Sir James Graham says:

Torrens, in his work on Political Economy, says:

Wolowski says:

Cernuschi says:

Prof. Francis A. Walker, in his work on "Money" (page 57), says:

Professor De Colange, in the American Cyclopedia of Commerce, article on "Money," says:

A curtailment of the volume of money in a country will, ceteris paribus, increase the value of the money of that country. All the authorities agree that this law applies to all forms of money, whatever the material; so that it applies to paper money with precisely the same force that it applies to metallic money.

Mr. Stanley Jevons, in his work on "Money and the Mechanism of Exchange," says:

Mr. Gallatin said:

In his Proposal for an Economic and Secure Currency Ricardo says:

Mr. J. R. McCulloch, in commenting on the principles of money laid down by Ricardo, says:

Says Lord Overstone—

Lord Overstone further declared that:

Alexander Baring, in his evidence before the secret committee of the House of Lords in 1819, said:

Prof. F. A. Walker says:

Sir Archibald Alison says:

THE TRUE MONEY STANDARD.

The true money standard of any country is not the material of which the money is made. The standard is not a concrete object, but a numerical relation. It is the relation between the number of units composing the monetary circulation of the country and the numbers of the population.

It is the legal-tender function that constitutes money. It is the power which the law imparts to any material to pay debts and liquidate obligations. It can not for a moment be doubted that the money function, being conferred by the supreme authority, is the all-sufficient guarantee of the money value. There is no necessity for re-enforcing that value with any inferior value that may attach to the material on which the money stamp is placed. The money function is immeasurably the most important that can be conferred by society upon any material, and it is absurd to urge that that function is not of itself sufficient for the maintenance of the value of money. All the value that money can possibly have—the totality of value that can exist in the shape of money in any country—will attach to anything upon which the sovereign authority stamps it, whether the material on which the stamp is placed be gold, silver, paper, or anything else. Legislators or executive officers of the Government, by increasing or decreasing the volume of money, correspondingly decrease or increase the value of each unit of that money. For no matter how many or how few the units may be, the total value of the money of the country will be comprised within the total number of those units. A change in the number of the units effects a proportionate change in the value of each unit, and whatever the value of the unit may be, it is of the utmost importance that that value should remain undisturbed.

It is absurd to maintain that a gold unit, which, as time goes on, is constantly increasing in purchasing power; is a better unit than a unit of any other material that maintains unchanging value through time.

Whenever the business of the country accommodates itself to a given number of units, the only question for the Government to deal with is to maintain that value as free from disturbance as possible; and according to all authorities on political economy that can only be done by increasing or decreasing the number of units in circulation in accordance with the demands of increasing or decreasing population.

If it be admitted that one of the most important offices of government is to see that the equities are preserved between its citizens (and if this be not so, to what purpose are our courts of equity instituted?), then it can not be denied that it is one of the highest offices of government to see that money, which measures all equities, and which must for all time continue to be the principal measure in the service of civilized society, shall be of unchanging value. It is impossible to secure this characteristic of uniformity in the value of money if we are to select as the only material on which to stamp the money function a substance whose yearly production is becoming more and more limited, and the prospect of whose sufficient yield becomes less and less encouraging.

IF SILVER REMAIN DEMONETIZED AND GOLD CONTINUE DECREASING, WHERE IS THE WORLD'S FUTURE MONEY SUPPLY TO COME FROM?

If the distinguished authorities I have quoted are correct, that a diminution of the volume of money increases the value of the money unit—which is but another form of stating that it lowers prices and produces stagnation, distress, and discontent,—what good reason can be offered by the advocates of the gold standard for confining the business of this rapidly growing country to a basis of gold, when it is well known that the entire stocks of gold and silver together are now insufficient to serve the purpose of the world's money, and have to be supplemented and re-enforced by large issues of paper notes? Do they not reflect that the production of gold is constantly diminishing and is likely to continue to diminish? And do they not know that our population is growing at the rate of over 3 per cent. per annum and will double in thirty years? Do they mean that the money volume which serves a population of 65,000,000, and is far below the needs of that population, will suffice for the 130,000,000 of the next generation? To be sure, if we are to take no note of prices, the question is a simple one.

But prices must be taken into account. The entire money question is one of prices. When it is said that money is scarce, what is meant is that business is depressed and that money is difficult to get, at the present range of prices. Should prices fall 25 per cent. money would be found plentiful enough to conduct exchange at the lower range. But when prices fall, goods sell below cost, business is unprofitable, workshops are closed, and men are thrown into idleness. If lowering prices do not affect injuriously either the business or the prosperity of the country, then it makes no difference what the volume of money may be; a small amount will meet the requirements as well as a large amount. In that case, the gold standard is as good as any.

But if gold alone is sufficient to bear all the enormous monetary burdens of the Western world, why do the advocates of the gold standard admit the necessity for any more circulation? To be logical, instead of favoring an increase of credit money, which has always lurking within it an element of danger to the business of the community, they should demand the retirement of the $347,000,000 of greenbacks and the $350,000,000 of coined silver, and base the business of the country exclusively on what they call "honest money." If that should be done all that could happen would be a fall in prices. Judging by the experience of the past it would not be surprising if the next move of the gold-standard men would be an agitation for the retirement and cancellation of the greenbacks. Such a movement is fully in harmony with the opinions of the gold-standard advocates for the past twenty years. Indeed, the Secretary of the Treasury who took charge of the finances at the opening of the last Administration, himself a banker, recommended the demonetization of the greenbacks almost as vigorously as he opposed silver.

MONEY VALUABLE ONLY FOR THE IMPORTANT SERVICE IT PERFORMS.

Money is valuable rather for the service which it performs than for the material of which it is composed.

When we consider the transcendantly important character of the service which money performs—when we reflect that, without it, the achievement of an advanced civilization would be impossible, we can not escape the conclusion that, compared with the value of that service, the commodity value of any material on which the money function may be stamped is too trifling to merit serious attention.

This will be made clear by reflection on the necessities of the situation.

