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+*** START OF THE PROJECT GUTENBERG EBOOK 78364 ***
+
+
+
+
+                           The Gold Standard.
+
+
+            HOW IT CAME INTO THE WORLD AND WHY IT WILL STAY.
+                A HISTORICAL SKETCH WITH SOME PRACTICAL
+                          REFLECTIONS THEREON.
+
+             _AN ADDRESS BEFORE THE CONGRESS OF BANKERS AND
+                 FINANCIERS AT CHICAGO, JUNE 20, 1893._
+
+                                   BY
+                             HORACE WHITE.
+
+                    The Evening Post Publishing Co.,
+
+                             NEW YORK CITY.
+
+
+
+
+  _Copies of this pamphlet may be obtained at 5 cents a copy, postpaid._
+             _Address_ THE EVENING POST PUBLISHING COMPANY,
+                   _206–210 Broadway, New York City_.
+
+
+
+
+                           THE GOLD STANDARD.
+
+
+The most impressive fact in the world of finance is the dominance of
+the gold standard. A year or two ago Roumania passed under its sway,
+to-day it is Austria, next year or soon it will be India, by and by it
+will be Russia, and meanwhile it has lost no ground that it has ever
+held. Three international conferences have been assembled to stay this
+conquering march, while none has been called to promote or assist it.
+Yet the movement has been as little impeded as that of an ocean steamer
+would be by the action of a debating society in its own cabin. Is all
+this due to human perversity, or has it a rational cause founded in the
+needs of mankind?
+
+
+                       THE EXPERIENCE OF ENGLAND.
+
+The first nation to adopt the single gold standard by law was England.
+This was really done in 1798, although the date usually assigned to it
+is 1816.
+
+The pound sterling was originally a pound weight of silver, divided
+into twenty parts called shillings, and each of these into twelve parts
+called pennies, or pennyweights. Gold made its first appearance in the
+coinage of England in the reign of Edward III. (A. D. 1345). The ratio
+of gold to silver fixed by royal decree in this coinage was about 12½
+to 1.
+
+From this period to the forty-third year of the reign of Elizabeth
+there were nine debasements of the silver coinage accompanied by
+changes in the gold coinage, but as these were arbitrary acts of
+the reigning sovereigns they possess no scientific interest. In the
+forty-third of Elizabeth (1601) the last debasement was made. The
+pound weight of silver was then coined into sixty-two shillings, and
+the pound of gold into thirty-three and one-half sovereigns of seven
+pennyweights and four grains each, the ratio of gold to silver being
+11 to 1. The silver coinage being henceforth unchanged, it becomes
+possible to trace the commercial variations of the two metals and to
+observe the ineffectual struggles of society and government to keep
+both of them in use as legal-tender money.
+
+Queen Elizabeth died two years later. Before her successor, James I.,
+had been on the throne three years, gold had risen in value as compared
+with silver, and the gold coins were exported to such an extent that it
+was necessary to diminish their weight about 11 per cent. The ratio now
+established was a little more than 12 to 1.
+
+In the ninth year of the same reign the gold coin began to be exported
+again, so that it was necessary to make a new change of ratio. This
+time the ratio was fixed at 13 to 1. But this was too great an advance
+in the rating of gold. An exportation of silver set in which caused
+great inconvenience in the kingdom. Instead of readjusting the ratio
+the King, in the year 1614, issued a proclamation prohibiting the
+exportation of the precious metals. The proclamation had no effect. So
+another one was issued in 1618 reaffirming the first one and forbidding
+the melting of coin for the purpose of making plate, although a certain
+amount might be used for repairing old plate and keeping it up to its
+original standard. As the evil continued a third proclamation was
+issued in 1622 and a fourth in 1624. None of these had any effect
+except to make an historical record of the futility of attempts to
+enforce a legal ratio which is different even in a slight degree from
+the market ratio. It was customary during this period to pay a premium
+of two pence for silver change to the amount of 20 shillings.
+
+Soon after Charles I. began his reign he issued a proclamation on
+the same subject, reciting the previous ones of his father and
+acknowledging that they had been disregarded. In 1636 seven persons
+accused of melting and exporting coin were arrested and fined £8,500
+and imprisoned till the fines were paid, but even this example did not
+put a stop to the practice. Silver was worth two or three pence per
+ounce more than the mint valuation, and this fact dominated society
+from the King on the throne to the beggar on the dunghill. But what
+could not be prevented by royal proclamation and star chamber was
+stopped by an unseen force. The price of gold was slowly rising, so
+that about the beginning of the Commonwealth the ratio that King James
+had established was identical, or nearly so, with the market ratio. The
+exportation of the precious metals ceased until the reign of Charles II.
+
+In 1663 gold had risen in value so that it was necessary to change the
+ratio to 14½ to 1. This was an advance of about 8 per cent. since James
+I.
+
+Each time that a change was made in the gold coinage a new name was
+given to the coin so produced, in order to distinguish it from its
+predecessors. The coin that Charles II. now introduced was called the
+guinea. It was ordered that this coin should pass for twenty shillings,
+but it immediately became current in trade at a higher rate, passing
+for twenty-one to twenty-two shillings. No attempt was made to enforce
+the mint valuation or to prevent melting or exporting. Consequently
+silver became in practice the only legal-tender money. Nobody would
+offer a guinea to pay a debt of 20 shillings when it was worth 21
+shillings. The guineas passed for what they were worth as bullion. That
+was a time when the clipping of coin was much practiced, but it was no
+advantage to clip a gold coin, since it was taken only at its bullion
+value. The silver coins, however, passed by tale. Consequently they
+alone were subjected to the clipping process. The evil became so great
+that a recoinage of silver was necessary and was undertaken in the
+reign of William III. This was a celebrated event in many ways. Both
+Sir Isaac Newton and John Locke were concerned in it. In the year 1717
+the guinea was made current by royal proclamation at 21 shillings in
+silver, at which figure the ratio was about 15⅐ to 1. This was in the
+third year of the reign of George I.
+
+It was about this time, says Lord Liverpool, that a marked preference
+was shown by the people for gold money rather than silver, on account
+of its convenience in making large payments. This he ascribes to the
+increase in the commerce of the country. As gold was slightly overrated
+at the ratio of 15⅐ to 1, there was a tendency to export silver. Only
+£584,000 of the latter metal was brought to the mint for a period of
+eighty-three years down to the end of the century, and most of this
+came from Spanish treasure ships captured in war. The only silver coin
+retained in circulation was that which had been much worn. As these
+light-weight pieces varied among themselves, the lightest ones were
+selected to make payments, a condition which became worse and worse
+until Parliament in 1774 passed an act limiting the legal tender of
+silver coins to £25 in tale. For any sum above £25 they could be paid
+by weight only. This act was to continue in force only two years, the
+expectation being that some other remedy for the evil would shortly
+be found. It was re-enacted from time to time till 1798, when another
+clause was added providing that no more silver should be coined at the
+mint, nor should any be delivered that had been coined, but that the
+owners of such silver should be paid for it. In the following year
+(1799) a brief act was passed making the act of 1774 perpetual. In
+1816 the character of the British monetary system was formulated by an
+act of Parliament on its present basis, the essential part of this act
+being in the following words:
+
+  “XI. And whereas at various times heretofore the coins of this realm
+  of gold and silver have been equally a legal tender for payments
+  to any amount, and _great inconvenience has arisen from both those
+  precious metals being concurrently the standard measure of value and
+  equivalent for property_; and it is expedient that the gold coin made
+  according to the indentures of the Mint should henceforth be the
+  sole standard measure of value and legal tender for payment, without
+  any limitation of amount, and that the silver coin should be a legal
+  tender to a limited amount only, for the facility of exchange and
+  commerce;
+
+  “Be it therefore enacted, That from and after the passing of this
+  act, the gold coin of this realm shall be and shall be considered and
+  is hereby declared to be the only legal tender for payments, except
+  as hereinafter provided, * * * and no tender of payment of money
+  made in the silver coin of this realm of any sum exceeding the sum
+  of forty shillings at any one time shall be reputed a tender in law,
+  etc.”
+
+This is a brief résumé of the experience and legislation of Great
+Britain. It is important as showing that the single gold standard was
+adopted on account of the “great inconvenience” of the double standard,
+which had been in vogue previously. Of course, this “inconvenience”
+had attracted the attention of learned men before 1798. John Locke had
+shown that a double standard composed of two things of varying value
+was an impossibility. He favored the single standard of silver, as did
+the learned men who considered the same question in France a century
+later.
+
+It appears that the gold standard was adopted without any particular
+design on the part of those who brought it about. They found, as a
+matter of fact, that the monetary evils existing in 1774 could be cured
+most readily by limiting the legal tender of silver. So they did it
+for two years, and then for two years more, and so on, till 1798–99,
+when they had become satisfied by the experience of twenty-five years
+that the single gold standard was the right thing to put an end to the
+“inconvenience.” Seventeen years later, the experiment having continued
+to be successful, they passed the law which I have quoted. That law,
+in substance, remains in force to the present time, and we may be sure
+that it would not have lasted so long if it were not a good thing _per
+se_.
+
+
+                THE GOLD STANDARD IN THE UNITED STATES.
+
+We will next consider the experience of the United States. At the
+beginning of our career as a nation we adopted the double standard
+of gold and silver. This was in 1792. Our statesmen followed in this
+matter the example of the older countries of Europe. Alexander
+Hamilton was the Secretary of the Treasury and the ruling spirit. At
+his instance the ratio of 15 was adopted, and there is no room to
+doubt that this was very close to the true market ratio at the time.
+The English ratio of 15⅐ ceased to be operative, as we have seen,
+because it was too high. France was at that time under the régime of
+irredeemable paper. Consequently nothing could be learned from her. The
+discussions and writings of the period show that there was an honest
+and earnest effort to adopt the market ratio as the legal ratio, and
+that the result reached was as nearly true as possible. Nevertheless,
+gold began to grow scarce in our circulation as early as 1810, and had
+wholly disappeared in 1817. One ounce of gold had come to be worth
+as metal something more than fifteen ounces of silver. It was worth
+while for bullion brokers to collect gold coins and export them. The
+testimony is emphatic and is not disputed, that after 1817 and until
+1834 our metallic money consisted of silver exclusively.
+
+
+                            THE LAW OF 1834.
+
+In 1834 people had become tired of lugging silver around. They had by
+this time found out what was the matter. They determined to have some
+gold in their pockets, but it cannot be affirmed that Congress had
+reached a scientific conclusion in favor of the single gold standard.
+What is certain is that Congress adopted the ratio of 16 to 1 in 1834
+by very large majorities in spite of proofs urgently presented that
+this ratio would drive silver out of circulation altogether, as it did.
+This bill was called the “Gold Bill” in the discussions of the time.
+As reported by the special committee, it provided for a ratio of 15.60
+to 1, but when it came up for discussion, Mr. Campbell P. White, the
+Chairman of the Committee, who was himself in favor of the single gold
+standard, moved to amend by making the ratio 16 to 1, and his amendment
+was adopted without a division. On the main question the debate was
+long and animated. An amendment to the amendment was offered, making
+the ratio 15.625 to 1, and it was supported on the ground that this was
+the true market ratio, and that it would enable the country to keep
+both silver and gold in concurrent circulation. This amendment was
+voted down--yeas 52, nays 127. The bill was then passed in the House by
+145 to 36, and in the Senate by 35 to 7.
+
+There was a variety of motives leading to the passage of the Gold Bill,
+but among these the desire of having gold in place of silver was the
+most influential. Thomas H. Benton, one of the strongest advocates of
+the measure, declared that the object of his endeavors was:
+
+  “To enable the friends of gold to go to work at the right place to
+  effect the recovery of that precious metal which their fathers once
+  possessed, which the subjects of European kings now possess, which
+  the citizens of the young republics to the south all possess, which
+  even the free negroes of San Domingo possess, but which the yeomanry
+  of this America have been deprived for more than twenty years, and
+  will be deprived forever unless they discover the cause of the evil
+  and apply the remedy to its root.--[Speech of Senator Benton of
+  Missouri, quoted by Louis R. Ehrich in his ‘Question of Silver.’]”
+
+The effect that was predicted was abundantly realized. Silver did go
+out of circulation. The minor coins, being of proportional weight and
+fineness with the dollar, were melted and exported, and their place in
+the circulation was taken by light-weight foreign coins, principally
+Spanish and Mexican six-pences, shillings, quarters, and halves.
+Those coins, when of full weight, were almost identical with our own
+fractional coins. If our own would not circulate the foreign ones
+of course would not. But if there was a certain proportion of these
+coins, whether foreign or domestic, that had been worn down by long use
+so that they really represented the market ratio or something less,
+such coins would circulate concurrently with gold. To illustrate: two
+halves, four quarters, or ten dimes, if new and of full weight, were
+worth about one cent and a half more than a gold dollar. Consequently
+they would be collected by brokers, melted and exported. But two
+halves, four quarters, or ten dimes, that had lost one and a half
+cents’ worth of silver by abrasion, would circulate, because there
+would be no motive to melt or export them. There would be no profit
+in it. When I was a boy the silver money of this country consisted
+exclusively of foreign coins, mostly Spanish and Mexican, but with a
+considerable sprinkling of English, French, German and Scandinavian
+pieces. Every merchant kept a coin chart manual for handy reference to
+determine the value of these pieces as they were offered in trade. I
+have also seen Spanish quarters cut in half, each piece circulating as
+a shilling. There was nothing remarkable about this, since all these
+foreign coins were circulating at their bullion value. The two halves
+of a Spanish quarter were therefore worth as much as they would have
+been if joined in a single piece.
+
+It became apparent to everybody that if full-weight silver coins would
+not circulate on the ratio of 16 to 1, while those of light weight
+would circulate, then it would be safe to _make_ minor coins (halves,
+quarters, etc.), designedly of light weight on Government account, of
+limited legal tender. There would be no profit in exporting such coins,
+because they would not sell as bullion for as much as it would cost to
+collect them. In 1853 an act of this kind was passed.
+
+From 1837 onward the country had gold money and the gold basis. Silver
+dollars were hardly ever seen. There was not an hour in the whole
+period of forty years to 1873 when the silver dollar was not worth more
+than the gold dollar. With the exception of a very few years it was
+worth fully three cents more. Did any of you ever see a silver dollar
+in circulation prior to 1878? I never did.
+
+
+                            THE LAW OF 1873.
+
+Under these circumstances, the gold standard existing _de facto_, and
+there being no silver except light-weight subsidiary coins, our mint
+authorities, the only people who took any interest in the subject,
+began even before the war to recommend that the single gold standard
+should be adopted in law as it had been adopted in fact. Ex-Gov.
+Pollock, Director of the Mint, in his report for 1861 called attention
+to the incongruity of a silver dollar that was worth 3.10 cents more
+than the gold dollar and 8 cents more than two half dollars. He
+recommended that it should either be dropped from the list of coins
+or reduced in weight so as to correspond with the subsidiary coins.
