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man Act (which authorizes the issu-
ance of silver certificates for bullion
purchased and deposited in the tl
sury) can afford that remedy has not



538



AMERICAN FINANCES.



yet been explained. Silver certificates
are used as money like greenbacks.
They pass everywhere and they are
everywhere in circulation. Is it wise
or needful to have less money, when
the whole people are needing
and demanding more money ? and
is it not afact that the repeal
of the Sherman Act will decrease the
amount of money now in actual
circulation ?

In this connection it is not argued
that some more efficient means cannot
be found to take the place of the pres-
ent system, nor is it claimed that the
Sherman Act meets all the expecta-
tions of those who favored its enact-
ment ; but to repeal that law without
enacting some other to take its place
(which new law will retain silver as a
money metal) could not fail to result
most disastrously to the country. In-
deed, financial legislation inspired by
great monetary distress is always dan-
gerous, and while it is true that the
resources of a great country cannot
be easily legislated out of existence,
they can be imperiled. But a great
nation cannot be impoverished because
it has gold and silver, instead of gold
only, nor will that legislation that re-
gards only the creditor class of our
people be conducive to the greatest
good. On the contrary, that legisla-
tion only should be enacted, which
justly measures the value of all
property and the interests of all the
people.

It is well to consider what would
be the result if a single gold monetary
standard were adopted all over the
world. Fiance would demonetize
$800,000,000 of silver ; the United
States fully $600,000,000 ; Germany
has $^0,000,000 in silver thalers
not yet disposed of; Austria-Hungary
has about $50,000,000 in silver. In
fact, every European nation has large
and varying amounts of silver on
hand now used as money. The busi-
ness world would be paralyzed if silver
should be thus demonetized. There
are not five nations of the earth, if
this were done, that could, for the



five succeeding years, pay in gold the
interest on their public debts, much
less provide for the payment in gold of
the principal due thereon. Now if sil-
ver cannot be safely demonetized, then
the best and most effective use should
be made of that money metal. It should
be built up and sustained by the finan-
cial world, and not destroyed or talked
down. If we must have it, then it
should be employed in the best pos-
sible manner. True, silver is the
money of small transactions ; but re-
member, there are hundreds of small
transactions where there is one large
one ; and, after all, it is the small man
financially who most needs, and who
often most deserves the protection of
the law. Silver money is so much
capital, and is it not the height of un
wisdom to destroy capital in any
form ?

"It is an incontrovertible fact,"
Bays Mr. James Piatt in his book en-
titled "Money," (Page 135), "that
in the history of commerce we find
no principle more firmly established
than this ; That as the capital of a
country is increased, agriculture, com-
merce and industry will flourish, and
as capital is diminished, these will
decline ; that the man who attempts
to annihilate any portion of the cap-
ital of a country wherein he dwells,
is as forgetful of his own advantage
as the miller who should endeavor to
dry up the mountain stream which
turns the wheels of his machinery, or
the farmer who should desire to inter-
cept the sun and the showers which
fertilize his fields."

It is most true the study of the
question of money has always been a
leading topic with students and theo-
rists. Indeed, there are too many
remedies for evils which either do not
exist or which are but slight ailments,
and which, in time, if left alone,
would cure themselves. What seems
the strangest part of this money prob-
lem is that those who have the most
to lose by unsettled financial condi-
tions, are the most anxious to have
financial conditions unsettled, unless






AMERICAN FINANCES.



539






settled their way. Those who deal
most in money, and who of necessity
are deeply interested in the ability of
the people to pay what they owe, are
themselves constantly but unwittingly
striving to make it impossible for the
debtor classes to pay their debts.
This applies with equal force to
nations and to individuals. The rich-
est nation of the world, England, is a
creditor country, and a gold and a sin-
gle standard country. The rest of the
world owes England and Englishmen
$8,000,000,000 of money, which is
nearly twice the amount of all the gold
in the world. It is claimed that the
combined indebtedness of the world is
$80,000,000,000, and .so the world
never can pay in gold, nor can English
creditors ever be paid in gold.

