Alphonso Taft.

Speeches on remonetization of silver and resumption online

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Sandusky, 0,, Thursday Evening, Sept, 13, '77.

FELLOW-CITIZENS If all laws prescribing the form and de-
nomination of coins, and giving to them the quality of legal
tender, were repealed, gold and silver would still be the practical
measures of value for the world, as they were before coinage
began, when "Abraham weighed to Ephron the silver," the price
paid for "the cave of Macphelah, " and as they are now in
China, where silver is the only currency, and passes by weight,
without regard to its formor coinage^y^Their indestructible and
lianCquafiHes, their convenient divisibility, their rareness for
other uses, and yet their sufficiency for a medium of exchange,
and the utter want of any other metal or material fitted for a
universal currency, have long since fixed their destiny, and
every attempt by legislation to prevent or defeat that destiny
has been a signal failure. Accumulated by the mining industry
of ages, they now exist as a reliable and constant measure of
the values of all other property in the world. Our ideas of
pecuniary values have originated in them their quantity, and
the cost of producing them. How poorly th

appreciates this^i^rtbaarsql blessing jvhich
fijsfied tp_ mankind ! The quantity of these metals that has been
made available^By the labor of man, in all past time, and which
now remains in use, amounts to not far from ten thousand mil-
lions of dollars, and is almost equally divided between gold and
silver. As coins they are durable. "Rust doth not corrupt


them." They are convenient, and every coin is a medal. Coins
have brought to our time important historical facts from remote
antiquity, and still have been continually used as a true and con-
venient measure of values. If the quantity of these precious
metals, at the present time, instead of being ten thousand
millions of dollars, had been but five thousand millions, the prices
of all property would have been less. Not that the precious
metals are equal in value to the total of all other forms of value,
nor that the reduction of their entire amount would necessarily
reduce the prices of all property in the exact proportion of that
reduction, but that prices do very largely depend upon the
quantity of the precious metals, and their distribution through-
out the world.

Uhese metals have a use, for which they seem to have been
nely^set apart. They perform the certain function of
measuring all the values of exchangeable property. If they
were more plenty they would be cheaper, and prices would be
higher, and if they were^ less plenty they would be dearer, and
Their increase in the world has kept pace

( with their consumption in the arts, their loss by friction, and the
increased demand by the growth of property interests incident
to the increase of the world's population and wealth.

I do not mean that, in the thousands of years during which
men have been at work in the mines, these metals have not
grown in quantity, as compared with other values, and the uses
to which they have been destined, and that, consequently, prices
have not grown ; but that growth has been so imperceptible as
to be detected only by the comparison of different centuries.

The supply of the precious metals, therefore, for each genera-
tion of people, is practically constant, and forms a just andper-
manent measure of value for all generations, and for all nations.
This is a matter of inestimable importance to the civilized world.
Prices have thus been formed in all time on this basis. Our
lands, our cattle and our merchandise are all measured by the
world's precious metals. These measures of value exist every-
where, and have always existed, and denote the values of all
kinds of property as truly as the weights upon one end of the
scale show us how heavy a body is that is balanced upon the
other. These ideas of value have been the growth of ages.
Although different natipnsJiaiEJnadejhese metals into different


coins, each putting upon them its peculiar stamp, still the ex-
changeable value_of_gach foreign coin is easily ascertained^and
practically \ the precious metals form one universal currency
measuring the valueslHroughout the civilized world. Whenever
any country or any part of a country attempts to do business on
some other currency of less value, prices rise, and we are con-
scious that these prices arc too high. ^We have a certain
instinctive sense of what prices ought to be, and that sense has
grown out of thjjjvelljgnown and uniform relation between the
precious metals and aU other values. So long as the nations ad-
here to this legitimate money, prices are maintained throughout
the world at nearly uniform rates, and exchanges of property
and international transactions are effected without material loss
or inconvenience. All or nearly all nations have originally
used what is properly denominated the double or optional
standard of value, regarding both metals as money at a ratio
between them which each country prescribes for itself. This
has been the general condition of the monetary world from the
beginning of history, and from before the beginning of civilza-
ion, to the present century. It prevailed in all the great empires
of antiquity, and has prevailed equally among Christian nations.
The ratio between the two metals has undergone some varia-
tions. The prevailing ratio in the Roman Empire was 13.33 to
I. But in some countries it has been greater or less than in
others, at the same time. The result has followed that each
metal has, for the time being, tended to the countries where it
was most highly valued, though it was lawful money everywhere.
In this state of things it was not very important whether both
gold and silver remained in every country, or whether one
country should have gold and another silver. The result was
the same, or nearly the same, as to the maintenance of uni-
formity in prices. Both metals were in full use as currency. If
one country accumulated too much of one metal, it would flow
off to where it could buy more property. The demonetization
of either of these metals that is, declaring by law that but one
shall be a legal tender in payment of debts has been of recent
origin, and has a very different effect, from the causing a metal
to leave the country by over valuing the other metal. In the
latter case the holder of the coin has an option to send his coin
to any country, and in using that option will select that where


the ratio is most favorable, if there is a difference. But in the
case of demonetization, one metal is absolutely excluded as
lawful money. But even this process of demonetization by a
single nation of a metal would not have much effect to depre-
ciate it, so long as it is recognized as money, and wanted by all,
or a large majority of other nations.

