Part 3

MR. BANKER: No, sir, I do not think that the increased output of gold is the cause of higher prices. The increased prices can be more than accounted for in other ways. Think of it. There are:

1. The Trusts, 2. The Middleman, 3. Advertising, 4. Unscientific Management, 5. Overcapitalization, 6. Monopoly! Monopoly! 7. Extravagance, 8. Militarism, 9. Exhaustion of Soil, 10. High Rates of Interest on Agricultural Loans, 11. Unnecessary Disease, 12. Concentration of Population in Cities, 13. Shorter Hours by one-quarter, 14. Increased Wages by one-quarter at least; in some instances, 150%, 15. Shorter Hours for Women, 16. Child Labor Laws, 17. Minimum Wage Laws, 18. Workmen's Compensation Acts, 19. Insurance Against Unemployment, 20. Old Age Pensions.

MR. LABORINGMAN: Well, I don't know what you fellows think, but I am for everyone of these forward movements that make for a better humanity, morally, intellectually and physically; and I'm utterly opposed to the unfair advantages that any man, or corporation, has over any other man, or any other corporation. A just government rules its people through just laws, and guarantees equal opportunities under the operation of those laws.

MR. BANKER: So I think we all are, or will be, very soon. Every lover of his country, everyone who recognizes that the government exists for man--manhood and womanhood--must be for these purposes, but all these things will require a readjustment, and will take time. I am only saying that these things more than account for all your high prices, but let me finish.

21. During the past ten years, 10,000,000 of our people have shifted, or gone, from the country to the cities. Food producers have decreased, and food consumers have increased by 10,000,000. Our population has increased 47% and our food products only 30% since 1890.

22. The hundreds of millions that have gone into automobiles, not one dollar in a thousand of which produces anything but a good time, or a joy ride, is a burden on production, and has been affecting prices, because they are nothing but luxuries.

23. Then there are all the other conveniences of life, such as telephones, electric light, etc.

Again, gentlemen, let us note where the gold has gone to during the last ten years, the period of increase in price. Germany got only $40,000,000, although her business has expanded enormously. England took only $30,000,000, while France took $300,000,000, Russia $200,000,000, and we absorbed $1,100,000,000. During the same time India took $433,000,000. Will anyone say that the prices in these various countries have in any way shown or reflected the amount of gold taken or absorbed?

Let some one come forward and prove that gold has become cheaper by pointing out that prices in the various countries indicate its effects upon commodities. Lastly, let them explain the fact that while the banking resources of the world have increased from $16,000,000,000 to over $55,000,000,000, or increased three and one-half times, the gold for monetary purposes has only doubled, or increased from $4,000,000,000 to $8,000,000,000.

MR. MERCHANT: I am more than satisfied and pleased that I asked you that question, for I knew it would be constantly bobbing up and bothering us, as we went along. When I interrupted you, you were speaking of gold and its functions as money.

MR. BANKER: Yes, and I assert that no other substance or thing possesses these functions, qualifications or characteristics, at least in no such degree as gold. Does anyone here deny that?

MR. LAWYER: I think we must all agree to that, and further I would say that anything that did not possess all these functions, qualifications or characteristics in combination cannot very well be called money. To illustrate, if anything was used as a medium of exchange but depended upon its relation to gold for its acceptance it could not be called money.

I am fully aware that we speak of "cash" and "money," as anything we get in exchange for property, but this language does not mean anything definite, except as to the transaction.

I want to lay this down as an absolute rule, and something that no one of us should forget or overlook during our conversations.

"_We should be careful to avoid calling any kind of credit instrument money, no matter how much used as a medium of exchange._"

Let me read that again.

UNCLE SAM: Now, let me see just what you mean by that. If I understand you, I think that is an attack upon me, upon my credit. For if my recollection serves me right, the United States Notes, or Greenbacks, have been called money, and treated as money ever since I issued them during the war, way back in 1862, I think it was.

