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 UNIVERSITY OF CALIFORNIA 
 AT LOS ANGELES
 
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 D, 
 
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 P' 
 
 fSCIKNTlFIC, HISTORIC, AND PRACTICAL TREAThSE ON 
 
 THE SUBJECT OF FINANCE, WITH OVER SIXTY 
 
 STATISTICAL TABLES ILLUSTRATIVE OF 
 
 THE HISTORY AND POINTING THE 
 
 ARGUMENTS EMBRACED 
 
 IN THE WORK. 
 
 ALSO, A 
 
 REVIEW OF AUTHORS, 
 
 BY R, W. JONES. 
 
 ST. LOUIS : 
 
 DAVIS & FREEGARD. 
 
 1878. 
 
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 CoPY!:ri,HT. 1.>7H. 
 Bv DAVIS & FUEKGAKD. 
 
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 Pao-e i)7 
 
 Page 
 
 Page 
 Page 
 Paire 
 
 143 
 
 In tifth and sixth lines from top of page, 
 it should be - Si to 4" (not §4), and 
 " ^/iT to 4" (not S4). 
 
 Total footing of first eolunin of tigures in 
 
 the table should hv - $1 .77l\:)()O,000." 
 
 Total iuEurope should be "$2,4()(),000,000" 
 in the footing. 
 
 In the l.'ltli line from top of page the tig- 
 ures should 1)0 '• $2,()!)0.00l),(K)()."" 
 
 Ninth and tenth lines from toj) of page 
 ought to read ; •• I'he imi)t)rtant point 
 with them is hiore <i >:[i'o repository," 
 etc.
 
 n 
 
 AITTHORS PREFACE. 
 
 ~ When the author c-ommeiiced the iiiViestigation of the 
 subject of Money he did it simply for information. 
 During- the progre-ss of his researches, extensive notes 
 were made, and when he liad u'ot throuirh he found 
 ample materials had been collected for a book ; and 
 
 '=? believino- the statistii-al facts and monetary history col- 
 lected would be useful and interesting to the public, he 
 arrano-ed them in systematic form and submits them, 
 together with the results of his reflections, to the can- 
 
 ] did reader. Finding that discussions of the subject 
 
 4 had often been contracted in view, and superlicial in 
 <?sT eharacter, the author, to avoid those defects, constantly 
 endeavored to gather within the range of his inquiries 
 all the forces which affect the material interests of a 
 .people; find out the prime causes o f national pros- 
 perity and adversit}^ ; discover the true nature, laws, 
 and functions of money, and assii>"n to the latter its 
 frue powers, in an economic point of vieAv, as a force 
 ('ontril)uting to the development and proper applicatioji 
 of man's mental and physical powers. Such a course 
 has resulted in ])ringin<r him in contlict with mauy writers 
 who have preceded him. 
 
 The nature of the work made it necessary for him 
 
 -'iC'^s^r\<nrk
 
 IV AUTHOR S PREFACE. 
 
 to review uiul ^criticise the theories of those who differ 
 with him — a duty he fain would have avoided, but one 
 which he endeavored to discharire in a candid and 
 courteous manner. 
 
 At the conclusion is a monetary system deduced from 
 fundamental truths Avhich have been estaldislied and 
 are sustained by monetary commercial, and industrial 
 liistorv through a lonir course of vears. 
 
 The work was prepared for the perusal of all classes, 
 and is, therefore, as plain and simple in lanirua<re and 
 style as the autlior could make it in the time he was 
 eno-aged on it. Whatever repetition nuiy be <liscovered. 
 was pnr))osely inserted to keep constantly befoi*e tiic 
 mind of the casual I'eader certiiiii important truths. 
 
 Notwithstandino- the diiferences in tlieor\' which ma\' 
 (^Kist between the author and reader, yet the historic 
 :ind statistical ]K)rtions of the work cannot fail to in- 
 terest the hitter, because ihcy :irc anthciitic — Meiiii:- 
 eollected from the most reliabh' sources. 
 
 Tf the work should result in throwing any light upon 
 the sul)ject treated, which is now being discussed from 
 Maine to California, and from the Ltd^es to the Gulf 
 of Mexico, the author will be satisfied, and considtn- 
 himself compensated for his laboi's. 
 
 MoNTiiOMKKY CiTV, MO., 
 
 March l^t, 1878.
 
 TABLE OF CONTENTS. 
 
 Pkkkatoky — Chaptkr First. — Review of Authors 5 i 
 
 Aristotle, ti. Fhigland in 1696: John Locke; Re-coinage, 7. Lord j 
 
 iMacaulcy, S. John I-a\v his Tmths and Errcrs, 9. David Hume, i 
 
 10. Adam Smith, 11. Dugald Stewart ; Parliamentaiy Committee. >• 
 
 12. Theii- Errors, 13. Lord King, 1.5. Mr. Huskisson, 16. David \ 
 
 Kicardo. !S. Lord T^iverpool ; Scotch Banks, 48. Thomas Tooke ; ' 
 
 Mr. Wilson, 19. J. H. McCulIoch, 20. John Stuart Mill. 21. H. D. 
 Macleod,22. Henry Fawcett : Continental Moner, 2;?. W.Stanley 
 .levous, 24. Francis Way lain! ; Francis Bowen, 25. His Error.s, 26. 
 Wm. G Sumner; A. K. I'eery; Cary Baird; B. A. Hill, 27. Henry 
 V. Poor, 28. 
 
 riiKKATouY— Ch.apteu SECOND — Criticisms on Current Theories. .33 I 
 
 tritia Greenhackers, 3:i. The U. S. as a Money Broker, .•;7- Inter- I 
 
 convertible Bonds, ;5S. Interest. 39. Xothing hut Legal Tenders 40. ! 
 
 '""Tluriliildi'nCalf, 41. National Banks. 44. Patches, 47 Ci>mnuiiie,4S. J 
 
 Cuvi'TKRl. — Money tdty rfuwcrs and Fimctio ixs^: 51 '. 
 
 Measure ;Xi)miiial : Ideal, .tI. Mental Process ; Tlie .\frican .\facute: • 
 
 >\vaiis ; Kstimaling and Expressing Values, .'vj. Plenty of Measures ' 
 
 S^ecossarv; .V Medium of Exchanges, 53. Plenty, easy to get ; Scarce, 
 ^hard to get ; Important Power; Without Money, Man Heduced to 
 What, .54 Illustration; Business Blocked. .55. Industries Ruined; j 
 
 Money Combines and .Vpplies Man's Powers. .56. .Amount Xeeded I 
 
 Depends on Civili/.ation ; Limit to Right Cse of Money ; Every Brain i 
 
 and Hand Pi-otltably Emi)loyed; Pror)lcm.57. Rule for Money and 
 its Increase: Exception, .59 Over-issue; Money Imparts Money ^ 
 
 Values: .V Thing; Relative Value; ItsPower Affected by Conditions, ^ 
 
 60. Illustrated : Xapolconic Wars, 61. Effects of Plenty ; Effects of 
 InsiitHciency ; Over-iiroductiou, 62. Detilining Volume, 63. Rome; 
 .Vugustus; Justinian; The Dark Ages; Isriel; Persia; Greece; \ 
 
 Europe; .Vmerica. 6t. Circulation its Proper Use: What Consti- • 
 
 tutes a Thing Money; Gold and Silver. 65. Need not have Com- i 
 
 modity Value : Indian Wampum, 66. Bank Paper: Money is What, ' 
 
 •■7. May consist of Anything: Intrinsic Value; .Vrticles of Confed- 
 er.'Uioi\, 68. No Power to make Money; Constitutional Powers of 
 Congress, 69. Different Oynnions; Supreme Court Decision, 70.
 
 VI TABLE OF CONTENTS. 
 
 Act of 179-2 ; Copper ; Strict Construction; 'Coin," "Money," and"To 
 Coin;" Their Meaning. 71. To Make, Fabricate, Invent, Stamp 
 any Material ; Objection to Legal Tendei-s Answered, 73. 
 
 ('HAPTER II. — Standard of Values 74 
 
 Two Theories, 74. Cold and .Silver not Uniform; Evils llesulting-, 
 75. Illustrated by Imports, 76. Value; Commercial llelation, 77. 
 Their Values Change; Fluctuations since 1.513, 78. Silver Declined 
 Only, How; Fall of Lands, 79. Value of Metals not Absolute, 80. 
 Controlled by Demand and Supply ; Demand Increased, Valua In.- 
 creases, 81. H. V. Poor, 82.. Universal Law of Values; BulUonists 
 Essay to Avoid it, 85. Cold Hunting in California; Its Cost, 84. 
 Bullion Theorj-; Al)surdity of it; Illustrated, 86. Addition to Stock 
 of Gold from 18.50 to 18.55 ; Increased Use in Arts ; Decline of Supply ; 
 Cause of its Rise; Never can be an Unvarying Standard, 88. Paper 
 Money not Symbolic; Amount in 1860; Values of 1860; Money an 
 Absolute Power; >[ine.y and Property Oijposing Forces, 81). Sym- 
 bolic Currency ; Bi-ror Illustrated; Any (juauiity of .Money wid be 
 Used, 9U. Checks, Drafts, Bills, etc.^ Not Symbolic, 91. Nominal 
 and Exchange Value of .Money Different; Quantity of Money Bears 
 a Relation to Value of Propertj'. 92. How Value Attaches to a 
 Thing; How Paper Becomes Eijual to Gold in Value; Bits of Paper 
 in the U. S. and Gold in England, 93. Money .Vcting on Propertj' 
 produces Prices. 96. E({Uilibriumof Values and a Standard Impossi- 
 ble, 97. Inflation of Redeemable Paperand Legal Tenders; Effects, 
 97. Cause of Panics and Crises; Legal Tenders Prevent them, 99. 
 Illustrated ; Rules of Differences of Values of Money, 100. Banks 
 of Issue Compelled to Violate the Primai'v Laws of the Supply of 
 Money; Evils of the System, 103. Benefit of Legal Tenders, 104. 
 
 (.'iLxPTER III. — Causes of the Rise and Fall of Prices <>f Prop- 
 
 er-l^y and Gold Premiuni 1 07 
 
 Kinds of Money ; Table of Pai)er from 1S54 to 1877, i07. How the Ex- 
 pansion and Contraction was Etfectfed; Seeming Paradox, lOS. Im- 
 mediate and Remote Effects of Large and Small Volume of 
 Money on Prices and Production, 108. Table of V^alueof Gold from 
 1862 to 1875,ill0. Tables of Pri(jes, HI. Rise and Fall of Prices not 
 J_^,- in Ratio to Amount of MonefflKJ. Critical Analysis of Cause-^ Each i^ 
 year, 114. Tables of Kxi)orts and Imi)orts of Merchandise and tiold 
 and Silver, 115. :>!. VicDn- Bonnet on Fi-encli Finance 118. Mr. 
 Huskison in BritisliParlianienC 119. Prices Affected by Paper a.s 
 well as Coin, IJO. Increase of Paper addsto the World's Stock of 
 Money; Raises Values and Reduces Gold Value; ExampreS— Eng- 
 land, France, Germany, .\ustria, U. S., 121. Rule of Coin Premium • 
 and Prices, 123. Debtor Nation Ought to Have Paper; Resumption ., 
 Delusion; .Mr. Ricardo, 124. (ireat Decline must result, 125. One 
 fouth of the Commercial V.dues will be Destroyed by Resumption, 
 136. 
 
 Chapter IV. — Par; its Laws 127 
 
 .What Produces it, 127. Evil when For<^ed; Resumption Intensi- 
 ties Demand for Coin, 138. Result of Forcing a Par of Values ; What 
 Pii and Premium indicate, 129. Eft"ects of Depreciated Currency
 
 TAKLE OF CONTENTS. VII 
 
 (HI Coininerce 130. Par not IIil' Goal ; Money ti> do the Vast Busi- 
 ness is the Thing; Amount of Business Done, 131. I'lobaMe Effects 
 of Renionetizing Silver, 132. Will not Save tlie Country from Evils 
 of Forced Par by Kesuniption, l;'.;i. . 
 
 Cn.vPTEK v.— Gold, Silver and Paper Money in tlio World 4<t'Sn 
 
 Civiliz.ttion; Increase of Commerce ; Gold Products Since 1492. 135. 
 Table of Products, Consumption, etc., from It^Kt tolSTl; Products 
 of Silver fi-om 1492 to ISTii: Amount Consumed in Arts. 136. Faw- 
 cell's Table of Gold and Silver in Europe ; Criticism 13S. Table of 
 Gold and Silver in the World. 140. Method of Estimation, 141. 
 Table of per capita Supply of Money in the Four Quarters of the 
 Globe, 142. Table of Paper .Money in the World and Where Dis- 
 tributed ; Tables of Commerce of Great Britain, France and U. S., 
 143. X. Y. Clearings from 1SJ4 to liSTT; London Clearings from IStiS 
 to 1874; Increase; Present Decline; Rome; Venice, 145. Table of 
 Gold and Silver Products from i8.)3 to 1876; That Shipped to Asia 
 never returns, 147 Decline in Supply; Decline in stock: Paper 
 Declined ; Depression ; Government.- n) ust Increase the Paper or 
 sutler Decline, 14?'. 
 
 C'u.vPiEK VI — Bonds of the Civilized World 14'.i 
 
 Coalitions and Accidents which Caused the Indebtedness. 149. 
 Table of National Debts, 151. Increase since 1S75; Municipal, Stale 
 and Railroad Debts, 152. Five Times the World's .Money, 153. Be- 
 come Oppressive, 154. Bitter Contest, 155. 
 
 CiiAPTKK VII.— The Mouej' Power i^. 150 
 
 Owns Bonded Indebtedness of the World, loti. Its Character ; Its 
 Policy; Its Vast Power and Influence, 157. Enemy of Iudu>tries; 
 Inimical to Civilization, l.M). Conllict, 16U. 
 
 Chapter VIIL— Gold and Silver Product in tiie I'liited States. . . ICI 
 Secretary of the Treasury, l(il, Mint Director's Estimate; How he 
 gets it; Errors; Amount used in Arts, 162. Deposits at the Mints, 
 163. Raymond's Estimate of Gol(l : Monetary Commission's Esti- 
 mate of Silver, 164. Fawcetl's Tables; Finance Report, 165, Coin 
 in Baziks; Coin Ceriiticates, 166. Table of E.\ports and Imports of 
 Merchandise, Gold and Silver, 167. Debt Owed Abroad and Inter- 
 est, 16S. TableofGold and Silver; Decline in 1877; Amount Brought 
 in by Immigration, 16;i. Foreign Balances not to be Counted on: 
 Table of Customs; Dec'ine: Immigrants Decreasing, 171. Problem 
 for the Connlry, 172. 
 
 Cii.vPTKK IX — Amount of Money Needed 1 7;'> 
 
 , Money Needs now Compared with 1859,- Tiue Measure of Money 
 
 Needs, 173. Business over three times that of 1S59; Capital Stock 
 of Banks then auil now; Increased Powers of Money to Circulate, 
 174. Debts in 1859 and 1877, 175. Interest; Increased E.xpenditures 
 of States and Municipalities; .■fl,500,000,000 Money Needed, 176. 
 
 Cu.wTEU X. — Resumption ; the Money it will Give Us .177 
 
 Provisions of the .\ct ; National Banks Reduce their Issues, 177. 
 January, ls79 ; After that ; Calculations ; To Resume Strategy ; Sales 
 of Bonds for Legal Tenders, 178. Bank Notes not Legal Tender, 179.
 
 Vlll TABLE OF CONTP^NTS. 
 
 Coin and Paper in 1859, 179. E^oportion of Bank Issues to Redemp- 
 tion Money; \Vhat tlie Banks will liave to do, ISO. Tlie L:iw mean* 
 the Destruction of all "Greenbacks" ; Banks then have only Coin 
 Reserves, 181. Coin now in Country; Can't Increase much, 182. 
 Table of Money we will have ; Result, Destruction of Business, 183. 
 1882 or 1883 the Bottom ; Why then, 184. Vital Question-Contrac- 
 tion, 185. 
 
 Chapter XI. — Contraction Caused the Country's Indebtedness. . l»'2 
 When the Increase took place; Railroads, 186. Municipal Debts; 
 Table, 188. State Debts, 18Vt. Bank Debts, 190. Tables ; Individu- 
 al Debts; Calculations of Men; Methods of Operating, 191. Mone- 
 tary Commission, 192. Bank Laws, 193. Laws of Indebtedness, 
 195. English Debts ; Table of Bank Notes and Discounts ; During 
 Inflation Debts Decrease; During Contraction they Increase, 196. 
 Total Sum of Debts ; Contraction and Ambitions succeeding the 
 War cnused them, 198. 
 
 Chapter XII.— Debtor Class ; Effects of Contraction on Them. . . 200 
 Illustration; Causes, 200. Kxti-act from Doubleday's History of 
 England, 201. 
 
 Chapter XII [.—Creditor Chiss ; Effects of Contraction on Them. .205 
 Reduces Interest; Tables; Interest and Earnings of Banks, 206. 
 Annihilation of Debts; Xo Reduction of Taxes, 207. It Injure.^ 
 Creditors; Inflation Compensates them for their supposed Losses, 
 208. 
 
 Chapter XIV. — General Effects of Contraction 20'.) 
 
 Arguments against it, 209. General Depression and Distress, 211. 
 Monetary Commission, 212. David Hume's Essay on Money, 213. 
 Alex. Hamilton's Report; Wm. II. Crawford; R. M. T. Hunter, 214. 
 Encyclopoedia Britannica; Ernest Seyd, 215. American Review: 
 Leon Fouchet; M. Wolowski. 216. Other Arganienis 217. 
 
 Chapter XV.— Jlonetary Affairs ; Rome, France, Germany 21 ^ 
 
 Rome used Paper in War with Cartlmgena, 218. Reduction of Money, 
 Fall of Rome. 219 France— Revolution of 1789; Caused by Scarcity 
 of Money and Oppressive Taxes ; Table of Deficiencies, 220. A Les- 
 son, 221. Assiguats; Causes of Depreciation ; Gold and Silver De- 
 monetized ; At Par in 1793; Operations in 1848; Extract from Lon- 
 don Times, 222. After Franco- Prussian War, 224. System, 225. 
 Germany; Errors ; Cause of their Present Depression. 226. 
 
 Chapter XVI. — En,<>;lish Finance, Crises, Strikes, and Riots 
 
 from 17'.)3 to 1829..^ 22f* 
 
 Crisis of 1793; Remedy, 226. Crisis and Mutiny of 1797; Causes and 
 Remedy, 229. Treaty of Amiens ; English Debt, 231. Table of Cur- 
 rency, Bank Discounts and Commerce; War Again; Prosiierity to 
 1S09; Crisis and Riots of 1810-11; Causes and Remedy, 2.52. Crisis 
 and Riots of 1816; (Causes and Remedy, 234. Depression, Crisis. 
 Riots, Strikes, and Incendiarism of 1819 to 1823, 240. Extract from 
 Doublcday g History, 253. Cause, 245. Remedy, 247. Terrible 
 Crisis of 1825; What the Annual Register, Quarterly Review and 
 Mr. Alifon 8:iid, 247. The Cause, 249. The Remedy, 250. Crisis of
 
 TABLE OF CONTENTS. ^ 
 
 18J0, •r)l: Kiot.x, strikes, Desti-uction of Property ; The Caude. 262. 
 The Remedy, iX). 
 
 CuaptkrXVII — Kniilisli Finance History from 1829 to 1833.... 2r>4 
 King's speech; Karl Stanhope, 254. Domestic Violence of 1S29, 
 255. OTonnel) ; Catholics and Protestants, 256. Alison ; Meetings ; 
 Posters; Object, 2.57. ISU ; Parliament Prorogued ; Brick-bat and 
 BhulKeon; Sir Walter Scott, 258. Political Unions 150.000; Mobs, 
 2.59. Destruction of Property, 260. 18:52 ; Ueforni Bill ; Threats ; Re- 
 bellion ; "Mobs 40,000 strong. 260. 18:53; Distress General, Extreme, 
 (rnnatiiral ; Th>; Cause, 261. Tables of Money and Bank Discounts, 
 1815 to 18:54; Tables of Exports and Imports, 1815 to 18:5'.; Sii- A. Ali- 
 .-.ou, 2<>:5 Mr. Attwood in Parliament, 265. Effect on Prices, 2o6, < 
 The Remedy, 260. Tables of Kmigration, Mortality. Pauperism, 
 <'rime, and llevenue; Banking System of England. 270. 
 
 Cii.MTKK XVIir.— Moiietiiiy History of the United States; Cri- 
 ses to the Close of the Rebellion -7o 
 
 Condition after the War of 1812, 274. Bank Paper; Crisis of 1818-20, 
 275. Great I^os.■^cs Pennsylvania .Senate, 276. Causes of the Crisis, 
 277. Table of Circulation and Specie from 1811 to 1851 ; Crisis of 
 18:57, 278. U. S. Bank Charter; Democracy; .Jackson; The Veto, 279. 
 Removal of Deposits; .state Banks; Expedient to Avert the Crisis, 
 280. Revenue Destroyed ; Fall of Cotton, 281. Repudiation of State 
 Debts, 282. The Cause; Table of Exports and Imports, 28 5. Im- 
 mense Balance; Contraction, 284. Speculation, 285. Amount of 
 Money, 286. Panic in Belgium, France and England, 287. Crisis of 
 1857; Cause, 288. Varying Values of Coin, 289. 
 
 ('iiM'iKK XIX —.Monetary History of tlie United States 2!tl 
 
 Present Crisis: Blindness of Government ; Disi-egard of Laws of 
 Prosperity, 291. Process of Contraction; Credit; CUilminated in 
 187:5; Resumption Act Ctmtinues the Evil, 292. Forces Oi.erating 
 from 186«i; Fall of Prices; Reduction of Money: Balances of Trade, 
 293. Resulted in the Great Strike; Business Still Declining; Table 
 of Xevv York Clearings; Opinions of Others, 294. Hon. \Vm. D. 
 Kelly's Speech ; Senator Beck's speech; 295. Peter Cooper's [>et- 
 ter, 296. 'Sydna Meyers, Banker, 297. X. Y. Sun on the Strikes, 298. 
 X. Y. Telegram on Workingmen, 299. True Citizen; Wilkes in the 
 Herald ; Geo. Adger in the Contemporary Review, :500. X. Y. Times: 
 Henry C. Cary,:*,01. X. V. Free Press; N. Y. Herald; Mo. Republi 
 can, :W-1. Ex-Gov. Uardin ; X. V. Times. 30:5. Secretary Sherman 
 in 1869, :!04. Ohio H. I.'.: Railway Age; X. Y. Financial Chronicle, 
 ;;05. Hon. B, A. Hill; Hon. .). .\. Dacus; X. Y. Sun, 307 Mr. Hay- 
 maud, :508. Hon. 15. A. Hill; Hon. J. A. lJacus,:509. Hon. T. T. Crit- 
 tenden. 311. St. Louis Times, 312. Hon. VV. D. Kelly, 313. Bankers' 
 Magazine. 314. Table of Paui)erism, 315. Capital on a Strike ; The 
 C'ause; Hon. D. A. Wells, 316. Monetary Commission. 317. Arch- 
 bishop Purcell, :(21. Hon S. F. Gary; Hon. A. H. Buckner, 322. Mr. 
 Hamilton, :523. Table of Bankruptcies from 1857to 1877 : Mercantile 
 Journal, :524. Mo. Republican, :525. Hon. Henr>- Gary Baird on 
 Decline of Values and Bankruptcies; Taxes, etc.,;526. Xo. of Deaths 
 in the U. S. ; Total Value of Property in 1860, 1870, and 1877, :5:;o.
 
 X ^ABLE OF CONTENTS. 
 
 Per Capita Paper in ISiJO and 1877. 3:53. Railroad Failures ; Tables, 
 :i33. Bank Earnings and Losses; Tables: Prisoners in the United 
 States in 1860 and 1870; Increase; Paupers Ooubled, 334. Table of 
 Heavy Embezzlemen's ; Tables of Government Revenue -. Inimigi-a- 
 tion and Emigration, 33.'5. Table of Condition of shipping in 1857 
 and 1877, 336 All Business in Decay, 336 Depression; Decline; 
 Disaster, 337. The Cause, .339. 
 
 Chapter XX.— The Remedy : a Perfect Monetary System 341 
 
 First Thing to be done; Identity of Interest of all Classes, ,341. 
 Money Power, 342. Conflict, 343. The Duty of Government, 344. 
 Commercial History settles What, 345. To Secure Relief, Renione- 
 rize Silver : Benefits, .345. Repeal the Resumption Acts; Effects 
 and Benefits, :346. All want Paper Money, :}48. Xational Bank 
 NTotes should be Retired, 348. Increase the Currency and Oischarge 
 the National Debt with it, :i48. Graduated Issues ; Buy Bonds with 
 it, 3.50. Surplus Revenue to be used same way. .352. New Legal 
 Tenders to cover Loss and Increase the Volume as Population In- 
 creases; In Times of Peace Prepare for War, :5o3. A Coin Fund to 
 be raised and sacredly kei)t for War; Objections Answered. 354 
 Postal Deposits; .3.57. Subsidiary Coins; Constitutional Amend- 
 ment, 358. 
 
 Chapter XXI. —Beuetirs of the System; Peace and ?:ndiu-iug 
 
 Prosperity 360 
 
 I'lenty of Money without Pi-oduciiig Crises, :360. Largely In- 
 creases Government Revenue, 361. Table of Revenue from 18.i0 
 to 1876. Enhance the Value of Public Securities; Give us the 
 Best Paper in the World; Set the Nation to Work. :563. Pay off the 
 Government Debt in a iew Vears; Free us from the Money Power. 
 364. 
 
 Chapter XXII.— Siigiiotioiis Subsidiary .^«7 
 
 Money Does not take the Place of Virtue and Intelligence, but 
 Promotes Both, 367. Shipping Laws Ought to be Amended; Nava- 
 gable Rivers Opened; Trunk Riiilroads Aided, :568. Canal Across 
 Central America; Tendency of Land to Concentrate in hands of the 
 few Dangerous, 369. National Pride in owning Homes to be 
 .Vroused; Mr. Garfield; Eflects of Resumption on Labor"; How will 
 we get the Money, 373.
 
 PREFATORY— CHAPTEK FIRST. 
 
 REVIEW OF AUTHORS. 
 
 Xo subject lias Ixh'Ii nioiv discussed, duriiii:" the 
 U'th Ceuturv, and less understood than that of ^Nlonev. 
 Money, liUe every otlier subject of economic science, 
 is affected and its forces are modified oi' intensified b\ 
 a myriad of things. The peculiar ci\ ilization of ;. 
 peoj)le : their temperament : their manners : thei)- 
 habits and custom-- : the state of tin- industries and 
 commerce : the method and fa('i!it\ of t! ansi)ortation : 
 the soil, (dimate. harxcsts. war, [)eace, Hoods, famine, 
 pestilence, — all the conditions of man. and the nation's 
 inten'ourse with other nations, — are conditions or 
 forces constituting" great factors in determining the 
 nation's economic ])o\vers, and modifying or intensify- 
 ins: the intiuenee of other forces — such as mon<'\', new 
 discoveries, and the liki'. For instance, if Russia's 
 volume of money were doubled, the immense territory 
 over which the inhabitants are scattered, the devotion 
 of the peasantry to agriculture, the slow and })lodding 
 habits and [^hlignnitie character of the [)eo[)le, and the 
 tardy means of transjjortation, would render impossible 
 so quick an impartation of vitality to trade and the in-
 
 f> FKKFATOKY C:HA1T£K f'rKST- 
 
 (iistnes ;is an equal increase of money in the United 
 >Ttates would do here, on account of the commercial 
 habits and mercurial character of the people an<l the 
 lapid means of transportation. The failure of students 
 of the subject to trace the hidden causes of monetary 
 phenomena throuo:h all the conditi(»ns of the in- 
 dustries, commerce, and nations to their sources, 
 has resulted in such an accumulation of errors that 
 the tioith itself emiiraced in the various tlie(n'ie> 
 is so infectcil with errrn- as to be scarcely pen-ept- 
 il^le. 
 
 The onh' ciUTecl method of stuch'inif the subject i> 
 that of learning and observing tlie facts and conditions 
 previous to and contemporaneous with tinancial i)he- 
 nomena. .ind tracing out their relations with each 
 (»ther, 
 
 Speculativ c [>hilo>oi)hy ha- in the past entered largely 
 into economic science, and its fruits exist in the form 
 of a myriad of theories embracing a compound of 
 truth and error. 
 
 Aristotle, Avho wrote over two thousand ycar> ago. 
 embraced both the speculative and inductive methods 
 of investigation. His i)ro})Ositions were generally 
 deductions fioni plu'noinena. This was evidently true 
 in his essay on money, wherein he expressed some 
 truths which lie at the foundation of every cor- 
 rect monetar\' system. One of these truths is that, 
 the use of a thing, no matter what it may bi-. 
 as money, is a use entirely different from the use of it 
 lis a connnodity. Another is that, money is a medium 
 of conunercial exchanges. A third is that, money i- 
 not the nltimate object of men — the end of business, 
 hut i^ a iiK'iin.'i of bnsine-^^, bv the Use or handliuii" of
 
 REVIEW OF AUTHORS. 7 
 
 which men supply themselves with the necessaries of 
 life and develop wealth. 
 
 No mind, without embracing these ideas, can frame 
 a correct monct:uy system or comprehend its phenom- 
 ena. The failure of statesmen and writers on political 
 economy to observe these truths has filled the world 
 with vicious theories pregnant with the seeds of finan- 
 cial disease and inimical to the growth of wealth and 
 the highest development of civilization. 
 
 The financial distresses of England from 1G89 to 
 169(3 have been referred to often by that class of thinkers 
 who clamor for a uniform standard of values, as con- 
 clusive evidence of the evils of debased coins. They 
 claim John Locke as the champion of standard coins, 
 because he proved to the world that equal weights of 
 silver were equal in value to equal weights of equal 
 fineness ; that is, that equal things are equal to each 
 other. This astounding triumph of logic will certainly 
 meet the approbation of all men. But it by no means 
 establishes the point sought to be gained by them. If 
 Enirland had debased all her coin alike it would not 
 have left the country as the purer coins did during that 
 time, and yet Mr. Locke's philosophy would have ap- 
 plied to the debased coins as well as to the standard 
 ones. In 169(3 a re-coinage took place under the act 
 of Parliament, restoring the metal money to standard 
 weight and fineness. In the autumn of that year the 
 financial distress began to disappear. The advocates 
 of a uniform standard seize upon this fact as an irre- 
 futable argument to prove that the restoration of the 
 standard coins removed the distress. But they fail to 
 consider the powerful effect the notes of the Bank of 
 England produced upon the country. The Bank Mas
 
 8 PREFATORY CHAPTER FIRST. 
 
 chartered in 1694 and by 1696 had got mto full opera- 
 tion, and her issues had doubtless largely increased. 
 Of the monetary condition of the last named year, 
 Lord Macaulay wrote, "The upper classes seem to 
 have lived to a great extent on credit. Even an opu- 
 lent man seldom had the means of discharging the 
 weekly bills of his baker and butcher. A promissory 
 note, however, subscribed by such a man, was readily 
 taken in the district where his means and character 
 were well known. The notes of the wealthy money- 
 changers of Lombard street circulated widely. The 
 paper of the Bank of England did much service. * * 
 The directors soon found it impossible to procure 
 silver to meet every claim which was made on them in 
 good faith. They then bethought them of a new ex- 
 pedient. They made a call of twenty per cent, on the 
 proprietors, and thus raised a sum which enabled them 
 to give every applicant fifteen per cent, in milled money 
 on what was due to him. They returned him his note, 
 after making a minute upon it that part had been paid." 
 It will be seen from this that the notes of the Bank of 
 England, of the wealthy money changers, and opulent 
 citizens, served the place of coin, and to them is attrib- 
 utable more than to anything else the return of pros- 
 perity. The depletion of the money of the country, 
 which had taken jDlace just prior to this time, had of 
 necessity so reduced values in England as to stop the 
 outflow of coin and turn the balance of trade in her 
 favor. This also greatly aided in restoring the mone- 
 tary conditions to a healthful state. The re-coinage 
 had a beneficial effect, not in making the coins standard 
 in weight and fineness, but in making all in the king- 
 dom uniform. Mr. Locke understood the powerful
 
 REVIEW OF AUTHOUS. 9 
 
 effect of foreign balances on a nation's finances, but 
 did not show how such balances were produced in a 
 nation's favor or against it. 
 
 John Law enunciated the truth that nothing, includ- 
 ing the precious metals, has a vailue except for the use 
 to which it is applied. The failure of many to apply 
 that truth has led them to not understiind the cause of 
 the depreciation of silver since its demonetization in 
 Europe and the United States. Bullionists hold, that 
 the precious metals are worth, as money, exactly their 
 value in the arts. In other words, they hold that the 
 monetization or demonetization of them does not affect 
 their value. This cannot be true in the very nature of 
 thiuirs, because the one increases and the other de- 
 creases its uses, this increases or depreciates demand 
 for it and this necessarily appreciates or depreciates its 
 value. 
 
 Mr. Law said, "Money is not the value for which 
 goods are exchanged, but the value by xohich they are 
 exchanged. " It is true that money is not the ultimate 
 object of business. Even the capitalist enters into his 
 transactions, not for the purpose of getting and hoard- 
 ing mone}^ like the miser, but to invest it in bonds or 
 stocks, or property for profit. Yet exchanges made 
 by money are made immediately for money, the ulti- 
 mate object being to use the money as a meatis of ob- 
 taining other things and of producing wealth. He held 
 that a nation's money need not be such as would cir- 
 culate in other nations. The truth of this has been 
 amply proved since his day by Russian, Italian, French, 
 and United States financiering. 
 
 Law's great error was that paper money should be
 
 10 PREFATORY CHAPTER FIRST. 
 
 based on and redeemable in something ; that any val- 
 uable property would serve as the redemption fund, 
 and laud, being the most substantial and useful of all 
 property, was the safest of all bases. Hence, his dis- 
 astrous land money scheme. Neither the paper money 
 issued on the land, nor the land nor titles beino; a le^al 
 tender, the paper itself came no nearer being money 
 than the public mind made it. Hence, when men re- 
 fused to take it for debt and in exchange for property, 
 it became in a manner worthless. 
 
 Paper money ought to be absolute, irredeemable le- 
 gal tender money like gold and silver. Otherwise, a 
 reduction, depreciation, or destruction of the redemp- 
 tion fund injures or destroys the value of the money. 
 And when a nation's money is supplied by banks of is- 
 sue, not only the success of those institutions, but the 
 welfare of millions depends upon the wisdom or folly, 
 the economy or profligacy of those who may happen 
 to direct the affairs of the banks, and upon the acci- 
 dents and incidents of foreiii^n trade. 
 
 David Hume asserted that the greater or less plenty 
 of money was of no consequence. This assertion alone 
 shows the looseness of his reasoning and the casuality 
 of his observations. He failed here to consider the 
 effects of supply and demand. At another place he 
 asserts that, "The greater plenty of money may even 
 sometimes be a loss to the nation in its commerce with 
 foreigners. « * * ^^^^j jj^ general, the dear- 
 ness of everything, from plenty of money, is a disad- 
 vantage which attends an established commerce, and 
 sets bounds to it in every country by enabling poorer 
 States to undersell the richer in all foreign markets.'*
 
 REVIEW OF AUTHORS. 11 
 
 This is true where the money is gold and silver or 
 paper redeemable in them, and to this fact is attribu- 
 table the recurring financial crises which have vibrated 
 from nation to nation in the past, where such money 
 constituted the medium of exchange. But that re- 
 sult does not, cannot flow from irredeemable paper 
 currency, because, no matter how much it may be in- 
 flated, it does not inflate coin prices, and, hence, does 
 not, on account of prices, produce a bad influence on 
 commerce. Because of the above named phenomenon 
 of plenty of money, coin and redeemable paper, in- 
 ducino; foreimi balances aojainst the nation or reducing 
 its exports, Mr. Hume doubted the propriety of having 
 banks and questioned the advantages of abundance of 
 money. 
 
 In another place he asserts that without an increase 
 of the volume of mony in a nation whose population 
 and business increase, a gradual fall of prices will en- 
 sue. This is true. 
 
 Adam Smith held the truth that, "Gold and silver, 
 like every other commodity, vary in value ; are some- 
 times cheaper and sometimes dearer, sometimes easier 
 and sometimes of more difficult purchase." That as a 
 standard or measure of values their capacities are al- 
 ways changing. He, however, held the absurd theory 
 that labor was the true measure of values. He prop- 
 erly distinguished the nominal from the exchange value 
 of money. He also held that money did not consti- 
 tute the revenues of society ; that it was but the ex- 
 change medium ; the thing which puts industry in 
 motion. He considered paper money issued by banks 
 economic, inasmuch as they would, as he supposed,
 
 12 PREFATORY CHAPTER FIRST. 
 
 supplant an amount of gold and silver equal to their 
 issues. This would l)e true in some cases, and in some 
 cases not. So long as the total sum of a nation's 
 money, coin and paper, remains inadequate to advance 
 the coin prices in that nation above those of other 
 nations the coin would not be exported unless it bore 
 a high premium over the paper. Otherwise it would 
 be exi)orted. 
 
 Dugald Stewart held that the commodity value of 
 gold and silver was different from the money value 
 thereof ; that commodity value was not necessary to 
 money. This idea has been constantly fought by bul- 
 lionists, but its truth has been irrefutably established 
 by the financial histories of several nations. 
 
 The advance of gold premium and the stringency of 
 monev matters in Enojland in 1809 and 1810 caused 
 alarm. The House of Commons appointed a committee 
 of twenty-one members, many of them distinguished 
 statesmen, "To inquire into the cause of the high price 
 of gold bullion, and to take into consideration the state 
 of the circulating medium, and of the exchanges be- 
 tween Great Britain and foreign parts." The report 
 of that committee, submitted June 8th, A. D. 1810, is 
 pregnant with truth and error. They said : 
 
 "It is important to observe that when the bank was 
 bound to answer its notes in specie on demand, the 
 state of foreign exchanges and the price of gold did 
 most materially influence its conduct in the issue of its 
 notes. * * * Xhe Directors of the Bank, having 
 their apprehensions excited by the reduction of their 
 stock of gold, and being able to replace their loss only 
 by restricted purchases of bullion at a very losing
 
 REVIEW OF AUTHORS. 13 
 
 price, naturally contracted their issues of paper, and 
 thus gave the remaining paper as well as the coin 
 for which it was iuterohangeable, an increased value." 
 They comprehended the powerful effects of foreign 
 balances upon the finances of a nation using coin or a 
 paper redeemable in coin, and the equally powerful ef- 
 fect of such a paper on the foreign balances. They 
 saw that the reduction of the amount of specie in the 
 vaults of the banks of issue necessitated a contraction 
 of the currency and that this reduced prices and in- 
 creased the purchasing power of both coin and paper 
 by reason of the reduction of the aggregate volume of 
 money. They erroneously attributed the coin pre- 
 mium to the quantity of paper money, when, in fact, 
 it resulted from the war and the great scarcity of the 
 precious metals in the kingdom caused by the exporta- 
 tion of large quantities of them for grain and for the 
 support of the armies on the continent. The bank 
 directors and some of the merchants who testified be- 
 fore the committee held that, so long as the bank 
 issued and loaned money on real commercial trans- 
 actions to be paid in a short time, there could not by 
 that means be an over-issue. The committee looked 
 upon this "as pregnant Avith dangerous consequences 
 in practice." The history of such issues proved to be 
 very beneficial to the country during suspension of 
 specie payments. The doctrine of the bank directors 
 and merchants above referred to could be mischievous 
 only when applied to issues of redeemable paper. The 
 committee held the opinion that there was too much 
 currency, and the most unquestionable symi)toni of it 
 was the high price of bullion and the low state of con-
 
 14 PREFATORY — CHAPTER FIRST. 
 
 tinental exchanges. The history of that time pointedly 
 refutes this opinion. The imports of 1810 were £7,- 
 000,000 more and the exports £3,000,000 less than for 
 the preceding year. This was caused in part by the 
 failure of the crops in England, necessitating the ex- 
 portation of large sums of coin to pay for grain. This, 
 with the heavy demand for coin to support the armies 
 on the continent, advanced the price of gold regardless 
 of the quantity of paper. That the quantity of paper 
 money in circulation did not cause the advance of coin 
 premium is evidenced by the fact that £6,000,000 ex- 
 chequer bills Avere issued and Bank of England issues 
 increased £2,300,000 simultaneously with a consider- 
 able decline of gold premium in 1811. • 
 
 The committee held that a proper reduction of the 
 quantity of irredeemable paper would produce a par 
 of it with gold. This would result under some circum- 
 stances and under others it would not. With a firmly 
 established government, in peace, when there was no 
 demand for coin to meet foreign obligations or bal- 
 ances, or to pay for imported goods, the commit- 
 tee's rule would apply to such paper ; but if the gov- 
 ernment were seriously threatened, of if there were 
 heavy demands for coin to meet foreign obligations 
 and an inadequate supply of it, no amount of reduc- 
 tion of the volume of such currency would immedi- 
 ately bring it to par with coin, for the simple reason 
 that the paper would not be redeemable in coin. This 
 committee, and after them Henry Thornton and many 
 others, entertained a distinction between what is called 
 real and fictitious bills, intimating that paper money 
 issued upon the latter, not representing merchandise,.
 
 REVIEW OF AUTHORS. 15 
 
 inflates and becomes vicious. The idea advanced by 
 them is that an inflation, so produced, enhances prices, 
 induces hirger imports or smaller exports, or both, 
 causes foreign balances against the country, conse- 
 quent expoilations of coin, reduction of bank re- 
 serves, and a collapse. This is true only of a redeem- 
 able currency, and then only when the inflation is suf- 
 ficient to advance prices above those of other nations. 
 Whether the banks might thus inflate their issues on 
 sufiicient or insuflicient reserves of coin, would make 
 but little difference in the effects on foreign commerce, 
 but it would ultimately materially affect the value of 
 the paper. 
 
 There is no such thing as paper money representing 
 merchandise. All money, paper as well as coin, is an 
 absolute power and represents nothing except when it 
 is redeemable money, iri which case it may be said to 
 represent the redemption fund, but nothing more. 
 Lord King, in 1803, stated the following important 
 truth : 
 
 *'The use of a paper currency in any particular 
 country, so far as it displaces coin, which would other- 
 wise be employed, diminishes the demand for gold and 
 silver for the purpose of coinage, and has precisely the 
 same effect in reducinsr their general value as an actual 
 increase of their quantity to the same amount. On 
 the supposition, therefore, of the whole quantity of 
 gold and silver remaining the same, thev must, in a 
 certain degree, be rendered cheap by every increase of 
 paper currency." 
 
 This is an important truth, but many fail to dis- 
 tinguish the value of the precious metals with reference
 
 16 PREFATORY CHAPTER FIRST. 
 
 to proiDerty from their value with reference to paper 
 money. A par of paper and gold does not indicate 
 that the latter is cheap ; it indicates the exact opposite. 
 When gold is now but 2 per cent, premium many peo- 
 ple imagine it is cheap ; it is not true. A dollar in gold 
 is 100 per cent, dearer than it was ten years ago, be- 
 cause it ^vill buy twice as much property now as then. 
 Mr. Huskisson held that, "It is of the essence of 
 money to possess intrinsic value." If he meant in- 
 trinsic value as money, that is, that it must pos- 
 sess qualities fitted to use as money, then he was 
 correct. But if he meant that it must possess com- 
 modity' value, he uttered a vicious error which has led 
 nations into much distress. It is evident, however, 
 that his idea was that money must possess a commod- 
 ity or property value, from his holding that paper cur- 
 rency was not money, but the representative of money. 
 Those theories of his have been so effectually refuted 
 by history as to scarcely need an answer. The legal 
 tender currency of the United States possesses no com- 
 modity value ; before the Resumption Act was passed 
 it did not represent coin, but was then and is now 
 money to all intents and purposes. He held the truth 
 that, if a country's money consisted of gold exclusively, 
 and if the quantity were so increased as to advance 
 prices there above those of other nations, the result 
 Avould be importations of merchandise into, and export- 
 ations of coin from, that nation until prices there 
 should be reduced to about the same as those in other 
 nations. He held that the same result would follow 
 an increase of the paper money of a nation, with the 
 addition that it would cause gold to rise to premium.
 
 REVIEW OF AUTHORS. 17 
 
 This proposition is true only in part. If the paper 
 were redeemable paper, that result would follow with 
 the exception that under certain conditions gold would 
 not rise to a premium. If the paper were irredeem- 
 able legal tender, prices would advance, but the in- 
 ducements to import would not be increased, and gold 
 would, under some contemporaneous conditions, rise 
 to a premium, and under athers it would not. If a 
 nation reduce the quantity of pure metal in its units of 
 value below the quantity in its standard unit of the 
 same denomination, the latter will generally be at a 
 premium over the former, but in all other respects the 
 same laws of value or purchasing power govern the de- 
 preciated coin and its effects on internal business and 
 foreign commerce that apply to irredeemable legal ten- 
 der paper money. 
 
 David Ricardo thought that the seignorage charged 
 by governments, no matter how much, would make the 
 coin equal in value to an equal weight of the precious 
 metal in the form of bullion, provided the quantity of 
 the precious metal supplied by alloy in the coin should 
 not exceed in value the seignorage charged. He at- 
 tributed the value assumed by paper money to the 
 same cause — seignorage. It is remarkable that so 
 acute an observer should so grossly misunderstand the 
 causes which produce value. It is the fitness of a thing 
 for use that is properly called intrinsic value ; this 
 brings it into use and its use gives it a money value. 
 Hence, in so far as debased coins and paper may serve 
 the purposes of money, they will be valuable. But if 
 there be a special use for pure metal, or a standard 
 coin, which cannot be served by debased coin or paper.
 
 18 PREFATORY CHAPTER FIRST. 
 
 then the standard com and bullion will be at a premium 
 unless the supply of them is as nearly equal to the de- 
 mand for them as the supply of the cheaper money is to 
 the demand for it. Mr. Ricardo held that by a nation's 
 issuing paper which would take the place of coin, the 
 country, thereby, would become richer to the extent of • 
 the coin so supplanted by paper. This would be true 
 only if it were irredeemable paper, because in that 
 case no coin would be required to redeem it. The coin 
 would be exported and merchandise brought in and yet 
 the nation would have as much money as before. But 
 if the paper were to be redeemed, it would be a debt 
 to discharge which the coin supplanted would have to 
 be replaced. 
 
 Lord Liverpool, in a letter to the Bank of England, 
 attributed the crisis of 1825 and distress of 1826 in 
 England to speculation. This is not true. It is true 
 that the heavy investments of capitalists in the South 
 American mines caused the exportation of vast amounts 
 of coin to meet their obligations ; but it was the de- 
 pletion of the bank reserves of coin, caused by the ex- 
 portation of gold, causing a heavy contraction of the 
 currency, which precipitated the crisis and continued 
 the distress. If the currency had been a legal tender, 
 the exportation of the coin and the speculations referred 
 to would not have produced the terrible and general finan- 
 cial distress of 1825-26. He and numerous others have 
 with great approbation referred to the successful oper- 
 ation of the Scotch banking system, but none of them 
 assign satisfactory reasons for the success of those 
 banks. Those banks are savings banks as well as banks 
 of deposit and issue. Thus, nearly all the money of
 
 REVIEW OF AUTHORS. 19 
 
 Scotland passes through them, and they, in a great 
 measure, control it. They issue small notes, thus ac- 
 commodating the people with a currency suited to the 
 myriad small transactions of the country. The direc- 
 tors and officers have been uniforml}^ honest and saga- 
 cious, Scotland is not the center of the world's com- 
 merce as England is. Much of her heavy foreign 
 transactions ai"e done through English houses. Her 
 money settles her dealings with English houses 
 and thus the latter form a breakwater for Scotch 
 banks as-ainst the adverse tides of financial affairs. 
 These several facts, especially the latter, constitute the 
 principal reasons of the uniform success of the Scotch 
 banking system. 
 
 Mr. Tooke, in his evidence before the Pai liamentary 
 committee of 1832, said that, "All paper money should 
 be issued by the government on the same ground that 
 coin is." He understood two great evils of banks of 
 issue, to-wit : that depletion of their reserves would 
 affect the volume and value of their issues, and that 
 they are unnecessarily expensive institutions. The 
 Parliamentary committee of 1832 threw very little 
 light on the subject of money. The principal result of 
 their labors was not the establishment of a system 
 upon sound principles, but a patching up of banking 
 laws and regulations. 
 
 There were committees again in 1844 and 1847, the 
 results of whose investigations, as usual, were disquisi- 
 tions upon banking rules and regulations, rather than 
 an investigation of the fundamental laws of monetary 
 science. No fundamental chano;e of svstem was made. 
 
 Thomas Tooke, Mr. Wilson, and many others, held
 
 20 PREFATORY CHAPTER FIRST. 
 
 that the quantity of currency did not affect prices. 
 This error has been so effectually refuted by financial 
 and commercial history that it needs no answer. 
 
 J. E.. McCuUoch held that the value or purchasing 
 power of any kind of money, in limited supply, was 
 determined by the law of supply and demand, but that 
 when its supply was free, its value was determined by 
 the cost of its production. The first rule would have 
 been true if he had said that the value, or purchasing 
 power, of money always depended upon the demand for 
 it and the supply of it. His second rule named is not true 
 from the fact that if there was no demand at all for the 
 money it w^ould be worth nothing, no matter what the cost 
 of its production might be. He held that the circulation 
 of redeemable bank paper was dependent upon confi- 
 dence in the ability of the issuers to redeem it. This 
 is true only of those who take it to present for redemp- 
 tion. The great body of the people of a nation take^ 
 bank paper simply because they believe others will 
 take it also in exchange for commodities or in pay- 
 ment of debts. He held that that which made an irre- 
 deemable currency circulate was the law making it a 
 legal tender, and that such a paper might be kept at 
 par with coin by properly contracting the issues, as in- 
 flation might be indicated by the state of the exchanges. 
 
 The idea of the great importance of par has distressed 
 the minds of most recent writers on the subject of 
 money, and the numerous schemes and efforts to pro- 
 duce and sustain a par of coin and paper have cursed 
 the nations for generations. Between an irredeemable 
 paper currency and coin, par may have an accidental 
 but not a scientific connection ; and with a redeemable
 
 REVIEW OF AUTHORS. 21 
 
 paper, tlie effort to produce and sustain par subjects 
 the currency to constant mutations and inflicts upon 
 nations financial panics and crises. He also held that 
 paper monej'^ was cheaper for a nation than gold and 
 silver money. 
 
 John Stuart Mill held that an increase of the volume 
 of money would advance prices in the same ratio. This 
 is not true. An increase of money increases both pro- 
 duction and consumption, but the former more than 
 the latter. This is proven by the rapid increase of im- 
 provements and substantial wealth in a nation, follow- 
 ing an increase of money. The increased volume of 
 'money circulates to a wider extent and fills innumer- 
 able reservoirs (the pockets of laborers and the poor) 
 before it flows freely and continuously through the 
 channels of trade. Thus the increase of property and 
 the wider scope of the circulation modifies the force of 
 the volume of money on prices. He also held that the 
 values of everything, gold and silver included, were 
 determined by the cost of production. This is an er- 
 ror common to political economists. It is not true in 
 anything. Go into the corn and wheat districts. In 
 years of plenty, corn is worth scarcely anything. In 
 many places it is sometimes so far from being worth 
 the cost of production that it cannot be sold at any 
 price at all. It has frequently been burnt in the West 
 to get rid of it. In years of failure, the lucky farmer 
 who produces a good crop realizes two, three, or four 
 times the cost of producing his grain. The successful 
 operators in silver lodes and gold mines amass immense 
 fortunes from the prq/its on production, while the less 
 favored sink ten dollars for every one produced.
 
 22 PREFATORY CHAPTER FIRST^ 
 
 Examine the markets of the United States, find out 
 the prices of articles, ascertain the cost of then' pro- 
 duction and then judge of the causes which fix prices. 
 The markets fluctuate during the four seasons. If cost 
 of producing a crop of cereals, cattle, codfish, cranber- 
 ries, cotton, sugar, or any other thing, fixed prices, then 
 there could be no change in the market prices of things 
 until a new crop came in, and then the change could 
 apply only to the new crop, because the cost of pro- 
 ducing the old crop had previously been fixed and could 
 not be changed. The changing demand and supply, 
 and prospective demand and supply fix values. He held 
 that credit acted upon prices — ^that an increase or de- 
 crease of credits, other things remaining the same, 
 would appreciate or depress prices. This is true, be- 
 cause credit facilitates, increases exchanging of prop- 
 erty, thus performing the functions "of money m a lim- 
 ited degree, and thus far it affects prices. 
 
 Mr. Mill held substantially the same views of incon- 
 vertible paper that J. R. McCulloch did, and fell into 
 the same error about the importance of par and the 
 methods of producing and ^astainmg it. He stated, in 
 regard to an inconvertible paper, that, "The rise of 
 prices (produced by it) will not, as in the cases (of 
 convertil)le paper) before examined, stimulate import 
 and discourage export The imports and exports are 
 determined by the metallic prices of things, not by the 
 paper prices ; and it is ordy when the paper is exchang- 
 abie at pleasure for the metals that paper prices and 
 metallic prices must correspond, " 
 
 n. D. Macleod held that money represented debt. 
 This IS even a more glaring absurdity than that paper
 
 REVIEW OF AUTHORS. 23 
 
 money is symbolic, representing merchandise. Money, 
 no matter what the form or kind, does not represent any- 
 thmg. It is an absolute distinct power performing its 
 functions according to its own nature. 
 
 Henry Fawcctt held that, "General prices depend 
 upon the quantity of money in circulation compared 
 with the wealth bought and sold with money, and also 
 upon the frcquciu y with winch this wealth is bought 
 and sold before it is consumed. ' 
 
 The correct statement of the effect of money on 
 prices is, that the quantity of money as compared with 
 the quantity in kind (not value) i)f property in a na- 
 tion and the conditions of the country and the people 
 fix prices. The frequency of exchanges is not a cause 
 but an effect of the quantity of money or credit, or 
 both. He failed to consider the powerful effects of 
 the accidents, incidents, and changing conditions of a 
 nation on prices. He believed that an incojv,.rtible 
 currency might, under exceptional circumstances, be 
 made to serve all the purposes of a redeemable curren- 
 cy, for a short time, and not disturb the finances of a 
 country, if kci)t within proper limit. He referred to 
 the depreciated currency of the American Revolution 
 as an example of the abuse of such currency. • 
 
 There are two jcasoiis why no money that might 
 have been issued by the United States then, except 
 ^old and silver, could have been received with favor or 
 worth much : 1st, The bond of union was of such a slack 
 character that the United States possessed scarcely any 
 political or legal poAvers and consequently had no ade- 
 quate means of enforcing the acts of Congress. It 
 had no power to make paper money a legal tender. 
 Certain of the States made their jjro rata part of the
 
 24 PREFATORY CHAPTER FIRST. 
 
 paper a legal tender, but this gave it the character of 
 local currency, and, outside the borders of each State, 
 that portion of the paper so made a legal tender therein 
 was not a legal tender, hence, worthless when it got 
 abroad, except in so far as confidence of the general 
 public in the ultimate success of the revolution gave 
 it value. 2nd, The vicissitudes of the war, the adver- 
 sities of the new republic, the almost hopeless and 
 often apparently futile effort to establish the indepen- 
 dence of the States, the general want of confidence 
 in a successful result of the war created a suspicion 
 of failure in every State effort and act. Hence 
 the worthlessness of the Continental money. That 
 these were the true causes of the depreciation of 
 that money is evident from the fact that the issuance 
 by Congress of a new kind of money in the latter part 
 of the war, redeemable in coin, met with scarcely any 
 better success than the other kind. No candid man 
 will, understandingly, bring forward the Continental 
 money as an argument against legal tender money is- 
 sued by a government possessing full and unquestioned 
 political and legal powers, such as the United States 
 now enjoy. 
 
 W. Stanley Jevons refers to inconvertible paper mon- 
 ey's acquiring a value as an abnormal phenomenon. It 
 is no more abnormal than that of the Indian wampum's 
 assuming a value. The very same thing which makes 
 gold and silver assume a value as money makes incon- 
 vertible paper assume value as money. It is the use 
 of the thing. If a surgeon wanted lint to staunch a 
 bleeding wound to save a life, gold would not do ; he 
 would give gold for the lint. Thus the lint, other- 
 wise useless and valueless, would assume a value for that
 
 REVIEW OF AUTHORS. 25 
 
 use. Commerce requires money — it is indispensable to 
 serve as a medium of exchanges. Anything which will 
 well serve that end may be used for that purpose and 
 the use of it thus gives it a value as money. Incon- 
 vertible legal tender paper serves the purpose well ; 
 hence, it assumes a value as money. He held the same 
 theory regarding the method of holding an irredeem- 
 able paper at par with coin that several others herein 
 before named did. Mr. Jevons understood the fact 
 that redeemable bank paper, when inflated, raised the 
 coin prices of commodities in the nation, turned for- 
 eign balances against it, and was thus the prolific par- 
 ent of financial panics and crises. 
 
 Francis AVayland appears, in one part of his Elements 
 of Political Econotny, to have fallen into the common 
 error that values are determined by the cost of pro- 
 duction ; but a few pages further on, he asserts the 
 truth that, "If the amount (of specie in a nation) be 
 increased, its value will fall. If the amount be dimin- 
 ished, its value will rise. " He also advances the truth 
 that specie may be higher — that is, its purchasing pow- 
 er may be greater in one nation than in another at the 
 same point of time. It is evident from a thorough ex- 
 amination of his theory that while he said the values of 
 gold and silver were the cost of their production, he 
 meant that their values were the cost of i\\Q\r purchase. 
 
 He held that the purchasing power of money and the 
 prices of merchandise were determined by the relative 
 quantities of money and property in a nation, and that 
 paper money was economic. 
 
 Francis Bowen holds money to be unproductive cap- 
 ital. He and a number of other writers seem never to 
 have comprehended the immense jDower of money as a
 
 26 PREFATORY CHAPTER FIRST. 
 
 force contributing to the production of wealth. Money 
 and men constitute the capital of a nation. Man, by 
 the use of money, is enabled to combnie and apply his 
 mental and physical powers in production. Thus the 
 varied wealth of a nation, material, artistic, scientific, 
 and mental is developed. 
 
 Mr. Bowen states that, "Money is even now only a 
 hypothetical or abstract medium of exchange in all the 
 larger transactions of commerce. I almost anticipate 
 the time, in the progi'ess of invention and discovery of 
 new expedients and facilities in commerce, when it will 
 become so universally." 
 
 He evidently failed to distinguish between the func- 
 tions of money as a measure of values and as a medium 
 of exchange. The former function is passive and is 
 applied by a mental comparison. The latter function 
 of money is an active power emitted from its circula- 
 tion, operating upon prices and every material interest 
 of the nation. Money is not a hypothetical or abstract 
 medium of exchange in large transactions, as Mr. Bow- 
 en supposes. Exchanges of property are made by 
 three, and only three, means besides that of barter: 
 1st, The actual passing of money between the contract- 
 ing parties ; 2nd, By the passing of the title to money 
 by means of checks, drafts, etc., for money actually 
 owned by the party making these papers ; 3rd, By credit. 
 There is nothing hypothetical or abstract here. By the 
 second means of exchanging, the money is not actually 
 handled, but its title passes by means of the title pa- 
 pers, checks, drafts, etc. By the third means, in the 
 form of bills, notes, accounts, etc., there is in point of 
 fact no hypothecation except that of credit. It is plain 
 bald credit, creating obligations, promises to pay, and
 
 REVIEAV OF AUTHORS. 27 
 
 in consideration of, and by means of, these obligations, 
 promises, the exchanges are made. Mr. Bowen held 
 substantially the same theory about inconvertible paper 
 money that Mill, MoCulloch and Tooke entertained. 
 
 Wm. G. Summer advances substantially the same 
 principles reported by the British Bullion Committee 
 of 1810, in regard to foreign balances, outflows of coin 
 and inconvertible paper currency. 
 
 A. R. Peery endeavored to show the distinctions 
 which exist between the functions of money as a meas- 
 ure of values and as a medium of exchanges. Aside 
 from this, his theories were but old ones redressed. 
 
 Many other Americans have "WTitten books and pam- 
 phlets on the subject of money. But few of them, 
 however, have done more than revamp old theories. 
 
 Hon. Gary Baird, of Philadelphia, and many others 
 advocate a legal tender currency, issued by govern- 
 ment, and made interconvertible with Ioav interest- 
 bearing bonds. Such a system would subject the cur- 
 rency to constant chan<jes in the size of volume, thus 
 afflicting the country with one of the greatest evils of 
 the redeemable bank paper system. 
 
 Hon. Briton A. Hill, of St. Louis, is properly termed 
 the champion of the absolute legal tender paper sys- 
 tem. His book, entitled Absolute Money ^ is, in many 
 respects, an able work, and is worthy a place in the 
 library of every student of monetary science. Money 
 is his theme, and in his fixed attention to it he appears 
 to have lost siirht of the immense force with which the 
 accidents and conditions of nations act upon the indus- 
 tries, commerce, and values. His central idea, though 
 not new, is very well sustained by scientific reasons ; it 
 is better sustained by his references to history. The
 
 28 PREFATORY CHAPTER FIRST. 
 
 idea of an absolute paper money is not new. The seed 
 of this idea existed in iron money, salt money, wood 
 money, etc. It germinated in the Bank of Venice in 
 the 12th century, in the form of a semi-legal tender 
 paper. The suspension of specie payments in England 
 and the legal tender character of Bank of England pa- 
 per from 1797 to 1820 gave it growth. Sir A. Alison, 
 the English historian, entertained a dimly outlined con- 
 ception of such a money. Our forefathers, in creating 
 the continental money, approached nearly up to the 
 standard of the absolute legal tender paper theory, and 
 the Congress of the U. S., in 1862, improved slightly 
 on the continental money system. With all these pre- 
 cedents and successful experiments it required no great 
 stretch of the imagination to seize the idea of absolute 
 paper money from the system of legal tenders irre- 
 deemal)le for an indefinite space of time. The idea of 
 an absolute paper money is logically deducible from 
 the uses, powers, nature, and functions of money, and 
 is as consistent with reason as the idea of any absolute 
 money the nominal value of which is fixed by law. 
 
 The last work I shall notice is that of Henry V. 
 Poor, entitled Money ; its Laws and History. He 
 is a bullionist in theory and has not been able to dis- 
 tinguish between the science of money proper and the 
 art and science of banking. He is a great critic. Of 
 his 623 pages, 365 are taken up in quotations from, 
 and flippant criticisms of, men who have deservedly 
 ranked high as authors, and in unmeasured abuses and 
 scandalous denunciations of, and attacks upon political 
 parties, sections of the Union and eminent men whose 
 memories millions of Americans cherish and revere. 
 
 His work is valuable principally for its extracts from
 
 REVIEW OF AUTHORS. 29 
 
 other authors, disquisitions upon the art and science of 
 banking, and sketches of monetary history. He com- 
 prehends the immense power of money in mobilizing 
 industry and producing wealth, and states it thus : 
 
 "The quantity of industry, therefore, which any so- 
 ciety can employ must be in direct ratio to the amount 
 of its money, in whatever form. * * * Without 
 it (paper money), the commerce and wealth of such 
 countries as Great Britain and the United States could 
 not have reached one-fifth of their present prodigious 
 proportions." 
 
 Notwithstanding Mr. Poor is so given to criticism, 
 yet he, as reckless critics usually do, subjects himself 
 to severe and merited criticism. He manifests a 
 reckless disregard of consistency, only a few instances 
 of which we notice. On page 6 he asserts that the 
 value of the precious metals is absolute, depending upon 
 one condition, cost of their production ; while on page 
 22 he advances the truth that increased demand 
 for them would cause them to rise in price. On page 
 589 he states that, "All such balances (meaning for- 
 eign balances of trade) must, in the long-run, be paid 
 in merchandise by countries that are not producers of 
 the precious metals ;" and on the same page he says, 
 "When the work of redemption is fairly entered upon, 
 this country will for some time be a large importer of 
 coin from the very countries to which it is now most 
 indebted." The countries to which we are most in- 
 debted are not producers of the precious metals, and 
 would, according to his first proposition, settle with 
 merchandise, but according to his other proposition 
 would settle with coin. He proposes a United States 
 bank with branches ; the parent bank to be the reposi- 
 tory of the revenues and the fiscal agent of the gov-
 
 30 PREFATORY CHAPTER FIRST. 
 
 ernment. He advances the idea that all the payments 
 to be made by the government could be done through 
 the bank by "symbols" — i. e., checks, drafts, etc., 
 without the use of a dollar in coin, and yet he violently 
 opposes a legal tender money ^vith which to do exactly 
 the same thing. He denounces a legal tender money 
 and yet advances the theory that all the issues of such 
 a bank, used by the government in its fiscal operations, 
 could be kept in circulation by reason of its being so 
 used by the government. Notwithstanding his oppo- 
 sition to legal tender paper, he would have the issues 
 of a United States bank made receivable in the reve- 
 nues of government — which would constitute them a 
 legal tender that far. He supposes that the trans- 
 actions of the government would keep about $100, 000,- 
 000 of the notes of such a bank in circulation without 
 any coin reserves to sustain them. The fiscal opera- 
 tions of the government are, say, $300,000,000 a 
 year. The transactions of the whole country are about 
 $100,000,000,000. Now, if $300,000,000 of transactions 
 by the government with such a bank paper will keep 
 $100,000,000 of it in circulation without any reserves 
 to sustain it, is it remarkable that it should be held by 
 some that $100,000,000,000 transactions by the whole 
 country would keep $1,500,000 legal tender paper 
 money in circulation without a dollar of coin to sustain 
 it? 
 
 Mr. Poor has gathered up a fragment of the legal 
 tender idea and incorporated it in his banking system, 
 in apparent ignorance of the conclusion to which it 
 would bring him if he pursued the idea logically. He 
 has permitted his mind to be so occupied with the in- 
 tricate transactions of banks in their operations with
 
 REVIEW OF AUTHORS. 31 
 
 money, as to prevent him from obtaining clear and 
 well defined conceptions of the laws which should con- 
 trol ih-c production and supply of money, as well as its 
 laws and functions as a distinct element of poAver. The 
 laws which control in the handling and distrihution of 
 money, as in everything else, are different in kind and 
 system from those which control in the production and 
 sup)ply of money, as in every thing else. Mr. Poor's 
 failure to distinguish between these very distinct arts 
 and sciences has resulted in producing in his mind a 
 mixed and very complicated money system, constructed 
 as follows : 
 
 A United States bank which shall deposit in the 
 Treasury bonds to the amount of $100,000,000, bearing 
 a low rate of interest, as a safety fund for depositors ; 
 the funds of the Treasury shall ])e deposited with the 
 bank and the latter shall be the fiscal agent of the gov- 
 ernment ; it is to issue notes which shall be receivable 
 for the revenues, about $100,000,000 of which he 
 thinks would circulate at par on that account without 
 any reserves to redeem them . This bank is to have 
 branches in all cities of 50,000 inhabitants, and these 
 branches are to issue notes. Then there are to be 
 local banks of issue with free banking. The national 
 bank issues are to be retired and the legal tenders all 
 funded. Thus, Mr. Poor would afflict the country with 
 the treble evil of a United States bank with branches, 
 local banks which are to issue notes and an increase of 
 our bonded debt $350,000,000 by funding the out- 
 standing legal tenders. This is very much like the 
 banking system of England and would inevitably bring 
 upon this country periodic panics and destructive crises 
 as that system has done in England.
 
 PREFATORY— CHAPTER SECOND. 
 
 CRITICISMS ON CURRENT THEORIES. 
 
 Before proceeding to a consideration of the science 
 and history of monetary affairs in regular order, 
 we submit the following criticisms on the various 
 theories current : 
 
 Ultra Greenhackers — This class want $2,000,000,- 
 000 or $3,000,000,000 of absolute paper money, full 
 legal tender, issued at once, directly by the govern- 
 ment, receivable for all debts, taxes, and dues, public 
 and private. They want the bonded debt of the United 
 States all paid off with these, regardless of the legally 
 bounden condition of the government to pay some of 
 them in coin. This theory is subject to several grave 
 objections : 
 
 First : Such an enormous and sudden inflation of 
 the currency would greatly depreciate its purchasing 
 power, and so quickly unsettle prices and change the 
 order of things as to result in evil. The prices of all 
 property would suddenly bound upward one or two 
 hundred per cent. Such a rapid emhancement of val- 
 ues would set the nation wild with speculation. Every 
 man that could command a little money or property, 
 amid the feverish state of trade, too impatient to wait
 
 CRITICISMS OX CURRENT THEORIES. 33 
 
 for the slow process of production, would swiftly pro- 
 ceed to buvinir and selling. Tliis, in addition to the 
 sudden increase of money, would send prices higher 
 and higher, until they would go far above the power of 
 even that enormous volume of money to su.'^ain them. 
 It would add fervid excitement to the mind and in- 
 spire all commercial and speculative classes with im- 
 petuosity and rashness overleaping the bounds of 
 prudence and setting cool judgment at defiance. 
 
 A limit to such a spasmodic ascent of prices would 
 soon be reached. Whenever prices should reach the 
 maximum and cease for a time to advance, quick sales 
 and profits would cease. At that point men would begin 
 to push off their stock in trade, then a process of de- 
 cline in prices would set in. At that point all the fever- 
 ish, fervid, spasmodic excitement in business would 
 give wav and nothing being left to sustain the markets, 
 but the legitimate elements of money and credits, prices 
 ■would fall as rapidly as they had risen. Thence 
 would inevitablv follow a great panic, a glut of markets, 
 hoarding of money, distrust, refusal of capitalists 
 to lend or invest, and a consequent continued shrink- 
 age of values until the mercantile and debtor classes 
 were ruined, and creditors either lost or collected all. 
 Thus the small operator would be ruined, and the 
 mamuK^h house reduced to half its value ; all business 
 would be stagnant ; thousands of laborers would be 
 quickly turned out of the industrial shops into the streets 
 to seek in vain for employment. The nation would 
 be thrown into a state of agitation, sudden and ex- 
 treme. 
 
 It is true that this state would not continue long, 
 because the monev being a legal tender, would not de-
 
 34 PREFATORY CHAPTER SECOND. 
 
 predate ; on the contrary, its value, its purchasing 
 power would enhance as our Greenbacks did in 1873 
 and since. Business would gradually revive on a 
 more solid basis than at first. But such a catastrophe 
 need not occur. It ought to be avoided, because it is 
 liable to result in riots, strikes, destruction of lives 
 and i^roperty, would arouse discontent and dissatis- 
 faction among the people, and might seriously disturb 
 the peace of the countr}'. 
 
 The objection is not so much to the quantity of 
 money asked by the ultra greenbackers as to the 
 suddenness of the issue. Although $2,000,000,000 is 
 more money than the country needs, yet so much as 
 that, if issued slowly and regularly, might be put in 
 circulation without bringing such a crisis as the one 
 referred to. Such a crisis would not result directly 
 from the quantity of mone}' issued. But the sadden 
 issue of so much mone}^ producing a sudden and very 
 excited state of trade, would elevate prices fur above 
 the power of the money alone to sustain them, and 
 when that sudden and excited state of trade should 
 bejrin to laniTuish, prices thereby loosino: one of their 
 supports, would tumble down, thence a crisis. 
 Then, of course, new efforts would be made to change 
 the system, and the irrepressible conflict of various 
 theories would again be revived to agitate the country. 
 An avoidance of this is much to be desired. 
 
 Second : If the legal tenders called for by this class 
 of people were receivable for custom dues, it would, on 
 that account, be current to some extent with all com- 
 mercial houses in other nations having commercial in- 
 tercourse with this countr}'. In proportion to the 
 foreign circulation of our money, our home supply
 
 CRITICISMS ON CURRENT THEORIES. 35 
 
 would be reduced and the volume subjected to change, 
 bringing in some degree the evils of fluctuating 
 markets . 
 
 Third : The government must have coin to pay in- 
 terest on its bonds so long as any of the coin bonds 
 remain unpaid, unless its contract be violated by the 
 forced payment of the interest in legal tender paper, 
 and this would be not only unjust, but unnecessary. 
 If legal tenders be made receivable for custom dues, 
 such dues would be all paid in paper, and the govern- 
 ment's only source, except the sale of bonds, for getting 
 coin would be cut oif . This would necessitate an in- 
 crease of bonded indebtedness to raise coin to pay in- 
 terest on outstanding bonds. 
 
 The government always needs coin in war, and a 
 stock of coin ought to be raised in time of peace, by 
 coin custom duties for war purposes. 
 
 Besides these objections, another arises with refer- 
 ence to the government's obligation to pay certain 
 bonds in coin. Wherever the government is legally 
 bound to pay bonds in coin, they ought to be so paid, 
 or settled in a manner satisfactory to the holder. 
 There will be neither occasion nor excuse for repudiat- 
 ing the slightest legal obligation of the government, if 
 our financial measures put it within the jjower of the 
 people to discharge them. But there are government 
 bonds outstanding, which the crovernment is neither 
 legally nor morally bound to pay in coin. I refer to 
 those issued under the act of Congress of 18G2, and 
 subsequent acts which provide that the bonds shall be 
 paid in lawful money. Lawful money meant "Green- 
 backs" when those bonds were issued, and means them 
 yet. The Congress of 1869, betraying their sacred
 
 36 PREFATORY CHAPTER SECOND. 
 
 trust, disreorardinor the risrhts and wrongs of their con- 
 stituents, and executing the mandates of the money pow- 
 er, made themselves infamous by passing an act pro- 
 viding that the bonds which had been issued by govern- 
 ment prior to that time should be paid in coin. At 
 the time that act was passed, every bond it had refer- 
 ence to had passed out of the government's hands ; 
 had been bought and the terms of the purchase and 
 payment of them by the government had been fixed by 
 the acts authorizing their issuance. They were pay- 
 able in lawful money, legal tender, paper, gold or 
 silver. 
 
 The act of 1869, was therefore an expost facto 
 law, and void by the terms of the Constitution of the 
 United States, and ought not to be obeyed or observed 
 by the administration. But the money power have 
 easily succeeded in procuring the passage of two other 
 acts of Congress, which will secure the payment of 
 those bonds in the dearest money, gold, if they are not 
 repealed. Those are, the acts for the resumption of 
 specie payment, and for the demonetization of silver. 
 The former will destroy all the Greenbacks ; and 
 the latter, the legal tender character of silver, so 
 that if they remain in force, the bond-holders will be 
 paid gold for their bonds in spite of the illegality of 
 the infamous act of 1869. 
 
 What Congresses we have had ! What perfect rep- 
 resentatives of a patient and long-suffering people? 
 Every man who had a hand in that system of legisla- 
 tion ought to be branded as a traitor and cast out as a 
 reproach and a byword. But, notwithstanding these 
 infamies, every lawful o])ligation of the government 
 ought to be met and will be cheerfully discharged by
 
 CRITICISMS ON CURRENT THEORIES. 37 
 
 the people, if the government will only put itself from 
 under the influence of the money power and so legis- 
 late and administer public affairs as to make it possible 
 for them to do so. 
 
 Tlie United States as a money broker. — Some urge 
 the virtue of the government's issuing more "Green- 
 backs ' ' and lendino; them to individuals on mortorao;es 
 at low rates of interest. This system is subject to sev- 
 eral objections. 1st, Unless the amount thus to be 
 loaned was limited, every man would be a borrower 
 and the country would suddenly be flooded with thous- 
 ands of millions of paper to set the country Avild with 
 excitement, induce an unhealthy and unsustamable ad- 
 vance of prices and result in a crisis. New avenues 
 for fraud would be opened up by this system and the 
 government would be swindled enormously by combi- 
 nations of sharpers and government loan agents. 2nd, 
 If the amount were limited, a few rich men in each 
 State would get all the money and re-loan at higher 
 rates of interest, and thus the system would become a 
 measure to fleece the people. 3rd, Such a system 
 would necessitate a new set of fiscal agents to eat up 
 the public revenues, swindle the government, and 
 practice administration favoritism. 4th, Such a sys- 
 tem w^ould be subject to great and sudden fluctua- 
 tions in the volume of money, resulting from the in- 
 crease and decrease of loans and payments at different 
 periods, thus afflicting the country with the curse of 
 fluctuating markets. 5th, If the debt, when con- 
 tracted wdth the government, were to remain, m other 
 words, if the loans were to be perpetual, then every 
 mortgage to secure such loan would be a perpetual en- 
 cumbrance on the laud mortgaged, converting the peo- 
 
 uu^i2,
 
 38 PREFATORY CHAPTER SECOND. 
 
 pie from independent freeholders into dependent mort- 
 ofaorors of the oroverument — a danixerous attitude for 
 people who want a perpetuation of free institutions. 
 
 Interconvertible Bonds. — Another class advocate the 
 issuance of government bonds bearing a low rate of 
 interest, interconvertible by the holder into legal tender 
 notes at will and vice versa . They claim that this sys- 
 tem would expand and contract the currency in pro- 
 portion to the needs of the country. This idea is one 
 of the most pernicious that belongs to the old coin 
 banking system. It is a fallacy. All past financial 
 history shows that in all times of stringency, those 
 who have money capital universally seek out safe se- 
 curities, no matter how low the rate of interest, and 
 invest in them rather than lend money at a higher rate 
 of interest, or invest in productive industry or com- 
 merce. On the other hand, when money is abundant, 
 every branch of business is brisk, money is in good 
 demand and lends for a higher rate of interest, and 
 those possessing money capital exchange their 3 
 and 4 per cent, bonds for cash and lend it freely at 10 
 to 15 per cent, interest. Such would be exactly the 
 case with the interconvertible bond system. Whenever 
 any depressing accident occurred, such as war, bad 
 crops, adverse foreign balances, etc., and money 
 ceased to circulate freely, safe borrowers became few 
 and interest on gilt-edged paper fell low, as it always 
 does in such times, those having money would sink it 
 in the U. S. Treasury and take three per cent, bonds 
 for it in preference to lending to borrowers, and thus 
 the system would result in further contracting the cur- 
 rency when an expansion should be had. Again, on 
 the other hand, when money appeared abundant by
 
 CRITICISMS ON CURRENT THEORIES. 39 
 
 Teasoii of its free circulation, business brisk, profits 
 large, and interest on commercial loans high, those 
 having interconvertible bonds bearing low interest 
 would take them to the U. S. Treasury, get legal ten- 
 ders for them, lend the money out at 10 or 15 per 
 cent, interest, and thus further inflate the currency 
 when the country did not need it. 
 
 The system would be a vicious one, operating on the 
 currency exactly like the system of banking on coin 
 does, alternately expanding and contracting the cur- 
 rency in reverse proportion to the needs of the coun- 
 try. The currency ought not to be alternately expanded 
 and contracted. Two things are absolutely essential 
 to continuing prosperity. They are, 1st, A sufficient; 
 and, 2nd, A steady volume of money. Any system 
 which conflicts with these Avill produce evil. 
 
 Interest. — Many writers and talkers, have much to 
 say about the rate of interest. They say it is too high 
 and that this or that system would reduce it. It is 
 very evident that any one holding such ideas have 
 not given that thought to the laws of interest that they 
 should have done. The rate of money interest in the 
 commercial and financial world is always determined 
 by the value, i. e., the purchasing power of money in 
 reverse proportion. The o\\\y general exception to this 
 is in the case of risky loans. 
 
 This law of interest is not controlled by any arbitrary 
 power. It is as much beyond the reach of legislative en- 
 actment as the relative values of property are. It arises 
 from conditions — from the state of the business affairs, 
 both financial and commercial, of the nation. "When 
 money is scarce a dollar is worth more than Avhen it is 
 plentiful, but it will not lend for more, because the in-
 
 40 PREFATORY CHAPTER SECOND. 
 
 terest is payable in money, and being so paid, a smaller 
 rate of interest will brinsi: the lender more wealth in 
 "hard times" than a higher rate of interest will in 
 "flush" times. - Furthermore, in times of stringency 
 in money matters, safe borrowers become scarce and 
 capitalists refuse to invest and mone}^ lenders become 
 cautious, doling out loans very sparingly. The result 
 is, that the banks and large capitalists have a surplus 
 of money by reason of hoarding, and as "gilt-edged" 
 borrowers are scarce — and they are the only ones that 
 capitalists like to lend to in stringent times — money 
 "o;oes a beo-oincr" at verv low interest. On the other 
 hand, in easy, prosperous times, when every man finds 
 profit in industry and enterprise, capitalists invest in 
 business and money loaners lend freely with assurance 
 of payment ; they hoard but little, money circulates 
 freely, prices of property rise, the purchasing power 
 of money is low, and three things raise the rate of in- 
 terest : 1st, Money being cheap, the rate of interest 
 must be his^h to bring the lender a revenue, because 
 the interest, being paid in money, is relatively de- 
 preciated although the rate is higher. 2ud, Business 
 being brisk and profits good, the borrower can afford to 
 pay a higher interest than in dull times. 3rd, The in- 
 vestments of money by capitalists and the free lending 
 by money loaners puts nearly all the money in actual 
 circulation and brings the quantity of loanable funds 
 low. Hence, the increased use of money and the re- 
 duction of the surplus of it, together with the ability of 
 borrowers to pay high rates, advance the rates of in- 
 terest. 
 
 Nothing hut Legal Tenders. — Others want both gold 
 and silver demonetized so that we shall have ' only le-
 
 CRITICISMS ON CURRENT THEORIES. 41 
 
 gal tender paper money. This scarcely needs an ans- 
 wer. The public indebtedness of the country bears 
 coin interest, some of the bonds are payable in coia 
 and foreign balances must be settled in coin. It is not 
 only to our interest, but it is the legal right of the gov- 
 ernment to make and regulate the value of gold and 
 silver coin in- which these obligations are to be paid. 
 Otherwise, we would be subject to the annoying per- 
 plexity of satisfactorily settling the question of how 
 many grains of gold and silver constiiute a dollar. 
 Furthermore, there is a profit in minting, and the gov- 
 ernment oujxht to have it. 
 
 One of the most important reasons why gold and 
 silver should be monetized is, that they would then be 
 minted, and as they constitute what is called the world's 
 money, that is, are current ever^^where, the quantity 
 minted by the United States would add just so much 
 to the world's stock of money and tend in some degi-ee 
 to sustain prices, stimulate production and business, 
 and advance civilization. We should have metal money 
 for our financial intercourse with foreiijn nations and a 
 legal tender paper money for domestic use. 
 
 The Golden Calf. — Others oppose the remonetiza- 
 tion of silver because, they say, if remonetized it will 
 be of less value than gold, will injure pul)lic credit and 
 be inconvenient on account of its bulk and weight. It 
 may or may not be of less value than gold. Its re- 
 monetization in the United States will quickly appre- 
 ciate its value. It will be on par with paper and per- 
 haps with gold also. Its increased uses by remoneti- 
 zation must enhance its value. The idea that it will 
 injure our foreign commerce has no foundation in fact 
 or in true principles of economic science. The object
 
 42 PREFATORY CHAPTER SECOND. 
 
 of commerce is trafic, the exchange of one commodity 
 for another. The least of all objects which forms a 
 motive for foreign trade is to get money from abroad. 
 England wants our cotton to employ her laborers and 
 produce fabrics which yield a profit, more than she 
 wants our gold. Our own exporters do not exjiect 
 to get the money of England, France or Belgium 
 for their exported goods. They know their balances 
 will be settled by bills of exchange on New York, Bos- 
 ton, Philadelphia or Baltimore ultimately. Generally 
 they do not expect the shipment of a dollar of coin to 
 them from abroad. Eno-land, with her leo^al tender 
 bank paper grew rich from foreign commerce during 
 her twenty-one years' war with Bonaparte. Italy and 
 France have prospered greatly under their legal tender 
 paper S3'stems and experienced no inconvenience or det- 
 riment to commerce on its account. Our foreiccn com- 
 merce has doul)led durinsi; the era of legal tenders, A 
 depreciated currenc}^ either paper or coin, does not in- 
 juriously affect our foreign commerce. 
 
 They say the remonetization of silver would depre- 
 ciate the national bonds. It is not certain that it 
 would, because with silver remonetized, the world's le- 
 gal tender money would be increased, and the increase 
 of such legal tender money would tend, at least slightly, 
 to increase values, or retard their further decline, se- 
 curities included. Remonetization would not be a 
 breach of public faith. A breach of faith is a violation 
 of some duty or pledge. The government can 
 make no pledges except such as are legally binding. 
 The government is not legally bound to keep silver de- 
 monetized, hence, to remonetize it would not break a 
 pledge. Whatever depreciation the bonds might suffer
 
 CRITICISMS ON CURRENT THEORIES. 43 
 
 in consequence of the remonetization of silver would 
 make them the more easily paid ; and as the great 
 bulk of them were, before the infamous act of 18G9, 
 payable in legal tenders, and up to 1873 in silver, it 
 would be no act of bad faith or injustice to bond hold- 
 ers to enforce the jDayment of them in silver. If such 
 a course should depreciate the public credit, let it de- 
 preciate. It would be a blessing to this country if it 
 never should sell another interest-bearing bond to waste 
 industry and make slaves of the toiling masses. To 
 force a payment of the vast bonded indel)tedness of this 
 country in gold is a thing impossible, and the effort to 
 do it will, soon or late, so oppress the people as to in- 
 duce repudiation and, perhaps, revolution. It would 
 be far better, not only for the people, but the bond- 
 holders also, to pay those bonds in legal tenders than 
 to goad the masses to repudiation. 
 
 The objections urged by bullionists against the re- 
 monetization of silver are only ostensible. Their real 
 objections are that such an act would tend to make 
 money more plentiful, and thus reduce its value and 
 reduce its purchasing power and their profits. These 
 were the bald-faced reasons assigned in Germany in ar- 
 guments for the demonetization of gold in 1857. Here 
 and there among the masses are found dupes of the 
 money power who oppose the remonetization of silver. 
 They ignorantly advocate their own destruction. They 
 fail to consider the fact that the internal commerce of 
 this nation is the immense thing that gives employment 
 to labor and profit to business, and rises in gigantic 
 proportions and importance above foreign commerce. 
 Our internal commerce is a hundred times greater than 
 our foreign trade. These figures illustrate the para-
 
 44 PREFATORY CHAPTER SECOND. 
 
 mount importance of the government's issuing such 
 kinds, denominations, and sums of money as will enable 
 it to penetrate every nook and corner of the republic in 
 sufficient quantities to facilitate ex(^hanges, stimulate 
 the movements of the vast production of the country, 
 energize every hand, and keep every man engaged at 
 such wages as will secure comfort and prevent pauper- 
 ism and crime. 
 
 National Banks. — The bullionists, national bankers 
 and tlioir friends want the national banking system 
 perpetuated. But there are many very grave object- 
 ions to this system. 
 
 First: It is needlessly expensive. Its bonds, upon 
 which its notes are issued, are safely deposited in the 
 U. S. Treasury. The bankers draw coin interest on 
 these bonds from the government and pay no taxes 
 upon them. The government allows them to issue 
 about 90 per cent, of the amount of their bonds in 
 notes, thus gratuitously without any cost to the banks, 
 except the tax on their issues, increasing their interest- 
 bearing capital 90 per cent. In other words, upon a 
 capital of $100,000,000 they can reap profits from 
 $190,000,000, They lend at from 8 to 12 per cent, 
 interest. The people pay them on their bonds from 
 five to six per cent, interest. Thus the people pay 
 from 13 to 18 per cent, interest to the national banks 
 on every dollar of "Blackbacks" in circulation. Be- 
 sides this, the government coins and issues to the banks 
 their notes free of charge. The government must also 
 settle up the busin(;ss of every broken bank. This is a 
 useless and extravagant system, calculated to concen- 
 trate wealth and rapidly enrich the money power of the
 
 CRITICISMS ON CURRENT THEORIES. 45 
 
 country at the expense and by the oppression of the 
 people. 
 
