ever before. If we could contribute to this result it would tend to
promote commerce and intercourse, trade and travel, peace and harmony
among nations. It would be in line with the civilization of our age.
It is by such measures statesmen may keep pace with the marvellous
inventions, improvements, and discoveries which have quadrupled the
capacity of man for production, made lightning subservient to his will,
revealed to him new agencies of power hidden in the earth, and opened
up to his enterprise all the dark places of the world. The people of
the United States boast that they have done their full share in all this
development; that they have grown in population, wealth, and strength;
that they are the richest of nations, with untarnished credit, a model
and example of self-government without kings or princes or lords. Surely
this is no time for a radical change of public policy which seems to
have no motive except to reduce the burden of obligations freely taken,
a change likely to impair our public credit and produce disorder and
confusion in all monetary transactions. Others may see reasons for this
change, but I prefer to stand by the standards of value that come to us
with the approval and sanction of every party that has administered the
Government since its beginning.
JOHN P. JONES,
OF NEVADA. (BORN 1830.)
ON TREASURY NOTES AND SILVER,
IN THE SENATE OF THE UNITED STATES, MAY 12, 1890.
MR. PRESIDENT, the question now about to be discussed by this body is
in my judgment the most important that has attracted the attention of
Congress or the country since the formation of the Constitution. It
affects every interest, great and small, from the slightest concern of
the individual to the largest and most comprehensive interest of the
nation.
The measure under consideration was reported by me from the Committee on
Finance. It is hardly necessary for me to say, however, that it does not
fully reflect my individual views regarding the relation which silver
should bear to the monetary circulation of the country or of the world.
I am, at all times and in all places, a firm and unwavering advocate of
the free and unlimited coinage of silver, not merely for the reason that
silver is as ancient and honorable a money metal as gold, and equally
well adapted for the money use, but for the further reason that, looking
at the annual yield from the mines, the entire supply that can come to
the mints will at no time be more than is needed to maintain at a
steady level the prices of commodities among a constantly increasing
population.
* * * * *
History gives evidence of no more prolific source of human misery than a
persistent and long continued fall in the general range of prices.
But, although exercising so pernicious an influence, it is not itself a
cause, but an effect.
When a fall of prices is found operating, not on one article or class of
articles alone, but on the products of all industries; when found to
be not confined to any one climate, country, or race of people, but to
diffuse itself over the civilized world; when it is found not to be a
characteristic of any one year, but to go on progressively for a series
of years, it becomes manifest that it does not and can not arise from
local, temporary, or subordinate causes, but must have its genesis and
development in some principle of universal application.
What, then, is it that produces a general decline of prices in any
country? It is produced by a shrinkage in the volume of money relatively
to population and business, which has never yet failed to cause an
increase in the value of the money unit, and a consequent decrease in
the price of the commodities for which such unit is exchanged. If the
volume of money in circulation be made to bear a direct and steady ratio
to population and business, prices will be maintained at a steady level,
and, what is of supreme importance, money will be kept of unchanging
value. With an advancing civilization, in which a large volume of
business is conducted on a basis of credit extending over long periods,
it is of the uttermost importance that money, which is the measure of
all equities, should be kept unchanging in value through time.
A reduction in the volume of money relatively to population and
business, or, (to state the proposition in another form) a volume which
remains stationary while population and business are increasing, has the
effect of increasing the value of each unit of money, by increasing its
purchasing power.
* * * * *
We have 22,000,000 workmen in this country. In order that they may be
kept uninterruptedly employed it is absolutely necessary that business
contracts and obligations be made long in advance. Accordingly, we read
almost daily of the inception of industrial undertakings requiring years
to fulfil. It is not too much to say that the suspension for one season
of the making of time-contracts would close the factories, furnaces, and
machine-shops of all civilized countries.
The natural concomitant of such a system of industry is the elaborate
system of debt and credit which has grown up with it, and is
indispensable to it. Any serious enhancement in the value of the unit of
money between the time of making a contract or incurring a debt and the
date of fulfilment or maturity always works hardship and frequently ruin
to the contractor or debtor.
Three fourths of the business enterprises of this country are conducted
on borrowed capital. Three fourths of the homes and farms that stand in
the name of the actual occupants have been bought on time, and a very
large proportion of them are mortgaged for the payment of some part of
the purchase money.
