6 The Conservative ,
AN ECONOMIC PROPHECY.
[ Written for The Conservative. ]
The greatest benefit to be derived
from science is the ability to predict
future events. Thus in astronomy wo
can predict the diurnal and annual
journeys of the earth , the phases of
the moon , the seasons of the year ,
and the recurring eclipses of the
sun , moon and planets ; in physics
wo know that force used iu one direc
tion will generate force in another
direction , and that in chemistry the
mingling or separation of two or
more elements will produce a sub
stance different from the original one.
The predictions thus derived have no
affinity with the prophecies derived
from pretended miracles and visions ,
N but are based upon observation , exper-
-i iment and deduction , and generalized
into laws by which human conduct
can be guided , and to which it must
conform.
Political economy claims to be a
science. It claims to have formulated
the laws which relate to the produc
tion and distribution of things useful
to the human race in material mat
ters all laws which control the com
plex and multiplied relations of men
and nations with each other. If it
has a real value , it should therefore
enable us to forecast from existing
facts the future in those lines which
it comprehends. The writer does not
pretend to special knowledge of the
subject , but from such as he has def -
f rived after years of study in this
branch of science in its application to
business , he ventures in a general way
to examine the situation and to pre
dict what he considers the consequences
quences which shall flow therefrom
under economic laws.
1. In 1896 credit in this country
had been reduced to a lower stage
than had been known for many years.
The original unit , and therefore ulti
mate standard of valueB , had been sil
ver in the form of the silver dollar.
At the same time an attempt had been
made to establish a bi-metallic cur
rency , by providing a gold coinage of
eagles'and half eagles , at what , at the
time , seemed to bo the proper ratio of
one of gold to fifteen of silver. Owing
either to a mistake in settling the
ratio , or to a decline in the price of
silver or a raise in the price of gold ,
it was soon found that the ratio had
been fixed too low , and as the cheaper
always drives the dearer currency from
circulation , gold coins soon ceased to
circulate. In order to restore to circu
lation the gold coinage therefore , con
gress in 1884 changed the ratio to one
of gold to sixteen of silver. It was
BOOU found that the ratio between the
metals was too high ; and the silver
coins ceased to circulate , so that in
185G in order to maintain a fractional
currency , congress was compelled to
enact a law reducing the amount of
silver in all fractional coins , the sil
ver dollar was no longer coined , and
gold became the actual standard of
values , and the fractional coins in use
were partially token money , but re
deemable in gold by the national gov
ernment. During the civil war , the
legal tender paper money issued by
; ho national government , by its depre
ciation , drove both of the precious
metals out of use except for the pay
ment of the bonded obligations of the
government , which were paid in gold.
To remedy the evils arising from a
depreciated currency and to restore a
metallic currency , congress in 1878
enacted a law making a gold dollar
the unit of values , and gold then be
came legally what it had been actual
ly since 1834 , the standard of values
throughout the United States. At
that time the .relative value of silver
was much higher than gold , and no
complaint was therefore made until
1878 , when the relative value of gold
again became higher than that of sil
ver. Then was first heard of the
crime of 1873. Then again was pro
claimed the indispensable necessity
of a double standard of values. Then
commenced a series of acts of congress -
gress which ; while not overthrowing
the gold standard , would have led in
evitably to the actual adoption of the
silver standard under the name of bi
metallism ; for in the meantime the
actual relative values between the
two metals had changed from a ratio
of 15 or 16 of silver to one of gold , tea
a ratio of which the relative value of
silver to gold was thirty- two to one ;
and it' was obvious to reasonable
minds , that any law which would
make obligatory the use of the metals
at the former ratio , in payments of
debts , really meant the adoption of a
silver standard.
The effect of this agitation between
parties which were , divided nearly
equally , was disastrous to business.
In every transaction was involved the
doubtful question of what should bo
the medium of payment. Sales were
prevented through fear of what
should be the value of the money to
bo received therefor. In some form
nine-tenths of the business of the
country was done through instrumen
talities of credit , and this credit de
pended on tno character of the stand
ard of values. Through constant re
iteration , the nature , use and value of
credit wore distorted and magnified
in the minds of the people. When ,
therefore , in 1896 , the question of
etandards was finally decided , and
the result was fully understood , the
public mind rebounded from the
lowest grade of despondency to an
ideal region of hope and confidence.
Credit was restored. Business re-
vived ; and the constant tendency has
been to extend the une of credit be
yond the limits of safety , and into
avenues of business in which it has
no legitimate place. Even without ,
the events which subsequently oc
curred , the natural inclination to go
to extremes would1 have been a source
of danger. With the addition of those
causes , in the opinion of the writer ,
calamity has now become inevitable.
2. In 1898 , under what seemed to
be an irresistible pressure of public
opinion , war was declared between this
country and Spain. Two hundred
thousand men Were taken from the
channels of industry and engaged in
tlie most expensive and destructive
of all human avocations. Arms ,
materials and stores were required in
immense quantities. Great fleets had
to be prepared and equipped with the
munitions of war. It has been estimated - , ,
mated that the Spanish war and the ,
conquest of the Philippine Islands .
have , cost this country $400,000,000
and 80,000 lives out of 200,000 men
engaged therein. While war lasts
also , it is intensely stimulating to all
industries of a country engaged
therein , because , while on the one
hand great numbers of men are taken
from the ranks of competitive toilers ,
on the other hand every branch of in
dustry is directly or indirectly em
ployed in manufacturing or furnishing
the munitions and supplies to carry
it on. In consequence , rates of wages
and prices of commodities steadily ,
advance to extravagant heights , to
recede when the war is over to nor
mal levels. We have had the former
of these phenomena during and since
the Philippine and Spanish wars.
Prices and wages hav.e advanced and
apparent prosperity has everywhere
filled the laud.
This prosperity has also been great
ly stimulated by the war between the
English and Boers in , South Africa ,
in which the -English have been
chiefly dependent on this country for
their supplies of food , horses and
mules for their cavalry , and the
transportation of their munitions and
materials.
8. Three causes have tended to ex
pand and inflate the currency. First :
During'the long depression extending
from 1891 to 1898 , growing out of the
agitation in reference to the'standard
of values , gold flowed out in enor
mous amounts and with unprecedent
ed rapidity , and national and railway
bonds , and obligations of the people
were returned in place thereof. There
wns but one method of bringing back
the gold , and under natural conditions
this method always acts automatical
ly. When money is too plenty , prices
go up , the home market for products
falls off and money seeks other places ,
where products can be purchased at
