XL
VOL. VI
GERMAN SILVER MEN.
Declaration of the Bi-metallist Members
f the German BilTeixIommiaaion.
pa
'TRKSBl 1TED BY E- B- AIDEEWS-
Appendix to the Record of the Twenty.
First Session By German Thinkers
And Scholars (Of Note.
Reprint from The RevleV of Reviews
The following document,, no part of which
has heretofore found Its way Into our news
papers or Into any English translation, la re
carded by President Andrews as one of the
most telling and weight; summaries of the
ease for bl-metalllsm that has ever been made.
Its authors are German authorities and schol
ars of high standing and great learning, and it
will have many points of Interest for American
students of the monetary problem. Editob
bf tbs Review or Rsvisws.
The undersigned, members of the Ger
man Silver Commission, believe them
jelves compelled to draw from the course
of the commissioner's proceedings the
following conclusions: ,
INCREASED PURCHASING POWEB OF GOLD.
1. We consider it proved by science and
xperience, and partly, in fact, by the ad
missions of prominent adherents of the
ole-gold standard, that the power of
old to purchase goods has risen since the
general extension of the gold standard
1873) is still rising today, and musi
tontinue to rise.
Our grounds for this belief are: i v. .,
1. Thej-ise in the purchasing power
of gold, that is, the general fall in the
price level of commodities, was predict"'
ty the well-known monetary w, ..e,
Wolowski and Ernst Seyd, in 1868, be
fore the introduction of the gold stand
ard. This prophecy was repeated later
toyE. de Laveleye and Carey. Even Dr.
Bamberger said, in. the session of the
Reichstag May 20, 1873, according to
the stenographic report: "On the con
trary, gentlemen, I fully agree with one
of the speakers who have preceded me,
that a greater demand for gold will re
sult from our gold policy and the similar
policies adopted by other countries. Gold
will then rise, and a consequence of our
currency reform will be that prices with
lis, if we once go over to the gold stand
ard, will decline." Robert Giffen, recog
nized as one of the best authorities of
the gold-standard party, declared in
1888: , "If events are the touchstones of
prophecies, no prophecy was ever more
certain than the increased dearness of
gold. That the fall of prices throughout
a compass so general as that in which
we now see it falling is to be referred to
an elevation in the purchasing power of
gold is generally, and I might almost
eay universally, admitted."
2. The attempt to refer this lowering
in the general level of prices to other
causes, lying outside the coinage system,
for instance, to cheapening and improve-
ment in means of communication, to the
perfecting of processes and machines for
the production of goods, etc., must be
considered a failure, for the reason that
the same causes were present in the same
strength during the twenty-year period
before 1873, though at that time there
was observable a gradual elevation in
the prices of goods in general; while,
since 1873. That is since the beginning
of the fall in the gold price of silver
through the intorduction of the gold
standard in Germany, a sharp and per
manent lowering in general prices has
come in.
Moreover, the industrial development
referred to is at present specially strong
in the lands having the silver standard,
yet without inducing any fall of prices
there. This is a direct proof that silver
has not lost in value, but merely gone
down injits gold price, and that, therefore,
the fact which confronts us is simply
an elevation in the value of gold.
3. Tbe objection that many things, as
city rents, securities, and, most of all,
wages, have increased in price is without
weight, because in all these things power
ful special factors have been influencing
prices. City rents must advance so long
as the population of the country con
tinues to be drained away into thelarger
towns, evoking a permanent increase in
the demand for i housos. Securities ad
vance in accordance with the increase in
the purchasing power of the income
which they yield. The prostration of the
productive industry lessens the demand
for capital for productive purposes and
increases the demand for those securities
whose interest is certain to be paid.
Wages rise with the elevation of the
standard of life in the different classes of
the population, although the full satis
faction of the demand thus originated is
made possible by tbe bad industrial
position of employers. The social bitter
ness proceeding from this unsatisfied de
mand is mostly a result of the pressure
with which a bad coinage system afflicts
the entire life of industry.
