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TJie good money that we have is enough 
Any cheap money is too much 



Copyright, 1895, by HARPER & BROTHERS. 

All rights reserved. 


THE diagrams accompanying the paper on "The 
Money We Need " were prepared by Mr. WORTHINGTON 
C. FORD, Chief of the Bureau of Statistics, at Washing- 
ton, and for this and other kind assistance I desire to 
thank him and the Hon. JOHN DEWITT WARNER. 

II. L. JST. 











1874-1894 " " 30 








UNCLE SAM u u ^ 


WORK . " " 78 


THE subject of money and the laws which govern 
its distribution have been made to appear so compli- 
cated that not only persons of ordinary intelligence, 
but experts on other subjects, shrink from an article 
or a book on money on account of its presumed in- 
comprehensibility. A strange mystery has grown up 
in connection with a subject that concerns every civ- 
ilized human being, and this mystery has been det- 
rimental to the interests of commerce in goods and 
services. The ills that come to merchants, manufac- 
turers, and working-men to all who have anything 
to sell or any desire to buy have been increased and 
complicated by the money question as it has been 
presented in different phases at different periods by 
theorists, speculators, and the unthrifty. It has served 
the purpose of some persons at crucial periods to 
practise deception concerning the nature of money. 
It has been in the past and still is believed that 
money could be made out of anything by the fiat 
of the government. Some people have professed to 
think that much money in a country means general 
prosperity, and they point to the time of the war of 

secession and to the greenbacks of our own country, 
to the period when the nation was piling up an enor- 
mous war debt, which the people have since been 
paying off through burdensome taxes. They think 
that because some manufacturers of shoddy, some 
sutlers, and some contractors made their fortunes in 
those days, the whole country grew rich, and that it 
was the cheap greenbacks that blessed us. Many 
persons who are ready to permit others to do their 
thinking for them accept this as the truth ; and yet 
if they stop to think for themselves, their reason will 
tell them that a country cannot grow rich by main- 
taining great armies. Riches are not gained in this 
way by those who stay at home and pay out of 
their earnings for the food, the shelter, the cloth- 
ing, the weapons, the powder and bullets, the med- 
ical care, and for the transportation of the thou- 
sands of soldiers in the field. It will tell them also 
that the wealth of a country consists in what it pro- 
duces ; and therefore if a hundred thousand citizens 
are taken from the fields and the shops to fight their 
neighbors, the aggregate production for the time 
during which they are engaged in international or 
domestic murder will be less than it is when they 
are employed in the less glorious arts of peace, 
and therefore the wealth of the nation will be less. 
A nation cannot grow rich by fighting unless it con- 
quers the enemy, and compels him to pay not only 
the expenses of the war, but a handsome profit on 

them. Bat up to tins time no nation that ever 
succeeded in a war has received back anything like 
its awful cost. There is no reason to believe that 
any conqueror will ever be repaid in wealth or its 
representative, money, for the expenditure which he 
is forced to incur to win his triumph. Reason will 
also tell our easy-going friends that no country can 
get rich by printing pieces of paper and calling them 

And yet the assertion that the United States grew 
rich during the war by making trade for the shoddy- 
mills and the sutlers is quite as worthy of respect as 
many of the arguments which are addressed to Con- 
gress and the country by those who are in favor of 
the silver dollar instead of the gold dollar, or of 
bimetallism, which means the same thing as a sin- 
gle silver standard, or of paper dollars printed by 
the government in quantities to suit. Whatever is 
said here must not be considered as addressed person- 
ally to all who believe that something radical ought 
to be done to reform our money system. A good 
many honest people have been deceived, and a good 
many intelligent people have been mystified, by the 
speculations of those for whose apparently studious 
pursuit of this subject they have respect. They 
have been led to believe, for example, that there is 
not enough gold in the world for the proper transac- 
tion of the world's business ; that gold has increased 
in value, become dearer, and that therefore it pur- 

chases more of other products than it used to. There 
is a universal outcry about low prices, and sugges- 
tions are made that if silver were used for money as 
well as gold, money would be cheaper and other 
products would be dearer. The idea has gained 
ground that money is something valuable in itself, 
something that men, especially bankers, pursue for 
its own sake, because they want to store it up. 
Therefore these greedy persons have devised meth- 
ods, arts, tricks all of them dishonorable and tyran- 
nical by the practice of which they may gather in 
the money -of the world and compel others who 
want it to pay enormously for it. 

It seems to me, now that Congress has adjourned 
the one Congress of all the legislative bodies that 
ever met in Washington which did most to becloud 
this question that it is well to make an attempt to 
think back out of the maze with which the philoso- 
phers have surrounded money, currency, and banking 
to the simple principles that underlie the subject. 


WHAT is wealth ? What is money ? These are 
the questions which first present themselves. The 
political economists find great difficulty in defining 
wealth, but for our purposes we may say that every 
material thing which man may use or enjoy, and 
which may be bought and sold, is wealth. Corn, 
cloth, houses, carriages and horses, and the works 
of art and literature all these constitute wealth. 
Money is the tool by which wealth is exchanged. It 
is only a tool or a vehicle. For itself merely it is 
not desirable. It is only desirable because it enables 
A to exchange what he has for something that he 
desires without going through the clumsy, sometimes 
the impossible, process of a barter. 

Money is a vehicle. It carries exchanges. It has 
also been likened to a tool, because men transact 
business with it. Melted down it may be sold by 
weight, as coffee, tea, or sugar is sold. Men collect 
coins, it is true. Some coins are artistic, while 
others have historical or antiquarian interest; but a 
sovereign or a dollar, considered as money, has 
merely the power of purchasing articles which men 

need or enjoy. A man might possess a bank full of 
money, but he would go hungry or naked for all 
that if there were no food or raiment for him to 

Money was invented for men's convenience. All 
great economic truth is essentially the same where- 
ever it is applied. The same laws govern the small 
trading of the simplest community and the large 
and complicated transactions of countries like the 
United States, Great Britain, France, and Germany. 
The great fundamental truth about money is that it 
must not be doubted. A coined piece should have 
a definite value, a universally recognized signifi- 
cance. When it does not mean the same thing to 
the man who sells as to the man who buys, it ceases 
to be able to perform its function perfectly. In a 
small community there is a man who grows wheat, 
another who rises sheep and clips them for their 
wool, one who is a butcher, one who makes cloth, 
one who is a tailor. If barter prevailed, the farmer, 
when he wanted a coat, would be obliged to carry 
his wheat, after it was grown, to the tailor, and ex- 
change it for a coat. A good deal of time and labor 
would be wasted in this process. But if the tailor 
happened to be supplied with all the wheat that he 
wanted, the farmer would be in a still more uncom- 
fortable plight. He would be obliged to carry his 
wheat from one neighbor to another, until he found 
one who wanted his wheat, and who had something 

to give in exchange which the tailor wanted. Then 
he could procure his coat. Money does away with 
all this trouble. It facilitates exchange. With 
money in his purse, the farmer would give the 
tailor the price that he demanded, and the tailor 
would accept the money because he would know 
that at any time it would procure for him, in whatever 
products he might desire, the worth of the coat 
which he had sold to the farmer. This is the first 
essential of money, that the man who receives it 
for what he has to sell shall know that it will always 
and anywhere procure for him just as much value 
as that with which he has parted. In a community 
where all the people know and trust one another 
almost anything might pass for money. But when 
any member of such a community wanted to buy 
something in a neighboring village where he was 
not known, he would be obliged to offer his pro- 
ducts in exchange, or money in which the person of 
whom he wished to buy had confidence. 

This is why money must have intrinsic value. 
There are various kinds of money or currency, 
money and currency being confused along with other 
things that go to make up the mystery of finance. 
Money is coined metal, and it is necessary that it 
shall be composed of material that is valuable in 
itself ; that is, which can be melted down and sold 
for other coin or products for very nearly the sum 
which is expressed on its face, and that its value 


shall be stable. As it is the instrument with which 
exchanges are carried on, it is a standard of value. 
It is that in which the farmer expresses the worth 
of his wheat, and the tailor expresses the worth of 
his coat. Some modern writers on finance, whose 
books are circulating just now in various parts of 
this country, are denying this attribute to money. 
But this is one of the paths by which men wander 
away from clear reasoning into the haze of the 
"currency question." It is sufficient for the mind 
that is trying to get at the truth to remember that we 
say in our common speech that a bushel of wheat is 
worth a certain part of a dollar ; that it used to be 
worth a full dollar ; that a house or a horse is worth 
so many dollars ; and that we can gratify our desire 
for any article of merchandise only by giving for it 
as many dollars as its owner believes will enable 
him, in turn, to procure something of equal value 
that he desires. Therefore it is essential that the 
significance of a dollar should be definite and certain. 
Moreover, there cannot be dollars or sovereigns made 
from two metals that not only differ in value, but 
one of which is frequently changing in value, so 
that no fixed relationship can be established between 
the two. 

Suppose, for example, in the simple community 
which we have imagined, that a dollar in gold was 
intrinsically worth 100 cents, and that the dollar in 
silver was worth 50 cents, both being legal tenders, 



would the farmer like to sell a gold dollar's worth 
of wheat for a silver dollar? Would he not know 
that his wheat would thereby be worth less in coats 
or groceries, or any other commodities that he 
might need? But the tailor would pay him in 
silver, and he, in turn, would pay the person whom 
he owed in the cheap metal. The gold would be 
hoarded and sent to the neighboring village where 
it was respected, while the people of this neighbor- 
ing village would scrape together all the silver they 
could find in order to pay with it their debts to 
those who accepted silver as current money. The con- 
sequence is that silver would grow cheaper and 
cheaper, it would buy less and less; finally the neigh- 
bors of those who employed it as money would cease 
to trust them, the payment of debts would be de- 
manded, the sheriff would be busy with foreclosure 
sales, and commerce and trade would decline. 

Money must be honest. The business of the 
world depends upon the general recognition that 
money tells the truth on its face. And gold alone 
receives that general recognition. Even silver coun- 
tries prefer to receive gold. Some Silver Senators 
insist in their contracts that they shall be paid in 
gold. It does not matter what ought to be thought 
of silver; gold is the only metal in which there is 
universal confidence. 


METAL money is the basic money. There are 
also representatives of money, for money has its 
representatives, its agents that do its work for it, 
just as money itself does the work for those who 
want to trade off the goods they have for goods 
that others have. Metal money is often inconve- 
nient. It is too heavy, for one thing, to be used in 
large quantities. When this is true it is open to all 
the objections that are made against barter. It will 
not serve for currency in some transactions. By 
currency, I mean money and its representatives that 
pass from hand to hand in daily transactions. Sup- 
pose, for example, that A should purchase property 
of B for $100,000. If A had nothing but gold in 
which to pay B, he would be obliged to buy a wagon 
and carry the price to B in this expensive and trou- 
blesome manner. If there were nothing but gold in 
the world, the man who goes into the central part of 
New York State to buy butter and cheese, or to the 
wheat farms of the Northwest, would be obliged to 
carry with him chests of gold and an arsenal for his 
protection against robbers, Therefore paper cur- 


rency and other representatives of money have been 
invented. And this paper is not confined to govern- 
ment notes and bank-notes. It does not necessarily 
represent gold or silver, but it must be good for 
every dollar that it promises to pay, and, more than 
that, it must be believed to be good by those who 
are asked to part with their goods for it. It in- 
cludes promissory notes, drafts, bills of exchange, 
and the checks of individuals. All these things pass 
from hand to hand, and the paper obligations of 
private persons, it is estimated, furnish the tools 
with which nine-tenths of business transactions are 
carried on. All these paper obligations rest on coined 
money or property of some other kind. They pass 
in trade because it is believed that they will be re- 
deemed. Paper representatives of money must be 
honest just as money itself must be honest. 

I have said that money is for the convenience of 
men. It not only does away with barter, but it 
facilitates and hastens trade and commerce. Since 
money was introduced men have been constantly de- 
vising methods to increase its convenience. The 
best paper currency is that which is issued by banks. 
It is best because it has a wider circulation, and is 
therefore more useful and effective than paper rest- 
ing on the trust or confidence felt in individuals. 
The safety of the holder of the bank-bill is best se- 
cured, of course, by the guarantee of the govern- 
ment. This guarantee of the government may be 


furnished in various ways. The national bank-note 
in this country is safe because there are in the hands 
of the government bonds of the United States, be- 
longing to the banks, amply sufficient for the re- 
demption of every note. The difficulty with this 
national bank-note circulation is that its amount 
depends upon the amount of the public debt. The 
debt of this government has been paid off with a 
rapidity that is marvellous, so that while the popu- 
lation and exchanges of the country have been in- 
creasing, the amount of bank-note circulation has 
been diminishing. 

The national bank-notes have been replaced by 
government paper representing gold and silver, but 
principally silver. That people greatly prefer paper 
to silver is illustrated by the history of the silver 
certificates and the efforts of the government to force 
silver dollars into circulation. In 1886, when there 
had been coined in silver $233,723,286, the amount of 
silver dollars actually in circulation was $52,668,623. 
In 1895 the coinage of silver had increased to $423,- 
289,219, the Treasury held $124,479,849 in uncoined 
silver, and the amount of silver in circulation had 
fallen to $51,983,162. At the same time the cer- 
tificates representing silver dollars had so increased 
that the amount of silver held in the Treasury for 
their redemption had increased from $88,116,225 
to $371,306,057. 

But we are now inquiring what money really is, 


what it means, and what laws govern it, and deter- 
mine its amount and its distribution. Paper cur- 
rency issued by banks, its origin and operation, may 
be best illustrated very simply. A man goes into a 
rural community, let us say, where there is a general 
store. He knows the storekeeper, who has confi- 
dence in his integrity, or he has gold or other valua- 
ble security, which he deposits with the storekeeper. 
It matters not why the storekeeper trusts him. Con- 
fidence and trust are at the base of the great struct- 
ure of commerce. When that departs men will be 
obliged to carry coin about with them, and when 
that time comes large transactions, such as are now 
of daily, perhaps hourly, occurrence, must cease. 
But no one who realizes the deep significance of the 
advance of civilization believes that commerce will 
cease through the failure of men's confidence and 
trust in one another. The man whom I imagine as 
going to the simple and rural community desires to 
purchase the products of the farmers of the neigh- 
borhood. He says to the storekeeper : " These 
farmers do not know me, and I have nothing with 
which to buy their products. But they know you. 
They have confidence in you. They will accept 
your promises in payment for their produce. Give 
me orders on yourself, and we will share the profits 
of the transaction." 

Upon this the stranger obtains the orders. For 
the community in which he is carrying on his trans- 


action these orders constitute a currency. The stran- 
ger goes out among the farmers, and finds, as he 
anticipated, that they are perfectly willing to ex- 
change their products for the orders on the store- 
keeper. He ships his purchases to the market, and 
from the proceeds of the sale he pays the storekeep- 
er the amount of the orders issued by him for the 
purchase of the farmers' products. Besides the 
amount of the orders, he pays the storekeeper some- 
thing for the risk he has run and for the accommo- 
dation. The amount that he pays is proportioned 
to the risk if he is the only applicant, and is limited 
by the amount or profit which the speculator will 
probably make in the market to which he will send 
his purchases. In this transaction we have the ope- 
rations of a bank of discount and of a bank of cir- 
culation. The storekeeper takes a receipt from the 
speculator for the orders which he has given him, 
and this receipt is in the nature of a promissory note, 
which may be payable on demand or at the end of 
a specified time. 

The speculator may pay the storekeeper in coin. 
If he does he must pay the cost of shipping it to 
him. If he can secure paper currency, however, he 
uses that. As a rule, he will have money in a bank 
in the place where he lives, and a check on this bank, 
especially if the bank certifies that the money to 
meet it is actually in its possession, will be satisfac- 
tory to the storekeeper. As to the orders issued 


by the storekeeper, they will come to him in due 
time, but he will not have to pay all of them in 
money. The farmers trade with him, and some of 
them are indebted to him. When he receives one 
of his orders from a debtor, he accepts it as a full 
or part payment of his account, according to the 
amount of each. No money has passed that is, 
no coin has been used in a transaction in which an 
order is finally cancelled by a debt due to him who 
issued it. The bit of paper calling for, let us say, 
$100, was accepted by the farmer in return for his 
grain. He may have used it to buy a horse from 
a neighbor, who also had confidence in the store- 
keeper. That neighbor may have paid a debt to 
another. This other may have paid interest with 
it on a mortgage held by the storekeeper. Let us 
suppose that the storekeeper has issued orders for 
$10,000. If $8000 of this goes to the persons in 
debt to the storekeeper, or who want goods that he 
has, only $2000 will have to be redeemed in actual 
money. In the meantime, in the instance of the 
$100 order which I have imagined, $100 worth of 
grain has purchased a horse, the horse has paid a 
debt owed by the seller, and the fourth holder has 
paid $100 of interest on his mortgage, and all of 
these transactions, aggregating $400, have been car- 
ried on with one piece of paper, and without the 
use of a single coined dollar. 

