UC-NRLF SB Efl 173 k*^. NATURAL LAW OF MONEY. INTERNATIONAL BIMETALLISM. "FREE SILVER." CURRENCY. THE SILVER QUESTION AND HARD TIMES. LAYMAN. f. Q.lJ *&'*. r r s - MONEY. \Vitl\ Compliments of PRESIDENT WELLS, FARGO & COMPANY, CALIFORNIA. 1 HE SILVER QUESTION AND HARD TIMES. BHI7SRSXTT MONEY Natural Law of Money. International Bimetallism "Free Silver." Currency. THE SILVER QUESTION AND HARD TIMES. BVI7ERSIT7 PRESS OF H. S. CROCKER COMPANY, SAN FRANCISCO THE four leading papers herein were incited by an admirable essay on the Bond Syndicate of 1895, rea( ^ before the Berkeley Club of Oakland, at one of their stated meetings last winter, by Mr. Nye, of the Oakland Enquirer. The members of the Club, to whom I re- spectfully dedicate this little series of discourses, were so courteous as to voluntarily accord me an unusual allowance of time to speak upon the same subject; and, my remarks having led to a number of questions upon that and kindred matters, I at once decided to forego the preparation of a paper on Franz Deak, the Hungarian statesman, which I had in contemplation to serve at my turn to read before the Club, and sub- stitute one upon the subject of money. My studies on this theme expanded into four separate papers, namely, The Natural Law of Money, International Bimetallism, Free Silver, and Currency, occupying as many meetings for their delivery ; and they were 4 listened to with such interest that I have been asked to publish them, the honored President of the Uni- versity of California, Prof. Martin Kellogg, having himself suggested that it was my duty to do so. In yielding to these requests I would have it fully understood that I offer nothing novel or theoretical, for there is nothing new under the sun in regard to money, any more than there is in regard to other things, and here, as elsewhere, we have the lessons of experience to draw upon. I have, therefore, utilized in my remarks the expressions of well-known writers, past and present, John Locke, Adam Smith, Lord Liverpool, Alexander Hamilton, Thomas Jefferson, Albert Gallatin, Daniel Webster, Mr. Jacobs, Jno. Stuart Mill, Walter Bagehot, Henry D. McLeod, Robert Giffen, Prof. W. A. Shaw, Prof. Alfred Marshall, Benjamin Kidd, William Brough, Mr. Schoenhof, Horace White, Andrew D. White of Cornell, Prof. Taussig, Prof. Farn- ham, Prof. Perry, Prof. Hadley, Prof, Laughlin, Prof. Moses, David A. Wells, C. F. Adams, Edward Atkinson, R. Q. Mills, O. H. P. Belmont, and others too numerous to mention, not omitting, however, my personal friend Louis A. Garnett, of this city, whom I deem as well informed a man upon the subject as I have ever come in contact with. I may add that, of the French Economists, Baisse, Levasseur, Chevalier, Parieu, Permez, D'Avenal, the two Says, Leon and J. B., Tirard, Beaulieu, des Essars, and more, there is not 5 a single one that was not, or is not, a supporter of the gold standard. It is not for the purpose of making a display of learning that I mention this formidable array of names, but in order to give credit to these writers from whom, as a constantly occupied business man, I have drawn, often bodily. I think I may claim that few men have been more steadily engaged than I during my forty- two years of business activity, but having always indulged a taste for reading, and been accustomed to mark and note any item of statistical importance, or argument which I particularly concurred in or dis- sented from, it was not difficult for me to collect the facts cited herein and draw my own conclusions from them. The subject in all its bearings is one to which I have given some attention for more than thirty years, con- siderable of it since the discussion began in the seven- ties which ended in the passage of the Bland-Allison Act, and which, in intervals of leisure since the passage of the so-called Sherman Act of July I4th, 1890, I have investigated with persistent, studious care. I came to its consideration with every possible motive for advocating the so-called cause of silver, but what- ever may be thought of the feasibility of International Bimetallism, however debatable that theory may be, or the influence of money on prices, or other monetary projects, it is an assured fact that the records of history and of economic science absolutely preclude the possi- bility of the concurrent circulation of gold and silver as legal tender under the independent, unlimited free coinage of both metals at a ratio of sixteen parts of silver to one part of gold, or at any ratio appreciably different from the commercial value of the metals, and that under unlimited free coinage of silver the pur- chasing power of each coin would be confined to its bullion value, whatever that might be, from time to time. A LAYMAN. SAN FRANCISCO, CAI,., August 18, 1896. BSI7BESIT7 THE NATURAL LAW OF MONEY. THE late Walter Bagehot remarked that the United States was a country for Exemplifying by experi- ments on a large scale the old truths of political economy. The people were indifferent to experience gained elsewhere, while they were protected by their magnificent resources from the most serious conse- quences of mistakes in their own practices that in old countries would be supremely disastrous. They were thus constantly renewing old experiments under favor- able conditions, and confirming, if not enlarging, the knowledge of the principles of political economy. The latest experiment of this kind is the silver legislation of which we have all heard so much. It is not my design or expectation to present any- thing new or original in the consideration of this ques- tion, but simply some of the laws and established facts that govern it ; and, in doing this, I have frequently utilized, without giving credit, the exact phraseology of the best writers upon the subject. Of all things in the world, money, which can least bear tampering with or anything but scientific treat- ment, is being made in this country the bone of noisy contention, instigated partly by the influence of mining interests which ardently desire to raise the price of silver, and the adherents of a soft-money heresy who hope to create abundant money out of metal of some kind if they cannot have inconvertible paper. 8 The natural law of money is, in general, the law of civilization, viz, evolution: beginning, it may be, with the barter of a horse for a cow, a sheep for a hog, a goat for a dog ; after that, the use of pebbles or shells as the representatives of value in the exchange of different commodities ; next iron ; then copper, bronze or brass ; then silver ; and finally gold, and obligations expressed on paper, showing throughout a law of displacement, the inferior by the superior, or the survival of the fittest gold as the standard money money of ulti- mate redemption, that metal having demonstrated to the world of commerce its superior utility, efficiency and refinement as the best basis and medium for the interchange of commodities, as well as for discharging the terms of time obligations. Aristotle, on the origin and definition of money, says : " It is plain that in the first society (that is, in the household) there was no such thing as barter, but that it took place when the community became enlarged ; for the former had all things in common, while the latter, being separated, must exchange with each other according to their needs, just as many barbarous tribes now subsist by barter, for these merely exchange one useful thing for another, as, for example, giving and receiving wine for grain, and other things in like man- ner. From this it came about logically that as the machinery for bringing in what was wanted, and of sending out a surplus, was inconvenient, the use of money was devised as a matter of necessity. For not all the necessaries of life are easy of carriage ; where- fore, to effect their exchanges, men contrived something to give and take among themselves that which, being valuable in itself, had the advantage of being easily passed from hand to hand for the needs of life, such as iron or silver, or something else of that kind, of which they first determined merely the size and weight, but eventually put a stamp on it in order to save the trouble of weighing, and this stamp became the sign of its value" Aristotle 's Politics, 1-9. It should be borne in mind, however, that all trade is barter, even when the precious metals are employed as intermediaries, the latter being articles of barter also, possessing intrinsically the same value as the things for which they are exchanged. The whole science of money hinges on this fact. One commodity employed as money does not go out of use until it is superseded by another of superior qualifications for the service. This is the natural law that governs the change from one kind of money to another. To give to coin all the elements of efficiency that it can possess, it is really only necessary to start it into circulation with its full weight and fineness of precious metal, that is, intrinsic equivalency, and its mintage or assay stamp, and let it go where it will. For examples, the Schlick Thaler of Bohemia; the Spanish milled dollar ; Bechtler's gold coinage of the Carolinas ; the ingot of Moffatt & Company, and coins of Kellogg, Hewston & Company, of San Francisco ; the Utah and Colorado gold coinages, and others. It is an advantage of a good standard, as gold or silver, that it may be used as a common measure of value, without altering very much the supply and demand of the article itself, so that the exchange value of the article may be 10 wholly left to natural conditions. Here we have the natural law of metallic money in all its simplicity. The complexities are of our own making. Debased money has entered into the experience of every civilized nation at some period of its history, and it is not necessary to particularize, but there are inter- esting chapters in Jacobs, showing conditions under Henry VIII. and Edward VI., and Macaulay, of a later date also, describing the imposition of brass money on Ireland, etc. What I have designated as the natural law of money is inverted by the interjection of the legal-tender qual- ity into money of unlimited issue ; and what is com- monly known as the Gresham Law demonstrates itself with certainty. Simply stated, this law is the operation of brokerage, assorting, culling, garbling, etc., thus always forcing the poorest money into cir- culation. And this all proceeds from the delusion on the part of men that, in some mystic or supernatural manner, governments can permanently regulate the value of money by conferring upon it a legal-tender quality. If by legislative enactment Government could exert that power, similar legislation would enable it to regulate the value of all commodities. About 1366 Charles V., King of France, sometimes styled Charles the Wise, observing that the coins of the realm were in dire confusion, empowered one of his ministers, Nicholas Oresme, a man of distinguished attainments, a member of the French Imperial Govern- ment, and subsequently President of the College of Navarre, to investigate and apply a remedy. As a II result, Oresme published a treatise entitled, " A Theory of Money," and in this he outlined what is now called the Gresham Law. In 1526 Sigisinund I. of Poland, to which Prussia then belonged, observing that the coins and money of his realm were in a deplorable con- dition of debasement, which was and had been the chronic condition of all Europe, selected Nicholas Copernicus, the great astronomer, to consider the sub- ject ; and Copernicus, after investigation, wrote a treatise setting forth doctrines that had been formulated one hundred and sixty years before by Oresme for the King of France, though there is no evidence to indicate that he knew the conclusions arrived at by Oresme. The doctrines of Oresme and Copernicus are sub- stantially identical : 1. That it is impossible for the law to regulate the value of the coins, i. e., the purchasing power. 2. That all the law can do is to maintain the coinage at a fixed denomination, weight and purity. 3. That it is robbery for the law to change the denomination, dimmish the weight, or debase the purity of the coinage. 4. That it is impossible for good, full-weighted coin and debased coin to circulate together. 5. That the coins of gold and silver must bear the same ratio to each other as the metals in bullion do in the market. In 1558 Queen Elizabeth, discovering in her realm the same unfortunate conditions connected with the coins that had existed in France two hundred years 12 before, and in Poland the previous generation, espec- ially produced in England by the repeated debasements that occurred under Henry VIII. and Edward VI., selected Sir Thomas Gresham, one of the most eminent men of the day, who, amongst other claims to distinc- tion, possesses that of having founded the Royal Exchange of London ; and he, after a careful examina- tion of the matter, reached the same conclusions that had in turn been reached by Oresme and Copernicus, known now as the Gresham Law, and which, as formu- lated to-day and accepted by economists and financiers the world over, is briefly expressed in the following terms : When two coins of the same denomination, but differing in commercial value, are current in the same nation, that which has the least value will be kept in circulation and the other withdrawn from it as much as possible, and hoarded, melted down, or exported, in short, that bad money drives out good. It may be fairly stated that this fundamental law of money is found to hold universally true in all ages and countries, and has been recognized and acknowledged by learned men in all discussions on the subject. It applies in the following cases : i. If the coinage consists of only a single metal, as in the early coinage of England, and clipped, degraded, and debased coins be allowed to pass current with good coin, all the good coin will disappear from circulation. It is either hoarded, melted down, or exported. All laws are ineffectual to prevent this; the clipped, de- graded, and debased coin will alone remain current. 13 2. If coins of two kinds of metal, such as gold and silver, are allowed to pass current together in unlimited quantities, and if a legal ratio is attempted to be en- forced between them which differs from their relative value in the markets of the world, the coin which is underrated disappears from circulation : it is either hoarded, melted down, or exported, and that which is overrated alone remains current. The law holds good also in relation to bank-note circulation. 3. This law is not confined to single and separate countries ; it is not limited in time or space ; it is abso- lutely universal. The Oresme, Copernicus, Gresham Law was expounded to the government of Great Britain by Locke, Newton, and other eminent men of the times ; but a knowledge of its workings did not reveal to them a remedy for continually existing and recurring evils of coinage, viz, the variations, the partings of the metals, the breakdown of parity of coin in circulation, etc., which were universal. A solution was found by Sir William Petty, who died in 1687, in a treatise of his discovered in 1691, viz, to make one metal the standard money, and the other subsidiary to it ; that so much subsidiary coin as could be kept in free circulation, redeemable in or exchangeable with the standard metal coins, was not only the best but the only method practicable for using both. That there could, of course, be no such thing as a double standard, and the greatest stability of money was to be attained by using one metal as standard. This theory was elaborated at a later date by Adam Smith. 14 It was the unbroken experience of centuries when Locke took up the question in England, as it has been the experience ever since, that immediately side by side with the legal ratio there is a market ratio, and there is no discernible tendency for the former to govern the latter. The laws that finally govern finance are not made in conventions or congresses. The foundation of the inter- national bimetallic theory a purely empirical proposi- tion is thus erroneous from the beginning. It is not claimed by any prominent advocates of bimetallism, for example Lavelleye of Belgium, Cer- nuschi of France, Ahrendt of Germany, Seyd (deceased) , Gibbs and Helm of England, or Andrews or Walker of the United States, that the unrestricted free coinage of silver by any one government now maintaining a gold standard could be otherwise than disastrous. On the contrary, they declare in print that it would be calamitous, and that they do not desire to debase the standard of value : they would have every debt paid in gold or its equivalent. And this is the attitude of bi- metallists generally in Great Britain and Continental Europe. To all of which I remark : When the two metals have unlimited free coinage at fixed ratios and are legal tender, the cheaper will, under all possible circumstances, drive the dearer out of circulation. Says Mr. Elijah Helm, one of the ablest bimetallists of England : " The scheme put forward by bimetallists for the resuscitation of the joint standard by an international agreement is a new thing to the world. Nothing exactly like it has ever yet existed." 15 Says Prof. W. A. Shaw : " The modern theory of bimetallism is almost the only instance in history of a theory growing, not out of practice, bnt of the failure of practice, resting not on data verified, but on data falsified and censure- marked. No words can be too strong of condemnation for the theorizing of the bimetallist who, by sheer imaginings, tries to justify theoretically what has failed in five centuries of history, and to expound theoretically what has proved itself incapable of solution save by cutting and casting away." INTERNATIONAL BIMETALLISM. MBEERNAERT, the Minister of Finance of Belgium, opened the Brussels International Bimetallic Conference or Convention of December, 1892, as follows : " The Conference in which you are called upon to take part has for its object the consideration of one of the most serious, complex and arduous problems pre- sented to modern society. The subject of money touches all economic and social interests ; it affects the commerce of the world, and is the real reason of more than one unexplained crisis," etc., etc. There were proposals as early as the seventeenth century for a universal common ratio for the money metals, but there is no trace, in the writings of Amer- ican statesmen, of the peculiar monetary theory on i6 which bimetallism is now based. Probably there is no later exposition of the theory of international bimetal- lism than that contained in Prof. Nicholson's " Money and Monetary Problems," Mr. Elijah Helm's "Joint Standard," Archbishop Walsh's pamphlet of 1892, and Prof. E. B. Andrews' essays, published in book form in 1894, under the title of " An Honest Dollar," which, condensed, is Jevon's illustration of Wolloski's doctrine of two balancing hoards, based upon what is known as the quantitative theory of money, which proceeds on the assumption that there is a pool of money into which a balance of the precious metals falls after other uses have been satisfied, and that prices rise or fall propor- tionately with an increase or diminution of the pool, otherwise stated thus : " Imagine two reservoirs of water, each subject to independent variations of supply and demand. In the absence of any connecting pipe, the level of the water in each reservoir will be subject to its own fluctuations only. But, if we open a connection, the water in both will assume a certain mean level, and the effects of any excessive supply or demand will be distributed over the whole area of both reservoirs, which enables one metal to take the place of the other as an unlimited legal tender." This theory being based on the conception of govern- mental power : first, by Archbishop Walsh, that, "while legislation cannot directly give value to a thing, it can do so indirectly, it can set up a demand which is one of the factors of value ;" second, by Professor Andrews, that, " while law cannot control value independently of supply and demand, it can set free an economic force which will largely control supply and demand them- selves." "The bimetallist affirms: (i), that the monetary demand and supply of gold and silver, supposing both freely coined, in fixing the purchasing power of given quantities of them, overwhelmingly out-influence the commodity demand and supply; (2), that law can, at least, establish a legal-tender and debt-paying parity between a given quantity of gold and a given quantity of silver, which parity treaty could extend throughout any number of States ; (3), that, since men are wont to discharge their pecuniary obligations as easily as they can, the existence of such legal-tender and debt-paying parity would, in case this legal parity should ever for any reason fail to match the commercial parity, stimu- late the demand for the cheaper metal, appreciate it, and so tend to identify the parities again; (4), that if the field of legal parity is large, embracing in its bimetallic basin a third or even a quarter of the world's gold and silver, unless the value-ratio between the two metals denoted by the legal parity is widely at variance with the ratio in quantity between the total stocks of the two, the aforesaid stimulus of demand for the cheaper will overbear every tendency to part the parities named, and maintain the unit quantity of gold and the unit quantity of silver perpetually at the same value." This reasoning seems to minimize the importance of the commercial demand for the precious metals for use in the arts and as a commodity in international com- merce. POSTULATE i. " The bimetallist affirms that the monetary demand and supply of gold and silver, supposing both freely coined, in fixing the purchasing power of given quan- i8 titles of them, overwhelmingly out-influence the com- modity demand and supply." The monetary demand is the demand upon the entire money mass, including not only money in all its various forms, but all the other signs of value and instrumentalities employed in effecting exchanges of which gold and silver constitute but a very small por- The_Hrg.y-jQr -pressure ..oJLthis.,.demand will-be a_ted only by the rates of interest, but will not in the slightest degree affect the purchasing power of money, or the commodity value of the material of which "^rnoney is made. From the days of Aristotle to the present time, it has been contended that coinage adds nothing to the value of the precious metals, but simply serves as a means of authentication by inspection only, and as a guar- antee of the weight and fineness of the coin, and saves the trouble of weighing and assaying. It has simply the effect that the stamp of " Goldsmith's Hall" has upon spoons or plate, and adds no more to the value of the material of which metallic money is made than printing bank notes or bonds produces upon the market value of bank-note paper or parchment. The fundamental error of this postulate, which goes to the very foundation of bimetallism, is that the coin- age of gold and silver operates as a demand upon the metal mass, and, therefore, brings them, as com- modities, within the general economic law of supply and demand. But this is a fatal error. The law of supply and demand, as applied to perishable commodi- ties, is founded upon the theory that demand is the 19 index of consumption, and that consumption, by the destruction or actual consuming of the material, creates a constant necessity for new supplies to satisfy new demands. But the precious metals, being practically imperishable and indestructible, are in no wise affected by mere coinage ; but, upon the contrary, their condition is thereby greatly improved for employment in either the arts or international commerce in which they are treated simply as commodities. Coinage, therefore, does not, in an economic sense, operate as consump- tion, but, upon the contrary, as a continual hoarding and stocking of the metal, the direct tendency of which is to depress its value as a commodity, by which alone its purchasing power as money is governed, and which will always be indicated by the true par of exchange, just as the demand for money will be indi- cated by the rates of interest. The facts, therefore, are just the reverse of those stated. Coinage exerts no influence whatever in fixing the purchasing power of the metals, which is governed entirely by the com- modity demand and supply operating through the rates of international exchanges, which fix the commercial values. POSTULATE 2. No one will deny this proposition. But, unless the legal parity established conforms to the commercial par- ity, it can only be maintained under exclusive coinage for account of the Government, and not under free coin- age. And even then it can only be maintained locally as a circulating medium, but not internationally as a medium of foreign exchange, which will always be based on the commercial parity. 20 POSTULATES 3 AND 4. These practically rest on the same basis and involve the same error pointed ont in No. i, in assuming that " free coinage " is a demand upon the metal mass, whereas it is evidence of an absence of demand, as gold and silver go to the mint only because they will com- mand no better price in the open market. When the commercial and legal parities differ, how- ever, while the difference may stimulate the demand for the cheaper metal for the purpose of coinage with a view of cheating creditors, it will produce no effect whatever in restoring the parity or equilibrium, for the reason given under Postulate No. i. The only experiment which history affords us of a practical test of this theory is the memorable one made by France from 1853 to 1859, the practical result of which was the very reverse of what is here claimed. Prior to 1853 the average price of silver for 30 years showed that at 15^/2 to i that metal was overvalued about 1 24 P er cent, and France during that period had practically only a single standard of silver. But, in consequence of the great demand for that metal in London for Oriental account, its commercial parity rose above 15^2 , and an immense drain of silver from the Bank of France set in. To check this and restore the equilibrium, the bank went into the London mar- ket and paid $3,000,000 in premiums for gold in less than three years, which exceeded the disparity between the metals. For five years her coinage of gold averaged $90,000,000 per annum, or 80 per cent of the world's product, and yet gold declined over i per cent in value 21 under this enormous coinage. But, to cap the climax, in 1859 she broke the world's record by coining $130,000,000 of gold, or $10,000,000 in excess of the entire product of the world, and yet the only effect was that gold fell i per cent lower. Or, in other words, silver had advanced over 2 per cent under this enormous coinage of the cheaper metal, the con- trolling factor being the rate of Oriental exchange on the London market, thus showing conclusively that coinage is utterly powerless, when brought in contact with the inexorable laws of commerce, to affect or change the parity between the metals ; and this whole theory the quantitative theory is without the slightest founda- tion in any known principle of economic law, and is a fallacy. Again, I quote from Professor Andrews : " Writers and thinkers of the highest ability believe that all necessary or attainable fixity of general prices is to come from international bimetallism. There can indeed be no doubt that this scheme would, for a long time, render extraordinary service, if it could only be carried into effect." So much for the bimetallist view. To restate the answer already given : Supposing that gold and silver are coined in unlimited quantities, and a fixed legal ratio is enacted between them. 1. Is it the fixed legal ratio enacted between the coins which governs the relative value of the metals in bullion ? 2. Or, is it the relative value of the metals in bullion which governs the relative value of the coins ? 