MR. BANKER: Well, Uncle Sam, do you think calling a thing something which it is not makes it that thing? To say that the moon is made of green cheese does not make it so. Now, here's one of your United States Notes, or Greenbacks. Do you recollect what you printed on that at the time you issued it, and have been printing on it ever since? This is what it says:

"_The United States will pay the bearer $5.00._"

That promise, or agreement, can mean but one thing, and that is that you will pay the bearer five times one dollar, or five times twenty-five and eight-tenths grains of gold, nine-tenths fine.

Now, it must be perfectly clear to you, indeed, the conclusion is incontrovertible, that that $5.00 United States Note, by which you agree to pay me $5.00 cash, can't be the $5.00 itself.

MR. FARMER: No, by jocks, I know that is true. Tom Jones gave me a written agreement to deliver me a horse last Monday morning. I sent my boy over with his written promise for the horse, and he refused to deliver the horse. Certainly, his promise was not the horse; that's perfectly clear to me, for I did not get the horse, and that's the same kind of a deal that this United States Note is.

MR. LABORINGMAN: Yes, but Uncle Sam is no such flunker as that.

MR. BANKER: Well, he flunked from 1862 until 1879, for about seventeen years, and he came within an ace of flunking again in 1894. He is liable to flunk any time it suits him, if he should get into a tight place.

UNCLE SAM: That's so, and the misfortune and the shame of it is, that I am left in a position where I am compelled to flunk.

MR. BANKER: I agree with you, but that only adds additional proof that this $5.00 bill, which is your promissory note, your I.O.U., or old due bill, given for boots, mules and ammunition during the war, is not money at all, but a mere promise to pay money.

As you have just said, it is most unfortunate that you have been left in this position by your boys who have been going to Congress for the past fifty years, apparently without the intelligence, or courage, to relieve you of this disgraceful situation.

UNCLE SAM: Well, if these United States Notes are nothing but my promissory notes, or due bills, agreeing to pay money, it is self-evident that they are not money. You have completely satisfied me on that point. Mr. Banker, how much of that kind of stuff have I got out?

MR. BANKER: $346,000,000.

UNCLE SAM: Great Scott, I presume if I should get into trouble with some first-class nation, and have to go to war for a few years, and the people began to wonder whether I was going to pull through and pay my debts, that is to doubt my ability to stand the bill, and all that $346,000,000, then that $5.00 United States Note would not pass for $5.00.

MR. BANKER: Precisely so; that very note passed for only $1.75 at one time in 1864, or only 35 cents on the dollar.

UNCLE SAM: Well, I wish Congress would get busy and pay these things off, so that I would be prepared for business, if anything should turn up compelling me to fight.

MR. MANUFACTURER: From what you have said, Mr. Banker, and what Uncle Sam admits, I guess we all agree that the United States Notes, or Greenbacks, are not money at all, but just ordinary debts, or demands for money, and therefore cannot themselves be money, of course. But what have you to say about this National Bank Note here? How does this differ from the United States Notes or Greenbacks? Don't you admit that this is some sort or kind of money?

MR. BANKER: I do not. It is no more money than the United States Note. Just read what it says:

MR. MANUFACTURER: I will. This is what it says:

"_The First National Bank of New York will pay the bearer $5.00._"

Mr. Banker: Don't you see that that bill is a mere I.O.U. of the Bank, nothing but a promise to pay five times twenty-five and eight-tenths grains of gold, nine-tenths fine, to the bearer? It does not differ in the slightest degree from the United States Note except that one is the promise of the First National Bank of New York, and the other the promise of Uncle Sam to pay $5.00. You can no more say that a promise of a bank to pay money is money than you can say that a promise of Uncle Sam to pay money is money. Both are debts, and both are demands for money, and therefore neither can be money.

MR. FARMER: Gentlemen, while I must admit that Mr. Banker has completely, yes, absolutely, gotten away with the United States Notes and National Bank Notes and convinced us that they are not money at all, just watch me choke him with this silver slug, weighing 412-1/2 grains, and bearing two invincible superscriptions.

_First_: "In God we trust."

_Second_: "United States of America, One Dollar." Mr. Banker, what have you to say about our Silver Dollar? Do you mean to tell me it is not money? That's what I want to know. Think of it, this dollar of our daddies not money.

