Address delivered at the twenty-second annual fair of the Washington County Agricultural Society, September 16th, 1896

y 1

ADDRESS

Washington County Agricultural

Society.

1896.

(NID O ashore

DELIVERED AT THE

TWENTY-SECOND ANNUAL FAIR

OF THE

Washington County Agricultural
Society,

SEPTEMBER I6TH, 1806,

ROW CAIN DP: PIAZ ARID,

President of the. Society.

WAKEFIELD, R. L.:
D. GILLIES’ SONS, TIMES PRINT,
1806.

BY TRANSFER

JUN 3 5910

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"BR UWiGe |, \Oek oe

7X BE Died steyey

MEMBERS OF THE WASHINGTON CoUNTY AGRICULTURAL SOCIETY,

LADIES AND GENTLEMEN :—

The ordinary phrase with which a speaker “invites” the attention
of his audience to his subject, has no place here to-day. There is
one subject which forces itself upon our attention; it occupies our
thoughts ; it fills our minds; it is vital to our welfare, shall we have
free coinage of silver at the ratio of 16 to 1?

In former years I have discussed before you the essential points
of this question. As long ago as 1877 I touched upon it. The
addresses of 1892 and 1893 were largely devoted to it. Iam glad
to be able to say that I believe the principles I laid down were
sound, and in the light of further investigation and greater expe-
rience they will stand as correct. But when in 1877 I warned you
against the danger of destroying the gold standard and attempting
to make silver a standard with gold, I was discussing the matter
from a scientific standpoint, The advocates of silver were an insig-
nificant number ; those who believed in paper money were more
numerous, and even they, the so-called “greenbackers,” were quickly
voted down. The danger was afar off; it was difficult to make
people believe there was any danger. Now the case is different.

The storm is upon us. We must examine this question with all the
intelligence we possess, and we must decide wisely if we would save
ourselves from disaster.

What is free coinage at the ratioof 16 tor? It is the attempt
to say that as a measure of value 16 ounces of silver shall be the

equal of 1 ounce of gold. Sixty years ago this was very near the

4

true ratio. At that time the weight of a gold dollar was fixed at
25.8 grains of standard gold. The silver dollar was made 16 times
as heavy, and contained 412.5 grains of standard silver. In the
markets of the world the metals exchanged for each other in this
proportion. There were, of course, fluctuations, and in general an
ounce of gold was exchanged for rather less than 16 ounces of silver.
The actual proportion was nearer 15% ounces of silver for one of
gold. But the ratio of 16 tor was a near approximation at that
time, and continued to be so down to about the year 1874.

But since 1874 a great change has taken place. There is a great
dispute as to the causes of this change; there is no dispute what-
ever as to the fact, and it is certain that with 1 ounce of gold you
can now buy in the markets of the world over 32 ounces of silver,
instead of 16.

The proposition, therefore, of the free coinage of silver at the
ratio of 16 to 1, 1s a proposal to change this market rate for silver
which is now firmly established throughout the civilized world. It
is proposed that the United States alone shall say to all holders of
silver, ‘Bring your silver to the mint, and we will double its value.
We will coin it into dollars which shall be equal to gold dollars, and
will put into those dollars one-half as much silver as a gold dollar
will buy.” It seems as if the simple statement of this proposal
would show its preposterous character. Consider for a moment its
effect. There are to-day in the vaults of a single Safe Deposit
company in New York 1,700,000 ounces of silver belonging to pri-
vate persons. It is worth to-day 68 cents an ounce. If this law is
passed, it could be taken to the mint and coined into dollars which
would have a debt-paying power of $1.29 an ounce. The owners
of that silver would make over half a million of dollars by the opera-
tion, but they would have done nothing whatever to entitle them to
such a profit, and, on the contrary, people to whom debts were
owing and who would be obliged to receive this silver in payment

of debt, would lose a corresponding amount. ‘The law would trans-

5

fer property from one man to another arbitrarily and without any
justice.

