THE VERDICT OF THE WORLD’S WISE MEN OF FINANCE.
The _grand salon_ of the French Foreign Office was once more the
meeting-place of a great international tribunal. Four years before, an
imposing bench of famous jurists had sat in the same chamber to
arbitrate the differences between two peoples who wisely preferred the
impartial judgment of a court of nations to the arbitrament of war. The
lofty _salon_, with its fine tapestries, its historical works of art,
its soberly rich furnishings, had not at all the appearance of a high
judicial chamber. As the sittings of the Bering Sea Arbitration Board
had suggested, it seemed arranged rather for the assembling of the privy
council of an emperor. A high, throne-like seat for the presiding
officer was placed at the end of the room farthest from the entrance. At
each side of the president’s chair was another place of honor for one of
the two members who were to act as secretaries. Grouped in a large
semi-circle were eleven richly carved desks, each provided with a great
leather chair.
The members of the monetary conference were but fourteen in number. They
represented Great Britain, France, Germany, Austria, Italy, Russia, and
the United States. They assembled on Thursday, the 9th of January, for
their first business session. The previous day they had been welcomed by
the president of the French Republic, and had been entertained at the
Elysée. At their brief meeting for organization, they had made choice of
one of the German representatives as president, and of an Italian and an
Englishman as secretaries. Now that the formalities were over, the
fourteen men were anxious to undertake the rather vague task which they
understood was before them. All the European members had received
intimations from their respective governments that matters of the
gravest importance would be brought before the conference by the
American delegates. They had gained no hint as yet about the nature of
the proposals or disclosures. A statement from the representatives of
the United States was awaited, therefore, with keenest interest and
curiosity by all the other members.
Their solicitude had been increased by an earnest request from the
Americans that not only should all the sessions of the conference be
held with closed doors, but that no officers outside the membership of
the board should be appointed, and that no stenographic or other
records be kept, save such as might be made by the official secretaries.
When, therefore, the great men in statesmanship and finance who composed
the small but august body found themselves ready for the performance of
their official duties, they looked for some explanation of these extreme
precautions.
As soon as the president had called the conference to order, just after
twelve o’clock, the American secretary of the treasury rose to address
the members. His manner even before he began to speak was extremely
grave, and his opening words were so ominous that the faces of the men
who listened, accustomed though they were to dealings with great
affairs, became anxious and apprehensive. This was what he said:
“_Mr. President and Gentlemen_: It is known to most of you that the
United States government has followed a somewhat peculiar course in
taking the initiative for the summoning of this conference. You will
expect, therefore, some explanation of its action from the
representatives of that government, and such explanation it is my duty
to place before you. We bring to you a task so difficult and yet so
delicate, that if its nature should be but suspected outside this
chamber, all hope of its successful performance would disappear. You
will pardon me, therefore, if I preface my message to you with a word
of warning. I am about to make known to you a fact so ominous, so
threatening to the world’s prosperity and the financial systems of all
countries, that the president of the United States has deemed it wise in
summoning this conference to withhold it even from the governments which
you represent. I beg of you at the outset, therefore, that not only
shall the ordinary obligations of secrecy, which of course we all
recognize, be imposed, but that for a time at least we shall restrict
ourselves even from communicating the subject of our deliberations to
our official superiors. I know that I am making an unprecedented
request, a request which some of you on first consideration will feel
yourselves powerless to grant. I shall not press the suggestion upon you
for decision, until the facts which seem to me to justify it are fully
before you. The nature of those facts will reveal to you a peril, which
not only warrants, but impels the assumption of an authority and
responsibility which under ordinary circumstances we should seek to
avoid.
“I now come to the burden of my message, which is soon discharged. It
relates to the sudden influx of gold in the markets of the world,
chiefly in America, during the last year. All of you are familiar with
the effects of this extraordinary increase in the supply of the standard
monetary metal. Every market in the world has felt its influence, while
in the United States the foundations of our financial and commercial
welfare have been severely shaken. Since the assembling of this
conference was proposed a few weeks ago, there has been some subsidence
of the general disturbance, and the monetary world has shown a tendency
to adjust itself to the new conditions. It is my painful duty to destroy
such confidence as you may have in the security of the present financial
or monetary situation.
