SILVER AND BIMETALLISM
I was compelled, by the state of my health, to be absent
from the country in the campaign which preceded the Presidential
election of 1896, except for the last week or two. But, of
course, I took a very deep interest indeed in the campaign.
Mr. Bryan's theories, and those of his followers in many parts
of the country, had thoroughly alarmed the business men of
the Northern and Eastern States. But in the new States of
the Northwest, especially in those that contained silver mines,
a large majority of the people, without distinction of party,
had become converts to the doctrine that the United States
should coin silver at a ratio compared to gold of sixteen
to one, and make the silver so coined legal tender in the
payment of all debts, public and private. The price of silver
as compared with that of gold had been constantly falling
for several years past. This was attributed to the effect
of the legislation which demonetized silver except to a limited
amount. Several eminent Republicans, both in the Senate and
in the House, as well as many others in private station, left
the Republican Party on that issue. Several States that had
been constantly and reliably Republican became Democratic
or Populist, under the same influence.
The Democratic Platform of 1896 demanded the immediate restoration
of the free coinage of gold and silver at the present ratio
of 16 to 1, without waiting for the consent of any other nation.
That doctrine was reaffirmed and endorsed in the Democratic
National Platform for 1900.
There were two theories among the persons who desired to maintain
the gold standard. One was entertained by the persons known
as Gold Monometallists. They insisted that no value could
be given to any commodity by legislation. They said that
nothing could restore silver to its old value as compared
with gold; that its fall was owing to natural causes, chiefly
to the increased production. They insisted that every attempt
to restore silver to its old place would be futile, and that
the promise to make the attempt, under any circumstances,
was juggling with the people, from which nothing but disaster
and shame would follow. They justly maintained that, if we
undertook the unlimited coinage of silver, and to make it
legal tender, under the inevitable law long ago announced
by Gresham, the cheaper metal, silver, would flow into the
country where it would have a larger value for the purpose
of paying debts, and that gold, the more precious metal, would
desert the country where there would be no use found for it
as long as the cheaper metal would perform its function according
to law. From this, it was claimed, would follow the making
of silver the exclusive basis of all commercial transactions;
the disturbance of our commercial relations with other countries,
and the establishment of a standard of value which would fluctuate
and shrink as the value of silver fluctuated and shrunk. So
that no man who contracted a debt on time could tell what
would be the value of the coin he would be compelled to pay
when his debt became due, and all business on earth would
become gambling. They, therefore, demanded that the Republican
Party should plant itself squarely on the gold standard; should
announce its purpose to make gold the exclusive legal tender
for the country, and appeal to the people for support in the
Presidential election, standing on that ground.
To them their antagonists answered, that the true law was
stated by Alexander Hamilton in his famous Report, accepted
by all his contemporaries, and by all our statesmen of all
parties down to 1873 or thereabouts, and recognised in the
Constitution of the United States. That doctrine was, that
the standard of value must necessarily be fixed by the agreement
of all commercial nations. No nation could, without infinite
suffering and mischief, undertake to set itself against the
rule adopted by the rest of mankind. It was best, if the
nations would consent to it, to have two metals instead of
one made legal tender, at a ratio to be agreed upon by all
mankind, establishing what was called Bimetallism. If this
were done, the Gresham law could not operate, because there
would be no occasion for the cheaper metal to flow into any
one country by reason of its having a preference there in
the payment of debts; and nothing which would cause the more
precious metal to depart from any country by reason of its
being at a disadvantage. If such a rule were adopted, and
a proper ratio once established, it would be pretty likely
to continue, unless there were a very large increase in the
production of one metal or the other. If the supply of gold
in proportion to silver were diminished a little, the corresponding
demand for silver by all mankind would bring up its price
and cure the inequality. So, if the supply of gold were to
increase in proportion to silver, a like effect would take
place.
If, however, the nations of the world were to agree on one
metal alone, it was best that the most precious metal should
be taken for that purpose.
The above, in substance, was the doctrine of Alexander Hamilton,
the ablest practical financier and economist that ever lived,
certainly without a rival in this country.
