Chapter 6

Let us imagine a farmer in the country to discharge a debt of £10 to his neighboring grocer by giving him a bill for that sum, drawn on his corn-factor in London, for grain sold in the metropolis; and the grocer to transmit the bill, he having previously indorsed it, to a neighboring sugar-baker in discharge of a like debt; and the sugar-baker to send it, when again indorsed, to a West India merchant in an outport; and the West India merchant to deliver it to his country banker, who also indorses it and sends it into further circulation. The bill in this case will have effected five payments, exactly as if it were a £10 note payable to the bearer on demand. A multitude of bills pass this way between traders in the country, in the manner which has been described; _and they evidently form in the strictest sense a part of the circulating medium of the kingdom_.

Mill in his "Political Economy" quotes this illustration with approval. Is the conclusion arrived at correct?

Suppose that instead of a bill of exchange for £10, a horse worth £10 had been made use of, and the farmer had delivered the horse to the grocer in satisfaction of his debt, and the grocer had turned it over to the sugar-baker, and the sugar-baker to the West India merchant, etc. The horse would have paid the five debts in precisely the same manner that the bill of exchange did, but would such a use of the horse _have made the horse, in the strictest sense of the term, a part of the circulating medium of the kingdom_? I think not! A bill of exchange is not money, but an order for money, and would be valueless unless honored by payment on presentation. From the time the bill was drawn until finally paid an amount of money equal to the demand of the bill must be held out of circulation for its payment. It adds nothing to the circulation, and in no sense does it constitute a part of the circulating medium. It may, possibly, increase the rapidity of circulation, but it is difficult to see how it could do even this. The £10 held out of circulation for the payment of the bill would have paid the debts in the same manner that the bill of exchange did, and I fail to see why they would not have made the circuit as quickly. If a horse had been made use of in the settlement of the debts mentioned by Mr. Thornton, it would have been barter, pure and simple, and not a money transaction.

That the contraction of the volume of credit will not tend to depress prices in the same manner and to the same extent that a contraction of the volume of money would will be apparent from the following illustration.

The most conservative estimates place the national, municipal, corporate, and individual debts in the United States at $30,000,000,000. The Secretary of the Treasury estimates the amount of money in circulation at $1,600,000,000. There is not, in fact, one-third of the amount available for use; but for the purpose of this illustration we will take the Secretary's estimate as correct. Now let us suppose that the volume of credit should be reduced to $28,400,000,000, either by the payment of $1,600,000,000 of the debt or by bankruptcy proceedings or in some other manner. If that amount of the credits were extinguished by payment, business would be stimulated. That sum of money, or at least a considerable portion of it, would pass into the hands of the creditor class, where it would seek investment, and the tendency would be, not to contract, but to expand prices. If that amount of the credits were extinguished by bankruptcy proceedings in which no money passed in either direction, such an extinguishment could not depress or expand prices; it could have no influence upon them.

Now suppose that $1,600,000,000 of the money, every dollar now claimed to be in circulation in the United States, should be withdrawn from the channels of trade, it would not be difficult to see that prices would fall; would, in fact, be completely annihilated. There would be no money with which to make purchases or to pay debts, civilization would go backwards, and universal bankruptcy and ruin would ensue. Suppose that only one-half or one-third of the money available for use should be withdrawn from circulation; even then business would be paralyzed, the money remaining would be hoarded or would be collected in the great money centres, prices would fall, and business men all over the country would be forced into bankruptcy. I think that it must be perfectly apparent that a contraction of credit does not act on the general level of prices in the same manner and to the same extent that a contraction of the volume of money does; that, in fact, it does not act on the general level of prices at all.

I, therefore, conclude that money, and money only, acts on the general level of prices, and that credit does not and cannot act on prices except only as it may increase the rapidity of the circulation of money; and even then it is the greater efficiency of the money, and not the credit, that stimulates prices. Credit may temporarily stimulate the price of the product of some particular industry, but to do this it must attract money from some other industry, and the stimulation will be at the expense of a corresponding depression in prices in the industry from which the money is attracted.

LOS ANGELES, COL.

POINTS IN THE AMERICAN AND FRENCH CONSTITUTIONS COMPARED.

BY NIELS GRÖN.

