SUPPLY and DEMAND Only Source of ValUw. A Discussion of the Money Question WmUlfllVI H- V Fr.RY. Chester, Pa. Z> \ y i -X SUPPLiY and DE|V[A|MD THE Only Source of Value. A Discussion of the Money Question — BY— V WILiLilfllVI H. BE{?t?Y, Chester, Pa. Single Copies, it^ cents; two for 2^ cents, postpaid. Lots of 100 for free distribution, at cost. COPYRIGHT, 1898. MORNING REPUBLICAN PRINT CHESTER, PA. ^^vq^ ^scfn 13;)'Ui Introduction During the last Presidential campaign I harded to a friend a work on " Bimetalism " bj' Wharton Barker, with a request that he read it carefully. Some weeks afterward I asked him what he thought of it. He ans\.\er(:d with a sm'Ie that ", life was too short " for him to read a book like that. I knew that he was straining every nerve to make a living and to pa}' the interest on a mortgage which, if foreclosed, would absorb every shred of his property and rob him of the hard earned savings of a lifetime, and I hoped to show him the cause of his trouble and the remedy for it. He voted against independent Bimetalism, as I believe, in ignorance of the facts in the controversy. I have centered this discussion upon what seem to me to be the critical points in the case and have made it as brief as possible, though I trust not too brief for clearness, in the hope that my friend and other victims of the present system may find time to read it. The argument endeavors to show that a short supply of money has increased its value and reduced the price or debt- pajdng power of property and products. This insolvency of propertv deters men from producing it and enforces idleness, thus causing an irreparable loss to those who can least afford it. In the struggle to maintain prices trusts and combines are formed, strikes, lockouts, riots and bloodshed ensue, and an intensifying alignment of our people into "classes" results. Free competition in tho production of money will remedy this evil by giving to every man who wants to work a chance to do so, and the free and independent coinage of silver at i6 to I with gold in the United States, is a just, safe and patriotic method of effecting this result. The facts which have compelled me to the conclusions reached, are set forth in the tables appended. They are taken from the latest publications (Feb 1898) of the United States Treasury, and from no other source. They are therefore reli- able. The facts as to the fall in prices as shown in Table I are confirmed in the experience of every citizen. I have arranged the statistical facts as to the Production, Coinage and Movement of Gold and Silver so as to emphasize the points of my argument- I believe that this set of tablfs will be found of great value to students of the question. Wha'ever of original thought may be expressed in this book, together with the compilation of the rest, I dedicate to the cans.' of humanity Mav God speed the right. WILLIAM H. BERRY. CONTENTS. CHAPrp:R I VALUE. Intrinsic Viilue— What is Value?— Supply and Demand — The Source of Value — Utility is not Value — Demand — Demand Resisted — Value may rise Indeftnitely— Fall in Value Limited by cost of Pro- duction— Skill and Advantage in Production — Automatic Reiiulalion of Values— Artificial Control of Values by Trusts- All Trusts and Combines Condemned — Improved Methods of Production— The Value of Labor. - 1-6 CHAPTER II. A MEASURE OF VALUK. What Is it to Measure Value? — An Average Stami.ird — A Com- modity standard— Stability Required— Methods of Regulating the Standard— Labor not a Suitable Standard— Labor : Its Value and i^ebt-paylug Power— Units E?tablis!\ed by L.-ivv. - - - 7-i() CHAPTER III. THE AMERICAN DOLLAR OUR STANDARD. The Demand for Dollars— The Supply of Dollars— The Produc- tion of Dollars — The Dollar the Standard— Value and Price Contrast- ed— Per capita Circulation not a Test of Value— One Dollar as good as another— Discrimination destroys Parity. - - - 11-15 CHAPTER IV. SUBSTITUTES. Gold and Silver Coin Insufficient— Substitutes for Dollars —Bank Notes— Character and Cost of Producing Subsiitutes— Substitutes Unreliable — Not Enough of Dollars— Eaormou-t use of Substitutes— The Limit of Substitution— A Difference in Substitutes. - 16-20 CHAPTER V. THE VALUE OF GOLD AND SILVER. Recapitulation— The Value of Gold— The Value of Silver Prior to 1S73— Parity under Free Coinage— Foreign Exchange as Affecting Parity— Different Coinage Ratios as Affecting Parity— Theory of Bi- raetalisai— Experience of Bimetalism— Importance of this Country IV CONTENTS, in the Past— Importance of this Country Now— No Reason for De- monetizing Silver in 1873— Demand for and Supply of Gold— The Present Vakie of Silver— Silver at par with other Commodities — The Effect of PVee Coinage of Silver. .... 21-30 CHAPTER VI. THE TEST QUESTION. The Arithmetic of F'acts— Production of Silver— Present Prod at all Consumed- Increased Production— Prohahle Supply <>f Silver— The Demand for Money — The Immediate Demand for Silver — The (yurrent Demand for Money— Demand Unlimited — Our Debts Abroad —Our Present Needs— What of tlie Future?— Hon. A. .1. Bilfour on Standards— Trusts and Combines born of Falling Prices — Tne Present Inquiry. .-..- 31-41 CHAPTER VII. THE EFFECT OF FALLING PKICES. Government VS. Private Regulation — Senator Hoar and Sh^'lock— The Owners of fixed debts in Go!d— The Aenian«l— The Sonrcf of Value— I'tiJity is not Value— l»einaiiy Trnsts— All Trusts and Combines O^tndcmned-^Iuftproved Methods of Produetaon- The value of Lor. A confused and ofcen erroneous conception of the phe- nomena of value is current in the minds of many intelligent men, and since clear thinking on fundamental principles is necessary to an intelligent conclusion we propose to discuss this question briefly, first : The persistent chatter of the ne\vsp.ipers, and other would- be teacher,-, about the •* intrinsic Value " of a gold dollar, and the universal habit of comparing all other values to that ot gold leads many to suppose that the value of gold is inherent and cannot change, and in order to free our minds of this error let us first enquire What is Value? We answer that the value of an article is what it will brinji in the open market, or in other words, its " purchasing power" or " power in exchange," and thus understood it is not and cannot be " intrinsic " or inherent in gold or in any other substance. As the altitude of a balloon is fixed at a point where the force of gravity is balanced by the buoyancy of the atmos- phere, so the value of everything in the world is fixed by the contending forces of Supply and Demand and at a point where these forces balance each other. The foolishness of referring to the " intrinsic " height of a balloon is at once apparent, and to speak of the " intrinsic " -2 VALUE. value of anything is equally absurd. Value refers to the po- sitioti of a thing and not to any quality it may posses-. The Source of Value. Value, or "Power in Exchange" is not onXy ^xed or regulated by the contention of Supply and Demand, but it is actually created by it, and does not and cannot exist in the absence of it. Utility is not Value. It is an error to suppose that because of certain intrinsic qualities an object is useful or desirab e, and is therefore valu- able. Nothing could be more misleading. As an illustration, take the air we breathe. Its intriiisic qualities render it usf- ful, desirable and even necessary to every human being, and yet it is absolutely valueless. One cannot get anything in ex- change for a bushel or for a ton of it. Her*., then, is the spec- tacle of an exceedingly useful thing entirely without value. While on the other hand there are some things that one might mention which are quite valuable and are not only useless but are positively harmful and destructive in their effects. The victims of the alcohol or opium habit will give anything they possess on earth in exchange for these drugs, while it is clearly seen that they are rapidly destroying those who use them. And so we see value where there is no utility, as well as utility where there is no value. " Demand ". The qualities, inherent or otherwise, (they may be and often are purely imaginary) in an object, tend to make it de- sirable and to create a demand for it, and it is important to notice that, the more uses to which an article can be put, and the more imperative the necessities which these uses supply, the greater and the more imperative will be the demand for it. But however broad and imperative the demand may be, there will be no value whatever unless the demand is resisted by a short supply, and the contention is set up between tho.'-e who have it and those who want it. The life-sustaining qualities VALUE. 3- of air, for which there is no substitute, rentier it absolutely necessary lo every man and an imperative demand arises from every quarter, and yet it his no value because the demand is not resisted. The supply is everywhere abundant. Demand Resisted. Take the case of water, and for the same reasons the de- mand is universal and imperative, but in certain sections the supply is limited, and the demand is resisted to a degree that gives rise to value, and water is "sold" or exchanged for other things. Values May Rise Indefinitely. As the resistance of short supply in the pre-;ence of im- perative demand increases, the value (of water for instance) ri-es uncil in many places it is considerable, while to the fam- ishing survivor of shipwreck or the bewildered t'aveler in an arid desert it may become infinite. Any ci'cumstance, providential or man-made, which af- fects the supply whih- the demand remains the same will af- fect the value of anything, and any circumstance that affects the demand while the supply remains the same will affect the value with equal certainty. The rise in value-; due to a short supply is not controlled or limited by the effort )rce idleness, and if practiced by aU woul! result in the ultimate stagnation of all enterprise. 1 11 proved Alethods oi Production. The cost of producing anything includes all the materials of every kind that are used in its cotistruction as well as all th eeffort, time and sacrifice that are involved in its creation and distribution to the point of consumption or ultimate stor- age, and since civilized man is poyressive and is continually adding to his experience and improving the direction and char- acter of his efforts, as well as the tools and appliances with which he works, a corresponding red notion in the cost of pro- ducing commodities, as measured in Jnnnari toil, occurs. In order to encourage the improvement of methods and machinery of production the government justly gives to those who make the improvements an exclusive privilege to use them for a period of years (17 in this country), after which it is thrown open to the public and in competition all may inherit the benefits of the march of improvement. Under fair economic conditions this should and would re- sult in a constant increase in the rewards of toil, and the value of labor would constantly rise as measured in any and all of its products. The Value of Labor is just as certainly due to the law of supply and demand as are other values, but since every laborer is a consumer and can furnish a demand for the product of his own toil, or its equivalent in the product of his neighbor, there cannot pos- sibly be an over-supply of labor if the opportunity to labor 6 VALUE. and to exchange products i'^ not restricted, and therefore the statement that the value of labor should constantly rise as compared to the value of its products is certainly true, and that the value of all products as compared to labor should con- stantly fall is equally true. If there be a product to which the improved methods and skill in production has not been and cannot be applied, and the demand for which continues, its value will range above that of its fellows and tend to keep pace with the value of labor, but such instances are extremel}' rare if, indeed, any exist, so that we have every reason to expect th^t the wages of the laborer will continuallj^ rise as measured by his pro- ducts and in proportion to his increased ability with improved tools to produce them. CHAPTER II, A Heasure of Value. What Is it to ni*'sis(«r«» Val«»'?