If Not Silver, What? Part 5

How fitly that describes the condition of the United States to-day. This was written some years ago, and so rapid has been the subsequent decline in prices that it almost equals the decline he had estimated for the fifteen or twenty years preceding the date of his work. And the end is not yet.

In his comments upon Mr. Goschen's address, delivered in 1883, wherein he pointed out that in the decade from 1873 to 1883 the annual supply of gold had decreased in a marked degree, and concurrent with this there was a marked increase in the demands upon the world's stock of gold, which was intensified by the subst.i.tution of gold for silver as money in Germany and other countries, Mr. Smith makes the following observations:

"The gold production, which for some years exceeded 30,000,000 annually, has fallen to 19,000,000 a year; and the best continental authorities, such as Soetbeer and Laveleye, reckon that more than half that amount is consumed in the arts.

"It may, therefore, be reckoned that since 1873 only some 10,000,000 on the average has been available for currency purposes.

"But Germany during that period has introduced a gold currency of 80,000,000, the United States has used up 100,000,000, and Italy has drawn some 20,000,000 for a similar purpose.

"So that 200,000,000 have been drawn for these special purposes, whereas the whole supply of new gold for coinage has not exceeded in that time 130,000,000.

"The balance must have been drawn out of existing stocks. Besides, a steady drain of some 4,000,000 a year has gone to India, further depleting stock in Europe.

"While trade and population constantly grow and demand more metallic currency, there is a steadily diminishing quant.i.ty to meet it. If you put the present product of gold at 19,000,000 a year, and the requirements of the arts at 8,000,000 or 10,000,000 a year, while the India demand is 4,000,000, there is only left 5,000,000 to 7,000,000 a year for Europe, America, and the British Colonies.

"It will seem to subsequent ages the height of folly that just at this period, when gold was running short, the chief states of the world decided to close their mints against silver, and cut off, so to speak, one-half the money supply of the world from performing its proper functions.

"Had the world continued to use both metals as freely as before, the painful crisis we have pa.s.sed through would have been much mitigated. But by a suicidal policy silver was cut off at the very time it was most needed, and a double burden thrown upon gold just when it was able to bear only half of its former burden.

"As Bismarck has well said, two men were struggling to lie under a blanket only big enough for one."

Bad as have been the effects of monometallism in England, they have been far worse in Ireland; and dark as is the future of the former, it is light itself compared with that evidently in store for the latter. Those familiar with Irish affairs know that after a long agitation several acts have been pa.s.sed to enlarge the rights of tenants and to secure them a larger share of what they produce. The Act of 1881 reduced the rents and fixed the amount to be paid at a specific annual sum in money for a long term of years; and the subsequent Ashbourne Act (so called from Lord Ashbourne, who introduced it) gave tenants a chance to buy and pay for lands in fixed yearly installments for forty-nine years. The intent was to create a peasant ownership somewhat like that of France. It was the end of a long fight, and was supposed to be a great victory and the inauguration of a very great reform.

Scarcely, however, was the great victory won and the great reform inaugurated when it became evident that, owing to the demonetization of silver and increased purchasing power of gold, the tenants were, in reality, bound to much heavier payments than before. Whatever may have been the intent, the tenant, who bound himself to pay a fixed annual sum as rent for a long term of years, found himself bound to deliver a much larger share of produce; and the purchaser under the Ashbourne Act found that what looked so easy in figures soon became impossible in fact, as the prices of his produce fell so rapidly that each successive payment became more oppressive until it finally became impossible. Thus it looks now as if by the appreciation of gold all that was gained for the tenant is more than lost, and that in the future his condition may be worse than in the worst days of rack-renting. In recent years this has become plain to those who have the good of Ireland at heart; they have taken the alarm, and are outspoken on the threatening evils. Among these is the Most Reverend Dr.

Walsh, Archbishop of Dublin. In a recent interview he says, referring to the rise in the value of gold:

"All this is indisputable; it is now fully in the public view; yet not even an attempt is being made in Parliament, or even out of it, to bring about an equitable readjustment of the conditions which are proving so disastrous in other nations, conditions too that are imposed under the provisions of statutes enacted as measures of protection for the tenants. The Irish Land Acts of 1881, 1885, and 1891 have, nevertheless--as a result of the increased and increasing value of our present unbalanced and consequently untrustworthy monetary standard of value--become fruitful sources of difficulty, and may very soon become fruitful sources of disaster, to those for whose benefit they were intended."

