forced it out of exist¬
ence, and confined the paper currency of the country exclusively to that
issue by the National Banks and the United States.
Specie payments were suspended by the state banks and by the general
government from January ist. 1862, to January ist, 187g.
The first act providing for the incorporation of National Banks passed
Congress, and was approved by the President, February 25th, 1863. This
act, however, was repealed, and gave place to another similar in character,
which became a law June 3d, 1864. The law sought to accomplish two
purposes; first, an increase in the paper currency of the country; second,
to provide a market for the government bonds at home. Section 21 of the
latter act provided :
"Upon the transfer and delivery of United States bonds to the Treas¬
urer of the United States, as required by section 20 of the act, a national
bank association should receive from the Comptroller of the Currency cir¬
culating notes of different denominations equal in amount to 90 per cent,
of the amount of said bonds at the par value thereof. By section 22 it was
enacted that the entire amount of notes for circulation to be issued under
the act should not exceed $300,000.000. This amount wassubsequently in¬
creased by law. The largest amount of national bank notes outstanding
was in January, 1883, when it rose to $362,651,169, and the lowest in July,
1891, when it had declined to $167,927,574. In December, 1894 it was
$207,472 603, and on November i, 1895, $207,364,628."
The issue and sale of bonds began immediately upon the breaking out
of the war and continued until its close. By 1865 the National debt had
reached the enormous sum of $2,808,549,337. ' The expenditures during the
war had been $3,752,844,234. It is a most remarkable fact that the
Rebellion was suppressed and the finances of the government managed,
without placing a loan in foreign countries. Mr. Fessenden, the Secretary
of the Treasury, stated in his report to Congress in 1864, that;
"This nation has been able thus far to conduct a domestic war of
unparalleled magnitude and cost, without appealing for aid to any foreign
people."
The uncertainty of the ability of the government to meet these obliga¬
tions, caused the depreciation of the greenbacks to such an extent, that on
July 16, 1864, gold was at a premium of $2.84. One dollar in gold was
worth $2.84 in greenbacks. With an impaired credit, the country flooded
with depreciated currency, we were in the midst of a period of inflation
and speculation, which involved the business of the country in the most
dire uncertainties. The work of restoring the credit of the nation, redeem¬
ing and paying our obligations, refunding our bonded indebtedness at a
lower rate of interest, and finally bringing every greenback to a par with
gold, presented a financial problem snch as few nations in the historyof the
world had ever been called upon to solve. But the nation was saved. The
energy, industry and productive powers of a united, industrious and am¬
bitious people, proved equal to the task.
The first step in this direction was to reduce the volume of depreciated
and inflated currency in circulati >n. By Act of Congress passed the 12th
day of April, 1866, the Secretary of the Treasury was authorized to pay,
cancel and retire not more than $10,000,000 of greenbanks with in the first
i8
The Financial Problem.
six months, and to continue their retirement at the trate of $4,000,000 per
month. This act was repealed, however, February 4, 1868. Next followed
the Public Credit Act. passed March 18, 1869, which concluded with the
following pledge of the government.
"And the United'States solemnly pledged its faith to make provision at
the earliest practicable period for the redemption of the United States notes
in coin."
This act was passed in pursuance of a message of President Grant, who
recommended a speedy return to a specie basis. The next step was to
fix the time when such payment would be made.
Resumption Act.
One of the most famous acts in our finamcial history, one which caused
no little controversy, fixed the time for resumption of specie payments, and
is known as the Resumption Act. This was passed on January 14th, 1875,
and declared that ;
"On and after January ist, 1879, the Secretary of the Treasury, shall
redeem in coin the legal tender notes then outstanding, on their presentation
for redemption at the office of the Assistant Treasurer of the United States,
in the City of New York, in sums of not less than $50.
It was also provided by the same act, that of all greenbacks outstanding
in exce.ss of $300.000,000, So per cent of such excess should be redeemed by
the substitution of National Bank Notes for the same. The paper money
infiationtists of the time, urged as their chief argument against the resump¬
tion of specie payment, that there was not sufficient gold for the purpose.
Horace Greely said that "the way to resume, is to resume."
A Gold reserve was being accumulated through the receipts of the
Custom House, under an act passed February 26th, 1862, which had
provided that all the duties on imported goods should be paid in coin,
which should be set apart as a special fund to be applied, first, to the
payment of interest on the bonds of the United States, and the surplus to
be placed in a sinking fund which was intended ultimately to be used for
resumption purposes when the government should again return to a spiecie
basis. During all the years, especially from 1874 to 1879, the Secretary of
the Treasury was making preparations to solve the financial problem which
had plunged the nation into the most violent political discussion. As soon,
however, as the resumption act was passed, confidence was restored, the
credit of the nation raised, and the value of the greenbacks rapidly
advanced until the ist of January, 1879, when the time arrived for their
redemption, they were worth their face in gold; and instead of the treasury
being drained of its specie, as had been predicted, the people preferred to
have the paper currency in their pockets to use as a medium of exchange,
to the gold which was in the treasury. Mr. J. K. Upton, Assistant
Secretary of the Treasury, in an article written at the close of 1892, gives
the following account of the manner in which the government passed to a
specie basis and entered upon that policy of maintaining all of its obliga¬
tions at par with gold which it has continued to the pre.sent time:
"The year, however, closed with no unpleasant excitement, but with
uupleasant forebodings. The ist day of January was Sunday and no
business was transacted. On Monday anxiety reigned in the office of the
Demonetization of Silver.
19
secretary. Hour after hour passed ; no news came from New York. In¬
quiry by wire showed all was quiet. At the close of business came this
message : ' $135,000 of notes presented for coin—$400,000 of gold for notes. '
That was all. Resumption was accomplished with no disturbance. By
five oclock the news was all over the land, and the New York bankers were
sipping their tea in absolute safety.
"Thirteen years have since passed, and the redemption fund still
remains intact in the sub-treasury vaults. The prediction of the secretary
has become history. When gold could with certainty be obtained for notes,
nobody wanted it. The experiment of maintaining a limited amount of
United States notes in circulation, based upon a reasonable reserve in the
treasury pledged for that purpose, and supported also by the credit of the
government, has proved generally satisfactory, and the exclusive use of
these notes for circulation may become in time, the fixed financial policy of
the government."
The gold reserve to be held for this purpose was fixed by statute at
$100,000,000.
The greenbacks which had been denounced as "rag money," and
discredited by many citizens, now began to be prized and recognized as a
useful and convenient medium of exchange. Hence, an Act was passed on
the 31st day of May, 1878, prohibiting the further cancellation of green¬
backs, and declared that :
"When any of said notes may be redeemed or received into the Treas¬
ury, under any law, from any source whatever, and shall belong to the
United States, they shall not be retired, cancelled or destroyed, but they
shall be re-issued and paid out again and kept in circulation."
The volume of greenbacks at this time amounted to $346,681. This
amount has since been kept good by renewal. We passed not only to
a specie, but to a gold basis, and with a reserve of $100,000,000 of gold, we
have not only maintained the whole volume of greenbacks and national
bank notes on a parity with gold, bilt we have been able to maintain a vast
volume of silver certificates and silver dollars above their commercial value
and kept them also at a parity with gold.
CHAPTER VIII.
Demonetization of Silver.
It has been pointed out that under the coinage law of 1792, the minis'
of the United States ■were open to the free and unlimited coinage oL^th
gold and silver as standard money, at a rate of 15 to i. That when the
coinage laws were revised in 1834, the ratio was changed to 15^-100 to i,
or as it is commonly called 16 to i. This law stood on the statute books in
1873. Although both gold and silver had been expelled from circulation
by the issue of paper currency, and the use of coin as a legal tender in
payment of debts was discontinued through the suspension of specie pay¬
ment in 1862, yet it had become the fixed policy of the Republican party,
when the Public Credit Act was passed in 1869, to return to a specie basis.
By the Resumption Act of January, 1874, the time was fixed when specie
payment was to be restored, and preparatiops for that event were being
20
The Financial Problem.
made by the accumulation of a sinking fund of gold. It is only by under¬
standing the financial policy of the government and the importance and
effect of the Resumption Açt, that a true conception of the silver legisla¬
tion of this time may be reached.
Act of 1873.
The coinage laws were revised on February 12, 1873, when the coinage
of the silver dollar of 412^ grains of standard silver or 371X grains of ^lure
silver, was dropped or omitted from the coins thereafter to be struck at the
United States mint; and a specific provision inserted declaring the gold
dollar to be the standard of values, as follows:
Section 14. "That the gold coins of the United States shall be a one
dollar piece which at the standard weight of 25 8 10 grains shall be the
unit of value."
This continued the finances of the government on a gold basis and
established by act of Congress, the policy of malcing the gold dollar the
unit of account, the value measurer and money of ultimate redemption. It
was a declaration to the world that when the day of resumption arrived,
our greenbacks and all of the paper currency issued by the government,
would be redeemable in gold, and that the bonds, principal and interest,
would also be paid in gold. That this legislation strengthened the credit of*
the nation and enabled the government to refund its bonded indebtedness
and replace the old bonds at a lower rate of interest, there is notlhe slight¬
est question. Although the language of the bonds and greenbacks called
for their payment in coin, yet during this whole period coin was under¬
stood and intended to mean gold, as the silver dollar had so effectually
passed out of circulation that it had ceased to be considered in the business
world as redemption money.
When the causes which induced the action of the government in select¬
ing the gold dollar are understood, it will go far towards refuting the
imputations which are now being cast upon the framers of this measure.
Amofifi: the causes which contributed to the demonetization of
the silver dollar and the adoption of the cold dollar us the stand¬
ard of our monetary system, may be mentioned the followlnij::
First; The experience of the nation from 171)2 to 1873. bad demons¬
trated the impracticability of a double .standard. That while two stand¬
ards might exist in law, that in practice only one would be used at a time.
Second: That the concurrent circulation of the two metals could not
be maintained under the free and unlimited coinage of both metals, at a
ratio fixed by statute.
Third: That under the act of 1834, the commercial value of gold being
below the coinage value of silver, the silver dollar had disappeared from
-circulation, and up to 1861 gold had come into use and had become not
only in practice the monetary .standard, but had become the only coin found
in the pockets of the neople, excepting the fractional silver pieces, which
returned to circulation under the act of 1853. The silver dollar had disap¬
peared to such an extent that/during the war silver was not quoted. Gold
had become the par of exchange in the commerce of the world ; all foreign
exchanges and transactions were computed ^nd measured by it. During
Demonetiïation of Silver.
21
the whole period'of the war gold quotations were watched; gold was at a
premium ; no one paid any attention to silver, and no one ever heard the
expression used during the twenty years, from the breaking out of the war
to 1873, that "silver was at a premium-"
Fourth: From most natural causes and for the best possible reasons,
gold had become the standard and money of international exchanges. A
million dollars in gold weigh 3,686 pounds; a mülion silver dollars
weigh about thirty tons. On the question of freight alone, no prudent busi¬
ness man would think of shipping silver from one country to another, or
even from one inland centre to another, for the purpose of settling a bal¬
ance in trade, if gold could be obtained. The saving in the cost of ship¬
ment alone was sufficient to cause business men to discriminate against
silver and prefer gold. Again, the loss from wear is five times greater
from silver than gold. Besides this, the history of the world through cen¬
turies had proven that gold was more stable in value than silver.
In 1816, when Great Britain adopted a single gold standard. Lord Liv¬
erpool, upon an his torical investigation, made a report to the king of Eng¬
land, as follows:
Value of Gold to Silver as Stated by Lord Liverpool In His Letter
to tbe King of England.
In the reign ot Constantino, the Great '. x to 01
The disorders in the Roman Empire under Arcadus and
Honorius raised it to i to 14 2-5
From which it appears that gold, unless when depressed by
sudden and unusual occurrences, or enhanced by
dread of public insecurity, may be stated to have
been upwards of 900 years in the proportion of 1 to 10 qj
In England, in the reign of Henry III, 1216 to 1272 i to/p^^
In England, in the reign of Edward III, 1330 to 1377 i><fx2^
In England, in the reign of Henry IV. 1400 to 1412.... io>á
In England, in the reign of Edward IV, 1461 to . i to 11 i-6
In England, in the reign of Henry VIII, 1510 to i to 11 .10
In England, in the reign of Queen Elizabeth, i to xi
In England, in the reign of King James I, x¿d4 x to 12 x-9
In England, in thé reign.of King i to 13^
In England, in-the reign of C.harles^jifi6$5 i to 14
In England, in the reign of OuuiiiuB^, X7X7 x to X5 x-5
The causes which contributed to these changes are immaterial. It is
sufficient to know that such changes have taken place, under free coinage
of both metals, and that no government on the face o^the globe, has been
able by legislative enactment, to prevent the depreciation of silver.
Nations have attempted to keep pace with these changes by fixing new
ratios.
Although from X834 to 1873, the commercial value of silver was
above its coinage value, and during that period it had been the
dearer metal, yet this was not sufficient to induce the financiers of the time
to accepf it as standard money in preference to gold. The following tables
show the market value of an ounce of pure silver from 1833 to X895, and the
value of a silver dollar from X850 to 1895, together with the commercial
ratio of the two metals :
22
The Fina'^icial Problem.
PRICE OF SILVER. AND RATIO TO GOLD.
No. 19.—Annual Price of Sliver In London, Per Ounce, and Com¬
mercial Ratio of Silver to Gold, 1883 to 1895.
[From Production of Gold and Silver In the United States, 1891, Preston.]
Calenrar year.
1833.
1834.
1835
1836.
1837.
1838.
1839
1840.
1841.
1842.
1843.
1844.
1845.
1846.
1847.
1848.
1849.
1850.
1851.
1852.
1853.
1854-
1855.
1856
1857.
1858
1859-
i860.
1861
1862.
1863
1864.
Value of a
flne ounce
ataverage
quotation.
297
313
308
315
305
304
323
323
316
303
297
304
2g8
30
308
304
309
316
337
326
348
348
344
344
353
344
36
352
333
346
345
345
Com¬
mer¬
cial
ratio.
Calendar Year.
15.93
15.73
15.8:
15.72
15.83
15.85'
15.62
I5.62¡
15.70
15.87
15.93
15.85'
15.92
15.90
15.80
15.85, ■
15.80 ¡
15.70Í I
15.46] I
15.59]
15.33.
15.33
15.38]
15.381
15.27
15.381
15-I9|
15.291
15.50
15.36,
15.37:
15.37
865.
866.
867
868.
869
870.
871
872.
873.
874
875
876.
877.
878.
879.
880.
881.
882.
883.
884.
885.
886
887.
888.
889.
890.
891.
892.
893.
894.
895.
Value of a
Com¬
fine ounce
mer¬
at average
cial
quotation.
ratio.
15.44
15.43
1.328
15.57
1.326
15.59
1.325
15 60
I ..328
15.57
1.326
15.57
1.32z
15.63
1.298
15.92
1.278
16.17
1.246
16.59
1.156
17.88
I.20I
17.22
1.152
17.94
1.123
18.40
1.145
18.05
1.138
18.16
1.136
18.19
1.11
18.64
1.113
18.57
1.0645
IQ.41
.9946
20. 78
.97823
21. 13
.93897
21.99
.93512
22. 10
1.04633
19.76
.98782
20.92
.87106
23.72
.78031
2g.49
.63479
32.56
.65406
31.60
PRICE OF SILVER BULLION.
Bullion Valueof 371 1-4 Grains of Pure Silver at the Annual Aver¬
age Price of Silver Bach Year from 1S50 to 1895, Inclusive«
[Prepared by the Director of the Mint.]
Ye 1.
Bullion
Year.
Bullion
Year.
Bullion
Year.
Bullion
Value.
Value.
Value.
Value.
1850....
$1.018
1S62....
$l .041
1874....
$ .988
1886
$ .769
1851
1.034
1363..,.
1.040
1875 ...
.964
1887
.756
1852
1.025
1864....
1.040
1876
.894
1888
.727
1853....
, I.042
1865
1.035
1877....
.929
1889
.723
1854
1.042
1866
1.036
1878....
.891
1890
.809
1855...
1.039
1867
1.027
1879
.868
1891
.794
1856....
1.039
1868
1.025
1880
.886
1892....
•673
1857....
1.046
1869....
1.024
1881....
.880
1893
.603
1858....
1.039
1870
I .027
1882
.878
1894 ..
.491
1859
1.052
1871
I .026
1883....
.858
1895
. 506
i860....
1.044
1872
1.022
1884
.861
.......
1861
1.031
1873....
I .05 4
1885....
.823
■
Demonetization of Silver.
23
The above tables show that in 1859 the silver dollar was worth $1.05 in
gold; by 1873 it had declined 5 per cent. It must then have been apparent
that at this rate of depreciation it would soon fall below gold, and that if
we attempted to resume specie payment in 1879, instead of passing to a
gold basis, we would pass to a silver basis, if we permitted the act of 1834
to remain on the statute book. That as soon as we resumed specie pay¬
ment, and as soon as silver fell below gold, which at that time was foreseen
as an event absolutely certain to take place, then the silver of the world
would come to our mint, flow into circulation, and the gold which we had
been accumulating in the sinking fund would immediately be expelled,
melted and exported, and disappear, and we would return to a silver basis,
resume in silver, and take our place with Mexico, South America, India
and the barbarous nations of the world.
This was the difficulty which was sought to be avoided
throuEh the demonetization of the silver dollar.
Fifth; England had adopted a single gold standard in 1819; Germany
in 1871, to take effect in 1873; France and Belgium had, during the past
fifty years, experienced the same difficulties in attempting to maintain a
double standard as the United States, at first losing the gold from circula¬
tion, and then seeing silver disappear. This was the experience of other
continental countries, so much so that France, Belgium, Switzerland and
other nations had, in 1866, united under an international agreement, known
as the Latin Union, and taken steps to prevent a loss of one-half of their
coin. The minor silver pieces were reduced in size, their coinage limited,
and the principles embodied in our act of 1853 was introduced. This was
regarded as a step towards the adoption of a single gold standard. The
consensus of opinion of the best financiers and statesmen of Europe was
tending towards the adoption of gold as the standard of value and the use
of silver under limited coinage. The tide had'already turned against the
free coinage of both metals under a ratio fixed by law. Not only in Europe,
but since 1858 a strong party had arisen in India which was complaining of
the disadvantages of a silver policy which attracted to India the silver of
the world, to the loss and impossibility of accumulating or keeping gold in
circulation.
All of the above causes, and many others which might be mentioned,
influenced the finance committee and those members of Congress who had
this class of legislation in charge, to revise our coinage laws and place the
finances of the government on a more enlightened and sounder basis. The
advocates of free silver during the past ten years have persistently urged
and charged that the act of 1873 was secretly put through Congress;
that it was the result of a conspiracy on the part of designing men,
whose purpose it was, in some way, to place the american people in
the hands of the money power, (as it is Called). This acquisition is as
untrue as it is unjust.
This legislation was net only effected at a time when there was no sil¬
ver lobby or silver kings in the country, but at a period when there were
probably few men in the nation who were in favor of continuing the double
standard. The statesmen and financiers of the government were in favor
24
The Financial Problem.
of returning to a gold basis, of redeeming our promises in gold, of making
every greenback worth its face in gold, and placing the national credit as
high and as secure from suspicion as that of any country on the globe.
Even Senators Stewart and Jones, who have since become the most
conspicuous leaders in the silver movement, were at that time in favor of a
single gold standard. On the iith of February, 1874, Senator Stewart
said (see Congressional Record, August 31st, 1893):
" I want the standard eold, and no paper money not redeem-
able in g^olcl; no paper money the value of which is not aMcer«
tained ; no paper money that will organize a sold board to specu¬
late in it.*'
On the 20th of the same month, on a resolution to instruct the Com¬
mittee on Finance to report a bill providing for the convertibility of the
Treasury notes into gold coin or bonds, he said:
'^By this process we «hall come to a specie basis, and when the
laboring man receives a doilar it will have the purchasinir power
of a dollar, and he will not be called upon to do what is impossi¬
ble for him or the producing classes to do, fleure upon the ex¬
changes, figure upon the fluctuations, figure upon the gambllog
In New York, but he will know what his money is worth. Gold Is
the universal standard of the world. Everybody knows what a
dollar in gold is worth."
On the ist of April of the same y«ar, Senator Jones of the same State,
said:
"Does this Congress mean now to leave entirely out of view
and discard forever a standard of value ? Did any country ever
accumulate wealth, achieve greatness, or attain a high civiliza¬
tion without such a standard? What other thing on earth
possesses the requisite qualities ? Gold is the artic.ulation of
commerce. It is the most potent agent of.civilizatlon. It is gold
that has lifted the nations from barbarism. So exact a measure
is it of hnman effort that when it is exclusively used asa money
it teaches the very habit of honesty. It neither deals in nor tol¬
erates false pretenses. It cannot lie. It keeps its promises to the
rich and poor alike."
In view of the foregoing, it is most surprising, to say the least, to now
find Senator Stewart imputing improper motives to men who held the
same opinion as he held and expressed in 1874.
The act of 1873 consummated the policy inaugurated by the demo¬
cratic party in 1834, when the House Committee said that they "Entertain
the conviction that the nearest to an invariable standard is its establish¬
ment in one metal." In 1853 the House Committee said, "We mean to
make gold the standard coin."
"We intend to do what the best writers on political economy have
approved ; what experience has demonstrated to be the best, and what
the committee believe to be necessary, and to make others subsidiary
to it."
Act of 1873.
25
Act of 1873.
The charge that this bill was -«secretly" put through Congress, is fully
refuted by the following record of the stages through which it passed :
(Taken from J. L. Laughlin's-History of Bimetallism in the United States.)
Proceedings.
Dec. 19, 1870
Jan. 9, 1871
Jan. 10, 1871
Sutimitted by Secretary of Treasury
Referred to Senate Finance Committee
Five hundred copies printed
Submitted to House
Reported, amended and ordered printed
Debated
Passed by vote of 36—14
Senate bill ordered printed
Bill reported with substitute and recommitted
Original bill re-introduced and printed
Reported and debated
Recommitted
Reported back, amended, and printed
Debated
Amended and passed by vote of no—13 '
Printed in Senate j May 29, 1872
16, 1872
7. 1873
17. 1873
Senate.
Apr. 25, 1870
Apr. 28, 1870
May 2, 1870
House.
June 25. 1870
Reported, amended, and printed Dec.
Reported, amended, and printed * Jan.
Passed Senate ,
Printed with amendments
Conference Committee appointed.
Became a law February 12, 1873..
Jan.
