Chapter III: Part 3

"Experience," says Dr. Johnson, "is the great test of truth, and is perpetually contradicting the theories of men," and the last experience, Mr. President, is the best.

If the professors of political economy, the Eastern newspaper editors, and the professional financiers were then so seriously mistaken ought they not to be a little modest now in making predictions, especially in renewing predictions that have been already discredited? They can not point to a single instance in which their prophesy has not been falsified by the event. So humiliating a failure on the part of the professors, in a realm of which they boastfully claimed to be masters, so complete an overthrow of these "experts" by men who were ridiculed and derided as rural financiers and crazy theorists, ought to put the advocates of the gold standard on their guard against a like defeat on this occasion. They are pressed for reasons to account for the utter miscarriage of their prophecies. They are left without a shadow of consolation except that the coinage of $2,000,000 worth of silver bullion each month has not succeeded in placing silver at a par with gold. They affect to believe that the advocates of silver in 1878 expected that that metal, under the very limited demand of $2,000,000 a month, would be brought to a level with gold, which, owing to the demonetization of silver, had risen abnormally and ruinously in value.

No such belief was ever entertained or expressed. On the contrary it was repeatedly asserted by the advocates of silver that so long as the entire yield of gold from all the mines of the world (in 1878, $119,000,000) was invested with the full money function and had free access to all mints to be transmuted into coin, it could not be expected that the conferring of the legal-tender function upon a sum so comparatively trifling as one-fourth the yield of silver (the yield in 1878 being $99,000,000) would have the effect of placing it on a level with gold.

It is, however, a significant fact that every silver dollar that has been coined under that act is at a parity with gold, and will to-day buy as much of all the objects of human desire as will the gold dollar. Nay, more, silver bullion--disparaged and discredited as it is by being shorn of the money function, and denied access to the mints, instead of decreasing in purchasing power, has maintained so steady a relation to commodities that 412-1/2 grains of uncoined silver will exchange for as much to-day as would the coined dollar, whether of silver or gold, in 1873, when the full money function attached equally to both metals. If this be true--and I shall presently demonstrate it beyond refutation--what an utter perversion of terms it is to say that silver has fallen in value!

WILL REMONETIZATION PLACE US ALONGSIDE INDIA.

We are solemnly warned that the full remonetization of silver in the United States would place us alongside India and the other barbarous countries of the world. This brilliant piece of reasoning is advanced with great confidence, and is intended to be conclusive of the argument against silver. But, Mr. President, India is no more barbarous now than it was in 1873--before our silver dollar was demonetized. India is no more barbarous now than it was in 1857, when Germany demonetized gold and placed herself "alongside" India. Neither is Germany any more civilized now than then. We did not at that time hear any complaint, either in the United States or Europe, that the use of silver as money placed any one nation more than any other in dangerous affiliation with the civilization of India. We have never heard it charged against France that its civilization was brought any nearer that of India by the immense quantity of silver money in France. Neither did we hear it charged against the United States up to 1873 that we were "alongside," or dangerously close to the barbarous nations by our use of silver as money.

Up to 1834 we had no metallic money other than silver in our circulation, and up to 1850 we had much more silver in circulation than gold. Were we "alongside" India then? Where were the wise and patriotic men of our country at those periods? History fails to record any protest on their part that we were placing ourselves "alongside" India or any other of the barbarous nations of the world by our use of silver and our recognition of its full money power. All the nations of the earth used silver and accorded it full recognition as money equally with gold up to 1819. Was all Christendom at that time "alongside" India? When, in that year, Great Britain sundered the silver link that from time immemorial had kept her "alongside" India and the other barbarous nations and, for selfish reasons of her own, arising from her position as a creditor of all other nations, decided to recognize gold only as money, was any evidence afforded of a sudden advance in the civilization of Great Britain? Was the emergence of that nation from the benumbing companionship of India and the other barbaric countries into the glittering and refulgent light of the gold dispensation signalized, as would be expected, by a corresponding improvement in the condition of the people?

On the contrary, the history of the time informs us that as a consequence of the passage of the bill by Parliament in 1819, compelling payments in gold, prices rapidly fell, cotton in particular sinking in the short space of three months to one-half its former level. Within six months all prices had fallen one-half, and showed no signs of improvement for the next three years. By reason of the contraction of the currency the industry of the nation was congealed, as is a flowing stream by the severity of an arctic winter. Alarm became universal; confidence and activity ceased. Bankruptcies increased in 1819 more than 50 per cent. over the number of the previous year. Meetings were held throughout England in which the people called on the government to devise some means of redressing the situation. So universal was the distress that the owners of land in England, who in 1819 numbered 160,000 were in seven years, by forced sales and foreclosure of mortgages on the smaller farms, reduced to 30,000, and one in every seven of the population lived on organized charity. All this was but a part of the price which the people of England paid for a policy imposed on them by the creditor classes among their own number. The condition of industry and disorganization of labor led to frequent and serious conflicts between the people and the military. They also led to commercial crises without number, and England, by demonetizing silver and thus ceasing to be "alongside" India, became the seat of panics, as Egypt had long been of the plague and India of the cholera.