It is said that this law would favor debtors, and would enable
them to pay their debts more easily. This would be true only of
the debts existing at the time the law went into effect. These
debts could be discharged for half their present value. Would that
be honest? If not honest, the question is settled. The sound
judgment of the American people cannot be brought to favor dis-
honesty. But would such payment be honest? Let us look at this
question fairly.

We have had the gold standard ever since 1834, except during
the period of paper money caused by the war. We resumed gold
payments in 1879. Since that date a current dollar has meant 25.8
grains of standard gold. Every borrower has therefore received
gold or its equivalent. With this gold he has purchased, at gold
value, goods, machinery, buildings, land or whatever he required in
his business, and from which he expected to derive a profit over
and above the interest on his loan. When a loan has been made on
good business principles, the borrower by the use of the money
borrowed makes such a profit. Sometimes mistakes are made, but
as a rule the borrower makes a profit besides paying his interest.
When the time of payment comes he is therefore wealthier than
when he first borrowed, better able to pay the loan, or better able
to borrow again. Why should he not pay back the gold he bor-
rowed, the use of which has increased his wealth? There is no
good reason.

It is argued, however, that gold is rising in value, and in the in-
terval between the borrowing and the time of payment this rise
compels the borrower to pay back more value than he received.
This is the argument on which silver advocates rely. Now if it
were true that gold is thus appreciating, it is by no means clear
that the borrower ought not to return just what he borrows. He

makes the loan for his own profit, by the use of the loan he makes

6

the interest he has agreed to pay, makes his profit, and is in condi-
tion to pay back the principal. __In this case it is simply a question
of interest. The borrower will say, ‘tat the time when I must repay
this loan gold will be more valuable than it now is, I must be com-
pensated for this increase in value; I can only afford to pay a low
rate of interest.” This is what actually happens, and whenever cur-
rency is appreciating then interest is low, and whenever currency is
depreciating then interest is high. Some curious statistics have re-
cently been collected by Professor Irving Fisher demonstrating
these facts. It is therefore not clear that, even if gold is appreciat-
ing, the borrower ought not to return exactly what he borrows, the
fact of appreciation will be discounted in the low rate of interest.

But the argument we are discussing assumes that there has been
a very large increase in the value of gold within the last thirty years.
To prove this they say that gold prices of commodities have fallen.
It is assumed that a fall in prices means a rise in gold. But this is
not necessarily true. New inventions and better machinery contin-
ually cheapen the cost of production, and prices fall even if gold re-
mains stationary. This is the universal law of prosperous industry ;
improved methods, lower cost, lower price to the consumer, in-
creased comfort to mankind. It is more reasonable to attribute the
fall in prices to greater cheapness of production than to the appre-
ciation of gold, which is purely conjectural. For instance the rea-
son for the fall in the price of wheat, which undoubtedly has been
very great, is easily found in the severe competition of wheat pro-
duced at low cost from Russia, from the Argentine Republic and
from India. Soin other cases where prices have fallen, we can find
good cause for the fall in increasing supply and lessened cost. Fal-
ling prices can be accounted for without the supposition of the
appreciation of gold.

But if we turn from commodities to labor, which produces com-
modities, we find that wages have not declined. Wages paid in

gold are higher than ever before in the world’s history. This fact is

7

shown by the report made to Congress by the committee of which
Senator Aldrich was chairman, and which is known as the Aldrich
report. This report was made after the most painstaking and judi-
cial examination and inquiry, and is of unquestioned authority.
The wages of labor measured in gold have risen 69 per cent. since
1860. They have risen 20 per cent. since we resumed gold pay-
ments in 1879. The silver advocates who allege that gold has ap-
preciated cannot explain this fact. It proves that gold has not
appreciated. It is easier to procure by labor a dollar’s worth of
gold than ever before. The borrower of gold has then no justifica-
tion in attempting to avoid the repayment of the metal borrowed.
The attempt to substitute a cheaper metal will not bear honest
scrutiny.