From what we have seen already, it is clear that 



persons who insist that hard times come from lack 
of money or currency must prove their case, for, if 
they are right, there is not only a sufficient supply 
of articles in the world, but there is also a desire on 
the part of those who own those articles to exchange 
with one another, while the only thing that prevents 
such an exchange is the lack of an instrument or 
vehicle with which to effect it ; and this is an im- 
probable state of affairs. 


Ix a bank-note the banker makes a promise to pay 
a definite sum of money to the person who presents 
it for redemption. The general storekeeper is the 
banker in the case which I have imagined. He is- 
sued orders on himself, which were used as cur- 
rency. It is quite possible that not one of such or- 
ders would ever demand the use of a single coined 
dollar. It must be recollected that the leading ques- 
tion raised by those who are opposed to a single 
gold standard is as to the quantity of real money. 

Let us assume for the sake of illustration that the 
storekeeper's $10,000 in orders came finally into the 
possession of his debtors ; that every man who held 
one of them owed him a sum of money equal to the 
face value of the order. The result would be that, 
through the agency of the speculator, the storekeeper 
would obtain payment of the debts due him. The 
farmers, by using the orders, would pay their debts 
in grain, in horses, in old accounts, in interest money, 
in products of various kinds. Trade would be facili- 
tated by the use of this paper. The speculator him- 
self might not employ any coin in repaying the store- 


keeper. As we have seen, he might send his check 
to the storekeeper to pay off the orders he had ob- 
tained from him, and it might easily be that the bank 
on which this check was drawn would hold a note 
owing by the storekeeper, who had in this way paid 
for goods which he had purchased. The check 
would then be used by the storekeeper to pay off 
the note. Or the check on the bank might be pre- 
sented to it through another bank, on which, in turn, 
the first bank might hold a check. Between these 


two banks there would be a settlement in money of 
the difference between the two checks. For exam- 
ple : If the check drawn by the speculator to the 
order of the storekeeper was for $10,500 the $10,- 
000 of orders and $500 half of the profit of the 
transaction it might be sent to a second bank for 
deposit, or in payment of the storekeeper's note for 
that amount or for a smaller amount. If the amount 
of the note were less than the check, the bank would 
simply give the storekeeper credit for the difference. 
Not a dollar of money would pass unless the store- 
keeper desired a settlement, and then he would re- 
ceive the balance due him in coin, or in another 
check, or in bills. The check on the first bank 
would not necessarily be .paid in money if it was 
presented by the second bank ; the first bank might, 
and if the two banks were located in a city it proba- 
bly would, hold a check against the second bank. I 
am now speaking of single transactions for the sake of 


simplicity. The truth is that to fairly represent the 
transactions between two banks situated in any con- 
siderable city, this single illustration would have to be 
multiplied by tens, or hundreds, or thousands, accord- 
ing to the size of the city and the volume of its business. 
The demand on the first bank would be for $10,500. 
If the demand on the second bank held by the first 
bank was equal to that, there would be simply an 
offset, and the accounts between the two would be 
settled without the passing of a single dollar. 

In this event we should have this history of the 
transactions which began with the loan of orders by 
the storekeepers to the speculator: The speculator 
having no money, borrowed orders drawn by the 
storekeeper on himself. These orders were promises 
to pay. With these orders the speculator purchased 
products of the neighboring farmers of the aggre- 
gate value of $10,000. With the same orders one 
farmer purchased a horse ; another paid a debt ; a 
third paid interest on his mortgage. Other farmers 
paid rent, repaired their houses, built barns, bought 
cattle ; and finally, all the orders coming into the 
possession of debtors of the storekeeper, they were 
employed to cancel their debts, and the orders were 
destroyed. With $10,000 worth of the storekeeper's 
orders transactions involving hundreds of thousands 
of dollars might thus be carried on, and all without 
the use of a single piece of real money, or even a 
single bank-note. 


On the other side of the transaction we have this 
state of affairs: The speculator sells the products 
which he has bought of the farmers. In payment 
he receives checks, which he deposits in his bank. 
Let us call it the First National Bank. These checks 
are orders on other banks. The speculator draws 
his own check, which is an order on the First 
National Bank, and sends it to the storekeeper in 
payment of the original orders. When the check is 
received the storekeeper is finally paid the debts 
owing him by the farmers. When the storekeeper 
receives the check he deposits it in his local bank, 
and this bank sends it to its corresponding bank in 
the city in which the First National Bank is located. 
Then the First National pays to this corresponding 
bank, the Second, the difference between whatever 
check is held by it which is an order on the Second, 
and that which the Second holds against it, which is 
the speculator's check to the storekeeper. This is 
the first use of money or bank-notes in all these 
many transactions. 

Not only has nothing but paper been used, but 
the paper has consisted of promises to pay, in the 
aggregate, $10,000 in the dealings between the spec- 
ulator and the farmers, and $10,500 in the dealings 
between the speculator and the storekeeper through 
the agency of the banks. 

But checks are not the only kind of currency 
which can be used as a tool for the facilitating of 

exchange. There are various other forms of credit, 
into which we need not inquire so fully as we have 
examined the procession of the checks. The store- 
keeper may make a record of his claim against the 
speculator in his books, and by assigning this claim 
may obtain goods that he needs ; or the farmer from 
whom the speculator buys the grain may take the 
promissory note of the speculator and by endorse- 
ment may purchase the horse that he needs ; and so, 
by endorsement after endorsement, the promissory 
note may act as the vehicle by which many ex- 
changes are carried on. Or the speculator may draw 
a bill against a merchant in the city to whom he 
expects to sell the grain, and use the bill for paying 
his debt to the storekeeper. There are endless de- 
vices by which men carry on business without the 
use of money, and if it should happen that these 
devices were abandoned, the business of the world 
would be greatly crippled. Transactions would be- 
come cumbersome. ' It would seem almost like go- 
ing back to the age of barter. As it is, real money 
is needed only for the settlement of balances, and 
how little is needed for that may be judged from 
the foregoing illustrations. The transactions of the 
Clearing House, New York City, show that $5,000,- 
000 in cash will clear $100,000,000 of transactions. 

THUS far we have examined the various kinds of 
tools which men employ for the carrying on of busi- 
ness, and we have seen that any tool is a good one 
that will be accepted confidently by the various per- 
sons whose industry and products are the subjects 
of exchange. Let us apply the principle on a larger 
scale. This country carries on an enormous business. 
Its foreign commerce in merchandise last year 
amounted to $1,547,000,000. Seventy-three per cent, 
of our exports were agricultural products. How much 
money was employed in carrying on this trade ? 
The exports and imports of gold will not begin to 
pay for all this business. In 1894 the total gold 
exports amounted to $76,978,061, and the net gold 
exports to $4,528,942. In 1893 the net gold ex- 
ports from this country amounted to $87,506,463. 
Much of the gold that went from this country was 
for the payment of debts represented by securities 
which the foreign holders sold because they were 
afraid that our currency was about to deteriorate, that 
we were about to become a silver country. It is evi- 
dent that our foreign commerce was not entirely car- 


ried on with real money, nor did the national banks 
of the country carry on all their transactions in such 
money. On October 2, 1894, as we learn from 
Secretary Carlisle's report, the national banks had 
loaned $2,007,122,191. But the money of all kinds 
in the banks amounted to $422,428,192 only. In 
July, 1895, all the money in the United States 
amounted to $2,389,000,000. This was a little more 
than the sum that was then loaned out by the banks. 
But even this amount was not all used in business. 
The amount in circulation in July 1894, was $1,662,- 
000,000. Although the silver men were crying out 
for money, the country was not using all the money 
then in existence, and yet, judging from the amount 
of loans and discounts alone, it was using tools of 
exchange that represented much more. Moreover, 
we had and continue to have a greater amount of 
money per capita than any other country except 
France, Portugal, the Netherlands, and Belgium. 
The amount of money in the United States was $24.07 
per capita, while Great Britain possessed $19.98 per 
capita. Our stock of gold is the largest in the world, 
except that of France. Our stock of silver of full 
legal tender is actually the largest, if we except India 
and China. At the same time our stock of uncovered 
paper is larger than that of any other country except 
Russia and the South American States. For a long 
time our society in the money market has been 

The foreign commerce of the country is based on 
the fact that there are many thousands of foreign 
people who want our meat, breadstuffs, and cotton, 
and that there are many thousands of persons in this 
country who want woollen goods, cotton goods, silks, 
velvets, iron, and steel ware from Europe, and sugar, 
tea, coffee, and spices from other parts of the world. 
These articles are exchanged for one another. The 
transactions, measured in money, amount to a much 
greater sum than the money itself which passes be- 
tween the two countries. The balances only are set- 
tled in specie, as already explained. Whatever grand 
balance there may exist at the end of the year between 
two countries like Great Britain and the United States 
does not depend wholly upon the commerce that has 
been carried oh between them, for Great Britain in- 
vests a good deal of money in this country in securi- 
ties, in business concerns, in real estate, so that while 
what is called the " balance of trade " may be in our 
favor that is, we may have exported more goods 
than we have imported Great Britain may never- 
theless still be our creditor. 

Whatever we have imported in goods is wealth. 
Whatever Great Britain has received from us in gold 
is a means of gaining wealth. Every piece of cloth, 
every suit of clothes, every mechanic's tool, every 
rail, is something that we want and that makes us 
better off. Every ship-load of grain that England 
receives from the United States is so much food for 


the hungry. Bat if we sold all this grain for gold, 
and received it, what good would the gold alone do 
us ? It is not a pile of gold that brings prosperity ; 
it is the gratification of our own and others' desires 
through the exchange of commodities. The world's 
commerce is the trade of a simple community ampli- 
fied. It is an exchange of products, and such ex- 
change is facilitated by the use of credit, of mutual 
confidence, represented largely by bankers' bills of 
exchange that do not depend for their validity, or 
for the trust felt in them by the mercantile communi- 
ties on the two sides of the ocean, either on the 
amount of gold in the coffers of the bankers, or on 
the fiat of the government, or on any legal-tender 
quality bestowed upon them by law, but upon the 
general belief in the willingness and ability of the 
persons on whom the bills are drawn to meet them 
when they are presented for payment. 

What is true of simple trade and of foreign com- 
merce is also true of the sale of a man's labor for 
wages. The man who works with his hands, or the 
professional man who works with his brains, wants 
food, raiment, shelter, books, education for his chil- 
dren. He buys all these things with his labor. He 
digs in the field, writes or paints, argues in the 
courts, or preaches in the pulpit for these things. 
He could not go to the tailor, or to the butcher, or 
the grocer to barter with any assurance of success, 
whenever he happened to be in want of the several 


articles in which they deal, for nine times out of ten 
his services would not be wanted, and he would be 
as badly off as the man possessed of a store of gold 
with nothing to buy with it. Therefore he sells his 
services for money, and the value of his services, the 
price which he obtains for them, is not in the slightest 
degree dependent on the amount of money there is 
in the community, but on the number of people who 
can render services such as he has to sell, and on 
the desire of other people for them. If, for example, 
there were no disputes requiring settlement by the 
law, a lawyer who should be dependent for his live- 
lihood on a community in which such a state of 
things existed would starve to death, even if there 
were millions of idle money stowed away in the 
local banks. 


IT has been demonstrated that no nation alone can 
compel gold and silver to stand on an unnatural and 
yet equal footing, and we have seen that little coin 
is actually used in the world's business. Bimetal- 
lism has never existed anywhere except in theory, 
and all the coins and bullion of the one metal on 
which the currency of any country has rested for the 
moment have never been needed for the exchanges 
of commerce. Neither Congress nor any other body 
can determine how much money is needed. The de- 
mands of business alone measure the amount which 
ought to be in circulation. 

Mr. Edward Atkinson estimates that our internal 
exchanges involve the expenditure of about $35,000,- 
000,000. The exchanges of the clearing-houses in 
1894 involved $45,000,000,000. The sum paid for 
the transportation of goods over the railroads alone 
in 1893 was more than $800,000,000. We have 
$1,662,000,000 of gold, silver, and government and 
bank paper in circulation. If we add our foreign 
commerce to Mr. Atkinson's reasonable estimate of 
the value of our domestic transactions, we have, on 


the quantitative theory, exchanges demanding the 
employment of $36,500,000,000 of tools, which is 
more than twenty times the sum of money and cur- 
rency in circulation. To sum up this part of the 
argument, we have never had a coined dollar for every 
outstanding paper representative of a dollar, and we 
never shall have. We have never had a dollar in 
currency for every dollar involved in exchanges, and 
we do not need any such amount of money anymore 
than a farmer needs ten forty-bushel wagons because 
he has to deliver 400 bushels of wheat. The quan- 
tity of money needed is best settled by the demand 
for it. 

Exchanges between those who produce and those 
who desire their products have never been, and never 
will be, checked by lack of legal-tender currency. In 
the simple community which I have imagined ex- 
changes were facilitated by the use of the store- 
keepers' orders. Whenever food, fuel, clothes exist, 
and there is a demand for them, there will be ex- 
change or trade. Men will obtain what they want, 
and the people who say that trade is stopped because 
there is not enough coined money to pay for all that 
is needed are talking nonsense. In 1893 there was 
a currency famine that is, the money and currency 
of the country were not available for trade. More- 
over, exchanges were checked, because demand was 
pretty generally satisfied. Men were able to wait 
until doubt and uncertainty should cease, and there 


should be a return of the general confidence, without 
which commerce is impossible. But the unwilling- 
ness of bankers to lend money was met by the in- 
vention of devices to take the place of the regular 
and hoarded currency of the country. Cities, banks, 
and private corporations and firms invented new forms 
of currency, and exchanges in the necessaries of life 
went on with the aid of these improvised tools. The 
country did not need more money, but it did need 
the removal of a certain fear which kept people from 
desiring to risk investment of their cash, and there- 
fore left the cash locked up and out of circulation. 
That fear was that our money was to be debased, and 
that our standard of value was to cease to be that 
which prevails in the rest of the civilized world. 

Let us return once more to our simple community. 
I have assumed that the storekeeper issued orders of 
the value of $10,000, and that with those orders the 
people of the community carried on the business of 
the year. The grower of wheat sold his product to 
the speculator, and received his price in the orders of 
the storekeeper. He in turn purchased a horse with 
the orders he received. The owner of the horse paid 
a debt. Another paid the interest due on a mort- 
gage. The money being sufficient for the purposes 
of the community, if the storekeeper had signed ad- 
ditional orders he would have had his labor for his 
pains. The orders would have remained in his drawer. 
If any more orders were needed he would have been 


notified at once by the demand for them. If those 
who received the orders had locked them up, for ex- 
ample, there might have been a demand for new or- 
ders not to supply more currency than there was 
before, but to take the place of the orders that, by 
being locked up, had ceased to be currency. Bat 
money is never locked up so long as there is a healthy 
desire for exchanges, and an adequate supply of goods 
to meet the desire. If, having paid out the whole 
$10,000 in orders, the speculator should suddenly 
find some wheat of the existence of which he had 
not known before, he might go back to the store- 
keeper and procure more orders, in order that he 
might purchase it. This is the natural way in which 
the amount of currency in circulation is increased. 
Or perhaps some other speculator would borrow or- 
ders for the purpose of buying other products of the 
farmers. The amount of the orders would depend 
upon the exchanges or trades that could be made 
through their employment. When all the products 
of the neighborhood had been purchased, the demand 
for orders would cease. Of course the amount of 
storekeepers' orders would vary from year to year. 
In one year the farmer would raise a great many 
more bushels of wheat than in the others. Then a 
dollar might buy more wheat, and the price of the 
whole crop might not change. Again, the demand 
for wheat might increase, and more dollars would be 
required. Two speculators might compete for the 

crop, and the price might thus advance ; or a second 
farmer might appear as a rival and the price might 
go down, or the storekeeper himself might take the 
farmer's wheat " on account," letting him have goods 
in the same way, and very few orders would be need- 
ed at all. In any case, the storekeeper's orders would 
equal the requirements of the market ; he would never 
be called upon to redeem them all in coin, no matter 
what might be the amount of the issue. 

