Chapter II: Part 2

Some thirteen years ago, as Chairman of the Monetary Commission appointed by Congress to investigate the causes of the changes in the relative values of the precious metals, I submitted to this body a report, in which I took occasion to refer to the motives which evidently influenced the creditor classes of the western world in destroying the automatic system of money. From that Report I quote as follows:

The world has generally favored, theoretically if not
practically, the automatic metallic system, and adjusted its
business to it. Some nations adopted one metal as their standard,
and some the other, and some adopted both. Those that adopted
both metals served as a balance-wheel to steady with exactness
their relative value. The practical effect of all of this was the
same as if all nations had adopted both, because it secured the
entire stock of both at a fixed equivalency for the transaction
of the business of the world. While some nations have changed
their money metal, or, having had paper money, have resumed
specie payments in one metal, the policy of a general
demonetization of one of the metals was first broached only about
twenty years ago. About ten years later a formidable propaganda
was organized to fasten that policy upon the commercial world.

This new school of financial theorists advocate the retention of
metal as the material of money, but favor its subjection to
governmental interference in every respect. Whenever new mines
are discovered, or old ones yield or promise to yield more
abundantly, instead of freely accepting their product in
accordance with the automatic theory, they advocate its rejection
through the restriction or the absolute prohibition of the
coinage of either or both metals, or through the limitation or
the abolition of the legal-tender function of one of them.
Whenever the interests of the creditor and income classes seem to
be in danger of being impaired by an increase in the volume and
decrease in the value of money, or in other words, by a general
rise in prices, these modern theorists are clamorous in
double-standard countries for the demonetization of one of the
money metals, and in single-standard countries for the shifting
of the money function from the metal which promises the most to
the one that promises the least abundant supply. They are
extremely anxious for the retention of the _material_ of which
the money-standard is composed when such material is rising in
value and prices are falling, and exceedingly apprehensive of the
evil and inconvenience which they predict as sure to result from
changing it.

Whenever a fall in prices occurs, through either a natural or
artificial contraction in the volume of money, they maintain that
it is due to antecedent inflation and extravagance, or to
overproduction through persistent and reckless industry; if the
contraction be natural, that it can not be helped, and if
artificial, that though it may inflict great temporary losses on
the masses of the people, it will be sure to result in their
ultimate benefit, and they console the sufferers with the
comforting assurance that such contraction is necessary in order
to reach the lowest depths of that "_hard pan_" whose foundations
they have previously undermined by demonetizing one of the
metals, and upon which alone they claim that money, capital, and
labor can securely and harmoniously rest. But when the material
composing the standard is falling in value and prices are rising,
they immediately discover that the maintenance of the value of
the standard is the all-important consideration, and that its
material is of no importance whatever and should be at once
changed to "_redress the situation_." After having reduced one of
the metals to a commodity by depriving it of the money function,
these theorists complacently point to the resulting fluctuations
in the value as a justification of the act producing them, and as
a conclusive proof of the unfitness for money of the demonetized
metal. * * *

Metallic money, on this theory, is no longer automatic, but is as
completely subjected to governmental control for all injurious
purposes as paper money. But, unlike paper money, the control
over this kind of metallic money can only be exercised in the
baneful direction of decreasing its volume, and thereby making
property cheaper and money scarcer and dearer.

This is a one-sided system, which can operate only in the
interest of the security creditor, the usurer, and pawnbroker,
whom it enables, through the falling prices which itself
occasions, to swallow up the shrunken resources of the debtor,
but is impotent to protect the interests of the unsecured
business creditor, the debtor, or society, when, from any cause,
the supply of the money metals becomes deficient.

The world has expended a vast amount of labor in the production
of the precious metals, and has made great sacrifices in
upholding the automatic metallic system of money, and has a right
to insist that it shall be consistently let alone to work out its
own conclusions, or that it be abandoned.

The history of the subsequent struggle to remonetize silver only serves to illustrate and emphasize the correctness of that statement of the case.