RESULTING EVILS.
II. Tbe advance in the purchasing
power of gold, proved in our judgment
beyond refutation, brought about by
the disuse of full silver money and the
adoption of a gold standard, has de
monstrably produced the following in
dustrial evils:
1. An incessantly heavier and heavier
burden is falling on the debtor in favov
of tbe creditor. In respect to this Arch
bishop Walsh, of Dublin, remarks: "A
great part of the capital employed in the
business of our land has passed into the
hands of creditors who have neither toil
ed nor spun, but hold securities and
mortgages. The discouragement caused
by this state of things is very deep. After
it has continued a number of years a
sense of hopelessness masters t entire
business world; all desire to undertake
business enterprises is paralyzed; a mul
titude of establishments are closed; the
laborer is forced out of work; and labor
ers as well as the whole middle 'class of
the population are made to feel that a
great misfortune has come over them.
The result, in fact, reaches still further;
a t rows of people whe were once well-to-
do in business have now become recipi
ents of alms."
2. This injury to the debtor must at
last involve the creditor, since the debtor
is becoming unable to pay. ,
3. A set-back to German agriculture
is manifest, referable, on the one hand,
to the necessity of selling a constantly
increasing amount of depreciated agri
cultural products in order to pay wages,
interest, rent, leases, taxes; and, on tbe
other hand, to tbe increased power of
competition on the part of other coun
tries, silver countries, that is, and
countries on a money basis of depreciated
paper. In proportion as their silver or
paper loses in power to buy gold, these
countries enjoying in effect a high export
premium, are able to throw their native
products upon the world's markets at
prices far beneath what it costs German
farmers to produce them, so plunging
these latter in deep distress.
4. The demonetization of silver Is also
working a more and more visible injury
to German manufacturing industry:
(a.) On account of the ever-lessening
ability of the farmer class to purchase
manufactured products.
(b.) On account of the decreases in ex
ports to silver lands and of the conse
quent recoil upon tbe home market of
the articles hitherto exported thither.
(c.) On account of the competition
offered by the rapidly developing manu
facturing plants of silver lands, favored
by the low cost of production there and
by the premium upon exportation there
from produced by the fall in the gold
price of silver.
Unless means are taken to prevent, it
will not be long before the manufactured
products of the silver countries will find
the German market. To im port Indian
yarn into Germany is already a paying
operation.
5. A suppression of the desire to en
gage in industry is the natural result of
falling prices. Instead of being applied
to undertakings that are for the people's
economic advantage, capital seeks invest
ment in securities considered certain to
pay interest. Lower rates of interest re
sult. In order not to suffer from this,
uncertain foreign securities are purchas
ed, occasioning a heavy loss of German
capital, f specially bad for small inves
tors. , eu
6. Capital cannot permanently
clear of the injuries which debtors suffer,
nor can it remain unaffected by the fall
ing off of production. Obligations made
payable in gold lead to the bankruptcy
of individuals, as well as of States
(Greece, Portugal, Argentina.)
7. Constantly increasing difficulty be
sets conutries which are financially in
volved by having gold debts to pay. In
stead of being able to reduce their
finances to order, they are confronted
with an increasing agio npon gold, and
also, corresponding to this, with an in
LINCOLN, NEB., THURSDAY. OCTOBER 4, 1894.
crease of the premium upon the products
which they export. This exportation,
moreover, is to the disadvantage of tbe
manufacturers and the agriculture of the
lands having the gold standard.
8. There results a permanent injury
and exhaustion of Germany's silver min
ing industry, which cannot be normally
carried on at the present prices of silver.
But as silver mining ceases there also
ceases in great part the production of
copper, lead, zinc, etc. In this way many
millions are yearly lost to the income of
the German nation; many thousands of
laborers are deprived of bread; entire
districts of Germany are ruined.