It follows, too, that no increase of his money or 
his orders would affect the course of the exchanges 
of the community unless the increase were demand- 
ed. The speculator would want his wheat, the farm- 
er would want that which would procure him his 
horse, the owner of the horse would want that which 
would pay his debt, and so on. A pile of money in 
the storekeeper's till would not increase the quanti- 
ty of exchangeable commodities nor the intensity of 
the desire for them. So long as there were as many 
orders out as those who used them demanded, so 
long there would be enough currency in circulation. 
If the storekeeper had more on hand it would not be 
used. A farmer would be as wise to send two wag- 
ons for one load of hay as the storekeeper would be 
if he signed orders for two dollars where only one 
dollar was needed for the transactions of the commu- 
nity. And yet there are men who contend that if 
you fill the treasury with gold and silver you will 
hasten transactions and increase prices. That is, if 


you have no desire to carry your goods to market, 
you will gain such a desire by providing yourself 
with some more carts, or if no one needs your goods, 
the additional carts will create the need. This is also 
like saying that if no one needs any carpenter-work 
done, the village carpenter can make work for him- 
self by buying another chest of tools. The difficulty 
with those who want more money is that they forget 
what we have learned, that money is a tool to " even- 
up " trades, and nothing more. Moreover, they think 
that Congressmen know better than those who are 
actually engaged in the work of carrying on the busi- 
ness of exchanging goods what amount of money 
they ought to have. Neither Congressmen nor bank- 
ers can tell how much currency is needed by a com- 
munity. And whoever does try to anticipate the 
want for currency is in danger of issuing too much, 
stimulating speculation, and bringing on a panic. 


THE undue increase in the amount of money in a 
country produces panics and brings ruin to business 
men. If the gold money were increased, the result 
would be a waste of wealth. If the stock of gold 
and silver were increased, in addition to this waste 
of wealth the stock of coin that could be used for 
money would grow less both in value and in actual 
amount. The reason of this is that gold would dis- 
appear, because men would use that money which is 
cheapest. The wage -earner would be paid with a 
silver dollar, because his employer could procure a 
silver dollarnvith less exertion or fewer goods than 
he would have to expend to procure a gold dollar or 
a paper representative dollar that was payable in 
gold. The foreigner would send his silver to this 
country, and our gold would go where it could find 
employment. If, for example, Mr. Bland had had 
his way and secured free coinage of silver, our metal- 
lic money would have shrunk nearly one-half. In 
1895 we had in the United States, according to the 
estimate of the Treasury, gold of the value of $579,- 
420,000, and silver of full legal-tender value to the 

amount of $548,000,000. If we had become a 
silver country, our legal-tender coin would Lave 
shrunk, by reason of the disappearance of gold, from 
$1,027,420,000 to $548,000,000. Not only would 
the amount of our coin have been reduced by driv- 
ing gold out of circulation, but the purchasing power 
of the uncovered paper, of which, according to Mr. 
Preston, the country had $475,700,000 in 1894, would 
also have been reduced. If a paper dollar is made 
redeemable in a silver dollar which will buy only one 
bushel of wheat, when a gold dollar will buy two 
bushels, the paper dollar shrinks to the value of the 
silver dollar as a matter of course. 

Let us suppose that our storekeeper is himself the 
purchaser of the products of his neighbors, and that 
he pays for his purchases in coin. Heretofore he 
has bought about $100,000 of products every year, 
and he has used about $20,000 in coin, the rest of 
his payments being made with the goods in his store 
which the farmers needed. These goods he has 
bought with checks and notes, after the manner 
which we have described. But now he secures a 
stock of coin equal to the sum involved in his trans- 
actions $100,000. In order to do this he must 
buy the coin. Coin cannot be had for nothing. It 
is bought with wealth. The storekeeper buys it 
with the goods with which he has supplied himself 
for the needs of his neighbors. The community is 
so much the poorer. It needs just enough money 


to pay off the balances that are left after all its 
trades of the year are consummated ; but the store- 
keeper's conduct has made it impossible for those 
local trades to be carried on. The goods which 
constitute his contribution to the trades have been 
sent off to secure his coin, and so the farmers 
are left without them having money, it is true, but 
money cannot be eaten or worn or used for agri- 
cultural implements. It can buy all these things, 
but too much of it causes much inconvenience and 
expense. In order to procure his stock of money 
the storekeeper parted with his goods, and it was 
these goods that the farmers really wanted to buy 
through the sale of their products. The money was 
only used when a farmer either was not ready to buy 
the goods or when he wanted something which the 
merchant did not have, or when he wanted to put it 
away for saving or for other purposes. As it is, the 
farmers will be obliged to travel to a distant town to 
buy their goods, and the expense and trouble of this 
are what the storekeeper's adoption of the quantita- 
tive theory of money has cost them. Multiply this 
expense by millions, and we will have an idea of the 
wasteful extravagance of securing too much, money 
or dead capital for the whole country. 

In 1872, before the passage of the act of 1873 
which omitted the silver dollar from the coinage, 
there was only $25,000,000 of coin in circulation, 
but there was $346,000,000 in greenbacks, $329,- 


000,000 in national-bank notes, and $31,500,000 in 
certificates. Altogether there was $738,000,000 of 
money in circulation, or about $18.19 for each per- 
son in the country. Then followed the panic of 
1873, and the amount of money kept on increasing, 
except in 1876, 1877, and 1878, when it diminished. 
Silver, it is asserted, was " demonetized," but there 
was no silver in circulation, except minor coins, in 
1872 and 1873. After 1878 the amount of money 
kept on increasing in the country. Prices went up 
and down without reference to this increase. Pros- 
perity came back when there was in circulation 
about $16, and again when there was about $23, for 
each person in the country, and hard times were 
upon us when the amount in circulation had grown 
to be nearly $25 per capita. 

In 1894 there was more gold in circulation than 
ever before in the history of the country. In the 
panic years, and those immediately preceding them, 
there were more silver standard dollars in circulation 
than ever before. The circulation of greenbacks 
fell off, and that of national - bank notes slightly 

All this teaches that the amount of money has 
very little to do with panics or hard times. The 
amount of metallic money that should be kept as a 
reserve for the redemption of paper, or, in other 
words, the settlement of balances, is best judged by 
the experiences of the bankers. What the country 


needs chiefly is a currency system that can respond 
to the demands of business, as the system which I 
described in the last article responded to the dis- 
covery of the new store of wheat, and to the increase 
of the desire to purchase it. This currency ought 
to be issued by banks, and there ought to be a cer- 
tain amount of gold maintained for a reserve. What 
that amount ought to be can be best determined by 
the peculiar circumstances attending the business of 
each bank. In any case it will be comparatively 
little. There is much more gold in the country to- 
day than is necessary for the settlement of balances 
in domestic and foreign commerce. The United 
States Treasury tries to maintain $100,000,000 of 
gold as a reserve for the redemption of its $346,681,- 
000 of greenbacks. It is abundant, and little demand 
was ever made upon it until the national credit arid 
finances were doubted. On this basis the amount of 
gold in the country would sustain a paper currency 
of about $2,000,000,000, nearly $400,000,000 more 
than we now have as the total of all our gold, silver, 
and paper in circulation. The procuring of more gold 
would be extravagance, for which the producers of 
the country would be obliged to pay as the farmers 
paid for the storekeeper's folly in the case that I 
have imagined. To add silver would be still greater 
folly. What is needed is the divorce of government 
from the whole system of circulation. If the gov- 
ernment does nothing with money except to stamp 


its certificate of tlieir value upon coins, then we shall 
not have panics bred by the fancies of Congressmen 
who think that the real money of the country ought 
to be increased, when it is clear from what we have 
seen that so long as the standard of value is certain, 
the country can be left to regulate the quantity of 
its currency by the law of demand and supply. 

Panics do not result from too little money, but 
generally because an era of speculation has resulted 
in many failures. If panics could be relieved by 
creating more money, why are they not relieved by 
using what exists? In 1893 the loans of the nation- 
al banks amounted to $1,843,000,000. In 1892 they 
had been $2,171,000,000. Panics come not because 
men have no tools for the carrying on of trade, but 
because there is nothing to trade with, or because 
they find out that they have been trading too much, 
and then follows a reaction or a lack of confidence 
in one another which kills credit, the life of trade. 
Our latest panic was not only largely due to the fear 
that Congress would do something with our mone- 
tary system that would disturb trade and commerce 
and injure our credit as a people, but to some causes 
that were world-wide in their operation, and to some 
that were due to Congressional interference with the 
laws of nature that govern exchanges, to protective 
tariff laws that hinder and eventually destroy com- 
merce. This country has had a great economic de- 
bauch, the terrible penalty for which has been pro- 


longed and debilitating. There is money enough in 
the country. There is gold enough for all the pur- 
poses for which we need money. 

What the country needs is peace from the politi- 
cal financiers, and from prophets who believe that 
the more mowing-machines a farmer owns the more 
hay will he raise. 


IT is asserted by the advocates of the free coinage 
of silver that what is known as the " demonetization " 
of silver has caused the general decline in prices that 
has gone on for many years throughout the world. 
There has, in fact, been no demonetization of silver. 
In all large commercial countries, except Great Brit- 
ain, there is to-day a large supply of silver of full 
legal-tender value. So far as silver has been affected 
by the laws, additions to this supply have been 
stopped. Even in Great Britain there is $112,000,- 
000 of subsidiary silver; in other words, there is in 
the United Kingdom very nearly as much silver as 
paper currency. In this country, as we have seen 
from an examination of the report of the Director of 
the Mint, there is full legal -tender silver currency 
amounting to $548,000,000. In France there is 
$434,300,000 in full legal-tender silver ; and in Ger- 
many there is $105,000,000. The estimated stock of 
full legal-tender silver in the whole world is $3,435,- 
800,000. Therefore prices have not gone down be- 
cause silver is not used as money of full purchasing 
power. It is so used. Moreover, in this country the 
era of low prices has come since silver began to cir- 


culate as legal tender. In 1872 there were no silver 
dollars in circulation. In speaking of silver I never 
refer to the subsidiary coin, for it is mere token mon- 
ey used for purposes of change. Silver dollars and 
certificates began to circulate in 1878. In that year 
dollars to the amount of $1,209,251 circulated, about 
$15,000,000 being in the Treasury. Silver certifi- 
cates of the value of $1,462,600 were engraved and 
printed, but only $7,080 got into circulation. In 1880 
the silver dollars in circulation amounted to $20,110,- 
557, and the silver certificates to $5,789,569. In 
1890 the amounts of silver coin and certificates in 
circulation were respectively $56,278,749 and $297,- 
556,238 a total of $353,834,987. This amount was 
slightly increased in the following years, and in 1895 
the total amount of silver in circulation in this coun- 
try was $374,365,741. If low prices are dependent 
on the scarcity of silver, it would follow that prices 
ought to have risen during these years. The fact that 
the prices of nearly all commodities, including silver, 
fell, however, tends to show that there is no relation 
between the employment of silver as money and what 
are known as the market values of commodities. 

So far as silver bullion itself is concerned, the 
laws of the United States intended to increase its 
price have not had that effect. The average price of 
silver bullion in 1873 was $1.298 a fine ounce, and 
a silver dollar, measured by the gold standard, was 
worth $1.004. The fall in price was not rapid imme- 


diately after the enactment of the law of 1873, which 
was merely the recognition of an existing fact the 
non-use of silver as money. The decline was steady, 
however, and in 1878 Congress undertook to check it 
by the passage of a law, usually called the Bland law, 
which made it the duty of the government to pur- 
chase and coin every month a certain number of sil- 
ver dollars. The average price of silver bullion in 
1879 was lower than the average price for 1878 
had been by about 3 cents an ounce. There was 
a slight rise in 1880, but after that the decline 
in prices was resumed, until in 1890 it was about 
$1.05 an ounce, which was nearly 12 cents higher 
than the price of 1889. In 1890 the Sherman act 
was passed. This law was much more " friendly to 
silver" than the law of 1878 had been, and a good 
deal was expected from it by the silver men. It added 
immensely to the government's stock of silver. The 
amount of silver coin and bullion in the Treasury in- 
creased from 1890 to 1895 from $346,597,273 to 
$495,785,906. The expense to the government also 
was enormous. Under the act of 1878 the govern- 
ment purchased 291,272,019 ounces, at a cost of 
$308,279,261. Under the act of 1890 it bought 168,- 
674,683 ounces, at a cost of $155,931,002. At present 
prices this mass of bullion is worth about $308,000,- 
021 a loss of about $156,000,000. These great 
sums were paid by the tax-payers of this country for 
the purpose of maintaining silver as a money metal ; 

vce /of <y/i/U9/c/t/. 


and what was the result ? In the first place, the ef- 
forts to thus establish silver created a doubt as to our 
credit, and helped to bring on a panic, and the Pres- 
ident was compelled to call Congress together in an 
extra session for the purpose of repealing the law that 
was the source of so much trouble. In the second 
place, they did not restore prices. Silver itself con- 
tinued to fall. In 1891 it sold for about 99 cents 
an ounce ; 1892, for 87 cents ; in 1893, for 78 cents ; 
in 1894 the price fell below 60 cents; and now its 
price is about 67 cents. 

The effect of these experiments with silver shows 
conclusively that the amount of money in the country 
has no influence on prices. We have seen how the 
total amount of all kinds of currency has increased, 
and also the increase in the amount of silver alone, 
both in circulation and in the Treasury, since 1873. 
Notwithstanding this increase in the amount of mon- 
ey, prices have gone down. Middling cotton brought 
20 cants in 1873 ; it brought 6 T 9 ^ cents in 1894 ; it 
fell to 5 T 9 ^- cents in February, 1895, and is now back to 
6-| cents. Sheetings have been reduced from 13 cents 
to 5 cents a yard, standard prints, from 11 to 5 cents; 
wool, from prices ranging from 47 to 70 cents to 
prices ranging from 19 to 23 cents, according to 
quality and season. Prices were not increased by in- 
crease of money, nor by the passage of laws friendly 
to silver. The act of 1878 did not check the decline, 
while the act of 1890, if it produced any effect, must 


have expedited it, for prices fell all the faster after 
the passage of that law. Wheat and corn rose a 
little after 1878 until 1882, but their prices fell in 
1883, without any connection with silver legislation, 
or even with the price of silver, for silver continued 
to decline while wheat and corn were rising, as the 
following table will show : 

Silver per ounce. Wheat per bushel. Corn per bushel. 

1879 $1.123 $1.212 49.8 cents. 

1880 1.145 1.270 55.1 " 

1881 1.138 1.318 63.1 " 

1882 1.136 1.278 80.1 " 

It will be seen from this table that even the prices 
of corn and wheat are not interdependent. 

In extending our inquiry into the relation between 
the amount of money in existence and the prices of 
commodities, recent statistics published by recognized 
authorities are of great value. The silver agitators 
are complaining of low prices, and holding that dear 
food, clothing, and house rent indicate prosperity. 
How different is this proposition from that usually 
advanced ? It is wholly opposed to the position held 
by the protectionists, who insisted that their tariff 
had not increased prices, but had reduced the cost 
of the necessaries of life by increasing competition. 
In the tariff discussion both sides were in favor of 
cheap food, clothes, tools, and houses. But when the 
same men talk in favor of the free coinage of silver, 


they are against cheapness and in favor of high 
prices. It would seem as though the whole discus- 
sion were a hollow mockery. 

Mr. Edward Atkinson has recently presented in the 
Forum the truth about prices as they are shown by 
the statistics gathered by Augustus Sauerbeck, by 
Labor -Commissioner Wright, computed and com- 
pared by Professor Falkner, of Johns Hopkins Uni- 
versity, on the assumption that prices were at par in 
1860. In that year a silver dollar was worth more 
than a gold dollar under our laws. Compared with 
the price in 1860 (100), silver was 95.3 in 1845, 97.3 
in 1850, and 100 in 1855. In the same years meat 
had risen from 79.4 in 1845 to 104.7 in 1855. Other 
food had risen from 82.8 to 114.5. Clothes had 
grown cheaper. While the gold price of silver was 
increasing 4.7 points, the price of meat increased 25.3 
points ; other food, 31.7 points ; that of clothes fell 
2.4 points ; and the average of all prices had in- 
creased 10.3 points. In the mean time wages in- 
creased 11.2 points. So while the price of silver was 
going up, the prices of other commodities went up 
faster, and the purchasing power of wages became 

The price of silver began to fall about 1866, and 
it has kept on falling ever since. In 1870, three 
years before the demonetization " crime," it had 
fallen 1.8 below the 100 standard of 1860. But 
every other commodity had advanced. Meat was 


174.3 when silver was 98.2; other food was 146.3; 
clothes were 139.4 ; while wages were 162.2. There- 
fore at this time, at all events, the prices of food, of 
clothes, and of labor did not fall with the price e>f 
silver. There was no silver in circulation, and the 
changes in its price had not affected the general 
market. Then as now, also, the purchasing power 
of wages was increasing. Not a necessary of life 
was so cheap in this country in 1870 as it had been 
in 1860, but the labor that could have purchased $66 
worth of goods in 1865 purchased more than $114 
worth in 1870. 

