/V\ Strides flOeuJ OWe^^-^s^M.^.) fldeo^ 0/-(«*^'^s M.^.) HB 231 .N4 ^opy 1 THE NEW ORLEANS COTTON EIGHMGE IN THE MATTER OF THE GENERAL DECLINE IN PRICES. :B 18 1 ^ 3 504 The accompanying extracts from the pi'oceedings of the International Monetary Conference held at Brussels, in Novem- ber, 1S93, and from the tables of the Finance Committee of the United States Senate, and also from those of Mr. Augustus Sauerbeck, and of the late Dr. Adolph Soetbeer, are sub- mitted to prove that of recent years there has been a marked decline in very many articles of great importance, and that the decline in the price of cotton is no greater than is the average decline of these other commodities, none of which are practi- cally handled in the so-called future markets. A notable exception is in the case of coffee, which, according to the tables of Mr. Augustus Sauerbeck, shows that as between i860 and 1S91 an important advance has taken place in this article. When it is borne in mind that no article is more extensively dealt in through the system of futures, both in the United States and Europe, than is coffee, it would seem clear that the conten- tion that future selling depresses prices abnormally has no ground to stand on. If, therefore, future selling, pure and simple, has put down the price of cotton, why has it not had the same effect on the price of coffee, when, as said above, coffee is an article that is enormously dealt in through the future markets of the United States and Europe ? The statistical information submitted is taken from the report by Senator Aldrich, from the Committee" on Finance, March 3, 1893, Senate Document 1394, part i. Fifty-second Congress, second session. J. W. LABOUISSE, President New Orleans Cotton Exchang-e. I submit for the consideration of the committee a table showing the decline in the wholesale price of many com- modities of daily use as between the period of i860 and 1891. The figures given in this table are taken from a report made by the Committee on Finance of the United States Senate in the second session of the Fifty-second Con- gress. The report is known as report No. 1394. The comparisons are made with the prices of i860, that year having been one that was free from tiie disturbing influ- ences brought about by the war and from the fluctuations in prices after the war that were caused by the constant change in the value of the greenback dollar as compared with the gold dollar until the resumption of specie pay- ment in 1879. It will require but a rapid glance at the figures given to show that the decline in these various commodities has been on an average much greater than in the case of cotton; and when it is borne in mind that the great bulk of these articles are not dealt in in the way of future selling, as is the case with cotton, it seems ob- vious that the contention that the decline in the price of cotton since i860 is due to future selling has no reason- able ground to stand on. Articles. Cheese Raisins Corn starch Oyster crackers Currants, dried Bacon Brown sugar Mess pork Flour Molasses Prices. i860. 1891. 100 95.00 100 91.30 100 82.40 100 80.00 100 79.20 100 76.00 100 75.00 100 75-00 100 72.10 100 67.90 Percentage of decline. 5.00 per cent. 8.70 " 17.60 " 20.00 " 20.80 " 24.0Q '^ 25.00 " 25.00 '* 27.90 '' 32.10 " Articles. Cut sugar Salt Beef, mess Coarse salt Fine boiled salt Tallow, prime, city, in hogsheads Brussels carpets Sole leather Leather, harness Cotton, upland, middling Brown sheetings, 4-4, Atlantic Blankets, 11-4, 5 pounds to pair, cotton warp, all wool filling Checks, black and white, all wool, 3-4, 70Z., Harris Wool, Ohio, medium fleeced, scoured Horse blankets, 6 pound, all wool Denims, Amoskeag Drillings, 30-inch, Pepperell Carpets, ingrain, 2-ply, Lowell Blankets, 11-4, 5 pounds to the pair, cotton warp, cotton and wool filling Sheetings, bleached, 4-4, N. Y. Mills Tickings, Amoskeag, A. C. A Wool, Ohio, fine fleece, scoured Calico, Cocheco prints Dry hides, Buenos Ayres Print cloths, 28-in., 64 by 64, Metacomet Print cloths, standard, 28-in., 7 yards to pound Matches, S-card Coal, bituminous Candles, best adamantine Lead drop shot Pig iron, No. i, Anthracite Foundry Copper, sheet Shovels, Ames' No. 2, cast steel Pig lead Bar iron, best refined, rolled Saws, crosscut, 6-t"oot, Disston's Locks, common mortise Scythes Copper, ingot Nails, cut Iron wire, market. No. 10 Locks, common rim Saws, circular, 52-inch, Disston's Meat cutters, Hale's No. 12 Door knobs, mineral Saws, hand, common, Disston's Plate glass, polished, unsilvered, i 3 sq. feet- Carbonate of lead in oil Cement, Rosendale Window glass, American, ID by 14, firsts, single 82.90 82.30 81.70 81.10 Si. 00 76.80 78.40 Percentage, of decline. 37.80 per cent. 17.10 17.70 18.30 1S.90 19.00 23.20 21.60 23-30 28.30 29.40 31 00 36.80 44.80 45-30 23.00 25.40 27.30 29.90 27.60 34.80 39-90 40.00 40.40 40.60 42.30 45.60 4720 57-70 60.00 62.50 12.20 13.80 i5'oo 16 90 Articles. Tar, Wilmington Pine doors, unmoulded, etc "Window glass, French, lo by 14, firsts, single Plate glass, polished, unsilvered, 40-80 sq. feet Putty Plate glass, polished, unsilvered, 80-100 sq. feet Sugar of lead, Brown Alum, lump, crystal Copperas Flaxseed Soda ash Brimstone, crude Bichromate of potash , Blue vitriol Opium Glycerine, refined Muriatic acid Quinine Sulphuric acid Wooden tubs Furniture, chairs, bedroom, maple, cane seat Glassware, tumblers, >5,-pint " sets, finished " bowls, 8-inch " pitchers, ^-gallon " goblets, common Soap, castile, mottled, imported Starch, ordinary laundry Prices. i860. 1 1891. 100 100 100 100 100 100 100 ICO 100 100 100 100 100 100 100 100 100 100 100 ICO 100 100 100 100 100 100 100 100 80.00 78.10 78.00 66.70 66.70 57.20 80.00 77.80 75.00 69.30 68.40 57.80 47.60 47.40 39.10 38.80 29.20 27.30 27.30 82.20 70.00 41.70 36.60 30.00 20.60 15.60 73-50 63.20 Percentage of decline. 