VI

MONEY

Prepared and inserted in the Congressional Record on June 5, 1894, but for lack of time it was not delivered. The speech discusses paper money, the House having then under consideration a bill to suspend the 10 per cent. tax on state bank notes.

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R. SPEAKER: The members of the com

mittee, following a time-honored custom, have opened this discussion and have consumed all the time allowed for general debate. The House has indulged me so generously on former occasions that I shall not now claim much of its time. The question under discussion, however, is so important that I shall avail myself of the general leave given, to extend my remarks in the Record, in order that my constituents may know the reasons which lead me to the conclusion to be exprest by my vote. I shall oppose the bill reported by the committee because I am not willing to extend to a few banks a relief which is denied to other members of the community. The amendment offered by the gentleman from Tennessee [MR. Cox] to repeal the 10 per cent. tax on State bank notes opens up the whole subject of paper money, and I shall follow the examples set by others and discuss the matter somewhat elaborately. No subject can more vitally concern the people than this, for money is the lifeblood of commerce,

and the financial health of the whole Nation depends upon the kind and quantity in circulation.

"Money answereth all things," said Solomon nearly three thousand years ago, and the expression is as applicable to our time as it was to his. It is written that "the love of money is the root of all evil," and we know by observation that it is wellnigh omnipotent for weal or woe. It can bless like the gentle dews of Heaven, and it can cover a greater multitude of sins even than charity.

Some have denied that the States have a constitutional right to charter banks of issue, but I shall assume the existence of such a right.

Some have denied the constitutionality of the law imposing a tax upon State bank notes, but I shall accept as conclusive the decision of the Supreme Court of the United States, and assume that Congress has the power to impose a tax upon the notes issued by such banks, even though the law in effect prohibits the issue and circulation of such notes, and even tho some other means of restriction might be preferred. It has been stated that every Democrat is in duty bound to vote for the repeal of the State bank tax, because of the plank relating to that subject adopted by the last Democratic National convention. A platform can only bind those who run upon it.

President Cleveland is, of course, pledged to the repeal of the tax, because he accepted a nomination and an election upon the National Democratic platform of 1892. Those also are pledged to repeal whose nominating conventions indorsed the National platform, and those are perhaps bound, also,

who ran as Democrats without expressly repudiating that part of the National platform. In my own case, I was not only nominated before the adoption of the National platform by the Chicago convention, but I expressly repudiated in my canvass the plank which declared in favor of repealing the State bank tax.

In the Fifty-second Congress I voted against repealing this tax, and, as a candidate for reelection, promised my constituents that I would vote against it again if the question came before the Fifty-third Congress. If there is any person in my district who favors a revival of State bank currency, I am not aware of it. In recording my vote against a repeal of this tax I am expressing, therefore, the opinion of my constituents and carrying out my pledges, as well as recording my own best judgment. Some have urged the return to State bank currency on the ground that more money is needed, and that it can be supplied in no other way.

The argument comes with but little force from those who voted for, and now justify, the unconditional repeal of the Sherman act, because that law provided us with nearly fifty millions of legal tender money annually. Those who opposed unconditional repeal and who have consistently favored an increased supply of good money might justify their acceptance of a State bank currency as a last resort if they could show that the advantages brought by such a currency were greater than the dangers attendant upon it.

I shall attempt to show, first, that we should use as money all the gold and silver which will come

to our mints; and, second, that whatever paper money we need should be issued by the General Government.

"Money," as defined by Cirnuschi, "is a value created by law to be a scale of valuation and a valid tender for payment." Perhaps in a technical sense the term "money" should be applied only to those instruments of exchange which are endowed with legal tender qualities, but the term is used generally to cover not only coin and legal tender paper, but also notes and certificates which are intended to circulate from hand to hand like money.

There is a clear and well-defined difference between the promissory note of the individual or of the corporation and what is known as a bank note. The former travels only where the maker or indorser is known, and each person who receives the note investigates for himself as to the responsibility of those who are obligated to pay it. In the case of the latter, however, the person who receives the bank note accepts it on the faith of the law which charters the bank and regulates the amount of the notes and the manner in which they are secured.

The first principle to be considered in the study of money is that there is a close and intimate relation between the value of each dollar and the total number of dollars in circulation. John Stuart Mill says: "The value, or purchasing power, of money depends, in the first instance, on demand and supply. But demand and supply present themselves in a somewhat different shape from the demand and supply of other things.

Laveleye says: "The value of money, like that

a

of any other object, depends on the relation between supply and demand.”

Cirnuschi appeared before the United States Monetary Commission in 1877, and his testimony contained the following question and answer:

"Question. Supposing the gold and silver metals to have no other use than as money, would they then maintain the same value that they now maintain as money?"

"Answer. There would be a diminution of their purchasing power, because the purchasing power of money is in direct proportion to the volume of money now existing. If all the gold and silver are used solely as money, all the ornaments and all the jewelry will be melted and coined, and the volume of money will be increased. It will be exactly as if a new mine of money had been opened. And the volume of circulating money being made larger than before, there will be a corresponding diminution in the purchasing power of the metalic dollar.

While it cannot be said with mathematical accuracy that the value of each unit of money will increase in exactly the same proportion that the total number of units decreases, and vice versa, it can be asserted without fear of contradiction that under similar conditions an increase in the volume of the currency will decrease the value of the dollar as measured by other kinds of property, and that a decrease in the volume of currency will cause an increase in the purchasing power of the dollar. To illustrate this point, let us suppose the sudden discovery of a quantity of gold and silver equal to the present volume of metalic money. We have now about eight billions of gold and silver coin in the world, a little more than half of it being silver.

Every one understands that if the newly discov