Rensselaer Republican, Volume 27, Number 48, Rensselaer, Jasper County, 6 August 1896 — SOLID FACTS ABOUT COINAGE. [ARTICLE]

SOLID FACTS ABOUT COINAGE.

PLAIN ANSWERS PEOPLE ARE NOW ASKING IN REGARD TO THE FINANCIAL ISSUE. Statistics Taken From the Official Records Furnish Conclusive Evidence of the’Cocrectness of Republican Principles.

’since political events have brought the, financial issue to the front I have received a great many letters asking information on various points. \ In order to cover the subject completely and furnish the data now called for in popular discussion, the points raised by the queries received have been arranged in order and the answers have been made as plain as possible. The statistics are taken from official reports, and their correctness may be depended upon. What Is meant by bimetallism? The literal meaning of the word is simply the monetary use of the two precious metals, just as a bicycle means a cycle with two wheels. By some the Word is used to mean the concurrent i use of gold and silver as full legal ten-; der coins, while according to others it j means the opening of the mints to the i free coinage of gold and silver. In a pamphlet issued by the American Bi- 1 metallic association the statement is made that bimetallism “is not the con- , stant contemporaneous circulation of both gold and silver , but that when the" I silver dollar becomes cheaper than the gold dollar the employment of gold should cease and the entire money service should bo performed by silver alone.” Others contend that such a condition of affairs should bo more properly described as monometallism, because it loaves only one metal in monetary use. What is meant by free 1 coinage at 18 to 1? It means that owners of silver bullion shall be allowed to send it to the mints of the United States, to be coined free of charge into dollars, each containing 871% grains of silver, the market value of which varies with the price of silver bullion, and is now about 53 cents. What is meant by the coinage ratio? A,s everybody knows, gold is more valuable than silver, In order to make the silver dollar equal in intrinsic value to a gold dollar, it is necessary to put enough bullion in the silver dollar to make” it equal in value to the bullion in the gold dollar. What is known as the coinage ratio is the number of parts of silver fixed by law as the mint equivalent of one part of gold. What is meant by 10 to 1? It means that 10 parts of silver shall be coined as the eq uivaleiit of one part of gold. Do 16 parts of silver equal one part of gold? No; silver is bought and sold for less than 70 cents an ou nee, which contains 480 grains, and at the ratio of 10 to 1, only a little more than three-fourths of an ounce is put into the silver dollar of the present standard. It takes about 31 parts of silver to equal in value one part of gold. But has not that been the ratio at which gold and silver has always been coined in this country? No; the original ratio was 15 to 1. How was that ratio fixed? Ry taking gold and silver nieces in circulation and finding how great a weight of silver it took to equal in value a given weight of gold. Why was that ratio changed? Because the market value varied from ' the mint ratio, and the effect was to 1 drive from circulation the money metal i which was undervalued by the mint, ra- j tio. The currency committee of con- ■ gross, in a report Feb. 2, 1821, said of ; that ratio: “It is sufficient to know by : unhappy experience that its tendency is ; to rid us of a gold currency and leave ■ us nothing but silver.” When was that ratio changed? By the act of June 28,1834. At that ■ time the market ratio was 15.73 parts’of ' silver to one part of gold, but it was thought likely that there would be a | further decline in the value of silver on i account of the large output of the Mox- j lean mines, and hence the ratio was | fixed at 13.98 parts of silver to one of ; gold. It is this ratio which is spoken i of in round numbers us 16 to 1. What was the effect of this change of ratio? It brought gold into circulation and silver dollars went outbff circulation, because .16 parts of silver wore worth more than one part of gold. Why should inequality in the value of the bullion contents of coins of like ilerimnInation expel the eoin of greatest value from circulation? Doe> it not stand to reason that, if anything, people would prefer the more valuable coin? People would prefer to get it, but mot to give it, so the more valuoable coin ceases to pass. Hence the impossibility of keeping the coin of greater value in circulation alongside of a coin of lessor value, but of the same denomination. It is more profitable to sell the former coin for the value of its bullion contents than to use it for current money. But, then, how is it that onr xllver dollars are as good as gold, though only worth half as much in bullion content*? Because the mint is closed to owners of silver bullion, and all silver dollars are coined by the government which accepts and redeems them as equivalent in value to gold dollars. Is there free coinage of gold? ‘Yes, in S2O, $lO, $5 and $2.50 pieces. '*The coinage of gold dollar pieces was discontinued by the act of Sept. 26, 1890? Why gold allowed to be coined free while silver is not allowed free coinage? Because the bullion value of gold coin is equal to its face value, while the bullion value of the silver dollar is not worth one-half of its face value. Was not the mint always open to owners of silver bullion for the coinage of silver dollars before the passage of the act of 1818? No. The coinage of silver dollars was stopped by President Jefferson in 1805, and no more silver dollars were coined until 1884, in which year a thousand wore turned out at the mint. After the change of ratio in 1834, the mints were ' open to the coinage of silver dollars until the passage of the act of 1873, but as the marked value of the bullion contents required by law for a silver dollar was worth more than a dollar, few silver dollars were coined and those which were coined wero as a premium and disappeared from circulation. How did the act of 1873 affect silver? It dropped the silver dollar from the Ijst Qi coins yrhicb the mint was »u- |