22 3- And if it be found impossible for any single country to maintain gold and silver coined in unlimited quantities in circulation together at a fixed legal ratio, is it possible for any number of countries combined to do so by an international agreement ? It is not only my purpose to combat the theory of international bimetallism, that has been so ably done by scores of writers, notably of late by Gififen, MacLeod, Brough, Shaw, Laughlin, Wells, Leon Say, Beaulieu, Schoenhof and others, but also to mention some of the fallacious reasons, inferences or conclusions ad- vanced by its advocates, and to present their refutation. Here are specimens culled from Professor Andrews' utterances setting forth the evils of a gold standard, as, for example, the following at the Brussels Conference : " They (the bimetallists) wish to stay that baneful, blighting, deadly fall in prices which for nearly thirty years has infected with miasma the economic life blood of the whole world." And the following from his " An Honest Dollar :" " The rise of gold, that is, the fall of prices, mainly consequent upon the demonetization of silver in and after 1873, has had, in particular, four great results, each of which has been pernicious in the extreme : " First, it has tainted with injustice every time con- tract made anywhere in the gold-using world since 1873- " Second, it has, all over this vast area, afflicted productive industry with anaemia, asphyxia and paral- ysis, owing to which the world's wealth is to-day less by billions than it would be had normal monetary conditions been enjoyed. 23 " Third, it has split the commercial earth in two, into a gold-employing and a silver-employing hemisphere, between which, so great is the difficulty of exchange, commerce has ceased to be a rational affair and has become in effect a game of hazard. " And, fourth, by thus deranging the international exchange, it has discouraged, and, upon a colossal scale, lessened in amount the loaning of capital by rich countries to poor. " I maintain it has been an absolute and unmitigated curse to human civilization." * * * However much a scarcity of gold may possibly have contributed to the recent fall of prices, and, through that, to the depression of trade, which I do not ad- mit, it does not necessarily follow that the effect will be continued, nor that trade will be permanently con- tracted. A less number of gold and silver pieces at low prices of commodities will serve for the same ex- changes as a larger number at higher prices. But the fundamental mistake of Prof. Andrews is in assuming that metallic money alone measures values, influences prices. It is, if at all, the whole money fabric built upon metallic money that does so, Credit Money bills of exchange, bank notes, cheques, money orders, etc. sustaining 98 per cent of the transactions of commerce. And, so long as these instruments are settled on a gold basis, they are gold measures of value. For example, let us take foreign commerce, aggregating say sixteen thousand millions of dollars per annum. Less than 2 per cent of gold is required to settle the balances of all this vast volume of trade, and therein credit represents confidence, the most important factor of all in the V ***** 24 world's commercial relations. The New York Clearing- house balances are not infrequently more in a week than the total current money of the United States. Says Daniel Webster : " Credit has done more, a thousand times, to enrich nations than all the mines of all the world." To clear up the confusion of birnetallist perception, we have only to revert to the sound doctrine of the ancients, that exchangeability is the sole essence and principle of wealth. Witness Demosthenes' dic- tum : " If you were ignorant of this, that credit is the greatest capital of all toward the acquisition of wealth , you would be utterly ignorant." It is not true, however, that the quantity of money, apart from the possibly mischievous consequences of any sudden change, socially and otherwise, can affect materially the real wealth and welfare of an in- dustrial community. As John Stuart Mill himself saw and expressly stated in a passage which is uni- formly not quoted by the later adherents of the quan- tity theory : " The proposition respecting the dependence of gen- eral prices upon the quantity of money in circulation must for the present be understood as applying only to a state of things in which money, that is, gold or silver, is the exclusive instrument of exchange, and actually passes from hand to hand at every purchase, credit in any of its shapes being unknown. When credit comes into play as a means of purchasing, distinct from money in hand, the connection between prices and the amount of the circulating medium is much less direct and inti- mate, and such connection as does exist no longer admits of so simple a mode of expression." 25 Mr. Giffen says : " There is a relation between the quantity of standard money and prices, but it is rather one in which prices assist in determining the quantity of the precious metals to be used as money, and not one in which prices are themselves determined by that quantity. There are some complicated elements in the problem ; but this is the substantial result. Allowing for oscillations and exceptions, the chronic ratios of exchange between gold and silver and other commodities are not determined by any special qualities these metals have as money. It is the range of prices as part of a general economic con- dition which helps to determine the quantity of money in use, and not the quantity of money in use which determines the prices." One word more of the international bimetallist. Not content with outdoing Jeremiah in their lamentations, they enter into judgment with all opposers. Said Mr. A. J. Balfour, of Manchester, England, three years ago, reiterated by Prof. Andrews, at Golden Gate Hall, in San Francisco, two years ago, " Any man who denies the entire feasibility of international bimetal- lism writes himself down as ignorant of the latest developments of economic science." This is simply sound and fury, signifying nothing. He might just as well have said, " Any man who denies the entire feasi- bility of an international agreement for the abolition of war writes himself down as ignorant of the latest development of altruistic feeling in the human race." The first is not more likely than the second, and to see how probable the latter is one has but to contemplate the Armenian, Transvaal and Venezuela episodes. 26 Archbishop Walsh, after writing a comparatively plausible argument in behalf of international bimetal- lism, concludes with this piece of fiatism : " New sovereigns might now be issued containing about one- third the weight of gold less than in the sovereign hitherto issued. Next year, in case of increase in the value of gold contained, there might be a new issue of sovereigns with a proportionately smaller amount of gold," and so on ad infinitum. And Prof. Andrews' doctrine is, in the last analysis, practically the same, viz : When the need comes to change the ratio do it by lightening the gold coins. Dr. Walsh's argument, however, is simply a plea for Irish tenant farmers, and comes to this : " If the State is unable, or unwilling, to apply a radical remedy, by changing its currency system, out of which the existing evil long-time land leases has grown, it surely is bound, at the very least, to take in hand the readjustment of the terms of those obligations which, through the working of that system, have grown to be so oppres- sively burdensome." Returning again to Prof. Andrews. It is, of course, possible, theoretically, that with international bimetal- lism the world's productivity since 1870 might have been greater than it has been, just as John Stuart Mill raises the question of how much more civilized the world might be now if Christianity had been adopted by the Roman government under Marcus Aurelius, instead of one hundred and fifty years later, under Constantine ; but it was not. 2 7 Some of the national steps for adopting gold as the standard of value, so far as expert or scientific consid- eration is concerned, have approximately been as follows : Prior to the year 1871, the countries that used the gold standard were Great Britain and her colonies, Portugal, Turkey, Brazil and the Argentine Republic, Great Britain in 1816 (resumption of specie payments 1821), though gold, because of its efficiency, had by choice been the money of commerce for a century previously. Of twenty powers represented at the International Monetary Convention at Paris, 1867, all (including the United States) favored the gold standard except Holland. France's movement really began in 1853-57, wnen sne advantageously exchanged a large volume of silver, $300,000,000, for gold. The subject was discussed by Bosredon, Chevalier, Levasseur and other French economists, Levasseur declaring that gold had made itself the standard, and that France should make the law conform to the fact. In 1 868 and 1869 two committees declared the superior efficiency of gold. The Imperial Commission of France, appointed in 1869, says : " On the general market, silver tends to depreciate, while gold is asked for. More than 500 millions in silver five-franc pieces are already accumu- lated at the Bank of France, and the public is no longer willing to receive these heavy pieces. Thus silver appears to be falling into disfavor, and we must hasten to demonetize it if we do not wish to be left the last to be encumbered with the inconvenient metal." The preamble of the French Currency Act of 1876 says : "From 1815 Great Britain has laid down principles 28 which have attracted around her an ever-increasing circle of nations;" and, further, "From 1857 the French Government has studied the question, and it may be stated that since that date the principle of the gold standard has won increasing favor through our several administrations." The German economist, Dr. Soetbeer, began to discuss the question in 1863, an ^ reported to a congress of German economists in 1868, upon which Germany decided, one year later, in favor of gold. The United States of America omitted the silver dollar from coinage in 1873, though it had not been in use for forty years. Holland adopted the gold standard in 1875 ; Denmark, Sweden and Norway entered a gold-standard union in 1876 ; and Finland adopted that standard in 1877. In 1873 Belgium sus- pended free coinage of silver ; the other States of the Latin Union, France, Switzerland, Italy, etc., following in January, 1874 ; whereupon the Economist Francaise said : " It is a step toward the abolition of a law which, after seventy years' experience, had been found to be effete in theory and prejudicial in action." Russia dis- continued free coinage of silver in 1876. The report of the special commission of the upper house of Austro-Hungary said, 1879, tnat "It became clear, as long ago as the decade 1860-70, when Europe was becoming saturated with gold, that this was the only metal fitted to be the standard of nations of advanced civilization. Gold was dominant and the standard of value in all trade on a great scale as early as the fourteenth and fifteenth centuries, even though silver was then the standard in all domestic 29 exchanges. In every age there is some metal dominant in the industry of the world, which forces its way with elemental strength in the face of any public regulation, and in our day gold is that metal." Italy limited silver coinage in 1883; Persia, Roumania, etc., later on, say 1887; later still, Chile. All this, too, despite the vari- ous monetary conventions: the United States Commis- sion of 1876 ; the international (Paris) conventions of 1878 and 1 88 1 ; the independent Paris convention in 1887; the Royal Commission (London), 1887; and the international convention (Brussels), 1892. Here, then, notwithstanding these six monetary congresses, within thirty years after France's conclusion that gold was the best standard of value, because of its greater stability, utility and efficiency, we see all the important Western powers, including the United States of America, Canada and Australia, on the gold-standard basis, that is to say, those peoples that transact more than 70 per cent of the commerce of the world, and whose governments control 70 per cent of the world's population. This cannot be regarded as caprice, or as the result of conspiracy, but is a natural gravitation toward greater efficiency in money. Says one of the best economic writers of to-day: "The gold standard has made its way in the world, not only without design on the part of individuals, but in spite of the strenuous resistance of almost all the men who busied themselves with the subject." So far as I have read, the changes have all been from silver to gold, and there is no case on record of a change from gold to silver. Whether these changes were wise or unwise, they were made, and 30 the United States, alone and unaided, cannot undo them. " It is a condition and not a theory that confronts us." If silver as standard money is now going out of use in a natural way we cannot stop it, and the attempt to do so can only involve us in trouble. Yet this movement the supremacy of gold as the standard within this century, particularly within this generation, or the past four decades, has been multifariously denounced as a demoniac crime against humanity, Prof. Andrews himself, at Brussels, as already quoted, denouncing it as the cause of " the baneful, blighting, deadly fall in prices," etc. ; that the fall in prices of commodities was caused by the action of the Powers in adopting the gold standard ; and that all over this vast area (the gold-using world) it has afflicted productive in- dustry with anaemia, asphyxia and paralysis ; that it has been an absolute and unmitigated curse to human civil- ization ; that the world's wealth to-day is less by billions than it would be had what he calls normal monetary conditions been enjoyed. Let us examine these extraordinary assertions. First, however, let me here call attention to the scant allusion in Professor Andrews' pages to two most important fac- tors, which he has almost entirely ignored in the consideration of this question : The general financial collapses and industrial depressions and stagnations of 1815, 1826, 1837-41, 1848, 1857-61, 1865-66, 1873-77 and 1883-85, all of which affected Great Britain, France and the United States of America, save that of 1873-77, which France escaped by reason of the previous Franco- German war disaster. That of 1857-61 was a period 3i in which primary money, money of ultimate redemp- tion, silver as well as gold, was in full force and effect, and gold more plentiful throughout the world, com- paratively speaking, than at any other period of history. Next, that the enjoyment by the laboring class (ninety- five persons out of every hundred) of wages on a gold basis, which have not fallen as compared with gold, but have risen largely, is, in degree, of importance to interest on all forms of long-time obligations, at least as ten to one. By reviewing a considerable period of time, espe- cially in this century, we find that the general tendency is toward lower values ; and this applies not only to the precious metals, but to all products of man's labor. Since the introduction of steam-power machinery and subdivision of labor, the tendency toward lower prices has been more decided than before. To obtain a more abundant supply of the necessaries, comforts and luxu- ries of life is the object of all industry, and with the increase of supply comes the reduction in price. This is the natural order of progress, of civilization, and I offer the following statistics as a complete refutation of " anaemia, asphyxia and paralysis " in the industrial world. No attempt is made in the following figures to be absolutely exact to a fraction. They are intended, however, to show by close approximation the general advance in the industrial and commercial world during the period treated of. It should be borne in mind that the natural increase of population is only a slight frac- tion over one per cent per annum. Percentages of Increase in the Production, etc., of Articles in the United States, 1870-93. Barley 165 Coal 400 Corn '. 50 Crops, cereal 123 Copper 1030 Cotton 213 Iron 328 Lead 859 Manufactures 276 Oats 158 Petroleum 860 Potatoes 60 Railroads, mileage 250 capital and bonded debt 311 earnings, gross 168 earnings, net 51 R y e 73 Sugar 537 Steel 4628 Silver 200 Gold 41 Wheat 68 World. Sugar 537 Gold 120 Silver (coinage value) approximately 300 Coffee 260 Coffee shows an increased value of from 65 to 85 per cent, according to different reports upon same. 1842. 1875. 1885. 1894. 1895. Coffee, tons 200,000 505,000 718,000 650,000 725,000 Total value of crop , $260,000,000 $255,000,000 33 Productions in the United States. ARTICLE. 1870. 1880. 1890. 1893. 1895. Barley bushels 29,761,305 33,000,000 13,000 760,944,549 874358 In 1887 they reached 967,000,000 In 1893 they reached 1,809,000,000 Total resources of such banks, deposits, surplus and capital represented : In 1882 $1,053,000,000 In 1893 2,014,000,000 National Banks, United States. Capital. Net earnings. Per cent. 1873 $488,100,951 $65,048,578 13.3 1891 760,108,201 75>763,5I4 9-9 In the days of Charles and Cromwell rates of interest in England were 10 per cent. At present a 2^ per cent interest-bearing consol sells above par ; and a gold-bear- ing 3 per cent United States bond will sell above par. The rate of dividend interest in California savings banks has fallen from 10 per cent in 1870 to 4 per cent in 1895. In the Atlantic States, say New England and New York, it has fallen from 6 per cent in 1870 to 4 and $J4 per cent in 1895. Money in the United States. 1873 Money per capita, $18 . 58 chiefly irredeemable paper. 1891 Money per capita, 34.31 1 896 Money per capita, 3 1 . 20 1 873.. Circulation per capita, $18.04 chiefly irredeemable paper. 1 89 1.. Circulation per capita, 23.41 1 896.. Circulation per capita, 22.47 ty&4 frf)4/*$* (s^AS&jjLsZ* 37 Wealth, United States. 1860 $16,000,000,000 1870 28,000,000,000 1880 45,000,000,000 1890 65,000,000,000 In 1890 the richest country in the world. This extraordinary increase may be discounted some- what because of the crude method of earlier censuses- Wealth of Great Britain, France, Spain, United States of America, Australia, Tasmania and New Zealand and Canada combined, estimated : 1870 $100,000,000,000 1890 200,000,000,000 Gold, World. Silver, World. 1853 $155,000,000 (Commercial Value.) 1870 107,000,000 1870 $ sijsys. 000 1874 91,000,000 1890 120,000,000 1890 172,235,000 1894 180,000,000 1894 105,757,300 1895 200,000,000 1895 120,000,000 Present annual output of gold alone is more than annual output of gold and silver together thirty years ago. Estimate of world's stock of coin (U. S. Mint Report, 1894) : 1860 $3,900,000,000 1894 8,021,000,000 1896 8,300,000,000 One of Professor Andrews' wails is that " Nations in the gold group can no longer trade freely with those in the silver group." The movement of merchandise and silver in connection with India has been as follows : 38 Shipments of Bullion and Specie from European Money Centers to Statement of Yearly Tonnage Eastern Countries. (Including Passing Through the Suez Canal Sundry and Alexandria, to 1886.): from Us Opening up to 1804 : 18,168,303 1862 21,455,884 1863 24,318,189 1864 13,933,183 1865 10,032,626 1866 3,659,154 1867 10,189,904 1868 9,053,186 1869 110,810,389 4,507,388 1870 436,609 8,687,431 1871 761,467 10,988,705 1872 T, 160,743 7,807,605 1873 1,367,767 11,448,512 1874 1,631,650 6,303,700 1875 2,009,984 15,147,012 1876 2,096,771 20,588,599 1877 2,355,447 85,478,952 11,820,438 8,403,350 1878 2,269,678 I3,39i,o86 1879 2,263,332 10,983,339 1880 3,057,421 7,985,996 1881 4,136,779 I 3,829,59i 1882 5,074,808 10,100,591 1883 5,775,86i 14,040,596 1884 5,871,500 13,365,500 1885 6,335,752 92,100,049 34,885,131 7,572,596 1886 5,767,655 8,541,505 1887 5,903,024 7,118,243 1888 6,640,834 11,380,823 1889 6,783,187 11,507,122 1890 6,890,094 8,809,828 1891 8,698,777 12,317,887 1892 7,712,028 14,667,799 1893 7,659,068 81,915,803 56,054,667 10,357,302 1894 8,039,175 Yearly tonnage passing through the Suez Canal was : In 1870 436,609 tons. In 1894 8,039,175 " 39 The foreign trade of India has more than doubled since 1872, and even the Lancashire manufacturers, who complain so bitterly, have more than doubled their exports of cotton goods to India. The quantity of cotton cloth exported to India in the year 1873 was 990 millions of yards ; while in 1894 the total had risen to the enormous amount of 2,279 millions of yards. The Secretary of the Lancashire Cotton Spin- ners' and Manufacturers' Association finds, on investi- gation of the facts, that while silver countries have, since 1873, increased their consumption of English cotton cloth by 100 per cent, gold countries have only increased it by 17 per cent, and India has, notwith- standing the increase in Indian mills, increased its consumption of English cotton manufactures by 130 per cent. In regard to the increase of wages on a gold basis, Prof. Andrews uses the following language : " The average value of labor, including unskilled, has not, in my belief, advanced so much as gold, even if it has risen at all." Rogers' " Economic Interpretation of History ;" McKenzie's " History of the Nineteenth Century ;" Walter Besant's " Fifty Years Ago ;" the report of Robert Giffen to the British Parliament on the progress of the working classes ; one by Alfred Xeymark to the Statistical Society of Paris ; Guyot's " Economic Science ;" D'Avenal's " History Econo- mique," as shown in Schoenhof 's " History of Money and Prices;" McMasters' " History of the American People ; " C. C. Jackson's " Has Gold Appreciated ; " the United States Senate Committee Report, commonly 40 called the " Aldrich Report on Prices, Wages and Transportation," the latter work a monument of in- dustry, patience and intelligence, and other literature on the subject too numerous to mention, all show that wages have increased in fifty years under the gold standard approximately over 60 per cent, and during this century 100 per cent. After examining the Aldrich Report, Prof. Taussig said : " All in all, the figures show that the purchasing power of money wages has been rising steadily for at least twenty years, and that the decline in prices since 1873, and especially since 1882, has been a source of prosperity, and not of depression, to the community at large." As to what has been the result to wage-earners under the gold standard in this country, I submit the following conclusions from the same Report : Prices and wages were examined from 1840 to 1892. The evidence demonstrated beyond all controversy two facts : (i) that wages, measured by the best dollar, had been increasing all the time ; (2) that prices, measured by the same standard, were falling during the whole fifty-two years. This is a happy condition for the wage-earner. He is doubly benefited by the standard of the gold dollar. He is benefited by the constant increase of his daily wage, and again by the constant decline in the prices of the things which he must buy. From 1840 to 1892 the rate of wages in- creased in the United States over 60 per cent, while the prices of things he had to buy were constantly de- clining. The investigation covered the prices of 223 articles, which showed an average reduction of 25 per cent. Many of the articles, which were every-day necessaries of life, declined much more than that. Fuel fell 75 per cent, metal 39, drugs and medicines 39, and house-furnishing goods 40 per cent. This is to-day the wage-workers' situation on a gold standard. Let us compare it with the paper-standard era, when the country had the highest prices it has ever known. In 1866 the unlimited issue of paper money had banished gold from our circulation, and the paper dollar was the standard. Wages in paper money had risen 52 per cent above the gold rate of 1860. At the same time we find that beef had risen 108 per cent above the gold rate, hams 198 per cent, New Orleans molasses 135 per cent, rice 182 per cent, salt 102 per cent, refined sugar 85 per cent, calico 121 per cent, ingrain carpets 141 per cent, denims 274 per cent, drillings 265 per cent, sheeting 291 per cent, shirting 222 per cent, coal 201 per cent, nails 132 per cent, pine shingles 121 per cent, window glass 10 x 14, 126 per cent, and quinine 131 per cent. Here we see that a depreciated standard of value robbed wage-earners of more than half their earnings. Of all the contrivances for cheating the laboring classes of mankind, none is more effectual than a currency that is not convertible into metallic money of intrinsic equivalency. I appreciate that estimating total relative prices with- out regard to relative importance or consumption of commodities is misleading, and in an analysis of such data, grouped according to relative importance of com- modities, it showed that the fall in prices was 6 per cent less than otherwise shown. That is to say, taking 100 42 as a standard of average from trie years of 1865 to 1869, the fall from 1870 to 1885 was 24 per cent, as against 30 per cent where the relative importance of com- modities was not considered. Eleven leading products of farms in the United States fell 26 per cent. Prices. Print cloth, per yard Quinine, per ounce 1873- $ .066 2.65 1891. Per cent. $ -029 56 .30 89 Goblets, per dozen 85 .25 70 10 x 14 glass 3-40 1.70 50 Undershirts 1.41 .62 56 Ginghams, per yard 13 .06 54 Carpets, two-ply ingrain, per yard. . 1.14 50 56 Black pepper, per pound 19 09 53 Molasses, per gallon .69 32 53 Freight rate, per ton 2.00 92 54 Refined sugar, per pound .116 057 50 Cut nails, per pound .049 .016 62 Pig iron, per ton 42-75 17.50 60 Cotton, per pound .188 io 53 Corn, per bushel .61 57 6 Wheat, per bushel I-3I 93 30 Bacon and hams, per pound .088 .076 14 L,ard, per pound 9 2 069 25 Average Pork, per pound .078 .059 2 4 fall of 26 Beef, per pound .077 .056 27 percent. Butter, per pound .211 145 32 V Cheese, per pound 131 09 31 j Tobacco, per pound .107 .087 19 1 Eggs, per dozen .26 17 35 / Leather, per pound 253 .16 36 Starch, per pound 053 .032 40 Illuminating oils, per gallon .235 .07 70 Steel rails, per ton . 120.50 29.92 75 Rio coffee, per pound .18 .16 ii Tea, per pound 95 25 73 Sheeting, per yard 133 .068 48 Drilling, per yard .141 064 55 Shirting, per yard .194 .106 45 Standard prints .113 .06 47 Average reduction of eleven chief farm products, 26 per cent. Average reduction in twenty-three other products, 55 per cent. 43 According to Dr. Krai's tables for Hamburg, without going into details, the average of prices of all vege- tables and animal food was considerably higher in 1884 than it was in 1844, f rtv years previously. Relative wages and prices in gold in the United States of all occupations, taking wages of 1860 as 100 : Prices. Wages. Prices. Wages. 