UNIVERSITY OF CALIFORNIA, SAN DIEGO 3 1822 0161 7673 A A n r 1 2 3 6 HERN 03 .- — ^J b Central University Library University of California, San Diego Note: This item is subject to recall after two weeks. Date Due l\ U.C.5.!>-. JUNOG RECD 0139(1/91} UCSDLib. THE UNIVERSITY LIBRARY UNIVERSITY OF CALIFOR'I university of California sandiego A PRIMER OF FIl^Al^lC^." ' I |||; ""I'l"]] 3 1822 0161 AN HONEST DOLLAR THE BASIS OP PROSPHRITY. DAVID JAYNE gILL, LL.D., Rochester, New Vokk. PUBLISHED BY THE NATIONAL REPUBLICAN EXECUTIVE COMMITTJJ' MADISON SQUARE, NEW YORK. CONTENTS. Introduction , I. First Bimetallic Experiment II. Adoption of the Gold Standard . III. Causes of the Demonetization of Silver IV. Demonetization of Silver in Europe . V. Experimental Legislation VI. International Bimetallism VII, Debtors and Creditors VIII, Prices and Wages IX. Agricultural Prosperity X. Commercial Honor XI. Fallacies of the Free Coinage Theory XII. Conclusion ...... 2 6 9 lO 12 14 i8 20 23 24 27 28 32 INTRODUCTION. 1. Present Importance of the Subject. — The diametrical opposition of the platforms adopted by tlic two j^reat political parties of the United States at their recent conventions, upon the question of the national currency, places the monetary issue in the front line of battle for the presidential election of 1896. The American people are once more called before the judgment-seat of history, as they were in 1861. Those who understand the character of American citizens believe that nothing is necessary beyond a clear and truthful presentation of the facts and principles involved in this controversy, in order to secure a just and honorable settlement of the question, l^ut it is evident that adequate compre- hension of the momentous issues involved in the inflation of the national currenc\-, and especially in a sudden change of the standard of value, is not to be acquired without serious and patient investigation on the part of every citizen. It is, there- fore, of the highest importance that the essential elements of this great problem be so presented to the public mind that every man of intelligence and ordinary knowledge of arithmetic may form his own conclusions regarding the justice and expediency of the propositions put forward by the party platforms. The present sketch is intended to supply a brief and intelligible statement of the whole question at issue between the parties, without partisan bias, and with absolute fidelity to the facts. 2. The Nature and Uses of Money. — The exchange of commodities is essential to the existence of civilized life. Division of labor gives to all the great advantage of profiting by the special skill and facilities of each. In a civilized state of society, almost all the products of every creator of value are offered for exchange. When they are exchanged directly against each other, as wheat for cloth, the exchange is called barter. When the exchange is effected by the me- dium of some common measure of value, as gold or silver, it is called a sah\ and the amount of the medium agreed upon is called the price. Such a common measure of value is called money. It is evident that a medium of exchange would not be accepted unless it had some definite relation to a standard of value. Price is, therefore, partly a ques- tion of arithmetic, which determines how m^iny times a unit of value is to be taken in order to be an equivalent medium of exchange; but it is primarily a question of value, that is, it has relation to some object of desire. Whatever this object of desire may be, in order to be a good medium of exchange it must be (i) Measur- able, so as to be capable of arithmetical treatment ; (2) Divisible, so as to be separable into arithmetical parts and again united in multiples of those parts ; (3) Hovioi^cjieoiis, so as to be always the same thing, without variation in quality from time to time ; (4) Portable, so that it can be removed from place to place, and thus really serve as a medium of exchange ; (5) Durable, so that it will not easily perish during possession ; (6) Stable in value, so that it will have the same purchasing power when it is paid as when it is promised ; and (7) Recognizable^ so that it can always be known and its value readily ascertained by sight. ■ In practice we have two kinds of mediums of exchange, both of which are called " money," but which need to be clearly distinguished. Real Money is always a commodity of some kind. Representative Money is a promise to 2 pay this, either expressed in definite terms on the paper or metal which serves as representative money, or implied by an authorization of law, or general agree- ment. Human nature the world over has settled upon the precious metals, gold and silver, as commodities fitted to constitute real money. If there is a doubt which of these two is to be preferred to the other, it must be settled by asking the question, Which is most desired '( And if any attempt is made to determine how much more one is desired than the other, that can be ascertained only by discovering the market price of one in terms of the other, at the time in question. The great bulk, probably ninety per cent, of all the business of the country is done without money. It is done on credit^ that is, in the faith that promises to pay money will be fulfilled, if required. When the credit of a person or cor- poration is good, the payment of money is not required. Checks, drafts, bills of exchange, promissory notes, and other forms of credit, are the mediums by which the world does its largest business. The clearing-houses equate these, and balances only are paid in money. 3. Definition of Terms. — There are a few technical terms which, al- though in popular use, are often misunderstood, and therefore require to be exactly defined before monetary questions can be intelligently discussed. (1) The distinction between " Pure " and " Standard " gold or silver is this : " Pure " gold or silver is free from all alloy, and consists of the one ele- ment alone ; " Standard " gold or silver contains an amount of alloy consisting, under the present laws of the United States, of loo parts to the thousand of copper in the case of silver, and of copper and silver in the case of gold, to give the coin greater hardness and durability in use. Coin of standard gold or silver is, therefore, 900 thousandths fine ; that is, 1,000 ounces of standard coin contain 900 ounces of pure metal. (2) " Free Coinage " means that any one bringing gold or silver bullion to the Mint may have it coined into standard coin, without charge. The owner of bullion, under a system of free coinage, would receive one dollar in coin for every 371.25 grains of pure silver brought to the Mint. If the coin is worth more than the bullion by weight, the owner of the bullion obtains all the profit. If a silver dollar contains 53 cents' worth of silver, the depositor of bullion gets a profit of 47 cents on every dollar thus coined. The government gets nothing, but is expected to keep the silver dollar at par with gold dollars of nearly twice its intrinsic value. (3) When gold or silver bullion is bought by the government and coined into money, if there is a difference between the price of the bullion and the value of the coin, the government makes this profit, which is called " Seignorage." ■Originally, it was the charge which the '■''seigneur,'''' or lord of the realm, made for coining. Free coinage gives this profit to the owner of bullion. (4) When two metals are used as standards of value, the arrangement is called a " Double Standard." This of course involves fixing a " Ratio " be- tween them, to indicate how much of one is equivalent to a given amount of the other. As the production of both gold and silver varies from year to year, the market value of both is subject to some variation. That of gold, as being by far the more constant and unchangeable, is regarded as the unit in establish- ing this " ratio " between the two metals. By recommendation of