«I i??i i ' Retirement of the Trade-Dollar and the Continuance of Silver Coinage. Gold and silver, the two great recognized fcpecies that represent the lasting conventional eredit of mankind.— Burke. 8 P E E C II OF HON. A. J. WARNER, OK OHIO. In thk House of Representatives, Tuesday, April 1, 1884. The House Iwving under consideration the bill (H. It. 4070) for the retirement and recoinage of the trade-dollar— . Mr. WARNER, of Ohio, said: Mr. Speaker: While the bill under consideration proposes merely the retirement of the trade-dollar, the whole silver question seems to have been imported into the discussion. I shall therefore not confine myself entirely to the question of retiring the trade-dollar. but shall attempt to reply to some of the arguments that have been presented, and to show that conclusions drawn by somegeutlemen respecting.silver in this country are erroneous. 1 am in favor of this bill. The trade-dollar is an anomalous coin. Its adoption in the first instance was a blunder. It was issued on the erroneous theory that if we coined silver into larger pieces the silver would bring more per ounce abroad. Now the silver in one hundred and fourteen trade-dollars will make almost exactly one hundred and sixteen standard dollars, and there never was a time in auv country when one hundred and sixteen standard dollars would not exchange for just as many commodities asone hundred and fourteen trade-dollars. The bad reasons put forward for coining this dollar have given rise to the charge that it was covertly connected in its origin with the scheme to demonetize silver and drop the standard dollar from our currency. At any rate, it was an ill-advised coin, which has plagued its originators, plagued the Government, and plagued the people, and should betaken out of circulation. It would have been better had this been done be¬ fore, when more of these coins were in the hands of the people and fewer in the hands of brokers. A bill to take up this coin did pass the House, in the Forty-sixth Congress, but failed in the Senate. But the idea that a government like ours may issue a coin and make it a legal tender, and afterward repudiate it or change its value, as princes were wont to do in the Middle Ages, is utterly indefensible, and is re- pulsive to a just sense of the obligations of a government on which rests the responsibilit y of establishing weights and measures and coin¬ ing money. Besides, it could be shown, I think, that there is no other way to get. these coins out of circulation but by redeeming them at their original legal-tender value. There is, therefore, nothing left to do but to pass this bill, even though undeserved profit may go to some holders who have bought th--.se coins at a discount. Thetrade-dollar is still a law¬ ful coin of the T'nited States, and can not justly be ignored by the Gov¬ ernment that issued it. As to the fourth section of this bill, I shall vote to strike it out; but. the main object being to retire the trade-dollar, I shall unhesitatingly vote for the bill with that section left in. Ido not agree with some of my friends that it is of so much importance that these tnule-dollars, six, seven, or eight millions of them, when they have been taken up by the Government and have become bullion, should be coined into other dol¬ lars in addition to the §2,000,000 of bullion per month required by law to be coined into standard dollars. Still I would prefer that this should be done. These coins are already in quasi-circulation, and their re¬ coinage simply changes their form into that of the standard dollar, at a saving to the Government of 7h grains on each piece, which will more than cover the cast of recoinage. This leaves the coinage of the standard dollar, under the act of February 28, 1878, to stand by itself, as I think it should. The re¬ coinage of the trade-dollar would then be a mere change of the form and weight of an existing coin, and the coinage of the standard dollar would go on as now without disturbance. The effect, however, on the currency of tin- country either way will be very slight, because with a total currenc, of from twelve to fourteen hundred millions in actual circulation, th • addition of six, seven, or eight millions more is not of so much con- quenec. However, to make the trade-dollar when re¬ deemed a pail of the bullion required, under existing law, to be coined each month, by lessening by so much the demand for silver bullion, will tend to lower the price of bullion. Nevertheless, I repeat I shall vote for the bill with the fourth section in it, because the main object I have in view is to retire the trade-dollar. With regard to the amendment proposed by the gentleman from Texas [Mr. Mills], J agree with him that it would be better to have a greater number of half-dollar pieces coined, but before doing that, I think we should increase the weight of the half-dollar to two hundred and six and one-quarter grains, making it contain just half the quantity of silver the dollar piece contains. Mr. CHACE. That is what the gentleman proposes to do. Mr. WARNER, of Ohio. That being done, I see no reason why the half-dollar should not he made a legal tender equally with the standard dollar. The half-dollar piece is a more convenient coin for small trans¬ actions than the dollar piece, and would largely take its place if made full tender and abundantly coined. But I think certificates should be issued only on full dollars. But the reason I do not think it advisable to include such a provision in this bill is, that it is a matter which should go to the Committee on Coinage and be considered there in connection with a further revision of our coins. I think the dollar gold piece, the 3-cent nickel piece, aud perhaps some other pieces ought to be dropped. At any rate, when such a change is made in the half-dollar piece as is proposed by the amendment offered, provision should at the same time be made for recoining all outstanding half-dollar pieces, so as not to have two coins of the same nominal value, but of different weights, in circulation at the same time. On the general question I can only touch on a few of the more im. portant points raised in this discussion. While I do not at this time advocate the free coinage of silver without international concurrence on some agreed ratio, I do agree with the gentleman from Missouri [Mr. Bland] that it is only by unrestricted coinage that natural regulation of a currency is possible. Then the mines regulate its volume and not legislation. But passing from this point. I wish iirst to answer