stable and costs less to maintain. By resort to the silver standard the United States would make money by disposing of its gold, and also in the enhanced price of silver. "And further," added Senator Jones, "the export of our gold will raise the price for our exported goods." Such was the reasoning for inflation in the silver debate of 1890.

C. THE REASONING IN FAVOR OF THE DEBTOR CLASS

The train of reasoning in favor of the debtor class is closely allied to that which was urged in favor of currency inflation. Both proceeded from a desire for more money and higher prices, but while the inflationists emphasized the benefits of rising prices, this class called especial attention to the evils of falling prices. The two lines of reasoning might be called complementary. The supposition at the foundation of the reasoning for the debtor class was that the depression under which the country labored had been caused by a contraction of the currency (producing lower prices and so decreasing debt-paying power) due to the silver legislation of 1873. The per capita circulation was not sufficient for the needs of trade.

The contraction of the currency being assumed, the silver advocate proceeded to emphasize the evils resulting therefrom. The following from a speech of Senator Jones is a characteristic example: "It is my firm conviction that the inexpressible miseries inflicted upon mankind by war, pestilence, and famine have been less cruel, unpitying, and unrelenting, than the persistent and remorseless exaction which this inexorable enemy has made upon society. As the volume of money contracts, prices decline, and with the decline of prices comes stagnation of industry. . . Stores, workshops, and factories, unoccupied and unused, are found on every hand. Crime increases, bankruptcies multiply, and even though the aggregate of wealth augments, it is unjustly distributed, and is consequently barren of results."

A careful examination of the statements on this subject seems to show that the silver advocates attributed the evils of contraction to two causes: first, the raising of the standard of deferred payment (by the fall of prices) and consequent increase of burdensome indebtedness; and, secondly, the decrease of loanable capital.

The reasoning in favor of the debtor classes was completed by an attempt to prove the justice of free silver as a remedy for the evils of contraction. The arguments were (1) theoretic, (2) technical, and (3) moral.

(1) It was urged that gold had risen in value, while silver, instead of falling, had maintained a remarkable steadiness as compared with the value of staple commodities. The belief that gold had risen followed logically from the postulate that credit must bear a fixed proportion to metallic money. If this be true, and the law of 1873, as was claimed, had cut off one-half the metallic basis, the increasing monetary work of the world was thrown upon the remaining metal, and its rise in value followed naturally. The steadiness in the value of silver was plausibly maintained by reference to tables of prices dating from 1873.

(2) Technically it was maintained that there are no obligations in the United States which may not be paid as well in silver as in gold. The Constitution, it was urged, provided for the coinage of gold and silver, and the law of 1873 was in direct violation of this. The Constitution secured the absolute right of the debtor to pay in the cheaper coin. Said Congressman Moore, of Texas: "Congress had no more power to demonetize it than it had to pass an ex post facto law." In this connection it was denied with great earnestness that we were actually upon a gold basis.

(3) Finally it was claimed that "this cry for the best money is at last beginning to be recognized for what it is: the cunning device of creditors to catch the conscience of the people and play upon the sense of fairness that characterizes the great mass of mankind."

To crown the argument the cry was raised that the limited coinage of silver is an unjust discrimination against the people's money: "Silver is the money of the people, the common people, not of the speculators, not of the wealthy men, not of the kings and princes and potentates. It is the money of the people and has been the money of the people so long and so far back in the history of the race as we have any record of whatever."

It seems almost incredible that this train of reasoning, its assumptions based on error in fact, its postulates on error in theory, and its conclusion leading directly and inevitably to repudiation, could have found supporters in the Congress of the United States, yet it was maintained vigorously by the leaders of the silver party in both Houses and with far more energy than it was opposed.

D. THE REASONING IN FAVOR OF A SPECIAL INDUSTRY

By the close of the last decade the persistent fall in the market value of silver had convinced the mine-owners and all those dependent

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

BY D. W. VOORHEES

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.

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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.

129.

B. The Results of the Silver Agitation

DIFFICULTIES UNDER THE BLAND-ALLISON ACT

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,

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· Adapted from Report of the Monetary Commission of the Indianapolis Convention (1898), pp. 141–42.