Alexander Hamilton, in 1792, the legal ratio was fixed at 15 to i ; that is, fifteen pounds of silver were to be regarded as equivalent to one pound of gold. This was 3 very near the true market ratio; but silver afterward fell in price from over-pro- duction, so that in 1834 the ratio was changed to 16 to 1. The market ratio has been subject to constant variation, and now stands at about 31 to 1. (5) The terms "Monometallism " and " Bimetallism " are intended to represent, respectively, the doctrines held by believers in a single standard, and the adherents of a double standard. " Monometallist " might indicate an adhe- rent of the single silver standard ; but there is no class of men in this country that advocates such a standard, which is universally regarded as a mark of finan- cial debasement. A " Monometallist " is, therefore, a believer in the gold stand- ard, holding that it is impossible to fix a ratio by legislation which will not drive out one or the other of the two metals, and that silver should therefore be used only for subsidiary coin. The "Bimetallist " holds that it is possible to fix and maintain such a ratio. Most " Bimetallists,*' however, believe that the theory of a double standard is practicable only by international agreement to maintain a fixed ratio throughout the civilized world. (6) The expression " Legal-Tender" is an important one to understand, because it gives rise to a very serious error. A " legal-tender " is a kind of money, real or representative, in which the payment of debts is prescribed or authorized by law. Thus, for example, the government notes known as " green- backs," first issued during the Civil War, were mere promises to pay, without date. At that time the gold dollar was the accepted unit of value, containing 23.22 grains of pure gold, or 25.8 grains of standard gold. But as the "green- backs" were made a legal-tender for all debts between citizens of the United States, they were considered as the legal money ; and gold, which was difficult to obtain, was said to be at a premiian. (7) At the present time, the " Unit of Value " in our system of coinage is the gold dollar of 25.8 grains of standard gold. As we shall presently see, there is a great variety of representative money issued by the government of the United States, only part of which is " legal-tender." As long as the treasury is prepared to redeem in gold, directly or indirectly, all of these kinds of money, they are equally good, and the people will be satisfied to exchange them on terms of equality. But the moment public confidence is lost in the ability or intention of the government to keep all its money equal to the standard, that moment gold will be at a pre- mium, and a part of the national currency will depreciate in the hands of the holders. 4. Present Forms of Money in the United States. — The following table exhibits the different kinds of money now current in the United States : — r I. Real Money : Gold Coin. II. Representative Money: { ( I ) Standard Silver Dollars, unlimited legal-tender.^ Metallic \ (2) Subsidiary Coin, legal-tender up to $10. (3) Minor coin, legal-tender up to 25 cents. ( 1 ) Gold Certificates, not legal-tender. (2) Silver Certificates, not legal-tender. (3) Silver Treasury Notes, unlimited legal-tender.^ (4) United States Notes, unlimited legal-tender. ^ (5) Currency Certificates, not legal-tender. .(6) National Bank-Notes, not legal-tender. Non-metallic The only " real " money now circulating in the United States is gold coin ; foi this alone is worth its face value apart from the element of credit. All the other 1 Except by contract to the contrary. 4 _. _ money is " representative ; " for it does not possess value equal to its face apart from the element of credit. The standard silver dollar is now worth as hnlUoii only about one-half its face ; for 480 grains of silver bullion can be bought for 68 cents, and the standard sil- ver dollar contains only 371.25 grains, or 53 cents' worth, of pure silver. \\'e trust the national government for the remainder. The subsidiary coin contains a proportionally smaller part of pure metal, and is, therefore, still more charged with the credit element. United States notes are promises to pay in coin ; while the certificates of de- posit simply call for what they indicate, — gold, silver, or currency. Of these, the gold certificates alone specifically call for gold ; bufeven they contain a credit ele- ment, — faith in the ability and intention of the government to pay them in gold. The national bank-notes are the promises of national banks to pay in lawful money of the United States, which includes all the legal-tender money already described. They have the endorsement of the government, and are amply se- cured by deposits of United States bonds. The Treasurer's Report for July i, 1896, gives the following exhibit of money in circulation and in the Treasury at that time, as follows : — IN CIRCULATION JULY I, 1896. IN TREASURY JULY I, 1896. Gold Coin $ 476,128,483 Gold Coin $111,803,340 Standard Silver Dollars . 52,175,998 • Standard Silver Dollars . . 378,614,043 Subsidiary Silver . . . 59)999)8o5 Subsidiary Silver . . . . i5t730,976 Gold Certificates . . . 42,320,759 Silver Treasury Notes . . 34,465,919 Silver Certificates . . . 33i>259,509 United States Notes . . . 121,229,658 Silver Treasury Notes . . 95,217,361 National Hank-Notes . . . 10,668,620 United States Notes . . 225,451,358 Gold Bullion 32,217,024 Currency Certificates . . 31,840,000 Silver Bullion Ii9>053,695 National Bank-Notes . . 215,331,927 Total $1,529,725,200 Total $823,783,275 It will be seen that about two-thirds of all the money now in use in the United States involves, to some extent, the element of credit. Hitherto, since the resumption of specie payments, Jan. i, 1879, that credit has been above sus- picion. It is now, for the first time, brought in question by a political party whose propositions have created general apprehension. 5. Opposing Platforms of 1896. — In order to show the peril with which the national credit is now menaced, the platforms of the Republican and Demo- cratic parties for 1896, so far as they relate to this question, are presented below for comparison : — REPUBLICAN PLATFORM. DEMOCRATIC PLATFOf Adopted at St. Louis. .Idopied at Chicago. The Republican Party is unreservedly for We are unalterably opposed to the sound money. It caused the enactment of the Single Gold standard, wiiich has locked law providing for the resumption of specie pay- fast the property of an industrial people in the ments in 1879 ; since then every dollar has paralysis of hard times. Gold mono-nietallism been as good as gold. is a British policy, and its adoption has brought We are unalterably opposed to every our nation into financial servitude to London, measure calculated to debase our cur- It is not only un-American, but anti-.\merican; rency or impair the credit of our couu- and can be fastened on the United States only try. We are, therefore, opposed to the by the stifling of that indomitable spirit and love free coinage of Silver except by in- of liberty which proclaimed our political inde- ternational agreement with the lead- pendence in 1776, and won it in the War of the ing commercial nations of the ■world Revolution. 