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EVILS OF FALLING PRICES.
SPEECH
OP
HON. W M . M. STEWART,
O F
N E V A D A ,
IK THE
SENATE OP THE UNITED STATES,
W E D N E S D A Y , J U L Y 20, 1892,
WASHINGTON.
1892.
SPEECH
OF
HON.
W I L L I A M M. S T E W A R T .
The Senate having under consideration the hill (H. R. 7845) defining "options" and "futures," imposing special taxes on dealers therein, and requiring such dealers and persons engaged in selling certain products to
obtain licenses, and for other purposes-
Mr. S T E W A R T said:
Mr. PRESIDENT: This bill is instructive. It is evidence that
there is a great deal of unrest in the country from some causs.
It is not the first bill that has been urged here as a panacea for
the evils under which the country suffers. W e had the interstate-commerce bill, which it was alleged would cure all the evils,
cheapen transportation, raise the price of property and farm
products, and relieve the distress. It became a law. It made
some good offices for very intelligent gentlemen, but we are not
aware of its great beneficial results. In the last Congress we
were told that the evil which afflicted the country was trusts,
and we labored during many hours and days in that Congress to
pass a bill limiting trusts. The bill was'passed. W e have not
h?ard from it since. Whether it has done any good or not nobody
has ascertained. So we go on session after session passing bills
of this nature.
Mr. SHERMAN. Will my friend allow me to interrupt him?
Mr. S T E W A R T . Certainly.
Mr. SHERMAN. The bill to which the Senator from Nevada
refers, called the trust bill, has been embodied almost in whole
or in large part by many of the States of the Union. It is enforced now by the courts of at least four, and I think several
other States, and in two or three cases with marked results, as
in the casa of the Standard Oil Company.
Mr. S T E W A R T . I am not aware that it has removed the difficulty or relieved the people from the growing evils which have
rested upon them. On the contrary, here is another evidence of
great dissatisfaction among the people. Here is an elaborate
bill proposing to enter largely into ihe transactions of business,
creating a large number of offices and much expense, and a
measure which will be very difficult of execution, requiring many
oaths and accounts, and all that; and those who are honestly engaged in business will have much inconvenience connected with
it. I agree that if any great good can be accomplished we ought
to pass it, but I fear that it will be numbered witli the others, and
that dissatisfaction will continue. I do not think it aims at the
real difficulty, at the real disease. I do not think it can remedy
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that disease. I do not think it is the medicine required. I do
not think it is the specific for the disease of falling- prices. That
is the disease which i t attempts to remedy, to prevent falling
prices in grain so that the farmer may get better prices.
I know very well that this speculation has worked to the ad vantage and the disadvantage of the farmer. Some years ago many
rich men sank their fortunes in the attempt to corner wheat.
They tried several times to buy up all the \yheat in the country.
They lost millions. X think I could name $30,000,000 or $40,000,000 that were lost in that way. The farmers who had wheat
at the time had the benefit of that in selling their wheat at a
high price. It is not absolutely certain whether the farmers
lose more from bears than they gain from the bulls in the market. It is a very doubtful question indeed. Some farmers with
whom I have talked think that the bulls do them more good
than the bears do them harm.
But there appears to be a general disposition to have this bill
passed. It is petitioned for by thousands of persons and urged
U£on the attention of Congress. But the evil of falling prices
will continue whether we pass it or not. I was reading this
morning an article in the Baltimore Sun, a very conservative
paper, with regard to the falling prices of land and the vast
change in the condition of our rural population from independent
farmers to tenant farmers. As it is in point with what I am
about to remark, I ask the Secretary to read the editorial which
is marked.
The PRESIDING OFFICER. If there be no objection the
Secretary will read as requested.
The Secretary read as follows:
INCREASE OF TENANT FARMERS.
The Ceusus Bureau has lately "begun to report the result of Its investigations into the number of persons who own and cultivate their farms and the
number who are simply tenants on farms owned by others. Thus far the report covers only ten counties in Kansas and ten counties in Ohio. In Kansas in 1890 the number of farmers cultivating their own lands was 66.75 per
cent, and of tenant farmers 33.25 per cent. Assuming that this proportion
of owners and tenants runs through the entire State, it is evident that onethird of the agricultural families are tenant farmers. A comparison with
the census of 1880 shows that in the same counties at the end of that decade
the number of families living on hired farms was only 13.13 per cent, and of
farms worked by their owners 86.87 per cent. The increase, therefore, in the
number of hired farms between 1880 and 1890 was over 20 per cent. This
change for the worse may be accounted for, at least in part, by the bad crops
of the three previous years and the foreclosure of mortgages given by farmers to tide them over their difficulties.
But the same reasoning does not apply so strongly to Ohio when ten counties chosen for comparison indicate even a greater increase of tenant farmers. In 1880 the number of farmers in Ohio tilling their own lands was 75.04
per cent and of tenant farmers 24.96 per cent. In 1890 only 63 per cent of the
farmers owned the land they cultivated, and the number of tenant farmers
had risen to 37 per cent. To what extent similar changes from ownership to
tenantry are going on in other States we are yet to learn, if the inquiry of
the Census Bureau extends to them also, as it is to be presumed that it will.
We know, from the reports of the Massachusetts and New Hampshire commissioners, that there are in those States a large number of farms not only
untenanted, but classed as ** abandoned " by their owners, and offered for sale
at incredibly low prices. The drift of the rural population into large cities
where, besides the attractions they hold out, enterprising men may hope to
do better than in farming and labor is better remunerated, has unquestionably induced the younger members of farming families to abandon the old
homesteads and seek their fortunes elsewhere; but underlying the several
causes we have mentioned there seems to be some force at work that is re-
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ducing the number of farmers of small means and is building up, as in Europe, a race of tenant farmers.
Intimately connected with the changes going on from independent to tenant farming is the decrease in the value of farm property. We have referred above to the abandoned farms in Massachusetts and New Hampshire,
and to these may be added thoss of Vermont. We now come to the inquiry
just made into the value of farms in Connecticut by Mr. T. S. Gold, secretary of the State Board of Agriculture. His report covers replies from 107
out of 168 towns in that State, and although the responses only come from
309 farms, they afford, in his opinion, a basis for computing approximately
the value of the remainder. The average price of the farms on Mr. Gold's
list is $28 per acre. In the census of 1880 the average value of the farm lands
of the State was said to be $49.34 per acre. -Here," said the Providence Journal, "in a little more than a decade is an apparent decrease in value of more
than $21 per acre, and though, of course, it would not be fair to put the
average value in 1880 in comparison with the value of land in 1892, it is difficult to believe that a farm census to-day would show an average value close
to that of 1880, for it is to be remembered that the price asked for the farms
included in the secretary's report is probably much higher than could be
secured on actual sale." Moreover, the report shows that in certain small
towns some 3.000 acres are offered at an average of $8 per acre, and farms
with buildings in good repair at one-third the price that was asked for
them twelve years ago. It is complained that one cause of the decline is the
bad condition of the roads, and a similar complaint comes from Maine and
Rhode Island, where a like depression in the value of farm lands exists.
Mr. STEWART. Mr. President, this shrinkage is not eonfined to farm lands. In the report just submitted by the Committee on Finance, who were instructed to ascertain the market
price of commodities and labor, to ascertain whether that price
was advancing or declining since the passage of the McKinley act,
I am informed that there has been an average shrinkage in the
price of c jmmodities and ol labor of about 3 per cent. That was
up to the time the committee closed its labors, which was last
December, was it not?