MR. BANKER: Well, Mr. Farmer, if you'll follow me for half a minute, I will only have to ask you whether you yourself think it is money; and I will abide by your own decision. But, what I would rather do is to put it to a vote of the crowd, and if it is not unanimous I'll give it up.

Here is a 1 cent piece, bearing one of your invincible superscriptions, "United States of America, One cent." We have more to trust God for in one of these cents than we have in your Silver Dollar, and therefore it was a grave oversight when Uncle Sam left off the other invincible superscription, "In God we trust," since this piece of bronze is worth only about one-thousandth part of a one-hundredth part of our Gold Dollar, or .0011890. Here is one of our nickels, bearing the same invincible superscription, "United States of America, V cents," which is worth about two-thousandths of one-hundredth part of a Gold Dollar, or .0026743. Here is a 10 cent piece, worth about 4 cents, or .04456, and here is a 25 cent piece, worth about 11 cents, or .11141. Here is a 50 cent piece, worth about 22 cents, or .22283. Here is the sacred dollar of our daddies, worth about 47 cents, or .47651.

Now, all these pieces of metal belong to the same class of coin from the cent to the dollar included, and are merely token coins.

MR. MERCHANT: Well, what is a token coin?

MR. BANKER: A token coin is a piece of metal bearing the stamp of the Government, and passing at its face value, though the metal it contains is worth less than its face value.

This definition covers every piece of metal coin Uncle Sam makes except our gold coins, which are worth just as much and no more in the form of coin than they are in the form of metal, or gold bars. Now, Mr. Farmer, I want you to understand that the silver dollar is included in these token coins.

MR. MANUFACTURER: Well, please tell me why do people take these pieces of money at their face value, when they are worth so much less than they pretend to be?

MR. BANKER: For the very simple reason that Uncle Sam over there redeems all the coins, smaller than one dollar, when presented to him in sums of five dollars or more, and because it is made the duty of his Secretary of the Treasury to maintain the face value of our silver dollar with our gold dollar by exchanging gold dollars for silver dollars, if anyone asks him to do so.

If the Government should pass a law refusing to redeem our silver dollars with gold dollars, our silver dollar would then pass for just what the silver it contains would be worth from day to day. It is now worth 47 cents. In 1902 it was worth 40 cents. In other words, our silver dollar is not its own redeemer at 100 cents any more than the United States Notes or the National Bank Notes are their own redeemers. A silver dollar is a demand or a check calling for a gold dollar. The silver dollar, the United States Note, the National Bank Note all pass at their face value because they are convertible into gold, and are temporarily redeemed by Uncle Sam in gold, while gold is its own redeemer, and a ten dollar gold piece, or any other gold coin, is worth just as much, if hammered into a spike, or melted into a slug, as when it bears the stamp of Uncle Sam, certifying its quality and its quantity.

MR. LAWYER: Mr. Banker, what are subsidiary coins?

MR. BANKER: All these token coins are properly called subsidiary coins. Let me read to you what Horace White says on that point:

"The word 'subsidiary' is usually applied to coins which constitute the small change of a country, and which are legal tender only for limited amounts. In the United States the silver dollar must be classed as subsidiary also; for, although it is full legal tender, the Government does not coin it for private individuals as it coins gold. It is subsidiary or subordinate to gold coin."

MR. LABORINGMAN: Uncle Sam, why do you make these token or subsidiary coins?

UNCLE SAM: I make token or subsidiary coins out of silver, nickel, and copper just as a matter of convenience to the people, and as a result of custom also.

MR. LAWYER: I think what Horace White says upon that point is particularly good, and answers your question, Mr. Laboringman, completely. White says:

"If subsidiary silver coins circulate at a value which is largely imaginary, the question may be asked, why not make them of some other metal, or even of paper? There are no reasons except custom and convenience. A coin, not heavier than a half dollar, is more convenient than a piece of paper; it is cleaner, and in the long run is probably cheaper, as it does not require frequent renewal. A cheaper coin might be made out of some other metal, but it is generally best to conform to the habits of the people. Having been always accustomed to a silver subsidiary coinage no good reason is apparent why we should depart from it."