+He considered that gold was _de facto_ the standard of value, and he
+recommended that the law should conform to the fact. But the nation
+had more exciting topics to discuss in 1861 than those relating to
+coinage. In 1866, after the war, Mr. John J. Knox, who then had
+charge of the Mint and coinage matters in the Treasury Department,
+recommended a revision of all the laws relating to the Mint. Secretary
+Boutwell approved of the suggestion. Mr. Knox and Dr. Linderman were
+appointed in 1869 a committee to make such revision. They presented
+their report with a draft of a bill in 1870. The report recommended the
+discontinuance of the silver dollar, this coin being obsolete.
+
+The bill and report were transmitted to the Finance Committee of the
+Senate on the 25th of April, 1870. The bill passed the Senate on the
+10th of January, 1871. It made the gold dollar the unit of value and
+it dropped the silver dollar from the list of coins. The bill failed
+in the House for want of time. The Forty-first Congress having expired
+without final action it came up again in the Forty-second. It passed
+the House May 27, 1872, by yeas 110, nays 13. It passed the Senate
+January 17, 1873, without a dissenting vote. The metal in the silver
+dollar at that time was worth two cents more than the gold dollar. No
+objection to the bill was heard until the price of silver had fallen so
+that the silver dollar, if there had been any, would have been worth
+less than the gold dollar. Then it became fashionable to say that
+the bill was passed surreptitiously. The truth is, that the bill was
+before Congress two years and ten months, that it was printed thirteen
+times by order of Congress, that the debates on it occupy sixty-six
+columns in the Senate proceedings, and seventy-eight columns in the
+House proceedings, and that the discontinuance of the silver dollar
+was specially discussed in the House. Any candid person must see that
+the reason why the discontinuance of the silver dollar attracted so
+little notice was that this coin had been discontinued _de facto_ in
+1834, when the ratio of 16 to 1 was adopted. I have given reasons for
+thinking that this ratio was adopted designedly to expel the silver
+dollar from circulation. At all events, it did so, to the satisfaction
+of the people. It is a great pity that our ancestors in 1834 did not
+put their intentions into the form of law at that time. If they had
+done so they would have spared us a Pandora’s box, to be opened forty
+years later.
+
+Bimetallism was abolished in the United States by the Act of 1873.
+It has not been re-established by any subsequent act. The purchase
+and coinage of a limited amount of silver by the Government is not
+bimetallism. Still less so is the purchase of bullion which is not
+coined. Any other metal would answer as well as silver as a backing for
+the issue of Treasury notes. Let us imagine for a moment that silver
+had not fallen in price after 1873. Would anybody ever have missed the
+silver dollar? Would anybody have doubted that the gold standard was
+brought about in this country by natural causes operating upon men’s
+minds in the same way as it was in England, the action of Congress in
+1873 merely giving the form of law to what had been done practically at
+an earlier period?
+
+
+                       THE EXPERIENCE OF GERMANY.
+
+Prior to 1871 Germany had the single silver standard, but as she could
+not transact business with silver alone, she used for her international
+and wholesale trade a heterogeneous assortment of gold coins, partly
+domestic and partly foreign, including napoleons, pistoles, guineas,
+eagles, Russian imperials, Friedrichs d’or, ducats, crowns, &c.,
+passing as commercial money. The question of a reform of the currency
+had been under discussion by the economists and publicists of Germany
+for nearly ten years, but until 1868 the question under debate was a
+question of _uniformity_ of money rather than of the metallic standard.
+Dr. Soëtbeer had indeed published two articles in 1863 and 1864 in
+the _Vierteljahrschrift für Volkswirthschaft_ on the gold standard,
+but it was not until after the Paris Monetary Conference of 1867
+that the commercial classes began to take an active interest in the
+question. This Conference was held, at the invitation of the French
+Government, to consider the question of uniformity of coinage. Nearly
+all the governments of Europe were represented. The United States were
+represented also. One of the earliest questions to be decided was that
+of a standard. The first vote was on the question of adopting the
+single standard of silver. This was rejected unanimously. Then the
+single standard of gold was adopted with only one dissenting vote--that
+of Holland. Nobody proposed bimetallism. The action of this Conference
+shows that even at a time when the two metals were at an equilibrium
+according to the French ratio, France and all her allies of the Latin
+Union were inclined to adopt the single gold standard, and also that
+Germany, Austria, Russia and the Scandinavian countries, all of which
+at the time had the single silver standard, were of the same mind.
+
+After this event a great many publications appeared in Germany showing
+an unmistakable tendency in the public mind to the gold standard. The
+most important of these is the report which Soëtbeer made at the Ninth
+Congress of German Economists in the year 1868. This Congress met in
+Hamburg and pronounced in favor of the unification of German money, and
+of the gold standard. Its action was ratified soon afterward by the
+united commercial bodies of the North German Confederation, and would
+have been carried into effect at once but for the war with France. This
+event postponed the reform one year.
+
+
+                      GERMAN MONETARY LAW OF 1871.
+
+On the 5th of November, 1871, the Finance Minister of the new German
+Empire, Herr Delbrück, presented to the Imperial Diet a brief report
+of the “motives” which had led the Government to propose a measure for
+the unification of the German coinage. This measure provided for the
+coinage of gold pieces of ten and twenty marks, and it discontinued
+the coinage of large silver coins, but did not demonetize those that
+were in circulation. The report says, first of all, that it may be
+considered as beyond doubt that the existing silver standard cannot
+be maintained. The only gold coins authorized by existing law were
+German crowns and half-crowns, but these had no fixed relation to the
+standard silver coins of the nation nor to those of any other country.
+Consequently they were not accepted in the domestic circulation. They
+had never been an integral part of it, nor had they acquired any
+standing in international commerce, being melted down as soon as they
+reached the frontier. Consequently the internal commerce of Germany
+was confined to the use of bulky and inconvenient silver coins. “The
+inconvenience of silver coins,” says the report, “led of necessity to
+a very considerable circulation of paper, which, in ordinary times,
+is taken as a welcome facility, but in critical times contains the
+germs of serious dangers. The artificial demand for paper created by
+the exclusive circulation of silver made it almost impossible to adopt
+any radical and rational regulation of the banking system through laws
+common to all Germany.” For these reasons--namely, that silver was
+bulky and inconvenient, and that it brought about a forced circulation
+of paper and prevented any wise regulation of bank issues--the single
+gold standard was recommended, with a silver subsidiary coinage. The
+measure was supported by very strong speeches by Minister Delbrück and
+by Dr. Bamberger, and it passed on the 23d of November. This measure
+was provisional only, a second and more detailed one being enacted two
+years later.
+
+It is said by some that Germany, by demonetizing silver in 1871 and by
+selling it in 1873 and later, drove France and the Latin Union into a
+suspension of silver coinage, and caused the great decline in the price
+of that metal. If this were true it might possess an academic, but
+hardly a practical interest. Germany is not answerable to us for her
+tastes. We cannot call her people to account for liking to have gold in
+their pockets or sauerkraut on their tables. We cannot go back to 1871
+or blot out the intervening years. Nor have we been able to persuade
+Germany that she has made any mistake in her new monetary system. She
+declined to take part in the Monetary Conference of 1878. She came with
+reluctance to that of 1881, and announced at the outset that she could
+not join in any movement for the free coinage of silver. She repeated
+this declaration at an early stage of the recent Brussels Conference.
+So I feel warranted in saying that the question whether Germany has
+been guilty above others in oppressing or depressing silver is of no
+practical consequence.
+
+But such a charge cannot be sustained. Germany had completed her new
+monetary system and stopped selling silver in 1879, and the Latin
+Union countries had closed their mints to silver three years earlier,
+whereas silver continued to decline all the same. The London price for
+1879 (average) was 51¼d. per ounce. It is now 38d. The decline has been
+greater since Germany stopped selling than it was before. From 1871 to
+1879 the aggregate decline was 9d.; from 1879 to 1893 it has been 13d.
+
+The simple truth is that Germany was driven to the gold standard, just
+as Great Britain and the United States had been previously, by the
+_inconveniencies_ of silver money. These inconveniencies manifested
+themselves with some variations of detail in different countries, but
+all grew out of the ponderousness of silver, an evil which increased
+with the growth of commerce. Some persons habitually speak of silver as
+a twin sister to whom some grievous injustice has been done. All such
+must admit that she is a very corpulent one.
+
+
+                     FRANCE BEFORE THE REVOLUTION.
+
+We will now look at the course of events in France. Here the livre was
+originally a pound weight of silver. It was debased by royal authority
+from time to time, as in England, but much more rapidly. M. Béranger,
+in his report on the French monetary system in 1802, says that the
+ratio of gold to silver was changed twenty-six times between 1602 and
+1773, and that the livre at the time when he wrote had been reduced to
+the seventy-sixth part of its original weight. The livre is now called
+the franc. It is impossible to trace any scientific connection between
+these recoinages and the metal ratios except that the divergencies
+between the legal and market ratios, whenever they were discovered,
+were seized upon by the Government as an excuse for further debasement.
+They “fell back alternately from gold to silver and from silver to
+gold,” says Béranger, making a profit to the royal treasury each time.
+M. Calonne, Comptroller-General under Louis XVI., has given us a list
+of the principal recoinages prior to his time, of which there were four
+in the reign of Louis XIV. and five in that of Louis XV.
+
+It would be a waste of time to recount them. The ratio existing when
+Louis XVI. came to the throne was 14⅝ to 1. It had been adopted in
+1726. The legal ratio in England at that time, as we have seen, was
+15⅐. Both ratios were, or gradually became, divergent from the market
+ratio. Silver was exported from England and gold was exported from
+France. A recoinage in the latter country became necessary, and this
+was undertaken and executed by Calonne in good faith in the year 1785.
+Calonne chose the ratio of 15½. This ratio was in force when the
+celebrated law of 1803 was passed, under the Consulate. It was not
+exactly conformable to the market ratio at the time. It rated gold
+too highly, but Calonne said that he had observed that gold had an
+advancing tendency, and he believed that if 15½ was not the true ratio
+then, it would become so before long. In this he was right, for when
+the law of 1803 was passed, there was no observable tendency to export
+either metal, and the Hamburg market ratio, as tabulated by Soëtbeer,
+was very close to 15½.
+
+
+                      FRENCH MONETARY LAW OF 1803.
+
+I have in another place made a study of the documents and debates
+which preceded and led up to the French Monetary Law of 1803 (see
+_Political Science Quarterly_, June, 1891). The substance is that these
+learned and patriotic men, without exception, considered a double
+standard impossible and any attempt to establish it disastrous.
+They accordingly determined to establish, and thought that they had
+established, the single silver standard by a law, the first paragraph
+of which reads as follows:
+
+  “General provision.--Five grams of silver, nine-tenths fine,
+  constitute the monetary unit which retains the name of franc.”
+
+But they were confronted by the fact that gold was an indispensable
+part of the monetary system. How to retain it in the circulation as a
+subordinate metal while making silver the sole standard was the great
+puzzle of the day. No less than eight important papers were drawn up
+from time to time on this question, and no decision was ever reached
+except to allow gold to be coined at the French mint at the ratio
+of 15½ to 1, with the understanding that if the market ratio should
+change, the gold, but not the silver, should be recoined.
+
+Such was the law of 1803. Although it was the intention of the
+lawmakers to establish the single silver standard, the clause which
+they introduced allowing the coinage of gold was the same thing in
+effect as re-enacting Calonne’s law of 1785. It was in practice, though
+not in intention, a bimetallic law at the ratio of 15½ to 1.
+
+Almost immediately after its enactment France plunged into wars which
+lasted till 1815. Of course, the nation had very little time to
+think about her coinage laws. Gradually the price of gold rose above
+the legal ratio, and that metal was exported to such an extent that
+Chevalier tells us that “twenty-five years after that date [1803] the
+circulation consisted of silver only.” Abundant proofs can be adduced
+showing that bimetallism did not exist in practice in France between
+1820 and 1847. Mr. Griffen has published a table showing the premium on
+gold in Paris during every month of that period. This premium was at
+times as high as two per cent. The contention of the bimetallists that
+the French law of 1803 kept the ratio steady at 15½ till 1873 is not
+supported by facts.
+
+
+                       THE GREAT INRUSH OF GOLD.
+
+From 1850 to 1860 there was an enormous increase in the production of
+gold in Russia, California and Australia, and scarcely any increase
+in that of silver. The market ratio declined to 15.46 in the year
+1851, so, of course, gold could again circulate in France. The ratio
+continued to decline till 1859, when it reached its lowest point,
+viz., 15.19. It remained below 15½ till 1867. During this interval of
+sixteen years France imported $600,000,000 of gold and exported about
+half that amount of silver. Her circulation became saturated with the
+yellow metal to the great delight of her people, who had become tired
+of carrying sacks of five-franc pieces to and fro in cabs and handcarts.
+
+The exportation of silver from France was so extensive at this time
+that the country was almost denuded of small money. It became necessary
+to coin gold pieces as small as five francs. In 1857 the scarcity of
+silver became so great that the Government appointed a commission to
+investigate the subject. This commission was bent upon maintaining the
+silver standard. So, instead of following the example of the United
+States and making silver coins of light weight and of limited legal
+tender, it recommended that an export duty be put on silver, that
+bullion brokers be prosecuted, and that assorting and trading in coins
+be prohibited by law. In other words, this sapient commission went
+back for inspiration to the times of Louis XIV. and of James I. and
+Charles I. of England. Some attempts were actually made to carry out
+these senseless recommendations, but they were soon abandoned. It was
+about this time that Chevalier, the French economist, who was a stout
+champion of the silver standard, proposed to solve the difficulty by
+providing that French gold coins should have a fixed weight, but a
+variable value, and that the value should be announced by legislative
+decree at certain short intervals. M. Levasseur, another economist of
+renown, but with a keener vision, expressed the opinion that gold had
+made itself the standard in spite of the law, and he suggested that the
+wisest thing for France to do was to make the law conform to the fact.
+
+
+                       THE LATIN MONETARY UNION.
+
+Nothing was done at that time. Events drifted till 1864, when the lack
+of small change had become so serious that the Government brought
+a bill before the Corps Legislatif authorizing the lowering of the
+fineness of all the silver coins less than five francs to 835 instead
+of 900 thousandths. This was in effect the same thing that we had
+done in 1853, when we converted all our silver coins less than one
+dollar into token money. The proposal was more shocking to the French
+legislator than to the American, for the reason that the franc was the
+monetary unit sanctioned by the law of 1803, and this monetary unit was
+one of the very things to be lowered. The Legislature recoiled, but
+it sustained the lowering of the pieces smaller than one franc. The
+difficulty could not be removed by such homœopathic treatment, and as
+the same difficulty existed in the neighboring countries of Belgium
+and Switzerland, a convention was called for the purpose of adopting
+some common steps for relief. Italy also was induced to join, and soon
+afterwards Greece. France considered it admissible to do by treaty what
+she had not been willing to do by direct act. By treaty dated December
+23, 1865, these four countries adopted their present token coinage of
+silver and limited its legal-tender faculty to fifty francs. This was
+the origin of the so-called Latin Monetary Union.