The duties specially assigned to me in the Senate and in
the House related to other matters. But I made as thorough
and faithful a study as I could of this great question, and
accepted Hamilton's conclusions. I believed they were right
in themselves, and thought the reasons by which they were
supported, although the subject is complex and difficult,
likely to find favor with the American people. Silver has
always been a favorite metal with mankind from the beginning.
While gold may be the standard of value, it is too precious
to be a convenient medium of payment for small sums, such
as enter into the daily transactions of ordinary life. It
is said that you can no more have a double standard, or two
measures of value, than you can have a double standard, or
two measures of distance. But the compensating effect may
be well illustrated by what is done by the makers of clocks
for the most delicate measurements of time, such as are used
for astronomical calculations. The accuracy of the clock
depends upon the length of the pendulum and the weight which
the pendulum supports. If the disk at the end of the pendulum
be humg by a wire of a single metal, that metal expands and
shrinks in length under changing atmospheric influences, and
affects the clock's record of time. So the makers of these
clocks resort to two or three wires of different metals, differently
affected by the atmosphere. One of these compensates for
and supplements the other, so that the atmospheric changes
have much less effect than upon a single metal.
Beside the fact that I thoroughly believed in the soundness
of bimetallism, as I now believe in it, I thought we ought
not to give our antagonists who were pressing us so hard,
and appealing so zealously to every debtor and every man in
pecuniary difficulties, the advantage, in debate before the
people, of arraying on their side all our great authorities
of the past. We had enough on our hands to encounter Mr.
Bryan and the solid South and the powerful Democratic Party
of New York and the other great cities, and every man in the
country who was uneasy and discontented, without giving them
the right to claim as their allies Alexander Hamilton, and
George Washington, and Oliver Ellsworth, and John C. Calhoun,
and Daniel Webster, and Henry Clay, and Thomas H. Benton.
I was, therefore, eager that the Republican Party should state
frankly in its platform what I, myself, deemed the sound doctrine.
It should denounce and condemn the attempt to establish the
free coinage of silver by the power of the United States
alone, and declare that to be practical repudiation and national
ruin. But I thought we ought also to declare our willingness,
if the great commercial nations of the earth would agree,
to establish a bimetallic system on a ratio to be agreed upon.
Some of the enemies of the Republican Party, who could not
adopt the Democratic plan for the free coinage of silver,
without contradicting all their utterances in the past, denounced
this proposal as a subterfuge, a straddle, an attempt to deceive
the people and get votes by pledges not meant to be carried
out.
I believed then, and I believe now, that we were right in
demanding that the Republican Party should go into the campaign
with the declaration I have stated.
It is true that you cannot give value to any commodity by
law. It is as idle to attempt to make an ounce of silver
worth as much as an ounce of gold by legislation, as it is to
try to make one pound weigh two pounds, or one yard measure
two yards. You cannot increase the price of a hat, or a coat,
or a farm, by act of Congress. The value of every article,
whether gold or silver, whether used as money or as merchandise,
must depend upon the inexorable law of demand and supply.
But you can, by legislation, compel the use of an article,
which use will create a demand for it, and the demand will
then increase its price. If Congress shall require that every
soldier in the United States Army shall wear a hat or coat
of a particular material or pattern, or shall enact that every
man who votes shall come to the polls dressed in broadcloth,
if there be a limited supply of these commodities, the price
of the hat or the coat or the broadcloth will go up. So,
when the nations of the world joined in depriving silver of
one of its chief uses--that of serving the function of a tender
for the payment of debts, the value of silver diminished because
one large use which it had served before was gone. Whether
this doctrine be sound or no, it was the result of as careful
study as I ever gave in my life, to any subject, public or
private. It was not only the doctrine of the Fathers, but
of recent generations. It was the doctrine on which the Republicans
of Massachusetts, a community noted for its conservatism and
business sagacity, had planted the Commonwealth, and it was
the doctrine on which the American people planted itself and
which triumphed in the election of 1896.
