Mr. REAGAN. If the Senator from Nevada will permit me, I wish to ask the
Senator from New Hampshire if he means to be understood as assuming that
a protective tariff reduces the value of the commodities produced?
Mr. BLAIR. I was simply asking for information of the Senator from
Nevada, and he can answer that question much better than I; but the
Senator from Texas understands very well that I do believe a protective
tariff reduces prices.
Mr. JONES, of Nevada. Mr. President, so far as a tariff has the effect
of reducing prices in any country, it is not by reason of the levying of
any certain percentage of duty on the imported goods. The first effect
of the tariff certainly always must be to raise prices. The fundamental
theory of the tariff is--whether it be correct or not I am not now
discussing--that by that tariff you place the price of manufactured
goods up to a range at which they can be produced in the country in
which the tariff is levied, and upon the level of the range of wages and
manner of living which obtain in that country. By so doing, if you have
a proper volume of money, you set all your people at work, and keep them
at work at a variety of occupations. In such case every forge, furnace,
and factory becomes a school, every machine-shop an academy, and every
cunning device and invention becomes a lesson, teaching the people how
to deal with the subtle forces of the universe. So far as this country
is concerned the theory of the tariff is that 65,000,000 people should
have a varied and complete system of manufactures, which should supply
practically all their own wants, instead of an abnormal proportion of
them being driven into the single occupation of farming and relying on
foreign manufacturers to supply such finished products as they need. To
draw out and develop the aptitudes of a people a large variety of
occupations is indispensable. When all men are employed at their
aptitudes new inventions multiply, progress is accelerated, and the
secrets of nature are more rapidly unfolded. Hence the McCormick reaper;
hence the sewing-machine, that great instrument which clothes the world,
because of the discovery that the eye of the needle should be at the
point; hence the air-brake, the telegraph, the electric light, and
thousands of other inventions that a protected people originate and
develop, which would perhaps not have been originated or might have been
long delayed if it had not been for the discouragement to imports caused
by the tariff, and the encouragement to our people to go into
manufactures by which their varied talents are drawn out and cultivated.
There is no doubt that eventually as our conditions improve, increasing
numbers of our people will by degrees emerge from agricultural and enter
manufacturing pursuits. A tariff, by stimulating the organization and
development of industries, trains men to greater skill and perfection of
workmanship in a variety of departments, and with greater skill comes
greater efficiency of labor, and so greater economy of time. In that way
the prices of certain products are in time reduced; but that is not a
reduction of which any one complains.
The true cause of the present discontent will not be found in the
protective tariff, but in the exactions of the single gold standard.
Fifteen years ago England was on the gold standard. It is on the gold
standard to-day; yet prices in England are 35 per cent. lower than they
were fifteen years ago. There being no reason why there should be any
change in the trend of prices, so long as a fierce contest for the
possession of gold shall be waged between England, France, Germany, and
the United States, we are justified in assuming that a proportionate
decline of prices will continue. That means a further decline of 30 or
35 per cent. in prices during the next fifteen years. Where is this
tendency to stop? and if it does not stop, how long will it be before
the masses of the people become the bond slaves of the creditors? It is
shocking to the moral sense of mankind that a few money-lenders and
bondholders should thus be able, silently and insidiously, to wreck the
business of every country in the world by constantly increasing the
value of the money unit.
While admitting the necessity of more monetary circulation, our gold
standard friends fail to show us how it is possible for an increase in
the volume of money to benefit our merchants, farmers, or mechanics if
the prices that prevail in gold standard countries are to prevail here;
for that is what the gold standard means for us, Mr. President. It means
that the prices that rule in gold standard countries are to rule here.
The extreme indefiniteness with which the term "gold standard" is used
has so befogged the relation which gold money bears to industry and
commerce that people lose sight of the essential feature of that
relation. It is impossible to have a clear conception of the gold
standard without keeping in view exactly what is implied by the term.
