53rd Congress, 3rd Session
(December 3, 1894--March 3, 1895)
Grower Cleveland President

Speech of Hon. Henry A. Coffeen,
in the House of Representatives

The Currency
Volume Controls Price
Prices Control Profits, Prosperity, and the Equity of Time Payments
Who should Control Volume ?

Mr. Coffeen of Wyoming [Henry Asa Coffeen (February 14, 1841 -- December 9, 1912)] said:

Mr. Chairman:  The great financial controversy between the money power and the people hinges upon the simple question:  Who shall control the issuance and the volume of money in circulation ?

The advocates of bank issues, coming forward with the claim that the currency must be "reformed," ask Congress to deprive the Government of the right to issue paper currency for general circulation and empower the banks to both issue currency and expand or contract the volume in circulation at their own option and as their interests might suggest.

On the other hand, representing, as we believe, the interests of the people, we demand the suppression of all bank issues and the future issuance of all forms of money, whether coin or paper, by the Federal Government, making all issues full legal tender, and controlling and regulating the volume in strict accord with the interests of industry and the maintenance of equity.

What is the Use or Function of Money ?

The functions of money are three in number--- to furnish, first, the common medium of exchange;  second, a common measure or unit of account by which the comparative values of other things are estimated;  third, a standard by which future payments and obligations are determined and enforced.

If the standard, the value of money in exchange, is changed by contraction or expansion of volume, then equity in payment is defeated and one of the parties in the contract suffers injustice.

If a farmer has a certain number of dollars to pay in taxes, on a note, or in any other obligation, the amount being fixed when the general range of prices showed the dollar worth one bushel of wheat, it will double the burden of debt and rob him of his wheat to change the dollar, the unit of account, so that it is worth two bushels of wheat, and does the farmer the same injustice as it would to double the size of the bushel measure or any other standard of measure and settlement.

So with the products of the factory, field, shop, mine, or store.  So with all, rich or poor, who have to obtain dollars in exchange for property, products, or labor.  The dollar is not a unit of value when its purchasing power is changed, but a unit of account.

Mr. St. John, president of the New York Mercantile National Bank, and, in my judgment, the most competent and patriotic bank president that appeared before the Banking and Currency Committee at its recent hearings, pointed out (page 328) that money is domestic ---that it is a matter of national legislation and national concern.  About 95 per cent of our trading is done within our own jurisdiction, and besides the international trade of any one country always requires translating both the money and the measures of other countries into its own.

Money is the creature of law.  Money is all domestic.  Our ten-dollar gold piece is accounted 258 grains of nine-tenths fine gold when beyond the jurisdiction of the United States.

Money and the yardstick have nothing in common.  The yardstick is an exact unvarying measure of length.  Money is an uncertain, variable measure of varying values.  The yardstick is not bartered for commodities.  Money is the means of acquisition and momentarily the measure of value of the things required.  The yardstick is a unit of length.  The dollar as a "unit of value" is preposterous.  Our Hamilton-Jefferson statute, founding the mint, provided a dollar as our "unit of account."  That dollar of 1792 and the dollar of 1894 contain identically 371.25 grains of silver.

Aggregate of Money Determines Prices.

The aggregate of all money afloat and in bank in the United States is our true measure of normal value of commodities here.  The aggregate of money of all nations trading internationally is the measure of normal value of commodities consumed by all.  Therefore, to enlarge the aggregate of money in the trading world is to raise normal prices of commodities everywhere.  To enlarge the aggregate of money in the United States is to raise normal prices for home and internationally-consumed commodities here.  Per contra, to diminish the aggregate of money in the United States is to lower all normal prices here, and to diminish the world's aggregate money is to lower all normal prices of internationally-moving commodities in all the trading world.

In reference to the coinage question, so ably discussed by my friend who has just taken his seat [Mr. Bland], I desire to say that I indorse in the main what he has said.  And yet I wish to call attention to another phase of the currency bill before us that is of paramount importance to a realization of the fact that this question is not so much as to what shall be the material of money or the money of ultimate redemption, whether it shall be silver coin or gold coin or uncovered legal tender paper.  No man who is competent to grasp the entire currency question will fail to realize that it is the volume of money that regulates prices, and therefore regulates profits and prosperity.  I have upheld the free coinage of silver, as you all know, from first to last.  I believe today it is a practical step to take, not so much that it is the only means that would relieve the depression, but because it is prominently before the country, and in due deference to the deep-seated desire on the part of the people in many parts of the country, and for the purpose of keeping the Democratic pledges to the people it should be carried forward until silver coinage is restored.

Mr. Chairman, the American Banking Association and its allied interests, including the European moneyed interests as well as the American, as far as they work in general concert of purposes, I wish to designate under the general terms money power or money dealers or bank syndicate, for general convenience, and not for the purposes of offense or abuse of persons engaged in the business of banking.

I have no blame to cast upon those engaged in the business of banking under the laws as they exist or as they may exist.  Every man has a right to engage in banking under such laws as are made.  I have had some little experience in banking, and my banking investments have been profitable.

It is the system of banking and the character of financial legislation and the unsound arguments and vicious methods that I would attack and expose.

In my judgment the money power and their advocates have in times past and even now on this floor are seeking to avoid the main issue and conceal from the general public their main purpose in all proposed legislation before us.

The main question and the most important issue is who shall control quantity or volume of currency in general circulation.

Their main purpose is to secure to themselves as a general class of money dealers the power to expand or contract the volume of currency, suddenly an entirely at their own option, so to control the value of money and credits in their relation to property and prices.

Banks Seek the Control of the Volume in Circulation.

Whoever controls the general volume of currency in circulation, controls the general range of prices, and prices control property values, wages, profits, and the opportunities for general prosperity;  and these things involve the welfare of mankind.

Believing these things, Mr. Chairman, and even knowing them as certainly as anything can be known in any of the ordinary sciences, how can I sit silent and unconcerned in this Hall, and in the midst of these debates, and see any proposition carried to turn this all-important control over the money volume and a new lease and extension of power into the hands of banking corporations ?  This places control out of the reach of the people and the Government, which is in duty bound to protect the people.

Sir Robert Peel said, when he brought forward in Parliament his bill for the reform of the currency, in 1844, in describing the importance of the question to all interests and people:

There is no contract, public or private --no engagement, national or individual, which is uneffected by it.  The enterprises of commerce, the profits of trade, the arrangements made in all domestic relations of society, the wages of labor, pecuniary transactions of the highest accounts and of the lowest, the payment of the national debt, the provisions for the national expenditure, the command which the coin of the smallest denomination has over the necessaries of life, are all affected by the decision to which we may come on that great question which I am about to submit to the consideration of the committee.

Every man, woman, and child in this country is vitally interested in this question, and so long as I represent them even the poorest and humblest citizens in the State of Wyoming shall have the satisfaction of knowing that their interests are neither forgotten nor bartered away and surrendered to the money power.

The Quantity of Currency in Circulation Regulates Prices.

The philosophy of this question is in this fact, that it is the total volume of money in circulation, whatever its form and without regard to its material, that controls the value of every dollar as far as its monetary use is concerned.  I see there are a few in my presence who are inclined to question this proposition, especially some of my colleagues on the Coinage Committee, but I say to you that all competent authorities almost without exception are agreed upon that fact.  There are no leading authorities in the universities of any land or continent, or any noted authorities, I believe, except one or two, but what have finally acknowledged the point that it is the aggregate, the entire quantity of money or number of units in circulation, that regulates the value of every unit or dollar for the time being.  Therefore, the free coinage of silver, great question as it is, bringing up the great injustice that has been done the people by its demonetization, all of which I admit and claim, still is an incidental question to the currency question.

Then, what is the issue before us to-day ?  The issue in which the people are most vitally interested is practically who shall control the volume in circulation ?  I will submit authorities to you in extended remarks to show you that it is the aggregate volume, without particular reference to the material of which the units are composed, that regulates the value.

Mr. Money.  Will the gentleman allow me to ask him a question ?

Mr. Coffeen of Wyoming.  Yes.

Mr. Money.  I want to understand the matter.  Do you contend that it is the volume of currency circulating in this country that regulates prices here ?

Mr. Coffeen of Wyoming.  Yes.

Mr. Money.  Or that it is the volume of currency in the world that regulates the prices of articles of universal consumption ?

Mr. Coffeen of Wyoming.  I intended to treat of that later, but I will take that up now.  The prices in every nation are regulated on the basis of the money of that nation, and we should not forget that monetary systems are of national and local concern, and not international, as some suppose.  There is no "money of the world."

Exports and imports are regulated purely and entirely in the exchange of merchandise for merchandise, and they are always translated into the local monetary system of the country dealt with.  Therefore, in answer to the gentleman, who has put a very pertinent and proper question, I will say, without fear of successful contradiction, that the prices in this country, named in the circulating money of this country, will depend on the aggregate number of units in circulation in this country, as they will depend and be named in every other country upon their respective monetary systems.

Mr. Money.  Now, I do not want to interrupt you---

Mr. Coffeen of Wyoming.  This is no interruption.  I think this is profitable.

Mr. Money.  Then, if that is true, would the increase of the volume of circulation in this country raise the price of cotton and wheat in this country, without regard to the universal volume of currency in the world and the demand for those two articles ?

Mr. Coffeen of Wyoming.  That is a proper question, and we ought to be able to answer such questions as that.  Those products that are produced in this country beyond the capacities of this country to consume, and which depend, therefore, on export for their market, will, without regard to prices named in our money, be at least partially influenced in price named in the foreign money by the foreign market.

But, going on now from where we left the question, who shall control the volume of money in circulation ?

From the very nature of the case, as I shall undertake to show a little further on, the volume or quantity of money in general circulation controls and regulates the general range of prices on commodities.

As money appreciates property and price depreciate.  As the volume of money increases prices of all commodities increase generally in the same ratio;  but increasing the volume of money cheapens the value of the dollars or units of account, which is the cause of the increase of general prices.  So again, to contract or diminish the volume of money increases the value or purchasing power of the dollars or units, which lowers the price of commodities.

Hence we state the general proposition, that to increase or decrease the value or purchasing power of money has directly opposite effect on the value or price of all commodities and properties exchanged for money.  It is folly, then, for the money power to claim that they want good, high-priced money and plenty of it.  To make money plenty cheapens it, and while cheaper money is both good and honest money, if kept in due proportion to the needs of the country, honest and helpful to all who have aught to sell or pay, yet the money dealers want high purchasing power money, and they know, or ought to know, that scarcity produces it.  There is no such thing possible as high-priced money and "plenty of it."

To prove this elemental truth of monetary science, that volume of currency in circulation controls the general range of prices, I submit the following authorities;  but in general let me say that all competent authorities in both Europe and America are nearly unanimous in their recognition of this principle.

John Stuart Mill says:

That an increase of the quantity of money raises prices, and a diminution lowers them, is the most elementary proposition in the theory of currency.

The authorities on this quantitative theory of money have been so thoroughly collated by Senator John P. Jones, and given in his great speech on the question of repeal of the silver-purchase law in October, 1893, that I shall quote a number of them as given by him, and in connection shall quote a part of what the Senator himself had to say on this topic.  I regard the great Senator himself as even a greater authority on almost every phase of the money question than many of the noted writers from whom he makes quotations:

I shall now proceed to speak of the quantitative theory of money.  I wish to say, preliminarily, that I have heard no Senator deny the scientific correctness of that theory;  yet if it be correct the so-called standard of gold is a standard of gross injustice.

The Quantitative Theory of Money.

Political economy, Mr. President, has been called "The dismal science."  The most dismal branch of it, if men are to endeavor to force conclusions to fit some preconceived theory without reference to principles, is that which relates to money.  The persistent determination to make the whole science subordinate to the absurdities of the gold standard has operated like a Westinghouse brake on the progress of the civilized world.  But there is one principle of monetary science that, if held steadfastly in view, will constitute an unerring guide through what would otherwise be a path of inextricable difficulty.  That principle is that the value of the unit of money in any country is determined by the number of units in circulation.  In other words the value of every dollar depends on the number of dollars out.

The greater the number of dollars out, other things being equal, the less will be the value of each dollar;  the fewer the number out, other things remaining the same, the greater the value of each --and this without any regard whatever to the material of which the dollars are composed.  This is the key to the financial situation in the United States.  Much more;  it is the key to the financial situation in every land.  Without this key it is in vain that the student attempts to unlock the door leading to the Arcanum of monetary knowledge.  Unlike many of the locks made by man, the lock on that door is unpickable.  The household of science is one that thieves can not break through and steal.  He who would enter must first find the key.  With this key in hand, the most secret recesses may be explored with confidence.  Without it, the student travels in a circle --returning, after much labor, to the point from which he started upon his journey.  Like one in a maze, when most confidently expecting to find his way out, he but sees himself coming up against impassable barriers.

To the possessor of this theory and of an impartial mind, that is to say, a mind in search of truth for truth's sake, there is no phenomenon of industry, of commerce, or of finance that is not accounted for.  With it, all facts in the monetary world harmonize.  All the teachings of history illustrate its force.  It has therefore for support both reason and experience.  It resolves all doubts;  unriddles all enigmas;  makes clear that which, without it, would be an insoluble problem of political economy.  But in order to receive all the benefits of truth, men must not approach the investigation with a predetermination to prove some special theory.  The truth is always its own justification.

No Senator will rise in his place and deny that, other things being equal, the value of each unit of money in a country depends on the total number of units forming the monetary circulation of that country.  No Senator will attempt to deny that, all other things remaining the same, the prices of property and commodities in a country are regulated by the number of units constituting the monetary circulation of the country;  and by the "number of units" I mean, of course, for this country the number of dollars, for France the number of francs, for Great Britain the number of pounds sterling, etc.

The quantitative theory, Mr. President, is not new.  In the third century of the Christian era the Roman jurisconsul Paulus gave a description of money which indicates the acceptance at that early period of the principle of quantity as that to which the money unit owed its value.  I invite special attention to this clear-cut statement:

"The origin of buying and selling," says Paulus:
"goes back to barter.  Primitively, there was no money.  One thing was not called "merchandise" and the other "price," but every one, according to his needs, and according to his circumstances, bartered things useless to him for those which would be useful to him;  for it often happens that what one has too much of another lacks.  But, as it would not always or easily happen that you had what I should have wished for, and that, conversely, I had what you wished to obtain, choice was made of a material which, being declared forever legal value, would obviate the difficulties of barter by means of a quantitative equation.  And this material, stamped in the corner by the State, circulates with a power which it derives not from the substance but from the quantity.  Since that time, of the things thus exchanged one is called merchandise, and the other is called price."

This description was deemed worthy to be incorporated in the Pandects of Justinian, compiled and promulgated in the sixth century, thus demonstrating that the lapse of three hundred years had not rendered it obsolete.  It is as sound to-day as it was when first written.

John Locke, in his Considerations, relating to the value of money, said:
"Money, while the same quantity of it is passing up and down the kingdom in trade, is really a standing measure of the falling and rising value of other things in reference to one another, and the alteration in price is truly in them only.  But if you increase or lessen the quantity of money current in traffic in any place, then the alteration of value is in the money."

Locke further said:
"The value of money in any one country is the present quantity of the current money in that country in proportion to the present trade."

David Hume, the historian, says:
"It is not difficult to perceive that it is the total quantity of the money in circulation in any country which determines what portion of that quantity shall exchange for a certain portion of the goods or commodities of that country.  It is the proportion between the circulating money and the commodities in the market which determines the price."

Ficthe says:
"If the quantity of purchaseable articles increases, while the quantity of money remains the same, the value of the money increases in the same ratio;  if the quantity of money increases, while the quantity of purchaseable articles remains the same, the value of the money decreases in the same ratio."

James Mill, in his treatise on Political Economy, says:
"And again, in whatever degree, therefore, the quantity of money is increased or diminished, other things remaining the same, in that same proportion the value of the whole and of every part is reciprocally diminished or increased."

John Stuart Mill (Political Economy) says:
"The value of money, other things being the same, varies inversely as its quantity;  every increase of quantity lowering the value, and every diminution raising it in a ratio exactly equivalent"

And again, as I have already quoted in connection with my remarks on cost of production, Mr. Mill says:
"Alterations in the cost of the production of the precious metals do not act upon the value of money, except just in proportion as they increase or diminish its quantity."

Ricardo (Reply to Bosanquet) says:
"The value of money in any country is determined by the amount existing.  That commodities would rise or fall in price in proportion to the increase or diminution of money I assume as a fact that is incontrovertible."

Ricardo further says:
"There can exist no depreciation in money but from excess;  however debased a coinage may become, it will preserve its mint value;  that is to say, it will pass in circulation for the [so-called] intrinsic value of the bullion which it ought to contain, provided it be not in too great abundance."

John Stuart Mill again says:
"W e have seen, however, that even in the case of metallic currency the immediate agency in determining its value is its quantity." --Principles of Political Economy, volume II, page 89.

William Huskisson (The Depreciation of the Currency, 1819) says:
"If the quantity of gold in a country whose currency consists of gold should be increased in any given proportion, the quantity of other articles and the demand for them remaining the same, the value of any given commodity measured in the coin of that country would be increased in the same proportion."

Sir James Graham says:
"The value of money is in the inverse ratio of its quantity;  the supply of commodities remaining the same."

Torrens, in his work on Political Economy, says:
"If the value of all other commodities, in relation to gold, rises and falls as their quantities diminish or increase, the value of gold in relation to commodities must rise and fall as its quantity is diminished or increased."

Prof. DeColange, in the American Cyclopedia of Commerce, article "Money," says:
"The rate at which money exchanges for other things is determined by its quantity. * * * Supposing the amount of trade and mode of circulation to remain stationary, if the quantity of money be increased its value will fall and the price of other commodities will proportionately rise, as the latter will then exchange against a greater amount of money;  if, on the other hand, the quantity of money be reduced, its value will be raised, and prices in corresponding degree diminished, as commodities will then have to be exchanged for a less amount of money. * * * In whatever degree, therefore, the quantity of money is increased or diminished, other things remaining the same, in that same proportion the value of the whole and of every part is reciprocally diminished or increased."

Says Prof. Sidgwick, of Cambridge University:
"The exchange value of any particular coin will vary in exactly inverse ratio to the variations in quantity of the aggregate." --Principles of Political Economy, page 251.

Does the Material in Money Control its Value ?

Now, having established the fact beyond any danger of successful contradiction that the value of money is controlled by the number of units in circulation, and since a few --mostly novices in the study of monetary questions, or special pleaders for special interests-- still hold and advocate that it is in whole or in part the value of the material of which money is composed that regulates its value, I wish to take up this feature of the question and we will find that it is equally clear that without regard to the material of which convenient forms of money are composed, still the volume in circulation regulates the value for monetary purposes.

This rule applies even to the circulation of uncovered paper money, whether issued by the banks or by the Government, as long as it is kept in general circulation, and so the values of gold dollars and silver dollars themselves, by adding paper money to the volume, are affected, and diminished or increased according as the quantity of paper money is increased or decreased.  On a former occasion [June 5, 1894.], when the repeal of State-bank tax was before us, I tried to make this clear to all.

This fact and a true recognition of the effect of expanding or contracting the amount of paper currency in circulation is essential in any proper discussion of the question of empowering banks to issue what they call an elastic currency or of issuing any currency whatever, or withdrawing any from circulation.

Senator Jones gives valuable testimony again.  He says:

So absolutely clear are the leading writers that the value of money unit is, in every case, other things being equal, determined by the number of units out, and does not depend on the material of which the money may be composed, that they have not the slightest hesitation in asserting that the rule applies even to uncovered paper money, so that the value of every dollar of gold and silver in circulation is diminished or increased, according as the quantity of paper money is increased or diminished;  and reciprocally as to all of these, the increase in the number of dollars of either kind diminishing the value of each dollar of the others, while the decrease in the number of either increases the value of each of the others, without the slightest regard whatever to the material of which either of the dollars is composed.

If this be so, if the value of the unit of money depends not on the material of the dollars but on their quantity, what becomes of the gold standard ?  If this be so, inasmuch as silver has been utilized as money since the dawn of creation, why abandon it now, unless Senators are prepared to abandon the automatic system altogether ?  If we must, by legislation, compel a change in the value of money (for that is what this measure means), why legislate so that it can change in one direction only, and that the direction which is always favorable to the classes that lend money and live idly on their incomes --the direction most injurious to society, most fatal to industry, most narcotizing to energy ?

Prof. Stanley Jevons, in his work on Money and Mechanism of Exchange, says:
"There is plenty of evidence to prove that an inconvertible paper money, if carefully limited in quantity, can retain its full value.  Such was the case with the Bank of England notes for several years after the suspension of specie payments in 1797, and such is the case with the present notes of the Bank of France."

In his proposal for an economic and secure currency, the great authority, Ricardo, himself a most acute dealer in money, says:
"A well regulated paper currency is so great an improvement in commerce that I should greatly regret if prejudice should induce us to return to a system of less utility.  The introduction of the precious metals for the purposes of money may with truth be considered as one of the most important steps toward the improvement of commerce and the arts of the civilized life;  but it is no less true, that with the advancement of knowledge and science, we discover that it would be another improvement to banish them again from the employment to which, during a less enlightened period, they had been so advantageously applied."

The distinguished economist and editor, Mr. J.R. McCulloch, in commenting on the principles of money laid down by Ricardo, says:
"He examined the circumstances which determine the value of money, * * * and he showed that * * * its value will depend on the extent to which it may be issued compared with the demand.  This is a principle of great importance, for it shows that intrinsic worth is not necessary to a currency, and that, provided the supply of paper notes declared to be a legal tender be sufficiently limited, their value may be maintained on a par with the value of gold, or raised to any higher level.  If, therefore, it were practicable to devise a plan for preserving the value of paper on a level with that of gold, without making it convertible into coin at the pleasure of the holder, the heavy expense of a metallic currency would be saved."

It appears, therefore, that if there were security that the power of issuing paper money would not be abused;  that is, if there were perfect security for its being issued in such quantities as to preserve its value relatively to the mass of circulating commodities nearly equal, the precious metals might be entirely dispensed with, not only as a circulating medium, but also as a standard to which to refer the value of paper.

Lord Overstone also admits that irredeemable paper money can, by a proper limitation of its issues, be kept at par with gold.  In adopting a paper circulation he says--
"We must unavoidably depend for a maintenance of its due value upon the adoption of a strict and judicious rule for the regulation of its amount."

Supporting this view we find also that Alexander Baring, in his evidence before the secret committee of the House of Lords in 1819, said:
"The reduction of paper would produce all those effects which arise from the reduction in the amount of the money in any country."

An early and distinguished authority in our own country, Mr. Gallatin, said:
"If in a country which wants and possesses a metallic currency of seventy millions of dollars, a paper currency to the same amount should be substituted, the seventy millions in gold and silver, being no longer wanted for that purpose, will be exported, and the returns may be converted into a productive capital and add an equal amount to the wealth of the country."

When we know that these are views of the leading writers --all uniting in the assertion that that which determines the value of money is the quantity, not the material-- it must excite our special wonder that Senators propose to destroy silver as money of final payment, or to repeal a law which by its slight addition to the quantity of money has at least tended to maintain, in some degree, among us the equities of time contracts and deferred payments.  When Senators know that all great projects in this country, on which the employment of labor depends, are based upon the prices of commodities, and that when those prices are constantly falling, workingmen must be relegated to idleness, that every debt must be paid in a dollar of increasing value, to the ruin of merchants and of the projectors of industrial enterprises in which labor should be employed, it is incomprehensible how they can advocate the establishment in this country of a gold standard, or of any standard except such as will furnish a sufficient volume of money for the business of the people.

With reference to Ricardo, it is to be borne in mind that his profession was that of stockbroker.  Hence we must make allowance for his desire to maintain the gold standard --knowing, as he very well knew, that the gold standard meant a certain level of prices for commodities-- that is to say, that it did not mean the possession of gold, but the ability of money-lenders, creditors, and the idle aristocracy and income classes of Great Britain to obtain all the comforts and luxuries of life at a level of prices getting constantly lower, for, if by those means, workmen were relegated to idleness, those idlers felt themselves not individually responsible.  Their inquiry was:  "Am I my brother's keeper?"

In a paragraph of the twenty-seventh chapter of his work on Political Economy, Ricardo makes the broad statement that a nation may be on the gold standard without having a solitary dollar of gold within its entire territory, provided only that, whatever may be the form of its money, the number of the units of that money shall not exceed the number of gold units which, if the country used gold money, would be its distributive portion of the gold of the world.  That proportion is, of course, fixed by the general range of prices.  Ricardo's statement is:

"A currency is in its most perfect state when it consists wholly of paper money, but of paper money of an equal value with the gold which it professes to represent.  The use of paper instead of gold --he continues-- substitutes the cheapest in place of the most expensive medium, and enables the country, without loss to any individual, to exchange all the gold, which before it used for this purpose for raw materials, utensils, and food --by the use of which both its wealth and its enjoyments are increased."

It will be remembered that on Saturday I demonstrated, by citations from the leading writers that money has no value whatever except value in exchange --purchasing power--and that when the term "value of money" is used, it means only purchasing power and not any value, which, for commodity purposes, might attach to the material of which it is composed.  "By limiting its quantity" --Ricardo says-- "its value in exchange which, as I have said, is the only value that money has, is as great as an equal denomination of coin, or of bullion in that coin."

And he very properly adds:
"There is no point more important in issuing paper money than to be fully impressed with the effects which follow from the principle of limitation of quantity."

Of course there is no point more important than that.  The principle of limitation of quantity is of the very essence of the value of money, of whatever material it may be composed.

If money were unlimited in quantity it would have no value whatever.  Nothing has value that is unlimited in quantity.  If, instead of sand, the ocean beach were strewn with gold dust, it would have no value whatever as a commodity;  yet if that gold dust were taken up and coined into pieces of money, the number of such pieces being limited, they would have value precisely as gold pieces have value to-day.  And, on the other hand, as Adam Smith says, if gold should reach a certain degree of scarcity, the slightest bit of it might become as valuable as a diamond.

Ricardo, leaving no form of the statement untouched, recurs to the subject by making the following remark:
"On these principles it will be seen that it is not necessary that paper money should be payable in specie to secure its value;  it is only necessary that its quantity should be regulated according to the value of the metal which is declared to be the standard."

If it is not necessary for paper money, in order to be of equal value with gold money, to be payable or "redeemable" in gold, how can it be asserted that silver money, in order to maintain its value in relation to gold, should be redeemable in that metal ?

Prof. Fawcett, in his work on Political Economy, says:
"In discussing the laws of price, the principle was established that general prices depend upon the quantity of money in circulation compared with the wealth which is bought and sold with money, and also upon the frequency with which this wealth is bought and sold before it is consumed.  If more wealth is produced and an increased quantity of wealth is bought and sold for money, general prices must decline unless a larger quantity of money is brought into circulation."

When Prof. Fawcett says that "general prices must decline unless a larger quantity of money is brought into circulation," he is but stating in another form of phrase that the value of money increases as its quantity diminishes.  This is the quantitative theory.  Prof. Fawcett further says:
"The amount of money required to be kept in circulation depends upon the amount of wealth which is exchanged for money.  Hence, ceteris paribus, the amount of money ought to increase as the population and wealth of a country advance." --Political Economy, page 371.

If the amount should be increased, surely the increase must be an increase of the quantity.  Mr. N.A. Nicholson, of Oxford, in his Science of Exchanges, says:
"Whatever substance may be used as currency, an excessive quantity of it (more than is required by the wants of the community) necessarily causes a diminution of its purchasing power."

To show that even gold is subject to the same law of quantity, Mr. Nicholson asks:
"Could a currency, then, consisting entirely of the best gold coin only, be depreciated ?"

To which he replies:
"Certainly, provided that the exportation of gold could be altogether prevented, the amount in use would soon become greater than what was required by the wants of the community, and its purchasing power would diminish in the same proportion."

What Mr. Nicholson means by the "wants of the community" is the amount of money necessary to sustain prices at the international level.

Earl Grey, writing to Mr. Grenfell, one of the governors of the Bank of England, and referring to Ricardo, says:
"I would remind you (though it is hardly necessary to do so) that in his admirable pamphlet on this subject, he (Ricardo) has shown the value of paper money issued by the authority of the state to depend upon its amount as compared to the wants of the state in which it circulates.  No one, I believe, now doubts this to be true, and experience has proved that inconvertible paper money will circulate not only without depreciation, but even at a premium if the issues are sufficiently limited." [Letter from Earl Grey, dated May 31, 1881.  Quoted in The Bimetallic Controversy, by Gibbs & Grenfell, page 160.]

Prof. Shield Nicholson, of Edinburgh, in an article in the Nineteenth Century for December, 1889, states that every economist of repute since Ricardo's time has been an advocate of the quantitative theory of money.

Even a so-called debased coinage --that is, a coinage, each piece of which contains a smaller quantity of metal than the law prescribes-- will maintain itself at par provided the total number of coins put in circulation be not too large.  On this point, as I have shown, Ricardo says, that in circulation such coins will pass for the quantity of metal they ought to contain, provided they be "not in too great abundance."

With reference to this relation of quantity, and to the absolute necessity of an increase of money pari passu with the demands for it, Prof. Perry, of Williams College, says:
"When, however, enterprises are multiplying and exchanges are being permanently increased in number and variety, then there must be a larger volume of money." ---Principles of Political Economy, page 409.