But some people, and conspicuously
the American people, have been
frightened into the adoption of the
English monetary ideas, because
the creditor class always dictates
to the debtor. And as England
is an old and rich nation, and as
London is the great financial center,
borrowers seek that money market,
and of necessity accept the terms
which that market imposes upon
them. All the English colonies are
in debt to England. India owes the
mother country vast .sums of money,
and yet England, until within the
month, has insisted on a silver stand-
ard for India and a gold standard for
England, and because India produces
what England must have (wheat, cot-
ton and rice) England goes into the
market with the gold it gets of Amer-
ica and other rich debtor countries,
and after forcing the price of silver
down to the lowest possible point,
uses the same American gold to buy
American silver at a British discount,
and then pays out that same silver to
its own people in India at par, dollar
for dollar, in buying articles w 7 hich
compete in an English market with
American products, like wheat and
cotton. This is a keen, sharp-sighted
business policy. Thus far it has
worked admirably for England, and



this policy will be continued in India,
although the free coinage of silver
there has recently been stopped, but
silver money is the currency of that
country and always will be. Not*
the result. Wheat is lower now than
ever before. And so are many, nay,
most ofthe surplus American prodtl
Who are the sufferers? Primarily,
the producers — American prodw
and indirectly every business man and
every bank in the whole country,
because financial unrest follows busi-
ness depression, and you cannot long
have prosperous banks and ]>oor peo-
ple, for dear money limits its uae.

These are the present conditio!
and they will continue to be the 1
ditions until America declares its finan-
cial independence of England,
this, it is not argued that America
should cease to trade with England,
but rather that as America i^ now the
largest producing country in the
world, and has the most wealth (but
not the most idle money) it is in a
position to command the situation, if
it is brave enough to do so. \\V pro-
duce what England wants and what
she must have. In the past, onr ex-
ports to England have vastly exceeded
our imports from England, and this
will continue so unless large and un-
wise changes are made in onr tariff
laws. Commerce is king — not gold.
Gold is but one of the tails to the
great financial kite. Commerce- is the
kite itself. Money does not alu
make business — dear money, never.
Credit is better than money. And the
man or nation that produces much and
has much to sell, has credit and can
command money the world over.

The business depression in industrial
pursuits in England has already lasted
a number of years, and it will continue
so long as commodities continue ch
and money continues scarce and d<
And to the producer money is alv
scarce and dear when commodities
cheap. The commerce of America
will soon hold the mastery, if Amer-
ica only encourages that commerce by
maintaining such a commercial and



54Q



AMERICAN FINANCES.



monetary policy as will make money
reasonably abundant and cheap at
home, and thus encourage home indus-
tries. Once make secure the business
of our country and our money will
care for itself. True, London is to-
day the great monetary center of the
world. It will not always hold that
supremacy. Every student of history
knows that Florence, Venice and
Genoa, each in its day and time, held
dominion over the commerce, and at
the same time, the banking of Kurope.
Silver was their standard. Do you
inquire what gave these cities their
financial supremacy over all other
places? It was their commercial
supremacy. It was not alone the
kind or amount of money that they
had in their banks or in circulation.
It was trade that made them rich, and
it was trade that kept them rich
through so many centuries.

Commerce has made London what
it is. Take from that great city her
commerce, relieve her of her indus-
tries, deprive her people of even the
present poor rewards for labor, throw
a dam across the Thames, or make
clear the air above her chimney t<>p>.
and London will cease to be a great
financial center. Money gravitates as
business moves. Commerce and money
go together and are necessary t<> each
other, but commerce holds the
mastery.

