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1876 United States. Monetary commission.

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caused by speculative movements or panics are of short duration and
very limited extent. Silver may not again fall as low as it was in July,
IcSTG; but it would be unreasonable to expect that it will soon recover
and permanently maintain the price which it commanded in 1870. %J

The next subject of inquiry referred to this Commission concerns the*
policy of a " restoration of the double standard in this country, and, if
restored, what the legal relation between the two metals, silver and
gold, should be."

As the value of any commodity whatever depends primarily upon its
cost of production, which is constantly varying, and secondarily upon
its supply and demand, which are also extremely variable, as is shown
by the incessant fluctuations of market-prices, it is obvious that there
cannot be an absolute standard of value. Such a standard means some-
thing fixed and unchangeable, by their relation to which all other valu-
ables may be measured. Now, there is no such commodity known ;
everything varies in value from one week to another, both from intrinsic
causes peculiar to itself, such as its inherent difficulty of attainment,
and from extrinsic causes affecting those agents, labor and capital, by
which alone this difficulty can be overcome. The best that can be done
is to selectman approximate standard, that is, some one commodity which
seems more stable than any other, and establish that by law as the stand-
ard by which the values of all other commodities are to be measured.
Legislation is competent to do this, and practically has done it both in
England and Germany, by establishing a certain number of grains of
pure gold, coined either into a sovereign or a mark, and declaring that
this shall be the common measure of value. But legislation is not com-
petent to select two such commodities, and to declare that they shall both
be the standard or common measure ; or in other words, that there shall
be a double standard. To attempt to do so is as absurd as it would be
to declare by law that two clocks should both be the standard for
measuring time, though, as everybody knows, no two clocks can be
made which shall keep perfect time with each other.

* According to the latest accounts, Belgium has done so already.
10



14G MINORITY REPORT OF MR. BOWEN.

This tbeoretical view of the matter is amply confirmed by experience.
Every attempt to establish the so-called u double standard '' has been a
failure. The first step toward causing any commodity to become a
standard of value is to make it a legal tender for the payment of debts.
But though the law may declare that either of two commodities shall
be legal tender, only one of them, and that the cheaper one, is actually
adopted as a medium of payment. If gold and silver be the two com-
modities chosen, and the legal relation between them be made to con-
form to the ratio of their market-prices at the time of the enactment,
the fluctuations of the market will speedily change that ratio; and
then the overvalued one speedily pushes the other out of circulation,
and becomes itself the sole standard of value. It appears from the
table already referred to, showing the monthly fluctuations in London of
the gold-price of standard silver per ounce, that this price remained un-
altered tor as long a period as four mouths only once in forty-three years.
Usually it varied every mouth, and but seldom remained fixed for two
successive months. But any such departure of the market-price from
the relative value of the two metals as established by law must cause
that one which is overvalued, or of which the nominal exceeds the real
value, to displace the other and take the whole circulation to itself.
Always the bad money pushes out the good, as every one will adopt the
easiest and cheapest means of paying his debts.

Thus France attempted, as early as,lS03, to establish a double stand-
ard, and fixed by law the relative value of the two metals at 1 to 15.5.
This ratio made the legal price of pure silver to be 28.64 grains of pure
gold per ounce. Bat for over forty years the market-price of silver
did not on an average exceed 28.25 grains of pure gold per ounce, so
that the law overvalued it more than one per cent. To this extent,
then, in France, silver was worth more as coin than as bullion, while
gold was worth more as bullion than as coin. There was a profit
of about one per cent, in carrying silver to thQ mint to be coined,
and in melting up or exporting gold. Of course, silver flowed into
France and filled up the circulation, while gold coins disappeared, or
could be obtained only at a premium. In those times, when one was
paid even so small a sum as 1,000 francs, he received his bulj^y and
heavy money in a canvas bag, and had to hire a porter or a cab to con-
vey it home. During the six years before 1852, the excess of the imports
of silver into France over the exports was more than 28 millions sterling.

