gishness of the circulation became so great that gold went down, and currency prices did not and could not go down pari passu, and then of course the result was an advance in metallic prices. Is not that correct?

The CHAIRMAN. You only state a fact, that if the price falls in currency and does not fall in gold relatively, the ratio is changed.

Mr. POTTER. That is what I mean. Now the currency prices have gone down on a level with gold on an undiminished volume of paper; but if the country were as prosperous as before the war and the circulation rapid, that ought not to be and would not be, if average paper prices depend on the quantity and activity of the paper circulation and not on the price of gold.

The CHAIRMAN. But now that they are down to a gold basis, wouldn't it be a good thing to keep them down by retiring the paper?

Mr. POTTER. If you can, without reference to the public and private indebtedness and to the maintenance of social order. As a scientific experiment it would be very interesting.

The CHAIRMAN. We can, by retiring paper.

Mr. POTTER. And putting gold in the place of paper. Then you have got a metallic inflation.

The CHAIRMAN. Well, if we could go on with that process to where we had nothing but metallic inflation until there was a surplus of gold, you say it would go out to other countries.

Mr. POTTER. Yes; but not, probably, till the circulation began to grow active, and then you would have to reissue your paper in order to supply the vacuum created by the exit of gold. I do not wish to speak authoritatively on this point. "Political economy, to be scientific, must be constantly inductive." No such experiment has ever been made, and I cannot, therefore, confidently affirm exactly what would take place. I suppose one of two things would happen. Either the gold would remain in circulation or it would not remain in circulation. In the former case we should have a permanent depreciation, created at great cost, and involving the destruction of society. In the latter case we should have an involuntary contraction of the volume of circulation, which would have to be met by a reissue of paper. In any case the excess of metal would eventually disappear, but how or under what circumstances we can tell better after the event.

The CHAIRMAN. Why? When you say we have already more paper than enough to maintain itself.

Mr. POTTER. Because our economies are adjusted on a circulation of 600,000,000 or more of monetary units.

The CHAIRMAN. I think our economies are adjusted to gold values, because I can sell anything I have to sell in paper and go and buy gold with the paper at less than a half per cent. and brokerage.

Mr. POTTER. That is the cause of the depression-perhaps I should say it is the evidence of our sad condition; it is a most lamentable and serious fact.

The CHAIRMAN. Proceed with your statement.

Mr. POTTER. I was going to say that imports did come in, and they came in because there was an advance in metallic prices, and we sent out our bonds, and that was the secret of our great foreign indebtedness. Then the circulation became sluggish. Of course when imports came in we could not employ circulating capital here in competition with foreign commodities at a protit, and so men began to build up these railroads. The circulating capital hid itself in railroads and houses, because railroads and houses could not be imported, otherwise it would have been consumed. Thus there was an excessive conversion of circulating into fixed capital. We could not produce commodities here in competition with Europe with our enormous metallic equivalent of paper in circulation, and circulating capital sought safety in building houses and railroads, in investment in corner-lots, and so on; and Mr. Boutwell aggravated that by gathering up the products of industry through excessive taxation and putting them into Wall street, thus reducing the rate of interest and making a market for railroad bonds. I pointed all that out in the Evening Post at the time when it was going on. I stated that the government was doing just what a bank of discount and deposit would do if it loaned its resources on the security of fixed capital; that if a bank of deposit did that, it would be wound up as the nation is being wound up. That is the trouble with the savings-banks now. Their assets are in fixed capital (real estate) and their liabilities in circulating capital (money). The average of currency prices has come down on a substantially undiminished volume of paper. There is the difficulty. There is the phenomenon. If we had only $200,000,000 of paper out, this condition of prices would be all right. Taxation has been maintained not quite so high in money value, although municipal taxes have been heavy. But as commodities and wages went down, of course taxation increased, and that is one of the causes of our trouble. This so-called balance of trade in our favor is disastrous, because it is so much more capital going out than is coming in, when there is already a deficiency of circulating capital, and the country is growing worse and worse all the time. The circulating