Jan. 13. 18;
Feb. 25 18;
Mar. 9, «8;
Jan. 9, 18;
¿an. 29, 18;
eb. 13, 18;
Apr. 9, 18;
May 27, i8-
Jan. 21, 1873
The long period of time during which this measure was before Con¬
gress, the number of times it was printed, the careful consideration which
was gfiven to,it by the various committees, together with the speeches made
in favor of its passage, fully explaining its effect on the silver dollar, ought
to satisfy every candid reader of the absolute falsity of the claims now
made by the silver mine owners ; and that this measure was not openly
presented ; its purpose and scope fully considered ; and that it received all
of the attention which its importance demanded.
The bill was prepared by John J. Knox, Deputy Comptroller of the
Currency, under the direction of the Treasury Department ; it was recom¬
mended to Congress by George S. Boutwell, Secretary of the Treasury,
April 25th. 1870; and accompanying the measure was a special report to
Congress by Comptroller Knox, of the same date, which clearly pointed
out the changes which were intended to be effected with relation to the old
silver dollar. Mr. Knox said;
"The coinage of the silver dollar piece, the history of which is here
given, is discontinued in the proposed bill. It is, by existing law, the
dollar unit, and assuming the value of gold to be fifteen and one-half times
that of silver, being about the mean ratio for the past six years, is worth in
gold a premium of about three per cent (its value being 103.12) and intrinsi¬
cally more than seven per cent premium in our other silver coin, its value
thus being 107.42. The present laws consequently authorize t)oth a gold
dollar unit and a silver dollar unit, differing from each other in intrinsic
value. The present gold dollar piece is made the dollar unit in the pro¬
posed bill, and the silver dollar piece is discontinued. If, however, such a
26
The Financial Problem.
coin is authorized, it would be issued only as a commercial dollar, not as a
standard unit of account, and of the exact value of the Mexican dollar,
which is the favorite for circulation in China and Japan and other oriental
countries."
There was certainly no effort on the part of the Treasury Department
to conceal the purpose of this bill. The report of Comptroller Knox con¬
taining the above reference to the old silver dollar, accompanied the bill as
it was first presented to Congress; was printed with the bill, was before the
Committee and was distributed among the members of Cong;ress, with
copies of the bill and the newspap>ers and the whole world were fully
appraised of its contents.
It is also asserted by the advocates of free silver, and many of them
believe that the bill as it was first presented, made no change with refer¬
ence to the old silver dollar, but that a clause of the bill was in some way,
as it passed through the committees, dropped out and the change effected
surreptitiously and corruptly. A careful examination of the measure as it
was first presented and the form in which it appeared in every stage of its
progress, shows that this charge is untrue and has not the slightest founda¬
tion of fact for its support. There was never, at any time, a provision of
the bill permitting the old silver dollar to be again coined at the United
States mint.
Sections 15 and 18 of the Ijill as it was originally presented, were as
follows :
"Sec. 15. And be it further enacted. That of the silver coin, the
weight of the half dollar, or piece of 50 cents, shall be 192 grains; and that
of the quarter dollar and dime shall be, respectively, one-half and one-fifth
of the weight of said half dollar. That the silver coin issued in conformity
with the above section shall be a legal tender in any one payment of debts
for all sums less than $1.
"Sec. 15. And be it further enacted. That no coins, either gold,
silver or minor coinage, shall hereafter be issued from the mint other than
those of the denominations, standards and weights herein set forth."
These sections are in perfect harmony with the report of Comptroller
Knox, which specifically stated that:
"The coinage of the silver dollar piece is discontinued in the proposed
bill."
On March 9th, 1871, when the bill was repiorted back to Congress an
amendment had been inserted,, fixing the legal tender value of the small
silver pieces at $5, instead of $1, as provided in section 15.
Xrade Dollar.
The principle that under a coinage law permitting the free and un¬
limited coinage of both the gold dollar and the silver dollar at a fixed ratio,
under which the commercial value of one might be less than the commer¬
cial value of the other, would result in expelling from circulation the dearer
metal and letaining the cheaper metal, was well understood. This was
kept in mind, and runs through every feature of the measure. The great
central purpose of the act of 1873 was to avoid those financial embarrass¬
ments which always arise from an attempt to have two standards of value
differing from each other. It was well known that the coinage of a silver
dollar having a value above the coináge value of a g;old dollar, would be
Act of 1873.
27
exported and might be used in our foreign trade with Central American
countries and with China and Japan ; hence, it was proposed that a silver
dollar be coined for this purpose, and the bill accordingly was amended, as
follows;
That the silver coins of the United States shall be a trade dollar, a
half dollar or fifty cent piece, a quarter dollar or twenty-five cent piece, a
dime or ten cent piece ; and the weight of the trade dollar shall be 420
grains troy; the weight of the half dollar shall be 12}4 grams; the quarter
dollar and the dime shall be, respectively, one-half and one-fifth of the
weight of said half dollar ; and said coins shall be a legal tender at their
nominal value for any amount not exceeding $5 in any one payment.
This was the form in which the bill passes. The dollar provided for by
the above provision, was known as the Trade Dollar, containing 420 grains
of standard silver. It was larger than the old silver dollar, which contained
only 412}4 grains. Although it could be freely coined at our mint, it was a
legal tender for the payment of debts, the same as fractional silver pieces,
to an amount not exceeding $5. '
The bill had provided for a dollar containing 384 grains, precisely the
weight of two half dollars, and of limited coinage and limited tender. This
was stricken out and the trade dollar provided for. At no time did any one
connected with the passage of the measare favor the unlimited coinage of
gold and silver at the old ratio, or the retention of the old silver dollar of
371X grains of pure silver.
The speeches made before Congress before its passage show that the
lack of information of Mr. Conkling and other Senators and Congress¬
men, upon the precise effect of the bill, could not have arisen from any
inability to inform themselves upon the subject. On the gth of April, 1872,
when the bill was being considered before Congress, Mr. Hooper, in a care¬
fully prepared speech in its favor (pages 2306-8, vol. 102, of the Congress¬
ional Globe), said :
Section 16 re-enacts the provisions of the existing laws defining the
silver coins and their weights, respectively, except in relation to the silver
dollar, which is reduced in weight from 412% to 384 grains, thus making it
a subsidiary coin in harmony with the silver coins of less denomination to
secure its concurrent circulation with them. The silver dollar of 412%
grains, by reason of its bullion or intrinsic value being greater than its
nominal value, long since ceased to be a coin of circulation, and is melted
by manufacturers of silverware. It does not circulate now in commercial
transactions with any country, and the convenience of these manufacturers
in ,this respect can better be met by supplying small stamped bars of the
same standard, avoiding the useless expense of coining the dollar for that
purpose.
The following is from a speech delivered by Congressman Potter, who
said (page 2310, vol. 102):
* * * This bill provides for the making of changes in the legal-tender
coin of the country and for substituting as legal-tender coin of only one
metal instead as heretofore of two. I think myself this would be a wise
provision, and that legal-tender coins, except subsidiary coin, should be of
gold alone; but why should we legislate on this now when we are not
using either of those metals as a circulating medium ?
Mr. Kelley, who is reported to have said that he "did not know that
28
The Financial Problem.
the bill omitted the standard dollar," made a speech in its favot (Globe,
vol. 102, page 2316), in which he used the following words:
I wish to ask the gentleman who has just spoken [Mr. Potter] if he~
knows of any government in the world which makes its subsidiary coinage
of full value? The silver coin of England is 10 per cent below the value
of gold coin, and, acting under the advice of the expe'rts of this country
and of England and France, Japan has made her silver coinage within the
last year 12 per cent below the value of her gold coin, and for this reason:
It is impossible to retain the double standard. The Values of gold and
silver continually fluctuate. You can not determine this year what will be
the relative values of gold and silver next year. They wer« 15 to i a short
time ago ; they are 16 to i now.
Hence all experience has shown that you must have one standard coin
which shall be a legal tender for all others, ond then vou may promote
your domestic convenience by having a subsidiary coinage of silver, which
shall circulate in all parts of your country as legal tender for a limited
amount and be redeemable at its face value by your Government.
In the light of the foregoing, it is now absurd to contend that there
was any secrecy or underhandedness connected with the demonetization of
silver in 1873. It was not only the specific purpose and intention of the
Treasury Department, but it was in harmony with the views and opinions
of the financial world at that time, as is clearly .shown by the utterances of
Senator Stewart and Senator Jones quoted above.
It would scarcely be necessary to present the foregoing facts in refuta¬
tion of the claim made by the advocates of free silver, were it not for
the fact that so many arguments are being resorted to for the sole purpose
of creating a prejudice against those favoring a single gold standard.
CHAPTER' IX.
The Limited Coinage Policy.
The advocates of the free coinage of silver now contend that the Uui-
ted States government has stricken down one-half of the money of
the people and thrown the burden on the other half, for the purpose
of driving out, debasing, and depbeciating silver that gold may be
appreciated- or made more valuable.
In refutation of these assertions, it can easily be shown that under the
system of limited coinage of silver, and adopting gold as a standard of
value, both metals may be kept in circulation and a larger supply of coin
be secured than through the free and unlimited coinage of both metals at a
fixed ratio. Professor George Gunton of New York, in an article read
before the Executive Committee of the National Leagpie of Republican
Clubs, at the Convention held at Cleveland, Ohio, in iSgs, stated the prin¬
ciple held by the Republican party as follows:
' ' The principle involved in coin circulation is the same as that in
commodity circulation. The value of the whole supply of a competing
product will never permanently remain above the cost of continuously
supplying the dearest portion. If the demand of the American market
for broadcloth will take all the foreign as well as American supply and
the American portion is the most costly the general price will equal the
Bland Act.
American cost of production, but if the foreign supply is equal to furnish¬
ing the whole market, the American product being the dearest, will be
rendered unnecessary and will be driven out and the close of American
factories will insue.
It is precisely to prevent this result that a protective tariff is necessary,
for the same reason that under free trade foreign products would drive out
the American, which are more costly. Under free coinage silver would
drive out geld, because gold is more costly. To maintain bimetalism, /. <?.,
to secure the circulation of both metals, makes the protection of the dearest
metal, gold, indispensible. The protection of the dearer in the case of
money can be secured only by limiting the use of the cheaper metal to
dimensions which shall prevent it from supplying the whole coin demand
and thereby drive out the dearer (gdldl.
Therefore, unless we are to abandon bimetalism, true monetary reform
must be sought in other ways than in the free coinage of silver, since that
word inaugurates silver monometalism pure and'simple.
The experience of the United States since 1876, as well as that of
France and other nations which have abandoned the double standard policy
and secured the concurrent circulation of both gold and silver, by prevent¬
ing gold from being expelled from circulation under a system of limited
coinage of silver, demonstrates that a larger volume of circulating mediums
can be maintained than has ever existed under the free and unlimited coin¬
age of both metals. It has met a difficulty which embarrassed the finances
of the world for so long a time, and affords a remedy for an evil which can¬
not be avoided in any other way.
It, therefore, may be safely asserted that Instead of " strtklng:
down ** one metal, the policy of our government ha» been to pro¬
tect and keep In circulation both metals, and thereby provide the
largest possible volume of coin as a medium of exchanire.
Coinage of Silver Under the Limited Coinage Policy.
On July 22, 1876, the trade dollar was deprived of its legal tender
feature, and finally dropped from the list of coins by an act March 3, 1887.
Bland Act.
Silver was steadily declining in value and by 1878 was worth only 89
cents on a dollar. It was at this time that the policy of maintaining a large
volume of silver in circulation, under a system of limited coinage, was
entered upon. By an act of Congress passed February 28, 1878, (known as
the Bland Act) the old- silver dollar of 37 rX grains of pure or 412^^ grains
of standard silver was directed to be coined in limited quantities. The
Secretary of the Treasury was authorized to purchase bullion on account of
the government, and coined not less than $2,000,000 nor more than $4,000,-
000 worth of silver bullion per month into these silver dollars which were
declared to be full legal tender for the payment of debts. This was not
free coinage, it was limited coinage. Under this act an individual could
not take his bullion to the mint, have coins struck and returned to him.
The silver producer sold his bullion to the Secretary of the Treasury at the
market price. There were coined under this act from February 28, 1878,
to 1890, $378,000,000 of these dollars.
silver Certificates.
It was fully recogjnized and understood at the time by all favoring this
measure, that the silver dollar was so bulky and inconvenient for use as a
30
The Fhjancial Problem.
medium of exchange, that it would be difiBcult to maintain its circulation
by the side of greenbacks, national notes and the gold coins. It was fore¬
seen that if a large quantity of these silver dollars were struck, instead of
passing into circulation, they would be discriminated against by the peo¬
ple and forced back into the Treasury, there to find lodgement and remain
dormant. Hence, to meet this difficulty, a very important provision was
inserted in the Bland Act, which authorized holders of silver dollars coined
under this act, to deposit or leave the same with the Secretary of the
Treasury and to receive therefor a certificate of deposit (a " silver^certifi¬
cate). These certificates were the same as warehouse receipts, yet they
were intended to and have circulated freely and been used as paper cur¬
rency. But they are. according to the contract printed on their faces,
redeemable in the silver coin deposited. They were not made legal tender
in the payment of debts, although receivable by the government for cus¬
toms, taxes and public dues. There was up to June i, 1896, $336,3i5-,o8o
of these certificates issued by the government.
Sherman L.aw.
The Bland bill remained in force until July 14th, 1890, when the bill
known as the Sherman Law was passed.
First—The Sherman Law stopped the compulsory coinage of the silver
dollar.
Second—It also required the Secretary of the Treasury' to purchase
4,500,000 ounces of silver bullion per month, and to issue therefor "Treas¬
ury Notes" redeemable in gold or silver coin, at the discretion of the
Secretary of the Treasury.
Third—The coinage of silver dollars was to cease after July ist. 1891,
except as they might be required to redeem treasury notes.
Fourth—The "Treasury Notes" were made a full legal tender for the
payment of public and private debts and were also receivable by the
government for customs, taxes and all public dues.
This remained in force until November ist, 1893, when that portion of
it was repealed which directed the purchase'_of 4,500,000 ounces of silver
per month, and the issue of the "Treasury Notes" thereon. The purchases
of silver by the government under the foregoing acts of 1878 and 1890,
were as follows ;
Blund Act.
1878 to 1891 (ounces purchased) 291,279,018
Cost $298,279,260
Dollars coined 378,000,000
Certificates issued 336,313,080
Purchases and Culnagre Under the Sherman Act.
Number of ounces purchased 168,674,682.43
Costing $155.931,002.25
Coinage value in silver dollars 218,084,438.00
Silver dollars actually coined 36,087,285.00
Balance uncoined oz. 140,699,852.67
Balance on hand, cost $126,753,280.00
Coinage value of blance (in silver dollars) 181,914,961.00
Circulation 1800 to 1876.
31
Coinage of the United States Mint 1792 to 1896.
Since the formation of the government there has been coined at the
United States mints $1,812,221,035 of gold, and $694,513,650 of silver, as
follows:
Period. Number
Years.
Gold.
SilTer
Dollars.
1793-1877...85 $1,010,900,324
1878-1896.. .18 801,320,711
$ 8,031,238
429,289,916
Subsidiary
Silver.
$182,855,223
38.371,349
Total
Silver.
$222,585,921
471,927,729
1793-1896 .. 103 $1,812,221,035 $437,321,154 $221,226,573 $694,513,650
The coinage prior to 1877 includes $31,699,460 trade dollars; and the
period since 1877 includes $4,266, 464 trade dollars.
It should be noted in this connection that the coins struck at the United
States mint at various periods furnish no indication of the specie in circula¬
tion. Large amounts are melted by jewelers and more is exported. The
following tables will show the amount of specie in circulation and in the
treasury during various periods since the formation of the government.
Prior to 1857 the coins of foreign countries circulated with full legal tender
power. Hence, when Mr. Harvey compares the silver coined at the
United States mint with the gold coined prior to 1873. he furnishes no
proof that the two metals had circulated side by side, or that the people had
received the benefit as money of both metals, although the mints were open
to their free and unlimited coinage at a ratio of 16 to i. Although as we
have shown in a pri' r chapter that of the gold and silver coined prior
to i860 there remained only $250,000,000.
Xbe Coinage of tbe United State^4 Mint During tbe Various
Periods Was as Follows:
Period.
Stundard.
Gold.
Silver (full
legal tender.
Silveroverval-
ued and lim¬
ited tender.
}
1792 to 1834
Gold and sil¬
ver at 15
to 1.
« 11,82.5,890
836,275,077
s 658.591.58
1834 to I&Vi,,
Gold and sil¬
ver at 15.«)8
to I.
224,96.5,730
42,938,204
787,885.81
1853 to 1873
Gold and sil¬
ver at 15.98
541,864,921
5,.538,948
«57,443,769.20
9,979,361.16
1873 to 1877 ,
to I.
(iold standard
silver sub-
iddiary.
201..503,154
Trade dollars,
no legal tender
24..581,350
42.004,852.00
7,4.58,865.00
Statement of tbe Specie and Bank-Note Circulation of tbe United
States in tbe Vears Specified from 1 800 to 1859.
, [Prepared by Loans and Currency Division, Treasury Department.]
Year.
Number
of banks
and
branches
Estimat'd
bank
notes out¬
standing.
Estimat'd Total
specie in money in
United United
States. States.
Specie in
Treasury.
Money in
circula¬
tion.
Popula^
tfon.
Per
cap¬
ita.
1800...
1810...
1820...
1880...
1834...
1840...
18.50 ..
1859...
506
901
824
1,476
#10,.500,000!
28,000,000
44,800,000
61,000,000
94,8:19,570
106,968,,572
181,366,.526
193,306,818
Ï17,.500,000
30,000,000
24,300,000
.12,100,000
41,000,000
83,000,000
154,000,000
250,000,000
»28,000,000
58,000,000
69,100,000
93,100,000
135,839,570
189,968,572
285,366,.526
443,306,818
*»1 ,.500,000
*3,000,000
*2,000,000
.5,7.55,705
11,702,905
3,663,084i
6,601,.514|
4,339,2761
»Specie in Treasury estimated.
»26,.500,000
.5.5,000,000
67,100,000
87,:«4,295
124,136,665
186,305,488
278,761,982
438;.967,542
.5,308,483
7,239,881
9,633,822
12,866,020
14.373.000
17,089,453
23,191,876 12.02
30.596.0001 14.35
»4.99
7.60
6.96
6.69
8.64
10.91
32
The Financial Problem,
Statement of the Coin and Paper Circulation of the United States
on June 30, from ISeO to 1894, Inclusive.
[Prepared by Loans and Currency Division, Treasury Department.]
Year.
1880..
1882..
1873..
1879..
1880..
1881..
1882..
188.3..
1881...
1883...
1886...
1887...
1888...
1889..
1890...
1891...
1892...
1893...
1894...
Coin In
United
Htate.s. In¬
cluding
bullion In
Treasury.
823.3,000,000
23,000,000
25,000,000
357,288,178
494,363,884
647.868,682
70.3,974,839
789,740,048
801,068,939
872,17.3,823
90.3,0-27,304
1,007,513,901
1,092,391,890
1,100,612,4.34
1,1.32,471,638
1,163,183,634
1,23-2,834,331
1,213,413,.384
1,232,071,667
Paper
money In
United
States,
«207,10-2,477
.3:13,4.32,079
749,44.3,610
694,233,363
711,363,313
7.38,67.3,141
776,.336,880
873,749,768
9O4,383,2-)0
94.3,482,313
963,.3;i2,.-i90
892,928,771
07(),.364,239
974,7:18,277
991,7.34,.321
1,61-2,639,021
1,1.39,743,170
1,109,988,808
1,169,390,080
Total
money.
«142,102,477
638,452,079
774,445,610
1,051,5-21,541
1,205,929,197
1,406,.541,823
1.480,.331,7I9
1,643,489,816
1,705,454,189
1,817,638,336
1,808,.359,694
1,900,442,672
2,06-2,9.33,949
2,07.3,630,711
2,144,226,1.39
2.19.3,224,07.3
2,372,599,501
2,323,402,392
2,421,461,747
Coin bul¬
lion and
paper
money In
Treas¬
ury,
«6,695,225
2.3,754;335
22,.363,801
232,889,748
2:i2,.346,969
292,303,704
306,241,300
413,184,120
461 „3-28,-220
.32.3,089,721
53.3,639,169
.382,903,.329
690,785,079
694,989,062
714,974,889
697,761,368
771,252,314
726,701,147
759,626,073
Circula¬
tion.
8463,407,252
334,697,744
751,881,809
818,631,79?
973,382,2a
1,114,238,119
1,174,290,419
1,-230,305,696
1,-243,9-2.3,969
1,292,.368,61.3
1,252,700,.325
1,317,539,143
1,.372,170,870
1,380,361,649
1,429,251,270
1,497,440,707
1,601,347,187
1,.396,7IH,24.3
1,661,835,674
Popula¬
tion.
31,443,321
32,704,000
41,677,000
48,866,000
60,165,783
61,316,000
62,49.3,000
53,693,000
54,911,000
56,148,000
57,404,000
58,680,000
.39,974,000
61,-289,000
62,622,250
63,97.3,000
53,.320,000
66,946,000
68,397,000
Money
In
United
States
per
capita.
I
«14.06
10.96
18.58
21.62
24.04
27.41
28.20
30.60
31.06
32.37
31..30
32.39
34.39
33.86
.84.24
34.31
36.21
34.70
35.40
Circu¬
lation
per
capita
Note 1.—Specie payments were suspended from .January 1, 1862, to January 1,
1879. During the greater part of that period gold and silver coins were not In circula¬
tion except on the Pacific coast, where, it is estimated, the specie circulation was gen¬
erally about 825,000,000. This estimated amount is the only coin included In the above
statement from 1862 to 1875, inclusive.
Note 2.—In 1876 subsidiary silver again came into use, and is included in this
statement, beginning with that year.
Note 3.-^he coinage of standard silver dollars began in 1878, under the act of
February 28, 1878.
Note 4.—Specie payments were resumed January 1,1879, and all gold and silver
coins, as well as gold and silver bullion in the Treasury, are included in this state¬
ment from and after that date.
The foregoing stati.stics afford a complete answer to the "more money"
argument of the advocates of free coinage. The cold facts of history, the
actual experiences and trials which have been made of the two systems,
present an unanswerable argument. Up to 1877, while the mints were
open to the free and unlimited coinage of both gold and silver at a ratio of
16 to i, there was coined $1,010.900,324 of gold, and $222,586,921 in silver.
