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y tion has been largely increased bv
mechanical inventions, better trans
portation facilities, and the like
Ihis argument wi 1 not bear close
analysis. 'I hat there has been any
greater increase smce 1873 than for
tie pieceding twenty years has not
yet been proved. It rests upon mere
assumption and the dexterous man
ipulation of figures. Taking the
I mted States alone and estimating
the increase in proportion to popula
tion it is shown that we have a larger
excess of cereals and breadstuffs than
formerly.
This is an unfair, or at least faulty,
method, because the fall in prices has
not been confined to this country,
and taking the commercial world as
a whole the production is no greater
per capita than it was twenty or
twenty-five years ago. Wheat has
always been regarded as a safer test
•of value than any other commodity
and a steadier quantity in economics
than even gold or silver. In my
speech of Juno 7, 1890, I gave the
figures showing the wheat crops of
Europe and America by decades and
periods of five years from 1870 down
to 1888. Those figures were care
fully taken from various standard
authorities, and I have no reason to
doubt their accuracy. The state
ment being as pertinent now as then,
I will reproduce it:
From 1870 to 1880 the annual average
was 1,287,000,000 bushe’e; from 1875 to
1884 the average was 1,249,000,000 bush
els ; in 1883, 1,267,000,600; in 1884 1 377,-
000,080; in 1885, 1,204,000,000; in 1886,
1.173,000,000; in 1887, 1,259,000,000; in
1888, 1 224,000,000.
For the decade first named the average
annual production of the United States
was about 328,000,000 bushels, making a
total average for the two continents of
about 1,625,000,000 bushels. For the five
years ending with 1888 the average crop
of Europe was 1 247 000,000; of the
United States, 440,000,000, making a to
tal average of 1,687,000,000, an increase
of about 62,000,000 But it is entirely
safe to say that the population of Europe
and America increased within that time
26,000,000:
To have kept pace with the population
3he increase of wheat should have been
>600,000,000 bushels, whereas it was only
12,000,000, so that there has actually been
a falling off in the production of this
great cereal, the price of which is con
sidered by all economists the surest ba
rometer of the general scale of prices.
I may add that in 1889 the product
■of Europe was 1,203,000,000 bushels,
and that of America 490,000,000,
1,093,000,000 in all, about 0,000,000
more than the average of the preced
ing five years. It no more than kept
pace with the increase of population.
Even including the importations
from India and Australia, I do not
think it is possible to figure out any
material increase in the wheat sup
ply of Europe and America. And
yet there are very few commoditiees
that have fallen in a greater ratio
than wheat, and nothing has caused
more distress throughout the agricul
tural regions of the country except
the fall in the price of cotton.
There has been considerable in
crease in the product of cotton in
America, which is the chief source
of European supply; but it must be
remembered that cotton being a raw
material used in manufacture the
product may increase almost indefin
itely, and consumption move right
along with equal pace. And so it
Ivould had not the purchasing power
of the people been crippled by a
diminution of the money with w’hich
to make payment. In the case of
such a commodity as cotton goods,
when the money supply falls short,
people w r ill naturally reduce their
purchases to the lowest possible point.
But the people must eat, and the
wheat has all been consumed. This
great cereal has not increased in
proportion to population and use,
but it evidently has increased
relatively to something, and that
something is money—the instru
ment which measures the wheat.
The argument that prices have fallen
because of increased production car
ries with it the admission that money
has not increased in the same ratio.
If we ask what controls the price of
wheat, we are instantly told “supply
and demand.” But when two things
are pitted against each other in a
trade, the law of supply and demand
applies to both. What is it that
makes wheat worth a dollar a bushel?
Why simply this: the supply of
w T heat and the demand for it, and
the supply of money and the demand
for it, are such that in the popular
-estimate they just balanced by a dol
lar of the one and a bushel of the
other. This suggests the query:
Why should not money increase with
the increase of products. I am not
able to see how any principle of
natural justice would be violated by
such increase. [Applause.]
True, a certain product might be
suddenly and enormously increased
by some extraordinary circumstance.
