I I Globe Litho. & Printing Co., Chicane THE PHILOSOPHY OF PRICE, AND ITS RELATION TO DOMESTIC CURRENCY. BY . A. DUNKING. Ill fares the land to hastening' ills a prey, Where wealth accumulates and men decay." Goldsmith. ... . - !F - tL ROYS & CO., Booksellers & Stationers, 89 Woodward PUBLISHED BY THE CHICAGO SENTINEL PUBLISHING CO., 544 OGDEN AVENUE. CHICAGO. COPYRIGHTED. 1887. CONTENTS. PREFACE CHAPTEK I. Price What it Is, and how established ; The theory of price; Value in use and value in exchange; Commercial value; Supply and demand; Overproduction; Ability to purchase ; Conditions compared ; Labor the sole producer of wealth; Visible and invisible capital; Products purchases money; How wages are reduced; Products of labor the ruling factor ; Relations in exchange of money. CHAPTER II. .rtice and its Dependence upon Currency The discov- ery of money; More money higher prices, less money lower prices; Money during the Dark Ages; Contrast between an abundance and want of currency; Effects of a decreasing currency; Worst effect upon labor; Conflict between labor and capital ; The quantity of currency gov- erns price ; Unjust money system ; Loss to the country 11 CONTENTS. through enforced idleness; Quotations from nearly 100 authors and statesmen. CHAPTER III. Price and Its Relation to Business Story of contraction ; How bonds were sold ; Public Strengthening Creoit Act ; Intent of the law ; Silver demonetized ; Grant's letter ; Re- sumption ; How bonds can be paid ; Decision of Supreme Court on the Legal Tender Act; Table of currency per capita; Table of failures each year; Table of payment of national debt; Henry Clay on currency; Comparison of prices ; Overproduction explained. CHAPTER IV. Kind and Amount of Currency "What we want ; *A distinctive currency ; Gold demonetized ; Silver demone- tized ; Money in the Old World ; Money a measure of value ; Bryant on the power of money ; Kind of currency needed ; How money is redeemed ; Thomas Jefferson on paper money ; Currency bottomed on taxation; Extracts from report of Silver Commission ; Objections to metallic currency ; Gold and silver a commodity; Amount of work performed by a dollar. CHAPTER Y. Value and its Relation to Currency Aristotle on value of money ; What is value in money ; Argument of the yard- stick ; How government should provide money ; Ancient idea of money; 90 per cent of business done with money having no value ; One commodity cannot measure the value of another ; Fluctuations of gold and silver ; Table of fluctuations ; quantity establishes value ; Difference between a treasury and a bank ; Mistakes of government. CHAPTER VI. Protection to Home Industry and Contraction 01 Curren- CONTENTS. Ill cy ; Synopsis of the argument of protection ; Benefits of protec- tion ; Its aim and object ; Conditions surrounding it ; Emigration and currency in connection with protection ; Protection to all or none ; The act granting foreign pauper labor con- tracts of 1864 ; Money appropriated to carry it into effect ; Contraction and protection, one or the other must cease. CHAPTEE VII. CONCLUSIONS. War between capital and labor ; The only remedy ; Reason for depression in business; How to examine these questions ; Hon. L. H. Weller's formula ; Why cheap prod- ucts make hard times ; Hard times produce crime as well as poverty ; Kind and amount of currency ; Proportion of rich to poor ; What the export of silver has done ; Wheat from India and Dakota ; Standard of value ; Standard of payment ; Knights of Labor ; Answers to questions. APPENDIX. LECTUEE DELIVERED BEFORE THE INGHAM COUNTY FARMERS* IN- STITUTE AT MASON, MICH., FEBRUARY 11, 1887. Labor Reasons for its present condition, and remedy pointed out ; The laws governing land and currency responsi- ble ; An expose of our land system ; Our currency system and its relation to labor ; Are we going back to barbarism ? PREFACE. In attempting to place this volume before the public, an apology would perhaps be in order. While this may be true I am led to believe my excuse will sufficiently justify the act. At an early age I began the business of merchandising, which I have recently given up. From 1862 to 1885 I was continually engaged in selling dry goods, groceries, etc., over the counter to my fellow townspeople and farmers from the adjoining country. Upon going out of business I was surprised to find myself, though comparatively young, the oldest business man in our city my business sign being the oldest in town. I have simce had leisure to examine into the changes of the past twenty-three years, and am astonished at the result. But eight men, out of more than one hundred and eighty who had tried to accumulate property by going into mercantile and mechanical business, had made a success. And not a single manufacturing establishment had weathered the storm. In fact, the business VI PREFACE. ventures in our town of 2,000 inhabitants resulted about as follows : Every person who had engaged in the business of loaning money, no matter how small his beginnings, had made a success, while about ninety-five per cent, of all other business ventures had proved a failure. Beginning with this revelation I have carefully and diligently sought for the cause, and to my own satisfaction at least, I have succeeded in finding it. My experience is simply that of all others engaged in similar voca- tions. I used to buy large bills of goods, bring them home, sell them to my customers and have a margin of profit. I would give credit to those asking it, to a more or less extent. The loss from this source was but trifling. After a time, buy goods as cheap as I could, the decline in price during the year consumed my profits. Besides this, men whom I had for years trusted with goods, and had paid promptly, either asked for more time or failed to pay altogether. This continued until self-protection compelled me to curtail my business buy much less goods and give but little credit. A general distrust took the place of confidence, so much so, that everyone asking credit was an object of suspicion. A sort of forced economy seemed to take possession of the people, which upon close in- spection proved only an inability to purchase what they actually needed. A struggle for cheap goods, to sell cheap in order to meet the wants of the people, who for some unknown cause were not prospering in their business, took the place of regular trade, and with it legitimate merchandising ceased. Now, bankrupt stocks, auction stores and brokers' offices reign PREFACE. Vll supreme in all branches of trade. During all these years, when values of all other forms of wealth have shrunk to such an alarming extent, money has continued steadily to increase in value, and now holds high carnival over all others. That this one branch out of all our vast and varied enterprises should thrive and all others wither and go down, is in my judgment a subject of profound importance. It calls for the most careful examination and the highest order of statesmanship. Labor, which is the architect of wealth in all its forms, calls loudly for justice and fair play. The innumerable business ventures of our people demand recognition of their right to survive. In fact, the continued preservation of our civilization, our high standard of morals, and our social and political equality, all conspire to direct attention to this ever increasing separation of values. This volume, which I venture to place before the public, contains my ideas of the cause and its remedy. However much they may be at variance with others, I have endeavored to have them represent independence of thought and honesty of purpose. I have received many suggestions of value, and many kind expressions predicting success, for which I am truly grateful. To my esteemed friend, Milton Ryan Esq., I desire to acknowledge a debt of gratitude not easily repaid.. He has, with characteristic unselfishness, aided me in every manner possible in the prosecution of this work. He has given me many valuable ideas and assisted in the development and com- pletion of many intricate arguments and propositions, which Vill 1'kKKACti. in a work of this kind must of necessity be thoroughly inves tigated. A careful perusal of this volume will enable the reader, if not convinced of the correctness of the propositions put forth, to at least become conversant with the arguments in their favor. K A. D. THE PHILOSOPHY OF PRICE AND ITS RELATION TO DOMESTIC CURRENCY. CHAPTER I. PRICE WHAT IT IS, AND HOW ESTABLISHED. In all ages past, the conditions of mankind, morally, so- cially and intellectually have been subject to changes, some- times for better, but often for worse. Why these varied conditions exist, has led to much thought and consideration. Men, who have built for themselves enduring monuments, are those who have sought and been successful in discovering and pointing out ways and means by which the human family could make advancement toward the consummation of life's chief end peace, happiness and prosperity. While attempting this, many theories have been put forward; some good, others bad, many impracticable, occasionally one sound enough to stand the test of centuries. Experience has performed an important part in this connection, and, while it has not, in all cases, selected that which was best, it has retained but a small portion of that which was bad. But, as civilization progresses, new questions are continually presenting themselves for solution. Sometimes they are old ideas coming .up under different cir- 10 PHILOSOPHY OF PKICE. cumstances in new forms, and again the same proposition may remain unsolved for many years, yet, periodically claiming the attention of -statesmen and scholars. Most men have theories for all the actions of life, and those who know the least concerning the real truth are apt to advance a theory the most promptly. For this reason, nothing but a careful study of the subject will enable any person to even approximate conclusions toward the right. The theory of price, what it is, how made, and the factors governing it, is no exception to this general rule. The more thought I have given this subject the more profoundly I am impressed with its importance. Notwithstanding this question has been under discussion for hundreds of years, it has assumed gigantic proportions in our own nation within a recent period. Without further remarks I will begin its consideration. Adam Smith, the father of political economy, attempts to prove, in his great work, "The Cause of the Wealth of Na- tions," the idea of a double value, or, as he expresses it, "a val- ue in use and a value in exchange." This proposition has been assailed by some of the ablest writers since that time, such as Mill, Senior and others. It has likewise been defended by some of the greatest minds the world has ever known. It is therefore no^v, as it has been in the past, a debatable question and calls for careful, candid consideration before opinions with any degree of honesty or intelligence can be given. Value is, without doubt, an essential element used in ex- change, but I do not believe that exchange is an essential ele- ment in value. In my judgment there is a manifest difference between value in use and in exchange which should be fully examined. Yalue in use is the holder's value ; value in ex- change is the seller's value. A person may hold a thing, not in order to sell or exchange it, but in order to use it. Many things may possess value that are not exchangeable at all. If we limit value to things that are wholly exchangeable we shall WHAT IT IS AND HOW ESTABLISHED. 11 exclude a large and very important class of commodities. A man may own an article which has no exchangeable value and at the same time place a very high value upon it himself, be- cause he understands its use and can turn it to a profitable account. Many instances showing the truth of this proposition might be given. Prof. Syme says : "Value in use is the basis of all industrial activity. Without it there would be no produc- tion, and without production there could be no exchange. To limit value to exchange then, is to deprive economic science of the very foundation on which the whole superstructure rests." Mill and others say : "There are two elements to value utility, and scarcity or difficulty of attainment." This can not be true, as these two elements cannot of themselves consti- tute value. There are many things, such as water, that may be useful, but at the same time have no value. Also an article may be exceedingly scarce and yet be valueless, neither diffi- culty of possession nor attainment, though combined with utility, will confer value. Water, however useful, and ever so scarce, as in the case of a traveler in a desert, does not have any value conferred upon it on that account, if the traveler does not want it. But if he wanted it, if he was suffering for it and if he believed it would satisfy his thirst, water would then be immediately invested with a value in his estimation which neither its acknowledged utility nor its inaccessibility or scarcity previously conferred. Value in use is an absolute term. Value in exchange, commercial value, or price, is a relative term. The intrinsic value of a thing is what it is worth to me, if I keep it. The price, or commercial value of a thing, on the other hand, is what some one else will give me for it. The price of a thing is what it will bring in the market; and while there is only one price, there are always several values. A price can only be arrived at when two or more values coincide, or when the estimate put upon an article by a seller agrees with the 12 PHILOSOPHY OF PRICE. estimate put upon it by a buyer. Not only do individuals differ in their ideas of commercial value (as I shall call it), but they have different methods of arriving at them. The commercial value of an article is always ascertained by a comparison of in- dividual values. Each party to an exchange demands a certain amount. If the demands are equal, the price will be made and the exchange will be effected. If the demands are unequal, no price will be established and consequently no exchange will take place, unless the demands of the one rise or fall to the demands of the other. The price of any article, therefore, is simply its commercial value. Almost everything, at the present time, and, as the arts and sciences are advanced, everything, no doubt, will have two values commercial value or price, in- trinsic value or worth. The first always fluctuates, the latter never. The first depends entirely upon the conditions sur- rounding it; the latter remains the same under all circumstan- ces. The iron girders which span the stream are not changed in their intrinsic value by their use, no matter if their com- mercial value varies from five to fifty cents per pound. This being true, price, then, is the result of commerce, trade or bus- iness. It is purely a commercial phrase, and obtains recognition in the language of the world by its connection with train e or exchange. We inquire the '-rice of wheat to-day, and are in- formed it is worth one dollar per bushel. This is the commer- cial value placed upon that product from the present under- standing of the situation it occupies. To-morrow it may be higher or lower, according to a better knowledge of all the facts relating to it; but during this fluctuation it requires only the same quantity to relieve hunger or sustain animal life. That price is commercial value, and that commercial values are always changing, I conclude are facts beyond question. But when we enter upon an investigation of the causes for this dif- ference in price, w r hy it is less or more at some times than at others, we pass into a field almost limitless in extent, which WHAT IT IS AND HOW ESTABLISHED. 13 shows signs of constant travel by the most profound thinkers of all ages past. For this reason we are met at the commence- ment with innumerable theories and speculations. Some writers have treated the subject as a matter of but trifling im- portance, while others have written volumes upon it. Political economists have sought to make it plain, but, in my judgment, have utterly failed. There seems to be no advancement beyond the old ideas of one hundred years ago. While the world is making rapid strides in all other arts and sciences, why should it not in that art or science no matter which it is called that treats of the desired end of all labor, the accumulation and enjoyment of wealth ? When people come to understand that political economy treats of the most common and ordinary affairs of life the business relations of men to each other that these relations are viewed from different standpoints, they will learn to look upon that science with less awe, and believe writers upon that subject less infallible. In the early ages of our race there were no commercial relations, no exchanges, and consequently no commercial value or price. The intrinsic value of food and raiment was alone considered. Soon, however, trade, barter or exchange came into use among the different families and tribes. The products of one tribe were exchanged for those of another. Then the idea of a price, or commercial value, began to obtain and has continued to the present time. To ascertain what makes that price, what constitutes the commercial value of the products of labor, is the subject of this chapter. Many writers have settled down to the theory that supply and demand wholly establish the price ; that with a surplus of products prices always decline, and with a scarcity always ad- vance. This theory has come to be almost the only recognized explanation of this question. It has been adopted by many 14 PHILOSOPHY OF PRICE. able writers, and quoted as true by both statesmen and scholars. This is a dangerous doctrine, and from it emanates many de- structive theories. This dogma of supply and demand can, with propriety, be placed beside Kicardo's theory of rent or the Malthusian theory of the population of the earth. Each has some foundation in fact, but when arguments are brought to bear upon them, the superstructure is quickly ascertained to be much larger than the foundation, and other theories must be manufactured and put forward to make up the necessary sup- ports. The theory of supply and demand will not admit of want and hunger amidst plenty and low prices. It cannot ex- plain the stubborn fact of pauperism and distress during an era of great abundance and cheap commercial values. The signs of the times and the hard experiences of daily life are a direct refutation of its soundness. It is claimed that overproduction is the prime cause of all this difficulty, or in other words, that the people are suffering from the effects of a surplus of success, or from the evils of a reckless and persistent industry. For, if the term "overpro- duction" means anything, it is that our business enterprises have been too successful; that the economic laws governing our people are too perfect and our inventive genius too prolific of good results; that the nation has been so prosperous anu o fortunate in its undertakings that the present hard times have been brought upon us in consequence. Here is an argument where too great a victory brings defeat, too much happiness brings distress and misery. Let us examine the subject in that light. Does an overproduction of wheat and beef cause my neighbor to go hungry ? Is an abundant supply of clothing the cause of his being ragged ; or of boots and shoes the cause of his going barefoot? Is yonder supply of wood and coal a reason for his being half frozen with wintry winds ? Certainly not. In all these cases the supply is abundant, and the demand most urgent, yet the supply is not lessened nor the demand sat- WHAT IT IS AND HOW ESTABLISHED. 15 isfied. Why ? Because there is a want of ability to purchase. It is plain that there can be no real overproduction unless a large surplus remains after all the people have been fully sup- plied with the necessaries and comforts of life. The public cannot overtrade by distributing each year's productions among those who really need them to use. Too high prices cannot be paid for labor, unless the laborers in general actually gain more than their equitable share of the year's productions. Neither can there be an overstock of laborers so long as thousands are suffering for want of the very articles these laborers would gladly produce, if they could be employed. There cannot be too many houses, when they would be filled with tenants able to pay the rent if work could be obtained. We must look, therefore, for the real cause of these calamities, not in overpro- duction, but in the power that governs the distribution of the products. It does not matter how urgent the demand or abundant the supply, there must be some ability to purchase, or the demand is not satisfied. How, then, can it be truthfully said that supply and demand are the sole arbiters of price ? John Stuart Mill discusses the question at greater length, but with the same conclusion. He says : "The argument against the possibility of general overpro- duction is quite conclusive, so far as it applies to the doctrine that a country may accumulate capital too fast; that produce in general may be increasing faster than the demand for it, reducing all persons to distress. This proposition, strange to say, was almost a received doctrine so late as thirty years ago." There can be no price without a purchaser ; no purchaser without the necessary ability to purchase. Therefore it must follow that the ability to purchase, in all cases, absolutely estab- lishes the commercial value or price. There may be isolated instances of an unexpected demand, or an unlocked for scarcity, which will initiate a competition among buyers, yet the wealth of the purchasers determines the limit beyond which prices cannot be driven. On the other hand, an abundant supply 1G PHILOSOPHY OF PRICE. may tend to lower the price of a commodity ; but the wealth of the people, the ability to hold and not sell, or to buy and hold, determines completely and finally how low the price shall go acting at all times as a check and safeguard. Let me illustrate this point that supply and demand do not make the price. Mr. A has a good dinner to sell. Mr. B is hungry. Mr. A has the supply, and Mr. B has the demand. In this case what establishes the price of the dinner; its original cost to Mr. A, or Mr. B's hungry stomach ? Neither. The commercial value is finally and fully fixed by the contents of Mr. B's pocket- book. It should always be remembered that price knows no original cost. No matter how much a bushel of wheat costs in production, its commercial value is made without any regard to it. The idea that cost of production enters into price is all wrong. Price is what it will sell for and nothing else. A man may consume a lifetime in making a machine, or some- thing else, perhaps of value to mankind, and when completed cannot dispose of it for a single dollar. Mr. A may want fifty cents for his dinner it may have cost that much or more but if Mr. B has but twenty-five cents, the dinner must be sold for that or remain unsold, and consequently without price, because a thing that cannot be exchanged has no commercial value or price. If supply and demand were the only factors in price, legislation might, to a large extent, regulate not only the price of the products of labor, but of labor itself. It could say to the farmer: You shall raise but a certain amount of grain; and to the laborer : You shall do but so many days' work. No greater calamity could befall a civilized nation. It would put an end to all progress or advancement, and destroy all intelli- gence and just emulation. But fortunately this is not the case, as the laws governing this question are of a social nature, and seem to rest on the prosperity and happiness of the whole peo- ple, and point with the finger of prophecy to one universal republic governed and controlled by wise and generous regula- WHAT IT IS AND HOW ESTABLISHED. 17 tions, which aim at making the people equal in all respects before just laws. No nation is, or can be, happy or prosperous with low prices. They operate as a gradually increasing weight in the great race of life ; and those who are the most in want usually carry the heaviest burdens. The condition of every nation is gauged, as regards advancement and social privileges, not by the cheapness of its products, but by their higher commercial values. The people who place the highest value on their labor and its products are the most enlightened, prosperous, and consequently the happiest. '-L o prove this, I refer to the cheap wheat of Russia and India ; the cheap rice of China and Japan ; the cheap cotton of India and Egypt, and the cheaper wools of the South American states. Compare the countries named with our own, or with France, England and Germany. These comparisons will prove my assertions true. This proposition is a strong argument against unrestricted commerce, as the poorest and most degraded nations can and do sell their products the cheapest, thereby compelling other nations, in their industrial pursuits, to sink down to a common level or not sell their products. For it is a well established fact that the products of each nation repre- sent its civilization, and its social, intellectual and religious standing. And, as the products of labor constitute the germ and extend the growth of national prosperity, they necessarily pay for all things beneficial to mankind in the form of direct and indirect taxation. Therefore it follows that the products of nations differ in cost of production in proportion to their different degrees of intelligence and social position. In com- mercial transactions, men buy where they can buy cheapest ; consequently the products of the half savage are taken in pref- erence to those put upon the market by more civilized nations, thereby forcing civilization out of the markets of the world and leaving its products unsold and without price. 18 PHILOSOPHY OF PRICE. With this view of the question, price assumes a more prominent position than many have supposed a position that makes it the arbiter of our joys and our woes, our intelligence or degradation. How important, therefore, is a careful and candid consideration of the subject, to the end that we may all be benefited, by ascertaining, if possible, the different factors that enter into its composition. Since ability to purchase makes the price, and that com- mercial values are an important factor in the success or failure of this life, let us inquire : 1. What this ability to purchase is. 2. From what causes or sources it originates. 3. How it is obtained. In answer to the first inquiry: Ability to purchase or possess is ability to labor and accumulate the products of labor, called wealth. In answer to the second inquiry : It comes from the brain and brawn of the toiling millions, and is that part of invisible capital called labor, the architect of all wealth. In answer to the third inquiry : The ability to purchase or possess is obtained by physical and mental labor alone. ~No matter how much political economists differ on othei subjects, they all agree that labor is the sole producer of wealth. This one fact alone ought to place labor in a position where it would receive the recognition and respect which it so justly deserves. Instead of this it stands on the lowest round of the social ladder with every social advantage above it, seeking to prevent its climbing higher. While this is an admitted wrong to labor which calls loudly for justice and fair play, its condi- tion is not bettered nor are its wrongs righted. We see, all about us, evidences of wealth, such as houses, farms, factories, railroads, shops, etc., etc. These were not stolen; neither are they the spoils of war, nor the result of fraud and knavery. We find by tracing buck the history of each WHAT IT IS, AND HOW ESTABLISHED. 19 that at the ultimate stands bare-handed labor ; that labor and that alone was the prime first cause the fiat of it all. Then I ask: Why should the created dictate to the creator ? Why should the accumulated products of labor be placed at all times and under all circumstances above and before labor itself? Wealth is divided into two classes visible and invisible^ The former consists of money, houses, merchandise, etc. The latter, of physical or mental exertion, stored up by nature in the human body as a means of self-preservation. The last being the creator of the first, as all visible wealth is the pro- duction of the invisible. Some may ask how this is accomplished how these, al- most, self-evident truths could remain undiscovered all these years under the light of modern civilization why have we not thought of them before? I answer : Because as a people, char- acteristically, we are not inclined to search for causes, but are constantly looking for results or effects. Men gather riches; nations become wealthy. These facts are plain, yet but very few ever take the trouble to examine into the cause. We see a new country to-day, almost an unbroken forest, perhaps, with here and there scattered through it a few hardy pioneers. Years -afterwards the wilderness has disappeared. In its place we find great cities, pleasant villages, splendid farms, costly churches, schools, and all the numerous adjuncts of civilization. Where did they come from? How came they here? The change seems impossible, miraculous; yet all this is the rich, ripe fruit of labor, of honest toil. We might, perhaps with profit, notice how this change was brought about. It should be well understood as it has been nan's chief employment from the days of Adam. Mr. A comes to this locality with his family, and, as is ;he usual custom, builds a. log house and goes to work, clearing up his land. lie clears off a small piece of land and plants it to crops. While they are growing he makes more improve- 20 PHILOSOPHY OF PRICE. ments. His products the first year perhaps feed and clothe himself and family. Those of the second year leave him a sur- plus. At this time Mr. B makes his appearance with neither shelter nor food, but is able and willing to work. Mr. A contracts with Mr. B at once to exchange some of his visible capital, such as corn, wheat, and a shelter, for some of Mr. B's invisible capital called labor. Then there are two at work. Soon Mr. B has exchanged more of his invisible capital than he has consumed of visible, and finds himself the possessor of visi- ble capital. With this he starts out for himself ; and in like manner others come, and make a start in life, the result being that soon the once dense forest is made to blossom with evi- dences of visible wealth in every direction all brought about by that one agency labor. Again, we find Mr. A with ten dollars in money, Mr. B with ten bushels of wheat, Mr. C with neither money nor wheat and a family to support. Mr. C wants bread to supply his family. How is he to obtain it? Let us examine. Mr. A wants sonie wood cut for market. Mr. C engages to prepare the wood, that is, he sells Mr. A ten dollars' worth of his invis- ible capital. When the labor is performed, or when Mr. A has received ten dollars' worth of invisible capital from 3fr. C in the shape of a certain number of cords of wood, he remuner- ates Mr. C with ten dollars in cash. This ten dollars Mr. C pays to Mr. B for his ten bushels of wheat which Mr. C's fam- ily at once begin to consume. Mr. A, by this transaction, is wealthier by the profit on his wood, and Mr. B by the profit on -Ids wheat ; and the nation at large is wealthier by the aggregate of both. . This process of accumulating wealth has been going on during the history of the world, and yet, but comparatively few persons either care about, or know, the conditions and cir- cumstances surrounding these ever present and every day pro- ceedings. From the above conclusions we can clearly draw the infer- WHAT IT IS AND HOW ESTABLISHED. 21 ence that the more Mr. A pays Mr. C for his labor, the more Mr. C can pay Mr. B for his wheat; and the more Mr. B re- ceives for his wheat, the more he can expend for clothing, gro- ceries, farming tools, etc., etc. Here again we are reminded of the prominent position that price occupies in all the commer- cial transactions of life. We notice that the price of one arti- cle labor governs all other prices, in the normal condition of trade, that the products of that labor come in direct contact with. It determines the price of B's wheat, and the price of his wheat determines the price of all his purchases. The neces- sity of having a fair price, and to begin in the right place, is not only just, but important to the general welfare of mankind. That place is with labor. When labor brings a good price, everything else does. But when labor is poorly and grudgingly paid, dull times overtake us and all business drags. Upon this point rest several propositions of vital importance to every individual and nation : 1. The degradation of every nation is measured accurately by the amount of the products of its labor given in exchange for a dollar, or unit of their currency. The poorest, meanest, most servile and abject nation and people, always have, and always will, barter the greatest amount of their products for a dollar. 2. The civilization, grandeur, position and social status of every nation is gauged absolutely by the amount of the neces- sities and comforts of life that a day's labor will purchase for its people. I bring as proof of these assertions the wages received and position occupied by the people of every nation on earth. These propositions are too plain to be disputed. Compare the low wages of India, Egypt, China and many other countries that might be mentioned, with the wages paid for labor in the United States, England, France, Germany and other like countries, and then note the difference of their standing among 22 PHILOSOPHY OF PEICE. the nations of the world. The proof is absolute and positive. Here, again, we find that labor is the prime factor in bringing about the best interests of the human family. f Its only terms for such service is being well paid that is, justly compens- ated. In my judgment, the greatest error into which the com- mercial world has fallen and that error seems to have made way for many others is, that money buys or purchases prod- ucts. This cannot be true. A little candid consideration of the question will demonstrate at once that products always buy or purchase money. The child who sold his pennies for candy was much nearer the truth in his ideas than his father who bought his coat with cash. This point is of the utmost import- ance in the discussion of the question of price. There may be those who will not admit the correctness of this proposition because it is ah innovation and somewhat novel; besides it de- molishes at once many oft quoted and long cherished theories. Let us take the example of the farmer, and inquire why he raises wheat. His object is, first to feed his own family, and then with the surplus he purchases money. Bear in mind we are not discussing barter, but commercial transactions where money is a factor. Now, if he uses some of this money to pay his debts, he is simply making a delivery of what he had sold and agreed to deliver some time previous. If he wishes to "purchase" a wagon, for instance, as the phrase goes (wrong nevertheless), what factors enter into that transaction ? The wagon-maker has made (produced) a wagon to pur. chase some money with, and he buys as much money of the farmer as he can for the wagon. A bargain, bear in mind, is the result of a mutual understanding between two or more persons. The farmer goes into the market with his money to sell for a wagon. The person who will pay him the most for his money, that is, sell him a wagon " the cheapest," as the term is used, will purchase his money. The wagon-maker pays, or sells WHAT IT IS AND HOW ESTABLISHED. 23 this same money to his workmen who had already paid for it with labor by manufacturing the wagon. Here we have traced money from one producer to another, and find it does not pur- chase at all, and in its legitimate use has no purchasing power, as it is a creation of law, and not in the true sense a product of labor. Money never goes in advance. Labor takes the lead, money follows. It is the incentive for all production. De- stroy the fact that production will buy money, and to a large extent all surplus production will cease. There is always an obligation preceding the payment of money. That obligation is either labor or its products, or the stipulated payment at some future time of one or both. As before stated, money has no purchasing power ; its one function is to pay debts. It only levels up the difference in bargains. Neither can money be bartered for money, because it has only the one function. But products can be, and often are, bartered for each other, both parties to the transaction being benefited. Here we see products exercising purchasing functions independ- ent and exclusive of money. But on the other hand, money cannot perform its functions without the aid of products. Nor does capital employ labor. Labor employs capital always, but does not employ money. It only employs some previous prod- uct of labor. Money can be utilized only by the laborer, in his vocation, as a medium to obtain some product of labor that he desires to use. Can a man cut dow T n a tree with a five dol- lar bill ? He will first sell enough of his money to obtain an axe, and with that product of labor cut down the tree. Capital employs labor ? Never. Capital is only sold for labor. That is the true and only sense in which it can be used. This explains why so much money is idle in dull times. Men who have money part with it for labor. In time they buy money with the products of that labor. When such products will not purchase more money than was sold to purchase the labor in 24 PHILOSOPHY OF PSICE. the first place, there is a loss. When they will bring more, there is a gain. Wages are reduced by men going into the market to sell money for labor. Those who will pay the highest price for the money, that is, give the greatest amount of labor for it, are sure to get it. Hence, the strife among laborers to buy money brings down the price of their own efforts. If it were true that money employs labor, then, with all the money hoarded, labor would of necessity cease. The fact is, a desire to possess money in order to gratify some other desire in its disposal is the main incentive to labor. This incentive includes the natural disposition of mankind to use all his faculties to sustain life. We are accustomed to say that money is invested in prop- erty, but this is not true. Money is no more invested in prop erty than the yard-stick is invested in the cloth that it meas- ures. When money has passed from one person to another, either as a loan or in payment of property, it is ready to be lent again or to be paid for another piece of property. The money is no more used up by passing from one person to an- other than the yard-stick is used up by measuring a single piece of cloth. We are often told, in the money articles of daily newspapers, that the money of the country has been used up in railroads; but upon traveling over these roads we see evidences that a great deal of labor has been expended in grading them, furnishing the iron and timber and so forth, but we do not see any money. If the money has been invested in these roads, it has now gone somewhere else; and it is still going to and fro in the earth, and up and down it. How true this is, and yet how few ever think of it in this light. In one breath we hear men say : " Times are hard be- cause the money has been sunk in speculation," and " there is just as much money as ever in the country if it could be found." This places the products of labor as the ruling factor or WHAT IT IS AND HOW ESTABLISHED. 25 sole purchaser. And when products are cheap it means that money is dear, and when products are dear, that money is cheap. Money is inert matter. Men gather it together and there it remains until some one wants it, and then it is bought, either with an obligation or with labor and its products. When we take this view of commercial relations, many of the most intricate phases of business are made plain. We can then discover the hidden sources from which financial depression, low prices, and labor strikes emanate ; and can also catch a glimpse of those fountains from which streams of plenty and prosperity now. This proposition clearly shows us where and how to look for the true solution of price. It enables us to examine intel- ligently one of the most intricate subjects of economic science. That products purchase money I believe is a sound doctrine, and one that will be accepted by all writers and thinkers in the near future. In looking in upon our social and business relations, we cannot fail to see the prominent position occupied by price. It is brought to our attention from almost every direction, and by the careful study of almost every subject pertaining to economic science ; in fact, upon it depends, to a more or less de- gree, our social, religious and commercial standing. One of old said : " Price is the dictator of civilization." Price, then, is the value put upon labor by the accumu- lated products of labor the recompense given to invisible capital by visible capital. It is the war cry that gathers the army of capital on one side and labor on the other, keeping them in almost perpetual strife. Without it the world would relapse into barbarism, and the nations of the earth would van- ish. Intelligence, civilization and human progress would cease forever. Price always should be the cost of well-paid labor in production, with reasonable profits for commercial exchange. But that is not the case ; it is established by con- 26 PHILOSOPHY OF PRICE. ditions entirely foreign and in no wise related to the cost of production. A recent writer sums it all up in the following : " The existing financial policy of the world is the same as that which in all ages has given the power of distributing the products of industry to non-producers ; so that while the great bulk of all burdens, of all miscarriages, of all follies and (fiscal) crimes by government and non-producing classes fall upon the industrious producers, no just share of the distribution has ever been made to them ; on the contrary, the greater the profits from the distribution of productions the greater is the contrast in the division between non-producing distributors and the producing industries ; the non-producers take to themselves so inordinate a proportion that the gap or contrast between the condition of distributors and producers in times of prosperity, or seeming prosperity, continually widens ; the prodigious and augmenting wealth of the non-producers and the everlasting subjection of the producers to the most moderate and often precarious supplies of necessaries. The producing classes, the authors and architects of all wealth, have never in any age been allowed the distribution of their own earnings, of the productions of their industry ; nor in its distribution by non-producers have they been allowed a just share. It has been this "creature" money which has controlled the world ; this creature of the law is the sinew of war ; it upraises and oversets kingdoms, empires and republics, as in time of peace it dominates despotically over productive indus- tries ; whosoever commands a man's purse, generally commands him. That such is the power of money, of fiscal legislation, is a truth, known to all men." But again, it^s also true that the ability to purchase depends entirely upon price. They are dependent upon each other. When prices are high it shows that the ability to pur- chase is increasing. When the ability to purchase is impaired, it indicates lower prices ; while the measure of ability to pur- chase makes prices higher or lower, the high or low price clearly shows the degree of ability to purchase. We see from this the sources from which come this ability to purchase. This denominator of prices, this motive power of all industrial WHAT IT IS AND HOW ESTABLISHED. action, upon which the hopes and fears of all nations are placed, should be sought out, carefully nourished and con- stantly strengthened. While the accumulation of wealth enters into this question, the distribution of wealth is the overshad- owing factor. The proper distribution of wealth will solve this great problem of price. Nothing else will. When labor and capital each has its just due when one cannot dictate to the other then will the idea of price be fairly and fully appreciated. Further; price, in other words, is the expression in money terms of the relation which the unit of money bears to a specified quantity, or to the unit of each and every other thing in exchange. It is also the expression in units of prop- erty and services of the value of the unit of money, and with- out having any influence on the relations, is the sure indicator of the exchange relations which the units of all other things bear to each other. Market-price is the expression in the units of money of an equilibrium between the correlative demands of buyer and seller. It is, in fact, generally established through a competition between sellers, rather than buyers ; the market- price of any article being the smallest quantity of money for which the unit of such an article is offered for sale in open market. By the word unit, when applied to money, is intended that denomination in which accounts are kept, and in which judgments are rendered for money, as the dollar in this country and the pound sterling in England. By the same word, as applied to commodities, is intended that specific portion or quantity by multiples or fractions of which all quantities are accustomed to be described, as a ton for coal, or a yard for cloth. The relations in exchange of all other things than money are not at all affected by the volume of money, or by its increase or decrease. Nor do changes in the volume of money practically affect a transaction wherein a seller of prop- erty makes immediate purchase of other property with the pro- ceeds of such sale. Exchange by barter can be as equitably 28 PHILOSOPHY OF PEICE. effected under one volume of money, and under one range of prices, as another. But under a credit system, where contracts aggregating a vast amount, to pay money at future periods, have been made, steadiness in prices becomes the all-important con- sideration, and that steadiness depends on the steadiness in the quantitative relation between money and all other things. The performance of contracts to deliver commodities or render services is not made either less or more difficult by an increase or decrease in the volume of money. But nearly all contracts in the commercial world are for the future delivery of money, and the consideration received and the promise made in such contracts are based on existing prices. The command, there- fore, which commodities and services may have over money in the future, and which will find its expression in price, becomes a matter of vital importance. Whenever under any firmly-established government a system of money has been generally accepted, the value of each unit of such money becomes a general mental conception, which, if it be what is called a value, or metallic money, is not based 'on the past or probable future cost of producing the material of which it is composed, nor on the average cost of its production, nor on the cost of its production in either the most or least prolific mine. Nor, if it be what is called credit-money, having full legal-tender functions, is that portion of it which is unhoarded and in circulation and performing the functions of money, based upon the present value of the promise of the issuer to redeem it, nor .upon the proximity or remoteness of such redemption. Under firmly-established systems the value of each unit of either metallic or paper money depends absolutely upon the number of such units and the relation they bear to the services they are required to perform. It is the limitation of the quantity of money without reference to its cost of production that regulates the value WHAT IT IS AND HOW ESTABLISHED. 29 of each unit of money, whether it be paper or meta^c. In the instance of paper money, limitation is imposed by law ; in that of metallic money it is imposed by nature. The effect in each case is precisely the same. In the one this limitation is regu- lated by the wisdom and judgment of men ; in the other by the numerous obstacles which nature throws in the way of production. The value of money, of whatever kind, is measured by the cost of obtaining it after it has been produced, and not by the expense of its production ; and this value is cor- rectly indicated by the general range of prices. Hence the truth of this proposition: Price is commercial value and is fully established by the ability of the people to purchase, and that ability is greater or less as the volume of currency is increased or decreased. 30 PHILOSOPHY OF PKICE CHAPTEE II. PEICE AND ITS DEPENDENCE UPON CURRENCY. The proposition sought to be made plain and substantiated beyond contradiction in this chapter is, that price, or commer cial value, depends entirely excepting in cases of a sudden demand or an unexpected deficiency upon the amount of cir- culating medium in the country where the price is established ; this circulating medium always controlling the ability to purchase. That with an increase of currency prices advance, while with a decrease they fall. That this has been true in ages past I will call economic history to verify. That it is proving true at the present time I will bring our own condition as a nation to testify. The volume of currency indicates the purchasable quantity which can be distributed for labor and its products. The greater that amount, the more can be distributed ; the less that amount, the less can be distributed. Money, or currency, is a medium of exchange, and also a measure of value for the pur- pose of exchange. These were the original and primitive functions of money ; and anything that by common consent performs these functions was and is money. The age has PRICE AND ITS DEPENDENCE UPON CURRENCY, 31 passed when kings rule by divine right ; also the time has gone by when any particular creation of Deity is recognized as the only material out of which money can be made. Money has come to be known as purely a creation of law ; that the fiat or command which clothes it with these functions is simply the recognized sovereignty of government ; that the material out of which it is made is commodity, and only valued as such. In tracing this back we find barter, an exchange between individ- uals and tribes. As barter increased, the necessity for some- thing to make up the difference in 'labor value between articles exchanged became apparent. Necessity compelled it, and, as has been the custom of mankind, it was found. Various expe- dients were resorted to skins of beasts, shells, cattle, iron, porcelain, copper, brass, silver and gold, all have had their turn ; but in each and every case the commercial value of all products was given as a certain multiple or division of the unit of whatever was used as -money. For example, in this country the commercial value of articles is reckoned either as multiples or divisions of the dollar ; in England, the same with the pound sterling ; in France, with the franc. But, in all these the busi- ness or barter had been conducted, as regards buying and sell- ing, by common consent. But human progress ascertained in the course of time that this money should have another func- tion, a debt paying power. This was given it by law. Now we consider money in our business transactions as a legal tender for the payment of debts. This legal tender func- tion is given it by law ; consequently money, as used to-day, is simply and only the creation of law, as I stated before. Money has no purchasing power, but when once the bar- gain is consummated money steps in and liquidates the debt. If money had purchasing power it would be simply con- fiscation, as it would then have the functions both to possess and remunerate. This has been wisely withheld. Legal tender money being the creation of law, it therefore follows 32 PHILOSOPHY OF PKICE. that tlie same power giving it its legal tender properties can designate its shape, form, and consistency. Here we meet with various theories, some wild, others rea- sonable, all honest. Some would confine the unit of currency to a certain quantity of gold and silver. Others would use copper, iron, or brass; again, others would use the faith and integrity of the nation stamped upon paper. There may be objections to all these, but in my judgment the last is by far the most preferable. No matter what this medium of exchange is, no matter what the fiat or authority of law determines is money, the great question after all is its quantity. The truth is, the most enormous power known to man, or that ever can be his, lies in money in the increase and decrease of its quantity. It is the tide of human affairs upon which all things must rise or sink. It is inevitable and cannot be re- sisted. This power has been obtained through the carelessness of the people, who have been and are now held in ignorance for that very purpose. So early as 1557 we find the keen and piercing intellect of Bodin saying the following : "For men have so well obscured \hefacts about money that the great part of the people do not see them at all. The money- ers do as the doctors do, who talk Latin before women, and use Greek characters, Arab words, and Latin abbreviations, /^rm^ that if the people understood their receipts they would not have much opinion of them." What was true then is practised now. Take the financial reports of Congress ; there is not one person in a hundred who can read them understandingly. They are written so purposely ; that the people may become disgusted and disheartened trying to decipher them, conclude the subject is too deep for their intellect, and leave it for others to interpret. This is exactly the end sought and will continually bring distress upon the na- tion. If the plain people of the country could have these questions fully and simply explained, there would be PEICE AND ITS DEPENDENCE UPON CURRENCY. 33 many vacant seats soon among our present law-makers. Whenever prices have become adjusted to a given amount of currency, an increase of that amount, other things remain- ing unchanged, will cause a rise, and decrease will cause a fall, in prices. But under such conditions other things never do remain unchanged. There are powerful causes, moral and ma- terial, which invariably operate, when money is increasing in volume, to moderate the rise in prices, and to intensify their fall when it is decreasing. Hence, the fall in prices caused by a decreasing volume of money would be much greater in degree than would be the rise caused by a proportionately increasing volume. Whenever it becomes apparent that prices are rising and money falling in value in consequence of an increase of its vol- ume, the greatest activity takes place in exchanges and productive enterprises. Everyone becomes anxious to share in the advan- tages of rising markets. The inducement to hoard money is taken away, and consequently the disposition to hoard it ceases. Its circulation becomes exceedingly active, and for the very plain reason that there could be no motive for holding or hoard- ing money when it is falling in value, while there would be the strongest possible motive for exchanging it for property, or the labor which creates property, when prices are rising. Under these circumstances labor comes into great demand and at remunerative wages. This results in not only increased pro- duction, but increased consumption, as the wants and expend- itures of laborers increase with their earnings. I quote the following from the report of the silver com- mission appointed in 1876 : "At the Christian era the metallic money of the Roman Empire amounted to $1,800,000,000. By the end of the fifteenth century it had shrunk to less than $200,000,000. During this period a most extraordinary and baleful change took place in the condition of the world. Population dwindled and commerce, arts, wealth, and free- 34 PHILOSOPHY OF PRICE. dom, all disappeared. The people were reduced by poverty and misery to the most degraded conditions of serfdom and sla- very. The disintegration of society was almost complete. The conditions of life were so hard that individual selfishness was the only thing consistent with the instinct of self-preserva- tion. All public spirit, all generous emotions, all the noble as- pirations of man, shriveled and disappeared as the volume of money shrunk and prices fell. History records no such disastrous transition as that from the Roman Empire to the Dark Ages. Various explanations have been given of this entire breaking down of the frame- work of society, but it was certainly coincident with a shrink- age in the volume of money, which was also without historical parallel. The crumbling of institutions kept even step and pace with the shrinkage in the stock of money and the falling of prices. All other attendant circumstances than, these last have occurred in other historical periods unaccompanied and unfollowed by any such mighty disasters. It is a suggestive coincidence that the first glimmer of light only came with the invention of bills of exchange and paper substitutes, through which the scanty stock of the precious metals was increased in efficiency. But not less than the energizing influence of Potosi and all the argosies of treasure from the New World were needed to arouse the Old World from its comatose sleep, to quicken the torpid limbs of industry, and to plume the leaden wings of commerce. It needed the heroic treatment of rising prices to enable society to reunite its shattered links, to shake off the shackles of feudalism, to relight and uplift the almost extinguished torch of civilization. That the disasters of the Dark Ages were caused by decreasing money and falling prices, and that the recovery therefrom and the comparative prosperity which followed the discovery of America were due to an increasing supply of the precious metals and rising prices, will not seem surprising or unreasonable when the noble func- tions of money are considered. Money is the great instrument of association, the very fiber of social organism, the vitalizing force of industry, the protoplasm of civilization, and as essential to its existence as ox- ygen is to animal life. Without money civilization could not have had a beginning; with a diminishing supply it must lan- guish, and, unless relieved, finally perish. Symptoms of disasters similar to those which befell society during the Dark Ages were observable on every hand during the first half of the century. In 1809 the revolutionary troub- PRICE AND ITS DEPENDENCE UPON CURRENCY. 