capital of the country is being consumed; the business failures show this. This is not mere theory. The fact that the prices of real estate have constantly declined, and are continually declining, is a proof that the disparity between circulating and fixed capital is increased. The circulating capital is growing less, and what is left of it is, by the power of interest and by the unequal distribution resulting from class legislation, being concentrated in the hands of a few. If the net product of industry is only 3 per cent., then the power of interest at 7 per cent. will in time gather all the circulating capital and much of the fixed capital of the country into the hands of the moneyed class, and then you have got to issue more paper money to redistribute the circulating capital again, and that is the secret of this cry for more paper money.

Now, the remedy is to increase the rapidity of the circulation at once, or as soon as it can be done. We must not experiment longer with this currency question; these experiments are interesting to the student of political economy, but they are death to the nation. Mr. McCulloch had his experiment, Mr. Boutwell his, Mr. Richardson his, and Mr. Sherman has his, and society, in the mean time, is like a dog that is being experimented upon and poisoned to death with the poisonous drugs of financial quacks. They have refunded a portion of the public debt at 4 per cent., and they have brought about a condition of things in which it is harder for us to pay 4 per cent. than it was to pay six. They have injured both the tax-payer and the bondholder. The remedy for this condition of the social body is the same that has always been applied. There is not a solitary instance in history where a paper circulation issued by a government to excess for the unproductive consumption of war has ever been paid at its nominal face value in coin or withdrawn from circulation by the volition of society. It has always been disposed of at a certain rate in gold, or the issues have been increased from time to time until the whole fabric has been destroyed. That is the law of the matter and that is the only way out; that is the invariable experience of mankind, and "we cannot argue the seal off the bond."

The CHAIRMAN. I wish to say, Mr. Potter, that I have your book, which I shall examine very carefully and which I think contains a great deal of what you have stated here to-day. Your views are very instructive, but I think you have failed to explain how you would increase the rapidity of circulation.

Mr. POTTER. It will increase itself the moment you advance gold.

The CHAIRMAN. But who shall put up gold?

Mr. POTTER. The government; the government put it down, let them put it up again and let it alone. As Mr. Mill says: "An inconvertible paper currency regulated by the price of bullion will conform in its variations to a metallic currency." He was speaking of "a fraudulent tampering with the price of bullion for the sake of acting on the currency." He did not believe that any government in open day could do such a thing. It was reserved for us to show that it could.

Mr. H. C. ROBINSON, an auditor, by the permission of the chairman and of Mr. Potter, put to the latter the following question: When the government shall have put up the price of gold, on your theory, how will the government pay off its greenback debt?

Mr. POTTER. At the rate of three and a half to one.

Mr. ROBINSON. Would you pay it off right away, or by the government's advertising to buy a certain amount of greenbacks at the market rate and pay for them in gold.

Mr. POTTER. No; we have got to adjust it on this ratio first, and then we may resume specie payment, and we can retire greenbacks then, because the gold will come into circulation and stay there. We may supplant the paper with coin at the rate of 34 to 1 or in certificates of redemption payable in coin on demand.

Mr. ROBINSON. But on the principle of exchange of equivalents, I don't see how you can fix the value of greenbacks in gold except by the fact that persons who have greenbacks are willing to exchange them for gold at a certain rate.

Mr. POTTER. I would have government gradually buy gold, put it up, and whenever gold got up to 350, or whatever the figure might be, I would make three and onehalf of greenbacks legal tender for one of gold. I would have the government say, "We will convert at the Treasury on that basis; we will buy at 345 and sell at 350.' By the act of 1844, the Bank of England is obliged to buy all gold bullion offered at a certain price.

Mr. ROBINSON. You said a while ago that if Mr. Sherman should take in $1,000,000 in greenbacks and issue an equal amount of gold dollars the transaction would produce such a change in the values of exchange as to send that $1,000,000 out of the country. How is an exchange of equivalents going to produce the effect to send that ont of the country?