thorized to coin. This had Vs 9 cit closing the mints to the coinage of silver bullion on private account, as the only silver coins authorized were of limited legal tender. Minor silver coins, such as halves, quarters and dimes, «have always been coined ou government account from purchases of silver bullion made by the government at the market price or bullion. , Was it understood at the time that this was the effect of the bill? The passage of the act of 1873 did not attract much attention at the time, because coined money was not in circulation. At that time treasury notesand national bank notes constituted the currency. The silver dollar had never been in actual circulation to an appreciable extent, and the people took no interest in the question whether it should be kept on the list of full legal tender coins. The original bill was prepared in the, treasury department in the winter of 1869-70, under the direction of Secretary Boutwell, and was submitted to the different mints and assay offices and to various experts on coinage. The bill was revised in the light of the suggestions received and was transmitted to the finance committee of the senate along with detailed reports and explanations setting forth the changes made by the bill. It was plainly stated that one of the features of the bill was “discontinuing the coinage of silver dollars.” The bill was introduced in the senate April 25, 1870. It passed the senate Jan. 10, 1871. It was passed by the house of representatives with amendments May 27, 1872. A conference committee was appointed Jam 27,1873. The bill became a law Feb. 12, 1873. In the course of its passage through congress it was printed 18 times and the proceedings taken with regard to it occupy 144 columns of The Congressional Record. In the debates the omission of the silver dollar was repeatedly referred to and the reason of it was stated. The late William D. Kelley of Pennsylvania (Pig Iron Kelley), stated this reason as follows: “It-is impossible to retain the double standard. The values of gold and silver continually fluctuate. You cannot determine this year what will be the relative values of gold and silver next year. They were 15 to 1 a short time ago; they -are 16 to 1 now has shown that you must have one standard coin, which shall be a legal tender for all others, and then you may promote your domestic convenience by having a domestic subsidiary coinage of silver, which shall circulate in all parts of the country as legal tender for a limited aniount, and be redeemable at its face value by your government.”—Congressional Record, 2d session, 42d congress, page 2,316. Is It not unconstitutional to restrict the free coinage of gold and silver, gold and silver being the money of the eonst! tut ion? The only reference to gold and silver in the constitution of the United States is in section X. of article 1, which says that no state shall “make anything but gold and silver a legal tender in the payment of debts.” Clause 4of section VIII of article 1 provides that congress shall have power “to coin money, regulate the value thereof and of foreign coins, and fix the standard of weights and measures." The metals which congress may use for monetary purposes are not specified, but the metals used arc gold, silver, nickel and copper. What was the effect of the act of 1873 on the price of silver? The free silver advocates say that ‘it caused the decline which has since then taken pl:ice in the price of silver, by lessening the demand for it so that its commercial value at once began to fall as compared with gold which was artificially appreciated by becoming the sole monetary standard. On the other hand, it is asserted that the true cause of the decline in the price of silver is the increase in the production of silver at a reduced cost. The facts bearing on the case are these: Silver has gradually declined from an average of $1,298 an ounce in 1873 to about 70 cents an ounce at the present time. The act of 1873 did not decrease the monetary use of silver. The coinage of silver dollars up to that time had been very limited, the total from the foundation of the government up to 1873 being only 8,045,838. Other silver coinage wont on under the act of 1873 largely increasing the total silver coinage. The following, taken from the mint reports, shows the total amount of silver coinage for the years mentioned* 1672 ;.... : $ 2,504,468.50 1873 4,024,747.00 1874 6,851,776.70 1875 15,847,89:1.00 1876 ~... 24,503,307.50 1877 28,303,045.50 Feb. 28, 1878, an act was passed “to authorize’the coinage of the’ standard and to restore its legal tender charactef.” Under that act there were coined 378,166,793 silver dollars. Under the act of Fob. 19, 1887, for the recoining of the trade dollars, there was an additional coinage of 5,078,472 silver dollars. 51 As silver still continued to fall in price, the passage of the act of July 14, 1890, was procured. It required the government to purchase 4,500,000 ounces of silver a month, which it was estimated would take care of the entire production of American mines. Under this law the government bought and Withdrew from the market more silver bullion than our mints couffi have handled, if they had done nothing but coin silver dollars, so that it provided a more extensive absorption of silver than would have been possible with free coinage. Senator Jones of Nevada predicted that the law would advance silver to par with gold. A speculative movement in which congressmen are said to have participated did carry the price of silver from $1.07 up to $1.16 an ounce before government purchase began. The price of silver under the operation of the law of 1890 was as follows, the quotations being taken from the mint reports: PRICE PER OUNCE. 1860 March 87 September $1.16 April 86 October 1.08 May.... 87 November 1.03 June 88 December 1.05 Ju1y..... 86 18W August 83 January 1.05 September 83 February..., VtOctobor 85 March...; 98NoveinI>ex 85 April 67 December 84 May.. 97 1893 inpe 08 January 84 July..., I.l*l February 84 Augu«t 09 March KI September. 96 April 83 October 97 May 83 November 95 June 81 December..., 95. July 78 o 1892 August 74 January 83 September 74 February OOlOctober 73 Altogether the government purchased 168,f174,083 ounces of silver at a cost of