35 les "between Spain and her American colonies broke out. These troubles resulted in a great diminution in the production of the precious metals, which was quickly indicated by a fall in general prices. As already stated in this report, it is estimat- ed that the purchasing power of the precious metals increased between 1809 and 1848 fully 145 per cent., or, in other words, that the general range of prices was 60 per cent, lower in 1848 than it was in 1809. During 'this period there was no general demonetization of either metal and no important fluctuation in the relative value of the metals, and the supply was sufficient to keep their stock good against losses by accident and abrasion. But it was insufficient to keep the stock up to the proper cor- respondence with the increasing demand of advancing popula- tions. The world has rarely passed through a more gloomy period than this one. Again do WQ find falling prices and misery and destitution inseparable companions. The poverty and distress of the industrial masses were intense and univer- sal, and since the discovery of the mines of America, without a parallel. In England the sufferings of the people found ex- pression in demand upon Parliament for relief, in bread-riots and in immense Chartist demonstrations. The military arm of the nation had to be strengthened to prevent the all-prevading discontent from ripening into open revolt. On the Continent the fires of revolution smoldered everywhere and blazed out at many points, threatening the overthrow of States and the sub- version of social institutions. Whenever and wherever the mutterings of discontent were hushed by the fear of increased standing armies, the foundations of society were honey-combed by powerful secret political associations. The cause at work to produce this state of things was so subtle, and its advance so silent, that the masses were entirely ignorant of its nature. They had come to regard money as an institution fixed and im- movable in value, and when the price of property and the wages of labor fell, they charged the fault, not to the money, but to the property and the employer. They were taught that the mischief was the result of overproduction. Never having observed that overproduction w r as complained of only when the money stock was decreasing their prejudices were aroused against labor-saving machinery. They were angered at capital, because it either declined altogether to embark in industrial enterprises or would only embark in them upon the condition of employing labor at the most scanty remuneration. They forgot that falling prices compelled capital to avoid such enter- prises on any other condition, and for the most part to avoid 36 PHILOSOPHY OF PRICE. them entirely. They did not comprehend that money in shrinking volume was the prolific parent of enforced idleness and poverty, and that falling prices divorced money, capital, and labor, but they none the less felt the paralyzing pressure of the shrinking metallic shroud that was closing around industry. The increased yield of the Russian gold-fields in 1846 gave some relief, and served as a parachute to the fall in prices, which might otherwise have resulted in a great catastrophe. But the enormous supplies of gold from California and Australia were all needed to give substantial and adequate relief. Great as these supplies were, their influence in raising prices was mod- erated and soon entirely arrested by the increasing populations and commerce which followed them. In the twenty-five years between 1850 and 1876 the money stock of the world was more than doubled, and yet, at no time during this period was the general level of prices raised more than 18 per cent, above the general level in 1848. A comparison of this effect of an increasing volume of money after 1848 with the effect of a de- creasing volume between 1809 and 1848 strikingly illustrates how largely different in degree is the influence upon prices of an increasing or decreasing volume of money. The decrease of the yield of the mines since about 1865, while population and commerce have been advancing, has already produced un- mistakable symptoms of the same general distrust, non-employ- ment of labor, and political and social disgust which have char- acterized all former periods of shrinking money." "It is in a volume of money keeping even pace with ad- vancing population and commerce, and in the resulting steadi- ness of prices, that the wholesome nutriment of a healthy vitality is to be found. The highest moral, intellectual, and material development of nations is promoted by the use of money unchanging in its value. That kind of money, instead of being the oppressor, is one of the great instrumentalities of commerce and industry. It is as profitless as idle machinery when it is idle; differing from all other agencies, it cannot benefit its owner except when he parts with it. It is only un- der steady prices that the production of wealth can reach its permanent maximum, and that its equitable distribution is pos- sible. Steadiness in prices insures labor to all and exacts labor from all. It gives security to credit and stability and prosperi- ty to business. It encourages large enterprises, requiring time for their development, and crowns with success well matured and carefully executed plans. It discourages purely speculative ventures, and especially those based upon disaster. It encour- PRICE AND ITS DEPENDENCE UPON CURRENCY. ages actual transactions rather than gambling on future prices. It metes out justice to both debtor and creditor, and secures credit to those who deserve it. It prevents capital from op- pressing labor and labor from oppressing capital, and secures to each the just share of the fruits of industry and enterprise. It secures a reasonable interest for its use to the lenders of money, and a just share in the profits of production to the bor- rower. It keeps up the distinction between a mortgage and a deed. It insures a moderate competence to the many rather than colossal fortunes to the few at the expense of the many." It may be impossible to devise any system through which the volume of money shall always increase or decrease in cor- responding ratio to the increase or decrease of all those things to measure which is its function. If it be admitted that the volume of money should increase in proportion with either wealth, commerce, or population, the least measure of increase would be that based on population, as in commercial countries both wealth and exchanges are multiplied more rapidly than population. The narrower measure of increase would probably be the more accurate one, as the thing to be measured and which it is important should have an unvarying value is human effort, and as that can neither be increased nor diminished ex- cept through an increase or diminution of the population, it would seem that the volume of money should only vary with population. As steadiness in prices, which depends on steadiness in the relation between money and all other things, is essential to prosperity, it follows that in any change in money-systems the volume of the new money, that is to say, the number of units of the new money issued, should if possible be neither greater nor less than the number of units in circulation at the time of the change. A strict observance of this rule, whatever may be the material of money, will prevent any general rise or fall in prices. The quantity of metallic money, or of paper money con- stantly convertible into metallic money, which can be main- 38 PHILOSOPHY OF PRICE. tained in circulation of any particular country cannot be con- trolled arbitrarily. It cannot be greater than such an amount as may be requisite to maintain the prices of such country at a substantial parity with the prices of all other countries using the same kind of money. Any change from this amount must be temporary, and will be soon automatically corrected by the course of exchange. The volume of inconvertible paper money, on the contrary, is local to, and subject to the control of, the country issuing it, and should be regulated solely with reference to existing prices, and consequently should be neither increased nor diminished, except in correspondence with changes in population and com- merce. The rates of interest for money are not lowered by increas- ing its quantity. It is prices, and not interest, which depend upon the volume of money. The rates for the use of loanable capital depend upon entirely different factors such as the current rates of business proiits, productiveness of the soil, the security of property, the stability of government, pres- sure of taxation, and the fiscal policies of governments such as the maintenance of public debts, which necessarily increase the rate of interest. In truth, increasing the amount of money tends indirectly to increase the rate of interest by stimulating business activity, while decreasing the amount of money reduces the rate of interest by checking enterprises and thereby curtailing the demand for loans. This is signally illustrated by the present condition of things in every part of the commer- cial world. The rate of interest should be, and under a correct money system would be, merely an expression of the rate of profit which could be made through the use of borrowed capital. While the volume of money is decreasing, even although very slowly, the value of each unit of money is increasing in corresponding ratio, and property is falling in price. Those PRICE AND ITS DEPENDENCE UPON CURRENCY. 39 who have contracted to pay money iind that it is constantly becoming more difficult to meet their engagements. The margins of securities melt rapidly away, and the confiscation by the creditor of the property on which they are based becomes only a question of time. All productive enterprises are. dis- couraged and stagnate because the cost of producing commodi- ties to-day will not be covered by the prices obtained for them to-morrow. Exchanges become sluggish, because those who have money will not part with it for either property or services, beyond the requirements of actual current necessities, for the obvious reason that money alone is increasing in value, while everything else is declining in price. This results in the with- drawal of money from the channels of circulation, and its deposit in great hoards. This hoarding of money, from the nature of things must continue and increase, not only until the shrinkage of its volume has actually ceased, but until capitalists are entirely satisfied that money lying 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 greater than would be caused by the direct effect of a decrease in the stock of money. Money in shrinking volume becomes the para- mount object of commerce instead of its beneficent instrument. Instead of mobilizing industry, it poisons and dries up its life- currents. It is the fruitful source of political and social disturbance. It foments strife between labor and other forms of capital, while itself hidden away in security gorges on both. It rewards close-fisted lenders and filches from and bankrupts enterprising borrowers. It circulates freely in the stock exchange but avoids the labor exchange. It has in all ages been tlie worst enemy w T ith which society has had to contend, while its legitimate function is to benefit society. The great and still continuing fall in prices in the United States has proved most disastrous to nearly every industrial 4:0 PHILOSOPHY OF PRICE. enterprise. The bitter experience of the last few years has been an expensive but most thorough teacher. It has taught capital- ists neither to invest in nor loan money on such enterprises, and just as thoroughly has it taught business men not to borrow for the purpose of inaugurating or prosecuting them. Of the few business enterprises now being successfully prosecuted, the larger part are based on a monopoly secured either by pat- ents or exceptional conditions. The business man has discov- ered that the less active and enterprising he is the better he is off. The manufacturer avoids loss by damping down furnace- fires and slowing down machinery. The mining companies would find profit in inactivity, and would probably suspend operations, were it not for the great 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 crushing in of shafts, the rusting of machinery, and the general disarrangement of their interior workings would require for their repair a not much less expenditure than was necessary for their original opening. Hoping for bet- ter times, they therefore struggle on against an adverse current, without profit and 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 with their scanty pittance, called wages, to find in a famishing household a gloom that is more profound. The stockholders of railroads have suffered a vast shrink- age in the value of their property and in the volume of their traffic and in rates of transportation, while their debts have remained nominally the same but really increasing. In order to make their decreased receipts meet the interest on their bonds, they are forced to reduce their operating expenses PRICE AND ITS DEPENDENCE UPON CURRENCY. 41* to the lowest possible point. Their struggles 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- ing 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 account, 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 lands are not mortgaged, and their employes 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 consumers. The tendency of falling prices is to break down the vast diversified 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 containing 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 accumu- lated in large amounts in the great financial centers where securities are more ample. The personal and property securities of individuals have generally ceased to be available, except at the highest rates of interest, or at ruinously low valuations. Money can be borrowed readily only upon such securities as bonds which are based on the unlimited tax-levying power of the government, or upon the bonds and stocks of first-class trunk-lines of railroad corporations, whose freight and fare rates are practically a tax upon the entire population and resources of the regions which they traverse and supply. The competition 42 PHILOSOPHY OF PRICE. among capitalists to loan money on these more ample securities has become very keen, and such securities command money at unprecedentedly low rates. These low and lowering rates of inter- est, instead of denoting financial strength and industrial prosper- ity, are a gauge of increasing prostration. Large accumulations of money in financial centers, instead of being caused by the overflow of a healthful circulation, or even being proof of a sufficient circulation, are unmistakable evidence of a congested condition, caused by a decreasing and insufficient circulation. The readiness with which government bonds bearing a very low rate of interest are taken, instead of showing that the credit of the government has improved, is melancholy evidence of the prostrated condition to which industry and trade have ~been reduced. When the money stock is diminishing and prices are fall- ing, the lender not only receives interest but finds a profit in the greatly increased value of the principal, when it is returned to him. A loan of money made in 1809 if repaid in 1848 would have been repaid with an addition of 145 per cent, in the purchasing power of principal and interest besides all the interest paid. Those who have loaned money to this government since 1861 have already received nearly or quite as much in the increased value of their principal as in interest, and all the probabilities are, in respect to the four per cent, thirty year national bonds, if they are redeemed in gold, that more profit will be made by the augumentation in the value of principal than through interest. Indeed, the signs of the times are that the bonds of a country possessing the unbounded resources and stable institutions of the United States, payable in gold at the end of thirty years without any interest whatever, would, through the increase of the value of that metal, prove a most profitable investment. The worst eft'ect, however, economically considered, of falling prices, is not upon existing property nor upon debtors, PRICE AND ITS DEPENDENCE UPON CURRENCY. 43 evil as it is, but upon laborers whom it deprives of employment and consigns to poverty, and upon society, which it deprives of that vast sum of wealth which resides potentially in the vigor- ous arms of the idle workman. A shrinking volume of money transfers existing property unjustly, and causes a concentration and diminution of wealth. It also impairs the value of existing property by eliminating from it that important element of value conferred upon it by the skill, energy and care of the debtors from whom it is wrested. But it does not destroy any existing property, while it does absolutely annihilate all the values producible by the labor which it condemns to idleness. The estimate is not an extravagant one that there are now in the United States four 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 falling prices shall continue to separate money-capital, the fund out of w T hich wages are paid, from labor, and to discourage its investment in other forms of property. Money capital, labor, and other forms of capital are the warp and woof of the economical system. Labor, co-operating with the forces of nature, is the source of all wealth, and to reach the highest degree of effectiveness it must be classified through the aid of capital and supported by capital during the process of production and be measured and paid in money, each unit of which is a sight-draft on all other forms of prop- erty, bearing a value in proportion to the number of such drafts. In order tliat any country may reach the maximum of material prosperity, certain conditions are indispensable. All its labor, assisted by the most approved machinery and appli- ances, must be employed, and the fruits ot industry must be justly distributed. These conditions are only possible when capital is absolutely protected against violence and free from illegitimate and legislative interference, and when the laborer 44 PHILOSOPHY OF PRICE. is protected in his natural right to dispose of his labor in such manner as he may prefer. They are utterly impossible when the money-stock is shrinking and the money-value of property and services is declining. Howsoever great the natural resources of a country may be, however genial its climate, fertile its soil, ingenious, enterprising and industrious its inhabitants, or free its institutions, if the volume of money is shrinking and prices are falling its inhabitants will be overwhelmed with bankruptcy, its industries will be paralyzed, and destitution and distress will prevail. The instinct of self-interest is the mainspring of industrial and commercial activity. It is the animating motive alike of the capitalist and of the laborer. Without it no labor would be performed, nor would capital have an existence. If money- capital is withdrawn from productive enterprises, it is from the apprehension of loss, and from the same instinct of thrift through which it was acquired. It is natural that the money- capitalist should exact from labor all he can, in exchange for his money, and that the laborer should exact all the money he can in exchange for his labor. What is known as the conflict between capital and labor is not so much a conflict between other forms of capital and labor as it is between money and labor. Indeed, the conflict between money and other forms of capital is as distinctly marked and quite as severe as the conflict between money and labor, and in that conflict other forms of capital suffer fully as much as labor, the only difference being that they are better able to endure losses. Other forms of capital must be constantly con- verted into money in order to pay wages and to meet other demands incident to industrial enterprises. When the stock of money is shrinking and prices are falling, this conversion can only be made at rates continually growing more unfavorable, while at the same time the products of the laborer for whose wages sacrifices have been made are also undergoing a shrink PRICE AND ITS DEPENDENCE UPON CURRENCY. 45 ing of money- value. Thus loss and sacrifice are encountered at every turn, and the owners of other capital than money shrink from the friction of exchange, withdraw from productive enterprises, and only exchange as much of their property for money as will suffice to meet the necessary expenditures of living, which are reduced to the most economical level, as it is principal and not income that is being consumed. Little more labor will be employed under these circumstances than is sufficient to support the owners of capital on this parsimonious basis, and as a consequence the labor market will be overstocked, and the competition between laborers will reduce wages to a starvation level. But during this period, when property is being sacrificed to meet current necessities, and laborers are being remitted to idleness and destitution, money fattens on the general disaster. Under any money system whatever, labor, money and other forms of capital confront each other as opposing forces, each seeking, through a natural instinct, to secure as much as possible of the others in exchange. These forces, although always operating against, are not necessarily inimical to or destructive of each other. On the contrary, under a just money system, they are not even harmful to each other. The conflict between them is essential to the proper adjustment and harmonious working of all parts of the eco- nomical machinery. They are the centripetal and centrifugal forces of the industrial system. The equilibrium of all things is maintained through counter-balances. It is out of the action and counteraction of antagonistic forces that the harmonies of the universe are evolved. But under an unjust money-system which through law or .accident fails to regulate the quantity of money so as to preserve the equilibrium between money and the other factors of production, the conflict between money and labor and other forms of capital becomes destructive and ruinous. It is in the shadow of a shrinking volume of money that disorders, social 40 PHILOSOPHY OK PRICE. and political, gender and fester, that communism organizes, that riots threaten and destroy, that labor starves, that capital- ists conspire and workmen combine, and that the revenues of governments are dissipated in the employment of laborers, or in the maintenance of increased standing armies to overawe them. The peaceful conflict 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 essential to the progress of society, is changed under a shrinking volume of money to an unrelenting war, threatening the destruction of both. Money, in either shrinking or unduly increasing volume, like a dissolving chemical, separates capital from labor. It is not against, capital, but against the false financial system that permits the volume of money to either shrink or unduly increase, that' the hostility of society should be aroused. Let labor and capital be put on equal terms, so that idle capital will be as unfruitful as idle labor, and the conflict between them will cease to be destructive. An unjust money-system produces an unnatural relation between labor, capital and money, and the resulting evils can- not be remedied by special legislation on particular cases, nor by general legislation abridging the natural rights of either. Such legislation would be futile and impertinent, destructive of that freedom of individual action so essential to progress, and subversive of the true interests of all classes of society, and would powerfully tend to the overthrow of free institutions. The equitable adjustment of the correlative demands of capital and labor cannot be made through violence, and is utterly impossible through any legal, or other 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. It is only through the action and counteraction of the antagonistic forces of capita) PRICE AND ITS DEPENDENCE UPON CURRENCY. 47 and labor, automatically operating under a just money-system, that equity and harmony can be evolved. The very same reasons which make capitalists refuse to exchange money, whose command over property is increas- ing, for property whose command over money is decreasing, also makes them refuse to exchange it for labor for the production of property. In a commercial sense industrial enterprises are never undertaken nor carried on, except with the hope and expectation of gain. This expectation, unless under exceptional conditions, falling markets destroy. While capitalists for these reasons cannot afford to invest money in productive enterprises, still less can anybody afford to borrow money for such investments at any rate of interest, however low, and but little money is being now borrowed, except for purely speculative ventures, or to supply personal and fam- ily wants, or to renew 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 performing any of the true functions of money, is nevertheless not unproductive. It may not be earn- ing 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. If this were not the case, and if money were, while idle, losing a little in value instead of gaining, or if it simply held its own, it would be constantly diminished to the extent of the necessary expenditures of its owners who, under such conditions, would be impelled by every instinct of thrift to seek for rev- enues through its employment in productive enterprises. The peculiar effect of a contraction in the volume of money is to give profit to the owners of unemployed money, through the' appreciation of its relative purchasing power or rather its comparative value with products 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 48 PHILOSOPHY OF PRICE. appreciating effect which a shrinkage in the volume of money has OH the value of money that renders the contest an unequal one, and gives to money-capital the decisive advantage 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 con- stantly deteriorate through rust and waste. They cannot escape the assessor and tax-gatherer, as the bulk of money -does, and must pay extra insurance when idle. Labor, unlike money, cannot be hoarded. The day's labor unperformed is so much capital lost forever to the laborer, and to society. It being his only capital, his only means of exist- ence, the laborer cannot wait on better times for better wages. Absolute necessity forces him to dispose of it on any terms which the owners of money dictate. These are the conditions which sui round the laborer throughout the commercial world to-day. The labor of the past is enslaving the labor of the present. At least that portion of the labor of the past which has been crys- tallized into money is enabled through a shrinkage of its volume and while lying idle in the hands of its owners to in- crease its command over present labor and over all forms of property and to transform vast numbers of honest and industri- ous workmen into tramps and beggars. These laborers must make their wants conform to their diminished earnings. They must content themselves with such things as are absolutely es- sential to their existence. Consumption is therefore constantly shrinking toward such limits as urgent necessity requires. Pro- duction, which must be confined to the limits indicated by consumption, is constantly tending towards its mini muni, whereas its appliances, built up under more favorable condi- tions, are sufficient to supply the maximum of consump- tion. Thus idle labor, idle money, idle machinery, and idle capital stand facing each other, and the stagnation spreads PEICE AND ITS DEPENDENCE UPON CURRENCY. 49 wider and wider. The future affords no hope or pros- pect of improvement, except through a change in financial 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 com- merce of the world to a single metal be persisted in by the United States, Germany, and 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 deathly, and the number of idle laborers will indefinitely multiply. The loss which this country sustains by reason of the en- forced idleness of four millions of 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 five per cent per .annum, on $1,800,- 000,000. It \vould be a sum more than sufficent to supply anew each year the circulating 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 money and falling prices, the amount which could, by any possibility be lost in a generation through fluctuations 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 the non-employment of productive ma- 50 PHILOSOPHY OF PRICK. chinery and appliances, the aggregate becomes appalling. The average stocks of nearly all commodities are at no time sufficient for more than a few months 1 consumption. Without constant reproduction mankind would soon be strip- ped of all their movable possessions. No more fatal blow, there- fore, could be directed against the economical machinery of civilized life than one against labor ; and that blow can be most effectively delivered through a policy which strikes down prices. If all debts in this country had been doubled by an act of leg- islation, it would have been a far less calamity to the debtor and to the country than the increase in the real burden already caused by a contraction in the volume of money. And infinitely more disastrous in every sense than an unjust increase in the burden of debt is the universal stagnation of industry and commerce resulting from the same cause. The doubling of debts would have left the productive forces unimpaired, while falling prices are sapping them insidiously and fatally. Nations have often exhibited an astonishing capacity for sus- taining and repairing the destruction of great and protracted wars. The explanation of this will be found in the fact that their productive forces have at such times continued vigorous and active. Armies in barracks and on parade are as essen- tially non-producers as when actively engaged, and a consid- erable proportion of the additions made to armies in times of war are recruited from the ranks of non-producers. England was never more prosperous than during the Napoleonic wars. The Northern and Western states of the Union were never more prosperous than during the civil war, and for some time afterward. So long as all the productive forces are active almost any burden can be borne. The debts of the country, great as they are, would scarcely weigh as a feather if all its labor were employed. Indeed, this country could better afford, in an economical view, to support one million soldiers in the field, than to support its present army of four millions that PRICE AND ITS DEPENDENCEUPON CURRENCY. 51 falling prices have conscripted into tlie ranks of non-producers. At this point I purpose to let authority emphasize what is taught by experience, and make liberal quotations from the soundest thinkers upon this subject, from authors, writers, statesmen, and scholars, to the end that their testimony may substantiate the position taken in this chapter. I have no apology to offer for their number or length except an earnest desire to make clear the proposition, that price depends upon the volume of currency. The earliest in point of time is the following, 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 be- gins to flow in greater abundance than formerly, everfhing takes a new face ; labor and industry gain life ; the merchant becomes more enterprising, the manufacturer more diligent and skillful, and even the farmer follows his plow with greater alacrity and attention. * It is of no manner of conse- quence with regard to the domestic happiness of a state whether money be in a greater or less quantity. The good policy of the magistrate consists only in keeping it, if possible, still increas- ing ; 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 lianol. "William H. Crawford, Secretary of the Treasury, in a re- port (February 12, 1820) to Congress, says : "All intelligent writers on currency agree that when it is decreasing in amount, poverty and misery must prevail." Mr. E. M. T. Hunter, in a report (1852) to the United States Senate, says : "Of all the great effects produced upon human society 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 ISew World to the Old. European industry had been declining under the decreasing stock of the precious metals, and an appreciating standard of values; human inge- 52 PHILOSOPHY OF PRICE. nuity 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 precious metals, in such quantity as to check this tendency, operated as a new motive-power to the machinery of commerce. Produc- tion was stimulated by finding the advantages of a change in the standard on its side. Instead of being repressed by having to pay more than it had stipulated for the use of capital, it was stimulated by paying less. Capital, too, w r as benefited, for new demands were created for it by the new uses which a general movement in industrial pursuits had developed ; so that if it lost a little by a change in the standard, it gained much more in the greater demand for its use, which added to its capacity for re- production, and to its real value." The Encyclopedia Britannica, 1859, (article Precious Metals, by J. R. McCulloch,) says : "A fall in the value of the precious metals, caused by the greater facility of their production, or by the discovery of new sources of supply, depends in no degree on the theories of philosophers, or the decisions of statesmen or legislators, but is the result of circumstances beyond human control ; and al- though, like a fall of rain after a long course of dry weather, it may be prejudicial to certain classes, it is beneficial to an in- comparably greater number, including all who are engaged 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 supply of gold has given a universal impetus to trade, commerce, and industry, and to general social development and progress." The American Review (1876) says : "Diminishing money and falling prices are not only op- pressive upon debtors, of whom, in modern times, states are the greatest, but they cause stagnation in business, reduced produc- tion, 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 wages. An increasing amount of money, and consequently augmenting prices, are at- tended by results precisely the contrary. Production is stiniu- PRICE AND ITS DEPENDENCE UPON CURRENCY. 53 lated by the profits resulting from advancing prices ; labor is consequently in demand and better paid, and the general ac- tivity and buoyancy insure to capital a wider demand and higher remuneration." Leon Fauchet, (1843,) in Kesearches upon Gold and Sil- ver, 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 enough." Before a French monetary convention in 1869 testimony was given by the late M. Wolowski, by Baron Rothschild, and by M. Rouland, governor of the Bank of France. 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 monetary service, they double the demand for the other metal, to the ruin of all debtors." Baron Rothschild said : "The simultaneous employment of the two precious metals is satisfactory and gives rise to no complaint. Whether gold or silver dominates for the time being, it is always true that the two metals concur together in forming the monetary circu- lation of the world, and it is the general mass of the two metals combined which serves as the measure of the value of things. The suppression of silver would amount to a veritable destruction of values without any compensation." At the session (October 30, 1873) of the Belgian Monetary Commission, Professor Laveleye said : "Debtors, and among them the state, have the right to pay in gold or silver, and this right cannot be taken away without disturbing the relation ot debtors and creditors, to the preju- dice of debtors, to the extent of perhaps one-half, certainly of one-third. To increase all debts at a blow, (brusquement), is a measure so violent, so revolutionary, that I cannot believe that the government will propose it, or that the Chambers will vote it." The contrast presented by these authorities between the effects of an increasing and decreasing volume of money, shows 54 PHILOSOPHY OF PRICE. that if a change in the one direction or the other is unavoida- ble, a change in the direction of an increase is the most desira- ble. Because the enlargement of commercial exchanges which results from an increase of money speedily restores the equilib- rium, the real danger of an unduly increasing money is theoretical and fanciful. The trouble which practically threat- ens the world and which has been the most prolific cause of all the social, political, and industrial ills which have afflicted it, is that of a decreasing and deficient amount of money. It is from such a deficiency that mankind are now suffering, and is the actual and present evil with which we are now confronted. I quote further : Adam Smith, the father of political economy, says, page 205: "From the high or low money price either of goods in gen- eral, or of corn in particular, we can infer only that the mines which at that time happened to supply the commercial world with gold and silver were fertile or barren." "Any rise in the money price of goods which proceeded altogether from the degradation of the value of silver, would affect all sorts of goods equally, and raise their price universally a third, or a fourth, or a fifth part higher, according as silver happened to lose a third, or a fourth, or a fifth part of its former value." John Stuart Mill, in Principles of Political Economy, says, page 301 : "The proposition which we have laid down respecting the dependence of general prices upon the quantity of money in circulation, must be understood as applying only to a state of things in which money, that is gold or silver, is the exclusive instrument of exchange, and actually passes from hand to hand at every purchase, credit in any of its shapes being unknown. When credit comes into play as a means of purchasing, distinct from money in hand, we shall hereafter find that the connec- tion between prices and the amount of the circulating medium is much less direct and intimate, and that such connection as does exist, no longer admits of so simple a mode of expression. But on a subject so full of complexity as that of currency and prices, it is necessary to lay the foundation of our theory in a PKICE AND ITS DEPENDENCE UPON CURRENCY. 55 thorough understanding of the most simple cases, which we shall always find lying as a groundwork or substratum under those which arise in practice. That an increase of the quantity of money raises prices, and a diminution lowers them, is the most elementary proposition in the theory of currency, and without it we should have no key to any other." 'Again he says : "If the whole money in circulation was doubled, prices would double. If it was only increased one-fourth, prices would rise one-fourth. The very same effect would be produced on prices if we suppose the goods (the uses for money) diminished instead of the money increased ; and the contrary effect if the goods were increased or the money diminished. So that the value of money all other things remaining the sam,e varies inversely as its quantity ; every increase in quantity lowering its value, and every diminution raising it in a ratio exactly equivalent." Ricardo plainly says in regard to this question : "That commodities would rise and fall in price in pro- portion to the increase or diminution of money, I assume as a fact that is incontrovertible. That such would be the case, the most celebrated wi'iters on political economy are agreed. * * The value of money does not wholly depend upon its absolute quantity, but on its quantity relative to the payments it has to accomplish ; and the same effect would follow either of two causes from increasing the uses for money one-tenth, or from diminishing its quantity one-tenth ; for, in either case, its value would rise one-tenth." William Stanley Jevons, Professor of Political Economy and Logic in Owen University, England, says: "I cannot but agree with Mr. Macculoch, that putting out of sight individual cases of hardship, if such exist, a fall in the value of gold (increasing the quantity of money) must have, and, as I should say, has already, a most powerful beneficial effect. It loosens the country from the old bonds of debt and habit, as nothing else could. It throws increased rewards he- fore all who are making and acquiring wealth, somewhat at the expense of those who are enjoying acquired w r ealth. It excites the active and skillful classes of the community to new exertions, arid is, to some extent, like a discharge of his debts is to the bankrupt and insolvent long struggling against his 5b PHILOSOPHY OF PRICE. burdens. All this is effected without the break of national good faith which nothing could compensate." The Professor proves by methods too lengthy to quote here, that the money already (in 1862) issued from the gold and silver mines of California and Australia had in effect re- duced the burden of the debt of England 40 per cent, by in- creasing the price of labor and all forms of wealth. He further says (Money and the Mechanism of Exchange, page 338) : "Considerable changes, it is true, are taking place in the mode of conducting business in some parts of the Continent. Professor Cliffe Leslie, who is well known to be intimately ac- quainted with the economical systems of the continental coun- tries, attributes the rise of prices in Germany in a great degree to the quicker circulation of the money, and the freer use of in- struments of credit. In the Fortnightly Review for November, 1870 (pages 568-9), he says : 'The improvements in locomotion and in commercial activity which have so largely augmented the money-making power of the Germans, have also quickened prodigiously the circulation of money, and the development of credit, likewise following industrial progress, has added to the volume of the circulating medium a mass of substitutes for money which move with greater velocity. A much smaller amount of money than formerly now suffices to do a given amount of business, or to raise prices to a given range, and to the increased amount of actual money now current in Germany we must add a brisk circulation of instruments of credit. Were the circulating medium composed of coin alone, what- ever the amount of the precious metals issuing from the mines, or circulating in other countries, and whatever the price of German commodities in markets abroad, no rise in the price of German commodities could take place without additional coin to sustain it.'" Page 335 : "To decide how much money is needed by a nation, we must, firstly, determine the quantity of work which money has to do. This will be proportional, leteris paribus, to the num- ber of the population. Twice the number of people, if equally active in trade and performing it in the same way, will clearly want twice as much money. It will be proportional, again, to the activity of industry, and to the complexity of its orgaiiiza- PRICE AND ITS DEPENDENCE UPON CURRENCY 57 tion. The more goods are bought and sold, and the more often they pass from hand to hand, the more currency will be needed to move them. It will be proportional, again, to the price of goods, and if gold falls in value and prices are raised, more money will be needed to pay the debts increased in nominal amount." Prof. Francis Way land, in his work, "Elements of Political Economy," which is taught in our schools and colleges, page 296, says : "The opening of new and richer mines, or the use of improved means for extracting the metals, may cheapen money. The value of money, like that of any other com- modity, is also affected in short periods by fluctuations of sup- ply and demand." Page 297: "If there is more money in a country than is needed for its exchanges, the price of goods is raised and it is sent abroad for new purchases. If there is a scarcity of money in a country, the price of goods declines, and money comes in from other hands to be exchanged for them." Page 298 : "So if one million of dollars serves all the purposes of exchange in a city, to double the amount of money will bring no benefit. If it is a city isolated from the rest of the world, such an increase will merely double prices, that is, twice as much money will be used in every exchange." "If money is abundant because business is stagnant and exchanges are few, it is a sign of adversity rather than of pros- perity. If a scarcity of money is caused by an increase of products and great activity of trade, it indicates a prosperous condition. In countries containing rich mines of the precious metals, money, or the material for money, becomes a product of regular industry, and its abundance is a favorable sign." Prof. Francis Bowen in his work, "American Political Economy," page 280, says : "The power of money thus to determine its own amount arises from the recriprocal action of the quantity of money in active circulation and the price of commodities. All exchange, as I have said, is a barter 01 merchandise for money; and the quantity of money which an article of merchandise will com- mand in the market is termed its price. Increase that quantity, 58 PHILOSOPHY OF PRICE. and the price of all articles inevitably rises ', diminish it, and the price as certainly falls. The whole process of exchange may be compared to the operation of weighing a well-poised balance ; the money and the merchandise being placed on the opposite arms of the lever, increase the weight on the money side and the merchandise is sure to rise. We can easily see, therefore, why the amount of currency for the whole world distributes itself, by its own laws, among all nations, in exact proportion to their respective wants. If by any means one nation should obtain a larger portion than belongs to it by the regular course of trade, all articles of merchandise belonging to that nation must rise in price ; they must be exchanged for a larger quantity of money. Articles of foreign growth and manufacture would be irresistibly attracted thither by this alteration of values. A single article might possibly be ex- cluded by prohibitory legislation. But no arbitrary enactments can so clip the wings of commerce as to prevent it from seeking a market in a country where the price of all commodities has risen above their average value all the world over. Foreign goods must necessarily be imported in such a case, whether by open trading or by smuggling; and, being imported, they must be paid for. Money is the only redundant article in such a community, the only one which can be offered in pay- ment, for all other goods are, by the hypothesis, of a higher price with lliem than in any other country, and cannot be sent abroad but at a sacrifice. Money then would be exported in spite of all coast guards, and the currency would thus be reduced to its natural level." Page 281 : "In the other case, if the currency of any nation should fall below the average proportion to its wants, the price of all merchandise there would fall, they being exchanged against a smaller amount of money." "The equalization of money is but another name for the equalization of prices." Prof. Thompson, Political Economy, while not exactly in accord with this theory as a whole, quotes from many eminent authors as follows : Page 22 : "Mr. Ricardo (following Say and Torrens) also elaborated the theory of international exchanges, in connection with the PRICE AND ITS DEPENDENCE UPON CURRENCY. 59 notion that money is a purely passive instrument of exchanges, changing its purchasing power according to the amount oi it that a country possesses. From this it was an easy infer- ence that a drain of money from a country would either have no effect, or would correct itself by so increasing the pur- chasing power of money in comparison with commodities, as to make the country a bad place to sell in, but a good place to buy in." Page 149 : "On the principles generally accepted by the English school, and first enunciated by David Hume in 1752, the rate of decrease in value should have been exactly proportional to the increase in amount. He says that 'the only influence which a greater abundance of coin has in the kingdom' is 'by heightening the price of commodities and obliging every one to pay a greater number of these little yellow or white pieces for everything he purchases.' He admits indeed a temporary effect of quite another kind. 'In every kingdom into which money begins to flow in greater abundance than formerly, everything takes a new face ; labor and industry gain life, the merchant becomes more enterprising, the manufacturer more diligent and skillful, and the farmer follows his plow with greater alacrity and attention." Page 150, quotes J. S. Mill : "If the whole money in circulation was doubled, prices would be doubled ; if it was only increased one-fourth, prices would rise one-fourth." Page 208, quotes Thomas Tooke : "Hence new uses will be found for it when it is abundant, new avenues of commerce will be opened, new branches of industries will be essayed, until increased production finds employment for the increase of money. If money has increased, industry and trade are increased ; and thus the tendency to depreciation is met and strongly counteracted." Page 208 : "The drain of precious metals from a country, though its effects are alleviated by the creation of the credit-fund for domestic payments, is therefore decidedly injurious to its gen- eral interests. It is not exactly true to say, as has too often been said over and over again, since Turgot first said it, that UK >ney is a commodity like any other. That proposition is untrue, 60 PHILOSOPHY OF PRICE. except as it regards the metal of which money is made, but in so far as it is the means of exchange, it has peculiarities of its own, which clearly distinguish it from other commodities. If iron and cotton are scarce, those who need them* suffer by the scarcity, but it lias no effect upon the prices of other materials. If, on the other hand, money is scarce, the price of everything else is affected. Every one must make exchanges, must buy and sell ; if, therefore, there is a tendency to a deficiency or a scarcity of the means of exchange, everyone is straitened, and all transactions become difficult. Just as when the water falls in its rivers, traffic is interrupted because the vessels are aground, so, when money is diminished or disappears from the channels of circulation, articles pass from one owner to another with great difficulty. We have got to the point of dispensing, in the commercial transactions of advanced countries, with a great quantity of money by replacing with credit in all its forms ; but, given the quantity of money that is still necessary, its rarity produces an embarrassment, and sometimes even a general crisis." Professor Perry says : "The fact that such a medium is in universal circulation, and that the holders are ready and willing to exchange it against any sort of service adopted to gratify their desires, ex- ercises a kind of' creative power, and brings a thousand produc- tions to market which would otherwise never have come into existence. Since money will buy anything, men are on the alert to bring forward something which will buy money ; and since money is divisible into small pieces, an incredible num- ber and variety of small services are brought forward to be ex- changed against these pieces, which service we have no reason to suppose would ever be brought forward at all, were it not for the strong attraction of money. Money is a form of capi- tal which stimulates and facilitates all the processes of pro- duction without exception.'''' Professor Chevalier, of France, than whom no greater authority on money has ever lived, in speaking of the increase of money, says : "Such a change will benefit those who live by current la- bor and enterprise ; it will injure those who live upon the fruits of past labor. In this repsect it will work in the same direction with most of the developments which are brought about by that great law of cizilization to which we give the noble name WHAT IT IS AND HOW ESTABLISHED. 