So long as society chooses to maintain the automatic or metallic money-system, it must be obvious that to escape the evils that would result from a sudden and overwhelming increase in the supply of the money-material as compared with the entire stock in existence, and the infinitely more serious evils that would result from a wholly insufficient yearly addition to that stock, it must have on hand an enormous accumulation of the metals on which the stamp is placed. It must be manifest that no material would be fit for universal acceptance for so important a function as money unless there were available so great a quantity of it that no sudden shock could be inflicted on society by ordinary fluctuations in the current yield, or in the current consumption in the arts.

But, in the nature of things, a supply sufficient to effect that result would be so enormous as practically to destroy the market value of the material as a mere commodity if the money function and use were withdrawn from it.

THE MONEY DEMAND, NOT THE COMMODITY DEMAND, THAT GIVES GOLD ITS VALUE.

Mr. Giffen the statistician of the London Board of Trade, in an article recently published in an English magazine, berating and deriding the bi-metallists, maintains that it is not the demand for gold as money, but for gold as a commodity, to be used in the arts, that determines its value.

To prove his case, Mr. Giffen states that the supply of gold is about $95,000,000 per annum, the annual demand for the arts $60,000,000, or about two-thirds of the annual supply; while the demand for money is only $35,000,000, or about one-third that supply. He therefore argues that the art demand, being the greater of the two, contributes more largely to the maintenance of the value of gold than does the demand for that article as money. It is hardly necessary to point out the absurdity of this claim.

The commodity demand in any one year is not made upon the current year's supply, but upon the entire amount in existence, which, is estimated to be about $4,000,000,000. If the demand for the arts entirely ceased, would the addition, to the money volume, of the $60,000,000 now used in the arts produce any appreciable effect on the value of the $4,000,000,000 in existence?

On the other hand, what is the demand on gold for the money use? All the labor and all the salable property of the western world are constantly offered in exchange for it. It is a moderate estimate to assume that each dollar is earned, demanded, and paid once a week, or fifty times in each year. This constitutes a total annual money demand of $200,000,000,000, compared with which colossal sum how inconsequential is the commodity demand of $60,000,000 in maintaining the value of gold.

The amount of gold annually used in the arts is not very definitely ascertained, but in 1886 it was estimated by the then Director of the United States Mint to be $46,000,000 per annum. Mr. Giffen estimated it at $60,000,000. It is my opinion that the arts forage on the money-stock of gold to the extent of about the entire annual yield. The bullion or commodity value of that metal being determined by its money value, whoever desires to use it for any purpose other than money, takes the bullion at its coinage value, or else melts up the coin.

Were gold demonetized and deprived of its money function, and its demand confined solely to that arising from its adaptability for various other purposes, the present stock of that metal on hand and in use as money would, according to the estimates of the director of the mint, supply the art demand for more than seventy-five years to come. But, assuming that the estimate of the Director of the Mint is too low, and that my own is nearer the truth, there is at least fifty years' supply on hand. Were there fifty or seventy-five years' supply of any other commodity on hand in the market, what would be the commercial value of that commodity? What would be the value of copper, of brass, or of iron, if there were fifty or seventy-five years' supply of either of those metals in the market for disposal at one time? Nobody can pretend that any commodity of which there is an available supply on hand equivalent to the whole demand for fifty or seventy-five years can have any but the most trifling value.

Contrary, therefore, to the generally received conviction that the commodity demand is the dominating force in fixing the value of gold I maintain and insist that the commodity demand, if entering into the account at all, is insignificant. It is the supremely important money-demand, as correlated to the supply, that fixes the value of all money of every description whatsoever.

The demand for gold as a commodity is limited and fluctuating, but when that metal is invested by law with the higher function of money, and thus constituted a common denominator of all values, that limited and fluctuating demand is changed to an unlimited and constant one, which fixes its value for other and inferior uses. If the commodity-demand for gold were, as many believe it to be, essential to its acceptance as money, it would be a great misfortune to society. The happiness and prosperity of the world, if not wholly dependent upon, are largely influenced by, steadiness in the value of money, and this can not exist without steadiness in its volume. Whatever demand exists for gold as a commodity can only affect the volume of money injuriously—that is to say, by decreasing it. The admonition of history is that a deficiency in the money-supply is more probable, and infinitely more to be feared than an excess, and this deficiency is, in great measure, caused by the insidious and constant encroachment, upon the precious metals, of demands for them for other than the money use. When we contrast the magnitude of the world's interests and equities, which rest on steadiness in the value of money, with the comparative unimportance of the uses of the metals as commodities, it becomes apparent that the subjection of the value of money to disturbance from the demands for gilded signs, looking-glasses, bangles and breast-pins, is an evil for which society is but poorly compensated by the benefits derived from such uses.

Whatever other quality gold may posses than as the bearer of the money function is inconsistent with the healthful and proper exercise of the task assigned it as such. Whenever any portion of the metal is used for any other purpose than money it destroys the money and thus changes the value of every unit of money in circulation, for, at already stated—other things remaining unchanged—the value of each dollar depends on the number of dollars that are out. Without forewarning, and with out knowledge on the part of the people, large amounts of the money volume, on which so infinite a number of equities rest, and on the basis of which all debts and time contracts have been entered into, are, as it were, surreptitiously abstracted and appropriated to other and always inferior uses, for by far the highest and noblest use of any material upon which the money function has been conferred, is the money use. No other use can possibly be so high or so noble as that of maintaining all equities undisturbed.

It seems unworthy a highly developed civilization which, as to all subjects other than money, regulates its affairs by the application of intelligence, and bases its policies upon exact data, scientifically ascertained and correctly applied, to depend for its money system upon the accidents, make-shifts, and expedients to which primitive society, by reason of the limitation of its powers and the undeveloped condition of the human mind and hand, was compelled to resort. If the quantitative theory of money be correct—if the money standard be, as I insist it is, a steady and duly proportioned numerical relation existing between the units of population and units of money—it is the duty of society and government to see that as far as practicable that principle is put into operation.

