silver when her Emperor rashly provoked the war with Germany; her expenses
were enormously increased, and she had to pay, in addition, a fine of
nearly $1,000,000,000. She paid it with a rapidity that amazed the world,
but in her hour of weakness she consented to gold monometallism. She had
become a creditor nation, and could endure the new system better than any
other, except Great Britain; nevertheless, she has suffered. Her exports
had steadily increased during all her years of bimetallism, and never so
fast as during the very years in which she was exporting silver so heavily
because of the influence of cheap gold. The very year of demonetization
her exports began to decline, and but once since have they reached the old
figures.
The statistics are fearfully suggestive. In 1840 her exports were valued
at $202,231,000, and her imports at $210,413,000; in 1873 her exports were
$964,465,000, and her imports $915,285,000, and in only six of the years
after she began to be "flooded with cheap gold" did her imports exceed her
exports. In 1874 her exports began to decline, and ran rapidly down to
$822,360,000 in 1878; and 1890 is the only year since demonetization in
which they reached the figures of 1873, being $968,030,000. On the other
hand, her imports have steadily outrun her exports until the excess has
been as high as $300,000,000 in one year (1880), and has only once since
(1885) been as low as $100,000,000. Here, then, are the points
demonstrated by France's official figures:
During seventy years of bimetallism she gained steadily and rapidly in
wealth, her exports increasing much faster than her population.
During the eight years (1853-60) in which she was "ruined by cheap gold,"
importing 3,082,000,000 francs of it and exporting 1,465,000,000 francs of
silver, a bullion operation to the amount of $909,000,000, she increased
her exports most rapidly and with no corresponding increase in imports.
During the twenty years following demonetization her exports have been
stationary or declining, being $99,000,000 less in 1893 than in 1873,
while her imports have increased.
Let us turn for a moment and trace the effects of monometallism in England
as compared with bimetallism in France during the same period.
England had in 1816, when she adopted gold monometallism, about
$10,000,000,000 in property and had in 1873 about $40,000,000,000. In 1816
she had about 18,000,000 people and in 1873 about 32,000,000; her per
capita wealth, therefore, in 1816 was $555, and in 1873 $1,250, or 2-1/5
times as much. In 1803 the property of France was valued at
$8,000,000,000, and in 1873 at about $40,000,000,000; in the former year
she had 29,000,000 people, and in the latter a little over 36,000,000. Her
per capita wealth, therefore, in 1803 was $276, and $1,081 in 1873, or
very nearly four times as much.
Thus, despite the immeasurable advantages which England enjoyed,
political, social, and industrial, her great colonial possessions from
which she drew enormous wealth, and her exemption from destructive war;
despite also the distressing condition of France and her recent enormous
losses, we find that in seventy years of bimetallism the working Frenchman
had gained wealth almost twice as fast as the working Englishman had in
the same number of years of monometallism.
France became a creditor nation, and yielded to the general pressure for a
single gold standard; she has lost heavily, as shown in her table of
exports, but she still retains a large part of the momentum acquired
during seventy years of bimetallism. Her wealth is still rated at
something over $40,000,000,000; her people have accumulated stocks of the
precious metals far in excess of those of any other country; and their
business is so solidly founded that the storm which recently shook the
foundations of credit throughout the British Empire scarcely produced a
quiver in France. They have wisely avoided the excessive issues of faith
money (or check money) which are the ever-present danger of England,
America, and other monometallic countries; and as a result, they have
almost entirely escaped those fearful convulsions have that threatened the
political stability of great nations. In fact, it is no exaggeration to
say that France has only felt the convulsions of recent years by their
reflex action on her from other countries; and twice within very recent
years has the Bank of England been compelled to go to France for the coin
to stay the devastating work of panics resulting from over-expansion of
faith money on an insufficient metallic basis.
France has an area less than that of Texas by some 60,000 square miles,
yet its aggregate wealth is two-thirds that of the United States; and on
the basis of assessed value her agricultural wealth is very much greater
than ours. Mulhall, the great British statistician, says of France that
she is "the best cultivated country in Europe." Her 6,000,000 peasant
proprietors are the owners of nearly all her cultivatable soil, which is
worth, on an average, $160 per acre. She has over 400,000 miles of the
finest common roads in the world, which have cost her, at the ordinary
rate of labor, over $5,000,000,000. Their benefit goes chiefly to
agriculture, binding the farmers of different provinces and farmers and
city dwellers together. She has over 10,000 miles of canals and canalized
rivers; she has 25,000 miles of railways, all in the highest state of
efficiency. She has, during her bimetallic period, become the second
colonial power of the world, and has acquired foreign territory at such a
rate as to excite the jealousy of England. She has become the second naval
power on the globe, and the second exporting nation, her exports averaging
some $900,000,000 per year, an amount larger than the exports from this
country, which has a population nearly double that of France, nearly all
of it being manufactures; and had the same rate of growth continued as was
maintained before France became monometallic, it is fair to presume that
her exports at this time would have equalled those of Great Britain. Best
of all, the great increase of wealth is in the hands of those who created
it. It is the universal testimony of all observers that the condition of
the French people and the general aspect of France has steadily improved
throughout this century. It is a country in which poor-houses are unknown;
in her cities a beggar is a curiosity. In their country's emergency the
common people came forward and out of their savings paid $1,000,000,000
accumulated during the bimetallic period. Despite the loss of $240,000,000
in the Panama Canal and of $1,000,000,000 in the indemnity to Germany, as
well as two of her richest provinces, France has accumulated hundreds of
millions of dollars in the securities of other countries, and has only
recently been able to subscribe twenty-five times over the Russian loan,
and is negotiating a loan to China, the money for which is to be supplied
by her working people.