1840 116.8 87.7 1871 122.9 J 47-8 1850 102.3 92.7 1880 106.9 I 4 I -5 1860 100 loo 1890 92.3 158.9 1870 uy-3 I 33-7 l8 9 x 9 2 - 2 160.7 The latest data obtainable shows that the annual average money wages of manual laborers in Great Britain increased from ^43 8s. in 1876 to ^53 i6s. in 1892, or over 23 per cent in fifteen years, though this may have been partly due to restrictions on child labor; but the increase from 1845 to 1895 has been relatively as great as in the United States. According to investigations of Yves Guyot, also J. B. Say, separately, the increase of wages in France from 1805 to 1883 was, in a superficial average upon ten callings, such as day laborers, cellar diggers, stone- cutters, brickmasons, carpenters, blacksmiths, etc., 120 per cent ; and the greatest advance in one of the five divisions of time into which this period was classified was in that from 1875 to I ^^3> ^ e wages of carpenters and laborers having increased over 33 per cent and those of cabinet makers 50 per cent within that brief period, at the very time when, according to birnetallists' theories, wages ought to have fallen. If a day's labor be a reasonable unit of value, as some economists, even Adam Smith, have contended, it is 44 certain that, judged by that standard, gold has not risen. I assert that the facts submitted utterly disprove Professor Andrews' contention of " anaemia, asphyxia and paralysis." This country is not so much in need of more money as it is of more common sense and less hysteria. To answer upon a historic basis the theories of the international bimetallists, it is enough to say that no form of bimetallism by which the two metals were coined without limit and were legal tender has ever succeeded. This is the unvarying verdict of history. For six hundred years, that is to say, since Florence began the minting of gold florins in 1252, which quickly extended to France, Flanders, Germany, and, later, to England, there have been a succession of reratings throughout the entire world in the endeavor to keep the two metals together, and fluctuations of less than one per cent in the difference between the com- mercial value and the coinage value of each have always been sufficient to exclude the more valuable from circulation ; and, under present facilities of com- munication and exchange, one-fourth of one per cent would be sufficient to produce the same effect. In the Overland Monthly for the present month of February, in an article on " Hard Times," Irving M. Scott says : " Europe, from early times down to a late date, employed both gold and silver as the ' standard of value.' This country, in its colonial and confederate 45 conditions, did the same. The United States, from the foundation of the Government (constitutional) down to 1873, employed both gold and silver, in accord with an Act of Congress making the standard unit of value 4 One Dollar,' of a certain fineness. Thus, from 1687 to 1873, embracing a period of 186 years, our country employed both the silver dollar and the gold dollar equal one to the other as the standard unit of value and as redemption money. Thus it is seen that from time immemorial gold and silver worked together har- moniously. A greater production of one or the other did not affect the parity established between them" The closing assertion by a business man of Mr. Scott's standing is astonishing, for the facts are exactly the opposite. In India, at the time of Alexander's invasion, silver to gold was as 2 to i, but in conse- quence of the rapid extension of commerce the ratio soon reached 6 to i. In Athens, at the zenith of her power, the ratio at one time reached 13 to i. At a little earlier period the ratio with the Romans was 10 to i. They allowed the ^Bolians to pay their annual tribute in either silver or gold at this ratio. Between the fifth and thirteenth centuries, the great national formative period, gold was hoarded, and, though Byzantine, Arabian, Egyptian and Spanish-Moorish gold coins were to be found in circulation occasionally, there was no gold coinage by Western Europe until the close of the twelfth or the beginning of the thirteenth century, the impetus having been given by the Crusaders. There never was agreement in the thirteenth, fourteenth or fifteenth centuries, and the sudden yield of money metals by the New World 4 6 utterly upset the mintage ratios of all Europe during the sixteenth and seventeenth centuries. There never was anything like an equal and generally recognized ratio of value between gold and silver prevailing at any single point of time. At one and the same date a ratio of 7 or 8 to i prevailed in the Moorish parts of Spain, and 12 to i in the Christian parts (the kingdom of Castile). Similarly, at a later period, in 1474, the ratio in England was 11.15; ^ n Germany 11.12; in France 11.00; in Italy 10.58; and in Spain 9.20. Vasco de Gama found the ratio prevailing in South America with the Indians 8 to i. Changes of ratio in Europe under the influence of New World metallic product are indicated by the following figures : 1545-60 11.30 to i 1621-40 14.00 to i 1561-80 11.50 to i 1641-60 14-50 to i 1581-1600 11.80 to i 1661 15.00 to i 1601-20 12.25 to i Or from 1545 to 1660, a period of 115 years, the ratios of the two metals varied 33 per cent. And it is reasonably certain that all important monetary trans- actions in England prior to the Elizabethan reforma- tion of the coinage, under Gresham, were settled by weight and not by tale. Lord Liverpool, writing in 1805, says : " The price of silver in dollars has varied in twenty- three years, that is, from the end of the year 1774 to the 3ist of December, 1797, 12 per cent (in round figures), and even in the course of one year, that of 1797, no less than 9^ per cent. The variation in the price of silver bullion appears to have been still 47 greater, by another account, with which I have been favored, by the later Mr. Garbett, an eminent merchant and manufacturer at Birmingham; it there appears that silver purchased by him, as a refiner, varied, accord- ing to his calculation, in the course of ten years, to 1793, more than i9/^ per cent, and in one year alone more than 131/3 per cent." In the 500 years, from the fourteenth to the eighteenth centuries inclusive, there were over 400 changes or reratings throughout continental Europe ; and even a cursory knowledge of the history of coinage of the last 500 years in the world will show that not alone has bimetallism, with free coinage, failed in Europe, but it failed also in India ; that two distinct attempts were made there, both of which resulted disas- trously. The difficult character of the question, as well as the nature of money dealings in the past, is well illustrated in a few words taken from Mr. D'Avenal, the French author of u Economic History," as interpreted by Mr. Schoenhof. Writing of former times, he says: "An endless number of disks of gold, silver and billon were coined by all sorts of people in all kinds of countries, and these people had to value in livres, sous and deniers, at their true valuation, by weight and fineness. The barons and prelates who coined money regularly in the thirteenth century numbered eighty. There were consequently eighty coming standards, but in reality there were a good many more. Besides this, there were quite a number of pieces circulating of much more ancient date." This author also pertinently remarks that " the cur- rent value of money does not obey the ordinances of kings," that is, legal enactment, government fiat. 4 8 Apart altogether from the arbitrary debasement of the coin, apart even from the changes of the ratio enacted with the mere crafty design of inducing a flow of gold, the monetary systems of the times were so rough, so unscientific, the tariffing of the coins of different na- tions against each other so inexact, of so hasty average, that it was simply impossible to provide general tables of equivalents of coins. The mint conventions of con- tiguous States in Europe in the sixteenth century were so frequent that their history has been characterized as a jungle of intricacies. A modern writer has said that to pick out and enumerate all the changes of ratings in Europe in a period of 600 years the thirteenth to the eighteenth centuries inclusive would be like counting the stars in the Milky Way. And in France, the cri- terion of the silverites, there were 150 changes in less than that number of years in the fifteenth and sixteenth centuries. During the French Revolution the ratings of gold and silver were changed over sixty times, with no effect whatever save to cheat the people. In that country, from 1820 to 1850, silver expelled gold, achiev- ing a proportion as currency of 91 to 9, while gold only was in effective circulation from 1850 to 1873. Said the Chevalier Baisse, in his " Problem of Gold," written in 1859: " A change of 1^/2 per cent in favor of gold sufficed, thirty or forty years ago, to cause that metal to dis- appear wholly from commercial payments. Under the regime of the law of the jth Germinal, year XI (1803), gold had ceased to figure in transactions of any magni- tude since it had acquired an appreciable premium. People took their gold to the money changer in order 49 to pocket the premium, and made payments exclu- sively in silver, as every investigator knows." Gold and silver never have at any time or place cir- culated freely, concurrently and indiscriminately as legal-tender coins at fixed ratios under unrestricted coinage. It was the unbroken experience of centuries when Locke took up the question in England, as it has been the experience ever since, that side by side with the legal ratio there is immediately a market ratio, and there is no discernible tendency for the former to govern the latter. The laws that finally govern finance are not made in conventions or congresses. The foun- dation of the bimetallic idea is thus erroneous from the beginning, and there is no discoverer or great econo- mist to set against the chain of authorities by which the opposite s}^stem has been established. Locke gave, as sufficient reason why silver was then the best money of account, that the world had so decided, that the world of commerce had so decided, and that it is enough that the world had agreed on it and made it their common money. And this is sufficient reason to-day why gold is the standard money, money of ultimate redemption with Western nations, because all the progressive nations of the world have made it so, and that out of regard to its superior efficiency. I would not have my hearers assume that scientists or economists, because they are ancient, are neces- sarily to be deemed infallible. About the last of the sixteenth century, Davanzati said : " All commodities 50 which serve to satisfy the wants of man are by con- vention eqnal in value to all the gold, silver and cop- per." It would seeni incredible that such an idea could have been entertained, yet it must have been, for Montesquieu appears to have adopted it, because Chevalier took the trouble to refute it as coming from him by simply pointing out that the money quantities of France were estimated at 3^ milliards of francs in value, while the value of real propert}' alone amounted to 83 milliards of francs. We have spoken of the Oresme, Copernicus, Gres- ham Law, which was expounded by Locke, Newton and other eminent men of the times to the government of Great Britain, but a knowledge of its workings did not reveal to them a remedy for continually recurring evils of coinage, viz, the variations, the parting of the metals, the breakdown of parity of coin in circulation, etc., which was universal. The remedy was not per- ceived even by the great expounders of the Gresham Law. A solution was found by Sir William Petty, who died in 1687, in a treatise of his discovered in 1691, viz, to make one metal the standard money, and the other subsidiary to it ; that so much subsidiary coin as could be kept in free circulation, redeemable in or exchangeable with the standard metal coin, was not only the best but the only method practicable for using both. That there could, of course, be no such thing as a double standard, and the greatest stability of money was to be attained by nsing one metal as standard. This theory was elaborated at a later date by Adam Smith. 5 1 The best brief exposition extant of money on this basis the Gresham-Petty laws is by Lord Liverpool, at the beginning of this century, say about 1805, as follows: " The standard coin of a country is the measure by which the value of all things bought and sold is regu- lated and ascertained, and it is itself, at the same time, the value or equivalent for which goods are exchanged, and in which contracts are generally made payable. In this last respect the standard coin, as a measure, differs from all others, and to the combination of the two qualities before defined, which constitute the essence of this standard coin, the principal difficulties that attend it in speculation and practice, both as a measure and an equivalent, are to be ascribed. These two qual- ities can never b brought perfectly to unite and agree ; for if the standard coin were a measure alone, and made, like all other measures, of a material of little or no value, it would not answer the purpose of an equivalent. And if it is made, in order to answer the purpose of an equivalent, of a material of value, subject to frequent variations, according to the price at which such material sells at the market, it fails on that account in the qual- ity of a standard or measure, and will not continue to be perfectly uniform and at all times the same. Civil- ized nations have generally adopted gold and silver as the material of their standard coin, because these metals are costly and difficult to procure, little subject to varia- tion in value, durable, divisible, and easily stamped or marked." Lord Liverpool was not insensible to the possibility of a change in the value of a money metal in respect of itself, and that the standard metal might so vary ; but he held this difficulty to be so essentially inherent as not to be susceptible of remedy. 52 Following the teachings of Gresham, Locke, Newton and Petty, Great Britain, after the most careful consid- eration, and after centuries of monetary welter, decided in 1816 to legally adopt the gold standard, though, as already stated, because of its efficiency, gold had really been, through the custom and usage of merchants as well as by proclamation, the money of commerce for one hundred years previously. The master of the mint declared in 1816 that the law merely established and legalized the system which had been adopted by public opinion since 1717. So, also, the Acts of the United States Congress of 1853 and 1873 merely carried into full legal effect the Acts of 1834-37, a fact of nearly forty years. As already stated, there is not a trace in the writings of American statesmen of the peculiar monetary theory on which bimetallism is now based. The conclusion that commodity values absolutely rule coinage values was concurred in and accepted by the statesmen of our own country, Morris, Gallatin, Hamilton, Madison, Jay, Jefferson, and other founders of our American Republic, and, later on, Webster, Clay, Jackson, Benton, Tilden, Cleveland, and others. Jefferson said, among other and similar utterances on the subject : " Just principles lead us to disregard legal proportions altogether, to inquire into the market price of gold in the several countries with which we shall be principally connected in commerce, and to take an average from them." This conclusion was followed in 1834 by the United States, as indicated by the following, taken from the Report of Currency Committee to Congress, June 30, 1832 : 53 u The Committee think that the desideratum in the monetary system is the standard of uniform value. They cannot ascertain that both metals have ever circu- lated simultaneously, concurrently and indiscriminately in any country where there are banks or money dealers ; and they entertain the conviction that the nearest approach to an invariable standard is its estab- lishment in one metal, which metal shall compose ex- clusively the currency for large payments," that is to say, standard money, money of commerce, money of ultimate redemption. This conclusion is impregnable. The only rational bimetallism possible is the circula- tion of so much silver as may be kept freely inter- changeable with gold and as may be necessary for the minor transactions of trade. All silver hoarded by Government in excess of this means the withdrawal of just so much capital from active operations in the hands of the people, for illustration, the present mone- tary status in the United States, which is a perverted example of the bimetallism of Sir William Petty. To assure the use of gold and silver at the same time on a par, gold must be the standard, and the coinage of silver so limited that the Government can maintain their exchangeability. And under such a policy any excess of silver beyond the actual uses of it by the people is, as stated above, just so much capital withdrawn from active operations, because the excess is useless for pur- poses of redemption and is a menace to the redemption money. If the coinage cannot be circulated, then it is waste to lock it up and circulate the paper instead entailing all the disadvantages of paper without the 54 advantage of its economy. The excess of silver over what can be practically used in active circulation is not more defensible than the Populists' farm-product Sub- Treasury schemes. The important point here is, that with all the complexity and confusion originating in notions of making money abundant (which will be referred to later on under the head of " CURRENCY "), our Government has arrived at nothing and has effected nothing which might not have been effected better by a thoroughly monometallic system, with gold for the standard. It is as impossible for the whole world, by inter- national agreement, to maintain coins of two or more metals in circulation, in unlimited quantities, at a fixed legal ratio, differing from the relative natural or market value of the metals of which they are composed, as it is for separate and independent nationalities to do it, and the latter never has been done. Let us now consider the status of the international bimetallic movement after twenty years of agitation. At the Brussels Convention of 1892 the delegates of the United States were, under date of November 22, 1892, thus instructed by Secretary of State John W. Foster : " You should not lose sight of the fact that no arrange- ment will be acceptable to the people or satisfactory to the Government of the United States which would, by any possibility, place this country on a silver basis while European countries maintain the single gold standard" The British delegates asserted from the outset that they would not adopt bimetallism on the basis of free 55 coinage ; German}^ and Austro-Hungary let it be known that they would not, at least not without the con- currence of Great Britain ; France explicitly declared this to be her attitude ; and Weber for Belgium, Forsell for Scandinavia, and Raffalovich and De Thoener for Russia, declared that, in the years that had elapsed since former conventions, 1878, 1881, they had seen no reasons for changing their convictions against it, citing examples to show how utterly impossible it is, in monetary matters, to resist natural forces by statutory laws or agreements. Forsell of Sweden voiced similar sentiments with a force and originality of reasoning, a wealth of learning and illustration, and a caustic wit, not exceeded by any member of the convention. Said Forsell : " The question is, What should be the size of a hogshead to contain a certain quantity of liquid when there is no possibility of stopping the bunghole ?" And, further, " If the conference of Brussels contributes to establish and fortify the conviction that an interna- tional agreement for the free and unlimited coinage of silver is not only rejected for the moment, but is inadmissible for the future, it will have reached a very important result." So the Brussels Convention closed with the following glittering generality in the way of a resolution, a diplomatic courtesy of Baron de Renzis, the Italian delegate, who represented the Latin Union, in the ab- sence of Mr. Tirard, French delegate : " The International Monetary Conference, recogniz- ing the great value of the arguments which have been developed in the reports presented and in the discus- sions at the meetings, and reserving its final judgment 56 upon the subjects proposed for its examination, ex- presses its gratitude to the Government of the United States for having furnished an opportunity for a fresh study of the present condition of silver. " The conference suspends its labors and decides, should the governments approve, to meet again the 3oth of May, 1893. It expresses the hope that during the interval the careful study of the documents* submitted to the conference will have permitted the discovery of an equitable basis for an agreement which shall not infringe in any way the fundamental principles of the monetary policy of the different countries." But the real status had been previously expressed by Mr. Tirard in the Convention, and, as France is constantly cited by the silver agitators, I ask my hearers' indulgence for quoting at some length Mr. Tirard, then Minister of Finance of the French Re- public and Governor of the Bank of France. Said Mr. Tirard : " Gentlemen, I believe that if a conclusion could not be reached which would be accepted by everybody, or at least by a majority sufficient to establish the base of an international system, it is because the adoption would result necessarily, for several large States, in a radical change of their monetary legislation. " That is, in truth, a difficult undertaking. Peoples already far advanced in civilization have habits, customs and laws which are adapted to their traditions. They are not applied in an arbitrary fashion ; they are bound up with the very conditions of the existence of these peoples. " Despite all the demonstrations and the speeches, all the publications, and all the newspaper articles, do we 57 see the Powers named, and, too, others, change their Opinion ? NOT THE LEAST IN THE WORLD. " Since the first day, we have heard upon this point declarations which were perfectly frank and sincere, declarations for which I, on my part, am grateful to their authors, because it is well to know upon what we may rely. We have heard the Minister of Germany, and the Minister of Austro-Hungary, and then Sir Rivers Wilson, declare that neither Germany nor Austro-Hungary nor England had any intention of modifying their monetary systems, with which they declared themselves fully satisfied. Under these con- ditions we evidently cannot re-establish free coinage, and I have not the vanity to believe that I should suc- ceed in persuading the governments of these great countries, and their eminent representatives, that they are mistaken, that they have taken the wrong road, and that they are in error in remaining attached to gold monometallism. I consider, therefore, until some change takes place, that the question of free coinage is decided so far as we are concerned." Said Mr. Currie, for Great Britain : " After the repeated declarations of the delegates of France, Germany and Great Britain, we should only delude ourselves if we did not admit that the question is closed." After the Brussels Convention, the German Agricul- turists, deluded into the belief that bimetallism might raise the price of grain, induced the Government to appoint a Commission on the subject, and the Commis- sion has reported that it is not possible to raise the price of silver by international agreement. After twenty-one sessions the President closed the proceed- ings with the single remark that these protracted 58 debates might be useful as showing how difficult it was to find something which would evidently be desirable if it were attainable. On the present status of the movement let me put in evidence M. Paul L,eroy Beaulieu, in The Forum for December, 1895: " To-day a fixed ratio between gold and silver, and equality in monetary function between the two metals, is an arrangement long since vanished. It seems an antiquated institution, abandoned for a quarter of a cen- tury. Any restoration becomes more difficult with the passage of time. Such is the fate of silver, a de- throned monarch. In 1876, in 1880, in 1885, even in 1890, though far less at the later dates, there were people disposed to maintain it in its former functions, or to restore those functions when they had been only recently lost. But to-day an entire new generation ot adults has arisen who never knew silver in complete possession of the functions of money. "There is not a single European country, in a normal financial condition, that attaches the slightest impor- tance to bimetallism. From time to time some Minis- ter utters in Parliament a few equivocal words on the subject, seeking to avoid stripping the bimetallists absolutely of all hope. But America must not be duped' by these ambiguous expressions. At bottom not a country, not a government of Europe, has the least wish to make the least change in the established mone- tary system, that is, in the pre-eminence of gold, and the secondary and circumscribed function of silver." As there were proposals as early as the beginning of the seventeenth century, or really the closing of the sixteenth century, that is, three hundred t years ago, for an international common ratio, we can see from the 59 present status what progress the theory or proposition for international bimetallism has made. Says Mr. Giffen : u After so much bimetallic clamor as we have suffered for twenty years, sober men may be interested to see how overwhelming are the facts and the economic opinion against the biinetallist, and how little claim bimetallism has to be a competing monetary theory with gold monometallism." Says Prof. W. A. Shaw : " The verdict of history on the great problem of the nineteenth century bimetallism is clear and crush- ing and final, and against the evidence of history no gainsaying of theory ought for a moment to stand." To conclude this part of my subject I will repeat: i st. The quantitative theory the international bimetallists' theory is without the slightest founda- tion in any known principle of economic law, and is a fallacy. 2d. That the economic phenomena of the past fifty years indicate that prices of commodities move in obedi- ence to natural and inherent causes, independent of circulating money quantities. 3d. By natural law, there is but one way to provide for bimetallism in any country, and that is to make the more precious metal the standard, and then float such an amount of the cheaper metal as can be kept upon an undoubted equality through free interchangeability "FREE SILVER." A CCORDING to the press dispatches of February JL\ 8th, Representative Hall of Missouri charged on the floor of Congress that Senators who voted for free coinage had, according to u credible information, " privately said they believed free coinage would bring upon this country national and individual bankruptcy and ruin. He declared that the greatest sin of the present age was the cowardice of statesmen. We have shown under the head of " Bimetallism " that it has been rejected by every Western power of any importance, and it should be borne in mind that it is not claimed by any prominent advocates of that theory, for example, Lavelleye of Belgium, Cernuschi of France, Ahrendt of Germany, Walras of Switzerland, Seyd (de- ceased) or Gibbs or Helm of England, or Andrews or Walker of the United States, that the unrestricted free coinage of silver by any one government now maintain- ing a gold standard could be otherwise than disastrous. On the contrary, they declare in print that they do not desire to debase the standard of value ; they would have every debt paid in gold or its equivalent. And this is the tone of bimetallists generally in Great Britain and Continental Europe. To all of which I repeat: When the two money metals have unlimited free coinage at 6i fixed ratios, and are legal tender, the cheaper will, under all possible circumstances, drive the dearer out of circulation. We now come to the present most aggravated form of the silver money question, its independent, un- limited free coinage by the United States. Alongside of me in business is a man of the utmost probity, who regards gold and silver as Siamese twins, and in effect says, " What God hath joined together let not man put asunder," though the commercial relations of the two metals have been, since the dawn of history, from 2 of silver to i of gold to 34 of silver to i of gold, and in the past three hundred years France alone has changed their ratios more than one hundred times to keep this pair of celestials in double harness. Nevertheless, this does not daunt my doughty friend, who ascribes all the trouble to the " natural cussedness " of mankind, the iniquitous machinations of avaricious goldbugs, and simply relies upon the leaven of genuine Christianity to keep the discordant couple in harmony. He finds Love a solvent for all refractory elements in life, an ounce of which he maintains in his philosophy on a parity with a pound of knowledge, that is, of the scientific methods in conformity with economic law. In support of his doctrine he quotes : "While Honor's haughty champions wait Till all their scars are shown, Love walks unchallenged through the gate And sits beside the throne." Recently one of our California Congressmen whom I met, after saying he would leave in a few days for 62 Washington, to vote for the unlimited free coinage of silver, volunteered the opinion that there is no economic law that is an absolute criterion in finance, and that the people are bound to have the unlimited free coinage of silver. It is very certain that the average man knows far less of finance and the laws of economic science than he does of the solar system and astronomical science ; and natural law governs economic science as surely as it does the movements of the planets. Popular clamor should never be heeded in finance any more than in astronomy; for, as we have already shown under the "Natural Law of Money " and "Bimetallism," all his- tory proves that economic law operates with as much certainty in the one as gravitation does in the other. As indicating the views of the free silver agitators, I quote from the proceedings of a Silver Convention in Iowa : " The demonetization of silver was a colossal con- spiracy and crime, the greatest ever perpetrated against the human family. It was demoniac." Senator Pfeffer of Kansas declared : " It matters not of what money is made, or what its intrinsic value is. What gives value to the coins is law, nothing else. Our dollars ought to represent our property, all that we have, and not merely the little gold in our possession; and our money ought to be made of material which, in small bits, would have no appreciable market value. Then it would not be ' cor- nered,' and when war or hard times should come it would not slink away and hide. When the people need money, they ought to have it within easy reach." 