The advocate and Topeka tribune. [volume], December 21, 1892, Page 3, Image 3

About The advocate and Topeka tribune. [volume] (Topeka, Kan.) 1892-1894

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HOBTABY COHHIS3I02f.
contrary, the eicesj ei exports to very
large, and must be so as long 03 the
Report of the United States Monetary United States has a large annual inter.
Commission, Appointed by Act of Con- est account to pay in Europe. Com.
gresa August 15, 1876
HO. XXV.
Indebtedness of the United States f Europe
and trade relations mm Europe.
We are largely the debtors of Europe,
a relation we do not occupy toward any
other quarter of the globe. The aggre
gate of our indebtedness, public and
corporate, held there, is estimated to ex
ceed $2,000,000,000, and is, on any com
putation, an immenae sum. If it be
taken at $2,000,000,000, the annual inter
est must be fully $100,000,000. This is
the minimum of the current estimates.
It is not a tribute, in the odious sense of
a contribution exacted by a sovereign
or imposed by a conqueror, but in its
financial effects does not differ from
either, and there has never been any par
allel to it in history, ancient or modern.
In the recent ana continuing discussions
in Great Britain it is treated as a capital
and dominating fact relative to British
India, that India is obliged to pay an
nually in London 15,000,000, or $75,
000,000, partly as interest upon loans and
partly for expenditures of the Indian
administration in England. But India
has a population five times greater than
that of the United States, and its Lon
don payments are in larger proportion
for interest on money expended in pro
ductive works than is the foreign inter
est account of this country. No part of
our national debt, which is so largely
held abroad, arose from investments in
productive works.
We occupy still another relation to
Europe. It is the principal purchaser
of our agricultural staples, of our petro
leum, and of the raw products of our
forests. So long as we export those ar
ticles Europe will be our chief customer.
It has the manufacturers to buy our
cotton, and a dense population whose
demand for food and raw producta of
various kinds cannot be supplied at home.
For a long future we shall find there the
principal foreign market for our timber,
petroleum, cotton, cereals, tobacco, rice,
beef, pork and dairy products, and it is
from the proceeds of these commodities
that the interest on our debts held in
Europe must be and is really paid. And
it is with those countries which now
have the sold standard, or have taken
steps in that direction, and pre-emi
nently with Great Britain, that we have
these relations of trade.
Two modes of resuming coin payments
in this country are proposed. One is
under the single standard of gold; the
other is under the optional stand
ard of gold and silver.
If we resume specie payments in gold
alone, the quantity needed will be very
great, and we must either withdraw it
from Europe or intercept gold that would
otherwise reach Europe, which would
amount practically to the same thing,
To whatever extent coin payments in
gold require more gold than coin pay
ments in gold and silver would require,
to that extent the competition for gold
between th United States ard Europe
will be made more severe, and the drain
of gold from Europe will be greater,
with the unavoidable consequence of a fall
in Europe of the gold prices of all com
modities. This would be disastrous to
the masses of the people of this country,
even if the merchandise imports and ex
ports in the European trade were equal
The producers of the staples sent to
Europe include the entire agricultural
interest, and far exceed in numbers the
consumers of European goods. But
merchandise imports and exports in the
European trade art not equal; on the
paring for the two last fiscal years, end
ing June 30, 1875 and 1876, the
merchandise imports and exports with
all European countries, the following re
sults are shown:
imports from Exports to
1875 t1.23t 787 $452 432 255
1876 233 133,8X2 4y8,U3,JW
The trade with Great Britain, which is
a gold standard country, shows the fol
lowing even greater proportion of ex
ports, exclusive of gold and silver:
Imporw frxm Export to
Yenrs. Oreat Britain. Urent liruain.
1875 $155,237,944 $371 745 63
1878 123,373,281 368,900.324
Falling prices in Europe, and espe
cially in Great Britain, imply diminished
returns for the same quantities of our
exports to that continent, and a corre
sponding increase of the real burden of
paying the principal and interest of our
debts held there.