the gen¬ tleman from New York [Mr. Hewitt] and the gentleman from Michi¬ gan [Mr. Lacey] on the point they have made, that under free coinage in this country all the coined silver of France and other European coun¬ tries would come here; come, as the gentleman from New York says, “As quick as steamships could bring it.” It is the more important to show the fallacy of this notion because it seems to he so commonly entertained. But it is a fallacy, never¬ theless, as I will show you. Suppose a banker in Paris, seeing the mints in Philadelphia and San Francisco open to free coinage, and enter¬ taining the same notion as the gentleman from New York that there would be 15 per cent, profit in changing silver francs into dollars, should send a million dollars in silver franc pieces, or say five million silver francs, to the mint at Philadelphia, what could he get in return for them? The ratio between coined silver and gold in France is ISA to 1. Ours is 16 to 1. A million dollars in silver francs, that is, what in France is equiva¬ lent to a million dollars and what it would cost a million dollars in gold to get, weigh 67,825 troy pounds. But a million dollars on our ratio of 16 to 1 weigh 72,060 pounds, or over t wo tons more than his mill¬ ion dollars in silver francs. The French banker, then, would get just as many dollars as his 67,825 pounds of silver would coin into, or $960,700, leaving off fractions, and no more. In other words, in changing his silver from francs to dollars he has lost 12.6 grains on every dollar. By this time our banker has probably taken a second t hought and asked himself how he is going to get back the difference between the dollars he now holds and the francs he has parted with. Suppose the mast favorable conditions possible to exist—conditions that would almost certainly not exist; suppose that having got his silver coined into new dollar-pieces he could exchange them without leaving the mint for $969,700 in gold—and certainly he could not get any more—how is he to make back the $50,300 which he has lost? You say he would take it back to Paris. What! and repeat the operation V Not many times, surely. Let us see. Suppose he does return to Paris with his $969,700 in gold and tries to buy silver francs with it. How many can he buy? Why, $969,700 in francs and not a franc more; or at 5 francs to the dollar he would get 4,818,500 francs for the 5,000,000 francs he started out with. Now, that is just what that operation would come to. He would have lost 151,500 francs, or $30,300, besides the cost of sending the silver here and taking the gold back. If instead of exchanging his silver dollars for gold he had bought commodities, flour for instance, he could have done no better. He could buy no more flour for his new silver coins than for gold. No, you can not figure out a profit in any such opera¬ tion. And if the gentleman from New York and the gentleman from Michigan, acting under the belief they have expressed here, should try 4 such a speculation they would not try it more than once. They would find that with a million in gold dollars they could get hut a million in silver francs, or 5,000.000 francs, and we have seen what they could do- with them. Therefore, Mr. Speaker, under free coinage not a lira, not a rupee, not a.silver florin, not a coined shilling, would come to the United States to be recoined. Gresham’s law is as true now as when first announced, and gold and not overrated silver leaves and would continue to leave European countries in settlement of adverse balances. And here is where our friends go astray; they do not distinguish between silver in the form of coin, upheld by legal tender and limited coinage, and sil¬ ver bullion. Coined silver in France is more than bullion; it is money. My friend from Michigan before me [Mr. Horr] will say, I know, that that has nothing to do with the value. But what is the fact? The stamp of a government can not create value, it is said. But the stamp of the government, with legal tender behind it, may give to or extend, the use of a metal, and to the extent the stamp and legal tender give use to silver to that extent they give it value. To the extent these conditions add to its use, I say, to that extent they add to its value; and in this way the value of either metal may be, and often is, very greatly increased. Why, the fact is that the great mass of silver now in use as money— all the coined silver in Europe—is kept at a parity with gold perforce of limited coinage and legal tender, and not by its bullion value. France lias $i>00,000,000 of si 1 ver kept at par with gold in this way. Germany still keeps $220,000,000 of silver—quite as much as we have. Austria and Spain, each has $75,000,000; Italy, $60,000,000; and altogether Eu¬ rope has not less than $1,300,000,000 of eoinedsilver, on the ratio of 15A to 1, and all kept, as I have said, at par with gold by legal tender and lim¬ ited coinage. So, after all the fuss that is made about it, you see we put more silver in our dollars than any country in Europe puts into its silver coins. Why does not silver drive gold out of Europe? There is far more silver relatively to gold now in circulation in Europe than in this country. Why the alarm about silver here then ? Mr. CHACE. Suppose a Frenchman should buy merchandise in India, would he not remit silver to India to pay for it? Mr. WARNER, of Ohio. That would depend upon whether it was more profitable to remit silver or to remit merchandise. He would not, however, remit silver coins. He might buy bullion and ship that. Which would be most profitable for him, silver bullion or merchan¬ dise, would depend upon circumstances. Mr. BRUMM. Even if he should remit silver he would ship bull¬ ion and not coined silver. Mr. WARNER, of Ohio. Yes, he would ship bullion rather than coined silver, notwithstanding the fact that coinage is free in India on theratioof 151 tol, becausegold isatapremiumin India over rupees, but not at a premium over francs in France. The French merchant, there¬ fore, had better ship silver bullion or merchandise or even gold rather than silver coins. For a thousand francsin gold at Paris will exchange for only fifteen and one-half times their weight in silver. But gold be¬ ing at a premium in India, a thousand francs in gold, or a thousand ounces of gold, will exchange there for more than fifteen and one-half times their weight in silver bullion, or silver rupees. But the fact 1 wish to impress upon the House is the all-important one that coined .silver ou the ratio of 15J to 1 will never leave