The discoveries of gold in California and Australia about 1850 re-
versed this state of things, as it was foreseen that gold must fall in
relative value. Hence the market-price of silver rose above its mint
valuation, and consequently the amount of gold presented for coinage
in France became immense, and there was a drain of silver, vast quan-
tities of which were melted down and shipped to India. The incon-
venience which resulted from the want of small change had to bo met
by reducing the small coinage to the state of a subsidiary or token -
currency, all pieces of two francs and under being much overvalued, so
that they could not be exported or melted up without considerable loss.
But the silver live-franc piece was nominally retained at its old valu-
ation, and to fill the gap caused by its practical disappearance, gold five-
franc pieces were coined to a large amount. Like our own gold one-
dollar coins, however, these were found to be inconveniently small, and
the coinage of them ceased even before the recent depreciation of silver
brought the silver five-franc pieces again into circulation. During the
six years, beginning with 1852, the excess of the exports of silver from
Fiance over the imports was more than 45 millions sterling.



MINORITY REPORT OF MR. BOWEX. 147

Hence it appears that the French attempt to establish a double
standard has been a total failure. France had silver for her only
standard from 1803 till about 1850, and gold for her only standard ever
since. Even now, since the recent great depreciation of silver, rpstrict-
iug the coinage of that metal within very narrow limits is a virtual
adherence to the single standard of gold. The corresponding attempt
to establish a double standard in the United States resulted in a
similar experience of loss, inconvenience, and failure.

A law of Congress passed in 1792 established the United States Mint,
and so regulated the coinage that both 24.75 grains of pure gold and
371.25 grains of pure silver were made legal tender for a dollar. This
was an attempt to establish the double standard on the ratio Of 1 to
15, which was probably the actual ratio of the market prices of the two
metals at that epoch. But silver immediately began to decline in price,
and before 1800 it had reached the ratio of 15.42 ; while in 1803, as we have
seen, even the French ratio of 15.5 had become too small. Of course,
the overvalued silver filled up the circulation almost entirely; the
whole coinage of gold for forty years was less than twelve millions of
dollars; and this little was for the most part either preserved as a
curiosity, or melted up and exported. A gold coin was seldom seen,
and silver was virtually the only standard. This was not the worst.
As the silver dollar had been made to conform almost precisely in
weight and fineness to the Spanish milled dollar, Spanish quarters,
eighths, and sixteenths, usually much debased by abrasion and clip-
ping, poured into the country through our trade with the Spanish West
Indies and South America, and soon formed almost our whole fractional
currency. A small Spanish coin called a pistarcen, so much worn as
hardly to be worth 17, passed current for 20 cents. Vainly did the United
States Mint issue American fractional coins of full weight and value,
as these were soon melted up, and the bullion sold at a high profit for
the worn Spanish coins which were equally current. Never was there
a better illustration of the principle that bad money invariably dis-
places the good.

The law of 1834 remedied these evils by actually lowering the stand-
ard more than 6 per cent., and thereby establishing the relative vali e
of the two metals at 1 to 16. Instead of 24.75, only 23.2 grains of pure
gold were coined into a dollar, and thereby the par of exchange with
England, which had been about $4.56, was raised to $4.87, for the pound
sterling. Moreover, as by the ratio thus established silver was under-
valued about 3 per cent., gold began to be issued in large quantities
and came into general use, while silver pieces ot the denomination of
$1 were almost entirely thrown out of circulation, and the silver frac-
tions of a dollar were kept in use only through the necessity of having
some small change, and because, being much handled, they soon lost a
portion of their weight by abrasion. The nuisance of the much worn
Spanish coins was gradually abated by a general refusal to accept them
at more than four-fifths of their nominal value. Practically, then, the
attempt to establish a double standard had resulted in lowering the
whole standard more than 6 per cent., and in establishing first silver,
and then gold, as the whole measure of value.

