The Curse of Gold, and The Philosophy of Currency.By O.F. Burton.
New York Ennis Brothers, Steam Printers, 42 Dey Street. 1876.
When corrupt legislation ruins trade and commerce, political demagogues cry out "Reform," and advise the people to practice economy; but, how are people to economize that have neither money nor employment? If the wealthy economize the poor must starve!
While labor can, and does, produce all the necessaries and luxuries of life in abundance, those that labor should never want Nations that produce and consume the most per capita. rank the highest in civilization. Barbarians who are non-producers, and who subsist solely upon what nature provides, should rank the highest as political economists. More than three thousand million dollars were expended in freeing black labor from bondage. Four million ballots are enough to free the products of white and black labor from a bondage which is becoming more oppressive than involuntary servitude.
Let producers reason with the facts on the following pages, and vote accordingly.
Gold, from the Garden of Eden to the Discovery of America.
A resume of Biblical and Profane History, from the Garden of Eden to the Nineteenth Century of the Christian Era, shows the bloody reign of a king, whose power over civilized man is second only to the power of the Almighty. Gold is that monarch, and the deeds that have been committed in consequence of it, are enough to convince one that it was the forbidden fruit in the Garden of Eden.
"And a river went out of Eden to water the garden; and from thence it was parted, and became into four heads. The name of the first is Pison : that is it which compasseth the whole land of Havilah, where there is gold."
(Genesis. 2d Chapter, 10th and 11th Verses.)
Gold must have been known, and used in the arts by the Antediluvians : for, three hundred and seventy years after the Deluge, Abram sent his servant out to find a wife for his son Isaac, and the servant met Rebekah at a well-near the city of Nahor, and she gave the servant and his camels water, and the servant gave her a gold earing, of half a shekel in weight, and two gold bracelets of ten shekels in weight.
(Genesis, 24th Chapter.)
"And Abram was very rich in cattle, in silver, and gold."
(Genesis, I3th Chapter, Sd Verse.)
"And he made his seven lamps, and his snuffers, and his snuffdishes, of pure gold. Of a talent of pure gold made he it, and all the vessels thereof."
(Exodus. 37th Chapter, 23d and 24th Verses.)
The last quotation refers to the ornaments that were in the tabernacle, built by Moses.page break
"And they came to Ophir, and fetched from thence gold, four hundred and twenty talents, and brought it to king Solomon."
(I. Kings, 9th Chapter, 28th Verse.)
The four hundred and twenty talents of gold, here spoken of, was used in building the Temple at Jerusalem. It was equal in value to about twelve million dollars.
There was neither gold nor silver coined in those days, and both of those metals were exchanged by weight. A shekel weighed half an ounce, and a talent weighed one hundred and twenty-five pounds, Troy.
The Jews, from the days of Abram to the death of Solomon, were gold hoarders, and their immense wealth in gold and silver made them the prey of other nations.
The Philistines were continually fighting with them, and frequently captured their cities and robbed them of their treasures. During king Solomon's reign the Jewish nation reached its zenith, but those inseparable destroyers of nations, gold and corruption, bred dissension and strife among the people, and shortly after King Solomon's death, the ten tribes of Israel seceded, and for nearly five hundred years they lived at enmity with the tribes of Judah.
The wars between the tribes of Israel and Judah were frequent and of a very sanguinary character; finally Judah triumphed over Israel, and they were again united. The metalic wealth of the Jewish nation became concentrated in the city of Jerusalem, the capital of Judea; and shortly after the reunion of Israel and Judah, Nebuchadnezzar, king of Babylon, made a gold raid on Jerusalem; robbed it of its treasure, and reduced the Jews to captivity.
Seventy years later, Cyrus, king of Persia, hearing of the great accumulation of treasure in Babylon, captured and plundered that city and liberated the Jew's.
After the capture of Babylon, the Jews returned to Jerusalem, and for three hundred years thereafter they were assiduously engaged in hoarding gold.
A religious creed prevailed with them at that time, opposed to fighting on the Sabbath.
Ptolemy, king of Egypt, hearing of this peculiar belief among the Jews, took advantage of it, and marched an army page break into Jerusalem on the Sabbath; captured its treasure, and carried a hundred thousand of the inhabitants into captivity.
Twenty years later, Antiochus, king of Syria, captured Jerusalem, robbed it of its remaining treasure, and sold forty thousand of its citizens into slavery.
Shortly after the raid of Antiochus, a deliverer arose among the Jews, named Judas Maccabeus. He rallied the scattered people, and gave battle to their oppressors. The Jews fought with such heroic courage that they succeeded in establishing their independence again, and enjoyed it for a century and a quarter.
Five hundred years before the Christian era, Syria had become very wealthy in gold and silver. This excited the cupidity of Darius, emperor of Persia, who made a gold raid into that kingdom, robbed it of its treasure and carried the spoils into his own empire.