Of the silver over $50,000,000 was coined into fractional pieces
under the act of 1853, and over $31,000,000 of trade dollars under the
Limited Coinage Act of 1873, leaving only $8,031,238 of the silver dollars
and the fractional currency coined under free coinage ¡ while under the
sixteen years of limited coinage of silver, after the silver dollar was
demonetized in 1873, ^nd when as our free silver friends say, "one-half of
the money metal was stricken down," there was coined over $471,000,000
in silver, $429,000,000 of which were silver dollars. More than twice
the whole amount struck at the mints during the 85 years which
preceeded. We have not only proportionately a much larger amount
of both gold and silver, but we have succeeded in preventing one
metal from driving the other out and kept in circulation a much larger
quantity than ever before. We have increased our per capita circulation
from $15.32 in 1873 to $24.30 in 1895.
Money Circulation 1872-1896
33
The total specie in the United States in 1859 of all kinds tvas $250,000,-
000; in 1878, $300,893,776, and iri 1896 it amounted to $1,233,457,463. In
1878, 41 per cent of our coin consisted of silver; while in 1896 the ratio
of silver to gold in the country was 103 per cent. Since the system of
limited coinage began under the act of 1878, the volume of silver in the
United States used as a circulating medium, in and out of the Treasury,
increased from $87,993,799, to $626,273,881; while the gold holdings
increased from $213,199,977 in 1878, to $607,183,582 in 1896. This enormous
expansion under a system of limited coinage of silver and the use of gold
as standard money, affords the most absolute proof that instead of ' "striking
down" one-half of the specie and restricting the American people to the use
of gold alone ; that we have been able to use both metals, and maintain
their concurrent circulation.
In i860 the money in circulation amounted to $442,102,477; in 1872, it
was $738,309,542, and on the ist day of July, 1896, as shown by the Treas¬
ury Bulletin, it was $1,509,725,200. The details of the circulation of 1872
and 1896, are as follows:
Money In Circulation July 1, 1872.
State bank notes $ 1,700,635
Fractional currency 36,402,929
V United States notes 346,168,680
National bank notes .-329,037,005
$713.309.549
Add specie on the Pacific coast 25,000,000
$738,300,549
Money In Circulation July 1, 1896.
Gold coin $456,128,483
Silver dollars 52,175,998
Small silver 59,999,«8o5
Gold certificates 42,320,759
Silver certificates 33i,2t9,509
Treasury notes of 1890 95,217,361
United States notes 225,451,358
Currency certificates 31,840,000
National bank notes 215,331,927
$1,509,725,200
These figures do not include the United States Treasury hhlding.
When this is taken into account, we find that the total was $442,102,477 in
i860, $701,253,576 in 1878; and $2,421,461,747 on the first of June, 1894.
Our money in circulation increased 240 per cent in 1872 as compared
with i860, and 104 per cent as compared with 1872. This is much greater
than the increase in population. Take the per capita circulation and we
find the same growth; it was $13.85 in i860, $16.75 101879, and $24,30 in
1894. The per capita of all moneys in the United States during these
years is shown by the above table to have been much greater.
The following table shows the per capita circulation of the leading
nations of the world, as given in the report of the Bureau of the United
States mint for 1894, page 45.
34
The Financial Problem.
United States $25.00 England $30.00
France v... 36.00 Germany 19.00
Austria g.oo Netherlands 25.00
Belgium 26.00 Italy 9 °°
Spain 18.00 Portugal 25.00
Russia 8.00 Roumania 6.34
Turkey 2.29 Australia 24.00
Japan 4.00 India 3-3o
China 2.08 Bulgaria 1-76
Mexico '4-71 South American States 17.00
Central American States 3.78.
nenomlnatloas of Paper Currency.
GREENBACKS. "The only United States notes (legal tender)
known as "greenbacks" now issued are of the series of 1880, although
there are still outstanding some of the series of 1878, 187.5, 1874, 1869 and
prior to the last mentioned year. The denominations outstanding rnn
from $i to $10,000, but no $5,000, or $10,000 United States notes have been
issued since 1883."
TREASURY NOTES. "The newtreasury notes of 1890 (legal tender)
are issued in denominations of $i to $t,ooo."
CURRENCY CERTIFICATES. "The currency certificates which
are issued in place of United States notes, greenbacks are of the series of
1875, a few of the series of 1872 still being outstanding. They are issued
in denominations of $5,000 and $10,000."
GOLD CERTIFICATES. Gold certificates are now issued undgr
the Act of July 12, 1882 and 1888. A few certificates issued under the Act
of March 3, 1863, are yet unredeemed. The certificates of the series of
1882 are in denominations of from $20 to $10,000, and those of the series of
1888 are for $5,000 and $10,000 only."
SILVER CERTIFICATES. "Silver certificates have been issued
of the series of 1878, 1880, 1886 and 1891, but none of the series of 1878 are
now printed. The certificates of the series of 1878 and 1880 are of the
denominations of $to to $1,000, and of 1886 and 1891, $i to $20."
NATIONAL BANK NOTES. "National bank notes were originally
issued in'denominations of $5 to $500. In 1865 the denominations of $1, $2
and $i,ooo were added. The issue of $i and $2 bank notes stopped in 1879,
and of $500 and $1,000 notes in 1885, but some notes of each of those de¬
nominations are still outstanding. "
Paper Currency in Circulation.
1878. 18i»l. 1896.
Legal lender notes $274,660,895 $323;7i4.272 $225,562,755
Treasury notes 40,463,165 98,080,506
Currency certificates 46,245,000 21,365,000 33,430.000
Gold certificates 24,897,680 120.850,399 42,901,909
Silver certificates 7,080 307,364,148 336,313,080
Total government paper 345.810,655 813,756,984 736,348,250
This does not include the circulation of national bank notes which
amounted to $207,364,628 on the ist of November, 1895. The total govern¬
ment paper currency in circulation, exclusive of national bank notes was
$345,810,655 in 1878, and $736,348,250 on June i, 1896. Since January ist,
1879, a gold reserve of $100,000,000 has been kept in the United States
Treasury for the redemption of greenbacks. The gold certificates are
issued upon gold actually deposited in the Treasury, which is in excess of
this reserve of $ioo,ooo,ooOi
ôoLD Reserve.
35
The following table shows the
Notes Redeemable In Gold and the Gold Reserve,
In 1878, 1892 and 1896:
1878. 1892. 1896.
Total Paper redeemable in gold $345,803,575 $580,931,836 $400.035,170
Total Gold in United States Treas¬
ury 128,460,203 255,577,706 151.307.143
Total Gold Reserve per cent 36.1 44.0 37.8
Paper redeemable in Gold; less
Gold Certificates 320,905,895 439,696,497 357,073,261
Net Gold in United States Treasury 103,562,523 114,342,367 108,345,234
Gold Reserve for Paper redeemable
in Gold other than Gold
certificates per cent 32.3 26.0 30.3
The gold reserve had been very easily maintained and steadily increased
until the passage of the Sherman Law in 1890. The following table discloses
its variations during the years from 1878 to 1896;
1878 .$103,562,523 1887 $186,875,669
1879 119,956,655 1888 193,866,247
1880 118,181,527 1889 186,711,561
1881 157,412,141 1890 190,232,404
1882 143,477.370 1891 117,667,723
r'883 138,271,198 1892 114,342.367
1884 133,729,954 1893 95,485,414
1885, 120,298,895 1894- 64,873,025
1886 156,793,749 '895 107.512,363
1896 108,345,234
Although we have had outstanding a large volume of paper currency,
including greenbacks, silver and gold certificates, Treasury notes and
Currency certificates, yet our metallic reserve has been very large. The
gold reserve varied between 37 per cent in 1878, to 42 per cent in 1890, not
at any time falling below 36.9 per cent, or rising above 49.9 per cent, until
after the passage of the Sherman Law in 1890, when in 1894 it fell as low
as 15.3 per cent. The silver reserve in the Treasury rose from 4 3-10 per
cent in 1878, to 67.4 per cent in 1896. The amount of total paper currency.
exclusive of national bank notes, was as follows:
Secured by Coin and Bullion in
Paper currency United States Treasury,
in circulation. Gold. Silver.
1878 $345,810,655 $128,460,203 $ 15,059,828
1890 763,466,888 321,612,423 323,909,360
189' 813,756,984 238,518,122 379,705,279
1892 907,812,639 255,577,706 438,858,402
1893 892,931,561 188,455,433 480,476,527
1894 856,008,170 131,217,434 495,409,178
'895 804,606.485 155,893,935 495,785,906
'896 737,348.250 151,307,143 496,562,413
36
The Financial I^roblem.
The following table shows the total gold and silver in the Treasury of
the United States from 1878 to 1896:
TREASURY HOLDINGS OF GOLD AND SILVER.
H
0
£
GO
H
0
P
0
CO
P 0
P g*
aS.
P °
M
0 D
» et-o*Ç
P
P A
0
c
a
o<
0
1
2,
0 2
so
0
c
P(r;
so
less
B 01
CË:
C <
S<D
B ct-? 0
(TQ (t w
P
*<
P
0
d
n
Id coin
Ion
; C
i S
: P 2,
: P Ö:
: o,e»
• e
: P
:
»
: ® ® §
:
: 0 a 0
: «r? 0.
QQ
5"
a
5*
a
0 a
a s
3 <
d a
; 1
: d
: 0
1878
$ 128,460,203
$ 103,562,523
1 15.059,828
Í 15,052,748
1 6,g60,506
$ 21.913,2&I
21.1
1879
135.236,475
119,956 625
33.239.917
32,825,4:17
8,903,401
41,728.838
34.8
1880
126.145,427
118,181.527
49.549,851
43.760.282
24,350,482
68,110,764
57.8
1881,,..
163.171.661
157.412,141
65.854,671
26.743,942
27.247,697
53,991,639
:i4.3
1882 ....
148.5()6.39(»
143,477,370
90.384,724
35.878,634
28.048,631
63,927.265
44.6
1883
198,078.508
1:18.271.198
116»896.235
43,775,549
28,486,001
72.261,550
52,3
1884 ...
204,870.594
133,729.954
139,616,414
43,189,403
29.600.720
72.790,123
,54.4
1.SK5
247,028.625
120,298,895
169,451,998
67,921,052
31,236 899
99,157,954
82.4
1886...:.
232,838.124
156.793,749
184,345,764
96,229,539
28,904,682
125,134,221
78.8
1887
278.101,106
186,875,669
222.401.405
80,283.388
26,977,494
107,260.882
57.4
1888
313.753,617
193,866,247
254,499,241
54 111*865
26,051,741
80,163,606
41.3
1889
303,504.320
186,711,561
289,688.374
32,585,929
25,129.733
57,715.662
:io.9
1K90
321,612,423
190.232,404
323.909,360
26,699,317
22,805,226
49,504.54:1
26,0
1891
238,518,122
117,667,723
379.705,279
72.341,131
19,656,695
91,997.826
78.2
1892
255,677.706
114,342.3(57
433.858.402
106.977,599
14.224,714
1:11,202,313
106.0
1893
188,455,433
95.485,414
480.476,527
153,987,362
11,855.944
165,843.306
173.7
1894
131.217;434
64.873,025
495,409,178
168,314,797
17,889.531
186,204,328
287.0
179.1»
1895
155,893,932
107,512,363
495,785,906
176,054,154
16,552.845
192,606,999
1896*....
1^1,307.143
108,345,244
496,562,413
160,249,3:13
15,637,424
175,886, 57
162 3
•June 1;
It appears from the foregoing that in 1896 there were $151,307,143 of
gold, coin and bullion; $108,345.224 of this amount constituted the gold
reserve which was being maintained for the purpose of redeeming green¬
backs and currency certificates. The remainder stood behind the gold cer¬
tificates which had been issued.
It appears by the above that there was $160,249,333 of silver dollars
and bullion lying in the Treasury in excess of the silver certificates which
had been issued. The vast holdings of gold and silver indicated by the
above table, wliich constantly increased from 1878 to i8g6, proves the
increasing financial strength o& the government under a system of limited
coinage and a policy of using gold as the standard money, into which all
of the silver and currency might be controvertible at the will of the holder.
It will appear later that this vast accumulation of coin not only constantly
increased, but was secure from invasion and attack so long as the receipts
of the government were greater than the expenditures, and so long as there
existed a favorable balance of trade between the United States and foreign
countries which prevented the export of gold. The intimate relations
which exist between our monetary system and the policy of protection to
home industries, cannot be lost sight of even in the discussion of finances.
The following table gives the gold and silver in circulation during each year from 1878 to i8g6. The first column
g^ves the actual coin in circulation outside the Treasury. The second gives the gold certificates which represent gold
deposited in the Treasury for their redemption. The third shows the total gold in circulation, which includes not only
the gold coins but the gold certificates. The fourth gives the silver dollars actually in circulation. The fifth the
silver certificates. The sixth the treasury notes of 1890 (issued under the Sherman Law). The seventh, the subsidiary
silver coins ; and the eighth column, total silver.
GOLD AND SILVER IN CIRCULATION.
Jnne 80.
Gold
Gold
¡Total gold. ISilrer dollars.
Silver
Treasury notes Subsidiary
of 18
Silv
Total Silver.
Ft
^ I
il
$ 84,739,774
$ 24,897,680
$ 109,687,454
$ 855,143
$ 7,080
$ 64,918,322
$ 65,780.645
110.005,362
15,27ît.82U
125.785.182
7,653,649
414,480
.....s . s
67,346.584
75,414,713
79.810.702
225,695.779
7.963.9i»0
233,659,679
19,309.435
5,71 9 569
-V" .: .
54,511,788
315.312,877
5,759..520
321.072.397
28.827,983
39,110,729 -
52,839,364
120,778,076
358,261,325
5,029.020
363,280,345
31.990,964
54,506,090
52.379,949
138,877,003
344,653.495
59.807,370
404.460.865
35.341,880
72,620.686
52.474.299
160.436,805
340,624,203
71,146,640
411.770.843
39.794.913
96,427,011
45,660.80$
181,882,737
341,668,411
126,729.730
468,398.341
38,471,269
101,530,945
43,702.921
183,705.136
186.742.200
357.936,337
76.044,375
533,980.712
52,469,720
88,116.2^5
46.256,255
,-,376,419,229
392.066,854
91.225.437
467.6y.666
55.506,147
142,118,017
......
48,570,305
246.194,469
119,887,370
511.9;>4,224
55,545.303
200.3-7.376
60,354,635
306,287,314
376,055,482
116,792,759
492,848,241
54,417,967
257,102,445
.51,476,834
362,997,246
374,396,381
131,380,019
120,850,399
505,776,400
56,166,356
297,210,043
.54,(160,743
407,446,142
408,073:806
528,924,205
57,683.041
307,364,148
9 40,463,165
58.200.024
423,338,113
408^767,740
141,235,339
550,003,079
56,790,484
326,880.803
98,051,657
02 ;186,.518
446,066,805
408,633.700
92,970,019
496,603.719
.57,020.743
i-26.480,165
140,661..596
65.400.21.8
448.919,176
497,873.990
66,344,409
564,218,399
628,656,626
498,838,348
51.19r377
327.004,381
134,862.009
.5S.233,:5y
436,519,102
480,275,057
48,381,569
61,983. It.J
310.7-U,7.52
11.5,978,708
60,210,718
431,934,632
455,876.439
42,961,909
52,717.417
336,313,080
98.U80,5(i6
61,.356.627
450,387,124
60.0
60.0
84.1
37.6
.SS.'?
39.7
39,?
AS,O
52.G
•5!«'8
7 3.ó
•80.P
S'KO
:sii
90.4
r7.4
•s:. 7
90.3
•June 1.
38
The Fxnatscial Problem.
The foîlawihg ^hows the total supply of gold and silver in and
out of the United States Treasury in 1878 to 1896:
TOTAL SUPPLY OF GOLD AND SILVER IN THE UNITED
STATES.
c-l
a
CO
0
B
0
ee
=0
S ^
:i.<D
— »1
p
0
B
2.
P
B
p
a
a
o*
P
tí
a
7*
a
1878
1879
1880
1881 .
1882
1883
1884
1885
1886
1887
1888
1889
1890
1891
1892
1893
1894
1895
1896*
*Jane 1
$213,199,977
245J4l,837
351,841,20«
478,484,538
506,757,715
542,732,0<J3
545,y00,797
588,697,03«
590,774,461
654,520,385
705,820,471
679,559,801
696,008,805
646.591,928
664.345,446
592,089,133
629,091,424
636,168,989
607,I83,5»2
$ 15,914,971
4(»,893,566
68,857,286
94,682,654
122,:}75,688
151,738,415
179,411,327
207,923,267
236,815,484
277,907,552
310,044.544
344,106,342
380,075,716
437.388,320
490,657,886
537,506,270
546,600,555
547.769,068
549,279,8:10
« 2
ag
P S£
: o
: D
• a
H
» 0
tí ¡»
$71,778,828
76,249,985
78,862,270
80,087,061
80,428,580
80,960,300
75,261,528
74,939,820
75,060,937
75,54¿.709
76,406,376
76,606,567
76,874,969
77,947.619
76,611,232
77,256,212
76,122,875
76,772,563
76,994,051
$ 87,
117,
147,
174,
202,
232,
254,
282,
311
353,
386
420,
456
515,
567,
614.
622,
624,
626,
,143,551
,721,556
,769,715
,804,268
,698,415
,672,855
,863,087
,876.421
.455,351
,450,920
,712,909
95<»,685
.335,939
,209,118
,762,482
,723,430
,541,631
,273,881
H
<a
® m
r* a
: oa
: o
: K
; P
: a
: a
$ 300,893,776
362,886,388
499.662,762
653.254,253
709,561,983
775,430,478
800,173,652
871,560,123
902,650,882
1,007,075,686
1.092.271,891
1,100,272.710
1,152,969,490
1,161,927,867
1,231,614,564
1,206,851,615
1,251,814.8«
1,260,710,620
1,233,457,463
m
o s
N Q
: o
: (PS
; O
: K
41.1
47*7
42.0
36.5
40.0
42,9
46.7
48.0
52.8
54.0
64.7
61.9
65.T
79.7
85.4
ia3.8
99.0
98.2
103.1
Le^al Tender Functions of Coin and Paper.
GOLD COIN is a legal tender without limit in payment of all debts.
SILVER DOLLARS. Full legal tender to any amount for private
debts.
FRACTIONAL SILVER. Limited legal tender to the amount of ten
dollars.
MINOR COINS, such as copper cents and nickles; legal tender in
payment of twenty-five cents.
GREENBACKS. Full legal tender to any amount inpayment of debts
public and private, except for duties on imports and interest on national
debts.
GOLD CERTIFCATES are not legal tender, but may be issued by
the government in payment of interest on national debt, and are receivable
by the government for customs, taxes and public dues.
SILVER CERTIFICATES are not a legal tender, but are receivable
for customs, taxes and all public dues.
CURRENCY CERTIFICATES are not a legal tender for any pur¬
pose, but are used as bank reserve and are accepted in settlement of clear¬
ing bouse balances.
UNITED STATES TREASURY NOTES OF 1890 are a legal
tender in payment of all debts public and private and are receivable for
customs, taxes and public dues. They are redeemable in gold or silver coin
in the discretion of the Secretary of the Treasury.
NATIONAL BANK NOTES are not a legal tender in payment of
debts except that they are receivable for all dues to the United States
government, except duties on imports and for all debts and demands owing
by the United States, except interest on the national debt and in redemption
of national currency. Each national bank, bo wever. is required to receive
them at par for any debt or liability to it.
Industrial Growth.
39
CHAPTER X.
Industrial Growth from 1S70 to 1892.
An effort is now being made by the advocates of the free coinage of
silver to attribute the hard times which have prevailed since
Grover Cleveland was inaugurated President on March 3rd, 1893,
to the demonetization of silver, which occurred 20 years before. That
our factories are closed ; that labor is out of employment ; that wages have
been reduced and the incomes and purchasing power of the masses of our
people have been so reduced that the market for farm products and every
article necessary for consumption has been greatly lessened, there is not
the slightest question. We are to-day in the midst of the most perilous
industrial and commercial crisis that has visited the United States since
1857. That this condition of affairs came suddenly upon us immediately
following the triumph of the Democratic party in 1892, and under a threat¬
ened reversal of the tariff policy is a fact beyond dispute. The causes which
brought about this condition of affairs and the remedy which must be applied
to restore prosperity, in the opinion of the writer, cannot be found in amend¬
ments to our monetary system, but must be sought in a restoration of that
policy of protection to native industries under which the American people
became the most prosperous and independent of any on the face of the
globe. If the present depression in trade had appeared without any
changes in our tariff policy, it might then be worth while to look to some¬
thing besides tariff legislation for the cause. The McKinley bill was
repealed and a free trade policy inaugurated by the votes of the advocates
of free silver in the South and West. Mr. Bryan, the democratic candi¬
date for President, an avowed free trader, was one of the chief actors in
closing our factories, throwing laborers out of employment and flooding
this country with manufactured articles made by the labor of foreign coun¬
tries, which hitherto had given employment to our own artisans. We
could hardly expect Mr. Bryan and his associates to admit that the calami¬
ties which so quickly followed their work were due to their insane tariff
legislation. We would expect to find them attempting to shift the responsi¬
bility and attributing the poverty and mi.sfortunes of their people to some¬
thing else. Mr. Bryan and his associates stand before the people as false
prophets and unsafe advisors. It is not necessary to recount their false
predictions and.promises; they are all fresh in the minds of the people.
Mr. Bryan and his free trade followers now come forward with a new
argument, with new promises. They have cheapened everything else, and
now they offer as a remedy a cheap dollar. It would reasonably be
expected that if the demonetization of silver would bring on hard times,
that such condition would not have been postponed for 20 years and sud¬
denly made its appearance just as the policy of protection was overthrown.
So it is fair to inquire of the condition of the country during the 20 years
which followed the demonetization of silver from 1873 to 1892.
Our industrial statistics show that this period was the most prosperous
.and progressive that any nation had ever enjoyed.
40
The Financial Problem.
Table Showing General Proirresa of United States, 1870 to 1890.
Compiled from Censas Reports, and United States
StatiHtlcal Abstract.
