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DECEMBER 18, 1903.
The Commoner.
MR. BRYAN ON BIMETALLISM
ir Tli-won hnc written frv tVin .nnifnun..ti. - . 4 XT A
J
Mr. Bryan has written for the Encyclopedia
Americana, now being published by the Americana
company of New York, an article on bimetallism.
This article gves in condensed form the prin
ciples involved in .the discussion of the suhject
and will bo reproduced in The Commoner by
courtesy of the publishers. Papers quoting from
this article will please give credit to the Encyclo
pedia Americana. It is not convenient to publish
the entire article in one issue. The third chapter
is presented in this issue, and the final chapter
will be reproduced in the next issue.
It is not out of place to refer in this connection
to another matter which has been tho subject of
much speculation, namely, the cost of produc
ing gold and silver. The labor cost has less In
fluence on the price of gold and silver than .upon
products of the soil. In the case of agricultural
p-oducts, an attempt to raise the price of any
kind of crop much above the cost of production
would immediately be followed by such an in
crease in tne crop as to at once cause a supply
that would reduce the price. If, on the other
hand, the cost of producing a particular kind of
crop is increased out of proportion to the price,
the production will fall off until the scarcity of
the article raises the price. In the case of tho
precious metals, however, the supply cannot be in
creased at will, and therefore the price does not
necessarily vary with the cost of production. If,
for illustration, all the gold mines were to be ex
hausted excepting one, and this one mine began
producing just the amount that all the mines
now produce, but no more, the price of gold would
remain the same whether it was produced at $1
an ounce or-at 1 cent an ounce.
We have no means of ascertaining the labor
cost of either gold or silver. About 10 years ago
the director of the mint was asked for statistics
in regard to the labor cost of producing gold
and silver, and his reply was that there were
no statistics in regard to gold and none of any
value in regard to silver, because the statistics
were gathered from the mines in operation and
did not include the money expended in prospect
ing and in mines that had ceased to produce.
No two mines in the world have produced either
gold or silver at the same" cost for any consider
able period. If we take into account the money
spent in prospecting and the money spent in the
purchase of claims that have proven worthless,
" well as the money invested in machinery and
other appliances, it is probable that more than
$1 has been expended for every dollar of either
gold or silver .taken out of the earth, and it is
also probable that, dollar for dollar, it has cost
less to produce gold th ""ver; first, because
gold is often found in nuggets, while silver is
found in veins, and, second, because gold is often
found on the' surface, while silver Is, as a rule,
a deep-mine product.
Space does not permit a history of the con
flict between the standards in Europe. England
has maintained the gold standard for about a cen
tury and has exerted a controlling influence on
several other European nations. During this per
iod France, although free coinage is now sus
pended, has been the most loyal supporter of bi
metallism, and' as,, late as 1897 offered to join the
United States, in the restoration of coinage", pro
vided England'and Germany would do likewise.
After the gold discoveries of 1849, the Europ
ean financiers became alarmed lest the increased
production of the yellow metal would largely aid
debtors, and there was quite a sentiment in favor
of the demonetization .of gold. Writers like
Chevalier were complaining that holders of fixed
investments were In danger of suffering from a
cheap gold dollar. It was exactly the same argu
ment that was "made against the white metal a
little later when the "Comstock lode and other
rich deposits of silver were discovered..
Bimetallism in the United States. The bi
metallic standard was recommended by Jefferson
and Hamilton, and adopted by our government by
a statute approved by George Washington April
2, 1792. This law provided for the free and un
limited coinage of silver and .gold at the ratio of
15 to 1, the coins being equally a legal tender for
all debts, public and private. The Spanish milled
dollar then in use in this country contained the
same amount of pure silver as our present silver
dollar and, the ratio of 15 to 1 having been
adopted, the gold dollar was made to weigh one
fifteenth as much. The silver dollars then coined
(many of which are now in existence), are some
times called the f'unit dollars," because they have
on the edge the folio wing inscription: "Hundred
Cents, One dollar or Unit." - -
In 1834 (June .28) the ratio was changed from
15 to 1 to ls.nssv t 1 .i.ti.