61 of progress. * * * It has been wisely said that there is no machine which ecvnowhcx labor like money, and its adoption ha:: been likened to the discovery of letters." In his work (1831) on the so-called precious metals, herein- before quoted from, Mr. Jacob says : "The following sheets owe their composition to the friend- ship with which, during more than twenty-h've years, I had the honor of the late Mr. Huskisson (Member of Parliament). * * * I had made some progress in the collection of facts from the sacred and profane writers of antiquity, when the dreadful accident occurred by which his country and the world were deprived of the services of that eminent and estimable man. * * * It will readily be believed that his penetrat- ing and assiduous habits would lead him to accurate views of the influence of the precious metals on the industry of man- kind. He saw that an increase in the production of the mines might act as a stimulus to excite industry, invention, and energy (consider the march of civilization since the issue of money by the mines of California and Australia, and the issue of paper money during the war of the rebellion) ; while a decline in their produce might have a contrary tendency. He looked with attention to other consequences which might arise from the failure or defalcation of the mines, and considered the effect of gold and silver (of money) on the production of wealth to be of less importance than .the influence it would ex- ercise in the distribution of it, in the complex situation of the several classes of which modern society in Europe is com- posed." Francis A. Walker, of Yale College, Professor of Political Economy and History, says : "Perhaps we shall get a better view of this subject by confining ourselves to the claims made in favor of a progress- ive increase of the money. It does not need to be said that Mr. Hume had in view an increase of money not so great as to bewilder the producer and the trader through a fiercely rapid rise in prices, or to render sober business calculations impos- sible. * * * The public indebtedness of the civilized world to-day probably stands between twenty-five and thirty thousand millions of dollars of American money. The volume of private debts, including the capitalized value of fixed charges loans, annuities, etc., is vastly greater. "Nearly the whole of this vast body of obligations is pay- C2 PHILOSOPHY OF PRICK. able, principal and interest, in money. The question whether the supply of money shall 'hwreaae or decrease is, then, the question whether the burden of these more or less permanent charges shall be diminished or enhanced. It is the fact of a large body of indebtedness (some hundreds of thousands of millions) which gives its chief importance to the current pro- duction of the pi ecious metals. * * That gold or silver should be yielded in exactly the amount, from time to time, from generation to generation, which will serve to keep the value of money uniform, is not to be expected. We are not to expect, therefore, that the value of money will remain constant through any long period. One of the two parties to long con- tracts (no matter how short they are, provided they are renewed instead of being paid, and public debts, as well as those of merchants, generally speaking, grow larger and larger) will, in all probability, lose, while the other will gain by the change in values. The losses thus sustained may be slight, or they may be serious and even ruinous. * * * Certainly, I think, no one could refuse to admit that, if it were an issue between having the pressure of the whole body of indebted- ness diminished by natural causes, or increased, the former re- sult would be preferable. If it were a question of sacrificing the Present to the Past, or the Past to the Present, all would agree in saying, Let the dead bury its dead" "The weight of opinion among economical writers of rep- utation seems to be in the* affirmative. Mr. J. R. McCulloch, the English economist, has perhaps taken the strongest grounds in favor of the desirableness of a gradual reduction in the bur- den of debts, through the natural increase in the volume of the precious metals. * * * It promotes industry, and di- minishes the weight of obligations which press upon the pro- ducing classes, whether employer or employed" Mr. Horton, after advocating the gradual increase of money, says : "I know the danger of giving the support of science to that spirit. On the other hand, I have confidence in truth and in the honesty and acuteness of my countrymen ; and I think the safe course for the advocates of sound currency is to grasp this mettle firmly. The truth will bear to be seen ; the greatest danger is in misrepresenting it." Regarding the observation of Professor Horton, Professor Walker says : WHAT IT IS AND HOW ESTABLISHED. 63 "On this point Mr. Ilorton's remark seems to me thor- oughly just and manly." Such are the opinions of men who occupy the world's honored seats of learning, and who are familiar with every page of the history of mankind, and are profoundly acquainted with all the facts and principles which have been established by the last three thousand years of man's experience. Prof. A. L. Perry, Political Economy, page 66, says : "Price is indeed only a case under the class values, but practically it becomes a very important thing in Political Economy, because the value of almost all exchangeable things is determined through price. So far as commodities, personal services, and claims are exchanged against each other directly, without the intervention of money or the use of the denomi- nations of money price plays no part though value does, but these cases are few and insignificant as compared with the whole. It is hardly necessary to add, that price, though rela- tive, is specific and not general, and consequently that there may be a general rise or fall of prices. If the money of a country becomes relatively more abundant than before, general prices will rise in that country for reasons already made appar- ent ; and when money becomes less abundant prices will fall for corresponding reasons." Mason and Lailor, Primer of Political Economy, page 50 : "One thing may rise in value, but in order that it may do so, other things (Prop, twenty-six) must fall. If money rises in value, it will take less of it to buy other commodities. Therefore, general prices will fall. If money falls in value, it will take more of it to buy other commoditiea. Therefore, general prices will rise. If tea has been selling for ninety cts., coifee for thirty, and sugar for twenty-two and one-half, a pound, and a scanty supply (Prop, six) forces their prices up to one dollar, eighty, sixty, and forty-five cents, a pound, the value of money so far as they are concerned will have fallen. A dollar will not exchange for as much of them as it used to. There has been a general rise of their prices, but there has been neither rise nor fall in their values, compared with each- other. For a pound of tea, before the rise in price, would have bought three pounds of coffee or four of sugar, and it will buy pre- cisely ^ the same amount now. Therefore, there may be a gen- eral rise or fall in prices." 64: PHILOSOPHY OF PRICE. Prof. Syme, Industrial Science, page 151 : "The price of money, or the rate of interest, does not depend on its quantity, as even Mill acknowledges, although somewhat inconsistently, as I consider, for why should not the price of money be regulated in the same manner as the price of any other commodity ? Money is subject to the same fluctu- ations as ordinary commodities, and its price ought to be regu- lated in the same way, namely, by demand ; and demand, again, is influenced, as in the case of ordinary commodities, by profits. If profits are small, the demand will be small, and the rate of interest will be low ; if profits are large the demand will be large, and the rate of interest will he high. Money in the United States is more plentiful than it is in England (as proved by the higher prices of commodities and wages in the former than in the latter country), and it is more plentiful in Aus- tralia than it is in the United States." Linderman, in his Money and Legal Tender, page 118 says: "If a nation may not depart from its metallic money standard, except as a last resort for its own preservation, it surely should not undertake to return too rapidly to the metallic standard, especially when there has been a wide departure from it. Years of frugality on the part of the people, as w r ell as a wise and economical administration of public affairs, are necessary to bring a country from a depreciated paper money to the metallic standard previously existing, however great may be its natural resources. This is shown in the United States, where a credit-money standard, which has prevailed since eighteen hundred and sixty-two (1862), has not yet been brought to a parity with the metallic standard." Fawcett, in Handbook of Finance, pages 146 to 148, says : "The decline of prices since 1872-3 is explained by the increased value of gold. The first effect was to cause a collapse in 'speculative securities' viz : bonds of railroads, etc., which were based on the expectations of a continuance of high prices for commodities, or in other words, a low value for gold. The losses which followed caused panic and a decrease in manufactur- ing industry and improvement enterprises. This diminished em- ployment for labor and necessarily decreased the consumptive demand for all commodities. Theorists have been jangling for three years about the cause of the reaction which began in 1872-3, and the decline of prices which has continued almost PEICE AND ITS DEPENDENCE UPON CURRENCY. 65 without interruption since. These causes are, however, not obscure. The progress of the physical sciences and of labor- saving inventions has undoubtedly had an important tendency to reduce the prices of nearly all manufactured articles and, to a small extent also, the value of raw materials. But the in- creased burden of debt, the increase of traffic (thus requiring a larger volume of the circulating medium), and the demonetiza- tion of silver, have all contributed to increase the value of gold beyond its equitable value as a measure for values of com- modities. The era of golden debt, like the era of gold, has had its culmination, and the causes at work are now preparing the way for some new era in financial affairs which will, in all probability, be as unique as either of the two which have pre- ceded it. No man can yet foresee what it is to be. It is, how- ever, not difficult to distinguish a few tendencies, that must operate toward the new development. The first of these is the decline in the rates of interest for money in order to reduce the burden of funded and mortgage debt everywhere. This will be accomplished partly by the repudiation and complete loss of a very large portion of the existing volume of funded debts, and partly by the concentration of capital (seeking safety rather than high rates of interest) on a smaller amount of the debt. Another tendency that must continue, is the necessity for sup- plementing the stock of gold in the world with the stock of silver, and a universal recognition of both metals as money at about the same relative values they maintained prior to the era of gold. Until these things are accomplished, "prices" will continue to decline, and the commercial world will be in dis- tress." Sir. E. Sulleran, in his work, Protection to Native Indus- try, page 7, says : "Nearly twenty years have elapsed since the discovery of gold in California and Australia, and the spread of steam com- munication by land and sea over the whole face of the globe, in- creased to an inconceivable extent the trade of the world, and equalized the trading conditions of the different nations of the globe and people that inhabit it. Every nation, every in- dustry, received an influence and enormously increased its com- mercial forces." A modern writer says : "That contraction of the currency (the f money of a com- munity) must contract values and derange industry, is a prop- 66 PHILOSOPHY OF PRICE. osition as simple and as true as that two added to two will make four; that, so long, therefore, as contraction shall con- tinue, shrinkage must progress and enterprise halt, because no one can buy anything under a continuing contraction without certain loss on any purchase. With an increase of money, a material rise in all values is not invariable. It may be that 'the increase will give rise to new enterprises, which give employ- ment to the idle, so that legitimate demand for money may keep pace with the increase, and relatively the demand and supply may continue on a par." The following extract from Alison's History of Europe shows that this ruinous policy of contraction has obtained in other countries besides our own, and that the effect was then as now to fill the coffers of the rich money-lenders at the expense of all other classes : "The evils complained of arose from the unavoidable re- sult of a stationary currency, co-existing with a rapid increase in the numbers and transactions of mankind, and these were only aggravated by every addition made to the energies and productive powers of society. * * * But if an increase in the numbers and industry of men co-exists with a diminution in the circulating medium by which their transactions are car- ried on, the most serious evils await society, and the whole re- lations of its different classes to each other will be speedily changed ; and it is in that state of things that the saying proves true, that "the rich are every day growing richer and the poor poorer." Henry C. Carey, one of our soundest thinkers, says in his work, Harmony of Interests, page 186 : "The introduction of a third commodity, itself liable to variation in the supply, as in the case with money, tends to produce additional variations in the quantity of one commodity that must be given for another. Thus, if the supply of money be large among one set of wheat raisers, and small among an- other, the raiser of sugar will sell in the first, and buy in the last, obtaining much money from the one and giving little to the other. Were all arrangements for the production, purchase, or sale of commodities or property executed on the instant, this cause of disturbance would scarcely exist, because the prices of all would be similarly affected, being high when money was plenty and low when it was scarce, and the quan- PRICE AND ITS DEPENDENCE UPON CURRENCY. 67 tity of sugar to be given for wheat or wheat for sugar, would depend upon the size of the crops almost as completely as if no intermediate commodity were used. Such, however, is not the case. The merchant buys coffee in January, and contracts to deliver its equivalent in money in July, at which time money may be so scarce that six pounds of coffee will command no more than would have been done in January by four pounds. The merchant commences to build a ship in July, when money is scarce, and the price of labor is low, and he finishes it when money is plenty and wages are high, and it costs him ten, fif- teen, or twenty per cent, more than he had calculated upon. The little trader, on the contrary, who buys and sell from day to day, loses nothing. If he buys high, he sells high, and if prices are low to buy, he makes them low to sell, and the measure of his business is the measure of his profits. The great suffers by such variations are those the nature of whose property, or the character of whose business, requires them to make arrangements far ahead, and to take the risks incident to changes in the currency for the whole period that elapses between the commencement and the conclusion of an undertaking. Such are all the persons the products of whose labor are not intended for immediate consumption, the owners of houses, farms, factories, furnaces, railroads all, in fact, connected with the improvement of land. In a time of pressure for money in one place, flour, cotton, cloth, and other articles intended for daily consumption, may be trans- ferred to other places where money is plenty, and the changes in their prices are therefore small when compared with those which are experienced by the possessors of property that can- not be transferred, and are therefore obliged to bear the whole burden of the change. In such cases land becomes entirely unsalable except at an enormous reduction of price, to which its owners must submit if they are placed in a position to ren- der sales necessary ; and thus it is that so many persons con- nected with land and its improvement are ruined by revulsions that affect but in a small degree the operations of the retail grocer. Such, likewise, is the case with labor. The man who has a family and finds no demand for his labor cannot change his locality. He and his family must suffer together. Food may be at a low money-price, but if he can obtain no employment, the labor-price is so high he cannot purchase it. Land and la- bor, then, are especially interested in the maintenance of uni- formity in the standard by which the products of both are 68 PHILOSOPHY OF PRICE. measured, because they are the great sufferers by the changes which occur in the progress of time." "W. G. Sumner, American Currency, page 329 : "We have seen that prices alone govern the flow of the precious metals, or, more strictly stated, that the movement of the metals and the prices of commodities in different countries act and react upon one another in such a way as to keep up the exact natural relation of prices between different countries, and give to each country in the world's market its full relative ad- vantage in production. If, therefore, a nation has a specie cur- rency, a drain upon it by an adverse balance of trade, a foreign payment, or any other similar cause, would immediately pro- duce a lowering of prices and a return of current specie until the natural level w r as once more restored." Nothing more certain than this. Henry Clay, during the debates on the sub-treasury in 1840, made the following elo- quent, truthful and logical speech. It shows clearly that his great mind had grasped the idea, that price, not only of products, but of labor, depended upon the quantity of money in circulation: "The proposed substitution of an exclusive metallic cur- rency to the mixed medium with w r hich we have been so long familiar, is forbidden by the principles of eternal justice. As- suming the currency of the country to consist of two-thirds of paper and one of specie; and assuming, also, that the money of a country, whatever may be its component parts, regulates all values, and expresses the true amount w T hich the debtor has to pay his creditor, the effect of the change upon that relation, and upon the property of the country, would be most ruinous. All property would be reduced in value to one-third of its pres- ent nominal amount, and every debtor would, in effect, have to pay three times as much as he had contracted for. The pres- sure of our foreign debt would be three times as great as it is, while the six hundred millions, which is about the sum now probably due to the banks from the people, would be multi- plied into eighteen hundred millions! Have gentlemen reflected upon the consequences of their system of depletion? I have already stated that the country is borne down by a weight of debt. If the currency be greatly dimin- ished, as beyond all example it has been, how is this debt to be extinguished ? Property, the resource on which the debtor re- PRICE AND ITS DEPENDENCE UPON CURRENCY. 69 lied for his payment, will decline in value, and it may happen that a man, who honestly contracted debt, on the faith of prop- erty which' had a value at the time fully adequate to warrant the debt, will find himself stripped of all his property, and his debt remain unextinguished. The gentleman from Pennsylva- nia (Mr. Buchanan) has put the case of two nations, in one of which the amount of its currency shall be double what it is in the other, and, as he contends, the prices of all property will be double in the former nation of what they are in the latter. If this be true of two nations, it must be equally true of one, whose circulating medium is at one period double what it is at another. Now, as the friends of the bill argue, we have been, and yet are in this inflated state; our currency has been double, or, in something like that proportion, of what was necessary, and we must come down to the lowest standard. Do they not perceive that inevitable ruin to thousands must be the inevita- ble consequence? A man, for example, owning property to the value of five thousand dollars, contracts a debt for five thousand dollars. By the reduction of one-half of the currency of the country, his property in effect becomes reduced to the value of two thousand five hundred dollars. But his debt un- dergoes no corresponding reduction. He gives up all his prop- erty, and remains still in debt two thousand five hundred dol- lars. Thus this measure will operate on the debtor class of the nation, always the weaker class, and that which, for that rea- son, most needs the protection of government. But if the effect of this hard-money policy upon the debtor class be injurious, it is still more disastrous, if possible, on the laboring classes. Enterprise will be checked or stopped, e 11- ployment will become difficult, and the poorer classes will be subject to the greatest privations and distresses. Heretofore it has been one of the pretensions and boasts of the dominant party, that they sought to elevate the poor by depriving the rich of undue advantages. Now their policy is, to reduce the wages of labor, and this is openly avowed; and it is argued by them, that it is necessary to reduce the wages of American la- bor to the low standard of European labor, in order to enable the American manufacturer to enter into a successful competi- tion with the European manufacturer in the sale of their re- spective fabrics. Thus is this dominant partv perpetually changing; one day cajoling the poor, and fulminating against the rich, and the next, cajoling the rich, and fulminating against the poor. It was but yesterday that we heard that all who were trading on borrowed capital, ought to break. It was 70 PHILOSOPHY OF PRICE. but yesterday we heard denounced the long-established policy of the country, by which, it was alleged, the poor were made poorer, and the rich were made richer. Mr. President, of all the subjects of national policy, not one ought to be touched with so much delicacy as that of the wages, in other words, the bread, of the poor man. In dwelling, as I have often done, with inexpressible satisfaction upon the many advantages of our country, there is not one that has given me more delight than the high price of manual labor. There is not one which indicates more clearly the prosperity of the mass of the community. In all the features of human society, there are none, I think, which more decisively display the general welfare, than a permanent high rate of wages, and a permanent high rate of interest. Of course, I do not mean those exces- sively high rates, of temporary existence, which result from sudden and unexpected demands for labor or capital, and which may, and generally do, evince some unnatural and extraordina- ry state of things; but I mean a settled, steady and durable high rate of wages of labor, and interest upon money. Such a state demonstrates activity and profits in all the departments of busi- ness. It proves that the employer can afford to give high wages to the laborer, in consequence of the profits of his busi- ness, and the borrower high interest to the lender, in conse- quence of the gain which he makes by the use of capital. On the contrary, in countries where business is dull and languish- ing, and all the walks of society are full, the small profits that are made will not justify high interest or high wages." In another speech later upon the same subject he spoke as follows: " And- what is the remedy to be provided for this most un- happy state of the country? I have conversed freely with the members of the Philadelphia committee. They are real, prac- tical, working men intelligent, well-acquainted with the gen- eral condition, and with the sufferings of their particular com- munity. No one, who has not a heart of steel, can listen to them, without feeling the deepest sympathy for the privations and sufferings unnecessarily brought upon the laboring classes. Both the committee and the memorial declare that their reli- ance is, exclusively, on the legislative branch of the govern- ment. Mr. President, it is with subdued feeMngs of the pro- foundest humility and mortification that I am compelled to say that, constituted as Congress now is, no relief will be afforded PRICE AND ITS DEPENDENCE UPON CURRENCY. 71 by it, unless its members shall be enlightened and instructed by the people themselves. A large portion of the body, whatever may be their private judgment upon the course 01 the presi- dent, believe it to be their duty, at all events safest for them- selves, to sustain him, without regard to the consequences of his measures upon the public interests. And nothing but clear, decided, and unequivocal demonstrations of the popular disap- probation of what has been done, will divert them from their present purpose. But there is another quarter which possesses sufficient power and influence to relieve the public distresses. In twen- ty-four hours the executive branch 'could adopt a measure which would afford an efficacious and substantial remedy, and re- establish confidence. And those who, in this chamber, support the administration, could not render a better service than to re- pair to the executive mansion, and, placing before the chief magistrate the naked and undisguised truth, prevail upon him to retrace his steps and abandon his fatal experiment. ~No one, sir, can perform that duty with more propriety than yourself. You can, if you will, induce him to change his course. To you, then, sir, in no unfriendly spirit, but with feelings softened and subdued by the deep distress which pervades every class of our countrymen, I make the appeal. By your official and per- sonal relations with the president, you maintain with him an intercourse which I neither enjoy nor covet. Go to him and tell him, without exaggeration, but in the language of truth and sincerity, the actual condition of his bleeding country. Tell him it is nearly ruined and undone, by the measures which he has been induced to put in operation. Tell him that his exper- iment is operating on the nation like the philosopher's experi- ment upon a convulsed animal in an exhausted receiver, and that it must expire in agony, if he does not pause, give it free and sound circulation, and suffer the energies of the people to be revived and restored. Tell him that, in a single city, more than sixty bankruptcies, involving a loss of upward of fifteen millions of dollars, have occurred. Tell him of the alarming decline in the value of all property, of the depreciation of all the products of industry, of the stagnation in every branch of business, and of the close of numerous manufacturing estab- lishments, which, a few short months ago, were in active and flourishing operation. Depict to him, if you can find language to portray, the heart-rending wretchedness of thousands of the working-classes cast out of employment. Tell him of the tears of helpless widows, HO longer able to earn their bread; and of 72 PHILOSOPHY OF PRICE. unclad and unfed orphans, who have been driven, by his poli- cy, out of the busy pursuits in which but yesterday they were gaining an honest livelihood." Was eloquence ever more logical ? Could language portray our present situation more completely ? This whole magnifi- cent plea was for more currency. That through this medium the distress in the land might disappear and bring relief to the toiling millions. Henry C. Carey, in his treatise on Wealth: "The money price of labor would have fallen with the increased difficulty of procuring the precious metals, but for the substitution therefor of credits in the form of drafts, bank notes, etc., in most of the operations of the world." From a speech in Congress on the currency: "Undue contraction, on the other hand, is fraught with like evil to the same classes. I cannot better illustrate this than by quoting from Sir Archibald Alison, in his 'England in 1815 and 1845; or, a Sufficient and Contracted Currency,' wherein he says: 'The period of a contraction of the currency and conse- quent fall in the money prices of all the articles of human con- sumption is one in which great profits are sure to be realized by the larger capitalists, and great losses sustained by the small- er. The former prosper because the magnitude of their trans- actions enables them to realize a handsome income upon the whole from a declining and at length almost inconceivably small amount of profit from each transaction; and they gradu- ally get the monopoly of the market in their own line of busi- ness by the extinction of the lesser capitalists whom the fall in the price of commodities has ruined, or the diminished profits have repelled from entering into competition with them. * Small traders, therefore, and farmers without capital are speedily ruined in such a state of things, and the laboring or destitute condition is only rendered the more dis- tressing by the contrast which it affords to the wealth and splen- dor with which the holders of large capital in the same line of business are surrounded. * * A period of contract- ed currency is one of embarrassment, difficulty, and generally, in the end, of insolvency to the small farmer and moderate land-holder. If a supply proportioned to the increase PRICE AND ITS DEPENDENCE UPON CURRENCY. 73 of men and the wants of their commercial intercourse is not afforded, the circulating medium will become scarce; it will rise in price from that scarcity, and become accessible only to the more rich and affluent classes. The industrious poor or those engaged in business but possessed of small capital will be the first to suffer." The following short extract from Doubleday's Financial History of England will give an idea of some of the conse- quences of that act of folly: "As the memorable 1st of May, 1823, drew near, the coun- try bankers as well as the bank of England, naturally prepared themselves, by a gradual narrowing of their circulation, for the dreaded hour of gold and silver payments 'on demand,' and the withdrawal of the small notes. We have already seen the fall in prices produced by this universal narrowing of the pa- per circulation. The effects of the distress produced all over the country^ the consequence of this fall, w T e have yet to see. The distress, ruin and bankruptcy which now took place were universal, affecting both the great interests of land and trade; but among the landlords whose estates were burdened by mortgages, jointures, settlements, legacies, etc., the effects were most marked and out of the ordinary course. In hun- dreds of cases, from the tremendous reduction in the price of land which now took place, the estates barely sold for as much as would pay off the mortgages; and hence the owners were stripped of all and made beggars. I was myself personally ac- quainted with one of the victims of this terrible measure. He was a school-fellow, and inherited a good fortune, made princi- pally in the West Indies. On coming of age and settling with his guardians, he found himself possessed of fully 40,000; and with this he resolved to purchase an estate, to marry, and settle for life. He Avas a young man addicted to no vice, of a fair understanding and most excellent heart, and was connected with friends high in rank and likely to afford him every proper assistance and advice. The estate was purchased, I believe, about the year 1812 or 1813, for 80,000, one moiety of the purchase money being borrowed on mortgage of the land bought. In 1822-23 he was compelled to part witli the estate in order to pay off his mortgage and some arrears of interest; and when this was done he was left without a shilling,, the es- tate bringing only half of its cost in 1812! Thus, without im- prudence or fault of any kind, was this amiable man, together with his family, plunged in irretrievable and inevitable ruin, 74 PHILOSOPHY OF PRICK. by the act of a legislature 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 uncommon case. On the contra- ry, the country teemed with similar examples, and on the com- mencement of the session of 1823 the tables of both houses were loaded w r ith petitions, detailing scenes of hardship and destitution appalling in the extreme. That great man, the astronomer Copernicus, whose amaz- ing genius penetrated and discovered a truth that all the ages and millions of men who had gone before him failed to per- ceive or to comprehend the proper movements of the planets of the solar system in his treatise "Monete Cudende Ratio" addressed to the king of Poland in the first part of the 16th century, said : "Numberless as are the evils by which kingdoms, princi- palities and republics are wont to decline, these four are, in my judgment, most baleful: civil strife, pestilence, sterility of the soil, and corruption of the coin. The first three are so mani- fest that no one fails to apprehend them; but the fourth, which concerns money, is considered by few, and those the most reflec- tive, since it is not by a How, but little by little, and through a secret and obscure approach, that it destroys the State" Mr. William Jacob, F. R. S., of England, in his profound examination into the quantity of money in use by man at vari- ous periods of history, states the quantity probably in use at the time of the Roman Augustus, and gives a table showing its decrease from that time forward through the exhaustion of the gold and silver mines known to man prior to the discovery of the American continent. I can only spare space for a part of his table. I begin with the time of Augustus, and close with that of the Saxon heptarchy, giving a few intervening sums to show the rate of diminution : A. D. 14, 358,000,000 About $1790,000,000 230, 181,943,000 " 909,000,000 410, 107,435,924 " 537,000,000 PRICE AND ITS DEPENDENCE UPON CURRENCY. ( 5 662, 51,324,889 256,000,000 806, 33,6T4,256 " 168,000,000 Mr. Jacobs says : "If we take a view of Europe during the existence of the Saxon heptarchy in England, we shall probably find the scarci- ty of money and the depression of prices to have reached their lowest point. The Romans, in abandoning Britain, Gaul, and the other western portions of the dominions over which their power had once extended, had carried with them all that was portable and valuable. We select a few facts to show how very small must have been the quantity of the money at that period in Britain, and how very low was the metallic valuation of every description of property." I can only give room to the following quotation of prices made by Mr. Jacob : s. d. Price of a slave or man, 2 16 3 horse, 1 15 2 mule, or ass, 14 1 " ox, 072 " cow, 062 " swine, 1 10 " sheep, 1 2 " goat, 004 And such was the power of the Nobles over the money- less people, many of whom were held in slavery, while others were reduced to a condition of servitude little, if any, prefera- ble to actual slavery, that the price of a hawk or a greyhound was the same as that of a man, and the robbing of a hawk's nest was as great a crime in the eye of the law, as was the mur- der of a human being. Numerous laws prohibited the farmers from weeding and hoeing, so that the young partridges should not be disturbed; steeping seeds lest it should harm the game, and manuring with night soil for fear of injuring the flavor of the partridges. Regarding this, and a later period of time, Sir Archibald Allison, in his history of Europe, says : "The two greatest events in the history of mankind have 76 PHILOSOPHY OF PKICE. been brought about by a successive contraction and expansion in the circulating medium of society. The fall of the Roman Empire, so long ascribed in ignorance to slavery, to heathen- ism, and moral corruption, was in reality brought about by a decline in the silver and gold mines of Spain and Greece. . . . . And as if Providence had intended to reveal in the clearest manner possible the influence of this mighty agent on human affairs, the resurrection of mankind from the ruin this cause had produced was owing to the directly opposite set of agencies being put in operation. Columbus led the way in the career of renovation; when he spread his sails across the Atlan- tic, he bore mankind and its fortunes in his bark. . . . The annual supply of the precious metals of money for the use of the globe was tripled; before a century had elapsed the price of every species of produce was quadrupled. The weight of debt and taxation insensibly wore off under the influence of that prodigious increase; in the renovation of industry the relations of society were changed, the weight of feudalism cast off, the rights of man established. Among the many concur- ring causes which conspired to bring about this mighty con- summation, the most important, though hitherto the least ob- served, was the discovery of Mexico and Peru" (their gold and silver mines). Bryant, in his work on Money, says : "Any reduction in the price which the producer or the art- isan is able to obtain for his labor, or the product of his labor, is an injury, misfortune and loss to every single member of society, excepting solely those who live iipon the interest of loaned money. If the reduction is temporary, then the loss is temporary; if it is permanent, then the loss is permanent." Albert Gallatin, ex-Secretary of the United States Treas- ury, in his work on Money, published in 1831, says: "It is well known that the discovery of America was fol- lowed by a great and permanent fall in the price of the pre- cious metals, which reduced it to one-fourth of their previous relative value to all other commodities." Humboldt says that the gold and silver money in circula- tion in the eighteenth century is at the time he wrote thirty times greater than in the fifteenth century, and that its value or purchasing power was only one-twelfth of what it then was PEICE AND ITS DEPENDENCE UPON CURRENCY. 77 ' that is, 8 1-3 cents would then buy as much as 100 would at the time he wrote. Professor Bonamy Price says that the purchasing power of the so-called precious metals has fallen fourteen times since the reign of the Henrys that is, 7 1-7 cents would then buy as much as 100 will now. The Boston Daily Advertiser of March 11, 1875, says : "The prime element in determining the value of money, whether gold or paper, is quantity, and it is subject to the same laws as other commodities. Increase the quantity, it will buy less. In other words, it produces a rise in prices, but no in- crease in values." Dr. Soetbeer, the great German authority, says : "The value of money has fallen through the issue of pa- per money, as well as through the increased productions of gold and silver." Judge John Barnard Byles, one of England's greatest ju- rists, in his work, Popular Political Economy, page 154, says : "Men talk glibly of variations in the currency. Few re- flect on the awful extent to which such changes affect the pros- perity of all ranks. The laborer, the pauper, and the beggar are as much interested in the currency question as the manu- facturer, the shopkeeper, or the great proprietor of land or funds, and even more. Sudden and great alterations in the amount of value of the circulating medium are at best transfers of property gi- gantic robberies ; they are often much worse ; they involve wanton destruction of immense property, and stoppage of in- dustry. The cure provided by the Act of 1844, for an adverse bal- ance of trade, and for every export, or tendency to an export of the precious metals, is a sudden and great diminution in the quantity of the currency a rise in its value next, a great and sudden rise in the rate of interest a fall in the price of all things a fearful injury to all the industrious classes. What you expected always eventually happened; the bal- ance of trade brought the bullion back. The issue of notes was then, in easier times, contracted to its safe and ordinary amount. You passed through the crisis with little or no altera- tion in the value of money, or rate of interest. When the 78 PHILOSOPHY OK PRICE. bullion went away, notes, by supplying its place, broke the shock to credit; when* bullion returned, the withdrawal of those notes still preserved the equilibrium. The paper portion of the currency, over and above its other advantages, was then an ingenious contrivance in the nature of a spring or elastic band, which, enabling you safely to expand the currency in times of distress, and to contract it again in times of prosperi- ty thus equalized and averaged the tension. Lord Ashburton has shown how the currency often was relaxed in periods of severe pressure with perfect safety. And this occasional relax- ation in times of difficulty was the ordinary course of proceed- ing long before the Bank Kestriction Act. Its advantage was well understood even as early as the beginning of the last cen- tury. Addison, writing in the time of Queen Anne, says: 'When the bullion leaves us, we make credit supply its place.' There was in the paper currency a union of convertibility with elasticity. There was a compensatory and self-adjusting action which artificially secured uniformity of value, and made a mixed currency, partly metallic, partly paper, a much better and more invariable standard of value than a mere metallic cur- rency could possibly have been. ' You can now no longer rely on an average favorable bal- ance of trade; there may not only be (as there will certainly be) periodical drains of the precious metals, but there may be a perennial stream running out, not as formerly less than the perennial stream running in, but much larger. How is it now proposed to meet the drain when the mis- ery begins to be felt ? Not as before, by supplying the void with notes. That is no longer consistent with the preservation of a metallic basis to the currency;, for we are told, and truly told, that if new notes were issued as fast as gold went out, the drain of gold would be continually going on, till all the gold had left the kingdom, the banknote w r ould be inconvertible, and another bank restriction act w T ould be inevitable. No, it is to be stopped violently by a diminution in the quantity, and consequent rise in the value, of the whole cur- rency, just as if it were enth ely metallic. No notes are to be issued in place of the gold that goes out. Nay, the law may even contract the notes as the gold goes out. Prices of every- thing are to fall. The industrious classes are to see their prop- erty thus taken from them, and their debts and incumbrances thus really augmented. Industry is to be paralyzed, trade stopped, and the pressure of the public burthens indefinitely PRICE AND ITS DEPENDENCE UPON CURRENCY. 79 aggravated; while the transactions of the empire are being dwarfed and stunted to fit a short allowance of the circulating medium of the civilized world. Then it is said prices will be effectually beaten down, and so at length imports will be checked, exports promoted, and an adverse balance of trade naturally redressed. Never mind, though this desirable and necessary result should be produced by the diminution or cessation of the ordinary operations of industry and commerce, and the bankruptcy of otherwise sol- vent houses. It will be seen at a glance how insignificant the aggregate amount of coin and notes is, compared with the aggregate amount of bankers' checks, bills of exchange, and money of account. But then the quantity and value of these checks, bills and money of account, depend entirely on the quantity and value of the coin and notes. Diminish the quantity of coin and notes by five per cent., and you may augment the exchangeable value of the residue, even of the coin and notes, by twenty or fifty per cent; for when the quantity of money or of any other article of first necessity, but of limited supply, is diminished, its exchangeable value rises in a much higher degree than the degree of diminution. Added to all which there is the effect of uncertainty and panic. That, however, is the least part of the mischief. Touch the coin and notes, the other and greater currency shrinks at once, like the sensitive plant. And no one can tell the proportion in which, when you curtail the lesser currency, the greater is actually curtailed; in some instances it may be in a less proportion, but in many in- stances a far greater proportion. The enhancement in value of the greater currency is the same, but who can tell or conjecture what the diminution in quantity is ? Lord Ashburton declared that the importations, large as they necessarily were, were not more than, under a wiser man- agement of the currency, the country could have easily borne. Mr. Mill says: 'The crisis of 1847 was of that sort which the provisions of the Act had not the smallest tendency to avert, and when the crisis came, the mercantile difficulties were prob- ably doubled by its existence.' And why was the industry of the country subjected to this horrible torture ? That an adverse balance of trade might be corrected by what is called the natural flow of the precious metals. That a theory might be carried out. In vain did men, grown gray in business, remonstrate against the measure three 80 PHILOSOPHY OF PRICE. years before. It was carried in contemptuous defiance of their warnings. Few subjects are so intricate as the distribution of the pre- cious metals among the countries of the world. Many consid- erations are overlooked by those who prophesy that the evil will work its own cure. David Hume says that a progressive increase in the quantity of the precious metals, and their de- clining value in any country, is favorable to a progressive in- crease of industry. And no doubt that is so. A stream, there- fore, of the precious metals poured into a country, produces effects exactly the converse of the effects which its dereliction produces in the country which it is leaving. This fertilizing stream, in the country to which it goes, stimulates industry, multiplies transactions, creates its own demand, and counter- acts its tendency to return. Our industry is crippled our neighbor's is augmented. We permanently need the bullion less he permanently needs it more." The following is from the celebrated report on the high price of gold bullion made to the English Parliament in 1810: "An increase or diminution in the demand for gold, or what comes to the same thing, a diminution or increase in the general supply of gold, will, no doubt, have a material effect upon the money prices of all other articles. An increased de- mand for gold, and a consequent scarcity of that article, will make it more valuable in proportion to all other articles; the same quantity of gold will purchase a greater quantity of any other article than it did before; in other words, the real price of gold, or the quantity of commodities given in exchange for it, will rise, and the money prices of all commodities will fall; the money price of gold itself will remain unaltered, but the prices of all other commodities will fall. That this is not the present state of things is abundantly manifest; the prices of all commodities have risen, and gold appears to have risen in its price only in common with them. If this common effect is to be ascribed to one and the same cause, that cause can only be found in the state of the currency of this country. The same rise of the market price of gold above its mint price will take place, if the local currency of this particular country, being no longer convertible into gold, should at any time be issued to excess. That excess cannot be exported to other countries, and, not being convertible into specie, it is not necessarily returned upon those who issued it; it remains in the channel of circulation, and is gradually absorbed by increasing PKICE AND ITS DEPENDENCE UPON CURRENCY. 81 the prices of all commodities. An increase in tlie quantity of the local currency of a particular country, will raise prices in that country exactly in the same manner as an increase in the general supply of precious metals raises prices all over the world. By means of the increase of quantity, the value of a given portion of that circulating medium, in exchange for other commodities, is lowered; in other words, the money prices of all other commodities are raised, and that of bul- lion with the rest. The same amount of paper may at one time be less' than enough, and "at another time more. The quantity of currency required will vary in some degree with the extent of trade; and the increase of our trade, which has taken place since the suspension, must have occasioned some in- crease in the quantity of our currency. But the quantity of currency bears no fixed proportion to the quantity of com- modities ; and any inferences proceeding upon such a suppo- sition would be entirely erroneous. The effective currency of the country depends upon the quickness of circulation, and the number of exchanges performed in a given time, as well as upon its numerical amount; and all the circumstances, which have a tendency to quicken or to retard the rate of circulation, render the same amount of currency more or less adequate to the wants of trade. A much smaller amount is required in a high state of public credit, than when alarms make individuals call in their advances, and provide against accidents by hoard- ing ; and in a period of commercial security and private confi- dence, than when mutual distrust discourages pecuniary arrangements for any distant time." The Right Hon. George I. G-oschen, M. P., an eminent English financier, in an address delivered before the Bankers' Institute, April, 1883, said : "If we take the $50,000,000 as the amount required for arts and manufactures and for all purposes other than circula- tion, and subtract that sum from the $100,000,000 of annual supply, it leaves for the purposes of circulation $50,000,000 only, arid on this hypothesis the extraordinary demand of $1,- 000,000,000 would 'absorb the available yield. Economists will accordingly ask themselves what result, if any, is such a phe- nomenon likely to have produced. I think there is scarcely an economist but would answer at once : 'It is probable, it is almost necessary, it is according to the laws and the principles 82 PHILOSOPHY OF PRICE. of currency, that such a phenomenon must he followed hv :i fall in the prices of commodities generally.' Let us now turn to the other side of the question and examine the range of the prices of commodities, and see whether or not it is a i'act that there lias been a great fall. For the figures I am about to place before you I am in- debted to Mr. Giffin, of the board of trade. I have examined the prices of commodities as published by the board of trade, but I have also consulted other sources. I have here a classi- fication of articles under certain heads showing prices in the years 1 873 and 1883 respectively. (Here he gi ves the table.) I am bound to say it appears to me that these figures reveal an ex- traordinary state of things. * * * It appears to me that if it be true that population continually increases, and that there is a certain increase in wealth, an additional amount of circulation will be necessary in order to meet the increased demand unless there are compensating counter economies by the extension of the check system and other methods. On the one hand you un- doubtedly have increased population. You also have an in- crease of wealth. Then again, you require more gold for more transactions. Gold has two or three functions to perform in circulation. It has to supply what I may call pocket-money, and it has to liquidate large transac- tions between nations and nations, and what is almost an anala- gous function, it has to remain in the vaults of bankers on deposit against the notes that are issued against it ; still it is more simple to treat these two latter functions as one. Such being the two functions of gold, if the population increases the nec- essary pocket-money must increase, and if the transactions increase, somewhat more is required for liquidating the balan- ces. Let us now consider whether the economies in the use of gold (checks and clearings) have been as great as the increase in the population and as the increase in the amount of gold re- quired to liquidate the balance of transactions. Mr. Giffin, in an article printed in the Journal of the Statistical Society for March, 1879, expresses the opinion that the United King- dom was thoroughly 'well banked' even twenty years ago, and that there have been no new devices invented during the last twenty years which have much economized the use of gold in the United Kingdom. We have already reduced the use of gold in this country almost to a minimum, and I am confirmed in this view by the statement that the total circulation of gold PRICE AND ITS DEPENDENCE UPON CURRENCY. 83 in England increased, according to the estimate of the authori- ties of the Bank of England, from $515,000,000 to $620,000,- 000 between 1870 and 1880. This would mean, and it is a most significant fact, that in this country, which is so ' well banked,' $100,000,000 more circulation was nevertheless re- quired in 1880 than in 1870. As regards England, then, I do not see that there has been any economy in the use of gold to counterbalance the increasing demand of the population, nor are we aware those of us who have been able to look into the matter that in France or Ger- many, or elsew T here, the economies have been such as to coun- terbalance the increasing demand for gold. I am now brought to the point that if there is any truth in the theory that the amount of circulation stands in a certain relation to the ques- tion of price, then this strain upon the gold circulation must have produced an effect upon prices. We have to deal with the fact, let us look at it how we will, the sovereign goes further than it used to go. Happy, then, it is for those who have the sovereigns ; on the other hand, unhappy it is for those who have commodities left on hand and produce which they have not sold. * -x- # * Let us now assume that there will be a continuance of low prices ; that is to say, a continuance of the increased value of gold. Two classes would be permanently affected. One is the class which is entitled to receive gold. They will be much better off. The class of debtors, on the other hand, who are bound to pay a given amount of gold for a long period to come, will be much \vorse off. In the same way, as the rise in prices is generally to the advantage of the debtor, so a fall in prices will be to his disadvantage. The holders of mortgages would be in a distinctly favorable position. While the mortgages would run, they will continue at a sum that will be on the constant increase in its purchasing power. Those who have borrowed the sum will be in a worse position by having their means of payment constantly diminishing in price. The influence of this circumstance on land owners will not be overlooked. Land owners who have borrowed money on their estates will be under contract to pay a sum which represents more value than when the loan was made, while the produce of the land, if it should fall in price like other commodities, would not secure the same amount of gold. It is impossible to see how farmers should be able to continue to. pay the same amount of gold for 84 PHILOSOPHY OF PRIOR. rent if the prices of what they raise from the soil should per- manently fall. # # * * A distinguished French economist lias said that he was not sure whether France would have been bankrupt in 1848 but for that great increase in the production of gold, which created a degree of commercial prosperity which enabled the French to escape from their difficulties. I have heard another distinguished man suggest that the great difficulties of the old Roman Empire with regard to laws that had to be passed for the relief of debtors was due to the fact that they never had an expansive currency, but that the supply of the precious metals was stationary, at least if compared with the increasing transac- tions and the increasing population, and that it did not enable the Roman men of business to conduct their operations with that continuously small increase in the supply of the precious metals which are required to meet the increased demands of population and increasing wealth." Alexander Hamilton, in his report on the Mint in 1792, said: "To annul the use of either of the two metals as money is to abridge the quantity of circulating medium, and is liable to all the objections which arise from a comparison of the benefits of a full with the evils of a s*cant circulation." I make no apology, in view of the importance of the question, for giving some quotations I find grouped in a very able and comprehensive pamphlet on this subject by Judge Robert W. Hughes, of Virginia, He quotes M. Edward Cazalet, of Milan, a distinguished and very able Italian banker, who says : "It is computed that the total metallic circulation of the world amounts to $7,000,000,000, of which about 3,750,000,- 000 are gold, and 3,250,000,000 are silver. The whole of this mass of metal is now doing service as currency, and to demonetize or eliminate either metal would involve a reduction of the circulation by about one-half. The half demonetized would be incalculaby depreciated in value ; the half which remained to do double service would be appre- ciated to an equal extent. Since the value of all articles of com- merce is represented by the currency, the value of these articles PRICE AND ITS DEPENDENCE UPON CURRENCY. 