 Second : The effects of this system on the volume 
 of the currency, and the lial)ility of the banks to fail 
 are in no essential point different from the old State 
 Bank System, or ain'- sj'stem of bank issues based on 
 coin. AVhen all the legal tenders shall have been re- 
 deemed and every dollar of bank notes shall be re- 
 deemable in coin, as they will be, and crises come, as 
 they must, then runs will be made on these banks for 
 coin, they will not be able to redeem, they will fail, 
 their notes will be presented at the U. S. Treasury 
 for redemption, and it, for want of coin, also, will fail 
 to redeem them. Then the debtor will be at the 
 mercy of his creditor and, with his pockets full of 
 national bank notes, may be sacrificed because they 
 will not be legal tender money. It is a kin to that of 
 England, and, if perpetuated, will afflict this country 
 with periodic crises just as it has afflicted England. 
 There will be periods of inflation when coin reserves 
 are favorable, followed by sudden contractions, pro- 
 duced by drains of coin from the countrj'^, causing pan- 
 ics, destruction of credit, fall of prices, bankruptcies, 
 pauperism, and crime. It will be the same old story 
 over and over again. The mutations of the currency 
 will curse this country with "panics" and "crashes" 
 so long as we have a redeemable pajDer issued by banks. 
 
 The theories of bullionists are drawn from the bank- 
 ing svstems which have cursed Enirland and this coun- 
 try for nearly a century. 
 
 The substance of all their theories is that, the paper 
 money nmst be based on and redeemable in coin. The 
 corollary to this is that the paper money nmst always
 
 46 PREFATORY CHAPTER SECOND. 
 
 be kept so small in volume, that the coin in banks and 
 that easily obtainable, will cover the paper presented for 
 redemption. The small quantity of coin in the country 
 and obtainable forces them to decry inflation as the 
 cause of all our woes and advocate contraction of the 
 currency as the only means of returning to solid pros- 
 perit}^ — by solid prosperity they mean a system of re- 
 deemable bank paper, whereby the banks promise to 
 redeem from three to ten dollars in paper with one in 
 coin. Such a currency system does very well in times 
 of general prosperity, when business is brisk and every 
 man has confidence in the intention and ability of his 
 neighbor to meet his obligations ; but when the coun- 
 try falls into hard times, when business is stagnant, 
 confidence gone and suspicion takes its place — when the 
 country is financially sick, such systems are like the 
 quack doctor in a case where the patient's life trembles 
 in the balance, they are powerless to save. 
 
 The history of all such systems shows that whenever 
 reserves were favorable or promised favorably, it has 
 been the habit of banks to issue paper largely, often 
 more than they were able to sustain when the tide of 
 coin reversed its course and flowed out of the country. 
 Hence the number of blighting, withering crises which 
 have marked the history of banking on coin. The ten 
 terrible crises in England, and seven in the United 
 States in the last sixty years under such banking prin- 
 ciples, ought to be enough to arouse the dullest brain 
 to a sense of the viciousness of the system. 
 
 It defies the inventive genius of man to find out 
 a finance system more variable in its effects, more 
 fraught with good at times, and more pernicious to 
 society and more destructive of the peace of
 
 CRITICISMS ON CURRENT THEORIES. 47 
 
 nations at other times, than that of bank issues 
 based on coin. During half of the hist sixty 
 years both Enghmd and the United States have 
 oToaned and writhed under excniciatinii tortures caused 
 by this vicious banking system and kindred principles. 
 
 Now, after we have had not only line upon line, 
 precept upon precept, warning upon warning against 
 that system, but thirty years terrible suffering from it 
 out of the last sixty, the bullionists and contractionists, 
 the money power want to place the country again at 
 its devouring mercy. 
 
 Resumption of specie payments and the national 
 banking system, are the poAvers by which they propose 
 to force the country into its old financial ruts, regard- 
 less of the unutterable woe the system has entailed, is 
 entailing and will continue to entail upon the people of 
 this country. 
 
 Patches. — Others, even Congressmen, suggest coin 
 certificates, postal banks, savings banks, compromises, 
 patches, bolstering, etc., etc. Postal and savings 
 banks are good agencies for operating with money. 
 Coin certificates are but a makeshift . The thing needed 
 by the country is a well defined, complete and perfect 
 money system established upon sound economic \iYm- 
 c\p\es for the creatioji a7ul pi-esei'vatioji of a sufficient 
 quantity of currency to meet the needs of the people 
 and develop the wealth of the nation. From the be- 
 ofinnins: of our national existence, the financial policies 
 of the government have been ill-considered exi^ediencies. 
 This has resulted in constant changes and produced 
 great suffering. One kind of paper of various denom- 
 inations, a full legal tender, in sufficient volume to 
 meet the commercial needs of the country, is immeas-
 
 48 PREFATORY CHAPTER SECOND. 
 
 urably better than the variety we now have. It is the 
 one thing needful ni finances. 
 
 The Commune. — The theory of this class is that 
 there shall be no money ; all property shall be common 
 property ; every man shall have a share of the products 
 equivalent to his labors, and that the government shall 
 be the grand agency by which all the affairs of the 
 nation shall be controlled and through which all prop- 
 erty shall be distributed. The most perfect exemplifi- 
 cation of this system imaginable was the constitution 
 of Peruvian society at the time the Spaniards invaded 
 and subdued Peru. Peruvian society consisted of four 
 castes or divisions : the government, the ecclesiastics, 
 the army and the common people. The government 
 consisted of an hereditary king, his court and officers ; 
 the ecclesiastics of the priests and their attaches ; the 
 army, of the officers and soldiery ; and the common peo- 
 ple, of all others. The latter were di\'ided into artisans, 
 tillers of the soil, fishers, road-workers and bearers of 
 burdens. They had no letters and kept their history 
 by knots tied in cords. They had no money, but had 
 immense quantities of gold with which they ornamented 
 their temples. They worshipped the sun, went half 
 naked, and the government distributed the products, 
 taking a part for itself, a part for the priesthood, a 
 part for the army, and giving the rest to the people. 
 The tillers of the soil did not o^\ti the land, but they, 
 as all the people, were changed about over the king- 
 dom from year to year as the government thought 
 best. There was communism in the full, ripe fruit. 
 Such a system is totally incompatible with civilized so- 
 ciety, and an effort to establish it here would be such a
 
 CKITICISMS ON CURRENT THEORIES. 49 
 
 violent attack upon the civilization of the age as to pro- 
 duce such results as similar efforts have done in the 
 French revolutions of the last and this century — 
 drench the country in blood.
 
 MONEY IS POWER,
 
 CHAPTER I. 
 
 MONEY : ITS PO"VVERS AND FUNCTIONS. 
 
 _Firsf. — Money is a measure of values. In this sense 
 it is a thing of nominal!}' fixed value, and simply ex- 
 presses the relative money value of other things with 
 reference to themselves and to itself. As, for instance, 
 a cow is worth, what? Money — thirty dollars ; a horse 
 is worth a hundred dollars. Here the relative values of 
 the horse and cow, with reference to each other and to 
 money, are expressed in dollars — that is, money. In 
 other words, their values are measured. 
 
 This use of money is purely idealistic. By this 
 mental measuring the total property of the United 
 States was estimated by the assessors to be worth 
 $14,178,986,732 in 1870. In that year the total sum 
 of money in the United States did not reach one- 
 seventeenth part of the assessed valuation of the prop- 
 erty. It is, therefore, clear that the money did not 
 represent the property, nor the property the money. 
 The assessment simply represented the sum of the 
 estimated relative values. 
 
 Measuring values with or by money, is literally 
 and exclusively a mental process, as is evidenced by 
 every commercial transaction, from the sale of a wheel-
 
 52 MONEY : 
 
 barrow up to the purchase of a railroad. The wheel- 
 barrow is rated at $10, and the raih^oad at $2,000,000. 
 How and why so rated? By comparing them with 
 other similar property, and considering their uses and 
 the profits they may yield, because these determine 
 their values. All property is so rated, its value so 
 measured, in the a1)stract, without the actual use of r 
 dollar in money. 
 
 So far as this use of money affects the commer- 
 cial affairs of the world, it matters not what the meas- 
 ure may be, so that its smallest unit is sufficiently 
 small to measure the smallest value. Pounds, shil- 
 lings, pence and farthings ; dollars, cents and mills, or 
 any other name or kind, would serve the purpose of 
 a measure equally well. 
 
 If this were the only use of money, one mill would 
 be enough for a whole nation. This is clearly demon- 
 strated by the method of measuring values adopted by 
 a tribe of heathens on the coast of Africa, who did it 
 by an abstract idea named macule. By this idea they 
 rated one article at one macule, another at two, and so 
 on. This was simply a method of comparing values 
 by the measurement of an abstract idea. The same 
 process is constantly exhibited in the United States in 
 barter. A man "swaps" three cows valued at $90 
 for a horse valued at an equal sum. No money passes. 
 These estimates or values are purely idealistic. 
 
 The only power this property of money posses- 
 ses is that of creating and preserving a uniform method 
 of estimating and expressing values. This property of 
 money is convenient and useful, but it is the most in- 
 significant power it exercises, as will be presently seen. 
 
 But when money enters into and is actually used
 
 ITS POWERS AND FUNCTIONS. 53 
 
 in the business affairs of life it is all-important that 
 there should be enough of it to supply eveiy man 
 "with all the measures necessary to do all the measuring 
 his brains, muscles and wealth make him capable of 
 doino;. Otherwise, the nation would be as a dry 2:oods 
 store with twenty clerks and but one yard-measure. 
 Immense loss of time, talents and powers would result 
 from an insufficient supply of measures. 
 
 The failure of statesmen to properly estimate the 
 other and grander powers of money, and their habit of 
 dignifj'ing its measuring propert}' and considering it 
 the most important, have caused the world untold 
 aijonies. 
 
 Lookins; on money as a measure of values, thev 
 have legislated for a "uniform measure, " " a standard 
 of values," in apparent ignorance of the destructive 
 forces they have set in motion by disregarding the 
 other and greater powers of money. 
 
 Second. — Money is a medium of commercial ex- 
 change. In this sense it is a tiling^ not an idea, which 
 enables men to exchange^ combine and apply their men- 
 tal and physical powers, to carry on commerce, transact 
 business and pay debts. 
 
 It enables the laborer to exchange his labor for 
 money, and the money for the necessaries of life. 
 Thus houses are built ; railroads, ships and steamers 
 are constructed ; streets paved, roads made practicable, 
 shafts sunk, mines opened, factories and workshops 
 operated ; all the industries are pursued and the ma- 
 terial wealth of the country is developed. 
 
 It enables the tillers of soil to exchange their products 
 for the necessaries of life and implements of hus-
 
 54 MONEY : 
 
 bandrv. Thus the agricultural wealth of the country is 
 developed. 
 
 It enables merchants, shopkeepers, owners of boats, 
 ships, and railroads to supply themselves with stock and 
 the necessaries of life. Thus the ag-encies of exchansr- 
 ing are multiplied, and the commercial wealth of the 
 country is developed and distributed. 
 
 It enables the scientist, the philosopher, the theolo- 
 gian, the lawyer, the doctor, the editor, the teacher, all 
 professional men, the painter, the sculptor, the archi- 
 tect, the draftsman, all artists to exchange their knowl- 
 edge and skill for money and the money for the 
 necessaries of life ; and thus the mental and artistic 
 wealth of the nation is developed. 
 
 Money, like every other thing, is easy to command 
 and possess when plentiful and hard to get when scarce. 
 "When plentiful, it is within the reach of the many; 
 when scarce, within the reach of only the few. Hence 
 the importance of a nation's supplying its people with 
 a large volume of money, in order to enable all people 
 to use it in applying and exchanging their j^owers and 
 products. 
 
 This proi:)erty of money is one of the most important. 
 
 "Without an exchange medium, the tiller of the soil 
 would be reduced to the use of the rudest implements 
 of husbandry, because factories and shopkeepers would 
 not exist. His food would consist of his scanty pro- 
 ducts and, his clothing of the skins of his flocks and 
 herds or primitive homespun. 
 
 The laborer would find no employment except with 
 the tiller of the soil or the owner of cattle, and his j^ay 
 would not be money, but a portion of corn or cattle. 
 
 Scientists, artists, professional men, clerks, merchants
 
 ITS POWERS AND FUNCTIONS. 55 
 
 railroads, boats, ships, would find no employment. 
 Every commercial agency and pursuit would become 
 extinct, and the efforts of men would be directed to the 
 simple and l)arbarous purposes of producing a scant}' 
 living and gratifying their base jiassions. The world 
 would be shrouded in the thick darkness of ignorance 
 and heathenism. 
 
 An illustration will show how the process of retro- 
 gression Avould sot in upon a nation without money. 
 
 Suppose that some day every dollar of money in the 
 United States should be destroyed and that we should 
 never have an}-" more money. Up to that day the rail- 
 roads, steamboats and canals would be read}^ to oper- 
 ate ; stores and shops would be full of goods ; factories, 
 mines and mills would be pouring forth wealtli and 
 bread ; editors, divines, scholars, artists and laborers 
 would be ready to supply the public with their services ; 
 farmer's fields would be rich in grain and their pastures 
 alive with fatted cattle ; ])anks and brokers would be 
 ready to lend mone}-, buy and sell coin and speculate 
 in securities. But there would be no money. What 
 would follow? 
 
 The merchant could not take cam and cattle for his 
 goods. The manufacturers would not take furs and 
 ribbons for their productions. The scientific and artis- 
 tic classes could not take coal and hides. Professional 
 men would not want a steamboat or a warehouse of 
 salt. The butcher and miller Avould not mve bread and 
 meat for laces and silk hats. The jeweler would have 
 no use for a steam engine, the porter for jewels, nor 
 the section hand for freight cars. 
 
 All business would be completely blocked. Stocks 
 would rot in warehouses. Factories would close.
 
 56 . MONEY : 
 
 Scholars, scientists and professional men would be 
 driven to the fields and streams to labor or fish for sub- 
 sistence. Every branch of industry and commerce 
 would be ruined ; men would be forced to the primitive 
 style of living and society would be resolved into its 
 orio-inal elements, because it is the exchans^e, combiua- 
 tion and application of the mental and physical powers 
 of man as exhibited in the arts, sciences, commerce and 
 morals which evolve the thing called enlightenment, 
 progress, civilization and wealth. Money is the me- 
 dium which produces the exchange, combination and 
 application of man's mental and jDhysical powers. 
 Without money these powers cannot be profitably ap- 
 plied. Hence, without money there cannot be arts, 
 sciences, commerce, civilization or wealth. 
 
 It follows then, that a nation, in order to enjoy the 
 highest degree of civilization and wealth, must be pos- 
 sessed of sufficient exchange power, a sufficient volume 
 of money to secure a speedy and easy combination and 
 application of all the mental and physical powers of 
 every citizen and the exchange of all the products of 
 those powers. And as the exchange medium, the vol- 
 ume of money, falls- below that amount, so must the 
 nation or some portion of its population tend toward 
 barbarism. 
 
 The amount of money needed by a nation at any par- 
 ticular time depends upon the degree of civilization the 
 nation has reached. In other words, it depends upon 
 the total sum of mental and physical force which the 
 nation is capable of applying in the industries, arts, 
 sciences and commerce. 
 
 Money increases a nation's i^owcrs of development, 
 and the development of a nation's powei's increases its
 
 ITS POWERS AND J^UNCTIOXS. 57 
 
 uses for money. Therefore, a nation must increase its 
 volume of money as it advances in civilization, in order 
 to sustain a continuing progress. 
 
 But there is a limit to the right use of money, and 
 consequently a limit to the sum needed at any particu- 
 lar time, and this limit determines the proper increase. 
 All that is needed is enough to keep every brain and 
 muscle in the whole nation usefully and profitably em- 
 ployed. When the volume of money exceeds that 
 extent, some of its powers are then wasted — as a 
 hundred and fifty horse power boiler's powers are 
 wasted on a fifty horse power engine ; or they are im- 
 properly directed in giving an excited impetus to ex- 
 changing, thus unduly increasing the commercial and 
 speculative classes. From the foregoing Ave conclude 
 that a certain indication of an insufficient supply of 
 money is the existence of unA\^llino; idlers in a nation. 
 When this is the case the volume of money should be 
 increased until every willing hand finds stead}'- and 
 profitable employment. 
 
 At this point a difficult problem presents itself. When 
 a nation is supplied with a sufficient volume of money 
 what should be the ratio of increase of money? To 
 arbitrarily limit the supply of money, it appears, would 
 retard the progress of man ; and to increase it in exact 
 proportion to his advancement would be a constantly 
 increasing ratio, gathering new strength with every 
 new development or application of his powers. And 
 the question is complicated somewhat by the introduc- 
 tion of another factor into the calculation. 
 
 As a people advance in civilization they multiply the 
 agencies of exchange. They build ships and railroads 
 and establish banks. Commerce flies upon the wings
 
 58 MONEY : 
 
 of the winds and money traces through the fiscal chan- 
 nels with great rapidity. 
 
 Thus as a nation progresses the powers of man great- 
 ly increase the exchange, circulating power, of money. 
 Hence it follows that the ratio of increase of money 
 should be fixed in proportion to the ratio of increase of 
 a nation's powers, less the increase of the power of 
 money to circulate. Then the solution would be as 
 follows : 
 
 To the sum of a sufficient volume of money, add a 
 part of its sum equal to the ratio of increase of the na- 
 tion's powers, and deduct from that sum a part of itself 
 equal to the ratio of the increase of the power of money 
 to circulate. But while it is conceded on all hands 
 that as a nation advances the power of money to cir- 
 culate increases, yet it is apparent the ratio of the in- 
 crease of money's power to circulate is not equal to the 
 ratio of increase of a nations powers. Because banks, 
 the most potent increasers of money's powers to circu- 
 late, constantly keep in their vaults large sums of money 
 as reserves, which are absolutely taken out of circulation, 
 and lose their use as a medium of exchange. And as 
 banks multiply, this sum of money taken out of circu- 
 lation increases. 
 
 This proposition is settled beyond dispute by the 
 fact that during the rapid progress of the civilized 
 world in the last 300 years, the increased powers of 
 man have necessitated the invention and use of paper 
 money, thus greatly increasing the volume of money, 
 notwithstanding the increasing power of money to cir- 
 culate during the same time. It is therefore evident 
 that a solution of the problem cannot be found by ab-
 
 ITS POWERS AND FUN'CTIOXS. 59 
 
 stract calculation, but must always depend upon the 
 existing conditions of a nation at any given time. 
 
 I, therefore, submit the following, as it appears to 
 me to be the safest rule that can be found : 
 
 First : Let the volume of money be increased until 
 every brain and muscle in the nation have constant re- 
 munerative emplo^^ment. This would give a sum bear- 
 ing a certain ratio to population ; say, for instance, $3S 
 per capita. To this sum add an equal per capita amount 
 for every addition to the population. Besides this, add 
 a sum every year sufficient to cover the usual per centum 
 of loss and destruction of money. This would give 
 an unvarying per capita supjily of money, and increase 
 the total volume in proportion to the incretise of the 
 nation's natural powers. 
 
 Second : Let the government observe the business 
 of the nation and the condition of the people, and if at 
 an}^ time a decline should set in and any considerable 
 number of people should be unwillingl}'^ idle, then let a 
 gradual and steady increase of the volume of money be 
 provided, until depression of business and enforced 
 idleness disappem-. 
 
 The only exception to this rule is when depression 
 and idleness are produced by other than financial causes, 
 such as famine, floods and war, etc. These are tempo- 
 rary and accidental causes and no system of finances can 
 prevent suffering from them . They are, however, easily 
 distinguished from a dearth of money and no wise gov- 
 ernment need fail to discover and remedy the latter 
 cause of distress. 
 
 If at any time an over-issue of money should be 
 made it would be better to let it remain until natural 
 wear and tear, loss and destruction sufficiently reduce
 
 60 MONEY : 
 
 it, because a forced contraction of the volume of money 
 would suddenly reduce exchanging, produce a pre- 
 cipitate fall of values and bankrupt the commercial and 
 debtor classes, unless credit should take the place of 
 money, and this would only defer for a time the inevi- 
 table destruction of business. 
 
 Both an insufficiency and an excess of money are 
 evils, but the former is much the greater evil. Neither 
 of them is more fraught with evil than a declining 
 volume of money for the reasons stated. 
 
 This method of regulating the volume of money 
 would approximate near enough to the needs of a peo- 
 ple to bring a high degree of prosperity to any nation 
 regulating its fiscal policy by it. 
 
 Third. — Money is the power which imparts money 
 values to property. Without it there could be no such 
 thing as mon^y value. As the volume of money, the 
 power increases, other things remaining the same, it 
 augments values and vice versa. This, as well as the 
 exchange power of money, is applied to property by its 
 (money's) circulation. Hence as the volume of money 
 diminishes or ceases to circulate the application of its 
 power diminishes and prices fall and vice versa. 
 
 Money, in this sense, is a thing of relative value. 
 Hence the supply of it and demand for it determine its 
 purchasing power. It is, thence, seen that as the sup- 
 ply is increased its relative value is diminished and vice 
 versa . 
 
 The effects of this power of money are greatly mod- 
 ified or intensified by other things, such as increase 
 of demand caused by increase of population and busi- 
 ness, war, famine, flood and other conditions. But the
 
 ITS POWERS AND FUNCTIONS. 61 
 
 ft 
 
 effects of money on prices as stated are universal with 
 the modifications produced by the causes named. 
 
 That such is the unvarying hiw of prices is evident 
 from the financial and commercial histories of all nations. 
 The United States had $1,800,000,000 paper in January, 
 18G6, and prices ranged high accordingly in that money. 
 This year, 1877, the volume of money is little over 
 $800,000,000 and prices are low accordingly. In 
 England from 1797 to 1815 there was a large volume 
 of money and prices were high ; and from 1819 onward 
 for 15 years, with periodic exceptions, the volume of 
 money was small and prices were very low. 
 
 During the Napoleonic wars all Europe increased 
 their volume of money with paper and prices ranged 
 high. At the close of those wars those powers funded 
 and destroyed much of their paper money, thus re- 
 ducing the amount of money, and a universal fall of 
 prices was experienced there. Exactly the same results 
 followed the contractions of the volume of money -m 
 the U. S. in 1819-21, 1837-9, 1857. 
 
 If money had no other than a direct effect upon prices 
 it would make but little difference, except to the debtor 
 and creditor classes, whether there was much or little 
 money, high or low prices, because the relative values 
 of property would remain nearly the same ; as for in- 
 stance, if a horse be worth $150 and a cow $50 in a na- 
 tion having $1,800,000,000, but in a nation having only 
 $600,000,000 the horse should be worth but $(30 and 
 the cow only $20, the relative values of the horse and 
 cow would be unchanged. But money affects men and 
 commerce in a myriad of ways, and these effects be- 
 come causes acting upon prices, labor, production and 
 commerce with great force.
 
 62 MONEY ; 
 
 When money is abundant, it, like everything else in 
 abundant suj^plj^ is cheap and consequently is within 
 the reach of every body, but when scarce, it, like every- 
 thing else in scanty supply, is dear and consequently is 
 within the reach of only a few ; and being dear is hus- 
 banded and hoarded by its possessors, circulating slu^-- 
 gishly and imparting but little vitality to business and 
 the industries. In " hard times, " money is so scarce 
 and dear that thousands of people are utterly unable to 
 possess it. Hence pauperism, crime, revolutionary 
 tendencies and outbreaks. 
 
 Let it be supposed that a nation, at any time, has 
 any volume of money, from a sufficiency down to a 
 tenth part of the amount needed. Every business in- 
 terest of the nation is adjusted to the volume of money. 
 Every department of the industries is supplied with all 
 the laborers needed, and everv brain and muscle, that 
 the volume of money can sustain, are busy. The pop- 
 ulation increases, say 500,000 a year, but there is no 
 increase in the volume of money. What will result? 
 There is no occupation for the new additions to popu- 
 lation because every branch of business is full. 
 
 It is true that they would be in demand of food, 
 clothing and shelter, which would tend to stimulate the 
 markets. But they produce also, which would tend to 
 reduce prices. Every prosperous civilized nation pro- 
 duces more than it consumes. Hence the increase of 
 material wealth. The same is true of any large number 
 of citizens of various classes. 
 
 This over production, as it is sometimes called, when 
 properly applied constitutes the growth of a nation's 
 wealth. It ultimately assumes the form of houses, 
 railroads, all substantial improvements. But when not
 
 ITS POWERS AND FUNCTIONS. 63 
 
 SO applied — and it cannot l)e so applied or iiUilized 
 
 without plenty of money — it becomes a source of pov- 
 erty and distress until production declines. This 
 500,000 new population would produce more than they 
 would consume. The net results, then, of their pres- 
 ence and powers would be to " glut the markets ' ' and 
 reduce prices, in the absence of an increase of the vol- 
 ume of money, because as the increase of supply of 
 products exceeds the increase of demand for them they 
 decline in value. The necessary result would be de- 
 pression, declining markets and loss in every branch of 
 business affected by the increased products, and as so 
 great a number as half a million people would represent 
 nearly every branch of business, and as every branch 
 of business bejirs some relation to and affects every 
 other branch of l)usiness, the whole business interests 
 of the country would be subjected to depression, de- 
 clining markets and loss by the increase of population 
 without an increase of money. 
 
 If the nation should continue to increase in popula- 
 tion without an increase of money, continually falling 
 markets, depression and loss in business would drive 
 one after another out of business until the industries, 
 commerce, the arts and sciences would be abandoned. 
 Retrogression would be slow but sure and steady. 
 
 But suppose that instead of the volume of money re- 
 mainins; the same it should be diminished. In such a 
 case the decline of prices, depression and loss in busi- 
 ness would be quick and terrible, precipitating the 
 nation into bankruptcy, millions into distress and 
 breeding a myriad of criminal impulses and revolution- 
 ary ideas. 
 
 Every civilized nation has passed through such or-
 
 64 MONEY : 
 
 deals. The history of the reductions of the volume of 
 money, and crises in England in the years 1816, 1819-23, 
 1825, 1829-33, 1837, 1847, 1857, 1866 and in the 
 United States in 1817-21, 1837-39, 1847, 1857, 1861, 
 1866-77 furnish indubital)le evidences of the terrible 
 effects produced on society and business by the des- 
 tructive forces of a diminishing or reduced volume of 
 money. 
 
 The property wealth of a nation does not consist of 
 men or money. It consists of the surplus products, or 
 over productions of the powers of men and money com- 
 bined. Without either, no national wealth can be pro- 
 duced. Witness the condition of the savage tribes who 
 have no money. With an insufficiency of money the 
 growth of national wealth must be slow and labored. 
 With a declining volume of money long continued, nat- 
 ional decay is inevitable. Witness the nations which 
 exist now only in name, notably the Eoman Empire 
 which had $1,800,000,000 in the time of Augustus and 
 but $400,000,000 in the time of Justinian. Witness 
 the decay of nations and the sufferings of humanity 
 during the dark ages when there was no paper money 
 and the world's mines failed to produce metal money 
 enough to vitalize and utilize the human powers. 
 
 On the other hand a large supply of money energizes, 
 applies and utilizes man's powers, and the two together 
 evolve civilization and produce wealth. Witness Israel 
 in the days of David and Solomon when the wealth of 
 Ophir Avas theirs ; Persia, Greece and Rome when they 
 owned the mines or commanded the money of the world. 
 Witness the rapid and glorious advancement of Europe 
 and America in civilization and wealth since the doub- 
 ling of their money by the invention and use of paper
 
 ITS POWERS AND FUXCTiaXS. 65 
 
 mone}- in the financial and commercial affairs of the 
 work] . 
 
 It follows, that a shrinking; volume of money and 
 falling prices retard man's progi-ess and atilict him with 
 suffering, and a sufficient supi)ly of money utilizes all 
 his powers, promotes civilization and produces wealth 
 and happiness. 
 
 FonrtJi. — Money circulates. This is its proper use. 
 It performs the functions of money only when it circu- 
 lates, because when hoarded or lying in bank vaults or 
 the ijovernment treasury it is neither exchanoinir nor 
 sustaining or measuring A'alues. Under the customs 
 or financial systems of most nations it is not only proper 
 but necessary that banks and the treasury should hold 
 money as reserve, safety or redemption funds. But 
 the fact remains that the money so held does not per- 
 form the functions of money while so held. 
 
 The circulating property of money or its currency is 
 the thing which puts into action its powers. In fact, 
 its currency as an exchan<re medium constitutes it 
 money. 
 
 AVhat made irold and silver money? At first men 
 took these metals on account of their beauty and for 
 ornamentation. While so taken they were in demand 
 simply as commodities on account of their inherent 
 properties. After awhile they came so into demand for 
 their beauty and purposes of ornamentation that men 
 knew, or believed, they could exchange them for other 
 things with other men at will, and they took them, not for 
 their beauty, for ornamentation or their inherent prop- 
 erties, l>ut from an entirely new motive and for a new 
 purpose. This new motive was to exchange them with.
 
 66 MONEY : 
 
 other men for other things, and it arose exclusively 
 from the knowledge or belief that other men would so 
 take them. At this point a new property attached to 
 gold and silver. It was the property of an exchange 
 medium, money. This new property was not inherent 
 in the metal. It was extrinsic. It was the w^illing- 
 ness of men to receive them in exchange for other 
 things, that then attached. This willingness of men 
 to so take them made them current and this constituted 
 them money. 
 
 Money may or may not have a commodity value. It 
 is not essential that it should possess any commodity 
 value whatever. This is not only so in theory but in 
 fact. The Indian Wampum was adopted as money by 
 a number of the colonies and made a legal tender by 
 Connecticut, although it was only a rude sea shell bead 
 carved out by the untutored savage and among white 
 men possessed no commodity value whatever. The 
 wdllingness of Indians to take wampum made it money 
 wath them. The lesrislation of Connecticut made white 
 men willing to take it as money in that colony at a legal 
 tender value arbitrarily fixed by law, although as a 
 commodity it was worthless among civilized people. 
 So it is with our "Greenbacks." They circulate as 
 money because the people are willing to take them as 
 such, notwithstanding they possess no commodity value 
 whatever. This willingness of the people to so receive 
 them was caused by the act of congress \yhich created 
 them. ' 
 
 Bank paper circulates as money, not necessarily be- 
 cause of its redeemability, but because of the willing- 
 ness of men to take it. This is exemplified by the his- 
 tory of 1837-40. Many a time Illinois bank notes
 
 ITS rOWERS AND FUNCTIONS. 67 
 
 circulated in Missouri for some time after the banks 
 
 had failed and the prospects of redemption were all 
 
 gone. 
 
 "The wild-cat currencies of the AVestern States, 
 which were issued in such abundance some forty years 
 ago, could never have got into circulation but from a 
 belief, on the part of those who took them, that they 
 could shove them off upon somebody else without loss 
 to themselves." — Money, its Laws and History, by 
 Henry V. Poor. 
 
 The notes were utterly worthless as redeemal^le paper, 
 but they performed all the functions of money. AVhy ? 
 Simply because men knew, or believed, other men would 
 take them, hence they willingly received them. 
 
 As we have seen, the powers of money are three : 
 
 1st. A measure of values. This function is idealis- 
 tic and arises from the other powers of money, and 
 may be performed without anything but a name to rep- 
 resent it. 
 
 2nd. It is a medium of exchange, and as such is a 
 thing, not an idea. 
 
 3rd. The power which creates, regulates and con- 
 trols prices. 
 
 The two latter are the more important functions of 
 money and can be exercised only by its circulation. Its 
 circulation or currency depends absolutely upon men's 
 willingness to take it as money. The willingness of 
 men to take a thing as money is produced by : 
 
 1st. Common consent or custom, and 
 
 2nd. By Legislation. 
 
 We, therefore, define money to be anything floating 
 on the tide of puhlic opinion, as a measure and creator 
 of prices and a medium of commercial exchanges.
 
 68 MONEY : 
 
 Fifth. — ^Monej may consist of anything that people 
 are willing to receive as money. Hence, iron, copper, 
 nickel, salt, cattle, sea shells, wampum, tobacco, wood, 
 gold, silver and paper have been money. 
 
 This proposition is sufficiently discussed in other 
 chapters of this work, and we dismiss it here with the 
 remark that those who claim that money must possess 
 intrinsic value confound that with commodity or merch- 
 antable value. Intrinsic value is essential to money. 
 But what is intrinsic value ? It is simply the fitness of 
 a thing for use. The intrinsic value of a thing is very dif- 
 ferent from its commercial or commodity value. These 
 values bear little or no relation to each other. Iron is 
 said to be of much greater intrinsic value than gold, 
 yet the commercial or commodity value of a pound of 
 gold is many times that of a pound of iron. The at- 
 mosphere has no merchantable value and yet its intrin- 
 sic value is inestimable ; man cannot survive without it. 
 Paper is well fitted for use as money, in many respects it 
 is much better fitted for such use than gold or silver. 
 It is durable, less bulky than the metals and much more 
 convenient to handle and carry. Its intrinsic value for 
 use as money is equal to if not greater than that of the 
 metals. 
 
 Sixth. — The Constitution of the United States em- 
 powers Congress to make money of any material or 
 substance whatever. 
 
 Under the Articles of Confederation and Perpetual 
 Union between the States the only power the Congress 
 had regarding money was the "sole and exclusive right 
 and power of regulating the alloy and value of coin 
 struck by their own authority or by that of the respec-
 
 ITS POWERS AND FUNCTIONS. 69 
 
 tive States." This provision is remarkable for several 
 reasons. First, it does not name the word money at 
 all ; secondly, it does not in terms confer upon Congress 
 the power to make money ; and the subsequent acts of 
 the Congress of the Confederation show that they con- 
 strued the provision, not as conferring power to make 
 money, but as power to regulate the nominal value and 
 alloy of coins. Those Congresses never passed any le- 
 gal tender or other acts indicating that they had power 
 to make money or to make it a legal tender. In those 
 Articles of Confederation was no provision whatever 
 conferring upon or taking from the States the right to 
 make money or to make it a legal tender. It is evident 
 that those Articles left the inherent power of making 
 money and declaring it a legal tender with the several 
 States, and the States and statesmen of the revolution- 
 ary period so understood it. This is demonstrated by 
 the fact that the several States, without special provis- 
 ions of their several constitutions, did by legislative en- 
 actments adopt ^ro rata portions of the "Continental" 
 money as their own, and made it a legal tender by law. 
 After the close of the Revolution, the States, desiring 
 to form a more perfect union and to confer upon the 
 Federal Government greater and on some points exclu- 
 sive power, adopted our present constitution. This, 
 our constitution, in terms prohibits the States from ex- 
 ercising that inherent power of government relating to 
 money, to-wit : prohibits them from making anything 
 but gold and silver coin a tender in payment of debts, 
 and confers upon Congress in terms the power to coin, 
 that is, to make, invent, stamp money and regulate the 
 value thereof. It appears from these provisions evident 
 to the mind of the author that they were intended to
 
 70 MONEY : 
 
 and did take away from the States the inherent power 
 of government to make money and to make it a legal 
 tender, and in terms conferred that power upon Congress. 
 It appears unreasonable that the framers of the consti- 
 tution, the statesmen who advocated it and the States 
 which adopted it, should have intended that broad and 
 comprehensive provision ' ' to coin money and regulate 
 the value thereof ' ' to embrace in it a restriction or lim- 
 itation of the identical power it purports to confer upon 
 Congress. To coin money means to make, invent, fab- 
 ricate any kind and all kinds of money. If it had been 
 intended to limit the making power to metal money, it 
 would have been stated thus : to coin metal money, etc. 
 
 Men have differed much in their construction of this 
 constitutional provision. Thomas Jefferson, John C. 
 Calhoun and others held the opinion that the constitu- 
 tion conferred power on Congress to issue paper money. 
 Daniel Webster and others held an opj)osite opinion. 
 
 The question has been passed upon by the Supreme 
 Court of the United States in an opinion adjudging U. 
 S. notes, "Greenbacks," a legal tender for debts created 
 before the passage of the act creating the notes ; and 
 this opinion may be held as settling the question. But, 
 notwithstandng-that objection, many yet hold that Con- 
 gress has no constitutional power to make anything but 
 gold and silver money. This is an error, as will appear 
 upon a construction of the constitutional provision. 
 
 The constitution of the United States confers upon 
 Congress the power "to coin money and regulate the 
 value thereof." This provision covers the whole power 
 of Congress to make money, and its meaning defines 
 that power. There is another provision of the consti- 
 tution which forbids any State from making anything
 
 ITS POWERS A>'D FUNCTIONS . 71 
 
 but gold and silver coin a tender in payment of debts. 
 The fact that the framers of the constitution were par- 
 ticular to qualify the word coin in Section 10, Art. I, 
 with the limiting words "gold and silver," shows that 
 they intended the words ''coin" and "money" in Sec- 
 tion 8 to mean more than gold and silver money. 
 
 This is proved beyond dispute by the act of Congress 
 passed April 2nd, 1792, when the ver}' men who framed 
 the constitution were living and many of them were in 
 high official positions, and when the ideas which pre- 
 vailed at the time of the adoption of that instrument as 
 the organic law of the land were in their full stren-nh 
 and vigor. That act pro\-ided for the coinage, not only 
 of gold and silver, but copper also into money. Then 
 it is clear that Congress has constitutional power to make 
 other than the common law, gold and silver, money. 
 Then the question arises, of what material or substance 
 may Congi'ess make money? 
 
 To answer this question, an examination of the deri- 
 vation and meaning of the words "coin," "money" and 
 *'to coin money" is necessary. 
 
 The noun "coin" is derived from the Latin word 
 cuneus, which means a wedge ; a company of men stand- 
 ing thick together, etc. As relating to money the word 
 primarily meant the die used in stamping money. The 
 English meaning of the word is, money stamped; a 
 corner ; a wedge ; a piece of metal on which certain 
 characters are stamped making it legally current money ; 
 that which serves for pa}Tnent or recompense. There 
 is nothins: in the Latin or English meanins: of the word 
 which relates to any particular substance. 
 
 It will be observed, that even when it relates to metal 
 money, the stamp, not the metal, makes it money. Tha
 
 "^2 MONEY : 
 
 word "money" is derived from the Latin word moneta, 
 meaning the adviser: a surname of Juno, in whose 
 temple money was coined. It is called money because 
 each piece has stamped on it an index or character which 
 advises or informs what it is. There is nothing what- 
 ever in the word which means metal or any particular 
 substance. 
 
 These words, which neither meant metal, any partic- 
 ular material, a measure of values, nor a medium of ex- 
 change, were for the reasons stated applied to the 
 things commonly used in effecting commercial ex- 
 changes. Hence everything which has filled that office 
 has been called "money." 
 
 The words "to coin," in the constitutional provision, 
 are not nouns, but a verb, meaning to stamp and convert 
 into money ; to mint ; to form by stamping ; to make ; 
 to fabricate ; to invent ; to originate. 
 
 It may be the verb transitive of anything that can 
 be stamped, made, fabricated or invented. As for in- 
 stance, Shakespeare coined, that is, made or invented a 
 word ; the government coins, that is stamps, makes, 
 fabricates money. 
 
 The verb "to coin" bears no significance whatever of 
 the material, quality or character of the thing coined, 
 but relates exclusively to the act to be performed ; that 
 is, to stamping, making, inventing, fabricating. The 
 act may be performed on any material. There is then, 
 nothings in the meaninor of these words which restricts 
 the powers of Congress to the coinage of metal money 
 only, much less to gold and silver only. 
 
 The word money is currently accepted to mean any 
 medium of commercial exchanges in general use in any 
 country. The conclusion of the whole matter is, there-
 
 ITS POWERS AXD i'U^•CTIONS. 73 
 
 fore, that the above named constitutional prpyiaion em- 
 powers Congress to make, stamp, invent, fabricate 
 money of any substance whatever. 
 
 Hence the currency commonly called "Greenbacks" 
 has performed all the functions of money, and if its re- 
 deemability and the promise to pay wei*e removed it 
 would be absolute money to all intents and purposes. 
 Some object to Government issuing legal tenders on 
 the grounds that the kind and quantity would depend 
 upon the whims of Congresses and the popular outcries 
 of the people. Quite as forcible an objection lies" 
 against banks of issue on the grounds that the quantity 
 and quality of the money issued by them, not only de- 
 pend upon the whims, the wdsdom or folly, the economy 
 or profligacy, of those who happen to control the banks, 
 but they also depend upon the notions of the chaitering 
 power, and are affected by foreign trade and foreign 
 panics. 
 
 The systems of redeemable currency have produced 
 such quick changes in the volume and value of the 
 paper and afflicted the nations with so frequent and ter- 
 rible money crises, that the probability is, it would be 
 impossible for national Congresses to produce so great 
 and frequent evils by legislation upon a system of irre- 
 deemable legal tenders.
 
 CHAPTER II. 
 
 STANDARD OF VALUES : GOLD AXD SILVER. 
 
 « 
 
 Upou this branch of the science of money there are 
 two important and exactly opposite theories. 
 
 One class holds that only gold and silver are money ; 
 that their values are uniform throughout the world and 
 remain nearly the same throughout all time, and are 
 always determined by the cost of their production 
 alone, and hence are absolute. 
 
 The other class holds the exact opposite. 
 
 It has been shown in the preceding pages that the 
 term money has been applied to and its functions per- 
 formed by many things beside gold and silver. 
 
 Anything which by the common consent of a people 
 or by force of law has been used as a common measure 
 of values and medium of exchange has been money. 
 The fact that bank issues and legal tender notes perform 
 all the functions of money, a standard of values-, and 
 are money to all intents and purposes, is too well known 
 and understood by the people of the United States to 
 call for further remarks here upon that point. 
 
 It might be admitted that gold and silver were more 
 nearly uniform in value over the world than any other 
 money or article of property, and yet be sho^\^l that
 
 GOLD AND SILVER. 75 
 
 they were not the best mone}', the best standard of val- 
 ues, for a nation for its internal business. 
 
 But while gold and silver appear to be uniform in 
 value over the world, thev are not in fact uniform in 
 value, as will be seen in subsequent pages, and their 
 difference in values in different nations at the same 
 time is the power which has brought periods of tmancial 
 and commercial ruin to all nations having only gold 
 and silver money, or paper money redeemable in them. 
 
 In this difference of their values, i. e. purchasing 
 power, in different nations at the same time, lies the evil 
 which makes them an unsteady, an unsafe standard of 
 values for the internal commerce of nations ; ])ecause 
 when they are cheaper, i.e. their pm'chasing power is 
 less in one nation than in another, they will at once 
 seek their highest market, induce imports into the coun- 
 try where they are cheapest, and flow out, thus reduc- 
 ing the volume of money and prices at home, bringing 
 commercial and tinancial depression. Their own 
 movements thus change their measuring powers, 
 chanire their standins; or height as a standard of values 
 in the nation. It so happens, therefore, that any na- 
 tion which adopts for its in1?ernal commerce, the world's 
 standard of values, imposes upon itself the evil financial 
 effects which flow from all serious disturbances of 
 financial and commercial affairs of all other nations 
 with which it has commerce. 
 
 It will be the object of this article to show that the 
 values of srold and silver are not uniform and are not 
 the same as the cost of their production, and that they 
 are not and never can be a uniform standard of values. 
 
 That this is true is proved by the foreign balances 
 of trade which accrue a<:;ainst the commercial nations
 
 76 STANDARD OF VALUES : 
 
 of the earth every year. It has been well and truly 
 said that foreign commerce is barter. The tendency is 
 •to an equal exchange of commodities. Wherever this 
 equilibrium is broken, and a balance to be paid in coiu 
 occurs, there is a cause for it. 
 
 Where two nations trade with each other, each is in 
 demand of some commodity of the other. These mu- 
 tual demands will produce trade which will mutually 
 settle accounts so long as the imported articles are in 
 greater demand in each importing nation than the 
 articles exported by it. 
 
 But when the home demand for the home article 
 equals the demand for the foreign article, then a falling 
 oif in imports or a foreign balance must occur. The 
 values of imported articles in the importing country 
 are determined by their prices in that country — not in 
 the nation exporting them ; and these values when 
 considered for the purpose of foreign trade are coin, 
 not paper money, prices. 
 
 Every importer so estimates the cost and value of 
 his imports ; and whenever an order is given by him to 
 a foreign house for articles, he does it expecting to pay 
 for thcfu in coin or its equivalent. 
 
 He imports cassimeres extensively, for instance, 
 knowing that they must be paid for by him in coin or 
 its equivalent. He does this in view of the home prices 
 and demand for cassimeres. 
 
 At the end of the year or any period of settlement, 
 he finds a balance of $1,000, 000 against him. This he 
 pays in coin or its equivalent. This transaction de- 
 monstrates a greater demand for cassimeres in the im- 
 porting country at the prices they bear than for the 
 gold paid for them ; and in the exporting country it
 
 GOLD AND SILVER. 77 
 
 demonstrates a greater demand for coin than for the 
 cissimeres at the prices they hear there. 
 
 We give the importer credit for ordinary Imsiness 
 capacity. lie would not import the cassnneres unless 
 he could realize a profit on them, which he could 
 not do unless the coin value of them was sufficiently 
 greater in his country than in the ex|3orting country 
 to cover all costs of transportation, warehousing, 
 insurance and duties, besides a reasonalde profit on 
 the investment. 
 
 In this case the purchasing power, that is the value, of 
 thS coin with reference to the cassimeres would be dif- 
 ferent in the two countries. It would be greater in the 
 exporting than in the importing country. 
 
 The same process will apply to every article which 
 enters into foreign commerce, and the same conclusion 
 is incvital)le. Ai^i2:re<zatino: the whole foreign com- 
 merce of any or all nations, wherever there is a foreign 
 balance against any nation it indicates in that nation a 
 smaller value of coin with reference to the articles im- 
 ported than in the nation to which the balance is due. 
 
 Such is the correct method of estimating the values 
 of coin in different nations. It is a fundamental error 
 to attempt to fix an arbitrary value on coin. There 
 is not, there cannot be, such a thing as absolute un- 
 chano;in2; value. 
 
 Value is simply a commercial relation of things. If 
 one ask the value of a horse, he may be told that he is 
 worth two cows, but properly his value would be ex- 
 pressed in money, as, for instance, a hundred dollars. 
 What does this value of the horse indicate or express? 
 
 That the horse is worth as much in the business 
 world as a hundred dollars in money, and is as
 
 78 STANDARD OF VALUES : 
 
 much in demand at the price he bears as any other thing^ 
 at the price it bears. 
 
 If one ask the value of 258 gi-ains of gold, and be 
 told they are worth ten dollars, he has learned nothing- 
 of the value of money. If he be told that ten dollars 
 in o;old are worth 258 o;i-ains of that metal, he is ianorant 
 of the value of jrold in buving an^'thins' else. But when 
 he is told that 258 gi*ains of gold are ten dollars, and 
 that ten dollars vdll buy one acre of land, a cassimere 
 coat, a week's board and lodging, or pay his passage 200 
 miles on the railroad, he learns something of the vaj[ue 
 of o-old. Thus and onlv thus can the A'alues of gold 
 and silver be estimated. It is their purchasing power. 
 Gold and silver are worth exactly what they will buy 
 — nothmg more, nothing less. 
 
 The purchasing power, ^. e., value of these metals, is 
 different in different countries at the same moment of 
 time, as has been shown. They are also different in any 
 one or all nations at different times, as is shoAvn by the 
 changing values of property at different periods. For 
 instance, the immense products of Calif ornian and Aus- 
 tralian mines caused the value, /. e., purchasing power, 
 of gold to fall from 20 to 50 percent, from 1850-55 be- 
 low that of 1840-48 ; and the immense consumption of 
 the precious metals in the arts during the last few years 
 is noAV rapidly appreciating their values, i. e., purchasing 
 power to anti-golden era periods. 
 
 The comparative values of gold and silver with refer- 
 ence to each other have fluctuated almost as gi-eatly as 
 the values of other articles. In 1543 an ounce of gold 
 was worth only 11.10 ounces of silver ; now it is worth 
 about 16.50 ounces. Silver has declined since 1870 in.
 
 GOLD AND SILVER. 79 
 
 comparison with gold only. Its purchasing power over 
 property has gi'catly increased. 
 
 Take the prices of land for illustration of the chang- 
 ing value or purchasing power of gold and silver. 
 
 In 1870, it was worth on an average over the United 
 States 75 per cent, more than it is now (1877). A piece 
 of land worth $1750 in the former year, in legal ten- 
 ders, would sell now for about $1000. Making the 
 proper discounts for gold premium, the net difference 
 in the o-old value of the land then and now would be 
 about $450. 
 
 The value of real estate rents in the great cities also 
 illustrate the increased values of coin. They have fal- 
 len from 25 to 50 and in many places 100 per cent, 
 since 1870. There is not an acre more of land in the 
 U. S. and territories than in 1S70, but the population 
 has considerably increased. This would enhance the 
 values of lands and rents if other things remained the 
 same. 
 
 But prices and rents of land ha^^ng fallen so greatly 
 indicate a potent cause somewhere, and that cause is the 
 diminution of the aairreorate sum of monev in the country 
 and the increased intensity of demand for it as compared 
 vrith the demand and supply of lauds and houses. 
 Hence the fall of the coin values as well as the fall of 
 paper values of property, and the increased purchasing 
 power or values of coin and paper money in this country, 
 since 1870. Consider also the different values, in gold 
 and silver, of an acre or block of ground in different 
 parts of the United States or any- State or in different 
 nations of the earth at the same moment of time. 
 
 An acre of jjood rich soil on the western borders of 
 Texas, where the climate is delicious and the seasons
 
 80 STAXDAED OF VALUES .* 
 
 are perfectly adapted to production, is worth, perhaps, 
 ten cents in gold. An acre of no better soil, situate 
 in a harder climate, in the most populous mral district 
 of Ohio, is worth, perhaps, one hundred dollars in gold. 
 K the values of gold and silver be absolute, why does 
 it take a' thousand times as much of them to buy an 
 acre in Ohio as in Texas ? The answer is, that the values 
 of gold and silver are not absolute, but relative, like the 
 values of everj^thing else. 
 
 In the case supposed, the demand for laud in West- 
 ern Texas is very slight, because it is almost beyond 
 the borders of ci^'ilization and subject to incursions by 
 Indians and Mexicans, and the supply of it is millions 
 of surplus acres, and when the value of these lands is 
 compared with that of gold they stand as one acre to 
 ten cents. 
 
 In Ohio the inhabitants are thickly settled, no Indians 
 or Mexicans disturb the peace or property of the peo- 
 ple, the State is desirable to reside in, hence, land is in 
 great demand and the value of it as compared with that 
 of o-old stands as one acre to one hundred dollars in ffold. 
 That is to say, in one case one acre is worth in the 
 commercial world just as much as ten cents in gold is, 
 and in the other case an acre is worth as much as $100 
 in ffold is worth. If sold be increased or decreased in 
 demand, the sfold values of these lands would decrease 
 or increase accordingly ; and if these lands should in- 
 crease or decrease in demand, then their gold values 
 would increase or decrease accordingly. 
 
 Pursue this process with every article of commerce 
 and property, measuring their values in coin, in all 
 countries at the same time and at different times, and 
 the conclusion is irresistible : that the values of the
 
 GOLD AND SILVER. 81 
 
 precious metals change — are different indifferent nations 
 at the same time — and are determined, controlled and 
 changed exactly like the values of commodities are. 
 That is to say, they are fixed and controlled by the 
 supply of them and the demand for them as compared 
 with the supply of and demand for an}i;hing or every- 
 thing else. 
 
 The bullionists hold that the item of demand for gold 
 and silver should not be taken into the account, because, 
 say they, it is universal. 
 
 This is not true. Demand in the commercial and 
 fiscal world is not a mere icif<h for a thing. It may be 
 true that all men wish for o-old and silver, but it is not 
 by any means true that all men are in demand of them. 
 Out of the 46,000,000 people in the United States now, 
 there are not, perhaps, ten thousand in demand of gold 
 and silver money. Demand means a call for some ar- 
 ticle in a business sense. It means that money, prop- 
 erty, securities or labor is put to sale to buy the thing 
 wanted. Demand for gold and silver means that prop- 
 erty, securities or labor are offered in the commercial 
 or money markets for them. 
 
 A ragged urchin may stand on the street peering 
 through a bank door and ivish for the piles of gold on 
 the banker's table, but this is xto demand for gold. 
 This wish might lead the urchin to offer his services as 
 a boot-black for gold. This offer of services, not the 
 wish, would constitute a demand, but it must be admit- 
 ted to be a very slight one, not likely to affect the gold 
 markets seriously. 
 
 But suppose the $3,300,000,000 of paper money in 
 Europe and America as well as silver were demonetized. 
 Then all the labor and merchandise of those continents
 
 82 STANDARD OF VALUES : 
 
 which constitute the productive power and business of 
 over three hundred millions of people would produce 
 immensely increased demands for gold and greatly en- 
 hance its value. 
 
 Demand does affect the values of gold and silver, and 
 no one who fails to put it into the account can escape 
 error. The demonetization of silver in the U. S. and 
 Europe, together with the increased products of the 
 Nevada mines, have so reduced the demand for it as 
 compared with the supply as to produce a considerable 
 decline in its value as compared with gold. 
 
 The proposition that the values of the precious metals 
 are absolute, uniform, remain nearly the same and are 
 not affected by demand, but are equal to the cost of their 
 production, is triumphantly asserted by a recent writer 
 of great pretensions, who so far forgets himself as to 
 state, a few pages further on, that, "were gold and sil- 
 ver required to be present in all exchanges, the amount 
 necessary therefor, provided the volume of such ex- 
 changes remained undiminished, would be more than 
 ten-fold greater than that in the world. As they would 
 rise in price from the increased demand, the stimulous 
 given to their production would be so great as to in- 
 crease their cost probably live-fold." — H. V. Poo7^'s 
 Money, its Laws and History. 
 
 Ah ! here it is. The increased demand luould raise 
 the price of the precious metals. This is a great truth, 
 the failure to see and understand which has led, not only 
 Mr. Poor, but many other men and governments, into 
 the gravest errors, and has caused the civilized nations 
 of the earth great suffering. According to his hypoth- 
 esis the universal use of gold and silver in all commer- 
 cial exchanges would o;reatlv increase the demand for 
 them and enhance the value of them. The corollary
 
 GOLD AND SILVER. 83 
 
 of tlii.s must be true. Were gold and silver excluded 
 entirely from the commercial transactions of the world, 
 the amount of them needed and the demand for them 
 would be greatly reduced and their values would, in 
 consequence, greatly depreciate. Therefore, an increase 
 or decrease of their uses and demand for them will 
 increase or decrease their values. As, for instance, a 
 return to specie paj'ments by the U. S. Avill create a 
 new demand for several hundred millions more gold 
 and silver, and will, consequently, enhance their values, 
 that is, their purchasing power. 
 
 Gold and silver bullion is the raw material out of 
 which is manufactured jew^els, gildings, bronze, watch 
 cases, plate, etc., and in that form is simply a com- 
 modity, and in demand by only a small part of the 
 people, manufacturers, bankers, speculators in these 
 metals, and when government buy them for coinage, 
 then by government. In the form of jewels, gildings, 
 watch cases, plate, etc., they are in demand by a com- 
 paratively small part of the people. The values of the 
 precious metals in all forms are controlled by the de- 
 mand for and the supply of them as compared with 
 the demand for and supply of any or all other things. 
 
 This is a universal law of values, and there is no escape 
 from it ; but T)ullionists attempt an escape by declaring 
 that gold and silver are exceptional and that their values 
 are controlled exclusively by the cost of their produc- 
 tion. If it be true, as bullionists assert, that gold and 
 silver ahvays have been and are the only true measure 
 of values, then before they were discovered or used as 
 measures there could have been no proper measure of 
 values. But some nomad in his wild perigrinations up 
 and do^^^l the earth in Asia ^Slinor, away back in the
 
 84 STANDARD OF VALUES : 
 
 twilight of time, before commerce had become an oc- 
 cupation of man, accidentally discovered and separated 
 from the sands an ounce of the glittering ore. What 
 did the production cost him ? The time was spent and 
 the labor performed before the ore was secured. There 
 was no measure of values. How shall the cost of that 
 production be measured ? If it be said that it cost one 
 day's work and that one day's work was the value of 
 that ore, then the value of the two pound nugget se- 
 cured in California in one day was worth but one day's 
 work. If it be said that the cost of the first production 
 was the worth of the thing produced, then what man is 
 there on the face of the earth who can tell what that 
 production was worth or cost ? But that is not the way 
 cost of production is estimated. The cost of producing 
 a thing is the interest and wear and tear of capital in- 
 vested and outlay for labor, clerks, foremen, officers, 
 etc., employed. 
 
 It is well known that from 1850 to 1856, in California, 
 many men, \v\th an insignificant outlay, in a few months 
 amassed immense fortunes in gold ore. An outlay 
 and the value of labor perhaps equaled $1000, and the 
 gold raised perhaps equaled $20,000. In such a case, 
 was the $20,000 in gold worth only the $1000 cost 
 of its production? No sane man would assert it. On 
 the other hand, thousands of men exi:)ended ten dollars 
 for every one dollar in gold produced. In such a case 
 was the the $1 of gold produced worth the $10 cost of 
 production ? By no means. Thousands of others spent 
 thousands of money and never produced a dollar of 
 gold. The expenditures of the latter cannot be taken 
 into the account of cost of production, because they are 
 only cost of non-production.
 
 GOLD AND SILVER. 85 
 
 It may be contended that the total cost of producing 
 every particle of gold should be aggi'cgated, and that 
 the sum would equal the aggi'egate value of the gold 
 products. This is the merest conjecture, and Avould 
 lead to a field of speculation or calculation as boundless 
 and uncertain in its results as an attempt to number the 
 stars or count the waves of the ocean. 
 
 One hundred thousand people started to the gold 
 regions of California in 1849. In 1860 the population 
 was about 380,000. Suppose that in 1853, a 3^ear of 
 heav}' gold products, 200,000 people were engaged di- 
 rectly and indirectly in producing gold. That is to say, 
 that some were mining and the others were supplying 
 the miners with the necessaries of life and implements. 
 
 Estimating the time of these people at $1.50 each 
 per dav, the cost of emigi-ating thither at $200 each, 
 the capital of each employed after arri\'ing there at 
 $200, and interest and wear and tear of it at 20 per 
 cent., the total products of gold in that year would 
 have cost $141,600,000. The amount of gold produced 
 that year was $65,000,000, not quite half the cost of 
 production. 
 
 This estimate is little better than guess work. But 
 any that may be made will be no better, because it is 
 impossible to find the aggregate cost of production, 
 and the onlv difference in estimates is the difference 
 in conjectures. We believe that the total value of 
 time, labor and money spent in gold hunting and pro- 
 duction in California since 1850, by all who have at- 
 tempted it, to be much greater than the total value of 
 all the gold produced there in the same time ; perhaps 
 double. "We also believe that the total sum of gold 
 produced, in the same time, by the successful gold hunt-
 
 86 STANDARD OF VALUES : 
 
 ers to be much greater than the value of the time, la- 
 bor and money spent and capital wasted in producing 
 it ; perhaps quadruple. 
 
 These beliefs are based on facts, but the facts known 
 are not numerous or extensive enough to base a theory 
 upon. They are, however, more worthy of acceptance 
 than the assertion of bullionists, that ffold and silver 
 are worth exactly the cost of their production, because 
 they not only fail to establish their theory by facts, 
 but assert the proposition that every dollar in gold 
 and silver produced costs its value to produce it, which, 
 if true, would close every gold mine in the world in 
 thirty days. There is no profit here. Men abandon 
 unprofitable employments. The hired miners get wages 
 for their work it is true ; but how is it with the owners 
 of leads and quartz-mills, who do not strike a blow and 
 yet live like princes ? 
 
 There are millions of profit in it, to the successful 
 operators. How, then, is the value of the precious met- 
 als the same as the cost of their production ? It is not 
 true. Their values are exacth^ what the commercial 
 world makes them worth. 
 
 A rare painting may sell for five thousand dollars, 
 when the cost of its production did not exceed one thous- 
 and. If it be said that the time, labor and money 
 spent in educating the artist should be put into the cal- 
 culation, then we answer that all the money received 
 by him for all the paintings produced by him, and all 
 the money he realized for imparting instruction dur- 
 ing his life, shoukl be put into the other end of the bal- 
 ance, and if he realized for all his labors $100,000 more 
 than his outlay, this would be actual profit, proving 
 that the taste and the capacity of the people to buy
 
 GOLD AND SIL^'ER. 87 
 
 fine paintinirs, in other words, the demand for them 
 and the scarcity of them, had exalted their value far 
 above the cost of their production. 
 
 It cost man nothing to produce an acre of unimproved 
 land, because he does not produce land, and vet there 
 are millions of acres of such land worth many dollars 
 an acre. The demand for them creates price. 
 
 If it cost $5 or $10 to produce a nuiriret of sold 
 weiohing 2i)S grains, and it be dropped into the bottom 
 of the sea, out of man's reach, it would not be worth a 
 farthinof,and vet the nufirijet exists, and the cost of its 
 production remains a fact. 
 
 Cost of production is only one of the many forces 
 which combine to determine the values of o^old and 
 silver and ever}i;hing else, and demand and supply of 
 them, as compared with the demand and supply of 
 everything else, are the results of all the forces, and de- 
 termine their values. 
 
 It is evident from all that has been said that 
 it is the use of all merchantable things, gold and 
 silver included, which gives them value, and the ex- 
 tent of the value is determined by the demand and 
 supply. 
 
 Should the supply of gold and silver increase and 
 the demand for them increase with the supply, there 
 would be no fall in their values ; l)ut if the demand did 
 not keep pace with the supply of them a fall would 
 take place, regardless of the cost of production. This 
 was exemplified soon after the Californian and Aus- 
 tralian mines began to yield immense sums. 
 
 The money systems of Europe and America were re- 
 deemable bank paper, and this paper was greatly in- 
 creased, taking the place of so much coin. The uses
 
 88 STANDARD OF VALUES : 
 
 of gold and silver in the arts did not begin to increase 
 rapidly until in 1855. 
 
 The addition to the stock of gold coin and bullion 
 in the world was $480,000,000 from 1850 to 1855 ; 
 hence, its value depreciated between those years. But 
 since 1855 the quantity used in the arts has rapidly in- 
 creased, until now as much is consumed annually in 
 that way as is produced, there is, therefore, no accum- 
 ulation of stock, Imt an increased demand for gold on 
 account of the rapid increase of population, business, 
 and wealth in Europe and America ; hence, a rise in 
 the value, purchasing power, of the precious metals 
 since 1855. Cost of production of all things, gold and 
 silver included, is only one of the myriad of things 
 which combine to fix and control values. The soil, the 
 elements, the seasons, all the conditions of man, and all 
 property, war, peace, floods and famine, are forces ac- 
 ting upon the values of all things, including gold and 
 silver. These various forces determine the uses and 
 supply of everything. They determine the extent and 
 intensity of demand and the supply of all things and 
 of every one thing, and these fix the respective values. 
 
 Values are only commercial relations of things to 
 one another, expressed in money. It therefore results 
 that the values of gold and silver are not absolute ; that 
 they change with time ; are different in different parts 
 of the world at the same time ; that their values are not 
 controlled by the cost of production, but by the extent and 
 intensity of the demand for them, and the supply of 
 them as compared with the demand and supply of 
 everything else. They are not, therefore, and never 
 can be, an unvarying or uniform standard of values, 
 because, unlike a fixed measure or standard, their
 
 TAPER MONEY. 89 
 
 measuring or purchasing capacities are constantly 
 chanidns:. 
 
 PAPER MOXEY. 
 
 Some hold that redeemable bank paper, and some 
 that all kinds of paper money, are symbolic, representing 
 merchandise ; that so long as they are symbolic they 
 represent merchandise and will be on a par A\ith coin 
 and Avill not affect prices ; that an over-issue of such 
 paper is not symbolic, does not rejjreseut merchandise, 
 and is therefore vicious. 
 
 This distinction is a meaningless one. Paper money 
 no more represents merchandise than the latter repre- 
 sents the former, or than gold represents both. 
 
 In 18()0 there was about $200,()00,0()() of redeemable 
 bank paper in the U. S. and about $12,000,000,000 of 
 proijerty. How much of the latter and what part of it 
 did the former represent ? 
 
 It is true that the circulation of money, sold and 
 silver as well as paper, indicates the existence of prop- 
 erty, but it does not represent property. 
 
 All money, including paper, is an absolute distinct 
 element of power acting upon values. Money and 
 property are opposing forces, constantly asserting them- 
 selves agamst each other, out of which action springs 
 money prices. As, for instance, when money is scarce 
 it is dear, and being dear forces prices down, and, on 
 the other hand, when any kind of property is scarce, 
 as for instance Avheat, it forces down the value of money 
 with reference to itself. 
 
 Two opposing forces cannot represent each other ; 
 therefore money, i)aper or coin, does not represent 
 merchandise. The error involved in the proposition 
 that bank paper is symbolic, representing merchandise,
 
 90 STANDARD OF VALUES : 
 
 is further illustrated by the habits of banks.. Sup- 
 pose the only money in circulation in the U. S. 
 was bank paper based on and redeemable in coin exclu- 
 sively ; that all the coin in the country amounting to 
 $100,000,000 was held by the banks as reserves or re- 
 demption funds ; that the proper rate of issue would be 
 $3 in paper upon $1 in coin ; that the banks had issued 
 to the full extent of that rule and that there were 
 $300,000,000 of their notes out. This would be less 
 than half the amount of money now in the country ; 
 prices would fall very low. This Avould cause smaller 
 imports or larger exports, or ])oth. This would bring 
 an increase of coin by reason of foreign balances. The 
 general demand for money in the commercial markets 
 would be undiminished. Property would be reduced 
 in amount by reason of increased exports or diminished 
 imports. The banks would add to their coin resei^ves, 
 as they always do when they can ; this would be easily 
 dono on account of the amount brought into the country 
 by foreign balances. They would then accommodate 
 borrowers more freely and issue, say, $100,000,000 
 more of paper. Prices of property would advance ac- 
 cordingly, because of the increased amount of money 
 when there was no increase in the amount of property. 
 This advance of prices would absorb or cause the use 
 of the additional issue of paper money in handling the 
 same or a less number of pounds, articles and yards of 
 merchandise than before. It appears, therefore, that 
 if the $300,000,000 paper money were symbolic, rep- 
 resenting the nation's merchandise, the $400,000,000 
 paper would be equally symbolic, representing the 
 nation's merchandise ; because all of it was used in ex- 
 changing the merchandise. The same process will show
 
 PAPER MONEY. 91 
 
 that any quantity of paper money, $2,000,000,000 even, 
 would be sjnnbolic equally with $300,000,000, because 
 the greater sum would so enhance values of property as 
 to require the whole of the $2,000,000,000 to handle it. 
 
 But if paper money be symbolic, it would represent, 
 not only merchandise, but all property, real and per- 
 sonal, and labor. In other words, it would represent 
 every article sold for money and everything done for 
 money. Then, to be a perfect symbol or representa- 
 tive, there should be enough of it to bring all the 
 powers of man and all the products of his labor to a 
 remunerative market ; enough to employ every man 
 in the nation, as well as to effect exchanges of all 
 property . This is the true test of the quantity of money 
 needed . 
 
 Checks, drafts and bills of exchange are also termed 
 symbolic currency, representing merchandise. There 
 is no truth in this proposition. They indicate four 
 things: money, property, debt and credit, but repre- 
 sent only the two latter. Money is the base on which 
 they rest ; not merchandise. For instance, a shipper 
 draws on his commission merchant for the anticipated 
 proceeds of a shipment of wheat. Suppose the wheat 
 should be lost on the way, never sold, or sold for half 
 or double the amount of the draft. In either case the 
 draft could not represent the wheat. If honored 
 before the wheat were sold, it would simply be a debt 
 of the shipper to the commission merchant, based on, 
 and in anticipation of, the net proceeds of the sale of 
 the wheat. Although the shipment of wheat would be 
 the occasion of the draft, yet the draft would never be 
 drawn or honored except in view of, or upon, the 
 prospective net cash proceeds of the wheat.
 
 92 STAJSDARD OF VALUES : 
 
 Again, suppose A ships 100 bushels of wheat in 
 April, when it sells at $1 per bushel, and draws on his 
 commission merchant for $95, and in the fall he ships 
 100 bushels more of the same kind of wheat when it 
 sells at fifty cents per bushel, and draws on his com- 
 mission merchant for $45. Here the same kind and 
 quantity of wheat is shipped each time, but the drafts 
 are for different sums intended to cover sales. This case 
 shows very clearly that the drafts did not represent the 
 kind, quality or quantity of merchandise, but were drafts 
 upon anticipated money to be realized on sales. 
 
 The idea of a symbolic currency is an erroneous 
 deduction from the phenomena of commercial trans- 
 actions producing or sustaining credits and floating 
 absolute money of no commodity value whatever ; such 
 as Russian or United States leijal tenders, Indian 
 wampum, and the like. These phenomena are founded 
 upon the fact that commerce imperatively demands a 
 medium called inone}^ to effect exchanges. This 
 Diedium called mone}^ either by common consent or by 
 force of law, assumes a named value, as, for instance, 
 a dollar, and becomes the measure of value and medium 
 of internal exchanges. But the named value, as a 
 dollar, of this medium, measure, or standard of value, 
 is only nominal. It does not express the exchange or 
 commercial value of the money at all. The latter is 
 purely relative ; the former ideal, nominal. 
 
 The quantity of money bears a relation to the values 
 of property, and vice versa, without any regard to the 
 nominal value of the money or the commodity value of 
 the material of which tlie money is composed. The 
 fact that the named values of money are only nominal, 
 not relative or actual, is evidenced by the various
 
 PAPER MONEY. 93 
 
 chansres in the coinaere acts of all civilized nations. Ef- 
 forts are constantly but unsuccessfully made by legis- 
 latures to make the nominal and actual or exchange 
 values of money of different nations and the different 
 monevs of the same nation the same. 
 
 Suppose we had no money in the United States. The 
 necessities arising from trade would cause the people to 
 adopt by tacit agreement or invent an exchange med- 
 ium of cattle, hides, salt, iron, tobacco, cotton or some 
 other thing. Suppose it to be bits of paper of a certain 
 kind and shape. The purchasing power of these bits 
 of paper would depend principally upon the frequency 
 and magnitude of exchanges and the supply of papers. 
 Suppose it would take one of these bits of paper to buy 
 a pound of cotton, a pound of sugar, a pound of soda ; 
 a thousand of them to buy a horse ; three hundred of 
 them to buy a cow ; one hundred of them to buy a cas- 
 simere coat — and so on. No matter what number of 
 bits of paper it might take to buy any particular article, 
 the prices of all articles and the purchasing power of 
 these papers would so adjust themselves that the value 
 of each would bear the exact relation to the value of 
 everything else that the demand and supply of each 
 would bear to the demand and supply of all or each of 
 the others. Just what these relations would be could 
 never be ascertained by abstract calculation, because, 
 as has been already stated, the soil, climate, the ele- 
 ments, and all the conditions of man would be forces 
 acting on property, money and man's wants and pro- 
 ductive powers. But the relations of the bits of paper 
 and values of property in them would ultimately and 
 continually adjust themselves in harmony with all these 
 other forces. Let these relations of the bits of paper
 
 94 STANDARD OF VALUES : 
 
 to cotton, sugar, horses, etc., be as above supposed in 
 the U. S. 
 
 Now, suppose that England has only gold money, 
 and it be called pounds, shillings and pence, and that 
 the relations of money and values stand as follows : 
 1 pound of cotton, 6c?. ; one pound of soda, 5d. ; 1 horse, 
 £20, and 1 cow, £6. Now, suppose England and the 
 United States should have extensive commercial rela- 
 tions. An English importer would buy cotton in the 
 United States. Of course he would first set down 
 cotton as worth, say, Gd.in England ; then estimate the 
 cost of warehousing, shipping, customs, insurance, 
 risks and profit, and if he found all these to equal 2d. 
 per pound, he would pay in gold in the United States 4cZ. 
 per pound for cotton . In the United States , one pound of 
 cotton has been supposed to be worth one of the bits of 
 paper. In other words, Ad. would be equal to a pound 
 of cotton, and one bit of paper would be equal to a 
 pound of cotton in the United States. Things equal 
 to the same thing are equal to each other. Therefore^ 
 the4f7. in gold and the one bit of paper would be equal 
 to each other. With the respective moneys bearing 
 that relation to each other and to i3roperty in the 
 United States, an English exporter would take a bill of 
 exchange drawn on a solvent New York house, to be 
 paid in the bits of paper at their value relative to gold ; 
 that is, at one bit of paper to Ad. because he could 
 either exchange it for gold in New York at Ad. to the 
 bit of paper, or buy w^hatever he wanted with it at that 
 rate. 
 
 But suppose that the relations of property and paper 
 in the United States should become different by reason 
 of a large increase in the number of the bits of paper^
 
 PAPER MONEY. 95 
 
 SO that it required two bits of paper to purchase a pound 
 of cotton. In that case, gold would advance in the 
 United States, and less, perhaps, only 2d., would equal 
 one bit of paper ; showing a decline of 100 per c(nit. in 
 the value ; i. e., purchasing power of the bits of paper 
 as compared with gold. But suppose that at the same 
 time England should establish banks and take her gold 
 as reserves, and upon it issue about twice or thrice as 
 much paper, redeenia])le in gold, as she had gold. In 
 such a case the English paper would be at par Avith 
 gold there, and on account of the great increase of it, 
 prices would rise. A pound of cotton would be worth 
 in England, say, 12(7. ; costs of warehousing, shipping, 
 insurance and profits on a pound of cotton, to be shipped 
 from the United States, Avould be about double what 
 they were before ; say, about Ad. Then the English 
 importer could pay 8cZ. per pound for cotton in the 
 United States, where it would be worth two bits of 
 paper. In such a case, 4(7. in gold would still be worth 
 one bit of paper, as in the first supposed case. 
 
 Now, instead of calling the money of the United 
 States bits of paper, go back over these supposed cases 
 and substitute five-cent pieces, of absolute irredeemable 
 United States notes, and the causes and the methods of 
 all lands of mone3'"s' assuming and changing values and 
 being at Avhat is termed par or discount, will appear 
 clear. We conclude therefore that paper money is not 
 symbolic ; does not represent property, but is simply a 
 power, measuring values and effecting exchanges ; that 
 its values are acted upon, affected and changed by 
 property ; that property and money are opposing forces, 
 acting upon each other, and that from the two thus 
 acting arise the phenomena of prices ; that these prices
 
 96 STANDARD OF VALUES : 
 
 are determined by the comparative quantities of money 
 and property as affected by the many other forces herein- 
 before referred to ; such as war, famine, floods, man's 
 conditions, etc., and that sucli a thinsc as a uniform 
 standard of values over the earth is an utter impossi- 
 bility. 
 
 The foreffoina' illustrates, and the financial and com- 
 mercial histories of nations demonstrate, that a people 
 will use all the money they can get, and that the prop- 
 erty and business of a nation will call into requisition, 
 or float, any quantity of money whatever, with the 
 values, ^. e., exchange or purchasing power, of both 
 mone}^ and property, determined by the respective 
 quantities of either, as modified or affected by the other 
 forces heretofore referred to. 
 
 As has been stated, from a quantity of money and 
 property acting upon each other arise prices; i. e., 
 purchasing or exchange power of both. A given quan- 
 titv of money acting upon a given quantit}^ of property 
 will produce in a nation certain prices or values of 
 property. As, for illustration, $1,000,000,000 of 
 monev and 4,000,000,000 m quantity of jDroperty would 
 produce, say |!lO,000,000,000 values in the United 
 States. This particular valuation arising upon a given 
 amount of money and property, in a nation, would be 
 partly determined ])y the soil, climate, and all the con- 
 ditions and peculiarities of man and the count^3^ It 
 might require a greater or less amount of money acting 
 upon the same quantity of property in England, France, 
 Germany or Kussia to produce money values of the 
 property equal to those in the United States of America. 
 But some amount, an unknown quantity of money, act- 
 ing on 4,000,000,000 iu quantity of property in the
 
 PAPER MONEY. 97 
 
 European states would produce $10,000,000,000 in 
 value. Suppose in England that quantity of money to 
 be $800, 000, 000. Then the proportion of money to 
 property in the United States to produce values to the 
 amount of $10,000,000,000 would be $1 to #4 and in 
 England, $r'ff to ^4. So long as the conditions of 
 these two nations, and the same ratio of money to 
 property in each might remain unchanged, so long 
 would the values of property in both nations be the 
 same. So soon, however, as the conditions of either 
 nation changed materially, or the ratio of money to 
 property changed in one without a corresponding change 
 in the other, prices of jiroperty in the two nations 
 would loose their equilibrium. As, for instance, war, 
 famine, floods, or great foreign balances against either, 
 or a change in the amount of money or property, would 
 quickly change prices in the affected nation. 
 
 The reason why values in the U. S. in 1866 were so 
 much above those of Europe was because the ratio of 
 mone}^ to property in the U.S. was so much greater 
 than in Europe. 
 
 Banking with coin on redeemable paper without re- 
 ffardine: this law of values has brought banks and whole 
 nations to srief , and from the phenomena arising from 
 want of observance of this law has been deduced the 
 false idea of a symbolic currency. 
 
 Suppose that the entire circulating money of the U. 
 S. was redeemable bank paper based on $100,000,000 
 of gold held as reserves by the banks, and that the 
 volume of that paper was $400,000,000 ; and suppose 
 that the respective relations of money to property, and 
 conditions in England and the U. S. be such as to pro- 
 duce an equilibrium of prices. So long as this condi-
 
 98 STANDARD OF VALUES : 
 
 tion of things remained there would be little inducement 
 for foreio^n commerce to be anvthins; but barter. No 
 balances would occur asrainst either nation sufficient to 
 disturb either the money or produce markets. But 
 suppose a spirit of enterprise should take hold of the 
 people of the U. S., and that they should go extensively 
 into railroad building; and should induce the banks to 
 trench upon the bounds of safety by issuing and loaning 
 $100,000,000 more of paper money redeemable in gold. 
 This additional issue would greatly enhance values in 
 the U.S ., but thev would be coin values because all the 
 paper would be redeemable in coin — paper would be at 
 par. This rise in prices in paper at par in the U. S. 
 would induce increased imports of goods from England, 
 for profit, because of the higher prices here, these being 
 coin prices. This would call for shipments of coin to meet 
 the balances of trade thus produced against the U. S. 
 
 The banks would be called on for coin, and their re- 
 serves and outstanding issues would be reduced, pro- 
 ducing a heavy decline in prices and, perhaps, a panic. 
 The process of reducing the outstanding volume of 
 money would continue until confidence became restored, 
 and this would take place so soon as the unusual demand 
 for coin to ship abroad might cease and the banks could 
 redeem all notes presented to them for redemption. 
 This would bring the quantity of money to a smaller 
 volume than before the panic, and keep it so until the 
 banks might increase their reserves or again trench upon 
 the law of issues, and then another inflation and another 
 panic would follow. 
 
 This gives no firrounds whatever for calling bank notes 
 and drafts, bills of exchange, etc., symbolic money 
 representing merchandise .
 
 PAPEK MONEY. 99 
 
 It proves three things : 1st. A people will use all 
 the money they can get. 2nd. When the ratio of 
 money to property in one nation is considerably above 
 that of other nations, by the issuance of bank paper 
 redeemable in coin, this inflates the co/n prices of prop- 
 erty in the nation so increasing its monc}'. 3d. This 
 inflation of coin prices induces large imports from for- 
 eign nations having smaller amounts of money and lower 
 prices, and this in turn causes foreign balances against 
 the importing nation and large shipments of coin out of 
 it, causing a depletion of bank reserves, a reduction of 
 the volume of money, falling markets and generally 
 panics, bankruptcies, and distress. 
 
 These evils result, not from the quantity of paper 
 money nor because it or any part of it is symbolic, but 
 from the hind of paper, the system of the money. 
 
 Now% suppose this money of the United States had 
 not been redeemable bank notes, but had been an ab- 
 solute legal tender irredeemable currency ; when there 
 Avas $400,000,000 of it prices m the U. S. and England 
 had been the same ; but the U. S. issued $400,000,000 
 more of this paper, and the paper prices of merchandise 
 here had advanced above English prices, would this 
 have induced larger imports, caused a flow of coin out 
 to foot balances and brought depression in business, 
 falling prices and distress? No. It would be impos- 
 sible for an increased issue of such paper to produce 
 such results, because this paper would not be redeem- 
 able in coin; prices would not be coin prices^ but only 
 paper prices, because the paper would not represent 
 coin ; coin would rise to a premium, coin prices of prop- 
 erty would be but slightly affected, if at all, and there 
 would be no more, or but very little more, profit on
 
 100 STANDARD OF VALUES : 
 
 imports or loss on exports, than if prices in the U. S. 
 and England were the same. 
 
 This is well illustrated by our commerce from 1865 
 to 1873. In 1865 and 1866 there was a thousand mil- 
 lions more money in the U. S. than in subsequent years. 
 None of it represented coin. A great part of it was 
 legal tender, and the National bank notes were re- 
 deemable in legal tenders . Notwithstanding the greater 
 amount of money in 1865-66 than from 1868 to 1873, 
 the foreign balances ao;ainst the U. S. from 1868 to 1873 
 averaged several millions greater per annum than for 
 the years 1865-66. 
 
 One of the important differences between such a 
 paper and redeemable bank notes is, that while a con- 
 siderable increase of either would give a great impulse 
 to production and vitalize all business, the former would 
 not itself produce a revulsion and consequent distress 
 as the latter would, but would, so long as its volume 
 continued undiminished, continue to sustain and vitalize 
 the productive and commercial interests of society. It 
 would be free from any depressing effects caused by 
 foreign panics or movements of coin abroad. In fact, 
 a destructive money crisis, such as this country has fre- 
 quently suffered from, would be utterly impossible with 
 such a money undiminished in volume, so long as con- 
 fidence remained strong in the government issuing it. 
 Commercial crises might be produced by war, famine 
 or flood, but such crises from such causes are common 
 to all countries, and no law, no money, no matter what 
 kind, can prevent them. 
 
 The difference in the values of the different kinds of 
 paper money in any nation depend upon : 1st, the 
 difference in the uses to which they can be applied and
 
 PAPER MONEY. 101 
 
 the supply of them, 2d, The difference of the public 
 confidence in the different kinds of paper money. 
 
 The difference m the values of coin and paper in 
 any nation depends upon: 1st, The difference in the 
 uses to which they can be applied and the supply of 
 them. 2d, The difference of the public confidence in 
 the coin and paper. Exactly the same laws of differ- 
 ence exist between coin and paper as between the dif- 
 ferent kinds of paper. The same is true of differeiit 
 coins. 
 
 The difference in the values of money of different 
 nations is the difference in their purchasing power over 
 the same articles at home. 
 
 From the foregoing reasons it appears that, if the 
 ratio of money to cjuantity of property and the con- 
 ditions of all nations were the same, there would be an 
 equilil)rium of values ; and that whenever such equil- 
 ibrium of values is broken, there can l)e no uniform 
 standard of values, because such want of equilibrium 
 at once changes the value, the purchasing power, the 
 standard, the measuring capacity of the money over 
 propert}' in the nation Avhere the equilibrium is broken. 
 
 The conditions and ratio of money to property of 
 every nation alwavs have differed and alwavs will differ 
 from those of every other nation. Therefore, a uniform 
 measure or standard of money values is just as utterly 
 unattainable, as impossible, as it is to make the condi- 
 tions and ratio of money to property of every nation 
 alike. 
 
 In every nation whose money is irold and silver there 
 must be constantly recurring inflations and depressions 
 of prices of property, resulting from the exports and 
 imports of the precious metals, caused by the balances
 
 102 STANDARD OF VALUES : 
 
 of trade chano-ino- from one nation to another. In 
 other words, with coin as the common money, an equi- 
 librium of prices over the civilized world can never be 
 had, and the absence of such an equilibrium would 
 doom the nations of the earth to recurring financial 
 crises in the midst of every period of unusual pros- 
 perity, because their prosperity and increase of money 
 would diminish the supply of money of other nations 
 using coin, reduce prices in such nations, cause larger 
 imports to or smaller exjDorts from the prosperous 
 nation. Thence would flow heavy exports of coin from 
 the prosperous nation, bringing a reduction of its vol- 
 ume of money, a fall of prices, depresssion and loss 
 in business, and a crisis. 
 
 These periods of financial prosperity and disaster 
 would chase each x)ther around the earth in endless 
 succession, forever seeking, but never being able to 
 effect an equilibriam of values. 
 
 What has been said of coin money applies with 
 double force to all systems of paper money redeem- 
 able in coin, because, an increase of coin in the country 
 will cause increased issues of the redeemable bank 
 paper, and when the period of reverse approaches and 
 coin is shipped abroad in large quantities, the revul- 
 sion is intensified by the great reduction of the volume 
 of paper money necessarily following a reduction of 
 the amount of coin in the country. Thence folloAvs 
 falling markets, depression in business, and frequently 
 failures of banks, immense losses among the financier- 
 ing and commercial classes, and their effects quickly 
 distress the industrial and laboring classes, and thus 
 the country is swept over by a terrible financial crisis. 
 
 All systems of bank paper redeemable in coin are
 
 PAPER MOXEY. 103 
 
 unsound in principle and "vncious ni practice. This 
 fact is established beyond dispute by the financial his- 
 tories of England and America. There haye been ex- 
 ceptional cases, but they Mere only exceptions. Coin 
 is mi2:ratory, constantly passinij from nation to nation, 
 chanffinff in volume, increasins; here and decreasins: 
 there to-day, and to-morrow decreasin<2: here andincreas- 
 ino; there, alternately increasins; and decreasins: the 
 yolume of bank paper, bringing inflations and depres- 
 sions of prices with every change in the supply of coin. 
 Such systems, all of them, are unsound in principle, 
 because they are subject to be suddenly and seriously 
 affected by the movements of coin, and afflict the coun- 
 try with financial and commercial disaster by their o^ni 
 vicissitudes. They are vicious in practice, because, 
 while they essay to supply the nation with currency, 
 they do not, the}- cannot regulate the amount of issues 
 by the needs of the nation but by their reserves, thus 
 disregarding, from necessity, the priniar}^ law which 
 ought to govern every S3'^stem of money. 
 
 Furthermore, when they do make a laudable effort 
 to supply the money needs of the country by issuing 
 largely, they violate the law of issues and bring upon 
 themselves destruction and many times unjust accusa- 
 tions of fraud, and distress the nation with the terrible 
 effects of a monetary crisis. 
 
 Beside these eWls of banks of issue, there is another, 
 scarcely less objectionable. It is that such systems 
 place in their hands, the hands of a few, an immense, 
 an overshadowing power, which can be, and generally 
 is, combined to influence legislatures and congresses, 
 governors, presidents, and other functionaries, upon 
 any fiscal measure which may arise, calculated to affect
 
 104 STANDARD OF VALUES ; 
 
 them, and such questions are constantly arising. They 
 thus become powers of evil, inducing government to 
 pass laws and adopt policies looking to their special 
 interests, often regardless of, and not unfrequently 
 directly against, the general good of the country. 
 These evils of banks of issue are common to all systems 
 of the kind, and a choice of systems, whether they be 
 state, national, or free, or any other, is only a choice 
 of evils. 
 
 The only money which could, in the nature of things, 
 be free from the evils named, would be an irredeem- 
 able legal tender paper, issued by government. Not- 
 withstanding the abuses and denunciations heaped 
 upon such a paper by a certain class of thinkers, it is 
 the best, the safest paper money ever invented. If 
 such a paper should be issued by government, and a 
 sufficiency of it kept in circjilation to serve the needs 
 of the people, a financial crisis would be utterly impos- 
 sible, so long as the volume of money remained undi- 
 minished and contidence in the stability of the govern- 
 ment remained strong. If the government should 
 become involved in a great war which threatened its 
 existence Avith destruction, such a paper would depre- 
 ciate accordingly. But the bonds of the nation would, 
 for the same reason, depreciate equally as much ; any 
 bank paper that might exist would, for the same 
 reason, depreciate. A financial crisis would be equally 
 certain and equally destructive, under such circum- 
 stances, with any monetary system. 
 