With regard to the irredeemable paper notes of the Bank of England, issued on the suspension of specie payments in 1797, Prof. Perry says:
"Cautiously issued at first, bank paper continued at par for several years after the suspension, which proves that when Government possess the monopoly of issuing paper money, and carefully limits its quantity, and both receives and pays it out at par, it may keep an inconvertible paper at par, or even by sufficiently limiting its quantity carry it above par."

How do gold-standard Senators, who talk of a sixty-cent dollar, explain the fact of a one-cent paper pound-sterling being at par with gold, or even at a premium over gold, without a penny's worth of gold existing in the entire kingdom ?  I suppose they will say the notes were sustained by the "credit of the government."  Then, why did the credit of the government allow the notes later on, when they were issued in larger quantity, to depreciate in value ?

All these great authorities agree, as I have shown, that the quantitative theory of money is correct, and that, instead of applying merely to gold, it applies to all money without discrimination or distinction of material.

Valuable Testimony of Delmar.

Alexander Delmar, whose very philosophical work on Money and Civilization I have examined and which is not so often quoted as this author deserves, says on pages 11, 12, and 13 of his introduction:

At long and adventitious intervals, like those great tidal waves which increase the disturbance or an always disturbed ocean, those openings of placer countries --Spain, Gaul, Africa, Spanish America, Brazil, California, Australia-- each of which caused a prodigious rise of prices and threw society into new forms.

Then, as if he would guard carefully against the frequent mistake of regarding the volume of coin and precious metals as being the only element to consider in the volume of money and regulation of value, he says:

Of all money now (1886) in circulation in Europe and America one half consists of paper notes.  If these notes were suddenly demonetized or destroyed it is evident that in consequence of the increased work which each coin would have to perform, its value or purchasing power would be greatly enhanced and prices would fall.  On the other hand, to the extent paper notes are added to the circulation prices will rise. * * * The purchasing power of the precious metals is susceptible of being depressed below the cost of producing them, by any circumstance that tends suddenly or greatly to augment the volume of money whenever the same is composed wholly or partly of such metals.

He has brought out here the essential point in determining value of coin to be the consideration of the total volume of both coin and paper money in circulation, and this should be understood better than it is by both mine owners and those engaged in other pursuits.  Delmar claims that in his Science of Money he has---

Shown by numerous arguments and references to history that money did not and could not consist of any less number of coins or notes than the whole number, their nature being such that they could not be used, nor could their value be fixed without reference to one another;  in other words, that the unit of money [for consideration of its value] was all money, and, therefore, that its value depended upon its volume; * * * that, therefore, money was related to equity or the maintenance of equitable relations between capitalists and laborers;  that, like other measures, the most necessary and essential characteristic of money was specific limitation (of mass or volume):  in other words, that to measure with precision and with justice the whole sum of money must be fixed at some more or less constant ratio to the volume of exchange.

But while quoting from Delmar I wish also to enforce the point I so strongly urge, that to protect property interests of the laboring world and the rights of mankind, and to simplify the whole subject of money as a standard of equity among the people, the State or Government must hold and use the power to regulate the volume of money, all kinds of money, in circulation, and to this end can not leave the coinage and issuance of either paper or metal money to the whims and interests of private corporations.  If either should be let out to corporations it would be better to let out to them the coinage of the precious metals, for the very limitations on their production keep the banks within approximate bounds.

In speaking of the legislation of about two centuries ago by which the leading States of Europe gave over their control of volume to the exigencies of mining operations and coinage on private account and option Delmar says, pages 13 and 14:

Previous to the act of 1666 in England and 1679 in France, which gave free coinage to both gold and silver and allowed the volume of money to depend upon the exigencies individuals to add to or subtract from the volume of coin at their will, the State no longer keeping control of volume, as it should money was a comparatively simple subject, readily understood and as readily susceptible of regulation.

This helps us to understand that even the question of free coinage of either gold or silver must be considered in relation to the effect of such coinage on the total volume.  We must never forget, if we would simplify and grasp the money question, that it is the volume or total number of units or dollars in circulation that controls and regulates the value of the units and the general range of prices on all exchangeable forms of wealth on which the welfare of mankind depends.

The Change of Volume of Money in its Ratio to Volume of Business.

To test our proposition we must start with already adjusted prices, and we will find that every great increase of volume in any country raises the prices in that country.  Every great contraction lowers prices.  All history and experience and reason teach this principle.

When nations are on a metallic basis of money, as on a silver basis, like India has been until within a year or so and like China has been, in part at least, silver being cheap and abundant for them to use as money and add to their volume, prices in silver are maintained.  This has been precisely the effect in India and China.  There has been no general decline of prices in either India or China in their silver money.  Index number tables on leading commodities will show this --while in our country demonetizing silver and pushing by contraction toward the gold standard our prices on all leading products have, as a consequence, fallen about 50 per cent.

At the end of twenty years after the demonetization of silver in our country and Germany, under which influence silver has been rendered more abundant for China, India, and others of the Oriental countries, while gold, by the greatly increased demand for it, has almost doubled in value in the mad scramble for a gold standard in our Occidental countries, we find wheat 43 per cent higher in China than it was in 1873, rice 19 per cent higher, beans 13 per cent higher, in their silver money.  (Appendix to Coinage Laws, page 463.)  In India, wheat was 18 per cent higher in Bombay and 3 per cent higher in Calcutta, while rice, that comes in competition with one of our Southern products, was over 60 per cent higher in these places at the close of 1892 than they were in 1873, when we demonetized silver.  (Coinage Laws, page 789.)

But are wheat and rice and other food products that we produce higher in this country than they were then ?  In other words, while their prices have been well maintained in their silver currency, what has occurred to our prices in our foolish and criminal following of the Anglo-American gold and bond conspiracy ?  Our prices, as every intelligent citizen in Nebraska and throughout the West knows, has gradually gone the other direction and is still going down, and the bottom for wheat prices resting on the ups and downs of money in circulation, may yet go to 20 cents per bushel in Nebraska if the money power can sufficiently control and contract the money volume.

Who gets the Benefits of this Gold Standard ?

Who gets the benefits among the nations we have mentioned in the attack upon and demonetization of our own silver ?  Every nation except America.  We get the losses, while England, using gold, and India and China, using silver, get the gains, and the mill still grinds and the bank and bond and gold advocates from Washington to Wall street tell us that we must hold on to the gold standard, issue bonds, and turn over the issuance of paper money to the tender mercies and financial erudition of the banks.

How does it work ?  This way.  An importer of wheat into England can say:  "Here, I will give you Americans 65 cents per ounce for your demonetized silver."  Before we demonetized our silver it cost him $1.29 per ounce.  He takes it over to India, where silver has been the standard currency, and can get about as much wheat for the one ounce as he did twenty years before, although the silver to buy it with cost him only half as much.  This keeps up prices in India and China in their currencies, but cheapens cost to Europe, and our wheat, sold not on silver but on gold prices, have fallen one-half, and our exports are retarded while Oriental exports have been greatly encouraged.  Statistics will show that in wheat, cotton, an some other articles that come in competition with our productions the exports of India have increased during the last twenty years to a marvelous extent.

Europe, that produces no silver, and the Orient, which absorbs silver, both get the benefit, while our country loses by the same operation, by reason of the gold standard and appreciated dollars, about $300,000,000 per year on wheat alone and from one to two thousand millions of dollars per year on our entire production of goods and grains and metals.  This is bank and gold-standard financiering.  Do you not think it is time for the workers of this country to do a little financiering on the property side of this question, and raise prices on what they deal in by the restoration of silver to our people by free coinage ?

You say this will cheapen money.

Yes, to raise prices is to cheapen money in exchange for products, and to say the same thing in another way, to cheapen money by making it more abundant is to raise the general range of prices.  This is the invariable and scientific law of money in every country and in all history.  No competent student of the money question, here or elsewhere, will deny this.  Other things being equal, an increase in volume of the money in any nation in proportion to the trade and work for money to perform will, in all cases, raise prices.

Then let us reduce the dishonestly high and scarce money of America by remonetizing silver or issuing legal-tender Government notes, or both, until we revive prices, profits, and industry, and secure more honest dollars in relation to the products, property, and debts of our own people.

Finally, I will say that prices of goods in China or England or France or elsewhere is only an indication of the ratio between the volume of money and the mass of exchangeable wealth in the one country, and can not therefore test the status of prices in other countries.  There is no exact ground to test the effect of per capita circulation and prices in countries widely different in their habits of trade and quantity of business, but the test comes by noting change of prices in each country when the volume is changed in that country.

There is according to estimates of a reliable authority which I have recently examined (speech of Senator John P. Jones on repeal bill, page 298, in pamphlet form) about $98,000,000,000 worth of production and commerce in the United States annually.  This is an enormous amount and probably six to ten times as great as the production and trade of China.  I have no means of knowing precisely as to this.  Now, $2 per capita, mentioned as the circulation in China, would give us at least $800,000,000 of circulation for China, which is very close to one-half of our circulation, although the total of her trade may not even be one sixth or one-tenth as great as ours.  So in proportion to her trade and need for money she may have far greater circulation than our country.

Now, having mentioned the question of export of gold in connection with currency and prices, I desire to take up this clamor about raids or withdrawals of gold from the gold reserve in our Treasury.

Who is Responsible for Continuance of the Raid.

I am convinced that the raids on the gold reserve are continued only by the option and consent of the Administration and these are my reasons:

1.  Greenbacks and Treasury notes, of which there are nearly $500,000,000 in existence, are used by the raiders to take the gold out of the Treasury.

2.  These are all payable in silver as well as gold;  are all payable in coin.  All obligations of the Government are coin or bimetallic obligations, practically, except gold certificates.

3.  There is abundance of silver in the Treasury that ought to be paid on these bimetallic or coin obligations, and if not a sufficiency coined to pay all coin obligations that may be presented, the Secretary of the Treasury can, under the laws existing, coin more at his discretion.

4.  The announcement by the Secretary that he should from this hour forward use the right and option of the Government of paying all coin obligations in silver coin at any time when the amount of the gold reserve in the Treasury was below, say $100,000,000, would instantly stop the presentation of any excessive amount of such coin obligations and protect the gold reserve.

The honorable Secretary of the Treasury is not using the legal right and option of paying coin obligations favorably to the Government and in the interest of preserving the gold reserve in the Treasury when he fails or refuses to pay out silver while it is more abundant than gold in the Treasury.

The option of payment is always and wholly the right of the debtor --the one who pays-- and by no fair construction can become the option of the creditor.

France and other nations, with their more or less complete control of the central bank, exercise their option for the side of the Government, and not for the disadvantage of Government, when given by law or contract to the Government as debtor.  Our own Treasury is the only place among the civilized nations of the earth where the legal right and option is not used favorably to the Government.  But here the gold speculators of the world may raid freely for gold with bimetallic or coin obligations.

The last paragraph of section 2 of the Sherman silver-purchase law of 1890, in declaring for a policy to maintain silver and gold metals at a parity, does not destroy the right or option of the Government to pay the coin of either metal on all coin obligations.

The Stanley Matthews Resolution.

The Stanley Matthews resolution, carried by a strong majority in both Houses of Congress early in 1878, is still in force, as declaring the intent of Congress, and ought to be obeyed.

Let the Secretary do his plain duty and exercise for us our legal and reserved right and option to pay in silver, and the raid on the gold reserve is ended.  I will quote the resolution from the speech of Senator Jones, together with the comments that he made thereon during the debate on the repeal bill:

Whereas by an act entitled "An act to strengthen the public credit," approved March 18, 1869, it was provided and declared that the faith of the United States was thereby solemnly pledged to the payment in coin or its equivalent of all the interest-bearing obligations of the United States, except in cases where the law authorizes the issue of such obligations had previously provided that the same might be paid in lawful money or other currency than gold or silver;  and

Whereas all the bonds of the United States authorized to be issued by the act entitled "An act to authorize the refunding of the national debt," approved July 14, 1870, by the terms of said act were declared to be redeemable in coin of the then present standard value, bearing interest payable semi-annually in such coin;  and

Whereas all bonds of the United States authorized to be issued under an act entitled "An act to provide for the resumption of specie payments," approved January 14, 1875, are required to be of the description of bonds of the United States described in the said act of Congress approved July 14, 1870, entitled "An act to authorize the refunding of the national debt;"  and

Whereas at the date of the passage of the said act of Congress last aforesaid, to wit, the 14th day of July, 1870, the coin of the United States of standard value of that date included silver dollars of the weight of 412½ grains each, declared by the act approved January 18, 1837, entitled "An act supplementary to the act entitled 'An act establishing a mint and regulating the coins of the United States,' to be a legal tender of payment, according to their nominal value for any sums whatever:  Therefore,

Be it resolved by the Senate (the House of Representatives concurring therein), That all the bonds of the United States issued or authorized to be issued under the said acts of Congress hereinbefore recited are payable, principal and interest, at the option of the Government of the United States, in silver dollars of the coinage of the United States, containing 412½ grains each of standard silver;  and that to restore to its coinage such silver coins as a legal tender in payment of said bonds, principal and interest, is not in violation of the public faith nor in derogation of the rights of the public creditor.

A motion to refer that resolution to the Committee on Finance of the Senate was voted down.  A very influential member of the Senate, the then Senator from Vermont, Mr. Edmunds, moved to strike out such phraseology of the resolution as declared silver to be legal tender in payment of the bonds and to insert instead phraseology which would make the bonds "payable in gold or its equivalent."  But, not satisfied with these words, the distinguished Senator from Vermont in addition moved to incorporate in the resolution the following declaration:

And that any other payment [that is to say, any other than gold or its equivalent] without the consent of the creditor would be in violation of the public faith and in derogation of his rights.

This proposed amendment brought sharply before the attention of the Senate the very point in issue.  What was the decision of the Senate upon that point ?

The amendment of the Senator from Vermont was voted down;  the vote standing-- yeas 18;  nays 48.  This means that nine years after the passage of the act to strengthen the public credit which guaranteed to the creditors payment of the principal and interest of their bonds in coin and seven and one-half years after the standard of the coin was named, 48 out of 66 Senators of the United States repelled the assertion or implication that the bonds were payable in gold alone.

This resolution passed the Senate on January 16, 1878, by a vote of 43 yeas to 22 nays, and passed the House on the 29th of same month by 189 yeas to only 79 nays, and this ought to be a sufficient guide as to the intent of Congress regarding the payment of the public debt, including even the refunded bonds, and it repels the assumptions of the money power that coin obligations must be paid in gold alone.

It is strange how pure and refined some men on this floor have become when they, in the face of such strong declarations and in the face of the plain provisions for coin payment recited in the acts of Congress on which the bonds have all been issued, even these last ones of doubtful authorization, for which the specie-resumption law of 1875 is quoted as sufficient warrant, and knowing how closely bond-holders scrutinize the terms of payment --I say it is strange that men here or anywhere claim that the Treasury gold must be kept open to the raid for it on all kinds of coin obligations, while the reserved right and option of our people to pay in silver coin as their interests may require is so completely retained although ignored by our administrations.

Did Silver Coinage under the Bland Act drive out Gold ?

On February 28, 1878, the so-called Bland Act, providing for the coinage of not less than $2,000,000 per month of silver dollars, also restored their full legal tender without limit.  The Wall street press raised a howl, as usual, and started to scatter throughout the country their usual false prophecies of panics and danger which failed to materialize for the occasion.

About three weeks after the passage of the Bland law of 1878, a conference regarding silver and the resumption of specie payments with the now Senator John Sherman, of demonetization fame, who was then Secretary of the Treasury under President Hayes, was held by the Senate Finance Committee.  The Secretary, Mr. Sherman, for the time, gave evidence bearing on silver that will prove how surely silver was held to be the proper payment on all coin obligations of the Government.  The chairman of the committee asked Mr. Sherman, "What effect has the silver bill had, or is likely to have, upon the resumption of specie payments?"  Remember that the Bland law was now in operation.  After saying "I shall have to confess that I have been mistaken myself," and after stating some adverse effects that he believed the new law would have, he goes on to state the advantages.

John Sherman's Testimony as Secretary of the Treasury.

On the other hand I will give the favorable effects.  In the first place, the silver bill satisfied a strong public demand for bimetallic money and that demand is, no doubt, largely sectional.  No doubt there is a difference of opinion between the West and South and the East on this subject, but the desire for remonetization of silver was almost universal.  In a government like ours it is always good to obey the popular current, and that has been done.  I think, by the passage the silver bill.  Resumption can be maintained more easily upon a double standard than upon a single standard.  The bulky character of silver would prevent payments in it, while gold, being more portable, would be more freely demanded, and I think resumption can be maintained with a less amount of silver than of gold alone.

Senator Bayard.  You are speaking of resumption upon the basis of silver, or silver and gold ?

Secretary Sherman.  Yes, sir;  I think it can be maintained better upon a bimetallic, or alternative standard, than upon a single one, and with less accumulation of gold.  In this way remonetization of silver would rather aid resumption.  The bonds that have been returned from Europe have been readily absorbed -- remarkably so.  The recent returns in New York show the amount of bonds absorbed in this country is at least a million and a quarter a day.  We have sold scarcely any from the Treasury since that time.  This shows the confidence of the people in our securities, and their rapid absorption will tend to check the European scare.

Senator Voorhees.  That shows, Mr. Secretary, that this cry of alarm in New York was unfounded.  Then this capital seeks our bonds when this bimetallic basis is declared !

Secretary Sherman.  Yes;  many circumstances favor this.  The demand for bonds extends to the West and to the banks.

Senator Jones.  Then, in its effect upon the return of the vast amount of bonds you refer to, would there not be an element of strength added in favor of resumption, in that the interest on these bonds returned would not be a constant drain upon the country ?

Secretary Sherman.  Undoubtedly.

Senator Jones.  Would the fact that they come back enable us to maintain resumption much easier ?

Secretary Sherman.  Undoubtedly.

Senator Bayard.  You speak of resumption upon a bimetallic basis being easier.  Do you make that proposition irrespective of the readjustment of the relative values of the two metals as we have declared them ?

Secretary Sherman.  I think so.  Our mere right to pay in silver would deter a great many people from presenting notes for redemption who would readily do so if they could get the lighter and more portable coin in exchange.  Besides, gold coin can be exported, while silver coin could not be exported, because its market value is less than its coin value.

Senator Bayard.  I understand that it works practically very well.  So long as the silver is less in value than the paper you will have no trouble in redeeming your paper.  When a paper dollar is worth 98 cents nobody is going to take it to the Treasury and get 92 cents in silver;  but what are you to do as your silver coin is minted ?  By the 1st of July next or the 1st of January next you have eighteen or twenty millions of silver dollars which are in circulation and payable for duties, and how long do you suppose this short supply of silver and your control of it by our coinage will keep it equivalent to gold when one is worth 10 cents less than the other ?

Secretary Sherman.  Just so long as it can be used for any thing that gold is used for.  It will be worth in this country the par of gold until it becomes so abundant and bulky that people will become tired of carrying it about;  but in our country that can be avoided by depositing it for coin certificates.

But possibly one may say that the recent Treasury notes of 1890 were issued under a law pledging parity.  Yes, possibly, but not such a parity as keeping silver in subordination to gold.  That is not parity, but imparity, as we may say, or inequality.

Besides, as we have at another time stated, this incidental injection or stump-speech clause about parity that has become the scapegoat on whose head were laid the crimes of Wall street and her allies --laid by the high priesthood of the Aaronical golden calf worshipers can not blot out or override the express statement of the act in the mandatory part of the same law that these Treasury notes should be redeemed "in coin."

Section 2 of the law of July 14, 1890, is plain enough on this point, but section 3 provides that there shall be coined of silver, "under the provisions of this act, as much as may be necessary to provide for the redemption of the Treasury notes herein provided for."

Where is the stump-speech, double-construction, parity-policy clause against such positive specific provisions to redeem in silver coin as well as gold ?

Notwithstanding the intent and plain provisions of the law, from tables I shall give you a little later in my remarks you will find that while the scheme of the money power was on hand to drive Congress to repeal the silver part of that law, Secretary Foster, and the present secretary following in the same line, made heavy payments in gold, instead of silver, as the interest of the Government demanded, in redemption of these same silver-purchase Treasury notes --ranging from one to eight million dollars in gold per month for the raiders.

Referring to this parity scapegoat clause, as I have termed it, I will call attention to the reply of Senator Jones of Nevada to Senator Vilas in his speech on the repeal bill:

Mr. Vilas.  I do not suppose that the Senator can make the answer he is making now without knowing that the reason why the silver dollars have been held at par is because the Government has done it by force of its pledge of parity, and by the practice of the Treasury in maintaining it.

Mr. Jones of Nevada.  I can say to the Senator that I was on the conference committee which made what he calls a "pledge of parity," and there was no "pledge of parity" given.  There is not, in my judgment, a lawyer in this body who will tell me that under any rule for the interpretation of statutes a stray expression, such as the Senator calls a "pledge of parity," without any provision for its enforcement, is more binding than a provision distinctly and expressly mandatory, specifying with precision what, under certain circumstances, the executive officers should do.

There was never any promise made that the silver dollars should be exchanged for gold.  And as every man knows, during the very period in which the gold standard press was stating that the people of this country feared the silver dollars would go to a discount, those very dollars were going to a premium over gold.  There was never a more impertinent declaration put before a people than that the recent panic was occasioned by any fear on the part of the people of this country that their silver money might not retain all its value.  What better proof can be cited of this than that silver dollars went to a premium of 3 per cent over gold ?

During all the period of the panic I never heard of a man taking any portion of the money of the United States, whether a silver dollar, a greenback dollar, a Treasury note, or note of any other kind, to the Treasury to be exchanged for gold.  In all the "runs" that were made upon the banks and all the money that was taken out of the Treasury no effort was made by our people to get gold.  The fear entertained by the people was not of the kind of money in which they would be paid.  What they feared --and subsequent events proved their fears to be well-founded-- was that the banks did not have any form of money in which to pay.

Retiring Greenbacks to Secure the Issue of Bonds.

Just at present the money powers are trying to secure the destruction of the United States notes or greenbacks and secure the issuance of bonds instead, and the advocates of the pending bill are seeking to turn over the issuance of all paper currency to both State and Federal banks.

So now the raid is by use of greenbacks instead of Treasury notes, and this will answer for them the double purpose of discrediting the greenback and preparing an excuse for the Secretary to sell more bonds to the raiders to get the looted gold back again.

It has been shown many times that the teaching and prophecy of our Wall street financiers are nearly always wrong whenever they put forward their efforts to influence financial legislation.  Under the plea, of standing for "honest money" they have stood for an appreciating money by contraction and demonetization until they have broken down prices, mined the investors in property and productive enterprises, and have given us the most dishonest money the world has ever seen.  Under the plea of desiring to maintain silver at parity with gold they have done everything in their power to prevent the possibility of parity, closing the mints and keeping silver out of use as far as possible, and then pretending they do not know why price of silver bullion has gone down.

They talk against the greenbacks and legal-tender notes of the Government as being "founded on nothing," meaning on Government credit, and yet make their own notes redeemable in greenbacks and founded on Government bonds, both of which rest purely on Government credit.

They assured us of "relief from the financial stringency" and the raiders on the gold reserves if the purchasing clause of the Sherman law of 1890 was repealed.  By these assurances and various other means the law was repealed November 1, 1893.  Instead of relief and prosperity following, the lowest prices ever known have overtaken all products, and as to the raiding of the gold reserve by presentation of greenbacks, it has suffered greater depletion during this last year, 1894, than in all the fifteen years preceding.

Did Repeal of the Purchase Clause of the Sherman Law Stop Gold Raid ?

That none may question the statistics I have given on the gold redemption of the United States notes since 1879 in comparison with the raids of the last year, I will insert the following tables and a brief letter from the honorable Treasurer of the United States, bringing the computations by months down to the beginning of this month, and from current reports the raid on our gold this month still continues:

Treasury Department, Office of the Treasurer,
Washington, D.C., January 10, 1895.
Hon. H.A. Coffeen, House of Representatives:

Sir:  In compliance with the request made in your memorandum of this date, I have the honor to say that the redemptions of United States notes and Treasury notes in gold during the months of October, November, and December, 1894, were as follows:

Remember that the gross exports of gold give no indication of the net exports.  Much of the gold that was drawn on Treasury notes and others while the scare was being worked up against Treasury notes, and to secure the repeal of the silver-purchase clause was shipped back again from Europe in the same kegs that contained the gold when exported.

Now, having stopped the issue of legal-tender Treasury notes, the scare and clamor is worked up against the United States notes, or greenbacks;  so they are being used, as you see from the tables, instead of the Treasury notes of 1890.  Will the people be caught again by the tricks of the bank and bond and gold conspiracy and allow the complete destruction of their legal-tender greenbacks and the issuance of interest-bearing gold bonds --not coin but gold bonds-- instead ?

Not by my vote shall the conspiracy win as long as I shall represent the interests of Wyoming on this floor.  Let us stand by the greenbacks and silver as a permanent part of our currency.

How the Banks Save the Country.

The redemption of greenbacks in gold began January 1, 1879, under the law known as the specie resumption act, and from that time to January 1, 1894, a period of fifteen years, the amount of gold paid out on United States notes, or greenbacks as commonly called, was less than $98,000,000 for the entire period, being an average of less than $7,000,000 ($6,521,266) per year.  This brings us to the year 1894, just closed, the first calendar year since the repeal of the silver-purchase clause, pushed through Congress by the gold and bank power to "save the country and stop the raids on the Treasury gold."  Did this stop it ?  Did it even reduce the payment of gold on greenbacks below the average of $6,521,266 per year ?

Oh, no;  here, as in nearly all other claims and prophecies, they have again failed.

The payment of gold to the raiders in 1894 under this repeal measure, entirely cutting off the coinage of silver, has been over $123,000,000 --a sum far greater than all paid out during the fifteen years preceding, including silver coinage under the Bland Act for over eleven years and the purchase of silver for the remainder of the period up to the time of the "great unconditional."

It would at the preceding average rate take over nineteen years to deplete the Treasury of as much gold as has been looted from the Treasury by the gold and bank combine within the last twelve months on greenbacks alone, leaving out of the account the manipulation of Treasury notes also.  And during this last month of December nearly one-third as much gold has been taken out by these vicious processes of the false prophets as in fifteen years before.

Why are the People not Protected at the Treasury ?

Who can rely upon such sources of teaching ?  Why should Congress longer listen to them ?  On what important financial proposition have they ever taken position since the gold conspiracy began but what has been directly or indirectly dangerous and detrimental to the people, who ought to have a circulation of currency independent of bank manipulation and who ought to have a Government and a Congress that would give the people such a currency ?

Why is it not done ?  Why are the people not protected ?

Because the people have too long been following the false teaching and the false prophecy of the money power.  And because, too, I fear, that we have not had an Administration and Secretary of the Treasury since the days of Lincoln and Johnson but what has allowed the money power the benefit of every possible construction, and sometimes bold misconstruction, of the laws, and as far as possible cut off the people from their highest and best legal rights and options to pay all coin obligations in silver as well as other lawful money for payment.

To-day, in one hour of bold, patriotic action, the raid on gold would be stopped forever if our Administration and the Secretary would pay out silver in all coin redemptions properly.  I know not what others may think of the actions of some of our highest officials during this twenty-five years' struggle with the money power, but as for me, "I would rather be a dog and bay the moon than such a Roman."

Let Congress Resist Executive Interference on Legislative Matters.

I can not attack motives.  I must, however, be allowed to attack ignorance and error in method.  I must be permitted to appeal to this House --a parliament than which none should be found on the face of the earth more honorable and intelligent and true to the people --so if possible to arouse them to break loose and throw off the hypnotic spell that the glare of wealth and power has thrown over this legislative body.

In our sphere as Representatives in the legislative branch of this Government there is no power greater than ours.  Our commissions are from the highest sources --the sovereign people themselves.  We do not derive our authority on legislative questions from the Chief Executive, and we ought to withstand encroachments upon our prerogatives from that source as we would those of the most insidious enemy that could undertake the subversion or subjugation of our country.

We must prove ourselves men and patriots and true to the trust the people have placed in our hands.  Is this a hard thing to do ?

From what I have witnessed in the brief period I have been trying to serve as Representative on this floor, I must conclude that it is exceedingly difficult for many, but I also must conclude that it arises from either ignorance or cowardice.  No others will surrender to this money power in this great crisis.  Stand, then, for your people and the right. (Applause).

Who Controls the Volume of Money, Controls the Wealth of a Nation.

The Government alone can be trusted with control of the money volume, and the Constitution makes it the explicit duty of Congress to regulate the value of money, which can not be done otherwise than by regulating the volume of dollars in circulation.  Well, you say, what shall that volume be ?  I will answer, first, in coin, in gold, for those who prefer it in circulation;  second, in silver, freely coined, for those who prefer silver, and I would have it coined at the old ratios of 16 to 1;  and thirdly, paper money, Treasury notes of full legal tender, shall be supplementary to the coin, and issued in volume sufficient to answer the demands of business and sufficient to bring prices up to an equitable basis with the prices existing when the greater debts of our people were contracted.