I do not mean that the supply of
money should be increased to meet
such a case, because that would
throw it out of proportion to other
things. But, striking a fair average
of the increase of products, I can see
no reason why money should not in
crease pro rata, thus preserving the
general average of prices. The
maintenance of absolute equality in
such matters is, of course impossible,
but in the way I have suggested, it
seems to me that a fair approxima
tion would be reached. With an in
creased production ami a stationary
or diminished demand the price of
some things would fall, while that of
others would rise from opposite con
ditions.
But these variations would be ad
justed by the business instincts of
man. If the price of one thing rose
very much, more people would en
gage in its production, and the price
would fall to the general level. On
the other hand, if the price of a par
ticular commodity fall, some of the
producers will engage in other pur
suits, the product will diminish and
the price rise again to the general
level. But where prices are nearly
all falling together it is impossible
for any such adjustment to take
place.
COMMODITIES AND LABOR.
It is claimed that commodities
ought to be cheaper now, because it
takes less labor to produce them.
That is bad logic, and the economics
of the proposition are still worse.
If it takes less labor to produce a
given commodity, that may be a
good reason why the commodity
should exchange for less labor, but
it is no reason why it should ex
change for less money. Money and
labor are by no means identical.
For the money price of commodi
ties to fall as production increases
would have the effect of keeping the
producer in the same condition,
while the possessor of money, and
particularly one who has a large
amount of it, would realize a great
and unconscionable advantage.
In this connection 1 want to read
a brief extract from a speech by
Prof. Taussig, a strong advocate of
the gold standard, recently delivered
before the Liberal Club of Buffalo,
as reported in the Buffalo Express :
The fall had been attributed to im
proved methods of production, better
machinery and cheaper transportation.
Personally, the speaker had never been
able to find in improved methods of pro
duction per se any time explanation of
the fall in prices. Commodities had
fallen in price, but there was one crucial
exception to the general tendency,
namely, in regard to money incomes
which had not fallen. Tnis was a very
important consideration and put a very
different face on the relations between
debtor and creditor. The former gave
back, it was true, the same amount,
j ielding a command over more commod
ities. The creditor got more than he
gave, but on the other hand the debtor
had not suffered, his money income was
as large as it was before.
Here is a distinct recognition of
three things: First, that prices have
fallen ; second, that improved meth
ods of production, etc., have not been
the cause, and third, that all the
benefit of the change has gone to
the creditor. But he says the debtor
has not been injured. Whether he
has been directly injured or not, he
has a good right to complain, for if
any benefit accrue to the nation as a
whole, the debtor surely ought to
receive his share.
Let us take a simple illustration
to show how this change will work
between the man who happens to
have money and the producer.
We will suppose a community of
101 persons. One of them has SIOO,-
000 in money. The other 100 have
no money and are fanners engaged
in the production of wheat. Farm
ing by the most primitive methods,
they produce 1,000 bushels each,
worth $1 a bushel, making the total
value of their product SIOO,OOO.
The man. with the money can buy it
all. Now, we will further suppose
that by the application of more labor,
or, if you please, better methods,
they increase their product to 1,500
bushels each, making altogether
150,000 bushels. If the price fall in
proportion to the increase, the wheat
will now sell for 66| cents per bushel,
in all, SIOO,OOO.
The man with the money, who has
done nothing but watch his dollars
and see them grow, can still buy the
whole of it. It may be said that as
each producer gets SI,OOO of greater
purchasing power than formerly, he
can procure more of those things
whicn he has to buy, and in this way
realize a benefit. If this be true it
does not obviate the glaring injustice
of allowing the miser, doing nothing
that is useful to others but simply
gloating over his gold, to command
50 per cent, more of the products of
other men's labor.
A dollar should be no bigger one
year than it is another. Besides, if
that farmer happens to be heavily in
debt he has to pay back just the
same number of dollars, no matter
how much they may appreciate in
value, €nd to this extent he loses all
the advantages that would have
naturally come to him through the
increase of his product. The wrong
becomes very much greater though
when we consider the caso of the
farmer as it actually is. I have sup
posed him to have increased his
crop, so as to realize the same num
ber of dollars. But in fact the far
mer can seldom do this. There is a
limit to his acres and a limit to the
capacity of the soil. Any consider
able increase of a given staple is
usually the result of bringing more
land under cultivation, which in
volves the application of more labor
or the use of expensive machinery.
