GREENBACKS
 
 sJ^O 
 
 <T^ 
 
 lyK^^j^^-^^^--^
 
 BY THE SAME AUTHOR. 
 
 THE CURRENCY AND THE BANK- 
 ING LAW OF CANADA. 
 
 8yo, paper, 75 cents. 
 
 " A verj' valuable volume. It will undoubtedly prove 
 to be an effective contribution to the campaign of cur- 
 rency education." — Buffalo Courier. 
 
 " It is a spirited recital and review of financial ups and 
 downs in the United States in the past, with a forecast of 
 the dangers ahead, with a review of the substantial ex- 
 cellence of the Canadian banking kiws. It makes good 
 reading. — Chicago Inter-Ocean. 
 
 G. P. PUTNAM'S SONS, New York and London.
 
 SOUND MONEY 
 MONOGRAPHS 
 
 BY 
 
 WILLIAM C. CORNWELL 
 
 President of The City Bank, Buffalo 
 
 Author of " The Currency and the Banking Law of 
 
 Canada," etc. 
 
 G. r. PUTNAM'S SONS 
 
 NEW YORK LONDON 
 
 27 West Twenty-third Street 24 Bedford Street, Strand 
 
 Si^t ^niclurbotktr ^rcss 
 1897
 
 Copyright, 1897 
 
 BY 
 
 G. P. PUTNAM'S SONS 
 
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 The Addresses, Magazine Articles, and other 
 Monographs in these pages date from 1892 to 
 1897. While they have no special serial con- 
 nection, they embrace the leading points in the 
 discussion of Currency Reform, and it is hoped 
 may be of service in popular education. 
 
 .1 
 
 m 
 
 •■li f."^ .-r"* ,-f* K^-t^-j
 
 CONTENTS. 
 
 Thirty Years of War Currency 
 -A, Greenbacks . 
 Currency Reform 
 
 Should the Government 
 Banking ? 
 
 A Way Out . 
 
 X The Gold Standard . 
 
 International Bimetallism 
 TiCAL nor Desirable 
 
 Bankers and Legislation 
 
 The State Bank Question 
 
 ^ The Money Power 
 
 V Abraham Lincoln 
 
 Retire 
 
 neither Prac 
 
 FROM 
 
 PAGB 
 
 I 
 
 21 
 51 
 
 68 
 
 79 
 92 
 
 no 
 
 134 
 
 147 
 
 158 
 165
 
 THIRTY YEARS OF WAR 
 CURRENCY* 
 
 FOLLOWING a great victory for national 
 integrity and honesty, it is natural for our 
 people to expect an industrial revival. 
 
 That this does not come promptly is because 
 we are not favored freely with that essential 
 factor, European investments in our securities, 
 and the reason for this hesitation of foreign 
 capital is that the Silver question has not been 
 finally settled, and a permanent Gold Standard 
 made secure beyond doubt. The underlying 
 reason for continued uncertainty is ourjunsottnd 
 ,<mTency, and until this is remedied we cannot 
 hope for solid prosperity. 
 
 In the United States we are to-day trying to 
 do what has^faUed of accomplishment in five 
 centuries of world history. 
 
 We are staggering under an endeavor to 
 make the state give the life of currency to a 
 
 * Address at the banquet of the Boston Merchants' Asssoci- 
 ation, January 15, 1897. 
 
 I
 
 2 Sound Money Monographs 
 
 valuekss_coi'pse, when history has proved that 
 the only function of Government, with refer- 
 ence to money, is to stamp upon the chosen 
 metals design and denomination, as the certifi- 
 cate of weight and fineness. 
 
 The channels of trade are filled with a cur- 
 rency which, in principle, is unscientifijc and 
 junsQund — currency of a kind which was first 
 emitted in the dark days of the republic under 
 the pressure of an advancing enemy and an 
 empty Treasury, but which was condemned 
 even then, with tremendous energy, by the 
 sound and patriotic statesmen of that great 
 day. The echo of their utterances in the 
 debate in Congress on the first Greenback 
 issue resounds in our ears even now as the 
 prophetic cry of Truth striving to keep her 
 children from error. 
 
 BIRTH OF THE GREENBACK. 
 
 "The notes to be emitted will be lepers in 
 the commercial world from the hour they are 
 brought into it," was Roscoe Conkling's pro- 
 phetic condemnation. 
 
 " It must inflict a stain upon national honor," 
 said Fessenden of Maine. 
 
 " It is hard, very hard, that such a country, 
 so powerful, so rich, so beloved, should be com- 
 pelled to adopt a policy of even a questionable
 
 Thirty Years of War Currency 3 
 
 propriety. Is it necessary to suffer this stain 
 upon our national honor? " said Charles Sum- 
 ner of Massachusetts. 
 
 " I am opposed to the legal-tender clause. 
 In my judgment it is dishonest," said Sheffield 
 of Rhode Island. — 
 
 And Morrill and Pendleton and Thomas and 
 a host of others opposed the bill with strong 
 argument and sound reasoning. 
 
 I have no words against the patriotism of 
 the men who urged this measure. They had 
 at heart the best interests of their country. 
 Its most prominent defenders were among the 
 first to advocate the retirement of the Green- 
 backs after the war, and they lamented the 
 excess of issue and the refusal of the country 
 to cancel, but the wild animals had been let 
 loose, and there seems to have been no power 
 to recapture them. 
 
 Before this, through the struggles of nearly 
 a century, paper fiat money had been strictly 
 avoided. Poor and weak as the nation was 
 in 1812, it had gone through that war without 
 resort to it. And in 1862, rich and strong, the 
 great mistake was made of reliance upon legal 
 tender. In spite of strenuous opposition, the 
 bill passed. It authorized the issue of 150 
 millions of Greenbacks. It passed with solemn 
 assurance on the part of those who advocated
 
 4 Sound Money Monographs 
 
 it that it was only temporary — a first offense, 
 and that we dare not repeat it. 
 
 How weak is human nature ! The fatal cup 
 had been, reluctantly, held to the lips, and 
 tasted with aversion. Not three months later 
 another issue of 150 millions was made, with 
 little opposition, and not long after still another. 
 
 FALLACY DEMONSTRATED. 
 
 The fallacy of this whole operation is seen 
 when we consider that after these comparatively 
 few millions had been thus raised, resort was 
 had to taxation and bonds, which should have 
 been done at first, and ten times the amount 
 was thus legitimately obtained before the war 
 was over. 
 
 As a result of the legal-tender forced loan, 
 the currency of the nation sank in value, slowly 
 but surely, and for 17 years was the football of 
 speculation. For 1 1 years there was a mad 
 carousal of inflation and high prices and, in 
 1873, a disastrous settling day. Millions and 
 millions were wiped out and six long years of 
 hard times ensued. 
 
 During this period earnest attempts were 
 made to retire and cancel the legal tenders. 
 Retirement was twice begun and as quickly 
 stopped by the cry of the rag-money contin- 
 gent. And when, in 1879, we safely accom-
 
 Thirty Years of War Currency 5 
 
 plished resumption, this Illegitimate Expedient 
 of War, the Greenback, became the corner-stone 
 of our monetary structure, and to-day the parity 
 with gold of all other of the millions and mil- 
 lions of American values depends upon the 
 parity of the Greenback. 
 
 TRUE CHARACTER HIDDEN AFTER RESUMPTION. 
 
 The 346 million Greenbacks in circulation 
 were forbidden to be cancelled, and ordered to 
 be paid out whenever taken in. Backed as they 
 were by the 100 million reserve and many more 
 millions in the Treasury and by the expanding 
 credit and growing wealth of the nation, their 
 true character was hidden and they became 
 beloved of the people. Like many other popu- 
 lar idols, however, they were unworthy of the 
 confidence placed in them. They are just as 
 false in principle to-day as when, at their birth, 
 they received the hesitant acceptance or open 
 denunciation of the statesmen of war times. 
 False friends in prosperity, they have proven 
 bitter enemies when revenue was declining and 
 confidence was ebbing. Their fierce attacks 
 upon the gold reserve have three times in three 
 years brought us to the brink of insolvency, 
 and they lurk to-day, behind more favorable 
 conditions, ready at any time to renew the 
 fearful operations of the endless chain.
 
 6 Sound Money Monographs 
 
 FIAT POISON WORKING. 
 
 Like all evils tolerated, they have refused to 
 remain stationary, but have steadily spread and 
 the fiat disease has developed. The Greenback 
 craze in 1874 swept over the country like a 
 prairie fire and came near enveloping the 
 Government. Scarcely was this suppressed when 
 the free-coinage advocate loomed up out of the 
 smoke of inflation — a veritable genie of evil. 
 He was compromised with and the Bland-Allison 
 bill was the result. The Government went 
 into the silver purchasing business and began 
 paying out good gold for pig silver and issuing 
 metal fiat dollars, instead of paper ones. It 
 was the old Greenback idea — one of the same 
 brood of reptiles — only the scales on this one 
 were of silver instead of green paper. This was 
 kept up for 12 years, and we became the dump- 
 ing-ground for a metal which under our vast and 
 useless accumulation of it was steadily sinking 
 in value thoughout the world. Then in 1890 
 the old fiat-money genie came to the front 
 again. It was the Silver-Mine Owner dressed 
 up and disguised as Popular Demand. He 
 demanded justice for silver — amends for the 
 crime of 1873 — ^^^^ coinage at 16 to i. Once 
 more our politicians, awe-stricken, capitulated, 
 and agreed to purchase the entire product of 
 the silver mines of the United States. We
 
 Thirty Years of War Currency 7 
 
 went back to the green paper — the Treasury 
 note, twin brother of the Greenback, and full of 
 fiat poison. 
 
 DANGER AHEAD — DISASTER. 
 
 Our fiat currency was now creeping up 
 towards the 1000 million mark. We were 
 pledged by every consideration of national 
 honor to redeem every dollar in gold. We 
 were af^icted by a powerful minority in our 
 legislatures in favor of silver and repudiation. 
 The reserve itself was growing inadequate and 
 gold began to leave our shores under the natural 
 effects of inflation. 
 
 Then the fangs of the old Greenback serpent 
 again became visible. They had been con- 
 cealed for years. 
 
 There is under our remarkable system only 
 one place in the United States where gold can 
 surely be obtained. 
 
 That place is the United States Treasury. 
 
 The Greenback demand note, payable in 
 gold, once paid, must be paid out again, and 
 may come back over and over again, each 
 time clutching the gold and depleting the 
 Treasury. 
 
 Although we had been issuing fiat silver since 
 1878, the amount of demand gold notes from 
 1879 to 1890, was limited to the original 346
 
 8 Sotmd Money Motwgraphs 
 
 millions and there seemed no doubt of the ability 
 of the United States to meet all these in gold. 
 In 1890, however, the Sherman law began to 
 create an unlimited supply of demand gold notes 
 of the endless-chain variety, at the rate of 50 
 millions a year. Investors viewed the spectacle 
 with doubt and alarm, and began to realize upon 
 their American securities and take away the 
 gold. This culminated in the panic of 1893, and 
 brought us to the edge of the precipice overlook- 
 ing the silver basis, where we have remained ever 
 since. 
 
 EVIL FORCES STILL ALIVE. 
 
 All the fatal machinery for depleting the 
 gold reserve is still in splendid working order. 
 Since the resumption of specie payments up to 
 the present time, every dollar of the whole 
 issue of Greenbacks has been paid once in 
 gold, and one-third of the issue has been paid 
 twice, and yet the whole amount is still in 
 existence. 
 
 A great popular election has declared un- 
 mistakably for a gold basis, but nothing thus 
 far has been done to assure such a basis. We 
 are still at the edge of the precipice. All the 
 evil forces still exist to push us off. 
 
 WAR CURRENCY STILL OUR DEPENDENCE. 
 Our dependence to-day, after more than 30 
 years, is still upon the old war currency ; upon
 
 Thirty Years of War Currejicy 9 
 
 a small issue of over-secured and rigid National 
 Bank notes, the outcome of war needs, and an 
 enormous Government issue, partly fiat silver 
 intrinsically worth 50 cents on the dollar, and 
 partly fiat paper which is constantly threaten- 
 ing the gold reserve and checking confidence. 
 No thinking citizen can doubt, in view of the 
 facts presented, that something should be done 
 with our currency. 
 
 CURRENCY REFORM. 
 
 I believe that the plan of reform should be 
 presented by an expert commission of the high- 
 est ability obtainable. I am confident that 
 such a body of men would have little difficulty 
 in agreeing promptly as to the main points, 
 and in soon arranging details. There can be 
 no harm, however, in considering at this time 
 the principal features of reform. 
 
 There is, I believe, but little difference of 
 opinion among earnest thinkers on the question 
 as to what should be done first. Practically 
 all are agreed that the Greenbacks and the 
 Treasury notes should be retired. 
 
 DELUSIONS. 
 
 And yet we have in our midst the Eastern 
 Greenback lover, who is as dangerous to the 
 existence of our commercial fabric as the West- 
 ern and Southern free-silver advocate. He
 
 I o Sound Money Monographs 
 
 ranges himself on the side of sound money, 
 when he is for the unsoundest kind of money, 
 the paper fiat of a Government. He ranks him- 
 self for gold and voted for McKinley, but he 
 scoffs at the idea of abolishing the paper, the 
 Government paper, that is a sleepless enemy of 
 gold, the daily menace to the gold reserve, a 
 shadow upon the possibility of maintaining 
 gold payments ; and by his obstinacy he im- 
 perils the value of every form of investment in 
 the United States, because the shadow of doubt 
 as to the Government's gold payments extends 
 over every promise to pay in the country and 
 keeps the foreign investor aloof. In other 
 words, every dollar of obligation not specifically 
 payable in gold would sink with the Greenback 
 if the Treasury was unable to redeem every 
 note in gold. 
 
 FAULT OF GOVERNMENT CURRENCY. 
 
 Many people ask the question, " Why cannot 
 a great Government with unlimited resources 
 for taxation best maintain the note issue, which 
 affects the daily life of the people?" 
 
 The answer is that the Government is made 
 up of representatives of the people, chosen not 
 for business but for political reasons, and wise 
 action in finances is rarely attainable.
 
 Thirty Years of War Currency 1 1 
 
 Many of our law-makers know what should 
 be done, but the fact stands that a few ignorant 
 or vicious legislators are enabled to block the 
 whole body of Congress, Besides, with the 
 most unanimous intention, Congress and the 
 Treasury have no way of finding out the needs 
 of commerce, and currency has essentially to do 
 with business, with commerce. The regulation 
 of it must be thoroughly in accord with the 
 needs and requirements of trade. 
 
 The Government bank has no depositors and 
 cannot get its notes into circulation through 
 depositors as business needs them. It has no 
 automatic method of getting information as to 
 how much money is needed by trade, and could 
 not act upon it if it had. The Secretary of the 
 Treasury, ostensible manager of the bank, has 
 his hands tied. The Government currency once 
 out, stays out. It drifts away from the towns 
 of the West and South to the great cities of the 
 east, and stays there to breed speculation from 
 unnatural plenty, while the farmers and traders 
 of the prairies and cotton fields are suffering 
 from contraction. 
 
 ORIGIN OF FREE-SILVER CRY. 
 
 Out of this agony of contraction and starving 
 scarcity of money goes up the cry (and it is an 
 honest cry) for more money. It grows steadily
 
 1 2 Sotuid ]\Io)icy Monogj'aphs 
 
 — it sweeps into a whirlwind — a wild appeal ; 
 the demagogue twists it to his foul purpose 
 and it becomes a demand, now for silver, now 
 for paper fiat, for unlimited issue. It incites 
 wide discontent, links itself with anarchy, cap- 
 tures one of the great political parties, and, 
 for a time, threatens the very existence of the 
 nation. 
 
 Do you think you have quieted the cry for 
 more money ? It never will be quiet until these 
 people with a legitimate want have that want 
 supplied in a legitimate way. 
 
 What are we going to do about it ? 
 
 Is there no way of meeting this demand ? 
 
 SOUND WAY TO MEET IT. 
 
 There is only one sound way to meet it, and 
 that is through the bank note based on the 
 general assets of the bank, and not on specially 
 deposited bond security, as is the case with 
 National Bank notes. 
 
 The State Bank circulation which was slowly 
 perfecting itself before the war, producing in 
 several States admirable results, while in others 
 it was bad, was cut off by a war tax which in- 
 stituted National Bank notes. These notes, 
 issued against special security, and not against 
 general assets, are rigid in volume.
 
 Thirty Years of War Ctcrre?icy 1 3 
 
 ELASTIC CURRENCY. 
 
 Notes issued against security pledged and held 
 specially, as are our Government bonds, are de- 
 fective in a country requiring sensitive elasticity 
 in its currency. Such a system fails to respond 
 to the laws of trade and under it the volume of 
 currency, if there is a profit in it, will be too 
 great, and if there is no profit, it will shrink 
 without regard to the needs of the community. 
 
 Our National Bank notes lack the vitalizing 
 element of a good bank note — that of daily re- 
 demption. Being secured by a special deposit, 
 and over-secured at that, nobody ever takes the 
 trouble to redeem them, and the fine character 
 which the redemption test gives is lost. 
 
 Inflation rushed them up to 360 millions, 
 when Congress set a limit. After that, lack of 
 profit rushed them down to 120 millions, and 
 contraction of the currency would have been 
 the result if the fiat silver dollars had not taken 
 their place. 
 
 We need in this country a currency especially 
 sensitive in the quality of elasticity, besides be- 
 ing absolutely secure. On account of great 
 field and forest production, we require at cer- 
 tain seasons of the year a rapid and substantial 
 increase in our medium of exchange, the vol- 
 ume of which should, to avoid inflation, as rap- 
 idly shrink when the need is past.
 
 1 4 Sound Money Monographs 
 
 There has never been a chance for a good 
 currency to take root in this country since the 
 beginning of the war, because the question has 
 been the football of politics, and Commerce has 
 not been allowed to choose its own methods 
 and perfect them as she always does when left 
 to do so, and as she was doing before the war. 
 
 The currency of a countiy should be based 
 upon actual possessions, upon wealth, not upon 
 public debt, such as Government or State bonds. 
 
 Commerce itself furnishes a perfect basis for 
 itself under natural laws. 
 
 Large commercial banks are the longest-lived 
 and the soundest institutions known to human 
 history, many of them outliving the change of 
 Governments and the fall of dynasties. In our 
 own country we have a number of flourishing 
 banks that are older than the Government it- 
 self. Sound commercial banks are the custod- 
 ians of the products of the labor of the people, 
 and these products represent mainly all there is 
 of wealth in a nation. 
 
 COMMERCIAL ASSETS THE BEST SECURITY. 
 
 The experience of the last fifty years among 
 nations of high civilization proves that com- 
 mercial assets, the representatives of these pro- 
 ducts, are the highest form of security for note 
 circulation.
 
 Thirty Years of War Currency 1 5 
 
 Notes issued by properly capitalized and in- 
 spected banks to the extent of a proportion 
 (possibly in the future the whole) of their paid 
 up capital and made a first lien upon these 
 commercial assets, have behind them the only 
 true scientific basis for circulation in a country 
 like ours — the basis being the product of the 
 energy, the muscle and brain, of our people. 
 Trade consists in the exchange of these pro- 
 ducts. Banks are the natural facilitators of 
 such exchange. They hold, in short bills-re- 
 ceivable, the paper representatives of the pro- 
 ducts themselves. As by the increase of 
 products trade increases, so scientifically and 
 naturally there is provided in an increase of 
 assets a larger basis for note circulation. The 
 means, then, to move the crops, that operation 
 which produces the great annual money- 
 squeeze in this country, is furnished by the 
 crops themselves. What better basis for bank 
 notes can be created than these quick assets, 
 the 60- and 90- day bills of millions of people. 
 These are the things that are paid in panics 
 when everything else is in default. 
 
 VOLUME AUTOMATICALLY REGULATED. 
 
 The volume of such bank notes is absolutely 
 regulated by trade, and no more of them can 
 stay out than trade needs. Let us examine this
 
 1 6 Sound Money Monog7^aphs 
 
 operation. The bank issuing its own notes de- 
 pends upon its business depositors or borrowers 
 to take such of its notes as they need in their 
 business. They in turn pay them out and the 
 notes go the rounds until deposited in some 
 other bank. All bank notes received by other 
 banks, under this system, are treated just as 
 though they were checks. 
 
 That is, any bank getting the notes of an- 
 other bank will promptly send them in, every 
 day, and get the money for them, so as to be 
 prepared to meet its own notes, which it is con- 
 tinually seeking to put out. But it will not dare 
 to put its own notes out beyond its power, daily, 
 to redeem them. 
 
 The increase in the number of bank notes is 
 regulated, consequently, by the requirements of 
 trade, and the desire of the banks to get their 
 own notes out because of the profit there is in 
 them — the interest there is on them when they 
 are out. 
 
 The decrease is effected by the pressure 
 brought to bear by other banks who, striving to 
 force their own notes out, send the notes of 
 other banks in, and the total amount kept out 
 can thus never be more than trade actually re- 
 quires. The regulation of volume is automatic. 
 There can never be inflation. There can never 
 be contraction. When the crops are to be
 
 Thirty Years of War Currency 1 7 
 
 moved, the money will come out to move them. 
 When the operation is over with, the bank cur- 
 rency returns as silently as it came. The whole 
 movement is like the rise and fall of the resist- 
 less tide. 
 
 As far as security is concerned, the statistics 
 of the Comptroller's ofifice show that if every 
 National Bank in the United States since the 
 inception of the system had issued against 
 assets the currency, which it did issue against 
 bonds, and a guaranty fund much smaller than 
 the one proposed hereafter had been main- 
 tained, every dollar of notes of failed banks 
 would have been redeemed in full throughout 
 the whole period. 
 
 PERFECT THE NATIONAL SYSTEM. 
 
 Graft this principle upon the National sys- 
 tem, which is great in every quality except that 
 of circulation. Abolish or reduce the tax on 
 circulation. Drop the United States bond 
 special security — adopt the general security 
 principle, making the note a first lien on all 
 assets, including double liability of stockhold- 
 ers, limiting its issue to a percentage of capital, 
 with a five per cent, guaranty fund maintained ; 
 all notes to be printed by the Government as 
 now ; all notes to be redeemable, daily, in gold, 
 by the banks themselves, and through redemp-
 
 1 8 Sound Money Mojiographs 
 
 tion agencies at the financial centres through- 
 out the United States. 
 
 LARGE BANKS ONLY TO ISSUE. 
 
 The question of whether all banks, small as 
 well as great, should issue currency, is one to 
 be carefully considered. My own opinion is 
 that only banks of large capital should issue 
 notes, I am not in favor of following blindly 
 the system of any other country, but am satis- 
 fied that the problem must be worked out 
 slowly for ourselves, with reference to our own 
 conditions. I believe, however, that if branches 
 were permitted to the larger banks, the smallest 
 towns and sparsely settled regions would get 
 the fullest benefit. Allow banks say of not 
 less than $1,000,000 capital to issue notes and 
 have branches, but said branches to be located 
 only in the State in which the head banks are 
 respectively established ; banks, however, with 
 $10,000,000 capital and with head ofifices in New 
 York City to be allowed branches in all parts of 
 the Union.* 
 
 EXPENSES SAVED AND PEOPLE BENEFITED. 
 
 By pledge of general security, the principle 
 of elasticity thus scientifically carried out, under 
 
 * Suggestion of B. E. Walker, Esq., of the Canadian Bank of 
 Commerce.
 
 Thirty Years of War Currency 19 
 
 the fire test of daily redemption, would suppress 
 inflation and foster enterprise in the South and 
 West as well as in the North and East. Rates 
 for money would be equalized and lessened, and 
 new regions would be constantly developed. 
 The immense saving of interest by this method 
 would, eventually benefit the whole people. 
 
 THRIFT ENCOURAGED— NEW TERRITORY 
 OPENED — FREE SILVER FALLACY SUPPRESSED. 
 
 Branches established in the small communities 
 would, even without deposits at first, begin at 
 once to develop the region covered. It would 
 not be necessary to wait for deposits, as the bank 
 notes could be loaned out at once on good 
 security. Crops could be grown and cattle fed 
 and goods conveyed to market by this means 
 in communities where now they are barren of 
 money and enterprise is stagnant. The people 
 benefited would soon learn to deposit money, 
 and thrift and wealth would follow. Without 
 the note-issuing and branch system, such things 
 are almost impossible. The dearth of money 
 and credit in these far-off communities would be 
 banished, populist fallacies would diminish, and 
 the cry for free silver would die out. 
 
 SOUND CURRENCY AT LAST. 
 
 Instead of a war currency, devised not for the 
 purposes of trade, but to appease the sharp
 
 20 Somid Mo7iey MotwgrapJis 
 
 tooth of gaunt necessity, and clung to long 
 years after the least excuse for its existence 
 had vanished — a currency, clumsy, inadequate, 
 unscientific, and dishonest, partly founded upon 
 a war debt, but mostly the debt itself made 
 legal tender, or added to in kind and variety 
 as the years went by, all of it unsuited to our 
 needs, — instead of all this, we should have at 
 last a currency, secure, elastic, uniform, and con- 
 vertible into gold on demand, and Commerce 
 in the United States would once more confi- 
 dently resume her sway.
 
 GREENBACKS* 
 
 THE CAUSE OF ALL OUR TROUBLE AND THE 
 SOURCE OF THE SILVER CRAZE. 
 
 PART I. — THE GOLD RESERVE. 
 
 THE Gold Reserve is a sum of gold coin 
 kept in the United States Treasury with 
 which to pay Government bank notes, when- 
 ever anybody wants gold for them. 
 
 The intention of the Government is to keep 
 this fund at not less than one hundred mil- 
 lions ($100,000,000). 
 
 The keeping up of this fund is what keeps 
 us on a gold basis. 
 
 When the amount of United States notes 
 was small, nobody paid any attention to the 
 Reserve. 
 
 * Greenbacks was issued originally as an illustrated pam- 
 phlet, during the campaign of 1896. It was sold by the Amer- 
 ican News Company and reached its twenty-seventh thousand 
 before election. 
 
 21
 
 2 2 Sound Mo7iey Monographs 
 
 But when the amount got up to nearly a 
 thousand millions, and was constantly increas- 
 ing, people were afraid the Government could 
 not keep enough gold to redeem the paper with. 
 
 Then everybody who knew anything about 
 the situation began to watch the Gold Reserve. 
 
 This began in 1890, and has kept up ever 
 since. 
 
 It was fear about the Gold Reserve that 
 made the panic of 1893. 
 
 The condition of all business in the United 
 States to-day depends upon the Gold Reserve. 
 
 When the Reserve is full, and it looks as 
 though it might be kept so, business revives 
 and increases. 
 
 When the Reserve goes down, or is threat- 
 ened, business stops, and we get along towards 
 panic. 
 
 The Reserve got low in 1895, and we were 
 saved from another panic by the President and 
 the Bond Syndicate. 
 
