The advocate and Topeka tribune. [volume], December 28, 1892, Page 7, Image 7

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

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Germany, which possess nearly the whole
of the disposable stock of that metal.
Notwithstanding the extraordinary
supplies of gold since 1843 from Cali
fornia and Australia, supplemented more
recently by new supplies of silver from
Nevada, a majority of the commercial
nations, which were all paying coin in
1848, have since been obliged to suspend
such payments. During this time the
metals exported from the suspending
countries, together with current supplies
have barely maintained the level of
prices in the few countries still paying
specie. Supplies from suspending coun
tries have nearly come to an end, as
there are but three or four commercial
countries left which now maintain specie
payments. The question therefore seems
to be a serious one, whether both the
metals together are not inadequate for
the advancing wants of the world.
During this time only one important
country, Great Britain, has been able to
maintain payments in gold. Such is
still the scarcity of that metal, notwith
standing a production since 1843 amount
ing to $3,215,000,000, that the pending
effort of one other important country,
Germany, to establish a gold standard,
has precipitated a monetary convulsion
throughout the world without example
in its extent and intensity, and the final
results of which it is impossible to fore
see, and has inflicted upon Germany
itself an industrial prostration which
menaces the most serious social and po
litical disturbances.
The attempt of a third country, of the
importance of the United States, to es
tablish a gold standard, while the pro
duction of that metal is still stationary
or declining, will be a ruinous failure,
or, if it succeeds, can only do so tempo
rarily and through the destruction of
all the productive interests of the coun
try. A detailed statement cannot be
made which will show that there is now
more than $1,600,000,000 in gold coin and
bars in the western world. That the
current supply is not more than the cur
rent consumption, is shown by the fact
that no increase of the aggregate stock
since 1S65 is anywhere visible. On the
3d of August, 1872, the London Econo
mist published tables proving that the
annual excess of gold imports into Great
Britain over exports, from 1858 to 1871,
averaged 5,000,000 sterling, showing that
amount to be needed annually to keep
up the British . stock. On the 16th of
January, 1875, the Economist reiterated
its convictions!
The annual supply necessary for Eng
land alone is 5,000,000.
Five millions sterling for that single
country is one-fourth part of the present
total gold production of the world.
At the lowest calculation $300,000,000
in gold would be required to enable the
government and banks of this country to
resume and maintain specie payments in
gold. This amount is about 20 per cent
of the entire stock of the western world.
No such draught can be successfully
made upon that stock without causing a
ruinous fall in gold prices everywhere.
These considerations should call a halt
in the attempt to chain this country to a
metal whose supply, without any demand
from this country, has been insufficient
to prevent the general decline in gold
prices which has been a continuing one
for several years and is still unchecked.
The resumption of specie payments in
gold is said to be an easy task, because
the premium on gold is now reduced to a
small percentage. It would be easy if
resumption involved only a reduction of
commodities from their present valu
ation in greenbacks to their present val
uation in gold. But what is really
involved is a reduction from preset
prices in greenbacks to the prices in
gold, which would prevail after gold was
enormously enhanced in value by the
new demand and competition for it with
other countries, which gold resumption
in this country would inevitably cause.
The premium on gold in greenbacks is
small, but the premium on gold in Bank
of England notes was still smaller in
1821, when the British resumption of
specie payments in gold resulted in a
most ruinous reduction of the prices of
property and of the wages of labor. The
value of gold is not at all the same thing
before and after a sudden and new de
mand for it to the extent of hundreds of
millions of dollars.
With the history yet fresh of the
British gold resumption, which brought
ruin upon a generation, there can be no
excuse for repeating the fatal error of
David Ricardo, the leader in that dis
astrous work, that resumption means
only an appreciation of paper equal to
the difference between paper and gold
before the resumption.
In the debates in the British house of
commons on gold resumption, May 24,
1319, Mr. Ricardo said:
The question is not deserving half an
hour's sonsideration of the bouse. The
difficulty is only that of raising the cur
rency 3 per cent, in value. And who
can doubt that, even in those states in
which the currency is entirely metallic,
it often suffered a variation equal to this
without inconvenience to the public?