5 ■which -we pledge ourselves to pro- We demand the free and unlimited mote ; and until such agreement can coinage of both Gold and Silver, under be obtained the existing Gold stand- the present legal ratio of 16 to 1, vrith- ard must be preserved. out w^aiting for the aid or consent of All our silver and paper currency must be any other nation. We demand that the maintained at parity with gold, and we favor all standard silver dollar shall be a full legal- measures designed to maintain inviolably the tender, equally with gold, for all debts, public obligations of the United States ; and all our and private; and we favor such legislation as money, whether coin or paper, at the present will prevent the demonetization of any kind standard — the standard of the most enlight- of legal-tender money by private contract, ened nations of the earth. It will be seen that the issue joined between the parties is. whether or not the United States shall change the present standard and adopt the free and unlimited coinage of silver at a ratio of i6 to i. Without partisan prejudice, we wish to determine in a strictly scientific manner, in the light of history and experience, whether or not this proposition to change our standard and open the mints of the United States to the free and unlimited coinage of silver at the proposed ratio is honorable and expedient. The question is made the more interesting by the fact that the financial plank of the party advocating the free coinage of silver was repudiated by a large and intelligent minority in the Chicago convention, by the presentation of the following protest : — " We declare our belief that the experiment on the part of the United States alone, of free silver coinage and a change of the existing standard of value independently of the action of other great nations, ^^ould not only imperil our finances, but retard or entirely prevent the establishment of international bimetallism, to ^vhich the efforts of the government should be steadily directed. " It ■would place this country at once upon a silver basis, impair contracts, disturb business, diminish the purchasing po^^er of wages of labor, and inflict irreparable evils upon our nation's commerce and industry. " Until international co-operation among leading nations for the free coinage of silver can be secured, -we favor the rigid maintenance of the existing gold standard as essential to the preservation of our nation in redemption of our public pledges and keeping inviolate our coun- try's honor. We insist that all our paper and silver currency shall be kept abso- lutely at parity with gold." 6. Our Method of Treatment. — Such a question as the one under dis- cussion cannot be rightly settled by the mere wishes or opinions of any number of men, but demands a calm and impartial survey of the facts of experience. We propose, therefore, to present a series of plain propositions in which our national experience may be summed up, and in which the inductions derived from it may be easily grasped. Each proposition will be supported by the historic proofs and economic facts of which it is the expression. The order of these proposi- tions will be, as far as possible, conformed to the historical sequence of events, so that the present problem may be set in the clear light of past experience. I. FIRST BIMETALLIC EXPERIMENT. The first bimetallic experiment of the United States, adopted in 1792, fixed a legal ratio bet^ween silver and gold w^hich drove gold out of the country, and reduced the currency to the single silver standard. 1. The Adoption of the Silver Dollar. — From 1782 to 1786 the Ameri- can colonies seriously contemplated the necessity of domestic coinage. During the War of the Revolution, the unit of common account was the " Spanish 6 milled dollar." It was expected that the "Continental currency" would be redeemed in this coin, but the day of redemption did not dawn. Pounds, shil- lings, and pence were fixed in the traditions of the people ; but the English coins were driven out of circulation during the war, and did not return rapidly after- ward. Numerous foreign coins were current, — French, Spanish, and Portu- guese, — but the need of a native coinage was sorely felt. In 1782 Robert Morris, Superintendent of Finance, made proposals for the establishment of an American mint, and these received the approval of the Con- gress of the Confederation. He believed that two metals, gold and silver, could not be used, because their ratio was not constant, and recommended silver as the standard. Jefferson proposed decimal denominations, and the dollar as the unit. He saw that the proportion between the values of gold and silver " is a vieramtile problem altogether,'' and said, ^^ Just principles 7vill lead us to disregard legal propor- tions,''' proposing to adjust the ratio to the '■'• market price.'" Nothing was done, however, until the adoption of the Constitution. In his Report on the EstablisJnncnt of a Mint, dated May 5, 1791, Alexander Hamilton proposed a double standard, 15 pounds of silver being considered equivalent to I pound of gold. Hamilton saw that gold was "less liable to variations of value than silver," and adopted it as the unit by which the ratio was to be deter- mined. "As long as gold," he said, "either from its intrinsic superiority as a metal, from its rarity, or from the prejudices of mankind, retains so considerable a pre-eminence in value over silver as it has hitherto had, a natural consequence of this seems to be that its condition will be more stationary. The revolutions, therefore, which may take place in the comparative value of gold and silver, 7i>ill be changes in the state of tlie latter rather than in that of the former." He was, nevertheless, disposed to utilize both metals as far as possible, as at that time silver was, from its prevalent use and value, not unsuited to the peculiar needs of the country, whose volume of exchanges was not great, and whose immature development required the retention of all its metallic wealth. 2. Hamilton's Bimetallic System. — The Act of April 2. 1792, the first coinage legislation under the Constitution, made the eagle, or ten-dollar gold piece, the basis of our gold coins, containing 270 grains of standard, or 247.5 grains of pure, gold. No gold dollars were coined until 1849, ^'""^ dollar piece being of silver, and containing 416 grains of coin, or 371.25 grains of pure silver. The ratio of value between silver and gold was fixed, as Hamilton had recom- mended, at 15 to I. Subsidiary silver coins were established, of corresponding weight and fineness. The coinage was to be free of expense to the depositors of bullion, thus establishing the privilege of " Free Coinage " for both gold and sil- ver. All the gold and silver coins issuing from the Mint were made '• lawful tender in all payments whatsoever," but " those of less than full 7i>eight at values proportional to their respective weightsT Three facts connected with this first coinage law of the United States are worthy of special note : (i) The legal ratio between gold and silver was exactly adjusted to the market ratio ; (2) It was believed that this ratio loould continue for a long time in the future ; and (3) The bullion value of both metals was recog- nized as the standard of measuretncnt upon which a just ratio should be based. This is a fitting place to note the sophistry contained in the expression "the money of the Constitution." The Constitution of the United States makes no provision for either a monometallic or a bimetallic standard of value, and pre- 7 scribes no system of coinage. It provides tiiat Congress, and not the legislatures of the separate States, shall have power " to coin money, regulate the Value thereof, and of foreign Coin." The Constitution nowhere defines the material of which money shall be made, and nowhere implies a preference with regard to it. The only use made of the words " gold " and " silver " in the Constitution is in the prohibition to the States to make anything else than coin a legal-tender in the pavment of debts ; that is, it prohibits them from making their own issues of paper money a legal-tender. But there is not one word in the Constitution to indicate either the substance or the system of coinage which Congress might subsequently adopt. A demand for '" the money of the Constitution," with the implication that the Constitution has established or proposed a legal ratio be- tween gold and silver, or prescribed their concurrent use as standards of value, is, therefore, merely a resort of the demagogue, who is either ignorant of the subject, or means to impose upon the ignorance of others. 