CHAPTER VI.

THE MONEY QUESTION-SOUND MONEY NECESSARY TO WAGE

EARNERS.

The people of the United States, after mature deliberation four years ago, decided that they wanted to continue the use of the gold standard of money because gold is the best and most unchangeable metallic money in the world, good wherever it goes, its intrinsic value equaling its coinage value, and current in all countries regardless of the stamp it bears.

The United States is on a gold basis. Gold is the standard of value. If there was any doubt of this before there can be none since the passage of the act of March 14, 1900. The title of this act is: "An act to define and fix the standard of value, to maintain the parity of all forms of money issued or coined in the United States, and for other purposes."

That act fixed by law the standard of value as gold. This was not, however, an act of Congress to create a new value or new duty for gold. It was simply the legal recognition of a commercial fact that had been undisputed for many years. Gold has been the measuring standard of value in this country, because gold has the same fixed value either as junk or money. Its value cannot be destroyed. Since it is the metal of least varying value the world over it has become the money standard of all commercial nations, including the United States. The law of March 14, 1900, did not change the standard in this country. It confirmed by law what had been the recognized fact in business transactions by men of all parties. The law was made necessary by the attacks upon our money and the credit of the government by the Democratic party in the campaign of 1896 when that party wrote into its platform: "We demand the free and unlimited coinage of both gold and silver at the present legal ratio of 16 to 1, without waiting for the aid or consent of any other nation."

This was a demand for what had never been, and it was as great an attack upon our credit as would be a demand for repudiation. It meant repudiation of a part of our national debt.

The United States government in its early history tried to maintain

the double standard, but for seventy-five years this has been a legal fiction. Gold has been the standard of value in all commercial and business transactions of the government and the people. Gold has been the money secured by issuing bonds by the government, and gold has been the standard in private contracts. It has maintained a fixed value which is the same the world over. An ounce of gold has the same value in Europe, Asia and America whether coined into money, kept in bars as it comes from the stamp mill, or sold as old gold from discarded jewelry. The stamp of the United States mint adds no value to the gold in the coin. There is not a country in the world where they have bimetallism, because it is impossible for one nation to maintain bimetallism alone. Monometallism is the universal rule. There are countries. with gold monometallism and other countries with silver monometallism. Those countries having the gold standard are our commercial rivals. Those having a silver standard are our commercial inferiors. We have nothing to fear from them, and nothing to gain by adopting their standard of monetary value any more than we have by adopting their standards of civilization and morality. The poorest paid labor in the world is in China and Mexico, where they have the silver standard.

When in 1792 Congress passed the first coinage act it made the dollar the unit of value, and it provided that the proportion of gold to silver should be as 15 to 1. Both metals were to be used, but Congress did not propose to make money but coin it for the holders of the precious metals. Coinage was free. It was soon after found that the two metals would not circulate together at this ratio. Silver had been overvalued and gold was worth more as bullion than as coin at the ratio provided by law. Silver alone went to the mints and gold was exported to Europe where it was more valuable than at home as money. There was bimetallism only in theory. In fact we had silver money. In 1834 and in 1837 Congress changed the ratio and made it 16 to 1, but this legal ratio did not conform to the commercial ratio. By these acts gold was overvalued at the mint and gold went to the mint while silver was attracted to Europe by a French ratio which declared that one ounce of gold was only worth 15 ounces of silver. The difference of half an ounce kept silver from going to the United States mint. These acts of 1834 and 1837 demonetized silver as the act of 1792 had demonetized gold. The demonetization of silver was accomplished under the administrations of Jackson and Van Buren, both Democrats. The country was placed on

a gold basis. Financial writers of reputation have held that the country has been on the gold basis ever since that time.

The "crime of 1873" was therefore committed forty years before that date-in 1834, during the administration of Andrew Jackson, one of the patron saints of the Democracy. That act of 1834 provided that the eagle should contain 232 grains of pure gold instead of 247 grains as under the act of 1792, and in this way it fixed the ratio of 16 to 1, which Democrats still claim is the legal ratio. But in fixing this ratio between gold and silver in 1834 Congress, as has been said, overvalued gold, making it more valuable at the mint than in the commercial market, and demonetized silver by making it less valuable at the mint than in Europe, driving it from the mint. Sixteen ounces of silver were worth more in the markets of the world than one ounce of gold, and consequently the owner of silver bullion preferred to sell it rather than take it to the mint and coin it. The effect was to drive silver out of circulation and bring back gold. The two metals would not circulate together at the ratio of 16 to 1. It was an illustration of the correctness of the Gresham law 200 years old, that when two pieces of metallic money of the same denomination and the same nominal or mint value, but of different intrinsic or market values, are in circulation, the one of least intrinsic value will continue to circulate while the other will be withdrawn, and being of greater market value, will be melted, hoarded or exported. The experience of history is that men will pay out the piece of money of least value and keep that which is of greater value.

