Part 6

Gold produced 1792-1892, inclusive... $5,633,908,000 Silver produced...................... 5,104,961,000 Excess of gold....................... 528,947,000

Thus are we confronted with the truly startling paradox that during all the century and a half when the production of silver was nearly twice that of gold, and the two centuries back of that when it was more than twice, the variation in coinage value never rose to 9 per cent., and for many years at a time corresponded with the ratio set by the mint; but at the end of a century during which the gold production was half a billion greater than that of silver, and at the end of half a century when it was nearly a billion and a half greater, the really scarcer metal has declined in terms of the other nearly one-half! And all this, the monometallist tells us, because there has been an excess of silver produced amounting to less than a quarter of a billion in twenty-three years. Belief in such a proposition would indeed be a triumph of faith over figures. And to add to the trial of our faith, we find, on bringing the figures down to the close of the year 1895--and we cannot bring them later on account of official slowness--the amounts of silver and gold in the world, as presented in values at our ratio, are almost exactly equal, the greatest divergence claimed by the most extreme monometallist being 16-3/10 ounces of silver to one of gold!

I do not indulge the hope that the figures herein presented will affect the opinion of any pronounced monometallist. There seems to be a mysterious power in gold which blinds the eyes to deductions from statistics and experience; the internal conviction of the monometallist that gold stands still while everything else changes in value resists all logic. In this country, that is. In England, where it has not become a political question, and no one is interested in denying the facts, monometallists almost universally concede the appreciation of gold and defend monometallism on that ground. It is to the laboring producers of the United States, still open to conviction, that I present these figures, which to me seem absolutely conclusive.

IS BIMETALLISM PRACTICABLE?

Can this great nation coin silver and gold on the same terms, at the ratio of 16 to 1, and maintain a substantial parity?

This question, like all others in political economy, may he argued theoretically or on the basis of actual experience. The monometallists say that one metal or the other always has been and always will be the cheaper at any ratio; that if both be freely coined, the dearer will be more valuable as bullion than as money, and will therefore go out of use. They say that, in spite of all devices to the contrary, we must have monometallism any how, and always on the basis of the cheaper metal.

The bimetallist replies that such is, in truth, the natural tendency; but when the dearer metal is thrown out of use as money it thereby becomes cheaper, and as the cheaper metal must take its place, a vastly greater demand for it is created, and so it becomes dearer; thus an alternating action keeps the two near a parity, provided that the ratio corresponds nearly with the relative amounts of the two metals in the world's stock. They claim that the world has thus a far less fluctuating standard of value than it ever can have with one metal alone.

The monometallist rejoins that this is "all theory." This brings both parties to the test of experience, and by common consent the experience of France in the seventy years from 1803 to 1873 is taken as the best practical test. At first view, it would seem as if the matter could easily be settled, as the time is so recent that there could be no great obscuration of the history; but on inquiry a determination of the real facts is found to be no such simple matter, and as the disturbance of natural law by war and other causes was almost constant, both sides find enough in the facts to make a basis for their respective contentions. Let us then consider this history.

Napoleon Bonaparte became First Consul and practically ruler of France in 1799, and at once addressed himself, with his usual energy, to the task of establishing a stable monetary system. He found that in 1785 Calonne had established the ratio of 15-1/2 of silver to 1 of gold, and that it had worked reasonably well. He accepted it, therefore, as justified by experience, and his Finance Minister carried through the Council of State an act for the free coinage of both metals at that ratio. For seventy years this law stood practically unchanged, and it is speaking with great moderation to say that in those seventy years there occurred more disturbance of every kind unfavorable to the maintenance of a ratio than in any other seventy years in monetary history. France was twice conquered, her soil overrun, and her capital held by the enemy. She four times changed her form of government. Once she was subjected to the payment of enormous war expenditures, and again not only to the payment of still greater expenditures but to a fine exceeding in amount the largest sum of gold ever held in the United States. During a large part of this time the world's production of silver was in excess of that of gold to an extent very much greater than it has been in recent years, and then, after a very brief interval of something like equal production, there was a sudden and tremendous increase in the production of gold until it exceeded that of silver more than 3 to 1 in value. During these years, also, several of the neighboring nations, including seventy million people, demonetized gold and threw the whole burden of sustaining its equality on the continent of Europe upon France, and during another portion of the time there were monetary disturbances so far-reaching that they shook the foundations of credit in every civilized country in the world. And yet, through all these convulsions, France for seventy years maintained a substantial parity, by welding the two metals together for monetary purposes.

