American Eloquence, Volume IV. (of 4) by Various

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If experience is needed to prove so plain an axiom we have it in our own
history. At the beginning of our National Government we fixed the value
of gold and silver as 1 to 15. Gold was undervalued and fled the country
to where an ounce of gold was worth 151 ounces of silver. Congress, in
1834, endeavored to rectify this by making the ratio 1 to 16, but by
this silver was undervalued. Sixteen ounces of silver were worth more
than 1 ounce of gold, and silver disappeared. Congress, in 1853, adopted
another expedient to secure the value of both metals as money. By
this expedient gold is the standard and silver the subsidiary coin,
containing confessedly silver of less value in the market than the gold
coin, but maintained at the parity of gold coin by the Government.

* * * * *

But it is said that those of us who demand the gold standard, or
paper money always equal to gold, are the representatives of capital,
money-changers, bondholders, Shylocks, who want to grind and oppress the
people. This kind of argument I hoped would never find its way into the
Senate Chamber. It is the cry of the demagogue, without the slightest
foundation. All these classes can take care of themselves. They are the
men who make their profits out of the depreciation of money. They can
mark up the price of their property to meet changing standards. They can
protect themselves by gold contracts. In proportion to their wealth
they have less money on hand than any other class. They have already
protected themselves to a great extent by converting the great body of
the securities in which they deal into gold bonds, and they hold the
gold of the country, which you cannot change in value. They are not, as
a rule, the creditors of the country.

The great creditors are savings-banks, insurance companies, widows and
orphans, and provident farmers, and business men on a small scale. The
great operators are the great borrowers and owe more than is due them.
Their credit is their capital and they need not have even money enough
to pay their rent.

But how will this change affect the great mass of our fellow-citizens
who depend upon their daily labor? A dollar to them means so much food,
clothing, and rent. If you cheapen the dollar it will buy less of
these. You may say they will get more dollars for their labor, but all
experience shows that labor and land are the last to feel the change in
monetary standards, and the same resistance will be made to an advance
of wages on the silver standard as on the gold standard, and when the
advance is won it will be found that the purchasing power of the new
dollar is less than the old. No principle of political economy is better
established than that the producing classes are the first to suffer and
the last to gain by monetary changes.

I might apply this argument to the farmer, the merchant, the
professional man, and to all classes except the speculator or the
debtor who wishes to lessen the burden of his obligations; but it is not
necessary.

It is sometimes said that all this is a false alarm, that our demand
for silver will absorb all that will be offered and bring it to par with
gold at the old ratio. I have no faith in such a miracle. If they really
thought so, many would lose their interest in the question. What they
want is a cheaper dollar that would pay debts easier. Others do not
want either silver or gold, but want numbers, numerals, the fruit of
the printing-press, to be fixed every year by Congress as we do an
appropriation bill.

Now, sir, I am willing to do all I can with safety even to taking great
risks to increase the value of silver to gold at the old ratio, and
to supply paper substitutes for both for circulation, but there is
one immutable, unchangeable, ever-existing condition, that the paper
substitute must always have the same purchasing power as gold and
silver coin, maintained at their legal ratio with each other. I feel a
conviction, as strong as the human mind can have, that the free coinage
of silver now by the United States will be a grave mistake and a
misfortune to all classes and conditions of our fellow-citizens. I
also have a hope and belief, but far from a certainty, that the measure
proposed for the purchase of silver bullion to a limited amount, and the
issue of Treasury notes for it, will bring silver and gold to the old
ratio, and will lead to an agreement with other commercial nations to
maintain the free coinage of both metals.