Be it noted also that the debt of France is held by the people of France,
largely by the industrial class, and especially by the agricultural class,
and the interest thereon paid, instead of being a foreign drain, is a
perpetual renewal of the current circulation.
One more brief contrast between France and England. No reader of current
literature need be told of the appalling prevalence of poverty in Great
Britain. As France is a country without poor-houses, so it may be said
that England is a land of poor rates and poor unions. The latest official
announcement is that the agricultural interest is declining more rapidly
than ever before; and in regions where only fifteen years ago the land
rented readily at several pounds per acre, statesmen and economists are
appalled at the sight of that which so alarmed our New England people a
few years ago: the phenomenon of abandoned farms. We are told that there
is a revival of industry because British capitalists have withdrawn their
money from other countries and will put it in anything rather than have it
entirely idle; but the condition of agriculture steadily grows worse.
And have we anything to boast of in our own happy land in comparison with
France? Our natural resources so far exceed those of any old country that
a comparison would be ridiculous; and the monometallists tell us, when
they are trying to prove that gold is not enhanced in value, that, by
reason of inventions, a day's labor will produce at least twice as much as
in 1870, and in many lines a great deal more than twice as much. Why,
then, does not the laborer receive twice as much as he did in 1870? As
wages are labor's dividend of its own product, and as capital had its
dividend then as now, if a day's labor does not bring the laborer twice
what it did, he is wronged; and, considering our resources, if we are not
five times as well off as the French people, the only reason can be that
we have slighted our opportunities, and blundered most fearfully in our
management.
The monometallists profess to be great sticklers for experience and
demonstrated fact; to have a horror of "theory." We present them the
example of France as an unanswerable proof that one great nation can
maintain bimetallism, and that by maintaining it she escaped the worst
evils that have affected the monometallic countries, and assured for
herself an extraordinary progress and prosperity. We present them, in
contrast, the example of England, and point them especially to the great
difference in the progress of the common people of the two countries. We
ask them, with this experience, to consider the present condition of this
country, and the evils that have affected it since 1873, and seriously to
consider the question as to whether something is not radically wrong;
whether some malign influence has not gone between us and the reward of
our work, and robbed us of that to which we are honestly entitled.
BIMETALLISM ABROAD.
Many monometallists start with the assumption that what they call the
"silver craze" is a mere fad, temporary and local; that the advocates of
bimetallism are confined chiefly to the United States, and to the western
part of it, and that, if they are thoroughly defeated at the November
election, the discussion will be at an end.
"Mistaken souls that dream of heaven."
They do not realize that, although it has not taken the same popular form,
the discussion is quite as serious in monometallic Germany and England,
and in the latter country opinion has so far advanced that both parties
agree on the enormous enhancement in the value of gold. There is now
scarcely a difference of opinion in England on this point, but there is as
to the effect. British monometallists assert that as England is a great
creditor nation, the world owing her, as estimated, $12,000,000,000, every
advance in the purchasing power of money is greatly to her advantage. In
Mr. Gladstone's last public speech on the subject he stated that fact with
great frankness, claiming that it was to England's interest that money
should remain as now in purchasing power, and that if she should abandon
the gold basis, because gold is worth far more than it was a few years
ago, the world might applaud her generosity, but it would sneer at her
wisdom.
The bimetallists of England, on the other hand, assert that the enormous
losses of traders owing to the dislocation of the par with silver-using
countries, of manufacturers by reason of the rapidly increasing
competition of the same countries, of home debtors and of many other
classes, and especially the loss to agriculture, far outweigh any gain
made by the creditors as such.
The national debts of Europe now amount in round numbers to some
$22,000,000,000. Including all other countries, the total of national
debts exceeds $26,000,000,000, and the growth for many years averaged
$500,000,000 per year. The local public debts of England and Canada are
set at $1,735,000,000. According to the best authorities, the mortgage
indebtedness of the principal European nations is as follows:
For Great Britain and Ireland........ $8,000,000,000
For Germany.......................... 8,500,000,000
For France........................... 3,850,000,000
For Russia........................... 3,250,000,000
For Austria.......................... 1,500,000,000
For Italy............................ 2,675,000,000
And for all other European countries. 3,050,000,000
A total of nearly $31,000,000,000.
