Money: Speech of Hon. John P. Jones, of Nevada, On the Free Coinage of Silver Part 5

But it is hardly necessary to a.s.sert that the predicted inflation of prices has not been observed as a consequence of the coinage of $2,000,000 a month. While the issuance of that amount has not, with our rapidly increasing population and wealth, been sufficient to arrest the downward tendency of prices, it has undoubtedly prevented them from falling much lower. Without that coinage, we should have had industrial depression, chronic and somber, with consequences of untold disaster.

But the result which gave most apprehension to those who advocated the gold standard, the evil which they regarded as on the whole the most threatening and direful of all the evils that were to result from even so small an increase in the money volume as that bill provided for, was the outflow of gold. They ridiculously under-estimated the tremendous money-absorbing power of this great country. And as if to emphasize to all the world the complete absurdity of their alleged fears--this apprehension has been conspicuously and notoriously set at naught by the constant inflow of gold. On the 30th of June, 1878, the amount of gold coin and bullion in the Treasury and in monetary circulation in this country is officially reported to have been $213,199,977, and this amount is probably much over-estimated. On November 1, 1889, we had more than three times as much--the amount of gold in circulation and in the Treasury being reported as $689,000,000.

"Experience," says Dr. Johnson, "is the great test of truth, and is perpetually contradicting the theories of men," and the last experience, Mr. President, is the best.

If the professors of political economy, the Eastern newspaper editors, and the professional financiers were then so seriously mistaken ought they not to be a little modest now in making predictions, especially in renewing predictions that have been already discredited? They can not point to a single instance in which their prophesy has not been falsified by the event. So humiliating a failure on the part of the professors, in a realm of which they boastfully claimed to be masters, so complete an overthrow of these "experts" by men who were ridiculed and derided as rural financiers and crazy theorists, ought to put the advocates of the gold standard on their guard against a like defeat on this occasion. They are pressed for reasons to account for the utter miscarriage of their prophecies. They are left without a shadow of consolation except that the coinage of $2,000,000 worth of silver bullion each month has not succeeded in placing silver at a par with gold. They affect to believe that the advocates of silver in 1878 expected that that metal, under the very limited demand of $2,000,000 a month, would be brought to a level with gold, which, owing to the demonetization of silver, had risen abnormally and ruinously in value.

No such belief was ever entertained or expressed. On the contrary it was repeatedly a.s.serted by the advocates of silver that so long as the entire yield of gold from all the mines of the world (in 1878, $119,000,000) was invested with the full money function and had free access to all mints to be trans.m.u.ted into coin, it could not be expected that the conferring of the legal-tender function upon a sum so comparatively trifling as one-fourth the yield of silver (the yield in 1878 being $99,000,000) would have the effect of placing it on a level with gold.

It is, however, a significant fact that every silver dollar that has been coined under that act is at a parity with gold, and will to-day buy as much of all the objects of human desire as will the gold dollar. Nay, more, silver bullion--disparaged and discredited as it is by being shorn of the money function, and denied access to the mints, instead of decreasing in purchasing power, has maintained so steady a relation to commodities that 412-1/2 grains of uncoined silver will exchange for as much to-day as would the coined dollar, whether of silver or gold, in 1873, when the full money function attached equally to both metals. If this be true--and I shall presently demonstrate it beyond refutation--what an utter perversion of terms it is to say that silver has fallen in value!

WILL REMONETIZATION PLACE US ALONGSIDE INDIA.

We are solemnly warned that the full remonetization of silver in the United States would place us alongside India and the other barbarous countries of the world. This brilliant piece of reasoning is advanced with great confidence, and is intended to be conclusive of the argument against silver. But, Mr. President, India is no more barbarous now than it was in 1873--before our silver dollar was demonetized. India is no more barbarous now than it was in 1857, when Germany demonetized gold and placed herself "alongside" India. Neither is Germany any more civilized now than then. We did not at that time hear any complaint, either in the United States or Europe, that the use of silver as money placed any one nation more than any other in dangerous affiliation with the civilization of India. We have never heard it charged against France that its civilization was brought any nearer that of India by the immense quant.i.ty of silver money in France. Neither did we hear it charged against the United States up to 1873 that we were "alongside,"

or dangerously close to the barbarous nations by our use of silver as money.