As a contrast to this I will merely cite the change in the condition of India within the past seventeen years. When the Western world discarded silver as money and, as a consequence, India received a larger supply of it than ever before, that barbarous nation, as is universally admitted, made progress by leaps and bounds. No country on earth has in the same time made such advances in material prosperity and in all the elements that conduce to the comfort and happiness of a people. Notwithstanding the alleged debasement of silver, no sooner had its increased inflow into India begun than the industries of a vast continent were established and set in motion, and a substantial part of the activity and prosperity that were wont to pervade some of the industries of the United States has, by that demonetization, been transferred to fields of wheat, and fields and factories of cotton 10,000 miles distant.

What really placed us alongside such barbarous countries as India was the demonetization of silver. It was by that demonetization that the people of Europe were enabled, with gold, to buy silver at 30 per cent. discount, which, when shipped to India and coined into rupees, would buy as much wheat as could ever have been bought with that coin. There has been no decrease whatever in the purchasing power of the rupee in India. This was equivalent to buying wheat at 30 per cent. below the price theretofore paid for it, and thus the farmers of the United States were by demonetization placed "alongside" the barbarous people of India. Their wheat had to compete in the European markets with the wheat of India, and it is this competition that placed them "alongside" India. The farmer of this country, therefore, by demonetization of silver, was compelled to compete with under-paid and half-starved ryots. And so it was that our cotton planters, by the demonetization of silver, were placed alongside the barbarous people of India. It is this degrading competition that places a highly civilized people alongside a barbarous one.

The advocates of the single gold standard deem even silver money much better money than greenbacks. Does it then follow that when greenbacks were our only money--good enough money to carry the nation through the greatest war in all history--we were "alongside" or underneath the barbarous nations of the world? It is not the form, or the material of a nation's money that fixes its status relatively to other nations. That is accomplished by the vitality, the energy, the intellectuality and effective force of its people. The United States can never be placed "alongside" any barbarous nation, except by compelling our people to compete with barbarous peoples--compelling them to sell the products of American labor at prices regulated by the cost of labor and manner of living in barbarous countries. As well might it be said that we are alongside the barbarous people of India because we continue to produce wheat and cotton.

The distinguishing feature of all barbarous nations is the squalor of their working classes. The reward of their hard toil is barely enough to maintain animal existence. A civilized people are placed alongside a barbarous one when, in their means of livelihood, the foundation of their civilization, they are made to compete with the barbarians. That was the result accomplished for the farmers and planters of the United States when silver was demonetized.

CREDITORS AND DEBTORS.--A COMPARISON OF MOTIVES.

All movements for the increase of the monetary circulation are ascribed by the money-lenders and creditor classes to the unworthy desire on the part of the debtors to escape their just obligations. But if motives are to be brought in question, the rule should work both ways. No note is taken of the motive of the creditor classes in securing a contraction of the circulation. Whatever the apparent purpose of contraction, and however specious the arguments advanced in its justification, the real object has always been to increase the purchasing power of money. In all countries, and throughout all time, it is the cupidity of the creditor classes and annuitants, and their desire to increase the value of the money unit that has brought about a shrinkage in the money volume. Unlike the great masses of the people, who were ignorant of the effects to be naturally expected from such a shrinkage, the annuitants and moneyed men very well understood that the value of every pound or dollar depended on the number of pounds or dollars that were in circulation; the larger the total number out, the smaller the purchasing power of each; the smaller the total number out, the greater the purchasing power of each.

Loaners of capital are not usually those who entertain further hope of personal achievement. When men realize fortunes it is rarely that they conserve the faculty of initiative; they find no special delight in novelty; they look so carefully to security in the use of money that the spirit of adventure is restrained. The realization of a fortune is usually the labor of a life-time, and few men who reach the goal care to retrace their steps to enter again upon a struggle that demands all the strength, the momentum, and the intrepidity of youth. Men of assured incomes therefore are disposed to take their ease, and society must look, for its material progress and development, to those who have a career to make, with the ambition and the power to make it.

It is a remarkable circumstance, Mr. President, that throughout the entire range of economic discussion in gold-standard circles, it seems to be taken for granted that a change in the value of the money unit is a matter of no significance, and imports no mischief to society, so long as the change is in one direction. Who has ever heard from an Eastern journal any complaint against a contraction of our money volume; any admonition that in a shrinking volume of money lurk evils of the utmost magnitude? On the other hand we have been treated to lengthy homilies on the evils of "inflation," whenever the slightest prospect presented itself of a decrease in the value of money--not with the view of giving the debtor an advantage over the lender of money, but of preventing the unconscionable injustice of a further increasing value in the dollars which the debtor contracted to pay. Loud and resounding protests have been entered against the "dishonesty" of making payments in "depreciated dollars." The debtors are characterized as dishonest for desiring to keep money at a steady and unwavering value. If that object could be secured, it would undoubtedly be to the interest of the debtor, and could not possibly work any injustice to the creditor. It would simply assure to both debtor and creditor the exact measure for which they bargained. It would enable the debtor to pay his debt with exactly the amount of sacrifice to which, on the making of the debt, he undertook to submit, in order to pay it.

WHO ARE THE DEBTORS?

In all discussions of the subject the creditors attempt to brush aside the equities involved by sneering at the debtors. But, Mr. President, debt is the distinguishing characteristic of modern society. It is through debt that the marvelous developments of nineteenth century civilization have been effected. Who are the debtors in this country? Who are the borrowers of money? The men of enterprise, of energy, of skill, the men of industry, of foresight, of calculation, of daring. In the ranks of the debtors will be found a large preponderance of the constructive energy of every country. The debtors are the upbuilders of the national wealth and prosperity; they are the men of initiative, the men who conceive plans and set on foot enterprises. They are those who by borrowing money enrich the community. They are the dynamic force among the people. They are the busy, restless, moving throng whom you find in all walks of life in this country--the active, the vigorous, the strong, the undaunted.