Mr. CARLISLE. If the Senator will allow me, I will state
that the subcommittee undertook to ascertain the retail prices
of two hundred and fifteen articles at seventy different places
in the United States during the period of two years, beginning in June, 1889, and ending- in September, 1891. The result of its labors shows that while prices of some articles rose
more than 3 per cent during part of the time after the passage
of the McKinley act, yet at the end of the period the prices of
the two hundred and fifteen articles taken altogether were fortyfour one-hundreths of 1 per cent lower than they were at the
beginning.
Mr. STEWART. Notwithstanding the McKinley act?
Mr. CARLISLE. Yes; the prices first went up for several
months after the act was passed and then the tendency to a reduction began to show itself.
Mr.- STE WART. That was up to September, 1891?
Mr. CARLISLE. Yes.
Mr. STEWART. There have been about ten months of fall
since then.
Mr. CARLISLE. It has bean about eleven months.
Mr. PASCO. I wish to ask a question of the Senator from
Kentucky. Does that include protected and unprotected articles?
Mr. CARLISLE. The committee selected 215 representative
articles, which were supposed to enter into the common consumption of the country, without reference to the que3tion
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whether the duties were increased or diminished upon those
articles by the McKinley act.
Mr. STEWART. Did the committee extend its investigation
as to pi ices of commodities in Europe during the same period?
Mr. CARLISLE. Part of the time the committee succeeded
in getting the retail prices in England, but not to such an extent as to justify anything like an accurate comparison of prices.
Mr. STEWART. The fall in prices there would be greater
than here.
Mr. CARLISLE. I am not able at this moment to state what
it was.
Mr. STEWART. The fall in prices would be much greater in
England. In my observation, from what little investigation I
have been able to make, and from the statements of English papers, there has been in the last two years a fall of over 10 per
cent, some put it as high as 15 per cent, in the general range of
prices of commodities in Europe since the fall of 1890; and it is
still going on, and it will continue to go on.
I do not believe that a bill of this kind will remedy the continual shrinkage of prices. The statisticians tell us that since
1875 the general decline has been from 35 to 40 per cent. I think
it has been more than that in Europe on account of the rapid decline recently. But this decline must go on, notwithstanding
the pending bill. It is not going to affect the,general range of
prices; and that is the evil under which the world is laboring.
This rapid increase of tenant farming has a parallel. At the
tim6 of the discovery of gold and silver i M e x i c o and South
America the feudal system was at its zenith of power and perfection, but it so happened that in Great Britain land leases were
for ninety-nine years. All who have studied Blackstone remember those leasehold estates. They were in the habit of allowing
those long leases for ninety-nine years. Mr. Jacob, who is the
best authority of anybody who has written upon the production
of the precious metals, and is so recognized throughout the country, tells us that at the time of this discovery there were 30,000
landholders in Great Britain, and that in one hundred years the
number of landholders increased to about 100,000.
At the end of the century there were 100,000 inhabitants of
Great Britain who owned the land they lived on and cultivated
He attributes it solely to the increase of the supply of money.
He said that these long leases, payable in money, made it necessary for th£ large landholders to sell their land; that they could
not live on their rents on account of the rise of prices. Money
became cheaper and commodities dearer.
These one hundred thousand land-owners in Great Britain remained for about one hundred and fifty to two hundred years,
the number of land-owners remaining about the same. During
the Napoleonic wars the currency was wonderfully inflated, and
immediately after the war the heroic remedy of resumption was
applied* The people were doing businass on a high range of
prices. They were in debt, as our people were during our war,
doing business on inflated prices. Contraction produced by resumption destroyed nearly all the enterprising men of that great
nation and reduced the number of land-owners in a few years
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back to thirty thousand, where it now remains. All this shows
the effect of contraction.
It has been stated that in this country the aggregate amount
of mortgages is not increasing, but is growing less. This is because the mortgages are being foreclosed. The mortgagees are
taking the property. The people are becoming tenant farmers.
What has produced this? A shrinking in the volume of money,
because it is a law that can not be changed that the average
range of prices is governed by the volume of money; I mean
of real money, money that does not have to be redeemed. The
volume of money determines the price. We witnessed that a
year ago, when $75,000,000 of gold went out of the country.
Every morning as the gold would go out stocks were marked
down ; No man would deal until he knew the amount of gold to
be shipped. It was the thermometer that determined the range
of prices. Every man could see the shipments of gold marked
on the bulletin boards, and prices of commodities were marked
accordingly.
Now, as the volume of gold money, which lies at the foundation, decreases in comparison with property and population, of
course property must go down and prices must go down to correspond. It is just as difficult to keep prices up with a shinking
volume of money as it would be to keep two levels of the water
of the ocean. It never has been done, and never can be done.
The volume of gold is shrinking not only with the increase of
population, but it is being diminished by the power of the creditor class operating upon the debtor class, compelling them to
make gold contracts. They ha\je even attempted to coerce Austria into adopting the gold standard: Is the Senate aware that
it would have taken 6 per cent of all the gold In the world if they
had succeeded in making Austria buy the two hundred millions
which it was proposed to coerce her into buying? That would put
up gold, make gold dear, and as the price of property is measured
in gold, therefore, when gold goes up property must go down.
That is the disease, and all the nostrums you can apply will effect
very little.
It may be well to pass this bill, not for the good it will do, not
because it will accomplish any good purpose, for I prophesy that
it will simply make trouble and accomplish no good, but to show
the people that it is not good medicine, that it does not reach
the disease* If this bill should pass, next winter when we meet
again the same clamor will be heard. As long as prices fall, as
long as men are driven from their homes and become tenant
farmers, it must continue. There can be no escape. > The only
f o o d accomplished by passing this bill will be to show the people
ow inadequate it is to remedy the evil. Perhaps the education
they will get may pay us for the inconvenience of thus meddling
with the business of the country.
I have been weighing this matter in my mind and I have not
yet determined how I ought to vote. I introduced a bill the
other day to reduce the salaries of officers, and I wish to explain
that in this connection.
The bill as introduced reads as follows:
That the salaries of all officers and persons receiving salaries from the
United States in excess of $600 per annum shall, from and after the passage
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of this act, be reduced 25 per cent of such excess: Provided, That this act
shall not apply to the salary of the President of the United States during
the present term of that office, nor to salaries of judges of United States
courts during the terms of the present incumbents.
I put the amount at $600. I think that was a mistake. On reflection I believe that those of that grade are simply laboring
people, and a reduction as to them would be unfair. So I propose when this bill shall come up for consideration—for I introduced it in good faith—to substitute $2,000 for $600, and to reduce by 25 per cent the salaries of all persons receiving- anything in excess of $2,000 from the Government. That will not
affect the people who are doing the labor of the Government;
it will only affect those with large fixed incomes.
My object in calling attention to this is the fact that as prices
go down we are creating a favored class with fixed incomes.
That favored class will fight for contraction th 3 same as the bondholder will fight for contraction to enhance the value of his income.
When I first came to the Senate the salaries of Members and
Senators were $3,000 a year; judges of the Supreme Court received $6,000 a year; and the President of the United States received $25,000 a year. I remember that once in those times I
called upon the venerable Justice Nelson, and found him in the
National Hotel with two rooms, very small, for himself, wife,
and daughter. He had to do all his work in those two rooms.
After some talk with him I asked him if he was able to .live on
his salary—for we were talking about that—and he said he could
not pay his bills on his salary however economical he might be;
that prices had gone up so he <*ould not live on his salary. I
found members of Congress complaining that it was impossible
for them to pay their bills and live on their salaries. Prices
then were high. The salary of the President of the United
States was very small for those times.