— An Av^-rag-c Standartl— A Coiiiiiiodity Standard— Stability Iteqnired— Motliods of R4>jK-n]ati]ii<; the Stand- ard—Labor not a unliable Standard— I^abor: lis valaac and d«>bt- payin^ l»ow«?r— Units Established by Lian-. In the exigercies of commerce it becomes necessiry to have some means of comparing or measuring values, ju-^t as m the mechanic arts it becomes necessary to compare weights and extensions, and as we establish the 'pound", which is the force with whicli a certain quantity of metal is attracted toward the earth under certain conditi(Mis, and the " yard ", which is the length of a pendulum which will vibrate in a cer- tain length of time under certain conditions, as the basis of our physical comparisons or as " units " in the terms of which our statements of weight and extension may be expressed and our records kept, so also must we establish a unit of value in the terms of which our records of value may be made and kept. What is it to Measure Value? In measuring or recording the value of an article we do not undertake to say how far above or below the cost of pro- duction it m;^y be, but our purpose is to state its position as related or compared to other things, and in order to do this we must by common consent select or create a certain thing as a standard and state that the thing to be located or valued is above or below the standard as the case may be. An Average Standard. It is urged by some that a line should be drawn striking an average of the values of all the leading articlts of commerce and that our records should refer to this and our units be based upon it, and there is no doubt that a fairly just measure could be thus obtained ; but we think that the difficulty of artificially fixing and regulating such a standard would be greater than the advantage gained, for the necessity of a circulating medium 8 A MEASURE OF VALUE. to be used as money and represent the unit quantity of average commodity would still remain, and unless redemption on de- mand was provided this form of currency would " fluctuate " in value under the stress of supply and demand the same as any other kind of money. A Commodity Standard, We think that the present method of selecting or creating a tangible commodity to which all other commodities shall re- fer for comparison will be found most s;itisfactory, for the reason that it would be produced by labor under free compe- tition and if the value rose, production would be stimulated and the rise checked ; if it fell, the cost of production would check producers who wer-c- poor!)- equipped and restore equi- librium. Stability Required. The standard however established should be as stable a** possible, and the diflicultv of cheating a just standard is not small ; in fiict it is impossible, and we must be content with a reasonable approach to exact jusiic-^. The difficulty grows out of the fact we have stated, that whatever we may create or select as our standard will itself be subject to a varying influence of supply and demand and will rise and fall in value. Slight and temporary changes in the value of the standard, like the element of friction in mechanics, may and in the na- ture of the case must be endured. Methods of Regulating the Standard. To regulate the standard and prevent a wide and perma- nent divergence from the average of values two methods are proposed : First, the artificial control of the supply by the creating authority ; and second, the automatic regulation of the supply by free competition in production under the gen- eral laws of trade. The first contemplates a comparatively costless creation like paper money produced by the creating authority as its judgment may dictate. We think this method quite possible, but not the best for reasons that will appear as we proceed. A MEASURE OF VALUE. 9 Labor not a SuitabSe Standard. It is contended b}' some that laborer "human toil" is the only true measure of value, and if the concrete result of toil is meant, such as a ton of iron or a yard of cloth, we will not dissent , but nothing is more certain than the impossibility of establishing a just standard directly from labor, such as a ■'day's work" or a "month's service". No two persons will give the same result from the same hours of service. Differences in capacity make it impossible, and differences in disposition as to industry make it unlikeh/, even if possible. If, however, we take a given amount of commodity of stand- ard perfection, such as a ton of iron, then he of the greater capacity and industry will justly reap a corresponding reward in its production, so that at the last analysis the commodity standard finally and justl)^ rests on labor. But again, one of the prime uses of a standard unit of value is to keep a record of debts to be paid in future, and if a debt was made payable twenty- five years from date, in, say " 1000 hours of service", the march of improvem.ent in skill and appliances would give to the creditor at the end of ihe time a larger return than was his due, for the " service " due him is the service of a period twenty-five years jiast, which was less valuable than is the service of the present. The creditor is entitled to tlie increment in tlie efficiency of his own efforts during that time, but not to that of his debtor. The commodity standard gives to the creditor his just due, and to both debtor and creditor the just reward of their efforts to improve the effectiveness of their labor, and also discriminates justly in favur of the able and industrious workman. Labor: Its Value and Debt=paying Power. We digress a little from the line of our argument at this point to expose a sophistry that has misled many per^ons in considering this question. It is affirmed that the wage^ of labor as stated in money, " are as high now as ever they were, and that the money earned will buy twice as /xiuch as formerly and therefore the wages of labor have been doubled", and ^O A MEASURE OF VA.LUE. without Stopping to investigate and test the first part of this questionable statement, but admitting for the sake of argument •that the whole statement is true, we call attention to the fact that although the value of labor as measured in its products may have increased twofold, its debt-paying power has not in- creased at all, and the debt-owning class has been able to reap all the benefits of the march of improvement at the expense of the laborer who, at the last analysis, must pay all the debts and interest charges, and with twice as much of the fruit of his toil as was contemplated in the contract. This of course is not true of debts of recent contraction, but as the great body of our debt is of several years' standing it is generally speaking true, and will be true entirely if the present condition continues. Units Established by Law. In every civilized country the various units of measure- ment are of necessity established by law, and with sole regard to the convenience of its own people. The unit of weight in this country is authoritatively fixed and called a " pound ", and is carefully defined as the force of gravity upon a certain quantity of metal under certain in- ternal and external conditions. The unit of value in this country is the American dollar. CHAPTER III. The American Dollar our Standard. The Demand for Dollars— The Supply of Dollars— The ProdurtiOH of Dollars— The Dollar the Stainlard— Valne and Price Contrast" ed— Per capita Circulation not a Test of Value— One Dollar a» Clood as Another— Discrimination Destroys Parity. The unit of value in this country was created and fixed ill 1792, and was called a " Dollar", Its value or purchasing power was fixed by the Law of Supply and Demand, as are all other values. The Demand for Dollars grows out of the fact that they are made by law a legal tender for all debts public and private in this country. Because of this quality tliey perform all the functions of money in the field of commerce and are in universal, imperative and per^ petual demand. The Supply of Dollars was left open to competitive production under the law which provided for the free and unlimited coinage of silver on private account at the rate of 371 j^ grains of pure silver to the dollar. The law distinctly stated that the dollar or unit should consist of 37 1 X grains of pure silver and has never been- chamed in this particular. It also provided for the free coin- age of gold into multiples of the dollar at the rate of 24^ grains of pure gold to the dollar. The amount of gold in a dollar has been changed twice since, and the free coinage of silver was suspended in 1873. The Production of Dollars, The production of one or the other of these commodities is the only way in which an individual has ever been permit- ted to manufacture money, and since 1873 it has only been possible by producing gold ; but the government from time to time has exercised its constitutional right to "coin money" \2 THE AMERlCAiN: DOIXAR of other substances such as nickel and copper, and to print it on paper. In 1861, $6o,ooo,<'00 of paper money was issued, which was a full legal tender redeemable in coin, and many millions more of partial legal tender quality has been issued since. Under the Constitution the States are restrained from making anything but gold and silver a legal tender, so that the only source of legal tender paper money is the general government. National Bank notes are issued under the super- vision of the general government and are receivable for public dues, but are not a legal tender as between individuals. It must be carefully noted that neither gold or silver or paper is or can be " money " until it is stamped by the gov- ernment into a "dollar" or some fraction or multiple of a dollar, and we repeat with all possible emphasis that the value of a dollar is due simply and only to the fact that the laws of this country give it the exclusive power to pay debts public and private in this country and thereby creates an imperative demand for it which is resisted by a more or less limited sup- ply, and hence it has value. If the supply of dollars is in- creased or diminished in the presence of a fixed demand by any means whatever, the value or purchasing power will fall or rise in response, and if the demand should vary in the pres- ence of a fixed supp'.y a like result would follow. The Dollar the Standard. Let us clearly understand then that it is the " dollar ", •considered as a manufactured commodity, and not the rav/ ma- terial of which it may be made that is our standard of value, and that the demand for " dollars " and not the demand for the materials of which they are made gives value to our ■money. We now have some $500,000,000 of silver dollars which are as valuable as our gold coins, and yet the silver in them is worth less than half as much as the dollar. The gold in our coins is of course worth as much as the coin because gold may be coined into money free of charge to the holder. The state- ment that our silver dollars are ' ' redeemable ' ' in gold dollars and are therefore as valuable is not true. The law states, and the official declarations of the Secretary of the Treasury also, OUR STANDARD. tj t'hat '■* silver dollars are standard coins and are not redeem- able". We will discuss the value of gold and silver bullion later. Value and Price Contrasted, It is necessary to make a broad distinction between the value and tile debt-paying power of a dollar or anj^thing else. The debt-paying power of a dollar is fixed by law and is en- tirely independent of the number in existence, the demand for them or for the material of which they are made, and it can- not change as long as the government that makes it is in force ; but its value or "purchasing power" will depend upon the number of dollars offeed in exchange as compared to the de- mand for them. The value of a coaimodity is its purchasing power as com- pared to all other commodities ; its "price" is its value as compared to money alone. The price of a commoditj'- is there- fore its debt-paying power, and it is quite clear that a com- modity might maintain its "value" and lose its debt-paying power, and vice versa. This is in fact always the case when the value of money changes. If the value of money rise, or its power to purchase commodities increase, the power of com- modities to pay debts must decrease in the same proportion ; and if the power of monej^ to purchase decreases the debt- pa3dng power of property must increase. This is the most important consideration in the money question and will be discussed later. Per Capita Circulation is not an index of the value of money in any sense, for it sim> ply shows the possible supply and does not indicate the de- mand. It is clear that as an individual may require more money at one time than at another, so the community may also. The per capita supply of horses in Chicago was prac- tically the same the day before the great fire as it was during the conflagration, and yet the demand for horses became so great that their value rose enormously in a single day, and the fact that the value of horses rose is proof conclusive that 14 THE AMERICAN DOLtAR there were too few horses in the city ; and if it appears that the value or purchasing power of a dollar is rising it is proof conclusive that there are too few dollars, even though at the same time it may be true that there are twice as many dollars per capita in circulation as formerly. One Doflar as Good as Another. So long as the service thcit dollars of different materials will perform for their owners is identical, their value will re- main the same ; but if for anj^ reason dollars of one kind be- come more desirable than those of another and the supply is not increased, they will become more valuable. The demand for dollars as we have seen is due entirely to the fact that