63 And for himself and constituents, in furtherance of such and kindred vagaries, a free silver Governor of a free silver State said that they would, if necessary, ride in blood " even unto the horses' bridles." Senator Stewart of Nevada, in the Overland Monthly for November, says : " The combination which wickedly, dishonestly and clandestinely demonetized silver and destroyed one- half of the metallic money of the world dare not admit why they did it and for whose benefit it was done, and that it is supported by time-servers, cringing politicians, trembling debtors, office-holders with fixed incomes, and fawning hypocrites and sycophants of every name and nature." The Silver party, in its Convention at Washington, on Thursday, January 23d, said : " The fall of prices has destroyed the profits of legiti- mate industry, injuring the producer for the benefit of the nonproducer, increasing the burden of the debtor and swelling the gains of the creditor, paralyzing the productive energies of the American people, relegating to idleness vast numbers of willing workers, sending the shadows of despair into the home of the honest toiler, and building up colossal fortunes at the money centers." Only a few weeks ago a free silver Senator from South Carolina denounced the President of the United States as a besotted t}'rant, declaiming on the floor of the Senate to this effect : " The derangement in our financial affairs and all this cry about sound money and maintaining the honor and credit of the United States are all part and parcel 6 4 of a damnable scheme of robbery, which has for its object: first, the utter destruction of silver as a money metal ; second, the increase of the public debt, the issue of bonds payable in gold ; and third, the surrender to corporations of the power to issue all paper money and give them a monopoly of that function." In a debate in the United States Senate, January 30, 1896, Senator Mitchell of Oregon said: "We must legislate to increase the value of our export commodities (including silver) so as to enable us to meet, reduce, and, if possible, wipe out the debt which to-day makes the people of this country virtually slaves to the money-lenders of Great Britain." Irving M. Scott says, in the Overland Monthly for February : u Not only have the demonetizing acts with respect to silver reduced the world's redemption money fully fifty per cent, but they have palsied its powers of recuperation, have effected a scarcity of money, and thereby infested our country's doors with countless packs of ravenous wolves." Such are some of the hysterical utterances of the finan- cial rough-riders of the country as they shout their pernicious doctrines to deluded adherents. The folly of the free silver agitators in the United States is but another form of the " whip-all-creation " braggadocio once so common in this country, but none the less hurtful and deplorable because common. To all of which I have repeatedly remarked in the past, and now reiterate, that if the Government of the United States can, by legal enactment, convert a given quan- tity of a commodity worth only fifty cents in the 65 world's markets into one dollar of money of per- manent value, why not waive the fifty cents' worth of intrinsic value and issue fiat money at once ? If law can do this, why not make gold and silver equal in value, ounce for ounce ? If this can be done, why levy taxes ? The doctrine is, in fact, that of the advocates of inconvertible paper ; only the latter are more logical. If Government is to fix prices at all, it is, of course, cheapest and easiest to go to incon- vertible paper at once. The perverted views in ques- tion have all resulted from the cheap-money delusion which has made the United States monetary system the irregular and wasteful patchwork that it is. To create more money in order to raise prices in general has been the object of one faction, while another has aimed purely and directly at raising the price of silver. What has been proposed and done, therefore, has tended to aggravate monetary evils instead of lessen- ing them. Senator Stewart says, " They dare not admit why they did it and for whose benefit it was done," namely, the omission of the silver dollar from coinage, that which he now calls " the crime of '73." As he voted for it, I will put him in evidence. In the Senate, February, 1874, Senator Stewart, replying to a ques- tion from Senator Logan, said : " I want the standard gold, and no paper money not redeemable in gold ; no paper money the value of which is not ascertained ; no paper money that will organize a gold board to speculate in it/' 66 The " gold board " referred to was the Gold Ex- change in New York, which existed during the sus- pension of specie payments. Subsequently Senator Logan, in discussing the same subject, stated that we could not get gold to resume specie payments with. To which Stewart replied : " When gold is invited to a country like this, with such an industrious people as we have, with our industry and our resources, I say there will be no difficulty about getting sufficient gold." Since those words were spoken the annual produc- tion of gold in the world has increased 120 per cent. Senator Stewart also says : " They (the advocates of a gold standard) know full well that, if silver had the same right of mintage with gold, the parity between the two metals would be restored and maintained, as it was for thousands of years pre- vious to the crime of 1873 " I wonder if he was conscious of the irony of his own words ? There never has been maintained, at any place or period, an evenly operating parity between the two metals as legal tender under free coinage at fixed ratios. He also asks : "Does anybody doubt that Japan, China, Mexico, and other free coinage countries, are more prosperous and happy than ever before in their history ? while every gold-standard country in the world is more miser- able than at any other time for the last two hundred years ?" I have taken at random nine callings, as follows, laborer, bricklayer, stonemason, blacksmith, driver, butcher, shoemaker, carpenter, printer, and find that at present their aggregate wages for one day in San Francisco are $29.35 gld ; at four Pacific Coast com- mercial centers, combined average, $25.56 gold; in commercial centers east of Missouri River, $22.17 gold; in Mexico, $8.17 in silver; in China, $3.25, and in Japan, $2.19, also silver, though since the Chino- Japanese war wages are rising in China as well as Japan. McMasters quotes the same number and calling of workmen in New York as earning, in the period between 1770-1800, for one day, $7.35 in silver. Thomas Carlyle, in his " Past and Present," quaintly records that Milton received for his " Paradise Lost," and other works, ^10 in installments and a narrow escape from hanging. And Bishop Larimer, in one of his sermons, shows that in his time ^8 was not infre- quently the yearly wage of a parish priest, which he very justly denounced as niggardly. In money of the present time it would be only about $10. The average wage-earner in Japan or China gets no more in silver than one-eighth the rate obtained in this country in gold, and in Mexico, right alongside of us, as a rule no more in silver than one-third the rate received in this country in gold. I also refer to the labor statistics quoted under " Bimetallism." Senator Stewart says, " One-half the metallic money of the world has been destroyed." Mr. Scott says, " Reduced the world's redemption money 50 per cent." There never has been any destruction of or reduction 68 in the amount of silver money. On the contrary, it has increased over 75 per cent in 45 years. Taking MulhalPs figures for 1860, $4,000,000,000, and 1890, $7,973,000,000, as a basis, and adding the total prod- uct, mint ratios, 1891-95 inclusive, and deducting from these five years 40 per cent for the arts, the amount of gold and silver money would now be approximately $9,100,000,000, or an increase of 134 per cent since 1860. But taking other figures, in 1860 the world's total stock of coin, estimated, was $4,000,000,000; in 1895, as per United States Mint Report, $8,157,000,000; and the present stock of metal- lic money exceeds $8,200,000,000, an increase of 105 per cent in 45 years. This money is divided at the present time: Gold, $4,130,000,000; silver, $4,070,- 000,000. Four thousand and seventy millions of dollars is the mint value of the silver money in the world, its commercial value being approximately sixty-five cents per ounce; and nearly half of it represents silver monometallism in Oriental lands. Does any sane man believe that unlimited free coinage by the United States of America would increase the market value of this mass of silver two thousand millions of dollars ? Although eighty-five per cent of the total is full tender, it possesses, practically speaking, no more commodity value in one place than another, as compared with gold, because, in the relations between gold and silver in India, China, Japan and Mexico, silver is subject to practically the same commodity price that it would be with us. Throughout the whole history of the subject, 6 9 whatever may have been the legal ratio enacted between gold and silver coins, gold and silver themselves have always had a commodity value independent of these ratios ; and this commodity value invariably controlled the purchasing power of each money under unlimited free coinage of both metals. In all large transactions of ancient or medieval times, the settlement of obliga- tions was in either gold or silver by weight (as it is now in China), and without reference to coinage ratios, which were variable and constantly set at naught by the commercial status of the metals, that is, by the will of the people, the supply and demand. However, so far as the world's stock of silver is con- cerned, it is only when it is employed in international exchanges or in the industrial arts that it is estimated at its bullion value in gold and subjected to a discount. In all countries where it is the legal standard, as well as in countries that have a so-called " limping " stan- dard, like the United States and the States of the Latin Union, it circulates as money at its full legal parity with gold and to the extent of $630,000,000, which represents the subsidiary silver in circulation, is cur- rent at nearly seven per cent more than its bullion value in standard silver coins. Of the $4,070,000,000 silver in circulation, according to the Mint Director's last report, $1,900,000,000, or nearly one-half, is held in Oriental countries, where it is the " standard of value," and hence cannot be at a discount in the domestic commerce of those countries ; while over $1,720,000,000 is held by the United States, the Latin Union, Germany, Spain and Great Britain, 70 all of which circulates at its full parity with gold. At no period in history has there ever been such a vast volume of silver coin performing the functions of money. And, as proof of this, while the world's produce of silver since 1873, when its alleged demon- etization occurred, has been $2,754,452,900, its coinage has been $2,756,423,015. This, of course, includes recoinage. Moreover, it has been persistently asserted by leading bimetallists that silver has not depreciated, and will buy as much now as it ever could. And, to demonstrate that proposition, we have been treated to an amount of arithmetical jugglery that might well make Hermann, prince of prestidigitators, or even an Indian fakir, turn green with envy. To merely touch upon Mr. Scott's assertion regarding what he deems reduction by reason of the gold standard, I may say that we find, upon reference to authorities, that the production of gold (I am now speaking of gold and silver as commodities) was, in 1874, $91,000,000 ; in 1876, $104,000,000; in 1878, $119,000,000; in 1890, $120,000,000; in 1892, $147,000,000 ; in 194, $180,000,- ooo ; and in 1895, breaking all previous records, it was $200,000,000. Silver represented, in 1870, $51,000,000; in 1874, $70,000,000; in 1884, $91,000,000; in 1894, $106,- 000,000; in 1895, $120,000,000; wherefore, I repeat, there has never been any destruction of or reduction in the volume of silver money. As Mr. Scott practically advises this country to abandon the gold standard and adopt the unlimited free coinage of silver, presumably at a ratio of 16 to i, 7* which is about twice its actual value, and which means cheap silver monometallism, I would ask what effect such a policy would have upon the welfare of the men whom he employs, and also upon that of the people of California whose gains and earnings are represented by the hundred and seventy-five millions of deposits on a gold basis in the savings and commercial banks of this State ? In other words, does he, or does any one, really believe that his workmen, or anybody's workmen, or the people at large, would be benefited by being paid their wages, or their deposits in banks, on a depreciated silver basis, instead of a gold basis, as now ? In the Elizabethan reformation of the English coin- age under Sir Thomas Gresham in the sixteenth century, the Queen, in her proclamation, said: "The loss in the base money falls principally on pensioners, soldiers, hired servants, and all other poor people who live by any kind of wages, and not by rents of land or trade or merchandise." This is in accordance with a natural law as inexorable as gravitation, that no legis- lation can evade or set aside. The way in which the subject of free silver coinage is discussed by many of its advocates would, without disrespect, suggest that they expected to be able to go forth with a sack and obtain money for nothing ; but there is no royal road to wealth, and all should consider the evils that would result to the industrial classes of this country from the substitution of a currency based on silver instead of gold. Every person should candidly reflect upon the indus- trial condition and wage-earning opportunities of human 72 kind in silver-standard countries as compared with the gold-standard countries. It is only in the gold-standard countries that high wages have been achieved. Every country in the world that has unrestricted free coinage is on a silver basis, and low wages prevail. There is not a gold-standard country in the world that does not use silver as auxiliary ; but there is no silver-standard country that does or can use gold as auxiliary, except by specific contract or as hoarded treasure. Why any considerable portion of the American people should have believed, or can now believe, that the unrestricted free coinage of silver could possibly be a benefit, or that silver and silver-producers should be deemed entitled to any more consideration than wheat and cotton and the men that plant and cultivate them, is simply astonishing. Professor Andrews stands aghast at the idea of social- ism, speaking of anarchism, nihilism and socialism in the same breath as corelated, thus: " That labor is the sole cause of wealth, and that things are wealth exactly in proportion as they embody labor, is a fundamental tenet of socialism, anarchism and communism, the admission of which leaves one no logical defense against the general doctrine of those people." Yet, " doing something for silver " is class socialism as pernicious in effect as that of the greenback legisla- tion, which is probably one of the most aggravating examples known in this country of home markets that do not qualify for the farmer when his products are brought into competition in the world's markets which fix 73 home prices with the products of Argentine peons, Indian ryots and Russian peasants. The alleged popular desire for free coinage, upon which so much stress has been laid, is presumably based on a belief in the public mind that silver, given free scope, would cure or at least mitigate industrial depres- sion, caused, as alleged, by scarcity of money ; and that it would contribute largely to the relief of farm mortgage or note debtors, both of which are points upon which the advocates of free silver also place especial emphasis. An advocate of free silver has said : " It is not a question of interest to the people whether the gold and silver bullion owners may have the right to have their metal coined into legal-tender dollars, but it is of vital interest that those who carry the burden of $2,500,000,000 of debts that are liens on their property shall have the right to the use of both metals for legal-tender money to pay those vast debts." The question arises, Would even they be helped under the independent, unlimited free coinage of silver? Any one possessing silver bullion would have the same coined, because of the artificial value placed upon it by Government, and use it to his own advantage. How would farmers with mortgaged farms obtain such silver but by exchanging their commodities for it, or by executing fresh mortgages? When asked how they are to get possession of a more plentiful supply of money, if on a free silver basis it should be more plen- tiful, they cannot tell. That our wheat farmers have suffered extremely admits of no doubt. In addition to drought and other climatic vicissitudes, they have 74 suffered from the competition of India, Argentina and Russia, thereby demonstrating the fallacy of the home- market delusion; and, latterly, cable and trolley cars and the bicycle have come in .to lower the prices of their horses and lessen the demand for feed grains, etc. But how would a depreciated currency, such as would be produced by the unrestricted free coinage of silver, help them? In California their obligations are in terms of gold. In any event contraction and panic would be the first result of a change, because gold would be driven out of circulation. Moreover, gold has by law been the standard for twenty-three years, a period of time long enough to permit six generations of ordinary farm or land mortgages to expire by limita- tion, the average life of such mortgages being less than four years. Debtors might avail themselves of a free-coinage law to pay their debts in cheaper money if their creditors should not be alert enough for them; but capitalists will be equal to the situation as regards future bar- gains, for by universal consent commercial communities may by contract free themselves from the burdens of such an act. The gold standard was, in fact, brought into use in England 180 years ago by the community contracting in this manner, and the experience on the Pacific Coast, as well as in England and elsewhere, shows that the commercial community is everywhere ready enough to use other than an enforced money if they do not quite like it. But there would be no protection whatsoever for the wage-earner of any kind. He would be as a lamb led to 75 the slaughter. The shopkeeper who sells goods, and the capitalist who rents houses or lands, can raise the prices thereof by their own volition ; but the workman who buys goods and rents houses or lands cannot simi- larly raise his own wages. Of all the contrivances for cheating the laboring classes of mankind, none is more effectual than a currency that is not convertible into metallic money of intrinsic equivalency. In this country to-day the laboring man receives a dollar equal to gold worth 100 cents, but with silver dollars of independent, unlimited free coinage he would be cheated of one-half of his dollar. Free silver coinage practically means cheating creditors out of one-half their dues. The adoption of free silver means silver monometallism, with silver coin depreciated one-half. The maintaining of both metals as money should be such that each should equal the other. That would be true bimetallism, and is only possible with gold as the standard and silver as auxiliary freely interchangeable. It is frequently asserted by advocates of the indepen- dent, unlimited free coinage of silver by the United States Government, that the prices of commodities, particularly wheat, have steadily moved in sympathy with the price of silver. An examination of this sub- ject has shown that within the past twenty-three years the fluctuations, for example, in wheat, corn and cotton, have almost invariably occurred because of an increase or a decrease in the world's supply ; that is to say, when the crops were light, prices increased, and, when crops were heavy, prices decreased ; beef and pork fol- lowing the fortunes of the cereals to a less degree ; and 76 such fluctuations show continuously throughout the period named, to wit, twenty-three years, from 1873 to 1895 inclusive, with no indication that the changes in prices were caused or governed by silver quotations in any way. In other words, the general downward ten- dency in the price of wheat has been due mainly to the increased product, for export, in Argentina, India, Russia and the United States also. Let us take the coffee crop, almost entirely confined to silver-using countries, and of the present value of $250,000,000 per annum. It has doubled in quantity since 1870, yet the demand has at the same time so increased that the price is now approximately 18 cents per pound in gold, as against an average of less than n cents for five years, from 1856 to 1860, an increase of 66 per cent. Cotton varied 77 per cent in 1895. Wheat declined in eighteen years that is, from 1879 (date of gold resumption) to 1896 45 per cent ; corn 15 per cent ; oats 15 per cent; lard 3 per cent ; mess pork increased 3 per cent ; butchers 7 beef 13 per cent, a superficial average decline on these six articles of 1 1 per cent ; while we have shown under " Bimetallism " that in the same period transportation of all kinds and manufac- tures generally declined over 50 per cent, which must surely be deemed a blessing, particularly as wages increased during the same period. What the explana- tion is of this situation is given in Professor Marshall's " Principles of Economics : " "A rise in the efficiency of any one group of workers may tend to glut the mar- ket with their wares, but a general increase in the efficiency of all workers would increase the national 77 dividend and raise earnings nearly in proportion." This, I think, fairly accounts for the fact that wages have in the aggregate largely increased during this century, while as a whole prices of commodities have fallen, but not nearly so much as the general outcry would indicate, as can be seen from the following table from Schoenhof 's u Money and Prices : " Variation of Prices and Approximating Totals of Index Numbers. 1845-50. 1879. 1884. 1888. 1. Coffee 100 140 106 166 2. Sugar loo 55 54 49 3. Tea 100 in 92 64 4. Tobacco 100 156 200 244 5. Wheat 100 75 73 58 6. Butchers' meat 100 127 123 108 7. Cotton ........ loo 73 92 90 8. Raw silk 100 113 117 117 9. Flax and hemp 100 80 76 66 10. Sheep's wool 100 107 98 in 11. Indigo 100 164 151 129 12. Oils 100 104 no 74 13. Timber 100 115 100 80 14. Tallow 100 83 113 73 15. Leather 100 146 139 133 16. Copper 100 72 71 91 17. Iron 100 77 69 67 1 8. Lead 100 84 70 90 19. Tin 100 77 104 173 20. Cotton, Pernambuco. . . 100 71 74 70 21. Cotton yarn fc 100 88 99 90 22. Cotton cloth 100 81 88 87 Totals of index numbers . .2,200 2,202 2,221 2,230 Price of silver per ounce . . 6o^d. 49^d. 5 id. 78 Thus in a period of forty years, 1845-50 to 1889, considering the prices of commodities, we find the fol- lowing advances: Butchers' meat 8 per cent. Raw silk 17 " Indigo 29 " leather 33 Coffee 66 " Tin 73 . " Tobacco (internal revenue tax) 144 The cry of distress has been chiefly because of wheat and cotton. If, during an average of eighteen years, the fall in silver caused wheat and cotton to fall, why did it not cause coffee, tobacco, beef, mess pork, lard, etc., to fall? In the year 1895, as stated, cotton varied from 5.28 to 9.38 per pound, or 77 per cent, and coffee was higher from 1890-95 than it had been for twenty years preceding, the average being 18 cents per pound for the six years named. Why? Because of a steadily increased demand for it. Let us now consider the side of the creditor. There are in the United States due or pending from savings banks, building and loan associations, and life and fire insurance companies, several thousand million dollars, to say nothing of railroad and other corporation stocks and bonds. There are 18,000,000 wage- workers whose earnings, let us say at $400 each, yield them $7,200,000,000 per annum. Think of the hardships that through these immense interests would be pressed upon the working people by a change to the free coin- age of silver, a 50 per cent reduction in the standard of measure and capital valuations. 