Full text of The Money Question of the 51st Congress : Silver Bullion Certificates : Speech of Hon. Edwin H. Conger of Iowa, Debate in the House of Representatives

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SILVER BULLION CERTIFICATES.

SPEECH

o*

Hon. EDWIN H. CONGER,
OF IOWA,

IN' THB

HOUSE OF REPRESENTATIVES,




T h u r s d a y , J u n e 5 ,1 8 9 0 .

WASHINGTON.
1 890.




SPEECH
OF

HON. E D W I N

H.

CONGEE.

The House having under consideration the bill (H. R. 5381) authorizing the
issue of Treasury notes on deposits of silver bullion—

Mr. CONGER said:
Mr. S p e a k e b : The silver question has become one of the most im­
portant, and at the same time most difficult of satisfactory solution, of
any that are now pending before Congress or the country. It has been
continuously agitated and discussed for the past fifteen years; theorized
upon and prophesied about, and yet during all this time the conditions
which surround it have each day made its immediate solution more
difficult.
I shall not attempt to recite the history of silver nor to discuss the
philosophy of its use as money, but, leaving that to my distinguished
friends who are to follow, shall content myself with a few practical
suggestions on the present unfortunate situation and the bill proposed
for relief.
The time has arrived in which something must be done, and what­
ever the solution may be it should be wise, conservative, and judicious,
and yet at the same time liberal, comprehensive, and courageous.
The settlement must be made on facts and logical conclusions, not
on mere fancy or vain hope.
The conditions must control, and not the theory.
We must take the conditions as we .find them and meet the demands
in a practical way.
Silver is and always has been one of the twin money metals of the
world, and for generations walked side by side with gold. But now
it has been outlawed or discriminated against by the great commercial
nations of the globe.
The United States furnishes about 45 per cent, of the entire world’s
production of silver, and yet in 1873—no matter how nor for what pur­
pose—our Government, by legislative enactment, joined in the general
crusade against this metal, and gold has become the principal standard
of value in the great markets of the world. Since that date the price
of silver, as compared with gold, has fallen 30 per cent., or at least the
two metals have parted company to that extent.
Our business and population are marvelously increasing, and a corre­
sponding increase of money is demanded. By reason of approaching
maturity and consequent high price of bonds our national-bank circu­
lation is being rapidly retired. We are now purchasing $2,000,000
worth of silver each month and coining it into dollars. There is great
depression in some branches of industry, notably that of agriculture,
the largest and most important of all, and in which more than half of
our entire\>opulation is directly or indirectly engaged.




4
These, then, are the conditions to be met, and therefore the objects
to be attained by legislation are to restore silver to its old place by the
side of gold, increase its use, and so appreciate its value, increase the
volume of our currency, raise prices of farm and other products, give
relief to all depressed conditions, and finally coax or compel some in­
ternational agreement that will make the desired situation stable and
permanent, but at the same time do nothing that shall imperil values,
endanger business, or greatly risk personal or national credit and pros­
perity.
Every possible measure has been proposed and every sort of solution
suggested, from the closing of our mints to silver by the man who be­
lieves only in gold, to the immediate opening of our doors to the free
and unlimited coinage ot all the silver of the world* by him who puts
all his trust in that metal.
The Committee on Coinage, Weights, and Measures have given pa­
tient hearings to all, to the suggestions of men who have given the
question years of study, to those of practical experience, to Represent­
atives who have introduced favorite measures, and to the distingished
Secretary of the Treasury, whose personal experience and successful re­
funding operations during a previous term of service entitle his sug­
gestions to careful consideration and great weight.
We recognize the fact that no measure can be satisfactory to all men,
nor to all parts of the country. You might as well expect the Lap­
lander and the Hottentot to exchange residences and then each insist
that tjie climate of his new home was delightful.
In a great country like this, with interests so divergent, all general
legislation must of necessity be a sort of compromise. So the bill we
have offered to-day exactly suits no one. I am sure it is not just such
a law as my gold friend from Massachusetts [Mr. W a l k e r ] would
have prepared if left to himself; neither is it the ideal measure of my
silver friend from Nevada [Mr. Ba r t in e ] ; nor is it entirely satisfac­
tory to me. I have believed and still believe that the bill first reported
and now on our Calendar was the best.
But this is a bill which a majority of the committee believe will
greatly improve the present status and make a long stride in the direc­
tion in which we ought to go. It is a plain, simple, practical plan, ex­
perimental it is true, yet one which meets all the demands of the
bimetallists, except that of immediate and absolute free coinage, and
it is a most important preparation for that step, an end which under
this scheme may be hoped for at no distant day.
The first section of the bill directs the Secretary of the Treasury to
purchase $4,500,000 worth of pure silver each month at the market
price, not exceeding $1 for 371} grains, and to pay for the same in
Treasury notes prepared for the purpose. This will take substantially
the entire product of the mines and smelters of this country.
Our product last year, including Mexican ore smelted and refined
here, was 60,000,000 ounces. About 6,000,000 was used in the arts,
leaving 54,000,000 for purchase, practically the amount required under
this bill at the present price, which is about $1 per ounce.
This measure will add $54,000,000 new Treasury notes each year to
our Circulation. And these notes go at once into circulation, the Secre­
tary being compelled to pay out these, and only these, in purchase of
the bullion, while under the present law the Secretary pays for it with
any funds on hand, and the coin may be represented by certificates or
it may, as much of it does now, lie idle in the vaults, without any rep­
resentation whatever in the circulation of our country.
In my judgment fixing an absolute limit to the amount which must
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5
be purchased every thirty days may lead to speculative attempts at
cornering, etc., which may prove dangerous, if not disastrous. But
the more conservative element has yielded this point to our extreme
silver friends, with the assurance from them and the hope that we
may be mistaken. As bearing upon this feature of the bill, I will ap­
pend to my remarks in the Record some valuable statistics in regard
to the production and distribution of silver and gold the world over, furnished by the able and experienced Director of the Mint and by Mr.
Ivan C. Michel, one of the most reliable statisticians in regard to pre­
cious metals in America.
From these many obvious conclusions will be deduced as to the scope
and effect of this legislation which it is not necessary for me now to take
time to discuss.
Section 2 provides for the redemption of the notes, namely, in coin,
i. e., gold or silver coin, or, if the holder demands it, the Secretary may,
at his discretion, pay out bullion. This insures the redemption in the
best money we have, if desired. Or if, peradventure, the best can not
be received, the holder knows that he can demand a dollar’s worth of
silver bullion. But it is not believed that redemption will be re­
quired, but that faith in the Government, and absolute knowledge of
its ability always to pay, will keep the liotes continually and perma­
nently in circulation.
The bullion proviso in this section, while only the shadow of thatm
the original bill reported to the House, yet is practically the only real
conservative feature of the substitute, and ought to be conceded by all;
for it both adds credit to the notes and gives the Government the op­
portunity to protect itself in case danger should arise, and it also fur­
nishes the opportunity to the public to procure silver bars from the
mint, just as gold bars can now be procured under existing law, and I
believe silver should be treated as well as gold.
Whether the prophecies of the silver men or the gold men shall come
true, or neither,this feature of the bill makes it absolutely certain that
come what may, happen what will, the man who owns one of these*
notes, whether earned by the sweat of his face or won in speculation,
whether in strong-box of the capitalist or in the sacred fund of the small
savings-bank depositor, will at all times and under all circumstances
positively know that his dollar will always be worth 100 cents. But
without this feature that assurance can not be had, unless we should
authorize the Secretary to sell bonds to procure gold in case the neces­
sity for its use shall ever arise. Our people seem to lie unwilling to
perpetuate our bonded indebtedness for any purpose, and so I insist
that the bullion redemption cjause should be left in this bill.
It is charged that this provision furnishes the opportunity for collu­
sion between the Secretary of the Treasury and the holder of Treasury
notes to buy and sell the same bullion over and over, and so prevent
the increase of circulation, as intended or expected. But there is noth­
ing in this, for no inducement can exist for such manipulation. The
bullion of the world will be for sale, and neither the owners thereof nor
the holders of the notes could possibly profit bv its depreciation.
Such a charge, Mr. Speaker, can only be based upon the assumption
that we are to have occupying the exalted position of Secretary of the
Treasury a man devoid of conscience, a scoundrel fit only for the
penitentiary. And the fact is, if such a thing Should ever be at­
tempted by any Secretary, he would at once be impeached or removed
in disgrace.
The proposition is so utterly improbable and preposterous that I
dismiss it without further comment.
-'
CON




