Part 9

And now, Mr. President, how many of all those alarming prognostications by all these distinguished prophets have been fulfilled? Not one! On the contrary, it is not too much to say that the public credit of the United States is to-day the highest in the world. It does not stand merely in line with that of other first-rate powers; it stands at the head. Our gold, silver, and paper money stand at a parity with each other. If a full measure of relief was not realized by the passage of that bill it is because the coinage of $4,000,000 a month was left optional with the Secretary of the Treasury, instead of being made mandatory on him.

But it is hardly necessary to assert that the predicted inflation of prices has not been observed as a consequence of the coinage of $2,000,000 a month. While the issuance of that amount has not, with our rapidly increasing population and wealth, been sufficient to arrest the downward tendency of prices, it has undoubtedly prevented them from falling much lower. Without that coinage, we should have had industrial depression, chronic and somber, with consequences of untold disaster.

But the result which gave most apprehension to those who advocated the gold standard, the evil which they regarded as on the whole the most threatening and direful of all the evils that were to result from even so small an increase in the money volume as that bill provided for, was the outflow of gold. They ridiculously under-estimated the tremendous money-absorbing power of this great country. And as if to emphasize to all the world the complete absurdity of their alleged fears--this apprehension has been conspicuously and notoriously set at naught by the constant inflow of gold. On the 30th of June, 1878, the amount of gold coin and bullion in the Treasury and in monetary circulation in this country is officially reported to have been $213,199,977, and this amount is probably much over-estimated. On November 1, 1889, we had more than three times as much--the amount of gold in circulation and in the Treasury being reported as $689,000,000.

"Experience," says Dr. Johnson, "is the great test of truth, and is perpetually contradicting the theories of men," and the last experience, Mr. President, is the best.

If the professors of political economy, the Eastern newspaper editors, and the professional financiers were then so seriously mistaken ought they not to be a little modest now in making predictions, especially in renewing predictions that have been already discredited? They can not point to a single instance in which their prophesy has not been falsified by the event. So humiliating a failure on the part of the professors, in a realm of which they boastfully claimed to be masters, so complete an overthrow of these "experts" by men who were ridiculed and derided as rural financiers and crazy theorists, ought to put the advocates of the gold standard on their guard against a like defeat on this occasion. They are pressed for reasons to account for the utter miscarriage of their prophecies. They are left without a shadow of consolation except that the coinage of $2,000,000 worth of silver bullion each month has not succeeded in placing silver at a par with gold. They affect to believe that the advocates of silver in 1878 expected that that metal, under the very limited demand of $2,000,000 a month, would be brought to a level with gold, which, owing to the demonetization of silver, had risen abnormally and ruinously in value.

No such belief was ever entertained or expressed. On the contrary it was repeatedly asserted by the advocates of silver that so long as the entire yield of gold from all the mines of the world (in 1878, $119,000,000) was invested with the full money function and had free access to all mints to be transmuted into coin, it could not be expected that the conferring of the legal-tender function upon a sum so comparatively trifling as one-fourth the yield of silver (the yield in 1878 being $99,000,000) would have the effect of placing it on a level with gold.

It is, however, a significant fact that every silver dollar that has been coined under that act is at a parity with gold, and will to-day buy as much of all the objects of human desire as will the gold dollar. Nay, more, silver bullion--disparaged and discredited as it is by being shorn of the money function, and denied access to the mints, instead of decreasing in purchasing power, has maintained so steady a relation to commodities that 412-1/2 grains of uncoined silver will exchange for as much to-day as would the coined dollar, whether of silver or gold, in 1873, when the full money function attached equally to both metals. If this be true--and I shall presently demonstrate it beyond refutation--what an utter perversion of terms it is to say that silver has fallen in value!

WILL REMONETIZATION PLACE US ALONGSIDE INDIA.

We are solemnly warned that the full remonetization of silver in the United States would place us alongside India and the other barbarous countries of the world. This brilliant piece of reasoning is advanced with great confidence, and is intended to be conclusive of the argument against silver. But, Mr. President, India is no more barbarous now than it was in 1873--before our silver dollar was demonetized. India is no more barbarous now than it was in 1857, when Germany demonetized gold and placed herself "alongside" India. Neither is Germany any more civilized now than then. We did not at that time hear any complaint, either in the United States or Europe, that the use of silver as money placed any one nation more than any other in dangerous affiliation with the civilization of India. We have never heard it charged against France that its civilization was brought any nearer that of India by the immense quantity of silver money in France. Neither did we hear it charged against the United States up to 1873 that we were "alongside," or dangerously close to the barbarous nations by our use of silver as money.

