were issued to replenish the gold reserve, there was a net balance in
the Treasury, exclusive of such reserve, of less than $13,000,000, but
the gold reserve amounted to more than $114,000,000, which was the
quieting feature of the situation. It was when the stock of gold began
rapidly to fall that fright supervened and our securities held abroad
were returned for sale and debts owed abroad were pressed for payment.
In the meantime extensive shipments of gold and other unfavorable
indications caused restlessness and fright among our people at home.
Thereupon the general state of our funds, exclusive of gold, became
also immaterial to them, and they too drew gold from the Treasury for
hoarding against all contingencies. This is plainly shown by the large
increase in the proportion of gold withdrawn which was retained by our
own people as time and threatening incidents progressed. During the
fiscal year ending June 30, 1894, nearly $85,000,000 in gold was
withdrawn from the Treasury and about $77,000,000 was sent abroad,
while during the fiscal year ending June 30, 1895, over $117,000,000
was drawn out, of which only about $66,000,000 was shipped, leaving the
large balance of such withdrawals to be accounted for by domestic
hoarding.
Inasmuch as the withdrawal of our gold has resulted largely from
fright, there is nothing apparent that will prevent its continuance or
recurrence, with its natural consequences, except such a change in our
financial methods as will reassure the frightened and make the desire
for gold less intense. It is not clear how an increase fix revenue,
unless it be in gold, can satisfy those whose only anxiety is to gain
gold from the Government's store.
It can not, therefore, be safe to rely upon increased revenues as a
cure for our present troubles.
It is possible that the suggestion of increased revenue as a remedy for
the difficulties we are considering may have originated in an
intimation or distinct allegation that the bonds which have been issued
ostensibly to replenish our gold reserve were really issued to supply
insufficient revenue. Nothing can be further from the truth. Bonds were
issued to obtain gold for the maintenance of our national credit. As
has been shown, the gold thus obtained has been drawn again from the
Treasury upon United States notes and Treasury notes. This operation
would have been promptly prevented if possible; but these notes having
thus been passed to the Treasury, they became the money of the
Government, like any other ordinary Government funds, and there was
nothing to do but to use them in paying Government expenses when needed.
At no time when bonds have been issued has there been any consideration
of the question of paying the expenses of Government with their
proceeds. There was no necessity to consider that question. At the time
of each bond issue we had a safe surplus in the Treasury for ordinary
operations, exclusive of the gold in our reserve. In February, 1894,
when the first issue of bonds was made, such surplus amounted to over
$18,000,000; in November, when the second issue was made, it amounted
to more than $42,000,000, and in February, 1895, when bonds for the
third time were issued, such surplus amounted to more than
$100,000,000. It now amounts to $98,072,420.30.
Besides all this, the Secretary of the Treasury had no authority
whatever to issue bonds to increase the ordinary revenues or pay
current expenses.
I can not but think there has been some confusion of ideas regarding
the effects of the issue of bonds and the results of the withdrawal of
gold. It was the latter process, and not the former, that, by
substituting in the Treasury United States notes and Treasury notes for
gold, increased by their amount the money which was in the first
instance subject to ordinary Government expenditure.
Although the law compelling an increased purchase of silver by the
Government was passed on the 14th day of July, 1890, withdrawals of
gold from the Treasury upon the notes given in payment on such
purchases did not begin until October, 1891. Immediately following that
date the withdrawals upon both these notes and United States notes
increased very largely, and have continued to such an extent that since
the passage of that law there has been more than thirteen times as much
gold taken out of the Treasury upon United States notes and Treasury
notes issued for silver purchases as was thus withdrawn during the
eleven and a half years immediately prior thereto and after the 1st day
of January, 1879, when specie payments were resumed.
It is neither unfair nor unjust to charge a large share of our present
financial perplexities and dangers to the operation of the laws of 1878
and 1890 compelling the purchase of silver by the Government, which not
only furnished a new Treasury obligation upon which its gold could be
withdrawn, but so increased the fear of an overwhelming flood of silver
and a forced descent to silver payments that even the repeal of these
laws did not entirely cure the evils of their existence.
While I have endeavored to make a plain statement of the disordered
condition of our currency and the present dangers menacing our
prosperity and to suggest a way which leads to a safer financial
system, I have constantly had in mind the fact that many of my
countrymen, whose sincerity I do not doubt, insist that the cure for
the ills now threatening us may be found in the single and simple
remedy of the free coinage of silver. They contend that our mints shall
be at once thrown open to the free, unlimited, and independent coinage
of both gold and silver dollars of full legal-tender quality,
regardless of the action of any other government and in full view of
the fact that the ratio between the metals which they suggest calls for
100 cents' worth of gold in the gold dollar at the present standard and
only 50 cents in intrinsic worth of silver in the silver dollar.