6
Section 3 directs the Secretary to coin whatever amount of bullion
may be necessary to redeem notes presented for redemption in coin,
thus fully preserving the coinage and money principle and absolutely
exploding the charge that silver is to be treated simply as a commodity.
Section 4 is simply administrative and directed to the management
of and accounting tor the bullion at the Mint.
Section 5 repeals so much of the act of 1878 as requires the monthly
purchase and coinage of not less than two million nor more than four
million dollars’ worth of bullion, but does not affect the legal-tender
character of the standard silver dollar.
Section 6 provides that whenever the market price of silver, as de­
termined in pursuance of section 1 of this act, is $i for 371.25 grains of
pure silver, it shall be lawful for the owner of any silver bullion, the
deposit of which tor notes is herein provided for, to deposit the same
at any coinage mint of the United States, to be formed into standard
silver dollars for his benefit, as provided in the act of January 18,1837.
And by the amendment of the gentleman from Maryland [Mr. McCom asJ purchase of bullion shall close while the mints are open, so
that we will not be buying $4,500,000 worth and coining free at the
same time.
Section 7 repeals certain provisions of law which require a special
fund to be held for the redemption of notes of national-banking asso­
ciations, the effect of which is simply to unlock about $70,000,000
which is now held as a special fund to redeem the notes of national
banks that have become insolvent, gone into liquidation, reduced their
circulation, or surrendered their charters, and which can be used for no
other purpose. This covers it into the Treasury whence it can be paid
out and thus add that much more to our volume of circulation.
The notes issued under this bill are a full legal tender. It is true
some of the ablest lawyers at both ends of the Capitol think that even
under the latitude of the late legal-tender decisions no warrant can be
found for clothing them with this function. But certainly no harm
can result and much good may, and because we want the best money
possible we have given them this power, and we hope our judgment
will be indorsed by the House.
While it is neither expected nor believed that, under the administra­
tion of this law, much of the bullion will be coined, yet it preserves
the right and empowers the Secretary to coin every ounce of it, if it
shall be necessary.
But it is quite evident, from our experience under the present law,
that we have already an amount of silver coin very much in excess of
any demand; for, although the Treasury Department will ship silver
dollars to any and all points free of expense, yet it has during all the
years since 1878 been able to put out and keep in circulation less than
$60,000,000, while we have piled up in our vaults $295,000,000 repre­
sented by certificates.
The people do not want more of the coin; but they do want its paper
representative, and they do not care whether it is based on bars or on
coin.
We have, therefore, gone to all the trouble of coinage, with the nec­
essary expense and wastage, to no purpose whatever, since the bars
stored in our vaults would answer every legitimate demand. Under
the proposed law every ounce of silver purchased will be represented
by paper in our circulation, while Under the present one the silver is
bought with current funds, coined, and then much of it piled up in the
vaults without any representation in our circulating volume, and fre­
quently the amount of this unrepresented or “ dead silver” has reached
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7
the enormous sum of seventy, eighty, and even ninety millions of dol­
lars.
It is claimed by many, and the statement is frequently reiterated
by the press, that our currency has recently been suffering a serious
contraction. The Statement is not borne out by the facts, but on the
contrary our circulation has considerably increased every year since
1878. The total circulation of all kinds on March 1 of that year, as
shown by the books of the Treasury, was $805,793,807.
Mr.* PAYSON. What does that include ?
Mr. CONGER. That includes every thing that was in circulation,
gold, silver, and pa^er.
On October 1, 1889, the amount was $1,405,018,000, showing a total
expansion of $599,224,193. During that time the increase of popula­
tion fots only been about 33 per cent., while the circulation has in­
creased over 74 per cent. The per capita circulation was only $16.50
in 1878; but in 1889 it was $21.75.
Mr. PAYSON. Mr. Speaker, will it interrupt the gentleman if I ask
him a question? The figures which the gentleman from Iowa gives, if
I understand it, make a statement of the amounts of eurrency of differ­
ent kinds, outstanding, including everything |hat has been issued from
the mints and everything that has been issued from the Treasury,
without regard to the vast amounts of money that are absolutely tied
up and practically as dead as though they had never been issued. _ Am
1 not correct in making that statement ?
Mr. CONGER. That is not right; but if the gentleman will allow
me-----Mr. PAYSON. Now, can the gentleman from Iowa state, so that
the House may understand, what as a matter of fact the actual per
capita circulation is in the United States ? I do not mean what amount
ought to be in circulation, if all issued was actually used, but what
amount is in active circulation?
Mr. CONGER. This is the fact as nearly as it can be ascertained in
the entire country. It is presumable that the per cent, in actual cir­
culation of the total volume in 1878 would be the same as the per cent,
in circulation of the total volume in circulation to-day.
Mr. PAYSON. Mr. Speaker, as I understand—and I ask this so that
we may understand the facts in what we are trying to do here—the
total amount in circulation as given by the gentleman from Iowa is
one billion four hundred and some odd millions of dollars; and it is
upon that basisi, dividing that amount of money by the population of
the United States, that he arrives at the per capita circulation.
Nbw, I understand the fact to be, and I think I will be able to dem­
onstrate it when the time comes for me to take part in this debate, that
as a matter of fact there is to-day less than $900,000,000 of money in
actual circulation in this country; in other words, that $700,000,000
of this money, embraced in the figures made by the gentleman from
Iowa, are tied up and are as dead as though that amount had never
been issued. The fact is this, as I believe: This amount given by the
gentleman from Iowa is made up from statements by the officers of the
Mint, the Comptroller of the Currency, andTthe Register of the Treas­
ury. All money issued, of every kind, is charged up to circulation;
but no account is taken of the vast sums, held in reserve by the Gov­
ernment, as well as the banking institutions of the country, nor of the
vast sums lost by actual destruction in the conflagrations of great cities,
as in Chicago, Boston, etc., nor of the natural destruction by ordinary
use, nor of gold hoarded, nor of gold taken abroad and spent, and numer­
ous other losses, obvious without statement,
cow




8

The statement of the gentleman is therefore misleading, and badly
so. This I can show.
Mr. CONGER. I will be glad if the gentleman can show that; but
lie can not, for the figures represent only the actual circulation outside
the Treasury, and not a dollar held therein as reserve or for any other
purpose. Of course, I can not tell, neither can the gentleman from Illi­
nois tell, how much is hoarded by banks and individuals; but the fact
remains the same, that the per cent, of the total volume of circulation
that was in use in 1878 is just the same to-day, and I divided that
eight hundred and five million by the population in 1878 just the same
as I divide the one billion four hundred and five million by the popu­
lation to-day, and that gives the per capita circulation as correctly at
one time as another, and the per cent, of increase would be the same,
regardless of how much was tied up, as the gentleman says.
Mr. PAYSON. But you do not take into consideration the amount
that is tied up.
Mr. CONGER. Certainly I do; but I do not agree with the gentle­
man’s guess, and it is only a guess, as to the amount tied up; the pro­
portionate amount tied up or lost would be the same at one time as at
another—the same in 1878 as in 1889.
Mr. PAYSON. Not at all, because there are $100,000,000 in gold tied
up in the Treasury now as a reserve fund, to protect the $340,000,000 in
greenbacks outstanding,that might just as well be in the mines as in
the Treasury, as far as circulation is concerned. I can show the gen­
tleman where there are millions and millions of dollars of other re­
serves; this I shall be glad to call the attention of the House to when
my time comes to address the House.
Mr. CONGER. Do you not know that that $100,000,000 and more
was also there in 1878.
Mr. PAYSON. No, sir, because the law authorizing it was not
passed until 1879.
Mr. CONGER. There is really no law authorizing it now. But the
resumption act was passed in 1875, and by 1878 a considerable portion
of the redemption fund was collected in the Treasury.
Mr. PAYSON. I only wish to understand the gentleman from Iowa
as we go along.
Mr. CONGER. I will be glad to have you show the date of the
passage of the bill authorizing the $100,000,000 gold redemption fund.
Mr. PARSON. I will show it.
Mr. CONGER. Of course I have not time to go to the records now,
but when you do go to the records you will find it as I state.
I will print tables, Mr. Speaker, which will show the fact more in
detail, and the gentleman from Illinois can find in those tables a suf­
ficient and accurate answer to his question.
Notwithstanding this increase in circulation I join in the general be­
lief that we need more money, and this bill will furnish it. As a com­
promise, this bill for the present meets fairly well every demand.
If wisely administered, the apprehensions of the most conservative
will be avoided; the silver producer who demands the largest use of
his product finds a market for the entire output of this country. The
farmer who believes an increased money volume will bring better prices
and relieve the great depression which his calling now experiences
will find $54,000,000 added annually to our circulation; and all who
hope for good from the permanent establishment of bimetallism will
find realization from the pperation of this measure.
I believe in silver and in its largest possible use as money, and believe
we should have free coinage at a fixed ratio at the earliest possible
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9
date; \but we should reach it tinder conditions that will be safe and
permanent. But with the present attitude of the great commercial
nations of the world toward silver it would be neither wise nor safe
for this Government to attempt it alone. ,
The world’s market has, for the present at least, established the
value of silver at its present price, namely, 30 per cent, less than gold,
and free coinage here means simply that this Government alone shall
undertake to raise the price of all the silver in the world one-third and
keep it there. In my judgment and in the judgment of many of the
wisest and ablest financiers and statesmen of our day, this can not be
done without serious disturbance to all values and the risk of such finan­
cial disaster as neither this nor any other Government could stand.
On the 1st day of Maich, 1890, the credit of the Government was
already carrying at a nominal value—
Of
Of
Of
Of
Of

standard silver dollars.........................................................................$58,850,380
subsidiary silver.................................................................................... 53,950,362
silver certificates.................................................................................. 284,176,262
United States notes............................................................................... 337,087,151
national-bapk notes.................-........................................................... 187,928,229
In a ll.................................................................................................. 921,992,384

