Money: Speech of Hon. John P. Jones, of Nevada, On the Free Coinage of Silver Part 18

THE WORLD'S SUPPLY OF GOLD AND SILVER.

Since for thousands of years the world recognized both silver and gold as money, can anybody tell what has happened to render one of them unfitted for the money use?

No argument based on fluctuations in the current supplies of either of the metals can militate against the use of both as money. The fluctuation in the annual yield of both, taken together, is much less violent and less frequent than the fluctuation of either taken separately. By the use of both, society has much greater security against the evil of an insufficient money volume. While a large yield, now of one, and again of the other, has taken place, there is no instance in the history of the world of an extraordinary yield of both occurring simultaneously, except in the single instance of the first discovery of the mines of America. When the gold mines have been yielding largely, there has been no special increase of silver, and during the period when silver has been produced in comparatively large quant.i.ties the gold mines have been less productive.

This will be ill.u.s.trated by the following table showing the yield of both gold and silver, from the discovery of America to the present time.

_Annual average production of the precious metals throughout the world from the discovery of America to 1872._

[From Director of United States Mint.]

-----------------------------------+-------------+-------------- Periods. Gold. Silver.

-----------------------------------+-------------+-------------- 1493-1520, average for each year $3,855,000 $1,953,000 1521-1544 do 4,759,000 3,749,000 1545-1560 do 5,657,000 12,950,000 1561-1580 do 4,546,000 12,447,000 1581-1600 do 4,905,000 17,409,000 1601-1620 do 5,662,000 17,538,000 1621-1640 do 5,516,000 16,358,000 1641-1660 do 5,829,000 15,223,000 1661-1680 do 6,154,000 14,006,000 1681-1700 do 7,154,000 14,209,000 1701-1720, average for each year 8,520,000 14,779,000 1721-1740 do 12,681,000 17,921,000 1741-1760 do 16,356,000 22,158,000 1761-1780 do 13,761,000 27,128,000 1781-1800 do 11,823,000 36,534,000 1801-1810 do 11,815,000 37,161,000 1811-1820 do 7,606,000 22,474,000 1821-1830 do 9,448,000 19,141,000 1831-1840 do 13,484,000 24,788,000 1841-1850 do 36,393,000 32,434,000 1851-1855 do 131,268,000 36,827,000 1856-1860 do 136,946,000 37,611,000 1861-1865 do 131,728,000 45,764,000 1866-1870 do 127,537,000 55,652,000 1871-1872 do 113,431,000 81,849,000 -----------------------------------+-------------+--------------

_World's production of gold and silver for the calendar years 1873 to 1889, inclusive._

----------+---------------+------------------------------------------- Gold. Silver.

Calendar +---------------+--------------+--------------+------------- years. Fine Market Coining Value. ounces. value. value.

----------+---------------+--------------+--------------+------------- 1873 $96,200,000 63,267,000 $82,120,000 $81,800,000 1874 90,750,000 55,300,000 70,673,000 71,500,000 1875 97,500,000 62,263,000 77,578,000 80,500,000 1876 103,700 000 67,753,000 78,322,000 87,600,000 1877 114,000,000 62,648,000 75,240,000 81,000,000 1878 119,000,000 73,476,000 84,644,000 95,000,000 1879 109,000,000 74,250,000 83,383,000 96,000,000 1880 106,500,000 74,791,000 85,636,000 96,700,000 1881 103,000,000 78,890,000 89,777,000 102,000,000 1882 102,000,000 86,470,000 98,230,000 111,800,000 1883 95,400,000 89,177,000 98,986,000 115,300,000 1884 101,700,000 81,597,000 90,817,000 105,500,000 1885 108,400,000 91,652,000 97,564,000 118,500,000 1886 106,000,000 93,276,000 92,772,000 120,600,000 1887 105,300,000 96,189,000 94,265,000 124,366,000 1888 109,900,000 109,911,000 103,316,000 142,107,000 1889 118,800,000 125,830,000 117,651,000 162,690,000 ----------+---------------+--------------+--------------+-------------

From this table it will be seen that from 1801 to 1820 the average yearly yield of gold was $9,710,500; of silver, $36,847,500--four of silver to one of gold.

From 1821 to 1840 the average yearly yield of gold was $11,466,000; of silver, $21,964,000--two of silver to one of gold.

From 1841 to 1860 the average yearly yield of gold was $85,150,000; of silver, $34,826,500--two and a half of gold to one of silver.

From 1861 to 1880 the yearly average yield of gold was $117,991,850; of silver, $68,043,900--nearly two of gold for one of silver.

From 1881 to 1889 the yearly average yield of gold was $105,500,000: of silver, $122,540,388--one-sixth more silver than gold.

