far cheaper than that of silver. I do not insist upon having the gold
standard, but if we are to have but one, I think that the best. The
expense of maintaining a metallic currency is of course greater than
that of paper; but it must be borne in mind that a paper currency is
only tolerable when convertible at the will of the holder into coin--and
no one asks for more than that. A metallic currency is also subject
to considerable loss by abrasion or the annual wear; and it is quite
important to know which metal--gold or silver--can be most cheaply
supported. A careful examination of the subject conclusively shows that
the loss is nearly in proportion to the length of time coins have been
in circulation, and to the amount of surface exposed, although small
coins, being handled with less care, suffer most. The well-ascertained
result is that it costs from fifteen to twenty-five times more to keep
silver afloat than it does to maintain the same amount in gold. To
sustain the silver standard would annually cost about one per cent. for
abrasion; but that of gold would not exceed one-twentieth of one per
cent. This is a trouble-some charge, forever to bristle up in the
path-way of a silver standard. It must also be borne in mind that the
mint cost of coining silver is many times greater than that of the same
amount in gold. More than sixteen tons of silver are required as the
equivalent of one ton of gold. As a cold matter of fact, silver is
neither the best nor the cheapest standard. It is far dearer to plant
and forever dearer to maintain.
A double standard put forth by us on the terms now proposed by the
commission or by the House bill would be so only in name. The perfect
dual ideal of theorists, based upon an exact equilibrium of values,
cannot be realized while the intrinsic value of either of the component
parts is overrated or remains a debatable question and everywhere more
or less open to suspicion. A standard of value linked to the changing
fortunes of two metals instead of one, when combined with an existing
disjointed and all-pervading confusion in the ratio of value, must
necessarily be linked to the hazard of double perturbations and become
an alternating standard in perpetual motion.
The bimetallic scheme, with silver predominant--largely everywhere else
suspended, if not repudiated--is pressed upon us now with a ratio that
will leave nothing in circulation but silver, as a profitable mode of
providing a new and cheaper way of pinching and paying the national
debt; but a mode which would leave even a possible cloud upon our
national credit should find neither favor nor tolerance among a proud
and independent people.
The proposition is openly and squarely made to pay the public debt at
our option in whichever metal, gold or silver, happens to be cheapest,
and chiefly for the reason that silver already happens to be at 10 per
cent. the cheapest. In 1873, to have paid the debt in silver would have
cost 3 per cent. more than to have paid it in gold, and then there was
no unwillingness on the part of the present non-contents to pay in gold.
Silver was worth more then to sell than to pay on debts. No one then
pulled out the hair of his head to cure grief for the disappearance of
the nominal silver option. Since that time it has been and would be now
cheaper nominally to pay in silver if we had it; and therefore we are
urged to repudiate our former action and to claim the power to resume an
option already once supposed to have been profitably exercised, of which
the world was called upon to take notice, and to pay in silver to-day
or to let it alone to-morrow. I know that the detestable doctrine of
Machiavelli was that "a prudent prince ought not to keep his word except
when he can do it without injury to himself;" but the Bible teaches a
different doctrine, and honoreth him "who sweareth to his own hurt and
changeth not." If we would not multiply examples of individual
financial turpitude, already painfully numerous, we must not trample out
conscience and sound morality from the monetary affairs of the nation.
The "option" about which we should be most solicitous was definitely
expressed by Washington when he said: "There is an option left to
the United States whether they will be respectable and prosperous or
contemptible and miserable as a nation." Our national self-respect would
not be increased when Turkey, as a debt-paying nation, shall be held
as our equal and Mexico as our superior. The credit of a great nation
cannot even be discussed without some loss; it cannot even be tempted
by the devious advantages of legal technicalities without bringing some
sense of shame; but to live, it must go, like chastity, unchallenged and
unsuspected. It cannot take refuge behind the fig-leaves of the law, and
especially not behind a law yet to be made to meet the case.
* * * * *
The argument relied upon in favor of a bimetallic standard as against
a monometallic seems to be that a single-metal standard leaves out
one-half of the world's resources; but the same thing must occur with a
bimetallic standard unless the metals can be placed and kept in a state
of exact equilibrium, or so that nothing can be gained by the exchange
of one for the other. Hitherto this has been an unattainable perfection.