About this time, Greece had become a powerful nation, and the emperor of Persia fearing an invasion of his territory by a Greek army, used his gold to create dissension and civil war among the Greeks, and thereby destroy their power.
This ruse had the desired effect, and Persia accomplished by gold what she feared to attempt by arms.
For a long time some of the states of Greece had opposed the use of gold as money. Sparta, one of the most powerful of the states, prohibited the use of gold as a currency during the reign of Lycurgus, and established iron instead. Subsequently, Lysander caused the iron law to be abolished, and gold was again used as a currency Then Persian gold flowed into Greece in large quantities, and the people partook of the forbidden fruit freely; this caused a rapid deterioration in their virtue and morals, and finally civil war broke out between the states, which soon reduced them to a condition that invited a conqueror. Then Philip of Macedonia invaded Greece with a large army, and fought a decisive battle at Cheronea; the Greeks were defeated, and that proud people which had, for upwards of three centuries, led the whole world in the arts of civilization, was blotted out as an independent nation.
During the civil wars in Greece, a large portion of the gold in the country at the commencement of those wars was taken to other countries for security, consequently Philip was dissatisfied page 6 with the amount of gold captured in Greece, and determined to draw on the Persian empire for a larger supply. When he had fully organized an army for the invasion of Persia, he was assassinated by a captain in his own service.
Alexander, son of Philip, succeeded him, and after he was well seated on the throne, he determined to carry out his father's project of invading Persia. He crossed the Hellespont, with an army of 35,000 men, and met a Persian army of 110,000 men, and defeated them. At Issus he met a Persian army of 400,000 men, and defeated them. The capture of Issus gave Alexander possession of the city of Damascus, where the emperor of Persia had stored a large amount of treasure. After disposing of Damascus and its treasure, he invested the city of Tyre, and after a siege of seven months he captured and destroyed it, and eight thousand of the inhabitants.
The City of Gaza was the next place captured by Alexander, and ten thousand of the inhabitants were sold into slavery. From Gaza he marched his army into Egypt, but finding the Egyptians had devoted themselves exclusively to agricultural pursuits, and there being very little gold or silver in the country, he retraced his steps through Syria, and met the emperor of Persia and his army at Arbelia. Darius offered Alexander ten thousand talents in gold, (equal to $275,000,000), half his empire, and his daughter in marriage, to make peace with him. Alexander declined the offer, and defeated the Persian army with great slaughter. Darius fled into one of the provinces of his empire, and shortly after was murdered by one of his own subjects.
Alexander's victory at Arbelia, gave him possession of the Persian empire, and its vast treasure in gold and silver; but he did not live long enough to enjoy it, for six years later he died in a drunken debauch, in the city of Babylon.
The curse that Persia had put upon Greece recoiled upon herself, for her own immense wealth became concentrated in the hands of a few of her people, and nine-tenths of her population were slaves to a money oligarchy; consequently, when Alexander invaded Persia, the down-trodden people were ripe for rebellion, and joined his army in large numbers.
Persia's metalic wealth was the cause of her overthrow. It destroyed the patriotism of her people, and invited the invader to join her rebellious subjects in dealing out retributive justice to her rulers.page 7
About one hundred and twenty years before the Christian era the Romans took the gold fever, and commenced raiding for gold upon other nations.
A hundred years later a Roman army, under Pompey, captured Jerusalem and reduced Judea to a Roman province.
Under the rule of Roman viceroys, and governors, Judea was thoroughly plundered, and her people became divided into violent and sanguinary factions, which caused great destruction to life and property. A large portion of the people were continually plotting to overthrow their Roman rulers, and, whenever they were suspected of treason, the adherents of Rome showed them no mercy. During this unhappy state of affairs, a portion of the Jews proclaimed Christ the Messiah and King. This drew upon him the vengance of Rome's cuthroats, and Pilate, governor of Judea, cowardly submitted to his crucifixion. The Jews continued to rebel against Roman rule, until finally Jerusalem was invested by a Roman army under Titus; six months of carnage around its walls ended with a total destruction of the city, and the final subjection of the Jewish people. Thus perished a great nation, that thrice relieved itself from bondage and was thrice conquered by king Gold.
What a commentary on the avarice of man!
Gold in large quantities flowed into Rome from Judea and other conquered provinces, and for nearly four hundred years Rome hoarded the plunder obtained from other nations. The rich grew richer, and the poor, poorer; until the entire wealth of the nation was absorbed by a very small minority of the people, and the balance were reduced to the most abject slavery. The wealthy reveled in gilded vice and corruption, until the great safeguards to nations, Virtue and Valor, were no longer inherent in the people. The forbidden fruit did its work effectually, and Rome became a nation of imbeciles and serfs. Then the gold raiders commenced to prey upon her, and for a time she ransomed herself with treasure; but finally she was conquered, and the emperor, Augustullus, abjectly begged his life of the conqueror of his empire, and yielded his royal neck to the iron yoke of Odoacer, king of the Goths and Vandals.
