Part 9

"The natural result of this method of enhancing the value of commodities other than gold is that when prices rise or fall the impression is conveyed to a superficial observer that it is the value of other things that changes, the value of the sovereign remaining fixed."

Under this head he says again:

"The price of things estimated in gold--their gold price--may change, whilst their price estimated in silver--their silver price--remains unaltered. This will occur if the value or purchasing power of gold goes up or down, while the value or purchasing power of silver remains unaltered. Suppose, for instance, that gold is in any way scarce in relation to the demands upon it. Then, in any country where gold is the standard metal of the currency, those who wish to obtain, a certain quantity of gold, whether in coin or in bullion, will have to give a larger quantity of other commodities in exchange for it; or, to put the matter in another light, those who have only a definite commodity to part with will receive less gold in return for that; in other words, there is a fall in gold prices. Suppose, on the contrary, that gold is abundant in relation to the demands upon it, then those who wish to obtain a certain quantity of gold, whether in currency or in bullion, will not have to give so large a quantity of other commodities to obtain the quantity of gold they require; or, to put the matter as before in another light, those who have a definite quantity of other commodities to dispose of will obtain more gold in return for them; in other words, there is a rise in gold prices. If in either case there is no change in the value of silver, then the price of commodities stated in silver, that is, their silver price, will remain unchanged."

In referring to the very prevalent notion, especially among the uneducated classes, that the gold unit of measure of value does not vary, he says:

"As for the tenant purchaser, he probably thinks that after the extra pressure of the first few years he may look forward to easy times for the rest of his life. He little knows what is before him. If things go on as they are, it will be harder for him, ten or fifteen years hence, to pay forty pounds a year than it would be to pay fifty pounds a year now; but of all this he knows nothing--how could he? His only idea is that a pound is always a pound, and a sovereign is always a sovereign; so, in the belief that the yearly payment, when it is reduced to forty pounds, will be well within his reach, he puts his head into the halter."

THE "DUMP" OF SILVER.

All the world will dump its silver on us if we adopt free coinage, says the monometallist. How much, and where will it come from? asks the bimetallist. Oh, the world has billions of it ready for us, is the vague general reply; but when we ask for a bill of particulars we get instead a fine confusion of prophecy.

One answers that it will come from Spanish America. But we have already shown that all nations from the Rio Grande to Cape Horn have but $100,000,000 for their 60,000,000 people. The South Americans have but 83 cents apiece. The Mexicans have $4.54. The Central Americans have $2.14. And the South Americans have $550,000,000 in paper money, to bring which to par and maintain it there will require at least $300,000,000 more in silver than they now have. No "dump" from there.

From France, says another. Well, France has $487,000,000 in silver coin, and some bullion; only $12.94 per capita in coin, and valued at 15-1/2 to 1 of gold. At her ratio an ounce is worth $1.3336; at ours $1.2929. Will she rob herself of coin, when she has none too much for business, and sell it to us at a loss of 4 cents on the dollar and freight charges? Germany has but $215,000,000 in silver coin, less than half as much as France, though having 13,000,000 more people, and Great Britain has but half as much as Germany. All the other Europeans together have much less than these three nations, and used at a higher valuation than ours. How then can they "dump" any on us?

From India, say a few. Well, India has a deal of silver--$950,000,000, according to our Director of the Mint. But she has 296,000,000 people, so it is but $3.21 apiece. And the best evidence that she has not too much is found in the fact that she is importing more. China has but $2.08 per capita; Japan has but $4, and is importing heavily; Australia but $1.49, and the black and brown races still less. In short, all the world outside of the United States has but $3,444,900,000 in silver coin, or $2.46 per capita. It is a plain case that there will be no "dump" from the coined silver.

But the bullion, the old silver, the scrap heap, will they not ship that to us by billions? Well, how much is there, and where is it? Will the nobility and gentry of Europe melt down their family plate, the plain people everywhere their silver ornaments, and the Hindoos their household gods, to send us the silver? If so, why did they not do it when a cup, a watch, or a silver god would buy twice as much gold as now? But the supposition is absurd. The manufactured articles are worth very much more than the metal in them, to say nothing of the sentimental value. A prize silver cup, for instance, won in a great race or regatta, could not be bought for ten times its weight in gold. There remain, then, only the scrap heap and the stored bullion, and nobody has been able to locate any great mass of it. Is it reasonable to suppose that moneyed men have been storing away silver for years, making no profit on it and losing the interest, and doing it in the face of a falling market? No, the timid may be reassured; there will be no "dump."