Between 1810 and 1849, according to Tooke and Newmarch (recognized authorities on the subject), gold increased in value 145 per cent. which is equivalent to a fall in the general range of prices of 59 per cent. No movement was then made or suggestion offered by the debtors, or by any class of the community, to add any new money-metal to the metals already in use, with the view of increasing the volume of money, so that the equity of time contracts might be maintained, and the value of the unit of money kept at a steady and unchanging level.

But as soon as the discoveries of gold were made in the alluvial deposits of California and Australia, or rather as soon as it was suspected that money would thereby become considerably increased in volume, the annuitants and income classes, the creditors everywhere, took steps to avert what they characterized as a great calamity. They openly declared their purpose, by every means in their power, to prevent a decline in the value of money, so that the purchasing power of their incomes might not be reduced. They determined to go to any length in order to prevent the rise of prices which their aggressive instincts led them to fear would follow the additions to the money volume of the world by the natural and much needed yield of the mines.

The fiat therefore went forth that one of the metals must be discarded.

THE PROPOSITION FIRST MADE TO DEMONETIZE GOLD.

If anything were needed to demonstrate that the reason for the demonetization of silver was the cupidity of the creditor classes--the money-lenders, annuitants, and those in receipt of fixed incomes--and that it was not any defect inhering in the metal silver, nor any change in its adaptability to subserve the purposes of money, it is to be found in the significant fact that the metal first selected for demonetization was not silver but gold--that metal which has since become the idol of the money-changers, and which is now declared to be the only "natural" money. The openly-avowed determination was to increase the value of money, and in order to accomplish that purpose the metal which promised the largest yield was to be condemned and stripped of its ancient monetary function. So strongly was this determination set forth, so earnestly was it presented, and so urgently pressed on the ground of duty that its achievement came to be regarded as the fulfillment of a high moral purpose.

It was with gold then as it came to be with silver afterward, and as it always is with whatever interferes with the interests of privileged classes, intrenched in power and prerogative,--the determination to destroy it being arrived at, measures were taken to prove that the public good required its destruction. While the purpose was to discard the metal, whether gold or silver, which threatened most immediately and seriously to reduce the purchasing power of money, the argument was that a decrease in the purchasing power of money was a calamity against the happening of which every energy should be directed.

The privileged classes found then, as they find now, able and ingenious advocates and defenders among the literary and educated guilds of the period. The celebrated De Quincy, in England, attempted to prove, and to his own satisfaction did prove upon figures drawn from his fears and a brilliant imagination, that the least yield of gold to be expected from the mines of California and Australia for an indefinite period in the future, was the yearly sum of $350,000,000.

M. Chevalier, in France, vehemently proclaimed the necessity of discarding one of the money metals, and that one not silver but gold. In his work upon the "Fall of Gold" M. Chevalier, in 1856, said:

The quantity of gold annually thrown on the general market
approaches in round numbers a milliard of francs ($200,000,000).
Those two countries (California and Australia) must yet for a
long series of years produce gold in such quantities and on such
conditions as to render a marked decline in its value inevitable.

It is absolutely certain that so vast a production should be
accompanied with a great reduction in value.

In no direction can a new outlet be seen sufficiently large to
absorb the extraordinary production of gold which we are now
witnessing, so as to prevent a fall in its value.

Unless, then, we possess a very robust faith in the immobility of
human affairs, we must regard the fall in the value of gold as an
event for which we should prepare without loss of time.

The "preparation" which Chevalier advocated was the discarding of that metal which gave promise of the greatest abundance. He did not attempt to hide his purpose. He boldly stated that his object was to enhance the value of money. This object was also clearly expressed on a later occasion by another distinguished advocate of dear money, Mr. Victor Bonnet, of France, in the Journal des Economistes. He said:

The world is now saturated with the precious metals, and if there
is any danger against which it is necessary to guard, it is that
this saturation should become greater. * * *

If the annual production of gold is now reduced to 500,000,000
francs, let us thank Heaven for it, and let us wish that it may
not be too rapidly increased, whereby we should be embarrassed.
It is the too great abundance and not the scarcity of metallic
money which is to be apprehended.