MR. MERCHANT: Of course, you must use something besides gold to make the 50, 25, 10 and 1 cent pieces out of, because even a gold dollar would be found to be impracticable on account of its size. It would take a microscope to find a piece of gold worth only 5 cents.

MR. LABORINGMAN: And it would take a telescope to find a piece of gold worth only 1 cent.

MR. BANKER: Mr. White has this to say also about the silver dollar: "The silver dollar is a larger kind of subsidiary coin, and should be treated by the Government exactly as the smaller ones are treated. The Government has received the value of a gold dollar for every silver one emitted, and is therefore bound in equity to redeem the dollars as it redeems the halves, quarters and dimes.... There are additional reasons, however, for direct redemption of the silver dollar. One is that such coins are unlimited legal tender between individuals. Another is that there is a certain amount of public apprehension and lack of confidence touching any coin which passes for more than its metallic value."

"McLeod says that in 1691 in a posthumous work Sir William Petty pointed out that one metal only should be adopted as the standard unit, and other metals should be issued as subsidiary to the standard unit. The same doctrine was advocated with great force and at great length by Locke in 1693, and also by Harris in the middle of the last century, and was finally embodied in the great masterpiece of the subject 'Lord Liverpool's Coins of the Realm,' published in 1805."

Now, gentlemen, it must be apparent to everyone that a silver dollar is only another form of a debt of Uncle Sam over there, and that unless he continues to stand ready to exchange gold dollars for silver dollars, and so keep the silver dollars in circulation at 100 cents, they would circulate at their metal or bullion value, or at about 47 cents.

Mr. Farmer, do you think that stamping One Dollar upon that silver coin, added one-hundredth part of a cent to it, or affected its value in the slightest degree? Are you not convinced that it is not money at all, but a mere debt of Uncle Sam and that it is a mere demand for One Dollar in gold, and nothing more?

MR. FARMER: I am bound to admit that you have surprised me, indeed paralyzed me, for I thought the Silver Dollar was money, but it is certainly exactly the same sort of thing that the Greenback and the National Bank Note is, and if they are not money, neither is the Silver Dollar money.

MR. MERCHANT: I am sure we all agree on that point now, but what about this silver certificate? Do you pretend, Mr. Banker, that all our Silver Certificates are not money either?

MR. BANKER: That is just what I assert, but I claim still more than that with regard to the Silver Certificate; for, if you will read it, you will find that it is only a warehouse receipt for silver dollars, which have been deposited in the United States Treasury; and therefore is not a promise to pay anything, but simply to deliver so many silver dollars, which, as I have just demonstrated, must be redeemed in gold to keep them going for 100 cents on the dollar.

MR. LAWYER: I am going to ask one question in this connection, and that is this. The United States Notes are a legal tender for everything except to pay taxes on goods coming into the country and interest on the debt and silver dollars are a legal tender, unless the contract is made payable in something else. Does not the fact that the United States Note and the Silver Dollar are legal tender, make them money?

MR. LABORINGMAN: What's legal tender?

MR. LAWYER: Anything which can be lawfully used in payment of a debt, or which creditors are compelled to accept, is called legal tender currency.

MR. BANKER: The fact that the United States Note and Silver Dollar are legal tender does not change the real character of either of them. Don't you know that the very fact that you are compelled, or think you are compelled, to make anything legal tender, to make it go for something it is not, lowers its value and depreciates that very thing?

The price of the United States Notes or Greenbacks from the day they were issued, until January 1, 1879, the date Uncle Sam redeemed his promise to pay gold for them, was simply a quotation of the government credit. This credit ranged from $1.00 to 35 cents. White says: "The difference between these extreme quotations may be taken to represent changes in the public credit, or various vicissitudes and states of mind, dependent upon the war."

Again he says: "In 1864 Congress attempted to check the depreciation of the currency by closing the gold exchange, and prohibiting sales of gold or foreign exchange for future delivery. The premium on gold advanced more rapidly after the passage of this Act than before, and Congress repealed it two weeks later."