3. The Operation of Gresham's Law. — The bimetallic system of Ham- ilton started well ; but, after 1793, there was a steady decline in the value of sil- ver as related to gold, broken only by a few spasmodic rallies, falling in 1813 to a ratio of 16.25 to i. At no time between 1793 and 1834 was the market ratio so low as the legal ratio of 15 to i ; that is, during that whole period, silver was overvalued and gold was uiuiervaliied at the United States Mint. Sir Thomas Gresham has laid down a principle, which has since been known as " Gresham's Law," as follows : " When two kinds of money of unequal value are put into circulation together, the cheaper money always drives out the dearer." The truth of this statement may be very simply illustrated. If, in the same village, one storekeeper offers 25 cents per pound for butter, and another only 20 cents, the farmers of the neighborhood can gain 5 cents per pound by taking their butter to the first storekeeper. If this condition of things continues, all the butter will tend to go to the store where the higher price is paid. Now, the government Mint and the bullion market offered different prices for silver. The Mint offered one ounce of gold for every 15 ounces of silver, while the market offered 16 ounces of silver for one ounce of gold. One ounce of gold, therefore, would buy 16 ounces of silver in the market, 15 of which could be taken to the Mint and exchanged for another ounce of gold, leaving one ounce of silver as a profit on the transaction. The money broker may be trusted to con- duct this business, whenever there is an appreciable difference between the Mint and the market ratios ; that is, as long as the Mint continues to be open. In 1806 the coinage of silver dollars was suspended by President Jefferson, and no more were coined until 1836. The whole number of silver dollars coined down to and including 1805 was 1,459,517. From that time to 1836, the largest silver coins issued from the Mint were half-dollars. But Jefferson's suppression of the silver dollar did not, as intended, restrain the outflow of gold. According to Benton,^ the circulation of gold " became completely and totally extinguished in the United States" in 18 12. Professor Laughlin, in summing up the effects of this first bimetallic experiment, says : -' While nominally possessing a double standard, the country really had only one, and that a silver standard. Owing to causes beyond the control of a legislature, and which could not have been foreseen, the value of silver was so affected in its relations to gold as to destroy the 7norking of a bimetallic system." ^ ' r.enton. Thirty Years' View, vol. I, chap. cv. 2 Laughlin, History of Bimetallism, p. 57. 8 11. ADOPTION OF THE GOLD S'I'ANDARD. The second bimetallic experiment of the United States, adopted in 1834, fixed a legp.l ratio between silver and gold which drove silver out of use and reduced the currency to the single gold standard. 1. The Adoption of a New Ratio. — The Coinage Act of 1834 did not. like tliat of 1792, attempt to fix a legal ratio adjusted to that of the market. I'he ratio adopted was that of 16 to i (accurately 15.988 to i;, which undervalued silver, the market ratio being then about 15.7 to 1. It was urged that the new ratio would anticipate the expected continued fall in the price of silver, which experience seemed to justify ; and also that Spain. J'ortugal, Mexico, South America, and the West Indies had rated silver to gold at 16 to i. 2. The Suppression of Silver. — The effect of changing the ratio was more sweeping than it was expected to be. Gresham's law was brought into operation, not, as in the period 1 792-1834, to drive out gold, but, by the legal undervaluation of silver, to suppress its circulation. For $1,570 in silver, one could buy gold bullion which the Mint valued at $1,600. One had only to sell his silver for gold, in order to pay his debts at a discount of $30 on every $1,600, or nearly two per cent. Silver, therefore, ceased to be used as money, and became merely merchandise. The subsidiary coins also, since they contained the full proportion of silver, passed out of circulation and became merchandise, resulting in a "small change" famine. Few persons born after 1840 ever saw a silver dollar, except as a curiosity, until the coinage of standard silver dollars was resumed in 1878. 3. The Debasement of Gold Coins. — In order to adjust gold and silver coins to the new ratio, leaving the silver dollar unchanged at 371.25 grains of pure silver, the gold eagle was reduced from 247.5 to 232 grains of pure gold. This made a difference of 6.26 per cent in the value of the gold coins, and facil- itated their use in the place of silver, by lowering their value to that extent. The coinage of gold rose from $978,550 in 1833 to $3,954,270 in 1834. The injustice done to creditors by this change is apparent. Their lo>s was 6.26 per cent of the amounts previously loaned. It may be instructive to remember that the year 1837 " was the most trying one to banks, and to busi- ness generally, that the country has ever known."' All the Massachusetts i)anks suspended specie payments for one year, and many of them never resumed busi- ness. It was largely owing to a sudden change in the standard of values. 4. The Changes of 1837. — In 1837 the amount of alloy was made uni- form for both gold and silver coins, — one-tenth alloy and nine-tenths pure metal, — making all standard coin, as at present, 900 thousandths fine. Previ- ous to this time, gold coins were one-twelfth, and silver coins one-ninth, alloy. Leaving the amount of pure silver unchanged at 371.25, the weight of the silver dollar was thus made 412.5, instead of 416, grains. 5. The Discoveries of Gold. — The undervaluation of silver was rendered permanent for nearly forty years by the enormous discoveries of gold in Russia, Australia, and California. From an average annual production of about $38,000,000 in 1840-1850, the gold supply was increased by an annual produc- tion of more than $150,000,000 after 1850. The effect of the great gold discov- eries was to give the United States a single gold staiuhuii, silver being out of circulation except as subsidiary coin, which last was kept in use only by redu- cing the amount of pure silver in such coin to a ratio of less than i5'to i, » 9 m. CAUSKS OF THE DEMON ETIZATION OF SILVER. Tile disuse of silver dollars resulted solely from the commercial relations of gold and silver at the legal ratio of 16 to 1, and not from the so-called •' Crime of 1873. " 1. The Act of 1853. — A Coinage Act was passed in 1853, having for its purposes ( 1 ) The preservation of subsidiary silver as currency, and (2) Tiie rec- ognition of gold as the only standard of value. It was a practical abandonment of the double standard as a commercial impossibility at the 16 to i ratio. The Act met with but little opposition, and that was chiefly directed against the change of ratio for subsidiary silver. Nothing was said of the silver dollar in the Act of 1853. That had entirely disappeared from circulation, and it was proposed to accept the fact. " Gold is the only standard of value by which all property is now measured," said Mr. Skelton of New Jersey : '' it is virtually the only currency in the country." ' 2. The Suspension of Specie Payments. — Such was the condition of the standard of value when, on account of the Civil War, specie payments were suspended by the United States, Dec. 31, 1861. Then followed the issues of legal-tender notes and of bonds, to provide means for carrying on the war. Gold disappeared from the circulation ; but it was still the standard of value, and the notes and bonds of the government were based upon that standard. Specie pay- ments were resumed upon a gold basis, Jan. i, 1879, under a law of 1875. 