What men must mean in this country by "the gold standard" is not the
touch of the metal, for they never touch it, and rarely, if ever, see
it. The maintenance of the gold standard here simply means the
maintenance here of the range of prices that prevail in gold-using
countries; that is to say, that low and lowering range of prices
rendered necessary by the attempt to measure the value of the constantly
increasing mass of the products of industry in all the western world by
the constantly diminishing volume of gold. No relief can come to the
toiling masses of this country until we can lift our prices above those
that now prevail in gold-using countries.
Even if our prices remain as they are and do not increase, gold will
eventually leave the country if it continue to increase in value as it
has been increasing during the past fifteen years. We have been enabled
to maintain the gold standard here for the past twelve years
notwithstanding a considerable addition of money other than gold to our
currency, but we have been able to do so only because other countries
have been using an equal or greater amount of money other than gold. We
have been using no greater proportion of silver or paper money than
other countries having the gold standard are using, hence we have been
able to maintain their level of prices and still keep the metals
together. But whenever we shall attempt to prevent a further fall or
prices in this country, it will be impossible for us to retain our gold
so long as prices in gold-using countries continue to decline as they
have been declining. Gold will leave as quickly because of contraction
abroad as of inflation here, if by "inflation" is meant a coinage of
money sufficient to maintain prices at a steady level.
Should gold leave the country, then, in order to supply its place, in
order to maintain the _status quo_ in prices, and prevent a further fall
from the present low range, we should need to have as many dollars of
silver in circulation as there are now dollars of gold. Gold would go
out only because our prices were rising, and as it went prices would
cease to rise. That process might continue until three or four hundred
million dollars of gold had gone. In all this, where would be the
disadvantage to our people?
Considering the rapidly increasing population and wealth of this
country, all the silver that can be procured from the mines will be
necessary to maintain the level of prices and to keep pace with the
increasing demands for money. If, however, it slightly exceeds--and it
could not at the utmost more than slightly exceed--the amount actually
demanded by increasing population and business, the over-plus of each
year would take a great many years to drive gold out of the country,
dollar for dollar. For, when prices here, of things internationally
dealt in, are at an equilibrium with prices of the same articles abroad,
gold can not go any faster than silver comes in.
IF $2,500,000 SILVER PER MONTH HAS NOT DRIVEN OUT GOLD, HOW MUCH WILL
DO SO?
For twelve years past we have had a silver coinage of nearly $2,500,000
a month, yet no gold has been driven out. Having tested the capacity of
that quantity of silver to drive out gold, we find that instead of
driving it out its coinage has resulted rather in bringing gold in. For,
to whatever cause the influx of gold may be ascribed, it is
unquestionable that the gold has come, and it has needed all that gold,
and all the silver that we have coined, to maintain international prices
here.
It is admitted by all that gold can not go out except by reason of a
rise in this country of the prices of articles of international commerce
beyond the prices of the same articles prevailing abroad. It is only
then that it becomes more profitable to send out gold in payment for our
foreign purchases than to send out commodities--the products of our own
country. Commodities will always be sent out in payment for other
commodities so long as it is more profitable to send them than gold, and
when, by reason of low prices prevailing abroad and high prices here, it
is no longer profitable to send out commodities, purchasers send out
gold, but only because it is to their advantage to do so.
Now, having seen that the coinage of $2,500,000 of silver each month was
insufficient to so raise prices in this country as to induce gold to go
abroad, but that on the contrary it resulted in an influx and
accumulation of a large amount of gold, we may safely assume that only
so much of the amount of silver which Congress shall now provide for as
exceeds $2,500,000 a month will have any influence in raising prices in
this country above international prices, and so providing a stimulus for
gold to go abroad in payment for commodities imported into this country.