I am, however, far from saying that all who are inclined to es-
pouse the cause of silver are dishonest. They are simply mistaken.
They have been deceived by fallacious statements.

One very common idea is that free coinage will make money
plenty, and somehow laboring men will be benefited. If this were
so, I would be the last to oppose the change. I recognize the fact
that when wages are high the country is prosperous, when they are
low prosperity is declining. If, therefore, a system of currency can
be devised by which wages can be raised and the condition of the
laboring man improved, that system should be adopted. But I
cannot see how the present proposal can produce any such result.
It is a proposal to double the price of commodities. The laboring
man wants low prices for commodities, not high prices. How will
doubling the cost of living improve his condition? Manifestly
there can be no improvement in this direction unless wages rise fas-
ter than commodities. We all know that this is not so. All ex-
perience teaches that wages rise more slowly than commodities ;
they are the last to feel the effects of advancing prices. Those of
us who can remember the great advance in prices which took place

with the issue of greenbacks in the war, must have observed this

8

fact. Between 1860 and 1865 prices of commodities went up 132
per cent. Wages advanced only 49 per cent. A table from the
Aldrich report, printed in this pamphlet, (copies of which are here
for distribution) shows this in detail. Wherever, through all history,
the currency has been inflated, prices of commodities have risen,
and wages have risen much more slowly, if at all. This is seen in
Mexico to-day, and, in fact, it is an argument which is gravely used,
that the producers of all the commodities which are exported from
Mexico have an advantage because labor is so low. They can
pay for labor in silver, and by exporting their commodities can get
paid for them in gold, which by exchange doubles the silver price
at home Whatever truth there is in this argument comes from the
fact that labor is forced down to a very low point by the use of
silver currency in Mexico.

We can see there the exact effect of silver free coinage. Silver
has become the sole standard. Gold is banished, and is used only
in foreign commerce. The laborer is paid in dollars which in com-
mon trade pass at the rate of two Mexican dollars for one United
States dollar. The Mexican dollar contains a little more silver
than our silver dollar, but our dollar is maintained on a parity with
the gold dollar by the United States government reserving to itself
the right to coin silver dollars. Admit free coinage and the parity
could no longer be maintained. Our coinage would sink to the
level of Mexican coinage, and our labor would be paid in 50 cent
dollars.

The truth is that wages are paid out of the product of labor.
When the laborer is intelligent, and is furnished with the best tools
and best facilities of production, then the quantity of his produet is
larger, and his share in wages is correspondingly large.

One other favorite argument of the advocates of silver is that the
debtor class will be benefited. The creditor class is spoken of as
oppressing the debtor class. This whole conception of debtor and

creditor classes is misleading. The debtor borrows to secure his

9

own good. He makes money out of his loan. Every one at times
owes money and at times has money owing to him. Most people
are both debtors and creditors at the same time. A clean cut sepa-
ration of these classes is impossible. But if any class is entitled
to the name of creditor class it is the laboring class. There is no
wage earner who does not have owing to him always some sum for
the labor which he has performed. He is not usually paid oftener
than once a week, and frequently the term for which he is paid is
longer than a week. It is safe to say that every Saturday night
there it due to the laboring people of the United States at least one
hundred million of dollars for the previous week’s work. They are
creditors to that amount. The laboring class is the most numerous
and most important creditor class which exists. The debt due this
class is never fully paid. Each succeeding week adds its hundred
millions. Now this law proposes that these laboring men shall be
paid with dollars coined out of silver now in possession of private
individuals, which has cost the owners a trifle over 50 cents for each
dollar. This single statement is sufficient to show the gross injus-
tice of such a law.