GOLD DEMONETIZED.

In 1857 the German states and Austria demonetized gold; and had it not been for the opposition of France, which insisted on retaining the double standard, the movement might have become general on the continent. With England, however, nothing could be done. More than a generation had passed since it had declared for the single standard of gold, and its creditors and income classes--the shrewdest, most adept, and watchful of financiers--did not believe that the large yields of gold would long continue.

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

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

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

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

THE MOTIVE FOR DEMONETIZING SILVER.

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

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

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

In behalf of the gold standard it was said:

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

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

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

THE MOTIVE OF ENGLAND.

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

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

ACKNOWLEDGMENT OF THE MOTIVE.

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

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

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

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

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

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

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

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

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

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

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

The liabilities of the banks of Great Britain to the public
amounted to L621,000,000, or about the amount of the national
debt of England; but the amount of coin or bullion to meet this
liability was only L35,000,000; or, deducting from each side of
the account L8,000,000 locked up in the Notes Department of the
Bank of England, it was L27,000,000; or only 4-1/2 per cent. of
liabilities.

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

I have contended--

said the Chancellor of the Exchequer--

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

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

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

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

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

THE MOTIVE OF GERMANY.

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

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

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

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

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

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

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

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

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

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

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

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

DEMONETIZATION IN THE UNITED STATES.

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

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

CONDITION OF THE COUNTRY AT THE TIME.

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

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

At the time silver was demonetized it might well have been supposed that a sufficiently large unearned increment had already been realized by the foreign and domestic holders of United States bonds. The greater portion of the debt of the Government was, when incurred, made payable simply in "lawful money"--the interest alone being payable in coin. Yet in March, 1869, the bond-holders secured the passage of an act of Congress, entitled "An act to strengthen the public credit," containing a pledge to pay in coin or its equivalent not merely the interest, but the principal of all national obligations not specially provided to be paid otherwise.

THE COURSE OF THE CREDITORS.

And again, when in 1870 Congress was about to provide for a refunding of the public debt, these clamorous creditors, not satisfied with having got the bonds at rates much below their face value, and not satisfied with the pledge to pay in coin--a pledge made long after the contract was made and the debt incurred--insisted that not only should the new bonds be payable in coin, but in order to guard against any possible interpretation which might work to their detriment they did what has rarely been done in the history of monetary legislation, insisted that even the very _standard_ of that coin should be fixed and nominated in the bond. They were willing to take no chances. They were not willing to place confidence in the sense of equity and fair dealing of the people of the United States. They held before Congress the covert threat that if the new issue of bonds did not provide for payment in "coin," instead of "lawful money," and did not prescribe the precise standard of coin in which they were to be payable, it would be difficult if not impossible to place the bonds on the market.

So, by the refunding act of July 14, 1870, Congress provided for the payment in "coin of the present standard value," that is to say, in either gold dollars of 25.8 grains of gold, nine-tenths fine, or in silver dollars of 412-1/2 grains of silver, nine-tenths fine, at the option of the United States. But even this extreme advantage to the creditors over payment in "lawful money" of the United States, in which the bonds were bought, and in which they were legally payable, was insufficient. All but the most ingenious would imagine that having thus provided for payment in coin then bearing a considerable premium over the current money of the Republic, and having the very standard of that coin fixed in the act, the highest point of vantage had been reached. One device, however, and only one, remained by which the money of the payment could be still further increased in value, and this device did not escape the watchful eye or cunning hand of the public creditors.

They clearly saw that if by legislative enactment they could secure the rejection of one of the money-metals they would succeed in enormously increasing the value of the metal retained. This they accomplished by the demonetization of silver, and thus by striking down one-half the automatic money of the world and devolving the money function exclusively on the other half, added thousands of millions of dollars to the burden of the debt.