The history of the production of the precious metals from the remotest ages demonstrates that under the automatic system of money this can only be effected by the unrestricted coinage of, and conferring the full legal-tender function on, both metals.

THE PROPOSITION THAT THE GOVERNMENT SHOULD LEND MONEY ON THE SECURITY OF REAL ESTATE.

If a change in the whole number of money units in circulation relatively to population and business do not affect the value of each unit, then no objection can be found to the proposition recently presented in the Senate by the distinguished Senator from California, which created some surprise among Senators. The resolution of that Senator contemplates a loan by the Government to holders of real estate based upon the security of the property; and the issue of a large amount of Treasury notes for that purpose. Certainly, if a dollar, in order to perform properly the money function, must have in it or back of it a dollar's worth of material, there can be no safer security found than that suggested by the Senator from California, namely, the arable land of the United States.

It is the most absolutely secure of all securities; it can neither run away nor be stolen, it can not be burnt up, lost, or destroyed.

Arable land is, in and of itself, capable of supplying all basic wants, and must be always in demand, while gold, so far as concerns any use to which it is, or can be applied, might be dispensed with altogether, with scarcely any inconvenience to society.

Certainly money based on land would seem to be better than money based on gold. Senators who are sticklers for so-called "intrinsic value" money, and "full-value" money, should be found supporting that proposition. But it must, on reflection, be obvious that, other things remaining unchanged, whenever the total number of units of money (or dollars) in the circulation of a country increases, the value of each unit will decrease. It is an axiom of political economy that no amount of increase in the number of units of money in a country increases the aggregate value of the money of that country.

The aggregate value of the money in circulation in a country, can, ceteris paribus, be increased only by an increase of population and business, that is to say, by an increase in the demand for it.

If, without increase of population, the money of a country be increased from, say, $1,000,000,000 to $2,000,000,000, the effect would be not to add to the aggregate value of the money of the country, but to decrease the value or purchasing power of each unit of the money, so that it would take ten dollars to buy what had before cost but five.

GOLD A FETICH—DEMAND FOR A STANDARD OF JUSTICE.

The history of the world affords no example of a money system regulated by human prescience and intelligent calculation. It is not too much to say that the money system of the world—the most important associative instrumentality of civilization, in so far as it is not controlled for their own advantage by the creditor classes—is practically the result of accident. We are even less logical than the ancients, for they availed themselves of the entire supply of money possible to their civilization and development. They used the full yield of both silver and gold, while we, in order to line the pockets of a privileged caste of money-lenders, reduce the money volume to the lowest possible minimum by discarding one of those metals and making all debts payable in the other.

Gold has been erected into a fetich by methods familiar to the pagan priesthood, who forbade investigation of the claims of their idol to the superstitious veneration of their followers. The quality of a universal standard claimed for gold has been set up by the classes which, like that priesthood, had interests to be served by the superstition. All things else may be subjected to the test of reason and argument, but the slightest approach to a scrutiny of the claims of gold as a much-vaunted universal standard of valuation has been repelled by interested casuists and sophists who constitute the sacred guard of the temple of the idol.

The people of this country, Mr. President, begin very seriously to doubt the sacredness of a so-called standard by which they have been robbed of thousands of millions of dollars—a standard that despoils and impoverishes the toiling masses, in order to swell the plethoric pockets of the privileged few. From all parts of the Republic we learn that the people have become aroused on this subject, that they have discovered gold to be a standard, not of valuation, but of spoliation and confiscation.

The world at large shares to a great extent in the doubts entertained by the people of this country as to the orthodoxy of the continuing worship of gold. Throughout all Europe the suspicion is beginning to make itself felt, among those who have no personal interest at stake, that the constantly appreciating value of this metal bodes no good to society, however advantageous it may be to the moneyed classes, and especially the money lenders. It begins to be feared that there may be too long a persistence in this artificial standard, and that the pressure upon the people, in the fall of prices and the increase of the burden of debt and of taxes, which multiply with time, may have serious consequences upon public order. The stock of gold, never half enough to meet the wants of the people anywhere, is year by year being drawn upon more and more for use in the arts, while the yield from the mines is decreasing, and giving no promise of any material increase from any quarter.

The pressing need of the time, the standard for which the people are calling, is a standard of equity, a standard of justice, a standard that shall measure fairly and impartially the rights of both parties to a contract, that will not wrongfully and stealthily add to the burden of the obligation on either side, that will not, under the guise of fair dealing, rob one of the parties for the benefit of the other. The first indispensable step to a realization of that standard is the full restoration of silver to its rightful position as a part of the money of the world.

In any discussion of the question, it would be uncharitable not to make allowance for the force, on many conscientious minds, of what, to the free and unprejudiced inquirer, can only be regarded as an absurd and meaningless superstition, which, notwithstanding the advance of thought in other directions, still persists in disarranging the industries and vexing the civilization of an enlightened age. It is to the strength of this obdurate superstition that we must ascribe the horror with which many minds contemplate the possible loss to the country of a part of its gold.

FEAR OF THE OUTFLOW OF GOLD.

Any prospect of the outflow of gold is regarded as the opening of a veritable Pandora's box, from which must issue forth all the evils that can afflict mankind.

It is to this fear, no doubt conscientiously entertained, that we must attribute the declaration of the President of the United States that we do not dare to tread on the edge of so dangerous a peril. It is not difficult to make the statement, but it will be very difficult to prove that we stand on the edge of any peril whatever, if most or even all our gold should go.

We heard this same apprehension expressed, and with equal, if not greater, force twelve years ago, when the silver question was before this body. We were then assured by the ablest of our so-called "financiers" that the country would be denuded of its gold and that all manner of dreadful catastrophies would result. The prospect was represented to be appalling, although I do not remember that any reasons were given to show how or why gold should leave the country, nor that any statement was made as to exactly how this country would suffer if it did leave.

For my own part, Mr. President, I regard it as a matter of very little consequence whether gold goes out or not. Certainly if, in order to retain gold, we must sacrifice justice, then I say let gold go.