$103,937,002. ~rom tins 'bullion there were coined 40,044,044 silver dollars. The total coinage of silver dollars since 1873 has therefore been as follows: Under the act of 18t8....... 378,168,793 Under the act of 1890 40,044,044 Recoined from trade dollars 5,078,472 423,289,309 In addition, the silver bullion stored in the treasury is represented by silver treasury notes to the amount of 155,931,002. Total silver dollars and silver notes, 579,220,311. Total coinage of silver flollara from 1792 to 1873, 8,045,838. Increase in legal tender monetary use of silver since 1873, $571,174,473. Such facts, it is contended, show that the decline in the value of silver cannot be attributed to any decreased monetary use of it by this country. It is argued that the figures of silver production are enough to account for the decline. Ac- • cording to the mint reports, the production of the world for the period of 1871-75 averaged annually 63,317,014 ouhees of silver and 5,591,014 ounces of gold; for the period 1876-80, 78,775,602 dunces of silver and 5,548,110 ounces of gold; for the period 1881-86, 92,003,944 ounces of silver and 4,794,755 ounces of gold. Yearly production qince then has been as follows: Years Qz. Silver. Oz. Gold. 1886 93,297,290 5,135.679 1887 96,123,588 5,116,861 W-• 108,827,606 5.830,775 1889 120,213,611 t 5,978,790 1860 126,095,062 5;?49,506 1891 137,170,919 6,320,194 18® 153,151,762 7,102,180 1893 165,165,876 7,609,242 18M..... 166,601,995 8,705,836 The fact that three times as much silver is produced when silver bullion sells for less than 70 cents an ounce than there was produced when silver bullion was worth $1.29 an ounce, is regarded as conclusive proof that the fall in the price of silver has been due to a decline in actual value. Is there not less money in the country i now, per capita, than there was in 1873? No, there is much more. The following figures.are taken from the reports of the treasury department: " MONEY IN CIRCULATION JULY 1, 1874. State bank notes.-!; ............. J 1,379,184 Fractional currency „? 38,076,006 United States notes 848,464,145 National bank notes 338,962,475 „, $726,881,809 Add specie in circulation on the Pacific coastM# $ 25,000,000 $751,881,809 MONEY IN CIRCULATION JUNE 1, 1896. Amount in circulation Gold coin , SU!$ U! Standard silver d011ar5............ 52,717,417 Subsidiary silver 61,856,627 Gold certificates 42,961,909 Silver certificates ; 336,313,080 Treasury notes, act July 14, 1890... 98,080,506 United States notes ~ 225,562,755 Currency certificates, act June 8, 1872...... 83,430,000 National bank notes 215,285,550 Total ; $ 1,521,584,283 The population in 1878 is estimated at 41,677,000; circulation per capita, $18,04; population in 1896, estimated at 71,263,000; circulation per capita, $21.35. Will not free coinage make money plentiful?

