Democratic Sentinel, Volume 2, Number 27, Rensselaer, Jasper County, 16 August 1878 — THE MONEY QUESTION. [ARTICLE]

THE MONEY QUESTION.

Speech of Hon. Thomas L Ewing, at McArthur, Ohio. What is the money question ? It is not whether we shall have coin or paper. There is no such issue, and never has been. Paper has long been, and must hereafter be, the great money factor in new and highly progressive countries. Gold and silver accumulate in countries which have approached or reached their zenith, where gathered wealth takes control of the productive forces and wage people toil for their existence. There, concentrated capital, low interest, and cheap labor, combine to make cheap products, and gold flows there to buy them. But in the United States, with our heretofore swift development, distributed wealth, and well-paid labor, we have never been able to get or keep enough gold or silver to be the chief currency, and have always relied and must hereafter rely mostly on paper money as the agent of industrial development. The practical money question in the United States is, therefore, not whether our currency shall be coin or paper, but who shall issue the paper money, and how shall its value be determined i And bn the settlement of this question depends the solution of the chief political and social problems which now agitate the American people. What is the oause, and what the cure, of the intolerable paralysis of business, destruction of values, and the degradation of labor, which now oppress and alarm our people ? The cause, fellow-citizens, I still insist, is the impracticable attempt to force specie payments. It was perfectly apparent from the outset, te every well-informed and reasoning man, that the scheme involved this distress, as inevitably as the amputation of a leg involves a serious shock to the nervous system. We have too little coin, and too little power to keep it, to make permanent resumption possible, without an enormous contraction of our paper currency. We have experienced a contraction of about $70,000,000 by cancellation, and much more than that by hoarding, through fears of capitalists as to the effect of the Resumption law; and this contraction has resulted in an enormous fall of priceß, ruin of debtors and taxpayers, profitless business, bankrup cy, pauper wages, want of employment, starvation, raggedness, beggary and crime. But, we are told there can be no further contraction, because Congress has forbidden the destruction of the greenback currency, and required the Secretary of the Treasury to pay it out when redeemed. But that law is a dead letter on our statute books, except for the moral effect of the declaration that the greenback shall not utterly perish. The Secretary, in his telegram to the Hon. William A. Phillips, of Kansas, of June 17, 1878, which you will find in McPherson’s political manual for this year, declares that he “will keep in circulation all the United States notes that can be maintained at par with coin.” That means that he will hoard all the redeemed greenbacks, if necessary, to maintain resumption. The law of Jan. 14, 1875, permanently appropriates for resumption purposes “all surplus moneys in the treasury not otherwise appropriated.” When the greenbacks shall be redeemed, after Jan. 1 next, they will become at once appropriated by the law to resumption purposes ; and the Secretary avows his intention to hold and hoard thorn, as far as he thinks necessary, for those purposes. In other words, he thinks that the recent law prohibiting the destruction of greenbacks, and requiring them to be paid out again, only requires him to pay them out in obedience to appropriations, and that the sweeping appropriation for resumption purposes of all greenbacks that may come in by redemption puts the reissue entirely at his discretion, to be made only if, and when, the needs of resumption demand. What difference will it be to the business of the country whether greenbacks are destroyed or only hoarded and held fast in the treasury? Mr. Sherman has repeatedly declared, and everybody who has studied the subject knows, that a large contraction of the paper currency is necessary to maintain resumption. So that, after the Ist of January next, contraction will go on with all its calamitous consequences precisely as if no law had been passed forbidding the destruction of greenbacks. Because of this construction by Mr. Sherman of the Resumption law in connection with the law forbidding the cancellation of greenbacks, I resisted and was instrumental in defeating, on the 18th of June last, a motion to concur in the Senate substitute for the House bill to repeal the Resumption law. This substitute proposed to strike out all of the House bill repealing the resumption scheme and insert in lieu thereof a provision making greenbacks receivable for customs and also receivable for 4-per-cent. bonds. It was a drag net devised by Mr. Sherman to haul in the greenbacks in payment