And now, sir, I want to state in conclusion, without any purpose to
bind myself to detail, that I will vote for any measure that will, in
my judgment, secure a genuine bimetallic standard--one that will
not demonetize gold or cause it to be hoarded or exported, but will
establish both silver and gold as common standards and maintain them at
a fixed ratio, not only in the United States but among all the nations
of the world. The principles adopted by the Acts of 1853 and 1875 have
been sustained by experience and should be adhered to. In pursuance of
them I would receive into the Treasury of the United States all the
gold and silver produced in our country at their market value, not at
a speculative or forced value, but at their value in the markets of the
world. And for the convenience of our people I would represent them by
Treasury notes to an amount not exceeding their cost. I would confer
upon these notes all the use, qualities, and attributes that we can
confer within our constitutional power, and support and maintain them
as money by coining the silver and gold as needed upon the present legal
ratios, and by a pledge of all the revenues of the Government and all
the wealth and credit of the United States.

And I would proclaim to all our readiness, by international negotiations
or treaties, to bring about an agreement among nations for common units
of value and of weights and measures for all the productions of the
world.

This hope of philosophers and statesmen is now nearer realization than
ever before. If we could contribute to this result it would tend to
promote commerce and intercourse, trade and travel, peace and harmony
among nations. It would be in line with the civilization of our age.
It is by such measures statesmen may keep pace with the marvellous
inventions, improvements, and discoveries which have quadrupled the
capacity of man for production, made lightning subservient to his will,
revealed to him new agencies of power hidden in the earth, and opened
up to his enterprise all the dark places of the world. The people of
the United States boast that they have done their full share in all this
development; that they have grown in population, wealth, and strength;
that they are the richest of nations, with untarnished credit, a model
and example of self-government without kings or princes or lords. Surely
this is no time for a radical change of public policy which seems to
have no motive except to reduce the burden of obligations freely taken,
a change likely to impair our public credit and produce disorder and
confusion in all monetary transactions. Others may see reasons for this
change, but I prefer to stand by the standards of value that come to us
with the approval and sanction of every party that has administered the
Government since its beginning.

JOHN P. JONES,

OF NEVADA. (BORN 1830.)

ON TREASURY NOTES AND SILVER,

IN THE SENATE OF THE UNITED STATES, MAY 12, 1890.

MR. PRESIDENT, the question now about to be discussed by this body is
in my judgment the most important that has attracted the attention of
Congress or the country since the formation of the Constitution. It
affects every interest, great and small, from the slightest concern of
the individual to the largest and most comprehensive interest of the
nation.

The measure under consideration was reported by me from the Committee on
Finance. It is hardly necessary for me to say, however, that it does not
fully reflect my individual views regarding the relation which silver
should bear to the monetary circulation of the country or of the world.
I am, at all times and in all places, a firm and unwavering advocate of
the free and unlimited coinage of silver, not merely for the reason that
silver is as ancient and honorable a money metal as gold, and equally
well adapted for the money use, but for the further reason that, looking
at the annual yield from the mines, the entire supply that can come to
the mints will at no time be more than is needed to maintain at a
steady level the prices of commodities among a constantly increasing
population.

* * * * *

History gives evidence of no more prolific source of human misery than a
persistent and long continued fall in the general range of prices.
But, although exercising so pernicious an influence, it is not itself a
cause, but an effect.

When a fall of prices is found operating, not on one article or class of
articles alone, but on the products of all industries; when found to
be not confined to any one climate, country, or race of people, but to
diffuse itself over the civilized world; when it is found not to be a
characteristic of any one year, but to go on progressively for a series
of years, it becomes manifest that it does not and can not arise from
local, temporary, or subordinate causes, but must have its genesis and
development in some principle of universal application.

What, then, is it that produces a general decline of prices in any
country? It is produced by a shrinkage in the volume of money relatively
to population and business, which has never yet failed to cause an
increase in the value of the money unit, and a consequent decrease in
the price of the commodities for which such unit is exchanged. If the
volume of money in circulation be made to bear a direct and steady ratio
to population and business, prices will be maintained at a steady level,
and, what is of supreme importance, money will be kept of unchanging
value. With an advancing civilization, in which a large volume of
business is conducted on a basis of credit extending over long periods,
it is of the uttermost importance that money, which is the measure of
all equities, should be kept unchanging in value through time.

A reduction in the volume of money relatively to population and
business, or, (to state the proposition in another form) a volume which
remains stationary while population and business are increasing, has the
effect of increasing the value of each unit of money, by increasing its
purchasing power.