+
+
+                 HOW FRANCE CAME TO THE GOLD STANDARD.
+
+In 1867 the price of silver had again declined, so that the French
+ratio of 15½ was substantially identical with the market ratio. That
+was the year of the International Monetary Conference, of which mention
+has already been made, at which France voted in favor of the single
+gold standard. Nevertheless, the French legislators abandoned the
+silver standard with extreme reluctance. They were attached to it by
+custom and tradition. They still desired, like their ancestors of the
+Revolution, to have the silver standard with gold as a subordinate
+metal. They allowed events to drift until 1873, when they were startled
+to find that 154,000,000 francs’ worth of silver had been deposited at
+the mint for coinage in that year, against only 5,000,000 francs’ worth
+in 1871–2. The amount of silver so deposited was more than the mint
+could coin in a year and a half, if it did nothing else. The market
+ratio of gold had risen nearly to 15.75. There was a profit of 1½ per
+cent. in sending silver bullion to the mint and using the resulting
+coin to buy gold for export. The delegates of the Latin Monetary Union
+were hastily assembled and they determined to limit the coinage of
+silver to 120,000,000 francs per year for all the countries concerned.
+This was virtually the adoption of the gold standard.
+
+At the beginning of 1876 the market ratio had reached nearly seventeen
+to one. The crisis was becoming acute. Switzerland had ceased to coin
+her allotted share of silver. Belgium had passed a law authorizing
+the Government to stop coining that metal. M. Leon Say, the French
+Minister of Finance, sent to the Senate March 21, 1876, a bill of only
+two lines, in these words, viz.: “The coinage of silver five-franc
+pieces may be limited or suspended by decree.” The Senate Committee to
+which it was referred, under the lead of M. de Parieu, reported a more
+drastic measure absolutely forbidding the coinage of any silver money
+of full legal tender. The legislative body again showed its aversion
+to change by rejecting the Senate report and adopting, on the 5th of
+August, the more moderate measure of the Minister of Finance. But it
+really made no difference which of the two was adopted. The door of the
+French mint was closed to silver on the following day, and has not been
+reopened.
+
+I think it has been shown that the gold standard made its way in France
+not only without design on the part of individuals, but in spite of the
+strenuous resistance of almost all the men who busied themselves with
+the subject at all. I have given a good deal of space to the experience
+of France, because of the great importance which has always been
+assigned to that country by the advocates of bimetallism.
+
+
+                   EXPERIENCE OF BELGIUM AND HOLLAND.
+
+It is unnecessary to go into details concerning the other members of
+the Latin Union, but one fact as regards Belgium deserves notice. This
+country was an integral part of France when the law of 1803 was passed.
+Her monetary system was accordingly identical with that of France
+until 1832, when she adopted the single silver standard retaining the
+franc as the monetary unit. In 1861, when the great influx of gold
+from California and Australia had made such a change in the monetary
+conditions of France, the people of Belgium began to taste the luxury
+of gold in the form of French coins. There was straightway a popular
+demand that French gold should be made legal tender in Belgium. The
+Finance Minister, Frère Orban, resisted it. He was impressed with the
+views of Chevalier in favor of silver, to which allusion has already
+been made. The popular demand grew apace, and Frère Orban, rather than
+yield to it, resigned his office. Then the bill was passed, and Belgium
+obtained what her people wanted, that is, the gold standard.
+
+The experience of Holland is no less instructive. Prior to 1847 this
+country had the double standard at the ratio of 15.60 to 1. She had
+become convinced, however, that a double standard was merely an
+alternate standard, first one thing and then the other. So she decided
+to have a single standard, and adopted that of silver in 1847.
+
+When Germany adopted the gold standard a commission was appointed
+by the King of the Netherlands to examine the monetary question. It
+recommended that the coinage of silver be suspended for six months, and
+a bill to that effect was passed in May, 1873. This law was renewed
+twice for periods of six months each. A second report of the Commission
+was made, recommending a bill for the adoption of the single gold
+standard, but this bill was rejected by the second Chamber in March,
+1874. When the law suspending the coinage of silver expired in May,
+1874, immense quantities of silver began to flow to the mint. Silver
+florins passed in trade at the old ratio of 15.60 because they were
+limited in quantity, but it was obvious that they would soon fall to
+the bullion value of silver. So in December, 1874, a new six-months’
+suspension of coinage was ordered by the legislative body--the same one
+that had refused to adopt the single gold standard. Before this period
+had elapsed the Minister of Finance proposed that the silver coinage be
+discontinued indefinitely and that gold coinage be allowed. This bill
+was passed in June, 1875. Here again the gold standard made its way
+over the heads of the wise men of the time.
+
+
+                     THE GOLD STANDARD IN AUSTRIA.
+
+The adoption of the gold standard by Austria is now in progress, and
+there is every assurance that it will be carried into effect. That
+country had had the single silver standard since 1857, but was under
+a suspension of specie payments. When it was ascertained in 1879
+that the decline in silver was likely to be permanent the Government
+gave orders to the mints in both Austria and Hungary to receive no
+more of that metal from private individuals for coinage. The effect
+of this order was to make Government paper money the standard, and
+this paper varied from day to day in comparison with gold, as did our
+greenbacks before we resumed specie payments. Some silver was coined on
+Government account, but as a matter of fact that metal was discarded as
+a standard by the refusal to coin for private persons. Austria had a
+gold coinage, indeed, but the gold was commercial money only. It had no
+legal-tender faculty, but passed at its quoted value from day to day.
+Since 1879 the problem of finance in Austria has been two-fold, namely,
+to resume specie payments (which must, under the circumstances, be
+gold payments), and to fix a ratio at which all paper money and paper
+obligations should be redeemable. The ratio decided upon was that of
+119 paper to 100 gold, that being the average ratio prevailing in the
+market during the thirteen years from 1879 to 1892.
+
+As the question of standard was really settled by Austria in 1879, when
+she closed her mints to silver, we are concerned to know how she came
+to take that step. The report of the special commission of the upper
+house on this subject, submitted last year, says that it had become
+clear as long ago as the decade 1860–1870, when Europe was becoming
+saturated with gold, that this was the only metal fitted to be the
+standard of nations of advanced civilization. “Gold was dominant and
+the standard of value,” says this report, “in all trade on a great
+scale as early as the fourteenth and fifteenth centuries, even though
+silver was then the standard in all domestic exchanges. * * * _In
+every age there is some metal dominant in the industry of the world
+which forces its way with elemental strength in the face of any public
+regulation, and in our day gold is that metal._”
+
+This is as good a statement as can be made of the reasons why not
+only Austria but all the other nations whose action we have examined,
+including the United States, have adopted the single gold standard.
+While Austria has been collecting her supply of the yellow metal we
+have heard a great deal about the “scramble for gold.” Why is there a
+scramble for gold? Merely because gold is universally acceptable. All
+civilized people are willing to exchange their property for it to any
+extent, and this is the only thing they are willing to accept in that
+way without limit or reserve. That is a good and sufficient reason why
+there is a scramble for gold and why there is no similar scramble for
+silver.
+
+
+                          A NATURAL EVOLUTION.
+
+If we find a movement of civilized mankind going on steadily for a
+hundred years, working out in different countries uniform results which
+commend themselves to successive generations, the presumptions are all
+in favor of that movement being beneficial. At all events, the burden
+of proof is upon those who think differently. I am so well convinced of
+the benefits of the single gold standard that if all power were placed
+in my hands I would not introduce anything different from it. I should
+consider it presumptuous to attempt to interfere with an obviously
+natural evolution in human affairs. I should know, moreover, that such
+an attempt would be futile, because the first step to be taken would
+be to alter the preferences and likings of individual men. Society
+consists of aggregations of individuals, who in their private business
+prefer one ounce of gold to sixteen ounces of silver, or twenty-five
+ounces, as the case may be. Unless I can change this preference and
+liking I cannot alter the monetary standard of Christendom. It is this
+preference which paralyzes all the international monetary conferences.
+The secret thought of the delegates in the Brussels Conference was
+something like this: “What would happen the day after international
+bimetallism if the commercial classes should continue to prefer one
+ounce of gold to sixteen ounces of silver?” Any responsible minister of
+finance must recoil before that query.
+
+I think that the “scramble for gold” would be worse the day after
+the bimetallic treaty than it was the day before, because everybody
+would suspect everybody else of gratifying his secret desire for
+gold at the expense of his neighbors. It should be remarked that
+the Brussels Conference, as a body, never touched the question of
+bimetallism, although some of the members improved the opportunity to
+make speeches on that subject. The Conference went to pieces on a minor
+question--that of buying a little more silver. The proposal was that
+the nations should purchase a certain amount of an article that none
+of them wanted. When the representatives of France and the Latin Union
+had the intrepidity to say that they would not recommend that policy
+to their governments, even if it should be adopted, the bottom dropped
+out of the Conference altogether. Although Mr. Bland has given his
+attention to this matter as a humorist, in a magazine article, I think
+that he has come short of exhausting the subject.
+
+
+                           NO STEPS BACKWARD.
+
+If the successive steps that we have described, whereby the nations
+have arrived one by one at the single gold standard, had been the
+result of a hundred years’ conspiracy against the “debtor class,”
+instead of being a natural evolution beneficial to all classes, I
+should still be unable to see any advantage in changing back. Whatever
+mischief appertains to this evolution has been done and now belongs to
+the remote past. Those books are closed. To retrace the steps would
+merely double the wrong, inflicting it upon a new lot. Those who,
+according to the hypothesis, suffered in the past are mostly dead. If
+there be any such victims living in France or Germany, in Holland or
+Belgium, or Scandinavia, they are very slow in disclosing themselves to
+the various international conferences held for their benefit. They are
+very backward in coming forward.
+
+What is meant by “debtor class” in this discussion? All men who are not
+bankrupt are both creditors and debtors. The fact that they are not
+bankrupt implies that they have more due to them in one way and another
+than they owe. I am proud to believe that the vast majority of my
+countrymen are of this class, _i. e._, of the creditor class. I take it
+that we are not legislating specially for bankrupts. Certainly it would
+not be wise to change our standard of value for their accommodation.
+Such a change would produce a great many new bankrupts and would not
+save any old ones.
+
+What our country needs is more capital. This is especially true of
+the West and South. There is a great deal of foreign capital that
+would like to come here, but is deterred by apprehensions of a change
+in the standard of value. This is not conjecture on my part, but
+actual knowledge. I do not think there will be a change of standard.
+I believe in the persistence of gold both here and in Europe, but
+the belief is very strong in Europe that we shall slip off the gold
+standard, if we do not go off intentionally. Consequently they keep
+their money at home or invest it here only on call, and they withdraw
+it in cases where they can do so without loss. This rule operates with
+our own capitalists more or less. If money is tight, it is because
+credit is paralyzed. Lenders are afraid lest the continued operation
+of the Silver Law should bring about a change of the standard, so that
+they would get back less than they have put out. While this state of
+mind continues, it is immaterial, so far as borrowers are concerned,
+whether the amount of cash in the country is large or small.
+
+We are told that there is not gold enough in the world to do the
+business of the world. I have been hearing this for seventeen years.
+How do you know that there is not enough? If there was not enough
+seventeen years ago, there may be enough now, seeing that there has
+been an addition to it of $1,500,000,000 during that interval, after
+making a liberal deduction for the amount used in the arts. The old
+stock does not disappear with use. I have a gold coin of the reign of
+Philip of Macedon, on which the name and face of that monarch are so
+well preserved as to possess artistic as well as archæological value.
+There is no ascertainable relation between the amount of gold in the
+world and the amount of business done or to be done. The function of
+gold as a standard of value is increasing while its function as a form
+of currency is diminishing. The time is surely coming when its currency
+function in civilized countries will be limited to international
+payments and to the wants of travelers. That time has already been
+reached in the greater part of the United States and Canada.
+
+
+                        ALLEGED FALL OF PRICES.
+
+We are told that the single gold standard has caused a disastrous fall
+in the prices of commodities; also that it has put an unjust burden
+upon those who have borrowed money on mortgage. I have seen no proof
+that the adoption of the gold standard by Europe and the United States
+has caused a decline in prices of commodities, nor can I admit that
+such a decline would be a bad thing. None of us, when we go to market,
+complain that prices of food, fuel, clothing, etc., are too low. Mr.
+David A. Wells has written a book entitled “Recent Economic Changes,”
+which accounts for the fall in price of all staple articles of commerce
+which really have fallen during the past twenty years, accounts for it
+by the increased facilities for producing and transporting the same. He
+has not grouped them all together, as our bimetallist friends commonly
+do, but has taken each one separately. I commend his example in this
+particular to their imitation.
+
+As to mortgage debts, I have learned by inquiry of the leading mortgage
+companies in New York that farm mortgages are generally made for the
+term of five years, and that about 25 per cent. of them are paid at
+or before maturity. Consequently, any wrong which mortgagors are now
+suffering, in consequence of the gold standard, must have accrued
+since 1888. To redress their supposed wrongs we are asked to turn the
+whole business of the country upside down and change the rating of
+all other contracts perhaps 35 per cent. But the average duration of
+mortgages is considerably less than five years. The Topeka _Capitol_
+newspaper a year or two ago made a special investigation of the records
+of a number of agricultural counties in Kansas, and found that more
+mortgages were paid off than were put on within the period covered by
+the investigation. Hence the presumption is that the average life of
+the farm mortgage in Kansas is not more than two and one-half years. I
+am aware that many mortgages are allowed to run for indefinite periods
+after they fall due, but these, after they fall due, are call loans
+on real estate security. I am not aware that borrowers on call are
+complaining of the gold standard. At all events, if they are oppressed
+by reason of that standard they can relieve themselves at any time by
+paying up. If they do not pay and are solvent, it must be because
+they find it to their advantage to endure these so-called oppressions
+a while longer. It is safe to say that all these mortgages would be
+called in on the first sign of a change in the monetary standard. The
+tightness of money in such an event may be imagined, but can hardly be
+described.
+
+
+                            NATIONAL DEBTS.
+
+It is insisted that national and State debts are enhanced by the
+prevalence of the single gold standard. To prove this we are asked to
+compare the low prices of the present day with prices of past times.
+Does not that prove that the bondholder gets more value now than he
+bargained for, and hence that the taxpayer pays more?