Of this amount the United States notes owe their whole value to the
public faith, and the other items are upheld on a par with gold by the
readiness of the Government to receive them as equivalent to gold and
by its ability to pay gold to creditors if they so demand.
To uphold its credit under this burden the Government had on that
day of gold $100,000,000 in its legal-tender reserve and 187,988,948
besides.
Now, if in addition to this burden we undertake to carry the silver
of the world and should fail, we will, instead of establishing bimetallism,
have driven our own country to the single silver standard, and, sur­
rendering the high commercial place now occupied, must take our place t
by the side of China, Mexico, and India. Then the gold-using nations
would make out of the United States the same profits of exchange which
it is alleged England now extorts from India.
For theorize as we may the fact remains and should not be lost sight
of that the commerce of the world is based on gold as the standard oi
value, and the balances of trade and the exchanges of products among
the great commercial Governments, even those using silver, are uni­
formly settled to-day in gold, or, if in silver, at its gold valuation.
Our duty, then, as men charged with a great public trust, is to so
legislate as to force silver to bear its full share of trade burdens and
at the same time relieve the pressure somewhat from gold, and compel
them both together to bear the weight of the world’s exchanges.
As before stated we produce nearly one-half of the silver of the world.
But if we open wide the doors of our mints and fix the price at $1 for
371} giains, the price must come up all over the world or else all the
silver will come here.
It would at once add $30,000,000 to the value of the foreign prod­
uct of last year alone, Without any advantage whatever to us, but
with possibly the disadvantage of furnishing the foreign owners with a
market for it at the increased price.
Free coinage at once means still more. It means a profit of 26 cents
on every dollar’s worth of bullion taken to our mint. It means that
the bullion-owners of this country can take their $50,000,000 worth of
bullion to the mint and walk away with $63,000,000, pocketing at
once a clear profit of $13,000,000, and the tax-payers must pay it;
while under the present practice, or under the proposed law, the GovCON




10
ernment makes whatever seigniorage there is. And last year this
amounted to over $9,000,000, and since 1878 it has in the aggregate
amounted to $56,000,000, which has been covered into the Treasury
and been used to pay the current expenses, of the Government.
It is claimed, Mr. Speaker, that if we should open our mints to free
coinage the other great nations would be forced to open theirs; that
a strong silver party is growing up in England and on the Continent,
and that France is anxious to take the step. But the legal ratio be­
tween the two metals in France is 15J to 1, while ours is 16 to 1, and
she knows that the moment she unlocked her mints, our silver, both
bullion and dollars, would be poured in there and overwhelm her. It
is also susceptible of demonstration that opening our mints, and thus
loosening our gold, would, instead of inviting to free coinage, be an
added inducement for other Governments to further demonetize silver.
Take the situation of France again. Lying between the gold-using
countries of England and Germany, she has been trying for years to
reach a single gold standard, and while in forty years her silver coin
has increased only $200,000,000 her gold has increased more than
$800,000,000. She could, even at the difference in our ratios, ex­
change her silver for our gold with comparatively little loss. The
Bank ot France holds $250,000,000 of silver as the basis for the same
amount of paper circulation; but as such basis it only has its bullion
value, and that is $190,000,000 in gold; the balance is simply upheld
by the credit of the Government. She could, therefore, exchange this
silver for gold and float the same amount of paper with equal ease.
It is also claimed by the advocates of free and unlimited coinage that
our Government is great enough, rich enough, and powerful enough to
do whatever we please in this line; that we can open our mints and
defy the world.
Mr. Speaker! I will yield to no man in admiration for my country
and appreciation of her strength and credit. I know we are the rich­
est and the strongest Government on the face of the globe and I know
we have a credit far beyond that of any other nation in the world. I
know, and I glory in the fact, that wherever our flag floats among
civilized m6*i it is the symbol of a promise that is payment itself. But
it is so because of our always wise, safe, and honest financial legislation,
and it always will be so, tor I believe the good sense of our law-makers
will still hoi-’ us inside “ the danger line of peril/’
We ought to get to free coinage of silver at the earliest possible date.
But we must have some of the other great commercial nations join with
us in the effort. It is true several attempts have already been made in
that direction, but always with unsatisfactory results. Y et it is believed
by those best able to judge th it the time is now ripening for successful
negotiations it attempted. The trend of our legislation should there­
fore be in that direction, and not away from it. This bill is a step, and
a very long one, on that line. If passed and fairly executed, as it will
be, it will surely pave the way for a succeeding Congress to open the
doors and rehabilitate the white metal with all the power and crown
her with all the dignity now enjoyed by her yeilow sister.
Mr. Speaker, it is a favorite argument with some of our extreme
silver friends that our volume of currency is grossly inadequate to our
needs, and they cite the per capita circulation of France for proof.
Why, sir, the circulation per capita is larger in the United States than
in any of the leading countries ot Europe, except France; and when
we take into consideration our greater number of banks, our unparal­
leled national and individual credit, and our innumerable facilities
ior making a single dollar do countless duties by checks, drafts, cerCON




11
tificates of deposit, exchange, express, telephone, and telegraphic or­
ders, etc., ,many of which are unknown in France, we really have a
larger and more effective per capita circulation than even that country.
The following table shows by way of comparison the estimated
arfaount of gold, silver, and paper money in circulation in the United
States and the principal countries in Enrope:
Statement of the estimated amount of gold, silver, and notes in circulation
in the United Kingdom, France, Germany, and the United States.
Countries.

Popula­ / Gold.
tion.

Silver.

metal­
Notes out­ Total
pa­
standing:. lic and
per.

France...................... 38.250.000 $900,000,000 $700,000,000 1594,000,000 $2,194,000,000
United Kingdom..... 38.165.000 550.000.000! 200,000,000 190.000.000 840*000,000
Germany:.................. 48.000.000 500.000.000, 215,000,000 275.000.000
990,000,000
United States........... 64.000.000 375,607,112! 116,298,802 938,728,545 1,430,634,459
1
1
------------------------ 7--------

. Per capita.
Countries.

Gold.

Silver.

France................................................................... $23.53
...................
United
Kingdom........ ........ ............ 14.41
Germany............................................................. 10.42
United States............ ..........................................
5.87

$18.30
2.62
4.48
1.82

Paper.
$15.53
4.98
5.73
14.67

Total.
$57.56
22.01
20.63
22.36

In France gold and silver coins are the investments of the peasar try. Their savings are not deposited in banks or loaned out as here,
but hidden away in the proverbial stocking or earthen pot, to be
brought out only in time of personal need or at the demand of the
Government, as was the case when the great war indemnity was so
quickly paid to Germany.
At least two-thirds of the gold and silver coin in France is thus hid­
den away, and might as well have remained forever uncoined, so far
as any exchanges in trade or commerce are concerned.
I wish it distinctly understood that I am not making this argument
to disprove the present necessity for a larger circulation here, but simply
to show the extreme, unfair, and untruthful lengths t<^which the bullion-owners or their advocates in this Congress are willing to go to gain
their cause; for, disguise it as they may, this contention is one be­
tween the silver-mine owners and bullion speculators on the one hand
and the business welfare and best interests of our 65,000,000 of peo­
ple on the other.
It is true the former have called to their aid all that element which
believes in and which has for the past fifteen years advocated and
fought for fiat money, and they have also taken advantage of the pres­
ent agricultural situation, and by means of specious arguments, illog­
ical conclusions, and false promises have prevailed upon some of our
farmer friends to lend themselves as cats’-paws to pull their (bullionowners’) chestnuts out of the fire.
It will be represented on this floor, Mr. Speaker, that there is a great
clamor by the people and a general demand, especially from the farmers,
for immediate free coinage. I have given careful and thorough in­
vestigation to this matter, and do not believe the statement. All
winter long, Mr. Speaker, a powerful silver lobby has been operating
coir