~ No. the immediate egect will be to contract the currency by expelling over ~ $600,000,000 in gold from circulation. The mints of the United States have a coinage capacity of about 40,000,000 silver dollars a year. It would take 15 years to coin enough silver dollars to take ’ the place of the gold coinage that would be driven out of circulation. If the government by law, declares a given quantity of metal or anything else a dollar, doesn’t that make it a dollar? It makesit a dollar in denomination but not in value. Value is not the name of a thing, but the worth of a thing. The government might declare that copper cents should pass as dollars, but that would simply mean a change of name. The new dollar would be worth no more than the old cent. In the constitution the power of congress “to coin money” -is coupled with a clause enabling congress to “fix the standard of weights and measures” congress has a power to pass a law making a standard quart of what is now a pint, but would that make the new quart measure hold any more than the old pint measure? Why have the prices of all farm products declined since 1873, in accordance with the decline of siTver?

Where the price of farm products has declined, the facts as regards production tire quite sufficient to account for it. In 1875 there were 26,381,512 acres of wheat cultivated in this country; in 1891 there were 39,916,897, an increase of 50 per cent. The yield in 1875 was 292,136,000 bushels, a heavy increase over preceding years. In 1891 the yield was 011,780,000. Even last year, with a greatly reduced acreage and a partial crop failure, the yield was 467,100,000 bushels. The cultivated area of corn in the United States in 1871 was 84,091,137 acres; in 1891 it was 76,204,515; increase, 124 per cent. The yield of corn last year was more than double that of any year prior to 1875. Both tho acreage and the average annual yield of oats have doubled since 1871. Our cotton crop in 1894 was 50 per cent greater than in any year prior to 1887.

Under such circumstances a decline in grain and cotton values was inevitable. That decline has not, however, corresponded to tho decline in silver, but has varied strictly according to tho conditions of supply and demand. On March 3, 1893, a subcommittee of the senate committee on finance, representing both political parties and both sides of the currency question, made a report on the course of prices and wages in this country for a period of 52 years. The investigation was most thoroughly made and the services of the most expert statisticians were employed, and the report was unanimous as to the statements of fact. Tables prepared by Labor Commissioner Wright, contained in tho report, give the following as the