Up to 1834 we had no metallic money other than silver in our circulation, and up to 1850 we had much more silver in circulation than gold. Were we "alongside" India then? Where were the wise and patriotic men of our country at those periods? History fails to record any protest on their part that we were placing ourselves "alongside" India or any other of the barbarous nations of the world by our use of silver and our recognition of its full money power. All the nations of the earth used silver and accorded it full recognition as money equally with gold up to 1819. Was all Christendom at that time "alongside" India? When, in that year, Great Britain sundered the silver link that from time immemorial had kept her "alongside" India and the other barbarous nations and, for selfish reasons of her own, arising from her position as a creditor of all other nations, decided to recognize gold only as money, was any evidence afforded of a sudden advance in the civilization of Great Britain? Was the emergence of that nation from the benumbing companionship of India and the other barbaric countries into the glittering and refulgent light of the gold dispensation signalized, as would be expected, by a corresponding improvement in the condition of the people?

On the contrary, the history of the time informs us that as a consequence of the passage of the bill by Parliament in 1819, compelling payments in gold, prices rapidly fell, cotton in particular sinking in the short space of three months to one-half its former level. Within six months all prices had fallen one-half, and showed no signs of improvement for the next three years. By reason of the contraction of the currency the industry of the nation was congealed, as is a flowing stream by the severity of an arctic winter. Alarm became universal; confidence and activity ceased. Bankruptcies increased in 1819 more than 50 per cent. over the number of the previous year. Meetings were held throughout England in which the people called on the government to devise some means of redressing the situation. So universal was the distress that the owners of land in England, who in 1819 numbered 160,000 were in seven years, by forced sales and foreclosure of mortgages on the smaller farms, reduced to 30,000, and one in every seven of the population lived on organized charity. All this was but a part of the price which the people of England paid for a policy imposed on them by the creditor classes among their own number. The condition of industry and disorganization of labor led to frequent and serious conflicts between the people and the military. They also led to commercial crises without number, and England, by demonetizing silver and thus ceasing to be "alongside" India, became the seat of panics, as Egypt had long been of the plague and India of the cholera.

As a contrast to this I will merely cite the change in the condition of India within the past seventeen years. When the Western world discarded silver as money and, as a consequence, India received a larger supply of it than ever before, that barbarous nation, as is universally admitted, made progress by leaps and bounds. No country on earth has in the same time made such advances in material prosperity and in all the elements that conduce to the comfort and happiness of a people. Notwithstanding the alleged debasement of silver, no sooner had its increased inflow into India begun than the industries of a vast continent were established and set in motion, and a substantial part of the activity and prosperity that were wont to pervade some of the industries of the United States has, by that demonetization, been transferred to fields of wheat, and fields and factories of cotton 10,000 miles distant.

What really placed us alongside such barbarous countries as India was the demonetization of silver. It was by that demonetization that the people of Europe were enabled, with gold, to buy silver at 30 per cent. discount, which, when shipped to India and coined into rupees, would buy as much wheat as could ever have been bought with that coin. There has been no decrease whatever in the purchasing power of the rupee in India. This was equivalent to buying wheat at 30 per cent. below the price theretofore paid for it, and thus the farmers of the United States were by demonetization placed "alongside" the barbarous people of India. Their wheat had to compete in the European markets with the wheat of India, and it is this competition that placed them "alongside" India. The farmer of this country, therefore, by demonetization of silver, was compelled to compete with under-paid and half-starved ryots. And so it was that our cotton planters, by the demonetization of silver, were placed alongside the barbarous people of India. It is this degrading competition that places a highly civilized people alongside a barbarous one.

The advocates of the single gold standard deem even silver money much better money than greenbacks. Does it then follow that when greenbacks were our only money--good enough money to carry the nation through the greatest war in all history--we were "alongside" or underneath the barbarous nations of the world? It is not the form, or the material of a nation's money that fixes its status relatively to other nations. That is accomplished by the vitality, the energy, the intellectuality and effective force of its people. The United States can never be placed "alongside" any barbarous nation, except by compelling our people to compete with barbarous peoples--compelling them to sell the products of American labor at prices regulated by the cost of labor and manner of living in barbarous countries. As well might it be said that we are alongside the barbarous people of India because we continue to produce wheat and cotton.

The distinguishing feature of all barbarous nations is the squalor of their working classes. The reward of their hard toil is barely enough to maintain animal existence. A civilized people are placed alongside a barbarous one when, in their means of livelihood, the foundation of their civilization, they are made to compete with the barbarians. That was the result accomplished for the farmers and planters of the United States when silver was demonetized.

CREDITORS AND DEBTORS.--A COMPARISON OF MOTIVES.

