Money: Speech of Hon. John P. Jones, of Nevada, On the Free Coinage of Silver Part 8

FAILURES IN BUSINESS.

The public have been startled by the announcement that during the year 1889 there were 11,719 business failures in the United States, against 10,587 in 1888 and 9,740 in 1887. The estimated liabilities of last year's insolvents were $140,359,000 and the a.s.sets were $70,599,000, against $120,242,000 liabilities and $61,999,000 a.s.sets for the failures of the previous year. Thus the failures in 1889 were more in number and far greater in liabilities than for 1888, and the proportion of a.s.sets to the obligations shows that the total insolvency was more disastrous.

Why in a season of profound peace, with no blighting frosts or withering droughts, and the most abundant yield from the field, forest, and mine so many in business have gone to the wall, no one seems able to answer. Many have tried their hand at a solution of the problem, and not one, as far as we can discover, has satisfied even himself with the result of his investigations.

HAS SILVER FALLEN?

In order to ascertain whether silver really has or has not fallen in value, it is necessary that all the facts be taken into account and the situation looked at from a correct point of view. If a person be seated in a boat that is headed to the stream and wishes to test whether or not he is making headway he must keep in view not the stream, but the sh.o.r.e.

The occupant of a railroad car who observes a moving train on a contiguous and parallel track, frequently thinks his own train at a stand-still, when in fact it may be in motion.

Whenever a rise or fall appears to take place in the price of any one article or commodity, that is to say whenever a difference takes place in the relation which that article bears to money--all other commodities remaining unchanged--such difference must naturally and properly be attributed to changed conditions affecting the commodity, and not to a change in the value of money. But wherever there is a fall in prices throughout the whole range of commodities then it is clear that this change is mainly due to a change in the value of money. Such however is the force of education and habit that the ma.s.ses of the people are slow to suspect any change in the standard by which they have been accustomed to gauge or measure all values. Indeed they find it difficult to understand how under any circ.u.mstances any change can take place in it.

Having their eyes fixed on the standard, and on that alone, they naturally attribute to the articles measured, and not to the standard, any difference that may seem to arise in the relation they bear to each other.

But the apparent is not always the real. Nothing seems more warranted by the evidence of our senses than that the earth is a stationary object, while the sun revolves around it. For thousands of years the world was convinced of the truth of the geocentric theory of the universe, and millions of men have lived and died in the confident belief that this planet was immovably fixed in s.p.a.ce, while the sun was a rolling and ever-s.h.i.+fting body. Even yet, among the ma.s.s of mankind, so ever-present is this impression, derived from ocular demonstration, that in spite of the declarations of science, the world continues in common use the phrases which originally described the process that took place, as men understood it; hence we speak of the "rising" and the "setting" of the sun. In the same way we speak of the rise or fall in the value of commodities, without being particular to note whether the change that has taken place is strictly a change in the value of the article itself or a change in the money with which its value is measured. Perhaps I can best ill.u.s.trate my meaning by an allegory:

THE BATTLE OF THE STANDARDS. THE ALLEGORY OF THE CLOCKS.

In an ancient village there once stood a gold clock, which, ever since the invention of clocks had been the measure of time for the people of that village. They were proud of its beauty, its workmans.h.i.+p, its musical stroke, and the unfailing regularity with which it heralded the pa.s.sing hours. This clock had been endeared to all the inhabitants of the village by the hallowed a.s.sociations with which it was identified.

Generation after generation it had called the children from far and wide to attend the village school, its fresh morning peal had set the honest villagers to labor; its noon-day notes had called them to refreshment; its welcome evening chime had summoned them to rest. From time immemorial, on all festive occasions, it had rung out its merry tones to a.s.semble the young people on the green; and on the Sabbath it had advertised to all the countryside the hour of wors.h.i.+p in the village church. So perfect was its mechanism that it never needed repair. So proud were the people of this wonderful clock that it became the standard for all the country round about, and the time which it kept came to be known as the gold standard of time, which was universally admitted to be correct and unchanging.