It is not of so much consequence that we should retain gold for the benefit of a small coterie of importers as that we should preserve the equity of time contracts between the millions of our own people who import no foreign goods. It is monstrous to think of violating all equities in time transactions—and nine out of every ten of our domestic business transactions are of that character—for the absurd and inconsequent purpose of keeping in this country some particular commodity, whether it be designated as money or otherwise.

The hoarding or the outflow of gold is a hardship when, under the law, somebody is obliged to have it, as was the case during the war, when gold alone would pay duties on imports. Combinations to hoard gold at that time frequently involved great loss to the importer. But thanks to the silver legislation of 1878 and other legislation making our Treasury notes receivable for customs dues, no damage could now result from any attempted corner in gold.

The creditors of this country never can convince the enterprising and energetic people who form the debtor class that it is to our interest that a certain material shall be kept in the country as money, if the expense of keeping it is that the debtors shall continue to be despoiled as they have been for the past fifteen years.

If we can only retain gold at the expense of steady and unwavering prices, and at the expense of a steady and unchanging value in money, then the quicker gold goes out the better. The constantly increasing value of gold by reason of its increasing scarcity means the constantly increasing burden of all debt, and involves the final absorption of all the property of the country by the creditor classes. Under the operation of the present system, by which prices are constantly falling and money is constantly increasing in value, the surplus earnings of the people are flowing in a steady stream into the vaults of money-lending institutions, and into the pockets of creditors.

In a very intelligent article published in a late number of an influential magazine—the Political Science Quarterly—there is the significant statement, apparently derived from the best sources, that in the year 1879-'80, one-half of all the mortgages in the State of Indiana were foreclosed.

It were better for society that property should at once be confiscated than that the great masses of the people in every community should have to struggle through years of painful and exhausting effort in the face of constantly falling prices and then in a large percentage of cases to lose their property at last. But this can not be avoided so long as we attempt to keep up what is called the gold standard. It is a necessary consequence of the gold standard that we shall have the scale of prices that obtains in gold standard countries If the presence of gold in this country is to destroy our people, who doubts that it should go? If its presence is to result in the destruction of equity and justice, who doubts that it should go?

Nearly every witness who testified before the secret committee of the House of Commons in 1857 agreed that gold could only be held by paralysing the business of the country. It is estimated by witnesses who testified before that committee, that in the panic of 1847, in Great Britain, the property of the country, by reason of the measures rendered necessary to maintain the single gold standard, was depreciated $1,500,000,000. I commend that report to the careful and serious perusal of the advocates of the single gold standard in this country.

Among the witnesses before the committee were John Stuart Mill, Lord Overstone, and many other men distinguished in the world of letters and finance. I am informed by the Librarian of Congress that there is but one copy of the work in the United States. It would be well worth while for Congress to order a number of copies of it printed, for there is no work with which I am acquainted that contains so much practical information as to the working of the single gold standard. According to the testimony taken before that committee, the experience of Great Britain since 1819 shows that gold alone, even when re-enforced by paper money convertible exclusively into gold, instead of being a beneficent instrument of valuation, has proved a cruel instrument of injustice.

A brief consideration of the causes which affect the movement of gold will not be out of place in this connection.

RATIONALE OF THE MOVEMENT OF GOLD.

Why is it that gold leaves country and goes to another? For one reason only—the advantage of its owner. Whenever he can make a profit by sending it out, the gold goes; and the period when that profit can be made is indicated when the prices of goods that are internationally dealt in are either rising in the country which it leaves or falling in the country to which it goes. It is only to pay for importable goods that gold ever leaves the country in which the owner resides. Being an international money, and receivable everywhere at its full face value, gold loses nothing by transfer; hence it is sent wherever it will for the time being have the greatest purchasing power.

Whenever the general range of prices in this country of commodities internationally dealt in becomes than higher than the general range of the same commodities abroad, it is manifest that then gold can used to advantage by purchasing those articles abroad and selling them here. If the gold that goes out goes from stock that has been hoarded here, the outflow has no immediate or direct effect upon prices in this country, although, by increasing or "inflating" the volume of money abroad it assists in raising prices there, and thus tends to secure for our exported products a better price in the foreign market. But if the gold goes from the amount that is in active circulation here, and if the void created by this outflow is not filled with other forms of money, such as silver, or paper, it results in a reduction of the volume of money in actual use in this country, while at the same time increasing the volume of money abroad.

This increase in the foreign money stock causes a rise of prices abroad, while the corresponding reduction of our currency causes a proportionate fall of prices here, hence there is a constant tendency to an equilibrium of prices of all articles of international commerce.

No outflow of gold would follow a rise of prices here except in so far as that rise affected articles internationally dealt in. No rise of prices of such articles as we do not import would tend in any way to drive out gold. If, for example, raw cotton should increase in price in this country, that fact would not tend to drive out gold, because we do not import raw cotton. But should the prices of articles of manufactured cotton rise here above what those same articles could be bought for in any foreign country our merchants would send abroad for them, provided that, after paying the freight charges and customs dues, they could make a profit on them.

So, also, if crockery-ware were made in this country, and its price should rise to, say, double the present price, then, instead of buying the American, or home-made article, our crockery merchants, finding that they could buy in England, France, or Germany cheaper than they could buy in this country, would decline to buy the American crockery, and would send abroad for any article, provided that, after paying freight charges and customs dues, they could sell it here at a profit. That would tend to increase the shipments of gold to foreign countries.

That an outflow of gold does not follow from a rise of general prices, but only of prices of articles of international trade, is manifest from the fact that if land becomes cheap in other countries, gold does not leave this country to buy it. When real estate is cheap in Brazil, or Australia, or in Germany, France, or even England, the owners of gold in this country do not send it abroad to make purchases of real estate.

So wages of labor may rise in this country, or compensation for all manner of services that must be performed here, and gold would not leave as a consequence. But if cloth were cheaper—quality considered,—in England, France, or Germany, or at the remotest ends of the earth,—than in this country, our merchants would send gold for it in order to sell it here at a profit.