If the amount of silver which shall be now provided should be, say,
$5,000,000 a month, the excess over the present coinage would be
$2,500,000 a month. This, then, would be the amount that would drive out
gold. As one dollar of silver would drive out no more than one dollar in
gold, no more than $2,500,000 could go out monthly. That would leave in
circulation the same amount of money that is in circulation now. There
would still be no increase in the money volume of the country, and, with
no increase in the volume of money, prices here would not rise above
international prices. At the rate of $2,500,000 a month, it would take
twenty years to drive out $600,000,000 of the $700,000,000 of gold now
in this country. It would take even longer than that, because the
$600,000,000 driven out would tend to raise international prices abroad,
and so check the outflow of gold from here.
Mr. McPHERSON. Will the Senator yield to me for a question, or does he
prefer to go on?
Mr. JONES, of Nevada. I am always ready to answer a question.
Mr. McPHERSON. I do not want to interfere with the Senator's line of
argument, or with his speech in any form, but it does seem to me that
there is something fallacious about the Senator's argument, or else my
judgment and the experience of the world is all wrong. I wanted to ask
the Senator this question: If it be known that the Government of the
United States, if you please, by such an increase of the silver coinage
in this country as will be produced by the free coinage of silver, to
which theory, as I understand, the Senator is fully committed--if that
be the theory of the Government hereafter by the command of Congress, I
want to ask the Senator if he broadly and boldly asserts that no gold
can be driven out of the country to a greater extent than dollar for
dollar for the silver that comes in?
Mr. JONES, of Nevada. Absolutely; I say so.
Mr. McPHERSON. Then I want to ask the Senator another question, which
seems to be pertinent. Does the Senator assert that if a 72-cent dollar,
the value in bullion of a silver dollar during the year 1889, as has
been furnished us by the Director of the Mint and the Secretary of the
Treasury, were coined without limit (I say without limit, the limit
being, of course, the amount of bullion that is brought to the Treasury
to coined), and the people of this country who have been in favor of a
safe and honest currency, a currency either gold or as good as gold,
which the Treasury has been able to maintain, having forced no silver
upon the people if they did not wish it, and in that way the silver
dollar having been maintained equal to the gold dollar, I want to know,
with the people of this country to-day the holders of $500,000,000 of
gold, how it is possible for the Senator to believe that with a 72-cent
dollar to take its place the gold coin would circulate for a single
week, or a single day, or a single hour? If they have the gold will they
not hold it?
Mr. JONES, of Nevada. The Senator has so involved his question with his
argument that I can scarcely get at what he wants me to answer.
Mr. McPHERSON. The question I want the Senator to answer is this: Will
the people of this country, the financiers of this country, the banks,
the moneyed men holding $500,000,000 of gold, with a certainty of the
free coinage of silver and going to a silver basis, for that is what it
means, put their gold in circulation, or will they hoard it? Will it
disappear?
Mr. JONES, of Nevada. I scarcely know what the Senator means by a
"silver basis." He talks about a 72-cent dollar. We have never seen a
72-cent dollar. The papers in the East have told us that the silver
dollar was worth 72 cents. I recollect talking on that subject once with
some Senators in the cloak-room. During the conversation one of the
Senate pages brought me a telegram, on which he said the telegraph
messenger had told him there were 50 cents due. I give the page a silver
dollar and said to him: "I have been informed by some very respectable
and intellectual gentlemen in here, some of them now candidates for the
Presidency even, that this dollar is worth only 75 cents. I do not want
to cheat a little boy. Take this out, and if the boy thinks it worth
only 75 cents he can send me back 25 cents, and if he thinks it is worth
a dollar he can send me back 50 cents. I will leave it to him." The page
brought back 50 cents and said the telegraph boy told him he did not
know what those old "duffers" in there might say, but it was as good a
dollar as he wanted and was very hard to get. [Laughter.]