9. A falling off amounting to billions
is taking place in the value of the na
tion's land and soil, threatening particu
larly the agricultural districts of the
eastern provinces; while the growth tak
ing place in the great cities and manu
facturing centers is going on in an un
healthy way. Increasing discontent is
overpowering the population, showing
itself in the progress of socialistic democ
racy and also in the anti-Semitic move
ment, which E. de Laveleye foretold as a
result of introducing the gold standard.
10. The depopulation of the rural sec
tions means a weakening of the German
military power. In case of war, our
financial preparations are entirely unsat
isfactory. That other countries are
quite as badly off as we in this respect
affords no satisfaction.
11. The fall in the gold price of silver
severely endangers our monetary circula
tion. We have in circulation nearly a
billion marks face value in thalers,
small silver pieces, nickel and copper
money, whoBe bullidtt value in all hardly
exceeds 400 million marks. This condi
tion gives rise to a donble danger viz.:
That our monetary system may break
down at critical times, and that counter
feit full legal-tender silver coins may be
circulated, indistinguishable from those
struck at the public mints, a process, at
tbe present low gold price of silver,
affording counterfeiters enormous profits
It is known that vast counterfeit issues
are already in circulation in other coun
tries. 12. AH these evils lead every now and
then to crises, which disturb business by
raising rates of discount, resorted to in
order to protect gold, which all banks
anxiously do, for the most part with
drawing it from commerce by an em
bargo. ' '
13. Beyond all question we have to
anticipate a still more acute develop
ment of these evils. All the silver coun
tries must try to place themselves on the
gold basis of Germany and the rest of
the great powers hold fast thereto.
Modern commerce cannot permanently
endure a difference in basal moneys, the
separation of the world into gold coun
tries and silver countries. ! But any
further extension of the gold system
muBt, as Goschen predicted so early as
1878, lead to a business crises such as the
world has never yet passed through.
ADVANTAGES FROM BEMONETlZATION F
SILVER.
III. Nothing but a restitution of silver
to its former coequality with gold as a
monetary metal can bring the needed re
lief. We promise ourselves the following
benign results in case of such restitution:
1. The persistent fall of general prices
would cease, the prices of all products
would again be determined in a normal
way, and agriculture and other indus
tries would flourish anew.
People's fears touching money deprecia
tlon, inflation, and injury to creditors,
supposing silver to be restored, rest up
on exaggerations. International free
coinage would at most leave barely
enough excess of gold and silver over the
industrial demand to keep pace with the
increase of business and population and
with the constant addition of new coun
tries to the civilized portion of the world.
Tbe precious metal production with
which we now have to reckon is, in fact,
proportionally to the various demands
which would be made upon it, very much
less than that of the fifties and the sixties
which then brought rich ecouomic bless
ing and did no injury whatever.
2. When prices rise, both the impulse to
undertake industrial enterprises and the
rate of interest also rise, working an ad
vantage to capital which fully makes
good any possible diminution in tbe
purchasing power of money. Public In
come swells, permitting an advance in
the salaries of the officials. A flourish
ing condition of general Industry en
hances the demand for labor and betters
the situation of the laboring classes.
3. Were it possible to make specie
payments in silver as well as gold, it
would be easier for countries with de
preciated paper money to regulate their
finances. Many can never accomplish
this in any other way. Variations in
paper-money values would then no
longer curse commerce; the products of
German industry would be in vast
T
HON. JOHN W. WILSON,
Our One-Armed Veteran Candidate or State Auditor.
imounta exported to silver lands East
Asia, Mexico, South America, and at
the same time the ability of our agricul
tural population to buy goods would be
restored.
4. A period of general advance in ma'
terial prosperity would rob of all signific
ance the agrarian, anti-Semitic and
Socialist-Democrat movements of agita
tors, and preventjthe mutual bitterness
of our political factions from becoming
as it now threatens to become, more
acute.
