Money: Speech of Hon. John P. Jones, of Nevada, on the Free Coinage of Silver; in the United States Senate, May 12 and 13, 1890

Chapter I: Part 1

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MONEY.

"Gold is a wonderful clearer of the understanding; it dissipates
every doubt and scruple in an instant, accommodates itself to the
meanest capacities, silences the loud and clamorous and brings
over the most obstinate and inflexible. Philip of Macedon refuted
by it all the wisdom of Athens, confounded their statesmen, struck
their orators dumb, and at length argued them out of their
liberties."
--ADDISON.

SPEECH
OF
HON. JOHN P. JONES,
OF NEVADA,
ON THE FREE COINAGE OF SILVER;
IN THE
UNITED STATES SENATE,
MAY 12 AND 13, 1890.

WASHINGTON.
1890.

SPEECH
OF
HON. JOHN P. JONES,
OF NEVADA.

On the bill (S. 2350) authorizing the issue of Treasury notes on
deposits of silver bullion.

Mr. JONES, of Nevada, said:

Mr. PRESIDENT: The question now about to be discussed by this body is in my judgment the most important that has attracted the attention of Congress or the country since the formation of the Constitution. It affects every interest, great and small, from the slightest concern of the individual to the largest and most comprehensive interest of the nation.

The measure under consideration was reported by me from the Committee on Finance. It is hardly necessary for me to say, however, that it does not fully reflect my individual views regarding the relation which silver should bear to the monetary circulation of the country or of the world. I am, at all times and in all places, a firm and unwavering advocate of the free and unlimited coinage of silver, not merely for the reason that silver is as ancient and honorable a money metal as gold, and equally well adapted for the money use, but for the further reason that, looking at the annual yield from the mines, the entire supply that can come to the mints will at no time be more than is needed to maintain at a steady level the prices of commodities among a constantly increasing population.

In view, however, of the great divergency of views prevailing on the subject, the length of time which it was believed might be consumed in the endeavor to secure that full and rightful measure of legislation to which the people are entitled, and the possibility that this session of Congress might terminate without affording the country some measure of substantial relief, I was willing, rather than have the country longer subjected to the baleful and benumbing influences set in motion by the demonetization act of 1873, to join with other members of the Finance Committee in reporting the bill now under consideration.

Under the circumstances I wish at the outset of the discussion to say that I hold myself free to vote for any amendment that may be offered that may tend to make the bill a more perfect measure of relief, and that may be more in consonance with my individual views.

THE CONDITION OF THE COUNTRY.

The condition of this country to-day, Mr. President, is well calculated to awaken the interest and arouse the attention of thinking men. It can be safely asserted that no period of the world's history can exhibit a people at once so numerous and homogeneous, living under one form of government, speaking a common language, enjoying the same degree of personal and political liberty, and sharing, in so equal a degree, the same civilization as the population of the United States. Eminently practical and ingenious, of indomitable will, untiring energy, and unfailing hope; favored by nature with a domain of imperial expanse, with soil and climate of unequaled variety and beneficence, with every natural condition that can conduce to individual prosperity and national glory, it might well be expected that among such a people industry, agriculture, commerce, art, and science would reach an extent and perfection of development surpassing anything ever known in the history of mankind.

In some respects this expectation would appear to have been well founded. For several years past our farmers have produced an annual average of 400,000,000 bushels of wheat. Our oat crop for 1888 was 700,000,000 bushels, our corn crop 2,000,000,000 bushels, our cotton crop 7,000,000 bales. In that year our coal mines yielded 170,000,000 tons of coal, our furnaces produced 6,500,000 tons of pig iron and 3,000,000 tons of steel. Our gold and silver mines add more than $100,000,000 a year to the world's stock of the precious metals. We print 16,000 newspapers and periodicals, have in operation 154,000 miles of railroad and 250,000 miles of telegraph. The value of our manufactured products at the date of the last census was $5,400,000,000. Our farm lands at the same time were estimated at $10,000,000,000, our cattle at $2,000,000,000, our railroads at $6,000,000,000, our houses at $14,000,000,000. It is not too much to say that there has been an increase of fully 50 per cent. in those values since the taking of the census of 1880. Our national wealth to-day is reasonably estimated at over $60,000,000,000.

Figures and facts such as these in the history of a young nation bespeak the presence not merely of great natural opportunities, but of a people marvelously apt and forceful. From such results should be anticipated the highest attainable prosperity and happiness. Our population is alert, aspiring, and buoyant, not given to needless repining or aimless endeavor, but, with fixity of purpose, presses ever eagerly on, utilizing every conception of the brain to supplement and multiply the possibilities of the hand, and at every turn subordinating the subtle forces of nature to the best and wisest purposes of man. No equal number of persons on the globe better deserve success, or are better adapted for its enjoyment.

But instead of finding, as we should find, happiness and contentment broadcast throughout our great domain, there are heard from all directions, even in this Republic, resounding cries of distress and dissatisfaction. Every trade and occupation exhibits symptoms of uneasiness and distrust. The farmer, the artisan, the merchant,--all share in the general complaint that times are hard, that business is "dull." The farmer is in debt, and is not realizing, on the products of his labor, the wherewithal to meet either his deferred or his current obligations; the artisan, when at work, finds himself compelled to share his earnings with some relative or friend who is out of employment; the merchant who buys his goods on time finds little profit in sales, and difficulty in making his payments.