“The quantity of gold which was added to the world’s monetary supply
during the first nine months of 1895, in addition to the normal output
of the mines, was no less a sum than five hundred millions of dollars,
one hundred million pounds sterling. This was native gold, all coming
from a single source. The owner of this metal has since withdrawn from
circulation about one half this sum either in gold or legal tender. This
action partly accounts for the checking of the financial disturbance in
the United States. The danger which we have already faced is bad enough,
but it is insignificant in comparison with that which I have to reveal
to you. It is this:
“_There remains in the same vault from which these millions have been
taken, the equivalent of nearly three billion dollars, six hundred
millions sterling, in the crude gold of nature._”
The effect of this announcement upon his hearers was so great that the
secretary of the treasury stopped speaking for a moment. Some faces were
pale, others flushed, all bore evidence of intensest feeling. All the
dignity of a great international court vanished. They needed no
explanation to carry to their minds the full significance of the
speaker’s words. The personal application of the sudden news came home
first to some of them. One man of many millions, who a few minutes
before had appeared the embodiment of the conscious power of wealth,
seemed stricken with an agony almost of death. His face turned haggard
with sudden age. Unconsciously, he wiped away the cold drops that
gathered upon his forehead, muttering aloud:
“It is ruin, ruin for us all!”
A great French banker sitting next him heard the words and sprang to his
feet in sudden passion.
“It is not ruin,” he cried hotly. “Who is this man that threatens the
world with his gold? Let him be seized. Let the gold be taken from him.
Let it be destroyed. No man can crush us all in this fashion. Desperate
conditions demand desperate remedies. It is a case for a _coup d’état_.”
The outburst evidently found sympathetic listeners. The looks of dismay,
of terror even, began to give place to returning self-possession after
the first shock of surprise was over. The president himself, almost as
much overcome at first as any of his associates, rose to his feet, and
in rather unsteady voice begged the conference to listen further to the
American representative. The secretary of the treasury had remained
standing, watching with keen solicitude the effect of his revelation.
Every man turned instantly to him and gave to his following words most
intense attention.
“I am glad to be able to assure you, gentlemen,” he resumed, “that
desperate measures are quite unnecessary. The owner of this gold is as
anxious as you are to avoid bringing any calamity or financial evil upon
his own or any other country. It was, indeed, at his suggestion that the
president invited the powers to send delegates to this conference. With
unparalleled generosity and laudable sagacity he desires to place the
fate of his vast treasure in your hands. That is the task which I bring
you, gentlemen, and I know you will give to it the unselfish and
sagacious consideration which its importance demands. I renew now my
suggestion that all knowledge of our deliberations shall be confined
strictly to the actual members of this board.”
An English delegate took the floor the moment the secretary sat down.
“I desire, Mr. President, to second the motion of the United States
secretary of the treasury,” he said impressively. “I do this in direct
violation of the instructions of my government, but it is a
responsibility which I do not hesitate for a moment to assume. The
emergency demands it so clearly in my mind that the question seems
scarcely debatable. I am still so far overwhelmed by the stupendous
revelation to which we have listened, that I am not prepared yet to
discuss it beyond taking this obvious precaution for guarding against
the terrible calamity which a disclosure of this secret would bring upon
us.”
The proposition was at once adopted unanimously by the conference. The
representative of the United States cabinet again took the floor,
saying:
“I have purposely refrained, gentlemen, from saying anything about the
history of the enormous treasure which I have described, or about the
details of what has thus far been done with it. The owner of the gold
has come with me to Paris. I much prefer that you learn from his own
lips all that he has to impart about his past policy and his plan. I
move, Mr. President, that Mr. Robert Brent, of New York, be invited to
attend the sessions of this conference and that he be privileged to take
part in all debates.”
The motion was instantly passed, and the secretary left the room to
secure the attendance of the man of whom these great men of
statesmanship and finance found themselves in sudden awe.
When Robert Brent entered rather diffidently the magnificent chamber a
few minutes later, he found himself the object of an interest that was
rather disconcerting. As he advanced up the room by the side of the
secretary, the president of the conference suddenly left his high seat
and came to meet him. In an instant every man present followed his
example. The young man was surrounded by distinguished potentates,
anxious to do him honor. Little was said. It did not seem to be an
occasion for many words. Brent grasped the hands held out to him
cordially and at length proceeded to a seat by the secretary’s side.
When the president had again taken the chair, the secretary formally
introduced the young man to the conference, inviting him to explain his
position and purpose.