Were there infinitely stronger reasons than can be adduced for hoping
that such action would secure for us a bimetallic currency moving on
lines of parity, an experiment so novel and hazardous as that proposed
might well stagger those who believe that stability is an imperative
condition of sound money.
No government, no human contrivance or act of legislation, has ever
been able to hold the two metals together in free coinage at a ratio
appreciably different from that which is established in the markets of
the world.
Those who believe that our independent free coinage of silver at an
artificial ratio with gold of 16 to 1 would restore the parity between
the metals, and consequently between the coins, oppose an unsupported
and improbable theory to the general belief and practice of other
nations; and to the teaching of the wisest statesmen and economists of
the world, both in the past and present, and, what is far more
conclusive, they run counter to our own actual experiences.
Twice in our earlier history our lawmakers, in attempting to establish
a bimetallic currency, undertook free coinage upon a ratio which
accidentally varied from the actual relative values of the two metals
not more than 3 per cent. In both cases, notwithstanding greater
difficulties and cost of transportation than now exist, the coins whose
intrinsic worth was undervalued. in the ratio gradually and surely
disappeared from our circulation and went to other countries where
their real value was better recognized.
Acts of Congress were impotent to create equality where natural causes
decreed even a slight inequality.
Twice in our recent history we have signally failed to raise by
legislation the value of silver. Under an act of Congress passed in
1878 the Government was required for more than twelve years to expend
annually at least $24,000,000 in the purchase of silver bullion for
coinage. The act of July 14, 1890, in a still bolder effort, increased
the amount of silver the Government was compelled to purchase and
forced it to become the buyer annually of 54,000,000 ounces, or
practically the entire product of our mines. Under both laws silver
rapidly and steadily declined in value. The prophecy and the expressed
hope and expectation of those in the Congress who led in the passage of
the last-mentioned act that it would reestablish and maintain the
former parity between the two metals are still fresh in our memory.
In the light of these experiences, which accord with the experiences of
other nations, there is certainly no secure ground for the belief that
an act of Congress could now bridge an inequality of 50 per cent
between gold and silver at our present ratio, nor is there the least
possibility that our country, which has less than one-seventh of the
silver money in the world, could by its action alone raise not only our
own but all silver to its lost ratio with gold. Our attempt to
accomplish this by the free coinage of silver at a ratio differing
widely from actual relative values would be the signal for the complete
departure of gold from our circulation, the immediate and large
contraction of our circulating medium, and a shrinkage in the real
value and monetary efficiency of all other forms of currency as they
settled to the level of silver monometallism. Everyone who receives a
fixed salary and every worker for wages would find the dollar in his
hand ruthlessly scaled down to the point of bitter disappointment, if
not to pinching privation.
A change in our standard to silver monometallism would also bring on a
collapse of the entire system of credit, which, when based on a
standard which is recognized and adopted by the world of business, is
many times more potent and useful than the entire volume of currency
and is safely capable of almost indefinite expansion to meet the growth
of trade and enterprise. In a self-invited struggle through darkness
and uncertainty our humiliation would be increased by the consciousness
that we had parted company with all the enlightened and progressive
nations of the world and were desperately and hopelessly striving to
meet the stress of modern commerce and competition with a debased and
unsuitable currency and in association with the few weak and laggard
nations which have silver alone as their standard of value.
All history warns us against rash experiments which threaten violent
changes in our monetary standard and the degradation of our currency.
The past is full of lessons teaching not only the economic dangers but
the national immorality that follow in the train of such experiments. I
will not believe that the American people can be persuaded after sober
deliberation to jeopardize their nation's prestige and proud standing
by encouraging financial nostrums, nor that they will yield to the
false allurements of cheap money when they realize that it must result
in the weakening of that financial integrity and rectitude which thus
far in our history has been so devotedly cherished as one of the traits
of true Americanism.
Our country's indebtedness, whether owing by the Government or existing
between individuals, has been contracted with reference to our present
standard. To decree by act of Congress that these debts shall be
payable in less valuable dollars than those within the contemplation
and intention of the parties when contracted would operate to transfer
by the fiat of law and without compensation an amount of property and a
volume of rights and interests almost incalculable.
Those who advocate a blind and headlong plunge to free coinage in the
name of bimetallism, and professing the belief, contrary to all
experience, that we could thus establish a double standard and a
concurrent circulation of both metals in our coinage, are certainly
reckoning from a cloudy standpoint. Our present standard of value is
the standard of the civilized world and permits the only bimetallism
now possible, or at least that is within the independent reach of any
single nation, however powerful that nation may be. While the value of
gold as a standard is steadied by almost universal commercial and
business use, it does not despise silver nor seek its banishment.
Wherever this standard is maintained there is at its side in free and
unquestioned circulation a volume of silver currency sometimes equaling
and sometimes even exceeding it in amount both maintained at a parity
notwithstanding a depreciation or fluctuation in the intrinsic value of
silver.