Free coinage has been described as a conspiracy against labor,
and it is in effect such a conspiracy, for it would degrade laborers
to the point of receiving one-half the value at present paid to them
in wages. This conspiracy was entered into by the owners of silver
mines about the year 1875, when silver, in consequence of enor-
mous increase in production, began to decline in value. They
thought if they could get the government to purchase it at the for-
mer price their mines would be more valuable. Persistent and de-
termined efforts have been made ever since to procure the passage
of a free coinage law. There has been a paid silver lobby at Wash-
ington, and misleading silver literature has been widely circulated.
Paid orators have made specious pleas and given out misleading
information until many honest people have been made to believe

that there was some merit in free silver coinage at 16 tor. The

10

times have been hard, and the promises of relief made by silver
advocates have been very bold and attractive. A proposition to
make something out of nothing is always attractive. A sick man is
willing to try almost any remedy if the promise of certain relief is
made strongly enough. We must not blame men harshly for this,
but we must show them their mistake by the light of reason and ex-
perience.

Now it so happens that we have in our own history most valuable
teaching on this very subject. In 1792 we began our coinage expe-
rience, with the attempt to establish a double standard. For over
eighty years the attempt was continued, changes were made in laws,
but absolute failure was the result. That you may see the nature
of this experiment and learn from it for yourselves the lessons
which it teaches, I have condensed from the Mint reports and other
sources a short history of United States coinage. As it contains
tables and statistics I have had it printed that you may take it home
and read it at your leisure. I will only summarize it now.

Our coinage laws began with the law of 1792. This law was
framed in accordance with the recommendations of Alexander
Hamilton. It fixed the ratio of silver to gold at 15 to r. The
standard dollar, or unit, was fixed at 24? grains of pure gold, and
also at 3714 grains of pure silver. These two units were declared
of equal value; both were unlimited legal tender, and there was
free coinage. Hamilton’s system was the most perfect system for
the establishment of the double standard which had ever been for-
mulated, but the result did not justify the expectation. Gold was
exported as fast as coined, because there was a profit realized by
sending it to Europe. The commercial ratio did not remain the
same as the legal ratio.

Silver dollars were also sent over to the West Indies because of a
small profit made by exchanging them for Spanish dollars. In 1806
it was found that the United States silver dollars were sent out of

the country as fast as coined. The mint was kept busy to no pur-

~

II

pose. In view of this fact Thomas Jefferson, then president, gave
an order through his secretary of state, James Madison, to discon-
tinue the coinage of silver dollars. The demonetization of silver
dates back to that order made by the authority of Thomas ‘Jefferson
in 1806. The commercial conditions prevented the use of silver
dollars. Jefferson recognized the fact, and stopped their coinage.

The laws of 1834 and 1837 were then enacted, but they did not
bring silver dollars into use. We practically had no silver dollars in
circulation until 1878.

Please take notice of these points in this history. The law of
1792 enacted a double standard, but after forty-two years trial it
failed in the attempt. It attempted to fix a ratio of 15 to 1; the
commercial ratio became more than 15 to 1, in spite of the law.
Under that law of 1792 we had no gold; the acts of 1834 and 1837
were passed to remedy this state of things; they fixed the ratio at
16 tor. The attempt was still made to continue the double stand-
ard. These acts also failed. Nineteen years more of trial were
added to the previous forty-two years. The act of 1853 then
became necessary, because under the act of 1837 we had no silver,
not even enough for small change. The act of 1853 practically
abandoned the double standard. It made no provision for the
coinage of silver dollars, but only for fractional parts of a dollar.
It was a confession that the double standard had failed, and it was
so stated in congress at the time by the chairman of the committee
having charge of the act.