79 In the monetary inquiry of Great Britain in 1381, Richard Aylesbnry is reported to have said : " The agreement of the gold with the silver could not be effected unless the money were changed; but that he dared not propose, on account of the general damage which would ensue." In 1830, when France, Germany, the United States, etc., were on a silver basis, a Mr. Atwood introduced a bill into Parliament to have silver which, as compared with gold, was then at a discount of 5 per cent in England invested with full money functions for the payment of all obligations, to which Mr. Herries, Master of the Mint, replied, conclusively, that it would mean general bankruptcy: ist, by demand for payment of debts in gold before silver became effective; ad, by change of capital valuations to a silver basis. Sir Robert Peel also said it would mean general bank- ruptcy. If 5 per cent depreciation would approximately occa- sion such results in England, what would 50 per cent do in the United States ? I take the liberty of quoting from John Locke one of several quaint and simple illustrations which he gave, in answer to a proposition from Secretary Lowndes of the British Treasury to increase the denominational value of a crown, and I trust my hearers will observe how aptly it applies to the artless theories of the silver agitators. Said Mr. Locke: " The multiplying arbitrary denominations will no more supply nor in any ways make our scarcity of coin commensurate to the need there is of it, than if the 8o cloth which was provided for clothing the army, falling short, one should hope to make it commensurate to that need there is of it by measuring it by a yard one foot shorter than the standard, or changing the standard of a yard, and so getting the full denominations of yards necessary according to the present measure. For this is all that will be done by raising our coin as is pro- posed. All that it amounts to is no more than this, viz, that each piece, and consequently our whole stock of money, should be measured and denominated by a penny one-fifth less than the standard. " The increase of denomination does or can do noth- ing in the case, for it is metal by its quantity and not denomination that is the price of things and measure of commerce ; and it is the weight of metal in it, and not the name of the pieces, that men estimate commodities by and exchange them for. " If this be not so, when the necessity of our affairs abroad, or ill-husbandry at home, has carried away half our treasure, and a moiety of our money is gone out of England, it is but to issue a proclamation that a penny shall go for twopence, sixpence for a shilling, half a crown for a crown, etc., and immediately, without any more ado, we are as rich as before; and, when half the remainder is gone, it is but doing the same thing again, and raising the denomination anew, and we are where we were, and so on." Lord Macaulay, reciting the events of the luckless " administration " in Ireland of King James the Second, in 1689, says : "The poverty of the treasury was the necessary effect of the poverty of the country. Public prosperity could be restored only by the restoration of private prosperity; and private prosperity could be restored 8i only by years of peace and security. James was absurd enough to imagine that there was a more speedy and efficacious remedy. He could, he conceived, at once extricate himself from his financial difficulties by the simple process of calling a farthing a shilling. The right of coining was undoubtedly a flower of the pre- rogative ; and, in his view, the right of coining included the right of debasing the coin. Pots, pans, knockers of doors, pieces of ordnance which had long been past use, were carried to the mint. In a short time lumps of base metal, nominally worth near a million sterling, intrinsically worth about a sixtieth part of that sum, were in circulation. A royal edict declared these pieces to be legal tender in all cases whatever. A mortgage for ^1,000 was cleared off by a bag of counters made out of old kettles." In discussing monetary matters, Thomas Jefferson said, as all the world's statesmen have said before and since, that the question of the difference between the value of gold and silver as money was purely a com- mercial question. It did not depend on legislation, or the fancy and taste of men, but on commerce, which regulates the price of commodities, and that " the whole art of government consists in the art of being honest." Every attempt to enforce the acceptance by a free people of a depreciated and practically fiat currency has failed eventually, even in times of war, and generally then before the close of the wars. It is unnecessary to cite more examples, though there have been striking ones, especially in France and the United States within the past 200 years, and elsewhere throughout the world in all times ; and it is Government fiat alone that is depended upon by the advocates of the independent, 82 unlimited free coinage of silver in the United States to make it go at $1.2929 per ounce as money. Its most vociferous spokesmen assert this vehemently. That this country should be kept in a state of continual sus- pense and incipient panic because of a product that is probably not the equal in commercial value of turnips or carrots, certainly not of potatoes or eggs, and which, expressed in figures, constitutes much less than one per cent of the country's product, is something amazing. The agitation of the silver question, aggravated by " Coin's Financial School," is one of those hallucina- tions that have occurred from time to time in this coun- try and elsewhere, but particularly in this country for the last twenty-five years, working incalculable evil, as all monetary schemes of like nature always and every- where have done. Mr. Harvey's arguments do not contain a single valid reason or suggestion why this country should engage in a free-silver crusade, should depart from a sound-money basis ; and, when I use the term sound money, I mean money redeemable in coin of intrinsic equivalency, or, in other words, a dollar that is worth a dollar the world over. An American gold dollar, if melted, will yield a dollar's worth of gold anywhere. The following is the dernier resort offered by Mr. Harvey in his " Coin's Financial School " for sustain- ing the independent, unlimited free coinage of silver by the United States of America : "If it is claimed we must adopt for our money the metal England selects, and can have no independent choice in the matter, let us make the test and find out 83 if it is true. If it is true, let us attach England to the United States, and blot her name out from among the nations of the earth." Such folly as this would seem to require no comment, but Mr. Harvey is not alone in it. Some of our public men 3 certainly the ablest, so far as the Eastern com- munities of this country are concerned, suggested pre- scriptive legislation against Great Britain to compel that country to co-operate with the United States in the unrestricted free coinage of silver at a ratio of 16 to i, the most egregious folly of the times. And what is to be thought of the action of Congress as a body in refus- ing to incorporate the word u gold " in the terms of bonds which were to be offered only for gold. While disavowing any sentiment of disrespect to individual believers in free silver and greenbacks, for while opposed to heresy I can respect heretics, I must say that in view of all the facts, which are too numerous to cite here, the action of Congress in refusing to incorporate the word " gold " was in my opinion inde- fensible, and it was repeated, and is only in accord with the vice inherent in the general agitation for free silver, namely, a desire to pay a creditor something less than one owes. It was an action in its essence not wholly unlike that of the North Carolina banks, about 1821, that loaned their own irredeemable notes to the public on condition that the customers' discounted paper be paid in specie. What inference should honest men draw from the noncommittal action of Congress ? If a banker knew a borrowing customer to be maneuvering to pay his debts in money of less value than that 8 4 borrowed, how long would the banker trust that customer ? Talleyrand admonished the National Assembly dur- ing the French Revolution in the following significant language : " You can arrange it so that people shall be forced to take a thousand francs in paper for a thousand francs in specie, but you never can arrange it so that the people shall be obliged to give a thousand francs in specie for a thousand francs in paper. " But did the National Assembly heed the timely sug- gestion ? Not one whit. In effect they said, " Vox populi, vox Dei ! " and rushed on pell mell to ruin. The same thing has just occurred in Argentina. It had been the general boast among those who were pushing on the " boom " there that Argentina was an " exceptional country," and that the ordinary laws of trade, currency and banking, however inexorable in their operation elsewhere, had no significance or appli- cability in the Argentine Republic. Referring to Senator Mitchell's declaration for rais- ing the price of silver and other products by legislation, as another exhibition of political subserviency to sup- posed popular clamor, I take the liberty of mentioning two planks in the State platform of a political party, in convention assembled at Sacramento, June 20, 1894, favoring the free and unlimited coinage of silver at the ratio of 1 6 to i ; and for the protection of the farmer, declaring that "the Government of the United States should reduce the cost of transporting the staple agri- cultural products from American seaports to foreign 85 seaports, to the end that the prices of the products should be advanced;" adding, " and for that purpose, inasmuch as an export can be protected in no other manner, we pronounce ourselves in favor of the use of a limited portion of the receipts of the United States customs for such purposes," etc. I only wish to show by these examples what absurdities men will commit themselves to in the pursuit of gain or political place and power. Even Mr. Harvey has not equaled in folly the two examples of local origin cited. For thirty years these United States of America have fumbled and shilly-shallyed with the financial and fiscal problems of the country as if there were no eco- nomic laws on the subject known to civilized peoples, have treated money from the standpoint of sentiment, hysteria, popular clamor and political subserviency, and taxation from that of personal aggrandizement ; while there is no law of the universe known to man and judged by human experience that works more inexorably than certain well-known economic laws. What is the excuse offered for such folly? The same that France offered when she issued forty-five thousand million francs of assignats ; that Argentina offered when ten years ago she plunged into a financial debauch in a fool's paradise of cheap money, ending in ruin, to wit, that " We are an exceptional country, and there is no absolute criterion of economic laws ;" in short, that we can defy all the teachings of human experience. Whom the gods would destroy they first make mad. It is often asked by the advocates of free silver, Why do bankers generally favor gold? The answer is : ist, it 86 is honest and an equivalent ; 2d, experience has proven it to be the best standard of value ; 3d, in the aggre- gate four-fifths of all they represent belongs to the masses, and in protecting themselves they protect the people. In other words, the man who pursues rational and conservative methods to avoid or to lessen the dan- ger of financial confusion and disaster is the man who seeks to maintain the best standard, thereby protecting himself as well as his fellow-men, those upon whose favor his prosperity depends. If a nation that has reached the gold stage of indus- trial development should adopt the single silver stan- dard, it would surely place itself under a disastrous disadvantage in its commercial transactions with gold- standard nations, which at the present time represent more than 70 per cent of the commerce of the world, and would involve itself, temporarily at least, in national and individual bankruptcy. Any attempt to make the cheaper of two metals the standard and the free coin- age of silver means no less will, under all possible circumstances, expel the dearer from circulation. I venture the opinion that however much unrest, perturbation and travail any Western power may go through in a monetary way, it will, if true to its best interests, be sure to adopt at last the best standard of value, that is, the one of intrinsic equivalency ; and intrinsic equivalency is determined, not by statutory enactment, congresses or conferences, but by the value placed upon a given commodity by the commercial world ; and by this token gold is the true standard of 37 value. It is not a question of politics, but of science and ethics, and one of superlative importance. To legislate that over $5,000,000,000 of savings and capital in savings and commercial banks, all the fire and life insurance obligations of the country, and all the railway and other bonds and interest due thereon, an aggregation of say $20,000,000,000, should be paid in silver, on an unrestricted free-coinage basis, to say nothing of seven thousand millions of dollars per annum of wages to the people at large, would be to work an injustice that could not be anything less than nationally calamitous in its results. For the United States to engage in the independent, unlimited free coinage of silver would simply be financial insanity. And while I cannot believe that, in the final appeal to the common sense and right principle of the American people, they will commit the government of this country to a policy of economic madness and repudiation, the agitation of free silver advocates and the attitude of the United States Senate have already imposed incalculable loss upon the people and now seriously retard the return of industrial activity and general prosperity. " Money is essentially rebellious to the orders of government. It comes without being called and goes without being arrested, is deaf to advances and insen- sible to threats." With unlimited free coinage it is impossible to have both metals circulate simultaneously, concurrently and indiscriminately. We must choose between them and accept one as the standard. UNDER WHICH KING, BEZONIAN? CURRENCY. QENATOR SHERMAN, in his article, " Deficiency O in Revenue the Cause of Financial Ills," in The Forum for April, in speaking of greenbacks, etc., which he has termed " A truly American currency," says : " They are a debt of the United States without interest and without other material cost to the Government than the interest on the cost of the coin or bullion held in the Treasury to redeem them" In considering the subject of currency it seems perti- nent to define standards and measures of value. u The giving of money for a commodity is termed buying^ and the giving of a commodity for money, sell- ing. Price, unless when the contrary is particularly mentioned, always means the value of a commodity rated in money" McCuLLOCH. A standard of value is simply a definite quality, by weight, of pure metal designated by law as the unit of account, usually represented by coins whose weights are multiples or divisional parts of the unit thus desig- nated. It is not, however, necessarily a coin itself, but may be simply a theoretical unit of weight, represented by no existing coin, as is the case with the money tael of China, or an actual unit of weight, as the pound of sterling silver formerly was in England. It is, therefore, simply an immutable unit of magni- tude representing a unit of account, and is employed as 8 9 a numerator by weight of standard coins representing its multiples and divisional parts, to which the law affixes certain names as a means of identification, and which indicate the denominate or numerary values of such coins, by means of which the ratio or relations of exchangeable value subsisting between standard money and commodities, or between commodities as rated in money, are expressed and determined. As exchange- able value, which is synonymous with price, is only an ideal relation subsisting between things commutable, having neither length, breadth, thickness, weight nor volume, it cannot be measured by a mere mechanical application of the standard unit of measure to the thing measured, as in the case of all other standard measures. A standard of value, therefore, unlike other standards, performs its functions as a measure of value by means of its intrinsic equivalency in exchangeable value as a commodity, as determined by its market price as com- pared with that of the thing to be measured, and for which it is to be exchanged. Its exchangeable value, therefore, as a commodity in the markets of the world, will always control the purchasing power of coined money regardless of its denominate value as fixed by law. A measure of value differs from a standard of value in this, that it may consist of anything which possesses exchangeable value, whether in the form of money, com- modities or services which may be given in payment as an exchangeable equivalent of the thing bought as rated in standard coins of account. When, therefore, coined money is given in payment of a commodity pur- chased, it performs the double function of serving both 90 as a standard and a measure of value. But as in the latter capacity it does not represent two per cent of the exchanges arising from trade and commerce, by far its most important function is as a standard of value for rating the different signs of value employed in effecting the exchange and distribution of the products of human industry. And for such purposes its capacity is abso- lutely unlimited, as it is only employed as an economic potential for differentiating arbitrated exchanges in the liquidation of balances and settlement of credits, and not as a material recompense or exchangeable equivalent as when employed as a measure of value. This technical distinction is only important in so far as it serves to refute the alleged insufficiency of the supply of gold for the purposes of currency, seeing that fully 98 per cent of the exchanges it effects are simply as a standard of value in the rating and differentiation of exchanges effected by credits and other instrumentalities of trade and commerce serving as the actual measures of value, and that this alleged insufficiency has not the remotest connection with the phenomena of falling prices and the depression of trade. Succinctly stated : A measure of value may be any- thing possessing exchangeable value which is actually given or exchanged for anything purchased, as its exchangeable equivalent as rated in standard money, and, therefore, always expresses the relation of value subsisting between money of account and commodities, or between commodities compared one with another. A standard of value is simply a fixed and immutable unit of weight of a precious metal designated by law as the unit of account by which all other values are rated, by means of its own intrinsic equivalency as a commod- ity in the markets of the world. It is usually repre- sented by coins, but not necessarily so. Its exchange- able value as a commodity will therefore always control the purchasing power of coined money regardless of its denominate or numerary value. Imaginary, ideal or merely denominative money, not infrequently called money of account, bank or book money, makes its appearance in the records of Western Europe in the twelfth century, while an actual coinage to correspond therewith does not appear noted any- where until a century later. The first of this denom- inative money that we read of after the actual gold augustale of Frederick of Sicily is the florin de sigillia, or florin of the public seal, in the banking and commercial life of Florence ; the next is the zechina grossi and zechina d'or of Venice. Later we find these conventional measures of value appearing in accounts of Flanders, Antwerp, Bruges, etc., and of Germany at Nuremburg and Hamburg, and ultimately in the pound sterling of England. A feature of accounting by these fixed standards, beginning with their adoption in Florence and subse- quently in Venice, was the integrity and general satisfaction that characterized commercial and financial transactions under them, that is to say, the fixity and approximate equivalency of payments thus assured by the adjustment of actual money to these standards in banks and commercial houses ; and it appears that wherever this practice existed it drew around the nations 92 or the peoples so operating an ever-increasing volume of business, though of course the general trend of trade, from the dawn of history, has been from the East toward the West. Thus the commercial importance of Florence and Venice during the thirteenth, fourteenth and fifteenth centuries was transferred to Flanders* in the sixteenth century, and to London in the seventeenth, eighteenth and nineteenth. It may also be in order to give examples of the difference there may be between currency, standard money, money of account, in terms, and money of redemption. In Colonial Virginia: Warehouse receipts were the currency, pounds, shillings and pence the money of account, and tobacco the money of redemption. In Colonial Massachusetts : Wampum was the cur- rency, pounds, shillings and pence the money of account, and beaver skins the money of redemption. In Colonial South Carolina : Warehouse receipts the currency, pounds, shillings and pence the money of account, and rice the money of redemption. In California : Gold has chiefly been the currency, dollars and decimals the money of account, and gold of ultimate redemption. Throughout the United States at present, green- backs, Treasury demand notes, National bank notes and silver certificates are the currency, dollars and decimals the money of account, in terms, and, legally, * The capture of Antwerp by the Duke of Parma, one of the Generals of Philip of Spain, in the latter part of the sixteenth century, caused the downfall of that city's commerce, and abruptly transferred the same to London, including not less than one- third of the merchants and manufacturers who had previously resided at Antwerp. 93 both gold and standard silver the money of redemp- tion ; though it being declared in the so-called Sherman Act of July 14, 1890, to be the policy of the Government to maintain the parity of the two metals, the rule in actual practice has been to use gold only as the money of ultimate redemption, this being essen- tial to the maintenance of silver on a parity with gold. The term "money of account" is used very indis- criminately, ordinarily referring to sterling, as in actual commerce there are at present, strictly speaking, only two moneys properly so designated, the English pound sterling and the Chinese tael, both of which names are merely denominative, there being no such coins as a pound or a tael. The English sovereign, however, represents the pound sterling. The Chinese tael is the oldest ideal or conventional standard of value of which we have any account, dating back some 2,000 years. The Shanghai tael represents 568 grains of pure silver, and the Hong Kong or Canton 579i%V of pure silver, which accounts for the difference in exchange on Hong Kong, Canton or Shanghai. For this country the United States Statutes define dollars and decimals as money of account. But the variety of money actually in use is notable, there being no less than ten different kinds, namely, cop- pers, nickels, subsidiary silver, standard silver, silver certificates, standard gold, gold certificates, greenbacks, demand notes, and National bank notes. However, despite all the noisy contention of the past twenty years as to the unit of value, and the standard 94 of value, and although the Revised Statutes and Stat- utes at Large direct the issue and prescribe the uses, more or less limited, of several kinds of currency, as already stated, to but one do they assign the office of standard. To but one dollar the gold dollar do they assign the function of " a unit of value." The func- tion of a gold dollar as the unit of value is, therefore, unqualified and unquestionable. Its value is the unit of value. Its measure is made the only measure. To that measure every other dollar must conform, while other dollars exist, and this law of Congress stands. Yet, despite this fact, for a score of years governors and senators have been declaiming as if gold were not the standard. It may not be amiss to say a word here regarding the common confusion of ideas as to capital. Money may be capital, but capital is not generally money. Capital is the difference between total production and total consumption, values at rest, free from lien ; and for one large capitalist there are many small ones. Only that part of wealth is capital which is or may be used for the production of other wealth. The United States affords to-day a very remarkable financial spectacle. The banks present an almost united front in favor of one policy, Congress of another. However they may differ on other questions, the bankers of the country believe that the time has come when the Government currency United States notes and Treasury notes should be retired ; while neither political party in Congress favors such a measure. 95 The attitude of the Senate particularly may be fairly expressed in the written words of a United States Sen- ator to myself, as follows : " You are not so broad in your views upon bimetal- lism as I would like to see you. But then I attribute this to your association with gold men, or with those who believe in reducing the volume of money so that they can better control the money commodity of the country, and thus take advantage of the necessities of others." This indicates an utter misapprehension of the prin- ciples or natural law and commercial usage that govern the efficiency and movement of money. Despite two thousand years of woeful experience in all sorts of statutory devices, that is, kingly decrees and Govern- ment fiat, and the manifest fallacy thereof, we are yet confronted with the amazing spectacle of a majority of most potent, grave and reverend signiors, our very noble and approved good legislators, sitting in the United States Senate chamber to conserve the welfare of this country, and not only entertaining the thought but asserting it, and by arbitrary legislative tactics seeking to impose a currency upon the country which would have for its maintenance as a standard of value, not intrinsic equivalency or commercial concurrence, but Government fiat merely, and out of which would inevitably ensue the collapse, disaster and misery which have attended the practical application of every such device since the world began, and always and every- where in a special manner augmented the burdens of the working people, the wage-earners of mankind. 9 6 The widespread delusion in the mind of this genera- tion of Americans on the subject of money, namely, that Government fiat creates values, is peculiarly due to the Legal Tender Act of 1862, and the subsequent action of a Supreme Court in upholding the right of Congress to issue such money. Thus bad began, and worse remained behind ; out of this the continued existence of this fiat money (for, as said by Thomas Paine, regarding Continental currency, " Every stone in the bridge that carried us over seems to have had a claim upon our esteem") was developed the silver craze. The financial policy of the founders of our Govern- ment, as manifested in the proceedings and discussions attending the adoption of the Federal Constitution, and in their subsequent legislation, indicated sound views on money ; and clearness of definition as to the proper measure of value characterized all their utter- ances, and all the monetary legislation of the country down to the time that the silver question made its appearance in our politics. Greenbacks, though not redeemable in coin, were exchangeable for Government bonds, that were payable, principal and interest, in coin ; and coin practically meant gold, under the acts of 1834-37 and 1853, for that was really the money of ultimate redemption ; and, although a majority of a Supreme Court of the United States finally declared the Greenback Act constitutional, after such an inter- pretation had been denied, there is no reason to doubt that it was the intention of the framers of the Consti- tution to withhold from Congress the power of making paper money a legal tender. Revolutionary War, and referring to Continental money, said : ' We have suffered more from this than from every other cause of calamity ; it has killed more men, per- vaded and corrupted the choicest interests of our coun- try more, and done more injustice, than even the arms and artifices of our enemies." Judge Story, referring to the revolutionary and post- revolutionary legal-tender laws, and following the lines and phraseology of Judge Marshall's opinions, says : " They entailed the most enormous evils on the country, and introduced a system of fraud, chicanery and profligacy which destroyed all private confidence and all industry and enterprise." Robert Morris said : " It has caused infinite private mischief, numberless frauds, and the greatest distress." When the bill to make greenbacks a legal tender was being discussed in Congress, the Hon. Roscoe Conkling of New York said : "But, passing from the constitutional objections to the bill, it seems to me that its moral imperfections are equally serious. It will, of course, proclaim through- out the country a saturnalia of fraud, a carnival for rogues. But surmounting every legal impediment and every dictate of conscience involved, viewing it as a mere pecuniary expedient, it seems too precarious and uncompromising to deserve the slightest confidence. I do not believe that you can legislate up the value of anything any more than I believe you can make gen- erals heroes by legislation. The Continental Congress 9 8 tried legislating values up by resort to penalties, but the inexorable laws of trade, as independent as the law of gravitation, kept them down. I do believe that you can legislate a value down, and that you can do it by attempting to legislate it up." Senator William Pitt Fessenden of Maine, after- ward Secretary of the Treasury, said : " To make the best of the matter it is bad faith, and encourages bad morality both in public and in private. Going to the extent that it does, to say that notes thus issued shall be receivable in payment of all private obligations, however contracted, is in its very essence a wrong ; for it compels one man to take from his neighbor, in payment of a debt, that which he would not otherwise receive, or be obliged to receive, and what is probably not full payment. " Again: It encourages bad morals, because, if the currency falls (as it is supposed it must, else why defend it by a legal enactment) , what is the result ? It is, that every man who desires to pay off his debts at a discount, no matter what the circumstances are, is able to avail himself of it against the will of his neighbor, who honestly contracted to receive something better ; I say, therefore, that another objection has been stated, of which the force must be admitted, and that is that it is bad faith. " Again : Necessarily as a resort, in my judgment, it must inflict a stain upon national honor. We owe debts abroad yet. Money has been loaned to this country, and to the people of this country, in good faith. Stocks of our private corporations, stocks of our States and our cities, are held and owned abroad. We declare that for the interest on all this debt, and the principal if due, these notes, made a legal tender by Act of Congress, at whatever discount they shall stand, 99 shall be receivable. Payment must be enforced, if at all, in the courts of this country, and the courts of this country are bound to recognize the law that we pass. " Again : It necessarily changes the values of prop- erty. What is the result ? Inflation, subsequent depression, all the evils which follow from an inflated currency. They cannot be avoided ; they