for bonds, and thus make them so scarce that few would be presented for redemption. Three days later the House passed a bill making greenbacks receivable for customs but not for bonds. That bill will probably pass the Senate next session. Meantime the House bill to repeal the Resumption law, with Mr. Sherman’s substitute, lies on the Speaker’s table; and I hope the people this fall will tell the House and the Senate in thunder tones that the Resumption law shall be repealed, Without substitute or compromise. Nothing is more certain than that a further large contraction of the paper currency is indispensable to the maintenance of resumption. Our paper currency is from two to three times greater than all the coin in the limits of the United States. No nation on earth ever maintained a redeemable paper currency equal to the amount of coin in such country. In fact, no great debtor nation ever maintained specie payments at all. England, France and Germany, the chief creditor and specie-paying countries, have three times more coin than redeemable paper. Before the war, when we had a paper currency spasmodically redeemable, we never had a volume of paper equal to the amount of coin in the United States. How can we now expect to maintain resumption with less than $300,000,000 of coin in the country, and near $650,000,000 of paper—loaded down as we are with enormous foreign debts and expenditures which in any year may drain away every dollar of our coin ? It can’t be done. The only possible way to maintain specie payment is by extinguishment of our annual foreign tribute, and by a sweeping reduction of our paper currency, entailing far greater busineas calamities than we have yet endured. The advocates of resumption rest their hopes on three fallacious assumptions. First, they say the people of this country will hot call for gold. Recollect that resumption means that every bank depositor or Government creditor shall have his free choice of gold or silver for his debt. There are about $350,000,000 of legal tender, and $300,000,000 of bank paper, and $2,100,000,000 of national and other bank deposits, every holder of which must be given gold if he demand it, before resumption can be regarded as established. Were the national banks—the right bower of the Treasury Department—to refuse to pay gold to either note-holders or depositors, the refusal would be interpreted to mean weakness at the treasury. Confidence would be shaken. The Secretary relies on confidence as a substitute for two-thirds of the coin needed. When that is shaken resumption dies. To maintain this confidence all national banks must pay gold as freely as paper or silver * demanded. Now, the people outside of the Pacific slope have no gold. They sold their hoards ten or fifteen years ago. Won’t they want it? Of course they will. I venture the prediction that the gold the Secretary has hoarded at such effort and cost will not supply the home demand alone. The second fallacious theory is, that the Secretary of the Treasury can refuse to pay gold and pay only silver for greenbacks, and that the banks, exporters and people will not want silver. But he will have but 20,000,000 to 30,000,000 of silver dollars. If he refuse to pay gold when demanded, he will advertise his inability to resume in gold. It will by that act be put at a premium; his barricade of silver will be drawn out to get at the gold, and resumption will collapse in a “ black Friday.” The third fallacy of the resumptionists is, that the balance of merchandise trade for the past eighteen months is making the maintenance of rasumption certain. But it brings us no gold—Tor the reason that we pay a tribute each year to Europe of not less than $200,000,000 for interest on American bonds and investments, expenses of foreign residence and travel, and cost of foreign shipping. That tribute far exceeds any balance of merchandise trade which it is possible for us to keep up. It has carried off more than the whole coined product of our mines since 1861—leaving us poorer in the precious metals now than then. This balance of merchandise trade has checked for the time being the export of gold, but brought us none. If it exceed our foreign tribute the balance is paid in bonds, not in gold. This large balance of trade is not healthy or