20.00 per cent. 2 1 .90 33-30 33-30 42.80 20.00 22.20 25.00 30.70 31.60 42.20 52.40 52.60 60.90 61.20 70.80 72.70 72.70 17.S0 30.00 5S.30 63.40 70.00 79.40 84.40 26.50 36.80 The following figures are from the tables of the late Dr. Adolf Soetbeer, which were submitted to the Royal Commission that had under consideration the divergence in the price of gold and silver. They represent prices current in the market of Hamburg. To show in what high esteem the figures of Dr. Soetbeer were held by the Royal Commission, I quote from their final report, as follows, viz. : " But before entering upon the statistics relating to the " production and consumption of the precious metals, " we desire to express our acknowledgment to the recent *' work of Dr. Soetbeer, which contains so much valu- *' able information on this and many other points con- *' nected with monetary questions. Throughout our " report we shall frequently refer on all statistical ques- *' lions to the figures compiled by Dr. Soetbeer. He ex- *' plains very fully in all cases the sources of his infor- " mation and the methods he has adopted in compiling it; " and we have not met with any other figures which ap- *' pear more deserving of general acceptance." In the subjoined table the average of the prices current in Hamburg for the period 1847-50, for the various articles named, is taken as a basis, and calling that basis 100, the prices current in 1891 in Hamburg, as shown in the table, indicate the relative prices as compared with those of the period 1847-50, and the percentage of decline: Articles. Carpets Wheat Wheat flour .... Linseed oil Raw sugar Refined sugar Tallow Lard Calf skins Fish oil Currants Olive oil Tea Pimento Cassia Rice Sago Cochineal Redwood Mahogany Palm oil Pig iron Bar iron Steel Copper Quicksilver .... Sulphur, raw .. Saltpetre Salt Prices. Percentage of Decline. 1849-50, 189 1. 100 76.62 2338 100 96.97 3-03 100 83.68 16.32 ICO 82.91 17.09 100 62.44 37-56 100 ^^" 3289 100 68.0^ 31-95 100 71.36 28.64 100 86.73 13-27 100 70.22 29.78 100 83-31 16.69 100 96.66 3-34 100 74-31 25.69 100 58.40 41.80 100 22.81 77.19 100 54-04 45-96 100 5309 46.91 ICX3 22.24 77.76 100 54-15 45-85 100 87-35 12.65 100 73.62 26.38 100 75-27 24-73 100 84.70 15-30 ICO 71.22 28.78 100 67.23 32-77 100 57-79 42.21 100 89.01 10.99 100 65-03 34-97 100 3489 65 . 1 1 Articles. Lime Cement Cotton Wool Flax Hemp Silk Rags Guano Potash Pitch Soda Tallow candles Wax Cotton yarn Piece goods, plain Piece goods, printed Glass, common bottles Linen, plain Woolen and worsted yarn Flannel Prices. Percentage of 1849-50. 1891. Decline. 100 69-75 30.25 100 87.66 12.34 100 87.32 12.68 100 47-38 52.62 100 78.6s 21-35 100 79-52 20.48 100 59.28 40.72 100 87.88 12.12 100 46.89 53-" 100 56.36 4364 100 98.53 1.47 100 51-99 48.01 100 41-63 58.37 100 5026 49-74 ICO 93-48 6.52 100 74-52 25.48 100 65.90 34.10 100 80.95 19.05 100 77-43 22.57 100 96.88 3.13 100 83.24 16.76 I also submit table of Augustus Sauerbeck. Relative prices of commodities in England as between i860 and 1891. The prices of i860 are all placed at 100, and the figures for 1891 indicate the rise or fall as com- pared with i860: Articles. Wheat, English Gazette Wheat, American Flour, town made, white Barley, English Gazette Oats, English Gazette Maize, American mixed Potatoes, good English Rice, Rangoon, cargoes to arrive Beef, prime Beef, middling Mutton, prime Mutton, middling Pork, large and small, average.... Prices. i860. 100 100 100 100 100 100 100 100 100 100 ICO ICO 100 I89I. 69-5 75-1 68.7 77.0 81.9 80.0 83.6 77-2 94.0 95-2 94-6 84.0 72.2 Percentage of Decline. Advance 30.5 24.9 31-3 23.0 18.1 20.0 16.4 22.8 6.0 4.8 5-4 16.0 27.8 Articles. Bacon, Waterford Butter, Friesland, fine to finest.. Sugar, British, West Indian, re- fining and German or French beet, average of price Sugar, Java, floating cargoes Coffee, Ceylon, plantation low middling Coffee, Rio, good channel Coffee, average of 19 and 20 Tea, Congon, common Tea, average import price Tea, average of 21 and 22 Iron, Scotch pig Iron, bars, common Copper, Chile, bars Tin, Straits Lead, English pig Coal, Wallsend, Hetton, in London Cotton, middling, upland Cotton, Fair Dhollorah (Surat) Flax, average of St. Petersburg, i2-head best, and Russian, average import Jute, good medium Wool, merino, average of Port Phillip, average fleece, andi Adelaide, average grease ] Wool, English, Lincoln, half hogs Silk, tsatlee j Hides, average of River Plate,! dry and River Plate, salted Leather, crop hides, 30-45 lbs.... Tallow, average of St. Peters-i burg, Y. C. and town Oil, palm Oil, olive Oil, linseed (49) Linseed (50) Average of 49 and 50 Nitrate of soda Indigo, Bengal, good consuming Timber, average of hewn, aver- age import; and sawn or split, average import Average of vegetable food Average of animal food Average of coffee, tea and sugar Average minerals Average of textile materials Average of sundry materials Average of all articles Prices. i860. 1891. 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 ICO 100 100 100 100 100 100 100 100 100 100 100 100 100 92.6 93.8 56.3 4S.4 148.5 126.7 137.6 33.8 57-7 45-8 88.2 86. 5 .S3-7 69s 56.8 92.7 75-0 65.0 54-0 81.3 60.1 4S.5 56.5 54-5 75-4 59-7 56.5 74.1 72.4 76.4 74-4 59-3 73-1 61.0 76.6 89-5 72.0 83.1 68.0 65-3 75-4 Percentage of Decline. 7-4 6.2 43-7 51-6 Advance. 66. 2 42. 