85 must fall in proportion to the reduction in the volume of the currency, otherwise the moneyed currency could not possibly do the work which the two metals combined had previously performed. Thus, to settle a debt of $100 it would be neces- sary to sell merchandise which under the double currency had been valued at $200. The creditor would gain at the expense of the debtor. * * * As the currency of a country is the only legal tender which can be offered in payment of a debt, the debtor would have to procure that currency from a circu- lation which had been suddenly contracted, and in proportion to this contraction the debtor would be a loser and the creditor a gainer. When the enormous 'amount of international and national as well as personal indebtedness is considered, and when we bear in mind that this indebtedness would be well- nigh doubled by the demonetization of either gold or silver, it becomes clear that such an event would revolutionize the actual conditions of society, and be nothing short of a universal ca- lamity." (See M. Cazalet's pamphlet on bimetallism, pages 14, 15.) Speaking of a later period, the historian Allison says : "If this circulating medium of the globe had remained stationary, or declining, as it w r as from 1815 to 1859, from the effects of South American revolution and English legislation, the necessary result must have been that it would have become altogether inadequate to the wants of man ; and not only would industry have been everywhere cramped, but the price of produce would have universally and constantly fallen. Money would every day have become more valuable ; all other articles measured in money less so ; debt and taxes would have been constantly increasing in burden and oppression ; the fate which crushed Home in ancient, and has all but crushed Great Britain in modern, times would have beset that of the whole family of mankind. All of these evils have been entirely ob- viated, and the opposite blessings introduced, by the opening of the great reserve treasures of nature in California and Aus- tralia. * * . * Before half a century has elapsed the prices of every article will be tripled, enterprise proportionately en- couraged, industry vivified, debts and taxes lessened." Sir Archibald wrote before 1873, says the author. The author then quotes from a distinguished German writer, M. Herr von Uurr, who, after showing the direct loss to Germany from the depreciation of her silver coin, and the 86 PHILOSOPHY OF PRICE. product of her silver mines, which he places at an enormous figure, from the demonetization of silver, says : "This direct loss, important as it is, is nothing, however, compared with the indirect loss resulting from the fall of prices." Himself a large land-owner, he first speaks of agriculture : "It is cruelly suffering from the reduced value of all pro- duce. The farmers are paying their rents irregularly, or not at all ; their stock in trade has often to be distrained to recover arrears of rent. The land-owners are overwhelmed by mort- gages. When at last, in order to extricate themselves, they try to sell their estates, they find no purchasers, or have to be satisfied with a price one-third below former estimates. The discouragement is universal. No more agricultural improve- ments are being effected; employment is, consequently, lack- ing; and there is great indigence. Hence that increasing emigration, for which special trains and steamers have to be arranged. It is a veritable exodus. What remedy for so much suffering ? The agriculturists, perceiving at length the real cause of the evil, demand the abandonment of the gold standard. * * * The fact is strange, yet certain, that from this intense crisis has sprung that odious and inexplicable re- turn to the intolerance of the Middle Ages, called the anti- semitic movement, the Judenhetze (Jew hatred). The Jews, being large holders of the gold, whose power is unduly in- creased, are regarded by the populace as enriching themselves by the ruin of others. The capitalist, unhurt, even profits by the cheapness of enforced sales." The awful disaster of 1847, falling like a thunder-clap from a clear sky, for the promise had been that nothing of the kind could ever happen under the patent system adopted in 1844, caused an enormous public commotion and the ap- pointment by the House of Lords and the House of Commons of a "Secret Committee" to make a solemn investigation into the affairs and management of the Bank. From a vast mass of testimony taken before this " Secret Committee," I quote the following, confining myself to brief extracts taken from the testimony of the chief officers of the Bank ; whose ability and knowledge to testify in the matter is beyond the pale of PRICE AND ITS DEPENDENCE UPON CURRENCY. 87 cavil or dispute. The following is a portion of tlie testimony given by Mr. John II. Palmer, at that time a director, and soon after made Governor of the Bank of England : "It is by producing a fall in the value of commodities in this country that you correct the exchanges ? Am. Yes ; not merely in that way, but you would bring capital into the coun- try by a high rate of interest. It is by interference with trade that it acts, and not merely by the inconveniences of the bill-holders? Ans. It causes the stoppage of trade. What would be the effect upon the manufacturers and la- borers of the country during such an operation ? Ans. It destroys the labor of the country. At the present moment, in the neighborhood of London, and in the manufacturing dis- tricts, you can hardly move in any direction without hearing universal complaint of the want of employment by the labor- ers of the country. That you ascribe to the measures it was necessary for the Bank to adopt in order to preserve the convertibility (specie payment) of its notes ? Ans. I think the present depressed state of labor is entirely owing to that circumstance. And the pressure of the Bank produced forced sales ? Ans. It stops credit, and the British merchant sells his goods for the purpose of meeting his private payments, and brings his capital to the Bank at an earlier period than it would come in the ordinary course of business. There is no means of sup- plying the Bank with gold, excepting only the diminution of the bank-notes, which immediately contracts the currency, and lowers prices by increasing the value of money." The following is a portion of the testimony of James Morris and Henry J. Fresco tt, the Governor and Deputy Gov- ernor of the Bank of England, before the " Secret Committee": "Is there, in your opinion, any mode by which the ten- dency to an efflux of the precious metals, and the consequent diminution of the circulating medium, can be arrested, other than that of such a reduction of prices of commodities as shall lead to export, and such a rise in the value of money as is in- dicated by the advance of the rate of interest? Ans. No, I think there is no other method. 'A diminished power of consumption on the part of the public would have been rather advantageous to the system PHILOSOPHY OF PRICE. (coin) of circulation ? Am. A diminished circulation would have checked importation. Then the more deprivation the public was subjected to, the safer the system of convertible circulation ? Ans. It is necessary sometimes . . . .in order to restore circulation to a proper state. Was it the intention of the act of 1844 (reorganization of the bank) to check importations, so as to correct the unfavora- ble balance of trade? Ans. I consider the act of 1844 was to cause the circulation of the country to be acted upon, by the exports and imports, in the same way as the currency would have been acted upon had it been entirely a metallic one. Then there having been an export of gold in the spring of 1847, the tendency of the system was to check imports? Ans. Inasmuch as the export of a certain amount of bullion would contract the circulation of the country, and cause a fall of prices, it would tend to check importation. Then, in 1847, when there was a great deficiency of food, the tendency was to check an importation of food ? Ans. The export of the precious metals, by reducing the circulation, tended to keep down the prices of grain, and also kept down the price of manufactures which might be exported in pay- ment. Do you think this system of circulation should be pre- served at any cost to the employment of the people? Ans. I think it desirable that the circulation should be placed on such a footing that it should expand and contract in the same way that a metallic currency would do. I cannot vary from that." Mr. Sealy, of England, in his work on " Coins and Cur- rency," published at London in 1853, holds the following opin- ion of the Bank of England. And I might quote an entire volume of the like opinions uttered by eminent and competent men. Mr. Sealy says : " The commerce of the country is now in the power of the Bank of England, as it was before in the legislature. For leg- islative enactment we have substituted the decision of the Bank Parlor; for a responsible government, composed of King, Queen, Lords and Commons, we have substituted an irrespon- sible body composed of twenty-four directors, and a governor and deputy governor. To these we have confided the com- merce of this mighty empire. Instead of a mercantile system supported by merchants and manufacturers and agricultural in- PRICE AND ITS DEPENDENCE UPON CURRENCY. SU terests, we have now the monetary system endangering the welfare of merchants, manufacturers and agricultural .inter- ests for the benefit of the fund-holding classes." Stephen Williamson, a prominent Liverpool merchant, in his pamphlet, "Bad Trade and its Causes," proves beyond question it is caused by a want of currency. , He says : " England has now entered upon the sixth year of com- mercial and manufacturing distress and decadence. There is as yet not a single ray of light shooting up through the dark mercantile horizon. A crisis without parallel in the experience of the present generation not only rests upon us, but intensi- fies as time rolls on. When a condition of affairs baffling all experience acquired in previous times of prostration exists, it is surely our paramount duty to investigate and to inquire whether this prolonged distress may not be traced in large measure to some special or peculiar cause. My object in writing this paper is to call attention to the serious injury inflicted on our commerce by the discrediting of silver ; and my contention is, that the practical cutting on of silver from the world's money has been at the root of much of our distress during late years, and is now one of the chief hin- drances to the return of prosperity. Undoubtedly, -our declen- sion in 1873, 1874, and part of 1875, was the natural revulsion from undue extension, and from the unduly high prices paid for labor and the products of our industry. Since 1875 these causes, however, have ceased to operate. It is undoubtedly true that hostile tariffs and the competition of several nations (particularly the United States) have greatly curtailed the de- mand for our manufactured goods which previously existed within their borders; but we have a large and open field almost to ourselves in many quarters of the globe ; and the lamentable fact is, that in these regions, peculiarly our own, trade contin- ues to languish as it does elsewhere, and the demand for our goods is greatly restricted and diminished. It will not be questioned that the large increase of the world's money, due to the Australian and Californian gold dis- coveries, led to a great extension of the world's commerce. The interchange of commodities was marvelously stimulated ; labor had for many years a greatly augmented recompense ; the material comfort and welfare of mankind were greatly promo- ted ; real and personal property increased enormously in value all over the civilized world ; the foreign commerce of England 90 PHILOSOPHY OF PRICE. alone rose from 250,000,000 in 1852 to 650,000,000 in 1875 ; the foreign commerce of many other nations rose in like pro- portion. From the surplus gains of our commerce in those years, we invested many hundreds of millions of pounds ster- ling in state and corporation bonds, railways and industrial en- terprises, and in property and mortgages in foreign countries leaving us immeasurably wealthier as a nation, notwithstand- ing many foolish investments, such as Turkish, Peruvian and Paraguayan bonds. It is difficult to believe that so great pros- perity and increase of national wealth had proceeded from a cause apparently so inadequate to produce results so fabulous. Such, however, was in large measure the result of the enlarged reservoir of the world's money created by the accession of gold from the Australian and Calif ornian mines. It acted as a stream of warm blood impelled through all the arteries of the world's commerce, vitally and powerfully stimulating the vast organ- isms of trade and industry. We have in this, our late national experience, a direct con- tradiction to the theories of some political economists who assert that, after all, international commerce is only barter, and that money has little or nothing to do with its extent or vol- ume. The very small measure of truth underlying this asser- tion has led many intelligent minds astray. It is because the largely increased supply of money had guaranteed to men and nations the payment of large international balances, that the volume of the world's trade, prior to 18 74, had augmented with such marvelous rapidity. And now it is in great measure because the world has of late greatly restricted and diminished the capacity of its money reservoir, that distress and calamity augment and intensify around us. A large portion of the life- blood of commerce has been artificially congealed. The whole organism has felt the shock ; but the financial intellect has be- come so beclouded and benumbed as not to have fully realized, even yet, the cause of the deadening paralysis which has over- taken it. Let us present for consideration the diagnosis : The world, of late years, traded on an effective metallic capital estimated at 1,400,000,000. Of this, we have good evidence for believ- ing that about 750,000,000 were gold coins and bullion, and 650,000,000 " silver coins and bullion. Now, we assert that the world, of late, has been commit- ting the suicidal act of discarding, discrediting and cutting off PRICE AND ITS DEPENDENCE UPON CURRENCY. 91 from performing its wonted functions one of the two agents or solvents for the liquidation of balances of international indebt- edness. In other words, the world, acting under the legal in- junctions of the leading monetary powers, has divorced from its monetary system that silver which, from time immemorial, has, conjointly with gold, formed its 'money.' "Widespread suffering has been the inevitable result of its folly. Our unwise legislation of 1816, which made gold sole legal tender in England, has been the underlying cause of all this evil. For years we played upon the currencies of Europe, and often swept away large quantities of silver for transmission to India,where, with an admirable contradiction in our monetary legislation, we have enforced a silver currency. While availing ourselves of the stores of silver belonging to our continental neighbors, we constantly vaunted about the superiority of our gold currency, and stimulated them to follow our short-sighted example. Even a Liberal Chancellor of the Exchequer (Mr. Lowe) boasted in full Parliament, in the year 1869, that he had made a convert of France. Germany, however, stole a march on France in the insane career which we had pointed out to them as the high road to success, and in 1874 decreed the de- monetization of silver and its substitution by gold. France, which had, in conjunction with the states of the Latin Union, provided for the world an equilibrium or par of exchange be- tween the two metals, by means of her free-mintage system and making both metals full legal tender on the ratio of 15 1-2 of silver to 1 of gold, thereupon suspended the free coinage of silver. France was driven to this act by the unwise monetary legislation of powerful neighbors. The par of exchange pro- vided betwixt gold and silver money was thereby lost to the world. Silver was dethroned. War to the knife was declared against that metal. Gold now reigns supreme and omnipotent. The results have been disastrous in the extreme. The hard money capital of the world has been practically reduced from 1,400,000,000 to 800,000,000, and yet men are at a loss to account for the greatly reduced interchange of commodi- ties, and the greatly reduced prices now paid for property, for goods and for labor ! " Let us turn to the words of wisdom uttered by the late Mr. Ernest Seyd, one of the most able and reliable statisticians and financiers of Great Britain. He was the author of a very able and exhaustive book, advocating the restoration of the 92 PHILOSOPHY OF PRICE. double standard to Great Britain, and his efforts are said to have produced a profound impression on his conservative coun- trymen. But financial disasters or events have done more in this direction than the able arguments of Mr. Seyd. In 1867, this far-sighted and clear-headed financier, in discussing this question, that was then exciting considerable interest, expressed himself very freely on the evils that would probably fall on the world, in an attempt to discard silver as a full legal tender money metal. He said : " Throughout the world a fall in prices will take place, injurious alike to the owners of solid property and to the labor- ing classes, and advantageous only, and unjustifiably so, to the holders of state debts and other contracts of that kind." He also said, that when these results followed the discard- ing of silver, all sorts of reasons would be brought forward to account for the distress, and thus the real cause would be neglected until this distress compelled thinking men to refer it to the legitimate cause. Blake, in his report on the precious metals, page 235. said : "With this continued decrease in the annual production, it seems probable that gold will soon begin to sensibly appre- ciate in value, unless some new and unlocked for discovery of placers shall be made, of which, however, there does not appear to be much probability. It was argued by Chevalier and others soon after the great discoveries in Australia and California, that gold would neces- sarily depreciate in value ; that its purchasing power was des- tined to be much lessened by the great influx of the metal from these new sources. But the relative value of gold has not changed as much as was expected, and it would now seem that the supply did not more than keep pace with the ever in- creasing demands of commerce and industry, stimulated as they have been by an increasing supply of gold. The wonder- ful increase of the industrial activity of the world, resulting chiefly from the varied developments and application of the physical sciences, has been sufficient to appropriate all the ex- cessive production of the past twenty years." North American Review : PRICE AND ITS DEPENDENCE UPON CURRENCY. 93 "A glut of loanable capital and low rates of interest are the inevitable final accompaniments of a shrinking money vol- ume and the consequent decline in market values." Sir Robert Peel in his great speech of May 6 and 20, 1844, on the British act regulating the issue of currency, said : "There is no contract, public or private ; no engagement, national or individual, which is unaffected by it. The enter- prises- of commerce, the profits of trade, the arrangements made in all the domestic relations of society, the wages of labor, pecuniary transactions of the highest amount and of the lowest, the payment of the national debt, the provision for the national expenditure, the command which the coin of the smallest denomination has over the necessaries of life, are all affected by the decision to which we may come on that great question which I am about to submit to the consideration of the committee." A contraction of the money volume changes the relations between money and other things, and necessarily affects prices. John Locke long ago laid down the true law relating to the value of money, as follows : "Money, while the same quantity of it is passing up and down the kingdom in trade, is really a standing measure of the falling and rising value of other things in reference to one an- other, and the alteration in price is truly in them only. But if you increase or lessen the quantity of money current in traffic in any place, then the alteration of value is in the money." That is, with a stable volume of money for a given popu- lation with given wealth, which determines the volume of business, variation in the price of commodities is a variation in the goods themselves as compared one thing with another ; but when the volume of money is changed, then the measure itself is changed, and we have what is taking place now, a double effect that is, both a change in the commodities under the law of supply and demand, as above stated, and a change in the measure itself affecting the price of everything. In fact, it is an admitted doctrine of political economy that there can not be a general rise or a general fall of prices except by a change in the value of money. A general fall or a general 94 PHILOSOPHY OF P1JICI-: rise of prices, when properly understood, means simply that there has been a change in the measure itself. I might continue references almost indefinitely, but the number given and the eminent sources from which they are derived ought to convince the most sceptical. When a proposition of this magnitude has received the careful consideration of so many persons, distinguished alike for their honesty and ability, whose conclusions are almost a unit as to its truthfulness, there is no good reason why we should not accept them as final. When this is done our future action regarding the correction or encouragement of the pres- ent condition of affairs becomes a sin of commission instead of omission. We act with a full knowledge of the facts before us. In describing the effects of contraction during Van Buren's administration, Henry Clay said : "What our present situation is, is as needless to describe as it is painful to contemplate. First felt in our great commer- cial centers, disasters and embarrassment have penetrated into the interior and at the present time rest like a black cloud over the whole nation." It has been justly said by one of the soundest and most practical writers that I have ever read, that : U A11 convulsions in the circulation of money and in the commerce of any country must originate in the operations of the government, or in the mistaken views and erroneous meas- ures of those possessing the power of influencing credit and circulation, for they are not otherwise susceptible of convul- sion, and if left to themselves they will find their own level and flow nearly in one uniform direction." Our condition is the same to-day as has many times oc- curred in the history of the past, and has been brought about by the same causes. Our currency has been steadily contracted for many years, and during all that time with but an occasional breathing spell, business has been drooping and values have fallen. We have been tricked, as other nations have been, into PRICE AND ITS DEPENDENCE UPON CURRENCY. 95 placing our national honor into our national credit. We have i)ucn. induced or seduced to believe that our honor as a peo- ple consisted in paying our national bonds in gold, one hun- dred cents on the dollar, which were bought with greenbacks at par, worth only fifty-five cents in gold ; and by so doing we have brought business stagnation, and continued financial disaster, from year to year, upon a confiding people. Why should United States bonds, bearing 4 per cent, in- terest, be worth one hundred and twenty-seven cents on the dollar while good farms cannot be mortgaged for over one- third of their value at 7 per cent, interest ? Why is it that bonds go up, and all products of labor, and labor itself, goes down ? Is that prosperity ? What labor and products lose in value finds a lodgment in the bonds and mortgages held against this same labor and its products, and all the vantage ground forced from labor and appropriated by capital, is really a loss to society and the na- tion, and weakens the government instead of giving it strength. The point made by Solon Chase is not only sound in logic but true in fact. He said : "I bought a yoke of steers a year ago for sixty dollars, fed them all summer and winter, and in the spring was offered but sixty dollars for them in the market. Now, who got the hay ?" What was true in the case of "them steers" is true of every class of property in this country. Now the question is, who gets this lost value ? It finds a lodgment somewhere ; that place must be with money. For, wherever that may be found it will show an increase in value over products and labor in proportion as products and labor have decreased. Nothing is plainer than this. The mistake is often made, that prices are not controlled by the volume of money, because they have neither risen nor fallen concurrently with, nor in exact proportion to the increase or decrease of such volume. The precious metals are diffused over so vast a surface, and their current production is so small 96 PHILOSOPHY OF PRICE. in comparison with accumulated stocks that it takes considera- ble time for changes in their yield to so affect their volume relatively to population and business as to produce any sensible effect upon prices. The entire property interests of a country are united in maintaining and, if possible, in advancing the price of property, and in resisting to the uttermost any de- cline. A temporary maintenance of nominal prices, even in the presence of a shrinking volume of money, is especially practicable with imperishable property, such as real estate. When money begins to become 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 transactions. Market reports quote real estate " dull" "few sales, but prices firm" This stagnation is as- cribed to temporary causes, and a speedy recovery predicted. In order to maintain price, the terms of purchase are made easier. The amount of cash payments is reduced, and the de- ferred payments, secured by mortgage on the property, extend- ed over longer periods. After a time this expedient fails, and, even then, nominal prices are unnaturally held up for a short period b/the struggles of those who have purchased upon these extended credits, and by the tenacity of owners who re- fuse to sell at lower figures, and mortgage their own property to protect their power to hold. The stagnation of voluntary transactions is finally followed by the activity of involuntary ones under the direction of sheriffs and by the foreclosure of mortgages. Upon any material decline in the price of real estate, a large class of investors, believing that the bottom has been reached, and desiring to profit by the reaction which they think is sure to come speedily, enter the market and temporarily check the decline. Another fall in prices sweeps them and their margins away, and a third class of dealers, now absolutely certain that bottom prices have been reached, and sure that a PRICE AND ITS DEPENDENCE UPON CUKKENCY. 97 further decline is impossible, come in as purchasers. Each succeeding purchaser fortifies his conclusion, that present prices are bottom prices, by comparing them with and finding that they are no higher than the prices of some period in the past which is arbitrarily assumed to be a standard level, below which subsequent prices could never permanently go. It is overlooked that price is only the expression of a rela- tion, and that no correct conclusions can be drawn from a com- parison of the prices of two periods', unless comparison be also made of the money stock, population, and exchanges of both periods. Contrary to all calculations, as the volume of money shrinks, prices continue to fall, and these dealers encounter the fate of their predecessors. These operations repeat themselves until universal distrust prevails, and until it is found that, when money is decreasing in volume, prices have no bottom except a receding one, and that they are inexorably ruled by the volume of money. The effects of a decrease of the vol- ume of money in a particular country, arising from its abnor- mal outflow, or from its withdrawal from the channels of cir- culation through the distrust which prevails when unsound and speculative undertakings are breaking down, or when the country is conviiised by political disturbances, are the same as the effects of a general decrease in the volume of money. The result in both cases is a fall in prices. But in the first case the equilibrium is restored by a quickly returning wave of prosper- ity, and the evils resulting are confined to individuals and to special localities ; and those dealers are fortunate who purchase in the first stages of the decline. But in the second case the cause of the fall in prices is radical, and must continue until prices go out of existence, unless the decrease in the volume of money is arrested. In the whole history of the world every great and general fall of prices has been preceded by a decrease in the volume of money. There has never been a decrease in the volume of money, nor has there ever been a stationary vol 98 PHILOSOPHY OF PRICE. ume of money, unless accompanied by a stationary population and commerce, which has not sooner or later resulted in a gen- eral fall of prices ; and there has never been a recovery there- from except through a preceding increase in the volume of money. After the volume of money has begun to decrease, every dollar of credit extended at the old range of prices ag_ gravates the disaster which must come sooner or later. Stag- nation and panic are nothing more nor less than the results of a struggle to make prices truly express the relation between money and all other exchangeable things. The true and only cause of the stagnation in industry and commerce now everywhere felt is the fact everywhere existing of falling prices caused by a shrinkage in the volume of money. This is, in part, the misfortune of mankind, as the mines have failed for several years, under energetic working, to yield the precious metals in quantities sufficient to keep pace with the increasing needs of the world for money. But it is in part due to the folly of mankind in throwing away a benefaction of nature by discarding one of the precious metals. Existing evils date with that folly, which precipitated and now enor- mously aggravates them. Many learned and excellent persons and associations of persons in all parts of the world, whose instruments of obser- vation seem to have been adjusted for the examination of re- mote objects, and consequently, unfitted for, and a hindrance to the inspection and examination of anything near at hand, have furnished many far-fetched, incomprehensible and impos- sible causes for existing evils, which agree in nothing except their remoteness. They have seen through a glass darkly, or they would have discovered that the cause was all around and about them ; that it is the same cause that has invariably pre- ceded and accompanied similar evils. They would have seen that money in shrinking volume was engaged in its legitimate work of ruin. This is the great cause. All others are collat- PRICE AND ITS DEPENDENCE UPON CURRENCY. eral, cumulative, or really the effects of that primal cause. Practical men see what the mischief is, and they all see it alike, and, without formulating their ideas in set words and phrases, they all state it alike. Capitalists, large and small, give one and only one reason, for refusing to invest in productive enter- prises. Uniformly and universally the reason given is that prices are falling and may continue to fall, and that money is the best thing to get and hold while that state of things con- tinues. All can see that prices have fallen and are falling, although they may disagree, or may not trouble themselves to form any opinion as to the cause of the fall. And all can see, and do see, that it is falling prices which cause the stagnation of business, with all its necessarily attendant circumstances of an increasing pressure of debts, of decreasing employment and wages of labor, and of diminishing consumption. " Falling prices" is only another expression for an increasing value of money, and those who desire still further to appreciate the value of money by contracting its volume, desire still further to reduce prices, and still further to widen and deepen the gulf between money-capital and labor. Money-capital is the fund out of which wages are paid. Capital can only fructify through the employment of labor, and labor is comparatively helpless without capital. It is by the employment of labor that money-capital is produced and increased. It is in vain to advise those who depend upon their daily wages for their support, and who possess no capital but their willing hands, to change their places of residence and en- gage in agricultural pursuits. Even had they the means to emigrate, which most of them have not, they would still have to be supplied with seed, implements, and animals, and with support from seed-time to harvest. It is still more plainly fu- tile to advise them to engage in any species of handicraft or manufacture on their own account. In modern times human labor is only available in connec- 100 PHILOSOPHY OF PKICE. tion with machinery and appliances. A policy which tends to a constant fall of prices, and therefore compels capital from the justifiable instinct of self-preservation to withdraw from pro. duction, is a policy which reduces laborers to a worse condi- tion than if money were wholly abandoned and the system of barter were re-established. The conditions of the laborer are as bad when money-capital is not employed, as if it did not exist. The effect of falling prices is the same upon the small- est capitalist as upon the largest. The hope of gain is for all of them the only inducement to take the risks and labor of enterprises, and they will all prefer to consume their accumu- lations rather than to invest with the certainty of losing them. They will, of course, consume them as slowly as possible, and to that end will reduce their expenditures within the smallest possible limits. Laborers thrown out of employment must in some way have a bare subsistence, but there can be no other sources for it than the scanty earnings of such as are employed, and the capital in existence, which cannot refuse food to the starving. That shrinking money and falling prices are the cause of existing evils, was pointed out by the London Economist in its review (1869) of the previous financial year. It then said: "It may be safely affirmed that the present annual supply of thirty millions sterling of gold is no more than sufficient to meet the requirements of the expanding commerce of the world, and prevent that pressure of transactions and commodi- ties on the precious metals which means, in practice, prices and wages constantly tending toward decline. The real dan- ger is that the present supplies should fall off, and among the greatest and most salutary events that could now occur would be the discovery of rich gold deposits in three or four remote and neglected regions of the earth." Having shown by the testimony of the ablest writers for long years in the past, together with the experiences of all nations, as far back as economic writings extend, also by the best of our own statesmen and our own national experience that PRICE AND ITS DEPENDENCE UPON CURRENCY. 101 price depends upon the circulating medium, and that the cir- culating medium makes the ability to purchase, it now devolves the more difficult task of expressing clearly how it is done. We see and know that a blade of grass grows and extends with each successive day's sun, but how it grows has never, in a suc- cessful manner, been explained. If my readers will follow me closely I will give my reasons in as intelligible a manner as possible for the conclusions above stated. Money is the meas- ure of values. That must be an admitted fact at the outset. This being true, all values must be determined by its measure- ment. As a nation we have selected the dollar to be our unit of value. Hence all values are either multiples or divisions of that unit, the dollar. It therefore follows that the less value the unit or dollar represents the greater number of units or dollars a given amount of value will possess. For example, 3600 pounds of wheat will show sixty bushels of wheat with the unit or bushel representing sixty pounds, but change that unit or bushel to represent but thirty pounds and it will in- crease the measurement to 120 bushels. Increase the unit or bushel to ninety pounds and it will shrink the measurement to 40 bushels. In fact, the value represented by the dollar is al- ways the divisor, the amount of values under consideration the dividend, and the number of values the quotient. From this it is plain that the size of the divisor determines the size of the quotient provided the dividend is always the same, which it is in this illustration. Let us represent all labor productions as the dividend, being the whole sum of produced values. "When we come to reduce this amount to the unit or dollar of value, does it not follow that the more value the unit or dollar possesses the less number of units or dollars the quotient will give ? But to show more plainly my proposition, let us again suppose the whole production of values for the year is repre- sented by a space of 1,000 feet cubic measure, that is 1,000 feet long by one foot in depth and breath. If we had 1,000 102 PHILOSOPHY OF PKICE. measures one foot deep, one foot wide, and one foot in length, they would exactly fill up the 1,000 cubit feet of space. Now if each space or cubic foot represented productive value to the amount of one dollar, the proposition will be stated complete. When the people brought their products to be measured, those who filled ten measures would have ten dollars in value ; those who filled 100 measures would have 100 dollars in value ; and so on until the whole product had been measured. If the measures remained the same in capacity, producers could calcu- late exactly upon the value of their productions. But suppose these measures should be increased in number 100 per cent, (bear in mind the space or volume of products remains the same), then the measure would be increased in number to 2,000, and their capacity for measurement would be decreased one-half. Now the measures would contain but one-half of a cubic foot, and when the producer brings his products for measurement as before, he finds that instead of filling ten measures as at first he can fill twenty. The other can fill 200 measures. The result is, that while they received ten, or one hundred dollars before, they now receive twenty, or two hundred dollars as the case may be. But, suppose the number of measures is dimin- ished to 500, then, in order to fill up the space, which includes the entire volume of products, their capacity must be doubled. They must now be two feet long, one foot deep, and one foot in width. The producers come for measurement as before and find that on account of the increased size of the measure they can only fill five and fifty measures respectively, and as a con- sequence one receives five and the other but fifty dollars. If we represent the period of our business year by the 1,000 feet of cubic space, the measures which fill that space by our circu- lating medium, and our whole volume of production from bus- iness by the products, we then have this illustration applied to the increase or decrease of the value in the unit or dollar of our measurement of values, and showing its resulting effects PRICE AND ITS DEPENDENCE UPON CURRENCY. 103 all of which goes to prove the truth of this statement : the cheaper the dollar the more dollars ; the dearer the dollar the less dollars. We see from this conclusion that the man who owns the dollar is interested in having its value increased to the utmost extent, while the man who accumulates products to purchase these dollars is interested in having their value reduced so that he may obtain a larger number of them for a given amount of his products. This being true the right action in the case would be equal justice to both. The laws of every Repub- lic, especially of ours, are founded upon the principle of " the greatest good to the greatest number." In this principle the fact is recognized that the same law will not, in its application, inure to the benefit of all ; that some must suffer through its working ; but if it is for the interest of the majority the mi- nority must acquiesce. Now, in this nation, a very large majority of the popula- tion are poor. They are people whose only capital is invisible, and whose means of support is through labor. Again, where one person is found free of debt, thirty-three are discovered to be involved. Where three persons are comfortably fed, housed, and clothed without labor, ninety-seven are in reduced circumstances. The census returns show the startling fact that the average of wealth in this nation is but a trifle over three hundred dollars per capita. Imagine the number of paupers to offset the wealth of Yanderbilt. Then, is it not true, that our economic laws should be so framed as to aid the poor as against the unjust encroachments of the rich ? Do not the poor of this land come directly under the application of the foregoing principles ? Some will say the rich will take care of the poor. As well might we expect the wolf to rear the young lambs. Not one man in a thousand who becomes wealthy, after having tasted the bitter fruits of poverty, but forgets that he was ever poor and becomes the 104 PHILOSOPHY OF PRICE. worst enemy of the unfortunate, and those -who inherit great wealth inherit with it a contempt for the laboring classes. Such is the contaminating influence of money. The only manner by which the general good of the public can be subserved is through the honest application of whole- some general law T s rigidly enforced. This is due to the people and this they have a right to expect. In concluding this chapter I quote from a late writer as follows : "The scheme of demonetizing one of the metals through- out the western world originated soon after the discovery of gold in California and Australia, at a time when the yield was at what has since proved to have been its maximum, but which w r as then expected by many to continue on an ascending scale for an indefinite period. An eminent English writer (De Quiii- cey) published at that time an elaborate collation of current ac- counts, from which he arrived at the conclusion that the annual out-turn of gold would soon reach seventy millions ster- ling, or $350,000,000. On the basis of such expectations, the governments of Europe w r ere invoked by Chevalier and others to prevent the anticipated depreciation in the value of money, or, in other words, the anticipated rise in general prices, by the demonetization, not of silver, but of gold. Chevalier (Fall of Gold, 1856-'5T) said : 'The quantity of gold annually thrown on the general market approaches, in round numbers, a milliard of francs ($200,000,000). These two countries (California and Australia) must, for yet a long series of years, produce gold in such quantities and on such conditions as to render a marked decline in its value in- evitable. It is absolutely certain that so vast a production should be accompanied with a great reduction in value. In no direction can a new outlet be seen sufficiently large to absorb the extraordinary production of gold which we are now witnessing, so as to prevent a fall in its value. Unless, then, we possess a very robust faith in the immo- bility of human affairs, we must regard the fall in the value of gold as an event for which w r e should prepare without loss of time.' Under these appeals of Chevalier and others, several na- PRICE AND ITS DEPENDENCE UPON CURRENCY. 105 tions in Europe, notably Germany and Austria in 1857, de- monetized gold. It is probable that the movement in that direction would have become universal in Europe but for the resistance of France. It was changed, at least as early as 1865, into a movement for the demonetization of silver. In the con- vention of 1865, in which the Latin union was formed, Bel- gium, Italy, and Switzerland insisted strenuously upon the adoption of the gold standard, but were overruled by France. But this change, from demonetizing gold to demonetizing sil- ver, was more of form than of substance. The object aimed at by both was through a disuse of one of the money metals to pro- tect the creditor classes and those having fixed incomes against a fall in the value of money aud a rise in general prices. This is the pith and marrow of the monetary discussions of the last twenty-five years." 106 PHILOSOPHY OF PKICE. CHAPTEE III. PKICE AND ITS EELATION TO BUSINESS. The laboring classes of all civilized nations have been, and are, as a body, poor. All wealth being the production of labor, therefore, laborers could have possessed it, had not something intervened to prevent this natural result. Even in our own country, where the reward of labor is greater than in most others, some cause is operating with continual and grow- ing effect to separate production from the producer. The wrong is evident, but neither statesmen nor philanthropists have traced it to its true source ; and hence they have not been able to formulate any plan sufficient for its removal. Believing both cause and remedy lie with our circulating medium, and that the great mass of our people have been led to distrust their own competency to comprehend the subject, I propose to discuss it in the plainest terms possible. In doing so, con- clusions must be arrived at after carefully considering all the factors entering into them. Solid facts and not abstruse the- ories are necessary in the examination of this question. In a previous chapter I have shown the dependence of PRICE AND ITS RELATION TO BUSINESS. 107 price upon the amount of domestic currency in circulation. In this chapter I shall endeavor to explain the relation that price has to the business of the country. Not to any particular branch, but "to the general business conducted among us as citizens. I shall begin by showing the various stages through which the volume of our currency has passed ; the numerous laws bearing upon it, and the evident conclusions to be drawn from the arguments and proofs presented. I shall neither conceal nor color anything to affect or promote my argument, but give plain facts in plain terms. The awakening interest manifested among all classes of people upon this question, seems to demand a thorough inquiry into the subject matter. "Without further delay, only to ask of my readers a careful perusal in a friendly but critical spirit, I will begin the investigation. The story of currency contraction has become an " oft-told tale"; yet, being a crime of a free government against a free people, and by their own chosen representatives, it should be repeated as often as possible, that all may come to know where, and through whose instrumentality their present distressing condition originated. After the war closed in April, 1865, the strength of the government had been tested, and the preservation of the Union clearly demonstrated. The people once more directed their attention to the cultivation of the arts of peace. January 1, 1866, found us as a nation about three billions of dollars in debt, made up of interest and non-interest bearing obligations. It is worthy of remark at this point, and is a fact not generally known, that up to the time of Lee's surrender not a single dol- lar of gold or silver had been subscribed or paid by any banker or capitalist, either in Europe or America, for a bond of the United States. Also, that it was about seven months after that event before a single bond had been sold in the money 108 PHILOSOPHY OF PRICE. markets of the Old World. Tims we see all this "vast amount of debt was being handled by our own people ; and their pros- perity at that period has never been equaled before nor since. The reason for this is plain. About one billion live hundred millions of this indebtedness was being used by the people as a circulating medium. In that capacity it was giving the gov- ernment no trouble. Gold and silver were hiding where they always do in times of trouble, and dared not venture out ; con- sequently, they did not enter into the aggregate of the circu- lating medium at that time. Among this currency was a large amount of interest-bearing notes, variously estimated from twelve to fifteen hundred millions. This with greenbacks and national bank bills made up the currency of the nation. Greenbacks had risen from 46 to 71 per cent measured by gold value; this, too, with over $50 of circulating medium per capita of population. Our situation at that time indicated many years of financial prosperity. Our debt was being cared for, and held among our own people. The men of both armies had returned home, and were uniting their efforts to rebuild the wealth of the nation destroyed by merciless war. The im- petus given to business and production by this means was truly marvelous. Not only did this vast increase of the volume of business call for more currency, but the entire South had to be supplied. Human wisdom, to-day, can find no reason for the subsequent course adopted by the government. The fact of supplying the people of the South from this stock of currency was, of itself, a question of great moment to the whole nation, which seems to have been entirely overlooked. There is not the least doubt, had Congress issued full legal tenders for this whole amount, they would have appreciated to gold value long before specie payment was enforced. "After the battle come the ghouls, to fatten and thrive on its victims." Just so with regard to our national finances. At that time the bankers and capitalists came in swarms to enrich themselves by reason of PRICE AND ITS RELATION TO BUSINESS. 109 the nation's disaster. The lamented Garfield said " that the people would remember the bankers and capitalists of Wall street as the Germans remembered the robbers of the river Klrine, who never came out from their strong-holds but to plunder and rob them." They performed their task so well that at one blow twelve hundred millions of what had been circulating as currency, was converted into 5-20 bonds, bearing six per cent interest, and sold abroad. The interest on these bonds was payable in coin, and since that .time we have been raising and shipping corn, wheat, cotton, etc., to pay it. The annals of economic history affords no parallel to this great crime against the indus- tries of a confiding people. The shock that immediately fol- lowed beggars description. The people had learned, during the war, to indulge somewhat in luxuries. The desire to live in more ease and comfort had naturally grown upon them dur- ing this season of prosperity. They enlarged their business, built new homes, bought new farms and began new enterprises, for which, to a considerable extent, they had gone in debt, an- ticipating as easy payments in the future as had been made in the past. They dreamed of no change in values, and all was progressing happily and smoothly, when, like a flash of light- ning from a clear sky, came this act of Congress which took from them more than one-half of their means of payment. Every debt, national and individual, was by means of that act doubled. This brought financial trouble all over the land. Not satisfied with funding this large amount of circulating medium, early in that year (April, 1866), Congress permitted the Secretary of the Treasury to further contract the currency by burning up on an average five million dollars of greenbacks each month. In order to obtain these greenbacks, he was au- thorized to sell bonds drawing interest and buy them. This continued until February 4, 1868. By that time a wail had gone up from the people that even Congress could not ignore. PHILOSOPHY OF PRICK. and an act was passed forbidding the Secretary of the Treasu- ry reducing the circulating medium further. President Grant refused to sign the bill, and it became a law without his signa- ture. In the mean time failures had increased from 495 in 1863 to 2,864 in 1868. Our currency had been reduced in volume from $1,863,409,216 in 1866 to less than $794,756,112 in 1868. We learn from these figures both the cause and the effect. One other feature of the question that escapes notice is, at this time bonds were selling at a premium. If that fact was significant in any sense, did it not show the rapid ap- preciation, in gold value, of our currency as it then was consti- tuted ? About this time there was also considerable discussion through the press as to what these bonds should be paid in. It was plainly apparent that the government would take advant- age of its option and soon begin to call them in. From 1863 to 1867 there had been bonds sold amount- ing to $1,429,392,400. These were all paid for in greenbacks at par. Reckoning the discount between greenbacks and gold we find that the price paid in gold value was only $945,251,- 220, leaving a difference of $484,141,180. It requires no great thought to understand that when these bonds were de- clared payable in coin their value was increased by this dif- ference. March 18, 1869, the following act was passed by Con- gress : "That in order to remove any doubt as to the purpose of the government to discharge all just obligations to the public creditors and to settle conflicting questions and interpretations of the law by virtue of which such obligations have been contract- ed, it is hereby provided and declared that the faith of the United States is solemnly pledged to the payment in coin or its equiv- alent of all the obligations of the United States not hearing in- terest, known as United States notes, and of all tin* interest- leuriny ollif/tttions of the United States, except in eases where PRICE AND ITS RELATION TO BUSINESS. Ill the law authorizing the issue of any such obligations has ex- pressly provided that the same may be paid in lawful money or other currency than gold and silver." When this became a law the bondholders had thereby made, through its operation and effects, the sum of $484,141,- 180, in the exchange of greenbacks for bonds that were to be paid in coin. That the original contract between the people and the bondholder implied their payment in lawful money, either paper or coin, I quote the following as proof. In a speech delivered in the Senate February 27, 1867, John Sherman said : "Equity and justice are amply satisfied if we redeem these bonds at the end of five years in the same kind of money, of the same intrinsic value it bore at the time they were issued. Gentlemen may reason about this matter over and over again, and they cannot come to any other conclusion ; at least that has been my conclusion after the most careful consideration. Sen- ators are sometimes in the habit, in order to defeat the argu- ment of an antagonist, of saying that this is repudiation. Why, sir, every citizen of the United States has conformed his busi- ness to the legal tender clause. He has collected and paid his debts accordingly." In 1868 he wrote to a friend as follows : "Dear Sir y I was pleased to receive your letter. My personal interests are the same as yours, but like you, I do not intend to be influenced by them. My construction of the law is the result of careful examination, and I feel quite sure an impartial court would confirm it, if the case could be tried be- fore a court. I send you my views as fully stated in a speech. Your idea is that we propose to repudiate or violate a promise when we offer to redeem the 'principal 1 in legal tenders. I think the bondholder violates his promise when he refuses to take the same kind of money he paid for the bonds. If the case is to be tested by the law, I. am right ; if it is to be tested by Jay Cook's advertisements, I am wrong. I hate repudiation or anything like it, but we ought not to be deterred from doing what is right by fear of undeserved epithets. If under the law as it stands, the holders of the 5-20's can only be paid in gold then we are repudiators if we propose to pay 112 PHILOSOPHY OF PRICE. otherwise. If the bondholder can legally demand only the kind of money he paid, then lie is a repudiator and extortioner to demand money more valuable than he gave. Truly yours, JOHN SHERMAN." Again in 1869, in another speech in the Senate, Mr. Sherman said : "The contraction of the currency is a far more distressing operation than Senators suppose. Our own and other nations have gone through that process before. It is not possible to take that voyage without the sorest distress. To every person, ex- cept a capitalist out of debt, or a salaried officer, or annuitant, it is a period of loss, danger, lassitude of trade, fall of wages, suspension of enterprise, bankruptcy and disaster. 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 fall of all agricultural productions without any great reduction of taxes. What prudent man would dare to build a house, a railroad, a factory, or a barn, with the certain fact before him that the greenback that he puts into his im- provements will, in a few years, be worth 35 per cent, more than his improvements are then worth ? When the day comes, every man, as the sailor says, will be close-reefed ; all enterprise will be suspended ; every bank will have contracted its cur- rency to the lowest limit, and the debtor compelled to meet in coin a debt contracted in currency will find the coin hoarded in the treasury, and no representative of coin in circulation ; his property shrunk, not only to the extent of the contraction of the currency, but still more by the artificial scarcity made by the holders of gold. To attempt this is to impose upon our people; by arresting them in the midst of their lawful business, and applying a new standard of value to their property with out any deduction of their debts, or giving them any opportu- nity to compound with their creditors, or to distribute their losses ; and would be an act of folly without example in evil in modern times." Hon. B. F. Wade, known from Maine to California for his sterling honesty and incorruptibility, in a letter to a friend, said : "VICE-PRESIDENT'S CHAMBER, ) WASHINGTON, Dec., 13, 1867. ) Yours of the 8th inst. is received, and I must cordially PRICE AND ITS RELATION TO BUSINESS. 