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in form; instead of silver dollars and silver certificates we are to have treasury notes, redeemable at the government's option in gold or in silver coin, which notes are made legal tender for debts. But under the act of 1878 the silver dollars were a legal tender, and the silver certificates were practically so. Both, moreover, were practically redeemable either in gold or in silver; directly of course in silver, and indirectly, but none the less effectually, in gold. This indirect redemption arose because the government was always willing to accept the certificates and dollars freely in payment of all public dues; while, on the other hand, it was always willing and able to pay each one of its creditors gold, if he wanted it. The effect of the double willingness was to keep the silver currency always equal in value to gold, and the new legislation does no more than to simplify matters by making the treasury notes redeemable in gold or silver coin directly. It is safe to say even without the express declaration, wedged into the act, that it is "the established policy of the United States to maintain the two metals on a parity on the present legal ratio" - that every administration, in the future as in the past, will wish to keep the notes equal to gold, and will redeem them in gold whenever that metal is demanded. The only important change, therefore, from the act of 1878, is as to amount. In both measures the annual increment of new silver currency is determined in a cumbrous way, depending on the price of silver bullion. The outcome under the old act was an annual issue of about thirty millions of dollars; under the new one it will be between fifty and sixty millions - for several years probably nearer sixty millions than fifty. . . .

Twenty millions a year, perhaps thirty millions, will find use in the increase of retail transactions arising from the general growth of the community. There is an inevitable elasticity about this item. In any one year, more or less may be absorbed. Present indications point to the use, for the first year or two, of rather more than twenty millions. Then there is the gap left by retired bank notes, where again the count must be uncertain . . . but, on the whole, some temporary aid in finding a lodgment for the new notes in the retail currency will doubtless be found in this direction. Between general growth and retired bank notes, so large a part of the new notes will probably find their way into general circulation for retail transactions that the government will be able to hoard any unused excess without great financial embarrassment. Barring unexpected revulsions in foreign and domestic trade, we may therefore expect that the new silver currency will be issued at the start as

smoothly and with as little immediate effect as that of the past. Those who expect any prompt effect on prices, on bank operations, or on government finances, are likely to be disappointed.

Next, as to the more ultimate effects, assuming that there will be no fresh legislation by Congress on the bank-note, silver, or greenback issues. We shall reach after a year or two the stage when more notes will be put out than can find a place in the old way. It is almost certain that sixty millions of new notes of the smaller denominations cannot be got into circulation every year. Of course it is possible that the government then will simply hoard the excess, as it did at an earlier period already referred to the years 1885 and 1886. A continued surplus of income over expenditure might enable it, if it chose, to maintain such a policy for a long time — to buy the silver, and simply to hoard so many of the notes as did not readily find their way into circulation or came back into its hands. But this escape from the difficulties of the situation is not likely to be resorted to, except as a makeshift to tide over a temporary emergency, or one expected to be temporary. In the end, the treasury will doubtless have to pay out the notes, whether they find a ready circulation or not. Then, at last, it may be said, we shall have a forced issue of new currency, and surely a period of inflation, with all its intoxicating and demoralizing effects.

No doubt the inflation must come, but the how and when are not so clear. The reader's attention must again be called to the importance of banking operations, and to the consequences which flow from the fact that all large payments are made by checks resting on bank deposits. No issue of government notes, large or small, can greatly affect prices, unless it affects the volume of bank deposits and that of the payments made through them. It would be wearisome, and indeed - since the precise turn which events may take is quite uncertain - hardly profitable, to speculate on the various possibilities of a future several years distant; but it may illustrate what I have said of the part which bank operations must play in any process of inflation, if I indicate the working of the silver notes under two simple and very possible sets of conditions. First, the notes may be issued at one of the ordinary periods of depression and business inactivity. At such times the banks have plenty of cash in their vaults; they find it difficult to induce business men to increase their credits and deposits; the industrial current is sluggish and is not easily moved by a fresh inflow. The notes which the government would pay out to bullion-sellers, or to other creditors, would accumulate

in bank vaults, and thence more and more of them would flow back into the treasury. A larger and larger proportion of the government's revenue would be received in these treasury notes. Meanwhile, gold would be paid out to such as called for it, and, the bank reserves being already over-full, the gold would tend to flow out in foreign payments; the more so because at such times securities, which form ordinarily a considerable part of our resources for foreign payments, would be difficult to sell abroad. By a process of this sort, the treasury might be drained of its gold, and even brought to a suspension of gold payments, while yet the note issues which had brought this about had had no effect on prices. Eventually, no doubt, the continuance of these issues would lead to a movement toward inflation; but only when, in the time of activity which usually follows in due course the time of depression, the banks, and still more the business community, were in a humor to respond.