 The Reserve dropped below a hundred mil- 
 lions a short time ago, and trouble was staved 
 off by the banks and the foreign bankers, who 
 chipped in and made the Reserve good.
 
 Greenbacks 23 
 
 How long will the business men of the 
 United States stand this? 
 
 Upon the success of the business men de- 
 pends also the success of clerks, mechanics, 
 laborers, and farmers. 
 
 How long will all these let the wobbling 
 Gold Reserve place the results of their hard 
 work in danger? 
 
 HOW TO ABOLISH IT. 
 
 The remedy is a simple one. 
 The Gold Reserve is made necessary by the 
 Greenbacks. 
 
 Pay up the Greenbacks, or even begin to 
 cancel them, and prosperity is assured. 
 
 The Greenback has made possible the quest- 
 ion of Free Coinage of Silver. 
 
 If there had been no Greenbacks, nobody 
 would have questioned the advisability of the 
 Gold Standard in the United States. 
 
 If the Greenback had been paid up after the 
 resumption of specie payments in 1879, busi- 
 ness would have grown better and better, 
 the nation would have become richer every 
 day, there would have been no Government 
 Reserve to worry about, and the security of 
 our currency would never have been doubted.
 
 24 Sotmd Mo7icy Monographs 
 
 The panic of 1893 would have been avoided 
 and the hard times since, during which silver 
 has taken its strongest hold. 
 
 PART II, — HISTORY OF THE GREENBACK. 
 
 Greenbacks were first issued in 1862. 
 
 They were Fiat money. 
 
 The Government said to the people : " Here ; 
 we want your produce, horses, mules, clothing ; 
 we will give you for it paper, with the printed 
 promise of a dollar on it, and will pass a law 
 saying that it is good to pay all debts with. 
 This will be a dollar." 
 
 The statement was a lie. 
 
 Some people believed the statement, and 
 some did n't, but everybody had to take the 
 dollar, and give up in exchange for it some 
 kind of value. 
 
 The Greenback is Fiat money. 
 
 Making Fiat money is an attempt to make 
 something out of nothing. 
 
 It is an attempt to create. 
 
 There is only one Creator. 
 
 Fiat money is a mild form of robbery.
 
 Greenbacks 25 
 
 It is a roundabout way of Governments 
 confiscating the property of the people ; is 
 generally intended to be temporary, and is 
 undertaken in great emergencies, like civil and 
 other wars. 
 
 This is done for the benefit of the Govern- 
 ment.* 
 
 Fiat-money confiscation is generally intended 
 to be temporary, on the ground that if you 
 have taken away a man's property because 
 you thought it absolutely necessary, it is the 
 proper thing when the necessity has passed to 
 restore it to him. 
 
 England borrowed heavily from the Bank 
 of England for the purpose of war with the 
 French Republic in 1797, and went on to a 
 paper basis in consequence. 
 
 France borrowed enormously of the Bank 
 of France in the Franco-German war of 1870, 
 and was forced to suspend specie payments. 
 
 * The free-silver people want this confiscation in time of 
 peace — not for the benefit of the Government, but for the 
 benefit of silver-bullion owners. 
 
 The confiscation in the case of paper Fiat currencj^, like the 
 Greenback, is lOO cents on the dollar, as the paper is worth 
 nothing. 
 
 The confiscation under free coinage would be 47 cents, as 
 the silver bullion in the dollar wou\d be worth 53 cents. 
 
 The silver-mine owners would get the 47 cents.
 
 26 Soimd Money Monographs 
 
 Russia, Austria, Italy, have all done the 
 same. 
 
 All of these great nations, however, immedi- 
 ately after the close of the war, began the 
 operation of retiring this legal-tender paper- 
 money. 
 
 Four years after the close of war, England 
 had retired all of hers. 
 
 Eight years after peace, France had paid 
 up every dollar. 
 
 Thirty years have passed, and the United 
 States floating war debt is not paid. 
 
 This is foolish and criminal negligence. 
 
 Worse than that, millions and millions of 
 the same kind of money have been manufact- 
 ured and issued since. 
 
 It is the fatal spread of the Fiat principle. 
 
 The Fiat principle is to a nation what the 
 whiskey habit is to men. 
 
 It got possession of the United States when 
 the first Greenback was rolled off the Govern- 
 ment printing-press. 
 
 It is in possession to-day.
 
 Greenbacks 2 7 
 
 PART III. — CONTINUATION OF THE HISTORY 
 OF THE GREENBACK. 
 
 The Greenback cost the people during the 
 war and until the time of resumption, hundreds 
 of millions, as a result of inflation.* 
 
 The total issue of Greenbacks was 450 mil- 
 lions. In 1865, Congress ordered their gradual 
 retirement. This was soon stopped, however, 
 and more were issued. 
 
 In 1875, provision was made for specie pay- 
 ments, and again for the partial retirement of 
 the Greenback. 
 
 But, the National Whiskey Habit developed 
 once more in the " Greenback craze," and al- 
 though this was crushed out, the fatal concession 
 was made in 1878 which prohibited further 
 cancellation, and commanded re-issue of the 
 Greenback, whenever and from wherever 
 paid into the Treasury. 
 
 * The total expenditure of the four years was $3,352,380,410, 
 of which it is safe to say that $2,500,000,000 consisted of 
 purchases in the open market, when the Greenback dollar 
 procured only 66 cents' worth of property. In other words, we 
 obligated ourselves for $2,500,000,000, and got $1,630,000,000 
 in actual value. The difference, $870,000,000, is the unneces- 
 sary cost to the taxpayers caused by the use of a depreciated 
 currency — Horace White, Money and Banking.
 
 28 Soimd Money Monographs 
 
 " 1878 SILVER." THE GREENBACK THE 
 FATHER OF THE " SILVER SNAKE." 
 
 The Bland law of 1878 was a result of the 
 Fiat principle established by the Greenback. 
 
 It was an outcome of the fatuous belief that 
 the Government can and ought to create money, 
 and was used by the silver-mine owners to 
 make the United States buy their wares. 
 
 Under this law the United States agreed to 
 buy 2 million dollars' worth of silver a month. 
 
 Why did the silver-mine owners not do some- 
 thing before 1878 ? 
 
 Why did they not oppose the Demonetization 
 Act of 1873? 
 
 Because in 1873 the amount of silver in a dol- 
 lar %vas xvorth more than 100 cents gold in the 
 market, and they did not wish to sell to the 
 Govermnent at a loss. 
 
 But in 1876 the price of silver had gone down 
 in the market, and the silver-mine owners began 
 to agitate for free coinage. 
 
 If they could restore free coinage, they would 
 make the Public buy all their silver above the 
 market price and they would pocket the profit. 
 
 They were not able to restore free coinage.
 
 Greenbacks 29 
 
 The Bland Act of 1878 went halfway. It 
 made it necessary for the Government to pur- 
 chase at least two million dollars' ($2,000,000) 
 worth of silver a month at the market price. 
 
 The production then in the United States 
 was about 3 millions per month. 
 
 The silver miners having made a Government 
 market for two-thirds of their product, were 
 satisfied for a time. 
 
 Disaster was predicted by the wise, as the 
 outcome of this inflation of the currency of the 
 country, but up to 1890 it had not come, 
 because of big crops, and because National 
 Bank notes not being profitable, had been re- 
 tired by the banks to the extent of 200 millions, 
 silver taking their place. 
 
 The currency was inflated under this act to 
 the extent of 378 million Fiat silver dollars. 
 
 " 1890 SILVER." 
 
 But by 1890 the production of silver from 
 the mines had increased to over 4 millions a 
 month. 
 
 By 1890 the Fiat principle had developed 
 •seriously. 
 
 The silver-mine owners had been doing all 
 they could to develop it.
 
 30 Sou J id Money Alonographs 
 
 They now demanded free coinage. 
 
 They demanded it on what they pretended 
 were high moral grounds, to make amends for 
 the "crime of 1873," but really so that the 
 mine owners might sell their whole product to 
 the Treasury. 
 
 Congress was so afraid of the Fiat principle 
 that a most disastrous compromise was effected. 
 It was full of inflation and weak finance. 
 
 It obliged the Government to buy 54 mil- 
 lion ounces of silver a year. 
 
 The total product of all the silver mines in 
 the United States the year before was only 
 50 million ounces. 
 
 So this law unloaded onto the Treasury every 
 dollar of silver that the mine oivners could get 
 out. 
 
 The Treasury was " held up " by the Silver 
 Kings. 
 
 This was the " crime of 1890." 
 
 THE CRIME OF 189O. 
 
 Instead of coining silver into dollars under 
 this act, the bullion was to be bought '' out 
 and out " and paid for in Treasury notes, 
 which were really Greenbacks.
 
 Greejibacks 3 1 
 
 This was the Law of 1890. 
 
 That was the time when the silver heresy 
 should have been fought to a finish, and the 
 Fiat-Silver principle crushed out. 
 
 It was an era of good times. The silver 
 heresy had not taken root. The silver-mine 
 owners were then the only ones really interested. 
 Hard times have since helped them to many 
 converts. 
 
 But the fight was not made. 
 
 Under the 1890 Law purchases of silver were 
 doubled, and the bullion piled up. 
 
 In 1893 the pile fell over. 
 
 It crushed commerce. Stagnation, poverty, 
 and misery followed and are still with us. 
 
 1893. 
 
 The people, convinced that Fiat money was 
 the root of all the trouble, rose in their might 
 and insisted that the deal with the silver miners 
 should be closed, and the purchase of silver 
 stopped. 
 
 The purchase was stopped. 
 
 But we had gone already too far.
 
 32 Sound Money Monographs 
 
 The Fiat money in the United States, issued 
 
 up to that time and still in existence, foots up 
 
 as follows : 
 
 Greenbacks, 346 millions - 1 
 
 Treasury notes, act of 1890, 1 56 ^ ^^."^^^"^^^^^ 
 
 ^ ^ -^ I m gold, 
 
 millions . - . - J 
 
 ] Must be kept 
 Silver dollars under act of 1878, \^^ ^j. ^^\-^ 
 
 378 millions . . - , ^^^^^ 
 
 In all nearly 900 millions depending upon the 
 slender gold reserve, to say nothing of National 
 Bank notes, which indirectly lean upon it too. 
 
 PART IV. — FIAT MONEY THE DISEASE — HOW 
 IT AFFECTS BUSINESS. 
 
 Fiat money is the disease. 
 
 Let us see how we suffer from it to-day. 
 
 We need gold at certain seasons to pay 
 debts to foreign nations. 
 
 In other countries they go to the banks for 
 this gold.* 
 
 * In any country where the banks are looked to for gold 
 for export, these institutions have within their own hands 
 the means of controlling such export. If gold begins to go 
 out unduly, they can raise the rate on money, and by this 
 method of calling in loans, moderately and automatically, 
 stop the purchase of imports. High rates for discount, and
 
 Greenbacks 3 3 
 
 There is only one sure place to go for gold 
 in the United States. 
 
 That place is the United States Treasury. 
 
 The Greenback is a demand note payable 
 in gold. 
 
 When the Government has paid it once in 
 gold it must pay it out again. 
 
 The same note will again be presented and 
 gold demanded. Gold must be paid once 
 more, and so on forever. 
 
 This is the endless chain. 
 
 There are 346 million Greenbacks and 156 
 million Treasury notes about the same in 
 character. 
 
 Five hundred millions in all payable in 
 gold on demand and payable over and over 
 again. 
 
 The Gold Reserve of 100 millions is de- 
 pended upon to supply this voracious demand. 
 
 curtailment of loans, tend to make holders reduce prices of 
 securities and commodities in order to effect sales and realize 
 cash. The low prices thus brought about produce exports by 
 inducing foreign purchase of produce, stocks, and bonds ; 
 these go out instead of gold, and meanwhile foreign capital 
 comes in, attracted by profitable investment at higher rates 
 for money.
 
 34 Sound Money Monographs 
 
 When the Reserve begins to sink, there is 
 only one way to replenish it. That is by buy- 
 ing gold with Government bonds. 262 mil- 
 lions have been issued in two years for this 
 purpose, and the other day the stock of gold 
 was once more under the 100. 
 
 If the Government cannot redeem in gold 
 every dollar of obligation presented for re- 
 demption, w^e drop to repudiation. 
 
 Upon this shifty expedient, the shifting Gold 
 Reserve, we depend to maintain the credit of 
 the nation. 
 
 The Reserve then is the big barometer of 
 the commercial atmosphere. Everybody in 
 this country and in Europe is forever anxiously 
 watching it ; the capitalist, the money lender, 
 the bank manager, the business man — always 
 looking in the newspaper to see how the 
 Reserve stands ; and all smile or look sorry 
 as it shows high or low. If below the limit, 
 the question from day to day is, " What shall 
 be done?" Enterprise wilts; business stops 
 short ; Europe sells our securities ; we are in 
 the gloom of coming storm. 
 
 FUSI YAMA. 
 
 In Japan a magnificent volcano rises out of 
 the Pacific Ocean.
 
 Greenbacks 3 5 
 
 Its top is covered with snow. 
 It is an object of worship and veneration. 
 People watch its slightest change, for it 
 means to them good or bad fortune. 
 Its name is Fusi Yama. 
 It is the mountain idol of Japan.* 
 
 The Treasury Reserve of the United States 
 is the Fusi Yama of business in America. 
 
 Night and morning we look to it with fear 
 and trembling, like that of the heathen of 
 Japan. 
 
 It is not surprising that the nations of the 
 world, educated by past history and the ex- 
 perience of generations, look on in mild amaze- 
 ment at the spectacle of a great people, tolerat- 
 ing, nay clinging with childish affection to such 
 a system ; they look on, but since 1890 the 
 
 *In far-off Japan, out of the waters of the Pacific, there 
 rises a magnificent volcano, higher than any other mountain, 
 and completely dwarfing all other eminences on the horizon. 
 Snows of an arctic region rest upon its rounded crest, and 
 bathed in eternal sunshine it glistens in the bright rays like 
 molten gold. It is the everlasting theme of poetry and art, and 
 has for centuries been the object of worship and religious awe. 
 Thousands of pilgrims annually make ascent to the line of 
 snow, and the whole nation watches with veneration and 
 reverence for the slightest change in its aspect as indicative of 
 weal or woe. 
 
 This is Fusi Yama, the gold-crowned mountain idol of 
 Japan. — Greenbacks and Legislation, Author,
 
 36 Soicnd Money Monographs 
 
 capitalists of Europe have taken good care to 
 avoid investing with us, and this they will 
 continue to do until our temporary insanity is 
 permanently cured. 
 
 INSUFFICIENT REVENUE. 
 
 Does lack of revenue play no part in this 
 loss of confidence ? 
 
 Yes, it certainly does. It plays the part 
 that added weight does in helping the fall of 
 the building when the foundation is rotten. 
 
 It is an incident, not the cause.* 
 
 * Let us look at the facts : 
 
 Up to i8go, although we had been purchasing silver since 
 1878, Fiat money had not been issued to such an alarming extent 
 as to make it seem to the impartial, unprejudiced outside 
 observer, that the United States Government would be unable 
 to pay all its obligations in gold. In fact, up to i8go, the 
 amoimt of demand notes payable in gold was limited to three 
 hundred and forty-six millions — that is, to the issue of Green- 
 backs which had not been cancelled in 1878, when the law to 
 stop went into effect. 
 
 THE BREAK OF CONFIDEN'CE. 
 
 In 1890, however. Congress passed a law which made it 
 necessary for the Government to issue over $50,000,000 a year 
 in Treasury notes, payable in gold. Thinkers and investors 
 throughout the world turned to the spectacle, and asked the 
 question, whether the United States, strong and great as she 
 was, could maintain an unlimited issue of demand notes, 
 payable in gold, whicli might be presented again and again,
 
 Greenbacks 3 7 
 
 There never was in the mind of the foreigner 
 any doubt as to the United States being able to 
 raise enough revenue to pay expenses. 
 
 So simple a problem as our ability by legisla- 
 tion to tax for this purpose never disturbed him. 
 
 What the foreigner doubted was whether we 
 (with no means of getting gold except on 
 bonds) could maintain on a level with gold a 
 vast mass of Fiat money, hundreds of millions 
 of dollars already, more and more being pro- 
 duced every year for an indefinite period. 
 That was the question that worried the foreign 
 investor in 1890, '91, '92, that worries him now, 
 that worries us all. 
 
 PART V. — ABOLISH THE GOLD RESERVE— AN 
 APPEAL TO CONGRESS. 
 
 If the fetish of the Gold Reserve were taken 
 away and Europe were but assured that the 
 
 and must again and again be paid out after being redeemed. 
 When that question came to be pondered in Europe, our 
 securities began to come home ; our cash and our gold began 
 to go out ; the Reserve began to be trended upon, and that 
 condition has continued ever since. In the latter part of 1893, 
 the purchase of silver was stopped, but by that time so many 
 notes had been issued, and in view of the law of iSgo, de- 
 claring the Government's intention to keep all- its currency at 
 par with gold (including silver certificates), a problem was 
 presented which failed to restore the confidence of investors 
 abroad and of those at home. — Greenbacks and Legislation.
 
 38 Sound Money Monographs 
 
 three, four, or five per cent, interest obtainable 
 within our shores was positively, permanently, 
 and forever a gold investment, the stream of 
 yellow metal would flow to us from all the 
 peoples of the world and cheer and unending 
 prosperity would roll in upon the shining 
 flood. 
 
 How can we rid ourselves of this panic-pro- 
 ducing Reserve? 
 
 Clearly, only by abolishing that which makes 
 the Reserve necessary, namely, the demand 
 gold-notes of the Government. 
 
 A request was sent to Congress on this sub- 
 ject last winter. It embodied these suggestions 
 for immediate financial legislation : 
 
 " First. Provide for the redemption and cancellation of the 
 Greenback to the extent of one hundred millions within one 
 year, and one hundred millions during each succeeding year 
 until three hundred millions of the Greenbacks are retired ; 
 then include in the cancellation also Treasury notes until the 
 entire five hundred millions of Government paper have been 
 extinguished. 
 
 "To provide funds for these operations, issue low-rate long- 
 time gold bonds. 
 
 " Second. As to what shall take the place of the Govern- 
 ment paper thus extinguished, appoint at once a non-partisan 
 expert currency commission to decide."
 
 Greenbacks 39 
 
 It was accompanied by the following argu- 
 ment : 
 
 " We ask to have the Reserve abolished, because fear as to 
 the Reserve has broken confidence at home and abroad, 
 stagnating business, holding off prosperity. 
 
 " We ask to have the Government notes abolished, because 
 their existence makes a Reserve necessary. 
 
 " We ask for their retirement gradually only, knowing that 
 the declared intention of this great Government to wipe out all 
 its gold-demand notes, would be a declaration unmistakable 
 for the gold standard, and would instantly restore confidence in 
 us throughout the world. 
 
 " This done, gold would come in without stint, and an 
 immense revival in trade would follow. Under these con- 
 ditions, and, pending the decisions of an expert currency com- 
 mission, the place of the Greenback, if currency was needed, 
 would be filled by the most desirable of all mediums — the 
 gold itself." 
 
 PART VI.— THE APPEAL NOT HEEDED — THE 
 DISEASE DEVELOPS — FREE SILVER. 
 
 The petition was unheeded. 
 
 Nothing was done to establish the certainty 
 of the gold standard. 
 
 Eight months have passed. 
 
 Naturally capital at home and abroad has 
 not gained confidence, and business enterprise 
 has been shut off. 
 
 The times have consequently grown harder, 
 and in hard times financial heresies flourish best. 
 
 To-day the Fiat Disease has developed into 
 a fever.
 
 40 Sou7id Money Moiiographs 
 
 THE PRESENT SITUATION. 
 
 It has pulled around itself the cloak of a 
 great party, hiding its hideous features. 
 
 Once more the demand for Free Coinage at 
 the old ratio of 16 to i. 
 
 It is still the silver-mine owners, shut off 
 in 1893 and hungry for the spoils. 
 
 But with them are the poverty-stricken, the 
 discouraged, the debt-ridden, the rainbow- 
 chasers, the false theorist, the place-hunters, 
 the dyed-in-the-wool politician, speculators, 
 repudiators, and many desiring to be honest 
 but deluded by superficial promises of pros- 
 perity. 
 
 Deluded with the belief that law can change 
 value. 
 
 That the United States can decree silver 
 equal to gold, and make it so in the markets 
 of the world. 
 
 The demand is for Free Coinage at 16 to i. 
 16 TO I. 
 
 That is that 16 oz, of silver shall equal i oz. 
 of gold. 
 
 But in the markets of the world it takes 31 
 ounces of silver to equal i ounce of gold.
 
 Greenbacks 4 1 
 
 "V^hat is the process under free coinage? 
 
 Wfy, you buy $iooo worth of silver bulHon. 
 You tike it to the mint and have it coined into 
 nearly 2000 silver dollars. 
 
 Who can do this? 
 
 Any om who has the silver bullion. 
 
 Who has the silver bullion? 
 
 No one in any quantity — except the silver- 
 mine owners. 
 
 It is the same old crowd who held up the 
 Treasury in 187& and in 1890. 
 
 They are creating once more a market for 
 their wares. 
 
 But who has to stand the expense ? 
 
 The people of the United States— the 
 masses. 
 
 Then it IS " the classes against the masses " ? 
 
 Yes, but the silver party represents the 
 classes and the gold-standard people the 
 masses. 
 
 SILVER FREE. 
 
 Some people think that free silver means 
 that money will be free to every one. 
 
 This is, of course, nonsense. It will take 
 the same hard work to get money then as now. 
 
 But the money, when gotten, will be worth 
 only half as much. 
 
 Promises of abundant money under free 
 silver are false.
 
 42 Sowid Money Monographs 
 
 No free-silver country ever had abundant 
 money. 
 
 The present silver dollar, although really 
 worth only 53 cents, is kept at par by the 
 guaranty of the United States to k>iep it so, 
 and the belief in the ability of the Government 
 to do this. 
 
 Under free coinage, the Government could 
 not possibly keep the silver at par with gold, 
 as the amount would be unlimited ; even now 
 with a limited amount it is difficult to keep up 
 the Reserve, as we have shovvn. 
 
 Consequently the value of all silver dollars 
 would be cut in two. 
 
 The 1,100 millions in circulation would thus 
 be cut down to 550 millions. 
 
 The 600 million gold now in circulation 
 would instantly disappear, as it would be worth 
 twice as much as silver and nobody would, 
 under those circumstances, pay it out. 
 
 So that immediately upon the adoption of 
 free coinage, the amount of money in use 
 w^ould be cut down from 1700 millions to 
 
 550 millions actual value. 
 
 This does not look like keeping promises, as 
 to more money. 
 
 What we want is more capital, not more 
 money, not cheap 50-cent dollars.
 
 Grec7ibacks 43 
 
 We want the capital that has been withdrawn 
 since 1890 returned to us. 
 
 The capital will come from the whole world 
 the moment it is assured as to our gold basis. 
 
 HIGHER PRICES. 
 
 Higher prices are promised by the silver 
 people. 
 
 These will come. 
 
 It will take two of the cheap dollars to pur- 
 chase as much as one good dollar does now. 
 
 But all wages, salaries, and incomes will be 
 paid in the cheap dollars. 
 
 What does the workman (high or low in the 
 labor ranks) say to this ? 
 
 It is true. 
 
 A vote for free coinage means a vote to in- 
 crease, to double, perhaps, the cost of all house- 
 hold expeftses, the necessities of life, zvithout the 
 power to add one cent to wages, salaries, or in- 
 cotne. 
 
 TO THE LABORING MAN. 
 
 With a given quantity of gold, more neces- 
 .sary things can be bought now than twenty 
 years ago.
 
 44 Soiuid Money AlonograpJis 
 
 But a given quantity of labor will command 
 a larger quantity of gold now than then. 
 
 What does the laboring man say to that ? 
 
 He can now get more things for gold, and 
 more gold for his labor than in 1873. 
 
 The gold standard dollar of to-day will buy 
 less labor and more goods than any dollar in 
 the history of the world. 
 
 Does the laborer want the free-coinage dol- 
 lar, which is the gold dollar cut in two ? 
 
 TO DEBTORS. 
 
 The silver people say they are working in 
 the interest of the debtor. 
 
 That means that they will make it legal for 
 the debtor to pay up in full at 50 cents on the 
 dollar. 
 
 This is true. 
 
 But who will stand the difference? 
 
 Who will be " out " the other 50 cents ? 
 
 Here is a partial table of those who will 
 suffer :
 
 Greenbacks 45 
 
 Depositors in Loan Associations, Savings Banks, Banks, etc., 
 10 million people of all classes, principally wage earners 
 and people with small incomes — 
 
 Amount of deposits $5,350,000,000 
 
 Value, cut in two, under free coinage 2,675,000,000 
 
 Loss to the people noted above $2,675,000,000 
 
 Beneficiaries of Life-Insurance Policies, 13 million of people — 
 
 Amount of policies $10,204,000,000 
 
 Value, cut in two, under free coinage 5,102,000,000 
 
 Loss to beneficiaries, widows and orphans,. . $ 5,102,000,000 
 
 This is only a partial list of the sufferers who 
 will help out the debtor. 
 
 It is repudiation pure and simple. 
 A SIREN. 
 
 The picture presented to us is of a charming 
 siren dispensing broadcast the pleasures of life. 
 Back of it all is a skeleton. 
 That skeleton is naked Repudiation of Debt. 
 
 PART VIL— PROSPERITY 1 879 TO 189O. 
 
 The gold standard unwaveringly main- 
 tained has always brought prosperity in the 
 United States. 
 
 It was the doubt about it that blighted 
 prosperity in 1890, and the continuing
 
 46 Sou7id Money Monographs 
 
 doubt since then that has steadily invited 
 adversity. 
 
 Wheat was maintained at an average of 7i|- 
 cents (gold) per busliel on the farm from 1862 
 to 1890. 
 
 The farmer had nothing to complain of until 
 after 1890. 
 
 It is since then tliat the serious decline in 
 the United States has come. 
 
 As for the workman (and this includes all 
 classes of labor), there never was a time in the 
 history of the world when he could earn so 
 many comforts and luxuries with his salary, 
 earnings, or wages as he could in 1890, and a 
 little later, until the effect of doubt about the 
 gold standard began to be felt, 
 
 THE GOLD STANDARD NECESSARY TO 
 PROSPERITY. 
 
 If the absolute stability of the gold stand- 
 ard in this country is assured, prosperity 
 will once more return, and in no other way 
 can it be secured. 
 