the countries where it Is legal tender to come here where the ratio is 16 to 1. Never will the silver coins of countries holding to the ratio of 151 to 1 come here till such coins are first demonetized in the countries in which they have been coined. This fact I hope I have made clear; but of course if France, for instance, should do as Germany did in 187:1 and demonetize her $600,000,000 of coined silver, then the case would be different. Hence the importance of international agreement ou tlii* question so vital to the whole world; for we see how the action of one country may affect the currency of another, or of all others. Indeed, should France hike such a step as I have suggested and demonetize her silver and call for a redistribution of gold, it would not only convulse France but disturb all Europe and prostrate the commerce of the whole world. The next proposition to which I wish to reply is the claim so persist ently made by those who insist on the suspension of silver coinage, or on its abandonment as money altogether, that the change in the relative value of silver to gold is due solely to the increased production of sil¬ ver in the last few years. Hereagain, Mr. Speaker, it is important, first to ascertain the facts and then to know that our conclusions are right. What are. the elements which determine value in money? What is it that determines the value of gold and silver metal ? A prevalent error, and one which many gentlemen here seem to labor under, is that gold is a metal which possesses in itself a certain fixed •or “ intrinsic” value, and lor that reason is taken as a measure of the value of other things. This is the common idea about gold, but it is a mistaken one. Until very recently 75 per cent, of tin* gold in the whole world and 75 per cent, of the entire production of thegold mines of the world was devoted to monetary use, and only about 25 per cent, to use in the arts and as ornaments. Now, there is bufcso much gold in the world, and the mines put out only so much annually. That is, the stock in hand amounts to four or five thousand millions, or by weight about 8,000 tons, with an annual production of $100,000,000. Here, then, are the elements of the problem: 8,000 tons in the hands of man, and two hundred tons, or a hundred millions, produced annu¬ ally; 75 per cent, of the demand for this Inis heretofore, I say, grown out of its use as money, and 25 per cent, from its use in the arts and as •ornaments. Hence 75 per cent, of the value of gold has come from its monetary use aud but 25 per cent, from its use in the arts. Then, the quantity remaining the same, any conditions that affect the use of this metal, must, and does affect its value as compared with everything •else. Any conditions which alter the ratio between quantity, on the one hand, and useor demand on the other—not use as money alone, nor ■use in the arts alone, hut all uses which give rise to demand—affect value. That is the law of value of everything, and gold is no excep tion. It is equally a mistake to attribute the value of gold to the cost of producing the annual supply. It is the whole mass we are dealing with, not merely the $100,000,000 produced last year; and only to the extent that cost of production affects the relation of all the gold in ex¬ istence to the demand for it all does it affect its value. Then, let us next inquire whether anything has taken place, or is now transpiring, to affect the value of gold. The Director of the Mint tells us that the use of gold in the arts, in ■dentistry, and as ornaments is rapidly increasing. We know, also, that G some countries which formerly used silver exclusively as money now use gold. We know, in short, that the monetary use of gold has been materially extended in many directions in the hist fifteen years. At the same time we know that production has fallen off. What are the con¬ sequences flowing from these disturbing causes ? Just what must occur— a steady rise in the value of gold. The same rule applies to silver. The estimate of Humboldt, Jacobs, and others was that about two- thirds of the silver in the world, and in about the same proportion the annual production, went to monetary use, and about one-third into the arts; consequently two-thirdsof the valueof silver arose outof its use as money, and one-third out of its use in the arts. Any condition that has restricted or now restricts the monetary use of silver, or its use in the arts, mostof course affect the valueof silver. So, too, of course any conditions which affect the quantity, not the annual supply merely, so as to change the ratio of the whole quantity to the demand tor it, whether the demand arises from the arts or for money, must affect its value. Until the demonetization of silver in Germany and in this country, and the restriction of coinage in Europe generally, a condition existed which equalized the demand for gold and silver for money. That con¬ dition was this: In all the principal countries in Europe, except Eng¬ land, and in England down to 181G, it was the right of everybody hav¬ ing money to pay to elect to pay it in either metal. The metals them¬ selves were held as money metals; coinage was unlimited, and anybody could make payment of any sum in either metal. That is the force of le]*al tender. But if the one to whom money is paid has the right to elect what kind of money he will receive—a right never set up till of late—then there would be no use in having legal tender. The dearest money would always he exacted, and there would soon be but one kind of money, and that the dearest. But by the power of legal tender the two metals were held together for long periods as effectively as if they had been melted together and coined as one metal. If the value of one tended to fall, it being legal tender, it was taken up and its use extended, and thus the two metals, not as separate standards, but, the two constituting one standard, made up the volume of money. The production of each varied relatively to the other, but the production of the two taken together has always been steadier than the production of either one alone. During the first half of the present century the production ot silver relatively to gold was nearly three times that of gold. In 1810 the pro¬ duction of silver relatively to gold was eleven times as great as in 1860, and yet during all these changes in the relative production of the two metals there was no change in their relative values. For two hundred years prior to 1871 there was no variation in the London price of silver, except such slight