Contracting the volume of money, which process by the unerring law of monetary science results in contracting and lowering prices of all products and property, while debts are pending is robbery of debtors, and our nation should guard our people against such robbery as faithfully as they would guard us against the invasions of a foreign foe.

How to Determine the Proper Volume.

Now, I will take up the question, What will answer the demands of business, and what will answer the demands of equity ?  While on the one hand there is an unlimited demand for money, since money will exchange for or buy all things offered to supply man's necessities, on the other hand the demands of equity must be considered and the supply or volume be limited.  I will answer the question, What, then, shall the quantity or volume be? in this way.  Our business, our prices, our enterprise, our industries are prostrated to-day by panic and contraction.  These are financial troubles, not tariff troubles.  We have heard, perhaps, too much from some quarters on this floor in the attempts to throw the blame for the depression of prices upon tariff legislation.  The question of prices is a financial question, not a question of exports and imports.  It is a question of money.  It is a question chiefly of local concern.  You can not understand money without understanding its effect on prices, because money by its volume controls prices, and there is no other way to maintain prices properly.

Now, a word or two further.  If, then, we acknowledge, as we should and do, and as all civilized nations practically do acknowledge, that we must have paper money in addition to coin, and if we also take the position, as I do, that the Government alone can safely be intrusted with this vast power over all these industries, over profits, over property, over enterprise, over prices, and that there must, for convenience and sufficiency, be supplemental paper money, you may ask me very pertinently, what is to be the volume ?  What are the demands of business ?  What amount will be proper?  Let us see if I can answer that question.  I would say, begin at once by issuing full legal-tender Treasury notes for the most immediate relief pending time necessary to coin silver, and let silver be freely coined up to the capacity of the mints.

There is a loud outcry today for the locking up and the cancellation of the legal-tender notes.  That seems to be a clamorous demand from Wall street and financial communities, but do you know in whose interest that outcry is made ?  Who is it that is demanding the return and cancellation of the legal-tender paper money issued by the Government ?  The people generally do not demand the destruction of the greenback money in circulation.  The demand comes from those who, either intentionally or unintentionally, are favoring the banks of issue and would increase the opportunities of these banks to supply the currency of the country in place of the greenbacks withheld or destroyed.

It does not come from the people.  It never has come from the people.  The people did not demand the demonetization of silver.  They have no hatred toward either silver or legal-tender greenback currency.  They will in future rebuke this demand for the cancellation of the greenbacks.  They do not demand the withdrawal of the notes called Treasury notes issued under the law of 1890 for the purpose of displacing them with bonds or with non-legal-tender bank notes.

Restoration of Prices and Prosperity Indicates the Requisite Volume.

Now, taking the prostrate condition of the country into account, equity demands, the interests of business and prosperity demands, the rights of the people to life, liberty, and the pursuit of happiness, and the opportunity to obtain happiness and wealth, all demand that you should expand the body of money to a degree sufficient to restore prices, profits, and prosperity.  If the free coinage of silver and issue of a certain quantity of legal tender paper does not give us a sufficiently expanded currency to bring up prices to a profitable range for business prosperity and for the employment of labor, then still expand with Treasury notes until business prosperity is reached and then stop, but not till that comes.  These notes should be full legal tender, because no other kind of money ought to circulate among the people.  The paper money in the pockets and hands of the people ought to have the legal power to cancel debts of all kinds by presentation in payment.  The people should not be compelled for their general circulating medium to depend on bank-note issue that you can not compel creditors to accept when tendered in payment.

Mr. Pickler.  How much capital would you provide ?

Mr. Coffeen of Wyoming.  Let me finish this question of volume, as that will answer your question, I presume.  I say expand, if you find it necessary, even beyond the free coinage of silver, until you have reached a point where your enterprise and your industry --the productive and laboring energies of your people-- are utilized to the best advantage, and there stop except to keep the volume increasing as wealth and population and business increase.  If that amounts to $40 per capita, issue that much, and stop at $40.  If it is $50, stop at $50.  But go on until the productive energies of your people are utilized to the best advantage.

Any Congressman who sits on this floor, I care not from what State he hails, who will stop short of that which is necessary to the utilization to the best advantage of the energies of the people of this country, is not the statesman who ought to represent people here.  [Applause]  Therefore I say go on with the expansion and you will not need to go very far to attain the desired result.  The very announcement of this policy will be hailed with delight b three-fourths of the people.  Perhaps the unlimited coinage of silver with right to deposit the silver coin against legal-tender notes may accomplish the proper rise in prices.  With silver freely coined and legal-tender paper as far as necessary as supplementary to coin go on by proper gradations until you have utilized the energies of the nation to the best advantage.  This is not difficult to understand, and the point to which expansion should be carried and where expansion should stop are matters as easily determined as any other matter upon which we legislate.

As you expand the volume of your currency prices will rise in equal ratio.  As prices rise profits will accrue, for profits in all kinds of business depend on the rise or at least the maintenance of prices, and as profits accrue labor will be fully employed.

Increasing Volume Gives Employment to Laborers.

Your 3,000,000 tramps in this country forced out of employment by the bankers' panic of 1893, the object lesson to illustrate the gold standard ideas of money, will be needed, every one of them;  and they will all be invited, at good fair wages, into employment and activity.  This will surely come about by the efforts of employers of labor to get the benefit of the profits accruing by the rise in prices and the expansion of the volume of money.

Realizing that the rise in prices means increase of profit, and that increase of profit means the employment of the labor and energies of the nation, when you find you have reached that point, then in view of equity to the creditor class, I would stop expanding the currency beyond the proper ratio to business, but would continue it at a ratio which would always maintain reasonable prices.  To stop short of that is contraction, and I care not what your currency system may be, it is unjust to the people to have a volume of currency that does not expand with expansion of business.

Money does not serve to exchange commodities only, but must also be a standard of equitable payment and the support of prices that will yield just reward to abor and enterprise.  A contracting or diminishing volume of money can not maintain equity nor support prosperity.  Neither can a stationary volume answer in a growing country or increasing population or expanding business.  Expanding the mass of wealth demands for equity the expansion of the volume of money in circulation.  Banks already have enough power over prices without giving them power to issue or contract the volume elastically at their pleasure.

Gentlemen say there is a deficit in the Treasury;  but this is not altogether on account of the tariff question;  it is very slightly owing to the tariff question.  It is because of a paralysis of the industries and activities of the country, a destruction of the ability of the people to obtain prices and money sufficient on what they do sell, and shrinking of prices also as well as quantity on imports that cut short Government revenues.  When people get good prices they readily consume more of home products and more of imports as well, and thus the revenues of the Government are more abundant.  A shrinking volume of money is destructive of revenues and resources of the laboring people, and for the same reason of the Government also.  All suffer that the money dealer may appreciate his money and get advantages of the debtor classes.

Hear Mr. St. John, president of the Mercantile National Bank, of New York, in his evidence before the Currency Committee, page 352 of the hearings:

Mr. St. John.  Primarily and underlying the whole thing is the fact that the aggregate sum of money in the United States is not sufficient.  If there were a general business revival in the United States we would have a painfully stringent money market within ninety days.  That is one answer to the question.

Mr. Johnson of Indiana.  Is it not a fact that at the very time that these people in the agricultural sections are complaining about the scarcity of money, there are large quantities of money lying idle and congested in the money centers ?

Mr. St. John.  Undoubtedly so, as I thought I had explained.

Mr. Johnson of Indiana.  Then would you say that the reason why this complaint exists is that there is not sufficient money for the purpose of moving the crops ?

Mr. St. John.  I would, undoubtedly.  When I find an accumulation in every bank of Europe greater this year than for years past, I know there is a reason for it.  The increase of the aggregate money of the world is stopped, except as one can provide 4.03 pounds of gold when he wants to add a thousand dollars to it.  Distrust is the concomitant and distress the achievement.

Mr. Johnson of Indiana.  Is the reason why money can not be had in agricultural districts in sufficient quantities to enable the crops to be moved because of the fear among lenders that there is no security for the money ?

Mr. St. John.  It is one and a sufficient reason for bank caution.  The people who are making these complaints, and justly too, I think, are not prosperous.  They are mortgaged to death to their factory and stores and country merchants.  What they mortgage their homes and crops for is dollars.  If their product will not yield dollars they cannot pay their debts.  Cheap overcoats do not concern the planter and farmer unless dollars are the outcome of their crops.

I have said that the aggregate of all our money is our measure of all values.  It follows that the aggregate of money must increase with the aggregate of the commodity considered, if the price of that commodity is to remain unchanged.  Large volume of wheat, low price for it;  large volume of dollars, low value of dollars.  I do not mean interest value of dollars.  I mean relative value of wheat and dollars.  High prices for flour and high rate of interest are found together.  We see this conjunction in mining districts.  To be brief, it is the fact that the world's growing abundance of the necessaries and luxuries is surpassing the world's sufficiency of money.  The prime sufferer is the producer of the abundance.  Reflectively and painfully all elements suffer on account of him.

Mr. Cobb of Alabama.  Is it not a fact that it is because of this vast accumulation of money in New York, and a number of other cities, that the country is not generally prosperous ?

Mr. St. John.  These accumulations are not the cause;  they are one evidence of the lack of prosperity.

Mr. Cobb of Alabama.  Have you any opinion as to what causes this want of general prosperity, whether it is from natural conditions, or from the result of operations of law, or what is your idea ?

Mr. St. John.  My opinion is that the aggregate sum of money in the United States is insufficient to establish confidence in its ability to meet the demands upon it under ordinary prosperity.  Also, our money has a scarcity value proportionate to our abundance of the commodities which it values.  "Prices," or dollar valuation of commodities, is ruinous to those who provide prosperity (by labor and production) when we have any.

Mr. Cobb of Alabama.  What remedy can you suggest ?

Mr. St. John.  Enlarging the primary money of the United States.

Mr. Cobb of Alabama.  How ?

Mr. St. John. Abandon experiment and go back to eighty years of our own experience and the world's experience in money.

Mr. Cobb of Alabama.  In your opinion, would that give us a more general dissemination of the volume of money in the country ?

Mr. St. John.  It would decidedly.  May I read my answer to that inquiry on another occasion ?  I assume that I may.

At this present moment a dollar, as the means of acquisition and measure of value, is more efficient than in any other period of recent years, prices of staple commodities being ruinously low.  And yet at this same time money seeking wages, entitled interest, seeks employment vainly, or at rates that barely pay.  Under these conditions fixed capital suffers in the failure of investments, the banker suffers as a lender, the merchant in the restricted distribution of commodities, the manufacturer and other producer in the current low prices, and labor in want of employment starves.  In the mutual relations between these elements of the people, accumulated wealth loses in the reduction of its income, but regains a portion in the increased efficiency of the remainder as related to the commodities which he consumes.  No other one of these elements, as such other, has profited at all.  Labor has lost every thing in losing its employment.  The enduring fact, therefore, if these functions in money were the only ones to be preserved, would be the rich made relative ly richer at the expense of the poor made poorer, as one achievement of statute law.

How to get Government Legal Tenders into Circulation.

But to answer more explicitly and fully, how can the Government get its issues of paper money into circulation ?  This is easily answered.  The yearly expenses of the Government, current expenses, are nearly $500,000,000, about $40,000,000 per month, nearly $10,000,000 a week, far above $1,000,000 per day.  Let the Government pay out and distribute the legal-tender notes that should be issued in the current expenses.  Will not this be practicable and convenient and safe ?  Certainly so.  And would it not distribute it with sufficient rapidity ?  Yes, far too much so.  If one-half of the current expenses of the Government were paid by issues of legal-tender notes, it would be abundantly rapid to cure present stagnation in three to six months' time.  It would be at the rate of $20,000,000 per month, and this would immediately revive business, with the promise of better prices, profits, and success in all kinds of manufacturing and productive enterprise.  This would, at the same time, very quickly cure the deficiency in the Treasury and help out the Government as well as the people.

But would it go to the right people ?  Very quickly, for through the salaries of Government officials and in payment of supplies and other expenses it would go to all parts of the country and render money more abundant everywhere.

Different Plans for Bank Currency Proposed.

We are all agreed that our present mongrel system of currency is wrong, dangerous to prosperity, full of confusion, and full of injustice to the laboring and debtor and property-holding classes.  It is, by its variations, contractions, and manipulations, used constantly to break the equities of all time contracts, lower general range of prices, and rob debtors of their rights and products.  We are all agreed that a remedy for these evils and relief from confusion should be applied.  What remedies are proposed ?

Plans to Amend Present System.

One is to give more power to the banks by issuing to them a greater amount of currency without compensation --that is, by issuing to them not only 90 per cent on their deposits of United States bonds at a charge of 1 per cent per year, but to furnish them 100 per cent or possibly 114 per cent while the Government bonds stand at 14 per cent premium, and release them also from paying even 1 per cent tax or interest on this currency furnished thus to the banks, and, as in all of these bank plans, it provides for the issuance of more bonds payable in gold.

Other Bonds for Security.

Another is to allow banks to deposit other than United States bonds for security, and yet make the Government liable for ultimate redemption of all the bank notes and issue gold bonds in place of the greenbacks.

Baltimore Plan.

Another plan is to allow banks to have a national form of currency printed for them that may be issued and loaned out as notes of the banks based nominally on bank assets, but the Government to guarantee ultimate redemption.  This is the Baltimore or bankers' own plan.

Carlisle Plan.

Another is to practically turn the entire responsibility of supplying currency over to both State and national banks under a sort of supervisory provision upon deposit of a 5 per cent and 30 per cent fund in legal tenders;  but relieving the Government entirely from all responsibility of final redemption of circulating bank notes.

Eccles Plan.

Another is to take 50 per cent of assets of the bank on which to determine amount of note issues allowed to the banks, and an additional amount may be allowed them under heavy Government charge or taxation as an emergency currency.

What these and other Bank Plans involve.

All of these plans involve the following:
1.  The banks to control the volume of currency.
2.  The banks to secure all the profits on currency.
3.  The banks to be allowed to exercise the principle called elasticity, another name for sudden contraction or expansion, as their own profits may dictate without public notice and without regard to the rights or needs of the people generally.
4.  The banks to protect one another as note holders (for they are the principal holders of bank notes under the deposit system of our country), while depositors are left completely unprotected.
5.  The banks to have to themselves and all creditor classes all the benefits of a highly appreciated gold-standard money, possessing double the purchasing power that money should have in exchange for all other property, while the burden of maintaining the gold redemption for a time, and the dishonor of an ultimate and a certain breakdown will fall on the Government.
6.  The banks to have all and unrestricted opportunity for pooling their interests and to have all limitations that are disagreeable to them removed under the pretense of removing obstructions to elasticity.
7.  The banks and money dealers to have the most absolute and fully legalized control over the prices and values of all property, all products, all industries, all equities of contract, and through these channels they will have the most complete control over all political power and governmental administration that the world has ever seen in any age or clime.
8.  If there is anything else in sight that Congress can give them they will, as humble conservators of financial integrity and wisdom and as saviors of the country in its time of need, accept that also.

Will the People bow Down ?

Will the people of America bow down to worship in abject servitude this golden image of the modern Babylon and the money syndicates of the empire of wealth ?  Will Congressmen bow down ?  It might possibly have some effect on the cowardly Congressmen who have so far forgotten their constituencies to have the Chaplain of the House start up the Sunday-school song of "Dare to be a Daniel."  Imagine the cuckoos and followers of Senator John Sherman singing that song.

There are times and crises among all peoples who seek to maintain liberty and justice that try the courage of discerning minds.  Such a trial is now impending over you who sit here to either protect or betray the rights and liberties of 70,000,000 people.  What will you do ?  Has the fad of elasticity become epidemic ?  Has the disease attacked your backbone ?  If so, have the manliness to resign and go home to your people and you will, by freely mingling with them and avoiding the blandishments of wealth, soon regain stamina and a clearer vision of the rights of mankind in its great contest with the combinations of wealth and iniquity.

Byron said, in his Song of the Greek Poet, in trying to arouse the Greeks to regain their lost liberty---

Must we but weep o'er days more bless'd ?
Must we but blush ? --Our fathers bled.
Earth ! render back from out thy breast
A remnant of our Spartan dead !
Of the three hundred grant but three,
To make a new Thermophylæ!

Stand Against all Evil Systems of Legislation.

But, Mr. Chairman, they tell us we must choose between the evils of the present system and the imperfections of the Carlisle plan of currency reform.  I have no hesitancy in saying that if such were the only alternatives I would prefer the plan of the Secretary, which will give temporary relief and break for a time at least, the intolerable monopoly of the money power and the international gold conspiracy manifest in Wall street as well as in Europe.

But, sir, our case is not so desperate as they would have us believe.  There is another alternative --that of opposing all schemes of the gold and bank and bond forces, and standihg and fighting to the end for a true and simple plan of Government issue and Government control of the volume of money in circulation against all theories of bank issues and bank control.

Mr. Chairman, there is still another way out of the difficulty.  When our revolutionary sires were told that they must submit to the new demands of the British King and Parliament or suffer fines, penalties, and imprisonment, they responded that they would not submit to either, but would choose a pathway and course of action of their own, and from one end of the country to the other camp fires were kindled and the humble but brave colonists formed in lines of battle.  The King found out that the American Colonies would not submit, but were determined to choose alternatives of their own.

So, now, we choose neither your bill nor the present banking law, but go to the country on appeal from both.

Who controls the volume of currency in circulation controls the welfare of the people, for the most fundamental and universally admitted truth in monetary science is that volume controls price.  To control price is to control profits, to control property, to control all branches of industry, and to control the happiness and prosperity of the people and the safety of our Republic.  Therefore we must never surrender this control to the banks or to any other one class of citizens whatsoever.

The Government must hold against all combinations of private capital the right to issue and coin all money for general circulation and control its volume in the interest of industry and equity.

This is the main question --this is the vantage ground over which the battle is raging.  Who shall control the aggregate volume of currency in circulation, thus to regulate value of money for purchase, exchange, and payment, and thus to protect property and prices for all producers and maintain the equity of all time payments.

There are other incidental questions.

To maintain compulsory redemption of all currency in gold is to cramp and limit the people to the conditions of the dark ages, and subject the welfare of mankind to the tricks of those who have their clutches upon and practical control of all the gold available in the world.

Gold Monometallism will end in Collapse.

The gold standard or gold monometallism is a failure, and it can not be otherwise.  There is great gain and power and wealth in it for those who control and manipulate the supply of gold, but for the people and the nations there is no wisdom or equity in it --no progress, no chance even to maintain the present status of civilization.  It hangs like a pall over the commercial world.  It is the most stupendous and unjustifiable experiment ever forced upon mankind, and is followed by a long train of injustice and extortion.  It is transferring the wealth and property of the industrial and debt- and tax-paying millions to the money dealers, until here, at the close of a century of wealth production exceeding perhaps that of any three centuries preceding, the net results of this marvelous wealth production is passing out of the possession of the producer into the possession and control of the money power.

This I have, as I believe, clearly shown by a strong array of facts and monetary statistics on a former occasion in my speech on Money, Banks, and the Debts of the World.  I have also shown that civilization must break down or the gold standard be abandoned.

Mankind and the universal product of all his toil and invention are greater than the one little yellow product called gold;  so, even if the gold standard must be abandoned, man and liberty must survive.  Gold must again be conquered and made a servant instead of a master by the sovereignty of law.

When I think of the cruelty of the gold power and how easily the prolonged suffering of our impoverished workers might be relieved by abandoning the gold standard and securing a sufficient supply of money through the sovereign power of government I think of the poet's song:

'Tis for this they are dying where the golden corn is growing.
'Tis for this they are dying where the crowded herds are lowing.
'Tis for this they are dying where the streams of life are flowing.
And they perish of the plague where the breeze of health is blowing.

The remonetization of silver, although a great question and under present conditions so important to the welfare of this nation, is yet an incidental matter and a subordinate question to this greater question of the control of the total volume of money in circulation.  Silver remonetization will double the metallic base of coin redemption money and successfully break the present control of the European gold power over the welfare of America.

But neither silver nor gold alone nor both in conjunction can in themselves furnish an adequate volume of money for the present stage of civilization.  Paper money is necessary to supplement the supply of gold and silver, and this is generally admitted by all competent authority.  So we come again to the question, Who shall issue the paper money and who control its volume ?

We answer again, unhesitatingly, that the Government must coin and issue all money, for there is no other way in which it can control the aggregate volume.  Coming to a more direct consideration of the pending currency bill, which has been prepared by the honorable Secretary of the Treasury himself, and is so generally known as the Carlisle plan, I am astonished to find him taking such an interest in upholding banking institutions today for the issuance of money, independent of the United States bonds, for the marketing of which the national banks were created, as shown by Mr. Carlisle himself.  His plan divorces all new banks of issue from the deposit of Government bonds.

Perhaps no man in America has more strongly contended, in these very halls, that the only sufficient excuse for the creation of national banks and conceding to them the privilege of issuing paper money was to provide a market for the bonds.  He even contended that except for this purpose of making the banks to a degree agencies of the Government to facilitate the placing and marketing of bonds the Federal Government would not have been competent under the Constitution to create such corporations.  Hear what he said on March 1, 1881, found in Appendix to the Record for the third session of the Forty-sixth Congress, page 247:

What was the primary purpose of the Government in establishing this system in the first place ?  If any gentleman entertains a doubt upon this subject let him read the reports in which Mr. Chase, then Secretary of the Treasury, suggested and recommended the passage of the original national-bank act, and he will be convinced that the principal purpose of that eminent financier was to create a certain demand and relaible market for Government securities.  Considered with reference to that purpose, it was unquestionably a wise stroke of financial policy, and it justly won for its author the highest encomiums from ministers of finance in all parts of the world.  In fact, the constitutional power of Congress to crate these corporations can not be maintained except upon the ground that they were to constitute, when organized, agencies of the Government for certain purposes.
---[Carlisle either did not know what he was talking about, or he was already lying;  for one thing, the national currency banks did not come into operation until after the $500million 5/20s were sold, over-sold;  obviously the government could sell bonds just fine, without the good offices of currency banks .... in his report Chase gives a different reason for establishing currency banks]

He then quotes Chief Justice Marshall to establish his position, and later takes up the evils of contraction and elasticity in bank issues.  I will quote further what Mr. Carlisle has said of allowing banks to contract and expand when I come to show that banks should be deprived of all privilege of issuance.

So we find now that instead of supporting the national banks as an agency of the Government, requiring them to deposit bonds and thus aid the Government in placing and marketing bonds, he proposes to perpetuate the banks for their own profit simply (which he has shown could not constitutionally be done), and allow them issue privileges in increased degree and he would stop any further use of bonds to secure circulation.

The rights of the people, safety against contraction of currency, and even the Constitution itself as it once appeared to him, are now thrown overboard.  He still sells bonds, but weakens the market.  He points out how the bankers and exporters raid the Treasury for gold on coin obligations, yet refuses to pay them silver coin and protect the rights of the Government.  He claims that silver ought to be kept at a parity, yet keeps it in subjection and disgrace.  The very Treasury notes paid out for silver he insists must be paid in gold instead of silver, if exporters and speculators demand it.

To me it seems clear, as I ve said, that the way to stop the drainage of gold is to stop it.  He has the legal power unquestionably.  It is just to the people that silver should be paid when gold is in short supply.  He should do the proper thing and stop the drainage. [Applause.]

Our Secretary Yoked to Republican Doctrine.

Like all former Secretaries of the Treasury for the last twenty five years he has yoked himself to the bank and bond and gold scheme, and so upon the most doubtful authority sells bonds under the pretense of maintaining coin redemption for greenbacks and Treasury notes, while the vaults are filled with hundreds of millions of full legal-tender silver coin and with tons of bullion out of which more should be coined if needed.

You have heard of the man in the old settlements who had one fine yearling steer that he thought best to subdue and train up in a good, proper manner;  so he yoked himself up with the steer to break him.  All went well for a little time, until the steer, becoming disgusted with the situation, started with the man down the lane furiously.  When the neighbors called out to the man, asking where they were going, the very proper reply of the man was "I don't know, ask the steer."  And he loudly called on all to stop them, if they could, for he believed they were "running away."

So this Administration has yoked itself to the Anglo-American gold and bond scheme, and unless stopped soon it may land in the arms of the Republican party in this financial runaway.

The way to resume, aid Greeley, is to resume.  Were he alive today he would say the way to stop doing the impractical thing and stop paying out gold voluntarily is to stop it. The fact was clearly brought out a few days ago by the gentleman from New York [Mr. Hendrix] that France, the greatest gold and silver holding nation in the world, through the Bank of France and for the protection of the Government, refuses to pay out over 5 per cent of gold on demand when raids are made for export, and pays out instead 95 per cent in silver.  Will any one say that France is therefore and thereby thrown on a silver basis ?  Will anyone say France thereby endangers her credit ?

Does it not in fact give confidence in a government to see it use its options in all financial matters in the interest of its own people and their treasury instead of the gold-mongers ?

Nearly all Treasury obligations are payable by explicit terms in coin, and it is optional with the Secretary to pay in silver coin, and he should do so.

Carlisle as a Patriot versus Carlisle in the President's Cabinet.

In taking up the Carlisle plan in the bill pending I wish to use Mr. Carlisle's own testimony against the principles retained in this bill, uttered by him in ringing and patriotic words in his speech of March 1, 1881, before he had been seduced into supporting bank and bond issues and the gold conspiracy that he once so strongly condemned.

He says:

But, Mr. Speaker, by far the most dangerous feature yet introduced into the national system is contained in that part of the fourth section of the act of June 20, 1874, which authorizes the banks at any time and for any reason which they may choose to consider sufficient, to deposit lawful money with the Treasurer, contract the currency to that extent and withdraw their bonds;  and sir, it is not going too far to say that until this feature is wholly eliminated or materially modified there can be no assurance of safety to any legitimate investment or business enterprise in this country.  If there was ever a doubt as to the dangerous character of the power which this part of the law gives to the banks over the business and property of the people, the arbitrary and unjustifiable proceedings of the last week ought to dispel it forever.  The power was conferred in the first instance, as I have said, for a special and temporary purpose, the equalization of the national-bank circulation, but when the resumption act of January 14, 1875, was passed which removed all restrictions as to the amount of such currency and made the system entirely free, there was no longer any necessity for this clause, and it should have been instantly repealed.  It is a standing menace against the prosperity of the country.  Armed with this destructive weapon the banks may at any time, without a moment's notice or a shadow of prevocation, strike down every industry and every commercial enterprise of the people.

He speaks of the power given to the banks to withdraw bonds for speculation and power contract the currency by depositing lawful money with the Treasurer as "the most dangerous feature yet introduced into the national banking system."  To-day he advocates releasing them from deposit of bonds, as in the substitute bill, and the deposit of these legal tenders.

It may be held by advocates of the Carlisle plan that the deposit of 30 per cent of circulation in greenbacks will not contract the currency, but the points I would make in reply are---

First.  That it is optional with banks to contract or expand, and Mr. Carlisle points out how they pervert and abuse the power conferred.

Second.  That the deposit of lawful money will contract the amount of legal tenders in circulation just to the extent that they are deposited, and the people must put up with nonlegal tenders instead.

Mr. Carlisle then goes on to say:

The banks, or some of them at least, first began to pervert this section of the statute from its original purpose and abuse the power which it conferred upon them by depositing lawful money and withdrawing their bonds from time to time, in order to speculate upon them in the market.  They thus withdrew large amounts of their circulation and contracted the currency, not because the reduced demands of business made the outstanding volume of circulation unnecessary or unprofitable, but simply because they wanted to realize the high premiums on their bonds and speculate in the securities upon which the Government had already delivered to them 90 per cent in notes.  These notes would be left outstanding for the time being, but an equal amount of Treasury notes would, of course, be withdrawn from circulation and held at the Department to redeem the bank notes as they might come in.  The Treasurer, in his last annual report, describes this process by reference to actual transactions in his office;  and as his statement on this subject cannot be condensed without impairing its force, I give it in his own words.  He says:

Under the construction placed upon the law, banks which have thus reduced their circulation have been permitted to increase it again as often and as largely as they chose, whether their legal-tender deposits were exhausted or not.  An example will better illustrate these operations.  In January and February, 1875, a certain bank reduced its circulation from $308,490 to $45,000 by deposits of legal tender notes.  Between September 26, 1876 and May 26, 1877, and before that deposit was exhausted, it increased its circulation to $45,000.  On September 19, 1877, nine days after completing the deposits for this reduction, it again began to take out additional circulation, although $402,550 prior deposits remained in the Treasury, and by the 26th of that month its circulation had again been increased to $450,000.  July 22, 1878, it, for the third time, reduced its circulation to $45,000, in August and September, 1870, again increased it to $450,000, at which it now remains, the balance of its former legal tender deposit then in the Treasury being $112,615.

This was elasticity for you.  It would seem that the then Treasurer of the United States and the now Secretary of the Treasury looked with suspicion upon so much elasticity as the banks then possessed and even now possess.

It seems that in 1881, as at other times, the associated banks could and did produce panics at will --contracting the circulation, as Mr. Carlisle says further along, to the extent of over $18,000,000 in thirteen days-- and let me remark herein passing that the then Secretary of the Treasury, to rescue business from their intended ruin, at once went into the market at New York and bought bonds, which threw that many more dollars at once into circulation, to counteract the contraction of the bankers, but here recently, in 1893, when the national banks contracted their circulation to the extent of about $40,000,000 and shortened their loans to produce another panic, our present Secretary, in line with the preceding Administration, left the people at their mercy, held back silver, and instead of buying bonds uselessly assisted the raiders on the gold reserve and sold bonds in exchange for the very gold extracted.