5. Instead of the separate measures
of value now actually in use by the
world's commerce, gold alone in some
oountries and silver alone in others,
there would be a single measure of value
for all mankind, that secured through
gold and silver together by rendering
invariable their values relative to one
another. That this fixity in the relative
values of gold and silver can be brought
about is proved by history, for it acta
ally prevailed frem 1803 to 1873 owing
to the mintage of both metals by France
That it is possible by a onion between
the chief commercial governments to
establish a practically unchanging rela
tion in value between silver and gold,
was unanimously recognized, after long
investigation, by the English gold and
silver commission of 1888.
OBJECTIONS CONSIDERED.
The objections against the above
opinions of ours seems to us to lack
sufficient foundation. '
1. If it is said that the restitution of
silver as a monetary metal is possible,
or possible in accordance with justice to
creditors, only by rating silver to gold
at its present market value in gold, we
reply that the market price of silver to
day is abnormal, resulting from a series
of panics evoked by legislation, and
from a limitation in tbe demand for
silver having no other cause than the
artificial one of closing mints to this
metal. Besides, it cannot be admitted
that the creditor has any natural right
permanently to receive at tbe debtor's
cost, in consequence of tbe steady rise
iu the purchase power of gold, a value
continually more and more in excess of
what would fall to him were there no
such appreciation of gold.
2. In reply to the objection, resting
on misunderstood theories, that the rela
tion in value between two "wares," gold
and silver, cannot be "fixed" by statute,
we appeal to actual experiences with bi
metallic mintage in France, where, be
tween 1803 and 1873, it maintained for
the whole world the relation of 15 to lf
Ithus persistently continuing the relative
'value of gold and silver, with slight
variations corresponding to the usual
movements of exchange, in spite of tbe
greatest fluctuations in their relative
production that has ever been known.
We appeal further to the unanimous
judgment at whidti the English Gold and
Silver Commission of 1888 arrived,
although half its members were opposed
to bi-metallism. Here is what the Com
mission says:
"We think that in any conditions fairly
to be contemplated in the future, so far
as we can forecast them from the experi
ence of tbe past, a stable ratio might be
maintained if the nations we have allud
ed to (Great Britain, the United States.
Germany and the Latin Union) were to
accept and strictly adhere to bi-metall
ism at the suggested ratio. We think
that if in all these countries gold and
silver could be freely coined and thus be
come exchangeable against commodities
at the fixed ratio, the market value of
silver as measured by gold would con
form to that ratio and not vary to any
material extent.
"We need not enter upon any extended
explanation of our reasons for this view,
since such reasons can be derived from
what we have set forth above, and since,
in our opinion, they abviously follow
both from theoretical considerations
and from the experience of the last half
century.
"It in fact appears impossible to main
tain any other view."
8. If it is objected that the restitution
of silver would occasion for Germany a
crisis whose limits could not be foreseen,
it must be noticed in the first place that
we do not strive for any interposition on
behalf of silver Bare on tbe basis of an
international agreement. No sort of
distrust can be occasioned by bi-metall
ism when it is introduced simultaneously
in all tbe great nations.
Besides, the fear of a "flood" of silver
is entirely groundless.
(a) Because not an increase but a de
crease in silver production is now in
prospect;
(b) Because the silver in the silver
countries (East Asai, Mexico) and in
circulation as money in the gold lands
has not yet become depreciated. The
billions which circulate as thalers, mark
francs, shillings and guilders still hold
fast their old value;
(c) Because compared with the tre
mendous stock of precious metal in the
world, which, including wrought gold and
silver, are valued at 100,000,000,000
francs ($20,000,000,000), the yearly
production is insignificantly small;
() Because the severe and long-con
tinued crisis has naturally reduced the
demands of business on the stock of gold
and silver coins, and in a period of
flourishing industry this demand will
greatly rise.
But the speedy establishment of inter
national bi-metallism seems to us neces
sary more particularly in view of the
facts concerning the production of the
precious metals.