3. The " Crime of 1873." — The Act of Feb. 12, 1873, is referred to by the advocates of the free coinage of silver as the " Crime of 1873," because it is alleged to have demonetized the silver dollar. The facts are: (i) That the silver dollar was not driven out of circulation by the Act of 1873, for it had not been in circulation for more than twenty-five years ; (2) it did not then for the first time cease to be coined ; for up to 1873 only $8,031,238 legal-tender stan- dard silver dollars had ever been coined, the coinage of silver dollars having been suspended by Jefferson in 1806. 4. The Crime of Omission. — The reason for referring to the Act of 1873 as a "crime" is found exclusively in its omissions. Its capital offence was the omission of the silver dollar from among the coins thereafter to be coined by the United States. As this had not been in circulation, or coined for circulation, for many years, it is not easy to justify the accusation of "crime" by its omission. But it is the circumstances of the omission that most arouse the indignation of the advocates of the standard silver dollar. That the step should ever have been taken with no opposition is the unpardonable wrong. The charge is, that the bill was "rushed'" through the House, partly by secrecy, and partly by oppo- sition to the wishes of the meml^ers. 5. The Charge Refuted. — Although this charge of haste, secrecy, and arbitrariness was fylly refuted by Professor Laughlin - in 1885, and again by Mr. Horace White ^ in 1895, it continues to be repeated and spread abroad, as if it were true and a just cause for public indignation. It is, therefore, necessary to repeat the refutation here. The bill was printed tJiirtecn times by the Treasury Department and by Con- gress, and the proceedings occupy one hundred and forty-four columns of the Con- gressiotial Globe. It was considered duringyfzr sessions of the Senate and House, 1 Congressional Globe, vol. xxvi., p. 629. ^ Money and Banking, pp. 213-223. 2 History of Bimetallism, pp. 92-101. and was in progress for more than two years. It was referred to in the Treasurer's reports for 1870, 187 i, and 1872, and passed through the hands of thirty experts for criticism and suggestion. It was sent to the House and Senate in various forms, and /aid on i/tc desks of all the 7ncmbers. It was debated by at least four members in the House, who called attention to the fact that the gold dollar 7vas the only standard recognized in the bill. There was no opposition in either Senate or House to the omission of the silver dollar from the list of coins. It was explained by Mr. Hooper, of Massa- chusetts, who had charge of the bill, that " the committee, after careful consid- eration, concluded that twenty-five and eight-tenths grains of standard gold, constituting the gold dollar^ should l)e declared the money unit., or metallic repre- sentative of the dollar of account.' He also called attention to the discontinu- ance of the silver dollar of 412.5 grains. The Law of 1873 never having been repealed, although the further coinage of silver dollars, as we shall see, was subsequently authorized, is still the law of the United States with regard to the standard of value. The coinage of silver in the three years 1873-1875, in spite of the "Crime of 1873,'' was $17,019,664, an excess over .he three years before 1873 of nearly $10,000,000. 6. The Trade Dollar. — To avoid all possible confusion, it is important to note that the so-called "trade dollar,'" authorized in 1873, was not intended as a legal-tender coin. " The trade dollar was in reality an ingot, shaped like a dol- lar piece, but with different devices than those on the dollar of 412.5 gcains; it weighed 420 grains standard weight (that is, 900 fine), and, consequently, con- tained 378 grains of pure silver. The cost of manufacturing the coin at the various mints was charged upon the owner of the bullion presented for coinage, so that the expense of melting, refining, and assaying the silver, and the expense of making the dollar, was borne entirely by the owners of bullion, and not by the United States." - It was not intended for circulation in the United States, but for trade with China and other silver nations, from which fact it derived its name. 7. The Myth of Ernest Seyd. — We should not leave this topic without recalling the fact that it was charged by the advocates of the silver dollar, that the "Crime of 1873 " was instigated by one Ernest Seyd, of London, who, it was said, had brought from England ;i^i 00,000 sterling, with which he bribed Con- gress to demonetize the silver dollar in the interest of foreign gold ! The only foundation for this infamous slander was, that Mr. Seyd's name was mentioned when the bill was introduced into the House as a "distinguished writer" who had "furnished many valuable suggestions " incorporated in the bill. Mr. Seyd had not been in this country since 1856, and was a bimetallist, who, along with his "valuable suggestions," as Senator Hoar showed in the Senate on the 22d of August, 1893, from the letter containing them, strongly urged that the provis- ion of the bill Ofnifting the silver dollar be not adopted .' If the newspapers that circulated this accusation, and the persons who invented it, have not reformed, it is likely to be revived and repeated, which is a sufficient reason for exposing it anew. 1 Congressional Globe, part iii.. Second Session, 42d Congress, pp. 2305, 2306. 2 l.a.ugh\\n, History of Bimetallism, p. 104. II rV. DEMONETIZATION OF SILVER IN EUROPE. The demonetization of silver by the leading commercial nations of the world, between 1870 and 1880, was the effect of the depreciation of silver, w^hich w^as occasioned by its inferiority to gold as money, and its overproduction. 1. The Change from Silver to Gold in France. — Between 1852 and 1864 France imported about $680,000,000 of gold, and exported $345,000,000 of silver. This was the first decided movement, outside of England, toward the gold standard ; but it indicated an unmistakable tendency. In 1867 the Inter- national Monetary Conference at Paris recorded its preference for the single gold standard ; and, from that time forward, this was the monetary ideal of every European nation. lUit France was not aljle to pass out of the double standard stage, on account of her enormous stock of silver. Before the transition to a single gold standard could be effected, the Franco-Prussian War broke out, which ended in the humiliation and defeat of France. 2. The Action of Germany. — The initiative for which France was pre- paring was reserved for Germany, her conqueror, to take. The opportunity came when $54,000,000 was paid to Germany in French gold coin, as a part of the war indemnity. For this advantage she had long been waiting, having been upon the silver basis since 1857, through a monetary treaty with Austria, and the expediency of the change having been discussed and accepted since 1868. The silver coinage of the German states was far from uniform. The coins were cumbrous and inconvenient, and the needs of the new Empire demanded a gold standard. The measures preparatory to the change were passed Dec. 4, 187 1 ; but the gold standard was not definitely adopted until July 9, 1873. The value of silver began to fall as early as November, 1872. By July, 1876, it had depreciated more than 22 per cent. This depreciation was, without doubt, partly owing to the increase in the production of gold, which displaced silver. Between 1850 and 1875 about $3,000,000,000 of gold had been added to the world's stock. (Germany therefore made her transition from silver to gold with perfect ease. As we shall presently see, the other leading commercial nations soon followed her. The production of gold during the 25 years from 1850 to 1875 was as great as in the 357 years preceding 1850; that is, since the discovery of America. It changed the money standard of the world ; because there was always a universal preference for gold, and all the commercial nations were only awaiting the appearance of a sufficient quantity to adopt it as the sole standard. 