12
about this city, a lobby paid for and supported by the bpnanza mine
and bullion owners. They have been faithful to their jcrust. They
have been persistent in season and out of season, have plied their vo­
cation at Capitol, hotel, and private residence.
From their headquarters printed petitions by the thousands for free
coinage have been sent all over this land, with urgent appeals “ to sign
and return.’9 And yet at the time our bill was reported to the House
less than one hundred, with less than twenty-five names on each, had
been returned, and found their way to the Coinage Committee of this
House.
The purpose of these men is not to establish bimetallism in this coun­
try, but is unmistakably to drive us to a single silver basis. The ar­
guments of their ablest and most effective advocates at the other end
of the Capitol abundantly prove this, and they openly admit that they
prefer such a situation.
They clearly show how, under present conditions, England is en­
abled to mercilessly rob her helpless subjects in India, an^ yet they
are willing, if only the price of their bullion can be enhanced thereby,
to surround us by the same conditions and plunge us down to a situa­
tion in which she can practice the same piracies upon us.
Gentlemen, do you know what a single silver standard means in
this country ? It means Mexicanization. It means an additional ele­
ment of cost to be added to every dollar’s worth of our imports, an
additional tax upon every dollar’s worth of our exports, for exchange
must be drawn and settlements made in gold, but made through the
medium of silver, and as that would be subject to rapid and material
fluctuations the exchange will always involve a question of specula­
tion. For this risk the broker must be paid, and the producers and
the consumers must pay him.
This expense could not probably be less than 8 per cent, or 10 per
cent., and would place an additional annual burden upon our people of
more than $100,000,000.
The deplorable condition of a silver-using country has been so ably
and truthfully portrayed by Mr. M. L. Scudder, jr., in a recent article
on Mexico, as to merit the considerate attention of every one. I shall
not take the time of the House to quote from or read it, but shall print
it with my remarks, and I hope every Inember on this floor will care­
fully peruse it.
Sir, I have taken my stand with the sixty millions of toilers and
tax-payers of my country as against the handful of bullion-owners and
silver-speculators.
Gentlemen may do as they please, but while I retain my reason or
my conscience I will never vote for a measure that will drive the in­
telligent farmer or laborer of my country down to the awful condition
of the peons of Mexico, the coolies of China, and the ryots of India.
[Applause on the Republican side.]
It is claimed that by reason of the act of 1873 a gfeat and unjust bur­
den was placed upon the debtor class; that it takes more of labor and
its products for the farmer to pay interest on his mortgage now than
then.
There is no force whatever in this statement, because ninety-ninehundredths of the mortgages now upon the Western farms have been
placed there during the last five years, and at a rate of interest more
than 30 per cent, less than in 1873.
But the farmer has something else to do with the products of his
farm than to pay interest and mortgages. He must buy clothing, food,
and comforts for his family, and all of these are very much cheaper,
CON




13
and hence require much less of product and labor to nav for them than
in 1873.
There is another condition the farmer must face. Should we so leg­
islate as to make silyer money plenty and cheap and at the same time
drive gold into hiding or make it scarce, the frightened owner of loans
and mortgages will demand immediate payment at maturity, and will
nol renew, except upon promise to pay in gold, and so bring upon bor­
rowers and debtors a calamitous condition far more burdensome than
the present status. Such instructions are already being sent by loan
companies to their agents, and gold notes and mortgages are being pre­
pared everywhere, in view of threatened ftee-coinage legislation.
This question, Mr. Speaker, should be approached from every side,
and, as I said in the beginning, the conditions must control, and not
the theory, and I very much prefer a practical, helpful, homely fact to
any unsubstantial will-o’-the-wisp theory, however pretty and invit­
ing it may be.
I want bimetallism. I want to see silver brought back to its old place
by the side of gold, not only here, but in all the great commercial
nations of the earth. I want a larger volume of good, sound money.
I want better prices, better pay for labor, and better conditions for all
my countrymen. The enactment of this bill into law will hasten their
realization; immediate free coinage will not.
It is true that some of our farmers are in sore distress and are look­
ing in every direction for help, and panaceas are being offered them on
every hand. One tells them that the sugar-beet industry is to lift
them from their slough of despond; another insists that the suppres­
sion of gambling in their products by bucket shops and boards of trade
is to be their only salvation; another that the destruction of trusts
and combines will bring relief, and another that certain changes in the
tariff will help them up; another that certain amendments to the na­
tional-bank acts will give material aid; and still another that in more
silver is their only hope.
But the truth is that in no one of these is there complete relief,
but some in each and much in all. Gentlemen, your constituents are
not imbeciles; you can not fool them with mere sentiment. They
know their prices are down, and they believe that an increased volume
of currency will raise them. They want more money and they want
it quick, but they also want it good; and they want it under such con­
ditions as will keep it good—such conditions as will give relief and at
the same time make relief permanent. These conditions first and
free coinage afterward. I believe both should come, and I believe
both will come under the administration of this act, and your constit­
uents believe it also.
Mr. Speaker, we have promised the country that this should be a
business Congress. So far it is splendidly fulfilling that promise. Lot­
us, gentlemen, emphasize that fulfillment by the speedy enactment of
this bill.
In it there is much of hope for all, promise for increased remunera­
tion for toil, for enhanced price of farm products, fresh impetus for all
business and trade, greater confidence in investments, and stable and
permanent financial improvement everywhere. [Loud applause on the
Republican side.]
CON




14

APPENDIX.

The amount and kinds of money in actual circulation on certain dates from 1878
to 1889.
[F'rom report of Secretary of the Treasury.]
Date.

Total circu­
lation.

sil­
Gold coin. Standard
ver dollars.

Subsidiary
silver.

March 1........
October 1.....
October 1.....
October 1.....
October 1......
October 1......
October 1......
October I.....
October J......
October 1..*..
October 1..
October 1..

$805,793,807
862,579,754
1,022,033,685
1,147,892,435
1,188,752,363
1,236,650,032
1,261,569,924
1,286,630,871
1,264,889,561
1,353,485.690
1,384,340,280
1,405,018, COO

$82,530,163
123,698,157
261,320,920
328,118,146
358,351,956
346,077,784
341, 485,840
348,268,740
364,894,599
391,090,890
377,329,865
375,947,715

$11,074,230
22,914,075
32,230,038
33,801,231
39,783,527
40,322,042
45,275,710
60,170,793
60,614,524
57,959,356
57,554,100

$53,573,833
54,088,747
48,368,543
47,859,327
, 47,153,750
48,170,263
45,344,717
51,328,206
48,176,838
50,414,706
52,020,975
52,931,352

Date.

Gold certifi­
cates.

Silver cer­
tificates.

United
States
notes.*

Nationalbank notes.

$311,436,971
327,747,762
329,417,403
327,655,884
325,272,858
321,356,596
325,786,143
318,736,684
310,161,935
329,070,804
306,052,053
325,510,758

$313,888,740
329,950,938
340,329,453
354,199,540
£56,060,348
347,324,961
324,750,271
311,227,025
301,406,477
269,955,257
237,578,240
199,779,011

Year.
1878.
1879.
1880.
1881.
1882,
1883
1884.
1885.
1886.
1887
1888,
1889.

Year.
1878
1879,
1880,
1881,
1882.
1883
1884.
1885,
1886
1887
1888.

March 1...
October 1.
October 1.
>etobe» 1.
October 1.
October 1.
October 1,
October 1.
October 1.
October 1.
October 1.
October 1.

$41, 364.100
14, 843,200

$1,176,720
7, 480.100 12,203,191
5, 239,320 52,590,180
4, 907,440 63,204,780
55, 014,940 78,921,961
87, 389,660 96,491,251
118, 137,790 93,656,716
84, 691,807 95,387,112.
97, 984,683 154,354,826
134, 838,190 218,561,601
116,
276,619,715

‘ Includes outstanding clearing-house certificates of the act of June 8,1872.

Comparison between March 1,1878, and October I, 1889.
[From Report of Secretary of the Treasury.]
In circula­ In circula­
tion March tion October
1,1889.
1,1878.

Decrease.

$375,917,715
57,554,100
52,031,352
116,675,349
276,619,715
325,510,758
199,779,011

114,109,729

Totals........................... 805,793,807 1,405,018,000

114,752,210

Gold coin.............................. $83,530,163
Standard silver dol'ars.......
Subsidiary silver.................. 53,573,833
44,364,100
Gold certificates............ .
Silver certificates.............. ...
United States notes............. *311,436,971
National-ban k notes............ 313,888,740

Net increase................
COTS’




Increase.

$293,417,552
57,554,100
$642,481

”‘*72,311,249
276,619,715
14,073,787
713,^76,403
599,224,193

15
Gold product of the United States.
Fine
ounces.

Calendar years.
1878...

2,476,800
1,881,787
1,741.500
1,678,612
1,572,187
1,451,250
1,489,950
1,538,325
1,693,125
1,596,375
1,604,841
1,586.700

1879...
1680...
1881...
1882...
1883...
1884...
1886...
1887...

Value.
$51,200,000
38.900.000
36.000.000
34.700.000
32.500.000
30.000.000
30.800.000
31.800.000
35.000.000
33.000.000
33.175.000
32.800.000

Silver product of the United States.

Fine
ounces.

Calendar years.

Commercial
value.

34.960.000
31.550.000
30.320.000
33.260.000
36.200.000
35.730.000
37.800.000
39.910.000
39.440.000
41.260.000
45.780.000
50,000,000

1878..
1879..
1880..
1881..
1882..
1883..
1884..
1885..
1886..
1887..
1688..
1889..

Bureau

of the

Mint, April 28, 1890.