Rome's epitaph should be: Died from a surfeit of Gold.
From the middle of the eighth to the latter part of the ninth century, the Scandinavians made a number of gold raids on page 8 England, France and Spain. In 981 the Danes made a gold raid on England, and a ransom was promised; but England failed to meet the payment, and the kingdom was surrendered to the Danes.
From the fall of the Roman empire to the commencement of the crusade wars, the strife for power between Church and State, kept the people busily engaged, except for a short period during the reign of Charlemagne. He did not seek to accumulate gold, but conquered for the purpose of advancing the people to a higher standard of civilization. The reign of Charlemagne fills the brightest pages of history. He taught the people to seek for wealth in the soil instead of the mines; and his daughters set the people good examples in industry, by spinning flax for their own garments. Charlemagne was a guiding star to the people of Europe for a short time, but at his death they were again left in darkness.
The next great event that caused a stir in the metalic wealth of Europe, was the crusade wars, instigated by Peter the hermit. Those wars commenced in 1095, and lasted over a hundred years.
In 1099 the Christians captured Jerusalem and massacred the Jews and the Mahometans. One hundred and twenty-seven years later, the Tartars, under Gengis Kan, made a gold raid into Syria, captured several cities and massacred Christians, Jews and Turks.
During the crusade wars nearly all the gold coin disappeared from Europe; what little remained became very much debased and remained in that state until the latter part of the sixteenth century.
The merchants of Genoa, Venice, and Constantinople gathered up gold coin during the crusades, in payment for supplies furnished to the armies on their way to the Holy Land. During the war and after it closed, gold advanced in value enormously throughout Europe, and the price of all commodities, measured by gold, declined accordingly.
Changeable Value of Gold.
The prevailing idea of the unchangeable value of gold is entirely hereditary. Very few people have endeavored to acquaint themselves with a true history of this metal. Because it has been the custom with many nations to use gold as a measure of values, many people take it for granted that nothing else can be used for that purpose. This inherited idea and custom has been instilled into the minds of the people; not that gold has any qualities that are suitable for an equitable measure of values, but simply because money speculators find it the most potent tool to secure the profits of labor. It is the best material for a changeable measure of values that has yet been found; therefore, the people have been compelled by class legislation to use it, and custom has cultivated the idea that nothing else will answer the purpose. It has never been used exclusively as a currency by any nation; but, at different periods, where it was plentiful, it has been used quite extensively. When it was scarce, people were compelled to barter their wares or exchange them for all manner of materials that have from time to time been used as a substitute for gold, or as money. Gold possesses inherent qualities which make it intrinsically more valuable than any other metal, and those qualities render it the most suitable material for hoarding up accumulated wealth, and the most unsuitable material for a standard measure of values. If Congress should repeal the legel tender act, and make gold the standard measure of values again, that would largely increase the demand for it; and the increased demand would increase its value, for its value is regulated by supply and demand, like all other commodities. Congress cannot regulate the value of any natural commodity that possesses intrinsic value; that is self-evident. How then can it regulate the value of one of the most intrinsically valuable commodities that the earth produces? Congress can enact that 254/5 grains of gold, cast into a coin, shall be denominated a dollar; but it has no power whatever to regulate the value of gold, in coin or in bullion. Any body of men that assume to regulate, by legal enactments, the value of gold, assume a prerogative that belongs only to the Great Power that regulates all natural laws. Then in order to obtain an unchangeable measure of values, some material must be employ- page 10 ed that is devoid of intrinsic value; then Congress can give to it an arbitrary legal value of the standard required. An article possessing only a legal value, cannot be affected in its value by natural laws; consequently it would remain unchangeable in value, except by the will of the creating power.
The most convenient material for a currency, and the least in intrinsic value is paper. Treasury notes with a legal standard of value stamped upon them, making them a lien upon the material wealth of the whole nation, are implements as necessary to the welfare of the country as plows and reapers.
G. L. Comstock, author of a history of gold and silver, says: "The estimated amount of those metals in circulation at the date of the discovery of America was $170,000,000. What had become of that vast amount of gold that the ancients had been fighting for, from fifteen hundred years before the Christain era up to the fall of the Roman Empire? War and abrasion had done its work upon that idol, and it had become nearly extinct; but the discovery of gold in America and Australia gave it a new lease of power, which in time will fade away and be known no more."
In Rome in the fourth century, gold was so plentiful that beef cost one dollar and fifty cents a pound, and wine was sold for five dollars per quart; whereas in England in the tenth century, an ox could be purchased for one dollar and forty cents; wheat sold for eight cents per bushel; bread four pounds for a cent, and laborer's wages were only seven cents per day.