Altogether too much importance is attached to the possession of a large stock of gold, unless that stock form part of the active circulation of the country. So long as it remains in circulation it sustains prices and develops industry and internal commerce. But the tendency of gold being to find the most profitable field for operation, its continued presence in the country can never be relied upon.

When we take gold from other countries prices in those countries fall, owing to the reduction of the volume of money there; and owing also to the action of the foreign banks in immediately raising their rates of discount on commercial paper and suddenly calling loans. As there is less money left in such country with which to pay for commodities, we are obliged to accept lower prices for the products we ship to it.

The larger the stock of gold, therefore, accumulated by us the lower, necessarily, must be the price which we can receive for our surplus agricultural products.

In order to maintain parity between the metals, it is not necessary for us to have all the gold we now have; $200,000,000, or even $100,000,000 of gold, would maintain that parity. The parity between the metals can never be broken until all the gold leaves, and provided we retain one or two hundred million, the rest can not be placed more advantageously than where our languishing surplus products must be sold.

When gold leaves this country it is because prices here are rising. Prices are now lower than they have been since 1847. Must they continue declining in order that we may be able to retain all our gold? It is manifestly impossible for the people of this country to prosper with a constantly lowering range of prices. It is equally impossible for the present level of prices to be maintained with a constantly increasing demand for, and as constantly diminishing a supply of, gold. It is universally admitted that an increase in the money circulation of this country at the present time is an exigent necessity. The advocates of the single gold standard, while admitting that we must increase our money volume, the effect of which must be to maintain, if it does not raise, the level of prices here, insist that we shall let none of our gold go in order that prices abroad may rise.

Mr. BLAIR. May I ask the Senator a question?

Mr. JONES, of Nevada. Certainly.

Mr. BLAIR. Does the Senator mean to be understood that the falling of prices is an absolute demonstration of the increased value of the money without limitation?

Mr. JONES, of Nevada. I have already, in the early portion of my remarks, had occasion to state that when a fall in prices was brought about by a larger subordination of the forces of nature to the uses of man, as where the comforts and conveniences of life could be produced with less sacrifice than before, it was not an injury to society, but in advantage. In other words, if, by a certain amount of sacrifice seventeen year ago, only one pair of shoes could be produced, and if by the same sacrifice two pairs could be now produced, there would be a lowering of the price of shoes to about one-half of what it was seventeen years ago, which would be a very great benefaction to mankind.

But, as I then stated, there is one certain sign that that is not, except to the slightest extent, the cause of the present universal fall of prices. When prices fall owing to improvements in manufacture, business revives, the masses of the people are at work, those who toil find themselves possessed of more of the comforts, of the conveniences, and even of the luxuries of life than before. They are better contented with their condition, and more buoyant and hopeful than before. On such occasions money becomes more and more in demand than it was before, and instead of being hoarded is put into active and productive business where it will make a profit. But when interest falls, pari passu, with the fall of prices, it shows that the fall of prices is not due, except in the smallest degree, to improved methods of production, but to the increased value of money.

Mr. BLAIR. I was not controverting the Senator's theory as to the existing facts in this country, but I understood him to be laying down an absolute principle, applicable under all circumstances and in all times, that the fall of prices is a demonstration of the increased value of money. I supposed that the fall in prices resulting from a protective tariff was beneficial, and not an indication of an increase in the value of money, and that that fall of price was not owing to the increased value of money, but was by improved machinery and all that. So it is possible that some of the fall in prices in this country may be owing to increased facility in the matter of production and to the beneficial operations of the protective tariff.

Mr. JONES of Nevada. Mr. President——

Mr. REAGAN. If the Senator from Nevada will permit me, I wish to ask the Senator from New Hampshire if he means to be understood as assuming that a protective tariff reduces the value of the commodities produced?

Mr. BLAIR. I was simply asking for information of the Senator from Nevada, and he can answer that question much better than I; but the Senator from Texas understands very well that I do believe a protective tariff reduces prices.

Mr. JONES, of Nevada. Mr. President, so far as a tariff has the effect of reducing prices in any country, it is not by reason of the levying of any certain percentage of duty on the imported goods. The first effect of the tariff certainly always must be to raise prices. The fundamental theory of the tariff is—whether it be correct or not I am not now discussing—that by that tariff you place the price of manufactured goods up to a range at which they can be produced in the country in which the tariff is levied, and upon the level of the range of wages and manner of living which obtain in that country. By so doing, if you have a proper volume of money, you set all your people at work, and keep them at work at a variety of occupations. In such case every forge, furnace, and factory becomes a school, every machine-shop an academy, and every cunning device and invention becomes a lesson, teaching the people how to deal with the subtle forces of the universe. So far as this country is concerned the theory of the tariff is that 65,000,000 people should have a varied and complete system of manufactures, which should supply practically all their own wants, instead of an abnormal proportion of them being driven into the single occupation of farming and relying on foreign manufacturers to supply such finished products as they need. To draw out and develop the aptitudes of a people a large variety of occupations is indispensable. When all men are employed at their aptitudes new inventions multiply, progress is accelerated, and the secrets of nature are more rapidly unfolded. Hence the McCormick reaper; hence the sewing-machine, that great instrument which clothes the world, because of the discovery that the eye of the needle should be at the point; hence the air-brake, the telegraph, the electric light, and thousands of other inventions that a protected people originate and develop, which would perhaps not have been originated or might have been long delayed if it had not been for the discouragement to imports caused by the tariff, and the encouragement to our people to go into manufactures by which their varied talents are drawn out and cultivated.

There is no doubt that eventually as our conditions improve, increasing numbers of our people will by degrees emerge from agricultural and enter manufacturing pursuits. A tariff, by stimulating the organization and development of industries, trains men to greater skill and perfection of workmanship in a variety of departments, and with greater skill comes greater efficiency of labor, and so greater economy of time. In that way the prices of certain products are in time reduced; but that is not a reduction of which any one complains.