These men are sustained in their efforts by the hope and belief that their labors will be crowned with success. Destroy that hope and you take away from society the most powerful of all the incentives to material development; you place in the pathway of progress an obstacle which it is impossible to surmount.

The men of whom I have spoken are undoubtedly the first who are likely to be affected by a shrinkage in the volume of money.

The highest prosperity of a nation is attained only when all its people are employed in avocations suited to their individual aptitudes, and when a just money system insures an equitable distribution of the products of their industry. With our present complex civilization, in order that men may have constant employment, it is indispensable that work be planned and undertakings projected years in advance. Without an intelligent forecast of enterprises large numbers of workmen must periodically be relegated to idleness. Enterprises that take years to complete must be contracted for in advance, and payments provided for.

A constant but unperceived rise in the value of the dollar with which those payments must be made, baffles all plans, thwarts all calculation, and destroys all equities between debtor and creditor. If we can not intelligently regulate our money volume so as to maintain unchanging the value of the money unit, if we can not preserve our people from the blighting effects which an increase in the measuring power of the money unit entails upon all industry, to what purpose is our boasted civilization?

By the increase of that measuring power all hopes are disappointed, all purposes baffled, all efforts thwarted, all calculations defied. This subtle enlargement in the measuring power of the unit of money (the dollar) affects every class of the working community. Like a poisonous drug in the human body, it permeates every vein, every artery, every fiber and filament of the industrial structure. The debtor is fighting for his life against an enemy he does not see, against an influence he does not understand. For, while his calculations were well and intelligently made, and the amount of his debts and the terms of his contracts remain the same, the weight of all his obligations has been increased by an insidious increase in the value of the money unit.

EFFECTS OF A SHRINKING VOLUME OF MONEY.

As to the benumbing consequences following a shrinkage in the volume of money, the testimony of history is briefly reviewed in the report of the Monetary Commission to which I have already referred, and from which I read the following:

At the Christian era the metallic money of the Roman Empire
amounted to $1,800,000,000. By the end of the fifteenth century
it had shrunk to less than $200,000,000. During this period a
most extraordinary and baleful change took place in the condition
of the world. Population dwindled and commerce, arts, wealth, and
freedom all disappeared. The people were reduced by poverty and
misery to the most degraded conditions of serfdom and slavery.
The disintegration of society was almost complete. The conditions
of life were so hard that individual selfishness was the only
thing consistent with the instinct of self-preservation. All
public spirit, all generous emotions, all the noble aspirations
of man shriveled and disappeared as the volume of money shrunk
and as prices fell.

History records no such disastrous transition as that from the
Roman Empire to the Dark Ages. Various explanations have been
given of this entire breaking down of the frame-work of society,
but it was certainly coincident with a shrinkage in the volume of
money, which was also without historical parallel. The crumbling
of institutions kept even step and pace with the shrinkage in the
stock of money and the falling of prices. All other attendant
circumstances than these last have occurred in other historical
periods unaccompanied and unfollowed by any such mighty
disasters. It is a suggestive coincidence that the first glimmer
of light only came with the invention of bills of exchange and
paper substitutes, through which the scanty stock of the precious
metals was increased in efficiency. But not less than the
energizing influence of Potosi and all the argosies of treasure
from the New World were needed to arouse the Old World from its
comatose sleep, to quicken the torpid limbs of industry, and to
plume the leaden wings of commerce. It needed the heroic
treatment of rising prices to enable society to reunite its
shattered links, to shake off the shackles of feudalism, to
relight and uplift the almost extinguished torch of civilization.
That the disasters of the Dark Ages were caused by decreasing
money and falling prices, and that the recovery therefrom and the
comparative prosperity which followed the discovery of America
were due to an increasing supply of the precious metals and
rising prices, will not seem surprising or unreasonable when the
noble functions of money are considered. Money is the great
instrument of association, the very fiber of social organism, the
vitalizing force of industry, the protoplasm of civilization, and
as essential to its existence as oxygen is to animal life.
Without money civilization could not have had a beginning; with a
diminishing supply it must languish, and, unless relieved,
finally perish.

Symptoms of disasters similar to those which befell society
during the Dark Ages were observable on every hand during the
first half of this century. In 1809 the revolutionary troubles
between Spain and her American colonies broke out. These troubles
resulted in a great diminution in the production of the precious
metals, which was quickly indicated by a fall in general prices.
As already stated in this report, it is estimated that the
purchasing power of the precious metals increased between 1809
and 1848 fully 145 per cent., or, in other words, that the
general range of prices was 60 per cent. lower in 1848 than it
was in 1809. During this period there was no general
demonetization of either metal and no important fluctuation in
the relative value of the metals, and the supply was sufficient
to keep their stock good against losses by accident and abrasion.
But it was insufficient to keep the stock up to the proper
correspondence with the increasing demand of advancing
populations.

The world has rarely passed through a more gloomy period than
this one. Again do we find falling prices and misery and
destitution inseparable companions. The poverty and distress of
the industrial masses were intense and universal, and, since the
discovery of the mines of America, without a parallel. In England
the suffering of the people found expression in demands upon
Parliament for relief, in bread riots, and in immense Chartist
demonstrations. The military arm of the nation had to be
strengthened to prevent the all-pervading discontent from
ripening into open revolt. On the Continent the fires of
revolution smoldered everywhere, and blazed out at many points,
threatening the overthrow of states and the subversion of social
institutions.