If the United States should resume
specie payments under the optional or
double standard, silver would alv
constitute a part of our currency. The
channels of circulation would doubtless
for a short time, and until the new de
mand here for silver caused the legal
and market relations of the metals to
coincide, be monopolized by silver and
by such paper as might be convertible
into the metals. It would, therefore, not
be necessary to resumption to draw gold
from Europe or to intercept it on its
way there. Even if the gold now in this
country, or some portion of it, should be
sent to Europe, it would be sent where
it would be of the greatest possible
service to us. and where it
would have a direct influence in rais
ing the prices of our exported products.
These prices are not regulated or con
trolled by the volume or kind of money
in use in this country, but by the vol
ume and kind of money used in the
countries to which our producta are ex
ported. A gold standard here will force
a fierce scramble with Europe for gold.
This would straiten our largest custom
era, diminish their means and disposition
to make purchases, and lower the prices
of our producta in European markets.
Last year our merchandise exports to
Europe (principally agricultural staples)
were $198,558,300, of which Great Britain
received $368,900,324. By retaining, in
stead of sending to Europe, any given
sum of gold, the United States would be
obliged to export that additional amount
of products, and to suffer also whatever
percentage of diminution in the prices of
$498,553,300 of producta suoha with
drawalofthe gold supplier of Europe
wuld occasion. On the other hand, to
whatever extent we emplojed silver as
money under the double standard, we
could add to the gold supplies of Europe,
and proportionally raise the prices of
$498,558,300 of our pr .ducts sold them
It is indeed hardly possible to conceive
of a financial policv mure clearly and
largely ruinous for the United States
than one which would raise the value of
the money in which our foreign debts
must be paid, aod dcreae the prices in
such money of our exported producta.
Before the British Royal commission
of 1868 on international coinage, Jacob
Behren, Esq, an eminent British mer
chant and member of the Associated
Chambers of Commerce, after answer
ing special and technical questions, was
asked, in conclusion, uif there mas any
thing else he wished to state." His reply
was:
I would only state that, in my opinion,
the general introduction of geld all over
the world has been one of the greatest
possible blessings to England. I believe
that England would be now tha fery1
poorest country in the world if tha silver
standard abroad had been kept up, and ,
gold had not been generally introduced.
Gold would otherwise have been very
muoh reduced in value, and we should
have had all the gold poured into Eng
land. All the debts owing to us would
have been paid in the depreciated cur
rency; and, therefore. T believe that Eng
land ought to have taken the lead in the
introduction of a gold currency abroad.
We ought to be very thankful that it has
been introduced, and we ought to give
every facility to its circulation.
The activity of the advocates in this
country of the gold standard has relieved
England from the necessity of openly
taking uthe lead in the introduction of a
gold currency" into the United States.
The resumption of coin payments.
A transition in this country from pa
per to coin involves a struggle for the
needed coin with other countries, no one
of which has any that is not all urgently
needed for its own payments, prices and
necessities. The United States will be
at the disadvantage of struggling for the
coin of which other countries are in pos
session. It can be successful only by a
reduction of prices in .this country, not
merely to the present level of coin prices
throughout the world, but to that lower
level to which they must descend under
such a new and great demand for coin
as the resumption of specie payment in
this country would occasion. This crash
in prices cannot be avoided by confining
our demand for the metals to the pro
duct of our own mines. That product
is a part of the current supply of the
world, and to subtract from that supply
is the same thing in its practical effect
as subtracting from the stocks of the
world, because the entire current supply
is not more than sufficient to keep the
existing stocks unimpaired. It cannot
be avoided by borrowing coin abroad
upon our bonds. No such borrowing
will be permitted to reach the gold of
the great European banks, and must be
confined to the small quantities floating
in commercial hands. But the decisive
consideration is, that even if gold should
be obtained in that way, it could be kept
here upon no other condition than a re
duction of our prices to or below the
coin prices of the world.