In consequence of these facts I became an enthusiastic advocate
for increasing salaries. We began with the judges of the Supreme Court. I had an ally in the then Senator from Wisconsin,
Mr. Carpenter, who espoused the cause with great earnestness,
and we succeeded in raising their salaries, and finally the salary
of the President of the United States was raised to $50,000. There
was no difficulty in raising the salaries of members of Congress.
That came first. Those salaries were raised to correspond with
the then range of prices.
* Now we find that prices have gone below what they were in
1860, or when these salaries were fixed, and as they stood before
Congress raised them. The prices of commodities have gone below those of any of this century; and I say that it is not in good
keeping for officers who are serving the Republic to maintain
this high range of salaries while prices are being forced down by
the legislation of Congress, for they are being forced down by
the legislation of Congress. In forcing the country to go to the
gold standard we are forcing prices down, and we ought not to
profit by our own wrong.
The President of the United States is receiving a salary of
$50,000 a year. That salary is more than $100,000 would have
been in 1871 when his salary was increased. If it were put back
to $25,000 it would have a greater purchasing power than his
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salary had in 1860. I say $25,000 would now have a greater purchasing power than it had in 1860. Congress raised all these
salaries on account of high prices. They should now be reduced
on account of low prices. The President is interested in mainJ
tabling the gold standard to the extent of $50,000 a year. Because gold is worth a hundred per cent more than it was in 1871.
We are told all around that the President will veto a silver bill.
It will put money in his pocket to do so. He has a large salary
and a large interest in the question. All good citizens hope he
will not be influenced by such considerations and there is no
foundation for the assertion that he would veto a silver bill.
This comes home to the pe3pleof the country in view of what
has occurred in Pennsylvania. The disease at Homestaad was
falling prices. The Carnegie .Company said the price of commodities had gone down, and therefore they must reduce the
price of labor to correspond. If wages must be reduced to correspond with falling prices, why should hot the compensation of
high-salaried officers share th3 sams fate, I ask'? If the feudal
lords of wealth can in a moment organize their armies and make
war to put down wages, and if that war can be justified, how
much more are we called upon to surrender our salaries if we insist that legislation shall put down prices?
The evil of the gold standard first fell upon the farming community. Our farmers were regarded as a brave and independent portion of citizens, We relied upon the farmers to resist
encroachments of centralized pow3r or any other power while
they were prosperous. But you have robb3d them of half their
estate by reducing the value of their farms. You have driven
them from their homes and made tenant farmers of 30 or 40 per
cent of them, and the process is going on. They have lost much
of their power in the body politic.
Who, then, will resist the encroachments of the gold kings?
The labor organizations of this country are attempting to resist.
The3r will get outside of the law. They will ultimately be
crushed, because nothing can withstand the iron hand of contraction. This resistance has been tried in other civilization.
But as the money disappears feudal slavery follows. These
men may resist for a time in this country > but see how they were
treated in Germany a month or two ago when they were assembled to protest against a reduction of their wages. The imperial army fired upon them without notice, and they had no redress.
Europe is a military camp and is controlled by the gold kings.
Labor must submit there. The penalty of any resistance, or
even of protest, is. death. The condition of the laboring man in
Europe is fast becoming what it was in the dark ages, and in
this country the same iron hand of contraction is being laid upon
him. He is the only one who stands to resist it, and he is denounced by the law-abiding citizens of this great Republic for
protesting against the lowering of his wages, and he must ultim a t e l y ^ subdued if this goes on.
Ah, tiie evil lies deeper than the mere dealing in futures,
speculation in futures, business transactions. It is brought about
by the destruction of half of the money of the world and by the
impossibility of increasing the other half. All the gold that is
produced is consumed without making any appreciable increase
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in the gold coin of the world. It is estimated by statisticians
that the gold coin of the world is no greater in amount than it
was eighteen years ago. Nearly $40,000,000 of the annual product goes to Asia, never to return, because their exports always
exceed their imports. The balance is used in the arts. Still,
the gold kings insist that those who are attempting to use any
other kind of money shall be forced to buy gold in ordar to increase the value of gold, the property they own, to make bonds
more valuable. That is what is being done.
We passed a bill of relief in the Senate, to supplement gold
coin with silver coin. But the edict of the gold kings went forth
operating upon parties, upon men. and upon conventions, to make
them forget their constituents, to make them forget the sufferings of the people whom-they rjbbed. How long this will continue is a question for the future; but if it is not stopped we
shall have a money famine the like of which the world has
never seen.
Between 1810 and 1840 whsn a money famine was created by
the Spanish-American wars the production of gold and silver
was between $30,000,000 and $40,000,000 per annum, and some of
that could be put into new money. From 1840 to 1850 little was
added to it, about $10,000,000 a year from the gold mines of Russia. From 1850 to 1875 the world's product of gold and silver
was more than $200,000,000 per annum. W e had then rising
prices, and business was conducted on the basis of high prices.
Since 1875 no addition has been made to the gold coin of the
world, and we are marching more rabidly to decline than we
were in the celebrated money famine in the early part of this
century. Still we are here proposing relief to the people, getting patriotic over side issues, and allowing the evil to go on increasing!
Much has been said about the reasons for the fall of silver.
Silver has not fallen. It will buy as much of all the commodities produced by man as it ever would. It is gold which has
gone up. The average price of a bushel of wheat has been an
ounce of silver in Liverpool every year for the last twenty years.
The Indian farmer will take his bushel of wheat to Liverpool,
sell it for an ounce of silver, take his silver home and coin it into
$1.37. That silver has for the farmer of India the same purchasing power it ever had. The American farmer, on the other hand,
takes his bushel of wheat to Liverpool, takes his ounce of silver
for it, and brings it here and sells it for 87 cents. He is put in
competition with the farmer of India, and in that way we are
driven out of the foreign market. Russia is similarly situated
in this respect to India.
So we go on putting up the price of gold and putting down the
price of proparty, and the gold men say what a terrible thing it
would be for some of this gold to go out of the country. If we
had this gold in Europe, where we sell our products, the price
might be higher there and we would be benefited. There is no
place on earth where our gold would do us so much good as in
Europe, where we sell our commodies. It is the falling of pr.c:3
that casts such a financial gloom that no business man can contend against it.
There has been much said about India and Indian finances.
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I have in my hand a digest of the laws of India with relation to
issuing paper money. It is a synoposis of the Indian papar currency act of 1882, giving a synopsis of the contents of the act,
with the financial status of India, and brought down to date.
* In order that a person dealing with this question may have at
hand the legislation of India enacted to depress the price of silver, I will print it in my remarks.
It will be seen from this publication that India from time to
time not only issues paper money based on sih er, but issues it
on government security, the same as we issue our national-bank
notes, and thus she avoids the necessity of buying silver. It is
an elastic system and can be carried on by administration. They
keep the demand for silver down so as to prevent the rise of th^
price of silver in this country.
Mr. GEORGE. Mr. President
The PRESIDING OFFICER. Does the Senator from Nevada
yield to the Senator from Mississippi?
Mr. STEWART. I do.
Mr. GEORGE. Does the Senator intend to have those statutes
printed?
Mr. COCKRELL. I would suggest to the Senator that he ask
that they be printed in document form also.
Mr. G E O R G E . I want to suggest to the Senator, if he has
those laws printed, that he get leave of the Senate to have the
print in the ordinary type of the RECORD, and not in the small,
fine, close type that nobody can read.