But let us quote further from Mr. Carlisle.  He then was fighting the powers he now upholds.

Through all that long and night
The prayer of Ajax was for light.

Elasticity, so Dangerous then, so Charming now.

He says, continuing and commenting upon the bobbing up and down elasticity of the banks as shown by his quotation from the Treasurer's report:

No one will contend that this was a legitimate and proper method of conducting business under the national banking system, and yet it can be resorted to every day by every bank in the United States as long as the fourth section of the act of June 20, 1874, remains unrepealed.  It disturbs values, affects the money market, and subjects the Government to unnecessary expense merely to gratify a spirit of speculation and gain on the part of the managers of the bank, and it ought to be peremptorily forbidden in the future.

Under this section the banks have it in their power to contract the currency and produce financial distress, involving every interest in the country and embarrassing the operations of the Government itself, whenever they may think it will promote their special interests to do so.  It they do not like proposed legislation in Congress or elsewhere;  if they are opposed to the success of a particular political party;  if they conclude that they ought to be exempt from all taxation, State and Federal;  if they want additional privileges conferred upon them in respect to any matter connected with their business;  in short, if their opinions and interests are not consulted in all cases whatsoever, they can resort at once to this tremendous power over the fortunes of the people and thus bring the timid to terms and ruin all who refuse to accede to their demands.  A plausible pretext can always be found or invented for the exercise of such a power as this, and powerful influences can always be brought to justify and sustain it.

In confirmation of the threats of the bank power many years ago through the New York press, that they were getting the machinery in order by which, on a few hours notice, they could act so strongly that no act of Congress could withstand them (which showed to my mind that treason was lurking close to the star chamber consultations of Wall street), and in confirmation with Jefferson's warning concerning such bank powers, that they were more dangerous than standing armies, and in general accord with what has long been pointed out by those of us who are Democratic enough to want bank issues suppressed and the circulation restored to the Government where it belongs, let us quote the arraignment that Mr. Carlisle makes against the national banks.  Continuing from sentences quoted above, he says:

The two Houses of Congress, representing the aggregate interests of fifty millions of people, have, after mature deliberation, passed a bill which the banks have chosen to consider obnoxious to them, and forthwith --within thirteen days-- they have contracted the currency to the extent of $18,722,340 and precipitated a crisis which would have been disastrous to the country had it not been met by measures which they had no power to prevent.  The prompt action of the Secretary of the Treasury in purchasing a large amount of bonds at the city of New York, and the course of the Canadian banks in throwing seven or eight million dollars of their loanable capital on the market, alone prevented a catastrophe from the effects of which we might not have entirely recovered for many years.

When Secretary McCulloch, several years since, in pursuance of his contraction policy, began to retire and cancel legal-tender notes at the rate of $4,000,000 per month, it produced such consternation in business circles that Congress was forced to intervene at once and arrest the process by the passage of a joint resolution;  but now we have seen nearly $19,000,000 of circulation withdrawn in less than half a month, not by the Government, but by institutions in the management of which the Government has no voice, and still gentlemen here insist that the power under which this has been done, and under which it may at any time be repeated, shall not be taken away.  Why, sir, the whole contraction of legal tender Treasury notes under the provisions of the resumption act, from January 14, 1875, to May 31,1878, when it was prohibited by law, was only $34,316,084, not twice as much in more than three years as the bank contraction has been in less than two weeks.

This experience warns us that we cannot safely permit this great power to remain in the hands of these institutions unchecked by legal restrictions.  It is an engine of destruction standing in the very narrowest part of the way to permanent industrial and commercial prosperity in this country: for there can be no such prosperity anywhere in the midst of sudden and enormous contractions of currency;  nor will prudent and experienced business men embark in large and expensive enterprises when the power to make such contractions is held by private and interested parties who acknowledge no restraints except public sentiment and their own views of the public welfare.

By law the volume of legal-tender notes is limited to $346,681,016, while under the policy of the Government nearly $150,000,000 in gold and silver coin are permanently withheld from circulation and hoarded in the Treasury.  Of the $454,000,000 gold coin in the country the Government and the banks held, on the 1st day of November last, $254,000,000, and the people only $200,000,000.  The circulation of State banks is taxed out of existence;  the coinage of silver is limited by statute to $4,000,00 per month;  and so it appears that by statute or public policy every form of currency which the people can use in the transaction of their business is restricted, except national-bank notes.  They alone are perfectly free from all restrictions, legal or otherwise, and upon them the people are compelled to rely under existing circumstances for the additional facilities of exchange necessary to enable them to carry on their growing industries and conduct their rapidly increasing commercial enterprises.

On another occasion it will be remembered how strongly Mr. Carlisle has insisted that there has been a conspiracy between American and European money powers to force the gold standard on this country, and how he compares the evils of their contraction policy to those produced by war, pestilence, and famine combined.

No Democracy in this National-Bank Scheme.

Do not let anyone recklessly say that I am attacking the honorable Secretary's Democracy.  I am upholding that which he strongly upheld some dozen years ago, and would uphold true Democracy everywhere, but I deplore and would oppose his Republicanism as shown in his recent upholding of Republican policies and practically a Republican bank system, and I call attention to his own abandonment of Democratic doctrine and his own former teaching on these questions.

This present pending currency bill has so little of Democracy in it that no Democratic Congress should accept its bank-issuing features.  It appears to my humble judgement that the present executive administration has, on the money question, abandoned all true democracy, the platform and all, as I understand Democratic teaching on the money question, and this will go far toward explaining the efforts of the people everywhere to reprove the President and Democratic party at the late general elections.

This bill will not even please the Republicans, chiefly because they have long been the champions of the national banks and do not want to lose their "occupation."  And if the people want national banks and bonds and gold-standard money prices they know what party has a long-standing record in favor of these things.  It will not in that case be the Democratic party.  Either this triple-headed scheme of bank issues and bond issues and gold standard money must perish or the Democratic party will perish.

For myself, in these days of halting I would still cry out, "Delanda est Carthago" to the gold conspiracy.  And if I mistake not, the pending bill is already beaten.  Democracy shall yet move out of this confusion into a clear field, where it can regain its bearings.

The English people cut off the head of Charles I because of what they believed to be his tyranny, and they tried Cromwell.  All went well until the second Cromwell began again the exercise of tyranny, from which they had sought to escape, when the people rose up again and restored the royal line in Charles II, saying "if we must have a tyrant, let us have a legitimate one."

This did not mean that the people loved tyranny, however.  So the people are likely to say to the Democracy in this country if they adopt the Republican tyrannies of turning over the country to the bank and bond and gold conspirators, "We would rather have the legitimate tyrant in power, if we must submit to these tyrannies;"  and so they would restore the Republican party to power again.

Here is a clipping from Henry Clews's Financial Review of January 5, 1895, in which we can see the purpose of the money power to use the Democratic party for the banks, bonds, and gold mongers during this short session, if possible, and then cast it aside as illegitimate and useless:

All that is really desirable for the present short session to do is to pass the railroad pooling bill and to pass a bill to amend the law which authorizes the issue of 5 per cent. United States bonds by reducing the rate of interest to 3 per cent. and, in consideration for making that low rate, the bonds to be payable, both principal and interest, in gold coin.  If this is done it would meet the present emergency, and would beyond doubt stop the export of gold and the present drain upon the Treasury in consequence.  Europe would take an unlimited number of such bonds and pay a handsome premium for them, and would prefer them to our gold.  This I do not hesitate to assert, as I know whereof I speak.  With this legislation, together with the appointment of a commission by President Cleveland, to be comprised of the newly elected members of Congress, half Republicans and half Democrats, to formulate a currency plan to report to the next Congress, the business situation would materially change for the better, and confidence and courage would revive and thereby immensely stimulate business enterprise, now so much needed in all sections of the country.

Specific Provisions in the Carlisle Bill.

The Carlisle plan provides no limit to the expansion and provides no safeguards against contraction of currency.  It provides that banks may issue notes up to 75 per cent of their paid-up capital under so-called safeguards for the ultimate payment of their notes.  There is, however, no safety against fraud in permitting banks to issue money on a deposit of less than the amount circulated.

There is no limit to the number of banks that may be organized or the capital that may enter into the banking business.  Nor is there any provision compelling any banks to issue any certain amount of currency or to keep it in circulation when issued.  In other words, it is entirely optional with banks what the volume of currency shall be or how far expansion or contraction of the currency may be carried.  It provides no means of current Government redemption, nor compulsory current redemption of the issued notes by the banks themselves in any specified kind of coin or money.  This leaves it optional with the banks to redeem in an legal-tender money.

And this again makes it of interest to banks, while gold is both scarce and dangerous to hold (see Hearings, page 46), to retain in their possession abundance of greenbacks and Treasury notes preventing, thus far, both their circulation and their cancellation, and yet keeping them as a menace to the Treasury gold reserve as "coin" redemption is now construed.

It weakens the securities for depositors in note-issuing banks, by holding all assets of banks and liabilities of stockholders under first lien to secure the ultimate redemption of the notes issued.  It contemplates redemption by the banks of all bank notes in either gold, silver, or legal-tender paper of the United States, with an opportunity to expand the volume of bank paper to a dangerous degree, while the volume of legal-tender notes may be retired, paid by surplus revenue, which thus lessens the means of redemption.

It provides for a possible inflation limited only by the capacity to transform wealth of this country into bank capital.  In this its advocates excel even some of the Populists they profess to condemn.

It discards all responsibility as to keeping the paper currency within due bounds or ratio to the coin that shall be available for coin redemption.

Some Pertinent Questions for the Goldites.

It may be said by the advocates of this bill that the banks are not compelled to redeem in gold, but are perfectly free to redeem all their volume of notes, whether inflated or contracted, in silver or in greenbacks.  Then answer me---

First.  Would we be on a silver basis or a greenback basis, or both, or neither ?

Second.  If the Government is by this system relieved from the redemption of the bank notes and permits their perfect and constant redemption in silver and Government legal tenders, what has become of the gold standard ?

Third.  Will not all of Europe and foreign holders of American securities become, according to your former teaching, alarmed and withdraw gold and force us upon that dreaded silver basis ?

Fourth.  Worse yet, are we not recognizing that dreadful "fiat" greenback as a money of ultimate redemption ?

Fifth.  Or, if we are still to be held upon a gold basis, does not the responsibility clearly rest upon the Government to keep up constant and current gold redemption and payments at the Treasury and be held to the ultimate redemption in gold of an uncontrolled volume of money ?

Sixth.  Is not this more greatly endangering the public and Government credit than any school of cranks and inflationists ever proposed before ?  It appears to me, therefore, clear that the adoption of this bill and plan of currency issues would at once place everybody on a silver and greenback basis but the Government, and leaves that still helpless to defend itself against the continued raids upon the gold supply.

This leaves the Government to hold the bag, or, in other equally common phrase, perform the part of cat's-paw to relieve the banks from any responsibility for gold redemption, while yet the banks would get away with all the profit in the scheme.

If the Government is to be completely and forever kept in subjugation to the money power this scheme is as good as any --far better than some-- but if the Government is to serve the people and provide an adequate volume of coin and its own legal-tender Treasury notes, which are always good for the people, and by this scheme, itself acknowledged to be a safe and perfect redeemer for all bank issues, then let us defeat this bill, suppress all bank circulation, as the founders of the Democratic party insisted upon, and then utilize the advancing thought and progress of financial legislation by issuing full legal-tender Treasury notes in safe and adequate volume, paying out the same by safe and reasonable gradations in the current and ordinary expenses of the Government.

Then What Will the Bankers Do ?

I answer, let them depart in peace to their homes and stay for a time behind their counters and do a proper and legitimate banking business in exchanges, deposits, and loans, the proper functions of banking, and forever hereafter let them keep their hands off from the issue of currency.  It is the nation's place and duty to provide the proper volume of money for the people, and thus regulate its value and protect prices, profits, and prosperity in the industrial avenues of life.  It is the banker's business to deal in money after it is issued or coined, and so serve the people in the business of exchange, deposits, and discounts.

Some Objections to the Carlisle Bill.

Section 1 of the substitute bill which the committee favors carefully leaves the present national-bank acts in force except so much as requires the deposit of United States bonds.

Section 2 states the conditions on which national banks may issue currency under this bill.

Amount to each bank is limited to 75 per cent of its capital.  Thirty per cent of amount of circulation must be deposited with the United States Treasurer in United States notes or Treasury notes, thus locking up as against the people, but not as against the banks, the legal-tender paper currency.

Banks that so desire can have their notes on a gold basis by having their notes made payable in gold coin.

Thirty per cent deposit on the 75 per cent for circulation makes the guaranty fund equal to 22½ per cent on the entire capital.  So by putting own 22½ per cent the bankers can take up 75 per cent, a gain of 52½ per cent added to their working capital for which they have paid nothing to either the Government or the people.  This is "richness" as a scheme for getting rich.

Worse than this--- it is a temptation to the fraud of organizing dummy banks on dummy capital, as the gentleman from Ohio [Mr. Johnson] has this day so ably pointed out in his challenge to the advocates of the bill to show why it may not be done.  I not only indorse the position of my friend from Ohio, but would oint out to him and to this House that all schemes for issuing bank notes on assets or property of any kind deposited as security in less amount than 100 per cent of the circulation allowed the banks is vicious in principle and permits fraud to the degree of the difference between the deposit and circulation.  If, therefore any plan is proposed that requires a deposit of less than the total amount of the bank notes issued for circulation, then his argument of opportunity for fraud under this bill will apply to all such plans as well as to this one.

But if the deposit of 100 per cent is required for protection against the possibility of fraud, then the banker will not favor such plan, for he may as well loan out the money he deposits, as the amount is the same.  But if the bank syndicate would deposit 100 per cent in Government legal-tender paper money instead of 30 per cent only, as this bill requires, although this would remedy the opportunity for fraud, yet a new question arises.

What reason can be returned to the people who have given us commissions to represent them on this floor if we favor any scheme of banking which simply locks up one kind of paper money, or destroys it, so that an inferior nonlegal-tender paper money may issue in place of the better kind ?  Can you find in all history of finance a more foolish legislative provision than that ?

We can readily see that if you give the banks a chance to put down $30 in paper money and take up and walk away with $75 in other paper money that they may use for an indefinite length of time, it will help the bankers, but it is not so clear to others than bankers just where the people come in for any benefits.  They lose from circulation the better kind of paper money and get the elasticity game worked upon them besides.

It is a so well to point out, that owing to the limited amount of the two kinds of paper money to be deposited and the very large amount that may come forward as baking capital to get the benefit of the 30 to 75 per cent exchange, there is very great probability of the older banks and those in the money centers getting a corner on the greenback and Treasury note supply necessary for deposit of organizing banks, and forcing these notes to a premium.

In the bond-deposit system, as at present existing, the banks pay 1 per cent tax or interest and receive 90 per cent in circulating notes.  In this Carlisle bill, on a tax of only one-half per cent per year, they receive back 300 per cent on their deposit investment.  Even this one-half per cent tax per year is not for the benefit of the Government, but it goes into a fund to pay off the debts or notes of failed banks, and it will take 10 years' time in which to accumulate 5 per cent.

Not Fair Toward the Depositors.

Depositors under this and all similar plans are left out in the cold, to say so, in case of failed banks, for both assets and the liabilities of stockholders are practically mortgaged to the note holders, and are not likely to bring the depositor any relief, even though his own deposits may have been used a few days before failure in a scheme to get out circulating notes for loan to some accomplice who, by this trick, can come in ahead of the depositor.

In estimating security for the people we must keep in mind that all of these bank plans provide only for the safety of note holders.  This protects the banks who have the notes and circulation on deposit.  But no security is offered for depositors.  The banks offer no safety plan whatever for the people who deposit money with them.

Carlisle says (and correctly) that the deposit of money with a bank is purely a voluntary and private transaction.  I say that the issuance of a nonlegal-tender bank note and the taking of it by any man is also a voluntary matter, the note not being legal tender.  But it should not at the whim of a banker be allowed to circulate as money.  The Government alone should control the issuance of money and control its volume.

It has been well pointed out by Mr. George Mayer, who has given much attention to this question of the rights of depositors to better security, that from the very lack of security for depositors more banks fail by runs upon them by the unsecured depositors, and more money is kept hoarded away and held out of circulation---

Since 90 per cent of all current business transactions are said to be transacted through banks by means of deposits, we should give more attention to the safety of the depositors.  This, by bulk, as well as for other reasons, is five to ten times as important as security for bank notes.

In section 5 of the substitute bill the provision is made for 6 per cent interest on all notes of failed banks not redeemed on presentation to the Treasurer or assistant until thirty days after notice has been given of readiness to pay them, and such notes are a first lien on the safety fund.  As our Western men would say, this is a "pay streak."  The rate of interest being so much better than United States 3 per cent or 4 per cent bonds, it will entitle such notes to a good premium over the notes of all other banks.

Section 6 puts the Government into the business of making investments of the safety fund, not for the benefit of the Treasury, but all for the banks.  There is nothing in this bill anywhere that gives any benefits or compensation to the Government or the people.  It is all for the banks.

Section 10 and forward provides, under certain conditions being complied with, that the State banks may also take out circulation in same proportions to assets and deposits as in the case of the national banks.

Here, then, we have concurrent jurisdiction by the State and the General Government over some points regarding State-bank paper money and separate jurisdiction over other features.  This will give us also two kinds of bank paper at least, and probabilities of complications between State and Federal jurisdiction.

The national-bank circulation to be issued remains apparently legal tender for payment of all taxes to the Federal Government, except duties on imports, this provision of the present law remaining as at present.  This will make them, by their receivability by the Government for such extensive revenues, so secure that they will have great advantages over all State issues.  In same section provision is made for the Secretary to give a sort of certificate of good character to State banks, which may lead the public to be satisfied with State issues.

The Carlisle Plan Better than the Present Law.

I would not feel that I had done complete justice in my treatment of the Carlisle plan of currency legislation after pointing out its many faults if I did not also point out what I believe are its advantages over the present national banking law and the proposed Baltimore plan, which is fairly representative of the preferences of the associated national banks.

To me they are all wrong in principle, as any system must be that permits the issuance of circulating notes and control or interference of the aggregate volume of money to pass into the hands of banking corporations.  They are, all of them, more or less founded on the idea that our Government must in all financial legislation keep constantly in view the regulation and issuance of currency in the interest of those who use currency for profit making on loans.

Instead of viewing money principally as an investment or form of property to hire out and loan to our 70,000,000 people for the profit of those who are in general the wealthy classes, the dominant idea ought to be the issuance and regulation of currency in the interest of investors and for the exchanging of all other forms of property so as to render the manufacturing and productive work of our people profitable.

We should Create Money to Make Investments Profitable
Rather than for Loanable Purposes.

Money for profitable investment in other forms of property rather than money for loans should be uppermost in the mind of Congress.  Money as an instrument for the profitable exercise of the productive energies of our people and the maintenance of equity in settlement of all time contracts is the proper idea, so that money shall be subservient as a means of exchange and payment to the needs of our people engaged in all the varied industries of this advanced and progressive age and country, rather than issue and regulate money for the sole profit of money dealers and money loaning.

Money for investment, exchange, and equitable payments means money as a servant, but money issued by and regulated in the sole interest of money-dealers means money as master and all other forms of property in subjection.

That party is the party of the people and truly democratic that will take the people's side of this question and issue and control all of our money in the interest of property and the general industries.

If, however, the people must be subject to bank control and bank issuance of the circulating medium, then that system which prevents centralization and monopoly in control of currency is best.

It is precisely in this matter that the Carlisle plan is superior to and better for the people than all the other plans for bank issues.  It starts out in an effort to make the centralized power of the present associated banks compromise or yield a part of the profits and control of currency volume to the States and State banking institutions.  It introduces a new and strong competitor in the field of banking and note issuance, and one that will, to some degree, permit the people of every State jurisdiction to protect themselves against money contractions in the interests of and by the national bank association.  It therefore threatens to break the intolerable monopoly of Wall street in financial matters.

Not only this, it permits people of smaller means to enter the business of issuing their credit notes to circulate as money and become participants of the showers of financial blessings sent forth by the Government for the profit of the banking fraternity, for the restrictions of $50,000 as the minimum for State banks and the ownership or use of United States bonds for deposit as security for all banks are both left out of the Carlisle plan.  So much for the anti-monopoly and free-banking features of the Carlisle plan.  But for these reasons the strong and wealthy bankers of Wall street and other allied money centers will sooner or later, as I have believed, sound a note of warning to their cuckoos and "make themselves heard in tones of imperative urgency" against the adoption of the Carlisle plan.

Wall Street's Imperative Demands.

Again, the Carlisle plan does not sufficiently insure the retirement and destruction of all the Government legal-tender money and the issuance of bonds to please the centralized money power.  Hear them through one of their favorite spokesmen, Henry Clews, in the Financial Review of December 22, 1894.  In speaking of the Carlisle bill he says:

Among the clauses deemed objectionable is the requirement that the banks of issue shall deposit legal-tenders at the Treasury to the amount of 30 per cent of their circulation;  which would largely restrict the net earnings from the notes, and so far lessen the inducement for the banks to avail themselves of their privilege of issuing;  besides which it might keep a very large amount of legal tenders in existence after the remainder had been retired.

The great and universal objection, however, is that Mr. Carlisle fails to make---

any adequate provision for carrying out the main feature of his plan, the retirement of the five hundred millions of legal-tender notes.  He asks for authority to use for that purpose any money in the Treasury not otherwise appropriated, but does not mention authorization to borrow money for these vast liquidations.  The men of intelligence and the organizations representing our great commercial and financial interests must make themselves heard in tones of imperative urgency.

So, now, ye Republican jumping jacks, operated by a Wall street string, and ye Democratic cuckoos, ever anxious to call out the plausible sophistries of the money power, take warning in time.  If you mean still to serve the money lords you would better begin now to hedge against this bill.  If you resist you may hear those "tones of imperative urgency."

Retirement and destruction of all Government legal tender and the authorized issuance of United States bonds are imperatively demanded by Wall street and a lessening of the 30 per cent deposit requisite as a condition for the issuance of notes is very urgently requested, for it "restricts the net earnings from the notes," and remember always that the banks, in the language of a character in the Hoosier Schoolmaster, desire "while they're gittin' to git a plenty," and it ought to be clear to all of their Congressional servants that if they are required to put down actually of their own money $30 on deposit for every time they loan $100 in their own circulating notes, they can not make as much off the people as if they were only required to put down $5 or $10 for every $100 taken up and used in loaning.

If now the national-bank interests can secure large additional bond issues and overcome the present premium on bonds, and can obtain 100 per cent on their deposit instead of 90 per cent, as now, and secure repeal of the 1 per cent tax on their circulation, they can make more profit, getting interest on capital invested in bonds and at the same time getting interest on same capital loaned out in notes to the people, as anyone can easily see, but we, in behalf of the people, must remember that all the additional profits they thus secure, as compared to the Carlisle plan, are just so much to the disadvantage of the people.

Every dollar of profit to banking corporations on issuance of circulating notes must come out of the people who use that money, and it is that much of a burden on productive industry.

Holding too much Outside "Reserves" in New York.

There is one feature of the present banking system that is generally overlooked, and yet of more importance than gentlemen usually suppose.  I refer to the provisions of the law favoring reserve cities, and especially New York.  Banks in other cities are allowed to keep part of their reserves in New York on deposit, subject to check, and yet count it in their legal reserves.  This results in vast accumulations of outside money in New York, and tempts the banks in that city to loan a large part of it at any rate of interest they can get.  This increasing of the supply in New York tending at the same time to decrease it elsewhere makes it impossible to obtain money in other places at such low rates as in New York.

On the evidence of more than one banker before the Committee on Banking and Currency recently it was shown that interest for the last year on call loans and short notice loans has been from 1 to 1½ per cent per annum.  How can business men and industries in other parts of the country, where they must pay from four to eight times as much for money, compete successfully with business in New York ?

This special favoritism for New York in the law ought, in fair play, to be repealed.  It would result in a wider and better diffusion of whatever volume of currency may exist.

Banking is Sufficiently Profitable Without Issue Privileges.

Mr. Chairman, remembering what great advantages the associate banks in the money centers have already, and how little they have in common with banking in the interior and on the frontier, I hold that we can not, for these reasons, follow their ideas and advice on financial matters, even if their desire for selfish advantage were not to be considered.  And I would say, too, that the business of banking independent of issuing notes for circulation is already sufficiently profitable, and especially in New York, from which city so much financial wisdom has been poured out upon Congress from time to time for many years.

Let me introduce the testimony of Mr. George G. Williams, president of the Chemical National Bank, New York, one of the greatest banks in the country (page 303 and 308 of Hearings, Dec. 15, 1894):

Mr. Warner.  So that the capital of your bank now represents how many millions of dollars ?

Mr. Williams.  Our capital is $300,000 and our surplus is about $7,000,000.

Mr. Warner.  Your stock is worth about $1,300 a share ?

Mr. Williams.  Yes sir;  it sells for that.  It sells for more than it is worth.

Mr. Warner.  Forty-three times as much as its par.  What is the amount of your bond deposit ?

Mr. Williams.  The Chemical Bank has never taken out any circulation whatever.  Our bond deposit is $50,000;  but we have never circulated any notes.

Mr. Warner.  What is the reason, may I ask, that you have not taken out circulation ?

Mr. Williams.  We were under the State-bank system, and issued circulating notes up to the breaking out of the war, and at that time we had about $300,000 of notes in circulation, and we redeemed every one of them in gold --and we did not care, as a matter of pride, and a little profit in it, too;  but we did not care, as a matter of pride, to issue notes which could not be redeemed in gold.

---[bankbook-entry credit (Ledger Credit Page Entry Money) functions the same as printed notes]

The Chairman.  Mr. Williams, some members of the committee desire to understand exactly the condition of your bank.  What did you state the capital was ?

Mr. Williams.  Three hundred thousand dollars.

The Chairman.  And the surplus ?

Mr. Williams.  The surplus and undivided profits are about $7,000,000.  The surplus is $6,000,000 and the undivided profit a little over a million dollars, making a little over $7,000,000 of surplus and undivided profits.

The Chairman.  And how much deposits ?

Mr. Williams.  Thirty million dollars.

The Chairman.  What dividends do you pay per annum on your stock ?

Mr. Williams.  We pay now 150 per cent per annum.

The Chairman.  You stated the dividend last year was 150 per cent.

Mr. Williams.  Yes, sir.

The Chairman.  What were the undivided profits of that year ?

Mr. Williams.  Well, I have not it in mind;  but owing to the panic our profits last year were not as large as usual.  Usually we expect to add to our surplus 100 per cent besides the dividend we pay of 150 per cent.

The Chairman.  That is $300,000 a year ?

Mr. Williams.  Yes, sir.

The Chairman.  And a dividend of 150 per cent besides ?

Mr. Williams.  Yes, sir.

We see, then, that without circulation banking is sufficiently profitable.  Here a great bank of New York is testifying that its stock is selling at 4,200 per cent above par, and we see that in a few years, on a capital of $300,000, besides paying enormous amounts in dividends, it has accumulated a surplus of about twenty-four times its capital.  And this bank does not take out circulating notes.  How long will it take 4,000 to 6,000 banks like this to eat up the wealth of America ?

Brief Inventory of Carlisle Plan.

We have seen how fast even the present system of banks is devouring the substance of the people.  Let us make no further concessions of any kind.  The measure before us, however, together with the substitute that the committee propose to offer, are already practically dead.  Sibley's appeal, Tom Johnson's thrusts, and Bland's exposé --the work of these honorable gentlemen to-day has been too much for the survival of the bill under discussion.

Let us, however, make a brief inventory: Democratic doctrine is not in it.  The people's interests are endangered by it.  Equity of payment is endangered by it.  Party exigencies are against it.  Drainage of gold is not stopped by it.  Cancellation of greenbacks (the desire of banks) is not compulsory in it.  Locking up of greenbacks is made certain by it.  Rights of depositors are endangered by it.  The needful supply of legal tenders is taken from the people by it.  Government receivability of national-bank notes is retained in it.  This receivability of State-bank notes is not in it.  Double jurisdiction over note issues is found in it.  Two kinds of money are added to our present complexity by it.  Power of banks over prices, profits, and prosperity is in it.  It threatens first undue expansion; then final collapse.  It makes no provision for free coinage or true currency reform.

Let us hope that it is dead, and that all other plans for the extension of power over our currency shall die with it.

The Coinage Committee Quorum Broken by the Gold Power.

Although our Committee on Coinage was organized with so small a margin and majority in favor of free coinage, only 1 majority, and that 1 doubtful, and the money power has been able thereby to prevent the free-coinage men on our committee from securing a quorum with which to present a free-coinage measure to this House, yet we believe the country is with us for free coinage, and even a majority of this House, if we can get the bank and gold schemes out of the way.  The money power do not hesitate to hold their portion of our committee absent to prevent silver legislation.  We claim the country ought to know this fact.

Money and Price -- As one Goes up the Other Comes Down.