I have been accused, sometimes, of want of sincerity, and,
by one leading New England paper, with having an imperfect
and confused understanding of the subject. Perhaps I may
be pardoned, therefore, for quoting two testimonials to the
value of my personal contribution to this debate. One came
from Senator Clay of Georgia, one of the ablest of the Democratic
leaders. After I had stated my doctrine in a brief speech
in the Senate one day, he crossed the chamber and said to
me that, while he did not accept it, he thought I had made
the ablest and most powerful statement of it he had ever heard
or read. The other came from Charles Emory Smith, afterward
a member of President McKinley's Cabinet and editor of the
_Press,_ a leading paper in Philadelphia. I have his letter
in which he says that he think an edition of at least a million
copies of my speech on gold and silver should be published
and circulated through the country. He also said, in an article
in the _Saturday Evening Post,_ June 14, 1902:
"In the great contest over the repeal of the Silver Purchase
Act he made the most luminous exposition, both of what had
been done, and the reasons for it; and what ought to be done,
and the grounds for it, that was heard in the Senate."
It occurred to me that I could render a very great service
to my country, during my absence, if I could be instrumental
in getting a declaration from England and France that those
countries would join with the United States in an attempt
to reestablish silver as a legal tender.
It was well known that Mr. Balfour, Leader of the Administration
in the House of Commons, was an earnest bimetallist. He had
so declared himself in public, both in the House and elsewhere,
more than once.
There had been a resolution, not long before, signed by more
than two thirds of the French Chamber of Deputies, declaring
that France was ready to take a similar action whenever England
would move. I, accordingly, with the intervention of Mr.
Frewen, the English friend I have just mentioned, arranged
an interview with Mr. Balfour in Downing Street. We had a
very pleasant conversation indeed. I told him that if he
were willing, in case the United States, with France and Germany
and some of the smaller nations, would establish a common
standard for gold and silver, to declare that the step would
have the approval of England, and that, although she would
maintain the gold standard alone for domestic purposes, she
would make a substantial and most important contribution to
the success of the joint undertaking, that it would insure
the defeat of the project for silver monometallism, from which
England, who was so largely our creditor, would suffer, in
the beginning almost as much as we would, and perhaps much
more, and would avert the panic and confusion in the business
of the world, which would be brought about by the success
of the project.
I did not state to Mr. Balfour exactly what I thought the
contribution of England to this result ought to be. He, on
the other hand, did not tell me what he thought she would
do. I did not, of course, expect that England would establish
the free coinage of silver for her own domestic purposes.
But I thought it quite likely that she would declare her cordial
approval of the proposed arrangement between the other countries,
and would reopen her India mints to the free coinage of the
rupee, and maintain the silver standard for the Queen's three
hundred million subjects in Asia. This contribution, I thought,
if Great Britain went no farther, would give great support
to silver, and would ensure the success of the concerted attempt
of the other commercial nations to restore silver to its old
place.
Mr. Balfour expressed his assent to my proposal, and entered
heartily into the scheme. He said he would be very happy
indeed to make such a declaration. I suggested to him that
I had been authorized to say, by one or two gentlemen with
whom I had talked, that, if he were willing, a deputation
of the friends of Bimetallism would wait upon him, to whom
he could express his opinion and purpose. He said he thought
it would be better that he should write a letter to me, and
that if I would write to him stating what I had said orally,
he would answer it with such a statement as I desired. I
told him I was going to Paris in a few days, and that I would
write to him from Paris when I got there. The matter was
left in that way. The next day, or the next day but one,
a luncheon was given me at White's, the club famous for its
memories of Pitt and Canning and the old statesmen of that
time, and still the resort of many of the Conservative leaders
of to-day. There were present some fifteen or twenty gentlemen,
including several members of the Government. A gentleman
who had known of my interview with Mr. Balfour, and sat at
the table some distance from me, made some allusion to it
which was heard by most of the guests. I said that I did
not like to repeat what Mr. Balfour had said; that gentlemen
in his position preferred, if their opinions were to be made
public, to do it for themselves, rather than to have anybody
else do it for them. To this, one member of the Government--
I think it was Sir Michael Hicks-Beach, but I will not undertake
to be sure--said: "It is no secret that Mr. Balfour's opinions
are those of a majority of Her Majesty's Government."