 An irredeemable legal tender paper, issued by 
 government, would give every holder of any of it a 
 pecuniary interest in being loyal and patriotic that no 
 other money would create. There is not half enough gold
 
 PAPER MONEY. 105 
 
 and silver in the civilized world to serve its financial and 
 commercial needs. Every nation must, therefore, supply 
 its people with some other money, and with each it is 
 only a question of kind and quantity. It is the duty of 
 government to supply its people with the best possible 
 money and with a sufficient quantity of it to put into 
 active operation all the productive powers of the 
 people. It is, then, the duty of the Government of 
 the United States to supply the people with legal tender 
 paper in sufficient quantity to keep every willing brain 
 and hand profitably employed. 
 
 Such would give the country the nearest possible 
 uniform standard of values for internal commerce, and 
 this is the standard which all nations should be con- 
 cerned about, because the efforts to conform the value 
 of money of one nation to that of another and to 
 secure a uniform measure of values all over the world 
 is a thing impossible, beyond the reach of legislatures 
 and ffovernilients.
 
 CHAPTER III. 
 
 PRICES OF PROPERTY AND GOLD PREMIUM : CAUSES OF 
 THEIR RISE AND FALL. 
 
 For the purposes of comparison we give tables of the 
 amount of money in circuhition, prices of commodities 
 and gold premium. The table of money embraces one 
 and two year demand notes ; temporary ten day loans ; 
 one year certificates of indebtedness ; sixty day and two 
 year treasury notes ; 7-30 three year notes ; compound 
 interest notes ; three per cent, certificates ; non-interest 
 bearing notes and fractional currency, because they 
 circulated as money ; in fact a great part of the 7-30 
 notes and compound interest notes were by law a legal 
 tender. Anything which is used as a medium of ex- 
 change and performs the functions of money is money 
 for all the purposes necessary in the consideration of 
 this subject. Therefore, we include all the above named 
 government paper in the estimates of money outstanding. 
 
 Following is a table showing the kinds of money and 
 the amounts outstandino; from 1854 to 1876 inclusive 
 as given by Mr. Fawcctt, and of 1877 taken from the 
 report of the comjitroUer of the currency :
 
 CAUSES OF THEIR RISE AND FALL. 
 
 107 
 
 
 
 
 
 Year. 
 
 OOQtOCJCtOOOOOCOtJOOODOOWOCiOO<XCClOO»g3DOOgg» 
 
 ^Oitn^-cota^o^soo-iosSj^Wbit-^otoa^OJOi*^ 
 
 to 
 
 i-ii-i i-> t-. u^ ^s od'go *- 
 
 • «o^o:c;d-x«ooi-' — •— "---icD*'!" 
 
 • *- *..*.*^ *- 4.4.00OO-I TCOO-I ;dm 
 
 . 1^ "-I .-I — I c;i i;i K* — — »— ' ^- »— . »— t— ' t— t O' 
 ■ cn cn OI iji o o c;i ts to bO LO to to t« LO c;i 
 
 
 
 Deinana and one and two 
 year Trea.-^uiy Notes. (Acts 
 March 2, 1801, Decenib. 27, 1857, 
 December 17, I860,) outstand- 
 ing July 1. 
 
 107,02^,096 
 
 259,1 OS 327 
 
 233,0.59,191 
 
 205,489,0iil 
 
 147,507 196 
 
 20,261.070 
 
 13,815,029 
 
 198,310 
 
 186,310 
 
 85,370 
 
 83,500 
 
 83,500 
 
 83,500 
 
 8,060, 
 
 8,0001 
 
 
 
 * ; • • 
 
 Temporary ten day loans. and 
 one year certillcates of indebt- 
 edness, July 1, each yeai\ 
 
 l-i W to M . . 
 
 . 0.-'t0 4--0 — J.^mO'lCtnCC^I 
 
 . _*- W-IJ.i 03iJ_GC-) Ul W *- S— ; 
 
 • O-IOO — J — i^iowo — en 
 
 • en in OI iJi -] (X to to to o o c o 
 
 
 
 
 Treasury Notes payable in 
 two year.s, and in sixty days, 
 (Act March 3, 18B3,) July 1, 
 each year. 
 
 • rf* X 35 — ,— MJ 
 W 00 0.-I O ii lO 
 
 ^ -J oc o^ to X ep to 
 
 • >-• to roio 03 4^ «1-t.| -^*:-■iJ,'-^'^-~%*^ 
 
 • JC w--ii;jo_o._h-_a5-i-jocc5: oS 
 " SfiS?=lS' f S"^'^^*— '-l"x ^in in 
 • ooooooooo oo oo o o 
 
 
 
 
 7-30 three year, July 1, each 
 year. 
 
 to to OI X >— ' • • 
 
 ; JO JO 00 jO o ii ot ■ . 
 
 ', CO oo .^ *.. OI.-!"— GC"— 'iC 0-l"0 I I 
 
 • GOj-iyi j£i w ooio — ^4-100:0. , 
 ' ^ w to'*-'*qi CI *:D 4^ V^'*--"o • ' 
 
 • ooooooooooooS- • 
 
 
 
 
 Compound Interest Notes Ju- 
 ly 1, each year. 
 
 50.000,000 
 45, .545, 000 : 
 12,220,000 ; 
 
 30,000 ; 
 
 5 000 : 
 
 5 000 ; 
 
 5,000 .' 
 
 •••••••• I. 
 
 
 
 
 3 per cent. Certiflcates, July 
 1, each year. 
 
 I' 00 -/; — "0 — 1— — '^"x — x'x'it 
 
 W 4^ -4 -1 .X X to *i --i i£ Si 35 
 W X — __05_!X 00 35 3: « — to ppic^lB 
 
 CC to T. -1 lO ii li -1 ^1 ic In 3-,"lJ< ^ 
 
 CDC xos3;oooiioiiE3;35-ixo 
 ^ -4 to ~t 35 3: o^cwcc-axotco 
 
 
 
 
 Non - Interest-Bearing, De- 
 mand and Legal Tender Notes, 
 (Acts July 17, 1861. February 25, 
 1802. July 11, 1862, and March 3, 
 
 f%?'^!f-*-'«'*^cowo3iototototo. 
 a, *. to oi *. p «5 to to -4 -4_*. 10 : 
 
 P f^ -; 'if ■■'"?= "en 'cr. 'ws-jOo o":d o"'-' • 
 
 4- t >« 31 — & X - 1 — 10 iO .- 1 ^ to 
 
 J.^ 35 w j— X OIJO X*.--4 00intf».to; 
 2*^ »- tow X QOV.'3-.O'^I CC"CX OOV . 
 
 IV ^ 10 3; :/; ^4 X 01 in 10 -1 to ^1 in . 
 
 ooi+.;noiOi*.*.^itoo:05tD-iC5- 
 
 
 
 
 Fractional Currency. 
 
 30, lis 
 
 213,239,-530 
 291,093,294 
 294,377,390 
 294,476,702 
 292,833,9.35 
 302,028,020 
 318,043.841 
 3X6,289,287 
 i50 020,062 
 349.402.8.39 
 510 809,136 
 320 631,719 
 
 
 
 
 National Banks. 
 
 Bank Note Circu- 
 lation Jan. 1, each 
 ar. 
 
 •Z;t~OT^ lot-^toto — — toh-i-^to 
 
 c;C3 r; ^ X*P?*r'^< ■■0 4' : 35-1 iv — cc"i-i-i -c "35 
 
 •^T)---CC -J ii'Vf "■?"•*; • ^:COOOOO*-0<Q0 
 tj — ~ -= ^' ~» *- to ►-• -X) . ►- 4^ 01 10 35 0; -X 00 to «5 
 
 v-^^tOij0.x'o'5 0*;V' ; TOOOO 000000 
 
 v5-j:OtaOoo35 — xoi t— 00000 00 (=0 
 
 ^--w 3: CXO W 50 W XOI ■ 0000000000 
 
 State Banks. 
 
 567,667,758 
 
 1,043,010 415 
 
 9(>8,059.995 
 
 1,651,282.373 
 
 1 803,702,726 
 
 1,330,414,077 
 
 817 199,773 
 
 750,025 989 
 
 740,0.39,179 
 
 7.34 244,774 
 
 736,349,912 
 
 7.38,291,749 
 
 779,031,589 
 
 778,170,2.50 
 
 7.«.358,832 
 
 690,078 729 
 
 1 
 c 
 
 ^} 
 
 Jl c 
 
 S5; 
 J 4.^ e 
 
 Hi 
 
 - tOl-Jl-itO 
 
 Ji — coooo 
 
 J'*-01 Ojt- 
 r> ;c *^ 0100 
 '■'.'- *j-J^ 
 
 = 0000 
 
 Total of Bank Notes .in 
 funded GDvernment Deb 
 cu biting to any extent 
 year. 
 
 d un- 
 
 t Cir- 
 
 each
 
 108 PRICES OF PROPERTY AND GOLD PREMIUM : 
 
 This table exhibits an expansion of the volume of 
 money from January, 18G2, to January, 1866, at or 
 just before which time it reached its maximum ; its 
 contraction until 1871 ; a slight expansion then until 
 1874 ; then a contraction until in 1877 it fell to 
 $690,078,399, and is still diminishing. 
 
 It is only necessary to say that the increase and de- 
 crease of the volume of currency as showni above were 
 produced by legislation and the fiscal operations of the 
 government. First, laws Avere passed authorizing the 
 issuance of the several kinds of money enumerated, 
 and they were issued ; next, laws were passed provid- 
 ing; for fundins: all the above named ojovernment notes 
 and bonds except fractional currency and legal tenders 
 still outstanding, and such notes and bonds were taken 
 up by the government and long bonds issued in their 
 stead. These long bonds were not intended to be, and 
 have not been used as money. Then the Kesumption 
 Act was passed producing the contraction which has 
 taken place since 1875. The Resumption Act is only 
 another method of contracting the currency so rapidly 
 begun in 18 60, and its effects on prices have been and 
 will continue to be the same as that produced by that 
 or any other method of contraction under like circum- 
 stances. 
 
 Before proceeding further, I note here a seeming 
 paradox in relation to the effects of the amount of a 
 nation's or the world's money on prices. It is, how- 
 ever, but seeming, not real. I^he direct effect of a 
 large volume of money is always a tendency to advance 
 prices, but its remote effect is to ultimately reduce 
 prices of manufuctui-ed goods, or anything the success- 
 ful and abundant production of which requires or admits
 
 CAUSES OF THEIR RISE AND FALL. 109 
 
 the use of skilled labor by the application of machinery. 
 Hence, calicoes are cheaper than they were 50 years 
 ago. Freighting is cheaper than it was before the con- 
 struction of railroads. These are the remote results of 
 large volumes of money enabling men to successfully 
 combine and appl}'- their powers and economize labor. 
 But this cheapening process does not attach to fixed 
 propert}^ houses, lands, etc., to animals, to labor, to 
 the professions or fine arts. The correct statement of 
 this law of prices is, that the direct effect of a large 
 volume of money is to enhance prices of all property, 
 and its remote effect is to ultimately reduce prices of 
 all property, the abundant supply of which depends 
 upon the use of skilled labor by the application of 
 machinerv ; and that the direct effect of a small volume 
 of money is to reduce the prices of all property, and its 
 remote effect is to ultimately advance the prices of all 
 articles, the production of which depends upon the use 
 of skilled labor by the application of machinery. The 
 remote effects of a small volume of inoney occur only 
 after its direct effect has so reduced prices as to ren- 
 der production so unprofitable as to destroy or seriously 
 cripple it, stop machinery and pauperize labor. 
 
 Fortables of currenc3q3rices of gold, and wholesale and 
 retail prices of certain articles, see pp. 110, 111 and 112. 
 
 As Avill be seen in the following pages the values of 
 lands have greatlj'^ depreciated, as well as those of all 
 other propei'ty. 
 
 Many other things operate on the markets with as 
 much force and effect as money. But a large volume 
 of money always tends to elevate prices, and a small 
 volume tends to depreciate them. Ample proof of 
 this will be found on a comparison of these tables.
 
 110 
 
 PRICES OF PROPERTY AND GOLD PREMIUM .* 
 
 Table showing currency value of one hundred dollars in gold in 
 New York market, by months, quarter-years, half-years, and fiscal 
 years, from January 1st, 18G2, to August 31st, 1875, both inclusive: 
 
 M o 
 
 p 
 
 s 
 c 
 
 "-5 
 
 P 
 
 p 
 
 OS 
 
 o 
 
 03 
 
 o 
 o 
 
 & 
 
 P- 
 p 
 
 CI- '^ 
 
 a 
 
 o 
 
 D" P' __ 
 
 E^ tS "5 ^o 
 
 P 
 ►-i 
 
 P 
 
 
 o 
 p 
 
 P 
 i-J 
 
 C 
 
 re 
 a 
 re 
 
 3 
 cr 
 re 
 
 o 
 
 <! 
 
 re 
 
 re 
 
 O 
 re 
 
 O 
 
 c 
 
 re 
 
 re 
 
 a? 
 
 P 2. 
 
 OS 
 
 OS 
 
 lO O i- ^ 
 
 OS OS 
 
 o 
 
 re 
 
 re 
 P 
 
 o o 
 
 OS lO 
 CO Ci 
 
 «-c 
 
 c 
 p 
 re 
 
 p ^ 
 
 re 
 
 1 
 
 P 
 P 
 
 a 
 p 
 
 
 OS ic t-" >— ^ 
 
 H-l 00 00 rfi. Ol 
 
 o o o 
 
 C5 OS >— 
 
 o o 
 
 oi o^ oi cj< c;i 
 
 OS 
 
 OS c Qc bi 
 
 O OB 
 
 1-' 
 
 OS 
 
 •<> 
 
 CI 
 
 1— ' 
 
 OS 
 
 CO 
 
 o 
 
 00 
 
 I—" 
 OS 
 O 
 
 00 
 
 OS 
 
 1— ' 
 
 1— ' 
 
 
 
 OS 
 
 tC 
 
 tor 
 
 OS 
 
 o 
 
 (—I 
 
 If' 
 
 00 
 
 Cl 
 
 CT 
 
 O 
 
 CI 
 
 oo 
 
 C5 
 
 H-" 
 
 t« 
 
 05 
 
 00 
 
 CO 
 
 M 
 
 OS 
 
 *« 
 
 h-l 
 
 O 
 
 •<l 
 
 to 
 
 00 
 
 C5 
 
 Oi 
 
 cr 
 
 Ci 
 
 Ol 
 
 Or 
 
 1— ' 
 
 09 
 
 1— ' 
 
 05 
 
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 OS 
 
 OS 
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 bS 
 
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 1— ' 
 
 00 
 
 I—" 
 
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 t>D 
 
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 00 
 
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 C5 
 
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 05 
 
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 l-i 
 
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 h^ 
 
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 a 
 
 CI 
 
 >»*• 
 
 bS 
 
 I—" 
 
 1— ' 
 
 1—' 
 
 h-l 
 
 h- ' 
 
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 H-l 
 
 H- 1 
 
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 H- 
 
 h-» 
 
 h- ' 
 
 (— • 
 
 )— ' 
 
 V— » 
 
 h- » 
 
 H-» 
 
 to 
 
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 H- • 
 
 CI 
 '<£> OS 
 
 If' o >*^ 
 4^ CO 05 
 
 ^ CO to 
 
 OS 
 
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 CO 4. ,+» rfx 4^ ^ ff- 
 00 ci ^1 Or OS OS to 
 
 OS 
 CI 
 
 00 OS CI C5 05 
 
 CI to 
 
 CICOCii— 'H-'ClCiOOCltO 
 
 oscoosostoosososio 
 
 -^OSOCTC5CIC505i— ' 
 
 Cl 
 
 1— " 
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 CI 
 
 1—1 
 
 OS 
 
 C5 
 
 *>.-l 
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 H- 1 
 00 
 
 h- 1 
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 1— 1 
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 t— 1 
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 H-i 
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 h-i 
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 1—1 
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 QP 
 
 Cl 
 
 1—1 
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 1—1 
 
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 H- 1 
 
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 00 
 
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 CO 
 
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 ^ 
 
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 ^ 
 
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 t— 1 
 
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 1—1 
 
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 1—1 
 
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 C5 
 t— • 
 
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 >-— 
 
 C5 
 
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 Ct 
 
 4^ 
 
 H-i 
 
 ct 
 
 00 
 
 1— ' 
 
 c o oo OS o 
 
 loososososososososososoo 
 
 C5OC54»-C500C0tOh-4*-CIlCS 
 
 ^ 'o '^ 
 
 00C^tOtO00tOI-i|-it5C0 
 
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 OS CO o 
 
 CI I— ' C5 
 ^ Cl CI 
 
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 lO 4- ^ 
 
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 H- F- ,— to 
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 *-■ C5 bi OS 
 
 00 
 
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 •^ ^ J-l 
 
 t-i ];-i OS h- 1 
 OS to h-i C I 
 
 COh- 'OS4'tOlOtOi-iO>-' 
 
 bsiotobilf'-cilf'bicso 
 
 T P 
 
 CI ^ 
 
 00 
 
 l-l to OS h- 1 
 bo 4k 4- 4^ 
 
 H- iH-k— 1(3)*-^1— 11— '•— '1— il"*!— '1— 1 
 
 l0 4^l0 0tOtOOSOS*-4'OSOS 
 
 bo h- CO bo to CO to bi If" OS CO •<( 
 
 I— o 
 
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 CO 
 
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 1-1 O -- -J 
 Cl O 4>- ^1 
 
 4" OS 
 
 0» bo CO ■-« to C5 
 
 O 00 00 to Cl CI Ci ^ 
 
 •<i bo Cl 
 
 00 
 03 
 
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 to i-i o to o CO to 
 o to OS io CO bo 4" 
 
 1-1 F- O O ^ 
 
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 to OS to to _^ 25 
 
 4» 4k "h- OS 4i» 4^ 
 
 »-» • 
 
 H-> • 
 
 >— 1 
 
 t— 1 
 
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 to • 
 
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 Cl 
 
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 w* 
 
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 00 
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 Ct 
 
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 Ct
 
 CAUSES OF THEIR RISE AND FALL. 
 
 Ill 
 
 J ^^ hH( ^d ^^ ta^ 1^ •K' ^H •«• ^— ^— ^— r— •—— 
 
 jocooococxxxocscxxzgcg 
 
 I ~>1 K^i K-l ^-1 ■^ ^-] w^ ^ w- V wi V- v* •; 
 
 
 « -4 ti 5 X-lSJOO-'CS-^X^-Q 
 
 S* 
 a 
 >-t 
 a 
 
 o 
 
 OiCT35:i00CiCi-lO — XOX^> C-^ 
 
 *. ti X cj li ti s £ 1 4 i '.^ r ' £ S i: r- 
 
 Wheat, 
 
 l)er bnshel. 
 
 Flour, 
 
 per barrel. 
 
 coooco — — H-^o — "-oo-w I Com, 
 
 ^ O O X W O *^__*^ ^'^ O wT gi o o o cs 
 
 per bushel. 
 
 Uorn Meal, 
 
 per barrel. 
 
 ="= t^ = -"' 2 =;; £ s? £ £ 2 1 ■ 2 '.^ ^ 
 
 Coal, 
 
 per chaldron. 
 
 Cotton Middlings, 
 per pound. 
 
 o I 
 
 kC M ic ■^ 1- i; t: *■ ii *» 3" ic ■^ H >S .„ 
 
 vciiiays: — xsx-^oxtci; — ^ 
 c o o o o = o o o c o — s — o ~ 
 
 Iron, Pig, i 
 
 per ton, 
 
 a 
 
 o 
 p. 
 
 s 
 o 
 >o 
 
 o 
 
 o 
 
 s 
 
 o 
 6 
 
 < 
 P 
 
 5 
 
 3 
 a 
 
 c:c:c:~. v~c:c:— . :: — *-ox -J^« 
 
 ic tc tc tc iw tc ic ic ic :-i jc zj 1^ iw tc 
 ..J X -1 X X -^ = X -] li i.1 X — ■-; o s 
 
 OSOOOCOC — — = 30-i« 
 
 COOCCOCC = = COOO-jt 
 
 Lead, Pig, 
 
 per 100 pounds. 
 
 Leather, Sole, 
 
 ))er pound. 
 
 Molasses, New Or.,' 
 per gallon. | 
 
 Molasses, Foreign, 
 per gallon, j 
 
 
 o 5 o o oooosoooooo^ 
 
 Pork, Mess, 
 
 per barrel. 
 
 Beef, Mess, 
 
 per barrel. 
 
 Hams, Smoked, 
 per pound. 
 
 o o o c o o o © o o o o c o o« 
 « S X 5; S rS ~ c; tc li V e li — X O 
 
 (^ ^ .;- ^ »-i i« -^ ic O X — * •'I X -^ Ci 
 
 ,*fc SI o *- » ocj^c;^ — ■.■■^^t<'0^^ 
 
 Lard. 
 
 per pound. 
 
 Butter, 
 
 per pound. 
 
 Cheese, 
 
 per pound. 
 
 -4 X -J -1 X I", r: X X — li tc X M -i«p 
 
 CO tc 
 
 ox 
 
 ; O V CI i^ ii X X -I -I O^ C O . 
 
 Rice, 
 
 per 100 pounds. 
 
 Salt, 
 
 per bushel. 
 
 Sugar, New Orlea., 
 per pound. 
 
 • OOO OOOOC O C C C O O-i/i 
 
 * cooo« — — — o — 'rrr5£., 
 oocooooc — cscsoo-s 
 ct ci v» * c: i;i VI c V" VI ^1 — X * ■;*■ 
 
 tOOCV'OWWOw'COS'Ol^-JCS 
 
 Sugar, Foreign, 
 
 per pound. 
 
 Wool, 
 
 per pound. 
 
 o 
 
 C-4 
 
 o 
 
 
 P-t5 
 
 o 
 O 
 
 o 
 o 
 
 ? t 
 
 ^ a 
 
 Q 
 •73 
 
 P 
 1— • 
 
 3. 
 o* 
 ® 
 
 03 
 
 o 
 
 to 

 
 112 
 
 PRICES OF PROPERTY AND GOLD PREMIUM 
 
 Table of aggregate prices of provisions, groceries, 
 etc., in the towns of the United States for the years 
 1867 and 1874, {Labor in Eurojje and America, page 
 810). 
 
 PKOVISIOXS 
 
 18G7 
 
 rioiir, sprfine.bbl $12 'JO 
 
 Fl ;ur, fxtmily " 
 
 13 G6 
 
 Flour, ryi? " 
 
 11 33 
 
 Corn meal " 
 
 8 07 
 
 Beef,frsli,rost .lb 
 
 16 
 
 Beef, " soup " 
 
 11 
 
 Beef, " steak " 
 
 17 
 
 Beef, corned . " 
 
 14 
 
 Veal, fquartrs. " 
 
 14 
 
 Veal,bqaartrs. " 
 
 16 
 
 Veal cutlets.. " 
 
 ISi 
 
 Muton, fqrtr.. " 
 
 13i 
 
 Mutton leg.. . " 
 
 15 
 
 Mutton chops.. " 
 
 161 
 
 Pork, fre>h.... " 
 
 17 
 
 Pork, corned.. " 
 
 201 
 
 Pork, buc'U.. - " 
 
 22 
 
 Pork, hams " 
 
 26^ 
 
 Pork, shoulders " 
 
 21| 
 
 Pork, sausages " 
 
 24i 
 
 Lard * 
 
 24i 
 
 Codfish, dry... " 
 
 17i 
 
 Mackerel, pkld " 
 
 20J 
 
 Butter " 
 
 4'.)i 
 
 Cheese " 
 
 29 
 
 Potatoes bus 
 
 1 62i 
 
 Rice lb 
 
 1711 
 
 Beans qt 
 
 16i 
 
 Milk '• 
 
 12 
 
 Eggs doz 
 
 49 
 
 1874 I GROCERIES 
 
 $6 83 Tea, black lb 
 
 7 93 Coffee, greenl. " 
 6 24 Coffee, ro'std. " 
 5 24 Sugar brown " 
 
 IH Sugar, vel 'C. " 
 
 08 J '^ugar, cof. B' " 
 
 13^ Molasses, NO. gal 
 
 10^ Molasses. P.R. " 
 
 Hi Syrup " 
 
 13;^ ^oap, common lb 
 
 15| Starch " 
 
 llj Fuel, coal ton 
 
 14 Fuel. wood.. . .cord 
 
 15 Fuel, pine.. .. " 
 14 Oil, coal gal 
 
 14i DOMESTIC DRY GOODS 
 
 15^ Shirtings yd 
 
 17.i sheetings " 
 
 14' Cotton flannel. " 
 
 16i Tickings «■ 
 
 17^ Prints " 
 
 11 Muslin delains '* 
 
 13^ Satinets " 
 
 35| Boots, men's ..pr 
 
 22i HOUSE-KENT 
 
 99i Four rooms... mth 14 92 
 11; 
 
 1867 
 
 1874 
 
 1 60 
 
 99 
 
 31i 
 
 28i 
 
 43 
 
 34J 
 
 20i 
 
 llj 
 
 20 i 
 
 12 
 
 22 
 
 131 
 
 1 57 
 
 98 
 
 1 43 
 
 84 
 
 1 soi 
 
 1 08i 
 
 16 
 
 09i 
 
 22 
 
 13i 
 
 10 83 
 
 9 11 
 
 5 71 
 
 5 30 
 
 5 00 
 
 5 42 
 
 1 20 
 
 38J 
 
 231 
 
 12| 
 
 34 
 
 20 
 
 354 
 
 19| 
 
 45^ 
 
 27i 
 
 18i 
 
 I0| 
 
 31i 
 
 23^ 
 
 96| 
 
 73i 
 
 6 22 
 
 5 05 
 
 14 92 
 
 11 93 
 
 22 09 
 
 16 27 
 
 6 79 
 
 5 01 
 
 6 06 
 
 3 53 
 
 ■six rooms. ..." 
 
 10| BOARD 
 
 0!tj Mechanics wk 
 
 30 'Factory women " 
 
 [Since 187-4 there has been a heavy decline in all 
 these articles.] 
 
 The tables show a larger volame of money in 1863 
 than in 1864, but prices of gold and other articles were 
 about 33 per cent, higher in the latter 3'^ear than in the 
 former. It is evident that the cause of the rise in 
 prices here was other than the size of the volume of 
 money. We find the volume of money in 1864 only 
 -i^ of the volume in 18(55, and yet ijold averasfcd a 
 third hiojher and merchandise a third lower in 1864
 
 CAUSES OF THEIR RISE AXD FALL. 113 
 
 than in 1865. Airain, the volume of money in Jan- 
 uary, 18()(3 was about $150,000,000 greater than in 
 January, 1S()5, and yet prices of the greater part of 
 commodities were 25 per cent., and gokl seyenteen 
 per cent, lower in January, 18G6, than in January of 
 the former year. 
 
 In January, 18()7, the yolume of money was $470, 
 000,000 less than in January, 1866, and yet gold was 
 but three per cent, lower on an average during 1867 
 than in 1866, and a number of articles advanced, while 
 others fell. In January, 1868, the volume of money 
 was $513,000,000 less than in January, 1867, and yet 
 gold was on an average one per cent, higher, and there 
 was a slight decrease in the value of commodities. 
 In January, 1869, the volume of money Avas $67,000, 
 000 less than in January, 1868 : irold fell on an averasce 
 seven per cent., and commodities fell slightl^^ In 
 January, 1870, the volume of money was $10,000,000 
 less than in January, 1869, and o-old fell on an average 
 eighteen per cent., and commodities fell in less propor- 
 tion. In January, 1871, the volume of money was 
 further reduced a few millions, commodities fell, but 
 fjold advanced slio-htly. 
 
 -This suffices to show, that, while the volume of 
 money and prices bear some proportion to each other, 
 yet the effects of the one on the other are greatly 
 moditied by other powers. The other forces which 
 affect prices and the purchasing power of money are 
 war, peace, failure of crops, or other great general 
 calamity, abundant crops, supply and demand, faith in 
 the government, faith in the currency of the paper, 
 credit — all the conditions of man. 
 
 It will be observed that the rise and fall of gold was
 
 114 PRICES OF PROPERTY AND GOLD PREMIUM : 
 
 out of all proportion to the increasing or decreasing 
 volume of paper money, so much so, that we are 
 forced to the conclusion that greater forces than the 
 volume of paper were operating on the gold market. 
 Or, if you please, greater powers than gold were oper- 
 ating on the value of paper. Thus, we see, that in 
 July and August, 1864, a dollar in gold was worth 
 more than two-and-a-half dollars in paper, when there 
 were but $968,059,995 of paper in circulation. This 
 was when victory perched upon the Confederate ban- 
 ners. AVhile in the same months of 1865, a dollar in 
 gold was worth but $1.43 in paper, when there were 
 $1,651,282,373 of paper money in circulation. This 
 was soon after the Confederates had surrendered. Here 
 gold fell nearlv one-half simultaneous! v with a two- 
 thirds increase of the currency and- an advance of the 
 price of commodities about one-third or fourth. 
 
 It will be observed that the fall of gold from 1869 
 to 1870 was eighteen per cent., when the currency was 
 reduced but ten millions. This fall of irold, the sfreat- 
 est in any one year since 1865, is not attributable to 
 the small decrease of the currency, but mainly to the 
 decision of the Supreme Court of the U. S. adjudg- 
 ing " Greenbacks" a legal tender for all debts created 
 before as well as after the passage of the legal tender 
 act. An examination of these tables reveals the indis- 
 putable fact, tliat the war and want of faith in the 
 stability of the government were the potent causes of 
 the great depreciation of jjaper money during the war 
 period. Exactly the same causes produced the great 
 depreciation of the French Assignats during the revo- 
 lution of 1789 and onward. 
 
 Other causes which aided in sustaining the gold pre-
 
 CAUSES OF THEIR RISE AND FALL. 115 
 
 mium in the U. S. after war, were the ceaseless poli- 
 tical and local broils, riots and disturbances in the 
 South. Two other powerful causes have constantly 
 operated on the gold market ; they are our foreign 
 commerce and foreign interest. Following is subjoined 
 a table of the exportations and importations of mer- 
 chandise, (excluding gold and silver), from June, 1863 
 to 1877 inclusive, and the balances against and in 
 favor of the U. S. 
 
 Tear. Imports. Exports. ^^'?heV'!f.''"'* 
 
 1863.. $243.335 815 $203 961,447 $ 39,371 368 
 
 1864... 316.447 283 158,837.988 157,109 275 
 
 1865... 238 745 580 166 029 303...... 27.716 177 
 
 1866... 434 812,066 348 859 522 85,952,544 
 
 1967... 395,763,100 292 361225 103 401,875 
 
 1868... 357,436 440 201952 899 75,584.541 
 
 1869... 417 506 379 286 117,697 131.388 682 
 
 1870... 435.958 408 392 771.768 43.176 640 
 
 1871... 520 223 684 442 820,178 87 403,506 
 
 1872... 626 595.077 444.177.586 182 417 491 
 
 1873... 642,136,210 522.479.922 119 656 288 
 
 Balance in favor 
 U. S. 
 
 1874... 567,406,342 646 856 926 39 450 584 
 
 1875... 535 005.336 579 367,543 44.362,207 
 
 1876... 460,741,190 519.114,630 158.373 440 
 
 1877... 451.323,126 589 670,224 138,357,098 
 
 All foreign imports re-exported are excluded for 
 1876-7. 
 
 We here give the exjjorts and imports of gold and 
 silver and the excess of exjiorts over imports for each 
 year from 1863 to 1877 inclusive. Also the average 
 gold premium for each of the years named :
 
 116 PRICES OF PROPERTY AND GOLD PREMIUM ! 
 
 Average 
 Tear. Exports. Imports. ^-^ilJo^^Js^.'"*^ ^o'" \- 
 
 Tenders 
 
 1863....$ 64,100,000..$ 8,500,000. .$55,600,000 $145 
 
 1864 105,300.000.. 13,100,000.. 9^.200 000.... 2.03 
 
 1865 67.600000.. 9,800,000. . 57,800,000. .. . 1.57 
 
 1866.... 86,000,000.. 10,700,000.. 75,300.000.... 1.40 
 
 1867 60.800,000.. 22.000,000.. 38,8 J0,000. . .. 1.38 
 
 1868 93.700,000.. 14,100,000.. 79.6;J<),000 1.40 
 
 1869 57,100,000.. 19,800,000.. 37,300,000 1.33 
 
 187) 58 100,000.. 26,400,000.. 31,700,000 1.15 
 
 1871 98,400,000.. 21.200,000.. 77.200,000.... 1.12 
 
 1872 79'800,000.. 13,700,000.. 66,100,000 1.12 
 
 1873 84.600,000.. 21,400,000.. 63,200,000 1.14 
 
 1874 59,600,000.. 28.400,000.. 31,2 i0,000 1.11 
 
 1875.... 73,800,000.. 18 900,0u0. . 54 9 tO,000. . .. 
 
 1876 56,5.6,3u2.. 15,936,681.. 4ii,569,621 
 
 1877 15 387,823.... 
 
 It will be seen from the table of exports, that up to 
 1874, large balances for merchandise accrued against the 
 United States, and for 1872 and 1873, these foreign bal- 
 ances against the United States amounted to the enormous 
 sums of $182,000,000 and $119,000,000 respectively. 
 These balances account in part for the gold premium not 
 falling in 1872 and for its advance in 1873. A com- 
 parison of the two tables shows an advance in the gold 
 premium with every increase of the exports of coin 
 except for the years 186G and 1871. The reason for 
 these exceptions is found in the fact that, including 
 gold and silver shipments, there were no balances 
 worth naming left against the United States. The 
 table also shows a corresponding fall in the gold pre- 
 mium with every annual decrease of exportation of the 
 precious metals, except for 1872 and 1873, and these 
 exceptions are founded in the fact that, after deducting
 
 CAUSES OF THEIR RISE AND FALL. 117 
 
 all the ex]3oii:s of both merchandise and gold and silver, 
 there remained enormous balances against the country. 
 These comparisons of tables must sutiice. The reader 
 may extend thcni at leisure. It is e\'ident, from these 
 exhibits, and from what has been said, that the gold 
 premium can be attributed only in pait to the amount 
 of the currency outstanding, and rests partly upon 
 other grounds, some of which have been named before. 
 The gi'eat cause of gold premium is the great intens- 
 ity of demand for it over the demand for other money. 
 Considering the foreign indebtedness of the countr}'", 
 that demand is next to absolute, and must be met ; 
 and so Ions: as that demand continues, gold, while insuf- 
 ficient in supply to readily meet the demand, will be at 
 a premium over any paper money that cannot, at will, 
 be converted into coin ; not because there may lie too 
 much paper, but because of an insufficiency of gold to 
 readily and easily meet the demand. The truth of 
 this proposition is evidenced by facts which have existed 
 in several nations. Cash payments have been sus- 
 pended in Eussia over sixty years. During that time, 
 up to 1870, her paper-money averaged near 750,000,- 
 000 roubles, and the gold premium was from 17 to 29 
 j)er cent. Between 1870 and 1876, her paper money 
 was increased to about 1,000,000,000 roubles, and the 
 jjremium on gold fell to 10 to 15 per cent. Italy had 
 about $50,000,000 of paper money in 1866, and gold 
 was at a premium of from 19 to 20 per cent. In that 
 year the government authorized the Bank to issue in- 
 convertible leeal tender notes. Resulting from this 
 act the total paper money was increased to $300,000,- 
 000 in 1874, and gold fell to 3 per cent, premium. 
 The case of France is a very striking one. In 1870,
 
 118 PRICES OF PROPERTY AXD GOLD PREMIUM : 
 
 the Bunk of France suspended specie payment. The 
 
 effects of this upon the notes and gold premium are 
 
 thus described by M. Victor Bonnet : 
 
 "The movements of the paper-money circulation in- 
 flicted on France by the war, are destined to surprise 
 a multitude of people. There is, in those movements, 
 a complete overturning of the economic and financial 
 ideas which the best authorities had endeavored to 
 establish in the previous history of monetary 
 science. These authorities have alwa3^s raised 
 their warning voices against paper-money and legal- 
 tender laws. They tell us, with one accord, that if 
 the quantity of paper money be not strictly limited, 
 and excessive issues prevented, the public confidence 
 will fail and depreciation will soon follow. In appar- 
 ent defiance of these sound principles, we find that in the 
 midst of the war troubles of France, paper money to 
 the amount of 1,800,000,000 francs was issued and 
 has been kept at par by means of a coin reserve of 
 600,000,000 francs, or 33 per cent. This paper money 
 never for a single moment lost its value, or fell to a 
 discount until the first payments were made to Prussia. 
 At that crisis the premium on gold rose to two and 
 one-half per cent., and, strange to say, this premium 
 on gold fell immediately when the law was passed to ex- 
 pand the circulation, and to increase the issues beyond 
 1400,000,000 francs, which was the limit at first assigned 
 to the maxinmm of the note issues. In November, 
 1871, these issues were 2,300,000,000 francs, and the 
 depreciation two and one-half per cent. At the end of 
 January, 1872, the issues were 2,450,000,000 francs, and 
 the depreciation had fallen to one per cent. At length, 
 after the lapse of a certain period, when new issues had 
 been authorized, and the legal limit had been fixed at 
 3,200,000,000 francs, the premium on gold was merely 
 nominal, and nobody paid any attention to it except 
 those concerned in the forei^jn exchanges. The singu- 
 larity of this was the more noteworthy because these 
 large emissions of notes took place amidst grave incer-
 
 CAUSES OF THEIR RISE AND FALL. 119 
 
 titude. For, in the first place, France was paying her 
 immense indemnity to the Prussians, and was seeking 
 in every possible way to augment her specie resources ; 
 and, secondly, she seemed likely, in spite of all she 
 could do, to lose her whole aggregate of coin circula- 
 lation . Never before had such dangers been surmounted 
 with so much success." 
 
 The reason for this phenomenon in French finance 
 seems plain to me. It is this : by the issuance of large 
 amounts of legal tender paper, the uses for coin in 
 internal commerce were reduced proportionately. 
 The extent and intensity of the demand for coin were 
 thus diminished, and the demand for foreign shipments 
 the more easily and readily supplied. The abundance 
 of paper-money stimulated all business, and created 
 for France a great foreisrn trade. The fiscal trans- 
 actions of the government were very profitable in buy- 
 ing bills of exchanofe. These transactions reduced the 
 demand for and augmented the supply of coin. 
 
 So it was in England. In regard to gold premium, 
 
 Mr. Huskison remarked in Parliament : 
 
 "The difference between the market and the mint 
 price of gold was erroneously considered as a test of 
 the superabundance of paper in the home market ; but 
 it, in reality, arose from a very different cause, the 
 gold was sent out of the country to pay up foreign 
 loans and to meet the wants of British travelers. The 
 experience of late years decisively proved that the doc- 
 trine of the Bullion Conniiittee in 1810, that the 
 difference between the market and the mint price of 
 gold was owing to an over-issue of pa[)er and was 
 measured by its amount, was decisively disproved by the 
 facts which had since occurred. In 1814, the bank 
 issues were £23,600,000, and the market price of gold 
 was £5 lO.s. per ounce; in 181,") the l)ank paper was 
 £26,300,000, and the price of gold had fallen to £4 6s. 6d.
 
 120 PRICES OF PROPERTY AND GOLD PREMIUM : 
 
 per ounce ; proving that the price of gold was owing 
 to the enhanced demand for it on the Continent, to 
 meet the exigencies of foreign war, and not to any 
 excess in the domestic circulation." 
 
 The fall of the premium on gold in 1876 and in 1877 
 in the U. S. is due, not more to the reduction of the 
 volume of the currency, than, 1st, to the enormous for- 
 eign balances in favor of this country which accrued in 
 those years ; and, 2nd, to the great decrease in custom 
 receipts ; both of which reduced the demand for gold. 
 The final settlement of the political troubles in the 
 Southern States in 1877 contributed also to the decline 
 in gold premium. 
 
 It has been common for writers on finance to assume 
 that prices of commodities are controlled by the sum 
 of gold and silver in the world. This was doubtless the 
 case before paper money came into general use. But 
 if that class of thinkers will take the pains to examine 
 the amounts of paper currency in the world, and the 
 general prices of commodities during the last fifty years 
 they will find that prices have advanced with an in- 
 crease of the aggregate amount of paper and deprecia- 
 ted with a decrease of it. 
 
 There is now no sufficient decrease in the world's an- 
 nual supply of the precious metals . for that alone to 
 cause the universal fall of prices experienced. The 
 cause of the general shrinkage of values rests in the .re- 
 duction of the total volume of money in the civilized 
 world, produced by the demonetization of silver in Eur- 
 ope and the United States, and the reduction *of the 
 volume of paper money. 
 
 If one nation make paper money serve for internal 
 «ommcrce, the uses for gold and silver in that country
 
 CAUSES OF THEIR lUSE AND FALL. 121 
 
 are diminished just that much, and the extent of the 
 demand for coin is, in consequence, reduced in equal 
 proportion. It also increases the metal supply of other 
 nations, because a plentiful sup[)ly of paper money in 
 a nation drives coin a])road, and, the aggregate demand 
 for it being thus reduced while the supply of it remains 
 undiminished, reduces its value, that is, its purchasing 
 power. If all nations used paper money exclusively in 
 internal commerce then the world's demand for coiii 
 for internal conniierce would be extinct and its use would 
 be confined to settling foreign balances and pa\nng for- 
 eign interest. The general demand for metal money 
 would proportionately decrease and, of course, its value 
 would depreciate. 
 
 In proportion as a country's uses for coin increase or 
 diminish in proportion to the supply thereof, the value 
 of coin as compared with that of paper money increases 
 or diminishes ; and as the world increases the aggregate 
 volume of circulating money, both coin and paper, 
 prices will advance, but not necessarily in the same 
 ratio. 
 
 As an example of the first part of this proposition 
 we refer to the years 1871,1873 and 1877. In 1871 
 this country exported ten millions more of gold and 
 silver than in 1873, and yet gold was on an average 
 two per cent, lower the former than the latter year. 
 This resulted from the fact that the shipments of gold 
 and silver in 1871 nearly settled that year's foreign 
 balances aorainst this country, and the demand for the 
 precious metals was nearly satisfied, while in 1873 the 
 exports of merchandise, gold and silver left nearly 
 $60,000,000 balance against this country, and on that 
 account the demand for coin in this country was inten-
 
 122 PRICES OF PROPERTY AXD GOLD PREMIUM : 
 
 aified, because the supply was not nearly equal to the 
 demand. 
 
 In 1877 the prem?uni on gold fell to 2f per cent., 
 because the decrease of custom- receipts and the enorm- 
 ous balances of trade in favor of the U. S. were applied 
 to satisfy the demand for the precious metals, thus 
 reducing the intensity of the demand. 
 
 In proof of the second clause of the foregoing pro- 
 position, we refer to the fact, Avell authenticated by 
 history, that soon after the close of the ^rars of Napo- 
 leon Bonaparte, in 1816, all the great powers of Eu- 
 rope proceeded to fund their floating and unfunded 
 debts, and to reduce the amount of paper currency, 
 and that upon the heels of this came a universal fall 
 in prJ-^-es there. On the other hand, between the years 
 1849 and 1860, there was a great increase of the vol- 
 ume of paper money, and a simultaneous advance of 
 prices. 
 
 From 1840 to 1860 the Bank of Ens-land increased 
 her issues about $15,000,000. From 1854 to 1863 
 the Bank of France increased her issues $35,000,000. 
 From 1850 to 1870 Germany increased her paper 
 money from $80,000,000 to $182,000,000. From 1852 
 to 1861 Austria increased her bank notes from 192,- 
 600,000 florins to 475,200,000. From 1830 to 1858 
 Russia increased her paper money from 639,000,000 
 roubles to 755,297,000. Bank notes in the U. S. in- 
 creased from $105,000,000 in 1847 to $207,000,000 in 
 1860. General prices advanced with this increase of 
 paper money. 
 
 Again, on the other hand, since the Franco-Prussian 
 war, and since the demonetization of silver by Prussia and 
 the U. S., and the restriction of its coinage by France,
 
 CAUSES OF THEIR RISE AND FALL. 12$ 
 
 and a reduction of the volume of i)apcr money by th© 
 U.S. a $1,000,000,000, there has been a diminution 
 of the aggregate sum of money, coin and paper, 
 l^er capita, in Europe and America, and at the same 
 time an increase of the airij^re}2;ate indebtedness of those 
 countries, thus increasing the uses for money, while 
 the supply thereof has been cut down. The result ha» 
 been a universal fidl of prices on both continents. 
 
 From the foregoing Ave lay down the following con- 
 clusion as indisputable propositions : 
 
 1st. The premium on co'n in the world, or in anj 
 country, depends upon the extent and intensity of de- 
 mand for it, as compared with the extent and intensitj 
 of the demand for other kinds of money. 
 
 2d. The purchasing power or value of coin depends 
 upon the extent and intensity of the demand for it, 
 caused by the extent of its uses, as compared Avith the 
 demand and supply of any other thing, or all other 
 things. 
 
 3d. In proportion, as the Avorld or any country in- 
 creases its volume of paper money, it decreases it» 
 uses for, and the purchasing power of, coin, and vice 
 versa . 
 
 4th. The price of property and labor are controlled 
 by the aggregate sum of money, coin and paper, in 
 circulation, as moditied by soil, climate, seasons and 
 the conditions of man and nations. 
 
 As any country increases its paper circulation, it adda 
 to the Avorld's aggregate stock of money, and reduces 
 its own uses for coin, which tends to produce both a 
 rise in values of property and labor and a fall in the 
 purchasing power of com, both of which are benefac- 
 tions to mankind.
 
 124 PRICES OF PROPERTY AND GOLD PREMIUM : 
 
 The United States being a debtor country, and com- 
 pelled to pay immense sums of coin interest to foreign 
 capitalists annually, would act wisely to transact all her 
 internal commerce with paper money, thus increasing 
 the world's aggregate supply of money, decreasing the 
 value of coin and increasing the value of property and 
 the prices of her exported commodities. 
 
 It seems to be a common delusion that, because gold 
 has fallen to a little below three percent, premium, the 
 whole question of resumption is simply what Mr. 
 Ricardo of England said m 1819, only a question of three 
 per cent. ; three per cent, decline in gold and three 
 per cent, decline in values. No greater error ever mis- 
 led or calamity befell England than that hallucination, 
 and probably no greater could befall this country than 
 that of regulating our finances b}-- such a theory. No 
 man can foretell what amount of contraction of the 
 currency will be necessary to bring paper to par wdth 
 gold, nor can any one fathom the depths to which prices 
 will fall in consequence of contraction. 
 
 In England they experienced a fall of prices of fifty 
 to one hundred per cent. A contraction of the volume 
 of money always produces a fall of prices ; though gen- 
 eral confidence and lil)eral extensions of credit, as in 
 this country up to 1873, retard the fall. But after a 
 crisis, when general confidence is shaken and capital is 
 cautious and credit doled out sparingly, the fall of prices 
 is greatly accelerated. Many, no doubt, believe that 
 in 1879 paper will certainly be at par with gold, and 
 that par is the point of safety. 
 
 ■ Par would be possible under certain circumstances. 
 For instance, if our net foreign balances of 1878 should 
 be more than our foreign interest, paper would reach
 
 CAUSES OF THEIR RISE AND FALL. 125 
 
 irold value, unless war or some accident should inter- 
 vene to prevent it. But there is no pro])abiliiy of such 
 a balance of trade in our favor. The indications are 
 that we have reached the maximum of our foreign bal- 
 ances for several years and that they will be less in the 
 future. If our foreign interest should be several mil- 
 lions more than our foreign balances in 1878, which is 
 possible, then instead of a decline in gold premium an 
 advance would necessarily follow. 
 
 The country should beware of the hope that rests on 
 foreisfn balances and accumulations of coin. It is 
 treacherous. 
 
 Par on one side and gold premium on tlie other form 
 an illimitable perspective from the outlook of existing 
 circumstances, without such a reduction of the volume 
 of money and of prices as to almost destroy business. 
 If the provisions of the resumption act should be car- 
 ried out, a continued and heavy contraction of the vol- 
 ume of the currency will result ; every debt and obli- 
 gation ill the land, $2:i, 000,000,000 of tliem, will be 
 payable in toin, after all the legal tenders shall have 
 been redeemed. This will make capital timid, cut off 
 credit, and liring the business of the country to cash 
 transactions. Then ever^•thino: in the land will he for 
 sale without a purchaser. The extent of the fall of 
 the values of property of all kinds, including corpora- 
 tion stocks, bonds and securities, cannot be estimated. 
 Thev must shrink enough to bring it ^^ithin the power of 
 the money that may then exist to move all the vast 
 property that enters into the commercial and business 
 transactions of the country. To effect this the shrink- 
 as:e of values must be crreat. In England from 1818 
 onward the contraction of the volume of currencv from
 
 126 PRICES or PROPERTY AND GOLD PREMIUM. 
 
 about £48,000,000 to £26,000,000 caused a general fall 
 of prices of from 50 to 100 per cent. The full in this 
 country wdll doubtless exceed 25 per cent. ; nothing in- 
 dicates that it can be less. A par of gold and paper 
 can be reached by a sufficient reduction of the volume 
 of paper if no accident, and no more intense demand 
 for the former than for the latter, intervenes to prevent 
 it, but it will be disastrous to business. We need not 
 indulge in gilded hopes . We cannot escape . The effects 
 of a contraction of the currency are inevitable . Resump- 
 tion will destroy one-fourth of the commercial value of 
 the property of tliis country.
 
 CHAPTER IV. 
 
 PAR : ITS LAWS. 
 
 This little word is harmless in the abstract ; but, ef- 
 forts to apply it to unequal things, are dangerous ex- 
 periments. To force a par of things, which by nature or 
 circumstances are different, is to disregard the laws of 
 their difference, and to produce evil results. No law 
 can be broken Avith impunity. Retribution will follow. 
 This principle applies to money with the same force as 
 to the physical or social world. 
 
 Money is a thing of value, as money ; its principal 
 use is to effect commercial exchanges, and its sum 
 ought to be commensurate with the requirments of 
 commerce. There are two kinds of money in this 
 country. They are different in value and volume. 
 Value is regulated by demand and supply. To bring 
 them to par, one of two things must be done. 1st, 
 Increase the amount, or destroy the uses for the dearer 
 money, until the intensity of the demand for it be 
 reduced, so as to correspond Avith the intensity of the 
 demand for the cheaper money ; or, 2d, Reduce the 
 amount and increase the uses for the cheaper money, 
 until the intensity of the demand for it be increased, 
 so as to correspond with the intensity of the demand
 
 128 par: 
 
 for the dearer money. A part of the second method, 
 that of reducing the amount of the cheaper money — 
 paper — is the phm adopted by the government of the 
 United States, to force a par of money values. The 
 laws of the difference in value of these moneys is the 
 greater intensity of the demand for coin than for paper. 
 The law of the supply of paper money should be the 
 requirements of commerce. The supply of both is not 
 greater than the extent of the demand. 
 
 If, then, the government pursue the policy adopted 
 of so reducing the volume of paper money as to 
 increase the intensity of the demand for it, until it 
 equals the intensity of the demand for coin, the laws 
 of their difference vn\\ be encroached upon, the require- 
 ments of commerce will be disregarded, and the sup- 
 ply of paper money so diminished as to cripple all 
 business. 
 
 This country is not in demand of coin for anything, 
 except to pay coin bonds, or coin interest, and foreign 
 balances of trade against it. It is not in demand of a 
 dollar in coin for its internal business. It needs more 
 money, but paper will serve every purpose. The stock 
 of coin in the country is small, and the annual sup- 
 plies are nearly consumed in the arts, and in foreign 
 interest. The supply of it is so small compared with 
 the millions upon millions of coin liabilities, that the 
 demand for it is intense. To force a par by resump- 
 tion of specie payments will still further intensify the 
 demand for coin, because its uses will be greatly in- 
 creased without a corresponding increase in supply. 
 
 There are now about $2,000,000,000 of coin obliga- 
 tions owing by this country, with the pittance of $150,- 
 000,000 to $235,000,000 of specie to pay them with.
 
 ITS LAWS. 
 
 129 
 
 On resumption day that sum of coin obligations will 
 swell to $2.'), 000, 000,000, and the country will have 
 about a hundredth part of it in coin. This enormous 
 increase in the demand for coin, Avill greatly intensify 
 the demand for it : will greatly enhance its value, or 
 purchasing power. The process of reaching par will 
 be one of laborious and fatiguing ascent towards a 
 constantly rising point. For paper money to reach the 
 elevated point of par, its volume must be diminished 
 until every dollar of it can be redeemed in coin when- 
 ever called for, and the demand for it must be increased 
 until it equals the demand for coin. This ^^^ll greatly 
 enhance its value — its purchasing power. 
 
 The result of this process of enhancing the value of 
 paper money to par value Avith coin, by force of the 
 resumption act, Avill necessitate a very great deprecia- 
 tion of the values of all property, real and personal, 
 and a corresponding falling off in the amount of all 
 business. As the elevated point, par, is a constantly 
 rising one, so the bottom of depreciation of values will 
 be a constantly receding one. It is a common error to 
 suppose that par is the goal, the central point, to which 
 all financial theories ought to tend. Par is a good 
 thing when it is produced by a condition of things 
 consistent with the business interests of the country. 
 But in every case where it has been produced by force 
 of legislation, it has been attended by great distress 
 of the people. 
 
 The only thing indicated by coin premium is an 
 intensity of demand for it, superior to that for paper. 
 The only thing indicated by par is an equipoise of de- 
 mand for the two kinds of money. Par and coin pre- 
 mium bear no relation whatever to the commercial or
 
 130 PAR : 
 
 industrial conditions of the country, and neither the one 
 nor the other affects the commercial or industrial con- 
 ditions of the country, unless they are produced by 
 laws or forces inconsistent ^vith a healthy condition of 
 business. It makes no kind of difference to a people 
 whether the money used in their internal commerce be 
 at par or not, so they have enough of it to transact all 
 their business. It may make no difference, and at 
 most, it will make be but little difference, whether their 
 mone}' is at par so far as their foreign commerce is 
 concerned, because the business of nations with each 
 other is always transacted on a coin basis of prices and 
 the balances are easily adjusted 
 
 It is commonly held that low exchanijes in a com- 
 mercial center result from the depreciation of the 
 money of that place, and are detrimental to commerce. 
 Neither of these propositions is necessarily true. Low 
 exchanges may result from other causes, and may not 
 be detrimental to commerce. If New York pay her 
 bills in coin, they Avill be worth in the commercial 
 world what other similar ))ills are worth, unless some 
 special cause makes those on English or other houses 
 worth more. If New York paj' them in depreciated 
 paper, they are discounted b}' the draAver in proportion 
 to the discount of the paper. So that low exchanges in 
 New York are not a loss to the drawer or acceptor, nor 
 are they depressing on New York commerce , except in case 
 of a constant falling in value of New York money. 
 Even in that case, the depreciated currency of New 
 York will, if there be plenty of it, so stimulate all in- 
 dustry and business as to fully oifset all losses caused to 
 her foreijjn commerce by her low exchanijes. Premium 
 on coin does not affect the ])rotits on exjiorts. The only
 
 ITS LAWS. 131 
 
 loss to the country in prices is in the very slight enhance- 
 ment of the value of inii)orted articles caused by the 
 premium on coin import duties, and the foreigner or 
 importer does not get this ; it goes into the government 
 coffers . 
 
 The people who talk and write so much in favor of 
 par, lose sight of the best uses of money and the place 
 where its greatest blessings rest. "Money is the sinews 
 of war." It is the vehicle of commerce ; the life of the 
 industries in peace. The greatest and best use of money 
 is to vitalize industry and facilitate internal commerce. 
 These, as compared with foreign commerce, are of 
 paramount importance. Our foreign commerce is 
 about one thousand millions of dollars a year. Our in- 
 ternal commerce is at least one hundred thousand mil- 
 lions ; one hundred times o-reater than our foreicrn 
 commerce.* 
 
 Where, then, rest the greater interests of money? 
 Every one must admit that they rest with the internal 
 business of the (-ountry. Will it pay to force paper to 
 par to facilitate foreign exchanges by so reducing our 
 volume of currency as to dry up the arteries of this 
 great internal commerce — ^the life of the industries? 
 No patriot who understands the terrible effects of such 
 a measure will defend it. Some imagine, because silver 
 is worth less than legal tenders, that if that metal were 
 remonctized, par and resumption wouhl both be already 
 accomi)lished. That hallucination may be another 
 
 *The New York clearings for 1877 were $20 87(5,555,937. This we 
 estimate as 40 per cent, of the clearings of all the great cities in the 
 United States. The sum of the business of all the great, commercial 
 centers would then be $50,000,000,000. Tlie business of the smaller 
 cities, villages, towns, country trading, etc., will eciual this nmouut; 
 making $100,000,000,000 as the total sum of tuternal transactions of 
 the country for 1877.
 
 132 PAR ; 
 
 "will-o'-the-"vvisp" to lead us through thorns and quag- 
 mh'es of affliction. 
 
 Let us examine the results of the remonetization of 
 silver. The first effect would be to greatly enhance its 
 value, not only here but in Europe. It would assume 
 exactly the position which gold now holds in this coun- 
 try. Gold, perhaps, would remain at a slight premium 
 over silver ; perhaps they would assume par. Silver 
 would appreciate to par with, perhaps to, a premium over 
 paper. AlmcKst every ounce of gold would leave the 
 country if it remained at a j^remium over silver. 
 
 Silver would take its place in the bank vaults and 
 the pu])lic treasury as redemption money. All the coin 
 liabilities of the country would be payable in silv^er. 
 This would tend to cause a constant flow of that metal 
 outward, to pay our foreign interest, and balances against 
 us. But silver would be at a slisfht advance here above 
 its value in Europe, perhaps. It might also be higher 
 in India and all Asia than in Europe, because it is Asia's 
 money. The demand of Asia for silver is insatiable. 
 All the Asiatic l)alances of Europe would be settled 
 in silver. This would nearly consume the annual pro- 
 ducts of the mines, less that used in the arts. Then 
 there would be left no considerable stock of silver to 
 be shipped to the United States. We think it prob- 
 able that the increased exportation of our gold stock, 
 which would follow the remonetization of silver, would 
 nearly equal in amount the increased importations of 
 silver, which would be caused by its higher value here. 
 
 We could not ex]3ect a raj^id or considerable increase 
 of our coin stock, bv reason of the remonetization of 
 silver. Persons who claim that the remonetization of
 
 ITS LAWS. 133 
 
 silver is all this country needs, because paper will be at 
 par with it, are in great error. 
 
 They lose sight of the more important consequence 
 that resumption, with silver remonetized, will neces- 
 sitate almost as great a diminution of our volume of 
 money as it would with only gold coin. This will be 
 the case, because the remonetization of silver does not 
 reduce our foreign demands for coin, it will increase 
 the value of the products of the mines only to the 
 extent of the appreciation of the value of silver, and 
 in the future, as in the past, all, or nearly all, our gold 
 and silver products and foreign balances of trade will 
 be consumed in paying off foreign interest. And here 
 is the great evil of forcing a par — the contraction , of 
 the volume of money so as to reduce values, cripple 
 business, and throw laborers out of emplo\mient. 
 
 Remonetization of silver will benefit the country. 
 It will benefit the world, because it will appreciate 
 the value of silver several per cent., and this will vir- 
 tually add that increase to the world's stock of money, 
 and tend, very slightly, to advance prices of property. 
 It will benefit the United States particularly, by caus- 
 ing capitalists and banks to unhoard large amounts of 
 money now held by them. This would give a consider- 
 able vitality to business for a short time, but it could 
 not continue long, for the processes of resumption 
 would soon produce a contraction equally as great as 
 the amount that might be unhoardcd. 
 
 Remonetization of silver will not save the country 
 from the blighting effects of a forced par value of 
 paper and coin. It will not prevent a large contraction 
 of the volume of money. A forcing of par in the
 
 134 PAK . 
 
 social world has desolated homes, destroyed kingdoms, 
 and caused human gore to flow in streams. 
 
 It was this terrible idea of forcing a par of the 
 lower and higher orders of people which made a hell 
 of France in 1789. Repeal the laws which are in- 
 tended to force a par. Let par come of its own ac- 
 cord, when the natural laws of finance and commerce 
 bring it. But let it not be forced to the destruction of 
 the peace and prosperity of the country.
 
 CHAPTER V. 
 
 GOLD, SILVER AND PAPER MONEY : 
 CIVILIZATION ; INCREASE OF COMMERCE. 
 
 The Monetary Commission, in their rei3ort, page 78, 
 estimate the total products of the Avorld's gold mines 
 from 1492 to 1848, at $2,()26,000,000, and from 1849 
 to 1876, inclusive, at $3, 2 15, 000, 000, making the total 
 gold products from 1492 to 1876 $5,841,000,000. 
 What the stock of gold was in 1492 is not known, but 
 it must have been $1,000,000,000, because, at the be- 
 ginning of the Christian era, Rome alone had $1,800,- 
 000,000 of gold and silver money. Prior to that time 
 Greece, Persia and Isroel had been very rich in these 
 metals, and since that time the mines of Spain, as well 
 as others, yielded gold and silver. 
 
 Then, to the total products of gold since 1492, add 
 $1,000,000,000, and it gives $6,841,000,000 as the total 
 sum of gold on hand and produced in and since 1492. 
 Mr. Fawcett estimated the total stock of gold money 
 and bullion in the world in 1877 at $2,700,000,000. 
 Deduct this from the last sum given and it leaves 
 $4,141,000,000 of gold lost, destroyed and used in the 
 arts since 1492 — nearly % of the total sum, and |§ of 
 the total products since that date. 
 
 It will be seen from the f oreo^oing that the total o;old
 
 136 GOLD, SILVER AND PAPER MONEY: 
 
 products of the last 27 years have exceeded those of 
 the precedmg 350 years by about $600,000,000. 
 
 But, while the products of gold have so rapidly in- 
 creased, its use in the arts has increased even more rap- 
 idly, as will be seen from the following table taken 
 from "Gold and Debt," showing the products, the 
 amount consumed in the arts, addition to, and decrease 
 of, the stock of gold for periods of 5 years. 
 
 Periods Addition to Decrease 
 
 ofSyrs Productions Consumption Stock of Stock 
 
 1840 4. $150,000 000 $132 000,000 $ 18 000,000 
 
 1845 9.. 196, 000 000.. 149, 000 000.. 47 000 000 
 
 1850 4.. 660. 000 000.. 180,000 000. .480 000 000 
 
 1855 9.. 680 000,000.. 295, 000 000.. 385, 000 000 
 
 1860 4.. 560 000,000.. 398 000,000. .162,0 000 
 
 1865 9. .615,000,000. .475.0 )0,000. . 140.0^0,000 
 
 1870 4. .530 0)0,000. .539,000,000 $9, 030, 000 
 
 This table exhibits three important facts. First : A 
 considerable decrease of production since 1855 ; a rap_ 
 idly increasing consumption in the arts, until in 1874, 
 it exceeded the products ; a constantly diminishing ad- 
 dition to the stock, from 1854 until in 1874 there was 
 not only no addition but a diminution of stock $9,000,- 
 000. 
 
 The total products of the world's silver mines from 
 1492 to 1876 have been estimated by statisticians at 
 $7,071,000,000. How much existed in 1492 is not 
 known. The probabilities are that there was then about 
 as much silver as gold. Its relative value to gold was 
 higher then than now. 
 
 Let it be supposed that there were $1,500,000,000 
 of silver in 1492. This, added to the total products 
 since, gives $8,571,000,000 existing and produced in 
 and since that date. It is not known how much silver
 
 CIVILIZATION ; INCREASE OF C0-M3IERCE. 137 
 
 has been used in the arts and ornamentation, lost and 
 wasted by abrasion since 1-492. 
 
 The Monetary Commission estimate $10,000,000 a 
 year used in the arts in the U. S. — about 22 cents j)er 
 capita of popuhition. Supposing that three hun- 
 dred and sixty millions of people in Europe and Amer- 
 ica consume the same per capita amount, they Avould 
 consume about $80,000,000 of silver in the arts a year. 
 Then making the low estimate of 3 cents per capita for 
 the 1,000,000,000 of people iu the rest of Europe, 
 British North America, Mexico, Central and South 
 America, Asia and Africa, the total consumption of sil- 
 ver in the arts and for ornamentation would be about 
 $110,000,000 a year now. If this calculation be cor- 
 rect, there is now no annual addition to the stock of 
 silver coin and bullion, but a yearly diminution of it. 
 But the present consumption does not indicate that con- 
 sumed in the past, because the consumption has in- 
 creased with the increase of production. 
 
 It seems reasonable that about the same proportion 
 of silver has been used in the arts, lost and destroyed, 
 as gold since 1492. Then as about § of the gold has 
 gone that way, we judge that of the $8,571,000,000 of 
 silver in stock and produced in 1492 and since, about 
 $5,714,000,000 have been lost, destroyed and consumed 
 in the arts and for ornamentation, lea\'ing the Avorld's 
 present stock of silver money and bulllion about $2,857,- 
 000,000. 
 
 The distribution of gold and silver coin and bullion 
 in Europe was estimated by 'Mi\ Fawcett in 1877 to be 
 as follows :
 
 138 GOLD, SILVER AND PAPER MONEY 
 
 Silver and 
 Countries Gold Base Metals 
 
 Great Britain $442,500,000 $ 80,000,000 
 
 France 650,000,000 350,000,000 
 
 Germany 380,000,000 370,000,000 
 
 Austria 
 
 Russia 
 
 Italy 
 
 Spain 
 
 Sweden 
 
 Belgium 
 
 Switzerland 
 
 AH others of Europe 
 
 200,000,000 
 250,000,000 
 145,000,000 
 
 )> 300,000,000 200,000,000 
 
 70,000,000 
 
 38,000,000 
 
 5,000,000 
 
 .^^ 360,000,000 
 
 Total ..liO^r^^-^T^^^Oe... $2,060,000,000 
 
 We think the estimates for France, Italy and Russia 
 are too large. In them specie payments have been sus- 
 pended, and coin has borne a premium during suspen- 
 sion. Premium on coin drives it out of circulation. 
 It seeks the government treasury, bank vaults and goes 
 abroad during suspension. 
 
 The enormous coin fine levied on France by Prussia 
 set the government of the former State and all its 
 agents to work to command all the coin in the Repub- 
 lic, and, we doubt not, it did so, excepting debased coins. 
 
 On June 23d, 1876, Marcaurd, Andre & Co., Bank- 
 ers of Paris, reported that the Bank of France had in 
 raults gold equal to about $295,000,000 and silver 
 equal to about $116,000,000. Add to these sums 
 $100,000,000 standard silver hoarded and $60,000,000 
 subsidiary and debased coins in circulation and we think 
 the sum of coin and bullion in France would be nearly 
 expressed. 
 
 The suspension of specie payments and premium on 
 coin in Russia and Italy indicate the exi^ortation of all 
 gold and silver except that needed for the payment of
 
 CIVILIZATION ; INCREASE OF CO.MMEKCE. 139 
 
 foreign interest. The debt of Russia was $2,149,000,- 
 000 in January, 1875. It has probably been increased 
 since enough to make the annual interest on it $150,- 
 000,000. The annual interest on the debt of Italy is 
 about $100,000,000. 
 
 Mr. FaAvcett's method of estimating the amount of 
 coin in all the European states except Great Britain, 
 France and Germany, is by comparing their annual 
 revenues ^vith the revenues of o-overnments known to 
 have a certain per capita volume of money, on tho 
 theory that the amount of revenue collected from a 
 certain per capita supply of ^loney in one nation bears 
 a relation to the revenue and per Qapiia supply of 
 money in other nations. It is true that the revenue of 
 • a nation will increase or decrease with the increase or 
 decrease of the sup})ly of money, Anthout any increase or 
 decrease of the rate of taxation. But it should be 
 borne in mind that the revenue of one nation bears no 
 relation to -the revenue of another, because the revenues 
 are regulated with reference to the exjjenditures of 
 government, and not with reference to the people's 
 capacities to i)ay ; and the expenditures of govern- 
 ment greatly differ in different nations, as well as in 
 the same nation at different times. It follows, there- 
 fore, that the collection of a $G per capita revenue from 
 a %\2, per capita volume of money in the United States 
 does not indicate that the per capita revenue of other 
 nations is half the per capita supply of money. 
 
 Prices of commodities are a nmch safer index to the 
 per capita supply of money, but they, even, are not a 
 sure one, because, while the amount of moncj 
 always affects prices, its effects are modified or intensi- 
 fied by the habits, manners, customs and conditions of
 
 140 GOLD, SILVER AXD PAPER MONEY : 
 
 the people. Prices in many of the states of Europe 
 are lower than in Great Britain and the United States. 
 This indicates a smaller jper capita supply of money 
 where prices are lower. 
 
 Adopting Mr. Fawcett's table, with the changes indi- 
 cated for Europe, and adding our own estimates for 
 Asia, Africa and the Americas, we submit the follow- 
 ing table of gold and silver coin and bullion in the 
 world, distributed according to the amount set opposite 
 the countries named : 
 
 Countries Gold Si^^er 
 
 Great Britain $442,500,000 % 80,000,000 
 
 France 370,000,000 226,000,000 
 
 Germany 300,000.000 170,000,000 
 
 Austria 
 
 Russia 
 
 Italy ..... 
 
 Spain 
 
 Sweden 
 
 Belgium 
 
 Switzerland 
 
 All others of Europe 
 
 200,000,000 
 
 150,000,000 
 
 120,000,000 
 
 ;> 360,000,000 146,000,000 
 
 40,000,000 
 
 38,000,000 
 
 10,000,000 
 
 240,000,000 
 
 Total in Europe . . . $1,472, 500,000. . . . $1,420,000,000 
 
 United States .$125,500,000 .$ 50,000,000 
 
 All other N. A. States 90,000,000 50,000,000 
 
 South America 50,000,000 100,000,000 
 
 The Americas $265,500,000 $200,000,000 
 
 Asia* $875,000,000 $1,213,300,000 
 
 Africa 87,000,000 23,700,000 
 
 ABia and Africa $962,000,000.... $1,237,000,000 
 
 Grand Total $2,700,000,000.. . .$2,857,000,000 
 
 ♦The products of China's mines are not kno^vn. It is probable 
 that their productions would add slightly to the above tigures.
 
 CIVILIZATION ; INCREASE OF COMMERCE. 141 
 
 All estimates of the stock of gold and silver com and 
 bullion in Asia and Africa are little better than guess. 
 But the above table is based on two h}^3otheses, at 
 least consistent with reason : 
 
 1st. As the stock of each metal in 1492 must have 
 been nearly equal to the other, and as the products of 
 each are now nearly equal, and the proportion of each 
 used in the arts, lost and destroyed are about the same, 
 we have estimated the total sums of each metal in the 
 world at the sums given above ; then deducting from the 
 total sum of silver and gold the amounts of each esti- 
 mated to be in the other quarters of the earth, leaves the 
 quantities in Asia and Africa at the amounts above given 
 to them. 
 
 2nd. The amounts of the precious metals in the four 
 quarters of the globe, as di.stributed in the last table, 
 are consistent with existing facts and the civilization 
 of the people. 
 
 Most statisticians reckon Asia to have an immense 
 amount of silver. Mr. Fawcett gives the people of 
 that country about $7 of gold and silver 'per capita. 
 It is true that the people of Asia have comparatively 
 little paper money, but their condition of heathenism 
 and abject poverty in many parts of the country, and 
 the rude and primative state in which hundreds of 
 millions of them live, and the low price of wages there, 
 do not indicate the presence or need of any such sum 
 of gold and silver money as $7 per capita. Further- 
 more, the profusion with which the people of Asia and 
 Africa adorn themselves with gold and silver ornaments, 
 when they can get these metals, indicates a heavy con- 
 sumption of them in that way. 
 
 A nation's uses for money increase with its advance-
 
 142 GOLD, SILVER AND PAPER MONEY .* 
 
 ment in civilization ; more properly, a nation developes 
 civilization and wealth in proportion to its supply of 
 money. The per capita supply of money, both coin 
 and paper, of the nations indicate very correctly the 
 degree of civilization existing in the four quarters of 
 the globe. 
 
 Follo^ving is a table of the per capita supply of money 
 in Europe, Asia, Africa and the Americas, including 
 coin and pa^Der : 
 
 Africa, per capita supply of money about $ .50 
 
 Asia*, " " " " " " 5.00 
 
 Two Americas" " " " " 14.00 
 
 Europe, " " " " " 17.50 
 
 From this the average degree of civilization appears 
 to be highest in Europe. This is true. But separating 
 Great Britain, France, Germany, and the United States 
 from the other states of Europe and America, and com- 
 paring their average ptr capita supply of money for 
 the last fifty years with that of all other nations, they 
 stand out prominently at the very head of civilization. 
 The conditions or states of the people of the four quar- 
 ters of the earth, as indicated by these money statistics, 
 are proved to be true Ijy existing facts, to learn which 
 one has but to turn to histories, travels, newspapers, 
 commercial, industrial, scientific and artistic reports of 
 nations, t 
 
 *There is a small amount of paper money in China, but the quan- 
 tity is not Icnown. Neither is tlio yield of the Chinese mines known. 
 There is also paper money in India. Taking these into considera- 
 tion, we put the per capita supply of money, coin and paper, of Asia 
 at $;■). Wages are very low in China; afoot-soldier's pay being 
 about ^3 or $4 a month. This indicates a very small supply of 
 money. 
 
 tit is proper to note here the seeming paradox, that while the 
 amount of money circulating in a nation indicates its degree of civ- 
 ilization, the amount uu individual possesses is no index to Ms
 
 CIVILIZATION ; INCREASE OF COMMERCE. 143 
 
 The amount of paper money in Europe and tlie 
 Americas is distributed about as follows : 
 
 Great Britain $200,000,000 
 
 France 500,000,000 
 
 Germany 200,000,000 
 
 Austria," 290,000,000 
 
 Eussia , 800,000,000 
 
 Italy 300,000,000 
 
 Otlier States 110,000,000 
 
 Total in Europe $ 1,400,000,000 
 
 United States 070,000,000 
 
 Canada 25,500,000 
 
 Brazil 1 10,000,000 
 
 Other S. American States 10.000,000 
 
 Grand total $3,215,500,000* 
 
 The rapid increase of commerce, both foreign and 
 domestic of the civilized world, is shown by the trans- 
 actions of Great Britain, France and the United States. 
 Their aggregate exports and imports for each decade, 
 from 1824 to 1874, were as follows : 
 
 GREAT BRITAIN. 
 
 1824 to 1834 $ 4,046,225,000 
 
 1834 to 1844 0,343,900,000 
 
 1844 to 1854 9,893,215,000 
 
 1854 to 1804 18,019,105,000 
 
 1804 to 1874 28,500,555,000 
 
 desree of civilization, as rompared with that of his fellow-country- 
 men. This is explained by the very simple reason that it is not the 
 possesswJi of money but the circulation of it that produces civili- 
 zation. 
 
 * These tables are not published as beinsr critically correct, but 
 proximately They are based on various reports and the most re- 
 liable statistics the author could obtain.
 
 / 
 
 144 GOLD, SILVER AND PAPER MONEY. 
 
 FRANCE. 
 
 1824 to 1834 $ 1,913,000,000 
 
 1834 to 1844 2,741,400,000 
 
 1844 to 1854 4,088,000,000 
 
 1854 to 1864 8,327,200,000 
 
 1864 to 1874 12,728,400,000 
 
 UNITED STATES. 
 
 1824 to 1834 $ 1,774,431,168 
 
 1834 to 1844 2,416,579,982 
 
 1844 to 1854 3,543,925,919 
 
 1854 to 1864 6,405,408,519 
 
 1864 to 1874 10,686,772,639 
 
 The amount of the internal commerce of the United 
 
 States is indicated by the following table of the New 
 York clearing house transactions, from 1854 to 1877. 
 
 1854 $5,750,455 987 1866 $28,717,146,914 
 
 1855 5,362',912,<i98 1867 28,675.159,472 
 
 1856 6,906,213,328 1868 28 484 288,637 
 
 1857 8'333,226 718 1869 37,407,028 987 
 
 1858 4756,664 386 1870 27,804 539 406 
 
 1859.... 6,448 0!5,956 1871 29 300,986 682 
 
 1860 7 231,143,057 1872 32 636 997,404 
 
 1861 5.915,742,758 1873 33,972 773,943 
 
 1862 6,871,443,591 1874 20,850 681963 
 
 1863 14,867 597.849 1875 23,042,276 858 
 
 1864 24,097,196.656 1876 21,597,274 247 
 
 1865 26,032,384,342 1877 2t),876 555 937 
 
 This table exhibits an increase of nearly 400 per 
 cent, in N. Y. clearinirs since 1854. We take the trans- 
 
 actions of the New York clearin": house to be about ^ 
 
 of the entire business of the country, both urban and 
 rural. 
 
 Upon this calculation it appears that the total in- 
 ternal business of the United States was about $28,-
 
 CIVILIZATION ; INCREASE OF COMMERCE. 145 
 
 000,000,000 ill 1854 and $104,000,000,000 in 1877, 
 nearly quadruple that of the former year.* 
 
 The London clearings were as follows for the years 
 named : 
 
 1868 $15,278,055,000 
 
 1869 17,670,195,000 
 
 1870 18,603,116,000 
 
 1871 20,092,315,000 
 
 1872 26,748,610,000 
 
 187.1 30,016,675,000 
 
 1874 29,970,000,000 
 
 This indicates a doubling of commercial transactions 
 in England from 1868 to 1874, when a decline set in. 
 These tables of French, English and United States 
 business indicate a general and very rapid increase of 
 production and business in the whole civilized world 
 during the last fifty years. Money, giving full scope 
 and application to man's powers, did it. 
 
 Rome, the richest and grandest of ancient nations, 
 
 had $1,800,000,000 of gold and silver, and used paper 
 
 money during her wars with Carthagena. "When her 
 
 volume of money fell to $400,000,000, decay brought 
 
 her downfall. Venice, the richest and greatest com- 
 mercial metropolis of the 12th century, invented and 
 
 used a semi-legal tender paper to sustain her wars and 
 commerce, and give application to the productive pow- 
 ers of her people. 
 
 The invention and general use of paper money in 
 
 * It will be noticed that the transactions of the New York clear- 
 ing house advauced to $37,407,028,987 in 18G9, indicating the in- 
 ternal business of the country for that year to have been about 
 f 185,000,000,000, nearly 85 per cent, more than for 1877. This fall- 
 ing off in business is explained in the great reduction of the vol- 
 ume of money, destruction of credit and the consequent fall of 
 prices and depression of business since then.
 
 14G GOLD, SILVER AND PAPER MONEY: 
 
 Europe during the last 200 years, gave a new impetus 
 to civilization, and notably during the last hundred 
 years Europe and America, finding coin totally inade- 
 quate to develope and apply the powers of man and 
 advance civilization, have doubled their money by the 
 use of paper, thus sextoupling their commerce and 
 elevating themselves to the highest degree of civiliza- 
 tion, wealth and glory. 
 
 "Within the last 100 years the commercial and busi- 
 ness transactions of the civilized world have needed an 
 increase of money equal to the increase of money of 
 all the previous 1800 years. In spite of the immense 
 discoveries of gold and silver in American, Australian 
 and Russian mines, no such increase of coin money, or 
 anything like it, has taken place as was required by the 
 necessities of trade and commerce. In the rapid 
 growth of industry throughout the civilized world, un- 
 der the advance of science, over 70,000,000,000 of 
 steam horse-power have been applied to mjaiad engines, 
 multiplying the producing power of man more than a 
 thousand fold." — B. A. Hiirs Gold, Silver and Pa/per 
 Money. 
 
 With the great increase of money in the last 100 
 years has sprung from the exhaustless powers of man's 
 mind and muscles, myriads of labor-saving, wealth- 
 producing and carrying machines and appliances, arts 
 and sciences, and these in turn have multiplied the 
 wealth and happiness of man a thousand fold in en- 
 lightment, civilization, houses, homes and countless pub- 
 lic and personal comforts. These, in turn have greatly 
 multiplied the uses of, and man's demand for, money. 
 
 According to the estimates of the best authorities, 
 the aggregate products of the world's gold and silver 
 mines have almost constantly diminished since 1853, as 
 will ])e seen from tlic folloAving table :
 
 « 
 
 CIVILIZATION : TNCrEASE OF COMMEHCfi. 147 
 
 Year Gold Products Silver Products Total Products 
 
 1853 $190,000,000 $45,000,000 $235,000,000 
 
 1854 165 000 000 45,000.000 210,000,000 | 
 
 1855 160,000,000 45,000,000 205,000,000 
 
 1856 158,000,000 45,000,000 203,000,000 
 
 1857 155.000,000 45,000,000 200,000,000 
 
 1858...... 150,000,000 45,000,000 105,000,000 
 
 1859 150,000,000 45,000,000 l'.»5.000,000 
 
 1860 148,000,000 50,000 000 198,000,000 
 
 1861 145,000,000 55,000,000 200,000 000 
 
 1862 145.000,000 50,000,000 1.95,000,000 
 
 1863 140,000,000 50 000,000 190,000,000 
 
 1864 140,000,000 55,000,000 195,000.000 
 
 1865 135,000,000 65,000,000 200,000,000 
 
 1866 135.000,000 65,000,000 200,000,000 
 
 1867 131,000,000 60,000,000 191000,000 
 
 1868 130 000,000 60,000,000 190,000 000 
 
 1869 125.000,000 55,000 000 180,000,000 
 
 1870 115,000,000 60.000,000 175,000,000 
 
 1871 110,000,000 65,000,000 175.000,000 
 
 1872 105 000,000 70,000,000 175.000,000 
 
 1873 95 000,000 75,000,000 170,000,000 
 
 1874 87 000,000 80,000.000 107,000,000 
 
 1875 90,000,000 75,000,000 165,000 000 
 
 1876 93 000,000 72,000,000 165,000,000* 
 
 The gold and silver which go to Asia aud Africa 
 never return . Civilization is slowly but surely encroach- 
 ing upon their benighted borders, and constantly in- 
 creasing their drafts upon Europe and America for the 
 precious metals. Europe and America may not, there- 
 fore, look to Asia and Africa for any addition to their 
 stock of gold and silver, but may rather expect that 
 shipments thither %\'ill increase, antl , perhaps, still further 
 reduce their stock. 
 
 Since 1853 there has been a decrease in the annual 
 products of the gold and silver mines of the world of 
 
 * The products are iriven in round numbers only, but approx- 
 imate verj- nearly the production of the precious metals aud the de- 
 crease for the years named.
 
 148 GOLD, SILVER AND PAPER MONEY. 
 
 about $70,000,000, and since 1866 about $35,000,000, 
 and during the same time a great increase in the annual 
 consumption of the precious metals in the arts, so that 
 there is now not only no addition to the stock, but an 
 annual diminution of it. 
 
 In 1865 and 1866 the civilized world's paper money 
 reached its highest point, when it was over $3,500,- 
 000,000. Since that date it has been reduced several 
 hundred millions, and with its reduction has come a uni- 
 versal fall of prices in Europe and America. With this 
 reduction of the world's supply of money and decline of 
 prices have come depression of business, bankruptcies, 
 riots, strikes, crime, suffering and pauperism to Ger- 
 many, Great Britain and the United States, and they 
 are the nations which have reduced their supply of 
 money most, or failed to increase it with the mcrease 
 of population. 
 
 Deduced from the foregoing facts we state the fol- 
 lowing propositions : 
 
 1st. Money is the power which has enabled man to 
 produce the existing civilization and wealth of the 19th 
 century. 
 
 2nd. The present stock of money, gold, silver and 
 paper, not only failing to increase with the increase of 
 pojoulation, but decreasing quite rapidly in the aggre- 
 gate, is insufficient to sustain the present degree of civ- 
 ilization, much less advance it. 
 
 There is no prospect of an increase of coin to sustain 
 the growing business of the world. Therefore, gov- 
 ernments must issue, or cause to be issued, more paper 
 money or suffer the dwarfing of man's powers and a 
 decline in all that makes nations great and their people 
 civilized, prosperous and happy.
 
 CHAPTER VI. 
 
 BONDS OF THE CIVILIZED WORLD : 
 NATIONAL, STATE, MUNICIPAL AND CORPORATE. 
 
 The conditions and accidents of the civilized world 
 during the nineteenth century have created immense 
 demands and uses for money. War has always been 
 expensive, and during the j^resent century, smce the in- 
 ventive genius of man has multiplied and improved the 
 engines of destruction, the mean?s of transportation and 
 the comforts of the soldiers, it has been immensely ex- 
 pensive. Each war has come to cost thousands of mil- 
 lions of money. 
 
 The waring nations, on their precipitation into con- 
 flict, found their exchequers insufficient to sustain 
 armies. A resort was made to semi-money, credit, 
 faith and debt — the offspring of civilization. Thence 
 resulted the system of national bonded indebtedness. 
 This became so necessary and so convenient that nations 
 in order to concentrate into a short conflict the ener- 
 gies of years, mortgaged the productive powers of man 
 for generations, by issuing bonds. 
 
 The great increase of money, both coin and paper, 
 resulting from the discoveries of ijold in the Australian 
 and Calif ornian mines in 1848-49 gave a tremendous
 
 150 BONDS OF THE CIVILIZED WORLD : 
 
 impulse to civilization aud caused it to bound forward 
 a century, increasing man's desires, tastes, ambitions 
 and capaljilities ten-fold beyond the power of the world's 
 money to sustain and satisfy them. These expressed 
 themselves in government plans for clearing out rivers, 
 erecting harbors, subsidizing ships and railroads, im- 
 provement and embellishment of capitols, education of 
 the youth, military academies, asylums for the unfor- 
 tunate and relief for the poor. The establishment and 
 support of these civilizing, beneficent enterprises re- 
 quired immense sums of money, to supply which the 
 treasuries of nations were inadequate, the world's money 
 insufiicient, and a resort to bonded indebtedness was 
 necessary. 
 
 The nations of the earth have not alwavs had wise 
 and good rulers. Hence, the frauds and profligacies of 
 governments have often exhausted the public treasuries 
 and caused a resort to the convenient, yet oppressive 
 system, of selling government bonds. 
 
 The impetus given to nations since 1849, has been 
 supplemented, or rather was caused by the inspiration 
 of individuals. The revelation to man of his wonder- 
 ful capabilities, aided by money, exalted his hopes and 
 extended his faith in his powers far beyond their for- 
 mer bounds. Thence the}'^ associated themselves together 
 to concentrate money and unite their energies in the 
 establishment of ships and steamboat lines, the building 
 of railroads, the opening of mines, the formation of ex- 
 press, insurance, manufacturing, trading, banking and 
 other companies to an unprecedented extent. Thence 
 grew up the great corporate systems, and the ready 
 money at their command ])eing far too small to carry 
 out their vast designs, immense sums of corporate
 
 NATIONAL, STATE, MUNICIPAL AND CORPORATE. 151 
 
 bonds were issued and sold in the money markets of 
 Europe and America. 
 
 Following are estimates of the national, state, mu- 
 nicipal and raiJroad bonded indebtedness of the civilized 
 world : 
 
 DEBTS or GOVERNMENTS. 
 