WHAT IS THE DIFFICULTY?

What can it be, Mr. President, that has thus brought to naught all the careful estimates and painstaking computations, not of thousands, nor of hundreds of thousands, but of millions, of keen, shrewd, and far-seeing men? Our people take an intelligent interest in their business; they look ahead; they endeavor, as far as possible, to estimate correctly their assets and liabilities, so that on the day of reckoning they may be found ready. Why this universal failure of all classes to compute correctly in advance their situation on the coming pay-day? What potent and sinister drug has been secretly introduced into the veins of commerce that has caused the blood to flow so sluggishly--that has narcotized the commercial and industrial world?

All have been looking for the cause, and many think they have discovered it. With some it is "over-production," with others either a "high tariff" or a "tariff not sufficiently high." Some think it due to trusts and combinations, others to improved methods of production, or because the crops are overabundant or not abundant enough. Some ascribe the difficulty to speculation; others, to "strikes." All sorts of insufficient and contradictory causes are assigned for the same general and universal complaint. However inadequate in themselves, they serve to emphasize the universal recognition of a difficulty whose cause without close inquiry is likely to elude detection. But the evil is of such magnitude, it is so widespread and pervasive, that, without a knowledge of its cause, all effort at mitigation of its effects can but add to the confusion and intensify the difficulty.

It behooves us, therefore, as we value the prosperity and happiness of our people, to set ourselves diligently to the inquiry: What is the cause of the unrest and discontent now universally prevailing?

ONE SYMPTOM COMMON TO ALL INDUSTRIES.

In surveying the question broadly, to discover whether there is anything that affects the situation in common from the standpoint of varying occupations, we find one, and only one, uniform and unfailing characteristic; the prices of all commodities and of all property, except in money centers, have fallen, and continue falling. Such a phenomenon as a constant and progressive fall in the general range of prices has always exercised so baleful an influence on the prosperity of mankind that it never fails to arrest attention.

History gives evidence of no more prolific source of human misery than a persistent and long continued fall in the general range of prices. But, although exercising so pernicious an influence, it is not itself a cause, but an effect.

When a fall of prices is found operating, not on one article or class of articles alone, but on the products of all industries; when found to be not confined to any one climate, country, or race of people, but to diffuse itself over the civilized world; when it is found not to be a characteristic of any one year, but to go on progressively for a series of years, it becomes manifest that it does not and can not arise from local, temporary or subordinate causes, but must have its genesis and development in some principle of universal application.

WHAT PRODUCES A GENERAL FALL OF PRICES?

What, then, is it that produces a general decline of prices in any country? It is produced by a shrinkage in the volume of money relatively to population and business, which has never yet failed to cause an increase in the value of the money unit, and a consequent decrease in the price of the commodities for which such unit is exchanged. If the volume of money in circulation be made to bear a direct and steady ratio to population and business, prices will be maintained at a steady level, and, what is of supreme importance, money will be kept of unchanging value. With an advancing civilization, in which a large volume of business is conducted on a basis of credit extending over long periods, it is of the uttermost importance that money, which is the measure of all equities, should be kept unchanging in value through time.

EFFECT OF A REDUCTION IN THE MONEY-VOLUME.

A reduction in the volume of money relatively to population and business, or, (to state the proposition in another form) a volume which remains stationary while population and business are increasing, has the effect of increasing the value of each unit of money, by increasing its purchasing power.

It is only within a comparatively recent period that an increasing value in the money unit could produce such widespread disturbance of industry as it produces to-day. In the rude periods of society commerce was by barter; and even for thousands of years after the introduction of money, credit, where known at all, was extremely limited. Under such circumstances changes in the volume and in the value of money, while operating to the disadvantage of society as a whole, could not instantly or seriously affect any one individual. An increase of 25 per cent. in one year in the value of the money unit--a change which now, by reason of existing contracts or debts, would entail universal bankruptcy and ruin--would not be seriously felt by a community in which no such contracts or debts existed, in which payments were immediate or at short intervals, and each individual parted with his money almost as soon as he received it.

Such proportion of the annual increase in the value of the money unit as could attach to any one month, week, or day would be wholly insignificant, and as most transactions were closed on the spot, no appreciable loss could accrue to any individual. Such loss as did accrue was shared in and averaged among the whole community, making it the veriest trifle upon any individual. But how is it in our day?

THAT EFFECT INTENSIFIED AS CIVILIZATION ADVANCES.

The inventions of the past one hundred years have established a new order of the ages. The revolution of industry and commerce, effected by the adaptation of steam and other forces of nature to the uses of man, have given to civilization an impetus exceeding anything known in the former experience of mankind. Under the operation of the new system, the rapidity and intensity with which, within that period, civilization has developed, is due in great part to an economic feature unknown to ancient civilization and practically unknown even to civilized society until the present century. That feature is the time-contract, by which alone leading minds are enabled to project in advance enterprises of magnitude and moment. It is only through intelligent and far-seeing plans and projections that in a complex and minutely classified system of industry great bodies of men can be kept in uninterrupted employment.

