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There is certainly nothing in these figures

that would excite alarm. There is of course a slight fluctuation in the production of the two metals, but it is so inconsiderable that it is impossible to suppose that it has performed any prominent part in causing the rise in the value of gold. Compared with the fluctuations of former years, it is simply insignificant. Thus the same table from which these figures are taken shows that from 1821 to 1840 the production of gold was 1189 millions of francs, while the production of silver was 2348 millions of francs. But from 1841 to 1860 the production of gold was 8837 millions of francs, and the production of silver was only 3725 millions. And yet, during the whole of this time of excessive fluctuation in production, the fluctuation in the ratio between the two metals was only 15.8 to 15.3.

Let us now look further into the fluctuation between the values of gold and silver: Between 1493 and 1520 the average ratio was 11.3 1521 1544

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11.2 11.5

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This shows that the variation for 170 years was within one point, the highest be

ing 15.8 and the lowest 14.8. From 1871 to 1879 the average ratios were as follows:

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Here was a variation of 2.39 points in nine years. Since 1879, I have no reliable statistics, but in July, 1886, the rates had fallen so that one ounce in gold would buy about twenty-three ounces in silver. From 1870 to July 1886, therefore, in less than sixteen years, there was a fall of seven points.

We are now in a position to ascertain the true causes of the rise in the value of gold.

In 1871 Germany began to change from a monometallic silver system to a monometallic gold system, and began its demonetization of silver, and, commencing in 1873, for some years her sales of silver and purchases of gold created an unnatural supply of one metal and an unnatural demand for other.

The following table shows the sales of silver made by Germany from 1873 to May, 1879, reckoning the marks at four to one dollar:

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Average, 53 15-16d. Total, $141,784,948 The amount of gold in circulation in Germany at the beginning of the year 1873, before the change began, is estimated to have been $23,000,000. From 1873 to the end of 1880, the coinage was $436,800,000. Deducting from this coinage the amount of gold formerly in circulation, we find that the amount of new gold required by the German mints was $413,800,000. Of this, $50,000,ooo was received from France as a part of the War Indemnity. The balance was derived from other sources. Between 1871 and 1876, $119,930,000 of gold was purchased in London alone.

The Scandinavian countries, which folfowed Germany in making the change, are estimated to have exchanged silver for gold to the amount of $9,000,000.

In 1874, France and the states of the Latin Union, alarmed at the action of Germany, restricted the coinage at their several mints, which had theretofore been unlimited; and in 1876 France suspended the coinage of silver altogether, and her example was followed in the next year by the other states of the Latin Union. In 1878 a definite agreement was entered into by all these states to suspend silver coinage until such time as resumption should be agreed upon by unanimous consent, and their mints are still closed to this metal.

The inevitable effect of this restriction upon the coinage of silver, was to discredit that metal and create an unusual demand for gold. Accordingly, the statistics of the French custom-house show that from 1874 to 1878, both inclusive, the imports of gold into France exceeded the exports by the large sum of 2,191,062,000 francs, whereas during the three years prior to the restriction.

the exports had exceeded the imports by 375,345,000 francs.

In 1879, the United States resumed specie payments. Ten months before, on February 28th, 1878, the Bland bill had been passed authorizing the coinage of not less than two and not more than four millions per month of standard dollars in silver, to be legal tender to an unlimited extent. From 1873 to the passage of the Bland bill there had been no silver pieces coined that possessed the unlimited legal tender quality. Practically there was no legal tender silver in the country when the Bland bill went into operation, and the amount was very small when specie payments were resumed. The mints were closed to silver coinage on private account, and the Government refused to mint more than the minimum prescribed by law. Resumption by the government brought with it, of course, resumption by the banks and by the people, and the natural result was that a very large demand was stimulated for metallic money. But since the coinage of silver was restricted while the coinage of gold was free, the demand became at once concentrated upon gold, that being the only one of the precious metals which could be easily and economically converted into coin by simply depositing it at the mint.

consequence, while we continued as before to sell the greater part of the product of our silver mines to foreign countries, we not only absorbed the entire product of our gold mines for purposes of coinage but also imported large quantities of gold from abroad. The following tables compiled from the report of the Director of the Mint for 1884, will make this clear.