 Here is what M. Leroy Beaulieu, the distin- 
 guished French economist, a man absolutely 
 unprejudiced, says, in The Forum :
 
 Greenbacks 47 
 
 " If the United States are to maintain a commercial, and 
 still more a financial position equal to that of England, the 
 dollar must be given the qualities of the pound sterling ; that 
 is, there must be no sort of doubt that it is a gold dollar, and 
 that never for any reason or under any pretext that which is 
 called a dollar shall be paid in silver. Then all nations will 
 have the same faith in the dollar that they have in the pound 
 sterling. As the United States have a territory infinitely more 
 vast than that of England, a territory full of the most varied 
 resources, and in which capital can find great opportunities of 
 profit, that country will become the chosen land for the capital 
 of the whole world. . . . All that is lacking is a com- 
 pletely solid monetary system to enable the American people 
 to profit by a large part of the capital accumulated in such 
 enormous quantities by the old nations of Europe. . . . 
 
 " So soon as the capitalists, small and great, of Europe, 
 shall know that the United States have definitely adopted the 
 gold standard and relegated silver to a subordinate monetary 
 role, the savings of Western Europe will flow toward that 
 country. Freed from the fear that he may some day be repaid 
 in depreciated money, every person with savings in all Europe 
 will be happy to find a return of 3|^ to 4 per cent, in good 
 American securities, and 5 to 5|- per cent, in the shares of 
 well established American enterprises. Then the immense 
 territory of the United States will find its vast resources rapidly 
 and completely put in the way of exploitation. 
 
 " The abandonment of notes or paper money issued by 
 the State (Government) ; the definitive adoption of gold 
 as the sole standard, — these are the two necessary conditions 
 on which the United States can secure a financial position as 
 important as that they now hold in agriculture and in industry." 
 
 In the face of these sober, deliberate, and un- 
 prejudiced statements of the truth, we are asked 
 to start out in pursuit of a will-of-the-wisp.
 
 48 Sound Money MonograpJis 
 
 A WILD CHASE. 
 
 The Chicago platform perched upon the 
 shoulders of unwilling Democracy, backed by 
 the death's head of Populism and Anarchy, is 
 riding rough-shod over stricken Commerce, out 
 into the abyss spanned part way by a single 
 plank, in wild pursuit of the lovely and seduct- 
 ive form of Fortune, who floats serenely onward 
 perched upon the bubble of Fiat money and 
 holding out the false light of Free Silver. 
 
 It is in this wild chase that the sober, think- 
 ing people of America are asked to join. 
 
 THE QUESTION WILL BE UNDERSTOOD. 
 
 The money question is a deep and puzzling 
 one. 
 
 But our thinking, sober, honest people are 
 bound to understand it. 
 
 They cannot be long deluded with false 
 reasoning. 
 
 Our greatest leader, he who perhaps of all 
 our public men, understood the American peo- 
 ple best, said of them : " You can fool some of 
 them all the time ; and all of them some of the 
 time ; but you cannot fool all of them all the 
 time."
 
 Greenbacks 49 
 
 PART VIII. — CONCLUSIONS — 1 879 TO 189O, 
 PROSPERITY — 1890 TO DATE, ADVERSITY. 
 
 Since 1873 the United States has been on a 
 gold basis by law, and since 1879, when specie 
 payments were resumed, on a gold basis in fact. 
 
 From 1879 ^° 1890, at home and abroad, con- 
 fidence in our intention and ability to adhere 
 to the gold standard was absolute. 
 
 During that period the United States was 
 more prosperous than at any other time in its 
 history, all classes of workers were comfortable, 
 happy, and better paid than ever before, and 
 the national wealth increased to an enormous 
 extent. 
 
 SINCE 1890. 
 
 Since 1890 the gold standard has been in 
 question ; due to non-payment of the floating 
 war debt — the Greenbacks — which allowed the 
 Fiat-money idea to obtain root and expand 
 under pressure from the silver-mine owners, 
 into Fiat-Silver Legislation. This loaded up 
 our currency system with inflated issues, and 
 culminated in the Purchase Act of 1890, which 
 absorbed the entire product of the silver mines, 
 continuing the inflation of the currency to an 
 enormous extent. 
 
 In 1890, confidence in our ability to maintain 
 our currency on a gold basis broke, foreign
 
 50 Sound Mo7iey Monographs 
 
 capital began to be withdrawn, panic ensued, 
 hard times settled down, and hard times will 
 stay until conditions are reversed. 
 
 Two things are needed for assured prosperity. 
 
 An overwhelming victory for the Gold 
 Standard this fall. 
 
 This will at once start the flow of foreign 
 capital this way. 
 
 Second. Legislation for the retirement of 
 gold-demand fiat-money, the Greenbacks 
 and the Treasury notes. 
 
 This will keep it coming. 
 
 The Gold Basis in the United States 
 is the cause of our marvellous pros- 
 perity from 1879 ^^ 1890. 
 
 The attempt to establish a silver 
 
 basis, throwing doubt on THE GOLD BASIS, 
 IS THE CAUSE OF HARD TIMES FROM 189O UP 
 TO DATE. 
 
 THE GREATER THE DEFEAT OF 
 THE CHICAGO PLATFORM IN NO- 
 VEMBER, THE LARGER WILL BE 
 THE SHARE OF PROSPERITY TO 
 EVERY CITIZEN IN THE UNITED 
 STATES.
 
 CURRENCY REFORM 
 
 * 
 
 THE currency question, one of the most 
 important to the welfare of any nation, 
 has never been satisfactorily settled in the 
 United States. 
 
 For more than a hundred years its history is 
 a record of experiments and temporary exped- 
 ients without a single adequate solution. 
 
 No country is so full of currency doctors as 
 ours, and we have finally evolved nine different 
 kinds of money, nearly all diseased. In the 
 meantime the commerce of the country has 
 gone on increasing enormously, with the effect 
 that at regular or irregular periods we have 
 some such a tremendous fit of sickness as that 
 through which we are just passing. 
 
 The cause is physical — there is poison in the 
 blood. Everything is all right except the cir- 
 culation ; that is diseased. 
 
 It is to be hoped that the people are now so 
 thoroughly aroused to the facts that they will 
 
 * Address at the Convention of the American Bankers' 
 Association, Chicago, October i8, 1893. (Previous to the 
 repeal of the purchasing clause of the Sherman act). 
 
 51
 
 52 Sound Motley Mo7iographs 
 
 insist upon a complete revision of the currency 
 system, going to the very bottom of things, 
 and placing the commerce of the country on 
 the most perfect monetary foundation which 
 the expert financial wisdom of this century 
 can construct. 
 
 I cannot hope to say anything new on this 
 subject, but a presentation of the salient points, 
 the essential requirements, the indisputable 
 errors, as they are generally agreed to by nearly 
 all thoughtful students of our conditions, can- 
 not fail to do good. 
 
 It is perhaps well enough to recall at this 
 point one or two essential principles as to cur- 
 rency that all history has proven true. 
 
 It is the province of a government to stamp 
 value upon precious metals, thus creating coin 
 out of the bullion belonging to the people and 
 for their uses, but beyond this no government 
 can properly or honestly go. The arbitrary 
 creation of paper currency by a government is 
 an abuse of power, which is always punished 
 in proportion to the amount issued. Such a 
 manufacture of so-called money is against all 
 principles of science and experience. 
 
 Commerce is the exchange of products 
 created by the exercise of human brain and 
 muscle. Currency is merely the representative 
 of these products, facilitating the exchange of
 
 Currency Reform 53 
 
 them. The moment currency ceases to repre- 
 sent products it becomes bad currency. Indi- 
 viduals can produce — governments cannot — 
 they can only tax. Hence government cur- 
 rency, like our Greenbacks, an arbitrary creation 
 issued against nothing but credit, is false in 
 principle and a hollow dependence. 
 
 Currency being solely a facilitator of com- 
 merce, should be regulated solely by the needs 
 of commerce, but in this country politics has 
 been the main consideration, and a deplorable 
 condition of things is the result. 
 
 I have spoken of our currency system as in 
 
 a diseased state. The existing causes may be 
 
 listed as follows : 
 
 CAUSES. 
 
 First, Silver Legislation. 
 Second, Greenbacks and Treasury Notes. 
 Third, National Bank Notes because over- 
 secure. 
 
 Fourth, Suppression of Bank Currency. 
 
 SILVER LEGISLATION. 
 
 Little need be said as to silver. The country 
 has received such an education in the last six 
 months as it will not soon forget. 
 
 One thing should be emphasized at this 
 point in the struggle : Silver-Bullion buying is 
 the cause of the reccfit panic. The fact that
 
 54 Sound Money Monographs 
 
 this country was apparently in the full whirl of 
 prosperity last October is no argument. The 
 steam engine just before explosion is running 
 at greatest pressure — it is then that false metal 
 in the boiler yields. Bullion buying, more 
 than three years ago, caused foreign buying of 
 our securities to cease and foreign selling to 
 begin, along with gold exports, and decrease 
 in treasury gold reserve. Financiers during 
 this whole period have been calling attention 
 to this and predicting just such a state of things 
 as has come about. 
 
 This is the turning point in the Nation's 
 career from bad to good finance. At this 
 juncture all eyes turn to one man. Unawed 
 by threats of enemies, unmoved by the en- 
 treaties of political friends, unbiased by fears 
 of party dissolution, with mind made up as to 
 what was right, he has stood in the breach, 
 almost alone at times. Had it not been for 
 his indomitable will, we would be as far away 
 as ever from a firm foundation. When the 
 happenings of these times have crystallized into 
 history, the name of Grover Cleveland will 
 shine out clear, as the hero of the hour, the 
 man whose courage stemmed the tide of shift- 
 ing compromise, brought to naught the craft 
 of trimming politicians, and saved the cause of 
 honest money.
 
 Currency Reform 55 
 
 Bullion buying is the worst financial measure 
 on the lowest possible motives ever undertaken 
 in this country. Its stoppage is positively 
 necessary for the arrest of disease. All other 
 reforms must wait for this one. It is the 
 poison in the circulation which, if not com- 
 pletely eradicated, will corrupt every remedy 
 applied. Beyond all this, it is absolutely fatal 
 to bimetallism, so-called, and those who deem 
 themselves friends of silver as a money metal 
 should remember this. 
 
 GREENBACKS AND TREASURY NOTES. 
 
 Under the second head of diseases of the 
 country come the fiat issues of the Govern- 
 ment, the Greenback and the Treasury Note. 
 
 The Greenback is the senior violator of the 
 principle that a government should issue no 
 paper money. 346,000,000 of them, the herit- 
 age of the war, are still with us. Since our 
 resumption of specie payments they have stood 
 up stiffly, and until recently have been accepted 
 round the world as good as gold ; but that does 
 not one whit abate the fact that their issue is 
 wrong in principle and a rotten element in our 
 monetary make-up. 
 
 These are times when all fallacies heretofore 
 tolerated, because they were not so very bad 
 should be stricken out. We have had enough
 
 56 Sound Money Monographs 
 
 of criminal compromise. We have tried it 
 with silver at a terrible cost. A thing is either 
 right or wrong, and if wrong, wipe it out no 
 matter how limited. 
 
 The Greenback is half-brother to rag money, 
 born when the flag was in danger. It has 
 managed thus far to appear in respectable gar- 
 ments, but its fiat character is visible to those 
 who lift the coat flaps. The 100,000,000 gold 
 reserve and the credit of the Government have 
 kept it in countenance until recently, when the 
 other fiat money, the paper silver, fell back 
 with a dull thud on that same hundred millions 
 and there was an earthquake which shook the 
 faith of many. 
 
 The Greenback must go if we desire to act 
 upon an absolutely sound basis. 
 
 The Treasury notes, of which something over 
 $140,000,000 have been issued under the Sher- 
 man Law, being legal tender and redeemable 
 in gold (if there is any), add to the danger of 
 fiat Government issues, begun by the 346,000,- 
 000 greenbacks. We have here, both together, 
 486,000,000 of paper money issued by a govern- 
 ment with less than 100,000,000 in gold to keep 
 it perpendicular. Whether or not the govern- 
 ment has the credit to do this, there comes a 
 time (no man can predict the moment), as there 
 came in June, when suddenly the people begin
 
 Currency Reform 57 
 
 to doubt, there Is one grand explosion, and when 
 the smoke has cleared away the Demon of 
 Distrust looms up, hovering over the ruins and 
 carrying devastation as he sweeps his uncanny 
 winsfs across a nation's commerce from ocean 
 to ocean. 
 
 If the Greenback and the Treasury note are 
 retired, as they should be, 500,000,000 of the 
 currency is wiped out. Something must take 
 its place. 
 
 NATIONAL BANK NOTES. 
 
 Let us take up now the National Bank note. 
 Strange as it may seem, this popular bread 
 buyer is the innocent cause of much of our 
 trouble, on account of its unscientific character. 
 
 The apparent necessities of war gave birth to 
 the national system as a proposed means of 
 placing more Government bonds. The issues 
 of all but National Banks were cut off by the 
 ten per cent, tax, and National Banks were 
 alone allowed to issue notes upon security of 
 U. S. bonds at par for ninety per cent, of 
 notes. The country was ofT a specie basis, so 
 that there was no pressure to redeem, and the 
 high rates of interest on the bonds made issue 
 very profitable. The tendency then was tow- 
 ards inflation, and the total issue went up to 
 360,000,000, and had to be limited by Congress.
 
 58 Sound Money Monographs 
 
 When Government rates decreased materially, 
 the issue began to contract because there was 
 no profit in it until in ten years it shrank to 
 120,000,000. When this decrease began a 
 contraction of the currency followed, and that 
 was the time when proper reform should have 
 been introduced as to security, so that the full 
 volume of bank currency could have been main- 
 tained and increased. Nothing of the kind was 
 done, and the politican and the silver-miner 
 jumped in to fill the gap caused by the con- 
 traction of 240,000,000 in bank currency. They 
 filled it — and to-day we have about 500,000,000 
 of debased silver issues as a result. 
 
 The National Bank note is an over-secured 
 fallacy, popular because of its abnormal de- 
 velopment in one direction, that of security. 
 It has back of it from 20)^ to 30^ more than its 
 face value in gold bonds. There is such a thing 
 as being too good. 
 
 The National Bank note is too good. 
 
 The cost of developing it in that direction is 
 so great that it lags, in a comatose state, under 
 its great burden like a sturdy yeoman who has 
 overdosed with morphine, or like the man in 
 the cave of treasure who loaded up with so 
 much precious metal that he could not move. 
 
 Additionally stupefying is the one per cent, 
 tax on circulation.
 
 Currency Reform 59 
 
 The elastic quality is thus effectually oblit- 
 erated. 
 
 A bank note should come out when needed 
 by commerce, and retire after the need has 
 passed. The National Bank note does neither 
 one thing nor the other. 
 
 It lacks the vitalizing element of a good 
 bank note — that of redemption. Being secured 
 by a special deposit, and over-secured at that, 
 nobody ever takes the trouble to redeem it, and 
 the fine character which the redemption test 
 gives is lost. 
 
 SUPPRESSION OF BANK ISSUES. 
 
 We come now to the fourth head. The ten 
 per cent, tax confines bank issues to national 
 notes, and these have been shown to be in- 
 effectual. The thinking public has come to 
 recognize the injustice of this suppression, and 
 hence the clamor in many quarters for the 
 repeal of the ten per cent. tax. Let us see what 
 would be accomplished by bringing on State 
 circulation. 
 
 Banking before the war was largely experi- 
 mental. Each State tried one thing or another 
 with variable degrees of success. A few States 
 struck the right principle, and in two or three 
 for a period of forty years the most exemplary 
 success was achieved and maintained.
 
 6o Sou7id Money Monographs 
 
 In other States there was no marked success, 
 and in the majority the most decided lack of it. 
 There never was any uniformity of system 
 between States, and as to safety, in twenty or 
 more this element was lacking. 
 
 If it is expected by reviving these varying 
 systems to make such a national currency as we 
 need, the expectation will only be fulfilled after 
 a long period of evolution. 
 
 As to the rights of State banks, it is a very 
 simple thing for a State bank to change to a 
 National one, carrying its rights with it and no 
 injustice done. 
 
 Admitting that the most perfect form of 
 currency is the note of a good bank, how can 
 you get your banks good before you allow them 
 to issue? 
 
 Not certainly by throwing the control of 
 them into the hands of forty-four different 
 legislatures of all degrees of intelligence and 
 political complexion, as would be done if the 
 State tax were repealed. 
 
 For thirty years the National system has 
 been perfecting its restrictions until to-day it 
 shows a high standard of average strength and 
 safety, and a record for the whole period of its 
 existence which probably — taking number of 
 banks and all, into consideration — is unequalled 
 in the history of banking. This record is con-
 
 Currency Reform 6i 
 
 densed in the statement of a recent comptroller 
 that the total average of loss in the whole 
 system for the whole time up to last year was 
 only three per cent. 
 
 Here, then, is a system which, on one side, 
 has been developed and perfected with the ut- 
 most care for thirty years by a succession of 
 competent comptrollers, until on that side — the 
 Department of Safety — it has attained a very 
 high level. On the other side — that most im- 
 portant one — of circulation — -there has been 
 actually no development whatever. 
 
 REMEDIES. 
 
 The situation then condensed is as follows : 
 
 We desire to place our currency upon a 
 sound basis, and while eliminating all false ele- 
 ments to maintain sufficient volume, with a 
 provision for increase and a provision for 
 elasticity. 
 
 In order to accomplish this : First of all, 
 silver purchasing must cease ; without this it is 
 absolutely useless to institute other reforms. 
 
 Then our legal tenders, the Greenback and 
 the Treasury Note must be retired. 
 
 This brings us to the question, What shall 
 fill the gap thus created. 
 
 There is but one answer. The present 
 tendency in all the great nations of the world
 
 62 Sound Mo7iey Monographs 
 
 is towards bank currency. Bank currency is 
 what we, too, must depend upon. This is 
 strictly in accordance with scientific sequences. 
 
 The wealth of a country should be the basis 
 of its currency. The basis is furnished by 
 commerce itself. 
 
 The products of the labor of the people 
 represent all there is of financial value (wealth) 
 in a nation. Commercial banks, the friends of 
 all classes of the people, of the wage earner, 
 the merchant, and the capitalist — commercial 
 banks, the longest lived and soundest institu- 
 tions known in history, are the custodians of 
 the representatives of this wealth in the shape 
 of commercial assets, and commercial assets, 
 all time proves, are the highest form of security 
 for note circulation. 
 
 Notes issued by properly capitalized and in- 
 spected banks to the extent of a proportion of 
 their paid-up capital, and made a first lien upon 
 their assets, not specially pledged, but held as 
 general security, have behind them the only 
 truly scientific basis for circulation in a country 
 like ours — the basis being the product of the 
 energy, the muscle, and brain of our people. 
 Trade consists in the exchange of these pro- 
 ducts. Banks are the natural facilitators of 
 such exchange. They hold, in short, bills- 
 receivable, the paper representatives of the
 
 Currency Refo^'m 63 
 
 products themselves. As by the increase of 
 products trade increases, so scientifically and 
 naturally, there is produced in an increase of 
 assets a larger basis for note circulation. The 
 means to move the crops are furnished by the 
 crops themselves. What better basis for bank 
 notes can be created than these quick assets ? 
 Such bank notes, under regulations for daily 
 redemption, modestly and automatically retire 
 when they are not needed. 
 
 Graft this principle upon the National sys- 
 tem. Abolish the over security and the tax 
 on circulation. Make the note secure enough, 
 but not too secure. Drop the United States 
 bond special security — adopt the general se- 
 curity principle which is in such successful 
 operation in Canada, making the note a first 
 lien on all assets, including double liability of 
 stock-holders, limiting its issue to a percentage 
 of capital with a guarantee fund and other 
 minor details to be arranged. 
 
 Establish redemption agencies at financial 
 centers throughout the United States. 
 
 Let all notes be printed by the Government 
 as now. 
 
 Under the general security principle, daily 
 actual redemption would then become a fact. 
 The operation would be the same as under the 
 Canadian law.
 
 64 Sound Money Monographs 
 
 In Canada, bank notes are redeemed every 
 day as checks. If a bank receives the notes 
 of other banks, it immediately sends them on 
 for redemption, paying out its own notes over 
 its counter in a daily endeavor to put them in 
 circulation. It is of course a direct benefit to 
 each bank to have as many of its own notes 
 out as it possibly can. Then with every bank 
 crowding for redemption and retirement all 
 the notes of every other bank, and pressing out 
 all it possibly can of its own, it is readily seen 
 that only the actual amount needed by com- 
 merce will stay out — that the amount will rise 
 and fall automatically with the actual business 
 demand or lack of it. This is the principle of 
 elasticity scientifically carried out, suppressing 
 inflation, fostering enterprise and working out 
 its own fine end under the fire-test of daily 
 redemption. 
 
 Would this currency meet in volume the re- 
 quirements of the country ? 
 
 There is no doubt about it. The redemp- 
 tion of the Greenback and the Treasury note, 
 $500,000,000 in all, could be accomplished 
 gradually, by the use of the $100,000,000 gold 
 reserve, by the sale of silver bullion, by means 
 of the debt sinking fund appropriation, by in- 
 come, by borrowing on gold bonds for the pur- 
 pose. This should be done gradually.
 
 Currency Reform 65 
 
 Meantime the National bank-note issues, re- 
 lieved of heavy burdens, but protected and 
 made absolutely safe, would increase, and as 
 they did so the legal tender retirement could 
 be kept automatically level with such increase. 
 The volume of notes would also swell from 
 rapid change of State banks into National and 
 from new organizations. A few years would 
 see the change completed. 
 
 We would then have for our main circulating 
 medium a bank currency, absolutely secure, 
 subject to daily redemption in specie, of uni- 
 form value in every part of the United States, 
 and because of daily redemption possessing 
 the necessary elasticity for the requirements of 
 our commerce, at one time growing rapidly to 
 meet its swelling volume, and afterwards sink- 
 ing out of sight as the need subsided. 
 
 Trade could then go on, for the first time in 
 the history of this country, unhindered by the 
 fear of disturbance and corruption at its very 
 base, sure of the essential foundation of all en- 
 during commercial prosperity — a sound cur- 
 rency. 
 
 We could then take the lead as the foremost 
 commercial nation of the earth, and it would 
 not be long before the Dollar of the United 
 States, instead of the Pound Sterling, would 
 rule the world.
 
 66 Sowid Money Monographs 
 
 SYNOPSIS. 
 
 Present unsatisfactory conditions of the cur- 
 rency question in the United States. 
 
 Causes : 
 
 Silver legislation. 
 
 Legal tenders. 
 
 National bank-note regulations. 
 
 Suppression of bank currency. 
 
 Under first head all responsibility for present 
 panic placed upon the Silver Purchase clause, 
 claiming that no other reform will be of any 
 avail until the poison of bullion buying is ob- 
 literated. The country warned that unqualified 
 repeal of the Silver Purchase law must be 
 carried out. Any compromise will be a com- 
 promise with poison. 
 
 Legal Tenders. — The Greenbacks and the 
 Treasury notes false in principle and a constant 
 menace to the stability of the currency. They 
 should be gradually retired. 
 
 National Bank Notes. — Their unscientific 
 character. Their retirement because unprofit- 
 able opened the way for the Silver craze. 
 Over-security, their great fault, excluding any 
 possible elasticity. 
 
 Bank-Note Suppression. — The ten per 
 cent. tax. Effect of its abolition. Unneces-
 
 Curre7icy Reform 67 
 
 sary if the right principle of security is intro- 
 duced into the National system, making bank 
 issues profitable. State banks could then be- 
 come National banks without trouble. 
 
 REMEDIES. 
 
 Stop buying silver. 
 
 Retire the Greenbacks and Treasury notes 
 gradually, letting National notes under new 
 regulations take their places. 
 
 The regulations to be : Abolition of the 
 Government bond security, making bank notes 
 a first lien on all the assets of the bank, includ- 
 ing the double liability of stockholders. In- 
 troduce a guarantee fund if necessary. Limit 
 issues to a proportion of the capital stock. 
 Establish central redemption agencies through- 
 out the United States. Let all notes be printed 
 by the Government, as at present. 
 
 We would then have a currency ; secure — 
 uniform — convertible into specie — and thor- 
 oughly elastic. 
 
 Commercial prosperity would come to stay, 
 and the Dollar of the United States, instead of 
 the Pound Sterling, would rule the world.
 
 SHOULD THE GOVERNMENT 
 RETIRE FROM BANKING?* 
 
 *' The government note, a bad, unsound, untrustworthy 
 currency, persecutes society at every turn and brings loss on 
 all but gamblers. . . , Not an hour should be lost by any 
 legislature who has any knowledge of the nature and working 
 of money to arrest the plague and sweep away inconvertible 
 money." — Bonamy Price. 
 
 THE popular opinion, now widely expressed 
 in intelligent quarters, that the United 
 States Government should go out of the bank- 
 ing business, is based upon the fact that one of 
 the important functions of banking has been as- 
 sumed and practically monopolized by an insti- 
 tution totally unfit for its performance. 
 
 The term bank, as used here, should be dis- 
 tinguished from the term banker. Prejudiced 
 writers constantly confound the two. A bank 
 is an extremely essential part of the business 
 structure. The capital stock of a bank, furn- 
 ished generally by hundreds of people, the 
 majority of whom are in moderate circum- 
 stances, is a small proportion of the whole. 
 
 * Appeared originally in The Forum for February, 1895. 
 Printed by permission of the editor of The Forum. 
 
 68
 
 Governmental Banking 69 
 
 The most important element is the deposits, 
 which are contributed by a large part of the 
 community. In respect to deposits, then, the 
 people are the bank. The banker, as generally 
 understood, is the paid officer who looks after 
 the interests of the entire institution. Banking 
 profits are not proportionately large, and go to 
 the stockholders, who are again the people. 
 Private bankers with capital of their own are 
 comparatively few in number and cut but a 
 small figure in the United States as compared 
 with incorporated stock banks. These private 
 bankers issue no notes, and are not benefited 
 or affected directly by laws relating to banks. 
 Laws which injure the banks do harm to the 
 whole community ; whereas laws which con- 
 tribute to the proper working and prosperity 
 of the banks help radically the whole people, 
 especially those who depend upon daily labor 
 for their wages. 
 
 The business of banking may be divided into 
 three principal operations: (i) The receiving 
 of money on deposit ; (2) the loaning of the 
 same on security of collateral or names ; (3) 
 the issuing of notes for circulation. In speak- 
 ing of the United States Government being in 
 the banking business, reference is made only 
 to the latter feature, the note-issuing part of 
 the business. The currency troubles in the 
 United States are mainly due to the assump-
 
 JO Sound Money Monographs 
 
 tion by the Government of this prerogative, 
 which as properly belongs, under certain re- 
 strictions, to individual associations as does the 
 right to manufacture the necessities of life. That 
 is to say, the experience of generations of trad- 
 ing people has demonstrated that the Govern- 
 ment from its very nature, is as unfit to issue 
 the circulating medium required by commerce 
 as would be the faculty of a young ladies' sem- 
 inary to conduct a great war. 
 