 Nation Amount Year Amount Year 
 
 Austria Iliui'^ary $ 625,000,000. .1848.. f 1,655, 9(J4, 500.. 1875 Dec 
 
 Belgium 123, 798,281.. 1844.. 185,909,802. .1873 
 
 Denmark 74, 312,325.. 1866.. 55,769,055.. 1875 
 
 France* 1,000,000,000.. 1850.. 3, 750,337,006.. 1875 Jau 
 
 Prussia 246,000 000. .1875 Jan 
 
 Bavaria 86,006, 000.. 1855. . 156.685,000. .1874 
 
 Wurtemburg* 30,000,000. .1850.. 73,500,000. .1874 May- 
 Saxony 3,000,000 
 
 G.Britain & Ireland. 3,928,000,000. .1836.. 3,876,000,000. .1875 Mch 
 
 Greece 25 OOO.OOO. .18.50.. 75,000,000.-1875 
 
 Italy 586,000,000. .I860. . 1,951 ,500,000. .1873 
 
 Netherland 386,300 000.. 1874 
 
 Portugal 105,000,000.. 1856.. 364,000 000. .1873 
 
 Russia 625,000,000.. 1850.. 2.149,900,000. .1875 Jaa 
 
 Spain* 1,075,000,000. .1869. . 2,650,000,000. .1875 June 
 
 Sweden 43, 000,000.. 1875 
 
 Norway 8,000,000.. 
 
 Switzerland 6,000,000. . 
 
 Turkey None.. 1850.. 900,000,000. 1874 
 
 United States 63,452,773. .1850. .12,245,018,579. .1876 June 
 
 Canada 70,000,000. .1863.. 116,082,917. .1875 July 
 
 Mexico 317,357,250.. 1865.. 395,500,000. .1874 
 
 Brazil ..1850.. 369,294,430. .1875 June 
 
 Argentine Republic. ..1850.. 67, 700,000.. 1875 June 
 
 Bolivia ..1850.. 17,000,000. .1875 
 
 Chili ..1850.. 63,400,000.. 1875 Sept 
 
 Colombia ..1850.. 75,000,000. .1873 
 
 Ecuador ..1850.. 16,400,000. .1855 
 
 Guatamala ..1850.. 4,400,000.-1875 
 
 Hayti ..1850. 16,000,000.-1875 
 
 Honduras ..1850.. 29,700,000- .1875 
 
 * Estimated. 
 
 rContinued on opposite page.]
 
 152 BONDS OF THE CIVILIZED WORLD : 
 
 Nation Amount Year Amount Tear 
 
 India 299,700,000.. 1859.. 537, 675,000.. 1874 Apr 
 
 Egypt. ..1850.. 350,000, 000.. 1875 
 
 Japan ..1850.. 16 500,000.. 1875 
 
 Colony of Good Hope. ..1850.. 8, 615,000.. 1874 
 
 Ceylon ..1850.. 3 200,000.. 1874 
 
 N.S.Wales ..1850.. 54,500,000.. 1874 
 
 NewZcaland ..1850.. 50 000,000.. 1873 
 
 Queensland ..1850.. 15,000 000.. 1873 
 
 S.Australia ..1850.. 17,000,000. .1875 
 
 Victoria ..1850.. 60 000,000. .1875 
 
 Nicaragua ..1850.. 9, 500,000.. 1874 
 
 Paraguay ..1850.. 24 000,000.. 1875 
 
 Peru ..1850.. 2.5,750,000. .1875 
 
 San Domingo ..1850.. 3, 7.50,000.. 1875 
 
 Uruguay ..18.50.. 211,785,000. .1875 Mch 
 
 Venezuela ..1850.. 100,000,000.-1875 
 
 Total .^9,032,626,023 $23,439,471,920 
 
 The increase of bonded debts has been very rapid 
 since 1860. It will be noticed that France, Ital}'', Por- 
 tugal, Russia, Spain, the United States, Austria and 
 India increased their debts nearly $10,000,000,000 
 between 18(30 and 1875 — an increase at the rate of 
 nearly $700,000,000 a year. Since 1875 the war of 
 Russia and Turkey has caused an augmentation of the 
 debts of them and the other European States largely, 
 perhaps $2,000,000,000. The famine in India; the 
 revolutions in Mexico ; the wars of the South American 
 States, and the efforts of Spain to suppress the rebellion 
 in Cuba, have added largely to the bonded debts of those 
 nations. We think the increase of the bonded debts of 
 the nations named has been at least $5,000,000,000 
 since 1875. Add to this Mr. Fawcett's estimate and 
 the present government bonded indebtedness of the 
 
 t Tills includes non-interest bearing debt and Pacific railroad 
 bonds.
 
 NATIONAL, STATK, MUNICIl'AL AND COKl'ORATE. 153 
 
 nations named would be about $28,500,000,000. Tho 
 railroad debts of the world were al)out $700,000,000 in 
 1850 ; in 18(50, about $2,000,000,000 ; in 1870, about 
 $3,500,000,000, and 1875 about $5,000,000,000. Add 
 the same ratio of increase, about 8 per cent, per annum j 
 since 1875, and the present (December, 1877) raih'oad 
 bonded indebtedness would be about $G, 200, 000, 000. 
 State and nmnicipal debts of the world have been esti- 
 mated at about $4,250,000,000, up to the year 1876. 
 Add the same per centum of increase as accrued in rail- 
 roads, and the state and nmnicipal debts would stand 
 now (December, 1877) atabout$5,0t)0,000,000. Adding 
 the several items, it gives $39,700,000,000 as the present 
 national, state, nmnicipal and railroad indebtedness of 
 the civilized world. The outstanding bonds of all other 
 largo corporations and companies in Europe and America 
 added would swell the bonded debts of the nations 
 named to the gigantic sum of over $40,000,000,000. 
 This vast sum of interest-bearing obligations is held 
 principally in Europe and America , constituting the 
 property of that class of men called the "money 
 power." 
 
 This immense sum is four times the actual money 
 values of all property in the United States, and nearly 
 five times the aggregate sum of money, l)olh coin 
 and paper, in the whole world. The interest on 
 it, about $2, 000, 000, 000 ^cr annum, consumes the sur- 
 plus products, the profits of the debtor nations. These 
 bonds, born of necessity and extravagance, have, in a 
 measure, served the purposes of money, and in that 
 way have done the world nmch good. But they have 
 grown to such enormous proportions that they threaten 
 whole nations with bankruptcy. So long as the vol-
 
 154 BONDS OF THE CIVILIZED WOELD : 
 
 ume of money (the aggregate of coin and paper) kept 
 pace in increase with the constantly developing powers 
 of man and the increasing uses for money, the money 
 power on the one side, and commerce, the industries 
 and labor on the other side, were not enemies. The 
 bonded indebtedness of the world was not felt as a bur- 
 den, because the increasing production, the profits of 
 business and the supply of money pro\aded the means 
 of paying the interest and principal of the bonds 
 with comparative ease. But when the increase of the 
 world's supply of money was stopped a few years ago 
 and the policy of reducing the volume was begun, a 
 universal decline of prices of property in Europe and 
 America set in, then those bonds began to be a burden 
 to the people, because the means of bearing them up, 
 money, was reduced. 
 
 The money power and the people found that as the 
 volume of money was reduced, prices fell and the pur- 
 chasing power of the annual interest on bonds rapidly 
 increased, thus greatly increasing the riches of bond- 
 holders, while the wealth of the people Mas corres- 
 pondingly reduced. At this point enmity sprang up 
 between the money power on the one hand, and the 
 people and all their interests on the other. As time 
 passed on, the interests, sympathies and feelings of the 
 two classes diverged wider and wider apart, until it 
 came to wars of words and diplomacy with governments 
 and ill the legislative halls of the nations, the money 
 power pressing for the cheapening system and dearer 
 money, and the people resisting, until finally, in the 
 United States, the contest threatens the destruction of 
 ))onds or the i)ayment of them in cheap money if the 
 people triumph, or the destruction of the commercial
 
 NATIONAL, STATE, MUNICIPAL AND CORPORATE. 155 
 
 wealth of the nation, the pauperization of labor, and, 
 perhaps, revolution if the policies of the money power 
 prevail. 
 
 Such is the condition of the United States and such 
 will be the condition of every nation bearing a heavy 
 load of l)onded debts, unless the overshadowing influence 
 of the money poAver cease to make governments their 
 fiscal agents and engines of oppression against the 
 l^eople. These are matters of great solicitude to every 
 lover of his country, and unless wise counsels and 
 equitable financial measures prevail, the worst appre- 
 hensions ^y\\\ inevitably be realized facts, soon or late, 
 in national decline, increased pauperism and crime, 
 riots, insurrections and revolutions. Extrication from 
 this fearful dilemma of repudiation on the one hand, 
 and revolution on the other, lies only in a judicious in- 
 crease of money so that the amount of money shall be 
 commensurate with the people's needs of it. Such an 
 increase must be of paper money, because the stock 
 and products of gold and silver are utterly inadequate 
 to serve the commercial needs of the world in the pres- 
 ent advanced state of civilization and under the existing 
 debt-burdened conditions of men and nations.
 
 CHAPTER Vn. 
 
 THE MONEY POWER ; ITS POLICY AND INFLUENCE. 
 
 This is that class of men who own the interest-bear- 
 ing bonded debts of the world, mentioned in another 
 chapter. The greed, the unwise policies, the arog- 
 ance, the cheapening system of this power have made 
 it, unconsciously may be, the enemy of every material 
 general interest of human society, the enemy of civil- 
 ization. The interests of all the industrial, commercial, 
 laboring, scientific and professional classes are natur- 
 ally identical, and wherever they differ, it is local, par- 
 tial and forced by bad laws or bad policy. 
 
 There are some so simple as to imagine that property 
 owners, the wealth v, are the natural enemies of the 
 laboring classes. This is not true. Labor and pro- 
 perty are natural friends. Not even railroads and 
 exchange and deposit banks are in their nature objects 
 and ends at variance with the rights and interests of 
 labor, and where a conflict arises between these institu- 
 tions and the interests of the people, it is the result of 
 a subversion of the uses, objects and ends of the 
 former. 
 
 But, the interests of the "money power" lie, or, at 
 least they think they lie, antagonistic to all the other 
 money interests of society ; hence, has sprung up a bit- 
 ter warfare between the money power and the people.
 
 ITS POLICY AND INFLUENCE. 157 
 
 Governments, in their folly, have mortgaged the brain, 
 muscle and property of the people to the bond-holders 
 for years, and the hitter, of that folly bom of avarice, 
 use the power placed in their hands in influencing gov- 
 eniracnts to pursue iinancial policies oppressive on the 
 people. 
 
 The country need not look to the money power for 
 relief, for, although thousands of that class of capital- 
 ists are, in feeling and impulses, the friends of the 
 masses, yet the money power of the world, in its mea- 
 sures and financial operations, is a monster to be 
 dreaded by the masses. It is the nightmare of the age, 
 riding with supreme indifference upon the galled backs 
 of a weary and heavy laden people. It is as a leech, a 
 huge vampvr on the body politic, sucking up the sub- 
 stance of the nations. Much has been said of it. 
 People heap denunciations upon it without ha\'ing any 
 true conception of its vast powci', of controling influ- 
 ence in the affairs of the world. It cTwns the public 
 indebtedness of Europe and America, air^refjatinij the 
 enormous sum of $40,000,000,000, and its measures 
 are directed by the most skillful financiers of the 
 world, with headquarters in all the financial centers. 
 A great part of this sum is free from taxes, and the 
 annual interest on it, wruns; from the toil and sweat of 
 the millions, is about $2,000,000,000. 
 
 It is cosmopolitan w'ith reference to country. It has 
 no country, no patriotism above pelf. Hence, it wants 
 a "universal standard of values," a "uniform money of 
 the world," regardless of the interests of the people. 
 Its annual income is fixed by the rate of interest on its 
 bonds, hence, self-interest — sheer Shvlockism, prompts 
 it to exclaim, "too much currency!'" "a plethora of
 
 158 THE MONEY POWER : 
 
 money !" and urge 'resumption of specie payments, so 
 as to make money scarce and dear, and property and 
 wages low, insuring greater gains for itself. Its power 
 operating through governments demonetized silver in 
 Enahind in 1816 ; demonetized gold in Germany in 
 1857, and in 1871 demonetized silver and remonetized 
 irold there, and restricted the further coinage of silver 
 in France and other smaller European states. It pro- 
 cured the passage of the infamous act of Congress of 
 1869, in the United States, making the bonds, which 
 were payable in "Greenbacks," payable in coin, de- 
 monetized silver in 1873, and procured the passage of 
 the resumption act in 1875. All this has been done at 
 the instance of the money power to make money scarce 
 and high for its enrichment. 
 
 It is a shrewd and cunning diplomatist, finding its way 
 into all places of power, and by its money or l)landish- 
 ments turns the destiny of nations and fixes the fate of 
 the people. 
 
 It dictates to thrones, arms nations for war, or in- 
 duces peace ; enthrones monarchs, elects high officers, 
 and turns the tide of political success or defeat where 
 it will. It is the god of mammon, whom the people 
 serve under protest. It regards the people as a com- 
 mon herd, to be tolerated only because they are useful 
 to pay interest and to do the drudgery of nations. It 
 subsidizes the press and corrupts the officers of govern- 
 ment. It bribes legislators to betray their sacred 
 trusts, and wins executive officers of state by its 
 seductive flattery. It ramifies all through civilized 
 society, insidiously instills its fallacious logic into the 
 minds of the unwary, and makes auxiliaries of millions 
 whom its measures are destined to destroy.
 
 ITS POLICY AND IXFLUEXCE. 159 
 
 Holy writ informs us that "the love of money is the 
 root of all evil." The history of nations proves this 
 to be a great truth. The inordinate greed of the money 
 power has caused the nations of the earth more misery 
 and wretchedness than famine and pestilence. By its 
 skillful manipulation of law-making powers and secur- 
 ing monetary i)olicies detrimental to commerce and pro- 
 duction, it has entailed upon nations the blighting 
 effects of declining markets, ruined industries, 
 pauperization of labor, riots, strikes and insurrections. 
 
 Year bv vear the strcnirth and influence of this 
 power grows. The suffering conditions of the people 
 eloquently petition for relief. But petitions avail 
 nothing. A desperate conflict will be fought. Let it 
 be an ideal one only. The money power will be over- 
 come and the people will free themselves from unjust 
 monetary laws. Let their efforts be founded in wis- 
 dom and tempered -with moderation. Action, vigi- 
 lence and wise counsels are indispensible to relief. The 
 sooner this fact is realized and acted upon, the better 
 it will be for all concerned, because, if deferred too 
 long, the masses might be goaded to desperation and 
 turn and tear in pieces not only their real, but imagin- 
 ary enemies, as the oppressed French did in the revo- 
 lution of 1789. Such would be deplorable. Let the 
 conflict take place now while it may be done peacefully, 
 lawfully, by reason and the silent force of the ballot. 
 All patriots would deplore insurrections, riots, revolu- 
 tion. No honest man can desire repudiation of lawful 
 obligations, because such would be not only unjust, but 
 would cover the nation with disgrace. All lovers of 
 their country, of liberty and justice will hope and labor 
 for such measures, such monetarv laws as will enable
 
 160 THE MONEY TOWER. 
 
 the country to pay its obligations with as little suffer- 
 ing and injustice as possible. Payment of every 
 farthinc: of just obliirutions oui?ht to be made and v.ill 
 be practicable, easy and cheerfully discharged by the 
 people if the government will onh' make it possible for 
 them to do it by supplying them with suincieut money.
 
 CHAPTER Vm. 
 
 GOLD AND SILVER : PRODUCT IN THE UNITED STATES. 
 
 The Secretary of the United States Treasury, in his 
 report dated December 7th, 1874, estimated the aggre- 
 gate amount of gold and silver in the country at a])out 
 $106,000,000. In that report the Secretary took 
 occasion to congratuhite the country upon the gro^vth 
 of the stock of specie. That Secretary and his succes- 
 sors have been ardent advocates of specie payment 
 and have embraced every opportunity to show to the 
 country the practicability of resumption. While the 
 Secretaries of the Treasury have, since 1874, referred 
 to resumption in hopeful terms, there has been a 
 marked silence in their reports about the amount of 
 specie in the country. No direct assurances are given 
 by them of an increase of the stock. Inasmuch as 
 specie resumption depends absolutely on the amount of 
 gold and silver in the country, it is but just to conclude 
 that if there had been any noteworthy increase in the 
 stock, the Secix^tarics would have so stated in tlueir 
 reports, in order to give strength to the policy of 
 resumption, and assurance to the people. It is very 
 questionable whether there has been an increase that 
 can be called permanent. 
 
 The Director of the Mint has constantly endeavored
 
 162 GOLD AND SILVER ; 
 
 to show an increase of specie. He estimated the total 
 stock of the precious metals in the country on the 30th 
 day of June, for the years named below, as follows : 
 1873, at $140,000,000; 1874, at $166,846,224 ; 1875, 
 at $167,614,803 ; 1876, at $181,678,000 ; 1877, at $242,- 
 355,858 ; on 31st day of October, 1877, at $235,000,- 
 000. To produce the estimate of $166,846,224, June 
 30th, 1874, he adds to the amount estimated for 1873, 
 two years products of the mines, estimated by him at 
 $70,000,000 per annum, and deducts the excess of 
 exports over imports. To obtain the estimate of $167,- 
 614,803, June 30th, 1875, he adds to the amount esti- 
 mated for 1874, the products of the mines, estimated 
 by him at $72,000,000, and deducts the excess of ex- 
 ports over imports. To obtain the estimate of $181,- 
 678,000 on June 30th, 1876, he adds to the amount 
 estimated for 1875, the products of the mines, which he 
 estimates at $85,250,000, and deducts the excess of 
 exports over imports, and $5,000,000 for gold and silver 
 used in the arts. 
 
 An examination of these reports with others reveals 
 the fact that the estimates are very loosely made and 
 unreliable. 
 
 1st. His estimate of the amount of gold and silver 
 consumed annually in the United States in manu- 
 factures and arts is not more than one-fourth the actual 
 amount so used, and for 1874-5 he makes no allowance 
 at all for the use of the precious metals in the arts. 
 W. L. Fawcett, a reliable statistician (See Gold and 
 JDeht, page 107) reports, after critical estimates, the 
 amount of gold used in the arts in the United States to 
 be at least $10,000,000 a year. The Monetary Com- 
 mission report the use of $10,000,000 of silver annually
 
 rRODUCT IX THE UNITED STATES. 163 
 
 in the arts. See Report to Congress for 1877, 
 page 83.) 
 
 2nd. The estimates of the Mint Director of the 
 annual products of the gold and silver mines of the 
 United States are too hiijh by manv millions. He re- 
 ports them for the years ending June 30th, 1873, at 
 $70,000,000 ; 1874, at $70,000^000 : 1875, at $72,000,- 
 000; 1876, at $85,250,000; 1877, at $82,000,000. 
 The facts upon which he makes these estimates are not 
 given in his reports. The face of his reports does not 
 sustain his estimates. 
 
 He reports the net dejDosits and purchases at the 
 mints to be as follows : For the year ending June 
 30th, 1874, $60,627,188; 1875, $54,626,920^1876, 
 $66,517,837. 
 
 We believe the amounts of net deposits and pur- 
 chases at the mints annually represent more nearly the 
 products of the mines than the Director's estimate, 
 because every ounce of the precious metals must pass 
 through the mints before it can enter into the fiscal 
 operations of the country. But even these may far 
 exceed the actual products of the mines, because eveiy 
 deposit is reported, and every year some portions of the 
 dei3osits are of old coins or bars. 
 
 The country cannot, therefore, safely rely upon the 
 Mint Director's estimates of the annual products of 
 the precious metals from the mines. Resort must be 
 had to other sources. The means of estimatinir the 
 stock of the precious metals and the annual productions 
 of the mines are so unreliable that all the estimates, 
 and they are many, are merely approximations, resting 
 in some part upon h}^3otheses and assumptions. We 
 give Mr. Raymond's estimate of the gold products for
 
 164 GOLD AND SILVER : 
 
 certain years ; Mr. Fawcett's estimate of the stock of 
 gold and silver in the country ; the Monetary Commis- 
 sion's estimate of silver products, and a table of our own. 
 
 R. "VV. Raymond, United States Commissioner of 
 IVIining Statistics, in his report for the year 1874, esti- 
 mated the total gold product of the United States and 
 Territories for that year at about $26,358,776. The 
 Monetary Commission (See Report, page 3) estimate 
 the total products of the silver mines in the United 
 States and Territories, for 1874, at $26,000,000. The 
 total products of both gold and silver mines added, 
 make $52,358,776 for that year, $17,642,000 less than 
 the Mint Director's estimate. The estimates of Mr. 
 Raymond and the Monetary Commission are the more 
 reliable because it was their special business to ascer- 
 tain, as nearly as possible, the products of the mines, 
 and such was not the duty of the Mint Director. 
 
 The gold products of the mines in this country have 
 been decreasing since 1867. For that year they were 
 $56,725,000 ; in 1872 they were $36,000,000, and in 
 1874 only $26,358,776. 
 
 No new mines have been discovered sir.ce 1874 to 
 add any considerable mcrease to the gold products. 
 Taking this estimate of gold by Mr. Raymond, and of 
 silver b}'^ the Monetary Commission, as correct, we have 
 an annual average product of both metals of $52,358,- 
 776 up to and including 1875. The products of silver 
 in 1876 and 1877, resulting .from increased yields of 
 the rich mines in Nevada, amounted to about $38, 500,- 
 000. Add this to the estimated gold product, and we 
 have an annual product of both metals of about $64,- 
 000,000 for 1876 and onward. This is about $20,000,- 
 000 less than the estimate of the mint director.
 
 PRODUCT IX THE UNITED STATES. 165 
 
 3d. In his estimate of the stock of coin in the country 
 in 1875, he d3da;.'ts $10,030,003 as probable over-estim- 
 ate. This shows a want of reliable data on his part. 
 It Avould have l)een as easy, perhaps, for him to have 
 deducted $50,000,000 for over-estimate , and it is 
 probable that this sum would have been nearer the pro- 
 per deduction 
 
 4th. The mint director's estimates of the annual 
 products of the mines being erroneous, his conclusions 
 about the stock of gold and silver in the U. S. are also 
 erroneous, because they are partly based on those 
 estimates. 
 
 Mr. W. L. Fawcett has estimated the coin in the 
 
 country as follows : (See Gold and Debt. ) 
 
 1S70 SrJl,000 000 1874 SllO.000,000 
 
 1871 110,000,000 1S75 100,000,000 
 
 1S72 102,000,000 1876 102,000,000 
 
 1873 100,000,000 
 
 Of which he estimates the followin2: sums as beins: 
 in the U. S. treasury on the years named : 
 
 18G9 §108,800,000 1873 §80,300,000 
 
 1870 Ot>,000,000 1875 67,833,316 
 
 1871 90,500,000 1876 73,625,584 
 
 1872 78,000,000 
 
 For 1877 the amount of gold and silver in the U. S. 
 treasury, owned by tjie government, ranged from 
 seventy to eighty millions dollars. The amounts re- 
 ported in excess of these sums consisted of coin certi- 
 ficates (which are not coin), and Sjiecial deposits by 
 banks and individuals. 
 
 By reference to the Finance Report for 1870, page 
 165, a table of the specie held by all the National 
 banks from 1868 to 1876 Avill be seen. Under the 
 head "Held by National banks in New York City,"
 
 166 GOLD AND SILVER : 
 
 is a column of "Coin," which shows the actual amount 
 of coin held by those banks during those years to have 
 been about $1,800,000 on an average. 
 
 The next column to the right, in that table, shows 
 the amount of coin certificates held at the same time. 
 Those certificates are reported as specie, but are not, 
 and should not be counted in estimating; the amount of 
 specie in the country. On an average, the specie of 
 the New York banks was about one-seventh of the 
 amount of coin certificates. In another column of the 
 table, headed "Held by other National banks," is a 
 report of the amount of specie and coin certificates to- 
 gether, held by all other National banks in the U. S. 
 Taking the same proportion of specie to coin certifi- 
 cates for these banks as that in the New York banks, 
 the amount of coin in them averaged about $850,000 
 a year. Then, all the National banks held in specie, 
 from 1868 to 1876, on an average, about $2,650,000. 
 In Oct., 1877, the amount held by National banks was 
 about the same as in 1876. Allowing $3,000,000 for 
 all banks of the Pacific States, and $1,000,000 for all 
 others, we have about $6,650,000 as the amount of 
 specie actuallj^ held by all banks in the United States 
 from 1868 to 1877. Making the liberal allowance of 
 $10 in specie ^jer capita for the 1,500,000 inhabitants 
 of California, Nevada, Oregon, Arizona, Colorado, 
 Idaho, Montana, New Mexico, Utah, Washington and 
 Wyoming, we have $15,000,000 coin in circulation in 
 the Pacific States and Territories. 
 
 Our foreigii commercial balances and interest paid 
 to foreign capitalists exert a strong influence upon our 
 stock of coin.
 
 PRODUCT IX THE UNITED STATES. 
 
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 168 GOLD AND SILVER .* 
 
 A portion of the balance in favor of this country for 
 the last two years, was doubtless settled with our own 
 corporation, state, municipal and government bonds. 
 How much was so settled I have no means of knowing, 
 but it must have been a small amount compared Avith 
 the total balance. The rest of the balance was paid as 
 interest on the indebtedness of the country held by 
 foreign capitalists. How much was thus paid we can- 
 not ascertain definitely. The amount of our state, 
 municipal, government and corporation bonds held by 
 foreign capitalists has been variously estimated at from 
 $1,500,000,000 to $3,000,000,000. The Monetary 
 Commission estimated it at not less than $2,250,000,- 
 000. (See Report, page 101). We take a medium 
 amount, $2,250,000,000. The interest on this sum 
 will average about 6 per cent, per annum, making 
 $135,000,000 interest that must be paid by this countrj'- 
 annually to foreign capitalists. Unless it can be shown 
 that more of our foreign balances for 1877 than $18,- 
 744,921 were paid us in bonds, or in something not 
 reported in the Commercial Reports, then, the conclu- 
 sion is irresistible, that the difference between this sum 
 and our net foreign exi^orts over imports, $135,000,000, 
 was paid as interest on bonds to foreign capitalists. 
 We take $135,000,000 as the annual interest this 
 country now pays to foreign countries. 
 
 Taking the mint director's estimate of the total 
 stock of the precious metals in 1872 at $128,000,000 as 
 a starting point, then the estimated products of the 
 mines, and the net amount brought in by immigrants,* 
 and adding them together, and deducting therefrom 
 $20,000,000 used annually in arts and the excess of 
 
 ♦The net excess of the precious metals brought into the country
 
 rUODUCT IN THE UNITED STATES. 169 
 
 exports over imports, the stock of precious metals 
 would stand about as follows for the years named : 
 
 Year Stock Year Stock 
 
 1872 $121,000,000 1S7G $123,000,000 
 
 1873 113,000,0(10 1877 160,000,000 
 
 1874 120,000,000 1877 152,000,000 Oct.31 
 
 1873 111,000,000 
 
 Under (he existing circumstances, can our stock of coin 
 increase? 
 
 According to the Mint Director's report for Oct. 31st, 
 1877, as compared with his report for June 30th, 1877, 
 both the products of the mines and the stock of specie in 
 the country have declined during this year. He reports 
 the products of the mines for the year ending June 30th, 
 1877, at $3,250,000 less than for the preceding year; 
 and the entire stock of precious metals in the U. S. 
 $7,885,888 less on the 31st day of Oct., 1877, than on 
 the 30th day of June of the same year. A decline at 
 the rate of about $23,000,000 a year. This indicates 
 an excess of forei<>;n interest aijainst us over our foreign 
 balances and the supply of the precious metals from 
 all sources. Our only means of paying foreign interest 
 
 and accumulating a stock of coin in the country are the 
 products of our mines, foreign balances, import duties, 
 and immigration. Commerce is but traffic, and we 
 may not expect our balances tp run up into hundreds of 
 millions Ions: at a time. 
 
 The great net balance of $138,000,000 in favor of the 
 
 by immigrants over that taken out by emigrants stands about as fol- 
 lows tor the years named : 
 
 Year Amount Year Amount 
 
 1 8(ii1 $23,868,000 1 873 $23,831,000 
 
 1870 22 440,0' "0 1874 11,424,000 
 
 1871 22,100,000 1875 8,160,000 
 
 1872 26,656,000 And for 1876 and 1877 a 
 
 further decline.
 
 170 GOLD AXD silver: 
 
 U. S. for the year ending June 30th, 1877, was produced 
 by special and temporary causes. The war between Rus- 
 sia and Turkey gave us a greatly increased market for 
 munitions of war. The famine in India also contri1>uted 
 
 very largely to the increased foreign demand for our pro- 
 visions. $50,000,000 may be safely estimated as the 
 
 amount of extra drafts upon our industries produced by 
 these causes ; and when they cease to exist we may look 
 for a corresponding decline in the next j^ear's balances in 
 our favor. Besides this, an era of tight times is ap- 
 proaching Europe. It is now being felt in England and 
 Prussia. Soon France will resume specie payments. 
 Then the competition for foreign trade and for coin will 
 be doubled in intensity ; our customers will be reduced 
 in ability to buy, and we may expect our foreign bal- 
 ances to correspondingly decline. 
 
 Taking a comprehensive as well as an analytic view 
 of the situation, we think that under the most favorable 
 laws and wisest management we may not expect our 
 foreign balances to be large for years to come, except- 
 ing, perhaps, 1878. And, if the universal fall of prices 
 continues, the probability is that we will have no large 
 foreign balances, except in case of failure of crops in 
 Europe or some other very exceptional circumstance. 
 Whatever balances may accrue in our favor a\411 be paid 
 to the exi:)orters in our own bonds ; but this would not 
 directly increase our stock of coin. If our past commer- 
 cial history be any index to the future, we may expect the 
 foreign balances to be generally against us. IVe may 
 exjjcct in the future, as in the past, that the total com- 
 mercial footings of every decade will show foreign l)al- 
 anccs ajrainst us, iiicludin2: our foreisjn interest. Two 
 other sources of the sui)ply of the precious metals are
 
 PRODUCT IN THE UNITED STATES. 171 
 
 diminishing. They are custom receipts and immigra- 
 tion. The custom receipts from 1874 to 1877 are re- 
 ported as follows : 
 
 1874 $163,103,833 
 
 1875 157,107,722 
 
 187G 148,071,984 
 
 1877 130,956,493 
 
 A gradual decline to 1876, and a great decline of 
 $17,115,491 for 1877. 
 
 The number of immigrants who arrived in this coun- 
 try in 1873 was 459,803 ; the number has rapidly do- 
 creased since. For the year ending June 30th, 1876, 
 they were only 169,986, a falling off of 289,817. Dur- 
 ing the same period the number of emigrants from the 
 U. S. has increased 5,713. In 1854 the immigrants 
 arriving brought on an average $68 in cash per capita. 
 Estimating the amount brought in by the immigrants 
 and taken out by the emigrants between 1873 and 1876 
 at the same, we have a decline in our metal supply 
 from that source of over $20,000,000 per annum. Be- 
 sides this, whatever proportion of the $17,000,000 de- 
 cline in customs might have been foreign coin should be 
 added. This offsets the increased products of the mines 
 and assists in accounting for the failure to materially in- 
 crease the stock of precious metals. 
 
 The problem for this country to solve is, how can 
 we resume specie payments in the face of $25,000,000,- 
 000 indebtedness and $135,000,000 foreign annual in- 
 terest to pay ? Our supply of the pre(;ious metals from 
 immigration and custom dues is declining rapidly. 
 The products of the mines and the stock in the country 
 have shown a decline in 1877, as stated by the Director 
 of the Mint. Our past commercial history shows that
 
 172 GOLD AXD SIL^'ER : 
 
 we cannot hope for foreign balances in our favor to 
 continue long at a time. From 1854 to 1860, when the 
 products of our mines were as great as now, and when 
 the country owed no foreign interest, the utmost store 
 of gold and silver that could be kept in the country 
 was from $200,000,000 to $275,000,000. We may not 
 now expect to keep so much at home with an annual 
 foreign interest of $135,000,000 to pay. 
 
 The circumstances under which the country labors 
 appear to make it utterly impossible to accumulate a 
 greater stock of coin than $200,000,000, Avithout a suf- 
 ficient reduction of the volume of paper money now 
 outstanding, to reduce values so far below European 
 prices as to induce very heavy exports. This could be 
 done if it were not for the fact that such destruction of 
 values would destroy business, ruin production, and 
 render a heavy commerce impossible. A considerable 
 increase of the stock of coin in the country is impos- 
 sible under existing conditions for some years to come.
 
 CHAPTEPw IX. 
 
 THE AMOUNT OF MONEY NEEDED : 
 FIFTEEN HUNDRED IVULLIONS. 
 
 In order to make an estimate it will be necessary to 
 begin with some period of time, compare the uses for 
 money then and now, and add to the sum of money we 
 then had, an increase equal to the increased uses for 
 money now over that time. 
 
 We take the year 1859 for comparison, as one 
 against which no one can exclaim : A year of inflation ! 
 The population was then about 30,000,000. The ag- 
 gregate sum of exports and imports, exclusive of gold 
 and silver, Avas about $030,000,000— about $20 per cap- 
 ita of the population. The aggregate sum of gold and 
 silver and paper money was about $468,000,000 ; about 
 $15x\ per capita. Now the population is about 46,000,- 
 000. The aggregate sum of exports and imports, in- 
 cluding the precious metals, is about $1,100,000,000 — 
 about $24 per capita of population. ^ 
 
 The true measure of the money needs of a country is 
 the total amount of business that the country is capa- 
 ble of doinir, toijethcr with the indebtedness and tiixes 
 thereof.
 
 174 THE AMOUNT OF MONEY NEEDED : 
 
 The increase of internal business since 1859 has been 
 much greater than that of foreign commerce or popu- 
 lation. This is shown by the immense increase in the 
 number of banks, bank clearinijs and railroad earninsfs. 
 The railroad mileage was 10,982, and gross earnings 
 $39,406,358 in 1851. In 1875 the railroad mileage was 
 72,623, and gross earnings $503,065,505. An increase 
 of 1300 per cent, of railroad business since 1851. 
 
 The exchanges at the New York Clearing House were 
 $6,448,005,956 for 1859, and for 1877 they were $20,-' 
 876,555,937, three and one-fourth times greater than 
 for the former year. We take the transactions of the 
 New York Clearing House as an index to the ratio of 
 increase of the aggregate business of the United States. 
 The number of banks have about doubled since 1859. 
 This great increase of business is also evidenced by the 
 great increase of urban population, of manufactures, 
 of small towns alons: railroads and elsewhere. These 
 facts justify the conclusion that the aggregate business 
 transactions of the country are now three and one-fourth 
 times their sum in 1859, and without an increased pow- 
 er of money to circulate Avould require three and a 
 fourth times as much money now as then. 
 
 But we estimate the increased power of money to cir- 
 culate at 44 per cent., on account of increased bank 
 facilities. The capital stock of all national, state and 
 savings banks and of trust and loan companies in the 
 United States in 1876 was about $651,725,000. For 
 1859 the capital stock of state banks was $401,976,242. 
 JThe capital stock of savings banks and trust and loan 
 companies for that year is not reported, but must have 
 been $50,000,000, making the total capital stock of 
 all banking institutions of 1859 about $450,000,000.
 
 FIFTEEN HUNDRED MILLIONS. 175 
 
 This gives an increase of 44 per cent, of capital stock 
 for 1876 over that of 1859.* 
 
 These estimates result in producing $1,056,000,000 
 as the money needs of the country now indicated by 
 business transactions alone. 
 
 But several other items come in to swell the sum. In 
 1859 the indebtedness of the country was as nothing 
 compared with the present liabilities. The existing in- 
 debtedness, national, state, municipal, corporate and 
 individual, has been variously estimated. The Mone- 
 .tarv Commission put the national debt at $2,000,000,- 
 000; certain state, city, town, county, railroad and 
 canals at $3,804,000,000 ; liabilities of 630,099 traders 
 and manufacturers at $13,000,000,000. These make 
 $18,800,000,000. There has been no estimate of the 
 liabilities of the thousands of mining and other com- 
 panies, of farmers, mechanics, worlvingmen, profess- 
 ional men, etc., and bank loans and deposits are not 
 included in the above stated sum. "We estimate them 
 to be at least $7,000,000,000, making the aggregate 
 indebtedness of the country at $25,000,000,000.1 The 
 total sum of indebtedness is absolutely' appalling. 
 
 *We do not think that the banks have increased the power of 
 money to circulate in a greater ratio, for two reasons : 
 
 l>t. Banks in small towns and in the rural districts do not facil- 
 itate the circulation of money, because they hold 25 to 50 per cent, 
 of their deposits as reserves, and simply take that much out of cir- 
 culation aud send it to the money centers for safe keeping, and thus 
 take from the country so nmch money that would otherwise 
 circulate. 
 
 2nd. While every new bank in cities may facilitate the circulation of 
 money, at the same time it absolutely takes out of circulation every 
 dollar of its reserves. 
 
 That the power of money to circulate does not increase equally 
 with the increase of business is proved by the necessity of inveuting 
 and using paper money, and of increasing the amount of it by civil- 
 ized nations during the last few centuries of advancement. 
 
 tSee Chapter XI : The Country's Indebtedness.
 
 176 THE AJIOUNT ON MONEY NEEDED. 
 
 There is no method of estimating the total indebted- 
 ness of 1859. But as the business of the country was 
 only 1% as much in 1859 as now, and as the great con- 
 traction of the currency since 1866 has created trel)le 
 the necessity of borrowing that there was' in 1859 and 
 had been prior thereto, we put the debts of that time at ^ 
 of the debts of 1877. This estimate makes the total in- 
 debtedness of the United States in 1859 about $3,000,- 
 000,000. The rate of interest on these sums averages, 
 say, six per cent., making $1,320,000,000 more interest 
 to pay ^jer annum now than in 1859. Of this interest, 
 the enormous sum of $135,000,000 goes abroad. 
 
 Then there are greatly increased uses for money by 
 reason of the $200,000,000 extra cost of Federal govern- 
 ment administration ; increased expenditures of state, 
 citv, countv and school district administrations ; increas- 
 ed expenses on colleges, asylums, hospitals, pauperism, 
 etc. Adding these several extra uses of money to 
 those of 1859, it would swell the sum to $1,500,000, 
 000 to place this country in as easy circumstances as in 
 that 3'ear. This would be a little over $32.50 per 
 capita of population. 
 
 This estimate is not extravagant. It is rather below 
 than above what the facts indicate. France has nearly 
 $40 79er capita of her population, and England has 
 about $26. This country ought to have $1,500,000,- 
 000 of money — enough to profitably emjjloy every 
 willins: hand and brain in the land.
 
 CHAPTER X. 
 
 RESUlVrPTION MEANS CONTRACTION ; 
 THE MONEY IT WILL Giy~E US. 
 
 We call it forced resumption because it is not pro- 
 duced by the natural laws of finance and commerce, 
 but is /orcferf by legislation. The resumption act pro- 
 vides that Avhenever any national bank increases its 
 issues, and whenever a new national bank issues its 
 notes, the secretary shall redeem an amount of legal 
 tender note?; equal to SOjjer centum of the amount of such 
 new issues of national bank notes, until the total sum 
 of leo-al tender notes outstanding shall be reduced to 
 $800,000,000. The legal tenders constitute the prin- 
 cipal reserves of the national banks, and in order to 
 keep their issues within safe bounds, they will, lietween 
 now and January 1st, 1879, do as they have done since 
 January 14th, 1875 : keep pace in the reduction of 
 their issues with the retirement of the legal tenders. 
 They have, since the passage of the Resumption Act, 
 as we have seen, reduced their issues over $32,000,000, 
 while a little over $30,000,000 of legal tenders were 
 being retired. We may safely conclude, then, that by 
 the 1st of January, 1879, they will have retired a large 
 amount of their issues, pehaps $20,000,000. This will 
 leave the country at that date $300,000,000 legal tenders
 
 178 RESUMPTION MEANS CONTRACTION; 
 
 and about $300,000,000 national bank notes ; in the 
 aggregate about $600,000,000 currency, about $70,000,- 
 000 less than we now have. 
 
 What will occur after January 1st, 1879, no man 
 knows. But we may calculate from experience and 
 upon what the future promises. The Resumption Act 
 provides that the Secretary of the Treasury shall, on 
 and after January 1st, 1879, redeem in coin the United 
 States legal tender notes then outstanding on their 
 presentation for redemption atthe office of the Assis- 
 tant Treasurer of the United States, in the city of New 
 York, in sums of not less than $50. To enable the 
 Secretary to prepare and provide for the redemption of 
 the legal tenders, the act authorizes him to sell United 
 State bonds for coin. -It took the Secretary from January 
 14th, 1875, to November 1st, 1877 — two years and nine 
 months — to redeem in coin and retire $27,509,108 of 
 the legal tenders by using all tlie power conferred by the 
 act. It is not probable that he can procure coin more 
 rapidly in the future than in the past. Nothing indi- 
 cates that he can. He will have to resort to strategy. 
 This he can easily do. The legal tenders will be pre- 
 sented for redemption princiijally b}^ banks. The Secre- 
 tary will offer to sell bonds. Perhaps he will appoint a 
 syndicate of bankers to negotiate the sale of them. 
 These banks or the syndicate will find parties in this 
 country who want to buy bonds with legal tender notes. 
 The banks or the syndicate will take the notes, and say 
 to the Secretary: "We have found purchasers for 
 $50,000,000 of bonds, and we present at the Treasury 
 $50,000,000 of Icgal-tcuders for redemption." The 
 Secretary will deliver the bonds to the syndicate or 
 banks and thoy will deliver the legal tenders at the
 
 THE MONEY IT WILL GIVE US. 179 
 
 Treasury. Thus $:)0,000,000 of coin bonds will be sold 
 und $50,000,000 of legal tenders will be redeemed with- 
 out the passage of a dollar in coin. The rapidity of 
 these transactions will depend upon the facility with 
 which the banks or S3aulicate can collect legal tenders 
 together and find parties willing to exchange paper 
 monc}^ for bonds. Such transactions may exceed or 
 fall below $50,000,000 a year. But let it be supposed 
 that that amount of le2:al tenders shall be redeemed 
 each year. This will materially affect the amount of 
 the issues of national banks. 
 
 There is no law which makes national bank notes a 
 leo:al tender for debts between individuals, or between 
 individuals and corporations, or for state and county 
 taxes. Section 5182 of- the revised statutes of the 
 United States, makes national l)ank notes payable on 
 demand at the banks that issue them. In other words, 
 all national bank notes are redeemable in legal tender 
 money, paper or coin, on their presentation for re- 
 demption to the bank which issued them. 
 
 The existence of the- national banks depends upon 
 their power to thus redeem their issues. Their ability 
 to so redeem their issues depends upon the facility 
 with which they can obtain the legal tender money to 
 redeem with. This, in turn, depends upon the amount 
 of legal tender money in the country. 
 
 The amount of redeemable paper money that can 
 circulate in a country, at par with the money it is to "be 
 redeemed in, generally ranges from one-half, two- 
 thirds, to three-fourths, rarely ever four-Hfths of the 
 amount of the redemption money in the countiy. 
 
 In 1859 the total amount of coin in the U. S. was 
 about $275,000,000. At that time the banks of this
 
 180 RESUMPTION MEANS CONTRACTION ; 
 
 country, "with practically unlimited power of issue, were 
 able to maintain in circulation only $193,000,000 of 
 bank notes at par with gold. If at that time the banks 
 could maintain in circulation at i3ar an amount of bank 
 notes bearing the proportion only of 2 to 3 of coin, in 
 which they were redeemable, it may not reasonably be 
 expected that the national banks can do more. The 
 probabilities are that they could not maintain so large 
 a proportion of notes. They in fact are not doing it 
 now. 
 
 The amount of irdd and silver coin and bullion now 
 in the U. S. we believe to be not very far from $150,- 
 000,000. Add this to the legal tender notes, and it 
 shows the total of legal tender money, both paper and 
 coin, now" in this country, to be about $000,000,000. 
 The total amount of national bank notes in circulation, 
 as reported by the Secretary of the Treasuiy, is $316,- 
 775,111, but little over three-fifths as much as there is 
 coin and legal tenders. 
 
 All financial history furnishes indubitable evidence 
 that whenever the legal tender jnoney, paper and coin, 
 of a country is reduced in its ao^<;reofate amount, a con- 
 traction of the volume of redeeana'ble l)ank paper money 
 quickly follows. This is forcibly illustrated by the 
 contraction of national bank issues, durinij the retire- 
 ment of legal tenders, since 1875, under the resump- 
 tion act. The finance history in subsequent pages will 
 also amply illustrate this point. 
 
 The national banks, in order to keep within safe 
 banking rules, and to i)reserve their existence, must 
 reduce their issues as the a<2:£;re2;ate amount of \e<za[ 
 tenders and coin diminishes. 
 
 The Secretary of the Treasury advances the opinion,
 
 THE MONEY IT WILL GIATE US. 181 
 
 that the resumption act docs not require the retire- 
 ment of legal tenders redeemed, but that they may be 
 reissued. The act creating the legal tenders says, 
 they shall be payable to the bearer, at the treasury. 
 This means a discharge, a destruction of all the money 
 functions of these notes. If the act means what the 
 Secretary intimates, why docs he destroy the legal 
 tenders now being taken up? The word "redeem" 
 means the same as applied to the ■$300,000,000 legal 
 tender and the $50,000,000 excess thereof outstanding. 
 
 The resumption act unquestionably means a payment 
 and destruction of all the legal tenders, or it means 
 nothing but a useless and expensive fiscal operation by 
 the government. Suppose the government should re- 
 issue the notes, as the Secretary intimates. It must 
 redeem them airain, according to the act. The Secre- 
 tary is authorized to sell bonds to get coin to redeem 
 with. It would result in redemption, reissue, and re-re- 
 dcniption over and over again, involving the govern- 
 ment deeper and deeper in interest-bearing coin indebt- 
 edness with every such operation — a measure which not 
 even the Secretary of the Treasury can defend with 
 any show of sound reason. 
 
 If the act is not repealed, every legal tender will be 
 destroyed ultimately, and the national banks can then 
 look to nothing but ijold and silver as reserves. 
 
 The operations of the resumption act Avill cause the 
 national banks to constantly diminish their issues, until 
 every legal tender note shall have been redeemed. 
 Then their only reserves will be the stock of coin in 
 the country, which, as we have seen in Chap. VIII., 
 increased only $31,000,000 in five years, from 1872 to 
 1877, and in 1877 decreased from June to October,
 
 182 RESUMPTION MEANS CONTRACTION ; 
 
 nearly $8,000,000, at the rate of over $23,000,000 a 
 year. 
 
 If $50,000,000 legal tenders be redeemed per an- 
 num, it will require seven years to complete the re- 
 demption of the total sum now outstanding. As has 
 just been seen, the stock of coin in the country in- 
 creased only at the rate of a little over $6,000,000 a 
 year, from June, 1872, to June, 1877, and from June 
 to October of the latter year it decreased over $8,000,- 
 000. It appears reasonable then that during the seven 
 years required for the redemption of the legal tenders, 
 the additions to the present stock of coin will not be 
 greater than they were from 1872 to 1877 — about $6,- 
 000,000 a year— about $40,000,000 in the aggregate 
 during the seven years required to complete the retire- 
 ment of the legal tenders. Thus it appears that while 
 $50,000,000 of legal tenders will be retired each year 
 there will be an increase of coin stock of only about 
 $6,000,000 — resulting in an actual reduction of the stock 
 of redemption money, coin and legal tenders of $44,- 
 000,000 a year. 
 
 According to this calculation there will be only about 
 $200,000,000 of coin in the country when the seven 
 years expire, and this will constitute the only reserve, 
 redemption fund, of the banks and the nation. 
 
 The past history of banks of issue in this country 
 shows that their mininmm and maximum issues have 
 ranged from about one-half to three-fourths, rarely ever 
 four- fifths, of the total sum of legal tender money in 
 the country. 
 
 Let it be supposed that up to January 1st, 1879, their 
 issues will l)e about three-fifths, and after that time 
 four-fifths of the stock of specie and legal tenders, and
 
 THE MONEY IT WILL GIVE US. 
 
 183 
 
 that the fractional curroncv will be retired durins: 1879. 
 Then, upon the foregoinj:: and estimating the population 
 to increase at the rate of half a million per annum, we 
 present the following table of the countr} 's total sup- 
 ply of money for 18GG and 1877, and the probable sup- 
 ply for subsequent years : 
 
 
 i 
 
 Per capita supply 
 
 
 
 Toral Gold, Silver! 
 
 ot' Money, 
 
 Actual per capita 
 
 Year. 
 
 aud Paper Moiuy 
 
 only a part of 
 
 circuiatiou, 
 
 
 in the U. S. 
 
 which 
 
 about 
 
 
 
 circulates. 
 
 
 Jan. l>si;i)... 
 
 Si,yoo,ooo,ooo 
 
 a '4.28 
 
 $-•^0.00 
 
 Dec. 1877 .. 
 
 8;i(i 000 000 
 
 18.17 
 
 11.00 
 
 Jan 1870... 
 
 747.000.(X)0 
 
 16.08 
 
 fi.OO 
 
 " 1880 .. 
 
 740.000,000 
 
 15 73 
 
 9.00 
 
 " 1881... 
 
 fii!4,000 000 
 
 13.1)8 
 
 8.00 
 
 " 1882... 
 
 581.000,000 
 
 12.16 
 
 7.00 
 
 '• 1883... 
 
 501,000 000 
 
 10.39 
 
 6 00 
 
 At this time, (December, 1877,) although there is a 
 per capita ^uppl}- of $18.17, yet only a little over $11 
 per cajnta are in actual circulation — that is about \^ of 
 the total per capita supply is in circulation, the l)al- 
 ance being hekl l^y the Treasury and the hanks. The 
 same proportion of reserves will reduce the actual per 
 caj)ifa circulation from year to year until in 1882 and 
 1883 it will fall to a little over six or seven dollars. 
 The process of contraction shown in the foregoing table 
 will be arrested at some time in the future by our for- 
 eign trade and the destruction, compromise and return 
 of large amounts of our government, state, corporate 
 and municipal bonds ; but, when that time will arrive, 
 cannot be foretold. The condition necessary to stop 
 the contraction, provided the resumption act is enforced, 
 will be a cessation of the exportation of coin from this 
 country, and this cannot occur until, 1st, Prices of
 
 184 RESUMPTION MEANS CONTRACTION ; 
 
 merchandise fall so low here below European prices as 
 to induce European importers to import from this coun- 
 try so largely in excess of our imports from abroad as to 
 make our foreign balances foot up our foreign interest ; 
 2nd, Or until our foreign balances, being paid in our 
 own bonds, ultimately return home and fix their own- 
 ership here, and thus stop exjDortation of coin to pay 
 foreiini interest. 
 
 When these c-onditions will occur, I am unable to 
 state, of course, but I reckon the termination of the 
 contraction process at 1882 or 1883 upon the theory 
 that, in the mean time, on account of the great shrink- 
 ao-e of values and destruction of business that must f ol- 
 low the reduction of the volume of money, the failures 
 of railroads and corporations, and the inability of munic- 
 ipalities and states to meet interest will, by destruction 
 of securities and compromises with foreign capitalists, 
 reduce the foreign l)onded debts of this country, per- 
 haps, half, thus cutting down our foreign interest in an 
 equal proportion. During the same time many millions 
 of national, state and other bonds ^vill be returned to this 
 country to settle balances, which will further reduce the 
 foreiirn interest the countrv will have to pay. 
 
 These calculations, made upon the hypothesis that 
 silver will be remonetized, are based on the most san- 
 guine hopes that can be reasonably entertained of the 
 amount of coin and bullion that may exist in the coun- 
 try, and a very gradual retirement of legal tenders. In 
 proportion, as the amount of legal tenders retired every 
 year exceeds the amount estimated, $50,000,000 a 
 year, in that proportion, would the contraction be more 
 rapid. 
 
 The sums estimated above as the probable amount of
 
 THE MONEY IT WILL GIVE US. 185 
 
 money the country will have under the continued en- 
 forcement of the Resumption Act, are utterly inadequate 
 to transact the gigantic business of this country. The 
 transaction of $100,000,000,000 of business a 3'ear on 
 five hundred millions of money is a thing utterly im- 
 possible. "NYe, therefore, conclude that resumption 
 means contraction. 
 
 The officers and directors of the national banks so un- 
 derstand it, and have given evidence of that belief by 
 reducing their issues over $33,000,000 since January 
 1st, 1875. The operation of the Resumption Act proves 
 it by reducing the amount of outstanding legal tenders 
 over $30,000,000 since January 14th, 1875. 
 
 Hon. Joseph S. Ropes, an able and honest resump- 
 tionist, in an article in the November-December No. of 
 the North American Review, for 1877, says, resump- 
 tion means contraction. Every advocate of resumption 
 admits it by declaring that there is a plethora of money 
 in the country. 
 
 TJien the vital question before the country now is: 
 What will be the effects of contraction?
 
 CHAPTER XI. 
 
 CONTRACTION OF THE CURRENCY : IT CAUSED THE COUN- 
 TRY'S INDEBTEDNESS. 
 
 Those who advocate a resumption of specie pay- 
 ments have constantly asserted that the vast indebted- 
 ness of this country has been caused by what they 
 term an unprecedented inflation of the currency during 
 and since the war ; and those who oppose resumption 
 have avoided a discussion of this point. This question 
 is an important one, and ouglit to be candidly investi- 
 gated. The national debt was created during the war, 
 and is not to be attributed to the currency at all, but 
 to the necessities, extravagancies and frauds of the war 
 period. The first thing to be done is to ascertain the 
 time, as near as can be, when the increase of debts took 
 place. 
 
 Of Railroads. In 1850 the total mileage of rail- 
 roads in the U. S. was about 9,000. By 18(J0 it had 
 increased 300 per cent. ; by 1870, 500 per cent., and at 
 the close of 1875, 800 per cent. 
 
 The number of miles of railroad at certain periods 
 were about as follows: In 1850, about 9,000; 1860, 
 about 27,000; 1870, about 53,000; 1875, about 74,- 
 000. It is readily seen that the greatest num})er of 
 miles of railroad constructed per annum since 1850, was
 
 IT CAUSED THE COUNTRY'S INDEBTEDNESS. 187 
 
 durlncr the years from 1870 to 1875. From 1850 to 
 18G0 the average miles completed per annmu were 
 1,800 ; from 18C0 to 1870, 2,(300 ; from 1870 to 1875, 
 4,200. The Railway Age reports the number of mites 
 co!iiploted and miles of track laid during 1870 at 2,264. 
 
 Poors IlaUroad Manual estimated the a2:2:re2:ate 
 amount of railroad indebtedness in the U. S. at $2,459,- 
 617, o4J) in 1875, or about $32,100 per mile. Taking 
 these tigures as a basis, we find that from 1860 to 1870 
 the amount of railroad debt created was $855,400,000, 
 or about $85,540,000 per annum, and for the fiv^e years, 
 from 1870 to 1875, the amount of railroad debt created 
 was about $690,900,000, or about $138,180,000 per 
 annum. 
 
 But from 1860 until after the war, say until 1866, 
 there was comparatively little done in building railroads. 
 We conclude, therefore, that of the 47,000 miles of 
 railroad constructed between 1860 and 1875 about 40,- 
 000 were built from 1867 to 1875. It follows, in any 
 view of the facts, that the most rapid accumulation ,of 
 railro:id debt has occurred since 1867, and probably 
 between 1870 and 1875, aggregating about $164,000,- 
 000 ])cr annum. 
 
 The period of greatest inflation of the currency waa 
 in t-ie latter part of 1865. when it amounted to over 
 $1,800,000,000. The periods of greatest contraction 
 were during 1866 and 1867, during which the currency 
 was reduced nearly $500,000,000 in the former, and 
 over $500,000,000 in the latter year. 
 
 We find, therefore, that not durins: the ffrcatcst infla- 
 tion, but, on the contrary, durini? and since the firreatest 
 contraction of the currency, the greatest increase of
 
 188 
 
 COXTRACTIOX OF THE CURRENCY 
 
 railroad debts has occurred, an increase of nearly 100 
 per cent, per annum. 
 
 Municipal, Debts. Following is a table of the debts 
 of the towns and cities named, for the years 1870 and 
 1875-76 ; hundreds are left off, excej)t in total foot- 
 
 ings. 
 
 
 
 
 
 
 Towus and Cities 
 
 1870* 
 
 1875-76 
 
 Towns and Cities 
 
 1870* 
 
 1875-76 
 
 New York 
 
 $54,436 
 
 $161,165 
 
 Chelsea, with 
 
 
 
 Philadelphia*. 
 
 42,103 
 
 69,616 
 
 Boston, inSuf- 
 
 
 
 Boston 
 
 22,598 
 
 43,923 
 
 folk Co 
 
 
 e 1,661 
 
 Brooklyn 
 
 20 
 
 38,494 
 
 Lawrence, with 
 
 
 
 Baltimore 
 
 13,568 
 
 32,943 
 
 Lynn.in Essex 
 
 
 
 New Orleans.. 
 
 26,.500 
 
 22,699 
 
 Co 
 
 
 1,594 
 
 Washington... 
 
 2,363 
 
 22,000 
 
 Springfield 
 
 646 
 
 1,562 
 
 St. Louis 
 
 13,613 
 
 17.423 
 
 Salem. with 
 
 
 
 Cincinnati 
 
 5,020 
 
 17,235 
 
 Lynn, in Essex 
 
 
 
 Chicago 
 
 14,103 
 
 1,6996 
 
 Co 
 
 
 1,483 
 
 Jersey City.. . 
 
 5,133 
 
 14,247 
 
 Somerville,with 
 
 
 
 Pittsburgh 
 
 4,042 
 
 13,533 
 
 Cambridge, in 
 
 
 
 Louisville 
 
 5,006 
 
 10,795 
 
 Middlesex Co. 
 
 
 1,472 
 
 Newark 
 
 3,100 
 
 9,465 
 
 Indianapolis .. 
 
 155 
 
 1,455 
 
 Providence . . . 
 
 1,795 
 
 8,843 
 
 St. Joseph 
 
 500 
 
 1,380 
 
 Cleveland 
 
 2,101 
 
 8,066 
 
 Brookliue 
 
 648 
 
 1 311 
 
 Buffalo 
 
 2,031 
 
 7,264 
 
 Columbus, O.. 
 
 none. 
 
 1,261 
 
 Portland 
 
 2,706 
 
 6,402 
 
 St. Paul 
 
 812 
 
 1,230 
 
 Memphis 
 
 5,272 
 
 5,851 
 
 New Bedford, 
 
 
 
 Rochester 
 
 634 
 
 5.579 
 
 with Fall R. in 
 
 
 
 Charrst'u,S.C. 
 
 5,137 
 
 5.514 
 
 Bri.stol Co.. . 
 
 
 1,195 
 
 Elizabeth 
 
 2 678 
 
 5,400 
 
 Beverly, with 
 
 
 
 Ricliniond 
 
 2,111 
 
 2,032 
 
 Lynn, in Essex 
 
 
 
 Cambridge... . 
 
 6,028 
 
 4,280 
 
 Co 
 
 
 1,041 
 
 Toledo 
 
 401 
 
 3,782 
 
 Lynchburg .... 
 
 720 
 
 921 
 
 Savannah 
 
 2,099 
 
 3,730 
 
 Galveston 
 
 250 
 
 873 
 
 Albany 
 
 2,800 
 
 3,083 
 
 Holyoke, with 
 
 
 
 .San Francisco* 
 
 7,458 
 
 3,431 
 
 . Springfield, in 
 
 
 
 Worcester .... 
 
 2,774 
 
 3,099 
 
 Hampton Co. 
 
 
 836 
 
 Mobile 
 
 2,195 
 
 2,804 
 
 Fitchburg,wlth 
 
 
 
 Fall River 
 
 1,462 
 
 2,500 
 
 Worcester, io 
 
 
 
 Milwaukee 
 
 118 
 
 2,544 
 
 Worcester Co. 
 
 # 
 
 698 
 
 Bangor 
 
 448 
 
 2,484 
 
 Northampton.. 
 
 357 
 
 663 
 
 [Continued on opposite page.]
 
 IT CAUSED THE COUNTRY'S IXDEBTEDNESS. 189 
 
 Towns and Cities 1870* 1875-76 
 Powell, with 
 
 Cambridge, in 
 
 Middlesex Co. 2,289 
 
 Detroit 723 2 282 
 
 Norf Ik 1,855 2,150 
 
 Augusta 1 3!)5 2,100 
 
 Lynn 4,424 2,030 
 
 Nashville 2,050 1,737 
 
 Alleghany, with 
 
 Pittsburgh, in 
 
 Alleghany Co, 1,667 
 Massachusetts, (other towns), for 
 
 Ohio, (other towns) for 
 
 Total 
 
 TowTis and Cities 1870* 1875-76 
 
 Columbus, Ga. 400 582 
 
 Zanesville none. 548 
 
 Newburyport, 
 
 with Lynn, in 
 
 Essex Co.... 535 
 
 Peabody, with 
 
 Lynn, in Essex 
 
 Co 523 
 
 Medford, with 
 
 Cambridge, in 
 
 Middlesex Co. 519 
 1870, $1,292,676; 1875-76, $14,161 
 1870, 549,150; 1875-76, 8,424 
 $278,646,125 $040,791,867 
 
 Total increase from 1870 to 1876. . $362,145,742 
 
 This table reveals the fact that the municipal debts 
 of the country (taking the towns and cities named here 
 as showing the average increase), increased between 
 1870 and 1876, to 2^ times greater at the latter date 
 than they were at the former. Here, by far, the great- 
 est increase of municyial debt ever known in this 
 country has occurred, not during inflation, but on the 
 contrary, after the most gigantic contraction of the 
 currency that ever took place. 
 
 State Debts. The total state indebtedness in 1860 
 has been estimated at $266,781,525, and in 1875, in- 
 cluding the latter year, $367,146,623, an increase of 
 $100,000,000 in fifteen years, or an average annual 
 increase of $6,666,000. The Monetary Commission in 
 their report to Congress, made March 2d, 1877, esti- 
 mated the amount of state debts then at $390,000,000, 
 
 *In this table, under 1870 are placed the debts of all municipal- 
 itiis in the counties in which those cities are located. As no city 
 debt was tlieu reported for Philadelphia and San Francisco, the 
 amounts then reported as county debts are included.
 
 190 CONTRACTION OF THE CURRENCY * 
 
 an increase since 1875 of $22,854,000 in one year and 
 three months clurino; 1876-7. The state debt of Mas- 
 sachusetts was $22,893,972 in 1805, and $33,550,464 
 in 1-^wG. We have not at hand reports of the present 
 indebtedness of all the states, but it is known that the 
 extravairancies of the governments of a number of the 
 southern states, since 1868, Lirgely increased their 
 debts since that time. Other states in other parts of 
 the Union, have erected and improved public edifices 
 and other property, given sul)sidies to railroads, and 
 increased ex}3enditures in various dh-ections since 1868. 
 
 Another evidence of the increase of state debts in 
 the last ten years is found in the enormous increase of 
 the amount of American securities held L'y foreign cap- 
 italists since that year. Dr. Edward Young estimated 
 sucli indebtedness so held to be about $1,200,000,000 
 in 1873. The Monetary Commission estimated it at 
 not less shan $2,000,000,000 up to March, 1877. Here 
 is an increase of the amount of bonds held abroad of 
 $800,000,000 in four years, of which much is state 
 bonds. 
 
 Banks. The report of tlie Comptroller of the Currency 
 for 1876 shows the following increase of liabilities of the 
 national banks from 1869 to 1876 : Due to depositors 
 in 1869, $523,000,000 ; in 1876, $666,200,000 ; increase 
 since 1869, $142,800,000. Due to other banks in 1869, 
 $118,900,000;' in 1876, $179,800,000; increase since 
 1869, $60,900,000. Other liabilities in 1869, $5,900,- 
 000; in 1876, $10,600,000; increase since 1869, 
 $4,700,000. A total increase of liabilities in these 
 three items of $208,400,000 from 1869 to 1876. These 
 facts prove that the gr-eatest increase of state, corpo- 
 2'ate and municipal indebtedness of the countrj' took
 
 IT CAUSED THE COUNTRY'S INDEBTEDNESS. 191 
 
 place, not during inflation, l)iit after the greatest con- 
 traction of the currency, from 18G8 omvard. 
 
 Individual Indebtedness. We have no data show- 
 ing in terms the increase of individual indebtedness, 
 and must, therefore, resort to reasoning from facts and 
 conditions. If the a2:<!:reijate of individual indebted- 
 ness of a country always bore an unvarying propor- 
 tion or relation in amount to the sum of business done, 
 it would be comparatively easy to arrive at something 
 near a correct conclusion, and from it the period of 
 greatest accumulation of individual indelitedness would 
 a})pear to be from 18G9 onward, after the greatest 
 contraction of the currency had taken place, because 
 the greatest amount of business ever done in this coun- 
 try was transacted in 1869, as appears by the bank 
 clearings given in another chapter. But such is not a 
 correct rule of estimating indebtedness ; other reason- 
 ing must be resorted to. 
 
 Prices of property are controlled by the volume of 
 money in circulation, as modified by other things. It 
 is known and will be conceded that the great body 
 of mankind in all their business arrangements base 
 their calculations mainly upon existing prices and con- 
 ditions. When the war closed, and a million of men 
 returned from the tented field to domestic and busi- 
 ness pursuits, there were $1 ,(i()0,()00,()00 of money in 
 the country. It took the country at least one year 
 after the close of the war to settle down to business. 
 In January, 18()G, there were $1,800,000,000 of money 
 in the United States. Prices rano-ed hiirh accordinijlv. 
 The hearts of men were glad and bouyant Avith hope. 
 A nation which had been mad Avith Avar, noAV engaged 
 in the pursuits of peace, the industries and connnerce,
 
 192 CONTRACTION OF THE CURRENCY: 
 
 with strons: hearts and vigorous hands. Men calculated 
 upon existing prices. Quietly, unknown to the masses, 
 the means which sustain prices and business, the vol- 
 ume of money, was being rapidly reduced by the gov- 
 ernment. No panic came ; the money was legal tender ; 
 confidence remained strong. The people, without 
 knowing that there was a decrease in the aggregate 
 amount of money, began to experience the handling 
 of less of it : bejjan to feel that there was not enough 
 money to sustain their undertakings. Piices, also, 
 began to decline moderately, but not sufficiently to 
 arrest general attention. The result of this combinti- 
 tion of circumstances and facts was a resort to credit. 
 Men did business on borrowed capital ; they bought 
 personal and real property on credit. It was credit 
 which took the place of the $1,000,000,000 of money 
 retired in 1866 and 1867, and so well sustained prices 
 until the crisis in 1873. 
 
 From the report of the Monetary Commission : 
 "A temporary maintenance of nominal prices, even 
 in the presence of a shrinking volume of money, is es- 
 pecially practicable with imperishable property, such 
 as real estate. AVhen money begins to l)ecome scarce, 
 by reason of a shrinkage in its volume, the first effect 
 upon real estate is found to be, not a decline of its 
 nominal price, but a diminution in the number of trans- 
 actions. Market reports quote real estate ^duU; few 
 sales, hut pr-ices Jinn.' This stagnation is ascribed to 
 temporary causes, and a speedy recovery predicted. In 
 order to maintain prices the terms of purchase are 
 made easier. The amount of cash payments is reduced, 
 and the deferred payments secured by mortgage on 
 the property, extended over longer periods. After 
 a time this expedient fails, and, even then, nominal 
 prices are unnaturally held up for a short period by 
 the strug2:les of those who have purchased upon these
 
 IT CAUSED THE COUNTRY'S INDEBTEDNESS. 193 
 
 extended credits, and by the tenacity of owners who 
 refuse to sell at lower figures, and mortgage their own 
 property to protract their power to hold." 
 
 The business of the country was kept up, but upon 
 constantly declining prices, resulting in constantly in- 
 creasing indebtedness to meet losses, until the pressure 
 of debts became extremely heavy. Then a system of 
 "borrowing from Peter to pay Paul" prevailed, and a 
 struggle to meet annual interest strained every nerve. 
 This state of affairs continued until in 1873, when an 
 enormous balance of foreign trade against the country, 
 together with the great decline in the prices of stocks, 
 bonds and securities, and an intense demand for gold 
 to meet foreign balances and interest came with crush- 
 ing weight, bringing a panic and ruining thousands. 
 The contraction of the currency assisted to reduce gold 
 premium, but credit kept prices up. And when gold 
 premium fell to a point below the fall of prices it in- 
 duced large imports for profit, produced heavy balances 
 against us and caused the crisis. 
 
 To-day the greatest part of the individual indebted- 
 ness of this country, amounting to billions, although 
 owing to new creditors, is, we doubt not, indel)tedness 
 with arrearages of interest which Avas contracted from 
 five to ten years ago. And these debts were caused 
 mainly by the reduction of the volume of money. 
 
 There is another fact which goes far towards sus- 
 taining our position that the greatest accunmlation of 
 individual indebtedness has occurred since the contrac- 
 tion of the currency. This is the great increase of loans 
 by banks. On the 9th of Oct., 1869, the total sum of 
 national bank loans was $682,900,000, and their capital 
 stock $426,400,000. On the 1st of Oct., 1875, the loans
 
 194 CONTRACTION OF THE CURRENCY : 
 
 were $984,700,000, and capital stock $504,800,000. 
 Here is an increase of loans of over $300,000,000^ 
 nearly 50 per cent. — from 1869 to 1875, while the in- 
 crease of capital stock was but $78,400,000, less than 
 twenty per cent. 
 
 It has been a commonly accepted theory that an in- 
 flated state of the currency causes a disproportionate, 
 ruinous increase of indebtedness, and many argue from 
 that premise in apparent ignorance of the fact that it is 
 false. The amount of indebtedness of a people which 
 is safe is no fixed sum. It, depends upon the amount 
 of money they have. $5,000,000,000 would be as hard 
 to pay mth a volume of $500,000,000 as $10,000,000,- 
 000 would be with a sufficiently lai-ger volume of money. 
 
 The amount of money in a country at any given time 
 does as little, perhaps, towards unduly increasing the 
 amount of mdebtedness as any other power which op- 
 erates upon the commercial world. A decline of 
 the volume of money tends to induce indebtedness. 
 The prime causes of the creation of debts are two : the 
 business hopes and ambitions of men, and necessity. 
 Only the first of these causes can exist to any note- 
 Worthy extent during inflation. Either of them may, 
 but the last one, necessity, always must exist during 
 and following contraction. Both these prime causes 
 spring from the same source, want of money, and they 
 intensify the human passions for it. 
 
 The first, hopes and amoitions, are spontaneous ; the 
 latter embraces the first with necessity born of extran- 
 eous circumstances added. The second, necessity, pro- 
 duces the intenser desire for money. The wnnt of 
 money produced hy ]\o\)qh and ambitions during infla- 
 tion finds ample means of being satisfied by sales of
 
 IT CAUSED THE COUNTRY'S INDEBTEDNESS. 105 
 
 propert}' or securities, or by skill and labor, because there 
 is a plethora of money, and the occasion for creating 
 debts, at least undue indebtedness, does not exist. Tlie 
 intense Avant of money produced by necessity, during 
 and followiniz; contraction tinds little means of beins: 
 satisfied, because there is a scarcit}'' of monej' — not 
 enough to supply the pressing needs, and neither prop- 
 erty nor labor can be readily exchanged for money ; 
 hence, the occasion for creating debts is great. It fol- 
 lows then, that in every case of a considerable contrac- 
 tion of the volume of circulating* money there will be a 
 larger increase or accumulation of indebtedness than in 
 times of inflation, with the single exception of a crisis 
 or panic, contemporaneous with or quickly following 
 contraction, when credit is cut off and swift destruction 
 overtakes the debtor. 
 
 Our own and English finance history establish the 
 truth of this proposition. In this country both causes 
 for want of money have existed since 1867 ; hopes and 
 ambitions and necessity producing an unprecedented in- 
 crease of indebtedness since that period. 
 
 Scrutiny of the foUowiuo- table of Eno-lish bank note 
 circulation and bank discounts exhibits the fact that an 
 increase of indebtedness is not attributable to inflation, 
 but uniformly followed contractions of the currency. The 
 increase of bank discounts in 1797 was due to the con- 
 traction of the currency from £16,729,000 in 1796 to 
 £9,674,000 in 1797. An increase of paper money from 
 £9,674,000 in 1797 to £13,000,000 in 1798 was atten- 
 ded by no noticeable increase of bank discounts. 
 
 Table of the amount of bank note circulation and 
 the amount of discounts at the Bank of England for 
 for the years stated. Up to 1811 only Bank of Eng-
 
 196 
 
 CONTRACTION OF THE CURRENCY : 
 
 land circulation is given, that of country banks not 
 being known ; after that year, the total is given. 
 Only notable years are embraced in the table : 
 
 Year. 
 
 1796. 
 1797. 
 1798. 
 1810. 
 1811. 
 1814. 
 1815. 
 181 (J. 
 1817. 
 1818. 
 1819. 
 1824. 
 
 1825. 
 
 1826. 
 1827. 
 1831. 
 1832. 
 
 Bank of England 
 
 Notes 
 
 in circulation. 
 
 16,729,529 
 9,674,000 
 13,095,000 
 21,019,600 
 23,360,220 
 
 Ist part of year 
 December 1 .. 
 December 25 . 
 
 Total Bank 
 circulation. 
 
 (Contractions lit Country 
 Bank issues) 
 
 47, 
 
 46, 
 
 42, 
 
 43, 
 
 48, 
 
 40, 
 
 32, 
 
 41, 
 
 31 
 
 40, 
 
 30, 
 
 32, 
 
 26, 
 
 26, 
 
 ri01,080 
 
 272,000 
 090,001) 
 294,000 
 278,000 
 928,428 
 758,000 
 000,000 
 000,000 
 000,000 
 219,6(il 
 732,900 
 452,000 
 763,000 
 
 Discount of Com- 
 mercial Paper at 
 Bank of Enj^land. 
 
 3 505,000 
 
 5,350,000 
 
 5 870,000 
 
 23,070,000 
 
 15,199,1100 
 
 13,285,000 
 
 20,600,000 
 
 11,180,000 
 
 5 507,000 
 
 5 113,000 
 
 6,321,000 
 
 6,253,000 
 
 7,691,000 
 
 7,369,740 
 3,389,000 
 5,845.000 
 3,247,169 
 
 In 1810 the drain of «fold from En2:land to meet for- 
 eign demands produced a great contraction of country 
 bank issues, and as a result immense advances were 
 called for at the Bank of England, raising its discounts to 
 £23,000,000. Ill 1811, a year of panic, discounts were 
 cut down to £15,199,000. Between 1814 and 1815 a 
 reduction of the total volume of currency of £1,300,- 
 000 took place, accompaned by an increase of discounts 
 from £13,285,000 to £20,600,000. 1816 the currency 
 was reduced £4,000,000, causing panic and reduction 
 of discounts £9,000,000. Between 1816 and 1817 the 
 currency was expanded £1,100,000 and discounts fell 
 nearly £6,000,000. In 1818 the currency was increased 
 £5,000,000, and discounts fell off £400,000. In 1819
 
 IT CAUSED THE COUXTUY's IXIM:15TE1).\E.SS. 197 
 
 the currency Avas reduced over £7,000,000 and discounts 
 increased £1,100,000, and so on. 
 
 Besides the necessity of borrowing money and buy- 
 ing on credit caused by the imprudent contraction of 
 the currency in 186G and in 1867 and since, another 
 great force operated to create debts. It was a new 
 ambition born of the great triumphs of the war. When 
 the war closed and left the government in the hands of 
 the triumphant party of progress, that party and its 
 leaders, deeply imbued with centralizing principles, a 
 passionate love for great corporations, and an intense 
 desire for display of progress, gave unrestrained course 
 to their ambition to make the part}' and themselves 
 great in peace as well as in war, which resulted in stu- 
 pendous schemes for corporations, railroads, i)ublic 
 buildings and other internal impi-ovements, and the 
 creation of hundreds of millions of debt, with a reck- 
 lessness before unknown in this countr}'. This was not 
 born of intlation, but of that spirit of aggression and 
 the love of display and power for which that party is 
 noted. This intense ambition radicalized everAlhinii. 
 The Republican spirit spread into every nook and cor- 
 ner of the republic and the idea of progress, the pet 
 ambition of that party, became the inspiration of the 
 times. States, cities, counties, school districts, cor- 
 porations and individuals followed in the wake of Re- 
 publican leaders after progress, and the result has been 
 millions upon millions expended upon all kinds of en- 
 terprises and the piling up of mountains of debt. 
 
 During the process of the contraction of the currency 
 credit took the place of money. The ambitions, hopes 
 and extravagancies of the times together with the effort 
 of credit to till the vacuum caused by the retirement of
 
 198 CONTRACTIOX OF THE CURRE>XY : 
 
 $1,000,000,000 from the business world, exj^lains the 
 mystery of the burden of debt which has pressed so 
 hard upon the country. 
 
 These, then, are the true causes of the vast indebt- 
 edness of the country : First, the effort of credit to 
 fill the vacuum produced by the unprecedented contrac- 
 tion of the currency in 18(30 and 1867 and since. Sec- 
 ond, the full-grown Republican idea of progress, re- 
 ceivinn^ di2:nitv and strength from the grand successes 
 of that party, took deep root among the people and in- 
 spired them Avith an overweening ambition for great 
 efforts and display, causing corporations and individuals 
 to expend money and contract debts with lavish hands 
 upon enterprises too great to be held well in hand and 
 too expensive, many of them, to yield profits. 
 
 These things, the contraction of currency and the ex- 
 travao-ant ambitions succeeding the war, have built up 
 a mountain of debt sublime in its proportions and 
 dreadful to contemplate. National debt $2,000,000,- 
 000. State, municipal and railroad debts about $4,- 
 000,000,000. The debts of 630,000 traders and manu- 
 facturers were estimated by the Monetary Commission 
 at $13,000,000,000. The liabilities of banks, mining 
 and other corporate companies, mechanics, workmen, 
 professional men and farmers cannot be ascertained, 
 but we think $7,000,000,000 a low estimate for them. 
 The raort^ao-es on real estate indicate an enormous sum 
 of debts of those classes. The amount of mortgages on 
 real estate existing in a few counties where no peculiar 
 conditions exist, ascertained to be about half the assessed 
 value of the real property thereof , indicate the aggregate 
 inort'T^aires to be about half the aggregate assessed value
 
 IT CAUSED THE COUNTRY'S INDEBTEDNESS. 199 
 
 of real estate in the U. S. for 1870. This alone would 
 give nearly $5,000,000,000 of mortgaged debts. 
 
 Summing up the foregoing we put the aggregate in- 
 debtedness of all kinds and of all classes of people in 
 the United States at not less than $25,000,000,000. 
 Two and one-half times the present commercial value 
 of all the property, and thirty times the money in this 
 debt-ridden land ! This is astounding, and the esti- 
 mate may seem chimerical to some, but if any will pro- 
 ceed to ascertain the indebtedness of individuals he will 
 be soon amazed at the numl)er and amount of private 
 debts, of which the public has not even a suspicion, 
 much less accurate information. How is this gigantic 
 indebtedness to be discharged? With money. With 
 much money only.
 
 CHAPTER XII. 
 
 THE DEBTOR CLASS ; EFFECTS OF CONTRACTION ON THEM. 
 
 As has been stated before, the mass of mankind 
 transact business with reference to existing facts. Pur- 
 chases on credit are made in view of existing prices. 
 Prices are affected by the amount of money in circula- 
 lation. When there is much money, prices are high; 
 when there is little, they are low. 
 
 A bought land for $20 per acre in 18G7, when there 
 was more money than now, and when credits were 
 easily obtained. He paid half cash and gave his notes 
 due in ten years, with interest, for the balance. The 
 extension of credit Avhich followed contraction, collapsed 
 in 1873, and is not sufficient now to sustain prices as it 
 did from 1867 to 1871-77. He cannot get credit. The 
 full effects of contraction on prices are noAv seen. The 
 land is worth only $10 per acre. He loses all he 
 actually invested. His ability to pay is reduced half, 
 which is equivalent to a doubling of the del)t. He is 
 unable to pay. His home is sold to pay the debt. He 
 is financially ruined and his family are turned out 
 homeless and penniless. By the same process, the mer- 
 chant, the sliopkceper, the trader is reduced to poverty. 
 The long lists of bankruptcy cases pending in the Fed- 
 eral courts exhibit the effects of contraction on the
 
 EFFECTS OF CONTRACTION ON THEM. 201 
 
 debtor class. Thousands of men l)ou<j:lit homos during 
 the high prices of property from 18<)() to 1870, paying 
 part and oivini:; notes and niortixaixes for the bahince. 
 
 J. ~ o or? 
 
 During and after the crisis, in 1873, Avhen the credit 
 which had so powerful I3' sustained prices prior 
 to that time, had been cut off, property fell to half its 
 former value. The notes became due. The debtor 
 could not get further credit. There was little sale for 
 propert}'. The mortgages were foreclosed and the 
 debtor ruined. Such cases are familiar all over the 
 Western States. In the South millions of acres were 
 sold for taxes. The appalling increase of bankrupt- 
 cies since the system of contraction set in, in 18GG, more 
 forcibly illustrates the terrible effects of a declining 
 volume of money on tlie business and debtor classes 
 than tongue or pen can. In 1865 they were 530 in 
 number with $17,625,000 liabilities, from which they 
 have increased to about 9,000, with lial)ilities over $190,- 
 000,000 for each of the years 1876 and 1877. Of 8G rail- 
 roads, of 14,179 miles length in the aggregate, the cap- 
 ital stock of which M'as $912,509,000, 30 were sold 
 under mortgage, receivers were appointed for 4(), and 
 10 defaulted in i)avini»: interest or moi'tirao'es. 
 
 The English historian Doubleday states the terrible ef- 
 fects of contraction on private fortunes in England from 
 1819 to 1823, so forcibly, and it illustrates the condi- 
 tion of affairs in this country so perfectly that I give 
 it here : 
 
 "I Avas myself personally acquainted with one of the 
 victims of this terrible measure (referring to Sir 
 Robert Peel's bill for resumption of specie payments). 
 He was a schoolfellow, and inherited a good fortune, 
 made principally in the West Indies. On coming of 
 age and settling with his guardians, he found himself
 
 202 THE DEBTOK CLASS : 
 
 possessed of fully forty tbo^usand poiincTs ; and witk 
 thi^ he resolved to Durchuse an estate, to> Kuirry and to- 
 settle for life. 
 
 *'He was a young man addicted to no vkes, of a fair 
 understandinir, and a most excellent heafft^ and was 
 connected Avith friends hiii;!! in rank and likelyto afford 
 him ever i)roper assistance and) advice. The estate 
 Was purchased, I believe, about the year 1812' or 1813, 
 for eighty thousand pounds, one moiety of thepurchase 
 money l)eing borrowed on mortgage of the land bought. 
 In 1822-23 he was compelled to part with the estate in 
 order to pay off his mt)rtgage and some arrears of in- 
 terest ; and when this was done he was left without a 
 shillinjx, the estate brinixiuir only half its cost in 1812 ! 
 Thus, Avithout imprudence or fault of any kind, was 
 this amial)le man, together with his family, plunged m 
 irrctrieval)le and inevitable ruin, by the act of a legis- 
 lature which ought to have protected both, and which 
 was fully warned of the consequences of what it was 
 about to do ; but which, in requital, chose to laugh 
 those who warned to utter scorn. My readers must 
 not suppose that this was either an exaggerated or un- 
 common case. On the contrary, the country teemed 
 with sinnlar examples, and on the commencement of 
 the session of 1823, the tables of l)()th Houses were 
 loaded with petitions, detailing scenes of hardship and 
 destitution appalling in the extreme. As a sample of 
 the whok^, I have selected one which most fully ex- 
 hibits the dreadful effects of this infatuated measure 
 upon the welfare and hap})iness of the coinnmnity ; 
 aiKl of this petition I here insert as complete an ab- 
 stract as I can frame. The substance of this very ex- 
 traordinary document was as follows. It was presented 
 to the Commons by Lord Folkstone, and to the Lords 
 Tjy Earl Stanhope. 
 
 <' It sets forth: 
 
 '< '1. That tiie petitioner, having contributed both in 
 < purse and person to the maintenance of the State, had 
 ' ft right to expect protection of person and property in
 
 EFFECTS OF COXTItACTION ON THEM. 203 
 
 return ; but that instead of this, he is ruined hy act of 
 the Parliament. 
 
 " '2. That he imputes no intentional wrong-doing, 
 but grievous error to the Govenment ; yet he hopes the 
 Government will not change error into inju>iice by per- 
 severini; in it. 
 
 " 'o. That the petitioner's ruin, as Avell as that of 
 thousands of other persons, arose from Peel's bill for 
 returning to cash i)ayments ; but that few cases can ex- 
 ceed his in hardship. 
 
 " '4. That the petitioner and his father were wine 
 merchants, and made a large fortune, with i)art of 
 which, in 1811 and 1812, they bought land. 
 
 ♦''5. That they bought the estate of Northaw, in 
 Herefordshire, for £(i2,000, and laid out £10,000 
 more in improvements, investing in all £72,0(.0. 
 
 " m;. That in 1812 they bargained with John A* 
 Trenchard, Doctor of Divinity, for the estate of Pontry- 
 las, for whieh they agreed to give £(iO,00(), paying £5555 
 as a deposit. That the title not being satisfactory the 
 result was a suit at law, which was not decided until 
 181i», when judgment went against them, awanlinur a 
 gross sum of £71,957 lit.s\ bit. to Dr. Trenchard, be- 
 ing purchase money and interest. 
 
 "'7. That in the mean time petitioners had experi- 
 enced heavy losses in trade, and could not i)ay this sum ; 
 and, therefore, gave Dr. Trenchard a mortgage on 6o/A 
 the estates of Northnw and I'oinrylas for £»>."^( )()(). 
 
 ♦ *X. That after 1819, when the suit ended, petitioner 
 and liis father paid £5,()0() in part of the debt, and- 
 £8,000 interest up to 1821. 
 
 " '9. That on the suit ending in 1819, they received- 
 up to 1821, out of the estate, for rent and wood", 
 £3,410. 
 
 ***1(). That in July, 1821, the two estates were 
 offered for sale, but would not bring the siun for which 
 they ivere mortgaged. 
 
 "'11. That in 1821 petitioner and his father were 
 bankrupts.
 
 204 TirR DEBTOR CLASS. 
 
 "'12. That Di*. Trenchard then got possession of 
 both estates, and gave notice to fordose tJie mortgage. 
 
 "'13. That petitioner and his father thus actually 
 paid Trenchard £18,555, and have only received out 
 of the estate £3,410 ; and they are now about to loose 
 both the estates of Pontrylas and ISorthaw ; the last 
 which cost £72,000. 
 
 " '14. That Trenchard, on the other hand, has 
 received in cash £18,555, with all the rents of Pon- 
 trylas from 1812 to 1819, and that he is now about to 
 get the two estates, with all arrears of rent from Feb- 
 ruary, 1820, in lieu of his debt of £60,000. 
 
 " '15. That petitioner's assignees are praying the 
 Court of Chancery not to allow this, for that if it be 
 granted, the result will be that Dr. Trenchard will have 
 received all the rents and protits of Pontrylas estate, 
 except for two years, £1,470 for timber, £18,555 in 
 cash from the petitioner, and in addition to his own 
 original estate of Pontrylas, he Avill also have got the 
 other estate of Northaw, which cost £72.000, 
 
 " ' 1(>. That petitioner and his father had other estates 
 in Middlesex, Essex and Hanishire, which cost £36,- 
 000, but have now been sold for £12,000 ! That by 
 the depression in trade they became bankrupts. That 
 petitioner's father died in 1822 of a l)roken heart, and 
 that he is himself a ruined man, with with seven child- 
 ren of his own, ten of his brother's and seven of his 
 sister's, all depending on him. 
 
 " '17. That petitioner, therefore, prays for an equi- 
 table adjustment of this and all similar contracts.' 
 
 "This petition was that of Charles Andrew Thomp- 
 son, of Chesewick, in the County of Middlesex, and is 
 certainly calculated to tear in pieces, .almost, the heart 
 of every just and sensible man that reads it."
 
 CHAPTER Xni. 
 