We have 22,000,000 workmen in this country. In order that they may be kept uninterruptedly employed it is absolutely necessary that business contracts and obligations be made long in advance. Accordingly, we read almost daily of the inception of industrial undertakings requiring years to fulfill. It is not too much to say that the suspension for one season of the making of time-contracts would close the factories, furnaces, and machine shops of all civilized countries.

The natural concomitant of such a system of industry is the elaborate system of debt and credit which has grown up with it, and is indispensable to it. Any serious enhancement in the value of the unit of money between the time of making a contract or incurring a debt and the date of fulfillment or maturity always works hardship and frequently ruin to the contractor or debtor.

Three-fourths of the business enterprises of this country are conducted on borrowed capital. Three-fourths of the homes and farms that stand in the name of the actual occupants have been bought on time, and a very large proportion of them are mortgaged for the payment of some part of the purchase-money.

Under the operation of a shrinkage in the volume of money this enormous mass of borrowers, at the maturity of their respective debts, though nominally paying no more than the amount borrowed, with interest, are, in reality, in the amount of the principal alone, returning a percentage of value greater than they received--more than in equity they contracted to pay and oftentimes more, in substance, than they profited by the loan. To the man of business this percentage in many cases constitutes the difference between success and failure. Thus a shrinkage in the volume of money is the prolific source of bankruptcy and ruin. It is the canker that, unperceived and unsuspected, is eating out the prosperity of our people. By reason of the almost universal inattention to the nature and functions of money this evil is permitted, unobserved, to work widespread ruin and disaster. So subtle is it in its operations that it eludes the vigilance of the most acute. It baffles all foresight and calculation; it sets at naught all industry, all energy, all enterprise.

CONTRAST OF EFFECTS PRODUCED BY AN INCREASING AND A DECREASING MONEY-VOLUME.

The difference in the effects produced by an increasing and a decreasing money-volume has not escaped the attention of observant writers.

David Hume, in his Essay on Money, says:

It is certain that since the discovery of the mines in America
industry has increased in all the nations of Europe. * * We find
that in every kingdom into which money begins to flow in greater
abundance than formerly, everything takes a new face; labor and
industry gain life; the merchant becomes more enterprising, the
manufacturer more diligent and skillful, and even the farmer
follows his plow with greater alacrity and attention. * * * It is
of no manner of consequence with regard to the domestic happiness
of a state whether money be in a greater or less quantity. The
good policy of the magistrate consists only in keeping it, if
possible, still increasing; because by that means he keeps alive
a spirit of industry in the nation and increases the stock of
labor, in which consists all real power and riches. A nation
whose money decreases is actually at that time weaker and more
miserable than another nation which possesses no more money, but
is on the increasing hand.

William H. Crawford, Secretary of the Treasury, in a report to Congress, dated 12th February, 1820, says:

All intelligent writers on currency agree that when it is
decreasing in amount poverty and misery must prevail.

Mr. R. M. T. Hunter, in a report to the United States Senate in 1852, says:

Of all the great effects produced upon human society by the
discovery of America, there were probably none so marked as those
brought about by the great influx of the precious metals from the
New World to the Old. European industry had been declining under
the decreasing stock of the precious metals and an appreciating
standard of values; human ingenuity grew dull under the
paralyzing influences of declining profits, and capital absorbed
nearly all that should have been divided between it and labor.
But an increase of the precious metals, in such quantity as to
check this tendency, operated as a new motive power to the
machinery of commerce. Production was stimulated by finding the
advantages of a change in the standard on its side. Instead of
being repressed by having to pay more than it had stipulated for
the use of capital, it was stimulated by paying less. Capital,
too, was benefited, for new demands were created for it by the
new uses which a general movement in industrial pursuits had
developed; so that if it lost a little by a change in the
standard, it gained much more in the greater demand for its use,
which added to its capacity for reproduction, and to its real
value.

The mischief would be great, indeed, if all the world were to
adopt but one of the precious metals as the standard of value.
To adopt gold alone would diminish the specie currency more than
one-half; and the reduction the other way, should silver be taken
as the only standard, would be large enough to prove highly
disastrous to the human race.

The Encyclopaedia Britannica, 1859 (article Precious Metals, by J. R. McCulloch), says:

A fall in the value of the precious metals, caused by the greater
facility of their production, or by the discovery of new sources
of supply, depends in no degree on theories of philosophers or
the decision of statesmen or legislators, but is the result of
circumstances beyond human control; and although, like a fall of
rain after a long course of dry weather, it may be prejudicial to
certain classes, it is beneficial to an incomparably greater
number, including all who are engaged in industrial pursuits, and
is, speaking generally, of great public or national advantage.

Ernest Seyd, 1868 (Bullion, page 613), says:

Upon this one point all authorities on the subject are agreed, to
wit, that the large increase in the supply of gold has given a
universal impetus to trade, commerce, and industry, and to
general social development and progress.