113 agree with every word and sentence of it. I am for the labor- ing portion of our people. The rich can take care of them- selves. While I must scrupulously live up to all the contracts of the Government, arid fight repudiation to the death, I will fight the bondholder as resolutely when he undertakes to get more than the pound of flesh. We never agreed to pay the 5-20's in gold ; no man can find it in the bond, and 1 never will consent to have one payment for the people. It would sink any party, and it ought tg. To talk of specie payments or a return to specie under present circumstances, is to talk like a fool. It would destroy the country as effectually as a fire. And any contraction of the currency at this time is about as bad. But I have not time to give my ideas in full. Yours truly, BENJAMIN F. WADE. Capt. A. Denny, Eaton, O." Garrett Davis offered the following amendment : "That the just and equitable measure of the obligations of the United States upon their outstanding bonds, is the value in gold and silver coin of the paper currency advanced and paid to the Government on these bonds." He declared the resolution "robbery and would make the people pay nearly $900,000,000 more than by law and equity they should pay." Senator Bayard seconded the arguments of Senator Davis : "Suppose instead of issuing paper money, it had pleased Congress to order an abasement of our national coinage. Sup- pose twenty-five per cent, more of alloy or worthless metal had been interjected into our currency, and with that base coinage, men had come forward to buy your bonds. What would be thought of the man who, when the day of payment of those bonds arrived, should say, 'I gave you lead, or lead in certain proportions; but for all the worthless metal I handed you, you must give me back pure gold.' Whether he was more mad- dened or more dishonest would be the only question arising in men's minds." The facts are, the Government received nothing but green- backs for the bonds, dollar for dollar, during the entire war ; that we never agreed to liquidate the principal of the debt in gold, the original contract being far from so stipulating ; and PHILOSOPHY oF I'UK'K. that the contract in question was ignored and another substi- tuted in the interest of the bondholders, it being this latter that provided for the redemption of the bonds in coin. The ablest men in all parties and in Congress have made that acknowledg- ment. To quote the language of the late Senator O. P. Mor- ton, of Indiana : "We should do foul injustice to the Government, and to the people of the United States, after we sold those bonds on an average for not more than sixty cents on the dollar, now to propose to make a new contract for the benefit of the bond- holders." And that noble old Commoner, Thaddeus Stevens, ex- pressed the sense of every true patriot in the House of Repre- sentatives when he uttered the following emphatic declarations in 1868, his voice trembling with emotion at the outrage which it was sought by powerful combinations to put into effect in the interest of the bondholders in changing the 5-20's into gold bonds : "If I knew that any party in this country would go for paying in coin that which is payable in money, thus enhancing it one-half ; if I knew there was such a platform and such a determination this day on the part of any party, I would vote for the other side, Frank Blair and all. I would vote for no such swindle upon the tax-payers of this country. I would vote for no such speculation in favor of the large bondholders, the millionaires who took advantage of our folly in granting them coin payment of interest." The object of the framers of the law could not have been to strengthen the public credit.. The amount of credit which either a nation or an individual can possess, depends' upon the strength and extent of the belief among lenders and capitalists that the borrower is both able and willing to meet the exact terms of his obligations. An offer to do more would subject the debtor to well-merited suspicion and distrust. He can not improve his credit by promising to pay a larger amount of money, or money of greater value, than the terms of the obli- gations held against him require. PRICE AND ITS RELATION TO BUSINESS. 115 The sufficient, best, and only means of improving credit, public or private, is exact performance of contracts. The debtor that insists upon all his rights and at the same time per- forms all his duties, is the one most confided in. Credit can be strengthened by fulfilling contracts, but not by changing them ; by performing all promises and not by making new ones. Nor could the honest object of the framers of the law have been to advance the value of bonds already sold and in the hands of purchasers. It would be of great public import- ance to enhance the value of bonds which the Government was proposing to sell, but to overload the country with addi- tional burdens for the purpose of enhancing the value of out- standing bonds, would be to subserve gratuitously and unjustly, private interest at the public expense. It would be very grati- fying to national pride to have the bonds of the United States, now in private hands, command the highest prices in the markets of the world, but it could scarcely be deemed a wise financial policy in the present condition of the country to ob- tain that gratification by paying a premium for it. If, how- ever, it were deemed advisable to enhance the value of bonds already sold, it should have been done by some plain and direct method, and in such a way that the country might know ex- actly what it was going to cost as for instance, by increasing the principal or rate of interest of outstanding bonds. It should not have been done by the indirect method of changing the medium of payment from gold or silver, at the option of the Government, to gold alone. The additional burden which that might impose, from a rise in the value of gold, is incal- culable. The passage of this act, while it declared the bonds pay- able iii coin, was done when coin was at a premium of nearly 25 per cent, which, of course, added at once 25 per cent of value to the bonds, and at the same time lessened the means of payment to the same extent by its effects in producing a gen- 116 PHILOSOPHY OF PRICE. eral decline of prices. Why it was necessary at that time to strengthen the public credit, and why it was an act of justice (?) to the people of the United States to have the whole basis of their indebtedness changed and increased by fully one-fourth its amount, will always remain a mystery to every student of political economy. This was the first time the contract between the people and the bondholder had been changed. I quote from an emi- nent English author on this point, Professor McCulloch. He says: " To make any direct change in the terms of the contract entered into between individuals would be too barefaced and tyrannical an interference with the rights of property to be tolerated. Those, therefore, who endeavor to enrich one part of soci- ety at the expense of another, find it necessary to act with great caution and reserve, and to substitute artifice for open and avowed injustice. Instead of directly altering the stipulations in the contract, they ingenuously bethought themselves of alter- ing the standard by which the stipulations were to be adjusted. They have not said, in so many words, that 10 or 20 per cent should be added or deducted from the mutual debts of society, but they have, nevertheless, effected this by making a difference in the value of the currency." (Increased or dimin- ished its quantity.) But, as the sequel shows, this was only a portion of the scheme. The next year, July 14, 1870, Congress passed a funding bill which authorized the sale or exchange at par for other bonds, fifteen hundred millions of interest-bearing bonds to run 10, 20 and 30 years, with interest and principal payable in coin. After the funding of these bonds had been accom- plished the last act was to be perpetrated. Feb. 12th, 1873, Congress passed an act dropping the standard silver dollar from our coinage, and in 1875 demonetized it. This act made our whole national indebtedness payable in gold and necessarily creating a new basis for the payment of all debts, public and private. PRICE AND ITS RELATION TO BUSINESS. 117 This again added to the burden of debt and also increased the difficulties of payment. The contract had been changed again. It seems as though the moneyed men on either side of the Atlantic owned our Congress ; and the people, to whom we must look for means of payment, were ignored entirely. The fact that over eleven thousand failures were reported during these two years is sufficient proof of the manner it was "benefiting" the nation. But this was not enough. Jan. 14, 1875, the specie resumption act was passed. It author- ized the Secretary of the Treasury to first sell bonds to buy silver for the purpose of exchanging and withdrawing the pos- tal currency and scrip from circulation. About eighteen mil- lions of 5 per cent bonds were sold for that purpose. There were also sixty-five millions of 4 1-2 per cent, and twenty-five millions of 4 per cent bonds sold for the purpose of retiring legal tender notes, which are still drawing interest. Here we see bonds of the United States sold on a long time that are now worth, and command a premium of 27 per cent, to take from the people the best small currency they ever had, and to retire from circulation the best medium of exchange known to any civilized nation. The failures following this, 1875-6-7, for each year re- spectively were 7,740, 9,092 and 10,480. This indicates the "success" of the experiment. The silver commission, in their report, say : "Its true character, as now interpreted, was neither avowed in Congress nor understood by the country ai the time of its passage. The phraseology of the act created the im- pression that there was to be no reduction of the aggregate of paper money, but 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 not with that understanding that it was sanctioned by Congress. 118 PHILOSOPHY OF PEICE. A more fatal misconception grew out of the ignorance that prevailed almost universally until after the passage of the resumption act, that silver had been demonetized, and hence, that a law providing for specie payments was really a law for gold payments. The people were not aware that coin then meant gold, and that coin payments involved the shriveling of all values to the measure of a single metal. They were in fa- vor of resumption but not confiscation, and they were not aware that resumption as proposed was but another name for spoliation. Although the period fixed for this spoliation was nominally in the future, it actually commenced at once, and is now proceeding day by day. It having been made certain, so far as the law could make it certain, that each dollar of the actual money of the country would, on a given day in the near future, be raised to the value of a gold dollar, the univer- sal tendency was, and has continued to be, to change all forms of property into money, and to refuse investment in either property or productive enterprises. Moneyed capitalists, know- ing the disastrous effects which the impending fall of prices would have on the financial condition of borrowers, pruden- tially withdrew or diminished all credits and hastened to real- ize on securities. They have never been deceived, for one mo- ment, by the idle fallacy that resumption in gold involved an appreciation in the value of the legal-tender notes and a fall in prices only to the extent of the present difference between the value of those notes and gold. They knew that the apprecia- tion of legal-tender notes must reach that vastly higher level which the value of gold must reach when hundreds of millions of it were and are demanded for resumption, and that prices would sink to a corresponding point of depression." In the campaign of 1876 there appeared a new feature in the economic views entertained by the people. Previous to that time they had considered " finance " too deep a study, and in consequence it had been left almost entirely with their con- gressional representatives for a solution. But, then, the ques- tion of American finances began to be discussed by them the acts of Congress and votes of members were freely criticised. Ugly questions were being asked, which soon developed the fact that the average Congressman was about as ignorant of the effect of his vote as were his constituents. All that was neces- PRICK AND ITS RKI.ATioX T< > P.rsi.NKSS. 119 sary to pass an act touching the finances was to "convert" the few leaders. The most striking evidence, perhaps, of the public inatten- tion to the effect of the coinage act of 1873, is the fact that President Grant, who signed it, and who was critically observ- ant of the legislation of Congress, had no knowledge of w r hat it really accomplished in relation to the demonetization of sil- ver, and was still uninformed about it as late as the following October. If the President of the United States, in daily in- tercourse with the public men of the country, had failed to hear* during certainly eight months that the laws no longer per- mitted money to be coined from silver, it must be true that the ignorance on the subject was general and profound. In a letter written October 3, 1873, to Mr. Cowdrey, Gen- eral Grant said : "I wonder that silver is not already coming into the mar- ket to supply the deficiency in the circulating medium. * * * Experience has proved that it takes about $40,000,000 of frac- tional currency to make the small change necessary for the transaction of the business of the country. Silver will gradu- ally take the place of this currency, and further, will become the standard of values, which will be hoarded in a small way. I estimate that this will consume from two to three hundred millions in time, of this species of our circulating medium. * * * I confess to a clesire to see a limited hoarding of money. But I want to see a hoarding of something that is a standard of value the world over. Silver is this. Our mines are now producing almost unlimited amounts of silver, and it is becoming a question, 'What shall we do with it?' I suggest here a solution which will answer for some years, to put it in circulation, keeping it there until it is fixed, and then we will find other markets." This may, to some extent, perhaps, explain how John Sherman and Hugh McCulloch became millionaires, and why Robert Schenck was sent to the Court of St. James to teach the English people how to play " draw poker." However this may be, a cry went up from the people for relief. Agitation and discussion disclosed many of the frauds embodied in the 120 PHILOSOPHY OF PRICE. acts of Congress, and through fear of political destruction, on the 28th day of February, 1878, the standard silver dollar was rehabilitated with its legal-tender power, and the coinage of at least two millions per month was made compulsory. The act of May 31st, of the same year, forbade the further retiring of greenbacks. During this year business failures in the United States amounted to more than $234,000,000 the most disastrous since the almost total extinction of values in 1857, which was at that time produced from the same causes. We notice also that the aggregate of failures from 1866 to 1878 amounted to the enormous sum of $1,784,394,132. During the years 1863-4-5, when we had an abundance of money in circulation, there were only 1545 failures, amounting to $34,- 103,000, while during the succeeding eleven years of contrac- tion there were 67,422 failures, amounting to the vast sum given above. Who can examine these figures and not come to the con- clusion at once that contraction was the prime cause of these bankruptcies, and the governing factor in this wide-spread de- struction ? On January 1st, 1879, specie payment was resumed, and with it came the inevitable lessening of the means of payment. Although Congress had remonetized silver and ordered its continued coinage, each Secretary of the Treasury, in collusion with banks and bankers, has succeeded in keeping it out of cir- culation up to the present time. Every document coming from the Treasury department has contained a carefully prepared paper upon the evils of silver coinage ; and the silver dollar that ought to be controlled by and belong to the people, has never had a friend in any administration since. Every- thing is being done to add to the coinage of gold, while every obstacle possible is thrown in the way of the coinage of silver. Congress passed an act permitting the issue of silver cer- tificates upon deposits of silver with the Treasurer, and after PRICE AND ITS RELATION TO BUSINESS. 121 repeated insults from the banks, in a lucid interval, passed an- other act that no National Bank should belong to a clearing house that would not receive these silver certificates in settle- ment of balances. This law the New York and other banks in large cities have persistently ignored. In order to assist in the evasion of the law the Secretary of the Treasury resorts to the following scheme as shown by one of the leading jour- nals. The local editor of the New York Tribune, a paper which has been distinguished for its zeal in supporting the re- fusal of the banks to receive silver certificates, gives in that paper of February llth, the following account of the motives of the banks in seeming, on the 9th, to have relaxed in their exclusion of silver : "It is understood that the Monday payment by the Sub- Treasury was intended to accomplish two objects to soothe any jealousy on the part of country banks and to enable the Sec- retary of the Treasury to answer satisfactorily the congress- ional inquiry whether any National Banks or clearing-house associations refused to accept silver or silver certificates. As the New York clearing house has now accepted silver in pay- ment of balances both it and the Sub-Treasury have complied with the Federal law. It is generally understood by bank officers that payment in silver will not be repeated except in cases of emergency." In issuing bonds under the act of July 14, 1S70, the United States took the risk of a rise in the value of both the metals. The parties accepting the bonds took the opposite risk of a fall in the value of either of them. The chances against the United States were wars and political disturbances in the mining countries, such as caused a decrease in the pro- duction of gold and silver between 1809 and 1848, or that the mines would be, from any other cause, less productive, or that countries not using gold or silver might decree their use as money, and thus make a new demand for them, or that a change of fashion might increase the consumption of the metals in the arts. Either of these circumstances, or all com- 122 PHILOSOPHY OF PRICE. bined, might raise the value of the metals very materially. On their part, those who accepted the bonds took the risks of an increased production of either or both of the metals by the discovery of new gold and silver mines, or by the more vigor- ous working of old mines, or that commercial countries might demonetize one or both of the metals, or that great amounts of gold or silver might be liberated by the suspension of specie payments in important countries, or that the habits of the world might be so changed that less amounts of gold or silver would be used for other purposes than as money. Either of these circumstances, or all combined, might depreciate the value of one or both of the metals very materially. One fact, not a matter of chance but of reasonable cer- tainty, operates steadily against the United States. This is the advance of the world in population, wealth, and exchanges, and the consequent requirement of more money, with no cer- tainty that the mines will produce more. The risks were and are mutual. Is it supposable that, upon the occurrence of any or all of the circumstances which would tend to raise the value of both metals, and thereby in- crease the burdens of the obligations payable in them, the United States would ask or that the bondholder would agree to a corresponding scaling of the contract? Has a bargain been made where the creditors, under all vicissitudes, stand to win and not to lose ? Is the United States bound to the obliga- tions and penalties of the contract, and debarred from all the advantages conferred by its terms ? These interrogatories ad- mit of but one reply. There is no dispute about the facts of the case, or the law. A contract has been entered into between the govern- ment and its creditors involving contingencies which may fa- vor either party, and both parties must abide the issue, what- ever it may be. It would be beneath the dignity of the Government to demand any advantages of the Government I'IMOK. AM) ITS RELATION TO BUSINESS. 123 which the law and the contract made under it do not confer. It would be a violation of justice and a betrayal of the great interests confided to its charge to accept anything less. The Government is an agent and not a principal. It is the trustee of the nation, and must find the charter and guide for the ad- ministration of the affairs intrusted to it in the law and not in sentimental emotions. The creditor would have no reason to complain of the law or the fact if he were now paid in silver. The contingencies which have happened have not been favorable to the United States, but otherwise. Not only has the value of both the metals risen, but a comparison of gold prices in 1870 with sil- ver prices in 1885 will show that the value of silver in buy- ing the products of labor is now greater than the value of gold was then. Payment to-day in silver would not only give the creditor all he is entitled to under the law and the contract, but would mete out to him more than equity would demand. It is sometimes said that the more recently issued bonds should be paid in gold, because the United States received gold for them. The obligations of a bond are not governed by the price or the species of money, or the nature of the con- sideration received by those who issued it. They are governed by the terms of the bond, and not by what it is sold for. A bond sold at 105 can have no other construction than a similar bond sold at 50, and a bond sold for gold can have no other construction than a similar bond sold for silver or greenbacks, or given in payment for supplies and services. The promise, and not the consideration, governs. If it were really true that what is received for bonds determines what they promise, the holders of a majority of the outstanding bonds of the United States w T ould be in a much less favorable position than they now occupy. In consequence of this war on silver, a large sum lies idle in the vaults of the national Treasury, with a fixed determina- 124 PHILOSOPHY OF PRICE. tion on tiie part of the Secretary and the Government that not one dollar shall be paid for the redemption of bonds. The plea of unfairness is made, that silver has depreciated in value, and is now at a discount compared to gold. With a hundred millions or more of bonds subject to call, which should be paid, thereby putting into circulation the same amount of cur- rency, and relieving the Nation of the interest on that amount of bonds, all this vast sum is held idle in the Treasury because the bondholders control the administration. Let us go to the facts and ascertain whether these bonds can be honorably paid in silver. The law passed February 25, 1862, provides that coin, and coin alone, shall be received for customs dues. That law has never been changed. It also pro- vides for the disposal of the coin so received as follows : "SECTION 3694. The coin paid for duties on imported goods shall be set apart as a special fund, and shall be applied as follows : First To the payment in coin of the interest on the bonds and notes of the United States. Second To the purchase or payment of one per cent, of the entire debt of the United States, to be made within each fiscal year, which is to be set apart as a sinking fund, and the interest of which shall in like manner be applied to the pur- chase or payment of the public debt, as the Secretary of the Treasury shall from time to time direct. Third The residue to be paid into the Treasury. Since the passage of the above-mentioned act, millions of silver has been received into the Treasury from customs, and not one dollar of it applied, as the law directs, in the purchase or payment of bonds, while the act expressly provides for the payment of one per cent, each year, of the entire debt with this coin. In 18 TO, when our present bonds were issued, they were sold in accordance with the following act of Congress : u CHAP. 256. AN ACT TO AUTHORIZE THE REFUNDING OF THE NATIONAL DEBT. Be it c/t9 material as to be sought for abroad. We want it kept in use at home, so that we may enjoy the benefits and reap the re- wards of its influence on the great business interests of our people. We want much less talk about that impossible thing, " the money of the world," and much more action in regard to what shall be the money of America. It is not generally known that at the present time our Government has commissioned a gentleman to take in the sights of the Old World, and, as he journeys along, ask such non-partisans as Gladstone, Bismarck and others, as to the wis- dom or unwisdom of continuing the coinage of silver. Such childlike simplicity in these times of intrigue and deception is, to say the least, refreshing. Of course, their advice, under the circumstances, would bear the stamp of disinterestedness. What a spectacle for 60 millions of intelligent people to wit- ness ! Where are our statesmen, our scholars and other men of brains? Are we bankrupt in that respect, or are they fol- lowing their plows and forging at their anvils? The latter is probably true. We hear and read much concerning the stability of for- eign ideas regarding money ; that we must copy and endorse their customs and laws, or so much of them as affect our finan- cial condition. Were that the case, we would make a sorry mess of it. Professor Levi says : " Frightened, and not without reason, at the possible con- sequences, some countries heretofore anxious to attract and re- tain gold in circulation, even at great sacrifices, showed a fever- ish anxiety to banish it altogether. In July, 1850, Holland de- monetized the gold ten-florin piece and the Guillaume. Por- tugal prohibited any gold from having current value except the English sovereign. Belgium demonetized her gold circu- lation (that is, repealed the laws making it legal money). Rus- sia prohibited the export of silver ; and France, alarmed but less hasty, issued a commission to look into the matter." In 1855 Germany demonetized gold, and made silver the 170 PHILOSOPHY OF PRICK. only legal money. But in 1870, after the silver mines had be- gun to issue vast sums of silver money, and the annual issue of gold money had declined from 146 millions to 98 millions, she demonetized silver and made gold the only legal money. I might give similar instances of fluctuations and changes in the views of European nations in regard to the use of the precious metals as money. From those given we learn that even those nations which have existed longest are not fully de- termined upon any fixed line of action. We infer from this that there is a probable chance for improvement with them. Hence I claim as we are or ought to be a distinctive nation in nearly all that the term implies, an effort on our part to im- prove the methods of issuing a circulating medium would not, if disastrous, stand alone. In a literal sense every nation has a distinctive circulating medium and no other, for there is no such thing as " a money of the world" any more than there is a market of the world. Where the market or the money is found, it is evident that both or either exist under the laws and regulations governing traffic in each individual nation. What I intend to convey is, a currency not differing in its organic construction from that of other nations. Nothing could be more disastrous to trade and commerce than for all nations to adopt the same monetary system. What affected one, in such a case, would affect all. In Holland silver was the sole standard until 1816. In that year the double standard was adopted with the legal rela- tion between the metals of 15.873 to 1, which undervalued sil- ver and practically banished it from the circulation. In 1847 silver was again adopted as the sole standard, not, as claimed by some, in consequence of the discovery of gold in California, but just before that event. The principal reason assigned by the statesmen of Holland for this change in 1847 was, that it had proved disastrous to the commercial and industrial interests of Holland to have a money system identical with that of Eng- KIND AND AMOUNT OF CURRENCY. 171 land, whose financial revulsions, after its adoption of the gold standard, had been more frequent and more severe than in any other country, and whose injurious effects were felt in Holland scarcely less than in England. They maintained that the adop- tion of the silver standard would prevent England from dis- turbing the internal trade of Holland by draining off its mon- ey during such revulsions, and would secure immunity from evils which did not originate in and for which Holland was not responsible. This proposition is undoubtedly sound, and is being so recognized by the best economic writers on both sides of the water. As the most important function of money is to measure values and to establish equities in time transactions, the great bulk of which are internal and between citizens of the same country, and all of which are expressed in the money of some par- ticular country, it follows that any system of money that is common to several countries is a vicious one, in that it subjects the entire internal business of each of them to all the disasters originating in the political or financial mismanagement of the Government, or in the political disturbances, follies, misfor- tunes, or reckless speculations of the inhabitants, of any one or all of the others. That money is simply the instrument of commerce and industry and not their object ; that a sufficiency of it is better than more, and infinitely better than less ; that the outflow of money from one country to another having money systems in common, is a double injury. It is an injury to the country that receives it and a greater injury to the coun- try that parts with it. It tends in the one instance to produce crises by inflation, and in the other panics through contraction. And that in addition to this is an injury to each on account of the derangement of the trade of the other ; that their inven- tion of money is but half completed when the necessary lim- itations and regulations of its quantity, and consequently of its 172 PHILOSOPHY OF PRICE. value, are remitted not only to the "vicissitudes and chances of mining, but to the vicissitudes in the business and legislation of foreign countries ; that these facts and considerations, and many others which might be urged, show that metallic money is an inaccurate money, and fills only in a moderate degree any of the requirements of a perfect system, while, in essential particulars, it so far fails to fill them as to render it unfit for an advanced civilization. On the other hand, every requirement of a perfect system can be met more nearly and more certainly by paper money than by any other ever devised. Not paper money based upon gold, silver, or any other fluctuating commodity, whose meas- ure it should be, nor upon a promise of commodities, near or remote, definite or indefinite, of governments or banks ; nor like the French assignats, based upon lands ; nor fastened to gold or silver by a chain sure to snap when the metals are wanted ; nor convertible into bonds and thereby offering the bribe of interest for its withdrawal from circulation ; nor of any use to its owner except when parted with ; nor capable of yielding profit except when employed in the production and distribution of' wealth ; but an absolute money, whose value, conferred by the sovereign authority, and regulated by a pre- arranged and perfected system, and not by the passions and caprices of the hour, would rest impregnably on functions es- sential to civilization and progress. Bryant, in his discussion of the question, says : " The power of money to fix the condition of man in all human affairs, is supreme, absolute sovereign. The condition, then, of those who gain the money must rise, while the condition of those who lose it must sink no alternative is possible. Hence, to possess the money becomes, as it were, the life-and-death struggle of civilization of man's existence. Now, it is obvious that, if the money of several nations ~be of the same kind in fact or in principle then this merciless struggle for the money -for existence will be of one nation against all the others, and of all against all. To make a money that is common to several nations is to KIND AND AMOUNT OF CURRENCY. 173 set up a huge auction-block, upon which PRICES will officiate as a heartless and soulless auctioneer. The money will be knocked down to those who bid the most for it of their labor or its productions. The highest bidders for the money will ever be those whose necessities are the greatest. What the necessities of a people are, is largely fixed by the institutions the government under which they live. That great statesman, Lord Chatham, has most truly and wisely said : ' The ruin or prosperity of a state depends so much upon the administration of its government, that, to be acquainted with the merit of a ministry, we need . only observe the condition of the people? If among these several nations having the same kind of money in fact or in principle there is even one nation whose institutions are such as enslave the masses to an aristocracy who own the capital and the land, then that curse spreads itself inevitably over all the other nations. The necessities and miserable condition of that people forces them to offer the most of their labor or its productions for the money. As the money flows to them their condition rises they prosper. But those from whom it ebbs, sink. Nor can any human power arrest their sinking condition, until they have reached a point where their necessities make them the highest bidders for the money. A system of money common to several nations guar- antees two things : First, that the condition of the producing and industrial classes will be about the same in each and all. And the condition of these classes fixes the condition of fully 85 per cent of the total population. The condition of the manufacturer for home consumption, the merchant, the profes- sional man, etc., etc., sinks with the foundation. Second : It guarantees that no one of the nations will ever enjoy more than three or four successive years of prosperity. Their pros- perity is ever born of the dire necessity which forces them to bid the most for the money ; but in gaining it they reduce some other nation to adversity, which, in turn, bids it away from them again. It is a tide that ebbs and flows like that of the seas. In connection with this, it is of the highest import- ance to consider the following fact, namely : For each year of prosperity there will be four or five of adversity ; for a pe- riod of three or four years of prosperity there will be one of twelve to fifteen of adversity. The prosperity of the few years is due to the fact that the purchasing power or value of money is sinking, while that of labor and its productions are rising 174 PHILOSOPHY oF PRICK. less and less of labor and its productions going to the monov- loaner, and more and more to general society. The mam/ years of adversity are due to the opposite fact more and more of labor and its productions are required to cancel the demands of the money-leaner, and less and less are left to the patronage of general society. So that, while it is a system of money that sometimes bears upon the money-loaner, we see that for each year of his adversity he is enriched by four or five of prosper- ity ; while general society has five of adversity to one of pros- perity. Society always gets into debt to the money-loaner when the value of the money is depreciated, and is forced to go out of debt when its value is appreciated; when ft borrows two dollars it obtains one day's work, and when it pays the two dollars it gives two days'" work; and merchants and others supposed to be intelligent say that it is ' hard times.' The periods 1812 to 1816, 1834 to 1837, 1853 to 1857, in all a peri- od of eleven years, were ' good times ' in each there was a great increase in the quantity of the money. From 1817 to 1833, 1838 to 1852, and 1858 to 1872 but for the war in all, a period of 44 years, were ' bad times,' in each there was an enormous contraction of the money. It is four or five to one in favor of the money-loaner. And, as an inevitable conse- quence, that portion of society which produces all the wealth are largely bankrupts or paupers, while those who do not pro- duce a single farthing of it are largely millionaires. And all that portion of society subsisting between the money-loaner and the producer are ever seized with the ' chills and fever,' a short season of fever and a long one of chills" No matter how large or small the exchanges are between nations, the difference must be leveled up with commodities. The balancing commodity used may be either wheat, corn, meat, gold or silver ; yet, it must be paid out and received as an article of commerce having its value fixed by the nation re- ceiving it. Nothing American is money when taken from under the jurisdiction of the stars and stripes. All articles of commerce are then simply exported commodities, and are put upon the market at a price to be fixed by foreign purchasers. We are told that gold and silver are the recognized money of the world. That is an error. The gold and silver coins of one nation are received by another only as so much bullion, KIND AND AMOUNT OF CURRENCY. 175 and its value is estimated by its weight and fineness. Wheat, cotton, meat and manufactured articles are used as the basis of more foreign exchange in one week than gold and silver is in a whole year. Gold, silver, copper and iron are the products of labor the same as all the other articles enumerated, and all nations, in their exchanges, treat them as such ; consequently, the domestic currency of a nation does not, in the least, con- flict with its foreign commerce. This being true, of what ben- efit is an expensive currency to .any nation ? The more pre- cious the material the more expensive the currency. If gold was the only metal used for money, it would cost much more than silver, and if silver was the only metal used it would cost much more than gold, while paper costs comparatively noth- ing. The entire expense of a dear currency is made simply to gratify an exploded idea. Outside of the legal quality that goes with the stamp of the government is the guarantee that the metal upon which it is impressed is of a certain weight and fineness. Of what use to the people, then, is all this ex- pense of coining gold and silver into money when it can be used as such only among ourselves ? When used abroad it is weighed and bought as produce, notwithstanding its costly and handsome coinage. Why not keep it in bullion, and when an adverse balance is to be settled, send it in that form in payment of the difference, if required. As I said before, both gold and silver are too expensive for the uses they are put to as legal money. For instance, take a paper dollar and a gold dollar. Suppose both are lost at sea, what is the difference in the effect of their loss ? With the pa- per dollar the individual loses a dollar in value, and the nation gains it. With the gold dollar both the individual and the nation are losers two dollars are lost, for the nation paid an equivalent for the metal before it was coined. This, of itself, amounts to a large sum in the course of years. Of the 45 millions of fractional currency issued, 15 millions have been 176 PHILOSOPHY OF PRICE. lost or destroyed. This would happen with silver or gold cer- tificates in like manner the nation would gain what the indi- vidual lost, instead of both being losers in the same calamity. I do not believe in deceiving the people in any manner, much less in regard to the great question of domestic currency. Squarely and honestly told, the only money in this nation to- day is gold and silver coin ; all else is a fraud, a delusion in- spired by undue confidence in a coin basis. National bank bills are redeemable in greenbacks, and greenbacks are redeem- able in coin. Now, if the people should bring all their prom- ises to pay to the banks and treasuries of the United States, and demand their redemption at one time, the nation would suspend payment, become bankrupt, and the banks would prove insolvent. We are led to believe that there is a coin dollar back of each paper dollar that is in circulation. This is not true. National bank bills are redeemable in greenbacks. These banks had in circulation Oct. 1, 1885, $268,869,597. The amount of greenbacks outstanding at that date was $346,- 681,016, making a total of $615,550,613. To redeem this amount the Government held $100,000,000. Here is an exam- ple of 100 millions of money secured by a coin reserve and 515 millions of absolute frauds. Ask one hundred men you may meet in your walk, if our currency national bank bills and greenbacks have a coin reserve to protect their redemption, and ninety-nine will say they have. When, in fact, the only issue that has an absolute coin basis is the certificates which are not legal tender. Domestic currency is one thing, but legal money is another. This paper money the Government and banks compel the people to receive in payment of all their dues, but the Government, under the present law, can only receive it from the people for certain specified payments, and for this .reason I claim again it is a fraud. If an individual will not take his own debt in pay- ment for a credit he holds, plain people will call him a scoun- KIND AND AMOUNT OF CURRENCY. 177 drel, and justly, too. All tins masquerading and financial jug- glery is concocted simply to deceive a trusting people, with the object of robbing them of their earnings. Why not present the bare facts, cut the matter open, and let the light of wisdom and common sense in to dispel the darkness ? I would have gold and silver, if they are to be used as money, coined free and unlimited, or gold and silver certifi- cates issued on bullion deposited at any of the mints or sub- treasuries, equal to the amount of coin, and in convenient de- nominations for circulation. That much currency would be bottomed on the precious metals. Then I would issue Govern- ment notes or greenbacks in sufficient quantities to give the people currency enough to keep capital, labor and its products independent of each other, and bottom this issue on taxation. Let the Government pay it to the people for what it wants of their labor, and products, and receive it of the people for all dues. With such a currency there could be no deception nor depreciation. I quote from Thomas Jefferson on this question : " And so the nation may continue to issue its bills as far as its wants require and the limits of its circulation will permit. Those limits are understood to extend with us at present to $200,000,000, a greater sum than would be necessary for any war. But this, the only resource which the Government could command with certainty, the States have unfortunately fooled away, nay, corruptly alienated to swindlers and shavers, under the cover of private banks. Say, too, as an additional evil, that the disposal funds of individuals to this great amount have thus been withdrawn from improvement and useful enter- prise, and employed in the useless, usurious and demoralizing practices of bank directors and their accomplices. In the war of 1755 our State availed itself of this fund by issuing a paper money bottomed on a specific tax for its redemption, and to in- sure its credit, bearing an interest of 5 per cent. Within a very short time not a bill of this emission was to be found in circulation. It was locked up in the chests of executors, guar dians, widows, farmers, etc. We then issued bills bottomed on a redeeming tax, but bearing no interest. These were readily 178 PHILOSOPHY OF PRICE. received, and never depreciated a single farthing. Opinions of Thomas Jefferson m 1813; his letter* 1<> Join, W. Kpp^ June 24, 1813 ; Jefferson's Works, volume 4, pages 40, 41. The question will be asked, and ought to be looked at, what is to be the recourse if loans cannot be obtained ? There is but one "Carthago delenda est." Bank paper must be suppressed, and the circulating medium must be restored to the nation to whom it belongs. It is the only fund on which they can rely for loans ; it is the only recourse which can never fail them, and it is an abundant one for every necessary pur- pose. Treasury bills, bottomed on taxes, bearing or not bear- ing interest, as may be found necessary, thrown into circula- tion will take the place of so much gold and silver, which last, when crowded, will find an efflux into other countries, and thus keep the quantum of medium at its salutary level. Let banks continue, if they please, but let them discount for cash alone or for Treasury notes." Letter September 11, 1813, vol- ume 6, pages 199, 200, 201. Bear in mind the first issue of our greenbacks was upon this identical plan. They w r ere received and taken for all dues, and in consequence remained equal with gold and silver, while those subsequently issued under a law discriminating as to their uses, to a large extent depreciated in value. Or, if this will not do, I would demonetize both gold and silver, and issue all the currency direct from the Government in legal tender notes. For iny part, I am inclined to the latter idea. It would avoid confusion and deception regarding the true status of our currency, and make it unnecessary to further discuss the ques- tion of a single or double standard of payments. It would en- tirely eliminate the little understood question of a ratio be- tween the two metals, and give us a currency that could not be increased or decreased in value only by limitation in quantity, which legislation could regulate. Every nation of the world is, at the present time, trying to solve this greatest factor in human progress the best currency. And I expect to live to see the time when silver and gold will be considered, by all stu- dents of political economy, as unfit for money as simply a commodity of considerable intrinsic value ; and the cheapest KIND AND AMOUNT OF CURRENCY. 179 of all materials paper solely used to bear the stamp of pow- er or governmental authority, which alone makes money. Then each Government will have its one distinctive currency, that cannot be impaired or depreciated by the financial or com- mercial success of any other country. I here quote from the report of the Silver Commission : "Describing our situation summarily, it may be said that our commercial intercourse with Western Europe consists of two parts : First, the export of articles indispensable to Europe, such as cotton, the cereals, tobacco, and the products of animals, a trade which needs no stimulation or favor of any kind. Second, the import from Europe of manufactures. This is a trade which all parties and the representatives of all shades of economical opinion in this country wish to see steadily di- minished and eventually terminated. The reasons which con- duce to this uniformity of desire are very diverse, as also are the modes proposed to accomplish the object sought. Some propose protective tariffs and high duties as the best means. Others maintain that the better if not the only way to keep out European manufactures is by the production in this coun- try of superior articles at lower prices, and that this is only possible with free trade or simply a revenue tariff and cheap raw material. But, by whatever way it may be reached, a dim- inution, tending always to an extinction of imports from Eu- rope, is universally desired in this country. It is in trade with other parts of the world, in less ad- vanced stages of civilization, or with essentially different sys- tems of civilization, or with essentially different raw products resulting from marked diversity of climates, that we find the natural outlets for our manufactures, and in many cases the op- portunity for a mutually advantageous exchange of native pro- ductions. It is not perceived that that trade can become too large. All interests and opinions favor its expansion, and, un- like the trade with Western Europe, its existence and extent depend upon the wisdom and vigor of our efforts to secure and increase it. Our trade with England would be but little affect- ed if we should be entirely passive in relation to it. With China, on the other hand, we have no trade which we do not actively seek. Commercial nations will seek after our trade. We must ourselves seek after trade with the non-commer- cial nations. 180 PHILOSOPHY OF PRICE. It is by no means clear that trade between nations is either increased or facilitated by a concurrence in their standards of money. But even if it were so, the double standard would meet all requirements better than the single standard. It would tend to keep constantly available a sufficient stock of both met- als for the trade of either gold or silver standard countries. However it may be in respect to trade with non-commer- cial countries, it has never been shown that diversities of mon- ey, however arising, whether from single standards of a differ- ent metal, or from systems of irredeemable paper currency, are - any hindrance to trade between commercial countries. What- ever the moneys of such countries may be, they are always in- terconvertible at known and not widely-variant rates. There is no property on sale in London for which the holder would refuse payment in silver or in greenbacks at the current rates of exchange ; and there is no property on sale in New York for which the holder would refuse payment in Bank of Eng- land notes at the current rates of exchange. Greenbacks are not a legal tender in London. Silver is not a tender there. Neither are American gold eagles, and both greenbacks and silver are as readily convertible into sterling money as gold eagles are. The irredeemable paper currency existing in this country since 1862 has not obstructed its European trade in any degree whatever. The trade of England with commercial countries was not obstructed when it had an inconvertible pa- per currency from 1797 to 1821. The paper moneys of Rus- sia, Austria, Italy, France and Brazil, although differing great- ly in their value relatively to gold and silver, are no hin- drances to their trade with each other, with the United States, or with European countries having metallic standards. Various nations in Europe, in close proximity to each other, or having large intercourse with each other, have had different single metallic standards, without experiencing any inconvenience from that circumstance. The single silver standard existed in Holland from 1847 to 1875, and in Germany from 1857 to 1871, but the large trade of both with England, having a sin- gle gold standard, was carried on during those periods with undiminished facility. The long and still continuing difference of currency be- tween England and its greatest dependency, India, is a striking illustration of the fact that trade between distinct peoples is not obstructed by the difference in their money standards. Both are parts of one empire, and the coinages of both are im- pressed with the head of the same ruler, but the British sover- KIND AND AMOUNT OF CURRENCY. -181 eign is not a good tender for a debt in Calcutta, nor is the Indian rupee a^good tender for a debt in London. Cases are said to have occurred of such extreme financial pressure in both those cities that loans of money, that is to say, silver, have been refused at Calcutta on a pledge of sovereigns, and that loans of money, that is to say, gold, have been refused in Lon- don on a pledge of rupees. ~No difficulty has ever arisen in the immense trade between Great Britain and India from this difference of currencies, although this is doubtless due in part to tlie exceptional circumstances which have given to England a large and constant supply of silver, notwithstanding that its standard money is gold. A fact, less striking in some aspects, but more so in oth- ers, is the difference in the actual currencies of the Atlantic and Pacific States of this Union. The difference is not made by law, but is a matter of choice on the part of the people of the Pacific slope. They judge that it has advantages for them, and both they and the people on the Atlantic perceive that it is not in the least degree obstructive to their mutual inter- course. There is no more difficulty in translating the green- back prices of New York into the gold prices of San Francis- co, than there is in translating pounds avordupois into French kilograms. A distinguished writer, J. E. Cairnes, professor in the University College of London, in a recent work (1874) on Po- litical Economy, says: ' It appears to me that the influence attributed by many able writers in the United States to the depreciation of the pa- per currency, as regards its effects -on the foreign trade of the country, is, in a great degree, purely imaginary. An advance in the scale of prices, measured in gold, in a country, if not shared by other countries, will at once affect its foreign trade, giving an impulse to importations, and checking the exporta- tion of all commodities other than gold. A similar effect is very generally attributed by American writers to the action on prices of the greenback inconvertible currency. But it may easily be shown that this is a complete illusion. Foreigners do not send their products to the United States to take back greenbacks in exchange. The return which they look for is either gold or the commodities of the country ; and if these have risen in price in proportion as the paper money has been depreciated, how should the advance in paper prices constitute an inducement for them to send their goods thither ? The nom- inal gain in greenbacks on the importation is exactly balanced 182 PHILOSOPHY OF PRICE. by the nominal loss when those greenbacks come to be convert- ed into gold or commodities. The gain may, in particular cases, exceed the loss, but, if it does, the loss will also, in other cases, exceed the gain. On the whole, and on an average, they cannot but be the equivalents of each other.' " The nations of Europe are not prepared to decide whether gold or silver is preferable for money. Centuries of study and experience does not appear to solve the question. The general money system of Europe had been that of the double standard until 1873. The conspicuous exceptions were Hol- land, which had been during much the larger part of its histo- ry a single silver standard country, and England, which had adopted the single gold standard, in 1816 by law, arid in 1821 in fact. In consequence of the apprehensions of a fall in the value of money, or, what amounts to the same thing, a rise in wages and the value of property, excited by the California!! and Australian yield of gold, Belgium adopted a single silver standard in 1850, and the German States in 1857. Belgium, however, returned to the double standard in 1861. Germany and the United States demonetized silver in 1873. At that time it was neither depreciated nor unsteady in value, nor had any change occurred in the relative production, consumption or distribution of the precious metals to indicate its depreciation in the future, nor was any actual or probable depreciation assigned as a reason for its demonetization. The average flow of silver to India was undisturbed, and the big Bonanza in the Comstock lode was undiscovered. Manifestly, the real reason for the demonetization of silver was the appre- hension of the creditor classes that the combined production of the two metals would raise prices and cheapen money, unless one of them was shorn of the money function. In Europe, this reason was distinctly avowed. This is no doubt the true reason for all this outcry against silver. The war against it is not made to destroy its commercial value, but to destroy its use as money, and thereby to lessen the volume of circulating me- KIND AND AMOUNT OF CURRENCY. 