In the fourteenth century, Edward III fixed, by law, the salary of a parish priest at fifty dollars a year, or twenty dollars and board. Thirty dollars a year for board! That would not pay a week's board in one of our fashionable hotels. When we consider that produce and labor have held nearly the same relative value from the first to the present century of our era, and the relative value of gold and produce has fluctuated, in seven centuries, more than one thousand per cent., we can realize how worthless gold is as a measure of values. One thousand per cent, was an enormous advance in value even for so long a period as seven centuries; but Wall street has changed the value of gold twenty-five per cent, in one day.
It is plainly evident from the foregoing facts that the value of gold is regulated by supply and demand, the same as all other commodities; and as the supply of gold cannot be regulated by page 11 human power, it should never be used as a measure of values.
A measure of values should be susceptible of regulation, otherwise it will be as changeable in its measure as its own value. Engineers regulate the regulators of steam engines, and watchmakers regulate the regulators of watches; the sun regulates our planetary system, and a greater regulator regulates the sun. We should act in accordance with the laws of nature, and establish a measure of values that can be regulated by a regulator that is susceptible of regulation; otherwise great irregularities must continue in our finances.
In 1550 nearly one hundred million dollars in gold and silver had been brought into Europe from America.
From 1545 to 1600 the Potosi mine in South America yielded one hundred and twenty million dollars, mostly silver.
This great increase in gold and silver caused a corresponding increase in the price of produce and labor. In 1600 wheat had advanced to eighty cents per bushel, and all other products had advanced in an equal proportion.
There is not much probability that within the next two centuries gold will become as scarce throughout the world as it was in Europe from the tenth to the fifteenth century; but in this speculative age, and with the enormous and steady increase in trade and commerce, fifty million in gold could be carried at as high a standard of value as one million in the fifteenth century; especially if gold continues to be the measure of values for all other products.
The legitimate trade of the country should be relieved from the incubus of a gold measure of values, and Congress should legislate to prevent a gradual combination of circumstances whereby gold hoarders can say to farmers, your wheat is worth only fifty cents per bushel by our gold measure of values; and to laborers, ten hours of toil is worth only fifty cents of this precious metal.
It is clearly the duty of Congress to provide some means for exchanging the products of the country, whereby producers and consumers can be relieved from the enormous tribute that they now have to pay to speculators in money. The nebulous legislation of Congress on financial questions gives speculators a great advantage over honest traders, especially when the laws are construed upon a gold basis.page 12
The six per cent, government subsidy National Bank act, is too great a tax on the industries of the country; and that act, and the resumption act, should be repealed immediately. Let the money come from the National Treasury directly to the people. There is no necessity for subsidizing middlemen to deal out government currency to producers. What is wanted is a self-regulating currency that will give an even and unchangeable measure of values to all products. A legal token, that will measure values as accurately and equitably as we arrive at quantities by legal weights and measures.
Labor should be the only standard of values; and National Treasury Notes the only measure of values.
There is no more necessity in making a measure of values out of gold, than there is in making a measure of quantities out of that metal. If a bushel of wheat is exchanged for a one dollar legal tender note, the receiver of the note holds a legal representative of the intrinsic value of the wheat, which is exchangeable at anytime for a quantity of any commodity equal in intrinsic value to the bushel of wheat; therefore it is not necessary to have the exchanging medium of the same intrinsic value as the commodity for which it is exchanged. If the exchanging medium has a high intrinsic value, and its volume cannot be controlled, it will furnish a very uneven measure, and cause frequent derangements in trade. On the contrary, if the medium has little or no intrinsic value, and the volume can be perfectly controlled, it will furnish an unchangeable and equitable measure of values.
But, say the hard money advocates, government notes may be legal tenders, exchangeable for wheat, beef, clothing, etc., but if a dollar note cannot be exchanged for a gold dollar, "the money of the world," as they boastingly term it, it will not answer as a measure of values.
A fair amount of reasoning on the theory of currency and exchange, will amply refute this bold assertion; besides, we have practical evidence of the superiority of government notes over gold as a measure of values. For nearly fourteen years they have been our only currency; and since the war business has prospered to a much greater extent than it ever did under a gold measure of values, with its accompanying worthless paper auxiliary. The depression in trade for the past year is entirely owing to the page 13 attempt of Congress to force a resumption of specie payment, and thereby shrink the value of labor and products to the vacillating standard of the speculators' gold measure. The people have conducted exchanges without gold since 1861; and, if Congress does not compel them to use that juggling measure of values again, the country will continue to prosper, and gold will no longer be potent in shrinking the value of labor and products; on the contrary its own value would shrink, and the loss would fall on the gold hoarders instead of the producers.