Gold and silver have, therefore, held their own with a nearly
constant ratio, till the present century.

In this connection it is well to consider how fortunate it is,
that so much has been done in time past in producing the
precious metals, and that the stock has become so large in the
world that they do not fluctuate, and can not be cornered. If
the precious metals were all to be remanded to their original
condition, and we were now to begin again to extract them from
the earth and coin them into money, our currency would neces-
sarily be inadequate and inconstant. A large yield in a partic-
ular year, a bonanza in California, or in some other part of the
earth, would cause a great and inconvenient change in prices.
A loss by accident of a quantity of coin would have a like effect,
and it would be easy for stock jobbers and speculators to corner
the money market. But the quantity is now so vast, and so
well distributed over the earth, that the irregularities of pro-
duction or of consumption have no appreciable effect. They
are like the waters of the ocean, which are distributed over the
face of the globe, but which, if by chance, or by some tem-
porary cause, they are heaped up in one place, will soon seek
their proper level, and if depressed in any one place, will soon
fill that place, from the fluid mass above, always tending to a
general level. So it is and must be with the distribution and
use of coin as a legitimate currency. -We can^not afford to ciiL
s off from this universal medium of the

Jender paper money; and if we have done so, for some tempo-
rary reason, as was our case in the war, the sooner we regain~our
old ^nETaTiori rn rV|e nriancial world, without unnecessary shock to-
be forbotrTtheput^

perity. On this subject the country has reason to expect from
the Republican party an honest and straightforward policy, ad-
vancing steadily and surely to specie payments, while the Dem-
cratic party and their platform afford to the country no such



Whether silver shall be re monetized, and on what terms, have
become questions of paramount importance to the country, in
view of the approaching resumption of specie payments. I am
decidedly iaJayorjof complete remonetization, and of the coin-
age of the silver dollar, containing as it has done since 1792,
37 l / g rams of pure_silver. This subject has been discussed by
many learned writers, philosophers, bankers, politicians and
orators of this and other countries. It is of national and of in-
ternational importance. It affects the convenience of exchanges
between different countries, and the relation between debtors
and creditors, whether individual or national. In reading an)H
author upon this subject, it is necessary to observe the stand- I
point of interest from which he writes, and the interest of the \
country to which he belongs.

It has been said that silver has become depreciated by over-
production. But the statement is groundless. The demand for
it has been suddenly and exceptionally dimished by demonetiza-
tion, and by suspensions of specie payments in countries having
silver as their specie standard.

In 1797, England, while engaged in the continental wars with
Napoleon, suspended specie payments. Up to that time she
had, like the rest of the world, used the double standard of gold
and silver. This suspension of specie payments continued
about twenty-five years. In ^816^ before any serious effort to
resume was made, and while neither metal was in actual
act_of_parliament was gat-Jiirough demonetizing silvej\
measure was__brought about by the aristocratic^wealth of

beneficial to what has-been called the

plutocracy, butwhen the_j^sjAmrj>tior^ in gold came, it was not
beneficial to ttie~English people. Nor can I suppose that, while
England stood alone in her exclusion of silver, her position se-
riously affected the value of that metal. It replaced in other
countries the gold which was absorbed by Great Britain, and was
as much in demand as before.

But in 1871 the German Empire, which prior to that time
had the single standard of silver, and which had just exacted
a thousand millions of dollars in gold from France, changed its
standard from silver to gold. In 1873, the United States


stopped coining the silver dollar (except the trade dollar for use
in Asia, which need not be particularly noticed here), and in
1874, took away its character of legal-tender for sums above
five dollars. This accomplished its demonetization. In 1876,
France, Italy, Belgium, Switzerland and Greece entered into
what they denominated the Latin Union, for limiting the coin-
age of silver- in their respective countries, to protect themselves
from the apprehended influx of silver from Germany. Mean-
time, Russia and Austria, whose specie standard is silver, are
under a suspension of specie payments,, furnishing* no market
for silver, and have even let go what they had. This action of
the leading commercial nations of the world accounts for the
present depreciation of silver.

_Mr. Ernest Seyd, in his recent work on "The Fall in the
Price of Silver," makes the distinction between nations that are
internationally rich and those that are internationally poor, by
which we are to understand that nations which are indebted to
other nations, or to the people of other nations, however rich in
their posessions, are internationally poor, and, on the contrary,
that those whose indebtedness is held at home, and the people
of which also hold the indebtedness of the Government and
people of other nations, are internationally rich. England, Ger-
many, France, Holland, Switzerland, with, perhaps, Denmark

i and Sweden, are creditors. Austria, Russia, Italy, the United
States, the British Colonies, Spain, Portugal, Turkey, with, per-
haps, the South American Republics, are debtors. England and

1 Germany may, perhaps, be regarded as the largest creditors.
The United States may, perhaps, be regarded as the largest
debtor, Her bonds and the indebtedness of her people are held
in vast amounts in England and in Germany. England holds
more than five thousand millions of foreign secureties, Germany
more than twenty-seven hundred millions, and France more than
twenty-five hundred millions, making an aggregate of more
than ten thousand millions, of which England and Germany
have more than eight thousand millions. When we realize that
the value taken from silver is added to gold, we can comprehend
the paramount interest of the creditor nations, at the present
time, in regard to the single and double standard.

Whatever enhances the value of the medium in which those
foreign securities are to be paid, increases the value of the


bonds, or other forms of credit in the hands of the creditor,
and adds to the burden of the obligation on the part of the
debtor. The same distinction exists between the interest of
the individual creditor and debtor at home. These differences
and opposing interests are never to be lost sight of, in the dis-
cussion of the currency which is to pay our debts at home, as
well as our debts abroad.

I have said that the ideas of the value of property de-
pended on the quantity of the precious metals. Silver has
contributed as much to the standard of value, as Gold. It
has contributed to the world's stock of coin nearly one-half;
for a large part of the history of the world more than one-half,
and at the present time it does not fall far below it. Although
a much larger amount of silver is used in the arts, yet, when
we take into consideration the vast population of Asia, who
use silver as their only currency, and the several countries of
Europe and South America that use silver as their only
standard, or the double standard of silver and gold, and the
estimated amount of silver coin existing in those countries, it
is clear that in the aggregate silver contributes nearly one-half
of the currency in circulation at the present time. The popu-
lation of the countries which have the silver standard alone is
much greater than of those that have the gold standard alone,
and, in fact, greater than both those that have the gold standard
alone and those that have the double standard ; including as
they do the most populous nations of Asia, and Austria and
Russia in Europe. But the United States are now ranking
among those that have the gold standard alone. France still
retains the double standard.


The following table is interesting, as showing how the silver
and gold have been distributed through the world:



Austria-Hungary 37,700,000

ostaRica ' 200,000

Argentine Republic 2,000,000

China 425,000,000

Columbia 3.000,000

Equador 1,000,000

Guatemala 1,200,000

Honduras 300,000

India 190,000,000

Mexico 9,300,000

Nicaragua 250,000

Peru , 2,700,000

Russia 86,500,000

San Salvador 600,000

Tripoli 1,000,000

Tunis 2,000,000

Total 762,750,000



Belgium 5,350,000

Bolivia 2,000,000

Algeria 2,500,000

France 36,100,000

Greece 1,500,000

Italy :..... 27,500,000

Netherlands 4,000,000

Spain 16,500,000

Switzerland 2,700,000

uba and Porto Rico 2,000,000

Total 100,150,000




Brazil 10,000,000

Australia 2,000,000

Canada and other British Colonies in North America

and the West Indies 5,000,000

'Chili 2,000,000

Denmark 2,000,000

Egypt 17,000,000

Oreat Britain JJ1, 000,000

Germany 42,700,000

Hawaiian Islands 100,000

Japan ^,000,000

Liberia 700,000

Norway 1,800,000

Portugal 4,300,000

Sweden 4,400,000

Turkey 28,000,000

United States 88,500,000

Total 22:',,100,000

Here, as will be seen, are twenty-six countries still using
-silver as a legal tender, and sixteen countries in which silver
has been demonetized.

Although it appears by this table that gold forms the currency
of some nations and silver of some, and some countries have
the double standard, yet, in a cosmopolitan sense, we may still
regard them as universal. The two supply the world with
money. The withdrawal, however, of any great commercial
country like the United States from the use of either metal
.affects its value. But the entire value of the total of both
metals remains constant. The prices of the world have, in fact
been based upon the quantities of both.