Whenever and wherever the mutterings of discontent were hushed by
the fear of increased standing armies, the foundations of society
were honey-combed by powerful secret political associations. The
cause at work to produce this state of things was so subtle, and
its advance so silent, that the masses were entirely ignorant of
its nature. They had come to regard money as an institution fixed
and immovable in value, and when the price of property and the
wages of labor fell, they charged the fault, not to the money,
but to the property and the employer. They were taught that the
mischief was the result of overproduction. Never having observed
that overproduction was complained of only when the money stock
was decreasing, their prejudices were aroused against
labor-saving machinery. They were angered at capital, because it
either declined altogether to embark in industrial enterprises or
would only embark in them upon the condition of employing labor
at the most scanty remuneration. They forgot that falling prices
compelled capital to avoid such enterprises on any other
condition, and for the most part to avoid them entirely. They did
not comprehend that money in shrinking volume was the prolific
parent of enforced idleness and poverty, and that falling prices
divorced money capital, from labor, but they none the less felt
the paralyzing pressure of the shrinking metallic shroud that was
closing around industry.

The increased yield of the Russian gold fields in 1846 gave some
relief and served as a parachute to the fall in prices, which
might otherwise have resulted in a great catastrophe. But the
enormous metallic supplies of California and Australia were all
needed to give substantial and adequate relief. Great as these
supplies were, their influence in raising prices was moderate and
soon entirely arrested by the increasing populations and commerce
which followed them. In the twenty-five years between 1850 and
1876 the money stock of the world was more than doubled, and yet
at no time during this period was the general level of prices
raised more than 18 per cent. above the general level of 1848.

A comparison of this effect of an increasing volume of money
after 1848 with the effect of a decreasing volume between 1809
and 1848 strikingly illustrates how largely different in degree
is the influence upon prices of an increasing or decreasing
volume of money. The decrease of the yield of the mines since
about 1865, while population and commerce have been advancing,
has already produced unmistakable symptoms of the same general
distrust, non-employment of labor, and political and social
disquiet, which have characterized all former periods of
shrinking money.

The time that has elapsed since that report was written has but served to verify and emphasize its statements.

THE FALL OF PRICES SINCE 1873.

It is a fact not disputed anywhere but universally admitted, that for many years past the prices of all articles entering into general consumption among the people have been steadily falling. It is obvious that the industrial conditions prevailing since 1873 are but a repetition of those above described as following 1809--with falling prices, constant unrest, and universal discontent.

The following table, compiled from figures published by the Bureau of Statistics of the Treasury Department, shows the average range of export prices of the articles named for each year since 1873:

_Annual average export prices of commodities of domestic production
for each year from 1873 to 1889, inclusive._