MR. LABORINGMAN: Now, men, let me see if I understand what this is all about. If I have caught on to just what you have been saying about gold, which is all the money we have, and all these promises to pay money, these United States Notes, Bank Notes and Silver Dollars, the difference between gold coins and these promises is the same as the difference between a meal and a meal ticket. And when you come to the Silver Certificate that is only an order for a meal ticket.

UNCLE SAM: By Jove, he's hit the thing plump and square on the head, hasn't he, boys? But what I want to know now is how many of these meal tickets I've got out in one form or another? And, Mr. Banker, I want to know another thing. I want to know how many cans of pork and beans I have on hand to meet the meal tickets with?

MR. BANKER: Well, Uncle Sam, as I look at it you have 1,659,000,000 meal tickets out, and only 150,000,000 cans of pork and beans to meet the demand for meals.

UNCLE SAM: Great Scott, what unbounded confidence the people must have in me not to shove those meal tickets in, before I get ready to supply the meals. What is worrying me is this, if anything should happen to cause any suspicion on that score, the jig would be up with me, and I can see the end of my credit; but of course that wouldn't be my finish. Now, what I want done is this: I want to shift these meal tickets over to the banks where they belong, or make full provision for them myself, so that I can stop worrying, and shall be ready for business, if called upon to meet a first-class nation in a protracted war.

By the way, Mr. Banker, just how did you make those meal tickets amount to 1,659,000,000 and that I had on hand only 150,000,000 cans of pork and beans to meet the meal tickets with? You must remember it takes one can of pork and beans to redeem one meal ticket.

MR. BANKER: Uncle Sam, you will remember that you have $346,000,000 of United States Notes to pay. You have also $563,000,000 Silver Dollars to redeem, and there are $750,000,000 National Bank Notes, making a total of $1,659,000,000, all resting on your $150,000,000 of gold in the reserve of your Treasury.

UNCLE SAM: Yes, but I don't have to pay those National Bank Notes, do I?

MR. BANKER: Well, Uncle Sam, it's this way, you know, you have to pay them out of a 5% fund created by the bankers, but the bankers can turn right around and ask you to redeem the United States Notes which you pay them for the National Bank Notes, in gold.

UNCLE SAM: Mr. Banker, tell me another thing. If these silver certificates are nothing but warehouse receipts calling for silver dollars, and the silver dollars are nothing but token coins, then all these silver certificates are nothing but token or subsidiary coins in another form.

MR. BANKER: That is literally true.

UNCLE SAM: And you say I have $563,000,000 of silver dollars out good for nothing but token or subsidiary coin?

MR. BANKER: Precisely so.

UNCLE SAM: Now, what I want to know is this. How much of this silver is needed today to supply the people with the token or subsidiary coin, up to and including the $2.00 bills; that is, the $2.00 bill, the $1.00 bill, 50, 25, 10 and 5 cent pieces?

MR. BANKER: There are in circulation today about $400,000,000 of these various forms of subsidiary or token coins, or about $4.00 for every man, woman and child in this country.

UNCLE SAM: What is the total amount of silver in the country then, of all kinds, silver dollars and pieces of silver less than one dollar? Tell me that.

MR. BANKER: There are, as I just said a moment ago, $563,000,000 of silver dollars and $147,000,000 of silver pieces less than one dollar, or a total of $710,000,000.

UNCLE SAM: Well, well, you frighten me, for at the rate of four dollars each, the amount necessary for the convenience of the people, I am stacked up ahead for at least fifty years, or until we have about 200,000,000 of people; for you say we have all told $710,000,000 of silver coins in the country now. I want to tell you gentlemen, right now, that I want to get out of this hole, and I want to keep your mind steadily on that point as we go along.

The whole situation is a most embarrassing one. Tell me how much gold coin we have scattered about everywhere over the country?

MR. BANKER: There is about $1,850,000,000 of gold available in the country.

UNCLE SAM: Then I am confident there is great plenty for the present, if we can devise some plan, or scheme, to avail ourselves of it.