the fiat of this government has made them the in>^truments with which debts may be paid in this country, just as postage stamp- are in demind because they are the in- struments with which postal -ervice may be secured. Men need "dollars" with which to pay debts, either prospective, of immediate contraction, as in effecting current exchanges or for deferred pavraents, £ind/or no other purpose . One mav wish to make a ring or other ornament of gold, but he does not need a " dollar " for that purpose ; a piece of gold that has never been in the mint will do as well, and if he has a "dollar" and decides to make a ring of it he will in sc doing destroy the dollar the moment be effaces the government stamp, and cannot compel bis creditor t ) receive it He may wish to make a silver spoon, but he does not need a " dollar "■ for that purpose ; other silver will do as well, and if be use a ddllar for the purpos^e he will destroy the dollar and cannot compel his creditor lo receive it, although the labor upon it may have trebled or quadrupled its cost. A man may wish to purchase goods or to pay a debt (settle a balance) in a foreign country, but be does not need "dollars" for this purpose. American dollars are not money outside of our own boundaries. It is irue, that onr dollars of different kinds (i aper as well as coin) are received at par with each other in limited quantities by our foreign neighbors, but it is only because they can be returned to us at par. Their debt- payi -g power in this country and this alone, gives them value OUR STANDARD. T5 in other countries. Tliere is no international money, nor can there be, for there is no international government to create it, and if one wishes to settle a balance in a fore'gn country h.: must purchase the money of that country with his pr perty or his American money. For all the purposes of money, therefore, any American dollar of full legal tender quality, is as good as any other American dollar of the same legal quality, and one would lie foolish to give more of his property for one than for the other If one wanted gold or silver for any purpose it might be more convenient to buy dollars made of either m^-tal than to seek for other bullion, but this demand would not be fir " dollars," but for the metal of which the dollars were made- This dis- tinction is important and should not be forgotten. Discrimination Destroys Parity. The first $60,000,000 of paper money issued during tlie war was full legal tender money and would do anything for its owner that any other money would do, and although the government was no more able to redeem it in coin on detnand than it was to redeem its other issues, it remained at par with •coin all through the war. The subsequent issues of paper money paid the soldiers and all other debts b tween individuals, but would not par "duties on imports or interest on the public debt. The.se obli- gations being payable only in coin or in demand notes of the iirst issue, a special and imperative demand for these forms of money was created which enabled their owners to demand a premium for them. This is the only reason for the premium on coin during the war, for there never was a moment during the war when there was a shadow of a doubt as to the .solvency of the North. The complete success of the Southern arms would not have ■affected it, for their secession would not have led to the repu-^ diation of a single dollar of our Jiational debt Discrimination alone was the cause of it and a frightful Injustice was by this means perpetrated upon the soldiers and every other citizen of this country which has never been popu- larly understood, but it is not 01 r purpose to discuss it here ; •it is simply mentioned to show how the law by discriminating in favor of one kind of dollars made them more valuable than another kind of dollars. CHAPTER IV. Substitutes. fiaM nnd Silver Coin Inssiflfieienl—SiibsJieEtfes for Dollars-Kanfo jVotes— Character wnd t'ost of Prodweiiiff Substitotes— Substitutew I'lirclialjle— Ntrt Enosi!K»» »<' I>oIlars— Enormeus Use of Substi' tutes— The I.Smit Of SmbHtitatJort— A Difference In Sab»titutes, Gold and Sliver Coin Snsofficietit. There has never been a time since the adoption of the •' dollar " as the standard of value in the United States when there has been enough of silver and gold presented foT coinage to suppi}' the people with a sufficient number of dollars with xvhich to conduct their business. If all the gold and silver that has been coined in all the mints in the world since the United States mint \v is established had come into and re- mained in this country to be coined into dollars we should noi: have had enough to meet the necessities of our people. All the nations of the world use silver and gold as money „ but if the money-using people of the world were confined tC' the use of such money to the exclusion of all other forms or substitutes, the demand v;ould be so great as to raise its value or purchasing power far above its present iX).iition. Substitutes for Dollars. It is not only true that the demand for dollars has been sufficient to keep paper dollars of full legal tender power ar. par with coin, but numerous "substitutes for dollars'" in various forms have been resorted to to supply the necessities of trade. Bank Notes. Treasury notes, checks, drafts, clearing house certificates and numerous other credit instruments pass from hand to hand, and while none of them are money in the true sense of the term but are rather promises to pay money, by performing the principal functions of money, they are in demand and as StTBSTrTUTES'. ly long as the faith of the local public in the solvency of those who utter them is maintained, they remain at par with real money and to the extent to which they are able to perform the work of money they relieve the demand for money and thus reduce its value. Horses were for many years the principal source of power for local transportation and locomoiion, and the value of horses was fixed by the available supply as meas- ured against the demand. Electricity and the bicycle have recently entered the field as substitutes for horses, performing some of the services for which horses were used as well or better than the hoise itself. This relieved the demand for horses and their value declined. A recent statement of Comp troller Eckles declares that 90 per cent, of our business trans- actions are effected with these substitutes for money and only 10 per cent, with actual money, and still the supply of money has been so short that its value or purchasing power has doubled in the last twent3"-fi\e years. Character and Cost of Producing Substitutes. The production of electric railways and bicycles involves the expenditure of labor and sacrifice, and while their intro- duction as a substitute for horses has worked a hardship to the owners and producers of horses labor has been largely em- ployed in thi.i UfW field, and great benefits have been derived by those engaged therein — benefits which equal or surpass the evils suffered by the horse producers, and the great body of the people who are engaged in neither of these pursuits are bentfited by the general advance of improvement and the vol- ume of business created. The production of Bank Notes and other substitutes for money costs practically nothing in labor and sacrifice. No one is employed in their manufacture and none are benefited by their issue except the few favored ones who are permitted to issue them as with a breath. These are able to collect in- terest upon most if not all of them while the general public is compelled to pay for their use. 1 S - HmBSTTTirFHS, Stebstitutcs Unr^iable.. No storm, epidemic, or other disturbance can drive tire •monetizin;; Silver in 1873— Remand for and Supply of Gold —The Present Vitlue of Silver — The Elfect of rree ^olnnse of Silver. Recapitulation. We shall now conclude that as far as the limited scope of this discussion will permit the following points have been demonstrated : First. Value wherever found is the result of the con- tending forces of supplj' and demand, and varies with the vari- ation of these forces. Second. That as a standard or measure of weight nuist have weight and be subject to the natural forces which pro- duce and govern weight, so also a standard or measure of value must have value and be subject to the varying forces of supply and demand which create and govern value. Third. That the American DoHat is the standard of value in this country, and not the material of which the dollar is made. Fourth. That the demand for dollars is due entirely to the fact that they are made by law the debt-paying instrument iji- this country and is not dependent upon the material oi whick they may be made. Fifth. ■ Thait the use of substitutes as far as they per- form the functions of dollars relieves the demand and tends to reduce their value. Sixth. That the value of a dollar is fixed by the num- ber of dollars in existence as compared to the demand for them, and not by the value of one or all of the materials of which they may be made. 22 THK VALUE OF GOLD AND SILVER. The Value of Gold. We now propose to show that the vaHie of gold is fixed by the valae of the money into which it may be freely coined, and that the contrary notio»that the value of money is fixed by the value of the gold of v;hich it is made is as false as it i& popular. The ralue of gold is fixed by the contention of supply and det?iand. The total production of gold m the world for the la&t 400 years was $8,781,858^700', and the total stock of gold money in the world in 1895 was $4,145,700,000. The total production of gold in the world since r873 is- given as $2,728,226,200, and during the same period the mints of the world coined into money $3,635 790,522, or $900,000,- 000 more than was mined. Some of this was of course old' coin recoined. The proportion of foreign recoinage is not given, but the United States corned $1,044, 130', 051, or nearly one-third of the entire amount in the same period, of which $45,354,422 was recoined ; so that if we allow the foreign re- coinage to have been four times as great Jn proportion, it seems safe to say that the entire production w-"S coined into money. Assuming then ascertain that at least /la.y of the supply goe& into money we see that the principal demand for gold is for the manufacture of money, and if this demand should cease entirely, or even considerably, the other demands could not sustain tke value. Nothirg is more certain than that the flow of any raw- material of which there is a limited supply will be into the most profiitable chan-nel, and its use in this channel will fix its- value and compel all other users either to substitute it with something cheaper or raise the value of their product, if the demand for it is imperative. The manufacture of money in civilized countries is now restricted to the single commodity, gold, and as the value of money has risen the va-lue of the raw material has risen, be- cause the supply has not been SAifficient to meet the demand for money and such othier imperative demands in; the arts- a& have per&iste(5. ■THE yA%Xm • OF ' G OTU'D . ATiD SILVER . 