The true cause of the present discontent will not be found in the protective tariff, but in the exactions of the single gold standard.

Fifteen years ago England was on the gold standard. It is on the gold standard to-day; yet prices in England are 35 per cent. lower than they were fifteen years ago. There being no reason why there should be any change in the trend of prices, so long as a fierce contest for the possession of gold shall be waged between England, France, Germany, and the United States, we are justified in assuming that a proportionate decline of prices will continue. That means a further decline of 30 or 35 per cent. in prices during the next fifteen years. Where is this tendency to stop? and if it does not stop, how long will it be before the masses of the people become the bond slaves of the creditors? It is shocking to the moral sense of mankind that a few money-lenders and bondholders should thus be able, silently and insidiously, to wreck the business of every country in the world by constantly increasing the value of the money unit.

While admitting the necessity of more monetary circulation, our gold standard friends fail to show us how it is possible for an increase in the volume of money to benefit our merchants, farmers, or mechanics if the prices that prevail in gold standard countries are to prevail here; for that is what the gold standard means for us, Mr. President. It means that the prices that rule in gold standard countries are to rule here.

The extreme indefiniteness with which the term "gold standard" is used has so befogged the relation which gold money bears to industry and commerce that people lose sight of the essential feature of that relation. It is impossible to have a clear conception of the gold standard without keeping in view exactly what is implied by the term. What men must mean in this country by "the gold standard" is not the touch of the metal, for they never touch it, and rarely, if ever, see it. The maintenance of the gold standard here simply means the maintenance here of the range of prices that prevail in gold-using countries; that is to say, that low and lowering range of prices rendered necessary by the attempt to measure the value of the constantly increasing mass of the products of industry in all the western world by the constantly diminishing volume of gold. No relief can come to the toiling masses of this country until we can lift our prices above those that now prevail in gold-using countries.

Even if our prices remain as they are and do not increase, gold will eventually leave the country if it continue to increase in value as it has been increasing during the past fifteen years. We have been enabled to maintain the gold standard here for the past twelve years notwithstanding a considerable addition of money other than gold to our currency, but we have been able to do so only because other countries have been using an equal or greater amount of money other than gold. We have been using no greater proportion of silver or paper money than other countries having the gold standard are using, hence we have been able to maintain their level of prices and still keep the metals together. But whenever we shall attempt to prevent a further fall or prices in this country, it will be impossible for us to retain our gold so long as prices in gold-using countries continue to decline as they have been declining. Gold will leave as quickly because of contraction abroad as of inflation here, if by "inflation" is meant a coinage of money sufficient to maintain prices at a steady level.

Should gold leave the country, then, in order to supply its place, in order to maintain the status quo in prices, and prevent a further fall from the present low range, we should need to have as many dollars of silver in circulation as there are now dollars of gold. Gold would go out only because our prices were rising, and as it went prices would cease to rise. That process might continue until three or four hundred million dollars of gold had gone. In all this, where would be the disadvantage to our people?

Considering the rapidly increasing population and wealth of this country, all the silver that can be procured from the mines will be necessary to maintain the level of prices and to keep pace with the increasing demands for money. If, however, it slightly exceeds—and it could not at the utmost more than slightly exceed—the amount actually demanded by increasing population and business, the over-plus of each year would take a great many years to drive gold out of the country, dollar for dollar. For, when prices here, of things internationally dealt in, are at an equilibrium with prices of the same articles abroad, gold can not go any faster than silver comes in.

IF $2,500,000 SILVER PER MONTH HAS NOT DRIVEN OUT GOLD, HOW MUCH WILL DO SO?

For twelve years past we have had a silver coinage of nearly $2,500,000 a month, yet no gold has been driven out. Having tested the capacity of that quantity of silver to drive out gold, we find that instead of driving it out its coinage has resulted rather in bringing gold in. For, to whatever cause the influx of gold may be ascribed, it is unquestionable that the gold has come, and it has needed all that gold, and all the silver that we have coined, to maintain international prices here.

It is admitted by all that gold can not go out except by reason of a rise in this country of the prices of articles of international commerce beyond the prices of the same articles prevailing abroad. It is only then that it becomes more profitable to send out gold in payment for our foreign purchases than to send out commodities—the products of our own country. Commodities will always be sent out in payment for other commodities so long as it is more profitable to send them than gold, and when, by reason of low prices prevailing abroad and high prices here, it is no longer profitable to send out commodities, purchasers send out gold, but only because it is to their advantage to do so.

Now, having seen that the coinage of $2,500,000 of silver each month was insufficient to so raise prices in this country as to induce gold to go abroad, but that on the contrary it resulted in an influx and accumulation of a large amount of gold, we may safely assume that only so much of the amount of silver which Congress shall now provide for as exceeds $2,500,000 a month will have any influence in raising prices in this country above international prices, and so providing a stimulus for gold to go abroad in payment for commodities imported into this country.

If the amount of silver which shall be now provided should be, say, $5,000,000 a month, the excess over the present coinage would be $2,500,000 a month. This, then, would be the amount that would drive out gold. As one dollar of silver would drive out no more than one dollar in gold, no more than $2,500,000 could go out monthly. That would leave in circulation the same amount of money that is in circulation now. There would still be no increase in the money volume of the country, and, with no increase in the volume of money, prices here would not rise above international prices. At the rate of $2,500,000 a month, it would take twenty years to drive out $600,000,000 of the $700,000,000 of gold now in this country. It would take even longer than that, because the $600,000,000 driven out would tend to raise international prices abroad, and so check the outflow of gold from here.

Mr. McPHERSON. Will the Senator yield to me for a question, or does he prefer to go on?

Mr. JONES, of Nevada. I am always ready to answer a question.