This failure to establish the double standard was fully recognized
after sixty years of trial. It failed when the difference between the
legal ratio and the commercial ratio was comparatively small. Ac-
cording to the best authorities, the commercial ratio was about 153
to 1; the legal ratio sought to be established was at first 15 to 1,
then 16 to 1; and yet the law could not overcome that small differ-
ence. It could not move the commercial ratio down to 15 to 1,

nor up to 16 to 1. What hope is there that a law can change the

EB

=

commercial ratio now existing of over 30 to 1, and make it 16 to 1 P

The law of 1873 only legalized the total disuse of the silver
dollars which had previously existed for many years. To attach to
this law of 1873 any importance in demonetizing silver, is to ignore
the facts of history. The disuse of silver dollars had taken place
long before, in consequence of natural laws which congress is pow-
erless to overcome.

The point to be observed is, “hat when a profit can be made by
sending coins out of the country, they will inevitably be sent out, and
will not remain in circulation.

If you keep this point in mind, you will see as you read this _his-
tory of our coinage, the folly of trying to fix by law values which
differ from those fixed by the judgment of mankind in the markets
of the world.

The general conclusion from our experience is that the attempt
to establish a double standard has proved a complete failure. This
agrees with the experience of other nations. France and the
nations of the Latin union tried it and failed. Pevious to 1874
there was in Europe an approximation to the circulation of both
metals at the coining ratio of 154 to 1. Sometimes there was a
small premium on gold, and sometimes a premium on silver. These
premiums showed that the parity was not perfect. But with the
great increase in silver production in 1874, the Latin union limited
the coinage of silver. In 1878 it was stopped entirely. There is
no free coinage in France or in any other European nation to-day.
The value of the silver franc is kept at par with the gold franc, by
the same means that the silver dollar is maintained at par with the
gold dollar in this country. Under free coinage this parity could
not be maintained a day.

The gold franc is the real standard in France. In our country
the gold dollar containing 25.8 grains of standard gold has been the
standard of value ever since 1837. This standard has been entirely

satisfactory. It has given us the least changeable measure of value

13
known to civilized man. It is the attempt to violently change this
standard, which has deranged our monetary system, inspired dis-
trust, destroyed credit, stopped industry, and is now opening the
door of the laborer’s cottage, that plenty may go out, and want may
enter.

Much of the obscurity which surrounds this subject will vanish if
you reflect on the true function of gold in our currency. The
modern methods of business require very little gold to pass from
hand to hand. Its most important function is to furnish the stan-
dard with which to measure all other values. I am aware that this
method of speaking of value as belonging to an ob‘ect is open to
criticism. Value is not a quality, it grows out of the relation which
one desirable object has to another. By comparison we determine
which is the most valuable to us. So we can measure value by its
relation to other objects which are desirable or valuable. Value is
thus analagous to weight. Weight is not a quality of a stone. It
is the relation which exists between the mass of the stone and the
mass of the earth. The same stone on a different planet would
have a different weight. But we measure this relation of weight by
comparing one weight with another. So we compare one value
with another. So long as business men are satisfied they are deal-
ing with gold values, the gold itself may be locked up in bank
vaults. But it must be known to be in the vaults in order to main-
tain confidence. If gold thus performs its office, furnishes a stan-
dard, and confidence exists, ninety-five per cent. of commercial
transactions are performed by bank credits which offset each other.
Goid is not used at all, or only for settlement of small balances.
The modern use of bank checks, drafts, notes, bills of exchange
and paper money, has furnished a means of doing business with
much greater celerity and much less expense than was possible
before these inventions. The telegraph and telephone are additional
aids. But the usefulness of all these inventions is destroyed if the

stability of the standard is threatened. For sixty years we have

14

had the gold standard. About it has grown up this vast compli-
cated system of credit. To violently and arbitrarily change this
time-honored standard is to strike a blow at all business and invite
universal disaster.

There is one point which I wish to mention because it affords
some excuse for the wild desire for change which pervades some of
our Western and Southern states. It is true that our National bank
system is not perfect. The defect which has been observed, is a
certain want of elasticity in the volume of currency. When the
grain crops are to be moved from the West, or the cotton crop
from the South, a larger volume of currency is required than at
other times. Our current circulation admits of little variation.
The West and South cry that their interests are neglected, and it is
true that a banking system can be imagined which would answer
the purpose better. The Canadian system is better than ours, and
we ought not to be ashamed to learn of our neighbors. This
defect can and ought to be remedied.

