Part 3

What is meant by “debtor class” in this discussion? All men who are not bankrupt are both creditors and debtors. The fact that they are not bankrupt implies that they have more due to them in one way and another than they owe. I am proud to believe that the vast majority of my countrymen are of this class, _i. e._, of the creditor class. I take it that we are not legislating specially for bankrupts. Certainly it would not be wise to change our standard of value for their accommodation. Such a change would produce a great many new bankrupts and would not save any old ones.

What our country needs is more capital. This is especially true of the West and South. There is a great deal of foreign capital that would like to come here, but is deterred by apprehensions of a change in the standard of value. This is not conjecture on my part, but actual knowledge. I do not think there will be a change of standard. I believe in the persistence of gold both here and in Europe, but the belief is very strong in Europe that we shall slip off the gold standard, if we do not go off intentionally. Consequently they keep their money at home or invest it here only on call, and they withdraw it in cases where they can do so without loss. This rule operates with our own capitalists more or less. If money is tight, it is because credit is paralyzed. Lenders are afraid lest the continued operation of the Silver Law should bring about a change of the standard, so that they would get back less than they have put out. While this state of mind continues, it is immaterial, so far as borrowers are concerned, whether the amount of cash in the country is large or small.

We are told that there is not gold enough in the world to do the business of the world. I have been hearing this for seventeen years. How do you know that there is not enough? If there was not enough seventeen years ago, there may be enough now, seeing that there has been an addition to it of $1,500,000,000 during that interval, after making a liberal deduction for the amount used in the arts. The old stock does not disappear with use. I have a gold coin of the reign of Philip of Macedon, on which the name and face of that monarch are so well preserved as to possess artistic as well as archæological value. There is no ascertainable relation between the amount of gold in the world and the amount of business done or to be done. The function of gold as a standard of value is increasing while its function as a form of currency is diminishing. The time is surely coming when its currency function in civilized countries will be limited to international payments and to the wants of travelers. That time has already been reached in the greater part of the United States and Canada.

ALLEGED FALL OF PRICES.

We are told that the single gold standard has caused a disastrous fall in the prices of commodities; also that it has put an unjust burden upon those who have borrowed money on mortgage. I have seen no proof that the adoption of the gold standard by Europe and the United States has caused a decline in prices of commodities, nor can I admit that such a decline would be a bad thing. None of us, when we go to market, complain that prices of food, fuel, clothing, etc., are too low. Mr. David A. Wells has written a book entitled “Recent Economic Changes,” which accounts for the fall in price of all staple articles of commerce which really have fallen during the past twenty years, accounts for it by the increased facilities for producing and transporting the same. He has not grouped them all together, as our bimetallist friends commonly do, but has taken each one separately. I commend his example in this particular to their imitation.

As to mortgage debts, I have learned by inquiry of the leading mortgage companies in New York that farm mortgages are generally made for the term of five years, and that about 25 per cent. of them are paid at or before maturity. Consequently, any wrong which mortgagors are now suffering, in consequence of the gold standard, must have accrued since 1888. To redress their supposed wrongs we are asked to turn the whole business of the country upside down and change the rating of all other contracts perhaps 35 per cent. But the average duration of mortgages is considerably less than five years. The Topeka _Capitol_ newspaper a year or two ago made a special investigation of the records of a number of agricultural counties in Kansas, and found that more mortgages were paid off than were put on within the period covered by the investigation. Hence the presumption is that the average life of the farm mortgage in Kansas is not more than two and one-half years. I am aware that many mortgages are allowed to run for indefinite periods after they fall due, but these, after they fall due, are call loans on real estate security. I am not aware that borrowers on call are complaining of the gold standard. At all events, if they are oppressed by reason of that standard they can relieve themselves at any time by paying up. If they do not pay and are solvent, it must be because they find it to their advantage to endure these so-called oppressions a while longer. It is safe to say that all these mortgages would be called in on the first sign of a change in the monetary standard. The tightness of money in such an event may be imagined, but can hardly be described.

NATIONAL DEBTS.

It is insisted that national and State debts are enhanced by the prevalence of the single gold standard. To prove this we are asked to compare the low prices of the present day with prices of past times. Does not that prove that the bondholder gets more value now than he bargained for, and hence that the taxpayer pays more?