3 54- 2 11.8 13-5 46.3 30.5 43 2 7-3 25.0 35-0 46.0 18.7 399 5I-S 43-5 45-5 24.6 40.3 43-5 25-9 27.6 23-6 25.6 40.7 26.9 39-0 23-4 10.5 28.0 16.9 32.0 34-7 24.6 48.5 26.7 37-6 (Extracts from speeches delivered at the International Monetary Conference in November, 1892.) During the conference, Mr. Adolph Allard, delegate from Belgium, spoke as follows: " Unfortunately, Mr. de Rothschild is not troubled by the fall in prices. He is disposed to think 'that wheat at 30 shillings a quarter, instead of 45 shillings, is rather a blessing than otherwise.' But I ask him what do the British farmers think of it? In Belgium, I can assert, agriculture is suffering from this deep evil; and as for England, I do not think that Mr, de Rothschild's views are shared by Mr. Chaplin, formerly Minister of Agri- culture, who has traversed the whole of England in the search for remedies to be applied to these evils. It appears, too, from the reports contained in tlie English papers a week ago, that Monsignor Walsh, the Archbishop of Dub- lin, is concerning himself with the monetary question, on account of the disasters which are befalling Ireland. Wiien giving evidence before an English commission on the subject of Irish evictions, he spoke in an absolutely bimetallic sense. He pointed out the evils which had been produced in England b}^ the scarcity and the appre- ciation of gold, and also the extremely difficult, embarrass- ing and disastrous position in which the Irish farmers were placed by the same cause." » * * * At the same conference, the delegate from Mexico spoke as follows : " The depreciation of silver, as it has appeared to foreign countries — for in our own country values have not perceptibly changed — has produced an actual pre- miutn on exportation. Articles which were not exported formerly are sold now in the markets of Europe and the United States at a loss of 8, 10, or 15 per cent, on the cost of their production and the expenses incurred, be- cause compensation is found in the gain in exchange of 25 to 30 per cent, corresponding to the depreciation of silver, and for this reason the export of articles other than silver has risen from $6,000,000 in 1873 to $27,000,000 in 1891." * * * * Mr. McCreary, member of the conference and delegate of the United States, spoke as follows: "The statement of Mr. de Rothschild that 'if the conference should break up without arriving at any- definite result, there would be a depreciation in the value of silver frightful to contemplate, and out of which a monetary panic might ensue,' is very significant, but this plan seems insufficient to meet the grave situation he presents, and inadequate as a remedy for decreasing prices and distressed agriculture. The complaints of English Chambers of Commerce, the recent statement of Archbishop Walsh, that ' the adoption of bimetallism or of some similar remedy, if there be a similar remedy, is, I am convinced, a matter of imperative necessity — that is, if the agricultural tenants of Ireland are not to be driven to inevitable ruin,' and the speech of Mr. Balfour, one of the ablest and most distinguished members of the British Parliament, in which, among other things, he said: 'I believe the bimetallic solution is possible and adequate. * * * I do say that the instrument of exchange which you actually have is a bad instrument, and I offer you for your acceptance an instrument which, if not perfect, is at all events practicable, and is incomparably better than any which you are likely to obtain by any other means of which I have any knowledge,' present the situation in Great Britain. It demands and will receive after awhile broader recognition and a better remedy than that sug- gested by Mr. de Rothschild." * * * * Sir William Houldsworth, delegate of Great Britain, spoke as follows: " Now, my honorable colleague, Mr. Bertram Currie, has told you that ' cheap goods, not dear goods,' have 10 always been held to be the conditions of profitable trade. How, then, does he account for the fact that during the last eighteen years an unprecedented fall in prices has taken place (not less than 30 per cent., as measured by seven independent sets of index numbers ), and yet there never was a time when, by the testimony of all engaged in agriculture, manufacturing and other trades, confirmed by the reports of two Royal Commissions in England and by investigations elsewhere, the profit earning power of every industry had more seriously and persistently de- clined, leading, as such a state of things must inevitably and ultimately lead, to irregularity of employment, serious reduction in the rate of wages in every department of industry, accompanied by strikes and lockouts and short time." Sir Guilford L. Molesworth, delegate of British India, spoke as follows : *' Our predecessors in the Paris Monetary Conference of 1878 and 1881 were almost unanimous in the opinion that silver must be rehabilitated. They only disagreed on the method of rehabihtation. Some were of opinion that matters would right themselves, whilst others consid- ered that the remedy could only come by re-establishing the link that had existed between gold md silver prior to 1873. " The opinion of the latter was undoubtedly correct. Matters have gone on from bad to worse, and now we are confronted by the fact that Mr. de Rothschild, the most re- nowned financier of the world, tells us that ' if this confer- ence were to break up without arriving at any definite result there would be a depreciation in the value of silver out of which a monetary panic would ensue, tiie far- spreading effects of which it would be frightful to con- template.' " Now this state of things was clearly predicted by Ernest Seyd in 1871, when the severance of the fink be- 11 tween gold and silver was first contemplated. His pre- diction has been so remarkably fulfilled that I must quote his words : " 'It is a great mistake to suppose that the adoption of the gold valuation by other States besides England will be beneficial. It will only lead to the destruction of the monetary equilibrium hitherto existing and cause a fall in the value of silver, from which England's trade and the Indian silver valuation will suffer more than all other in- terests, grievous as the general decline of prosperity all over the world will be, " ' The strong doctrinarianism existing in England as regards the gold valuation is so bhnd that when the time of depression sets in there will be this special feature: the economical authorities of the country will refuse to listen to the cause here foreshadowed, every possible attempt will be made to prove that the decline of commerce