Another class threaten us that a great mass of securities will be "unloaded on us." Well, Great Britain, Germany, and Holland, all gold countries, are the nations which hold practically all the American stock and bonds held abroad. Of course they did not invest expecting to be paid principal and interest in coin, for they know that there is not enough in this country to pay it; it is in commodities that we must pay. So far as these securities are bad, as we are sorry to say very many are, foreigners having been badly "plucked" by some of our operators, they will be returned anyhow. In fact, they are coming back now. As to those which are good, being held against property capable of earning a steady and reliable income, they will not be returned. Held in gold countries, the interest and dividends on them will be paid in our products measured in the currency of those countries, no matter what our monetary system may be.

But suppose the "prophets" of evil are correct to this extent that silver and securities will be "dumped" on us to the amount of a billion or two. Will the foreigners give us all these good things? Assuredly not. They must all be paid for; and with what? Manifestly with agricultural products, for there is little or nothing else. The farmer must furnish the stuff, and he is ready and willing to do it--yes, anxious. At least three-fourths of our exports are agricultural, and of the new exports probably seven-eighths would be. We find, moreover, that in 1891 55,131,948 bushels of wheat exported brought us $51,420,272, and in 1892, 157,280,351 bushels brought us $161,399,132, while in 1894 the 88,415,230 bushels exported brought us only $59,407,041, and in 1895, 76,102,704 bushels brought us but $43,805,663. Similarly it may be shown that our largest cotton exports have brought us the least money; but this is an old story. It goes without saying, that to the farmer there are three great factors in the present situation: a ruinously low price for his products, a tremendous surplus left over from last year, and an immense crop for this year now adding to the surplus, with no possible home consumption to give an adequate outlet. Suppose then the "dump" should come and the farm produce go--what then?

First of all there must come as a result a rise in prices. Farmers receiving much more money would immediately pay their most pressing debts; the release of idle money would break the deadlock which now paralyzes trade, and from the farmer the money would at once be poured into the channels of rural business. The consumptive demands would be tremendous because of the long and forced abstinence, and the farmer would supply himself with those things he has so long wanted. The railroads would have a vastly increased business, and as a result there would be a greatly increased demand for labor. Instead of the ruinous "cut in rates" which we read of almost every day, made in order to stimulate the movement of crops, we should soon hear of vastly increased shipments at profitable rates; these of course would soon be followed by increased net earnings, which would in time create increased values of securities, which again would check foreign sales and stimulate purchases. There would be a boom in stocks to dispel the gloom of Wall Street, and we should do the money-mongers good in spite of themselves.

Is this all supposition? Well, we are proceeding upon the theory of the monometallists, that a billion dollars' worth of silver and securities would be shipped here. We are showing what must inevitably result if their predictions should hold good--more money for the farmers, more business for the merchants, more transportation for the railroads, and more business for their correlated industries; and, as a result, more work, abundant work, for those now idle. And this last would be the greatest blessing of all. The benefit would be to the farmer, the handlers of grain and all who serve them, to the retail tradesmen, the small manufacturers, all the country artisans immediately dependent upon the farmer, and all those who supply all of these classes. In short, there would be a general quickening of all branches of production and trade as a certain result of the transfer of foreign silver and securities for our agricultural surplus. Is there anything in all this to alarm Americans?

ASIA'S DEMAND FOR THE PRECIOUS METALS.

Among the many errors which distort men's opinions on the so-called "silver question" is the belief that the gold supply of the present and near future need be considered merely as it may affect Europe and America. Asia and Africa are in most men's minds entirely excluded from the calculations. The popular belief in the United States may be briefly stated thus: Asia is and is long to be the land of stagnation. Asiatics are unprogressive and will remain so. In contact with the higher civilization of Europe the yellow and brown races are likely to fade away as did the Maori and the American Indian; or if they continue to increase, their trade and government will be conducted chiefly by Europeans.