* * * * *

We have 22,000,000 workmen in this country. In order that they may be
kept uninterruptedly employed it is absolutely necessary that business
contracts and obligations be made long in advance. Accordingly, we read
almost daily of the inception of industrial undertakings requiring years
to fulfil. It is not too much to say that the suspension for one season
of the making of time-contracts would close the factories, furnaces, and
machine-shops of all civilized countries.

The natural concomitant of such a system of industry is the elaborate
system of debt and credit which has grown up with it, and is
indispensable to it. Any serious enhancement in the value of the unit of
money between the time of making a contract or incurring a debt and the
date of fulfilment or maturity always works hardship and frequently ruin
to the contractor or debtor.

Three fourths of the business enterprises of this country are conducted
on borrowed capital. Three fourths of the homes and farms that stand in
the name of the actual occupants have been bought on time, and a very
large proportion of them are mortgaged for the payment of some part of
the purchase money.

Under the operation of a shrinkage in the volume of money this enormous
mass of borrowers, at the maturity of their respective debts, though
nominally paying no more than the amount borrowed, with interest, are,
in reality, in the amount of the principal alone, returning a percentage
of value greater than they received--more than in equity they contracted
to pay, and oftentimes more, in substance, than they profited by the
loan. To the man of business this percentage in many cases constitutes
the difference between success and failure. Thus a shrinkage in the
volume of money is the prolific source of bankruptcy and ruin. It is the
canker that, unperceived and unsuspected, is eating out the prosperity
of our people. By reason of the almost universal inattention to the
nature and functions of money this evil is permitted, unobserved, to
work widespread ruin and disaster. So subtle is it in its operations
that it eludes the vigilance of the most acute. It baffles all foresight
and calculation; it sets at naught all industry, all energy, all
enterprise.

* * * * *

The advocates of the single gold standard deem even silver money much
better money than greenbacks. Does it then follow that when greenbacks
were our only money--good enough money to carry our nation through the
greatest war in all history--we were "along-side" or underneath the
barbarous nations of the world? It is not the form or material of a
nation's money that fixes its status relatively to other nations. That
is accomplished by the vitality, the energy, the intellectuality and
effective force of its people. The United States can never be placed
"alongside" any barbarous nation, except by compelling our people to
compete with barbarous peoples--compelling them to sell the products of
American labor at prices regulated by the cost of labor and manner of
living in barbarous countries. As well might it be said that we are
alongside the barbarous people of India because we continue to produce
wheat and cotton.

The distinguishing feature of all barbarous nations is the squalor of
their working classes. The reward of their hard toil is barely enough
to maintain animal existence. A civilized people are placed alongside
a barbarous one when, in their means of livelihood, the foundation of
their civilization, they are made to compete with the barbarians. That
was the result accomplished for the farmers and planters of the United
States when silver was demonetized.

* * * * *

It is a remarkable circumstance, Mr. President, that throughout the
entire range of economic discussion in gold-standard circles, it seems
to be taken for granted that a change in the value of the money unit is
a matter of no significance, and imports no mischief to society, so long
as the change is in one direction. Who has ever heard from an Eastern
journal any complaint against a contraction of our money volume; any
admonition that in a shrinking volume of money lurk evils of the utmost
magnitude? On the other hand, we have been treated to lengthy homilies
on the evils of "inflation," whenever the slightest prospect presented
itself to a decrease in the value of money--not with the view of giving
the debtor an advantage over the lender of money, but of preventing the
unconscionable injustice of a further increasing value in the dollars
which the debtor contracted to pay. Loud and re-sounding protests have
been entered against the "dishonesty" of making payments in "depreciated
dollars." The debtors are characterized as dishonest for desiring to
keep money at a steady and unwavering value. If that object could be
secured, it would undoubtedly be to the interest of the debtor, and
could not possibly work any injustice to the creditor. It would simply
assure to both debtor and creditor the exact measure for which they
bargained. It would enable the debtor to pay his debt with exactly the
amount of sacrifice to which, on the making of the debt, he undertook to
submit, in order to pay it.