is due to all sorts of causes and irreconcilable matters; the workman and his strikes will be the first convenient tar get, then speculation and overtrading will have their turn. Many other allegations will be made, totally irrelevant to the real issue, but satisfactory to the moralizing tendency of financial writers. The great danger of the time will be that, among all this confusion and strife, England's supremacy in commerce and manufactures may go back- ward to an extent which can not be redressed when the real cause becomes recognized and the natural remedy is, applied.' " In fulfilment of this prediction we find that the diffi- culties under which we labor have been attributed to all sorts of irreconcilable causes. It has been necessary to- invent a theory that progress in manufactures, in im- proved transport, inventions and banking have caused a species of economic revolution, which has created a new state in the conditions of trade and commerce differing from that which previously existed. But they overlook the fact that the alleged causes have been in active oper- 12 ation during the greater portion of the century (and when compared with the previous progress the}' were far more pronounced). It is obvious, therefore, that such a revo- lution, if it existed, should have arisen at an earlier period, and that it should have developed graduall}^ in- stead of setting in suddenly at the exact moment when the link was broken between gold and silver. Moreover, this theory involves another irreconcilable position. It is absurd to suppose that a revolution of this character could have affected gold prices so seriously, and yet should have left silver prices unaffected. Silver is the standard of value of more than half the world, yet silver prices have remained stable, whilst gold prices have fallen from 40 to 50 per cent." * * * * Mr. Van Den Berg, delegate from Holland, spoke as follows : " The loss incurred by the Treasury of British India on the sum which it has annually to pay to the home treasury already amounts to millions of rupees. This loss is one of the heaviest charges of the Indian Budget. It falls ultimately upon the taxpayers and indirectly makes them suffer. Nothing can be more natural, then, than that many voices should have already been raised in India in favor of the gold standard. The director of the Bombay Mint, Mr. Lewis E. Hynes, has published in the Bombay Gazette of the 17th and i8th of August, 1875, ^" article showing that the immediate adoption of gold as a standard of value has become an absolute and imperative necessit}'. " According to him, silver may remain in use as small change to supplement the gold, but the public must not be allowed to coin it freely ; so that the importation of that metal will cease, and gold alone will be used to liquidate the balance which is generally due from Europe to the East. " In this way it is possible that India, too, may be 13 found among the competitors, struggling for their share in the production of gold, and, in that case, the monetary question will enter upon a stage far graver than any pre- vious ones. The theory of the insufficiency of gold, which you have successfully attacked by confining your- self to the needs of the people of Europe, will assume an entirely different aspect when we have to deal with an additional annual demand of 100,000,000 francs, perhaps, for the needs of the East. A general appreciation of gold will be the necessary consequence. The prices of all commodities which are exchanged for gold will fall." * * * * Dr. Andrews, President of Brown University of Rhod^ Island, and delegate of the United States, spoke as fol- lows: " Gentlemen, as I suggested, a second powerful con- sideration urges the thoughtful people of the United States to try and rehabilitate silver as money of full debt-paying power. It is this: They wish to stay that banetul, blighting, deadly fall of prices which for nearly thirty years has infected with miasma the economic life-blood of the whole world. They do not desire to debase the standard of value. They would have every debt paid in gold or its equivalent, but they do not wish gold to be arbitrarily and unjustly appreciated. " Many writers of great intelligence fall into a curious confusion of cause and effect upon this point, identifying fall of general prices with intrinsic cheapening of com- modities. For instance, the Berlin Nation had, some years since, an editorial on ' The Decline in Prices an Ad- vance in Civilization,' wherein such decline was set forth, not as asign of economic advance, which, under the world's present economic system, it often is, but as itself an element in such advance, which it is not. That many manufact- ured articles have long been decreasing in intrinsic cost is a great blessing, and articles of this class would doubtless have gone down more or less under an ideal system of y 14 money. But it was not necessary that general prices should fall, and this fall, I maintain, has been an absolute and unmitigated curse to human civilization. Mark, it is not low prices which we condemn. Low prices, once established, are as good as high. That is to say, the words 'high' and ' low ' in respect to prices are not abso- lute but relative terms. The everlasting fall of prices, the act of sinking, is the accursed thing. None profit from it but such as are annuitants, and nothing else, and we may be sure that no civilized state is going to legislate to keep prices falling, when the fall is once seen, as it must soon be seen, to injure all but the very few unproductive peo- ple, who live upon their incomes." * * ♦ * Mr. Boissevain, delegate of the Netherlands, spoke as follows : " But how is the existence of plenty to be established, if not by an increase of prosperity? Now, I do not see that we have cause for rejoicing in any increase of general prosperity which has been exhibited in recent years. On the contrary, I think that almost