variations from 601 pence per ounce as was due to vary¬ ing mint charges and the course of exchange. Now the silver production is a trifle more than the production of gold, and that fact is seized upon as a sufficient explanation of the depreciation of silver throughout the world. Is there no other sufficient cause ? Is there no other cause consistent with the true theory of value? Let us see. Tn 1870 and 1871 a great war was waged in Europe. Paper money was issued in large quantities. Gold went from France to other Enro¬ ll 1111 states, but nevertheless the ratio between gold and silver did not change. Germ my compelled the payment by France of the unprece¬ dented sum of $1,000,000,000. Upon this Germany stopped the coin- age of silver and began the coinage of gold. In IK73 Gerinutix demon¬ etized a considerable part of her coined silver. France and the States of the Latin Union, soon alter, tirst restricted and then stopped the coinage of silver. Here. then, was the situation: In 1871 the price of silver in lamdon was (10 \d. per ounce, Germany stopped the coinage of silver, and then began to sell silver and buy gold. Between this time and 1676 Germany put into the market $260,000,00001' silver and bought $350,000,000 of gold. That is, Germany in these lew years made a new market for $350,000,000 of gold, and not only shut oil'a former market for silver but turned intoother markets $200,000,000 of silver, the other markets at the same time being restricted by the action of France, and the states of the Latin Union in closing mints which had been before open to all the world, on the ratio of 151 to 1. The United States iiad, in the mean time, demonetized silvei. Silver fell from tilFrf. per ounce in 1671 to 47 <1. per ounce in 1676; and yet with al! these changes in the monetary demand for silver we are told that the fall in silver was due entirely to increased production, while the actual increase in pro¬ duction was only from $60,000,000 in 1671 to $60,000,000 in 1876! Is it possible that the market for silver could be restricted to one-half what it had been, as I have shown, and then $200,000,000 of additional silver be thrown onto the market so restricted, and on the other hand a new demand be made for $350,000,000 of gold, without affecting the rela¬ tive value of the two metals? Impossible. Here in these very condi¬ tions we have the whole cause of the tall of silver. The effect of the slight increase in production has been almost inappreciable. On this point it is pertinent to quote the opinions of some lygh au¬ thorities. The select committee appointed by Parliament in 1876 to in¬ quire into the cause of the depreciation of silver says And the conclusion seems justified that a review of the relations of metals in times past shows that the fall in the price of silver is notdue to any excessive production as compared with gold. The fact is that, as was correctly pointed out by Mr. Gifl'eu in his evidence, the changes have been in the uses of the Mr. Ernest Seyd, in a very able inquiry ou this subject, published in 1879, says: In truth, the real cause of the fall of the price in silver is the enforced cessa¬ tion of the demand resulting from its demonetization by mistaken legislation. Again, the same author says: The greatest variations in the relative production between gold and silver have taken place within the last two centuries without causing any difference in the relative value between the two metals. Indeed, I think writers ou money generally agree in the opinions ex¬ pressed by the authorities quoted. The effect of the increase in the production of either of the metals, relatively to the other, on their val ue has never been in proportion to such increase; and with free coinage as it existed for a long time prior to 1873, it had no effect on their relative value at all; and at any time the annual production of either metal goes into the common mads, and affects the relative value of each only as it affects the relation of the total quantity of each. Laveleye illustrates this very handsomely in this way: This immense stock of the precious metals lessens the variations in the value which might result from the variations in the annual supply, just as the level of a great lake is little aflfecte 1 by any changes in the discharge of the rivers which flow into it. Fo annual production, at most, affectt the relative value of the metals 8 only an it affects the proportion between the whole masa of each in exist¬ ence, at any given time, and the demand for each. Hence I think it proven that the change in the relative value of silver and gold which has taken place in the last twelve years has been due almost entirely to the restriction of the monetary use of the one, and the iucrease in the use of the other, both as money and in the arts, and this is due almost exclusively to legislation. Now, what is the remedy? Mr. HOUR. We remonetized silver upon the theory that the re¬ monetization was going to increase the value of the metal. Now will the gentleman explain how it is that silver has been going down ever since we remonetized it ? Mr. WARNER. I will answer the gentleman’s question with great pleasure. Silver has not been going down ever since we began coining $2, 000,000 per month. Silver was as low as 1 Cy\d. per ounce in Londonin 187(1. The average London price last year was 51.23d., as given by the Director of the Mint. Now, what an; the facts of the case ? Silver did decline rapidly from 601 d. per ounce in London in 1871 tooOtf., and even to47d., in 1876 and 1879. and unquestionably it would have fallen lower but for the market we made for it here when we began coining two million dollars’ worth of bullion a mont h. This is the problem: a hundred millionsof silver are produced annu¬ ally; our mints take $28,000,000 of i(; the rest goes to India or China or South America, or is used in the arts. If we took none the quantity thrown upon other markets would be so much greater, would it not? And of course the price would go down. Tf. therefore, our coining two million dollars' worth of bullion a month has not had the effect of bring- ingsilver to a par with gold, it certainly has upheld it and kept it from going as low as it otherwise would have gone. For no one would claim that a market for $28,000,000 a year has had no effect on price. What the effect of coining $50,000,000, ayear instead of $28,000,000, would he can not bo stated exactly. But it is as certain as the multiplication table that if there is a production of $100,000,000 of silver a year, and $30,- 000,000 