One finds this belief expressed in many standard works. "The helpless apathy of Asiatics" is a favorite phrase of Macaulay. "Man is but a weed in those vast regions," says DeQuincey. "In Asia there are no questions, only affirmations," says another philosopher. And no amount of experience seems to shake the popular faith in this notion that what Asia was she is always to be. And yet enough has occurred within the memory of men still middle-aged to dissipate it. Only a few years ago Americans looked upon Russia as an inert mass, semi-barbarous in large part; and when Kennan pictured the horrors of Siberia most readers thought the condition only such as might be expected from such a government and such people as they believed the Russians to be. But Russia is to-day one of the world's greatest powers, with 120,000,000 of people, building the two longest railways in the world, developing the Siberian and Transcaspian region with a rapidity only exceeded in our own far West, and drawing gold from this country and western Europe at a rate that threatens the stability of our financial system.

It is only forty-one years since our Commodore Perry astonished the world by securing admission to Japan and proving to the western people that it was at least worthy of their notice, yet that empire has undergone a most beneficent revolution in which the Daimios or local lords consented to a self-sacrifice without a parallel in history, has been the victor in a great war, has adopted the best features of the western civilization while sacrificing none of its own, and is advancing in material development with a rapidity rarely equalled and perhaps never excelled. Five years ago the first complete census showed thirty-six cotton factories with 377,970 spindles; three years later the number of factories had doubled and that of the spindles had much more than quadrupled, and there is every indication that next year's tabulation will show a still more rapid increase. In 1894 there were 17,000 people employed in that industry.

Hon. Robert P. Porter, who has recently returned from Japan, after making a thorough study of her progress and resources, tells us that while her export of textiles of all kinds in 1885 was worth but $511,990, they were in 1895 worth $22,177,626, the estimate of both years in silver dollars. Similarly in the same years the exports of raw silks increased from $14,473,396 to $50,928,440, of grain and provisions from $4,514,843 to $12,723,771, of matches from $60,565 to $4,672,861, of porcelain, curios, and sundries from $2,786,876 to $11,624,701, and several other articles in the like proportion, while the commerce for 1895 showed an increase of $30,000,000 over 1894, reaching a total of exports and imports of $296,000,000, or about $7.50 per capita.

The government granted 2,250,000 yen as a bounty to the first iron works, begun in 1892, and already the products of those iron works in hand-made articles are underselling American products on our Pacific coast. In five years, prior to those covered by Mr. Porter's figures above, Japan's exports rose from 34,800,000 to 68,400,000 yen, and her imports from 27,000,000 yen to 64,000,000 yen. Nor does there appear any reason to doubt the confident statement of British experts that development for the coming years will go on much more rapidly. Politics in the empire already turns upon fiscal and economic questions; of two bills urged in the Imperial Parliament by the progressists, one decrees the nationalization of all railways not yet owned by the state, and the other asks for an appropriation of 50,000,000 yen for the building of a new railroad. While this is going through the press it is announced that Japan has established two new steamship lines, one running from Yokohama to our own Pacific coast, and the other from Yokohama to Marseilles, stopping at Shanghai, Hong Kong, Singapore, and Columbo.

The western mind has long looked upon China as given over to hopeless inertia and stagnation, but China has awakened at last. In one year the importation of illuminating oil rose 50 per cent., of window glass 58 per cent., of matches 23 per cent., and needles 20 per cent. In six years the tonnage of vessels discharging in Chinese ports rose by one-third. While these lines are going through the press Li Hung Chang is in Europe negotiating for a loan of 400,000,000 francs to be expended in internal improvements, and he gives the weight of his very high authority to the statement that China is no longer opposed to the introduction of railways.

Consul-General Jernigan reports to the Department of State that the prospectus of a new industry is now before the public at his station, Shanghai. It is called the Shanghai Oil Mill Company, and purposes to manufacture oil from cotton seed. It is the logical result of the cotton mills at Shanghai, and the consequent stimulus given to the cultivation of cotton in China. Since 1890 there have been forty-five new manufacturing plants established in Shanghai. They are all in successful operation, especially the cotton factories, in which large capital is invested. He adds:

"The area suitable for cultivation of cotton in China is almost as limitless as the supply of labor, and labor being very cheap, there can be no doubt that China will soon be one of the great cotton-producing countries of the world, and that this product, produced and manufactured in China, will command serious consideration in all calculations with reference to the cotton market. It will not be safe to discount the cotton of China because it now grades low, for it is certain to improve. At present it is estimated there are 3,000,000 tons of cotton seed, equal to 90,000,000 gallons of oil, now yearly lost to commerce which would find a ready market. The company will start with a capital of 250,000 Mexican dollars. One company has already ordered its machinery from the United States."