The Senator talks about the bullion value as though that had anything
whatever to do with the value of the dollar. I have attempted to
demonstrate that the material that was in the dollar has nothing
whatever to do with it. Let me illustrate. Suppose the entire supply of
silver of the world to-day were $60,000,000. Suppose the law limited the
coinage of it to $58,000,000, and every dollar coined was at par with
gold. Suppose there were a demand for half a million dollars of silver,
to be used in the arts, and that the remainder ($1,500,000) of uncoined
silver were barred from the imperial money use. That supposes a supply
of $2,000,000 left after satisfying the requirements for coinage, and
supposes only half a million dollars' demand for use in all the arts. In
that case there would be a $2,000,000 supply bearing down a half million
dollars' art demand, or a proportion between supply and demand of 4
to 1. Suppose that under those circumstances silver bullion went to 50
cents an ounce. Would the Senator then say that 50 cents an ounce was
the value of the $58,000,000, and all the rest of the coined silver of
the western world, while by coining another million and a half, which
would be nothing to a country like this, all the silver would be at par
with gold? Every ounce of silver coined in Europe and the United States
is at par with gold, a thousand or twelve hundred million dollars of it
to-day in France, $200,000,000 in Germany, $370,000,000 of it here. We
are not dealing with the price of silver bullion, that portion of silver
that is deprived of its immemorial use as money. We do not say what the
commodity demand for silver may make that worth. Such a consideration
has no bearing whatever on the value of money.
I will suppose that in some one county of the United States a law were
passed that the wheat grown in that particular county should have no
right to go through the grist-mill, and that that wheat, as it might
very naturally do, being deprived of use, fell to one-half the price of
the wheat grown elsewhere in the country. Would the price of the wheat
of that one county thus under interdiction and denied the grist be a
fair gauge by which to measure the value of the entire wheat crop of the
country? Manifestly not. All we have to do is to take up the little
"slack" of silver, and all of it will at once be at par with gold; then
we shall hear no more about the "commodity value" of silver. That is the
contention that the bimetallists make.
Mr. HEARST. It will be $1.29.
Mr. JONES, of Nevada. It will be $1.29 an ounce in one week--in three
days--in fact the very moment you give it back its ancient right of
coinage and restore to it its full money power. You coin of gold all
that is brought to the mint, and you deny to a certain portion of silver
that same long-established privilege, and then you measure the value of
the whole supply of silver by that of the little fraction that is not
coined, and which therefore has to find a market as a commodity.
Mr. McPHERSON. Then, if the Senator will permit me, he necessarily
proposes that the Government of the United States shall take up all this
"slack," as he calls it, in the surplus quantity of silver and shall
use it in the coinage. The mints of Europe being closed against the
coinage of silver, there is no other place where it will be coined. Now,
if the Government of the United States should use all the surplus silver
in the country, which has simply forced the price down since we
remonetized silver in 1878 more than 20 per cent.----
Mr. JONES, of Nevada. Gold has risen 35 per cent.
Mr. McPHERSON. Then I think the Senator's argument is upon this idea and
upon this plan, that after we are upon a silver basis, as we should be
most assuredly, there would be no inequality in the money, because it
would be all silver.
Mr. JONES, of Nevada. And no inequality between it and gold.
Mr. McPHERSON. Certainly not, because there would be no gold in
circulation. But let me ask the Senator another question. While he can
use his short-legged silver dollar for the payment of debts, when he
comes to make a new obligation would not the price of the goods assume a
price equal to the difference between gold and silver? In other words,
while you can use a debased currency for the payment of debts, if a
legislative decree requires that you shall accept it, you can not use it
for any other purpose.
Mr. JONES, of Nevada. I can not understand the Senator. We have not
provided any "short-legged" dollar. The Senator is assuming a good many
facts and attempting to adjust me to them. I ask the Senator to wait
until he has heard my argument, and I invite the Senator then to make
reply to it.
Mr. McPHERSON. I am sorry that I interfered with the Senator.