of that is required in the arts, and that India would take $25,000,000 for money at the ratio of her coinage to gold, and China, South America, and other countries would consume tin- currency $10,000,000 more, and the United States should coin $50,000,000, there would be a scarcity of silver, and that under these influences silver would approximate if not reach the value of gold. But I am not advocating even an increase of coinage for this country now, for before taking any important step we ought to know that Europe would at least maintain the xtatm quo of silver, and that the mints of British India would be kept open: so that in any view of the case inter¬ national interests are involved. I do not say either that the time will not come when we should reconsider the question of silver coinage here. I can see how such reconsideration might be forced upon us by the ac¬ tion of other countries. If the states of the Latin Union, for instance, should determine to reduce the proportion of silver in their currency by selling off a part, which they are not likely to do, or if England should determine to close the mints of India, under such circumstances it might become necessary for us to change our policy. The Latin Union com¬ pact however, holds till the close of 1885, and there is no occasion now toralarm or for lessening by a dollar the present rate of coinage: on the other hand there are many reasons why the coinage should be continued. _ In , th . e hrs * P lace . our Paper currency is in an unsettled condition. I he debt is being paid off and bonds cal led in. Bank circulation is un- dergoing diminution. It is possible that the contraction of that part of the paper circulation may be considerable at no distant day. In that event silver and silver certificates would *be the only substitute, with¬ out which there might be a contraction which would seriously affect the business interests of the country. Stability of value, which is only secured by stability of volume, is what the business interests of thecoun - try demand. We want neither contraction nor inflation. Stability is the prime requisite of money. But I must proceed at once to the great question: Shall the coinage of silver he stopped or be further restricted ? I n this question the whole country is interested. It concerns not the banker only, but. the mer¬ chant, the producer, the laborer, everybody, and merits the fullest consideration and the most careful action, it is well known that the large, cities, especially the Eastern cities, are pressing for a suspension of silver coinage, and generally, 1 believe, they are opposed to silver altogether. These cities, I say. are calling on us to stop the coinage of silver. They say its continuance will drive out gold. But at the same rime in the other end of the Capitol they are asking that steps be taken to prevent the contraction of the national-bank currency, or business, they tell ns, will suffer. Now, I say to these people, bankers, merchants, or whoever they may be, that they must take one horn or the other of t his dilemma. A mill¬ ion dollars in bank notes lias the same effect precisely upon the gold currency of the country as a million dollars in silver certificates, and will drive out gold just, as effectually. I am not talking now against bank notes or paper currency. But I do sav, and challenge refutation, that $200,000,00!) in hank notes, or any other form of paper currency, will displace or drive out just as much gold, or keepjust as much from coming in, as $200,000,000 in silver or silver certificates. Willanybody deny that ? No; it can not be denied. It is too patent to admit of denial. But let us examine the question a little further. Our currency now consists of $700,000,000 of paper. $165,000,000 of full tender silver— four times its much paper as silver—and five to six hundred millions of gold; or if we take out permanent reserves, twelve or thirteen hun¬ dred million dollars in all, sis the effective money volume, or that which operates on prices. This volume is just sufficient, and no more than sufficient, to maintain prices here at the level of prices abroad; that is, on this volume an equilibrium of international prices is maintained. Out of it. of course a little gold at one season may shift to one side and at another season shift back to the other—although usually the part that goes out or come3 in is taken from reserves and not from circulation. Now, grant that thereshall be no increase of the paper currency, and how will $165,000,000 of silver expel $600,000,000 of gold? Or how will the coinage of $2,000,000 a month expel it? ft would do so in time if our population were stationary, but it would take many years even then. But gentlemen forget one important factor in the problem, and that is that our population is not stationary. On the contrary, we are •adding to it every year a number almost espial to the entire population of a State like Indiana—nearly 2,000,000 a year. I u the year 1000, only sixteen years off, our population will be 83.000,001)—mo re than the pop¬ ulation of England and France together; and wealth increases faster than population. The 2.000,000 added annually to our population re¬ quire as much bread and meat and clothing, and do as much work, on 10 the average, as any other 2,000,000; and will they not call for as much money? Certainly they will. What increase, then, in the money vol¬ ume will this increase of population and wealth require in order to maintain the present relation of volume to population? And the only way possible to preserve stability of value is to keep this ratio con¬ stant. Let it be repeated and emphasized that there is one way and one way only by which the stability of money can he maintained, and that is by maintaining the stability of volume. Xo other way is pos¬ sible. Xow, what will these conditions require? Our population is now over 56,000,000, and if we take the present volume of actual circulation at $1,300,000,000 we have in round numbers$23 per capita. We are coining silver at the rate of about $28,000,000 a year. But this isonly $14 per capita tor an increase of two millions of population. By the year 1890 an addition of at least $50,000,000 will be required in asingle year to meet the demands growing out of increased population and increased wealth. Indeed, the report of the Director of the Mint, which I hold in my hand, shows an actual increase of our currency last year of $40 - 000,000, which just about satisfied the demand of the added population. N ow what is the production of our gold