William Ward (Remarks on the Com
mercial Legislation of 1846), quoted in
Doubleday's "Life of Sir Robert Peel"
(volume 1, page 245), sajs:
Mr. Ricardo Hved to change his opin
ion, and shortly before he died (1823)
expressed that he had done so. The late
Sir W. Heygate was with him, and h
said: "Ay! Hevgate, you and the few
others who opposed us on the cash pay
ments have proved right I said the
difference at most would be only J per
cent, and vou said that, at the least, it
would be 25 per cent." This is stated on
the authority of the late Alderman Hev
gate. It is a pity that Mr. Ricardo did
not, as some atonement to his coumtry
for the tremendous mischief he then,
past doubt, occasioned, publish this re
cantation under his own hand.
If, however, what is intended is not an
actual resumption of specie payments in
gold, and the actual and constant con
vertibility of greenbacks and bank notes
into gold, but only the appreciation of
greenbacks to a nominal parity with
gold, and if greenbacks are to continue
to be the ordinary currency of the peo
ple and gold is still to be used only for
the payment of import duties, an im
mense injury will have been inflicted
upon the country without any commen
surate benefit. There would still be
fluctuations, depending upon the course
of foreign trade in the relative value of
gold and greenbacks, and calculations of
the greenback price of gold would be no
easier at 100 than at 105. Any re
sumption not based upon a large and
adequate supply of gold would be a de
lusion and a snare, leaving the country
exposed to the changes and chances of
commercial and political events abroad.
The business of the country would be
always disturbed by the fear or fact of
suspension. A merely nominal resump
tion would be a baseless air-built castle,
liable to be toppled over by every
breeze.
If a parity of the national currency
with specie is to be treated as resump
tion, that currency has already reached
not merely a parity with, but a premium
of 3 per cent, above a specie (silver) dol
lar, which as a fall lfgal tender when
specie payments were suspended. To
that resumption, the only one that law
or equity could demand there is no pres-
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ent impediment except the interdiction
of the coinage of that dollar.
The United States a silver producing coun
try. The United States is the largest silver
producing country in the world, furnish
ing, in fact, rather more than one-half
of the total Bupply. Although there is
no good reason to expect any great and
sudden enlargement of the silver yield
of this country, our argentiferous terri
tory is wide and is being vigorously ex
plored, and the facilities of all kinds for
that species of mining are being con
stantly enlarged. From the nature of
things, silver production rises and falls
more slowly than that of gold, but we
may expect the occasional discovery of
rich veins, and a steady increase of the
capital invested in silver mining, unless
the value of silver be depreciated by de
monetization. And the first impreesion
at any rate must be that it is a singular
policy for the greatest silver producing
country in the world to co operate in
movements to depreciate the value of
the product.
In a report made to the United States
senate, June, 1808, recommending "a
single standard exclusively of gold," and
assigning four reasons therefor, Mr.
Sherman, of Ohio, gave the first place to
the following:
The United States is the great gold
producing country of the world, now
producing more than all other nations
combined, and with a capacity for future
production almost without limit.
Mr. Sherman was misinformed as to
the facts. The United States have not
produced as much gold as all nations
combined in any year since 1850. 'Its
production in 18C3 was $48,000,000, and
that of all other nations, $72,000,000.
But if the supposed fact in 1808, that
the United States produced more gold
than all other nations, was a good reason
for making gold the sole money standard,
the real fact that the United States now
produce more silver than all other na
tions seems to be at least as good a
reason for retaining that metal in its old
place in the double standard.
It is said that, although we produce
silver largely, we produce gold quite as
largely, and that it may be some time be
fore there is such an excess of silver
production as to cause a material depre
ciation in its value.
The suggestion made is, in substance,
that if we lose by the depreciation of
silver resulting from its demonetization,
we shall gain as much or more, or, at any
rate, some considerable offsetting ad
vantage by the appreciation of gold. That
seems to be true if wedo not look beyond
the direct gain of the rise in the value of
the gold that we produce. But, aa, in
the case supposed, gold is to be the
measure of the value of everything eke,
a rise in the value of gold moans a fall
in the prices of all commodities and all
forms of property. And as gold meas
ures commodities and property so im
measurably exceeding itself in value, no
rise in its value can be a compensation
for the losses it must cause. If no better
indemnification is proposed for the ruin
of our silver mines than such an appre
ciation of gold 'as will reduce the pricj
of property of every description to a
ruinous level, aggravate the burden of
debts, and arrest the industrial progress
of the human race, the indemnification
is an immeasurably greater calamity
than the loss for which it is proposed &s
a compensation.
(To be continued.)
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