In less than twenty years, the fluctuations of price in the market again
created a necessity of tinkering the so-called u double-standard" cur-
rency. Soon after 1850, silver rose so much in price that even the smaller
silver coins began to be melted up and sold as bullion. It became diffi-
cult to effect small purchases, or to obtain " change " for a dollar. Con-
gress had now to undo what it had done in 1834. But its action was



148 MINORITY REPORT OF MR. BOWEN.

reversed, not by restoring the gold dollar to its former full weight and
value, but by diminishing the quantity of silver which represented a dol-
lar just about as much as it had lessened the quantity of gold in the dol-
lar nineteen years before. The law of 1853 virtually surrendered the
double standard, and made gold coin the only available legal tender for
any debt over five dollars; for though the former one-dollar piece, con-
taining 371.25 grains of pure silver, was not expressly demonetized, it
had gone out of use, and practically remained out of use, in the domestic
currency, because its value as bullion had come to exceed by about three
per cent, its value as coin. But the silver fractional denominations, from
half a dollar downward, were reduced to the state of a subsidiary or
token currency, by so far diminishing their weight that a dollar's worth
of them contained only 345.6 grains of pure silver, and by making them
legal tender only for an amount not exceeding five dollars.

Thus gold was maintained as the single available standard for nine
years longer, when, in 1862, the issue of an inconvertible paper cur-
rency, and making it legal tender, practically abolished every standard
of value, and introduced the state of uncertainty, of wild fluctuations of
prices, and consequent reckless speculation from the evil effects of which
the country has not recovered up to the present day. In 1873, however,
probably as a precaution against the great depreciation of silver which
was even then foreseen, Congress took the last step to ward t the legal
establishment of the single gold standard by demonetizing silver alto-
gether, making all our silver coins legal tender only for an amount not
exceeding five dollars. The gain which would accrue from manufactur-
ing silver bullion into coins at a nominal value largely exceeding its cost
was constituted a special fund for making good " the wastage; " it might
properly be used to meet the heavy Joss to which a silver currency is
always subject from abrasion and clipping.

In the opinion of the undersigned, it is expedient to take one more step
toward assimilating our system of metallic currency to that of England
and the commercial world generally. By diminishing the quantity of
pure gold in the dollar only three-fifths of one grain, or considerably
less than half of what the law of 1834 subtracted from it without pro-
ducing injury or complaint, our American half-eagle or five-dollar piece
would become almost the exact equivalent of one pound sterling, and
would differ only by a very small fraction from the value of twenty-five
(gold) francs in France and the other States of the Latin Monetary Union,
and from twenty (gold) marks in Germany. Already the English sov-
ereign or one pound sterling is a recognized portion of the actual cur-
rency of such countries as Portugal, Brazil, and Egypt, and is practi-
cally current at its full value in every civilized country. Austria has
recently coined and issued gold four-florin and eight-florin pieces, which,
as practical equivalents respectively of the French ten-fianc and twenty-
franc coins, are easily expressed as definite portions of the pound ster-
ling. Hence the slight change here recommended would be attended
with the following important advantages :

1. It would be a long step toward establishing one monetary unit,
denomination of account, and standard of value for the whole commer-
cial world.

2. It would greatly facilitate the computation and settlement of in-
ternational balances, accounts, and exchanges.

3. It would be the strongest possible safeguard for the future sta-
bility of the standard of value, as all nations would be interested in its
preservation, and it could not be effectively altered without their unani-
mous consent.



MINORITY REPORT OF MR. BOWEN. 149

4. In making remittances to other countries, it would no longer be
necessary to inelt the coins and have the bullion recoined at consider-
able charge in a foreign mint. The Government would no longer be put
to the heavy expense of coining and recoining the same bullion, which
had been first sent abroad, and then returned, through fluctuations in
the balance of trade.

o. As American gold coins would be equally current everywhere with
English sovereigns, New York would share at least one of the advan-
tages which have made London the banking-house and commercial cen-
tre of the civilized world.