THE PRETENSE TO "STRENGTHEN THE PUBLIC CREDIT."

It will be observed that this anxiety to strengthen the public credit was evinced by the bondholders _after_ and not before the bonds were in their possession. No anxiety for the public credit was manifested by them at a time when the Government might be able to reap advantage from it. The Government having parted with the bonds at a heavy discount, their selling price in the market became a matter of no direct pecuniary importance to the people of the United States.

The "strengthening of the public credit" that was to be effected by the act of March 16, 1869, consisted of a rise in the price of the bonds for the benefit of the holder, at a time when they were no longer the property of the Government but of private individuals. The real effect of the act, therefore, was not in any way to benefit the Government but greatly to enrich, by an increment unearned and unbargained for, a few men who had already been greatly enriched by their dealings with the United States. The title of the act should have read "An act to strengthen the bank account and credit of the holders of United States bonds."

The excuse and apology for the act was that by its passage the refunding process then contemplated, and afterward provided for by the refunding act of 1870 might be rendered more certain of success; but if any advantage accrued from that cause, it was lost, and much more with it, by the increase which the act of 1869 effected in the burden of the bonded obligation, by pledging the nation to a payment in a medium much more valuable than the medium provided for in the contract. And, again, in 1873 when all the bonds provided for by the refunding act of 1870 had been sold and had passed out of the hands of the Government, another act was passed, intended by the money-lenders again to strengthen the public credit, and again to the disadvantage of the people and to the exclusive and enormous advantage of the bondholders. It bore the innocent title of "An act revising and amending the laws relative to the mints, assay offices, and coinage of the United States." This act, bearing on its face no suggestion of any change more serious than that of regulating the petty details of mint management, has proved to be an act of momentous consequence to the people of this country. This is the act that demonetized the silver dollar, which it did by merely omitting that coin from the enumeration of the coins of the United States.

DEMONETIZATION WHOLLY UNJUSTIFIABLE.

Among all the explanations that have been made to account for that demonetization by a Congress of the United States, I have never heard any reason advanced which constituted a justification for it. To my mind, in view of all the circumstances--in the face of the herculean difficulties by which the nation was surrounded, in the face of the sacrifices which our citizens had made to preserve the Republic, and in the face of all that had already been done by an over-generous people, proud of their national strength, and jealous of their national honor, to satisfy the rapacious demands of the money-lenders--in view, I say, of all these facts, the demonetization of silver by the United States must be regarded as one of those historic blunders that are worse than crimes. It was the child of Ignorance and Avarice, and is already the prolific parent of enforced idleness, poverty, and misery.

It is to undo as far as possible the effects of the blunder of 1873 that new legislation is now imperatively demanded by the people. While the past can not be recalled, the present is ours, and the pressing duty of to-day is to provide for the future. The demand comes from all sections of the country that a remedy for the depressed industrial conditions caused by the legislation of 1873, be applied at the earliest moment. And what better remedy could be applied than absolutely to reverse that legislation and to put the monetary position of this country back to exactly where it was when that wrong was committed?

Some twelve years ago an attempt was made to apply a remedy, but the attempt was only partially successful. Instead of resulting in free coinage, it resulted in the passage of the bill which authorized the coinage of not less than two nor more than four million dollars' worth of silver per month. On that occasion a financial debate of great interest and importance was had in this Chamber and in the other House of Congress. The proposition to remonetize silver or to increase the silver coinage was vigorously opposed, but the arguments then presented by the advocates of remonetization never have been, and never can be, refuted.

In fact, but rarely has there been any attempt made to answer those arguments. Puerile attempts at wit, and diatribes of abuse are all that the silver men have heard in sixteen years in answer to the contentions they have made in favor of the remonetization of silver.

EDUCATIONAL EFFECT OF DISCUSSION.