 THE CREDITOR CLASS : 
 EFFECTS OF CONTRACTION ON THEM. 
 
 It has been common for the creditor class, and all 
 who embrace the theories of buUionists, to argue that 
 an increase of the volume of money lessens the value 
 or purchasing power of money, reduces the value of 
 debts in the hands of holders, and is therefore injustice 
 and an injury to the creditor. This proposition is not an 
 axiom by any means. In fact, it is attended with much 
 doubt. If the only thing the creditor intended to do 
 Avas to collect and lay the money out in realized wealth, 
 houses and lands, and hold them, the proposition would 
 be in part true. But such is not the common object of 
 creditors. They look to money profits, interest, safe, 
 paying investments. Interest and profits on loans 
 depreciate with a contraction of the currency. This is 
 evidenced by the low rate of interest at which govern- 
 ment bonds were sold in England during the scarcity 
 of money there, after resumption in 1820, and it is 
 evidenced in this country now by the rapid sale of four 
 per cent, bonds. Below we give a table of the rate of 
 interest in New York, as appears in the report of the 
 comptroller of the currency, and one of the ratio of 
 earnings to capital and sur[)lus of the national banks 
 from March, 1869, to September, 1877, taken from the
 
 206 THE CREDITOR CLASS : 
 
 annual report of the comptroller of the currency, for 
 
 1877. 
 
 TABLE OF RATES OF INTEREST. 
 
 1874, call loans, 3.8 per cent. ; commercial ])aper, 6.4 per cent. 
 
 1875, call loans 3.0 per cent. ; commercial paper, 5 6 per cent. 
 187(), call loans, 3.3 per cent. ; commeicial paper, 5.3 per cent. 
 1877, call loans, 3.0 per cent. ; commercial paper, 5 2 per cent. 
 
 TABLE OF RATIO OF BANK E.mXINGS TO CAPITAL AND SURPLUS. 
 
 March, 1 8G9 to September, 1 8G9 6 per cent. 
 
 September, 18U9 to March, 1870 5.8 '■ 
 
 March, 1870 to -eptember, 1870 5.2 " 
 
 September, 1870 to March, 1871 5 2 ' 
 
 March, 1871 to September, 1871 5 " 
 
 September 1871 to March, 1872 5.0 '* 
 
 March, 1872 to Sipteraber, 1872 5.4 " 
 
 September, 1872 to March, 1873 * 5.4 '• 
 
 March, 1873 to .September, 1873 5.5 '' 
 
 September, 1873 to March, 1874 4.8 '* 
 
 Maich, 1874 to September, 1874 4.9 " 
 
 Sepi ember, 1874 to March, 1875 4.7 " 
 
 March, 1875 to September, 1875 ...4.6 " 
 
 September, 1875 to March, 1876 3 6 " 
 
 March, 1876 t > September, 1876 3.3 '* 
 
 September, 1876 to March, 1877 3 1 " 
 
 March, 1877 to September, 1877 2.5 " 
 
 This table shows a large decrease from 1869 to 1877, 
 during which time there was a contraction of the cur- 
 rency $80,000,000, and in 1873 a collapse of credit, 
 which has not recovered since. It will be observed in 
 the table that the smallest earnings before the panic of 
 1873 was in 1871. This exactly corresponds witli the 
 greatest contraction of the currency between 1869 and 
 1873. We take the experience of the national banks 
 as an exemplification of the universal fall of interest, 
 attending contraction, except on loans to unsafe bor- 
 rowers. As has been said before, the full effects of 
 contraction were not felt until in 1873, when the panic 
 came and cut oif credit. So, from that year on, the 
 banks have experienced the effects of contraction in a 
 very great decrease of earnings. Then, one of the 
 injuries to creditors which contraction brings, is a
 
 EFFECTS OF CONTRACTION ON THEM. 207 
 
 great depreciation of interest profits. The magni- 
 tude of this depreciation of interest is determined prin- 
 cipally by the extent of contraction and destruction of 
 credit. 
 
 There is another great injury done to creditors by 
 contraction, which is commonly overlooked. It is the 
 total or partial annihilation of the value of debts. 
 While the number of dollars which the debts calls for, 
 would, if realized, possess greater purchasing power in 
 times of contraction than in times of inflation, yet, 
 contraction often so reduces the debtor's profits and 
 the value of his property as to render him unal)le to 
 pay. Then the creditor must sue him or sell him out 
 under mortgage and realize one-half or three-fourths 
 of his del>t, or buy the property in, and be encumbered 
 with a lot of troublesome, tax-bearing, unproductive 
 property, which has scarcely any marketable value. 
 Besides this, the great increase of cases in bankruptcy in 
 times of contraction, increases the creditor's liability 
 to loss, by the debtors going voluntarily or being 
 forced into bankruptcy. 
 
 While contraction reduces the volume of money, and 
 thus reduces the ability of all to pay, it never brings a 
 corresponding decrease of the rate of taxation, and is 
 thereby another means of loss to the creditor as well 
 as the debtor. On the other hand, while inflation 
 reduces the purchasing power of money and thereby 
 reduces the relative value of debts, it greatly modifies 
 the disadvantages enumerated, increases interest and 
 profits, better enables the debtor to pay, multiplies 
 opportunities for the safe and profitable investment of 
 capital, and thus, itself, compensates the creditor class 
 in several directions for the injury supposed to be in-
 
 208 THE CKEDITOR CLASS. 
 
 flicted upon them in another. Taking the sum of re- 
 sults of moderate inflation to the creditor class there 
 is no injury or injustice done to them by it. This is 
 amply evidenced by the vast profits of capital during 
 our flush times. Contraction has in this country caused 
 great depreciation of the value of municipal, railroad, 
 and other corporation bonds and stocks, and greatly 
 injured all of the holders of such securities and ruined 
 many. The only creditors benefited hy such a contrac- 
 tion of the currency as we have had, are those who 
 hold firs-t-class bonds. Even those holdinsj bonds of 
 some of the states have lost heavily on account of the 
 inability of the latter to pay. 
 
 We therefore conclude that while contraction injures 
 all, a reasonable expansion of the volume of money 
 injures none, but greatly benefits the great body of the 
 people, especiall}^ the debtor, commercial, industrial 
 and laboring class.
 
 CHAPTER XIV. 
 
 CONTRACTION ITS GENERAL EPFECTS. 
 
 BRIEF ARGUMENTS AGAINST IT. 
 
 There is not gold and silver enough in the United 
 States, even if the Government could command every 
 dollar of it, to redeem the outstandhig legal tenders. 
 If thev are redeemed it must be done by a resort to 
 strategy ; that of trading interest-bearing bonds for 
 lec:al tenders. 
 
 This would effect a destruction of our legal tender 
 paper money, and increase our bonded indebtedness, 
 without placing a dollar of coin in circulation to take 
 the place of the paper. There is not now, nor is there 
 likely to be, coin enough in the United States to sustain 
 $300,000,000 of national bank issues. Under existing 
 circumstances, the vast indebtedness of the country, 
 $135,000,000 of coin interest to pay annually to for- 
 eign capitalists, and the uncertain tenure by which we 
 hold foreign commercial balances, we cannot hope for 
 the accumulation of a large stock of coin. Before the 
 war, when our country owed no foreign debt, our stock 
 of coin never reached $300,000,000. Under the ad- 
 verse circumstances against the country now, the prob- 
 abilities are that our stock of coin cannot reach that 
 sum for years to come. When all the legal tenders
 
 210 CONTRACTION ITS GENERAL EFFECTS 
 
 shall have been redeemed, the national banks must then 
 bank on coin. Every dollar of their issues will be 
 redeemable in coin. If we should be so fortunate as 
 to accumulate a stock of $300,000,000 of coin, which 
 we believe impossible for years to come, then the bank 
 issues could not safely exceed $225,000,000 to $250,- 
 000,000, a sum but little over one-third of our present 
 volume of currency. Such a contraction of the cur- 
 rency would utterly ruin the business of this country. 
 It would produce a revolution. But suppose the banks 
 then would hold $75,000,000 of coin as reserves, and 
 the other $225,000,000 should circulate among the 
 people : this is the most sanguine supposition we could 
 entertain. Even then our total volume of circulating 
 money, both paper and coin, would be only $450,000,- 
 000 to $475,000,000. This would be less than the 
 present volume of money actually circulating. So 
 small a sum could not serve all. 
 
 Money, like other things, is hard to get, is within the 
 reach of few, when scarce and dear ; but when plenti- 
 ful, it is cheap, and, like every other cheap article, is 
 within the reach or command of a much larger number 
 of people than when scarce and dear. It might be 
 made so scarce that it would be very dear, and as hard 
 to command as diamonds. Who, then, but the wealthy 
 could possess it? 
 
 If past finance history and experience be any index 
 to the future, even this, the most hopeful condition 
 that can be looked for, must inevitably result in a fur- 
 ther continuing shrinkage of values, reduction of pro- 
 fits, business and wages, and increase of bankruptcies, 
 crime and pauperism, until the volume of money sinks 
 to about the sum above stated. To reach that point, a
 
 bijip:f argumexts against it. iM 1 
 
 journey of three or four years over a rough and rugged 
 road, flanked on either side by chasms and pitfalls of 
 ruin, awaits the country. Along that cheerless and 
 desolate wav will be strewn wrecks of ruined fortunes, 
 expiring corporations, collapsed banking houses, un- 
 tenanted homes, abandoned factories, rusted and 
 wasted machinery, vacant stores and warehouses, and 
 rotten hulls. State, municipal and corporation stocks 
 and bonds will be hawked about among the groups of 
 money-mongers as worthless bits of paper. Tales of 
 woe will be written in nnnigagee's sale notices, posted 
 on abandoned and desolate houses and along the dull 
 and heavvhisfhwavs. The workman's tools will become 
 dull and silent, and the auctioneer's hammer be heard 
 resoundins: from mornins: till niirht. Povertv and want, 
 clad in rags, and pinched with hunger, will swarm as 
 the locusts of Egypt to devour the country. Beneath 
 the whole, the smouldering tires of wrath and revenge 
 of an oppressed and tortured people will be ready to 
 spring up into consuming flames of destruction ! Is the 
 country prepared for this? Can it afford to take the 
 chances, or even risk the possibility of such a catastro- 
 phe? 
 
 If the government persists in enforcing the Resump- 
 tion Act, disaster is inevitable. The ridicule of 'the 
 bullionists, the fine-spun theories of gold worshippers, 
 cannot avert the pending calamities, or change the na- 
 tural laws of finance and commerce. Like the pyramids 
 of Egypt, standing the test of ages, the unchanging 
 laws of money and trade, and the exi)erience of all coun- 
 tries, broad-based and indestructible tower to the 
 heavens as land-marks for the nations, A decreasing 
 volume of money brings misery ; an increasing volume
 
 212 CONTRACTION ITS GENERAL EFFECTS. 
 
 of money brings prosperity and happiness. This great 
 truth is indelibly "written on the pages of History. Ex- 
 perience of all commercial nations attests it. 
 
 AUTHORITY EMPHASIZES AVHAT EXPERIENCE TEACHES. 
 [Froin the Report of the Monetary Commisision.] 
 
 "The two metals together till but scantily the meas- 
 ure of the money needs of the country. In the whole 
 histor}' of the human race, not a single instance can 
 be pointed out of a fall in the value* of either or both of 
 the metals Avhich has not proved a benefaction to man- 
 kind, while on the other hand, during every period, 
 whenever a rise in the value* of metalic money has oc- 
 curred, it has been attended hy financial, industrial, 
 political and social disaster. An increasing value of 
 money and falling prices have been and are more fruit- 
 ful of human misery than war, pestilence or famine. 
 They have Avrought more injustice than all the bad 
 law\s which were ever enacted. The steadiness of gen- 
 eral prices can only be maintained when money and pop- 
 ulation increase in equal relative proportions. General 
 prosperity and a general fall in prices never did and 
 never can co-exist. 
 
 "The suspensions of specie payment in Russia (in 
 1857), in the United States (in 1862), and in Italy (in 
 18()t5), all within twenty years, not only liberated a 
 very hirge amount of specie, wdiieh was exported to 
 specie-paying countries, but cut off the demand of the 
 suspending countries for the supplies of gold and silver 
 which woukl have been required to keep up their stock 
 of money if it had remained metalic. Were it not for 
 this extraordinary supply and decreased demand, it is 
 more than prolxihle that the specie prices of commod- 
 ities would now range lower than they did in 1849. It 
 is certain that a resumption of specie payments in all 
 or either of these countries would make .such a demand 
 for specie its would greatly appreciate its value, and 
 force prices to a much lower leve?. 
 
 ♦Purchasing power over property.
 
 BRIEF ARGUMENTS AGAINST IT. 213 
 
 "Duriiii!; certain periods in the past when prices have 
 been falling, by reason of a shrinlcage in the volume of 
 money, a slow and toilsome advance has been made in 
 the accumulation of wealth. Under such condi- 
 tions its just distribution is impossible. A shrinking- 
 volume of money and falling prices always have had 
 and always must have a tendency to concentrate wealth, 
 to enrich the few, and to impoverish and degrade the 
 many. This tendency is subtle, active and portentous 
 throughout the world to-day. 
 
 "On a comparison with any country on a mctalic 
 basis, $500, 000, 000 is the least amount of mctalic 
 money that can be assumed to be suificient for this 
 country in the event of resumption. It is in the shadow 
 of a shrinking volume of money that disorders, social 
 and political, gender and fester, that communism or- 
 ganizes, that riots threatc i and destrov, that labor 
 starves, that capitalists conspire and workmen combine, 
 and that the revenues of government are dissipated in 
 the employment of la1)orers or in the nuiintainance of 
 increased standing armies to over-awe them. The 
 peaceful conflict which under a just money s^^stem is 
 continually waged between money, capital and labor, 
 and which only tends to secure the rights of each, is 
 chan<2;ed under a shrinking volume of moiiev to an unre- 
 lentinii" war, threatening the destruction of both. 
 
 The mischief which practically threatens the world, 
 and Avhich has been the most prolific cause of the social, 
 political and industrial ills which have atilicted it, is 
 that of a decreasing and deficient money. It is from 
 such a deficiency that mankind are now suffering, and 
 it is the actual and present evil with which we have to 
 deal. 
 
 From David Hume's Essay on Money : 
 
 *'It is certain that since the discovery of the mines 
 in America industry has increased in all the nations of 
 Europe. * * We find that in every kingdom into 
 which money begins to How in greater abundance than;
 
 214 CONTRACTION ITS GENERAL EFFECTS. 
 
 formerly, everything takes a new face ; labor and in- 
 dustry gain life ; the merchant becomes more enter- 
 prising, the manufacturer more diligent and skillful, 
 and even the farmer follows his plow with greater 
 alacrity and attention. * * The good policy of the 
 magistrate consists only in keeping it, if possible, still 
 increasing ; because by that means he keeps alive a 
 spirit of industry in the nation and increases the stock 
 of labor, in which consists all real power and riches. 
 A nation whose money decreases is actually at that time 
 weaker and more miserable than another nation which 
 possesses no more money, but is on the increasing 
 hand." 
 
 Alexander Hamilton, in his report (1791) on the 
 mint, says : 
 
 *' To annul the use of either of the metals as money 
 is to abridge the quantity of circulating medium, and 
 is liable to all the objections which arise from a com- 
 parison of the benefits of a full with the evils of a 
 scanty circulation." 
 
 AYilliam H. Crawford, Secretary of the Treasury, 
 in a report (February 12th, 1820), to Congress, says : 
 
 "All intelligent writers on currency agree that when 
 it is decreasing in amount, poverty and misery must 
 prevail." 
 
 Mr. R. M. T. Hunter, in a report (1852) to the 
 United States Senate, says : 
 
 "Of all the great effects produced upon human so- 
 ciety by the discovery of America, there were probably 
 none so marked as those brought about by the great 
 influx of the precious metals from the New "World to 
 the Old. European industry had been declining under 
 the decreasing stock of precious metals, and an appre- 
 ciating standard of values ; human ingenuity grew dull 
 under the paralyzing influences of declining profits, 
 and capital absorbed nearly all that should have been 
 divided between it and labor. But an increase in the
 
 BRIEF ARGUMENTS AGAIXST IT. 215 
 
 precious metals, in such quantity as to check this tend- 
 ency, ()i)erated as a now niotiv(»-powcr to the machinery 
 of commerce. Production was stimulated by tinding 
 the advantaires of a chauije of the standard on its side. 
 Instead of being repressed by iiaving to pay more than 
 it had sti[)ulatcd for the use of capital, it was stim- 
 ulated by ])aying loss. Capital, too, was benefited, for 
 new demands were created for it by the new uses which 
 a general movement in industrial pursuits had devel- 
 o})ed ; so that if it lost a little by a change in the stand- 
 ard, it o-ained much more in the ijreater demand for its 
 use, whieh added to its capacity for reproduction, and 
 to its real value, 
 
 "The mischief would be great, indeed, if all the 
 world were to adopt but one of the precious metals as 
 a standard of value. To adopt gold alone would 
 diminish the specie currency more than one-half; and 
 the reduction the other way, should silver be taken as 
 the only standard, would be large enough to prove 
 highly disastrous to the human race." 
 
 The Encylopoedia Britannica, 1859, (article Precious 
 
 Metals, by J. R. McCuUoch,) says : 
 
 "A fall in the value of the precious metals, caused 
 by the greater facility of their ])i-oduction, or by the 
 discovery of new sources of supply, depends in no de- 
 gree on the theories of philosophers, or the deeisions 
 of statesmen or legislators, but is the residt of circum- 
 stances beyond human control ; and although, like a 
 fall of rain after a long course of dry weather, it may 
 be prejudicial to certaui classes, it is beneficial to an 
 incomjjarably greater number, including all Avho are en- 
 gaged in industrial pursuits, and is, speaking generally, 
 of great public or national advantage." 
 
 Ernest Seyd, 1868, (Bullion, page 613,) says: 
 
 "Upon this one point all authorities on the subject are 
 agreed, to wit, that the large increase in the sup[)ly of 
 gold has given a universal impetus to trade, commerce,
 
 216 CONTRACTION — ITS GENERAL EFFECTS. 
 
 and industry, and to general social development and 
 progress." 
 
 The American Review (1876) says : 
 
 "Diminishing money and falling prices are not only 
 oppressive upon debtors, of whom, in modern times, 
 states are the greatest, but they cause stagnation in 
 busjness, reduced production, and enforced idleness. 
 Falling markets annihilate profits, and as it is only the 
 expectation of gain which stimulates the investment of 
 capital in operations, inadequate employment is found 
 for labor, and those who are employed can only be so 
 upon the condition of diminished wa^es. An increasing 
 amount of money, and consequently augmenting prices, 
 are attended by results precisely the contrary. Pro- 
 duction is stinmlated by the profits resulting from ad- 
 vancing prices ; labor is consequently in demand and 
 better paid, and the general activity and })uoyancy in- 
 sure to capital a wider demand and higher remuner- 
 ation." 
 
 Leon Fauchet, (1843,) in Researches upon Gold and 
 Silver, says : 
 
 "If all the nations of Europe adopted the system of 
 Great Britain, the price of gold would be raised beyond 
 measure, and we should see produced in Europe a result 
 lamentable enouirh." 
 
 Before a French monetary convention in 1869, M. 
 Wolowski said : 
 
 "The sum total of the precious metals is reckoned at 
 fifty milliards, one-half gold and one-half silver. If, 
 by a stroke of the pen, they suppress one of these 
 metals in the Jiionetary service, they double the demand 
 for the other metal, to the ruin of all del)tors." 
 
 These arguments for the double standard are arsru- 
 ments for more money and apply with equal force 
 a";ainst a contraction of the currency. 
 
 The specie Kesumption Act is a fraud and ought to 
 be repealed, for that reason as well as others. The
 
 BRIEF ARGUMENTS AGAINST IT. 217 
 
 true character of that act was not understood cither by 
 Congress or the country at the time of its passage as it 
 is now interpreted. The phraseok)gy of the act created 
 the impression that tluere was to be no reduction of the 
 aggregate of paper money, l)ut that legal tender notes 
 were to be diminished only as bank notes were increased. 
 As the act is administered in practice, both classes of 
 notes are being reduced at the same time, while the 
 population of the country is expanding. The words of 
 the act may justify this method of administration, but 
 it was ncrt with that understanding that it was sanc- 
 tioned by Congress. This act is perpetuating the evils 
 of the crisis of 1873. It is constantly diminishing 
 the currency, reducing values, clogging the wheels of 
 commerce, stopping the machinery of industry, des- 
 troying profits, multiplying bankrupts, lowering wages, 
 pauperizing labor, breeding a myriad of revolutionary 
 ideas, and inciting riots and insurrections. A declining 
 volume of money is always attended by an accumulation 
 of ills to human society.
 
 CHAPTER XV. 
 
 ROMAN, FRENCH AND GERMAN FINANCES. 
 ROME : MONETARY AFFAIRS. 
 
 1 
 
 Paper money in the form of treasury bills saved 
 Rome, and an inadequate supply of money caused the 
 downfall of that empire. 
 
 ^'The great contest between Rome and Carthage, 
 which Hannibal and Scipio conducted, and Livy has 
 immortalized, was determined i)y a decree of the Senate, 
 induced by necessity, which postponed the payment of all 
 obligations of the public treasury in specie to'^the conclu- 
 sion of the war, and thereby created inconvertilde paper 
 currency for the Roman Emjiire. ]More, even, than 
 the slaughter on the Metaurus, the triumph of Zama, 
 this decree determined the fate of the ancient world, 
 for it alone equipped the legions by whom those victo- 
 ries were gained." — Alison. 
 
 "The censors found the treasury unable to supply 
 the public service. Upon this, trust money, belonging 
 to widows and minors, or to widows and unmarried 
 women, were deposited in the treasury, and whatever 
 sums the trustees had to draw for were paid by the 
 quarter in bills on the banking commissioners, or tri- 
 umvirs 'iiiensarii. It is probable that these bills were 
 actually a pap(!r currency, and that they circulated as 
 money, on the security of the public faith. In the 
 same way the pul)lic contracts were also paid in paper ; 
 for the contractors came forward in a body to the cen-
 
 MONETARY AFFAIRS. 219 
 
 sors, and begged them to make their contracts as usual, 
 promising not to demand payment till the end of the 
 war. This must, I conceive, mean that they Avere to 
 be paid in orders upon the treasury, which orders were 
 to be converted into cash Avhen the present difficulties 
 of the government should be at an end." — Arnold. 
 
 "Rome, itself, saved in its utmost need by an ex- 
 pansion, sunk in the end under a still greater contrac- 
 tion of the national currency. The fall of the Roman 
 Empire, so long ascribed, in ignorance, to slavery, 
 heathenism and moral corruption, was in reality brought 
 about by a decline in the gold and silver mines of Spain 
 and Greece, from which the precious metals for the 
 circulation of the world were drawn, at the very time 
 when the victoi'ies of the legions and the wisdom of 
 the Antonines had given peace and security, and with 
 it, an increase in numbers and riches to the Roman 
 Empire. The supi)lies of specie for the old world be- 
 came inadequate to the increasing wants of its popula- 
 tion, when the power of its emperors had given lasting 
 internal i)eace to its hundred and twenty millions of in- 
 habitants. The mines of Spain and Greece, from 
 which the chief supplies were obtained at that })eriod, 
 were worked out or became unworkable from the ex- 
 actions of the Enqjerors'; and so great was the dearth of 
 the precious metals which thence ensued, that the treas- 
 ure in circulation in the Empire, which in the time of 
 Augustus amounted to £3.s(),000,0()0, had sunk in that 
 of Justinian to £80, 000, 000 sterling ; and the golden 
 aureus, which, in the days of the Antonines Aveighed 
 118 grains, had come, in the lifth century, to weigh only 
 68, though it was only taken in discharoe of debts and 
 
 • . 1 * ^ 
 
 taxes at its original and standard value. As a necessary 
 consequence of so i)rodigioiis a contraction of the cur- 
 rency, Avithout any ])r()p()rtional diminution in the num- 
 bers or transactions of mankind, dcljls and taxes, which 
 were all measured in the old standard, became so over- 
 whelming that the national industry Avas ruined ; agri- 
 culture disappeared, and Avas succeeded by pasturage in
 
 220 FRAMCE : 
 
 the fields ; the great cities were all fed from Egypt and 
 Libya ; the revenue became irrevocable ; the legions 
 dwindled into cohorts, the cohorts into companies ; 
 and the six hundred thousand men who guarded the 
 frontiers of the Empire in the time of Augustus, had 
 sunk to one hundred and tifty thousand in that of Jus- 
 tinian — a force wholly inadequate to its defence." — 
 Alison. 
 
 FRANCE : MOXETARY AFFAIRS. 
 
 The immediate cause, the occasion which brought 
 about the grandest, most terrible, and bloodiest revo- 
 lution of which modern history gives an account, was 
 scarcity of money and oppressive taxes. This was the 
 French Revolution of 1789. Long continued feuda- 
 tory oppressions of the peasantry, mal-administration 
 of justice, royal prerogatives and corruptions in gov- 
 ernment for a long series of years, spread general dis- 
 content among the common people, such that they longed 
 for a chano-e of condition. This loniring for change, this 
 intense desire of the people for a better state was like 
 the smouldering fires of a volcano. They wanted but 
 the occurrence of some circumstance, some irritating 
 cause to make them burst forth with destructive 
 energ3^ 
 
 The profligacy of the government and financially 
 oppressed condition of the people is seen in the fol- 
 lowino- table of jjeneral deficiencies of the revenue for 
 several years preceding the revolution : 
 
 Year Income Expenditure Deficit 
 
 17!^4 23(i, 833,000 frs. 2>*3,] 02,000 frs. 4G,32;> 000 frs. 
 
 178(i 4 74, 04 7, (Ui) 589,184,995 115,137,346 
 
 1787 474,048,239 599,135 795 125,087,556 
 
 1788 472,415,549 627,255 089 154,839,540 
 
 We do not claim that want of money was the under- 
 lying cause of the French Revolution. But the facts 
 detailed in Thiers' Ilistonj of the French devolution
 
 MONETAIiY AFFAIRS. 221 
 
 indicate most clearly that it was the irritating cause, 
 the occasion. 
 
 Frederick Schoberl, the translator and editor of the 
 American edition of that history, in his introductory 
 remarks in relation to the cause of the revolution, says : 
 "The immediately propelling cause was no doubt 
 financial." 
 
 In a commercial nation, where a large part of the 
 people live by buying and selling and by wages for their 
 labor, there is nothinir, there can be nothins:, in which 
 their prosperity and happiness is so bound up as in 
 money. Cut off the supply of money and their means 
 of livini? are aone. 
 
 History records no case of revolution precipitated by 
 the industrial or commercial classes of any country 
 while money was abundant. Governments would act 
 Avisely to note the swift and terrible revenge of a finan- 
 €ially-o})pressed and tax-ridden people. 
 
 Much has been said and written about the French 
 Assiijnats, which were issued durins; the revolution, at 
 the close of the last century. They armed the new 
 empire ^vith irresistible power. 
 
 But there were two causes which produced a great 
 depreciation of their value. The first and greatest 
 cause of their depreciation was want of confidence in 
 the stability of the republic and the fear that the titles 
 of the confiscated estates in which they were redeem- 
 able would fail. 
 
 The second cause was the enormous issues of them. 
 "They amounted to thousands of millions, more than 
 was necessary to serve the business needs of the peo- 
 ple, and, as a matter of course, they depreciated, just 
 as gold did after the great increase of supplies from
 
 222 FRANCE : 
 
 the Australian and California mines. But notwith- 
 standnig their great depreciation from the causes stated, 
 a singular phenomenon appeared in 1793, which forcibly 
 illustrates the wretched reasonins^ of bullionists, and the 
 immense power of legislation on the relative values of 
 money. The precious metals were demonetized and the 
 severest of laws passed against the use of them in finan- 
 cial and commercial operations. The result was a des- 
 truction of their uses as money and a depreciation of the 
 demand for them. One thousand millions of Assiirnats, 
 equal to about $200,000,000, were funded and retired 
 from circulation. The republic had lately been very 
 successful in war, and confidence in the stability of the 
 government had greatly revived. These three things 
 had the extraordinary effect of bringing the Assignats, 
 which had been depreciated four-fifths below gold, to 
 par with it, while there were yet outstanding thousands 
 of millions of them. 
 
 These Assignats were an absolute paper money, not 
 redeemable in coin at all. Holders might buy the con- 
 fiscated estates of the republic with them, and this was 
 all the redeemability they had, and yet the success of 
 the French arms and legislation brought them to par 
 with gold. 
 
 The wisdom of the French government in making the 
 paper a legal tender in 1848, and the extensive and 
 beneficial operations of the bank, the surmounting of 
 the difliculties of a drain of specie from the country and 
 the energizing of business and employment of labor re- 
 sulting therefrom, are interesting and instructive, as 
 will be seen by reading the following comment from 
 the London Times, of February, 1849, upon those 
 transactions :
 
 MONETARY AFFAIRS. 223 
 
 '* As a mere commercial speculation, with the assets which the 
 bank hold \n its hands, it might then have stopped payment, and 
 liquidated its affairs with every probability tJiat a very few weeks 
 would enable it to clear off all its liabilities. But this idea was not 
 for a moment entertained bv M. D'Argout, and he resolved to make 
 ever}' ettbtt to keep alive what maj- be termed the circulation of the 
 life-blood of tlie community. Tlie task was overwhelming. Money 
 was to be found to meet, not only the demands of the bank, but the 
 necessities, botli public and private, of every rank in society. It was 
 essential to enable tlie manufacturers to work, lest their workmen, 
 driven to desperation, should fling them-elves amongst the most 
 violent enemies of public order. It was essential to provide money 
 for the food of Paris, for the pay of the troops, and for the daily 
 support of the ateliers natioiiaux. A failure on any one point would 
 have led to a fresh convulsion. But the panic had been followed 
 with so great a scarcity of the metallic currency, that a few days 
 later, out of a payment of 20 millions fallen due, only 47,000 francs 
 could be recovered in silver. 
 
 " In this extremity, when the bank alone retained any available 
 sums of money, the government came to the rescue, and, on the 
 U'glit of the l.")th of March, the note^ of the bank were by a decree 
 made a le(/al tender, tlie i>sue of these notes being limited in all to 
 350 millious, but the amount of the lowest of them reduced for the 
 public convenience to 100 francs. One of the great difficulties men- 
 tioned in the leport, was to print these 100 Iranc notes fast enough 
 for the public consumittiou — in ten days the amount issued in this 
 form had reached 80 millions. No sooner was the bank relieved from 
 the necessity of paying away the remnant of its coin, than it made 
 every exertion to increase its metallic rest. About 40 millious of 
 silver were purchased abroad at a high ))rice. More than 100 mil- 
 lions were made over in dollars to the treasury and the executive de- 
 partments in Paris. In all, taking into account the branch banks, 
 506 millions of flve-franc pieces have been thrown by the bank into 
 the country since March, and her curreucy was thus supplied to all 
 the channels of the social system. 
 
 "Besides the strictly monetary operations, the bank of France 
 found means to furnish a series of loans to the Goveruinent — 50 mil- 
 lions on exchequer bills on tlie 31st of March, 30 millions on the 5th 
 of May, and on the 3d of June 150 millions, to be })aid up before the 
 end of March, 1849; of this last sum only one-third has yet been re- 
 quired by the State. The banlc also took a part in the renewed loan 
 of 250 millions, and made vast advances to the City of Paris, to Mar- 
 seilles, to the department of the Seine, and to the iiosp tals, amount- 
 ing in all to 260 millions more. But even this was not all. To enable 
 the manufacturing interests to weather the storm, at a moment when 
 all the sales were interrupted, a decree of the National Assembly had 
 directed warehouses to be opened for the reception of all kinds of 
 goods, and provided that the registered invoice of these goods, so 
 deposited should be made negotiable by endorsement. The Bank of 
 Prance discounted these receipts. In Havre alone, 18 millions were 
 thus advanced on Colonial produce, and. in Paris, 14 millions on mer- 
 chandise — in all, 60 millions were thus made available for the purpo- 
 ses of trade. Thus, the great institution had placed itself, as it
 
 224 FRANCE : 
 
 were, in direct contact with every interest of the community, from 
 the Minister to the Treasury down to the trader in a distant port- 
 Like a huge hydraulic inaciiine, it employi'd it-; colossal power-* to 
 pump a fresh stream into the exhausted arteries of trade, to suataia 
 credit, and preserve the ciiculatiou from complete collapse." 
 
 Hon. "Wm. D. Kelly, in an address, has given the 
 history of the remarkable transactions of France dur- 
 ing and after the Franco-Prussian war, so concisely 
 and correctly and brought forward the vital points of 
 the policy so forcibly, that we give it in his own words, 
 as follows : 
 
 THE BASIS OF FRKNCH FINANCE. 
 
 "The distinoruishing characteristic of the financial policy of the 
 French iiovernment is f'>und in tlie fact that it assumes the duty of 
 preventing alternate periods of iiiflati(jn and their inevitable conse- 
 quent diutrac^ion, and that to accomplish tliis end. whenever war 
 or other exigency lias caused an issue of irredeemable paper, it has 
 invested such i>sue with the character of legal tender- made it 
 available for all purposes to whicli m ney could Reapplied iuF ance, 
 whether the transactions w- re b tweeu cit.zeus or between citizens 
 and tlie government, or vii:e vo-.-ia, and h ts ta'<en measures to jire- 
 vent tlie witlidrawal of the paper until a continuous ba au^e of trade 
 had brought into the c 'uutiy metallic muuy enough to supply tlie 
 channels temporarily filled by the paper m )ney with which the exi- 
 gency had been met. Colbert taug .t the French people, and Napf>- 
 leon emphasized tiie lessons of Colbert, that it is labor that supports 
 government and sociei y, and that to arre-t the employment of p o- 
 ductive industry is to imnov ri<!i the public treasury and produce 
 discouteut and possible disorder amuug tho people. 
 
 THE WAR AND ITS KESt'LTS. 
 
 "The war between France and Gornniy was declared July 10. 1870, 
 and was teruiinated by the treaty I'l M.i/ iU, 1871. In April, ls70, 
 the circulation of the B ink of France w ;s §2S^i, 750,000, and it held 
 of specie and bu lion .$201,550,000 luAugjt the government rei^uired 
 it io suspend sp( cia payments, and by the same decree made its 
 notes a legal tender. Tlie first statement published after peace had 
 been restored sliow.d a circula i..n oi bH?,onO,00M,with 8110,000,000 
 of specie. In cousideraliou of the su^ii ii-^ion of specie payments, 
 and tlie use of i;s note-; as leg d tctd r, lae bank lo uied the govern- 
 ment $300,000,000, at 1 per cei.t. iuii rest, a ul agreed lo pay the tax 
 above referred to on iiS circulati ii. Wlun, in August, 1870, the 
 French armies had been deieateil, and on Lcrnation had seized the 
 people of Paris, the Bank of Fra ce and l e ether credit institutions 
 of the city entered into co-operatic)n. and determined, as a matter 
 absolutely necessary to the maintenance of society, to advance to 
 the people within a fortnight 180,000,01)0 francs (.So(j,000 000), and it 
 Is a matter of history that not a single failure of moment look place 
 in France pending the use and liquidation of these loans. * *
 
 MONETARY AJjTAIKS. 225 
 
 "These loans were made to merchants, mannfactnrers, shop- 
 keepers, artisans and mechanics ; to any citizens indeed, whose 
 books showed that their business during a sutliciently long period 
 had been fairly prosperous, and whose industry and integrity were 
 established, and of course much importance was attached to this 
 latter fact. Many of the advances to artisans and mechanics were 
 made wiihout indorsement or collateral at all, or on other security 
 indeed than a fair business and an lioiu;st name. The effects of this 
 extraordinary operation were of commensurate public importance, 
 lathe midst of the most frightful and accumulated miiiUiry and 
 poliiical calamities in the gradual environment of tlie Frencli capital 
 by the German hosts, the ti'ade and labor of lYance were preserved 
 and even stimulated; and it was altogether owing to this patriotic 
 anil most sagacious audacity that, in a period of special and terrible 
 trial, no noteworthy commercial or industrial failure occurred, and 
 that France was afterward enabled to provide for the payment, with- 
 out serious difficulty, of an indemnity intended permanently to crush 
 her, and wliich excited by its magnitude the astonishment of the 
 wluile world. 
 
 "The decree of legal tender (course force) fixed the maximum of 
 the issue of the bank at $480,000,000. It was, however, increased 
 by the law of December 21), 1871, to $560,000,000, ami finally, by the 
 law of July, 15, 1872, to $040,000,000. What effect had the issue of 
 this vast amount of paper money on the premium in gold? * * 
 
 " In November, 1871, when a large payment on account of the war 
 fine, which, as you know, amounted, with interest and charges, to 
 •$1 100,000,000, in addition to the surrender of the magnificent pro- 
 vinces of Alsace and Lorraine and their wealthy and industrious 
 peoi)le to Germany, was due, the premium on gold rose to its high- 
 est point, 2,'2 per cent., at which, to the French people, exorbitant 
 rate it remained for but a few days , and when the irredeemable cir- 
 culation had been increased from $4G0,000,000 to $4'JO,OliO,000, the 
 premium fell to 1 per cent., and in October, 187:5, when the volume 
 of notes had actually reached $014,000,000, the premium was merely 
 nominal, and was only demanded on large sums. Legal tender, gold, 
 silver and paper money were then circulating in common and at par 
 with each other. As I have said, the war fine amounted to $1,100,- 
 000,000. The total cost of the war to France has been officially esti- 
 mated at $2,000,000,000, and the direct loss to agriculture at $800,- 
 000,000; yet the last i)ayment on account of the war fine was made 
 on the 5th of September, 1873, or in two years and four months after 
 the conclusion of the treaty of peace. * ♦ * The advance of the 
 banks to the manufacturers in August, 1870, enabled them to main- 
 tain their indusiries and by paying living wages to place the whole 
 people in a position to, not only respond to the demands of the gov- 
 ernment for taxes, but to meet its call for two loans, one for $550,- 
 000,0(10 and the other for $827,000,000; the tenders in response to the 
 latter call amounted to the fabulous sum of $8,000,000,000, or four 
 times the amount of the national debt of the United States. * * 
 
 THK TRANSFER OF BULLION. 
 
 " The highest estimate I have seen anywhere of the loss of the 
 precious metals by France in the payment of the fine is $240,000,000.
 
 226 
 
 GERMANY : 
 
 * * * The French government shipped $100,000,000 of 
 
 specie and bullion directly to the German governiiient. Yet the tables 
 of the iwo countries (and they are confirmed by the Britisli tables of 
 exports and imports of specie) show that France lost from her inter- 
 course with Germany, from January 1, 1871, to December 31, 1874, 
 but .SUO,OUO,000 in gold and silver. 
 
 "This is the statement of M. Leon Say, made during the time he 
 ■was Finance Minister, whicli he continued to be till MacMahon 
 changed iiis Cabinet. * * * Between January 1. 1871, and 
 December 31, 1874, the dates just referred to, she sent $110,000,000 
 more of gold and silver to Germany than she drew from her. As- 
 suming, whicli there is no good reason for doinir, that all this went 
 on French account, and it appears tiiat Germany rereived but $250 - 
 000,000 of cash from France in payments thereof. The truth is that 
 FraiKie bein:^-, for the reasons stated in my introductory remarks, the 
 creditor of all commercial nations, paid Germany in bills drawn 
 against foreign debtois by the French people, or, in other words, 
 Germany was paid in foreign merchandise, ihe imports of which in 
 excess of exports from January 1, 1S70, to December 31, ls74, hav- 
 ing been, according to the Bavarian Vaterlaiid, $1,132,000,0 0. Many 
 of the earliest of those bills were drawn against German merchants 
 and bankers, and served to transfer money which had licen in circu- 
 lation in Germany to the Imperial Treasurj-^, and thus withdraw it 
 from commercial use. Thus the industrial and financial sagacity of 
 the French government enabled France to revenge herself upon 
 Germany ))y the methods with which it settled the unconscionable 
 war fine imposed upon her. " 
 
 The secret of this grand success of France is not a 
 secret, in fact, to any but those who having eyes see 
 not, and ears hear not. It was simply the furnishing 
 of the people with the means of successfully apply- 
 ing their powers in the industries and commerce. It 
 was money. This set that powerful people to work. 
 Every brain and muscle brought forth wealth, and the 
 commerce of France, thus produced, paid Prussia 
 $1,100,000,000 without impoverishing France. 
 
 GERMANY. 
 
 Germany achieved the grandest military success of 
 the age, in her war of 1870-71 with France. At its 
 conclusion she levied the most gigantic fine on her con- 
 quered foe of which history makes mention, $1,100,- 
 000,000 ! Germany was thus made rich, she thought. 
 Her financial policy prior to that time had been consid-
 
 MONETARY AFFAIRS. 227 
 
 ered \<^ise. Her money had consisted of silver and 
 paper. But, feeling proud from her successes, she 
 changed her financial system to comport with, what she 
 deemed, her newly acquired wealth. She demonetized 
 silver and prohibited the issuance of small bank notes. 
 This greatly depressed business and dried up the foun- 
 tains of commercial prosperity. Her expectations based 
 on the French fine added to these depressing measures, 
 a spirit of extravagance. The result was that but little 
 over one-fifth of the French fine was received bv Prus- 
 sia in money. The balance was paid jn bills of exchange 
 on her own people and in merchandise. And now, 
 while Prussia did actually have added to her coffers 
 over two hundred millions in cash and eiirht hundred 
 millions in merchandise, she, is, to-day, suffering from 
 a great stringency of money and depression of business. 
 She is in immeasurably worse circumstances than her 
 conquered foe. Why? Because her unwise legislation 
 deprived her people of money and depressed business, 
 thus bringing much greater loss than the gain of the 
 thousand millions French fine 
 
 The wealth of a nation is its industries ; the produc- 
 tive labor of its people ; its commerce. Money is the 
 life of these. Cut off the supply of money and these 
 languish. A thousand millions is no compensation to 
 a people for the depression of business.
 
 CHAPTER XVI. 
 
 OUTLINE OF ENGLISH HISTORY ! 
 FINANCIAL, COJUVIERCIAL AND DOMESTIC. 
 
 1793 to 1829. 
 
 The precipitation of England into war with France 
 in 1793 created apprehensions, causing money to seek 
 its hiding phices, resulting in commercial embarrass- 
 ments. 
 
 The government ordered the issuance of £5,000,000 
 of exchequer bills to restore confidence. The rip- 
 ples of financial disturbance disappeared, and the 
 surface of the commercial tide became smooth and 
 serene. In the spring of this year, 1793, France had 
 called out 300,000 men for the army, and declared war 
 against all Europe. This caused a general resort to 
 arms, and the invasion of French territory. Then 
 France sprang to combat as a giant and the continent 
 fairly trembled under the tread of her armies. She 
 levied a new army of 1,200,000 men, and thenceforth, 
 for several years, the tide of success was for France. 
 
 This in turn, necessitated greater preparation for 
 war on the part of England and the other allies. 
 
 In the beginning of 1795, the anti-war paWy in Eug-
 
 FINANCIAL, COMMERCIAL AND DOMESTIC. 229 
 
 land was losing power, and a steady growth of feeling 
 in favor of the war became visible, but the success of 
 the French arms again raised the power and influence 
 of the opposition at the close of 1795, and beginning 
 of 1796. The heavy and increasing weight of taxation 
 and apparent inability of the allies to successfully resist 
 Bonaparte made the opposition violent. Added to these 
 causes of discontent were the high prices of provisions, 
 resulting from scarcity, and a considerable contraction 
 of the currency. Stringency in money was sensibly 
 felt. These depressing conditions resulted in outbreaks 
 and an attack on the kin<x, but without serious results. 
 During this year, Ireland, ever oppressed and ever 
 anxious to throw off the yoke of British government, 
 was in an alarniins: state. Secret arrangements were 
 made with the French for an orijanized revolt. The 
 conspiracy was wide-spread. An organization of 500,- 
 000 Irishmen was ready to join Hocke, who prepared 
 to set sail with a fleet and army across the channel. 
 The winds and waves cri{)pled the fleet and it Avas com- 
 pelled to return to port, saving England from a great 
 Irish rebellion. 
 
 At the beginning of 1797, the public affairs of Great 
 Britain Avere in a deplorable condition. The rejection 
 by France of overtures for peace, the violence of party 
 spirit, increasing embarrassment in commercial circles, 
 continued pressure on the bank of England, and insur- 
 rection, discontent and suffering in Ireland, added to 
 the reverses of the allied armies, increased taxation 
 and augmentation of the public debt, spread a gloom. 
 over the whole country and threatened a destruction 
 of public credit. The three per cent, bonds fell from 
 99 at the beginning of the war to 51, and petitions
 
 230 OUTLINE OF ENGLISH HISTORY : 
 
 from all quarters were presented, asking for a change 
 of ministers and government. Among these disasters, 
 one of tJie most serious was the threatened suspension or 
 breaking of the Bank of England. For two 3'ears the 
 bank had felt a growing pressure for money, owing to 
 the demand for specie to meet government loans to the 
 allies and to supply the army on the continent. In 
 the latter part of 1796 matters were brought to a crisis 
 by " runs " upon the country banks, which arose from 
 dread of invasion, and the desire of everyone to con- 
 vert his paper into coin. These banks having no other 
 source of relief, applied to the Bank of England. The 
 panic soon reached London, became general, and such 
 was the run upon that bank that it was on the very 
 verge of insolvency ; when an order of government in 
 council was issued, for their relief, suspending all cash 
 payments until Parliament could devise some means of 
 preserving the public and commercial credit of the 
 country. 
 
 On the assembling of Parliament, early in 1797, the 
 order of council was framed into a law. Cash pay- 
 ments were suspended, and Bank of England notes 
 made legal tender. The bill was limited in it^ opera- 
 tions to June 24th, 1797, but afterward was renewed 
 from time to time, and in November was continued 
 until six months after general peace should be restored. 
 This wise act at once stopped the run on the banks, 
 prevented a universal crash, restored confidence, busi- 
 ness and internal prosperity. 
 
 Amid the dark surroundings of this crisis, an occur- 
 rence took place which threatened the very existence of 
 the British empire. It was a great mutiny of the fleet. 
 The causes of the mutiny were published by the sailors
 
 FINANCIAL, COMMERCIAL AND DOIVIESTIC. 231 
 
 in a petition to the government. They claimed that 
 wages and rations were insufficient. Concessions were 
 made by government to the sailors and the mutiny 
 ended. 
 
 The cause of this crisis was neither inflation of the 
 paper money nor credit, because, in 179(), the country 
 bank issues had been lessened about £4,000,000, and 
 in 1797 the Bank of England issues were £7,000,000 
 less than in the preceding year. The amount of com- 
 mercial paper discounted at the Bank of England in 
 1797 was only £1,800,000 more thail in 1796, and was 
 less by £500,000 than in 1798, a year of prosperity. 
 The drain of coin from the countrv, necessitatino; a con- 
 traction of the currency, caused the crisis. Immedi- 
 ately following the act suspending specie payments and 
 making bank notes a lejjal tender. Bank of Enijland 
 issues increased from £9,674,000 in 1797 to £13,095,- 
 830 in 1798. Business revived and prosperity returned 
 in a corresponding degree. 
 
 Such was the commencement of the paper system of 
 Oreat Britain which enabled her to unite the allies 
 against France, to ultimately overthrow Bonaparte, to 
 maintain armaments of great magnitude, and to devel- 
 ope wealth and commerce during the war period in a 
 wonderful degree. 
 
 On the 27th of March, 1802, the treaty of Amiens 
 was made between England and France, closing a nine 
 years' war. From 1797 to the close of the war in 
 1802, the British Empire had been steadily increasing in 
 wealth and prosperity. Notwithstanding the increase 
 of her debt to £484,465,000, a larger increase of taxa- 
 tion and the famine of 1799, her internal and foreign 
 commerce had greatly increased, her merchant and
 
 232 OUTLINE OF ENGLISH HISTOKY : 
 
 war marines had improved, her army was strengthened, 
 her wealth had grown, her credit was first-class, prices 
 of all property and labor had advanced, none were 
 idle, peace and order jd re vailed everywhere, and pros- 
 perity blessed the land. Following is a table showing 
 the amount of Bank of Ens^land note circulation, com- 
 mercial paper discounted at the Bank of England, and 
 exports and imports from 1795 to 1802, official value: 
 
 
 Bank of 
 
 
 
 
 Tear. 
 
 England Notes. 
 
 Discount. 
 
 Exports. 
 
 Imports. 
 
 1795. 
 
 ... £14,017,510.... 
 
 £2,946,000 
 
 £27,123,338... 
 
 . £23 736,889 
 
 1796. 
 
 . .. 16,729,520 
 
 3,i05,000 
 
 30,518,913... 
 
 . 23,187,319 
 
 1797. 
 
 9,674,000 •... 
 
 5,350,000.... 
 
 28,917,000.... 
 
 . 21,013,0!IO 
 
 1798. 
 
 ... 13 095 000.... 
 
 5 870 000 .... 
 
 27,317,0 'O... 
 
 . 25,122 000 
 
 1799. 
 
 ... 13,389,000.... 
 
 5,403,0 0.... 
 
 29,556,637... 
 
 . 24,066,000 
 
 1800. 
 
 ... 16,854,800.... 
 
 6.401 000 
 
 33,381 000... 
 
 . 28,257,000 
 
 1801. 
 
 ... 16,213,000.... 
 
 7 90.5,000 
 
 34,838,000.... 
 
 . 30,435 000 
 
 1802. 
 
 ... 15,186,880 
 
 7,523 300 
 
 37,873,320... 
 
 . 28,308,373 
 
 A2:riculture advanced even in a areater desrree than 
 commerce ; contrary to all precedent, the country had 
 eminently prospered during the long and arduous 
 struggle, and the disaffection and divisions which ap- 
 peared during the early part of the war disappeared. 
 From the close of the war in 1802 to the renewal of 
 hostilities in 1803, an era of prosperity reigned in Eng- 
 land. The revenue increased £2,000,000 without any 
 increase of taxation. Internal as well as external 
 peace blessed the country. An extensive paper cur- 
 rency maintained the prices and activity of war times, 
 and the opening of the ports of Europe made the Eng- 
 lish seacoast cities the emporiums of the world. 
 
 The peace of Europe was again destroyed by declar- 
 ation of war in 1803. Notwithstanding the vast ex- 
 penditures and increase of the debt of Great Britain 
 from 1803 to 1809 to meet the emergency of war, there 
 was no stringency in money matters. The country
 
 FINANCIAL, COMMERCIAL AND DOMESTIC. 233 
 
 was blessed with internal peace and prosperity. In 
 the years 1810 and 1811 the harvests were very poor, 
 insufficient, causing the exportation of £4,271,000 in 
 specie to pay for grain. There was much distress in 
 the manufacturing districts. To add to the trouble of 
 the times, a strong opposition to the war was aroused, 
 headed hy Sir Francis Burdett. The government caused 
 him to be arrested and lodged in the Tower. This added 
 much to the discontent. During this time a stringency 
 and threatened panic in the money market occurred. 
 This has been attributed to the Milan and Berlin de- 
 crees of Bonaparte, the destruction of a large English 
 merchant's fleet in the Baltic, and to the American 
 Non-hitercourse Act. These produced a sensible effect 
 upon English business, but alone did not create the 
 general financial distress that prevailed. The real cause 
 for this is found in the fact that the shipments of gold 
 abroad to buy bread so reduced the reserves of the 
 banks, that the country banks greatly reduced their is- 
 sues, thus reducing the volume of money, and at the 
 same time there was an immense cuttino- off of credit. 
 The discounts of paper at the Bank of England fell 
 from £23,000,000 in 1810 to £15,000,000 in 1811. 
 While this shipment of coin abroad was going on, the 
 supply was sensibly diminishing on account of the wars 
 in the mining country of South America. Besides 
 this, there had been a constant increase of population 
 and business in England. 
 
 In 1811 the combination of circumstances pointed to 
 a want of more paper money, at the time when it and 
 credit were being reduced. Parliament was wise enough 
 to see the cause of the distress and applied the right 
 remedy. Provision was made for the issuance of
 
 234 
 
 OUTLINE OF ENGLISH HISTORY: 
 
 £6,000,000 exchequer bills to the commercial classes, 
 at nine and twelve months. This act restored confi- 
 dence and credit and prevented a crisis. During the 
 depression of 1811, prices fell greatly, and there was 
 a considerable decrease in wages and demand for labor, 
 causinjj much distress amouiz; the working class in the 
 manufacturing districts. Amid this state of affairs, a 
 widespread conspiracy was formed among laboring men 
 for the destruction of improved machinery, they be- 
 lievinff it to be the cause of the fall in wages and their 
 inability to oljtain employment. This consj^iracy was 
 suppressed by the execution of a few of the ring- 
 leaders. 
 
 From 1811 up to the close of the Avar in 1815, Eng- 
 land constantly increased in population, in commerce 
 and in wealth. The internal affairs were prosperous 
 and peaceful. At the close of the war, there was uni- 
 versal joy and high hopes of a great increase of all 
 business. The transition from war to peace in 1815 
 transferred 100,000 soldiers from the battle-field to 
 business pursuits. In 1815, the export merchants 
 greatly increased their exports, insomuch that for that 
 year the amount reached £44,053,455, being £8,000,- 
 000 more than for 1814. The fall of prices all over 
 Europe, as well as in England, after the war closed, 
 caused the exporters immense losses on these goods. 
 
 Simultaneously with this condition of things — in fact, 
 preceding it — the banks began a rapid retirement of 
 their notes, in preparation for the evil day of resump- 
 tion, which was to take place six months after the close 
 of the war. The contraction of the currency was from 
 £46,272,000 in the early part of 1815 to £42,000,000 
 in 1816, being a reduction of £4,272,000 within a few
 
 FINANCIAL, COMMERCIAL AND DOMESTIC 23v' 
 
 months. This together with the apprehensions of the 
 results of resumption greatly reduced credit. The dis- 
 counts of commercial paper at the Bank of England fell 
 from £20,(500,000 in 1815 to £11,182,000 in 181C. 
 During this rapid contraction of currency and credit 
 and consequent paralj^sis of lousiness, a failure of the 
 grain crop sent the prices of food up high in the latter 
 part of 181 G, necessitating the payment of high prices 
 for living out of low wages and small profits, thus add- 
 injj ruinous living rates to insufficient remuneration of 
 industry. The result of this combination of circum- 
 stances was distress and saffering; severe and wide- 
 spread. Merchants, shippers and manufacturers were 
 in failinj; circumstances. The as-riculturalists were in 
 like distress. The laborin«: classes were on little more 
 than half wages or in idleness, and many in want. 
 
 As usual, in times of general depression, so in this 
 case, the suffering and those thrown out of employment, 
 joined by hosts of wretched vagabonds assembled in 
 crowds, held meetiuirs and announced an ultimatum. 
 They, contrary to facts, held that the reckless prodig- 
 ality of government sust'iiiicd by a fictitious paper 
 credit were the sources of all their distresses ; that it 
 was this which made provisions high, wages low, and 
 want of employment universal. They demanded a sud- 
 den reduction of pu])lic expenditures, and a return to 
 metallic currency. These meetings resulted in serious 
 riots, in which several lives were lost. 
 
 The general suffering and discontent manifested itself 
 in a vast plan of insurrection, having its head in Lon- 
 don and ramifying through all the manufacturing and 
 mining districts, having for its object the overthrow of 
 the monarchy and the establishment of a republic.
 
 236 OUTLINE OF ENGLISH HISTORY: 
 
 Great meetings were held by the discontented, under 
 the direction of leaders. The Prince Regent was openly 
 attacked. Open insurrection broke out in Derby, and 
 it was only by the most vigorous and severe measures 
 that the contemplated general uprising was prevented. 
 The opening up of the grain trade from the Baltic, in 
 the end of 1816 and in 1817, suddenly reduced the 
 price of grain and rendered the condition of the farmers, 
 already depressed, almost desperate. This made bread 
 cheaper for all, especially laborers, but correspondingly 
 reduced the farmers ability to buy manufactured goods, 
 and thus lessened the demand for labor so that the re- 
 duction in the price of corn Avas of little benefit to the 
 laboring classes beyond lessening the chances of im- 
 mediate starvation. 
 
 This crisis and distress, and those riotous demon- 
 strations of the laboring classes, were not caused by a 
 decline of commerce, because in 1815 the exports ex- 
 ceeded those of the previous year by £8,000,000 and 
 imports fell below those of 1814 £600,000, and this, 
 according to the generally accepted theories, indicated 
 commercial prosperity. In 1816 the exports fell £8,- 
 000,000 below those of the previous year and the im- 
 ports fell off £5,500,000, but this decline in commerce 
 did not precede, but followed the crisis. The exports 
 of each of those years exceeded the imports several 
 millions, and were an average of those previous to 1815. 
 There is, then, nothing in the foreign commerce to ac- 
 count for the crisis. The losses of the exporters on 
 shipments of 1815 do not account for the depression of 
 the times, because, had this been the only circumstance 
 of importance, it would have resulted simply in weaken- 
 ing or breaking the exporters, and there stopped. Other
 
 FINANCIAL, COMMERCIAL AND DOMESTIC. 237 
 
 men would have taken their phices, and, beyond local 
 and isolated cases of loss occasioned by the failure of 
 those shippers, the community would not have been 
 affected. The failure of the grain crop in 1816 could 
 not have produced the disastrous state of affairs just 
 related, because the failure did not come until after the 
 crisis came, and in the last part of 1816 and in 1817, after 
 large importations from the Baltic had set in, although 
 prices of grain were reduced to half, yet the condition 
 of all classes remained unimproved, and the distress of 
 all the aflrriculturalists was ago-ravated. Furthermore, 
 by reference to the history of 1799, we find that pros- 
 perity existed when there was almost a total failure of 
 crops The clamor against public extravagance had no 
 foundation, because the revenue and expenditures of 
 government were considerably reduced below those of 
 previous years. The sudden transition from war to 
 peace cannot be considered a cause of the woeful times 
 of 1816, because a cessation of war and a return to 
 peaceful pursuits is a relief from the exhausting in- 
 fluence of war and enables a people to turn all their 
 poAvers to the accumulation of wealth, and if it decreases 
 the demands for munitions of war it increases demands 
 for domestic consumption. This fact is illustrated in 
 the history of the United States during the first few 
 years after the close of the rebellion. No period in 
 their history has been marked by greater prosperity and 
 accumulation of wealth than that from 1865 to 1870. 
 It is also proven by the condition of France after the 
 Franco-Prussian war, AVhen peace was declared, she 
 bent all her energies toward production and connnerce, 
 and the ffiijantic results have astonished the world. 
 England owed no debt abroad that drained her cof-
 
 238 OUTLIXE OF ENGLISH HISTORY : 
 
 fers. She was at peace with all nations. There 
 was nothing in either her internal or external con- 
 dition or relations which, prior to the money crisis, in- 
 dicated the approach of such a catastrophe. There is 
 but one other source we can turn to for a cause : that 
 is the finances. The war which had just closed had 
 kept the country well drained of specie to maintain the 
 English army on the continent. The supply of gold 
 and silver from the South American mines had fallen, 
 from £10,000,000 in 1809 to £2,500,000, on account 
 of the revolution there, so that Ensfland had no ade- 
 quate supply of coin to carry on her business. Simul- 
 taneouslj' with this reduction of the coin and the other 
 depressing circumstances related, the banks, instead of 
 enlarging their paper circulation to hold up and 
 strengthen the arms of industry and spread the sails 
 of commerce, were compelled, by the law, on the close 
 of the war to begin a vigorous retirement of notes in 
 order to be prepared for resumption. Thus the paper 
 currency was reduced four or five million pounds within 
 a short time, followed by a panic, and consequently 
 credit Avas rapidly reduced and all business paralized. 
 Besides this, a large amount of exchequer bills was 
 retired by the government in 1816, thus still further 
 reducing the volume of money. Another fact tendinsr 
 to accelerate the approaching ruin was the general ap- 
 prehensions and forebodings felt in view of the coming 
 day of resumption. Furthermore, at the close of the 
 war all the powers of Europe pursued the same unwise 
 policy of funding their unfunded and floating debts, 
 reducing the paper money and returning to specie pay- 
 ments, thus reducing the aggregate volume of money 
 and causing a universal fall in prices over Europe.
 
 FINANCIAL, COMMERCIAL AND DOMESTIC. 239 
 
 In this, then, rests the cause of the crisis and labor 
 riots of 181(5 — rapid contraction of the currency; and 
 this resulted from the approach to specie resumi)tion 
 required by law. In the parliamentary debates on the 
 distress of 181G, Lord Liverpool, Lord Castlereah, and 
 Mr. Vansittart mentioned that "co-incident with the 
 fall in prices of corn, has been a great reduction in 
 the amount of the circulating medium. Beyond all 
 question, this is the principle cause of the distress which 
 now generally prevails." Even the bullionists, headed 
 by Messrs. Horner, Ponsonby, and Tierney, in moving 
 for resumption of cash payments, were compelled to 
 admit that "a greater and more sudden contraction 
 has never taken place in any country than in this, since 
 the peace, with the exception, perhaps, of France after 
 the failure of the Mississippi scheme. This sudden 
 contraction has been the cause of all our distresses ; it 
 is, and will long continue to be, the cause of all our 
 difficulties." The last clause was prophetic, and yet 
 their faith in a metallic currency and specie basis of 
 prices was so blind that they relentlessly moved for 
 resumption, although they knew the suffering it would 
 entail upon the people. 
 
 Sir A. Alison said of 1816 : " The sudden contrac- 
 tion of the currency, from the prospect of a speedy re- 
 sumption of cash payments, then involved one-half of 
 the farmers and traders of the United Kingdom in 
 bankruptcy." 
 
 This condition of affairs continued through the first 
 half of 1817. 
 
 The Remedy. — Parliament, after long debating, 
 deferred a resumption of cash payments, and issued 
 £7,500,000 exchequer bills. The banks were there-
 
 240 OUTLINE OF ENGLISH HISTORY: 
 
 by enabled to reissue their notes with safety, and the 
 volume of currency rapidly grew in the latter part of 
 1817 and 1818, so that in the latter year it had in- 
 creased £5,000,000, this with the exchequer bills mak- 
 ins: a total increase of circulatini]^ medium of £12,500,- 
 000. Symptoms of improvement appeared in the 
 enlarged issues of country banks in the latter part of 
 1817. An advance of prices and a restoration of peace 
 and prosi^erity followed all through 1818 and in the 
 first part of 1819. 
 
 1819, 1820, 1821, 1822, and first part of 1823. 
 — In 1818 Parliament thought it expedient to still 
 further defer a resumption of specie payments, until 
 July 5th, 1819, which was accordingly done. At the 
 opening of Parliament in January, 1819, affairs were 
 in a prosperous condition ; so much so that the Prince 
 Regent said in his speech: "There is a considerable 
 and progressive improvement of the revenue in its most 
 important branches, and trade, commerce, and manu- 
 factures of the country are in a most flourishing condi- 
 tion." Parliament rejoiced at the auspicious circum- 
 stances under which they met. The country being thus 
 blessed with internal peace and prosperity, and there 
 being nothing to mar the present happiness or cii-ite 
 apprehensions for the future. Parliament, early in Feb- 
 ruary, took up the question of resumption of specie 
 payments. Upon news of this action becoming spread 
 abroad, merchants, traders, and bankers sent petitions 
 in praying for a still further postponement of resump- 
 tion, and warning members against the dangers liable 
 to follow a return to specie payments. The sul)ject 
 was lengthily discussed, and so universal was the con- 
 viction of members that the time for resumption was
 
 FINANCIAL, COJIMERCIAL AND DOMESTIC. 241 
 
 auspicious, that when the resolutions for partial resump- 
 tion to begin Fcbruar}'' 1st, 1820. and full resumption 
 to begin in May, 1823, were put upon their passage 
 there was not one dissentins: voice against them. The 
 effects of this act were terrible in the extreme. The 
 country banks, alarmed, at once refused to extend 
 credits, and quickly reduced their circulation nearly 
 £5,000,000 sterling. The entire paper circulation was 
 reduced from £40,278,000 in 1818 to £40,928,428 
 in 1819. Credit was almost destroyed. Commercial 
 paper, discounted at the Bank of England, fell from 
 over £20,000,000 in 1815 to £6,515,000 in 1819. "The 
 current of business was at once congealed, as the flow- 
 ing stream by an artic winter." Impoi'ts and exports 
 fell off from ^ to ^. Prices fell to half their former 
 amount. Distress was universal in the latter months 
 of 1819. Distrust, the forerunner of all financial dis- 
 asters, was in all branches of industry and business. 
 The three per cent, government bonds fell from 79 in 
 Janaary to 65 in December. The bankruptcies in- 
 creased from 86 in January to 178 in May; and for 
 the whole year were 531 more than for the preceding 
 year. 
 
 The effects of this panic spread disaster and distress 
 over the whole country, and the discontent and suffer- 
 ing resulting were soon manifested in gigantic and 
 threatening assembla£i:es of the laborinor classes. Mis- 
 taking the cause of their sufferings, these meetings, 
 
 which became general all over the manufacturinE: dis- 
 cs » 
 
 tricts of England and Scotland, demanded universal 
 suffrage and annual parliaments. The leading topics 
 of discussion were the depression of wages and misery 
 of the poor. They organized and drilled in military
 
 24:2 OUTLINE OF ENGLISH HISTORY ; 
 
 exercises. They assembled at different points in great 
 numbers, sometimes as high as 30,000 or 40,000, with 
 flags, banners and mottoes, with such inscriptions on 
 them as these: "No Corn Laws;" "Annual Parlia- 
 ments;" "Universal suffrage;" "Vote by Ballot;" 
 " Equal Eepresentation or Death ;" "Liberty or Death ;" 
 "God armeth the Patriot." One of the greatest of 
 these meetings was dispersed by the military. It soon 
 appeared how little effect the violent suppression of the 
 Manchester meeting had in preventing assemblages of 
 a similar or a still more alarming character through- 
 out the country. Meetings took place at Birmingham, 
 Leeds, Westminster, York, Liverpool, and Notting- 
 ham, attended by great multitudes, at which flags, rep- 
 resenting a yeoman cutting at a women, were displayed 
 with the word ^^ vengeance" inscribed in large letters, 
 and resolutions vehemently condemning the Manchester 
 proceedings were adojited. Li order to suppress these 
 gatherings of suffering and desperate humanity the 
 government was compelled to open the lists for volun- 
 teers, and by adding 11,000 recruits to the home force 
 succeeded in suppressing them here and there for a 
 time. But, while the insurgents were thus dispersed 
 and cast down, they were not broken. Finally, in Feb- 
 ruary, 1820, one of the most alarming and brutal con- 
 spiracies ever known was formed for the destruction of 
 the English ministry, the overthrow of the monarchy, 
 and the establishment of a provisional government. 
 The plan was for hired emissaries to seek out the min- 
 isters at their places of abode and murder them, seize 
 the artillery, take possession of the government prop- 
 erty and force submission to the conspirators. This 
 nefarious conspiracy would have succeeded, perhaps, at
 
 FINANCIAL, COMMERCIAL ATVD DOMESTIC. 243 
 
 least ill part, had not one of the number secretly re- 
 vealed the conspiracy to the authorities. Secret meas- 
 ures were at once taken, and the ringleaders were 
 captured unawares. On the heels of this came insur- 
 rections and outbreaks a\l over the north of England 
 and Scotland, having for their object the overthrow of 
 the government. These outbreaks necessitated an in- 
 crease of the yeoman soldiery to 35,000, besides the 
 reirulars and militia. This state of affairs continued 
 from the latter part of 1819 to and including the greater 
 part of 1823. Riots, incendiarism, house breaking, 
 strikes, insurrection, conspiracies to overthrow the 
 government, destruction of property, and universal dis- 
 tress among the lal^oring classes, and great depression 
 among agriculturalists, merchants, and manufacturers, 
 rent and distracted the country during the space of 
 over three years. 
 
 Following is a graphic description of the terrible re- 
 sults of British resumption measures from 1816 to 1823, 
 taken from Doubleday's History of England : 
 
 "Prices fe^l, on a pudden, to a minons extent; banks broke; 
 wn^es f( 11 with llie prices of manufactures, and before the j'ear 181(> 
 had come to a close, panics, bankruptcy, riots and disaffection had 
 spread through Ihe land. Vast bodies of starving and discontented 
 arti-ans now congregated together demanding a reform of the Par- 
 liuiient, a repeal of the corn laws, and a reduction of taxation. The 
 discontent"^, the government, as usual, put down by an armed force, 
 •who, with th'> Constitution in their mouth's, salired the people a la 
 Cdssaque The commercial distress lli'y ascribi d to the traii'^itioii 
 from war to peace, and contented themselves with the app'ication 
 of some palliatives in tlie shape of advances of money and exchequer 
 bills through the Bank, hoping that alluirs would gradually come 
 round to a settled state. In this they were, after a time, partly 
 gratified The mercantile part of the community accommodated 
 themselves gr.Kluallv, perforce, to thenewscile of prices, afier a 
 transition which rendered bankrupt no l(!-3 than eiirhty-nine country 
 banks, together With an enormous number of trailers of all grades 
 and descriptions. In tlie mi'lst of this turmoil, anot'.ier grand 
 cause of confusion remains to be mentioned, and this was tlie new 
 and ticklish position of the Grandam of so many years of villainy
 
 244 OUTLINE *0F ENGLISH HISTORY : 
 
 and egregious folly, to-wit, of the 'Old Lady of Threadneedle 
 btrtiet,' as she now began to be called ; that is to say, of the Bank 
 itselt. The reader will remember tliat throughout the various times 
 wiieu the act for coutinuing Pitt's 'liaulc Kestiiction' were to be re- 
 newed or altered, one clause was always retained, that was the 
 clause binding the Banli to resume cash payments wiiMn a few 
 months after peace sliould corae. It has been asserted that Pitt 
 never meant this clause to be enforced, at least so far as regarded 
 the fund-holder ; and that he in, imaled as much in Par lament on one 
 occasion. This may possibly be true ; but the clause, nevertheless, was 
 adlieredto; so that, before tlie Waterloo bonlires were well out, the 
 Bank directors, withth.s clause staring them in the face, began to 
 bethink themselves how they migiitniostquicklykssen the enormous 
 bales of their paper that were afloat, so as togi\ e tliem .'^omecliauce of 
 paying the remainder in gold and silver 'on demand.' Tiiis was a new 
 featui'e. During the former revulsions, such as thai, in 1810, caused by 
 the decrees of Bonaparte against the admission of British goods, the 
 Bank had come promptly lorvvaid with loans and discounts to re- 
 lieve the pressure. Now, however, the Directors scarcely dared to 
 move an inch. They knew that the 'political economists* were 
 strung in the House, and that they were bent upon cash payments at 
 all risks. They knew that the Jews of Change Alley would secretly 
 abet the same doctrine. Against a combination oi usurers and the- 
 oi'ists, one set all seltishness, the other all crochets, there was m» 
 defence to be made The country gentlemen, who were the dupes 
 of the economists, were led to believe that cash payments were 
 necessary for both the interest and security of th -mselves. Those 
 wlio iLid the power were resolved, and nothing was leit to the Bank 
 but to narrow its issues, and look about for gold and silver where- 
 with to meet the storm. Tnis was altogether a diiHcult business. 
 1\\ X,iHi ynjit laUi sAowii, thirty-seven country banks had become bank- 
 rupt. The commercial world, therelore, required additional prop- 
 ping. But the government was in tue same dilemma; a, id to it Hie 
 merchants were sacrdiced. Between February and August, 181G, 
 the l^ireccors lessened their discounts from twenty-three millions to 
 eleven millions ; and before February, 1817, to eiy at millions; and be- 
 fore August of the same year to seycra »/it/^Jons; w,iilst up to nearly 
 tlie same period, they held of exchequer btUs, etc., twenty-Jive mil- 
 lions! This reduciion of private discounts answered two purposes 
 of the Bank: it kept taeir circulaiion within bv>unds; and, if it 
 slaughtered the merchants and manul.icturers, it brought about an- 
 other novelty, viz., areduction in the price of gold damn to four pounds 
 theounce; or nearly to the mint price! This euabled them to get gold 
 on ea.iier terms, and to make a flourish, by the voluntary issue of a 
 large sura in sovereigns ; a measure absurd and prennture to the 
 last degree, for by this addition thrown into the currency, the prices 
 ot gold and silver bunion were again raised a little, and the whole 
 of tliis new coin was exported! 
 
 "This reduction of the Bank issues, and destruction and crippling 
 of the country banks, had auotlur and still more important effect, 
 inasmuch as by causing the price of gold to fall to nearly the mint 
 price, ii encouraged the political economists to press forward, and 
 at last, in 1811), to pass an act, the most important in its conse-
 
 FINANCIAL, COMMERCIAL AND DOMESTIC. 245 
 
 quences, and extraordinary in its circumstances, that ever was de- 
 cided upon by any legislature, in any age ur cuuntiy. This was the 
 celebrated 'Bill lur the Restoration of Casli rayinents,' passv^d in 
 18ia, aid since lanious as 'Peel's Curreuc, Bill.' ***** 
 
 "When the two Houses of Parli.iiiK.-ut 111 1 1 r the session of the 
 year 16i'2-l>3, to the eyes of intelligent observe :'s an extraordinary 
 scene pre-euted itself. Ther^-, on one side, w re t le two Houses, 
 constitullug the 'Imperial Parliament,' gaged aud pledged, as deeply 
 and solemnly as ever mcu were pkdgcd iu ad t.e world, to set the 
 curreuey question 'at rest forever,' as far as exiinclim of all Bank 
 notes for sums uiuk-r li\e pounds, aud the payment of the remainder 
 on demand, in sovereigns coiued out of gold at tlie rate of £3 19s. 
 10|.2ii. per ounce Troy, coidd sot it at rest; at.d there, on the other 
 side, were Mr. Cobuct and his readers wimt.n^iv gridiron ready either 
 to repeat upon the person of that extraordiiiary m.m the sail story of 
 St. Lawrence, or to be adopted as a type aud token of the trhiinph of 
 his principles as to this graud topic for ever ;iud ever! At this period, 
 however, Mr. Cobbett did not stand so much aloue as he did at the 
 time ofhis hazarding the prediction, with ail its penalties annexed to 
 it. As thememoraule tirst of May, 1823 d ew near, the country bank- 
 ers, as well as the Bank of England, natuiaily pri-pared themselves 
 by a gradual narrowing of their circulation, lor ihe (h'ead.d hour of 
 gold aud silver payments 'on demand,' an! la.' witluirawal of the 
 small notes. We have already seen the fill in prices pro- 
 duced by tins universal narrowing of the paper circulation. The ef- 
 fects of the distress produced all over the country, the cousequences 
 of this fall, we have yet to see. 
 
 "Tlie distre-s, ruin aud laauKrnptcy winch now took place were 
 universal, affecting both tlie great interests of land aud trade; but 
 amongst the landlords whose e.-tates were burthened by mortgages, 
 jointures, settlements, legacies, etc., the effects were most inarked 
 and out of the ordinary course. In hundreds of cases, from the tre- 
 menduous reduction, in tne price of land winch no .v took place, the 
 estates barely sold for as much as would pay off tne mortgages ; aud 
 hence the owners were stripped of all, and mado beggars." 
 
 The cause of this chaotic state of society was not a 
 decline of commerce, because that did not precede but 
 followed the crisis. In 1818 the exports were £44,- 
 564,044, and the imports £35,84j,;>10, both several 
 millions greater than they had been since 1815. For 
 1819, the year the crisis began, the exports were £35,- 
 643,415, being nearly £9,000,000 less than those of 
 the preceding year ; and the imports were £29,681,640, 
 being over £6,000,000 less than for 1S18. This was 
 during the crisis. The exports of 1819 were £6,000,- 
 000 greater than imports, showing a healthy balance in
 
 246 OUTLINE OF ENGLISH HISTORY: 
 
 favor of England. The crisis in France and Belgium 
 of 1817 and 1818 was not the cause of the English 
 chaos, because, at the time when the former were suf- 
 fering most severely, England was most prosperous, as 
 appears from her commerce and internal conditions in 
 1818. There was no scarcity of provisions. Prices of 
 food were low, and plenty filled the country. Eng- 
 land's foreign relations were all peaceful. The country 
 abounded in agricultural, mechanical and mineral pro- 
 ducts. Taxes had been considerably reduced, and gov- 
 ernment expenditures brought down several millions. 
 
 There were no changes in the form of government ; 
 no radical transitions or changes in society ; no great 
 questions of church or state ; nothing in the condition 
 of things, except the unwise legislation of Parliament, 
 which could have produced such a state of affairs as 
 distracted England from 1819 to 1823. The exporta- 
 tion of gold in 1818, one of England's most prosperous 
 years, to pay for previous importations of grain, to- 
 gether with the payment of a small French loan, had 
 reduced the bullion in the Bank of England from £11,- 
 914,000 in 1817, to £6,363,000 in 1818, and the small 
 supply of bullion continued until 1823 ; but this of 
 itself could not have been the cause of the disasters, 
 else the crisis would have taken place in 1818. That 
 the exportation of bullion was not alone the cause of 
 the crisis is evident from the fact, that during all the 
 prosperous years, from 1800 up to 1809, the bullion in 
 the bank averaged fully as low as it did in 1818. 
 Want of credit cannot have been the cause, because 
 discounts for 1819 were £1,100,000 greater than they 
 had been in 1818. But credit was much below what 
 was needed.
 
 FINANCIAL, COJOIERCIAL AND DOMESTIC. 247 
 
 The real, the mo\nng cause of the crisis, was the act 
 of Parliament, early in 1819, fixing a day for a partial 
 resumption of specie payments, to begin February, 
 1820, and full resumption, May, 1823. So soon as 
 this act was passed, the banks began a rapid contrac- 
 tion of their issues. The contraction in 1819 was £8,- 
 000,000, being one-sixth of the entire currency, within 
 a few months, and it continued until sometime in 1822, 
 when it fell to the sum of £26,586,000, but little over 
 half what it had been in 1818. The effects of this 
 contraction of the currency have been but feebly por- 
 trayed. 
 
 The Remedy. — At length the distress had become 
 so great, and the danirers so alarmins;, that orovem- 
 meut recognized the fact that some remedy must be 
 administered, or revolution might ensue. Accordingly, 
 in July, 1822, Parliament, driven to it ])y the necess- 
 ities of the times, passed an act permitting the Bank 
 of England to issue £1 notes, and making the £5 and 
 upward notes of that bank a legal tender. Authority 
 was also conferred for issuing £4,000,000 exchequer 
 bills for the relief of the agriculturalists. Thus it was, 
 after three years of suffering, distress, riots, strikes 
 and threatened revolution on the part of the people, 
 the buUionists in Parliament were compelled to reverse 
 their steps, renew the legal tender character of the 
 bank paper, and issue a large sum of exchequer bills to 
 relieve the country. The result was an expansion of 
 the currency £6,000,000, and relief to the country. 
 
 The volume of currency stood as follows : for 1822, 
 £26,588,600: for 1823, £28,096,544; for 1824, £32,- 
 789,152; and in the beginning of 1825, £41,048,298. 
 
 1825. — The year 1825 opened auspiciously. Lord
 
 248 OUTLINE OF ENGLISH HISTORY: 
 
 Derby said in his speech, at the opening of Parliament r 
 *' Our present prosperity is a prosperity extending to 
 all orders, all professions, and all districts." The 
 jLnnual Register said : 
 
 '•Agricultural distress had disappeared; the persons engaged iit 
 the cotton and woolen manufactures were in full employment; the 
 various branches of the iron trade were in a state of activity; on 
 all sides new buildings were in a state of erection and m ney was- 
 so abundant that new plans of enterprise found no difficulty in com- 
 manding funds." 
 
 The Quartei'ly Review said : 
 
 "The increased wealth of the middle classes is so obvious that we 
 can neither walk the fields, visit the slopes, nor examine the woi"k- 
 shops and storehouses without being deeply impressed "vith the 
 change a few years have produced." 
 
 This prosperity seemed to rest on a solid basis. The 
 three per cent, government bonds advanced to 96 in 
 July. Prices of almost all commodities advanced, as 
 did also stocks of banks and corporations ; exports had 
 risen to £48,735,351 from £40,831,744 in 1822; im- 
 ports had reached £42,680,954 from £30,500,000 in 
 1822. This prosperity existed until the autumn of 
 1825, when the storm of financial disaster, which had 
 been gathering for some months, burst suddenly upon 
 the country, sending dismay to the hearts of the people, 
 and spreading ruin through the land. 
 
 "In the end of November, the Plymouth bank failed. This was 
 followed on the 5th of December by the fuiluie of the house" of Sir 
 Peter Pole & Co. in London, which diffused universal consternation, 
 as it had accounts with fifty country banks. In the next three 
 weeks, seventy banks in town and country suspendi'd payment. The 
 London houses were besieged from morning to night, by clamorous 
 applicants, all demanding cash for their notes The Bank of Eng- 
 land itself liad the utmost difficulty in weathering the storm, and 
 numerous applications were made to government for an order in 
 council suspending cash payments. But this was ste.(dily refused so 
 long as the Bank had a guinea left; and meanwhile the con tenia ion 
 over the whole country readied the highest point Evt ry creditor 
 pressed his debtor, who souglit in vain f>r money to di-^chatye his 
 debts. The bankers, on the verge of insolvency themselves, sternly 
 refused accommodation even to their most approved customers. 
 Persons worth £100,000 could not command £100 to save themselves 
 Irom ruin." — Alison.
 
 rnfA2sCIAL, COMMERCIAL AND DOMESTIC. 249 
 
 The cause of this "was not the condition of commerce, 
 for it "Nvas steadily increasing and in a healthful condi- 
 tion, the exijorts of 1825 being £6,000,000 greater 
 than imports. The exports had exceeded the imports 
 for a series of years. Credit was not the cause, for in 
 that year it was low — only £7,691,4(3-4 in discounts at 
 the Bank of England, which was £5,000,000 less than 
 it had been in the year 1816 and £13,000,000 than that 
 of 1815. There was no war; no failure of crops — 
 nothing which could produce such a crisis prior to the 
 contraction of currency. 
 
 The Cause. — On account of expenditures of English 
 capitalists on their South American mines, large 
 amounts of coin were needed by them. This created a 
 pressure on all the banks for the precious metals, and 
 the country banks being unable to supply the demand 
 aj^plied to the Bank of England. This resulted in a 
 reduction of specie in its vaults from £14,200,000 to 
 £8,779,000 between July and November, and ulti- 
 mately to £1,000,000 in December. The Bank at 
 once proceeded to draw in its notes and reduce its 
 circulation in order to insure safety. This was done so 
 rapidly that its outstanding notes fell to £17,709,000 
 in the first week in December from £26,000,000 in the 
 summer, and the entire bank circulation was reduced 
 during the same time from £40,000,000 to £31,000,- 
 000. This enormous contraction in the space of two 
 or three months unsettled all business, brought prices 
 down and almost bankrupted the country. It may be 
 proper here to ex-j^lain that the charter of the 
 Bank of England was such that its paper circulation 
 was regulated by the amount of coin in its vaults, and 
 although its notes were legal tender all over the king-
 
 250 OUTLINE OF ENGLISH HISTORY : 
 
 dom for everything, yet they were by law required to 
 be redeemed by the Bank in coin, whenever presented. 
 The country bank issues were redeemable in Bank of 
 England notes or coin, so that whenever a demand for 
 gold arose for any purpose, the country banks and peo- 
 ple applied to the Bank of England with its notes, 
 which were then paid in specie. If coin became scarce, 
 the Bank was compelled, in consequence of the pro- 
 visions of the law, to retire a sufficient quantity of its 
 notes to bring itself within the bounds of safety. 
 Thus it was that when coin was scarcest and most paper 
 money was needed there was least of it, and when coin 
 was plentiful and there was least need of paper money, 
 there was most of it. The whole banking system of 
 England was, in effect, although not in terms, based on 
 coin, and, consequently, subject to all vicissitudes in- 
 cident to the constantly varying volume of the precious 
 metals, resulting from their migratorv tendencies. 
 
 The Remedy. — " In this extremity, government, despite their 
 strong reliance on metallic currency, were iairly driven into the only 
 measure which con d by possibility save the country. It was evident 
 to all, what the ciash, which threatened universal ruin, was owing 
 to. It arose from the currency of tiie country being suddenly con- 
 tracted in consequence of the drain of specie from the banks at the 
 very time when an expansion of it was most called for to sustain the 
 immense engaLiements of the people. The remedy was obvious— ex- 
 pand the circulation irrespective of the drain of gold. This accord- 
 ingly was done by goveriiment. Immediately after the failure of 
 Cole & Co. 's bank frequent cabinet councils were held; and it was 
 at length wisely determined to issue one and two pound notes of the 
 Bank of Kngland for country circulation. Orders were sent to the 
 Mint to strain every nerve for the coinage of sovereigns; and for a 
 week l.")0, 000 sovereigns were thrown off daily. But here a fresh 
 difficulty presented itself. Such was the demand for the Bank of 
 Kngland notes, t!iat no amount of strength applied to throwing them 
 off could enable the bank to keep pace^with it. In this dilemma, 
 when the spece in their cotters was nduced to £1,000,000 and runs 
 (for coin) were daily increasing, an accidental discovery relieved the 
 bank of their immediae difficulties and enabled them to continue 
 the issues to the country bankers, which saved the country from 
 total ruin. An o'd box containing £7U0,0i'0, in one and two pound 
 notes, which had been retired, was accidently discovered in the
 
 FINANCIAL, COMMERCIAL AND DOMESTIC. 251 
 
 Bank of England and immediately issued to the public By this 
 means the demand was supplied till the new notes could be thrown 
 off. The efl'ects were soon apparent. The people having got notes,' 
 abated their demand for gold; c intidonce b'gau to revive, because 
 the means of discharging obligations were afforded; and at a meet- 
 ing of bankers and merchants in the city of London, resolutions de- 
 claratory of confidence in government and the Bank of England were 
 passed, which had a great effect in restoring general confidence. 
 So vigorously were the new measures carried into effect that the cir- 
 culation of the Bank of Englan<l, which on the '6 d of Dccembi r had' 
 been only £17,000,000, was so raided that on tlie 24th of Di'cembcr it 
 was £25,611 800. Thus was the crisis surmounted, tliough its con- 
 sequences long continued, and left lasting effects on the legislation 
 and destinies of the nation. Markwortliy circumstance' The 
 danger was overcome, not by any increase in the metallic treasure of 
 the country, but by a great issue of paper when there was no specie 
 to sustain it. " — Alison. 
 
 The total issue of bank paper increased from £31,- 
 000,000 in the first week in December, to £40,000,000 
 on the 25th of same month. This was a short but sharp 
 and dreadful panic. We give its history because it 
 was the bes-innino: of a Ions; season of financial disas- 
 ters, and exhibits the wonderful and rapid effects which 
 may attend contraction or expansion of the currency. 
 
 i^-^^.—Although the issue of £9,000,000 of bank 
 paper between the 3rd and 25th of December, 1825, 
 averted the panic and saved the country from a univer- 
 sal financial crash, yet it Avas not equal to restoring en- 
 tire confidence and making business prosperous, because 
 the law requiring cash payments at the bank still exis- 
 ted and the people and the bank were held in constant 
 dread of a recurrence of the catastrophe of December. 
 The Bank of P]ngland was almost entirely depleted of 
 coin, and just so soon as the panic was over, it and the 
 country banks again proceeded to contract their issues, 
 resulting in a reduction of the currency from £40,000,- 
 000 on December 25th, 1825, to £30,219,661 in 1826.' 
 The consequence was a restriction of accommodations 
 at banks, fall of prices, reduction of work, discharge of
 
 252 OUTLINE OF ENGLISH HISTORY: 
 
 manufactory hands, much distress, want, and suffering, 
 and, in many places, the most appalling proofs of 
 
 wretchedness. 
 