23 '^he Value of Silver Prior to I873. "Prior to 1S73 tlie same was true of -silver, for the same j'j:;cner'il relations of supply and . money use'e-xisted with Tefer- ence to silver. Th« total production of silver in t^he world to date is .... .. ^10,344,561,140 Coinage to date^ - - - $4,235,900,000 '-Since 1873, the world's proSucti'Oii has 'been $2,967,200,200 " ■" *' coinage " " $2,878,033,234- Parity under Free Golnage. Under tlie laws which permitted the free coiuage of botk ^old and silver at a fixed ratio in tlie principal money using countries, the demand for money being in excess of tfec supply of either metal and coKStituting the principal demand fur both, ■maintained them at a substantial parity because a short supply -of one and a tendency to rise in value would ^transfer tfoe entire .money demand from it to tlie other and prevent a separation. Foreign Exchange as Affecting Parity., Money., like everything eke, flows from one ceuEJtry to -nn 'ther in obedience to varying demand. Even gold itself is .alternating above and below par as indicated by the rate of exchange. If the demand for money is greater in Germany than m France, French coins of given weight as well as bul- lion, would flow to Germany to be coined into German coins of equal weight, and vice versa. If the demand for American dollars exceeded the demand for coins of equal weight in any foreign country, the coins and bullion of that country would flow to omr mints for coinage, 'dui not etkerwise. Different Coinage Raties as Affecting Parity. When the free coinage of silver and gold was first estab- lished in this country the ratio was fixed at 15 of silver to i of gold by weight, while the ratio in Europe was 151^ to i, and in the ebb and flow of coin and the corresponding coarse of bullion we got all the silver and the Europeans all the gold, for the obvious reason that when money was flowing to Europe 24 THE VALUE OF GOLD AND SILVER^ an American gold coin conld be converted into more European money than could a silver coin of equal value, and therefore gold went out instead of silver ; and wlien money was flowing to us, a foreign silver piece could be converted into more of our money than could a gold piece of equal vaJue, and there- fore silver cayne in instead of gold. This was our experience from 1792 to 1834, but in 1834 the weight of our gold coin was altered and the ratio changed from 15 to I to 16 to I, and the foreign ratio remaining at 15}^ to I the position was reversed and silver went out and gold came into this country. From 1834. to 1873, 8,031,238 standard silver dollars and $77,734,964.50 of full weight and full legal tender fractional pieces were coined in our mints, nearly all ot which was shipped abroad and recoined into European money. In 1853, the weight of our fractional coins was reduced and $59,047,406 of them were coined, most of which remained in this countiy because it did not pay to export them. About $[,000,000,000 of gold was coined in our mints during this period (62,000,000 in a single year), and silver was coined in correspondingly large quantities in foreign countries. The foreign coinage for each of these years is not given by our official reports, but the world's production of silver for the period was $2,000,000,000, more than half of which was coined in the French mint. (See table III). It is clear that with two different ratios established in countries where the demand for money was practically equal there would be room for a divergence of the values of the two metals to the extent of this difference plus the cost of trans- portation to and from the mints. For, since an American sil- ver dollar could be coined into 3 per cent, more of European money than could a gold dollar, the value of gold must rise more than 3 per cent, before the American demand would leave it for silver, or silver must fall more than 3 per cent, before the American demand would fall upon it ; but if the change should exceed 3 per cent, sufficiently to paj^ transportation and show a profit, the entire demand both European and American would leave the one and fall upon the other and jire- vent a further divergence. THE VAtUS OF GOtT) AND SILVER. 2^ Theory of Bimetalism. This is the theory of Bimetalism and the practical test of all time down to 1873, and especially this experience of the two ratios from i'<34 to 1873, confirms its correctness. With the mints open to the free coinage of both metals, at a fixed ratio, and the option with the debtor to pay in either, there can be no serious divergence unless the entire money demand can be fully met by one of the metals, or the de- mand in the arts is sufficient to absorb one of them ejitirely from the money use. A glance at the figures will show that there is no reason- able probability that the latter will ever occur on account of the enormous quantity of eacli already coined. The total out- put in iSy6 is given a-^ of gold $202,956,000, and of silver $213, 463, 70c, of which $59,251,640 gold and $38,580,184 sil- ver, or about 24 per cent, was used in the arts, and tlie stock of coin is over $4,000,00-), 000 of each, or enough to supply ihe world's present consumption in the arts for forty years if none were mined. That the world can ever be fully supplied with money from either of the metals alone is even more unlikely, for after having ab^•orbed all the gold that could possibly be diverted from the arts, and an equal quantity of silver, together with fabulous sums of paper money, the value of money in civilized countries has steadily risen for the last twenty-five 3'ears, not- withstanding the fact that substitutes for money in the shape of our modern credit instruments are used in 90 per cent, of our current exchanges, thus lessening the natural demand for money. Experience of Bimetalism. Under the conditions existing prior to 1873, when the principal mints of the world were open to the free coinage of both metals, the recorded experience of the world was as follows : VEKK.)!). ■ GOLD. SILVER. l792toiS).o. World's nnmia! product, ^ 10.000,000 526,000,000 1S40 to 1S73. " " " 111,861.000 48,000,000 25 THIS VALUE OF GOLD AND SILVER. varying from 2.6 times as much silver as gold to 2.3 times :*s much gold as silver, and yet the parity was maintained within the limits pointed out. Importance of this Country in the Past. The importance of the United States as contributing to that result is significant, and we wish to emphasize; it here, for during the period from 184'© to 1873, xvhen the production -of gold was enormously in excess of any recorded precedent and frequently four times as great as that of silver, the United States had '^'overvalued gold^" or bad established a higher mint rate for it than that of Europe, aud the burden of xijain- taining its value fell first upon this country, for while the annual output increased from $33,393,000 to $132,513,000, or nearly fourfold in four years, and Germany, Austria and Bel- gium, at the behest of the money lenders, completely, and Holland and Portugal, partially demonetized it, the United States absorbed the entire output of the mines, in California and elsewhere in this country from 1847 to ■1865, and imported some millioas from abroad, thus maintaining its value within tdie li'mits of the difieTenoe in -coinage r-atio plus the cost of traTtsportation. Only a few times during the entire period did the value of silver rise to a point thai would check its flow to the European mints, and then o^ly for brief periods. The United States coined $62,6i4.,49-2 of gold in r85i., $56,846,187 in 1852, and $83,395,530 in 1861, while in 1895, (forty years later), we coined but $59,616,357, and in 1896 but $47,053,060. importance of this Country Now. 'This was an exhibition of the demand for money in the ^United States as compared to that of the world, and if any ' have doubts as to the ability of this cottEtry to remonetize silver and maintain its parity at 16 to i with gold, let him. ■remember this experience in which our country was but an infant (23,000,000) among «the aations, and the disproportion ■ in the production of the two metals infinitely greater than it r is now, and greater than it is ever likely to be again, and per- haps his appreciation of the present importance of this country in. determining the financial policies of the world will expand THE VALUE OF GOLD AND SILVER. 27 to a realization of the fact that with 75,000,0. o of people whose appreication of the value of money is second to none on earth, and with our relative numerical and financial import- ance many times as great as in the former struj^gle, we can dic- tate the gold price of our silver product to the world, as we then dictated the silver price of our gold product. The United States was then one of the greatest and is now the greatest money using country in the world, and when in 1873 we Ceased the coinage of standard silver money and the coinage of "Trade Dollars" was substituted, the pace was set for the world and in a few years all the civilized nations had followed suit. No Reason for Demonetizing Silver in 1873. No intelligent reason has ever been given for this change, but lest any suppose that a serious change in the relative sup- ply of silver or gold hnd occurred to induce it, we append the following table showing he world's production by years : GOLD. SILVER, ('•"lining Value. Commercial Value. 1872 — 1873 — 1874- 1875- $55,663,000 81,864,000 81,864,000 81,800,000 71,000,000 80,000,000 87,600,000 81,040,700 94,882,200 96,172,600 ,173,000 83,958,000 83,706,000 82,120,800 70,674,000 77,578,000 78,322,600 75,278,600 84,540,000 83.532,700 1870— $129,614,000 1871— 115,577,00. 115.577.000 96,200,000 90 750,000 97,500,000 1876 103,700,000 1877- 113,947,000 1878 119,092,000 1879 108,778,800 No change either in quantity or value is here disclosed that could warrant such legislation, but it was done and the entire demand of the civilized world for money fell upon and was restricted to gold. The production of gold had fallen from $123,000,000 in 1863 to $96,ooo,oo<3 in 1873, while the per capita demand for money had increased with the march of civil- ization and the inevitable result was a rise in the value of money. An enormous increase in the use of substitutes and an abnormal inflation of credits has served to check this rise 28 THE VALUE OF GOLD "AXfj BiLVnK. and modify its consequences, but the limit of the safe use of crediis and substitutes has been reached and long since passed and v-till the value of money has risen lo > per cent. Demand fer and Supply of Gold, The demand for gold in the moneys channel lias been in •excess of the supply and since gold may be converted into money without cost its value has risen with the value of money. The production of gold in the twenty > ears from 1853 to 1873 was $2,559,253,0':o., or $4.10,495,600 ni&Kc than was pro daced in the twenty years following from 1873 ^o 1893 (J>2,- 168,757,400), showing ikdecfeased supply meeting an increased demand, so that an increased value was inevitable. In short, its value has become so great that it can be, and is now being mined in the most inhospitable and inaccessible regions of the world and in nearby districts, from ores so poor that notwith- standing the enormous im^provements in methods they could not be worked with profit zX its normal value. Under the stimulus of this abnormal demand the production rose in 1891-2 to the highest figure reached in the fifties, and is now far in excess of it and still the value is rising. The Present Value of Silver like that of gold is fixed by the value o{ the money iuto which "it may be freely coined. The production of silver since 1873 >lias been normal and has increased in about the same propor- tion as that of gold. The demand for it has ccnsisttd of that used in the arts, and for the //w//fcmand Unlimited — Oar Debts Abroad— Our Present Needs- What of the Future? — Hon. A. J. Salfonr on Standards — Trusts and Contblnes born of Falling Prices— The Present In-qulry, The test question in the minds of those who think it Tiecessary that gold should not go to a premium, is as to whether the United States can furnish a demand for money that will absorb the world's surplus product of silver and still ■maintain the value of our money at par with the jjold money ■of Europe. The Arithmetic of Facts •assures us t'hat we can and we now review it as a conclusion to this part of our argument. Production of Silver. The anRual product of silver in the world has remained iibout the same for the last four years. For the last two years it has been as fellows : 1895. 1896. World's product, . $216,292,500 $2:3,463,700 United States, . . . 72,051,000 76,069,000 Mexico, .... 60,719,000 59 017,600 Bolivia, .... 28,444,400 ^9.393,900 Chile, .... 6,505,900 6,505,900 Peru, 4,089,500 2,914,300 Columbia, . , . 2,182,400 2,182,400 Central American States, . 2,000,000 2,000,000 North and South America, . 175,992,200 168,' 83,175 From this we learn that four-fifths of the entire product >comesfrom this hemisphere, three-fifths from the United States and Mexico, and one-third of it from the United States alone. 3^ TUB TEST gaESTiojr. The total production in the United States for the last fouf years, 1=93-94-95 and '96 was 1289,696,000 Of this sum we coined $ 46,791,202 Exported . . . 138.924,761 Consumed in arts . . 