183 diuni. Evidence like this ought to be sufficient to condemn both metals as a basis for currency. A transition in this country from paper to coin involves a struggle for the needed coin with other countries, no one of which has any that is not urgently needed for its own payments and necessities. The United States will be at the disadvantage of struggling for the coin, of which other countries are in pos- session. It can be successful only by a reduction of prices in this country, not merely to the present level of coin-prices throughout the world, but to that lower level to which they must descend under such a new and great demand for coin as the resumption of specie payment in this country has occa- sioned. This crash in prices cannot be avoided by confining our demand for the metals to the products of our own mines. That product is a part of the current supply of the world, and to subtract from that supply is the same thing in its practical effect as subtracting from the stocks of the world, because the entire current supply is not more than sufficient to keep the existing stocks unimpaired. It cannot be avoided by borrow- ing coin abroad upon our bonds. No such borrowing will be permitted to reach the gold of the great European banks, and must be confined to the small quantities floating in commercial hands. But the decisive consideration is, that even if gold should be obtained in that way, it could be kept here upon no other condition than a reduction of our prices to or below the coin prices of the world. My objections to a metallic basis for a circulating niedium are: 1st. All currencies based on metallic values must varv / more or less as the supply .of these metals increase or diminish. 2nd. No two metals can bear the same ratio of value to each other for any considerable length of time, owing to the above reasons. 3d. When one metal is made the standard or unit of 184: PHILOSOPHY OF PRICE. value, all other metals are forced to become subsidiary. 4th. "When one metal is uamed as the sole measure of value, it immediately contracts the circulating medium of the country to the amount of that one metal, because all other cur- rency is measured by the existing standard. This increases the value of the one metal at the expense of all other kinds of cur- rency. It makes this one metal the arbiter of all values, there- by giving it a power never intended in the economy of the exchanges of the world. 5th. It makes the volume of circulating medium entirely dependent upon the success or failure attending the discovery and operation of gold mines. With an increase of gold min- ing our circulation would expand ; with a decrease in that en- terprise, our circulation would contract. This would place all commercial values, both of products and labor, in a vacillating condition, rising or falling in proportion to the success or fail- ure of this one branch of business. 6th. The effect is bad enough when the condition of prices rests upon the success or failure of the two enterprises the mining of gold and silver together, but when reduced to the single venture resulting from a gold standard, the effect is reduced to a degree of uncertainty that is generally disastrous to business. Tth. Our business prosperity should be placed beyond any such contingency, because a failure in the business of min- ing the precious metals would react on all other branches of industry, and make their success depend entirely upon the good or bad luck of mining ventures. All our industries out- side of mining are based upon close calculation, while the suc- cess of mining is simply and only the result of chance. 8th. ,The value of both gold and silver frequently change, and for this reason it is difficult to determine whether other commodities have depreciated, or gold and silver appreciated in value. KIND AND AMOUNT OF CURRENCY. 185 9th. Gold and silver being simply commodities, it is nei- ther logical nor philosophic to say that one commodity shall measure the value of another. 10th. The only currency that will perform the functions of an equitable exchange and measure of values is the incon- vertible paper dollar or unit, in itself incapable of increasing or diminishing intrinsically, and based on the wealth and .abili- ty of the whole people, and the power of the general govern- ment to levy taxes, thereby making it for the interest of every citizen of the Republic to support and maintain our national integrity. llth. There is no such thing as a recognized money of the world. Outside of each nation all money is sold for its commodity value in pounds, ounces, etc. The oft-quoted idea has no foundation in fact, and only obtains through the igno- rance of the people on financial questions. 12th. A nation with the diversified interests that ours possesses should have a currency of its own, a currency that if used and passed outside of our borders, beyond our national lines, would be with'out our consent ; and that for every dollar so used by foreign nations we should be that much the richer instead of becoming poorer, as now, by a constant drainage from our circulation of the precious metals. u Government paper money has always enriched a nation when properly issued, restricted, and secured. It has ever been a success. Specie, for a domestic currency, or as a basis for paper, has been a failure without a solitary exception. Napoleon, at St. Helena, claimed that England beat him with her spindles, but it was her paper money that kept the spindles in motion. Specie in its stead would have given him the victory. England's entire disregard of specie and copious issue of paper money after the suspension of specie payments in 1797 till 1819 were the most prosperous days that England ever saw. This wise policy, to which she was driven by necessity, to- gether with the bills of credit issued by the United allied pow- ers, and which were not only as good, but superior to gold, KIND AND AMOUNT OF (TKKKXCY. 1S() from ' Kamschatka to the Rhine,' turned the tide of war against Napoleon, and won the decisive battle of Waterloo, saving- England from becoming a province of France." In order to discuss the question of a supply of currency understandingly, we should h'rst examine the sources from which this supply is obtained, which are as follows : 1st. The coinage of gold, which is free and unlimited. 2nd. The coinage of silver, which is not free, and is lim- ited to two millions per month. 3rd. The issuing of legal tenders by the Government, which is limited to about 347 millions in amount. 4th. The issuing of bank notes, which is unlimited in amount, but is not made compulsory. Through these four channels must come all the circulating medium of the nation. A glance at the above statements will show how completely the supply of currency is in the hands of moneyed men, and how strongly they are entrenched be- hind the law. The coinage of gold is absolutely without expense ; that is, any one who has gold can have it coined into money free of charge. This gives to that metal a premium over silver, and creates at the outset a discrimination against it. The coinage of silver is limited to a certain amount each month, and the Government reserves the right to purchase it, wherever it can be bought the cheapest. This makes competi- tion among the silver producers, which also tends to discredit that metal, for no matter how much may be mined, ready for coinage, this arbitrary act of Congress limits the amount to two millions each, month all of which creates a feeling of distrust that is not favorable to silver^ and is beneficial to gold. The issuing of more greenbacks is forbidden by law ; hence, a further supply from that source is impossible. The only recourse seems to be with the national bank issue. This, at first glance, seems to be sufficient and reasona- KIND AND AMOUNT OF CURRENCY. 187 ble, but to examine it closely dissipates all such hopes. There is nothing, absolutely nothing, that compels a bank to take out any currency. Many banks do not. The only inducement for them in that direction is the question of profit. If it will pay to issue their bills, the banks issue them ; if it will not pay, they not only refuse to issue any, but retire what they have issued. So the amount of national bank currency does not de- pend on the wants or demands of the people, but the profit accruing to the banker; the people in the mean time pay to the banks this profit. In proof of this, we have 2,714 banks, with a combined capital of $527,524,410 ; these banks are entitled to 90 per cent, of this amount in currency, which would be $474,771,969. Instead of that amount, there is but $268,869,597 of national bank bills in circulation, a difference of $205,902,372. If it should appear to their advantage, the whole might be retired, and the circulating medium reduced to the extent of their whole issue. Such an act on their part would certainly bankrupt the nation. This is a power for evil that is delegated to no other corporations on the face of the earth. It absolutely dictates the values of everything in our country, fixes the price not only of labor, but all the produc- tions and accumulations of labor. The fact that gold is not mined in sufficient quantities to satisfy the demand even for the manufacture of ornaments, and that the stock of coin and bullion has been encroached upon, is not very encouraging for a greater supply from that source. Men well posted in the supply of that metal declare that within the next decade the present stock of gold coin will be lessened by a large per cent, for purposes outside of money use. The world has been ex- plored to its uttermost parts for this metal, and the time seems near at hand when that industry will prove to be unremunera- tive at its present value. Even now its value is enhancing with every year. The supply for the purpose of money will grow less as the demand for it for other purposes increases, because 188 PHILOSOPHY OF PRICE. money is gold in its cheapest form. People will pay more for it to use as ornaments than can be paid for it to use as money. It is its value as a commodity, and not as money, that is con- sidered. Gold is now rapidly appreciating in value, and the time will soon come when for that reason alone it can not be utilized in that capacity. When that time comes, silver will go through with the same course, being the next most precious metal, and without doubt the appreciation in value will force it from the metals out of which money is made. Enough good reasons have presented themselves to me to justify the idea that sooner or later the supply of currency must come from the Government direct. That we must have free, unlimited coinage of gold and silver, and a certain amount of Govern- ment issues per capita of the people, with an increase as the nation becomes more populous. The late decision of the Supreme Court has shown us that the Government can issue legal tender paper money at such times and in such quantities as Congress may determine. Why should the Government not put that prerogative in force? Why should the people be compelled to pay for its being done by heartless corporations ? In a debate in Congress upon this question a member said : " On the other hand, take away the profits on issuing cur- rency, and the banks will take away the currency itself. This is the condition of things now. It comes to this then : If you make it their interest to do so, the banks will put out an abund- ance of currency, even to the wildest inflation ; but if it is not made their interest to do it, they will not put out any." Under the present banking laws, the banks of this country could inflate the currency to the extent of one or more billions of dollars in less than six months' time, and in the same time contract it by that amount. This is a power granted to a mon- opoly by our laws. This power is not only dangerous to the nation, but disastrous to the common welfare of the people. What we need is a steady volume of currency, increasing with KIND AND AMOUNT OF CURRENCY. 189 Dur population, and the growing demands of business. This cannot be brought about through delegated power. Such pow- er is almost always used in the furtherance of selfish purposes. Class legislation will prove rninous to any nation. There should be, and might be, a happy medium between the debtor and creditor classes, the buyer and seller, the producer and con- sumer, in which the rights of each should be impartially con- sidered. After careful examination, I am led to believe that we should have at least fifty dollars per capita of currency in the United States. Our industries are so diversified and the extent and area of our land so great that we require more circulating medium to do the same amount of business than other nations whose populations are more condensed. This amount should be increased in volume in proportion as the country increases in population and business. "With a currency of this volume, issued as before stated, universal prosperity would prevail throughout our land. We might with profit ascertain as nearly as possible what amount of work a dollar is required to do during one year of business. But few, I venture to say, can even approximate the truth in this respect. First, we will take up the actual debts of the country from our best authorities known and estimated as follows : Our National Debt proper is $2,149,725,277.02 Bonds to Railway Companies 64,623,512.00 Interest on Bonds 18,627,743.43 Unsettled liabilities (estimated) 250,000,000.00 State and Municipal 1,000,000,000.00 Loans, etc., by National Banks 944,233,304.22 Loans, etc., by State Banks, etc 514,081,496.90 Loans, etc., by same in twenty-eight States, etc. (estimated) 1,500,000,000.00 Individuals to each other, etc., (estimated) 2,000,000,000.00 Funded, etc., of Railroads 1,511,578,944.00 Making the fearful total of $9,952,870,266.67 This aggregate is almost incomprehensible. Add to this the returns from the clearing-houses for one 190 PHILOSOPHY OF PRTCJ5. year. A comparison of the business of ail the clearing-liouses of the United States is afforded by the following table, com- piled from the figures furnished for the year ending Decent ber 31, 1884, and representing the clearings of each insti- tution : New York .$30,985,871,170 Boston 3,243,327,658 Philadelphia 2,514,028,803 Chicago 2,259,680,392 St. Louis 785,202,177 Baltimore ' 631,687,135 San Francisco 556,857,691 Pittsburg 469,316,010 Cincinnati 460,600,000 New Orleans 454,500,000 Providence 217,448,300 Louisville 211,700,000 Milwaukee 178,995,637 Kansas City 177,175,467 Detroit 133,611,910 Minneapolis 110,556,620 Cleveland 106,044,770 Hartford 81,834,837 Indianapolis 73,213,168 Memphis 60,040,361 New Haven 57,799,870 Portland 45,421,102 Peoria 44,058,884 Worcester 39,610,041 Springfield 37,585,774 Columbus 34,858,428 St. Joseph 34,657,818 Norfolk 34,158,781 Syracuse 27,266,247 Lowell ; . . . 24,460,396 Total $44,091,569,447 To this enormous amount we will also add : Agricultural Products $ 3,600,000,000 Manufactured 6,000,000,000 Mining 1,500,000,000 Imports : 650,000,000 Taxation 300,000,000 Freights 1,000,000,000 Labor 3,000,000,000 Total $16,050,000,000 But this is only a commencement. If the clearing-house returns alone show 44 billions, how much would all the busi- ness of the nation outside of what I have mentioned, aggre- KIND AND AMOUNT OF CURRENCY. 191 gate ? I have placed it at one hundred times as much. Let us recapitulate : 1st, Debts $ 9,952,000,000 2nd, Clearing-house Returns 44,091,000,000 3rd Products, etc 16,050,000,000 4th, All other transactions 6,900,000,000,000 Total $6,970,093,000,000 The above sum is beyond human conception. With the present amount of currency among the people, say 500 million dollars, each dollar would have to change hands at least 46 times per day, or nearly five times during each business hour. Bankers will say, and truly, too, that 94 per cent, of all business is done with checks^ drafts, etc. In view of this fact, which is more important than all others, we, as a people, should have an increase of currency sufficient to reduce this per cent, of business, which has really been transacted on inflated credits, to a point as near to a cash basis as human wisdom can deter- mine. For the reason that the great volume of all the busi- ness of the country has long been done through a system of inflated credits, we notice with alarm that the wealth of the many is rapidly concentrating in the hands of the few. This kind of currency was invented for the rich those who are able to have bank accounts ; and, bear in mind that 99 per cent of our people never had a bank account. None but the wealthy can use these substitutes for a circulating medium. Of all the inventions that man has devised to add riches to the rich at the expense of the poor ; of concentrating business in large monopolies and soulless corporations, thereby driving out all the smaller industries ; of making one portion of our people masters and the others slaves I believe this system of check, draft and exchange paper inflation is the most ingenuous and destructive substitute for money ever known. It is not maintained that a compensation can be made for a shrinkage in the volume of money by an increase of such banking expedients as checks, bills of exchange, and clearing- 192 PHILOSOPHY OF PRICE. houses. These expedients are now resorted to, and because profit is found in their use, always will he availed of to the ut- most possible extent. It is manifest, therefore, that, whatever the proportion or per centage they bear to the volume of mon- ey, it cannot be increased except through an increase in that volume. And it is as manifest that, when the volume of money is diminished, these expedients must diminish, and prices must fall in a corresponding ratio. Money is the prime and govern- ing force, whose functions cannot be superseded by any device whatever, and whose volume or existence does not depend on banking expedients, while these expedients grow out of money and could not exist without it. The farthest extent to which they can be used is already practically reached, and they can only increase, and must decrease, as the volume of money in- creases or diminishes. This reasoning partially applies as to the effect of credit on prices. It would seem to be reversing the natural order of things to maintain that prices are controlled by the volume of credit, instead of by the volume of money. Without entering into an elaborate discussion of this intricate question, it may be said that prices were affixed to property at the time when the in- vention of money superseded barter. Fluctuations of prices frequently arise from special causes, but they are local and temporary in their character. Even were it possible to devise a money system so perfect that steadiness in the general level of prices would be absolute- ly assured, there w r ould still occur occasional fluctuations in the prices of particular commodities, arising from a temporary glut or scarcity of such commodities in the general markets, caused by exceptionally favorable or unfavorable conditions, which might suddenly enlarge or diminish their production, or vary the demand for them. Such fluctuations cannot be avoid- ed. They mark the ebb and flow of business, and no more affect the general level of prices or prosperity than the ebb and KIND AND AMOUNT OF CURRENCY. 193 flow of the tides affect the general level of the ocean. The producers of and dealers in each article should be better able than anybody else to foresee and guard against them, and have no reason to complain of them. But they may well complain when the general level of prices is disturbed by monetary leg- islation which they could not foresee, are not responsible for, and whose injurious effects they could not, by any degree of prudence, avoid. As I have stated before, all the nations of the world, at the present time, seem to be striving for the possession of gold, and are determined, if possible, to make it the sole standard of payment. The only means by which it can be obtained is by the sale and exchange of the products of labor. The nation that will part with its products the cheapest will obtain the gold and hold it until some other nation forces the price of products down to a still lower point. This is the cause of such a general depression in business all over the world. This strife has been so bitter and earnest that the price of all productions has shrunk below the range of any profit, and even below the cost of production. Consequently, we find bankruptcies and business failures throughout the civilized globe. No matter if all adverse balances are leveled up with exchangeable commod- ities, they must first be measured by the prevailing standard of payments of the country to whom the balance is paid. We now find England, France, Germany, Holland, the Scandina- vian States, and the United States all struggling for gold, because that metal, by secret governmental interference, has virtually become the standard of payments. "We might, in certain cases, with some degree of safety, attempt to establish a gold standard by law, but with all these nations attempting to do the same thing, and competing with us for the gold neces- sary to keep the standard good, it would be the height of folly for this nation to adopt it. It would wreck the entire indus- tries of the countrv. 194 PHILOSOPHY OF PRICE. I quote from a London paper : " Probably, if there were gold enough for all the world, it would be best that there should be only a single standard of value throughout the world, and that one gold. But this is impossible. Some have doubted whether there is gold enough even for the nations which now intend- to use it ; and there cer- tainly is not enough for all the world." London Economist. One writer claims there is not gold and silver enough in the world to pay the interest on the world's indebted- ness. If our currency could be expanded sufficiently to enable at least a majority of business transactions to be conducted with money, the wealth of the nation would seek its level, and each individual would, in a much larger degree, reap the reward of his own energies. All of the truly great economists and scientists of the world freely admit that both gold and silver have ever been, and from the nature of things, must ever be imperfect money, and an unjust standard or thermometer of prices. And they also admit, that a paper money issued solely by the Govern- ment, under a system that would duly and properly limit its amount would be the most perfect economic and just money of which the present knowledge of man is able to conceive. Those who deny that such is the position held by the great economists of the w T orld, and also the truth that has been estab- lished by some thirty centuries of mankind's experience, have failed in their study of the world's history, and any one who is inclined to doubt these statements can verify them by re- course to the proper course of reading. Those economic laws which may be perfectly sound and correct under certain customs and conditions, would, if carried into effect with us, be suicidal. The laws of many nations are made for dense populations, where there is and always has been, the rigorous rules of caste ; where men are born as law- makers, instead of being selected by the people. There is hardly KIND AND AMOUNT OF CURRENCY. 195 a condition in our social and economic life where the same rule of action would apply to both. Then why should we not be nationally independent in that greatest of all factors entering into our individual pros- perity and happiness tlie currency of our country? Instead of being led by the older nations of Europe, why do w r e not turn our attention to the vast field for operations at home, and lead the South American States and Mexico up to the plane of civilization, financially and socially, that we occu- py ? It would be satisfactory, remunerative and beneficent to the entire people. PHILOSOPHY OF PRICE. CHAPTEE V. VALUE AND ITS RELATION TO MONEY. " Money is, as it were, the substitute for legal demands (for payment) and hence it lias the name vouioua (that which is established by law), because it is not so by nature, but by law ; and because it is in our power to change it and render it useless." A ristotle. In the minds of most people there is a sort of supersti- tious awe about money. Why it is money and how did it come to be such, are queries that have generally been vaguely answered. The word is invested with a kind of glamour that keeps its real properties and functions from being investigated and made plain. No person ever handled a dollar, any more than he ever held in his hand a days' work. A dollar is an abstract idea, not the name of a thing, but the name of a qual- ity of a thing. Take for example a gold dollar. Its super- scription denominates it a dollar. Place it beneath the blows of a hammer, and deface the inscription. Now, what is it ; a dollar? No. It is a quantity of gold. The dollar is gone, without any loss of metal. No one saw it go from the metal. Neither can it be found. This dollar is an idea a mental con- ception and has no relation to value in itself whatever. Nei- ther can it be value of itself in any sense. One class of writers state their case as follows : The dol- lar measures values the same as the yard-stick measures yards. The dollar is made of a certain number of grains of gold Or silver. The yard-stick is composed of thirty-six inches linear VALUE AND ITS RELATION TO MONEY. 197 measurement. From this they argue : Is it right that the yard-stick should measure thirty-three inches to-day, and-thirty- eight tomorrow ? Where would the just standard of measure- ment be found? If it is not right to change the yard-stick it cannot be- right for a dollar to be of one value at one time, and increase or diminish in value at another. This argument ap- pears plausible and quite unanswerable. Let us examine it. In the first place, it is not true that the dollar measures value as the yard-stick measures the yard. In the one case both are considered actual substances, while in the other both are mental conceptions or ideas. But suppose they were alike. In order to measure yards it is necessary to have yard-sticks ; also to measure value we must have the dollar or unit of meas- urement. It would follow, therefore, that the more yards to measure the more yard-sticks would be necessary. Likewise, the more value to measure, the more dollars would be needed. We will not stop here. If the yard-stick should be made more than 36 inches in length, the seller would lose and the buyer gain, because the measure is increased and the number of measurements lessened. If the value of the dollar is in- creased, its capacity for measurement will be increased, arid the number of measures lessened. Suppose a government should set its people to manufacturing cloth by offering special induce- ments, and at the same time make up a quantity of yard-sticks for their use. At first there might be yard-sticks enough and to spare, but as business increased, they would become more and more in demand, until the time came when there would riot be enough to measure the cloth as fast as it came from the looms. ISTow, suppose these yard-sticks were made from some rare material, difficult to find, whose very possession was - the result of chance, and the making and furnishing was monopo- lized by the government. Suppose under these conditions the people clamored for more measures, saying their goods were unmeasured, and, consequently, for a lack of sufficient meas- 198 PHILOSOPHY OF PRICE. ures remains unsold. What would be the wise course for that government to pursue ? Would it break up a large per cent, of the measures on hand and in constant use ? Would it say to its people go out among the swamps and through the timber, and perhaps you may find some of the material out of which these measures are made. You can make no absolute calcula- tion as to its location, but must depend entirely upon chance to obtain it, and if luck should be in your favor, bring the mate- rial to me, and I will make you a certain number of measures each month. Would this be the wise course to pursue ? Cer- tainly not. The government should ask how many measures were needed, and then take the most convenient commodity, and make as^many as its people needed, and also provide for future wants. How does this illustration apply to the dollar ? Congress said, when the people were using three measures of value, "You have too many; we will destroy a portion of them," and it did. It claimed the measures were made of too many kinds of material paper, silver and gold ; therefore, we will limit their composition to two of these silver and gold. Again, it said, "We will limit the measures to one material, and that shall be gold alone." It was done. No matter how great the need of the people for these measures, no matter how much they clamored for them, the Government said, " Go to the hills and dig, and if you are successful, bring the results to me, and I will make the measures for you as I think you need." Would it not be better for the Government to say to the peo- ple, " You shall have all the measures that your business de- mands, and for fear some evil disposed persons might in some manner get possession of too large a portion of them, and levy a contribution for their use, I will furnish an abundant supply." Notwithstanding the fact that time and human progress has changed nearly everything else in our economic existence, we find ourselves paying out to-day, silver, the current money of the merchants, the same as Abraham did more than 4,000 VALUE AND ITS RELATION TO MONEY. 199 years ago, when he bought the cave of Machpelah. We are digging for the same material, gold, for which Solomon so anxiously struggled. The most ancient idea connected with the temporal rela- tions of man is that of gold arid silver as money. No other idea, among the millions that have been advanced, relating to the social and business conditions of the human family, has withstood the changes of progressive civilization and main- tained its original character as has this idea of money. In those days of nomadic governments, this idea became general for obvious reasons. It continued down through the history of weak and unstable nations preceding the fifteenth century, and began to be relaxed with the invention of bills of exchange, or paper money, in the sixteenth century. As bills of exchange, checks, and paper money have increased in use, mankind have, without understanding its import, in direct ratio to that increase, yielded to the solid fact that there can be no intrinsic value in money. During the reign of Augustus Caesar, the gold and silver money of the whole world amounted to less than the present amount of gold and silver in the United States. During the Dark Ages, from the fourth to the fifteenth centuries, the mines having failed, this amount was diminished to about 200 millions. The gold and silver mined arid used, following the discovery of America, combined with the use of bank paper, rekindled the glimmering fires of civilization, and made possi- ble the grandeur of the nineteenth century. We are met here with representatives or substitutes for money. If money must have value intrinsically a certain amount of either gold or silver then there is no method known by which it can be increased in amount, only by an increase in the quantity of the metals. If they are represented or substituted, they must remain at their maximum to redeem their represent- atives or substitutes. They cannot perform both functions at 200 PHILOSOPHY OF PRICK. once. When there are more substitutes than principals, the overplus ceases to be substitutes, and necessarily becomes a fraud. It is impossible to represent value, when there is no value to represent. A thousand paper dollars cannot be repre- sented by five hundred coin dollars, both being possessed of equal debt-paying power. Yet, if this doctrine of intrinsic value in money should be strictly applied, there is not enough of this kind of value to redeem one per cent, of the money obli- gations of the world. There is not enough to pay one-half the yearly interest on national and corporate indebtedness. This idea has been so far exploded that ninety per cent, of all the business of the world is done with money having no in- trinsic value. Some will say these representatives of money are good. That may be true, but their worth comes only through a strained confidence in business men. The persons issuing them may be rich in property, but property is not money. The fact is, this kind of money is good as currency until the principal is called for, then the fact of its being a representative of an obsolete idea becomes painfully ap- parent. The material upon which the imprint that makes money is stamped may have a commercial value, but the money the insignia of a nation's sovereign authority never. The precious metals change less in value than other com- modities, silver much less than gold ; but both being products of labor, and controlled by the same factors that control all other labor-products, must fluctuate in value as the circum- stances under which they exist change. These two metals, aside from their money functions, are governed by the same rules which govern all other metals, and are exempt from none. They are more valuable because of their scarcity, and more precious because of the difficulty connected with their acquisi- tion. If gold was as plenty as iron, it would not be as valua- ble, because it could not be as useful to man as iron. The ex- VALUE AND ITS RELATION TO MONEY. 201 periment has been tried for a long series of years to maintain ? certain ratio between silver and gold for the purpose of securing a uniform standard of payment. While these two met- als are less apt to fluctuate than others, it is certain that they do vary, and have maintained their ratios but for short periods at a time. In this relation they act as a check upon each other and should never be separated in their legal functions. That gold and silver fluctuate in'value, I quote : " By limiting the quantity of money, it can be raised to any conceivable value. It is on this principle that paper mon- ey circulates." David Eicardo. " Thus it appears that, whatever may be the material of the money of a country, whether it consists of gold, silver, copper, iron, salt, cowries, or paper, and however destitute it may be of any intrinsic value, it is yet possible, by sufficiently limiting its quantity, to raise its value in exchange to any con- ceivable extent." Prof. McCulloch. " It is well known that the discovery of America (with its rich deposits of gold and*silver) was followed by'a great and permanent fall in the price purchasing power of the precious metals, which reduced it to one-fourth of their previous rela- tive value to all other commodities." Albert Gallatin. "From 1789 to 1809 gold fell 45 per cent. From 1809 to 1849 it rose in value 145 per cent." William Stanley Jevons. Humboldt says that the gold and silver money in circula- tion in the eighteenth century is at the time he wrote thirty times greater than in the fifteenth century, and that its value or purchasing power was only one-twelfth of. w r hat it then was that is, 8 1-2 cents would then buy as much as 100 would at the time he wrote. Prof. Bonamy Price says that the purchasing power of the so-called precious metals has fallen fourteen times since the reign of the Henrys that is, 7 1-7 cents would then buy as much as 100 will now. Laveleye illustrates this very handsomely in this paragraph: "This immense stock of the precious metals lessens the variations in the value which might result from the variations in the annual supply, just as the level of a great lake is little 202 PHILOSOPHY OF TRICK. affected by any changes in the discharge of the rivers which flow into it." Adam Smith, Wealth of Nations, p. 38, says: "Gold and silver, however, like every other commodity, are sometimes cheaper and sometimes dearer ; sometimes of easier and sometimes of more difficult purchase. The discov- ery of the abundant mines of America in the 16th century, reduced the value of gold and silver in Europe to about one- third of what it had beeji before, and this revolution in their value, though perhaps the greatest, is by no means the only one of which history 'gives some account. But, as a measure of quantity, such as a foot, fathom, or handful, which is con- tinually varying in its own quantity, can never be an accurate measure of the quantity of other things, so a commodity which is itself continually varying in its own value can never be an accurate measure of the value of other commodities." * "Silver, in bullion or money, changes its value from any change in its quantity, or in the demand for it. In either of these cases goods are said to be dearer or cheaper; but 'tis sil- ver or money is dearer or cheaper, being more or less valuable, and equal to a greater or lesser quantity of goods." f "The value of money is inversely as general prices: fall- ing as they rise, and rising as they fall. Let it, therefore, be remembered and occasions will often arise calling it to mind that a general rise or a general fall of values is a contradiction, and that a general rise or general fall of prices is tantamount to a rise or fall in the value of money." ^ "But there is abundance of evidence to prove that the value of gold has undergone extensive changes. Between 1789 and 1809, it fell in the ratio of 100 to 54, or by 46 per cent., as I have shown in a paper on the variation of prices since 1T82, read to the London Statistical Society in June, 1865. From 1809 to 1849 it rose again in the extraordinary ratio of 100 to 245, and by 145 per cent., rendering government annui- ties and all fixed payments, extending over this period, almost two-and-a-half times as valuable as they were in 1809. Since 1849, the value of gold has again fallen to the extent of at least 20 per cent., and a careful study of the fluctuations of prices, as shown either in the American Reviews of Trade of the Economist newspaper, or in the paper referred to above, *John Law: Money and Trade Considered, chap. v. fj. S. Mill: Principles of Political Economy, page 267-297 JW. Stanley Jevons' Mechanism of Exchange, p. 325. VALFi: AND ITS RELATION TO MONEY. 203 shows that fluctuations of from 10 to 25 per cent, occur in every credit cycle/' * u The precious metals are often spoken of as c the standard of value,' which is true only in a restricted sense. ' A standard must remain the same, however other things change ; and this is certainly not true of gold and silver. Their purchasing power has been continually varying, generally declining, as the natural deposits of their, ores have been laid bare, and the resist- ance of nature to those who searched for them has diminished." REPORT FROM THE SELECT COMMITTEE ON THE HIGH PRICE OF GOLD BULLION. (Ordered by the House of Commons, to be printed, June 8, 1810.) " THE SELECT COMMITTEE appointed to enquire into the cause of the High Price of Gold Bullion, and to take into con- sideration the state of the Circulating Medium, and of the Exchanges between Great Britain and Foreign Parts ; and to report the same, with their Observations thereupon, from time to time, to the House ; Have, pursuant to the Orders of the House, examined the matters to them re- ferred ; and have agreed to the following report : Your Committee proceeded, in the first instance, to ascer- tain what the price of gold bullion had been, as well as the rates of the foreign exchanges, for some time past ; particular- ly during the past year. Your Committee have found that the price of gold bull- ion, which, by the regulations of His Majesty's Mint, is 31. 17s. 10 l-2<#. per ounce of standard fineness, was, during the years 1806, 1807 and 1808, as high as 4:1. in the market. Towards the end of 1808 it began to advance very rapidly, and continued very high during the whole year 1809 ; the market price of standard gold in bars fluctuating from 41. 9s. to 41. 12s. per oz. The market price at 41. 10s. is about 15 1-2 per cent, above the Mint price. Your Committee have found, that during the first three months of the present year, the price of standard gold in bars remained nearly at the same price as during last year; viz., from 41. 10s. to 41. 12s. per oz. In the course of the months of March and April, the price of standard gold is quoted but 41. once in Wettenhall's tables, viz., on the 6th of April last, at 6s. which is rather more than 10 percent, above the Mint price. It will be found by the evidence, that the high price of gold is ascribed, by most of the witnesses, entirely to an alleged *R. E. Thompson: Social Science and Nat. Economy, p. 160. PHILOSOPHY OF PRICE. scarcity of that article, arising out of an unusual demand for it upon the continent of Europe. This unusual demand for gold upon the continent is described by some of them as being chiefly for the use of the French armies, though increased also by that state of alarm, and failure of confidence, which leads to the practice of hoarding." Mr. Patterson : "The effect of the Eastern Trade upon the value of the precious metals has hitherto attracted but little attention ; yet, without a perception and appreciation of the facts which w/e have now set forth, the events connected with the value of money during the last quarter of a century would be wholly inexplicable. It has been the drain of the precious metals to the East, to meet the requirements of Indian trade and invest- ments, which alone has falsified the confident predictions of all the highest authorities as to a stupendous fall in the value of money, and especially of gold. But one remarkable cir- cumstance still remains to be explained namely, the recent fall in the value of silver ; which event, likewise, is the very opposite of what was expected. The currency of the East is silver, and consequently it is in silver that the greater part of the enormous payments of specie to India have been made. How, then, does it happen that it is silver, and not gold, that has fallen in value ? fallen, or apparently fallen, in the West, while its value is still maintained in the East? When the new gold-mines were discovered it was univer- sally predicted that, while gold would lose a great part of its old value, the value of silver would be fully maintained. And had the extraordinary expansion of the Eastern trade been foreseen, it must have been predicted that silver would not only maintain its old value, but rise almost to a famine-price. As is well known, silver did for several years rise in value compared to gold ; although we think there is ground for be- lieving that the rise was not absolute i. e. 9 as measured in general commodities, but was only equal to, and produced by, the contemporaneous decline in the value of gold. Be that as it may, for upwards of twenty years subsequent to 1850, the price of silver, as measured in gold, stood considerably above its old value rising from 59 3-4<:Zper ounce to 626?, and then declin- ing to its old value ; or a fraction below it viz., 59 ~L-4d in 1873. Considering the facts of the case, this rise in the value of silver was a very small one. As we have shown, between 1858 and 1865, the amount of silver exported to India actually absorbed VALUE AND ITS RELATION TO MONEY. 205 the entire contemporaneous yield of the silver mines, and 40,000,000 more. In other words, this drain of silver to the East was equivalent in its effects upon Europe and America to an entire stoppage of the silver mines, together with an actual drain and deduction of 40,000,000 from the existing curren- cy of the Western world. But in 1873 the tables turned, and silver began to decline rapidly in value compared to gold- reaching its lowest point in 1876, the year of the Silver Panic, when the price fell to 47<#. per ounce. To some extent, doubt- less, this fall in the value of silver may be ascribed to the recent comparative scarcity of gold, occasioned by the decreased production of the gold mines. It has also been owing to the large increase in the supply of silver from the new Nevada mines; and also to the fact that, owing to the increase of wealth, silver has recently been gradually becoming less suita- ble as currency in the leading countries of the Western world, and has, to a great extent, been legislatively demonetized in some of those countries, viz., in Germany and Scandinavia, and partially in the United States and France." From the foregoing excellent authority I have clearly proven that both gold and silver fluctuate in value. How is it possible, then, to measure correctly when the measure itself is defective ? That gold has varied in its value, and that gold and silver have varied in their ratio to each other, I give the following carefully prepared table : Gold, coined and uncoined, has varied greatly in value within historic times. A pound of gold in London brought : D. 1344 15 OOs. Od. or | 75.00 ' 1345 13 3 4 or 65.83 ' 1347 14 00 or 70.00 ' 1412 16 13 4 or 83.32 ' 1464 20 16 8 or 104.16 ' 1526 27 00 or 135.00 1549 34 00 or 170.00 1605 40 10 or 202.50 1626 44 10 or 222.50 ' 1718 46 14 6 or 233.62 That is the value of a pound of gold, Troy weight, to-day. The relative values of gold and silver have changed at different times, and we have collated a few of the more note- worthy variations in the subjoined table: PHILOSOPHY <)F PKTCK. Herodotus recorded that 1 part go d equaled 13 of silver 10 17.57 18.93 10 to 12 14 to 16 15 15.69 15 & 15.87 15.50 Alexander the Great's time 1 Home after Punic War .1 Rome under Julius CaBsar 1 Century after Columbus 1 Following two centuries 1 England under William, 1689 1 Berlin in 1838 1 United States laws, 1792 and 1834. .1 France under and since empire 1 I have stated that value never did, and never can, measure value, any more than corn can measure corn ; the idea of quan- tity alone determines that. Not only the quantity to be meas- ured, but the size of the measure as well. It is no more cor- rect to say that value shall be measured by a gold dollar than that a yard shall be measured by a gold yard-stick. We. are told that a yard used to be the length of the King's arm. It increased and decreased in length with the stature of the king. So with the measure of gold or silver; it increases and de- creases with the amount of it in sight or in use. Quantity is the fundamental element that establishes value. In the attempt to evade this general law all the swindles inci- dent to the use of money originate. As I have stated in a previous chapter, I repeat in substance again, demonetize both gold and silver, and at the same time permit the unlimited coinage of both. Then authorize the Government to issue paper money, redeemed by taxes, to the amount of not less than fifty dollars per capita. This, in my judgment, is a com- plete solution of the whole currency question. With this cur- rency there could be no variation. Gold and silver would still be worth their commodity value the same as now, with one ex- ception. This commodity value would be a thing to sell in- stead of an instrument to measure values, as is now the case. Neither gold nor silver is a fair measure of value. The com- mercial value of one commodity can never be determined by the commercial value of another, with any degree of equity, for any length of time, because the relations existing at one time are rarely the same at another. The commercial value of VALUE AND ITS RELATION TO MONEY. 207 the metal in the gold or silver dollar makes the size of the measure, as judged by them, with an increase or decrease cor- responding to its value commercially. There is an increase or decrease in the commercial value of all commodities measured by them. If every factor in all business transactions could remain stationary this might do, but we know that at any mo- ment changes of conditions may occur that will affect not only the material but moral world. We can no more take gold and silver at a certain ratio of value as compared with each other, and measure labor and its products, than we can take a bushel of wheat and a bushel of corn for the same purpose. The ratio of value, between the two measures of value cannot be maintained with any degree of accuracy, much less the ratio of all other products. If corn should be a failure one year, there would have to be more wheat in the bushel. On the other hand, if wheat should be a failure, more corn would be put in the bushel, not to measure values by alone, but to keep the ratio exact between the two measures. This process seems burdensome and unnecessary. Some nations have one, and some another ratio by w r eight between the two metals. During the war the bullion in a silver dollar was worth three and a half per cent, more than the bullion in a gold dollar. It is claimed now that gold bullion, with the same ratio of weight, is worth the most. Who can tell ? When the commercial value of the two measures of value is changeable and uncertain, how can their measurement be accurate ? For these and many other reasons that might be advanced I believe the time is near at hand when our circulating medium will be based on taxation. This nation could float at par fully two billions of paper money based on our present taxation. This would not only be safe but always uniform. The difference between a treasury and a bank is, one pays out money, while the other loans it. Let the government say to the people : We will pay you this money for services and material PHILOSOPHY OF PRICE. for public use, and will receive it from you for all taxes State as well as national. Who will doubt the success of the enter- prise? The taxation for ordinary government expenses and internal improvements actually necessary for this great nation would amount to from five to eight hundred millions per annum. What a permanent and safe basis this would make for a circulating medium. In connection with an unlimited coin- age of gold and silver this would give us purely an American currency for an American people. The fatal mistake of our government was in paying one kind of money to the bondholder and another to the soldier. The war would have ended two years before it did, and the debt resulting would have been merely nothing if a full gov- ernment legal-tender had been issued and kept in circulation. Besides this, there is no such thing as money value either in justice or in fact. There would be one value for gold, another for silver, another for copper. Money measures value, and therefore cannot be value itself. We want a measure that can- not fluctuate. Such a measure must be an abstract thing, of no intrinsic value, but having legal functions. That is exactly the status of the dollar. But men have coupled the abstract idea with the substance and given it a commercial value. If we should issue notes payable in wheat, the less wheat the greater the value of the notes ; the more wheat the less would oe the value of the notes. Thi; same rule applies to gold and silver, because wheat and coin (bullion) are both commodities and sub- ject to similar variations in value. For these reasons I submit that notes or currency bottomed on taxation would be stable and without any fluctuation. "Metallic money, whilst acting as coin, is identical with paper money, in respect of being destitute of intrinsic value ; with this single difference, that when it is desired to reproduce that intrinsic value, the sovereign can be instantly turned into bullion. * * * Still, whilst circulating, both make no use of intrinsic value ; and this is the great point to grasp firmly." North British Keview. Nov.. 1861- PROTECTION TO HOME INDUSTRY, ETC. 209 CHAPTEE VI. PROTECTION TO HOME INDUSTRY AND CONTRACTION OP CURRENCY. I am a firm believer in a protective tariff. Not an exces- sive tariff, but one sufficient to afford ample protection to our native industries. Our free, intelligent, civilized labor should not be com- pelled to compete with foreign servile, ignorant, half-civilized labor upon our own soil. We should not, under any circumstances, permit foreign pauper labor made so by despotic laws to rob our cwn toil- ing millions of their richest and most righteotls inheritance, a home market for the fruits of their labor. The products of every nation carry with them in their cost of production, the morals, civilization and intelligence of the country in which they are produced. Therefore, we should allow no foreign production to compete with its kind in our own markets, unless it represents in its cost value of produc- tion the same elements of civilization that enter into our own. If, by reason of an absence of these factors in its cost of pro- duction, its value is lessened below that with which it seeks to compete, I believe a tax should be placed upon it to make up the discrepancy. This should be done that our own laborers shall not be compelled to dispense with their civilizing and moral benefits which have placed them on a higher and hap- pier plane of social existence than their less fortunate compet- 210 PHILOSOPHY OF PRICK. itors. In doing this we simply obey Nature's first great law- self-preservation. At the present time, with our alleged surplus, there is much discussion about the markets of the world. Many of our people are anxious to compete for their surmised benefits. There is nothing to prevent such action, even now. There is no law on our statute books against such competition. The farmer or manufacturer, if dissatisfied with the home market, can go to that of any other country, as there is no export dntv. But when once out from under the flag of this nation, the rules and regulations of commerce of the nation to which they would go must be obeyed. The reason our exports are not larger is because some other people sell similar products cheaper. The only question asked by a purchaser is, "Where can I buy the product I want cheapest?" When that condition is complied with, nothing is easier than large sales. Wheat will serve as an example to illustrate this fact. Russia and India compete with us in the sale of that cereal. Our wheat goes into the market as the product of well-paid, well-fed, intelligent, free labor. It rep- resents in its first cost its share of the taxation that built our highways, bridges, and improved our water ways ; that pays for our free schools, our institutions of charity and reform, our churches, and the expense of our moral training ; the enforce- ment of laws for protection to life an-d property, and the gen- eral welfare of the people. These, in part, are the objects for which, not only this product, but all others in this nation, are compelled to contribute. The product of our competitors pre- sents a far different example. It represents ignorance, supersti- tion, and a want of moral culture. It brings with it no smile of civilization, none of the higher conditions of freedom, but instead, it comes weighted with the blight of oppression, and brings with it the foul breatli of beastly instincts. Neverthe- less, these products compete with ours. If we must meet this PROTECTION TO HOME INDUSTRY, ETC. 211 competition, if we must give up our home markets and go abroad, our duty is plain we must look to the first cost of our productions, which alorue will enable us to sell chea|>. Every factor that enters into this first cost must be eliminated that is possible. Every endeavor must be made to render our produc- tions cheaper than those of other countries ; for by this means only can success be expected. In following out this line we must ignore public improvements, and suffer those already made to go uncared for ; do away with our public school sys- tem ; destroy our other institutions of learning and charity ; open the doors of our penitentiaries, and close the doors of our churches. In a word, wipe out the means by which the com- mon desire of our people to excel in all that ennobles our race can be satisfied, and we will then be on the high road toward successful industrial competition. One of two conditions must be brought about. The civ- ilization of other nations must be raised to the same plane as ours, or our civilization must be lowered to the level of theirs, before anything like just or fair competition can be entered into. In order to make this argument complete, there are two other important factors to take into consideration, first, for- eign immigration, and second, domestic currency, both of which are of vital consequence to this question. It is not right to keep the manufactured end of a piece of cloth protected from foreign competition, and at the same time permit the labor end of this piece of cloth to stand open for the labor competition of the world. If the manufacturer is per- mitted to go abroad for his workmen, let the laborer go also for his clothes. If the laborer is debarred from importing his coat, let the manufacturer be denied the right to import his help. Free trade in men and protection of manufactured articles builds up monopolies, and makes the rich richer, arid the poor poorer. Either protect both, or make both free ; that is the doctrine of common sense, and must sooner or later prevail. 