 We hear frequently the natural inquiry, Why 
 should the banks issue currency? Why cannot 
 a great government, with unlimited resources 
 as a background for taxation, best maintain 
 this instrument which affects the daily life of 
 all the people? The answer is that currency 
 is one of the tools of trade ; and, whether good 
 or bad, it is controlled or acted upon by the 
 laws of trade, which are as immutable and as 
 powerful as are any of the great laws of nature. 
 Proud kings and powerful states have endeav- 
 ored to pervert these laws by creating some- 
 thing out of nothing, and to wrest to them- 
 selves the benefits which are the reward of 
 industry alone and which belong to the whole 
 people ; but, in every instance, these great laws 
 have in the end, long confined by false condi- 
 tions, broken away with the force of bursting 
 cyclones, leaving behind them death, destruc- 
 tion, and ruin.
 
 Governmental Banhing 7 1 
 
 Money is one of the tools of trade, but in all 
 banking transactions, for instance in the United 
 States, metallic and paper money are used only 
 to the extent of about six per cent, of the 
 whole. How is the place of money taken as 
 to the other ninety-four per cent. ? It is made 
 up of checks on banks, bank drafts, and other 
 like instruments of exchange. The business 
 of the United States, then, is done to this 
 great percentage by bank machinery, which 
 has grown to its present perfection as a result 
 of the operations and development of com- 
 merce through the ages. The bank is as much 
 the machine of trade as money is its tool. If 
 this machinery did not exist, it would make 
 necessary the use of actual money in every 
 transaction. This great business is done with 
 immense economy by banks, safely, smoothly, 
 and in fabulous amounts. Actual coin is used 
 to an extent of about \\ per cent., paper 
 money to about /\\ per cent., but the other 
 94 per cent, is just as much in effect money 
 as if it were actually coin. Let us call it check- 
 money, if you please. The check-money, then, 
 is used for the larger transactions, and paper 
 money and coin for the smaller. 
 
 Now, what is the difference between check- 
 money and bank-notes ? The first is an order 
 of the depositor on the bank to pay a larger
 
 72 Sound Money Monographs 
 
 sum, the second is an order of the bank on 
 itself to pay a smaller sum ; in effect, there is 
 no difference. One is payable to order, the 
 other to bearer ; one is as safe as the other, as 
 convenient and as justifiable. Commerce is to- 
 day using check-money to an extent of 94 per 
 cent, out of 100 per cent, of its transactions. 
 Is there any objection to giving it the privilege 
 of using 4^ per cent, more and furnishing, 
 through perfect machinery adapted for the pur- 
 pose by the experience of all time, all the paper 
 money needed ? 
 
 The bank-note, if sent in every day for re- 
 demption (as a check is) and as it should be 
 sent in under any proper system of bank cur- 
 rency, becomes identical, in almost every 
 respect, with the check. The validity of check- 
 money is based on representatives of wealth 
 deposited in the bank : so is that of the bank- 
 note issued by the bank. Check-money will be 
 issued to the extent that trade requires it in a 
 community : so will the bank-note. Check- 
 money will stay out only so long as it is needed 
 and will come back again for redemption from 
 other banks who want the money : so will the 
 bank-note, under the daily redemption arrange- 
 ment which is essential. Check-money circu- 
 lates in the neighborhood where it is needed; 
 so will the bank-note, if redeemed daily.
 
 Gavernjiiental Banking 73 
 
 The increase in the number of bank-notes is 
 regulated thus by the requirements of trade 
 and the desire of the banks to get them out, 
 because of the profit there is in the operation. 
 Their decrease is effected by the pressure 
 brought to bear by other banks, who, striving 
 to force their own notes out, send the notes of 
 other banks in, and the total amount kept out 
 can thus never be more than trade actually re- 
 quires. The regulation of volume is automatic. 
 We see thus the uses, the convenience, the es- 
 sential propriety of notes issued by banks. 
 
 Does the Government, usurping this function 
 of the bank in going into the banking business 
 to the extent of note-issuing, fulfil, with its 
 paper issues, the mission of the bank-note? 
 Emphatically no. The Government is made 
 up of representatives of the people, not chosen 
 for any peculiar business qualification, but on 
 account of a variety of attainments, in most 
 cases political. Now the currency has essen- 
 tially to do with business — with commerce — and 
 the regulation of it must be thoroughly in ac- 
 cord with the needs and requirements of trade. 
 True, we have many students of finance and 
 practical financiers in our own Congress. I 
 venture to say that the Committee of the 
 House on Banking and Currency is one of the 
 best-informed bodies of men on financial sub-
 
 74 Sound Money Monographs 
 
 jects to be found in any government. They 
 are thoroughly cognizant as to what should be 
 done ; but partisan pressure, expediency, the 
 wishes of constituents, weigh heavily. Most 
 of all comes to them the question, What will 
 pass? Can this or that, no matter how good, 
 be put through ? The fact stands that one bad 
 man, or a few ignorant or vicious legislators, 
 are enabled to block the whole body of Con- 
 gress ; and at just the point when prompt and 
 sound action is imperative they stand in the 
 way, with the whole country in peril. We had 
 such a state of things in the criminal tardiness 
 of the silver-purchase repeal. Given a body 
 like this, subject, too, to change from period to 
 period, so that a wave of Populism and Anarchy 
 may at any time cast up temporarily an unrea- 
 sonable and dangerous representation, we turn 
 over to them the privilege of issue — the very 
 life-blood of trade and commerce. In addition 
 to the dangerous element, we have the Repre- 
 sentative who is impelled by the demands of 
 honest but ignorant constituents. Except he 
 be a born statesman, he necessarily sinks to the 
 level of the voters who elected him. 
 
 There comes now a grand emergency like 
 war, and the pressure for money is very great. 
 There are conferences and conferences, sound 
 council and weak council, but the easy way
 
 Governmental Bmiking 7 5 
 
 prevails, and the Government is authorized to 
 create a paper currency, and the poison of fiat 
 money enters the blood, never wholly to be 
 eradicated. We then have the legal tender. 
 The business of making a note-issue was thus 
 started in this country. It has never perma- 
 nently stopped since. The danger, of course, 
 lies always in over-issue ; but, with admirable 
 firmness and decision, the limit of $400,000,000 
 was regarded throughout the War. But at 
 these figures, gradually reached in an ascend- 
 ing scale, the greenback was productive of wild 
 inflation, speculation in trade, extravagance in 
 living, recklessness of expenditure, and final 
 collapse with widespread ruin, bearing hardest 
 upon the hand of labor. Then came slow and 
 painful recovery. It has been computed that 
 the War cost us eight hundred millions more 
 than it would have cost if there had been no 
 greenback. This is what we have already in 
 the past to thank the greenback for. 
 
 Now let us note what follows this first warning. 
 A cancellation of the greenback is begun. But 
 the Avorking poison — the deadening comfort of 
 inoculation — stops it. Specie payments are 
 resumed. But the eruption appears in another 
 form : in fiat silver, the Bland dollar. No harm 
 seems to follow, and back again we swing in the 
 dehrium of 1890 to paper. Once more the
 
 76 Soimd Money Mo?iographs 
 
 legal tender — the Treasury note. Now the 
 fever is high again and we plunge with a crash 
 into '93, and for a second time the issues are 
 stopped — the second warning. But we have, 
 nevertheless, not stopped soon enough. We 
 have the over-issue. The necessity is upon us 
 to maintain these over-issues. From the con- 
 ditions thus produced every person in the 
 United States is suffering more or less to-day. 
 
 The bank, issuing notes, depends upon its 
 business depositor to take what he needs of 
 them to pay out in the conduct of his business. 
 This puts them into circulation. No more are 
 taken out than business needs. Another busi- 
 ness depositor, getting more of them than he 
 needs, brings them back to the bank, where 
 they are retired. Business thus regulates their 
 volume. The Government bank has no depos- 
 itors and can get its notes into circulation in 
 no such way. It has no automatic method of 
 getting information as to how much money is 
 needed by trade, and could not act upon it if it 
 had. The Secretary of the Treasury, ostensi- 
 ble Manager of the Bank, has his hands tied. 
 The Government currency once out stays out ; 
 and, as if natural conditions were not strong 
 enough to keep it out, the legal tenders, when 
 they come in for gold, must by law be paid out 
 again.
 
 Governmental Bankiiig 7 7 
 
 The tendency of an irredeemable Govern- 
 ment currency is to drift to the money centres, 
 and there, when its vokime is too great for the 
 uses of legitimate trade, to incite to inflation 
 and speculation. Once at the great centres it 
 stays there, and this is the cause of the dearth 
 of money in the West and South. It is the 
 real reason for that honest cry (which dishon- 
 est leaders take advantage of and fan into a 
 dangerous flame) — the cry for more money — 
 which ever and anon sweeps into a whirlwind, 
 now for silver, now for State money, now for 
 fiat money, for people's money, money on farm 
 mortgages, money per capita, by the barrel, 
 tons of it, millions and millions ! I do not 
 wonder that our Representatives from those 
 regions which have been denuded of the nat- 
 ural right of a community, the right to bank- 
 notes, feel that they must heed this cry. 
 
 There is a good honest remedy for all this. 
 It is through the permission of note-issue to 
 banks, without specially pledged security, un- 
 der proper general supervision. We have this 
 supervision in almost complete perfection in 
 the national system. But the banks are now 
 held down to an issue of 90 per cent, against 
 par of bonds. There is no profit in this and so 
 no relief, because banks will absolutely refuse 
 to put out a single note voluntarily unless there
 
 78 Sound Money Monographs 
 
 is a profit in it. The issue must eventually be 
 not against bond security, but against the gen- 
 eral assets of the bank with provision for daily 
 redemption, so that the notes will stay to do 
 their work in their own neighborhood, thus 
 clothing them with all the advantages claimed 
 for State-bank issues, but with none of the 
 dangers. 
 
 The real want thus met, the dangerous, igno- 
 rant, but honest cry for money will cease. 
 Above all and before all, Government money, 
 the legal tenders, must be wiped out. They 
 are danger-breeders, inoculated with fiat poison, 
 clumsy, unscientific and out of place. The 
 Government must go out of banking, a busi- 
 ness which it is manifestly unfitted for, and a 
 business which has proved disastrous to gov- 
 ernments in every historical instance. It must 
 adopt once more the high and only prerogative 
 of a state with regard to the issue of money, 
 namely, the stamping upon precious metals the 
 state's certificate of their weight and fineness.
 
 A WAY OUT* 
 
 PROPOSAL : 
 
 To issue $500,000,000 lYz to 3 per cent Gold Bonds ; cancel 
 the legal tenders with proceeds thereof ; allow Banks to issue 
 currency to a percentage of 150, instead of 90 per cent., on 
 the Bonds — total circulation to be limited by capital. 
 
 THE TREASURY BANK. 
 
 WHEN the Baltimore convention finished 
 its work last October, it had formu- 
 lated a plan for the perfecting of the banking 
 law, mapping out the part for the banks in the 
 work of currency reform. It did not say and 
 did not intend to say what should be done 
 with that great Government bank, the United 
 States Treasury — a bank the counterpart of 
 which exists nowhere in the world to-day ; a 
 bank with unlimited credit, which it cannot 
 use — vast resources not available — issues out 
 
 * Before the Reform Club, New York City, December 29th, 
 1S94. The serious dangers pointed out as threatening the 
 Treasury at the close of the year 1894 culminated a month 
 later, when the Government was within two days of suspen- 
 sion, and the country was saved from disaster only by the 
 arrangement made with the Bond Sydicate by the President 
 and Secretary. 
 
 79
 
 8o Sound Money Monographs 
 
 of all proportions to reserves — cellars full of 
 hundreds of millions of useless silver — no 
 power to operate — with none of the privileges 
 of the ordinary bank or individual — paralyzed 
 completely on the side of executive action — 
 its doors wide open to the outpour of gold — 
 furnishing itself the legal instrument of suc- 
 tion, to be used over and over again to exhaust 
 the precious stores, but on the other hand cut 
 off completely from power to replenish, except 
 through one small antiquated aperture (the 5 
 per cent, bond), a crack in the wall left by 
 chance in the legislation of the Long Ago. 
 What more dreary financial spectacle than 
 this? What more ridiculous, if it were not so 
 serious? 
 
 I hesitate even to give full expression in 
 public as to how serious this condition, in my 
 opinion, seems to be. To-day the Govern- 
 ment is receiving practically no gold at its 
 customs. At its one source of supply of gold 
 (except the sale of bonds), the percentage of 
 gold received is so small that it cannot be 
 estimated. Silver has possession of the field 
 of circulation ; there is absolutely no resource, 
 except another issue of bonds. And what 
 does it all mean ? The people love the Green- 
 backs, say the congressmen ; they do not want 
 to fund it in bonds, because it would cost
 
 A Way Out 8i 
 
 interest to carry bonds, whereas, now it costs 
 nothing. Nothing, say you? The interest 
 for one year on the whole $500,000,000 would 
 be but $10,000,000 to $15,000,000, and already, 
 in less than a year, the Greenback has cost the 
 people two issues of bonds of $50,000,000 each, 
 one hundred millions instead of fifteen, with 
 every prospect of another $50,000,000 in three 
 months, if something is not done ; to say 
 nothing of the incalculable millions lost in the 
 great panic of 1893. 
 
 We are facing a great problem in this country 
 to-day. We are facing the problem of main- 
 taining a vast mass of fiat money and fiat coin 
 at par with the money of the world — with 
 gold. We are facing this problem loaded with 
 $600,000,000 of silver, with income nearly all 
 payable in silver, with 500,000,000 of demand 
 notes payable in gold, knocking daily at the 
 treasury doors. 
 
 Do you wonder that the other nations of 
 the world look askance at us and wonder 
 whether we will or will not win in this great 
 fight, and while they look they keep their hands 
 well on to their own gold and well off our invest- 
 ments, waiting, waiting, to see what the out- 
 come will be ? 
 
 And, too, our own people are possessed with 
 the idea of danger. Millions of dollars of cash 
 
 6
 
 82 Sotind Money Mo7iographs 
 
 balances are on deposit in our banks, kept there 
 by capitalists and merchants who will not let 
 them out in legitimate enterprises and invest- 
 ments until this question is permanently set- 
 tled. Many wage-earners are thus kept idle 
 and want waits at the door with winter. 
 
 NECESSITY FOR ACTION. 
 
 The Baltimore convention stirred up the 
 banks and business men to the need of reform 
 in the banking law. The messages of the 
 President and Secretary have aroused the peo- 
 ple to the condition of the Treasury and to the 
 need of action. Immediately following this 
 came the hearing before the committee on 
 banking and currency, reports of which were 
 widely circulated, and then the presentation of 
 the Carlisle bill, the discussion in the House, 
 and the submission of the substitute bill. All 
 this has done great good. The advanced posi- 
 tion taken by the President and the Secretary 
 as to bank-note systems has been of incalcu- 
 lable value in the education of the people of 
 this country, and even Congress, the fair and 
 thinking part of it at least, has come to feel 
 and admit that two things must be done : 
 
 First, that the legal tenders must in some 
 manner be gotten out of the way. 
 
 Second, that their place must be taken by 
 bank-notes.
 
 A Way Out 83 
 
 OBJECTIONS TO PRESENT BILLS. 
 
 The debate in the House has cr^'stallized on 
 these lines, and the principal objections at this 
 time to the Carlisle substitute bill are: (i) 
 The absence of a definite provision for the re- 
 tirement of the Greenback and Treasury notes. 
 (2) The admission of state bank issues — a dis- 
 turbing feature, experimental, unwise, and pos- 
 sibly dangerous. 
 
 OTHER OBJECTIONS. 
 
 I say principal objections. I propose to-night 
 to note briefly some of the other objections to 
 all plans so far advanced, and finally to make a 
 suggestion for your consideration, which, while 
 it will not, if adopted, accomplish at once the 
 full requirements of currency reform, nor place 
 us upon the sound foundation toward which it 
 trends, will obviate the difficulties in the way 
 of the harmonious settlement of the question 
 for the present, and pave the way for a further 
 completion and perfection of the system of 
 bank-note issues based upon general security. 
 
 If the problem were simply the retirement of 
 the legal tenders, the business men North, 
 South, East, and West, could be aroused to the 
 dire necessity for this action, and by urging 
 upon Congress an issue of bonds and cancella- 
 tion of paper, that body could, I believe, be
 
 84 Sound Money Monographs 
 
 prevailed upon to take this step. But, as you 
 know, the wiping out of five hundred milHons 
 of circulation would produce a very inconven- 
 ient and possibly dangerous contraction, even 
 though we now have too much paper out. 
 
 If the problem were simply to reform the 
 banking system, we have the progress in educa- 
 tion already made, the impetus given by the 
 administration in the direction of the funda- 
 mentally correct system of bank-notes against 
 assets, against general security with safety fund, 
 and the solid good sense of the voters and 
 most of their representatives, which would 
 permit of reform solely on the lines of the tried 
 and true national banking organization. But 
 these two problems confront us together, and 
 neither the Carlisle substitute bill nor the Balti- 
 more plan — and these are practically the only 
 plans before the country to-day — provides ef- 
 fectually for both problems. 
 
 It is urged by those who desire no change 
 whatever that the national bank-notes are good 
 enough. They are absolutely secure, convert- 
 ible, uniform. Elasticity is wanting, but it is 
 claimed that the people are satisfied, the na- 
 tional bank-note is as good as gold anywhere 
 in the United States, etc., etc. It is further 
 urged as against the new plans that they neces- 
 sitate a surrender of the present national circu-
 
 A Way Out 85 
 
 lation of over $200,000,000 in bonds. This 
 would throw upon the market a lot of govern- 
 ment securities at a time when all disturbances 
 are at least disquieting ; at a time when govern- 
 ment credit should be handled with discretion. 
 It is true that the Carlisle substitute gives 
 opportunity for continuation of the bond circu- 
 lation, but in view of the no-profit under bonds 
 as against the decided profit of the new circu- 
 lation, the effect would probably be the same ; 
 the bonds would be sold. 
 
 Further, under the Carlisle substitute, it was 
 urged in the House debate that there would be 
 the old and the new national notes, the old 
 ($206,000,000) secured by 130 per cent., and 
 the new secured by 30 per cent. (Greenbacks). 
 Here would be introduced a feature hetero- 
 geneous and unsatisfactory. 
 
 The advocates of the currency against assets, 
 against general security, under the new plan, 
 claim that the other side discuss this question 
 as though the present system could last for- 
 ever, when, as Mr. White says, there is not a 
 national bond in existence to-day that has 
 more than twelve years to run. The project 
 of issuing special bonds for the purpose of 
 maintaining a basis for bank-notes, keeping the 
 nation in debt on that account, is contrary to 
 all rules of common sense and good financier-
 
 86 Sound Money Monographs 
 
 ing, and the business men and the people 
 would not accept it. Something, some time, 
 and not so very far off, has got to be done in 
 the way of giving up bond security. The 
 change has got to be made, and why not make 
 it now ? The choice to be made at any rate 
 in a very few years is not between the present 
 bond plan and a plan against general assets, 
 but between one or other of the asset plans, 
 whether the Carlisle plan, the Baltimore plan, 
 or something of the same kind based upon 
 general security instead of special bond secu- 
 rity. It will be noted that the condition of the 
 Treasury is not met by either side in the above 
 argument. 
 
 PROPOSAL. 
 
 The suggestions to which I referred a few 
 moments ago in the interest of harmonious 
 adjustment, and more especially in the interest 
 of the Treasury, which, in my mind, is an in- 
 terest far beyond any present requirements of 
 the bank system, except as that system can aid 
 in placing our national finances on a sure basis, 
 is as follows : 
 
 Issue $500,000,000 of low-rate bonds, 2\ per 
 cent, to 3 per cent., payable in gold and pay- 
 able at the option of the government. Bonds 
 to be delivered $200,000,000 now, $100,000,000
 
 A Way Out 87 
 
 in six months, $100,000,000 in twelve months, 
 $100,000,000 in eighteen months ; but all to be 
 subscribed for now, under forfeit. 
 
 Cancel legal tenders with the proceeds of 
 these bonds. 
 
 Continue the national bank issues and sys- 
 tem exactly as at present, except that banks be 
 allowed to take out circulation to the extent of 
 150 per cent, on bonds instead of 90 per cent., 
 as at present ; circulation to be limited to 
 amount of capital ; notes still to be a first lien 
 upon assets and double liability of stockhold- 
 ers. Establish a safety fund replenishable 
 when impaired, continue government guaran- 
 tee and, for the present, government redemp- 
 tion for a very short period, with the idea in a 
 few months of establishing daily redemption. 
 The emergency circulation feature of the Balti- 
 more plan could, too, be adopted if deemed 
 wise in connection with this proposition. 
 
 SMOOTH SAILING. 
 
 Let everything go on as before, safely, uni- 
 formly, with the same provision for converti- 
 bility and a new provision to a percentage, for 
 elasticity with general security (which is really 
 absolute security) back of it. 
 
 We make thus a conservative, well-guarded 
 step towards the plan of issue against general
 
 88 Sound Money Monographs 
 
 security without bonds, to which we must uhi- 
 mately come as the only sound solution in the 
 end, but we retain temporarily two-thirds of 
 the bond security and obtain with the other 
 third a measure of elasticity sufficient for the 
 present. It may be noted here that the 
 Carlisle plan furnishes a proportion of elastic 
 issue equal to ^2\ per cent, of capital, the Balti- 
 more plan 50 per cent, thereof, and the suggest- 
 ion here made, 33J per cent, of same. 
 
 Stated periods could and should be adopted 
 for the further retirement of bond security and 
 permissible increase of elastic issue. The pub- 
 lic are enabled so to test the security and, as it 
 were, to become accustomed to a new and the 
 only right principle, without letting go alto- 
 gether of old-time anchorage to bonds. The 
 dangerous indebtedness of the government is 
 thus speedily wiped out. The bonds once sub- 
 scribed for become a bulwark of security to the 
 national credit, and the act restores immedi- 
 ately the confidence of the great foreign in- 
 vestment contingent, a confidence which has 
 been so fast slipping away from us, and which 
 is so important an element in our general pros- 
 perity. Gold will begin to flow our way. 
 Confidence restored, our own people will renew 
 investments and put out enterprise. The sure 
 foundation so sadly needed will have been 
 begun to be laid.
 
 A Way Out 89 
 
 As to the national currency, as I have said, 
 it stays. The two hundred millions already 
 out stay out. Additional circulation on the 
 same bonds is added as the Greenbacks retire 
 and the need is felt. There are no new notes 
 with 30 per cent, security and old ones with 
 130. Each is as good in the pocket as under 
 the magnifying-glass. No minute inspection is 
 necessary to see what is what. The public, 
 the innocent bill-holders, go right on taking in 
 and paying out, just as well protected, abso- 
 lutely undisturbed, safe and tranquil, with the 
 bank-bill in the wallet, meantime that a mighty 
 reform is taking place in the currency, as silent 
 and as momentous as the vast but impercepti- 
 ble changes wrought by chemistry in the 
 bowels of the earth. 
 
 Without yielding one point as to what is the 
 only sound principle of bank issues, namely, 
 that they should be against general security, 
 the total assets of the bank, the short bills re- 
 ceivable, the representatives of products, the 
 results of toil, the promissory notes of hundreds 
 of thousands of honest promisers who will keep 
 their promises and pay their notes, working 
 day and night to do so, as they did in 1893, and 
 have done in every year before and since — 
 without yielding one point as to the doctrine 
 that this is and must be the only true and ulti- 
 mate outcome of currency reform in this coun-
 
 go Soinid Money Monographs 
 
 try — I venture to put out this proposition as a 
 step in the direction towards which we are 
 heading, a step which must be followed by 
 others, but, above all, a step which clears away 
 the danger and closes up the Treasury Bank 
 and takes care of the national credit, which to 
 me, as I have said, is an interest far above the 
 question of the best thing for the banks as 
 banks. For the bankers of this country, I am 
 thoroughly convinced, are citizens of the 
 United States first and bankers afterwards. 
 
 MR. cornwell's currency plan. 
 (The New York Times, Editorial, December 31st, 1894.) 
 It seems pretty plain that in this part of the country the 
 opinion of business men very generally is concentrating upon 
 two points in the financial situation — the final retirement of 
 the greenbacks and their replacement by national bank notes, 
 issued on the bonds with which the greenbacks are retired. 
 The suggestions of Mr. W. C. Cornwell, President of the 
 New York State Bankers' Association, which we published 
 yesterday morning, have some new features that are well worth 
 attention. Mr. Cornwell's plan is intended not merely to meet 
 the present difficulty — grave as that is— but, while doing so, 
 to provide for a gradual transition to a sound and lasting and 
 elastic credit currency. With this end in view, he proposes 
 an issue of $500,000,000 in low-term bonds, to be subscribed 
 now, but to be issued in installments extending over eighteen 
 months, payable at the discretion of the government. On 
 these bonds he proposes to allow the issue of bank-notes to 
 the amount of 150 per cent, of the bonds deposited, to be se- 
 cured by a guarantee fund, by a first lien on all assets and by 
 the personal liability of shareholders, the issues of each bank
 
 A Way Out 91 
 
 to be limited by its capital. He further suggests that the 
 emergency-issue feature of the Baltimore plan could be 
 adopted, if desirable. 
 
 Under this plan, as the government should be in a position 
 to redeem the bonds, the sufiiciency of the safety fund and the 
 general liens would be tested, ami the banks could gradually 
 proceed on that basis. There is no serious question that the 
 provisions of the Baltimore plan would in practice be found to 
 afford ample security ; the principal objection to its adoption 
 has been the fact that the public might not recognize the safety 
 of the notes and that unnecessary disturbance might ensue. 
 Mr. Cornwell's plan meets this objection by the provision for 
 the continuance for a time of the bond security and also by a 
 temporary redemption by the Government. It is probable 
 that no new scheme could be worked with entire smoothness 
 and security without this feature. Ultimately the banks should 
 be required to redeem their own notes, and some provision 
 should be made for their regular presentation for redemption. 
 But it is of the last importance that any change in the currency 
 should not breed the faintest distrust, and this can probably 
 be secured only by temporary Government redemption. 
 
 It will be noticed that Mr. Cornwell's plan is one in which 
 the advocates of the Baltimore plan and those of the Carlisle 
 plan can find some of their own most important provisions. 
 It differs from both in aiming at a gradual but thorough with- 
 drawal of the legal-tender notes ; which are the only source of 
 real difficulty and danger. We are very much mistaken if the 
 discussion of the past month has not convinced the country 
 that no plan will be of real and permanent advantage that 
 does not get rid of the legal tenders. No amount of gold in 
 the Treasury can surely suffice for the prompt redemption of 
 notes perpetually reissued and liable constantly to return for 
 redemption. Mr. Cornwell's plan has the great merit of be- 
 ing the first that embraces the essentials of a sound system of 
 bank currency, ultimately independent of the Government, 
 and, with this, the sure disposal of the legal-tender notes.
 