With that debate, Mr. President, long pending and eagerly maintained on both sides, there began in this country an educational movement among the masses, that is destined to have far-reaching consequence. The public attention was fastened, as it had never been fastened before, on the subject of money, and on the forces which govern its value, and up to this time that attention has never flagged. As a result we find the great body of our people to-day--the farmers and artisans of the country--after years of reflection and discussion in their lyceums and trade organizations, adopting to a large extent the views then presented by the advocates of an increased money volume--views which at the time were contemptuously derided by the advocates of contraction and of gold.

The cry for relief appropriately now comes from the farmers, the artisans, and the laboring classes, as well as from the young, the enterprising, the thoughtful, of all classes, who have not inherited wealth, but are hewing out for themselves the rugged path to success. It is they who have had to bear the exactions of the system which has prevailed. It is from the proceeds of their labor that the extortions have been paid. If objection be made that the character of relief proposed is not indorsed in financial circles, or by the literary guild or professional political economists that surround them, the sufficient reply is that the world can not wait for the correction of abuses by those who are profiting by them. In the nature of things, all movements for reform must be initiated by those who can not lose by the installation of justice.

But there are others besides the laboring masses who are working in the cause of humanity. There are noble, unselfish, and altruistic men in all the countries of civilization, who see the wrong and are indefatigable in their efforts to set it right.

I will read a cable dispatch recently addressed to me by Mr. Henry H. Gibbs, formerly governor of the Bank of England, and now president of the Bimetallic League of Great Britain:

LONDON, _May 6_.--The friends of silver deeply regret the death
of Senator Beck, whose services in the cause of monetary reform
are warmly appreciated on this side of the Atlantic. The
bimetallist party of the United Kingdom, now including over one
hundred members of the House of Commons, attach the greatest
value to the debate about to commence in your illustrious
chamber. We fully recognize not only that the support afforded to
silver by your legislation during the last twelve years has
helped the protect the industrial world from an acute monetary
crisis, but also that the debates in Congress have served more
than all else to educate our people to recognition of the
important issues involved. We believe also that the increase and
coinage of silver contemplated by Congress will restore, wholly
or considerably, your coinage rates, and will thus make
international settlement of this complex question comparatively
easy. We anticipate further and with much confidence, that the
advance in the price of silver which must follow your action will
stimulate both the export and the other trades of your country,
and, while tending to the prosperity of your agricultural
classes, will also assist the manufacturing industries of the
United Kingdom and the whole body of our wage-earners.

Mr. Moreton Frewen, of London, an able writer on economic subjects, whose recent work on the "The Economic Crisis" I commend to the careful perusal of Senators, says:

It may, indeed, be affirmed, without fear of contradiction, that
legislation arranged in the interest of a certain class, first by
Lord Liverpool in this country, and again by Sir Robert Peel at
the instigation of Mr. Jones Loyd and other wealthy bankers,
which was supplemented recently by simultaneous anti-silver
legislation in Berlin and Washington at the instance of the great
financial houses--this legislation has about doubled the burden
of all national debts by an artificial enhancement of the value
of money.

The fall of all prices induced by this cause has been on such a
scale that while in twenty years the National debt of the United
States quoted in dollars has been reduced by nearly two-thirds,
yet the value of the remaining one-third, measured in wheat, in
bar iron, or bales of cotton, is considerably greater--is a
greater demand draft on the labor and industry of the nation than
was the whole debt at the time it was contracted. The aggravation
of the burdens of taxation induced by this so-called
"appreciation of gold," which is no natural appreciation, but has
been brought about by class legislation to increase the value of
the gold which is in a few hands, requires but to be explained to
an enfranchised democracy, which will know how to protect itself
against further attempts to contract the currency and to force
down prices to the confusion of every existing contract.

