Part 2

Certainly not. On the contrary, they are for many reasons much less competent, as experience has repeatedly shown. All students of social science know, indeed all close observers know, that those who do the routine work in any vocation seldom form comprehensive views of it, and those who manage the details of a business are very rarely indeed able to master the higher philosophy thereof. This is a general truth applicable to all vocations except those, like law, in which a mastery of the science is a necessity for conducting the details. Experts in details often make the worst blunders in general management. Nearly all the inventions of perpetual motion come from practical mechanics. Nearly all the crazy designs in motors come from engineers. The educational schemes of truly colossal absurdity come mostly from teachers; all the quack nostrums and elixirs to "restore lost manhood" are invented by doctors, and nearly all the crazy religions are started by preachers.

On the other hand, three-fourths of the great inventions have been by men who did not work at the business they improved. The world's great financiers have not been bankers. Alexander Hamilton was not a banker. Neither was Albert Gallatin, nor Robert J. Walker, nor James Guthrie, nor Salmon P. Chase. William Patterson, who founded the Bank of England, was a sailor and trader; and of the British Chancellors of the Exchequer whose names shine in history, scarcely one was a banker. One of Christ's disciples was a banker, and the end of his scientific financiering is reported in Acts i. 18. John Law also, whose very name is a synonym for foolish financial schemes, was a banker, and a very successful one. Where was there ever a crazier scheme than the so-called "Baltimore Plan," exclusively the work of bankers?

=But as the bankers and great capitalists have no faith in it, the free coinage of silver would certainly precipitate a panic.=

The gold basis has already precipitated several panics. Even in so conservative a country as England they have, since adopting monometallism, had a severe currency panic every four years, and a great industrial depression on an average once in seven years. The only reason we have not done worse is that the rapid development of the natural resources of the country saves us from the consequences of our folly. We draw on the future, and in no long time it honors our drafts. Nevertheless, in the twenty-three years since silver was demonetized we have had two grand panics, several minor currency panics, hundreds of thousands of bankruptcies with liabilities of billions, and five labor wars in which 900 persons were killed and $230,000,000 worth of property destroyed. Could a silver basis do worse?

=You admit, then, that the immediate adoption of free coinage would, for a while at least, drive gold abroad?=

And what then? Why do the gold men always stop with that statement and so carefully avoid inquiry into what would follow? Let us look into it. We may have in this country $500,000,000 in gold, though no one can tell where it is. Assuming that free coinage would send it all abroad, the inevitable result would be a gold inflation in Europe, which would cause a rise in prices. I observe that of late the gold organs have been denying this--denying, in fact, the quantitative principle in finance, something never denied before this discussion arose. It is too true, as some philosopher has said, that if a property interest depended on it, there would soon be plenty of able men to deny the law of gravitation. But as the men who deny it in one breath admit it in the next by assuring us that we shall soon have a great increase in the production of gold, and that prices will therefore rise, we may with confidence adhere to the established truth of political economy.

Sending our gold to Europe, then, would raise prices there, which would raise the price of our staple exports, such as wheat, meat, and cotton; the great rise in the price of these would, of course, stimulate exports, and thus aid us in maintaining a favorable balance, would restore to the farmers that income which they have lost by the decline of prices, would thus put into their hands the power to buy manufactured goods and to pay our annual interest debt to Europe by commodities instead of gold. In short, if the gold went abroad, it would necessarily be but a short time till much of it would come back to pay for our agricultural exports, and at the same time our farmers would get the benefit of higher prices by both operations. If any man doubts that an increased gold supply in Europe would increase the selling price of our farm surplus, I ask him to examine the figures for the twelve years following the discovery of gold in California, or the history of prices in the century following the discovery of America--an era described by all economists as one of inflation. Is there any reason why a like cause should not now produce like effects?