Mr. JONES, of Nevada. It was no interference on the part of the Senator,
except that I can not separate the Senator's questions from the argument
and assumptions that he makes. As to the outflow of gold, as I have
said, it would take a long time for even $400,000,000 of it go. The
amount of gold driven out would tend to raise prices abroad by making
money more plentiful there, and so check the outflow of gold from here.
When Senators speak about $600,000,000 of gold being withdrawn from
circulation here a question that is a little curious arises. What are
these people who own it going to do with that gold after they have
withdrawn it from circulation? Are they going to invest it in Great
Britain? Are they going to invest it in France? Are they going to the
Cape of Good Hope to invest it? If they are they will reverse the policy
that English capitalists are pursuing now and have been pursuing for
years--bringing their gold over here for investment. The Senator tells
us that gold is to disappear from circulation. What will the owners do
with it? Where and in what are they going to invest it?
Mr. McPHERSON. It will be held for a premium.
Mr. JONES, of Nevada. But who will buy it at a premium? Who needs it at
all? For what purpose is it needed? Who is going to pay any premium for
it? Nobody is "short" on it, and there is no law which forces anybody to
have it.
Mr. President, nobody wants it enough to give a premium for it. It is
only worth what is daily paid in the markets of the world and nobody is
going to pay a premium for it. It is a bogie with which to frighten the
people who demand reform in the currency of this country. Let them
withdraw their gold.
I tell the Senator it is not the men who hoard the gold in vaults who
maintain or promote the prosperity of this country, but the toilers in
the wheat-fields and on the farms of the country, the men who work in
the planing mills, the forges, the furnaces, the factories, and in all
our institutions of industry. It is they that bring us our prosperity,
and not these people who are gambling for premiums on gold.
Let them gamble among themselves; let who lose and let who win, the
people care nothing. The people of the United States are going to
institute a money that shall install and maintain justice as between the
citizens of this country, and they will not be impeded. I can tell the
Senator that neither his party nor the Republican party will ever impede
the march that this great country is about to make--the first in the
world, I am glad to say--in adjusting to the demands of industry and
commerce, that great instrument, money, the non-adjustment of which, as
I have already stated, has, in my belief, caused more misery than was
ever caused by war, pestilence, and famine.
But to resume at the point where I was interrupted:
The gold going out would tend constantly to restore the equilibrium
between our prices and those of the gold-using countries, making the
proportion of the gold outflow each year less than that of the year
before. If there be included in this computation the remaining
$100,000,000 of gold, which would remain after the outflow of the
$600,000,000, we shall be compelled to come to the conclusion that the
time when our stock of gold can be driven out will be almost
indefinitely postponed.
But even should all our gold go by reason of the remonetization of
silver, it will not be to the injury of the gold standard, but to its
great advantage, and to the equally great advantage of the masses of the
people, as well of this country, which the gold may leave, as of all
countries to which it may go. It will make the "gold standard"
consistent with the prosperity of the countries maintaining it. But
instead of preserving the gold standard of to-day, which is a standard
of wrong, it will inaugurate a gold standard that will approximate to a
standard of justice.
The new "gold standard" that would be established by the outflow of our
gold would be a standard of prices resulting from the influx into
England, France, and Germany, the principal gold-using countries of
Europe, of more than $600,000,000 of money.
So considerable an addition to their money-stock would raise prices in
those countries, and by remaining there, would, with the current
production, which we could spare to them, tend to maintain prices at a
steady level. Such a condition would be an inestimable boon to the
overburdened masses of Europe, and their prosperity would not be
attained at the expense of the people of the United States. We could
well afford to let gold go, since, by the coinage of silver, our own
money volume would not be reduced. The rise of prices which it would
effect in Europe would not only, as I have stated, secure better prices
for our exported goods, but would undoubtedly enable us to maintain
prices here at a substantial parity with those of Europe--that is to
say, with those of the new, more rational and more beneficent gold
standard which would be established by the full remonetization of silver
in this country.