Of all classes of middle-men, bankers have been by far the most
successful in intercepting and appropriating an undue share of
produced wealth. While the modern system of banking and credit
may be said to be even yet in its infancy, that portion of the
assets of the community which is to-day in the strong boxes of
the bankers would, if declared, be an astounding revelation of
the recent profits of this particular business; and not only has
the business itself become a most profitable monopoly, but its
interests in a very few hands are diametrically opposed to the
general interests of the majority. By legislation intended to
contract the currency and force down all prices, including wages,
the price paid for labor, the money owner has been able to
increase the purchase power of his sovereign or dollar by the
direct diminution of the price of every kind of property measured
in money.

UNFULFILLED PROPHECIES.

During the debate on the limited coinage bill, not content with abuse of the advocates of the measure; with flimsy criticism of it and specious arguments against it, its opponents in and out of Congress indulged in diverse prophecies and predictions. They pictured forth the lamentable results that would follow its passage, and the direful consequences that would ensue from an increase of the circulating medium of the country. Among the results confidently predicted were the following: that the silver would not circulate at all, and again that it would circulate to the exclusion of gold, which metal, we were informed, would flow out of this country with a velocity and in a volume theretofore unknown; that we should be unable to redeem our paper money in gold; that we should be precipitated into a silver vortex; that an inflation of the currency would follow, which would ruinously raise prices of all commodities and that this inflation would result in an unprecedented contraction. We were charged with forcing upon the public creditors a dollar worth only ninety cents. We were warned that the passage of the bill would indefinitely postpone the refunding of the public debt, and would lower the price and impair the value of our national securities. It was charged that we were setting on foot a new and irrepressible conflict between two great sections of the country--the East and the West. We were charged with uttering a debased coin; with lowering the standard of American credit; with tarnishing the integrity and honor of our country before foreign nations, and with unprecedented moral turpitude in setting an example of flagrant and shameless national dishonesty.

The men of the far West, and of the Pacific slope especially, were the particular targets of this abuse. They were denounced by some as "lunatics," by others as dangerous and unworthy demagogues, because, as was charged, their constituents, if not themselves, were directly interested in the restoration of the ancient right of silver to full recognition as one of the money metals. For their benefit resort was had to every epithet which the English language afforded. In holding them up to public scorn the rich and varied vocabulary of odium and opprobrium was exhausted.

These prophecies of disaster were united in by the professors of political economy in all the Eastern colleges, by the President of the United States, by the Secretary of the Treasury, by the leading American newspapers, by the principal public men and journals of Great Britain, if not of all Europe; and, of course, by all bankers, money-lenders, and professional financiers the world over.

And now, Mr. President, how many of all those alarming prognostications by all these distinguished prophets have been fulfilled? Not one! On the contrary, it is not too much to say that the public credit of the United States is to-day the highest in the world. It does not stand merely in line with that of other first-rate powers; it stands at the head. Our gold, silver, and paper money stand at a parity with each other. If a full measure of relief was not realized by the passage of that bill it is because the coinage of $4,000,000 a month was left optional with the Secretary of the Treasury, instead of being made mandatory on him.

But it is hardly necessary to assert that the predicted inflation of prices has not been observed as a consequence of the coinage of $2,000,000 a month. While the issuance of that amount has not, with our rapidly increasing population and wealth, been sufficient to arrest the downward tendency of prices, it has undoubtedly prevented them from falling much lower. Without that coinage, we should have had industrial depression, chronic and somber, with consequences of untold disaster.

But the result which gave most apprehension to those who advocated the gold standard, the evil which they regarded as on the whole the most threatening and direful of all the evils that were to result from even so small an increase in the money volume as that bill provided for, was the outflow of gold. They ridiculously under-estimated the tremendous money-absorbing power of this great country. And as if to emphasize to all the world the complete absurdity of their alleged fears--this apprehension has been conspicuously and notoriously set at naught by the constant inflow of gold. On the 30th of June, 1878, the amount of gold coin and bullion in the Treasury and in monetary circulation in this country is officially reported to have been $213,199,977, and this amount is probably much over-estimated. On November 1, 1889, we had more than three times as much--the amount of gold in circulation and in the Treasury being reported as $689,000,000.