Now, suppose in the case I have
taken the 100 farmers are increased
to 150, each producing 1,000 bushels.
The price falls to 66f cents, and the
owner of the SIOO,OOO commands the
product of the labor of 150 men in
stead of 100 as before.
Each farmer now receives $666,-
66? f instead of SI,OOO. He has lost
33J per cent. “No,” it is said, “he
has not lost anything because he can
now buy as much with $666 as he
formerly could with $1,000.” Per
haps he can and perhaps he can not.
If all his business be cash, his pur
chases just equaling his sales, and
everything that he buys falls in the
' same ratio, he neither gains nor
loses. But none of these conditions
obtain. Everything does not fall in
the same ratio. Some things, such
as taxes and other expenses in the
nature of fixed charges, do not come
down at all. The chief fall has been
in the great staples, raw materials, as
they are generally termed.
Again his purchases and sales are
not just equal. If the producer
realize any profit he must in the na
ture of things sell more than he
buys. Consequently a fell in prices
hurts him more than it helps him.
Finally, his business is not all cash;
and right here intervenes this ele
ment of credit which it is claimed
has made silver unnecessary in the
monetary system of the w r orld.
The great majority of farmers are
more or less in debt; some of them
heavily. If one has a mortgage of
$2,000 on his farm, the value of his
crop at a dollar a bushel will pay it
in two years ; at G 65 cents per bushel
it will take the value of three years’
crops to accomplish the same result.
And this principle holds good wher
ever deferred payments are to be
made. The proportions may vary,
but with prices continually falling,
the man who incurs a debt always
pays it in money that is dearer and
more difficult to get than the money
of the contract. So that the vast
edifice of credit, invoked as an an
swer to our demand for free coinage,
instead of relieving the situation is
the prime cause of the inequity which
grows out of a shrinking volume of
actual money.
* * * * * * *
THE GRESHAM LAW.
The gentleman from New York
[Mr. Cockran] and others, have re
ferred to the Gresham law, but not
one of them seems to have grasped
the true principle involved in the so
called law.
People speak of the Gresham law
very much as they would of the
cholera, yellow fever, or small pox.
One would think it was a sort of
a financial pestilence laden with dis
honor and death. What is this dread
ful thing? In order to determine
just how far it will apply to the cur
rency under free coinage we must
understand the precise question with
which Sir Thomas Gresham was
dealing; and then we will be in a po
sition to consider the harm which
came from the operation of the law.
At the time that he conducted his
investigation the greater part of the
currency of England was below the
limit of tolerance; that is, below the
legal weight. The full-weight coins
had nearly all been melted down or
shipped abroad. Hence, the cur
rency was in a very bad condition.
He therefore laid down the maxim
that “ bad money drives good out of
circulation.” But this is merely a
loose generalization and far from be
ing an accurate statement of what
had really taken place.
In the currency of all countries
where coin has circulated freely for a
long time there is always a great deal
of it that is light. This is produced
by natural wear and by various fraud
ulent methods, clipping, filling and
the like. It was so in England.
Now, if a gold or silver smith want
ed a certain quantity of metal for use
in his art he would either purchase
bullion or he would utilize the heavi
est coins that came into his hands.
The man who desired specie for ex
port did the same. The effect was
to leave a large proportion of light
coins in circulation as money. But
it is erroneous to say that the light
coins “ drove ” the heavy ones out of
circulation. There was no “driving”
about it.
The heavy coins were not melted
down or exported merely because
they were heavy, but because a cer
tain quantity of gold or silver was
needed for those purposes. It was
not a case of antagonism between
heavy-weight coins and light ones;
it was a matter of commercial neces
sity. Had there been no light coins
in the realm there would have been
just as many melted and exported,
but in the latter case the coin remain
ing in circulation would have been
equally good.
WHAT WAS THE HARM ?