Mr. POTTER. I did not say that with reference to the present state of the circulation. I have said that our economies are adjusted to this volume of paper. We have $600,000,000 of paper, and if you put gold out instead of paper, then you have metallic inflation, and the circulation is so sluggish that we will have to adjust it to that state of things.

Mr. ROBINSON. I do not understand it so. I am a merchant, and I import goods, and I find that French and English goods can be placed in the New York market at a half per cent. difference. Now I cannot see how those prices are based on an excessive paper circulation, and if you exchange your paper circulation for gold I cannot see where you have increased the price of commodities.

Mr. POTTER. We haven't done anything in that case.

Mr. ROBINSON. Then it produces no effect on the price of commodities?

Mr. POTTER. Not at all; so long as the circulation remains sluggish.

Mr. ROBINSON. You said that from 1865 to 1872 we had a period of apparent prosperity?

Mr. POTTER. If I said that I didn't mean it.

Mr. ROBINSON. You said that there was a rapid circulation.

Mr. POTTER. Yes; but it was declining all the time.

Mr. ROBINSON. And the evidence of it, you said, was in the excess of importation from foreign countries, thus throwing the balance of trade against us.

Mr. POTTER. Yes.

Mr. ROBINSON. Now, was not that excessive importation paid for by the creation of a bonded debt on the part of the government to the extent of $2,500,000,000, and on the part of municipal corporations, counties, and States to the amount of $2,500,000,000, and was it not by the creation of that debt that we were enabled to purchase foreign commodities at excessive prices, and are we not now simply trying to pay off our mortgage?

Mr. POTTER. Of course; we exchanged bonds for foreign commodities at excessive prices. As to whether we are taking back bonds now at excessive prices I do not know.

Mr. ROBINSON. To simplify the question, was not the creation of the bonded debt on the part of States and municipal corporations, and on the part of individuals by mortgages on their property, the secret of the apparent prosperity during the period of high prices from 1855 to 1872? I hold that that was the cause, and not the rapidity of circulation.

Mr. POTTER. The things that you enumerate were the results of the excessive circulation.

Mr. ROBINSON. The primary cause was our putting debt on our people in the shape of mortgages, and living without producing.

Mr. POTTER. The primary cause was the metallic inflation of money, which prevented our producing commodities in this country as cheaply as they could be purchased abroad, and that is why they were imported. We had a good market to sell in, but a poor one to buy in, and foreigners took bonds instead of commodities in exchange. The equation of the average of international metallic prices is the law of international trade. In order to establish this equation, we had to export gold, thereby raising the price of gold and lowering metallic prices here; or we had to export bonds, and continue excessive imports until we beat down metallic prices by sheer exhaustion of our consuming power, thus creating a sluggish circulation and establishing the inevitable equation in that way. And it is this latter alternative which has been forced upon us by those who have had charge of the administration of public finance in this country.

Mr. ROBINSON. We could not do it. When we mortgaged our property and went to living on the proceeds we could import much cheaper than we could produce, and consequently we bought excessively abroad, and now we are trying to pay off our debts.

The chairman announced that the committee would hold future sessions at Pittsburg and at Chicago, and, later, another session in New York, and expressed the hope that the heads and representative men of industrial organizations throughout the country would appear and state their views freely, as the committee were particularly anxious to hear from that class of the community.

The committee then adjourned sine die.

SCRANTON, PA., November 13, 1878.

The committee met at 10 a. m. Present, Mr. Hewitt, the chairman, and Messrs. Thompson and Rice.