Again, referring to the importance of some remedy, possibly that which bimetallism might provide, he says:

"The adoption of bimetallism or of some equivalent remedy, if there be any equivalent remedy, is, I am convinced, a matter of imperative necessity; that is, if the agricultural tenants of Ireland--and I do not limit this to Ireland--are to be saved from otherwise irretrievable ruin. If things go on as they are, even the excellent land purchase scheme, which is a.s.sociated with the name of Lord Ashbourne, may become, before many years are over, a source of widespread disaster to the tenants who have purchased under it."

Again, in view of the steady and dangerous increase in the burdens of the obligations entered into under either of the acts referred to, by reason of the continued enhancement in the price of gold, he says:

"The bimetallists may be right or they may be wrong; but, at all events, if they are right, then it is noticeably plain that the Irish tenants who have the misfortune to have their rents fixed for terms of ten or fifteen years under the Act of 1881, and in much the same way the Irish tenant purchasers who have the misfortune to have found themselves saddled with the obligation of making annual payments fixed for forty-nine years, are simply sliding down an inclined plane with bankruptcy awaiting them at the bottom of it."

And again:

"The point, as I have already stated it, is that so long as our monetary system remains what it is, every one who is placed under an obligation to make yearly payments of a fixed amount of money is thereby placed under a burden which is growing heavier from year to year."

In discussing the question of variability in the purchasing power of gold, he says:

"The reason of the liability to fluctuation in the purchasing power of the sovereign is plain: When gold rises in value a larger quant.i.ty of any other commodity, say of corn, of meat, of b.u.t.ter, or of cloth, will have to be given in exchange for any given quant.i.ty of gold, such, for example, as the quant.i.ty contained in a sovereign. On the other hand, when gold falls in value a smaller quant.i.ty of any other commodity, say of corn, of meat, of b.u.t.ter, or of cloth, will suffice to obtain in exchange any given quant.i.ty of gold, such as that which is contained in the sovereign. It is an obvious inference that our gold coinage, however useful as a medium of exchange, does not furnish us with a standard of value fixed and unalterable. It does not furnish us, for example, with such a standard as the yard is of length or as the pound troy is of weight. The popular notion that the pound sterling const.i.tutes a fixed standard of value is merely a popular delusion. The sole foundation for that delusion manifestly is that in these countries the values of all commodities are commonly stated in terms of a pound sterling; in other words, in pounds, shillings, and pence; a shilling being a twentieth part of the pound, and a penny the twelfth part of that again.

"The natural result of this method of enhancing the value of commodities other than gold is that when prices rise or fall the impression is conveyed to a superficial observer that it is the value of other things that changes, the value of the sovereign remaining fixed."

Under this head he says again:

"The price of things estimated in gold--their gold price--may change, whilst their price estimated in silver--their silver price--remains unaltered. This will occur if the value or purchasing power of gold goes up or down, while the value or purchasing power of silver remains unaltered. Suppose, for instance, that gold is in any way scarce in relation to the demands upon it. Then, in any country where gold is the standard metal of the currency, those who wish to obtain, a certain quant.i.ty of gold, whether in coin or in bullion, will have to give a larger quant.i.ty of other commodities in exchange for it; or, to put the matter in another light, those who have only a definite commodity to part with will receive less gold in return for that; in other words, there is a fall in gold prices. Suppose, on the contrary, that gold is abundant in relation to the demands upon it, then those who wish to obtain a certain quant.i.ty of gold, whether in currency or in bullion, will not have to give so large a quant.i.ty of other commodities to obtain the quant.i.ty of gold they require; or, to put the matter as before in another light, those who have a definite quant.i.ty of other commodities to dispose of will obtain more gold in return for them; in other words, there is a rise in gold prices. If in either case there is no change in the value of silver, then the price of commodities stated in silver, that is, their silver price, will remain unchanged."

In referring to the very prevalent notion, especially among the uneducated cla.s.ses, that the gold unit of measure of value does not vary, he says:

"As for the tenant purchaser, he probably thinks that after the extra pressure of the first few years he may look forward to easy times for the rest of his life. He little knows what is before him. If things go on as they are, it will be harder for him, ten or fifteen years hence, to pay forty pounds a year than it would be to pay fifty pounds a year now; but of all this he knows nothing--how could he? His only idea is that a pound is always a pound, and a sovereign is always a sovereign; so, in the belief that the yearly payment, when it is reduced to forty pounds, will be well within his reach, he puts his head into the halter."

THE "DUMP" OF SILVER.

All the world will dump its silver on us if we adopt free coinage, says the monometallist. How much, and where will it come from? asks the bimetallist. Oh, the world has billions of it ready for us, is the vague general reply; but when we ask for a bill of particulars we get instead a fine confusion of prophecy.

One answers that it will come from Spanish America. But we have already shown that all nations from the Rio Grande to Cape Horn have but $100,000,000 for their 60,000,000 people. The South Americans have but 83 cents apiece. The Mexicans have $4.54. The Central Americans have $2.14.

