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Fqrr vstt v The Commoner. DECEMBER i, 1S03. HR. BRYAN ON BIMETALLISM Mr. Bryan has written for the Encyclopedia Americana, now being issued by the Americana company of New York, an article on bimetallism. This article gives in condensed form the prin ciples involved in. the discussion of the subject and will bo reproduced in The Commoner by cour tesy of the publishers. Papers quoting from this article will please give credit to the Encyclopedia Americana. It is not convenient to publish the entire article in one issue. The first chapter is presented In this issue and other chapters will be reproduced until the entire article has been printed in The Commoner. BIMETALLISM. Gold and silver have been used as money for thousands of years, both the Old Testament and profane history malting frequent reference to such use of the precious metals. (See Money.) As time went on the metals were coined into convenient pieces, and the weight and fineness of the coins guaranteed by the government. Finally, a legal ratio between the metals was fixed and the coins made a tender in payment of debts. The term bimetallism is employed to describe a financial system wherein gold and silver are used as standard money and coined without limit at a fixed ratio. Bimetallism proper implies, first, that the money unit shall rest upon two metals; second, that these metals shall enjoy equal and unlimited coinage privileges; third, that they shall be connected by a fixed and definite legal ra tio; and, fourth, that the coins made from them shall be a full legal tender. The term "limping bimetallism" has been ap plied to systems wherein gold and silver were used as standard money, but in which one of the metals was not coined at all, or not coined on equal terms with the other. The term, free coin age, has sometimes been used to mean unlimited coinage and sometimes to mean gratuitous coin age. Unlimited coinage is necessary to a 'com plete bimetallic system. When coinage is limited the volume of standard money is regulated by law; when coinage is unlimited the volume de pends, first, upon the total accumulation of coin, and, second, upon the annual production of the money metals. This sum is further augmented by the coinage of gold and silver plate when mbney Incomes scarce, or lessened by an increased de mand for gold and silver in the arts when money becomes plentiful. Gratuitous coinage is not necessary to bl- metallism, although it usually accompanies it. A charge can be" made for mintage without destroy ing the bimetallic character of the system, but such a charge necessarily creates a difference be tween the coinage and the bullion value of the metal. When coinage is gratuitous melted coin can be recbined without loss; when there fs a mint charge melted coin loses an amount equal to the cost of coinage. The "melting pot test" is,therefore, not a test of honest money. Bimetallism does not rest upon any partic ular ratio; the coinage ratio is fixed by law, and can be changed by law. The ratio simply states the proportion existing between the silver dollar and the gold dollar when measured by weight that is, at the ratio of 16 to 1, the silver dollar weighs 16 times as much as the gold dollar. While the legal and commercial ratios between the metals have fluctuated from time to time the legal ratio has, as a rule, caused the change in the commercial ratio, and from the begin ning of history clown to 1873 the fluctuations in the commercial ratio were never as sudden or as great as they have been since 1873. During the 400 years which elapsed between 1473 and I87rf the extreme variation in the commercial ratio was from 14 to 1 to 16 to 1, although during that period there were greater changes In the relative production of the metals than have occurred since. For instance between 1800 and 1840 the worlds production of silver was about 4 to 1 in value, compared with the production of gold; after the now discoveries of gold in 1849 the production qf that metal so increased that the annual output or gold was soon more than 3 to 1 in value com pared with the output of silver, and yet dur nfe this tremendoua change in relative production the commercial ratio was comparatively stable, ow ing to the fact that all the gold and all the sil ver could go through the mints into the world a currency. Hostile legislation has driven the metals Widely apart since 1873 and it is the contention 61 bimetallists that friendly legislation will bring sthe metals together, . - . L The ratio of 16Tto lis the one advocated W rAmerJcan bimetallism, first, because it. was the ratio existing' when .the, crusade against silver. q gan; second, localise, i$: fhq rati? nowexisUng f betweon the silver and gold coins in circulation in the United States; and, third, because an In crease in tteo ratio, mado by increasing tho slzo of tho silver dollar, would to tho cxtont that it was joined in by other nations' requlro tho re coinage of silver coins into larger coins, and thus reduco tho world's volume of standard money. If, for instance, the ratio wore changed to 32 to 1 by international agreement, and the silver money of the world, approximating $4,000,000,000, were recoined Into $2,000,000,000, it would cause a shrinkage of about 25 per cent in the total volume of metallic monoy and, as contracts would still call for the same number of dollars, such a change in tho ratio would transfer billions of dol lars in valuo from tho wealth producers to tho holders of fixed investments. It will bo noticed that bimetallism relates to tho legal status of tho metals rather than to their commercial value, and does not necessarily imply tho simultaneous or concurrent circulation of both metal3, although American bimotallists contend that tho restoration of free coinage at the ratio of 16 to 1 would result In the concurrent cir culation of both metals in this country. When tho ratio was 15 to 1 in this country gold wont to a premium of about 3 per cent because tho French ratio was 15 to 1; when our ratio was changed to 16 to 1, silver, being undervalued at our mint as compared with its value at tho French mint, rose to a premium of about 3 per cent. The Grosham law has often been quoted against bimetallism. That law Is merely a state ment, mado by a master of the English mint of that name, who announced as his observation that the bad coins ran the good coins out of the country the explanation being that while, to a majority of the people, ono.coin was as good as another so long ns it would pass current, tho jewelers would melt and tho dealers in money would collect and export tho heaviest coins (coins passing by weight rather than by legal tender outside of their own country). It can readily bo seen that the Gresham law was not intended to apply to tho use of two metals, and that it can apply to tho use of two metals only when there is difference betweon government ratios. When, "for instance," wo