------+----------+----------+----------+--------+--------+--------
Year | Corn | Wheat | Wheat | Cotton | Leather| Illumi-
ending| per | per | flour |(upland)| per | nating
June,| bushel. | bushel. | per | per | pound. | oils,
30-- | | | barrel. | pound. | |refined,
| | | | | | per
| | | | | | gallon.
------+----------+----------+----------+--------+--------+--------
|_Dollars._|_Dollars._|_Dollars._|_Cents._|_Cents._|_Cents._
1873 | .618 | 1.312 | 7.565 | 18.8 | 25.3 | 23.5
1874 | .719 | 1.428 | 7.144 | 15.4 | 25.2 | 17.3
1875 | .848 | 1.124 | 5.968 | 15.0 | 26.0 | 14.1
1876 | .672 | 1.242 | 6.216 | 12.9 | 26.2 | 14.0
1877 | .587 | 1.169 | 6.488 | 11.8 | 23.9 | 21.1
1878 | .562 | 1.338 | 6.358 | 11.1 | 21.8 | 14.4
1879 | .471 | 1.068 | 5.252 | 9.9 | 20.4 | 10.8
1880 | .543 | 1.245 | 5.878 | 11.5 | 23.3 | 8.6
1881 | .552 | 1.114 | 5.668 | 11.4 | 22.6 | 10.3
1882 | .668 | 1.185 | 6.149 | 11.4 | 20.9 | 9.1
1883 | .684 | 1.127 | 5.955 | 10.8 | 21.1 | 8.8
1884 | .611 | 1.066 | 5.588 | 10.5 | 20.6 | 9.2
1885 | .540 | .862 | 4.897 | 10.6 | 19.8 | 8.7
1886 | .498 | .870 | 4.699 | 9.9 | 19.9 | 8.7
1887 | .479 | .890 | 4.510 | 9.5 | 18.7 | 7.8
1888 | .550 | .853 | 4.579 | 9.8 | 17.3 | 7.9
1889 | .474 | .897 | 4.832 | 9.9 | 16.6 | 7.8
============================================================
Year | Bacon | Lard | Pork, | Beef, | Butter
ending| and hams | per | salted, | salted, | per
June,| per | pound. | per | per | pound.
30-- | pound. | | pound. | pound. |
------+----------+----------+----------+----------+---------
| _Cents._ | _Cents._ | _Cents._ | _Cents._ | _Cents._
1873 | 8.8 | 9.2 | 7.8 | 7.7 | 21.1
1874 | 9.6 | 9.4 | 8.2 | 8.2 | 25.0
1875 | 11.4 | 13.8 | 10.1 | 8.7 | 23.7
1876 | 12.1 | 13.3 | 10.6 | 8.7 | 23.9
1877 | 10.8 | 10.9 | 9.0 | 7.5 | 20.6
1878 | 8.7 | 8.8 | 6.8 | 7.7 | 18.0
1879 | 6.9 | 7.0 | 5.7 | 6.3 | 14.2
1880 | 6.7 | 7.4 | 6.1 | 6.4 | 17.1
1881 | 8.2 | 9.3 | 7.7 | 6.5 | 19.8
1882 | 9.9 | 11.6 | 9.0 | 8.5 | 19.3
1883 | 11.2 | 11.9 | 9.9 | 8.9 | 18.6
1884 | 10.2 | 9.5 | 7.9 | 7.6 | 18.2
1885 | 9.2 | 7.9 | 7.2 | 7.5 | 16.8
1886 | 7.5 | 6.9 | 5.9 | 6.0 | 15.6
1887 | 7.9 | 7.1 | 6.6 | 5.4 | 15.8
1888 | 8.6 | 7.7 | 7.4 | 5.3 | 18.3
1889 | 8.6 | 8.6 | 7.4 | 5.5 | 16.5
============================================================
Year | Cheese | Eggs | Starch | Sugar, | Tobacco,
ending| per | per | per | refined, | leaf,
June,| pound. | dozen. | pound. | per | per
30-- | | | | pound. | pound.
------+----------+----------+----------+----------+---------
| _Cents._ | _Cents._ | _Cents._ | _Cents._ | _Cents._
1873 | 13.1 | 26.6 | 5.3 | 11.6 | 10.7
1874 | 13.1 | 22.1 | 5.7 | 10.5 | 9.6
1875 | 13.5 | 25.6 | 6.0 | 10.8 | 11.3
1876 | 12.6 | 28.0 | 5.4 | 10.7 | 10.4
1877 | 11.8 | 25.9 | 5.2 | 11.6 | 10.2
1878 | 11.4 | 15.8 | 4.7 | 10.2 | 8.7
1879 | 8.9 | 15.5 | 4.2 | 8.5 | 7.8
1880 | 9.5 | 16.5 | 4.3 | 9.0 | 7.7
1881 | 11.1 | 17.2 | 4.7 | 9.2 | 8.3
1882 | 11.0 | 19.2 | 4.8 | 9.7 | 8.5
1883 | 11.2 | 20.9 | 4.6 | 9.2 | 8.6
1884 | 10.3 | 21.2 | 4.5 | 7.1 | 9.1
1885 | 9.3 | 21.5 | 4.0 | 6.4 | 9.9
1886 | 8.2 | 18.3 | 4.1 | 6.7 | 7.8
1887 | 9.3 | 16.3 | 3.8 | 6.0 | 8.7
1888 | 9.9 | 15.9 | 3.5 | 6.3 | 8.3
1889 | 9.3 | 13.9 | 3.8 | 7.6 | 8.8
------+----------+----------+----------+----------+---------

To show from another source the same general fact of the decline of prices, I quote from an article published in the New York Tribune early in 1886.

The New York Tribune is pretty good authority. These figures are undoubtedly from the calculations and from the pen of Mr. Grosvenor, of the editorial staff of that able journal, formerly editor and proprietor of the "Public," whose estimates of prices have, in my judgment, been more correctly made than those of any other statistician in the world. The article is as follows:

Quotations of about two hundred articles are compared since 1860,
and the amount of money is ascertained which would purchase,
at different dates, of these various articles, quantities
corresponding as closely as possible to their ascertained
consumption in 1880, the date of the last census. Among the
articles compared are wheat, corn, oats, rye, barley, beans and
pease, mess pork, bacon, ham, live hogs, lard, fresh beef, tallow,
live sheep, poultry, butter, cheese, eggs, milk, hay, potatoes,
turnips, cabbage, onions, apples, raisins, sugar, brown and
crushed; molasses, coffee, tea, tobacco, whisky, malt and hops,
mackerel, codfish, salt, rice, nutmegs, cloves, pepper, cotton,
print-cloths and standard sheeting, wool of different qualities,
blankets, carpets, flannels, leather, boots, shoes, hides, silk,
India rubber, iron (pig and bar), nails, steel rails, coal, oil
(crude and refined), tin and tin plates, copper, lead, hemp,
lumber, spruce and pine, oak, ash, walnut, and white wood, lath,
brick, lime, turpentine, linseed oil, soap, glass, paper, white
lead, and twelve other kinds of paints, fertilizers, and over
fifty kinds of drugs and chemicals.