In the course of time there wandered that way a queer character, a clockmaker, who being fully instructed in the inner workings of time-tellers, and not having inherited the traditions of that village, did not regard this clock with the veneration accorded to it by the natives. To their astonishment he denied that there was really any such thing as a gold standard of time; and in order to prove that the material, gold, did not monopolize all the qualities characteristic of clocks, he placed alongside the gold clock, another clock, of silver, and set both clocks at 12 noon. For a long time the clocks ran along in almost perfect accord, their only disagreement being that of an occasional second or two, and even that disagreement only at rare intervals, such as might naturally occur with the best of clocks. But the Council of the village, in their admiration for the gold clock, pa.s.sed an ordinance requiring that all the weights (the motive power) of the silver clock, except one, be removed from it, and attached to those of the gold clock. Instantly the clocks began to fall apart, and one day, as the sun was pa.s.sing the meridian, the hands of the gold clock were observed to indicate the hour of 1, while those of the silver clock indicated 12.15. At this everybody in the village ridiculed the silver clock, derided the silver standard, and hurled epithets at the individual who had had the temerity to doubt the infallibility of the gold standard.

Finally, the divergence between the clocks went so far that it was noon by the gold standard when it was only 6 a. m. by the silver standard, so that those who were guided by the gold standard, not withstanding that it was yet the gray of the morning, insisted on eating their mid-day meal, because the gold standard indicated that it must be noon. And when the sun was high in the heavens, and its light was s.h.i.+ning warm and refulgent on the dusty streets of the village, those who observed the gold standard had already eaten supper and were preparing for bed.

But this state of things could not last. It was clear that the difference between the standards must be reconciled, or all industry would be disarranged and the village ruined.

Discussion was rife among the villagers as to the cause of the difference. Some said the silver clock had lost time; others that both clocks had lost time, but the silver clock more than the gold; while others again a.s.serted that both clocks had gained time, but that the gold clock had gained more than the silver clock.

While this discussion was at its height a philosopher came along and observing the excitement on the subject remarked, "By measuring two things, one against the other, you can never arrive at any determination as to which has changed. Instead of disputing as to whether one clock has lost or another gained would it not be well to consult the sun and the stars and ascertain exactly what has happened."

Some demurred to this because, as they a.s.serted, the gold standard was unchanging and was always right no matter how much it might seem to be wrong; others agreed that the philosopher's advice should be taken. Upon consulting the sun and the stars it was discovered that what had happened was that both clocks had gained in time but that the gain of the silver clock had been very slight, while that of the gold clock had been so great as to disturb all industry and destroy all correct sense of time.

Notwithstanding this demonstration, there were many who adhered to the belief that the gold standard was correct and unchanging, and insisted that what appeared to be its aberrations were not in reality due to any fault of the gold clock, but to some convulsion of nature by which the solar system had been disarranged and the planets made to move irregularly in their orbits.

Some of the people also remembered having heard at the village inn, from travellers returning from the East, that silver clocks were the standard of time in India and other barbarous countries, while in countries of a more advanced civilization gold clocks were the standard. They therefore feared that the use of the silver clock might have the effect of degrading the civilization of the village by placing it alongside India and other barbarous countries. And although the great ma.s.s of the people really believed, from the demonstration made, that the silver standard of time was the better one, yet this objection was so momentous that they were puzzled what course to pursue, and at last advices were consulting the manufacturers of gold clocks as to what was best to be done.

Now our gold standard men are in the position of those who first refuse to look at anything beyond the two things, gold and silver, to see what has happened, and who, when it is finally demonstrated that all other things retain their former relations to silver, still persist that the law which makes gold an unchanging standard of measure is more immutable than that which holds the stars in their courses. If they will compare gold and silver with commodities in general, to see how the metals have maintained their relations, not to one another but to all other things, they will find that instead of a fall having taken place in the value of silver, the change that has really taken place is a rise in the value of both gold and silver, the rise in silver being relatively slight while that of gold has been ruinously great. And those who do not shut their eyes to the truth must see that the change of relation between the metals has been effected by depriving silver of its legal-tender function, as the want of accord between the clocks was brought about by depriving the silver clock of a portion of its motive power--the weights. The only thing that has prevented a greater divergency between the metals is the limited coinage by the United States--the single weight that, withheld from the gold clock, prevented its more ruinous gain.