The American Review (1876) says:

Diminishing money and falling prices are not only oppressive upon
debtors, of whom, in modern times, states are the greatest, but
they cause stagnation in business, reduced production, and
enforced idleness. Falling markets annihilate profits, and as it
is only the expectation of gain which stimulates the investment
of capital in operations, inadequate employment is found for
labor, and those who are employed can only be so upon the
condition of diminished wages. An increasing amount of money, and
consequently augmenting prices, are attended by results precisely
the contrary. Production is stimulated by the profits resulting
from advancing prices; labor is consequently in demand and better
paid, and the general activity and buoyancy insure to capital a
wider demand and higher remuneration.

PRICE THE INDEX OF THE VALUE OF MONEY.

There can be no truer index of the value of money than the general range of prices. Price is the mercury by the rise and fall of which the heat and struggle of industrial and business life are daily measured and made plain. Where the tendency of this indicator continues downward, there is no more certain sign that money is increasing in value.

During a period of falling prices the fear of impending calamity hangs like a pall over the business of the country. Notwithstanding unremitting efforts, men feel themselves constantly on the edge of disaster. Gloomy foreboding and timidity take the place of confidence and courage.

A shrinking volume of money is the most insidious foe with which civilization has to contend.

It is my firm conviction that the inexpressible miseries inflicted upon mankind by war, pestilence, and famine have been less cruel, unpitying, and unrelenting than the persistent and remorseless exactions which this inexorable enemy has made upon society. As the volume of money contracts prices decline, and with the decline of prices comes stagnation of industry, and the relegation to idleness of thousands of willing workmen. Capitalists become unwilling to invest their money in enterprises that employ labor while the products of that labor are constantly decreasing in price. During all periods of falling prices therefore money capital is withdrawn from active industry and seeks investment in bonds and other forms of money-futures yielding fixed incomes. For although the rate of interest in many such cases may be low, the capitalist is compensated for this by the enhancement in the purchasing power of each dollar of the principal and by the necessarily greater command it secures over the products of labor.

Avoiding the very purpose for which it was devised, money at such times seeks seclusion and declines to circulate. Its owner finds that he can better afford to leave it idle in a vault or bury it in the earth, than subject it to the probability of diminution by investing it in business on a constantly falling market. Thus, contrary to all principles of progress and of natural justice, the man who keeps his money idle, and deprives society of its use, is rewarded by an unearned increment, while he who puts his money into active business, where industry and labor may profit by it is punished by unmerited loss.

Under such conditions it is impossible for a community to reach that degree of material progress which, under proper circumstances, it would readily attain. At every turn distress and discouragement stare the people in the face. In every town and village men, willing to work, stand idle. Even their misfortune does not end with themselves, for not only are they a tax upon their friends, lessening to some extent the meager income of those who give them temporary assistance, but their necessary and eager competition for the little work that offers, tends to reduce the compensation of those to whom they are thus indebted. Stores, workshops, and factories, unoccupied and unused, are found in every direction. Crime increases, bankruptcies multiply, and even though the aggregate of wealth augments, it is unjustly distributed, and consequently barren of beneficent results.

A GLANCE AT THE HISTORY OF MONEY.

The system of relying upon the precious metals as money has long been known as the Automatic system. Accurately, it should be called the _Accidental_ system. It has been called "automatic" because, so long as money was made to depend solely upon the yield of the mines, the supply regulated itself by what was believed to be a natural method, namely, by the expenditure of labor in its production, and was limited only by the rude obstacles which nature opposes to the production of the metals. The necessity of expending this labor placed the money volume of any country beyond the control of the kings and conquerors who, in the primitive periods of society, exercised despotic sway over their subjects. It was undoubtedly better for the people of those early times to risk the accidents of production than the follies and sinister designs of rulers.

This automatic system grew out of barter. It is a survival from the period when articles were exchanged directly, not for gold and silver as money, but for gold and silver as commodities--on the basis of their cost of production--as in the case of the articles for which they were exchanged.

There have been the same evolutions of progress in money as in all other things. In the rude original of society no kind of money was possible. The first trade was by barter, after which, some one or more commodities attainable in the vicinage, and in general use and demand were selected as the common media through which all exchanges were filtered. The use for that purpose of various metals by weight followed next, and, at a succeeding stage, gold, silver, and copper by weight, and after this their use in the form of coins, the value of which coincided with the bullion-value, which must necessarily be the case when free coinage is permitted.

It may be not uninteresting in this connection to have a general view of the materials which, at different epochs of the world's history, have been used as money. I therefore present a tabular statement giving those particulars in chronological order.

_Table showing some of the substances which have, at various periods
and in various countries, been used as money._

_Period following the failure of the ancient mines._

_Period following the discovery of the American mines._

_Period following the openings of California and Australia._

An analysis of this table will show how carefully even the most primitive communities guarded against a too restricted money volume.

The materials chosen to serve the purpose of money in each country during the early history of society were, it will be observed, such as at the time and place would be of sufficient quantity or volume to insure against any sudden deprivation of supply. In countries where the chase was common, the skins of wild animals were used as money; in maritime communities, shells; in pastoral countries, cattle; in the early history of agriculture, grain; in early mining periods, base metal; in primitive manufacturing ages, nails, glass, musket-balls, strips of cotton, etc.