_Cost of products at different dates._

---------------------+-----------+----------+---------
Dates. | Cost in | Price of | Cost in
| currency. | gold. | gold.
---------------------+-----------+----------+---------
1860, May 1 | $100.00 | $100.00 | $100.00
1865, November 1 | 174.77 | 145.87 | 119.81
1866, May 1 | 157.60 | 125.12 | 126.04
1866, November 1 | 170.31 | 146.25 | 117.82
1871, November 1 | 122.03 | 112.00 | 108.95
1872, May 1 | 137.13 | 112.50 | 121.81
1873, November 1 | 115.14 | 108.50 | 106.01
1874, May 1 | 122.77 | 112.87 | 108.77
1875, January 1 | 113.01 | 112.37 | 100.37
1876, October 1 | 97.30 | 110.00 | 88.45
1877, May 1 | 99.29 | 106.75 | 93.01
1878, May 1 | 82.09 | 100.37 | 81.81
1878, October 18 | 77.94 | 100.37 | 77.65
1879, November 1 | 93.48 | -- | --
1880, January 1 | 103.42 | -- | --
1881, January 1 | 95.98 | -- | --
1882, May 16 | 106.59 | -- | --
1883, March 13 | 97.82 | -- | --
1883, November 1 | 88.71 | -- | --
1884, January 1 | 88.37 | -- | --
1884, November 21 | 78.47 | -- | --
1885, January 1 | 79.66 | -- | --
1885, May 9 | 80.22 | -- | --
1885, August 22 | 74.56 | -- | --
1885, November 1 | 75.35 | -- | --
1885, Close | 78.53 | -- | --
---------------------+-----------+----------+---------

It is not only clear from this comparison that the prices of 1885
have been the lowest in our history for twenty-five years, but
that there has been a general tendency toward lower prices. From
1866 to 1871, and again from 1872 until 1885, prices fell quite
steadily. Indeed, had not the short crop of 1881 caused a
temporary advance in the spring of 1882, the range of January,
1880, would have been the highest of the later period, and it
might have been said that the present era of declining prices had
continued with little intermission for six years. None will fail
to observe how swift and sharp the advances have been--about 12
per cent. from November, 1871, to May, 1872, and 25-1/2 per cent.
from October, 1878, to January, 1880. But these spasmodic
advances, by which the general tendency downward is interrupted,
only serve to make it more clear that prices have been tending
irresistibly toward a lower level than that of 1860, not only
during the period of paper depreciation, but since gold has been
the measure of value.

In order to show that the United States are not alone in their complaint of falling prices, but that the complaint is universal, and in order that we may have before us a broad view of the field of general prices, I submit a table showing the relation to each other of the range of prices from 1809 to 1849, by decades, based on the prices of fifty leading articles of commerce, prepared by the distinguished Professor Jevons and published in the London Economist for May 8, 1869.

Taking the range of prices of 1849 as a datum line (the range for that year being the lowest of the century) Mr. Jevons works backward to 1809, when the revolt of the South American colonies against the authority of Spain shut off at a blow the supplies of the precious metals, and set on foot a money famine from which the world knew no relief till the discovery of the mines of California and Australia.

Professor Jevons's figures are as follows, the prices of 1849 being represented by 100:

_Relation of prices, 1809 to 1849, by decades, those for 1849 being
rated at 100._

1809 245
1819 175
1829 124
1839 144
1849 100

From these figures it will be observed that the fall from 1809 to 1849, a period of forty years, was as 245 to 100, or 59 per cent.

By the next table which I submit, that of Dr. Soetbeer, it will be seen that the general range of prices rose gradually from 1849 to 1873, in the last of which years the figures bore to those of 1849 the relation of 138 to 100. It has never been denied that this rise was due to the increase in the world's money supply by the yield of the precious metals from the mines of California and Australia, the effects of which, however, as will be seen by the table, were not felt on prices till 1853--five years after John Marshall's discovery of the yellow metal in the tail-race at Sutter's mills. Yet, because it interferes with the pecuniary interests of a large and influential class, it is vehemently denied that the fall of prices since 1873 is due to a decrease in the volume of the money caused by the demonetization of silver in that year throughout the western world.

From and after that year, as will be perceived by an examination of the figures; in other words, from the year when one-half the world's money supply was deprived of the money function, we find an almost uninterrupted decline of prices. The figures of 1873 and 1885 will be seen to bear to one another the relation of 138 to 108, or a fall of 22 per cent. in twelve years. Should the fall continue at that rate without interruption--and there is no reason apparent why it should not, we shall in forty years have witnessed a decline of 72 per cent. in the general range of prices--a decline considerably greater than that from 1809 to 1849. And these are not the figures of bimetallists or silver "theorists," but of pronounced advocates of the single standard of gold. Where, I would inquire, is the fall of prices to stop?

Dr. Soetbeer's table represents the general average price of one-hundred leading articles of commerce each year for a period of nearly forty years. He takes as a basis the general range of gold prices prevailing between 1847 and 1850, and calling that range 100, shows the relative standing toward it of the general range of prices for subsequent years, up to 1885.

_Relation of prices by years from 1849 to 1885, the general range of
prices of 1849 being rated at 100._

1849 100.00
1851 100.21
1852 101.69
1853 113.69
1854 121.25
1855 124.23
1856 123.27
1857 130.11
1858 113.52
1859 116.34
1860 120.98
1861 118.10
1862 122.65
1863 125.49
1864 129.28
1865 122.63
1866 125.85
1867 124.44
1868 121.99
1869 123.38
1870 122.87
1871 127.03
1872 135.62

1873 138.28

1874 136.20
1875 129.85
1876 128.33
1877 127.70
1878 120.60
1879 117.10
1880 121.89
1881 121.07
1882 122.14
1883 122.24
1884 114.25
1885 108.27

Mr. Sauerbeck, also an advocate of the gold standard, and whose work has the approval of the Statistical Society, takes as a datum line the prices ruling from 1867 to 1870. Rating those at 100 he finds that by 1873 prices had risen to 111, by 1886 they had fallen to 69, and by September, 1887, to 68.7. He declares the average prices for the first nine months of 1887 to have been the lowest reached for a hundred years.