Silver continued to fall. In 1875 it was 92.2, com- 
pared with the scale of 100 in 1860. At the same 
time all other prices had gone down, and they have con- 
tinued to go down, until within the last few months, 
when they are rising again. But it is to be noticed 
that while the cost of commodities decreased, the 
purchasing power of wages increased, until it had 
risen from 114.1 in 1870 to 172.1 in 1890. 

The fall in prices has not been confined to this 
country. It has taken place in Great Britain as well. 
It is due to better and cheaper methods of produc- 
tion and transportation. The tendency of prices has 
been the same in gold and in silver countries. The 
amount of money has had no influence upon it, 
but modern progress is accountable for most of 
the decline, and so-called overproduction for some of 
it. How much the inventions of cheaper and better 


methods of production have accomplished in bring- 
ing about a reduction of prices is shown by the de- 
cline in the cost of metals and implements to the 
producer, to effecting which the inventive genius of 
the world, and especially of this country, has chiefly 
directed itself. Representing the gold price of met- 
als and implements in 1860 by 100, in 1870 it was 
127.8 in paper, and in 1890 it was 74.9 in gold. In 
England, at the same time, the price fell from 100 to 
87.4. The causes that bring about reductions in 
price are shown by these statistics of production : In 
1860, less than 7,000,000 tons of iron were produced 
in the world. In 1892 the production of iron had 
increased to 26,000,000 tons, the United States alone 
producing 9,157,000 tons. What wonder that iron 
is cheaper than it was ? Silver has grown cheaper 
for the same general reason that has governed the 
price of iron. In 1873 the world produced 63,267,- 
000 ounces of silver. It was worth $82,120,000. If 
it had been coined it would have made only $81,800,- 
000. In 1893, the world's product of silver was 
161,776,100, and it was worth $126,185,300. But 
if it had been coined it would have made $209,165.- 
000. Can any one imagine a greater swindle than 
such a creation of false values would have been ? 
Iron that was worth $100 in 1860 could be bought 
for $75 in 1890. Suppose that the law had com- 
pelled every farmer to pay for the iron in his agri- 
cultural implements at the price prevailing in 1860? 


Would there not have been a revolution? Why 
should the laws treat the silver-miners any better 
than they treat the iron-miners ? 

In 1874 this country produced 850,148,500 bush- 
els of corn; in 1893 it produced 1,619,496,131 
bushels. In 1874 we produced 308,102,700 bushels 
of wheat; in 1893 we produced 396,131,725 bushels. 
In 1875 we produced 3,827,845 bales of cotton; in 
1894 we produced 7,549,817 bales. These are potent 
reasons why corn, wheat, and cotton are cheaper. 
Another reason is that transportation charges are 
cheaper. In 1875 the freight charge on a bushel of 
wheat sent by lake and canal from Chicago to New 
York was about 11^ cents; in 1894 it was less than 
4 cents. If sent by rail the charge in 1875 was 24 
cents; in 1894 it was about 13 cents. 

. Perhaps the most striking contribution to this dis- 
cussion of the relations between the employment of 
silver as money and prices has been made by Mr. 
Upton, formerly Assistant Secretary of the Treasury. 
He makes his compilation from the report of a com- 
mittee consisting of Senators Aldrich, Allison, His- 
cock, Jones (Nevada), Harris, and Carlisle. The com- 
mittee computed the average prices of nine principal 
agricultural articles barley, corn, cotton, hemp, oats, 
meats, rye, tobacco, and wheat. It was found that in 
1860, when the average price of these nine articles 
was 100, the price of the bullion in a silver dollar 
was 104.6. In 1870 the price of the nine agricult- 


ural products had risen to 107.7, but the price of 
the silver dollar had fallen to 102.3. In 1875 silver 
fell still further, to 92.2, but the price of the agricult- 
ural products increased to 116.8. In 1891 the price 
of silver had fallen 30.5 points, and the average price 
of the other commodities 1.6 points. 

So we see that while silver has been going down, 
the prices of all other products have also gone down, 
but not so steadily nor so much as that of silver, and 
that at times when silver fell the prices of other arti- 
cles rose. We have also seen that prices of agricult- 
ural products rose after the so-called demonetization 
of silver, although the price of silver fell. The price 
of silver continued to fall after the acts of 1878 and 
1890, which were passed to advance it. On the other 
hand, the average price of the nine articles already 
mentioned fell from 116.8 to 102.9 after the act of 
1878, and rose from 87.9 to 98.4 after the act of 

Still further evidence that prices are not affected 
by the amount of money in the country is furnished 
by the commercial and financial history of the present 

There is much evidence in the recent history of 
the country that while the amount of money in cir- 
culation, or in existence, has little to do with prices, 
and that trade and commerce are only temporarily 
checked by lack of currency, the character of our 
currency has a strong influence upon our prosperity. 

We know, for example, that the mad speculation in- 
spired by the cheapness of our paper currency led 
directly to the disastrous and distressing panic of 
1873, and that to the apprehension felt by the hold- 
ers of our securities was largely due the panic of 
1893. In 1878 the country was on a gold basis. 
Prices had begun to fall about 1865; and that de- 
cline was not due, of course, to any war on silver, 
or to any currency legislation whatever. In 1877 
there was slightly less money in the country than 
there had been before, in consequence of the re- 
demption of greenbacks. In 1878, however, the 
amount of money began to increase. In 1879 
there was in existence in money and legalized sub- 
stitutes for money $5 more for each person in the 
country than there had been in 1878; but only 
$1.43 of this increase got into circulation. The 
government (in other words, the tax-payers) had 
paid the expense of creating $5 in currency for 
every $1.43 demanded by the business interests. In 
1894 the amount of money in the country was 
about $19 per capita more than it was in 1877 
that is, it had a good deal more than doubled. But 
the business of the country at the end of those six- 
teen years, as shown by its demand for currency, 
needed only $9 per capita more than was required 
by it in 1877. In that period there had been 
created money and currency to the amount of $1,- 
657,000,000, in addition to that which existed at 






the beginning of the period, to meet an increased 
demand for $937,494,000. And this enormous in- 
crease of money and currency, wasteful and extrav- 
gant as it was, costing the tax- payers enormous 
sums of money, did not check the fall of prices, 
which was due to the lower cost of production and 
distribution, the result of the wonderful inventive 
genius, enterprise, and energy of the age. 

What was the effect, however, of the resumption 
of specie payments the mere declaration that the 
co-nntry was on a gold basis, and would redeem its 
promissory notes in coin of the legal standard? 
Let us examine the prices prevailing in two periods. 
One period is from 1878 to 1890, when the Sher- 
man law was passed for the purpose of compelling 
the government to buy substantially the whole prod- 
uct of American silver-mines, and to add its fictitious 
value to the currency of the country. The other 
is the period immediately after the passage of that 










Articles. Prices. 






Middling cotton 



Middling cotton 11.07 


Standard sheetings. 

. 7.8 


Standard sheetings. 7.0 





Shirtings 10.9 


Print cloths 

3 44 


Print Cloths 3.34 





Wheat 98.3 





Corn 48.1 


It is clear from these two tables that prices were 
steadier when there was no question as to the value 
of our money 7 when the irredeemable paper had 


been converted into a gold note. Even the attempt 
to depreciate the currency through the silver act of 
1878 did not disturb the markets. The reason is 
that the country was rich enough to pay the cost of 
adding millions of silver dollars each year to the 
amount in the Treasury without suffering disas- 
trous consequences, and silver did not enter into the 
circulation, either in the form of coined dollars or 
certificates, before 1888. In that year the amount of 
silver certificates out was $200,760,000, while silver 
dollars amounting to $55,527,000 were in circulation. 
Since then the amount of silver certificates in cir- 
culation has increased to $319,700,000, while the 
amount of silver dollars that are out has fallen to 

It is hardly worth while to furnish other facts and 
statistics to prove that prices of commodities do 
not depend on the quantity of money in existence. 
I have shown that the rise and fall of prices have 
not depended on the quantity of money ; that the 
quantity of money has been actually increased and yet 
prices have gone down ; that silver has fallen while 
prices of other commodities have risen ; that laws 
have been passed to increase the value of silver and to 
advance other prices without accomplishing either ob- 
ject ; that prices have been steadier when the country 
was frankly on a gold basis than when it was encour- 
aging the employment of silver as legal-tender money ; 
and that the effort to maintain silver has much more 


than doubled the quantity of money in the country, 
has added to the currency nearly twice as much 
money as the increased business of the country 
has absorbed, and all this, of course, at an enormous 
cost to the tax-payers. 

Prices are determined by demand and supply. To 
go back to our simple community, if the wheat- 
grower has a bad year and raises only half the usual 
crop of grain, his crop will be worth twice as much per 
bushel in horses, corn, clothes, as in a full crop year. 
He will get twice as many dollars per bushel, other 
things being equal, as he usually receives. Each 
bushel of wheat will buy twice as much as a bushel 
brought last year. But the whole crop will not 
buy any more than the whole of the larger and 
cheaper crop brought. If there is a falling off in 
other crops, or if clothes and other merchandise in 
the storekeeper's stock are dearer in consequence of 
an increased demand or an increase in the cost of 
production or transportation, the farmer's bad crops 
will bring less to him in what he needs that is, in 
what he uses his money to procure although he 
receives actually more money. If the storekeeper's 
goods advance in price he will receive more money, 
but that money will buy less of the produce of the 
farmer. What has really happened throughout the 
world has been already indicated, and that has hap- 
pened especially in this country, which is so amply 
blessed in material wealth that it prospers in spite 


of the follies and ignorance of those who makes its 
laws, and who tamper with its economic and mone- 
tary systems with a hardy recklessness that is born 
of ignorance of the fact that exchange is governed 
by the laws of nature, which cannot be successfully 
opposed by those of man. The necessaries of life 
have been growing cheaper while it has been growing 
easier to earn them. Even now, when prices are going 
up, when the iron-mills find it difficult to keep up with 
the orders that are pouring in upon them, wages have 
been advanced in the manufacturing establishments 
of the country in the cotton and woollen mills of 
New England and the iron and steel mills of Penn- 


IT was a free-coinage advocate who invented the 
theory that cheap necessaries of life are curses. Un- 
til this curious doctrine was promulagated, it had 
been supposed that cheap bread meant prosperity 
that the only price that rose with the coming of bet- 
ter times was the price of labor. And now when we 
have the conditions that make for prosperity we hear 
that the world has been mistaken, and that the wage- 
earner will be the happier when his food and tools 
cost him more ; that the farmer will once more smile 
when he pays war prices for his clothes, his lumber, 
and his agricultural implements. As to the farmer, 
he should bear in mind that while the prices of some 
of his products have decreased, the prices of others 
have risen since 1873 ; that pig-iron, which is the chief 
material of his reaper and other implements, sells for 
about $13 a ton, although in 1873 it sold for about 
$43; that steel rails have fallen from $120 to $24 a 
ton ; that the freight charges on his products are 
less, as I have already shown, by at least 50 per cent. ; 
that while the price of his wheat has been reduced 
about 50 per cent., the price of his corn has risen ; 


and that the price of rtiess pork is about the same 
as it was twenty years ago, while he pays about 
60 per cent, less for the cottons that he wears and 
uses in his house, about 66 per cent, less for his sug- 
ar, more than 80 per cent, less for his illuminating 
oil, and that his clothes and shoes do not cost more 
than a third of what he paid twenty years ago. 

There is only one class that would apparently be 
benefited by cheap money and dear goods, and that 
is what is called the " debtor class," but the debtor 
who fancies that he is to be ultimately benefited in 
this dishonest way is grievously mistaken. Accord- 
ing to the census report of 1890, the number of 
mortgaged farms in the country was one in five. In 
the South the number was between two and three per 
cent. The mortgage indebtedness in the Northwest 
was for lands and improvements. The greater part of 
this indebtedness was owing in the Northwest, where 
land has risen in value, this increase alone being far be- 
yond the amount of the mortgage indebtedness. Are 
we to change our currency system, and to establish a 
fluctuating and dangerous currency which will bring 
disaster, the mere threat of which has already pro- 
duced a panic from which we have not yet recovered, 
in order that the owners of these valuable farms may 
pay their creditors less purchasing power than they 
borrowed ? It would be like this : Thirty years ago 
a pioneer borrowed $2500, and with it bought and 
improved a hundred acres of land in Wisconsin. 


His land and buildings are now within a short dis- 
tance of a thriving town, and are worth $20,000. He 
still owes the money that he borrowed, preferring to 
pay 7 or even 10 per cent, interest for money on 
which he can make a profit of from 15 to 25 per cent. 
Or it may be that with all his prosperity, and not- 
withstanding the growing value of his lands, he is 
not often in command of ready cash, or he may be 
extravagant. Whatever the reason may be, he is 
still in debt, and he wants cheap money with which 
to pay his creditor. He wants to drive gold out of 
circulation, to introduce silver through free coinage, 
two dollars of which will purchase only as much of 
his products as could be bought by one of the dollars 
that he borrowed. At present prices he owes the 
man who has enabled him to make $20,000, less the 
$2500 of capital that he lent him, the equivalent of 
about 4000 bushels of wheat, and he wants the mon- 
ey system changed so that he can pay with about 
2000 bushels. It is hardly probable that the four 
farmers out of every five who owe nothing will con- 
sent to incur the perils of free coinage of silver in 
order to permit the one debtor to pay 2000 bushels 
of wheat where 4000 are honestly due. Nor is it 
probable that many of the debtors themselves will 
ask such a dishonest favor when they come fully to 
understand the real nature of their request. 

But the silver men say that the cheaper money will 
benefit those who are paying their debts every year 


not mortgage debtors only. How many of the com- 
munity do these debtors number? One would sup- 
pose that the majority of the people of this country 
were in debt to the minority and to foreigners, who 
ought to be thankful if they are swindled by our free 
and independent debtors. As a matter of fact, out 
of annual payments and receipts made and acknowl- 
edged in the business of this country, amounting to 
about $50,000,000,000, only about $1,500,000,000, 
or 3 per cent., is paid and received in settlement of 
debts, so that we are asked to debase our currency, 
to make our money cheap, to increase the burdens of 
the producers, the wage-earners, the merchants, and 
the professional men, to incur the terrors and disas- 
ters of a fluctuating medium of exchange, and to add 
greatly to the dangers of trades and exchanges involv- 
ing $50,000,000,000 in order that persons owing 
$1,500,000,000 may pay in fewer goods or effects 
than they owe. 

So much for the debtor argument, or rather out- 
cry. It is a dishonest argument, and is very proper- 
ly supported by a dishonest pretence that most of 
the country is on the verge of bankruptcy, and that 
the government should save the great majority of the 
people from the oppression of those who demand 
just payment of that which is their due. Such an 
outcry would have produced very little effect on the 
minds of the American people if it had not been com- 
plicated with false pretences as to the causes of low 




prices and as to the pretended conflict of interests 
between the different sections of the country. There 
is no such conflict. The interests of all sections of 
the country are the same. The man who lends money 
is deeply and selfishly interested in the prosperity of 
the man who borrows. He desires him to make mon- 
ey in order that he may pay his interest and debt. 
One word more concerning mortgage debtors. Much 
the larger part of this debt is now overdue. The 
amount of the mortgage debts in this country is 
about $6,000,000,000, and of this payment of at 
least $4,000,000,000 could be demanded to-morrow. 
Suppose that free coinage of silver were adopted, 
and gold were driven out of circulation. Silver would 
pass then at its real worth, and as it has been contin- 
uously depreciating for a long time, the mortgage 
creditors .would greatly fear its still further depreci- 
ation. The result would be that a large part of these 
mortgages would be foreclosed at once. Has the 
" debtor class " taken this into account ? 