The contrasted figures are simply amazing. In the decade of 1811-20 there were produced 47 ounces of silver to 1 of gold, and yet the market ratio outside of France never stood higher than 16.25 to 1. In the decade of 1821-30 the production was 32 ounces to 1 and the average ratio 15-80/100 to 1. In 1831-40 the production was 29 ounces to 1 and the average ratio 15-75/100 to 1. In 1841-50 the production was 14-9/10 ounces to 1 and the average ratio 15-83/100 to 1. The demonstration is as complete as that of any proposition in Euclid. In spite of the enormous overproduction of silver, the maintenance of the mint ratio in France held the two so nearly together that in three years out of four the difference in other countries only amounted to the cost of transporting the silver to the French Mint and of coinage.

To this should also be added the fact that French coins would have a slightly less value in other countries than the coins of those countries, but it is not easy to estimate the sentimental difference this would make. From the enactment of the law of 1803 to the limitation of the coinage in 1875 France coined 5,100,000,000 francs of silver and 7,600,000,000 francs of gold, or $1,020,000,000 of silver and $1,520,000,000 of gold, very nearly, or 40 per cent. of the total amount of silver and 33 per cent. of the total amount of gold produced in the world during those years.

It is further to be noted that, whether gold or silver was the dearer metal at the ratio of 15-1/2 to 1 at any given time, France at that time had more of gold and silver per capita than any country in the world, and that, despite the enormous inflow of the cheaper metal, she held the dearer and absorbed what now seems an astonishing amount of the cheaper. Thus, in 1822 the imports of silver into France exceeded the exports by 125,000,000 francs, and in 1831 the amount had risen to 181,000,000 francs, and then it fell off and did not reach the latter sum again until 1848.

On the other hand, in the eight years 1853-60 there was a net import into France of gold to the value of 3,082,000,000 francs, or $616,000,000; and in the same years a net export of silver to the value of 1,465,000,000 francs, or $293,000,000. Thus in the short space of eight years France had made monetary, or, rather, metallic transfers amounting to $909,000,000, and that without a quiver of her financial system, and scarcely a perceptible trace of the effects of that financial storm which swept America, England, and Central Europe with such destructive fury in 1857-8. It further appears that, despite the enormous import of gold, the subsequent export was comparatively small, and thus, such was the wonderful absorbing power of the nation under the free coinage law of 1803, that France came out of each successive financial storm with an increased stock of the precious metals, and more than once has the Bank of England been compelled to apply to France for the specie to arrest a destructive panic growing out of an insufficient amount of coined money upon a safe basis and an overissue of supplemental or faith money.

By the year 1860 it was supposed that the danger of the world being "flooded with gold" was substantially over; and during that decade France not only sustained the double standard single-handed and alone, but did it against the tremendous pressure due to the demonetization of gold in Austria, Germany, and other countries. It is not possible to say with certainty how far gold would have cheapened, or, to speak in the current language, how high the ratio of silver would have become, had France during the decade abandoned her bimetallic system; but it is certain that the disproportion would have been enormous, undoubtedly very much greater than the present disproportion in the market between silver and gold, resulting from the demonetization of silver. M. Chevalier gave it as his opinion that the ratio would sink at least as low as 8 to 1, that is, that gold would be worth but half what it was rated at in relation to silver in the American coinage, and this he believed would certainly happen, despite the power and willingness of France to maintain the old ratio. He did not venture to say how low the ratio would sink if France abandoned her policy, but he evidently looked forward to a time when gold would be practically too cheap for money.