lasting. It is a spasmodic symptom of the prostration of our industrial system. The aggregate of our foreign trade, exports and imports combined, has fallen off largely since the Resumption law passed. The loss is in imports, because we are too poor to buy. Exports have increased, because home consumption has diminished, and our warehouses must empty on foreign markets at any price their glut of unsalable wares at home. A failing merchant who is foroed to sell out below cost, while his family is ragged and hungry, might as well brag of his large business as we of our increased exports. While this has been going on our foreign tribute is being paid in foreign goods at half prioe, instead of partly in gold, as heretofore. Hence the export demand for gold has fallen off, and its premium consequently is reduced to almost nothing. Now, just as long as we are kept too poor to consume the usual quantity of our own and foreign products, and so long as raw material and raw products are kept at or below the cost of production, and labor is kept at starvation wages, we can undersell the world, pay our foreign tribute wholly in products, keep our gold, and enjoy the blessings of specie payment, provided our own people won’t ask for gold. The tremendous sacrifices which have nearly brought equalization, have not at all insured the maintenance of resumption. Approximate equalization has been forced by contraction and hoarding and consequent breaking down of prices below the gold level. Meantime the Government hoards gold, gathered from our mines and the banks, and don’t pay out a dollar except for interest on bonds. Bnt the day approaches when the treasury, instead of being the receiving reservoir, is to become the distributing reservoifpfOß all the banks, and all who want to ship, or hoard, or use, or speculate in gold. Success depends not only on attaining equalization before the outpour begins, but also on being able to supply all comers, at home or abroad, with all the gold they want for greenbacks. If the Secretary should hoard all greenbacks redeemed, he will still further crush and destroy the business of the country, for the gold paid out will not move the currents of trade, as greenbacks do, but will largely settle in hoards, or reserves, or go abroad. And the country will rise in arms against such protracted pressure, and smash the machine. But if he should (as I believe he will not) pay out greenbacks as fast as redeemed, then the increase of currency, though it will not be large, will be enough to lift the screw-pressure from business, and it will revive, wages will increase, consumption of home and foreign products return toward a normal condition, and forthwith our boasted balance of trade will disappear, and our annual tribute to Europe wili again be paid in part by an annual shipment of from fifty to sixty millions of gold as for twelve years before the Resumption law passed. Then the mad attempt to resume specie payments without a quarter of an adequate supply of coin, and under conditions of foreign debt which made success impossible, will collapse. The country will then shake off tlie rule of the usurers and theorists that have navigated it over Niagara ; and the attempt will take its merited rank in history as a gigantic robbery of the people, and a high crime against civilization.

Our people are in debt at least $12,000,000,000 for Government, individual and corporate obligations. These debts represent an annual interest charge of $800,000,000 or $900,000,000 a year. Our Government taxes, national, State and municipal, are about $750,000,000 annually.' Excluding the taxes for interest on bonds, the two sums together represent an annual charge of noar $1,500,000,000 a year. This sum is about twice the amount of the annual inorease of wealth in the United States, after deducting living expenses, and is equivalent to interest at 6 per cent, on a sum greater than the present selling value of all the property, real and personal, iu the United States. It is this condition of unparalleled indebtment and taxation which makes the question of the volume of money we are to have so transcendentally important. The volume of money determines values. The scale of present expenditures having beeu fixed, and the public and private indebtedness contracted on a basis of values more than twice as high as those of today, a restoration of values is demanded by every consideration of honesty and statesmanship. But there can be no restoration of values without the utter abandonment of resumption, and a restoration of the currency to its per capita volume when the Resumption law was enacted. To restore the paper currency to the per capita volume at which it stood in January, 1875, would require a new issue of greenbacks to the amountof $130,000,000. Let such issue be made and expended in purchasing for cancellation about $130,000,000 of our 6 per cent, bonds. That restoration of currency will not do full justice to debtors and taxpayers, for the immense contraction of interest-bear-ing money in 1866-’7 operated for years to steadily break down values; but it will restore prices to where they were when the soheme of resumption was inaugurated. And without such restoration I believe this crisis will end in a general ruin of the industrial classes, and in wide-spread repudiation of public debts. The howl of “ inflation” raised against ail who resist contraction and lowering of values springs from the craft of the money power, and not from either honor or statesmanship. War necessity increased the currency .and raised the prices. If some creditors were wronged, theirs were