 THE GOLD STANDARD 
 
 AN ARGUMENT IN FAVOR OF A SINGLE STAND- 
 ARD OF GOLD — THE BEST OF METALS 
 NONE TOO GOOD FOR AMERICANS.* 
 
 MR. PRESIDENT and gentlemen of the 
 Liberal Club : There are in operation 
 throughout the universe and co-incident with 
 the community of man, certain great laws 
 which are as unerring in their workings as the 
 laws of Nature herself, and no decree of man 
 or State can swerve them from their relentless 
 course. Recognized by man, given full sway, 
 and with human laws conformed completely 
 to them, they become the gentle friend even 
 the abject slave of man. But thwarted, with- 
 stood, or met with dissembling action, they 
 become cyclone breeders of disaster and blood- 
 shed. 
 
 These are the laws of Trade and Commerce. 
 
 Let the puny Populist, raising his sacri- 
 legious hands pipe out " Let there be money," 
 
 * Before the Liberal Club, Buffalo, N. Y., February i6, 
 1894, in reply to Gen. Francis A. Walker, on Bimetallism. 
 
 92
 
 The Gold Standard 93 
 
 and they will grind him to powder and scatter 
 him with the wind-swept dust of his Western 
 prairie. 
 
 Let the Assignat-maker of France turn loose 
 his worthless decree-sustained paper money, 
 and these laws will wipe out his tribe with the 
 flames and blood of a Revolution. 
 
 Distress and disaster follow in the wake of 
 Commerce's laws broken — mellow prosperity 
 ripens under their sunshine, if profoundly kept. 
 It is no wonder then that we turn with much 
 interest to see what history records as to the 
 action of these laws regarding the Standard of 
 Value, and we find that Commerce in every 
 age has decided what shall be the Standard. 
 The decision in this century is for Gold. 
 England, the United States, Germany, Bel- 
 gium, and Holland, Austria, and Russia have 
 recorded this decision. Says the report of the 
 Special Commission of the Austrian Upper 
 House in 1879 • " ^^ had become clear as long 
 ago as the decade of i860 to 1870, when Europe 
 was becoming saturated with gold, that this 
 was the only metal fitted to be the standard of 
 nations of advanced civilization," *' Gold was 
 dominant and the standard of value," says this 
 report, " in all trade on a great scale, as early 
 as the 14th and 15th centuries, even though 
 silver was then the standard in all domestic
 
 94 Sound Money Monographs 
 
 exchange. ... In every age there is some 
 metal dominant in the industry of the world, 
 which forces its way with elemental strength 
 in the face of any public regulation, and in our 
 day, gold is that metal." 
 
 Why has this decision been made ? 
 
 Because Commerce insists on the best me- 
 dium for its own requirements. 
 
 Commerce in this last century has needed 
 a metal, precious, but still of sufficient quan- 
 tity to be used as an everyday medium of 
 exchange — fusible, ductile, malleable, easily 
 divisible, indestructible, or nearly so, and of 
 vast purchasing power, concentrated in small 
 bulk. 
 
 Has silver these qualities? 
 
 It is fusible, ductile, malleable, divisible, not 
 so easily so as gold, but sufficiently. It is 
 practically durable, not so nearly indestructible 
 as gold, but nearly enough. 
 
 Has it vast purchasing power concentrated 
 in small bulk. 
 
 No. 
 
 For that reason the vast increase in com- 
 merce in the last century, the enormous size of 
 its transactions, the resistless drawing together 
 of the great commercial world, through the 
 discovery, subjugation, and application of the 
 great powers of nature — steam and electricity
 
 The Gold Standard 95 
 
 — almost annihilating time and space — these 
 things have made it necessary for commerce to 
 select for its transactions a metal which, while 
 possessing all other requirements, shall have in 
 a pre-eminent degree this one quality of con- 
 centrated value. 
 
 Silver has not vast purchasing power concen- 
 trated in small bulk. 
 
 During the deliberations of the Brussels Con- 
 ference, M. Rothschild, delegate for Great Brit- 
 ain, says : 
 
 " Our firm have, on several occasions, been obliged to send 
 a million sterling in sovereigns or bar gold abroad, which mill- 
 ion, when packed up, amounts to a weight of about lo tons. 
 Is it likely, and even if desirable, would it be feasible and 
 practical, supposing a ratio of 20 to i were established, to 
 send 200 tons of metal at one and the same time ? It seems to 
 me that the operation would be impossible, and the sender 
 would, therefore, naturally elect or rather be compelled to 
 send gold, even if it had to be bought at a premium." 
 
 It is the old law of natural selection and 
 survival of the fittest, and, for the same reason 
 that in turn iron, lead, tin, and copper were 
 dropped, so silver has fallen out of place in 
 international commerce. 
 
 And yet it is a beautiful metal ; so surpass- 
 ingly brilliant, says our distinguished guest 
 here to-night, in one of the standard works 
 which have made his name known wherever 
 money is made a study of, "so surpassingly
 
 96 Sound Money Monographs 
 
 brilliant, that it almost justifies the preference 
 expressed by the barefoot boy of Sir Walter 
 Scott, ' Give me the white money, please.' " 
 
 The barefoot boy of commerce of the old 
 centuries has grown to be an enormous giant 
 in these latter days. He has perhaps lost his 
 gentle manners, for now, when he is offered 
 the white money, he thunders out the demand 
 " Give me gold," and he speaks in English, Ger- 
 man, French, Hungarian, and a lot of other 
 languages, and he does n't say " please." 
 
 I do not think the bimetallists anywhere 
 deny the superiority of gold for the purposes 
 of the commerce of to-day. 
 
 I have quoted from one of the works of Mr. 
 Walker. He says further in his volume on 
 money : 
 
 " The extreme beauty of silver, brightest of all the metals, 
 together with its numerous applications in the economy of life, 
 make it an object of admiration and desire among peoples in 
 all degrees of social advancement. Easily fusible, highly duc- 
 tile, practically imperishable, silver would have filled our ut- 
 most conception of a money metal had not the earth yielded 
 one transcendent product in comparison with which even silver 
 fades from desire." 
 
 That product is gold, and of gold Mr. Walker 
 says : " Its compendious value allows a vast 
 amount of purchasing power to be concentrated 
 for conveyance or for concealment in little bulk. 
 A small planchet of gold has the power to
 
 The Gold Standard 97 
 
 command the labor of days. But while thus 
 precious it is found in sufficient quantity to 
 allow of its convenient use as an every-day me- 
 dium of exchange. Its durability, fusibility, 
 ductility, and malleability form a group of 
 properties of the highest importance for the 
 purposes of coinage and circulation." 
 
 The choice of the world then is Gold. 
 
 It is even the choice of the bimetallists 
 themselves, except for one thing. 
 
 At the Brussels Conference, Mr. Van den 
 Berg, delegate of the Netherlands, one of the 
 strongest bimetallists present, said : 
 
 " From whatever side I look at the question I always come 
 back to the dilemma, Is universal monometallism possible and 
 practicable ; yes or no ? If yes, if it can be demonstrated 
 that there is no lack of gold for the monetary needs of the 
 whole world, I become a turncoat — allow me the word — a 
 turncoat, and place myself beside my present antagonists." 
 
 The question, then, it seems to me, narrows 
 itself down to whether or no there is, and will 
 be, enough gold. 
 
 I desire for a moment to leave the question 
 there and briefly to cite some of the principal 
 objections to bimetallism. 
 
 GOVERNMENT INTERFERENCE. 
 
 And first as to the interference of govern- 
 ments which would be necessary in the adopt-
 
 98 Sound Money Mo7iograpJis 
 
 ion of international bimetallism. What are 
 the functions of a government with respect to 
 standard money ; what ought it to attempt 
 and what can it properly effect ? 
 
 The best thought of the nineteenth century, 
 among unprejudiced economists, approves of 
 as little interference by governments as is at 
 all possible in the affairs of commerce. We 
 have had some sad examples in this country 
 of the disasters which follow upon a violation 
 of this principle. Our own silver bubble, 
 which had been filling with wind since 1878, 
 has burst at last, leaving blighted hopes and 
 empty factories and hunger and cold instead of 
 the soapy rainbows that our inflationist states- 
 men so loved to look upon. And these windy 
 criminals are still mussing around in the suds 
 endeavoring to blow up seigniorage and other 
 silver bubbles. 
 
 It has even been suggested by so high an 
 authority as Herbert Spencer, that the very 
 Government stamping of coin attesting weight 
 and fineness might be dispensed with, leaving 
 the question of a medium and the attestation 
 of it to commerce itself. But admitting that 
 the stamping of metal to give guaranty of 
 weight and quality is a proper function, the 
 declaration of legal tenders is the second as- 
 sumption of authority by a government. This
 
 The Gold Standard 99 
 
 establishes what shall be received by the Gov- 
 ernment itself for taxes and what a contract 
 made in money shall be paid in, avoiding thus 
 any misunderstandings or contentions. But 
 Mr. Robert Gififin says : " Even without a 
 declaration of legal tender, metallic currency 
 if a good one would circulate and be useful 
 much to the same extent as it does now." 
 But the bimetallist contends that the Govern- 
 ment must keep a stable standard, from period 
 to period, keeping both metals in use either 
 by fixing the ratio forcibly or by changing it 
 every time it is necessary. And in the course 
 of all this it would be necessary for the gov- 
 ernment to insist that all contracts must be 
 fulfilled in gold or silver at the certain ratio. 
 No other contracts in money could be per- 
 mitted, or bimetallism would become of no 
 value. The freedom of the individual must 
 be restricted. Emergencies would arise, as in 
 case of war, where large sums of gold would 
 be required ; very complicated questions would 
 have to be dealt with — questions on which 
 even experts are not agreed. The question is, 
 even if it were worth the trouble. Could gov- 
 ernments be depended upon to regulate such 
 problems ? Governments ! What are they ? 
 Tribunals full of people who have no intel- 
 lectual interest in financial subjects; no quali-
 
 lOO Sound ]\Ioncy Monographs 
 
 fication of any sort or kind for dealing with 
 them, themselves elected by constituencies still 
 more unfit, with little conception of the value 
 of the problems, and no means whatsoever of 
 forming practical conclusions. 
 
 Let me say one thing further : if you read 
 carefully the deliberations of the Brussels Con- 
 ference, the very last international expression 
 on this subject, you will be thoroughly con- 
 vinced of the impossibility of getting govern- 
 ments together on bimetallism. The positive 
 refusals of the gold-standard nations to even 
 consider international bimetallism places the 
 matter entirely out of reach. I do not say we 
 cannot come to a more extended international 
 subsidiary use of silver on a gold basis, but to 
 get governments to act together on the com- 
 plicated questions which would surely arise 
 under a managed currency — a currency artifi- 
 cially controlled by politics and not automatic 
 under the great undeviating laws of commerce 
 — to do this will be surely impossible. 
 
 EXPERIENCE OF FRANCE. 
 
 And now as to the experience of France. 
 It is claimed as a principal argument by the 
 bimetallists that France, from 1803 to 1873, 
 under the free coinage of both gold and silver, 
 was for seventy years successfully bimetallic
 
 The Gold Standard loi 
 
 at a legal ratio of I5|- of silver to one of gold. 
 To this the monometallist replies that in or- 
 der to be truly bimetalhc gold and silver in a 
 country must be used indifferently as a legal 
 tender. Carefully prepared tables show that 
 from 1803 to 1873 either one metal or the 
 other was at so serious a premium that they 
 could not possibly pass as equivalents. At a 
 premium of from one to two per cent, no man 
 would think of paying a debt of $500 in a 
 metal that would cost him $505 or $510 to 
 procure. And that was almost continuously 
 the condition, and at times the variations were 
 very much wider, running as high as 7^ per 
 cent, in two instances. For instance, in 18 13, 
 16.25 to I, and in 1814, 15.04 to i ; or ']\ per 
 cent, variation, and about the same difference 
 in 1819 and 1820. 
 
 In 1850 came the immense gold finds of Cali- 
 fornia and Australia. Up to that time France, 
 since 1803, had been practically on the silver 
 standard, and gold was at a premium except in 
 a very few years, at from i to 2 per cent. From 
 1850 on, France went to the gold standard and 
 stayed there until 1867. Then the great change 
 began again — until in 1874 she must suspend 
 the free coinage of silver or go over absolutely to 
 the silver standard. She suspended it and to-day 
 is on what is called the "limping standard."
 
 I02 Sound Aloncy Monogj'apJis 
 
 The conclusions are that France was never 
 truly bimetallic. 
 
 As to the steadiness of the market ratio be- 
 tween gold and silver and its being kept so on 
 account of French bimetallism its opponents 
 claim that the steadiness was natural, that simi- 
 lar periods of steadiness have occurred before 
 and that as to immense finds of gold in 1850 
 and after, the fact that gold did not materially 
 fall in value was due not to the French ratio 
 but to gold being really the choice of com- 
 merce, and that the influx was received with 
 joy and quickly absorbed by the commercial 
 world. 
 
 FALL OF PRICES. 
 
 Now as to the fall in prices brought about by 
 scarcity of gold the monometallists claim that 
 in the last fifteen years gold prices have fallen 
 20 per cent, while silver prices have remained 
 unchanged. If then the two had been linked 
 together, the fall would have been one-half, 
 that is 10 per cent. If, in other words, we had 
 had international bimetallism, there would any- 
 way have been a fall in prices of 10 per cent, in 
 the last fifteen years. The evil then (and it is 
 claimed by some that it is not an evil) of fall- 
 ing prices could not have been prevented. This 
 evil will go on anyway say probably to the ex-
 
 The Gold Si ail da}' d 103 
 
 tent of 10 per cent, in fifteen years, and it must 
 be met. Great gold discoveries or great exten- 
 sion of bank paper temporarily prevent, but the 
 fall afterwards continues, and bimetallism can- 
 not stop it. 
 
 There is, however, quite a ray of hope, as I 
 shall afterwards show, in the increase in gold 
 production in the last two years. 
 
 There is a great deal of talk about the dis- 
 tressed condition of the world ascribed to fall 
 of prices and used by the bimetallist as a grand 
 argument, but Mr. David A. Wells, that most 
 distinguished economist, accounts for the fall 
 in price of all staple articles of commerce which 
 really have fallen during the last twenty years 
 by the economy of production and economy of 
 transportation, and Mr. Horace White says : 
 
 " He has not grouped them altogether as our bimetallist 
 friends commonly do, but he has taken each one separately." 
 
 Mr. Atkinson also says : 
 
 " The gold standard's great and complete justification in 
 this country is to be found in the fact that since specie pay- 
 ment was re-established upon the gold unit of value on the 
 1st of January, 1879, there has been a progressive and almost 
 continuous reduction in the price of the necessaries of life, 
 accompanied by such improvements due to science and inven- 
 tion in their production, that there is not a single important 
 article that can be named of which the reduction in price is 
 not more than justified by the reduction in cost due to labor- 
 saving improvements which have been applied either to primary
 
 I04 Soimd Money Monographs 
 
 or secondary production and to distribution since that date or 
 since 1S73. On the other hand, the lawful unit of value, a 
 gold dollar, is completely justified by the benefit, which has 
 ensued from its adoption, to that great majority of the working 
 people of this country who earn their daily bread from salaries, 
 earnings or wages. There was never a period in the history of 
 the world in which an industrious workman of this country, 
 possessing skill and aptitude in the higher or lower grades of 
 labor, could secure so many units of gold in compensation for 
 his work as during the years 1890, 1891, and a part of 1892 ; 
 nor has there been a period in which he could buy so large a 
 quantity of the necessaries of life with his earnings as in the 
 year 1891 and the early part of 1S92." 
 
 Mr. White referring to the alleged conspiracy 
 against the debtor class, says : 
 
 " What is meant by ' debtor class ' in this discussion ? All 
 men who are not bankrupt are both creditors and debtors. 
 The fact that they are not bankrupt implies that they have 
 more due to them in one way and another than they owe. I 
 am proud to believe that the vast majority of my countrymen 
 are of this class, i.e., of the creditor class. I take it that we 
 are not legislating specially for bankrupts. Certainly it would 
 not be wise to change our standard of value for their accommo- 
 dation. Such a change would produce a great many new 
 bankrupts and would not save any old ones." 
 
 Mr. White replying to the argument that 
 national and State debts are enhanced by the 
 gold standard, wants to know why the standard 
 of value for all the countless daily business 
 transactions should be changed simply to meet 
 this point, when the clearings for one week in 
 the United States amount to about $1,100,000,-
 
 The Gold Standard 105 
 
 000 which is about double the interest-bearing 
 debt of the nation. He says : 
 
 " Add to this the payment of wages and the retail transac- 
 tions not embraced in the clearings and multiply it by the fifty- 
 two weeks of the year and you will see how large a cannon 
 you are loading to kill a mosquito and what a tremendous 
 recoil it must have." 
 
 THE SUPPLY OF GOLD. 
 
 I would like now to turn back to the conclu- 
 sion reached in the early part of this address, 
 namely, that the question has narrowed down 
 to whether or not there is or will be gold enough 
 for the gold standard. On this point a recent 
 article on the production of gold throws perti- 
 nent and most encouraging light. 
 
 It is shown that the gold production in 1892 
 was 138,000,000 which is more than the average 
 of the great years from 18 50 to i860. That the 
 production for 1893 will probably show 150,- 
 000,000, an increase even over 1892. That this 
 increase comes largely from the recently dis- 
 covered South African gold fields, that they 
 may be expected to constantly increase, and 
 will probably not reach their maximum figures 
 for the next thirty years. Those who know 
 the country well think that there is a gold field 
 in the Transvaal that will not be exhausted for 
 centuries, and that the output now ranging be- 
 tween 20,000,000 and 30,000,000 will be in-
 
 io6 So7uid Money MonograpJis 
 
 creased in three or four years to 50,000,000, 
 and this can be kept up for a generation from 
 those mines alone which are now being worked. 
 Wliat with new processes enabhng ore contain- 
 ing only $2 in gold a ton to be worked profit- 
 ably, and a steady increase guaranteed from 
 Africa, Mr. Fraenkcl, the author of the article, 
 concludes : " It is not impossible that in a few 
 years a quantity of gold not far from 100,000,000 
 will be available for monetary use. If this should 
 prove true, it would seem futile to speak of an 
 impending scarcity of gold." 
 
 A few words about the commercial condition 
 of the United States in this matter and I am 
 done ; and in what I am to say now I shall 
 use, very materially condensed, the demonstra- 
 tion of Mr. Edward Atkinson. 
 
 GOLD BEST FOR THE UNITED STATES. 
 
 The whole world is becoming one neighbor- 
 hood, and with this, each country tends to 
 increase the excess of production in which it 
 excels every other. Those products of which 
 the production pays the highest wages at the 
 lowest cost of production will be the ones in 
 which any country can most successfully com- 
 pete. 
 
 The United States can, on these conditions, 
 produce, far in excess of all our wants, all the
 
 The Gold Standard 107 
 
 necessaries of life. Fuel, food, timber, and 
 metals are the things that we excel in on con- 
 ditions of highest wages and lowest cost of 
 production. Now, the nations producing fuel, 
 metal, and timber on these conditions are 
 thereby enabled to apply labor-saving machin- 
 ery to other branches of production most ad- 
 vantageously, and the machine-using nations 
 of the world control its commerce. On the 
 fuel, food, timber, and metal basis, then, the 
 United States controls the commerce of the 
 world. 
 
 The commerce of Great Britain and the 
 United States with each other is greater than 
 with any other nation or State. They are the 
 two principal importing and exporting coun- 
 tries. They are also the two chief machine- 
 using nations of the world, and consequently 
 practically dictate terms and conditions for all 
 other international commerce. 
 
 And what are these terms as regards the ful- 
 fillment of contracts ? They are for their dis- 
 charge in comparison with the unit of gold. 
 It is called pound sterling, but it is actually 
 1 1 3 grains of gold. Why has this been chosen ? 
 Let me give Mr. Atkinson's own words : 
 
 " Because the unit of gold is the safest, surest, least costly, 
 and most convenient standard and method of determining the 
 relation of one commodity to others, in the exchange of which
 
 io8 Sound Money ]\IonograpJis 
 
 commerce consists. If it had not been the safest and best 
 unit some other would have been discovered and adopted. 
 This unit or standard of value has been slowly developed as 
 an international measure in the progress of mankind without 
 regard to legislation of any kind, and without the interven- 
 tion or interference of any act of legal tender. 
 
 Bimetallism seeks to establish some other 
 unit or standard — an international legal tender 
 of gold and silver. Do you imagine for one 
 minute that commerce would accept it ? You 
 might wipe out the pound sterling, but inter- 
 national commerce would spurn the new tender 
 and make one of its own. It would cling to 
 gold ; a certain number of grains of it, say one 
 hundred, and that would be commerce's reply 
 to infringement of her laws. And if you went 
 still further and forbade its use, woe be to the 
 meddlers who thus tamper with the imperial 
 laws of all time, laws that in the back centuries 
 have swept away kings and principalities and 
 kingdoms under like aggravation. 
 
 This country is the greatest creditor nation 
 of the world. The articles we buy from others 
 we can spare. The articles they buy from us 
 they must have. The price of these things has 
 been established in gold, and when we want 
 gold (more than we want other goods) gold we 
 can have. Shall we throw away this advant- 
 age ? Under bimetallism our hands would be
 
 The Gold Standard i og 
 
 tied. Wc would have to accept silver. Have 
 you any doubt that the other nations would 
 pay us in silver? And when the experience 
 of the ages, the maturity of all time, and six 
 centuries of a gradually developed choice have 
 decreed gold to be the most valuable, shall we 
 accept the baser metal ? 
 
 But, says the bimetalHst, there will then be 
 no baser metal. One will be as good as the 
 other. Yes, by declaration of the earthly pow- 
 ers, but can royal edict turn stones to bread or 
 stay by proclamation the ocean's restless tide ? 
 Shall we depend upon the assurances of an 
 untried theory which overwhelmingly broke 
 to pieces in 1873, and so depending, take the 
 chances of loss and great disaster ? 
 
 The misery and distress of falling prices ap- 
 peal to us ; but although the bewildered Dane 
 charged it to cowardice, we of commerce would 
 " rather bear the ills we have than fly to others 
 that we know not of." 
 
 Let us by private and public charity do all 
 we can to relieve the world's distress ; but here 
 in this favored land let us accept open-handed 
 the golden prosperity which commerce is ready 
 to pour down to us, firmly convinced that 
 gold, the best ! the best ! is none too good for 
 Americans.
 
 INTERNATIONAL BIMETALLISM 
 NEITHER PRACTICAL 
 NOR DESIRABLE * 
 
 THE BIMETALLIC PICTURE. 
 
 THE picture drawn for our consideration by 
 the bimetallists is a most interesting one. 
 They depict, first of all, the distress prevailing in 
 the world since 1873, when they say the machin- 
 ations of the enemies of silver, the selfish efforts 
 of gold-loving tyrants broke down a perfect 
 system of bimetallism which had prevailed 
 with almost flawless perfection for seventy 
 years. They picture since then the terrible 
 strain caused by an insuf^cient gold supply ; 
 the fatal fall of prices consequent upon it ; the 
 crowding out of business enterprise ; the pall 
 of ruin settling over everything. After depict- 
 ing all this with graphic pencil, they call upon 
 the nations to combine, to touch with magic 
 wand the vast hoards of silver, and, turning 
 them to gold, to open the flood-gates and let 
 in this glorious stream upon the commerce of 
 
 * Before the Commercial Club, Chicago, April 28th, 1894. 
 
 no
 
 International Binictallism 1 1 1 
 
 the world, raising prices, equalizing exchange 
 between all the nations, steadying the money 
 mass to such an extent that international trade 
 will be fructified to the last extremity, to the 
 betterment of every soul on the broad earth ; 
 until each inhabitant thereof shall thrive and 
 wax fat in the sunshine of Universal Prosperity. 
 
 This is the dream of our bimetallic friends. 
 So rosy, so full of comfort, so philanthropic, so 
 plausible ; alas ! so near to apparent reason, 
 that one is loth to search for error, feeling that 
 if this is not the truth, it ought to be. 
 
 And yet we must turn to the practicable and 
 desirable, and coldly weigh facts, first for the 
 world, and then for ourselves — and that is 
 what we are here for to-night. 
 
 I am sorry that the bimetallists have chosen 
 a time for agitating this subject when the 
 whole industrial system in the United States 
 has been prostrated by panic brought on by a 
 senseless, long-continued, obstinate pursuit of 
 the silver will-o'-the-wisp in this country. Their 
 allusions, at this time, to distress in the business 
 world receive, consequently, considerable atten- 
 tion although the fact is, the present depression 
 is not an element of their argument. It is also 
 unfortunate at this time, when we have suffered 
 so much from silver agitation, and had so well- 
 nigh blocked it by the Silver Purchase Repeal,
 
 1 1 2 Sojtnd Money MonograpJis 
 
 that the matter is once more stirred up and the 
 brilHant picture of Universal Prosperity is 
 thrown upon the midnight sky, to be gazed at 
 by a crowd of hungry and idle people in this 
 country. Bimetallism is thus urged, inferen- 
 tially at least, as the cure-all of present ills. 
 
 How futile is the proposition, I shall en- 
 deavor to-night to point out. And with all 
 respect to the distinguished men here and else- 
 where, who honestly believe the doctrine, I am 
 bound to say that I believe it to be as full of 
 error as the pursuit of perpetual motion, the 
 advocacy of fiat money, or any of the other 
 dreams of magic which have engaged the at- 
 tention of the world since Adam started out 
 from the Garden under the ban or blessing of 
 the inflexible rule which has prevailed ever 
 since, namely : Labor is the price of Bread. 
 
 GOLD THE CHOICE. 
 
 The high laws of commerce, untrammelled 
 by acts of human government, have decided 
 from the earliest times what shall be the stand- 
 ard of value in international exchange. For 
 five centuries gold has been dominant in all 
 trade on a large scale, even though silver has 
 been the standard in domestic exchange. And 
 in this last century, gold has been rapidly 
 forced to the front, so that the Austrian Com-
 
 International Bimetallism 113 
 
 mission in 1879 declared that "it had become 
 clear as long ago as the decade of i860 to 1870, 
 when Europe was becoming saturated with 
 gold, that this was the only metal fitted to be 
 the standard of nations of advanced civilization. 
 
 Gold alone has in a pre-eminent degree the 
 quality of vast purchasing power concentrated 
 in small bulk. And gold is the choice of the 
 world, as evinced by its adoption by the most 
 civilized nations. 
 
 Our bimetallist friends claim with distinct 
 manifestations of resentment that this, that, and 
 the other leading nation, did not naturally se- 
 lect gold— that England stumbled into it, Ger- 
 many wickedly forced herself into it— the 
 United States was feloniously and criminally 
 seduced into it, etc., etc. Nevertheless, the 
 great economic truth that natural laws over- 
 power, sooner or later, all attempts of an 
 artificial character would long ere this have 
 prevailed and changed the standard of gold 
 countries, if it were not absolutely true that 
 gold is the choice of the most advanced and 
 civilized commerce. 
 