But it is also said farm products are very low. This is particu-
larly true of wheat. It is probable that we must grow less wheat
for export. We cannot compete with India and the Argentine
Republic. But we are not compelled to grow wheat. Farmers
must diversify their products. Each locality must produce those
products which will ¢Aere pay the best, and there must be intelli-
gence used in the choice of crops. But granting that the prices of
farm products are low, how will coinage of silver at 16 to r benefit
the farmer? We are dependent now on the foreign market for the
price of a large part of our agricultural produce. Under free coin-
age the pressure to export would be greater than ever, because the
price of commodities by rising faster than the wages of laborers
would lessen the ability of consumers to consume, and a greater
proportion of products would be forced to go abroad. The pressure
to export would depress the foreign market, and at the same time

the home market would be injured. This injury to the home mar-

15

ket would be most serious. The consumption which takes the pro-
ducts of the farm without long transportation, is the most profitable.
So that a general cut down in wages, which would follow the coin-
age of silver at 16 to 1, could not benefit the farmer. The small
gain he would make in hiring his labor cheaper, would be lost many
times over in the injury to his market. If it were otherwise, few
farmers would desire to better their own condition by forcing wages
down. The farmer stands in very close relation to labor. The
prosperous farmer labors himself. The old adge is true:

“He, who by the land would thrive,

Must hold the plow himself, or drive.”
Such a farmer is successful, and he recognizes the fact that his
prosperity is bound up and interlaced with the prosperity of those
who labor with him.

One thing is certain, the market for the farmer which will pay
him the best is the home market. The farmer will be most pros-
perous when all other business is most prosperous. We see how
interdependent are all parts of our society from what has recently
happened, and what is now taking place. The stability of our stand-
ard of value was threatened. Credit was disturbed. Capital became
timid. Rates of interest advanced. The building trade, which now
consumes immense quantities of iron began to languish. The pro-
jectors of all great enterprises hesitated, and many suspended opera-
tions. The consumption of iron decreased. Furnace fires were
put out. Artisans and workmen were.thrown out of work. Then
the great iron mines found no market for their ore, and the
miners became idle in the mountains of Michigan and Wiscon-
sin. In Pennsylvania the coke ovens, which furnished the coke
to smelt these ores, have recently put out their fires, and ten thou-
sand coke burners are looking for work to supply food to their fam-
ilies. All these workers have been deprived of their usual wages.
They have no money to buy clothes, and the factories of New Eng-

land pile up goods in their warehouses until they are forced to run

16

short time, or to suspend work entirely. The single blow at our
standard of value, aimed by ignorance and conceit, has paralyzed
industry all over our land, and has brought loss and depression to
our own doors. ‘The lesson is severe, but it is plain we are so bound
together that whatever affects one part affects the whole. The
West cannot say to the East, we are independent of you. The East
cannot ignore the South, nor the South the North. We are one
great country. Every part is dependent on every other part, and all
must pull together for the common good.

We have the best standard of value which exists. We have built
upon it our great financial and commercial system. If any section
of our country believes it can change this standard and destroy this
system without injury to itself it makes a terrible mistake. The
mere threat of a change of standard has deprived tens of thousands
of workers of their wages. This standard of value, this gold stan-
dard, has come down to us from our fathers. It is the outgrowth of
experience. Nation after nation has adopted it, until all the great
civilized nations are gold standard nations. They have done this
because gold is better than silver for the purposes of standard
money. To go back to silver would hinder the onward march of
civilization. Our duty is to resist every such attempt at retrogres-
sion. We must stand firmly for what is right, for what is just, and
for what is honest. Then shall we all truly pull together for the

common good.

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