among the least of the inevitable sufferings inflicted by the war. That they suffered was not the fault of the mass of the people. On the basis of those prices the most of tne great public debts were made and public expenditures fixed, and when fees and salaries are once fixed there is no such thing as lowering them. On a scale of prices greatly reduced by the destruction of the interestbearing Treasury notes in 1966-’7, the private debts existing when the Resumption law passed were incurred. Honesty, honor and sound policy demand that, as the Government had no power to scale debts and expenditures, it should abstain from reducing the currency, and thereby the values of labor and products with which debts and taxes were to be paid. But such consideration of common honesty and sound policy are utterly ignored and spit upon by the “honest-money” men, who invented this subtle scheme to break down values and rob the masses of their labor and property. To repeal this most destructive and rascally law, and restore the prices of commodities to where they stood when it was enacted, is demanded alike by every consideration of justice and sound policy. Can the country be harmed by such restoration of the currency and values to where they stood in January, 1875 ? Is it not rather now being destroyed by the opposite policy ? Look abroad over the land from Maine to Florida, from Cape Cod to the Golden Gate. What do yon see but ruin? Idleness, starvation, and beggary of labor ; a pestilence of insolvency; business stagnant; enterprise dead ; and all in the midst of every bounty a kindly heaven can pour on its favorite land. Even the blessing of invention—designated by God to alleviate the curse of slavish toil by substituting the forces of nature for the muscle of man—by the devilish alchemy of this scheme is changed to a curse. In ordinary times production, increased and cheapened by invention, is met by consumption increased by the lessened cost of products; and an equal amount of human labor, but less and less drudging, is required to fill the growing demand. But now the cunning of invention, forced by the abnormal fall of prices, is pompelled to fill the shriveling markets by employing hands of steel instead of hands of flesh and blood, thus hourly swelling the ranks of the unemployed. So that, with invention stimulated and consumption stopped, our society drifts like a Mississippi steamer with one wheel broken and the other moving, while the heady current sweeps it helplessly along. A restoration of the currency and consequently of prices to where they stood in Jannary, 1875, means justice to debtors and taxpayers, public and private solvency, revival of business, increased production and consumption, with full employment and fair pay to labor, and the reawakening of every dormant energy of our industrious and progressive people. The assumption that this great nation must be paralyzed to keep it from rushing to a wiid excess of paper money—must be crushed with doubled debt and taxes, and impoverished, by enforced idleness, so as to chain its currency to gold as the only method of saving it from illimitable inflation—is an error too monstrous and insulting to be tolerated by a self-governing people. If resumption could now be reached without costing another pang of hunger, or another groan from a broken heart, we would have paid for it a thousand times more than it is worth. Be it worth much or little, it is, under existing conditions, wholly unattainable, and the struggle for it must be indefinitely postponed. Whether a currency kept by convertibility at par with gold were desirable, if practicable, is a question on which there is difference of opinion among the opponents of the Resumption law. For myself, I believe that a Govern-

ment paper currency—fnU legal-tender except for pre-existing contrasts, redeemable only by reoeivability for public dues, fixed in amount of constitutional provision, and increased o&ch year in a ratio equal to the annual per cent, of increase of business —would be a far more stable measurer and exchanger of values than any currenoy which fluctuates in quantity with the fitful ebb and flow of gold, ana tosses the business of the country up and down in a seesaw of alternate prosperity and panic. In addition to the repeal of the Resumption law and the restoration of values to their status when it was enacted, the chief measures of currency reform are the full remonetization of silver and the substitution of greenbacks for national-bank notes. The partial remonetization of silver was the result of what I regarded, and resisted in Congress, as an unnecessary and inexpedient compromise with the money power. If that concession had not been made, and the foroe of public sentiment broken by it, I believe we would have to-day a complete restoration of our great product to its equal rank with gold as a money metal. The question cannot be settled until that act of justioo is accomplished.