Population
Wealth
per capita
Savin^H banks* deposits
'* " " per capita
Number of depositors
Products of manufactures
Number of establishments
Capital invested
Hands employed
Wajies paid in manufactures
Material used
Products of agricultural
Farm values
Products of mining
Railroad mileage
Manufactures of iron and steel
Manufactures of iron and steel rails, tons
All kinds of steel, chiefly ingots, tons
Manufacture of pig iron, tons
Production of wool, pounds
Number of sheep
Production of cotton, bales
Manufacture of wool
" cotton
Production of wheat, bushels
" corn, "
Consumption of raw wool, pounds
" cotton, pounds
Chemicals
Manufacture of silk
Clay products, potterv, etc
Printing and Publishing
Glass
Foreign trade
Immigration
National debt (interest bearing)
Debt, per capita
38,55s,371
530,068,518.507
$780
$549,874,358
$14.26
1,630,846
$4,282,325,442
252,148
$2,118,208,769
2,058,996
$775,584,343
$2,488,427.242
$2,447,538,658
$9,262,803,861
$152,598,994
52,922
$207,208,696
553,571
68,750
1,665,179
100,102,387
28,477,951
4,011,996
$199,137,362
$177,489,739
287,745,626
760,744,549
214,373,219
398,308,257
$19,417,194
$12,210,662
$6,045,536
$66,862,447
$19,225,862
$828,780,176
7,735,855
$2,046,455.722
$60.46
1890
62,622,250
$65,037,091,197
$1,039
$1,524,844,605
$24.35
4,258,893
$9,372,437,283
355,415
$6,524,475,305
4,712,622
$2,283,216,529
$5,162,044,070
$2,460,107,454
$13.279,252,649
$587,230,662
166,706
478,687,519
1,885,307
4,277,071
9,202,703
276,000,000
44,336,072
7,472,511
$338,231,109
$267.981,724
468,373 968
2,122,327,547
351,158,020
1,117,945,776
$59,352,548
$87,298,454
$84,827,785
$275,452,515
$41,a51,004
1,647,139,093
15,866,772
$725,452,.~>15
$14.22
The census returns of agricultural products, however, are by no means
complete. In the first place returns from no farm of less than three acres
were given unless the product exceeded $500. The census gives only
** principal vegetable productions" and ** livestock on hand." Under the
head of ** manufactures " we find values of meats produced in the packing
houses, but of all the livestock killed by over 75,000 butchers, by whom the
people are supplied with the best of their meat, the census gives no return
whatever. It gives the number of livestock kept, but not the number
killed for food. The amount killed by the butchers is ten times that which
goes through the packing houses. It has been estimated that the per capita
consumption of meat in the United States is from fifty to seventy-five dol¬
lars per year. Taking the lowest of these estimates our annual consump¬
tion of meat would now reach the enormous value of $3,700 000,000, includ¬
ing that enumerated in the census. The census also omits **garden truck,"
so-called, except potatoes. Nothing is said of turnips, beets, celery, cresses,
asparagus, pumpkins, squash, melons, citron, caulflower, lettuce, beans,
onions, cabbage, parsnips, carrots, berries of any kind, peas, peanuts, nuXs
of any kind, quinces, grapes, currants, cider, cider brandy, applejack, oys- -
ters, clams, or other water products, cordwood, building materials, quar-
Industrial Growth.
41
ries, game, of many other products of countless farms. Certainly $2,000,-
000,000 is a fair estimate for all these. Our total farm product, then, on a
most conservative estimate, reach a grand total in excess of $7,500,000,000,
of -which we sent abroad in 1894 $628,000,000 worth, or about 8 per cent.,
and if we exclude cotton and tobacco it will only be about 4 per cent. But
we imported $270,000,000 of farm products in the same year, so that our
actual consumption is from 96 to 98 per cent, of our production.
Again, it should be noted that the valuation of 1870 was made on a de¬
preciated paper money basis, from which 20 per cent, should be deducted
in order to make a comparison with 1890.
Take the period from 1870 to 1880, we find that we gained in popula¬
tion 30 per cent. Of wealth we added over $13,000,000,000, a gain of 44
per cent. In savings we gained 49 per cent. In total manufactures 27 per
cent. And iron and steel production, nearly 200 per cent. We increased
our railway mileage over 40,000.. In fact, we gained in every brapch of
industry, at the same time reducing the national debt by $322,462,622.
The ten years from 1880 to 1890 was the most prosperous decade the
United States ever experienced. Our wealth increased from $43,000,000,-
000 to $65,000,000,000, a gain of over 50 per cent. Our savings gained in
like proportion. Our manufactures increased over 75 per cent. ; bands em¬
ployed, 75 percent.; capital invested, 133 per cent., and wages paid, 140
per cent. We built 73,000 miles of railroad, and our production of iron and
steel showed an increase of over 200 per cent. During these years, too,
our national debt was decreased by $998,679,940, nearly one billion of
dollars.
Taking the whole period from 1870 to 1890, there is not in the history of
any people a parallel in the expansion and growth of industries, the accu¬
mulation of wealth, the employment of labor and universal prosperity.
We had developed our mines, manufactures and agriculture to such an
extent that by 1892 our 70,000,000 of people were practically supplying thedr
own wants through an exchange of native commodities. In 1890 the
products of our factories amounted to over $9,000.000,000, and of our farms,
gardens, forests and fisheries to over $7,000,000,000, constituting a total
production of over $16,000,000,000, and yet this was not all. All of this vast
sum constituted net spendable income to the American people, and formed
a basis upon which was carried on our vast system of transportation, our
wholesale and retail trade, and all the various departments of industrial
and commercial activity. This formed a basis of the business transactions
of the country, which -have been estimated by high authorities at over
$50,000,000,000 a year. The magnitude and importance of our home trade
may be illustrated by comparing the United States with the rest of the
world. Our 70,000,000, or about one-twentieth of the inhabitants of the
globe, according to a careful estimate made by Speaker Reed, were equal
as consumers—as a market for our own and the world's production—com¬
pared with the rest of the world, to 700,000,000 of people. According to
Mulhall's Dictionary of Statistics, we manufactured one-third of the world's
products, that is, one-half as much as the world outside of ourselves. We
used all of our manufactures or their equivalent at home. We consumed
42
The Financial Problem.
one fourth of all the sugar produced in the world, one-third of all the coffee,
one-third of the iron and steel, one-quarter of the cotton, one third of the
wool, nearly one-half of all the coal, and one-half of all the tin plate. We
raised twice as much cotton and ten times as much corn as the remainder
of the world put together. We produced one-third of the world's produc¬
tion of gold and silver; we had one-third of the world's steam power. We
g;ranted twice as many patents annually as the rest of the world. One-
third of the wealth daily accumulated by the whole world was acquired by
the United States. While the debt of the rest of the world increased dur¬
ing the decade from 1880 to 1890 over $1,000,000,000, the debt of the United
States during the same period was reduced by exactly that amount.
The 800,000,000 tons carried on the railways of the United States ex¬
ceeded by 60,000,000 tons all of the freight carried on all of the railroads
and all of the ocean commerce of the entire world.
These are some of the marvelous results of the American people at the
close of 20 years following the demonetization of silver in 1873. During
this period there was a steady and continuous advance in wages, which had
begun in i860.
It was during this period that the great states of the Northwest were
developed. The following table of the assessed valuation, compiled from
Census Bulletin No. 104, Aug. 22, 1891, shows the mcrease in the assessed
valuation of real and personal property of some of the states of the West
and Northwest in 1880 and 1890;
• Per Capita. Increased
States. 1880. 1890 1880. 1890. per cent.
Kansas $160,891,689 $290,593,711 $161.52 $203,63 80.61
Nebraska 90,585,782 184,770,305 200.23 174.49 103.97
Calorado 74,471,693 188.911,325 383.23 458.30 153.67
California 584,578,036 1071,102,327 676.05 886.58 83.23
Idaho 6,440,876 25,581,305 197.51 303 15 297.17
Minnesota 258,028,687 588,531.743 3^30.48 452.08 128.
Montana 18,609,802 106,392,892 475.24 805.04 471.70
North Dakota. .. 8,786,572 78.394,536 238.06, 429.04 792.21
South Dakota... 11,534,958 131,592,587 117.38 421. 1040.82
Oregon 52,522084 166,025,731 352. 529.14 216.11
Washington 23,810,693 124,795,449 31699 357-18 424.12
Wyoming 13,621,829 31.431.495 655.24 517-77 130.74
The increased accumulation of wealth in the state of New York was
42 36 per cent. In Pennsylvania it was 54.02 per cent. In Massachusetts
it was 35.93 per cent.
It has been under a single gold standard that the new states of the
West have developed. It has been under a single gold standard that they
exhibited this most marvelous accumulation of wealth from 1880 to 1890.
The greatest accumulation of wealth between 1880 and 1890 of any part of
our country is found in these new states, where men of industry, enterprise
and ability, aided by their own eff )rts, and in many instances by borrow¬
ing capital from the East, have accomplished results never before wit¬
nessed. It is unbecoming for them now to attempt to convince the country
that a panic which has been brought about by free trade legislation, is due
in the smallest degree to an event which occurred in 1873, and which
according to the industrial facts exerted no influence whatever.
Sale of Bonds.
43
CHAPTER X.
Causes Which Made the Sale of Bonds, the Export of Gold and
the Repeal of the Sherman Law a Necessitv.
The sale of $262,000,000 of government bonds and an increase of the
national debt to that amount in a time of peace, indicates a most unusual
and extraordinary conditions of affairs. Prior to the inauguration of Mr.
Cleveland there had for many years been a constant surplus in the Treasury
applied to the extinguishment of the national debt, which was reduced
by $1,881,367,873 from March ist, 1869, to March ist, 1893. or at
the rate of $5,701,000 per month. Since the Democratic party came into
power, however, there has not only been an absence of surplus but the debt
has been increased at the rate of $7,502,921 a month, or by $262,000,000
between March 3d, 1893, to March ist, 1895, exclusive of interest. A
surplus in the Treasury has always been a prominent feature of Republican
administrations. During the four years o*^ President Harrison's term it
was as follows:
1890 $85,040,271
1891 26,838,541
1892 9,914,453
1893 2,341,674
The falling off during the years 1892 and 1893 was due to several
causes. The McKinley bill reduced revenu(;s by $40,000,000 in the repeal
of duty on sugar alone. Moreover, the Democratic party being pledged to
the repeal of McKinley bill the election of Mr. Cleveland was a notice to job¬
bers and importers that foreign made articles could soon be brought into the
country at much lower rates of duty. Hence, foreign purchases declined and
buyers waited for the more favorable conditions, while the receipts
from customs duties declined from $203,000,000 in 1893 to $131,000,000 in
1894, and $152,000,000 in 1895. If the McKinley bill had remained in force
with no prospect existing of a revision of the tariff, there would have been
ample revenues and an adequate surplus in the Treasurv. There was no
deficiency, however, and no sale of bonds until after the inauguration of Mr.
Cleveland. As soon as the result of the November election of 1892 was made
known, the very threat of free trade which stared the American people in
the face, paralyzed industries at once and set in motion that levelling
process which has produced the most disastrous industrial revolution the
nation has ever experienced. From a surplus in the Treasury, we
immediately passed to a deficiency, which during the present administration
has reached over $152,000,000. The deficiency was as follows each year,
closing June 30th:
July, 1894 $69,803,262
1895 42,805,223
1896 26,790,304
1896, the first month of the fiscal year, it reached 13,000,000
Independent of the silver question and arising from the insane tariff
policy alone, every dollar of the gold reserve would have been exhausted
from lack of revenue and Mr. Cleveland would have been compelled to sell
bonds to the extent" of $152,000,000 to pay the ordinary running expenses
of the government. Under these conditions it is sheer nonsense to
44
The Financial Problem.
attribute the sale of bonds wholly to the agitation of the free coinage of
silver. There has been no time in recent years when a free coinage
measure could have passed both branches of Congress, and there has
certainly been no probability of such a bill receiving the approval of any
President who has occupied the White House during the past fifteen years.
The necessity for the sale of bonds arose when Mr. Cleveland was
compelled to draw his own salary from the gold reserve and to further
deplete it for current expenses of the administration.
The experience of Mr. Cleveland has simply been a repetition of the
embarrassments which Presidents Tyler and Buchannan encountered under
the free trade legislation of 1833 and 1857. Under the act of 1833 revenues
declined, and in 1841 there was a deficiency of $11,000,060. President
Buchannan was compelled to increase the national debt by $50,000,000 to
keep his administration runnning under the declining revenues of the low
tariff bill of 1857.
The Export of Gold.
We are also told that gold is leaving the country. The export of our
precious metals has accompanied every low tariff period that we have had
since the formation of the government. As soon as we adopt the policy of
buying manufactured articles of foreigners, instead of our own producers,
a balance of trade at once arises against us which must be settled for by
the export ot gold. It is to provide for the payment of debts incurred by
the purchase of foreign merchandise that New York bankers and importers
have been presenting greenbacks for redemption, drawing gold out of the
United States Treasury and shipping it to Europe. This is not the first
time that gold has been shipped abroad to pay for manufactured articles
that ought to have been made by American labor. During the last free
trade period from 1846 to 1857 a balance of trade arose against us of over
$485,000,000, which caused the export of $340,000,000 of specie. This must
always occur when we buy more than we sell. We are what is known as a
debtor nation. It is estimated that we are required each year to pay
$100,000,000 of interest to foreign holders of our securities. It is also
estimated that American tourists visiting Europe take with them each year
another $100,000,000 of coin in excess of the coin brought to our shores by
foreign tourists and immigrants. Hence at the outset, we have a balance
against us to settle of about $200,000,000 a year, and in order to retain our
precious metals in the country, we must export of merchandiee at least
$200,000,000 more than we import. In 1892 the balance of trade in mer¬
chandise was in favor of the United States by over $202,000,000, and on
that year our net export of gold was only $495.873 and less than $4,000,000
of silvèr. From 1878 to 1892 our exports exceeded our imports of merchan¬
dise by $1,662,000,000, there being a large balance of trade in favor of the
United .States nearly every year, the current of gold was tqrned to our
shores and from 1878 to 1892 the imports of gold to the United States was
$101,558,310.
The following table shows the excess of expprts of merchandise over
imports between United-States and foreign countries, or Jhe balance; of
trade in our favor, from 1878 to 1892, and the excess in the exports and
Balance of Trade.
45
imports of gold, coin and bullion during the same period, taken from the
Statistical Abstract of the United States for 1895:
Gold. Coin and Bullion.
Merchandise.
Excees of
Excess of
Excess of
Excess of
Exports over
Imports over
Exports over
Imports over
Imports.
Exports.
Imports.
Exports.
1878
$4,125,760
1,037*334
77,119,371
97,466,127
1,789,174
6,133,261
$257,814,234
264,661,666
167,683,912
259,712,718
25,902,683
100,658,488
72,8Í5,916
164,662,426
. 44.088,694
23,853,443
1879
1880.
188L
1882
1883
1884
$18,260,640
1885
18,213,804
1886
22.208,842
1887.
33,^',4Ü
25,558,083
1888
$28,002,607
2,740,277
1889
49,667,427
4,3.31,149
68,130,087
495,873
1890
68,518.275
39,564.614
202,875,686
1891
1892
$163,094,018
$264,652,328
$1,692,822,755
$30.732,884
Excess Import of Gold, $ 101,558,3 lO. Excess Exports of Merchan¬
dise, $1,802,089,678.
Had our citizens during this period not been so large borrowers from
foreign countries, our imports of gold would have been much greater.
This favorable balance of trade from 1878 to 1892 occurred during a most
prosperous industrial period, when we were building railroads, opening
mines and establishing industries which absorbed a vast amount of capital.
It was during this time that American securities were very largely sold in
foreign markets. It should be noted in this connection that when a
domestic security is sold in a foreign country that the vender does not neces¬
sarily receive and bring home the gold for which the security is sold ; but he
may receive a bill of exchange on New York which passes into the clearing
house to settle a balance, if one exists in our favor, in international trade.
Democratic Administration.
From a favorable balance of trade of $202,000,000 in 1892 there was a
falling off until it reached the insignificant sum of $23,269,884 at the
close of the calendar year of 1895. The $100,000,000 of interest to foreign
holders of our securities must be met the same as before. Our tourists
continued going abroad while immigration declined. This situation alone
required the export of a large amount of gold each year, which immedi¬
ately set in, as shown by the following figures:
Exports of Gold, Coin and Bullion In Excess of Imports of Gold,
Coin and Bullion.
1892, excess of exports over imports $ 495,87£
1893, excess of exports over imports 87,505,463
1894, excess of exports over imports, calendar year closing Jan.
i. 1895 81,212,363
1895, excess of exports over imports, calendar year closing Jan.
i, 1896 72,065,607
Duriqg the years of r893, 1894 and 1895 our exports of silver, coin and
bullion exceeded $60,000,000. The large export of gold indicated by the
above figures was scarcely in excess of what was required to settle adverse
46
The Financial Problem.
balances arising from interest and travel. In view of the foregoing facts
the reader will at once arrive at the conclusion that it is absolutely impossible
to separate the present ñnancial condition of the country from the tariff
policy of the Democratic party. In seeking after the causes which have
forced the sale of bonds and the export of the gold, we need look no
further than the threatened tariff legislation of Mr. Cleveland and the
introduction of the factory-closing, deficit-creating, debt-increasing and
gold-exporting policy of the Democratic party.
Repeal of the Sherman Law.
That the tariff legislation proposed by Mr. Cleveland would result in
paralyzing the industries of the country and bring about a falling market,
low prices, limited business, cautious buying, reduced stock and a shrinkage
in values, was conceded by the New York Journal of Commerce and Com¬
mercial Bulletin, a leading free trade paper, in an editorial on the 17th day
of November, 1892, nine days after Mr. Cleveland's election. It was well
known to the business world that it would result also in an adverse balance
of trade, the export of gold, a raid on the Treasury, the presentation of
greenbacks for redemption and impairment of the gold reserve. This
shook the confidence of the financial world in the ability of the United
States to maintain a gold reserve of $100,000.000 and to keep all of our paper
currency and silver dollars at par with gold. The very conditions which
foreshadowed the shipping of gold from the United States to settle an
adverse balance of trade which was sure to arise, would bring about the
presentation of greenbacks for redemption to obtain gold for export.
On November ist, 1895, under the decline in the market value of the
silver purchased under the Bland and Sherman laws, the government had
already sustained a loss of over $173,000,000. With the gold reserve already
impaired, the business of the country paralyzed and the credit of the nation
shaken, it was deemed unwise to continue the purchase of 4,500,000 ounces
of silver per month. Congress was convened by President Cleveland and
the purchasing clause of the Sherman law repealed." The gold reserve had
been assailed, and in order to pave the way for the Wilson bill or the inaug¬
uration of that system of free imports which would fiood the country with
foreign made goods, and necessitate the export of gold, the purchase of
silver must cease. The gold reserve was being assailed from two
sources. First, by threatened free trade legislation ; second, by threatened
free coinage of silver. Mr. Cleveland and his free trade associates striving
to open our markets to the tree import of foreign made goods, and by the
free silver party who would gladly see our whole financial policy collapse,
every dollar of gold expelled from the country and the nation forced to a
silver basis. In the midst of this crisis the Republican party presented the
Dingley bill which was framed solely for the purpose of providing adequate
revenues for the expenses of the government, that the gold reserve in thjs
way might be protected. This measure for temporary relief met the com¬
bined opposition of free traders and silverites in the Senate and suffered
defeat. Having wiped out the surplus, deprived the nation of sufficient
revenue, flooded the country with foreign merchandise, and forced the
export of gold, Mr. Cleveland was compelled to sell bonds an4 increase the
Gold Reserve.
47
national debt to save the nation from bankruptcy. Under these circum¬
stances, it is not at all surprising that a small volume of American securities
were returned for payment, and the gold exports thereby increased. That
the gold withdrawn from the United States Treasury upon the redemption
of greenbacks, was shipped abroad by importers to pay for foreign made
goods and to settle an adverse balance of trade, there is not the slightest
question. An importer or banker in New York requiring gold for this pur¬
pose, will not hunt around and collect the amount required from the banks,
but will take currency to the sub-treasury in New York, obtain the gold, put
it in sacks where it can easily be carted to ships lying oply a few rods away.
This IS not raiding the Treasury, this is not attempting to injure the gov¬
ernment it is simply adopting the most simple and convenient method of
despatching business.
It has been the policy of the government to maintain at a parity with
gold all of our paper currency and silver dollars. This was not only the
purpo.se of the resumption act but the Sherman Law of July 14th, 1890,
specifically declared it to be the policy of the United States to maintain
silver and gold on a parity with each other upon the present ratio, or upon
such ratio as may be provided by law. The credit and good faith of the
nation was pledged to make every dollar of every kind issued by the gov¬
ernment as good as gold. $346,000,000 of greenbacks, $141,000,000 of
Treasury notes, making a total oí $487,000,000 of paper currency were con-
cededly redeemable in gold. In addition to this, there had been coined
$423,000,000 of full legal tender silver dollars which under the depreciation
of silver had become worth but little more than 50 cents a piece. There
had been issued upon a portion of the silver dollars $336,000,000 of silver
certificates, making a total of $900,000,000 of paper currency and silver
dollars dependent for redemption upon a gold reserve of $100,000,000. This
small amount of gold even under normal conditions of high credit and
unshaken confidence, seemed like a frail foundation. With declining re¬
ceipts, with the balance of trade turning against us, the reserve in the
Treasury must necessarily be invaded to pay the ordinary expenditures of
the government. During all those years of adequate receipts and a surplus
and when a favorable balance of trade with foreign countries existed, the
gold reserve had not only been maintained, but a considerable sum in
excess of $100,000,000 was constantly in the Treasury. Thé following
statement from the United States Treasurer's report shows that its impair¬
ment began soon after Mr. Cleveland's election in 1892, and fell below the
$100,000,000 mark in the month of April after his inauguration.
1892
1893.
January....
Febrnary...
March
April
May
Jane
Jaly
Antust
September.
October
November.
December..
$119,574.904 24 January..
122,122,112 53 February
125,815,040 34 March
119,909,756 45 April
114.231,882 86 May
114,342,366 23 June
110,444,391 66 July
114,156,316 63
119,395,509 58
124,006,119 91
124,409,656 89
121.266,662 29
$108.181,713 53
103,284,218 91
106,892,223 99
97.011,330 08
95,048,640 76
95.485,413 59
99,202,933 98
48
The Financial Problem.
Remedy.
In seeking after a remedy for our financial embarrassments we need
not conjecture, we need not indulge in guess work or resort to new or un¬
tried experiments. We need but to be guided by the past experiences of
former administrations and adopt those measures which have always fur¬
nished relief. Whenever in the history of our nation we have had low
tariff, there has been lack of revenue, increase of national debt, impaired
credit, the sale of bonds, financial disaster, an adverse balance of trade and
the export of gold. These things occurred under the low tariff of 1S33,
1846 and 1857. On the other hand, whenever we have had adequate pro¬
tection there has been sufficient revenue, a surplus in the Treasury, a
reduced national debt, a favorable balance of trade, the import of gold, .
high credit and universal prosperity. Under the high tariff from 1824 to
1832 the national debt was all paid off under President Jackson, with a sur¬
plus left over whicji was distributed among the states. The act of 1842,
which lasted only four years, arrested business depression and reversed the
disordered condition of affairs which the act of 1833 had brought about.