Brent faced his small but distinguished audience with evident
embarrassment and hesitation. The almost painful eagerness and
earnestness in every countenance speedily made it clear to him that his
words were awaited with a deference entirely free from criticism. Strong
emotion unmasks most faces, and there was fear and admiration and
bewilderment still upon the features of the proud men who now hung
expectant upon the words of the young American of whose existence they
had been ignorant an hour before. Such is the mastery of gold!
Brent’s embarrassment gave place to an uncomfortable sense of undeserved
power which he had usurped from these, its rightful custodians! It led
him to speak deprecatingly, almost apologetically, of himself and his
difficulties. He described as fully as he was able the history of his
treasure and his operations in the financial world during the previous
year. Coming at length to the question at issue, he said:
“With the best intentions in the world, I have inflicted great wrongs,
especially upon my own country. I have done what I could to repair some
of the damage I have caused. But I realize clearly now, as no doubt you
do at a glance, that the greatest evil of all is still impending. The
simple possession of more than five thousand tons of unknown, unused
gold, under the present circumstances, is a crime of which I will not be
guilty a moment longer than I can help. I place the fate of this
treasure entirely, unreservedly in your hands. I have no personal wishes
in the matter, not even any suggestions to offer. The task is too great
for me. I assumed it at first without hesitation and with the foolish
confidence of ignorance. It seemed to my thoughtless enthusiasm the
simplest portion of my plan of gold-getting. I believed, when I had
locked the last box of gold in the vault in New York, that my
difficulties were practically at an end. The mischief which my blind
self-assurance has wrought will be a life-long reproach to me.
“To be absolutely honest, I cannot plead complete ignorance of the
dangers which I risked. Some of them I dimly foresaw, after I had
seriously grappled the problem which I have now delegated to you. A
selfish desire to escape if possible the penalties of wealth--the
notoriety, the curiosity, the adulation, the insincerities, the
importunities--led me to conceal my secret, when I should have sought
the best counsel at the outset. I hope I am not now too late in
performing this duty. Whatever your honorable body shall advise, I will
execute. I place at your disposal not only the gold not yet used, but
certain other moneys and securities, embracing all of my property with
the exception of a fund of $100,000,000, which I reserve for the
carrying out of certain obligations which I have undertaken, and in part
for my own use. The remainder, and it will amount at a rough estimate to
$3,300,000,000, or £660,000,000 sterling, shall be devoted in whole or
in part in such manner as you prescribe to the execution of
international enterprises too great for private capital to undertake. Or
I am prepared, if you so advise, even to sink the treasure in
mid-Atlantic.”
The motionless, almost breathless silence in which the conference had
listened continued for a moment after Brent had finished. It was broken
by a French delegate, who sprang to his feet, and without any of the
dignified formalities which the occasion demanded, exclaimed excitedly:
“The gentleman has named the solution of the problem in his last
sentence. It is the only solution. Any other will bring disaster, ruin,
chaos. Let the gold be sunk in the sea!”
“The honorable representative of France may be right, Mr. President,”
said a great German banker in response, “but we have before us a task
which demands the most careful, the most profound consideration which we
can give to it. We have all of us, I doubt not, been overwhelmed by the
mere statement of its terms. We are in no way prepared at this moment to
devote that calm and dispassionate thought to the subject which is
necessary. I move that the sitting be suspended until to-morrow.”
The formal session was speedily ended in response to the motion, but no
one left the chamber. All gathered about Brent and plied him with
questions so incessantly that two hours had passed before any one
thought of going. Even then the delegates separated with the agreement
to meet again for informal consultation in the evening at one of the
hotels. The dispatches which they sent to their respective governments
were non-committal and evasive, while other inquirers about the business
of the conference were refused any information.
No attempt was made at the subsequent sessions to return to the
formalities and dignities of procedure which the startling nature of the
opening speech had so effectually banished. The debates were man to man
business consultations of the most earnest and practical description.
Nobody had any pet theories to put forward or any hobbies to ride. There
was a single-minded purpose on the part of every man to seek and find an
escape from a danger which, in the estimation of them all, grew more
threatening and more appalling every hour.
They recognized at once the necessity for reaching an early solution of
their problem. The secrecy of their deliberations might itself excite
suspicions. Their home governments would soon become displeased over
their reticence. In fact, the British ministry intimated very promptly
to the English delegates that their silence regarding the proceedings of
the conference was unsatisfactory. It became necessary to limit the time
during which the policy of secrecy should be continued. The delegates
finally informed their superiors at home that they had bound themselves
to preserve silence in regard to all matters coming before the
conference for one month. In cases where this was a violation of
instructions, cabinet ministers were informed that the step seemed
justified by certain exigencies of the situation, and that the end must
justify the temporary defiance of authority.