I went to Paris, and wrote at once the letter that had been
agreed upon, of which I have in my possession a copy. I
at once secured an introduction to M. Fougirot, the Member
of the French Assembly who had drawn and procured the signatures
to the resolution to which I just referred. That is, I am
told, a not uncommon way in France of declaring the sense
of the House in anticipation of a more formal vote. He entered
heartily into the plan. He thought Germany would at once
agree, at any rate, he was sure that Belgium, Spain, Italy
and all the European commercial powers would come into the
arrangement, and that the whole thing would be absolutely
sure if Great Britain were to agree. I waited a week or two
for the letter from Mr. Balfour. In the meantime I got a
letter from Mr. Frewen, who told me that Mr. Balfour had
shown him the letter he had written to me; that it was admirable,
and eminently satisfactory. But no letter came. I waited
another week or two, and then got another letter from Mr.
Frewen, in which he said that he had taken no copy of Mr.
Balfour's letter, and had returned the original, and asked
me, if I had no objection, if I would give him a copy of it.
I answered that I had heard nothing, whereupon Mr. Frewen
wrote a note to Mr. Balfour, telling him that I had not heard.
Mr. Balfour said that he had, after writing the letter, submitted
it to a meeting of his colleagues; that one of them had expressed
his most emphatic disapproval of the plan, and that he did
not feel warranted in taking such a step against the objection
of one of his colleagues. I gathered, from what I heard afterward,
that Mr. Balfour wished he had sent he letter without communicating
its contents. But of this I have no right to be sure. Mr.
Balfour sent Mr. Frewen the following letter, which is now
in my possession. It was, I suppose with his approval, sent
to me.
10 DOWNING STREET, WHITEHALL, S. W.
August 6, 1896.
DEAR MORETON FREWEN.
I think Senator Hoar has just reason to complain of my long
silence. But, the truth is that I was unwilling to tell
him that my hopes of sending him a letter for publication
had come to an end, until I was really certain that this was
the case. I am afraid however that even if I am able now
to overcome the objections of my colleagues, the letter itself
would be too late to do much good. Please let me know what
you think on this subject.
Yours sincerely,
ARTHUR JAMES BALFOUR.
I never blamed him. He was in the midst of a good deal of
difficulty with his Education Bill. Certainly there can
be no obligation on the Leader of the English House of Commons
to do anything that he is not sure is for the interests of
his own country, or his own party, for the sake of benefitting
a foreign country, still less for the sake of affecting its
politics. Indeed, I suppose Mr. Balfour would have utterly
and very rightfully disclaimed any idea of writing such a
letter, unless he thought what was proposed would benefit
England. When I went back to London, an offer was made me
later to arrange another interview with Mr. Balfour, and
see if something else could not be devised. This I declined.
I thought I had gone as far as I properly could, with a due
sense of my own dignity. The exigency at home had pretty
much passed by.
A day or two after I got to Paris, after I had seen M. Fougirot,
I cabled my colleague, Mr. Lodge, at St. Louis, where the
delegates to the convention to nominate a President were then
gathering, stating my hope that our convention would insert
in its platform a declaration of the purpose of the Republican
Party to obtain, in concert with other nations, the restoration
of silver as a legal tender in company with gold, and that
I had reason to feel sure that such a plan could be accomplished.
This cable reached St. Louis on the morning the convention
assembled. I do not know how much influence it had, or whether
it had any, in causing the insertion of that plank in the
platform. Such a plank was inserted. In my opinion it saved
the Presidential election, and, in my opinion, in saving the
Presidential election, it saved the country from the incalculable
evil of the free coinage of silver.
After I came home, at the next winter's session, I told the
story of what I had done, to a caucus of the Republican Senators.
A Committee was thereupon appointed by John Sherman, President
of the Caucus, to devise proper means for keeping the pledge
of the National platform and establishing international bimetallism
in concurrence with other nations. The Committee consisted
of Messrs. Wolcott, Hoar, Chandler, Carter and Gear. They
reported the Act of March 3, 1897, authorizing a commission
to visit Europe for that purpose, of which Senator Wolcott
was chairman.