Mr. STEWART. I will have the synopsis printed in my remarks.
Mr. G E O R G E . Has the Senator the consent of the Senate to
have it printed in the ordinary type of the R E C O R D ?
Mr. STEWART. Yes; and I will ask, if it bs agreeable, that
the act of India of 1882, which is the basis, and this synopsis, be
printed together in document form so that people can have it. I
am certain everybody would be glad to have it.
The PRESIDING OFFICER, If there be no objection it will
be so ordered. The Chair hears no objection.
Mr. PADDOCK. x I ask the Senator what document it is that
is to be printed?
Mr. STEWART. The document that is to ba printed is the
currency act of India of 1882 and the condensation and statement
of tne'elfect of that act, continuing down to date, showing the
legislation of India.
»
Mr. PADDOCK. Does that bear any intimate relation to the
commercial evil of selling what you have not and buying what
you never expect to have?
Mr. STEWART. Yes, I think it does, because no man can
expect to have anything under this system. The antioption bill
is to put money in the pockets of the farmer, wnich can not be
done while the gold kings have it all.
Mr. PADDOCK. I have secured all the information I want.
The paper referred to by Mr. S T E W A R T is as^follows:
INDIAN PAPER CURRENCY.
The value of silver and gold does not depend on production
alone. Both metals owe their present state almost entirely to
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the currency legislation of the different governments of the world.
Taken together or separately they fail to supply a sufficiency of
money for the trade requirements of the world, and government
credit issues are inevitable. If the face value of all paper currency represented an actual deposit of coin or bullion to that
amount held in trust to redeem it, and for no other purpose—and
all base metals in use as fractional curr^cy were likewise only
issued against the value represented in silver and gold deposited
to secure that—the supply of the precious metals would be inadequate.
It can not be made good by any monometallist that gold is capable of bearing the strain alone, nor can the advocates of silver
claim a stronger position for that metal as a single standard, because either e vent can only be accomplished by an undue exercise of Government credit within range of and subject to many
disasters. In this connection one should not be deceived by the
assumption of the gold standard by the few governments claiming to have accomplished it, as a glance at the commercial world
reveals their position a favored one, extremely partial and
with no proof that their system can be successfully extended to
cover the whole.
^ The present generation witnesses ths opening up of more nations to trade and commerce under the in tluencss of steam and
electricity, while the increase of population in the enlightened
countries is known to have been very great during the past hundred years, and the United States of America, by their growth,
add, as it were, anew and greater nation each decade, and will
long continue to do so, it being a fair estimate that their next
census will show an increase of 15,000,000 of inhabitants. It is
evident, therefore, with its rapidly developing and inexhaustible
resources, that country can only ba amused by those who maunder oVer its silver legislation.
The cause and the reason for the great decline in the value of
silver during 1891 and 1892 is exceadingly simple once made
known. On the one hand, it is unnecessary to go back further
than the legislation of 1890 in the United States which culminated in the enactment of the monthly purchase of four and a
half million ounces of silver; but on the other hand, to make out
the case, it is essential to revert to " the Indian paper currency
act of 1882," of which a synopsis is presented, with occasional
remarks, before proceeding to sum up the conclusion. It is interesting to observe the keenness manifested by those who control Indian finance managemant respecting United States silver
legislation, a matter the legislators of the United States appear
to think nothing of.
4 'The India paper currency act" of 1882 was passed by the
governor-general of India in council and (( received the assent
of the governor-general on the 26th of October, 1882." "This
act may ba called the Indian paper currency act of 1882. It extends to the whole of British India, and it shall come into force
on the passing thereof." "Act No. 3 of 1871 (to consolidate and
amend the law 'relating to the government paper currency) is
hereby repealed." This act of 1882 bagins with—
•MDepartment of paper currency;" "head commissioner;"
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13
"commissioners for Madras, Bombay, and Rangoon." Then
comes "Power to establish circles of issue," as follows:
"SEC. 5. The governor-general in council may from time to
time by order, notified in the General Gazette of India—
"(a) Establish districts to be called circles of issue, four of
which circles shall include the towns of Calcutta, Madras, Bombay, and Rangoon respectively;
" (b) Appoint in each circle some one town to be the place of
issue of currency notes as hereinafter provided;
" (c) Establish in each such town an office or offices of issue;
41 (a) Establish in any town situate in any circle ^n office to be
called a currency agency; and
" (e) Declare that for the purposes of this act, any town (other
than Calcutta, Madras, Bombay, or any town situate in British
Burmah) in which an office of issue is established shall be deemed
to be situate within such presidency as is specified in the order."
The establishment of ciicles of issue has been quoted fully, because further on it will be important in connection with the circulation of this paper currency.
The act then continues, dealing with " deputy commissioners
and currency agents;" " subordination of commissioners;" " a p pointment, suspension, and removal of officers;" " signatures to
notes;" " issue of notes for silver by head commissioner, commissioner, and deputy commissioners;" " issue of notes for silver
by currency agents;" "issue of notes for gold," which part of
this act is no longer in force; " melting and assaying bullion or
coin received for notes," which refers to foreign coin; " certificates for bullion or coin." The act now comes to " notes where
legal tender," and it is .interesting to read that " within any of
the said circles of issue a currency note issued from any town in
that circle shall be a legal tender for the amount expressed -in
that note in payment or on account of, any reserve or other
claim to the amount of five rupees and upwards due to the Government of India, and any sum of five rupees and upwards due
by the Government of India or by any body corporate or person
in British India, provided that no such riote shall be deemed to
be a legal tender by the Government of India or any office of
issue."
The purpose of the act to confine the currency notes to circulate as alegal tender only within the circle of issue to which
each note belongs appears open to criticism, especially when it
will be shown that the notes have as security the general credit of
the Government of India. Bank of England notes are only legal
tender in England and Wales, but the case is not a parallel one.
The act continues:
" Notes where payable:" "notes issued from currency agencies to
be deemed to be issued from place of issue of circle."
The act now reaches the "reserve" of which it is to be borne
in mind that at the present time no part of it consists of gold.
The whole amount of coin and bullion received under this act
and under act 3 of 1871 for currency notes shall be retained and
secured as a reserve to pay those notes, with the exception of
such an amount, not exceeding 60,000,000 rupees, as the governorgeneral in council, with the consent of the secretary of state for
India, from .time to time #xes. The amount so fixed shall be
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14
published in the Gazette of India, and the whole or such jjart
thereof as the governor-general in council from time to time
fixes shall be invested in securities of the Government of India.
" The si i l coin, bullion, and securities shall be appropriated
and set apart to provide for the satisfaction and discha.-ge of the
said notes, and the said notes shall be deemed to have been issued on the security of the said coin, bullion, and securities, as
well as on the general credit of the Government of India."
The act then deals with 1 'trustees of securities purchased under
the act;" " power to sell and replace securities;" "accounts of interest on securities;" " prohibition of issue of private bills or
notes payable to bearer on demand;" " penalty for issuing such
bills or notes;" "prosecutions;" " monthly abstractof accounts,"
which " shall be made up monthly by the head commissioner,
and published as soon as may be in the Gazette of India."
W e arrive now at section 28, which ends the " act" as passed
in October, 1882, and is "supplementary powers of the Government of India," as follows:
The governor-general may, from time to time, by notification
to the Gazette of India, regulate any matters relative to paper
currency which ate not provided for by the act, revoke or alter
any notification previously published under this act.