No man can say how much the value of gold or of silver
would be reduced if it were demonetized throughout the world;
but as both are used mainly as money, it is reasonable to
suppose that it would lose more than half its value. The
recent fall in the price of silver has not been caused by any
over-production of that metal. It is to be remembered that in
1873-4, when the legislation was enacted by Congress which
demonetized silver, it was worth more than gold by three per
cent., according to the legal ratio of sixteen to one existing
here between gold and silver. Since that time there has been


a fall in the price of silver. It has not been by the over-
production of silver, for the plain reason that the statistics of
the mining of these metals show that during each year since
silver was demonetized, the product of gold has been greater
in value than that of silver; and, in the second place, this very
fact of demonetization of silver on the part of the United
States, together with the change of the German Empire from
the silver to the gold standard, with the pressure on the part
of England to proselyte other nations to its policy of the single
standard of gold, account in the most satisfactory manner for
the depreciation of silver. If the whole civilized world should
demonetize one-half of its precious metals, the effect \vould be
to leave us in the same condition as if the entire currency of
the world were contracted to that extent. The demonetizing
of silver, or of gold would have substantially the same effect.
England, Germany and the United States are not the whole
world, and cannot drive silver from France or the Asiatic
nations; yet, by driving it out of their own realms, they can
depreciate it. It would remain money in other parts of the
world, but by withdrawing the markets of England, Germany
and the United States, the demand for it would be greatly re-
duced ; at the same time the demand for gold would be equally
increased. It was clearly an oversight when the United States
followed England and Germany into the demonetization of silver.
It was not the work of either party; it was an inadvertence.
But it was a plain contraction of the basis of our currency, and,
as we had immense debts to pay to England and to Germany,
we wanted all our legitimate currency to pay them with. Eng-
land and Germany, as we have seen, held enormous amounts of
our bonds, and bonds of other Nations, and were interested to
have the interest and principal paid in a medium as valuable as
possible. If, by the demonetization of silver, gold shall be
made more valuable as compared to property, their bonds will
be just so much more valuable to them, and will be just so
much harder for the United States to pay, if they shall submit
to the contraction of their own currency by excluding silver.
The amount they will gain by the decline which has been
already brought about through the demonetization of silver and
the appreciation of gold, is more than seven per cent, on the
whole amount, and will go on increasing, unless it shall be


resisted and checked. The United States was, and is under no
obligation to join in the crusade against silver. In 1873, it is
true, when the silver dollar was three per cent, more valuable
than the gold, Congress ceased to coin silver, and in 1874, by
the Revised Statutes, it limited its use as a legal tender to five
dollars. As our currency in circulation consisted, and still con-
sists of paper, the effect has been less in the past than it wil.
be in the future, if this state of things continues.

Of the power of Congress to restore silver to its old place
in the currency, I have no doubt. The American silver dollar,
as adopted in 1792, was the successor to the Spanish milled
dollar, which had been made a legal tender by act of Congress,
and was in general circulation. It contained the same -quan-
tity, viz: 371^ grains of pure silver, and it has remained the
same to this day, nothwithstanding the change made in the
gold dollar when, in 1834, the ratio of 1 6 to I was adopted in
place of 15 to i. The Funding Act of July 14, 1870, for the
purpose of retiring the five-twenty six per cent, bonds, pro-
vides for the issue of bonds bearing interest at five, four and
a half, and four per cent., to the aggregate amount of fifteen
hundred millions of dollars, which were made ''redeemable in
coin at tJie present standard value, bearing interest payable in
such coin." In the Resumption Act of 1875, the Secretary of
the Treasury was authorized "to issue, sell and dispose of, at
not less than par in coin, either of the description of bonds of
the United States described in the act of Congress approved
July 14, 1870." All the bonds of the United States, therefore,
whether under any of the acts of Congress prior to the fund-
ing act of 1870, or under that act, are redeemable in coin of
the standard value of July 14, 1870, of which the ancient silver
dollar was one. I find nothing in our legislation to prevent a
provision, by act of Congress, for coining the silver dollar,
to be a legal tender without limit. On the other hand, the re-
monetization of silver will not prevent us from paying our
bonds in gold. It is not necessary that I should say in this
discussion what discretion ought to be exercised by the Govern-
ment in the use of silver or gold coin in the payment of bonds
which may have been taken under assurances that they would
be redeemed in gold. Our government will, undoubtedly, act
in the highest good faith, and will not permit purchasers of


bonds to be deceived as to the medium in which they shall be

Congress could, by express enactment, provide for the issue
and sale of bonds payable in gold. But all that is material to
this discussion is the conclusion that there is no constitutional,
or legal, or moral objection to the provision by act of Congress
for the coining and putting into circulation the old silver dollar,
and making it an unlimited legal tender in payment of debts.

But aside from the question of constitutional power there is
nothing in the history of the country, nor even in the legisla-
tion of the country, that ought to create the expectation on the
part of the creditors, national or individual, that silver should
be permanently excluded from the currency of the United
States. All changes in the standard of values affect the rela-
tions between debtors and creditors, and should not be made
without clear and urgent reasons. They are sometimes una-
voidable. But how much more just would it be to restore
silver to its old place now, as we are about to enter upon the
resumption of specie payments, than it was three years ago, to
exclude it ? That was an incipient wrong, which has done more

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Online LibraryAlphonso TaftSpeeches on remonetization of silver and resumption → online text (page 1 of 4)