mines ? Thirty-two millions a year. Mr. Burchard tells us $12,000,000 of this is consumed in the arts at home, leaving but $20,000,000 to be coined into money. We will require, then, gentlemen—unquestionably we will require, if our pros¬ perity continues—in addition to the coinage of $28,000,000 of silver a year, the coinage of all the gold that our mines produce, save what will he consumed at home in the arts. So, Mr. Speaker, instead of driving out gold, the coinage of only $28,000,000 a year will not supply the demand growing out of the in¬ crease of population and wealth, and more currency of some kind will he required to keep up the ratio of money to population and wealth And it the paper part be not increased then the gold part will increase natural !y itself. And is not this just what has taken place since 1878 v , ;|S ** 1)01 said in 1878 that the coinage of sil ver would drive out gold or keep it, out? But what are the facts? The volume of gold has increased i 10111 lef f than $2;>0,000,000, all told, in 1878, to $600,000,000, according silver D,rect ° r ° f the >fint ’ imd that Ullder the continued coinage of But this question is of such importance that 1 will give another illustration _I lance has $540,000,000 of full-tender silver, coined on the ratio ol l.»2 to 1. She has a population of 38,000,000. This gives her $14 per capita in silver. If we go on coining silver at the rate it is the year 1900 we will then have about asmuch , but possibly to 40, 35, or 30 pence, I must dissent from his views. Why, I ask again, this demand to shut olf the silver mines and limit the supply of metallic money to the gold mines alone? Is it not a fact that the supply of gold is diminishing from year to year? Ts it not certain to diminish from century to century ? Geologists are in perfect accord on this. The supply of gold is certain to be a waning sup¬ ply. What, on the other hand, are the conditions as to its use ? Pop¬ ulation and wealth increasing, more extended commerce demanding more money, and a larger use of gold in the arts. Mr. Burehard, the Director of the Mint, tells us that not 35 percent., as formerly, but 50 if not 75 per cent, of the gold production of the world to-day goes into use in thearts and as ornaments. Fifty millions of gold a year, at most, left for monetary supply, and to make up lor abrasion and loss; fifty millions of gold for abrasion and supply, and that diminishing from year to year, and half the world crazy to shut off silver entirely! Why, at the rate of increase iu the use of gold in the arts that has been going on for the last decade it will not be ten years more till every dollar of the world’s production of gold will be used in the arts and for dentistry, leaving not an ounce for new coins. An allowance of 6 cents for each inhabitant of the globe for filling teeth would take every ounce of gold now produced for dentistry alone. In the face, then, of a diminishing supply, and the rapidly increasing de¬ mand for gold in the arts, for dentistry, &c., is it not astounding that such a clamor should be raised to shut out silver? What fools these mortals be! If it were not for the world’s vast indebtedness would such a demand be made ? Can the motive, then, to reduce the solid money of the world to one metal be a righteous one? To do it, remember, is to change the relation of debt to property throughout the world and to increase the debt burden of every people on whom debts rest. It is to lay on labor greater toil for lesser rewards. I think I have shown that to keep our volume of money stable from forty to fifty millions must be’added each year to meet the demands of increased population and wealth, and I have shown that twenty-eight millions of silver or silver certificates will not alone be sufficient. Gold or paper must be added or the volume rela- tively to our population will shrink. There is no probability that the paper part of the volume will be increased immediately. On the other hand, the question of the national-bank currency remains unsettled, ami some contraction from this side is almost certain. In view of these facts, how absurd to say that the coinageof $28,000,- 000 of silver or the issue of $28,000,000 of silver certificates will drive outgold without an increase of paper! But silver, we are told, will not go into circulation. In Heaven’s name, then, how will itdrive out, gold? One currency can drive outanother only by taking its place in circulation and filling to overflowing the channels of trade. Yet silver will not go into circulation, but will drive out gold, is paradoxically asserted in the same breath. But why will not silver, or its representative certificates, go into circulation? Is Gresham’s law suspended in this country ? S:l- ver is legal tender, and that is enough to insure its place in our money system. . ' Another strange delusion has taken possession of the country m con¬ nection with the idea that silver was about to expel all of our gold. Just how $165, 000, OUU of silver was going to expel $(>00,000,000 of gold, nobody has told us, hut if one believed the admonitions of Wall street and the press, gold nevertheless was on the eve of taking wings and de¬ parting forever. At least gold was going to a premium immediately. Now, a half per cent, premium would undoubtedly take, gold out of circulation at once: let us see how that would affect things. It takes now $700,000,000 of paper, $165,000,000 of full-tender silver, and $600,- 000,000 of gold, or. leaving out reserves, say $650,000,000 of paper, $150,000,000 of silver, and $100,000,000 of gold—$1,200,000,000 in all of effective currency—to maintain prices in this country at a level of prices in other countries. Now, imagine the $400,000,000 of gold taken suddenly out of this volume by a premium, what would be the result? The active money volume would then stand at $800,000,000 instead of $1,200,000,000. Under such conditions prices would collapse, and gold would come in to restore the equilibrium. No; it is impossible for $150,000,000 of silver to drive out $100,000,000 of gold—if that be the amount in circulation—and it is equally impossible for gold to stand at a premium as long as any remains in circulation. The gold can all be expelled only by adding at once $400,000,000— or an amount equal to the gold in circulation—more silver or paper to our present currency, and not till all the gold, or substantially all of it, is driven from circulation can gold stand at a premium. I do not, how¬ ever, wish to be understood as advocating the enforced circulation of the coin