been piIIpH ir , '. ". " lur convenience has
purpose of cLuk T? chang0 was made for tho
as the nnw rn Mng ,the ?xI)orlou of gold, but
So mnW, Uo uudcrvalul silver it made gold
ThoZs iU ,f Tal U8- ThIs ,aw- supported by
Ihomas H. Benton, and approved by Andrew
all of0,P,rOVlde(iMfor th0 frco aud unlimited coin
age of gold and silver into full legal tender money
?n So S'flt;.ln lm lJanuarv 28 ie alloy
in the dollar both gold and silver, was cm I
of Thfti011? to one-tcuth. making the weight
tontL 5l andard fl1Ver d011ar 412 Kraln8 nlne
?i i?onnd the we,6ht of the standard gold
dollar 25 8-10 grains, nine-tenths line.
As the law of 1834 undervalued silver and led
to the exportation of considerable quantities of 'it,
It became difficult to keep fractional currency in
circulation, and to remedy this the law of 1853 was
enacted. By the terms of thia law subsidiary sil
ver (that is, coins of less denomination than SI),
were reduced '- m full weight to light weight and
made token money, with limited legal tender, in
stead of standard money. This law, however did
not change tho .revision in regard to the stand
ard silver dollar, the free and unlimited coinage
of that dollar still continuing. Tho subsidiary
silver coins were redeemable in the standard
money, either gold or' silver. Sometimes the act
of 1834 has been referred to as establishing tho
gold standard, but this ia erroneous. It merely
changed the ratio and that, too, by reducing the
weight of the dearer dollar, not by increasing the
cheaper dollar. Equally erroneous is the asser
tion that the act of 1853 established the gold
standard. That did not In the least change the
law relating to tho stanuard money, either gold
or silver.
On July 12, 1873, the demonetization of silver
was effected by an act entitled "An act revising
and amending the laws relative to. the mints, as
say offices, and coinage of tho United States."
(A similar law having the same purposo had just
before been enacted in England, and a copy of it
delivered to the director of our mint.)
When this law was passed the business of
the country was being transacted wiln paper
money, both gold and silver being at a premium
silver at a greater premium than gold. No
attention was being paid to the subject ot-nietalhc
money and the purpose of the law of 1873 was not
generally understood. In making' provision ior
silver Coinage it omitted the coinage oi the stand
ard silver uoilar, and substituted ior it a trade
dollar of 420 grains which was intended ior use
in the Orient, it being thought that the trade
dollar would compete with the Mexican dollar in
China and other eastern countries. In IS4 (Jan
uary 20) the federal statutes were revised, and in
this revision a clause was inserted limiting the
legal tender of silver coins to $5. Neitner thd act
of 1873 nor the act of 1874 was generally dis
cussed, and it Is only the recognition of a wen
settled fact of history to say that this discrimina
tion against silver and in favor of gold was not
known among the people, and not thoroughly dis
cussed even in congress. When the matter be
came known an active agitation for the restora
tion of silver- at once began, and nearfy ail of
those who voted for the measure denied that they
knew that the act of 1873 was intended to demone
tize silver '
The suspension of silver coinage by the' United
States alone would not have caused a fall in tho
price of silver as measured with gold, but other
nations joining in the demonetization of silver it
soon became apparent that the mints still open
could not utilize all the silver available for coin
age, and the gold price of silver began to decline.
The effort to reopen the mints td silver resulted
In the passage of what was known as the Bland
Allison act. The bill, as It passed the house, un
der the leadership of Richard P. Bland, of Mis
souri, restored the free and unlimited coinage of
gold and silver at the ratio of 16 to 1. The oppo
sition in tho senate was sufficient, however, to
defeat the bill in its original form, and to compel
the acceptance of a substitute framed by Senator
Allison, whose name was thus connected with
the law. This compromise measure provided that
there should be "coined at the several mints of
the United States silver dollars of the weight of
412 grains troy of standard silver as provided by
the act of January, 1837," and also provided that
such silver dollars "together with all silver dol
lars heretofore coined by the United States of like
weight and fineness" should be "a legal tender at
their nominal value for all debts and dues, public
and private, except where otherwise expressly
stipulated in the contract"
It will "be seen that this law restored the
coinage of silver dollars under the law of 1837,
tZft1
but did not contain the former provision In re
gard to tho unllmltod coinage of silver on private
account as gold was then and Is now coined. In
order to secure the bullion out of which to coin
the dollars mcntlonod in tho act of 1878, tho law
provided "that tho secretary of tho treasury la
authorized and directed to purchase, from tlrno
to time silver bullion, at the market price there
of, not loss than $2,000,000 worth por month nor
more than I4.000.ou0, worth and causo tho same to
sucS dollar." y' f8t "" fl Purchaacd.