As communities developed, and commerce between them began, substances somewhat common to all countries, portable and indestructible, such as the precious metals, came to be more, and other substances less, resorted to. By reason of their great beauty those metals were always in demand, even among barbarous peoples, for purposes of ornament and decoration. Because of their universal use for such purposes they came to be recognized as things for which anything else could with safety be exchanged, and as society advanced, and it came to be recognized that some medium should be adopted in which to make all exchanges, those metals were naturally selected for the purpose, so that, together, they became, as it were, a common denominator of value. Their selection proved a convenient method of storing away wealth in a form that commanded at all times every other form of wealth. They had always passed by weight wherever used, but as society became better organized, and its methods more complex, it became necessary, in order to insure against fraud, to form them into pieces convenient for handling, and to invest them distinctly with the function of money, so that, by law, they became a universal solvent for debts and demands, the stamp of the government placed on the coin testifying to its weight and fineness.

Both metals, as shown by the table, have been concurrently used as money for thousands of years--not only since the dawn of history, but from a period anterior to any historical records. The oldest annals show that they had already been employed as circulating media and that their relative values, or the ratio of their exchange for one another, had already been established. Gold and silver were used as money in Palestine as early as the year 1900 B. C. We read in the Bible that Abraham weighed to Ephron the Hittite 400 shekels of silver, "current money with the merchant." An inscription on the temple of Karnak, of the date of 1600 B. C. mentions those metals as materials in which tribute was paid.

But long anterior even to these dates, both metals had been used, as, among the relics of the bronze age of the prehistoric era, ornaments of both gold and silver have been found. Gold, being the less abundant of the two metals, has had the higher value; but the ratio between the two has been marvelously steady, taking into account the great sweep of ages during which they have been used as money. This will be seen by reference to the following tables of ratios. I will first take their relative values during ancient times.

_Table showing the ratio of gold and silver in various countries of
the world up to the Christian era._

----------------------------------------------------------------------
B. C. | Ratio. | Authorities.
----------------------------------------------------------------------
1600 | 1 to 13.33 | Inscriptions at Karnak; tribute lists of
| | Thutmosis. (Brandis.)
708 | 1 to 13.33 | Cuneiform inscriptions on plates found in
| | foundation of Khorsabad.
| 1 to 13.33 | Ancient Persian coins; gold darics at
| | 8.3 grams = 20 silver siglos, at 5.5 grams.
500 | 1 to 13.00 | Persia. Darius. Egyptian tribute. Herod.
| | III,.95. (Boeckh, page 12.)
490 | 1 to 12.50 | Sicily. Time of Gelon. "At least" 12.50.
| | (Boeckh, page 44.)
470 | 1 to 10.00 | Doubtful. Asia Minor. Xerxes's treasure.
| | (Boeckh, page 11.)
440 | 1 to 13.00 | Herodotus's account of Indian tributes.
| | 360 gold talents = 4,680 silver.
420 | 1 to 10.00 | Asia Minor. Pay of Xenophon's troops in silver
| | darics. (Anab.; Boeckh, page 34.)
407 | 1 to ---- | Spurious and debased gold coins at Athens.
| | (MacLeod, Polit. Econ., page 476; Boeckh,
| | page 35.)
400 | 1 to 13.33 | Standard in Asia, according to Xenophon.
400 | 1 to 12.00 | Standard in Greece according to "Hipparchus";
| | attributed to Plato.
400 | 1 to 12.00} | Various authorities adduced by Boeckh.
400 | 1 to 13.50} |
| |
| {12.00}| Values in Greece from the Peloponnesian war to
404-336 | 1 to {13.00}| the time of Alexander, according to hints in
| {13.33}| Greek writers. There were variations under
| | special contracts--unit, the silver drachma.
| |
340 | 1 to 14.00 | Greece. Time of Demosthenese. (Boeckh,
| | page 44.)
338-326 | 1 to 11.50 | Special contracts in Greece.
343-323 | 1 to 12.50 | Egypt under the Ptolemies.
300 | 1 to 10.00 | Greece. Continued depression of gold, caused
| | by great influx under Alexander.
207 | 1 to 13.70 | Rome. (Boeckh, page 44.) Gold scriptulum
| | arbitrarily fixed at 17.143 for 1.
100 | 1 to 11.91 | Rome. General rate of gold pound to silver
| | sesterces to date.
58-49 | 1 to 8.93 | Rome. Continued depression of gold, caused
| | by influx of Caesar's spoil from Gaul.
| | [N. B.--Caesar's headquarters were at
| | Aquileia, at the head of the Adriatic,
| | where there was also a gold mine, which
| | at this period became very prolific.]
50 | 1 to 11.90 | Rome. "About the year U. C. 700," the rate
| | was 11 19-21. (Boeckh, page 44.)
29 | 1 to 12.00 | Rome. Normal rate in the last days of the
| | republic.
----------------------------------------------------------------------

By reference to the foregoing table it will be observed that the increase in the supply of gold in Europe, consisting of the spoils of the Orient, gathered by Alexander the Great, and brought by him to Greece, had the effect of decreasing the value of that metal so that instead of being exchangeable at the ratio of 1 to about 13-1/2 of silver, as formerly, gold became depressed, 1 ounce of it exchanging for only 10 ounces of silver. Later, when Julius Caesar extended his conquering arms into Gaul, and sent to Rome the accumulations of treasure amassed by him, the value of gold by reason of the increased supply was again depressed, so that an ounce of it was exchangeable for only 8.93 ounces of silver. With these exceptions it may be said that the relation of silver to gold for sixteen hundred years before the time of Christ had varied only from the ratio of 1 to 12 to that of 1 to 13.33. Silver at no time during all this period fell below 13.50 to 1 of gold.