everywhere and almost continuously, in spite of certain periods of reaction, we have had a period of depression for trade and industry. No one would be so bold as to say, no one would be able to prove, that we have passed through a period of pros- perity, and yet prosperity ought to have been the result of plentiful supplies of products. I am not by any means alone in thinking that the real situation in recent times, the situation with which we are all acquainted, proves that the fall in prices is not the result of plenty. It is not the abundance of products which has made the scale sink on one side; it is the scarcity of coin, of money, which has made it rise on the other. " I will not deal with this point at length, for all the arguments are known to you. This scarcit}'^ of money, this scarcity of gold, which has become the sole standard in all the countries of Europe and America, has neces- 15 sarily had an unfavorable influence upon commerce and industry. "Mr. Weber told us also that the fall in the price of the white metal was wrongly attributed to its demonetiza- tion, instead of to the increased production. In my opin- ion the chief cause of the lall in the gold price of silver has been the enormous decrease in the monetary use of silver during the last twent}'^ years, in consequence of the legislative measures which date from the new monetary law enacted in Germany. "What is the state of things that we see at present? We see that in those countries which have a gold stand- ard prices have fallen enormously; and that, on the con- trary, in the countries which have a silver standard, in spite of the unfavorable treatment of silver in Europe, and in spite of the diminution in its uses, the relation of value between money and goods has remained almost exactly what it was twenty years ago. They try to frighten us by pointing to the dangers which ensue from the abundance of silver, and yet I repeat that in spite of the unfavorable position in which silver is placed we fail to observe in silver standard countries any of the evil re- sults which ought to follow from ihat abundance." * * * * Further remarks of Mr. Allard, delegate of Belgium: " The mass of precious metals, that is to sa}' of gold and silver, in the world forms it seems a sort of common pos- session of the various nations. They pass from one na- tion to another; they exchange wealth and facilitate its just distribution, and they regulate general prices. " Between 1848 and i85ithe production of these metals increased in a degree unprecedented in history. In a few years the gold from California and Australia had doubled the amount of gold and silver money actually circulating in the world. " In spite of the efforts of a school which was at that time new, gold was not demonetized. Up to that time 16 the business world had not suspected that there was such a thing as a monetary question. We therefore refused to try so bold and dangerous an experiment. » " Under the influence of abundant money and the rise of prices there was such a rapid growth of progress, of commercial intercourse, of enterprise, and of production that the amount of gold soon became insufficient for the continually increasing demands upon it. The Bank of England was so much in need of the metal in i860 that it was compelled to borrow 52,000,000 francs in gold from the Bank of France. It was for civilization an era of business, of prosperity, of work, and of abundance, which lasted till 1873. " In 1873 silver was demonetized in Europe in accord- ance with the theories which had not prevailed in 1851. " Silver had not fallen in value, and had given rise to no anxiety; and yet it was deprived of the right of being used as money, and was forbidden to enter Europe. It is confidently stated that this action was a serious blow to freedom of trade. " In 1870, that is to say three years before this prohi- bition, it had been foretold that such a step would be in- evitably followed by a revolution in prices, by a general fall in values and by a serious crisis. " This crisis, which was foretold in 1870, is now, it is said, in action. The disturbances which it produces are the more unjust and the more profound since the fall in prices is not produced by the development of labor or by the abundance of wealth, but by an artificial cause, which is none other than the law proscribing silver and thereby producing appreciation of gold. "No variation in the level of prices can be observed in silver countries. It follows therefore that the deprecia- tion of silver in Europe is only produced by the apprecia- tion of gold. "It is said that this artificial fall in prices caused by the appreciation of gold has for its results terrible social 17 inequalities, the ruin of our agriculture, the slackness of our industries, the distress of our workmen, and the un- easiness which prevails everywhere. " For twenty years there has been a continual endeavor on all sides to find some other cause, but none has been discovered; and therefore no more effectual remedy has been found than the monetary remedy. '•• It appears to me that the task to which this confer- ence of 1892 is specially called is to counteract the evil of the fall of prices and the artificial appreciation of gold, and to combat the instability of exchange between the gold countries, w^hich constitute one-third of the world, and the silver countries, which form the other two-thirds." * * , * * Sir Guilford Molesworth, delegate of British India spoke again, as follows: " But in England we have something worse to fear than the crisis which Mr. de Rothschild predicts. It is impos- sible to close our eyes to the dangers which have been disclosed by the honorable delegate for Great Britain, Sir William Houldsworth. He will tell you that the in- dustries of Lancashire have been simply ruined by the condition of our currency system, and that both employers and employed are clamoring for currency reform. In whatever