No, it does not. Bondholders are entitled to share with others the advantages of low prices of manufactured goods resulting from new inventions and facilities for production and transportation. As to products of the farm, prices were much lower when I was a boy than they are now. Eggs sold then for 4 cents per dozen, butter for 6 to 8 cents per pound, corn for 15 cents per bushel, wood for $1 per cord, etc., etc. If the gold standard has had any lowering effect on prices it has not touched these articles. But why should we shed tears over national and State debts, seeing that ours are nearly all paid? Let the crocodiles of Europe weep over the enhanced burden of national debts if there be any such enhancement due to the gold standard, which I take leave to deny.

Suppose it were true that national and State debts were enhanced in the manner alleged, would that be a reason for changing the standard of value for the countless daily transactions of business? The bank clearings of seventy-nine cities in the United States for the week ending May 20 amounted to $1,165,478,664, which is about double the interest-bearing debt of the nation. Add to this the payments of wages and the retail transactions that are not embraced in clearing-house returns, and then multiply the whole by the fifty-two weeks of the year and you will see how large a cannon you are loading to kill a mosquito and what a tremendous recoil it must have.

A FEW WORDS MORE ON THE COINAGE ACT OF 1873.

FROM THE N. Y. EVENING POST, JULY 3, 1893.

A correspondent for whom we have a good deal of respect writes to us to remonstrate once more against the Silver-Demonetizing Act of 1873. “Just as soon as it was discovered,” says this writer, “that bimetallism was abolished, and before silver had fallen in price, Mr. Bland, the humorist, as Mr. White is pleased to call him, attempted to restore to the people a right that had been unwittingly taken from them.” The record shows that neither Mr. Bland nor anybody else attempted to remonetize silver until after it had fallen in price more than 5d. per ounce. When the Act of 1873 was passed, the London quotation for silver was 59¾d. When Mr. Bland introduced his bill (November, 1877), the quotation was 54½d. But that is not very important now.

The assumption that “the people” had “a right” which was “unwittingly” taken from them embraces a congeries of errors which need to be exposed--all the more because they are honestly entertained. In the first place, who are “the people” who had a right that was unwittingly taken from them? Of course, they were the people of the United States. How do we know what the people of the United States want at any particular period? By their action in Congress. There is no other way by which their wants can be ascertained. Now, what do we find as to this Act of 1873 demonetizing silver? It was passed by a Congress which was the sole organ of the people as to such matters--passed by a vote unanimous in one branch and nearly unanimous in the other.

“But _we_ did not understand it,” says somebody who was not a member of Congress. It was not necessary that you should understand it. This would be a queer country if it were necessary that all the people should understand all the laws before they are passed. Neither the Constitution nor common sense required that you should understand it. But neither did they forbid your understanding it if you had wanted to. Your understanding it would not have given it greater validity or higher equity. Your not understanding it took nothing from its validity or its equity. The frame of government under which you live prescribed that your representative in Congress should act for you. It did not even require that _he_ should understand it, but as a matter of fact he did understand it, because it was explained to him by public officers and also in public debate.

If we could get an impartial jury from another country or another planet to try this question, that jury would be bound to decide that “the people” passed that Act of 1873 in its entirety, in the only way they ever pass an act applicable to the whole Union. The impartial jury would probably add that since the people had had twenty years in which to remonetize silver, and had not done so, but on the contrary had voted down propositions of that kind _four times_ in the popular branch of Congress, the evidence was conclusive that they were _not_ misrepresented by the Congress which passed the Act of 1873. They voted down the remonetization of silver on the 21st of February, 1878, when they substituted the Allison Bill for the Bland Bill by yeas 203, nays 72. They voted it down on the 8th of April, 1886, on Mr. Bland’s direct motion for the free coinage of silver, yeas 126, nays 163. They voted it down on the 19th of June, 1890, on a motion to concur in the Senate free-coinage bill, yeas 135, nays 152. They practically voted it down on the 24th of March, 1892, by voting against a parliamentary motion made by Mr. Bland. The majority against Mr. Bland was only two votes in this case--150 to 148--but it was sufficient for the purpose.