F. W. Taussig, The Working of the New Silver Act, in Forum, October, 1890 (New York), X, 165-171 passim.

171. Defence of Silver (1896)


Bryan entered Congress from Nebraska in 1891, and soon became noted for his advocacy of a bimetallic standard. His speech before the Democratic national convention in 1896, from which this extract is taken, was instrumental in securing for him the nomination for president by that convention. Both during that year and in 1900, when he was again candidate for the presidency, his name was considered as inseparably connected with the free-silver policy. -For Bryan, see W. J. Bryan, The First Battle. - Bibliography as in No. 168 above.


'HEN you (turning to the gold delegates) come before us and tell us that we are about to disturb your business interests, we reply that you have disturbed our business interests by your course.

We say to you that you have made the definition of a business man too limited in its application. The man who is employed for wages is as much a business man as his employer; the attorney in a country town is as much a business man as the corporation counsel in a great metropolis; the merchant at the cross-roads store is as much a business man as the rchant of New York; the farmer who goes forth in the morning and day—who begins in the ring and toils all summer- and who plication of brain to the natural resources of the

country creates wealth, is as much a business man as the man who goes upon the board of trade and bets upon the price of grain; the miners who go down a thousand feet into the earth, or climb two thousand feet upon the cliffs, and bring forth from their hiding places the precious metals to be poured into the channels of trade are as much business men as the few financial magnates who, in a back room, corner the money of the world. We come to speak for this broader class of business men.

. . . We do not come as aggressors. Our war is not a war of conquest; we are fighting in the defense of our homes, our families, and . posterity. We have petitioned, and our petitions have been scorned; we have entreated, and our entreaties have been disregarded; we have begged, and they have mocked when our calamity came. We beg no longer; we entreat no more; we petition no more. We defy them. .

Let me call your attention to two or three important things. The gentleman from New York says that he will propose an amendment to the platform providing that the proposed change in our monetary system shall not affect contracts already made. Let me remind you that there is no intention of affecting those contracts which according to present laws are made payable in gold; but if he means to say that we cannot change our monetary system without protecting those who have loaned money before the change was made, I desire to ask him where, in law or in morals, he can find justification for not protecting the debtors when the act of 1873 was passed, if he now insists that we must protect the creditors.

If they

And now, my friends, let me come to the paramount issue. ask us why it is that we say more on the money question than we say upon the tariff question, I reply that, if protection has slain its thousands, the gold standard has slain its tens of thousands. If they ask us why we do not embody in our platform all the things that we believe in, we reply that when we have restored the money of the Constitution all other necessary reforms will be possible; but that until this is done there is no other reform that can be accomplished.


Mr. Carlisle said in 1878 that this was a struggle between "the idle holders of idle capital" and "the struggling masses, who produce the wealth and pay the taxes of the country;" and, my friends, the question we are to decide is: Upon which side will the Democratic party fight; upon the side of "the idle holders of idle capital" or upon the side of "the struggling masses?" That is the question which the party must answer first, and then it must be answered by each individual hereafter.

The sympathies of the Democratic party, as shown by the platform, are on the side of the struggling masses who have ever been the foundation of the Democratic party. There are two ideas of government. There are those who believe that, if you will only legislate to make the well-todo prosperous, their prosperity will leak through on those below. The Democratic idea, however, has been that if you legislate to make the masses prosperous, their prosperity will find its way up through every class which rests upon them.

You come to us and tell us that the great cities are in favor of the gold standard; we reply that the great cities rest upon our broad and fertile prairies. Burn down your cities and leave our farms, and your cities will spring up again as if by magic; but destroy our farms and the grass will grow in the streets of every city in the country.

My friends, we declare that this nation is able to legislate for its own people on every question, without waiting for the aid or consent of any other nation on earth; and upon that issue we expect to carry every State in the Union. I shall not slander the inhabitants of the fair State of Massachusetts nor the inhabitants of the State of New York by saying that, when they are confronted with the proposition, they will declare that this nation is not able to attend to its own business. It is the issue of 1776 over again. Our ancestors, when but three millions in number, had the courage to declare their political independence of every other nation; shall we, their descendants, when we have grown to seventy millions, declare that we are less independent than our forefathers? No, my friends, that will never be the verdict of our people. Therefore, we care not upon what lines the battle is fought. If they say bimetallism is good, but that we cannot have it until other nations help us, we reply that, instead of having a gold standard because England has, we will restore bimetallism, and then let England have bimetallism because the United States has it. If they dare to come out in the open field and defend the gold standard as a good thing, we will fight them to the uttermost. Having behind us the producing masses of this nation and the world, supported by the commercial interests, the laboring interests, and the toilers everywhere, we will answer their demand for a gold standard by saying to them: You shall not press down upon the brow of labor this crown of thorns, you shall not crucify mankind upon a cross of gold.

William J. Bryan, The First Battle: A Story of the Campaign of 1896 (Chicago, [1896]), 200-206 passim.

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