In all discussions of the subject the creditors attempt to brush aside
the equities involved by sneering at the debtors. But, Mr. President,
debt is the distinguishing characteristic of modern society. It is
through debt that the marvellous developments of the nineteenth-century
civilization have been effected. Who are the debtors in this country?
Who are the borrowers of money? The men of enterprise, of energy, of
skill, the men of industry, of fore-sight, of calculation, of daring.
In the ranks of the debtors will be found a large preponderance of the
constructive energy of every country. The debtors are the upbuilders of
the national wealth and prosperity; they are the men of initiative, the
men who conceive plans and set on foot enterprises. They are those who
by borrowing money enrich the community. They are the dynamic force
among the people. They are the busy, restless, moving throng whom you
find in all walks of life in this country--the active, the vigorous, the
strong, the undaunted.

These men are sustained in their efforts by the hope and belief that
their labors will be crowned with success. Destroy that hope and you
take away from society the most powerful of all the incentives to
material development; you place in the pathway of progress an obstacle
which it is impossible to surmount.

The men of whom I have spoken are undoubtedly the first who are likely
to be affected by a shrinkage in the volume of money.

The highest prosperity of a nation is attained only when all its people
are employed in avocations suited to their individual aptitudes, and
when a just money system insures an equitable distribution of the
products of their industry. With our present complex civilization, in
order that men may have constant employment, it is indispensable that
work be planned and undertakings projected years in advance. Without
an intelligent forecast of enterprises large numbers of workmen must
periodically be relegated to idleness. Enterprises that take years to
complete must be contracted for in advance, and payments provided for.

A constant but unperceived rise in the value of the dollar with which
those payments must be made, baffles all plans, thwarts all calculation,
and destroys all equities between debtor and creditor. If we cannot
intelligently regulate our money volume so as to maintain unchanging
the value of the money unit, if we cannot preserve our people from the
blighting effects which an increase in the measuring power of the
money unit entails upon all industry, to what purpose is our boasted
civilization?

By the increase of that measuring power all hopes are disappointed, all
purposes baffled, all efforts thwarted, all calculations defied. This
subtle enlargement in the measuring power of the unit of money (the
dollar) affects every class of the working community. Like a poisonous
drug in the human body, it permeates every vein, every artery, every
fibre and filament of the industrial structure. The debtor is fighting
for his life against an enemy he does not see, against an influence
he does not understand. For, while his calculations were well and
intelligently made, and the amount of his debts and the terms of his
contracts remain the same, the weight of all his obligations has been
increased by an insidious increase in the value of the money unit.

* * * * *

In an ancient village there once stood a gold clock, which, ever since
the invention of clocks, had been the measure of time for the people
of that village. They were proud of its beauty, its workmanship, its
musical stroke, and the unfailing regularity with which it heralded the
passing hours. This clock had been endeared to all the inhabitants of
the village by the hallowed associations with which it was identified.
Generation after generation it had called the children from far and wide
to attend the village school; its fresh morning peal had set the honest
villagers to labor; its noonday notes had called them to refreshment;
its welcome evening chime had summoned them to rest.

From time immemorial, on all festive occasions, it had rung out its
merry tones to assemble the young people on the green; and on the
Sabbath it had advertised to all the countryside the hour of worship in
the village church. So perfect was its mechanism that it never needed
repair. So proud were the people of this wonderful clock that it became
the standard for all the country round about, and the time which it kept
came to be known as the gold standard of time, which was universally
admitted to be correct and unchanging.