The difficulty of obtaining gold in that
way was pointed out in the senate of the
United States, January 22, 1874, by Gov
ernor Boutwell, who had been recently
at the head of the treasury department
He scouted the proposition that it was
possible to obtain even $100,000,000 in
gold bv the sale of bonds for resumption
or for any other purposes. Referring to
a proposition to transfer to this country
from London only $21,000,000 in gold, he
said:
I'he Bank of England, foreseeing that
there would be an accumulation of
coin to the credit of the United States
which might be taken away bodily in
SDecie. Grave notice ro the officers of the
treasury department of the United States
that the power of that institution would
be arrayed against the whole proceeding
unlees we ave a pledge that th coin
should not be removed, ard that we
would reinvest it in the bonds of the
United Stated as they were offered in the
markets of London. We were com pel led
to comply. It ws in the interest of the
government that we should do bo, be
cause we did not want the coin, and we
did want the bonds. But it shows the
feeling that animate that central finan
cial power of Great Britain, and it shows
a policv on the part u that institution
and of every kindred institution on the
continent of Europe, sustained by all the
banking and commercial classes, by
which, if it were necessary, and this
DroDoeition should become a law, the
bonds of the United States would be ex
eluded from the stock markets of every
financial city. There are in the nine
great banks of Europe only $600,000,000
in snecie. That specie ia held aa a re
serve with reference to their local busi
neea and with reference to the great
transactions that take placs betwaan the
countnea of the continent of Europe and
Great Britain. I may say, without dis
paraging the authors or theRe propo
sitions, that it is useless for congress to
waste time upon legislation looking In
that direction. Ther ia another fact
known to all. We recovered at Geneva
an award against Great Britain of $15,
500,000. When this claim was maturing
the banking and commercial classes of
Great Britain induced the government
to interpose, and by diplomatic arrange
ments through the state department
here, operating upon the treasury de
partment, secured the transfer of securi
ties, and thus avoided the transfer of
coin. In the presence of these facts- is
it to be assumed for a moment that we
can go into the markets of the world and
purchase coin with which we can redeem
four, three, two, or one hundred millions
outstanding legal tender notes?
When a drain of gold sets in, the Bank
of England raises its rate of discount un
til it makes money scarce enough; and
reduces the prices of commodities low
enough to arrest the drain. This is a
necessity for its own preservation, to
which it must sacrifice everything else,
not excepting its own customers. It is
unfortunately too plain how the United
States, depending upon the European
prices of its commodities for the means
to pay its debta, must fare in a contest
for gold with the banka of London and
Berlin.
And so far as it ia true, aa it doubtless
is to some extent, that our indebtedness
to Europe ia paid from the sale of com
modities elsewhere, the United States, aa
a debtor country, is interested against
such a diminuation of the world's meas
ure of values aa would result from de
monetizing silver, and ought to throw
the weight of its example and influence
against it
Every additional employment for gold
increases its value, and it must be an un
wise policy for the United States, owing
large debts held in gold standard coun
tries, and many of them specifically pay
able in gold, to make a new demand for
that metal, of from $300,000,000 to
$500,000,000, by adopting an exclu
sive gold standard. The interests to be
subserved by such a policy are not
American interests, but those of the
gold standard countries of western Eu
rope, and especially of England, which
are to an enormous extent the creditors
of the United States and of other parta
of the world.
Upon thia general statement it ia ap
parent that a struggle for a given quan
tity of both the metals must be lees
severe than a struggle for the same
quantity of a single metal. The needed
quantity is a less percentage of the stock
of both metals than it is of the stock of
either. The whole world can be drawn
upon for both, while only a part of the
world can be drawn upon for one; and
if the single metal sougut for is gold, it
ia only the smallest part of the world
which can be drawn upon.
Tne actual and legal money of the
United States ia now. and haa been since
1862, paper issued by the government.
It owed its origin to exigencies growing
out of the civil war, and to the belief
that it was necessary for the preserva
tion of the government. The la au
thorizing its issue haa been & cidtd by
the highest judioial tribunal to be war
ranted by the constitution. It owes its
value to the demand of the population
of the country for money, and not to the
indefinite promise to redeem it in coin.
The value of each unit or dollar, popu
lation and productive forces remaining
the same, depends upon the number ot
such dollars issued and occupying the
channels of circulation. It ia not dis
guised that it will be an extreme hard
ahip to compel those who have borrowed
(fontfnued on pr 7.)