3. The Latin Union. — As we have already seen, France was making prep arations for the adoption of the gold standard when the Franco-Prussian VVai broke out. "The public applauded the introduction of gold in the place o; silver, for the same reasons that had earlier attracted the English people namely, gold pieces are more easily handled, a certain amount can be carriec more conveniently, and counting takes less time." ^ The Latin Union had beei created in 1865 by France, Belgium, Switzerland, and Italy, afterward addinj Greece. Dec. 23, 1865, a treaty between the four countries first named wa^ signed, adopting a uniform token coinage of silver. In 1873 the Mints of th Union were crowded with silver bullion. On Jan. 30, 1874, a meeting of dek gates was called, and limited the number of five-franc silver pieces that shouL 1 M. Chevalier in Journal des Economistes, June, 1876, p. 444. 12 I be coined during that year. This was a suspension of free coinage, and it has never been resumed. This act has been denounced by the advocates of free silver as a '* great wrong " to that metal, and as a cause of the depreciation that had already begun, and has ever since continued. It was simply an act of self-preservation. Whatever its effect upon the subsequent value of silver may have been, " the suspension of the free coinage of five-franc silver pieces by the Latin Union was Zi consequence of the falling value of silver."^ In 1877 the Latin Union entirely suspended the coinage of five-franc pieces for that year, except in Italy ; and in a treaty of Nov. 5, 1878, in order to prevent gold from disappearing and being replaced by silver, complete suspcnsioji was adopted. 4. The Action of Other Countries. — Prior to 1847, Holland had a double standard, with a ratio of 15.6 t(> 1. In that year she adopted a silver standard. In 1873 and 1874 the coinage of silver was several times temporarily suspended ; and in June, 1875, i^ ^^-^ discontinued indefinitely. Austria-Hungary, although on a paper basis, closed her mints to the free coinage of silver in 1879, and is endeavoring to resume specie payments on a gold standard, which was adopted in 1892. Even British India, which, for special reasons, has been favorable to silver, owing to the small transactions that prevail in her internal trade, and the native love of silver ornaments, — used as depositories of their wealth by the natives, — abandoned the free coinage of silver in June, 1893. Spain sus- pended silver coinage, except on government account, in 1878. There is, at present, not a mint in Europe opoi to the free coinage of siker. The leading countries of the world may be classed as follows, as regards their monetary standards, meaning by "standard" the present accepted measure of value : — Double .Standard. Argentine Republic. Bulgaria. Chile.2 Haiti. Hawaii. Java. Japan. Nctherlands.2 Philippine Islands. Servia. Spain. Uruguay. Venezuela. Silver Standard. Bolivia. Central America. China. Colombia. Ecuador. India. Mexico. Peru. Russia. Gold .Standard. Austria-Hungary. Belgium. Brazil. Canada. Denmark. Egypt. France. Germany. Great Britain. Greece. Italy. Norway. Portugal. Sweden. Switzerland. Turkey. United States. An examination of the list will show that all the most highly civilized nations whose people have extensive commercial interests are upon the gold standard, while most of the others are semi-civilized or barbaric. The full significance of this fact is well stated by Professc^r^^ghlin when he says, " In considering this movement in monetary progress, tli^^ibstitution of gold for silver, and compar- ing it with similar events in industrial progress in almost every branch of activity, no illustration seems to me more exactly to describe the change caused by the introduction of gold than that of steam. In former days the world carried on its exchanges by the slow, uncertain, and clumsy methods of coaches, wagons, and sails ; now all is done at less expense, more rapidly and conveniently, by railways 1 Laughlin,///.y/tfr> of Bimetallism, p. 156. - -About to adopt a gold standard. 13 and steamships. Both coaches and railways existed to transfer passengers and freight ; so both gold and silver were used to interchange goods. Formerly coaches were our chief dependence ; so was it with silver. In later years the railway has supplanted the coach, because it does the same service much better, leaving the coach to do minor work in other directions ; in the same way gold is supplanting silver, because it serves the needs of commerce better, and silver is rel- egated to use as subsidiary coin for retail transactions. Consequently, when there is offered to a commercial country the choice between using gold and using silver, we should as soon expect it to prefer silver as we should expect merchants to-day to send their goods to New York or to Chicago by wagons instead of by railway.^ V. EXPERIMENTAL LEGISLATION. The movement for the free and unlimited coinage of silver in the United States is the lineal descendant of greenback inflation, and the experi- mental legislation of 1878 and 1890 was a compromise in palliation of this extreme. 1. The Greenback Delusion. — At the close of the Civil War, the United States found itself burdened with an enormous debt ($2,844,649,626), and with a paper currency worth about seventy-five cents on the dollar. A speculative period followed, in which real estate and other property were greatly overvalued, and vast sums were borrowed for speculative purposes. The Western States were in particular the field for ambitious enterprises, undertaken in a spirit of adven- turous excitement. The collapse of credit and prices in 1873, not occasioned by the demonetization of silver, — which, as we have seen, was more largely coined that ever before, — but by the overstrain of the credit system, involved the great distress of debtors, particularly in the West. When the crisis came, the debtors, having consumed what they had borrowed, and finding themselves without means of payment, began to feel that it was cruel in the creditor to require his own, and that he should be paid off in the cheapest money possible. They were, therefore, opposed to the resumption of specie payments, which was authorized by the Resumption Act of 1875. " Weighed down by debt, and led] by skilful politicians, or impelled by selfish interest, the greenback faction de- manded that the government should come to the aid of debtors, and, by plentiful i issues of United States notes, create an inflation which should enable them to get] off the shoals of debt on the tide of rising prices," How the greenbacks were] ever to get into the hands of the people, unless the government distributed them I by mail to the unfortunate debtors that demanded them, still remains a mystery. 1 The government might print its notes by the billion, with no other result than to destroy its own credit, unless they were paid out of the treasury. They were to be used in paying off the United States bonds, which were drawn in coin. The greenback advocates were not, however, solicitous about this point of honor. If - greenbacks were good enough for the people, they were good enough for the! bondholders. But, as the debtors that wanted money were not bondholders,] this redemption of bonds in greenbacks would not put money directly into theirj hands. It would, however, accomplish two things: (i) It would inflate the ciir-\ raicy, and (2) It would effect a partial rcpudiatioti of the war debt. Upon thej tide of cheaper money they dreamily hoped to float into prosperity ! 2. The Rise of the Free Coinage Movement. — The greenback delusion! was effectually dissipated in its original form by President Grant's veto of the| 1 History of Bimetallism^ p. 168. 