+
+No, it does not. Bondholders are entitled to share with others the
+advantages of low prices of manufactured goods resulting from new
+inventions and facilities for production and transportation. As to
+products of the farm, prices were much lower when I was a boy than
+they are now. Eggs sold then for 4 cents per dozen, butter for 6 to 8
+cents per pound, corn for 15 cents per bushel, wood for $1 per cord,
+etc., etc. If the gold standard has had any lowering effect on prices
+it has not touched these articles. But why should we shed tears over
+national and State debts, seeing that ours are nearly all paid? Let the
+crocodiles of Europe weep over the enhanced burden of national debts if
+there be any such enhancement due to the gold standard, which I take
+leave to deny.
+
+Suppose it were true that national and State debts were enhanced in
+the manner alleged, would that be a reason for changing the standard
+of value for the countless daily transactions of business? The bank
+clearings of seventy-nine cities in the United States for the week
+ending May 20 amounted to $1,165,478,664, which is about double the
+interest-bearing debt of the nation. Add to this the payments of wages
+and the retail transactions that are not embraced in clearing-house
+returns, and then multiply the whole by the fifty-two weeks of the year
+and you will see how large a cannon you are loading to kill a mosquito
+and what a tremendous recoil it must have.
+
+
+
+
+              A FEW WORDS MORE ON THE COINAGE ACT OF 1873.
+
+               FROM THE N. Y. EVENING POST, JULY 3, 1893.
+
+
+A correspondent for whom we have a good deal of respect writes to
+us to remonstrate once more against the Silver-Demonetizing Act of
+1873. “Just as soon as it was discovered,” says this writer, “that
+bimetallism was abolished, and before silver had fallen in price, Mr.
+Bland, the humorist, as Mr. White is pleased to call him, attempted
+to restore to the people a right that had been unwittingly taken
+from them.” The record shows that neither Mr. Bland nor anybody
+else attempted to remonetize silver until after it had fallen in
+price more than 5d. per ounce. When the Act of 1873 was passed, the
+London quotation for silver was 59¾d. When Mr. Bland introduced his
+bill (November, 1877), the quotation was 54½d. But that is not very
+important now.
+
+The assumption that “the people” had “a right” which was “unwittingly”
+taken from them embraces a congeries of errors which need to be
+exposed--all the more because they are honestly entertained. In the
+first place, who are “the people” who had a right that was unwittingly
+taken from them? Of course, they were the people of the United States.
+How do we know what the people of the United States want at any
+particular period? By their action in Congress. There is no other way
+by which their wants can be ascertained. Now, what do we find as to
+this Act of 1873 demonetizing silver? It was passed by a Congress which
+was the sole organ of the people as to such matters--passed by a vote
+unanimous in one branch and nearly unanimous in the other.
+
+“But _we_ did not understand it,” says somebody who was not a member
+of Congress. It was not necessary that you should understand it. This
+would be a queer country if it were necessary that all the people
+should understand all the laws before they are passed. Neither the
+Constitution nor common sense required that you should understand it.
+But neither did they forbid your understanding it if you had wanted
+to. Your understanding it would not have given it greater validity or
+higher equity. Your not understanding it took nothing from its validity
+or its equity. The frame of government under which you live prescribed
+that your representative in Congress should act for you. It did not
+even require that _he_ should understand it, but as a matter of fact he
+did understand it, because it was explained to him by public officers
+and also in public debate.
+
+If we could get an impartial jury from another country or another
+planet to try this question, that jury would be bound to decide that
+“the people” passed that Act of 1873 in its entirety, in the only way
+they ever pass an act applicable to the whole Union. The impartial
+jury would probably add that since the people had had twenty years in
+which to remonetize silver, and had not done so, but on the contrary
+had voted down propositions of that kind _four times_ in the popular
+branch of Congress, the evidence was conclusive that they were _not_
+misrepresented by the Congress which passed the Act of 1873. They voted
+down the remonetization of silver on the 21st of February, 1878, when
+they substituted the Allison Bill for the Bland Bill by yeas 203, nays
+72. They voted it down on the 8th of April, 1886, on Mr. Bland’s direct
+motion for the free coinage of silver, yeas 126, nays 163. They voted
+it down on the 19th of June, 1890, on a motion to concur in the Senate
+free-coinage bill, yeas 135, nays 152. They practically voted it down
+on the 24th of March, 1892, by voting against a parliamentary motion
+made by Mr. Bland. The majority against Mr. Bland was only two votes in
+this case--150 to 148--but it was sufficient for the purpose.
+
+But we are told that “a right” was taken away from the people when
+the Act of 1873 was passed, and the implication is that they have
+been vainly struggling to recover this right for twenty years--a very
+odd situation indeed for a country where the people can pass any law
+that they really want. It is the fault of some writers that they use
+important words without explaining, perhaps without knowing, their
+meaning. What is this “right” of which the people were deprived by the
+Act of 1873? Rights may be legal, or moral, or religious. In which
+category does this right fall? If it was a legal right, it was founded
+upon a law which Congress had the same right to repeal as to enact. It
+is not even affirmed that this was a valuable right, although that is
+implied. A man may have a legal right to two wives, but it may be an
+injury to him. He may have a legal right to get drunk, but that can
+hardly be considered valuable.
+
+Was this right of coinage, of which the people were deprived, a moral
+right? Moral rights are matters of opinion and of dispute, but it
+may be affirmed with confidence that the existence of a moral right
+of coinage, in the sense here implied, has never been affirmed or
+imagined in any country or age since the world began. In the early
+history of California coins were manufactured by private parties and
+put in circulation, to pass for what they were worth, and this has been
+done in various parts of the world at various times. Such coins had
+no legal-tender property. They were small ingots which anybody could
+accept or refuse, according to his liking. The contention here is that
+a moral right exists for private persons to make 412½ grains of silver
+legal tender for a dollar in the absence of any law to that effect and
+in the teeth of any law which forbids it. This is really too absurd
+for discussion--as absurd as it would be to claim this as a religious
+right. We may add that if this is a moral right, it belongs to all
+mankind, seeing that they have all had silver money at one time or
+another. It is surprising that so few recognize it as a right or set up
+any claim to it.
+
+Finally we are told that this right had been taken from the people
+“unwittingly.” We repeat that ours would be a very queer country if
+no law could be passed till everybody understood it. There has been a
+great deal of talk in the newspapers lately about an act of Congress
+regulating the seal fisheries in Alaska. How many people knew what that
+bill was before it was passed? How many know what it is now? Even the
+lawyers who are discussing it before the Paris Tribunal do not agree
+in their understanding of it. Science has not yet devised any means to
+compel people to know what is going on in Congress. The difficulties
+of forcing such knowledge upon ten or twelve millions of voters, large
+numbers of whom do not speak English or read and write any language,
+and still larger numbers of whom know nothing of finance, and never
+could by any possibility learn anything of it, are simply appalling.
+
+Even in the case of those who make some pretensions to scientific
+attainment an attempt to make them understand the bills before Congress
+would be quite herculean. Suppose that our correspondent and the writer
+of this article were brought to the bar of the House and asked whether
+they understood the pending measure, so that it might not be passed
+“unwittingly” as to themselves, and suppose they should apply in the
+affirmative, what guarantee would Congress have that they really did
+understand it? They might think that they understood it when they did
+not. Something of this kind actually happened in connection with the
+Coinage Act of 1873. The Hon. William D. Kelley of Pennsylvania took
+part in the debate on the clause dropping the silver dollar from the
+list of coins, and defended that clause on the ground that the silver
+dollar was worth two cents more than the gold dollar, and that it was
+impossible to have two dollars of different values. He afterwards said
+that he did not understand this particular part of the bill.
+
+What happened in Mr. Kelley’s case would be still more likely to
+happen in the case of talesmen hastily summoned from the body of the
+people as assistant Congressmen. Our forefathers, anticipating all the
+difficulties attendant upon the endeavor to force all the people to
+understand all the bills before Congress at all stages, wisely provided
+that such antecedent knowledge should be dispensed with, but they took
+steps to give facilities for such knowledge. If it is a defect of our
+system that laws are passed “unwittingly,” it is a defect which we
+share with all other governments, and it seems to us to be inherent in
+the representative system. At all events, we see no present cure for it.
+
+It thus appears that our correspondent, for whom, as we have said, we
+entertain much respect, has, in a single sentence, used three phrases,
+all of them important, and carrying with them the gist of the debate
+on a momentous question, without any clear idea of their meaning. He
+has used the word “people” as though it were an entity separate and
+distinct from the only organ established for the expression of its
+will, but he has not told us where we can find this entity or how we
+can interrogate it. He affirms that the people have been deprived of
+a “right” without telling us whether it is a legal or a moral right,
+or how it came to exist, or what portion of the civilized world regard
+it as a right, or how we are to know that it is a right, or anything
+about it. He has affirmed that the people were deprived of this
+right “unwittingly,” implying that no law ought to be passed until
+all the people understand it. (It is not necessary, according to the
+hypothesis, that they should approve it, but only that they should
+understand it.) In using these phrases in this way he has “begged
+the question” completely, but we presume that he was not aware that
+he was doing so. We have taken some pains to point out his unfounded
+assumptions because we know that he represents a good many people who,
+like himself, are honestly in error.
+
+
+
+
+                           Transcriber’s Note
+
+
+Some inconsistencies in spelling, hyphenation, and punctuation have
+been retained.
+
+This file uses _underscores_ to indicate italic text. Small capitals
+changed to all capitals.
+
+p. 9: changed as-printed “15 1-7” to “15⅐”, based on context.
+
+
+*** END OF THE PROJECT GUTENBERG EBOOK 78364 ***
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+      The Gold Standard | Project Gutenberg
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+<body>
+<div style='text-align:center'>*** START OF THE PROJECT GUTENBERG EBOOK 78364 ***</div>
+
+<div class="transnote">
+<p class="center"><b>Transcriber’s Note</b></p>
+
+<p class="center">
+New original cover art included with this eBook is granted to the public domain.
+</p>
+</div>
+
+<hr class="chap x-ebookmaker-drop">
+<div class="chapter">
+<p><span class="pagenum" id="Page_1">[Pg 1]</span></p>
+
+<h1>
+The Gold Standard.
+</h1>
+</div>
+
+<figure class="figcenter illowe2" id="tp-decoration">
+  <img class="w100" src="images/tp-decoration.png" alt="" data-role="presentation">
+</figure>
+
+<div class="width1">
+<p class="center p2 lh-1">HOW IT CAME INTO THE WORLD AND WHY IT WILL STAY.
+A HISTORICAL SKETCH WITH SOME PRACTICAL
+REFLECTIONS THEREON.</p>
+
+<p class="center lh-1 pad-1"><i>AN ADDRESS BEFORE THE CONGRESS OF BANKERS AND
+FINANCIERS AT CHICAGO, JUNE 20, 1893.</i></p>
+</div>
+
+<p class="center p2">BY<br>
+<span class="smcap size-xl"><b>Horace White</b></span>.</p>
+
+<figure class="figcenter illowe2" id="tp-decoration2">
+  <img class="w100 p2" src="images/tp-decoration.png" alt="" data-role="presentation">
+</figure>
+
+<p class="center p2"><b>The Evening Post Publishing <abbr title="Company">Co.</abbr>,</b></p>
+
+<p class="center"><b>NEW YORK CITY.</b></p>
+
+<p><span class="pagenum" id="Page_2">[Pg 2]</span></p>
+
+
+<hr class="chap x-ebookmaker-drop">
+<div class="chapter">
+<p class="center"><i>Copies of this pamphlet may be obtained at 5 cents a copy, postpaid.</i><br>
+<i>Address</i> <span class="smcap">The Evening Post Publishing Company</span>,<br>
+<i>206–210 Broadway, New York City</i>.</p>
+</div>
+
+<hr class="chap x-ebookmaker-drop">
+<div class="chapter">
+
+<p><span class="pagenum" id="Page_3">[Pg 3]</span></p>
+
+
+  <h2 class="nobreak" id="THE_GOLD_STANDARD">
+    THE GOLD STANDARD.
+  </h2>
+</div>
+
+
+<p>The most impressive fact in the world of finance is
+the dominance of the gold standard. A year or two
+ago Roumania passed under its sway, to-day it is
+Austria, next year or soon it will be India, by and
+by it will be Russia, and meanwhile it has lost no
+ground that it has ever held. Three international
+conferences have been assembled to stay this conquering
+march, while none has been called to promote or
+assist it. Yet the movement has been as little impeded
+as that of an ocean steamer would be by the
+action of a debating society in its own cabin. Is all
+this due to human perversity, or has it a rational
+cause founded in the needs of mankind?</p>
+
+
+<h3 id="THE_EXPERIENCE_OF_ENGLAND">
+  THE EXPERIENCE OF ENGLAND.
+</h3>
+
+<p>The first nation to adopt the single gold standard
+by law was England. This was really done in 1798,
+although the date usually assigned to it is 1816.</p>
+
+<p>The pound sterling was originally a pound weight
+of silver, divided into twenty parts called shillings,
+and each of these into twelve parts called pennies, or
+pennyweights. Gold made its first appearance in the
+coinage of England in the reign of Edward <abbr title="the Third">III.</abbr> (<abbr class="nowrap spell">A. D.</abbr>
+1345). The ratio of gold to silver fixed by royal decree
+in this coinage was about 12½ to 1.</p>
+
+<p>From this period to the forty-third year of the
+reign of Elizabeth there were nine debasements of the
+silver coinage accompanied by changes in the gold
+<span class="pagenum" id="Page_4">[Pg 4]</span>coinage, but as these were arbitrary acts of the reigning
+sovereigns they possess no scientific interest. In
+the forty-third of Elizabeth (1601) the last debasement
+was made. The pound weight of silver was then
+coined into sixty-two shillings, and the pound of gold
+into thirty-three and one-half sovereigns of seven
+pennyweights and four grains each, the ratio of gold
+to silver being 11 to 1. The silver coinage being
+henceforth unchanged, it becomes possible to trace
+the commercial variations of the two metals and to
+observe the ineffectual struggles of society and government
+to keep both of them in use as legal-tender
+money.</p>
+
+<p>Queen Elizabeth died two years later. Before her
+successor, James <abbr title="the First">I.</abbr>, had been on the throne three
+years, gold had risen in value as compared with silver,
+and the gold coins were exported to such an
+extent that it was necessary to diminish their weight
+about 11 per cent. The ratio now established was a
+little more than 12 to 1.</p>
+
+<p>In the ninth year of the same reign the gold coin
+began to be exported again, so that it was necessary
+to make a new change of ratio. This time the ratio
+was fixed at 13 to 1. But this was too great an advance
+in the rating of gold. An exportation of silver
+set in which caused great inconvenience in the kingdom.