The first table shows the gold production compared with the gold coinage of the United States from 1878 to 1883, both inclusive:

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gold than we produced. compares the imports and

The next table
exports of gold

coin and bullion during the same period.

Fiscal Years.

1878..

1879.

1880.

1881

1882. 1883.

Gold Imports.

$12,976,281
5,624,948

80,758,396

100,031,259

34,377,054
17,734,149

Gold Exports.

$ 9,204,455
4,587,614
3,639,025
2,565,132
32,587,880
11,600,888

This shows an excess of imports over exports of $187,317,093. While there was this enormous influx of gold during the first few years of our resumption of specie payments, the statistics show that there was an analogous counter-current or outflow of gold during the first few years of Germany's change to the gold standard. From 1873 to 1877, both inclusive, we lost by excess of exports of gold over our imports $127,466,036.

It appears from this table that during together and making all possible allowances. these years we coined $130,727,865 more for errors and for the alternate exportations and importations of gold by France and the United States disclosed by the tables, it is entirely safe to say that the demonetization of silver by Germany and the Scandinavian states, the restriction and subsequent total suspension of silver coinage by France and the Latin Union, and the resumption of specie payments, under restricted silver coinage, by the United States, caused an unusual and excessive demand for gold to the extent of at least one billion of dollars. The result was of course a gold famine. That metal rose in value not with reference to silver alone but with reference to everything which is bought and sold. While the exclusion of so much silver from its ordinary use as a circulating medium had of course the effect of depressing the market price of that metal, this seems to have been small compared with the rise in the value of gold in consequence of this extraordinary demand created for it. Measured in gold, the fall in the price of silver was very great, as we have seen, but measured in the amount of staple commodities for which it could be exchanged at its gold value, it was inconsiderable. Thus Senator Beck, in a recent speech in the United States Senate, demonstrated from the statistics of the Treasury Bureau for 1885 that a dollar would then purchase of such staple commodities as corn, wheat, flour, cotton, leather, mineral oils, bacon, hams, lard, pork, salt beef, butter, cheese, eggs, starch, sugar, and tobacco, from 25 to 30 per cent more than it would in July, 1870.

The next table shows the estimated gold production of the world for the calendar years 1881, 1882, and 1883, compared with the coinage of the United States for these years.

Calendar Years.

1881.

1882.

1883..

Total.....

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From these figures it appears that the gold coinage of the United States during these years was equal to nearly two-thirds of the entire gold production of the world, and in the year 1881 it was more than twelve-thirteenths of the entire product of that year. The estimated amount of gold coin in this country at the close of the year 1873 was $135,000,000. The estimated amount October 1st, 1883, was $610,000,000. Assuming that these figures are approximately correct, we gained in a little less than ten years about $475,000,000 of gold.

It is impossible that these coincidences should be accidental. Taking all the facts

The effect of this governmental action was to increase the purchasing power of the gold unit to give it about twenty per cent greater value than it formerly possessed. We first created an artificial scarcity of gold, and thus raised its value, and having thus raised its value, we next adjusted the prices. of all other articles to conform to the raised price of this one article of gold. The complaint has been frequently heard that by

reason of the Bland bill the public were compelled to accept eighty cents worth of silver for a dollar; the complaint would have been more just if it were said that by reason of legislation hostile to silver the public were compelled to give a dollar's worth of goods or labor for eighty cents worth of gold.

Nor was the influence of this hostile legislation confined to the actual changes in the currency created by it. The financial markets of the world were filled with fear and doubt lest some further step should be taken, or some additional nation continue in the work of demonetization. There arose a widespread distrust of silver and a general apprehension that its use as a circulating medium was in danger, if not of discontinuance altogether, at least of further and prejudicial restriction. The situation was well described by Mr. Goschen in 1878 when he said: At present there is a vicious circle; states are afraid of employing silver on account of of the depreciation, and the depreciation continues because states refuse to employ it." Speaking of the action of Germany, which was the beginning of this hostile legislation Gen. Walker says: "The history of the century will be searched in vain for a political blunder of equal enormity." I cannot forbear quoting his clear and convincing

statement of the result of this action:

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Australian gold, unprecedented in the history of the world, to move the silver price of gold permanently more than 11⁄2 points in 100; which did not permit their relative value to change greatly between the time when three dollars in silver was produced to one dollar in gold and the time when one dollar in gold was produced to twenty-seven cents in silver. Yet no sooner was the tie snapped, this purely legal arrangement broken up, than gold and silver rushed apart with a violence which in three years caused a maximum variation of 1 in 4."