Under the protective tariff of 1868 to 1892 the American people enjoyed the
most meçvelous period of prosperity and witnessed the most wonderful
financial and industrial achievements to be found in the history of nations.
There is no guess work, there are no uncertainties involved in these sug¬
gestions, they have all been tried with unmistakable results. The finances
of our nation cannot be restored to a sound and safe financial basis until we
return to that time-honored policy of protection to native industries which
will supply the government with ample revenue, restore a favorable bal¬
ance of trade, and turn the current of gold from foreign countries to our
own shore. A favorable balance of trade continuing for fifteen years, such
as we enjoyed from 1875 to 1892, would either attract to our shores large
quantities of the precious metals held by foreign countries, or it would
force a return of American securities held in foreign countries and convert
the United States into a creditor, instead of a debtor, nation. Instead of
borrowing in Europe, our enterprising business men would place their
loans within our own country, and we would soon become financially, as
well as industrially, independent of the whole world. Even if we should
be so unwise as to pass to a free silver basis and expel gold from the coun¬
try, an adverse balance of trade would constantly drain us of our silver
the same as it is now draining us of our gold. It would impair a silver
reserve as it has destroyed a gold reserve.
CHAPTER XII.
Decline in the Value of Sil^
It is a conceded fact that silver has steadily^eclined in value/since
1859. It has fallen from $1.36 per ounce of 452^rains in 1859, to $«3«^ in
1873, $1.15 in 1878, 93 cents in 1889, to 65 cents in 1895. The commercial
ratio of value has also fallen. In 1859 15.19 of an ounce of silver was worth
as much.as one ounce of gcdd. In 1873 the ratio was 15.92 to i. In 1878,
Deciine in Silver.
49
17.94 to I ; and in 1889 it took 22.10 ounces of silver to equal one ounce of
gold. In 1895 an ounce of gold was worth as much as 31.60 ounces of silver.
In no country practicing the policy of bimetalism has silver passed current
or had a higher purchasing power than its commercial valuation. The
legal proportion of rsj^ to i has not in the slightest degree influenced the
commercial value. In all free silver countries (and what we mean by free
silver countries is the free coinage at their mints of both gold and silver at
a fixed ratio), silver has stood on its own bottom ; its purchasing power, the
value at which it circulates current among the people, is what it is worth in
the markets of the world when sold as a commodity.
The following table taken from the reports of the Treasury Department,
shows that silver coins have continued to decline in all of the free silver
countries with its bullion or market price.
Value of Silver Moaey In Free Colnaee Countries Shown in
United States Money.
Silver
Austria.
Russia,
Mexico
Peru,
Central
India,
Countries.
Florin.
Rouble.
Dollar.
Sol.
Peso.
Rupee.
Unit
47.6
77.2
106.6
96.5
96.5
45.8
1874
47.6
77.1
104.7
92.5
96.5
45.8
1875
45.3
73.4
99.8
91.8
91.8
43.6
1880
41.3
66.9
90.9
83.6
83.6
39.7
1883
40.1
65.0
88.2
81.2
—
38.6
1884
39.8
64.5
87.5
80.6
—
38.3
1885
39.3
63 6
86.4
79 5
—
37.8
1886
■ 37.1
60.1
81.6
75.1
—
35.7
1887
35.9
58.2
79.0
72.7
—
34.6
1888
34.5
55.9
75.9
69.9
69.9
35.2
1889
33.6
54.4
74.9
68.0
68.0
32.3
1890
42.0
68.0
92.3
85.0
85.0
40.4
1892
32.0
51.9
66.9
61.6
61.6
29.3
1893
—
48.3
57.7
53.1
53.1
25.2
1894
—
41.3
50.4
46.4
46.4
22.0
1895
—
35.3
52.2
48.9
48.6
23.1
The above figures confirm the declaration of Senator Morrill of Vermont,
who said:
"No man outside of an insane asylum would receive the silver coins of
Mexico, India or Peru for more than their weight value in bullion."
The experience of every nation teaches that 37 iX grains of pure silver
cannot be made worth as much as 23.22 grains of pure gold, simply by a
nation opening its mints to the free and unlimited coinage of both metals
and declaring them to be a legal tender at those proportions. Mr. Harvey
concedes this fact. At page 143 cf "Coin's Financial School," he says:
"With silver remonetized and a just and equitable standard of values,
we can if necessary, by act of Congress, reduce the numbers of grains in a
gold dollar till it is of the same value as the silver dollar."
Causes of the Decline in the Value of Silver.
Although it is generally conceded that the decline in the value of silver
was in part at least, caused by the action of Germany and other European
50
The Financial Problem.
countries, in closing their mints to its free coinage, yet it may be easily
demonstrated that the prime factor in bringing about its fall in price was
increased supply and cheapened methods of production.
Hon. Binger Hermann, Member of Congress from Oregon, in a speech
before the House of Representatives August 25, iSgj, said:
"The great increase of the silver production since 1873 is due largely to
the improved facilities for operating mines. Greater improvements have
been made in mining in the last thirty years than in the five hundred pre¬
ceding. Among them may be noticed the diamond drill for prospecting;
machine drills for driving, sinking and stopping ; the use of compressed air
for winding underground ; the force of stronger explosives, especially that
of nitro-glycerine compound, dynamite, and the blasting gelatin; the
increased use of steel for various purposes, with Bluke's stone-breaker and
continuous jiggers; the extended application of hydraulic mining; the
larger employment of electricity, both for blasting as well as for signaling,
and for lighting and transmission of power ; improved means of ventilation,
natural as well as artificial ;- quicker and cheaper transportation of ores,
metals and supplies. Even magnetic attraction is utilized.
Silver is seldom found in the native state, and the ores were formerly
difficult of reduction. Gold could easily be washed out of the sand and
gp-avel by hand or by simple appliances, while silver which is found in the
solid rock, could only be released and obtained by subterraneous mining
and at g;reater expense. The ores are generally complex mixtures, and
their métallurgie treatment depends much upon the conditions in the admix¬
tures, and was slow and costly and crude. In Mexico. Perue, and Chilli,
mules were used to tread together the ground, stamped ore and salt until,
with crude sulphate of copper, the silver was converted into amalgam. All
these old processes are now superseded by newer, later, more rapid, and
more economical means. Hence it is that silver mining has cheapened
more perhaps than any other class of metal mining."
Senator Morrill, in discussing this phase of the question said (Congres¬
sional Record August 22nd, 1893):
The average wages of all persons, foremen, miners and laborers,
employed in our gold and silver mines, according to the census report of
i8go, were $729 a year, and the average output per man amounted to
$1,732 a year. In any other business these facts would indicate no stinted
half-rations in the measure of profits. Certainly it far exceeds the profits of
wool-raising in Oregon, of cotton-raising in Texas, and even of corn-raising
in Kansas.
This statement includes 1,610 mines, for each of which the bullion pro¬
duct was less than $1,000, and 1,408 mines where the product of each was
over $1,000 and not over $10,000. The greater bulk of silver bullion comes
from a very limited number of mines, and their rich ores have afforded
some silver kings large profits, surely higher returns than the capital
invested and labor employed in any other industrial occupation.
It is not to be assumed that all silver mines now, like the Consolidated
Virginian years ago, with an assessment on stockholders of only $411.20g,are
paying dividends of over 1,000,000 per month; nor that any other mines now
equal to the Mollie Gibson mine of Colorado, which was claimed to have pro¬
duced upto December 31,1891, 2,000,000 ounces of silver ata cost of 4.8cents
per ounce ; but it should be claimed that the average cost of the production
of silver within a few years has been greatly and radically diminished by
improved machinery, by new processes of treatment, and by much cheaper
transportation.
Mr. William H. Beck, as quoted by Cowperthwait, says:
•When I went to Montanna, in 1866, it cost us to to transport ores from
Dillon to Omaha $24 per ton. This transportation now costs $10 a ton. It
Decline in Silver.
51
cost us then to treat ores $173 ton. Now it costs $8 and $10. Mining pow¬
der cost 50 to 60 cents a pound. We can buy it now for 20 and 22 cents a
pound. It cost then to board a man $i a day and more. We can do it now
for a less sum. Machinery is better and improvements in mining machinery
are being constantly made. '
He also states that when he went to Colorado, in 1^78, he was told that
they could not treat ores that assayed less than $20 to the ton. Ores
can now be profitably handled that yield as low as $5 a ton.
It cannot be doubted that the cheaper cost of mining silver has had the
natural effect of reducing its value. If by any means the product were
now to be considerably increased, an equal or greater reduction in value
would be likely to follow. With no greater consumption of silver than now
exists, the interest of no part of our country can be promoted by stimulating
work in the poorest mines or in the tailings of the richest."
The same causes have brought about a reduced cost in the production
of copper, as shown by Hon. James T. McCleary, Member of Congress from
Minnesota, in his speech before the House of Representatives, February
i2th, 1896, as follows:
"And while we are on the subject, here is something new and fresh in
the same line. An article in a recent number of the Iron Age gives the
statistics of one of the copper mines, the Quincy mine, in the Lake Superior
district. These show that the production commenced with 2,498,574 pounds
in 1864, had increased to 15.484,014 in 1894—the yield per fathom and the
average richness being about the same. But the cost of production had
decreased from 26.71 cents per pound in 1864 to 5.68 cents in 1894. So that
the production in thirty years had increased almost sevenfold, while the
cost of production is but one-fifth of what it was in 1864. Meanwhile the
monthly wages of the miners have increased from $38.76 in 1864 to
$50.70 IN 1894. 'The lowering of cost,' says the Iron Age, 'is of course due
to the multiplicity of improvements in every department.' It mentions
some of them. High explosives, machine drilling, modern stamps for
crushing the rock, more economical engines for hoisting and pumping,
improved means of transportation, cheaper supplies, and more economical
processes generally."
Under these conceded tacts it seems almost irrational for any person of
ordinary intelligence, to attribute the decline in the value of silver to the
act of 1873. Silver has declined in price the same as, and from the same
causes, as other commodities; causes which are beyond the control of
legislation.
The increased use of checks, drafts, bills of exchange, and other med¬
iums of exchange more convenient than either gold or silver, has tended
consta itly to diminish the demand for coin. This would affect the price of
silver more than gold, because gold is favored in commerce, being better
adapted to the business world both from its stability in value and from being
less bulky than silver. Hence, the tendency has been in the natural course
of business,to crowd silver out. Mr. Mulhall shows in "History of Prices,"
published in 1S85, that:
"The amount of imports and exports of all nations measured by value,
has increased since 1850 no less than 283 per cent, or ten times faster than
population."
And that in the settlement of balances in international trade, the per¬
centage of coin used, has declined. He says:
"That sea borne gold and silver are now less than 6 per cent of the
value of merchandise exchange, against 12 per cent in ï868 and 1865."
52
The Financial Problem.
P'l'Btt that the decline In the value of allver has been due to
causes entirely Independent of the legislative action of nations.
Second, that In all free colnase countries It circulates and has
a purchasing power based on Its commercial or bullion value.
Third, that Its remonetlzatlon by the United States govern¬
ment at a ratio of 16 to I, would not restore Its former commercial
value.
CHAPTER XIII.
How Parity Is Maintained.
Secretary Carlisle in a recent discussion of the question, laid down the
following propositions, which are sustained by the experience of the world
as follows:
First—There is not a free coinage country in the world to-day
that is not on a silver basis.
Second—There Is not a gold standard country In the world
to-day that does not use silver along with gold.
Third—There is not a silver standard country in the world to¬
day that uses any gold as money along with silver.
Fourth—There is not a silver standard country In the world
to-day that has more than one-third as much money in circula¬
tion per capita as the United States have.
Parity of Gold and Silver Maintained.
It has been shown, and is an incontrovertible fact, that silver and gold
at a fixed ratio of valuation differing from their commercial value, cannot be
kept at a parity in purchasing power and forced to crculate side by side,
excepting by adopting gold as the standard, limiting the coinage of silver
and applying the principle of redemption ; that is, agreeing to redeem
silver with gold. The only way that 371X grains of pure silver can be kept'
equal in purchasing power to 23.22 grains of pure gold, when this amount
of silver is actually worth only about half as much as the above amount of
gold, is by redeeming the silver with gold. This is now being done by the
United States and by the principal nations of Europe. As proof of this
proposition, the attention of the reader is called to the evidence of Mr. O.
E. Leech, Director of the United States Mint, before the Committee on
Coinage, Weights and Measures in 1891, as follows:
Mr. Vaux In what way has the value of the silver dollar been kept
equal to that of gold notwithstanding the difference in their bullion value ?
Mr. Leech. Mainly by the limitation of Ihe coinage of silver and
endowing it with legal-tender power equal to gold ; and from the fact that
holders of legal-tender paper of the United States have been allowed to
receive gold upon demand: that the government has not exercised any dis¬
cretion in payments between gold and silver dollars; from the fact that we
have a sufficient quantity of gold in the United Slates to maintain the gold
standard ; from the fact that our credit is so good and that it is the general
faith of mankind that we will always redeem a silver dollar with a gold
dollar.
Mr. Vaux. Under legal tender currency ?
Mr. Leech. Yes, sir. The silver dollar and silver certificate are
practically controvertible through the banks and in circulation with legal-
tender notes, which are redeemed in gold upon demand of the holder, and
just as long as we areabletofreely redeem the obligationsof the Government
Parity.
53
in gold, the silver dollar, in domestic circulation, at least, will be of equal
value with the gold dollar. You want to know how the European countries
keep their silver coins at par with their gold coins, they being intrinsically
of less value. In England of course, silver is subsidiary. It is token
money and is redeemable in gold. So of course there is no trouble there,
or in the other countries having a gold standard. In the states of the Latin
Union—
Mr. Walkër. Give us thfe list.
Mr Leech. France, Belgium, Switzerland, Italy and Greece. Spain
has the same .coinage system, so that it is practically the same, although
not a member of the Union.
Those countries, as you very well know, suspended the coinage of full
legal-tender silver in 1878. First, the States of the Latin Union limited the
coinage of the s-franc piece in 1874. In 1878 they closed their mints to the
coinage of the 5-franc pieces, since which time this coinage has not been
resumed. All Europe followed suit, and there have been no full legal-
tender coin struck in Europe tor thirteen years. There has been some
trade coins struck by Austria-Hungary; but there has been no coinage
worth mentioning of full legal-tender silver coins.
By limiting the coinage they have been able in domestic circulation to
keep their silver cojns in circulation at par with gold ; but it must be borne
in mind, and this is a-very important fact, that under the terms of the T.,atin
Union the full legal-tender silver coins are redeemable in gold by the coun¬
tries which issue them; that is to say, when the Latin Union expires, which
can be done now, at the end of any year by any one of the countries—it is
only kept along by sufference from year to year—the Bank of France can
call upon the other states of the union to redeem in gold the 5-franc pieces
of their coinage that it holds ; so that the full legal-tender coins of the Latin
Union are practically redeemable in gold.
Mr. Vaux. By consent?
Mr. Leech. By the terms of the union.
* * * * * * * * ♦
Representative Vaux. Under free coinage of both metals would the
silver dollar exchange at its equivalent value or at its nominal valué as
compared with gold ?
Mr. Leech. Just as long as the Government was able to keep it at par
by not discriminating in payments between gold and silver, they would
remain at par with gold, but the moment the Government discriminate
and refuse to pay gold dollars on demand for legal tender notes, I think
they would cease to circulate at their face value concurrently with gold.
Productloii of Gold and Silver.
Another cause which has brought about a decline in the price of silver
is its greatly iucreased production, which remained quite uniform up to
1865, it being $36,540,000on an average between 1801 and 1810, and reached
only $37,663,000 lieitween 1856 and 1865. By 1870 the annual output from
the mines of the vVorld had increased to only $55,851,000. From this time
On the production grew' year by year until 1894, when it had reached $215,-
404,600."' In 1860 thete was only $150,000 mined in the United States, By
1873 it was $57,000,000", and in 189k, $73,697,000. An examination of the
following taUes of the productiop of gold and silver in the world and in the
United States, .shows a most marvelous .increase in the output of both
metals duping these years. While the average production of gold between
1821 and 1831 was only $9,440,000, by 1840 it had reached $13,484,000. The
large finds in Australia and California increased the average yield between
1851 and 1855 to $132,513.000. By 1894 it was $179,665,600. In 1895, $203,-
54
The Financial Problem.
000,000, and the mint estimate for 1896 is $220,000,000. From 1873 to 1894
there was added to the gold of the world $2,526,000,000. This vast increase
in the supply of gold has operated also against silver. It has tended to
take its place not only as a medium of exchange, but to crowd it out as a
measure of value and money of redemption.
Productloa of Gold and Silver In the World Since the Discovery
of America.
[From 149.3 to 188.5 Is from a table of averages compiled by Dr. Adolph Soetbeer.
For the years 1886 to 1894 the production Is the annual estimate of the Bureau of the
Mint.]
Period.
I GOLD.
1 Annua 1 a vera ge for period-
Ounces, fine Value.
SILVER.
Annual average for period.
Ounces, fine. Coining value.
1493-
1521-
1545-
1561-
1581-
1601-
1621-
1641-
1661-
1681-
1701-
1721-
1741-
1761-
1781-
1801-
1811-
1821-
1831-
1841-
1851-
1856-
1861-
1866-
1871-
1876-
1881-
1886,
1887,
1888,
1889,
1890,
1891,
1892,
1893
1894.
1520
1544
1560
1580
1600
1620
1640
1660
1680
1700
1720
1740
1760
1780
1800
1810
1820
1830
1840
18.50
1855
1860
1865
1870
1875
1880
1885
186,470
230,494
273,596
219,906
237.267
273,918
265,845
281,955
297.709
346,095
412,163
613,422
791,211
665,666
571,948
571,563
367,957
457,044
652,291
1,760,502
6,410,324
6,486,262
5,949,582
6,270,086
5,591,014
5,543,110
4,794,755
5,135,679
5,116,861
5,330,775
5,973,790
5,749,306
6,320,194
7,102,180
7,609,242
8,705,836
$3,855,000
4,759,000
5,656,000
4,.546,000
4,905,000
5,662,000
5,516,000
5,828,000
6,154,000
7,154,000
8,520,000
12.681,000
16,356,000
13,761,000
11,823,000
11,815,000
7,606,000
9,448,000
13,484.000
36,393.000
132,513,000
134,083.000
122,989,000
129,614,000
115.577,000
114,586,000
99,116,000
106,163,900
105,774,900
110,196,900
123,489.200
118,848,700
130.650,000
146,815,100
157,297,000
179,665,600
1,511,050
2,889,930
10,017,940
9,628,925
13,467,635
13,."^ 96,135
11,654,240
11,776,545
10,834,550
10,992,085
11,432.540
13,863,080
17,140,612
20,985,591
28,261,779
28,746,922
17,385,755
14,807,004
19,175,867
25,090,342
28,488,597
29,095,428
35,401,972
43,051,,583
63,317,014
78,775,602
92,003,944
93,297,290
96,123,586
108,827,606
120,213,611
126,095,062
137,170,919
153,151,762
165,165,876
166,601,995
$1,954,000
3,749.000
12,952,000
12,450,000
17,413,000
17,579,000
16,361,000
15,226,000
14,008,000
14,212,000
14.781,000
17,924,000
22,162,00©
27,133,000
36,540,000
37,168,000
22,793,000
19,440,000
24,824,000
32.618.000
36,772,000
37,663,000
45,864.000
55,851,000
81,864,000
101,8.51,000
118.955,000
120,626,800
124,281,000
140,706,400
155,427,700
163,032,000
177;352.300
198,014,400
213,547,800
215,404,600
Production.
55
Product of Gold and Sliver In the United States from 1792-1844,
and annually since.
[The eetimate tor 1792-1873 ie by R. W. Raymond, CommiRsiODer, and since by the Director
of the Mint.]
Tears.
Gold.
Silver.
Total.
April 2,1792—Jnly 31. 1834
Jnly 31,1884—December 31, 1844
1845
1846
1847
1848
1849
1850
1851
1852
1853
1864
1866
1856
1867
1858
1859
1860
1861
1862
1864.,
1865..
1866.
1867.,
1868..
1869..
1870.
1871.
1872.
1873.
1874.
1876..
1876.
1877.
1878.
1879..
1880.
1881..
1882.
1883..
1884.
1885..
1886.
1887.
1888.
1889.
1890.
1891..
1892..
Total 81,937,881,769
G»
$14,000,000
7,500,000
1,008,327
1.139,357
889,085
10,000,000
40.000,000
50.0<»0,000
55,000,000
60,000,000
65,000,000
60,000,000
55,000.000
55.0<K),000
55,000,000
50,000,000
60,000.000
46,000,000
43,000,000
39,200,0 K)
40,000,000
46,100,000
53,225,000
53,500,000
51,725,000
48,0(K),000
49,500,000
50,000,000
43,500,000
36,000,000
36,000,000
33,500,000
33,400,000
39,900,000
46,900,( 00
61,200,000
38,900,000
36,000,000
34,700,000
82,500,000
80,009, ÜUO
80,800,9UÜ
31,800,uOO
35,000,000
33,000,000
33,175,000
32,800,000
32,845,000
33,175,000
"1,000,000
Insigniflcant.
$250,000
50^000
50,000
50,000
50,000
60,000
50,000
50,000
50,000
50,000
50,000
50,000
50,000
50,000
600,000
100,000
150,000
2,0 H),000
4,500,000
8,500,000
11,000,000
11,250,000
10,000,000
13,500,000
12,000,000
12,000,000
16,000,000
23.000,000
28,750,000
35,75«,000
57,300,000
31,700,000
38,800,000
39,800,000
45,200,000
40,800,000
39,200,000
43,000,000
46,800,000
46,200,000
48,800,000
51.600,000
51.000,000
53,350,000
59,195,000
64,646,000
70,464,000
75,417,000
73,697,000
$14,000,000
7,750,000
1,058,327
1,189,357
939,085
10,050,000
40,050,000
60,050,000
55,050.000
60,050,000
65,050,000
60,050,000
55,0.50,000
55,050,000
55,0.50,000
50,590,000
50,100,000
46,150,000
45,000 000
43,700,000
48,500,000
57.100,000
64,475.000
63,500,000
65,225,000
60,000,000
61,500,000
66,000,000
66,500,000
64,750,000
71,750,000
70,800,000
65,100,000
78,700,000
86,700,000
96.400,000
79,700,000
75,200,000
77,7(X),000
79,300,000
76,200,000
79,600.000
83,400,000
86,000,000
86,350,000
92,370,000
97,446,000
ia3,309,U0O
108,592,000
106,697,000
$1.146,869,000 I $3.084,750.769
Hence, we are able to draw the following conclusioas from the state¬
ments from Mr. Leech, who is concededly one of the highest authorities on
this subject in the world. That the leading nations of the world now and
during the past 13 years have been, practicing a single gold standard, limit¬
ing the coinage of silver and keeping it equal to gold by redeeming it in
gold, as follows; The United States. France, Belgium, Italy, Switzerland.