The plainest possible terms would seem most necessary to simplify the money question, although in using some of them in application to money I will meet prejudices and be misunderstood by some and misconstrued by others.  I refer especially to the word cheapness when applied to money and the dollars or units of money.  It is difficult, owing to long-standing prejudices, fostered purposely by the self-ordained priesthood of the money dealers, for people to understand that money derives its value through its power and rate of exchange for other goods, and so its value is in its exchangeability for other things on the same general principle that wheat, shoes, cloth, or anything else has value, and so money value is relative to its supply and may be cheap or dear in the same sense that other things are cheap or dear, and so again it measures all other property on the same general principle that the general range of prices on other things measures the value of money.

There is this peculiarity, however, regarding money.  that it is a universal solvent for all other things, and is, therefore, in universal demand, while other things are only partially so, hence we find the value of money is almost wholly regulated by its supply, for its demand is universal, while other things are regulated or modified in value by both supply and demand.  Hence again we find that the volume or supply is the chiefest element in regulating value of money since the demand is universal, while both supply and demand must be equally and constantly considered in estimating the value of other single kinds of property, and owing to the variations in supply or demand for special kinds or lines of goods we must take the general range of prices on the staples or more generally used articles for a basis on which to test and discover the value of monetary units such as dollars.

The value of dollars or monetary units will be found remaining constant or uniform, therefore, if we find the general range of prices are constant;  that is, prices neither going up or down.  This should be the condition to maintain --by Congress if we would maintain equity-- uniformity of general prices which shows with unerring certainty uniformity or constancy in the value of money.

If, however, money becomes dear or high, then the general range of prices becomes lower or cheaper, but if money becomes plentiful and cheap, then prices, moving always in the opposite direction, become higher.  So, then, we must conclude from the very nature of the case that the general range of prices of commodities measures the value of money as certainly and on the same principle that money measures the values or prices of commodities.  One is the standard of the other, and the movement of one is always in exact but reverse movement of the other, so that as one goes up the other always goes down.

Money and Property Prices act as a Lever.

To illustrate this reverse action of depreciating or appreciating money on prices I have called into play the action of a lever as an illustration with money on one end, property to be priced or valued in money on the other, and the fulcrum between representing constancy and stability.  There ought to be maintained a level or equilibrium between money on one end of the lever and price on the other.

One thing is certain, however, that if one end, say the money end, of the lever goes up the property end or price must go down, and vice versa.  If there is variation, however, in either end you can certainly know that the other end is moving in the opposite direction.  As dollars go up --are appreciated--their purchasing power increased-- property goes down, prices go down, and profits are lost.

On the other hand, if money comes down, depreciates, becomes cheaper, it is equally certain that the general range of prices on property appreciates, increases, becomes higher.

So money and property are pitted against each other.  Money on one end of the lever, and price, or valuation of property, on the other.  It is the work and duty of the people to produce property, but of the Government to produce or furnish money in proper and sufficient volume to maintain prices for the people, to keep their property at a true level.

Bankers want to appreciate their end of the lever --that is, the money end.  The people must remember that as they are the workers and producers and holders of property they are all on the property and price end of the lever, and their interests suffer, their prices go down, and values shrink, and profits to them are destroyed if they allow the money dealers to manipulate the Government and secure a lifting of their end of the lever, increasing the purchasing power of money.

Interests and Methods of Money Dealers Antagonistic to Productive Enterprise.

From this clear and exact illustration of the relation of money to price we desire also to expose another fallacy and false phrase of the monetary syndicate.  They are forever prating about their interests being identical with the industrial interests.  They are not, but are exactly opposite to the interests of the producing classes when they appreciate money, for to appreciate or raise the purchasing power of money is to depreciate all other property by lowering prices, and this destroys also the profits that equitably belong to the producing classes.  They thus pit themselves against the people.

Another assumption of theirs, equally false, is that they represent the business interests of the country.  They do not.  The property and producing side of the lever is the side of business and industry, and the Government alone should regulate the other end of the lever, and that in the direction of supplying money for circulation and keeping volume, and therefore prices, both at a proper level and protect the business and the debtor classes against ruinous appreciation of money.

To turn over to bankers the privilege of supplying the money of circulation and controlling to any degree its volume, the privilege of changing up or down, as may suit their interests, the money end of the lever, and so holding power over the prices, profits, property, and prosperity of all the people, is to give them the power that belongs to sovereign government alone.

With this power to supply the currency and control its volume they can devour the surplus and encroach rapidly upon the wealth already held by the people, as they have been so rapidly doing for twenty-five years.  They prate about elasticity of bank currency;  but it is contraction and expansion, sudden and without warning, and in the interests of the banks, who work the india-rubber scheme, and always to the disadvantage of the rest of the people, and to the ruin of one generation of debtors after another.

They talk about maintaining public confidence;  but instead of playing a fair game they demand as a condition that they shall hold all the trump cards and thus keep the people on the other side entirely at their mercy.  They talk about honest and best dollars;  by which they mean the highest purchasing-power dollars, which kind is a cheat and a robbery of all who labor or sell anything at the ruinously low prices necessary to obtain the high gold-standard dollars.  They are thus blocking the wheels of industry and forcing debtors to bankruptcy or crime.

What chance have the people if banks control the volume of money ?

The Producing Classes have lost $10,000,000,000 or more by the Appreciation of Money.

It is safe to say that if the same tact and energy had been used during the last twenty-five years by Congress to appreciate property and the prices, that is to say, the general range of prices thereon, that has been used to appreciate money and advance the interests and profits of the money dealers, the producing classes in this country would have been worth at least ten thousand million dollars more than they are to-day.  A truer estimate would be that their wealth and holdings would be twenty thousand millions more than it is today.  The agricultural classes alone would hold ten thousand million dollars more wealth than now.

But this would have required an appreciation or at least the maintenance of price and property values and a protection of profits instead of an appreciation of money and legislation constantly in the direction of securing greater advantages and profits to the creditor classes.  This at least would have required a protection against depreciation of prices.  For, let it never be forgotten, that the appreciation of either prices or money is the depreciation of the other --as money goes up prices come down, and as prices go up money comes down.  The law is invariable, and the appreciation or depreciation of either prices or dollars is dependent on the relative volume of currency in circulation.

The Dishonest Dollar.

Let us be plain about the matter and say what all competent judges know, but what few dare to say, that to have better prices we must have cheaper money, cheaper dollars, dollars of less purchasing power.

But is not a cheaper dollar a dishonest dollar ?

No, not necessarily.  There is no dishonesty in keeping the country well supplied with reasonably cheap dollars.  The very fact that there will be a good supply of dollars in circulation is a guaranty that they will be reasonably cheap and that prices consequently will be reasonably good.

Dollars that are not reasonably cheap, making prices reasonably good, are dishonest or unfair dollars, unfair and unjust to nineteen-twentieths of our people who are dependent upon exchanging products, property or labor, for dollars, and the whole question of honesty is involved in the question of rates or prices at which they must exchange what they have to obtain dollars.

High value or appreciated dollars produce low and depreciated prices on all other forms of property and labor, and this robs producers, and especially robs those who have debts and fixed amounts and taxes to pay.

Dollars, then, have been dishonest ever since they began to appreciate under the policies of the money dealers, who have controlled financial legislation for twenty-five years.

The honesty of dollars, therefore, must be determined by looking at the general range of prices.  Are prices too low ?  Then money is too high and dishonest.  Are prices good and running at a fair level and profitable to producers ?  Then the dollars in circulation are honest and reasonably cheap in relation to prices or exchange for property.  When prices are honest and fair to the debtors and producers, then money is honest and fair.

Are prices abnormally high so that you, in the old phrase, get a hat full of dollars for a pair of boots, or barrel of pork, or a few bushels of wheat, then money or dollars must be unreasonably cheap, and therefore dishonest again and unfair toward the creditor.

The whole question of the honesty of the dollars in general circulation is dependent upon the question of general prices, for one is always a true index of the other.  To look at the material of which the dollars are composed with the idea that the value of the material in the dollar as a commodity is the essential basis upon which to measure the value or honesty of the dollar for monetary uses is a childish delusion and results from ignorance of the nature and function of money, which is an instrument of exchange and should be a constant support of prices and measure of values in the payment of debt.

The Maintenance of Honest Prices shows Honest Dollars.

Look to prices, then, to estimate the value and honesty of dollars.  Is the farmer getting $1.25 per bushel for his wheat and 16 cents per pound for his cotton as examples of the general range of prices necessarily consequent upon the volume of currency circulating and regulating the prices and payment of debts as the nation came out the great struggle for the maintenance of its existence ?  Then these are honest prices brought about, not by selfish schemes of farmers, manufacturers, and producers generally, but by the patriotic action and highest and best motives of the truest friends of the people and their Government.  Remember that the whole country had adjusted its business, both its debits and credits and its varied industries and commercial conduct, to the volume of currency and range of prices then existing.  This, the established volume of currency and range of rices following the war, was honest money and honest prices.  These two always go together.

Equity demanded the maintenance of these prices, and maintenance of prices demanded the maintenance of a proper volume of currency.  This currency, to maintain these general post bellum prices, as from 1865 to 1868, should have expanded in volume to correspond with the expansion and extension of the volume of business and population.  If this had been done prices would have been upheld and the equities of contract between debtors and creditors would have been maintained.  This maintenance of equity and protection of the interests and prices of the producing and true business world should have been vigilantly and thoroughly done by the Government.  This is the true province of government.

But contraction and demonetization policies have been followed instead, and so now the farmer to pay a hundred-dollar debt or a hundred dollars in taxes, must produce and sell 200 bushels of wheat to pay the debt instead of 80 or 100 bushels.  This more than doubles the burden of payment upon him.  The same great loss comes upon all producers in their efforts to obtain dollars in the general fall of prices consequent upon the raise in the purchasing power of the dollars.

But the creditor gains what the producer loses.  He gets 200 bushels or the value of it where the value of 80 bushels only was due him.  The general fall of prices, which means the appreciation of money, has caused a loss of about one-half on price and a doubling of the value of money to the very great advantage of the creditor classes.  This wrong upon the people is greater than generally supposed.  That it has not been forced upon them all at once but has been by gradual process of appreciating the money scattering the losses and disturbances over a period of twenty-five years has not in any manner lessened the injustice of it, but it has been borne by the people with a degree of patience and submission that could not have been otherwise obtained.

I am not sure but this generation would be better off if the change had come all at once instead of by slow gradations.  The boy who undertook to shorten his dog's tail by cutting off an inch at a time may have secured one point by getting his dog hardened to the process;  but I am not sure but what the dog would have been as well off if the tail had been all cut off at once.

Losses on National Debt by Appreciation of Money.

The great losses to the people on their general business for the last twenty-five years can be perhaps illustrated by noticing the losses to the Government on the national debt by the same processes;  but we must remember that the national debt only represents about one-eighth to one-tenth the entire volume of the people's indebtedness upon which their losses have occurred.

Remembering that the people in general produce and sell commodities as a means to obtain the money necessary to pay debts, I call your attention to the following ascertained facts which, for present use, I derive chiefly from the speech of Senator Jones, in the United States Senate, October 23, 1893, page 267 of his published speeches:

United States bonds sold,1862-1868 nominal value, $2,019,975,700.  The Government received for these only $1,400,000,000.  The average rate received was 67 per cent of par value.  These were payable when due in lawful money, interest in coin.  The Government has paid back on principal $1,756,000,000;  there has been paid in interest on them $2,538,000,000;  paid in premiums on bonds bought $58,000,000;  total amount paid (three times the amount received) $4,352,000,000.

The value of money is its purchasing power, and this to maintain equity ought to maintain uniform prices.  The purchasing power received from bondholders in wheat was 1,007,000,000 bushels.  If equity had been maintained we ought to be able to pay the debt principal with the price of same amount of wheat, but by appreciation or increase of the purchasing power of the dollar lowering the prices of commodities we find we have paid on principal 1,986,000,000 bushels;  on interest, 2,974,000,000 bushels;  in premiums, 62,000,000 bushels;  total paid, 5,022,000,000 bushels.

This is paying five times as much in equity as originally received.  If estimated in cotton we would have paid 94,690,000 bales, whereas we received on the then cotton prices 14,184,000 bales, or less than one-sixth as much as has been paid back to them, and yet to pay the remainder to-day will require as much wheat or cotton as would have paid off the entire net amount received of them at the close of the war.  It is no sufficient reply to say that those were "war prices," for they were also "war values" of dollars, and both dollars and prices were the same to all, whether bondholders or bond payers.

Now, figured in the general range of prices on commodities, the results are substantially the same, as illustrated in the two great staples of wheat and cotton.  How much, then, have been the losses already accrued by increasing the value of dollars and lowering prices ?  Estimating that the interest paid doubles the amount of principal on payments so far made, the people have lost not less than $3,000,000,000 on the national debt, and they have lost not less than five times as much, or $15,000,000,000, on all other kinds of debts.  No other age or nation ever suifered such robbery.  Shall we, then, vote to allow these extortions to continue ?

Shall we, in presence of this grievous wrong,
In this supremest moment of all time,
Stand trembling, cowering, when with one bold stroke
These groaning millions might be ever free ?---
And that one stroke so just, so greatly good,
So level with the happiness of man
That all the angels will applaud the deed.

Mr. Hainer of Nebraska.  If the gentleman will pardon a further interruption, I desire to submit for his consideration, conceding his argument to be sound, that with an increased circulation we have a consequent and proportionately higher price;  with higher prices a consequent and proportionately greater prosperity, and that the Government has the power to increase this circulation by an issue of paper money in such quantities as Congress desires or deems conducive to the prosperity of the people;  then why place a limit on such issue ?  Why not have unlimited issues of paper money and thus usher in a millennium of prosperity ?

As I know my friend would not seriously propose a Utopian scheme, but wishes to be practical, will he not admit that paper money is simply and in the last analysis the obligation --debt-- of the Government, which must at some time be either paid or repudiated, and when, we authorize the issue of paper money we thereby mortgage the future revenues of the Government ?  The seeming prosperity attending the issue of even a limited amount is that of the mortgagor who has just made a loan, is spending the proceeds, and has not yet been called upon to pay.

Mr. Coffeen of Wyoming.  I am pleased to find such interest in my discussion of the currency question and do not object to the interruption of my friend from Nebraska.  The question submitted, briefly stated, is:  First.  Why not have unlimited issue of currency if expansion brings prosperity ?  Second.  Is not paper money issued by the Government in the form of debt which must be paid or repudiated ?  Third.  Is not the prosperity secured by better prices if occasioned by Government issue of currency notes like the prosperity of one spending borrowed money, which prosperity will be reversed when pay day comes ?

These are questions arising sometimes out of the failure to comprehend the true nature of money and the Government's relation to it.

As to the first, why not issue an unlimited amount of Government paper if more money brings more prosperity ?  A short yet incomplete answer would be by contrasting the Government's condition with that of a hungry or sick man and to say, If a man is hungry and needs more food, why not stuff him with an unlimited amount of food ?  The case is similar.  If a man is weak and emaciated for want of blood in sufficient quantity to revive him, why not furnish him an unlimited quantity of blood ?  A proper amount of food is useful and a proper amount of blood to circulate through the body is necessary to health and prosperity.

If prices are too low and people unable to pay their debts and make any profit on their labor and produce and workers are idle for want of employment and more money will cure the evil and raise prices and employ labor, then, some say why not issue too much money and give the patient an overdose of the remedy ?

Money is the Life-Blood of the Nation.

The need of a proper supply of money to circulate through the body politic, or the organized nation, is like the need of food or blood for the human body.  Money is an instrumentality to facilitate exchange among the people so necessary to their existence in civilized life, and also to maintain prices at an equitable standard so as to enable all the industrial interests and people of the nation a fair opportunity to calculate safely on the values or prices of their future crops, products, and manufactures in relation to all kinds of obligations, debts, profits, and employment of themselves and others, as well as the employment of their acquired property resources.

If prices are properly sustained, and this depends, as my friend, at least for the present, has admitted, on the proper amount of money in circulation, then prosperity can and will ensue in all commercial and manufacturing affairs.  Not only can all debtors get dollars in exchange at fair prices for their labor and products with which to pay debts and interests and taxes, but also all men, in whatever productive or manufacturing enterprises they may engage, can safely count on the profits that ought to obtain in the future if prices are maintained.  If prices and the money which sustain prices remain at a fair and equatable standard their investments in property and labor in general will be profitable.

But while there are debtors there are creditors.  While there are sellers of goods there are buyers.  While there are calculations for a reasonable profit there are calculations and a reliance against unreasonable profits and prices on the part of those whose forms of wealth and resource are fixed and, so to say, not productive of anything that would get a compensating benefit from higher prices.

Now, if I have made this sufficiently plain, my friend will at once see and agree with me that money value, and price or property value, which represent the two ends of a swinging lever, ought to be kept at a fair level, so that neither end of the lever goes so high as to sink the other into ruin and injustice.

The question of money volume is a question of justice, but so, too, is the question of prices.  I have already shown how property values swing against money values as on a lever.  The prosperity that we want is one where justice prevails and equity between the money dealers and property producers, or wealth producers, is maintained.

In the face of this idea of prosperity for the whole and all classes, founded upon justice to all, how can my friend insist that an unlimited issue of money would, by raising prices constantly higher when counted in that over-issue, be conducive to prosperity ?

The true function of money is to maintain equity as well as to facilitate exchange of commodities, and equity protests against too great expansion on the one hand as against too great contraction on the other.

Money to Maintain Equity as well as to Exchange Commodities.

We can destroy equity and the proper function of money, let my friend remember, as easily by contraction as by expansion.  It is as great a wrong for prices to fall too low as it is to raise them too high;  and, indeed, when you consider how many are interested on the property side and their needs in contrast with the few and the rich on the money side of the lever, if we depart from a proper level at all it ought to be by expanding the volume of money and raising the value of property and products instead of contracting the money and lowering the prices of all products and property.

Do you ask me what is the proper volume and the proper level between money and price ?  I have already gone over that subject, but will say in passing that the $20,000,000,000 of debts of our people, that on present low prices of property requires twice as much labor and products of labor to pay as it required in the period and conditions out of which these debts and renewals have arisen --that is, the period following the civil war, in which money was abundant-- demands of us, in the interest of equity and fair play, that we again double our money volume by fair yet sure gradations, so that prices shall again be restored to the old level from which they have been cast down by the schemes of contraction and demonetization.  By breaking own equity we have broken down prosperity.  If the volume of business transactions and exchanges requiring the use of and counting in money is four-fold what it was at the close of the war, and I believe it is fully that, then we need not two times but four times the volume of money we had in general circulation.

Currency is Essentially Transferable Debt.

On the second question --is not the paper money issued by the Government in the form of a debt?-- let me answer yes.  All currency is debt or in the nature of a certificate of indebtedness, and is carried or circulated or held by us as representing something sold or services rendered when it was received, for which property or service compensation is not yet made, but remains in suspense until we pass the currency or money to some other person for property or service that we receive from them.

When we buy some other person's property or service or pay it out to others for value received then we get pay for the services or property we parted with when we first received that money.  From the time we receive the money until we part with it, we carry it as an evidence of property sold or service rendered, and it is therefore and in this sense in the form and nature of a debt.  When it passes to another in exchange for his service or property the debt is transferred to him and is evidence in the case of money or currency that the society or the Government owes him so many dollars.  When he passes it or transfers it to the next one the debt is again transferred.  So we may say currency, money, all money is in the nature of transferable debt.  Money is transferable debt, and do not be startled if you find that all money, whether coin or paper is transferable debt.  The only exception is that when one takes a coin and uses the material in it as a commodity as in making something useful out of it besides money, then in that case he has accepted the material as pay for the debt, and the coin in consequence ceases to be money.

How Does the Government Pay its Notes ?

On the third question, when the Government issues even a limited amount of its own notes, will it not be like a mortgagor who borrows money to spend that must afterwards be paid ?  Yes, in some slight degree.  But the repayment by the Government is chiefly in receiving the notes circulating back again in taxes, customs, excises, an so on, in exchange for what the Government has done and is doing in behalf of its own people.  There is no mortgage about it, but there is an exchange of services, with the notes of the Government circulating in the intervening time, the Government redeeming its currency notes by receiving them back.

And still more, the note is being redeemed every day, when it passes among the people, being a legal tender and competent unit of account in all monetary transactions among the people.  But it is the duty of the Government to both issue an adequate supply of currency and by reissuing and making all of it legal tender keep it out in circulation.  The people need this currency, and, since they are in an organized form the Government also, it is practically the people providing themselves with a proper currency and agreeing that they will circulate it also among themselves.

Value is not Intrinsic in Anything.

Many, especially many advocates of bank interests, still cling to the idea that the money of ultimate redemption, as they call it, must have and does have intrinsic value.  This arises from a misunderstanding of the nature of value.  For anything to have value it must be exchangeable for something else of value with which it is compared.  If you say to me that any certain thing has value, you are giving me but one side of the comparison or equation.  I will reply by asking value in what or what value, and your answer will complete the equation or comparison.

Thus, if you say this horse is value, I ask value in what ?  You may say in cattle, and equal to three cattle, or you may say in dollars, and is equal to or valued at $100.  To say that a thing has value in itself or per se is an error, and it is as useless as to say that a number is equal or has equality without giving us the other term of the comparison.  If you say 15 is equal to 3 times 5 we understand it.  If you say a certain house is distant one mile, you should also give us the term of comparison by saying, for instance, one mile from the bridge.  So value of anything always implies comparison with some thing else outside of itself, and so value is by comparison or extrinsic.

Value is not intrinsic.

Qualities or properties of things are intrinsic, as brittleness for glass, malleability for gold, and so on, but value is not intrinsic.  It is founded on exchangeability for other things and on demand and supply, and is measured by its power in exchange for other things.

On this definition of value, which we shall find applies to dollars and all other denominations of money as well as to all that money can buy, we have thus tried to comprehend the truth or statement that value is extrinsic and not intrinsic in anything.

So, too, the value of the units or dollars of our current money is not intrinsic value, since value can not be intrinsic in anything but the value of a dollar, or the unit of any system of money is in its exchangeability, and measured by its purchasing or exchangeable power in commodities, and is constantly related to the quantity, whole number, volume, or aggregate supply of units or dollars in circulation.  Its purchasing power or value may be great or small --great if the volume or supply of them is small, and of small value if the volume is great relatively to the quantity of exchangeable things --commodities-- to be exchanged for them.

Money or the units of money have no intrinsic value but relative value only.  Money is not a natural thing nor the natural property or quality of anything, but is constituted or decreed by custom, convention, or law.

All money is the creation of the law.

If it existed otherwise than by law it could not be demonetized by law.  Those who talk about money existing otherwise than by force of law in any legalized and civilized nation are either knaves or they are ignorant of what constitutes money.

While on this work of exposing the fallacy in the theory of the money power that gold and silver money is money because of intrinsic value, on the testimony of Ricardo, as quoted by Senator Jones, and so ably commented upon by him, I wish to call attention to the point that has such an important bearing on the question of paper money to be issued elastically by the banks if this bill shall pass.  He points out clearly that uncovered paper money such as our bankers spit at with such terms as "irredeemable trash," "money founded on nothing," etc, will have "value as great by limiting its quantity as an equal denomination of coin or of bullion in that coin."

Ricardo does not stop with this statement.  He says:

On these principles it will be seen that it is not necessary that paper money should be payable in specie to secure its value.

He is demolishing, it would seem, all the pet sophisms of "intrinsic value money" and "coin redemption money" of the Wall street advocates at once and emphasizing what I have tried heretofore on this floor to point out to my fellow-members, that quantity of currency in circulation regulates and controls the value of money without regard to the material of which the money is composed, and also that redemption of one kind of a legal-tender dollar in coin or any other kind of a dollar is not necessary to maintain the value of money.  Note how Ricardo goes on to say that---

"it is only necessary that its (uncovered paper money) quantity be regulated according to the value of the metal which is declared to be the standard."

It must be an annoyance to the advocates of bank issues and gold standard and intrinsic value money theories to find that fundamental principles, historic examples, and the best authorities are constantly furnishing evidence against them.

Government Paper Money the Highest Achievement of Wisdom.

My position is that the regulation and control of the quantity of currency in circulation is of supreme importance, and that therefore it must not be turned over to banking corporations or any other private interests.  The Government alone must retain and constantly exercise control over the volume of all kinds of money permitted to circulate as money among the people so to maintain general prices and the equity of payment on all future obligations.

Since the coinage, if unlimited, either for one or both metals, is slightly automatic as to quantity and may vary with the production, the export, the import, and the consumption of these metals in the arts, and therefore the quantity may vary, to the ruin of prices and bankruptcy of debtors without some compensating balance, therefore I see in paper money the highest achievement of wisdom;  for by issuing it through the authority of Government, the aggregate volume of money in circulation can both be controlled and rendered adequate for the progressive march of industry and civilization.

The remonetization of silver has its chiefest benefits in breaking the monopoly of the Anglo-American gold conspiracy by increasing to some degree the volume of money so as to relieve price depression and the ruin of debtors.  We can thus double the volume of coin redemption money so as to better secure our redemption system of money from collapse so long as the Jewish trick and scheme of "coin redemption" shall be allowed foolishly by mankind.  We thus render ourselves, by free coinage of silver, more independent of gold exports and appreciations during the mad scramble of the nations in efforts to maintain the gold standard.

That it would cheapen money is possibly its first effect, and this would be curative or remedial, and would save the industrial world from further extortion and ruin at the hands of the money power that for many years has been appreciating money and rendering it so dear that ruin has been greater among all western nations than could have been wrought by invasion either of armed forces or Asiatic cholera.

A Proper American System of Money Necessary.

As to the effect of our legislation regarding silver on the other nations, let me say that we should keep in mind the effect of money legislation on our own country.  We must legislate for America, not Europe.  Senator Jones of Nevada has well said:

It is one of the inalienable rights of a free people to provide themselves with a sufficient and properly regulated money system, regardless of the systems prevailing in countries of less enlightenment, or in which the rights and interests of the people are subordinated to the cupidity of money lenders and privileged classes.

But, to say a brief word on effect of free coinage of silver by our nation upon other nations, I will state that it will cheapen gold and raise silver all over the world, and that almost instantly.  Relieving the undue strain that now exists on gold by injecting silver as fast as our mints could coin it into the metallic money of our country would at once show to Europe that we would no longer pursue a blind competition with them for gold.  It would at once make a new valuation of gold in relation to silver and all other commodities throughout Europe, and even in China and India.

If silver displaced gold in our coinage so much as to permit the flow of a single hundred millions of gold to Europe it would so far enlarge their supply and raise prices all through the countries where we now have to sell on prices ruinously low.  Silver, on the other hand, would rise to our mint price, $1.29 per ounce, in every market of Europe and the Orient.  I quote the Senator from Nevada again --page 395, speech of October, 1893:

I must here repeat that there is no ground whatever for supposing that in case of the remonetization of silver in this country all the silver of the world would be sent here.  As quickly as the telegraph could convey the news that the United States had fully remonetized silver, that metal would command $1.29 ounce in an every market in the world.  As I have said, there is no silver bullion in the markets of the world to exceed 25,000,000 ounces, if so much.  Such silver as may exist in any market would not need to come to the United States, because when men knew they could get $1.29 for it by sending it here they would not part with it for less.

We have a demonstration of this in the fact that when in 1890 there was some expectation that a free-coinage bill might become a law in this country, and silver rose in consequence to $1.29 an ounce, it rose to that price not in the American market alone, but in every market of the world that had any silver bullion for sale.

When it is said that the hoards of silver in India would come here to be exchanged for gold there is not the slightest foundation in reason for such a supposition.  Gold is not the money of the 280,000,000 people of India and it is impossible to conceive that it ever can be.  The remonetization of silver simply means that with silver freely admitted to the mints gold would fall in relation to silver.

Yet let me say that silver coinage alone is not sufficient for the protection of our people.  Metals are always subject, more or less, to go and come by export and import.  Paper money must be also issued and added to give adequate volume and steadiness of value to our currency, and its highest utility will be found when issued by the Government to supplement the volume of specie and used to maintain adequacy and uniformity of circulating volume.  If metallic money becomes relatively scarce by export or otherwise, let the deficiency be supplied by Government issues to prevent contraction of the aggregate volume of coin and paper in circulation and to keep up an increase of money to accord with the increase of population and business.

If by balances of trade or from other sources there should come too great an addition of coin to our currency so as to raise prices too high and do injustice to the creditor class of our people, then let the Government withdraw and cancel enough paper money or notes to keep the aggregate volume at a proper equilibrium.

This would be wisdom in financial legislation.
This would secure justice regarding debts.
This would maintain prices and profits.
This would insure prosperity.
This would protect the people.

But to secure these results we must recognize the right of the Government to issue Treasury notes and to make them full money or legal tender.

We must insist on the value of money always dependent on volume, being regulated by Congress, and Congress must represent the highest good of the people.  Congress shall have power to coin money and regulate the value thereof.

This is our constitutional power and duty, and we know that there is no way to regulate the value of money except by regulating the quantity or volume.  To give the power, "elasticity," of controlling the volume over to banking corporations is to betray our people.

Do Banking Corporations Stand Higher than Sovereign Government ?

From what sources have banks received a higher power or right of issue than is held by the Government itself ?