 M. Rothschild, the banker, said at the Brus- 
 sels Conference, not more than two years ago : 
 
 " When we consider that the whole of England's commerce, 
 and a great part of that of other countries, is carried on by 
 bills of exchange on London, which are naturally payable in
 
 1 1 4 Sound Money Monographs 
 
 gold, I think it must be admitted that the world in general 
 transacts its business on a gold basis, and that in reality such 
 a thing as a double standard, except in a modified form, does 
 not exist even in those countries who profess to pay in either 
 of the two metals. 
 
 Money for the purposes of international 
 money, must be universally acceptable. No- 
 body denies that gold is so. Is silver? Ah ! 
 That is all that " ails " it ! It is not generally 
 acceptable. If it were, there would be no need 
 of conferences, treaties and international agree- 
 ments to make it current, to make it " go." 
 Gold " goes " without any of this artificial 
 machinery. 
 
 " If," says Horace White, " silver were as ac- 
 ceptable as gold, we would all be ' silver-bugs.' " 
 
 So one great nation after another has taken 
 up gold, and after the most careful and deliber- 
 ate consideration, has adopted it. The advance 
 under the natural law of selection has been irre- 
 pressible, aided by the excessive and continually 
 increasing production of silver. This alarming 
 increase made it necessary in 1873 to suspend 
 the free coinage of silver in bimetallic States, 
 because of the fall in price of the metal and the 
 ever-widening gap between the market price 
 and the legal value in comparison with gold. 
 The suspension, of course, increased the depre- 
 ciation.
 
 Internatioital Bimetallism 1 1 5 
 
 FALL OF PRICES. 
 
 The year 1873, then, markes the final aban- 
 donment of bimetalhsm, and the bimetallists 
 point to the fact that since 1873 there has 
 been a steady fall in prices, claimed by them 
 to have produced distress and ruin and to be 
 due to the steady appreciation of gold. 
 
 Such reliable statisticians as David A, Wells 
 and Edward Atkinson have carefully investi- 
 gated this matter and have practically laid at 
 rest this argument. 
 
 These gentlemen prove conclusively that 
 there has been no decline in the price of neces- 
 sary articles of food, clothing or construction 
 which cannot be accounted for by a cheapening 
 of production or transportation — that if we go 
 back to i860, before the period of inflation 
 caused by our own Civil War, the Franco-Prus- 
 sian war, the Austro-Prussian war, and all the 
 other great struggles of that era, if we go back to 
 i86o,therehasbeen no general decline whatever. 
 Mr. Atkinson shows that if the articles of food, 
 clothing, fuel, and construction required by the 
 average mechanic per year are grouped in 
 what is called a multiple standard or portion, 
 the workman on his wages in 1850 could have 
 purchased 4. 9 / 10 portions; in i860, 5. i/io; 
 in 1865,4.2/10; in 1873, the culmination of the 
 speculation period, he could purchase 5. 1/2
 
 1 1 6 Sound Money Monographs 
 
 portions. From 1879 wages l^^ve been steadily 
 advancing. In 1890 the mechanic could buy 
 8. 66/100 portions, and in 1891 and 1892, 9 
 portions. Mr. Atkinson says : 
 
 "If that is the effect of a so-called 'fatal fall' in prices, 
 which is to be attributed to the appreciation of gold, to 
 whom has it been fatal ? Why should it be resisted 1 Con- 
 ditions which have made the workman's life twice as easy in 
 i8go as in 1S65, and which make him nearly twice as well off 
 as he was in 1873, may well be maintained by him." 
 
 PROSPERITY SINCE 1 873. 
 
 Since 1873, the United States has had an 
 era of marvellous prosperity. 
 
 Under the head of " Twenty Years of Pro- 
 gress," Mr. Edward Atkinson shows that our 
 population since 1873 has increased 57 per cent. 
 Our per capita national debt has diminished 
 75 per cent. That the postal receipts (fore- 
 most sign of progress) have increased 218 per 
 cent. Appropriations for public schools in- 
 creased 103 per cent. Grain crop increased 96 
 per cent. Western farm mortgages have steadi- 
 ly decreased since 1880, and the farmers in 
 many States have grown rich and are lenders 
 themselves. 
 
 In cotton the increase has been 132 per cent. 
 In iron, 257 per cent. In steel, from almost 
 nothing to the leadership of the world. Ton-
 
 International Bimetallism 1 1 7 
 
 nage of the Great Lakes 787 per cent. Last 
 year the traffic through the Sault Ste. Marie 
 Canal was over ten million tons, exceeding that 
 through the Suez Canal by two million tons. 
 
 As to wheat, it cost 242 per cent, more to 
 move a bushel of wheat from Chicago to New 
 York in 1873 than it did in 1892, and the cost 
 of producing wheat has been reduced in about 
 a similar proportion. 
 
 The record of the twenty years has been one 
 of steady progress, and from 1879, the date of 
 the restoration of specie payment on a gold 
 basis, one of almost undimmed prosperity. 
 
 But think, says the bimetallist, what it might 
 have been under bimetallism. Think of the 
 variation in exchange between the countries of 
 the world and the consequent loss of business 
 resulting therefrom. 
 
 THE EXAMPLE OF FRANCE. 
 
 Then the bimetallists point to France as an 
 example of what bimetallism can do — their 
 only argument from actual experience — claim- 
 ing that France from 1803 to 1873, under the 
 free coinage of both gold and silver, was for 
 seventy years successfully bimetallic at a legal 
 ratio of fifteen and a half silver to one of gold. 
 
 This is the only experiment in bimetallism 
 that amounts to anything, and it practically
 
 1 1 8 Sound Money Monogi^aphs 
 
 fell to pieces. It fell in 1873, just as it would 
 have fallen in 1850, if it had not been for the 
 great gold discoveries. During all that period, 
 from 1820 to 1850, France was practically a 
 silver-using country. 
 
 Silver being cheaper than the legal rate, and 
 tending to become cheaper still, had expelled 
 gold from circulation (remember this is France 
 for thirty years, right in the middle of the 
 much-boasted bimetallic period) — gold, mind 
 you, had been expelled by cheap silver until 
 1848 ; the Bank of France had hardly any gold 
 left in its till. Suppose now that instead of 
 immense gold discoveries (the only thing that 
 saved bimetallism in 1850 from annihilation) a 
 change had occurred, not in the direction of 
 making the cheaper metal — silver — dearer than 
 the other, but in the direction of making it 
 cheaper still. There would then have been no 
 gold to arrest the fall, France would have been 
 powerless and would either have had to slide on 
 to the silver standard or else close her mints, as 
 she actually was compelled to do in 1873. To 
 be truly bimetallic, gold and silver, in a country, 
 must be used indifferently as a legal tender. 
 Carefully prepared tables show that in France 
 from 1803 to 1873 either one metal or the 
 other was at so serious a premium that the two 
 could not possibly pass as equivalents.
 
 Interjiational Biinctallisin 1 1 9 
 
 THE LATIN UNION. 
 
 As to the bimetallism of the Latin Union, 
 the suspension of the coinage of silver, as a 
 result of the immense fall in price, took place 
 in this aggregation only after the channels of 
 the various States had been stuffed full of the 
 white metal. At the Brussels Conference it 
 was stated that " in the countries of the Latin 
 Union it would be impossible to force into cir- 
 culation a single five-franc piece over and above 
 those which are in use at present." 
 
 To-day the Latin Union is practically on a 
 gold basis. The five-franc silver coins have a 
 full debt-paying power, but only because they 
 are tokens always exchangeable for gold at par. 
 I cannot help quoting that graphic picture of 
 the Union taken from the speech of the dele- 
 gate of Sweden at the Conference last re- 
 ferred to : 
 
 " The States of the Latin Union, and especially Belgium, 
 can tell us something of the practical side of bimetallism. 
 Those States entered one fine day full of international confi- 
 dence under the magnificent arches of a bimetallic system 
 supported by pillars of gold and silver ranged in a pre-estab- 
 lished harmony of fifteen and a half to one. But the harmony 
 was disturbed, silver fell, the white pillars were transformed 
 into walls which barred the outlet and they were imprisoned. 
 In prison tempers are easily soured, and the Latin States no 
 longer bless the treaty of 1865."
 
 1 20 Sound Money Monographs 
 
 A TRIAL OF BIMETALLISM. 
 
 Bimetallism seeks to bring about an appar- 
 ent, unnatural, ephemeral prosperity by raising 
 prices. The effect would be merely transitory 
 and would be followed by an inevitable re- 
 action. 
 
 " Everybody," says a forcible writer, " everybody distrusts 
 silver coin, of which there is evidently more than necessary. 
 Everybody, therefore, seeks to keep his gold, and at this mo- 
 ment it is that everybody is asked to agree by international 
 contract to coin the disliked silver in unlimited quantities, 
 while remaining free to get and keep gold each as best he 
 may." 
 
 It is sought to create a full debt-paying 
 power for silver, which nobody wants much of 
 in his pocket, and can only carry a moderate 
 amount of in his safe, obliging creditors to 
 receive unlimited quantities of a metal of 
 which they can keep only a limited quantity. 
 
 This is certainly a flagrant violation of na- 
 tural law. 
 
 The supply of silver is practically unlimited. 
 Why not use paper? That of course would 
 be fiat money ; but silver in forcible use by 
 legal tender declaration, intrinsically worth 
 fifty cents on the dollar (with prospects of 
 further depreciation under enormous product- 
 ion, stimulated by international bimetallism) is 
 virtually fiat money. How can it be otherwise?
 
 International Bimetallis^n 1 2 1 
 
 What makes the fifty-cent dollar good but the 
 fiat, not of one government but a dozen? 
 
 The coin which is not worth as much in the 
 viclti7ig-pot as in the pocket, is not trite money. 
 
 This is the fire test of economics — put the 
 buzzard product of bimetallism in it and smell 
 the singeing feathers. 
 
 Well, let us see what would follow, if, after 
 all, the nations could be made to agree and 
 international bimetallism became a fact. The 
 mints of the world are now practically open 
 at the ratio of fifteen and a half to one, to the 
 free and unlimited coinage of dollars, crowns, 
 florins, marks, or five-franc pieces. The annual 
 production of silver on a rapidly falling market 
 price has risen in the last twenty years from 
 $87,000,000 to over $200,000,000. What fig- 
 ures of production will not be reached if prices 
 by bimetallic union can be maintained ? The 
 production will be stimulated tenfold. From 
 the moment the mints are opened producers of 
 silver will no longer be at the mercy of con- 
 sumption in the arts or the demands of the 
 silver-using countries. There will be no com- 
 petition from other producers in the great 
 markets of the world. For forty to fifty cents 
 worth of silver bullion anyone can get a dollar 
 coined. With smiles on their faces they will 
 carry each his load of bullion to the mint, and,
 
 1 2 2 Sound Money MonograpJis 
 
 as fast as the coining presses can coin, they 
 will carry away their bags of dollars or five- 
 franc pieces. " It must not be overlooked that 
 the work done by a coining-press is not in 
 proportion to the size of a country on whose 
 behalf it operates. Whether it be in Brussels, 
 Paris, London, or Philadelphia, it Avill produce 
 in an hour or in a day the same number of 
 coins." And the producer, carrying away his 
 bags-full, will have no difficulty in making them 
 circulate. Wherever there is a debt to be paid 
 it will be paid, by virtue of the glorious inter- 
 national law, in the silver-producers* hard and 
 heavy cash, no matter what the dissatisfied 
 creditor may say. Is there any limit to the 
 amount of silver that would be thus discharged 
 upon the world? The annual output, it has 
 been estimated, would rise from $200,000,000 
 to $400,000,000. Where would it go ? Out of 
 the pockets and safes into the banks, and they ? 
 More and more encumbered and embarrassed 
 with it they would seek to get rid of it ; utterly 
 unfit as it is for large payments which the banks 
 are expected to make. Then would come the 
 struggle for gold. Hear what Mr. Rothschild 
 says. He certainly is prepared to say what the 
 great banks would do. 
 
 "We are then asked," he says, " suddenly to go back to 
 what took place before 1873, and to forget the enormous
 
 International Bimetallism 1 23 
 
 progress which civilization has made in facilitating the finan- 
 cial operations of the world. 
 
 " It is proposed to revert to a great extent to the old state 
 of things which existed until 1873, namely, to open all or 
 part of the mints of Europe to the free coinage of silver and 
 to discuss a ratio to be fixed. 
 
 " Well, gentlemen, have the bimetallists for a single mo- 
 ment thought what the result would be if such a measure is 
 introduced? Why, clearly from that very moment, the Bank 
 of England note would cease to represent sovereigns and 
 would be payable in depreciated currency, because the Bank 
 of England could never pay its notes in gold and at the same 
 time be purchasers of an unlimited amount of silver, for within 
 a very short period the twenty-five millions of gold which the 
 bank now holds in its vault would, in my opinion, have dis- 
 appeared and have become replaced by silver. 
 
 " In the final adjustment of international balances, I cannot 
 help thinking, whatever arrangement might be made on the 
 principles of bimetallism, and whatever ratio might be estab- 
 lished, gold, and gold alone, will always be chosen as the 
 favorite, if not the only possible, medium of settling a large 
 debt, or of making a large remittance for some cause or 
 other. 
 
 "We, i. e., our firm, have on several occasions been 
 obliged to send a million sterling in sovereigns or bar gold 
 abroad, which million, when packed up, amounts to a weight 
 of about ten tons. Is it likely, and, even if desirable, would 
 it be feasible and practical, supposing a ratio of twenty to 
 one were established, to send two hundred tons of metal at 
 one and the same time ? It seems to me that the operation 
 would be impossible, and the sender would therefore naturally 
 elect, or rather be compelled, to send gold, even if it had to be 
 bought at a premium " 
 
 Well, we have then the premium. But the 
 premium is the death-knell of the system. It
 
 124 Sound Mo7iey Monographs 
 
 is a death struggle. The Bank of England, 
 the Bank of France, the Bank of Germany, the 
 banks of the United States, all forced into a 
 struggle to keep the gold which is the necessary 
 instrument of their operations, and now very 
 much harder to obtain on account of its in- 
 creased relative scarcity in comparison with the 
 enormous mass of recently made silver money. 
 
 The premium on gold is the death-knell and 
 downfall of universal bimetallism. The strug- 
 gle for self-protection has begun — the treaties 
 are suspended, free coinage stopped, and the 
 double standard denounced, and liquidation 
 entered upon. 
 
 What a liquidation ! Following on the eve 
 of enormous silver coinage, and consequently 
 of inflation and speculation such as the world 
 has never seen ! Millions and thousands of 
 millions of depreciated coin to be redeemed ! 
 and if to be redeemed in gold — universal bank- 
 ruptcy — universal ruin. 
 
 INTERNATIONAL AGREEMENT IMPOSSIBLE. 
 
 Is international bimetallism even possible? 
 It involves an international agreement between 
 the leading nations. Let us take up the ques- 
 tion of the possibility of forming an interna- 
 tional agreement. There can be no better
 
 International Bimetallism 1 2 5 
 
 indication of this than the attitude of the 
 various governments at the most recent meet- 
 ing on the subject, the Brussels Conference, 
 At that time, a mild form of advocacy of 
 bimetallism was involved in the following reso- 
 lution embodied in the program by the United 
 States Government : 
 
 "That in the opinion of this Conference it is 
 desirable that some measure should be found 
 for increasing the use of silver in the currency 
 system of the nations." 
 
 In speaking upon this resolution and in the 
 further deliberations, there developed the great- 
 est reserve on the part of all but one or two of 
 the delegates present. 
 
 The Netherlands supported it without re- 
 serve, and advocated pure bimetallism. 
 
 So did Mexico. 
 
 England placed herself on record as follows : 
 
 " Our faith is that of the school of mono- 
 metallism, pure and simple. We do not admit 
 that any other than the single gold standard 
 would be applicable to our country." 
 
 And in substance, further : " Our Govern- 
 ment desires to have it known that we do not 
 care to take up the discussion of bimetallism. 
 We decline to accept any invitation to a con- 
 ference which implies that our Government 
 had any doubt as to the maintenance of the
 
 126 Sound Money Monographs 
 
 monetary system which has been in force since 
 1816." 
 
 Germany — single gold standard — put herself 
 on record thus : 
 
 " Germany being satisfied with its monetary system, has no 
 intention of modifying its basis. ... In view of the 
 satisfactory monetary situation of the Empire, the Imperial 
 Government has prescribed the most strict reserve for its dele- 
 gates, who, in consequence, cannot take part either in the dis- 
 cussion or in the vote upon the resolution presented by the 
 delegates of the United States." 
 
 Austria-Hungary — gold standard : 
 
 " Gentlemen, the Conference is not unaware that recently 
 by a series of legislative measures the two States which com- 
 pose the Austro-Hungarian Empire, have changed their mone- 
 tary system to the gold standard. In fact, the two countries 
 are at present in a transition period, which explains suffi- 
 ciently, I hope, the reserve which is forced upon them." 
 
 The delegate from Roumania expressed him- 
 self as follows : 
 
 " Gentlemen, Roumania is one of the group of States which 
 have adopted the gold standard, and the first result of that 
 reform, which was not effected without sacrifices on our part, 
 was to make the agio which in some years had reached twenty- 
 two per cent, disappear immediately." He adds: "How 
 could it be admitted that countries like Germany, England, 
 Austro-Hungary, without speaking of Russia, whose gold re- 
 serve increases daily, and which advances with rapid strides 
 toward monometallism should renounce the monetary system 
 and laws which these great powers had adopted only after 
 mature reflection, and after being thoroughly convinced of the 
 advantages to be derived from them."
 
 International Bimetallism 1 2 7 
 
 Holland : *' Holland will not enter into a 
 bimetallic union without the full and complete 
 participation of England as a part of the formal 
 instructions furnished us by our Government." 
 
 France defined her position as follows, 
 through her delegate : '' Why should France 
 permit the coinage of silver when she is al- 
 ready amply provided with it? I believe that 
 she alone possesses as much as all the other 
 States of Europe put together." 
 
 "The aspect of the question would be 
 changed if England, the German Empire, 
 Austro-Hungary, the Scandinavian States and 
 others would consent to open their mints to 
 the free coinage of silver (well knowing that 
 this would not be done)." 
 
 Latin Union States : The States in the Latin 
 Union held all of them the same views as those 
 expressed by France and Holland. 
 
 Sweden : Mr. Hans Forssell of Sweden said, 
 
 " Sweden joins with Germany, Austro-IIungary, Great 
 Britain, Switzerland and Russia in refusing to enter into a 
 bimetallic agreement. If the conference of Brussels contrib- 
 utes to establish and fortify the conviction, which is already 
 very general, that ait international agreement for the free and 
 tmlimited coinage of silver as full legal tender money is not 
 only rejected for the moment, but inadmissible for the future, 
 it will have reached a very important result. It will have 
 destroyed the vain and sterile illusions which have already too 
 long troubled men's minds and turned them from the reality 
 of facts, towards the dream of an unrealizable Utopia."
 
 128 Sound Money Monographs 
 
 Switzerland : Mr. Cramar Frey, of Switzer- 
 land, said, 
 
 "As at the conferences of 1878 and 1881, Switzerland con- 
 tinues to consider it as a fixed principle of her monetary policy 
 that there should not be two standards or two measures of 
 value. The most formal instructions from the Swiss Govern- 
 ment were to the effect that the Government would not enter- 
 tain the idea that bimetallism would be admissible for Switzer- 
 land." 
 
 Italy: Italy voiced her opinion as follows: 
 " It is evident that a higher and almost inevita- 
 ble law impels civilized nations to pass gradu- 
 ally to gold monometallism. In proportion to 
 their economic progress the intrinsic value of 
 the monetary unit which they adopt must be 
 raised." 
 
 I wish I had time to read to you parts of 
 some of the other speeches at this Conference. 
 They are full of expressions of the most 
 determined opposition to bimetallism. The 
 statesmen of Europe will not consent to it and 
 the bimetallists over there have about made 
 up their minds that it is out of the question. 
 
 After the Conference had been in session 
 nearly three weeks, Mr. Alphonse Allard, dele- 
 gate of Belgium and Turkey, one of the most 
 pronounced and intelligent bimetallists pres- 
 ent, made the following admission in writing, 
 prefacing a compromise proposal. 
 
 He said :
 
 International Bimetallism 1 29 
 
 " The obstacles to bimetallism, which it would be useless to 
 pretend not to see, are : 
 
 " I. The enormous difference of thirty-six per cent, be- 
 tween the value of the two metals. 
 
 "2. The gold standard, to which, rightly or wrongly, 
 several important European countries cling. 
 
 " 3. The artificial inequality produced by the exchanges, 
 which since they are unfavorable to some, are for that very 
 reason advantageous to others. 
 
 "4. The difficulty of proposing additions to the coinage 
 of those countries which already hold very large stocks of their 
 own silver coins." 
 
 Then he adds — and I especially call your 
 attention to this as the conclusion of the whole 
 Conference summed up on the bimetallist side 
 by an enthusiastic advocate of that school : 
 
 " If we are to find a remedy for the fall in 
 prices and to increase the stock of money in 
 international circulation, we must coin no more 
 silver ; we must put more silver in circulation : 
 we must keep in view nothing but the gold 
 stajidard'' 
 
 This was just about one week before the 
 Conference adjourned, and the intelligent, 
 deliberate, conclusion of a leading bimetallist, 
 after careful consideration of the expressed posi- 
 tion of twenty leading nations of the world, 
 gathered together for the special purpose of 
 considering this very subject. 
 
 It is conclusive against the practicability of 
 international bimetallism.
 
 1 30 Sound Money Monographs 
 
 The nations of Europe are already saturated 
 with silver. They are thoroughly convinced 
 of its inadaptability to the purposes of inter- 
 national commerce, and to repeat Roumania's 
 observation, " How can it be expected that 
 countries like Germany, England, Austro-Hun- 
 gary and others will renounce the monetary 
 system and laws which these great powers had 
 adopted only after mature reflection and after 
 being thoroughly convinced of the advantages 
 to be derived from them ? " 
 
 Gentlemen, they will not do it, and interna- 
 tional bimetallism, even if desirable, which it is 
 not, is in this view absolutely impossible. 
 
 THE GOLD SUPPLY. 
 
 The Bimetallists themselves concede the su- 
 periority of the single gold standard if only 
 there is gold enough. On that point all the 
 most recent statistics show a decided increase 
 in gold production all over the world. Stimu- 
 lated by the needs and conditions as regards 
 gold vs. silver, the genius of the century is 
 being turned towards cheapening processes 
 which have already made it profitable to work 
 ore containing only $2.00 in gold per ton. 
 The gold hunter is abroad in all parts of the 
 world. 
 
 Murat Halstead says : " The call for the
 
 International Bimetallism 1 3 1 
 
 yellow metal will be answered, the demand 
 supplied, and we may anticipate the discoveries 
 of abundance, as in South Africa." Mr, Tran- 
 ekel, in an elaborate article on the South Africa 
 field, says : 
 
 " It is not impossible that in a few years a 
 quantity of gold not far from 100,000,000 will 
 be available for monetary use. If this should 
 prove true, it would seem futile to speak of an 
 impending scarcity of gold." 
 
 The most recent report is from Professor 
 Lexis, who has prepared for the Imperial Cur- 
 rency Commission exhaustive statistics of the 
 gold production of the world. He proves that 
 the markets of the world may be assured an 
 average annual supply of 145 millions of dollars 
 in gold for the next thirty years, and that the 
 gold currency countries need not fear a scarcity 
 of the metal. 
 
 Well, let us recapitulate. We have seen 
 
 1st. That bimetallism in France was a 
 failure. 
 
 2d. That the fall of prices since 1873 was 
 not caused by the appreciation of gold. 
 
 3d. That it did not bring misery and ruin 
 in its wake, but, on the contrary, that the 
 workman in the United States was twice as 
 well off in 1892 as in 1873, ^^^ that since 1873 
 we have had an era of marvellous prosperity.
 
 132 Sound Money Monographs 
 
 4th. That universal bimetallism, even if it 
 could be tried, which it cannot, would bring 
 inflation, the worst scramble for gold ever 
 known, liquidation, and wide-spread ruin. 
 
 5th. That the positive refusal of govern- 
 ments at the Brussels Conference to consider 
 bimetallism, proves the absolute impossibility 
 of getting the leading or any other nations 
 together into an international agreement for 
 bimetallism. 
 
 6th. That the supply of gold is on the 
 increase, is suf^cient, and will continue to be. 
 
 UNITED STATES AND THE GOLD STANDARD. 
 
 We have one thing more to consider ; that 
 is, the position of the United States with re- 
 spect to the gold standard. 
 
 We are the great creditor nation of the world, 
 and can demand what we please in payment. 
 It cannot but be admitted that to-day there is 
 nothing better than gold. Shall we accept an 
 inferior metal, even though we are assured that 
 silver would h^Jtist as good xxwd^r International 
 Bimetallism (an untried theory that exploded 
 under partial pressure in 1873)? 
 
 The business men of the United States would 
 make short work of it if the question and the 
 facts were brought before them for decision.
 
 International Bimetallism 1 2,'^ 
 
 They would say, as I believe you, gentlemen, 
 are saying to yourselves : 
 
 Gold is the best. 
 
 We of America are satisfied with gold. 
 
 We do not admit for a moment that any 
 other than the Single Gold Standard will do 
 for the United States.
 
 BANKERS AND LEGISLATION/^ 
 
 THERE was a time, not many years ago, 
 when the banker was content to keep 
 still, and under the ban of curses and objurga- 
 tions to pursue his quiet course. He would 
 earnestly advise submission, to anyone of the 
 fraternity, who, smarting under injustice, es- 
 sayed to defend against wrongful accusation or 
 to institute needed reforms. This very submis- 
 sion was in itself an acknowledgment of guilt, 
 and the silence of the banker on the important 
 questions of the day, for the solution of which 
 the public looked to him, has been one of the 
 most potent reasons for the present unsatis- 
 factory condition of our national finances and 
 the existence of our currency troubles. 
 
 If, in 1875-6-7 and 8, the bankers and the 
 sound money men had been organized as they 
 are organized now, and had spoken out as they 
 are speaking out now ; had started out on a 
 campaign of education as they are starting out 
 now, the Greenback would long ago have been 
 wiped out ; the Silver lunacy, before it had 
 
 * Before the Banker's Club, Chicago, April 27, 1895. 
 
 134
 
 Bankers and Legislation 1 35 
 
 wrought incalculable damage, would have been 
 confined to the asylums where it belongs, and 
 Populism would have been promptly swept 
 back into the holes of its native prairie from 
 which it originally emerged and would have 
 become a rare specimen of this dangerous 
 manifestation of barbarism, which now mouths 
 poisonously against our possessions and our 
 liberties. 
 
 LEGISLATION AND BUSINESS. 
 
 What ought bankers to do about legislation ? 
 
