Hawke's Bay Herald. TUESDAY, APRIL 11, 1898. THE SILVER QUESTION IN AMERICA.

Hawke's Bay Herald, Volume XXVIII, Issue 9342, 11 April 1893, Page 2

Hawke's Bay Herald. TUESDAY, APRIL 11, 1898. THE SILVER QUESTION IN AMERICA.

Wb have referred more than once to the almost desperate efforts of the United States to obtain heavy gold loans. No country in the world ia more solvent than the States, yet other nations with onefiftb the wealth could raise almost unlimited loana on teimß more favorable than those offered by the States and rejected. The reason is plain enough. : To placate the " silver ring " the States have coined Bilver money ten times as fast as the requirements of the people for currency purposes demanded, and the I Burplus, amounting to several hnndred million dollars, remains stored in the Treasury vaults. Bat while the silver ] dollar passes lreely at par within the States, ib cannot be used to pay forelgu debti. For that gold or goods have bad to he sent out of the country. Gradually gold coins almost disappeared from circulation, being sent abroad, and it bus become necessary to attract gold back. But while it was easy enough to state tba present position, we were unable to explain how it was brought about. Tbh information is contained in a contributed article in a recent issue oi the Otago Daily Time*. The bi-metallio monetary system of the United States ia 1812, says

the writer, fixed the relative valne of gold to (silver as 1 to 15 instead of 1 t-> 15J, to which the whole of Europe theu adhered. An ounce of gold could therefore ba boucht in the Statea for 15oz of silver, and could be resold in Europe for 15Joz, thus offering a sure profit of half an ounce of silver on each transaction. This v?as found sufficient to cause a gradual drain of tho gold of tho States to Europe, and a crmnequonb difficulty in facing payments contracted to bo paid in that metal. This was removed by lowering the standard of quality of the gold to •9, bringing it down to the proportion of 1 to 15 98 in relation to silver, This rendered It possible to buy in the United State* 48 cents worth more silver for an ounce of gold than could be bought in Europe for'the same, consequently the silver immediately began to flow away from the New World to the Old. The war of secession swept both gold and silver out of circulation. After the war, Presidents Grant and Hayes and other statesmen all desired and recommended the resumption of specie payments, the retirement of the paper currency, and the adoption of gold as the standard. January, 1879, was fixed as the date for terminating tho compulsory currency of paper and the resumption of cash payments. In the meantime, before this date arrived, new Interests had sprung up which embarrassed the efforts of the Government. The Western States were overflowing with paper money. The inhabitants overlooked the fact that it had depreciated by about) 20 per cent, They merely noticed the nominal price paid for com» modicies and salaries. The withdrawal from circulation of 200,000,000 dollars of greenbacks sent them up to 75 per cent. Prices of commodities and rates of wages at once fell, a fact which the western people attributed to Che action of capitalists and speculators of the Eastern States in restricting the large currency which had produced the high prices. The cities and States that had borrowed largely for public works In New York, Boston, or Philadelphia, became alarmed at the prospect of having to repay in gold, or in paper at its market, instead of its nominal, value. They therefore demanded that the further restriction of the currency should be prevented, The production of silver had just undergone an enormous development, and those interested in the mines joined their influence to that of the "inflationists," demanding that nilver should as a legal tender be placed on the same footing as gold. A fierce contest now began between the Western States, partisans of bimetallism, and the Atlantic States, whichdesiredtheresumption of cash payments and a gold standard, with the result that in spite of all the efforts of the President and his Executive, the former managed to obtain a decision of Congress that the 346,681,016 dollars of paper still in circulation should not be either bought up or withdrawn, and that such as came into the Treasury should be reissued. The i-ilver weu, us their reward for supporting the " inflationists," as the favorers of poper currency were called, secured the remonetisation of silver. This was effected by a measure introduced in the Senate by Senator Matthews, and in the House of .Representatives by Mr Bland. President Hayes announced that he would veto the bill if it passed, and he was supported by the Legislatures of New York aud Maine and the mercantile community of the Eastern States, who demanded the absolute resumption of cash payments. The Senate, nevertheless, passed the bill in a somewhat modified form by a majority of twothirds. The principal modifications imposed were: The coinage of silver was limited to a minimum of two million and a maximum of four million dollars a month, The right to coin f and the profit) accruing therefrom, was reserved exclusively to the State. Holders of the new moneys were permitted to lodge them in the Treasury in sums of not less than 10 dollars, which were made receivable in payment of Customs duties, or other [ moneys payable to the State. The bill, as finally amended, retained the clause for which the silver men had fought— via., that all silver dollars issued in the . future— as well as all dollars of equal weight and standard previonsly issued by 1 the United States— should be received at their nominal value io payment of all ) debts, public or private, unless the contrary bad been expressly stipulated when • the debt was incurred. The President, as a protest against the breach of faith involved in making the acceptance of silver compulsory in payment of debts which had been contracted on the nnder standing of payment in gold, exercised the veto, although the majority by which the bill had been passed rendered the proceeding nugatory. The only effect of his action was that the Senate re-enacted the bill afterwards by a still larger majority. This caused the United States 5 per cents to fall from 109 to 103 on nil the European Exchanges, a till which has not been "ustained merely because all succeeding Secretaries to the Treasury have exercised their option in favor of payment in gold. An additional clause was added to the bill requiring the President to endeavor to come to an understanding with the European States, and particularly with (hose having a bimetallic currency, with a view of giving bimetallic money an international character aud fixing the value, in relation to each other, of the two metals. Id does not appear to have occurred to the legislators that they had themselves placed a very formidable obstacle in the way by having in 1837 changed the relative value of gold aud silver. The President made proposals to the European States for holding a conference, and his overtures were courteously received. A conference met) in September, 1878, with the result of showing, in the course of ft few sittings, that any agreement was hopeless. Meantime the coinage of silver, under the Bland Act, was going on. In ISBO President Hayea renewed his protest against the law. fle pointed oub that out of 72,848,750 dollars coined, 47,594,450 remained in the Treasury, while only 25,763,291 were in the hands of the public. Every method had beoa tried of keeping the coin in circulation, but they always speedily returned to the Treasury. The silver dollar, as compared with gold, remained at a discount of 9 to 10 percent notwithstanding the fact that it was, by law, a legal tender. The President recommended the repeal of the Act, or as analternative, that the weight of bhe silver dollar should be increased. The interests with which the President had to contend were too powerful to be overcome. The inflationists fell back on the hope of coming to an understanding with Europe. M. Magnin, an ardent bi-metallist, was the Minister of Finance in France, and an anderstaniiing having been come to with the French Ministry, a joint invitation by France and the United States was addressed to the Powers, and a conference at which 14 States were represented, met at Paris on the 19th of April, 1881. M. Majjnin was elected president. His Idea was that silver would regain its relative valne if it was coined freely side by side with gold, and an international bi-metallle convention concluded. Although both ■England and Germany were represented, and whjle their representatives expressed a hope for the rehabilitation of silver, neither was empowered to agree to any step having that object. The representative of India declared that his Government would not bind itself, unless on the condition that, and for so long as, a certain number of leading States agreed on their part to the free coinage of silver with fnll force as a legal tender, in the relative value of gold of 1 to 15J. At the eighteenth sitting the conference adjourned for a month to await the possibility of new instructions being sent to the delegates, ond on the 9th of Jnly, 1881, it was adjourned till the 12th of April, 1882. It has never met since. Meantime, each Presi. dent in turn has called attention to the increasing difficulties arising from the operation of the Bland Act, and the actual circulation of the silver dollar has slightly increased, while the number in the Treasury inoreased to such an extent that it threatened to exhaust the storage spaco. Up to the Ist of November, 1889 i the number of dollars coined under the Bland Act was 343,638,001, out of which 283,539,521 remained stored in the Treasury, In 1889 a new plan of aotfon