The contents of this Indian act of 1882 have been presented in
full text, because it is necessary to have an idea of it in order to
comprehend what is to be said, at the same time remembering
that this act has been subjected to some changes since 1890, respecting which all information has not been obtainable as yet.
In dealing with the silver question in India it must be remambered that the surveillance of financial England from the standpoint of a monometaUist, favoring only such silver legislation as
is thought to inure to the benefit of her gold standard, is none
the less powerful behind the scenes than is that army which
holds the country in subjection.
Referring to the results from these Indian currency acts of
1871 and 1882 to 1890, and then from the latter period to the
present year, stating definitely what has occurred and the apparent reasons therefor, especially since 1890, it is found that
from 1871 to 1890 the total issue of paper currency amounted to
161,514,960 rupees, and the reserve to secure that was 60,000,000
of Government of India securities, 91,995,970 coined rupees (silver). and 9,579,000 rupees' worth of silver bullion, making of
silver coin and bullion at that time (January 1,1890) held a total
of 101,574,970 rupees.
The sixty millions of Government securities, and the one hundred and one millions of coined' silver and buillion just mentioned, constituted in 1890 the reserve to secure the one hundred
and sixty-ones millions of paper currency at that time issued,
all of which is under the control of the comptroller of currency.
This comptroller of currency also has control of the Government
of India public money : which fact is mentioned in this connection because, while it is stated that he can not and does not at
any time deposit any portion of the coined silver (paper currency reserved fund) ifc any of the/banks either in Bombay, Calcutta, or elsewhere, yet he does at times make deposits in the
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15
banks of Bengal, Calcutta, and other cities from the government
fund.
Referring now to the circles of issue and the various provinces,
we find that during the crop seasons the comptroller of currency
has the total amount of the coined silver (paper currency) reserve fund absolutely at his disposal, and moves it from one point
to another as he deems trade requirements necessary, for the
sole purpose, it is stated, of redeeming currency note$ when presented for silver. These facts are particularly mentioned in order to call attention to a formidable financial power, which shall
be again referred to before closing.
Having given the status of Indian paper currency as it was in.
the b:ginning of 1890, we distinctly assert that admitting the,
action of the United States Congress in 1890 was made a cause
for an uncalled-for rise in silver, the continued decline sines that
rise culminated is chiefly, if not entirely owing to the usage of
silver in connection with Indian paper currency. It is not necessary to go back further than 1871 to 1890, therefore from 1871 to
1890, a period of nineteen year3, the total amount of India rupee
paper currency issued by the Government amounted to, in round
numbers, one hundred and sixty-one millions; but within seventeen months after the passage of the 1890 act by the Congress of
the Unitad States, this issue of Indian paper currency increased
to two hundred and sixty-one millions. This most remarkable
increase is claimed to be entirely owing to private speculation
in silver; that large purchases were made in anticipation of a yet
greater rise than the one which occurred, and that the purchasers at once converted their coin into paper currency.
It is also c!aimed that this movement resulted in a redundancy
of silver money and that th? financial condition of India directly
became abnormal, money being cheaper than ever before, but it
is significant to note that the Government of India saw fit just at
this time to pass an act increasing their issue of this paper currency on Government of India securities from 60,000,000, where
it had remained a number of years, to 80,000,000, thus making
20,000,000 more silver paper currency (based on government securities) available. That amount is not very great, but when it
is reflected that the nominal purchases of India amount to 30,000,000 ouncss per annum or more, we have nearly 30 per cent,
taking the government valuation of the rupee at 2s. of one year's
purchases most conveniently suppli :d and at the disposal of what
is asserted to have been a loaded market. It is very important
to bear in mind this handy support of silver paper currency
secured by government securities, 10,000,000 of it having bean
issued at an opportune moment during the height of the decline,
which we are presumed to suppose a mere coincidence.
During the past year, and while the decline in silver was progressing. India's purchases of silver fell about 15,000,000 ounces
below the usual quantity taken, owing it is said to the abundantf
supply which has baen mentioned, but it is now admitted that
there is no longer a surplus, silver is needed and the country has
resumed its normal oondition of wanting the white metal; but
notwithstanding that every nerve shall be strained to keep from
purchasing except at a price.
There are two indisputable facts bearing on the silver market
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16
of 1891, and nearly to the sharp decline of 1892, which latter is
entirely resultant:
First. That in little if any more than twelve months1 time the
Indian paper currency increased by over 60 per cent of what it
had previously taken nineteen years to reach.
Second. That during-1891 India fell short of her normal purchases of silver 15,000,000 ounces.
There are two ways of summing the matter up, both of which
tend to strengthen the real position of silver. It is proclaimed
that the act of J 890 by the United States has failed in its intent
because silver has declined, but it is now apparent that in spite
of the enormous quantity of silver run into India either as a
speculation or as an offset to the action of ths United States in
1890, that country is now badly in need of silver, and although
abstaining for a time from usual purchases, yet the supply of
silver bullion in the commercial world has been continually
decreasing all the while. The writer, basing his conclusions on
the statistical position of silver at that time, predicted in this
city that it would take two years for the real effects of the act
of 1890 to become perceptible, and from the date of its passage
no people are batter aware that such is the case and more thoroughly alarmed at its continuance in force than those who manage the finance and commerce of India. W e believe that it is
now admitted that the available (commercial supply) of silver
bullion is about 70 per cent less than two years ago.
Accepting, therefore, as facts the statements made by Indian
officials that all that has happened has been the result of mere
speculation because of the action taken by the United States,
who constitute the great worker of iniquity in their eyes, standing convicted of a great mistake, and about which they are overwrought with anxiety, namely, that the United States will lose
all their gold if their buying of silver continues, we still find
that the statistical position of silver is stronger than for several
years, but one reserves to oneself the privilege of forming one's
own conclusions when told that English influence meekly allows
the silver question in India to drag along its own way, for when
that is said we are at the same time informed that while "India
is now badly in need of silver she will not buy except at a price,
and a low one." Venturing the suggestion that 25c?. per ounce
would probably suit them if they had their way, and being taken
seriously, the reply was, " Oh, no, that would be too low," but
from what can be inferred 35(2. or 37d. would be acceptable.
These remarks are the result of personal investigation and interviews.
In taking the other view of the matter, while the statements
made respecting the speculative movement of silver may be
granted true and honestly expressed, it is to bd remembered that
a vast deal more than is seen exists, and those who are conversant with the state of alarm and anxiety manifested by certain
circles in London after the action of the United States in 1890,
and especially when it became apparent that the November elections of that year had resulted in a sweeping victory for the advocates of silver, can well appreciate that it requires no stretch
of the imagination to perceive a desperate attempt to counteract
the United States and depreciate silver, in order, if possible, to
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17
discredit future legislation and parchance bring about the repeal of what had taken place.
This part of the question is difficult to handle, because official
data can not be obtained, but British diplomacy, whether in
state or financial affairs, allows nothing that can t>e overcome by
the use of any means whatsoever to stand in the way of success.
No one can dispute this proposition, viz, that the Government
of Great Britain holds to the single gold standard. It does not
require special acuteness to conclude that England's influence is
opposed to any action taken or movement favoring the parity of
silver and gold, and that her influence has exerted and will continue to exert itself to the utmost to throw discredit upon - and
checkmate any. attempt in that direction, and such is the spirit
animating and pervading the Government offices. W e now make
the prediction that England will never join any bimetallic movement with honest intent Until compelled, by a force of circumstances beyond her control, to do so; further that such a time
has not yet arrived, and if she is represented in any movement
now progressing, it will be merely for the purpose of soft-soaping and making a fool of
ft.