direction we turn our eyes we find similar con- ditions of depression and distress, whether we turn to iron, steel, silk, woolen, or agricultural industries. A very large number of Chambers of Commerce in the United Kingdom have petitioned government for currency reform; and it was onW last week that a large and influ- ential meeting of the representatives of agricultural indus- try passed a resolution requesting the government to endeavor to secure, by an international agreement with the leading nations, the unrestricted coinage both of silver and gold. Next we find that Archbishop Walsh (the leader of political opinion in Ireland) declares that the adoption of bimetallism is a matter of imperative necessity 18 if the agricultural tenants of Ireland are not to be driven to inevitable ruin. And lastly we hav^ India crying out that the development of her resources is hindered and her trade paral3^zed by the difficulties into which the state of the currency has plunged her." * * * * Mr. Van. Den Berg, delegate of the Netherlands, spoke again, as follows: *' The sufficiency or the insufficiency of gold for the monetary uses of the world is, gentlemen, the real knot of the question before us. It is not unfamiliar that up till now the defenders of monometallism have always sup- ported the idea that there was no lack of gold, and that a more or less considerable appreciation of the yellow metal was entirely out of the question. The bimetallists alone were of the contrary opinion, but now one of the most fervent partisans of monometallism has joined their ranks, and tells us that it is not silver which has fallen, but gold which has risen. The partisan which I have in mind is the Statist, of London, which is an authority in monetary and financial matters, and rightly so, because, unless I am mistaken, it is written at the dictation, or at least the inspiration, of the learned statistician, Robert Giffen. In the number of November 5, we read the fol- lowing declaration apropos of the proposals submitted to the British government in regard to the possible introduc- tion of the gold standard in British India. "We presume that the plan is based upon llie mistaken notion that the value of gold is more stable than that of silver. We have seen that between 1873 and 1880 all gold prices fell ruinously. We have also seen that during the same period silver prices did not fall; in other words, while the smaller quantity of gold year after year ex- changed for a larger quantity of all other commodities, silver included, the same quantity of silver, or nearly the same, exchanged for the same quantity of all other com- modities, gold excluded. Does it not necessarily follow 19 that it was the conditions which determined the value of gold, which altered, not the condition which determined the value of silver; or to put the matter into perhaps plainer language, does it not necessarily follow that the value of silver during the past twenty years has been far more stable than the value of gold? " Gentlemen, has the weakness of gold monometallism ever been placed in clearer light than in the lines which I have cited, written by one of the most convinced mono- metallists?" * * * * Senator J. P. Jones, delegate from the United States, spoke as follows: " Dr. Soetbeer's tables of prices, which include 114 leading commodities, taking the figures of 1849 as ^ basis, and estimating them at 100, show that by 1853 prices had risen to the ratio of 113, in 1863 to 125, and in 1873 to 138. "It is a significant coincidence that beginning with 1873, the year in which, by the demonetization of silver, the volume of the world's money was reduced, the trend of prices of commodities in general was reversed, and a fall set in. Continuing his figures to 1885, Dr. Soetbeer gives the number for that year as 108 — a decline of 30 percent, in twelve years, or an average of 2^ per cent, per annum. " Mr. Sauerbeck's investigations, made independently, take as a datum line the prices ruling from 1867 to 1877 ^"d show that by September, 1887, the general range of prices had fallen to 68.7 — the lowest within the century. " Statistics show that the fall of prices in gold-standard countries has continued up to the present time and is still in process of operation, the London Economist stating the fall for the past two years at 4.8 per cent., or about 2yi per cent, per annum. '' Under the baneful influence of falling prices, agri- culture ceases to be profitable. In the case of leased 20 farms, the rent, which was just and equitable when fixed, becomes, with the progress of time, unjust and inequi- table, the payment requiring from year to year a constantly increasing proportion of the product, till nothing is left for the tenant but the hardest and barest existence. In cases in which the farms are owned by those who work them, the ownership in nine cases out of ten is encumbered by a mortgage. Very few working farmers own their own farms free. The mortgage that, at the beginning, was equivalent to but one-half the value of the farm, soon, owing to the fall of prices of the product and conse- quent reduction of value of the property, becomes worth three-fourths and ultimately, in many cases, upon the maturity of the mortgage, the farmer finds himself com- pelled to yield up his entire farm to the mortgagee in satisfaction of the incumbrance. Thus, by reason of the fall of prices, owing to an increase in the value of the money unit, agriculturists are reduced from comparative comfort to absolute penury. The effect upon the artisan class is no less injurious. " When, at tlie beginning of this century, the South American colonies began their prolonged struggle for in- dependence a material reduction took place in the sup- plies of the metal with which Europe had been enriched, and again the effects of monetary shrinkage began to make themselves felt in a fall of prices and a shriveling of industry. Professor Jevons