6. In the language of Professor Jevons, u a world- wide goW currency
of unimpeachable fidelity and excellence would be obtained '"alike from
British, French, German, and American mints.

7. It would much facilitate our return to specie payments, the present
premium on gold, 5J, being reduced immediately to about 3 per cent.

Justice, however, requires that all debts and contracts expressly made
payable in gold, and outstanding on the date of the law authorizing
this change in the coinage, should be discharged only by tender of dol-
lars each containing 23.2 grains of pure gold, or by their equivalent.

After what now has been said, it is hardly necessary to consider the
third subject proposed by Congress to this Commission, namely, " the
policy of continuing legal-tender notes concurrently with the metallic
standards." As it has been proved both by theory and experience that
a double standard is an illusion and a failure, every attempt to establish
it having led to frequent changes of legislation, and to great inconveni-
ence and uncertainty in commercial affairs, any project for creating a
triple standard ought to be summarily rejected as impracticable and
absurd. The law may say that either a gold dollar, a silver dollar, or a
paper dollar shall be indiscriminately legal tender ; but the only actual
tender ever made for the payment of a debt will be that one which, at
the time, is the cheapest of the three. Hence the most effectual means
of rapidly debasing the standard, that is, of depreciating the value of
a dollar, will be to authorize any one to cancel debts outstanding against
him by proffering in payment that one out of three different kinds of
dollars which happens at the moment to be of the smallest value, espe-
cially when, as during the last year, the three are rapidly and largely
changing their relative values. Only last July, the so-called " trade-
dollar,' 7 the heaviest and most valuable one ever coined, was worth
about .86, and the " greenback" paper dollar about .89, of a gold dollar.
Five months later these proportions were reversed ; the trade-dollar had
risen in value to .94 J, and the greenback to .92 , in gold. What sort of
a standard would they have been, either separately or together, when
they are liable to such fluctuations both in their relative and absolute
values in less than -six months'? As there was no apparent change in
the average price of commodities in general between July and Decem-
ber, 1876, we may be sure that the value of the gold dollar during that
interval remained without alteration. Yet, under the attempt to create
a triple standard, it is certain that the gold dollar would have been the
only one which, during those five months, could not have come into use.

Whatever, then, -might be the intention of Congress in attempting to
create a double or triple standard, it is certain that the actual conse-
quence of such attempt must be to exclude gold altogether, and to make
either silver or the legal-tender note the only measure of value, and the
only medium for the payment of debts. We have, therefore, merely to
consider whether it is expedient and just to establish either of these
two forms of money, in preference to gold, as the sole standard.



150 MINORITY REPORT OF MR. BOWEN.

Money, properly so called, has two perfectly distinct functions to per-
form. It must be capable of use both as a standard of value and as a
medium of exchange. It is obvious that the former of these functions
is by far the more important. As to the latter, almost any commodity,
even any ticket of transfer or token of debt, though without any in-
trinsic value, may be made to serve perfectly well as a medium of ex-
change, the question which of them is to be preferred for this purpose
being determined solely by considering which is the most convenient.
Silver, copper, nickel, bank-checks, railroad-tickets, postage-stamps, ac-
counts-current or offsets of sales against purchases, and the like, may
serve as loedia to facilitate the transfer of those commodities which are
the only real objects of barter and sale. What is called a subsidiary or
token currency, whether it be silver, copper, or nickel, is of this nature,
the law affixing a definite limit both to the amount of it in use, and to
the extent to which it shall be a legal tender, and also giving it a con-
ventional, often differing from its intrinsic, relation to the real measure
of value.