From those figures it is plain that no continuous, extraordinary yield of silver, such as might warrant the slightest fear of an unnecessary addition to the money volume, is to be expected. On the other hand the continuous drain of gold for use in the arts, as dentistry, gold plate, jewelry, gilding, and articles of decoration generally, is seriously encroaching upon the annual supply.

Both metals possess in common, and neither in any different degree from the other, all the qualities which are recognized as necessary in a commodity money. Silver enjoys in an equal degree with gold the quality of indestructibility, of divisibility, of malleability, and of resistance to chemical changes. The stock of both existing in the world (the product of all time) is estimated to be about equal, the production of the past 500 years being set down as--

Gold $7,240,000,000 Silver 7,435,000,000

That silver mining has not proved exceptionally profitable in this country is proved by the comparatively small number that have engaged in the business. This country has been thoroughly explored in the search for additional mines without any of great value being discovered. The allurements of the business lie in its uncertainty; and for the occasional prize that is drawn thousands of blanks are found. There is always enough hope of results to induce continued effort, but there is also sufficient doubt and discouragement to deter an undue number from engaging in the business.

The mines of Mexico have been worked for hundreds of years; and up to 1873 the business of silver mining in that country had all the stimulus that a parity at 15-1/2 to 1 could give to it. It is not, therefore, probable that any material increase of output can be expected from that quarter.

Conceding, for the sake of the argument, the eventual possibility of so superabundant a yield of silver as to work injury and inequity to the interests of creditors, is it not manifest that it is in the power of society at all times to remedy the evil by a limitation of the coinage?

And on the other hand, is it not equally manifest that for an insufficient supply there is no remedy?

If great mountains of silver should be discovered, does not Congress meet constantly? If there should seem to be too much, could not the coinage be readily limited to prevent depreciation? But, on the other hand, when we dedicate the monetary function solely to one metal, of which there is manifestly and admittedly the world over an insufficient supply, where is the remedy? What can Congress do to enlarge that supply? Absolutely nothing.

THE GOLD USED IN THE ARTS.

The Director of the United States Mint a few years ago estimated that of the $100,000,000 gold annually produced from the mines of the world $46,000,000 are consumed in the manufacture of jewelry, gold plate, plated ware, gold-leaf, etc., and in various processes of dentistry.

The single standard of gold, therefore, is maintained by the creditor nations in the face of the admitted fact that but $50,000,000 of that metal are annually added to the money stocks.

Not only is this encroachment of the commodity demand on the money supply becoming greater year by year, with the growth of population, but the supply of gold from the mines is itself becoming less, having declined from an average of $137,000,000 between 1856 and 1860 (the period of greatest yield from California and Australia), to an average of $107,000,000 for the past ten years. Of the entire gold supply of the world, nine-tenths of it have come from placer mines, readily discoverable and easily worked, because requiring little or no capital.

All known fields of those are practically exhausted, and there is no reasonable prospect of the discovery of others. Hardy, adventurous, and skillful miners from the United States, and capitalists from all countries, have ransacked the world in vain for new fields of gold. Why, then, with the knowledge of those facts before us, should we discard from the full money use and function the only metal that gives to the world any prospect of relief from the money famine from which civilization is now suffering and from which, if silver be not speedily restored to its ancient use and function, the world is destined to suffer much more?

If it be conceivable that the demonetization of either metal were necessary, why demonetize that which promises the greater and more steady yield? If for any reason society should decide that one of the metals should be discarded, should it not rather be that one which promises the smaller future yield, than that which promises the larger?

Silver is the money-metal best suited to the ma.s.s of the people, and to the variety and character of transactions that const.i.tute the interchanges of daily life. The supplies of both metals if united by law, in the full money function, would have a steadiness of value which can not be attained by either separately.

TREASURY NOTES SHOULD NOT BE REDEEMED IN BULLION

The proposition to redeem the proposed treasury notes in silver bullion or in anything but lawful money of the United States will never meet the approval of the people.

What the people of this country want is money, and what they should have is money. These notes will represent full value received, the evidence of which is the bullion in possession of the Government. When issued, they will enter into circulation. They will have to do the work of money among the people. They will go to make up the volume of the currency. On the basis of that volume each dollar acquires a certain value, and represents a given amount of sacrifice. On that volume, and on those conditions, bargains will be made, prices established, debts contracted, values adjusted, and equities created. If any portion of that money be withdrawn from circulation (for that is what "redemption" means) without an equivalent amount of money in some other form being issued to take its place, the circulation will to that extent be contracted, every dollar in circulation will increase in value, prices will fall, property-values established on the basis of the larger circulation will shrink, and equities will be destroyed.