 ''The great distress, as usual in such cases, led to serious acts 
 of riot in several of the manufacturiug districts. The recent im- 
 provements in machinery were generally regarded as the main cause 
 of the general suffering, and in Lancashire the indignation of the 
 operatives against what they deemed an invasion of tlieir birthrights, 
 broke out in various and most melancholy acts of outrage. It was 
 a woeful spectacle to see the streets of Manchester, and the chief 
 towns in its viciuity, with vast crowds, sometimes ten thousand in 
 number, whose wan visages and lean figures but too clearly told the 
 tale of their sufferings, snatching their food from bakers' shops, 
 breaking into factories and destroying power-looms, mills, and 
 throwing stones at the military, at tlie hazard of being shot, rather 
 than relinquish an object on the attainment of which they sincerely 
 believed their very existence dt-pended. berious riots took place in 
 Carlisle; and in Norwich, where twelve thousand weavers were em- 
 ployed, an alarming disturbance, attended with gn^at violence, oc- 
 curred. In all the iron districts, strikes to arrest the fall of wages 
 took place; and in Dublin and Glasgow immense crowds of opera- 
 tives paraded the streets entreating relief," 
 
 The Cause. — The falling off in exports from £48,- 
 735,550 in 1825 to £40,965,735 in 1826, and of im- 
 ports, from£42, 660,000 in 1825 to £37,686,000 in 1826, 
 was not the cause of the disasters, because the crisis of 
 1825 and the stringency beginning vnth. the beginning 
 of 1826 preceded the decrease of commerce. The 
 improved machinery, complained of by workmen, was 
 not the cause, for the reason that no revolution in the 
 method and means of manufacturing took place in that 
 year ; and for the further reason that improved ma- 
 chinery does not lessen the demand for wages of labor, 
 because it lessens the cost of producing the manufac- 
 tured article ; this puts it in the power of a greatly 
 increased number of people to buy the article h,nd 
 laro-cly increases the demand ; this again calls for more 
 hands to work the machinery, and thus increases the 
 demand for labor. There was no lack of bread, for 
 the country was blessed with abundance. There was
 
 FINANCIAL, COMMERCIAL AND DOMESTIC. 253 
 
 no war, nothing to cause the want, WTetchedness, riots 
 and strikes above detailed, but the rapid contraction of 
 the currency as above particuhirized. The distress 
 was enhanced, and the contraction accelerated by the 
 heavy exportations of coin by capitalists, on account 
 of their liabilities arising from their South American 
 mines. The immense investments in railroad building, 
 which had sprung up lately, also added to the complica- 
 tions and aggravated the suffering of the country. 
 
 The Remedy. — Notwithstanding the attachment of 
 government and the House of Commons to the cheap- 
 ening system, and their determination to enhance the 
 value of money by reducing values of property to a 
 specie basis, the necessities of the country drove them 
 to adopt some measures of an opposite tendency. The 
 first was an act permiting private bankers to have an 
 unlimited number of partners, instead of six, to which 
 they had been restricted by law. This gave more 
 capital and strength to these banks, and enabled them 
 to extend accommodations. The second was an act 
 authorizing the establishment of branches of the Bank 
 of England in the country towns. This gave a wider 
 circulation to the small notes of that bank during the 
 three years they had to run. The third was an act 
 guaranteeing £3,000,000 of advances by the bank, on 
 goods and other securities, to merchants and manufac- 
 turers. These sensibly averted the effects of the crisis 
 of December, 1825, and the stringency of 1826, and 
 brought a slow but steady relief to the country until 
 the summer of 1829.
 
 CHAPTER XVn. 
 
 OUTLINE or ENGLISH HISTORY. 
 FINANCIAL. COMMERCIAL AND DOMESTIC. 
 
 1829 TO 1833. 
 
 With the latter part of 1829 began a period of strin- 
 gency in money matters, depression in business, losses, 
 bankruptcies, riots, strikes, predial crimes, incendia- 
 rism, insurrections, agitations and outrages, disastrous 
 and appalling. From 1829 to the latter part of 1833, 
 a deeper gloom and distresses more general and acute 
 afflicted the country than all the disasters of the 21 
 years' war vnih France. To attempt to follow up and 
 give individual cases of bankruptcy, ruin and distress 
 would be a vain and useless effort. On the assembling 
 of Parliament, in February, 1830, the King in his 
 
 speech said : 
 
 "The exports in the last year of British produce and manu- 
 factures had exceeded that of any former year. He laments that, 
 notwithstanding this indication of an active commerce, distress 
 should prevail among the agricultural and manufacturing classes in 
 some parts of the United Kingdom. It would be most gratifying 
 to the paternal feelings of his majesty to be enabled to propose for 
 your consideration measures calculated to remove the difficulties of 
 any portion of his subjects and at the same time compatible with the 
 genL,ral interests of his people." 
 
 Of the distress of the times. Earl Stanhope said : 
 
 "The speech from the throne spoke of distress in some parts of 
 the country ; but what part of the country was it in which Ministers 
 had not found distress prevailing, and that, too, general, not partial?
 
 FINANCIAL, COMMERCIAL AND DOMESTIC. 255 
 
 The Kingdom is in a state of universal distress — one likely 
 to be unequalled in its duration, as it is intolerable in its pressure, 
 unless Parliament think fit to incjuire for a reniedv It is not con 
 fined to agriculture; it has extended to manufactunn<r, to trade and 
 to commerce. All these jrreat interests had never before it one 
 time, been at so low an ebb, nor in a condition which demanded 
 more loudly the prompt and energetic interference of Parliament 
 The speecli ascribed the distress which was so uninersal to a bad 
 harvest; but did a bad harvest make corn cheap? and yet it is the ex- 
 cessive reduction of ])rices which is now felt as so great an evil, es- 
 pecially by the agricultural classes. The evil is so notorious that 
 nobody but the King's Ministers doubt its existence. And how could 
 eveu they deny it if they cast their eyes around and saw the counties 
 spontaneously pouring on them every kind of solicitation for relief; 
 while in towns, Mr. Alderman Waithman has attested the stocks of 
 every kind have sunk in value 40 per cent ? 
 
 "There can be no uoubt to wh:it this universal distress is owing, 
 it is to be ascribed to the erroneous basis on whicii our currency has 
 been placed since 1819. Prices have not fallen in agricultural pro- 
 ducts only; the depre^siou has been cuntinuuus and universal ever 
 since the Bank Restriction Art passed, and especially since the sup- 
 pression of small notes took efffct in the beginning of the year. All 
 these tilings have sunk in value together; and in manufactures and 
 traders' stocks the fall has been so Ln-eat th.it in the last ten years 
 it ha-< amounted to 68 per cent. Such a universal and continued de- 
 pression can be ascribed only to some cause pressing alike upon all 
 branches of industry, and that cause is t > be found in the enormous 
 contraction of the currency which has taken place When we recol- 
 lect that the Bank of Jlngland notes in circulation have been re- 
 duced from £30,000,000 to £20,000,000, and the country bankers- 
 notes in a still greater proportion, it is easy to see whence the evil 
 has arisen, and where a remedy is to be found." 
 
 Following are given the outlines of some of the com- 
 motions, outbreaks, riots, and other demonstrations 
 expressive ot the agony and suffering of the common 
 people : 
 
 1829.— " Manufacturers' stocks had fallen in price 40 per cent. 
 This great fall in prices pervaded all branches of industry, both ag- 
 ricultural and manufacturinir, and caused a corresponding and dis- 
 tressing fall in wages, and, in many places an entire cessation .n 
 demand for labor. In many places two and a half pence a day was 
 the amount paid for labor. This lamentable fall in wages of 'abor 
 was soon attended by its usual consequences— a variety of outbreaks 
 and disturbances in the districts which were more immediately affec- 
 ted. Constrained by the general fall in the price of their produce to 
 lessen the cost of production, the masters everywhere lowered the 
 "wases of their workmen, and this Immediately gave rise to strikes 
 and disturbances. A general strike took place at Macciesflcid, and 
 the delegates from Spitalfiolds openly recommended the destruction 
 of looms by cutting out the silks. Ignorant of the real cause of their
 
 256 OUTLINE OF ENGLISH HISTORY; 
 
 sufferings, the whole vengeance of the working men was directed 
 against the engine-looms, the visibi ; rival of their labor, and the 
 supposed source of their distress. The d legates assured them that 
 ' the destroying angel was the best ally they had.' n jr were they l')ng 
 of acting upon the advice. At C>veiitry, Nuueatou, and Beadworth 
 serious strikes took place ; and such was the terror produced by the 
 violence of the workmen, that the masters generally gave in for a 
 time to their demands. They soon found it impossible, however, at 
 existing prices, to go on wiih siicli wages, and a reduction again 
 took place. Upon this, riots agan ensiud, and they were particu- 
 larly violent at Barnsley, in Yorkshire, where the combined working- 
 men atiacked the dwelling houses of obnoxious manufacturers and 
 deliberately piled their furniture in great heaps to which they set 
 fire. The workmen who had taken in work at the reduced prices 
 were next assailed ; and such was the alarm produced by this 'reign 
 of terror,' as it was called, thit they were compelled to return the 
 materials they had received from their masters and join the strike." 
 — Alison. 
 
 The extreme suffering of Ireland during the same 
 
 year made the time opportune for politicians to excite 
 
 the people. There was no lack of such leaders, and a 
 
 violent agitation arose for the repeal of the Union. Mr. 
 
 O'Connel was the leader, and in the peroration to one 
 
 of his warmest speeches said : 
 
 "The new society of 1782 shall be formed nor cease to spread its 
 influence over Ireland till her Pmliaraenr. be restored, her sons be of 
 one creed, all joined in common cau-e of seeing old Ireland great and 
 glorious among the nations of Europe " 
 
 The Catholics at once embraced the project. The 
 Protestants as Ciuickly opposed it, fearing, if successful, 
 it might result in religious proscription. Thence result- 
 ed the most serious consequences. In Clare County 
 the two parties met, one armed with muskets and bay- 
 onets, the other with scythes and pitchforks ; and a 
 conflict ensued in which lives were lost and much dam- 
 ao^e done. The Count v of Fermau^h assumed the as- 
 pcct of open war. Catholics to the number of some 
 thousands encamped on Benauglen Mountain, to which 
 reinforcements speedily poured in from the adjoining 
 counties. A large body of military only prevented 
 open civil war.
 
 FINANCIAL, COitMERCIAL AND DOMESTIC. 257 
 
 "Before the jrreat strife of parties began in Parliament, symptoms 
 of discontent attended with danger and alarm began in several agri- 
 cultnral districts. It h id been predicted that, unless relief was 
 granted in answer to petitions which had been sent in for several 
 years by agriculturalists, the working cl.i-Jses won'd break out in open 
 acts of violence. This prediction was now verified. Tiie disturb- 
 ances b'^gan in Kent, from which they rapidly spread to Surrey, Sus- 
 sex, Hampshire, Wiltshire and Buckiiighainshire. Night alter night 
 new confliigrations were lisrhted up by binds of incendiaries; com 
 stacks, barns, farm buildings, and live cattle were indiscriminately 
 consumed. Bolder bands attacked mills and demolished machinery ; 
 tlireshing mills were in an especial manner the object of their hos- 
 tility. i)uriiig October and November, these acts of incendiarism 
 became so frequent as to excite universal alarm, and it was not till 
 several examples were made by a special commission sent into the 
 disturbed districts, and a larire body of military quartered in them, 
 that they were at length put down." — Alison. 
 
 The reception of the King by the Lord Mayor of 
 London, on the 9th day of November, an ancient and 
 honorable custom, was postponed for fear of violence 
 and a general uprising of the people. Thousands of 
 handbills had been printed and circulated, calling on 
 the people to come armed on the occasion. Such no- 
 tices as these were widely circulated : 
 
 "To arms! Liberty or death! London meets Tuesdny next. An 
 opportunity not to be lost for revengins the wmngs we have suffered 
 so long. Come armed, be firm, and victory must be ours." 
 
 "Englishmen, Britons, and honest men : the time has at length 
 arrived, and all London meets on Tuesday. Come armed. We as- 
 sure you from ocular demonstration, six thousand cutlasses have 
 been removed from the Tower for the immediate use of Peel's 
 bloody gang. Remember the cursed speech from the Throne. These 
 damned police are to be armed. Englishmen, will you put up with 
 this?" 
 
 Their intention was to have a great riot in London 
 and tittack the ^Ministers of Government. The effects 
 of the announcement of this conspiracy were immense. 
 The most alarming reports were spread, and the people 
 imagined that the awful scenes of Paris durinof the 
 French Kevolution were to be enacted in the streets of 
 London. The panic was general. The public funds 
 fell 3 J per cent, in two hours. But the King's recep- 
 tion was deferred. The opportunity for the acts con-
 
 258 OUTLINE OF ENGLISH HISTORY: 
 
 templated by the conspirators being removed, no vio- 
 lence occurred. Lord Grey said in Parliament that the 
 southern counties around London "were in a state of 
 open insurrection." The condition of Ireland was 
 even worse. Riots, incendiarism and violent agitation 
 for the repeal of the union distracted that suffering 
 country over its whole length and breadth. 
 
 2831. — From the time of the crisis of 1825, agita- 
 tion for reform set in, and in 1831 it culminated in the 
 introduction of a bill to that end, the main feature of 
 which provided for a great change in the basis of rep- 
 resentation. Parliament was prorogued and the canvass 
 for the fall elections was marked ^nih. the most brutal 
 violence. The brickbat and bludgeon were freely used. 
 Opposers of the bill were daubed with mud and ducked 
 in mill ponds, and their windows were smashed in. The 
 Lord Provost of Scotland was seized by the mob on the 
 day of the election, and an effort made to throw him 
 over North Bridge. The mob continued their depreda- 
 tions through the whole day. At Ayr the opposers had 
 to flee. In London the windows of the Duke of Wel- 
 lington, Mr. Baring, and other leading anti-reformers 
 were all broken. At Lanark a dreadful riot occurred, 
 and the Conservative candidate Avas seriously wounded 
 in a church where the election was held. At Dunbar- 
 ton the Tory candidate. Lord William Graham, escaped 
 death by being concealed in a garret all day. At Jed- 
 burg a band hooted the dymg Sir Walter Scott. 
 
 The political unions formed to force the carriage of the 
 Eeform Bill. They were thoroughly organized and 
 claimed to be able to muster two armies, either of which 
 was as large as the allied army at Waterloo, and threat- 
 ened to march on London. The political unions to the
 
 FINANCIAL, COMMERCIAL AND DOMESTIC. 259 
 
 number of 150,000 assembled at Birmin<2:ham and peti- 
 tioned the King. They portrayed the awful consequences 
 which might ensue on a rejection of the bill. Their lan- 
 guage and demonstrations at the mectino: were violent in 
 the extreme. Similar meetings were held at Liverpool, 
 Newcastle, Edinl)urgh, Glasgow, and all the great towns, 
 at all of which the most violent lan<mao^e was used, and 
 the most revolutionar}'- ensigns were displayed. At 
 Derby the mob demolished the windows of anti-reform- 
 ers. Some of the leaders were thrust into jail, but the 
 mob broke the doors and rescued them. At Nottinsf- 
 ham they stormed the castle of the Duke of Newcastle, 
 sacked and burned that venerable structure to the 
 ground. They burned other houses in the rural dis- 
 tricts. At Bristol they gathered in great numbers in the 
 streets and about the Mansion House, hissino;, crroanina', 
 and throwing stones and brickbats at the anti-reform 
 leader, Sir Charles Wetherall. Tlie riot act was read 
 to them ; this infuriated them. The constables were 
 attacked and driven back ; the Mansion House was 
 stormed and its furniture smashed and pillaged, and the 
 iron railings in front taken as weapons by the rioters. 
 The occupants of the house escaped through back waj^s. 
 The mob then stormed the Council House, but beins: 
 charged by the military dispersed. Next day thousands 
 were added to the mob. The barijemen from the neiirh- 
 boring canals flocked in on all sides, and those wild- 
 looking haggard desperadoes began to appear in the 
 streets. 
 
 "Thus reinforced, the mob returned on the following mornine;, 
 broke open and r:insacked the cellars of the Mansion House, and 
 soon intoxicated wretches added the fumes of drunkenness to the 
 horrors of the Scene. " 
 
 There now being nothing more to destroy at the
 
 260 OUTLINE OF ENGLISH HISTORY ' 
 
 Mansion House the rioters dispersed in bodies over the 
 city. The most frightful scenes of violence and devas- 
 tation ensued. One detachment proceeded to the Bride- 
 well, where they broke open doors, liberated prisoners, 
 who immediately joined them, and set the building on 
 fire. Another went to the new jail, which was also 
 broken open, the prisoners liberated and the building 
 consigned to flames. The Gloucester County prison 
 shared the same fate, and the chief toll-houses around 
 the town were destroyed. A band next proceeded to 
 the Bishop's palace, which was set on fire and totally 
 consumed. The Mansion House shared the same fate, 
 and not content with this, the rioters set fire to the 
 Custom House, Excise Office, and other buildino;s in 
 Qiieen Square, which soon were wrapped in one awful 
 conflagration. An attempt was made to fire the ship- 
 ping in the docks, but hapjiily repulsed by the vigilance 
 and courage of seamen. Exclusive of the Mansion 
 House, Jails, and other public edifices, forty-two pri- 
 vate houses and warehouses were burnt, and property 
 to the amount £500,000 destroyed. During the riot 
 many lives were lost. 
 
 1832. — During the pendency of the new reform bill, 
 decisive proof of the ungovernable and revolutionary 
 spirit of the times exhibited itself. The political 
 unions and radicals assembled in great numbers, and 
 the violence of their speeches exceeded anything which 
 had yet transpired. Threats, denunciations, predic- 
 tions of approaching and organized rebellion formed 
 the staple of the harangues. At Liverpool, Glasgow, 
 Edinlmrg, Manchester, Leeds, Paisley, Sheffield and all 
 the great towns, meetings attended b}-" 30,000 or 40,000 
 persons were held, at which violent threats were re-
 
 FINANCIAL, COMMERCIAL AND DOMESTIC. 261 
 
 peated, and revolutionary ensigns were displayed. The 
 
 National Union, on the 3d of May, declared that if 
 
 the Heforni Bill was defeated, the jpayinent of taxes 
 
 would cease, the other obligation of society would be 
 
 disregarded, aud the ultimate consequences might be the 
 
 extinction of the priviledged orders. The Reform Bill 
 
 passed and became a law, but it did not relieve the 
 
 country. The greatest disorders, distraction, distress 
 
 and threatened revolution existed in Ireland. 
 
 " The scene of predial violence and bloodshed which followed 
 those savage denunciation-^ had never been paralleled in Europe, 
 save in the Jacquerie of Fr.ince, and the most violent excesses of 
 the insurrection of the Boors in Germany." 
 
 1833. — Mr. Attwood, member of Parliament, said : 
 
 ** Distress, general, extreme, unnatural, is greater than 
 in any former period of our history." 
 
 The violence which had distressed the country for 
 years began to pass away in 1833. Business assumed 
 more vigor, and men's countenances bore a more cheer- 
 ful aspect. 
 
 The Causes. — England had engaged in no war since 
 the fall of Bonaparte. She owed no debt abroad 
 which drained her coffers, her debt being owned at 
 home. The taxes had been reduced. The revenue 
 and expenditures of the government had been decreased. 
 Her subjects had a full measure of personal liberty ; 
 and all their industries, agriculture, manufactures, 
 mines, shipping and fisheries, yielded abundantly under 
 the fostering and protecting care of the government. 
 No calamity had befallen the nation ; no famine had 
 starved, nor pestilence destroyed — excepting the chol- 
 era one season. Excepting Ireland, which has always 
 been restless under the yoke of British government, 
 there was no sectional, local or class quarrel. Except-
 
 262 OUTLI3S1E OF ENGLISH HISTORY: 
 
 ing the payment of tithes to the church of England, 
 and the differences between catholics and protestants 
 in Ireland — and these things were not peculiar to the 
 period of time under re\'iew — there was no church 
 question to disturb the peace. Commerce had been in. 
 a healthful state for a number of years, both exports 
 and imports steadily increasing, the former always 
 exceeding the latter, except for the year 1829, which 
 was marked by a great falling off of exports and an 
 excess of imports over the exports. The government 
 owed an enormous debt of nearly $4,000,000,000, con- 
 tracted under the French war, but it was nearly all owned 
 by British subjects, and the interest was at the low 
 rates of from three to four per cent., so that the annual 
 expenses of the public debt were but little over 
 those of the United States at this time, and the interest 
 being paid to Englishmen the money was kept in that 
 country instead of being sent abroad, as is the case 
 with the United States now. 
 
 The internal and external relations and conditions of 
 the government and country were healthful. And yet, 
 during all these years, from 1829 to 1833, one continu- 
 ous Avail of distress pierced the heart, and riot, con- 
 flai^ration and bloodshed startled the sense of the 
 country. 
 
 In reviewing this history, one is forced to conclude 
 that the vicissitudes of the currency, and the contrac- 
 tion of the volume of money below the needs of the 
 country, were the direct causes of commercial and finan- 
 cial distress, and the irritating causes which excited 
 every other feeling of discontent and aroused the suf- 
 fering laborers and gave occasion to desperate charac- 
 tci'S to engage in riots, strikes, house-burnings, insur-
 
 FINANCIAL, COMMERCIAL AND DOMESTIC. 
 
 263 
 
 rection and bloodshed. Below we give two tables, one 
 showing the Bank note paper in circulation and the 
 amount of commercial paper discounted at the Bank of 
 England from 1815 to 1834 inclusive, the other show- 
 ing the amount of exports and imports during the same 
 time : 
 
 
 
 Notes 
 
 ' 
 
 
 Notes 
 
 Year. 
 
 Paper Money 
 
 Discounted 
 
 Year. 
 
 Paper Money. 
 
 Discounted 
 
 1815.. 
 
 £46,270,650. 
 
 . £20,600,000 
 
 1825.. 
 
 £40 000,000" Dec. 25th 
 
 1816.. 
 
 42,090,620. 
 
 . 11,182 000 
 
 1825.. 
 
 
 £7 691,464 
 
 1817.. 
 
 43,294,9(10. 
 
 3,960,600 
 
 1826.. 
 
 30,219,661.. 
 
 7,369,749 
 
 1818.. 
 
 49,278,700. 
 
 . 5,113,748 
 
 1827.. 
 
 32,732,900.. 
 
 3,389,725 
 
 1819.. 
 
 40,928,428. 
 
 6,321,748 
 
 1828.. 
 
 31,478,988.. 
 
 3,322,754 
 
 1820.. 
 
 34,145 395. 
 
 . 4,672,123 
 
 1829.. 
 
 27 674,517.. 
 
 4,589,370 
 
 1821.. 
 
 30,727,630. 
 
 . 2,722,.i87 
 
 1830.. 
 
 26,965,096.. 
 
 3,654,071 
 
 1822.. 
 
 26.588,600. 
 
 . 3,622,151 
 
 1831.. 
 
 26,452,846.. 
 
 5,848,478 
 
 1823.. 
 
 28,096,544. 
 
 . 5,624,698 
 
 1832.. 
 
 26.763,895.. 
 
 3,247,169 
 
 1824.. 
 
 32,759,152. 
 
 6,255,342 
 
 1833.. 
 
 27 684,014.. 
 
 
 1825.. 
 
 41,000,000 
 
 In first half 
 
 1834.. 
 
 29,347,600.. 
 
 
 1825.. 
 
 31,000,000 
 
 Dec. 5tli 
 
 
 
 
 
 TABLE OF EX FOR 
 
 TS AND 
 
 IMPORTS. 
 
 
 Year, 
 
 Exports. 
 
 Imports. 
 
 Year. 
 
 Exports. 
 
 Imports. 
 
 1815.. 
 
 £44,0.53,455. 
 
 . £31,822,053 
 
 1826.. 
 
 £40.965,735.. 
 
 £37 686,113 
 
 1816.. 
 
 36,697 610. 
 
 . 26,374,921 
 
 1827.. 
 
 52,219.280.. 
 
 44,887 774 
 
 1817.. 
 
 41 ,558, .585. 
 
 . 30,834,299 
 
 1828.. 
 
 52 797,455.. 
 
 45,028,805 
 
 1818.. 
 
 44, ,564, 044. 
 
 . 35,845,340 
 
 1829.. 
 
 35,522,627.. 
 
 43,981,317 
 
 1819.. 
 
 35,634,415. 
 
 . 29,681,640 
 
 1830.. 
 
 69,691,302.. 
 
 46,245,241 
 
 1820.. 
 
 40,240,277. 
 
 . 31,515,222 
 
 1831.. 
 
 71,429,004.. 
 
 49,713,889 
 
 1821.. 
 
 40,240 277. 
 
 . 30,729,769 
 
 1832.. 
 
 76,071,577.. 
 
 44,586,741 
 
 1822.. 
 
 40,831,744. 
 
 . 30,500 094 
 
 1833.. 
 
 (Not known to author) 4(j 245,241 
 
 1823.. 
 
 44,286,533. 
 
 . 34,591 260 
 
 1 8.34 . . 
 
 73,821,550.. 
 
 49,.362,811 
 
 1824.. 
 
 43,804,372. 
 
 . 36,056,-551 
 
 1835.. 
 
 78,376,731.. 
 
 48,911,542 
 
 1825.. 
 
 48 735.5-51. 
 
 . 42,660,954 
 
 
 
 
 Sir Archibald Alison, in his History of Europe, in 
 commenting upon the public clamor for reform and 
 assigning a cause for the distresses of the country, 
 said : 
 
 "A circumstance occurred at this time which most materially 
 tended to swell the cry lor reform in Parliament, by increasing the 
 difficulties under which, from the effect of leiiislative measures, the 
 industrious classes labored. By the act passed in February, 1826, 
 regarding small notes, it had been provided thnt, tliough no new 
 stamps were to be issued for small notes after its date, tlie notes 
 already in circulation were to continne to circulate and be received 
 as legal tender three years longer. These three years expired in 
 March, 1829, and all notes iu England below £5 imm' diately disap- 
 peared from the circulation. Great was the effect of this "decisive
 
 264 OUTLINE OF ENGLISH HISTORY : 
 
 change upon the fortunes and -wellbeing of the industrious classes, 
 both in town and country, over the whole nation. Coinciding, by a 
 singular chance, in point of time, with the sudden conversion of so 
 many statesmen and legislators, in both Houses on the subject of 
 Catholic claims, and the passing of the Relief Bill in consequence, 
 it powerfully tended to inflame the desire for radical chansie, by 
 superadding personal and private distr'.-ss generally in the industri- 
 ous classesto indignation at public measures, distrust in public 
 men. The diminution in the circulation in consequence, was imme- 
 diate and decisive These considerations explain how it came to 
 pass that the passion for reform, unfelt as a national feeling prior to 
 1820 became gradually stronger, until in 1832, it was altogether Ir- 
 resistible. The feeling which produc> d it was the most powerful 
 which can agitate an intelligent community, and which, when it per- 
 vades all ranks in the state, ere long acquires such force that it 
 must obtain its entire direction. 'Deliverance from evil!' was the 
 universal cry. This desire which had acquired such force and in- 
 tensity as to' have become a perfect passion with nearly all classes, 
 and especially the agricultural, is easily explained when we recollect 
 how deeply all interests, and especially those of labor and produc- 
 tion, had been affected by the prodigious change of prices of coramod 
 ities of all sorts, from grain to cotton, which had been effected by 
 the successive contractions of the currency in 1»19 and 182G. With 
 each of these contractions the cry for reform was revived : with the 
 last it became so powerful as in six years wrought an entire change 
 in the feelings, desires, and interests of all cla^ses. It is in this 
 reduction of l^rices tliat the explanation of the English revolution, 
 with all its mighty effects, foreiiru and domestic, is to be found. 
 Every article of production or exchange fell gradually in price after 
 the suppression of small notes in 1826. tU it settled at about two- 
 thirds of its former amount. There was no clas of society, save 
 the holders of realized wealth, which was not affected or ruined by 
 the change. The capitalists and fundholders alone were benefitted; 
 thence the cry, that the rich were every day getting richer, and the 
 poor poorer. ' This was no senseless popular outcry: it was the 
 simple statement of an acknowledged and undoubted fact. The 
 organs of the moneyed interest made a boast of it, when after the 
 contraction of the currency had worked out its ful! effects, they 
 said their mea-ures had made the sovereign worth two sovereigns. 
 They had done so, and not less certainly had they made the laborer's 
 shiliiusi only sixpence. They had halved tl e remuneration of in- 
 dustry^when they doubled the value of money. The two effects 
 were "consistent for they both sprang from the same cause. 
 
 " This constant decline of fortunes and diminution of income in 
 the largest, most industrious, and most important class of the com- 
 munity, was felt as the more galling, from the contrast exhibited at 
 the same time by the holders of realized wealth, who were every day 
 becomins richer, not from an additi(m to their incomes, but an addi- 
 tion to its exchangeable value. Every holder of commodities felt 
 them every day getting cheaper; the longer he retained them, the 
 worse was his" sale, the greater loss on his transactions. Manufac- 
 turers and farmers found that they could not with markets constantly 
 falling, work to a profit, except bv saving every shilling in the cost 
 of production, and lowering to the uttermost the wages of their
 
 FINANCIAL, COIVIMERCIAL AND DOMESTIC. 265 
 
 workmen. Tlience a stoadj' fall at once in thf profits of stock and 
 the wages of labor, aud the distressing recurrence of strikes and or- 
 ganization of trades union to arrest tlie decline. Thence, too, the 
 origin of the sore and angry feelings between the employers and em- 
 ployed, which has never been allayed, and has so much aggravated, 
 in periods of distress, the danger of our social position. All classes, 
 save the moneyed, were suflering from the long continuance of the 
 fall of prices ; and this general suffering produced the ill-humors 
 which, skillfully directed by the popular leaders against the nomina- 
 tion boroughs, produced the change of the constitutiou." 
 
 The distresses of the people had fancd to a flame 
 every smouldering spark of dissatisfaction. Violent 
 political agitation for a repeal of the union distracted 
 the country, A universal clamor for reform and a 
 change of constitution was carried successfully. Var- 
 ious acts looking to a remedy for existing evils had been 
 enacted by Parliament ; but all to little purpose. Dis- 
 tress still scourged the country. On the 21st of March, 
 1833, Mr. Attwood, who had been an active member of 
 the Political Union and a strenuous supporter of the re- 
 form bill, in a speech before Parliament portraying the 
 existing wretchedness, incidentally admitted the futility 
 of the acts which had been passed to bring relief. He 
 said ; 
 
 " What is the good of having a reformed Parliament if they do 
 not apply a remedy to the existing distress? And what will people 
 think of a Reformed Parliament having sat so many weeks without 
 attempting any one measure in behalf of the distressed. Distress, 
 general, extreme, unnatural, is greater than in any former period of 
 our history. 
 
 " In agriculture, one-half have more labor than they can bear, 
 while the other half have nothing to do; and yet the laborer can pro- 
 duce four times more than is required for the support of himself and 
 family. In manufactures the proportion of the produce to ihe wants 
 of the laborer is S'ill greater, but matters, instead of getting better, 
 are daily getting worse. Labor Is badly i)aid; manufactures scarce- 
 ly carried on with any protit — in some with a loss ; commerce is de- 
 clining in the same proportion; and such Is the distress of the ship- 
 ping interest that two-thirds of the shipping in the Thames is under 
 mortgage, which is not fore-dosed only because it is not considered 
 worth the redemption. The poor-rates have doubled in real weight, 
 from the price of the produce from which they are paid having been 
 halved. There are 100,000 men walking about London in search of 
 employment. In many parts of the country, able-bodied men are 
 working night and day for 8s. or 7s.6d. a week, and often can earn no
 
 260 OUTLINE OF ENGLISH HISTORY: 
 
 more than 4s. England may be divided into two classes, the dis- 
 tressed and the atliuent. In the fir.st class are included the whole 
 laud holders, in the last the bond and fund holders. The former are 
 depressed by charges on their estates which were to be paid in a 
 currency 50 per ceut. dearer than that in which they were contrac- 
 ted; the latter are enriched by receiving £90 in gold for their £G0. 
 The land-holders, in these circumstances cannot contribute to war, 
 and the fund-holders will not, because it will reduce their £90 back 
 to £G0. Thus we do not venture to take a decided part in foreign 
 transactions and surrender Antwerp to France, and Constantinople 
 to Russia rather than endanger the ill-gotten gains of the class whom 
 it had been our sole object to enrich. The result of the distress is 
 an enormous increase of crime. These deplorable effects are all 
 owing to the alteration made on the currency, which, it had been 
 said, would only alter prices 4 per cent., but had in reality towered 
 them 100 per cent, and in the same proportion reduced the gains of 
 the producing classes." 
 
 The effect upon pnces produced by the monetary 
 system adopted by Enghmd in 1819, and pursued to 
 1833, was clearly demonstrated by Mr. Waithman, from 
 the Parliamentary returns. The values of exported 
 and imported articles were determined by a schedule of 
 prices adopted by the government in 1697. Hence, the 
 official values of exports and imports do not show the 
 money or commercial values of them. Mr. Waithman 
 demonstrated that from 1814 to 1820, though the 
 greater portion of this time were years of distress, the 
 excess of real or money value over official value in ex- 
 ports was £41,000,000, or an average of £5,857,142 
 per annum, while for the eight years, from 1821 to 
 1828, the excess of the official over the real or money 
 value of exiDorts, was £80,000,000, or £10,000,000 per 
 
 annum. 
 
 " Whoever considers this immense depreciation and the effects it 
 must have had on industry of every description, while taxes, bonds, 
 bills and money debts of every description remained the same, will 
 have no difficulty in discerning what it was that uprooted the attach- 
 ment to old institutions," 
 
 and produced the distress referred to from 1819 to 
 1833. 
 
 There is a coincidence between the large volume of
 
 FINANCIAL, CO^LMERCIAL AND DOMESTIC. 267 
 
 currency of certain periods reported in the foregoing 
 table, and the peace and prosperity of the country 
 during the same period, no less remarkable than the 
 coincidence between the small volume of currency and 
 the depres^on of business and disturbances of other 
 periods. For instance, in 1814 the volume of currency 
 Avas £47,500,000, and in 1815 it Avas £4(5,272,000. 
 Those were remarkably prosperous years, while 1816 
 and 1817 were years of great depression, and the cur- 
 rency amounted to only £42,000,000 in the former, and 
 £43,294,000 in the latter year. In 1818, a year of 
 peace and prosperity, the currency was £48,278,000, 
 while in 1819, a year of very great distress, riots and 
 disturbances, the currency was reduced to £40,738,- 
 000, and it continued to decline in volume during the 
 distressing years of 1820, 1821 and 1822, until in the 
 latter year it fell to the low point of £26,588,000. 
 From this point" it began to expand again, followed by 
 corresponding imi)rovement in i)eace and prosperity, to 
 £28,000,000 in 1823; £32,759,000 in 1824 and £41,- 
 000,000 in the first half of 1825, when it rapidly fell 
 to £31,000,000 on the 5th of December, when there 
 "was a great crisis ; from Avhieh it again expanded to 
 £40,000,000 on the 25th day of December, tlie same 
 year, stopping the panic. It again fell to £30,219,- 
 000 the next year and continued to lessen in volume 
 followed b}^ a corresponding increase of suffering, riots, 
 strikes and desperate deeds, until the latter part of 
 1833, when a slight expansion set in, followed by ap- 
 pearances of returning peace and prosperity. The 
 reports of exports and inqjorts exhibit nothing upon 
 which the disasters referred to could rest. On the 
 contrary, they, taken alone, exhibit evidences of pros-
 
 268 OUTLINE OF ENGLISH HISTORY : 
 
 perily during the periods of the most appalling wretch- 
 edness. It was argued that the corn laws, protective 
 tariff, free trade, extravagance of government, war, 
 peace, whig administration and tory administrations, 
 abundant harvests, failure of crops, speculation, debts, 
 want of credit — in fact, every immaginable thing, was 
 the cause or were the causes of the disasters of Eng- 
 land from 1819 to 1833. All these things, doubtless, 
 had more or less effect upon the state of the country. 
 But that neither one nor all of them brought the 
 distress narrated is evident, for three insurmountable 
 reasons. 
 
 1st. We find that every one of the foregoing alleged 
 causes existed during two exactly opposite conditions 
 of the country. They existed in "flush times" and 
 in "tight times." 2d. They are not of a financial 
 nature, nor did they affect all branches of business, 
 nor were their effects alike upon all branches of busi- 
 ness. 3d. But, whether there M^as war or peace, pro- 
 tective tariff or free trade, corn laws or anti-corn laws, 
 abundance or scarcity of gold, abundant harvest or 
 failure of crops, whig administation or tory, high taxes 
 or low, little credit or much, the old constitution or the 
 new ; it mattered not what existed, the absolute and dis- 
 tinct element, money, under all circumstances, secretly, 
 but powerfully operating, produced one or the other of 
 two clearly defined universal effects upon society, result- 
 ing from one or the other of its (money's) states. That 
 is, whenever money was plentiful, there was internal 
 peace and prosperity, and when scarce, depression and 
 commotion. We therefore conclude, that the greatest' 
 factor, if not the sole one, which caused the wretched-
 
 FINANCIAL, COMiEERCIAL AND DOMESTIC. 269 
 
 ness of Great Britain from 181 G to 1833, was the 
 mutations and contractions of the currency. 
 
 The Remedy. — The charter of the Bank of England 
 was renewed in 1833 for 21 years, making the issue 
 thereof a legal tender. The Ivf^al tender character of 
 the notes, thus enacted, enabled that bank to expand 
 its issues with safety whenever there was no great de- 
 mand for gold to ship abroad, and gave the people a 
 money which answered all the purposes of gold for in- 
 ternal commerce. The effects of this act, thouirh slow 
 at first, began to be felt very soon. The volume of 
 currency was increased £1,000,000 in 1833, and the 
 commercial interests, always the first to be affected, at 
 once began to be materially improved. The next year 
 the currency was expanded £3,000,000 more, and con- 
 tinued to so expand until in 1836 it amounted to £36,- 
 200,000. The prosperity and internal peace and hap- 
 piness of the country were entirely restored and so 
 continued until another contraction of the currency 
 occurred. 
 
 By a critical examination of statistical reports and 
 history, it will be found that a fall of prices of prop- 
 erty, stocks and bonds, an increase of crime, pauper- 
 ism, mortality rates, emigration, internal commotion, 
 riots, strikes, and agrarianism, and a decrease of the 
 revenue receipts of the government followed right upon 
 the heels of contractions of the currency. The fore- 
 going historic facts and the following tables, compared 
 with the foregoing tables of currency, verify the prop- 
 osition :
 
 270 
 
 OUTLINE OF ENGLISH HISTORY : 
 
 Tear. Emigration. Mortality. Pauperism. Crime. 
 
 1820 18.984 -6 23.277 
 
 1821 13.194 o 1 to 1,500 
 
 1822 12.349....,...! to 41 .w'S 
 
 1823 8.8G0 1 to 33| - o 1 to 1,3GS 
 
 1824 8 210 1 to 34 -^tl 1 to 1,361 
 
 182.-) 14.891 1 to 33 «^ ..-1 to 1,037 
 
 1826 20.900 1 to 37 gg 1 to 90» 
 
 fl.2 
 
 1827 28.003 1 to 34 St! 
 
 1828 26 092 1 to 30 
 
 1829 31.198 1 to 34 
 
 1833 56.907 1 to 37 ... . 
 
 1831 
 
 1832 103.140 1 to 20* 
 
 1833 62.684 1 to 32 . 
 
 . O) g 
 
 . ^ .22 
 88.160 1 to 30 ^^ 1 to 
 
 P.' 
 
 .1 to 1,041 
 873 
 790 
 719 
 84S 
 768 
 63^ 
 
 1 to 
 .1 to 
 .1 to 
 
 to 
 
 to 
 
 Tear Revenue in round numbers 
 
 1815 £79,000,000 
 
 1816 67,000,000 
 
 1817 68 000,000 
 
 1818 58 000,000 
 
 1819 56,000. 000 
 
 1820 57,000,000 
 
 1821 .''8,000,000 
 
 1822 60,00 000 
 
 1823 57,000 000 
 
 Year. Revenue in round numbers 
 
 1824 £59,000,000 
 
 1825 56,000,000 
 
 1826 54,000,000 
 
 1827 54 000,000 
 
 1828 55,000,000 
 
 1829 50,000,000 
 
 1830 .50,000,000 
 
 1831 46,000,000 
 
 1832 46,000,000 
 
 The Banking System of England. — Excepting the 
 issuance of Treasury bills by the government for tem- 
 porary purposes, the entire paper money of England is 
 issued by banks. The oldest, the parent bank, is the 
 Bank of England, which was chartered in 1694, with a 
 capital of £1,200,000, and was required to loan the 
 government the same amount on government securities. 
 The bank charter has been renewed a number of times, 
 with slight changes, until in 1816, its capital stock in 
 public securities reached £14,000,000, upon which it 
 always has been and is yet permitted to issue an amount 
 of notes equal to the amount of capital in public securi- 
 ties prescribed for it by law. From its organization up 
 to 1844, its custom had been to issue about £3 in notes 
 for every £1 in coin in its vaults in addition to its is- 
 sues on public securities. Its notes were always re- 
 
 •Cholera.
 
 FINANCIAL, COMJIERCIAL AND DOMESTIC. 271 
 
 deemable in coin when presented at the bark, except 
 during suspension of cash payments provided for by 
 law from 1797 to 1823, and excepting also, the time 
 of suspension of cash pa^^ments ni 1847, 1857 and 1866. 
 Its notes were, by hiw, made a legal tender everywhere 
 from 1797 to 1823, and everywhere except at the Bank, 
 by the act of Parliament of 1833, The country bank 
 notes were issuable on stocks and securities, and re- 
 deemable in coin on the Bank of England notes. 
 
 While the Bank of England might issue £14,000,000 
 and country banks their entire issues, on stocks, bonds 
 and securities, yet, excepting the periods when the law 
 suspended cash payments, country bank notes being re- 
 deemable in Bank of England notes or coin, and Bank 
 of England notes, the whole issue, redeemable in coin 
 whenever they were presented at the Bank, the whole 
 banking system of England in effect rested on a specie 
 basis, and the currency was and is yet subject to all 
 mutations and changes resulting from the migratory 
 tendencies and ever changing volume of the precious 
 metals. So it was that when coin or bullion was plen- 
 tiful in England, it was presented at the bank and notes 
 taken for it, on account of their greater convenience, 
 and thus the currency, at such a time, expanded when 
 there was least need of it, resulting in abundance of 
 money and a consequent energizing of all business un- 
 til the country was in the delirium of great prosperity, 
 when, unlooked for, a sudden contraction of the cur- 
 rency, the effect of the silent unobserved transition of 
 gold from the country, brought an appalling and disas- 
 trous crisis ; and the bank officers, standing amid the 
 wreck and ruin, looking to the redemption of their 
 notes and their depleted coffers, were unable to avert
 
 272 OUTLINE OF ENGLISH HISTORY. 
 
 the crisis or extend help when the country needed it 
 
 most. 
 
 ''Unobserved amidst the strife of parties, unmarked by political 
 leaders, unknown to the dominant multitude, one cause of para- 
 mount importance and irrisistible force was, durinj; the forty years' 
 peace, incessantly acting on the British Empire. The mutations of 
 the currency, anticipated before 1819, experienced since that period, 
 furnishes the key to all the variations in social happiness which 
 were experienced during that eventful period. They explain the 
 alternations of feverish and short-lived prosperity, and exhausting 
 and long continued distress, which invariably occurred; and they 
 account for the vast political chantres which ensued, and the en- 
 tire alteration in the balance of internal power, and in the tendency 
 of foreign and commercial policy which occurred during their con- 
 tinuance. Without a constant reference to this paramount, irresist- 
 ible cause, all attempts to explain the politics of Great Britain 
 during this long period will prove nugatory, and the most important 
 lessons to be derived from contemporary history will be lost,"— 
 Alison. 
 
 Such is a brief outline of the domestic and business 
 history of England. The years 1797, 1816, 1817, 
 1819 to 1823, 1825, 1826, 1829 to 1833 have recorded 
 tales of woe and wretchedness that pierce the heart 
 with pity and make one wonder that the suffering, the 
 distressed, the starving, made wretched by the unwise 
 policy of the government, did not rise in their frenzy, 
 lift from their places the pillars of government, and, 
 like Sampson of Isrsel, bury it and themselves beneath 
 the ruins wrought by their own hands. 
 
 i^
 
 CHAPTER XVni. 
 
 MONETARY HISTORY OF THE UNITED STATES : 
 CRISES TO THE CLOSE OF THE REBELLION. 
 
 We do not discuss the finances of the revolutionary 
 period, because the financial measures of that period 
 were peculiar, unlike anything before or since that time. 
 The continental currency was not a national legal 
 tender ; the adoption of pro-rata portions of it by the 
 States made it a local currency ; the adversities, ex- 
 tremities and fears of failure, and the great quantities 
 of it destroyed the people's confidence m it. That 
 these facts are true is evidenced by the fact that in 
 1781 a change of system was effected, whereby new 
 notes were issued, bearing five per cent, interest, and 
 redeemable in specie in six years. They depreciated, 
 as the old ones, and no considerable quantity of them 
 ever got into circulation. They were legal tenders, 
 bearing interest, and redeemable in coin, yet they were 
 almost worthless. It was want of faith in the srovern- 
 ment — not in the kind of money — that destroyed the 
 value of both kinds of money. 
 
 The contractions of the currency which occurred prior 
 to the passing of the resumption act, and that result- 
 ing from that act, have produced the same general 
 effects upon the country, with the exception that some-
 
 274 MONETARY HISTORY OF THE UNITED STATES : 
 
 times an extension of credit, and at other times a des- 
 truction of it, have followed contraction. 
 
 Forced resumption means contraction, and contrac- 
 tion, no matter by what means effected, produces the 
 same general results, with the exceptions named. The 
 resumption act is in its material effects upon the country 
 but a continuation of the process of contraction, insti- 
 tuted by the government in 1866-67. Hence, we have 
 considered the effects of contraction prior and subse- 
 quent to the passage of the resumption act together, 
 beginning with the early financial history of the 
 country, and dividmg the account into two chapters, 
 at the year 1866. 
 
 After the close of the last war with Eno-land, the 
 United States, possessed of territory nearly as large 
 as Europe, with virgin soil full of richness and prolific 
 in productions, watered by innumerable rivers, the 
 natural commercial highways of the nation, wanted but 
 two things to make it the richest and most populous 
 nation on the globe. These were men and money. 
 They were indispensable to fell the forests, till the 
 soil, and open up the mineral and commercial wealth. 
 A considerable number of immigrants from Europe 
 were annually swelling the population and adding to 
 the productive powers of the country, but they were 
 soon almost lost when scattered over the vast districts 
 of country. 
 
 The demand for labor was great, but capital to open 
 up business enterprises was scarce. The high wages 
 of labor of workmen presented little inducement to 
 European capital. The world's annual production of 
 gold and silver had fallen to half its former amount, 
 on account of the South American revolution, and but
 
 CRISES TO THE CLOSE OF THE REBELLION. 275 
 
 little of this found its way to America. Thus it was 
 that the United States, possessed of as much natural 
 wealth as ever blessed a people, was without the means 
 of developing it and might have remained a wilderness 
 but for the energizing power of a new agency. This 
 was paper money. To this the achievement of their 
 independence is attributable as much as to all things 
 else, save their patriotism and valor. As it had been 
 with Rome, in her wars with Carthage, and with 
 Great Britain, in her wars with Bonaparte, so it was 
 in the revolutionary struggle of the United States ; 
 paper money was the sinnews of war. It proved to 
 be of equal strength in peace. Except dunng the 
 depressing effects of the crises of 1818, 1819-20, 
 1837-8-9 and 1840, and the later ones, the advance- 
 ment of the United States in population, wealth and 
 universal prosperity among the people has been unex- 
 ampled. The demand for labor has been unbounded, 
 the prices of all property have generally ranged high ; 
 all the industries have increased ; commerce has multi- 
 plied itself many times ; in the rural districts and in 
 the towns and cities the cheerful hum of successful 
 business life, and unmistakable evidences of prosperitjs 
 have gladdened the hearts of the people. But these 
 cheering conditions were changed to scenes of depres- 
 sion, bankruptcy and general distress during money 
 crises. 
 
 One of these terrible crises came in 1818-19-20. 
 The charter of the iirst U. S. bank expired in 1811. 
 From that time until 1817 the currency was supplied 
 by state banks. The immunity from redemption of 
 their issues, resulting from the suspension of specie 
 payments in 1814, caused a great exT[3ansiou of the
 
 27Q MONETARY HISTORY Oi THE UNITED STATES : 
 
 currency by the state banks. It rose from about $33,- 
 000,000 m 1811 to $110,000,000 in 1815. In 1817 the 
 second bank of the United States having been chartered 
 in 1816, went into operation. The removal of all gov- 
 ernment funds from state banks to the Bank of the 
 United States and a return to resumption of specie pay- 
 ments produced an enormous contraction of the cur- 
 rency. From $110,000,000 in 1815 it fell to $45,000,- 
 000 in 1819, when there was a general crash and a des- 
 truction of credit. An iimnense number of bank and 
 other failures ensued. It was estimated that two-thirds 
 of all the traders in the United States failed. Lands 
 and agricultural products fell to one-half of what they 
 readily commanded in 1808-10, and great distress and 
 suffering fell upon the people. Between 1811 and 1820 
 no less than 165 banks, in different parts of the Union, 
 either became bankrupt or withdrew from business. 
 During this period of return to cash payments, industry 
 was essentially blighted ; suffering was universal, and 
 the people, glad as usual to fix the responsibility of 
 misfortune on anyone but themselves, generally ascribed 
 it to the banking system, which, though grieviously 
 abused, had been the mainspring of their progress, and 
 the principal cause of their prosperity. 
 
 So terrible was the prostration that the Pennsylvania 
 Senate appointed a committee to report on the subject. 
 On the 20th of February, 1820, they reported this as 
 
 the condition of affairs : 
 
 "I. Ruinous sacrifices of landed property at sheriff's sales, 
 whereby iu many cases lands and houses have been sold at less than 
 a half, a thiid, or a fourth of their former values, thereby depriving 
 of their homes and of the fruits of laborious years a vast number 
 of our industrious farmers, some of whom have been driven to seek 
 in the uncultivated forests of the west that shelter of which they 
 have been deprived in their native State. 
 
 «'II. Forced sales of merchandise, household goods, farming stock
 
 CRISES TO TITE CLOSE OF THE REBELLION. 277 
 
 aud utensils, at prices far bolow the cost of production, whereby 
 many families have been deprived of the cominou necessities of life, 
 and of the implements of tlieir trade. 
 
 "III. Numerous bankruptcies and pecuniary embarrassments of 
 every description, as well among the agricultural and manufacturing 
 as the mercantile classes. 
 
 "IV. A general scarcity of money throughout the country, which 
 render; it almost impossible for the husbandman or the owners of 
 real estate to borrow at a usurous interest, and where landed secur- 
 ity of the most indubit;ible character is offered as a pledge. A 
 singular dilKculty of procuring on loan had existed in the metropolis, 
 previous to October last, but since then been partially removed. 
 
 "V. A general suspension of labor, the only legitimate source of 
 "Wealth, in our cities aud towns, by which thousands of our most 
 useful citizens are rendered destitute of the means of support, and 
 are reduced to the extremity of poverty aud despair. 
 
 "VI. Numerous hiwsuits upon the dockets of our courts and of 
 our justices of the peace, which lead to extravagant costs and loss 
 of a great portion of valuable time. 
 
 "VII. A general inability in a community to meet with punctuality 
 the payments of debts, even for family expenses, which is experienced 
 as well by those who are wealthy in property, as by those who have 
 hitherto relied upou their current euiragements. With such a mass 
 of evils to oppress them, it cannot be wondered at that the people 
 should be dispirited, and that they should look to their representa- 
 tives for relief. Their patient endurance of suffering, wliich can 
 only be imagined by those who have habitually intermingled with 
 them at their homes and by the firesides, merits the commendation 
 of the legislature and prefers a powerful claim to their interfernce." 
 
 No candid mind can fail to see that a return to specie 
 
 payments ruined the banks, forced them to greatly 
 
 reduce their circulation, and this contraction of the 
 
 currency caused a preci])itation of prices down one-half, 
 
 brimjinsf oreneral distress to the country. If inflation 
 
 had been the cause of the crisis, it would have come in 
 
 1815, according to the arguments of bullionists. They 
 
 claim that the crisis is reached at the highest point of 
 
 inflation. Secretary Sherman affirms that inflation of 
 
 paper money and credit causes crises. Who ever heard 
 
 of a financial failure because of too much money ? "Who 
 
 ever heard of the financial ruin of a debtor so lonij as he 
 
 could command ample credit ? With all due respect to 
 
 the opinions of that high functionary, we must say that 
 
 the theory of the Secretary of the Treasury is radically
 
 278 MONETAEY HISTORY OF THE UNITED STATES : 
 
 wrong. Crises are caused by a contraction of the vol- 
 ume of the money or credit, or both. After the Bank 
 of the U. S. got into full operation, with general confi- 
 dence in it and its paper, together with an increase of 
 the stock of specie in the country of about $1,000,000, 
 and a slight enlargement of the volume of paper cur- 
 rency, confidence was measurably restored and prom- 
 ises of better times began to return ; in 1820 and from 
 1821 on to 1837 an era of prosperity blessed the coun- 
 try. Below is a table of the amount of specie held by 
 banks, and the circulation of all the banks in the U. S. 
 on the 1st of January for the years named : 
 
 Year 
 
 Circulation 
 
 Specie 
 
 Year 
 
 Circulation 
 
 Specie 
 
 1811. 
 
 ..$ 33 500,000..$ 
 
 21,200,000 
 
 1841. 
 
 8110,000,000. 
 
 .§ 34 813,958 
 
 1815. 
 
 . 110 100,100.. 
 
 17,000 000 
 
 1842. 
 
 83,734,011. 
 
 . 28,440 423 
 
 1819. 
 
 . 4', 000, 000.. 
 
 not kuown 
 
 1843. 
 
 . 58.563,608. 
 
 . 33,515,806 
 
 1820. 
 
 . 48,452,825.. 
 
 23,212.995 
 
 1844. 
 
 75,167,646. 
 
 . 49,898,269 
 
 1830. 
 
 . 74,248,043.. 
 
 29,722,993 
 
 1845. 
 
 . 89,608,711. 
 
 . 44,241,242 
 
 1834. 
 
 . 114,047,949.. 
 
 not known 
 
 1846. 
 
 . 105 552,427. 
 
 . 42,012,095 
 
 1835. 
 
 . 121,032,292.. 
 
 59,645,994 
 
 1847. 
 
 . 108,519 766. 
 
 . 35,132 516 
 
 1836. 
 
 . 163,376,460.. 
 
 48,437,582 
 
 1848. 
 
 . 128,506 091. 
 
 . 46,369,765 
 
 1837. 
 
 . 122,906,977.. 
 
 40,553,789 
 
 1849. 
 
 . 114 743,415. 
 
 . 43,619 368 
 
 1838. 
 
 . 160,633,858.. 
 
 38,954,954 
 
 1850. 
 
 . 131 366.526. 
 
 . 4 --.,379,345 
 
 1839. 
 
 . 141,153.616.. 
 
 49,286,280 
 
 1851. 
 
 . 155,565,251. 
 
 . 48,671,048 
 
 1840. 
 
 . 113,664,433.. 
 
 34,574,829 
 
 
 
 
 Another of these reverses besran to be felt in the lat 
 
 fc' 
 
 ter part of 183G, and settled with terrible effect upon 
 the country in 1837, lingering and blighting industry 
 and commerce in varying degrees until 1849. Many 
 now living remember the fluctuations and immense fall 
 of prices and general depression of business that af- 
 fected the country during that period. During the 
 first three years of the crisis, nearly all the banks in 
 the United States stopped payment, and a great num- 
 ber of them failed. Almost nine-tenths of the com- 
 mercial houses became bankrupt, the cotton planters of 
 the South Mere ruined, and the commercial wealth of 
 the country was nearly destroyed. Debtors were ruined,
 
 CRISES TO THE CLOSE OF THE REBELLION. 279 
 
 creditors were subjected to imaiense losses. Every- 
 where, in every nook and corner of the republic where 
 civilized men dwelt, the searching hand of "hard times" 
 thrust its lean and bonv finders into everv household 
 and spared neither age nor condition from its chilling, 
 pinching, distressing grasp. Between 1837 and 1849, 
 there were short seasons of apparant return of prosper- 
 ity, but they were delusive ; exciting hopes only to 
 
 blast them aijain. 
 
 "Althousrli the United States shared to a certain decree in the 
 comiuercial disasters consequent on the resumption of cash pay- 
 ments in Great Britain, in 1819, and the consequent monetary crises 
 in lt<25 and 1832, yet this period was, upon the whole, one of extra- 
 ordinary and unprecedented prosperity over their whole extent. 
 Prices were hiiih, but wages were still higher; ease and content- 
 ment generally prevailed; cultivated land was encroaching at the 
 rate of seventeen miles a year over a frontier seventeru hundred 
 miles in lenuth, upon the gloom of the forest; and the seaport 
 towns on the coa'-t, sharing in the vast commerce which such a 
 rapid increase required, were rapidly advancing in wealth, popula- 
 tion and enterprise During these iifteen years the population of 
 the United States advanced 65 per cent.; its exports and imports 
 doubled, and a vast stream of emigrants from the British Isles, 
 which had come at last to be above 50,000 a year, added to the pro- 
 lific power in providing hands to keep pace with this immense in- 
 crease It is to the influence of the American banks, in furnishing 
 the means of cultivation and improvement to the hardy settlers in 
 the forest, that the superior aspect of the American side of the St. 
 Lawrence to the British, which has attracted the notice of every 
 traveler, is mainly to be ascribed 
 
 "The charter of the United States Bank being only for twenty 
 years from 1816, the Pirectors of the establishment under the direc- 
 tion of their able chairman, Mr. Biddle, brought forward a bill in 
 1832 to authorize the renewal of the charter for the like term of 
 years. This was the signal for the deadly strife which ensued. 
 'v\ ar to the knife was immediately proclaimed by the whole Demo- 
 cratic party of the Union against the United States Bank. Both 
 Houses of Congress passed tiie bill renewing the charter of the 
 United States Bank by considerable majorities. But the Demo- 
 cratic party were not discouraged. Secure of the concurrence of 
 General Jackson, the President, they raised such a clamor against 
 the Hank in the newspapers, that he was induced to oppose the veto, 
 which the Constitutinn intrusted to him, to the bill. Not content 
 with putting a negative on the act passed by Congress renewing 
 the B nk cliarter. General Jackson, in the succeeding year, went a 
 step further, and withdrew the whole public deposits from the 
 United States Bank and its branches, and handed them over to the 
 local banks.
 
 280 MONETARY HISTORY OF THE UNITED STATES 
 
 "The states in the valley of the Mississippi, encouraged by the 
 support of government, and strong in the possession, through their 
 banks, of the public deposits, rushed, as it were, with inconsiderate 
 fury into the void created by the contraction of the business 
 of the United States Bank, which- had been conducted with 
 comparative prudence. It was soon seen what free trade in banking 
 will speedily become. The President had sought to destroy one 
 bank of which he was jealous ; he did so ; but in so doing lie reared 
 up a hundred. The effects of this state of things was to the very 
 last degree disastrous in every part of the United States. The 
 whole bullion of the country was withdrawn from the commercial 
 cities on the coast, where it was essential to support the banks and 
 regulate the exchanges, and thrown, as government deposits, 
 to stagnate unemployed in the vaults of remote provincial banks. 
 The gold and silver so abstracted from the great commercial cities 
 found no channel for return ; for when the Western banks began to- 
 restrict their loans, the merchants in those parts were deprived of 
 the means of making remittances, and the proceeds of the goods re- 
 mitted to them having been for the most part invested in the pur- 
 chase of land, were now locked up in the banks to meet the Treas- 
 ury orders. Thus credit was dc'stroyed. and transactions of all 
 sorts were stopped alike in the cities on the coast and the forests 
 in the interior. The banks, compelled to pay in specie by the ex- 
 isting law, could get none, and their only resource was sternly to 
 refuse accommodation even to houses of the first respectability. 
 Terror and distrust universally prevailed; the machine of society, 
 like a huge mill turned by water which was suddenly fi'ozen, came 
 to a stand. General Jackson retired from office, having served his 
 time in March, 1837, and was succeeded by Mr. VanBuren. 
 
 "The catastrophe was for a short period kept off by the expedient 
 adopted by the chief merchants and bankers in New York and Phila- 
 delphia, of drawing bills at twelve months on certain great houses in 
 London and Liverpool, which accepted them, and on which cash 
 was paid in the mean time. But this expedient only postponed, it 
 did not avert, the disaster; England itself was involved in the conse- 
 quences of the crusade against paper raised in the United States; the 
 acceptors for the most part failed before the bills became due ; and 
 the crash set in with unexampled severity, in March, 1837. It first 
 began in New Orleans, in consequence of the great transactions in 
 cotton of that place with Great Britian, but rapidly spread to New 
 York, Philadelphia, and other cities on the coast, and the scene of 
 confusion and panic which ensued baffles all description. A utiiver- 
 sal run took place upon the banks, which being in a great degree un- 
 provided with cash, in consequence of its having been drained away 
 to the banks in the West, were unable to meet the demand for 
 specie. They all, including the United States Bank, accordingly 
 soon suspended cash payments, and upon this the panic became uni- 
 versal and the crash as widespread. Deprived of the wonted re- 
 source of discounted bills to meet their engagements, the greatest 
 as well as the smallest houses in the commercial cities becaine 
 bankrupt. Two hundred and fifty houses stopped payment in New 
 York in the first three weeks ot April; and in Boston, Philadelphia, 
 Baltimore, and other cities, the devastation was not less universal. 
 Cotton fell from Ud, the pound, in 1835, to 7>^'d , and all other ar-
 
 CRISES TO THE CLOSE OF THE REBELLION. 281 
 
 tides of export in a similar proportion. Soon the distress spread 
 like a pestilence tlirough tlie various raraificiitions of society. Pub- 
 lic works railways, canals were brousrht to a stand; tlie shipwright 
 and builder dismissed their men, tlie manufacturer closed liis 
 doors ; one sentiment pervaded all classes — the anticipation of uni- 
 versal ruin and indivi(hial beggary. 
 
 " The merchants of New York presented a petition to the Presi- 
 dent, praying him to retract I is steps, relax the laws as to the pay- 
 ment of the price of lands sold, and convoke Congress to consider 
 what means could be devised to alleviate the public distress. They 
 met only with a stern refusal. The calamities which prevailed 
 were ascribed entirely to the mania of speculation and over-trading; 
 the 'mercantile ari-tocracy' were signalized as the authors of all the 
 public misfortunes; and the deposit banks were charged with 'base 
 treacliery and perfidy unparalelled in the history of tlie world, all 
 purely with the view of gratifying Biddle and Barings.' At the 
 same time to evince his determination to persist in the course of his 
 predecessor, Van Burcn issued a circular to the different collectors 
 of the revenue in the United States to receive nothing but specie, or 
 notes of banks still paying in specie, in payment of revenue bonds or 
 debts due the gtates. But it was easier to issue such a circular than 
 give the means of complying with it; and the public revenue, entirely 
 dependent on the Custom House duties and the sales of public lands, 
 almost entirely disappeared. Within six months after the general 
 suspension of cash payments, it was found that not more than five 
 per cent of the sum due on tlie public debts had been paid to the 
 collectors; the government, without a revenue, were compelled to 
 bring in a bill authorizing them to appropriate S9, 367, 214 lying in 
 the Treasurv — which, under the existing laws of the 23rd of June, 
 1836 sliould have been distributed among the States — and give them 
 Treasury bonds instead. 
 
 " So utterly was the government bereaved of money, that they 
 were reduced to tlie necessity of issuing Treasury Bills to the amount 
 of $10,000,000 more, which was justified to the public upon the hu- 
 milating confession that above $28,000,000 were due to government 
 by State banks of deposit, and $15,000 000 by private banks and in- 
 dividual-!, and that it could recover no part of these sums ; a state of 
 things, it is believed, unparalelled in any other age or country. 
 
 " Such was the scarcity of specie, in consequence of its being 
 locked up in Western banks, that the banks on the coast were com- 
 pelled to apply to England for assistance before they could resume 
 cash payments ; and l\w. Bank of England, with praiseworthy liberality, 
 in April, 1838, remitted the United States Bank £1,000,000 in specie. 
 This enabled them to resume payment in specie and recommence op- 
 erations on a large scale, whicti soon restored credit, as all the other 
 banks did the same. Tlieir efforts were immediately directed to ar- 
 rest tiie fall in prices of cotton, the great article of commercial ex- 
 port, which had fallen to 4d. a pound, being not a third of what it 
 had been three years befoi-e, and that although the last crop had been 
 deficient rather than the reverse. For this purpose they made im- 
 mense advances on long-dated bills drawn on and accepted by houses 
 in England t-o the holders of cotton, to prevent their stock being 
 forced into English markets at these ruinously low prices. This op- 
 eration, which was indispensable to arrest the ruin of the country,
 
 282 MONETARY HISTORY OF THE UNITED STATES : 
 
 succeeded for a time, and prices of cotton rose considerably in the 
 first half of 1839; but, unhappily, the crash which ensued at that 
 time in England utterly destroyed the means of carrying it forward. 
 The Bank of England, itself nearly as hard pressed as the banks of 
 America, was obliged, in the Autumn of 183i), rapidly and rigidly to 
 contract its advances; the houses which had accepted the long-dated 
 bills became bankrupt; and the consequence was, that the crash 
 came on again in America, after this vain attempt to arrest it, with 
 more severity than ever. The United States Bank stopped payment, 
 finally and irrecoverably, on the 5Lh of October; all the other banks 
 in the Southern Stares of the Union suspended cash payments, and 
 before the end of the year nine-tenihs of tlie whole commercial 
 houses in America were bankrupt, and nearly the whole commercial 
 wealth of the country was swept away. 
 
 "The banks were ruined; the 'commercial arris tocracy, ' the ob- 
 ject of so much jealously, was destroyed. 
 
 •' Immense was this change upon the government and policy of 
 America; the revolution was as great and irremediable as that of 
 1789 had been in France — that of 1832 in Great Britian. But at what 
 price was this victory gained? At that of national wealth, the na- 
 tional happiness, the national hcmor. Foreign commerce was almost 
 destroyed; that with England was reduced to a little more than a 
 fourth of its former amount. The embarrassment in the interior, 
 from the failure of the customs and the diminished sales of the pub- 
 lic lands, became so great that payments of public debts was impos- 
 sible, since no«legislator had ever ventured, for general and national 
 objects, to pronounce the words direct taxation. Thence the 
 KEPUDiATiON OF STATE DEBTS became general in the United States, 
 and has affixed a lasting and inefTaceable stain on the national lionor 
 and on the character of the people for common honesty. " 
 
 Wc have given this lengthy extract from the account 
 of our crises of 1837 and 1889, by Sir A. Alison, of 
 England, because he was one of the most critical ob- 
 servers of the financial measures of nations and their 
 operations of the time in which he wrote. 
 
 The real cause of the distress was not, however, as 
 Mr. Alison supposed, the destruction of the United 
 States Bank, and the transition of coin from the banks 
 of the East to those of the West. It resulted from a 
 great contraction of the currency, and the contraction of 
 the currency resulted from an insufficient supply of the 
 precious metals to sustai-n the bank issues. 
 
 The study of the tabhi of money given a few pages 
 back, in connection with the history of the correspond- 
 ing times, reveals to the inquirer the causes of the state
 
 CRISES TO THE CLOSE OF THE REBELLION. 283 
 
 of affair? just related. It will be observed that on the 
 1st of January, 1835, the total paper circulation in the 
 United States was $121,032,292, and the amount of 
 coin in the banks was $59,<U3,904. The banks then 
 banked on coin. Their issues being based on coin, the 
 volume of paper money was increased or reduced, as a 
 rule, in proi)ortion to the increase or reduction of coin 
 in bank vaults and in the countr^^ Operating on thus 
 principle we tind the banks, in consequence of the im- 
 mense amount of coin in their vaults on January 1st, 
 1835, enlarging their issues until, on Januar}' , 183G, they 
 rose to the unprecedented sum of $103,376,460. On 
 the 1st of January, 1836, the specie in banks had been re- 
 duced to $48,437,582, and in consequence during 1836, 
 the bank issues were reduced so that on 1st of January, 
 1837, they stood at $160,633,858, and specie in banks 
 was but $40,553,789. This further reduction of specie 
 necessitated a further contraction of the currency dur- 
 ing the year 1837, so that it fell to $122,906,977 on the 
 1st of January, 1838. The cause of this drain of specie 
 and consequent contraction of the currency is visible in 
 the reports of exports and imports for 1835 and 1836. 
 Following is a table of exports and imports for the 
 years named, and the balances in favor of and against 
 
 the United States : Bal. in favor Bal. against 
 
 Year. Exports. Imports. of U. S. U.S. 
 
 1S24 S7r),;t8G,(!57 .S8U,.j49,007 $5,502,350 
 
 1825 99,535,3S8 1X5,340 075 §3,195 312 
 
 1826 77.595,322.... 84,974,477 7,379,155 
 
 1827 821324,8(17 70 484,008 2,840,759 
 
 1828 72,204,080. .. 88,.^09,814 16,255,188 
 
 1829 72.3r)8,071 74,492,527 2,133,856 
 
 1830 73.844.508 70,870,929 2,972,,588 . . . 
 
 1831 81,310 583 103,191124 21,880,541 
 
 1832 87,170,943 101,929,200 13,842,323 
 
 1833 90,140,433.... 108,118,311 17.978,378 
 
 1834 104,348 973 120,.n21,332 22 174,359 
 
 1835 121,093,577.... 149,895,749 28,202,172 
 
 1836 128,603,040.... 189,880,035 01,210,995
 
 284 MO^^:TARY history of the uxited states : 
 
 It will be seen that, from 1831 to 1835 inclusive, bal- 
 ances against the United States ranged from $13,842,- 
 323 to $28,202,172, these l)alances, being comparatively 
 small, were either carried over each vear to the next 
 or settled in coin. 
 
 It will be observed that in 1836 there existed aijamst 
 the United States the immense sum of $61,216,995 
 foreign balances. This necessitated large shipments 
 of coin abroad, reducing the stock in banks from $48,- 
 437,582 to $40,553, 789"on the 1st of Jan., 1837. At 
 the latter date the currency stood at $160,633,858, but 
 a rapid contraction set in which reduced it to only 
 $122,906,977 on the 1st of January, 1838. In the 
 spring of 1837 the effect of this rapid contraction 
 culminated in the great crisis just described. This 
 ruinous crisis which scourged the countrv for three 
 years, and left its blight upon it until 1849, has been 
 ascribed to various causes. 
 
 It has been held that the speculation in wild lands in 
 the Avest, from 1830 onward, caused it. That the veto 
 bill of the charter of the Bank of the United States, by 
 Jackson, and the removal of the deposits to State banks 
 did it. That the spirit of speculation and increase of 
 debt, caused by the inflation of the currency, did it. 
 But whoever studies history, and draws such conclu- 
 sions from it, studies to little purpose. That these 
 facts affected the country, no one doubts. But to say 
 that they were the cause of the universal ruin of 1837-39 
 is to dignify accidental, irritating circumstances, and 
 attrilnitc to them the character and power of general 
 and fundamental causes. 
 
 The speculation in wild lands in the west could not 
 have seriously affected any, except those who sustained
 
 CRISES TO THE CLOSE OF THE REBELLION. 285 
 
 loss on the Lands. The veto of the Bank of the 
 United States und tlie removal of the deposits, simply 
 transferred the money power from one bank to others : 
 it did not produce the crisis. If it be said that the 
 removal of the government deposits to the State banks 
 caused the latter to inflate, we answer, that this was 
 a circumstance of an accidental character, and the 
 same result would have followed an accumulation of 
 treasure in State bank vaults, obtained from any other 
 source. If it be said that inflation caused the crisis, 
 we answer that the cause existed in the kind, not in the 
 quantity of the paper money. The inflation niflated 
 €0171 values, because the paper was redeemable in 'coin. 
 This inflation of coin values induced large imports for 
 profit, producing a foreign balance of $G1,000,000 
 against the United States in 183(). This, in turn, 
 forced a large amount of coin out of the country to 
 pay it, and this demand for, and drain of, coin depleted 
 bank reserves, depreciated their notes, necessitated a 
 rapid contraction of the currency, producing rapidly 
 falling prices and a panic and universal distress. 
 
 It has been said, that the spirit of speculation and 
 increase of indebtedness, produced by inflation, caused 
 the crisis. Such has been the broad assertion and the 
 cause assigned for all crises, and is the constant staple 
 of a certain class of thinkers. We answer that they take 
 it for granted that inilation caused both speculation 
 and an increase of indebtedness. But if such were 
 true, if there had been no contraction, the disasters 
 would have been confined to those who lost on specu- 
 lation, and those who went in debt beyond their al)ility 
 to pay. There would have been no universal fall in 
 prices, no suffering of laborers, no general stagnation
 
 28 G MONETARY HISTORY OF THE UNITED STATES.* 
 
 of business, no universal distress, disaster and gloom, 
 such as made the heavens black, and swept the country 
 with commercial and financial ruin. 
 
 There is more reason for attriljutino; the crisis to the 
 jrreat balances of trade against the United States in 
 1835-36.* That large foreign balance against the U. S. 
 produced a drain of coin from the country, and greatly 
 reduced the bank reserves. This necessitated a reduc- 
 tion of their issues by the banks, because they were 
 banking on coin. But this Avas only an accidental 
 cause. If the banks had had a surplus of reserves, 
 the balance of trade against the United States would 
 not have caused th.6 contraction, and the country would 
 have been spared the universal suffering of such a 
 crisis. Any other circumstance which might have 
 caused a reduction of the bank reserves would have 
 produced the same effect that was produced by the 
 balance of trade against the country. 
 
 Paper money was at a discount, and as always is the 
 case, under the circumstance, coin almost ceased to 
 circulate, and found its way to its hiding places. This 
 being the case, the paper constituted the circulating 
 medium, and it amounted to about $10 per capita. 
 The most ardent advocate of resumption will not assert 
 that that was more money than the country needed. 
 The crisis, then, was not owing to the amount of money 
 — ^to too much money. 
 
 The fundamental cause of the crisis of 1837-39 rested 
 
 * This balance was produced, as has been shown, not by the 
 quantity but by the kind of paper. Such must always be the effect 
 of inflation of redeemable bank paper, because it produces an infla- 
 tion of coin prices, being redeemable in coin. Such is never, cannot 
 be the effect of an inflation of irredeemable paper, because inflati(»ns 
 of the latter only inflate the paper prices, not coin prices, hence, it 
 creates no inducements to import goods.
 
 CRISES TO THE CLOSE OF TUE KEBELLION. 287 
 
 in the financial system of that time. The nature of 
 the banking system was the funuamental cause, and 
 the drain of coin from the country the accidental or 
 immediate cause. That sj'stem, or any other which 
 makes bank notes redeemable in coin on presentation, 
 induces an inflation of the currency when bank re- 
 serves or prospects of bank reserves are favorable, and 
 necessitates a contraction of the currencv when bank 
 reserves are reduced or when the prospects for ample 
 reserves are adverse. These characteristics of the sys- 
 tem subjected the currency to frequent, various and 
 sudden nmtations, induced by foreign balances or any 
 circumstance causing an outflow of coin. And the con- 
 traction of the currency drjing up the fountains of 
 trade, cutting off the means of paying obligations and 
 crippling credit, brought down prices of all property, 
 reduced wages, diminished demand for labor, ruined 
 debtors, and distracted the country with the universal 
 cry of hard times and suffering. This was the cause 
 of the crisis of 1837. Had the $163,000,000 of paper 
 currencv out in 1835 been leo-al tender, and its volume 
 remained undiminished, the crisis could not have come. 
 There was another remote cause which operated on 
 the financial and commercial affairs of the United 
 States between 1837 and 1849. This was the crisis 
 that occurred in England, and the panic in Belgium 
 and France. These, reducins; values and increasinir the 
 general demand for gold, operated unfavorably upon 
 both the commerce and finances of America. With 
 varying degrees of intensity and occasional symptoms 
 of returning prosperity, the blighting effects of the 
 crisis of 1837-39 continued for several years, followed 
 by another in 1847, the effects of which continued un-
 
 288 MONETARY HISTORY OF THE UNITED STATES : 
 
 til 1849. The crisis of 1857 resulted from causes sim- 
 ilar to those of 1837. On the 1st day of January, 
 1857, the total bank paper in circulation was $214,- 
 799,000, and coin in banks $59,272,000. This was an 
 undue issue of paper in proportion to the coin reserves, 
 but it was not more money than the country needed. 
 Over-issues necessitated, at some time or other, a draw- 
 ing in of bank notes. This process was resorted to in 
 that year. The contraction of the currency was so 
 great in 1857, that, by the first of January, 1858, it was 
 reduced to $155,208,000 from $214,769,000 on the 
 same date of the preceding year. Such a destruction 
 of the means of conducting business and paying debts 
 produced a heavy fall of prices, and disastrous effects 
 amonir the commercial and business classes of the 
 country. This crisis was not caused by too much 
 paper money for the uses of the country. It was 
 caused by the increased imports for the year ending 
 June 30th, 1857, amounting to $38,000,000 more than 
 for the preceding year. This necessitated large ship- 
 ments of coin abroad, caused runs on the banks, a 
 heavy reduction of the volume of money, and the crisis. 
 These experiences will not fail to excite in the dullest 
 brain a sense of danger attending any financial system 
 based on the precious metals. Gold and silver are the 
 world's money. They are constantly flowing in and 
 out of all countries, but in very irregular volume. 
 Their volume and value in any nation are subject to 
 quick and material changes, effected by crises, resump- 
 tion of specie payments, war, or great prosperity in 
 any other powerful nation with which the foi-mcr has 
 commercial relations. Thus, a crisis in Il^ngland affects 
 the world. A crisis in France, German v, or America
 
 CRISES TO THE CLOSE OF THE REBELLION. 28& 
 
 affects each other and England. It appears unwise to 
 the writer for any nation to adopt a system of finance 
 which is subject to disaster from the extraneous causes 
 and circumstances named. Any paper currency based 
 on or redeemable in coin is subject to these evils. 
 
 The Secretary of the United States Treasury, in his 
 report of December 7th, 1874, says : " The quality of 
 a stability in money attaches only to coin." This idea 
 has been the base upon which has rested English and 
 American financiering for nearly a century. It is also 
 the great error which has distressed these countries 
 with frequent and dreadful financial crises. It is not 
 true : coin is not stable, either in value or volume. 
 This is too well known by every observer to need con- 
 firmation. 
 
 The discovery of gold in California and Aus- 
 tralia reduced its value from 20 to 50 per cent. Its 
 volume has experienced changes equally great. Look 
 at the changing volume of coin in England, as reported 
 in the prccetling pages. Consider the reports of the 
 Mint Dire(!tor, who says the coin in the United States 
 in 1874 was $166,000,000, and that it was $242,000,000 
 in 1877. Consider the fluctuations of the values of 
 gold and silver with reference to each other : they have 
 range from 1 to UtoV in A.D. 1543 to about 1 to 16xVff 
 in 1877. Remember that banks, when banking on coin, 
 issue about half to two-thirds as much paper as there 
 is coin in the country, and from two to four, and some- 
 times ten, times as much as they have coin in their 
 vaults. If in such case the coin is doubled, the paper 
 issues will about double, producing inflation. If, on 
 the other hand, the coin should be reduced one-half, 
 volume of paper money will b§ reduced one-half.
 
 290 MONETARY HISTORY OF THE UNITED STATES . 
 
 Fluctuations, sudden and great, in the volume, and 
 consequently in the value or purchasing power of mon- 
 ey, are the great evils attending a paper money redeem- 
 able in coin.
 
 CHAPTER XIX. 
 
 MONETARY HISTORY OF THE UNITED STATES : 
 THE PRESENT CRISIS. 
 
 The watch fires of the armies had hardly died out, 
 the smoke of battles had scarcely disperse^, before the 
 government began to tinker with the currency. Not 
 content with the devastations of war and the desolation 
 of battles, they were intent on experimenting upon the 
 nation's money. Either ignorantly or wickedly they 
 set in motion a force more destructive of the commer- 
 cial wealth of the nation than the deadly conflict of 
 battles or the exhausting powers of a long war. 
 
 Blinded by the fallacious logic and truculent to the 
 overshadowing powers of the bond-holders and bullion- 
 ists, which have so long controlled the financial measures 
 of Europe and America, the government of the United 
 States, immediately upon the close of the war, pro- 
 ceeded to destroy the money which had nerved the arm 
 of the nation and carried it successfully and triumph- 
 antly through one of the most gigantic wars of modern 
 times. 
 
 Disregarding the fundamental laws of national pros- 
 perity and determined to force financial policies totally 
 inconsistent with the conditions of the times, they in-
 
 292 MONETARY HISTORY OF THE UNITED STATES .* 
 
 augnratecl a rapid contraction of the currency in the 
 face of enormous indebtedness, to reduce values and 
 destroy the means of discharging obligations. Whether 
 it was ignorantly or wickedly done matters little to the 
 people now, because Avhether in the one or the other 
 sjDirit, the same result has followed : a destruction of 
 wealth and an accumulation of misery and WTctchedness 
 unsurpassed even during the war period. Measures 
 were iuausfurated for the fundinir of the floatins: debt 
 of the United States. Within three years after the 
 close of the war a thousand millions of the nation's 
 money were destroyed, and interest-bearing bonds sub- 
 stituted instead thereof to oppress the people and eat 
 up their substance for years. Credit made an effort to 
 fill the o-reat void^made bv the retirement of so much 
 money, and succeeded in a wonderful degree ; but the 
 unprecedented indebtedness thereby created only aggra- 
 vated the evil when the crisis came. It culminated in 
 1873 in a panic which threatened, and would have 
 brouirht, o;eneral ruin throuirhout the nation but for 
 the virtue of the remainino; leijal tenders. The con- 
 traction of the currency has continued "vvith steady pur- 
 pose since 1866. The Resumption Act of 1875 was 
 but an auxiliary to fasten upon the country the des- 
 tructive policy of contraction, and the effects of the 
 crisis preceding. 
 
 The forces which produced the crisis of 1873 had 
 been operating from 1866. Although credits retarded 
 the fall of j)rices and sustained the business of the coun- 
 try with unexampled strength after the contraction of 
 the currency set in, yet the tendency of prices was con- 
 stantly downward all the time, and business classes, 
 bankers, merchants, manufacturers, and traders, either
 
 THE PRESENT CRISIS. 293 
 
 contracted debts to meet losses and obligations falling 
 due or curtailed their business. Thus two forces were 
 constantly gathering destructive power — falling markets 
 and increased debts. The decline of prices was not 
 confined to special articles. It was general. With 
 such poAvers acting it was only a question of time when 
 a crisis would be reached. It needed but some disturb- 
 ins: cause. That cause was the enormous balances of 
 trade occurrinji as-ainst the United States in 1872 and 
 1873. Notwithstanding the great fall of prices in the 
 U. S. they w^ere yet higher here in 1872 and the first 
 part of 1873 than in Europe. That is to say, the coin 
 values of merchandise were higher here than in Europe. 
 The near approach of our paper to coin value in 1872 
 and '73, instead of indicating future prosperity, pointed 
 to a coming crisis, because, while our paper prices^ 
 sustained by credit, were much higher than in Europe, 
 the coin premium was not correspondingly high. This 
 induced large imports for profit, resulting in great for- 
 eio;n balances a2:ainst the U. S., much of which had to 
 be paid in coin. Coin being very scarce, immense of- 
 ferings of merchandise, stocks, corporation bonds and 
 securities for sale to raise coin, precipitated the values 
 of these things, already much reduced by the contrac- 
 tion of the currency, down to ruinous prices. Thence, 
 the panic, immense losses, bankruptcies, stagnation of 
 business, and the setting in of permanent hard times. 
 That crisis did not bring swift and general destruc- 
 tion upon debtors and business ; but it, with the aid of 
 the resumption act passed in 1875, brought a slow but 
 steadily increasing stringency in money matters, de- 
 cline of business, shrinkage of values, reduction of 
 wages, increase of want and destitution, which culmin-
 
 294 MONETARY HISTORY OF THE UNITED STATES : 
 
 ated in 1877 in the most appalling and threatening up- 
 rising of the "working classes which ever startled this 
 nation. 
 
 It is claimed by some that business is reviving. Such 
 is not the case. Year by year it decreases in the ag- 
 gregate. 
 
 Following IS a table of the business of the New York 
 Clearing House, from 1869 to 1877, taken from the' 
 reports of the Comptroller of the Currency for those 
 years : 
 
 1869 ... . $37*407,028,987 1874 $20,850,681 ,963 
 
 1S70 27,804,539,406 1875 23,(J42,57ti,858 
 
 1871 ... 29 300,98(1,682 1876 21,597,274 247 
 
 1872 32,636,997,404 1877 20,876,555,937 
 
 1873.... 33,972 773,943 
 
 We estimate the business of New York, as shown by 
 the clearings, at one-lifth of the entire business of the 
 country. The clearings reached the highest point in 
 1869, when they were $37,407,028,987. In 1877 they 
 were $20,866,555,937— less by nearly $17,000,000,000 
 than in 1869. This shows a decrease of the aggresrate 
 business of the country for 1877 of $85,000,000,000 
 below that of 1869 — a decline of 85 per cent. This is 
 not only so regarding the business of these years, but 
 the decline has also been constant from 1875, as will 
 be seen in the table. The clearings for 1877 are about 
 $700,000,000 below those of 1876, $2,200,000,000 be- 
 low those of 1875. 
 
 To give a detailed account of the disasters produced 
 by the contraction of the currency, the cheapening 
 system, since 18(56, would be beyond the ability of the 
 writer. It is not needed, for all people have seen or 
 felt its terrible effects. Instead, we give reports from 
 all classes of men frorn different sections of the Union, 
 as found ni {lublic speeches, newspapers, books and
 
 THE PRESENT CRISIS. 295 
 
 pamphlets. The Hon. "Win. D. Kelley, in a speech 
 delivered in the Academy of Music, Philadeli)hia, Jan. 
 15th, 187(), said: 
 
 " In 1S()5 and ISGfi, every man in Araericn r'.io liad the skill and 
 the will to labor could earn wages to support his family and lay 
 something by. All industries were qu:ck and active. Production 
 ran on. The Ameiican people waked each new morning to feel that 
 there were great duties before them, that there were mines to be 
 opened, fnrges and furnaces to be erected to work the iron, the cop- 
 per, the silver, antl the gold of our mines New houses were to be 
 built. ISkill, energy, .-cience, and gtnms were taxed to quicken and 
 cheapen productive processes. Our wealth grew as it or that of 
 any other people, had never grown. We were moving onward when 
 one Hugh McCnlloch tap|)ed a great artery and let nearly all the 
 blood fl-jw from the body politic. Diseased, paralyzed, shrinking 
 from day to day, what American ha.s the energy to engage in devel- 
 oping a new mine? Pennsylvauians, who of you are ready to con- 
 struct a ni-w forire or furnace? Where are the factories building to- 
 dav? Your laborers — moody, sulltn and in want - are beggmg the 
 poor privilege of earning a day's food by an honest day's labor! 
 Tlieir homes are being si ripped of everything ihey cherish. * * 
 Courage gone hope gone, despair crusiied him to the earth, and 
 destroyed all the pride that made the American mechanic the boast 
 and nouor ot his country. Many a man to-day, loiig;ng for honest 
 work biit powerless to obtain it, creeps and crawls from town to 
 town, fot)isore, ragged, dusty, to beg from strangers rather than 
 from those wiio know him and will remember it — to be denounced 
 as a tramp,' and commended to the custody of the police * * 
 
 " Widle the government has withdrawn C(J per cent, of our money, 
 it has so destroyed confidence that those who own money depost it 
 as dead capital in the treasury of the United '■tates, or in the vaults 
 of the banks; they will not lend or use it The vaults of the banks 
 at the gieat money ci utres and the treasury of the United States are 
 gorged with that winch should be money — was issued as money — 
 and would be money if it were circulating; but which is in fact dead 
 capital in the lorm of money. Therefore, all exchanges of hibor or 
 comm<.)dities not required by the exigencies of life are suspended." 
 