Greece, Spain, Austria-Hungary, Norway, Denmark and Sweden. This is
not bimetalism. It is a system of limited coinage and redemption. It is in
these countries alone and under this policy that silver is forced to circulate
and has a purchase and debt paying power above its actual commercial
56
The Financial Problem.
value. Should the United States and these nations refuse to redeem silver
with gold and open their mints to its free and unlimited coinage, then silver
would stand on its own bottom and circulate at its bullion value and no
more, precisely as it does in Mexico, South America, in Russia, and as it
has in India and in every country which has practiced the system of free
coinage.
The following table gives the monetary systems of the world;
a
s
'W
«
a
«
o
u
a
a
fl
C8
fa
h
n
a ®
0 a
s-r
* a
0
u u
0
e Ö
•*1» u
(B Q
Et
H 0-
0 u
fil **
a
Q
V
c
fl
s
y
fl
fl
fa
«
fl
0
S
tm
9) a>
Sa
S
o
H
o
GQ
■Si
S S
•M •
s 4)
® n
g
Mû
S o
P 60
33 .
= ?
a®
fl S Si® .
5 "fes
fl43 o*:: fl
PS äs 5
s
o
Q
s'slssl'lis'ï
jj - -H ^
s8SSI§SS''SS2SSgS«''SS SSggS"='*
1-4 Ä r— •—«
s
S>î
S''íC3occ-^<-rcr cT-^' cT
« 0S5O
S.
IsiSiSI
o »Ä ^ !i •;
ill
, s
iiiiiii
'É^É
SsS
■ s
:ÍÍÍÍÍÍi
; sp
S8
g
c
lili
:g
• C
;ii
,§§
'2SS
,555
:l
;§i
§§
;i§§i
;§i
ill
■§§i
iiii
:§§
§§
s
!5
1®"— »
1 CO
IX
¡"'S
I ^x
■ «
1 tc
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> la Q
' »0 5
74 ^
M
à!
O la M>tâ
¿ c o 'o o O
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;£
à!
ta
10
® ta ta ® ta
p
0
0 0 0 0 0
©
^ „ „a g
fl fl floooo ©fl C(,00®fc,0 o
"O"©*©tj•©"fl"fl*0"O ®*o'O"fl ®"fl^"fl' 2^
OOOOO o OO3OO á ©3 o
00000 o OOqsOO 00 OgQ O
S
o
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II ?
«« &s -3
^ ® fl fl ^
^ Ö
® ® fl
s«5
fl 5
fl.
fl
13©
2^
S S
«fl S
1? fl |5-S5 fl fl e^fl fl' ê
CflS®®flfe2D.O fl ®-S fl fl fl ici? § o «tí-O-fl fl fl
L^Oh<0eQ^Er>OcnCU-4Zcntf£-t<H^t0cQ'-3i-i0&^00
aj ^ "5
O
Decline in Prices.
57
CHAPTER XIV.
Decline in Prices.
The following table shows the decline in the prices of farm products
and of articles that farmers buy:
articles that farmers buy.
1891.
$0,057
.186
42.00
29.92
1873.
Refined sugar.pound.$ 0.116
Cut nails, pound 046
Bar iron, ton 86.00
Steel rails, ton 120.50
Rio coffee, pound....
Tea, pound
Sheeting, yard
Drilling, yard
Shirting, yard
Standard prints, yard.
Print cloth, yard
.18
.16
•95
.25
•1331
.0683
•1413
.0641
.1941
. 1064
.1137
.06
.0669
.0295
2.65
.30
.85
•25
3 40
1.70
1.41
.62
•13
.06
1.14
• 50
.19
.09
.69
.32
2.00
.92
articles that farmers sell.
Bacon and ham, lb..
Lard, pound ...
Pork, pound. .
Tobacco, pound
1S73.
1891.
$0.188
$0.18
, .61
•57
1.31
•93
. .088
.76
.132
.069
. .078
.059
. .077
.056
. .211
.145
. .131
.09
. .107
.087
Goblets, dozen
Window glass, 10x14.
Under shirts, each...
Ginghams, yard
Carpets, 2-ply ingrain,
yard.
Black pepper, pound.
Molasses, gallon ....
Freight rate, per ton,
per mile
Average reduction in 10 farm products, 21. i per cent.
Average reduction in 19 other products, 55.4 per cent.
The above prices of farm products for 1873 was estimated on a paper
money basis, which at'that time was about 20 per cent, above gold prices.
Hence, to make a fair comparison with iSgt about 20 per cent, should be
deducted from the prices of 1873. Prices given above are also those of the
seaboard cities as reported by the New York Produce Exchange. The
higher freight charges which prevailed in 1873 should also be taken into
account in making this comparison. Mr. Lewis B. Swift, of Indianapolis,
editor of the " Civil Service Chronicle," has recently compiled statistics
showing the prices of six farm products realized by the farmers of Indiana
in the markets nearest their farms in 1873 and 1892, Those prior to 1879,
when gold was at a premium, have been reduced to a gold basis. • The
result is as follows :
1873-1877
1878-1882
1882-1887
1888-1892
Corn, per bushel
Oats, per bushel
Wheat, per bushel
Rye, der bushel
Potatoes, per bushel
Hay, per ton
35.6
29.6
95
62.8
53
9.31
41.8
31.6.
102.6
70.4
60.6
9-47
37
28.8
79
57.6
50.8
8.21
39.8
35 2
87 2
68
59-4
9-54
A comparison made of the average prices of five year periods is emi¬
nently fair. The above figures show that taking the whole period prices
58
The Financial Problem.
were higher from 1888 to 1892 than between 1873 and 1877, of five out of six
of the crops given. The decline in the price of wheat is easily accounted
for by the increased production in foreign countries, better means of trans¬
portation and the use of labor saving machinery.
In 1872 we were paying $2 a yard for body Brussels carpets, which in
1890 were sold for 93 cents. The price of tapestry carpets has been reduced
from $1.46 in 1872 to 65 cents in 1890. And ingrain carpets from $1.20 a
yard to 45 cents in the same years. In 1864 a crate of assorted earthen¬
ware which sold for $210.75 was reduced to $57.85 in 1882, and $46.30 in
1890. A crate of white earthenware which sold for $95.30 in 1852 could be
bought for less than $40 in 1891. The price of laces and embroideries has
been reduced 33 per cent. Silks and velvets from 25 to 33 per cent., and a
general reduction in every article constituting a stock of dry goods in any
store in the United States from 23 to 33 per cent, from 1880 to 1890. It is
difficult to make comparisons in the price of clothing, because of so many
changes in style and variety, but since 1880 there has been a general reduc¬
tion in all grades of ready-made clothing of from 30 to 50 per cent. There
has been a decline in the price of boots and shoes during the sam.' time of
over 30 per cent. A similar result is found in watches, clocks and jewelry,
while a most marked reduction has taken place in all articles of household
furniture. The following decline in the price of dry goods from i88o to
i8go has taken place.
This is true of farm products and crude materials as well as of manu¬
factured articles. The fall in price has been the greatest in those articles
which are more largely produced by machinery.
Based on the prices of 1873 and 1879, the following table, compiled by
Congressman J. H. Walker of Massachusetts, shows that although farm
products have declined in price, that there has been a much larger fall in
the prices of those things a farmer is compelled to purchase. So much so
that the purchasing power of the principal farm products was greater in
1889 than in 1873. This of itself proves conclusively that in the decline of
prices which has taken place, the farmer has been the gainer instead of the
loser. The table is as follows ;
Articles.
Unbleached muslin, per yard....
Calico, per yard
Gingham, per yard
Worsted dress goods, per yard
1880. 1890.
Price. Price.
$ .08 Î .06
.07 .05
.12H .10
.15 .12H
.35 .25
.65 .50
1.00 .75
Decline in Prices.
59
Prices upon by Messrs. Kinjcsland & Doublas, successors
of Kiufsland, Ferguson & Co., Simmons Hardware Company,
and Mansur & Tibbetts implement Company, all of
St. Louis, Mo.
Implements.
One-horse steel plow (wood tieam)
Two-horse steel plow (wood beam)
Ooe-borse iron plow (wood beam)
Two-horse Iron plow (wood beam)
Two-horse side hill or reversible plow...
One potato-dlfçiçer
Old-fashioned tooth harrow-
One-horse cultivator
Two-horse corn cultivator
One-horse mowing; machine
Two-horse mowing machine
Horse rake (snlky)
Commi n Hunt rake (horse)
Common iron garden rake (10-tooth
steel) dozen
One-horse horse-power
Two-horse horse-power
Reaper
- Binder
Cornsheller (one hole)
Fanning mill
Common hues (cast-steel socket), per
dozen
Common rakes (wood), per dozen
Scythes (Ames' grass)^ per pozen
Do
Scythe snaths (patent), per dozen
Shovel (Ames), per dozen
Spades (Ames), per dozen
Crowbars (steel)
Crowbars (iron)
Money
in—
$2 75
12 00
2 00
8 00
10 00
7 50
6 50
3 50
15 00
45 00
50 00
20 00
3 50
3 75
25 00
35 00
75 00
135 00
6 00
15 00
3 60
2 00
7 50
9 50
4 50
9 50
10 00
06
06
$6 50
20 00
5 00
13 00
18 00
20 00
15 00
7 00
28 00
85 00
90 00
80 00
6 50
12 00
45 00
65 00
95 00
ïï ä
25 00
6 50
3 00
16 00
21 00
11 00
18 00
18 50
10
1889, in bnshels
of—
3.8
16.4
2.7
10.9
13.7
10.2
89
4.7
20.5
61.6
68.5
27.4
4.8
5.1
34.2
(•)
(•)
184.9
8.2
20.5
4.7
2.4
10.2
(•)
6.1
13.0
13.7
(•)
.06
».6
37.5
6.2
25.0
31.2
2<4
20.3
10.9
46.8
140.6
156.2
62.5
19.9
11.7
78.1
(•)
421.8
18.7
46.8
10.9
6.2
23.4
n
14.0
29.6
31.2
n
.15
11.5
50.0
8.3
33 3
41.7
31.2
27.0
14.5
62.5
187.5
208.3
83.3
14.5
15.6
104.1
(•)
(•)
562.5
25.0
62.5
14.5
8.3
31.2
(•)
18.7
39.5
41.6
(•)
.2
1873, in bnshels
of—
6.4
19.6
4.9
12.7
17.6
19.6
14.7
6.8
27.4
83.3
88.2
29.4
6.3
11.7
44.1
n
(*)
277.7*
11.2
24.5
6.3
2.9
15.7
(•)
10.8
17.6
18.1
(•)
.09
For 1880.
Table Sbowing: Relative Values of Priacipal Farm Products and
Articles of Consumption In 1873 and 1891.
Gallons of
Oil.
1873. 1891.
Pounds of
Sugar.
1873. 1891.
Founds of
Nails.
1873. 1891.
Yards of
Sheeting.
1000 pounds cotton would buy
" •* beef would buy
" " pork would buy
** " bacon a haras would buy
" " butter would buy
•* " tobacco would buy
100 bushels com would buy
" " wheat would buy
Total above
766
281
289
345
779
418
279
590
3,742
:i,428
800
842
1,085
2,071
1,243
820
1,328
1,620
555
571
682
1,539
K33
551
1,176
1,754
982
1,035
1,157
2,643
1,526
1,P07
1,631
9,6171 7,527
3,832
1,282
1,319
1,554
3,553
1,886
1,273
2,.509
5,322
3,010
3,172
7,795
4.677
3,086
5,000
11.635
17,208
36,148
6o
The Financial Problem.
Yards
of
Drilling.
Yard«
t of
Sheeting.
Yaffls of-
standard
Print.
Yards
of Print
Cloth.
1 ■
1873. ! 1891.
1
1873.
1891.
1873.
1891. ' 1873.
1
1891.
1000 pounds cotton would buy
" " beef would buy
" " pork would buy
'■ " bacon A hams would buy
" butter would buy
" •' tobacco would buy
100 bushels corn would buy
" •' wheat would buy
Total
1,3:10
462
475
.568
1,281
680
- 4.58
961
1,500
873
i»20
1,18.5
2,262
l,a57
896
1,4.5a
970
338
348
415
938
498
336
6!t
940
526
.554
714
1,362
817
5.39
853
1,6.5.3
.583
600
716
1,616
8.')8
579
1,225
1
1,666 2,810
933 888
983 914
l,-286 1,091
2,416 2,461
1,4.'» 1,307
956 881
1,.550 1,840
3,389
1,898
2,000
2,576
4,915
2.949
I.M'vt
2,784
6,218
10,506
4.4Vt
6,305
■7,880
11,220 12,192
22,465
But prices, especially of farm products, are influenced by many causes.
Supply and demand are always operating to enhance or depress them.
While it is possible to control and keep manufactured articles within the
ordinary demands of the world, an abundant harvest will produce a surplus
of wheat, or a .short crop bring about a scarcity. Again, industrial condi¬
tions exert an influence. A period of war, during which an army of labor¬
ers are taken from productive industries, accompanied with waste and de¬
struction of property during several years, bring what is known as war
prices. A long term of peace produces the opposite effect. Not only the
productive capacity of labor is fully exerted, but barriers to sharp competi¬
tion are broken down and over-production is sure to occur.
The statistics given above are not carried beyond 1891 because prices
have been controlled during the past four years by abnormal conditions.
The leveling process of the recent free trade tariff legislation of the United
States has brought about such a reduction in wages, loss of incomes, cur¬
tailment of domestic production and hard times, that people in nearly
every walk of life have been compelled to restrict their purchases and deny
themselves many luxuries or necessaries that they had formerly bought
with perfect freedom. The home market for American farm produce has
not only been impaired, but the competition which has arisen in recent
years with the farmers of the Argentine Republic, Russia, Austria, Rou-
mania and other countries has greatly injured our export trade.
With the foregoing facts so well understood by intelligent and thought¬
ful people, it is not believed that the populists or free silver demagogues
can'make much headway in convincing the American people that the de¬
cline in prices has been due in the slightest deg^e to the demonetization
of silver. Statistics might be presented to show that prices declined
throughout the world from 1815 to 1841. following the period of inflation
brought about by the Napoleonic wars. This occurred under bimetal ism
in the United States and in Europe, when the mints of all these nations
were open to the free and unlimited coinage of both gold and silver.
Prices were high also during and following our late civil war, when the
value of commodities were measured in an inflated paper currency. Their
decline, however, began in 1865, eight years before the demonetization of
sUver in 1873.
ÜsE OF Machinery.
6i
The higher prices promised under free and unlimited coinage of silver
simply means that the money of the country will have less purchasing
power than it now has.
This new money would constantly fluctuate in value. Buyers of farm
produce would take this fact into account and buy at such prices as would
protect them from loss through a further decline. The whole country
would be thrown into a period of speculation. The farmer would always
be ^discriminated against, and suffer incalculable loss from a constantly
changing and uncertain market. • The gambler in f^arm products would find
a rich field for his operations.
Mr. Mulhall, in his Dictionary of Statistics, has compiled some of the
causes which have operated to lower prices, as follows :
Owing to machinery, two work people can now produce manufactures
to the same value as three could in 1841; but if the volume, instead of the
value of merchandise were considered, we should find that two now pro¬
duce more than five did fifty years ago.
And again;
1. Arkwright's spinning jenny enabled one operative in 1815 to pro¬
duce as much yarn as 200 could a few years before.
2. The crane of Cologne Cathedral in 1870, with two men, did the
same work in one hour in lifting stone as required 60 men to work 12 hours
in the Middle Ages; that is, one man now is equal to 180 of the olden time.
3. The American boot-making machine enables one man to turn out
300 pairs of boots daily ; one factory near Boston makes as many boots as
32,000 boot-makers in Paris. In 1880 there were 3,100 of these machines
at work, producing 150,000,000 pairs of boots yearly.
4. Altmann's American reaper cuts and binds grain at 45 minutes per
acre. D. Glynn, of California, cuts, threshes, winnows and bags with each
of his machines 69 acres of grain daily.
5. The United States in i 888 produced 600,000 sewing machines,
which could do the work of 7,200,000 women.
6. In the Western States of America one man can raise as much wheat
as will feed i.ooo persons for 12 months; a second can thresh, winnow and
bag it, and a third convey it to the market.
7. A girl 12 years of age in a Lancashire mill can turn out 35 yards of
printed calico daily, her work in one year sufficing to clothe yearly ,1200
persons in the East.
Mr. Bryan asserted in his Madison Square Garden speech that, "Rail¬
road rates have not been reduced to keep pace with falling prices." He
evidently had not examined the figures published by the United States
government showing the remarkable decline in the cost of shipping a bushel
of wheat from Chicago to New York, by lake, canal and rail since 1872.
The statistics are as follows :
By Lak« and Canal. By Lake and Rail. By All Rail.
1872 24.47 28.ÜU 83.5U
1873 19.19 26.90 33.20
1882 7.89 10.90 14.60
1890 5.85 7.50 14.31
1891 5.96 8.53 15.00
1892 5.61 7.55 14.23
1893 6.33 8.44 14.70
1894 4.44 7.00 12.88
1895 4.11 6.95 12.17
The Financial Problem.
There has hot only been a saving of over 20 cents a bushel in freight
rates, but by the self binder and the improvement in threshing machines,
so that 2,000 bushels can now be threshed in a dav with one machine, run
by steam power, whereas in 1872 the capacity of a machine was only 500
bushels, with more help required.
The decline in prices of farm products and manufactured articles has
been introduced, and cheapened methods of production have been applied.
There is no commodity which has beenJ|Bold in the markets during the last
twenty years, the price of which has declined, that has been affected in the
slightest degree by the demonetization of silver. Single out any article of
manufacture or farm product and its price in any one year as compared
with former years, whether a temporary fluctuation is indicated, or other¬
wise, can be accounted for entirely independent of the demonetization of
silver.
Ha» Gold Appreciated?
Standing alone and tested by all those conditions and facts which
influence the price of commodities, it may easily be shown that it has
depreciated in value.
The introduction of the use of machinery and high explosives in
mining, improved methods in refining ores, better railroad facilities,
reduced freight rates, and all of those means by which the cost of produc¬
tion is cheapened, have reduced the value of gold as well as silver. It is
produced .in much larger and increasing quantities. The more extended
use of checks, drafts, bills of exchange, paper curerncy and systems of
credit, not only in the United States but throughout the world, has tended
constantly to lessen the demand for coin of any kind. As more perfect
banking and means of communication are perfected, and as the financial
world has settled down to a gold basis, confidence has been strengthened,
and the use of paper currency and silver, based on gold has been so
increased that the use of gold is confined more exclusively to the settlement
of final balances. During the past 25 years there has been sufficient gold
in the world, to enable Germany to adopt a gold standard, and for Italy
and the United States to resume specie payments in gold, and for France
and the other nations of the Latin Union to suspend the coinage of silver
and make gold their primary money. Russia and Austria have accumu¬
lated gold reserves, and yet only a small part of the supply has been
required to accomplish these results.
The report of the Comptroller of Currency for 1892 showed that of
$400,000,000 of business transacted in a single day in the United States
only $6,000 000 in gold was required to settle final balances. With the
establishment of an international clearing house, which is sure to come,
under the progress of banking not $15,000,000 of gold will be required to
effect the daily exchanges of the commercial world.
While the stock of gold in the world has constantly been accumulating,
influences have been at work which have reduced its cost of production
and diminished those necessary uses to which it has been applied. The
reduced price of cotton cloth and all commodities which might be enum-
Results.
63
erated. has been no greater and in many instances not so great as would
naturally arise from cheapened methods of production and distribution.
Measured by labor, measured by cost of production, measured by the
labor cost of commodities, measured by the wages of artisans, gold has
depreciated as wages have gone up. In i860 a blacksmith received $1.50
or 38 7-10 grains of gold for a day's work; in 1890, for fewer hours' labor,
he received $2.50 or 64 5-10 grains of gold. The wages of the carpenter
increased from 43 grains of gold in i860 to 64 5-10 grains of gold in 1890,
and each grain of gold in 1890 would buy more of the necessaries of life
and of everything excepting labor than in i860. A similar illustration
might be made of the entire wage scale of every occupation. This ought
to be regarded as the fairest and most reliable test. When we trace the
subject to the bottom, it is after all, the reward of human effort that is
most important to be considered.
Under a gold standard or a monetary system which maintains all of
the currency and mediums of exchange on a parity with gold, all human
effort is measured by and paid in gold.
CHAPTER XV.
Results Whlcb Would Follow Free and Unlimited Colnaee
at 16 to 1.
remonctization oi silver means that 371X grains of silver, worth
only about half as much as 23.22 grains of gold (the gold dollar), and worth
only half as much as it was in 1873. shall be adopted as a value measurer.
That all of our greenbacks, national bank notes, silver certificates and
national bonds shall be redeemed by the government and paid in silver
dollars instead of gold, and that the mints shall be open to the free and
unlimited coinage of silver by individuals. This is free coinage at the
ratio of 16 to I, when, as a matter of fact, the actual ratio is 32 to i. Yes,
but the free silver advocate says that then we would have a double standard
instead of a single standard for measuring values. Quite true, but the
gold standard would be worth just twice as much as the silver standard ; it
would be like having two yard sticks, one 18 inches long and the other 36
inches long. It would be like declaring that 80 square rods, instead of 160,
should constitute an acre ; or that 160 rods should be a mile, instead of 320.
If the government should change the length of a mile by one-half, Buffalo
would be no farther from New York than it is to-day, although computed
by the new measurement it would be 828 miles, instead of 414 under the
present standard of measure.
It may safely be stated that the following results are sure to follow the
remoneiization of silver;
First. Silver will stand on its own bottom, and be worth no more
when coined into money than when in bullion. The bullion might, how¬
ever, experience a slight temporary advance above its present price in re¬
sponse to the manipulation of speculators, but it would soon find its own
level the same as other commodities.
64
The Financial Problem.