There are several reasons why, particularly in the light of what is going on in the two countries, a comparison between certain points of the constitutions of the French and United States republics should be of more than passing interest. Successive ministerial crises in France threaten the stability of the republic; here, while political conventions representing millions of people meet and produce radical platforms, nobody is apprehensive of revolution or trouble. The constitution is a bulwark against sudden change; its wisdom is believed to be guarded by impregnable security against caprice or panic.

One in the Eastern hemisphere, the other in the New World, the two countries are the only great republics; both are watched by monarchies with invidious eyes, and, as before suggested, both have passed through, or are passing through, interesting not to say exciting experiences. American admirers of the republican form of government believe that the cause of human liberty would be seriously injured were the French Republic to cease to exist; they go further, and say that the death-knell of civil freedom would be sounded the moment the American republic became a failure. Something like a crisis is seen in the United States to-day, brought about by a whole series of concomitant causes, such as business depression, bank failures, industrial disputes terminating in strikes and lockouts, Coxey armies, panicky people, and unsettled views regarding commerce and finance, this last cause predominating.

Though France has her difficulties about raising sufficient money to carry on the administration, and an income tax is just as unpopular there as it would be here, nevertheless the chief cause of her trouble is to be traced, not to financial, but to constitutional sources. The country is very rich, and its ministers probably will always find some means of raising enough money to pay the cost of administration. Quite true, it is a sore point for a proud country which yearns for revenge upon Germany and longs for large colonial possessions, that its population does not increase, while the populations of its enemy, Germany, and of its well-wisher, the United States, go up by leaps and bounds. True, there are economic writers who regard the dearth and even the decrease of population in France as an advantage to the country. But these need not be considered in this inquiry, for it is quite obvious that any country which really aspires to be numbered with the great powers, and effectually wishes to own important colonial possessions, must have a stalwart and increasing people. And it is a real source of weakness that there should yet be in France so many Royalists constantly on the alert and hoping always for a change in the existing form of government.

Happily, on the contrary, no matter how widely the Western American may differ from his friend in the East, or how keenly the ex-Confederate may feel over the "lost cause," the warm-blooded son of Kentucky will fight as bravely under the flag of the republic as will his frozen-featured brother from Minnesota, and the dreamy individual who gazes poetically upon the placid waters of Puget Sound will shout as loudly for one country, and one allegiance to its glorious emblem, as will the gilded youth whose republicanism is artistically refreshed by a constant vision of the Statue of Liberty triumphantly standing in New York harbor.

Royalism, conservatism, concentrationism, moderate republicanism, opportunism, radicalism, ultra-radicalism, socialism, and heaven knows how many other "isms" besides, exist in France to-day, and make it hard for any ministry to carry on the government. Numerous disintegrating influences are ever present, and political convictions are seldom sufficiently decided for any ministry to form a stable majority.

Though France has had the experience of two previous experiments in republican forms of government (the one set up in 1792, and the second established in 1848), they were such mere makeshifts and so very short-lived that they could not have taught the country very much of the real genius of republican institutions. The centralization and tyranny of centuries brought revolt and hatred of the past, but did not prepare the people for self-government; while here the principles of civil liberty, transplanted from the mother country and flourishing in congenial conditions under colonial administration, found apt and natural expression in the Declaration of Independence and the Constitution. The event of republican institutions twice tried in France failed to show that even the leaders understood the principles of liberty as they were understood by the fathers of the American system of government, and enthusiastically adopted by the people, as the crystallization, so to speak, in definite terms, of what they had long enjoyed. Short-sighted acts of tyranny, exercised by George III and his ministers, were regarded, and justly so, as mere accidents of the time and as innovations to be resisted and overcome. The outcome was the vindication of the principles of government founded by the countrymen of King Alfred the Great, their expansion, and the invaluable expression of those principles in the Declaration and the Constitution.

Some of the bravest and best under the French monarchy helped to establish the reign of popular liberty in the United States, and there can be no question but that the French Revolution was accomplished in part as a result of what had been seen and done on this side of the Atlantic on behalf of the civil rights of the people; but the founders of the first republic in France had no complete foundation on which to build a fabric firm and lasting. It was not easy for a venerable European nation, intrenched within its own regal institutions, in shaking off the past to begin a future of popular sovereignty. Much was gained by sweeping away the worst abuses of the past, but reaction came, succeeded, after a long lapse of time, by a second attempt to establish a republic, again to fail, until the collapse of the power of the adventurer whose election to the presidency was the beginning of the end of the republic of 1848, led to the third experiment, the permanent success of which we all hope for.