Mr. McPHERSON. I do not want to interfere with the Senator's line of argument, or with his speech in any form, but it does seem to me that there is something fallacious about the Senator's argument, or else my judgment and the experience of the world is all wrong. I wanted to ask the Senator this question: If it be known that the Government of the United States, if you please, by such an increase of the silver coinage in this country as will be produced by the free coinage of silver, to which theory, as I understand, the Senator is fully committed—if that be the theory of the Government hereafter by the command of Congress, I want to ask the Senator if he broadly and boldly asserts that no gold can be driven out of the country to a greater extent than dollar for dollar for the silver that comes in?

Mr. JONES, of Nevada. Absolutely; I say so.

Mr. McPHERSON. Then I want to ask the Senator another question, which seems to be pertinent. Does the Senator assert that if a 72-cent dollar, the value in bullion of a silver dollar during the year 1889, as has been furnished us by the Director of the Mint and the Secretary of the Treasury, were coined without limit (I say without limit, the limit being, of course, the amount of bullion that is brought to the Treasury to coined), and the people of this country who have been in favor of a safe and honest currency, a currency either gold or as good as gold, which the Treasury has been able to maintain, having forced no silver upon the people if they did not wish it, and in that way the silver dollar having been maintained equal to the gold dollar, I want to know, with the people of this country to-day the holders of $500,000,000 of gold, how it is possible for the Senator to believe that with a 72-cent dollar to take its place the gold coin would circulate for a single week, or a single day, or a single hour? If they have the gold will they not hold it?

Mr. JONES, of Nevada. The Senator has so involved his question with his argument that I can scarcely get at what he wants me to answer.

Mr. McPHERSON. The question I want the Senator to answer is this: Will the people of this country, the financiers of this country, the banks, the moneyed men holding $500,000,000 of gold, with a certainty of the free coinage of silver and going to a silver basis, for that is what it means, put their gold in circulation, or will they hoard it? Will it disappear?

Mr. JONES, of Nevada. I scarcely know what the Senator means by a "silver basis." He talks about a 72-cent dollar. We have never seen a 72-cent dollar. The papers in the East have told us that the silver dollar was worth 72 cents. I recollect talking on that subject once with some Senators in the cloak-room. During the conversation one of the Senate pages brought me a telegram, on which he said the telegraph messenger had told him there were 50 cents due. I give the page a silver dollar and said to him: "I have been informed by some very respectable and intellectual gentlemen in here, some of them now candidates for the Presidency even, that this dollar is worth only 75 cents. I do not want to cheat a little boy. Take this out, and if the boy thinks it worth only 75 cents he can send me back 25 cents, and if he thinks it is worth a dollar he can send me back 50 cents. I will leave it to him." The page brought back 50 cents and said the telegraph boy told him he did not know what those old "duffers" in there might say, but it was as good a dollar as he wanted and was very hard to get. [Laughter.]

The Senator talks about the bullion value as though that had anything whatever to do with the value of the dollar. I have attempted to demonstrate that the material that was in the dollar has nothing whatever to do with it. Let me illustrate. Suppose the entire supply of silver of the world to-day were $60,000,000. Suppose the law limited the coinage of it to $58,000,000, and every dollar coined was at par with gold. Suppose there were a demand for half a million dollars of silver, to be used in the arts, and that the remainder ($1,500,000) of uncoined silver were barred from the imperial money use. That supposes a supply of $2,000,000 left after satisfying the requirements for coinage, and supposes only half a million dollars' demand for use in all the arts. In that case there would be a $2,000,000 supply bearing down a half million dollars' art demand, or a proportion between supply and demand of 4 to 1. Suppose that under those circumstances silver bullion went to 50 cents an ounce. Would the Senator then say that 50 cents an ounce was the value of the $58,000,000, and all the rest of the coined silver of the western world, while by coining another million and a half, which would be nothing to a country like this, all the silver would be at par with gold? Every ounce of silver coined in Europe and the United States is at par with gold, a thousand or twelve hundred million dollars of it to-day in France, $200,000,000 in Germany, $370,000,000 of it here. We are not dealing with the price of silver bullion, that portion of silver that is deprived of its immemorial use as money. We do not say what the commodity demand for silver may make that worth. Such a consideration has no bearing whatever on the value of money.

I will suppose that in some one county of the United States a law were passed that the wheat grown in that particular county should have no right to go through the grist-mill, and that that wheat, as it might very naturally do, being deprived of use, fell to one-half the price of the wheat grown elsewhere in the country. Would the price of the wheat of that one county thus under interdiction and denied the grist be a fair gauge by which to measure the value of the entire wheat crop of the country? Manifestly not. All we have to do is to take up the little "slack" of silver, and all of it will at once be at par with gold; then we shall hear no more about the "commodity value" of silver. That is the contention that the bimetallists make.

Mr. HEARST. It will be $1.29.

Mr. JONES, of Nevada. It will be $1.29 an ounce in one week—in three days—in fact the very moment you give it back its ancient right of coinage and restore to it its full money power. You coin of gold all that is brought to the mint, and you deny to a certain portion of silver that same long-established privilege, and then you measure the value of the whole supply of silver by that of the little fraction that is not coined, and which therefore has to find a market as a commodity.

Mr. McPHERSON. Then, if the Senator will permit me, he necessarily proposes that the Government of the United States shall take up all this "slack," as he calls it, in the surplus quantity of silver and shall use it in the coinage. The mints of Europe being closed against the coinage of silver, there is no other place where it will be coined. Now, if the Government of the United States should use all the surplus silver in the country, which has simply forced the price down since we remonetized silver in 1878 more than 20 per cent.——

Mr. JONES, of Nevada. Gold has risen 35 per cent.

Mr. McPHERSON. Then I think the Senator's argument is upon this idea and upon this plan, that after we are upon a silver basis, as we should be most assuredly, there would be no inequality in the money, because it would be all silver.

Mr. JONES, of Nevada. And no inequality between it and gold.

Mr. McPHERSON. Certainly not, because there would be no gold in circulation. But let me ask the Senator another question. While he can use his short-legged silver dollar for the payment of debts, when he comes to make a new obligation would not the price of the goods assume a price equal to the difference between gold and silver? In other words, while you can use a debased currency for the payment of debts, if a legislative decree requires that you shall accept it, you can not use it for any other purpose.

Mr. JONES, of Nevada. I can not understand the Senator. We have not provided any "short-legged" dollar. The Senator is assuming a good many facts and attempting to adjust me to them. I ask the Senator to wait until he has heard my argument, and I invite the Senator then to make reply to it.

Mr. McPHERSON. I am sorry that I interfered with the Senator.

Mr. JONES, of Nevada. It was no interference on the part of the Senator, except that I can not separate the Senator's questions from the argument and assumptions that he makes. As to the outflow of gold, as I have said, it would take a long time for even $400,000,000 of it go. The amount of gold driven out would tend to raise prices abroad by making money more plentiful there, and so check the outflow of gold from here. When Senators speak about $600,000,000 of gold being withdrawn from circulation here a question that is a little curious arises. What are these people who own it going to do with that gold after they have withdrawn it from circulation? Are they going to invest it in Great Britain? Are they going to invest it in France? Are they going to the Cape of Good Hope to invest it? If they are they will reverse the policy that English capitalists are pursuing now and have been pursuing for years—bringing their gold over here for investment. The Senator tells us that gold is to disappear from circulation. What will the owners do with it? Where and in what are they going to invest it?

Mr. McPHERSON. It will be held for a premium.

Mr. JONES, of Nevada. But who will buy it at a premium? Who needs it at all? For what purpose is it needed? Who is going to pay any premium for it? Nobody is "short" on it, and there is no law which forces anybody to have it.

Mr. President, nobody wants it enough to give a premium for it. It is only worth what is daily paid in the markets of the world and nobody is going to pay a premium for it. It is a bogie with which to frighten the people who demand reform in the currency of this country. Let them withdraw their gold.

I tell the Senator it is not the men who hoard the gold in vaults who maintain or promote the prosperity of this country, but the toilers in the wheat-fields and on the farms of the country, the men who work in the planing mills, the forges, the furnaces, the factories, and in all our institutions of industry. It is they that bring us our prosperity, and not these people who are gambling for premiums on gold.

Let them gamble among themselves; let who lose and let who win, the people care nothing. The people of the United States are going to institute a money that shall install and maintain justice as between the citizens of this country, and they will not be impeded. I can tell the Senator that neither his party nor the Republican party will ever impede the march that this great country is about to make—the first in the world, I am glad to say—in adjusting to the demands of industry and commerce, that great instrument, money, the non-adjustment of which, as I have already stated, has, in my belief, caused more misery than was ever caused by war, pestilence, and famine.

But to resume at the point where I was interrupted:

The gold going out would tend constantly to restore the equilibrium between our prices and those of the gold-using countries, making the proportion of the gold outflow each year less than that of the year before. If there be included in this computation the remaining $100,000,000 of gold, which would remain after the outflow of the $600,000,000, we shall be compelled to come to the conclusion that the time when our stock of gold can be driven out will be almost indefinitely postponed.

But even should all our gold go by reason of the remonetization of silver, it will not be to the injury of the gold standard, but to its great advantage, and to the equally great advantage of the masses of the people, as well of this country, which the gold may leave, as of all countries to which it may go. It will make the "gold standard" consistent with the prosperity of the countries maintaining it. But instead of preserving the gold standard of to-day, which is a standard of wrong, it will inaugurate a gold standard that will approximate to a standard of justice.

The new "gold standard" that would be established by the outflow of our gold would be a standard of prices resulting from the influx into England, France, and Germany, the principal gold-using countries of Europe, of more than $600,000,000 of money.

So considerable an addition to their money-stock would raise prices in those countries, and by remaining there, would, with the current production, which we could spare to them, tend to maintain prices at a steady level. Such a condition would be an inestimable boon to the overburdened masses of Europe, and their prosperity would not be attained at the expense of the people of the United States. We could well afford to let gold go, since, by the coinage of silver, our own money volume would not be reduced. The rise of prices which it would effect in Europe would not only, as I have stated, secure better prices for our exported goods, but would undoubtedly enable us to maintain prices here at a substantial parity with those of Europe—that is to say, with those of the new, more rational and more beneficent gold standard which would be established by the full remonetization of silver in this country.

PRACTICALLY NO GOLD MONEY IN THE UNITED STATES.

But, aside altogether from this consideration, the gold that we already have is really a surplus—it is practically a dead and useless article. Gold, Mr. President, can not with entire truth be said at the present time to form any part of the money of this country. Who but a bank clerk ever sees a gold piece? With the exception of a few million dollars on the Pacific coast, gold is not really in circulation in this country. It is performing no useful function whatsoever. While I am engaged in delivering these remarks I venture to say no Senator within the sound of my voice has in his pocket a single gold coin of any denomination whatever, or any paper representative of one.

This is the answer to the fear expressed by some Senators that when those who hold gold shall observe the enlargement of the money circulation by the issue of the proposed Treasury notes they will be likely to hoard it. They are already hoarding it. Every body knows that that is about all that gold is used for in this country. It is hardly possible for it to be hoarded to any greater extent than it is at the present time. So little is this metal in circulation that I do not deem it any exaggeration to say that there are millions of people in the United States, "native here, and to the manner born," who have never in all their lives seen a gold coin.

How absurd, then, is the claim that any loss is to be suffered by the alleged future hoarding of gold, or that any calamity can occur to 65,000,000 people by the disappearance of that which has long since disappeared.

THE ARGUMENT BASED ON OUR BALANCE OF TRADE.

One of the staple arguments of the advocates of the single gold standard is, that if our stock of gold were greatly reduced we should be unable to make payments to foreign countries in case the balance of trade turned against us. It is only through an excess of imports over exports that gold could go, and this country now produces of nearly all articles almost all that it consumes. With the exception of two years there has not been a balance of trade against us for fourteen years, as the following table will show:

Value of merchandise imported into, and exported from, the United States, from 1876 to 1889, inclusive; also annual excess of imports or of exports—specie values.