THE notion that low prices have been compelled 
by the alleged " demonetization " of silver in 1873, 
and that they have caused general distress, has been 
sufficiently answered. Low prices have not resulted 
from a disuse of silver as money, for there has been 
an increase in the amount of silver money since 1873 ; 
nor from a decrease of the quantity of money in ex- 
istence and in circulation, for there has been an in- 
crease of that. They are due to other causes, which 
have been explained, and they have aided instead of 
retarded the welfare of the people. A bushel of 
grain buys more than it bought twenty years ago, 
and a day's work buys much more than it purchased 
when the pretended " crime against silver " was com- 

It remains to examine some further evidences of 
the country's prosperity during the last twenty years. 
Not only can a day of effort obtain more of the nec- 
essaries and luxuries of life, but the public burdens 
have been decreased and consumption has increased, 
while if there has been a slight increase in taxes, it 
is because of the expenditures of local governments, 


for which the people themselves are responsible. 
Local taxes may represent increased prosperity. The 
community may add to their common expenditure 
because they feel better able to pay for permanent 
improvements or communal luxuries. Taxes may, 
and dften do, grow by reason of the carelessness or 
corruption of local authorities, but if the people of 
any community do not desire to be burdened by the 
ignorance or corruption of their servants, they have 
the remedy in their own hands. 

The signs of the increased wealth and prosperity 
of the people of the United States since 1873 are 
abundant. The people of this country, as a whole, 
have not been distressed either by the currency act 
of 1873 or by any other cause. Here and there in- 
dividuals or classes may have suffered by over or 
extravagant production, or by the growth of competi- 
tion in special industries and in foreign countries. 
Great distress and disturbance have been wrought 
by the acts of 1878 and 1890, which were intended 
to " rehabilitate silver." But during the period from 
1873 to 1894 the people reduced the interest-bear- 
ing public debt from $1,710,483,950 to $635,041,- 
890, thereby saving nearly $73,000,000 a year in in- 
terest alone. The result of the silver act of 1878 
was to immediately increase the debt by about 
$83,000,000, and the annual interest charge by 
$1,500,000, while the act of 1890, and accompanying 
extravagant appropriations, increased the debt from 


$585,029,330 in 1892 to $635,041,890 in 1894. At 
the same time the debt on which no interest is paid 
decreased, from 1873 to 1879, from $472,069,333 to 
$410,835,742. After the passage of the Bland- 
Allison act in 1878, and of the Sherman act of 1890, 
and up to 1892, it increased from $410,835,742 to 
$1,000,648,939. Since the repeal of the Sherman 
act this debt has been reduced. Thus the people 
have paid off about $1,100,000,000 of their interest- 
bearing debt since 1873, and the efforts to " rehabili- 
tate silver " have alone checked the work of wiping 
out this burden. 

In 1873 the net deposits in the national banks of 
the United States were $673,400,000; in 1894 they 
were $2,019,300,000. I have not the data of savings- 
banks prior to 1883. In that year their deposits 
amounted to $1,024,856,787. In 1894 they amount- 
ed to $1,777,933,242. 

I have already spoken of our increased production 
of agricultural wealth. In 1873 this country ex- 
ported cotton goods of the value of $2,947,528. In 
1894 its exports of cottons, had increased in value 
to $14,340,886. In 1873 the country produced 
264,314,148 gallons of crude petroleum, and in 
1894 its production had increased to 2,033,331,- 
972 gallons. In 1873 the total product of cane- 
sugar in this country was 134,832,493 pounds; in 
1894 it was 610,825,618 pounds. In 1873 our wool 
product was 158,000,000 pounds; in 1894 it was 


298,057,384 pounds. In 1874 we manufactured 
2,401,262 tons of pig-iron ; in 1893 we made 7,124,- 
502 tons. 

If we examine the statistics of this period, so 
prosperous in spite of adverse tariff and silver legis- 
lation, with reference to the population of the coun- 
try, we find that they are quite as encouraging. In- 
creased wealth, easier circumstances, are shown by 
the lightening of the burdens of debt to the in- 
dividual, and by his greater consumption of the 
necessaries and luxuries of life. 

In 1873 the public debt was a little more than 
$50 for each individual in the country; in 1894 it 
was about $13. The per capita consumption of 
cotton increased from 15.19 to 15.91 pounds; of 
sugar, from 39.8 to 66.4 pounds; of coffee, from 
6.87 to 8.01 pounds; of malt liquors, from 7.21 to 
15.18 gallons. The consumption of wheat and dis- 
tilled spirits fell off, and the consumption of raw 
wool remained about stationary. The revenue of 
the post-office increased from 55 cents to $1.10 per 
capita, and the expenditures from 70 cents to $1.24. 
The expenditures for public schools increased from 
$5.95 to $8.31 per capita, 1893 being the last year 
for which data are available on this subject. 

I have already stated the decline in the cost of 
transportation within this period. In 1873 the 
average toll on a telegraph message was 62 cents, 
and the profit on it was 19.1 cents. In 1894 the 



average toll was 30|- cents, and the profit was 
slightly less than 10 cents. 

In 1870 the true value of real and personal prop- 
erty in New England and the Middle States was 
$15,290,032,687, or $1,243 per capita; in 1890 it 
was $21,435,491,864, or $1,232 per capita. In the 
Southern Atlantic States, the value in 1870 was 
$2,249,280,146, or $384 per capita; in 1800 it was 
$5,132,980,666, or $579 per capita. It will be seen 
that the South has been especially blessed with in- 
crease of wealth since the commission of the " crime 
of 1873." The same is true of the Middle West, 
including the Dakotas, Nebraska, and Kansas. In 
the twenty years the property of that section in- 
creased in value from $9,542,053,355 to $25,255,- 
915,549, or from $735 to $1,129 per capita. The 
story of growing prosperity in these twenty years is 
repeated in the Middle South, including Kentucky 
and Tennessee, the Gulf States, Arkansas, Oklahoma, 
and the Indian Territory. The value of property 
increased there from $2,152,182,361 to $6,401,281,- 
019, or from $334 to $569.* In the Northwestern 
and Pacific States the census statistics tell a far 
more wonderful story of growth in wealth and pros- 
perity. In 1870 the total property of those States 
and Territories was valued at $834,969,958, or $843 
per capita; in 1890 it had increased to $6,811,422,- 
099, or $2,250 per capita. The total value of the 
* Omitting the true valuation of the Indian Territory. 


real and personal property in the United States in 
these twenty years increased from $30,068,518,507 
to $65,037,091,197, or from $780 to $1,036 per 

In the mean time taxes have increased and de- 
creased in the various sections of the country, as 
will appear from the following table, which shows 
the per capita rates of taxation : 

Divisions. 1870. 1890 

New England and Middle $10.07 $ 10.29 

South Atlantic. 3.97 3.69 

Middle West 7.42 8.13 

Middle South 4.18 3.35 

Northwest and Pacific 10.51 13.67 

United States , 7.28 7.53 

Taxes have been reduced per capita in the South, 
and slightly advanced in the whole country. 

In the last decade the total State, county, and 
local indebtedness has increased in the whole coun- 
try from $1,123,278,647 to $1,135,210,442, but it 
has decreased per capita from $22.40 to $18.13. 

The free-silver man's tale of woe seems to be un- 
supported by the facts of the country's industrial 

* Omitting the true valuation of the Indian Territory. 

IN all that I have said thus far, I have simply al- 
luded to the subject of international bimetallism. I 
have refrained from dwelling on it because it is re- 
mote from the discussion of the day. Whether by 
the concurrence of all the nations of the world 16 or 
15^ ounces of silver could be made equal to one 
ounce of gold, it seems clear to me that the world 
does not need the amount of metal money that the 
universal free coinage of silver might provide, for it 
may be at once assumed that as the mints of the 
world would thereby become the best customers of 
the silver mines, most of the 'silver mined would be 
made into coin. Perhaps the whole world would go 
to a silver basis. No one can foresee exactly what 
would happen, but if the expectation of the bimetal- 
lists were realized there would be a great increase in 
the amount of metal money in the world, and if I am 
right in believing that I have succeeded in showing 
that such an increase is not needed, the metal money 
added to the present store would represent just so 
much wasted effort, energy, and wealth. The world 
can no more procure metal money for nothing than 

can a single country. If the storekeeper provides 
himself with gold and silver to carry on the transac- 
tions of his neighborhood when his own notes will 
accomplish the task, he and the community will lose 
the amount of useful wealth or merchandise with 
which he purchases his useless hoard of silver and 
gold. As it is with the storekeeper so it has been 
with this country, and so it will be with the world. 
I have already shown how many millions the United 
States have lost through the compulsory purchase of 
silver, and how much greater has been the increase 
in our stock of metal money than in the demands of 
our business for it. If our village storekeeper should 
follow the example of the United States and should 
expend all his wealth for gold and silver coin, trade 
between the farmers and himself, either direct or car- 
ried on through the medium of the speculator, would 
come to an end, or at least be greatly decreased. 
And this would be a costly experiment for the mer- 
chant whose wealth, instead of being in goods which 
he could sell at a profit, would be in idle coin, which 
the farmers did not at all want. Of course trade 
would then go on between the farmers and the wiser 
merchants of a neighboring community, and the 
farmers would be obliged to pay for the transportation 
of their products to the distant point, and for the 
transportation back of the goods that they needed, 
and for which they would exchange their own prod- 
ucts. As I have already said, the farmer pays the 


cost of transportation both ways. There is another 
thing that might happen. Oar original shopkeeper 
might be a cunning man wishing to make money out 
of the troubles of his rural neighbors. He might 
sell his goods for coin in order to lend the farmers 
money to transport their products, or by way of ad- 
vance on their crops, in order that they might pur- 
chase what they needed before they had earned the 
money by selling their products. Here is another 
way by which the farmer would be obliged to pay 
for the folly or the cunning of the storekeeper in 
buying unnecessary coin with his goods, the goods 
that were needed in the homes of the farmers. 

It may be assumed that the man who wants money 
to enable him to exchange his products or his day's 
work for the necessaries or luxuries of life, is the man 
who pays the cost of extravagant money schemes ; 
and bimetallism, if it shall be adopted, will prove no 
exception to the rule. Bimetallism has never existed 
in practice in the world's history. It has been de- 
creed by law, but whenever two metals have been 
made legal tender the cheaper has invariably driven 
the dearer metal out of circulation. In our own 
country gold was undervalued from 1792 to 1834, and 
we had nothing but silver, and cheap foreign silver at 
that, as circulating coin, and after that silver disap- 
peared, because, at the established ratio, silver was 
too valuable to be coined into dollars. At the pres- 
ent time, if the government should say that 16 


ounces of silver shall be accepted by the wage-earner, 
the professional man, the merchant, and the manu- 
facturer, in return for services and goods that are 
worth 1 ounce in gold, it would cheat the producers 
and working-people of the country out of about 16 
ounces of silver on every such transaction, for an 
ounce of gold is now worth about 32 ounces of silver. 
Perhaps all the nations of the world together might 
make 16 ounces of silver equivalent to 32 ounces, but 
if the attempt should be made, any one of the na- 
tions might break the agreement, and then all would 
be confusion in the world's monetary system. And 
again, if all the governments of the world, agreeing, 
can make 16 ounces equal to 32 ounces, why waste 
15 ounces? why not make 1 ounce equal to 32? 
Why use silver or gold ? Why not adopt the iron 
unit of the ancient Spartans ? 

I am not trying to discuss the question of interna- 
tional bimetallism, but simply to indicate the uncer- 
tainties into which the adoption of such a scheme 
would plunge us. International bimetallism is as 
much an intellectual vice as is the game of chess 
when it is played too much. Ingenious minds like to 
speculate concerning it, and they enjoy the excite- 
ment of chasing their own fancies. But international 
bimetallism is not a practical or immediate issue. 
What this country and the world want above all 
things, and just now especially, when business seems 
to be reviving, is to leave existing monetary condi- 

tions as they are, so far as the metals are concerned. 
Above all else, everything that is uncertain is dan- 

So far as the United States are concerned, it is 
certain, for it has been demonstrated, that we cannot 
maintain bimetallism alone ; that we have gone be- 
yond the danger point in expending revenue and 
wealth in the attempt to maintain what we call the 
parity of the two metals. The immediate issue be- 
fore the country is not international bimetallism, but 
silver monometallism. If any considerable body of 
people want international bimetallism, there will be 
ample time and opportunities to discuss that question 
when there is a conference of the nations. As it is, 
our people are not concerned with it at all. All that we 
have to decide now is this : Shall Congress pass a law 
which will compel the tax-payers of this country to 
buy of the silver-mine owners 16 ounces of silver 
with goods and services that ought to command 32 
ounces ? Shall our whole currency system be con- 
fused by a double standard which means silver mon- 
ometallism ? Shall prices be measured in a fluctuat- 
ing medium ? Shall our foreign exchanges be com- 
plicated to the profit of the money-broker and the 
loss of the producer and the working-man ? Shall we 
have a money that may scale down debts, but which 
will destroy our credit, drive capital out of the coun- 
try, especially from those parts of the country which 
need development, and transfer the United States 



from among the great commercial nations and make 
it the monetary comrade of China, Japan, India, and 
the South and Central Americas? These are the 
questions which the people of this country must an- 
swer at once, and any one who, under these condi- 
tions, undertakes to talk to them about international 
bimetallism is their enemy, for he is trying to deceive 
and confuse them. 


IN conclusion, I will restate some of the proposi- 
tions that I have laid down and endeavored to sus- 
tain in these papers. I began with the proposition 
that money is not a good in itself, but only as it 
easily and conveniently procures for its possessors 
what they need or desire. It saves the trouble and 
expense of barter. It represents food, raiment, 
shelter, and other necessaries of life as well as its 

The quality that money should possess ought to 
be clear to every one. It must be honest money. 
If it is metal it must be intrinsically worth the sum 
it professes. If it is paper it must be redeemable 
in the amount called for by its face. It must mean 
what it says. It must not only actually possess 
these qualities, but those who are asked to accept it 
in return for their products and goods must believe 
that it does. In the simple community the store- 
keeper's orders possessed these qualities, and they 
passed as money. So bank paper passes in the 
country in which the bank is situated, whose people 
believe that the bank is sound. But in international 


commerce, gold is the only money that is universally 
recognized, and it is necessary, therefore, for this 
country and for all countries that carry on commerce 
to accept gold as the standard of value. Otherwise 
there must be confusion arising from fluctuations in 
exchange, which would be largely due to fluctua- 
tions in the price of any other metal than gold that 
became the standard of value of the country depart- 
ing from the gold standard. 

Whatever may be said in favor of international 
bimetallism, international bimetallisn is not an im- 
minent question. The first question that this coun- 
try must answer is whether it will abandon the 
monetary system which prevails among the stronger 
nations of the world, and adopt that which prevails 
among the weaker nations, whether it will abandon 
gold and take silver as its standard. It has been 
proved that it cannot alone maintain silver. The 
panic of 1893 demonstrated this to intelligent minds. 
It has also been proved that it cannot alone main- 
tain the price of silver, which has been falling for 
nearly thirty years. The failure of the attempts to 
do so through the acts of 1878 and 1890, is a sig- 
nal proof of the inability of this country, acting 
alone, to make sixteen ounces of silver equal to one 
ounce of gold, when in the markets of the world 
thirty-two ounces of silver are equal in value to one 
ounce of gold. The only ground on which the 
single silver standard could be maintained is that 


we may be independent of Europe ; but to say that 
our commercial life could be maintained in vigorous 
health with any other than the world's monetary 
standard, is like saying that our physical and mate- 
rial well-being could be preserved if we could and 
did shut out the beneficent light and heat of the sun 
of the universe. International commerce is part of 
our existence. We cannot live without it, as our 
farmer, who is our principal exporter, ought to know. 
If we should try to, he and the man who lives by his 
personal services would be the first to discover what 
it means to be in the hands of the money-broker, as 
they found out before when we paid for our green- 
back debauch, and when Europe in 1893 began to 
doubt our intentions as to silver. 

The quality of the money and currency which we 
need being established, the question is as to its 
quantity. I have endeavored to show that this 
quantity is dependent on the demands of business. 
The amount of money in circulation is the amount 
needed to carry on the trade and commerce of the 
country, and that ought to fix the amount of money 
in existence. A currency that responds to the de- 
mands of business, expanding with a brisk trade and 
a large demand for the tool of exchange, and con- 
tracting when trade is dull and the demand is light, 
is an elastic currency. Our own currency is not 
elastic. No human prescience, least of all the pre- 
science of the excellent but inexperienced gentle- 


men who are elected to Congress, can fix the amount 
of money that is needed by the business interests of 
this country. They have attempted it and failed. 
They have not understood the great truth which 
was illustrated in the imaginary account of the trans- 
actions between the storekeeper and the wheat buyer 
and the wheat buyer and the farmer, the fact that 
one dollar of money or currency carries many dollars 
of transactions. They have added to the currency 
of the country since 1873 the sum of $1,657,000,000, 
but the business of the country has employed only 
$937,000,000 of this great amount. Was there ever 
a finer demonstration of folly ? And this enormous 
and needless addition to the money of the country 
has been expensive. Without counting other ele- 
ments of extravagance, the government has lost 
$156,000,000 on the value of the bullion it purchased 
under the acts of 1878 and 1890 alone. -Business 
alone can determine how much money a country 
needs, and business has determined in this country 
that politicians have added too much to our stock 
of money, and that they have wasted valuable time, 
energy, and wealth in the commission of this grievous 

Not only has the country a great supply of money. 
It has too much of certain kinds, and no elastic cur- 
rency whatever. It has more than it ever had be- 
fore, and more than is held by any great commercial 
nation. Moreover, we have enough gold to sustain 


a bank-note or paper circulation, on the basis of the 
Treasury's gold reserve, greater than our whole pres- 
ent circulation. 