In his report to the Secretary of the Treasury for 1876, Comptroller Knox, in speaking of the effect of this act on silver, said: "The act of June 28, 1834, which reduced the gold standard about six and one-fourth per cent., practically demonetized the silver coinage. Previous to the date of the passage of that act American gold and silver coins of all denominations were equally a legal tender, and the silver coins of less denomination than one dollar were chiefly in use, only $1,369,517 in sil ver dollars having been issued from the mint at that date. The Act of 1834 overvalued the gold coinage, driving from the country the fullweight silver coins previously in circulation; and it may be confidently stated that from 1834 to 1873 no silver dollar pieces have been presented at any custom-house in payment of duties.”

The act of 1837 reduced the weight of the silver dollar to 412 grains

by reducing the amount of alloy. It did not change the weight of the silver in the dollar. It did not bring silver to the mint.

In his report in 1851 Thomas Corwin, Secretary of the Treasury, called attention to the inequality of the metals at the existing ratio.

He said: "The relation of gold to silver in the legal coinage of the United States is as 1 to 15.988; in Great Britain, as 1 to 14.288; and in France, as 1 to 15.499. Thus it will be seen that one ounce of pure gold will, in the United States, be equal to that produced from the coinage of 15.988 ounces of pure silver; in Great Britain, it will be equal to that derived from only 14.288 ounces pure silver; and in France, to 15.499 ounces. So soon, therefore, as the state of our foreign commerce, as is now the case, requires an exportation of specie, it is obvious that our silver coin must be exported whilst it can be procured, till the demand for exportation is supplied."

The result of the secretary's recommendations was the passage of the act of 1853. It reduced the weight of the half-dollar to 192 grains, and the quarter-dollar, dime and half-dime, in proportion, but it made no mention of the silver dollar. This act also provided that "No deposits for coinage into half-dollar, quarter-dollar, dime and half-dime shall hereafter be received, other than those made by the treasurer of the mint as herein authorized, and upon account of the United States." It did not provide for free coinage of silver. This coinage was on account of the government not the holder of silver. These subsidiary silver coins were limited in their legal tender power to five dollars. It did not remonetize silver. And Mr. Dunham, chairman of the Committee on Ways and Means, said in the debate:

"We propose, so far as these coins are concerned, to make silver subservient to the gold coin of the country. We intend to do what the best writers on political economy have approved; what experience, where the experiment has been tried, has demonstrated to be the best, and what the committee believe to be necessary and proper-to make but one standard of currency, and to make all others subservient to it. We mean to make the gold standard coin, and to make these new silver coins applicable and convenient, not for large, but for small transactions."

The next coinage act was that of 1873-"the crime of 1873," as Mr. Bryan calls it. It did not change the position of silver. It did not change the amount of silver in the half-dollar, quarter and dime. It did not pro

vide for the coinage of the dollar of 412 grains because that piece had gone out of existence 40 years before. It did provide for a trade dollar of 420 grains of silver for the benefit of the people of California in their trade with China, which has the silver standard. It did not change the amount of gold in the Eagle, but it fixed the standard weight of the dollar at 25 8-10 grains and made it the unit of value. The Act of 1873, therefore, did no more than write into the law what had been in practical operation for forty years, and had been ignored in previous laws. It dropped the silver dollar which had not been coined since 1835, and limited the coinage of silver, except for trade dollars, to the pleasure of the government as did the act of 1853. It is hardly creditable to a great political party seeking the responsibility of directing the government that it should try to make the American people regard this act as a great moral crime. One-half the metallic money was not destroyed by that act for it had never had any existence. The act of 1873 did not demonetize silver. Silver had been demonetized forty years before in the administration of Andrew Jackson. There was no inore demand for the coinage of the silver dollar in 1873 than there had been from 1835 to that time. Silver was still more valuable in the market than at the mint in 1873 and the holder of silver bullion had no object in having it coined. The average value of the 3714 grains of silver which went into a silver dollar was 1:004 in 1873, and there had not been a time since 1835 when it was not more valuable than gold at the ratio of 16 to 1. The silver men did not begin to complain of the "crime of '73" until several years later when the enormous output of the silver mines sent silver down in the market and 16 ounces of silver were less valuable than one ounce of gold. This fall in the price of silver began in 1874 when the average price of the silver necessary to make a silver dollar was 98.8, or one and two-tenths cents less than a dollar. The price of silver has continued to fall, until to-day it is worth less than one-half what it would represent if coined into dollars, and the silver owner would have profited by free coinage in every year since the passage of the act of 1873. Considering the weakness of human nature it is easy to see why the silver owners demand the free and unlimited coinage of silver at the ratio of 16 to 1.

By the acts of 1875 and 1876 Congress authorized the issuance of silver coins of fractional denominations with which to redeem the frac tional paper currency. This issue was limited to $50,000,000. The act