=In the meantime, however, all the other nations would dump their silver upon us and we should be overloaded with it.=

Where would the silver come from? The best authorities agree that there is not enough free silver in the world to even fill the place of our gold, which, you say, would be expelled. And right here is where the advocates of the gold standard contradict every well-established principle of political economy, and every lesson of experience, by declaring that the transfer of all our gold to Europe would not cheapen it there, and that free coinage would not increase the value of silver. They insist that we should still have "50-cent dollars." Stripped of all its fine garniture of rhetoric, their proposition simply amounts to this: The sudden addition of 20 per cent. to Europe's supply of gold would not cheapen it, and making a market here for all the free silver in the world would not raise its value; laying the burden of sustaining an enormous mass of credit currency on one metal instead of two has added nothing to the value of that metal; a thirty years' war on the other metal was not the cause of its depreciation in terms of gold, and if the conditions were reversed, greatly increasing the demand for silver and decreasing the demand for gold, they would remain in relative values just the same. If those propositions are true, all political economy is false.

=Government cannot create values, in silver or anything else.=

You have seen it done fifty times if you are as old as I. During the war, government once raised the price of horses $20 per head in a single day. On a certain day the land in the Platte Valley, for perhaps one hundred miles west of Omaha, was worth preemption price; the next day it was worth much more, and in a year three or four times as much. Government had authorized the construction of the Union Pacific Railroad, and before a single spade of earth was turned, millions of dollars in value had been added to the land. It had created a new use for the land. Value inheres in use when the thing used can be bought and sold. Whatever creates a use creates value, and a great increase in use forces an increase in value, provided that the supply does not increase equally fast; and with silver that is an impossibility. If you think government cannot add value to a metal, consider this conundrum: What would be the present value of gold if all nations should demonetize it? It can be calculated approximately. There is on hand enough gold to supply the arts for forty years at the present rate of consumption. What, then, is the present value of a commodity of which the world has forty years' supply on hand and all prepared for immediate use?

Take notice, also, that in the decade 1850-60 Germany, Austria, and Belgium completely demonetized gold, and Holland and Portugal partially did so, thus depriving it of its legal tender quality among 70,000,000 people, and that this added very greatly to its then depression.

=Free coinage would bring us to a silver basis, and that would take us out of the list of superior nations, and put us on the grade of the low-civilization countries.=

That is, I presume, we should become as dirty as the Chinese, and as unprogressive as the Central Americans, agnostics like the Japanese, and revolutionary like the Peruvians. And, by a parity of reasoning, the gold standard will make us as fanatical as the Turks, as superstitious as the Spaniards, and as hot-tempered and revengeful as the Moors. If not, why not? They all have the gold standard. You may say that this answer is foolish, and I don't think much of it myself, but it is strictly according to Scripture (Proverbs xxv. 5). The retort is on a par with the proposition, and both are claptrap. The progress of nations and their rank in civilization depend on causes quite aside from the metal basis of their money.

We must remember that for many years after the establishment of the Mint we had in this country little or no coin in circulation except silver, and were just as much on a silver basis then as Mexico is now. Were our forefathers, then, inferior to us, or on a par with the Mexicans and Chinamen of the present day? Even down to 1840 the silver in circulation greatly exceeded the gold in amount.

By the way, where do you goldites get the figures to justify you in creating the impression on the public mind that Mexico and the Central and South American States are overloaded with silver, having a big surplus which we are in danger of having "dumped" on us? Didn't you know that they are really suffering from a scarcity of silver? that altogether they have not a sixth of what we have? One who judged from goldite talk only, would conclude that silver is a burden in those countries, that they have to carry it about in hods. Now what are the facts?

In all the Spanish American States there are 60,000,000 people, and they have a little less than $100,000,000 in silver. Not $2 per capita! This is a startling statement, I know, but it is official, and you will find it in the last report of the Director of the Mint (1895). The South American States have but 83 cents per capita in silver, and Mexico has but $4.50. With a population nearly twice that of Great Britain, they have much less silver, and less than half of that of Germany, though having a much larger population. In fact, to give the Spanish American nations as large a silver circulation per capita as the average of England, France and Germany, they must needs have nearly $300,000,000 more, or nearly three times as much as they now have. It looks very much as if the "dump" would have to be the other way.