$40,270,000
35.430.000
34.720.000
37.850.000
41.120.000
39.660.000
42.070.000
42.500.000
39.230.000
40.410.000
43.020.000
46.750.000

Coining
value.
$45,200,000
'40,800, (foO
39.200.000
43.000.000
46.800.000
46.200.000
48.800.000
51.600.000
51.000.000
53.350.000
59.195.000
64.646.000

£ . O. LEECH, Director of the Mint.

World's production of gold and silver, 1889.
[Kilogram of gold, $664.60; kilogram of silver, $41.56, coining rate in United
States silver dollars.]
Countries.

United States......................
Australasia.........................
Mexico...................... .......
European countries:
Russia................ ..........
Germany ....................
Austria-Hungary........
Sweden........................
Norway........................
Italy.............................
Spain.............................
Turkey.........................
France...........................
Great Britain...............
Dominion of Canada..
South American States:
Argentine Republic ..
Colombia......................
Bolivia............ .............
CON




Gold.

Kilograms.

Silver.

49,353
49,784
1,465

Dollars. Kilograms.
32.800.000 . 1,595,486
33,086,700
144,309
$74,000 1,335,828

32,052
1,958
1,877
76

21.302.000
1,301,286
1,247,450
50,000

160

106,000

*1*0

....7:666

97
1,919

64,370
1,275,045

47
4,514
90

31,000
3,000,000
59,800

14,523
32,040
53,391
4,648
7,200
34,280
51,502
1,323
54,314
8,734

10,866

10,226
24,061
230,460

Dollars.

64.646.000

6,000,000

55.517.000

604.000
1,331,576
2,218,900
193.000
299.000
1,424,600
2,140,400
55,000
2,257,300
363.000
451,680
425.000

1,000,000
9,578,000

16

World's production of gold and silver, 1889—Continued.
Countries.

Gold.

South American States, cont’d: Kilograms,
2,953
Chili.................................
Brazil...............................
670
Venezuela........................
2,130
Guiana (British)............ .
687
158
Peru.................................
226
Central American States....
564
Japan................ .....................
12,155
Africa......................................
13,542
China......................................
India (British)......................
2,273
Total .

178,760

Silver.

Dollars.

Kilograms.

1,962,430
445,3D0
1,415,598
456,580
105.000
150.000
375.000
8.078.000
9,000,000
1.511.000

185,851

118,803,559

Dollars.

7,723,957

75,263
48,123
32,065

3,128,000

3,914,555

162,689,063

2,000,000
1,332,650

Stock of gold and silver in civilized world.
Gold.

Countries.

Germany.............................. ..........................................
Belgium...........................................................................
Switzerland...................................................................
Greece.............................................................................
Portugal.........................................................................
Austria-Hungary.........................................................
Netherlands...................................................................
Norway and Sweden.....................................................
Denmark......................................................... ..............
Russia.............................................................................
Turkey............................................................................
Australia.........................................................................
Mexico............................................................................
Central American States..............................................
South America...............................................................
India...............................................................................
The Straits.....................................................................
Canada............................................................................
Cuba, Hayti, etc.............................................................
Total....................................................................

Silver.

$689,275,007
550.000.000
900.000.000
500.000.000
65.000.000
140.000.000
15.000.000
2,000,000
100.000.000
40.000.000
40.000.000
25.000.000
32.000.000

$438,388,624
100,000,000
700.000.000
215.000.000
55.000.000
60.000.000
15.000.000
4,000,000
125.000.000
10.000.000
90.000.000
65.000.000
10.000.000

190.000.000
50,000,000
100.000.000
100,000,000
5,000,000

16,000,000
20,000,000

60,000,000
45.000.000
7,000,000
15.000.000
50.000.000
500,000
25.000.000
50.000.000
900.000.000
700.000.000
100.000.000
5.000.000
2.000.000

3,714,275,007

3,846,888,624

45.000.000
90.000.000

E. O. LEECH, Director of the Mint.

World's circulation of gold coins.
[Comparative statistics by Ivan C. Michel.]
Countries.

In 1849.

Austria............................................................................ .
Belgium...........................................................................
France..............................................................................
Germany.........................................................................
Great Britain..................................................................
Holland...........................................................................
.

$15,480,000
10,200,000
80.400.500
48.665.500
295,558,500
20,525,000
80,475,000




In 1889.
$46,145,847
54,642,250
899,272,547
498,580,923
574,095,175
27,061,478
112,863,644

17
World's circulation of gold coins—Continued.
Countries.

In 1849.

Portugal...........................................................................

$46,870,500
30.500.000
8.940.000
28,000,000
6.850.000
8,540,800
168,950,800
None.
22.480.000

*$46,695,866
249,156,845
20,930,518
98,804,8t3
16.965.000
77.652.000
705,061,975
None.
*None.

872,445,800

3,427,928,941

Sweden and Norway.....................................................
S witzerland.................... ........ ........................................
Turkey........................ ....................................................
United States...................................................................

Total............................................................... .......

In 1889.

♦Gold coins no longer a legal tender in India.
In 1889......1............................................................................................... 83,427,928,941
In 1849......................................................................................................
872,445, MX)
Increase.........................................................................................

2,555,483,141

World-8 circulation of silver coins.
Countries.
Austria..........................
Belgium....................... .
France...........................
Germany......................
Great Britain................
Holland........................
Italy..............................
Portugal.......................
Russia...........................
Sweden and Norway..
Spain............................
Switzerland..................
Turkey..........................
United States..............
China...*.......................
India.............................
Total..

In 1849.

In 1889.

$50,840,500
088,487
40.500.000
58, 505,400
752, 749,537
525.800.000
226, 446,970
195,000,000
125, 714,049
60,580,400
64, 156,780
42.875.000
88, 279,395
55.600.000
35.400.000
13, 459,855
50.950.000
49, 020,580
9.660.000
6,754,247
39,000,000
144, 125,234
11.400.000
19, 782.000
46, 880.000
5.760.000
30.250.000
403, 516,756
450.500.000
750, 000,000
290.500.000 1,119, 750,540
1,895,905,000 3,957,229,830

In 1889...................................................................................................... $3,957,229,830
In 1849...................................................................................................... 1,895,905,000
Increase........................................................................................

2,061,324,830

THE FREE COINAGE OF SILVER— THE EXAMPLE OF MEXICO.

A. J. Warner, of Ohio, in a speech accepting the chairmanship of a convention
held in St. Louis in November, 1889, for the purpose of advocating free coinage
of silver in this country, referred to the act of Congress of 1873, by which the
gold dollar was made our sole monetary unit, as “ worse than a blunder.” Ten
years ago he and the other so-called silver men of the country probably would
have said that the passage of this act was effected by a conspiracy and by stealth.
Possibly many American citizens still regard the dropping of the silver dollar
from our coinage by the act of 1873 as the deliberate attempt of mysterious finan­
cial potentates to force the people of this country to pay in gold debts which
might otherwise have been paid in silver.
At the time of the silver agitation which culminated in the act of 1878, author­
izing the coinage of silver dollars, the circumstances surrounding the passage
of the act of 1873 were closely examined, and1every possible conjecture as to the
motive of the authors of that act was submitted to a test of probability. It was
established beyond controversy that the failure to continue the old silver dollar
as a legal-tender coin was due solely to the fact that it was not, and had not
been for at least a generation previous, in use as a monetary unit in this coun­
try. In the four months following the passage of the act ot 1878 more silver
c o n -------2




18
dollars were coined than in all the time since silver-dollar coinage was first
authorized by the act of 1792 up to the discontinuance of the coinage in 1873. Of
the old silver dollars, 8,045,838 had been coined in the eighty-one years previous
to 1873. Prom February 28 to June 30, 1878, $8,593,500 were coined.
What would have been the result had the act of 1873 continued the old silver
dollar, though actually not in use, as a legal-tender coin ? If the decline in the
price of silver, which began in 1873, had found the mints of the United States
obliged to accent silver bullion and give in exchange therefor coined silver dol­
lars of 412| grains each, nine-tenths fine, which would be a legal tender in pay­
ment of debts, it is hardly doubtful that the manufacture of these coins would
have been demanded and carried on with all possible rapidity, and that the
currency of the country at the resumption of specie payments in 1879 would
have been based upon the silver dollar as its monetary unit.
I do not propose to go into an elaborate statement of the effect which the
opening of the mints of the United States for free coinage of silver during the
years following 1873 would have had upon the price of that commodity. The
silver production of the world largely increased in those years, and the price of
silver rapidly but gradually declined until, in 1888, it reached the lowest point
in comparison with gold which it has ever touched. In the light of experience
it can not be contended that the United States, by adopting an exclusive
silver coinage and exporting its gold, could have prevented wholly this decline.
Instead of accumulating a stock of gold, this country would have accumulated
a stock of silver dollars. The gold—something like $500,000,000—which has
been either produced here or imported since 1873 would have found its market
elsewhere, and we should have had, say 1,000,000,000 or more of silver dollars
in the banks or Treasury or in the hands of the people. What would have been
our condition commercially and financially had this taken place?
For the purpose of picturing our condition under such circumstances we have
a close analogy in the experience of our neighboring Republic, Mexico. The
most notable prod uct of Mexico is silver. The Government of Mexico, whether
in the old time when it was a colony of Spain or during the many changes
which it has experienced since the declaration of independence in 1821, has
always attempted to encourage and carefully watch the silver-mining industry.
Before 1850 it is calculated that two-thirds of the silver in use in the world had
come from the mines of Mexico. It has been the policy of the rulers of Mexico
from time immemorial to compel all silver taken from the mines to pass through
the mints. Even now this is the law. All precious metal, both gold and silver,
when taken from the mines, must be sent to the mints to be refined, and the
mint charge, supposed to be uniform and said to be about 4.41 per cent, of the
value of the metal, is levied upon all gold and silver alike. This charge is com*
pulsory on all the products of the mines, and the owner of the metal may re­
ceive from the mint either coin or bullion at his option. Whether he chooses
to take coin or bullion the charge is the same. A very large proportion of the
precious metals which pass through the mints of Mexico comes out in the form
of coin. Mexican silver dollars are a well known article of commerce. The
coinage of the mints is much greater for this reason than the monetary affairs
of the country require. Consequently there can not be a scarcity of metal
money. The coinage of the mints Is in large quantities taken for immediate
export, and never passes into circulation at all.
The following table exhibits approximately the coinage of silver and gold
since the conquest of Mexico by Cortez, the coinage in this case being almost
identical with the production:

Coinage of Mexico from, 1537 to 1873 (beginning offall in price of silver),
GOLD.

Colonial, 1537 to 1821.............................................................................
Independence, 1822 to 1873..................................................................

$68,778,411
45,598,020

,

114 376,431

SILVER.

Colonial, 1537 to 1821............................................................................. $2,082,260,656
Independence, 1822 to 1873...................................................................
758,822,710
2,841,083,366

Since decline in silver began, July 1,1873, to June 30,1888.
Gold.........................................................................................................
$8,386,069
Silver............................................................................. ..........................
350,594,608
By the laws of Mexico the so-called bimetallic standard is established. Both
silver and gold are legal tender. Previous to the fall in silver the currency of
the country consisted of both gold and silver coins. Travelers report that the
tables in the gambling-houses held piles of gold “ onzas ” as well as silver
“ pesos.” Gold was used for larger transactions, and being more convenient
for transportation, performed the principal service. The conditions in Mexico,
therefore, when the decline in the price of silver took place, were similar to those
which would have existed in this country had not the free coinage of the silver

OON




19
dollar been suspended by the act of 1873. There was an abundant supply for
monetary use either of silver or gold in Mexico.
When, however, the fall in silver took place, the gold coin was rapidly ex­
ported and disappeared from circulation. The difficulty in effecting domestic
exchanges, by reason of the greater weight of the silver, caused a notable em­
bargo on internal commerce. The disturbed condition of the country made the
transportation of large amounts of silver very precarious, and the rates of ex­
change between the capital and the chief towns became very high and con­
stituted an almost total prohibition of trade. The unreliability of the Govern­
ment rendered banking unprofitable, for a bank-vault containing precious
metals afforded a temptation too strong to be resisted by the military chiefs
temporarily in power. The issue of note circulation under these circumstances
was impossible. For ten years following the fall in silver Mexico remained
dependent entirely on silver dollars as a medium of exchange, This caused
great complaint from foreigners undertaking to do business in the country.
Travelers were obliged to carry heavy bags of silver dollars, and every enter­
prise of moment was compelled to employ a mule train and an armed guardin effecting its regular business transactions.
When the Government become more stable, after the railroads were built and
brigandage was suppressed, and the party in power showed ability and deter­
mination to protect commercial credit, banks of issue sprang up, and paper
money began to take the place of silver dollars. The National Bank, which
had existed for a few years previously, was reorganized in 1884 under a new
charter. This was soon after the second election of President Diaz. The first
statement of this bank after reorganization, June, 1884, shows that it had in its
vaults $2,890,274.85 in silver, and had a paper circulation outstanding of $4,341,377. About this time it was estimated that the coin circulation of the country
was from 15,000,000 to 20,000,000 of silver dollars.* This I think an underesti­
mate.
The National Bank at the present time (October, 1889) reports in its vaults in
specie $12,304,206, and a paper circulation outstanding of $15,352,229. The Lon­
don and Mexican Bank, the second largest in Mexico, reports $3,357,793 “ c&usm,”
and an outstanding circulation of $5,344,698. This indicates a rapicLincrease in
recent years in the circulating media of Mexico. In addition to the banks here
mentioned ihere are in nearly all the principal cities banks which have some
outstanding note circulation.
The population of Mexico is about 12,000,000. The rapid increase in the
circulating media, it may well be supposed, has had a stimulating effect on the
trade of the country. But even when thus stimulated it fails to attain what we
would call a condition of activity. There has been some rise in prices. Staple
commodities, however, are said not to be materially affected, but the prices
of real estate in the capital and the wages of laborers along the lines of the
railroads and in the principal cities have increased from 25 to 50 per cent. The
import and export business of the country has also increased somewhat. It
is probably 30 per cent, greater in volume than it was ten years ago. Govern­
ment revenue has also shown an increase, but is still very small in comparison
with that of other countries. The Mexican tariff on importations is said to be
higher than that of any other country. Its foreign trade is limited and harassed
by vexatious and intricate customs regulations. The internal trade of the
country is hampered by irregular taxes levied on common commodities by the
various States. Retail trade and banking operations are burdened by stamp
taxes. The cities of Mexico levy petty taxes on food products, even on the
canoe-loads of radishes or lettuce which the poor peons bring to market. A
burro’s load of fagots is taxed at the gates of the city of Mexico. Contending
with such unwise and variable restrictions commercial affairs must be limited
in magnitude and must remain in anything but a flourishing condition.
It interests us at the present time to trace the influence which the exclusive
use of silver as a monetary basis has on the commerce and finances of Mexico.
It is not to be contended that the sluggishness and unprofitableness of Mexican
trade is chargeable solely to the silver currency. The mediaeval methods of col­
lecting Government revenue there would effectually prevent general prosperity,
even if the soundest and most perfect monetary system prevailed. Yet I think
there is a peculiar phase of the paralysis which affects Mexican commerce which'
may be attributed directly to the use of silver as the standard of value. There
first is the inconvenience and expense involved in each movement of a consid­
erable sum of money. Silver coins, even when at par with gold in Mexico and
in the United States, are si xteen times heavier than equal values of gold. When­
ever, therefore, it is necessary to transport a round amount of money the ex­
pense is sixteen times more if it be in silver than if in gold. But this is not the
only or the most burdensome evil which the use of silver money inflicts upon
the Mexican people.
The American traveler in Mexico experiences an agreeable sensation when
he exchanges his United States funds for Mexican money. For every $100 of
American money he receives from $135 to $140 of Mexican money. The pur­
*D. A. Wells: A Study of Mexico.
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20
chasing power of his funds appears to have expanded. Nor is this altogether a
delusion. Those commodities and services which a traveler requires are not
notably higher in the city of Mexico in Mexican currency than they are in the
United States in United States currency. Hotel and restaurant charges, carriage
hire, railroad fares, and articles of common use produced in the country are gen­
erally obtainable at about the same figures as we are accustomed to pay in
the United States.
The effect of this is that the American money which a traveler carries pro­
cures for him much more than it would in his own country, and his return
across the border is accompanied by a disagreeable sensation when he sees his
funds dwindle to their old proportions. Mexico, to the American traveler,
seems therefore a land where living is cheap and where a given amount of
income from the United States will go much further than at home. The first
impression is that surplus funds from the United States placed in Mexican in­
vestments should prove very profitable. But a closer examination and a little
experience remove or dissipate this view. The experience of investors in
Mexican enterprises, railroads, banks, mines, and haciendas shows that there
is an annual loss from a decline in the domestic currency which offsets the ap­
parent profit. Reports of the railroad companies and of the banks owned by
Englishmen or Americans contain each year a considerable item to be deducted
for the depreciation of Mexican currency.
The experience of foreign merchants in Mexico is especially instructive. The
question of exchange on every payment on foreign goods which the importers
take into Mexico is one in which they find themselves constantly at a disad­
vantage. The process of shitting from the silver to the gold standard in mak­
ing payments is an expensive one. It involves a speculation in silver. Ex­
change is always against Mexico in consequence of this peculiar condition.
The money in which the Mexican importer sells his goodis is only merchandise
in the market in which he buys them; consequently in every transaction he is
obliged to add a very considerable percentage over and above the difference
between silver and gold to the price at which he sells his goods in Mexico in
order to cover the risk he takes in paying for them in gold. This addition to
the price must necessarily eventually come from the consumer or else the im­
porter suffers loss. But the difficulty which has been experienced in correctly
calculating with each importation the amount necessary to cover this risk often
results in a loss to the importer. He finds that the price at which he has sold
his goods, adding expenses, duties, and exchange into gold, will not cover the
price at which he has bought them. It is probably not unfair to say that the
average prices of imported goods to the consumer are made at least 10 per cent,
higher than the difference between silver and gold indicates, in consequence of
the risk necessary in the conversion from a silver standard to a gold standard
in making foreign payments therefor.
Nor is the importer the only one who suffers from the uncertainty involved
in making conversion from the gold to the silver standard. The exporter is
obliged to take a similar risk. The larger part in value of the exports of Mex­
ico is silver, mostly in the form of silver dollars. Exchange drawn against these
shipments is estimated on the London price of silver and is converted at the
Mexican banks into Mexican currency. The conversion involves a speculation
by the banks in silver, and the charge for this service is necessarily much higher
than it would be if the rate of silver were stable and showed no fluctuations—
necessarily much higher than if the Mexican currency were on a gold basis and
could be turned without risk into foreign currency on the same basis. In other
words, if Mexican domestic trade were conducted on a gold basis, the Mexican
mine-owners would receive more for their silver product. The same is true as
to producers of all other Mexican products sold in foreign markets.
A friend of the writer, who contemplated engaging in the banking busi­
ness in the City of Mexico, in making inquiries into the conditions of the ex­
change market, asked a broker how long it would take him to collect $25,000
in gold, to be shipped againstan equal amount of exchange drawn. The broker
replied that he would not be able to find so much gold in the City of Mexico in
less than ten days. This fact shows that Mexican exchange must be almost
altogether drawn against shipments of silver or merchandise, and the banker
who draws such exchange can not protect himself against the risk of specula­
tion by shipping gold, even if he is willing to pay a premium therefor. How
much the export charge, made necessary by the conversion from gold foreign
currency into the silver currency of Mexico, adds to the expenses of exporta­
tion can not be readily estimated. It is a fluctuating item, always adding some­
thing to the cost of selling in a foreign market, sometimes resulting in loss to
the banks on exchange transactions, but generally undoubtedly being a loss
suffered by the producer.
The experience of the Mexican importers and exporters affords an exact illus­
tration of what would be the condition of our foreign trade if we were doing
business in this country on a silver basis. The imports and exports of Mexico
are comparatively small. They amount only to about $30,000,000 annually of
imports and $40,000,000 annually of exports. The annual imports of the United
States are not less than $700,000,000 and the annual exports are at about the
CON