Up to 1834 we had no metallic money other than silver in our circulation, and up to 1850 we had much more silver in circulation than gold. Were we "alongside" India then? Where were the wise and patriotic men of our country at those periods? History fails to record any protest on their part that we were placing ourselves "alongside" India or any other of the barbarous nations of the world by our use of silver and our recognition of its full money power. All the nations of the earth used silver and accorded it full recognition as money equally with gold up to 1819. Was all Christendom at that time "alongside" India? When, in that year, Great Britain sundered the silver link that from time immemorial had kept her "alongside" India and the other barbarous nations and, for selfish reasons of her own, arising from her position as a creditor of all other nations, decided to recognize gold only as money, was any evidence afforded of a sudden advance in the civilization of Great Britain? Was the emergence of that nation from the benumbing companions.h.i.+p of India and the other barbaric countries into the glittering and refulgent light of the gold dispensation signalized, as would be expected, by a corresponding improvement in the condition of the people?

On the contrary, the history of the time informs us that as a consequence of the pa.s.sage of the bill by Parliament in 1819, compelling payments in gold, prices rapidly fell, cotton in particular sinking in the short s.p.a.ce of three months to one-half its former level. Within six months all prices had fallen one-half, and showed no signs of improvement for the next three years. By reason of the contraction of the currency the industry of the nation was congealed, as is a flowing stream by the severity of an arctic winter. Alarm became universal; confidence and activity ceased. Bankruptcies increased in 1819 more than 50 per cent. over the number of the previous year. Meetings were held throughout England in which the people called on the government to devise some means of redressing the situation. So universal was the distress that the owners of land in England, who in 1819 numbered 160,000 were in seven years, by forced sales and foreclosure of mortgages on the smaller farms, reduced to 30,000, and one in every seven of the population lived on organized charity. All this was but a part of the price which the people of England paid for a policy imposed on them by the creditor cla.s.ses among their own number. The condition of industry and disorganization of labor led to frequent and serious conflicts between the people and the military. They also led to commercial crises without number, and England, by demonetizing silver and thus ceasing to be "alongside" India, became the seat of panics, as Egypt had long been of the plague and India of the cholera.

As a contrast to this I will merely cite the change in the condition of India within the past seventeen years. When the Western world discarded silver as money and, as a consequence, India received a larger supply of it than ever before, that barbarous nation, as is universally admitted, made progress by leaps and bounds. No country on earth has in the same time made such advances in material prosperity and in all the elements that conduce to the comfort and happiness of a people. Notwithstanding the alleged debas.e.m.e.nt of silver, no sooner had its increased inflow into India begun than the industries of a vast continent were established and set in motion, and a substantial part of the activity and prosperity that were wont to pervade some of the industries of the United States has, by that demonetization, been transferred to fields of wheat, and fields and factories of cotton 10,000 miles distant.

What really placed us alongside such barbarous countries as India was the demonetization of silver. It was by that demonetization that the people of Europe were enabled, with gold, to buy silver at 30 per cent.

discount, which, when s.h.i.+pped to India and coined into rupees, would buy as much wheat as could ever have been bought with that coin. There has been no decrease whatever in the purchasing power of the rupee in India.

This was equivalent to buying wheat at 30 per cent. below the price theretofore paid for it, and thus the farmers of the United States were by demonetization placed "alongside" the barbarous people of India.

Their wheat had to compete in the European markets with the wheat of India, and it is this compet.i.tion that placed them "alongside" India.

The farmer of this country, therefore, by demonetization of silver, was compelled to compete with under-paid and half-starved ryots. And so it was that our cotton planters, by the demonetization of silver, were placed alongside the barbarous people of India. It is this degrading compet.i.tion that places a highly civilized people alongside a barbarous one.

The advocates of the single gold standard deem even silver money much better money than greenbacks. Does it then follow that when greenbacks were our only money--good enough money to carry the nation through the greatest war in all history--we were "alongside" or underneath the barbarous nations of the world? It is not the form, or the material of a nation's money that fixes its status relatively to other nations. That is accomplished by the vitality, the energy, the intellectuality and effective force of its people. The United States can never be placed "alongside" any barbarous nation, except by compelling our people to compete with barbarous peoples--compelling them to sell the products of American labor at prices regulated by the cost of labor and manner of living in barbarous countries. As well might it be said that we are alongside the barbarous people of India because we continue to produce wheat and cotton.

The distinguis.h.i.+ng feature of all barbarous nations is the squalor of their working cla.s.ses. The reward of their hard toil is barely enough to maintain animal existence. A civilized people are placed alongside a barbarous one when, in their means of livelihood, the foundation of their civilization, they are made to compete with the barbarians. That was the result accomplished for the farmers and planters of the United States when silver was demonetized.

CREDITORS AND DEBTORS.--A COMPARISON OF MOTIVES.

All movements for the increase of the monetary circulation are ascribed by the money-lenders and creditor cla.s.ses to the unworthy desire on the part of the debtors to escape their just obligations. But if motives are to be brought in question, the rule should work both ways. No note is taken of the motive of the creditor cla.s.ses in securing a contraction of the circulation. Whatever the apparent purpose of contraction, and however specious the arguments advanced in its justification, the real object has always been to increase the purchasing power of money. In all countries, and throughout all time, it is the cupidity of the creditor cla.s.ses and annuitants, and their desire to increase the value of the money unit that has brought about a shrinkage in the money volume.

Unlike the great ma.s.ses of the people, who were ignorant of the effects to be naturally expected from such a shrinkage, the annuitants and moneyed men very well understood that the value of every pound or dollar depended on the number of pounds or dollars that were in circulation; the larger the total number out, the smaller the purchasing power of each; the smaller the total number out, the greater the purchasing power of each.

Loaners of capital are not usually those who entertain further hope of personal achievement. When men realize fortunes it is rarely that they conserve the faculty of initiative; they find no special delight in novelty; they look so carefully to security in the use of money that the spirit of adventure is restrained. The realization of a fortune is usually the labor of a life-time, and few men who reach the goal care to retrace their steps to enter again upon a struggle that demands all the strength, the momentum, and the intrepidity of youth. Men of a.s.sured incomes therefore are disposed to take their ease, and society must look, for its material progress and development, to those who have a career to make, with the ambition and the power to make it.

It is a remarkable circ.u.mstance, Mr. President, that throughout the entire range of economic discussion in gold-standard circles, it seems to be taken for granted that a change in the value of the money unit is a matter of no significance, and imports no mischief to society, so long as the change is in one direction. Who has ever heard from an Eastern journal any complaint against a contraction of our money volume; any admonition that in a shrinking volume of money lurk evils of the utmost magnitude? On the other hand we have been treated to lengthy homilies on the evils of "inflation," whenever the slightest prospect presented itself of a decrease in the value of money--not with the view of giving the debtor an advantage over the lender of money, but of preventing the unconscionable injustice of a further increasing value in the dollars which the debtor contracted to pay. Loud and resounding protests have been entered against the "dishonesty" of making payments in "depreciated dollars." The debtors are characterized as dishonest for desiring to keep money at a steady and unwavering value. If that object could be secured, it would undoubtedly be to the interest of the debtor, and could not possibly work any injustice to the creditor. It would simply a.s.sure to both debtor and creditor the exact measure for which they bargained. It would enable the debtor to pay his debt with exactly the amount of sacrifice to which, on the making of the debt, he undertook to submit, in order to pay it.

WHO ARE THE DEBTORS?

In all discussions of the subject the creditors attempt to brush aside the equities involved by sneering at the debtors. But, Mr. President, debt is the distinguis.h.i.+ng characteristic of modern society. It is through debt that the marvelous developments of nineteenth century civilization have been effected. Who are the debtors in this country?

Who are the borrowers of money? The men of enterprise, of energy, of skill, the men of industry, of foresight, of calculation, of daring. In the ranks of the debtors will be found a large preponderance of the constructive energy of every country. The debtors are the upbuilders of the national wealth and prosperity; they are the men of initiative, the men who conceive plans and set on foot enterprises. They are those who by borrowing money enrich the community. They are the dynamic force among the people. They are the busy, restless, moving throng whom you find in all walks of life in this country--the active, the vigorous, the strong, the undaunted.