It is in vain for the bank syndicate to cry out against Government issues of paper money on the theory that the Government has insufficient power to issue and legalize paper money while banks have power to do it, or can obtain the power to do it by law.  What arrogance for them to assume that the Government can by law bestow upon the banks a right to issue money while not itself possessing the right !  What stupidity for them to teach that they are greater than the Government !  What ignorance or deception for them to insist that paper money issued by the Government is any more fiat money than what they would issue by fiat of law supplemented by the fiat of the banks !

We say again, there is no money in nature.  Money is an artifice of man and the creation of law.  Any money issued without the authority or decree or fiat of the sovereign Government is counterfeit and fraudulent, and the issuers of such money, whether of paper or coin, should be apprehended, and, if found guilty, should be punished accordingly.

In my speech on Money, Banks, and Debts of the World [Tuesday, June 5, 1894.], while the bill for the repeal of the tax on State-bank issues was pending, I endeavored to make this, the legal basis of money, clear.  But to what I then said I shall add additional authorities on this occasion so as to clear away all doubts on the matter.

Money Exists by Law and not by Nature.

Henry Cernuschi was perhaps the ablest scholar that appeared before the monetary commission of our own country in 1877.  He defines money and speaks of it as follows:

I will give you my definition of money:  Money is a value created by law to be a scale of valuation and a valid tender for payments.

Certainly everyone understands that, as regards paper money, the value is created by law;  but it is, perhaps, not easy for everyone to admit that, with regard to metallic money also, the value is created by law.  It is however, the fact.  If you suppose that gold is not money, is not legal tender --if you suppose that silver is not money, is not legal tender-- the value of gold and the value of silver is lost.

This fact that money is a value created by law is one of great importance, and I can cite you the highest authorities in proof that what I say is true.

When this question was put to the witness---

Q.  Supposing the old and silver metals to have no other use than as money, would they then maintain the same value that they now maintain as money ?

He answered---

A.  There would be a diminution of their purchasing power, because the purchasing power of money is in direct proportion to the volume of money existing.  If all gold and silver are used solely as money, all the ornaments and all the jewelry will be melted and coined, and the volume of money will be increased.  It will be exactly as if a new mine of money had been opened.  And the volume of circulating money being made larger than before, there will be a corresponding diminution in the purchasing power of every metallic dollar.

Again he says:

Mr. Chairman, the doctrine that money is a value created by law was promulgated twenty-two centuries ago.  It was advanced by Aristole, the great philosopher --is practical and so positive that I would dare call him an American philosopher.  I quote from his writings:

"Money (nomisma in Greek) by itself is but a frivolity, a futility, a trifle, and has value only by law (nomos in Greek), and not by nature, so that a change of convention between those who use it is sufficient to deprive it of all its value and power to satisfy all our wants. (Politica.)"

In virtue of a voluntary convention, money (nomisma) has become the medium of exchange.  We say "nomisma," because it is not so by nature, but by law "nomos," and because it is in our power to change it and to render it useless. (Ethica.)

There is great weight attached to what that great economic writer Henry Dunning MacLeod may say, and rightfully so, when he is not a special pleader, as in his recent article against silver.  In his Principles of Economic Philosophy, volume 2, page 346, I find that, after approving some things John Law has said, he quotes this from Law:  "Any goods that have the qualities necessary in money (by which he means the commodity value of the thing) may be made money equal to their value."

"In this sentence," Macleod goes on to say, as I have quoted him already while speaking on the nature of money, "is concentrated the whole essence of that eternal delusion which we designate Lawism.  It is indeed nothing but the stupendous fallacy that money represents commodities.  No man who does not thoroughly understand the great fundamental principle established by Turgot and others, that money does not represent commodities, can ever have sound ideas on this subject.  Money does not represent commodities at all, but only debt or services due which have not yet received their equivalent in commodities."

Sovereign Governments, not Banks, should Issue all Money.

On the general proposition of permitting banking corporations to issue currency and expand and contract volume and the prices of all things that money measures or prices or values at their own option, I desire to support my general arguments against it by referring to some great names and authorities under the general heading---

Should Banks be Allowed to Issue Currency ?

The money power are doing their utmost to establish the claim by constant assertion --for they have no argument in the case-- that the Government should, as they call it, "go out of the business of banking."  In this they are begging the question by a misuse of terms, for issuance of circulating notes is no proper function or duty of banks any more than coining money is the duty of banks instead of the National Government.

The legitimate business of banking is to deal in exchange, loans, and deposits.

The Government should indeed keep out of this, but the legitimate and constitutional duty of the National Government under our Constitution is to coin and issue all money needed for circulation and regulate its value by the only method possible, which is to regulate and control its volume.

Daniel Webster, who has been so greatly eulogized within the last few days in this House, on the occasion of unveiling his statue, said of paper-money circulation:

"Its regulation naturally belongs to the hands which hold the power over coinage.  This is an admitted maxim by all writers."
---[Daniel Webster said this while speaking in opposition to the Independent Treasury and on behalf of the Bank of the United States and the paper money issued by that bank;  attorney Daniel Webster, while Senator, was on retainer to the Bank of the United States]

The plea of the advocates of bank issues instead of Government issues of paper money rests largely upon these points, which they say are essential in a sound currency and can be furnished by the banks---

First.  Security of final redemption.

Second.  Convertibility.

Third.  Elasticity.

On this third point I have already shown that elasticity such as they mean, which disturbs the volume, disturbs prices and profits and these must not be under private control.

The first two rest on the delusion that it is in money matters safer to have representatives of money in circulation --credit substitutes, as they call them-- than to have legal-tender money itself in circulation.

Of course the idea that substitutes for legal-tender money are better than the money itself is a snare and a delusion.  The whole theory of compulsory coin redemption of money is wrong to those who will take the trouble to investigate.

The old economists did not have the benefit of full light and liberty on a question of a properly discovered system of legal tender paper money issued and controlled by the Government, independent of the coming or going of gold, nor did all the fathers of our own Republic prior to the issuance of the greenback properly discern the idea that money is wholly a creature of law.  But they had no doubt as to the effect of volume on prices, and therefore generally took ground against bank issuance.

General Warner [Chairman of the National Executive Silver Committee], from whom I have already quoted, in his testimony and statements before the committee says, on page 245:

Acting upon this principle, the business of banking and the creation of money are so distinct and separate in their nature that they can not be safely blended.

I say that all enlightened nations have abandoned the practice of turning over the issue and regulation of currency to an indefinite number of banks.  It was stated yesterday before the committee that the three things necessary to a sound currency were, first, security;  second, convertibility as a means of regulation;  and third, elasticity.  Now, I wish to refer to these three principles briefly in their order.  First, security.  One of the earliest Secretaries of the Treasury, Crawford, I think, and I have not had time to look that up said that the security of final payment of notes was no such regulation of quantity as would secure stability in the value of the currency.  That saying was quite extensively quoted in the British discussions on that question as being a clear statement of a perfectly sound doctrine.

---[Secretary William Crawford had been, throughout his political life, a warm friend and advocate of the Bank of the United States, and the privately-owned central bank concept, and the supporter of national paper currency issued by such central bank.]

Mr. Cobb of Alabama.  Please state that over again.

Mr. Warner.  That the security of final payment of notes, or their redemption, is no such regulation of the quantity of money as will insure stability of value, and the reason for that is very apparent.  The United States might now issue $500,000,000 of 5 per cent bonds and if it would allow banks to take these bonds at par, is there any doubt but that the national banks would issue $500,000,000 of currency, or as much as they are allowed law to issue ?  The ultimate payment of the notes would be amply secured --there would be no question about that, none whatever-- but the quantity of the currency would be so increased that its value would become immediately depreciated.

At first the depreciation would extend not only to the paper part but to the coin as well, involving the entire currency of the country as compared with the currency of other countries;  hence the principle of ultimate security was abandoned sixty years ago as a principle upon which the regulation of the currency could be safely founded.  If security of note circulation is a safe principle, then security by a pledge of land ought to be as good as a pledge of bonds.  John Law said:  "Any goods that have the qualities necessary in money may be made money equal to their value."

Mirabeau said of the French assignats:  "They represent real property, the most secure of all possessions, the land on which we tread."  The fundamental error in this principle lies in the attempt to hold a thing as property and at the same time to coin it into money.  At bottom the principle of basing the currency on bonds is just as vicious as basing it on land.  There is no limit to the amount of bonds that may be issued any more than for the land that may be pledged, nor as much;  but the principle itself is wrong for the reason that security of final payment affords no proper regulation of quantity upon which the value of each unit depends.

Ricardo, in his evidence before the secret committee of the House of Commons in 1819, says:

"Plans for an improved system of currency are frequently laid before the public which rest entirely upon this fallacy.  The exclusive object of these systems is to obtain for the paper currency to be issued under them a greater degree of security than that which is supposed to attach at present to the notes of the Bank of England.  This end the authors of these schemes generally propose to accomplish by contrivances which they deem to be extremely ingenious, but which always resolve themselves into the simple plan of making property of some kind or other the basis of the circulation.  Sometimes the plan suggested proposes to issue a paper currency against the security of land, sometimes against the security of the public debt, and sometimes against merchandise in the docks;  but, having provided for the security of the notes, the plan generally terminates at this point:  the projector apparently conceiving that he has satisfied all the desiderata of a good paper currency, although he has introduced no specific measure for regulating the amount of that currency and maintaining its value relatively to the currencies of the other countries of the world."

The "Scare Word" of "Fiat Money."

From what source have banks ever, in this country, derived the privilege of issuing notes to circulate as currency ?  Always and only by the grant or law of the colony, State, or nation in which such banks exist.  Will anyone, then, state on this floor that foolish and indefensible doctrine that a government can grant a power to banking corporations that it can not maintain and exercise itself ?

To state the question plainly is to expose the fallacy of our opponents;  for Congress can not authorize any corporation or agent to do what it can not properly and constitutionally do for itself.  It is now generally seen and conceded, and no member on this floor will deny, that money can not be coined or issued or otherwise sufficiently certified for general circulation without the authority of law, and the right and force of money as such, whatever it may be, are legal rights --not natural.

In short, money is the creature of law.  All genuine money, whether coin or paper, is in this sense fiat money.

The term "fiat money" is another scare word or "bogy man" with which the cunning bank syndicate would scare people out of the right to exercise their own authority to issue legal-tender notes.  Bank notes can not and do not circulate in this country except by the fiat of law.  They are the joint creation or fiat of the banks and the Government.

Banks versus Greenbacks.

In my speech before this House on money, banks, and debts of the world, when the question of repeal of the tax on State-bank circulation was before Congress, I gave a, strong list of noted authorities to establish the quantitative theory of money value ---I need not repeat the quotations here--- but a few words on the application of this elemental and universally accepted monetary truth to the question now before us.

All the propositions coming from this Committee on Banking and Currency and all advocated by those anxious to befriend the money and bank power in this country, as far as I know, and especially the Carlisle plan, and the Baltimore plan, provide for banks to have control over the issuance of notes to circulate as money and thus to control the volume of money in circulation.

To give this power to the banks is to turn over to them the power over prices an the prosperity of the people.  Why should Congress abdicate its rights and turn away from its responsibilities to protect the people from the ruinous aggressions of the money power ?  Has Shylock in these modern days become a saint, that he should receive greater power and service than ever before ?

Have gentlemen on this floor lost view of the great injustice and irreparable damage they do to the people who sent them here when they propose to turn over to the banks the control of all prices, profits, and through these ultimately all property and wealth of our unsuspecting population ?

Surely no Congressman can be ignorant at this stage of the discussion that all of these propositions look to the denial to the Government of the right to provide and maintain in circulation an adequate supply of money "and regulate the value thereof."  Shall we surrender the constitutional duty and power of Congress to banking corporations by vote of the Democracy ?

In the corrupted currents of this world
Offense's guilded hand may shove by justice;
And oft 'tis seen the wicked prize itself
Buys out the law.

But Congress must see to it that Shakespeare's cutting analysis of the corruptions of the courts have no fitting application in an American Congress.  I can not imagine a more dangerous surrender of power than this would be that could ever come in times of peace to the Congress of the United States---

When all the blandishments of life are gone,
The coward sneaks to death, the brave live on.

Mr. Chairman, I could never believe that the freely chosen representatives of 70,000,000 Americans could be induced to so far betray their people, if I had not on a former occasion witnessed the confusion and cowardice of so many Representatives who yielded to the threats and clamors and blandishments of the gold and bond conspiracy when the people stood for, and still ask for, the restoration of silver as a standard money.

The Parity Fraud and the Greenback.

The so-called Sherman silver-purchase bill, enacted as a compromise measure in the act of July 14, 1890, between the free-silver and gold-standard opponents, had in it a more vicious, far more vicious, measure than simply the purchase of four and one half million ounces of silver bullion per month.  I refer to that clause and provision of the law, which is the cunning statement of a doctrine or the catch phrase of a campaign speech rather than the enactment of a law, declaring it to be---

The established policy of the United States to maintain the two metals (gold and silver) on a parity with each other upon the present legal ratio (16 to 1) or such ratio as may be provided by law.

The free-silver men were permitted to believe that this admitted the doctrine that silver should henceforth have equal right before the governmental authorities with gold at the standard ratio of 16 to 1 until some other ratio should be established by law;  but Senator John Sherman, who was as deep in this scheme to subordinate silver to the gold standard in 1890, and is still in 1895, as he was in the demonetization scheme of 1873, seemed to have known just what interpretation the Harrison Administration would put upon that phrase, and so keeping "the two metals at a parity with each other upon the present legal ratio" has from that time to this been construed to require not an equality or parity between them on the 16-to-1 ratio, but a constant and determined subordination of one of the metals --silver-- to the other --gold-- on the theory that all other money, silver as well as paper, must be redeemable on demand instantly in gold;  as if gold alone was the only money of ultimate redemption.

Surely the eminent services that the eminent demonetizer has rendered the European gold mongers ought to entitle his portrait to a place in the innermost temples of the gold worshipers of Europe.

Surely the shylock, schuckling over the successful game and trick of gold redemption of all other money which they are playing upon the leading nations of the commercial world, while they play the elasticity scheme of contracting and clutching the gold always when most needed by the debtor world, can find abundant reasons for lauding the financial qualities of their greatest advocates in America.

Parity !  As played upon our people it is worse than the plague of fiery serpents upon ancient Israel in the wilderness.  And the lifting up of silver before the people, coined without limit, into good, bright, and honest dollars will have as great an effect instantaneously and psychologically to cure the gold plague of our day as did the lifting up of the brazen serpent to cure the plague of the ancient times.

But I have already sufficiently discussed the question of misconstruing the word parity.

Does anyone believe, after a careful and fair-minded investigation of that "parity" clause, that the two metals --not coins, but metals-- gold and silver, are kept at a parity or on an equality on the old ratio by such a subordination and non-coinage of silver ?  Does such conduct tend to keep up the price or value of silver ?  Does it not, on the other hand, cast silver down and greatly depreciate its use and value and destroy the very parity that they profess they desire to uphold ?

And today listen to the ominous sounds that come up to these halls from the tamed and untamed boasts (the bulls an bears) of Wall street declaring that the public credit is endangered;  that the gold in the Treasury is about to be carried away and the Government to be left without gold resources with which to keep up the redemption of United States notes and Treasury notes --aye, that even European money speculators are afraid we will, by this drainage of gold, be driven upon a silver basis.

Is there any member of this House who needs to be told that the policy and decision of our Treasury officials to keep silver in subordination to gold are the very means that subject our Treasury to a constant drainage of its gold reserves ?

Does not every member who is in any degree competent to legislate on this question know that if our Treasury officials would at once exercise, as our present laws allow, the option that European governmental officials, notably in France, constantly exercise, of paying all coin obligations in silver coin, and to such extent as best agrees with the needs and supplies of the Treasury, that this would at once protect the gold reserve and stop all runs upon our Treasury to obtain gold ?

The Purpose of the Money Power Regarding Treasury Gold.

What, then, is the meaning of this clamor from Wall street and the bond markets ?

It means that they wish to keep up the very condition of a gold redemption of greenbacks or some other form of money easily accessible to them, that permits the drainage of gold, at their option, from the Treasury.  But at the same time by trying to alarm the country generally they hope to secure financial legislation that secures to them these two points:

First.  To get United States bonds issued in quantities sufficient to provide them investments for idle money, money that declines to take any part in the risks and contingencies of our industries and property, which suffer in falling prices necessarily while the country is being driven upon the narrow and contracted gold standard.  And these bonds, they insist, must be exempt from taxation, with interest semi-annually or quarterly and payable in gold.

Second.  To get the non-interest-bearing legal-tender notes of the Government, so highly valuable to the people, retired, canceled, or locked up out of circulation, so as to provide more room for them to issue and loan their bank notes to the people, and so also to better control the volume of money in circulation for expansion or contraction at their option, thus making it elastic for them, and as their interests and profits may require.  Never yet have they proposed a currency elastic for the relief of any other class than themselves.

Greenbacks not the Cause of Financial Stringency.

I challenge any member on this floor or any man elsewhere to find any instance among intelligent business men and laborers anywhere in the country where they have ever shown lack of confidence in the monetary qualities and debt-paying power of the greenbacks.  The people everywhere know they are as reliable as the foundations of the Government itself.  They are the best money ever coined and issued to the people.

Then away with this sham cry against the legal-tender Government money.  It is because Government money is the best money that the bank syndicate clamors so boisterously for its retirement.  They want the best and full legal-tender money out of the way, so that from sheer necessity the people will have to use their inferior bobtail nonlegal-tender bank issues.

They are trying to play the old fox game on the Government and people to persuade them that it is far better for them to cut off their own legal-tender currency.

By his own avariciousness an old fox had lost his tail in a trap and feared he would, owing to this shortage, become the laughing stock of all the other foxes in the country.  So he resolved to try to induce them to have their tails cut off also.  At the next assembly of the foxes he made a speech on the unprofitableness of tails in general, on the greater advantages of promissory substitutes for tails, and the inconvenience of foxes' tails in particular, since they so greatly exhausted the resources of the central body while in circulation, and were often switched around so as to disturb the gold reserves.

Why Destroy the Greenback Currency ?

Again we ask, Why this sudden and impulsive haste to get rid of United States legal-tender notes ?  Whence arises the banker's animosity to them.  Have the common people, manufacturers or merchants, ever demanded their retirement ?  Have they ever failed to pay debts or to circulate at par for debt-paying purposes and exchange for commodities ?  Has anyone ever questioned their reliability to perform all the functions of money given to them by law ?

But we need not go far to find the reasons why the associated banks are against them.

First.  They are better money than any the banks can issue in competition with them.

Second.  They supply near $500,000,000 of money for circulation ($346,000,000 greenbacks and $152,000,000 of Treasury notes) to the people without interest cost, and the bankers can make no profit on their issue.

Third.  Their volume is beyond the option and power of the banks to contract and expand at their pleasure.  So to that extent illustrate a currency which, if issued in proper volume, would destroy the power of the banks to manipulate prices, profits, and progress of industry.

They rest on the law and credit of the Government without the mediation of a priesthood of Jewish bankers.  They are pure and perfect money to the extent of their volume and legal-tender qualities.  They are the non-interest-bearing form of national debt, and if issued in proper volume would destroy the burdens of bonded debt.

Mr. St. John, before the Committee on Banking and Currency, well said "that the underlying demand of the gentlemen who have been here to testify in behalf of any of these bills is that the greenbacks shall be retired.  That is basal in their demands.  Profit to the issuing banks is the first requisite of any creation of bank notes."

It may not be improper here to suggest that every one of these reasons why the bank-issuing fraternity dislike the greenback currency is also a strong reason why the people of our country should hold to them and resist the selfish demands of the banks regarding them.

Why should banks decry the credit of the little non-interest-bearing bonds in shape of greenbacks, which the people need even in greater volume in circulation, resting, as they do, on the law and decree of the Government, while at the same time they have used larger and interest-bearing bonds, resting on the same law and fiat of the Government, as an all-sufficient basis of security for their own national-bank issues ?

Why do they still decry greenback form of money, while they still use it with universal approval among themselves as bank reserves and perfect redemption of their own note issues ?

That want of parity does not interfere with international trade, and that paper legal-tender money will stay at home better than metallic money, and yet be no interference to our foreign trade, while maintaining prices at home, I quote again Senator Jones, and through him Professor Cairnes and John Stuart Mill:

With a national money --a money which would not be sent out of the country-- there would be no great rise or fall of prices, and no great changes in the volume of money.  All the money would remain in the country, for the use of our own people, and all differences in exchange would then be settled (as they should be settled) by commodities.

It would then be as profitable to meet balances of trade with commodities as with money, because our money would in foreign countries be mere merchandise, which, I assert, is as it should be.  The money supply of our country should not be continually oscillating between a feast and a famine, alternately raising hopes and dashing them to the ground.

Want of Parity no Obstacle to Foreign Trade.

The absence of a parity between the moneys of nations does not affect their foreign trade, as some would have us believe.  I challenge any gold-standard Senator to point to an authority of repute on political economy who anywhere pretends to assert that any nation having money other than gold is, or can be, injuriously affected in its business or other relations by any variance in what is called the parity of moneys.  The money of this country, whether gold, silver, or paper, will always command --will always purchase--upon equitable terms, the money of any other country with which we have commercial relations, whether those relations be directly with itself or through other countries.

One of the most eminent of economists, Prof. J.E. Cairnes, of the University College, London, though an eminent advocate of the gold standard, in his Leading Principles of Political Economy, says:
"It appears to me that the influence attributed by many able writers in the United States to the depreciation of the paper currency, as regards its effects on the foreign trade of the country, is, in a great degree, purely imaginary.  An advance in the scale of prices, measured in gold, in a country, if not shared by other countries, will at once affect its foreign trade, giving an impulse to importations, and checking the exportation of all commodities other than gold.

"A similar effect is very generally attributed by American writers to the action on prices of the greenback inconvertible currency.  But it may be easily shown that this is a complete illusion.  Foreigners do not send their products to the United States to take greenbacks in exchange.  The return which they look for is either gold or the commodities of the country;  and if these have risen in price in proportion as the paper money has been depreciated, how should the advance in prices constitute an inducement for them to send their goods thither ?  The nominal gain in greenbacks on the importation is exactly balanced by the nominal loss when those greenbacks come to be converted into gold or commodities.  The gain may, in particular cases, exceed the loss, but, if it does, the loss will also, in other cases, exceed the gain.  On the whole, and on an average, they can not but be the equivalents of each other."

I find this point touched upon also by an American writer whom I regard as one of the ablest contributors to the literature of political economy to be found in this or any other country.  I allude to Mr. John P. Young, the managing editor of the San Francisco Chronicle.  In a luminous article on bimetallism in the issue of that journal for August 3, last [1893], Mr. Young says:
"But the suggestion that this country might have a sole silver currency is the bogie that frightens many who know little or nothing of the subject.  To have a sole silver currency in their eyes means unparalleled disaster.  Such people completely ignore the fact that during the period that we had a sole gold currency no one thought that the country was threatened with ruin because the dearer silver was not coined.  Such as gave the subject a thought at all and had any real knowledge of the difficulty desired that the mistake of undervaluing silver might be corrected, but they would have judged a man a fit candidate for the lunatic asylum had he asserted that disaster would certainly follow the free coinage of gold because it was cheaper than silver. * * * If a nation has resources and a people capable of developing them, it will increase its wealth no matter what sort of money it employs to circulate values, provided the standard of values is not tampered with."

Between 1860 and 1880 the precious metals, silver and gold, were not used to circulate values in the United States.  Our only currency was the greenback --except in California.  There was no demand for gold except that artificially created by promising to pay the interest on bonds in money of that metal, yet during the period in question, in spite of a devastating war during which production was interrupted and vast quantities of property destroyed, the wealth of the United States increased from $16,160,000,000 to $43,642,000,000, or nearly threefold in twenty years.  If the theory of those who make a fetich of gold were sound this could never have happened.  Nor while we were increasing our wealth at home did our foreign trade suffer.  That went on precisely as described by John Stuart Mill in his chapter "On the Foreign Exchanges."  After supplying an illustration, Mill remarked:
"It thus appears that a depreciation of the currency does not affect the foreign trade of the country.  This is carried on precisely as if the currency maintained its value. * * * If the currency is depreciated 10, 15, or 20 per cent, then in whatever way the real exchange arising from the variation of international debts and credits may differ the quoted exchange will always vary 10, 15, or 20 per cent from it.  However high this nominal premium may be it has no tendency to send gold out of the country for the purpose of drawing a bill against it and profiting by the premium, because the gold so sent must be procured, not from the banks at par, as in the case of a convertible currency, but in the market at an advance of price equal to the premium."

A currency issued by the Government, in adequate volume and made full legal tender, circulating among a people, is the best possible form in which a people can fund its debt, for these three principal reasons:

First. It is an absolutely inexpensive form in which the people of a nation can carry their nation's indebtedness.

Second.  It provides a more convenient form of currency than coin and independent of the international scramble for accumulations of precious metals.

Third.  It provides a perfect safeguard, when issued in adequate volume, against contraction and expansion of volume in the interest of money dealers and protects prices of all other property and preserves the equities of time contracts.

Why then Coin Metals into Money ?

Then would you have the precious metals coined at all? asks an opponent.  Yes;  not that a government paper currency can not, when wisely provided and its volume wisely regulated, prove the best currency independent of coins that a nation may have when competent to reach the highest ideals in practical realization, but because the traditional or race thought of our people demands an adherence to the coinage of metals, I would have the Government freely coin into dollars, for all who desire it, all the bullion that they choose to bring to the mints.

And again, as long as the banking forces can keep up the conviction among the people that money made of paper must rest on the basis of instant an compulsory redemption at the demand of the holder in coin, instead of resting on the decree of law and receiveability of the issuing government, which principles keep up the monetary value of coins themselves, so long must we have the broadest possible basis of coin to furnish a sufficient and available supply of coin to support said redemption.

This requires a bimetallic basis, for all competent authorities are settling down to the conviction that gold alone can not furnish an adequate supply of coin for a sure maintenance of coin redemption.

But, Mr. Chairman, why give away the interests of the public, the interests of all classes --the laboring, developing, and progressive classes-- the truly American interests in a laboring and debtor nation, on this banking and currency question ?  Why divert the bankers by temptations so strong to depart from the true, safe, and legitimate business of handling loans, discounts, deposits, and exchange which at all times and in every country is understood to be the proper sphere of true banking, and induce them to go into the business of issuing currency notes to supply the money that the Government itself should supply for the cure of the money famine now existing ?

A Three-Card-Monte Game.

Why by law authorize bankers, in a sort of three-card-monte game with the public, to take up $100 for every $30 (30 per cent) that they put down, and to have the free use of the $100 taken up for an indefinite length of time --to such time as they choose to lay it down again and take up the $30 ?

Why allow this extraordinary privilege to the present bankers, with their thousand-million-dollars capital, and all other bankers who choose to bring other millions of capital into the bankers' side of the game ?  Have such privileges been offered to any other class of our citizens ?

Coupling these privileges with the provisions looking to the retirement and destruction of the Government legal-tender notes so that the money issuers will have complete control of the circulating medium of the people, is there anything in sight left for the industrial interests of the country ?  Is there anything to keep the money dealers from manipulating prices in their own interests and taking ultimate possession of as much property as they may desire ?

Since they will have complete control of volume, who can prevent their control of price, for the most fundamental truth in monetary science is that the volume in circulation will and does control the price of all other forms of property ?

Remember, too, that prices control profits and profits control the employment of labor and the prosperity and welfare of the people.

Our Attack is on Bad Measures, not Men.

Let no man on this floor jump too hastily to a false conclusion or assertion concerning my views or relations to the business of banking, nor let any man assert that I have any animosity toward bankers.  I have no such views or feelings.  I do not so much condemn the bankers who are urging legislation in their special interests as I condemn you who, on this floor by the confidence of your people and the sacred duty upon you of protecting their interests, seek by vote and speech to turn your people over to the control of the money power.

Needless Fear of Free Coinage of Silver.

There is a sort of terrorism on this silver question in New York City and a strong effort to suppress facts as bearing on the benefits of free coinage.  I will note what Mr. St. John, president of the New York Mercantile National Bank, said before our Currency Committee:

Public opinion is under a newspaper terrorism in New York.  Men who agree with me fully, and I know many of them of considerable wealth, prefer to keep silent for the present.  Any body who will write at length a lot of nothingness adverse to silver money will be accorded certain newspaper's space and be dignified into great authorities.  Rejoinder, if complete, and the more complete the more certainly is denied even a limited space.  Again, other men believe that until a change of administration here approaches it will merely cost them influence to speak their conclusions favorable to silver money.  Then, too, certain newspapers shield their readers against intelligence and cow them out of convictions they might indulge.

As an instance, Mr. Horace White's Evening Post a few weeks ago quoted at length from the London Economist one Rawlinson's criticism of Manchester's complaint of England's gold monometallism as relating Manchester to India.

The complete rejoinder two weeks later in the Economist, a compilation of facts that refuted Rawlinson totally, has never even been mentioned by the Evening Post.

But conditions current here and elsewhere are forcing the truth upon general attention, and a rebellion against this tyranny and concealment of facts will manifest itself erelong in New York as elsewhere.