There is a vast difference between a standard of value and a currency
for monetary use. The standard must necessarily be fixed and certain.
The currency may be in divers forms and of various kinds. No
silver-standard country has a gold currency in circulation, but an
enlightened and wise system of finance secures the benefits of both
gold and silver as currency and circulating medium by keeping the
standard stable and all other currency at par with it. Such a system
and such a standard also give free scope for the use and expansion of
safe and conservative credit, so indispensable to broad and growing
commercial transactions and so well substituted for the actual use of
money. If a fixed and stable standard is maintained, such as the
magnitude and safety of our commercial transactions and business
require, the use of money itself is conveniently minimized.
Every dollar of fixed and stable value has through the agency of
confident credit an astonishing capacity of multiplying itself in
financial work. Every unstable and fluctuating dollar fails as a basis
of credit, and in its use begets gambling speculation and undermines
the foundations of honest enterprise.
I have ventured to express myself on this subject with earnestness and
plainness of speech because I can not rid myself of the belief that
there lurk in the proposition for the free coinage of silver, so
strongly approved and so enthusiastically advocated by a multitude of
my countrymen, a serious menace to our prosperity and an insidious
temptation of our people to wander from the allegiance they owe to
public and private integrity. It is because I do not distrust the good
faith and sincerity of those who press this scheme that I have
imperfectly but with zeal submitted my thoughts upon this momentous
subject. I can not refrain from begging them to reexamine their views
and beliefs in the light of patriotic reason and familiar experience
and to weigh again and again the consequences of such legislation as
their efforts have invited. Even the continued agitation of the subject
adds greatly to the difficulties of a dangerous financial situation
already forced upon us.
In conclusion I especially entreat the people's representatives in the
Congress, who are charged with the responsibility of inaugurating
measures for the safety and prosperity of our common country, to
promptly and effectively consider the ills of our critical financial
plight. I have suggested a remedy which my judgment approves. I desire,
however, to assure the Congress that I am prepared to cooperate with
them in perfecting any other measure promising thorough and practical
relief, and that I will gladly labor with them in every patriotic
endeavor to further the interests and guard the welfare of our
countrymen, whom in our respective places of duty we have undertaken to
serve.
GROVER CLEVELAND
***
State of the Union Address
Grover Cleveland
December 7, 1896
To the Congress of the United States:
As representatives of the people in the legislative branch of their
Government, you have assembled at a time when the strength and
excellence of our free institutions and the fitness of our citizens to
enjoy popular rule have been again made manifest. A political contest
involving momentous consequences, fraught with feverish apprehension,
and creating aggressiveness so intense as to approach bitterness and
passion has been waged throughout our land and determined by the decree
of free and independent suffrage without disturbance of our
tranquillity or the least sign of weakness in our national structure.
When we consider these incidents and contemplate the peaceful obedience
and manly submission which have succeeded a heated clash of political
opinions, we discover abundant evidence of a determination on the part
of our countrymen to abide by every verdict of the popular will and to
be controlled at all times by an abiding faith in the agencies
established for the direction of the affairs of their Government.
Thus our people exhibit a patriotic disposition which entitles them to
demand of those who undertake to make and execute their laws such
faithful and unselfish service in their behalf as can only be prompted
by a serious appreciation of the trust and confidence which the
acceptance of public duty invites.
In obedience to a constitutional requirement I herein submit to the
Congress certain information concerning national affairs, with the
suggestion of such legislation as in my judgment is necessary and
expedient. To secure brevity and avoid tiresome narration I shall omit
many details concerning matters within Federal control which, though by
no means unimportant, are more profitably discussed in departmental
reports. I shall also further curtail this communication by omitting a
minute recital of many minor incidents connected with our foreign
relations which have heretofore found a place in Executive messages,
but are now contained in a report of the Secretary of State, which is
herewith submitted.
At the outset of a reference to the more important matters affecting
our relations with foreign powers it would afford me satisfaction if I
could assure the Congress that the disturbed condition in Asiatic
Turkey had during the past year assumed a less hideous and bloody
aspect and that, either as a consequence of the awakening of the
Turkish Government to the demands of humane civilization or as the
result of decisive action on the part of the great nations having the
right by treaty to interfere for the protection of those exposed to the
rage of mad bigotry and cruel fanaticism, the shocking features of the
situation had been mitigated. Instead, however, of welcoming a softened
disposition or protective intervention, we have been afflicted by
continued and not unfrequent reports of the wanton destruction of homes
and the bloody butchery of men, women, and children, made martyrs to
their profession of Christian faith.