Under the operation of a shrinkage in the volume of money this enormous
mass of borrowers, at the maturity of their respective debts, though
nominally paying no more than the amount borrowed, with interest, are,
in reality, in the amount of the principal alone, returning a percentage
of value greater than they received--more than in equity they contracted
to pay, and oftentimes more, in substance, than they profited by the
loan. To the man of business this percentage in many cases constitutes
the difference between success and failure. Thus a shrinkage in the
volume of money is the prolific source of bankruptcy and ruin. It is the
canker that, unperceived and unsuspected, is eating out the prosperity
of our people. By reason of the almost universal inattention to the
nature and functions of money this evil is permitted, unobserved, to
work widespread ruin and disaster. So subtle is it in its operations
that it eludes the vigilance of the most acute. It baffles all foresight
and calculation; it sets at naught all industry, all energy, all
enterprise.
* * * * *
The advocates of the single gold standard deem even silver money much
better money than greenbacks. Does it then follow that when greenbacks
were our only money--good enough money to carry our nation through the
greatest war in all history--we were "along-side" or underneath the
barbarous nations of the world? It is not the form or material of a
nation's money that fixes its status relatively to other nations. That
is accomplished by the vitality, the energy, the intellectuality and
effective force of its people. The United States can never be placed
"alongside" any barbarous nation, except by compelling our people to
compete with barbarous peoples--compelling them to sell the products of
American labor at prices regulated by the cost of labor and manner of
living in barbarous countries. As well might it be said that we are
alongside the barbarous people of India because we continue to produce
wheat and cotton.
The distinguishing feature of all barbarous nations is the squalor of
their working classes. The reward of their hard toil is barely enough
to maintain animal existence. A civilized people are placed alongside
a barbarous one when, in their means of livelihood, the foundation of
their civilization, they are made to compete with the barbarians. That
was the result accomplished for the farmers and planters of the United
States when silver was demonetized.
* * * * *
It is a remarkable circumstance, Mr. President, that throughout the
entire range of economic discussion in gold-standard circles, it seems
to be taken for granted that a change in the value of the money unit is
a matter of no significance, and imports no mischief to society, so long
as the change is in one direction. Who has ever heard from an Eastern
journal any complaint against a contraction of our money volume; any
admonition that in a shrinking volume of money lurk evils of the utmost
magnitude? On the other hand, we have been treated to lengthy homilies
on the evils of "inflation," whenever the slightest prospect presented
itself to a decrease in the value of money--not with the view of giving
the debtor an advantage over the lender of money, but of preventing the
unconscionable injustice of a further increasing value in the dollars
which the debtor contracted to pay. Loud and re-sounding protests have
been entered against the "dishonesty" of making payments in "depreciated
dollars." The debtors are characterized as dishonest for desiring to
keep money at a steady and unwavering value. If that object could be
secured, it would undoubtedly be to the interest of the debtor, and
could not possibly work any injustice to the creditor. It would simply
assure to both debtor and creditor the exact measure for which they
bargained. It would enable the debtor to pay his debt with exactly the
amount of sacrifice to which, on the making of the debt, he undertook to
submit, in order to pay it.
In all discussions of the subject the creditors attempt to brush aside
the equities involved by sneering at the debtors. But, Mr. President,
debt is the distinguishing characteristic of modern society. It is
through debt that the marvellous developments of the nineteenth-century
civilization have been effected. Who are the debtors in this country?
Who are the borrowers of money? The men of enterprise, of energy, of
skill, the men of industry, of fore-sight, of calculation, of daring.
In the ranks of the debtors will be found a large preponderance of the
constructive energy of every country. The debtors are the upbuilders of
the national wealth and prosperity; they are the men of initiative, the
men who conceive plans and set on foot enterprises. They are those who
by borrowing money enrich the community. They are the dynamic force
among the people. They are the busy, restless, moving throng whom you
find in all walks of life in this country--the active, the vigorous, the
strong, the undaunted.
These men are sustained in their efforts by the hope and belief that
their labors will be crowned with success. Destroy that hope and you
take away from society the most powerful of all the incentives to
material development; you place in the pathway of progress an obstacle
which it is impossible to surmount.
The men of whom I have spoken are undoubtedly the first who are likely
to be affected by a shrinkage in the volume of money.
The highest prosperity of a nation is attained only when all its people
are employed in avocations suited to their individual aptitudes, and
when a just money system insures an equitable distribution of the
products of their industry. With our present complex civilization, in
order that men may have constant employment, it is indispensable that
work be planned and undertakings projected years in advance. Without
an intelligent forecast of enterprises large numbers of workmen must
periodically be relegated to idleness. Enterprises that take years to
complete must be contracted for in advance, and payments provided for.
A constant but unperceived rise in the value of the dollar with which
those payments must be made, baffles all plans, thwarts all calculation,
and destroys all equities between debtor and creditor. If we cannot
intelligently regulate our money volume so as to maintain unchanging
the value of the money unit, if we cannot preserve our people from the
blighting effects which an increase in the measuring power of the
money unit entails upon all industry, to what purpose is our boasted
civilization?