The redemption of any number of those notes in silver bullion means the withdrawal of many dollars of money from circulation and the destruction of so much of the money of the country. Money is not a thing that can be destroyed with impunity. It should be kept in use among the people. It is to industry what the blood is to the human body; it is the life-giving and life-sustaining medium. The money volume of a country should not be subject to frequent and violent changes. In a new and growing country, it should be characterized by that steady accretion that characterizes the increase in the quant.i.ty of blood in the human body as it progresses from infancy to maturity. It is no more unreasoning, empirical, or unscientific to be alternately withdrawing blood from, and injecting blood into, a human body than to be constantly contracting and expanding the money volume of the country. And as activity of circulation of the blood is essential to the health of the body, so activity of circulation in money is indispensable to the well-being of society. The possession of no mere commodity, whatever its value, will compensate a country for the destruction of any considerable portion of its money, upon the entire volume of which vast equities rest.

MONEY SHOULD BE REDEEMABLE IN ALL THINGS.

Money should be redeemed in all things; not in one thing alone. The peculiar characteristic of true money, that which distinguishes it from all other things whatsoever and const.i.tutes it a prime factor in civilization, is that it is at all times redeemable in any thing that is on sale. Being an order for property, it should be redeemed in any form of disposable property which the holder may desire.

A guinea--

said Adam Smith--

may be considered as a bill for a certain quant.i.ty of necessaries and conveniences upon all the tradesmen in the neighborhood.

Any form of money, the condition of whose existence depends on redeemability in one thing alone, can not be money in the full sense, and whenever an urgent demand for real money springs up the other ceases altogether to be money.

The redemption of money should be reciprocal between the Government and the people and between and among all individuals in the community. It should not only be redeemable by the Government by acceptance for taxes but also redeemable by and among the people for all property for sale and services for hire. Its quant.i.ty should be so regulated as that its unit (the dollar) should neither increase nor diminish in value, and it should be kept constantly in circulation, and not be permitted to lie uselessly in the Treasury. Any other money than this is to a certain extent counterfeit; it is false money, because when most needed it fails to be money and has to be "redeemed" in something else (gold) which can not be got except at ruinous sacrifice.

It is of the very essence of money--its pith and marrow and protoplasm--that it should be a legal tender, a universal solvent, the ultimate of payment, and redeemable, at the prices ruling, in everything that is on sale. If the volume of such money be properly regulated, while there may from time to time be variations in the prices of particular articles, the general range of prices will be maintained practically undisturbed.

What an absurdity it is for the Government to put its stamp on one thing in order to make it redeemable in another thing imprinted with the same stamp, but which n.o.body wants except for the purpose of getting a third thing that could have been got just as well without the intervention of the second. As well might he who, wanting water, is given a silver cup wherewith to get it, but on going to the spring is forbidden to drink until he exchanges his silver cup for a gold one.

The real reason why it is insisted that all other things than gold shall be exchangeable into gold is that gold is getting dearer by reason of decreasing supply and increasing populations. The necessity for convertibility into gold implies that, in ordinary times, a range of prices higher than the gold range will prevail, and when, by reason perhaps of increased activity of business, redemption comes to be demanded prices are at once precipitated to those of the gold standard and below, to the great advantage of the creditor cla.s.ses, who, as owners of bonds, may be considered in the language of the stock exchange "long" on money, and to the equally great injury of the producing cla.s.s, who, being in debt, may be considered as having sold money "short."

The supreme consideration is that the money of a country shall be so regulated as that prices may not fall from any cause inhering in the money system. The value of money--in other words, the sacrifice necessary to obtain it--should be no greater at one time than at another. In order to effect that object of prime consequence, to maintain the value of money unchanging, there should be no hesitancy whatever in changing the material of which it is made.

n.o.body who has reflected on the subject for a moment doubts that what gave "value" or exchangeable power to the greenback was not the promise made on its face, without date, to pay a dollar, but the inscription on its back which declared it a legal tender for all dues and demands, public and private, except duties on imports. It was a misfortune to mankind that the words "promise to pay" were printed on it, because by it millions were led to believe that the "value" or exchangeable power resided in the promise instead of in the legal-tender power conferred upon it.

There is no object in redeeming in gold, except to maintain gold prices, that is to say, the range of prices prevailing in gold-using countries, and as those prices are constantly trending downward, any country that insists on maintaining the gold standard must accept the consequences in a corresponding fall of prices. The advocates of the gold standard, in effect, maintain that no matter to what extreme prices may fall, we must be content--we must bow in humble submission to the inevitable, since, in their view, it is more necessary to maintain the sacredness of the gold standard than to establish justice, promote prosperity, or to maintain equity in all time transactions.

It is in no way necessary, on account of any intrinsic or inherent quality of gold, that should have that particular metal, and that alone, for money.