t J? car,ryIn ol,t u,e provisions of the law, tho
mfrn yJ !opar, ment, Purcuasod the minimum re
quired rather than the maximum permitted.
It will bo seen, also, that while tho silver dol
lar was restored to general legal tender, a prov -
Jhe florIi18Crt,U Vmt P0rm,Ucd the cxclSalon of
the dollar by private contract-that Is, private n-
2iiviUal8n.werc. V??mllic discriminate against
2rifA althougfh hy wer not permitted to dis
criminate against gold. The purchase of silver
for co nage under this act retarded tho fall In
the price of silver, but as it did not consume tho
entire surplus it was not sufllclont to restore the
prico of bullion to tho coinage price of $1.29 an
The Bland-Allison act remained on the stat
ute books until 1890, when it was repealed by
what was known as tho Sherman purchaso act
which provided for the purchase of 4,600 000
ounces of silver per month, or so much thereof as
might be offered at a price not exceeding tho
coinage value, tho bullion to be paid for by the is
sue of treasury notes, redeemable In coin, and af-
ftvrh0 flP8 f JU,T' 1891' onIy 80 ch of the
silver was to be coined as was necessary to re
deem the treasury notes presented.
This act immediately Increased tho demand
for silver and raised tho prico of silver bullion,
not only in the United States, but all over tno
world, to about 1.21 an ounce. But when it was
found that oven this demand was not sufficient
to utilize all the surplus silver, tho price again
iCnnSecrnta,ry U8,' In t,,e cultural report of
1809, called attention to the fact that the Sner
man purchaso law raised the price of silver and
declared that that rise in price "unquestionably
had much to do with tho recent advance in tho
price of cereals," and added, "the same cause has
advanced the price of wheat in Russia and India,
and in tho same degree reduced their power of
competition. English gold was formerly exchanged
for cheap silver, and wheat purchased with tho
cheap silver metal was sold in Great Britain for
gold. Much of this advantage is lost by the ap
preciation of silver In those countries."
The Sherman act was also a compromise,
urged by the opponents of silver to prevent tho
passage of a free coinage law. Mr. Sherman, in
his "Recollections," published in 1895, thus speaks
of the strength of the free silver movement and
of the purpose of tho compromise: '
"A large majority of tho senato favored free
silver, and it was leared that the small majority
against it In tho othr .house might yield and
agree to it. The silence of the president on the
matter gave rise to an approhenslou that if a freo
coinage bill should paa both houses he would
not feel. at liberty veto it. Some action had
to be taken to prevent a return to free sliver
coinage, and the measure evolved was the best
obtainable. I voted lor it, but tho day it became a
law I was ready to repeai it, if repeal could bo
had without substituting in its place absdlute freo
coinage."
Tho treasury notes issued in tho purchase of
silver were made a legal tender for the payment'
of all debts, public and private, except where ex
cluded by contract, and were redeemaole by the
secretary of tho treasury "in gold or silver coin at
his discretion." It will be seen that the option as
to the coin of payment was reserved to the gov
ernment, but another clause In the measure which
declared it to be "the established polley of the
United States to maintain the two metals on a
parity with each other upon tho present legal
ratio or such ratio as may be provided by the
law," was afterward construed by the treasury
department to deprive the secretary of the op
tion. At any rate the department adopted the
policy of paying in gold when gold was demanded,
and although Secretary Carlisle afterward de
clared before one of the house committees that it
would have been better for the government to
have reserved the option, he, when he came into
office, followed the precedent set by his predeces
sor. Continued on Page 7.),
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