average price of spring vffieat In Chicago and the arerage price of silver for the years named: ‘ Price Price Year. silver. IjgQ.... $135% 1H5..., 105 1 24U 1876 ire 115 S JBU 130 “.fl 21) 18,8. • WIU 11514 1860 1 09 " i ].p ’ 1881 .118 ♦ 11341 1884 80% tn 1885 ....... ?2% ?06 1888 136 ei 1889 re KUZ 1890. 01 . 1 04to 1891 100 OH-g 1892., ? Tn77T7trZ7?;...-7«’- . 87J4 In 1877 wheat was higher than in 1873. although the silver had declined 15 cents an ounce. During the period when the coinage of silver dollars was altogether discontinued, ’ the average price of wheat ranged at a dollar and upward. The great decline began in 1878, when the government began to coin silver dollars at the rate of 2,000,000 a month. Wheat in 1860, when silver was was slightly lower than wheat in 1889, when silver was 93>£, and wheat in 1888 was $1.36, with silver at 94, and only 80J£ cents jn 1884 with silver at. sl.ll. Wheat rose in 1879, 1881, 1885, 1887, 1888, and in 1891, notwithstanding silver fell Cotton varied before the war from 5% cents in April, 1843, to 8 cents in 1848, 7>£ cents in 1849, 12 cents in 1850, 9% cents in 1852, 11 cents in 1853 and 1854, 10J£ cents in 1855 and 1856, 13l£ cents in 1857, and 12 cents in 1859 arffi 1860, at a period when the cotton seed was a waste product; after the full reestablishment of southern industry, varied from 11 cents in 1879, 11% cents in 1880, 12 cents in 1881, 11% cents in 1882 and 1883, 10% cents in 1884, 10% cents in 1885, 9% cents in 1886, 10% cents in 1887 and 1888, 10% cents in 1889, 11 cents in 1890, and 8% cents in 1891—an average substantially the same hi the 12 years before the war and the 12 years beginning with 1879, when the cotton seed was utilized so as to yield a large return, and thus practically reduce the cost of production. In 1891 and 1892 the price went down to 8% cents and 7% cents, almost exactly wnat it was in 1848 and 1849, and in 1894 and 1895 went abnormally low under the influence of enormous crops; but in tho past year it has risen 25 per cent over the price of 1895. An important factor in the decline of prices at terminal markets since 1873 has been the reduction in transportation charges. In 1875 the freight charge on a bushel of wheat sent by lake and canal from Chicago to New York was about 11% cents; in 1894 it was less than 4% cents. If sent by rail the charge in 1875 was 24 cents; in 1894 it was about 13 cents. This reduction, of charges would produce a corresponding reduction in New York quotations, but would not lessen the price at primary markets. The report of the lowa State Agricultural society for 1873 gives the followDecember, 1873: Wheat, .85; rye, .40; barley, .70;corn, .22; oats, ,23;hay, $5.00. With the exception of wheat all these products have in late years brought higher prices at Des Moines than in 1873. The report of the statistician of the agricultural department for 1894, gives the following table.of average prices on the farm or in the market nearest the farm: Year Wheat Corn Oats 1880.. ...$0.95 $0,395 80.36 1881 ).19 .635 .465 1882 .88 .485 .375 1883 11l .425 .328 1884.. 646 ■ .358 .278 1885 .77 . .828 .285 1886 688 .365 M 1887 .68 .445 .805 1888 925 .345 .278 1889.. 698 .283 .230 1890 £3B .505 .425 1891 84 .405 .315 1892 625 .895 .818 1893 518 A>s 1894 49 .458 .825 The average price of corp (which is the most important farm crop) was 39% cents between 1879 and 1889, and- 42% cents between 1889 and 1894.

The average price of oats in the first period was 31 cents, and in the second period 33 cents. Tho value of the oat crop was about the same as that of the wheat crop. While corn and oats went up silver kept going down. The reports made by the senate committee show that while manufactured products have fallen in price an average of 25 por cent—some articles, like steel, wire nails, steel rails, and kerosene, «80 por cent—the great mass of small products of the farm, cultivated mainly by hand labor, beef, pork, and many other articles, have risen 25 per cent since 1860. The products of tho farm have more value now in exchange for clothing, tools and household supplies, than in 1873, or at any previous time. As regards the wage worker, the movement of prices has been enormously beneficial to him. The senate committee’s tables show that while the average prices of 223 leading articles declined 8 per cent from 1860 to' 1892, average wages have increased 60 per cent since then. Since 1873 average prices have declined 30 per cent, and average wages have increased 12 per cent.