And the South Americans have $550,000,000 in paper money, to bring which to par and maintain it there will require at least $300,000,000 more in silver than they now have. No "dump" from there.

From France, says another. Well, France has $487,000,000 in silver coin, and some bullion; only $12.94 per capita in coin, and valued at 15-1/2 to 1 of gold. At her ratio an ounce is worth $1.3336; at ours $1.2929. Will she rob herself of coin, when she has none too much for business, and sell it to us at a loss of 4 cents on the dollar and freight charges? Germany has but $215,000,000 in silver coin, less than half as much as France, though having 13,000,000 more people, and Great Britain has but half as much as Germany. All the other Europeans together have much less than these three nations, and used at a higher valuation than ours. How then can they "dump" any on us?

From India, say a few. Well, India has a deal of silver--$950,000,000, according to our Director of the Mint. But she has 296,000,000 people, so it is but $3.21 apiece. And the best evidence that she has not too much is found in the fact that she is importing more. China has but $2.08 per capita; j.a.pan has but $4, and is importing heavily; Australia but $1.49, and the black and brown races still less. In short, all the world outside of the United States has but $3,444,900,000 in silver coin, or $2.46 per capita. It is a plain case that there will be no "dump" from the coined silver.

But the bullion, the old silver, the sc.r.a.p heap, will they not ship that to us by billions? Well, how much is there, and where is it? Will the n.o.bility and gentry of Europe melt down their family plate, the plain people everywhere their silver ornaments, and the Hindoos their household G.o.ds, to send us the silver? If so, why did they not do it when a cup, a watch, or a silver G.o.d would buy twice as much gold as now? But the supposition is absurd. The manufactured articles are worth very much more than the metal in them, to say nothing of the sentimental value. A prize silver cup, for instance, won in a great race or regatta, could not be bought for ten times its weight in gold. There remain, then, only the sc.r.a.p heap and the stored bullion, and n.o.body has been able to locate any great ma.s.s of it. Is it reasonable to suppose that moneyed men have been storing away silver for years, making no profit on it and losing the interest, and doing it in the face of a falling market? No, the timid may be rea.s.sured; there will be no "dump."

Another cla.s.s threaten us that a great ma.s.s of securities will be "unloaded on us." Well, Great Britain, Germany, and Holland, all gold countries, are the nations which hold practically all the American stock and bonds held abroad. Of course they did not invest expecting to be paid princ.i.p.al and interest in coin, for they know that there is not enough in this country to pay it; it is in commodities that we must pay. So far as these securities are bad, as we are sorry to say very many are, foreigners having been badly "plucked" by some of our operators, they will be returned anyhow. In fact, they are coming back now. As to those which are good, being held against property capable of earning a steady and reliable income, they will not be returned. Held in gold countries, the interest and dividends on them will be paid in our products measured in the currency of those countries, no matter what our monetary system may be.

But suppose the "prophets" of evil are correct to this extent that silver and securities will be "dumped" on us to the amount of a billion or two.

Will the foreigners give us all these good things? a.s.suredly not. They must all be paid for; and with what? Manifestly with agricultural products, for there is little or nothing else. The farmer must furnish the stuff, and he is ready and willing to do it--yes, anxious. At least three-fourths of our exports are agricultural, and of the new exports probably seven-eighths would be. We find, moreover, that in 1891 55,131,948 bushels of wheat exported brought us $51,420,272, and in 1892, 157,280,351 bushels brought us $161,399,132, while in 1894 the 88,415,230 bushels exported brought us only $59,407,041, and in 1895, 76,102,704 bushels brought us but $43,805,663. Similarly it may be shown that our largest cotton exports have brought us the least money; but this is an old story. It goes without saying, that to the farmer there are three great factors in the present situation: a ruinously low price for his products, a tremendous surplus left over from last year, and an immense crop for this year now adding to the surplus, with no possible home consumption to give an adequate outlet. Suppose then the "dump" should come and the farm produce go--what then?

First of all there must come as a result a rise in prices. Farmers receiving much more money would immediately pay their most pressing debts; the release of idle money would break the deadlock which now paralyzes trade, and from the farmer the money would at once be poured into the channels of rural business. The consumptive demands would be tremendous because of the long and forced abstinence, and the farmer would supply himself with those things he has so long wanted. The railroads would have a vastly increased business, and as a result there would be a greatly increased demand for labor. Instead of the ruinous "cut in rates" which we read of almost every day, made in order to stimulate the movement of crops, we should soon hear of vastly increased shipments at profitable rates; these of course would soon be followed by increased net earnings, which would in time create increased values of securities, which again would check foreign sales and stimulate purchases. There would be a boom in stocks to dispel the gloom of Wall Street, and we should do the money-mongers good in spite of themselves.

