Part 30

I admit that, as interested in the commerce and monetary system of this country I feel a kind of shame that on the occasion of L2,000,000 or L3,000,000 of gold being taken from this country to Brazil, or any other country, it should immediately have the effect of causing a monetary alarm throughout the country. (Speech of the chancellor of the exchequer in the House of Commons, April 18, 1890.)

This is a suggestive admission, from so well-informed a source, as to the operation of the single gold standard. I commend it to those who would circumscribe and hamper the prosperity of this country by making gold alone the standard of all values.

I have thought it necessary, Mr. President, to state what I conceive to be the true principles of the science of money, the principles that, with the progress of time and growth of intelligence, must prevail the world over; because, without a clear understanding of the relation which the quantity of money in a country bears to the prosperity and happiness of its people, there would be no justification for an addition of either silver, gold, or any other form of money to the quantity already in circulation. If the value of money depends on quantity, then, as long as the world adheres to the automatic theory of money, my contention is that all the silver produced from all the mines of the world should be transmuted into coin; and even then, if the wants of the world continue to increase as they have been increasing, it is only a question of time, and that not far distant, when the combined supply of both metals will be insufficient to maintain the equities in time transactions.

The world having decreed to stand by the automatic system we are now dealing with the question as a practical one.

The only relief that can be had is to adhere strictly to that system, and give it full scope. Remove all legislative restrictions and let the world have the full benefit of all the precious metals that are yielded by the mines.

THE WORLD'S SUPPLY OF GOLD AND SILVER.

Since for thousands of years the world recognized both silver and gold as money, can anybody tell what has happened to render one of them unfitted for the money use?

No argument based on fluctuations in the current supplies of either of the metals can militate against the use of both as money. The fluctuation in the annual yield of both, taken together, is much less violent and less frequent than the fluctuation of either taken separately. By the use of both, society has much greater security against the evil of an insufficient money volume. While a large yield, now of one, and again of the other, has taken place, there is no instance in the history of the world of an extraordinary yield of both occurring simultaneously, except in the single instance of the first discovery of the mines of America. When the gold mines have been yielding largely, there has been no special increase of silver, and during the period when silver has been produced in comparatively large quantities the gold mines have been less productive.

This will be illustrated by the following table showing the yield of both gold and silver, from the discovery of America to the present time.

Annual average production of the precious metals throughout the world from the discovery of America to 1872.

-----------------------------------+-------------+-------------- Periods. | Gold. | Silver. -----------------------------------+-------------+-------------- 1493-1520, average for each year | $3,855,000 | $1,953,000 1521-1544 do | 4,759,000 | 3,749,000 1545-1560 do | 5,657,000 | 12,950,000 1561-1580 do | 4,546,000 | 12,447,000 1581-1600 do | 4,905,000 | 17,409,000 1601-1620 do | 5,662,000 | 17,538,000 1621-1640 do | 5,516,000 | 16,358,000 1641-1660 do | 5,829,000 | 15,223,000 1661-1680 do | 6,154,000 | 14,006,000 1681-1700 do | 7,154,000 | 14,209,000 1701-1720, average for each year | 8,520,000 | 14,779,000 1721-1740 do | 12,681,000 | 17,921,000 1741-1760 do | 16,356,000 | 22,158,000 1761-1780 do | 13,761,000 | 27,128,000 1781-1800 do | 11,823,000 | 36,534,000 1801-1810 do | 11,815,000 | 37,161,000 1811-1820 do | 7,606,000 | 22,474,000 1821-1830 do | 9,448,000 | 19,141,000 1831-1840 do | 13,484,000 | 24,788,000 1841-1850 do | 36,393,000 | 32,434,000 1851-1855 do | 131,268,000 | 36,827,000 1856-1860 do | 136,946,000 | 37,611,000 1861-1865 do | 131,728,000 | 45,764,000 1866-1870 do | 127,537,000 | 55,652,000 1871-1872 do | 113,431,000 | 81,849,000 -----------------------------------+-------------+--------------

World's production of gold and silver for the calendar years 1873 to 1889, inclusive.