are inevi- table ; the consequence is admitted. " Again : A stronger objection than all that I have to this proposition I am stating the objections which everybody must entertain, because I suppose these facts are palpable is that the loss is to fall most heavily upon the poor. I believe it never was disputed it can- not be in the light of experience that those who are injured most by an inflated currency are the laboring people, the poor. The large capitalists can bear it ; but there are small capitalists in this country whom it will vastly injure. When you speak of a capitalist, in the common acceptation of the term, you mean a rich man ; but every man who is free from debt and earning something, and earning a surplus, is a capitalist, and the greater number of capitalists together make up a great whole; and these are the men who suffer by the disorder of affairs, the poor laborer, in the first place, more than all ; the small capitalist, if I must so call him, next ; and the rich capitalist last of all. Such is the necessary result and consequence always of this system" AND ALL THE EVILS PREDICTED CAME TO PASS. Prof. Andrew D. White says, in his sketch of the paper-money inflation in France : " A curious parallel may perhaps be drawn between Necker, the Finance Minister at the beginning of the IOO French Revolution, and the Secretary of the Treasury at the beginning of the recent struggle in our own country. Each had shown his ability to build up a fortune for himself before he entered public life ; each had shown great financial skill and integrity ; each had thus secured the confidence of the thoughtful part of the nation in the time of national difficulty ; each had proposed measures and carried them out which resulted in great good ; each attempted to stop the nation on the downward path of inflation ; each was at last obliged to succumb ; and each retired from the country which he had endeavored to save, Necker to Switzerland, Hugh McCullough to England." To the credit of Salmon P. Chase, he, as Chief Justice of the Supreme Court of the United States, said of his own creation, the greenback, in the Hepburn case, 1869: " That the making of notes or bills of credit a legal tender for pre-existing debts is not a means appropriate, plainly adapted, or really calculated to carry into effect any expressed power vested in Congress, is inconsistent with the spirit of the Constitution, and is prohibited by the Constitution ;" and, finally, u the legal-tender quality was only valuable for purposes of dishonesty. Every honest purpose was answered as well or better without it." In 1861 the Government had none other than coined legal-tender money of intrinsic equivalency. Since Jackson destroyed " the bank " and made its revival " an obsolete idea," there had been no other. In green- backs, Congress authorized the emission, for the first time in the history of the Government under the present 101 Constitution, of United States paper notes as legal ten- der in payment of all private debts, which legal-tender clause the Supreme Court, as already stated, declared unconstitutional (as to antecedent debts), and then (on reargument before a court with two new judges) reversed that decision. Then Congress, by a ten per cent tax, swept all State bank issues out of existence to make room for National bank notes. For eighteen years those greenbacks and bank notes were inconvertible into coin; and, as I have shown in my article on " Interna- tional Bimetallism," robbed wage-earners of half their earnings. As the best experts estimate, for example, Professor Adams and Edward Atkinson, they doubled the cost of the Civil War, and have been a continual burden ever since. In 1875 the promise was held out of paying and extinguishing in 1879 the greenback debt. It was not done; but, on the contrary, the law of 1878 made it unlawful to cancel or retire any more greenbacks, and, even after payment, the Treasury was commanded to reissue them, pay them out again, and keep them in circulation. The law of 1878 reads thus: " And when any of said notes may be redeemed or be received into the Treasury, under any law, from any source whatever, and shall belong to the United States, they shall not be redeemed, canceled or destroyed, but they shall be issued and paid out again and kept in circulation." In like manner the Sherman Law of 1890 required the redeemed greenbacks to be reissued. That " endless 102 chain " of redemption is the canse of our recent cur- rency and gold trouble and deficiency in the amount of our gold reserve. Congress began, in 1878, the Treasury purchasing and coining of silver dollars, and enlarged the opera- tions in 1890, by which some 425,000,000 of silver dollars were coined. These silver dollars, manufactured by the Treasury Department, cost on an average seventy- one cents each. To-day they can be made for fifty- three cents. They were sold or paid out of the Treasury for a dollar each. Besides some $80,000,000 of sub- sidiary silver coins, there had been issued, under the so-called Sherman Act, $155,000,000 of new greenback debts in payment for the purchase of silver. At the Brussels Conference of 1892 Senator Allison, one of the United States delegates, said : u Our country, in its currency and in all its money, rests upon the gold standard. Our statutes declare that it is the settled purpose and policy of the United States to maintain silver and gold in circulation at par with each other, and there is no currency in circulation in the United States, whether it be paper or silver, that is not convertible into gold at the will of the holder." And this is practically so, as I shall proceed to demon- strate. The law having authorized private owners of the silver dollars to deposit them in the Treasury and receive therefor certificates payable on demand in silver dollars, some $330,000,000 of those certificates are out- standing, and, though technically redeemable in silver 103 dollars only, are in reality an incubus on the gold reserve of the Treasury. Until the question of the diminution of the $100,- 000,000 gold reserve in the Treasury came to be pub- licly discussed, silver certificates were used directly in procuring gold from the Government Sub-Treasuries. The necessity to use all legal methods to keep the reserve intact stopped the practice, but silver certifi- cates can now be used to procure gold by exchanging them through the medium of brokers, using them as bankable funds, or directly in the purchase of green- backs or the gold itself, or by exchanging the silver dollars received for them for greenbacks. They can be deposited at par with banks, where they are accepted as bankable funds. Checks against these deposits are accepted by money brokers in payment for gold, and the commission thereon. This commission ranges all the way from $1.25 to $10 per thousand, according to the pressure. The effect which these transactions have on the reserve fund in the Treasury is that legal tenders still circulating among the people are accumu- lated at financial centers and presented to the Govern- ment for redemption in gold. The payments of duties in 1894 were made with silver certificates alone to the extent of 66 per cent, and 96 per cent were paid in 1895 in silver certificates and other paper currency, only 4 per cent in gold. Here we have the Gresham Law in operation on circulating notes and silver cer- tificates. A notable paper-money example of this kind, fifty years ago, though the law is always in operation on 104 any depreciated currency, metallic or paper, was that of the so-called Suffolk Bank system of Massachusetts, viz, the circulation among the people in and about Boston of country bank notes that were at a discount ; while those of the Suffolk Bank, which were at par, were hoarded by individuals or deposited in bank. By reason of this the circulation in Boston was at one time $24 in country bank notes to $i in those of the Boston banks. The sorting and culling, as we call it, or garbling, as the English call it, of currency by money brokers is a business of this kind in great cities, domestic as well as foreign, at the present time; and this is what a free silver friend calls a proof of the natural cussedness or total depravity of human nature. Whether it evidences depravity or not, it is according to human nature and that economic principle which in its wider application constitutes the Gresham Law. There are now over $500,000,000 of paper dollars piled upon $500,000,000 more of greenbacks and Treas- ury demand notes, to be perpetually redeemed in gold on demand, and then reissued, to be again redeemed. This has been called, with unconscious irony, a " truly American currency." The author omitted to say that the " truly American currency " has been the arch enemy of our finances; that it occasioned, in 1893, one of the most disastrous panics known in our annals, which occurred because of the general belief that the Treasury could not long continue to redeem in gold on demand the outstanding $500,000,000 of greenbacks and Treasury notes, with the incubus of $330,000,000 of silver certificates and $200,000,000 of National bank notes on top of them. Hence the repeal of the silver- purchasing law of 1890. This " truly American currency " has, annually, dur- ing the last few years, cost the Government $80,000,000 to get the gold for its " endless chain " of redemption, to say nothing of $175,000,000 loss on the silver, use- lessly hoarded in the Government Treasury vaults, that caused it. For years past the bulk of the gold exported from this country has been for account of brokers, demonstrating that, under the practical opera- tion of this " truly American currency," resting on a peremptory law of 1878, the United States Treasury Department is compelled to be the purveyor of gold for foreign governments, home speculators and importers of luxuries. These evils have been repeatedly pointed out by the President and Secretary of the Treasury, but Congress has failed to remedy them. The deficit in current revenues is unimportant compared with the evils growing out of the status of greenbacks. It has been frequently alleged that bond sales for gold have been caused by the Wilson tariff and Cleve- land administration, which is not so, but, in fact, wick- edly untrue. During the four years, March 4, 1885, to March 4, 1889, Mr. Cleveland's first term, but $9,000,000 of gold was exported, under a tariff not appreciably higher than the present so-called Wilson tariff, while during the similar period from March 4, 1889, to March 4, 1893, Mr. Harrison's term, chiefly under the McKinley tariff, $213,000,000 was exported. In the three years from March 4, 1893, to March 4, io6 1896, over $200,000,000 was exported. The reason for these increased exports of gold greater demand for it is to be found in the increase of the currency, silver certificates and Treasury demand notes, set forth in Secretary Foster's report of December 7, 1892, to Presi- dent Harrison, as follows : " If $100,000,000 in gold was a suitable or necessary reserve in 1882 and 1885, it would seem clear that a greater reserve is necessary now. It should be remem- bered that since 1882 we have added to our silver circu- lation $259,016,182 in standard silver dollars coined under the old Silver Act of 1878. These dollars are nearly all outstanding, largely represented by silver certificates. We have also increased the legal-tender circulation by issuing about $120,000,000 of the Treas- ury notes authorized by the act of July 14, 1890, and to this we are adding about $4,000,000 each month in payment of silver bullion purchased. " When President Harrison left office the gold balance was but $113,000,000 and steadily falling. The first year after the Sherman Act, July 14, 1890, nearly $80,- 000,000 gold was exported, and during its existence more dollars of gold were exported than were acquired of silver, to say nothing of loss on silver purchased. Why? Because of the doubt in investors' minds of our finan- cial policy, a redundancy of silver, silver having fallen 52 cents per ounce in three years, that is, from 119 to 67 cents. Eighteen years ago we accumulated one hundred millions of gold to guarantee redemption of less than three hundred and fifty millions of greenbacks. This was the proportion which prudent financiers judged to be necessary. The redemption fund was about 30 per cent of the paper to be redeemed. We went on from that day adding to our stock of fiat money, partly silver dollars, partly Treasury notes, till we have placed six hundred millions on top of the original three hundred and odd millions, and now have, of all kinds of paper, over one thousand millions imposed on a diminished gold reserve, the redemption fund having at one time been as low as 12 per cent of the currency to be redeemed. The peculiar inflation mentioned by Secretary Foster now alone exceeds $400,000,000. The two bond issues of 1894, amounting to $100,- 000,000 in lo-year 5 per cents, and the third issue in February, 1895, f $62,315,400 of 3O-year 4 per cents, and the fourth of $100,000,000 in February, 1896, of 3O-year 4 per cents, have imposed upon the people of this country a debt of $262,000,000. That is what we must pay directly for Government redemption of cur- rency ; what we pay for greenbacks and Treasury demand notes that do not bear interest ; what we pay for a " truly American currency;" what we pay for having the Government furnish plenty of money. As Emerson says, " We pay a price for everything we get ; " or, as Forssell of Sweden said of bimetallism, " How much liquid will it take to fill a hogshead of which there is no possibility of stopping the bunghole?" Since this paper was typed, a friend has called my attention to a series of articles in the Ladies' Home Journal, " This Country of Ours," by ex-President Harrison, in the August number of which he says : io8 " If the revenues are largely in excess of expendi- tures, the surplus is taken out of use in commerce and locked up in the Treasury vaults, and the money mar- ket is tightened. If the surplus is used to buy Govern- ment bonds not yet due, the market is eased. The gold reserve, too, as it is diminished by exportations of gold, or increased by bond sales, powerfully affects every business interest. What is the Treasury going to do is the query heard in every bank and counting room and store. It is unfortunate, I think, that this should be so ; and the mending of existing conditions will be a task for the wisest and strongest statesmanship. " But while the Secretary of the Treasury has a large discretion in a few directions, and may by its exercise largely influence the money market, he is, in the main, conducting a great bank on undeviating and unelastic rules, and with Congress for his board of directors. He is not chosen by the board, and is rather often than not out of harmony with it. The managers of the Bank of England may, by some small allowances in the way of interest or exchange, draw gold to its vaults from New York, and the transaction be confidential ; but, if fifty dollars would suffice to hold fifty millions of dollars in the United States Treasury, the Secretary could not expend that small sum. He must stand by until the gold is gone, and then sell bonds to bring it back." In an admirable paper read before the Reform Club of New York, Mr. W. Dodsworth of the New York Journal of Commerce said, in part : " The greenback bug is the most insidious pest of these trying times. He insists upon compelling the Government to borrow 100 millions a year to save its notes from protest. He will have no interference with the distrust that is causing foreign holders of our secu- rities to send them home in exchange for our gold. He insists upon the acceptance of the notes being kept perpetually compulsory. By retaining this legal-tender quality, he would expose every form of investment, not expressly payable in gold, to being sooner or later liquidated in depreciated paper. He thus saps the very foundations of all credit. " There is no hope for any reconstruction of our currency worth the trouble of getting it, unless its first step be the extinction of the legal-tender notes. So long as they remain a lawful money of redemption, there can be no fixed safety in bank paper made redeemable in them. The vitiation of the major cur- rency must necessarily carry the vitiation of the minor. Within the last five years the greenback has suffered a deterioration of credit from which it can never recover. At home and abroad it has been discovered how easily it may become an instrument for draining off our stock of gold and transferring it to the retentive custody of the European banks. By demonstrating how easily the notes may be used for the most dangerous ends, a direct blow is struck at the credit of the Government, and, therefore, at these obligations. At last a point has been reached in the checkered history of this currency at which it hopelessly discredits itself by the exposure of its inherent lack of protection. It has become an expulsive force as against gold; and, as such, it is destructive of the only resource for its own redemption. We have long been boastfully assured that the notes were safe because the Government, with its vast resources, stood behind them. The world now discovers that this paper insidiously saps and exhausts the funds through which alone the Treasury can protect it, and thus the whole theory of State guaranty is exploded. Thus the greenback has lost its character, and it can never recover it. The great mass of public and private credit built upon it stands imperiled, and the vast interests no thus threatened can never regain confidence until gold takes the place of these discredited promises to pay." The issue of legal-tender paper was in direct violation of that principle on which so much stress was laid by our political forefathers, that no power which can be con- veniently exercised by a community should be delegated to the General Government. Banking is especially that quality. Practically all our monetary enactments since the issuance of greenbacks in 1862, thirty-four years ago, have been in conflict with this principle.. The Legal Tender Act, and the act taxing State bank notes out of existence, a fine, nothing else, because there is not and never has been any increment derived from them, also the act by which silver was mechanic- ally injected into the currency, were such; and the effect of these several enactments in respect to money issues has been to accomplish a centralization in conflict with the principles of popular government, and to instill into the public mind utterly false conceptions of the functions and powers of government. Since 1873, the date of the omission of the silver dol- lar from coinage, the politicians of this country seem to have been possessed by the idea that all the laws of political economy and finance that have been discovered by the human race in its slow and toilsome march can be violated or set aside by the United States of America ; and for this economic heresy we are punished year by year, and will be punished until we learn to adopt a policy based upon well-known principles of finance and political economy. So long as forced-loan money greenbacks continues, and purchased silver Ill bullion to the amount of hundreds of millions of dollars remains uselessly hoarded, our monetary system will be disturbed, and we shall suffer recurrences of panic. There never can be safety until this forced legal-tender money is canceled by payment and retirement. The issuance of paper money is properly a function of banking, not of Government. To have it of high efficiency two conditions are absolutely essential. It must rest upon the one true basis, namely, true standard money of precious metal, and it must be bank and not Government paper. True standard money has been well defined by Henry Cernuschi, the Italian bimetal- list: u The coins which, being melted down, retain the entire value for which they were legal tender before being melted down, are good money. Those which do not retain it are not good money." Walter Bagehot, in " Lombard Street," says : " In what form the best paper currency can be sup- plied to a country is a question of economical theory with which I do not meddle here. I am only narrating unquestionable history, not dealing with an argument where every step is disputed. And part of this certain history is that the best way to diffuse banking is to allow the banker to issue bank notes of small amount that can supersede the metal currency. As yet, his- torically, it is the only introduction ; no nation as yet has arrived at a great system of deposit banking without going first through the preliminary stage of note issue, and of such note issues the quickest and most efficient in this way is one made by individuals resident in the district, and conversant with it." 112 The Government of the United States should not issue paper money. It is not properly a Government function ; for the Government has no way to protect itself in the gold redemption of such notes, either in the rate of exchange or of discount. Under the present status, redemption is a cause of continual expense, and this expense, in the final analysis, is borne by the people. Prof. H. C. Adams estimates the cost of the greenbacks to the people at $870,000,000, Edward Atkinson at $2,000,000,000. See the latter's pamphlet on " Cost of Bad Money." This country will be in financial unrest, uncertainty and apprehension until the law-making power retires the greenbacks and definitely affirms that all obliga- tions in terms of United States of America dollars shall always and everywhere mean payment on a basis of value, of intrinsic equivalency, in gold, as the British pound sterling has meant for one hundred and eighty years. What is imperatively needed is not more money, but a policy of monetary legislation in conformity with the laws of finance which all human experience has shown to be certain in their action. Our National bank system, so far as note circulation is concerned, seems to be a failure. It was inaugu- rated in 1866; the maximum circulation, $345,000,000, was reached in 1881 ; a minimum, $123,000,000, in 1890; shrinkage in nine years, 64 per cent; circulation in 1896, $200,000,000; present shrinkage from maxi- mum, 43 per cent. I do not propose to offer for consideration any plan for reorganizing the currency and banking system of this country, though it certainly should be organized upon an independent basis ; and in the cases of Canada and Scotland we have examples of the highest mone- tary efficiency, with a flexible maximum of bank notes issued on a minimum of gold reserve, 15 per cent, the notes fortified by bonds and redeemable in gold. The Canadian system is similar to that of the New York Safety Fund Bank system, which was in successful operation for nearly fifty years before the adoption of the National bank system ; or the Massachusetts Suf- folk Bank system, which embraced at one time 500 banks. In the great crash of 1837, and general suspension of specie payments of 119 Massachusetts banks, with $9,400,000 note circulation, under the Suffolk system only eleven failed to resume specie payment, entailing a loss on note-holders of but $240,000, or 2^2 per cent, and at that time note-holders did not have a first lien on assets. The Suffolk Bank system was an excellent one, and thoroughly stood the test of time. The " Canadian Bank Act " of 1890 covers forty pages of printed matter. (Our own National Bank Act and amendments cover ninety-four pages.) The old Safety Fund system of New York was adopted in Canada in 1890, in order to secure the prompt redemp- tion of the notes of failed banks, i. e., to avoid a dis- count on the notes of such banks pending their liquidation. Under the Canadian system the circu- lating notes are the first lien on the assets, and it is believed that the assets will always suffice to redeem the notes ; but the delay in converting them into cash, prior to the establishment of the Safety Fund, had led to a temporary discount on such notes. There is now in the Canadian " Bank Circulation Redemption Fund " $1,800,000, and it is deemed sufficient to meet all con- tingencies of this kind. Under the Canadian law the Government is not responsible for the notes of failed banks, but such notes draw interest at 6 per cent. The maximum amount of the fund is 5 per cent of the outstanding circulation of all the Canadian banks, and it must be kept up to this maximum, the Minister of Finance having power to call on the banks for addi- tional contributions, when necessary, not exceeding i per cent in any year. When the assets of failed banks are paid in, however, refunds may be made to the con- tributing banks of the excess over 5 per cent. The Canadian system embraces 40 banks, with 460 branches. Regarding the Scotch banking system: Without going into details or referring to the various acts from the time of Queen Anne down to, say, the beginning of the eighteenth century, it is sufficient to mention that banking companies, with numerous partners, have existed for a long period in Scotland. The Bank of Scotland was established in 1695, tne Royal Bank of Scotland in 1727, and the British Linen Company in 1746. What is in general called the Scotch system may be said to have been inaugurated about 1770, or 125 years ago. In 1845 an ac t was passed relating to the Scotch banks, by which the circulation of those then issuing notes was confined to the average output of each for the year preceding the ist of May, 1845, P^ us an "5 amount equal in any one month to the average amount of gold and silver coin held during the previous month, as shown by the weekly returns, silver to be not more than one-fourth of the gold, which rule holds through- out Great Britain. These banks may issue notes from one pound upward, and in their returns have to dis- tinguish the amount of notes issued of five pounds and upward from those issued below five pounds. It the monthly average circulation be above the limit of notes and coin authorized, the bank is liable to forfeit a sum equal to such excess. At present there are but eleven banks of issue in Scotland, but these have numerous branches, extending to almost every village and hamlet, say 1,000 places. Their notes are not redeemable except at the parent banks. The issue of notes by the parent banks not secured by coin is, in round figures, fifteen millions of dollars, and the average of gold and silver coin will probably approximate thirty-five millions of dollars. Bank of England notes circulate freely, but are not a legal tender there. There have been only three bank failures in Scotland of any importance in 125 years, those of the Ayr Bank in 1772, the Western Bank in 1857, and the City of Glasgow Bank in 1878. Any one of the foregoing successfully demonstrated systems, or the Baltimore or Carlisle plans recently recommended, is worthy of serious consideration and adoption by our people. The Baltimore plan dispenses with bond security for bank notes, and substitutes therefor a guaranty fund equal to 5 per cent of all n6 bank notes outstanding, on the same general plan as the New York Safety Fund and the Canadian " Bank Circulation Redemption Fund." It restricts note issues to 50 per cent of a bank's capital, except in emergen- cies, when they may be increased to 75 per cent, and the Government remains responsible, as now, for the notes, and redeems them as now, having the guaranty fund and also a first lien on the assets of failed banks and on the shareholders' liability, together with the 5 per cent redemption fund required by the existing law, and the power to tax all circulating notes at the rate of one-half per cent per annum. Even a State bank system might be preferable to the present system, because there is no reason why the admitted evils of the old banking system could riot be effectively obviated, and such proper safeguards estab- lished as would be required for the protection of the people. For instance, by uniformity in the banking laws of the several States, and the issue of all notes redeemable in gold, the note-holder being secured by proper bond deposits, either State or National. Another way would be to provide, without bonds, for the issue of a certain percentage of notes, so redeem- able as compared with the paid-up capital of the bank, the notes being a first lien upon the bank's assets and stockholders' liabilty in case of failure. There would be no greater danger of the revival of wild-cat banks than there is of losses under the present patchwork system. A most important fact, that ought never