BOTH GOLD AND SILVER VARIABLE IN VALUE.

The fact that the metals have separated considerably since 1873, and that silver bullion now sells at less than par value of $1.29 per ounce, is taken to signify that silver has fallen--not that gold has risen. This proceeds from the assumption that whenever a change takes place in the relation between gold and any other article the change must necessarily be in the other article. This assumption, in turn, is based on the absurd idea that calling gold a "standard" will insure it against change.

Among political economists it is a well-recognized principle that neither gold or silver is exempt from the universal application of the law of supply and demand. That law governs gold and silver, not only as commodities, but as money, and governs as well all other kinds of money that may be used. And while the advocate of the single gold standard is at all times ready to concede the truth of this assertion as to silver, he is confident that it does not and can not apply to gold; that the economic law which makes supply and demand a regulator of value is suspended as to gold.

That a metallic money, whether of gold or silver, is very far from being stable is admitted by innumerable authorities, of whom I will cite only a few.

Dr. Adam Smith, in his "Wealth of Nations," book 1, chapter 5, says:

Gold and silver, like every other commodity, vary in their value.
The discovery of the abundant mines of America reduced in the
sixteenth century the value of gold and silver in Europe to about
a third of what it had been before. This revolution in their
value, though perhaps the greatest, is by no means the only one
of which history gives some account.

And again:

Increase the scarcity of gold to a certain degree and the
smallest bit of it may be more precious than a diamond.

John Locke, "Considerations, etc., in relation to money" (published in 1691), says:

The greater scarcity of money enhances its price and increases
the scramble; there being nothing that does supply the want of
it; the lessening of its quantity, therefore, always increases
its price and makes an equal portion of it exchange for a greater
of any other thing.

Prof. Francis A. Walker, "Money," etc., page 210, says:

Gold and silver do, over long periods, undergo great changes of
value and become in a high degree deceptive as a measure of the
obligation of the debtor of the claim of the creditor. Thus
Professor Jevons estimates that the value of gold fell between
1789 and 1809, 46 per cent., that from 1809 to 1849 it rose 145
per cent., while in twenty years after 1849 it fell again at
least 20 per cent.

Jevons, "Money and Exchange," chapter 6, says:

In respect to steadiness of value the metals are probably less
satisfactory, regarded as a standard of value, than many other
commodities, such as corn.

And again, in chapter 24 of the same work, he says:

We are too much accustomed to look upon the value of gold as
a fixed datum line in commerce; but in reality it is a very
variable thing.

Sir Archibald Alison (England, in 1815 and 1845), says:

The coining of gold and silver, which is universal in all
civilised nations, and affixing to them one definite and
permanent value by authority of law, has no effect whatever in
preventing the fluctuations in the real value of the current coin
of the realm.

Professor Laughlin, of Harvard, in his work on Political Economy (page 72), says:

It is quite evident that the name dollar does not always have the
same value, although people often think it does. We get into the
habit of using names without thinking what they really mean. The
23.22 grains in a gold dollar may be exchanged sometimes for
more, sometimes for less, of other commodities. When it is
exchanged for less, its value has fallen relatively to all other
commodities, and, even if the name dollar remains the same, its
value has fallen. One must then offer more dollars than before
for the same commodities. That is, when money falls in value,
prices rise; when money rises in value, prices fall.

Now, we shall say a few words in regard to another function, a
means of paying long contracts, or debts which run over a long
term of years.

Suppose that I loaned you in 1880, $1,000 for twenty years. In
that year the $1,000 bought a certain quantity of corn, wheat,
sugar, salt, wood, hats, and shoes. In 1900, when you are to pay
me back the $1,000 in money, if prices have changed, you may give
me back the same amount of money, but you will not return to me
the same purchasing power over other things. If for some reason
prices have fallen between 1880 and 1900, it will take less money
to buy the same quantity as before of corn, wheat, etc. If so,
the $1,000 you return me in 1900 will be of more value than the
$1,000 I gave you, and it would be unjust to oblige you to give
me more than you borrowed. If, on the other hand, prices have
risen, then the $1,000 in money would buy me less than before, so
that I should lose. * * * Hence, the value of money (gold or
silver) does not remain the same for any length of time; and the
precious metals, while they are very satisfactory for exchanges
which do not take very long to complete, can not serve as a
proper measure of value during a long term or years.

Ricardo, the greatest authority on the gold standard, the financial writer, more highly regarded throughout the world than any other that has ever appeared in Great Britain, whose logical utterances have never failed to attract the attention of mankind, stated the true condition of things in 1810, and advocated the true policy for Great Britain.

In his "Proposals for an Economical and Secure Currency," Ricardo makes the following statement, which I commend to the careful attention of the advocates of the single gold standard:

While a standard is used, we are subject to only such a variation
in the value of money as the standard itself is subject to; but
against such variation there is no possible remedy, and late
events have proved that, during periods of war, when gold and
silver are used for the payment of large armies distant from
home, those variations are much more considerable than has been
generally allowed. This admission only proves that gold and
silver are not so good a standard as they have been hitherto
supposed--that they are themselves subject to greater variations
than it is desirable a standard should be subject to. They are,
however, the best with which we acquainted.