Years afterward, in writing as a philosopher rather than an advocate, he took more rational ground, and compared the action of France to that of a parachute which retarded the fall of gold. The maximum effect of the enormous gold inflation of 1848-65 was to create a disturbance of less than five per cent. in value of the metals in countries outside of France. During all the years that the law of 1803 was in practical force the variations as shown by a diagram seemed but trifling, despite the enormous over-production of silver for many years and of gold for many other years, and yet, immediately after 1873, although ten years were yet to elapse before the world was to produce silver in excess of gold, almost instantly the diagram shows the downward trend of silver far, far in excess of any previous experience.

How was it through all these years with the industrial and financial condition of France? It would indeed be little to the purpose to prove that she had maintained the metals at a parity by free coinage, if, in the meantime, her people had suffered loss. Monometallists tell us that not only is bimetallism impossible, but that the attempt to maintain it is in every way hurtful, in fact, disastrous. They point us to the fact that England is the clearing house of the world; that those whose currency is not assimilated to that of England are subjected to enormous losses in the exchange, resulting from fluctuations; that by attempting bimetallism a nation puts itself in the second or third rank, and that the results are in every way bad. Well, all those conditions applied to France. She, like the United States, may be considered as regarding England in the light of the world's clearing house, and her currency may be said to have fluctuated, as they declare ours would, with bimetallism. What, then, have been the general results to France? What effect has it had upon her commercial, social, and industrial development? On this point let us return thanks that the testimony is universal. No other nation in the world has made such stupendous progress in the general improvement of her people as France has made since 1803. No civilized country probably had sunk to such depths of popular misery as had France at the beginning of her revolution, and we can hardly believe that the subsequent fourteen years of war and internal turmoil had greatly improved her condition when the policy of 1803 was adopted.

Bimetallism and a rigid adherence to a specie basis were two of the means adopted by Bonaparte to restore France, and during all his wars, with their terrible expenses, he never once departed from the specie standard. After the Act of 1803 France was still to have twelve years of war and severe trial. She has subsequently had two revolutions and a foreign war, singularly destructive in its course, and ending in her subjugation, the occupation of her territory, and the loss of two of her wealthiest provinces.

Seventy years of bimetallism had left France saturated with gold and silver when her Emperor rashly provoked the war with Germany; her expenses were enormously increased, and she had to pay, in addition, a fine of nearly $1,000,000,000. She paid it with a rapidity that amazed the world, but in her hour of weakness she consented to gold monometallism. She had become a creditor nation, and could endure the new system better than any other, except Great Britain; nevertheless, she has suffered. Her exports had steadily increased during all her years of bimetallism, and never so fast as during the very years in which she was exporting silver so heavily because of the influence of cheap gold. The very year of demonetization her exports began to decline, and but once since have they reached the old figures.

The statistics are fearfully suggestive. In 1840 her exports were valued at $202,231,000, and her imports at $210,413,000; in 1873 her exports were $964,465,000, and her imports $915,285,000, and in only six of the years after she began to be "flooded with cheap gold" did her imports exceed her exports. In 1874 her exports began to decline, and ran rapidly down to $822,360,000 in 1878; and 1890 is the only year since demonetization in which they reached the figures of 1873, being $968,030,000. On the other hand, her imports have steadily outrun her exports until the excess has been as high as $300,000,000 in one year (1880), and has only once since (1885) been as low as $100,000,000. Here, then, are the points demonstrated by France's official figures:

During seventy years of bimetallism she gained steadily and rapidly in wealth, her exports increasing much faster than her population.

During the eight years (1853-60) in which she was "ruined by cheap gold," importing 3,082,000,000 francs of it and exporting 1,465,000,000 francs of silver, a bullion operation to the amount of $909,000,000, she increased her exports most rapidly and with no corresponding increase in imports.

During the twenty years following demonetization her exports have been stationary or declining, being $99,000,000 less in 1893 than in 1873, while her imports have increased.

