Part 4

The creditor classes of the continent, finding England immovable and realizing that the object sought by the English creditors was identical with their own, namely, the increase in the value of money and the depression of prices, concluded that the common purpose could be as well served by the demonetization of one as by that of the other. This conclusion was emphasized by developments on the Comstock lode whose bountiful and beneficent yield of silver was the fitting supplement to the great discoveries of gold on the Pacific coast. The danger of a decline in the value of money was more imminent than ever. The annuitants became alarmed. Commissions were sent from Europe to the Pacific coast to investigate the subject. The United States, too, sent a commissioner to examine into the condition and prospects of the Comstock, and, imbued with many of the characteristics of De Quincey and Chevalier, the United States commissioner, in 1868, reported that if all other mines were worked with the machinery used on the Comstock "their yield would flood the world."

Like many of the present opponents of silver he was endowed with the gift of prophecy, and accordingly we find him confidently predicting that other and innumerable rich lodes of silver would be found on the Pacific coast which would be worked with great profit. The attack on gold was immediately changed to a combined attack on silver. From that period till the present no means have been left untried to belittle and degrade that metal, and also to disparage those who are in favor of continuing it as one of the money metals of the world.

It was then announced with all the dogmatism of authority that silver was unfit to be used as money. Defects were suddenly discovered in it that the scrutiny of three thousand years had failed to disclose. Its weight and bulk were found to be insuperable obstacles to its use as money. Yet the specific gravity of silver is no greater now than it has been for all the ages during which it has been used as money by all mankind, nor is it any heavier or more bulky than it was in 1851 or 1857, when Belgium, Germany, and Austria demonetized gold and made the "heavy," "bulky," and "inconvenient" metal, silver, their only money metal. Silver can now be transported from place to place with less risk and at no greater expense than gold, and at much less cost than at any previous period in the history of the world.

The objection that silver is too heavy for the pocket is an objection common to all metallic money. We see hardly any gold in circulation in this country--infinitely less than of silver. When our people have a choice as to the form in which they will take money they prefer paper representatives as being the most convenient. The extraordinary perfection to which the arts of the engraver and paper maker have been brought gives paper money a security against counterfeiting and imitation far superior to any immunity which can be claimed for the metals. The marvellous inventions of modern times in the form of safes and vault-locks render it a matter of practically no risk to store the metals, both silver and gold, so that paper representatives of them may be issued. These representatives are preferred by the general mass of the people, and have almost entirely occupied the channels of circulation to the exclusion of both metals. A silver certificate for $1,000 weighs no more than a gold certificate for the same amount.

THE MOTIVE FOR DEMONETIZING SILVER.

The motive for the demonetization of silver was precisely the same that had previously inspired the demonetization of gold. The object was to demonetize one of the metals--that metal which promised the greatest abundance, and which would contribute most largely to maintaining at an equitable level the general range of prices. The motive in both cases was to aggrandize the privileged classes--the income and the creditor classes of the world--and by means of a subtle and sinister manipulation of the money volume, whose effects it is not always easy to trace to their true cause, to practically confiscate the reward of the hard toil of the masses. To all intent and purpose the design was to establish a new system of slavery for the western world, of which the debtor classes among the white races should be the victims.

When demonetization was determined on there was no pretense that there was any difficulty in maintaining a parity between the two metals at the established ratio.

In the official résumé of the doings of the French monetary commission of 1869 the arguments upon both sides were summed up.

In behalf of the gold standard it was said:

The rise in price which has taken place within twenty years in a great number of articles of merchandise is evidently due to many causes, such as war, bad harvests, and increase in consumption; but it is very probable that the depreciation of the precious metals has contributed to it, since there has been a striking coincidence between the rise of prices and the production of the new mines of gold and silver. The annual production of the two metals, which was only $80,000,000 in 1847, exceeds now $200,000,000. It has nearly tripled, and it is easy to see that the real value of the metals has diminished. It is difficult to estimate exactly what the diminution is, but whatever it may be it demands the attention of governments, because it affects unfavorably all that portion of the population whose income, remaining nominally the same, undergoes a yearly diminution of purchasing power. As governments control the weight and standard of money, they ought so far as possible to assure its value. And as it is admitted that the tendency of the metals is to depreciate, this tendency should be arrested by demonetizing one of them.