It is utterly impossible to give a steady measure of values to the products of the country under a gold standard, for its value is continually changing under the operation of speculators; and through frequent changes in the measure of values they secure the profits of labor. With a mixed currency of gold and paper it is equally impossible to maintain a steady measure of values.
Trade requires a volume of currency ten times greater than gold can furnish; hence it is absurd to expect any government to furnish a paper currency redeemable in gold; and a partial redemption is a source of great evil. It is class legislation in favor of a money aristocracy. It is a legal advantage given to speculators over producers. And any public man that advocates the restoration of this advantage to a money oligarchy, will be politically damned, when the people become throughly posted on the subject.
Government should not issue demand notes; its notes should be legal tenders, in payment of all debts, public and private, including duties on imports, and whenever gold is wanted, it should be bought in the market, the same as oilier merchandise. (Payment of the interest on the public debt having been authorized in gold, it should be bought for that purpose.) The people should understand that legal tender notes are to be used in paying their debts to the government, and in purchasing merchandise from each other; and not as demand notes on the government for gold. When they want legal tender notes redeemed, they should purchase some commodity with them, and then they will receive intrinsic value for representative value. Bakers will redeem them with bread; millers with flour; farmers with wheat; and laborers with labor; and if any one wants gold, they can purchase it with legal tenders, the same as they purchase tin or any other metal. Gold hoarders, who think there is no wealth page 14 in any thing but gold, would seek to employ their treasure in some way in order to derive an income from it. The demand for gold would be light if it were no longer a legal measure of values, and its own value would shrink accordingly. The people should look upon government legal tender notes not as their own property, but as a loan to be used in exchanging their commodities: they should look upon them as a loan that government could call in at any time by levying a gold tax upon the people, equal in amount to the currency in circulation. They should remember that they received the greenback notes from the government in payment for supplies that the government had a right to take from them by taxation, and without any money equivalent. They should remember that when they ask to have government notes redeemed in gold, that they are virtually demanding the government to levy a gold tax upon themselves, which they are utterly unable to pay. It should also be remembered that government paid out large amounts of legal tender notes to speculators for almost worthless supplies, during the war, and in return those patriots purchased from the government gold interest bearing bonds, and paid for them in legal tender notes. Many of the government bonds were secured by the present holders for forty percent., in gold, upon their nominal value. $40,000 in English Consols could have been exchanged for $100,000 in United States six per cent, gold bearing bonds, and a handsome profit realized from the transaction—and no doubt many availed themselves of the opportunity. $40,000 in English Consols at three per cent, would amount in fifteen years, interest and principal, to $58,000; whereas, the interest alone on $100,000 in United States bonds, at six per cent, would amount in the same time to $90,000—leaving a balance of $32,000 in gold in favor of the interest on United States bonds, against the principal and interest of English Consols; and yet some of our Congressmen are very much troubled about the credit of our government abroad.
We produce more than we consume, and there is no reason why we should not pay cash, or its equivalent, for all that we receive from foreign countries.
The bondholders are now soliciting Congress to pass a law that will allow them to gather up the balance of the greenback notes, at from eighty-five to ninety per cent, on a dollar, and exchange them at par for gold interest bearing government bonds. And Senator Sherman advocates this measure.page 15
Is it weakness in our government that compels it to offer from ten to fiften per cent, discount to secure a loan that will remove from circulation a currency that does not cost the government or people anything, but will, if removed, ruin the business of the country?—or is it a weakness in Senator Sherman that induces him to advocate the payment of such enormous discounts to still further increase the bonded debt of the country?
Senator Sherman is a man of acknowledged abilities, and he deserves to be severely rebuked for advocating the perpetration of so palpable a fraud upon the industries of the country. The people of Ohio would deserve the thanks of the whole nation if they would retire this champion of a money oligarchy to private life. General Grant also bids for the support of the money oligarchy, by recommending Congress to repeal the legal tender act, and thereby force the funding of the currency at a still greater discount, and with a corresponding increase in the profits of the bondholders. If General Grant was an expert in financial matters, his recommendations on a financial question would he worth criticising; however, the people will have an oportunity to show their appreciation of his financial abilities at our next presidential election, for he will undoubtedly be the candidate of the money oligarchy.
Within the present century the leading commercial nations of the world have contracted debts amounting in the aggregate to $20,000,000,000; or in other words, a money oligarchy, chiefly through class legislation, has succeeded in securing bonds, against the chief commercial nations of the world, covering this enormous amount; and the producers are now compelled to appropriate the profits of their labor to pay the interest thereon.
How long this state of affairs will continue, in our country, depends entirely upon the wisdom of our legislators. If, by their greed for gain, they swell our debt to an amount that the profits on the industries of the nation will be insufficient to pay the interest thereon, then revolution will "wipe out" the debt, as all national debts have been "wiped out" when they became too great a burden upon the people.
To live comfortably, or luxuriously, without labor, is the problem that a large portion of the people are trying to solve.