Hon. Samuel Smith, M. P., places the mortgages of England at something
over $2,000,000,000, which is more than half the value of the landed
property, and those of Scotland and Ireland (the latter one of the worst
mortgaged countries in the world) make up the grand total given above.
A highly suggestive fact is that, as experience develops the enormous
evils of the monometallic system, the number of conversions among
prominent men to bimetallism steadily increases, and they become more
outspoken and radical in their views.
At the Paris Monetary Conference of 1867, Mr. Mees, President of the Bank
of the Netherlands, protested against a single gold standard and foretold
literally what has followed. Two years later Baron Alphonse de Rothschild
said: "As a sequel we should have to demonetize silver completely. That
would be to destroy an enormous part of the world's capital; that would be
ruin."
At the conference of 1878, Mr. Henry Hucks Gibbs, director and former
governor of the Bank of England, was an advocate of the single gold
standard; but a few years' experience so completely changed his views that
he said: "Mr. Goschen and I were together in the conference in Paris; both
of us were sturdy defenders of gold monometallism; but I have changed my
mind. I do not say Mr. Goschen has changed his mind, but he has somewhat
modified it."
In the Paris Conference of 1878, Mr. Goschen said: "If other states were
to carry on a propaganda in favor of a gold standard and of the
demonetization of silver, the Indian Government would be obliged to
reconsider its position, and might be forced by events to take measures
similar to those taken elsewhere. In that case the scramble to get rid of
silver might provoke one of the gravest crises ever undergone by
commerce."
As it is the fashion of our monometallists to sneer at the possibility of
bimetallism, it may be well to quote here the report of the Royal
Commission on gold and silver, made in 1888. This commission was composed
of six monometallists and six bimetallists, but they assented unanimously
to this proposition:
"SECTION 107. We think that in any conditions fairly to be
contemplated in the future, so far as we can forecast them from
the experience of the past, a stable ratio might be maintained if
the nations we have alluded to (herein), the United Kingdom, the
United States, and the Latin Union, were to accept and strictly
adhere to bimetallism at the suggested ratio. We think that if in
all these countries gold and silver could be freely coined and
thus become exchangeable against commodities at the fixed ratio,
the market value of silver as measured by gold would conform to
that ratio and not vary to any considerable extent."
Mr. Leonard H. Courtney, one of the monometallist members of that
commission who signed the report, has since become an avowed bimetallist,
as have many other prominent Englishmen. Among them may be mentioned
Professor Alfred Marshall and Professor Sidgwick, of Cambridge University;
Professor Nicholson of Edinburgh; Professor H. S. Foxwell, Professor of
Political Economy in University College, London; Professor E. G. Gonner,
of Liverpool; Professor J. E. Munro, of Kings College, London; and many
others.
Mr. Courtney says, in his article in the _Nineteenth Century_, April,
1893: "Is it true that gold is this stable standard? I was one of the six
members of the Gold and Silver Commission who could not see their way
clear to recommend bimetallism, and reported: 'When we look at the
character and power of the fall in the price of commodities, we think that
the sounder view is that the greater part of the fall has resulted from
causes touching the commodities rather than from an appreciation or
increase in value of the standard,' In the same paragraph we had said: 'We
are far from denying that there may have been, and probably has been, some
appreciation in gold, though we may hold it impossible to determine its
extent.'" Now, then, he goes on to say: "Let me make a confession. I
hesitated a little about this paragraph. I thought there was perhaps more
in the suggestion of an appreciation of gold than my colleagues believed;
but while I thus doubted it, I did not dissent. I am now satisfied that
there has been an appreciation of gold greater than I anticipated when I
signed the report, and I should not be able to concur in that same
paragraph again. We have been passing through a period of an appreciation
of gold, and no one can tell how long it will last. This is a serious
matter. The pressure of all debts, private and public, has increased. The
situation is serious. It is a dream to suppose that gold is stable in
value. It is no more stable than silver. It has undergone a considerable
appreciation in recent years, and industry and commerce have been more
hampered by this movement than they would have been had silver been our
standard. Every step taken towards the further demonetization of silver
must tend to the enhancement of the value of gold. It is true that much
inconvenience is involved in the use of gold as a standard in some
countries, and of silver as a standard in others, with no link to check
their divergent relations; but the advantage of having the same monetary
standard throughout the world would be counterbalanced if we made gold
that universal basis and tied all the fortunes of the nations to it."