In behalf of the double standard it was replied as follows:

Many economists argue that the precious metals, having become very abundant, have lost 10 or 15 per cent. of their value, and that the situation must be redressed by making money scarcer by demonetizing silver. To this it may be answered that the great discoveries of gold of the last twenty years have injured nobody. The new mass of gold, spreading over the whole world, has found employment in stimulating all forms of business, and, as a consequence, the value of gold has fallen very little. According to Mr. Newmarch, the mass of gold and silver has augmented 3 per cent. per annum, while the mass of exchanges has augmented more than 3 per cent. per annum, so that the equilibrium has been maintained. And the present is an especially inopportune time to demonetize silver, because the annual production of gold has been falling off for several years. It was $200,000,000 in 1853, and it is now not more than $140,000,000. What will happen to the civilized world if silver is demonetized and if gold shall then fail?

THE MOTIVE OF ENGLAND.

England did not adopt the gold standard until she was in a position to become the principal creditor nation. When her forges, furnaces, spindles, and looms were ready to supply manufactured goods to all the world, she saw that all countries and peoples would be compelled to pour their treasures into her lap. Her insular position and great navy guarantied her against external assault. Released from the anxieties and labors incident to the Napoleonic wars, with a sturdy population of trained mechanics, and with fields of coal and iron in abundance, she was well adapted to become the "workshop of the world." With colonial possessions in every sea, and with Continental Europe in ceaseless unrest, England could rely on customers who could themselves produce nothing but raw material and would be obliged to buy her finished products.

The field of industry had been recently broadened by basic inventions of unparalleled importance--the steam-engine, the power loom, the spinning-jenny, and a multiplicity of other devices that increased a hundred fold the efficiency of artisan labor. England knew that her trade would in the main be a foreign trade and her financial dealings largely with foreign governments. She knew that from the people of the continent, impoverished by years of struggle for existence against the attacks of Napoleon, she could not expect immediate payments in cash, or in commodities. Time bonds and other deferred obligations were the media in which for the most part she received pay, she made interest and principal payable in gold alone, and if before the date of payment the value of money should increase it would not be to the disadvantage of the creditor. Whatever we may think of the _ethics_ of this policy, we can have no difficulty in understanding its _motive_.

ACKNOWLEDGMENT OF THE MOTIVE.

As to the object which England had in view in demonetizing silver we are left in no sort of doubt. It has been candidly admitted by many of her financiers and publicists. The reason for her stolid adherence to the gold standard now is the same for which she originally demonetized silver. Her income and creditor classes are daily in receipt of an unearned increment to their wealth by reason of that demonetization. More candid than the advocates in this country of the single gold standard, the writers and press of Great Britain openly avow the object. No better testimony to the fact can be adduced than that supplied by the royal commission appointed in 1886 to inquire into the changes in the relative values of the precious metals.

At page 90, Part II, of the final report of that body, section 128, the commission say:

It must be remembered, too, that this country is largely a creditor country, of debts payable in gold, and any change which entails a rise in the price of commodities generally; that is to say, a diminution of the purchasing power of gold would be to our disadvantage.

Before the British Royal Commission of 1868 on International Coinage, Mr. Jacob Behren, an eminent British merchant and member of the Associated Chambers of Commerce, after answering special and technical questions, was asked, in conclusion, "if there was anything else he wished to state." His reply was (p. 13):

I would only state that, in my opinion, the general introduction of gold all over the world has been one of the greatest possible blessings to England. I believe that England would be now the very poorest country in the world if the silver standard abroad had been kept up, and gold had not been generally introduced. Gold would otherwise have been very much reduced in value, and we should have had all the gold poured into England. All the debts owing to us would have been paid in the depreciated currency; and, therefore, I believe that England ought to have taken the lead in the introduction of a gold currency abroad. We ought to be very thankful that it has been introduced, and we ought to give every facility to its circulation.

Sir Lyon Playfair, in a speech delivered in the English Parliament on April 18, 1890, according to the report in the London Times of the day following, said that--

The true policy of England as the chief creditor nation of the world was to keep perfect independence, and to refuse participation in any entangling conference on our monetary system.

And, according to the same report, Sir Lyon Playfair, referring to the holding of the metals together by law, said that--

It was quite true that, if you yoked a cart-horse to a racer, the strength of both would be increased but the speed of the racer would be sacrificed.

Gold is the "racer" whose "speed" must not be sacrificed, no matter how much injury may be effected by its tendency to greater and greater gain.