 This, it seems to me, is the most important 
 thing for us to-night, or for any body of bank- 
 ers in this country, to consider and to consider 
 at once. It supersedes all questions of individ- 
 ual management and money making, because 
 the course of legislation at this time is either to 
 make towards a solid foundation on which all 
 future business may be based wdth success, or 
 failing this, we are to go on upon the vibrating 
 scaffolding which has been our only dependence 
 for many years. 
 
 When we come to consider it, what a lament- 
 able condition of affairs we have in the busi- 
 ness world of the United States. We have a 
 country teeming with millions of industrious, 
 law-abiding people ; we have unlimited re- 
 sources of earth and air — a rich soil, a favor-
 
 136 Sound Money Monographs 
 
 able climate, immense deposits of mineral 
 wealth, fabulous resources in gas, oil, coal, 
 iron, silver, and gold. With all these advan- 
 tages we have had to endure the destruction 
 of millions upon millions of property by the 
 blighting fires of panic. 
 
 I do not believe that any but the most super- 
 ficial investigator or a prejudiced demagogue 
 will deny that the trouble at the base is a 
 trouble of currency. Certainly no honest and 
 intelligent student of the facts can arrive at 
 any other conclusion. 
 
 THE CURRENCY. 
 
 What is wrong with the currency? 
 
 In a few words the redemption of our entire 
 volume of paper money falls upon the Treasury 
 — a thousand millions of dollars depending for 
 redemption in gold upon an institution which 
 has no means of getting gold in a legitimate 
 business way to redeem with, has none of the 
 machinery necessary for carrying on the note- 
 issuing business, no automatic way of getting 
 information as to how much money is needed 
 in trade, no possible way of getting that money 
 out when needed, and no way of getting it back 
 if by clumsy chance some gets out. 
 
 Like the man with too many notes out, as 
 long as things are prosperous and the revenue
 
 Bankers and Legislatioji 1 3 7 
 
 is heavy the notes float, but the moment there 
 is a turn and a prospect of insufficient revenue 
 every one wants his notes cashed. The revenue 
 condition then is merely an incident, not the 
 cause of trouble. 
 
 We must depend upon legislation to get us 
 out of this condition, because the mistakes 
 of our law-makers through many years have 
 brought us where we are. You are well ac- 
 quainted with the history of these mistakes. 
 I need only touch upon them. 
 
 If there was any experiment in finances, no 
 matter how many times it had exploded in 
 history, the United States was ready to take 
 it up. Some French writer, referring to this, 
 has said that God is good to little children, 
 drunken men, and the people of the United 
 States, and that any other country in the 
 world, under like experiments, would have 
 gone to eternal destruction long ago. 
 
 Unlike other great nations, when the peril 
 of war confronted the United States, it had no 
 great financial institution to look to, and its 
 only dependence in a banking way was upon 
 the thousands of small institutions of the 
 country. It turned then in its extremity to 
 the fatal expedient of issuing its own notes, 
 and the seductive poison has never been erad- 
 icated. Through misery and destruction we
 
 138 Sound Money AIo7iographs 
 
 slowly emerged from the Greenback era after 
 the heresy had swept more wildly over the 
 Western plains than the silver heresy is sweep- 
 ing to-day, after it had taken possession of leg- 
 islation more wholly than has that to-day. The 
 glory of resumption of specie payments was 
 dimmed by the malarial fogs of Bland silver 
 legislation in 1878, and by the stoppage of can- 
 cellation of the Greenback, and the spirit of 
 compromise with wrong, completed its second 
 fatal treaty in the Sherman Law of 1890. 
 
 Every person in the United States to-day 
 is suffering more or less from this cancerous 
 blight of fiat money. 
 
 THE SILVER HERESY. 
 
 At this juncture, when the struggle of the 
 Government to maintain its vast obligations in 
 gold, nearly failing, has through the sagacity 
 and magnificent courage of President Cleve- 
 land been turned over to the strongest bankers 
 in the world, who are demonstrating daily that 
 the Government should retire from banking — 
 at this time, we are confronted once more in or- 
 ganized masses by the silver heresy. I cannot 
 but feel that this is the last desperate onslought 
 and that these wild delusionists are making 
 their last fierce fight before it is too late, feel- 
 ing that the great American people, quick
 
 Bankers and Legislation 1 39 
 
 scholars as they have always proven, have be- 
 come educated by the stirring events of the 
 past three years to see things as they are. 
 
 On this silver question the American people 
 are beginning to discard the old delusion that 
 law can regulate the value of coin or of any- 
 thing else ; that law, covered with some vague 
 power, can decree that twice one are one, 
 whether it be standard metals, base-balls, or 
 grains of wheat. 
 
 WHAT IS THE . STANDARD ? 
 
 They have asked themselves what must be 
 the Standard of value, and they have wrought 
 out this answer. 
 
 It must be the thing that the largest number 
 of most intelligent people in the community 
 interested, decide that they would rather have 
 for such part of their possessions, as they do 
 not wish, temporarily to put into the form of 
 food, clothes, real estate, and like ownings. 
 
 It is, in other words : 
 
 What everybody would rather have than any- 
 thing else. 
 
 Put the question to a thousand average 
 people : 
 
 " What material thing would you rather have 
 than anything else ? " 
 
 Answer, " Money."
 
 1 40 Sound Money Mo7iographs 
 
 Question. " What kind of money, Silver or 
 Gold?" 
 
 Answer. " Gold." 
 
 " Why Gold ? Why not Silver ? " 
 
 " Because Silver is in dispute. Silver is in 
 doubt. There is no doubt about Gold — Gold 
 is the best." 
 
 Do you think you can change that opinion 
 by law ? 
 
 Suppose a thousand intelligent educated 
 people in the United States decide that Gold 
 is the best and that they want their money in 
 Gold. Are you going to change that opinion 
 bylaw? Will an Act of Congress do it? Will 
 the combined command of all the Nations of 
 the Earth do it ? And yet that is what the 
 International Bimetallists propose to do. To 
 change intelligent public opinion, the positive 
 conclusion of a vast army of people skilled in 
 Commerce, to change by act of law, a verdict 
 which has been arrived at through the opera- 
 tions and development of Commerce through 
 the- ages — a development which in the last 
 thirty years has been amazingly rapid. To 
 change all that, and waving back the great 
 brainy crowd that do the business of the world, 
 do it with marvellous skill, intelligence and 
 honor, say to them : "You do not know what 
 you are talking about ; silver is as good as
 
 Bankers and Legislation 1 4 1 
 
 gold. We declare it to be so, and you must 
 accept this declaration as final." 
 
 These men, it seems to me, are assuming the 
 functions of the Almighty. 
 
 DELUSION OF INTERNATIONAL BIMETALLISM. 
 
 Then comes the theorist with the honey of 
 philanthropy on his tongue and the distress, 
 wrought by the very thing he advocates, before 
 his eyes, and says: " What are you going to do 
 about falling prices? Don't you want pros- 
 perity everywhere ? Don't you all want to be 
 happy? " 
 
 These are the illusions of Utopia. 
 
 You can't help falling prices at times. 
 
 You can't have prosperity everywhere all 
 the time. 
 
 You can't all be happy always in a material 
 way. 
 
 You ask how to avoid the ills of shrinking 
 prices and the hardships of fluctuating ex- 
 changes that come in trade. 
 
 They cannot be avoided altogether, any more 
 than you can avoid, altogether, sickness and 
 death. Improved methods of living may be 
 adopted, microbes and bacilli for numberless 
 diseases discovered and eradicated by antidote, 
 but sickness and death come at last to the
 
 142 Sound Money Monogi'-aphs 
 
 strongest constitutions. It is natural law. 
 Legislation cannot cure it. The same thing 
 is true in trade. There is as much clap-trap 
 about the programme of the International Bi- 
 metallist, as there is in that of the circus doc- 
 tor selling his universal " cure all." And this 
 International Bimetallist has wrought incalcu- 
 lable harm with his specious theory, his high 
 educational atmosphere, his charming oratory. 
 He has led men who had no time to think to 
 believe that the rose-colored theory must be 
 true, because honesty and intellect endorsed it. 
 
 It is time to tear off disguise. International 
 Bimetalhsm is a traitor in the camp. It is a 
 false fraud. It can never be accomplished. It 
 is a Will-o'-tlie Wisp dancing above the deadly 
 marsh. It is as elusive as a dream of magic ; 
 as idle as the pursuit of perpetual motion ; as 
 dangerous as the delirium of Fiat Money. 
 
 If it could ever be accomplished, which, 
 thanks to the inability of several great Nations 
 to agree, it never can be, what would be the 
 consequences ? 
 
 A TRIAL OF UNIVERSAL BIMETALLISM. 
 
 The mints of the World would be open at 
 the ratio of sixteen to one to anyone who cared 
 to bring silver bullion, and to any extent. Any- 
 one bringing forty to fifty cents worth of silver
 
 Bankers and Legislation 1 43 
 
 bullion could carry away a dollar. Do you 
 know of any better business than that — sixty 
 cents on the dollar clear profit ? Production of 
 silver would be stimulated enormously. It has 
 been estimated that the annual output would 
 rise from $200,000,000 to $400,000,000. The 
 producer with his $600 profit on every $1000, 
 would carry away his bagsful, and everybody 
 would have to receive his fiat silver dollar 
 under the glorious international law. Where 
 would they go ? Out of the pockets and safes 
 hito the Banks, and then? More and more 
 encumbered and embarrassed by the bulky 
 silver they would seek to get rid of it, utterly 
 unfitted as it is for large payments which the 
 Banks are expected to make. Then would 
 come the struggle for gold — and then the 
 Premium. 
 
 But Premium means dissolution to Bimetal- 
 lism, a death struggle between the great Banks 
 of the world to retain Gold the only instrument 
 of the liquidation which would follow the down- 
 fall of Universal Bimetallism. Liquidation ! 
 after the enormous coinage of silver brought 
 on by the international experiment and follow- 
 ing as it would a period of inflation and specu- 
 lation such as the world has never known — 
 liquidation? — redemption in Gold of thousands 
 upon thousands of millions of depreciated coin ?
 
 144 Soiind Money Af anagraphs 
 
 it would be an attempt at the Impossible; it 
 would accomplish only one thing — Universal 
 Bankruptcy and Ruin. 
 
 THE bankers' part. 
 
 In these times when such things are preached 
 as good doctrine, when sound money principles 
 are sapped and weakened by such suggestions 
 of compromise with the silver lunacy as Inter- 
 national Bimetallism, it seems to me that plain 
 words are best. Gentlemen, I am here to- 
 night to talk over with you the question of 
 what should be our part in this fight. Because 
 the fight is on ; this is War for Education and 
 all disguise should be thrown off. 
 
 The Banker has a large influence if he would 
 only use it. He is the confidential advisor of 
 thousands and thousands of business men. 
 The business men of the United States, a great 
 class, are peaceable, industrious, intelligent 
 citizens, and the mainstay of this country as 
 against fanaticism and demagogism. The 
 laboring element comes closely in contact 
 with these business men. The prosperity of 
 the latter means the prosperity of the daily 
 wage earner. Now the banker's part is to 
 make his clients thoroughly understand the 
 issue at stake and the effect of Heresy upon 
 trade. To do this, he must himself be well 
 informed, and every Banker in these times
 
 Bankers and Legislation 145 
 
 should go to the bottom of these questions. 
 He should take a firm stand on the highest 
 plane of sound money principles. 
 
 It is a time for aggressive action, and the 
 bankers could do a great work if they would 
 organize sound money clubs in every commu- 
 nity, including business, professional, and work- 
 ing men. These could perfect and carry out 
 programmes for talks and conferences. Edu- 
 cation by pamphlet and speech could be car- 
 ried on. 
 
 A DEFENSIVE UNION 
 
 Once created, the clubs could unite under a cen- 
 tral head similar to the one just formed in Ger- 
 many, a " Union for the Defence of the Gold 
 Standard," admitting representatives from all 
 the leading Chambers of Commerce. This 
 action would soon make itself felt in the polit- 
 ical tide. The politician would be made to 
 feel that the sentiment of the great intelligent 
 majority is for sound money, and that in heed- 
 ing the call of the Populist, or even in endeav- 
 oring to conciliate the Silverite, he is conspiring 
 for his own downfall. These are the things the 
 banker could accomplish, and no one could 
 more widely disseminate sound doctrine, more 
 earnestly make known the simple requisites of 
 sound money, the essential requirements in 
 currency for solid prosperity, than he. In the
 
 1 46 Sotuid Money Monographs 
 
 counting-room, in consultation with his own 
 customers, at the Board of Trade, and at the 
 banquet, he could make himself heard and felt, 
 and would become a tower of strength for the 
 conservation of what is right in money. A 
 new sentiment would blaze from one end of 
 the land to the other ; a sentiment which, once 
 established, would mean quick legislation in 
 the right direction, and a satisfactory settle- 
 ment of the currency question in the United 
 States for all time. And the sentiment which 
 would thus be crystallized by the organized 
 work of the bankers, and the fact that would 
 be demonstrated and which is true to-day, 
 would be this: 
 
 THE POLITICAL PARTY THAT PANDERS TO 
 FREE SILVER, OR THAT WITH A REPUTATION 
 FOR BEING A SOUND PARTY, ENDEAVORS TO 
 TAKE A MIDDLE COURSE ON THE MONEY 
 QUESTION BETWEEN SOUND AND UNSOUND 
 MONEY, IS DOOMED AND DESERVES TO BE. 
 
 And this other : 
 
 THE POLITICIAN, HIGH OR LOW, WHO TO- 
 DAY TURNS FROM THE STRAIGHT COURSE OF 
 SOUND MONEY AND THE GOLD STANDARD, 
 STABS DEAD ONCE FOR ALL HIS EVERY 
 CHANCE FOR POLITICAL SUCCESS, especially if 
 he wants to be president.
 
 THE STATE BANK QUESTION. 
 
 •K- 
 
 THE commercial interests of the United 
 States demand a circulating medium ade- 
 quate to the great business of the country. 
 
 Instead of this, the currency situation is one 
 of the most complicated and unsatisfactory 
 which our national life has produced. 
 
 Thus far in the history of the world, every 
 attempt by a government to create paper cur- 
 rency has brought discomfiture and disaster. 
 It is because of governmental interference in 
 the issue of paper money that we, in the United 
 States, are in our present uncomfortable di- 
 lemma. 
 
 The politicians, urged on by the complaints 
 of their constituents, are groping after some 
 panacea which is afar off, and because some of 
 the features of the old State bank system em- 
 bodied a likeness to the true principle of circu- 
 lation, one great political party has uneasily 
 turned toward that as a refuge for answer to 
 the cry of commerce for better things. 
 
 * Appeared originally in Rhodes's Journal of Banking iox 
 October, 1892. 
 
 147
 
 148 SoiLiid Money Monographs 
 
 What is the true principle of circulation ? 
 What is the perfect currency ? 
 
 In answer to this question we go over the 
 old ground. 
 
 It must be absolutely secure. 
 
 It must be of uniform value throughout the 
 country. 
 
 It must be convertible into gold. 
 
 And last of all, especially in this country, it 
 should be elastic in volume, expanding or con- 
 tracting at need. 
 
 Does the National Bank system furnish such 
 a currency ? 
 
 If not, will the revival of State bank circula- 
 tion do it? 
 
 In answer to the first question, I beg to re- 
 peat from a former article, that norwithstand- 
 ing the popular notion that our National bank 
 currency is the best the world ever knew, 
 it is a fact that the unscientific character of 
 that currency is the very thing that has brought 
 us to the present uncomfortable condition of 
 our finances ; that is to say, the rate-reduction 
 and redemption of Government bonds (the 
 pledging of any comparatively short-lived secur- 
 ity like a Government bond being necessarily 
 disturbing) has caused thus far by retirement 
 of National notes a contraction of over $230,- 
 000,000 in our currency, and just at a time
 
 TJie State Bank Question 149 
 
 when more currency has been needed. This 
 has made it possible for the silver scheme to 
 gain such preposterous headway in this coun- 
 try, and under the guise of supplying the great 
 commercial need of more currency, has flooded 
 us with the baser metal. 
 
 This brings us to the fault of bonds as a 
 basal security. The currency of a country 
 should be based upon actual possessions^ not 
 upon public debt — upon wealth, not upon pov- 
 erty — and a bond. Government or State, is an 
 evidence of public debt, not of public property. 
 
 Further than this, the system, having for 
 its principle, special security, that is, security 
 pledged and held specially, as are our govern- 
 ment bonds, is defective in a country requir- 
 ing sensitive elasticity in its currency. Such 
 a system fails to respond to the laws of trade, 
 and under it the volume of currency, if there 
 is a profit in it, will be too great, and if there is 
 no profit it will shrink without regard to the 
 needs of the community. These two con- 
 ditions have both at different times con- 
 fronted us. 
 
 Then, too, because the National notes are 
 specially secured, there never was any actual 
 daily redemption of them in the natural course 
 of trade, and this great controlling feature is 
 lost to the system.
 
 1 50 Sound Mo7icy Monographs 
 
 I have said that we need in this country a 
 currency specially sensitive in the quality of 
 elasticity, besides being absolutely secure. On 
 account of great field and forest production, we 
 require at certain seasons of the year a rapid 
 and substantial increase in our medium of ex- 
 change, the volume of which should, to avoid 
 inflation, as rapidly shrink when the need is 
 past. 
 
 What have we actually got for currency in 
 the United States ? With what is left of the 
 National bank notes and our vastly increased 
 and ever-increasing Government issues, we have, 
 as far as elasticity is concerned, a sodden, un- 
 yielding mass. There is not one first principle 
 of elasticity in it. Our present system is a vast 
 financial cyclone breeder. Under it when con- 
 fidence is felt, the excess of money provokes 
 speculation and inflation. But when confidence 
 shrinks there is no natural relief, and we get a 
 panic. 
 
 Will the State Bank system do any better 
 things for us? Let us see what would be ac- 
 complished by turning on State circulation. 
 Banking before the war was largely experi- 
 mental. Each State tried one thing or an- 
 other with variable degrees of success. A few 
 of the States struck the right principle, and in 
 two or three, for a period of forty years, the
 
 The State Bank Question 1 5 1 
 
 most exemplary success was achieved and main- 
 tained. 
 
 To particularize : the State of Louisiana had 
 such wise laws for its banking department that 
 its system was a model of stability and its cur- 
 rency good. Three States, Ohio, Kentucky, 
 and Indiana, under a system of currency 
 based on commercial assets, maintained a se- 
 cure and successful position for years without 
 loss to the community who handled their bank- 
 notes. The system of New England, with its 
 central redemption agent, the Suffolk Bank of 
 Boston, was perhaps the most peculiarly suc- 
 cessful and practically safe of all. Notes were 
 issued on general commercial security, and 
 entailed no loss to noteholders for the whole 
 period of existence, which was terminated only 
 by the imposition of the ten per cent. tax. 
 The system of New York was like our National 
 system, based on the false principle of special 
 security, bonds and mortgages being first 
 pledged, and State bonds afterwards substi- 
 tuted. The system, like our National one, was 
 unscientific and a failure, in that it was obliged 
 to suspend (in 1857), although the notes were 
 all redeemed eventually. 
 
 In other States there was no marked success, 
 and in the majority the most decided lack of 
 it. There never was any uniformity of system
 
 152 Soiuid Money Monographs 
 
 between States, and as to safety, in twenty or 
 more the windiest thing in the State wasbanking. 
 
 If it is expected by reviving these varying 
 systems to make such a national currency as 
 we need, the expectation will only be fulfilled 
 after a long period of evolution. It is just as 
 sensible to expect to plow a field with thirty 
 wild colts harnessed in with a few staid old 
 farm horses. Of course the colts can be trained. 
 
 So it seems there is no relief to be expected 
 from that quarter. 
 
 Reverting again to the requirements of com- 
 merce, the question arises, " What is the nat- 
 ural basis for a scientific currency?" The 
 answer is not a new one, but nevertheless true. 
 
 The wealth of a country should be the basis 
 of its currency. The basis is furnished by com- 
 merce itself. 
 
 The products of the labor of the people rep- 
 resent all there is of financial value (wealth) in 
 a nation. Commercial banks are the custo- 
 dians of the representatives of this wealth in 
 the shape of commercial assets, and commercial 
 assets, all time proves, are the highest form of 
 security for note circulation. 
 
 Now it is because some of the old State sys- 
 tems involved a part of the principle here laid 
 down, and because the old State systems grad- 
 ually perfected in all the States on the best
 
 The State Bank Question 1 5 3 
 
 models in this or that State, would slowly but 
 certainly, after many years of delay and loss, 
 have reached something approaching the per- 
 fected system of our friends the Canadians; it 
 is because of this, and because such men as 
 Russell, the Massachusetts member of the Chi- 
 cago Platform Committee, and Harter, and 
 others recognized this, that the State-bank 
 plank was introduced into the Democratic plat- 
 form — a good move from one point of view, 
 because of the vigorous discussion of the ques- 
 tion which has ensued, and which will ensue — 
 a discussion which cannot but educate the 
 people. 
 
 Admitting that the most perfect form of cur- 
 rency is the note of a good bank, how can you 
 get your banks good before you allow them to 
 issue ? 
 
 Not certainly by throwing the control of 
 them into the hands of forty-four different 
 Legislatures of all degrees of intelligence and 
 political complexion, as would be done if the 
 State tax were repealed. 
 
 For twenty-nine years the National system 
 has been perfecting its restrictions until to-day 
 it shows a high standard of average strength 
 and safety, and a record for the whole period 
 of its existence which probably — taking num- 
 ber of banks and all into consideration — is
 
 154 Sound Money Mo7Wgraphs 
 
 unequalled in the history of banking. This 
 record is condensed in the statement that the 
 total average of loss in the whole system for 
 the whole time is only three per cent. 
 
 Here, then, is a system which on one side 
 has been developed and perfected with the ut- 
 most care for twenty-nine years by a succession 
 of competent comptrollers, until on that side — 
 the Department of Safety — it has attained a 
 very high level. On the other side, that most 
 important one — of circulation — there has been 
 actually no development whatever. On the 
 contrary, that limb of the system has become 
 a withered member. The paralysis which set 
 in there as soon as Government bonds got out 
 of sight as rate-payers, was allowed to continue 
 without the skilful attendance of those who 
 alone should have been allowed to prescribe — 
 a Committee of expert bankers and financial 
 men. The currency doctors, of which no other 
 nation on earth has as many as we, were al- 
 lowed to get in their work, controlled and 
 owned, as they were, by the silver men, who 
 saw their opportunity in a lack of circulating 
 medium to foist their metal upon the people, 
 and to-day we oscillate at dizzy height on the 
 feather edge of a change from gold to silver 
 standard, with miUions of the baser metal on 
 hand to tip the balance toward disaster.
 
 The State Bank Question 1 5 5 
 
 We must go back now to the period when 
 the circulation of the National system first 
 began to fail and apply remedies that should 
 then have been used. 
 
 The State bank system was a spotted growth 
 from bad to better, with the right principle of 
 note-issue as a general basis in some of the 
 States, But to go back twenty-nine years, tear 
 down the delicate net-work of safety which has 
 developed around the national system, and by 
 a repeal of the ten per cent, tax start over 
 again, would be a crude and unwise move — a 
 retrogression — unnecessary, because every good 
 feature of State bank issue can be grafted on to 
 the strong and efficient trunk of the National 
 system. 
 
 If commercial assets, held as general security 
 by making bank-notes a first lien upon the as- 
 sets, are the best basis for note circulation, why 
 should not that system, regulated and perfected, 
 be adopted and developed by the National 
 banks? The double liability of stockholders 
 would be a further security, and a redemption 
 fund could be perpetuated by yearly tax. Add 
 to this actual daily redemption dX all of the great 
 cities, and the retirement of currency not needed 
 would be ensured and parity maintained. 
 
 We would then have a secure, elastic, con- 
 vertible, and uniform currency. Dangerous
 
 1 56 Sound Money Monographs 
 
 Government issues could be stopped, and com- 
 merce growing, would grow its own circulating 
 medium. 
 
 The argument then condensed is this : 
 
 1. We need a better currency system. 
 
 2. The State bank systems were varied, a 
 few only being successful, but those few pos- 
 sessed the right and vital principle of circula- 
 tion. 
 
 3. The National bank system is strong in 
 nearly all vital particulars except circulation. 
 
 4. Combine the right principle of circulation, 
 the best part of the State systems, with the 
 National system, and you have the highest 
 safety and the best currency — an almost per- 
 fect whole. 
 
 To-day enterprise is stifled by uncertainty. 
 Foreign buying is sluggish, lacking confidence. 
 Money in large amounts has been for a long 
 time congested at the centres, idle, and waiting. 
 
 To banish uncertainty. 
 
 To restore confidence, 
 
 To inaugurate an era of continuing prosper- 
 ity, two things are needed to be done. Let the 
 people thoroughly understand this, and they 
 will insist upon it. 
 
 First — Repeal the silver bill of 1890 
 (and that alone would make it possible for a 
 long time to do nothing else).
 
 The State Bank Question 157 
 
 Second— Q'^KY'Y THE principle of note 
 ISSUES BY BANKS (a first lien and secured by 
 general assets) UPON THE NATIONAL BANKING 
 SYSTEM. 
 
 The party that inaugurates these moves will 
 merit enduring power. 
 
 The politicians who urge and accomplish 
 them will win honest and substantial fame.
 
 THE MONEY POWER* 
 
 WHEN your Chairman invited me to speak 
 to you, he said to me that a few months 
 ago he intended to vote for McKinley, but that 
 since the free-silver movement had come up, he 
 had been told that the money power was work- 
 ing for McKinley and he did n't know but that 
 was a reason for not voting for him, although he 
 had not decided, and anyway he really wanted 
 to be enlightened. 
 
 Now, I do not hesitate to say that the money 
 power is for McKinley and the Gold Standard. 
 
 But I follow this up with the inquiry, " What 
 is the money power in this country ? " and with 
 this reply : 
 
 " The money power is the power that fur- 
 nishes and controls the cash and the cash credits 
 of the United States." 
 
 This power is concentrated in the hands of 
 the Banks, the Loan Associations, the Mort- 
 gage Companies, and the Insurance Companies. 
 There are a few individual bankers, but they 
 are in a small minority. 
 
 * Address during the Presidential Campaign, 1896. 
 
 158
 
 The Money Power 159 
 
 I have mentioned first the Banks. 
 
 What is a Bank ? 
 
 A Bank is one of the machines of business. 
 
 The capital is generally furnished by hun- 
 dreds of people, most of them in moderate cir- 
 cumstances, who take shares of stock and put 
 in the money to start with. 
 
 The greater part of the Bank's money is, 
 however, the property of small depositors and 
 business men, hundreds and thousands of them 
 for each Bank, and the average amount placed 
 on deposit by each is small. Taken all together, 
 however, the whole makes up a very large sum 
 which the Bank Officer is expected to loan out 
 and invest safely, but must always be ready to 
 pay back to the depositor in cash. 
 
