Democratic Sentinel, Volume 9, Number 6, Rensselaer, Jasper County, 6 March 1885 — THE SILVER QUESTION. [ARTICLE]

THE SILVER QUESTION.

President Cleveland’s Recent Letter Elicits a Reply from the Friends of Silver Coinage. An Earnest Protest Against the Position Assumed by Mr. Arthur’s Successor (Associated Press dispatch from Washington.] The friends of silver in the House, while at first inclined to make a formal reply to the letter of President-elect Cleveland, since it has been given to the public, decided at a conference held this evening to reply openly to those parts with which they do not cree. They say they did not invite a cont oversv, but. on the co .trary, were anxious to avoid it. They also say it was not until it had become known that a determined effort was being made to induce the President elect to commit himself and his administration in advance to the gold side of the currency question that they decided merely to ask him not to commit himself until his Cabinet had been formed, and both sides of the question could be considered. They believe, however, in the independence of ‘the legislative branch of the Government, and assert they will at all times maintain it. They furnish the following as a statement of their views: In the letter no distinction is made between silver coinage and silver bullion. While it is true that the silver bullion, which is excluded from coinage and consequently from monetary use, is worth less (in the ratio of 16 to 1) than 85 per cent, of the gold dollar, silver coins, which are admitted to monetary use the same as gold, are equal in value to gold coin. The silver dollar will exchange for as mnch as a gold dollar. It will even buy the gold with which gold dollars may be made. France, with a population of 36,000,000 and territory not as large as Texas, has in circulation $600,000,000 silver with $850,000,000 gold, while we have bnt $200,000,000 full-tender silver to over $600,000,000 in gold. Altogether $l,3X),ooo,ooo silver coins, at a ratio of 15.1 to 1, are held in circulation in Europe, side by side with $’,600,000.000 gold. Of paper and silver together, including silver certificates, we have less than $750,000,000, which shows that in this country, there is more gold than paper, and nearly three times as much gold as silver. With this proportion in our currency, and with gold and silver equally full tender for everything, it is difficult to understand why the Secretary of the Treasury might not, if he chose to do so, pay out more silver and less gold. Of course, if while receiving into the Treasury United States notes, silver and elver certificates, gold, or gold certificates, he pays out only gold, his stock of gold would diminish. If, on the other hand, he should pay out more silver and paper and less gold, the character of the reserve in the Treasury would control the Secretary. There would be no need for a legal tender if one who receives money be permitted to choose the kind he will have. That si ver and silver certificates displace gold is true, but only as Treasury or bank notes displace it. The withdrawal of a hundred m llions of bank notes, or the issuance of a hundred millions, has the same effect on gold as so much in silver or silver certificates. Why has it never been proposed to withdraw the national bank notes as a means of preventing the > xpulsion of gold? , To the proposition that there now exist, or ever have existed under our Constitution, obligations specifically payable in gold, the silver men feel it their solemn duty to enter their most emphatic dissent at the very outset of a discussion of the question. No such obligations exist or ever djd exist. Webster said: ‘ "Gold and silver at rate-(.fixed by Congress constitute a legal standard of value in this country, and neither Congress nor any State has authority to establish any other standard or to displace this." One act to strengthen the public credit, approved March 18, 1869, solemnly pledged the United States to the payment of bonds in coin. The refunding act of July 14, ls7o, provided for the payment of all refunding bonds in coin, of their present standard value, which is the same as the present va ue. The resumption act of Jan. 14, 1875, provides that from and after Jan. 1, 1879, the Secretary ot the Treasury should redeem in coin the outstanding legal-tender notes. By the act of Feb. 28,1878, provid nv for the resumption of the coinage of the standard dollar, the silver dollars were made legal tender for all debts and dues, public and private, unless otherwise expressly stipulated in the contract; aud there is not a public obligation outstanding, and never was, containing a stipulation of payment in gold. In January, 1878, Congress adopted the following concurrent resolution, offered by Stanley Matthews, then Senator, now on the Supreme bench:. That all bonds of the United States issued or authorized to be issued under the acts of Congress hereinbefore recited are pavable, principal and Interest, at the option of the Government ot the United States, in silver dollars of the coinage of the United States, containing 412)6 grains each of standard silver, and that to restore to its coinage such silver coins as legal tender, in payment of said bonds, principal and interest, is not in violation of the public faith, nor in derogation of the rights of the public creditor. The opinions of Secretaries of the Treasury from 1878 down are r ferred to as authority. The opinions are valuable when supported liy facts and sound reasons, but ought not to control unless they are. It cannot be forgotten, however, that these same Secretaries have steadily predicted what has not taken place. The friends of silver concur in the opinion that it is most desirable to maintain and continue in use the mass of our gold coin, hs we 1 as the mass of silver already coined. They agree, too. that it is of momentous importance to Drevent the two metals from parting company. But the two metals have already parted com i any, under the influence of silver demonetization in other countries, and the hostility of the Treasury and banks to silver in this, but that the continued coinage of silver at the rate of $28,000,060 a year will drive gold out ot circulation in the near future, or force it to a premium, does not to them seem to be sustained by facts or sound reasoning. The total volume of currency in the United States, outside of gold, is less than $750,000,000. It is believed to be a principle ot economic science, perfectly well settled, that if a volume of $750,000,000 Is not sufficient in itself to maintain prices in this country at the level of international prices, then gold will come here and stay here in sufficient amount to make, with the volume already in circulation, what will constitute our distributive share of the world's money as determined by our international trade. That $750,000,000 is not a sufficient volume to maintain prices at the world’s level of prices is evidenced by the fact that $6 0,000,000 in gold, a considerable part of which is in circulation, either in the form of coin or certificates, now stays here, and it will go away only when prices become lower elsewhere than they are here. It is believed, therefore, that no such crisis as has been foreboded can overtake ns under the existing conditions. It is not believed to be in the power of all the banks in the country, even if they were so disposed, to take the gold out of circulation and hold it for any length of time at a premium. They must first lock up the world’s money and arrest the world’s commerce. Nor can paper or silver certificates now in circulation side by side with gold expel gold. The gold can be expelled only by forcing into circulation, in addition to $750,000,000, either silver or paper equal to the entire volume of gold now in circulation. In that manner, under Gresham’s law, gold might be expelled, and probably would be. It is doubtless true, too, that if the population and wealth of this country were at a stand, then the continued coinage of siver in sufficient volume would in time expel gold from circulation, but as long as the population and wealth go on increasing, then the conditions of the problem are changed. In fact, in order to preserve a stable ratio between the money volume and the population and wealth in annual increase, not less than $10,000,000 currency of some kind is now required. In other words, the increase of th 1 population and wealth calls for an addition to our circulation of at least s!o,ooi>,o ,0 a year. If, while these condi ions continue, silver is coined at the rate only of $28,000,000> a year, there is left still a considerable void to be filled with gold. This is the reason why gold has increased in the country steadily since the act of 1878 was passed, and why gold has increased by nearly $14,000,000 during the last year, and is now increasing at tne rata of nearly $1,500,000 a month, notwithstanding the depression of business in the country, and as a matter of fact there is to-day Aore gold in this country than there ever was before in its whole history. Another fact is that $80,000,100 of gold in the treasury was put there in exchange for silver certificates. ’Jh'i immediate effect of stopping the coinage of silver must necessarily be to lower the price of silver bullion and gradually to appreciate the value of gold the world over. The difficulties in the way of establishing an international ratio, so much desired, or of the readjustment of the relative value to gold here would thereby be increased. How it is possible for snch things to take place as are predicted in the last paragraph of the letter it is difficult to see. Gold is to be withdrawn to its hoarding places, followed by an unprecedented contraction in the actual volume of our currency. Such a contraction, it has been shown, must be followed by a great fall es prices. What then? Would not gold flow here as tides flow? Surely it would come as f st as ships could bring it. What would those who have been hoarding gold do with it th ■ ■ Labor, the letter I Bays, already greatly depressed, would suffer still farther depression by tne scaling down of , the purchasing power ot every so-called dollar 1 paid into the hand of toil. Here in one sentence we have gold hoarded, unprecedented oou-