 Extract from a speech of Senator Beck, of Ken- 
 tucky : 
 
 "The country has been brought by law to the point where all 
 debts of ttie general government, of the states, of the municipalities, 
 of the railro-id and other corporations, as well as of private individ- 
 uals, have to be paid in gold alone, or its equivalent, on and after 
 the first day of January. 1879, about seventeen months from this 
 date. * * We have not got, and cannot possibly obtain be- 
 fore that date, $'^00,000,0' in gold * * Forced resumption 
 now fastened upon us is, under such circumstances, universal bank- 
 ruptcy; the number and magnitude of failures of our businessmen 
 are fearful to cont'inplate, and we are daily going from bad to 
 worse. The federal and state governments, the banks and other
 
 296 MONETARY HISTORY OF THE UNITED STATES 
 
 corporations, are all compelled to contract their loans and their cir- 
 culation in order to meet what tliey have outstanding in gold, which 
 they must of course make the smallest amount possible. No pru- 
 dent man dare borrow money now to invest in any business, as it is 
 obvious that he cannot hope to realize enough from the sale of any 
 product of industry hereafter to repay the money he borrows and 
 its interest in gold. A lender may be willing to lend $10,000, taking 
 a mortgage on a farm for $20,000, in the hope of buying it in for the 
 $10,000 loaned; but the owner of such a farm, no matter how much 
 he wants the money, dare not borrow. Yet we are told money is 
 abundant! Certainly, because safe borrowers can.iot be found. 
 Manufacturing establishments, rolling mills, industries all over the 
 land, which demnnd vast sums of money, a.-e closed, and their hands 
 are tramps or strikers, because there is not only no prospect of pro- 
 fit, but a certainty of absolute ruin by a c- .ntinuance of the business. 
 Yet the bondholders and other leeches who are demanding gold, and 
 gold only, so that they can buy property at their own prices, are 
 continuing the cry that money is cheap and abundant. Does any 
 gentleman here (unless he is a banker or bondholder) know now 
 where, or from whom, he can obtain gold to pay his debts or meet 
 his liabilities? The government pays gold only to the bandholder; 
 from him only can it be obtained, at his own rates, by those who 
 are compelled to have it." 
 
 Extracts from an open letter from Peter Cooper to 
 
 President Hayes, after the strikes of 1877 : 
 
 "Although I have but lately addressed you an open letter on the 
 sad state of the industrial and financial conditions of our common 
 country, and the causes that have brought it about, yet the events 
 that have since transpired, while they have given additional empha- 
 sis to that appeal, justify me in once more addressing you on the 
 same subject. 
 
 "Surely the peaceful expostulations and complaints of so many 
 thousands of your fellow-citizens, going up from every part of this 
 distressed country, not to speak of the violence and lawlessness 
 which the distress has occasioned, not only appeal to your humani- 
 ty and patriotism, but call for the most earnest and instant action 
 on the part of the government of which you are the Chief Executive. 
 
 "More than 200,000 men, within the last few weeks, have joined 
 in 'strikes' on the various railroad lines, the workshops, and the 
 mines of the country, on account of further reduction in their 
 wages, already reduced to the living point. That some of these 
 strikes have been attended with lawless and unjustifiable violence 
 only shows the intensity of the evils complained of, and the despair 
 of the sufferers. For four years past, since the 'panic of 1873,* 
 millions of men and women, in this hitherto rich and prosperous 
 country, have been thrown out of employment, or, livino: on precar- 
 ious and inadequate wages, have felt embittered with a lot in which 
 neither economy nor industry, nor a cheerful willingness to work 
 hard, can bring any alleviation. 
 
 "Is it to be wondered at that enforced idleness has made tramps 
 of so many of our laboring population, or induced them to join the 
 criminal and dangerous classes?
 
 THE PRESENT CRISIS. 097 
 
 "During the same period, immisration into this country of the 
 hardy and industrious of all nations, who have hitlierto built up our 
 country, has, in a ^reat measure, stopped, while thousands of arti- 
 sans and mechanics, whom a prosperous couutry cannot spare, are 
 emiscratinir to other countries. Our manufactories are, many of 
 them, closed, or runniiii; at a loss, or sriviiis starvation prices to 
 their operatives. Our merchants are demaudinf: a reduction of their 
 rents, dischariiinEf many of their employees, and such as are "in 
 debt are fast goinir into bankruptcy. The mining and railroad in- 
 terests of the country, on wliich the income and the employment of 
 so many thousands depend, are fast succumbing; to the irener.d fail- 
 tire in the tinanres of the country, so that their stocks have become 
 depreciated or worthless, and their employees discharged or muti- 
 nous on account of reduced wages. Real Estate has depreciated 
 to less tlian half of what it would have brought four years ago; 
 much of it cannot be s dd for any price, and mortgages of one-quar- 
 ter its value, if foreclosed, swallow up the whole. The thriving 
 and enterprising firmer of the West, especially, feels this lise in 
 the value of money, as compared with hibor or property. Wiih the 
 hardy toil of years, he has opened and improved his farm, and the 
 comparatively small loan, which laid but a light weight on the re- 
 sources of his land in prosperous times and with a sufficiency of 
 money, is now threatening to swallow up the labor of his life! 
 Even the banks and the loaning institutions, not being able to invest 
 their money on 'good securities,' are embarrassed on both sides — 
 the failure of their debtors, that throws so many of the securities 
 on thi-ir hands, anrl makes bonds and mortgages a 'glut in the 
 market,' and the difficulty of making any new loans or investments 
 — so that money 'goes a begging' at one and a half and' two per 
 cent. 
 
 * During the last ten years thousands of millions of money have 
 been swallowed m government and railroad bonds and other secur- 
 ities, and in importations which, till lately, have far exceeded our 
 exportations. It is a fact on record in the books of the United 
 States Treasury, and by such authorities as Spaulding in his 'His- 
 tory of the Currency,' Mr Maynard, chairman of the committee on 
 banking and currency in Congress, and Spinner, Assistant Secretary 
 of the Treasury, that this country had, up to the year 18G.5, issued, 
 in different forms of currenc}' and treasury notes, current as n.ouey 
 among the people, S2,l'.t2, 305,527! This vast sum had, on the first 
 of November, 1873, shrunk to §(531,488,076 (see Congressional liecord, 
 March 31, 1874.)" 
 
 From a letter of Sydna Meyers, a banker and writer 
 of ability, of Chicago, III. : 
 
 " Bounteous nature has lavished upon this land resources of wealth 
 bej-oud all others. Her soil is fertile, her mines are rich and not 
 yet fully d veloped, her timbers are varied and abundant, her 
 rivers a:e navigable and furnish highways for commerce through 
 thousands of miles of fertile regions, tiie extent of her railways 
 exceeds that of any other nation, her climate is salubrious, her peo- 
 ple industrious, and the material progress of the last century is only
 
 S)0/? MONETARY HISTOEY OF THE UNITED STATES .* 
 
 an earnest of her capabilities. Witli all these advantages, industry 
 is paralyzed and the people are sufferiau; distress. 
 
 •'Tile depreciation of the greenback by the unwise mutilation of 
 the legal tender power, and the abrogation of its convertibility into 
 interesL-bearing certihcates, has been the main cause of all our 
 trouble. It was this caused the depreciation of the greenback — it 
 was the dei)reciation which led to the unwise policy of arbitrarily 
 contracting the currency, as it was said, 'to raise its value to gold.' 
 This policy has been a complete failure, for, after a contraction of 
 $G8G,000,0b0 by Secretary McCulloch in two years, 1866-67, g Id was 
 higher than it was before contraction began. And yet this policy is 
 persistently going on. We are burning greenbaclvS, the best circu- 
 lating medium, and substituting long-time bonds — adding to the 
 interest bearing debt— bankrupting the country, and for what? To 
 return to a system that has repeatedly failed and must ever fad. 
 
 "The contraction of tlie currency has paralyzed industries, de- 
 preciated the value of every kind of property to the extent of thous- 
 ands of millions of dollars. It has increased the annual number of 
 bankrupts from 530 in 18G5 to [1,002 in 1876— has deprived 2,000,000 
 persons of employment, and spread a pall of gloom over the whole 
 country, which is a sure forerunner of ciimc and turbulence." 
 
 Relating to the strike of 1877, the New York Sun 
 said : 
 
 " When the five-twenty bonds were first issued, no condition was 
 attached to them requiring payment in coin, except as to the inter- 
 est. Tlie debates and voles prove incontestably that there was 
 no obligation to redeem, except in legal currency, and Mr. Sherman, 
 now Secretary of the Treasury, was c nspicuous in asserting that 
 fact at the time, and in opposition to an amendment to redeem in 
 gold. The bondholders were largely represented in both Housi'S of 
 Congress, and the outsiders were not idle. A great lobby was or- 
 ganized, and in 1869 these bonds were made payable in gold. By 
 this legislation the bondholders profited to the extent of several 
 hundred millions, and the taxpayers were burdened proportionately. 
 
 " Most of the legislation for the banks was manipulated by a com- 
 mittee of which the chairman was a shrewd bank president, and 
 others were bank directors. Those iu-titutions, under fostering 
 charters and friendly protection at Washington, grew rapidly into 
 wealth, and many of them paid fabulous dividends before the crash 
 came. After seven years of fictitious success, the bubble burst by 
 the bankruptcy of one of the pillars of the vicious system, and in 
 spite of the illegal efforts of the tlien Secretary of the Treasury to 
 prevent an inevitable catastrophe. The ruin and misery inflicted by 
 the collapse of ls73, and by its consequences since tiien, cann..>t be 
 measured in money Of all the sufferers, tlie laboring men and 
 their fanulies have had most to endure, not only in the reduction of 
 wages, but also in the increase of tlieir burdens — for it is not the 
 ricii class, by any means, who p.ay the bulk of the taxes. They are 
 the favored few, who do not feel the turn of the screw which makes 
 poverty shriek in agony. 
 
 •It is not to be supposed that the workingmen, laborers and 
 others were indifferent spectators to these events. They saw great
 
 THE PRESENT CRISIS. 299 
 
 corporations and rings combining to increase their wealth and they 
 combined also for their interests. ♦ * * -yy-Q must de- 
 
 plore the sad scenes and the awful events of the past week ; but cer- 
 tainly no reflecting and candid man, who recalls the recent past and 
 observes the actual present, can entirely wonder at them." 
 
 Mr. Smith, of Georgia, in Congress, June 14tli. 1876 
 
 said : *> 
 
 "A casual survey of the condition of the people and government 
 of the United States does not produce the most encouraging impres- 
 sions. The cry for relief to Congress comes from every suction of 
 this great country — from every industry, and from every grade of hu- 
 man life. The distress is paralyzing the manufacturer, the merch- 
 ant, the mechanic, the farmer, and the laborer; and so far from 
 touching the bottom of this linaucial quicksand and re-ascending, it 
 seems as if we were sinking deeper and deeper, and our condition 
 becoming gradually worse and worse. ***** 
 
 "And why is tiiere a clamor rising from the mouths of the millions 
 — deep-toned — admonishing the country that there is something ti- 
 naiicially, criminally wrong in the administration of the monetary 
 atfairs of this country? 
 
 " Rfpreseiitatives, you have only heard the crepitation of the vol- 
 cano; soon you will hear the explosion of the crater unless there is 
 relief. And it is wise to give that relief before the lava is thrown 
 higli nnd far over hill and plain iu scorching, consuming tires upon 
 the autliors of the people's wrongs." 
 
 The N. Y. Telegram, of July 9th, 1877, pul)lishcd 
 
 the foUowinij in reference to Brooklyn workinojnien : 
 
 "The summer of 1877 thus far bids fair to rank second to none 
 in recruiting the great army of unemployed laborers, both skilled 
 and iinskilk'd. Cleanly, pooi'-looking men stand on the street corn- 
 ers looking wistfully up and down the block for the si:zn of ' a job. ' 
 And here and there, should an odd building be commenced, the appli- 
 cants for work cluster in crowds. The action of the Commissioners 
 of Board of City Works yesterday, in discharging a large number of 
 laborers who were engaged in tilling up sunken lots, has led to severe 
 criticism, not only among the men who were affected by the action, 
 but also among matiy taxpayers, who recognize the propriety of giv- 
 ing work to the i)oor laborers in tlie summer mouths, in order that 
 they niiiy l)e enabled to save a liltle money and make provision of 
 some description for their families for the winter. The City Hall 
 Park is the scene of large assemblages of idle workmen daily, who 
 sit brneath the shade trees and look toward the great marl)le struc- 
 ture as though they were expecting momentarily a summons from 
 the municipal government olHcials to go to work. One of these men 
 remarked to his companions to-day : -The politicians nuike well of 
 us, any how. They get our votes, and after that we may go to the 
 poor-house or to prison. In winter ihey tell us we shall have work 
 when snow disappears — when the spring comes. In April they tell 
 us the money is out, and when at last we get to work they discharge 
 us, telling us taxes are too high and all public works must stop. 
 So here we ai'e, and the politicians are all right.' "
 
 300 MOXETARY HISTORY OF THE UNITED STATES : 
 
 True Citizen, of August, 1877, on the tendency to 
 concentration of property in this country, as in Eng- 
 land, resulting from bad financial policy : 
 
 " CONCEXTRATION OF PROPERTY. 
 
 "This journal has, with uuswerving persistency, for many years 
 patiently endeavored to impress upon the citizens of this republic 
 the re^^ults which would surely follow from class legislation as con- 
 trasted with careful and conscientious attention to the rights of all. 
 In exemplification of this, among other illustrations, we have refer- 
 red to the experience of the Repubic of Venice, where the buying 
 and debt-paying power of its full legal tender paper money was for 
 centuries largely greater than that of specie, which had been demon- 
 etized. In fact, the diflereuce was at one time as great as thirty per 
 cent against specie, when the government interposed and limited 
 the ditlerence to twenty per cent. In other words, they made gold 
 and silver legal tender at eighty cents on the dollar. 
 
 "vve have repeatedly compared the more recent practical working 
 of the French contrasted with the English and American schools of 
 political economists, but have done so mostly- to show the eflect of 
 class legislation on the industries and contiuous employment of the 
 people. 
 
 "The object of this article is to show how surely, though slowly, 
 such special legislation stops the progress of civilization, and, by ab- 
 sorption of small estates, re-establishes the feudalism of tlie medi- 
 aeval barons which was fondly supposed to have been buried with 
 other debris of barbarism. 
 
 "Mr. Willies, iu a series of letters to the New York Herald, wrote 
 from Paris, September 21, 1871, as follows: 
 
 " 'In England, throiigh the centralizing influences of the laws of 
 primo'zeniiure and entails, which tie the laud to families and fasten 
 its descent from eldest son to eldest son, the entire surface, on which 
 so mauy meu depend for tiieir subsistence, is owned by tlie ridicu- 
 lously small number of thirty-tico thousand proprietors ; and the 
 number of these proprietors is annually decreasing, throi'gh laws 
 which load the transfer of land with so much expense that it has 
 ceased to become a marketable article. * * * As an evidence 
 of this, there were in England, a hundred years ago, two huudred 
 and fifty thousand proprietors, for the thirty-two thousand owners 
 of to-day. To quote from Mr. George Odger, who has recently pub- 
 lished an able article upon the Land Queston in the Contemporary 
 Hevieio of Loudon : 
 
 " 'A better notion of the growth of our land monopoly may be ob- 
 tained from the following: The Earl of Breadalbane can ride on 
 his own property lou miles from his own house in a single direction. 
 The Duke of Southerland owns the county of the same name; this 
 county reaches from sea to sea. The Duke of Richmond holds pos- 
 session of 340,000 acres at Gordon Castle and Goodwood; and the 
 Duke of Devonshire f)G,000 acres in the county of Derby alone. It 
 has been authoritatively stateil that less than IGO persons now own 
 oue-lialf of England and three-fourths of Scotland. The way in 
 which political power, so largely monopolized by landed proprie- 
 tors, has been used, may be gleaned from the fact that within the
 
 THE PRESENT CRISIS. ' 301 
 
 last two hnndred years, 7,000,000 acres of common lands have been 
 added to their estates — that is the estates of adjoining proprietors.' 
 
 'We are free to confess that upon the perusal of this letter, in- 
 cluding the author's inference, that we in in this country were fast 
 traveling in the same direction, at the time of publication, we felt 
 inclined to classify the writer with the large and increasing school 
 of Jeremiahs, and charitably ascribed its gloomy prophecies to a'bad 
 cold in the liead or an attack of dyspepsia; but the annexed extract 
 from the New York Tirnes gives the correspondence almost the dig- 
 nity of a prophecy : 
 
 " "It is very certain that American agriculture is on the eve of ser- 
 ious changes and of great improvements. This must be, for it can- 
 not go back and it cannot stay Avhere it is. The greatest intlustry 
 of the country cannot remain in an iinprofitable or unsatisfactoiy 
 condition, nor can it l'>ng remain without the use of adequate c;ipi- 
 tal to invigorate it and give it full scope. T!\ousands of persons 
 now idle look to it for employment, and if there were farms to rent 
 there would be plenty of tenants for them. Everything seems ripe 
 for the change. Half the farms in the country are reatty to be sold, 
 if buyers would appear: and hundreds that can now be bought for 
 less than their value 20 or 3u years ago need only some judicious 
 outlay to make them as productive as ever. Few farmers cm hope 
 to provide their sons with farms of their own, and there is no place 
 for these j'oung men in the overcrowded cities. But to stock a 
 rented farm is not so difficult a matter for a father intent on start- 
 ing a sou in life This would be easy to do if the faim could be 
 rented on a long and satisfactory lease. But before this can be 
 done the owner of the land must hold it as a i^ermanent investment, 
 and not as a property to be offered for sale to the first comer. When 
 farm land is so held by the owners, there will be some probability, 
 if not certainty, that it will be permanently improved, and then 
 such property will ])e eagerly sought for by tenants who will be able 
 and willing to rent it on long leases, and cultivaie it in a more pro- 
 ductive and profitable manner than farms are now worked. And 
 then will begin a new era in American agriculture, and one that 
 seems to be very det<irable.^ 
 
 ♦'Commenting on the foregoing bold proposition to establish on 
 this hemisphere something akin to the serfdom which has been vol- 
 untarily discarded by the Russian Czar, Henry C. Carey, in an open 
 letter to the President, says: 
 
 " 'Throughout Mr. Lincoln's administration the internal commerce 
 of the free States grew with wondei-ful rapiility, making such de- 
 mands for labor and its products, raw and manufactured, that far- 
 mers everywhere were enabled to free their property from the mort- 
 gages by which it had before been bound. Under the present system 
 the internal commerce, where not already dead, is dying, and with 
 each successive day there comes increased necessity lor forcing the 
 products of the soil on distant markets, with constantly increasing 
 competition for their sale, and as constant decline in their prices, as 
 a consequence of which the pressure of interest becomes daily more 
 severe, until at length the sherifl" performs his part by converting 
 the independent farmer of the Lincoln and greenback period into 
 that humble tenant of the more civilized hard money man so wel 
 described by the Usurer's Advocate of New York City.'
 
 302 MONETARY HISTORY OF THE UNITED STATES: 
 
 "Corroborative of the dismal picture drawn by the New York 
 Times, is the subjoined extract from the editorial correspondence of 
 the New Jersey Frca Press, dated Sussex County, New Jersey, July 
 7th: 
 
 " 'With all the apparent wealth and prosperity in and about this 
 region, we were pained to learn that some of the farmers have been 
 obliged, this Spring, to give chattel mortfjages on their stock, in order 
 to meet their interest and taxes, and that tlie occurrence was not au 
 uncommon one in the neigliborhood. Wlien such things can be. it 
 proves tliat complete exiiaustion is not far ahead, and unless tax- 
 payers can have their relief soon, a general caving in of farmers wUl 
 soon follow.' " 
 
 New York Herald, July 24th, 1877 : 
 
 "Ever since 1873 railroads have been going into bankruptcy, and 
 this is even now goiu;;- on at a rate which few people, exc.^pt those 
 interested in this kind of property, suspect. During the six months 
 ending the 1st of this mouth, foreclosure sales have been ordered of 
 fifteen roads, with a capital stock of over forty-seven millions, and 
 a debt of over eighty-five millions. During the same lime thirty-two 
 roads, representing nearly fifty millions of stock and over seventy- 
 five millions of debt, have been sold, and receivers havt^ been ap- 
 pointed for sixteen roads, with stock and debt amounting to over 
 one hundred and fifty millions." 
 
 From the Missouri Republican, August 27th, 1877 ; 
 
 " Municipal Debts. — A recently-prepared table, giving the com- 
 parative valuations and debts of thirty-seven cities in this country, 
 each with a population of over 40,000, for the years 1876 and 1866, 
 throws a good deal of light on the present hard times. The aggre- 
 gate valuations of these cities in 1866 were ^2,300,84:2,000; in 1876, 
 $4,008,580,981; their aggregate populations in 1866 were 2,671,."i54; 
 in 1876, 5,043,618; their aggregate debts in 1866 were f l."2,055 877; 
 in 1876, #436,608,119; and their aggregate taxes in 1866 were S42,- 
 523,574; in 1876, $79,333,777. The increase in debt for ten years 
 has been 187 per cent. ; increase in valuation, 74 per cent. ; increase 
 in taxation, 86 per cent.; increase in jiopulation, 88 per cent ; pro- 
 portion of debt per mpito $86.50. The exhibit for 130 cities is as 
 follows: Debts in 1866, $221,312,000; in 1876, $644,378,000; valua- 
 tion in 1866, $3,451,719 000; in 1876, $6,175,082,000; taxes in 1866, 
 $64,060,000; in 1876, $112,711,000; population in 1866, 4,919,000; in 
 1876, 8,576,010. Seven years of the decade here inferred to, that is 
 to say, from 1866 to 1873, inclusive, were regarded as a period of 
 great prosperity ; there was abundant employment for labor, enter- 
 prise was active, wages were good, all kinds of business were brisk, 
 prices were stiff and profits were large. And yet, this was not a 
 period of prosperity, as we now know ; what we took for prosperity 
 was a simulation; we weie increasing our indebtedness and taxes 
 faster than we wi-re increasing in wealth — and a very large propor- 
 tion of the mass of ti-ansactions that we called business was merely the 
 multiplication of debts. Since 1873, everything in the country in 
 the shape of property has shrunk in value, except debts and the 
 anoney they are payable in ; lands, houses, ships, steamboats, rail-
 
 THE PRESENT CRISIS. 303 
 
 roads, farm property, manufactories and labor have dwindled to half 
 the value they bore iu 18GG, but the debts remain the same." 
 
 Ex-Gov. Ilardiu suid 8tli Jauuary, 1878 : 
 
 •' Although the newspapers continually talk about times changing, 
 and the real e>tate ageuts insist that laud is going up, yet I can see 
 no change for the better. Everything seems dead ; all kinds of busi- 
 ness is stagnant; soniethin;r must be done at once to revive business 
 and awaken our business men to the importauco of enterprise." 
 
 New York Times oa miners : 
 
 " What shall be done to miiigate the miseries of the starving min- 
 ing population iu the distiict of which Scranton is the center? 
 There, as at Pittsburg and other places, a vicious Hscal system has. 
 brouglit together vast bod es of working people, who are now' 
 thi'owu helpless upi)u the world. The coal companies, great and 
 small, profited by the industrial inflation. They bought coal lands 
 at high prices. They opened mines, which, for a time yielded tlu-m 
 princely revenues. Tiiey divided large profits, added to their capi- 
 tal, and forced the developin.'ut of their properties. To carry on 
 their works, they brought together miners from Europe to an extent 
 far in excess of the le^iiiniaien'qiiirements of trade. They imported 
 them fn)m Wales, from the North of Eughiud from Ireland, tempting 
 them with promise of hitih wanes and lasting employment. Can it 
 be pretended that these corp >rations have no responsibility in these 
 premises?— that they may cut down wages to starvation point, or 
 suspend work altogether, without further care for those whom they 
 took thither with expectations that have not been fultilled? Moral 
 responsibility there certainly is, but that, unfortunately, does not 
 admit of practical application. It is not sullicieut to say that the 
 companies have been working at a loss. In the peculiar circum- 
 stances of the case, they owe m )re to their men than the stern eco- 
 nomic law exacts. Exac'Iywhat their obligation is, and how it 
 should be fulfilled, are que-ti(nis which in view of their great suffer- 
 ing cannot always remain unmswered The Old World no longer 
 faces alone the labor problem. It is here, and it presses for a solu- 
 tion. * ♦ * 
 
 " The plain, unvarnished tale supplied by our special correspon- 
 dent now among the Peiuisylvania miners cainiot be read with in- 
 tiifference by any just or humane man. We speak of 'hard times' 
 "When it becomes necessary to forego some luxury, to deny ourselves 
 some familiar jilea^ure, ami to reduce our general standard of ex- 
 penditure. We complain wh n pinched to keep up appearances, and 
 repine at the hardship which invades our comfort. In and around 
 the coal fluids of an adjoining State, however, are tens of thousands 
 of workinf) men, icho, xcith theirfamilles, are on the verge of starva- j 
 tion. A large proportion are unemployed ; ^/lose ^/iii /((/re irorA", are *■ 
 paid so scantily, that ichat thetf earn barely keeps soul and body togeth' 
 er The picture of squalor and wretchedness, of hunger and naked- 
 ness, is shocking enough to touch the hardest lieart. It is made more 
 painful by the fact that some of the companies add to the miseries 
 of their people by tlie enforcement of the truck system. There 
 may be reasons for suspending work iu some cases, and for reduc- 
 ing wages iu others, but the greed which prompts employers of labor
 
 304 MONETARY HISTORY OF THE UNITED STATES : 
 
 to squeeze out of it the beggarly pittance through the agency of 
 store-pay admits of no excuse. It is an infamy, which the law in 
 other countries has suppressed." 
 
 The utterances of Secretary Sherman, when he was 
 
 U. S. Senator, in 1869 : . 
 
 " The appreciation of the currency is a far more distressing opera- 
 tion than Senators suppose. Our own and other nations have gone 
 through tliat process before. * * * For eighteen years, 
 
 (previous to 1821) the notes of the Bank of England were practic- 
 ally a legal tender, and upon them, as upon our greenbacks, was 
 based a currency issued by the country banks. When tho war (with 
 Napoleon) was over, measures were slowly adopted for the appreci- 
 ation of the paper currency to the gold standard It is only neces- 
 sary to appeal to the histories of the time to show the disastrous ef- 
 fects. Small traders, debtors and laborers weie reduced to the 
 sorest distress. The loss to them was far greater than the actual 
 appreciation of the currency, /yr a/Z coHMe«ce a«d trust were lust. 
 The only compensation to Great Britain ivas the rapid fall in the rate 
 of interest, from the abundance of idle capital, and her ability to reduce 
 the rate of interest on her public debt within a short period to three per 
 cent. If Senators wish other examples of the severe process or pass- 
 ing from a depreciated currency to a currency convertible into gold, 
 let thein read the story of the times after the Revolution, and after 
 the war of 1812, and after the revulsion of 1837. all of which were 
 periods of transition from a depreciated to a convertible cuireucy. 
 
 *' It is not possible to take this voyage without the sorest distress. To' 
 every person except a capitalist out of debt, or a salaried officer or aa- 
 nuitant, it is a period of loss, danger, lassitude of trade, fall of wages, 
 suspension of enterprise, bankruptcy and disaster. To every railroad 
 it is an addition of one-third to the burden of its debt, and more than 
 that, deduction from the value of its stock. It means the ruin of all 
 dealers whose debts are twice their (business) capital, though one- 
 third less than their actual property. It means the fail of all agri- 
 cultural product ions without any great reduction of taxes. Wliat pru- 
 dent man would dare to build a house, a railroad, afactory ora barn, 
 with the certain fact before him that the greenbacks he puts into his 
 improvement will, in two years, be worth thirty-tive per ci nt, more 
 than his improvement is then worth? Why not hold his money for 
 two years until his building will cost him one-third less? When the 
 day comes, every man, as the sailor says, will be close rei fed; all 
 enterprise will be suspended; every bank will have contracted its 
 currency to the lowest limit, and the debtor, compelled to m> et in 
 coin a d bt contracted in currency, will find the coin honrded in the 
 Treasury, no representative of coin in circidatiim, his property 
 shrunk, not only to the extent of the ajipreciition of the currency, 
 but still more by the artificial scarcity made by the hoarders of gold. 
 To attempt this task by a surprise I'poii our people, by arresting 
 them in the midst of their lawful business and applying a new standard 
 of value to their propn-ty, loithout any reduction of their debts^ or giv- 
 ing them an opportunity to compound loith their creditors or to distri- 
 bute their losses, would be an act of folly without example in evil in 
 modern time! "
 
 TIIE PRESENT CRISIS. 305 
 
 "Onio Railroads. — In Ohio there are fifty railroads, eTclnsive 
 of the narrow-iiauge roads— eight of which did not paj- their ruuniug 
 expenses during the year 1875. Thirt»-eu paid no interest on tlieir 
 bonded indebtedness. Seven are in the hands of receivers. The 
 gross receipt of these roads for 187tJ amounted to S34 119,04".», while 
 the operatinii expenses were 824,404,505, leaving 89,714,484. Tlie 
 total cost of these roads, including all debts, was 8317,222,232 show- 
 ing tluit the net earninirs are a tntle over three per cent, of the in- 
 vested capital. The total bonded indebtedness of these roads is 
 ^100,000,000 all of which bear six per cent, interest or more, so 
 that the net earnings will not be sutticient to pay tlie interest on the 
 bonded debt and leaving nothing for the millions invested by stock- 
 holders, of which tliere are 1 7,000. Il this is tlie result, railroad in- 
 vestments in Oliio, the leading State in agricultural products, with 
 growing manufacturing enterprises and coal and iron in abundance, 
 what mu-t be the condition of railroad property in less populous 
 and favored States? " 
 
 " Hard Times for Railways. — Some facts are gathered by Chi- 
 cago liaihcaij Aije, regarding the foreclosure of mortgages on Ameri- 
 can railways durinsr the year just ended. It appears" that the actual 
 sales undi-r foreclosures cover 3,875 miles of road, with bonds and 
 debt of SlUt, 938, 7(10. and capital stock of 879 045,700. The capital 
 stock is practically rendered valueless by foreclosure, and mortgaires 
 later than the first generally go the same way, so that it is probable 
 that the proceedinus recited above involve a net loss of not less 
 than a hundred millions of dollars. In addiiion to this there have 
 been (>rd(.-red sold, but not yet brought to the hauinier, 2,388 miles 
 of road, \vi h 8128,833,400 of bonds'^and floating debt, and 8126,021,- 
 900 of c.ipital stock ; and in these cases the sales involve a loss of 
 rot less than 8150,000,000. In the preceding year sales were made 
 of 8,846 miles of road, with 8218 000,000 ofdvbt and capital, so 
 that ic is not unreasonable to set down the shrinkage of railroad 
 property involved in the cases of these two years at 8350,000,000. 
 The end is not yet but it is generally believed to be near, and the 
 10,000 miles or more of mad involved in the above statistics may, 
 as a rule, be rcirarded as reduced to 'hard pan,' and ready to do fair 
 wi>rk at reasonable profit for their present owners."— ..Veio York 
 Times. 
 
 " Decline of Raii.road E.vrxivgs.— The New York Financial 
 Chronicle gives a table showing the earnings of twent\'-two leading 
 railroads for the yt-ar 1877 (with the exception of the last week in 
 December). Their gross earnin<rs were 867,712, 196. For the pre- 
 ceding yvar they were 878,189,781. The decrease has been only 
 $477,585. All the roads referred to do not show an increase; the 
 incna.^e of those which have gaineil is $2,000,728; and the decrease 
 of tho.se that have lost is 82,478 313— leaving the net decrease 84 77,- 
 585. The roads that show an increase are those running west and 
 southwest Irom St. Louis. The increase in the earnings of the St. 
 Louis, Iron Mtiuntain and Southern was 8494,173; that of the Miss- 
 ouri r.:citic w.is 8139,730 : that of the Kansas Pacific was 8288,911 ; 
 that of the Denver and Rio Grnnde was 8311,433. The great trunk 
 lines leading from New York and Boston to the West show a decline. 
 The gross earnings of the New York Central were §26,579,085 for
 
 306 MONETARY HISTORY OF THE UNITED STATES: 
 
 1877, and $28,046,588 for 187G; those of the Lake Shore and Michi- 
 gan Southern were $13,214,434 for 1877, and $14,417,020 for 1876; 
 those of the Erie -were $14,708,887 for 1877, and $15,852,461 for 
 1876; those of the Boston and Albany were $6,762,147 la 1877, and 
 $7,074,758 in 1876." 
 
 Hon. Britton A. Hill, in his preface to Absolute Money y 
 
 page 9 , says : 
 
 'The financial prosperity of this country never was so general, and 
 commercial failure never touched so low a figure as during the years 
 1863-67, when the volume of our currency was at its higliest. Then 
 the effects of Secretary McCulloughs policy of contraction began 
 to be felt; and what has been the resuit? A gradual increase of 
 commercial failures at a rate simply frightful to contemplate, and a 
 general paralysis of every business enterprise which culminated in 
 the great crash of 1873. The building of railroads has been stopped, 
 our factories are clo>ed, our commerce is languishing, our laborers 
 are out of employment, and the tide of immigratiou fiom Europe 
 has been checked by the reports of our financial distresses; and the 
 reason? There is work ennuirh to be done, resources enough to be 
 developed, and not only enough, but rather too many for the instru- 
 ment wherewith to operate : Money. We want a large lever for 
 the work before us — a great amount of money wherewith to under- 
 take our enterprise again " 
 
 Hon. J. A. Dacus, AnnaU of the Great /Strike of 
 
 1877, savs : 
 
 "Republican government in this country has just been subjected to 
 a strain greater than any which our system has been before required 
 to sustain. It is true, that great armies were not organized to meet 
 in the shock of battle as in the civil war between tlie North and 
 South. Nor were powerful sections arrayed against each other. 
 But the phase assumed l)y the recent conflicts are far more threaten- 
 ing to social organization and political stability than was the terrible 
 contest waged between sections from 1861 to 1865. In that collis- 
 ion, the North represented the idea of tlie organic unity of the 
 several States of the Federal Government, tlie South the idea of 
 State Sovereignty; but both represented the principles of social or- 
 der, and contended for the reigu of law. But we have witnessed an 
 uprising of no mean magnitude, which represented nothing in com- 
 mon with the fundamental principles of republican institutions. 
 
 ' The history of the great strike of 1877 affords material for thought, 
 a basis for the most profound reflections 
 
 "The causes which produced the results, so startling to the friends 
 of liberal institutions, have not ceased to operate, and as a conse- 
 quence the records of tlie events conn.cted with the inception, pro- 
 gress and culmination of the disorders must prove to be an inter- 
 esiing^tudy to all thinking minds. The very foundations of American 
 socifty have been disturbed; the whole political structure has been 
 made to sway to antl fro, as if about to be overthrown. 
 
 "The sirength, tiie fearful power, which stopped the wheels of 
 commerce, closed the marts of trade, and threatened to engulf all 
 Wealth, institutions, social organization, everything, in the vortex
 
 THE PRESENT CRISIS. 307 
 
 of ruin, was not the offsprins; of a conspiracy, was not generated by 
 elaborate planuinj^, and did not resull from mature deliberation. 
 And in this very fact, tlie man of calm reflection discovers, not far 
 aliead, the rocks on which the ship of States is likely to be driven — 
 on which every hope of mankind may be wrecked. If it had been a 
 deliberately planned and concerted movement, if those enji;aged iu 
 it had exhibited evidence of organizaiioii, then its failure would have 
 given a better promise of enduring peace and order But the spon- 
 taneity of the movement shows the existence of a wide-spread dis- 
 content, a disposition to .subvert the existinij social order, to modify 
 or overturn the political institutions, under which such unfavorable 
 conditions were developed. Somewlieie there must be something 
 radically defective, either in the system or in the manner of its con- 
 trol. Such spontaneous demonstrations by l.-irsie masses of the 
 people, as have been witnessed in ttie United States in the year 
 1877, do not take place without a sufficient cause. To discover that 
 cause and take measures for its removal is one of the first and most 
 Important duties required of the patriotic citizen. 
 
 "Never before in this country— perhaps iu no other counti'y la 
 the world — has so vast a number of men taken part in riots and 
 strikes for increased wages. It was an impulsive, perhaps, an im- 
 prudent outburst, and certainly it was characterized by violence and 
 lawlessness, that cannot be palliated or excused. The supremacy 
 of the law is an essential condition of social order, the right to pri- 
 vate propertj', the right to personal security cannot be assurefl with- 
 out it. Social disorganization means political death. With the 
 reign of anarchy commence the miseries of the people without dis- 
 tinction of class. In the thi'oes of expiring societj', all alike become 
 victims. 
 
 "But social discords cannot take place in the midst of a prosper- 
 ous community. The alarming movements of the present year are 
 the logical results of the condition of society. They are but eviden- 
 ces of deep suHerings among a large class of the people of this coun- 
 try. Somewhere great wrongs have been committed, and society 
 must pay the pentlty for crimes The study of tlie natural causes 
 that govern the rate of wages, is a study of the causes tliat di.'-trib- 
 ute wealth to the mass of mankind. Capitalists cannot afford to 
 oppress laborers, because such oppression endangers their own se- 
 curity. 
 
 "But neither government nor social order can be maintained when 
 the majority of tiie people are homeless and hopeless. The poor 
 num's hopes are the rich man's protection. The condition of Mex- 
 ico may be cited as an illustration of the position here taken. A 
 country containing a population of upwards of nine millions of souls 
 Is owned by lehS than a luuulred thousand proprietors. What has 
 been the result of this ill-distribution of wealth? The answer is, 
 fifty years of anarchy. The poverty of the masses is fatal to the se- 
 curity of the wealthy proprietors " 
 
 The New York Sun, October, 1877 : 
 
 "City Real Estate — Some of our contemporaries have of late 
 painted the future of New York real estate in very rosy colors, but 
 the man who owns mortgaged property and is compelled to realize
 
 308 MONETARY HISTORY OF THE UNITED STATES 
 
 or go under, takes comparatively very little interest in the probable 
 prospective value of the property one, two, or three years hence. 
 
 "That real estate, as a general tiling, is now very firmly held, and, 
 except in the case of weak holders, not pressed for sale at going 
 rates, is universally admitted. Duriugthe past four years enor- 
 mous quantities of real property have been sold at foreclosure sales. 
 It has mostly gone into the bauds of mortgagees, at prices utterly 
 ruinous to the owner of the fee. Property so bought pays, if im- 
 proved, from ten to twelve per cent, net on the investment Where 
 unimproved, and situated in choice locations in the building dis- 
 trict, it can even now be sold at a handsome profit to speculative 
 builders, who are again in the market as buyers. 
 
 "The whole area from Sixty-fourth to Eighty-sixth street, between 
 Madison and S;,'Cond avenues, is being ripidiy covered with bicks 
 and morrar, and presents a scene of great activity. Capita. ists are 
 buying lots in this district from weak holders at from 33)^ to 59 per 
 cent, less than they cost six years ago, the owners having in the 
 meantime lost interest and paid taxes. In most cases, these buy- 
 ers sell immediately at a considerable advance to speculative build- 
 ers, making a building loan, which is paid in installments as tiie 
 building progresses. Those capitalists, backed by shn-wd lawyers, 
 who have of late turned their attention to this matter of buying lots 
 low for cash and reselling them with a loan, have found the business 
 more lucrative than any o her safe mode of investment or spec- 
 ulation. It is simply a way of investing money on first bond and 
 mortgage at seven per cent., with the additional profit gained on the 
 sale of the lots." 
 
 Hon. Mr. Haymand, of Indiana, said in Congress, 
 April 1st, 1876: 
 
 " The President of the Uuited States in his last mes«age has rec- 
 ommended Hhat the Secretary of the Treasury be authorized to redeem, 
 say, not to exceed $2,000,000 monthly of the legal tender notes,'' and 
 bills have been introduced in both Houses of Congress advocating 
 a similar policy with the view of hastening resumption; yet with a 
 contraction amounting practically to $2,000 000 per month, and 
 without the expenditure of a single dollar in gold, we chronicle the 
 result, namely, an increase of about 3 per cent, in the gold premium. 
 During this period our financial troubles have increased instead of 
 being diminished; trade and commerce have been in a more lan- 
 guishing condition than any time since the panic; the industrial and 
 mechanical pursuits of the country have been ptiralyzed; enterprise 
 and improvements have been suspended or discouraged; and thous- 
 ands and tens of thousands of people, dreading the legitimate con- 
 sequences of the policy inaugurated, are trembling on the brink of 
 bankruptcy. While contraction has been going on and our financial 
 troubles thickening, resumption, like the \V ill-o'-the wisp, has flitted 
 ahead only to delude, and we are as far from the realization of this 
 hope as we were a year ag >. 
 
 "By this policy we are not only piling up an enormous indebted- 
 ness, Mike Pelion upon Ossa,' to consume the vitality of the nation 
 and entail perpetual burdens upon the people, making them hewers 
 of wood and drawers of water to the moneyed aristocracy of the
 
 THE PRESENT CRISIS. 309 
 
 world, but, worse even than this, it leads to the assumption that 
 the legal tender currency of tliis country, the boasted money of the 
 realm, based upon the faith and credit of the nation, is a greater 
 evil tlian the interest-bearing indebtedness, which we now seek to 
 increase, and wiiich has already attained colossal proportions. 
 
 "We had a panic three years ago that swept over the land like a 
 pestilence, and yet before its shadow has passed over the horizon, 
 and coiitidence has been restcred, the whole country is again pre- 
 cipitated in worse confusion by a species of legislation that attempts 
 hastily and out of season to cramp and crush the business of the 
 country down to a specie basis." 
 
 From a speech of Hon. Britton A. Hill, reported in 
 
 the St. Louis Times, of November 13th, 1877 : 
 
 *• The pcop'e and their governments, municipal, State and Federal, 
 are rapidly drifting into bankruptcy and lawlessness, under the 
 fraudulent system of money contraction and specie resumption 
 adopted by Congress in 18(i9, 1870 and 1875, which is relentlessly re- 
 ducing our traders, manufacturers, mechanics and workiugmen to 
 distress and starvation. In the midst of peace, with abundant 
 harvests, overflowing granaries, and a foreign war, creating a strong 
 demand for all our supplies and products, tiie workingmen, mechan- 
 ics and tradesmen are crying for bread. Misery, poverty and want 
 in the midst of plenty appear everywhere, as I predicted would be 
 the case in 1869, 1873 and 1875, if the gold basis and the money con- 
 traction were to be forced upon the people by the bondholders. 
 The acts of Congress of 18(;9 and 1870, changing the greenback 
 bonds into gold bonds, and the subsequent acts for the destruction 
 and redemption of the people's greenbacks in gold, have brought 
 this present ruin upon the workingmen, traders'aud mechanics, and 
 even upon the farmers, in spite of their fair crops. 
 
 From a letter of Hon. J. A. Dacus, in the Missowi 
 
 Republican, November 17th, 1877 : 
 
 * Now let us consider some of the recent social developments 
 in our own country. Some forty years ago Thomas H. Benton, in 
 a speech in the United States Senate, declared that 'a republic does 
 not want landlords and tenants.' As yet hurtful as the existence of 
 such relations may be to the peace of society and the stability of 
 government, facts prove that the tendency in that direction is alarm- 
 ingly rapid. Statistics show that the increase of pauperism to the 
 ratio of the increase in population is as 78 t ) 45, hence the appear- 
 ance of that ubiquitous wanderer, the 'tramp.' He is here, there, 
 everywhere, in the city, in the country, wherever there are inhabit- 
 ants Now, why is he abroad? Where did he come from? What 
 caused him to come? Vv hy has he an existence at all? The coun- 
 try is not overpopulate, there are yet vast flelds to be opened and 
 tilled, there is yet much room for the erection of homes, and many 
 indu-tries to be developed. All these are undeniable facts. And 
 yet the proportion of people who have no homes is steadily, cer- 
 tainly growing larger. 
 
 '•To be without a home, and without the hope of acquiring one,
 
 310 MONETARY HISTORY OF THE UNITED STATES .* 
 
 is to be placed in a situation devoid of motives to eitVier labor or 
 exercise self-command. The laborer who possesses properly, 
 though he be unable to either read or write, possesses an educated 
 mind. He has forethought, caution and influence guiding every act- 
 ion ; he knows the value of r straint, an 1 is in the constant habitual 
 practice of it. The day laborer, who is n)t the owner of anything, 
 on the other hand, is almost always improvident; he is generally 
 content to live from hand to mouth It is no blind instinct that at- 
 taches the idea of respectaljility to the possession of property. It 
 gives the owner a locus stantli in society, generates a feeling of self- 
 respect, establishes a standard which c tuluces to and gives a claim 
 to outward respect. But, on the one hand, too large possessions 
 often create, out of self-respect, self-conceit and a disregard of the 
 happiness of others; it is the comparaiive poor who must feel for 
 and assist the poor, while a too minute subdivision of property 
 might lead to an equally lamentable ri^sult by fost^ ring the senti- 
 ment and developing selfish feelings from an opposite quarter. The 
 benefactions of 2.5,000 persons, each owning S2,000, fairly estimated 
 at $20 each, would Lj $500,000, a sum irreater than Vanderbiit ever 
 bestowed in any one year, thouirh repuluvi to be tne possessor of a 
 much larger amount than the ag::regate fortunes of the 25,000 men 
 in moderate circumstances. The millions acquired by Vanderbiit 
 during a life-time were equal to the aggregate fortunes acquired in 
 a life-time by no less than i/ur^;/ thousand lionest, industiious and 
 prudent laborers under our existing sy^um. * ♦ * 
 
 " The social problem forced upon the attention of the American 
 people by recent events cannot be solved wituout a consideration of 
 the causes which have produced he disease in our country Mere 
 expedients will not answer. Any plan calculated to lower the opin- 
 ions and lessen the self-respect of men arc ol)jectionable. * * * 
 
 *' It would be a fatal mistake to encourage men to become con- 
 tented with their lot; and it would be impossible to carry out even 
 so mild a plan as that suggested by Dr. Elior, without detracting 
 somewhat Irom the independence and manhood of some one who 
 might be forced by a necessity, produce 1 by misfortune, to become 
 a temporary slave in order to preserve Hie. That man who is once 
 forced to labor for a scanty support only, is not likely to gain in self- 
 respect, and may readily accept his fate and become a permanent 
 charge upon society. Men must have hope in lite to be good citi- 
 zens of a republic. Make labor hopeless and you make it danger- 
 ous. Place the unfortuntite wanderer under the direction of an 
 overseer backed by the authority of the government, and his in- 
 dividuality and manhood are at once d stro.ved * * * 
 
 " The collapse of credits in 1873 indiced — we will not say com- 
 pelled — the employers of laborers to attempt to maintain their own 
 revenues by curtailing the wau:es of em doyecs. This course caused 
 a shock to the whole labor s\ stem of the country, and great num- 
 bers of the working people, unaole to (lesc< nd at once to the stand- 
 ard which the redu^ lion in their income imposed, sought in other 
 fields of effort to retrieve their fortunes. They became tramps in 
 search of work. The general depression in all departments of in- 
 dustry caused a failure of their projects for improving their con- 
 dition hope expired, and many honest men have become wanderers — 
 and some that were honest before have become thieves."
 
 THE PRESENT CRISIS. 311 
 
 From a speech of the Hon. Thomas T. Crittenden, 
 in Congress, Nov. IGth, 1877: 
 
 "In tlie language of Edmund Burke: *It is to the property of 
 the citizen, and not to tlie d^'uiauds of the creditor of the state," that 
 tlic original faith of sock-ty is pjeilged. The claim of the citizen is 
 prior in time, paramount in title, superior in equity.' 
 
 "What has ])een the efl'ect of this resumption law upon the finan- 
 ces and business of the country? It was passed at a time when the 
 country was in disties-;, as a measure of relief. It was said by its 
 friends that it would not contract, but, under the free-coiuage and 
 free-banking sections, it would gradually increase the currency. 
 Has tliat been so? Let us see. On the 14th January. 1875, the date 
 of the passage of the resumption act, there were outstanding in legal 
 tender notes, ^382,000,000; in national bank notes, $!34y,8"J-i, 182 ; 
 total, $731,894,182. On the 3d November, 1877, there were out- 
 standing in legal tender notes, $354, 490, 992; of national bank notes, 
 $316,775,111; total, $(!71,266,103 ; being a reduction in legal tender 
 notes of $27,509,108; in national bank notes, $35,086,339; total, 
 $62,595,447. 
 
 "And this is not all the promised blessings of that law. Besides 
 the contractions above mentioned, others have followed in their 
 tracK. Nine millions of dollars of legal tenders have been held in 
 the Treasury Department with which to redeem the outstanding 
 fractional currency, supposed to be worn out or burned, which sum 
 of course is permanently retired, and $13 000,000 of legal tender 
 notes are also held in the Treasury Department for the consummation 
 of the withdrawal of national banknotes now in the process of re- 
 tirement; to which also add $22, 144,000 of fractional currency which 
 has been retired and lis place not tilled by the subsidiary silver coins 
 of fi ty, tw( nty-five, twenty, ten, and five cent pieces, making in the 
 aggregate, iu round numbers, $107,000,000 of absolute contraction, 
 and, too, at a time when money is in great demand. 
 
 ''Since the resumption law went into operation in 1875, this coun- 
 try, North, South, East, and West, has been blessed with the most 
 prolific crops, exporting annually over one hundred million bushels 
 of wheat alone. Europe has been more or less in a disturbed con- 
 dition, two of its grand powers actually engaged in armed hostility, 
 one of which b( ing the only formidable competitor that our country 
 has had in wheat in the markets of the world, our exports annually 
 exceed ng our imports by $200,000,000. And yet in the midst of all 
 this we are in the nndst of bankruptcy, sorrow, aiul maddening dis- 
 tress. Il is an anomaly that sets at defiance all theories of contrac- 
 tionists, all fine-spun ideas of these latter-day financial saints: 
 Millions of idle men, women, and children, in the presence of the 
 most ^lupendous crops of cereals, cotton, hay, and toba<-co that ever 
 loaded !ind graced any soil under the sun. With the enactment of 
 this resumption law and such crops, -these wise men of the East' 
 said peace and prosperity would abound. In the language of one of 
 old I say to them : 
 
 "Ye are forgers of lies, ye are all physicians of no value."
 
 312 MONETARY HISTORY OF THE UNITED STATES : 
 
 From a letter by an able writer in the St. Louis 
 Times, of October 20th, 1877 : 
 
 "The depreciation in the value of real estate throughout the Union is 
 Tiniversally conceded to have been not less than 30 per cent., which, 
 upon the census valuation of 1870, amounts to S3 000 000,000. 
 
 "The loss by the cessation of nearly all the industries of the coun- 
 try, and the shrinkage in value of stocks, bonds of railroads, and 
 other corporations, cannot accurately be ascertained ; but, including 
 all other personal property which has suffered diminution in value, 
 it has been estimated by experts at not less than $5,000,000,000. 
 
 "Bank, savings institutions, and insurance companies which have 
 heretofore stouil high in the public confidence have been compelled, 
 by reason of the enormous shrinkage in the values of all securities 
 and the disasters which have overtaken their customers, to suspend 
 aud go into liquidation, and in many cases into bankruptcy, 
 
 "Nearly 200 of our railroad companies have defaulted in the pay- 
 ment of their interest on bonds to the amount of $789,367,665, and 
 the greater number of them have been placed in the hands of receiv- 
 ers. According to official reports, out of 811 railroads in the United 
 States only 196 were earning dividends in 1876. 
 
 "Over one-half of the furnaces, fouudi-ies, machine-shops, and 
 rolling mills of the United States are idle, and nearly all of those 
 which^are in operation are losing money. On the 1st day of Sep- 
 tember, 1876, out of 719 iron furnaoes in the United States, 503 were 
 out of blast. 
 
 "Our inland as well as our foreign commerce has almost ceased 
 to have existence, and instead of hundreds of thousands of people 
 coming from abroad annually, the strange spectacle is witnessed of 
 foreitruers returning to their native land to better their condition. 
 
 "Rents have fallen in all our cities from 30 to 50 per cent., and 
 the people of some of our largest cities are unable to pay their taxes 
 — the delinquent lists in some cases exceeding the amount collected! 
 
 "States— not even excepting some of Northern locality— are in 
 default in payment of the interest on their public debt, not from 
 choice, but from compulsion, the people being unable to nay their 
 taxes. 
 
 •'Thousands of business men have been keeping up their estab- 
 lishments at a loss each year, hoping— vainly, thus far— that a change 
 for the better would occur. The misfortunes have come, not alone 
 to the reckless, the extravagant, or the speculative The wise and 
 prudent business men of the country, in vast numbers, have been 
 (and are beinsi daily) overwhelmed by the groat national calamity 
 that broods over us. Men who by a lifetime of toil and economy 
 had accumulated, as they supposed, a competency for tlieir declin- 
 ing years, suddenly find themselves— scarce knowing how or why— 
 utterly ruined; their business at a standstill; their income cut oflf, 
 and their property sold to pay debts of not one-fourth its value. 
 Hundreds of thousands of men willing and anxious to labor cannot 
 find emplovment. Nearly every productive industry of the country 
 is in a crippled, if not in a bankrupt, condition. 'Tramps' fill the 
 land, and an almost universal cry of distress is heard in every part 
 of the Union. In the eloquent language of Mr. Peudelton's recent
 
 THE PRESENT CRISIS. 313 
 
 Columbus speech : 'Men are idle ; women are suffering ; children are 
 hungry ; and all are unhappy ; our industries are a I deranged ; busi- 
 ness is sCagiiaTit ; enterprise and energy sit icith f-idrd hnnds^ and all 
 men look with anxiety for that which shall come to pass.^ " 
 
 From a speech of Hon. Win. D. Kelly, in Congress, 
 
 November 15tli, 1877 ; 
 
 "Lnnd, as Mr. Shuckers has shoAvn us, sold iu Ln2f>and for nomi- 
 nal prices during the approach to resumption. I li.> d in my hand 
 the rhihideli)hia Times of November 5th, a conservative paper, 
 which dissJOiits in the main from my vicvsrs, but wiiich does believe 
 that a government bond interconvertible at all times with money 
 "would be a safer depositor}' for the people's earnings flian savings- 
 banlis have shown themselves to he within the last four years, and 
 would therefore allow the government to receive the people's eani 
 iugs on deposit in excliange for such bonds. It says : 
 
 *' To-day, at four o'clock, in the new quartcr-nui.-tcr-house, Sher- 
 iff Wright w\\ sell under the hammer the large.-t n mber of proper- 
 ties of unfortunate debtors ever exposed at one f-ale in this county. 
 There are four hundred and thirtj'-uiue writs on the list, embracing 
 in all over fitteen hundred different properties. Ab-ut seventy-five 
 of these are sales to be made on foreclosed mortgaiivs or building 
 associations for money advanced mostly c>n the small homes of the 
 laboring classes. 
 
 " I hive heard gentlemen say : ' They who hav'-; rashly speculated 
 ought to be wiped out, and tlie currency ought to be made more val- 
 uable.' Sir, the owners of these seventy-live homi'S have not been 
 rash speculators. They characterize my native city which I have 
 had the lionor so long to represent here. They are workincr people ; 
 they train their children mainly to mechanical pur nits. They had, 
 with their sons and daughters, learned liow muc i they could earn a 
 month and how much, after living comfortably, they could set apart 
 as savings. These savings tliey put into stock in b'lilding associa- 
 tions. And I say here, as I have often said elsewhere, that the build- 
 ing association is, in normal times, the best saviugs iu-titutiou I 
 have ever known, and one calculated to make the best citizens of 
 poor pi op!e. These working people have gone on paying until all 
 the family lost employment, or all but one or tw >, whose earnings 
 were necessary to support the household. Uuab'e to pay their 
 monthly installments, their homes, often paid for \\ ithiu two hun- 
 dred or three hundred dollars, sonietiuies within one hundrid, are 
 being disposed of to the 'wrecker,' to quote fr<»m the gentleman 
 from Georgia who spoke yesterday (Mr. Felton ) — the wrecker 
 who stands by and sees the ship stranded and her crew .struggling in 
 the surging Ava' ers, iu the hope that the cargo may be picked up and 
 purc^asrd by him for a nominal price. 
 
 " Philadelphia does not suffer alone. Turn to the c'ty of Boston 
 and Slate of Massachusetts. How are values shrinking there? 
 The assessed value of the real estate of the city of lioston shrank 
 $54,000,000 in the last year, and the assessed value of the personal 
 property of her citizens to a greater extent. The assessed value of 
 personal and leal estate in Massachusetts shrank last year more 
 thau $101,000,000.
 
 314 MOISTETARY HISTORY OF THE UNITED STATES : 
 
 *' But. gentlemen, the worst has not yet come if this act is to be 
 maintained. And I tell you — and you may book it to jeer and scoff 
 at nie fifteen mouths lieuce if it prove not to be a true prediction — 
 the sultering we have endured during the three years tills law has 
 been in existence is like the chill which embellishes while it blasts 
 with feathered frost the leaves and flowers of the tropical plants 
 that surround the homes of our extreme Southern States, compared 
 with the arctic cold that builds up the mountainous iceberg which 
 chills the summer atmosphere of our coast as it passes ucux wux 
 shores " 
 
 From the Banker s Magazine, Juife, 1877 : 
 
 "The Financial Situation — Among the most prominent topics 
 of discussion in tinaiicial circles is the revival that has been so gen- 
 erally expected from that widespread stagnation by which nearly all 
 the commercial nations of Europe have suffered equally witti our- 
 selves. When the panic < f 1873 occurred, few persons supposed that 
 the effects of that disaster would extend sofar or would last so long. 
 The favorite theory was that, like all other recent monetary spasms, 
 the Jay Cooke,panic would soon pass away, leaving but little trace 
 of its visitation. Many months elansed before the true nature of 
 the economic crisis which was then beginning was at all appreciated 
 even by the shrewdest and most far-seeing of our financial obser- 
 vers. It is so natural to the human intellect to seek out arguments 
 to prove and sustain its foregone conclusions, and the American 
 mind is so habituated, in finance as elsewhere, to look upon the 
 bright and hopeful side of the early future, that there is no wonder 
 if a general disposition was manifested to regard the storm which 
 was passing over the country as a mere temporary disturbance of 
 the financial firmament, destined to close before long and to usher 
 in a bright day of industrial prosperity and continued growth. It 
 was not then seen how deep were the injuries which had been sus- 
 tained by our commercial and industrial organism, in consequence 
 of the protracted period of extravagant inflation and expanded credit, 
 in which vast amounts ot floating capital had been, j'ear after year, 
 converted into fixed forms of investment in railroads and a multi- 
 tude of other productive enterprises; until, like Nebuchadnezzar's 
 image, the great structure which had been reared fell in ruins with- 
 out expectation, ahnost without warning, and fi'om causes which 
 were all but unknown. 
 
 "The panic of 1873 differed in several essential points from the 
 financial revulsions which were before on record. In 1837, 1848, 
 1857, 18G1, and 18G6, the trouble was rather flue to a disturbance of 
 credit or of currency, which are two of the three great forces of the 
 financial world. At present the evil lies in another quarter It is 
 capital now which originates the financial perturbation. Hence, it 
 has been well said that 'capital is on strike.' * * * 
 
 "The predictions of such conservative men were made light of, 
 and the growth of the thiancial fabric wenton with dangerous speed, 
 until the panic of 1873 brought it down in disaster. 
 
 ''From that time cupiial has been obstinately avoiding and refus- 
 ing its old channels of absorption and investment, as is proved by 
 the low rates at which it is now lending on call. The capital which
 
 THE riiESENT CRISIS. 315 
 
 formerly wonld have soniiht permanent investment is now timidly 
 hoardod, and the pletlioric re-^erves of loanable funds in all the great 
 monetary centirs are full to overflowing. Capital is on strike, not 
 because it shrinks from employment aitogether, but because it re- 
 fuses its old employments in the clianuils of permanent investment. 
 
 "Nor is tins ilie only feature of the present crisis. Another of 
 equal imiiortaiue is the check which has been given to enterprise 
 and industrial activity Even were capital less timid, good borrow- 
 ers are scarce. The men who are capable of organizinir labor and 
 of developing the productive energies of the country with safety and 
 sucess, have been discourazed and repelled by the insecurity and 
 incertiirde which covered the financial world with srloom. 
 
 "The depression which has done so much to injure and impede 
 the movements of capiial, has of course spread much distress 
 amonx the laboring population, and has thrown great multitudes 
 out of work. In lu'oof of this tlie following table has been prepared 
 of the in-door panperism.iu England a^ present as compared with a 
 year ago. The table is as follows, and shows an increase during 
 the last year of nearly live per cent., and the out-door pauperism is 
 reported to show even a larger increase : 
 
 IN-DOOR PAUPERS, FEBRUARY 28, 1876 AXD 1877. 
 DIVISIONS. 1877. 1870. INCREASE. 
 
 The Metropolis 3<).18.5 37,321 1,865 
 
 South-Ea'<tern 17,707 17 r)7.> 132 
 
 South Midland 9,851 9,547 304 
 
 Ea.stern 8,722 8,592 130 
 
 South-Western 11,332 1^,792 540 
 
 West Midland 16 339 15,033 1,306 
 
 North Midland 6,581 6,372 209 
 
 Noith-VVestern 21,292 20,096 1,196 
 
 York 10,286 9,556 680 
 
 Northern 5 946 5,734 212 
 
 Welsh 5 597 5,002 595 
 
 152,786 145 G20 7,166 
 
 "In view of these facts it is easy to see that the recuperation 
 which has been so often predicted and so ardently waited for may 
 be still deferred, and may be slow and ineirnlar in developing itself. 
 Our vast area of asriculrural production gives us exceptional ad- 
 vantaires, especially in the event of a p' otracted war in the Orient. 
 We have also many other advantages which seem to give ns a better 
 prospect of early revival in industrial and financial activity than is 
 offered to most of the naticms of p:urope." 
 
 Capital on a strike ! It is true. And the strike of 
 capital drove 200,000 hungry laborers to strike dur- 
 ing last summer, who made capital to quake in its 
 slippers. 
 
 But why is capital on a strike? Not voluntarily. 
 No ! It is because the legislation of governments has
 
 316 MONETARY HISTORY OF THE UNITED STATES : 
 
 SO reduced the world's stock of money in the face of 
 untold millions of debt as to make it shrink from in- 
 vestment or accommodation from sheer fear of des- 
 truction. 
 
 The check which has been given to enterprise and in- 
 dustrial activity has rendered it impossible for the real 
 benefactors of mankind, the enterprising workers of 
 society, to draw profits from labor or trade. 
 
 The constant decline of the volume of money has 
 caused a constant shrinkage of values in this country 
 since 1866. This shrinkao;e of values has entailed con- 
 stant losses in all branches of business. These losses 
 have astoundingly increased bankruptcies, raising them 
 from little over 500 in 1865 to nearly 10,000 in 1877— 
 almost 2,000 per cent, increase. These bankruptcies 
 have caused money lenders to lose millions, hence they 
 will no longer lend, and capital Avill not seek employ_ 
 ment in any business enterprise because the contin- 
 uing shrinkago of values, resulting from a continually 
 lessening voluiie of money, makes profitable investment 
 impossible, c iployment of capital certain loss, and 
 causes hoarding of money to enrich the capitalist on 
 account of the increasing purchasing power of money. 
 
 Hence, much of the currency has found its way to 
 the great financial centres and, because gilt-edged bor- 
 rowers are scarce, it is hoarded and those whose mental 
 vision is too limited to look beyond the gilded circles 
 of banks and money changers exclaim, "A plethora of 
 money !" when there is scarcely enough to circulate. 
 
 lion. David A. Wells, a very ardent advocate of 
 resumption, has been writing a series of articles this 
 year (1877) for the North American Revieio, under 
 the significant caption, "How shall the Nation Regain
 
 TIIE PRESENT CRISIS. 317 
 
 Prosperity?" This implies all that has been said or 
 that could perhaps be said. It implies that this nation 
 is now in adversity. 
 
 Extract from the report made March 2d, 1877, of 
 the Monetary Commission appointed by a joint resolu- 
 tion of both Houses of Congress August loth, 1876: 
 
 " Effects of a Decreasing Volume of Money — While the 
 volume of money is decreasing, even although very slowly, the val- 
 ue of each unit of money is increasing in corresponding ratio, and 
 property is falling in price. Those who have contracttd to pay 
 money find that it is constantly becoming more difficu t to 
 meet their engagements. The margin of securities melt rapidly 
 away, and the confiscation by the creditor of the property on wliicli 
 they are based, becomes only a question of time. All productive 
 enterprises are discouraged and stagnated, because the cost of pro- 
 ducing commodities to-day will not be covered by the price obtain- 
 able for them to morrow. Exchanges become sluggish, because 
 those who have money will not part with it, for either property or 
 services, beyond tlie recjuirements of actual current necessities, for 
 the obvious reason that money alone is increasing in value, while 
 everything else is decreasing in price. This results in the widi- 
 drawal of money from the channels of circulation, and its deposit 
 in great hoards, where it can exert no influence on prices. Tiiis 
 hoarding of money from the nature of things must continue and in- 
 crease, not only until the shrinkage of its volume has actually 
 ceased, but until capitalists are entii-ely statisfied that money l.\ ing 
 idle on special deposit will no longer afford them revenue, and that 
 the lowest level of prices has been reached. It is this hoarding of 
 money, when its volume shrinks, which causes a fall in prices great- 
 er than would be caused by the direct effect of a decrease in the stock 
 of money. Money, in shrinking volume, becomes the paramount 
 object of commerce, instead of its benelicieut instrument Instead 
 of mobilizing industry, it poisons and dries up its life currents. It 
 is the fruitful source of political and social disturbances. It 
 foments strife between labor and other forms of capital, while 
 itself hidden away in security gorges on both. It rewards close- 
 llsied lenders, and filches and bankrupts enterprising borrowers. 
 It circulates freely in the stock exchange, but avoids the lab )r ex- 
 change. It has in all ages been the worst enemy with which society 
 has had to contend 
 
 •'The great and still continuing fall in prices in the United States 
 has proven most disastrous to nearly every industrial enterprise. 
 The bittex' experience of the last few years has been an expensive, 
 but most thorough teaciier. It has taught capitalists neither to in- 
 vest in nor loan money on such enterprises, and just as thorouirhly 
 has it taught business men not to borrow for the purpose of inaugu- 
 rating or prosecuting them. Of the few business enterpri>es now 
 being successfully prosecuted, the larger part are based on a monop- 
 oly secured either by patents or exceptional conditions. 'Ihe busi- 
 ness man has discovered that the less active and enterprising he is,.
 
 318 MONETARY HISTORY OF THE UNITED STATES : 
 
 the better he is off. The manufacturer avoids loss by damping 
 down furuace-flres aud slowing down machinery. 
 
 "The minins companies would find profit in inactivity, and would 
 propably suspend operations, were it not for the {ireat loss they 
 would sustain in doing so. Mines can be properly opened only 
 through a great outlay of capital, which would be practically lost if 
 they were closed down for any considerable period of time. The filling 
 up with water, the caving in of galleries, the crashing in of sliafts, 
 the rusting of machinery, and the general disarrangement of their 
 interior workings would require for their repair a not much 1 ss ex- 
 penditure than was necessary for their original openhig. Hoping 
 for better times, they therefore struggle on against an adverse cur- 
 rent without profit, aud generally only without loss by reducing 
 their miscellaneous expenditures to the lowest possible point, and 
 wages to a starvation level. The miners ascend from the dark and 
 gloomy depths of the mine witii their scanty pittance called wag.-s, 
 to find in a famishing household a gloom that is more profound. 
 They await with heroic fortitude and a sometimes impatient hope 
 the advent of another Sir Humphrey Davy, with a lamp capable of 
 shedding light on the cause of existing evils, and of protecting 
 them and all others who depend on their labor for their daily bread 
 against a lingering misery more to be dreaded than the deathly dan- 
 ger that lurks in the teacherous fire-damp. 
 
 •'The stockholders of railroads have suffered avast shrinkage ia 
 the value of their property and in the volume of their traffic and in 
 rates of transportation while their debts have remained uommally 
 the same, but really increasing. In order to make their decrease 
 receipts meet the interest on their bonds, they are forced to reduce 
 their operating expenses to the lowest possible point. Their strug- 
 gles seem to be in vain, and unless that system can be changed, 
 which is making each dollar which they owe more valuable, and at 
 the same time causing a shrinkage in their business, and which is 
 chain iu2 labor and all other forms of capital to the chariot wheels 
 of money-capital, they will, one after another, be swallowed by the 
 bondholders. In the end the stockholders will be entirely out of 
 the accouut, and the contest will be between different classes of 
 bondholders, if that can be called a contest where victory is assured 
 in advance to the liens which have priority. 
 
 "Farmers, whose land- are not mortgaged, and their employees, 
 who at least are insured against absolute want, best escape the evils 
 of the times, but the prices of agricultural products must finally 
 decline with the reduction in the number and means of the consum- 
 ers. The tendency of falling prices is to break down the vast diversi- 
 fied interests of the country, and to force a constantly-increasing 
 proportion of the population into the one single primitive industry 
 of cultivating the soil. The United States, instead of continuing 
 a highly commercial and manufacturing nation, will, until falling 
 prices are checked, become more and more exclusively agricultural 
 and pastoral. 
 
 "Securities have already become so impaired through falling 
 prices, that loanable capital has fled affrighted from the newer and 
 more sparsely settled sections of the country, and accumulated ia 
 large amounts in the great financial centers where securities are 
 juore ample. The personal aud property securities of inviduals
 
 THE PRESENT CRISIS. 319 
 
 Tiave generally ceased to be available, except at the highest rates of in- 
 terest, or at. ruiuuusly low valuation-. Money cau be borrowed 
 readily, only upon such securities as bonds which arc based on the 
 unlimited tax-levying power of the government or upon the bonds 
 and stocks of flrst-ciass trunk-lines of railroad corporations, whose 
 freight and fare rates are practically a tax upon the entire popula- 
 tion and resources or the regions which they traverse and supply. 
 The competition among capitalists to loan money ou these more 
 ample securities, has become very keen, and such securities com- 
 mand money at unprecedentedly low rates. These low and lowering 
 rates of interest, instead of denoting tlnancial strength and indus- 
 trial prosperity, are a gauge of iucreasing prostration. Large ac- 
 cumulations of money in financial centers, instead of being caused 
 by the overflow of a healthful circulation, or eveu a proof of a suffi- 
 cient circulation, are unmistakable evidence of a congested condi- 
 tion, caused by a decreasing and insufficient circulation. The readi- 
 ness with which government bonds bearing a very low rate of in- 
 terest are taken, instead of showing that the credit of the government 
 has improved, is melauclioly evidence of the prostrated condition 
 to which industry and trade have been reduced 
 
 "■Effects of a shrinking vilume of money on productive industry — 
 The worst effect, however, economically considered, of falling 
 prices, is not upou existing property nor upon debtors, evil as it is, 
 but upon laborers whom it deprives of employment and consigns to 
 poverty, and upou society, which it deprives of that vast sum of 
 wealth which resides potentially in the vigorous arms of the idle 
 workman. A shrinking volume of money transfers existing pro- 
 perty unjustly, and causes a concentration and diminution of wealth. 
 It also impairs the value of existing property by eliminating from it 
 that important elemenf. of value eonferre<l ujjon it by the skill, en- 
 ergy and care of the debtors from whom it is wrested. But it does 
 not destroy any existing property, while it does absolutely annihi- 
 late all the values producible by the labor which it condemns to idle- 
 ness. The estimate is not an extravagant one that there are now 
 in the United States three million persons willing to work, but who 
 are idle because they cannot obtain employment. 
 
 "This vast poverty stricken army is increasing and will continue 
 to increase as long as faldiig prices sha.l continue to separate money 
 capital, the fund out of which wages are paid, from labor, and to 
 discourage the investments iu other forms of property. 
 
 «'In Older that any country may reach the maximum of material 
 prosperity, certain conditions are indispensable. All its labor, as- 
 sisted by the most appri-ved machinery and appliances, must be em- 
 ployed, and the fruits of industry must be justly distributed. These 
 conditions are only possible wheu capital is absolutely protected 
 against violence and free from illegitmate legislative interference, 
 and when the laborer is protected iu his natural right to dispose of 
 his labor iu such manner as he may prefer. They are utterly im- 
 possible when the money .stock is shrinking and the money value of 
 property and services is declining. Howsoevi-r great the natural 
 resources of a cimntry may be, however genial its climate, fertile its 
 soil, ingenious, industrious, and enterprising its inhabitaffts, or free 
 its institutions, if the volume of money is shriukiu'.; and prices are 
 ialling, its merchants will be overwhelmed with bankruptcy, its in-
 
 320 MONETARY HISTORY OF THE UNITED STATES : 
 
 dustries will be paralizod, and destitution and distress will prevail. 
 It is in the shadow of a shrinking volume of money that disor- 
 ders social and political, gender and fester, that communism organ- 
 izes, that riots threaten and destroy, that labor starves, that capi- 
 talists conspire, and workmen combine, and that the revenue of 
 governments are dissipated in the employment of laborers, or in 
 the maiutainance of increased standing armies to over-awe them. 
 The peaceful war which, under a just money system, is continually 
 waged between money-capital and labor, and which tends only to 
 secure the rights of each and is e.-sential to the progress of society, 
 is changed under a shrinking volume of money to an unrelenting 
 war, threatening the destruction of both. 
 
 "The equitable adjustment of the correlative demands of capital 
 and labor cannot be made through violence, and is uterly impossi- 
 ble through any legal or otlier contrivance, under any system that 
 permits contraction or undue expansion of that great instrument 
 which measures alike the property of the capitalist and the labor of 
 the workman. 
 
 "The vei'y same reason which makes capitalists refuse to exchange 
 money, whose command over property is inci'easing, for property, 
 whose command over money is decreasing, also makes them refuse 
 to exchange it for labor for the production of property. In a com- 
 mercial sense, industrial enterprises are never undertaken nor car- 
 ried on except with the hope and expectation of gain This expec- 
 tation, unless under excefitional conditions, falling markets destroy. 
 While capitalists, for th^-se reasons, cannot atlbrd to invest money 
 in productive enterprises, still less can anybody afford to borrow 
 monev for such investments at any rate of interest, however low, 
 and but little money is bt'ing now borrowed, except for purely spec- 
 ulative ventures, or to supply j)ersonal and family wants, or to re- 
 new old obligations. Money withdrawn from circulation and hoarded 
 in consequence of falling prices, although neither paying wages, nor 
 serving to exchange the fruits of industry, nor pi-norniing any of 
 the true functions of money, is nevertheh'ss not unproductive. It 
 may not be earning interest, but it is enriching its owner through 
 an increase of its own value, and that, too, without risk and at the 
 expense of society. The peculiar effect of a contraction in the vol- 
 ume of money is to give profit to the owners of unemployed money, 
 through the appreciation of its purchasing power, by the mere lapse 
 of time. 
 
 "It is falling prices that robs labor of employment and precipi- 
 tates a conflict between it and money capital, and it is the appreciat- 
 ing effect which a shrinkage in the volume of money has on the 
 value of money that renders the content an unequal one, and gives 
 to money capital the decisive advantage over labor and over other 
 forms of capital invested in industrial enterprises. Idle machinery 
 and industrial appliances of all kinds, instead of being productive of 
 profit, are a source of loss. They constantly deteiiorate through 
 rust and waste. They cannot escape the a-<sessor and tax-gatherer, 
 as the bulk of money does, and must (>ay extra insurance when idle. 
 Labor, unlike money, cannot be hoarded. The d.iy s labor unper- 
 formed is so much capital lost forever to the laborer and to society. 
 It beimr tiis only capital, his only means of existence, the laborer 
 cannot wait on better times for better wages. Absolute necessity
 
 THE PRESENT CRISIS. 321 
 
 forces him to dispose of it on any terms which the owners of money 
 may dictate. These are the conditions which surround tlie laborer 
 througliout the commercial world to-day. 
 
 '♦These laborers must make their wants conform to their dimin- 
 ished earnings. They must content themselves with such things as 
 are absolutely essential to their existence. Consumption is there- 
 fore constantly shrnking toward such limits as urgent necessities 
 require. Productiou, which must be confined to the limits indicated 
 by consumption, is constantly tending toward its minimum, whereas 
 its appliances, built up under more favorable conditions, are suffi- 
 cient to supply the maximum of consumption. Thus idle labor, idle 
 money, idle machinery, and idle capital stand facing each other, and 
 the stagnation spreads wider and wider. The future affords no 
 hope or prospect of improvement, except through a change in finan- 
 cial policies Prices have been persistently falling throughout the 
 world since 1873, and as fast and as far in specie-paying countries 
 as elsewhere. If the policy of chaining the industry and commerce 
 of the world to a single metal be persisted in by the United States, 
 Germany, and the other European countries acting in concert with 
 them, money must still rise in value, and prices must continue to 
 fall. The depression in productive industry will become more 
 deadly, and the number of idle laborers will indefinitely multiply. 
 
 'The loss which this country sustains by reason of the enforced 
 idleness of three million persons, who although idle, must still in 
 some scanty way be supplied with food, clothing, and shelter, is in 
 the aggregate very great. If it be estimated at one dollar per day 
 for each laborer, it would amount in two years to a sum sufficient 
 to discharge the national debt. It would pay the interest, at 5 per 
 cent per annum, on eighteen thousand millions of dollars. It would 
 be a sum more than sufficient to supply anew each year the circula- 
 ting medium of the country. It would amount, in four years, to a 
 greater sum than the world's entire gold product has amounted to 
 in the last fifty prolific years. It would aggregate in ten years a 
 value far greater than the value of the world's entire product of 
 both gold and silver for the last hundred years. It would amount 
 in four years to a sum more than sufficient to duplicate and stock 
 every mile of railroad now in the United States. Contrasted with 
 the startling sum thus annually lost through the shrinkage of mouey 
 and falling prices, the amount which could by any possibility be 
 lost in a generation through fluctations in the relative values of 
 gold, silver, and paper would weigh as mere dust in the balance. If 
 to this loss be added that caused by non-employment of productive 
 machinery and appliances, the aggregate becomes appalling. The 
 average stocks of nearly all commodities are at no time sufficient 
 for more than a few months' consumption. Without constant re- 
 production mankind would soon be stripped of all their movable 
 posses.^ions. No more fatal blow, therefore, could be directed 
 against the economical machinery of civilized life than one against 
 labor, and that blow can be most eflectively delivered through a pol- 
 icy which strikes down prices." 
 
 Archbishop Purcell, on the occasion of the dedication 
 of the Davidson Fountain, in Cincinnati, in October,
 
 322 MONETARY HISTORY OF THE UNITED STATES : 
 
 1871, said: " Who is there at the present hour who 
 sees not in the nearing future the first signs of a con- 
 flict ;"I mean the irrepressible conflict of rich and poor 
 — of capital and labor?" How true! How terribly 
 it has been verified in 1877 ! 
 
 Extract from a letter of Hon. S. F. Gary, in the 
 Irish World, August 25th, 1877 : 
 
 "Dear money and cheap labor antagonize well-paid labor and 
 cheap money. The former is tlie object of the monied class; the 
 latter is the'absolute need of the producing class. To secure the 
 former the contraction and resumption policy of the Government 
 was inaugurated ; to obtain the latter there should be earnest and 
 united action by the masses. The contraction of the circulating 
 medium reduces the commercial value of labor and of all property, 
 real and personal, but it appreciates in like ratio the purchasing 
 power of bonds and money, and increases the burdens of debts and 
 taxes. 
 
 "For instance, a mechanic in 1865 purchased himself a home, pay- 
 ing one thousand didlars down and giving his note and a mortgage 
 for one thousand moie. He was then getting four dollars a day for 
 his labor, and his purchase was then a fair one. The note and mort- 
 gage become due. In the meantime, by the contraction of the circu- 
 lation, he is able only to realize two do lars per day, and his property 
 has shrank in like proportion, being now dear at one thousand dol- 
 lars. The bond-liolder and money-lender can now iiire two men and 
 buy two such homes as his, with the same amount of money, because 
 their means have been dcmbled in their purchasing power, while his 
 have diminished one-half. 
 
 "If debts and taxes, and the cost of living could be scaled down 
 in proportion to men s diminislied resources to meet them, it would 
 not work so much injustice to labor and business capital. 
 
 "Here is the ^needless and unholy irrepressible conflict.^ It has 
 been inaugurated by the greedy and rapacious money power. If 
 the starving millions of workingmt-n, the manufacturers, the mer- 
 chants, the owners of railroad stocks, and all others who have their 
 investments in productive industry, do not unite and resist the en- 
 croachments, the legalized robberies, they deserve to be slaves! " 
 
 From a speech of Hon. A. H. Buckner, in Congress, 
 
 Nov. Kith, 1877 : 
 
 "I have never entertained a doubt of the impolicy of the attempt 
 to reach resumption by contraction. I am not surprised at the in- 
 crease of bankruptcy, "the shrinkage of values, the depression in 
 business, the paralysis of traile and commerce the despondency and 
 dissatisfaction of the laboring population, the discontent of the ag- 
 ricultural classes, and the growth of critne and civil commotion, ap- 
 proximating to the very verge of social anarchy. It required no gift
 
 THE TRESENT CRISIS. 323 
 
 of prophecy to forecast the condition of the country, as we neared 
 the lime fixed for convening; the vast nioimtaius of debt of America 
 into specie obli;4ations. No spicial ac<iuainlance wiih llie dojzmas 
 of the so-called science of political ecuuomy was needed to fore- 
 shadow the commercial, industrial, and social mischief which must 
 necessarily ensue upon the attempt to brinn; down tlie prices of all 
 commodities rejjnlated under a r^ duudaut circulation, to the level of 
 an lusutHcient and contracted one. 
 
 "The slightest knowledge of English history, the experience of 
 our own country within the knowledge of many now living, not to 
 say the dictates of common sense and the lacts of every-day life, 
 should have averted the ruin of the great lal)or interests of this 
 country, which has strewed the path of contraction and an insuffi- 
 cient circulation. For nearly ten long and dreary years the people 
 have beeu uttering their protest auaiust the madness that ruled the 
 hour against the folly of attempting to resume by crippling every 
 industrial pursuit, against the criminality of conforming the tiiian- 
 cial policy of this magnificent heritage of Providence to the demands 
 of Wall street and the money drones of the creditor section of the 
 Union. Warnings, expostulations, entreaties, in season and out of 
 season have come up from the toiling, despairing millions against 
 a financial policy that threatens to make shipwreck of every interest 
 on which the Government depends for its support and on which so- 
 ciety depends for its existence and prosperity. And now we are 
 confronted with the solution of the question whether we shall per- 
 sist in this suicidal and destructive policy or whether we shall halt 
 in this work of bankruptcy and disaster and obliterate the crowning 
 triumph of a whole decade of financial wrong-doing : the resumption 
 act of Januarj-, 1875." 
 
 Mr. Hamilton, of Maryland, a staunch resumption- 
 
 ist, in a speech in Congress, Dec. 22d, 1874, said : 
 
 "We must go back to our normal condition before we can build 
 up ourselves again. And we are getting there day by day. More 
 and more we are enduring, more and more Me are suffering, and 
 now one step more and all may be righted for a progi'ess that our 
 past bitter experience may secure for untold time." 
 
 Resumption was the "step" referred to. The step 
 has been taken ; the act has been passed nearly three 
 years, and yet no relief has come ; it has been a step of 
 constantly increasing suffering and distress. 
 
 Following is a list of the number and afftrresrate 
 amount of bankruptcies from 1857 to 1877 inclusive, 
 taken from Messrs. Dunn, Barlow & Co.'s report:
 
 324 MONETARY HISTORY OF THE UNITED STATES: 
 
 
 
 
 Average 
 
 Tear 
 
 Number 
 
 Amount 
 
 indebtednew 
 
 1857 
 
 4,932 
 
 $291,750,000 
 
 §59,154 
 
 1858 
 
 4,225 
 
 95,749,000 
 
 22,662 
 
 1859 
 
 3,913 
 
 64,394,000 
 
 16,430 
 
 1860 
 
 3,673 
 
 79,807,000 
 
 21,710 
 
 1861 ■ 
 
 6,993 
 
 207,210 O-IO 
 
 29,631 
 
 1862 
 
 1,652 
 
 23,049,300 
 
 13,452 
 
 1863 
 
 485 
 
 6,864,700 
 
 14,154 
 
 1864 
 
 520 
 
 8,579,000 
 
 16,498 
 
 1865 
 
 530 
 
 17,625 000 
 
 33,255 
 
 1866 
 
 632 
 
 47.333 000 
 
 74,894 
 
 1867 
 
 2,386 
 
 86,218,000 
 
 36,134 
 
 1868 
 
 2,608 
 
 63,774,000 
 
 24,452 
 
 1869 
 
 2,799 
 
 75 054,000 
 
 26.814 
 
 1870 
 
 8,551 
 
 88.242,000 
 
 24,849 
 
 1871 
 
 2,915 
 
 85,251,000 
 
 29,245 
 
 1872 
 
 4,069 
 
 121,056,000 
 
 29,750 
 
 1873 
 
 5,183 
 
 228.499 000 
 
 44,085 
 
 1874 
 
 5,830 
 
 155,239,000 
 
 26,627 
 
 1875 
 
 7,740 
 
 201,060,353 
 
 25,978 
 
 1876 
 
 9,092 
 
 191,117,786 
 
 21,020 
 
 1877 
 
 8,872 
 
 190,669,936 
 
 21,491 
 
 Nearly twenty times the numljer, and over ten times 
 the liabilities, in 1877, that there were in 1865. 
 
 There were 89 failures in New York in the mouth of 
 December, 1877, not including 11 assignments. The 
 aggregate assets were $3,118,000, and the liabilities $7,- 
 704,000. This record exceeds by 25 per cent, that of 
 any previous month of the year 1877. 
 