These men are sustained in their efforts by the hope and belief that their labors will be crowned with success. Destroy that hope and you take away from society the most powerful of all the incentives to material development; you place in the pathway of progress an obstacle which it is impossible to surmount.

The men of whom I have spoken are undoubtedly the first who are likely to be affected by a shrinkage in the volume of money.

The highest prosperity of a nation is attained only when all its people are employed in avocations suited to their individual apt.i.tudes, and when a just money system insures an equitable distribution of the products of their industry. With our present complex civilization, in order that men may have constant employment, it is indispensable that work be planned and undertakings projected years in advance. Without an intelligent forecast of enterprises large numbers of workmen must periodically be relegated to idleness. Enterprises that take years to complete must be contracted for in advance, and payments provided for.

A constant but unperceived rise in the value of the dollar with which those payments must be made, baffles all plans, thwarts all calculation, and destroys all equities between debtor and creditor. If we can not intelligently regulate our money volume so as to maintain unchanging the value of the money unit, if we can not preserve our people from the blighting effects which an increase in the measuring power of the money unit entails upon all industry, to what purpose is our boasted civilization?

By the increase of that measuring power all hopes are disappointed, all purposes baffled, all efforts thwarted, all calculations defied. This subtle enlargement in the measuring power of the unit of money (the dollar) affects every cla.s.s of the working community. Like a poisonous drug in the human body, it permeates every vein, every artery, every fiber and filament of the industrial structure. The debtor is fighting for his life against an enemy he does not see, against an influence he does not understand. For, while his calculations were well and intelligently made, and the amount of his debts and the terms of his contracts remain the same, the weight of all his obligations has been increased by an insidious increase in the value of the money unit.

EFFECTS OF A SHRINKING VOLUME OF MONEY.

As to the benumbing consequences following a shrinkage in the volume of money, the testimony of history is briefly reviewed in the report of the Monetary Commission to which I have already referred, and from which I read the following:

At the Christian era the metallic money of the Roman Empire amounted to $1,800,000,000. By the end of the fifteenth century it had shrunk to less than $200,000,000. During this period a most extraordinary and baleful change took place in the condition of the world. Population dwindled and commerce, arts, wealth, and freedom all disappeared. The people were reduced by poverty and misery to the most degraded conditions of serfdom and slavery.

The disintegration of society was almost complete. The conditions of life were so hard that individual selfishness was the only thing consistent with the instinct of self-preservation. All public spirit, all generous emotions, all the n.o.ble aspirations of man shriveled and disappeared as the volume of money shrunk and as prices fell.

History records no such disastrous transition as that from the Roman Empire to the Dark Ages. Various explanations have been given of this entire breaking down of the frame-work of society, but it was certainly coincident with a shrinkage in the volume of money, which was also without historical parallel. The crumbling of inst.i.tutions kept even step and pace with the shrinkage in the stock of money and the falling of prices. All other attendant circ.u.mstances than these last have occurred in other historical periods unaccompanied and unfollowed by any such mighty disasters. It is a suggestive coincidence that the first glimmer of light only came with the invention of bills of exchange and paper subst.i.tutes, through which the scanty stock of the precious metals was increased in efficiency. But not less than the energizing influence of Potosi and all the argosies of treasure from the New World were needed to arouse the Old World from its comatose sleep, to quicken the torpid limbs of industry, and to plume the leaden wings of commerce. It needed the heroic treatment of rising prices to enable society to reunite its shattered links, to shake off the shackles of feudalism, to relight and uplift the almost extinguished torch of civilization.

That the disasters of the Dark Ages were caused by decreasing money and falling prices, and that the recovery therefrom and the comparative prosperity which followed the discovery of America were due to an increasing supply of the precious metals and rising prices, will not seem surprising or unreasonable when the n.o.ble functions of money are considered. Money is the great instrument of a.s.sociation, the very fiber of social organism, the vitalizing force of industry, the protoplasm of civilization, and as essential to its existence as oxygen is to animal life.