I have no doubt that a very great number of persons honestly fear that free coinage of silver at this time would have disastrous results --and so they would thus sacrifice the sure relief and great benefits it would bring to us.  They fear that we would at once be thrown upon what they would call a silver basis, or, in other words, that gold would go to a premium over silver and our other ordinary forms of currency.

Let me observe to quiet needless fears on these points---

First.  That for export purposes there would be no more demand for gold than now exists, so we would lose nothing in that regard.  Second.  That there would be no inducement for hoarding gold for the reason that its monetary use in coins is its principal use, and it could pay no more debts legally than the same amount of silver dollars could pay.  Third.  That if Europe became afraid to sell us goods and take their pay --as some imagine-- in silver, the result would be that they would have to pay for our products --of which they must continue to consume large amounts-- in money instead of goods, and that would bring gold into the country instead of taking it out.  Fourth.  They have no stock of silver, outside of their own silver coins, that they could use to pay us or to "dump" upon us, as some express it;  and besides this condition existing their own coinage of silver is on a basis of 15½ to 1 of gold, so they would lose one-half ounce of silver out of every 16 ounces sent us, as our ratio is 16 to 1.  So silver will not come.  Fifth.  There would as a first impulse probably be a tendency to send their holdings of United States bonds in Europe back to this country.  The result of that would be that interest payments thereon would stay in this country instead of being as now a constant drain upon us and a present means of withdrawing gold from us at their option.  These returning securities would require a portion of our gold supply unless in their need of our wheat, cotton, and other staples they preferred to leave the gold with us and take our staple products which at any rate they must have.  Sixth.  The mint price of silver under free coinage becomes $1.29 per fine ounce instead of a present market price of 65 cents per ounce.  With our use for all of it at home Europe would still have to get supplies of silver for their Asiatic trade and would have to give also $1.29 per ounce for it, as I have already shown.  Seventh.  But lessening the demand on gold by bringing silver into fuller use for money would tend to cheapen gold throughout the world as well as here.  So, as silver went up to mint price, gold would tend to come down or be less valuable than before.  Eighth.  The more thoroughly silver under free coinage would stay at home, as some hold, and accumulate in our circulation and vaults the further we would be removed from panic and failure on account of coin redemption of all coin obligations.

The history of gold movements under the adoption of the Bland-Allison silver law of 1878 will verify these claims. (See testimony of St. John on this.)

Does Silver Coinage Increase Export of Gold.

In addition to evidence already quoted let us add that from the excellent tables prepared by Maurice L. Muhleman, cashier of the United States subtreasury at New York, we find the following facts, showing that the increase of our stock and coinage of silver, instead of driving gold out of the country, as the goldites then prophesied and still do, the effect is exactly the opposite.

The figures are given by the author in round numbers the more readily to indicate the general fact.

Our entire stock of gold in this country at the end of fiscal year 1877 was $145,000,000.  Restoring silver to coinage under the Bland-Allison act of February 28, 1878, was followed by acquisition and coinage of $16,000,000 of silver the first year.  Instead of loss in the stock of gold there was an actual gain of $68,000,000 in gold.

The prophecy of the goldites was wrong and that of the friends of silver was right.

During the next year there was a gain in silver of $25,000,000.  Did it drive out gold ?

On the contrary, there was a gain of $33,000,000 in gold.  And going on increasing our stock of silver the following year $28,000,000, there was also an increase of $106,000,000 in gold, and while our stock and coinage of silver kept on upward there was another addition to our stock of gold of $126,000,000 the next year.

The same tendency for gold and silver stock to accumulate together in a country is noticeable in the total general results.  While our stock of silver has increased to a total of $538,000,000 at end of fiscal year in 1893, our stock of gold also was $592,000,000.

Silver Lessons from other Nations.

The most recent available statistics showing money systems and aggregate stocks of the various countries of the world, on page 130 of the Coinage Laws and Statistics, prepared by the present Senate Finance Committee, show the following:  The two countries having the greatest stock of silver in the world, except India, are France and the United States, and these two countries instead of losing their gold have accumulated and hold the greatest stocks of gold also.

Enlarging the use and coinage of silver then does not drive out gold but seems to have, in a general way, the exact opposite effect.  The philosophy of this is that whatever conditions of finance and trade enables a country to best utilize its productive energies and accumulate either of the precious metals enables it to accumulate and to hold both.

Dismiss, then, your fears, Oh, ye timid, that by unlimited coinage of silver you will drive gold from us or throw us for any length of time upon a silver basis.

With the bitter irony that students of monetary science in Europe ought to appreciate the gold standard British bankers themselves at the time of the Barings failure had to go to France for help and for gold ---to France, where not only a very large volume of silver money exists, but where the Bank of France insists on using silver as a money of redemption at her own option, and not the option of others, as is the case at our Treasury.

The Entire Mass of Money Measures the Entire Mass of Wealth.

Again recalling the illustration of the lever, with money and the banks on one end of it and property and the people on the other, I wish to spend a little time in speaking to you of the entire mass of money on one side and its divisions, and of the entire mass of wealth or property and its divisions and price or valuation and measurement of its divisions on the other side.

When we speak of the value of money what is generally understood is that we are referring to each unit, or dollar, measured in prices of other things.

By proper subtraction of all money now held in bank reserves, in secret hiding, in hoarding to await revival, and in the congestion of money in the deposit banks of reserve cities, we shall find there is not over $500,000,000 in actual circulation against $50,000,000,000 of wealth.

Before this late "bankers' panic" --the panic of 1893-- the valuation of the wealth was at least $60,000,000,000, but we must allow at least 15 per cent for shrinkage in the wealth.

So there is to-day one dollar in money, approximately, for every hundred dollars of wealth or property, or about 1 per cent, and if we do not make the subtractions for congestion of currency in banks it may amount to 2½ per cent.  Senator Plumb, in 1890, in June, said:

If I was deciding the case [the actual number of dollars in circulation] upon what I consider the best evidence, I would be bound to say that I believe the money in actual circulation did not much, if at all, exceed $500,000,000.

Now, Mr. Chairman, having such high justification of the reasonableness of my estimate of the number of dollars in actual circulation as the case stands under present conditions of money stringency and record-breaking decline of prices resulting therefrom, let me go on with my elucidation of relations between the units of money and their entire mass on one side and the entire mass of property on the other side, subject to exchange for money.

Our entire mass of actually circulating money is then divided we will say into five hundred million parts, which we call dollars or units of valuation in our monetary system.  Let us compare these units now with some specific part of exchangeable wealth to see where prices are ranging.

Our illustration will be true whether you regard five hundred million or fifteen hundred million parts or dollars as the present circulation.  Each of the parts now equals in value two bushels of wheat, which gives us 50-cent wheat, or two bushels to the dollar.  If, now, we would divide the entire mass of money in circulation into double as many parts or dollars, making money twice as abundant, then it would take two parts or dollars to equal the two bushels of wheat.  This must be clear to all and would give us dollar wheat instead of 50-cent wheat.

As we divide the mass of money into greater numbers of parts we multiply or increase the price in same proportion.  Now, suppose we divide the mass into fewer parts than the present status, then each part will be larger or of greater value or purchasing power.  If we divide the entire mass into only one-half as many as now exist, then we have exactly doubled the value of each part or monetary unit ---and so our one dollar for two bushels changes its ratio into one dollar for four bushels which gives us 25-cent wheat.

And if the gold standard contractionists shall continue their processes to produce by contraction what they call the "highest and best dollars" we will yet see 25-cent wheat in Chicago, and cotton 3 cents, and all other things reduced in proportion.  It is idle to talk about reaching bottom in prices or to claim that the industrial world can not see prices go lower.

There is no bottom, except that which stands on the number of dollars in circulation, and if Congress perpetuates the present banking system, with unlimited bond issues, or enacts this present so-called Carlisle bill, which, to an equal, if not greater degree, puts the power to control the aggregate circulation into the hands of banking corporations, then as certainly as the law of gravitation regulates the general movements in planetary systems so sure will these corporations control and regulate price to add to their own gains and those of their favorites at the loss and expense of the laboring and producing world.

They will, as far as they are able to, act in concert, contract circulation and price when they desire a period of liquidation and settlement, and then expand the circulation and boom prices when they wish to sell back to the people the harvestings of their periods of panic and liquidation.

This is the elasticity they want, the india-rubber game they have been playing for twenty-five years, and the game they still will play if they can get bonds enough on the one hand or the Carlisle bill on the other.  It is like the great wickedness of the Israelites of old in changing standards between the periods of buying and selling, against which iniquity and robbery the prophet Amos hurled his vehement utterances:

Hear this, O ye that swallow up the needy, even to make the poor of the land to fail.

Saying, When will the new moon be gone, that we may sell corn? and the Sabbath, that we may set forth wheat, making the ephah small, and the shekel great, and falsifying the balances by deceit ? ---Amos viii 4, 5.

The modern method is much more subtle and unobserved by many of the producers of the land, but far more effectual and far-reaching than any scheme the Jews had ever invented until within the last two centuries.  Their game now is not to change weights and measures between the periods of buying and selling, but to change prices, so as to take in wealth at depressed and panic prices and then reverse the processes, expanding so as to sell back again at high prices on gold contracts until the next period of contraction, panic, and liquidation.

Yes--- "elasticity of the currency" is a catchy phrase for the game.

Loading the dice and packing the cards are such dishonorable methods that few gambling houses can maintain their reputation by such tricks;  but they are comparatively harmless beside the game the money power seeks continuously to play, by their tricks of gold redemption and bank issuance in which all the people are involved.

When the bankers of Wall street started in the spring of 1893 to give us an object lesson, aided by those who sit in high position, and aided further by the fine hand of the European gold conspirators in the sudden demonetization of silver for the subjugated people of India, did they not successfully teach us the lesson of contraction ?

They not only suddenly contracted bank circulation thirty to forty millions of dollars in a few months, but they pushed all the associated and corresponding banks into shortening up their loans and credits at the same time.  They followed this after October, 1893, with such an expansion as suited their purposes.  This is the elasticity game well exhibited.  Then since that they have secured an issue of $100,000,000 in bonds under the claim of maintaining the supposed gold redemption basis, paying for the bonds largely out of gold that they loot from the Treasury under the pretense of helping the Government maintain parity and its gold reserve.  Although these bonds are of very doubtful if not absolutely illegal issue, yet doubtless they intend using them largely as basis on which to expand the currency.

Is not this object lesson enough to show what elasticity for the banks means to the people ?

Is it not sufficiently evident, Mr. Chairman, that the banks ought to be deprived forever from having anything to do with the issue of currency, and, as Jefferson taught, that bank issues should be suppressed, and the circulation be restored to the Government, where it properly belongs ?  If we can not learn from these lessons, and from the threats of their insolent power, often given, and on the other hand, from the teachings of the fathers of true Democracy, from the teachings of eminent authorities and the testimonies of able financiers in every country, and from the lessons of history and the ruin of our industries and our people, then when can we learn the curse of submission to the bank and bond and gold conspiracy ?

Our enemies are united in both Europe and America, and throughout the world.  The invisible empire of wealth is not bounded by the shores of wide salt seas nor by the snow-capped mountain ranges that have through long centuries bounded and limited the usual aggressions of national power.

Its conquests are the wealth of the all-trading nations;  its victims, the helpless people of all climes;  its demands, the patient toil and slavery of all races;  its instrument, gold redemption bank money.  If there is one thing above others that it has hated and feared, it is that America and her legal-tender greenbacks might live and teach mankind to provide their own money independent of the banks.

When we see the insolence with which the gold conspirators seek to plant themselves in power, may we not say of them as Cicero against Cataline said:

How long, O Catalina, wilt thou abuse our patience ?  Art thau not daunted by the nightly watch posted to secure the Palatium ? * * * Thy wretched conspiracy is laid bare to every man's knowledge herein the Senate. * * * We are well aware of thy proceedings last night. * * * Alas the times!  Alas the public morals!  The senate understands all this.  The consuls see it.  Yet the traitor lives!  Lives?  Ay, truly, and confronts us here in council;  takes in our deliberations;  and with his measuring eye marks out each man of us for slaughter. * * *

And may we not say as he again said against the rich and strong tyrant præter Verres, in which Cicero so strongly pleaded for action on the higher motives:

O liberty!  O sound once more, once more delightful to every Roman ear !

Once sacred -- now trampled on !

Is it come to this ? * * * Shall nothing restrain the merciless monster who, in the confidence of his riches, strikes at the very root of liberty, and sets mankind at defiance ?  And shall this man escape ?  Fathers, it must not be !  It must not be unless you would certainly undermine the very foundation of social safety, strangle justice, and call down anarchy, massacre, and ruin on the commonwealth.

Should we Increase the Volume in Circulation ?

I have already referred to the volume of circulation.  It is not the absolute volume of currency in circulation that endangers prosperity so much as the variations occurring in the volume after business is established.  It is by the change of the money end of the lever up or down that carried the property and people's side of the lever up or down in opposite directions.

The general range of prices when money was abundant at the close of the civil war marks a proper level.  Shrinkage from those prices was what destroyed the equity of time payments.  The changing of circulation disturbed price and valuation of all these things, and so broke the demands of equity.

It is impossible to maintain prices and secure an equitable share of profits to producers on a shrinking volume of currency.  In speaking on this subject, and having reference to the contraction and expansion of the currency indulged in by the banks of issue during his day, Mr. Webster said:

It is hardly necessary to dwell, Mr. President, on the evils of a suddenly depreciated circulation.  It arrests business, puts an end to it, and overwhelms all debtors, by depression and downfall of prices.  And even if we reduce circulation --not suddenly, but still reduce it farther than is necessary to keep it within just and reasonable limits-- we produce many mischiefs;  we augment the necessity of foreign loans;  we contract business, discourage enterprise, slacken the activity of capital, and restrain the commercial spirit of the country.

To keep up the increase of currency with the increase and development of business and population is no relief, for that simply prevents an actual relative shrinkage.

I know of no method to exactly measure the volume of business and exchange in our country, buying, selling, and paying debts.  We can approximate to it by taking the population of a country as a basis and stating circulation as being so much per capita.  This, all points considered, is perhaps the best term to use.

But when it comes to determining what number of dollars per capita should be in circulation I do say that we have an infallible index of a departure from the proper circulating volume when we see a general decline or fall in prices.  When that is detected the true method to be used by Congress, if it seeks the welfare of the whole people and the maintenance of equity on all time contracts, is to begin at once to increase the volume of currency to cure the evils of falling prices.  Expand the currency until the general average of prices is restored and all the productive energies of the nation are utilized to the best advantage.  When this point is reached the circulation is right and the volume is proper.

Those Who Plead for Equity, Must Do Equity.

The creditor portion of the community have no right to complain of expansion, for they have had the benefit of twenty-five years of contraction.  "He who demands justice must administer justice," is a good old German maxim.

Starting to correct wrongs as we find them, however, and not undertaking to reverse the contraction methods of the money power and creditor world any further than necessary to provide for the present and future protection of the people from the financial wrongs they have suffered, we should not expand the circulating currency volume only to that point where prices are restored, profits accrue to legitimate industrial effort, and labor is fully employed at remunerative wages.  These good, price-restoring results of expansion of the currency may be reached at $40 per capita.  If so, stop at that and keep the volume substantially uniform in relation to business at that ratio.  If the full and profitable employment of our productive forces are not secured at $40 per capita, as I have said, issue more, for we should never stop short of issuing and coining together the requisite amount to secure the results of restored prices and activity.

The best and most productive and prosperous times we have ever had in this country was at the close of the war or soon thereafter, when the circulation was slightly above $30 per capita, and no men nor class of men were suffering any injustice by reason of the good times secured.

Currency Contraction Followed the close of the Civil War.

I will submit the table published in the Chicago Inter Ocean, which circulates largely in the West, and is high authority among Republicans there:

This table shows gradual contraction down to the year 1877.

In the same connection, the Inter Ocean makes this remark in regard to the circulation of the 7.30 notes, of which at one time there were over $800,000,000 out:

The 7.30 three-year notes, whose circulation as currency is most scouted, were outstanding on the 1st of September, 1865, to the amount of $830,000,000, every dollar of which was legal tender for its face value under the terms of the law "to the same extent as United States notes."

Gen. John A. Logan in 1874 (from page 139, Congressional Record of that year), in a speech he made in this body, said that there had been at that time a contraction of over one thousand million dollars ($1,018,167,784).  He once was high and honorable authority in the West.

General Grant said in his message of 1873:

In view of the great actual contraction that has taken place in the currency, and the comparative contraction continuously going on, due to the increase of population, increase of manufactories, and all the industries, I do not believe there is too much of it now for the dullest period of the year.
---[as president of the United States, Ulysses Grant's first act was to sign the credit strengthening act into law]

Speaking of the volume of money---

During the last four years the currency has been contracted directly by the withdrawal of 3 per cent certificates compound-interest notes and 7.30 bonds outstanding on the 4th March, 1869 (all of which took the place of legal tenders in the bank reserves), to the extent of $63,000,000.  During the same period there has been a much larger comparative contraction of currency.  The population of the country has largely increased.

As the annual increase of population is 3½ per cent, to even keep pace with it, if we did nothing else, would require over $50,000,000 additional currency per year.  We should issue more in addition to this annual demand to secure any increase and relief.

In a full discussion of this question of circulation we should take into account the marvelous increase of business through all the various new appliances and rapid development of our country.  To keep up with this alone would require great additions to our currency.  But when banks desire the appreciation of money and the consequent depreciation of prices, what care they for the ruin of industry and property prices ?

If we compare our money circulation to the wealth of the country as generally estimated, it is 2½ per cent.  We ought to have more nearly 5 per cent circulation.  That of France is 4 per cent;  Belgium, 3.2 percent;  Italy, 3.1 per cent;  Portugal, 4.6 per cent.

With our great expanse and variety of business and our people scattered across an entire continent, we ought to have more than any of these.

Cheaper Money is Necessary for Relief and Equity.

The same question is pertinent as to silver coin and money coined from silver in possession of the Government.  How can the Government get this silver money into circulation if it does coin it ?  We answer, by paying it out in current expenses and on all coin obligations.  But our opponents will say that by issuing paper money or silver money and putting it into circulation, in addition to the money now out, will so increase the supply or volume of money in circulation that money will become too cheap.

This is the plea against free coinage of silver and is also against the issue of legal-tender notes by the Government.  It makes money too plentiful and too cheap, say our opponents.  Too plentiful and cheap for whom ?  I know that increasing the volume by adding any kind of money to the circulation will make money cheaper;  and so will withdrawing money from circulation make money scarce and dear and high in its purchasing power.

But who is harmed by making money more plentiful and cheap ? Surely not those who have been suffering from falling prices for the last twenty-five years by money haying been made too dear.

I have never uttered a word favorable to a careless and unlimited expansion of the currency.  I have protested against making money too abundant on the one hand, and against making it too scarce and dishonestly dear on the other.

But the coinage of all silver offered, or the issue of a certain amount of Government legal tender strictly limited to reasonable bounds, as I have suggested, will not make money too cheap for all who own or produce other properties than money, bonds, and mortgages.  It tends to bring the value of our dollars in circulation back again to that ratio to property and price that formerly obtained.

More Money Means more Investments in other Property.

And then it will pay to invest money in lands and products of field, farm, and factory, for profit will then follow these industries.  Even bankers would, many of them, seek to invest money in the various forms of property, produce, and manufacture.

Hear what Mr. George A. Butler, bank president, had to say of the advantages accruing to property if silver were even paid out freely on our coin obligations by the Secretary of the Treasury.  I quote his testimony before the Banking and Currency Committee of this House on December 12, page 153 of the hearings:

Mr. Black.  I will ask you even a broader question than that.  I should like to get your opinion as to the effect of the Government establishing the policy, as to redeeming this paper currency, of exercising its own option whether it would pay in silver or gold, rather than to let the holder decide that question for himself.

Mr. Butler.  I cannot answer that any better than to as this:  The very hour that l am convinced that the Government will do it I will sell every dollar's worth of personal property I have on earth and invest it in real estate.

Mr. Ellis.  Why ?

Mr. Butler.  Because that brings the country to a silver basis and eliminates more than half the value of personal property in the form of stocks, bonds, mortgages, and everything of that sort.

Mr. Hall.  Would it not affect real estate in the same way as personal property would be affected ?

Mr. Butler.  No;  because in the case of real estate you can put up the rents in proportion.  Before the last election I was intending to dot this, and indeed, commenced, but then the election occurred, which was not so favorable to the silver men, and I thought better of it and stopped.

Remember that the personal property to which he refers, as he explains, is such as he owns --"stocks, bonds, mortgages, and everything of that sort."  Personal property, the product of factory or field, goes on the other side.

A very intelligent friend of mine, another bank president, took the same position with me in conversation on the silver question.  If money becomes abundant enough to raise prices and make products and property profitable, then even the bankers will invest in property.  They will invest on the side of property if it once gets out from under the domination of high and scarce money.

They see as clearly, it would seem, as an increasing volume of money the property side of this controversy with the banks will become profitable by reason of improved prices.

Efforts of Chevalier and the Income Classes of Europe
to Demonetize Gold Forty Years Ago -- Gold Despised in 1853.

Mr. St. John, president of the Mercantile National Bank, New York, said before the committee:

Our "goldites" would dismiss all this on the ground of an overabundance of silver.  Had the most influential doctrinaire in money in Europe been as influential with lawmakers in 1853 as our aforesaid tutor was influential with law dictators in 1893, France would have closed her mints to gold.  Silver mono-metallism would have been the coinage system of the world.  Chevalier threatened France with an abundance of gold as cheap and overwhelming as iron.  Silver is the overabundant prediction of our influential doctrinaires.  Note, however, that $5,000,000 worth of silver bullion is at this moment an overestimate for the world's distributing markets' supplies of silver.

Senator John P. Jones, in the following, marks the parallel between Chevalier and the French bondholders of that day and the same class of to-day:

page 271

The Example of France in Dealing with Bondholders.

The attempt of the American bondholder to get the word "coin" erased from his contract, and to get written into its place some word which would describe a coin that was always getting dearer, is not the first attempt of the kind in history.  A similar attempt was made on behalf of the French bondholders after the discoveries of California and Australia.  Gold was then the metal that was becoming cheap money, and the French bondholders took ready alarm at the prospect of the purchasing power of their incomes being reduced by the inflow of the new money.  They found, as all bondholders find everywhere, ready and pliant agents and advocates in the literary guilds.

Chevalier and those in accord with him made a demand for the payment of the bonds of the French Government in silver.  Their cry was for honest money.  It is the same cry that we hear now, and have heard for more than twenty years.  It was a demand for a payment of the money that was becoming dearer.  For it appears that when money is becoming dearer it is honest money, while if wheat and cotton become dear, which means that money is becoming cheap, the wheat and cotton are dishonest and fraudulent.

Chevalier demanded the payment of the bonds in silver.  In order that the people might suppose that he had some ground in reason for his demand he maintained that silver had always been the money of France, and that when people bought the bonds of the Government they supposed they were buying bonds payable in silver --very much the same sort of argument that has been used in the United States, except that in this country the demand was for bonds payable in gold.

This ruse did not work, however.  The officers of the Government refused compliance with the demand.  They declined to transfer to the creditor the option which the people of France had reserved to themselves.  That they were right no man but a bondholder could have the hardihood to deny.

Our modern Chevaliers have been more successful --chevaliers of industry, whose only connection with industry is the laying it under tribute, and exacting from it an unearned increment, with the approval and through the instrumentality of our executive officers.

p.329

He was arguing that gold would probably depreciate one-half in purchasing power.  It was for the national creditor that his sympathies were aroused, and it is for the national creditor that the sympathies of the bankers are now aroused.

All commodities, --he continued-- excepting gold [the money that was growing cheap] and every kind of property excepting that of which the income is, from the present, fixed, as is the case with government funds ought from the moment that the monetary crisis is terminated, to have attained in a gold currency double the price which they are at present worth.

His opinion then was that the price of commodities and of property, except government funds, would "double in price."  How was it with wages --the reward of the workingmen ?  Were they to continue low as before while prices were rising ?  Chevalier says:

It will be the same eventually with the wages of labor [that is to say, wages would double], and with all personal services, whether rendered in the factory or on the farm or from the liberal professions.

And in a summing up distinguished for clearness of statement he concludes this portion of his remarks with this paragraph:

"Thus, as a definitive analysis," he says, "the proprietors of lands, houses, and other real estates, manufacturers, merchants, and their auxiliaries of every kind:  public functionaries of all ranks:  and also those who follow the different learned professions, will all find themselves in the end compensated in the new state of things with advantages which they now enjoy, all other things being equal."  "It is another class of persons," he says, "whom we have previously defined in a general way (the national creditors) who have to submit to a sacrifice in the proportion to the fall in the precious metal.''

Will Higher Prices drive Gold to Europe ?

My friend from New York [Mr. Tracey], my colleague on the Coinage Committee, now kindly honoring me with his attention, is, however, fearful that the rise of prices will drive gold out of the country.  There are a few points that I wish to make on this question in addition to what I have already said.

First.  Gold in export goes as a commodity at its commodity value in exchange for other commodities.  Whatever nation bids highest for gold in such exchange --that is, gives greatest quantity of other goods for gold-- will get the gold, on the same principle that they would get wheat or any other product for gold in international trade as a commodity, to be bought as such.

When prices are so low on other things that nations can better afford to take them instead of gold, they will go to settle balances of trade, and gold will stay.  When, however, prices rise on other articles above the commodity or mercantile value of gold, then gold will go out in export.  It flows then toward countries of low prices on other articles.  High prices, however, can not obtain on other articles without money volume is ample.  So we can be sure gold will not leave us until other money is in circulation to more than take its place --enough more to raise prices of other property.

Even the matter of distrust regarding our bonds and securities abroad, so often mentioned, do not entirely set aside these economic forces, as some suppose.  Suppose a hundred millions in bonds should be, so to say, sent back to us from England suddenly.  The payment is not necessarily in gold;  it is in wheat and cotton if they can take them to better advantages in exchange for our bonds, and that depends entirely on the price of wheat, cotton, etc.  Gold will not go, then, unless other money is so abundant that prices are up or rising, and in that case, mark you, we can easily spare the gold.  We can get along without it while other money is sufficient to keep up prices.

If, however, we have bank money dependent upon gold redemption, bankers must hold gold, or must contract their paper currency at the same time gold is being reduced by export, then the contraction resultant quickly forces prices down so low that our other products will be taken instead of gold.  Let Government issue our paper money as far as necessary and silver be freely coined, then the outflow of gold should excite no alarm, for our money is sure, founded on the law of the Government.  Gold going abroad under these conditions would be profitable to our people in many ways:

First.  Having other good money to take its place, we would get for it value in other things more than it would be worth to us for money uses.

Second.  It would swell the prices in Europe by increasing money volume there so we would get higher prices on all of our exports to those countries.

Third.  And by silver being accepted at our mints freely at $1.29 per ounce, Europe could not longer buy wheat in India with silver at 65 cents per ounce, but wheat would at once rise to meet the new price on silver.

Valuable Monetary Facts --- Movement of Gold.

From valuable tables by Maurice L. Muhleman, cashier of the United States subtreasury at New York, found in his Money of the United States, we derive the following:

Table showing gold and silver movement 1873-1893, page 60.  From 1873 to 1877 exports of gold were against us $127,000,000 in a period of silver demonetization complete, neither one of the five years securing us any gold by international trade.

From 1878 to 1883, the first period of coinage of silver under the Bland Act, we gained an excess of import over export of gold every year amounting in six years $187,000,000.

Coinage of silver did not drive out gold, therefore, as our mono-metallists claim, but had the direct opposite effect of increasing our gold by trade with foreign nations, and at the same time our product of gold mines was increased from $184,000,000 during the 1st five-year period preceding the coinage of silver under the Bland Act, to $200,000,000 during the next five years.

After the passage of the Sherman silver-purchase act which we were told would drive out gold, the reverse was true again, for we saved all our product and gained in three years, July 1, 1890, to July 1, 1893, $156,000,000 by international trade, gaining $68,000,000 of this the first year after said act.  Now, since the repeal of all laws favorable to silver, we are losing gold by international trade at an alarming rate, and that, too, while Europe could get our products instead of gold, at lower rates than ever before.  These great facts and experiences are all against the claims of the advocates of silver demonetization.

On silver we have exported more than we imported every year from 1873 to 1893, as shown by the tables, so again the evidence is that by reason of the European and Oriental demand for silver for their own coinage there is no danger of silver becoming too abundant by free coinage in America.

In studying questions of banking, it will be well to notice the growth of the deposit feature of banks in this country.

Growth of Deposits in Banks.

We give the following on the authority of Muhleman, page 59.  The period from 1873 to 1893 is the period we have taken:

National-bank deposits start at $673,000,000 in 1873 --during Bland Act period.
They continue nearly same for six years to $677,000,000, in 1878 --ending demonetization period.
They grow next six years to $1,099,000,000, in 1884 --during Bland Act period.
They grow next six years to $1,759,000,000, in 1890 --during Bland Act period.
They grow next two years to $2,022,000,000, in 1892 --silver purchase period.