 Remember, then, the Banker, against whom 
 we hear so much abuse from ignorant quarters, 
 is the paid servant who looks after the interests 
 of the entire institution, the interests of thous- 
 ands of people in each institution. And, al- 
 though he must have more experience than 
 the man who digs, or the man who takes care 
 of horses, he is, nevertheless, " a hired man." 
 
 When Mr. Bryan was in Buffalo, he took 
 special pains to stigmatize Bankers, but in his 
 speech in New York, and in all his speeches, he 
 has shown such great ignorance on the subject 
 of banking, that I am inclined to think that it
 
 1 60 Sound Mo7iey Monographs 
 
 is his age more than anything else that is at 
 fault. I remember when I was about as old as 
 he is (and I had then been in the Banking busi- 
 ness more than half my life), I knew a great 
 many things about Banking which I have since 
 learned were not so. 
 
 Now youth is a magnificent quality, but it is 
 better on a Ranch than in an Executive Chair, 
 especially if such things have to be said, as 
 have to be, concerning Mr. Bryan, namely, for 
 instance, that what he knows about Finance is 
 not so, and that in all his ninety-seven speeches 
 in the "enemies' country," speeches teeming 
 with crowns, crosses, firebrands and revolution, 
 appealing, as they do, to the dangerous ele- 
 ment, not one of his arguments will stand the 
 test of calm, cool investigation, based on facts 
 and experience. 
 
 And, now, what does the Banker do with the 
 money left in his care. 
 
 He loans it out judiciously to the business 
 man and manufacturer in the place where the 
 Bank is located, and it helps these to do busi- 
 ness, to increase their plants, to employ labor 
 and so to get money into circulation. 
 
 And this, my friends, is the only way to get 
 money into circulation in the United States. 
 The farmer will tell you that he wants to see 
 "more money in circulation." Well it can't be
 
 The Mo7iey Power i6i 
 
 done without the business man is prosperous 
 and employs labor that spends and eats, and 
 without the business man is prosperous, the 
 Banks cannot be prosperous. 
 
 The Bankers, then, of the United States, are, 
 mainly, trustees of the people's money, em- 
 ployed on salary, and expected to so conduct 
 the affairs of the Banks that the greatest benfit 
 will come to their stockholders, to their de- 
 positors, to the whole business of the locality, 
 by means of careful loaning. 
 
 Remember, now, each Bank, Savings Bank 
 and Trust Company is made up in about the 
 same way. 
 
 Let us take them all together and add the 
 Building and Loan Associations, which come 
 under the same class. 
 
 We have in round figures: 
 
 Amount. No. of people. Av. each. 
 
 Savings Banks Deposits, $1,810,597,000 4,875,000 $371.00 
 
 State Banks, Trust Com- 
 panies and Private 
 Banks, 1,340,888,000 1,500,000 900.00 
 
 National Banks, with 
 whom 1,724,000 per- 
 sons have less than 
 $1,000 each to his 
 credit, 1,701,653,000 1,929,000 
 
 Building and Loan Asso- 
 ciations, 500,000,000 1,800,000 280.00
 
 1 62 Sound Money Monographs 
 
 or, all in together, five thousand three hundred 
 and fifty millions of dollars, owned by ten mill- 
 ions of thrifty people — owning, many of them, 
 only a few dollars apiece, and, at the average, 
 only about $500 apiece. 
 
 This is the money power. 
 
 Listen. It is early morning in the great 
 City. Do you hear that sound of footsteps on 
 the cool stones — shuff — shuff, hundreds, thou- 
 sands, stepping, stepping, regularly, increas- 
 ingly, through the marts and highways where 
 commerce flows ? 
 
 These are they who carry the dinner-pail ; the 
 laborers, the shop-girls, the clerks, the vast 
 army of the employed ; millions and millions of 
 them. 
 
 This is the money power. 
 
 They do not drive on the boulevards. They 
 do not live lives of ease and luxury. They 
 do service wherever commerce needs a willing 
 hand, a clear head, a thrifty soul. 
 
 The man next to you, you yourself, the man 
 v/ith the pick-axe, the bookkeeper behind that 
 long desk, the girls in the store, the factory 
 hands, the man who owns the corner grocery, 
 that old woman there knitting behind the pile 
 of vegetables which she has for sale and which 
 she has raised with her own hands ; the tin- 
 smith who is pounding the music of industry
 
 The Money Power 163 
 
 out of that great winding strip of tin at his 
 bench ; the widow woman whose Httle fund in 
 the savings bank, added to the work of her 
 hands, keeps her above want. 
 
 This is the money power. All there is of 
 thrift, industry, virtue, the good old-fashioned 
 qualities that make a nation great — these are 
 the reasons of the existence of this great army 
 — " the potentates of the dinner-pail." 
 
 They own the hundreds of millions in our 
 Savings Banks, they hold the foremost lien 
 upon the assets of our great Life Insurance 
 Companies. They are the shareholders in the 
 Loan Associations, and, in the aggregate, each 
 owning a little, are heavy stockholders in our 
 great railway corporations and industrials. 
 
 The country's wealth is distributed among 
 them, they are relatively rich, and there never 
 was a time in any age or in any land when these 
 wage earners received so much for their toil and 
 could buy so much with what they received as 
 they could from 1879 to 1890, when the gold 
 basis in the United States was a sure thing and 
 everybody thought so. 
 
 They are the money power. They, the in- 
 dustrious, thrifty, money-saving people of this 
 country. They furnish the cash and cash 
 credits which make the power, and that is why 
 the money power is for gold — for an honest
 
 1 64 Sound Money Monographs 
 
 dollar — against repudiation — against revolu- 
 tion. 
 
 It is a question of self-preservation. 
 
 An attack has been made upon their property. 
 
 An attempt is being made to get them to 
 consent to cut in two the savings of years. 
 
 To take these dollars, for each of which they 
 have given one hundred cents in the sweat of 
 the brow and legislate half of it away. 
 
 My friends do you think they will consent to 
 this? 
 
 The honesty and thrift of the Green Moun- 
 tains has already answered the question. 
 
 Their answer is 39,000 thundering Noes.
 
 ABRAHAM LINCOLN 
 
 WORDS have small power to bear out the 
 thoughts and memories which crowd 
 around us to-day in the shadow of this sacred 
 tomb. 
 
 And foremost as we stand here there comes 
 that vision of the funeral pageant, the solemn 
 procession that wound its way for sixteen hun- 
 dred miles, while a nation looked upon its be- 
 loved, cold and dead, and, to view the venerated 
 one on the way to the tomb, flocked by day 
 and night, in the cool dawn, at full noon, when 
 the solemn twilight was settling, and by the 
 ruddy glare of torches in the night, and at his 
 bier the people mourned uncomforted, and the 
 whole Nation throbbed like one heart with 
 aching sorrow. 
 
 The mystery of life and death is made doubly 
 wonderful here by the life and character of this 
 mighty one. 
 
 Gentle, merciful, full of humor, friend of the 
 
 * Address at Springfield, 111. , before the American Bankers' 
 Association at the tomb of Lincoln, Sept., 25, 1896. 
 
 165
 
 1 66 Sound Money Monographs 
 
 homely and the unfortunate, courageous, just, 
 forgiving, fertile in resources, unerringly wise. 
 Seeing final effects far ahead, with wonderful 
 knowledge of men, the power of his intellect 
 moulded irresistibly the circumstances that pre- 
 sented themselves, and let them come stronger, 
 so he grew stronger to meet them and to mould 
 them his way. 
 
 He is called the greatest intellectual force of 
 our time, one of the world's greatest men, and 
 withal tender in heart and full of yearning pity 
 for the downcast, even the dumb animals. This 
 quality of tenderness, and sympathy with the 
 simple, so impressed itself upon the people who 
 knew him and the humble ones with whom he 
 came in contact, that there grew around his 
 memory a halo of romance. Why, the farmer's 
 of central Illinois around here will tell you to 
 this day that the brown thrush did not sing for 
 a year after he died. 
 
 But this tolerant justice extended to those 
 in good circumstances, to the prosperous and 
 wealthy, as well as to the poor. This appeals 
 especially to us at this time when abuse of the 
 Fortunate and the Thrifty is so common. Full 
 of enthusiasm to accomplish, to right wrongs, 
 he yet worked with utmost caution, diplomacy, 
 statesmanship. His patience, as his biographers 
 truly say, was like that of Nature — a vast and
 
 Abraham Lincoln 167 
 
 fruitful activity but knowing neither haste nor 
 rest. 
 
 In days like these in which we live, when the 
 very life of our Republic is threatened by wild 
 theories, revolutionary platforms and appeals to 
 hate, sedition and dishonor, we turn to our great 
 ideals for comfort, to the heroes and the heroic 
 epochs of our native history for encouragement 
 and for inspiration — and we do not turn in vain. 
 
 If we look to our greatest name and the 
 record of the time of Lincoln, before he had 
 taken up the leadership, we find that a greater 
 emergency confronted us in those days. Re- 
 bellion had become rampant in those four 
 months between November of the election and 
 March of the inauguration. Difficult as were 
 his future tasks (through four long years when 
 opposition, calumny, misrepresentation, bore 
 down upon him) none were more so or required 
 more consummate skill and wisdom than the 
 Deliverance of those early days of '61 ; the crys- 
 tallization of the Union from out the chaos of 
 secession in which it was apparently inextri- 
 cably involved. 
 
 God raised up this Leader then, not in a day 
 but through years of trying discipline, to lead 
 the people ; through a heritage of hardship and 
 sorrow — out of privation and ignorance — came 
 this great intellect — a light to lead a people out
 
 1 68 Sound Money Monographs 
 
 of darkness and bondage, a Nation out of the 
 throes of dissolution, into strong Unity. A 
 Nation that can produce such a man and that 
 has come through such an ordeal under his 
 guidance ; that fully appreciates the character 
 of that struggle and the character of the hero 
 that led them, can never decide wrong on any 
 such question as that which to-day confronts it. 
 
 Seeds of sedition and revolution are hourly 
 cast broadcast from the throats of those who, 
 let us in charity say, know not what they do. 
 
 Appeals for degradation and National dis- 
 honor fly on the voice and on the wire from 
 State to State. 
 
 In this situation the mind cannot but revert 
 to another time when a demagogue, on Union 
 soil, in a series of public addresses, surpassed 
 all bounds in traitorous denunciation of the 
 government and in malicious vituperation of 
 the Union. 
 
 Then, as now, crowds flocked to hear him ; but 
 when the time for ballots came Vallandigham 
 was swept out of sight by the largest majority 
 old Ohio ever gave. 
 
 That great people, who through four years of 
 battle days — through ordeal of blood and fire, — 
 worked out that wonderful salvation, Freedom 
 for the Slave and Unity and Honor for the 
 State, will never give up the heritage so dearly
 
 Abraham Lincoln 169 
 
 bought, will never allow the National banners 
 to be stained with repudiation and tarnished 
 credit. 
 
 History will repeat itself, and the disturbers 
 of public law and order, the breeders of mass 
 and class revolution, the pleaders for dishonesty 
 and National dishonor, will be swept to oblivion 
 by the greatest majority this country has ever 
 known. 
 
 His great spirit looks down upon us to-day. 
 Here rests the Moses of the people who after 
 the four years of terrible trial, when victory was 
 won, and the bells were ringing out the sweet 
 hymns of peace, was allowed, only to look upon 
 the promised land — not to enter in. But a 
 higher glory and reward were reserved for him. 
 
 He has entered into the eternal rest and his 
 great spirit looks down complacently upon our 
 struggle, with sure knowledge of the outcome. 
 
 My friends let us humbly imitate him in the 
 honest work we are doing for the Nation's 
 honor. In his own words, almost his last, " With 
 malice towards none, with charity for all, with 
 firmness in the right as God gives us to see the 
 right, let us strive on to finish the work we are 
 
 m. 
 
 THE END
 
 INDEX. 
 
 Act of 1873, 28 
 
 Action, necessity for, 82, 145 
 
 Africa, South, 105 
 
 Allard, M. Alphonse, 128 
 
 American Bankers' Association, 51, 165 
 
 Americans quick scholars, 138 
 
 Appeal to Congress, 38 
 
 Assignat, 93 
 
 Atkinson, Edward, 103, 106, I15, I16 
 
 Austria, at Brussels conference, 126 
 
 Austrian Special Commission, 93 
 
 A way out, 79, 86 
 
 A wild chase, 48 
 
 Baltimore plan, 82, 84, 86, 87, 88 
 
 Bank currency, progress, 62 ; large banks only to issue, t8 
 
 Bank, machinery development, 71 ; machinery economizes all 
 business, 71, what is a, 68, 159 ; notes, 15, 82 
 
 Bank note suppression, 59, 66 
 
 Bank notes, first lien, 15, 62 ; and checks identical, 71 ; how 
 they operate, 76 ; increase and decrease, 16 ; national, good 
 enough, 84 ; security, 17 
 
 Bank of England, 123 
 
 Bank officer, 159 
 
 Banker paid servant, 69, 159 
 
 Bankers and legislation, 134 
 
 Bankers' Club, Chicago, 134 
 
 Bankers part, 144 ; trustees, 161 ; silence, 134 
 
 Banking, and currency house comm., 73, 82 ; by government 
 should cease, 68, 69 
 
 Banking business, 69 ; why government unfit for, 11, 70, 73 
 
 Bankruptcy universal, 124, 144 
 
 Banks, dependence of small, 137 ; injury to, is injury to com- 
 munity, 69 ; to get good, 60 
 
 Barometer, the reserve is, 34 
 
 171
 
 172 Index. 
 
 Beaulieu, Leroy M., 46 
 
 Belgium at Brussels conference, 128 
 
 Best security, 15, 62 
 
 Bimetallic picture, no 
 
 Bimetallism, trial of 120, 142 ; International, 100, no, 132; 
 International, dream of, 112, 141 ; International, exploded, 
 132 ; premium, death knell of, 123, 143 
 
 Bland dollar, 75 
 
 Bond sales, 34, 81 
 
 Boston Merchants' Association, i 
 
 Bryan, W. J., 159, 160 
 
 Brussels Conference, 97, 100, 125, 132 ; Austria-Hungary, 
 126; Belgium, Turkey, 128; conclusions of bimetallists, 
 129; England, 125 ; France, 127 ; Germany, 126 ; Holland, 
 127 ; Italy, 12S ; Latin Union States, 127 ; Mexico, 125 ; 
 Netherlands, 125 ; Roumania, 126; Sweden, 127; Switzer- 
 land, 128 
 
 Building and Loan Associations, 161 
 
 Bullion buying fatal, 55 
 
 Business and legislation, 135 
 
 Business men, U. S., 144 
 
 Buffalo Liberal Club, 92 
 
 Capital, 43, 49 
 
 Carlisle Bill, 82, 83, 84, 85, 86, 88 
 
 Causes currency disease, 53 
 
 Cheap dollars, 43 
 
 Check money, 71, 72 ; percentage of, 71 
 
 Checks and bank notes identical, 71 
 
 Chicago platform, 48-50 
 
 Classes and masses, 41 
 
 Cleveland, Grover, 54, 138 
 
 Coin, in pocket and melting pot, 121 ; percentage used, 71 
 
 Commerce requires best medium, 94 
 
 Commercial assets, 14, 62 ; basis currency, 155 
 
 Commercial banks long-lived, 14, 62 
 
 Commercial Club, Chicago, no 
 
 Confidence restored, 156 
 
 Congress appealed to, 38 
 
 Crime of 1873, 30 
 
 Crime of 1890, 30 
 
 Criminal compromise, 56 
 
 Currency, based on wealth, 14, 62 ; progress to bank, 62 ; 
 
 commission, 9 ; causes of disease of, 53 ; doctors, 51, 154 ; 
 
 elastic, 13, 18, 150; errors in, 52,66, 136; foolish experi-
 
 Index. 1 ']^ 
 
 ments in, 138 ; reform, 51 ; issued by government an abuse, 
 52 ; issued by government, causes cry more money, 11, 77 ; 
 issued by government, a failure, i, 10, 53, 136 ; remedies, 
 61, 67, 77 ; represents products, 53, 152 ; tool of trade, 70, 
 71 ; true principle, 148 ; trade unhindered when currency 
 is sound, 65 ; volume, 64 ; war, 8 
 
 Daily redemption, 13, ig, 63, 155 
 Danger ahead, 1890, 7, 75 
 Days of '61, 167 
 Debtors, 44, 45, 104 
 Defensive Union Gold Standard, 145 
 Demand gold notes, 38 
 Democratic Party, 40, 48 
 Democratic State-bank plank, 153 
 Demon of distrust, 57 
 Dependence small banks, 137 
 Deposit and depositors, U. S., 161 
 Disaster predicted 1S7S, 29 
 Dollar, Bland, 75 
 Doubt, time of, 56 
 
 Eastern Greenback lover, 9 
 
 Education, war for, 144 
 
 Effects of free coinage, 42 
 
 Elastic currency, 13, iS, 150; national bank notes not, 59, 
 
 149 
 Endless chain, 5, 33 
 England, Bank of, 123 
 Errors in our currency, 52, 66, 136 
 Europe not investing, i, 36, 81 
 
 Fall of prices, 102, 103, 109, 115 
 
 Fatal machinery still operative, 8 
 
 Fiat disease, 39 
 
 Fiat money, 24, 25, 31, 32, 37, 48, 142 
 
 Fiat money, England, 25 
 
 Fiat money, France, 25 
 
 Fiat money, principle, 26, 29, 30, 138 
 
 Fiat poison, 6, 75, 78 
 
 Fiat silver, 31, 49, 75 
 
 Floating war debt not paid, 26 
 
 Foolish currency experiments, 138 
 
 Football of politics, 14, 53 
 
 Foreign gold debt, 32 ; investors, 37, 38, 47
 
 1 74 Index. 
 
 Forty-four legislatures, 60, 153 
 
 France, experience bimetallism, 100, lOi, 117; at Brussels 
 
 Conference, 127 ; variations in ratio in, loi, 102 
 Free coinage, 28, 30, 40, 41, 43 ; effect of, 42 
 Free silver, 19, 41, 42 
 Fusi Yama, 34, 35 
 
 General security, 18, 62, 78, 87, Sg 
 
 Germany at Brussels Conference, 126 
 
 Giffin, Robert, 99 
 
 Gold, best United States, 106, 109, 133 ; " criminally chosen," 
 113 ; for export, 32 ; our way, 88 ; reserve, 21, 22, 23, 33, 
 34. 37, 38, 39. 42. 93 ; standard, 45, 46, 47, 50, 92, 129, 130, 
 158 ; standard not yet assured, 8, 47 ; struggle for, 124 ; 
 supply, 105, 130, 132 ; unit of, 107 ; world's decision for, 
 93, 97 T12 
 
 Gold's concentrated value, 95, 96, 113 ; qualities, 94, 96 
 
 Government, banking should cease, 68, 69 ; buying silver, 30, 
 31 ; can tax, not produce, 53 ; currency an abuse, 52 ; cur- 
 rency causes cry more money, 11, 77 ; currency, failure, i, 
 10, 53, 136; currency inflates, 11, 77; currency in opera- 
 tion, 76 ; interference, 97 ; j^aper money, 47, 52 ; money 
 functions, 98 ; to stamp value, 52, 78, 98 
 
 Governments, what are, 99 
 
 Greenback, birth, 2 ; Conkling's condemnation, 2 ; craze, 27, 
 138 ; doubt on all investments, 10 ; early defenders regret, 
 3 ; Eastern lover of, 9 ; early debate, 2 ; Fessenden's con- 
 demnation, 2 ; re-issue, 27 ; vSumner's condemnation, 3 
 
 Greenbacks, 21 ; attack on gold reserve, 5, 33 ; cancellation 
 stopped, 75 ; cost of, 27, 75, 81 ; effects of, 4, 75 ; fallacy 
 demonstrated, 4 ; first issue, 3 ; "good as gold," 55 ; his- 
 tory of, 24 ; law to redeem, 64 ; retirement advocated after 
 war, 4 ; second issue, 4 ; should be retired, 9, 23, 38, 39, 
 50, 56, 66, 82, 83 ; the corner-stone of our currency, 5 ; 
 total issue, 27, 75 ; true character hidden, 5, 55 
 
 Halstead, Murat, 132 
 
 Hard times since 1890, 50 
 
 Higher prices, 43 
 
 Holland at Brussels Conference, 127 
 
 House Committee Banking and Currency, 73, 82 
 
 How redeem greenbacks, 64 
 
 How to perfect national system, 17, 63 
 
 Industrial revival, i
 
 Index. 1 75 
 
 Inflation, caused by, Government currency, ii, 77 ; national 
 bank notes, 13, 57 
 
 Injury to banks injures community, 69 
 
 Insufficient revenue, 36, 136 
 
 Interest saved, 19 
 
 International, agreement impossible, 12a, 130, 142 ; liimetal- 
 lism, 100, no, 132 
 
 International bimetallism, dream, 112, 141 ; neither practica- 
 ble nor desirable, no 
 
 International bimetallism exploded, 132 
 
 Issues, State banks, 12, 59, 60, 78, 148, 150, 151 
 
 Italy at Brussels Conference, 128 
 
 Labor and gold, 43, 44, 46, 104 
 
 Large banks only to issue, 18 
 
 Latin Union, 119 ; states at Brussels Conference, 127 
 
 Law of 1878, 28, 29, 32 
 
 Law of 1890, 31, 36, 49, 138, 156 
 
 Laws of trade powerful, 70, 92, 108 
 
 Legal tender rejected 1S12, 3 
 
 Legal tenders danger breeders, 78 
 
 Legislation and business, 135 
 
 Legislation, 1874 to 1S90, 6 ; mistakes in, 137 
 
 Liberal Club, Buffalo, 92 
 
 Life insurance companies, 163 
 
 Lincoln, Abraham, 165 
 
 Masses and classes, 169 
 
 Mexico at Brussels Conference, 125 
 
 Mistakes, legislation, 137 
 
 Money, Fiat, 24, 25, 31, 32, 37, 48, 142 ; princii)le, 26, 29, 
 
 30, 138 ; England and France, 25 
 Money in circulation, 160 
 Money power, 158, 162 
 Monometallism, universal, 97 
 
 National bank note no active redemption, 59, 149 ; note not 
 elastic, 59, 149; note over-secure, 58, 60; "notes good 
 enough," 84 ; notes, inflation and contraction, 13, 57 
 
 National Banks, 161 
 
 National system, how to perfect, 17, 63 ; thirty years' trial, 60 
 
 Necessity for action, 82, 145 
 
 Netherlands at Brussels Conference, 125 
 
 New territory opened, ig 
 
 No development national circulation, 61, 148
 
 176 
 
 Lidex. 
 
 No general fall prices since 1S60, 115 
 No middle political course, 146 
 N, Y. Times editorial, 90 
 
 Opinion by law, 140 
 Over-issue, 75, 76 
 
 Panic, 1893, 31, 50 
 
 Paper money, government, 47, 52 ; percentage used, 71 
 
 Payments, specie, 75 
 
 Percentage check money, 71 
 
 Percentage coin used, 71 
 
 Percentage paper used, 71 
 
 Political course, no middle, 146 
 
 Political expediency, 74 
 
 Populist, the, 92, 135, 145 
 
 Premium, death-knell bimetallism, 123, 143 
 
 Prices, fall in, 102, 103, 109, 115 
 
 Prosperity since 1873, 116 
 
 Prosperity, 1S79 to 1890, 45, 49, 50 
 
 Rag money, 56 
 
 Rates equalized, 19 
 
 Redemption, no active, of national bank notes, 59, 149 
 
 Reform Club, 79 
 
 Reform, time to, 1S7S, 54, 134 
 
 Relief, Treasury, 79, 86 
 
 Repudiation, 45 
 
 Reserve, the barometer, 34 
 
 Resources U. S., 135 
 
 Restore confidence, 156 
 
 Retirement automatic, 65 
 
 Revenue, insufficient, 36, 136 
 
 Rhodes's Journal, 147 
 
 Rothschild, M., 95, 113, 122 
 
 Roumania at Brussels Conference, 126 
 
 Savings bank deposits, 161 
 Secure, national bank notes over-, 58, 66 
 Should the government retire from banking, no 
 Silver, bugs, 114; buying, cause of panic, 53, 54, 66; Fiat 
 money, 31, 49, 75 ; free, 19, 41, 42 ; kings, 30 ; legislation, 
 53 ; mine owners, 28, 40, 41 ; purchase stopped, 31, ill ; 
 by government, 30, 31 ; snake, 23 ; 1876, 28 ; 1890, 29 
 Silver's qualities, 94, 95, 96
 
 Index. 1 7 7 
 
 Sixteen to one, 40 
 
 Smooth sailing, 87 
 
 Some State-bank issues right, 151, 155, 156 
 
 Sound currency, 19, 156 
 
 Sound way out, 12 
 
 South Africa, 105 
 
 Specie payments, 75 
 
 Springfield, 111., address at, 165 
 
 Standard ? What is the, 139 
 
 State-bank, issues, 12, 59, 60, 78, 148, 150, 151 ; some right, 
 
 151- 155. 156; deposits, 161 ; question, 147 ; rights, 60 
 Struggle for gold, 124 
 Sweden at Brussels Conference, 127 
 Sv/itzerland at Brussels Conference, 12S 
 
 The premium, 123 
 
 Thirty years of war currency, i 
 
 Thirty years' trial national system, 60 
 
 Thrift encouraged, 19 
 
 Time of doubt, 56 
 
 Time to reform 1S7S, 58, 134 
 
 Times, New York, editorial, 90 
 
 To get banks good, 60 
 
 To take place of greenback, 57, 84 
 
 Trade unhindered if currency sound, 65 
 
 Traenkel, M., 106, 131 
 
 Treasury, bank, the, 79, 90 ; gold, 33 ; notes, 30, 32, 56, 66, 
 
 76, 83 ; problem, 81 ; relief of, 79, 86 ; serious condition, 
 
 1894, 80 
 Truly bimetallic, lor, 102 
 Turkey at Brussels Conference, 128 
 
 Unit of gold, 107 
 
 United States, creditor nation, 108, 132 ; resources of, 135 
 
 United States leading, 65, 67, 107 
 
 Universal bankruptcy, 124, 144 
 
 Universal monometallism, 97 
 
 Vallandigham, 168 
 
 Value should be stamped by government, 52, 78, 98 
 
 Variations ratio France, loi, 102 
 
 Volume automatically regulated, 15, 73 
 
 Walker, Frances A., 92, 96 
 War currency, 8
 
 1/8 Index. 
 
 War for education, 144 
 
 Wells, David A., 103, 115 
 
 What is a bank ?, 68, 159 
 
 What is the standard?, 139 
 
 Wheat prices, 46 
 
 White, Horace, 103, 114 
 
 White money, 96 
 
 Why governments unfit for banking, 11, 70, 73 
 
 Will-of-the-Wisp, 47, in, 142 
 
 World's decision for gold, 93, 97, 112
 
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