----------+---------------+------------------------------------------- | Gold. | Silver. Calendar +---------------+--------------+--------------+------------- years. | | Fine | Market | Coining | Value. | ounces. | value. | value. ----------+---------------+--------------+--------------+------------- 1873 | $96,200,000 | 63,267,000 | $82,120,000 | $81,800,000 1874 | 90,750,000 | 55,300,000 | 70,673,000 | 71,500,000 1875 | 97,500,000 | 62,263,000 | 77,578,000 | 80,500,000 1876 | 103,700 000 | 67,753,000 | 78,322,000 | 87,600,000 1877 | 114,000,000 | 62,648,000 | 75,240,000 | 81,000,000 1878 | 119,000,000 | 73,476,000 | 84,644,000 | 95,000,000 1879 | 109,000,000 | 74,250,000 | 83,383,000 | 96,000,000 1880 | 106,500,000 | 74,791,000 | 85,636,000 | 96,700,000 1881 | 103,000,000 | 78,890,000 | 89,777,000 | 102,000,000 1882 | 102,000,000 | 86,470,000 | 98,230,000 | 111,800,000 1883 | 95,400,000 | 89,177,000 | 98,986,000 | 115,300,000 1884 | 101,700,000 | 81,597,000 | 90,817,000 | 105,500,000 1885 | 108,400,000 | 91,652,000 | 97,564,000 | 118,500,000 1886 | 106,000,000 | 93,276,000 | 92,772,000 | 120,600,000 1887 | 105,300,000 | 96,189,000 | 94,265,000 | 124,366,000 1888 | 109,900,000 | 109,911,000 | 103,316,000 | 142,107,000 1889 | 118,800,000 | 125,830,000 | 117,651,000 | 162,690,000 ----------+---------------+--------------+--------------+-------------

From this table it will be seen that from 1801 to 1820 the average yearly yield of gold was $9,710,500; of silver, $36,847,500--four of silver to one of gold.

From 1821 to 1840 the average yearly yield of gold was $11,466,000; of silver, $21,964,000--two of silver to one of gold.

From 1841 to 1860 the average yearly yield of gold was $85,150,000; of silver, $34,826,500--two and a half of gold to one of silver.

From 1861 to 1880 the yearly average yield of gold was $117,991,850; of silver, $68,043,900--nearly two of gold for one of silver.

From 1881 to 1889 the yearly average yield of gold was $105,500,000: of silver, $122,540,388--one-sixth more silver than gold.

From those figures it is plain that no continuous, extraordinary yield of silver, such as might warrant the slightest fear of an unnecessary addition to the money volume, is to be expected. On the other hand the continuous drain of gold for use in the arts, as dentistry, gold plate, jewelry, gilding, and articles of decoration generally, is seriously encroaching upon the annual supply.

Both metals possess in common, and neither in any different degree from the other, all the qualities which are recognized as necessary in a commodity money. Silver enjoys in an equal degree with gold the quality of indestructibility, of divisibility, of malleability, and of resistance to chemical changes. The stock of both existing in the world (the product of all time) is estimated to be about equal, the production of the past 500 years being set down as--

Gold $7,240,000,000 Silver 7,435,000,000

That silver mining has not proved exceptionally profitable in this country is proved by the comparatively small number that have engaged in the business. This country has been thoroughly explored in the search for additional mines without any of great value being discovered. The allurements of the business lie in its uncertainty; and for the occasional prize that is drawn thousands of blanks are found. There is always enough hope of results to induce continued effort, but there is also sufficient doubt and discouragement to deter an undue number from engaging in the business.

The mines of Mexico have been worked for hundreds of years; and up to 1873 the business of silver mining in that country had all the stimulus that a parity at 15-1/2 to 1 could give to it. It is not, therefore, probable that any material increase of output can be expected from that quarter.

Conceding, for the sake of the argument, the eventual possibility of so superabundant a yield of silver as to work injury and inequity to the interests of creditors, is it not manifest that it is in the power of society at all times to remedy the evil by a limitation of the coinage? And on the other hand, is it not equally manifest that for an insufficient supply there is no remedy?

If great mountains of silver should be discovered, does not Congress meet constantly? If there should seem to be too much, could not the coinage be readily limited to prevent depreciation? But, on the other hand, when we dedicate the monetary function solely to one metal, of which there is manifestly and admittedly the world over an insufficient supply, where is the remedy? What can Congress do to enlarge that supply? Absolutely nothing.

THE GOLD USED IN THE ARTS.

The Director of the United States Mint a few years ago estimated that of the $100,000,000 gold annually produced from the mines of the world $46,000,000 are consumed in the manufacture of jewelry, gold plate, plated ware, gold-leaf, etc., and in various processes of dentistry.

The single standard of gold, therefore, is maintained by the creditor nations in the face of the admitted fact that but $50,000,000 of that metal are annually added to the money stocks.