+Instead of readjusting the ratio the King, in
+the year 1614, issued a proclamation prohibiting the
+exportation of the precious metals. The proclamation
+had no effect. So another one was issued in 1618 reaffirming
+the first one and forbidding the melting of
+coin for the purpose of making plate, although a certain
+amount might be used for repairing old plate and
+keeping it up to its original standard. As the evil
+continued a third proclamation was issued in 1622
+<span class="pagenum" id="Page_5">[Pg 5]</span>and a fourth in 1624. None of these had any effect
+except to make an historical record of the futility of
+attempts to enforce a legal ratio which is different
+even in a slight degree from the market ratio. It was
+customary during this period to pay a premium of
+two pence for silver change to the amount of 20 shillings.</p>
+
+<p>Soon after Charles <abbr title="the First">I.</abbr> began his reign he issued a
+proclamation on the same subject, reciting the previous
+ones of his father and acknowledging that they
+had been disregarded. In 1636 seven persons accused
+of melting and exporting coin were arrested and fined
+£8,500 and imprisoned till the fines were paid, but
+even this example did not put a stop to the practice.
+Silver was worth two or three pence per ounce more
+than the mint valuation, and this fact dominated
+society from the King on the throne to the beggar on
+the dunghill. But what could not be prevented by
+royal proclamation and star chamber was stopped by
+an unseen force. The price of gold was slowly rising,
+so that about the beginning of the Commonwealth
+the ratio that King James had established was identical,
+or nearly so, with the market ratio. The exportation
+of the precious metals ceased until the reign of
+Charles <abbr title="the Second">II.</abbr></p>
+
+<p>In 1663 gold had risen in value so that it was necessary
+to change the ratio to 14½ to 1. This was an
+advance of about 8 per cent. since James <abbr title="the First">I.</abbr></p>
+
+<p>Each time that a change was made in the gold
+coinage a new name was given to the coin so produced,
+in order to distinguish it from its predecessors.
+The coin that Charles <abbr title="the Second">II.</abbr> now introduced was
+called the guinea. It was ordered that this coin
+should pass for twenty shillings, but it immediately
+became current in trade at a higher rate, passing for
+<span class="pagenum" id="Page_6">[Pg 6]</span>twenty-one to twenty-two shillings. No attempt was
+made to enforce the mint valuation or to prevent
+melting or exporting. Consequently silver became
+in practice the only legal-tender money. Nobody
+would offer a guinea to pay a debt of 20 shillings
+when it was worth 21 shillings. The guineas
+passed for what they were worth as bullion. That
+was a time when the clipping of coin was much
+practiced, but it was no advantage to clip a gold
+coin, since it was taken only at its bullion value.
+The silver coins, however, passed by tale. Consequently
+they alone were subjected to the clipping
+process. The evil became so great that a recoinage
+of silver was necessary and was undertaken
+in the reign of William <abbr title="the Third">III.</abbr> This was a celebrated
+event in many ways. Both Sir Isaac Newton and
+John Locke were concerned in it. In the year 1717
+the guinea was made current by royal proclamation
+at 21 shillings in silver, at which figure the ratio was
+about 15⅐ to 1. This was in the third year of the
+reign of George <abbr title="the First">I.</abbr></p>
+
+<p>It was about this time, says Lord Liverpool, that a
+marked preference was shown by the people for gold
+money rather than silver, on account of its convenience
+in making large payments. This he ascribes to the
+increase in the commerce of the country. As gold
+was slightly overrated at the ratio of 15⅐ to 1, there
+was a tendency to export silver. Only £584,000 of
+the latter metal was brought to the mint for a period
+of eighty-three years down to the end of the century,
+and most of this came from Spanish treasure ships
+captured in war. The only silver coin retained in
+circulation was that which had been much worn. As
+these light-weight pieces varied among themselves,
+the lightest ones were selected to make payments, a
+<span class="pagenum" id="Page_7">[Pg 7]</span>condition which became worse and worse until Parliament
+in 1774 passed an act limiting the legal tender
+of silver coins to £25 in tale. For any sum above £25
+they could be paid by weight only. This act was to
+continue in force only two years, the expectation being
+that some other remedy for the evil would shortly be
+found. It was re-enacted from time to time till 1798,
+when another clause was added providing that no
+more silver should be coined at the mint, nor should
+any be delivered that had been coined, but that the
+owners of such silver should be paid for it. In the
+following year (1799) a brief act was passed making
+the act of 1774 perpetual. In 1816 the character of
+the British monetary system was formulated by an act
+of Parliament on its present basis, the essential part
+of this act being in the following words:</p>
+
+<blockquote>
+<p>“<abbr title="11">XI.</abbr> And whereas at various times heretofore the
+coins of this realm of gold and silver have been equally
+a legal tender for payments to any amount, and <em>great
+inconvenience has arisen from both those precious metals
+being concurrently the standard measure of value and
+equivalent for property</em>; and it is expedient that the
+gold coin made according to the indentures of the
+Mint should henceforth be the sole standard measure
+of value and legal tender for payment, without any
+limitation of amount, and that the silver coin should
+be a legal tender to a limited amount only, for the
+facility of exchange and commerce;</p>
+
+<p>“Be it therefore enacted, That from and after the
+passing of this act, the gold coin of this realm shall be
+and shall be considered and is hereby declared to be
+the only legal tender for payments, except as hereinafter
+provided, * * * and no tender of payment
+of money made in the silver coin of this realm of any
+sum exceeding the sum of forty shillings at any one
+time shall be reputed a tender in law, <abbr>etc.</abbr>”</p>
+</blockquote>
+
+<p><span class="pagenum" id="Page_8">[Pg 8]</span></p>
+
+<p>This is a brief résumé of the experience and legislation
+of Great Britain. It is important as showing
+that the single gold standard was adopted on account
+of the “great inconvenience” of the double standard,
+which had been in vogue previously. Of course, this
+“inconvenience” had attracted the attention of
+learned men before 1798. John Locke had shown
+that a double standard composed of two things of
+varying value was an impossibility. He favored the
+single standard of silver, as did the learned men who
+considered the same question in France a century later.</p>
+
+<p>It appears that the gold standard was adopted
+without any particular design on the part of those
+who brought it about. They found, as a matter of
+fact, that the monetary evils existing in 1774 could be
+cured most readily by limiting the legal tender of
+silver. So they did it for two years, and then for
+two years more, and so on, till 1798–99, when they
+had become satisfied by the experience of twenty-five
+years that the single gold standard was the right
+thing to put an end to the “inconvenience.” Seventeen
+years later, the experiment having continued to
+be successful, they passed the law which I have
+quoted. That law, in substance, remains in force to
+the present time, and we may be sure that it would
+not have lasted so long if it were not a good thing
+<i lang="la">per se</i>.</p>
+
+
+<h3 id="THE_GOLD_STANDARD_IN_THE_UNITED_STATES">
+  THE GOLD STANDARD IN THE UNITED STATES.
+</h3>
+
+<p>We will next consider the experience of the United
+States. At the beginning of our career as a nation
+we adopted the double standard of gold and silver.
+This was in 1792. Our statesmen followed in this
+matter the example of the older countries of Europe.
+<span class="pagenum" id="Page_9">[Pg 9]</span>Alexander Hamilton was the Secretary of the Treasury
+and the ruling spirit. At his instance the ratio
+of 15 was adopted, and there is no room to doubt
+that this was very close to the true market ratio at
+the time. The English ratio of <span id="TN1">15⅐</span> ceased to be
+operative, as we have seen, because it was too high.
+France was at that time under the régime of irredeemable
+paper. Consequently nothing could be
+learned from her. The discussions and writings of
+the period show that there was an honest and earnest
+effort to adopt the market ratio as the legal ratio, and
+that the result reached was as nearly true as possible.
+Nevertheless, gold began to grow scarce in our circulation
+as early as 1810, and had wholly disappeared in
+1817. One ounce of gold had come to be worth as
+metal something more than fifteen ounces of silver.
+It was worth while for bullion brokers to collect gold
+coins and export them. The testimony is emphatic
+and is not disputed, that after 1817 and until 1834 our
+metallic money consisted of silver exclusively.</p>
+
+
+<h3 id="THE_LAW_OF_1834">
+  THE LAW OF 1834.
+</h3>
+
+<p>In 1834 people had become tired of lugging silver
+around. They had by this time found out what was
+the matter. They determined to have some gold in
+their pockets, but it cannot be affirmed that Congress
+had reached a scientific conclusion in favor of the
+single gold standard. What is certain is that Congress
+adopted the ratio of 16 to 1 in 1834 by very
+large majorities in spite of proofs urgently presented
+that this ratio would drive silver out of circulation
+altogether, as it did. This bill was called the “Gold
+Bill” in the discussions of the time. As reported by
+the special committee, it provided for a ratio of 15.60
+to 1, but when it came up for discussion, <abbr>Mr.</abbr> Campbell
+<span class="pagenum" id="Page_10">[Pg 10]</span>P. White, the Chairman of the Committee, who
+was himself in favor of the single gold standard,
+moved to amend by making the ratio 16 to 1, and his
+amendment was adopted without a division. On the
+main question the debate was long and animated.
+An amendment to the amendment was offered, making
+the ratio 15.625 to 1, and it was supported on the
+ground that this was the true market ratio, and that
+it would enable the country to keep both silver and
+gold in concurrent circulation. This amendment
+was voted down—yeas 52, nays 127. The bill was
+then passed in the House by 145 to 36, and in the Senate
+by 35 to 7.</p>
+
+<p>There was a variety of motives leading to the passage
+of the Gold Bill, but among these the desire of
+having gold in place of silver was the most influential.
+Thomas H. Benton, one of the strongest advocates of
+the measure, declared that the object of his endeavors
+was:</p>
+
+<blockquote>
+<p>“To enable the friends of gold to go to work at the
+right place to effect the recovery of that precious metal
+which their fathers once possessed, which the subjects
+of European kings now possess, which the citizens of
+the young republics to the south all possess, which
+even the free negroes of San Domingo possess, but
+which the yeomanry of this America have been deprived
+for more than twenty years, and will be deprived
+forever unless they discover the cause of the
+evil and apply the remedy to its root.—[Speech of
+Senator Benton of Missouri, quoted by Louis R.
+Ehrich in his ‘<cite class="nonitalic">Question of Silver</cite>.’]”</p>
+</blockquote>
+
+<p>The effect that was predicted was abundantly
+realized. Silver did go out of circulation. The
+minor coins, being of proportional weight and fineness
+with the dollar, were melted and exported, and their
+<span class="pagenum" id="Page_11">[Pg 11]</span>place in the circulation was taken by light-weight
+foreign coins, principally Spanish and Mexican six-pences,
+shillings, quarters, and halves. Those coins,
+when of full weight, were almost identical with our
+own fractional coins. If our own would not circulate
+the foreign ones of course would not. But if there
+was a certain proportion of these coins, whether
+foreign or domestic, that had been worn down by
+long use so that they really represented the market
+ratio or something less, such coins would circulate
+concurrently with gold. To illustrate: two halves,
+four quarters, or ten dimes, if new and of full weight,
+were worth about one cent and a half more than a
+gold dollar. Consequently they would be collected
+by brokers, melted and exported. But two halves,
+four quarters, or ten dimes, that had lost one and a half
+cents’ worth of silver by abrasion, would circulate, because
+there would be no motive to melt or export them.
+There would be no profit in it. When I was a boy
+the silver money of this country consisted exclusively
+of foreign coins, mostly Spanish and Mexican, but
+with a considerable sprinkling of English, French,
+German and Scandinavian pieces. Every merchant
+kept a coin chart manual for handy reference to determine
+the value of these pieces as they were offered in
+trade. I have also seen Spanish quarters cut in half,
+each piece circulating as a shilling. There was
+nothing remarkable about this, since all these foreign
+coins were circulating at their bullion value. The
+two halves of a Spanish quarter were therefore worth
+as much as they would have been if joined in a single
+piece.</p>
+
+<p>It became apparent to everybody that if full-weight
+silver coins would not circulate on the ratio of 16 to
+1, while those of light weight would circulate, then it
+<span class="pagenum" id="Page_12">[Pg 12]</span>would be safe to <em>make</em> minor coins (halves, quarters,
+<abbr>etc.</abbr>), designedly of light weight on Government account,
+of limited legal tender. There would be no
+profit in exporting such coins, because they would
+not sell as bullion for as much as it would cost to collect
+them. In 1853 an act of this kind was passed.</p>
+
+<p>From 1837 onward the country had gold money and
+the gold basis. Silver dollars were hardly ever seen.
+There was not an hour in the whole period of forty
+years to 1873 when the silver dollar was not worth
+more than the gold dollar. With the exception of a
+very few years it was worth fully three cents more.
+Did any of you ever see a silver dollar in circulation
+prior to 1878? I never did.</p>
+
+
+<h3 id="THE_LAW_OF_1873">
+  THE LAW OF 1873.
+</h3>
+
+<p>Under these circumstances, the gold standard existing
+<i lang="la">de facto</i>, and there being no silver except light-weight
+subsidiary coins, our mint authorities, the only
+people who took any interest in the subject, began
+even before the war to recommend that the single
+gold standard should be adopted in law as it had been
+adopted in fact. <abbr title="Ex-Governor">Ex-Gov.</abbr> Pollock, Director of the
+Mint, in his report for 1861 called attention to the incongruity
+of a silver dollar that was worth 3.10 cents
+more than the gold dollar and 8 cents more than two
+half dollars. He recommended that it should either
+be dropped from the list of coins or reduced in weight
+so as to correspond with the subsidiary coins. He
+considered that gold was <i lang="la">de facto</i> the standard of
+value, and he recommended that the law should conform
+to the fact. But the nation had more exciting
+topics to discuss in 1861 than those relating to coinage.
+In 1866, after the war, <abbr>Mr.</abbr> John J. Knox, who then
+had charge of the Mint and coinage matters in the
+<span class="pagenum" id="Page_13">[Pg 13]</span>Treasury Department, recommended a revision of all
+the laws relating to the Mint. Secretary Boutwell approved
+of the suggestion. <abbr>Mr.</abbr> Knox and <abbr>Dr.</abbr> Linderman
+were appointed in 1869 a committee to make
+such revision. They presented their report with a
+draft of a bill in 1870. The report recommended the
+discontinuance of the silver dollar, this coin being
+obsolete.</p>
+
+<p>The bill and report were transmitted to the Finance
+Committee of the Senate on the <abbr>25th</abbr> of April, 1870.
+The bill passed the Senate on the <abbr>10th</abbr> of January,
+1871. It made the gold dollar the unit of value and
+it dropped the silver dollar from the list of coins.
+The bill failed in the House for want of time. The
+Forty-first Congress having expired without final
+action it came up again in the Forty-second. It
+passed the House May 27, 1872, by yeas 110, nays 13.
+It passed the Senate January 17, 1873, without a dissenting
+vote. The metal in the silver dollar at that
+time was worth two cents more than the gold dollar.