I traction, fall of prices, and selling down of, ' the purchasing power of the dollar. That is, when these impend ng calamities come, prices I are to fall, everything becomes cheaper, and money becomes less valuable at the same time. That is, bo h s,des of the ba ance go down together. Usually tne side goes up as the other goes down; usua ly as commodities become cheaper mon-y b comes relatively dearer and „vi. e versa; usually a contraction of the money volume results in a rise in the value of money, , an-J not in a fall. The contrad ctions involved in this paragraph of the letter are-bar Jly calculated to carry conviction to those who have ever studied the mqpsy quest ons at all, or to. awaken in them any sense of alarm at our approaching calamities irom such causes. In one thing all will agree, and that is in the importance to the whole country, and especially to the laboring classes now struggling with want, of the revival of business and tne reaction prosper! y. The one condition essent al to this is to stop the contraction of currency. No country ever did thrive, and never can, while its money was undergoing contraction. Business can not be secure when its foundation is constantly giving way. Stability in the volume of money is the one essential to safe and prosperous business. Wt at is the monetary condition of the world to-day? Are we not brought face to t. ce with the startling (act that the gold proauction of tue world has i alien below its’consumption in the arts, an 1 that there is no probability of any new gold for the money supply for centuries to come- W.th thfe condition ot things as to gold, shut off silver, as is now proposed, and where is the money supply, even for keeping up the stock of coin now in the hands of the world, to come from? As aegrava ing to this state of affaire in tnis country, the paper currency is undergoing contraction by the surrender of ban . notes. If this state of things is to last, upon what is theA to build ths hopeof returning prosp r.tyg 1 In the la t three years, according to the London Economist, prices have fallen more th n 20 per cent, —that is. money has appreciated in that ratio. In the quarter century following the gold discoveries of California and Australia, the stock of precious metal in use as money was increased by nearly 40 per cent. The trade and commerce of Great Britain and the United States during ’the same period increased more than four fold, and wealth proportionately. Reverse these conditions, shut off all money supply, and what room for hope is there for mankind, except for those whoso incomes are sure? With the appreciation of money all debts appreciate. When it is remembered that such debts run into tens of billions—more than the entire jiresent wealth of the United States—the vast consequences of the appreciation of money are seen. The control of feudal lords over the earth in the middle ages was insignificant compared with the control the modern creditor kings and lords, who, through legislation, can secure an; increase in the value! of money. It can be shown tnat it will take more labor, or more of the produce of labor, to pay what remains of our own national debt now than it would have taken to pay it all at the close of the war. Eighteen million bales of cotton were equivalent in value to the entire interest-bearing debt in 1865, but it will take 35,0.;0,u00 bales at the price of cottnn now to pay the remainder of the debt. Twentyfive million tons of bar iron would have paid the wixjle debt in 1865. It will take 35,000,000 tons to pay what remains, after all that has been paid as principal and interest. . In view of the vast interests involved the friends of silver did not think it too much to ask that the question of stopping the coinage of silver should not be separated from its relation to the whole currency question and acted upon by itself. The currency question, it is believed, at the present time overshadows all other questions, and all the friends cf silver have asked is that the President elect should give it full consideration and hear both sides before committing his administration to any particular view respecting it.