The testimony of expert geologists has
strengthened us in our conviction that
goM is not adapted to . be alone th
measure of value, and that the fears of a
too great production of silver are utterly
unjustified.
Experts have unanimously declared:
(a.) That the large production of sil
ver in Australia is a transitory pheno-
n
i.
NO 17
menon, whose end is but a Utile way in
the tnture;
(6.) That silver production is at pre
sent rapidly falling off in the United
States, not only in consequence of the
fall in gold price, bat as well because the
bonanzas and also the carbonite one
necessary for smelting are becoming ex
hausted; (c) That a permanently large produc
tion of silver is to be expected only in
Mexico and South America, where, be
cause those countries are on the silver
basis, the gold price of silver has, in onr
belief, no effect in checking the production
of the metal.
As against tbe view prevalent in our
country that the gold price of silver fell,
because of increase in production, it is
certain that this fall is to be referred
entirely to the doings of legislators; that
when tbe fall began the production ot
silver was, in fact, not sufficient to meet
the demand; and that tbe American sil
ver laws led to a "skinning" of the silver
mines, which was the main cause of the
increase in production. Let normal con
ditions return and we may expect astable
production of silver, corresponding to
the vast demand, though hardly suflt
cient to satisfy it.
The production of gold has greatly in-'
creased in the last few years, yet not in
a way to equal the demand so long as
gold alone is full money. Should the
gold states at last be driven to go on
and lay aside their many billions of sil
ver money, continually losing more and
more of its gold value, it would be abso
lutely impossible to fill thegap so caused
in their circulation.
But the production of gold cannot
maintain itself at its present height. The
more strongly and intensively the extrae
tionofgold is pushed, so much more
rapidly and completely will the mines be
exhausted. The allegations of Professot
Ed. Suess in reference to the prospective
exhaustion of gold mines have not been
proven incorrect, but have been confirm
ed; and Suess, when before the Commis
sion, only strengthened us in his views
when be declared that the present copious
production of gold is bringing the world
essentially nearer to the moment assum
ed by him when the produntion of gold
will be entirely at an end.
In the Transvaal, according to micro
scopic investigations, it is only a ques
tion of fossil "soaps" (alluvial or dilu
vial gold). The wealth of gold there,
therefore, does not refute but confirms
Suess' doctrine thatimportant treasures
i'c gold are to be found only in newly
opened countries, where they quickly
give out.
People still refer to the possibility ot
further "surprises" in respect to gold pro
duction. This possibility is all the time
growing less and less with men's restlessly
advancing examination of the earth's
surface.
The gold production of today, inade
quate as it is, is rapidly using up the
world's last great gold reserve. Tobnild
the world's coinage system upon a pro
duction which can at best last only some
decades is as impossible as a coinage
system based upon tbe chance of "sur
prises."
A provident statesmanship cannot dis
credit silver and let it lose its value, when
all human foresight is to the effect that
the metal will be absolutely indispen
sable in the future.
The present moment, witnessing an in
crease in gold production which may be
the last, is precisely the time to carry
through an international system of bi
metallism, as this can now be done with
out any fear that gold will leave the
circulation or attain an agio. Those
who prophesy a gold agio in case of bi
metallism overlook the fact that they
thereby ascribe to gold a scarcity and
dearness too great to allow of gold
possibly continuing the sole standard.
If, now, the united German government
recognize the necessity of procedure to
stop the depreciation of silver, it com
ports with the high position of Germany
as a nation that it should assume the
initiative toward international negotia
tions, exerting its influence in the coun
cil of the nations in favorof silver, whose
depreciation had its beginning in the
German coinage law of 1871. Such is
the condition of affairs that Germany
will be permitted to reckon upon the co
operation of all powerful States, includ
ing England.
Dr. arendt,
Von Kardorff-Wabbitz,
Leuschner.
Von Scbalecha,
Wolfing.