212 PHILOSOPHY OF PRICE. For twenty-five years this Government lias been guided by a protective tariff, based upon conjectured benefits, and the acknowledged purpose of bettering the condition of the labor ing man to make him more intelligent, more happy, and better fitted for a higher plane of civilization. During twenty years of that time the following law has been upon our statute books. Read it carefully, and, if possible, imagine a more gigantic fraud, a more colossal example of hypocrisy possible. The bulk of those who honestly believe in the doctrine of pro- tection, would hardly believe such an imposition possible : "JBe it enacted hy the Senate and House of Representatives of the United States of America in Congress assembled: SEC. 1. That the President of the United States is hereby authorized, by and with the advice and consent of the Sen- ate, to appoint a commissioner of immigration, who shall be subject to the direction of the Department of State, shall hold his office for four years, and shall receive a salary at the rate of two thousand five hundred dollars a year. The said commis- sioner may employ not more than three clerks, of such grade as the Secretary of State shall designate, to be appointed by him, with the approval of the Secretary of State, and to hold their oifices at his pleasure. SEC. 2. And be it further enacted, That all contracts that shall be made by emigrants to the United States in foreign countries, in conformity to regulations that may be established by the said commissioner, whereby emigrants shall pledge the wages of their labor for a term not exceeding twelve months, to repay the expenses of their emigration, shall be held to be valid in law, and may be enforced in the courts of the United States, or of the several States and Territories ; arid such ad- vances, if so stipulated in the contract, and the contract be recorded in the recorder's office in the county where the emi- grant shall settle, shall operate as a lien iipon any land there- after acquired by the emigrant, whether under tlie homestead law when the title is consummated, or on property otherwise acquired until liquidated hy the emigrant; but nothing here- in contained shall be deemed to authorize any contract contra- vening the Constitution of the United States, or creating in any way the relation of slavery or servitude. SEC. 3. And he it further enacted, That no emigrant to the United States who shall arrive after the passage of this act PROTECTION TO HOME INDUSTRY, ETC. 213 shall be compulsively enrolled for military service during the existing insurrection, unless such emigrant shall voluntarily renounce under oath his allegiance to the country of his birth, and declare his intention to become a citizen of the United States." Such an act as this does not tend to strengthen a belief in the integrity of those benefited through a protective tariff. Every speaker or writer upon this subject undertakes to show that this restriction on commerce is for the entire benefit, in the ultimate, of the laborer. While at the same time an- other law made by the same party, and under the same admin- istration, pours into this nation, to compete with its laborers, this stream of filthy pauper laborers from foreign countries under contract. To make absurdity absurd, in the general appropriation bill passed a few months after the one quoted above, was the following : u For expenses under the act of Congress to carry into effect the treaty between the United States and Her Britannic Majes- ty for the suppression of the African slave-trade, seventeen thousand dollars. For expenses under the act to encourage immigration, twenty-five thousand dollars." Seventeen thousand dollars to put down black slavery, and twenty-five thousand dollars to inaugurate a system of white slavery, in order to make protection protect. This first propo- sition must be seriously considered. Second. Protection of home industry and contraction of currency cannot be successful in the same country. 'No gov- ernment can enforce both of these propositions and be pros- perous for any great length of time. They are diametrically opposed to each other. To protect home industry is to increase our home business. The more successful protection is, the more these business transactions will be multiplied. The found- ations on which this great doctrine stands are home markets and home consumption. The purpose of protecting our domestic industries is to increase the volume of our domestic ^ PHILOSOPHY OF PRICE. or national business. The more it is practiced, the larger pro- portions will the transactions assume. On the other hand, con- traction means a limitation of the currency to the smallest possible amount, thereby taking away the very means by which business transactions are made practicable. All values are measured with money, and all business transactions are leveled up with money. Consequently, the amount of business must conform to the volume of currency in circulation. "More business transactions with less currency " is pure fiction. The engineer might, with equal reason, attempt to run more ma- chinery with less power. The ideas of protection and contrac- tion are contradictory, and can never be successfully enforced together. I have clearly demonstrated in the previous chapters of this book that the ability to purchase establishes the price of our produces. Another proposition I desire to state is, that when we do not, for any reason, no matter what it may be, see fit to avail ourselves of the price or commercial value placed upon our products by the ability to purchase which our own people can offer, and go to some other nation to sell, we are simply exchanging the ability which that nation has to pur- chase, for that of our own. Many times, in that case, the price or ability to purchase of the foreign nation not only establishes the commercial value of the exports, but of all that is con- sumed at home. If we exported no wheat or flour, our own markets would govern their price. But now the London market rules both ; that is, the ability of England to purchase breadstuffs determines how much or how little the American consumer shall eat. We are met here with the question of overproduction. In reply I emphatically say there can be no overproduction, but instead it is always an underconsumption that gluts our markets. That underconsumption is an unsupplied demand for products, visible all over the land. The unrequeited demand is the result of a lack of ability PROTECTION TO IICMK INDUSTRY, ETC. 215 to purchase. And when our products are sent abroad to he sold, in almost every case it is owing, not to a want of demand at home but to a lack of ability to purchase ; and it shows con- clusively that some other nation is better prepared in that respect than ours. If every person living within the confines of our national borders was comfortably fed, clothed and housed, there could be no surplus. With our present diversified industries it would be impossible. We exported in 1883, the last authentic report I have: Wheat, bush 106,385,000 Flour, bbls 9,205,000 All reduced to flour would be about 5,912,280,000 pounds. Dividing this among 60 millions of people gives 98 1-2 pounds to each, or 4 1-3 ounces each per day. That is, if as a nation we had consumed 4 1-3 ounces of flour per day, for each per- son, more than was consumed, no wheat or flour would have been exported. Again, the same year there was exported : Sheep 337,000 Cattle 104,000 Hogs 16,000 Reduced to pounds would amount to about 71,850,000. Hams and Bacon 340,258,000 Beef, fresh 81,000,000 Beef, salted 41,680,000 Pork 62,116,000 Pounds total .* 596,904,000 Divide this among 60,000,000 of people and we have less than ten pounds for each person, or about one-half ounce of meat per day for each to consume, more than was consumed, in order that there would be no exportation of meats. Our whole exports amounted to only $14.00 per capita, or less than four cents each per day. Is- there anyone who doubts the present demand in this nation for 4 1-3 ounces of flour and 1-2 ounce of meat per day for each person ? If there is, let him make a tour of the haunts of wretchedness and starvation that exist all 216 PHILOSOPHY OF PKICE. about us in every direction. Less than four cents per day expended by each would keep all our products at home, thereby giving our people much more labor and consequently a pro- portionate quantity of the comforts of life. Why does this amount go abroad ? Certainly, as I have shown, not for want of home demand, but for want of means to purchase. This want of ability to purchase their home products has been brought on the people by the contraction of our circulating medium. For these reasons I repeat : Protection and Contraction can not prove successful. One must give way to the other. CONCLUSIONS. 217 CHAPTER VII. CONCLUSIONS. I have untertaken to show that price is established by an ability to purchase ; that the ability to purchase depends entirely npon the volume of currency among the people ; and that upon the price of labor and its products depends the pros- perity of the civilized world. I have shown clearly in the case of our own nation, and from the ablest writers and scholars of other countries, that, with an increase of currency prices advance and prosperity fol- lows, while with a decrease of currency prices fall and adversity soon comes. Nothing is plainer than the truth of these propo- sitions. In view of the facts, what, as intelligent men having the welfare of the whole nation at heart, ought we to do in the matter ? We know the cause of our ills, and where the remedy lies. Shall we sit down and not apply the remedy not make an effort to rectify these growing evils ? If we remain inactiv e there should be no further complaint if trouble overtakes us in the near future. The war between labor and capital must be settled, that is, each must have its rights as near as possible, and then continue in a state of armed neutrality to protect each other from encroachments. Capital has been the dictator for many long years, in consequence of which it has reaped a Hch harvest of wealth. Labor has turned now, with the desperation of long continued spoliation, and unless given at least a portion of its 218 PHILOSOPHY OF PRICE. just dues may soon break loose and no one can tell the destruc- tion that may follow. There is at the present time a most bit- ter hatred existing among the poorer classes of our people toward the law-pampered aristocrat and millionaire. This hatred will find vent at no distant day if not prohibited jby just counsels and fair legislation. Our laws are oppressive towards the poor, and generally operate in favor of capital. There can be no denial of that fact ; and until they are changed it is useless to theorize upon the matter. We have had a dear dollar arid a cheap day's work long enough. The people are getting tired of it. They demand a cheaper dollar and a dearer day's work. Who can blame them, and why should their demand be denied after having given the contraction and "hard pan" policips of the govern- ment a fair trial ? When the services of a skillful physician are required he first makes a careful diagnosis of the case in order that he may locate the disease. He compares the patient in health with his present condition. The difference between the two conditions is the malady. Now, if he should locate the disor- der in the head, would he prescribe for the feet ? or if in the lungs, would he give remedies for the brain ? Under such treatment the patient would die, and the physician would be disgraced. The true practice would be a thorough treatment of the parts afflicted, to the end that they might be restored to their normal condition, in which they could, with the other members of the body, perform the usual functions necessary to health and life. In applying the same rule to our body politic, we find, in 1866, health and vigor in every part of the system. Business was good, wages were high, and money plenty. People were out of debt and all were contented, prosperous and happy. In 1886, twenty years after, we find the debts of all kinds in the nation equal to ninety per cent of its equalized valuation. CONCLUSIONS. 219 We find all business nearly at a standstill ; low prices and no work ; our country full of tramps ; our jails and poorhouses filled with those unable to find labor. We see want and distress on every hand. Labor strikes and riots are of daily occurrence and seem to be on the increase. The body politic of our nation is sick. It is stricken with lingering disease. Where is it located, and what is its nature ? The blessings of Deity sunshine and rain, day and night, summer and winter, seed time and harvest, health and energy are granted us now as they were twenty years ago. Our people are as industrious, intelligent and economical now as then. The earth yields as rich harvests; the herds and flocks are as prolific. All other bounties of nature are as abundant as ever before. The reward of labor in gross pro- duction never was greater than at present. We may search in vain through our whole economic or social system and we can find but one factor in the entire range different at this time from twenty years ago. Then the people had fifty and one- half dollars per capita to do business with, while to-day, at the outside, they have but $8. This is the root of the disease, the one great factor in all this present disorder. For twenty years contraction has cursed our land until it has gradually dried up the fountains of our prosperity. The trail of this serpent can be clearly traced by the bleached bones of its bankrupt victims 109,000 in 20 years. Can the misery and despair of these unfortunates be measured in money ? No wonder Mr. Shella- barger said : "They the money-loaners are seeking to coin the gains of their infamy put of the blood of their sinking country." Mr. Kellogg said : " Mr. Chairman : I am pained when I sit in my place in the House, and hear members talk about the sacredness of cap- ital ; that the interests of money must not be touched. Yes, sir; they will vote six hundred thousand of the flower of the Amer- ican youth for the army, to be sacrificed, without a Mush, but 220 PHILOSOPHY OF PRICE. the great interests in capital must not be touched. We have summoned the youth, ami they have come. I would summon the capital; and if it does not come voluntarily, before this Republic shall go down, or one star be lost, I would take every cent from the treasury of the states, from the treasury of cap- italists, from the treasury of individuals, and press it into the use of the Government." We should call a halt; demand that the conditions under which we were prosperous and happy should again be restored, and that at once. " Monay is the life-blood of business. Make it plenty, all business prospers, and working-men are employed at good wages. Make it scarce, all business languishes ; merchants become bankrupt and laborers are starving. Who don't know this?" We are encountering the same difficulties which all nations, in all ages past, have met, when the money of account has been contracted beyond the reach of the people. Its path has been strewn with wreck and ruin, until nothing written in the pages of history is more plainly seen than the black pall which has followed every attempt to wrong the people by enhancing the value of money. A proper amount of currency will regulate the equilibrium between the rich and poor, high and low, visible and invisible capital, when all class laws and regulations fail. I quote from the report of the Silver Commission : "During certain periods in the past, when prices have been falling by reason of a shrinkage in the volume of money, a slow and toilsome advance has been made in the accumula- tion of wealth. Under such conditions its just distribution is impossible. A shrinking volume of money and falling prices always have had and always must have a tendency to concen- trate wealth, to enrich the few, and to impoverish and degrade the many. This tendency is subtle, active, and portentous throughout the world to-day." Whenever a monopolist gives public expression to his ideas, he always pleads for the laborer, that a cheap dollar is his continual curse. This is only a pretext. Capital wants a CONCLUSIONS. 221 dear dollar that it may compel cheap labor, while labor wants a cheap dollar that it may increase the value of its earnings. Upon this point I will give the following illustration : " Be it remembered ever that the legal, debt-paying value of money never changes, except to exist and not exist. The legal, debt-paying properties the property imparted by the law- making power that creates money never fluctuates; it is stationary, year in and out. PROPOSITION DEMONSTRATED. Wages per day. Cost of living, etc. Sum left. $1.00 50 25 12* 2.00 4.00 $0.75 37i 18f 09f 1.50 3.00 $0.25 12* 06i 03i 50 1.00 Suppose a laborer had a mortgage of $1,000 on his home, which he desired to pay as fast as his earnings accumulated. Let us notice how high wages and high cost of living compares with cheap labor and cheap cost of living, in -the amount of his yearly payments : Sums left. Iowa rate 10 per cent. Year's work. Yearly interest. Days needed. $0.25 12| 06i 03i 50 1.00 $100 100 100 100 100 100 Days. 313 313 313 313 313 313 $100 100 100 100 100 100 400 800 1,600 3,200 200 100 Thus we see that, $1 per day and 25 cents " left," it takes 400 days to pay the interest, for interest and debt national, State and individual must be paid out of "sum left" after cost of living is paid. This being the case, it taking 400 days to pay the interest and there being but 313 work days in a year, the debtor finds himself "short" 87 days. This is deferred by "credit note." But the next turn of the thumbscrews of con- traction finds him short 487 days, which means credit gone for a chattel-mortgage substitute. The next turn toward "hard-pan" finds the debtor "short" 1287 days. This means a mortgage on everything, as well pres- ent as future. The next turn reaches out to "specie basis" and " resump- 222 PHILOSOPHY OF PRICE. tion,'' and the court of last resort the high sheriff (?) bids the debtor go! in the name of law, good order, and the Christian teachings of the nineteenth century, out into God's land, if he can rind any that monopolists have not gobbled ; or go, as the tramp, branded by law. But of the up-turn to $2 per day, the "sum left" at this price, he pays his interest with 200 days' work, and has 113 left to work for wife, babies, home, improvement, with something to spare to pay the principal of debt. But of the up-turn to $4 per day he pays his interest with 100 days' work, and has 213 left to apply for God, home, and humanity. This means the debt honestly paid, the mortgage canceled, hopes realized, wife cheerful, children gay, hearthstone loves brightened, family educated, society built up a better citizen a man." I quote the above from a speech by the Hon. L. H. Weller of Iowa. Comment is unnecessary. Again, when low prices are paid for labor, the prices of products are proportionally low. It is, therefore, generally supposed that the laborer can as readily procure all needful supplies when labor is at a low price, as when it is at a high one. But the articles whose price is diminished by the lowering of labor, are the productions of labor ; and the pro- ducing classes suffer great injury from this depression of both their labor and products. The following illustration will exhibit the advantage of high prices for labor. A man raises a hundred bales of cot- ton, sends them to market, and receives three and a half cents per pound. A laborer in New York receives fifty cents a day for his labor ; with a days work he can purchase fourteen pounds of cotton. If labor be at a dollar per day, and cotton at seven cents per pound, with a day's labor he can purchase the same quantity. If labor rise to a dollar and fifty cents a day, and cotton to ten and a half cents per pound, a day's labor will still purchase fourteen pounds of cotton. Thus far we do not observe the difference of price to have any influence upon the ability of the laborer to purchase ; but we have yet CONCLUSIONS. 223 to notice the condition of that class of producers who raise the cotton at the first price, three and a half cents per pound. After paving for the use or rent of the plantation one-half the price at which a loan of money can be obtained, say three or four percent, interest on the cost of the plantation, they do not earn fifty cents a day, but, in fact, receive little or no com- pensation for their labor. The same labor and land are required to produce cotton when it brings three arid a half cents, as when it brings fourteen cents per pound. Suppose a work- man in New York to buy cotton at fourteen cents per pound ; a barrel of flour at $8 ; wheat at $1.50 per bushel ; potatoes at 40 cents ; brown sugar at 10 cents ; boots at $3 a pair ; brown sheeting at 10 cents per yard ; and good calico at 12 cents per yard. If labor falls to 50 cents per day, and he have full em- ployment, to be as well off as when labor was at $2 per day he must buy flour at $2 per barrel ; wheat at 37 1-2 cents per bushel ; potatoes at 10 cents ; brown sugar at 21-2 cents per pound ; boots at 75 cents per pair ; brown sheeting at 2 1-2 cents per yard ; calico at 3 cents, and everything else in pro- portion. Traveling expenses, rents and taxes must be diminished three quarters. All the necessaries of life must be reduced in price three quarters, or the laborer who is out of debt will not be as well off when labor is fifty cents per day, as when it is at $2 per day. But suppose one class of the laborers to buy at these low prices, what will the producers of wheat, etc., receive for their labor? The reason that the laborer can buy as much cotton when labor is at fifty cents per day, as when it is at $2, is, that he buys a fellow-laborer's products at a price which. will not pay a cent a day for the toil of producing them. So, when the prices of labor are reduced in this ratio, laborers, as a body, are unable to provide themselves with the necessaries of life, and sparingly live upon the meager fruits of each others toil. The reduction of the prices of labor and products, conse- quent upon a scarcity of money and a rise of interest, forces 224 PHILOSOPHY OF PRICE. producers and merchants to suffer great losses, because the diminution of the prices of products does not diminish the amount of their debts, nor their legal obligations to pay them ; while the capitalists who own these debts will compel laborers and owners of land and products to sell double, treble, and quadruple the quantity of these, to obtain money to satisfy the debts. Thus wealth passes with great rapidity into the hands of a few capitalists. If the merchant has bought goods at as low a price as they can' be afforded by the manufacturer, it is no safeguard against loss by the fall of goods in the market, because the market-price of the goods does not depend upon the labor necessary to their production, but upon the ever- varying value of the dollar. Our laws make the. dollar the real value, or. standard of payment, and producers and all kinds of property are controlled by its power. The objection is often urged, that to make money plenty would destroy the value of products. But how would or could it destroy their value to allow the needy to earn the means to purchase them ? Will not a starving people buy products ? Does anyone suppose that the people of Ireland would live upon their present scanty food, if their labor would afford them the means of purchasing more and better ? Was there ever a bad market for products when labor was receiving what are called high prices, or a good market when labor was at a low price ? The market is made poor by the inability of the laboring community to earn enough to make purchases. If labor were well paid, the market would always be good, and the laborer, assured of a just reward, would work cheerfully. Large production, at a fair price, gives a better compensa- tion to producers than half production at a double price. The families of producers require as many products for their own consumption when the crops are diminished one-half, and their price is doubled, as when products are abundant. The pro- ducers cannot then spare a sufficient quantity to sell for their CONCLUSIONS. 225 usual profits, even at the increased price, and capital makes the same requisition upon their labor for rent or interest as if their crops were abundant. It is a solemn truth that hard times fill up alike our poor- houses and jails ; that these periods of financial depression not only bring more poverty, but increase crime. It is plain enough when understood. When hard times begin to press upon an individual, and retrenchment of expenses are commenced, the moral luxuries go first. Next follow his intellectual luxuries ; lastly he cuts off personal luxuries, and gradually little comforts of life are dropped one by one, until the struggle for the bare necessities of life takes the place of all. The moral, social and intellectual conditions are sacrificed to the physical. From this condition come poverty, helplessness and crime from despair. When, for any reason this condition is bettered, the same route is traveled back, starting through individual comforts, then to intellectual luxuries, and finally to moral obligations and a higher life. "Talk to the winds and reason with despair, But tell not Misery's sons that life is fair." History proves these propositions true, and the experi- ences of an ordinary lifetime confirm them. I would not be understood that the poor are wanting in these virtues, or that they are debarred from acquiring them ; but I do say that poverty and deprivations are not promoters of moral and social advancement that the over-worked, ill- fed, distressed individual, whose whole time is occupied in "bread winning" is in no condition to discuss, much less to participate in the higher moral and social attainments. Life, to them, is but a continual fight to supply the demands of nature, with no place for elevating or refining sentiments. But in direct ratio as the battle for life is lessened, and physical energies are relieved from the constant strain of production, the 226 PHILOSOPHY OF PRICE. molding influences of civilization are seen to find lodgment. We are all creatures of circumstances. Our welfare depends upon the rules of society, or rather the customs of our asso- ciates, the regulations and restrictions of law, and our own ability to interpret them. The importance, therefore, of salu- tary laws, and their proper adaptation to the circumstances and conditions of those whose conduct is sought to be directed, is of the first consideration. While Governments do not point out to each individual the course he shall pursue, they should make such general restrictions that all might fully and equally act within their limits. These restrictions, in a government like our own especially, are for the greatest good to the great- est number. The great bulk of our people are producers. Almost sixty per cent, are wage-workers. The proportion of rich to poor is as 6 to 94. This being true, then our laws should be so framed as to benefit the poor as against the rich, to protect the weak against the strong. That this is not the case, that our laws are not so constructed, we have but to glance about us for proof. We can discern at once that something is at fault with our economic system. That fault, in my opinion, is due to a misap- prehension of money functions, or to a willful mismanagement of our circulating medium. The great difference between the extremes of poverty and prosperity in this country is wholly due to the condition of our currency. What is commonly called "good times" are periods when the quantity of money is rapidly increasing. Bad times come when the quantity is diminished or at a standstill, or not increasing as fast as the population and needs of business require. The history of civilization shows that the fall of Rome and the subsequent elimination of nearly all the civilizing in- fluences were due almost entirely to the failure of the mines from which it derived its currency, paper substitutes being then unknown ; that the first glimmer of returning hope CONCLUSIONS. 227 co-incident with the discovery of paper money, which, after several evolutions, was put in the form of bank paper for the first time in Sweden, in 1658. From that day to the present, the nation using the cheapest unit as a standard of payment, has prospered the greatest. A standard of value is like the money of the world, an impossible something, which is made use of by demagogues to frighten or mislead the people. If we are to have either silver or gold as the standard of payment, let us by all means take silver. All countries prosper where debts must be paid in the cheapest standard of payment. This means dear labor, dear productions, and cheap payments. The curse of all monetary systems, at the present time, is caste. There is in every nation a money unit for the rich, and a money unit for the poor. We have it. England, France, Germany and other Nations have it. Why is copper, nickel, and all subsidiary coin not a full legal tender ? Not for the reason advanced by many, that in payment of debts men might misuse the privilege and load down the creditor with large amounts of this coin. JSTo ; far from that being the true answer. It is because a large majority of the people are poor and can use but small amounts at best. Why is silver used in India? Because 110 gold coin could be made of small enough value to even pay for labor ; it is so cheap. Gold is found in use with diamonds, silks, satins, palatial residences, etc., while the use of silver is discovered among rags, hovels, want and wretchedness. The United States is one of the greatest silver producing nations in the world. As one of our precious met- als, it should be used as money to a much greater extent than gold. By our laws, but two million dollars each month is per- mitted to be coined. Silver, being one of our staple products, if not wanted at home, goes abroad like wheat or meat, but with a far different purpose. Other products of export are sent abroad to be consumed, while silver is bought from us to 228 PHILOSOPHY OF PRICE. be used principally as money. This silver goes to those nations where silver is used as the circulating medium, and assists in building up industries to compete with our own. Large amounts of our silver has found its way to India. By the use of it, India has so improved her- condition in regard to produc- tion, that to-day wheat can be laid down, duty paid, in New York, from that country, cheaper than from Dakota. A con- tinuance of this will not only deprive us of our wheat market, but wool as well ; and the solemn fact presents itself to the minds of every one that the silver using countries do now, and will in the future, compete successfully with any and all nations using gold. When we attempt to cry down the value of silver, we are injuring one of the large factors employed in the accumulation of our own wealth. Besides this, it is a downright injury to all other forms of wealth below it, and a benefit to all forms above it. Thus we see that the depreciation of silver depre- ciates every other product but gold, as gold is the only produc- tion more valuable than silver intrinsically. Just so long as we undertake to put into practice that worst of all ideas, a standard of values, just so long will the higher valued products measure the lower. The large pocket book governs the smaller, and the rich will rule the poor. At the present time there is much said and written about the shrinkage of values. There has been really no shrinkage of values, but there has been an increase in the measure by which values were estimated. Some well-disposed, but extremely ignorant persons have introduced a bill in Congress to establish a uniform standard of value, hoping thereby to avoid these fluc- tuations. The Pope's bull against the cornet was sound logic com- pared to this. In doing so, legislation seeks to establish an utter impossibility. As I have said repeatedly before, there can be no such thing as a standard of value. That, with the markets of the world, the money of the world, and the philos- CONCLUSIONS. 220 opher's stone, all belong in the same category of ancient fables. Coins are not standards of value, but standards of payment. The only measure of value is the money of account, that abstract thing, the dollar, of which we talk so much. Yalue is an abstract, intangible something that can not be measured by a concrete tangible something any more than an idea can be measured by a quart cup, or a sentiment by a foot rule. The difference between a standard of payment and a standard of value is this : A standard of payment is a certain legally authorized amount of specified commodities which are the basis of all debts or agreements, and are received in liquidation of the same. The standard of payment in this nation is a specified number of grains of gold or silver. A standard of value is a commodity value, ascertained by the relation which the standard of payments bear to it and all other things. It is an assumption, having no existence either in logic or fact. The only manner in which value is ascer- tained is by a comparison with the standard of payment. The word, standard, means stable, solid, unchanging. There never was a commodity of value in the world that was not constantly changing as its conditions to other commodities changed. The standard of payment cannot be a standard of value, because the value of that standard has always been, is, and always will be, fluctuating. The value depends upon its amount and the demand. Yalue is an abstract idea, like goodness, idleness, labor and the dollar. Who ever saw a day's work or handled a dollar ? Who ever bought a pound of goodness, or a foot of idleness ? To have a standard of value it would be necessary to find some product that never varies in value. Where can it be found ? We have a standard of length in the twelve inches to the foot ; of weight, in the sixteen ounces to the pound ; of time, in the sixty seconds in a minute. Who ever purchased either of 230 PHILOSOPHY OF PRICE. these ? and yet, they are real products as compared to the idea of a standard of value. We have a standard for length in the foot. It will measure distance, it will measure timber, cloth, etc. The pound weight will measure gold as well as wheat. The gallon will measure water as well as wine. But in the standard of the measure of value there must be something found that can be applied, at any and all times, to any and all substances to determine their value with unvary- ing minuteness. Will a certain number of grains of gold or silver determine the value of the cargo of lumber, the cargo of wheat, or the cargo of molasses? How can 23 22-100 grains of gold do all this? How is it applied? If this amount of gold should become more valuable from scarcity, as it is now, the measure would be too large. If it should shrink in value, the measure would be too small. In fact, as before stated, there is no standard of value. Money is simply a standard of payment. Value itself cannot be measured ; it can only be determined approximately by comparison. Quality cannot be measured by quantity. The abstract cannot be obtained by applying the concrete. There may be different degrees of quality, but not an increase or decrease of amount. After all, the two great objects of law are the protection of life and the proper distribution of wealth. In fact, a just distribution of wealth itself would be one great factor in the protection of life and the prevention of crime. The lust for money is the foundation of and incentive to much of the crime committed, for which the human family is guilty. One potent agent in the equalization of wealth is taxation. A graduated income tax, increasing with the wealth of the individual, would not only be just, but would do much toward bringing about this result. When a man becomes able to command the power of one hundred thousand dollars in wealth, he at once becomes a menace to the state and the just application of law. This is true in the nature of things. His influence, in so far as his CONCLUSIONS. 231 money goes, is equal to, and by virtue of its concentration, much greater than that of the 325 pauper neighbors that his accumulation of wealth necessarily brings into existence. Very few men are punished for crime who are worth this sum of money. Now, if we should abolish all internal revenues ; limit duties or customs to an amount that would protect labor and the products of labor from unfavorable competition on our own soil ; then put such an income tax on the production of wealth as would make it unprofitable to be worth more than $100,000, I think the question of the just distribution of wealth would be much less difficult of solution. Let the in- come tax be so arranged that all the profit of business above the legitimate earnings of $100,000, be paid over to the na- tional Treasury. Then millionaires would soon cease to curse our land. There is nothing more disastrous to the nation than large accumulations of wealth. I do not wish to be understood as making war on capital, or not upholding a just emulation in the acquirement of wealth, but I do wish to convey this that the laws of distribution should take from money its power of attraction to other forms of wealth ; that is, I would elim- inate the idea from the minds of men that " it takes money to make money," as they now express it. I would substitute instead the plain fact that it takes labor to make money. And I would so frame our economic laws that when men labor no matter if they are foolish and ignorant the result would show that labor did bring a reward. If after the reward was earned men squandered it, the assumption should not follow that by reason of this they should not be permitted to earn it. I would not bring in the fact of a man's incapacity to hoard money as the reason for not giving him the opportunity to earn it. When one man goes to his grave worth ten million dol- lars, and his neighbor, who has been equally industrious, is 232 PHILOSOPHY OF PRICE. buried at the public expense, it shows on its face an unjust dis- tribution of the fruits of labor. I do not subscribe to the doctrine that what one man gains another loses, because we are producing wealth all the time through the medium of invisible capital. This would be true, however, if wealth was stationary. But I do claim when a man produces wealth through his own labor, the economic laws of the land should be so framed that he may retain peaceable possession of it. As Thomas Paine says in his Rights of Man : "When the old men go to the poorhouse, and the young men to prison, something is wrong with the economic system of the nation." At the present time there is a general desire among all nations, to find some remedy for the increasing dissatisfaction so manifest with the laboring classes. Opinions upon this sub- ject are widely at variance. Neither employer nor employe can answer the question satisfactorily, even to themselves. The Knights of Labor, that grand organization for good, are not quite a unit as to the real difficulty. This Brotherhood, so well disciplined, so powerful, backed up as it is with a sense of justice and right in its cause, will fall to pieces, and that soon, if it does not at once state to the world some one great remedy for the complaints made. The long list of demands shown in their platform, will require years to legislate upon singly. If these charges are true, they are simply ulcers upon our body politic. To treat them one at a time would be not only bad practice, but doubtless prove fatal. The proper course points to a thorough cleansing of the body, a powerful, searching purifier, that in its operation would rid the system of all this poison, and drive out all extraneous matter. Is there not one great panacea that will, in the proper course of its action, rem- edy the larger part of these evils ? I think there is. Let us make the search. In previous chapters I have pointed out the causes for all these troubles. I have shown the attitude of Capital and Labor. I have endeavored to treat the matter CONCLUSIONS. 233 fairly, to give facts and figures, as well as the opinions of others to sustain my position. The remedy, in my judgment, does not lie in labor laws, tariffs, arbitration, poor laws, or anything of like character. I believe they will simply act as an irritant, and in the end do more harm than good. But I do believe that relief can be found in a proper regulation of our domestic currency. The point in the whole matter is money; the point on which it all turns is money ; and the object of all this strife is money. This being true, why not use that one factor to correct what it has misplaced ? Its possession or non-possession is the differ- ence between rich and poor between starvation and plenty. Every proposition in this book, every quotation and every argument, points out the one complete and final remedy an increase in the domestic currency of our country. I have proven it by statistics, by the writings of the most eminent economists from the time of Aristotle to the present ; by the condition of our own country now, as compared with other dates ; in every manner and by all means by which a proposi- tion of this character can be substantiated, that a decreasing volume of money is a curse, while an increasing volume is a blessing. While it may not be true that the greater the amount of currency, the less earnest will be the demand, it is a fact that the less the amount the more eager each one is to obtain their full share or more. When the amount of any commodity is small or diminish- ing, every one interested in its use becomes at once anxious for present and future wants. If a prime article of necessity, it shows this anxiety in its higher commercial value. But if the same is in abundance, it becomes cheap, because consumers, aware of its abundance, are not in the least worried about present or future supplies. Just so with the volume of money. The one primal function of money which measures value, and the other bestowed function which pays debts, are both gov- 234 PHILOSOPHY OF PKK'K. erned by the same rule. They can both be increased or decreased in their activity and power. The same conditions that affect the price of commodities, govern the action of money. Thus, measures of value do not of themselves per- form the function of measurement, but are bought with the products of labor, or labor itself, for the purpose of being held to measure the value of some other product more desirable to the holder than the product which he sold to obtain the meas- ures. For example, the farmer buys these measures with wheat, in order to sell them for a carriage. Of themselves, they are incapable of action, but are sought for in order that this particular function may be used, when occasion may require. Just so with the debt-paying power ; it is only put in force when debts are to be paid, and as every business trans- action necessitates an obligation, this function is continually being used. Now, with plenty of these measures of value in sight, people would not be anxious about their ability to obtain them when wanted. Equally true with the debt paying func- tion ; with an abundance on hand which could be had in ex change for a reasonable amount of labor, no one would be troubled. The more products to measure, the more measures would be necessary. Also, the more business transactions to complete, the more debt-paying factors would be needed. An increase of production or of business not only calls for more money for the above reasons, but urgently demands it. A less amount of products or business transactions would require less currency. It is a settled fact among economists of all nations that money becomes more valuable at some times than at others, that it increases and decreases in value under certain conditions. This change in value is only obtained by comparing it with labor and its products. This comparison has brought out the fact that money is more valuable when its quantity is decreasing or remaining stationary, while the demand for it is increasing. CONCLUSIONS. 235 Also, this rule invariably shows labor and its products in conjunction to bring lower prices. The history of the financial world proves this to be true. Continuing to make money less in amount, would as steadily make it more valuable, and, following out the rule, would lower the price of labor and all its products. ' Eliminate all money, and commercial values would cease altogether. Labor value or barter would then take its place. On the other hand, increase the amount of domestic currency, and this measure will decrease in value and at the same time increase the money value of all labor and production. Continue this increase indefinitely, and in the end money value will become an absurdity and cease, which would bring about the same result, a resort to barter or labor exchange. Here we find an example of arriving at the same point from opposite directions. This would seem to imply a middle ground, alike honorable and just to both contestants. It is evident that the quantity of domestic currency alone is master of the situation, and is the only remedy that can be applied. This never can be accomplished by granting the power to issue currency to corporations, or trust to the judg- ment of men in high positions. It must be a per capita amount, increasing with population. Make the amount suffi- cient to place capital and labor on the same footing. In other words, make dollars as plenty as days' work, and confine them to the same power of accumulation. There is but one way to bring about this result, and that is through the increase of our domestic currency to that extent that its very abundance will make it less valuable. If, by acci- dent or design, the laborer fails to perform the days' toil, it is lost to him forever. I would have money so constituted that it would bring in no remuneration unless actively engaged in exchanges. That can be done by making it so plenty that the surplus beyond that actually in use will be the same as so much produce unsold. I do not concur in the idea of eliminating 236 PHILOSOPHY OF PRICE. interest in financial matters. Men do not object to the pay- ment of fair interest, Imt they do rebel against returning a more valuable dollar than they borrowed. Increase the volume of domestic currency to such an ex- tent that a dollar will sell for a just rjid reasonable amount of labor or its products, and that point in our economic affairs will have been reached where tramps will be seen no more, labor strikes will cease, and the smile of happiness will once more be seen on the face of the toiler. We shall then be standing on that honorable middle ground which is so necessary to the prosperity and comfort of all nations. Make this amount, as I have said before, mandatory, so much per capita, and to increase each year with the increase of population ; then prices would fluctuate only from the effect of supply and demand, which would soon regulate itself. With this arrangement banks of issue would be abolished, and our domestic currency come to us direct from the Govern- ment. Finally, in conclusion, repeal the internal revenue tax. Enact a vigorous income-tax law, increasing with the amount of income. Reduce the tariff to a revenue basis, and give labor all the protection which that would afford. At the same time issue gold and silver certificates, to which add greenback paper money, each and all a full legal tender for all debts, pub- lic and private, to the full amount of $50 per capita of popula- tion, that amount to increase as population increases. This would, in my judgment, put labor and capital on nearly an equal footing, and bring prosperity and happiness to the people of this nation. APPENDIX. 23 APPENDIX. LABOR A LECTURE DELIVERED BY N. A. DUNNING AT THE FARMER'S INSTITUTE, HELD AT MASON, MICH., FEE, 11, 1887. The question of Labor which I shall attempt to discuss at this time, is older than the universe, as far-reaching as human- ity, and as little understood as the most marvelous works of God. It has occupied the mind of man since man was created, and will continue to demand recognition until heaven and earth shall pass away. The idea of labor at the present time is associated with but a portion or class of our people those who are compelled to work for the necessities and comforts of life, and those who, for other reasons, choose to do so. It represents an undesirable condition of existence from which all humanity seeks to be freed either at once, or when some cherished pur- pose has been accomplished. The man or woman does not live who desires to labor every day, in every year, of their whole PHILOSOPHY OF PRICE. sojourn on earth. Such desire would be unnatural, a sin against the future and a libel upon the past. Nine-tenths of the labor performed at the present time is done with the idea that this hard labor and toil will bring about future ease and comfort. Those who can live without labor, or, who can labor when they so elect, are envied these privileges by their less fortunate associates. This envy, this desire for like situation, lias led to war, bloodshed, riot and ruin. It has been the fruit- ful source of the greater part of the misery and woe which have overtaken mankind since the beginning of the race. If the present differences in the human family, regarding this question, were intended in the plan of creation, if a portion were to toil at pain and sorrow that others might live in idle- ness and pleasure, then it is the will of God, and we should sub- mit. But, if these differences were not considered in the great scheme of humanity, they are among us through the perversion of natural laws, and our duty to each other, as well as the obli- gation we owe our Creator, demands, alike, they should be eliminated. " In the sweat of thy face shalt thou eat bread," declared an outraged Jehovah ! Did that apply to only a portion of the human beings who were destined to people this earth ? Or, was not the entire human family, from Adam to the babe born but yesterday, included in this declaration ? Common sense and a fair interpretation of the intent of Providence would answer that it was a condition put upon the race without exception that none bearing the human form was exempt from its obli- gations. This fiat demanded that all should support their bodily natures through Nature's own exertion Labor. This was the primitive condition of labor ; it knew no class, it recognized no exceptions, it made no distinction. Labor and humanity started out together, hand in hand, to fight the great battle of life, each being dependent on the other and both conscious of the will of its creator. Since that time, who can APPENDIX. mark the changes, who can portray the vicissitudes through which both have passed ? Noah and the deluge ; Abram and his offering ; Solomon and his wisdom ; Christ and Mount Cal- vary ; the splendor of Rome ; the horrors of the Dark Ages ; Martin Luther and the Reformation ; King John and the Magna Charter ; Columbus and the Discovery of America ; the war of the Revolution, and the founding of our own great nation- through all these human nature remains the same, dependent now upon labor as in - the primal hour of its exist- ence. But the conditions under which this relationship exists have undergone a wonderful change. Then it was a companion of labor, a sharer in its joys and sorrows ; now it commands, it coerces, in a word it has become the master. What has pro- duced this change, and how to better the situation, is the Alpha and Omega of the labor question. In the primitive state of our race, men labored, simply for personal or family wants ; there was neither commerce nor exchanges. Each produced what would satisfy, and each enjoyed the full benefits of his labor. We style these people barbarians, and shudder at the thought. Why ? Because they could not read or write ? or, wear diamonds and silks ? or, get drunk and swear in five or six different languages ? Are these among the reasons ? If not, what are they ? A few things were true, however, of barbarism. If a man made a coat, it was his ; he was not obliged to sell it to pay interest, or hide it from the tax-collector. If he planted a field, he was not compelled to eat the refuse and sell the best to pay rent, or make a payment on the mortgage. If they were without schools, churches, and railroads, it is no less a fact they were wanting in prisons, poor-houses and tramps. They are called cruel, blood-thirsty, and possessing none of the finer sensibilities which mark the progress of civilization that th'eir hopes in a future life were blasted by their condition. How long since this great nation, the most civilized on 242 PHILOSOPHY OF PRICE. earth, was plunged in fraternal strife, where brother sought the blood of brother, and friend the life of friend? Have we forgot, the cruelties of Libby Prison, or the black horrors of Anderson- ville ? Even to-day the whole earth is bristling with bayonets and rumors of war are heard at every turn. Beside, who would not rather stand in the place of an ignorant barbarian in the Day of Judgment, than a civilized hypocrite ? Pope says, "All nature's difference makes all nature's peace." That may be true in nature ; I doubt if it is in man. If civilization could be, as no doubt it was intended, a blessing to all alike, it would be pleasant to contemplate, but when we see its ad vantages gran ted to the few and witheld from the many, there do come up feel- ings of doubt and disappointment. It must be remembered, that a people can not be better taught than fed ; that constant physical exertion in production, is not only a hindrance but, in a majority of cases, a positive check to moral and social culture. The laborer, by reason of his being a laborer, is denied by the logic of events to share in this higher civilization. The condition of the laborer not being bettered, must as a . natural sequence become worse ; and society to-day presents the melancholy spectacle of a small portion of our people climbing higher and the greater portion going lower on the social ladder. This is not all; the whole fabric of civilization, all its advantages, all its various adjuncts, all things that in any manner contribute toward progress and higher life, are the di- rect results of labor. Nothing but its constant efforts produced it, and nothing but its continued efforts will maintain it. Labor and that alone can support what it has brought into existence. It can not be ignored ; the time has come when it must and will be heard. It stands to-day on the threshold of future progress and further advancement, and sternly demands of us, of you and me, "Shall my efforts in time to come be free or enforced ?" The fate of the civilized world depends upon the answer. The people of this generation must decide, and the APPENDIX. 