Those who have a large capital in money or land generally succeed in solving the problem, with little or no labor; but a page 16 poor man must procure life sustaining commodities with labor; and his labor must necessarily command a price that will purchase a sufficient quantity of those commodities to sustain not only his own life, but the lives of a family of two or three persons depending upon him for support; this is a fundamental law of nature, and without it life could not exist. If a laborer produces no more than he consumes, his labor, and the product of his labor, are of equal value; but generally the products of the labor of one man are sufficient to support five or six persons.
The profit in free labor regulates its price almost exclusively, and the price of free labor regulates the price of its productions to a great extent The nonproducer cannot legally secure any of the profits of free labor except through a system of exchange, and if the medium used for exchanging products has a shifting value, those speculators who deal exclusively in exchange secure a very large portion of the profit of labor. If the measure of value is gold,' its scarcity admits of sudden changes in its own value which, with an arbitary rate of interest, legally robs producers of their profits.
In some cases the nonproducers secure the entire profit of labor, and the producers are barely able to exist. This state of affairs causes a large decrease in consumption, and a consequent stagnation in trade. Producers must be liberal consumers, otherwise trade and commerce will languish.
If nonproducers secure the entire profits of labor, leaving producers barely enough to sustain life, then surplus productions must be consumed by the nonproducers or remain in their hands without profit.
We have daily examples of the evil of under-consumption in the disposal of perishable products. Speculators generally hold those products at such a high value that the laboring classes are unable to purchase them for consumption, the result is that a considerable portion of those products are entirely lost; the speculators making up for the portion lost by large profits received on what is consumed. A fair profit would probably lead to the consumption of the entire product, thereby giving to the speculators an aggregate profit greater than the profits received from a partial consumption.
The moment that the profits in production are unequally divided, that moment under-consumption commences, and a page 17 general derangement in trade follows. It is clearly evident that middlemen and merchants are necessary, especially in a country like ours, where large quantities of produce are consumed from one to three thousand miles from the place of production. Merchants are just as necessary as mechanics. If a Kansas wheat-grower had to bring his wheat to Massachusetts, to exchange it for cloth, to supply his family with clothing, he would find that the cost of the trip would amount to considerable more than the profits that a merchant would receive in exchanging those commodities.
Legitimate mercantile business is indispensible in a true system of political economy; but gambling in produce is a curse to any country, and should be prohibited by stringent laws.
Capitalists should be allowed to establish banking houses and loan deposits of National currency at a legal rate of interest; but no other system of banking and loaning the currency of the country should be allowed—any other lawful system is a legalized fraud upon the people.
Economy in Currency.
If a mixed currency of gold and silver be again established, it would require at least $300,000,000 in gold to properly balance the paper; and as gold coin, when kept in circulation, loses over one per cent, per annum by abrasion, the loss annually would amount to over $3,000,000, and in less than one hundred years the whole $300,000,000 would become a total loss to the people. Gold is a very expensive currency, compared with paper, which loses nothing by abrasion; and a total loss of paper currency by individuals, produces a corresponding gain to the government.
Gold should be used only as a commodity, and it should be cast by the government into piece of one ounce, five ounces, ten ounces, and one hundred ounces, Troy weight; each piece should be stamped with the weight, and the standard in carats; then it could be exchanged by weight, at its market value, whenever it was needed in trade, and the loss by abrasion would be very small.
The great financial question, that many people believe to be beyond the comprehension of man, is as simple as the alphabet.page 18
The rate per cent. on money is the great governing power that controls trade and commerce, and all the industries of the country, and while producers are compelled to pay from seven to ten per cent, on money that does not net them but four or five per cent., trade must continue unremunerative.
Money is earning seven percent, for the lenders, and only five percent, for the borrowers; the result is, the borrowers are running in debt and becoming bankrupt.
If money was earning 3.65 per cent, for the lenders and five per cent, for the borrowers, the profits of labor would be more equitably divided. Reduce the rate of interest to 3.65, or, better yet, to three per cent., and the producers of the country would secure some of the accumulating wealth derived from their labor, and there would be no more complaints of hard times.
The domestic trade of the United States needs a currency of at least $500,000,000 in constant circulation, and that amount should be issued directly from the Treasury to the people; and the interest on loans of currency should be limited to 3.65 per annum.
Usury, directly or indirectly, should be punished by a heavy fine, and forfeiture of principal and interest.