103,980,037 $289,696,000 The world's production in the same period was $854,000,000 Of this the world Coined, $526,000,000 Recoined, 70,000,000 Net coinage, *Used in the Arts, United States, $103,000,000 $456,000,000 India, Russia, ♦ France, England, Italy, Other Nations, 140,000,000 40,000,000 25,000,000 20,000,000 12,000,000 20,000,000 $360,000,000 $Si6,ooo,ooo To be accounied for $38,000,000 Statistics as to China are not at hand, but judging by the exports of England to China it is probable that sluf imported as much as $50,000,000 more than she coined in the period, and if so, it shows that the entire product has been consumed- Present Product all Consumed. The latest report of the director of the mint does not show that any considerable stock of silver bullion has accumu- lated anywhere in the world, and we therefore conclude that the experience of the last four years, in which the production of silver has been greater, and its opportunity for free conver sion into money less, than in any similar period of the world's history, has demonstrated that the demand for it is persistent and to a degree imperative. *No reliable statistics are obtainable as to the amount of silver consumed in the arts in foreign countries and our own are not coinplete, but the net i ^ipnrts are given and tlie coinage for each year, and the amoiint above given is the difference between ttie net inrtpons and the coinage. THE TEST QUESTION, 33 Increased Production. Under an increased value it is certain that some of these demands would be decreased, just how much no one carf tell, but we will assume as a basis for our calculation that under a value double that of the present only one-half of this demand would persist, and that the remainder ($100,000,000) of the present production would come to the United States mint. Under an increased value it is certain that the production would be stimulated, but to what extent no one can say ; but the greatest recorded increase in the production of gold under a similar stimulus was 50 per cent, in five years. We think it altogether probable that this ratio would be equaled by sil- ver, and so we assume that the production would rise to $300,- 000,000 per year, and that $200,000,000 of it would come to our mints. ProbabJe Supply of Silver, We consider this the largest quantit}'- that could ever come in a single year, for as the volume of money was in- creased its value would be decreased and ultimately, to the present bullion value of silver (cost of production), at which time its production would have shrunk to its present propor- tions. The coined silver of Europe could not flow to us, for it is now worth 3 percent, more in gold than it would be then, nor could the manufactured silver come to the mint for it is also' more valuable than our coin , so that with as much certainty as we can predict anything with regard to either gold or sil- ver, we can say that the supply cannot he expected to exceed $200,000,000 per year, and may not reach half that sura. This would be eight times as much as was coined under the Bland Act. The quantity of Mexican or Indian money that can be spared from their present circulation would be comparatively small, but large or small it rou/d come but once, and then only in exchange for our products. With this estimate of the possible suppl)^ of silver we now consider 314 THE TEST QUESTIO^f. The Demand for Money which is to absorb the silver product, and it may be sumrae(5 "up as follows : iBy the last statement of the Treasury department (July 31, 1897), we have outstanding $346,000,000 of greenbacks and $230,000,000 of National Bank notes. The greenbacks are objected to by our gold standard friends ostensibly because they are redeemable in gold and cannot be maintained at par without forcing the governiaent to borrow gold with which to redeem them on demand. We think, however, that the real reasons why the smaU percentage of the gold men who really understand the ques- tion want them retired are, First, that they are a legal tender for all debts between individuals and cannot be discriminated! against by gold payment clauses in private contracts ,' second, that they are fwf redeemable in gold, but in cotn at the option of the government ; and third, that their retirement with bonds will furnish a permanent investment for the banks and make room for more bank notes which will be under the con- trol of the banks. We with other bimetalists object to the bank notes as being a special privilege to a favored class, and therefore lei us retire both of these objectionable forms of substitutes and create an immediate and imperative demand for silver which will restore its parity whh. gold. W>e can thus make room for $576,000,000 of silver without affecting the present vo'urae of our currency or dts purchasing power in the least- This demand can be made immediate and imperative to the extent of the cash in the treasury ($250,000.,- 000) and the volume of bank notes ($230,000,000), and this being three times as great as the possible immediate supply the value of silver will immediately rise to a par with gold at i6 to I. Again, we have been told that under free coinage of silver our gold would immediately leave us. This is, of course, a mere conjecture without a single fact or argument to sustain it, but if it does leave us altogether or in part the volume of our money would be decreased and its value increased in pro- portion, so that gold would /a// beUnv ^ar. (This is amon|^ THE f tST QUESTION'. 3-5 tile most foolisli of the fool statements of the gold standardT advocates). If we admit however that our gold will leave ns and flow to Europe, which is possible in the course of ex- change, it would make room for $700,000,000 of silver with- out increasing our stock of money at all or decreasing its value in the least. On the contrary, if our $700,000,000, to- gether with the annual output, ($240,000,000) of gold should flow to Europe it would inevitably increase the supply and decrease the value of European money, and our money would go to a premium unless our stock was proportionately in- creased. It is therefore probable that more than $1,000,000.- 000 of silver would be required to replace the gold and keep our money from rising above that of Europe. Again. The Comptroller of the Currency reports thai our people have on deposit in our banks and savings institu- tions $5,000,000,000, and the law requires certain of the Na- tional banks to hold 25 per cent, of their deposits in reserve. If all the banks were required to do the same, and common prudence would seem to irtdicate that they should be, $1,250,- 000,000 would be thus inipounded as against $850,000,000 which is now so held, makirlg room for $400,000,000 without increasing the circulation and simply furnishing a safe basis for our present bank deposits. The Immediate Demand for Silver. From the foregoing it is clear that $2,0 0,000,000 of sil- ver can be absorbed without afi"ecting the value of our money as measured in gold, but it is also clear that the predicted flow of $700,000,000 of gold to Europe and its replacement with that amount of silver in this country would add that much to the world's stock and tend t'» a general increase of prices. The parity of the metals once restored it is likely that European countries would reopen their mints to silver, but presuming that they do not do so, and that the burden of maintaining the parity of silver will rest entirely up m the United States, we now consider The Current Demand for Money in this country as compared to that of Europe, for it is to be remembered that while we must absorb all the silver, Eui ope 36 THE TEST QUESTIOISr. must absorb all the ^old, and as the production of tlie twe metals is now about equal the difScuhy is not so great as it would seem, and not nearly as g neat as tfeat of maintaining tflie parity of gold in the fifties, when there was n'ere than twice as tauch gold as silver produced and our comparative importance far less than now. Demand Unlimited. What is the demand for money in the United States ? It comes from seventy millions of the most industrious, enter-* rprising, wealth-producing and comfort-consuming people on the earth, e^ual in number and double in consuming power to -England, Ireland, Scotland, Wales, Spain, Belgium, Holland, ^Portugal and Switzerland combined. This vast army of work- ers inhabit a territory that stretches from the Atlantic to the -Pacific Ocean, and includes three million square miles of the most productive land in the world. In point of development the vast resources of this country are practically untouched, although of the 1,400,000,000 tons of freight per 100 miles, we carry 800,000,000, or 57 percent., and notwithstanding the loss we have sustained through the gold standard, our tetal wealth is $64,00 ,ooo,ooe, or 36 per cent, greater than that of Great Britain. Our manufactures in 188S were $7,200,000,000, or 75 per cent, greater than those of the United Kingdom. Gur agricultural products e.re $3,800,000,000 more thaE double those of Great Britain, and $500,000,000 more than those of Russia (including Poland), but time would fail us t© write further in this line. Suffice it to say that -this is the mightiest nation that the v.'crld has ever seen, full of inherent power and untold possibilities, and yet slie seems to be gradu- ally losing headway. Like a mightj^ steamer in mid-ocean, with every ether equipment to perfection and a scant supply of oil, with smoking boxes and abraded bearings, the machinery .groans and labors as if in .the throes ef death. She gradually loses way and finally steps for want of oil. So this great na- tion in the forefront of the race of civilization, freighted with lhe{]dear«st hopes of the common people ^f the world., backed THE TEST QUESTION. 37 'by Tesources "beyond computation and invited forward by in- comparable opportunities, is hampered and restrained by lack of money. Witk brains and labor to spare, with enterprise and intelligence and uRtold resources to develop, we are idle for lack of naoney. With an area capable of sustaining the population of the •globe, a form of governrReiit that should command the love and patri<;^ic service of every man, and a -traditiotial reputa- tion as the land v/here the oppressed of every -clime u)ighi find a refuge, we find otarselves so hanapered and depressed that ix is seriotisly .proposed lore-strict iinani grata on .and " Shut the gates of mercy on mankind ". For years we have borrowed money from abroad for every rising Keed in our development until our indebtedness is appal- ling, ard when we propose to coin the product of our owm .'iabor into the cons-atutional money of the land, we are met with the as'-ertion that we will " over produce " it and impair our credit so that we can borrow ko more. It is strange that men do not see that when we shall sup- ply our own demand by employing out own labor in manufac- turing our own money, we shall not need to borrow, but can "begin 10 pay what we already owe abroad, But let us see. We need money — First, to lubricate the naachinery of 'trade, and to leosen the abraded bearings of our industi%5/. We are said to have a circulation, when it is not hoarded in banks and stockiEigs, of $r,6o©,ooo,©OG at the highest estimate, and yet 9© per cent, of our business as done with bank and other credits, le percent, of "oil" and 9© per cent, of '"'wind", ■with which to lubricate our machinery. What money we have lias been borrowed from England three times over, and we owe 'iier now $5,000,000,000, Every tinjie we get stuck for " oil " we borrow from England until we are now in a position where (with normal crop conditions abroad) we cannot pay our inter- .est without borrowing money to do it with. <5ur Debt Abroado The steady and persistent growth of our debt abroad is ■ene of the most serious facts with which we have to deal. We Slave not space to go into detail to show how our debt abroad 38 THE I'ESr QUESTION. began and reached its present magnitude. Sufficient to say that in i860 it was insignificant, and we were carrying 65.2 per cent, of our foreign commerce in American bottoms. In 1869 American shipping had fallen to 27.5 per cent., and had netted an annual loss of $25,000,00-5 in freights to us. This and other items together with the balance of trade against us had created a debt of $1,500,000,000 in 1889. The fall in prices since 1873 has served to decrease the debt paying powar of our balances of merchandise, and the debt has steadily grown until it now amounts to $5,000,000,000. To see how, take the year 1894, which though Mr Cleveland and the Wil- son bill were in full force, showed a larger balance in our favor of merchandise than any year since 1881. DR. CR. 5200,000,000 1894. United States. To interest on debt. To excess of freights on Eng- lish ships, To excess of bills drawn by American travelers abroad. By net exports, merchandise, By net exports, gold. By net exports, silver, Total. Net balance against us, 1895. United States. To interest on debt. To excess for foreign freight, To excess of bills by travelers in Europe, By net exports merchandi>e. By net export gold, By net export silver, Total, Balance against us. 31,400,000 75,000,000 $306,400,000 DR. $200,000,000 39,760,000 75,000,000 $237,145,950 4,528,942 37,164,715 $278,837,005 27,600,395 $306,400,000 CR. 75,568,200 31,948,449 27,037,901 114,760,000 $434,590,550 180.169,450 $314,760,000 Thus we see that in two years we have gone in debt to Europe to the extent of $207,769,845, or over $rco,obo,ooo p'er THE TEST QUESTION'. 