^
In order to maintain her commercial sway over the world
England's opinion is that gold must be kept the best money and
her dues paid her in it. Therefore to accomplish this successfully and thus insure the continued supremacy of her merchant
marine, it is her desire that all the other commercial nations of
Europe and the United States shall hold silver demonetized, and
then with her control over India she will be able to hold such a
price on silver as to satisfy her trade requirements and prevent
any future attempt at the establishment of a ratio between silver
and gold save as she may deem necessary. It is needless to expatiate on the advantages England would derive from such a
state of affairs were she allowed for all time the peaceful possession of India, a result hardly probable, bat not to be regarded
a present danger.
In treating of the present condition of silver and the causes
operating respecting it, there is one fact all persons should constantly keep in view, viz, silver has not yet been rehabilitated
and therefore it is not on trial as money. Legislation favoring
it as money is only partial; therefore as a commodity it has been:
and is subjedt to any speculative attack brought to bear upon it.
This statement being indisputable, upon turning ta the commercial world we find that the Baring failure and the action
taken to cover it, wise or unwise, has hung over the commercial
world like a nightshade, causing large gold exports from the
United States, and yet that condition of things did not affect
silver. The antisilver legislatiwi in Austria-Hungary had
nothing to do with establishing the decline, and we revert ta
the position that, had not India abstained from the silver market, backed by all that English influence could accomplish together with encouragement from the monometallists of the
United States principally influenced by the national banks, the
fall in silver could not have taken place.
Overproduction can not be taken into account, for accepting*
the figures of Mr. E. O. Leech, the Director of the United States
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%
IS
Mint, for the world's total production of silver during 1891 to
be in round numbers 140,000,000 ounces, we on the other hand
find that the United States requires for coinage and other uses
about 03,000,000.- India's normal requirements are acknowledged
to be more than 30,000,000, while in reality they are nearer fifty
annually, absorbing some from China. During the past five
years England's coinage has absorbed 6ver 5,000,000 ounces annually, and it is exceedingly fair to credit Great Britain with a
consumption of 10,000,000 ounces annually, and then allowing
the whole of Europe, including Russia, 20,000,000 ounces, which
is ridiculously small, we have only 17,000,000 left for the rest of
the world, including China, with its 300,000,000 inhabitants.
If correct in the position—which is that maintained by clever
statisticians—respecting the decline in the available stock of
silver bullion during the past two years, had a buying-pool been
formed in January, 1892, and with a comparatively small capital,
the price of silver could have easily been advanced to more than
45 in London or 100. in Now York, instead of the decline to 38
and 85 respectively; in which event the temporary panic in the
United States Congress might not have occurred over the freecoinage measure, and tlie condition of supply on the marketcertainly favors any operation for a rise at the present time.
Respecting the present condition of things in India, the amount
of paper in circulation has declined from two hundred and sixtyone millions to two hundred thirty-one millions since February,
1892; that is, thirty millions of coined rupees have been drawn
from the silver reserve by presenting paper money, a fact which
is significant. Europeans have funny notions respecting the
United States, and the English Indian financiers thought they
had given silver the " coup de </rctqe" in connection with their
>New York allies when they sent it humming downwards in the
faca of the United States Congress. Well-informed men have
seriously asked if it was possible to introduce the free-coinage
measure again in the Congress of the United States.
We ara told, and the information is from an official source,
that India needs silver badly, but will only buy at a price. It
is also stated that "under Indian financial management, which
England never influences, it is impossible to affect silver from
any speculative standpoint," and that " the silver reserve is kept
scrupulously intact," and yet "India will only buy at a price."
The "fact has been mentioned that the " comptroller," who is
also the " head commissioner "under the " Indian paper currency
act," has lha coined silver reserve absolutely under his control,
to move from place to place, as he may deem necessary, as well
as the control of government, public, or revenue money, and that
he (it is said) can only make a certain use of that coined reserve.
Now, it is indisputable that the whole British history of India
from its inception is founded simply on the idea of making money,
its origin being entirely financial.
One would have to be mere than credulous to believe that
financial matters in India are managed entirely from a disinterested standpoint, or run on a millenium basis. The British lion
and the Indian lamb setting an example of honesty the whole
world should pattern after. The fact of the matter appears to
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19
be that one-man power is vast and far-reaching in India, and always has been when it leans in favor of England's interests, and
the more that one sees, hears, thinks, and knows, so much greater
is the impression that Indian financial, management constitutes
a formidable machine, and one which has been used during the
past seventeen months most effectually to depreciate silver. It
may be, as is stated, that the coined silver reserve is scrupulously held intact^ etc., but there are tnany ways of doing tt^ngs,
as for instance:
,
The banks want money and the comptroller concludes to make
a deposit of government money on hand. He can not take it
from the coined silver reserve represented by the papar currency, but he can hand oyer the paper currency notes taken in
from revenue, which upon presentation can be instantly converted into silver from that coined silver reserve.
In the same manner the paper money issued, based on government securities, may at once be deposited in banks and silver at
once obtained therefor from the coin reserve. We are informed
that last February or March the Government of India issued
(silver) paper money on government securities amounting to
10,000,000 rupees. It has b:en mentioned that during March
30,000,000 of rupees in silver were drawn from the reserve by
holders of currency notes, a matter of no small significance.
The present position of silver is a very strong one from every
legitimate standpoint, and its present value entirely too low.
India wants silver, " but will only purchase at a price," which
entirely depends as to whether or not they can manage the matter.
It will not be long before the United States purchases, continuing
in the even tenor of their way, will have an appreciable effect;
at the same time, if there be any possible way to array public
opinion in the United States against silver, the monometallists
in the United States may confidently countpn Indian manipular
tion to help them discredit silver. The capacity of India to absorb silver is greater than ever before; during the past ten years
India has absolutely absorbed 500,000,000 ounces of silver, which
has utterly disappeared from view^
The shell currency of the masses is being gradually dispensed
with, and they are learning the value of silver. Any talk of
India's adopting a gold standard is entirely visionary and not
practical; all the gold has been and continues to be used as ornaments. Indians of wealth are very fond of decorating their wives,
and to suppose that their jewelry would go into coin is amusing
to those who know anything about it.
In finishing we make the prediction that with the United
States support of silver continuing firm, India will be compelled
in less than twelve months to become a steady buyer, much to
British chagrin. They want silver, they will have it, and their
paper money manipulations can not be continued beyond a certain point. But this must not be overlooked, viz: India intends
to pursue the policy at present of an irregular buyer, for ulterior
purposes, and the purchases now being made may enable them,
in the desperate hope of influencing the course of the United
States, to withdraw from the market again during the coming
summer or autumn, and that, too, knowing well their risk is a
terrible one if they fail to accomplish their object,
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20
T H E I N D I A N P A P E R CURRENCY A C T 1882.
Preamble.
SECS.
CONTENTS.
I .—Preliminary*
1. Short title.
Local extent.
Commencement.
2. Act No. I l l of 1871 repealed.
II.—The department of paper currency.
3. Department of paper currency.
4. Head commissioner.
Commissioners for Madras, Bombay, and Rangoon.
5. Power to establish circles of issue, etc.
6. Deputy commissioners and currency agents.
7. Subordination of commissioners, etc.
8. Appointment, suspension, and removal of officers.
III.—Supply and issue of currency notes.
9. Head commissioner to provide and distribute currency
notes.