In the early stage of their deliberations, the temptation was strong
upon the delegates to adopt the easy and obvious plan suggested by Brent
at his first appearance before them. If the entire mass of gold should
be loaded once more upon a ship and sunk in the fathomless depths of
mid-ocean, the unique problem would be completely solved, and none like
it would ever arise probably to distract the brain of man.
But there was something inherently revolting and intolerable, especially
to these men of money, in the thought of thus destroying untouched and
unused the greatest mass of what the world regards as wealth which had
ever come into the possession of men. Reason told them, so they all
agreed at the outset, that to attempt to employ this treasure in the
monetary world would destroy or reduce to almost nothing the value of
all gold, now held in the belief that it was the securest form of
wealth. They did not need to go beyond the _a_, _b_, _c_ of finance and
political economy to make that truth apparent.
Two or three of the older delegates recalled the agitation in the money
markets of the world which followed the California gold discoveries of
1849. There had been a loud clamor, especially in the United States,
for the demonetization of gold, for the same reason that silver was
attacked as a monetary metal when its production increased in large
proportion. The yellow metal had been almost in disgrace for several
years, while its modest white rival had possessed in a higher degree the
essential quality of stability.
At one time, early in their deliberations, the old controversy between
bimetallists and monometallists which the problem so closely involved
threatened to make some division among the delegates. But the danger was
soon overcome. Monetary conditions throughout the world had already been
so changed by the influence of the fraction of Brent’s treasure which
had been poured into the channels of trade that matters of argument a
year before had now become matters of accepted fact. Previous opinions
and convictions were willingly revised in the light of new and
unsuspected conditions. No man sitting at the conference board was so
strongly wedded to hobbies or theories as to oppose them for an instant
to the stupendous facts now presented.
The air was most effectually cleared at the moment a disagreement seemed
possible, by a plain, straightforward statement of the situation by one
of the English delegates. Speaking in simple, business-like fashion, he
said:
“Gentlemen, I do not think we need concern ourselves too seriously with
the question of bimetallism. It is a matter which need not be directly
passed upon by this conference. I admit that our decree upon the fate of
this gold will have an almost decisive effect upon the monetary use of
silver; but let us look at the matter from another and I believe broader
point of view.
“Our problem really amounts to this: How shall we, in deciding the
destiny of this gold, secure to the world the greatest stability of
monetary values? In other words, how much if any of this gold can be
devoted to monetary and general use without seriously disturbing proper
standards of value? When we settle that point, the ratio between gold
and silver will adjust itself. I submit that it is not in the power of
any government or combination of governments to fix that ratio
arbitrarily in defiance of the actual ratio of the supply of the two
metals.
“Look at the matter for one moment in the light of history. The
fluctuations have been great, and dependent solely upon supply and
demand. Go back as far as Darius, and the ratio was thirteen to one.
After the pillage of the Temple of Delphi, B.C. 357, it fell to ten to
one. In the Roman world it rose as high as seventeen to one, but after
Cæsar’s return, loaded with spoils from Gaul, it was reduced to nine to
one. In the Middle Ages it ranged between ten and twelve to one. It
began to rise soon after 1600, and in 1717 the English government fixed
the ratio at 15.2 to one. The relative supply of the two metals has
always fixed their relative values, and it always will continue to do
so.
“Our task is to determine what is the world’s necessary consumption of
gold; that is, what should be the annual supply for maintaining a steady
standard of values. Solve that problem and our work is done. The gold
production of the world during recent years has averaged little more
than twenty-five millions sterling ($125,000,000). In 1852 it was
thirty-six millions sterling. The latter yield was too great, no doubt,
for the world’s financial needs at that day; but most of us will agree,
I think, that the vastly increased trade of the end of the century
demands much more than the comparatively meager supply of recent years.
In fact, the world was suffering from the first stages of a gold famine
when Mr. Brent landed his cargo of treasure in New York.
“I beg you to remember, gentlemen, that I represent a creditor country.
It would be greatly to the advantage of England if every ounce of Mr.
Brent’s gold could be buried in the bottom of the sea. But England is
unselfish and honest enough, I believe, not to require the payment of
the debts due her in coin of enhanced value. Give us a solution of this
problem which will maintain all obligations at their original value,
actually as well as nominally, and England will be content.