Let us turn for a moment and trace the effects of monometallism in England as compared with bimetallism in France during the same period.

England had in 1816, when she adopted gold monometallism, about $10,000,000,000 in property and had in 1873 about $40,000,000,000. In 1816 she had about 18,000,000 people and in 1873 about 32,000,000; her per capita wealth, therefore, in 1816 was $555, and in 1873 $1,250, or 2-1/5 times as much. In 1803 the property of France was valued at $8,000,000,000, and in 1873 at about $40,000,000,000; in the former year she had 29,000,000 people, and in the latter a little over 36,000,000. Her per capita wealth, therefore, in 1803 was $276, and $1,081 in 1873, or very nearly four times as much.

Thus, despite the immeasurable advantages which England enjoyed, political, social, and industrial, her great colonial possessions from which she drew enormous wealth, and her exemption from destructive war; despite also the distressing condition of France and her recent enormous losses, we find that in seventy years of bimetallism the working Frenchman had gained wealth almost twice as fast as the working Englishman had in the same number of years of monometallism.

France became a creditor nation, and yielded to the general pressure for a single gold standard; she has lost heavily, as shown in her table of exports, but she still retains a large part of the momentum acquired during seventy years of bimetallism. Her wealth is still rated at something over $40,000,000,000; her people have accumulated stocks of the precious metals far in excess of those of any other country; and their business is so solidly founded that the storm which recently shook the foundations of credit throughout the British Empire scarcely produced a quiver in France. They have wisely avoided the excessive issues of faith money (or check money) which are the ever-present danger of England, America, and other monometallic countries; and as a result, they have almost entirely escaped those fearful convulsions have that threatened the political stability of great nations. In fact, it is no exaggeration to say that France has only felt the convulsions of recent years by their reflex action on her from other countries; and twice within very recent years has the Bank of England been compelled to go to France for the coin to stay the devastating work of panics resulting from over-expansion of faith money on an insufficient metallic basis.

France has an area less than that of Texas by some 60,000 square miles, yet its aggregate wealth is two-thirds that of the United States; and on the basis of assessed value her agricultural wealth is very much greater than ours. Mulhall, the great British statistician, says of France that she is "the best cultivated country in Europe." Her 6,000,000 peasant proprietors are the owners of nearly all her cultivatable soil, which is worth, on an average, $160 per acre. She has over 400,000 miles of the finest common roads in the world, which have cost her, at the ordinary rate of labor, over $5,000,000,000. Their benefit goes chiefly to agriculture, binding the farmers of different provinces and farmers and city dwellers together. She has over 10,000 miles of canals and canalized rivers; she has 25,000 miles of railways, all in the highest state of efficiency. She has, during her bimetallic period, become the second colonial power of the world, and has acquired foreign territory at such a rate as to excite the jealousy of England. She has become the second naval power on the globe, and the second exporting nation, her exports averaging some $900,000,000 per year, an amount larger than the exports from this country, which has a population nearly double that of France, nearly all of it being manufactures; and had the same rate of growth continued as was maintained before France became monometallic, it is fair to presume that her exports at this time would have equalled those of Great Britain. Best of all, the great increase of wealth is in the hands of those who created it. It is the universal testimony of all observers that the condition of the French people and the general aspect of France has steadily improved throughout this century. It is a country in which poor-houses are unknown; in her cities a beggar is a curiosity. In their country's emergency the common people came forward and out of their savings paid $1,000,000,000 accumulated during the bimetallic period. Despite the loss of $240,000,000 in the Panama Canal and of $1,000,000,000 in the indemnity to Germany, as well as two of her richest provinces, France has accumulated hundreds of millions of dollars in the securities of other countries, and has only recently been able to subscribe twenty-five times over the Russian loan, and is negotiating a loan to China, the money for which is to be supplied by her working people.

Be it noted also that the debt of France is held by the people of France, largely by the industrial class, and especially by the agricultural class, and the interest thereon paid, instead of being a foreign drain, is a perpetual renewal of the current circulation.