As long as the light coins circu
lated at par nobody was injured.
But as the abrasion and the sweating
and clipping increased, a point was
finally reached in the life of each
coin when somebody would refuse to
take it at its nominal value. Then
the holder was subjected to a loss,
for if he took it to the mint he could
only get its value.
This is whe, the injury comes in,
and it resulted from the fact that the
underweight c cin in circulation was
not legal tendi r. But under bimetal
ism if one metal be shipped out of
the country, tlje one that remains is
legal tender, full-standard money,
which no man is at liberty to refuse
so long as it retains its legal weight.
But as soon as a coin drops below
the weight prescribed by law, it
ceases to be money, and it then pre
sents the evil which confronted Eng
land in the days of Sir Thomas
Gresham. [Applause.]
* * * * * *
RATIOS ARE LEGISLATIVE.
Again, not only is the monetary
use of gold and silver an artificial
one, but when the coinage is free it
absolutely controls the market value.
The reason is obvious. Under a free
coinage a pound of metal is convert
ible into a certain number of dollars
free of charge. Manifestly it is worth
just the number of dollars it will
make.
And yet some people seem to
think that because an ounce of stand
ard gold will always coin into $18.65
its value never changes. So the
ratios between the metals for the last
two or three hundred years have al
ways been legal ratios.
If all nations had adopted the same
ratio, that would have been the uni
versal market price. But as the
ratios have generally differed, we find
small market variations within the
limits of the legal ratios of different
countries, Prior to 1785 there was
not a market in Europe in which the
ratio was 15£ to 1. They ranged
from a little above 14 to almost 16 to
1, but nowhere was the ratio 154 to
1. In that year it was deemed ad
visable to recoin the French Louis.
De Colonne, the French minister of
finance, advised the ratio of 154 as a
fair average. In England it was
about 15.[, in Portugal 15£, in Spain
15*|, m France 14f. All the other
European ratios were below 15. So,
considering that Portugal furnished
England with gold, while France
drew her silver chiefly from Spain,
DeColonne concluded that 154 was
the safe ratio for France, and accord
ingly recoinago took place at that
rate.
A little later, when Hamilton was
considering the ratio to be adopted
by the United States, he concluded
that the French ratio was erroneous,
and that a just(average*of European
ratios was about 15, which was estab
lished by the United States. Mr.
Hamilton may have been right; 15
to 1 was possibly the true one prior
to 1875 ; but Hamilton overlooked
the fact that when a great, powerful
and wealthy nation like France adopt
ed the ratio of 154 that action itself
became a tremendous force in fixing
the true ratio. As a historical fact
it became the absolutely controlling
force. The American Republic was
then in its infancy, poor and feeble,
and its ratio of 15 became a com
plete nullity.
In 1834, perceiving that a mistake
had been made, the American ratio
was changed. But instead of placing
ourselves in alignment with France,
we went to the other extreme, and
adopted the ratio of 16, or more ac
curately, 15.988. By our first ratio
we undervalued gold and overvalued
silver; by our second we overvalued
gold and undervalued silver. Both
were therefore nugatory. But it was
only because France was so much
richer and more populous than we,
and her conditions were such that
she was capable of absorbing and
using vast quantities of both metals,
thereby controlling their relative
value. So gentlemen will see that
the condition which made silver 3
per cent, more valuable in Europe
than in America was an artificial one.
Our silver did not go to Europe be
cause it was worth more to the sil
versmith there, for it was not. The
prices of merchandise, including sil
verware were generally higher here
than m Enrope. It was attracted by
the French coining rate.
******
CHANGED CONDITIONS.
It is urged, though, that, con
ceding force of the action of France
prior to 1873, conditions have
changed; that neither France n®r
any other country could have main
tained free coinage with one metal
30 per cent below the other.
That is true. If, while the mints
were .open freely to both metals on
equal terms at a certain ratio, they
had gone apart 30 per cent., the
coinage of the dearer metals must
have stopped.