Without money civilization could not have had a beginning; with a diminis.h.i.+ng supply it must languish, and, unless relieved, finally perish.

Symptoms of disasters similar to those which befell society during the Dark Ages were observable on every hand during the first half of this century. In 1809 the revolutionary troubles between Spain and her American colonies broke out. These troubles resulted in a great diminution in the production of the precious metals, which was quickly indicated by a fall in general prices.

As already stated in this report, it is estimated that the purchasing power of the precious metals increased between 1809 and 1848 fully 145 per cent., or, in other words, that the general range of prices was 60 per cent. lower in 1848 than it was in 1809. During this period there was no general demonetization of either metal and no important fluctuation in the relative value of the metals, and the supply was sufficient to keep their stock good against losses by accident and abrasion.

But it was insufficient to keep the stock up to the proper correspondence with the increasing demand of advancing populations.

The world has rarely pa.s.sed through a more gloomy period than this one. Again do we find falling prices and misery and dest.i.tution inseparable companions. The poverty and distress of the industrial ma.s.ses were intense and universal, and, since the discovery of the mines of America, without a parallel. In England the suffering of the people found expression in demands upon Parliament for relief, in bread riots, and in immense Chartist demonstrations. The military arm of the nation had to be strengthened to prevent the all-pervading discontent from ripening into open revolt. On the Continent the fires of revolution smoldered everywhere, and blazed out at many points, threatening the overthrow of states and the subversion of social inst.i.tutions.

Whenever and wherever the mutterings of discontent were hushed by the fear of increased standing armies, the foundations of society were honey-combed by powerful secret political a.s.sociations. The cause at work to produce this state of things was so subtle, and its advance so silent, that the ma.s.ses were entirely ignorant of its nature. They had come to regard money as an inst.i.tution fixed and immovable in value, and when the price of property and the wages of labor fell, they charged the fault, not to the money, but to the property and the employer. They were taught that the mischief was the result of overproduction. Never having observed that overproduction was complained of only when the money stock was decreasing, their prejudices were aroused against labor-saving machinery. They were angered at capital, because it either declined altogether to embark in industrial enterprises or would only embark in them upon the condition of employing labor at the most scanty remuneration. They forgot that falling prices compelled capital to avoid such enterprises on any other condition, and for the most part to avoid them entirely. They did not comprehend that money in shrinking volume was the prolific parent of enforced idleness and poverty, and that falling prices divorced money capital, from labor, but they none the less felt the paralyzing pressure of the shrinking metallic shroud that was closing around industry.

The increased yield of the Russian gold fields in 1846 gave some relief and served as a parachute to the fall in prices, which might otherwise have resulted in a great catastrophe. But the enormous metallic supplies of California and Australia were all needed to give substantial and adequate relief. Great as these supplies were, their influence in raising prices was moderate and soon entirely arrested by the increasing populations and commerce which followed them. In the twenty-five years between 1850 and 1876 the money stock of the world was more than doubled, and yet at no time during this period was the general level of prices raised more than 18 per cent. above the general level of 1848.

A comparison of this effect of an increasing volume of money after 1848 with the effect of a decreasing volume between 1809 and 1848 strikingly ill.u.s.trates how largely different in degree is the influence upon prices of an increasing or decreasing volume of money. The decrease of the yield of the mines since about 1865, while population and commerce have been advancing, has already produced unmistakable symptoms of the same general distrust, non-employment of labor, and political and social disquiet, which have characterized all former periods of shrinking money.

The time that has elapsed since that report was written has but served to verify and emphasize its statements.

THE FALL OF PRICES SINCE 1873.

It is a fact not disputed anywhere but universally admitted, that for many years past the prices of all articles entering into general consumption among the people have been steadily falling. It is obvious that the industrial conditions prevailing since 1873 are but a repet.i.tion of those above described as following 1809--with falling prices, constant unrest, and universal discontent.