The CHAIRMAN. It is proper to explain to the gentlemen present that this committee is organized under a resolution adoped at the last session of Congress, for the purpose of inquiring into the depressed condition of business in this country, and the conse quent inadequate reward for labor, and to ascertain whether any means can be devised to improve the condition of business generally, and remove the difficulties which now stand in the way of the laboring classes. The committee have held several sessions in the city of New York, and, at the request of Mr. Chisholm, they have decided to

hold a meeting in Scranton. They were induced to come here because this region had been the center of great industrial disturbances. There had been outbreaks here, and very grievous complaints of the sufferings endured by the working people throughout the coal region, and Mr. Chisholm, in his letter of invitation to the committee, suggested that Scranton was a central point. The committee do not desire to summon witnesses. They have come here to receive information, and they wish all gentlemen who are interested, both employers and employed, to come before them and state what their grievances are, and to suggest whatever remedies they can. I will therefore ask Mr. Chisholm what witnesses he proposes to present before the committee.

VIEWS OF MR. CORNELIUS SMITH.

The first witness who appeared at the suggestion of Mr. Chisholm was Mr. Cornelius Smith, a lawyer of Scranton. He expressed the opinion that the industrial troubles throughout the country were due mainly to the great contraction of the currency, and stated, incidentally, his belief that there were many miners in the anthracite-coal region who were not earning $100 a year.

VIEWS OF MR. JAMES B. HICKEY.

Mr. JAMES B. HICKEY (one of the auditors in the committee-room, who stated that he had been formerly a practical miner) said: I think Mr. Smith's statement is correct. You understand that there are what are known as miners and miners' laborers. I would include in my statement all who work in and about the mines. There are miners working in what are known as gangways who earn more than that; but taking the men who work at general work and the men who work company work, such as laying track, timbering, and the like, and averaging them one with another, their earnings do not average over twelve or fifteen dollars a month.

The CHAIRMAN. Twelve dollars a month would be $144 a year, and $15 a month would be $180 a year.

Mr. HICKEY. Their earnings won't average that; for I have known a number of those men to work, for three or four months in succession, for $7 a month, and even for six or six and a half.

The CHAIRMAN. Is the smallness of the amount earned owing to lack of employment, or to the lowness of the rate of wages?

Mr. HICKEY. Both.

The CHAIRMAN. Wouldn't they earn more than that if they had steady employment? Mr. HICKEY. They work about one half the time at the present rate of wages.

The CHAIRMAN. That is to say, working half time, they earn how many dollars a month?

Mr. HICKEY. Probably about ten dollars a month.

The CHAIRMAN. Then the radical difficulty is the want of steady employment?
Mr. HICKEY. That is one of the difficulties.

The CHAIRMAN. If the men were fully employed they would earn twice as much?
Mr. HICKEY. Yes.

The CHAIRMAN. Then want of full employment is the great difficulty. Now, will some gentleman tell us why there is not more employment here? Were the workmen ever fully employed in this region?

Mr. HICKEY. Ŏ, yes.

The CHAIRMAN. What is the cause of the present lack of employment?

Mr. HICKEY. Some of you wise men in Congress say it is because we produce too much coal. Other men, who are shivering around cold hearths, say it is because coal is too high.

The CHAIRMAN. Is the price of coal any higher now than it was at its lowest period? Mr. HICKEY. It is higher by comparison. A man who has coal to buy now finds it practically higher than he did when the price was double what it is now, for then he had money to pay for it; I mean that it will take a greater percentage of the man's monthiy earnings in New York or Philadelphia at present to buy a ton of coal than it would have taken in 1870, '71, and '72.

The CHAIRMAN. What was the price of a day's labor in 1870, 71, and '72?

Mr. HICKEY. In 1870 the price of mining a diamond car of coal was $1.31 in the diamond vein. At that same time, the price of mining a diamond car, supposed to hold one ton and a half of clean coal, in the big vein, or G vein, was $1.52.

The CHAIRMAN. How much did a man make a day at that time?

Mr. HICKEY. He mined six of those cars for a full day's work in the big vein, at $1.60 per car; making $9.60. He paid men who loaded the coal into the mine car onethird of that. He paid for mining-supplies nearly the same price as now, with the exception of powder, which has been reduced 50 cents per keg, the price now being

$2.50 instead of $3. At that time a miner working an average number of days felt that if he did not make from $100 to $125 a month he had made a poor month's wages. The CHAIRMAN. What did his laborer make?