It is most true that a number of the
great financial nations of the world.
conspicuously England and Germany,
through influences which it is quite
unnecessary here to discuss, have in
recent years attempted to, and finally
have, demonetized silver ; and yet both
these nations use a large amount of
.silver subsidiary coin, which is issued
at par and passes at par. Paper money
is also used by most European peo-
ples, and conspicuously by these two
great nations. And when issued and
used as money, the government or
bank that issues the paper usually
guarantees its payment in gold, and
the credit of the bank or nation stands
behind the paper so issued. And yet,



whenever there is a great financial de-
pression, or when there is a war, they
cease to pay in gold, because there is
not gold enough. In a word, gold is
the standard when gold is not wanted,
but when it is most needed there is
none to be had. The promise to pay
in gold is a deception, says Mr. Piatt,
you only see the ghost of gold when
it is wanted in the substance.

It is also a fact that substantially all
the gold and silver of the world, not
actually used in the arts, is now coined
into money and used somewhere as
money, with the single exception that
in the United States, as a matter of
convenience, paper money is issued as
the representative of the value of silver
bullion on deposit in the vaults of the
treasury. It is also a fact that during
tlie last century, the commerce of all
the nations of the earth has very largely
increased, and for that reason, more
money is required to carry on the busi-
of the world than ever before.
This large increase of trade and com-
merce is chiefly attributable to rapid
communication by steam and tele-
graph, the advance of civilization, im-
provements in transportation of freight
and passengers, and increased facilities
for manufacturing. It would thus ap-
pear that as a matter of exchange of
values, money becomes more and more
necessary to mankind as people become
more and more commercial. Gold and
.silver, being the most valuable metals,
are the natuial money of the world.
Every civilized man knows both metals
as money. It is the common law of
mankind to look upon them as money
metals. The tradesmen and producers
all over the world receive either coin
in exchange for their commodities.
And as the use of money is increasing,
the demand for it becomes a greater
necessity. Without it no enterprises,
great or small, can be successfully es-
tablished or carried on, and so any
contraction of the monetary circulation
would result in a monetary crisis,
reaching not only the stability of great
banks and business houses, but the
stability of governments themselves.



AMERICAN FINANCES.



54



It is a mistake to suppose a banker
different from other people — he is
simply a keen dealer in money, and
the man who deals in money is like
any other man who has something to
sell. He wants his goods (money) to
bring a good price — to be in demand ;
and whatever will make his
goods scarce, and difficult to get,
increases its value, and thus appar-
ently benefits him. He knows, as
every intelligent man knows, that
when there are two kinds of money in
the world, and an equal amount of
each, if he can destroy one kind, what
remains will be more valuable ; and so
many of the moneyed men of the
world are for mono-metallism, because
if a single gold standard is adopted by
all the nations of the earth, and silver is
demonetized, there will be only about
one half the present amount* of
money in circulation ; and he knows
that this alone would double the value
of the money that is left, because it
would double the purchasing power of
gold, and in a like proportion lower
the value of all other commodities,
because the commodities would neces-
sarily increase in amount, while the
means to purchase them would de-
crease.

In a word, we would then have dear
money and cheap commodities ; the
men who have money would be richer
by half; the men who have commodi-
ties would be poorer by half. But the
latter are as one hundred to one.
Labor is a commodity and would go
down in the general fall. The result
necessarily follows that as money be-
comes scarce, there will be a lowering
of prices ; land becomes cheap as
money gets dear ; the products of the
factory and the farm suffer alike ; and,
as people have less money for use in
the purchase of needful articles, less
of those articles are consumed. And
then comes poverty, suffering and un-
rest, with an increase of crime and
lowering of the moral standard.

The answer made to these argu-
lents is that as money would be
rorth more, the relative value of com-



modities would not cnange, because
one dollar then would be worth two
dollars now. If the gold men think
this is true, why not double the price
of commodities and double the amount
of money, and cheapen its value, and
thus make two dollars worth bttt one
dollar? If the rule is correct, why
will it not work both wa\ t he-