There is no need for more money in this country. 
There is every reason why the present gold standard 
should be maintained. I do not believe in interna- 
tional bimetallism, but, even if its adoption would 
be beneficial to the world, the question is now wholly 
speculative. Until there is a stronger movement 
towards that end than now exists, this country has 
only one of two courses to take either to retain its 
present system, which makes the gold dollar the 
standard, or to adopt the South American system, 
which makes the silver dollar the standard. Most 
of the present talk about international bimetallism 
comes from politicians who are trying to deceive the 
people, and especially the silver men. They are 
fishing for silver votes. But what the silver men 
want is the free coinage of silver at the ratio of 16 
to 1, and they want this country to adopt that system 
independently of other nations. They do not care 
what happens to the commerce of the country, nor 
to the farmer, whose products constitute the larger 
part of the goods that are sold to foreign countries, 
so long as they can sell fifty cents worth of silver 
for a dollar. The international bimetallic politician 
cannot deceive the silver-mine owner, nor can the 
silver-mine owner, I trust, deceive the farmer, the 
mechanic, the wage-earner, the professional man, the 



merchant, who make up the people for whose bene- 
fit this country ought to be governed. 

In the course of these papers, while I have been 
trying to establish the propositions that the money 
we need is honest money, the world's money, and, 
under existing conditions, gold money ; that the 
amount we need cannot be determined by politicians, 
but must be fixed by the demands of business ; and 
that these demands have shown that we already pos- 
sess more money than we need, and that the redun- 
dance has cost us dear, I have also shown that prices 
are not dependent on money, that the so-called " de- 
monetization " of silver did not cause a fall in prices, 
and that the country has prospered greatly since 
1873, notwithstanding the mournful outcries of the 
bimetallists. Whatever may be the present state of 
the public mind in this country on the subject of 
money, I have no doubt that reflection and study 
will bring the people to the conclusions that I have 
reached. There is no economic problem, especially 
no problem involving a moral issue, that the people 
of the United States have not solved on the side of 
honesty and common-sense, after a full and free dis- 
cussion. Such a free and full discussion is now in 
progress on the money question, and I am confident 
that the United States will not consent to become 
one of the cheap-money nations of the earth, but 
will insist on remaining among the sound-money 


" Now these are the names of the different pieces of 
their gold, and of their silver, according to their value. 
And the names are given by the Nephites : for they 
did not reckon after the manner of the Jews who were 
at Jerusalem; neither did they measure after the man- 
ner of the Jews, but they altered their reckoning and 
their measure, according to the minds and the circum- 
stances of the people, in every generation, until the 
reign of the Judges ; they having been established by 
chapter viii., verse 8. 

The only supernatural authority which has been 
found for the almost universal practice of trying to 
make two unequal things equal is that which is 
printed above from the Book of Mormon. The au- 
thority must stand on its merits. The fact, however, 
of the failure of the efforts to use silver and gold as 
the standard of value, as if their equality could be 
compelled, leaves this solitary utterance of alleged 
inspiration in a bad way. 


FROM 1600 TO 1792 

WHEN the Puritans came to Massachusetts Bay in 
1630, England alone of all the nations of Europe 
was endeavoring to maintain the double standard. 
On the Continent of Europe silver was frankly the 
standard. That great commercial country, Holland, 
maintained the silver standard from 1609 until recent 

When this country was discovered the store of 
gold and silver in the world was very small. The 
quantity of the product from 1493 to 1850 was 8 of 
silver to 1 of gold, but the ratio of value was 10.75 
of silver to 1 of gold. This difference may be ac- 
counted for by the greater comparative difficulty of 
obtaining gold. At this period gold came from 
West Africa, while silver was mined in Saxony and 
Bohemia. The relative values of the two metals 
have changed with the relative products of the mines. 
At the same time, the use of silver as money, which 
is as old as the coinage of the precious metals, shows 
that there are other causes than varying production 
that govern the price of the white metal, and when 
we come to the era of demonetization of silver we 


shall find the most potent of all causes, except, perhaps 
the discovery of the great silver mines of the West. 

In 1630 when the Puritans came to Massachusetts, 
and when the commercial Hollanders were in New 
Amsterdam, the world's supply of the two metals 
was still very small. During this period gold had 
been found in New Granada, silver mines that had 
been worked by the Aztecs had been discovered by 
the Spaniards in Mexico, the still celebrated mines 
of Potosi, in Bolivia, had been found, and the patio 
process of working ore had been invented. Between 
1601 and 1620 more than three times as much silver 
was produced as had been mined up to 1545, and its 
price had fallen until 12.25 ounces of silver were 
required for the purchase of an ounce of gold. In 
the next twenty years there was a slight decline of 
product, but the output of both gold and silver was 
still very large, while the price of silver fell so that 
the ratio between it and gold was 14 to 1. Here 
was a relative decrease in the product of silver, ac- 
companied by an important fall in price. 

In the meantime England was struggling with 
bimetallic difficulties in its attempt to sustain the 
two metals. Gold was rising in value when James 
I. came to the throne, and during the period which 
we are now considering 1600 to 1792 gold rose 
or silver fell until the ratio between the two in- 
creased from H.80 to 15.17. In the intervening 
years it had not been less than 12.25, but several 


times it had been higher than 15.17. An attempt 
was made in this reign to fix the ratio by law at 
13 to 1 at a time when the market ratio was really 
about 12 to 1, and the consequence was the exporta- 
tion of silver from the kingdom and general distress 
among the working-people. In 1614 the king or- 
dered that the exportation of coin should cease. 
This was naturally ineffective. Proclamation after 
proclamation followed, and Charles I. continued the 
absurd financial policy of his father. The Star 
Chamber undertook the enforcement of the proc- 
lamations, and in 1636 there was a further dem- 
onstration of Gresham's law. The guineas were 
selling for a premium in clipped shillings, and the 
law undertook to fix their value, decreeing that a 

' O 

guinea should not be taken for more than a certain 
number of shillings. The good shillings were worth 
more than this and at once disappeared in the melt- 
ing-pot, the worn and clipped shillings alone appear- 
ing in circulation. Trade sprang up in the good 
shillings, and in the case before the Star Chamber 

O i 

seven persons were convicted of " culling out the 
most weighty pieces of the coin of this realm and 
melting them down and exporting the same, as well 
as foreign coin and bullion, to foreign ports." The 
culprits were fined 8100, it having been shown to 
the satisfaction of the Star Chamber that they had 
made a profit of between 7000 and 8000 a year 
by their practices, 

In the reigns of William III. and George I. 
various efforts were made to stop the traffic in gold 
and good silver coin. French louis-d'or and moi- 
dores were found circulating in England at a valuation 
greater than their intrinsic worth. The law, there- 
fore, decreed that they should pass for their real 
worth, and they immediately disappeared from cir- 
culation. Under an act of William III. (1696), 
which endured for sixteen days, the guinea was 
made worth twenty-six shillings. At the end of 
that brief time another act made the guinea worth 
twenty-two shillings. Both were ineffectual. 

Nothing but clipped or cheap money passed. 
Gold was undervalued as to worn shillings, and 
overvalued as to good shillings, while the good 
shillings were melted into bullion and bought and 
sold as a commodity. In 1699 the silver of the 
kingdom was recoined at an enormous loss to the 
Government, and at about the same time John Locke 
came to the conclusion, which he stated in a letter 
to Sir John Somers, Keeper of the Great Seal, that 
there should be only one metal coined, and that 
should be silver, for, notwithstanding the theoretical 
double standard of Great Britain, silver was " the 
money of the world," as Locke stated it to be, just 
as much in the time of William III. and George I. 
as it had been in the days when the patriarchs of 
the Old Testament bought their fields and flocks 
with silver shekels. 


Notwithstanding the recoinage, clipped silver con- 
tinued to circulate and the new and good coins 
disappeared. In the last forty years of the seven- 
teenth century only 64,000 was brought to the 
mint to be coined. The speculative character of the 
currency brought great distress. In 171 7 Sir Isaac 
Newton, then Master of the Mint, was asked by 
George I. for an opinion, and he recommended the 
reduction of the guinea to twenty-one shillings. 
This did not retain the good silver, for then the 
guinea was worth only 20s. 8d. 

In the meantime the currency difficulties of the 
mother country were experienced in the Amer- 
ican colonies, where, in 1652, a mint had been il- 
legally established at Boston for the coinage of light 
" Pine-tree " shillings. Finally the evil became so 
great that, in 1774, an act of Parliament was passed 
limiting the right to coin silver to the Government 
and making it a legal tender by tale to the amount of 
,25. Above that it was legal tender by weight only. 

This was the state of the silver question when the 
first coinage act of this country was passed in 1792. 
The act of 1774 was powerless to fix the mutual 
ratio of gold and silver values. The ratio in 1773 
and 1774 was 14.62 to 1. In 1775 it rose to 14.72, 
but in 1776, when the act was extended, for at first it 
was only temporary, the ratio fell to 14. 55, and in 1777 
it fell still further, to 14.54. Silver grew dearer, 
notwithstanding adverse legislation in Great Britain. 



THE first coinage act for the United States was 
passed in 1792. Silver was actually first coined in 

1794, and gold in 1795. The first silver dollar con- 
tained the same number of grains of fine silver as 
the standard dollar of to-day. Gold was coined in 

1795, and the gold dollar contained 24.75 grains of 
pure gold. 

England was still struggling with the currency 
question. Her commerce, manufactures, and work- 
ing-people were suffering by reason of uncertainty 
as to the value of her circulating coins. Although 
the gold sovereign was the standard of value, silver 
was a legal tender for all debts. It is true that it 
was a legal tender by tale only to the amount of 25, 
"but for amounts above that it was legal tender by 
weight. In the early part of the eighteenth century 
silver was generally supposed in commercial circles 
to be the English standard, and Adam Smith, in his 
explanation of the principle of foreign exchange, 
assumed that the metallic currencies of England and 
France were the same, and that both were silver. 
In this country we began by undervaluing gold, 


making the ratio 15 to 1, whereas the true ratio, in 
1792, was 15.17 to 1. The latter was the ratio in 

England adopted the single gold standard in 1798, 
six years after the enactment of our first coinage 
law. The temporary law of 1774 having been con- 
tinued in 1776, was again extended in 1798 by acts 
which prohibited the importation of light silver coin, 
restrained the tender thereof beyond a certain sum, 
suspended the coinage of silver, and prohibited the 
reception of any silver to be coined, or any silver al- 
ready coined to be delivered. The first of the acts 
of 1798 ran by its terms to January 1, 1799, and in 
that year the two coinage and currency acts of 1798 
were revived and made perpetual. 

Thus England passed under the gold standard ; 
for gold becomes the single standard of a country 
when the mints are closed to private coinage of 
other metals. The silver that was in circulation 
continued to pass from hand to hand at the estab- 
lished rate of 21 to the guinea, much to its advan- 
tage, for the suspension of further coinage of silver 
bullion raised the value of both the gold and the 
current silver coins. Silver was overrated by the 
mint laws, for while its market price was ranging 
from 5s. an ounce to 5s. l-|-d., it would have become 
worth 5s. 2d. by being coined. 

The effect of the act of 1798 on the comparative 
prices of silver and gold was not serious. Silver 

rose from 5s. 4c?. to 55. 6d. under the act of 1797, 
restricting the payment of specie by the Bank of 
England in anticipation of a possible discount on 
bank-notes, but in September of the same year it fell 
back to 5s. Id., and it remained in that neighbor- 
hood for some time. The following are the ratios of 
values for the ten years following the passage of the 
act of 1798: 

1799 15.74 to 1 

1800 15.68 to 1 

1801 15.46 to 1 

1802 15.26 to 1 

1803 15.41 to 1 

1804 15.41 to 1 

1805 15.79 to 1 

1806 15.52 to 1 

1807 15.43 to 1 

1808 16.08 to 1 

From this statement, taken from Dr. Soetbeer's 
tables, it appears that the market value of silver 
during the five years following 1799 was higher 
than the price obtaining that year. In 1803 France 
adopted by law the silver franc as the monetary unit, 
and Belgium, Italy, Greece, and Switzerland followed. 
These nations then fixed the ratio at 15^ to 1. 
The product of silver between 1801-1810 was a 
little more than 50 per cent, of the total product of 
the two metals, and while the price decreased in 
1805, probably in consequence of the increased out- 
put, it increased in 1806 and 1807, presumably in con- 
sequence of the acts of the Continental Governments. 
In 1808 the price fell to a point lower than it had 
ever yet reached, but it recovered in 1809, 1810, and 
1811, although it did not reach the prices of 1801 
and the year immediately following. 


The gold standard was not formally adopted by 
England until .181 6, and even that act was followed 
by a general rise in the price of silver. Gold seems 
to have been chosen instead of silver, because the 
" common people" had found it more convenient. 
Transactions of any importance required so great a 
weight of silver that the burden of transportation 
became onerous and expensive. Native gold coins 
were not circulating in England in the last years of 
the seventeenth century, but the French gold, under- 
valued at home, as we have already seen, was circu- 
lating at more than its intrinsic worth. Lord Liver- 
pool, speaking of this era, said : 

" It is evident that * * * the common people had 
become accustomed to the use of gold coins, and the 
reason which induced them still to prefer them was, 
perhaps, the convenience of making large payments 
in coins of that metal." 

Silver is still legal tender in Great Britain, but 
only to the amount of 2, and the legal ratio is 
14.28781 to 1. Silver is coined on account of the 
Government only. Gold is coined at private account 
at the fixed rate of 3 17s. lO^d. per ounce. Prac- 
tically the Bank of England alone sends gold bars 
to the mint for coinage, paying individual owners 
of bullion 3 17s. 9o?., the l^d. being supposed to 
compensate the bank for the loss of interest while 
the bars are being transformed into coin. Most of 
the English colonies have adopted the gold stand- 

ard and the monetary system of tlie mother country. 
The monetary unit in Canada, however, is the gold 
dollar of the United States. The Straits Settlements 
and Hong-Kong have adopted the single silver stand- 
ard, because it is in harmony with the currency of 
the adjoining peoples. 

The British India currency law dates back to 1835. 
It makes the country silver monometallic, and the 
rupee the monetary unit. The mohur is a gold coin, 
but gold is not a legal tender. The ratio of coinage 
is 15 to 1. The recent suspension of silver coinage 
for private account places India on a gold basis, and 
unless there is a return to the old order the gold 
standard must be formally adopted. A money stand- 
ard of a metal that cannot be coined on private ac- 
count is an anomaly that will not endure. 

It will be seen from an examination of the various 
coinage laws of Europe that Locke's dictum was 
growing in favor, and that the experiences of the 
commercial countries of the world had gradually led 
men of affairs to the conclusion that no nation could 
maintain a double standard. The growth of inter- 
national commerce had led to the invention of bills 
of exchange. The rate for bills of exchange was 
easily computed if the countries between which they 
circulated possessed the same standard of value, the 
same ratio, and coins of like intrinsic value ; but as 
this was never the case, and the price varied with 
fluctuations in the market values of the two metals, 


with their exports and imports, with legislative acts, 
and with increase or diminution of product, the trade 
in bills of exchange became a speculation in gold, 
and silver. Foreign commerce and domestic trade 
became unsettled. Therefore, at the beginning of 
the present century there was a general tendency in 
Europe towards monometallism. England chose gold 
and France silver. But although it was the inten- 
tion of the French to establish a single silver stand- 
ard, the law of 1803 was bimetallic, and gold was 
not driven out of circulation until under the Napo- 
leonic wars the price of gold rose, and silver alone 
circulated. From 1820 to 1847 gold was constantly 
at a premium in France. 