39 year, to "balance which interest-bearing obligations of one kind •or another have been sold in Europe. We need therefore 5 £00,000,000 per year with which to pay our interest charges to Europe before any can be had for the development of our own resources. If we add to this an equal sum per year to apply on the principal we can see a demand that will absorb ;all the silver we can hope to get during the next century. Our Present Needs, Again. If the last generation found a legitimate use for f the wealth-producing enterprisesJ which it was used to capitalize and develop is proof that they ■did, what shall we .sa}'- of the present and future needs of our people? Will they be less? Impossible:! Will they be greater ? Undoubtedly, and many fold. There i>*. no dis-ent from this conclusion, for tven tiie most radical goldjtes adtjiit it in their strenuous coatention for "^strengthened credit." Hon Thomas B. Reed, in all his public utterances during the last campaign^ insisted that we shoiild " maintain otir credit " so as to " invite foreign capital to come to us for iijvestment," and we submit it to the candid judgment of patriotic Ameri^ ■cans if these facts do not prove that otjr demand for money is in excess of the possible supply from silver. And also ask them to consider whether it would not have been better /or us in the past to J^ave employed our army of idle and hopeless working people 'm p reducing- this money from our silver mines, than to have followed the advice of Mr. Reed and borrowed tt from abroad ? This ^' home industry " would have employed every idle man in the United States at remunerative wages, without ad ding one iota t© the stock of manufactured goods competing in the markets of our country or the world. The money we borrowed would have remained in EtjrQpe to maintain the price of commodities there, the debts of the world would have ibeen reduced, the "tramp" and the '-anarchist" would iiave been unknown in this fair land, and the star of hope would have shed its blessed lustre in the homes and hearts of $he poor. The past is gose. 40 THE TEST OUES'TIO]??. But What of the Future ? That our money must increase in quantity, as we increase our store of property, or a fall in price, or debt-paying power ensue, is as certain as that God reigns or that $ Hanna Secured a $eat in the Senate. Money is one of the modern agencies in the production of property or commodity wealth. If one desires to build a house or manufacture any other product he must, in the advanced stage of our civilization where the division of labor is so great, take mcntey, which is imperishable and of fixed debt- paying power, and exchange it for a commodity which is not only perishable, but certain to vary in debt-paying power with the rise and fall of the value of money.. If, therefore, the supply of money is not increased so as to prevent its rise in value, no man can safety undertake to produce or improve property. Speculative enterprises, which depend upon spo- radic development from local causes, alone can thrive under such conditions. Hon. A. J. Balfour on Standards, The Right Honorable A. .J. Balfour, of Manchester, Eng- land, said in a speech on October 27, 1892 : "Of all conceivable S) stems of currency, that system is ass\iredly the wor.-t, which gives you a standard steadily ap- preciating, and which by that very fact throws a burden upon every man of enterprise, upon every man who desires to pro- mote the agricultural or industrial resources of the country, and benefits no human being whatever, but the owner of fixed debts in gold/' No truer words were ever spoken, and in the new ceatury that is about to dawn the world will s^o forward in the produc- tion and improvement of property, just in proportion to the speed with which we increase our stock of money. The im- proved meihods of production, communication and transpor- tation, which are but the concrete rt-sults of increased skill and intelligence, have multiplied our productive capacity manj' fold, and unless the production of money is proportionally multiplied some of our people must of necessit}- remain idle TIIK TEST QUESTION. 4! all tlie time, or all of us a part of the time, or else a continued loss of the debt-p?:ying- p:)\ver of property and a constant .o-am in the power and burden of debts result. Trusts and Combines born of Falling Prices. The limitation of the production of money to gold in the last twenty-five years has resulted in a short supply followed by its rise in value, and a corresponding loss in the price or debt-paying power of property, to resist which " trusts " and combinations of capital invested in productive enterprises have been formed, and employers, pinched by the increasing bur- dens of fallinjj prices have reduced or endeavored to reduce wages, to resist which Labor Unions and Federations of Workmen have been formed, strikes, lockouts, riots and blood- shed have ensued from the clash of contending efforts, all aiming at the last analysis to ma/nfavi prices by restricting produciioji, tJirous;h voluntary or enforced idleness. The God-given and constitutionally guaranteed rights of men to buy and sell in the most advantageous markets have been denied by law to merchants and producers and the in- dustrious and ambitious laborer, with the brawn and muscle of youth as the only means of providing for his helpless and decrepit age, is restrained from using it by the threats of his fellows and compelled to see it peri'^h, with his hopes as ihe hours pass by, and all in well-meant but fruitless endeavors to maintain prices while adjusting ourselves to the shori supply of money from the single gold source. The Present Inquiry. Shall the selfish outcry of the owners of '' fixed debts in gold " deter us from applj-ing the reujedy to the root of the evil ? Shall the slavish fear of " depreci.iting " their money induce us to continue the suicidal policy of destroying the debt-paying power of all other property, together with the hopes and aspirations of our people ? We answer No ! a thous- and times NO ! and as long as the God of heaven gives us breath we will, protest against the present system. CHAPTER VII. The Effect of Falling Prices. ■.tJovernmeiift vs. Private Rosr«lati<»«»— Senator Hoar and Shylock— The Owners of fixed debts In Cioltl— The Ag'ents of these gold Own- ers— Officials who are hired— European Cereal Oonsnntcrs— Europe V*. United States— Our ]Loss their Oaiu— Eoss to Farmers— Wheat and Silver — Prices liave not fallen in Silver-using: Countries — Mexican vs. American — Disadvantage of Americans — England's use of American silver in India— Who wants Bimetalism ?— Stand- ard of Prosperity. Government vs. Private Regulation. As long as the " Dollar" is maintained as the standard •unit of value, the government which created it and is author- ized by the Constitution to "regulate the value thereof" is in a position to protect itself and its citizens from extortion. To correct a rising tendency, free coinage may be extended or paper money issued, while a fall in the value of money beyond an equitable average may be checked by withdrawing paper substitutes or restricting the coinage of commodity money. For the unequivocal assertion and strict maintenance of this financial policy we strenuously contend, for if it be con- ceded that the commodity gold is the standard and that all moaey shall refer to gold for valuation, then will the regula- tion of the value of money pass into the hands of those who own the gold, and by a concerted withholding of gold from circulation they can enhance its value, and with it the value of all our money, and correspondingly decrease the value of all other property. Having thus wrecked unfortunate debtors and absorbed their property at ruinous prices they can loosen the strings, send out their gold, reduce its value, boom the price of property and sell at the advanced valuation. Having unloaded their holdings they can begin again the hoarding process, withdraw their gold, reduce prices and shear the world ad libitum ad infinihim. Senator Hoar and Shylock. In a discussion of this que'^tion in the U. S. Senate, on January 25th, 1898, Senator Hoar, of Massachusetts, compared THE EFFFCT OF PALLING PRICES. ^3 those who were contending for the rights of the debtor under- existing law, to Shylock, dt-iuanding his " pound of flesh " because it was " nominated in the bond." Mr. Teller, of Colorado, who was speaking (on the Teller resolution which was an affirmation of the rii.,'hts of the gor- ernment) declined to belittle the discussion by following Mr. Ploar into such a comparison, but we shall insist that if the figure is used at all the celebrated " Fourth Act " shall be set with the characteis rightly placed. The United vStates government in the role of " Portia ", the righteous judge, who is to determine the issue as berween " Antonio ", the hapless debtor, who represents the producing classes whose blistered hands and* quivering flesh must pay the bond with all its increment and interest, and " Shylock ", the money lender, who, with merciless purpose, demands not justice, but the consummation of a scheme which in its execu- tion will destroy the merchant's life. We shall not attribute the malice of Shylock to the modern creditor, but rather thank God that the metaphor fails in this as in some other particu- lars ; but we shall insist that the consummation of the gold standard scheme as it is now boldly advocated by its promoters- would not only be a travesty upoa justice, but would invoke increased intensity in the struggle to maintain prices which has already resulted in the loss of life, and which must, event- ually, result in conflicts beside which the Pittsburg and Chicago riots, to sa)' nothing of the deadly work of Martin's deputies at Wilkesbarre, would pale into insignificance. We expect, nay, we demand that " Portia " shall re nd-. r the judgment of "a Daniel," giving to the creditor the ut- most farthing of his bond, not only in the letter but in the spirit of the law. But since in the case before us there is no forfeiture, we shall expect a decision that will say to the mis taken advocates of gold monometalism, " No, gentlemen, j^z^ s/ia// not bind the proiectmg hand of government, nor endanger the peace of the nation by the consummation of your sense- less scheme. You shall have your ' pound of flesh,' but ' not one drop of christian blood ' shall flow to gratify the avarice of one, or condone the ignorance of another of thoic who would pursue this suit." ^^ THE EFFECT OF FALI.TNG PKICES. The merchant then, as we are now, was willing to pay "three times the value of the bond," and it had been well for Shylock to have taken the ducats, and it vv'ill be wiser for those who hold our bonds to-day to be content with the dollar named in the contract than to invite a discussion of tlie meth- ods by which a bond, purchased with paper money worth only half as much as gold, when gold was worth only half as much as now, has come to be payable in money worth four times as much as the original cost in prodacts. When we shall b ing " a 3'ouiig and learned doctor to our courts," it may go hard with Shylock.. The Owners of Fixed Debts in Gold. When we consider that the Rothchilds alone own one- 'third and that less than fifty men own two- thirds of the free gold in the w^orld, it is easy to see how this fleecing of the world may be done, and to locate the prime movers in the gold standard agitation. The farther thought that the world' s pro duction of gold above tha' de7nanded in the arts is 7iot 7norc thapi sufficient to pay the annual interest upon the debts owned by these people, should reveal the gravity of the situation to every patriot. The Agents of these gold Owners in every civilized country and a horde of hangers on, who thrive by assisting these men to despoil and en-^lave the race., are also interested in the success of their pL^ns, and also certain Officials who are hired to serve their purposes in legislating and interpreting the law in their interest. After these the debt-owning and money-lending classes generally »ee in the appreciation of money an added power over their fellows, and unless restrained by humanitarian or ■patriotic motives ally themselves to the gold standard forces. THE EFFECT OF FALLING PRICES. 45 European Cereal Consumers a'Ho find in the appreciation of gold a decided advantage. The fall in the price of commodities is a loss to them on their exports, bnt since they import more than they export the net result is a general gain. Europe vs. United States. The balance of trade in merchandise is uniformly in favor of this country ; that is, we have since 1-8S0 exported an an- nual average of $100,000,000 worth of merchandise more than we have imported, and it is clear that if the general range of prices Vvcre twice as high as at present (about v;h it they should be as to farm prv)dact>} the money value of this balance would be $200,000,000 instead of ^.100,000,000. If we add to this the annual net export of silver which during the last four years has bten worth over $30,000,000, and at normal value would have been worth $60,000,000, we see that the sum of ^260,000,000 would have stood to oar credit yearly., almost if not quite enough to pay our interest charges and leave a com- forts b'e balance. Our Loss their Gain. The loss to the country at large on its export trade by virtue of appreciated money has bten enormous, but since the farmers furnish about 75 per cent, of all our exports the loss falls most heavily upon them. There are some notable exceptions to the general slump in prices, some things seem to have had peculiar power to re- •sist the downward trend. Wages are said to have maintained their average rate, and while we are loth to dispute official reports, we find it hard to believe this statement. It is contrary to our observa- tion and is certainly not true of the men and women workers that we personally knov/ ; but if for the sake of argument we admit it, we have already observed that the debt-paying power of the laborer has not increased with his increased skill ; and his hoarded savings, if in money, are only half what they would have been had his wages increased in money as they 46 THE EFTFCT OF FALLING PRiCtS. have in products, and if invested in a home or other property, are only worth half the money he has paid for them. Organized labor, no <'oubt, has also been potent to resist the reductions in wages. Loss to Farmers. The farmers contribuied to the exports of merchandise, as follows : Pork, hams, lard, etc., in 1873, . . $54,000,000 Pork, hams, lard, etc., in 1895, .