+No objection to the bill was heard until the price of
+silver had fallen so that the silver dollar, if there had
+been any, would have been worth less than the gold
+dollar. Then it became fashionable to say that the
+bill was passed surreptitiously. The truth is, that the
+bill was before Congress two years and ten months,
+that it was printed thirteen times by order of Congress,
+that the debates on it occupy sixty-six columns
+in the Senate proceedings, and seventy-eight columns
+in the House proceedings, and that the discontinuance
+of the silver dollar was specially discussed in the
+House. Any candid person must see that the reason
+why the discontinuance of the silver dollar attracted
+so little notice was that this coin had been discontinued
+<i lang="la">de facto</i> in 1834, when the ratio of 16 to 1 was
+<span class="pagenum" id="Page_14">[Pg 14]</span>adopted. I have given reasons for thinking that this
+ratio was adopted designedly to expel the silver dollar
+from circulation. At all events, it did so, to the
+satisfaction of the people. It is a great pity that our
+ancestors in 1834 did not put their intentions into the
+form of law at that time. If they had done so they
+would have spared us a Pandora’s box, to be opened
+forty years later.</p>
+
+<p>Bimetallism was abolished in the United States by
+the Act of 1873. It has not been re-established by
+any subsequent act. The purchase and coinage of a
+limited amount of silver by the Government is not
+bimetallism. Still less so is the purchase of bullion
+which is not coined. Any other metal would answer
+as well as silver as a backing for the issue of Treasury
+notes. Let us imagine for a moment that silver had
+not fallen in price after 1873. Would anybody ever
+have missed the silver dollar? Would anybody have
+doubted that the gold standard was brought about in
+this country by natural causes operating upon men’s
+minds in the same way as it was in England, the
+action of Congress in 1873 merely giving the form of
+law to what had been done practically at an earlier
+period?</p>
+
+
+<h3 id="THE_EXPERIENCE_OF_GERMANY">
+  THE EXPERIENCE OF GERMANY.
+</h3>
+
+<p>Prior to 1871 Germany had the single silver standard,
+but as she could not transact business with silver
+alone, she used for her international and wholesale
+trade a heterogeneous assortment of gold coins, partly
+domestic and partly foreign, including napoleons,
+pistoles, guineas, eagles, Russian imperials, Friedrichs
+d’or, ducats, crowns, <abbr title="etc.">&amp;c.</abbr>, passing as commercial
+money. The question of a reform of the currency
+had been under discussion by the economists and publicists
+<span class="pagenum" id="Page_15">[Pg 15]</span>of Germany for nearly ten years, but until 1868
+the question under debate was a question of <em>uniformity</em>
+of money rather than of the metallic standard. <abbr>Dr.</abbr>
+Soëtbeer had indeed published two articles in 1863 and
+1864 in the <cite>Vierteljahrschrift für Volkswirthschaft</cite> on
+the gold standard, but it was not until after the Paris
+Monetary Conference of 1867 that the commercial
+classes began to take an active interest in the question.
+This Conference was held, at the invitation of the
+French Government, to consider the question of uniformity
+of coinage. Nearly all the governments of
+Europe were represented. The United States were
+represented also. One of the earliest questions to be
+decided was that of a standard. The first vote was
+on the question of adopting the single standard of
+silver. This was rejected unanimously. Then the
+single standard of gold was adopted with only one
+dissenting vote—that of Holland. Nobody proposed
+bimetallism. The action of this Conference shows
+that even at a time when the two metals were at an
+equilibrium according to the French ratio, France
+and all her allies of the Latin Union were inclined to
+adopt the single gold standard, and also that Germany,
+Austria, Russia and the Scandinavian countries,
+all of which at the time had the single silver standard,
+were of the same mind.</p>
+
+<p>After this event a great many publications appeared
+in Germany showing an unmistakable tendency in the
+public mind to the gold standard. The most important
+of these is the report which Soëtbeer made at
+the Ninth Congress of German Economists in the
+year 1868. This Congress met in Hamburg and pronounced
+in favor of the unification of German money,
+and of the gold standard. Its action was ratified
+soon afterward by the united commercial bodies of
+<span class="pagenum" id="Page_16">[Pg 16]</span>the North German Confederation, and would have
+been carried into effect at once but for the war with
+France. This event postponed the reform one year.</p>
+
+
+<h3 id="GERMAN_MONETARY_LAW_OF_1871">
+  GERMAN MONETARY LAW OF 1871.
+</h3>
+
+<p>On the <abbr>5th</abbr> of November, 1871, the Finance Minister
+of the new German Empire, Herr Delbrück, presented
+to the Imperial Diet a brief report of the
+“motives” which had led the Government to propose
+a measure for the unification of the German coinage.
+This measure provided for the coinage of gold pieces
+of ten and twenty marks, and it discontinued the coinage
+of large silver coins, but did not demonetize those
+that were in circulation. The report says, first of all,
+that it may be considered as beyond doubt that the
+existing silver standard cannot be maintained. The
+only gold coins authorized by existing law were German
+crowns and half-crowns, but these had no fixed
+relation to the standard silver coins of the nation nor
+to those of any other country. Consequently they
+were not accepted in the domestic circulation. They
+had never been an integral part of it, nor had they
+acquired any standing in international commerce,
+being melted down as soon as they reached the frontier.
+Consequently the internal commerce of Germany was
+confined to the use of bulky and inconvenient silver
+coins. “The inconvenience of silver coins,” says the
+report, “led of necessity to a very considerable circulation
+of paper, which, in ordinary times, is taken
+as a welcome facility, but in critical times contains
+the germs of serious dangers. The artificial
+demand for paper created by the exclusive
+circulation of silver made it almost
+impossible to adopt any radical and rational
+regulation of the banking system through laws common
+<span class="pagenum" id="Page_17">[Pg 17]</span>to all Germany.” For these reasons—namely,
+that silver was bulky and inconvenient, and that it
+brought about a forced circulation of paper and prevented
+any wise regulation of bank issues—the single
+gold standard was recommended, with a silver subsidiary
+coinage. The measure was supported by very
+strong speeches by Minister Delbrück and by <abbr>Dr.</abbr>
+Bamberger, and it passed on the <abbr title="twenty-third">23d</abbr> of November.
+This measure was provisional only, a second and more
+detailed one being enacted two years later.</p>
+
+<p>It is said by some that Germany, by demonetizing
+silver in 1871 and by selling it in 1873 and later, drove
+France and the Latin Union into a suspension of silver
+coinage, and caused the great decline in the price
+of that metal. If this were true it might possess an
+academic, but hardly a practical interest. Germany
+is not answerable to us for her tastes. We cannot
+call her people to account for liking to have gold in
+their pockets or sauerkraut on their tables. We cannot
+go back to 1871 or blot out the intervening years.
+Nor have we been able to persuade Germany that she
+has made any mistake in her new monetary system.
+She declined to take part in the Monetary Conference
+of 1878. She came with reluctance to that of 1881,
+and announced at the outset that she could not join in
+any movement for the free coinage of silver. She repeated
+this declaration at an early stage of the recent
+Brussels Conference. So I feel warranted in saying
+that the question whether Germany has been guilty
+above others in oppressing or depressing silver is of
+no practical consequence.</p>
+
+<p>But such a charge cannot be sustained. Germany
+had completed her new monetary system and stopped
+selling silver in 1879, and the Latin Union countries
+had closed their mints to silver three years earlier,
+<span class="pagenum" id="Page_18">[Pg 18]</span>whereas silver continued to decline all the same.
+The London price for 1879 (average) was 51¼<abbr title="pence">d.</abbr> per
+ounce. It is now 38<abbr title="pence">d.</abbr> The decline has been greater
+since Germany stopped selling than it was before.
+From 1871 to 1879 the aggregate decline was 9<abbr title="pence">d.</abbr>;
+from 1879 to 1893 it has been 13<abbr title="pence">d.</abbr></p>
+
+<p>The simple truth is that Germany was driven to the
+gold standard, just as Great Britain and the United
+States had been previously, by the <em>inconveniencies</em> of
+silver money. These inconveniencies manifested
+themselves with some variations of detail in different
+countries, but all grew out of the ponderousness of
+silver, an evil which increased with the growth of
+commerce. Some persons habitually speak of silver
+as a twin sister to whom some grievous injustice has
+been done. All such must admit that she is a very
+corpulent one.</p>
+
+
+<h3 id="FRANCE_BEFORE_THE_REVOLUTION">
+  FRANCE BEFORE THE REVOLUTION.
+</h3>
+
+<p>We will now look at the course of events in France.
+Here the livre was originally a pound weight of silver.
+It was debased by royal authority from time to time,
+as in England, but much more rapidly. <abbr title="Monsieur" lang="fr">M.</abbr> Béranger,
+in his report on the French monetary system in
+1802, says that the ratio of gold to silver was changed
+twenty-six times between 1602 and 1773, and
+that the livre at the time when he wrote had
+been reduced to the seventy-sixth part of its
+original weight. The livre is now called the
+franc. It is impossible to trace any scientific connection
+between these recoinages and the metal ratios
+except that the divergencies between the legal and
+market ratios, whenever they were discovered, were
+seized upon by the Government as an excuse for further
+debasement. They “fell back alternately from
+<span class="pagenum" id="Page_19">[Pg 19]</span>gold to silver and from silver to gold,” says Béranger,
+making a profit to the royal treasury each time. <abbr title="Monsieur" lang="fr">M.</abbr>
+Calonne, Comptroller-General under Louis <abbr title="the Sixteenth">XVI.</abbr>, has
+given us a list of the principal recoinages prior to his
+time, of which there were four in the reign of Louis
+<abbr title="the Fourteenth">XIV.</abbr> and five in that of Louis <abbr title="the Fifteenth">XV.</abbr></p>
+
+<p>It would be a waste of time to recount them. The
+ratio existing when Louis <abbr title="the Sixteenth">XVI.</abbr> came to the throne
+was 14⅝ to 1. It had been adopted in 1726. The
+legal ratio in England at that time, as we have seen,
+was 15⅐. Both ratios were, or gradually became,
+divergent from the market ratio. Silver was exported
+from England and gold was exported from France.
+A recoinage in the latter country became necessary,
+and this was undertaken and executed by Calonne in
+good faith in the year 1785. Calonne chose the ratio
+of 15½. This ratio was in force when the celebrated
+law of 1803 was passed, under the Consulate. It was
+not exactly conformable to the market ratio at the
+time. It rated gold too highly, but Calonne said that
+he had observed that gold had an advancing tendency,
+and he believed that if 15½ was not the true
+ratio then, it would become so before long. In this
+he was right, for when the law of 1803 was passed,
+there was no observable tendency to export either
+metal, and the Hamburg market ratio, as tabulated by
+Soëtbeer, was very close to 15½.</p>
+
+
+<h3 id="FRENCH_MONETARY_LAW_OF_1803">
+  FRENCH MONETARY LAW OF 1803.
+</h3>
+
+<p>I have in another place made a study of the documents
+and debates which preceded and led up to the
+French Monetary Law of 1803 (see <cite>Political Science
+Quarterly</cite>, June, 1891). The substance is that these
+learned and patriotic men, without exception, considered
+a double standard impossible and any attempt
+<span class="pagenum" id="Page_20">[Pg 20]</span>to establish it disastrous. They accordingly determined
+to establish, and thought that they had established,
+the single silver standard by a law, the first
+paragraph of which reads as follows:</p>
+
+<blockquote>
+<p>“General provision.—Five grams of silver, nine-tenths
+fine, constitute the monetary unit which retains
+the name of franc.”</p>
+</blockquote>
+
+<p>But they were confronted by the fact that gold was
+an indispensable part of the monetary system. How
+to retain it in the circulation as a subordinate metal
+while making silver the sole standard was the great
+puzzle of the day. No less than eight important
+papers were drawn up from time to time on this
+question, and no decision was ever reached except to
+allow gold to be coined at the French mint at the
+ratio of 15½ to 1, with the understanding that if the
+market ratio should change, the gold, but not the silver,
+should be recoined.</p>
+
+<p>Such was the law of 1803. Although it was the intention
+of the lawmakers to establish the single silver
+standard, the clause which they introduced allowing
+the coinage of gold was the same thing in effect as
+re-enacting Calonne’s law of 1785. It was in practice,
+though not in intention, a bimetallic law at the ratio
+of 15½ to 1.</p>
+
+<p>Almost immediately after its enactment France
+plunged into wars which lasted till 1815. Of course,
+the nation had very little time to think about her
+coinage laws. Gradually the price of gold rose above
+the legal ratio, and that metal was exported to such
+an extent that Chevalier tells us that “twenty-five
+years after that date [1803] the circulation consisted
+of silver only.” Abundant proofs can be adduced
+showing that bimetallism did not exist in practice in
+<span class="pagenum" id="Page_21">[Pg 21]</span>France between 1820 and 1847. <abbr>Mr.</abbr> Griffen has published
+a table showing the premium on gold in Paris
+during every month of that period. This premium
+was at times as high as two per cent. The contention
+of the bimetallists that the French law of 1803 kept
+the ratio steady at 15½ till 1873 is not supported by
+facts.</p>
+
+
+<h3 id="THE_GREAT_INRUSH_OF_GOLD">
+  THE GREAT INRUSH OF GOLD.
+</h3>
+
+<p>From 1850 to 1860 there was an enormous increase
+in the production of gold in Russia, California and
+Australia, and scarcely any increase in that of silver.
+The market ratio declined to 15.46 in the year 1851,
+so, of course, gold could again circulate in France.
+The ratio continued to decline till 1859, when it
+reached its lowest point, <abbr>viz.</abbr>, 15.19. It remained
+below 15½ till 1867. During this interval of sixteen
+years France imported $600,000,000 of gold and exported
+about half that amount of silver. Her circulation
+became saturated with the yellow metal to the
+great delight of her people, who had become tired of
+carrying sacks of five-franc pieces to and fro in cabs
+and handcarts.</p>
+
+<p>The exportation of silver from France was so extensive
+at this time that the country was almost
+denuded of small money. It became necessary to
+coin gold pieces as small as five francs. In 1857 the
+scarcity of silver became so great that the Government
+appointed a commission to investigate the subject.
+This commission was bent upon maintaining
+the silver standard. So, instead of following the example
+of the United States and making silver coins
+of light weight and of limited legal tender, it recommended
+that an export duty be put on silver, that
+bullion brokers be prosecuted, and that assorting and
+<span class="pagenum" id="Page_22">[Pg 22]</span>trading in coins be prohibited by law. In other
+words, this sapient commission went back for inspiration
+to the times of Louis <abbr title="the Fourteenth">XIV.</abbr> and of James <abbr title="the First">I.</abbr> and
+Charles <abbr title="the First">I.</abbr> of England. Some attempts were actually
+made to carry out these senseless recommendations,
+but they were soon abandoned. It was about this
+time that Chevalier, the French economist, who was
+a stout champion of the silver standard, proposed to
+solve the difficulty by providing that French gold
+coins should have a fixed weight, but a variable value,
+and that the value should be announced by legislative
+decree at certain short intervals. <abbr title="Monsieur" lang="fr">M.</abbr> Levasseur,
+another economist of renown, but with a keener
+vision, expressed the opinion that gold had made
+itself the standard in spite of the law, and he suggested
+that the wisest thing for France to do was to
+make the law conform to the fact.</p>
+
+
+<h3 id="THE_LATIN_MONETARY_UNION">
+  THE LATIN MONETARY UNION.