jlaboratecf by Mr Wlmlon, -Secretary tn (ho Treasury, was proposed by President Harrison, This was based on giving depositors of specie in ingots Treasury bills of an equal nominal value with the market valns of the silver at the date of its deposit, The proposition evoked strong opposition, fcml was only carried subject to a concesnrm to the Mlver inon of nn undertaking on too pnifi of the State lo purchnsß mon hhly iugol.i nf silver amounting to (i total weighti of 4.60O,000ov! for Treasury bills payable ou demandThe obligatory coinage of silver ceaaed on the Ist of July, 1891. The silver men have secured the advantage of this change, bub it is not easy to discover any way in which the State profits. The vast resources of the States enable them to carry on a system of finance which, in the poorer States of the old world, would speedily end in financial disaster. This does not, however, exclude the possibility of setious financial embarrassments arising, the position being clearly one of "unstable equilibrium." Negotiations for holding another international conference were set on foot laßt year. The principal States acceded as a matter of courtesy rather than with the hope of arriving at any agreement. President Cleveland, who in 1886, on assuming office for hh first term, had to make a requisition fnr money to construct new cellars for storing the oveiflow of dollars, has according to recent telegrams declared his purpose of going into the question, and it seems as if a change in the monetary as well as the commercial policy of the United States was now imminent. Though the writer of the article which we have freely quoted above does not " point a moral and adorn a tale" from the facts he states, the lesson in an obvious one. It is that it is utterly useless for any nation, however wealthy, to attempt to establish a bi-metallic currency singlehanded, Whether silver could be given a fixed value in relation to gold if all the nations agreed is, perhaps, a debatable question. We are among those who believe it to be not only possible, but desirable. But id is folly for one, or even two or three, nations to endeavor to establish such a ratio of values unless with the concurrence of all the chief currency- using peoples. India is a standing example of this. There, however, the evil has loner been recognised, and to a certain extent faced. The United States, on the contrary, endeavored to keep up the value of silver, and it has to free ignominious failure, and an enormous national loss, estimated at not less than one hundred millions sterling.