fact is, the argument in favor of dear
money is a narrow policy. Il
ful it only creates misery, want, un-
rest — it is not a creative, but rather a
destructive theory. It will benefit the
few and destroy the many. It is ad-
mitted that the intrinsic value
silver is less than gold — it alw a\ | was
less. Our laws make the coinage
value of gold sixteen times more
valuable than silver; but, owing t«»
the fact that some of the nations, which
are the money powers of the world,
are demonetizing silver, the diffen
in the commercial value between the
two metals is much greater now than
heretofore, and so the same power
that cheapened silver now demands
its demonetization as a money metal.
because it is cheap. The creditor
classes, who are interested in making
money dear, are doing this and will
continue to do it, until the commun-
ism of organized wealth endangers
the peace of society. Indeed it has
already imperiled the business tt*
tries of the world. Money cannot
become dear if silver is continued as
one of the circulating mediums of the
world, because the supply will more
nearly equal the demand ; but the
supply of gold is not largely increas-
ing, while the demand for mom
increasing as the wealth and comni'
of the world increases. And so, on
the one hand, it is a contest for good
money and more money and fair prices
for commodities ; on the other, it i
contest for less money and dear money
and cheap commodities; and this con-
test will continue and increase in force
while these conditions continue, and
they will continue until actual and
practical bi-metallism is restored.
It is the logic of events, that a



542



AMERICAN FINANCES.



single gold standard cannot be main-
tained for any great length of time,
without causing depression of values
and a financial crisis, for money is
only valuable, whether dear or cheap,
when it can be used in some form of
enterprise. The borrowers of money
are the men who do something, who
build up and .sustain the wealth of the
world. They are the creators ; and
when money becomes too valuable to
borrow, then commodities will be too
cheap to create, because no margin of
profit will be left to the producer, and
dull times will be inevitable. It can-
not be denied that a change in the
financial system of a country is dan-
gerous, because any change affects the
value of property, and therefore,
stability is more needed than improve-
ment. No nation is great enough to
impose its own monetary system on
the rest of the world, unless it is to
the interest of the rest of the world to
adopt it. And a free people will not
willingly adopt a monetary system
which makes property less valuable
and the masses of its people poorer.
England has done this, for it is admit-
ted by English statesmen that within
twenty years, all property in England
has decreased in value fully thirty per
cent, its agriculture is in decay, its
laboring people are migrating in vast
numbers to remote colonies or to the
United States, its manufacturing inter-
ests are not prospering, and while its
rich people have more gold, its poor
people have none, and they can earn
none. Indeed, there is no encourage-
ment for prosperous America to swap
financial systems with England.

It has been well said that it is the
paying ability of the people that gives
confidence and sustains credit, and
their paying ability depends on their
prosperity. A bank cannot divorce
itself from the community in which
its business is conducted, any more
than can our government at Washing-
ton sustain itself by opposing the
clearly expressed wishes of the people
of the nation. For a time, organized
financial power can control even the



policy of a nation, but in the end the
unorganized but resistless business in-
dustries must be felt and will control,
because they represent the most
people and the best average judgment
of the people. It is nonsense to say
that a comparative few of the moneyed
men of a nation living in a single city,
in matters in which they are person-
ally interested, fairly represent the
common business sense of the whole
country. They are unwittingly like
a bribed jury: they cannot give an
impartial verdict. Money kings, how-
ever useful, cease to be beneficial
when they rule as kings rule. They
should not be allowed to enrich them-
selves at the expense of other men, nor
to muddy the fountains of wealth
after they have slaked their own
thirst. Ranks are necessary, money
istiecessarv, and gold is necessary to
the prosperity of our country, but
labor, business enterprise, silver money
and borrowers of money are equally
necessary to our industrial and finan-
cial progress.

Silver and its uses is not the bug-
bear it is re pr es e nted to he. True, in
large transactions neither silver nor
gold is actually u^vd. Both metals
are needed to stand behind and sus-
tain the credit of the world. Note
the present uses of silver.

Secretary Windom reported to Con-
gress in December, 1SX9, that the
annual product of silver of the world
(coinage value) was $142,000,000, and
his report shows where this silver was
used, viz :

Amount required in India. . .135,000,000
Amount required in Austria

and Japan 10,000,000

Subsidiary coinage in Europe

and South America, 16,000,000

Amount annually exported

to China, Asia, and Africa,

other than Indian coinage 10,000,000
Annual coinage of Mexican

dollars 5,000,000

Indian coinage 10,000,000

Amount used in the arts. . . . 15,000,000
• Surplus or balance 51,000,000

|i42,ooo,ooo



AMERICAN FINANCES.