Second. Greenbacks would at once be presented for redemption in
gold. The government would either be compelled to redeem in gold until
all the gold in the Treasury was exhausted, or to at once cease gold pay¬
ments and redeem in silver. As soon, however, as gold payments were
refused, every silver dollar, every greenback, all of our paper currency and
silver certificates would become worth no more than the silver in the silver
dollar. Hence they would all depreciate in purchasing power to the value
of silver bullion. This depreciation in the purchasing power of our paper
currency and silver coin, to the bullion value of silver, would leave gold at
a premium. Gold would not be at a premium because it had risen, but be¬
cause silyer coins and paper currency had fallen to the commercial value of
their new redeemer.
Third. This would drive gold out of use. It would cease to be used
for settling final balances between banks in domestic exchanges. We
would pass to a silver basis. Silver would not only become the value
measurer, the redemption money, the final paymaster and solvent of all
accounts, but all values would become adjusted to the commercial value of
silver. All property would be bought and sold according to the new stand¬
ard. This leveling process would bring about the most sudden and disas¬
trous financial revolution ever witnessed.
The extent and magnitude of the loss which this industrial revolution
would entail on the people of this country cannot be over-estimated. It is
estimated that there is now on deposit in the banks of the country $5,000,-
000,000. Every dollar of this when deposited was equivalent to gold. A
discharge of these obligations on a silver basis would bring a loss at once
of $2,500,000,000 to bank depositors alone. The $1,524,844,506 deposited in
savings banks by people of small means, would be cut in two, and the
accumulations of those least able to sustain such a loss would be one-half
swept away. The savings banks alone represent 5,000,000 depositors,
which, counting each depositor as representing a family, would affect
nearly 15,000.000 of people. The stock and mutual life insurance compa¬
nies of the United States are obligated to pay over $3,000,000,000 to pol cy
holders, representing over 1,000,000 families scattered throughout the coun¬
try ; while the insurance policies held by members of assessment companies
exceed $5,000,000,000. These people have all invested their money and paid
premiums upon policies equal to gold. The same rule applies to every fire
insurance policy in the country. To settle a loss in 50 cent dollars could
benefit only the insurance companies. But this is not all. There are
$4,500,000,000 paid in wages to the working men in the country, consti¬
tuting a vast wage fund of §15,000,000 a day. Before the farmer, the mer^
chant, or any other person interested in a home market concludes to vote
for Mr. Bryan, he should consider how he will be affected by taking$2,25o,-
000,000 from the wage fund of the American people. Even the populist
who would destroy the holders of $600,000,000 of government bonds, should
consider the welfare of the wage earners whom he would at the same time
strike down.
Fourth. If the commercial value of silver should remain the same as
it is to-day, then gold would be at a premium of 100 per cent. Every ten
Result of Free Coinage.
65
dollar gold piece would be equal in purchasing power to 20 silver dollars.
The holders of the $600,000,000 of gold in the United States could buy suf¬
ficient silver bullion in the markets of the world to have coined into $1,200,-
000,000 silver dollars, and what would prevent their doing it ? Mexico is
full of silver ; India has $900,000,000 of silver, China $700,000,000, the
Straits $100,000,000 that is circulating as money simply at its commercial
value. Either of these nations would be glad to exchange silver for gold,
especially India, since it has gone to a gold basis. The exchange could be
made with these countries without their suffering a particle of loss. The
slightest rise in silver bullion above the cost of shipment and recoinage
would turn the whole current of the silver of India and China to our
shores. Besides, France has a vast volume of silver, amounting to $700,-
000,000, not more than half of which is in circulation among its people.
Does any one suppose that a rational person would use gold for the purpose
of paying debts, when a gold dollar would purchase silver enough to dis¬
charge two dollars in debts. A bank having a gold reserve of $80,000 could
buy silver enough to have coined into 160,000 silver dollars, use $80,000 to
pay off its depositors and have $80,000 left. The prospect of a situation
arising under which speculation of this character is made possible, fully
accounts for the hoarding of gold which has taken place. Up to the passage
of the Sherman Law in 1890, and the increased threatening attitude of the
free silver party, gold and gold certificates were fiowing through the chan¬
nels of trade with the utmost freedom. But in the speculations which
would take place it would not be necessary for a person having gold to buy
and coin silver. It would be at a premium over greenbacks, national bank
notes and silver certificates the same as over the silver dollars. Hence, as
soon as it went to a premium, it would be used for purchasing greenbacks
and paper currency, and with this depreciated currency thej banks woul4
pay off their deposits without being at the trouble of buying and coining
silver.
Fifth. Another result which would surely follow the remonetization of
silver at a ratio of 16 to i, is a contraction by one-half in the purchasing
power of our silver dollars, silver certificates and paper currency. The
$225,000,000 of legal tender notes, the $98,000,000 of treasury notes, the
$33,000,000 of currency certificates, the $336,000,000 of silver certificates,
and the $207,000,000 of national bank notes would have a purchasing power
of just half their present value. This would also be true of the $626,000,-
000 of silver coin and bullion. A sudden contraction in the purchasing
power of the circulating medium of a country to this extent would of itself
create such a loss as no people have yet witnessed.
Sixth. It would plunge the nation into a period of speculation and un¬
certainty which would derange and ruin every species of business. It
would be difficult to borrow money at any price or upon any security. The
rate of interest would at once be advanced, which would result in calling in
all short loans and ruin business men in every part of the nation.
Xbe Debtor Class.
Should Mr. Bryan be elected, every sensible holder of a mortgage
which is past due will at once demand that it either be renewed and made
66
The Financial Problem.
payable in gold, or that it be paid at once. He will not stand ■ idly by and
permit himself to be cheated out of one-half of what he had loaned to the
debtor. A debtor, then, will be unable to borrow money to pay off the
mortgage excepting by giving a new mortgage with a gold clause. This
every creditor will be in. duty bound to demand in order to protect himself
against loss. No debtor would expect, neither would he have a moral
right to demand anything else. The vast amount of money loaned on farm
mortgages was obtained from persons of small means. It is not the Wall
street banker who loans his money out in this way.
The investigation of the United States Census Commissioner shows
that between 1880 and 1890 real estate mortgages were paid and discharged
to the extent of $7,500,000,000, leaving a mortgage indebtedness in 1890 of
$6,000,000,000, That of this amount $1,279,343,703, or 21.25 per cent, of
the whole real estate mortgage debt of the United States was on property
in and about New York City. It appears that 51.4 ¡jer cent, of this indebt¬
edness exists in Ohio and other western states, including the great cities of
Chicago, Cincinnati, Cleveland, Detroit, Minneapolis, Kansas City, Mil¬
waukee, Omaha, St. Louis and St. Paul. Mr. Edward Atkinson, in speak¬
ing upon this subject, says :
Thus far the mortgages upon acres have been dealt with as if they
were the same as mortgages on farms. As yet no complete separation has
been made, but I am permitted to make the following statement on the
authority of the census ofiScials :
In Bulletin No. 63 a partial analysis is made of the specific mortgages
on actual farms which are occupied by owners apart from hired farms, and
acres which are not strictly farms. Deductions from these figures, applied
to the total mortgages on acres in the United States, would give the follow¬
ing result:
Total mortgage on acres in the whole country, January i,
1890 $2,209,148,431
On farms occupied and worked by owners (estimated) 1,009,148,431
On hired farms and acres not strictly farms 1,200,000,000
The incumbrance on hired farms is believed to be very small. The
value of all the 4,564,641 farms in the United States in 1890, including im¬
provements, was $13,279,252,649. The estimated mortgage thereon Jan¬
uary i, 1890, was $1,009,148,431, equal to 8 per cent., subject to the addi¬
tion of a small amount on hired farms.
In substantiation of these views of Mr. Atkinson, the following can be
added from the last annual report of the Secretary of Agriculture, Sterling
Morton. Speaking of the indebtedness of various classes of owners, he
says:
These figures show an enormous and constant indebtedness of the
banks and the bankers alongside of which the money in farm mortgages
and the debts offered by farmers are relatively insignifieant. The debts of
railroads, bankers, manufacturers and merchants entitle them, and not the
farmers, to be called the "debtor class" in America:
Mr. Atkinson, in his article published in the Forum of May, 1894, con¬
cludes as the result of his investigation as follows:
"There are within the United States 4,564,641 separate farms, averag¬
ing about 137 acres each, of which, in the Eastern, Middle, Western and
Pacific states, 80 per cent are occupied and managed by their owners. Far
Farm Mortgages.
67
more than one-half these farms are free of any mortgage whatever ; the
rest are mortgaged for far less than half their value.
The result of that investigation has sustained the conclusions which I
had reached hy a very i>artial investigation of the same subject in the
preceding five years, namely:
1. That the larger part of the Western farms cultivated by owners
were free of any mortgage whatever.
2. That the Western farms were creditors rather than debtors.
3. That the burden of farm mortgages is a very light one.
In fact, the statistics of this partial investigation which was necessarily
very limited, had led me to the conclusion that there existed no great body
of people of any class in this country, who were, as a whole, so free from
debt and so absolutely independent as the Western farmers of the grain-
growing states. "
The recent investigation of the census department of the United States
into the causes which induced farmers in the West to borrow money,
disclose a thrifty and prosperous condition. It is one of the tests of
prosperity rather than of impoverishment. Senator Allison speaking upon
this subject, when addressing the United States Senate September 6,
1893, said:
'T wish to say one word respecting the tables as applied to Iowa. It
may have escaped the Senator's notice that in Iowa, of the mortgages as
shown by the census bulletin, the aggregate is $150,000,000, and that upon
town property, as stated by him, the mortgages amount to about $50,000,-
000, leaving $100,000,000 upon the farms of Iowa and properties outside of
the cities.
" It so hapi)ens that in four counties in my State, and they are average
counties, accurate and detailed accounts were taken as to the character of
these mortgages and the purpose for which they were made. Two of the
newer counties were taken and two of the older ones, and it appeared from
actual invèstigation that on these mortgages 64 per cent in one county, 68
per cent in another, and a larger percentage in two others was for addi¬
tional lands purchased by farmers who own their farms, and of the re¬
mainder 15 per cent was for improvements made upon those tarms, leaving
merely 10 per cent of the whole of this great sum forpurposes not accounted
for ; not connected with the purchase of farms for homes. So these mort¬
gages, as a rule in the State in which I live, show a prosperity of the
farmers, and not that they are mortgaging their land because of their
poverty."
The opportunity which has been enjoyed by the new settlers of the
western states to borrow money with which to purchase and improve their
homes, is disclosed by an investigation made by Mr. A. H. Heath, the
Commissioner of Labor Statistics of Michigan, for the year of 1888. He
obtained the data for 58 per cent of all the farms of Michigan, numbering
90,803 assessed for $94,854,633. Mr. Atkinson speaking upon this subject
said of the results of this investigation:
"Out of 90,803 farmers 43,079 stated that their farms were mortgaged.
A few refused to reply. The greater part of the remainder stated that
their farms were not mortgaged. The true value of the farms which
were mortgaged, estimated to be about one-half the total number, was
$100,000,000; the mortgage debt $37,500,000. Of the farms investigated,
31,570 were owned or occupied by men of foreign birth, the rest
by Americans. In answer to the question put to the foreign element,
' Had they any money when they arrived in the State ? ' 8067 answered,
•Yes," giving the sum of money in their possession at $4,633, 188 in all;
23,503 answered 'No.' From these data we reach the following conclusion:
68
The Financial Problem.
Foreigners brought money Into the United States to the amount ol 14,663,18S
The mortgage debt on theee epeciflc farms was 11,191,714
Making a total of 315,824,902
The assessed value of these specific farms was 52,537,871
The true value 65,672,833
It follows that these 31,570 foreignets who came from Germany,
Canada, England, Ireland, Holland, Scotland and nearly every other
country in Europe, from the East» Indies, Australia, Hayti, Mexico and
South America, had been enabled by borrowing money on mortgages to
become possessed of real estate worth $50,000,000 more than the encum¬
brance and the cash brought in by themselves ; and this estimate does not
include the farm animals, tools and furniture use d upon the farms.
Thp average life of a mortgage, as shown by the report of the census
department of 1890, is five years. Not only were mortgages to a great
extent paid ofif between 1880 and 1890 but the rate of interest was greatly
reduced.
Wafife Earners.
Mr. Bryan gave the laboring people of the United States some very
interesting information on the subject. He said;
"Wage earners know that while the gold standard raises the purchasing
power of the dollar ; they know that employment is less permanent, loss of
work more probable, and reemployment less certain."
Mr. Bryan in certainly not familiar with the history of his country from
1873 to 1892. Mr. Bryan should know, as every laborer well knows, that
there has never has been a time in the history of the United States when
such steady and renumerative employment existed as prevailed between
1873 and 1892 under a single gold standard. Mr. Bryan concedes that a
gold standard has increased the purchasing power of the dollar. He says;
"What shall it profit us to have a dollar which gp-ows more valuable
every day."
Two causes have steadily operated during this time favorable to wage
earners. Weekly earnings have constantly been increased, while the price
of commodities has declined. Commodities have been cheapened without
cheapening labor. This has been supposed by all respectable economists
to be the mo.st favorable result that could be achieved in behalf of the toil¬
ing masses. Up to within two years not a young man could be found in
the United States who had arrived at the age of 36 years who would ques¬
tion that the wage earner is benefitted by ircreasing the purchasing power
of his day's labor. Upon the question of increased wages Mr. Edward
Atkinson, a well known authority, stated in an article publishedJn the
Forum in July, 1888, that;
"Since 1865 the wages of foreman, ovefSeers, boss blacksmiths, speci¬
ally skilled cabinet makers and. the like, have advanced 108 per cent ;
average mechanics, engineers, carpenters, machinists and the like, 90 per
cent ; factory operatives and all persons engaged in the ordinary arts of
making stoves, boots, hats, cars, wagons and the like, 78 per cent, and
common laborers only 66 per cent."
This increase was shown by a Senate investigating committee to have
continued up to 1892. During the period from 1873 to 1892, while there
was a decrease of only 21. i per cent in the price of ten principal farm
products, there was a reduction of 5S'4 per cent in the price of nineteen
Bryan's Speech.
69
principal commodities which the farmers buy. Viewed from any stand¬
point, measured by any test, the period between 1873 and 1892 was the
most satisfactory in industrial growth and prosperity for every class of our
citizens that had ever been enjoyed by any people since the day of Adam.
Mr. Bryan would inflate the price of tea, coffee, sugar and every
necessity of life which the laboring man is compelled to purchase without
offering any assurance that his wages would be increased. He would
plunge the country into bankruptcy, confiscate property, repudiate debts
and leave the laboring man to shift for himself.
CHAPTER XV.
Some of Mr. Bryaa's Propositions Analysed.
The speech delivered by Mr. Bryan at Madison Square Garden, on
August 12, 1896, exposes the fallacies of the free coinage theory. There
is scarcely a sentence in the speech free from inconsistencies, false premise,
erroneous statement of facts or unwarranted conclusions. In discussing
what is called the two kinds of money, he exposes the absurdity and
impossibility of bimetalism under free coinage, by the United States alone,
he not only demonstrates but illustrates that under free coinage of silver,
we would become a single standard silver country.
" If there are two klada of moaey the option (to pay In either)
must rest either with the debtor or with the creditor."
Mr. Bryan insists on a double standard or two kinds of money as being
indispensible. The very idea is to make it possible for an option to exist.
This is fatal to the use of both metals and is an element of instability. To
prevent either the debtor or creditor from being benefitted by exercising
that option which will surely be exercised under bimetallism is the chief
point to be attained in a sound and stable monetary system. When two
metals differing in value are used, the only way by which the gaining of
an advantage by the debtor over the creditor, or by the creditor over the
debtor, can be prevented, is by maintaining the equality of values of the
two metals through the limited coinage of the cheaper, and a system of
redemption in the dearer. This keeps the metals together and neither the
debtor nor the creditor can gain or lose by payments made in one or sales
made in the other.
Under this system a creditor will not care in which money he is paid;
neither will a debtor care in which one he pays. The identical thing for
which Mr. Bryan contends, is an opportunity on the part of debtors to
exercise thè option of paying in the cheaper metal. This is absolutely
fatal to bimetalism, and his whole theory, or the use of both gold and silver
falls to the ground.
Mr. Bryan proceeds ■
"Under the bimetallic system eold and silver are linked
together by a law at a fixed ratio."
This is entirely erroneous. The two metals are not "linked together"
by bimetalism under any law. Each metal stands on its own bottom.
70
The Financial Problem.
Both may be freely coined, yet no one but a lunatic would bave gold
bullion coined into legal tender dollars or use gold for the purpose of
paying debts when the dollars coined would bave a debt paying power
below the commercial value of the bullion. Mr. Bryan defies the history
and experience of all nations. Mexico has free coinage of both gold and
silver, so have South America and other countries ; they have what be calls
bimetalism, yet the metals are separate, they are not "linked together;"
nothing but silver is taken to their mints ; there is no gold in circulation,
and silver passes simply at its bullion value, entirely independent of the
value of gold. This is true of every free coinage country. It is only in
the United States, France, and those nations which practice the system of
limiting the coinage of silver, and redeeming all their money in gold, thaÇ
they are "linked and held together" by legi.slation ; and this only operates
on the coinage value, leaving their commercial values wide apart.
Mr. Bryan further says:
"If the creditor has the rieht to choose the metal In which
payment shall be made. It Is reasonable to suppose that he will
require the debtor to pay In the dearer metal, if títere Is any
perceptahle difference between the bullion value of the metals."
Mr. Bryan assumes that under a single gold standard the creditor
exercises the option of comp>elling payments in the dearest metal. In this
he is in error. There is no option exercised either by the debtor or by the
creditor, under a single gold standard. Neither is there any option exer¬
cised by the creditor under a system of limited coinage of silver and gold
redemption. The creditor does not control it. Contracts are entered into
and payments are made according to a policy established by the general
Government, which is uniform, invariable and applies to all alike. It is
not the creditor who determines the kind of money the debtor must pay,
but it is the government or debtor which decides to pay its debts in the
best money. There is no option exercised by anyone. The debtor and
creditor both deal with each other and with the world in the same identical
kind of money. Mr. Bryan says also:
"Assumlnsr that their rlfrhta are equal," (that Is, the rights of
the debtor and creditor) "we must look at the Interests of society
In general In order to determine to which side the option should
he given."
He proposes then that the government will give the option to one or
the other. If the government should make two standard yards, one of 36
inches and the other of 18 inches, would Mr. Bryan consult the interest of
" society in general " to determine which one should be used?
He says further assuming that the creditor exercises an option under a
gold standard.
" Fhls new demand created for the dearer metal will make that
metal dearer still, while the decreased demand for táe cheaper
metal will make that metal cheaper still."
Mr. Bryan. in this assumption entirely over-estimates the demand
which exists for redemption money. We have already shown that of
$400,000,000 of business cleared at the banks of the United States on a
single day in 1892, only $6,ooo.qoo of gold was actually used or required.
The rest of the gold in the United States amounting to $600,000,000, was
either lying idle, held as reserves, or circulating as a medium of exchange.
Bryan's Speech.
71
The demand for primary money is so limited that only a small portion of
the gold in the -world is required for this purpose. As a measurer of values
the gold need not be bodily present in any transaction. With a reserve
of $100,000,000 the United States government has maint^iined its
circulating medium at parity with gold for thirteen years. The fact that
only a small percentage of the gold in the world is actually in use as
redemption money, or actually employed in the daily transactions of the
wOTld to settle final balances, is conclusive proof that the exclusive use of
gold as standard or redemption money does not create such a demand as
in the slightest degree to influences its prices. When perfect confidence
exists and the two metals are kept at a parity, silver and paper currency
enter into the final balances at the clearing houses. Again he says ;
''If on tbe other hand» the debtor exercises the option» it is rea¬
sonable to suppose that he will pay in the cheaper metal» if one
metal is perceptably cheaper than the other, but the demand thus
created for the cheaper metal will raise Its price, while the less»
ened demand for the dearer metal will lower its price.
Here Mr. Bryan concedes that the immediate effect of bimetalism will
be to place the United States on a silver basis, force" silver into use ^s
primary money and expel gold from circulation. This would at once break
the "bimetallic link" under which he has just told his audience that gold
and silver were tied together. Mr. Bryan not only conceeds but illustrates
that the very forces of nature under bimetalism repel the two metals and
keep them apart. Mr. Bryan invokes the great law of supply and demand
to regíate the value of the two metals and to keep them together. He
says ;
"In other-words,-when the creditor has the option, the metals
are drawn apart, whereas when the debtor has tbe option, the
metals are held together approximately by tbe ratio fixed by law;
provided the demand created Is sufficient to absorb all of both
metals presented at the mint."
The last clause "provided the demand created is sufficient to absorb all
of both metals presented at the mint," contains an admission that in case
the "demand created " is not "sufficient to absorb all of both metals pre¬
sented at the mint," then the whole theory falls to the ground and silver
would not advance to the value of gold, neither would gold be brought
down to the value of silver, even though the option of paying'in the cheaper
money was exercised to the fullest extent both by the general Government
^nd the debtor. Under this principle Mr. Bryan asserts that:
"We contend that free and unlimited coinage of sliver by the
United States alone will raise the bullion value of silver to Its
coinage value and thus make sliver bullion worth $1.29 an
ounce througbout the world. This proposition is In keeping wiih
natural laws."
Opening the mints of the United States to the free coinage of silver, is
not making a demand for silver, this is simply manufacturing silver bullion
into money, it is a means of supplying the people with siluer money. The
demand for more silver money must come from the requirements of tbe
people.
It is error to assume that there is an unlimited demand for money.
Experience shows that there is not only a limited demand for primary
72
The Financial Problem.
money, but that there is a limit to the amount of mediums of exchange
which are necessary to he used in transacting the business of the world,
the same as there is a limit to the number of spades, shovels, plows and
other tools which are required. But the increased demand for silver which
might he created by the triumph for Mr. Bryan's policy would he confined
to the United States, it would not he world-wide. Under free coinage of
silver the people of the United States would continue to use checks, drafts,
hills of exchange and all means of credit and paper currency. Silver coin
and bullion would simply take the place of gold as a measurer of value and
as redemption money. It would he used also in fractional pieces for small
transactions, as it is now. When the Bland Act was passed the govern¬
ment began coining silver dollars, shipped them to the sub-treasuries and
made every effort posi^hle to force them into circulation. But, as Senator
Morrill said, it was like trying to roll stone up hill ; they soon found their
way hack into the United States Treasury there to remain, and of about
$500,000,000 of silver coined, the Government was unable to keep in
circulation more than $62,000,000 of fractional coins and 56,000,000 of
silver dollars. This was the amount of silver in circulation in 1892. one of
the most prosperous years ever known, when there was the greatest
demand for money and the largest volume of all kinds in use. The fact is,
the people do not desire silver excepting in very small quantities, if they
can obtain any other kind of money. A merchant who should attempt to
give a lady customer a large amount of silver coin in change, would soon
lose his trade. A person getting a bill changed or a check cashed a
bank, will not receive more than three or four dollars in silver. He desires
gold coin or paper currency. An individual can carry on his person
twenty twenty dollar gtld pieces or $400 in gold with more convenience
than he can carry twenty silver dollars. Mr. Bryan says:
"Tbis arguraent is completely answered by tbe silver certifi¬
cate which is as easily carried as sold certificate or any other
kind of paper money.**
This is a concession that silver will not circulate in large quantities.