The following table, compiled from figures published by the Bureau of Statistics of the Treasury Department, shows the average range of export prices of the articles named for each year since 1873:

_Annual average export prices of commodities of domestic production for each year from 1873 to 1889, inclusive._

------+----------+----------+----------+--------+--------+-------- Year Corn Wheat Wheat Cotton Leather Illumi- ending per per flour (upland) per nating June, bushel. bushel. per per pound. oils, 30-- barrel. pound. refined, per gallon.

------+----------+----------+----------+--------+--------+-------- _Dollars._ _Dollars._ _Dollars._ _Cents._ _Cents._ _Cents._ 1873 .618 1.312 7.565 18.8 25.3 23.5 1874 .719 1.428 7.144 15.4 25.2 17.3 1875 .848 1.124 5.968 15.0 26.0 14.1 1876 .672 1.242 6.216 12.9 26.2 14.0 1877 .587 1.169 6.488 11.8 23.9 21.1 1878 .562 1.338 6.358 11.1 21.8 14.4 1879 .471 1.068 5.252 9.9 20.4 10.8 1880 .543 1.245 5.878 11.5 23.3 8.6 1881 .552 1.114 5.668 11.4 22.6 10.3 1882 .668 1.185 6.149 11.4 20.9 9.1 1883 .684 1.127 5.955 10.8 21.1 8.8 1884 .611 1.066 5.588 10.5 20.6 9.2 1885 .540 .862 4.897 10.6 19.8 8.7 1886 .498 .870 4.699 9.9 19.9 8.7 1887 .479 .890 4.510 9.5 18.7 7.8 1888 .550 .853 4.579 9.8 17.3 7.9 1889 .474 .897 4.832 9.9 16.6 7.8 ============================================================ Year Bacon Lard Pork, Beef, b.u.t.ter ending and hams per salted, salted, per June, per pound. per per pound.

30-- pound. pound. pound. ------+----------+----------+----------+----------+--------- _Cents._ _Cents._ _Cents._ _Cents._ _Cents._ 1873 8.8 9.2 7.8 7.7 21.1 1874 9.6 9.4 8.2 8.2 25.0 1875 11.4 13.8 10.1 8.7 23.7 1876 12.1 13.3 10.6 8.7 23.9 1877 10.8 10.9 9.0 7.5 20.6 1878 8.7 8.8 6.8 7.7 18.0 1879 6.9 7.0 5.7 6.3 14.2 1880 6.7 7.4 6.1 6.4 17.1 1881 8.2 9.3 7.7 6.5 19.8 1882 9.9 11.6 9.0 8.5 19.3 1883 11.2 11.9 9.9 8.9 18.6 1884 10.2 9.5 7.9 7.6 18.2 1885 9.2 7.9 7.2 7.5 16.8 1886 7.5 6.9 5.9 6.0 15.6 1887 7.9 7.1 6.6 5.4 15.8 1888 8.6 7.7 7.4 5.3 18.3 1889 8.6 8.6 7.4 5.5 16.5 ============================================================ Year Cheese Eggs Starch Sugar, Tobacco, ending per per per refined, leaf, June, pound. dozen. pound. per per 30-- pound. pound.

------+----------+----------+----------+----------+--------- _Cents._ _Cents._ _Cents._ _Cents._ _Cents._ 1873 13.1 26.6 5.3 11.6 10.7 1874 13.1 22.1 5.7 10.5 9.6 1875 13.5 25.6 6.0 10.8 11.3 1876 12.6 28.0 5.4 10.7 10.4 1877 11.8 25.9 5.2 11.6 10.2 1878 11.4 15.8 4.7 10.2 8.7 1879 8.9 15.5 4.2 8.5 7.8 1880 9.5 16.5 4.3 9.0 7.7 1881 11.1 17.2 4.7 9.2 8.3 1882 11.0 19.2 4.8 9.7 8.5 1883 11.2 20.9 4.6 9.2 8.6 1884 10.3 21.2 4.5 7.1 9.1 1885 9.3 21.5 4.0 6.4 9.9 1886 8.2 18.3 4.1 6.7 7.8 1887 9.3 16.3 3.8 6.0 8.7 1888 9.9 15.9 3.5 6.3 8.3 1889 9.3 13.9 3.8 7.6 8.8 ------+----------+----------+----------+----------+---------