on subsidiary employments that the only hope of restoring prosperity to the silver-mining industry lay in immediate and decisive action of Congress in the direction of greater silver coinage. Thus was added a powerful wing to the free-coinage party in the Fifty-first Congress. The Congressmen from the Far West were among the most insistent advocates of free coinage. The arguments they brought to bear in behalf of this industry resulted in a plausible chain of reasoning. At the outset this reasoning assumed the postulate of the National Bimetallist, that the legislation of 1873 caused the fall in the value of silver. It was then argued that the prosperity of the whole country is so intimately connected with the silver industry that the depression forced upon it by hostile legislation had spread throughout the nation. This idea was vigorously expressed by Delegate, now Senator, Dubois, of Idaho: "The West is pouring in upon the East $95,000,000 annually in gold and silver. This has been a steadily swelling stream for forty years. What would your country have been without it? You might have had one railroad to St. Louis or Chicago now, and your business would have been swapping loopholes for tobacco and burning corn for fuel, as of old. . . . . The farmers made a profit by their labor all through the great war; they continued to prosper for eight years after the war closed. But a blight came upon them. What was it? What caused it? The chief function of silver, that of money, the perfect measure of values, was taken from it. So soon as that dishonor was cast upon it as compared with gold it began to fall in value. . . . . But silver is a royal metal, and as it has gone down it has carried every other product of industry with it in precisely the same ratio." The true animus of this whole train of reasoning, which many wished to conceal, was in fact a desire for protection to a particular industry. By some this was plainly confessed. The silver miners, they said, had built up the industry and the country on the supposition that free coinage would continue. They had a right to expect its continuance, for had it not the sanction of the Constitution and the usages of centuries? Its restoration would be only justice. Said Senator Stewart: "There is not a silver dollar in the United States that will not bring one hundred cents in gold. The United States buys 412 grains of bullion for eighty-two cents, and coins it into a dollar and makes the difference. Why should not the owner of the bullion, as formerly, have it coined and save the loss?". Further, it was argued that there is no reason why the United States should not protect the silver industry as well as other industries. The mining states had aided to protect eastern industries-turn about is fair play. 127. THE VIEWPOINT OF THE DEBTOR MASSES1 It may be stated without the slightest fear of contradiction that the attack upon silver money in this and other countries is based upon no demerit or unsoundness on its part, but is simply a movement for the contraction of the currency. This movement is made by the moneyed classes who wish to increase the purchasing and interestgathering power of money in their own hands by making it scarce in the hands of others; by people with large incomes growing out of monopolies protected by unjust legislation; by those who enjoy annuities, interest on public securities, fixed salaries under great corporations, and by the creditor classes in general, including all the enormous loan associations, who join in the movement of silver destruction and financial contraction in order to enhance twofold, and more, the value and power of the money they wring from the hands of the laboring people. This will result in the practical enslavement of those who are in debt and who toil for a living. The policy of contraction is the policy of organized, unsparing, pitiless avarice. 128. THE VIEWPOINT OF THE CREDITOR CLASSES BY FRANCIS A. WALKER The inflationists, like the poor, we have always with us. Political education, the growth of sound economic ideas, the establishment of manufactures, trade, and banking will do much to diminish the number of the members of this class; but humanity will have to pass through many more stages of refinement and education before that element will be entirely eliminated. The instinct of spoliation and confiscation, the passion for making something out of nothing and much out of little, the desire to pay debts in depreciated currency, are too deeply implanted in poor, fallen human nature to give way altogether, either to ethical instruction or to demonstrating that in the Adapted from "A Plea for Free Silver," North American Review, CLIII (1891), 529-30. I 2 Adapted from Journal of Political Economy, I (1892-93), 166. long run honesty is the best policy. There are tens of thousands of people in Massachusetts today who, if removed west of the Mississippi, or only even beyond the Alleghanies, would be rampant inflationists, but are here overawed by the dominant sentiment of the community, or are silent because they see no chance to act with effect in such a hopeless minority. B. The Results of the Silver Agitation 129. DIFFICULTIES UNDER THE BLAND-ALLISON ACT1 It was soon found that there was no demand for more than 30,000,000 or 35,000,000 of silver dollar pieces in circulation as coins. But the provision for the issue of certificates made it possible for some time to force this stream of silver into the channels of circulation without serious difficulty, because owing to the price of bonds, the national bank circulation began about this time to contract. The banks, however, were not partial to the new currency, and objected to the use of silver or silver certificates in their clearinghouse transactions; and though legislation in 1882 made it impossible for the banks thereafter formally to refuse to accept the silver or certificates for clearing-house balances, as a matter of fact in the larger clearing-houses silver has not been used. Nor have the banks cared to carry any large proportion of their reserves in silver or silver certificates. As the first certificates were not issued in denominations below $10, the Treasury soon found it difficult to force into the channels of circulation paper representing the $2,000,000 or $2,500,000 which were being coined each month. Consequently, an embarrassing amount of silver and paper representing it began to accumulate in the Treasury in spite of the most persistent efforts to force it out, involving the payment of express charges on vast sums in the years 1882-86. In 1885 the Treasury inaugurated the policy of retiring the $1 and $2 United States notes in order to make a vacuum in the circulation to be filled by silver dollars. During the fiscal year 1886, the amount of United States notes of $1 and $2 outstanding was reduced by $14,439,000. In the same period the silver dollars in circulation increased $13,998,000. Meanwhile the accumulation of silver in the Treasury had grown from $39,000,000 in 1884 to $64,000,000 in 1885, 1 Adapted from Report of the Monetary Commission of the Indianapolis Convention (1898), pp. 141–42. and to $93,000,000 in 1886, at which time over half of the large available cash reserve in the Treasury was in silver dollars. In 1886, the Treasury, for its protection against the threatening danger that it would itself have to accept and care for the entire further coinage of silver dollars, secured the enactment of legislation permitting the issue of silver certificates in denominations of $1, $2, and $5. By the use of these certificates it has since been possible to keep in actual circulation, irrespective of the bank reserves, the larger part of the silver coinage. |