“My suggestion, therefore, of a general basis for a settlement of our
problem is this: Establish a fund out of this gold in charge of a small
international commission. Estimate carefully the sum which may safely be
added to the present average gold production of the world. Let the fund
be large enough for twenty, or at most twenty-five such annual
additions. Charge the commissioners with the duty of expending the
agreed sum annually upon great international enterprises, as Mr. Brent
has suggested. Then let the remainder of the gold be loaded upon a ship
and thrown into the sea at the earliest possible moment.”
It was not long before the entire discussion of the conference was
devoted to this proposition. Its general policy soon received the
unanimous approval of the delegates. But when it came to details there
was much difference of opinion. There was no certainty that the ordinary
gold production would remain $125,000,000 yearly; in fact, a
considerable increase was probable. South Africa was making enormous
additions to her annual contributions. British and Dutch Guiana and
other South American states were developing new and important fields,
while Australasia was gradually increasing her production. On the other
hand, the mercantile, as distinct from monetary consumption of gold was
steadily increasing, and it was estimated by most of the delegates that
this demand would absorb practically all the natural increase.
After several prolonged debates, the conference fixed upon $200,000,000
as the maximum quantity which might be added to the world’s supply of
gold without disturbing the conditions of trade. When it came to the
practical regulation of this supply, there were serious difficulties.
The power which it was necessary to delegate to the controlling board
was greater than that of kings, greater than had ever been intrusted to
the hands of man. They would be virtually the keepers of the world’s
purse, the bankers of all Christendom. The power of giving prosperity or
adversity to nations, or to one country at the expense of another
country, would rest with them. To whose hands could responsibility so
vast be safely consigned?
There was also the almost inevitable danger of international jealousy in
the expenditure of such colossal sums. A higher virtue than patriotism
must control the distribution of benefactions for the good of humanity
at large, rather than of nations. All the great international projects
which had been brought seriously before the world would not consume in
their execution half the treasure now at command. The delegates talked
in a desultory way of the Nicaragua Canal, great sanitary schemes for
purifying the continent of Europe, the stamping out of cholera and other
plagues at their source in the East, the irrigation of the western
plains in America and of portions of African deserts, the tunneling of
the English Channel. They became hopelessly confused and divided upon
this branch of the subject, and speedily abandoned it as too vast and
too technical for consideration by a temporary assembly.
A proposition to divide the gold, which it might be decided to
distribute annually, _pro rata_, according to population, among the
governments of Europe and America, was rejected after brief
consideration. Brent himself ventured to express his disapproval of the
suggestion, and his wish was at once respected. Such a plan would lead,
he argued, to more extreme militarism in Europe, while in America it
would yield merely a temporary easing of the burden of taxation, and a
temptation to jobbery at Washington. It would produce no genuine and
permanent boon to mankind.
All the schemes and suggestions offered finally sifted down to a very
simple plan, and four weeks of almost incessant work brought the
conference to substantial unanimity in its approval. In brief outline,
these were its terms:
The conference recommended that the equivalent of $1,500,000,000 of
Brent’s treasure be delivered to the United States government as
custodian. It should remain in the United States Treasury in its crude
state of native gold until drawn upon from time to time, according to
prescribed conditions, by an international board of trustees. This board
should consist of five members, to be appointed, one by the president of
the United States, one by the queen of England, one by the emperor of
Germany, and one by the president of France. The fifth member should be
Robert Brent of New York. The term of office of the trustees should not
be limited, and they should receive each an annual salary of $250,000.
Their duties should be the expenditure, upon works for the general
benefit of mankind beyond the scope of private undertaking, of such sums
from the fund in the custody of the United States government as their
judgment should dictate, and subject to the following restrictions: The
expenditure should not in any one year exceed the sum of $75,000,000,
nor fall below $30,000,000, unless the addition to the world’s supply of
gold from all sources, the fund included, during the next preceding year
had exceeded $200,000,000. No excess over the last named maximum of the
world’s supply should be permitted by means of the trustees’
expenditures.
This agreement was reached by the conference two days before the
expiration of the time during which it had been voted to keep the
subject under consideration secret from the home governments of the
various delegates. Before final adjournment, the conference adopted
unanimously a report, setting forth in the strongest terms their
admiration of the qualities of mind and heart which had led the owner of
the greatest treasure in history to make of it a blessing and not a
curse to his fellow-men.