The weight of the enormous burden which is imposed on gold can not be better illustrated than by a statement of this same Sir Lyon Playfair, made in the same speech. According to the London Times of April 19, he said that--

The liabilities of the banks of Great Britain to the public amounted to £621,000,000, or about the amount of the national debt of England; but the amount of coin or bullion to meet this liability was only £35,000,000; or, deducting from each side of the account £8,000,000 locked up in the Notes Department of the Bank of England, it was £27,000,000; or only 4-1/2 per cent. of liabilities.

On the same occasion Mr. Goschen, Chancellor of the Exchequer, delivered an able speech, in which he gave his facts, his eloquence, and his logic to the struggling masses of his countrymen by maintaining the wisdom of remonetization of silver, but gave his conclusions and his policy to the creditor classes by recommending no disturbance of present conditions.

I have contended--

said the Chancellor of the Exchequer--

and am prepared still to contend, that I should prefer the currency of the world to depend upon two metals rather than upon one metal. To those views I gave expression in 1878. * * * I have always looked upon silver and gold not as antagonistic to each other; not as being metals the price of one of which would necessarily fall when the other rose, but I have looked upon them as partners who together were doing the work of the currency of the world.

The English creditor classes have not been without able coadjutors in this country. We have noticed for the last twelve or fourteen years that zealous advocates of the gold standard, the advantages of which are not confined to Great Britain, are to be found among the creditor classes of the United States.

If the toilers of this country, from the proceeds of whose labor these exactions have to be paid, had as little influence on the legislation of the United States as the toilers of England have on the legislation of that country, the creditor classes and financiers of the United States might be as frank as those of Great Britain in admitting the object of maintaining the single gold standard.

How graphically, though unintentionally, does the English poet, Waller, in the following verse, express the advantage which the gold standard gives to creditors everywhere, and the self-satisfaction with which they contemplate life:

The taste of hot Arabia's spice we know, Free from the scorching sun that makes it grow. Without the worm, in Persia's silk we shine, And, without planting, drink of every vine. To dig for wealth we weary not our limbs, Gold, though the heaviest metal, hither swims. Ours is the harvest where the Indians mow. We plow the deep, and reap what others sow.

THE MOTIVE OF GERMANY.

When Germany, intoxicated by her victory over France, and in order to further cripple a fallen foe from whom she had exacted $1,000,000,000 in gold, demonetized silver, she inflicted on her people by the fall of prices consequent on the increase in the value of money, more misery than all her armies of horse and foot had been able to inflict on France. France, on the contrary, notwithstanding this unprecedented war tribute, by keeping a sufficient volume of money in circulation to maintain, and even advance, her range of prices, emerged in a few years from the consequences of the greatest disaster in her history, conscious of a triumph more complete than Germany had achieved by all the military splendor of the war. The ransom exacted of France was received back by her almost as soon as paid, in exchange for the products of her industry. It is not a sign of prosperity, Mr. President, when hundreds of thousands of people, the best bone and sinew of a nation, are found annually emigrating; and it is a coincidence which I merely mention, in passing, that as soon as the effects of demonetization of silver had had time to make themselves felt in Germany, a veritable hegira of its people took place.

From 1873 to 1889, the emigration from Germany numbered 1,546,000 persons.

Students of social science everywhere recognize the statistics of illegitimacy and of suicides as among the most powerful evidences of monetary distress. By reference to those statistics we find that notwithstanding the large emigration during that period the number of illegitimate births in Germany increased from 161,294 in 1883 to 169,645 in 1888. The suicides in Prussia, Bavaria, Saxony, and Baden--the leading states of the German Empire--increased from 179 for each million of population in 1868 to 196 for each million of the population in 1876 and to 218 for each million of the population in 1882. In Prussia alone the number of suicides in 1876 was 151 per million, while in 1882 it was 191 per million.

This is part of the price which the toiling masses of Germany are paying for the gold standard experiment, which, without their consent their imperial government foisted upon them.

Bismarck made the mistake that many able men in all countries of the western world have made and continue to make, namely, that of attributing the commanding position of Great Britain in the commercial and industrial world to her adoption of the gold standard. Bismarck mistook for cause and effect what was a mere coincidence, the result of exceptional conditions, as did those of our legislators in 1873, who happened to know anything whatever of the nature of the act demonetizing silver. The belief of some of the most far-sighted statesmen of Great Britain has been that she secured her position, not by reason of the gold standard, but in spite of it.