By the increase of that measuring power all hopes are disappointed, all
purposes baffled, all efforts thwarted, all calculations defied. This
subtle enlargement in the measuring power of the unit of money (the
dollar) affects every class of the working community. Like a poisonous
drug in the human body, it permeates every vein, every artery, every
fibre and filament of the industrial structure. The debtor is fighting
for his life against an enemy he does not see, against an influence
he does not understand. For, while his calculations were well and
intelligently made, and the amount of his debts and the terms of his
contracts remain the same, the weight of all his obligations has been
increased by an insidious increase in the value of the money unit.
* * * * *
In an ancient village there once stood a gold clock, which, ever since
the invention of clocks, had been the measure of time for the people
of that village. They were proud of its beauty, its workmanship, its
musical stroke, and the unfailing regularity with which it heralded the
passing hours. This clock had been endeared to all the inhabitants of
the village by the hallowed associations with which it was identified.
Generation after generation it had called the children from far and wide
to attend the village school; its fresh morning peal had set the honest
villagers to labor; its noonday notes had called them to refreshment;
its welcome evening chime had summoned them to rest.
From time immemorial, on all festive occasions, it had rung out its
merry tones to assemble the young people on the green; and on the
Sabbath it had advertised to all the countryside the hour of worship in
the village church. So perfect was its mechanism that it never needed
repair. So proud were the people of this wonderful clock that it became
the standard for all the country round about, and the time which it kept
came to be known as the gold standard of time, which was universally
admitted to be correct and unchanging.
In the course of time there wandered that way a queer character,
a clock-maker, who being fully instructed in the inner workings of
time-tellers, and not having inherited the traditions of that village,
did not regard this clock with the veneration accorded to it by the
natives. To their astonishment he denied that there was really any
such thing as a gold standard of time; and in order to prove that the
material, gold, did not monopolize all the qualities characteristic of
clocks, he placed alongside the gold clock, another clock, of silver,
and set both clocks at 12 noon. For a long time the clocks ran along
in almost perfect accord, their only disagreement being that of an
occasional second or two, and even that disagreement only at rare
intervals, such as might naturally occur with the best of clocks. But
the Council of the village, in their admiration for the gold clock,
passed an ordinance requiring that all the weights (the motive power) of
the silver clock, except one, be removed from it, and attached to those
of the gold clock. Instantly the clocks began to fall apart, and one
day, as the sun was passing the meridian, the hands of the gold clock
were observed to indicate the hour of 1, while those of the silver clock
indicated 12.15. At this everybody in the village ridiculed the
silver clock, derided the silver standard, and hurled epithets at the
individual who had had the temerity to doubt the infallibility of the
gold standard.
Finally, the divergence between the clocks went so far that it was noon
by the gold standard when it was only 6 A.M. by the silver standard, so
that those who were guided by the gold standard, notwithstanding that it
was yet the gray of the morning, insisted on eating their mid-day meal,
because the gold standard indicated that it must be noon. And when
the sun was high in the heavens, and its light was shining warm and
refulgent on the dusty streets of the village, those who observed the
gold standard had already eaten supper and were preparing for bed.
But this state of things could not last. It was clear that the
difference between the standards must be reconciled, or all industry
would be disarranged and the village ruined.
Discussion was rife among the villagers as to the cause of the
difference. Some said the silver clock had lost time; others that both
clocks had lost time, but the silver clock more than the gold; while
others again asserted that both clocks had gained time, but that the
gold clock had gained more than the silver clock.
While this discussion was at its height a philosopher came along and
observing the excitement on the subject remarked: "By measuring two
things, one against the other, you can never arrive at any determination
as to which has changed. Instead of disputing as to whether one clock
has lost or another gained would it not be well to consult the sun and
the stars and ascertain exactly what has happened?"
Some demurred to this because, as they asserted, the gold standard was
unchanging and was always right no matter how much it might seem to be
wrong; others agreed that the philosopher's advice should be taken.
Upon consulting the sun and the stars it was discovered that what had
happened was that both clocks had gained in time but that the gain of
the silver clock had been very slight, while that of the gold clock had
been so great as to disturb all industry and destroy all correct sense
of time.
Nothwithstanding this demonstration, there were many who adhered to the
belief that the gold standard was correct and unchanging, and insisted
that what appeared to be its aberrations were not in reality due to any
fault of the gold clock, but to some convulsion of nature by which
the solar system had been disarranged and the planets made to move
irregularly in their orbits.