+</h3>
+
+<p>Nothing was done at that time. Events drifted till
+1864, when the lack of small change had become so
+serious that the Government brought a bill before the
+Corps Legislatif authorizing the lowering of the fineness
+of all the silver coins less than five francs to 835
+instead of 900 thousandths. This was in effect the
+same thing that we had done in 1853, when we converted
+all our silver coins less than one dollar into
+token money. The proposal was more shocking to
+the French legislator than to the American, for the
+reason that the franc was the monetary unit sanctioned
+by the law of 1803, and this monetary unit was one
+of the very things to be lowered. The Legislature
+recoiled, but it sustained the lowering of the pieces
+smaller than one franc. The difficulty could not be
+removed by such homœopathic treatment, and as the
+<span class="pagenum" id="Page_23">[Pg 23]</span>same difficulty existed in the neighboring countries of
+Belgium and Switzerland, a convention was called for
+the purpose of adopting some common steps for relief.
+Italy also was induced to join, and soon afterwards
+Greece. France considered it admissible to do
+by treaty what she had not been willing to do by
+direct act. By treaty dated December 23, 1865, these
+four countries adopted their present token coinage of
+silver and limited its legal-tender faculty to fifty
+francs. This was the origin of the so-called Latin
+Monetary Union.</p>
+
+
+<h3 id="HOW_FRANCE_CAME_TO_THE_GOLD_STANDARD">
+  HOW FRANCE CAME TO THE GOLD STANDARD.
+</h3>
+
+<p>In 1867 the price of silver had again declined, so
+that the French ratio of 15½ was substantially identical
+with the market ratio. That was the year of the
+International Monetary Conference, of which mention
+has already been made, at which France voted in
+favor of the single gold standard. Nevertheless, the
+French legislators abandoned the silver standard with
+extreme reluctance. They were attached to it by
+custom and tradition. They still desired, like their
+ancestors of the Revolution, to have the silver standard
+with gold as a subordinate metal. They allowed
+events to drift until 1873, when they were startled to
+find that 154,000,000 francs’ worth of silver had been
+deposited at the mint for coinage in that year, against
+only 5,000,000 francs’ worth in 1871–2. The amount
+of silver so deposited was more than the mint could
+coin in a year and a half, if it did nothing else. The
+market ratio of gold had risen nearly to 15.75. There
+was a profit of 1½ per cent. in sending silver bullion
+to the mint and using the resulting coin to buy gold
+for export. The delegates of the Latin Monetary
+<span class="pagenum" id="Page_24">[Pg 24]</span>Union were hastily assembled and they determined
+to limit the coinage of silver to 120,000,000 francs per
+year for all the countries concerned. This was virtually
+the adoption of the gold standard.</p>
+
+<p>At the beginning of 1876 the market ratio had
+reached nearly seventeen to one. The crisis was becoming
+acute. Switzerland had ceased to coin her
+allotted share of silver. Belgium had passed a law
+authorizing the Government to stop coining that
+metal. <abbr title="Monsieur" lang="fr">M.</abbr> Leon Say, the French Minister of Finance,
+sent to the Senate March 21, 1876, a bill of only two
+lines, in these words, <abbr>viz.</abbr>: “The coinage of silver
+five-franc pieces may be limited or suspended by decree.”
+The Senate Committee to which it was referred,
+under the lead of <abbr title="Monsieur" lang="fr">M.</abbr> de Parieu, reported a
+more drastic measure absolutely forbidding the coinage
+of any silver money of full legal tender. The
+legislative body again showed its aversion to change
+by rejecting the Senate report and adopting, on the
+<abbr>5th</abbr> of August, the more moderate measure of the
+Minister of Finance. But it really made no difference
+which of the two was adopted. The door of
+the French mint was closed to silver on the following
+day, and has not been reopened.</p>
+
+<p>I think it has been shown that the gold standard
+made its way in France not only without design on
+the part of individuals, but in spite of the strenuous
+resistance of almost all the men who busied themselves
+with the subject at all. I have given a good
+deal of space to the experience of France, because of
+the great importance which has always been assigned
+to that country by the advocates of bimetallism.</p>
+
+
+<h3 id="EXPERIENCE_OF_BELGIUM_AND_HOLLAND">
+  EXPERIENCE OF BELGIUM AND HOLLAND.
+</h3>
+
+<p>It is unnecessary to go into details concerning the
+other members of the Latin Union, but one fact as
+<span class="pagenum" id="Page_25">[Pg 25]</span>regards Belgium deserves notice. This country was
+an integral part of France when the law of 1803 was
+passed. Her monetary system was accordingly
+identical with that of France until 1832, when she
+adopted the single silver standard retaining the franc
+as the monetary unit. In 1861, when the great influx
+of gold from California and Australia had made such
+a change in the monetary conditions of France, the
+people of Belgium began to taste the luxury of gold in
+the form of French coins. There was straightway a
+popular demand that French gold should be made
+legal tender in Belgium. The Finance Minister,
+Frère Orban, resisted it. He was impressed with the
+views of Chevalier in favor of silver, to which allusion
+has already been made. The popular demand grew
+apace, and Frère Orban, rather than yield to it, resigned
+his office. Then the bill was passed, and Belgium
+obtained what her people wanted, that is, the
+gold standard.</p>
+
+<p>The experience of Holland is no less instructive.
+Prior to 1847 this country had the double standard at
+the ratio of 15.60 to 1. She had become convinced,
+however, that a double standard was merely an alternate
+standard, first one thing and then the other. So
+she decided to have a single standard, and adopted
+that of silver in 1847.</p>
+
+<p>When Germany adopted the gold standard a commission
+was appointed by the King of the Netherlands
+to examine the monetary question. It recommended
+that the coinage of silver be suspended for six
+months, and a bill to that effect was passed in May,
+1873. This law was renewed twice for periods of six
+months each. A second report of the Commission
+was made, recommending a bill for the adoption of
+the single gold standard, but this bill was rejected by
+<span class="pagenum" id="Page_26">[Pg 26]</span>the second Chamber in March, 1874. When the law
+suspending the coinage of silver expired in May, 1874,
+immense quantities of silver began to flow to the mint.
+Silver florins passed in trade at the old ratio of 15.60
+because they were limited in quantity, but it was obvious
+that they would soon fall to the bullion value of
+silver. So in December, 1874, a new six-months’ suspension
+of coinage was ordered by the legislative
+body—the same one that had refused to adopt the
+single gold standard. Before this period had elapsed
+the Minister of Finance proposed that the silver coinage
+be discontinued indefinitely and that gold coinage
+be allowed. This bill was passed in June, 1875.
+Here again the gold standard made its way over the
+heads of the wise men of the time.</p>
+
+
+<h3 id="THE_GOLD_STANDARD_IN_AUSTRIA">
+  THE GOLD STANDARD IN AUSTRIA.
+</h3>
+
+<p>The adoption of the gold standard by Austria is
+now in progress, and there is every assurance that it
+will be carried into effect. That country had had the
+single silver standard since 1857, but was under a
+suspension of specie payments. When it was ascertained
+in 1879 that the decline in silver was likely to
+be permanent the Government gave orders to the
+mints in both Austria and Hungary to receive no
+more of that metal from private individuals for coinage.
+The effect of this order was to make Government
+paper money the standard, and this paper varied
+from day to day in comparison with gold, as did our
+greenbacks before we resumed specie payments.
+Some silver was coined on Government account, but
+as a matter of fact that metal was discarded as a
+standard by the refusal to coin for private persons.
+Austria had a gold coinage, indeed, but the gold was
+commercial money only. It had no legal-tender
+<span class="pagenum" id="Page_27">[Pg 27]</span>faculty, but passed at its quoted value from day to
+day. Since 1879 the problem of finance in Austria
+has been two-fold, namely, to resume specie payments
+(which must, under the circumstances, be gold
+payments), and to fix a ratio at which all paper
+money and paper obligations should be redeemable.
+The ratio decided upon was that of 119 paper to 100
+gold, that being the average ratio prevailing in the
+market during the thirteen years from 1879 to 1892.</p>
+
+<p>As the question of standard was really settled by
+Austria in 1879, when she closed her mints to silver,
+we are concerned to know how she came to take that
+step. The report of the special commission of the
+upper house on this subject, submitted last year, says
+that it had become clear as long ago as the decade
+1860–1870, when Europe was becoming saturated
+with gold, that this was the only metal fitted to be
+the standard of nations of advanced civilization.
+“Gold was dominant and the standard of value,”
+says this report, “in all trade on a great scale as early
+as the fourteenth and fifteenth centuries, even though
+silver was then the standard in all domestic exchanges.
+* * * <em>In every age there is some metal
+dominant in the industry of the world which forces its
+way with elemental strength in the face of any public
+regulation, and in our day gold is that metal.</em>”</p>
+
+<p>This is as good a statement as can be made of the
+reasons why not only Austria but all the other nations
+whose action we have examined, including the United
+States, have adopted the single gold standard.
+While Austria has been collecting her supply of the
+yellow metal we have heard a great deal about the
+“scramble for gold.” Why is there a scramble for
+gold? Merely because gold is universally acceptable.
+All civilized people are willing to exchange their
+<span class="pagenum" id="Page_28">[Pg 28]</span>property for it to any extent, and this is the only
+thing they are willing to accept in that way without
+limit or reserve. That is a good and sufficient reason
+why there is a scramble for gold and why there is no
+similar scramble for silver.</p>
+
+
+<h3 id="A_NATURAL_EVOLUTION">
+  A NATURAL EVOLUTION.
+</h3>
+
+<p>If we find a movement of civilized mankind going
+on steadily for a hundred years, working out in different
+countries uniform results which commend
+themselves to successive generations, the presumptions
+are all in favor of that movement being beneficial.
+At all events, the burden of proof is upon
+those who think differently. I am so well convinced
+of the benefits of the single gold standard that if
+all power were placed in my hands I would not
+introduce anything different from it. I should consider
+it presumptuous to attempt to interfere with an
+obviously natural evolution in human affairs. I should
+know, moreover, that such an attempt would be
+futile, because the first step to be taken would be to
+alter the preferences and likings of individual men.
+Society consists of aggregations of individuals, who
+in their private business prefer one ounce of gold to
+sixteen ounces of silver, or twenty-five ounces, as the
+case may be. Unless I can change this preference
+and liking I cannot alter the monetary standard of
+Christendom. It is this preference which paralyzes
+all the international monetary conferences. The
+secret thought of the delegates in the Brussels Conference
+was something like this: “What would happen
+the day after international bimetallism if the
+commercial classes should continue to prefer one
+ounce of gold to sixteen ounces of silver?” Any responsible
+minister of finance must recoil before that
+query.</p>
+
+<p><span class="pagenum" id="Page_29">[Pg 29]</span></p>
+
+<p>I think that the “scramble for gold” would be
+worse the day after the bimetallic treaty than it was the
+day before, because everybody would suspect everybody
+else of gratifying his secret desire for gold at
+the expense of his neighbors. It should be remarked
+that the Brussels Conference, as a body, never touched
+the question of bimetallism, although some of the
+members improved the opportunity to make speeches
+on that subject. The Conference went to pieces on a
+minor question—that of buying a little more silver.
+The proposal was that the nations should purchase a
+certain amount of an article that none of them wanted.
+When the representatives of France and the Latin
+Union had the intrepidity to say that they would not
+recommend that policy to their governments, even if
+it should be adopted, the bottom dropped out of the
+Conference altogether. Although <abbr>Mr.</abbr> Bland has
+given his attention to this matter as a humorist, in a
+magazine article, I think that he has come short of
+exhausting the subject.</p>
+
+
+<h3 id="NO_STEPS_BACKWARD">
+  NO STEPS BACKWARD.
+</h3>
+
+<p>If the successive steps that we have described,
+whereby the nations have arrived one by one at the
+single gold standard, had been the result of a hundred
+years’ conspiracy against the “debtor class,” instead
+of being a natural evolution beneficial to all classes, I
+should still be unable to see any advantage in changing
+back. Whatever mischief appertains to this evolution
+has been done and now belongs to the remote
+past. Those books are closed. To retrace the steps
+would merely double the wrong, inflicting it upon a
+new lot. Those who, according to the hypothesis,
+suffered in the past are mostly dead. If there be any
+such victims living in France or Germany, in Holland
+<span class="pagenum" id="Page_30">[Pg 30]</span>or Belgium, or Scandinavia, they are very slow in
+disclosing themselves to the various international conferences
+held for their benefit. They are very backward
+in coming forward.</p>
+
+<p>What is meant by “debtor class” in this discussion?
+All men who are not bankrupt are both creditors and
+debtors. The fact that they are not bankrupt implies
+that they have more due to them in one way and
+another than they owe. I am proud to believe that
+the vast majority of my countrymen are of this class,
+<i><abbr>i. e.</abbr></i>, of the creditor class. I take it that we are not
+legislating specially for bankrupts. Certainly it
+would not be wise to change our standard of value
+for their accommodation. Such a change would produce
+a great many new bankrupts and would not save
+any old ones.</p>
+
+<p>What our country needs is more capital. This is
+especially true of the West and South. There is a
+great deal of foreign capital that would like to come
+here, but is deterred by apprehensions of a change in
+the standard of value. This is not conjecture on my
+part, but actual knowledge. I do not think there
+will be a change of standard. I believe in the persistence
+of gold both here and in Europe, but the
+belief is very strong in Europe that we shall slip off
+the gold standard, if we do not go off intentionally.
+Consequently they keep their money at home or invest
+it here only on call, and they withdraw it in cases
+where they can do so without loss. This rule operates
+with our own capitalists more or less. If money
+is tight, it is because credit is paralyzed. Lenders are
+afraid lest the continued operation of the Silver Law
+should bring about a change of the standard, so that
+they would get back less than they have put out.
+While this state of mind continues, it is immaterial, so
+<span class="pagenum" id="Page_31">[Pg 31]</span>far as borrowers are concerned, whether the amount
+of cash in the country is large or small.</p>
+
+<p>We are told that there is not gold enough in the
+world to do the business of the world. I have been
+hearing this for seventeen years. How do you know
+that there is not enough? If there was not enough
+seventeen years ago, there may be enough now, seeing
+that there has been an addition to it of $1,500,000,000
+during that interval, after making a liberal deduction
+for the amount used in the arts. The old stock does
+not disappear with use. I have a gold coin of the
+reign of Philip of Macedon, on which the name and
+face of that monarch are so well preserved as to
+possess artistic as well as archæological value. There
+is no ascertainable relation between the amount of gold
+in the world and the amount of business done or to be
+done. The function of gold as a standard of value is
+increasing while its function as a form of currency is
+diminishing. The time is surely coming when its
+currency function in civilized countries will be limited
+to international payments and to the wants of travelers.