A law fixing the ratio of 16 of silver to 1 of gold, as proposed by
different members of the Commission, would now be a gross over-valuation
of silver and wholly exclude gold from circulation. It will hardly be
disputed that the two metals cannot circulate together unless they are
mutually convertible without profit or loss at the ratio fixed at the
mint. But it is here proposed to start silver with a large legal-tender
advantage above its market value, and with the probability, through
further depreciation, of increasing that advantage by which the
monometallic standard of silver will be ordained and confirmed. The
argument in behalf of a double standard is double-tongued, when in
fact nothing is intended, or can be the outcome, but a single silver
standard. The argument would wed silver and gold, but the conditions
which follow amount to a decree of perpetual divorcement. Enforce the
measure by legislation, and gold would at once flee out of the country.
Like liberty, gold never stays where it is undervalued.
No approach to a bimetallic currency of uniform and fixed value can be
possible, as it appears to me, without the co-operation of the leading
commercial nations. Even with that co-operation its accomplishment and
permanence may not be absolutely certain, unless the late transcendent
fickleness of the supply and demand subsides, or unless the ratio of
value can be adjusted with more consummate accuracy than has hitherto
been found by any single nation to be practicable. One-tenth of one per
cent. difference will always exclude from use one or the other metal;
but here a difference nearly one hundred times greater has been
proposed. The double-standard nations and the differing single gold- or
silver-standard nations doubtless contributed something to the relative
equalization of values so long as they furnished an available market for
any surplus of either metal, but this they are doing no longer. Silver,
though not yet universally demonetized, is thrown upon the market in
such masses and from so many prolific sources as to be governed by the
inexorable laws of demand and supply. Its magic as coin, if it has not
hopelessly departed, has been, like the retreating soldier, fearfully
"demoralized," and is passing to the rear.
* * * * *
It cannot be for the interest or the honor of the United States, while
possessed of any healthy national pride, to resort to any expedient of
bankrupt governments to lower the money standard of the country. That
standard should keep us "four square" to the world and give us equal
rank in the advanced civilization and industrial enterprise of all the
great commercial nations.
I have failed of my purpose if I have not shown that there has been
so large an increase of the stock of silver as of itself to effect a
positive reduction of its value; and that this result has been confirmed
and made irreversible by the new and extensive European disuse of silver
coinage. I have indicated the advisability of obtaining the co-operation
of other leading nations, in fixing upon a common ratio of value between
gold and silver, before embarking upon a course of independent action
from which there could be no retreat. I have also attempted to show
that, even in the lowest pecuniary sense of profit, the Government of
the United States could not be the gainer by proposing to pay either the
public debt or the United States notes in silver; that such a payment
would violate public pledges as to the whole, and violates existing
statutes as to all that part of the debt contracted since 1870, and for
which gold has been received; that the remonetization of silver means
the banishment of gold and our degradation among nations to the second
or third rank; that it would be a sweeping 10 per cent. reduction of
all duties upon imports, requiring the imposition of new taxes to that
extent; that it would prevent the further funding of the public debt at
a lower rate of interest and give to the present holders of our 6 per
cent. bonds a great advantage; that, instead of aiding resumption, it
would only inflate a currency already too long depreciated, and consign
it to a still lower deep; that, instead of being a tonic to spur idle
capital once more into activity, it would be its bane, destructive of
all vitality; and that as a permanent silver standard it would not
only be void of all stability, and the dearest and clumsiest in its
introduction and maintenance, but that it would reduce the wages of
labor to the full extent of the difference there might be between its
purchasing power and that of gold.
JAMES G. BLAINE,
OF MAINE. (BORN 1830, DIED 1893.)
ON THE REMONETIZATION OF SILVER,
UNITED STATES SENATE, FEBRUARY 7, 1878.
The discussion on the question of remonetizing silver, Mr. President,
has been prolonged, able, and exhaustive. I may not expect to add much
to its value, but I promise not to add much to its length. I shall
endeavor to consider facts rather than theories, to state conclusions
rather than arguments:
First. I believe gold and silver coin to be the money of the
Constitution--indeed, the money of the American people anterior to
the Constitution, which that great organic law recognized as quite
independent of its own existence. No power was conferred on Congress to
declare that either metal should not be money. Congress has therefore,
in my judgment, no power to demonetize silver any more than to
demonetize gold; no power to demonetize either any more than to
demonetize both. In this statement I am but repeating the weighty dictum
of the first of constitutional lawyers. "I am certainly of opinion,"
said Mr. Webster, "that gold and silver, at rates fixed by Congress,
constitute the legal standard of value in this country, and that neither
Congress nor any State has authority to establish any other standard or
to displace this standard." Few persons can be found, I apprehend, who
will maintain that Congress possesses the power to demonetize both
gold and silver, or that Congress could be justified in prohibiting the
coinage of both; and yet in logic and legal construction it would be
difficult to show where and why the power of Congress over silver is
greater than over gold--greater over either than over the two. If,
therefore, silver has been demonetized, I am in favor of remonetizing
it. If its coinage has been prohibited, I am in favor of ordering It
to be resumed. If it has been restricted, I am in favor of having it
enlarged.
Second. What power, then, has Congress over gold and silver? It has
the exclusive power to coin them; the exclusive power to regulate their
value; very great, very wise, very necessary powers, for the discreet
exercise of which a critical occasion has now arisen. However men may
differ about causes and processes, all will admit that within a few
years a great disturbance has taken place in the relative values of gold
and silver, and that silver is worth less or gold is worth more in
the money markets of the world in 1878 than in 1873, when the further
coinage of silver dollars was prohibited in this country. To remonetize
it now as though the facts and circumstances of that day were
surrounding us, is to wilfully and blindly deceive ourselves. If our
demonetization were the only cause for the decline in the value of
silver, then remonetization would be its proper and effectual cure. But
other causes, quite beyond our control, have been far more potentially
operative than the simple fact of Congress prohibiting its further
coinage; and as legislators we are bound to take cognizance of these
causes. The demonetization of silver in the great German Empire and the
consequent partial, or well-nigh complete, suspension of coinage in the
governments of the Latin Union, have been the leading dominant causes
for the rapid decline in the value of silver. I do not think the
over-supply of silver has had, in comparison with these other causes,
an appreciable influence in the decline of its value, because its
over-supply with respect to gold in these later years, has not been
nearly so great as was the over-supply of gold with respect to silver
for many years after the mines of California and Australia were opened;
and the over-supply of gold from those rich sources did not effect the
relative positions and uses of the two metals in any European country.
I believe then if Germany were to remonetize silver and the kingdoms and
states of the Latin Union were to reopen their mints, silver would at
once resume its former relation with gold. The European countries when
driven to full re-monetization, as I believe they will be, must of
necessity adopt their old ratio of fifteen and a half of silver to one
of gold, and we shall then be compelled to adopt the same ratio instead
of our former sixteen to one. For if we fail to do this we shall, as
before, lose our silver, which like all things else seeks the highest
market; and if fifteen and a half pounds of silver will buy as much gold
in Europe as sixteen pounds will buy in America, the silver, of course,
will go to Europe. But our line of policy in a joint movement with other
nations to remonetize is very simple and very direct. The difficult
problem is what we shall do when we aim to re-establish silver without
the co-operation of European powers, and really as an advance movement
to coerce them there into the same policy. Evidently the first dictate
of prudence is to coin such a dollar, as will not only do justice
among our citizens at home, but will prove a protection--an absolute
barricade--against the gold monometallists of Europe, who, whenever the
opportunity offers, will quickly draw from us the one hundred and sixty
millions of gold coin still in our midst. And if we coin a silver dollar
of full legal tender, obviously below the current value of the gold
dollar, we are opening wide our doors and inviting Europe to take our
gold. And with our gold flowing out from us we are forced to the single
silver standard and our relations with the leading commercial countries
of the world are at once embarrassed and crippled.
Third. The question before Congress then--sharply defined in the pending
House bill--is, whether it is now safe and expedient to offer free
coinage to the silver dollar of 412 1/2 grains, with the mints of the
Latin Union closed and Germany not permitting silver to be coined
as money. At current rates of silver, the free coinage of a dollar
containing 412 1/2 grains, worth in gold about ninety-two cents, gives
an illegitimate profit to the owner of the bullion, enabling him to take
ninety-two cents' worth of it to the mint and get it stamped as coin and
force his neighbor to take it for a full dollar. This is an undue and
unfair advantage which the Government has no right to give to the owner
of silver bullion, and which defrauds the man who is forced to take the
dollar. And it assuredly follows that if we give free coinage to this
dollar of inferior value and put it in circulation, we do so at the
expense of our better coinage in gold; and unless we expect the uniform
and invariable experience of other nations to be in some mysterious way
suspended for our peculiar benefit, we inevitably lose our gold coin.
It will flow out from us with the certainty and resistless force of the
tides. Gold has indeed remained with us in considerable amount during
the circulation of the inferior currency of the legal tender; but that
was because there were two great uses reserved by law for gold: the
collection of customs and the payment of interest on the public debt.
But if the inferior silver coin is also to be used for these two
reserved purposes, then gold has no tie to bind it to us. What gain,
therefore, would we make for the circulating medium, if on opening the
gate for silver to flow in, we open a still wider gate for gold to flow
out? If I were to venture upon a dictum on the silver question, I would
declare that until Europe remonetizes we cannot afford to coin a dollar
as low as 412 1/2 grains. After Europe remonetizes on the old standard,
we cannot afford to coin a dollar above 400 grains. If we coin too low a
dollar before general re-monetization our gold will flow out from us. If
we coin too high a dollar after general remonetization our silver will
leave us. It is only an equated value both before and after general
remonetization that will preserve both gold and silver to us.
* * * * *
Fifth. The responsibility of re-establishing silver in its ancient and
honorable place as money in Europe and America, devolves really on the
Congress of the United States. If we act here with prudence, wisdom, and
firmness, we shall not only successfully remonetize silver and bring it
into general use as money in our own country, but the influence of our
example will be potential among all European nations, with the possible
exception of England. Indeed, our annual indebtment to Europe is so
great that if we have the right to pay it in silver we necessarily
coerce those nations by the strongest of all forces, self-interest, to
aid us in up-holding the value of silver as money. But if we attempt the
remonetization on a basis which is obviously and notoriously below
the fair standard of value as it now exists, we incur all the evil
consequences of failure at home and the positive certainty of successful
opposition abroad. We are and shall be the greatest producers of silver
in the world, and we have a larger stake in its complete monetization
than any other country. The difference to the United States between the
general acceptance of silver as money in the commercial world and its
destruction as money, will possibly equal within the next half-century
the entire bonded debt of the nation. But to gain this advantage we must
make it actual money--the accepted equal of gold in the markets of the
world. Re-monetization here followed by general remonetization in Europe
will secure to the United States the most stable basis for its currency
that we have ever enjoyed, and will effectually aid in solving all the
problems by which our financial situation is surrounded.
Sixth. On the much-vexed and long-mooted question of a bi-metallic or
mono-metallic standard my own views are sufficiently indicated in the
remarks I have made. I believe the struggle now going on in this country
and in other countries for a single gold standard would, if successful,
produce wide-spread disaster in the end throughout the commercial world.
The destruction of silver as money and establishing gold as the sole
unit of value must have a ruinous effect on all forms of property except
those investments which yield a fixed return in money. These would be
enormously enhanced in value, and would gain a disproportionate and
unfair advantage over every other species of property. If, as the most
reliable statistics affirm, there are nearly seven thousand millions of
coin or bullion in the world, not very unequally divided between gold
and silver, it is impossible to strike silver out of existence as money
without results which will prove distressing to millions and utterly
disastrous to tens of thousands. Alexander Hamilton, in his able and
invaluable report in 1791 on the establishment of a mint, declared that
"to annul the use of either gold or silver 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 circulation with
the evils of a scanty circulation." I take no risk in saying that the
benefits of a full circulation and the evils of a scanty circulation
are both immeasurably greater to-day than they were when Mr. Hamilton
uttered these weighty words, always provided that the circulation is one
of actual money, and not of depreciated promises to pay.
In the report from which I have already quoted, Mr. Hamilton argues at
length in favor of a double standard, and all the subsequent experience
of well-nigh ninety years has brought out no clearer statement of the
whole case nor developed a more complete comprehension of this subtle
and difficult subject. "On the whole," says Mr. Hamilton, "it seems most
advisable not to attach the unit exclusively to either of the metals,
because this cannot be done effectually without destroying the office
and character of one of them as money and reducing it to the situation
of mere merchandise." And then Mr. Hamilton wisely concludes that this
reduction of either of the metals to mere merchandise (I again quote
his exact words) "would probably be a greater evil than occasional
variations in the unit from the fluctuations in the relative value
of the metals, especially if care be taken to regulate the proportion
between them with an eye to their average commercial value." I do not
think that this country, holding so vast a proportion of the world's
supply of silver in its mountains and its mines, can afford to reduce
the metal to the "situation of mere merchandise." If silver ceases to
be used as money in Europe and America, the great mines of the Pacific
slope will be closed and dead. Mining enterprises of the gigantic scale
existing in this country cannot be carried on to provide backs for
looking-glasses and to manufacture cream-pitchers and sugar-bowls. A
vast source of wealth to this entire country is destroyed the moment
silver is permanently disused as money. It is for us to check that
tendency and bring the continent of Europe back to the full recognition
of the value of the metal as a medium of exchange.