itself. There is in my opinion nothing gained in that. If peo¬ ple prefer paper representatives in the form of certificates, why should they not have them? There is no good reason for compelling those who use money in large amounts to carry or handle the metal itself. Let every one choose for himself between coined dollars and paper represen¬ tatives, and for one I am opposed to retiring the small notes. They are convenient, and the people are accustomed to them, and there is noth¬ ing in the world gained by compelling all payments of small sums to be made in wined money. Paper saves abrasion of the coin and is light and convenient. It is a shallow view of the money question, itseems to me, to compel 1h > handling of the metal itself when people prefer something else. Let that be a matter of choice. The great question is to maintain the stability of the whole mass. By doing that you secure the stability of the value of each unit. How the whole shall be subdivided and how it shall be represented is of minor importance and should be left entirely to the choice of thos ■ who use it. For this reason I should be quite willing to let certificates issue on the bullion, at the same ratio and in the same way and in the sameamount only, as now issued on coined silver, and let the silver be actually coined only when called for. For it makes not the least difference whether the metal circulates by certifi¬ cates or the metal itself is actually handled, only it be so that when the certificates are out the metal is in, and when the certificates are in the metal is out. And it is an entire misapprehension of the true situation to suppose that because silver is locked up in the Treasury vaults it is no part of the money of the country, for to the extent that certificates are out sil¬ ver is doing money’s work the same as if the coin itself were circulate 15 ing, and it gives a -sense of security to know that solid money is behind this form of paper. It is very different from the credit currency of pri¬ vate issuers. Certificates representing the metals not onl v have a solid basis, but they are titles to the metal and limited by the metal itself, and in that lies theirgreaterstability; and I repeat t hat what bimetallists plead for is stability in the value of money, and that can only l>e secured by stability of volume. O | From The Banker’s Magazine for August, 1885.) THE WARNER SILVER PLAN. What is known as the “Warner plan” for the adjustment of the silver question, is understood to be the outcome of conferences held since the ad¬ journment of Congress, between Gen. Warner and others on one side, and persons on the other side representing various shades of opposition to the present method of coining silver dollars under the law of February 28 , 1878 . The two most prominent features of the plan are : First .—The issue to depositors of silver bullion, of certificates of a fixed and unchanging number of dollars declared upon their face, and endowed with .at least sufficient functions of being a tender by and to the Government, to give them currency and acceptability as money. In this feature it differs radi¬ cally from the plans, of which many have been proposed, to issue certifi¬ cates varying as to the number of dollars for which they shall be current, ' from day to day, or at other short periods, in proportion to the variation in the relative market valuation of gold and silver bullion. The scheme of a coin, or of a certificate, with a fluctuating money valuation, is absurd to the last degree, and although often broached in this and other countries, it has always been rejected by the common sense of mankind. It is an essential part of the conception of a sound and practical money, that the receiver of it shall have an assurance of his ability to pass it as money at the same rating at which he took it. It surely cannot be necessary to argue the point, that in this particular of giving monetary functions at a fixed dollar valua¬ tion to certificates of deposited silver bullion, the Warner plan is the only one fit to be considered. Second .—The Warner plan monetizes silver substantially without limit, at a ratio fixed at every given moment by the then actual market relative valua¬ tion of gold and silver bullion. A certificate for ten ( 10 ) dollars under this plan is, therefore, not only always a certificate for that number of dollars, no more and no less, but there is the further assurance that these dollars, as certified in respect to their number, shall always have the same market and commercial value at home and abroad as gold dollars, or, in other words, hat the certificate shall always have the market and commercial value of ten ( 10 ) gold dollars. This steadiness of value relatively to gold is secured under the plan ( 1 ) by the original issue of the proposed silver certificates upon the market gold value of the deposited silver, and ( 2 ) by the redemp¬ tion, when demanded, of the certificates, either in an amount of silver equal in gold value, at the time of redemption, to the sum expressed on the cer¬ tificates, or in dollars, at the option of the Treasury. The latter mode of 142 THE BANKER’S MAGAZINE. [ August, redemption is equivalent to a gold redemption, inasmuch as all our lawful dol¬ lars are now equal to gold, the paper dollars by convertibility, and the coined silver dollars from the fact that the actual number in existence is not in ex¬ cess of the quantity which the circulation will sustain at a parity with gold. In essential respects the monetization of silver by this plan makes it as com¬ pletely a world’s money as if the United .States was able to negotiate treaties with leading commercial nations for the coinage of silver at a ratio to gold of iS'/ 2 , or 16 , or any other agreed ratio. If we monetize silver at a ratio to gold always exactly corresponding to the market ratio between the metals, we necessarily have an international ratio, inasmuch as the easy mobility of the two precious metals makes their relative market valuation practically the same in all commercial countries at every given time. If, possibly, a settle ment of the ratio by treaties would be a better method, it is sufficient to know that no treaties of that kind have so far been made in the history of the world, the Latin Union Treaty not being an example of it, but an ar¬ rangement of a special kind between contiguous countries, and having no relation to the matter now being considered. The parties forming the Latin Union Treaty were, when they entered into it, and had long before been, on the