In the course of time there wandered that way a queer character,
a clock-maker, who being fully instructed in the inner workings of
time-tellers, and not having inherited the traditions of that village,
did not regard this clock with the veneration accorded to it by the
natives. To their astonishment he denied that there was really any
such thing as a gold standard of time; and in order to prove that the
material, gold, did not monopolize all the qualities characteristic of
clocks, he placed alongside the gold clock, another clock, of silver,
and set both clocks at 12 noon. For a long time the clocks ran along
in almost perfect accord, their only disagreement being that of an
occasional second or two, and even that disagreement only at rare
intervals, such as might naturally occur with the best of clocks. But
the Council of the village, in their admiration for the gold clock,
passed an ordinance requiring that all the weights (the motive power) of
the silver clock, except one, be removed from it, and attached to those
of the gold clock. Instantly the clocks began to fall apart, and one
day, as the sun was passing the meridian, the hands of the gold clock
were observed to indicate the hour of 1, while those of the silver clock
indicated 12.15. At this everybody in the village ridiculed the
silver clock, derided the silver standard, and hurled epithets at the
individual who had had the temerity to doubt the infallibility of the
gold standard.

Finally, the divergence between the clocks went so far that it was noon
by the gold standard when it was only 6 A.M. by the silver standard, so
that those who were guided by the gold standard, notwithstanding that it
was yet the gray of the morning, insisted on eating their mid-day meal,
because the gold standard indicated that it must be noon. And when
the sun was high in the heavens, and its light was shining warm and
refulgent on the dusty streets of the village, those who observed the
gold standard had already eaten supper and were preparing for bed.

But this state of things could not last. It was clear that the
difference between the standards must be reconciled, or all industry
would be disarranged and the village ruined.

Discussion was rife among the villagers as to the cause of the
difference. Some said the silver clock had lost time; others that both
clocks had lost time, but the silver clock more than the gold; while
others again asserted that both clocks had gained time, but that the
gold clock had gained more than the silver clock.

While this discussion was at its height a philosopher came along and
observing the excitement on the subject remarked: "By measuring two
things, one against the other, you can never arrive at any determination
as to which has changed. Instead of disputing as to whether one clock
has lost or another gained would it not be well to consult the sun and
the stars and ascertain exactly what has happened?"

Some demurred to this because, as they asserted, the gold standard was
unchanging and was always right no matter how much it might seem to be
wrong; others agreed that the philosopher's advice should be taken.
Upon consulting the sun and the stars it was discovered that what had
happened was that both clocks had gained in time but that the gain of
the silver clock had been very slight, while that of the gold clock had
been so great as to disturb all industry and destroy all correct sense
of time.

Nothwithstanding this demonstration, there were many who adhered to the
belief that the gold standard was correct and unchanging, and insisted
that what appeared to be its aberrations were not in reality due to any
fault of the gold clock, but to some convulsion of nature by which
the solar system had been disarranged and the planets made to move
irregularly in their orbits.

Some of the people also remembered having heard at the village inn, from
travellers returning from the East, that silver clocks were the standard
of time in India and other barbarous countries, while in countries of a
more advanced civilization gold clocks were the standard. They therefore
feared that the use of the silver clock might have the effect of
degrading the civilization of the village by placing it alongside India
and other barbarous countries. And although the great mass of the people
really believed, from the demonstration made, that the silver standard
of time was the better one, yet this objection was so momentous that
they were puzzled what course to pursue, and at last advices were
consulting the manufacturers of gold clocks as to what was best to be
done.

Now our gold standard men are in the position of those who first refuse
to look at anything beyond the two things, gold and silver, to see what
has happened, and who, when it is finally demonstrated that all other
things retain their former relations to silver, still persist that the
law which makes gold an unchanging standard of measure is more immutable
than that which holds the stars in their courses. If they will compare
gold and silver with commodities in general, to see how the metals have
maintained their relations, not to one another but to all other things,
they will find that instead of a fall having taken place in the value of
silver, the change that has really taken place is a rise in the value of
both gold and silver, the rise in silver being relatively slight, while
that of gold has been ruinously great. And those who do not shut their
eyes to the truth must see that the change of relation between the
metals has been effected by depriving silver of its legal-tender
function, as the want of accord between the clocks was brought about
by depriving the silver clock of a portion of its motive power--the
weights. The only thing that has prevented a greater divergency between
the metals is the limited coinage by the United States--the single
weight that, withheld from the gold clock, prevented its more ruinous
gain.

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