+That time has already been reached in the
+greater part of the United States and Canada.</p>
+
+
+<h3 id="ALLEGED_FALL_OF_PRICES">
+  ALLEGED FALL OF PRICES.
+</h3>
+
+<p>We are told that the single gold standard has caused
+a disastrous fall in the prices of commodities; also
+that it has put an unjust burden upon those who have
+borrowed money on mortgage. I have seen no proof
+that the adoption of the gold standard by Europe and
+the United States has caused a decline in prices of
+commodities, nor can I admit that such a decline
+would be a bad thing. None of us, when we go to
+market, complain that prices of food, fuel, clothing,
+<abbr>etc.</abbr>, are too low. <abbr>Mr.</abbr> David A. Wells has written a
+<span class="pagenum" id="Page_32">[Pg 32]</span>book entitled “<cite class="nonitalic">Recent Economic Changes</cite>,” which
+accounts for the fall in price of all staple articles of
+commerce which really have fallen during the past
+twenty years, accounts for it by the increased facilities
+for producing and transporting the same. He has
+not grouped them all together, as our bimetallist
+friends commonly do, but has taken each one separately.
+I commend his example in this particular to
+their imitation.</p>
+
+<p>As to mortgage debts, I have learned by inquiry of
+the leading mortgage companies in New York that
+farm mortgages are generally made for the term of
+five years, and that about 25 per cent. of them are
+paid at or before maturity. Consequently, any wrong
+which mortgagors are now suffering, in consequence
+of the gold standard, must have accrued since 1888.
+To redress their supposed wrongs we are asked to
+turn the whole business of the country upside down
+and change the rating of all other contracts perhaps
+35 per cent. But the average duration of mortgages
+is considerably less than five years. The Topeka
+<cite>Capitol</cite> newspaper a year or two ago made a
+special investigation of the records of a number of
+agricultural counties in Kansas, and found that more
+mortgages were paid off than were put on within the
+period covered by the investigation. Hence the presumption
+is that the average life of the farm mortgage
+in Kansas is not more than two and one-half
+years. I am aware that many mortgages are allowed
+to run for indefinite periods after they fall due, but
+these, after they fall due, are call loans on real estate
+security. I am not aware that borrowers on call are
+complaining of the gold standard. At all events, if
+they are oppressed by reason of that standard they
+can relieve themselves at any time by paying up. If
+<span class="pagenum" id="Page_33">[Pg 33]</span>they do not pay and are solvent, it must be because
+they find it to their advantage to endure these so-called
+oppressions a while longer. It is safe to say
+that all these mortgages would be called in on the
+first sign of a change in the monetary standard. The
+tightness of money in such an event may be imagined,
+but can hardly be described.</p>
+
+
+<h3 id="NATIONAL_DEBTS">
+  NATIONAL DEBTS.
+</h3>
+
+<p>It is insisted that national and State debts are enhanced
+by the prevalence of the single gold standard.
+To prove this we are asked to compare the low prices
+of the present day with prices of past times. Does
+not that prove that the bondholder gets more value
+now than he bargained for, and hence that the taxpayer
+pays more?</p>
+
+<p>No, it does not. Bondholders are entitled to share
+with others the advantages of low prices of manufactured
+goods resulting from new inventions and facilities
+for production and transportation. As to products
+of the farm, prices were much lower when I
+was a boy than they are now. Eggs sold then for 4
+cents per dozen, butter for 6 to 8 cents per pound,
+corn for 15 cents per bushel, wood for $1 per cord,
+<abbr>etc.</abbr>, <abbr>etc.</abbr> If the gold standard has had any lowering
+effect on prices it has not touched these articles. But
+why should we shed tears over national and State
+debts, seeing that ours are nearly all paid? Let the
+crocodiles of Europe weep over the enhanced burden
+of national debts if there be any such enhancement
+due to the gold standard, which I take leave to deny.</p>
+
+<p>Suppose it were true that national and State debts
+were enhanced in the manner alleged, would that be
+a reason for changing the standard of value for the
+countless daily transactions of business? The bank
+<span class="pagenum" id="Page_34">[Pg 34]</span>clearings of seventy-nine cities in the United States
+for the week ending May 20 amounted to $1,165,478,664,
+which is about double the interest-bearing debt
+of the nation. Add to this the payments of wages
+and the retail transactions that are not embraced in
+clearing-house returns, and then multiply the whole
+by the fifty-two weeks of the year and you will see
+how large a cannon you are loading to kill a mosquito
+and what a tremendous recoil it must have.</p>
+
+<div class="chapter">
+
+<figure class="figcenter illowe12" id="image034">
+  <img class="w100" src="images/image034.png" alt="" data-role="presentation">
+</figure>
+
+  <h2 class="nobreak" id="A_FEW_WORDS_MORE_ON_THE_COINAGE">
+    A FEW WORDS MORE ON THE COINAGE
+    ACT OF 1873.
+  </h2>
+  <p class="smcap center size-l">From the <abbr title="New York">N. Y.</abbr> Evening Post, July 3, 1893.</p>
+</div>
+
+
+<p class="p2">A correspondent for whom we have a good deal of
+respect writes to us to remonstrate once more against
+the Silver-Demonetizing Act of 1873. “Just as soon
+as it was discovered,” says this writer, “that bimetallism
+was abolished, and before silver had fallen in
+price, <abbr>Mr.</abbr> Bland, the humorist, as <abbr>Mr.</abbr> White is
+pleased to call him, attempted to restore to the people
+a right that had been unwittingly taken from them.”
+The record shows that neither <abbr>Mr.</abbr> Bland nor anybody
+else attempted to remonetize silver until after it
+had fallen in price more than 5<abbr title="pence">d.</abbr> per ounce. When the
+Act of 1873 was passed, the London quotation for silver
+was 59¾<abbr title="pence">d.</abbr> When <abbr>Mr.</abbr> Bland introduced his bill
+(November, 1877), the quotation was 54½<abbr title="pence">d.</abbr> But that
+is not very important now.</p>
+
+<p>The assumption that “the people” had “a right”
+which was “unwittingly” taken from them embraces
+a congeries of errors which need to be exposed—all
+the more because they are honestly entertained. In
+<span class="pagenum" id="Page_35">[Pg 35]</span>the first place, who are “the people” who had a right
+that was unwittingly taken from them? Of course,
+they were the people of the United States. How do
+we know what the people of the United States want
+at any particular period? By their action in Congress.
+There is no other way by which their wants
+can be ascertained. Now, what do we find as to this
+Act of 1873 demonetizing silver? It was passed by a
+Congress which was the sole organ of the people as
+to such matters—passed by a vote unanimous in one
+branch and nearly unanimous in the other.</p>
+
+<p>“But <em>we</em> did not understand it,” says somebody
+who was not a member of Congress. It was not
+necessary that you should understand it. This would
+be a queer country if it were necessary that all the
+people should understand all the laws before they
+are passed. Neither the Constitution nor common
+sense required that you should understand it. But
+neither did they forbid your understanding it if you
+had wanted to. Your understanding it would not
+have given it greater validity or higher equity. Your
+not understanding it took nothing from its validity or
+its equity. The frame of government under which
+you live prescribed that your representative in Congress
+should act for you. It did not even require
+that <em>he</em> should understand it, but as a matter of fact
+he did understand it, because it was explained to him
+by public officers and also in public debate.</p>
+
+<p>If we could get an impartial jury from another
+country or another planet to try this question, that
+jury would be bound to decide that “the people”
+passed that Act of 1873 in its entirety, in the only way
+they ever pass an act applicable to the whole Union.
+The impartial jury would probably add that since
+the people had had twenty years in which to remonetize
+<span class="pagenum" id="Page_36">[Pg 36]</span>silver, and had not done so, but on the contrary
+had voted down propositions of that kind <em>four times</em>
+in the popular branch of Congress, the evidence was
+conclusive that they were <em>not</em> misrepresented by the
+Congress which passed the Act of 1873. They voted
+down the remonetization of silver on the <abbr>21st</abbr> of February,
+1878, when they substituted the Allison Bill
+for the Bland Bill by yeas 203, nays 72. They voted
+it down on the <abbr>8th</abbr> of April, 1886, on <abbr>Mr.</abbr> Bland’s
+direct motion for the free coinage of silver, yeas 126,
+nays 163. They voted it down on the <abbr>19th</abbr> of June,
+1890, on a motion to concur in the Senate free-coinage
+bill, yeas 135, nays 152. They practically voted it
+down on the <abbr>24th</abbr> of March, 1892, by voting against
+a parliamentary motion made by <abbr>Mr.</abbr> Bland. The
+majority against <abbr>Mr.</abbr> Bland was only two votes in
+this case—150 to 148—but it was sufficient for the
+purpose.</p>
+
+<p>But we are told that “a right” was taken away
+from the people when the Act of 1873 was passed,
+and the implication is that they have been
+vainly struggling to recover this right for twenty
+years—a very odd situation indeed for a country
+where the people can pass any law that they really
+want. It is the fault of some writers that they use
+important words without explaining, perhaps without
+knowing, their meaning. What is this “right”
+of which the people were deprived by the Act of
+1873? Rights may be legal, or moral, or religious.
+In which category does this right fall? If it was a
+legal right, it was founded upon a law which Congress
+had the same right to repeal as to enact. It is
+not even affirmed that this was a valuable right,
+although that is implied. A man may have a legal
+right to two wives, but it may be an injury to him.
+<span class="pagenum" id="Page_37">[Pg 37]</span>He may have a legal right to get drunk, but that can
+hardly be considered valuable.</p>
+
+<p>Was this right of coinage, of which the people
+were deprived, a moral right? Moral rights are
+matters of opinion and of dispute, but it may be
+affirmed with confidence that the existence of a
+moral right of coinage, in the sense here implied, has
+never been affirmed or imagined in any country or
+age since the world began. In the early history of
+California coins were manufactured by private parties
+and put in circulation, to pass for what they were
+worth, and this has been done in various parts of the
+world at various times. Such coins had no legal-tender
+property. They were small ingots which anybody
+could accept or refuse, according to his liking.
+The contention here is that a moral right exists for
+private persons to make 412½ grains of silver legal
+tender for a dollar in the absence of any law to that
+effect and in the teeth of any law which forbids it.
+This is really too absurd for discussion—as absurd as
+it would be to claim this as a religious right. We
+may add that if this is a moral right, it belongs to all
+mankind, seeing that they have all had silver money
+at one time or another. It is surprising that so few
+recognize it as a right or set up any claim to it.</p>
+
+<p>Finally we are told that this right had been taken
+from the people “unwittingly.” We repeat that ours
+would be a very queer country if no law could be
+passed till everybody understood it. There has
+been a great deal of talk in the newspapers lately
+about an act of Congress regulating the seal fisheries
+in Alaska. How many people knew what that bill
+was before it was passed? How many know
+what it is now? Even the lawyers who are
+discussing it before the Paris Tribunal do not
+<span class="pagenum" id="Page_38">[Pg 38]</span>agree in their understanding of it. Science has not
+yet devised any means to compel people to know
+what is going on in Congress. The difficulties of
+forcing such knowledge upon ten or twelve millions
+of voters, large numbers of whom do not speak English
+or read and write any language, and still larger
+numbers of whom know nothing of finance, and
+never could by any possibility learn anything of it,
+are simply appalling.</p>
+
+<p>Even in the case of those who make some pretensions
+to scientific attainment an attempt to make
+them understand the bills before Congress would be
+quite herculean. Suppose that our correspondent
+and the writer of this article were brought to the bar
+of the House and asked whether they understood the
+pending measure, so that it might not be passed
+“unwittingly” as to themselves, and suppose they
+should apply in the affirmative, what guarantee
+would Congress have that they really did understand
+it? They might think that they understood it when
+they did not. Something of this kind actually happened
+in connection with the Coinage Act of 1873.
+The <abbr title="Honorable">Hon.</abbr> William D. Kelley of Pennsylvania took
+part in the debate on the clause dropping the silver
+dollar from the list of coins, and defended that clause
+on the ground that the silver dollar was worth two
+cents more than the gold dollar, and that it was impossible
+to have two dollars of different values. He
+afterwards said that he did not understand this particular
+part of the bill.</p>
+
+<p>What happened in <abbr>Mr.</abbr> Kelley’s case would be still
+more likely to happen in the case of talesmen hastily
+summoned from the body of the people as assistant
+Congressmen. Our forefathers, anticipating all the
+difficulties attendant upon the endeavor to force all
+<span class="pagenum" id="Page_39">[Pg 39]</span>the people to understand all the bills before Congress
+at all stages, wisely provided that such antecedent
+knowledge should be dispensed with, but they took
+steps to give facilities for such knowledge. If it is a
+defect of our system that laws are passed “unwittingly,”
+it is a defect which we share with all other
+governments, and it seems to us to be inherent in the
+representative system. At all events, we see no
+present cure for it.</p>
+
+<p>It thus appears that our correspondent, for whom,
+as we have said, we entertain much respect, has, in a
+single sentence, used three phrases, all of them important,
+and carrying with them the gist of the debate
+on a momentous question, without any clear
+idea of their meaning. He has used the word
+“people” as though it were an entity separate and
+distinct from the only organ established for the expression
+of its will, but he has not told us where we
+can find this entity or how we can interrogate it.
+He affirms that the people have been deprived of a
+“right” without telling us whether it is a legal or a
+moral right, or how it came to exist, or what portion
+of the civilized world regard it as a right, or how we
+are to know that it is a right, or anything about it.
+He has affirmed that the people were deprived of this
+right “unwittingly,” implying that no law ought to
+be passed until all the people understand it. (It is
+not necessary, according to the hypothesis, that they
+should approve it, but only that they should understand
+it.) In using these phrases in this way he has
+“begged the question” completely, but we presume
+that he was not aware that he was doing so. We have
+taken some pains to point out his unfounded assumptions
+because we know that he represents a good
+many people who, like himself, are honestly in error.</p>
+
+<div class="transnote">
+<h2 class="nobreak">Transcriber’s Note</h2>
+
+<p>
+Some inconsistencies in spelling, hyphenation, and punctuation have been
+retained.
+</p>
+
+<ul>
+<li><abbr title="page">p.</abbr> 9: <a href="#TN1">changed</a> as-printed “15 1-7” to “15⅐”, based on context.</li>
+</ul>
+
+</div>
+
+<div style='text-align:center'>*** END OF THE PROJECT GUTENBERG EBOOK 78364 ***</div>
+</body>
+</html>
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