If--much virtue in an "if"--the leaders of the first French Republic had been thoroughly masters of and thoroughly imbued with the principles of American liberty, it is possible they might have so instructed and led a bright and capable people as to lay a sure foundation for the future. But even this modified statement is open to question. While it may be regretted that the American Constitution was not copied in the establishment of the successive French republics, it is by no means certain that this matchless paper would have been so far appreciated in its recognition of the great principles underlying it, as to insure success. Some of the South American republics have the American Constitution, more or less, but are not shining examples of republican success. No one can question that monarchies like the United Kingdom and Germany enjoy a larger diffusion of civil liberty than they.

Taking the French system, however, as it exists to-day, there can be no question that it would be vastly improved by copying the American model. It seems to have been founded with a view to the possibility of restoring the monarchy, and, this being so, the men who created it had no object in studying the American Constitution with a view to preventing those ministerial crises which threaten the destruction of the third republic. It will not do to attribute these crises to the unstable character of the fiery Frenchman, nor can the difficulty be disposed of by saying that a French minister will create a crisis for the sake of a pleasing _bon mot_ or a sprightly paradox. A crisis supposes something outside of, or above, or beyond the ordinary, but French ministerial crises have become so common that they are the laughingstock of the nations, and may be said to be almost the normal condition of the legislative assemblies of France. So long as such critical situations can be thus easily brought about there cannot be that continuity of policy which is essential for carrying out great projects. The problem to be solved is a constitutional one,--a statement, I think, easily proved true.

Article Six of the constitution of 1875 reveals the real cause of ministerial crises in France: "The ministers are in a body responsible to the Chambers for the general policy of the government, and individually for their personal acts." This article obviously leaves the respective powers of both houses very undefined. Which chamber is the superior? To which of them are the ministers in fact responsible? The ministers may have a majority in the Chamber of Deputies, and may be in a minority in the Senate. Then there is a crisis. The Senate blocks the way and will not allow the government to go on, for it claims that it is the superior body. This absence of the proper demarcation of the powers of the Senate, of the Chamber of Deputies, and of the ministers necessarily leads to conflict; conflict is but a step from instability, and instability is a crisis which threatens revolution.

The remedy for these oft-recurring ministerial crises in France is to be found in the American Constitution. The French Constitution should be revised and changed at the part quoted and all parts relating to it, so as to provide against ministerial crises; and the instrument presenting a sure guide in the performance of this necessary work is the American Constitution. It has been in operation over a hundred years and has been found to be an admirable working document, affording ministerial stability to its cabinets for over a century. Such a document is surely worthy of the closest study by the public men of the sister republic. It was inevitable that in so long a time some amendments should have become necessary; but for a long period it has undergone no change, save such as noted, and formulating the results of the civil war. Now and then are heard murmurings which claim the necessity of a sixteenth amendment, to the effect that the name of God should be put in the Constitution. The obvious answer to this is, that in the official life of the United States there is a more real acknowledgment of the Divine Being than there is in the official life of any other country, and it is better to have the name of God impressed upon the hearts of the people than upon even the best official document ever drawn up.

It would not be correct to say that no attempts have been made to bring about a ministerial crisis in the United States by encroachment upon the rights of the Executive. Only once, however, when Andrew Johnson was President, has the action of the Executive been seriously hampered. Professor Bryce's remark may be applied to all other attempts. He writes: "Congress has constantly tried to encroach, both on the Executive and on the States,--sometimes like a wild bull driven into a corral, dashing itself against the imprisoning walls of the Constitution." There is the secret. The "imprisoning walls" of the American Constitution keep contending powers in their proper places. The Constitution is so well drawn up that a deadlock is an impossibility, the equilibrium of concomitant powers is easily maintained, and the sovereign will of the people has a fair opportunity of finding a natural exponent.