All movements for the increase of the monetary circulation are ascribed by the money-lenders and creditor classes to the unworthy desire on the part of the debtors to escape their just obligations. But if motives are to be brought in question, the rule should work both ways. No note is taken of the motive of the creditor classes in securing a contraction of the circulation. Whatever the apparent purpose of contraction, and however specious the arguments advanced in its justification, the real object has always been to increase the purchasing power of money. In all countries, and throughout all time, it is the cupidity of the creditor classes and annuitants, and their desire to increase the value of the money unit that has brought about a shrinkage in the money volume. Unlike the great masses of the people, who were ignorant of the effects to be naturally expected from such a shrinkage, the annuitants and moneyed men very well understood that the value of every pound or dollar depended on the number of pounds or dollars that were in circulation; the larger the total number out, the smaller the purchasing power of each; the smaller the total number out, the greater the purchasing power of each.

Loaners of capital are not usually those who entertain further hope of personal achievement. When men realize fortunes it is rarely that they conserve the faculty of initiative; they find no special delight in novelty; they look so carefully to security in the use of money that the spirit of adventure is restrained. The realization of a fortune is usually the labor of a life-time, and few men who reach the goal care to retrace their steps to enter again upon a struggle that demands all the strength, the momentum, and the intrepidity of youth. Men of assured incomes therefore are disposed to take their ease, and society must look, for its material progress and development, to those who have a career to make, with the ambition and the power to make it.

It is a remarkable circumstance, Mr. President, that throughout the entire range of economic discussion in gold-standard circles, it seems to be taken for granted that a change in the value of the money unit is a matter of no significance, and imports no mischief to society, so long as the change is in one direction. Who has ever heard from an Eastern journal any complaint against a contraction of our money volume; any admonition that in a shrinking volume of money lurk evils of the utmost magnitude? On the other hand we have been treated to lengthy homilies on the evils of "inflation," whenever the slightest prospect presented itself of a decrease in the value of money--not with the view of giving the debtor an advantage over the lender of money, but of preventing the unconscionable injustice of a further increasing value in the dollars which the debtor contracted to pay. Loud and resounding protests have been entered against the "dishonesty" of making payments in "depreciated dollars." The debtors are characterized as dishonest for desiring to keep money at a steady and unwavering value. If that object could be secured, it would undoubtedly be to the interest of the debtor, and could not possibly work any injustice to the creditor. It would simply assure to both debtor and creditor the exact measure for which they bargained. It would enable the debtor to pay his debt with exactly the amount of sacrifice to which, on the making of the debt, he undertook to submit, in order to pay it.

WHO ARE THE DEBTORS?

In all discussions of the subject the creditors attempt to brush aside the equities involved by sneering at the debtors. But, Mr. President, debt is the distinguishing characteristic of modern society. It is through debt that the marvelous developments of nineteenth century civilization have been effected. Who are the debtors in this country? Who are the borrowers of money? The men of enterprise, of energy, of skill, the men of industry, of foresight, of calculation, of daring. In the ranks of the debtors will be found a large preponderance of the constructive energy of every country. The debtors are the upbuilders of the national wealth and prosperity; they are the men of initiative, the men who conceive plans and set on foot enterprises. They are those who by borrowing money enrich the community. They are the dynamic force among the people. They are the busy, restless, moving throng whom you find in all walks of life in this country--the active, the vigorous, the strong, the undaunted.

These men are sustained in their efforts by the hope and belief that their labors will be crowned with success. Destroy that hope and you take away from society the most powerful of all the incentives to material development; you place in the pathway of progress an obstacle which it is impossible to surmount.

The men of whom I have spoken are undoubtedly the first who are likely to be affected by a shrinkage in the volume of money.

The highest prosperity of a nation is attained only when all its people are employed in avocations suited to their individual aptitudes, and when a just money system insures an equitable distribution of the products of their industry. With our present complex civilization, in order that men may have constant employment, it is indispensable that work be planned and undertakings projected years in advance. Without an intelligent forecast of enterprises large numbers of workmen must periodically be relegated to idleness. Enterprises that take years to complete must be contracted for in advance, and payments provided for.

A constant but unperceived rise in the value of the dollar with which those payments must be made, baffles all plans, thwarts all calculation, and destroys all equities between debtor and creditor. If we can not intelligently regulate our money volume so as to maintain unchanging the value of the money unit, if we can not preserve our people from the blighting effects which an increase in the measuring power of the money unit entails upon all industry, to what purpose is our boasted civilization?

By the increase of that measuring power all hopes are disappointed, all purposes baffled, all efforts thwarted, all calculations defied. This subtle enlargement in the measuring power of the unit of money (the dollar) affects every class of the working community. Like a poisonous drug in the human body, it permeates every vein, every artery, every fiber and filament of the industrial structure. The debtor is fighting for his life against an enemy he does not see, against an influence he does not understand. For, while his calculations were well and intelligently made, and the amount of his debts and the terms of his contracts remain the same, the weight of all his obligations has been increased by an insidious increase in the value of the money unit.

EFFECTS OF A SHRINKING VOLUME OF MONEY.

As to the benumbing consequences following a shrinkage in the volume of money, the testimony of history is briefly reviewed in the report of the Monetary Commission to which I have already referred, and from which I read the following: