If Not Silver, What? Part 4

After the Act of 1803 France was still to have twelve years of war and severe trial. She has subsequently had two revolutions and a foreign war, singularly destructive in its course, and ending in her subjugation, the occupation of her territory, and the loss of two of her wealthiest provinces.

Seventy years of bimetallism had left France saturated with gold and silver when her Emperor rashly provoked the war with Germany; her expenses were enormously increased, and she had to pay, in addition, a fine of nearly $1,000,000,000. She paid it with a rapidity that amazed the world, but in her hour of weakness she consented to gold monometallism. She had become a creditor nation, and could endure the new system better than any other, except Great Britain; nevertheless, she has suffered. Her exports had steadily increased during all her years of bimetallism, and never so fast as during the very years in which she was exporting silver so heavily because of the influence of cheap gold. The very year of demonetization her exports began to decline, and but once since have they reached the old figures.

The statistics are fearfully suggestive. In 1840 her exports were valued at $202,231,000, and her imports at $210,413,000; in 1873 her exports were $964,465,000, and her imports $915,285,000, and in only six of the years after she began to be "flooded with cheap gold" did her imports exceed her exports. In 1874 her exports began to decline, and ran rapidly down to $822,360,000 in 1878; and 1890 is the only year since demonetization in which they reached the figures of 1873, being $968,030,000. On the other hand, her imports have steadily outrun her exports until the excess has been as high as $300,000,000 in one year (1880), and has only once since (1885) been as low as $100,000,000. Here, then, are the points demonstrated by France's official figures:

During seventy years of bimetallism she gained steadily and rapidly in wealth, her exports increasing much faster than her population.

During the eight years (1853-60) in which she was "ruined by cheap gold,"

importing 3,082,000,000 francs of it and exporting 1,465,000,000 francs of silver, a bullion operation to the amount of $909,000,000, she increased her exports most rapidly and with no corresponding increase in imports.

During the twenty years following demonetization her exports have been stationary or declining, being $99,000,000 less in 1893 than in 1873, while her imports have increased.

Let us turn for a moment and trace the effects of monometallism in England as compared with bimetallism in France during the same period.

England had in 1816, when she adopted gold monometallism, about $10,000,000,000 in property and had in 1873 about $40,000,000,000. In 1816 she had about 18,000,000 people and in 1873 about 32,000,000; her per capita wealth, therefore, in 1816 was $555, and in 1873 $1,250, or 2-1/5 times as much. In 1803 the property of France was valued at $8,000,000,000, and in 1873 at about $40,000,000,000; in the former year she had 29,000,000 people, and in the latter a little over 36,000,000. Her per capita wealth, therefore, in 1803 was $276, and $1,081 in 1873, or very nearly four times as much.

Thus, despite the immeasurable advantages which England enjoyed, political, social, and industrial, her great colonial possessions from which she drew enormous wealth, and her exemption from destructive war; despite also the distressing condition of France and her recent enormous losses, we find that in seventy years of bimetallism the working Frenchman had gained wealth almost twice as fast as the working Englishman had in the same number of years of monometallism.

France became a creditor nation, and yielded to the general pressure for a single gold standard; she has lost heavily, as shown in her table of exports, but she still retains a large part of the momentum acquired during seventy years of bimetallism. Her wealth is still rated at something over $40,000,000,000; her people have acc.u.mulated stocks of the precious metals far in excess of those of any other country; and their business is so solidly founded that the storm which recently shook the foundations of credit throughout the British Empire scarcely produced a quiver in France. They have wisely avoided the excessive issues of faith money (or check money) which are the ever-present danger of England, America, and other monometallic countries; and as a result, they have almost entirely escaped those fearful convulsions have that threatened the political stability of great nations. In fact, it is no exaggeration to say that France has only felt the convulsions of recent years by their reflex action on her from other countries; and twice within very recent years has the Bank of England been compelled to go to France for the coin to stay the devastating work of panics resulting from over-expansion of faith money on an insufficient metallic basis.

France has an area less than that of Texas by some 60,000 square miles, yet its aggregate wealth is two-thirds that of the United States; and on the basis of a.s.sessed value her agricultural wealth is very much greater than ours. Mulhall, the great British statistician, says of France that she is "the best cultivated country in Europe." Her 6,000,000 peasant proprietors are the owners of nearly all her cultivatable soil, which is worth, on an average, $160 per acre. She has over 400,000 miles of the finest common roads in the world, which have cost her, at the ordinary rate of labor, over $5,000,000,000. Their benefit goes chiefly to agriculture, binding the farmers of different provinces and farmers and city dwellers together. She has over 10,000 miles of ca.n.a.ls and ca.n.a.lized rivers; she has 25,000 miles of railways, all in the highest state of efficiency. She has, during her bimetallic period, become the second colonial power of the world, and has acquired foreign territory at such a rate as to excite the jealousy of England. She has become the second naval power on the globe, and the second exporting nation, her exports averaging some $900,000,000 per year, an amount larger than the exports from this country, which has a population nearly double that of France, nearly all of it being manufactures; and had the same rate of growth continued as was maintained before France became monometallic, it is fair to presume that her exports at this time would have equalled those of Great Britain. Best of all, the great increase of wealth is in the hands of those who created it. It is the universal testimony of all observers that the condition of the French people and the general aspect of France has steadily improved throughout this century. It is a country in which poor-houses are unknown; in her cities a beggar is a curiosity. In their country's emergency the common people came forward and out of their savings paid $1,000,000,000 acc.u.mulated during the bimetallic period. Despite the loss of $240,000,000 in the Panama Ca.n.a.l and of $1,000,000,000 in the indemnity to Germany, as well as two of her richest provinces, France has acc.u.mulated hundreds of millions of dollars in the securities of other countries, and has only recently been able to subscribe twenty-five times over the Russian loan, and is negotiating a loan to China, the money for which is to be supplied by her working people.

Be it noted also that the debt of France is held by the people of France, largely by the industrial cla.s.s, and especially by the agricultural cla.s.s, and the interest thereon paid, instead of being a foreign drain, is a perpetual renewal of the current circulation.

One more brief contrast between France and England. No reader of current literature need be told of the appalling prevalence of poverty in Great Britain. As France is a country without poor-houses, so it may be said that England is a land of poor rates and poor unions. The latest official announcement is that the agricultural interest is declining more rapidly than ever before; and in regions where only fifteen years ago the land rented readily at several pounds per acre, statesmen and economists are appalled at the sight of that which so alarmed our New England people a few years ago: the phenomenon of abandoned farms. We are told that there is a revival of industry because British capitalists have withdrawn their money from other countries and will put it in anything rather than have it entirely idle; but the condition of agriculture steadily grows worse.

And have we anything to boast of in our own happy land in comparison with France? Our natural resources so far exceed those of any old country that a comparison would be ridiculous; and the monometallists tell us, when they are trying to prove that gold is not enhanced in value, that, by reason of inventions, a day's labor will produce at least twice as much as in 1870, and in many lines a great deal more than twice as much. Why, then, does not the laborer receive twice as much as he did in 1870? As wages are labor's dividend of its own product, and as capital had its dividend then as now, if a day's labor does not bring the laborer twice what it did, he is wronged; and, considering our resources, if we are not five times as well off as the French people, the only reason can be that we have slighted our opportunities, and blundered most fearfully in our management.

The monometallists profess to be great sticklers for experience and demonstrated fact; to have a horror of "theory." We present them the example of France as an unanswerable proof that one great nation can maintain bimetallism, and that by maintaining it she escaped the worst evils that have affected the monometallic countries, and a.s.sured for herself an extraordinary progress and prosperity. We present them, in contrast, the example of England, and point them especially to the great difference in the progress of the common people of the two countries. We ask them, with this experience, to consider the present condition of this country, and the evils that have affected it since 1873, and seriously to consider the question as to whether something is not radically wrong; whether some malign influence has not gone between us and the reward of our work, and robbed us of that to which we are honestly ent.i.tled.

BIMETALLISM ABROAD.

Many monometallists start with the a.s.sumption that what they call the "silver craze" is a mere fad, temporary and local; that the advocates of bimetallism are confined chiefly to the United States, and to the western part of it, and that, if they are thoroughly defeated at the November election, the discussion will be at an end.

"Mistaken souls that dream of heaven."

They do not realize that, although it has not taken the same popular form, the discussion is quite as serious in monometallic Germany and England, and in the latter country opinion has so far advanced that both parties agree on the enormous enhancement in the value of gold. There is now scarcely a difference of opinion in England on this point, but there is as to the effect. British monometallists a.s.sert that as England is a great creditor nation, the world owing her, as estimated, $12,000,000,000, every advance in the purchasing power of money is greatly to her advantage. In Mr. Gladstone's last public speech on the subject he stated that fact with great frankness, claiming that it was to England's interest that money should remain as now in purchasing power, and that if she should abandon the gold basis, because gold is worth far more than it was a few years ago, the world might applaud her generosity, but it would sneer at her wisdom.

The bimetallists of England, on the other hand, a.s.sert that the enormous losses of traders owing to the dislocation of the par with silver-using countries, of manufacturers by reason of the rapidly increasing compet.i.tion of the same countries, of home debtors and of many other cla.s.ses, and especially the loss to agriculture, far outweigh any gain made by the creditors as such.

The national debts of Europe now amount in round numbers to some $22,000,000,000. Including all other countries, the total of national debts exceeds $26,000,000,000, and the growth for many years averaged $500,000,000 per year. The local public debts of England and Canada are set at $1,735,000,000. According to the best authorities, the mortgage indebtedness of the princ.i.p.al European nations is as follows:

For Great Britain and Ireland........ $8,000,000,000 For Germany.......................... 8,500,000,000 For France........................... 3,850,000,000 For Russia........................... 3,250,000,000 For Austria.......................... 1,500,000,000 For Italy............................ 2,675,000,000 And for all other European countries. 3,050,000,000

A total of nearly $31,000,000,000.

Hon. Samuel Smith, M. P., places the mortgages of England at something over $2,000,000,000, which is more than half the value of the landed property, and those of Scotland and Ireland (the latter one of the worst mortgaged countries in the world) make up the grand total given above.

A highly suggestive fact is that, as experience develops the enormous evils of the monometallic system, the number of conversions among prominent men to bimetallism steadily increases, and they become more outspoken and radical in their views.

At the Paris Monetary Conference of 1867, Mr. Mees, President of the Bank of the Netherlands, protested against a single gold standard and foretold literally what has followed. Two years later Baron Alphonse de Rothschild said: "As a sequel we should have to demonetize silver completely. That would be to destroy an enormous part of the world's capital; that would be ruin."

At the conference of 1878, Mr. Henry Hucks Gibbs, director and former governor of the Bank of England, was an advocate of the single gold standard; but a few years' experience so completely changed his views that he said: "Mr. Goschen and I were together in the conference in Paris; both of us were st.u.r.dy defenders of gold monometallism; but I have changed my mind. I do not say Mr. Goschen has changed his mind, but he has somewhat modified it."

In the Paris Conference of 1878, Mr. Goschen said: "If other states were to carry on a propaganda in favor of a gold standard and of the demonetization of silver, the Indian Government would be obliged to reconsider its position, and might be forced by events to take measures similar to those taken elsewhere. In that case the scramble to get rid of silver might provoke one of the gravest crises ever undergone by commerce."

As it is the fashion of our monometallists to sneer at the possibility of bimetallism, it may be well to quote here the report of the Royal Commission on gold and silver, made in 1888. This commission was composed of six monometallists and six bimetallists, but they a.s.sented unanimously to this proposition:

"SECTION 107. We think that in any conditions fairly to be contemplated in the future, so far as we can forecast them from the experience of the past, a stable ratio might be maintained if the nations we have alluded to (herein), the United Kingdom, the United States, and the Latin Union, were to accept and strictly adhere to bimetallism at the suggested ratio. We think that if in all these countries gold and silver could be freely coined and thus become exchangeable against commodities at the fixed ratio, the market value of silver as measured by gold would conform to that ratio and not vary to any considerable extent."

Mr. Leonard H. Courtney, one of the monometallist members of that commission who signed the report, has since become an avowed bimetallist, as have many other prominent Englishmen. Among them may be mentioned Professor Alfred Marshall and Professor Sidgwick, of Cambridge University; Professor Nicholson of Edinburgh; Professor H. S. Foxwell, Professor of Political Economy in University College, London; Professor E. G. Gonner, of Liverpool; Professor J. E. Munro, of Kings College, London; and many others.

Mr. Courtney says, in his article in the _Nineteenth Century_, April, 1893: "Is it true that gold is this stable standard? I was one of the six members of the Gold and Silver Commission who could not see their way clear to recommend bimetallism, and reported: 'When we look at the character and power of the fall in the price of commodities, we think that the sounder view is that the greater part of the fall has resulted from causes touching the commodities rather than from an appreciation or increase in value of the standard,' In the same paragraph we had said: 'We are far from denying that there may have been, and probably has been, some appreciation in gold, though we may hold it impossible to determine its extent.'" Now, then, he goes on to say: "Let me make a confession. I hesitated a little about this paragraph. I thought there was perhaps more in the suggestion of an appreciation of gold than my colleagues believed; but while I thus doubted it, I did not dissent. I am now satisfied that there has been an appreciation of gold greater than I antic.i.p.ated when I signed the report, and I should not be able to concur in that same paragraph again. We have been pa.s.sing through a period of an appreciation of gold, and no one can tell how long it will last. This is a serious matter. The pressure of all debts, private and public, has increased. The situation is serious. It is a dream to suppose that gold is stable in value. It is no more stable than silver. It has undergone a considerable appreciation in recent years, and industry and commerce have been more hampered by this movement than they would have been had silver been our standard. Every step taken towards the further demonetization of silver must tend to the enhancement of the value of gold. It is true that much inconvenience is involved in the use of gold as a standard in some countries, and of silver as a standard in others, with no link to check their divergent relations; but the advantage of having the same monetary standard throughout the world would be counterbalanced if we made gold that universal basis and tied all the fortunes of the nations to it."

The bimetallic sentiment in England is not confined to the mere theorist and doctrinaire or statesman, but is advocated by some of the ablest journalists in the kingdom. Thus, the _Statist_, which undoubtedly ranks in that country as the highest authority in financial and economic matters, is quite as p.r.o.nounced as Mr. Balfour and others in its views upon the effect the demonetization of silver has had upon the value of gold. In its issue of July 1, 1893, it says: "The new policy is likely to intensify the appreciation of gold. One consequence of the further appreciation of gold will be to intensify the agricultural depression all over Europe. Most of the charges upon land having been fixed heretofore, they will weigh more and more heavily upon land-owners as gold rises in value. So, again, rents will become more onerous, and it will be found by and by that the settlement of the last few years was only provisional, and that a further reduction will become necessary. Also it is evident that the burden of debt, not only upon individuals, but upon governments, will be much increased. Everywhere the burden of debt will necessitate increased taxation, and so will weigh very heavily upon the general population."

Hon. Robert Giffen, the well-known chief of the statistical department of the Board of Trade, London, was long known as the most determined and uncompromising monometallist in England. In 1888 he read a paper before the Royal Statistical Society, in which he showed that gold had notably gone up in purchasing power; that the increase was continuous and likely to continue, and that this was the true explanation of the fall in the prices of commodities.

In a former paper read in 1879 he had predicted the rise in the purchasing power of gold, and in his paper of 1888 he said: "If the test of prophecy be the effect, there was never surely a better forecast. The fall of prices in such a general way as to amount to what is known as rise in purchasing power of gold is, I might almost say, universally admitted.

Measured by any commodity or group of commodities usually taken as the measure for such a purpose, gold is undoubtedly possessed of more purchasing power than was the case fifteen or twenty years ago, and this high purchasing power has been continued over a long enough period to allow for all minor oscillations."

In 1871, when the discussion may be said to have begun, the French economist Ernest Seyd pointed out very plainly that the adoption of the gold standard by Europe and the United States would lead to the destruction of the monetary equilibrium hitherto existing, and then added this singular prophecy: "The strong doctrinarianism existing in England as regards the gold valuation is so blind that when the time of depression sets in the economic authorities of that country will refuse to listen to the cause here foreshadowed. Every possible attempt will be made to prove that the decline of commerce is due to all sorts of causes and irreconcilable matters. The workman and his strikes will be the first convenient target; then speculating and over-trading will have their turn; many other allegations will be made, totally irrelevant to the real issue, but satisfactory to the moralizing tendency of financial writers."

How literally has that been fulfilled in our sight. At this very time, the monometallists of the United States are pointing to all sorts of causes and irreconcilable matters to explain the ruinous fall in prices. They not only allege all the causes here a.s.signed, but many more peculiar to this country; and, after the fashion of all who oppose any reform in the interests of producing labor, they particularly and even savagely deprecate agitation.

By the way, does not every clear-headed American, know that any system that cannot stand agitation is totally unfitted to this country?

Agitation, investigation, public discussion in the papers and on the stump, are the very life-blood of our inst.i.tutions. And if our finances were as they should be, the more thoroughly they were discussed, the more warmly would the system be approved, and the more would investigation be invited.

Hon. G. J. Goschen, former Chancellor of the Exchequer, pointed out as early as 1883 that the enormous increase in the demand for gold consequent upon the demonetization of silver was liable to create great evil. After elaborating this subject, and saying that the fall in prices had already produced serious evils, he added: "Some writers have appeared to show something approaching to irritation at the view of the situation that gold should have largely influenced prices. I scarcely know why, unless through the apprehension that the bimetallists may utilize the argument." A little later he said: "I must repeat that to my mind the connection between the additional demand for gold and the fall of prices seems as sound in principle as I believe it to be sustained by facts."

We might multiply at length quotations to show that opinion is unanimous in England, regardless of party, to the effect that there has been a great increase in the purchasing power of gold. As to the effect of this Mr.

Giffen says: "The weight of all permanent burdens is increased.... Our people, in paying annuities or old debts, have to give sovereigns, which each represent a greater quant.i.ty of the results of human energy. The debtors pay more than they would otherwise, and the creditors receive more. It is a most serious matter to those who have debts to pay."

Mr. S. Dana Horton says that on the basis of prices "The national debt, regarded as a princ.i.p.al sum, has increased its weight upon the shoulders of the British taxpayer between 1875 and 1885 by nearly two hundred millions sterling, an amount nearly equal to the Franco-German war fine."

This gives us the explanation of the fact that the consols on which the interest was reduced by Mr. Goschen, when Chancellor of the Exchequer, to 2-3/4 per cent., are now selling at a much higher premium than formerly; the smaller amount of money paid in interest will purchase a very much larger amount of commodities than the former larger interest did.

The matter is very clearly set forth by Hon. Samuel Smith, M. P.: "If the question of protection is to be introduced into the discussion, then it will be found to tell more forcibly against our opponents. What do they seek for, but the protection of gold as against silver? They wish, as far as lies in their power, to boycott silver and throw the world upon gold alone, even though such a course should change the value of gold. In trying to boycott silver, they are giving protection to the wealthy capital cla.s.s, just as truly as the old corn laws did to the landed owners of this country. The only difference is that the amounts involved are much larger and the protected cla.s.s much richer and the confiscation of the fruits of the toiler much greater than under the old system of the corn laws. When the ma.s.ses of this country awake as those of America have awakened to the magnitude of this question, they will brush away this idle talk that we are trying to restore protection." If Mr. Smith were in Congress instead of Parliament, what a howl there would be about him as an anarchist!

It being now the unanimous opinion of English statesmen and financiers that gold has greatly appreciated, and that such enhancement has already wrought great evil, the important question arises, Will this process continue? In the speech already quoted Mr. Giffen says: "I am bound to say that all the evidence seems to me to point to a continuance of the appreciation. It is impossible to suppose that the movement will not extend to other countries. All these facts point to a continued pressure on gold. The better probability seems to be, that the increase of the purchasing power of gold will continue from the present time."

The Right Hon. A. J. Balfour, now the head of the British Cabinet, in a speech delivered at Manchester, October 27, 1892, said: "We want two things of our currency. We require that it shall be a convenient medium of exchange between different countries, and we require of it that it shall be a fair and permanent record of obligation over long periods of time. In both of these great and fundamental requirements of a currency, our existing currency totally and lamentably fails." After showing that within fifteen years the money of Great Britain and Ireland had advanced in purchasing power no less than 30 or 35 per cent., he went on to say that of its further progressive appreciation "No living man can prophesy the limit." A little later he spoke of it as progressing "steadily, continuously, indefinitely," and closed his remarks on that subject in these words: "If you will show me a system which gives absolute permanence, I will take it in preference to any other. But of all conceivable systems of currency, that system is a.s.suredly the worst which gives you a standard steadily, continuously, indefinitely appreciating, and which by that very fact throws a burden on every man of enterprise, upon every man who desires to promote the agricultural or industrial resources of the country, and benefits no human being whatever but the owner of fixed debts in gold."

In his work "The Bimetallic Question" Hon. Samuel Smith, M. P., presents as an evidence of the hardships due to the increasing purchasing power of money these facts: "The English landlords who borrowed 400,000,000 on their property, agreeing to pay, let us say, 16,000,000 a year, interest at 4 per cent., supposing that it represented one-quarter of their rents, now find, owing to the fall of prices, that it represents one-third, or even in some cases one-half of their rent.... The factory owner, the mine owner, the ship owner, who thought it safe twenty years ago to borrow half the value of his plant in order to find capital for his business, now finds that the mortgagee is the virtual owner. Nearly all the profits go to pay the mortgagee's claim, and in many cases he has foreclosed, and sold out the unhappy borrower, ruined through no fault of his own, but through the extraordinary sinking of prices. As a matter of fact, I believe that if all the fixed capital engaged in trade in England could be valued to-day at its real selling price, it would be found that it would do little more than pay the mortgages and debts upon it. Trade is very greatly and injuriously affected by sudden alterations in the standard of value, especially when the alteration is, as now, towards increased values. It arises in this way: trade is largely carried on by borrowed capital, or, in other words, by the use of credit in some shape or other; the vast banking deposits are mainly loaned to traders; a very great deal of the invested capital of this country is lent upon mortgages upon trading property such as ships, factories, and warehouses. A prudent trader usually considers it safe to draw considerably beyond his floating capital, and to borrow say 50 per cent. upon his plant or a fixed capital.

Now, the constant decline in prices within the last few years has virtually swept away his own portion of the capital, and only left him enough to pay the loans and mortgages. For instance, a ship or a factory built at a cost of twenty thousand pounds, of which ten thousand were borrowed, is now worth only twelve thousand pounds, or 40 per cent. less; and so the mortgage represents five-sixths of the value instead of one-half, the trader's interest having sunk to two thousand pounds in place of ten thousand. Probably, if trade is unprofitable, he fails to pay the interest and the mortgage is foreclosed; the property is forced off at just sufficient to cover the loan and he is ruined. I have no doubt that this exactly describes the condition that confronts numbers of traders in this country and other countries having the gold standard. A great portion of the commercial capital of the country has pa.s.sed into the hands of the mortgagees and bondholders who have neither toiled or spun. The discouragement this state of things produces is intense. After it has gone on for several years, a kind of hopelessness oppresses the commercial community, all enterprise comes to a standstill, many works are closed, labor is thrown out of employment, and great distress is felt, both among laborers and the humbler middle cla.s.s. Indeed, it strikes higher than this; for mult.i.tudes of people who were once prosperous traders have now become dependent on charity. I know many such myself."