10. Signatures to notes.
11. Issue of notes for silver by headcommissioner,1 commissioners, and deputy commissioners.
12. Issue of notes for silver by currency agents.
13. Issue of notes for gold.
14. Melting and assaying bullion or coin received for notes.
15. Certificates for bullion or coin.
IV.—Notes where legal tender and where payable.
16. Notes wher^e legal tender.
17. Notes where payable.
18. Notes issued from currency agencies to be deemed to be issued from place of issue of circle.
V.—Reserve.
19. Coin or bullion received for notes to be kept as a reserve,
except amount fixed as herein provided.
20. Investment of such amount.
21. Appropriation of coin, bullion, and securities.
22. Trustees of securities purchased under act.
23. Power to sell and replace securities.
24. Accounts of interest on securities.
VI£—Private bills payable to bearer on demand.
25. Prohibition of issue of private bills or notes payable to
bearer on demand.
26. Penalty for issuing such bills or notes.
Prosecutions.
VII.—Miscellaneous.
27. Monthly abstracts of accounts.
28. Supplementary powers of the Government of India.
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ACT NO. X X
or 1883.
Passed by the governor-general of India in council. (Received
the assent of the governor-general on the 26th of October,
1882.)
An act to amend the law relating to the government paper currency.
Whereas it is expedient to amend the law relating to the government paper currency, it is hereby enacted as follows:
I.—Preliminary.
-1. This act may be called the Indian paper currency act, 1882;
It extends to the whole of British India;
And it shall come into force on the passing thereof.
2. (1) Act No. I l l of 1871 (to consolidate and amend the law relating to the government papar currency) is hereby repealed.
(2) All appointments made, rules prescribed, notifications published, authorities conferred, securities purchased, and notes issued under the said act, or any act thereby repaaled, shall, if in
force, undisposed of, or in circulation when this act comes into
force, be deemed to be respectively made, prescribed, published,
conferred, purchased, and issued under this act. And all references made to any portion of the Indian paper currency act, 1871,
or any act thereby repealed, in actsor regulations passed before
this act comes into force, shall be deemed to be made to the corresponding portion of this act.
II.—The department of paper currency.
3. (1) There shall continue to be a department of the public
service whose function shall be the issue of promissory notes of
the Government of India, payable to bearer on demand, for such
sums, not being less than 5 rupees, as the governor-general in
council from time to time directs.
(2) Such notes shall be called currency notes.
(3) The department shall be called the department of paper
currency.
4. At the head of the department there shall b 3 an officer called
the head commissioner of paper currency, and there shall be
three other officers, called, respectively, the commissioner of
paper currency for Madras, the commissioner of paper currency
for Bombay, and the commissioner of paper currency for Hangoon.
5. The governor-general in council may from time to time, by
order notified in the Gazette of I n d i a fa) Establish districts, to be called circles of issue, four of
which,circles shall include the towns of Calcutta, Madras, Bombay, and Rangoon, respectively;
(6) Appoint in each circle some one town to be the place of
issue of currency notes, as hereinafter provided;
, (c) Establish in each such town an office or offices of issue;
(<2) Establish in any town situate in any circle an office, to be
called a currency agency; and
(e) Declare that, for the purposes of this act, any town (other
than Calcutta, Madras,'Bombay, or any town situate in British
Burmah) in which an office of issue is established, shall be
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22
deemed to be situate within such presidency as is specified in
the order.
6. For each circle of issue, other than those which include the
towns of Calcutta, Madras, Bombay, and Rangoon, there shall be
an officar, called the deputy commissioner of paper currency,
and for each currency agency an officer called the currency agent.
• 7. For the purposes of this act,
(a) Tne commissioners of paper currency for Madras, Bombay,
and Rangoon, and the deputy commissioners of paper currency
in the presidency of Fort William in Bengal, shall be subordinate to the head commissioner of paper currency; and
(b) The deputy commissioners of paper currency in the presidencies of Fort St. George and Bombay, and in the Province of
British Burmah, shall be subordinate to the commissioners of
paper currency for Madras, Bombay, and Rangoon, respectively.
(c) The currency agent at any town shall be subordinate to the
head commissioner, commissioner, or deputy commissioner, as
the casa may be, of paper currency for the circle of issue in which
that town is situate.
8. All officers under this act shall be appointed and may be
suspended or* removed by the governor-general in council.
III.—Supply and issue of currency notes.
,9. (1) The head commissioner shall provide currency notes of
the denominations prescribed under this act, and shall supply
the commissioners and the currency agents subordinate to him,
and the deputy commissioners, with* such notes as they need for
the purposes of this act.
(2) The commissioners and deputy commissioners shall supply
the currency agents subordinate to them, respectively, with
such notes as thos3 agents need for the purposes of this act.
(3) Every such note shall bear upon it the name Of the town
from which it is issued.
10. (1) The name of the head commissioner, of one of the commissioners, of a deputy commissioner, or of some other persons
authorized by the head commissioner, or by one of the commissioners. to sign currency notes, shall be subscribed to every such
note, and may be impressed thereon by machinery.
(2) Names so impressed shall be taken to be valid signatures.
11. The head commissioner, the commissioners, and the deputy
commissioners shall, in their respective circles of issue, on the
demand of any person, issue from the office or offices of issue established in their respective circles, currency notes of the denominations prescribed under this act, in exchange for the amount
thereof—
(a) In current silver coin of the Government of India;
(b) In current silver coin made under the Portuguese convention act, 1881;
(c) In current silver coin made under the native coinage act,
1876, as to which coin a declaration has been made under section
3 of that act; or
{d) In silver bullion or foreign silver coin, not baing coin of
the descriptions mentioned in claus3s (6) and (c), at the rate of
979 rupees per 180,00;) grains of silver fit for coinage and of the
standard fineness prescribed by the Indian coinage act, 1870;
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23
Provided, That in all places where there is no mint of the
Government ,of India, any such head commissioner, co nmissioner, or deputy commissioner may refuse to issue notes in exchange for the bullion or coin receivable under clause (d).
12. Any currency agent to whom notes have been supplied
under section 9 may, if he thinks fit, on the demand of any person, issue from his agency any such notes in exchange for the
. amount thereof in any coin specified in clause (a), clause (&), or
clause (c) of section 11.
13. The governor-general in council may, from time to time,
by order notified in the Gazette of India, direct that currency
notes, to an extent to be specified in the order, not exceeding
one-fourth of the total amount of issues represented by coin and.
bullion as provided by this act, shall b3 issued at such offices of
issue as are named in'the order, in exchange for gold coin of M l
weight of the Government of India, or for foreign gold coin or
gold bullion, at the rates, and according to the rules and conditions, fixed by that order.
14. (1) The head commissioner, commissioners, and deputy commissioners may require any bullion or foreign coin received under
section 11, clause (d), or under section 13, to be melted and assayed.
(2) Any loss of weight caused by such melting or assay shall be
borne by the person tendering the bullion or coin.
15. (1) Every person tendering bullion or foreign coin under
section 11, clause (cZ), or under section 13, and depositing it in
any office of issue, shall, after the expiration of time necessary
for melting and assaying the same, be entitled to receive for it
a certificate signed by the person authorized to issue the notes
aforesaid.
.
(2) The certificate shall—
(a) Acknowledge the receipt of the bullion or coin;
\b) State the amount of noteslssued under this act, or of such
notes and cash, to which the holder is entitled in exchange for
the bullion or coin; and
(c) State the interval on the expiration of which, if the certificate is presented to the office, the holder shall be entitled to
receive that amount.
IV.—Notes where legal tender and where payable.