An additional $500,000,000 in legal tender notes should be issued, with an equal amount of introconvertible bonds, as proposed by Judge Kelley, bearing 3.65 interest, payable in currency. $500,000,000 in currency should be kept in circulation, and the reserve could be drawn on when the business of the country needed a larger volume. The 3.65 bonds would regulate the volume of currency between the minimum $500,000,000 and the maximum $1,000,000,000, to suit the requirements of trade. Forty million people, in such an extensive country as ours, need, and can afford to carry, at least $500,000,000 in currency, in their business. It is but a trifle over twelve dollars per capita, and the law should require that amount, at least, to remain in the hands of the people; otherwise speculators would convert the currency into bonds, which would cause a stringent money market, and thereby force down the price of all commodities for the purpose of speculating in them. The people must be content to carry a little money in their business without interest; their carts, plows, and other utensils do not yield any interest, and money is just as necessary in exchanging the products of the page 19 country, as the utensils are in producing them. If utensils are loaned, the party loaning them should receive pay for their use; and if money is loaned, the party loaning it should receive pay for the use of it. If a man loans all his tools or implements of industry, he cannot produce anything; and if he loans all of his money, he cannot expect to do an exchange business on a cash basis. Producers use all their implements in their trade, except, in too many instances, the implements of exchange, which they loan on interest. Speculators loan out a large portion of their implements of trade, money, and conduct their business on a credit basis; this leads to buying what they cannot pay for, and to selling what they have not got, thereby causing great inflation in trade, and frequent financial panics.
When the rate of interest is high, people will loan their money, and conduct their business on an inflated credit system; this is axiomatic.
One of the greatest drawbacks to trade arises from the avidity of the people to secure interest on money. They resort to all manner of devices to carry on trade without money, when they have plenty of it loaned out at a high rate of interest. Many merchants buy goods on sixty days' credit, when they have funds in bank drawing but a trifle more interest than the discount on the goods would amount to if they paid cash for them. Their deposits in many cases are loaned to speculators, who use the money to "corner" and unsettle the value of the goods that the merchants are dealing in. With a currency in government notes, restricted to a low rate of interest, and its volume regulated by introconvertible bonds, merchants could forecast their business with a fair prospect of success, and without any fear of a sudden change in values, which might destroy all their profits and perhaps bankrupt them, as it often happens when gold is the measure, and "Wall street the ganger."
How are importers to pay for foreign goods? They must export as much as they import, or buy gold to settle the balance. They have done this for fourteen years, and they will continue to do it, unless the government attempts to balance gold and paper again, for the especial benefit of foreign trade, and to the destruction of domestic industries.
When gold is no longer a legal measure of values it will lose its fictitious value and decline to its intrinsic value; then page 20 the gamblers in currency will lose their most potent tool, and be forced to seek some other means of livelihood. Cheap money promotes trade on a cash basis; and dear money promotes inflation, extended credit, grand transmutation scenes, and financial panics. These are truisms that the people should not forget.
Only within the past three hundred years have paper notes, secured by gold, been used as money; and within the past fifty years banking, under this system, has become one of the "fine arts." Expert financiers frequently balance twenty dollars in paper with one in gold; occasionally they fail to maintain a balance, and when they do the paper always falls to their creditors—for an expert financier never looses his grasp on gold.
Financial feats in balancing paper and gold were practiced in this country extensively previous to our late war; and it is being practiced largely in England at the present time. In 1857 there were two hundred and sixty-three banks in the New England states, not including those in Boston, circulating $24,880,000 in their own notes, with only $2,110,000 in specie, held for redemption; twelve dollars in paper to one in gold! The same year New York State banks were circulating seven dollars in paper to one in specie, held for redemption. March 27, '57, the Clearing House transactions, for fifty-four New York city banks, amounted, in round numbers, to $40,500,000 in paper, balanced by $1,500,000 in gold; twenty-seven dollars in paper to one in gold!
This was on the eve of the great financial panic, and the inflation bubble was rapidly approaching a collapse; but the fifty-four city banks were sound, as far as their own notes were concerned, for their circulation was less in amount than the specie held in their vaults for redemption; but they were floating large amounts of doubtful paper hypothecated by stock jobbers and other speculators. August 8th, '57, the loans of those fifty-four banks amounted to $122,000,000, their circulation $9,000,000, and the specie in their vaults amounted to $12,000,000. October 8th, '57,—the blackest day of the panic—their loans amounted to $97,000,000, their circulation to $8,000,000, and their specie to page 21 $8,000,000. From August 8th, to Oct. 8th, '57, those fifty-four banks reduced their loans only $25,000,000; thus leaving $97,000,000 in the hands of speculators, which they were unable to call in in time to save their depositors from bankruptcy. It is plainly evident that the panic of 1857 was not caused by an over-issue of bank notes, or in other words by an inflation of bank notes. It was caused wholly by the banks loaning their deposits to speculators without proper securities. The banks had, for a long time, been loaning deposits at a high rate of interest, on very poor securities; consequently the banks became inflated with worthless securities, and when the people called for their deposits, instead of receiving bank notes, they were invited to examine the worthless assets held as securities for their money. The Ohio Life Insurance and Trust Co., at that time supposed to be the corner-stone of the financial system of Ohio, went into bankruptcy; and the grand inflation scheme of 1857, which was reared upon a gold basis, collapsed, with a heavy balance in favor of the speculators. Panics will occur under any financial system where gold is the standard of values, and a high rate of interest is allowed on the currency of the country. A high rate of interest is the talisman that draws money from legitimate trade into wild speculations.