The population of the Chinese Empire is estimated at 400,000,000, but Li Hung Chang declares, and experienced western observers confirm it, that the country with modern improvements could sustain more than twice its present population in a very high state of comfort.

Of all the popular errors, however, the greatest is that of regarding India as an overpopulated, stagnant, and unprogressive land. Suffice it to say here that the population has trebled under British rule, and that the country is abundantly able to sustain in great comfort twice its present numbers by agriculture alone; that the extension of the railway system has recently been rapid, and along with this has gone on a growth of manufactures that is simply amazing. Only recently Burmah borrowed in London $15,000,000 for railway construction, a sum that was subscribed in that market five times over. In these vast fertile regions, which in comparison with what they are destined to be might be called new and undeveloped, live 290,000,000 of people, who are increasing at the rate of something like 2,000,000 per year. And these are but a few of the facts I might present to show that the early development of the Orient is the great fact America must take into account, and that it is almost a certainty that the world's greatest possible production of gold in the future may be absorbed in the East, leaving the West to struggle with an increasing scarcity. Indeed, Prof. Eduard Suess, the great German authority, after giving reasons for his belief that the larger part of the gold product is used in the arts, and that all of it will soon be, points out that Asia will soon, in all probability, absorb almost the entire silver product, and that we shall then have a "crisis" indeed.

In my travels through India and the Orient generally I took notice of her enormous capacity to export wheat. As a result, I predicted that the export, then but fairly begun, would soon menace our supremacy in the British market. I began at the same time to study the social and industrial condition of Russia, and was soon satisfied that she was in the dawn of a great day. I predicted the eastern extension of her enterprises, and increased political influence, especially with China, and the consequent absorption of western gold and capital generally. It appears from the latest summary of the United States Bureau of Statistics that Russia had, on the first of January, 1892, $324,828,300 in gold in her banks, and on the last of last May $424,193,700. If she carries out her present policy, this is less than half of the amount she will require. On a strictly gold basis we must allow her at least $10 per capita, which would make for the empire $1,200,000,000. But if we greatly reduce the per capita, in view of the undeveloped condition of her subjects, the amount still to be required will be enormous. During the same four years and five months the Bank of France has increased its holdings of gold from $260,888,299 to $391,519,658; the Austrian-Hungarian Bank from $26,634,400 to $133,006,312, and the Bank of England from $109,342,800 to $232,791,709, while the Banks of Germany, Belgium, Spain, Italy, and the Netherlands have also increased their holdings some $30,000,000. Thus we see that in these few years the leading nations have added nearly $500,000,000 to their previous hoards of gold, which shows too plainly that they are looking forward to a gold famine. How much more will Asia demand? In my opinion, India, notwithstanding British rule and influence there, has developed less rapidly than China will when she once comes into as intimate contact with western nations as has India, for the rigid system of caste which prevails in India and which does not exist in China has been and will be the cause of greater immobility. It is not possible to say how long it will operate as an impediment to a high industrial development, but from the lessons taught in other countries where race and religion create similar castes, we may believe in its long continuance. I take pleasure at this point in referring to the late able work of Prof. Charles H. Pierson, of Oxford, who passed twenty years in the Orient. In his "National Life and Character" he points out that China in 1844 had doubled her population in eighty years, and there since has been a great increase; that Russia has doubled since 1849, very largely by natural increase, the Russian peasant being the most prolific of human beings; and the Hindoos, who had doubled in eighty years, have recently gained 20,000,000 in ten years.

Professor Pierson also points out the great error of assuming that the black and yellow races will fade away before the white, and shows it to be far more likely that with the increased security afforded by British and Russian rule they will increase so rapidly as to industrially force the white race back to the higher latitudes of the north temperate zone. Industrial commonwealths will not dispense with great armies--at least not for a long time--but China has passed the militant age, and reached the purely industrial. It may be said that work is a pleasure to the Chinese, as active sports are to Western people. Continuous toil is looked upon as a matter of course. To them it does not seem a hardship that men should work. As a measure of the possibilities of the Orient, consider what has been done in the western world within half a century, where the population is much less than one-half of that of the far East. Over four hundred thousand miles of railroad have been constructed, together with a vast, almost incalculable system of telegraphs, to say nothing of the great cities and common roads, or the enormous mass of productive machinery, which has even outrun the increase of population.