demonstrated that between 1809 and 1B49 the purchasing power of money increased fully 145 per cent., which is but another mode of stating that the general level of the prices of commodities fell 60 per cent., or at the rate of i^ per cent, per annum. " As was to be expected, all industry was deranged and distress was universal. As a consequence the masses of the people in all countries became engaged in riot and in- surrection. In Great Britain mass meetings were held which sent to Parliament monster petitions for bread. On the continent of Europe open revolt taxed the energies of 21 the troops, and as a result of a display of military force large numbers of the people took refuge in secret political organizations which under cover of darkness plotted the overthrow of social order. " So subtle was the cause of the difficulty that its origin eluded detection. The distress of the working classes was attributed to all causes except the real cause. By some it was ascribed to the greed and cupidity of the employing classes. By others — among them for the most part the economical writers of the time — to overproduction of commodities. The working men adopting these ex- planations inveighed violently against labor-saving ma- chinery and against employers as a class. They could observe the hesitancy of capital to invest in productive enterprises — an investment that would mitigate the evil by giving employment to labor — but they failed to per- ceive that during a period of falling prices capitalists are compelled, in self-protection, to avoid industrial under- takings. It did not occur to the workers, nor to those who undertook to inform and instruct them in political economy, that at such time the basis upon which the operations of industry are conducted is not a level platform but an in- clined plane — the production of the articles being effected at the cost, or price, corresponding with the higher end of the platform, while sales are effected at figures cor- responding with that of the lower end. Employers were, therefore, carrying on business with little or no profit, and it was hardly to be expected that capital would seek investment in a direction in which the risk was not warranted by the reward." * * * * Senator Jones said again: " Yet under present conditions the prices of all com- modities are falling, and industrial conditions are yearly becoming less and less satisfactory. " If the present ruinous process of falling prices is to be arrested, a larger supply of money must be provided with which to do business." 22 Senator Jones said again : <* Before the question of remonetization of silver arose, some of the ablest advocates of the gold standard were frank to admit and deplore the evils which they prophesied would result from a rise of gold owing to the failure of its supply to keep pace with demand. Thus the London E conomist , in 1869, in its review of financial conditions, said : " ' It may be safely affirmed that the present annual supply of 30,000,000 pounds sterling of gold is no more han sufficient to meet the requirements of the expanding commerce of the world, and prevent that pressure of transactions and commodities on the precious metals which means m practice, f rices and wages constantly tending toward decline. " ' The real danger is that the present suppHes should fall off, and among the greatest and most salutary events that could now occur would be the discovery of rich gold deposits in three or four remote and neglected regions of the earth.' "Not only have ' no rich gold deposits' been discov ered since that time, but the production of the deposits then known has declined. The yield of $150,000,- 000, which in 1869 was considered barely sufficient to meet the demand, has fallen to $130,000,000 in 1892, while during the same period the needs for money have enormously increased. This increasing demand, pressing upon the falling supply, was of itself a sufficient misfortune, but the subsequent demonetization of silver struck a blow at all industry and commerce from which they have ever since been staggering." Senator Jones quotes from speech of the late Earl of Beaconsfield, delivered in 1879, ^^ follows: " Gold is ev^ery day appreciating in value, and as it ap- preciates in value, the lower become prices." 23 Senator Jones said further: " According to the painstaking computations of Mr. Sauerbeck, production increased in England between 1850 and 1870 by 2^ per cent, per annum, while between 1870 and 1885 it increased by only i 1-6 per cent, per annum. Yet the general level of prices rose during the first period 15 to 20 per cent., while it fell during the second and shorter period no less than 30 per cent." * * * • Senator Jones said further: "And now, Mr. President and gentlemen, I trust I shall not transcend the proprieties of the occasion if I take the liberty of inviting the special attention of the honorable delegates from Great Britain to what I am about to say. " According to statements which have received wide- spread publication and which I have not seen contradicted, the fall of prices in England has been on such a scale that farms are going out of cultivation, and the landed in- terest is passing into the hands of mortgage companies. These circumstances serve to remind us of the statements made by an eminent historian of Great Britain, Sir Arch- ibald Alison, to the effect that on the occasion of a former severe contraction of the money volume, on the passage by Parliament of the bill compelling payments in gold, prices rapidlv fell — cotton sinking in the course of three months to one-half its former level. Within six months all prices had fallen one-half, and for three years showed no indi- cations of improvement. By reason of this contraction of the currency the industry of that great nation was con- gealed as is a flowing stream by the severity of an Arctic winter. " Bankruptcies increased in 1819 more than 50 per cent, over the number