When England adopted the single gold standard 
the Netherlands was a silver monometallic country, 
but, while it did not follow England's example, it 
adopted the double standard in 1816, returning in 
1847 to the single silver standard. 

Germany was a single silver standard country until 
its currency reform of 1871. Austria has also been 
a single silver standard country, although it is now 
putting into operation the single gold standard 



THE tendency of European countries in the early 
part of the present century was towards the adop- 
tion of the single standard. This course was dic- 
tated by common prudence and a desire to simplify 
transactions between the various countries. 

M. Chevalier was the most conspicuous advocate 
in Europe of the use of silver as a money metal, and 
he is authority for the statement that gold disap- 
peared from France during the Napoleonic wars and 
was not in circulation, while Mr. Giffen, the eminent 
English statistician, asserts that gold was constantly 
at a premium in France from 1820 to 1850. During 
the thirty years France was a silver country and gold 
was expelled, until in 1848, the Bank of France had 
hardly any gold in its vaults. It ought to be ex- 
plained that it is a mistake to suppose that the 
French law of 1803 first fixed the ratio of 15^ to 1. 
If there is any magic in that ratio to keep the metals 
at a parity, it had an opportunity to show itself in 
the reign of Louis XVI., for Colonne fixed the ratio 
15| to 1 ' ln 1*785, and the statute of 1803 merely 
affirmed what already existed, and extended its life. 


Colonne chose the ratio because gold was thereby 

In 1785 the commercial ratio was 14.92 to 1, and 
in 1803 it was 15.41. This ratio was maintained for 
two years, but in 1805 it became 15.79 to 1 ; in 1806 
it was 15.52 ; in 1807 it fell below the French legal 
ratio once more, but gold recovered, and in 1808 the 
actual ratio was 16.08 to 1. It was not again as low 
as 15^- until 1814, and for six years gold was over- 
valued by the French coinage law. In 1820, how- 
ever, the ratio was once more above 15^-, and re- 
mained above for thirty years. It did not fall again 
until 1851, under the influence of the gold discov- 
eries in California and Australia. Once more the 
ratio was below 15^- for one year only. In 1852 it 
was 15.59. It again fell below 15|- in 1853, and re- 
mained below for eight years. In 1861 the actual 
and legal ratios in France were the same ; for the 

o ' 

next five years gold was overvalued. In 1867 it was 
again undervalued, and the difference since then has 
been increasing, owing to the depreciation of silver. 
The experience of France in undertaking to main- 
tain the parity of the two metals was not happy. 
Since Colonne determined on the ratio of 15^ to 1, 
one hundred and ten years ago, that ratio has been 
below the market ratio seventy-three years ; it has 
been equal to the market ratio one year, and above it 
thirty-six years. In other words, it has expressed 
the truth once during that long period. Since 1803 


has been undervalued in France sixty-eight 
years, correctly valued one year, and overvalued 
twenty-two years. 

It was the intention of the frarners of the law of 
1803 to provide France with a single standard of 
silver, but nature was against them, and by circu- 
lating gold the tendency was to exclude their favor- 
ite metal from circulation, until war came to the 
assistance of the financiers, when the ratio of 15^ 
to 1 became an undervaluation of gold, whereupon 
gold disappeared and silver constituted the circu- 

Silver was the circulating medium in 1803, and 
remained so until the great gold discoveries brought 
a flood of the yellow metal to Europe. Between 
1851 and 1853 gold began to appear in the French 
circulation, and the people, like the people of Eng- 
land in the last decade of the seventeenth century, 
found it preferable, by reason of its smaller bulk and 
weight, to the heavy five-franc pieces. 

This state of things lasted until 1867, when the 
discovery of the great silver deposits had begun to be 
made. The Cornstock lode was discovered in 1859, 
but the Belcher Bonanza was not found until 1864; 
the Chollar-Potosi bonanza in 1865; the Hale and 
Norcross bonanza in 1866. During the period when 
the gold discoveries were being made the price of 
silver gradually rose in London from 59^d. per 
ounce in 1848 to 61fc?. in 1864, but it did not fall 

below QOd. until 1873, when the average price was 

In the meantime the commercial countries of Eu- 
rope were coming to the gold standard. The attempt 
to maintain the single silver standard was about to 
be abandoned. So much silver was deposited for 
coinage at the mint of France that the mint could 
not have performed its expected task in much less 
than two years. The currency was becoming in- 
flated. Exchanges were disturbed, and France was 
suffering from cheap money. In addition to the sil- 
ver thrown upon the market by the extraordinary in- 
crease of the output of the silver mines of this coun- 
try, the closing of the German mints to the coinage 
of silver and the sale of the Government's stores for 
the purchase of gold needed for the adoption of the 
gold standard had reduced the price of silver. 

Germany abandoned silver in 1871 and adopted 
the single gold standard. The suspension of silver 
coinage was followed by the melting down of the old 
coins and the sale of the bullion. This sale was 
stopped in 1879. While it was going on the price 
of silver in London fell from GQ^d. in 1871 to bl^d. 
in 1879. It is undoubtedly true that Germany's de- 
monetization of silver had much to do with this de- 
cline in price ; but, as has been already shown, a 
decline had set in six years before 1871. 

During that six years silver had gone down only 
about Id. on the ounce. While, therefore, the whole 

decline in price from 1871 to 1879 cannot be charged 
to the action of Germany, most of it is evidently due 
to the coinage law of the new empire. Since Ger- 
many stopped selling, the price of silver has declined 
more than 20c?., and this decline has not been ar- 
rested by the two silver purchase laws enacted by 
the United States. 

It is fair to assume that the decline has been partly 
aided by the closing of the mints of the Latin Union 
to silver, and by the action of the Austrian Govern- 
ment in deciding to adopt the single gold standard. 
The Latin Union was formed in 1865. The metallic 
coinage of Continental Europe was in a most deplor- 
able condition, and the silver countries found them- 
selves, in contrast with Great Britain, at a serious 
commercial disadvantage. Therefore, France, Bel- 
gium, and Switzerland formed a union, and they were 
subsequently joined by Greece and Italy. Silver 
token coinage was adopted, and, following the Eng- 
lish system, it was made legal tender to the amount 
of 50 francs, equivalent to 2, or $10. 

In 1876 the mints of the Latin Union were closed 
to the coinage of silver on private account, and while, 
as had been said, it is fair to assume that this action 
had some effect on the price of silver, that effect was 
not great, for the price was 52 %d. in 1876, and it was 
not until 1881 that it fell permanently below 52d. 
Spain adopted the monetary system of the Latin 
Union in 1868, but in 1878 determined that silver 

should be coined on state account only. Austria 
suspended silver coinage in 1879. 

While the fall in the price of silver was inducing 
the United States to u rehabilitate" that metal by the 
Allison Purchase Act, Europe was adopting the single 
gold standard. 



THE experience of the Government of the United 
States with bimetallism during the first eighty years 
of its history was somewhat similar to that of France. 
It had a theoretical double standard, but was practi- 
cally monometallic. Its monetary history was also 
like that of England in the latter part of the seven- 
teenth century. Its good coin was hoarded and sold 
abroad, and the coin that circulated was the worn and 
light foreign coin that came into a country where it 
was able to procure more than its intrinsic worth. 

The first coinage act of this country was passed in 
1792. The question of currency at that time seems 
to have excited merely a languid interest in Congress, 
and for some time it was doubtful if a mint would be 
established. The probable cost of its maintenance 
seemed to be an insuperable objection. The matter 
of coinage was practically settled by the executive 
branch of the Government. For once those old and 
persistent political enemies, Hamilton and Jefferson, 
came together and decided that both metals should 
be used, and that the ratio should be 15 to 1. 

It was the English ratio and the French system 


coming together. England, vvas:cxaniLhif)g v li3 - 
age question for herself, and had temporarily sus- 
pended free coinage of silver, but the people of this 
country had little commercial experience to instruct 
them in the consequences of bimetallism, and accept- 
ed the double standard because gold and silver had 
both been the money metals of the world from time 
immemorial. After a fashion that has not yet gone 
out of date the people of this country insisted on ac- 
quiring their experience for themselves and paying 
for it. 


THE coinage act was passed in 1792, but the first 
silver was actually coined in 1794 and the first gold 
in 1795. Under the first statute the silver dollar 
weighed 416 grains, 1485 parts pure and 179 parts 
alloy. The fine silver in a dollar was, therefore, then 
as now, 371.25 grains. The gold eagle weighed 270 
grains, \^ fine, so that a gold dollar contained 24.75 
grains of fine gold. The ratio established was not 
the true ratio. Gold was undervalued. An ounce 
of gold was worth more than 15 ounces of silver; it 
was worth 15.17 ounces. The new coins, as has been 
pointed out, did not circulate. The Government it- 
self was largely responsible, for it permitted cheap 
and worn foreign coin which came to it in payment 


of r,s customs dues to go out into the circulation, 
once more, to illustrate the truth of Gresham's law. 
Gold was exported, and quantities of our new eagles 
were seen in the show-windows of European gold- 
smiths. In 1793 only were the legal and market ra- 
tios the same. In 1794 the ratio was 15.37 to 1, and 
not once so long as the ratio of 15 to 1 prevailed, ex- 
cept in 1793, was gold down to the value fixed by 

Neither the gold nor the silver circulating, the coin- 
age of silver dollars was suspended in 1806, and none 
were coined again until 1836, when 1000 were struck 
off. None were coined after that until 300 were 
struck off in 1839. Then the coinage went on, but 
it was 1869 before the number minted in any year 
reached 400,000, and 1871 before it was 1,000,000. 
In 1873, the year when silver was demonetized, the 
mints coined only $293,600, which measures the de- 
sire of the bullion owners of that time for the pres- 
ervation of silver as a money metal at the ratio of 
16 to 1 then prevailing. 

Gold entirely disappeared from circulation by 1817, 
and no gold dollars whatever were coined until 1849, 
after the discovery of gold in California. The estab- 
lishment of American coins as circulating currency 
was a work of great labor, attended with many diffi- 
culties. The early years of the Republic were years 
of struggle war, and financial distress. After the 
dissolution of the United States Bank the business 


of the country was carried on by means of paper 
currency of more than uncertain value. Specie pay- 
ments were suspended in 1814 by all the banks ex- 
cept those of New England, and metallic money was 
practically unknown. 

So disastrous to the material interests of the coun- 
try was the lack of confidence in the paper currency 
that in 1816 the money question came up in Con- 
gress for discussion. The United States Bank was 
rechartered, and the right of establishing branches 
with the privilege of issue was granted to it. After 
that for a time the country had paper money based 
upon foreign coin. 

Several efforts were made to establish our own 
coin and to prevent the inroad of foreign coin, but 
nature insisted on having its own way. A propo- 
sition was made to Congress to return to the devices 
that had been found futile in the reigns of James I. 
and Charles I., and to prohibit the exportation of 
specie. In 1816 and 1819 laws were passed provid- 
ing that foreign gold coin should not be legal tender 
in this country, but this accomplished nothing, and 
in 1823 all foreign gold coins were made receivable 
for the public lands, while in 1834 an act was passed 
making the dollars of Mexico, Peru, Chili, and Central 
America, and the five-franc piece of France, legal ten- 
der at their nominal value,, when of full weight. 



IN 1834, foreign gold not being legal tender under 
the laws of 1816 and 1819, the basis of our circula- 
tion was foreign silver and fractional coin. A move- 
ment now began in the interest of gold. Like the 
silver movement of to-day, it was largely protective. 
The gold mines of North Carolina, discovered in 
1801, had begun to yield a generous output in 1828. 
About the same time gold was discovered in Georgia, 
and great results were expected. Congress under- 
took to care for the American gold interest by chang- 
ing the ratio and by also changing the composition 
of the gold coin. The ratio was changed from 15 
to 1 to 16 to 1. The weight of the silver dollar was 
changed from 416 to 412.5 grains, but the fine sil- 
ver in the coin, 371.25 grains, remained unchanged. 
The fine gold in a dollar of the other metal, however, 
was reduced from 24.75 to 23.22. 

Thus, in the interest of an American industry, the 
gold dollar, which had been worth under the old law 
$1.038, became worth 97-J cents. Silver became the 
more valuable metal and disappeared from the circu- 
lation. Up to the passage of this law about $12,000,- 
000 of gold had been coined in this country, chiefly 
in half-eagles. Eagles had not been coined since 

o o 

1804, and their coinage was not resumed until 1838. 
Double eagles were not coined until 1850, at the 


time when the recent gold discoveries had greatly 
increased the production of the metal. In 1849 an 
act was passed providing that the gold dollar should 
contain 25.8 grains of fine gold. 

No sooner had the silver dollar been underrated 
than silver coins began to be exported from this 
country in large quantities. Silver coin became 
scarce in the circulation, except the Spanish-Ameri- 
can coins with which every one was familiar thirty 
years ago. So greatly was the market value of silver 
in excess of its coinage value that the fractional 
coins began to disappear, and in 1853 our fractional 
silver was made subsidiary and token money by the 
reduction of the amount of fine silver in the coins. 
It was at the same time made legal tender to the 
value of $5. 

Thus the country continued under a practical gold 
monometallism, with subsidiary or token silver coins, 
until the passage of the act of 1873. The silver 
dollar was not in circulation, because it was too val- 
uable for that use at the existing ratio. It had never 
been in circulation. The only silver dollars with 
which the people of this country were familiar were 
those of the South American and Central American 
countries mentioned in the act of 1834. 

The act of 1834 may be said to have deliberately 
driven silver out of circulation and out of use as 
money, except for small change, because gold was 
overvalued for that purpose. And yet the price of 


silver was not affected by that action of the United 
States, as the following quotations from the London 
market reports will show : 

1833 59 T V 

1834 59ifd. 

1335 591^. 

1836 60c/. 


1838 59jd. 

1839 60fd. 

1840 60fd. 

1841.. . 60.W 

1842 59 T 7 ^. 

Silver increased in price, and the increase contin- 
ued during the years when the output of gold was 
growing by reason of the discoveries of gold mines 
in California and Australia. But silver began to 
fall, as has already been shown, after 1866. In 1873, 
however, the law that was passed omitting the silver 
dollar from the coinage merely made statutory a fact 
that had existed for nearly forty years. 


WHEN the act of 1873 was passed extraordinary 
movements affecting currency were going on every- 
where. That act has been made altogether too im- 
portant in the discussion of bimetallism. It was in 
reality a mere formal declaration of a fact. Silver 
was not demonetized by it. That was done by the 
act of 1834, changing the ratio of the two metals and 
the amount of fine gold in a dollar. The act of 1853, 
reducing the amount of silver in the fractional cur- 
rency and making it token money, was also a move- 
ment strengthening gold monometallism. Not only 
was the single gold standard the result of the two 
laws, it was the declared intention of their movers 
and advocates to adopt the gold standard in this 
manner. The silver dollar was not in circulation, 
because it was worth $1.04 in gold, and no one made 
an effort, as by urging a revision of the legal ratio, 
to make it a^ree with the market ratio, to secure its 

O ' 

restoration. The great fall in silver that was to occur 
shortly had not set in. Therefore when the bill, 
accompanied by the reports of the Secretary of the 
Treasury and Mr. John J. -Knox, its author, was pre- 


sented to Congress no comment was made on the 
fact that the 41 2^ grain dollar was dropped by it 
from the silver coinage of the country. The bill 
simply provided that certain pieces, naming them, 
should constitute the silver coinage of the United 
States. The 412^ grain dollar was not included. 
The trade dollar was authorized, and, by mistake, 
a legal-tender quality up to $5 was bestowed upon 
it as upon the subsidiary coins. Subsequently the 
mistake was rectified. Really, the trade dollar was 
not part of the coinage of the country. It was sim- 
ply a bit of silver weighing 420 grains, stamped by 
the Government at the expense of the owner of the 
bullion, to be sold at a profit in Oriental countries. 

It has been the fashion of some controversialists 
to say that the silver dollar was surreptitiously de- 
monetized. History does not sustain the contention. 
As has been seen from a simple record of the events, 
silver was demonetized in 1834. But whether the 
method of passing the act of 1873 was or was not 
surreptitious has no bearing on the merits of bi- 
metallism or of monometallism. They must stand 
on a sounder basis than that or fall altogether. As 
a matter of fact the bill was before Congress for 
nearly three years. It was first submitted to the 
Senate on April 25, 1870, and to the House on June 
25. It was debated in the Senate and passed on 
June 10, 1871, by a vote of 36 to 14. It was de- 
bated in the House in 1872 and passed, with amend- 


merits, by a vote of 110 to 13. It was passed in the 
Senate, as amended, January 17, 1873, a conference 
committee was appointed, and the bill became a law, 
February 12, 1873. The reports accompanying the 
bill, especially Mr. Knox's, explained the fact, and 
the purpose of dropping the silver dollar from the 
coinage. This fact was therefore brought home to 
the members, who discussed it, and Mr. William D. 
Kelley, Chairman of the Committee on Coinage, 
Weights and Measures, in reporting the bill to the 
House, said that it had been most carefully and de- 
liberately considered by the committee, who had 
gone over it " line by line and word by word." Al- 
though he subsequently joined the advocates of free 
coinage, he said on this occasion that " it is impossi- 
ble to retain the double standard." 