* , . 90,000,000 At 1S73 prices this would have amounted to 87,000,000 Net gain in one year, .... Cotton export in 1873, , . . . Cotton export in 1895, This would have been worth at 1873 prices, Net loss in one year, .... Flour exported in 1S73, Flour exported in 1893, This would have been worth at 1873 prices, Net loss in one year, .... Wheat export in 1873, .... Wheat export in 1895, This would have been worth at 1873 prices, Net loss in one year, .... Exports 10 principal products, 1873, Exports 10 principal products, 1895, This would have been worth at 1873 prices, $3,000,000 $202,000,000 205, CK 0,000 591,000 000 $386,000,000 $ 17,000,000 52,000, 00 103,0 '0,000 $51,000,000 $46,000,000 44,000,000 89,000,000 $45,000,000 $372,000,000 453,000,000 932,000,000 $479,000,000 Net loss in one year, .... The experience in 1896 was not materially different, and with the exception of wheat 1897 was even worse. Wheat and Silver. Much emphasis has been laid upon the fact that silver- using countries are in competition with us as exporters of THE EFFECT OF FALLING PRICES. 47 wheat and the peculiar advantage given them by the rise in the value of gold over silver. And we here restate our argu- ment with the facts upon which it was based for the purpose of showing that the recent rise in the value of wheat is a proof of its carrectness, rather than a refutation of it, as some affect to believe. Prices have not Fallen in Silver-using Countries. The debt-paj'ing power of their property and products is the same or a trifle greater than in 1873. In this and other gold-using countries they have fallen to one-half their former range. (See Table I) Let us note the effect of this diver- gence by a familiar illustration. Mexican vs. American. Two men in 1875 bought farms exacfy alike in every par- ticular, one on the north and the other on the south bank of the Rio Grande river. Each invested $10,000, one in Mexican and the other in United States coin, which at that time were of equal value. Each borrowed 1^5.000 with which to stock and operate his farm, giving 6 per cent, mortgages as security. Now let us suppose every condition of climate and soil as well as of ability and industry to have been exactly the same with these two men, and what has been the result of their respect- ive endeavors ? The Mexican has found that when he invested his money in seed and machinery to put in a crop one year, the same amount of crop next year would return him the money invested, and that his interest charges ($900) and taxes could be paid with the same amount of crop each year. The American has found that with every succeeding year a larger amount of crop has been required to pay his interest, taxes and other fixed charges, until in 1896 twice as much is required from him as from his Mexican neighbor. If the crop is wheat, the Mexican receives $1.00 per bushel and can pay his interest charge with 900 bushels, while the American gets but 50 cents and must part with 1800 bushels to pay his interest. (As we write wheat is $1.06 in Chicago and it is $2.25 in Mexico). 4^ THE EFFECT OF FALLING PRICES. The Disadvantage of the American is seen at once in competition with the Mexican. Our conten- tion is that the Mexican or other silver-using producer of wheat gets as much for his product as formerly, and since his cost of production is not increased in any way he can afford to sell his wheat at the old price and make a fair profit. Mexico does not produce wheat for export, but India, which is a silver using country does, and can afford to :^ell it at $i.oo per bushel (in their silver coin) The United States and Mexico rsre the silver-producing countries of the world, and as long as Europe can buy enough of silver from us for 50 cents. (gold) to mike $1.0 of Indian coin, with which she can buy a bushel of wheat, .>^he will never give us more than 50 cents (gold) fir a busht-l of wheat. As long as we raise a surplus of wheat the foreign buyer will fix our price , but when there is no wheat /or sale in silver coimtries he cannot use silver to depress our pi ices but must supply his imperative demand in the open market and the price of silver is not a controlling factor. This has been the con- dition for the last 3'ear. The failure of the wheat crop in India has served to show us only more clearly what the effect of cheap silver is on our wheat prices. England's use of American silver in India. A glance at Table No. II is instructive, for it shows the movement of silver to have been as follows : IMPORTS AND EXPORTS OF SILVER PER YEAR, SINCE 1880. Net exports from United States and Mexic9. Grois imports into England. Gross exports from England. Net imports into India. $49,000,000 I $47,000,000 I $46,000,000 I $41,000,000 In view of this remarkable exhibit (of heads I win and tails you lose) the reason for English adherence to the gold standard is apparent, but these figures show but a tithe of the evil, for they only exhibit the means used 1o beat dov/n the gold price and debt-paying power of all our products. THE EFFECT OF FALLING PRICES. 49 Who wants Bimetalism ? The contention for the restoraiion of silver to free coinage comes not so much from the producers of silver, although they are to be immediately benefited by it, but from the pro- ducers of all forms of commodity wealth who have come to realize that money, the debt-paying instrument, is a necessary factor in the present methods of producing property. In the present condition of diversified and divided labor no one person can build a modern house or construct a fabric, and he who would produce either must use money to hire workmen and purchase his materials, so that the completed structure neces- sarily becomes his debtor in a certain sum of money. Under the operation of the gold standard the property gradually but surely loses its money value, and becomes insolvent, or unable to pay its debt to the producer. This leads to a general loss of confidence in the solvency of property and sensible men must refrain from producing it. The supply of money from silver and gold will be greater than from gold alone, and will tend to decrease its value and restore the debt-paying power of property. This will certainly stimulate the production of property, and the only way in which our money can possibly become too cheap will be in that we fail to produce property with suf- ficient speed, and in view of modern appliances and the hordes of idle workers in this country, those of us who grasp this thought have no fear of such a result Property has become cheap because we have produced it faster in proportion than we have produced money. Thousands have been compelled to cease producing it altogether, while to every newly discov- ered source of gold supply thousands of would-be money pro- ducers rush pell mell, braving even death itself, in the struggle to be first. Every man to whom a comprehension of the significance of this situation has come, wants the free coinage of silver, because yCeiit Dollars— Building Ansociations, «^tc.— Parity as Measured in Property— Maintaining; Parity of Silver with €»old Money— Dis- crimination (Liegal)— The L.aw— Discrimination in Defence of Law —A False Pretense— The Pledge of Government— Why not Change the Ratio?- There has been more Silver Coined since 1873 than B«- fore— We want " Honest Money "—We want '" Sound Money "—A X'lood of Silver. Among the objections offered to the free coinage of silver, the statement that it will debase our currency is perhaps the most frequent, and while many of the crude and contradictory statements of this objection are absurd and even amusing, the fear that is honestly entertained by many and which finds ex- ipression in this *'50-cent Dollar" objection is entitled to consideration. To those who believe that the higher priced dollar^ or one that will buy the largest amount of property is the best, for us all, and the only ^' honest" dollar, we have offered an argument in the preced- ing considerations to show that their contention is not true. If we have not convinced them we despair of doing so except by an experimental test, and join the issue squarely on this ;point. We aps certain that a dollar which appreciates is not honest for anybody, and is profitable only to a comparatively small class of citizens. Building Associations, etc. To their great concern lest the savings institutions, build- ing associations, employers, etc., shall pay in 50-cent dollars (as measured in property) we oppose our concern for the ex- perience of thousands of our citizens who are in the position of a certain hard working mechanic who joined a building association about twelve years ago, bought a house and bor- rowed $800 from the association on it. The association has recently run out, and during the time this man paid in, in OBJECTIONS ANSWERED. 5^ actual cash. $1176; interest on his payments would have brought them up to or near $1500 ; he has improved the place to a con>iderable extent and to-day it will not sell for $600. While our " hest dollar " loving fiiends are prophesying this 50-cent dollar plague, we ask them 10 rise and console the men who are actually receiving 40-cent property right here in Chester and all over the land for the loocent dollars they have earned by their labor and paid into these institutions. Parity as Measured in Property. We believe that under the stimulus of prospective profit and restored confidence in the solvency of property, it-; pro- duction would increase with sufficient rapidity to prevent its rapid or serious rise in price due to the increased money sup- ply from silver, and it would be many ye^rs before a just parity between money and property would be restored, if at all, so that the fear of a " 50 cent dollar ", as measured in property, is unfounded. Our prediction of prosperity is based not upon cheap dol- lars, but upon the fact that all may work who will, and when all are employed the wage earner can demand, and will be cheerfully accorded by prosperous employers, a fair share of the product of his toil. Maintaining; Parity of Silver with QoJd Money, There are those who apprehend the need of an adequate supply of money and would favor free coinage of silver, but they fear that the United States alone cannot maintain the parity of gold and silver coins at 16 to i, or, in other words, that gold will go to a premium and our silver dollars will be- come " 50-cent dollars ", or at least be less than loo-cent dollars as measured in gold. To these we have already sub- mitted facts and arguments to show that their fears are ground- less, but we now call attention to the fact that it has been twice declared to be the policy of this government to maintain the parity between gold and silver, once as to the metals and once as to the coins. 54 CyBjECTlONS ANSWEREf?. Discrimination (LegalJ^ The legislation of 1873 discriminating against silver de-^ stroyed the parity between the two metals, and the legislation of 1878 failed to restore it b;catlse it did not remove the dis- crimination. The only possible way in which the government can keep this pledge, as to the two metals, is to restore free coinage to silver. The legislation of 1878 restored the silver dollar to its original position on an equality with gold dollars with the sin- gle exception that it might be stipulated against in a private contract, and notwithstanding the fact that thousands of con- tracts have been Written in which silver is stipulated against, the demand for money has been so great that this discrimina- tion has not destroyed the parity. Under free coinage this discrimination could, and doubtless would destroy the parity. We therefore pfopose to remove this disability and make our silver dollar a full legal tender. But not only has the silver dollar overcome this /f^a/ dis- abilitvy but it has been able to survive a most infamous attempt on the part of the executive oflBcers of the government to destroy the parity by illegally discriminating against it. The Law. The Act oi March i8th^ 1869, the first law ever signed by President Grant, declared "That the faith of the United States is solemnly pledged to the payment In coin or Us equivalent, of all the obligations of the United States not bearing interest, known as United states motes, and of all the Interest^bearing obllg»< lious of the United States except in cases where the law auiborising the issue of any such obligation has expressly provided that the aame may be paid In lawful money or other currency than gold and sllVef." The refunding Act of July 14th, 1870, provided for the issue of bonds, payable principal and interest in coin of the then standard value, and every bond extant to-day, even the last Cleveland issue, carries the inscription that they are payable " in coin of the standard valiie of the tfnlted States on July I4th, 1870 " The Matthews Resolution, passed in 1878, declared "That all the bonds of the United Stat*s * • • are payab'e, principal and interest, at the option of the government, la silver, dollars of the coinage OBJECTIONS ANSWERED. 