 Commenting upon the increase of bankruptcies of 
 1876 and 1877, the N. Y. Mercantile Journal said : 
 
 "The results of the first half of the present year are by no means 
 entirely satisfactory . Neither as to extent or profltableue.'-s are there 
 many signs of improvement: while in the recovery or stability of 
 values the indications are uncertain, and not ^infrequently the tenden- 
 cy is still decidedly doionward. All the conditions seem to favor bet- 
 ter time.*, yet there seem fatal barriers to their return. We have 
 had years of marvelous production, and of good prices for the pro- 
 ducts of the earth; the figures indicating the value of exports were 
 never so large or satisfactory — this, too, in the face of restricted 
 Imports, indicating an economy on the part of the people which 
 OUfjht ere this to have borne better results. ***** 
 
 "Yet the experience of the past does not permit the hope that all 
 this will bring around a prosperous or satisfactory trade. Something 
 more is needed; but xohatthe true remedy is, none have yet discovered. 
 Numerous explanations are. of course, at hand; and it is eloquently 
 urged that the adoption of this or that policy would restore coufi-
 
 THE PRESENT CRISIS. 325 
 
 dence and prosperity Yet the fact remains that, in the presence of 
 all favoring coiulitions, depression reigns, values decline, and busi- 
 ness is restricted and unprofitable. Judging from the state of 
 business abroad, all this is not chargeable to the peculiar disabilities 
 under which this country labors. Other nations loith a gold basis, a 
 low tarifl", aud not chargeable with either public or private extrav- 
 agance, are sutl'ering even to a greater extent than the United 
 States, with an absence of many of the advantages and prospects 
 whicli this nation enjoys " 
 
 Commentini!: on the same unanswerable evidences of 
 the great depression of business, the Missouri Repub- 
 lican, of January 21st, 1878, said: 
 
 "According to the figures presented, the failures in the United 
 States for the year 1877 are 8,872 in number, being 220 less than for 
 1876, in which 3'far they were 9,092. The total liabilities for 1877 
 are stated at f 190 GG9,000 as against $191,117,000 in 1876, or barely 
 half a million of dollars less. For the three quarters ending with Sep- 
 tember hist, the number of failures had lessene<l by 495. with a de- 
 cline in liabilities of $4,320,0 '0 as compared witli a similar period 
 in 1875, but the casualties of the last quarter have been so numer- 
 ous and important, that the ratio of improvement for the fir>t nine 
 months lias not been sustained. So frequent of late have been the 
 announcement of suspensions and so much has occurred in the last 
 few months to impair confidence that it is all the more gratifying to 
 know lliat the figures for ttie whole year do show a decreased num- 
 ber of disasters, with losses somewhat less. The agency, however, 
 says it is a pregnant fact, illustrative of the general condition, that 
 the failures of the past year approach so nearly those of the year 
 preceding, which were deemed very excessive, and that the failures 
 are really above the avera;:e of the four years since the panic of 1873. 
 Time does not seem to improve these statistics with tlie same rapid- 
 ity that it did subsequent to the panic of 1857 or 1861, for in the 
 four years succeeding these dates, the number of failures and the 
 amount of liabilities steadily diminished, the average rapidly decliu- 
 ing, while this, the fourth year since the panic of 1873, largely in- 
 creases the average. Tills is illustrated by the figures in detail for 
 the periods referred to, and the comparison thus instituted, is made 
 specially interesting as grouping the few years preceding the panic 
 of 1873 opposite the four years succeeding. The average number 
 of failures for the four years prior to and including 1873 was 3,929, 
 wliile for the four years ending with 1877, the yearly average num- 
 ber is 7,883. In 1871, for inst.mce, the failures Avere ouly oue to 
 every 163 traders, while in 1877 the ratio is one in every 73. The 
 average total yearly liabilities prior to and including 1873 were $130,- 
 000,000: the yearly average for the four years subsequent is $184,- 
 000,000. 
 
 These great journals, as well as others, comment on 
 
 the appalling increase of bankruptcies from 1866 to 
 
 1877 as phenomena strange, mysterious, and un-
 
 326 MONETARY HISTORY OF THE UNITED STATES : 
 
 accountable ! But a much stranger thing is that they 
 — the educators of the masses — should be ignorant of 
 the causes which produced and perpetuate bankruptcy. 
 Money makes commercial values, prices. From 1866 
 to the present time a continued lessening of the volume 
 of money has been going on. With this reduction in 
 the amount of money, and produced by it, has moved 
 a continuing shrinkage of values and shriveling of 
 profits, until business has come to a point where there 
 is scarcely any profit in it. The people of this country 
 have been doing business for ten ^^ears with a constant- 
 ly shrinking volume of money on constantly declining 
 markets. Is it strange that bankruptcies have multi- 
 plied ? It is only strange that they have not increased 
 more rapidly. 
 
 Hon. Henry Gary Baird, in a pamphlet entitled 
 Turkey and the United States, issued in 1877, says : 
 
 "THE UNITED STATES. 
 
 "CoxDiTiox OF THE SOUTHERN STATES.— Turning now to the Uni- 
 ted States, we shall, perhaps, be asked, what has this country in om- 
 niou with Turkey as here depicted? We an wer, that almost the en- 
 tire Si'Uth presents a picture very nearly identical with it— an almost 
 total abscence of manufa^ tures and the mechanic arts; a barbarous 
 and exhaustive system of culture; bankrupt State treasuries, cor- 
 porations, individuals; excessive rates of interest; taxation which 
 amounts to conh-cation, and has already confiscated thousands of 
 onoe valuable estates; corrupt and irrespou>ible governments; wide- 
 spread pauperism and ignorance, and a general tendency of sochty 
 to become once more resolved into its elements. The saddest part 
 of I his sad picture is the reflection which it brings with it, that after 
 passincr through one great war by reason of the South being almost 
 entirely devoid of diversified industric'S,and consequently of a power 
 of association that creates tliat constant demand for labor which 
 makes for the laborer a free and intelligent being, that country is 
 to-day, in almost every respect, in a worse condition than it was ia 
 
 18«0. , , , . 
 
 "We have abolished chattel slavery, and yet enslaved almost a 
 whole people, whitr as well as buick. Without that great middle 
 class which is the broad basis upon which alone a free government 
 can permanently endure, the South must ever be to the United 
 States a source'of weakness and discord, and to itself a scene of 
 misery, wretchedness, and ignorance.
 
 THE PRESENT CRISIS. 327 
 
 "While, like Turkey, the demand for revenue in most of the South- 
 ern States lias iu;rowu with each succeeding year; we need hardly 
 be surprised tliat taxation and confiscation in several of these States 
 are almost synonymous terms. The rate (m realpstate in Louisiana, 
 Arl^ansiis, Mississippi, and others is about G per cent.; and. we are 
 told, that tlie valuation of real and personal property had, between 
 18G0 and 1870, declined in Virginia and West Viririnia from §7t»3,- 
 247, ()S1 to ^G00,2:yj,C>2i; North Carolinia, from $2!)2, 277,012 to ^132,- 
 04«,3',»0; i» South Carolina, from $489,310,128 to .1JIG4,401»,!»4G; in 
 Louisiana, from $435,000,000 to $2.")0. 000,000; in Mississippi, from 
 $509,472,912 to $154,535,547 ; in Alabama, from $450,000,000 to $155,- 
 000,000. But we shall be told that the waste of war and the freeing 
 of the slaves, which were, in 18G0, included in ihese valuations, 
 should be taken into account. To this the reply is, that in the live 
 years, from 18G5 to 1870, with even a moderate degree of prosperity, 
 all of the States would have been enabled to have restored their prop- 
 erty at least to what it stood atin 18G0; the increase in Pennsylvania, 
 for instaiicc, between 18G0 and 1870, being from $1,416,501,818 to 
 $3,808,340,112. 
 
 • "By wise administration France has so far recovered from her 
 late war — which was estimated to have cost the State alone over $2,- 
 000,000,000, and agriculture in addition $850 000,000— as to have 
 placed herself in the position of being the most prosperous of all 
 the nations of the earth. 
 
 "But the loss of slave property and the waste of war will hardly 
 account for the fact that in Louisiana, a plantation of 1,G00 acres in 
 one of the most fertile sections, once valued at $100,000, could not. 
 in 1874, be sold for $1,G00; or that another of 600 acres, which orig- 
 inally cost $30,000, was, about 1874, offered for $700; or that in 
 New Orleans, a house which, in 18G8, was worth $12,000, Avas alittle 
 later sold for $8,000, and then for $G,000 ; and that in 1874 no one could 
 be found to take it at $4 OUO; or that the Sheriff of New Orleans has 
 become the prosperous man of the city, his office, in the midst of 
 the ruin by which he is surrounded, being worth $G0,000 per annum. 
 
 "The waste of war, which was closed in 18G5, and emancipation 
 will hardly account for the fact tliat in South Carolina, Mauds that 
 were held before the war at twenty-five and thirty dollars an acre, 
 and cheap enough at that, can now be had at two, three, four, five, 
 and ten dollars an acre. These lands are in working order and 
 need only good farming to make them more profitable than they ever 
 were;'* or 'that the largest half of the population of South Carolina 
 live to-day in huts and hovels, so poor that their total destruction, 
 
 "*The New York Tribune, of April 16th, 1877, iincler the heading of 'Wrecked 
 by Ileal Estate,' says: A reporlcr of the Tribune recently had a long inter- 
 view with a gentleman who has been clo.sely identilled Mith the ups and 
 downs of the market during the past few years. 'It is a frightful retrospect,' 
 he said, 'but as a warning to those wlio again may desire to s|.)ecuJate in unim 
 proved property, the whole story ought to be told. It is not necessary to 
 give names: the facts will speak for tliemselves, and those at all acquainted 
 with our innrket will at once be able to identify the bodies, when I come to 
 call the roll of the killed and wounded. * * * xhe masses of the 
 people, who imagine that they alone h.ive suffered during tliese hard times, 
 would open their eyes if they could understand the misfortunes sustained 
 during the past four years by many of the formerly wealthy families of New 
 York, and see how changed are the circuiastauces and surroundings ia which, 
 they are now living.'
 
 328 MONETARY HISTORY OF THE UNITED STATES : 
 
 from one end of the State to the other, would not diminish the tax- 
 able value of the State one-tenth of one per cent.,' being 'worth no 
 more than so many dog-kennels or pig-sties.'* 
 
 "But we shall doubtless be told that Louisiana and South Carolina 
 have for years been under the combined rule of the negro and the 
 carpet-bagger, and that this fact alone is sufficient to account for 
 their sad condition. Let us, then, turn to Virginia and Tennessee, 
 two States which have now for several years both enjoyed, in a great 
 degree, immunity from these blighting influences; States, too, of 
 magniflcient natural resources, which only need to be developed in 
 order to extend prosperity, happiness, contentment, and civilization 
 into every nook and corner of their wide domains. 
 
 "Virginia, with a territory of 38,348 square miles, and in 1870 a 
 population of 1,22.5,163, hus to-day a funded debt of $29,489,326, the 
 annual interest charge on which is $1,951,175. The expenses of the 
 State Government for 1876, exclusive of interest on the debt, were 
 but $1,5.56,715— showing a remai-kably economical administration of 
 public affairs ; and yet the due and unpaid interest on this debt De- 
 cember, 1876, was $3,510,834. That such a body of people inhabit- 
 ing such a territory, should be unable to support such an economical 
 government, and pay such an annual interest on its deljt, shows an 
 absence of the utilization of its resources which is disgraceful to the 
 general government under which they live. But that their difficul- 
 ties must increase rather than decrease will be indicated by the fact 
 that while in 1873, in Virginia and West Virginia, the mercantile 
 failures were 125, and the debts $2,188,000, in 1876 the failures 
 were 172, and the debts $3,381,289. It need hardly be added that 
 this is not the road which leads to the payment of the interest or 
 principal of this debt; but that it leads to repudiation, no matter 
 how great the pride or how high the tone of the debtors; for, in 
 justice to this ancient Commonwealth, it must be said that the Ex- 
 ecutive shows, in his late message, the most honorable anxiety about 
 the discharge by tlie State of all her just obligations. 
 
 "Turning now to Tennessee, we find a population of l,258,!i20, in- 
 habiting one of the most magnificent territories in the world, 42,- 
 000 square miles in extent, of genial climate, abounding in the finest 
 agricultural lands, and possessed of wonderful mineral resources; 
 coal and iron especially being inexhaustible in supply. This State 
 has a funded debt of .$23,203,400, on which there is now due and 
 unpaid eighteen months' interest, or $2,088,756. How unlikely she 
 is to increase her ability to discharge this debt, interest or princi- 
 pal, while on the road she is now made to travel, will be seen and 
 appreciated when it is considered that the taxable property in the 
 State, which was in 1873 valued at $308,089,738, had in 1876 fallen 
 to $268 002,485; and that the failures, which in 1873 were 77, with 
 liabilities of $1,036,000, had in 1876 swollen to 158, with liabilities 
 of $2,229,553. 
 
 'Even in the State of Georgia, now for years under the control of 
 its white population, and with fuller developed industries than most 
 of the other Southern States, land is so nearly without value that no 
 
 "*The New York Tribune has recently expressed the opinion that either the 
 debt of the city of New York must be repudiated, or the entire real estate in 
 that city pass Into the hands of new holders at lower prices.
 
 THE PRESENT CRISIS. 329 
 
 money can be borrowed on it on mortgage ; aiui cases liave been 
 known where UKjrtgagees liave preferred to abandon their claims 
 entirely to foreclosing their mortgages, because they did not wish 
 to be incumbered with the lands, their taxes, and other responsibili- 
 ties. No l)et,ter test of a decline in civilization in any coumiunity or 
 country can be hati tlian a decline in the value of its lands — man in- 
 variably declining with a fall in the vaku' of huul. 
 
 "The CoNDiriox ok the Nouthekn States and of the Union 
 UENKKALLY. — But wc may, perhaps, be told tliat all of these South- 
 ern States have been over-run and plundered by hostde armies, and 
 have furthermore undergone a revolution in tlieir labor system; and 
 that this condition of prostration was therefore to have been looked 
 for. Let us, then, turn to the contemplation of the North, and of the 
 nation at large 
 
 "In 187G, the failures in the loyal States were 7,972, with liabilities 
 amounting to .$ 174, (jt)3, 712; and tliose in the States lately in re- 
 bellion 1,120. with liabilities of f l(J,4r2-t,07-l ; or a total of liabilities 
 of $191,117,780; there being one failure for every ()3 persons in busi- 
 ness. In the four years, 1873 to 1870 inclusive, the liabilities 
 amounted to the enormous sum of $775,910,130. 
 
 "New YoKK ANi> OTHER CITIES. — According to estimates of the 
 Tax Commissioners of New York City, the actual value of real es- 
 tate in that city has declined from $1,39-1,488 900, in 1873, to $892,- 
 428,103, in 1870, or $i02 000,803; while it was assessed, for tlie pur- 
 poses of taxation, at $05,000,000 higher in the last named than the 
 former.* In 1873, tlie total value of the personal property, exclu- 
 sive of bank stock, assessed in that city, was $215,000,000, while in 
 1870 it had fallen to $133,500,000— a decline of $81,500,000. At the 
 same time the puljlic debt of that city December 3Ist, 1872, was 
 $95,407,154, while December 31st, 1870, it was $127,919,993 net.f 
 While the transactions of the clearing houses of twelve of the prin- 
 cipal cities of tlie United States, which includes 312 banks, were, in 
 1875, $31,292,000,000, in 1870 they were but $28,234,000,000— a de- 
 cline of 9.8 per cent , and $5,738,000,000 less than those of New 
 York City alone in 1873. For the fiscal year ending June 30th, 1873, 
 the total net receipts of the government of tlie United States, exclu- 
 sive of loans, were $333,738 204; while for the year ending June 
 30th, 1870, with increased taxes on many articles, they were but 
 $287,482,039 -a decline of over $40,250,105; and the late Secretary 
 of the Treasury, Mr. Morrill, in his report on tlie Finances, in 
 Decemlier, 1870. acknov/ledged his inability any longer to provide 
 for tlie sinking fund.* 
 
 "The Unemployed.— From statistics gathered from trades-uu- 
 
 "*This re.«ult was foreshadowed bpfore the crisis of 1,S73, by an able Eng- 
 lish writer— the author of 'The Bank Charter Act and tlie Rate of l:Ut>re.st.' 
 LiMid. 187.'}: ' To us,' ho says, -it is indeed a rnelanrliolf/ rcjlectioti, and one 
 Vfithal tvorthy of fir ace pondering , that when the United Stdtcs shall return af/ain 
 to a convertible currenci/, the liqaidation of this nation di'bt mast cease. Our own 
 Sinkiuff Fund, derisedfor a similar ohje t, we knoiv, ceased to receive any ini/iort- 
 ant payments after the abrogation of the bank restriction act. No currency, 
 doubtless, but one that tons able to SUSTAIN a greater war, need be expected to 
 
 LiyniOATK ITS COST.' 
 
 '•jThe i)hilosoi)hy which explains these facts is simple; the subordination of 
 commerce to it.s instrument, money, in destroying the i)o\ver of as.sociutioa 
 among the people, of necessity destroys their ability to contribute to the 
 reveiiues of the State.
 
 330 MOXETARY HISTORY OF THE UNITED STATES : 
 
 ions, and other reliable sources, it is estimated that there are over 
 45.000 skilled workman out of employment in the city of New York; 
 while the mayor of Chicago recently expressed the opinion that in 
 the latter city there were 50,0' '0 people without work. During the 
 month of December last, in Philadelphia, outdoor relief was grant- 
 ed by the authorities to 16,637 persons; while January 20th, 1877, 
 there were 4,249 inmates in the Almshouse of that city, and 2,116 in 
 the House Correction, making in the two institutions 6,365 paupers, 
 vagrants, and drunkards. In the once prosperous and happy city of 
 Newark, N. J., one-eighth of the entire population was, in January 
 last, depending on public charity 
 
 "Ix THE Words ov ax Eximext Americ\x Writer. — Laborers, 
 skilled and unskilled, abound, vainly seeking to sell their labor, 
 and mth the proceeds to pay for food and clothing for their wives 
 and children. Banks and savins funds are everywhere being ruined. 
 Thousands of millions of capital invested in coal mines, iron works, 
 factories and railroads, are idle, yielding nothing to their owners. 
 Everywhere mortgages are being foreclosed, and the unfortunate 
 debtor, turned adrift, seeks in vain for lodgings, for either wife or 
 child." 
 
 The total number of deaths in the' United States for 
 the year 1860 was 374,022, and for 1870 they were 
 492,263, as shown by the ninth census report — an in- 
 crease of 118,241, or about 32 per cent, for the year 
 1870 over that of 1860, when tlie increase of popula- 
 tion was only about 22 per cent. 
 
 The total assessed value of all property in all the 
 States and Territories in 1860 was $12,084,560,- 
 005, and in 1870 it was $14,178,986,732— an in- 
 crease for 1870 over that of 1860 of $2,094,426,- 
 727, or about 17^ per cent. — equal to an increase of 
 not quite If per cent, a year.* 
 
 But the values of real estate have greatly depreciated 
 
 *The Chief of the Bureau of Statistics estimated the entire wealth 
 of the country at §30,000,000,000 for 1870, but his method of arriv- 
 ing at this estimate is not at all reliable, as any one may see who 
 reads his explanatory notes on page 636 et. seq. of compendium of 
 the ninth census of the United States. Doubtless the assessments 
 as returned by the county and state officers do not show the exact 
 wealth of the country, but their returns are I^y far the most authen- 
 tic that can be had. It is said they assess too low. If this be true, 
 it would apply to the assessment of 1860 as well as to that of 1870, 
 and the per cent, of increase or decrease of wealth would not be 
 changed by that fact.
 
 THE PRESENT CRISIS. 331 
 
 all over the United States since 1870. Tliis deprecia- 
 tion has been variously estimated. We believe it to be 
 over 75 per cent., but in the following calculation put 
 it only 50 per cent. The total assessed value of real 
 estate for 1870 was $9,914,780,825. Add to this 25 
 percent, foj* undcr-assessnient audit would be $12,- 
 393,486,031. Deduct from this sum 50 per cent, de- 
 cline since 1870, it gives $8,262,350,687 as the present 
 true value of all the real estate in the United States. 
 The assessed value of all the real estate in the United 
 States for 1860 was $6,973,006,049, Add to this 25 
 per cent, for under- valuation and it gives $8,716,257,- 
 561 as the true value of real estate in that year — $453,- 
 906,874 more than its present worth. 
 
 The assessed value of all the personal property in the 
 United States for 1870 was $4,264,205,907. Add to 
 this 25 per cent, for under-value and it gives $5,330,- 
 257,383 as the true value of the personal estate m 
 1870. But prices of personal property have declined 
 since that date on an average over 50 per cent. De- 
 duct 50 per cent, decline since 1870 and we have $3,- 
 553,504,922. But United States bonds are not taxed. 
 Add $700,0(10,000 of them owned in the United States 
 and it gives $4,253,504,922 as the true present value 
 of all personal property in the United States. The 
 assessed value of all the personal property in the 
 United States in 1860 was $5,111,553,956. Add 25 
 per cent, for under-valuation and it gives $6,389,442,- 
 245 as the true value of all the personal property in 
 the United States in 1860— $2,135,937,323 more than 
 its present value. 
 
 It may be said that the freeing of the slaves of the 
 South since 1860 is the cause of the decrease of ag-
 
 332 MOXETAEY HISTORY OF THE I'MTED STATES : 
 
 gregate value of all personal property, but we answer, 
 that the enormous increase of state, municipal and cor- 
 porate bonds which have been issued since 1860, and 
 which are returned in the assessors' list, together with 
 the o-overnment bonds above added to the assessment, 
 will more than offset the destruction of assessed values 
 by reason of emancipation of the slaves. 
 
 These figure show a total depreciation of values of 
 all the property in the United States in 1877 below 
 that of 1860 of $2,598,844,197— equal to a decrease of 
 nearlv 22 per cent, during 17 years, or l/y per cent, 
 per annum I Is this strange ? Not at all, Avhen viewed 
 in the lisht of existinir facts. Taxes have trebbled, 
 debts more than quadrupled, and the amount of money 
 in circulation among the people is less^er capita than in 
 1860. Deducting $60,000,000 coin held In- banks as 
 reserves in 1860, the amount of money then in actual 
 circulation among the people was about $422,000,000, 
 or $14x5 P^r capita. 
 
 The total amount of paper mone}^ of all kinds, 
 too-ether with the subsidiary coins and $15,000,000 of 
 coin circulating in the Pacific States and Territories, 
 now outstanding, is about $732,000,000. Deduct from 
 this $210,000,000 held as reserves by banks, as re- 
 ported hY the Comptroller of the Currency for 1877, 
 and it ""ives $522,000,000 of monev circulating among 
 the people, or %ll^^ per capita, estimating the popula- 
 tion at 46,000,000. This is nearly $3 less per capita 
 than the people had in 18t)0 ! And yet there are men 
 in this country whose heads are so empty, or cheeks so 
 hard, that they unblushingly exclaim, "There is a 
 plethora of money ! " 
 
 The total state, municipal and county taxation for
 
 THE PRESENT CRISIS. 333 
 
 the year 1860 was $94,186,746 ; for 1870 it was $280,- 
 591,521 — an increase of 300 per cent., and the increase 
 has continued to progress since 1870. Besides this, 
 the federal taxes have increased over 400 per cent, 
 durino; the same time. 
 
 Statement of the conditions of the raih'oads in the 
 United States in 1876 and 1877, showing immense 
 losses : 
 
 The Railway Age, of Chicago, stated on Feb. 22nd, 
 1877, that eighty-six railroads had, during the year 
 1876, met with disaster as follows : 
 
 No. of roads. Mileage. Capital invested. 
 
 Sold under foreclosure 30 3846 $217,848,000 
 
 Keceivers appointed, or 
 
 foreclosures commenced 4G 7576 538,000 000 
 
 New defaidts 10 2577 156,6(;i,000 
 
 Grand total 86 14,178 $912,509,000 
 
 The same paper, under date of March 22nd, 1877» 
 
 says : 
 
 '< Out of a total nominal investment of the railroads of this coun- 
 try of $4,775,000 000. about 38 per cent., or $1,800,('00,000, is repre- 
 sented in defaulting roads, and is therefore, fm- the present at least, 
 almost wholly unproductive to the investors." 
 
 And on the same date says : 
 
 "The losses incurred by the shrinkage of the stock of the four 
 
 principal coal roads within the last year are appalling, as shown by 
 
 tiie following table : 
 
 Value 
 Railroads. March 8, 1876. Present value. Shrinkage. 
 
 Central, of New Jersey $21,',)61,750..$ 1,724,645. .$20,217,125 
 
 Dela., Lackaw;ina& Western. 31178,000.. 17.423 0('0.. 13,753,000 
 Delaware & Hudson Canal ... 24,000,000.. 10,400,000.. 13,600,000 
 Reading 32,863,000.. 4,251,000.. 28,612,000 
 
 Total 110,003,250.. 33,818,625.. 76,184.625 
 
 "Add to this $76,000,000 of loss the depreciation upon the bonds 
 of the companies, and the estimate that the total apparent loss 
 caused by the coal panic M'ithin a year will reach one hundred mil- 
 lion of dollars is not far from correct." 
 
 And adds : 
 
 "The loss of nearly $8,000,000 in annua! dividends by the stock-
 
 334 MONETARY HISTORY OF THE UNITED STATES .' 
 
 holders of the four roads named is a calamity of wide-spread 
 effect." 
 
 Table of the average ratios of earnings to capital 
 
 and surplus, of National Banks from March, 1873, to 
 
 Sept. 1st, 1877 : 
 
 1873 5.5 per cent. 187(i 3.2 per cent. 
 
 187-i 4.1) " " 1877 2.5 " " 
 
 1875 -AG " " 
 
 The foregoing table shows a decline of over 100 per 
 cent, since 1873, and a decline of nearly 100 per cent, 
 since the passage of the Resumption Act. 
 
 Bank losses for 1876 and 1877, as reported by the 
 Comptroller of the Currency, pages 34 and 35 of re- 
 port for 1877 : 
 
 Amount March 1. September 1. Total. 
 
 Totallosses for 1877 J6,17.o,960 56 $ll,7.i7,627 4:3 $19,0?,:5,5S7 99 
 
 Tot^l losses for 1876 6,501,169 82 13,217,856 60 19,719,026 42 
 
 Increase of losses of 1877 over those of 1876 f 214,561 57 
 
 The Ninth Census Report shows that, on June 1st, 
 1860, the number of persons in prison in all the States 
 was 19,086. On June 1st, 1870, they were 32,901— an 
 increase of 13,815, or 72 per cent., while the popula- 
 tion increased only 22 per cent. The number of pau- 
 pers for 1860 and 1870, reported in the Ninth Annual 
 Census, is utterly unreliable for the purposes of com- 
 parison, as will be seen by explanatory notes on page 
 563 of the report. The annual cost of support of 
 paupers is more reliable. It was $5,445,143 for the 
 year ending June 1st, 1860, and $10,930,429 for the 
 year ending June 1st, 1870 — an increase of $5,485,286 
 — 100 per cent, for the year 1870 over that of 1860, 
 when the increase of population was but 22 per cent. 
 The increase of pauperism is now very rapid. 
 
 List of heavy embezzlements, condensed from the 
 :N. Y, jSuji of Jan. 1st, 1878 :
 
 THE PRESENT CRISIS. 335 
 
 Year. No. Embezzlers. Amounts embezzled. 
 
 1873 27 § 3,4G0,007 
 
 1874 59 2,0(;8,839 
 
 1875 45 !), 297,331 
 
 187G 59 3,808,048 
 
 1877 122 12,577,951 
 
 Showiiii!- a G-reat increase of that class of crimes. 
 
 Following is a table of the total net revenue of the 
 United States, from 18GG to 1876, inclusive: 
 
 Year. Net revenue. Year. Met revenue. 
 
 1866 .$558,032,620 06 1872 $374,106,867 5G 
 
 1867 490,634.010 27 1873 333,738 204 67 
 
 1868 405 638,083 32 1874 289,478,755 47 
 
 1869 370,943.747 21 1875 288.000,051 10 
 
 1870 411,255,477 63 1876 287,482,039 16 
 
 1871 383,323,944 89 
 
 A constant and rapid decrease of revenue without a 
 corresponding reduction of the rate of taxation. 
 
 Followinir: is a table of the net inimiijration to the 
 United States for the five years ending June 30, 187(>, 
 taken from the Annual Eeport of the Chief of the Bu- 
 reau of Statistics for that year : 
 
 Years ended Net immigration, 
 
 June 30, 1 872 404 806 
 
 June 30, 1 873 459,803 
 
 June 30, 1874 313,339 
 
 June .30, 1 875 227,498 
 
 June 30, 1876 169,986 
 
 Table of net emiijration from the United States for 
 the five years ending December 31st, 1875, taken from 
 the Annual Report of the Chief of the Bureau of Sta- 
 tistics for that year : 
 
 Years ended Net emigi-ation. 
 
 Decemhor31, 1871 21,367 
 
 December 31, 1872 45,323 
 
 December 31, 1873 70,188 
 
 December 31, 1874 92,635 
 
 December 31, 1875 71,725 
 
 The above tables exhibit a decrease of immi2:ration to 
 
 the country of over 100 per cent, since 1872 and 1873, 
 
 and an increase of emigration from the country of over 
 
 300 per cent, since 1871. Perhaps no truer indication
 
 336 MONETARY HISTORY OF THE UNITED STATES : 
 
 of the decline of our prosperity exists than the facts 
 exhil)ited in tliese tables of immio-ration and emiora- 
 tion. 
 
 Hon. Chas. S. Hill, of New York, states the decline 
 of our shipping interests as follows : 
 
 "In order to give an idea of the retrograde movement of our ship- 
 ping interests, let us compare tlie following proportionate value of 
 foreign trade as transported in 1857 and 1867 : 
 1857. To and from New York City in American ships. ...$239,565,610 
 
 " To and from New York City in Foreign ships 104,354,6Sl 
 
 And in 
 
 1867. To and from New York City in American ships. . . 113 313,303 
 
 " To and from New York City in Foreign sliips 371,849,274 
 
 And for 
 
 1857. To and from all our ports in American ships 510,000,000 
 
 " To and from all our ports in Foreign ships only.. 213,000,000 
 Or double in favor of American tonnage. 
 In 
 1867. To and from all our ])orts in American ships 296.000,000 
 
 " To and from all our ports in Foreign ships 580,000,000 
 
 Or double in favor oi foreign tonnage. 
 And in 
 1877. To and from all our ports in American ships 280,000,000 
 
 " To aud from all our ports in P'oreign ships 770,000,000 
 
 Which shows a startling increase of foreign tonnage." 
 
 And a decrease of our own of nearly half in 20 years. 
 Thus it appears that every material interest of the na- 
 tion is in a state of rapid decay. In the last ten years 
 the values of all property, both real and personal, have 
 fallen from 50 to 100 per cent., and the shrinkage con- 
 tinues slowljs but steadily and surely. 
 
 Industrial shops, manufactories, and mines have 
 closed by the hundred ; mercantile and trading classes 
 are becoming bankrupt by thousands ; although the 
 earth yields bountifully to the husbandman's culture, 
 yet his abundant crops are almost consumed in freight- 
 ing the grain to market, his labors go uncompensated, 
 and each year l)rings him harder toil, harder living, and 
 greater distress ; the land owner's rents diminish an- 
 nually and his substance is eaten up with taxes or his
 
 THE PRESENT CRISIS. 337 
 
 estates sacrificed at mortgai^cc's sales ; laborers stroll 
 idly through the streets of cities and trainj) the high- 
 Wixys of the country anxiously but vainly looking for 
 employment ; hundreds of millions of railroad stocks 
 arc sacrificed at mortgage sales, and the shipping in- 
 terests of the country are swept from the seas. Every 
 business man in the countr}^, the merchant, the shop- 
 keeper, the miner, the manufacturer, the miller, the 
 trader, the farmer feels and knows that profits on the 
 industries and business have constantly diminished for 
 some years, and that the diminution progresses with 
 unwearied, unfaltering stejD. They know that the 
 grounds upon Avhich they stand are treacherous. They 
 feel the foundations slipping from beneath their feet ; 
 experience the utmost tension of all their powers to 
 keep them from sinking amid the quick-sands of un- 
 certain, poorly remunerative business. Thousands 
 every year succumb. The basis of their enterprises, 
 the values of property, and the profits of business con- 
 tinue to shrink and shrivel until the feeble, totterin<r 
 base gives way, and years of toil and sweat, and hard 
 earnings fall in a ruined mass together. 
 
 Crime stalks abroad like a devouring monster ; pau- 
 perism skulks in the highways and byways of the coun- 
 try, and shivers through the streets of the cities beg- 
 ging bread from door to door ; prices of labor and 
 profits of business and industry are poorly renmnera- 
 tive and grow less day by day ; factories, workshops, 
 and mines are closing up, and railway corporations 
 failing with millions of liabilities ; death rates are in- 
 creasing ; want of confidence, apprehension, and general 
 discontent irritate the peoi:)le ; fresh and terrible upon 
 the memory is the picture of 200,000 strikers and rioters
 
 338 MONETARY HISTORY OF THE UNITED STATES .' 
 
 with the cry of bread upon their lips, and swift revenge 
 in their hearts, feeling the pillars of government and 
 threatening the "gilded apex of society." The wealth 
 of the country is slipping away like the sands from the 
 hour glass ; morals, the base of all human society, are 
 diseased. 3,000,000 of sturdy men are in idleness and 
 unable to procure honest labor for willing hands ! Up- 
 on the top of this inverted pyramid of weakness and 
 rottenness is piled a crushing weight of. $25,000,000,- 
 000 of debt, and beneath it comes the keen, cutting 
 tide of resumption to dig away the slender base upon 
 which it rests ! This is America ! 
 
 How Ions; must this condition of things last? When 
 will the end be ? When will the country be crushed 
 beneath its mountain of distresses? Is there no help? 
 "Is there no balm in Gilead ?' ' Can the ofovernment find 
 out no remedy? or, finding one, will they refuse to ap- 
 ply it ? Need they be told where the evil lies ? Are 
 they of those who are forever learning and never able 
 to come to a knowledije of the truth ? This distressing 
 state of the countrv is sacrificinsr the debtor classes to 
 close-fisted money lenders ; the mercantile classes to 
 falling markets and liankruptcy ; all the material inter- 
 ests of the nation to decay ; concentrating the wealth of 
 the country in the hands of the few ; dooming the lab- 
 orer to want and misery ; arousing all the evil passions 
 of men and sowins; broad-cast the seeds of revolution. 
 These are not accidental . There is a cause for all these 
 things. Some say it was inflation of the currency. If 
 so, why did not the crisis come during, or soon after, 
 inflation, in the fall of 1865 and beginning of 1806? 
 The crisis did not come until seven years after that, 
 hence, it could not have been caused by inflation. We
 
 THE PRESENT CRISIS. 339 
 
 say coutraction of the currency is the prime cause of 
 the present distress. But l)ulIionists sa}'', "If contrac- 
 tion caused the crisis, wh}^ di<l it not come while the 
 jirreat contraction "svas ffoins: on, or soon after?" "We 
 answer, that the crisis was kept off until 1873 by the 
 extension of credits, as we have shown in the former 
 pages. The bullionists again say, "Inflation Avas not 
 the immediate but the remote cause. It induced spec- 
 ulation and the creation of large indebtedness, and these 
 produced the crisis." "We reply that all the evidences 
 and facts are directly against that assumption. As we 
 have shown in preceding pages, the vast indebtedness 
 of this countrv was not created durinjx iuHation or caused 
 
 r 
 
 by it, but, on the contrary followed and was caused by 
 the vast contraction of the currency. These proposi- 
 tions of the bullionists are contrary both to facts and 
 philosophy. There is no relation whatever between an 
 inflation of the currency and stringency of money, be- 
 cause the supply of money, in such case, is adequate 
 to meet the demand. 
 
 Sound money is not like the human sj^stem, subject 
 to over-exertion and excitement, followed by exhaust- 
 ion or collapse. A dollar, if it be a sound one, whether 
 paper or coin, is good, strong, vigorous, possessing the 
 same powers, functions, and vitality as a dollar all 
 throuirh its life, until the hour of its loss or destruction. 
 If its purchasing power be less at one time than at 
 another, it is not because of any internal weakness or 
 exhaustion of the dollar or its powers, but because of 
 the increased exchange value of the thing sought to be 
 purchased. 
 
 If the currency were gradually inflated to $1,500,- 
 000,000 there would be no strinsencv of money so long
 
 340 MONETARY HISTORY OF THE UNITED STATES : 
 
 as it remaiued thus inflated. On the contrary, money 
 matters would be easy. But suppose the country had 
 $1,500,000,000 and the volume should be reduced half : 
 falling prices would follow and business men would be 
 forced to borrow to meet losses and keep up their estab- 
 lishments. Then would be experienced a stringency in 
 money matters. Why? Not because of inflation, but 
 the very opposite. It would be the necessary result of 
 contraction. But there is a relation between a contrac- 
 tion of the currency, or a contracted volume of money, 
 and stringent or hard times. Money, in one sense, is 
 like other things of value. When plentiful, it is easy 
 to get; when scarce, hard. Every man, the merest 
 novice, knows this to be true. The business of a na- 
 tion as well as of individuals adjusts itself to the quan- 
 tity of money at command, and a decline in the volume 
 of money forces a decline in business, reducing the 
 means of meeting obligations and forcing resort to bor- 
 rowins to meet losses, and thus, while it reduces the 
 supply of money, multiplies the pressing needs of it ; 
 hence, a stringency in money matters inevitably fol- 
 lows and is produced by contraction.
 
 CHAPTER XX. 
 
 THE REMEDY : 
 A PERFECT MONETARY SYSTEM. 
 
 [Review of authors of the past, and criticisms on the current theo- 
 ries of the day, iu Prefatory Chapters I and II, ought to be read before 
 reading this Chapter.] 
 
 The first thins; to be done is for every mim to find 
 "where his interest lies with reference to national finan- 
 ciering. It may seem strange that any one should not 
 know where his own interests are, but it is true that 
 very many do not know what finance policy would be 
 best for them ; aye, thousands are to-day advocating, 
 sustainins;, votino; for financial measures which are iu- 
 imical to their prosperity. 
 
 It is to the interest of the farmer to sell his products 
 and stock at good prices ; the laborer to find constant 
 employment at remunerative wages ; the mechanic that 
 houses should be built ; the artisan and artist that their 
 services should be in good demand ; the professional 
 classes that their skill and ability should be constantly 
 sought after ; the merchant to find large sales and quick 
 returns of profit ; the miner that his products should 
 find a ready market ; the miller that wheat, flour, and 
 lumber should never waste in his bins or rot in the mill
 
 342 THE REMEDY : 
 
 yard ; the commission merchant to have large consign- 
 ments and brisk sales ; the railroad and other lines of 
 transportation to have immense and constant shipments ; 
 the manufacturer that the demand should be equal to 
 or greater than the supply of his line of products ; the 
 real estate owners that houses and lots and land should 
 advance in value and that rents should rise ; the deposit, 
 exchanije and savinsfs banks, and loan and fund com- 
 panics that all business should be brisk and transactions 
 immense ; and the owners of corporate stocks and bonds 
 that the business of the*'corporation should be large and 
 its profits good, so that interest on the bonds may be 
 paid and dividends declared on the stocks. 
 
 The interests of every one of the classes named — 
 and they embrace all the productive, commercial, trans- 
 portation, professional, industrial, and laboring classes 
 — are that times should be "flush," business brisk. 
 Whatever may be the circumstantial, local, sectional and 
 temporary differences between these several classes of 
 men, their general interests, their common prosperity 
 point to and rest in a plentiful supply of money, because 
 commercial and business prosperity cannot exist in a 
 commercial nation with a meagre supply of money. 
 Upon the subject of money the general interests of all 
 these classes are identical, and it is all important that 
 they should awake to a consciousness of their identity 
 of interests and engage in the great conflict now being 
 fought between the general interests of this country 
 and the money power. While the best interests of the 
 latter do not, in point of fact, lie antagonistic to those 
 of the great body of the people, yet their unwise, un- 
 holy greed for money and power have brought them 
 to concentrate all the influence of their abilities and vast
 
 A PERFECT MONETARY SYSTEM. 34S 
 
 wealth to bear upon governments to secure financial 
 policies and monetary laws inimical to every interest of 
 human society. 
 
 The money power is composed of those who hold 
 government bonds and first-class state, municipal, and 
 corporate securities. The national banks are identified 
 with it. The power, wealth, and influence of that class 
 is almost immeasurable. It has been strong; enough to 
 control the government of the United States ever since 
 the war. It is the power the people of this country 
 must overcome before relief can be had. 
 
 The contest will not be one of pigmies, but of giants, 
 of the gods. It behooves the people to summon all their 
 energies, join themselves together, present a united 
 front against the money power, and never cease to con- 
 tend, even for years, until they shall have rescued the 
 government from the influence, flatteries, and strong 
 grip of that giant adversary. This must be done peac- 
 ably. Riots, insurrection, revolution would not accom- 
 plish the object sought, but would add a thousand ills 
 to existing distress. It must be done by the creation 
 of a full irresistible tide of public sentiment expressed 
 on the rostrum, at the hustings, in journals, pamphlets, 
 and books, and then its power applied through the bal- 
 lot so forcibly that the friends and auxiliaries of the 
 money power shall be driven from the commanding of- 
 ficial positions they now hold in the national councils, 
 and their places filled by the friends of the people, 
 by patriots. 
 
 Thus, and only thus, can a remedy adequate to the 
 evil be applied. No palliatives Avill suffice. No patches 
 should be tacked to the threadbare fabric of policies 
 that now cover the nation with distress. Let the cloak of
 
 344 THE remedy: 
 
 hypocritical financial pretensions and policies be rent 
 asunder and cast aside for all time. A thorough and 
 radical change is needed before the country can be res- 
 cued from the rapacity of the money power and freed 
 from the blighting effects of vicious systems. 
 
 The duty of the Government, — The object and end 
 of government is to secure to the people the highest 
 possible degree of general welfare. To this end it is 
 its duty to enact such laws of a general character 
 and so administei public affairs as to encourage virtue 
 and intelligence ; facilitate commerce, foster the indus- 
 tries, encourage production, and secure the adminis- 
 tration of justice. While many acts of government 
 may promote these ends, nothing operates upon them 
 with more force than the exercise of its inherent ri2:ht 
 to control and regulate the nation's monetary affairs. 
 A hiirh decree of national intellio-ence and commercial, 
 industrial, and productive prosperity is incompatible 
 with indigence, scarcity of money ; they are contem- 
 porary only with affluence, plenty of money. Neces- 
 sity knows no law ; misery and wretchedness arouse 
 the blackest passions of men, causing them to fall into 
 vice and trample justice under their feet. In such a 
 state, unions, howsoever auspiciously formed ; consti- 
 tutions, howsoever wise, and laws, howsoever just and 
 wholesome are but the empty form without the sub- 
 stance, the letter without the spirit — ropes of sand, 
 powerless to serve the noble ends for which they were 
 framed. 
 
 The government, for its own preservation, in the 
 faithful discharge of the object of its creation, ought, 
 whenever the nation or any considerable number of its 
 people fall into decay and distress, by the exercise of
 
 A TERFECT MONETARY SYSTEM. 345 
 
 its constitutional powers, administer a relief fuiulamen- 
 tal in its nature and enduring in its character. The 
 present distress of the country is financial. The rem- 
 edy should be applied against the cause and made ade- 
 quate to bring perfect and continuing relief. 
 
 Scai'city of money is the cause of existing evils, and 
 every moral, intellectual, and material interest of the 
 country, for vigorous and healthy development, depends 
 upon the restoration by the government of a sufficient 
 volume of currency to revive all business, give employ- 
 ment to labor, and drive from the country the evil 
 genius, idleness. 
 
 The history of all commercial nations settles, beyond 
 question, two propositions : 
 
 First : That a volume of money large enough to cir- 
 culate freely in every part of the nation^ move all the 
 products of the country, and keep every brain and mus- 
 cle in the land profitably employed is indispensable to a 
 fxdl measure of prosperity . 
 
 Second : That a sufficient and steady volume oj 
 money is absolutely necessary to continuing prosperity. 
 
 To secure these ends the following system is 
 proposed . 
 
 First : Remonetize Silver, and make it a full legal 
 tender in any amount. This would not seriously affect 
 the value of public securities, because it would greatly 
 enhance the value of silver. The remonetization of 
 silver would bring the following benefits to the coun- 
 try : 1st, The capitalists of Europe would, perhaps, 
 move for a remonetization of it there for their own 
 protection, and this would further enhance its value and 
 thus benefit this country, because it produces largo 
 quantities of it. 2nd, Our immense foreign interest
 
 346 THE REMEDY : 
 
 and indebtedness would he more easily paid than 
 if it all had to he paid in gold. 3rd, If silver 
 should remain below gold in value, our foreign cred- 
 itors would desire to aet rid of our bonds. This 
 would induce larger exportations of merchandise 
 from this country to Europe, and the settlement 
 of balances in our favor would be made by sending 
 home our bonds. 
 
 Thus, a process of reducing our foreign indebtedness 
 would set in, proportionately reducing the outflow of 
 coin, and thus the drain of coin would be reduced 
 and our stock would be increased. This, again, would 
 give the banks, if the present banking system be per- 
 petuated, larger coin reseiwes, enabling them to supply 
 the countrv with a larger volume of currency. It would 
 not be a breach of public faith or government contract, 
 because every holder of public securities took them with 
 constructive notice, if not positive knowledge, that all 
 governments have absolute power to make and unmake 
 money and regulate the value thereof. Hence, they 
 took the risk of a change of the legal tender money. 
 Besides this, silver was a legal tender at the time much 
 the larger part of the government bonds were sold. 
 The remonetization of silver would, in some desfree, in- 
 crease the world's legal tender money, and thus tend, 
 in a slight degree, to elevate prices, which would be a 
 benefaction. 
 
 Second : Repeal the Resumption Act. — This Act, if 
 not repealed, will ultimately destroy every dollar of 
 the best paper money we ever had. Legal tender pa- 
 per was the sustaining power which saved this country 
 from universal bankruptcy in 1873. It was good and 
 sound, possessing all the functions of money, and its
 
 A PEKFECT MONETARY SYSTEM. 347 
 
 value and desirableness were not in the slightest degree 
 depreciated hy the panic. On the contrary, it was 
 rather enhanced in both respects. If we had Had no 
 legal tender paper money then, the drain of coin to 
 settle the immense foreign balances, which accrued in 
 1872 and 1878 against us, would have depicted the 
 bank coffers, runs on them would have ruined them 
 and the enormous debts of the country, without a suffi- 
 ciency of legal tender money to meet them, would have 
 crushed the commercial classes and destroyed the in- 
 dustries. 
 
 Legal tenders do not leave the country like gold and 
 silver, but remain with us to avert the reflex action 
 which movements of coin and foreign crises tend to 
 have upon the tinancial affairs of this countr3^ Let 
 the country at least retain its $350,000,000 of legal 
 tenders and not pois itself upon the ticklish inverted 
 cone of banks of issue to experience a precipitate fall 
 to ruin at every tremor of financial disturbance. 
 
 Uepeal the Kesumption Act and the country will be 
 relieved at once from doubt and apprehensions of the 
 future ; confidence will l)e measurably restored ; the 
 system of hoarding will cease ; purse-strings will be 
 loosened ; vaults and safes vnW give up their treasures ; 
 capitalists will invest and lend funds more freely, and 
 considerable improvement will return to all branches 
 of business. This alone is very desirable. But it is 
 not enough. The country nmst have more money. 
 
 All want paper currency. — There is no question be- 
 fore the country as to whether we shall have a paper 
 money or not. All, the most zealous bullionists, know 
 that we cannot rely upon coin. In fact, all their theo- 
 ries are arguments for bank paper. The question then
 
 348 THE REMEDY : 
 
 is reduced to two inquiries : 1st, 'V^^lat kind of paper 
 money shall we have, and who shall issue it? 2nd, 
 How much shall we have ? The second inquiry has 
 been answered in the preceding pages. We ought to 
 have at least $32 or $33 ^er capita. 
 
 Third : National Bank Notes sliould he retired. — 
 The National Bank Act charters them for twenty years, 
 and as a legal question would arise as to the govern- 
 ment's power to directly force the banks to call in iind 
 retire their issues, we do not propose that method. 
 
 It can be effected without any breach of law or infringe- 
 ment upon charters by an act of Congress providing as 
 follows : 1st, Prohibiting the organization of any 
 new banks or any new issues of paper by established 
 banks. 2nd, Let Section 5191 of the Revised Statutes 
 be so amended as to require national banks to increase 
 their deposits of legal tenders in the United States 
 Treasury to ten or twenty per cent, of their issues, 
 and require the Treasurer to retire and destroy national 
 bank notes whenever they come into the Treasury 
 equal in amount to the bank deposits there ; cancel an 
 amount of the government bonds on deposit by the 
 banks equal to the same, and require them to again in- 
 crease their deposit fund in the Treasury. The banks 
 would retire their notes if the tax on their issues were 
 raised so as to render the issuance of notes unprofitable. 
 This process would rapidly accomplish the retirement 
 and destruction of all national bank notes. 
 
 Increase the currency and discharge the national in- 
 debtedness with it. — The financial measures of the gov- 
 ernment ought to be reversed. A radical and thor- 
 ough change is needed. The policy of the government, 
 ever since 18G0, has ])een to reduce the volume of cir-
 
 A PERFECT MONETARY SYSTEM. 349 
 
 culating money, increase the bonded indebtedness and 
 clog the finances of the country with the useless and 
 extravagant national l)anking system. If this policy 
 secured present good or promised future prosperity it 
 could be borne patiently. But it does neither. It 
 brings present distress and piles up interest-bearing 
 obligations to torture and oppress us in the future. 
 The bonded debts ought to be discharged and the vol- 
 ume of i)aper money largely increased. AVc need a 
 paper that will buy food and clothing, and l)e a legal 
 tender for all debts at all times and under all circum- 
 stances ; a money that will be good and current amid 
 panics and crises as well as in prosperity ; a paper 
 whose nervous system will not be so delicate as to feel 
 the shock of every European panic ; a i:)aper which will 
 not inflate with every passing breeze of prosperity, or 
 shrivel under the nipping frosts of adversit3^ 
 
 An absolute, irredeemable leiral tender currency is- 
 sued by the government is the highest type and most 
 perfect kind of paper currency that can be made, and 
 such is the kind we favor most, because it would, after 
 the, maxununi per capita issue had been reached, se- 
 cure to the country a steady per capita supply of 
 money, and free it from the constantly changing sup- 
 ply resulting from banks of issue and redeemable 
 legal tender systems. The objections urged against an 
 absolute legal tender currency^ have already been an- 
 swered in other parts of this work, and it is only 
 necessary to repeat here, that it is not the redeema- 
 bility of legal tender currency which gives it money 
 value and imparts to it the functions and powers of 
 money. Its virtue rests in the people's faith in its cur- 
 rency, and this faith arises from the power and authority
 
 350 THE REMEDY : 
 
 of the government to declare it a legal tender in all 
 business transactions and to enforce its acceptance in 
 the discharge of money obligations, as well as its ac- 
 ceptance in payment of government revenue. 
 
 Fourth : Then, in order to secure the best possible pam- 
 per money and a continuing sufficiency of it, let an act 
 of Congress provide that for every dollar of national 
 bank notes retired there shall be issued bv the United 
 States Treasury a dollar in absolute legal tender notes 
 (or, if 3^ou prefer it, redeemable legal tenders raised 
 to $1,500,000,000 and then constantly increased in 
 proportion to the increase of population and never to 
 be reduced in volume) receivable for all debts and ob- 
 ligations, public and private, except such sum of coin 
 custom duties as may be required to provide a constant 
 coin treasure for war purposes ; until all such bank is- 
 sues shall have been retired from circulation. This 
 would cause the issuance of about $320,000,000 of legal 
 tenders. Let the act of Congress further provide for 
 the issuance of $1,000,000,000 more of the same kind 
 of legal tender paper, in various denominations, from 
 twenty-five cent pieces up to thousand dollar notes, in 
 installments somethins: like the f ollowinir : 
 
 Beginning with January, 1879, $350,000,000 during 
 that year in equal monthly issues ; during 1880, $275,- 
 000,000 in like manner; during 188^, $200,000,- 
 000 in like manner; during 1882, $125,000,000 
 in like manner, and during 1883, $50,000,000 
 in like manner. Let the act further provide that the 
 United States Treasurer use all the new issues which 
 may be made in paying off all government bonds that 
 may be lawfully paid that way, and the residue in buy- 
 ing up and retiring outstanding government coin bonds ;
 
 A PERFECT MONETARY SYSTEM. 351 
 
 and in case lie can not use all of them in that way, then 
 that he shall use the residue of the issue each year in 
 buying up and holding for the government good State 
 bonds. Deducting the over-estimate of the amount of 
 currency now outstanding by reason of that destroyed 
 since it was issued, and the amount of loss and des- 
 truction which would take place during the five years, 
 this system would result in placing in circulation about 
 $1,500,000,000, of legal tender currency at the end of 
 that time ; or $81.25 per capita, estimating the popula- 
 tion then at 48,000,000. This process would enhance 
 the paper value of government ])onds to some extent, 
 but we think it safe to say that they would not average 
 more than 25 per cent, premium over the paper during 
 that time, for the following reasons : 1st, The business 
 and production of the country would so rapidly increase 
 that the new issues of money would not be so excessive 
 as to inflate prices to what they were in 1866. In the 
 beginning of the latter year, with an amount of prop- 
 erty and business far less than will exist under this 
 system, the country, with a population of only 35,000,- 
 000 had a volume of over $1,800,000,000 of money. If 
 in 1866, the country, in an unsettled and excited state, 
 with a volume of money $300,000,000 greater, a pop- 
 ulation many millions less, and the amount of business 
 and property much less than during the enforcement of 
 this system, gold bore only forty per cent, premium 
 over paper money then, it appears reasonable that 
 with peace, prosperity, largely increased population, 
 business and production, bonds would not be higher 
 than 25 per cent, premium over legal tenders under the 
 proposed system. Another reason, and a strong one, 
 for this belief is that the rate of bond interest, being
 
 352 THE remedy: 
 
 much lower than interest on loans will be, and that in- 
 vestments of capital in business and productive enter- 
 prises will be profitable under this system, bond-holders 
 will desire to exchange their bonds for money to invest 
 in business, in safe corporate bonds bearing higher in- 
 terest, or to loan on good security. This would keep 
 down the premium on government bonds bearing low 
 interest. 
 
 Congress should also provide that the surplus reve- 
 nues arising under this system — which would be near 
 a hundred and fifty millions per annum from 1879 on- 
 ward without any increase of the rate of taxation — 
 should be used also in buying up and retiring govern- 
 ment bonds. By this process about $1,700,000,000, 
 nearly the total government interest-bearing bonded 
 debt, would be paid off in five years ; $212,500,000 in- 
 terest saved during the same time and $85,000,000 a 
 year gold interest would be saved to the people for all 
 time. This vast saving would be made even by buying 
 the bonds that way, and if any of them should be re- 
 deemed m leo-al tenders at par, then the saving would 
 be 25 per cent, greater on those so redeemed. 
 
 Possibly the whole of the $1,320,000,000 legal ten- 
 ders so issued, and the surplus revenue could not be 
 used in buying up government bonds during the five 
 years. In that case the Secretary ought to be em- 
 powered to use any amount, not so paid out, in buying 
 up good State bonds, bearing, as State bonds do, a 
 higher rate of interest than government bonds, thus 
 yielding the government profit on interest ; and further 
 empowering him to exchange these bonds for govern- 
 mens bonds, destroying the latter. 
 
 Congress should further provide that after the expi-
 
 A PEEFECT MONETARY SYSTEM. 353 
 
 ration of the five years required for eompleting the is- 
 suance of the $1,320,000,000, new legal tenders like 
 the others shall be issued every year sutfioient to cover 
 the quantity lost and destroyed by use and to increase 
 the volume of currency constantly in proportion to the 
 ratio of increase of population, and that these issues be 
 used also in buvins: up and retirins: jrovernment bonds 
 until all of them shall have been paid off : and that af- 
 ter all the iiovernment bonds shall have been dis- 
 char«red, then the annual issues of new lea^al tenders be 
 applied to defraying the expenses of government and 
 thus reduce the taxes, or used in improving the i\a.Y\- 
 gatiou of rivers, subsidizing ship lines. improA^ing postal 
 facilities, enlarging the national libraries, hospitals, 
 military academies, improving and embellishing the 
 Capitol, encouragement of the industries, or put to 
 such other use as the Ts-isdom of the people may dic- 
 tate. This system would totally extiniruish the ^ov- 
 ernment bonded debt in six or seven years without the 
 slightest taint of repudiation or increase of taxation. 
 Fifth : In ti))}€S of peace prepare for war. — "We may 
 not hope to escape the scourge of war. These terrible 
 con\'ulsions of human society are inevitable. Twenty- 
 five years of unbroken peace is not common. "Wars 
 pile up millions of debt on the people. Under the ex- 
 isting financial policy of the government it is probable 
 that before its present bonded debt is half jDaid off it 
 will have to issue more bonds for war purposes. If 
 such a system be perpetuated as now is administered, 
 it is only a question of time, perhaps not a long time 
 either, when all our energies will be spent in paying 
 interest with scarcely a hope of reducing the principal 
 of the debt. The national government debts in the
 
 354 TKd REMEDY* 
 
 form of bonds, of the civilized world, are estimated at 
 about $28,500,000,000 — an increase of nearly twenty 
 thousand millions in the last twenty-eight years. No 
 corporate, municipal, or individual debts are embraced 
 in this estimate. This enormous sum, most of it pro- 
 duced by war, will prove to be the ruin of nations, un- 
 less they have wise financiers. Shall such be the fate 
 of the United States? It is possible. Another brush 
 or two with Mexico, disagreement with England about 
 boundaries, or fisheries or Fenians, or breaches of 
 treaties, or some unlooked-for event, might at any time 
 precipitate a war and necessitate the sale of large 
 amounts of coin interest-bearing bonds. Unless a 
 rapid discharge of existing obligations takes place the 
 national debt may soon begin a steady growth which 
 will ultimately destroy the liberties of the country. 
 
 A few pages back we have offered a plan for the 
 total extinetion of the present government bonded in- 
 debtedness.- We now su2:2:est one to forever hereafter 
 prevent the necessity of creating any more bonds. It is 
 as follows : Let Congress pass an act providing that 
 after the forejjoing svstem shall have l^een inauo-urated 
 there shall be provided, every year, a surplus revenue 
 of $50,000,000, to be raised from coin custom dues, 
 and that this sum be put away in government vaults 
 and sacredly kept for use only in war. By this method 
 $500,000,000 of coin would be accumulated in the 
 treasury every ten years ; in twenty years, one thous- 
 and millions. 
 
 This may be objected to on the ground that the loss 
 of interest on this money would not justify the hoard- 
 ing of it. We answer that the exj)crience of this gov- 
 ernment during the rebellion refutes the objection,
 
 A PERFECT MONETARY SYSTEM. 355 
 
 because the government lost almost as much in the 
 sale of her bonds as twenty year's interest at five per 
 centum per annum on a thousand millions would amount 
 to. Besides this, every dollar of interest that might 
 be lost on the hoarding would be fully offset by the in- 
 terest the people would have to j^ay on government 
 bonds that must be issued to sustain war, 'if this stock 
 of coin be not accumulated. Furthermore, the govern- 
 ment, in case of w^ar, would not be put to the painful 
 anxiety, expense, and delay of waiting on fiscal agents, 
 in the face of hostile foes, but would have the means 
 of defense, the "sinews of war" at hand, ready to arm 
 and equip her fleets and soldiery at coin prices. This 
 policy would not oppress the people at all. The im- 
 port duties need not be increased. That amount could 
 be so raised even with a reduction of the rate of cus- 
 tom duties. Furthermore, Avith $1,500,000,000 of 
 money the present government taxes would scarcely 
 be felt by the people. 
 
 It might seem best to some that this treasure should 
 be loaned by the government on first-class State and 
 foreign government bonds, and thus not only have the 
 capital but a constantly accumulating interest. This 
 idea is subject to several objections : 1st, The point 
 to be gained is to have at hand a stock of coin always 
 ready for war purposes ; if the money were loaned, a 
 conflict might come and find the government treasury 
 empty ; the bonds would have to be sold in the money 
 markets for whatever they would bring ; the loss on 
 sales would exceed the interest ; but the greatest evil 
 would be a failure to obtain the needed amount of coin ; 
 the government without funds -would be compelled to 
 experience the delay and expense of waiting on fiscal
 
 356 
 
 THE REMEDY : 
 
 agents in a critical moment. 2nd, Such a system of 
 loaning might involve the United States in entano-lino- 
 alliances with her debtor and draw her into war with 
 another power. Some may suppose that such a treas- 
 ure would induce large embezzlements by government 
 officials. This could be avoided by Congress appoint- 
 ing a committee of its own members to weigh the treas- 
 ure every session and report. This would every year 
 detect any abstractions. With a law passed to hang 
 every embezzler, and constant yearly examination and 
 weighing of the treasure no official would lay the hand 
 of theft upon it. The present system of bond selling, 
 and constant tinkering mth the currency and handlino- 
 of revenues present greater facilities for embezzle- 
 ment than such a treasure so guarded would. It may 
 be said that such a store of treasure might put it 
 within the power of some ambitious President or 
 Secretary of the Treasury to usurp the political pow- 
 ers of the nation. We answer that the condition of 
 the country contemporaneous with such a store of 
 treasure would be the surest of all safe-guards against 
 usurpation. Universal prosperity and intelligence 
 among the people would be such as to shame away 
 any such base effort. Outbursts of the bad passions 
 of men and usurpations are common in times of gen- 
 eral distress, but extremely rare during periods of nat- 
 ional prosperity. Furthermore, ten thousand millions 
 of treasure would not suffice to make usurpation a suc- 
 cess, unless the temper of the people offered the oppor- 
 tunity, and when the times are ripe for revolution or 
 usurpation, either may be successful without a dollar 
 in the treasury as well as with plenty. 
 
 It may be said that if the plan proved successful the
 
 A PERFECT MONETARY SYSTEM. 357 
 
 abstraction of so large a sum of coin as $500,000,000 
 or $1,000,000,000 from the commercial world might 
 prove disastrous to the general interests of Europe and 
 America. We answer that, if the United States con- 
 tinue the present financial system it will require at least 
 the smaller sum of coin named to serve her internal 
 uses, which would be taken from or kept out of Eur- 
 ope, and if we substitute a paper money and lock the 
 coin up in the vaults of the treasury it would be the 
 same to Europe as if we used it, and the United States 
 could not suffer by it ; and if we should accumulate 
 and hoard $1,000,000,000 and so take it from the bus- 
 iness world it would simply force the other civilized 
 nations to issue more paper money to take its place, 
 as this country did after the war — a thing they ought 
 to do any way. It could injure them only if they ob- 
 stinately refused to issue the necessary quantity of pa- 
 per to take the place of the coin, and such refusal would 
 be voluntary on their part for which we could not be 
 censured. In case of war and the expenditure of the 
 coin by the government it would not be likely to circu- 
 late here, because it would probably be at a premium 
 over our paper, but would be hoarded or shipped to 
 Europe, in either of which cases it could not detrimen- 
 tally affect our markets, but would tend to advance 
 prices generally on both continents, which would be a 
 benefaction to mankind. 
 
 Sixth : Postal Deposits. — Let Congress also, for the 
 convenience of the people and the safe keeping of small 
 sums of money for the poor, provide that every post 
 office shall be a public repository of money ; that when 
 a deposit is made the post master shall issue to the de- 
 positor a certificate of the amount, assignable by en-
 
 358 THE REilEDY: 
 
 clorsement, protected against fraud and forgery by 
 marks and stamps, payable at any post office in the 
 U. S. or at the Treasury — depositors to pay a small 
 sum, say three cents, for every such certificate, but to 
 receive no interest on deposits. This would give the 
 poor the advantages of the savings bank without im- 
 posing on the government the expense of paying in- 
 terest on deposits. It would be all that small depos- 
 itors need. The important point with them is a more 
 safe repository for their savings, until they have ac- 
 cumulated enough to lend or invest, than three or 
 four per cent, interest on little sums of money. This 
 non-interest-bearing deposit system would be free 
 from serious objections to the interest-bearing gov- 
 ernment deposit system. The latter would induce for 
 interest profits large deposits of money, which would 
 be sunk, for the time being, in the post ofifices and 
 Treasury, reduce the volume of currency actually cir- 
 culating and thus be likely to seriously affect markets 
 and business. 
 
 Seventh : Subsidiary Coins. — For convenience, a few 
 million dollars in silver coins, in pieces from ten cents 
 to a dollar, should be kept in circulation ; also nickel 
 in five cent pieces should be coined. For smaller trans- 
 actions and for convenience in remitting through the 
 mails, one, two, and three cent postage stamps might 
 be made a legal tender in very small amounts — less 
 than a dollar. 
 
 Eighth : Constitutional Amendment. — Simultaneous- 
 ly with the efforts to procure the passage of the above 
 named acts by Congi-ess, let a united and continued 
 pressure be made for an amendment to the Constitution 
 of the United States, eml)odying the same principles
 
 A PERFECT MONETARY SYSTEM. 359 
 
 and empowering Congress to increase the currency and 
 pay off tlie bonds as stated, but prohibiting them from 
 ever reducing the volume of currency. 
 
 Without such constitutional amendment the benefits 
 of the proposed system would be of comparative short 
 duration, because there are always those in the govern- 
 ment councils who manifest an itching desire to tamper 
 with the currency, and it would not be long until ef- 
 forts would be again made to change the system by 
 such uneasy and restless patriots. Then, by all means 
 and above all things, a constitutional amendment should 
 be adopted to secure a good system and so put it be- 
 yond the reach of any class of men to arouse appre- 
 hensions in the minds of the people by spasmodic or 
 constant agitation of the currency question. Such 
 measures would put an end to the mutations of the 
 currency and stop the ceaseless wrangle on the money 
 question, because when once tried it would be found 
 so universally beneficial and satisfactory that to erase 
 it from the constitution would be next to impossible.
 
 CHAPTER XXI. 
 
 BENEFITS OF THE SYSTEM : 
 PEACE AXD EXDURING PROSPERITY. 
 
 First ; While this system would, on the one hand, 
 relieve the country of periodic inflations and contrac- 
 tions of the currenc}'^, alternate buoyancy in business, 
 speculation and feverish markets, followed by depres- 
 sion, falling prices, bankruptcy and general distress, 
 occasioned by the present sj'^stem and all systems of 
 redeemable bank issues, it would not, on the other 
 hand, like the system proposed by the " ultra Green- 
 backers," quickly flood the country wdth a redundant 
 currency, excite the mercantile, trading and soeculative 
 classes, suddenly advance prices beyond the power of 
 the money to sustain them, and after the commercial 
 excitement and the delirium of sj)eculation subsided 
 and failed to sustain values, precipitate prices suddenly 
 down to a ruinous fall, crushing the mercantile and 
 debtor classes, depressing business, stopping the ma- 
 chinery of the industries, throwing labor out of em- 
 ployment, and bringing a great revulsion and general 
 disaster upon the country. 
 
 One of the i)rincipal virtues of the system proposed 
 is that, Avhile it ^vill revive and stimulate all business 
 and advance prices, the graduated system of increasing 
 the volume of currency will constantly sustain them
 
 PEACE AND ENDURING TKOSrEKITY. 361 
 
 and render a revulsion impossible. If the first year's 
 issue should advance prices be3^ond the power of the 
 money issued to sustain them, then the next year's 
 issues, coming on the heels of the advance, will sus- 
 tain it. So with the issues and advance of the second, 
 third, fourth, and fifth years; and after the entire 
 $1,320,000,000 shall have been issued, then the new 
 issues every year to cover loss and destruction of 
 money and to increase the volume in proportion to the 
 increase of population will be constantly strong enough 
 to sustain the prices previously reached. 
 
 There would be no undue inflation of prices to col- 
 lapse, caused by the feverish state of trade, because 
 the steady increase of money would be an ample force 
 to sustain values, even if a season of excitement 
 should prevail, followed by a subsidence. The ad- 
 vance of prices that this system would produce would 
 not be unhealthy ; they could not reach the bight of 
 values in 1866, because then the country had one- 
 fourth less population, less property, and one-sixth 
 more money than will exist under this system. 
 
 Like a successful passage between Scylla and Cha- 
 rybdis, it would bring the countr}'' safely through the 
 straits out into the open seas and quiet harbors of 
 peace and enduring prosperity. 
 
 Second : It would largely increase the government's 
 revenue without any increase of the rate of taxation. 
 This is evidenced by the financial history of all gov- 
 ernments When the volume of money is greatest 
 the revenue is greatest, to prove which the reader has 
 but to examine tables in preceding pages, ^^'e subjoin 
 one here of the net revenues of the Federal Govern- 
 ment from 1830 to 1876, from which, it will be seen
 
 362 
 
 BENEFITS OF THE SYSTEM 
 
 by comparison with tables of mon'ev, in the preceding 
 pao-es, that the revenue has uniformly risen and fallen 
 with the rise and fall of the volume of money in the 
 
 country : 
 
 1830 §24,844,116 
 
 1831 28,526,820 
 
 1832 31,865,561 
 
 1833 33,948,426 
 
 1834 21,091,93.-) 
 
 1835 35,430,087 
 
 1836 50,826,796 
 
 1837 24,890.864 
 
 1838 26,302,561 
 
 1839 30,023,9611 
 
 1840 19,442,646 
 
 1841 16,860,160 
 
 1842 19,965,009 
 
 1843 (to June 30) 8,231,001 
 
 1843-'44 29,320,707 
 
 1844-'45 29,941,853 
 
 1845-'46 29,699,967 
 
 1846-'47 26,437,403 
 
 1847-'4S 35,698,699 
 
 1848-'49 30 721,077 
 
 1849-'50 43,592,888 
 
 1850-'51 62,555,039 
 
 1951-'52 49,846,815 
 
 1852-'53 61.483 730 
 
 1853-'54 73,800,341 
 
 1854-'55 65,350.574 
 
 1855-'56 74 056,699 
 
 1856-'57 68,96.-),312 
 
 1857-'58 46,655,365 
 
 1858-'59 52,761,699 
 
 1859-60 56,054,599 
 
 1860-'61 41,476.209 
 
 186l-'62 51,907,944 
 
 1862-'63 112,088,945 
 
 1863-'64 262,742,354 
 
 l864-*65 323,092,785 
 
 1865-'66 619,646,647 
 
 1866-'67 489,912,182 
 
 ]867-'68 405,638,083 
 
 1868-'69 370,945,817 
 
 1869-'70 411,255,477 
 
 1870-'71 383,327.341 
 
 187l-'72 374,111,365 
 
 1872-'73 333,741.252 
 
 1873-'74 304,979,794 
 
 1874-'75 288.000,051 
 
 1875-'76 265,995,982 
 
 51 
 
 82 
 
 16 
 
 25 
 
 55 
 
 101 
 
 08 i 
 
 69. 
 
 74 1 
 
 68 
 
 08 
 
 27 
 
 25 
 
 26 
 
 78 
 
 90 
 
 74 
 
 16 
 
 21 
 
 50 
 
 88 
 
 33 
 
 60 
 
 31 
 
 40 
 
 68 
 
 34 
 
 57 1 
 
 96/ 
 
 58 
 
 83 
 
 39. 
 
 62 
 
 50 
 
 32 
 
 92 
 
 91, 
 
 34 
 
 32 
 
 94 
 
 63 
 
 07 
 
 73 
 
 47 
 
 84 
 
 10 
 
 39 
 
 Large amount paper money circulat'g. 
 Contraction of currency and crisis. 
 
 Years of scarcity of money and de- 
 pression of business. 
 
 Flush times. Plenty of Money. 
 
 Crisis. Contraction. 
 
 Increase of Money. 
 ■ Crisis of 1861. 
 
 Increasing volume of money. 
 
 . Greatest inflation. 
 
 Years of contraction.
 
 PEACE AJ^D ENDURING PROSPEKITY. 363 
 
 A volume of $1,500,000,000 would raise the revenue 
 to $400,000,000 or $500,000,000 without an increase 
 of taxes. This would yield a suq^lus of $150,000,000 
 per annum, and it invested every year in buying and 
 retiring government bonds would soon pay off the 
 whole bonded debt. 
 
 Third : It would enhance public, municipal and cor- 
 porate securities and thus benefit the holder of them 
 M'ithout inflicting the slightest injury on the jDcople. It 
 would relievo the railroads aud enable their owners to 
 extricate them from the toils of bankruptcy, to pay in- 
 terest on their mortgage bonds, and to pay their em- 
 jiloyes better wages. It would save the debtor from 
 ruin, enable him to pay his debts ; and save creditors 
 from the effects of repudiation, stay laws, exemption 
 laws and bankruptcies. 
 
 Fourth : It would give us the best j^aper money in 
 the world ; a legal tender whose purchasing and debt- 
 paying powers could not be destroyed by money crises 
 or by anything except the will of the government or 
 the destruction of the government. ^N'or could it be 
 seriously affected by anything except loss of faith in 
 the government. So long as the government might 
 stand, so long woukl this money remain good. It 
 woukl give every holder of this paper a jiecuniary inter- 
 est in being loyal and patriotic, in preserving the govern- 
 ment that he would not feel with any other kind of 
 money. 
 
 Fifth : It would unclog the wheels of progress, in- 
 spire the brain to thought, nerve the arm to labor and 
 arouse tile latent energies of 46,000,000 of people to 
 industry. It would re-open the abandoned mines, re- 
 people the sho^is and factories with workmen and give
 
 364 BENEFITS OF THE SYSTEM : 
 
 employment to the 3,000,000 of unwilling idlers. It 
 would give opportunity to all to eat honest bread and 
 thus reduce the appalling mass of pauperism, crime 
 and wretchedness which now distress the country. It 
 would advance prices, increase profits, silence the pub- 
 lic crier, restore the cheerful hum of machinery and 
 drive bankruptcy commissioners and assignees to other 
 pursuits. It would give a new impetus to all the in- 
 dustries, spread the sails of commerce, open up the 
 channels of business, fill the land with peace and 
 plenty and the hearts of the people with gladness. 
 
 Sixth : It would pay off every government bond in a 
 few years, relieve the country from the intrigues of 
 European capitalists and lift from the backs of the 
 people the crushing load of interest under which they 
 now stajrsrer. 
 
 SeveMh : It would free us from the money power of. 
 the world, and relieve us from the bad reflex influence 
 of foreign crises and foreign financial policies. Times of 
 depression produced by extraneous causes M^ould come 
 for a season, but not in the form of destructive panics 
 and financial crashes. Our national coffers would arm us 
 against the world. The weakness of o-overnments which 
 is born of poverty would not be ours. The government's 
 known strength in riches would protect it from insult. 
 Peace would rest securely upon the shield and buckler 
 of defense. A new era of unbounded prosperity 
 Avould set in, peopling the vast regions of this richly 
 endowed heritage with a hundred millions of happy 
 souls, and swelling the rippling, eddying current of 
 progress to a full and steady tide of success. 
 
 Drawn from the general depression of business, de- 
 cay of the industries, the appalling increase of cas-
 
 PEACE AND ENDURING PROSPERIXr 3G5 
 
 ualties, pauperism, crime, suicides, murders, riots, 
 strikes, iucendiarism and general distress, many people 
 have reasoned, and not without some foundation in 
 view of these facts, that our free institutions, our form 
 of government and its methods of administration are 
 failures. Howsoever loth the patriot may be to believe 
 this and howsoever much it may distress him, yet it 
 is true, and the feeling of insecurity and the apprehen- 
 sion that the government under its present constitution 
 is inadequate to preserve the peace and mete out jus- 
 tice spreads, grows and strengthens with every new 
 evidence of national distress. Notwithstanding the 
 fact that the billions and nervous are as prone to mag- 
 nify causes of apprehension as the sanguine are to over- 
 look them, yet the present state of the country, with- 
 out immediate legislative relief, points the mind of the 
 candid investigator to such an accumulation of ills by 
 the time we reach another national election as will in- 
 duce a large part, perhaps a majority, of the people, to 
 seek out and elect to the Presidency some man whom, 
 from his iron will, imperviousness to common sympa- 
 thy, and imperial impulses and tendencies, they may 
 believe equal to grappling Avith the public dangers and 
 suppressing by force the tendency to disorder, rather 
 thiui have the administration guided by law and tem- 
 pered with a paternal care. If such should occur, 
 then a stern sj'stem of governing by blood and steel 
 would set in to blot out the Constitution, cut down 
 the Tree of Liberty, and cleave asunder the bond of 
 union between the States. 
 
 The monetary system proposed by the author, if put 
 in force, would revive business, restore prosperity, 
 give employment to labor, remove the general distress.
 
 366 BENEFITS OF THE SYSTEM. 
 
 relieve the minds of the people, remove doubts of 
 the virtue and strength of the government, water the 
 Tree of Liberty, knit the bonds of Union more closely 
 together, insure the conduct and results of the next 
 national campaign, and succeeding ones, on true and 
 time-honored American principles, and secure adminis- 
 trations composed of patriots whose hearts beat in 
 sympathy with the people, and whose acts would be 
 cQrected toward securing them the largest measure of 
 peace, liberty and happiness. Then discontent, the 
 mainspring of revolutions, would give place to zeal in 
 peaceful pursuits ; idleness, the fruitful parent of riots, 
 strikes and insurrections would be changed to diligent 
 industry ; communism would no longer organize to dis- 
 integrate society, but having lost a practical reason to 
 sustain it, would perish ; the imperial rule of blood 
 and iron would find no place- on this continent, but the 
 goddess of Liberty, with her soft, maternal touch, 
 would rule the land with gentleness. Then Columbia 
 would be, indeed, "the land of the free and the home 
 of the brave," the hope of all the earth, and an asylum 
 for the oppressed of all nations.
 
 CHAPTER XXII. 
 
 SUGGESTIONS SUBSIDIARY. 
 
 First : The author does not hold, nor endeavor to ad- 
 vance the idea, that money can perform the vital functions 
 of national intelligence, virtue and patriotism. These 
 are the enduring support of all good government. 
 When they give Avay, money cannot save the i^olitical 
 fabric ; it topples and fnTls to ruin. A great, an awful 
 responsibility rests upon the teachers, the preachers and 
 stiitesmen of this age, for to them is committed the 
 three vital spirits of liberty, intelligence, ^^l•tue and 
 patriotism. But of all the forces in a nation which re- 
 move the barriers from between the people and these 
 mind leaders, and facilitates the application and utili- 
 zation of their thoughts which warm and words which 
 burn down into the soul, none is so powerful or uni- 
 versal as money. This is so because money circulating 
 freely in a nation gives employment to all, places them 
 in comfortable circumstances and brings the mind into 
 a tranquil state, thus placing the people in a condition 
 to read, reflect and receive good and wholesome in- 
 struction. It subtains the teacher, minister and the 
 statesman, enabling them to devote their lives to the 
 public good. It also increases schools and colleges and
 
 368 SUGGESTIONS SUBSIDIARY. 
 
 facilitates the publication and dissemination of good 
 literature ; sustains benevolent institutions and dis- 
 tributes the gospel. Thus, the free circulation of 
 money in a nation not only brings the minds of the 
 masses into a healthy state, but supplies them with 
 wholesome moral and intellectual nutriment, securing 
 national growth in those virtues. Properly train up 
 the youth and supply the people with a sufficient and 
 steady volume of money, and all the material interests 
 of the nation will be well provided for. 
 
 Second : The complex, arbitrary features of the nav- 
 igation laws ought to be so amended as to give capital 
 and enterprise that freedom which they must enjoy to 
 successfully engage in shipping. Lines of steamers to 
 India, China, South America, the isles of the seas, and 
 wherever else profit awaits the enterprising shipper, 
 ought to be judiciously aided. Our languishing ship- 
 ping interests would thus be greatly benefitted and our 
 commerce and internal wealth increased. And the in- 
 creased custom receipts would suffice to repay the 
 Treasury every dollar of subsidies granted. One of 
 the greatest benefits would l)e the employment of three 
 or four hundred thousand Americans in maritime pur- 
 suits, thus giving employment to an army of men who 
 mi<Tht otherwise remain in idleness, and fitting them 
 for naval warfare. 
 
 Third : All the navigable rivers in the country ought 
 to be so improved as to make internal commercial 
 transit l)y water safe, speedy and cheap. 
 
 Fourth : Such new great trunk lines of railroad as 
 would })enefit the country at large or any great section 
 by their consti-uction, should receive such assistance as 
 would be compatible with the general interests of the
 
 SUGGESTIONS SUBSIDIARY. 369 
 
 country and not impoverish the Treasury, put the 
 government in dol>t or impose burdens upon the 
 people. The Southern, or Texas Pacitic Railway 
 ought to be judiciously aided by the government, so as 
 to secure its completion through Texas and Mexico to 
 the Pacific coast. Thus would be established a trans- 
 continentiil line, free from the snows of the North, 
 lying through a pleasant climate. It would rapidly 
 people the South and develop the great natural re- 
 sources of that section of the Union. It would induce 
 the opening up of some of the richest mines in 
 the world, situate in iNIexico, whose untold wealth 
 would flow into the United States. It would open 
 such a system of commercial and social intercourse be- 
 tween the United Stales and Mexico as to impress 
 .upon that people the ideas, manners and customs of 
 our country and thus be the means of the more se- 
 curely establishing friendly relations between the two 
 nations. 
 
 Fifth ; Such treaties should be made with the proper 
 governments as would secure a canal across Central 
 America from Amatique Bay, or across Panama, to 
 the Pacific, deep and wide enough for the greatest 
 steamers to pass with ease and safety, and with special 
 privileges to the United States and her people. This 
 would give our own ships a monopoly of the trade 
 with ISIexico, secure home transit from the Atlantic to 
 the Pacific and jrreatlv aid our ocean intercourse with 
 China. 
 
 Sixth : The marked tendency of the landed property 
 of the country to concentrate in the hands of heavy 
 capitalists and the rapid increase in the number of the 
 houseless and homeless are matters well calculated to
 
 370 SUGGESTIONS SUBSIDIARY. 
 
 excite apprehensions in the minds of the thoughtful. 
 Nothing gives men greater interest in the peace and 
 prosperity of the sections of country where they reside 
 than ownership of real property. Let a man be de- 
 prived of a property interest in the soil and he stands in 
 the attitude of a wanderer upon the face of the earth, 
 without anything to give him a fixed habitation or an 
 abiding personal interest in the things, conditions or 
 laws of his locality ; and if misfortune be his lot and 
 poverty his portion he is in no condition to enjoy or 
 appreciate the common blessings of free institutions. 
 Such an one, as the unfortunategenerally do, wouldbe 
 apt to attribute his poverty, misfortunes and distress 
 to the conditions of society and the government. There 
 are millions of such in the United States to-day ! 
 What materials for busybodies, the evil-minded ene- 
 mies of our institutions to work upon ! What a stock 
 for the average politician to handle, arousing their 
 passions and increasing their prejudices against the 
 laws and the crovernment ! What a school for commun- 
 ists, disorganizers and revolutionists ! And the private 
 lives of this unfortunate class, consider them ! With- 
 out any fixed habitation, no place of rest, no abiding 
 home, buffetted about from place to place by the busy, 
 bustling, heartless world, Avith scarcely time to snatch 
 a crumb of fleeting comfort as it flies, or catch a 
 glimpse of pleasure as it dances by, the plowshare of 
 distress, or the hard lines of desperate thought cut 
 deep furrows in his face, or utter abandon and dogged 
 indifference sit upon his countenance. The compan- 
 ion of his bosom, with the shades of melancholy on 
 her countenance and a deep, abiding sadness in her 
 heart, yearning for a surcease of sorrow but despair-
 
 SUGGESTIONS SUBSIDIARY. 371 
 
 ing of a better state, prepares the meagre meal, cares 
 for the helpless and unfortunate offspring and performs 
 the round of drudgeries with a dull and hopeless resig- 
 nation, as if the fates had l)ound her to the chariot 
 wheels of distress forevermore ! Ambition gone, 
 emulation dead, self-respect strangled, every hope of 
 life burnt out, the heart seized with despair, anger, re- 
 venge and desperation alone animating them, the un- 
 fortunate and poverty-stricken classes constitute the 
 body of riots, the strength of insurrections and the 
 terrible passion and destructive force of revolutions ! 
 
 The poor man's hope is the rich man's protection. 
 No nation can long remain in peace with an oppressed, 
 poverty-stricken citizenship. No people can long re- 
 main free where the masses are tenants. The ques- 
 tion of property qualifications to vote soon arises in 
 the minds of landed proprietors where their tenants 
 exercise the right of freemen and vote a tax ; the ten- 
 antry bitterly denounce the restrictions, and the irre- 
 pressible conflict of labor and capital grows and 
 strengthens. Thus, two forces combine to destroy the 
 peace of the country and the liberties of the poor : the 
 tendency of the rich to restrict the political rights 
 of the poor, and the tendency of the latter, driven by 
 distress, oppression, and revenge to assume the rights 
 of unrestricted sovereignty, take the law into their o\\ti 
 hands, right their wrongs, and punish their oppressors. 
 Nothing drives a nation more certainly to this state 
 than the concentration of the landed property into the 
 hands of a few and a growing army of poverty stricken 
 tenants and homeless wanderers. Proof of this is 
 abundant in the histories of Rome, France, Ireland, 
 and Mexico.
 
 372 SUGGESTIONS SUBSIDIARY. 
 
 It is important that the law-making power should 
 look to the comfort of the masses and enact such laws 
 as will place relief within the reach of the poor. And 
 it is of paramount importance that a national pride 
 should be aroused in the American mind for the pos- 
 session of landed property. It should be one of the 
 first and most enduring ambitions of the poor man to 
 own a home, to possess in fee the soil upon which he 
 lives ; it is his surest safeiruai'd airainst want, and the 
 strongest barrier that can be raised against oppression 
 and the destruction of his liberties. A state of pros- 
 perity and contentment among tlie people is a stronger 
 conservator of peace and order in society than the arm 
 of the law or standing armies. 
 
 Mr. Garfield. — In his great speech in Congress in 
 favor of resumption, Mr. Garfield deplored the loss by 
 workingmen of $12,000,000 of their $120,000,000 de- 
 posits, w^iich he claims would follow a repeal of the 
 Kesumption Act, on account of the depreciation of the 
 legal tenders. This would be a depreciation of 10 per 
 cent., raising gold to 12| premium, a little higher than 
 it was in 1874, before the Resumption Act was passed, 
 when there was more paper money than now. The 
 simple repeal of the Resumption Act would not necessi- 
 tate the advance of the gold premium. We doubt 
 whether the repeal of the Resumption Act would be 
 followed by 1 per cent, advance in gold, unless some 
 other circumstance produced it, such as falling off in 
 our forcii»;n balances or the accruing of balances against 
 us, and an advance in gold in-emium from these causes 
 would occur as well with as without resumption, un- 
 less the United States Treasur}'' possessed coin to 
 redeem every note that might be presented, and this
 
 SUGGESTIONS SUBSIDIARY. 373 
 
 may not be looked for The loss to workmen on their 
 deposits, resulting from a repeal of the Resumption 
 Aet would scarcely be perceptible. But what would 
 they gain? 
 
 The repeal of the Resumption Act would unhoard at 
 least $100,000,000 of the money now hoarded ; it would 
 cause the National Banks to issue more notes, saj^ $25,- 
 000,000 ; it would remove the apprehensions, doubts, 
 fears, and want of faith now existing everj-^vhere ; give a 
 new imjDetus to all busmess ; enhance values and raise 
 wages. It would not only do this, but proportionately 
 increase all business and thus bring a demand for the 
 employment of idle workmen, and give more constant 
 employment to those engaged. Thus a double benefit 
 would result to workmgmen ; a large advance in wages, 
 and more constant employment. This would be the 
 workman's gain by repeal, and it is all in all to him. 
 It is work that he wants at living wages. Without it, 
 
 ♦' What crowds, in even' land, 
 Are wretched and forlorn ; 
 Sei yonder poor, o'er labor'd wight, 
 So abject, mean, and vile, 
 Who bt^jjs a brother of the earth 
 To give him leave to toil ! 
 And see his lordly fellow worm 
 The poor petition spurn, 
 Unmindful, tho' a weeping wife 
 And helpless offspring mourn. " 
 
 A Question. — Some ask : "If the government should 
 issue more money, how will the people get it, the gov- 
 ernment will not give it to them?" It is stran2re that 
 such a question should be asked, but it has been asked 
 a million tunes, no doubt. It is easily answered. Sup- 
 pose the government should issue $1,000,000,000 new 
 "Greenbacks" ard buy up her bonds with them. The 
 parties to whom this money is paid will invest it in 
 houses or land, or in commerce or the industries, and
 
 374 SUGGESTIONS SUBSIDIARY. 
 
 thus give it a start to circulate, or eise lend it to some 
 one who will so invest it. The man who sells his lands 
 for it will invest it somewhere, perhaps in mules or 
 cattle, or grain- The man who goes to manufacturing 
 with part of it will employ masons, carpenters, and 
 machinists to erect his buildings ; then he will buy the 
 raw material from others, and hire factory hands and 
 pay out his money to them. They must live ; they 
 buy food and clothing. Thus the money would soon 
 scatter in every direction and circulate in all parts of 
 the country, buying merchandise and employing labor.
 
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