543



Since that report was made, there
has been no marked difference as to
the use of that metal. It does appear,
however, that our country requires
more and more money. Then wherein
is the fear of too much silver coin, or
too many silver certificates? As before
stated, do not this coin and these
certificates pass as money, and are hard
times caused by too much money, and
will good times come when we have
less money? Does any one claim
that money is now too cheap or
too abundant ? Failures are caused by
a want of money, not because there is
too much of it, and especially when
that money is gold or silver."

But we are told that gold is leaving
the country. This is true ; and being
true, would you make money less
abundant here by demonetizing what
money we have left at home? And
would not even more gold be shipped
away, if we lowered our credit by
decreasing the amount of money in
circulation here? Gold is sent to
Europe because we owe someone in
Europe, and as we have lost confidence
in ourselves and are making a political
question of our finances, cur debtors
there have lost confidence in us, and
want their money.

A constant repetition of the menace
which some of our own people make
against our revenue system, and the
threats to lessen the amount of money
in circulation, has already had its
effect in disturbing public confidences.
It is the fear of what is to come that
causes hard times, infinitely more
than any actual injury inflicted.

And again, suppose our foreign
creditors are afraid we will some day
pay them in silver, and for that reason
they are now realizing on their Amer-
ican securities — would they not do
the same thing at any time when
money is scarce in America?

Indeed, there is not a nation on the
globe that can pay its indebtedness in
gold. No, not even England, rich as
she is. Too much indebtedness and
too little gold is the reason. And so
this very statement that the United



States will pay its indebtedness in sil-
ver is a fallacy. In any event, our
foreign creditors do not want their
money as long as they feel their in-
vestments are safe. Once SUStaitl OUT
home industries, and our home credit
will sustain itself, and our gold and
silver will remain with us.

It is confidence we most need, and
confidence must be created by our own
people, in our own country. We
must first sustain our own finances by
encouraging American Bnterpri
We must sustain home markets by
protecting home made products, ami
thus give labor a fair reward. We
must make more to sell to others and
buy less from others. Then we
will be more prosperous; our banks
will cease to call in their loans, or to
close their doors; property will en-
hance in value, industries will multi-
ply; business will assume its usual
channels, and as confidence is restored
less money will l>e required to do the
business of the country; the East and
West will then join hands in building
up and sustaining American credit at
home and abroad. Wall street is
necessary to the country, and espec-
ially when Wall street is right. But
it is not necessary to sustain Wall
street when Wall street is wi
Prosperity cannot l>e written or
figured into existence. It must
grow, and its growth can l>e aided
by wise legislation, but not created
by it.

What legislation would be a urn
is the question. Silver must be used in
some form. If the Sherman Act i
pealed, some other law must tak<
place. If freecoina-e. it would pos-
sibly be the free coinage of American
produced silver. Another remedy is
to prohibit the circulation of any paper
money under ten dollars, and to ooifl
no gold pieces less than five or
dollars, as the case might l>e. \
little gold is now coined under
dollar pieces. England has no paper
of a denomination less than twenty-five
dollars. The small money thus taken
out of circulation should be replaced



544



SILVER COINAGE.



by larger money put into circulation,
the object being to make all smaller
transactions in silver money. It is
estimated this would put into circula-
tion $400,000,000 of silver not now in
actual use, and it would not drive out
of circulation one dollar in paper or
gold.

Even these remedies may not
be the true ones. But one thing is
certain, the American people and the
American financiers cannot longer sus-
tain themselves upon European pre-
cedents, because our conditions are
American. We are all producers, we
have no great standing armies, no
cheap or pauper labour, no monarchical
government, no class distinctions.
Here the rich man of to-day may be



Online LibraryCharles Frederick HolderThe Californian (Volume 4) → online text (page 72 of 120)