to be forgot- ten, is that the banking facilities in existence in the United States amount to some five thousand three hun- dred millions of dollars in paid-up capital, surplus and deposits, while the Government currency of all kinds at present in existence is, say, $830,000,000, greenbacks, demand notes, silver certificates, etc. The National banks have out only $200,000,000, secured by bonds on a capi- tal of $660,000,000. The security afforded note-holders in banking operations covers but a fraction of the risk to the depositors, the proportion of capital employed as compared to the circulating notes being approximately as 6 to i. A National bank of $100,000 capital may fail with a million and a half of deposits, and for this amount there is no guaranty beyond the supposed sol- vency of the stockholders after the moiety of interest in the way of bank notes shall have been provided for. The great danger lies in the excessive creation of bank- ing credits which the Government does not provide for, and upon which the law places no effective limitations. The writer personally knows of a failed National bank, with less than $50,000 outstanding notes to redeem, losing $90,000 by discounting drafts for one cus- tomer. In conclusion I repeat, that what is imperatively needed is not more money, but a policy of monetary legislation in conformity with economic laws that all human experience has shown to be certain in their action. To quote Mr. Brough: " The question is not one of politics. It is one of science and ethics, and of the first magnitude. A State wields no power so effective to lift or lower the morals of a people as its monetary legislation." u8 " Westward the course of empire takes its way." In the thirteenth, fourteenth and fifteenth centuries, Italy (Venice and Florence) was the center of exchanges for the commerce of Western Europe ; in the sixteenth, Flanders (Antwerp and Bruges) was that center; and in the seventeenth, eighteenth and nineteenth, England gradually became the center of exchanges for the world. But in each case it grew out of standards of value, real or ideal, of intrinsic equivalency. If the United States of America be true to the teachings of history, to common sense and right, it may gain that financial supremacy in the twentieth century ; but, if so, it will have to be through the gold standard and a reliable system of banking. THE SILVER QUESTION AND HARD TIMES. THE following articles, published in the San Fran- cisco News Letter over the signature u A Layman, " were occasioned by a series of papers in the Overland Monthly under the caption of " Hard Times," and other contributions to that periodical upon the subject of silver. [From News Letter, February 29, 1896.] Editor News Letter : SIR : Referring to an article in the Overland Monthly for the present month of February by Irving M. Scott, on " Hard Times," I turn to the subject to point out inaccuracies of assertions made by Mr. Scott, in the hope that, if he again essays to advise the people what to do, he will be more careful about his statistics. The following occurs in his article : " In 1889 the silver mines of the United States yielded $64,80x5,000, equal to two-thirds of the silver yield of the balance of the world. In 1894, owing to the great depreciation in the price of silver, many of our silver mines were compelled to stop work, and our yield of silver was, as measured in gold, $14,350,000. The in- dications are that the silver yield of our mines this year will not exceed $4,000,000. Not only have the demon- etizing acts with respect to silver reduced the world's redemption money fully 50 per cent, but they have palsied its powers of recuperation, have effected a scarcity of money, and thereby infested our country^ doors with countless packs of ravenous wolves" If Mr. Scott had referred to current statistical author- ity, abstracts, atlases, government bureau reports, or even newspaper almanacs, he could have materially lessened the surprising inaccuracy of these statements. He says the yield of silver as measured in gold was, for 1894, $14,350,000. As a matter of fact it was, measured in gold (commodity value), in round figures approximately $32,000,000 ; in 1895, $36,000,000. He states that the indications are that the yield of silver this year will not exceed $4,000,000. In contradiction I beg to offer the assurance that the indications are that the product of silver in the United States for this year of 1896 will approximate $40,000,000, commodity value. Mr. Scott takes the year of 1889 as a criterion, which I accept, and will mention that the total product of the I2O Pacific Coast and Rocky Mountain States and Terri- tories, gold, silver, copper and lead, all of which are in the aggregate intimately related in their production throughout that section, and the falling off in commer- cial value was only 8 per cent in 1895 as compared with 1889, the gld product of the same localities for 1895, as compared with 1889, showing an increase of over 50 per cent. If we take our sister republic of Mexico into account, we find that the total product there of 1889 was $42,000,000, gold and silver combined, mintage ratios ; and for 1895 ^ was $59> ooo > ooo > an i n - crease in the six years of 42 per cent. The production of gold alone in the world during 1895 was ver Y con ~ siderably more than the combined product of gold and silver thirty years ago. To go into the question of the world's product, as Mr. Scott applies his argument to the world in setting forth what he deems the evils of the gold standard, I have to say that we find, upon reference to authorities, that the production of gold (I am again speaking of gold and silver as commodities) was, in 1874, $91,000,- ooo; in 1876, $104,000,000; in 1878, $119,000,000; in 1890, $120,000,000; in 1892, $147,000,000; in 1894, $180,000,000; and, in 1895, $200,000,000, breaking all previous records. Silver represented, in 1870, $51,000,- ooo; in 1874, $70,000,000; in 1884, $91,000,000; in 1894, $106,000,000; in 1895, $120,000,000. The price of silver in 1889-90 was artificial, arising from the then confident fallacy in the United States of Government power to create values by legislative enactment. 121 By reference to pages 40 and 41 of the Report for 1895 f the Director of the United States Mint, Mr. Scott will find that, of the $4,070,000,000 of silver money in the world, $3,440,000,000, or 85 per cent, is full tender, and that 60 per cent of that is in Oriental lands. But the status does not confer upon silver there any greater commodity value than in the United States, and never did. Always and everywhere, from the dawn of history, alongside of any legal ratio whatever there is a commodity ratio that fixes the real value of the metals. In one of our city dailies of Monday, the 24th, a prominent divine, commenting upon the moral status of San Francisco and California, indulged in extremely severe reflections, and, if Mr. Scott's assertion regard- ing countless packs of ravenous wolves infesting our country's doors is accurate, not only the condition of San Francisco and California but the entire country is certainly very deplorable. He may well cry with Hamlet : The time is out of joint. Oh, cursed spite, That ever I was born to set it right ! However, I am not disposed to take so pessimistic a view of the situation. Mr. Scott opens and closes his articles with the fol- lowing quotation from Virgil : "To the shades you go a down-hill, easy way ; But to return, and rejoin the day, That is a work, a labor." Something like this would be more pertinent: " How difficult it is to get back to the path of truth after floundering in the slough of error." 122 The hard times, which we all deplore and which Mr. Scott pathetically bewails, are largely the legitimate results of pernicious economic methods in commerce and finance, namely, of the delusion that the Govern- ment can create value by statutory enactment, and make the people rich by taxation. Honesty, patience, hard work and frugal economy are the only remedies for the ills we have largely drawn upon our own shoulders, and which we must bear nntil relieved by common-sense methods of our own devising. As Emerson says, " We pay a price for everything we get." [From News Letter, March 7, 1896.} Editor News Letter : SIR: Recurring to Mr. Scott's article, "Hard Times," in the February Overland, he takes, for ex- ample, the year 1889 as a criterion, which, with correc- tions, I am willing to accept. He states the silver output of the world for that year at $64,800,000, which is approximately correct, seeing that the Director of the Mint gives it at $64,646,000. But note the method of the comparison that follows. He tells us that " in 1894, owing to the great depreciation in the price of silver, many of our silver mines were compelled to stop work, and our yield of silver was, as measured in gold, $14,350,000." Here is an apparent falling off, within the five years embraced, of $50,450,000, or 73 per cent, which is scarcely less remarkable, as a simple state- ment of fact, than his estimate for the current year, which he places at $4,000,000, though, as I have already stated, we have indications, from the output of 1895, that it will probably be $40,000,000. 123 The defect of this comparison arises from the fact that Mr. Scott states the output of silver iu 1889 at its "coining" value of $1.2929 per fine ounce, while he states that of 1894 at its " commercial " value, which averaged for that year less than 64 cents per ounce. And, even at that, he states the amount inaccurately. As given above, he makes it $14,350,000, whereas the Director of the Mint gives it at $31,422,000, or some- thing over $17,000,000 more. But the true measure of the quantity produced is its weight in ounces of pure silver and not its value. In order to show, there- fore, the relative output, and the extent to which the alleged " great depreciation " of silver compelled " our miners to stop work," I give below the actual amounts as stated by the Mint Director : 1889. ..Fine ozs., 50,000,000 Com. value, $46,750,000 Coining value, $64,646,000 1894. ..Fine ozs., 49,500,000 Com. value, $31,422,000 Coining value, $64,000,000 It will thus be seen that the falling off was only 500,000 ounces, or i per cent of the mass, while the increase of gold was over 20 per cent, and for 1895 was 50 per cent. The same erroneous form of state- ments is observable in other items. He tells us, for example, that from 1873 to 1892 the world produced $2,224,000,000 of silver, estimated at $1.29 per ounce, but that " demonetization " had " reduced " this value, " as measured in gold, 50 per cent, and had reduced the world's entire amount of silver extant ' nearly $2,000,000,000." Now the table from which Mr. Scott apparently takes these figures shows that the " coin- ing " value of the silver produced from 1873 to 1892 was $2,322,339,700, while its value, " as measured in 124 gold," was $1,916,402,800, being equivalent to a dis- count of $405,936,900, or 17^ per cent, instead of 50 per cent, making a difference of something over $755,- 000,000. The same inaccuracy is apparent in his methods of stating the facts concerning the output of gold. " Let us not forget," he says, " that the yield of gold in California in 1851 was $81,000,000, and in the Colony of Victoria, Australia, in 1853 was $62,000,000, and that these countries are now yielding each only $13,000,000. Mr. Scott, of course, knows that in 1851 California practically represented the whole of the United States as to its gold output, as in 1853 the Colony of Victoria did the whole of Australasia. Now in 1894, according to the Director of the Mint, the United States produced $39,500,000 and Australasia $41,760,000, being in each case over three times the amount stated by him. And the world's present prod- uct far exceeds all previous records. But perhaps the most remarkable statement of all made by him in this connection is to the effect that for the 50 years, from 1831 to 1880, the world's consumption of gold " by the arts and manufactures exceeded its production $96,- 468,560." During this period the world's output of gold was $4,245,579,000, and of silver $2,370,343,000, making a total of $6,615,922,000. If he will refer to Mulhall's " Dictionary of Statistics " under article " Plate," he will find that the amount of these metals consumed in the arts during this period, in Great Britain and France, which probably represented half of the world's 125 consumption, did not amount to 10 per cent of the world's produce. (This, however, is probably too low. It is variously estimated at from 20 to 40 per cent, some even higher.) And again, if he will refer to the same work under the head of " Coin," he will find that this author states that the world's stock of coin in 1830 was ^313,000,000, or say $1,565,000,000, while in 1880 it was ^1,128,000,000, or $5,640,000,000, an increase of ^815,000,000, or $4,075,000,000. If, then, the con- sumption in the arts during this period exceeded the entire production by $96,000,000, as Mr. Scott asserts, where did this enormous increase of " coin " come from ? It must be remembered, too, this is not only in excess of the consumption of the arts but of loss by abrasion, shipwreck and all other destructive causes. Max O'Rell relates a story of an American visitor's description of things seen in Paris that he ought not to have seen, and the humorist, after intimating each questionable view, exclaims comically, " Where did he go ? " After reading Mr. Scott's article I am con- strained to ask, Where did he go in his little journey into the world of economics ? To go into the question of the world's precious-metal product, and of the influence it is supposed to exert over the products of labor and industry, I have not the time at present. But as the evident purpose of Mr. Scott's article is to show that existing economic maladies are attributable to " a scarcity of money largely due to the demonetization of silver," and " as the demonetization of silver depreciated its value, so remonetizing it will appreciate its value," if there is 126 any principle of economic law governing such phenom- ena, Mr. Scott would undoubtedly confer a lasting obligation upon many earnest inquirers who, like my- self, have been groping their way in search of truth through the bewildering maze of perplexing phenomena which surround this subject, if he will reconcile his theories of " Hard Times " as a result of the scarcity of money with the history of financial and industrial phenomena for the last forty odd years. And to assist him in such a task I will here furnish the necessary data so far as it relates to the " supply " of the precious metals to the Western world during this period, which approximately represents the " supply " of metallic money and its supposed effect upon " prices " and came the crash from which the country is still suffering. As a matter of fact there is no logical connection whatever between these periods of feverish activity and subsequent collapse and depression, and silver or the policy of protection, beyond the pernicious, the noxious, effect of artificial stimulus to prices, speculation and industrial exploitation, because such periods of activity and depression have manifested themselves in Great Britain as well as France, and Great Britain and her colonies have progressed as we have. Nor have circu- lating money quantities had any appreciable effect, except as they departed from the true standard of value, intrinsic equivalency, thereby making commodities high in the ratio of money depreciated below the true standard of value, as witness France during the Revolu- tion, etc., England during the continental wars, and the United States during the Revolution and our Civil War. Mr. Gladstone has stated that the amount of trans- mittible wealth, that which could be handed down to posterity, produced during the first eighteen hundred years of the Christian era, was equaled by the produc- tion of the first fifty years of this century, and that an equal amount was produced in the twenty years from 1850 to 1870. What of the period from 1870 to 1896? If we take railroads, iron steamships, electric power, and improved manufacturing plants, these last twenty- five years have exceeded all the rest. Of the railroads and. iron steamships at present in existence, 70 per cent have been constructed since 1870. It is alleged that twenty years ago the power of machinery in the mills of Great Britain was computed to be equal to 600,000,- ooo men, or more than all the adults, male and female, of mankind. If that was so twenty years ago, what is it now ? Last century pig iron cost $60 per ton ; now it can be produced for $6, and in 1895 the State of Tennessee alone had the furnace capacity to produce a greater quantity of iron than the output of the entire United States in 1860. Output of the United States, 1885 4,044,000 tons. Output of the United States, 1895 9,446,000 " This one illustration on iron will answer all Mr. Scott's fallacies on page 28 of the July Overland. To expect relief from the disturbing influences of such enormous increases in production as these facts betoken, such gigantic changes, aggravated in the United States by empirical and selfish legislation and a mania for speculation (all the vast industrial expan- sion of twenty years past has been accompanied by 1 84 unexampled speculative inflation, not to say chicanery and fraud, that discounted the future for at least one, if not two, decades), I say, to expect relief from such disturbing influences by a resort to cheap money, a depreciated standard of value, and extreme protection, is to trust to antique fallacies which are condemned by history and by the best economic thought of the world. Now, then, as to Mr. Scott's tour de force on protec- tion. He says : " The Congressional Act of 1894, throwing wide open the gates to the inflow of foreign cheap labor products, has operated to close the doors of many American man- ufactories, turn vast numbers of American workmen into the streets, reduce the price of labor and American products, and to bring gaunt hunger to many an other- wise happy home of the country." As Mr. Gradgrind would say, " Let us apply a few hard, cold facts " to this heated and groundless rhetor- ical assertion. The average duty under the several tariffs of the last fifty years has been : Average ad Free valorem rates of and duty on dutiable. dutiable. Walker 1846-62 inclusive 25.53 percent 21.55 per cent. Morrill 1862-73 inclusive 42.86 Various 1874-82 inclusive 42.64 Acts of 1883. . .1883-90 inclusive 44-72 McKinley 1891-94 inclusive . 48.66 Wilson, 10 months 1895 41.75 37-29 26.33 .29.84 .22.31 .20.23 The Wilson tariff, an aggregate reduction on free and dutiable goods of only 10 per cent below the McKinley tariff, and on dutiable alone only i per cent lower than the average of Republican tariffs for the twenty years from 1862 to 1882, is what Mr. Scott calls ;< throwing wide open the gates to the inflow of foreign cheap labor products." Under the McKinley tariff the following shows the workings for first two years, comparatively : Dutiable goods, 1891 . . .1466,455,173 1892... 355,526,741 ) Decrease in imports of dutiable goods 1110,928,432 J during second year. Free goods 1891 ... 1388,064,404 " " 1892 . . . 458,074,604 Increase in imports of free goods $ 70,010,200 f during second year. Duty collected 1892 as against 1891 decreased $42,- 761,431. The manufactured exports in no year under the McKinley tariff quite touched $184,000,000. In the first year of the Wilson tariff's full operation they exceeded $200,000,000, and they promise in 1896 to amount to $215,000,000. The official figures show that while, for the eight months ending February, 1895, the percentage of exports of manufactured articles to the whole of our exports was 21.26 per cent, for the eight months ending with February last, with a general increase of exports, it rose to 24.41 per cent. Tariff for other than revenue is a form of class socialism, and inequitable ; but even a McKinley tariff, which is a calculable evil, is tolerable compared with the independent, unlimited free coinage of silver by the United States, which would be an incalculable one. I repeat, a coin is just as bad when debased by over- valuation , if not exchangeable for better^ as when unduly alloyed, clipped or sweated. i86 In Mr. Scott's article in the July Overland he shows a decided advance in zeal, having progressed from what he termed in previous papers reprehensible legis- lation to what he now calls " the crime against silver," and remarks that " bimetallism, long tested, proved highly efficient in performing all the duties required of money, and therefore may safely be re-established, and so ought to be." A definition of what Mr. Scott deems bimetallism now will be in order, and also as to how he would establish it. I have hitherto quoted the declaration for gold by the Republicans at St. Louis. The Democrats at Chicago, in their National Conven- tion, cut the Gordian knot by declaring for the inde- pendent, unlimited free coinage of silver by the United States of America at a ratio of 16 to i. If Mr. Scott is at all familiar with the natural laws of money, he knows that this means silver monometallism for the United States of America. Prof. Francis A. Walker, as reported in the press dispatches of the i3th inst, in a speech at a meeting of the British Bimetallic Society in London, said : "It is deeply to be regretted that millions of our best citizens, as represented at the Chicago Convention last week, declared for the free coinage of silver at the ratio of 16 to i without waiting for the action of other countries. This was done passionately, but the effect will be to maintain the gold standard unimpaired." The Populist Convention at St. Louis, as reported in the Bulletin of the 24th inst., declares as follows : " We demand a national currency safe and sound, issued by the general Government only, a full legal i8 7 tender for all debts, private and public, and without the use of banking corporations, a just, equitable and efficient means of distribution direct to the people and through the lawful disbursements of the Government." Thus it appears that in this campaign the Repub- licans are for Gold ; the Democrats are for silver ; the Populists are for anything. What is Mr. Scott for ? What camp is he in, Republican or Democratic? [From News Letter, August 8, 1896.] Editor News Letter : SIR : I referred in my paper of July yth (your issue of nth) to the following remarks of Mr. Scott on page 566 of the Overland Monthly for May : ( That) on a gold basis, money in this country is scarce, is evidenced by the fact that we, by necessity, issue bonds to the amount of hundreds of millions of dollars, obsequiously paying the bond-takers mostly foreign a large premium on the gold received from them." In addition to the reference therein, I shall oppose to Mr. Scott's erroneous dictum the views of a Republican in good standing, Hon. Thomas B. Reed, who, in a speech at Alfred, Maine, July 28th, said: " What we want is not more money, but more capital. Money always comes with capital. We have money now, more than we can use, lying idle. We have just exported a lot of it. Money is the transferer of capital, as a hay rake with horse attached is a transferer of hay. More such hay rakes will never make more hay, but more hay will require more such hay rakes and is sure to get them. i88 " If I sell my house in Portland, or mortgage it for $5,000 and send the result to a Washington State coal mine, and it is spent and comes back to the Casco Bank, my $5,000 worth of capital is in Washington just the same. What this whole country needs is capital from abroad, from the whole world. I expect some of you will be surprised and ask whether the world of the United States is not immense and sufficient. Immense, yes; sufficient, no." For the purpose of external or foreign trade, a debase- ment of currency is utterly fatuous and pernicious. The coins are estimated at their contents of pure metal, and the international exchange is so rated. The conse- quence is an apparent rise of foreign prices proportioned to the extent of the debasement. This at once unsettles internal or home trade prices, and the}'- rise to the same level, but with such inequality of motion as may hap- pen to follow from friction, local ignorance, want of communication, or from the intricacies of trade. The inequality of coin-exchange rates which results from this is the broker's opportunity, margins large enough to cover all commissions and risks ; and swiftly and inevitably the good species, or any, bad or good, upon which a differential profit can be made, disappears from circulation. The consequence is that the rising prices which instituted the process are no longer accompanied by an expanding or increasing volume of currency, but, on the contrary, by a decrease in the total of acceptable or efficient currency. In Great Britain, whose monetary system is on a scientific basis, and the integrity of whose obligations 189 is undoubted, Government revenues for the past year exceeded requirements some forty odd millions of dol- lars. The trade depression and business stagnation is passing away, as the following information will indi- cate. The London Standard, July 14, 1896, says, relative to bankruptcies : " The thirteenth annual report by the Board of Trade on the bankruptcies which occurred during the past year has been presented to Parliament. In an introductory report, Sir Courtenay Boyle, after com- paring the returns for the past five years, says : ' On the whole it appears to be the fact that the annual amount of trading insolvency, so far at least as private traders and partnerships are concerned, is steadily diminishing, and that it has during the last few years attained a considerably lower level than at any time during the present generation. This a fact which should not be lost sight of in any review of the position of English commerce. It would be a mistake to treat this fact as bearing conclusively upon the question of the prosperity of trade, but it appears to indicate clearly that, so far as the system of credit is concerned, trade rests on a sound foundation.' ' If there were no agitation for fiat money, if there were no question of the entire integrity of our financial purposes as a people, no question as to the soundness of our monetary status, normal conditions of industry and trade would be restored within twelve months. I repeat, that a coin is just as bad when debased by overvaluation, if not exchangeable for better, as when unduly alloyed, clipped or sweated. What we need is a reformed, not a debased, currency. 