If any other commodity less variable could be found, it might
very properly be adopted as the future standard of our money,
provided it had all the other qualities which fitted it for that
purpose; but while these metals are the standard the currency
should conform in value to them, and whenever it does not, and
the market price of bullion is above the mint price, the currency
is depreciated. This proposition is unanswered and is
unanswerable. Much inconvenience arises from using two metals as
a standard of our money; and it has long been a disputed point
whether gold or silver should by law be made the principal or
sole standard of money. In favor of gold it may be said, that its
greater value under a small bulk eminently qualifies for a
standard in an opulent country.

And I may here remark that it requires an opulent country to maintain the single gold standard, and the country does maintain it at very great expense. I do not wonder that he thought an opulent country, a creditor country, the only one that ought to adopt it, for no other country can afford to adopt it. But, like many people who in attempting to improve their condition in society attempt luxuries and extravagances which they can not maintain and which force them back into the ranks from which they came, so nations in attempting to establish the gold standard may find themselves reduced from opulence to poverty.

Ricardo continues:

But this very quality subjects to greater variations of value
during periods of war or extensive commercial discredit, when it
is often collected and hoarded, and may be urged as an argument
against its use. The only objection to the use of silver as the
standard is its bulk, which renders it unfit for the large
payments required in a wealthy country; but this objection is
entirely removed by the substituting of paper money as the
general circulation medium of the country. Silver, too, is much
more steady in its value in consequence of its demand and supply
being more regular; and, as all foreign countries regulate the
value of their money by the value of silver, there can be no
doubt that on the whole silver is preferable to gold as a
standard, and should be permanently adopted for that purpose.

Innumerable additional citations from authors of repute could be adduced to fortify this position.

It will thus be seen that the fluctuations in the value or purchasing power of both gold and silver have always been admitted by scientific writers. They were so well understood three centuries ago that in Queen Elizabeth's reign (1576) the British Parliament directed that the rents reserved in the long leases of certain college lands should be payable, not in money, but in wheat. And at various times during the past seventy years propositions have been formulated to substitute for gold and silver as a standard of value for deferred payments, a tabular statement of the prices of the principal articles of commerce, to be made by official authority and published from time to time, by the average of which the fluctuations of gold could be ascertained and proper allowance made for them in the settlement of time transactions. Professor Jevons, Prof. Francis A. Walker, and other political economists of note have expressed approval of such a tabular standard for long-time contracts, as securing greater equity than would gold as a measure of values.

Those who now assert that silver has fallen and that gold has not risen in value arrive at this conclusion by a very safe process of reasoning. First, to show that silver has fallen they measure it by gold alone, without reference to the general range of prices; and then to prove that gold has not risen they make it the measure of itself. An increase or decrease of the value of either can not be ascertained by reference to the other, and certainly not by constituting either of them a standard by which to judge itself. It would of course be forever impossible to show any change in the value of gold or silver, or of anything else, measuring it by itself. It is only by looking at the relations which both metals bear respectively to a considerable range of commodities generally dealt in as well as to each other, that it can be ascertained with certainty what has happened.

Not only upon consideration of all the facts I have given, but upon the logic of the situation, it must be obvious that gold has risen and will continue to rise in value as long as its volume decreases and the demand for it increases. Since 1860, when 77 per cent. of the combined yield of the two metals, it has diminished not only in relative proportion to the yield of silver, but it has diminished absolutely. For the five years ending with 1860 the yield of gold throughout the world was $137,000,000 a year; for the five years ending 1889 the yield was but $110,000,000 a year. If, as claimed by the advocates of the single gold standard, an increase in the yield of silver decreases the value of silver, by what system of logic can they deny that a decrease in the supply of gold increases the value of gold?

In a late issue of the London Economist, that of April 26, 1890, I find an editorial article relating to the recent discussion on bimetallism in the British House of Commons. That article comments somewhat sharply on Mr. Smith's assertion that "a conspiracy had been formed among the financial class in Europe and America to get rid of silver as full-valued money in order to increase the value of gold, in which their revenues are paid." In the course of his comments the editor, by "confession and avoidance," admits our whole contention as to the rise of gold and the fall, as a natural consequence, of the prices of commodities. He says:

It may not be amiss, however, to point out that the increase in
the exchangeable value of gold has been by no means such a gain
to the financial class as he in common with many others suppose;
for advantage has been very largely taken of it to cut down the
return upon the capital which the financial classes have
invested. It has favored debt conversion schemes, and it has been
one of the influences that have caused the rate of interest in
general to decline so decidedly, that, all round, the yield of
investments is now very appreciably lower than it was fifteen
years ago. The idea that the creditor class have realized unmixed
gains and the debtor class have suffered unmitigated losses by
the alteration in the purchasing power of gold is thus altogether
fallacious. There has in their case, as in all others, been a
species of compulsory give and take. Each has gained and each has
lost something, and now that the process of readjustment has been
carried so far it would be unwise to the last degree to unsettle
everything again by such legislation as the bimetallists propose.

The editor of the Economist is to be commended for at least one thing. He does not quibble as to the most important point in the bimetallic controversy. He frankly admits that gold has risen, and does not, as some others do, attribute the fall of prices to improvements in methods of production.

He also admits that coincidently with and caused by the rise in gold there has been a great decline in the rates of interest, and, strangely, claims that the debtor is compensated for the rise in the value of money by the ability to convert the debt into one bearing a lower rate of interest, or, as he calls it, resorting to "debt-conversion schemes."