All this is interesting as history, but it has noth- 
ing to do with the merits of the question. After 
1873 and until 1878 the country was not only in 
fact but in law on a gold basis. Silver had begun 
to be cheaper, as has already been shown ; but it was 
not until 1876 that the fall had become great enough 
to arouse the owners of mines and the friends of sil- 
ver generally to the beginning of a contest. 

By 1876 the price of silver in the London market 
had dropped from 59^o?. an ounce in 1873 to 52%d. 
The causes of this decline open up a very interest- 
ing field of investigation and discussion. The de- 
mand for gold had been growing since 1849. The 


production of this metal in twenty-five years from 
1851 to 1875 was enormous. The value of the out- 
put during that period was $3,317,625,000 as against 
a silver product of $1,395,125,000. Prof. Laughlin, 
in his " History of Bimetallism in the United States," 
has shown that this output of gold was a trifle more 
than the gold product of the 357 years from 1493 to 
1850. The price of gold fell, and consequently ob- 
tained a still wider circulation as money. It drove 
silver into the melting-pot, and threatened the small 
change not only of the United States but of Contin- 
ental Europe. There the Latin Union was formed 
and the franc was lightened just as our own 50, 25, 
and 10 cent pieces were lightened. In 1840 the an- 
nual production of gold was about $15,000,000, in 
1851 it was $150,000,000. Between 1852 and 1864 
France absorbed $680,000,000 of gold and sent 
abroad $345,000,000 of silver. There was no dis- 
position manifested anywhere to surrender gold and 
to procure silver in its place. On the contrary, a de- 
cided preference was shown for gold, and nowhere 
more than in France, where, as time went on, silver 
coins were changed and limited in purchasing power, 
but gold was left untouched. 

In this country the annual product of gold in- 
creased from $889,085 in 1847 to $10,000,000 in 
1848. The next year it was $40,000,000, the next 
$50,000,000, and from then to 1859 it ranged from 
$50,000,000 to $65,000,000. In 1858 the product 


of silver in the United States was $500,000. Before 
then it had never exceeded $50,000 in a year. It 
was not until after 1860 that it reached $2,000,000 
a year. From that year it rapidly increased, and in 
1873 it was $35,750,000, while the product of gold 
for the same period was $36,000,000. The produc- 
tion of silver increased, and gold about held its own. 

Undoubtedly this increase in the supply of silver 
made the metal cheaper, but there were other causes 
than the increase of supply to cheapen silver. Along- 
side with the increase there was a decrease of de- 
mand. From 1848 to 1860, when the annual prod- 
uct of gold in this country was increasing from 
$10,000,000 to $50,000,000, $60,000,000 and $65,- 
000,000, the product of silver was inconsiderable. 

But the price of silver did not materially fall, 
notwithstanding the increased production of the 
years immediately following 1860. The highest 
prices ranged from GOfc?. to 6L16J. But in 1873 
the price of silver fell so much that the average 
price was 59^c/., and in the three following years 
the fall was so great that the lowest price in London 
in 1876 was 46fd and the highest 58%d. By this 
time the annual product of silver had grown to be 
$91,208,750 as against $115,756,750 of gold. The 
interpretation of this is at least that the fall in price 
did not result wholly from the increase of supply. 
The demand had a good deal to do with it. Much 
stress is laid on the nW German coinage act and the 


consequent increase of the supply of silver in the 
world's bullion market. The fact is that from 1871 
to 1876 the German sales of silver did not exceed 
$30,000,000. At the same time the German demand 
for gold for the purpose of establishing the single 
gold standard was about $414,000,000. This de- 
mand for gold had a greater effect on the price of 
silver than the sale of the silver coins for bullion. 
At the same time there was a decreased demand for 
silver on the Continent. Belgium and Holland had 
already closed their mints to silver, and the French 
mint was closed in 1876. India, too, helped the 
depreciation of the price of silver. Her indebted- 
ness to England temporarily suspended her enor- 
mous power for absorbing silver. In 1869-70 the 
excess of India imports of silver was $36,601,685; 
in 1870-71 it fell to $4,709,685; in 1872-73 it 
was down to $3,523,220. It was not back to large 
figures until 1878. The effect of the decreased de- 
mand is shown in our own statistics of exports. In 
1871 our total exports of silver amounted to $31,- 
755,780; in 1876 they were down to $25,329,252, 
notwithstanding the greatly increased production, 
which in the same year advanced from $23,000,000 
to $38,800,000. Nor did the decline of exportations 
cease with 1876. In 1882 they were only $16,829,- 
599, while the silver product of the country had 
grown to be $46,800,000. 

In addition to the increased supply and the excep- 


tional state of things in India, the fact that silver 
had generally gone out of use as^l standard of value 
in Europe must be taken into consideration in seek- 
ing for the reason of the fall in price in 1876. It 
was this fall that led to the movement in this coun- 
try to " rehabilitate " silver. Before this, gold was 
the native product that appealed successfully to Con- 
gress for protection. Now silver was becoming the 
national metal. In 1876 Colorado was admitted as a 
State, the enabling act having been passed in 1875. 
The silver interests thus secured two Senators in 
Congress. In 1876 the products of gold and silver 
were about equal. By 1879 the annual product of 
silver exceeded in commercial value that of gold, 
and this excess steadily increased until 1893. There 
is no doubt, whatever may be said as to causes gov- 
erning the market prior to 1876, that this rapid 
increase of silver production since then accounts in 
great measure for the great fall of price from an av- 
erage of 52fc?. to about 33c?. 

The movement for the free coinage of silver in 
1876 was very brisk. Several bills were introduced 
in the House for the issue of coin notes and for the 
re-establishment of the silver dollar. One of these 
was passed, but received no consideration from the 
Senate. On November 5, 1877, Mr. Bland intro- 
duced a free coinage and unlimited legal -tender sil- 
ver bill, which was passed, without debate and under 
suspension of the rules, by a vote of 163 to 34. 


When the bill reached the Senate it was placed in 
charge of Mr. Allison, who reported it back from 
the Finance Committee with important amendments. 
The bill passed the Senate, February 15, 1878, by a 
vote of 48 to 21. As it passed it provided for the 
monthly purchase of not less than $2,000,000 worth 
of silver bullion or not more than $4,000,000 worth 
" at the market price thereof," the bullion to be 
coined into 412|- grain dollars. Silver certificates 
and an international monetary conference were pro- 
vided for. Free coinage was defeated. After some 
protest the House concurred in the Senate amend- 
ments by a vote of 203 to 72. On February 28 
President Hayes vetoed the bill. On the same day 
both houses passed it over his veto. While the dis- 
cussion of these measures was in progress Senator 
Matthews secured the passage of a resolution declar- 
ing that the United States might lawfully redeem its 
bonds in silver dollars. The result of the passage of 
this resolution was immediately felt. Our bonds be- 
gan to come back from Europe. In one week $10,- 
000,000 of them were thrown upon the market, and 
the amount sent home was estimated by Mr. Allison 
to have reached $100,000,000. We had warning 
seventeen years ago of what actually resulted from 
the act of 1890. 

Under the act of 1878 the Treasury never coined 
more than $2,000,000 worth of silver a month. 
Sometimes the bullion owners demanded more than 


the market rates, when Secretary Sherman, inter- 
preting the law as Mr. Carlisle has lately interpreted 
it, declined to make the purchases. The Govern- 
ment found it almost impossible to force the new 
silver dollars into circulation. The people would 
not take them. The Clearing House in New York 
declined to receive the certificates in settlement of 
balances, until they were compelled to do so by an act 
of Congress which forbade national banks from join- 
ing an association governed by such a rule. The 
Government did its best. It paid the cost of trans- 
porting the dollars. It discontinued the issue of 
legal-tender notes of denominations of less than five 
dollars. It issued one, two, and five dollar silver cer- 
tificates, and finally obtained a circulation for the 
smaller of these. 

Fortunately for the country, the surrender of large 
amounts of national bank currency at this time made 
a place for the new silver currency, so that all the 
evil effects of a silver coinage adopted in the face of 
the action of the commercial world and in antago- 
nism to it were not felt. Under the act of 1878 
the Government purchased 291,272,019 ounces of 
silver, for which it paid $308,279,261. But out of 
it the Government issued in coins 378,166,793 silver 
dollars. The purchases of the Government did not 
check the rapid decline in the price of silver, as is 
shown by the following quotations of the average 
London price per ounce ; 


1880 ...................... 


1882 ............................... . 51|f< 

1883 ................................ 50f d. 

1884 .......... ' ...................... 50 Jd 

1885 ................................ 48 T V/. 

1886 ................................ 45fd 

1887 ................................ 44|J. 



The friends of silver were not satisfied. They in- 
sisted that the Government should do something more 
for their favorite metal. On June 17, 1890, the Sen- 
ate passed a free coinage bill by a vote of 42 to 25. 
The House did not concur, and there was a compro- 
mise measure agreed upon by a conference committee, 
which became a law, known as the Sherman act. 
The law required the monthly purchase of 4,500,000 
ounces, and the coinage every month of 2,000,000 
ounces of the bullion so purchased until July 1, 1891. 
After that bars were to be coined for the redemption 
of the legal-tender Treasury notes authorized by the 
act, in the discretion of the Secretary. The act re- 
cited further that it was the " established policy of 
the United States to maintain the two metals on a 
parity with each other." 

The Treasury purchased under the Sherman law 
168,674,683 ounces at a cost $155,931,002. At 67 
cents an ounce this bullion is worth $113,012,037, a 
loss to the Government of $42,918,965. 


The operation of the Sherman law was quickly 
felt. Although there was no free coinage, Gresham's 
law began to act. Holders of American securities 
became alarmed lest they would be obliged to ac- 
cept payment in silver, and a general hoarding and 
exportation of gold followed. The following table 
will show the increase of our exports of gold coin 
and gold bullion : 

1888 $34,526,447 

1889 50,933,460 

1890 24,063,074 

1891 79,086,581 

1892 76,532,056 

1893 79,775,820 

Total $344,917,438 

Subtracting imports, there was in these years a net 
loss of gold to the United States of $230,234,403. 

In the mean time the departure of gold was shown 
in another way. In January, 1890, of the customs 
dues received by the Government 92.6 per cent, 
were paid in gold; in December 88.3 per cent, was 
in gold. In December, 1891, the amount of gold 
received for customs dues had fallen to 65.4 per 
cent. ; in January, 1893, only 8.9 per cent, was paid 
in gold ; and though the hoarded gold forced from the 
bank vaults by the currency famine of 1893 tempo- 
rarily swelled the gold receipts from customs, the 
proportion in January, 1894, was but 17.6 per cent. ; 
from which it rapidly dwindled, until in October 
and November, 1894, gold receipts had entirely 


The business distress which followed the loss of 
confidence in our securities, in one another, and in 
everything that usually commands the respect of 
business men, is only now beginning to depart, and 
it will return if the legislation of the new Congress 
is as foolish as that of its predecessors has been. 



CONGRESS was called together in the summer of 
1893 for the purpose of repealing the Sherman act. 
After many vexatious delays, involving disaster and 
loss to the business interests of the country, a bill 
was passed unconditionally repealing the purchasing 
clause of the law. In the meantime, June 26, 1893, 
the Indian mints were closed to the free coinage of 
silver. While the effect on the monetary and com- 
mercial relations of India has not been what the au- 
thors of the act expected, the immediate result was 
a panic in silver. The price fell at once in London, 
reaching 30%d. , the lowest point ever touched up to 
that date. This was in June. In July the price 
rose to 32^d. , but in December it was down to 3l^d. 
in London and 70.25 cents an ounce in New York. 
Silver is now (July 1, 1895) selling at 30 T 4 g-d. in 
London, and at 67^ cents an ounce in New York, 
and in the meantime the production of gold has 
enormously increased. At the first of the year the 
price was down to 27 T 7 ^. in London and 59f cents 
in New York, but since then the price of silver has 
risen with that of other commodities. In the calen- 


dar year of 1893 it was the largest known in the 
history of gold mining, the output being valued at 
$157,228,100. The gold output for 1894 was $181,- 
669,100, which was more than equal to the rate of 
gold and silver output of 1861-1865, and it is ex- 
pected that the increase will continue indefinitely. 
In other words, the world will soon have as much 
gold as a basis of value as it had of both gold and 
silver together in the days before the act of 1873 
was passed, before Germany was on a gold basis, 
and when th,e Latin Union was trying to keep the 
two unequal metals at parity. 



THESE developments raise the point as to whether 
the whole question of bimetallism, as compared with 
a single standard- either of gold or silver, is not be- 
ing satisfactorily answered by the course of events 
outside of legislation. Whatever may have been 
true in earlier periods, when governments were com- 
paratively isolated, and practically omnipotent in 
influencing trade conditions within their respective 
boundaries, the developments of the last half -cen- 
tury in breaking down international barriers, in the 
increasing dependence of governments upon the con- 
ditions of finance and commerce, in the unexampled 
development of international as compared with local 
affairs have reached a point where laws are as 
powerless to affect the tides of commerce as are 
imaginary boundary -lines to limit the climates or 
change the natural relations of the territories through 
which they run. In other words, in the essential 
matters of currency, commerce has become all-pow- 

Fifty years ago the world's aggregate of coined 
money, silver and gold, was probably a fair supply 


for commerce as it then existed. Since then the 
question of supply and demand for coin currency 
has been vitally affected by three -factors, namely: 

1. The development of facilities for communi- 
cation, greater since 1840 than from the time of 
Abraham to that date, and the corresponding de- 
velopments of commercial expedients. These de- 
velopments have reduced the absolute amount of 
coin necessary for exchanges. 

2. Discoveries of new deposits and cheapening 
of gold and silver production in America, Australia, 
and Africa. These have been so important in the 
last half -century as to add to our supply of these 
metals a greater amount than had been secured in a 
thousand years before. 

3. The increasing (now almost universal) extent 
to which the use of silver as a basis for currency 
has been renounced by one nation after another. 

Of course it must be remembered that in the case 
of a comparatively indestructible product, such as 
gold or silver, the world's stock on hand is so great 
as to permit its value to be affected but slowly by 
any increase in the annual production. But, even 
after all allowance has been made for this, during the 
earlier part of the last half-century, while the first 
and second of the suggested causes were in more 
active operation than was the third, the actual result 
was the inevitable one. The demand for gold and 
silver decreased greatly when compared with their 


rapidly increasing supply, and both were cheapened 
when compared with the price of labor. 

Daring the last twenty-five years, however, the 
third factor has come so rapidly to the front that the 
civilized world (practically the whole world, so far as 
concerns commerical conditions) is now conducting 
its business upon the basis of gold alone. 

The movement, which commenced in earnest as 
nearly as may be one hundred years ago, for the dis- 
carding of silver as a money metal, is now practically 
complete, having circled the commercial globe. Its 
incalculable force in tending steadily to depress the 
price of silver and appreciate that of gold is, there- 
fore, practically spent ; and we are relegated, as a 
basis for calculation as to the future, to the effect of 
the other causes noted, both of which are still in full 
operation. Commercial developements are still les- 
sening the amount of metal required to facilitate a 
given quantity of exchanges ; and the annual pro- 
duction of gold has of late so rapidly increased as to 
promise for the year 1895 a greater output of that 
metal alone than of both gold and silver combined 
during any four years before 1850. Indeed, the 
rate of increase of gold production during the last 
two years has been such that, if continued until 
1900, it will have added, in gold alone, to our stock 
of precious metals, during this decade, more than the 
production of both silver and gold for any ten years 
previous to 1890. 


It seems, therefore, clear, first, that the last quar- 
ter-century has been that in which has culminated a 
world-wide movement to displace silver and appre- 
ciate, comparatively, the commercial value of gold ; 
that the operation of this cause is not merely practi- 
cally at an end, but that its workings have coincided 
with and set in motion compensating forces; as a 
result of which the value of gold must henceforth 
steadily depreciate, as a consequence of the steadily 
increasing proportion which its supply from this 
time on will bear to the world's demand for its use. 




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