21
same figure. If doing business on the basis of depreciated metal is a damage to
Mexico, how much more would it affect the commercial affairs of the United
States?
The foreign commerce of Mexico in 1880 amounted to only $5.66 per inhabit­
ant. The foreign commerce of the United States in the same year amounted
to $31.63 per inhabitant. The foreign commerce of the United States is not
nearly so great in proportion to population as that of the principal nations of
Europe; but if this commerce is curtailed or burdened with additional unnec­
essary charges it will greatly interfere with our prosperity as a nation At
times in our history there have been outbreaks of narrow-minded American
spirit when it was argued that this country was independent of the rest of the
world, and would be most prosperous without international commercial inter­
course.' Many of the advocates of the free coinage of silver have maintained
that, this nation could adopt and maintain a silver currency no matter what the
other chiefcommercial nations of the world might do. I think there is a prevail­
ing notion that if we chose to use silver as our monetary basis, whatever loss there
might be would fall on foreign nations. According to this idea the foreigners to
whom we owe money would be obliged to accept silver instead of gold in pay­
ment. This would be simply scaling our debts held by the outside world. But we
should still go on conducting our domestic commerce, producing food and man­
ufacturing goods and exchanging commodities among ourselves with as much
energy and success as fever. We could be as prosperous as we are now if the
civilized nations outside our borders had no existence.
How far this conception of our actual situation is from the truth it is hardly
worth while to consider. If we no longer had a foreign market for our wheat
and cotton, our petroleum and provisions; if we no longer bought from foreign
nations sugar and coffee and tea, it should be apparent to the least intelligent
that our buying power of home products would be greatly curtailed and. the
condition of our lives rendered much less comfortable. We depend on our
foreign commerce for our prosperity as absolutely as upon our internal com­
merce. Every unnecessary impediment placed in the way of our commercial
intercourse with other nations is a distinct step backward, and materially dam­
ages our welfare.
The effect of estimating our transactions in silver money, while the chief
nations with whom we exchange commodities estimate theirs in gold, is not, I
think, clearly understood, and, so far as I know, has not been carefully ana­
lyzed. Even those who are opposed to free coinage of silver content themselves
with saying that it would be a great damage to oui foreign commerce, but do
not attempt to show the particular forms in which this damage would occur.
The condition of Mexican foreign trade illustrates well the damage which
would result to the foreign commerce of the United States if we should come
to do business exclusively on the silver standard. It costs the Mexican importer
probably from 2 to 5 per cent, over and above the current discount on silver to
make the change from the gold price, in which he buys his goods, to the silver
price, in which he sells them. It would cost our importers a similar percentage
to make the same conversion. In each case there would be a speculation in
silver, and the charge for the risk involved would necessarily be imposed
upon the goods imported. This charge would eventually be paid by tlie con­
sumer. The effect would be the same as if an uncertain and fluctuating addi­
tional charge were made for the transportation of goods coming to our shores
Sugar, coffee,tea, rice, all articles which we buy from other countries would ex­
perience this rise in price. On our $700,000,000 of imports this additional ex­
change charge would aggregate many millions, and would be paid in the 1 ong
run by the people.
In tne case of exports the necessary conversion from a silver to a gold stand­
ard would work even more to the disadvantage of the people. For the sake of
illustration let us take as an example a common transaction. Say that a Lon­
don commission merchant buys, through a Chicago commission merchant, 100,000 bushels of wheat, to be shipped to Europe.' Say that the price of this wheat
is $1 per bushel in the silver currency of the United States and that silver is
selling in the London market at 42$ pence per ounce, which would be about 70
cents for our silver dollar. The Chicago merchant snips the wheat, draws his
draft on the London merchant, and takes it, with a bill of lading, to his Chicago
banker. He asks the Chicago banker to buy the draft, in order that he may
with the proceeds pay for the wheat. The draft is drawn payable in English
currency, which is gold in London. The Chicago banker in buying the draft is
obliged to make the conversion from gold currency to silver. He must estimate
the value of the gold draft in silver, based on the quotation for silver in London,
and he must take the risk of silver advancing or declining between the time
wnen he buys the draft and the date at which the draft is payable. This neces­
sitates a speculation in silver on his part, and it is reasonable to suppose that he
will not engage in the speculation without making a charge which in his opin­
ion will cover the risk of the transaction. What this risk may be will depend
somewhat on the activity in the silver market. If silver is rapidly fluctuating in
rice, the charge will be higher than if the price of silver is comparatively stable;
ut under the most favorable conditions it is hardly probable that the banker

S

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will take this risk without compensation. He will pay less for the draft than the
gold price of silver in London would indicate it worth. Exchange on London
now never selis at a greater discount than the cost of sending gold to pay it in
London,with interest added for the time. The speculation involved in the con­
version from gold to silver would add a new element and make an additional
discount.
Silver may fluctuate 5 per cent, in price while the wheat and the draft are on
their way to Europe. If silver advances, the banker who buys the draft at the
value of silver at the time when it is drawn will lose money. If silver defines
he will make money. It can be readily seen, therefore, that the business of
buying exchange against exports will be burdened with a considerable extra
charge in consequence of the risk made necessary by the conversion of paper
payable in gold into money on the silver basis.
This exchange charge, made necessary in the exportation of wheat by the
conversion from gold to silver, must be taken account of by the Chicago mer­
chant in purchasing wheat for export. He will pay less for wheat than he
would if there were no exchange charge to be considered in the transaction, and
it is obvious that the producer of wheat must eventually sell his product for ex­
port at a less price than if no exchange conversion from gold to silver were nec­
essary in disposing of it in a foreign market. All the wheat exported from the
United States will suffer this extra expense and be reduced in price accordingly.
It is a common belief that the price of wheat in this country is regulated and
determined by the price of so much of our wheat product as is exported. If
the wheat taken for export, therefore, must be sold at a less price, m order to
pay for the risk made necessary in converting gold to silver, the price of the
whole wheat crop must suffer accordingly. Can any one calculate what will be
the effect of this depreciation ? Will it be one, two, or three cents less per bushel
that the farmers of the country must take for their wheat crop if it is sold on the
silver basis in this country? What is said regarding the price of the wheat crop
will be equally true with regard to the prices of our other principal products for
export, our cotton and meats, our petroleum and manufactured goods.
We should not forget that much of the prosperity of the United States is due
to the well ordered machinery by which commercial exchanges are here con­
ducted. The facilities afforded for buying and selling, for handling goods, and
for settling accounts, in no small degree increase the volume and the profit of
our foreign and internal trade. Any change which causes new friction in the
machinery will surely diminish both the volume and the profit of all our busi­
ness operations.*
What has been said as to what would be the commercial situation of the
United States had not the act of 1873 prevented free coinage of silver dollars
may be said as to the future should free coinage of silver now be made lawful.
The only means of avoiding the expense of converting gold into silver in inter­
national exchange, and the consequent burden upon our commerce, would be
by raising the price of silver to par with gold and maintaining it at that point,
it is improbable that such a consummation could be effected by any act of this
nation or even by a combination of nations. The production of silver was so
greatly in excess of the production in the early part of the century and is so
constantly increasing, year by year, that the attempt to raise silver to par with
gold, even by supplanting the gold in this country entirely by silver dollars as
fast as our mints could turn them out, may well seem hopeless.
The following table shows the world's production, and the production of
Mexico and of the United States, of silver for periods of five years each, begin­
* Since this article was written, my attention has been called to a portion of
the address delivered before the Bankers’ Association, at Saratoga, in August,
1884, by the president of the association, at that time Mr. Lyman J. Gage, who
is vice-president of the First National Bank of Chicago. As the course of reason­
ing, and the conclusion reached as to the effect of conversions from a gold to a
silver standard, and vice versa, in making exchanges, is so exactly in accord with
what is contained iu my article, I quote here nearly all that is there said on that
subject:
“ It will not be disputed that, for all our commercial transactions with other
people, settlement must be made in the London money market. If we buy
sugar in Cuba, we pay in London. If we sell goods in Brazil, we take payment
in English funds payable in London. So that, whether we buy or sell in ihe
course of our foreign trade, London is the settling-house for all this trade. At
the present moment our financial system rests upon and our commercial values
are measured by the same metallic standard, namely, gold coin. Our gold coin
shipped to the British mint may be coinecl into sovereigns at a nominal expense,
and English sovereigns shipped to us may be transmuted into our gold coins at
no material cost. Thus, in the competitive struggle for a place in foreign mar­
kets, we enjoy a great advantage in using the same metallic money standard.
“ The rise and fall of gold, or the rise and fall of commodities in their relation
to gold, affect us in our great competition in an exactly similar manner. We
enter the commercial contest with weapons equally matched. Now it is pro­
posed to voluntarily surrender this important condition. With silver money of
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23
ning with 1851. (The last figures in this table are for three years only, from
1886 to 1888 inclusive:)
PRODUCTION OF SILVER.