14 bill, and by defeat in the elections of 1876. " The demand for the coinage of silver dollars began where the cry for unlimited paper money left off.' The debtors and the demagogues continued their mission, but with a new and unex- pected alliance. They had objected to the purchase and coinage of silver in the Greenback Platform of 1876 ; but when it was perceived that a silver dollar was worth only ninety cetits as bullion, the inflationists saw their opportunity. The greenback idea was gradually abandoned, and its former advocates have since been rallied under the banner of the free and unlimited coinage of silver. The friends of inflation and repudiation saw in silver a new means of accom- plishing their end. Now, for the first time, it was discovered that a " crime '' had been committed in 1873, when the standard silver dollar was dropped from the list of coins. Being at that time (1876) a ninety-cent dollar, it represented to them at least ten per cent of inflation and repudiation. They could now make both appear vastly more respectable. Government notes should be issued, based on a deposit of coin; the United States bonds should be paid in coin: but it should be sih A bad dollar that no one wants to take is a dishonest dollar when a debtor is forced to take it. It impairs every existing contract, and the freedom of contract. It is a blow at the right of property, and at simple equity between man and man, and has in it the seed of anarchy. Let us now suppose that such inflation and consequent depreciation are forced upon the business world : how would it operate .? Every creditor would be disposed, as quickly as possible, to collect his debt before money had lost its present value. Most mortgage debts are now collectable, being usually drawn for one to three years. Foreclosures would follow ; numerous properties would be thrown upon the market ; buyers would be few ; the creditors would bid in the properties, and the debtors would lose their equities in them. All gold would be withdrawn at once from the circulation, which would involve a serious contraction of the volume of currency. For a time, money would be less plenty than it is now. Credit ivotild be extinguished, and it must be remembered that ninety per cent of the business of the country is done on credit. It is no exaggeration to say that the debtor would be crushed under his burdens. What is propagated as the debtor's deliverance would, in all probability, prove to be the debtor's doom. 4. Who are the Debtors ? — It is important just here to consider who are the greatest debtors in the United States. First come the United States Government, the States, and the municipalities. Considered with reference to their bonds, when not drawn in gold, the free coinage of silver is meant to be a measure of partial repudiation. But many State and municipal bonds are drawn in gold for long terms. Unless some legal quibble should defraud the debtor, gold would have to be bought at a premium for the interest and principal of such bonds, creating an additional burden of taxation. Among the largest debtors are the railways. Their bonds are largely drawn in gold ; and a premium upon it would not only wipe out all dividends, but, in most cases, render the companies insolvent, with the consequences of insolvency to their employees, stockholders, and bondholders. When it is remembered how many thousands of widows, orphans, and prudent people who have saved a little money hold municipal or railroad securities, the enormity of the proposition to defraud the creditor becomes apparent. The next class of debtors on the list is the banks of deposit. Nearly all the money of the people is intrusted to them, with nothing to show for it but a credit on the bank's books. Suppose all these depositors want their money, in antici- pation of its depreciation : what would happen? The banks would, of necessity, be closed, and all payments suspended. It may be said. Why should people want to withdraw their money under a free coinage law, when they can be paid 22 in silver now i The answer is very simple. Because a silver dollar is no^v as good as a gold dollar, on account of the policy of parity which the government has established and thus far maintained ; but the free coinage of silver 7vould destroy this parity. No one wants "cheaper money" who can get back the good money he parted with. For that reason, every one who can will try to get it back, when it is in serious danger, and will refuse to wait until its full recovery is impossible. 5. Who are the Creditors ? — But now let us see who the greatest credi- tors are. Prominent among them are the savings banks, with 4,354,045 deposi- tors, and $1,575,594,678 of deposits, mostly loaned on bond and mortgage. Who are these depositors who constitute so large a class of creditors t They are chiefly laboring people, who, by economy and prudence, have saved little sums averaging from $50 to $500. These are the creditors who are to receive their hard earnings in " cheap money," — in dollars worth fifty cents ! Another large class of creditors is the life insurance companies. In the United States they have policies in force to the amount of $9,681,497,447. and affecting probably 25,000,000 persons. The funds of these companies are chiefly invested in mortgage bonds. Could these companies ever pay their risks, if they were defrauded of half their investments ? Most of them would certainly become insolvent, and fail to pay the policy holders. Those that survived could pay only in proportion to what they received as creditors. And who are these policy hold- ers .-^ They are men of all classes, — ministers, teachers, professional men, mer- chants, farmers, clerks, whose savings have been sufficient to enable them to take out a policy of insurance on their lives, for the sake of their wives and chil- dren when their hands fall helpless and their busy brains are still. And these rapacious creditors, also, are to be paid in '* cheap money " VIII. PRICES AND WAGES. The free coinage of silver -would increase the cost of living, but ■w^ould not increase proportionally the -wages of labor. 1. The Wage-earner as Creditor. — It is important to remember that, among the creditors of the country, the largest class consists of the wage-earning part of the population. More than any other class, the wage-earners are share- holders in the great creditor institutions for saving and for mutual insurance; but, apart from this, they are directly and personally prospective creditors to the whole extent of their income. All who are paid for their services, whether by the day, week, month, or year, at fixed rates, belong to the class of expectant creditors. For them, and for all who would deal justly by them, the question is, How would they be affected by the free coinage of silver ? 2. The Difference between Commodities and Services. — Whoever has a commodity for sale can put upon it an anticipatory price. He may not get it to-day, but, if he holds on, he may get it to-morrow. This is what leads to speculation in wheat, cotton, bullion, and other commodities. An anticipatory price is a speculative price. It is impossible to speculate in personal services with any success. A man who withholds his labor in the hope of getting a higher price for it, usually loses his place, and is thrown out of work. By uniting with others, he may sometimes and for a while force an increase of wages ; but, while this process of forcing is going on, he remains idle, and, consequently, without pay. He must sell his services to-day, or he loses to-day's income. 23 This important difference between commodities that can be kept for a profit, and labor that cannot be withlield except at a loss, is the principle that operates to raise prices witlioiit raisin;^ Ti^u/j^rs, or to raise prices much more rapidly t/ian wages. 