No silver advocate denies that
proposition. The trouble with the
suggestion is that it is another case
of inverted logic. The cart has
been put before the horse. It as
sumes that silver has fallen 30 per
cent, through natural causes, and
that therefore the mints are closed
to it, while the truth is that the
mints were closed first, and that
silver fell as an inevitable result.
If we are to consult natural con
ditions only, it ought to be very
much easier to maintain the ratio
now than at [ any for
300 years before it was demcne
tized. So much is being said about
the overproduction of silver that it
may surprise many people to learn
that silver, relatively to gold, instead
of having enormously increased, has
very greatly diminished. When
America was discovered the quanti
ty of silver in Europe was forty times
as great as the quanttiy of gold.
I am speaking of the metals by
weight. From that time until the
year 1800 the quantity of silver ex
ceeded that of gold in the propor
tion of at least 45 to 1, taking the
period as a whole; and for a large
portion of the time it reached 60 or
65 to 1, never falling below 30
to 1.
In 1803, according to the En
cycopedia Britannica, the annual
production was 53 to 1. From 1800
to 1810, according to Dr. Soetbeer,
the product by value was in the
ratio of 77.2 to 22.8, about 5t to 1
by quantity, while Dean Horton
states that in 1810 the total quanti
ty by weight in the hands of man
was about 45 to 1. The quantity of
gold then gradually increased until
1850, when the relative quantity as
given by Mullhall was 32 to 1. So
that from 1492 down to 1850, three
hundred and fifty-eight years, the
weight of silver never exceeded that
of the gold less than 30 to 1, some
times reachiug, as I have said,
65 to 1.
In 1885, according to Mullhall
again, the proportions of the two
metals were 19 to 1, the change
having been brought about by tre
mendous yield of the California and
Australian gold mines. Other in
vestigators estimate the relative
quantity at 16 to 1, and this seems
to be just about the relation of the
gold and silver coms. Now, if
France could sustain the raito of 15.1
in the face of a supply of 45, how
much easier ought it to be for us to
sustain the ratio of 16 when con
fronted with a supply of very nearly
the same ratio.
It is said though that silver has
increased greatly in quantity sinee
187®. True. It has more than
doubled in annual production, but
the agregate quantity relative to
gold in 1885 was, as 1 have stated,
from 16 to 19 to 1.
Short periods of production are
an unsafe guide, because the
precious metals have always been
produced by spurts. From 1850 to
1870 the production of gold increas
ed nearly 400 per cent., but open
mints absorbed it, and there was no
appreciable fall in value.
*****
EFFECT OF FREE COINAGE UPON THE
CURRENCY.
My friend from lowa, [Mr. Dol
liver,] wishes to know whether this
will be depreciate the currency.
The “70 cents” that is talked of
so much here as the value ©f the
silver dollar is merely the price of
the uncoined and uncoinable bullion.
After we establish free coinage,
will not that silver possess every
quality which it possesses now, and,
in addition, the power of paying
debts? Hence, it must be more
valuable than the uncoined bullion
of today. My judgement is that
the first effect will be to bring silver
bullion and silver coin in an abso
lute parity. Then the silver coin
having exactly the same functions
that the gold coin has the silver coin
and the geld coin will have the
same value with reference to each
other. (Applause.)
But the restoration of silver to the
position of full standard money will
multiply the number of units of
standard money, and thus bring
down the value of every dollar both
gold and silver. Just how much
of course no human being can tell,
because questions of this kind can
not be solved upon mathematical
lines, but that is my theory. (Ap
plause.
Mr. Doliver. How far does the
gentlemen think this proposed leg
islation will expand the volume of
the currency?
Mr. Bartine. I do not think it
would add very much to the number
of dollars except as by taking the
bullion at its coining rate instead of
its bullion value, we would get this
difference into our currency. The
report ©f the majority shows that
this difference would be about $22,-
000,000, but the effect overreaches
that completely. By the legislation
which demonetized silver it was re
duced to the grade of token money,
not only in America, but in Europe
as well. Now, if we restore the
silver bullion to a parity with the
coin, ipso facto we substantially re
store the character and value of
silver money, not merely in our own
country, but all over the continent
of Europe.