So the growth of deposits is three-fold during the fourteen years of partial silver coinage, and practically nothing during six years preceding, and they drop again in 1893 to 1,575,000,000, being year of purchase-clause repeal.  Again, during and succeeding panics deposits fall short.  Notice the shrinkage 1877 and 1878, 1884 and 1893, panic years.  State-bank deposits increase nearly five-fold, being $111,000,000 in 1873, and increasing, except during panic years, to $648,000,000 in 1892.  Savings-bank deposits increase to more than double, $802,000,000, in 1873, growing, except during panic years, to $1,712,000,000 in 1892.

People seem to distrust banks, especially national and State banks, during years of panic or financial disturbances;  but banks also seem to distrust the people, for, as Muhleman points out, "the only two years" wherein cash reserves equaled 20 per cent of deposits were 1874 and 1885, "years succeeding panics."

These accumulations of cash in banks following panics are often claimed to be evidences of abundance of money, but they are in fact evidences of the flow of money out of active channels of trade and away from investments into the money centers owing to the preceding contractions and withdrawals of credit, which, breaking down prices, render all business and property investments unprofitable.

If we take New York City and large cities alone we will find, as to-day, excessive congestion of idle money in the money centers.

A Gleam of Light on the Money Question from Boston.

We have found most excellent treatment of some of the essential elements of monetary science in the brief monthly letters of Cox, Bickford & Co., bankers and brokers, of Boston.  In their circular letter of March 1, 1894, they say, in defining money and quoting J.S. Mill:

We stated in our February letter that money is a function or relation, not a commodity;  that its value cannot be intrinsic under any circumstances, nor due to its first cost of production, as is the case in the general range of commodities, but is clearly expressed in what it exchanges for;  i.e., the general range of commodity price.

"The value of money is to appearance an expression as precise, as free from possibility of misunderstanding, as any in science.  The value of a thing is what it will exchange for, the value of money is what money will exchange for --the purchasing power of money.  If prices are low, money will buy much of other things and is of high value;  if prices are high, it will buy little of other things and is of low value.  The value of money is inversely as general prices, falling as they rise and rising as they fall." --James Stuart Mill.

Before such an authority as the above, and such a plain statement of the value of money, what becomes the term "the intrinsic value of money," so often repeated as to have become a popular by-word, a plausable falsehood, generally credited without a particle of proof and only bearing conviction to its hearers through constant reiteration.  The value of money is not, and cannot, in the very nature of its function, be intrinsic.

"The value of money is inversely as general prices, falling as they rise and rising as they fall," and therefore dear money is expressed in a low range of prices, while cheap money attends a high plane of general prices.

Contraction is the compression of prices to a low level, always attended by dear money, while inflation is the expansion of prices to a high level, finding expression in the term cheap money.

Falling prices is the sure index of a rising value in money, while rising prices is the exact reverse, or an indication of the decreasing value of money.  The stability of money is the all-essential of an honest standard of value and is of inestimable worth in maintaining the equilibrium of civilized effort and the equitable distribution of the wealth of production.

Unstable money, one that is either appreciating or depreciating in value, is thoroughly dishonest.

These are such clear-cut statements from practical bankers that I am pleased to quote them as indorsing so forcibly what I have claimed on these points:

1.  That there is no intrinsic value in money.

2.  That volume controls and regulates value of money.

3.  That the unstable money of either unduly contracted or expanded is dishonest money.

4.  That the value of money, like other things, is what it will exchange for and is so measured by the general range of prices.

5.  That money is a function an not a commodity.

Equity and Prosperity Destroyed by Falling Prices.

Unstable money, caused by change of volume, and especially appreciating money, caused by contraction, is not only dishonest toward people who have invested money in property and productive enterprises, but when seen in its action on those who have contracts to pay in dollars, it is a crime that even ignorance ought not to excuse.

Look to the range of prices if you would determine the extent and grade of variations in money.  Tables of prices covering the average prices of a certain period on leading commodities have been prepared by many able statisticians to determine the relative value of money.  Such averages over quite a large number of staple articles are called index numbers.

Mr. Augustus Sauerbeck, a gold mono-metalist as far as his interests are concerned, made a most thorough set of price averages or index numbers that has been published by the Royal Statistical Society of England.  To obtain a base line, or starting valuation, with which to compare the range of prices, he takes prices in gold for ten years, five of which precede and five succeed the year in which silver was demonetized, 1873, and calls this average 100.

This will show the value of gold rising in nineteen years, given in table, to nearly double its purchasing power as it stood in 1873, prices falling about one-half from 1873 to 1891.  I quote his tables from the Boston circular mentioned, in which the various prices of commodities are averaged in groups of different lines of staples.  I have also added from another source Sauerbeck's table of average prices of silver bullion for period 1874 to 1892 so as to show how silver and commodities compare.

Mr. Robert Giffen, statistician of the London Board of Trade, in speaking on this subject, says:

We can say positively that the recent change from a high to a low level of prices is due to a change in money of the nature or in the direction of absolute contraction.

Who are the Inflationists of this Day ?

I have hinted at the probabilities of inflation.  I do not know of any Democrat who, contending for the value, safety, and perfect convenience of Treasury-note legal tenders, has ever yet on this floor proposed such a loose, gigantic, and uncontrolled and possible inflation of the paper money of the country as do the advocates of the present and pending plans of issuing currency.

I have no doubt but that the first effect of the adoption of the Carlisle plan would be an inflation of the currency.  Neither do I doubt that the first effect of this inflation would be a rise in prices and a temporary relief for the people generally.  It would be a convenient time in which people could get out of debt on the rising prices, great profits, and general prosperity.

The remonetization of silver possibly could not appreciate prices or cheapen the relative value of money, which is the same thing as raising general range of prices, so rapidly, nor even to so great a degree, as could be done under the inflation of currency likely to ensue under the passage of the so-called currency-reform bill now pending.  It would, for a time at least, set the people free from the intolerable monopoly of Wall street.

The aggregate volume of banking capital could and under the temptations for multiplied profits I believe would be increased to double the present volume, which is estimated, in round numbers, to be $1,000,000,000, and indeed it might easily be swollen to three times the present amount as rapidly as men of wealth perceived that they could safely to themselves have the free and unrestricted use of $100 for every $30 they chose to deposit with the Government in Treasury notes.

The $498,000,000 of existing Treasury notes as a 30 per cent safety fund deposit provides for an actual inflation of the currency on top of existing bank issues, which are permitted to remain in circulation of $1,600,000,000.  From this should be subtracted the 30 per cent reserve to find the extent of inflation, which would leave over $1,200,000,000.  Does any Populist on this floor at this time desire to distinguish himself by proposing a greater inflation than this by one single act of legislation ?

The famous Coxey public-road bill, which bill I have never indorsed, although favoring a proper discussion of it, only proposed an issue of $300,000,000, and even this he did not propose to make redeemable in coin on demand so to favor gold mongers.

No, Mr. Chairman and gentlemen, the inflationists of to-day are those who advocate plans for bank issues of currency.  I have long seen that this great cry of the money power against inflation meant only that they were in favor of contracting Government legal-tender issues that have for so long a time furnished a safe, popular, and convenient legal-tender currency to the people, but they were all of the time in favor of allowing inflation of bank issues when it suits their private interests to do so.

They have cried out against fiat money, but they have been all of the time favorable to alternate expansions and contractions of currency under the fiat of the bankers.  Many common laboring people can not see why the fiat of a bank is better than the fiat of a sovereign Government.

Who Wants Money turned out by Printing Machines ?

They have cried out against running the printing machines of the Government to print greenbacks to pay out to the people for service or supplies, but they have all along been in favor of running these same printing machines to turn out millions of bank notes that they might loan to the people at high rates of interest.

And under the present banking system they have insisted that they shall draw another stream of interest on their capital deposited in the form of United States bonds.  Surely the national bank forces understand that it makes a great difference to them "whose ox is gored."  I believe there are gentlemen on the floor of this Chamber who would split their throats, even, if they did not endanger the solidity of the cerulean skylights above them, in their efforts to decry any proposition to issue circulating notes to farmers, merchants, manufacturers, or any other class of citizens to any extent whatever upon their deposit of 30, 40, 50, or even 100 per cent of their capital, or property, or titles to property.

Yet these same Congressmen will vote and work for the passage of this bill, which proposes to issue millions upon millions of notes to the banks with unrestricted opportunity for them to put the same into circulation upon their deposit of 30 per cent of the amount of their circulation in that same despised fiat paper that they have sought so long to discredit.  To my mind, the jewels of consistency do not shine abundantly on the shirt fronts of such fellows.

The Proposed Coin Redemption by the Banks.

But the Democratic advocates of this measure, if the term were permissible, tell us that they propose to relieve the Government of the responsibility of coin redemption of all of this volume of bank currency and throw that burden on the banks and off the shoulders of the Government.

How ?

This bill fails to make any such provision.  As long as any Treasury legal tenders are out, and practically also as long as coin certificates are out, they can redeem them in these.  If they shall struggle to accumulate gold in which to redeem these notes, notice the condition of competition for gold in which they place the Government.  Does any one believe that if any sincere effort of the banks to accumulate gold coin in quantities sufficient to redeem any adequate supply of paper currency were made that there would be any chance for the Government to maintain gold payments of all of its maturing coin obligations and its current expenses ?  Hear Mr. St. John again regarding ability of banks to redeem in gold (Hearings, page 345):

Mr. Johnson of Indiana.  What is your opinion of section 10 of the Carlisle bill ?

Mr. St. John.  My opinion of that is just what I said when I came here, that it is absolutely impossible for the banks of the United States to redeem a liberal issue of bank notes in gold.  That possibility does not exist.

The Government now, without any serious competition from the banks, is unable to keep up a supply of gold on its present methods.  What, then, when 4,000 to 10,000 banks enter the field against the Government for the gold suppy, to say nothing of the strained conditions that this situation would produce in Europe as well ?

The retirement as a safety deposit of $225,000,000 of legal tenders that the committee speak of as the probable result of the proposed act does not prevent the withdrawal of gold from the Treasury by any holders of other coin obligations, as well as holders of the remaining legal tenders.  So there is practically no relief on the Treasury holdings of gold on this theory.

But if there were, still the annual expenditures of the Government must, on the vicious "parity" idea, be payable on demand in gold.  So, after all, the burden of maintaining the gold standard still rests on the Government.

A Permanent and Reasonable Expansion is Desirable.

Let no man conclude that I am opposing an expansion of the currency either by silver coinage or by the issue of full legal-tender notes by the Government because they find me opposing the power of the banks to expand the currency under the Carlisle bill.

Expansion by the banks means also contraction by the banks as soon as they may desire it and are able to associate for it --which power of combination is, however, doubtful under this Carlisle bill;  "hence these tears."  Either this or it means a collapse more ruinous and more widely extended than any the world has yet seen by the gold redemption trick that promises yet never fulfills.

It is the dangerous elasticity quality of bank issues that I oppose, rendered still more dangerous by destroying legal tenders.

It is the perfectly safe and efficient expansion of currency, both of coin and legal-tender Treasury notes, by the National Government, in proper form and quantity that I uphold, well knowing that this will prevent the manipulation of currency volume and property prices by the banks, and that equity can be easily maintained when the Government, recognizing that the money question is also and essentially the property question, shall turn its attention to rendering property and industry safe, secure, and equity to the debtors safe by constancy of circulation.

Can the Banks Maintain the Gold Standard ?

But let us suppose for the moment that the legal tenders were all retired by the 30 per cent safety fund, and that by surplus revenues enough could be secured in gold (although no one, so far, has been able to precisely explain how) to pay off maturing bonds and interest on the public debt;  and suppose enough of the present national bank issues are kept in circulation according to provisions of the amended substitute bill to permit the Government to receive them and pay them out except on import duties and public interest as now provided by law in current expenses;  and suppose that the Secretaries of the Treasury continue the policy of keeping silver coins and coinage in complete subordination to gold under the anomalous pretense of keeping it equal ("at a parity") with gold, yet continue to receive silver in customs dues as now ?

And suppose however difficult it may seem to some suspicious mortals, that all of the banking corporations are honest and earnest in efforts to keep a full supply of gold coin on hand, both in their own vaults and at the redemption agencies designated for them, so that they can also maintain the gold standard of payment and note redemption, and thus maintain their honor and dignity, and at least consistency in turning out gold, "the money of the world," instead of the despised fifty-cent silver dollars that they say is such a cheat and swindle for creditors when forced upon them.  Suppose all of these in accordance with the arguments and claims of our opponents, then what will be the financial condition and the probabilities of the banks maintaining coin redemption ?

Here is the showing :

Circulation on $496,000,000 deposited ...... $1,660,000,000
Present bank notes retained ....... 200,000,000
Due on deposits, all banks, estimated .......... 3,728,418,819
Total bank debt payable in gold ........... 5,588,418,819
Gold (probable) accumulations in banks ........ 350,000,000
Uncovered paper and obligations ................ 5,238,416,819

We here have less than $1 in gold with which the banks can redeem about $15, or in actual test $350,000,000 resting honestly and certainly on gold basis, and $5,238,418,819 resting on the pale blue air of confidence.  Does anyone believe that gold redemption could be maintained against the first ripple of suspicion that would come against the banks ?  To maintain public confidence the people have a right to demand an intelligent basis for that confidence.  Why prate about wanting to establish public confidence, and constantly abuse that confidence ?  The basis here when examined shows that there is no just ground for confidence, and the whole superstructure would collapse on first disturbance.

But this is not all.  The total stock of gold coin, by last annual report of the Secretary of the Treasury, in reserve and in circulation November 1 was $564,738,578.  Of this the national banks held only small amount, their entire holdings of specie (gold and silver both) on October 2, 1894, was $237,250,654.  In the above estimates, however, I have allowed that the banks might possibly accumulate $350,000,000 in gold, leaving, say, only $50,000,000 in Treasury and $161,000,000 in circulation among the people in gold.

While considering the vast superstructure of bank obligations, resting on gold basis of less than one-tenth the promises of the banks, let us also notice that the total debt of all kinds in the United States is $20,000,000,000 and all of this is resting on a pivot of $564,000,000 gold, which is less that 3 cents in gold on the dollar of debt.

The impossibility of maintaining gold redemption by the banks is clear to every conservative mind that will study the facts.  Even with unlimited coinage of silver the redemption of such a superstructure of credit in both gold and silver is still exceedingly doubtful.

If anyone believes I have estimated the issues of bank paper too high, let him remember that if the whole body of legal tender is not deposited in the 30 per cent safety fund which would give the $1,600,000,000 circulation, as in my estimate, then whatever is not so used remains in circulation and can be used to pump gold out of the Treasury, as now, being used over and over again.  It would leave the Government still responsible for the redemption in gold and throw it in sharper competition with the banks in the general scramble for gold.

What is the remedy ?

First.  Bimetallic basis by free coinage of silver so to enlarge the money of specie redemption.

Second.  Pay out silver as well as gold at the option of the Government, and as its own interests might appear.

Third.  Suppress bank circulation and issue legal-tender Treasury notes instead, and increase the volume to equalize against any or all exports of either metal.

The Bland Free Coinage Substitute Bill.

To this end, and as the nearest approach possible at present time to a complete remedy and safe American system of money, for the protection of all against the schemes of the European gold power and all of its Tory allies in this country, I shall favor and vote for the Bland free-coinage substitute.

It provides first for the unlimited coinage of silver at the old ratio, to the end that silver coinage may be restored to the American people from whom it was taken away by the cunning and treachery of the Anglo-American gold and bond conspiracy.

Bimetallism and the equal coinage of both gold and silver into standard money without discrimination against either, and without any entangling foreign alliances or agreements, is the best possible salvation for the maintenance of property values and prices and redemption of debtors in this country.

Persistency in the appreciation of money in the mad career after a gold standard will yet bring wheat and cotton and the general range of prices still lower, and this means the ruin of a majority of business men in all the ordinary lines of business.

Why further enslave our people to the money dealers and income classes ?

The people must and will ultimately destroy every political party that upholds the gold conspiracy, or their ability to maintain freedom and equity is gone forever.

The second section of the Bland substitute bill provides for the issuance of coin notes for all depositors of gold or silver who prefer paper money to coin for currency, and these notes shall be full legal tender.  It is safe to say that nineteen-twentieths of our people prefer legal-tender paper money to either gold or silver for general use, and so any satisfactory system of money issues must provide for a legal-tender paper money.

The third section provides for the redemption of these coin notes in either gold or silver at the option of the Government, and proposes to enact into law the declaration of our last National Democratic Convention that there shall be no discrimination against either gold or silver coin in redeeming either coin notes or other Treasury notes now in circulation.  It provides also for the retirement of gold and silver certificates, and issuance of legal-tender coin notes in lieu thereof.

The fourth section provides for depositing gold or silver coins and receiving coin notes in exchange at any subtreasury of the United States.  The aggregate volume of coin notes put in circulation must not exceed the coin and bullion in the possession of the Government except in emergencies caused by panic or stringency in the money market.  The Secretary of the Treasury may at his discretion issue coin notes against United States bonds deposited with the Government, but the interest on such bonds while deposited shall accrue to the Government.

The limit of issue in emergencies is such that the coin and bullion shall not fall at any time below 60 percent of the aggregate volume of coin notes outstanding.

Section 5 provides that the coin notes may be reissued.

Excellent Features of the Bland Proposition.

First.  In the provisions of this bill it will be observed that all money coined or issued under it is Government money and legal tender.

Second.  That the volume is automatically controlled in relation to the aggregate amount of coins and bullion in possession of the Government by present stock, by exchange, or by deposit.

Third.  That ready expansion of the volume of coin notes is provided for to meet panic and emergencies to all persons or associations in exchange for deposited interest-bearing bonds.

Fourth.  The interest on deposited bonds is retained by the Government while on deposit instead of being paid out to the persons or associations depositing them.  This is right.  Why should the Government furnish emergency currency to anybody and pay them interest on its own bonds at the same time ?

Fifth.  This is an elasticity where banking associations have no monopoly of control as to contractions and expansions, and gives all classes equal chance to obtain emergency circulation.

Sixth.  It leaves the national-bank system intact, but destroys their ability to control volume and force a panic or stringency to the ruin of all others.

Seventh.  It provides for a perfectly safe and immediate expansion of the volume of money in circulation.

Eighth.  It at once relieves the Treasury from any further dangerous drainage of its gold supply and establishes an immediate and sure parity between gold and silver by admitting both metals at a parity to the mints and in payment of all coin obligations, and thus secures their full utilization at the old standard ratio as standard money metals.  I can not see on what grounds any sincere and patriotic Representative can oppose this bill with so much of relief and safety in it, and at a time when both of these things are needed.  It will be notice to the world, and especially to the gold conspiracy, that America is yet to be maintained and governed in the interest of Americans.

We have already spoken of the questions of elasticity, convertibility into coin, and so-called security of note holders.  We wish now to briefly refer to that subject again.

Elasticity at Option of the Banks is Dangerous.

The advocates of bank issues seem to believe that elasticity, convertibility, and ultimate security are the great and necessary elements for the regulation of the currency.

On the question of elasticity we have shown that it is equivalent to sudden contraction and expansion at the option of the issuing banks: that is intended by them.

This is one point of the greatest possible danger of any scheme of bank issues, for it allows the appreciation and depreciation of the purchasing power of money to be constantly manipulated in the interest of the associated banks and to the detriment and frequent ruin of all others.

The appreciation of dollars means the certain depreciation of everything that the dollar measures, and so the interests of the people, the property holders and producers, are in this respect directly opposite that of the money dealers.  This simple fact seems forever to be overlooked by those who favor allowing the banks to manipulate the volume.

Elasticity at the option of the banks, and without regard to the interests of the people, is therefore to be avoided.  Adequate supply of money in circulation independent of bank control is the sure safeguard to maintain prices and the equities of contract, and prevent panics and monetary stringency.

Convertibility does not Control Volume.

Neither will convertibility into coin furnish any safe regulation of the banks in the issuance of notes to circulate as currency.  All bank notes are issued, and will be issued under any of these systems, upon the theory that there is a dollar in coin, or as now in United States legal-tender Treasury notes, held in reserve with which to redeem, if called upon to do so, every dollar issued.  But we know, and the people know, that in the practical workings of the banks this is not true.  If banks were compelled to keep in reserve $1 in Government coin or Treasury notes for every dollar they issue, they would not issue such notes.  They could just as well put out or loan out the coin and Government notes themselves as to hold them against circulating notes dollar for dollar in amount.

The only inducement to the banks for issuing their own notes for currency is in the privilege or opportunity to promise to pay more dollars than they hold in reserve against those promises.

Their profits on circulation arise wholly upon the practice of increasing the circulation above the reserve, and the more they are permitted to owe the people on their circulation, the greater their profits.  They draw interest on what they owe, which encourages them to put out larger quantities of their promissory notes.

Sir Robert Peel was quoted before the Currency and Banking Committee of this House, page 240, and his words should be heeded:

It appears to me that we have, from reasoning, from experience, from the admissions made by the issuers of paper money, abundant ground for the conclusion that under a system of unlimited competition, although it be controlled by convertibility into coin, there is not an adequate security against the excessive issue of promissory notes.

Thus we have his own clear statement that from reason, taking hold of the nature of the case, from experience, the lesson of history, and from admissions of the bankers themselves, the control of the volume of note issues, even with convertibility into coin as a requirement, could not safely be left to the banks, although there were probably not more than the twentieth part as many banks then to regulate as in our country.

Notice also that convertibility into coin was a greater limitation than convertibility into any form of legal tender, as well as coin contemplated by these banking schemes.  One will ask me if I would deny to the banks the privilege of loaning their capital to merchants and business men when needed.  Certainly not;  let them loan all the capital they choose and all the spare money they have on hand, as any other business firm could do, but never permit them to make their promissory notes a permanent part of the currency in circulation.

Security to Noteholders does not Control Volume.

The ultimate payment of their notes may be as secure as the payment promised in the notes and obligations of other branches of business, although banks are not in the habit of giving any thing near such strong security to the holders of their notes as they require from others.  Yet let me say that all plans of security based upon assets and liens and double liability and partial reserves will still fail to prevent the manipulation of the volume of notes in circulation to the constant advantage or supposed advantage of the banks.

The theory of ultimate redemption and strong security for the notes they issue when they are allowed to draw interest instead of being compelled to pay interest on their notes, does not prevent even bankers (sacred as their calling seems to be in the minds of many Congressmen) from giving way to the strong temptations before them.

The burdens of interest on other lines of business on what debts they owe, tend strongly to keep up their efforts to lessen their indebtedness, while profits on notes issued for circulation by bankers lead to efforts to increase their note issues, and as far as possible keep the debt out perpetually.

Even United States bonds as security afford us no protection as to volume of bank issues and expansion and contraction by the banks, unless we have a limit on bond issues, and that seems difficult to enforce on recent Administrations.  I have long felt that if our money system could be so simplified as to have only three kinds in circulation it would be far better for the people, and besides they could better understand the subject in all financial discussions.  I would have gold and silver freely coined at 16 to 1 for all who bring them to the mint, and in addition United States Treasury notes, and all of these made full legal tender;  and all other kinds of money funded or changed into these three kinds as fast as possible.

I have, however, prepared a table showing the status of all of our different kinds of money, as far as can conveniently be done, as they stand at this date.

Appeal.

I have endeavored to present to you the greater facts and more fundamental principles of the money question.  Will you heed them and forever remember that, other things being equal, the volume, that is, the number of units in circulation in a nation, controls the general range of prices of commodities that the people must produce and exchange to pay the various monetary obligations of modern civilization and supply themselves with the necessaries of civilized life.  The money question is a question of property and prices.

Prices regulate profits in all industries.  Profits are necessary to equitable employment of labor.  Money, prices, profits, employment, equity of payments, all of these are necessary to prosperity and freedom.

In the face of these all-important principles, will you betray all of them into the further control of the banks and the Anglo-American gold conspiracy ?  Will you betray the people of your country, 70,000,000 of them, with upturned faces looking out of discouragements and unjust sufferings to you who sit here in the high places of legislative power, praying for relief and deliverance from the gold power ?

Have you neither sense of justice nor sense of official obligation, nor a heart for the suffering of the trustful, yea, the too trustful people, who have sent you to this Chamber to legislate for them ?  If not, yet humanity must exist, despite the betrayal of those lifted into political power.  And when once aroused and indignant at injustices long suffered, the people mount to the chariot and ride on and over the entrenchments of selfishness and error with a vengeance and unsparing cruelty that remind us of God's greater forces in wind and storm that show no respect of persons.

There's a cry among the needy, there's a wrong on every side;
For the bankers take the harvest and the reaper is denied.
Now the king mounts to his chariot, whose warning was defied.
For the rising sons of freedom shall soon come marching on.
In the old Plutonian temple there's an image made of gold.
Where his worshippers assemble in their revels as of old.
But a Samson now is feeling for its pillars, we are told.
Then arouse the sleeping people, and forward, men, march on.

But a greater poet said also:

But life shall on and upward go:
The eternal step of progress beats
To that great anthem, calm and slow,
Which God repeats.

So sang Whittier for the reformers of his day, when the arrogance of the slave power threatened the overthrow of the nation.  It was not long after that he sang of the victory, saying, with true poetic fire:

Loud and long
Lift the old exulting song.

Behold a Cloud of Witness for Justice.

I am a firm believer in the ultimate victory of America over monetary conspiracies.  We have all things about us in this glorious country to encourage us to persist in the line of justice and patriotism.  Our plains are fertile, covered over with waving fields of abundant and nutritious grain.  Our mountains are beautiful, often majestic, and always beckoning to highest thought and bravest action.

The statues of our heroes and statesmen range themselves in ever-increasing numbers along the aisles and corridors of our public buildings to inspire to noble action.

Our homes for the people, whether cabin or palace, show the efforts and aspirations of the Americans for beauty and comfort, and justice and peace.

Our schoolhouses, colleges, universities, bedeck our hills with greater strength and promise for the maintenance of the state than the rock-built embattlements and turreted castles of the foreign and ancestral lands across the sea.

Religion, reaching out in the direction of equity and fraternity, unpinioned by dogmatism, leads our people toward a common brotherhood for all mankind.  Art, culture, wealth, and independence.  What more can be needed to stimulate patriotic action ?  If these great surroundings and your own ambition to be worthy of citizenship in this age, surpassing the dreams of the Magi, and this country, opening a new epoch or freedom and progress, will not enable you to brave the threats and clamorings of the mercenary agents and venal influences of the greedy money mongers, then surely anything I may say will be in vain.

I have indeed been hopeful, yet in the midst of misgivings, that the members of this great legislative assembly might prove themselves worthy of the land and the people and the high order of citizenship and responsibility that they represent in this Congress.

To make it so and bring justice and prosperity back to a long-betrayed people we must withstand in this great crisis the insidious and merciless encroachments and legislative advantages that the gold and bond conspirators now see to fasten upon our beloved country.  I pray you, gentlemen, stand up erect, gird for the battle, and move forward like men worthy of the confidence and love of mankind.  But if you will not, still mankind is of greater value and power than money and all of its treacherous methods.  Still, whether you go with it or no, shall humanity move forward toward the dawn of a new and better day. [Applause]

The time will come when the unjust demands and the oppressive exactions of our Eastern brethren will compel the South and West to unite in the restoration of an honest dollar --- a dollar which will defraud neither debtor nor creditor, a dollar based upon two metals, "the gold and silver coinage of the Constitution." "Thomas efferson still survives" and his principles will yet triumph. He taught equality before the law; he taught that all citizens are equally entitled to the consideration of government; he taught that it is the highest duty of government to protect each citizen from injury at the hands of any other citizen.

I have just read your editorial pertaining to articles from the London Financial News. I can confirm the authenticity of the articles, having first used the article in a speech I made in congress in June 5, 1894.  I found the date of the article to be April 30, 1894, and my present recollection is that I verified it by reference to the Financial News of that date.  I used the article to show by the confessions of the great financiers of London that by free coinage of silver our country could at once command the greater trade of the world.  I send you by today's mail a copy of my speech on "Money, Banks and Debts of the World," containing said article, on page 21.

The greatest financial journal in London, if not the greatest in the world, acknowledges and points out incidentally the stupidity of American financial legislation in the following, which I quote from an editorial in the Financial News of London of April 30, 1894:

Senator Cameron points a plain moral when he remarks that if the United States would venture to cut herself adrift from Europe and take outright to silver she would have all America and Asia at her back, and would command the markets of both continents.  "The barrier of gold would be more fatal than any barrier of a custom house.  The bond of silver would be stronger than any bond of free trade."

There can be no doubt about it that if the United States were to adopt a silver basis tomorrow British trade would be ruined before the year was out.  Every American industry would be protected not only at home, but at every other market.  Of course, the states would suffer to a certain extent through having to pay their obligations abroad in gold;  but the loss on exchange, under this head would be a mere drop in the bucket compared with the profits to be reaped from the markets of South AMerica and Asia, to say nothing of Europe.

The marvel is that the United States has not long ago seized the opportunity, and but for the belief that the way of England is necessarily the way of commercial success and prosperity, undoubtedly it would have been done long ago.  Now, Americans are awakening to the fact that so long as they narrow their ambition to becoming a larger England, they cannot beat us.  It has been a piece of luck that it has never occurred to the Americans to scoop us out of the world's markets by going on a silver basis, and it might serve us right if, irritated by the continuous apathy of our government to the gravity of the silver problem, the Americans retaliate by freezing out gold.  It could easily be done.