double standard and at a common ratio. Furthermore, we know that our own efforts, persisted in since 1878 , to negotiate such treaties, have met no success, and extremely little encouragement. And, finally, if such treaties shall prove to be practicable of attainment hereafter, the present monetization of silver by the Warner plan will in no event be an impedi¬ ment to our entering into such treaties, and will rather tend to facilitate their future negotiation. Upon the whole, the proposed plan, while it will not satisfy that portion of the gold party which desires to narrow the volume of metallic money to a single metal, does offer a method of monetizing silver, which is not sub¬ ject to the two objections which are the controlling causes of the opposition of other portions of the gold party to the present method of coining silver dollars, viz. : ( 1 ) that it creates a species of money not available for paying debts in important foreign countries which use only gold, and ( 2 ) that there is danger of the coinage becoming at last so excessive as to result in a de¬ preciation at home of the market value of the silver dollar as compared with gold. To me, while quite conscious that advancing age and retirement from ac¬ tive life prevent my knowing very much, as a matter of fact, about the actual tendencies of current public opinion, it seems probable that a very consider¬ able portion of the gold party, if satisfied that silver as proposed to be mone¬ tized by the Warner plan, will be as available internationally as gold is, and will not depreciate at home below gold, will feel that it is a recommendation of the plan, rather than an objection to it, that it will expand the mass of metallic money, and thereby check and perhaps reverse the now declining course of general prices, and thus avert greater disasters to industry and pro¬ duction than the world has already suffered. It is naturally enough distasteful to silver men to regulate the valuation of silver by that of gold, and many of them object to doing that, upon the ground that it will make gold the money standard. Undoubtedly it will do that, in the sense of causing all other descriptions of money in this country, greenbacks, bank notes and silver, to be and remain at a parity with 1SS5. J THE WARNER SILVER PLAN. M 3 gold. But it does not make gold the standard, in the sense in which it would be if gold constituted the only money. The monetary standard of a country which fixes prices, and thereby determines the relation of property and labor to debts and taxes, is the total volume of money of all kinds, and the question in this case is, whether the proposed change in the method of using silver as money will increase or lessen the monetary use of it, and thereby increase or lessen the volume of money. If making gold the standard of the other moneys in use is what is ob¬ jected to, it is something which already exists, and will, under present laws, continue to exist for an indefinitely long period of years. The coined silver dollar will remain, as it is to-day, exactly equal in market value to the gold dollar, until it is coined in sufficient quantity to expel all the gold from monetary use. If this exact equality did not now exist in the city of New York, and if silver dollars could be purchased at a discount of even one- fourth of one per cent , the entire customs’ revenue there would be paid in them, whereas only a small proportion of it is so paid. The same parity of market value between gold and silver coins of like denominations which exists here, as a consequence of the slow and limited rate at which it is coined, exists in every double-standard country in Eu¬ rope, as a consequence of the stoppage of the further coinage of silver in all of them. The enforced parity of market value between gold and silver money, whether it is an evil or otherwise, is an existing fact, and it is also a very permanent fact under our present laws. It is not a new feature to be now for the first time introduced by the Warner plan. What that plan does is to change the method by which the market parity of value between the two metallic moneys is enforced. The present method is a close limitation upon the silver coinage, reducing it $ 15 , 000,000 annually below the production of our own mines. The Warner plan, on the other hand, enforces the parity of the two moneys by a method which imposes no legal limitation upon the conversion of silver to monetary uses. No reason is apparent why an adjustment of the question of the metallic standards on the general lines of the Warner plan may not harmonize all conflicting interests and opinions in this country, with the exception of the classes and persons who desire that the metallic money of this and all com¬ mercial nations shall consist of gold alone. With those classes and persons no compromise is possible, but that extreme party is not numerically power¬ ful, although the number of its real adherents is undoubtedly much greater than the number of those who are willing to avow themselves as such. Aside from those extremists, nothing seems to be needed towards consoli¬ dating public opinion upon a practicable measure of monetary adjustment, except that we should conquer our prejudices, and we shall be wonderfully aided in doing that, by remembering that other people as well as ourselves have prejudices, which must be taken into the account, considered, and as far as possible conciliated. Existing prices in this country are below the range which the actual amount of money would justify. They are kept below that range by what is a hope in some quarters and an apprehension in others, that the existing monetary volume may be contracted still more by further steps in restrict¬ ing and arresting the coinage of silver. The adoption of the Warner plan, 144 THE BANKER’S MAGAZINE. I August. in view of the commanding position of the United States, as beyond com¬ parison or question the leading commercial and financial nation of the world, would be recognized here and everywhere as the definitive end of the battle of the standards, upon the basis of making the combined mass of gold and silver in itself, and as the basis of representative paper money, ths measure of the prices of property and labor. In advance of, and inde¬ pendently of, the actual increase of money by the larger monetary use of silver which the plan involves, prices would rise from the removal of the fear of the further contraction of money, and the rise would probably be much greater and more sudden than is generally anticipated. Geo. M. Weston.