At the present time every great
banking centre looks to its
gold reserve as the support of
credit, and it is estimated that
nine-tenths of the business of the
world is transacted on a credit basis
At this time there is about $1,500,-
000,000 of silver coin in Europe and
America. If it is no longer a sup •
port of credit it has been deprived
of nine-tenths of its power as money;
that is to say, it has lost $1,350,000,-
000 of its value. That estimate
though goes too far, because silver
certainly does support credit to some
extent, especially in the smaller
transactions of the people.
But if we assume that it has been
deprived of its power, as a support
of credit then the effect of remone
tizing it would be to re-enforce the
currency of the two continents by
substantially $900,000,000 of stan
dard coin. Money thrown into the
circulation of Europe would bene
fit this country also, because by in
creasing the circulation in Europe
it would increase the power of for
eign countries to buy our commodi
ties and in that way would raise the
prices of American products. [Ap
plause.]
AN INTERNATIONAL AGREEMENT.
This is the latest fad with every
body who is opposed to free coin
age. The minority of the commit
tee present a measure looking to
such an agreemant for the consider
ation of the House. It is peculiar
to this controversy that our op
ponents always have some counter
proposition which they claim to be
in the interest of silver. For my
part, I have no confidence whatever
m the good faith of a large majori
ty of those who are shouting for an
international conference.
We do not look for safe advocates
of protection in the ranks of the
freetraders; neither do we turn to
the cohorts of protection to find the
reliable champions of free trade.
We who are urging free coinage
may be fanatics and cranks, but,
thanks be to God we are not fools
enough to believe that the only true
friends of bimetallism and silver are
to be found among those who des
troyed the double standard, and who
have been denouncing, deriding, dis
crediting, and disparaging the silver
dollar ever since its ceinage was re
sumed in 1878. [Applause.]
If silver is ever restored it will be
by its friends and not by its ene
mies. If they are sincere, then it is
a complete abandonment of every
essential principle for which they
have been contending for the last
fifteen or twenty years. You may
rake the whole broad field of econo
mic literature and not find a case in
which the advocates of a particular
policy have so ingloriously surren
dered. What becomes of the den
unciation of the “infamous and
thieving silver miner, trying to arti
ficially enhance the value of his pro
duct?”
If silver be restored by interna
tional agreement, will not such
agreement be a purely ’artificial
thing? And if silver be thus restor
ed, will it not benefit the miner as
much as if it be done by the United
States alone? Because if there
should be an international agree
ment, it is almost certain to be upon
the ratio of which would make
silver worth 3 per cent, more than at
the ratio of 16, which we propose
to give it. What becomes of the
time worn argument that values can
not be controlled by legislation?
What is international agreement
but legislation in which two or
more countries of all the twaddle
about the importancy ®f fiat and the
government stamp? What be
comes of the claim that there is an
abundance of gold for the business
requirements of the world, and that
we only need silver for small
change.
If there is an abundance of money,
why have an international agree
ment give us more? What becomes
of the “intrinsic unchangeable value
of gold?” If that value be intrinsic
and unchangeable, how can it pos
sibly be affected by an international
agreement? What becomes of the
great economic principle recently
discovered that silver has depreciat
ed because it only costs 40 cents an
ounce to produce it? Can it be that
an international agreement is going
to increase the price of producing
silver?
There is not, I repeat, a single
substantial argument going to prin
ciples involved in this problem that
is not totally abandoned when our
opponents declare themselves in
favor of an international agreement.
The whole question resolves itself
into one of quantity or force; and
the ability of the United States
alone to restore the parity is the
only real issue between us. Now,
then, if our opponents have been
wrong upon every question of princi
ple, is it not possible that they may
also be wrong as to the question of
quantity? In all the speeches or
writings that I have heard or read,
I have never yet seen a systematic
attempt by facts and figures to
prove the inability of the United
States to solve this problem by its
own unaided action. Those speech
es and writings consist mainly of
glittering generalities, worn-out
platitudes, and passionate appeals to
prejudice, which would be entirely
devoid of weight in discussion of a
great economic question like this.
The silver men have no objections
(Concluded on sixth