Looking, now, at the relative values of gold and silver from the time of Christ to the discovery of America, we find the ratio between the two metals to be as follows:

Table showing the ratio of gold and silver in various countries of the world from the opening of the Christian era to the discovery of America:

----------------------------------------------------------------------
A. D. | Ratio. | Authorities.
----------------------------------------------------------------------
1-37 | 1 to 10.97 | Rome. Rate under Augustus and Tiberius.
37-41 | 1 to 12.17 | Rome. Reign of }
| | Caligula. } The silver coinage
54-68 | 1 to 11.80 | Rome. Reign of Nero. } much debased,
69-79 | 1 to 11.54 | Rome. Reign of } consequently the
| | Vespasian. } ratio of the
81-96 | 1 to 11.30 | Rome. Reign of } metals pure was
| | Domitian. } about 1 to 11.
138-161 | 1 to 11.98 | Rome. Reign of }
| | Antoninus. }
312 | 1 to 14.40 | Byzantium. Reign of Constantine. Arbitrary.
438 | 1 to 14.40 | Byzantium and Rome. Theodosian code.
| | Arbitrary.
864 | 1 to 12.00 | Probable ratio, as shown by the Edictum
| | Pistense, under the Carlovingian dynasty.
1260 | 1 to 10.50 | Average ratio in the commercial cities of
| | Italy. Local or doubtful.
1344-1660 | 1 to ---- | England. Numerous mint indentures given in
| | McLeod's Political Economy, page 475. The
| | ratio, except when fixed arbitrarily and
| | in violation of market price, varied
| | between about 1.12 and 1.14 during the
| | two hundred and fifty-seven years
| | included in this period.
1351 | 1 to 12.30 } |
1375 | 1 to 12.40 } | Ratio in North Germany as shown by the
1403 | 1 to 12.80 } | very accurate rules of the Lubeck mint,
1411 | 1 to 12.00 } | corroborated in the main by the accounts
1451 | 1 to 11.70 } | of the Teutonic Order of Knights,
1463 | 1 to 11.60 } | averaged in periods of forty years.
1453-1494 | 1 to 10.50 | Ratio according to the accounts of the
| | Teutonic knights. As the ratio fixed in
| | England by numerous mint indentures from
| | 1465 to 1509 was about 1.12 this German
| | ratio is considered local or doubtful.
----------------------------------------------------------------------

It will thus be observed that during the one thousand four hundred and ninety-two years from the coming of Christ to the discovery of America, silver never went below the ratio of 14.40 to one of gold.

The relations which the metals have borne to each other since the discovery of the New World will appear from the following:

_Table showing the relative values of gold and silver in the various
countries of the world from the discovery of America to 1680._

----------------------------------------------------------------------
A. D.| Ratio. | Authorities.
----------------------------------------------------------------------
| |
1497 | 1 to 10.70 | Spain. Reign of Isabella. Edict of Medina. Local.
1500 | 1 to 10.50 | Germany. Adam Riese's Arithmetic. Local or
| | doubtful.
1551 | 1 to 11.17 | Germany. Imperial mint regulations. Arbitrary or
| | local.
1559 | 1 to 11.44 | German Imperial mint regulations.
1561 | 1 to 11.70} | France. Mint regulations.
1575 | 1 to 11.68} |
1623 | 1 to 11.74 | Upper Germany. Mint regulations.
1640 | 1 to 13.51 | France. Mint regulations. Transition period.
1665 | 1 to 15.10 | France. Mint regulations.
1667 | 1 to 14.15 | Upper Germany. Mint regulations. Doubtful.
1669 | 1 to 15.11 | Upper Germany. Mint regulations.
1679 | 1 to 15.00} | France. Mint regulations.
1680 | 1 to 15.40} |
| |
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Table showing the ratio of silver to 1 of gold from 1687 to the demonetization of silver by Germany and the United States and the closing of the Mints to its free coinage.

[From the Report (1890) of the Director of the U. S. Mint on the Production of the Precious Metals in the United States.]

[NOTE.--From 1687 to 1832 the ratios are taken from Dr. A. Soetbeer; from 1833 to 1878 from Pixley and Abell's tables; and from 1879 to 1889 from daily cable-grams from London to the Bureau of the Mint.]