While none of our citizens in Turkey have thus far been killed or
wounded, though often in the midst of dreadful scenes of danger, their
safety in the future is by no means assured. Our Government at home and
our minister at Constantinople have left nothing undone to protect our
missionaries in Ottoman territory, who constitute nearly all the
individuals residing there who have a right to claim our protection on
the score of American citizenship. Our efforts in this direction will
not be relaxed; but the deep feeling and sympathy that have been
aroused among our people ought not to so far blind their reason and
judgment as to lead them to demand impossible things. The outbreaks of
the blind fury which lead to murder and pillage in Turkey occur
suddenly and without notice, and an attempt on our part to force such a
hostile presence there as might be effective for prevention or
protection would not only be resisted by the Ottoman Government, but
would be regarded as an interruption of their plans by the great
nations who assert their exclusive right to intervene in their own time
and method for the security of life and property in Turkey.
Several naval vessels are stationed in the Mediterranean as a measure
of caution and to furnish all possible relief and refuge in case of
emergency.
We have made claims against the Turkish Government for the pillage and
destruction of missionary property at Harpoot and Marash during
uprisings at those places. Thus far the validity of these demands has
not been admitted, though our minister, prior to such outrages and in
anticipation of danger, demanded protection for the persons and
property of our missionary citizens in the localities mentioned and
notwithstanding that strong evidence exists of actual complicity of
Turkish soldiers in the work of destruction and robbery.
The facts as they now appear do not permit us to doubt the justice of
these claims, and nothing will be omitted to bring about their prompt
settlement.
A number of Armenian refugees having arrived at our ports, an order has
lately been obtained from the Turkish Government permitting the wives
and children of such refugees to join them here. It is hoped that
hereafter no obstacle will be interposed to prevent the escape of all
those who seek to avoid the perils which threaten them in Turkish
dominions.
Our recently appointed consul to Erzerum is at his post and discharging
the duties of his office, though for some unaccountable reason his
formal exequatur from the Sultan has not been issued.
I do not believe that the present somber prospect in Turkey will be
long permitted to offend the sight of Christendom. It so mars the
humane and enlightened civilization that belongs to the close of the
nineteenth century that it seems hardly possible that the earnest
demand of good people throughout the Christian world for its corrective
treatment will remain unanswered.
The insurrection in Cuba still continues with all its perplexities. It
is difficult to perceive that any progress has thus far been made
toward the pacification of the island or that the situation of affairs
as depicted in my last annual message has in the least improved. If
Spain still holds Havana and the seaports and all the considerable
towns, the insurgents still roam at will over at least two-thirds of
the inland country. If the determination of Spain to put down the
insurrection seems but to strengthen with the lapse of time and is
evinced by her unhesitating devotion of largely increased military and
naval forces to the task, there is much reason to believe that the
insurgents have gained in point of numbers and character and resources
and are none the less inflexible in their resolve not to succumb
without practically securing the great objects for which they took up
arms. If Spain has not yet reestablished her authority, neither have
the insurgents yet made good their title to be regarded as an
independent state. Indeed, as the contest has gone on the pretense that
civil government exists on the island, except so far as Spain is able
to maintain it, has been practically abandoned. Spain does keep on foot
such a government, more or less imperfectly, in the large towns and
their immediate suburbs; but that exception being made, the entire
country is either given over to anarchy or is subject to the military
occupation of one or the other party. It is reported, indeed, on
reliable authority that at the demand of the commander in chief of the
insurgent army the putative Cuban government has now given up all
attempt to exercise its functions, leaving that government confessedly
(what there is the best reason for supposing it always to have been in
fact) a government merely on paper.
Were the Spanish armies able to meet their antagonists in the open or
in pitched battle, prompt and decisive results might be looked for, and
the immense superiority of the Spanish forces in numbers, discipline,
and equipment could hardly fail to tell greatly to their advantage. But
they are called upon to face a foe that shuns general engagements, that
can choose and does choose its own ground, that from the nature of the
country is visible or invisible at pleasure, and that fights only from
ambuscade and when all the advantages of position and numbers are on
its side. In a country where all that is indispensable to life in the
way of food, clothing, and shelter is so easily obtainable, especially
by those born and bred on the soil, it is obvious that there is hardly
a limit to the time during which hostilities of this sort may be
prolonged. Meanwhile, as in all cases of protracted civil strife, the
passions of the combatants grow more and more inflamed and excesses on
both sides become more frequent and more deplorable. They are also
participated in by bands of marauders, who, now in the name of one
party and now in the name of the other, as may best suit the occasion,
harry the country at will and plunder its wretched inhabitants for
their own advantage. Such a condition of things would inevitably entail
immense destruction of property, even if it were the policy of both
parties to prevent it as far as practicable; but while such seemed to
be the original policy of the Spanish Government, it has now apparently
abandoned it and is acting upon the same theory as the insurgents,
namely, that the exigencies of the contest require the wholesale
annihilation of property that it may not prove of use and advantage to
the enemy.