3. The Verdict of Experience. — This principle is not merely theoretical ; it is proved and illustrated by universal experience. A f j\v examples \vill serve to establish this. The statistics of wages and prices for the period from the beginning of the Civil War and the issue of legal-tender notes are excej^tionally full and accurate. Says Professor Taussig : — '• Money wages responded with unmistakable slowness to tlie inflating influences of the Civil War. In 1865, when prices stood at 217 as compared with 100 in 1S60, wages had onlv touched 143. The course of events at this time sliows the truth of the common statement, that, in times of inflation, wages rise /ess quickly than prices, and that the period of transition is one 0/ hardship to the wage-receiving class.'''' ^ The same fact is shown by the data of Senator Aldrich's Report on Wages, submitted to the Senate. It is also clearly brought out in this report, that when wages were highest, their purchasing power was not proportionally increased. When a laborer received $1.00 per day in i860, he was better off than when he received $1.48 in 1865. In i860 the purchasing power of his wages was equiv- alent to $1.00; but in 1865 it was equivalent to only 78 cents. After the re- sumption of specie payments, wages continued to increase, and their purchasing power also, with slight variations, and were never before so high as in 1890-1891, when their purchasing power considerably exceeded that of any preceding year. A comparison of wages paid for all kinds of labor shows that they are uni- formly higher in gold standard countries than in countries on a silver basis, and higher in the United States than anywhere else in the world."'' Japan is a good example of a country upon a silver basis. Her money has constantly depreciated in value; but while the price of staples in Japan has risen 28 per cent, wages have increased only 14 per cent, or only half as rapidly. Gold will buy more there now than at any previous time, — showing that the rise in prices is wholly illusory , for it is a rise in a depreciated money. Mexico is a sufficiently near neighbor of the United States to be particularly instructive. Wages have risen nominally in Mexico within the last few years, as silver has depreciated, but less rapidly than prices ; and they are from one-third to one-half lower than they are in the United States. The exchange value of a Mexican silver dollar, containing more silver than the American dollar, is about 54 cents. Wages would, possibly, rise in this country under a system of free coinage, but much more slowly than the prices of commodities. To sustain the present scale of living, it would be necessary that they should be doubled. No sane man can dream of this. The injustice of free coinage to the wage-earner is, therefore^ evident. // ^oould double his cost of living jvifhout doubling his income. IX. AGRICULTURAL PROSPERITY. The free coinage of silver would not conduce to the agricultural prosper- ity of the United States, -which will profit most from general prosperity. 1. The Agrarian Argument. — The movement for the free coinage of sil- ver has been promoted by a propaganda originating in the silver-producing States, 1 Quoted by White, Money and Banking, pp. 163, 164. 2 World Almanac for 1896, pp. 158, 159. 24 and addressing itself chiefly to the agricultural classes. Aside from the incite- ment of sectional jealousy and hostility, the movement has proceeded mainly along this line of argument: (i) Parallel with the fall in the value of silver, there has been a decline in the price of agricultural products, especially wheat; (2) This decline is owing to the demonetization of silver by the " Crime of 1873." the appreciation of gold, and the efforts of Wall Street and foreign powers to keep the United States on a gold standard ; ('3) The only cure for this unjust state of things is to overcome the political supremacy of the East, through the free and unlimited coinage of silver at the old ratio of 16 to i. These teachings have been spread throughout the country, especially in the West and South, by a wide distribution of literature, and the personal work of agents sustained by the wealth of the silver-producing interests. Large numbers of honest men, unfamiliar with the facts of our monetary history, or with the great principles that underlie economic relations, have been deceived by the mis- representation of facts, and the fallacies of reasoning contained in these teachings. 2. The Relation of W^heat and Silver. — The representations of the advocates of free coinage have created the impression, in many minds, that there is a natural relation of equivalence between 412.5 grains of standard silver and a bushel of wheat. This great staple, which was worth a dollar a bushel in 1872, is now worth only about fifty cents. Wheat, therefore, seems, at first sight, to to have followed the fortunes of the silver dollar ; and if we could once more make that dollar the standard, it would seem as if we might thereby restore the price of wheat. The absurdity of this idea, however striking at first thought, becomes appar- ent when we consider that there is no causa/ relation between the two orders of fact. Wheat and silver rise and fall in value, quite independently of each other, accord- ing to the fluctuations of demand and supply. The prices current show this clearly. In 186 1 wheat was as low as 55 cents a bushel, yet a silver dollar was then worth more than a gold dollar. In 1882 wheat was worth $1.40, and a sil- ver dollar was worth only 85 cents in gold. In 1894 wheat was as low as 50 cents a bushel, and a silver dollar was equal to only 46 cents in gold. It is evi- dent that there is no natural relation, not to speak of a divinely appointed har- mony, between the silver dollar and a bushel of wheat ! The fact of a decline in the price of wheat is evident, but the inference as to its cause is wholly false. What, then, is the true explanation .-• Since 1872 the grain-growing area has increased with a rapidity unprecedented in the history of the world. Enormous new tracts have been devoted to the raising of wheat In both North and South America and in Asia. In the United States alone, the development has been remarkable. In 1875 the acreage of wheat growing in this country was 26,381,512 acres. In 1891 it was 39,916,897 acres, an in- crease of more than 50 per cent. The crop, in 1875, was 292,126,000 bushels, the largest in many years; but in 1891 it was more than loo per cent greater, being 611,780,000 bushels. There has been, also, a large increase in the production of other cereals, some of which are competitive with wheat. It is obvious that the true cause of the decline of agricultural prices is not the fall in the value of silver. 3. The Relation of Wheat and Gold. — The second assumption of the free coinage theory is, that the price of grain has fallen because of the mainte- nance of a gold standard. We have seen, in the discussion of Proposition ^T.^ ■ 25 how absurd it is to believe that free coinage by the United States alone could have absorbed the surplus silver of the world without making its money valueless. We have also seen, in Proposition III., how baseless is the accusation made regarding the "Crime of 1873." The abuse of Wall Street and the intimation of foreign influence are equally without foundation. Wall Street, no doubt, has enough sins to answer for ; but its intiuence upon legislation has not been to corrupt the standard of money, and it has not been equal in measure to that of the free coinage propaganda. The source of the silver produced in the United States in 1893, the amount from each State or Territory, with the population of each, may be stated as follows : — STATE OR TERRITORY. VALUE OF SILVER. POPULATION, 189O. Arizona 1 $ 2,935, 7CX) 59.620 Cilifornia 470,100 1,208,130 Colorado 25,838,600 412,198 Idaho 3,919,600 84,385 Montana 16,945,000 132,159 Nevada 1,561,300 45'76i New Mexico! 459-40° 153-593 Utah 7,196,300 207,905 All Others 674,000 Total $60,000,000 2,303,751 Here are eight States and Territories which produce practically all the silver of the United States, with an annual increase of wealth of $60,000,000, and a population of less than two and a half millions, complaining that the East has had too large a share in national legislation, and stirring up sectional hostility on this account. With a proportional Congressional representation, these six States have h(.