190 [From News Letter, August 75, 1896.'] Editor News Letter : SIR : In my paper of a fortnight ago reference was made to the vast industrial expansion of the past twenty-five years, and its incalculable disturbing in- fluences by reason of its being accompanied by the pernicious growth of artificial trade stimuli, reckless legislation, and a mania for hazardous exploitation to an extent exceeding even its own magnificent propor- tions. It is impossible to exaggerate the baneful effects of the speculative craze, yet when the evil days have come the remedy clamored for is cheap money, which is but adding insult to injury inflicted upon a deluded people. It may be of interest to recall past experiences similar in origin, but of less magnitude, because the prodigious industrial development of the present was then undreamed of. Lord Macaulay says : " In the earlier part of the reign of William the Third, all the greatest writers on currency were of opinion that a very considerable mass of gold and silver was hidden in secret drawers and behind wain- scots. " The natural effect of this state of things was that a crowd of projectors, ingenious and absurd, visionary and knavish, employed themselves in devising new schemes for the employment of redundant capital. It was about the year 1688 that the word stockjobber was first heard in London. In the short space of four years a crowd of companies, every one of which con- fidently held out to subscribers the hope of immense 191 gains, sprang into existence, the insurance company, the paper company, the lute string company, the pearl fishery company, the glass bottle company, the alum company, the Blythe coal company, the swordblade company. There was a tapestry company, which would soon furnish pretty hangings for all the parlors of the middle class, and for all the bedchambers of the higher. There was a copper company, which pro- posed to explore the mines of England, and held out a hope that they would prove not less valuable than those of Potosi. A company to recover the treasure engulfed with Pharaoh's hosts. There was a diving company, which undertook to bring up precious effects from shipwrecked vessels, and which announced that it had laid in a stock of wonderful machines resembling complete suits of armor. In front of the helmet was a huge glass eye like that of a cyclops, and out of the crest went a pipe through which the air was to be admitted. The whole process was exhibited on the Thames. Fine gentlemen and fine ladies were invited to the show, were hospitably regaled, and were de- lighted by seeing the divers in their panoply descend into the river and return laden with old iron and ship's tackle. There was a Greenland fishing com- pany, which could not fail to drive the Dutch whalers and herring busses out of the Northern Ocean. There was a tanning company, which promised to furnish leather superior to the best that was brought from Turkey or Russia. There was a society which under- took the office of giving gentlemen liberal education on low terms, and which assumed the sounding name of Royal Academies Company. In a pompous ad- vertisement it was announced that the directors of the Royal Academies Company had engaged the best masters in every branch of knowledge, and were about 192 to issue twenty thousand tickets at twenty shillings each. There was to be a lottery : two thousand prizes were to be drawn, and the fortunate holders of the prizes were to be taught, at the charge of the com- pany, Latin, Greek, Hebrew, French, Spanish, conic sections, trigonometry, heraldry, japanning, fortifica- tions, bookkeeping, and the art of playing the oboe." All this ended, of course, in a colossal collapse, finan- cial ruin and general misery. Walter Bagehot says : u The panic was forgotten till Lord Macaulay revived the memory of it. But, in fact, in the South Sea bubble, which has always been remembered, the form was the same, only more extravagant still. The com- panies in that mania were for objects such as these : ( Wrecks to be fished for on the Irish coast ; insurance of horses and other cattle (two millions) ; insurance of losses by servants ; to make salt water fresh ; for building of hospitals for bastard children ; for building of ships against pirates ; for making of oil from sunflower seeds ; for improving of malt liquors ; for recovery of seamen's wages ; for extracting of silver rom lead ; for the transmuting of quicksilver into a malleable and fine metal ; for making of iron with pit coal ; for trading in human hair ; for fatting of hogs ; for a wheel of perpetual motion ; for importing a number of large jackasses from Spain.' But the most strange of all, perhaps, was ( For an undertaking which shall in due time be revealed.' Each subscriber was to pay down two guineas and thereafter receive a share of one hundred, with a disclosure of the unrevealed under- taking ; and, so tempting was the offer, that one thousand of these subscriptions were paid for the same morning, with the proceeds of which the projector decamped the following afternoon." 193 In 1825 there were speculations in companies nearly as wild, and just before 1866 there were some of a like nature, though not quite so extravagant. The fact is that the owners of savings, or those who supposed themselves so, not finding their usual kinds of invest- ment in adequate quantities, rush into anything that holds out specious promises; and, when they find or believe that these tempting investments can be disposed of at a high profit, they rush into them more and more. The first desire is for high interest, but that soon becomes secondary. It is superseded by an appetite for large gains, to be made by selling the principal on which the yield of interest is ^expected. So long as sales can be effected the mania continues ; when they cease to be possible ruin begins. Ruin has always been the result of such folly, and always will : be while time lasts; and sadly enough its evil effects fall, not alone on the unjust and foolish, but on | the just and prudent. The list of hairbrained, swindling schemes put forth in connection with the South Sea bubble should have made it apparent to the sturdy Britons that there was no need for the importa- tion of large jackasses from Spain or anywhere else. Yet, wild and foolish as the English people were in that and the other instances named, they have been excelled in folly by those of the United States within the past twenty years. And when the chickens come home to roost they are, according to Mr. Scott's logic, to be dispersed by cheap money and more protection. " Angels and ministers of grace defend us ! " 194 Referring to Mr. Bagehot's specification of "an under- taking which shall in due time be revealed," which had for its outcome that the projector went off in the after- noon with the moneys he had collected in the forenoon, it seems very remarkable, and yet is trivial compared to similar schemes that were foisted upon the people of this country, for example, what was known as the Blind Pool, of some twelve or fourteen years ago, to which millions of dollars were contributed, the dis- position of which was left to the caprice of an audacious operator, who invested them in various transportation stocks in order to pool and bull the prices of them. It is a sufficient showing of the madness and iniquity of this and similar deceptions of the times to say that to-day the stocks of this same Blind Pool are not worth fifteen cents on the dollar, and the inflation that was then accomplished had no visible basis except the cupidity and gullibility of the people. The transporta- tion lines are all in the hands of receivers, and the decrease in share values of the companies concerned has been over 85 per cent. And yet the remedy for all the losses, privations and misery resulting from the egregious folly of furthering such schemes is cheap money, itself the most potent of all agencies for the purposes of the gambler and swindler. / repeat, a coin is just as bad when debased by overvaluation, if not exchangeable for better, as when unduly alloyed, clipped or sweated. Speculation run riot through the land, particularly in building railroads (and even towns) that were not needed, and what took place at Vancouver, Seattle, Tacoina, Winnipeg, Sioux City, Omaha, Kansas City, Denver, Wichita, Los Angeles, San Diego, and scores of other places, is illustrated by the fate of a sister city. The loot of a Northwestern city, as told in a San Fran- cisco daily of December 16, 1895, * s another and a yet more startling revelation of such folly, and its entail of crime and financial ruin. A public debt of $5,000,000 now hangs over that city of only 25,000 people, with interest on the debt at $1,000 a day, and an assessed property valuation of only $26,000,000. For the $5,000,000 of city obligations, it has probably not to exceed $1,000,000 of property and $4,000,000 of debt, with nothing to show for the latter, and all this out of a vain and knavish endeavor to evolve something out of nothing, for which the panacea now is, cheap money. Our financial and industrial crises have, as hitherto shown, usually followed periods of marked activity, but liave been owing to or influenced by various causes, vicious financial legislation; extreme protection, so called; wastefulness, governmental, corporative and personal; undue expansion of credit; wildcat schemes of speculation ; corporate ventures capitalized into stock shares beyond all reason, beyond any just proportion to the money actually invested; mushroom towns with plush hotels and nickel-plated paraphernalia generally, etc., all accompanied by endless assertion of self-sufii- ciency. And now the last and biggest bubble of all is " free silver," the inevitable effect of which would be to rob all wage-earners. The reformation of all these evils requires more virtue than ever was or ever can be 196 found in money, fiat or otherwise. If the gentlemen who are advocating silver in the magazines of California would consider the speculation that the American public has indulged in for thirty years in swindling projects of every name and nature, and stock shares endlessly inflated, it seems to me that they would doubt the power of Government to obviate the evil consequences of such enormous waste, moral as well as material, by more " protection " and the issue of fiat money, whether metal or paper. " Transgression brings retributive stings To candle-makers as well as kings." There is no real capital except what comes from previous labor performed ; and a government is as powerless to bring wealth into existence out of nothing by fiat as an individual. If it be ascertained that such a device is practical, it is in truth the discovery of the philosopher's stone, and more's the pity it was not dis- covered sooner. John Law conceived the idea of making all the prop- erty of France security for the money that country issued. As the historian Blanqui ironically remarks, " What could be a finer mortgage than France." Yet, says Blanquij when the financial debauch was over: " Of all the industrial values produced under the hot atmosphere of Law's system, nothing remained but bankruptcy, ruin and desolation. Landed property alone had not perished in the tempest." One of its lessons is that neither real estate nor anything else not immediately convertible into real money, money of intrinsic equivalency, can support a circulating cur- rency. Yet the lesson was unheeded even by France, 197 and during the Revolution alleged statesmen came forward in overwhelming numbers to insist that John Law's money had at first restored prosperity, that the immeasurable wretchedness and wrong it finally caused had resulted from overissue, and that such an over- issue was possible only nnder a despotism. The col lossal ruin that was wrought by the issue of assignats is a matter of word-wide notoriety. Professor Perry, in his " Elements of Political Economy," says of the crazy monetary schemes of the French Revolution : " The distress and consternation into which a coun- try falls when its current measure of services is dis- turbed and destroyed is past all powers of description. The prisons and the guillotine did not compare with the assignats in causing suffering during those six years. This example is significant because it shows the powerlessness of even the strongest and most unscrupulous government to regulate the value of anything. The assignats were depreciating during the very months in which Robespierre and the Com- mittee of Public Safety were wielding the power of life and death in France with terrific energy. They did their utmost to stop the sinking of the revolutionary paper. But value knows its own laws, and follows them in spite of decrees and penalties." The history of the world is replete with examples of nations that have thought to get over hard times and become suddenly rich by depreciating their currency. The wrecks from this source line the pages of history. Not one has ever succeeded, and not one ever will succeed, in bettering its condition by depreciating its 198 money standard. Our people must learn this important truth, and the sooner they do so the better it will be for their welfare. I take the liberty of quoting the language of a San Francisco writer of the present, in which he characterizes the "perverse spirit of the times, as everywhere manifesting itself in wild aspirations for impossible advantages, in the resurrection of the dis- credited beliefs and methods of antiquity, in cutting loose from all that is conservative, in a reign of unreason." In quest of what ? I repeat that honesty, patience, hard work and fru- gality are the only remedies for the ills we have largely drawn upon our own shoulders, and which we must bear until relieved by common-sense methods of our own devising. [from News Letter, August 22, 1896.] Editor News Letter : SIR : In the July Overland Mr. Scott says : " In the United States, gold and silver on an equal footing and at an established parity were employed as legal money, with happy effect, from 1792 to 1873. During this period of eighty-one years, their value lines were nearly coincident, and doubtless would have so continued till the present time but for the demon- etizing crime of silver in 1873. * * * " Gold monometallism has proved highly fluctuating appreciated over 100 per cent in twenty-three years and should therefore be permanently abolished. Bi- metallism, long tested, proved highly efficient in performing all the duties required of money, and there- fore may safely be re-established, and ought so to be." These assertions are not in accord with the facts of history. Bimetallism is impossible in the United States under the independent, unlimited free coinage of silver as legal tender at a ratio of 16 to i, or, for that matter, at any other ratio. Prof. Francis A. Walker, the ablest bimetallist in the United States, says in the preface to his recently published work, " International Bimetal- lism :" " Though a bimetallist of the international type to the very center of my being, I have ever considered the efforts made by this country, for itself alone, to rehabil- itate silver, as prejudicial equally to our own national interests and to the cause of true international bimetal- lism. For us to throw ourselves alone into the breach, simply because we think silver ought not to have been demonetized and ought now to be restored, would be a piece of quixotism unworthy the sound practical sense of our people." Referring to Mr. Scott's observations on due propor- tions of gold and silver, I would remark, the " due proportion " which Mr. Hamilton and Mr. Jefferson considered and discussed in connection with coinage was the average of coinage ratios in European coun- tries. The commodity ratios were then between 15 and 16 to i. At a coinage ratio of 15^ to i, gold dis- appeared ; at 1 6 to i, silver disappeared ; now the commodity ratio is 31 to i, and of course, under the free coinage of silver at 16 to i, all gold would instantly disappear from current circulation. The concurrence of the commercial world fixes mercantile ratios, and the United States, immense as it is, cannot change them by free coinage. / repeat, that a coin is just as bad when debased by overvaluation, if not exchangeable for better, as when unduly alloyed, clipped or sweated. 2OO General Weaver, in his speech at St. Louis pre- senting Hon. W. J. Bryan for the Populist nomination, stated that the issue was between the gold standard, gold bonds and bank currency on the one hand, and the bimetallic standard, no bonds and a Government cur- rency on the other, asserting that the conflict can neither be postponed nor avoided. Now this statement, divested of all sophistry, resolves itself into this : A gold standard of value, with silver as auxiliary, and a currency redeemable in money of intrinsic equivalency upon one side, and upon the other Government fiat money. That is just what it means in the end, and there need be no doubt about it. I had the opportunity of talking with a leading Cali- fornia Populist, and asked him if it was the belief of the people whom he represented that the par of the metals could be maintained under independent, unlimited free coinage on a ratio of 16 parts of silver to i of gold, and he frankly derided the possibility of such a thing, and declared that the Populists advocated the indepen- dent, unlimited free coinage of silver as a means of discharging debts with cheap money, and that, if silver money did not prove cheap enough, they would, if intrusted with power, resort to fiat paper money. Whether the gentlemen who cast the majority vote for free silver at the Chicago Convention will make so frank an admission I do not know, but Governor Alt- geld and others are reported as clearly defining the contest to be what Henry George phrased one of the " House of Want " against the " House of Have." In discussing money the advocates of the inde- pendent, unlimited free coinage of silver universally 2OI ignore the natural laws of money (which are certain to control finally), and generally display, not only a mis- apprehension of the essential principles of money, that, in view of the all-important nature of the subject, is simply astounding, but also a lamentable unfamil- iarity with its technical and legal status. In a speech of the present Democratic candidate for President, Hon. W. J. Bryan, delivered before the Trans-Mississippi Congress in St. Louis, he declared that " true bimetallism means that the value of a dollar shall be regulated, not by artificial laws, but by the natural laws of supply and demand," and then immediately proceeds to controvert his own position by saying that the coinage ratio shall be 16 to i, when the commercial ratio is about 31 to i. The natural law is that coins shall be equivalent to that for which they are accepted, go where they will. The imposition of a forced ratio and legal-tender quality is a purely arbi- trary and artificial arrangement, and sets in motion the Gresham Law. Senator Turpie, as chairman of a silver convention in Indiana, some time ago, declared that the gold coinage of the country was fiat to the extent of 10 per cent, and predicated his entire speech upon this erroneous assumption. Quite recently Governor Matthews of Indiana declared that we should not make gold the standard, while gold has specifically been the standard for twenty-three years and by custom and mercantile concurrence for sixty years. These examples are rivaled by silver advocates in California, who set at defiance the facts of history and teachings of economic science in their insistence on empiricism pure and simple, an empiricism, too, that has encountered 2O2 countless practical illustrations of its own futility ; and Layman is constrained to say that Mr. Scott is no exception to the rule ; that when he assayed to discuss money he selected a subject with which its laws, history and modern functions he is manifestly not familiar. In the February Overland Mr. Scott says : u Not only have the demonetizing acts with respect to silver reduced the world's redemption money fully fifty per cent, but they have palsied its powers of recu- peration, have effected a scarcity of money, and thereby infested our country's doors with countless packs of ravenous wolves" We might expect such an utterance from Mr. Debs, Governor Altgeld, Senator Tillman or Professor An- drews, but not from a level-headed California Repub- lican in good party standing. However, greenback and silver legislation is chiefly responsible for the cloud of doubt that hangs over our financial status, that de- presses industry and retards the return of prosperity. When confidence prevails, the activity of exchange is at once manifest, money moves about rapidly, is handled everywhere, and seems the more abundant because of its general distribution ; but when political commotion, "false doctrines, heresy and schism " create alarm, capital halts, money moves slowly, is frequently hoarded, and complaints are unjustly made of its absence. It is the persistency of the fiat movement that causes capital to withdraw from investment and hold aloof from new enterprises, hence the continued stagnation and depression of business in the United States. 203 The following is from the May Overland : " The Congressional Act of 1894, throwing wide open the gates to the inflow of foreign cheap labor products, has operated to close the doors of many American manufactories, turn vast numbers of American work- men into the streets, reduce the price of labor and American products, and to bring gaunt hunger to many an otherwise happy home of the country" Confronted by the historical lessons cited in this series of papers, and familiar to all well-informed men, Mr. Scott must perceive the unwisdom of such rhetor- ical flourishes ; the uninformed may take them for facts, and thereby cause the rapid pace at which the country is already moving toward a perverted socialism to be further accelerated. On page 565 of the May Overland Mr. Scott says : " Monometallists seem to regard gold as supernal, divine. The cathode rays of their minds photograph gold only. The disposition which Moses, the divinely appointed agent for promulgating the commands of the Great Author of the Decalogue, made of the golden calf set up in the wilderness, evidences his estimate with respect to the divinity of gold. Permit me respectfully to suggest that Layman well con this cogent lesson of the great Law Giver." Layman begs to assure Mr. Scott that he cares no more for gold than for iron or coal, but considers the subject from a purely historical and economical stand- point. However, as it is alleged that Mr. Scott is now a Presidential elector for the Republican party (the party that committed "the crime against silver") and on the present gold standard, it seems in order to ask him if he is disposed to con the cogent lessons of the 204 great Law Giver for himself, and with a mind receptive of wise precept. On the presumption that he is, the following is submitted to his consideration : ( Ye shall do no unrighteousness in judgment, in meteyard, in weight or in measure. Just balances, just weights, a just ephah, and a just hin, shall ye have." Leviticus xix : 35, 36. Without attempting to recapitulate Mr. Scott's con- tention in detail, suffice it to say it amounts to this, viz, that scarcity of money and nonprotection of home industries are the causes of the evils which now afflict the body politic and social ; and, if I have inter- preted him aright, that more money free silver and higher tariff legislation would remedy them. To summarize my position in this discussion I affirm that, in general, what the country needs is at least a rest from tariff tinkering and a reformed, not a debased, currency, with more common sense, honesty, patience, hard work and frugality, and maintain as follows : First I recognize the peculiar hardships of the American wheat farmer, but they are largely because of competition with Argentina peons, Indian ryots and Russian peasants, still further aggravated by the reduced value of horses, mules, oats, hay, etc., owing to steam and electric power on street railways, and the use of bicycles. But in California the farmer's obli- gations are payable in gold, and the unlimited free coinage of silver by the United States, which would inevitably drive gold out of current circulation, could not remedy but would aggravate his misfortunes, and further would probably bring farm laborers to the same plight as their foreign competitors. 205 Second That the welfare of the whole mass of man- kind is finally promoted by obtaining cheaply all the necessaries of life, if it can be shown that alongside of these lower prices for life's necessaries wages have in the main increased, and they have. Third That prices of commodities move in obe- dience to natural and inherent causes, independent of circulating money quantities. The economic phe- nomena of the past fifty years demonstrates this. Fourth That gold and silver coins never have in any country circulated simultaneously, concurrently and indiscriminately, as legal tender, at a fixed ratio under unrestricted free coinage of both metals. Fifth That the International Bimetallic theory the quantitative or so-called double-standard pool theory lacks foundation in any known principle of economic law, and is a fallacy, rejected as such by nearly every modern economist and financier of credit and renown, and by every Western power of any com- mercial importance whatsoever. Sixth That by natural law there is but one way to provide for bimetallism in any country, and that is to make the more precious metal the standard, and then float such an amount of the cheaper metal as can be kept upon an undoubted equality through interchangeability. Seventh That there can be no such thing as a double standard. We must have either gold or silver for our standard. Eighth That Government cannot create values, and that the current value of moneys is determined inde- pendently of the decree of kings, legislative enact- ments, or Government fiat. 206 Ninth That a coin is just as bad when debased by overvaluation, if not exchangeable for better, as when unduly alloyed, clipped or sweated. Tenth That there never was a contrivance so potent for injuring the masses of mankind as so-called cheap money. Eleventh That there is not a free-coinage country in the world to-day that is not on a silver basis. Twelfth That there is not a gold-standard country in the world to-day that does not use silver as money along with gold. Thirteenth That there is not a silver-standard country in the world to-day that uses any gold as money along with silver. Fourteenth That there is not a silver-standard coun- try in the world to-day that has more than one-third as much money in circulation per capita as the United States has. Fifteenth That there is not a silver-standard coun- try in the world to-day where the laboring man receives as fair pay for his day's work as he now does in the United States under the present gold standard. I repeat : There can be no such thing as a double- standard. We must have either gold or silver for our standard. UNDER WHICH KING, BEZONIAN ? A Layman begs permission to say a few words more. In the May Overland, page 566, we find : " It is to be apprehended that the reader will perceive that Layman's comments are hypercritical, evincing an aim to say something brilliantly carping rather than to 20J present truth. The writer would respectfully * com- mend him to a prudent husbandry of his resources. 7 " As a measure of relief to Mr. Scott's solicitude in advising Layman to " husband his resources/' Layman answers that from the force of habit, as well as a due regard for the friendly admonition, he has carefully held in reserve sundry pages of manuscript on the subject of money in general, and silver in particular, which can be drawn upon in case of future need. On page 568, same number of the magazine, he observes : " Charity suggests that Layman may be ' mad.' If he be so, it would, in view of his utterances as to the power of Government to create value by statutory en- actment, seem the acme of hyperbole to say, ' Much learning doth make thee mad. J ' Now, in view of the stubborn facts of history, past and present, does Mr. Scott think his " Hard Times " articles entitle him to distinction for " much learning?" A Layman cannot perceive that his expositions are edifying, nor refrain from characterizing his statistics as inaccurate, his assertions as erroneous, his infer- ences as fallacious, and his conclusions as lame and impotent ; wherefore he pronounces them unsatisfactory. Let him be assured that A Layman has not been moved by any desire to say something u brilliantly carping," but, considering the momentous issues before the people, is sincerely regretful that a gentleman of Mr. Scott's standing should have gone so far astray in his monetary vagaries and Populistic views as he has, for it is calculated to make the judicious grieve. 208 " Money is not a question of politics or sentiment, but of science and ethics. It comes without being called and goes without being arrested, is deaf to advances and insensible to threats. " When Paul stood before King Agrippa at Caesarea, discoursing of righteousness and judgment to come, things the haughty Festus, who was present, did not understand, and defended himself against unjust accusations, the disdainful remark of the latter was fitly answered, " I am not mad, most noble Festus, but speak forth the words of truth and soberness" A LAYMAN. P. S. Since the foregoing was written, Mr. Scott is reported, in the Examiner of the I2th inst., as having spoken before a Republican meeting at Santa Rosa, and in part his remarks were summarized as follows : " He controverted the statements that hard times had followed the so-called demonetization of silver, claiming that the period since that alleged act had been one of unexampled prosperity. He declared that the claim made by the silver men that the restoration of free coinage would result in the raising of prices of products and labor is fallacious." A Layman is pleased to observe these evidences of conversion, but is unable to perceive how Mr. Scott can reconcile them with his four articles on " Hard Times " in the Overland Monthly of this year, except upon the assumption that a great light has shone upon him. A LAYMAN. OV ERDUE *I.OO ON THE " = SEP 21 1933 ftB SEP 181935 OCT 2 1935 i SEP 19 f 941 M SEP 22 19)26 9ct8'48Jl- YC 15004 THE UNIVERSITY OF CALIFORNIA LIBRARY