Some of the people also remembered having heard at the village inn, from
travellers returning from the East, that silver clocks were the standard
of time in India and other barbarous countries, while in countries of a
more advanced civilization gold clocks were the standard. They therefore
feared that the use of the silver clock might have the effect of
degrading the civilization of the village by placing it alongside India
and other barbarous countries. And although the great mass of the people
really believed, from the demonstration made, that the silver standard
of time was the better one, yet this objection was so momentous that
they were puzzled what course to pursue, and at last advices were
consulting the manufacturers of gold clocks as to what was best to be
done.
Now our gold standard men are in the position of those who first refuse
to look at anything beyond the two things, gold and silver, to see what
has happened, and who, when it is finally demonstrated that all other
things retain their former relations to silver, still persist that the
law which makes gold an unchanging standard of measure is more immutable
than that which holds the stars in their courses. If they will compare
gold and silver with commodities in general, to see how the metals have
maintained their relations, not to one another but to all other things,
they will find that instead of a fall having taken place in the value of
silver, the change that has really taken place is a rise in the value of
both gold and silver, the rise in silver being relatively slight, while
that of gold has been ruinously great. And those who do not shut their
eyes to the truth must see that the change of relation between the
metals has been effected by depriving silver of its legal-tender
function, as the want of accord between the clocks was brought about
by depriving the silver clock of a portion of its motive power--the
weights. The only thing that has prevented a greater divergency between
the metals is the limited coinage by the United States--the single
weight that, withheld from the gold clock, prevented its more ruinous
gain.
* * * * *
Everybody admits that the value of all other things is regulated by the
play against each other of the forces of supply and demand. No reason
has been or can be given why the value of the unit of money is not
subject to this law.
The demand for money is equivalent to the sum of the demands for all
other things whatsoever, for it is through a demand first made on
money that all the wants of man are satisfied. The demand for money is
instant, constant, and unceasing, and is always at a maximum. If any man
wants a pair of shoes, or a suit of clothes, he does not make his demand
first on the shoemaker, or clothier. No man, except a beggar, makes a
demand directly for food, clothes, or any other article. Whether it be
to obtain clothing, food, or shelter--whether the simplest necessity
or the greatest luxury of life--it is on money that the demand is first
made. As this rule operates throughout the entire range of commodities
it is manifest that the demand for money equals at least the united
demands for all other things.
While population remains stationary, the demand for money will remain
the same. As the demand for one article becomes less, the demand for
some other which shall take its place becomes greater. The demand for
money, therefore, must ever be as pressing and urgent as the needs of
man are varied, incessant, and importunate.
Such being the demand for money, what is the supply? It is the total
number of units of money in circulation (actual or potential) in any
country.
The force of the demand for money operating against the supply is
represented by the earnest, incessant struggle to obtain it. All men, in
all trades and occupations, are offering either property or services
for money. Each shoemaker in each locality is in competition with every
other shoemaker in the same locality, each hatter is in competition
with every other hatter, each clothier with every other clothier, all
offering their wares for units of money. In this universal and perpetual
competition for money, that number of shoemakers that can supply the
demand for shoes at the smallest average price (excellence of quality
being taken into account) will fix the market value of shoes in money;
and conversely, will fix the value of money in shoes. So with the
hatters as to hats, so with the tailors as to clothes, and so with those
engaged in all other occupations as to the products respectively of
their labor.
The transcendent importance of money, and the constant pressure of the
demand for it, may be realized by comparing its utility with that of any
other force that contributes to human welfare.
In all the broad range of articles that in a state of civilization are
needed by man, the only absolutely indispensable thing is money. For
everything else there is some substitute--some alternative; for money
there is none. Among articles of food, if beef rises in price, the
demand for it will diminish, as a certain proportion of the people will
resort to other forms of food. If, by reason of its continued scarcity,
beef continues to rise, the demand will further diminish, until finally
it may altogether cease and centre on something else. So in the matter
of clothing. If any one fabric becomes scarce, and consequently dear,
the demand will diminish, and, if the price continue rising, it is only
a question of time for the demand to cease and be transferred to some
alternative.
But this cannot be the case with money. It can never be driven out of
use. There is not, and there never can be, any substitute for it. It
may become so scarce that one dollar at the end of a decade may buy ten
times as much as at the beginning; that is to say, it may cost in labor
or commodities ten times as much to get it, but at whatever cost, the
people must have it. Without money the demands of civilization could not
be supplied.
GEORGE WILLIAM CURTIS,
OF NEW YORK (BORN 1824, DIED 1892.)
ON THE SPOILS SYSTEM AND THE PROGRESS OF CIVIL SERVICE REFORM.
An Address delivered before the American Social Science Association at
its Meeting in Saratoga, New York, September 8, 1881.