55 of the United States containing 412}/j grains of standard siver, and that to re- store to its coinafee such silver coins as a legal tender in payment of such bonda, principal and interest, is not In violation of the public faith nor in derogation jof tlie rights of the public creditor." Secretary of the Treasury Sherman, in 1878, in bis report stated tliat he would redeem United States notes in gold or silver, but expressly "reserving the legal option of ttoe government" to pay in either. The Act of July 14, E890, (Sherman Act) declared that the Secretary maj' redeem "in gold or sliver coin at his discretion, it being the established policy of the United States to maintain the two metals upon a parity with each oth«r upoia the present ratio or upon such ratio as may be established by law." Discrimination in Defiance of Law^ And yet, in spite of all these clearly stated laws Secretary of the Treasury Foster, under President Harrison, on October 14th, 1 89 1, surrendered the option of the government to pay in silver and began the senseless policy of paying gold vvhea gold was demanded, thus transferring the option from the debtor to the creditor and making it possible to throw the entire demand for money from the less to the more desirable coin, which under normal conditions of money supply would be certain to destroy the parity. The Cleveland administration pursued the same policy ■even when it required an increase of $263,000,000 in the pub- lic debt to do so, and the present administration follows this precedent to its only legitimate conclusion and declares that these silver dollars are not dollars at all, but are i^imply prom- ises to pay dollars, and Secretary Gage is now trying to induce Congress to make pr-ovision for redeeming them in gold. We charg*' that in the presence of the solemn pledge of the government to maintain the parity, this persistent effort to destroy the parity is little less than treasonable, and thank God that the United States Senate as tiow constituted will prevent its consummation. A False Pretense. We perfectly understand that the pretense of those who are actively pushing this plan is ihat gold redemption is neces- sary in order to keep the faith of the government and maintain 56 OBJECTIONS ANSWERED. the parity ; and to fix this idea in the public mind they have not hesitated to falsely assert that the past and present parity of our silver dollars was due to the fact that they were ulti- mately redeemable in gold. We charge that this is false, and that certain men in high positions in the government who have the confidence of many citizens, are talking and acting as if it were true while know- ing it to be false, and are purposely trying to deceive the people. If 500,000,000 of silver dollars, the material in which is worth but half that sum, have maintained their parity with gold in spite of the persistent effort to discredit them, and without the support of gold or other redemption, then is every visible or invisible support of the gold fallftcy removed, and the contention of those established who assert that any dollar of full legal tender quality will remain at par with any other dollar of the same quality. Nor can it be shown that any number of dollars having the cost of producing 412}^ grains of silver behind them can ever reduce the value of a dollar below an equitable relation to other property. The Pledge of Government to maintain parity can only be kept by the government stand- ing ready to receive either silver or gold as its debtors of every class may choose to pay it, and to compel its creditors and all other creditors who live under its flag to do the saoie. No other nation on earth attempts to maintain the parity of its money in any other way, and if this way fail, it cannot be done at all except by the surrender of all that was valuable in the purchase of our revolutionary struggle. The Declaration of Independence, to sustain which the choicest blood on earth was shed, and The Constitution of the United States, the Magna Charta of human liberty, have each for their foundation stone the purpose to '• Establish Justice," and if any policy whatever shall thwart this purpose it mus« be abandoned. OBJECTIONS ANSWERED. 57 The ultimate question then is not whether we will main- tain parity, but whether we will surrender governmental pre- rogatives and our people to the mercy of Shylocks. Why not Change the Ratio ? Many think the ratio should be raised to a point nearer the present commercial ratio and there are several reasons why it should not. ist. The stock of gold and silver in the world to-day is about equal at 16 to i, and the present rate of production is- at a ratio of less than 14 to r. If these facts indicate any- thing they show that the present ratio should be lowered instead of raised. 2d The French ratio is 15^'^ to i and if au agreem'-nt should be made between France and this country it would be best to establish the French ratio for both, since our present coinage could be then recoined at 153^ to i without los-;, while the French coinage could not be changed to 16 to i without loss. 3d. Assuming (what we do not admit) that free coinage will not restore parity at 16 to i, we hold that no human being can predict how much if anj^ it will fall short of it, and that thererore no other ratio can be intelligently selected until the true conditions of supply and demand are established under free coinage at its old ratio, and until this is done the question of a change cannot be entertained. 4th. If the value of money should ultimately fall to the present bullion value of silver only justice would be done, and nothing but good would follow, for the purchasing power of 4i2}4 grains of silver is practicall}^ the same to-day as it was in 1873, and the cost of production is a guarantee against a further decline. There has been more Silver Coined since !873 than Before. The point sought to be made by those who urge this ol)- jection is, that the coinage of silver since 1S73 having been enormously greater than before, and the price continuing to fall is proof that the cause of its fall in price is not to be 58 OBJECTIONS ANSWERED. charged to demonetization. In support of this, the fact is cited that in eighty-one years, from 1792 to 1873, only 8,000,000 silver dollars were coined, and in twenty years, from 1873 to 1893, nearly $500,000,000 were coined under the Bland Act. This statement is true, but as they well know who make it, it refers only to the United States mint, and ignores the fact that while the United States mint was coining 8,000,000 silver dollars it also coined 136,000,000 of small coins, and the French mint coined 1,053,000,000 in the same period, to say nothing of other European countries , so that any fair state- ment of the facts will show that in each period the demand was about equal to the supply, and the value remained stable. ^\\^ price of silver fell as did the price of everything else, foi the reason that the supply of gold plus $500,000,000 of silver was not sufficient to meet the demand for money and the value of money rose destroying W\^ price or debt-pajdng power of all property. We want " Honest Money ". Yes, and so say we all. Our contention is for an honest dollar, but we shall insist that a dollar which has increased and is increasing in purchasing power is not an honest dollar, but on the contrar}^ is of all thieves the most detestable, for it not only deprives his victim of his wealth but paralyzes his efforts to earn more. We want a dollar that will be subject to as free competition in its production as are the other forms of material wealth it is used to measure, and which will thus be kept at par with them by the automatic operation of the laws of trade and render an honest account to posterity of the obligations we incur for them to pay. We want ♦♦Sound Money". Yes, and so do we. Our differences are not so much as to what we want, as to what we have and are to have. We deny that our currency'' is or can be "sound" when it is shown that every dollar of it has been sold and resold until a vast volume of credits and substitutes have become an absolute necessity in our business. A vast balloon swayed and dis- torted by every passing breeze, and in constant danger of col- lapse. So much so that the dignity and honor of this country OBJECTIONS ANSWERED . 59 cannot be asserted as against even an effete power like Spain without danger of precipitating a panic. As we write (March 14th, 1898) the Phila. Ledger affirms that the uncertainty as to a war with Spain growing out of the "Maine" disaster has destroyed the vahie of stocks to the extent of many mil- lions, as follows : "Siuce the 15th of February sixteen of the most active stocks have declined 85^@26^. Sugar has fallen 17)4 percent,, Burlington 155-s. Consolidated Gas 18;vg, St. Paul 10, Rock Island 11, Louisville U, Manhattan 22, Metropolitan 26^, New York Central 10%, and Northwest 14%." and that while nearly every one of the properties represented are earning more than they have been for years on account, as Mr. Depew says, of the recent movement of wheat to Europe. We want "sound money" " commodity money ", with the cost of production back of it, and in sufficient quantities to place our business on at least a semblance of a cash basis, nor will we be deterred from our purpose to secure it by the selfish or senseless cry of those who wish to thrive by issuing a lot of " wild cat " bank paper substitutes, instead of allowing our working people to produce the honest, stable and reliable money we need. We propose to open the production of real money to a WIDER and more ADEQUATE FIELD OF COMPETITION, AND ENABLE THE PRODUCING MASSES TO COIN THEIR POWERS OF BRAIN AND MUSCLE INTO THE DEBT-PAYING INSTRUMENT OF THE NATION, IN- STEAD OF ALLOWING IT TO PERISH IN IDLENESS, AND DISCHARGE THEIR OBLIGATIONS TO THE DEBT-OWNING CLASSES, AT LEAST TO THE FULL EXTENT OF THEIR POWER AND WILLINGNESS TO PRODUCE, AND THUS TO FREE THEMSELVES AND POSTERITY FROM A PERPETUAL SLAVERY TO A MONFIYED ARISTOCRACY, BUILT UPON A SERIES OF DEBTS THAT ARE EVER INCREASING. IN SHORT, TO ENTER UPON A DEBT-PAYING INSTEAD OF A DEBT-CREATING ERA. The End. APPENDIX. crj b"5 1— I r.7 Ti** iH l-O CO •«*< O O O CO o t- ;>0 M r-< M OS n ^ O C5 M 00 KJ C5 CO lO l3 CCOlOOil^CO-^iCOCrjLOOt^LOlO-^CSOlMt-OO 00 OO CO C o ■ 02 CO CJ rH cr> w> rH 35 00 O O OO rH O o o o o o o CO i-H rxi r^ C-5 w> CO o t^ UO C-l 35 -jH crs r^ 00 '^i o OO '*< o lO CO M in r^ fl i-< ^ r-^ CD ■* OO m LO CTi CO o CO r- o OC) 00 ^ dj r-t OJ CD TTl C^ (M 35 o r-- CO iH U rH rH eg rH U3 eo rf rH M r-( r~- 35 o o O o o O o o o o r^ Tf iH r-3 tH ■* yi to o o lO ^4 o C3 o CO o o o o o o o O :o ■^ 31 iH CO CO T-H CO o 35 o O OO r-i ^- •^ Irt O CO r^ o j-i o !M rH iH i-( rH lO CO CD lO lo O rH ^ ot; r— m •* CO 35 T-< o rH rH Tfl •* C^I irt CD CD ■>* rH T-i tH :::i rH rH - = a . ci bO J l>.bc rt ^ '^ '^ '^ ^ ^ a> *^ i3 fl os C CC 02 03 fC" -^ xl • Ph a M o C3 -t-> -O ^ „' csS P] CD O 1^ cS > APPENDIX. II Table II.— MOVEMENT of SILVER COIN and BULLION. Net Exports from the United i^tatcs Net Exports I Gross Imports' Gross Exports i Net Imports from into from into India. Mexico. I Great Brittiin ! Great Britain. 1879 1 5.738.,775 21,835,872 52,494.269 53,561,156 19,323,407 1880 1,227,980 22,388,576 33,087,441 34,360,804 38,298,391 1881 6,297,477 19,567,144 33,585,673 34,084,878 18,943,610 1882 8,743,263 17,337,024 44,980.695 43,630,382 26,177,337 18S3 9,464,203 30,103,064 46,076,032 45,369,630 36,402,52S 1884 11,456,481 34,008,568 46,881,403 48,598,733 31,170,935 1885 17,203,006 34,314,384 45,908,639 47,946,155 35,215,819 1886 11,660,912 30,384,496 36,360,731 35,154,131 56,483,655 1887 9,036,313 34,097,976 37,853,295 37,994,732 34,823,511 1888 7,632,278 31,502,096 30,240,139 37,060,480 44,911,970 1889 12,034,403 39,405,560 44,700,749 51,907,607 44,998,963 1890 8,545,455 41,847,008 50,541,810 52,866,658 53,229,174 1891 1 * 2,745,365 20,912,328 63,663.246 64,993,889 67,147,619 1892 g,035,828 49,250,763 60,222.938 68,495,988 42,738,068 1893 I 7,653,813 51,769,745 72,912,463 68,219,827 60,934,726 1894 31,041,359 47,320,215 65,431,903 60,979,318 65,177,677 1895 27,631,789 56,781,075 60,428,333 52,209,705 30,381,745 1896 33,262,258 44,919,693 76,043,209 74,182,191 31,17»,988 1897 32,636,835 27,740,012 ''■Iruportev/"v v% r> y. THE AUTHOR