The bimetallic sentiment in England is not confined to the mere theorist
and doctrinaire or statesman, but is advocated by some of the ablest
journalists in the kingdom. Thus, the _Statist_, which undoubtedly ranks
in that country as the highest authority in financial and economic
matters, is quite as pronounced as Mr. Balfour and others in its views
upon the effect the demonetization of silver has had upon the value of
gold. In its issue of July 1, 1893, it says: "The new policy is likely to
intensify the appreciation of gold. One consequence of the further
appreciation of gold will be to intensify the agricultural depression all
over Europe. Most of the charges upon land having been fixed heretofore,
they will weigh more and more heavily upon land-owners as gold rises in
value. So, again, rents will become more onerous, and it will be found by
and by that the settlement of the last few years was only provisional, and
that a further reduction will become necessary. Also it is evident that
the burden of debt, not only upon individuals, but upon governments, will
be much increased. Everywhere the burden of debt will necessitate
increased taxation, and so will weigh very heavily upon the general
population."
Hon. Robert Giffen, the well-known chief of the statistical department of
the Board of Trade, London, was long known as the most determined and
uncompromising monometallist in England. In 1888 he read a paper before
the Royal Statistical Society, in which he showed that gold had notably
gone up in purchasing power; that the increase was continuous and likely
to continue, and that this was the true explanation of the fall in the
prices of commodities.
In a former paper read in 1879 he had predicted the rise in the purchasing
power of gold, and in his paper of 1888 he said: "If the test of prophecy
be the effect, there was never surely a better forecast. The fall of
prices in such a general way as to amount to what is known as rise in
purchasing power of gold is, I might almost say, universally admitted.
Measured by any commodity or group of commodities usually taken as the
measure for such a purpose, gold is undoubtedly possessed of more
purchasing power than was the case fifteen or twenty years ago, and this
high purchasing power has been continued over a long enough period to
allow for all minor oscillations."
In 1871, when the discussion may be said to have begun, the French
economist Ernest Seyd pointed out very plainly that the adoption of the
gold standard by Europe and the United States would lead to the
destruction of the monetary equilibrium hitherto existing, and then added
this singular prophecy: "The strong doctrinarianism existing in England as
regards the gold valuation is so blind that when the time of depression
sets in the economic authorities of that country will refuse to listen to
the cause here foreshadowed. Every possible attempt will be made to prove
that the decline of commerce is due to all sorts of causes and
irreconcilable matters. The workman and his strikes will be the first
convenient target; then speculating and over-trading will have their turn;
many other allegations will be made, totally irrelevant to the real issue,
but satisfactory to the moralizing tendency of financial writers."
How literally has that been fulfilled in our sight. At this very time, the
monometallists of the United States are pointing to all sorts of causes
and irreconcilable matters to explain the ruinous fall in prices. They not
only allege all the causes here assigned, but many more peculiar to this
country; and, after the fashion of all who oppose any reform in the
interests of producing labor, they particularly and even savagely
deprecate agitation.
By the way, does not every clear-headed American, know that any system
that cannot stand agitation is totally unfitted to this country?
Agitation, investigation, public discussion in the papers and on the
stump, are the very life-blood of our institutions. And if our finances
were as they should be, the more thoroughly they were discussed, the more
warmly would the system be approved, and the more would investigation be
invited.
Hon. G. J. Goschen, former Chancellor of the Exchequer, pointed out as
early as 1883 that the enormous increase in the demand for gold consequent
upon the demonetization of silver was liable to create great evil. After
elaborating this subject, and saying that the fall in prices had already
produced serious evils, he added: "Some writers have appeared to show
something approaching to irritation at the view of the situation that gold
should have largely influenced prices. I scarcely know why, unless through
the apprehension that the bimetallists may utilize the argument." A little
later he said: "I must repeat that to my mind the connection between the
additional demand for gold and the fall of prices seems as sound in
principle as I believe it to be sustained by facts."
We might multiply at length quotations to show that opinion is unanimous
in England, regardless of party, to the effect that there has been a great
increase in the purchasing power of gold. As to the effect of this Mr.
Giffen says: "The weight of all permanent burdens is increased.... Our
people, in paying annuities or old debts, have to give sovereigns, which
each represent a greater quantity of the results of human energy. The
debtors pay more than they would otherwise, and the creditors receive
more. It is a most serious matter to those who have debts to pay."
Mr. S. Dana Horton says that on the basis of prices "The national debt,
regarded as a principal sum, has increased its weight upon the shoulders
of the British taxpayer between 1875 and 1885 by nearly two hundred
millions sterling, an amount nearly equal to the Franco-German war fine."
This gives us the explanation of the fact that the consols on which the
interest was reduced by Mr. Goschen, when Chancellor of the Exchequer, to
2-3/4 per cent., are now selling at a much higher premium than formerly;
the smaller amount of money paid in interest will purchase a very much
larger amount of commodities than the former larger interest did.