Far otherwise is it with the other function of money, that of serving
as a standard of value, as on the proper execution of this office some
of the most momentous interests of the whole community are entirely
dependent. The very life of trade, and of confidence between man and
man, depends on the due performance of contracts, on the successful
maintenance of a system of credits, and on the anticipation of what will
be the relative value of money and commodities at some future day.
Very few mercantile transactions are really completed at the time when
the bargains are first made, or when the commodities affected first change
hands. Nearly all of them, either directly, or in their necessary and in-
tended consequences, extend into a more or less remote future. The
trader buys only in order to sell again, it may be the next week, the next
mouth, or the next year. In every commercial community, far the larger
portion of the sales which are effected are made on credit; that is, on
promises of payment at some future day. And the debt thus contracted,
through the agency of banks and other financial instruments, becomes
itself an object of barter and sale, which are again dependent on trust
in the future. Even in the case of cash-sales of commodities for speedy
consumption, the purchaser's choice of the time and place for the trans-
action usually depends on his estimate of what prices are, or will bo,
elsewhere or on some other day. All such bargains, expectations, and
promises must be expressed, and, if necessary, registered, in the common
denomination of account in francs, pounds sterling, or dollars ; and
any uncertainty as to the future value of this denomination of account
must discourage individuals from engaging in the transaction, or, if not
foreseen, must work hardship and injustice to them in the result. And
these evils may all be caused, not only by any actual alteration of the
standard within the period of time belonging to the transaction or the
contract, but by any reasonable grounds of fear that within that time
it may fluctuate in value. Any depreciation of the currency, if foreseen
a few weeks before its occurrence, may be so far anticipated and exag-
gerated in its effects upon the market, that a very considerable rise of
prices may take place some time before the currency is depreciated at
all ; and then, owing to the reaction of disappointed hopes and fears,
the real depreciation, when it comes, may be contemporaneous wicli a
considerable fall in prices. Trade thus becomes a lottery, and legiti-
mate enterprises in commerce and manufactures must either be aban-
doned altogether, or kept up under a heavy cost of insurance against
the uncertainty of the returns. The enhancement of prices produced






MINORITY REPORT OF MR. BOWEN. J51



by such insurance takes place without any of that compensation to the
consumers, embracing- the whole laboring class in the community, which
arises from a corresponding increase in their income or wages.

In the opinion of the undersigned, to adopt silver for the standard
dollar, would bea greater discouragement to manufactures and trade, and
would do more harm to all the great industrial interests of the country,
than even thecontinuanceof the present wretched system of an inconverti-
ble paper currency. Not only during the last year has silver undergone
greater and more rapid fluctuations in price than paper, but the causes
of its fluctuation are more difficult to be discovered, and less controllable,
because wholly out of reach by legislation., By a very moderate and
gradual contraction of the legal-tender currency, it is certain that Con-
gress can prevent the paper dollar from sinking below its present value,
and, by afew other well-considered measures, can steadily raise its value
to par without spreading alarm, or creating any disturbance in the
markets, or perilling any interest but those of the stock-jobbers, even
before the time now fixed by law for the resumption of specie payments.
But in view of recent experience, who can tell what the price of silver
will be six months hence, or what legislative enactment can increase or
diminish that price a single penny? As well might a legislator attempt
by taking thought to add one cubit to his stature. Yet the only appar-
ent motive for urging the adoption of a silver standard in the United
States, at the very time when all Europe seems to be on the point of
discarding it, is the vain expectation that an act of Congress may have
the effect, in the stock-jobbers' phrase, of ItulUng the price of silver
throughout the markets of the world. Granted that such an act might
create a market for the silver which still remains to be sold by Germany
and other European countries, it certainly could not restrict the pro-
ductiveness of the mines in the Com stock lode, or restore to British
India and China their former power of absorbing the surplus silver of
the civilized portions of the globe. It would not be becoming for the
dignity, as it certainly would be prejudicial to the interests, of the
United States to engage in an operation equivalent to stock-jobbing, by
making heavy purchases on a falling market of a commodity generally
discredited elsewhere, in the idle hope of raising and controlling its price.
The benefits of such an operation, if any, would be reaped only by the
stockholders in silver mines, while the inconvenience and loss would
be sustained by the people.

There are special reasons why silver is less eligible than gold for the
chief place in a metallic currency. Its weight and bulk are too great
in proportion to its value, so that it is very inconvenient for use in large



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