We have seen that the recent rise in the value of gold and relative depreciation in silver are due, not to an overproduction of the one metal or an underproduction of the other, but that they are directly and distinctly traceable to governmental action intentionally or unintentionally hostile to silver and favorable to gold-that they are the work not of nature but of man. We may draw the line still closer. The great fluctuations in value and disturbances in trade that have arisen from these causes are attributable not in any degree to the action of the nations of the East whose civilization we consider "backward or stationary," but exclusively to that of the highly cultivated and enlightened nations of the West. It has been frequently said that the fall in silver arose from a cessation of the demand for that metal in India and the East, and that there can be no hope of improvement until there comes some favorable change in the mysterious and complicated influences which govern the trade and prejudices of Asia.

The following table taken from Prof. J. Laurence Laughlin's recent work on The History of Bimetallism in the United States would seem to demonstrate the fallacy of this theory.

It shows the net imports of silver and gold into British India between the years 1867 and 1882 with the council bills sold and the excess of exports of merchandise over imports.

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The decline of shipments of silver to India between 1871 and 1876 is explained as owing to an increase of payments from India to London of money borrowed prior to that time for internal improvements in India. Now turning to our table of ratios of silver to gold, we find that from 1871 to 1876 the average did not rise above 16 to 1. From that time on, the ratio commenced to rise rapidly but we look in vain for any corresponding diminution in the amount of silver imported into India. Indeed, the whole table indicates that the Indian silver demand is governed by influences that operate entirely apart from those that operate in Europe, and that European and American legislation could have had very little effect upon it.

Before leaving this branch of the subject it is proper to notice the novel theory advanced by Prof. Laughlin, in his recent book, to which reference has already been made, according to which a prominent factor in the recent depreciation of silver is the natural preference which men have for gold over silver. To quote his words, "Monetary history reveals in every modern commercial country a prejudice in favor of gold as against silver.... The world of commerce, whatever the reason may be, believes in gold.... Gold satisfies the desires of men for a medium of exchange better than silver." He then shows that between 1493 and 1850 there were produced $3,314,553,000 of gold to $6,741,705,000 of silver, or about twice

as much silver as gold, and between 1851 and 1875 there were produced $3,317,625,ooo of gold to $1,395,125,000 of silver, or about two and one-half times as much gold as silver. During the first period, in consequence of there being so much more silver than gold, men could not indulge their natural prejudice for gold; but in the latter period gold became so plentiful that the human race began to gratify its 'long cherished desire to use gold rather than silver and thus the abundance of gold had the effect of raising its own value and depreciating the value of silver.

If Professor Laughlin means that men naturally choose the more valuable of the two metals on account of its value, and prefer gold to silver just as they prefer silver to copper, just as they prefer a fifty dollar bill to a five dollar bill-nobody would probably gainsay him. But if he means that men prefer gold to silver because the one is yellow and gold and the other is white and silver, then he can justly claim to have presented a solution vastly more inexplicable than the original problem. To say that a glut of gold has increased the value of gold ought to satisfy the appetite of the most paradoxically inclined. But apart from the startling nature of the fundamental proposition, even if we assume that Professor Laughlin is quite correct in his view of this mysterious prejudice in the minds of men for the yellow over the white metal, there would seem to be some difficulty in explaining why this prejudice, after submitting to strict restraint for so many centuries, and enduring even the great influx of gold from California and Australia with decent tolerance, should choose the precise time of the demonetization of silver by Germany to break forth with irrepressible violence.

It is probable that if the preferences of men were consulted as to the particular kind of circulating medium to be employed, they would choose neither gold nor silver but would rather select paper representatives of

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