For fourteen years our currency has been government notes, secured by the whole material wealth of this great nation. No juggling device of a gold standard has interfered with its free circulation, and, therefore, it has worked admirably. There never has been any system of currency to equal it, in convenience, economy and security; and if it is abolished, it will be the most gigantic fraud that was ever perpetrated upon a free people.
England claims that her currency is founded upon a gold basis: let us see if that is so. The first issue of $75,000,000 in Bank of England notes is secured by Bills of Exchequer, and the law requires that the balance of its issue shall be secured by gold held in its vaults; but when there is any extraordinary demand for money, parliament conveniently suspends that portion of the bank act requiring gold securities, and the bank is allowed to issue notes on government securities, until the demand for money is fully supplied.
There. are thirteen banks in England that are floating $500,000,000 in paper, with $10,000,000 in gold to secure their page 22 loans and indorsements; fifty dollars in paper to one in gold! Such is England's boasted financial policy, established on a gold basis. Cannot hard-money advocates discover inflation in this system of banking? There is one creditor of the English government that could collapse that gigantic financial bubble and beggar the nation! And yet we are told, by some of our senators, that unless our financial policy is established upon the English basis our foreign credit will be destroyed. "What do we want to establish a foreign credit for? Can't we produce as much as we consume? or, have we got to eternally run the nation in debt in order to exist? If the entire wealth of the nation is to be bonded for the purpose of obtaining foreign capital to create and enrich a money aristocracy, then the quicker we destroy our credit the better it will be for the American people. The people must rise en masse and wipe out class legislation, and class legislators, or the entire profits of production will be secured, through class legislation, to a money oligarchy, and the balance of the people will become slaves and paupers. That is the condition of the people of England to-day: the producing classes are slaves to a money oligarchy, and the balance of the people are paupers.
There is an abundance of currency in the National Banks at the present time, and yet there is a great depression in trade; simply because money speculators have drawn the currency into their coffers for the purpose of enforcing a high rate of interest.
Manufactories are suspending, and the operatives, being out of employment, are forced to a minimum consumption. Merchants are failing in their business in consequence of underconsumption, and thousands of honest laborers are forced into the great army of tramps that beg from door to door, until hunger tempts them to become criminals. All this suffering and crime is the result solely of class legislation. And now when the mischief is done, and money cannot be loaned in consequence of the great prostration of business, producers are invited to resume their toil on borrowed capital, at a lower rate of interest. Spring has come again; but a dead horse cannot eat grass, be it never so plentiful! Nearly the entire press of the Middle and Eastern States is controlled or overawed by the money power of the country. It dares not advocate a just financial policy, but it panders to the interest of the National Banks, and treats with ridicule every honest effort made by the people to unshackle the golden chain that is dragging them to destruction. page 23 The bond-holders claim that they took great risks in loaning the government money during the war, and they claim that they should be well paid for it. They want to convert the balance of the treasury notes into government bonds, and subject the country again to the old inflation system of banking upon a juggling gold basis. We know that some of the bond-holders took great risks in running the blockade; for they were engaged in supplying both sides with the sinews of war, for the purpose of prolonging the contest, and thereby enriching themselves at the expense of the government.
But the men that did the lighting took some risks, and thousands of them are now laying in unknown graves, while their wives and children are pleading to the government to repeal the acts that place them at the mercy of the bond-holders, who are steadily forcing them to pauperism and crime. Laboring men, instead of joining trade unions and striking for higher wages, should unite upon a financial policy that would secure to them the profits of their labor. They should not be led away by church and school questions. Religion has been used in all ages of the world, by political demagogues, to divide and enslave the people. The only vital question for the people to settle at the ballot box is, how to exchange the products of the country and prevent public robbers from securing all the profits of labor.
Organize! There is no time to lose! The money oligarchy is marshaling the speculators and office seekers for another four years raid upon the industries of the country, and the Grangers of the West and South are moving in solid phalanxes against them. The toilers of the East should break their party shackles and join the great army of producers in their noble effort to secure a currency that will protect them against legalized juggling with the national measure of values.
An honest financial system is the only foundation that will sustain a just and substantial government. Liberty, prosperity, and the life of our nation depends upon it!
We should review the past, that it may guide us in shaping our future.
We must disabuse our minds of the false idea that there is no solid wealth in any thing but gold.
We can perpetuate our government at its highest pinnacle of prosperity, and avoid the fate of Greece and Rome, by protecting honest industry from legalized robbery, and absolving our nation from The Curse Ok Gold!