Years.

World.

1851-1855 ....... $197,274,775
1856-1860 ....... 203,664,440
1861-1865....... 246,515,300
1866-1870....... 295,950,850
1871-1875 ....... 423,870,430
1876-1880...... 477,314,230
1881-1885 ....... 558,473,400
1886-1888....... 373,597,105

Mexico.

Per
cent.

United
States.

$104,635,125
101,033,050
106,131,825
115,588,025
130,555,775
128,158,680
158,112,610
107,049,585

53.0
49.6
43.0
39.0
30.7
27.0
28.0
28.7

$258,250
878,090
38,481,400
65,599,175
161,673,555
210,538,225
244,216,945
164,993,820

1

Per All other
cent. countries,
per cent.
0.13
0.43
15.0
22.0
38.0
44.0
44.0
44.0

46.87
49.97
42.0
39.0
31.0
29.0
28.0
27.3

The following table shows the production by years for the last decade, and
more _plainly illustrates the relation of Mexico and thei •
TT“ 41‘~J States to °the
-----1
1
United
silver market.
PRODUCTION OF SILVER.

Year.
1879
1880
1881
1882
1883
1884
1885
1886
1887
1888

Mexico.

World.
$96,293,845
97,284,135
103,715,045
108,801,445
109,517,730
115,3$3,600
121,055,580
121,541,320
124,833,670
127,222,115

$25,955,580
27,935,950
30,200,440
30,298,555
30,546,490
32,742,770.
34,324,380
35,239,670
35,743,800
36,066,115

Per
cent.

United
States.

26.9
28.7
129.1
27.8
37.9
28.4
28.4
29.0
28.6
28.3

$40,800,000
39.200.000
43.000.000
46.800.000
46.200.000
48.800.000
51.600.000
51.000.000
53.357.000
5$, 195,000

Per
All other (
cent. countries.'
42.4
40.3
41.4
43.0
42.2
42.3
42.6
41.9
42.7
46.5

$29,537,265
30,148,185
30,514,605
31,702,890
32,771,240
33,841,830
35,131,200
35,301,650
35,732,870
31,961,000

(The above tables are compiled from figures furnished by the Commercial
and Financial Chronicle and the Reports of the Director of the United States
Mint, and are probably approximately correct.)
Mexico has produced yearly an increasing quantity, but the United States has
increased its production of silver more rapidly. "These two countries have in­
creased their production of silve* more rapidly than the rest of the world, but
everywhere the production of this article nas increased.
The price of silver declined from 59£f pence per ounce in London in January,
1873, to 41f pence per ounce in May, 1888. This decline was attended by consid­
the present weight and fineness the recognized and established money of ac­
count in our domestic affairs, we shall have our industrial exchanges carried on
under a money standard about fifteen points removed from the English or set­
tling-house standard. Our domestic values will rise and fall in relation to an
entirely different standard. Can any one measure the deranging influence of
this fact upon our foreign trade ? But this indirect and ambiguous adverse in­
fluence is n6t all. In every settlement abroad we shall be at the disadvantage
of converting our domestic money of account1, silver, into English money of
account, gold. And that this will always be at a change to us is*plain if we re­
flect a moment.

*

*

*

*

*

*

*

“ We all know that trade turns upon small percentages^ and the larger the
transaction the more influential is a fractional per cent. It follows, then, that,
with silver the established money of account at home, our foreign trade will be
prejudiced and restricted. It follows, also, that those who farnish products to
go abfoad must furnish them at a price somewhat less, and those who consume
products brought from abroad must pay somewhat more, to make good the in­
creased margin for cost and risk in converting the unrelated standards of the
two countries. It will give an increased profit to dealers in foreign exchange.
It will force the importer to add an extra percent, to his otherwise selling price.
It will make the exported deduct a percentage xrom his otherwise purchasing
price. Who will suffer therefrom ? The industrial classes who produce and
consume the exchangeable products.”
CON




24
erable fluctuations, and fluctuations still characterize the silver market. The
price of standard silver when at par with gold, in London, ic*60|pence per ounce.
Although tnere is no large stock of uncoined silver now in sight anywhere in
the world, the large accumulations in the form of plate and ornaments consti­
tute a great reserve stock which would be drawn on undoubtedly if any con­
siderable rise in price should occur. It is quite probable that if the free coin­
age of silver should be enacted by Congress at the present time, and the capacity
of the mints for coining silver be made equal to the demand fo? silver dollars,
silver sufficient to replace all our gold coin would be furnished from the world’s
stock within a year or two, and without raising the price of silver in the London
market to anything like par with gold.
The act of 1878, at present in force, under which $2,000,000 worth of silver is
purchased each month by our Government and coined into dollars, furnishes a
market each year for about $25,000,000 worth of silver,which is coined into more
than 28,000,000 of legal-tender silver dollars, vAt the time when this act was
passed it was predicted by its advocates that the effect of the purchase monthly
of silver by the United States would raise the price of silver to par with gold.
In February, when this act was passed, silver sold in London at 55£ pence per
ounce; in December of the same year it had declined to 49} pence per ounce;
and the decline from that time has been gradual, and apparently unaffected by
the purchases of our Government.
In the faee of these facts it is reasonable to conclude that any action of the
United States in the coinage of silver dollars will not have a permanent effect
on the market price of silver bullion. The coinage of the United States, under
the act of 1878, of legal-tender silver dollars, has now amounted to about $350,000,000. The advocates of silver coinage now demand, if free coinage can not be
secured, that the Secretary of the Treasury of the United States exercise the dis­
cretion conferred upon him by that act to purchase $4,000,000 worth of silver
each month to be coined into silver dollars.
What will be the ultimate effect of the coinage of silver dollars under the aet
of 1878 should be a matter of grave consideration. Should the coinage continue
until there is a supply of this kind of money equal to the monetary needs of the
United States, it may well be imagined that a contingency will arise in which
this silver money will take the place of the higher-valued gold money, and our
stock of gold coin be exported. Should sucn displacement of sold by silver
take place in this country, our commercial affairs will necessarily be brought
from a gold to a silver basis. In that event the example of Mexico will be
brought home to our experience. Mexico floated from a gold to a silver basis as
a log floats down stream. The United States, under similar conditions, would
yield to the same resistless forces, although it may be a fully equipped vessel,
steered by commercial intelligence and manned by an energetic crew.
If silver circulation is provided in sufficient quantity for all our monetary
uses, either by free coinage or by the manufacture of dollars under the act of
1878, oi; otherwise, the laws of commercial gravity will draw us down to the sil­
ver level.
The paralysis which the use of silver causes in Mexican trade will then also
affect our foreign and domestic commerce. Our production, distribution, and
consumption will be at a disadvantage. We shall be handicapped in the strug­
gle for life in comparison with the chief European nations. Can we afford t o '
assume this burden ?
M. L* SGUDDSB) Jfi*