for the previous year. The owners of land, who in 1819 numbered 160,000, were, as the histo- rian veritably informs us, reduced in seven years to the number of 30,000, and one person in every seven of the population was obliged to be supported by organized 24 charity. The disorganization of industry and the conse- quent compulsory idleness of workmen led to frequent conflicts between the people and the military. They also led to serious commercial crises." * * * * Senator Jones spoke again, as follows: "By the evidence given before more than one Royal Commission, we are assured that the rupee will to-day in India purchase as much as it ever did in its history. What is the significance of this statement? It clearly implies that the farmer of the Punjab is now receiving more rupees for the 30 shillings which his wheat realizes in London than ten years since he obtained for 40 shil- lings. How is it possible that Europe and America can market their crops under such conditions of competition? Should the rupee fall in gold value in Great Britain to a shilling, while maintaining its full purchasing power in India, the agriculturists of England will see wheat selling in London at 20 shillings a quarter. " While the so-called ' fall ' of silver is stimulating the exports of India at the expense of the farmers of England and of the United States, it is at the same time building up in India a destructive and merciless competition in cotton goods to Chma at the expense of the people of Lancashire. " To show the extent of the stimulus supplied to the Indian industries and the effect which the present policy of Great Britain is exercising upon the industries of Lan- cashire, I read the following brief but suggestive extract from a speech delivered by Mr. John A. Beith at a meet- ing in the town hall of Manchester, last October. Mr. Beith on this subject says : " ' In 1874 the total exports of yarn from Indian mills to China and Japan amounted to only 1,000,000 pounds. It was only in 1875, ^^^ when silver had fallen 3 pence per ounce, that the 1,000,000 pounds of exports, which it had taken Indian mills nearly ten years to get up to, at 25 once expanded, as if in obedience to the wave of an enchanter's wand, into 5,000,000 pounds. In 1880 there was a further fall of 5 pence per ounce, and, conse- quently, a further advantage to the silver of India and China, as compared with England accepting only gold payments, and so, then, the five millions of exports from India became 25 millions. In 1885 another fall took place, and the 25 millions became 75 millions. In 1889 there was a further fall of 5 pence in silver, and the 75 millions became 127 millions. In 1891 there was slill a further fall, and the 1.27 millions of exports of yarn from India to China became 165 millions, so that in seventeen years, through the operation of this cause chiefl}', 1,000,- 000 pounds of yarn exports per annum had risen to 165,- 000,000 pounds per annum. These are very large figures, but if you look a little more into the details they become even more appalling. " 'One hundred and sixty-hve million pounds of yarn sent from Bombay to China and Japan means that India is sending six times as much as the United Kingdom sends to China and Japan, twice as much as the United Kingdom sends to India, China and Japan together, and is indeed very fast approaching the figure of Lancashire's total exports of yarn to tiie whole world. If the ratio of increase continues as hitherto, the shipments from India will exceed in from three to four years the total shipments of yarn from the United Kingdom to the whole world, in- cluding India, China and Japan. It seems to me that those figures speak eloquently for themselves.' * * * » Further on, Senator Jones spoke as follows : " While, owing to the ruinous rise of gold, we have been unable to prevent a serious and continued fall in the prices of such commodities as are internationally dealt in, we have been able, by the aid of silver money, to sustain at a level more nearly consistent with justice the prices of com- modities that form the subject of our domestic business. 26 013 514 478 2 The products that have not had an export have maintained their position better and fallen less than those of inter- national trade, such as wheat and cotton." * * * » Mr. Allard, delegate from Belgium, spoke again, as fol- lows: " The statistics of Mr. Sauerbeck have clearly proved that the allegation of overproduction as a cause of falling prices is absolutely false. From i860 to 1873 the total production of the world increased each year 2.8 per cent. That was the age of California and bimetallism. Prices increased 40 per cent. "From 1873 to 1885 the production of the world in- creased yearlv only 1.6 per cent.; a decrease of nearly one-half. Prices should have increased ; but on the con- trai}^ they fell 32 per cent. "The truth, gentlemen, was told by Mr. Goschen, in England, 1883: ' The fall of prices comes from the rise of gold.' He expressed his thought in these typical phrases: 'Fortunate are they who own sovereigns, and unfortunate they who own commodities, products, and other goods.' " * * * * Mr. de Osma, delegate of Spain, spoke as follows: " Whatever personal sympathies we may feel, we must admit, gentlemen, that very few of us have been able to agree with the stoic opinion which denies the existence of a crisis and concludes very logically that there is no need of looking lor a remedy. That opinion is too strongly contrasted with the atti'.ude of some of our colleagues who are moreover themselves thoroughly convinced and perfectly impenitent monometallists. It disappears before the reiterated and recent declarations of statesmen, who have described the evils which are ruining the agriculture and destroying the industries of their countries with a precision whose significance it is impossible to mistake." /Vv ^trices [/(JeuJ Orlefi^^is^M.^.) LIBRARY OF CONGRESS 013 514 478 2 ^|