In a speech delivered at Glasgow, in November, 1873, after the alteration by Germany in her monetary standard, Mr. Disraeli said:

The monetary disturbance which has occurred, and is now to a certain extent acting very injuriously upon trade, I attribute to the great changes which the Governments of Europe are making in reference to their standard of value. Our gold standard is not the cause of our commercial prosperity, but the consequence of that prosperity. It is quite evident that we must prepare ourselves for great convulsions in the money market, not occasioned by speculation or any of the old causes which have been alleged, but by a new cause with which we are not sufficiently acquainted.

And again in March, 1879, when the effects of the decreasing volume of money were making themselves more and more felt, Mr. Disraeli, then Lord Beaconsfield, said:

All this time the produce of the gold mines of Australia and California has been regularly diminishing, and the consequence is that, while these great alterations on the continent in favor of a gold currency have been made, notwithstanding that increase of population which alone requires a considerable increase of currency to carry on its transactions, the amount of the currency itself is yearly diminishing, until a state of affairs has been brought about by gold production exactly the reverse of that which it produced at first. Gold is every day appreciating in value, and as it appreciates the lower become prices. It is not impossible that, as affairs develop, the country may require that some formal investigation should be made of the causes which are affecting the value of the precious metals, and the effect which the change in the value of the precious metals has upon the industries of the country, and upon the continual fall of prices.

In reaching their conclusions, Bismarck and others ignored the fundamental principle that a gold supply that might be sufficient for one country with a gold standard, and might even result in a measure of prosperity to that country, would be wholly insufficient if other countries should adopt the same standard and should enter upon a keen competition and rivalry for the acquisition of gold.

The adoption of that standard by Germany and France was therefore not only destructive of their own prosperity, but was a stunning blow at the prosperity of England and all other gold-using countries. In taking England for his model, Bismarck had not the condition of the toiling masses before his mind, but the glamour of prosperity which surrounded the creditor-barons.

The unprejudiced observer can not fail to perceive that the $370,000,000 coined under the Limited Coinage Act of the United States of 1878, supplementing the gold stock of the western world, postponed great industrial and financial crises. But the elements of these crises are gathering, and, unless relief be soon forthcoming, will burst upon the world with crushing severity.

DEMONETIZATION IN THE UNITED STATES.

If we are surprised that the sordid selfishness of the privileged classes of Europe should have induced them to perpetrate so gross an act of injustice, we are reminded that the legislation of monarchical countries has usually been controlled in the interest of the privileged classes. But what shall be said in defense of the demonetization of silver by the United States? No such stupendous act of folly and injustice was ever before perpetrated by the representatives of a free people.

Our position differed materially from that of Great Britain. This was not a creditor nation. Our people did not, and do not, own thousands of millions of dollars of foreign bonds, on which to receive semi-annual interest in a constantly appreciating money, which would have to be paid from the current earnings of foreign labor. Instead, therefore, of our demonetization unjustly enriching our creditor-classes at the expense of foreigners, it enabled the creditors at home here to rob and despoil the debtors among their own countrymen. Instead of despoiling the Canadian, the Australian, the East Indian, the Egyptian, or the Turk, the spoliation arranged for by our adoption of the gold standard was a spoliation of the debtors in our own communities. In so far, however, as our debt was held abroad, it provided for a spoliation of our citizens by the foreign bondholders also. And as nearly all our public debt was so held, we had presented to us in 1873 the extraordinary spectacle of representatives, sent here to enact laws for the welfare and advancement of our own people, devoting all their energies, whether aware of it or not, to the upbuilding of the fortunes of the moneyed aristocracies of other countries, at the expense of the producers of the United States.

CONDITION OF THE COUNTRY AT THE TIME.

Consider for a moment the condition of this country at the time when this amazing piece of legislation was enacted.

The Republic was but just recovering from an exhausting war, which loaded it with a national debt approaching $3,000,000,000. There were also State, county, city, and town debts aggregating many more thousands of millions, with railroad and other corporate bonds and debts aggregating yet other thousands of millions and private debts of indefinite and unascertainable amount, represented largely by mortgages on real estate. This constituted an aggregate whose burden might naturally be presumed to be sufficient to tax all the resources of the people. Although some portion of those debts has been liquidated and the national bonds have been refunded at lower rates of interest, yet we all know that in this age all municipal and corporate debts, if not national debts, are practically perpetual. No sooner is one form of bond liquidated than another takes its place; no sooner is one public improvement completed than another is begun.