Is this all supposition? Well, we are proceeding upon the theory of the monometallists, that a billion dollars' worth of silver and securities would be shipped here. We are showing what must inevitably result if their predictions should hold good--more money for the farmers, more business for the merchants, more transportation for the railroads, and more business for their correlated industries; and, as a result, more work, abundant work, for those now idle. And this last would be the greatest blessing of all. The benefit would be to the farmer, the handlers of grain and all who serve them, to the retail tradesmen, the small manufacturers, all the country artisans immediately dependent upon the farmer, and all those who supply all of these cla.s.ses. In short, there would be a general quickening of all branches of production and trade as a certain result of the transfer of foreign silver and securities for our agricultural surplus. Is there anything in all this to alarm Americans?

ASIA'S DEMAND FOR THE PRECIOUS METALS.

Among the many errors which distort men's opinions on the so-called "silver question" is the belief that the gold supply of the present and near future need be considered merely as it may affect Europe and America.

Asia and Africa are in most men's minds entirely excluded from the calculations. The popular belief in the United States may be briefly stated thus: Asia is and is long to be the land of stagnation. Asiatics are unprogressive and will remain so. In contact with the higher civilization of Europe the yellow and brown races are likely to fade away as did the Maori and the American Indian; or if they continue to increase, their trade and government will be conducted chiefly by Europeans.

One finds this belief expressed in many standard works. "The helpless apathy of Asiatics" is a favorite phrase of Macaulay. "Man is but a weed in those vast regions," says DeQuincey. "In Asia there are no questions, only affirmations," says another philosopher. And no amount of experience seems to shake the popular faith in this notion that what Asia was she is always to be. And yet enough has occurred within the memory of men still middle-aged to dissipate it. Only a few years ago Americans looked upon Russia as an inert ma.s.s, semi-barbarous in large part; and when Kennan pictured the horrors of Siberia most readers thought the condition only such as might be expected from such a government and such people as they believed the Russians to be. But Russia is to-day one of the world's greatest powers, with 120,000,000 of people, building the two longest railways in the world, developing the Siberian and Transcaspian region with a rapidity only exceeded in our own far West, and drawing gold from this country and western Europe at a rate that threatens the stability of our financial system.

It is only forty-one years since our Commodore Perry astonished the world by securing admission to j.a.pan and proving to the western people that it was at least worthy of their notice, yet that empire has undergone a most beneficent revolution in which the Daimios or local lords consented to a self-sacrifice without a parallel in history, has been the victor in a great war, has adopted the best features of the western civilization while sacrificing none of its own, and is advancing in material development with a rapidity rarely equalled and perhaps never excelled. Five years ago the first complete census showed thirty-six cotton factories with 377,970 spindles; three years later the number of factories had doubled and that of the spindles had much more than quadrupled, and there is every indication that next year's tabulation will show a still more rapid increase. In 1894 there were 17,000 people employed in that industry.

Hon. Robert P. Porter, who has recently returned from j.a.pan, after making a thorough study of her progress and resources, tells us that while her export of textiles of all kinds in 1885 was worth but $511,990, they were in 1895 worth $22,177,626, the estimate of both years in silver dollars.

Similarly in the same years the exports of raw silks increased from $14,473,396 to $50,928,440, of grain and provisions from $4,514,843 to $12,723,771, of matches from $60,565 to $4,672,861, of porcelain, curios, and sundries from $2,786,876 to $11,624,701, and several other articles in the like proportion, while the commerce for 1895 showed an increase of $30,000,000 over 1894, reaching a total of exports and imports of $296,000,000, or about $7.50 per capita.

The government granted 2,250,000 yen as a bounty to the first iron works, begun in 1892, and already the products of those iron works in hand-made articles are underselling American products on our Pacific coast. In five years, prior to those covered by Mr. Porter's figures above, j.a.pan's exports rose from 34,800,000 to 68,400,000 yen, and her imports from 27,000,000 yen to 64,000,000 yen. Nor does there appear any reason to doubt the confident statement of British experts that development for the coming years will go on much more rapidly. Politics in the empire already turns upon fiscal and economic questions; of two bills urged in the Imperial Parliament by the progressists, one decrees the nationalization of all railways not yet owned by the state, and the other asks for an appropriation of 50,000,000 yen for the building of a new railroad. While this is going through the press it is announced that j.a.pan has established two new steamship lines, one running from Yokohama to our own Pacific coast, and the other from Yokohama to Ma.r.s.eilles, stopping at Shanghai, Hong Kong, Singapore, and Columbo.