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Year. | Ratio.|| Year. | Ratio.|| Year. | Ratio.|| Year. | Ratio.
-------+--------++-------+--------++-------+--------++-------+--------
1687 | 14.94 || 1721 | 15.05 || 1755 | 14.68 || 1789 | 14.75
1688 | 14.94 || 1722 | 15.17 || 1756 | 14.94 || 1790 | 15.04
1689 | 15.02 || 1723 | 15.20 || 1757 | 14.87 || 1791 | 15.05
1690 | 15.02 || 1724 | 15.11 || 1758 | 14.85 || 1792 | 15.17
1691 | 14.98 || 1725 | 15.11 || 1759 | 14.15 || 1793 | 15.00
1692 | 14.92 || 1726 | 15.15 || 1760 | 14.14 || 1794 | 15.37
1693 | 14.83 || 1727 | 15.24 || 1761 | 14.54 || 1795 | 15.55
1694 | 14.87 || 1728 | 15.11 || 1762 | 15.27 || 1796 | 15.65
1695 | 15.02 || 1729 | 14.92 || 1763 | 14.99 || 1797 | 15.41
1696 | 15.00 || 1730 | 14.81 || 1764 | 14.70 || 1798 | 15.59
1697 | 15.20 || 1731 | 14.94 || 1765 | 14.83 || 1799 | 15.74
1698 | 15.07 || 1732 | 15.09 || 1766 | 14.80 || 1800 | 15.68
1699 | 14.94 || 1733 | 15.18 || 1767 | 14.85 || 1801 | 15.46
1700 | 14.81 || 1734 | 15.39 || 1768 | 14.80 || 1802 | 15.26
1701 | 15.07 || 1735 | 15.41 || 1769 | 14.72 || 1803 | 15.41
1702 | 15.52 || 1736 | 15.18 || 1770 | 14.62 || 1804 | 15.41
1703 | 15.17 || 1737 | 15.02 || 1771 | 14.66 || 1805 | 15.79
1704 | 15.22 || 1738 | 14.91 || 1772 | 14.52 || 1806 | 15.52
1705 | 15.11 || 1739 | 14.91 || 1773 | 14.62 || 1807 | 15.43
1706 | 15.27 || 1740 | 14.94 || 1774 | 14.62 || 1808 | 16.08
1707 | 15.44 || 1741 | 14.92 || 1775 | 14.72 || 1809 | 15.96
1708 | 15.41 || 1742 | 14.85 || 1776 | 14.55 || 1810 | 15.77
1709 | 15.31 || 1743 | 14.85 || 1777 | 14.54 || 1811 | 15.53
1710 | 15.22 || 1744 | 14.87 || 1778 | 14.68 || 1812 | 16.11
1711 | 15.29 || 1745 | 14.98 || 1779 | 14.80 || 1813 | 16.25
1712 | 15.31 || 1746 | 15.13 || 1780 | 14.72 || 1814 | 15.04
1713 | 15.24 || 1747 | 15.26 || 1781 | 14.78 || 1815 | 15.26
1714 | 15.13 || 1748 | 15.11 || 1782 | 14.42 || 1816 | 15.28
1715 | 15.11 || 1749 | 14.80 || 1783 | 14.48 || 1817 | 15.11
1716 | 15.09 || 1750 | 14.55 || 1784 | 14.70 || 1818 | 15.35
1717 | 15.13 || 1751 | 14.39 || 1785 | 14.92 || 1819 | 15.33
1718 | 15.11 || 1752 | 14.54 || 1786 | 14.96 || 1820 | 15.62
1719 | 15.09 || 1753 | 14.54 || 1787 | 14.92 || 1821 | 15.95
1720 | 15.04 || 1754 | 14.48 || 1788 | 14.65 || 1822 | 15.80
----------------------------------------------------------------------
Year. | Ratio. || Year. | Ratio. || Year. | Ratio. || Year. | Ratio.
-------+--------++-------+--------++-------+--------++-------+--------
1823 | 15.84 || 1836 | 15.72 || 1849 | 15.78 || 1861 | 15.50
1824 | 15.82 || 1837 | 15.83 || 1850 | 15.70 || 1862 | 15.35
1825 | 15.70 || 1838 | 15.85 || 1851 | 15.46 || 1863 | 15.37
1826 | 15.76 || 1839 | 15.62 || 1852 | 15.59 || 1864 | 15.37
1827 | 15.74 || 1840 | 15.62 || 1853 | 15.33 || 1865 | 15.44
1828 | 15.78 || 1841 | 15.70 || 1854 | 15.33 || 1866 | 15.43
1829 | 15.78 || 1842 | 15.87 || 1855 | 15.38 || 1867 | 15.57
1830 | 15.82 || 1843 | 15.93 || 1856 | 15.38 || 1868 | 15.59
1831 | 15.72 || 1844 | 15.85 || 1857 | 15.27 || 1869 | 15.60
1832 | 15.73 || 1845 | 15.92 || 1858 | 15.38 || 1870 | 15.57
1833 | 15.93 || 1846 | 15.90 || 1859 | 15.19 || 1871 | 15.57
1834 | 15.73 || 1847 | 15.80 || 1860 | 15.29 || 1872 | 15.63
1835 | 15.80 || 1848 | 15.85 || | || |
-------+--------++-------+--------++-------+--------++-------+--------

By the foregoing table it will be seen that in the three hundred and seventy-five years from 1497 to 1872 the maximum separation of the metals was only as 1 to 16.25--notwithstanding the widest divergencies during that long period in the yield of the two metals from the mines. It will be observed that all the later quotations are from the London market, but it is a significant fact that in France, where, by the law of 7 Germinal, _An_ XI, (1803,) free coinage was permitted to both metals, at the ratio of 15-1/2 of silver to 1 of gold, for a period of seventy years, and until the coinage of silver was limited, there was at no time the slightest variance from that relation.