In the United States the Senate and the House of Representatives are coördinate bodies; in the French Republic each claims superiority over the other. In the United States bills are never introduced by the Cabinet, all bills must originate either in the Senate or in the House of Representatives; such is not the case in the French Republic. In the United States the chief duty of the President is to see that the laws are faithfully executed; the Cabinet administers; its members are rather the aids or secretaries of the chief magistrate of the nation than otherwise. They are his advisers and helpers. During the four years for which the President of the United States is elected, the limitations of his authority are so remote and theoretical that, for practical purposes, it may be stated that he always serves out his full term of office. On the contrary, Presidential resignations are not unknown in the French Republic. France elects her President for seven years, yet Thiers, MacMahon, Grévy, Carnot, Casimir-Périer, and Faure make a list longer than that of the names of the men who have lived in the White House during the past quarter of a century. In the United States, the Cabinet lasts as long as the President's term of office; in the French Republic, the Cabinet sometimes goes to pieces in four months. Briefly, it is quite clear that in the United States there can be no ministerial crises, since the President's chief duty under the Constitution is to see that the laws are faithfully executed, and the members of his Cabinet do not introduce bills, even for finance or supplies, but act as his aids. As previously intimated, the difficulty with the French legislative bodies is that royalistic precedents and rules run side by side with republican principles, and the result is a mongrel institution divided, too often, against itself. When matters shall be so arranged that the French President will have to fill out his full term of office, and French ministers will not be permitted to originate legislation, and cabinets shall be selected to serve as long as the Presidential term, then the French Republic will enjoy the same ministerial stability as that of the United States.

It were hard to say that the French method of electing a president is any better or any worse than that of the United States. The President of the French Republic is elected by the majority of the votes of both Chambers. This plan does not seem to remove him further from the people than does the system of electing a president by electors, as in the United States. As human ingenuity has not yet succeeded in creating the ideal republic, wherein, according to Ouida, there would be no president, some system of election must be followed. The question is not a burning one. There is notable, however, a growing tendency in France in favor of electing the president directly by the votes of the people. The seven-years' period for which the French president is elected is considered by many to be an excellent provision; but it loses half its excellence by reason of the fact that the president has the power to initiate laws, this and other things concurring to make his resignation a possibility, and not a remote one.

That the office of vice-president does not exist in France seems to be of no great consequence. In the history of the American Republic there have been five vice-presidents who have been called upon to step into the Presidential chair by the deaths of presidents. According to the French Constitution, in case of a Presidential vacancy, whether from death or any other cause, the two Chambers proceed immediately to the election of a president. In the interval the ministers are invested with executive power.

What I have written regarding the growing tendency to think it would be better to elect the president directly by the votes of the people, applies with a little more force to the election of senators. In France the municipalities elect the senators, as do State legislatures in this country. It is held by some who have discussed the question that it is much more in conformity with the genius of republican institutions that the people express their will directly by ballot rather than through the votes of municipal councils, as in France, or of legislatures, as in the United States. I cannot see that the difference of terms, that of French senators being nine years, and of American six, is of practical consequence. While both republics are at one as to the necessity of a second chamber, providing thus a check to hasty and unconsidered legislation, many thinkers in both countries agree that some change is necessary to make it possible for others than millionaires to be elected senators.

If I were a Frenchman and had the power, I should get every newspaper throughout the land, and every public man and influential citizen, to enter upon a crusade for the purpose of impressing upon the minds of the whole people the following extract from the Constitution of the United States:

Congress shall make no laws respecting the establishment of religion, or prohibiting the free exercise thereof.

In France, there are constantly continuous and unseemly clashes between church and state. No matter what complications may exist as results of the past, surely it would be better for all concerned to leave the churches to be sustained by the voluntary contributions of the people. In the United States churches seem to live and thrive under this system of noninterference by the state in religious matters, and voluntary support. The more than eighty thousand clergymen are provided for. In the French Republic one reads everywhere, on the walls of churches and of schools, the words "_Liberté, fraternité, égalité_," while there seems to be a serious disagreement between Clericals, on the one side, and Radicals, on the other, as to the meaning of these words. To effectually put an end to this strife, the adoption of the clause I have quoted would be sufficient.

In writing thus freely of the French Republic I am free, I trust, from the spirit of the carping critic delighting in comparisons to the advantage of his own country. I appreciate the splendid literature, the brilliant art, the advanced civilization of the France of to-day. I recognize with gratitude the debt which the United States owes the gallant Gallic people for sympathy and material aid in her struggle for independence. It is now only necessary to be in France on the Fourth of July to realize the reality and depth of the friendship which exists between the sister republics. But I do think that until France shall copy more closely the Constitution of the United States, the stability of the third republic cannot be regarded as assured.

HONEST MONEY; OR, A TRUE STANDARD OF VALUE:

A SYMPOSIUM.

I. BY WILLIAM JENNINGS BRYAN.