From this we may reasonably infer that the free silver scheme involves the
cancellation of all of our greenbacks and the substitution of silver certifi¬
cates redeemable in silver bullion deposited with ^the Secretary of the
Treasury, for greenbacks now redeemable in gold, even if silver should
come into exclusive use as reserves for our banks and for the settlement of
balances in domestic trade, it would require but little more silver than we
now have corned in a single day.
It may seriously be considered that tbe $600,000,000 of silver now in
the country would be amply sufficient to adjust all final balances and dis¬
charge all the requirements of coin as primary money. Should we require
more, however, it would soon be supplied from the surplus holdings of
other countries which would flow to our shores upon the slightest indication
of a rise in price. This would check the rise in price and hold it down to
its present level. The United States mines are capable of supplying from
$75 ,000,000 to $100,000,000 of silver per annum. Mexico can yield a surplus
of $50,000,000. Even if we should prohibit the import of silver, in ten years
Bryan's Speech,
73
$1,000,000,000 could be obtained from our own mines. Under these cir¬
cumstances free coinage of silver could only result in depressing* the price
still lower. There is in the world $4,070,500,000 of silver money. It is
estimated that there is an equal amount existing in silverware and orna¬
ments, making a total of $è,000,000,000 in the world estimated at the present
bullion value. It is not rational to suppose that by simply opening the
United States mints to its free coinage, the whole volume ot silver in the
world, every silver spoon, platter, piece of silverware or jewelry would be
raised to the value of gold. In order to accomplish the results suggested
by Mr. Bryan the free coinage of silver by the United States alone would
increase the value of all the silver in the world to $16,000,000,000. This
proposition on its face is absurb and unreasonable. According to Mr.
Bryan's proposition under free coinage of silver 16 ounces of silver would
exchange in the markets of the world for one ounce of gold, while to-day
the world over, it takes 31 ounces of silver to buy one ounce of gold. If the
value of silver is to be doubled why should there be any rise in prices?
And if there is to be no rise in prices, wherein does the intolerable cruelty
of the gold standard consist? If the value of silver is not to be doubled,
what is the meaning of the talk about the ability of 70,000,000 of people to
maintain any standard of value they choose. These are inconsistencies
from which Mr. Bryan cannot escape.
The Legral Tender Function of Money Does Not Influence Its
Value.
Mr. Bryan in speaking of the United States says:
"The silver dollar is now held up to the gold dollar by legal tender
laws and not by redemption in gold, because the standard silver dgllafS"
are not now redeemable in gold either in law or by administration;^^
Mr. Bryan well knows that the chief controversy w^jrfinas arisen
between the free silver party in Congress and Secretaty'tíarlisle, grew out
of the position taken by Mr. Carlisle that the $jgii^(Sœ,ooo of
nates must be redeemed in gold or they would at once fall to the bullion
value of silver. He well knows that it is the policy of the United States
Government to maintain these certificates on a parity with gold solely
through gold redemption.
The stamp on a silver dollar simply indicates that it contains 412^^
grains of standard silver. This has nothing whatever to do with the legal
• tender function. When money is made a legal tender for the payment of
debts, the law simply compels a person to receive it at its face value in
discharge of debt. For instance. A.*sells to B. a horse for fifty dollars,
on three months time. A debt is created. B. can tender to A. fifty silver
dollars in discharge of the debt, and A. is compelled to receive them.
This can, however, only occur after a debt is once created. In the first
instance A. before selling his horse to B. could fix his price either in silver
or gold. He could say to B. "I will sell you my horse for fifty dollars in
gold, or one hundred dollars in silver," and he would not be obliged to sell
the horse unless he got his price. This applies to the sale of all
commodities, and to all business transactions. While silver is kept equal
in value to gold, it matters not to A. in which he is paid or for which hé
74
The Financial Problem.
sells his property, but as soon as silver depreciates and passes for its
bullion value, then we have two standards of value, two moneys of account.
These are not interchangeable. The gold standard is worth twice as much
as the silver standard, it will purchase twice as much ; hence no person in
the first instance will agree to sell his property for the same price in both
standards. So it appears that while existing debts might be paid off on a
silver basis, with a depreciated money, all new debts created, all property
after existing debts were discharged would sell at prices measured by the
cheaper money. Two prices of commodities would exist, one in gold and
the other in silver. This occurred during and following the war, when our
depreciated paper currency constituted the circulating medium. Pnces
became adjusted to the cheaper money, (the greenbacks), although they
were a full legal tender. This is the rule in Russia, China, South America,
Mexico and all free silver countries, and was the rule in India until silver
was demonetized in 1893. It is not the rule in the United States, France,
Belgium, and those countries of Europe which have a system of limited
coinage of silver and keep the silver coins equal to gold by agreeing to
redeem them in gold. The legal tender function does not control the
value of money in a single free coinage country.
While Mr. Bryan and his followers might pass a law prohibiting a
person from making a contract requiring payment to be made in gold, yet
such a law would exert no influence over individuals in fixing a price on
their property before consenting to exchange it for silver. What does Mr.
Bryan mean when he says that :
' 'The Chicago platform expressly declares in favor of such legislation
as may be necessary to prevent the demonetization of any kind of legal
tender by private contract."
The very plan which he favors would as effectually ;demonetize gold as
a law •entirely prohibiting its use.
No importer would buy sugar in Germany or any other foreign country
on a gold basis at 4 cents a pound, and sell it to his American customer on
a depreciated silver basis, without raising the price sufficient to provide for
the difference in the value of gold, the money in which he purchases, and
of silver, in which he receives his pay. This rule would apply to every
commodity. If contracts were forced to be based on silver, they would be
entered into according to the value of silver, and not according to the value
of gold.
Mr. Bryan says:
" If, on the other hand, the debtor exercises the option, it is reasonable
to suppose that he will pay in the cheaper metal, if one metal is perceptably
cheaper than the other."
Silver, or the cheaper metal, then would pass into use and the whole
country would be doing business on a silver basis. Hence, according to
Mr. Bryan's own argument, his whole theory of bi-metalism falls to the
ground and he stands before the country urging the policy of silver mono-
metalism.
Sepudlatloii.
Mr. Bryan again complains because creditors, who have loaned the
fruits of their labor in gold, may attempt to save themselves from confisca-
Bryan's Speech.
75
tion and the repudiation which is certain to result from free silver. He
says:
"If the assertion that loans will be withdrawn and mortgages fore¬
closed is made to prevent such political action * • • then a new and
vital issue is raisei"
A new and vital issue certainly is raised. It is raised by Mr. Bryan
himself. He explained to the people of Pittsburg that :
" i6 to I means that if you owe a debt you can go out into the market
and buy silver and have it coined and use that silver to pay your debt."
That is, if a man has borrowed $i,ooo in gold, he can go into the mar¬
ket and buy $773.4 ounces of silver, at cents an ounce, which would
cost him $531.59; take this amount of silver to the United.States mint, have
it coined into 1,000 silver dollars, and with this money force his creditor to
discharge the $1,000 debt, thus enabling the debtor to repudiate, leaving
out the question of interest, $469.41 of an honest debt.
Why did Mr. Bryan give this information to the people of Pittsburg,
when on the very next evening he appears before the bankers and capital¬
ists of the city of New York, at Madison Square Garden, and informs them
that the price of silver would at once advance to $1.29 an ounce ? If. this
is true, how could his hearers in Pittsburg be benefited by buying cheap
silver to pay honest debts ?
International AKreement.
While free coinage of silver by the United States alone would at once
change its monetary system and place it on a silver basis, it would not in
the slightest degree affect the systems of other nations. For nearly a cen¬
tury the international trade of the whole world has been measured by a
gold standard, and for more than thirteen years the domestic trade of all
Continental Europe, of Canada, Australia, Egypt, Cuba and Hayti has
been measured in and balanced with gold. The property of nearly the
whole world has become adjusted to a gold valuation. Wages are meas¬
ured by it, as well as prices of all commodities.
"A grain of gold," says the Hon. Joseph H. Walker, "is now the par
of exchange of every country in its international commerce, and between
all countries in the world, and has been without a single exception for a
hundred years, not the slightest attention was ever paid in a single instance
to the coinage of England or any other country, excepting as it is a guar¬
anty of the weight and fineness of the pieces of gold offered. The five
dollar gold piece of the United States contains 116.09 grains of gold; the
sovereign of England contains 113 grains of gold ; the twenty mark piece
of Germany contains 110.62 grains of gold, and the twenty-five franc piece
of France contains 112 grains of gold. Not one of these pieces passes in
its own country or anywhere else in buying commodities, for the slightest
percentage over its bullion value, and never has. Take a twenty-five franc
piece or an English sovereign or an American five dollar piece into any
...shop in Brussels, or the smallest hamlet in Germany, and they will give you
the difference in its bullion value over the twenty mark piece in change.
Take the twenty-five franc piece, the twenty mark piece or the sovereign
into any store in this country to pay the price of five dollars, and the differ¬
ence in gold bullion value between each and the five dollar American coin
will ^ dfemanded and paid as a matter of course. Every dollar of silver
that is current here or in any country not a monometallic silver country, is
current as paper money is current, because, like paper money, it can be ex¬
changed for a gold dollar, and for that reason only."
76
The Financial Paoblem.
It is sheer nonsense to contend that if the United States should become
Mexicanized and commit financial suicide, that the rest of the world would
be compelled or influenced in the slightest degree to follow our example.
The opportunity would then be presented for the great commercial nations
of the world to get rid of their silver by exchanging it for our gold, we
would then be left more powerless than ever to plead in an international
conference for bimetalism. If permitted to pursue our present jxilicy for
another decade, our gold holdings under a proper tariff policy can easily be
increased to at least $1,000,000,000. We can better force the great com¬
mercial nations of the world to a more extensive use of silver by maintain¬
ing a favorable balance of trade, which will draw gold from abroad to the
United States, than by adopting a policy which will at once deprive us of
what gold we have and make the United States the dumping ground for
the surplus silver of foreign parts. Hence the Republican party has de¬
clared in its platform that it is in favor of continuing our present gold
standard and of maintaining silver at a parity with gold until a sufficient
number of the leading nations of the world will join with us in an interna¬
tional agreement to maintain such parity at a ratio to be agreed upon.
CHAPTER XVII.
Parties to tbe Controversy.
There are at present three distinct parties to the financial controversy
in the United States, which may be described briefly as follows;
First. The extreme gold wing of the Democratic party, composed of
men who hold the free trade theory of economics, and contend for the
financial policy practiced by Great Britain. These men would have the
United States entirely out of the banking business. They would adopt
gold as the standard of value and money of ultimate redemption, open the
mints of the United States to its free coinage and permit no silver to be
coined excepting a small volume of fractional pieces or dollars, all of
limited legal tender. They would issue bonds and borrow gold sufficient
to redeem and cancel all of the greenbacks and papier currency, and leave
their issue entirely to private banks which would be required to sustain the
circulating medium with a gold reserve and be subject to the inspection,
supervision and regulation of Congress.
Second. The second party, made up of the extreme silver men, woifld
open the mints of the United States to the free and unlimited coinage of
silver dollars, containing 412^^ grains of standard silver, and make silver
the redemption money of the country, even though it resulted in expelling
every dollar of gold from the United States; and in order to provide a
market for their bulky and inconvenient coin, would call in and cancel a
large pjortion of our greenbacks and national bank notes and force the
American people to use as much silver as possiole, or place silver behind
all paper currency.
Behind this silver party stands a powerful syndicate of mine owners,
who have amassed vast fortunes, and during the past fifteen years have
Siiijjlp Pae.
77
maintained a r mcrful lobbv at Wasiingtoi doodjd the country '.th liter
ature favoring the remoneiization of silver, and finally gained Ci.- ' rol of
the populist ani democratic ,'arties. The Repujlican Congressional,v. 5 m-
paign Commhi^ has recen''y published a doftiment giving the names vf
the persons and- corporations which form the backbone <3 this gpgantic
movement in favor of the white metal, as follows:
Hearst estate, California ^ 75,000,000
Fair estate, California 5,000,000
John Mackay 40,000,000
Hagan 000,000
W.A.Clark 4i>jOio,000
William M. Stewart, Nevada 40,0í^j000
Francis J. Newlaiids, Sharon estate 35,0U®Cj00
Dave Moffet 30,00^,000
Senator John P. Jones, Comstock lode 2-lJD0,000
■ Flood estate ^000,000
Denver Smelting Works ••• 25,i/>()^000
R. C. Chambers. Ontario silver mine 20,^00,000
Charles E. Lane, California .- 20,Oca ooq
L. E. Holden, old Telegraph mine 15,000,too
Marcus Daly, Anaconda, Montana 15,000,0to
Butte Silver Smelting Works 14,500,000
S. T. Hauser, Granite Mountain silver mines.... 10.000,000
French Syndicate, old Telegraph mine, Utah.... 10,000,000
Leadville Silver Smelting Works 8,500,000
Broadwater estate, Helena, Montana..^ 5,000,(M)0
Senator Henry M. Teller, Colorado 2,000,000
Senator Lee Mantle, Montana 2,000,000
\
Total $547,000,000
It appears that the demonetization of silver has not prevented the gen¬
tlemen who own this vast sum of $547,000,000 from gaining a fair compe¬
tency. These large fortunes have been mostly accumulated within the
past twenty years. Through the Bland and Sherman acts they were ena-
Ned to sell to the United States government since 1878 over $450,000,000
worth of their product. Thia sale was made for gold or its equivalent, and
while they are advocating free silver it is a custom with a large portion of
them to require their own contracts to be made payable in gold. It is not
at all surprising that these individuals should attempt to bull the silver
market of the United States. An advance in the price of silver of 10 per
cent, would increase their incomes by about $7,000,000 a year. Besides
this, if it is possible to corner the silver market and force a temporary ad¬
vance in its price, this combination ought to be able to do it. These are
the men who have turned loose the jxjpulistic dogs of war to howl "gold
bug" and "Wall street," and to tell the people how they are being "robbed
by Eastern bankers. "
Third. Between the extreme gold men on the one hand and the silver
men on the other, stands the republican party,committed to the only policy
under which the parity of values between gold and silver can be main¬
tained. The only policy under which gold and silver can be forced to cir-
78
'j iir. PrNANQ. NOBLEM.
dilate
un
Í'iKíl'
í.
Iff
e by
V'er •
d.
'ir r .
(«rt fr i,,.„
I^i'-iíisí: 'i:-
' íe iari;« .?-
"■-^k-ííiity -
It - ■ -lid contioue
■ -lint iu such qvj
II
wi-uid contiü.w;
i' cii'-uiati-'.ii 'r;;
irioi'c
d '.ïli!"!":' Ji
>ur
,1
fr.
coin sil-
1 be kept
and maiu-
It may in
but it will
•a and pt-r-
ands com-
sgreement
at endac-
^ ' ' '-isdr^ nf tli'r
oo a
ty with gold, '
_ ííí^proven durii;g
«*pcci4:,,d , J -.r
1 *' ^ralyzed, with
^ ^^^yzed, with . Ol
" ^ I^^faalation ar.d
pu
tiiJUeci a eo.a
„„J ^ * -t-. >%ietsof!' t
and of ..
O.I11,1.^ i-icçain-, Í
. . tlaes
.1 present go:i
tWes that its ca!
1 ce of paper • ' .
every othe .d--
- /.stem of bs .
y of gold .CO •
I'lo louniry.
lû intsrnatioi.ai
'... lT silver, .vi!-
• .e world
,> ! V. lie circula-ing med
f.">ld redemption, has been
With every branch of
-iv-.' gold in great part ex-
I",. Government has mai l-
•- ' jllar of paper currency
i.;e in gold. This has
>n has stood pledged
i the nation's credit
under an unfa, or-
- ■ and when the
fi-
;- O;-: ■
was borrowed
. . onditions,
..Xt.-Ui, of
■ - '
L V
^ . ' «,S •• Wt-i
heen accr.r* ^ ,
to ¡nainT''"^' .
and
able balance of tradi wni. a- w a' d '
receipts of thfe Government w-.ic- : f
to pay the ordinary running ex¡ - a.' •- -. v
however, have necessitated an incrcar of
$262,000,000. But it should be
amount constitutes little loss to the j« -de 1
the necessary expenses of the Gover..:Tient. Theo:
taken out of the Treasury by the presentation of greenbac» -n , - --rt
"When this gold was paid out and the greenbacks redeemei . G. -
ment still had the greenbanks in its possession. Before t hi.- ai -
tern should be condemned, one should first com der whether j • . ate 'jauk*.
would have been able to keep our paper currency good during th 1 fi:
crisis and period of bank failures, had our paper currency bei " i-si ■ ■
private institutions instead of by the general Government. The 1 - a
mpnths have proven the ability of the United States under this sysu u ■ ■
recPiption, with a small gold reserve of only $100,000,000 to maint.i . a; a
paty with gold over a billion and a half of paper currency and dey . í- vi
Bibr. It is the first great test of this policy since the resumption i -t t.v.'c
efft on January i. 1879.
We are told by theiadvoeate of free silver that gold has been
af.withdraxvn from circulation. This is true. Why should it not b- s •
■fitead of this being an injury at the present time it is a bencic.c'.v
wile country. Our banking institutions owe a duty to their deix;=it ..; .
id their bill holders. What better means could they adopt for strov.tT,
li ig their own credit and making their solvency sure than to accurr. . ".i.
. tl. -ir vaults as much g(4d as possible? Would the free silverite ' 1 •
I'im iispose of their gold and fill their vaults with fifty cent d.
*; . uld they adopt this course and the United .States be placed ov. i ¿ . .
. coin s;
be kq,
:.id mai
may
t it F
md pe
ds c^-
"eemf
et J.
aatî
.irt ei
spe; - -
'1
li
u
EXPE» NCE.
silvt. ■-.! :.is, their security would rs^u^ion a depr^iated an«^ trtly worth¬
less ii^etal. The banks of the countr not only have a righ^ tif it has
been their public duty, to strengtbtc their credit and ability to^ •• their
depc-sitors by providing themselves with a stock of the best property ^ud
money in the wórld. In this lies their safety. The fact that the Nation,,'
Banks now hold $196,000,000 of gold adds immeasurable confidence to their
stability. The United States Gover^ent has weathered the storm
because it has kept in its vaults $150,000 vh, of gold. Tru.st Com^nies,
Savings Banks and other institutions t ive pursued the same course.
"W hile gold has largely been withdrawn 'm circulation it has not been
expelled from the country, it has not cea,»?', to be used as money, it hàs
not gone to a premium, but ;t has conti mied to perforn; the- most potent
function of money by upholding the vale«- "i v - r w.T.de circulating medium,
and sustaiDiuc- the cre^lit of âll oi t .. fi: t-â' finan' î-rl institutions, the
United Sut. = -. virrmn'r v ! t.: jubbt credit have been
supported by it
Instead ..f :/ •' ■' •■u!d be a source of
satisfactii-r. u - . • b . • ■ ' ät n the- threatening
times w- ... .. , -• . r g..M coin and
bullion tot:i • . ■ . , . •
We hav. S'- ' ' • ■ id. because
we redeem tl ■ .r, j dher
dollar.
We are :■ - ■ -> of wealth
on a free s-:-.-. • : i, i¿xc&n repudi¬
ation, inflai -
That t) , ■ 1 : _ 'Hiige ot silver would not
enhance its pru 1 v^erience of the following free silver
countries;
'I'l - silver tised Uncovered Paper.
Central America $.000,000 $2,000,000
South America 3.o,000,000 25,000,000 600,000,000
-Mexico 11,000,000 50,000,000 2,000,000
India 25.5,000,000 900,000,000 28,000,000
Cbiaa 400,000,000 700,000,000
Russia 113,000,000 60,000,000 500,000,000
Total 817,000,000 $1,735,500,000 $1,132,000,000
When ^817,000,000 of people with $1,735,500,000 of silver under free
coinage circulating at its bullion value, and with $1,132,000,000 of paper
currency worth no more than the silver in which it is redeemed, are unable
to prevent the decline in silver, it is unreasonable to assume that 70,000,000
of people in the United States could raise the price from 68 cents an ounce
to $1.29 or aocomplish what these nations have failed in.
CONTENTS.
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Chapter I.—The Issue Deñned... 1--4b
Chapter II.—Mouey Defined <*-5
Chapter ill.—Money as a Medium of Exciiauge I'T
Chapter IV.—Money of Final Account (-8
Chapter V.—Coinage Laws from 17S<'2-18;f4
Chapter VI.—Coinage Laws from 18-14 to IhdO LT 16
Chapter VH.—Ureenbacke, National Banks apd the Kesurap-
tion Act 16-19
Chapter Vlll.—Demonetization of Siivr ( t of l>^76i. . . 19-1*8
Chapter IX.—Limited Coiuage Policy, '. 1m7>< ;o t•»'»(;> 28---}
Chapter X.—Industrial Growth, l87'í to 1H92 .. 39-48
Chapter XI.—Causes of the iSale of Boud« Fx; ' of lold
and Kep«'UI of Sherman I>aw ^ 4-3-48
Chapter XII.—liecline in Value of Silver.. 4-S-52
Chapter XIII.—How Parity is Maiutained r)-2-57 ,
Chapter XIV.—Decline in Prices 07-60
Chapter XV.—Results of Free Coinage of Silver 63-69
Chapter XVI.—Criticism of Mr. Bryan's Madison Square
Garden Speech 69-76
Chapter XVII.—Parties to the Attitude of Controversy,
Gold Democrats, Free Silverites and Republicans 76-79
ERRATA.
Page 9,10th line from bottom, read 371JÍ.
Page 19, 27th line from top, read $346,681,000.
Page 19, 9t.h line from botton. read 15 98-100.
i'.igc 21, 8th line of table, read 1 to lOJj.
Page 22, 2d line of table, 5th column, read 1.339.
Page 31, heading of last column should be Minor Coinage.
332.423
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