When silver was deprived of the full money function, and all the money-work of society was placed on gold, the metals began to separate. The following table shows the degree of that separation from year to year:

Table showing the ratio of silver to 1 of gold since the demonetization of silver by Germany and the United States, and the closing of all mints of the western world to its free coinage:

1873 15.92 | 1882 18.19
1874 16.17 | 1883 18.64
1875 16.59 | 1884 18.57
1876 17.88 | 1885 19.41
1877 17.22 | 1886 20.78
1878 17.94 | 1887 21.13
1879 18.40 | 1888 21.99
1880 18.05 | 1889 22.10
1881 18.16 |

The foregoing figures show that it is only since the legislative proscription of silver by Germany and the United States, and the closing of all the European mints to its coinage, that any material change took place in the ratio between the two metals, which conclusively demonstrates that the present divergence in the relative values of the two metals is directly due to the legal outlawry of silver and not to natural causes.

Not only has the concurrent use of the two metals as money had the sanction of all time, but the approval of the greatest minds of history, and, when not blinded by self-interest, the approval of practical and experienced financial minds. So well recognized is this fact that I need only cite a few instances of such approval.

Alexander Hamilton said:

To annul the use of either of the metals as money is _to abridge
the quantity of circulating medium_, and is liable to all the
objections which arise from a comparison of the _benefits of a
full with the evils of a scanty circulation_. (Report to
Congress, 1791.)

Thomas Jefferson, in a letter to Hamilton, indorsed this view, saying:

I return you the report on the mint. I concur with you that the
unit _must stand on both metals_. (Letter to Hamilton, February,
1792.)

In his "Recherches sur l'or et sur l'argent," 1843, Leon Fanchet said:

If all the nations of Europe adopted the system of Great Britain,
the price of gold would be raised beyond measure, and we should
see produced in Europe a most lamentable result. The Government
can not decree that legal tender shall be only gold, in place of
silver, for that would be to decree a revolution, and the most
dangerous of all, because it would be a revolution leading to
unknown results (_qui marcherait vers l'inconnu_).

In a memoir read before the French Institute in 1868, M. Wolowski said:

The suppression of silver would bring on a veritable revolution.
Gold would augment in value with a rapid and constant progress,
which would break the faith of contracts and aggravate the
situation of all debtors, including the nation. It would add at
one stroke of the pen at least three milliards to the twelve
milliards of the public debt.

In a debate in the French Senate on January 28, 1870, Senator Dumas eloquently pleaded for caution in dealing with a subject of such farreaching importance as the demonetization of one of the money metals. He said:

Those who approach these questions for the first time decide them
at once. Those who study them with care hesitate. Those who are
obliged practically to decide doubt and stop, overwhelmed with
the weight of the enormous responsibility.

The quantities of the precious metals which are now sufficient
may become insufficient, and we should proceed with great
prudence before we diminish that which constitutes a part of the
riches of the human race. Sometimes gold takes the place of
silver. Sometimes silver takes the place of gold. _This keeps up
the general equilibrium._ Nobody can guaranty that the present
vast production of gold will continue. The _placers_ are found on
the surface of the earth, and may be exhausted by the very
facility of working them. Silver presents itself in the form of
subterranean veins. Science may contribute to accelerate its
extraction. In presence of the unknown, which dominates the
future, we should practice a prudent reserve.

Before a French monetary convention in 1869 testimony was given by M. Wolowski, by Baron Rothschild, and by M. Rouland, governor of the Bank of France.

M. Wolowski said:

The sum total of the precious metals is reckoned at fifty
milliards, one-half gold and one-half silver. If, by a stroke of
the pen, they suppress one of these metals in the monetary
service, they double the demand for the other metal, to the ruin
of all debtors.

M. Rouland, governor of the Bank of France, said:

We have not to do with ideal theories. The two moneys have
actually co-existed since the origin of human society. They
co-exist because the two together are necessary, by their
quantity, to meet the needs of circulation. This necessity of the
two metals, has it ceased to exist? Is it established that the
quantity of actual and prospective gold is such that we can now
renounce the use of silver without disaster?

Baron Rothschild said:

The simultaneous employment of the two precious metals is
satisfactory and gives rise to no complaint. Whether gold or
silver dominates for the time being, it is always true that the
two metals concur together in forming the monetary circulation of
the world, and it is the general mass of the two metals combined
which serves as the measure of the value of things. The
suppression of silver would amount to a veritable destruction of
values without any compensation.

At the session (October 30, 1873) of the Belgian Monetary Commission, Professor Laveleye, one of the most luminous writers on economic subjects, said:

Debtors, and among them the state, have the right to pay in gold
or silver, and this right can not be taken away without
disturbing the relation of debtors and creditors, to the
prejudice of debtors, to the extent of perhaps one-half,
certainly of one-third. To increase all debts at a blow
(_brusquement_) is a measure so violent, so revolutionary, that I
can not believe that the Government will propose it or that the
Chambers will vote it.

WHY WAS THE AUTOMATIC SYSTEM INTERFERED WITH?

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Money: Speech of Hon. John P. Jones, of Nevada, on the Free Coinage of Silver; in the United States Senate, May 12 and 13, 1890Chapter I: Part 1

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