THE PURCHASING POWER OF SILVER IN 1873 AND 1889.

If I can show that for a period of seventeen years, since its demonetization in 1873, silver has lost none of its purchasing power, none of its command over commodities; that is to say, if I can show that 412-1/2 grains of silver to-day, uncoined, and shorn by hostile legislation of its princ.i.p.al element of value--the money use--will buy as much as would 412-1/2 grains of silver in 1873 (when our silver dollar bore a premium over gold) of all the articles that enter into the daily consumption of the people, it must be manifest that silver has not fallen in value.

I present a table which I shall ask to have inserted in the RECORD as part of my remarks, showing the purchasing power of 412-1/2 grains of silver, nine-tenths fine, in 1873 and 1890, respectively, so far as concerns several leading articles of daily consumption.

The table is as follows:

_Comparative purchasing power of 412-1/2 grains silver, nine-tenths fine, in 1873 and 1890, respectively._

-----------------------------------+-------+------- 412-1/2 grains silver would buy-- 1873. 1890.

-----------------------------------+-------+------- Wheat bushels 0.87 0.88 Corn do 1.84 1.97 Cotton pounds 5.32 6.71 Beef, mess barrels 0.05 0.05 Pork, mess do 0.07 0.06 Lard pounds 12.89 11.75 b.u.t.ter do 5.40 4.63 Cheese do 8.69 6.94 Sugar do 9.80 10.34 Eggs dozen 4.27 5.38 -----------------------------------+-------+-------

From this table it conclusively appears that while in 1873 the standard silver dollar of 412-1/2 grains, which then bore a premium over the gold dollar, would purchase four-fifths of a bushel of wheat; to-day the same quant.i.ty of silver, without the advantage of coinage and merely as bullion, will also buy four-fifths of a bushel of wheat--the only difference between the figures for the two years being that at the present time 412-1/2 grains of silver bullion, as will be seen by the table, will buy a fraction of a bushel more than would 412-1/2 grains of coined silver in 1873.

If, then, silver has fallen, it is manifestly not in its relation to wheat.

By the same table it is shown that the silver dollar of 1873, containing 412-1/2 grains of silver, nine-tenths fine, would purchase one and eight-tenths bushels of corn; in 1890, a like number of grains of silver, uncoined and estimated at its gold value, will purchase one and nine-tenths bushels of corn. Here again the advantage is slightly in favor of the 412-1/2 grains of silver bullion of 1890. This shows conclusively that silver has not fallen in its relation to corn.

The figures of the same table show that in 1873 a coined silver dollar of 412-1/2 grains would buy 5-1/3 pounds of cotton; to-day 412-1/2 grains of uncoined silver will buy 6-3/4 pounds of cotton. From this it appears that silver has not fallen relatively to cotton, the great staple of universal use, but that, on the contrary, it has advanced somewhat in its purchasing power when compared with that article.

In order to present the question from another point of view I submit another table showing the number of grains of silver that are required in 1890 and the number which were required in 1873 to buy a bushel of wheat, a bushel of corn, &c., by which it will even more clearly appear that silver has not fallen in value in respect to commodities.

_Comparative purchasing power of silver bullion, in grains nine-tenths fine, in 1873 and 1890, respectively._

----------------------------+-----------+----------- 1873. 1890.

Articles. Legal Commodity.

tender. ----------------------------+-----------+----------- _Grains _Grains silver._ silver._ Wheat per bushel 474.3 468 Corn do 223.9 209.25 Cotton per pound 77.55 61.42 Beef, mess per barrel 8,662.5 7,560 Pork, mess do 5,465.62 6,750 Lard per pound 31.97 35.1 b.u.t.ter do 76.31 89.1 Cheese do 47.44 59.4 Sugar, refined do 42.07 39.82 Eggs per dozen 96.52 76.68 ----------------------------+-----------+-----------

From this table it will be seen that in 1873 it required 474 grains of standard silver, in the form of coined dollars, to buy one bushel of wheat; in 1890, only 468 grains of standard silver (and that merely in bullion form, or in other words, at its market value) are required to buy a bushel of wheat. This does not show that silver has fallen in value, in its relation to wheat, but, on the contrary, that it has risen in value.