16. Within any of the said circles of issue a currency note issued from any town in that circle shall be a legal tender for the
amount expressed in that note, in payment or on account of—
(a)" Any revenue or other claim, to the amount of 5 rupees and
upwards, due to the Government of India; and
(b) Any sum of 5 rupees and upwards, due by the Government
of India, or by any body corporate or p :rson in British India:
Provided, That no such note shall be deemed to b J a legal tender by the Government of India at any office of issue.
17. A currency note shall be payable o n l y fa) At the office or offices of issue of the town from which it
has been issued, and
(b) In the case of notes issued from any town not situate in
British Burmah, also at the presidency town of the presidency
within which that town is situate.
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18. For the purposes of s ections 16 and IV, notes issued from
-any currency agency shall he deemed to have been issued from
the town appointed under section 5 to be the place of issue in
the circle of issue in which that agency is established.
V.—Beserve.
19. The whole amount of the coin and bullion received under
this act, and under A c t M o f 1871, for currency notes, shall be retained and secured as a reserve to pay tl\ose notes, with the exception of such an amount, not exceeding 60,000,000 rupees, as
the governor-general in council, with the consent of the secretary of state for India, from time to time fixes.
20. The -amount so fixed shall be published in the Gazette of
India, and the whole or such pavt thereof as the governor-general in council from time to time fixes, shall b3 invested in securities of the Government of India.
21. (1) The said coin, bullion, and securities shall ba appropriated and set apart to provide for the satisfaction and discharge
of the said notes; and the said notes shall be deemed to have bean
issued on the security of the said coin, bullion, and securities, as
well as on the general credit of the Government of India:
Provided, That any silver bullion or coin received under section 11, clause [d) may be sold or exchanged for silver coin of
the Government of India, and that any gold coin or bullion received under section 13 may be sold or exchanged for silver coin
or bullion, to ba so appropriated and S3t apart instead of the coin
or bullion sold or excnan^ed.
(2) .For the purposes of this section, silver bullion and coin
shall be rated at 9b rupees per 18,000grains of standard fineness,
and gold bullion and coin at the rates fixed" by the governorgeneral in council under section 13.
22. The securities purchased under section 20 shall be held by
the head commissioner and the master of the mint at Calcutta,
in trust for the secretary of state for India in council.
23. (1) The head commissioner may, at anytime when ordered
so tq do by the governor-general in council, sell and dispose of
any portion of the abDve-mentioned investment.
(2) For the purpose of effecting such sales, the master of the
mint at Calcutta shall, on a request in writing from the head
commissioner, at all times sign and indorse the securities, and
the head commissioner, if so directed by the governor-general
in council, may purchase securities of the Government of India
to replace such sales.
24. (1) The interest accruing due on the securities purchased
and held under this act shall be entered in a separate account to
be annually rendered by the head commissioner to the governorgeneral in council.
(2) The amount of the interest shall, from time to time, as it
becomes due, be paid to the credit of the Government of India,
under the head of V profits of notes circulation."
(3) An account showing the amount of the profits and of the
charges and expenses incidental thereto, shall be made up and
published annually in the Gazette of India.
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VI.—Private bills payable to bearer on demand.
25. No body corporate or person in British India shall draw,
accept, make, or issue any bill of exchange, hundi, promissory
note, or engagement for the payment of money payable to bearer
on clemand, or borrow, owe, or take up any sum or sums of
money on the bills, huridfs, or notss payable to bearer on demand, of any such body corporate or of any such person:
Provided, That checks,or drafts payable to bearer on demand
or otherwise, may be drawn on bankers, shroffs, or agents, by
their customers or constituents', in respect of deposits of money
in the hands of those bankers, shroffs, or agents and held by
them at the credit and disposal of the persons drawing such
checks or drafts.
26. (1) Any body corporate or person committing any offense
under section 25 shall, on conviction before a presidency magistrate, or a magistrate of the first class, be punished with a fine
equal to the amount of the bill, hundi, note, or engagement in
respect whereof the offense is committed.
(2) Every prosecution under this section shall be instituted by
the head commissioner, commissioner, or deputy commissioner,
as the case may be, of papar currency for the circle of issue in
which the bill* hundi, note, or engagement is drawn, accepted,
made, or issued.
VII.—Miscellaneous.
27. An abstract of the accounts of the department of paper
currency, showing—
ia) The whole amount of currency notes in circulation;
(6) The amount of coin and bullion reserved, distinguishing
gold from silver; and
(c) The nominal value of, and the price paid for, the government securities held by the said departmentShall be made up monthly by the head commissioner, and published, as soon as may be, in the Gazette of India*
28. (1) The governor-general in council may, from time to
time, by notification in the Gazette of India—
(a) Fix the amounts (not being less than 5 rupees) for which
currency notes shall be issued;
{b) Alter the limits of any of the circles of issue;
fc) Declare the places at which currency notes shall be issued;
(d) Fix the rates, rules, and conditions at and according to
which gold may be taken in exchange for currency notes.
(e) Fix the charge for melting and assaying bullion and foreign
coin received for such notes;
( / ) Fix the interval on the expiration of which holders of certificates under section 15 shall be entitled to receive such notes.
(g) Regulate any matters relative to paper currency which are
hot provided for by this act; and
{h) Revoke or alter any notification previously published under this act.
(2) Every notification under this section shall come into force
on the day therein in that behalf mentioned, and shall have
effect as if it were enacted in this act.
(3) Provided that no notification under clause (d) of this sec178
26
tion shall have effect until six months have elapsed from the
date of its appearance in the Gazette of India.
Mr. STEWART. I would remark here that the legislation of
India is English legislation; that the people of India have nothing to say about it. It is arranged for the purpose of carrying
out the English scheme of finances.
Now, there are in England two parties. The most numerous
party and the suffering party are in favor of bimetallism. The
owners of real estate in England are suffering the same as they
are here. Wages are declining there and on the Continent the
same as they are here and more so, because they have an army
at hand there to keep them down. But England has the world
at her feet. She has a mortgage upon the energies of mankind
in the shape of an enormous debt which she holds. The dearer
she can make money and the cheaper she can make property
the greater her commercial, her political, and her financial,
power will be. She dominates tha wo:\Ld because she is the center of a bondholding fraternity, and the thousands of millions
that are paid annually by labor to the bondholders are riveting"
the chains of slavery upon mankind.
What I say here, after much reflection, is that the demonetization of silver has done more to advance the cause of slavery
than all the efforts of the patriotic men to advance the cause of
freedom has accomplished in fifty years. In other words, the
crime of 1873 has done more for slavery than the abolition of
African slavery has done for liberty. The contraction of the
world's money one-balf after the world became in debt $100,000,000,000, on the basis of the larger' supply, means ultimate slavery
of both whites and blacks. It is making tenant farmers. It
is making dependent men. It is crushing the energies of the
people.
Those who have read Sir Archibald Alison's statement of the
effect of the gold and sil/er from California and Australia in
breaking the shackles of slavery and letting loose the energies
of men and breathing new life into enterprise throughout the
civilized world, can now realize the terrible effects of a counter
movement to rob the world of its money after having secured the
obligations, the payment of which by this new standard invented
by the gold kings means ultimate slavery. It is coming. It is
coming in Illinois, it is coming everywhere.
It is admitted that the farmers have lost half their property
by shrinkage in the value of their farms. It is admitted that
armies have become necessary to keep down troubles with organized labor, and this must be done in the name'of law. I ask
in the name of justice that the laws which have produced these
results be repealed.
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