A Commission was sent abroad by President McKinley, in pursuance
of the pledge of the Republican National platform, to endeavor
to effect an arrangement with the leading European nations
for an international bimetallic standard. Senator Wolcott
of Colorado, who was the head of this Commission, told me
he was emboldened to undertake it by the account I had given.
The Commission met with little success. I conjecture that
the English Administration, although a majority of the Government,
and probably a majority of the Conservative Party, were Bimetallists
and favored an international arrangement on principle, did
not like to disturb existing conditions at the risk of offending
the banking interests at London, especially those which had
charge of the enormous foreign investments, the value of
which would be constantly increasing so long as their debts
were payable, principal and interest, in gold, the value of
which, also, was steadily appreciating.
It has been the fashion of some quite zealous--I will not
say presumptuous, still less ignorant or shallow writers on
this subject--to charge bimetallists with catering to a mischievous,
popular delusion, for political purposes, or with shallowness
in thinking or investigating. I have had my share of such
criticism. All I have to say in reply to it is that I have
done my best to get at the truth, without, so far as I am
concerned, any desire except to get at and utter the truth.
In addition to the authority of our own early statesmen,
and to that of the eminent Englishmen to whom I have referred,
I wish to cite that of my pupil and dear friend, General Francis
A. Walker, who is declared by abundant European, as well as
American authority, to be the foremost writer on money of
modern times. He was a thorough believer in the doctrine
I have stated.
He pointed out the danger, indeed the ruin, of undertaking
to reestablish silver without the consent of foreign nations.
But he declared that the happiness and, perhaps, the safety
of the country rested on Bimetallism. He said:
"Indeed, every monometallist ought also to be a monoculist.
Polyphemus, the old Cyclops, would be his ideal. Unfortunately
our philosophers were not in the Garden of Eden at the time
when the Creator made the mistake of endowing men with eyes
in pairs. Perhaps it would not be too much to say that there
are probably few men whose eyes do not differ from each other
as to every element affecting vision by more than the degree
from which gold and silver varied from the French standard
of fifteen and a half to one for whole decades."
The German Imperial Parliament passed a resolution, in June,
1895, in favor of Bimetallism, and the Prussian Parliament
passed a resolution favoring an international bimetallic convention,
provided England joined it, May 22, 1895.
The great increase in the gold product of the world, and
the constant diminution in the value of silver, have put an
end to the danger of the movement for the free coinage of
silver, and made the question purely academic or theoretic,
at any rate for a good while to come. The same causes have
diminished the desire for a bimetallic standard, and make
the difficulty of establishing a parity between silver and
gold, for the present, almost insuperable. So the question
which excited so much public feeling throughout the world
for nearly a quarter of a century, and endangered not only
the ascendancy of the Republican Party, but the financial
strength of the United States, has become almost wholly one
of theory and ancient history.
After leaving Paris I spent a few delightful weeks at Innsbruck
in Austria, and Reichenhall in Germany, both near the frontier
between those two countries. The wonderful scenery and the
curious architecture and antiquity of those towns transport
one back to the Middle Ages. But I suppose they are too well
known now, to our many travellers, to make it worth while
to describe them. I went to those places for the health of
a lady nearly allied to my household. She was under the care
of Baron Liebig, one of the most famous physicians in Germany,
the son of the great chemist. I got quite well acquainted
with him. He was a very interesting man. He had a peculiar
method of dealing with the diseases of the throat and lungs
like those under which my sister-in-law suffered. He had
several large oval apartments, air-tight, with an inner wall
made of porcelain, like that used for an ordinary vase or
pitcher. From these he excluded all the air of the atmosphere,
and supplied its place with an artificial air made for the
purpose. The patients were put in there, remaining an hour
and three quarters or two hours each day--I do not know but
some of them for a longer time. Then they were directed to
take long walks, increasing them in length day by day, a considerable
part of the walk being up a steep hill or mountain. I believe
his method was of very great value to the patient who was
in my company. The Baron thought he could effect a complete
cure if she could stay with him several months. But that
was impossible.