In 1873 it required 224 grains of silver to buy a bushel of corn; to-day only 209 grains of silver are required to buy the same quant.i.ty. These figures fail to prove that silver has fallen in value, in its relation to corn. On the contrary, again, it has risen.

In 1873 a pound of cotton could not be had for less than 77-1/2 grains of silver; to-day the same pound of cotton can be bought for 61 grains of silver. Silver, therefore, has not fallen, but risen in value in its relation to cotton.

In 1873 96 grains of silver were required to buy one dozen eggs; to-day only 76 grains of silver are required to buy the same quant.i.ty of eggs.

Silver therefore has not fallen but risen in value, in its relation to eggs.

These comparisons might be continued with the same results as to a great majority of the articles entering into general use.

These figures demonstrate that in its relation to all commodities that enter into the daily consumption, silver has not fallen in value, but, as is clearly seen, while holding a remarkably steady ratio to commodities, has slightly increased in value, as is shown by the fact that a less number of grains of the metal are to-day required to purchase the same quant.i.ty of the commodities mentioned than were required in 1873.

In relation to what, then, is it that silver has fallen? As it has not fallen in relation to commodities, there remains but one thing in relation to which it can be said to have fallen, and that one thing is gold. The phrase "the fall of silver" is the ingenious and cunning invention by which it is sought to cast on that metal the discredit of depreciation rather than subject gold to the suspicion of any change whatever. The term to correctly describe what has taken place would be "the rise of gold;" but that term is scrupulously avoided, as implying that gold does not remain immovably fixed. That gold has risen, however, admits of no doubt, except to those who willfully shut their eyes to facts of common observation. The true test of the increasing or decreasing value of any one thing is not to compare it with any other one thing, but with a large range of commodities generally dealt in. It is not of so much importance to know how much gold can be bought with a given amount of silver, as it is to know how much bread, how much meat, and how much clothing can be bought, and how much of all the things that are necessary to the comfort and well-being of the people can be bought with that amount of silver.

PROOF THAT GOLD HAS RISEN.

In order to demonstrate that gold has risen, I will bring side by side the gold prices of a number of leading commodities of commerce in 1873 and 1889, respectively, and the amount in silver bullion that in 1889 would purchase an equal quant.i.ty of the same commodities, by a table prepared at my request by the Bureau of Statistics of the Treasury Department.

_Average export prices of the following named domestic commodities for the years ending June 30, 1873 and 1889._

-------------------+----------+--------------------------------------- Average price of the year ending June 30-- +--------------------+------------------ Commodities. Unit of 1873. 1889.

quant.i.ty.+-----------+--------+--------+--------- In In In In silver currency. gold. gold. bullion.

-------------------+----------+-----------+--------+--------+--------- Bacon and hams Pounds $0.088 $0.077 $0.084 $0.108 b.u.t.ter do .211 .184 .166 .212 Cheese do .130 .113 .092 .118 Corn Bushels .617 .539 .508 .650 Cotton: Unmanufactured, Pounds .188 .164 .099 .127 not sea Island Cloth, colored Yards .166 .145 .065 .083 Cloth, uncolored do .162 .142 .068 .087 Iron and steel: Bar-iron Cwt 5.480 4.784 3.183 4.074 Pig-iron do 2.498 2.181 .953 1.220 Railroad-bars do 4.114 3.592 2.169 2.776 Lard Pounds .092 .080 .076 .097 Leather do .253 .221 .185 .237 Rice do .071 .062 .055 .070 Sugar: Brown Pounds .092 .080 .056 .072 Refined do .116 .101 .066 .084 Wheat Bushels 1.312 1.145 .874 1.119 Wheat-flour Barrels 7.565 6.604 4.703 6.020 -------------------+----------+-----------+--------+--------+---------

What does an examination of this table show? It shows beyond dispute that gold has risen in value.

A bushel of wheat that, according to the figures of the Bureau of Statistics cost $1.14 in gold or silver in 1873, and which, as will be seen by the table, still commands $1.12 in silver bullion, will to-day bring only 87 cents in gold.