But we are told that “a right” was taken away from the people when the Act of 1873 was passed, and the implication is that they have been vainly struggling to recover this right for twenty years--a very odd situation indeed for a country where the people can pass any law that they really want. It is the fault of some writers that they use important words without explaining, perhaps without knowing, their meaning. What is this “right” of which the people were deprived by the Act of 1873? Rights may be legal, or moral, or religious. In which category does this right fall? If it was a legal right, it was founded upon a law which Congress had the same right to repeal as to enact. It is not even affirmed that this was a valuable right, although that is implied. A man may have a legal right to two wives, but it may be an injury to him. He may have a legal right to get drunk, but that can hardly be considered valuable.

Was this right of coinage, of which the people were deprived, a moral right? Moral rights are matters of opinion and of dispute, but it may be affirmed with confidence that the existence of a moral right of coinage, in the sense here implied, has never been affirmed or imagined in any country or age since the world began. In the early history of California coins were manufactured by private parties and put in circulation, to pass for what they were worth, and this has been done in various parts of the world at various times. Such coins had no legal-tender property. They were small ingots which anybody could accept or refuse, according to his liking. The contention here is that a moral right exists for private persons to make 412½ grains of silver legal tender for a dollar in the absence of any law to that effect and in the teeth of any law which forbids it. This is really too absurd for discussion--as absurd as it would be to claim this as a religious right. We may add that if this is a moral right, it belongs to all mankind, seeing that they have all had silver money at one time or another. It is surprising that so few recognize it as a right or set up any claim to it.

Finally we are told that this right had been taken from the people “unwittingly.” We repeat that ours would be a very queer country if no law could be passed till everybody understood it. There has been a great deal of talk in the newspapers lately about an act of Congress regulating the seal fisheries in Alaska. How many people knew what that bill was before it was passed? How many know what it is now? Even the lawyers who are discussing it before the Paris Tribunal do not agree in their understanding of it. Science has not yet devised any means to compel people to know what is going on in Congress. The difficulties of forcing such knowledge upon ten or twelve millions of voters, large numbers of whom do not speak English or read and write any language, and still larger numbers of whom know nothing of finance, and never could by any possibility learn anything of it, are simply appalling.

Even in the case of those who make some pretensions to scientific attainment an attempt to make them understand the bills before Congress would be quite herculean. Suppose that our correspondent and the writer of this article were brought to the bar of the House and asked whether they understood the pending measure, so that it might not be passed “unwittingly” as to themselves, and suppose they should apply in the affirmative, what guarantee would Congress have that they really did understand it? They might think that they understood it when they did not. Something of this kind actually happened in connection with the Coinage Act of 1873. The Hon. William D. Kelley of Pennsylvania took part in the debate on the clause dropping the silver dollar from the list of coins, and defended that clause on the ground that the silver dollar was worth two cents more than the gold dollar, and that it was impossible to have two dollars of different values. He afterwards said that he did not understand this particular part of the bill.

What happened in Mr. Kelley’s case would be still more likely to happen in the case of talesmen hastily summoned from the body of the people as assistant Congressmen. Our forefathers, anticipating all the difficulties attendant upon the endeavor to force all the people to understand all the bills before Congress at all stages, wisely provided that such antecedent knowledge should be dispensed with, but they took steps to give facilities for such knowledge. If it is a defect of our system that laws are passed “unwittingly,” it is a defect which we share with all other governments, and it seems to us to be inherent in the representative system. At all events, we see no present cure for it.

It thus appears that our correspondent, for whom, as we have said, we entertain much respect, has, in a single sentence, used three phrases, all of them important, and carrying with them the gist of the debate on a momentous question, without any clear idea of their meaning. He has used the word “people” as though it were an entity separate and distinct from the only organ established for the expression of its will, but he has not told us where we can find this entity or how we can interrogate it. He affirms that the people have been deprived of a “right” without telling us whether it is a legal or a moral right, or how it came to exist, or what portion of the civilized world regard it as a right, or how we are to know that it is a right, or anything about it. He has affirmed that the people were deprived of this right “unwittingly,” implying that no law ought to be passed until all the people understand it. (It is not necessary, according to the hypothesis, that they should approve it, but only that they should understand it.) In using these phrases in this way he has “begged the question” completely, but we presume that he was not aware that he was doing so. We have taken some pains to point out his unfounded assumptions because we know that he represents a good many people who, like himself, are honestly in error.

Transcriber’s Note

Some inconsistencies in spelling, hyphenation, and punctuation have been retained.

This file uses _underscores_ to indicate italic text. Small capitals changed to all capitals.

p. 9: changed as-printed “15 1-7” to “15⅐”, based on context.