Mr. HICKEY. I was loading coal at that time, and my wages during the summer and fall of 1870 would average about $70 to $75 a month. We usually worked twentytwo, twenty-four, and, in some instances, twenty-six days in a month, and the wages were about $3, $3.10, $3.25, and as high as $3.50 a day.

The CHAIRMAN. What was the price of coal at that time?

Mr. HICKEY. The price of coal was something about $5 or $5.50 a ton in New York. The CHAIRMAN. That is to say, in 1870 the price was about 60 per cent. higher than

it is now?

Mr. HICKEY. On the 30th of November, 1870, there was a reduction ordered in this Lackawanna and Wyoming coal-field. The price of mining a diamond car in the diamond vein was reduced from $1.31 to 86 cents. On that reduction being ordered the men suspended work, and the suspension continued until the latter part of May, 1871, when they resumed work at 93 cents per diamond car of diamond vein coal. The price of mining a car of big vein coal (the car being the same size but filled from a different vein) was $1.154. That rate of wages continued until the 31st of December, 1874, when there was a reduction of 10 per cent. ordered.

The CHAIRMAN. During the intervening period, before that reduction, how much did a miner make and how much a laborer?

Mr. HICKEY. From May, 1871-that is, from the first time of the men going to work in 1871 down to the panic in 1873-the average wages of a laborer was about $50 per month. I speak now of a laborer who worked when there was work to be had; for you understand that in this mine-work it is very easy to lose time. A car thrown off the track will delay a man so that he will lose one-sixth or one-third or, in some instances, half of his day's work. If a fall of roof occurs in any part of the mine it may throw one half of the men employed in that mine idle, by blocking the way and preventing the taking out of the coal.

The CHAIRMAN. That is why I ask you how much a laborer earned per month.

Mr. HICKEY. Well, I say that from May, 1871, until the panic of 1873 the average wages of miners' laborers in this region was $50 per month. I think that is a fair average. I know that I worked steadily at that time, and that was about my average. The CHAIRMAN. What did a miner make per month during the same period?

Mr. HICKEY. He made from $70 to $75 a month, and in some instances more than that; but that, I think, was about a fair average.

The CHAIRMAN. What is a miner's average earning now?

Mr. HICKEY. It has got down now so that if a miner works steadily he will make about $40 a month. He really works about one-half time, and makes less than half wages. Bear in mind that anything above twenty days in a month is counted full time for a miner, for the reasons I have given. A laborer now who works twenty days in a month, at $1.50 a day, makes $30, and is regarded as making an extraordinary month's wages.

The CHAIRMAN. Are the laborers paid by the day?

Mr. HICKEY. They are paid by piece-work. Six cars in one vein and seven in another is considered a day's work.

The CHAIRMAN. Then if the miners and laborers had full work, the distress which exists here would be to a very large extent remedied, because they would earn a great deal more money. In other words, the radical trouble at present is lack of employment, is it not?

Mr. HICKEY. That is one of the troubles; but I contend that even with full work, these miners and laborers employed at full time, at the present rates of wages, would not earn enough to give them a living.

The CHAIRMAN. In order that they should get more, wouldn't it be necessary that the price of coal should go up? In other words, would not the present price of coal warrant the payment of higher wages?

Mr. HICKEY. I think so.

The CHAIRMAN. Are the coal companies making any money?

Mr. HICKEY. They evidently are, or they would not continue to mine.

The CHAIRMAN. That does not follow; there are plenty of people who carry on business at a loss. I may state incidentally that I have carried on a coal mine near Pottsville at a loss every year since 1873, hoping for better times. That may be the case with the companies here, and I want to find out what the fact is, whether they are really making any money at the present rates.

Mr. HICKEY. Well, I think they are, or they would not continue to mine. I know that they are all anxious to work, and I believe that one reason why our mines are idle here is that three great railroad corporations control all our coal works so that the small operators are really nothing more or less than time-keepers in their own works, having nothing to say as to the price to be paid for the coal in the mine or in the market.