243 Nineteenth Century must declare it. We who enjoy great privileges are no less burdened with great responsibilities. Let us consider w r ell how w r e discharge them. Labor must be free or enforced. The usual picture of enforced labor shows a fierce looking w^hite man driving forward in their work a num- ber of miserable looking black men. Happy, indeed, the world would be if it ended here. It does not. It represents the fair- est part. The reverse of the picture presents to our view the great struggling mass of humanity, urged on by some unseen power, working, slaving, toiling day by dty, bringing into existence untold treasures of wealth, but are permitted to enjoy but a mere per cent. Economists all agree that labor is the sole producer of wealth. If this proposition is true, why does not the producer of this wealth possess it after production ? What intervening cause steps in between the producer and this wealth and prevents his o\vning and enjoying what his brain and brawn have created 1 No one seems to question the right or justice of each individual enjoying the fruits of his own labor. But to recognize this right, however, does not explain the reason why production and possession are separated, or what line of action would remedy the evil. At this point all labor discussion must begin, and thus far all theories have had their end. I believe that labor is being enslaved, being spoiled of its reward through the laws governing land and currency. " Whoever owns the land owns the people" said John Locke ; and "whoever controls the currency of the nation rules the people" said President Garfield. All production is from the earth, and all business is through the medium of currency ; therefore make one cheap and the other plenty in order to bring prosperity. Let us return again to barbarism. Then nothing but labor value was considered. How much warmth will it secure? or, how many of the life-giving principles will it yield ? were the great questions. Soon barter and exchange of commodities be-r 244 PHILOSOPHY OF PRICE. gan to take place between individuals and tribes. The fish of one section were exchanged for the fur of another section. It often became difficult to make these exchanges exactly balance. One class of products would possess more labor value than the other. For example, ten pieces of fur would have more labor value than ten fish, but not enough for eleven. This made the bargain unequal and entailed a loss. After a time they .began to use shells and beads to represent this difference in labor value. These shells and beads had no value of themselves, but by com- mon consent represented labor value. By and by some one hoarded up enough of these representatives of value to exchange entire for some of the fish or fur. Then the war between capital and labor began and has continued until the present time. The man with the beads and shells wanted all the fur and fish he could obtain for them, while the hunters and fishermen wanted to give him as little as possible. The self-same struggle is with us to-day. The shells and beads of barbarism are the prototypes of the gold and silver of civiliza- tion. The owners of these shells and beads of barbarism are identical with the banker and bond owner of civilization. The form and material have changed. The conditions and circum- stances of exchanges have differed since that time. But the old idea of barbarism, the relationship which these representatives of value bear to each other and to all created wealth has remained the same has obeyed, all these years, the same gen- eral laws, and has been guided by the same unvarying rules. The same general laws govern the production and distribution of wealth to-day that did when production and distribution began. With an increase of these representatives*of value prod- ucts are more justly distributed, labor is paid better, and pros- perity makes its appearance. With a decrease, exactly the reverse of this is effected. This has proven true in all ages of the world, and is praving true at the present time. Our land laws are the worst of any age or any nation. Other countries APPENDIX. 245 have been robbed of their possessions by force and arms ; but to the American government alone belongs the disgrace, of knowingly, recklessly, and wantonly confiscating the rightful heritage of future generations, and passing them over gratuit- ously to heartless corporations. ~No other nation would permit so vast an amount of its public domain to be owned and con- trolled by aliens. With our present population, land is becom- ing scarce ; what will be the situation at the next Centennial, with four or five times the number of people ? No wonder the doctrine of Henry George is being thoroughly considered. No wonder the idea is beginning to obtain that no man has the right to own one acre more land than he cultivates. The total area of the United States is given at 1,814,000,000 acres. Of this amount 831 million acres have been disposed of. Sixty- five million acres of this large amount only has been taken under the homestead and timber-culture act. Prior to 1860 less than 28 million acres had been granted to railroads, canals, etc. Since that time there has been over 143 million acres given to these corporations, making a total of 1T1 million acres in all. Hundreds of millions of acres have been patented to individuals under Spanish and other foreign claims. In one instance 2,714,765 acres was patented under one of these Spanish claims. In 1880 there were private land claims of this character, amounting to 567 millions of acres on file in the land office at Washington. It has been discovered that more than ten million acres of land have been stolen by the railroad companies by false measurement alone, and that more than 15 million acres of government land have been fenced in by herders and used as their own. Thirty-four alien land-owning syndicates own 29 million acres of American soil. Let me give you the figures. The number of acres remaining unsold is 983 millions. Take from this the area of Alaska, 370 million acres, and we have 613 million acres on hand. In this amount is included all the waste land of the nation the swamps, the mountains, deserts 246 PHILOSOPHY OF PRICE. etc. which in the opinion of well posted men will reduce this amount by 400 million acres more. This leaves but 213 mil- lion acres for future generations to enjoy. Who can contem- plate these facts without alarm, or consider the statesmanship which has permitted this wholesale appropriation, without dis- gust ? Every acre of land taken in this manner makes it more difficult to obtain free homes, which of itself increases the value of the land already bought, and consequently lowers the price of labor. I believe no alien should own a single foot of American soil. I believe every railroad grant should be for- feited. All these vast tracts should be bought back by the gov- ernment, and every acre given to actual settlers alone. No man has the right in justice or in fact to more land than he can cultivate, while his neighbor has none. Land, labor and currency are the three controlling factors of every government. With proper relations between each, prosperity always follows. With lack of harmony, adversity is sure to come. Labor is dependent upon land and currency ; therefore, whatever affects either is certain to be felt by labor. A stationary, inadequate, or shrinking volume of currency is productive of greater loss to labor than all other conditions. The invention of money has corrupted the labor value of exchanges, the same as Satan corrupted the morals of Heaven. It took Michael and the hosts of Paradise to chain that mon- ster ; what will it require to bind the other ? Money in its primitive and beneficial condition was the instrument, the inci- dent, of exchange, but not the object. So long as it continued the instrument, the aid and friend, it benefited all conditions of men in a proper degree ; but when it became the object, the aim and prize, that moment it ceased to do good and began to do evil. Then differences in condition began to appear, master and servant began to be seen, rich and poor broke in upon our vision. All classes of men, and all the various kinds of busi- ness, are interested in- this question. APPENDIX. 247 The farmers are vitally interested in this question. In 1866, the ten principal crops wheat, corn, oats, barley, rye, buckwheat, potatoes, hay, cotton and tobacco sold for $2,007,- 462,231. In 1884, after a lapse of 18 years, these same crops sold for $2,043,500,481 ; only 36 millions more after 18 years of labor and improvement a gain of less than 2 per cent in production in 18 years. The number of acres cultivated was nearly doubled, the number of farms and farm hands were doubled, agricultural machinery was greatly improved, and yet the products of 1884 brought the farmer less than 2 per cent more than the production of 1866. The annual income of the fourteen principal States of the Union is about five thousand seven hundred millions. This is the estimated value of agricultural products and manufactured goods together. Of this total estimate, only nine hundred and forty-one millions is allowed for the products of the farmer and grazier and fruit-grower ! That means that the most absolutely necessary of all the industries receives for its annual share of the common increase of the land one-sixth of the entire home- made income of the nation. In 1870, the number engaged in agriculture was about seven millions. Those engaged in manufactures were about two millions. Since then the population of the country has increased from thirty-eight to fifty-two millions. The increase has been larger in the first class than in the second. The pro- portion of agriculturists to the other class is therefore not far from eight to two. Four times as many farmers as artisans, and these receive only one-sixth of the national income from the two branches of industry. If four times six are twenty-four, then the farmer has one twenty-fourth of the annual benefits of industry and civilization, and the factory mechanic or artisan, or somebody else has the rest ! Some farmer will say we can buy more with a dollar than ever before. Can you pay any more debts ? Can you pay wiE the producte of labor boy! This is the when labor or its products will pun-In* 1 leas dollars to-day than a year ago, the proof is consequently everything ebe money now and a few yean ago with the price received for products. It win not only prove that money has increased in value but that it must be included in afl "other things" that are cheapened, in order to bring about anything Eke fan- play. Fifteen years ago money rented at ten per cent and wheat sold for two dollars per bushel; fifty bushels -paid the per cent and wheat sells at seventy cents per bushel; instead of taking Jifty bushels to pay the interest it requires one hundred. If the use of money had leaHBued in value with wheat, interest would be to-day three and one-half per cent. Ifothing in ihg gnd is 4*fa*ap to one producer that is nude so at the loss of another producer. Let us *"""** carefully the wage rialvnwnt of Ac last 4" years from the census reports. I will take op the tures, only: In 1850, there were 95 7,000 hands employed, dnced, less raw material and wear of 000,000. Avenge wages, each, $348. her of employes by the av folio wing solution: The laborers increased value as wages ; the of the same for profits. Or, each laborer received $248, and each emplover received from ih<% During I860, 1,300,000 hands produced $805,000,000; wages, $292; labor received 47 per cent, capital 53 per cent; each laborer received $i9i : gave capital $327.501 During 1-7 ". 2,000,000 hands prodnced $1,310,000,- 000; wages, $310; labor received 47 per cent. 250 % PHILOSOPHY OF PRICE. 53 per cent ; each laborer received $310 ; gave capital $345. During 1880, 2,739,000 hands produced $1,834,000,000 ; wages, $346 ; labor received 51 2-3 per cent, capital 48 1-3 ; each laborer received $346 ; gave capital $323.50. Of course, this vast amount of profit does not go into the pockets of manufacturers, wholly. A portion pays rent, taxes, interest pays for lawyers, directors, etc., etc. The fact I desire to impress is, that fully one-half of the wealth produced by the laborer goes from him and into the pockets of those whose interest it is to take with each year more and more of labor's products, with no return whatever. In this difference between wages paid and the proceeds of labor lies hidden the germ of all profit, interest and rent, of all pauperism, all want, and nearly all crime. How true the poet : "The seed ye sow another reaps; The wealth ye find another keeps." For these reasons and from these causes, laborers have been compelled to band together, and are putting into practice in all parts of the world, in one form or another, the God-given right of self -protection. For years capital has considered itself thoroughly entrenched behind the law, but to-day it is looking up the weak points. It has heard the sullen murmur. " Do you dream," said the old Sheik Ilderim, of Medina, a thousand years ago, to certain Roman ingrates, "do you dream, because the Prophet of Allah dwells now beyond the bridge of Al Sirat, that therefore he is dumb, and deaf, and blind ? I tell you, by the splendor of God ! there is tempest brooding on his brow, there is lightning gathering in his soul for you!" Men often ask what has brought about the present labor movement and the order of Knights of Labor? It began with the employer losing personal feeling toward his laborers, by APPENDIX. , 251 looking upon them as so many beasts of burden ; regarding their efforts as so much commodity sold in the market. They were hired for the cheapest price, worked to the utmost limit of endurance, and, when used up, thrown aside like any other old and worthless machinery. The employers grew richer ; luxury and extravagance increased among them. The thinking laborer, noticing this, asked himself : "Is my condition im- proved ?" He could but know it had not improved. His daily bread was not earned with less toil, nor was he any more certain of steady work. Being brought together in large shops with those of like condition, what was more natural than to talk over these matters, to discuss their wrongs and sufferings. A class feeling soon developed under these circumstances, which could only end in united action. Free competition imposed no restraints upon the powerful they were at liberty to exploit the poor to their heart's content. The strength on the one side was so great and the ability to resist on the other so insignificant that there could exist no freedom of contract. As Sismondi said : "The rich man labored to increase his gains, the poor man to sat- isfy the cravings of his stomach. The one could wait, the demands of the other were imperative." As the knowledge of their wrongs became more apparent, the yoke of oppression began to get heavier. At last the idea of banding together for mutual protection against a common foe began to obtain and has resulted in these trade unions, Knights of Labor and don't start Grangers. Let me say at this point : United Labor, to-day, does not seek charity, does not sk for alms, is not beg- ging bread. Instead of this it stands before the world demand- ing justice, asking for its God-given rights, and seeking for those privileges that were born with the human family that of earning honorably the food it eats and the clothes it wears. These demands must be granted, these wrongs must be righted, or the whole fabric of our civilization will crumble as has others. The interests of the farmer and the Knights of 252 . PHILOSOPHY OF PKICE. Labor are identical. Both are at war with a common enemy monopolies or corporations. Did you ever think what a corporation is, and its use ? It is an artificial agency of man destined to countervail certain great natural and salutary laws. It is a natural law that the man who acquires capital shall administer it ; his administration of it and his responsibility for such administration being of the essence of his proprietorship, such use of it should cease with his death. In other words, the natural law which operates to prevent the irresponsible use of capital and the undue accumulation of wealth is the law of personal responsibility for what a man has, and that it shall be distributed at his death. Corporations never die ; they keep on accumulating capital and power, defying the law of death, which arrests all human enter- prises. The enormous advantages of corporations over individ- uals is noticed at a glance. This is one of the vested rights we read so much about. When you hear of the next labor strike, don't get cross don't say that these Knights are disturbing business, but send them some wheat, or pork or beef something that will sustain them in this fight. They are contending for living wages, that will enable them to pay you good prices for your products, that in the end you can pay that mortgage or that note or account without quite so much hard labor. The people are not blind to their wants, neither are they oblivious to the danger, that threatens not only them but our whole social condition. They know a permanent laboring class is being formed ; they realize the full import of that situation, because they know the conditions under which, it is possible to exist. A permanent laboring class is a certain number of our people doomed to per- petual servitude ; without hope, with nothing better in pros- pect than the everyday drudgery of the slave. Any change for them would be better ; they could be 110 worse ; from this ' fact comes the great danger. John Stuart Mill says : "If the APPENDIX. 253 bulk of the human race are always to remain as at present, slaves to toil in which they have no interest and therefore feel no interest, drudging from early morning till late at night for bare necessaries, and with all the intellectual and moral defi- ciencies which that implies without resources either in mind or feeling untaught, for they cannot be better taught than fed ; selfish, for their thoughts are all required for themselves ; without interest or sentiments as citizens and members of soci- ety, and with a sense of injustice rankling in their minds, equally for what they have not and what others have, I know not what there is which should make a person of any capacity of reason concern himself about the destinies of the human race." What a fearful picture, and yet how true ! It shows us vividly the condition of this permanent laboring class which, under our present financial laws, is rapidly forming. O luxury ! thou curst by Heaven's decree How ill exchanged are things like these for thee ! How d thy potions, with insidious joy, Diffuse their pleasure only to destroy ! Kingdoms by thee, to sickly greatness grown, Boast of a florid vigor not their own. At every draught more large and large they grow, A bloated mass of rank unwieldy woe ; Till sapped their strength, and every part unsound, Down, down they sink, and spread a ruin round. "The iron law of wages," says Ricardo, " is the natural price of labor which is necessary to enable the laborers, one with another, to subsist and to perpetuate their race without increase or decrease." " Labor," says Karl Marx, " is bought at its exchange value and sold at its use value." Exchange value is the least amount that will permit the laborer and his family to live, while the use value is all the employer can squeeze out of it." " You believe, perhaps, fellow laborers and citizens," said Lassalle, "that you are human beings, that you are men. Speaking from the stand-point of political economy, you make a terrible mistake. You are nothing but a commodity, a high price for which increases your numbers, just the same as a high 254 PHILOSOPHY OF PRICE. price for stockings increases the number of stockings, if there are not enough of them and you are swept away. Your number is diminished by smaller wages, by what Malthus calls the preventative and positive checks to population. Just as if you were vermin, against which society wages war." " 111 fares the land, to hastening ills a prey, Where wealth accumulates, and men decay; Princes and lords may flourish, or may fade: A breath can make them, as a breath has made; But a bold peasantry, their country's pride, When once destroyed, can never be supplied." Goldsmith. This condition must be bettered ; but how ? Labor laws have proven no good, as they are easily evaded. Arbitration only weakens labor, and strengthens its oppressors. Lectures upon the duties and relations of labor and capital is but idle wind. Some factor must be brought to bear upon this ques- tion^ that of itself will bring about the desired change. That factor, in my judgment, is money. Through its scarcity all these evils overtake us, and by its abundance prosperity and joy return. From the earliest economic history to the present, the plain fact that an increase of money has been beneficial and a decrease disastrous to the business and prosperity of the human race has been fully recognized. In fact, the degrees between barbarism and civilization are clearly defined by the volume of the circulating medium. This is no longer a party question, it is national ; its truth is appreciated by men in all parties and in all conditions of life. To the laborer, for all producers are laborers, the volume of currency is of great im- portance, as it fixes the price both of labor and its products. Increase the amount of currency and prices advance ; decrease the amount of currency and prices fall. This rule is infallible. Whenever prices have become adjusted to a given amount of currency, an increase of that amount, other things remain- ing unchanged, will cause a rise, and decrease will cause a fall, in prices. But under such conditions other things never do remain unchanged. There are powerful causes, moral and ma- APPENDIX. 255 terial, which invariably operate, when money is increasing in volume, to moderate the rise in prices, and to intensify their fall when it is decreasing. Hence, the fall in prices caused by a decreasing .volume of money would be much greater in de- gree than would be the rise caused by a proportionately in- creasing volume. "Whenever it becomes apparent that prices are rising and money falling in value in consequence of an increase of its volume, the greatest activity takes place in exchanges and pro- ductive enterprises. Everyone becomes anxious to share in the advantages of rising markets. The inducement to hoard money is taken away, and consequently the disposition to hoard it ceases. Its circulation becomes exceedingly active, and for the very plain reason that there could be no motive for holding or hoarding money when it is falling in value, while there would be the strongest possible motive for exchanging it for proper- ty, or the labor which- creates property, when prices are rising. Under these circumstances labor comes into great demand and at remunerative wages. This results in not only increased production, but increased consumption, as the wants and ex- penditures of laborers increase with their earnings." "At the Christian era the metallic money of the Roman Empire amounted to $1,800,000,000. By the end of the fif- teenth century it had shrunk to less than $200,000,000. Dur- ing this period a most extraordinary and baleful change took place in the condition of the world. Population dwindled, and commerce, arts, wealth and freedom, all disappeared. The people were reduced by pov- erty and misery to the most degraded conditions of serfdom and slavery. The disintegration of society was almost com- plete. The conditions of life were so hard that individual selfishness was the only thing consistent with the instinct of self-preservation. All public spirit, all generous emotions, all the noble aspirations of man, shriveled and disappeared as the volume of money shrunk and prices fell. History records no such disastrous transition as that from the Roman Empire to the Dark Ages. Various explanations 256 PHILOSOPHY OF PRICE. have been given of this entire breaking down of the frame- work of society, but it was certainly coincident with a shrink- age in the volume of money, which was also without historical parallel. The crumbling of institutions kept even step and pace with the shrinkage in the stock of money and the falling of prices. All other attendant circumstances than these last have occurred in other historical periods unaccompanied and unfollowed by any such mighty disasters. It is a suggestive coincidence that the first glimmer of light only came with the invention of bills of exchange and paper substitutes, through which the scanty stock of the precious metals was increased in efficiency. But not less than the energizing influence of Potosi and all the argosies of treasure from the New World were needed to arouse the Old World from its comatose sleep, to quicken the torpid limbs of industry, and to plume the leaden wings of commerce. It needed the heroic treatment of rising prices to enable society to reunite its shattered links, to shake off the shackles of feudalism, to relight and uplift the almost extinguished torch of civilization. That the disasters of the Dark Ages were caused by decreasing money and falling prices, and that the recovery therefrom and the comparative prosperity which followed the discovery of America were due to an increasing supply of the precious metals and rising prices, will not seem surprising or unreasonable when the noble functions of money are considered. Money is the great instrument of association, the very fibre of social organism, the vitalizing force of industry, the protoplasm of civilization, and as essential to its existence as oxygen is to animal life. Without money civilization could not have had a beginning ; with a diminishing supply it must lan- guish, and, unless relieved, finally perish." " It is in a volume of money keeping even pace with ad- vancing population and commerce, and in the resulting steadi- ness 01 prices, that the wholesome nutriment of a healthy vitality is to be found. The highest moral, intellectual and material development of nations is promoted by the use of money unchanging in its value. That kind'of money, instead of being the oppressor, is one of the great instrumentalities of commerce and industry. It is as profitless as idle machinery when it is idle ; differing from all other agencies, it cannot benefit its owner except when he parts with it. It is only under steady prices that the production of wealth can reach its permanent maximum, and that its equitable distribution is pos- sible. Steadiness in prices insures labor" to all and exacts labor APPENDIX. 257 from all. It gives security to credit and stability and prosper- ity to business. It encourages large enterprises, requiring time for their development, and crowns with success well matured and carefully executed plans. It discourages purely speculative ventures, and especially those based upon disaster. It encour- ages actual transactions rather than gambling on future prices. It metes out justice to both debtor and creditor, and secures credit to those who deserve it. It prevents capital from op- pressing labor and labor from oppressing capital, and secures to each the just share of the fruits of industry and enterprise. It secures a reasonable interest for its use to the lenders of money, and a just share in the profits of production to the bor- rower. It keeps up the distinction between a mortgage and a deed. It insures a moderate competence to the many rather than colossal fortunes to the few at the expense of the many." When the stock of money is shrinking and prices are fall- ing, this conversion can only be made at rates continually grow- ing more unfavorable, while at the same time the products of the laborer for whose wages sacrifices have been made are also undergoing a shrinking of money-value. Thus loss and sacri- fice are encountered at every turn, and the owners of other capital than money shrink from the friction of exchange, with- draw from productive enterprises, and only exchange as much of their property for money as will suffice to meet the neces- sary expenditures of living, which are reduced to the most Economical level, as it is* principal and not income that is being consumed. Little more labor will be employed under these circumstances than is sufficient to support the owners of capi- tal on this parsimonious basis, and as a consequence the labor market will be overstocked, and the competition between laborers will reduce wages to a starvation level. But during this period, when property is being sacrificed to meet current necessities, and laborers are being remitted to idleness and des- titution, money fattens on the general disaster. The worst effect, however, economically considered, of falling prices, is not upon existing property nor upon debtors, evil as it is, but upon laborers whom it deprives of employment 258 PHILOSOPHY OF PRICE. and consigns to poverty, and upon society, which it deprives of that vast sum of wealth which resides potentially in the vigor- ous arms of the idle workman. A shrinking volume of money transfers existing property unjustly, and causes a concentration and diminution of wealth. It also impairs the value of existing property by eliminating from it that important element of value conferred upon it by the skill, energy and care of the debtors from whom it is wrested. But it does not destroy any existing property, while it does absolutely annihilate all the values producible by the labor which it condemns to idleness. The estimate is not an extravagant one that there are now in the United States four 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 falling prices shall continue to separate money-capital, the fund out of which wages are paid, from labor, and to discourage its investment in other forms of property. Labor, unlike money, cannot be hoarded. The day's labor unperformed is so much capital lost forever to the laborer, and to society. It being his only capital, his only means of exist- ence, the laborer cannot wait on better times for better wages. Absolute necessity forces him to dispose of it on any terms which the owners of money dictate. These are the conditions which surround the laborer throughout the commercial world to-day. The labor of the past is enslaving the labor of the present. At least that por- tion of the labor of the past which has been crystallized into money is enabled through a shrinkage of its volume and while ying idle in the hands of its owners to increase its command over present labor and over all forms of property and to trans- form vast numbers of honest and industrious workmen into tramps and beggars. These laborers must make their want 8 conform to their diminished earnings. They must content APPENDIX. 259 themselves with such things as are absolutely essential to their existence. Consumption is therefore constantly shrinking toward such limits as urgent necessity requires. Production, which must be confined to the limits indicated by consumption, is constantly tending toward its minimum, whereas its appli- ances, built up under more favorable conditions, are sufficient 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 financial policies. This is my version of the cause and remedy for the pres- ent distressing condition of labor. It may not please you ; it may not meet with your approval ; yet it is honestly given, with the hope that it or some other theory may be applied to wipe out this misery and wretchedness. I sincerely believe our present civilization is in danger by reason of this labor question ; that our further advancement depends upon its proper solution. "When the Great Augustus was transforming a Rome of brick to a Rome of marble ; when its wealth seemed rapidly increasing ; when its victorious legions were extending its bor- ders in every direction ; when in its manners and customs it was becoming more and more refined ; when Art and Litera- ture were making rapid advances, who would have prophesied then that Rome had reached its zenith, that its bright sun would go down in black midnight, that the bat and the owl would soon inhabit the palaces of the Caesars ? Yet that was true ; it went down amid the gathering gloom of the Dark Ages, never to reappear. Greece also followed, "That land of scholars and nurse of arms." Soon we find Socrates drinking the deadly hemlock, and Demosthenes slaughtered in the sanctuary of the gods. We learn that the Huns and Yandals, together with other vast 260 PHILOSOPHY OF PRICE. hordes from the North, swept over these nations with the besom of destruction, leaving nothing but ruins and barbarism behind. We read of the great law-giver, Lycurgus ; of the wisdom of Solon ; the heroism of Leonidas ; the patriotism of Cincin- natus, and the statesmanship of Graecus ; of the wars of Caesar, Trojan and Constantine. We are made acquainted with their great acts and deeds, but look in vain for the benefits or results. Why were their ideas of government, social life, and the best interests of mankind, permitted to sink into the unknown of the Dark Ages, from the Fourth to the Fifteenth centuries, a period of more than one thousand years ? The broad empire of Augustus Caesar was made bright noonday by the birth of the Son of God. Why did that star at Bethlehem sink below the horizon of human vision only to reappear at the reforma- tion after a period of more than fourteen hundred years? Why, I ask, was a civilization begun so auspiciously, allowed* to sink back into oblivion ? We can only answer by saying it was true. Was their civilization of a low order? Let us examine. What position in poetry does the Iliad of Homer, or the ^Eneid of Yirgil occupy ? Where shall we place the Phillipics of Demosthenes, or the orations of Cicero, the philosophy of Plato, or the massive intellect of Euclid or Aristotle ? Would Hannibal, Alexander or Caesar lose by comparison with the great military commanders of the present day ? No. The world never saw men in their several spheres who were their superiors. Yet, notwithstanding all this, the present gen- eration can only look with wonder upon the ruins of their greatness, and speculate as to the means in which this whole- sale destruction was brought about. Our present civilization has been made possible by fire and blood, and must be watched closely and protected carefully. The fire which burned the body of John Huss in the early APPENDIX, 261 part of the fifteenth century burns even now. A torch was lighted then which to-day brightens the universe Belted knights led by a mitered bishop curbed the proud spirit o haughty King John, and wrested from him the first great bill of human rights the Magna Charter. The pride of Charles I was broken by the honest piety and unsheathed sword of Oliver Cromwell. Our own nation was carved out of an unbroken wilderness. Deeds of heroism, loyalty of purpose, and judgments unbiased by prejudice, have given us the grandest nation on the face of the earth. But amid all this greatness, and with all this prosperity, are we oc- cupying safe grounds ? Has not our civilization reached its zenith ? We look about us and find poverty and distress in the midst of plenty; hunger and nakedness amid bursting granaries and crowded warehouses. The wail of the starving is wafted into the banquet halls of the wealthy. The cry of the unemployed comes up from every part of our land, and the miseries and 'wretchedness of poverty are seen at every turn. Our situation is almost analogous to that of Rome and Greece. Will it end as did they? Who can tell? Then, the legions, the army, whose aid and friendship enabled any one to govern, was bought and sold and the people, the oppressed, paid the tribute-money. Now, our public offi- ces are put up at public auction, and those who have the longest purse and the most elastic conscience are usually the successful bidders. It is claimed that we could not go back to barbarism, as there is no barbarism to conquer us. Go into the by-ways and hedges of civilization, the slums of our cities and the yards of our penitentiaries and jails. What do you find there ? Worse foes to the elevating sentiments of civilization than ever were the Huns and Vandals of old. The whole world has gone mad for gain. Money seems to be the only incentive for activ- 262 PHILOSOPHY OF PRICE. ity. Everything is swallowed up in that one blind rage. Pres- ent joys, future prospects, kindly hopes and even the future world is valued in dollars and cents. "When John sent his messenger to Christ, he directed him to ask, "Art thou he that should come, or do we look for another ? " Christ said, " Go, show John those things which ye now hear and see. The blind receive their sight, and the lame walk ; the lepers are cleansed and the deaf hear ; the dead are raised up." Was that all ? No, that which by being last was witnessed as the climax of all his deeds, more important than either : "The poor have the gospel preached unto them." Going into our churches of the present day, knowing the poverty and distress among the people, knowing the many ragged coats and threadbare gar- ments which necessity compels to be worn, may we not ask, upon beholding the rich clothing and costly apparel seen on every side : Is this the religion of Christ, or are we to look for another ? This state of things can not endure. Something must be done to break down the barrier be- tween rich and poor ; between those who have and those who have not. A right to live comfortably, work honorably, and act independently, must in some manner arid through some medium be granted to all. For six thousand years Capital in various forms has oppressed Labor. For six thousand years- the cries of the victims and the shouts of the victors have mingled together. For six thousand years the wild shrieks of the vanquished and the hoarse laugh of their persecutors have together ascended to the throne of God. Well might we exclaim: "How long, oh, Lord, how long ! " During all these years this black midnight has envel- oped labor. During all these years labor has struggled man- fully to dispel this gloom. Some have prayed earnestly to see the morning, but went down to their graves in the gloaming. Others have worked earnestly and well, but died in the even APPENDIX. 263 ing. Some fought on and hoped on, but went over to the wide beyond before the meridian of midnight. Again, others, believing the time almost at hand, plunged into the thickest of the fight, only to perish in the small hours of the waning night. But to us, here in the last quarter of the nineteenth century, are given, if we wisely improve our time, the long- looked-for privilege of beholding the gray in the east which betokens the sure rising of the orb of day. And unless these signs fail, unless we are recreant to our most solemn duties, we shall see, before the beginning of a new century, the sun, that great prototype of creative power, riding majestically high in the blue dome of heaven, sending down to earth its life- giving rays, upon Labor, protected in its rights, free in its action, and permitted to mark out its own destiny. INDEX. 265 INDEX. Ability to Purchase Establishes the price, page 15 ; what ability to purchase is, how obtained, etc., 18 ; depends upon price, 26 ; governs what we shall eat, 214 ; Eng- land's ability to purchase, 214 ; what an ability to pur- chase would do, 215, 216. American Review Quotation, 52 ; on prices, 93. Allison Sir Archibald Sufficient and contracted currency, 72 ; in his history of Europe, two great events, 75, 76 ; offsets of less currency, 153. American Currency Wanted, why? 167, 168. Aristotle Value in money, 196. Barter Between tribes, 13 ; in exchange, 27 ; barter, how destroyed, 31. Bonds National, bought with paper and paid in gold, w r hy should they be worth 20 per cent premium when farms cannot be mortgaged, etc., 95. Bonds Sold, 1.07 ; 5-20 bonds sold abroad, 109 ; bonds selling at premium, 110; discussion as to how the bonds should be paid etc., 110; the gold cost of bonds and greenback cost compared, profit to bankers, 110; bonds payable in paper or coin, 111 ; Sherman's letter and speeches, 111, 266 PHILOSOPHY OF PRICE. 112; bonds, how bought, 113; bonds, premium, 115 ; bonds of 1870, how taken etc., 121 ; reasons that should govern such contracts, 122 ; effects of changing the stand- ard of payment, 123 ; no silver ever paid on a bond, 124 ; law of 1862 providing for payment of a per cent of bonds, 124 ; act under which bonds were issued, 124, 125 ; read- ing of the bond, 125, 126 ; amount of bonds bought between 1875 and 1878, comments, 126 ; bonds can be paid in sil- ver, 127 ; bonds due and payable at any time, 127, 128 ; effect of paying in silver, 129. Bodin In 1557, quotation, 32. Bowen Francis Increase of currency, 57 and 58. Bryant In his work on money, result of price, 76 ; on money, 172, 173, 174. Boston Advertiser Increase and decrease of currency, its effects, 77. Byles Judge John The effects of increasing and contracting the currency of England, 77, 78, 79, 80. Bullion Report To parliament 1810, on the high price of bul- lion, 80, 81. Bank of England Its examination in 1847, testimony of its officers, 86, 87, 88. Blake Report on precious metals, 92. Bayard Senator Kind of money to pay for bonds, 113. Beck Senator Speech on the silver question, 130, 131, 132, 133. Burke On changing contract, 147. Bancroft Effects of shrinking currency, 147. Belknap Effects of shrinking money, 148, 149. British Ambassador to France Effect of less money, 152. Commerce Unrestricted 17; cur'cy contraction discussed, 50. Currency Its increase and decrease and their effects, from dif- ferent authorities, 51 to 94 ; currency contraction, 65 ; its effects, 94, 95, 96 ; effects upon real estate transactions, 96 ; worse and worse, 97 ; contraction, story of, 107 ; currency, amount of in 1866, what it consisted of, 108 ; its contrac- tion laws, 108 ; currency contraction continued, 109 ; cur- rency burned up, 109 ; amount of currency reduction up to 1868, 110 ; seven-thirty bonds as currency, 140 ; cur- rency contraction, 140 ; amount and effect of contraction, 143 ; lessening of volume, 164 ; the natural result, 165 ; currency volume governs prices, 166 ; distinctive currency for each nation, 170 ; reasons, 170, 171 ; expensive cur- rency, 175, 176 ; kind and amount of currency, 177; cur- rency for sparsely settled countries, 194. INDEX. 267 Crawford "William H. Quotation, 51. Chevelier Professor Increase of currency, 60. Carey Henry C. Increase of currency, 66, 67, 68, 72. Clay Henry Eloquent speech on currency during the debates of 1840, pages, 68, 69 70, 71, 94, 151. Copernicus His address to the King of Poland, 74. Chase Solon" Them Steers," 95. Carey Mathew Effect of less money, 149. Caireus Prof. J. E. Greenbacks and foreign trade, 181. Credit How maintained, 114; how improved, 115. Campaign Of 1876, 118. Contract Between bondholders and people, howmanaged, 145; with bondholders changed, 116. Confidence and good times, 164. Coin Basis Shown up, 176 ; kind of currency not decided yet in Europe, 182 ; change of currency, its effect, 183 ; metal as a basis for currency, objections, 183, 184, 185 ; cur- rency and Napoleon, 185, 186. ' Currency Supply, where from, 186, 187, 188 ; currency, how inflated and contracted, 188 ; power of banks over cur- rency, 188, 189 ; what currency is required to perform, with tables, 189, 190, 191 ; credit currency, bank checks etc., its cause, 191, 192 ; currency and its relation to pro- tection, 213, 214 ; currency and its effects on business, the cause and remedy discussed, 218, 219 ; currency makes the extreme between poverty and prosperity, 226 ; currency the great panacea, 232. Capital and Labor the war between, 217, 220. Doubling of Debts Discussed, 50. Debt Public statement for 1866, 138 ; its condition, 143, 144 ; it has not been lessened in labor value, 144. Doubleday's Financial History of England Effects of contrac- tion, '73, 74, 156. Davis Garrett Kind of money to pay bonds, 113. England's Prosperity During war with Napoleon. 50. Economists Being a creditor nation, etc., 129. Ewing Thomas On Resumption, 156. Exchanges Leveled up with commodities, 174. Experts Governed by ability to purchase, 215, 216. Financial Reports to Congress, 32. Fanchett Leon Quotations, 53, 64. FundingBill of 1870, 116. 268 PHILOSOPHY OF PRICE. Gallatin Albert From his work on money, varieties of price, 76 ; value of money, 201. Goschen Hon. Geo. I. Address to Banker's Institute, London, 1883; effects on price of the currency of a nation, 81, 82, 83, 84. Garfield "The people would remember the bankers of Wall street" etc., 109. Grant President Letter on silver, 119. Greenbacks Rescued from destruction, 120. Gibbs H. II. England a creditor nation, 129. Government Honor etc., 129. Government Debts How to pay, etc., 129. Gordon Senator Contraction, its effects, 153, 154, 155. Gold Its scarcity etc., 160 ; demonetized, 169, 170 ; bought by all nations, the result, 178 ; the struggle for gold and the effects, 193 ; gold or silver not fair standards of pay- ment, 194. Hume David Quotation, 51. Hunter E. M. T. Quotation, 51. Horton Mr. Increase of currency, 62. Humboldt Relating to amount of gold and silver and its ef- fects, 76, 77 ; value of money, 201. Hamilton Alexander Use of money, evils of contracting it, 84. Hughes Judge Robert, of Virginia Effects on price of increas- ing or decreasing amount of money, 84, 85. Interest Discussed, 38 ; lowering rates of interest indicates financial prostration, 42. Industry The true cause of its stagnation, 98. Jerons W. J. Increase of currency, 55, 56 ; value of money, 201 ; value in currency, 202. Jacob Mr. Increase of currency, 61. Jacob William His examination into the quantity of money at various periods, tables, 74, 75. Jefferson On currency basis, 177, 178. Kellogg Mr. Sacredness of money, 219. Labor Sole producer of wealth, 18 ; labor employs capital but not money, 23 ; labor products ruling factor in exchange, 24 ; quotation, 26 ; effect of a shrinking volume of money discussed at length, 43, 44; conflict between labor and capital, 44 ; reasons, 45 ; labor cannot be hoarded, con- ditions which surround labor discussed, 48 ; number of idle INDEX. 269 laborers and the effect, 49 ; a blow at labor, etc., 50 ; labor and its products lose value, 95 ; where found, 95 ; labor thrown out of employment by falling prices. Laboring Classes Their condition, 100 ; labor and capital con- flict, etc., 14-0 ; laws favoring capital as against labor, 14:6 ; three million unemployed laborers, the result, 163 ; labor and protection, 211 ; pauper labor act, 212, 213 ; labor laws oppressive, 218 ; labors reward, 219 ; advantages of well paid labor, 222, 223, 224:; Knights of Labor, their de- mands, comments, 232. Laveleye Professor Quotation, 53 ; value of money, 201. Linderman Increase of currency, 64. Laws Should protect the weak as against the strong, 103. Law John Yalue in currency, 202. Locke John Yalue of money, 93. London Economists Evils of shrinking money, 100 ; amount of gold, 194. London Times Less money in France, 152, 153. Levi Prof. Why gold was demonetized, 169. Mill John Stuart Overproduction, 15 ; increase of currency, 54, 55 ; value in currency, 202. McCulloch J. R. Quotation, 52 ; effect of a change of con- tract, 116, 157 ; value of money, 201. Mason and Labor Increase in currency, 63. Morton O. P. How bonds should be paid. Marshall Chief Justice Effects of less currency, 149, 150. Minot Cause of public disorder, 151. Monetary Systems The curse of, 227. Money Does not purchase products, example, 22 ; money levels up bargains, 23 ; money not used up in speculation, 24 ; money is inert matter, men gather, it etc., 25 ; under a firm system, 28 ; quantity limited without cost of pro- duction considered, 28 ; how limited, 29 ; medium of exchange, measure of value for exchange, 30 ; creation of laws, substitutes for money, if money had purchasing power, 31 ; money of to-day, no matter what is used, the amount governs everything else, 32 ; money of the Roman empire at the Christian era and at end of the Dark Ages, 33 ; ruinous effects of decreasing money, disasters of the Dark Ages, symptoms of like character in 1809, money the instrument of association, etc., 34 ; money increased in value 145 per cent between 1809 and 1848, 35 ; shrinking money volume enforces idleness, volume of money keep- 270 PHILOSOPHY OF PRICE. ing pace with population and business, etc,., 36 ; how it should increase or decrease, 37 ; quantity can not be con- trolled arbitrarily etc., decreasing volume of money increases the value of each unit, 38, 39 ; increased value of money discussed, 42 ; quantity of money discussed, 45, 46, 47 ; hoarded money, its effects, 47 ; money functions, 171, 172 ; money-capital, the wage fund, etc., 99 ; metallic money an unfair measure of value, 172 ; paper money as a measure of value, 172 ; money, from Bryant, 172 ; paper money and its relation to foreign trade, 179, 180, 181 : money measurement compared to the yard-stick, 190 ; money ideas of gold and silver the same as in the time of Abraham, 198, 199; money value considered 199 ; how increased, 199, 200 ; Intrinsic value in money, 200. National Degradation or Civilization, 21 ; national debt in 1866 etc., 107 ; national bonds sold, 107 ; New York Tribune Statement of comparative prices of 200 articles with table, 157, 158, 159. North British Review Yalue in money, 208. Overproduction Means a surplus of success, overproduction of wheat brings hunger, 14 ; ignorance regarding overproduc- tion 35 ; overproduction explained fully, 161. Otto, French Master Effect of less money,' 149. Price Theory of, 10 ; how determined, 11 ; what it is, cause for differences in price, 12 ; price of labor governs, etc., 21 ; dictator of civilization, the value put upon labor, etc., 25 ; is the expression in money terms, market price, 27 ; dependence upon currency, volume of currency indicates purchasable amount, 30; rise and fall of prices, reasons for, with increasing prices come more labor and better times, etc., 33; prices fell 60 per cent between 1809 and 1848, discontent in England and on the continent in conse- quence of falling prices, they compel capital to avoid en- terprises, 35 ; steady prices insures labor to all, etc., 36 ; gives justice to debtor and creditor, keeps up the dis- tinction between a deed and a mortgage, 37; price de- creases with the volume of currency, 39 ; effects of falling prices in the United States, on mining and railroads, 40 ; on farms and securities, 41 ; prices have fallen since 1873, 64 ; change in amount or value of money changes the price, 73 ; every general fall in price the result of a decreasing currency, 97 ; falling prices a reason for not in- INDEX. 271 vesting in business, 99 ; falling prices compel capital to withdraw from production, 99 ; explanation of how an in- crease and decrease of money increases or diminishes the price, 86, 101, 102 ; rock bottom prices the result, 163.' Pierpont Edwards Payment of bonds, 127 Political Economists 13. Perry Professor Increase of currency, 60, Price Prof. Bonomy Power of money, 77 ; vame of money, 201. Peel Sir Robert Contracts and currency, 93. Public Credit Strengthening Act 110 ;' effect of 128. Panic of 1847 in England 86. Patterson Prof. Value in Currency, 204, 205. Protection to home industry defined, 209, 210,[211; protection, and the conditions following, 211, 212 ; nrotection and its relation to emigration and currency supply, 211, 212 ; protection and pauper labor, 212, 2l3 ; protection and contraction, 213, 214 ; effects of low prices on the moral and material interests, 225. QUOTATIONS Allison Historian 66, 72, 75, 76, 85, 86, 153. American Review 52, 92, 93. Aristotle 196. Bancroft Historian 147, 148. Bayard Senator 113. Beck Senator 130, 131, 132, 133. Belknap Historian 148, 149. Blake Mr. 92. Bodin 32. Bowen Francis 57, 58. Bryant 76, 172, 173, 174. Bullion Report to Parliament 203, 204. Burke 147. Carey Henry C. 66, -67, 72, 94. Carey Matthew 149. Cazalet Edward 84. Chase Solon 95. Chevelier Prof. 60, 104. Clay Henry 68, 69, 70, 71, 151. Congress Acts of 110, 124, 125, 126, 127, 128, 140, 212, 213. Copernicus 74. Crawford Win. II. 51. 272 PHILOSOPHY OF PRIEC Davis Garrett 113. Doubleday Historian 73, 74, 156. Ewing Thomas 156. Fanchet Leon 53. Fawcett 64, 65. Gallatin Albert 76, 201. Gibbs II. H. 129. Gordon General and Senator 154, 155, 156. Goschen Hon. Geo. 81, 82, 83, 84. Grant President 119. Hamilton Alexander 84, Hooton Mr. 62. Hume David 51, 59. Humboldt 76, 201. Hunter K. M. T. 51. Jacob Mr. 61, 74, 75. Jefferson Thomas 177, 178. Jerons W. J. 55, 56, 57, 201, 202. Kellogg Mr. 219. Law John 202. Laveleye Prof. 53, 201. Levi Prof. 169. Linderman Dr. 64. Locke John 93. London Economist 100, 194. London Times 152. Marshall Chief Justice 149, 150. Mason & Lailor 63. McCulloch 52, 116, 156, 157, 201. Mill John Stuart 15, 54, 55, 59, 202. Minot Historian 150, 151. Morris James 87. Morton O. P. 114. New York Tribune 121, 158, 159, 160. North British Review 208. Otto, French Minister-149. Palmer John M. 87. Patterson Mr. 204, 205. Peel Sir Robert 63. Perry A. L. 60, 63. Pierpont Edwards 127. Prescott Henry J. 87, 88. Price Bonoinv 77. 201. INDEX. 273 Eicardo 55, 58, 201. Kothschild Baron 53. Sealy Mr. 88, 89. Seyd Earnest 52, 91, 92. Shellabarger Mr. 219. Silver Commission 33, 34, 35, 117, 118, 179, 180, 181, 182. Sherman John 111, 112. Smith Adam 54, 203. Soetbeer Dr. 77. Stevens Thaddeus 114. Sullivan Sir E. 65. Sumner W. G. 68. Supreme Court Decision 134, 135, 136, 137. Syme Prof. 64. Thompson Prof. 58, 203. Tooke Thomas 59. Wade Hon. B. F. 112, 113 Walker T. A. 61, 62, 63. Way land Francis 57. Weller Hon. L. H. 221, 222 Wolowsld M. 53. Rothschild Baron Quotation, 53. Ricardo Increase of currency, 55 ; value of money, 201. Resumption Act Bill, etc. 117; result of specie resump- tion, 120. Resolutions 1878, declaring the bonds payable in silver, 127. Railroads in excess 162; money sunk in railroads, 162. Smith Adam Double value, use and exchange, 10 ; increase of currency, 54 ; value of currency, 202. Seyd Ernest Quotation, 52 ; on price, 92. Syme Prof. Increase of currency, 64. Sullivan Sir Edward Increase of currency, 65. Sumner W. G. Increase of currency, 66. Soetbeer Dr. Value of money, 77. Sealy M., of England Bank of England, power, etc., 88, 89. Supply and demand Theory of, 13; dangerous doctrine, 14; does not establish price, 15 ; example, 16. Securities How affected by falling prices ; personal property securities not available ; what is, 41. Silver coinage and its effect 227, 228. Standard of value and payment explained 229, 230. 274 PHILOSOPHY OF PRICE. Silver Commission Keport Quotation 33 ; effect of resumption, 117, 118. Sherman On the kind of money with which to pay 5-20 bonds, 111, 112 ; agent, 169. Stevens Thaddeus How the bonds should be paid. Silver dollar dropped and silver demonetized 116. Silver remonetized 120 ; silver certificates, 121. New York Tribune on the same 127. Supreme Court legal tender decision 134, 135, 136, 137. Speculation and price 163. Standard of payment 166. Shellabarger on money loans 219. Thompson Professor Increase of currency, 58, 59; value in currency, 203. Theories for currency evils 98. Table Amount of currency, 1866 and 1886, 139. Table Average circulation per capita, from 1866 to 1886, 139. Table Showing failures from 1866 to 1886, 141. Table Proving the debt larger than when first made, 144. Tables Of Gen. Gordon, relating to contraction, 154, 155. Table Showing good and bad times, and amount of currency, 157. Table Of ISTew York Tribune, showing comparison of prices for more than 200 articles ; rise of gold proven, 159. Taxation A basis for currency, 177. Trade relations with other nations 179. Value An element in exchange ; exchange not an element of value, 10; value basis of industrial activity; two ele- ments to value, utility and scarcity; value in use and in exchange ; intrinsic value ; commercial value, 11 ; com- mercial value fluctuates, intrinsic never, 12 ; commercial value fixed, 16 ; high commercial value a gauge of civiliza- tion, 17 ; value of each unit, 26, 28 ; of money how meas- ured, 29 ; value of paper money, 165 ; values of metal money how it changes, 200, 201 ; value of gold and silver changing, table, 205, 206 ; values changed with each other, 206 ; value established of quantity, 206, 207 ; value, how measured, 206, 207 ; what the measure must be, 208 ; shrinkage of values discussed, 228 ; standard of value ex- plained, 228, 229, 230; standard of payment explained, 229, 230 ; what value is, 229, 230 ; labor value discussed, 233, 234, 235. INDEX. 275 I Von Barr Evils of demonetizing silver in Germany, 86. Vanderbilt and the paupers 103. Wealth Visible and invisible, 19 ; how wealth is produced, 19, 20 ; wealth, its just distribution discussed, 230 ; wealth, there should be a limit, 230, 231 ; wealth in large amounts not beneficial, 231. Wages Are reduced how, 24. Wolowski M. Quotation, 53. Wayland Francis increase of currency, 57. Walker Francis A. increasing currency, 61, 62. Williamson Stephen from his work " bad trade and its caus- es," effects of currency on price, 89, 90. 91. Wade Hon. B. F. kind of money to pay 5-20 bonds. Weller Hon. L. H. formula for better times, 220. RETURN CIRCULATION DEPARTMENT 202 Main Library LOAN PERIOD 1 wfl 2 "3 HOME USE ' 4 1 5 6 j ALL BOOKS MAY BE RECALLED AFTER 7 DAYS Renewals and Recharges may be made 4 days prior to the due date. Books may be Renewed by calling 642-3405. DUE AS STAMPED BELOW 1 NOV 1 6 1991 I 1 j ^1 m is i 1 i UNIVERSITY OF CALIFORNIA, BERKELEY FORM NO. DD6 BERKELEY, CA 94720