had a ratio o 15 to 1 in this country and tho French ratio was 15 to 1, there was .a tendency to send American gold to Franco and bring French silver to tho United States, and yet this tendency did not cause tho exportation of all American gold to Franco or of all French sil ver to the United States. France, being at that time the stronger nation commercially, fixed the ratio and our gold rose to a premium. In tho payment of debts silver was tho money employed, and gold, when it was used, was used at its com modity prico. After 1834 the situation was re versed and silver went to a premium. Gold was then used for the payment of debts and for gen eral transactions, and silver, when it was used, brought a premium. It Is not fair to say, how ever, that gold went out of circulation, entirely during flie former period or that silver went out of circulation entirely during the latter period, for a great deal of the undervalued, coin remained here and served the purpose of money, and lo that extent relieved the pressure upon other kinds of money. That which loft our country in exchange for another kind of metal did not reduce our cir culation, and tho exported coin still remained a part of the circulation of the world and helped to fix international prices. In bimetallism tho debtor always has tho option. This is true, not because of a desiro on the part of the government to favor the debtor, but because the parity can be maintained in no other way. If the debtor has the option the de sire of all debtors to secure that metal which is the cheaper, will in Itself, by increasing the de mand for the cheaper metal and decreasing the demand for the dearer metal, 'tend to make the commercial value of tho metals identical with the legal value, whereas, through tho operation of the same selfishness, tho metals wouia; be driven apart if the creditor had the option, because the demand of tho creditors for the dearer metal would still further increase its price, while the lessened demand for the cheaper metal would still further decrease its prico. The arguments in defense of the bimetallic system begin with the self-evident truth that fitabillty in purchasing power is the test of virtue or honesty in money-tha dollar being the best dollar which changes least from year to year in its command over all articles of merchandise. Sta hUitv would not be so Important if all transac Sw on a cash basis, but. with. the increase In credits, especially long time credits, it In a matter of vital Importance to havo tho purchasing power of tho dollar fluctuate as little as possible, Jacobs, in his work on tho precious metals, bIiowb that an increase of 2 per cent a year in tho pur chasing power of tho dollar would amount to an increase of 500 por cont In 100 years. It will bo seen, therefore, that tho bunion of national dobts and other long-tlrao securities may bo materially increased or decrcasod by a chango in the pur chasing power of tho dollar. That tho valuo or purchasing power of the dollar depends upon tho numbor of dollars has been declared to bo, and correctly so, tho most fundamental prlnclplo in tho scionco of money To Illustrate: If tho business of tho world Is ad justed to a certain volumo of money, and that volume of money Is aftorward suddenly doubled, prices will ncccssnrlly rlao, becauso thcro will bo more monoy with which to purchase other things. If, on tho other hand, tho volumo of monoy is suddenly reducod one-half prices will fall be cause of tho scarcity of money. Next to absolute stability In tho purchasing powor of tho dollar or unit, tho most doslrablo thing Is that any nec essary chango in tho purchasing power of th'o dollar shall bo gradual rather than sudden, and a sudden change In tho valuo of the dollar can only bo prevented by tho prevention of a sudden change in tho volumo of money. Whon It Is remembered that tho money changer and tho owner of fixed investments profit by a rising dollnr it Is easy to understand why they havo always led the move ments in favor of scarco monoy. Dr. Sturtovant in his book, entitled "Eco nomics, or tho Science of Wealth," Illustrates tho gradual chango in tho volume of metallic money as follows: "Gold and silver, considered as a standard value, aro an ocean flowing around tho whole economic world, and very largo additions at two or three points aro Immediately distributed to overy part." Tho quantity of metallic monoy is so great that tho annual addition to it is small in com parison. Bimetallism is theoretically better than mono metallism (cither of gold or silver), because un der tho double or bimetallic standard the volume of monoy changes less rapidly and less suddenly than under tho singlo standard. Thus far history has shown no Instanco of a large simultaneous in crease In tho production of both gold and silver. There was an enormous increase in tho produc tion of silver during tho 16th century; then there was a great increase in tho production of gold during tho year 1849 and the years immediately following. Early in tho 'seventies thcro was an other increase In tho production of silver and we are just now enjoying a considerable incrcaso in tho production of gold. In each instance the in crease in tho production of one metal has spread itself over the entire volumo of money and has, therefore, caused a less proportionate increase than it would havo caused had the world been using but one metal, cither gold or silver, as standard money. The superior stability of tho bimetallic sys tem over tho monometallic system has been shown by many illustrations, the moat familiar being that which likens tho volumo of money to a body of water receiving the Inflow from two rivers instead of one. The practical argument In favor of bi metallism Is that neither metal alono furnishes a sufficient quantity of money to support the world's commerce. Bimetallism is, therefore, act ually necessary as well as theoretically advantag eous. This phase of the question was not much considered until after 1873 because, prior to that date, there were sufficient mints open to the coin age of both metals to furnish a monetary use for every ounce produced. When all of tho gold and, silver available for coinage could go through the mlnta into the currency, each nation could con sider tho question from a purely theoretical standi point, because so long as tho commercial world had the benefit of the entire volume of gold and, silver, it did not make so much difference how many nations used one metal, or the other, or both. When, however, tho crusade against sliver began and enough nations joined in it to reduce the demand for silver below the supply available for coinage, then each nation was compelled to consider not only its preference as to a standard, but whether and it was a vital question it waa always sure of having a sufficient quantity of th chosen metal. " (To be continued in next issue.. .." j !I tl w M M 'I, ll m . 1 ;' tr- .- . a V ft. c .t ttitet -i-' , A rti.