From these figures it would seem that the trouble, if monometallists are right in saying there is trouble there, is due not to their having too much silver, but that they do not have enough. Not having enough, they have followed the usual course of nations lacking a sufficient coin basis, and have issued a great volume of irredeemable paper money. By reference to the authority above cited, you will find that they have in circulation $560,000,000 in paper money. One fourth of all the uncovered paper in the world is in those countries, though their total population is less than that of the United States. Who will say that it will be a calamity to them to coin $200,000,000 more in silver and retire that much of their uncovered paper?

=Gold ought to be the standard metal, because, apart from its use as money, it has a fixed intrinsic value.=

There is no such thing as intrinsic value. Qualities are intrinsic; value is a relation between exchangeable commodities, and, in the eternal nature of things, never can be invariable. Value is of the mind; it is the estimate placed upon a salable article by those able and willing to buy it. I have seen water sell on the Sahara at two francs a bucketful. Was that its intrinsic value? If so, what is its intrinsic value on Lake Superior?

=Well, if what you say be true, there is no intrinsic value in any of the precious metals, and we cannot have an invariable standard of value at all.=

No more than an invariable standard of friendship or love. Value is, in fact, a purely ideal relation. All this talk about an invariable dollar which shall be like the bushel measure or the yard stick is the merest claptrap. The fact that gold men stoop to such language goes far to prove that their contention is wrong. The argument violates the very first principle of mental philosophy, in that it applies the fixed relations of space, weight, and time to the operations of the mind. Would you say a bushel of discontent or eighteen inches of friendship? Men who compare the dollar to the pound weight or yard stick are talking just that unscientifically. Invariable value being an impossibility, and an invariable standard of value a correlative impossibility, all we can do is to select those commodities which vary the least and use them as a measure for other things; but you will not find in any economic writer that any metal is a fixed standard. And this brings me to consider that singular piece of folly which furnishes the basis of so much monometallist literature, namely, that gold is less variable in value than silver, and that one metal as a basis varies less than two. Some of our statesmen have got themselves into such a condition of mind on this point as to really believe that, while all other products of human labor are changing in value, gold alone is gifted with the great attribute of God--immutability. It is sheer blasphemy. It is conclusively proved, and by many different lines of reasoning, that silver is many times more stable in value than gold.

=I never heard such a proposition in my life! How on earth can it be proved that silver, as things now stand, has not changed in value more than gold?=

By the simplest of all processes. If we were in a mining country, I could easily prove it to you by the observed facts of geology, mineralogy, and metallurgy; but that is perhaps too remote and scientific, so we will take the range of prices since silver was demonetized. Of course you have seen the various tables, such as Soetbeer's and Mulhall's. Take their figures, or, better still, take those of the United States Statistical Abstract, and you will find the following facts demonstrated:

In February, 1873, a ten-ounce bar of uncoined silver sold in New York city for $13 in gold, or $14.82 in greenbacks. To-day the ten-ounce bar sells there for $6.90.

"Awful depreciation," isn't it? "Debased money," and all that sort of thing. But hold on. Let us see how it is with other things. For prices in the first half of 1873 we will take the United States Abstract, and for present prices to-day's issue of the New York Tribune. Wheat then was $1.40 in New York city, so our silver bar would have brought ten and four-sevenths bushels; to-day wheat is "unsteady" in the near neighborhood of 64 cents, and our silver bar would buy ten and five-sixths bushels. No. 2 red is the standard in both cases.

Going through a long list in the same manner, we find that the ten-ounce bar of uncoined silver would buy in '73, in New York city, twenty-three and a half bushels of corn, to-day twenty-four bushels; of cotton then eighty pounds, to-day eighty-six pounds--and there is "a great speculative boom in cotton," and has been for some time, but on the average price of this year silver would buy much more. Of rye, then about fifteen bushels (grading not well settled), to-day thirteen bushels; of bar iron then 310 pounds, to-day 460 pounds, and so on through the market. In the Central West in 1873 it would have taken ten such silver bars to buy a standard farm horse, Clydesdale or Percheron-Norman.

Will it take anymore bars to-day at $6.90 each?