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Page 14
The improved, more extended, and more intimate intercourse of the nations
brought about by the introduction of steam, electricity, and other
agencies tends to minimize the fluctuations of the two metals, and
indicates that the divergences of the metals in medi�val times was due
rather to the want of speedy, easy, and certain intercourse and
communication of the nations than to an innate commercial tendency of the
two metals to diverge. Had the same intimate and speedy commercial
relation existed between the nations of the world in those times as now
exists, the equalizing tendencies of trade would evidently have prevented
not only the ratio of divergence to which the metals attained at different
periods, but would have prevented a difference of ratio existing between
the different nations at the same period of time.
From 1761 to 1800, inclusive, the relative production of gold decreased
steadily, until it was but 23.4 per cent. of the total value, to 76.6 per
cent. of silver. In other words, there were for many of the later years
over 50 ounces of silver produced to 1 of gold, and yet the ratio stood
long at 15.68 to 1. This is almost exactly the ratio fixed by Hamilton and
Jefferson, fixed because of its long-continued maintenance in European
markets. During these forty years the production of silver in proportion
to gold was never for even one year as low as the highest proportion of
any year since 1873, and yet the money value only varied from 14.42 to
15.72, or a fraction over 8 per cent. In the face of such figures as
these, the change in relative production since 1873 seems too trifling to
be taken into account, especially since in that year and some time after
the value production of gold at 16 to 1 was much the greater, nor was it
till 1883 that the world's silver product exceeded that of gold.
In 1800-10 the annual production of gold was $12,069,000 and of silver
almost exactly $39,000,000, or some 50 ounces to 1; yet the highest ratio
was 16.08, and the lowest 15.26. This relative production changed very
slowly, and in 1831-40 of the total in values produced 34.5 per cent. was
gold and 65.5 per cent. silver.
That is, there were, for ten years, about thirty times as many ounces of
silver mined as of gold, and during these years the change in the ratio
was so minute that it can only be calculated in small fractions of 1 per
cent. In 1841-50, for the first time since the middle of the sixteenth
century, we find the production of gold the greater, that metal being 52.1
per cent. of the total product, and silver but 47.9 per cent. During the
decade the lowest value ratio of silver to gold was 15.70, and the highest
15.93, a variation of only 1.4 per cent. Then California and Australia
poured out their wonderful golden flood, and all the world was changed. In
1851-55 the gold yield was 77.6 per cent. of the total, and the silver
yield 22.4, and for the next five years the change was but .2 of 1 per
cent. In other words, during those ten years the average annual yield of
silver was less than 5 ounces to 1 of gold; so if the "overproduction
theory" laid down by the _Times_ were correct, gold should have
lost--well, at least 70 per cent. of its value in silver. The actual
variation was from a ratio of 15.98 to one of 15.46, or a relative
depreciation of gold of considerably less than 3 per cent. Now, it is
alleged by many who have made a study of prices during that period, that
in actual value gold depreciated 25 per cent.; so it is plain that it
carried down silver with it, and the only logical explanation is that the
mints were equally open to both.
We have seen that in all the century and a half when the mines were
pouring forth silver at the rate of from 20 ounces to 1 of gold up to 55
ounces to 1, the greatest variation in their value was less than 9 per
cent., and in the twenty years when the silver production was to that of
gold as less than 5 ounces to 1, the value of gold produced being more
than three times that of silver, their money value varied less than 3 per
cent., and yet we are coolly asked to believe that since 1873 silver is to
be rated among variable commodities like potatoes, the size of the crop
each year determining the value. Monometallists have had much to say about
the relative cheapness of gold during those years, and have laid much
stress upon the fact that it was an era of great prosperity and rapid
development, with rise of wages and the prices of farm produce. In this
argument they admit three things: that we have a moral and constitutional
right to use the cheaper metal at any time; that we did use gold for all
those years simply because it was easier to pay debts with it, that is, it
was cheaper, and that the use of the cheaper metal aided greatly in making
prosperity. That is all that any bimetallist claims. As the entire burden
was not then thrown upon silver, we claim that it should not now be thrown
upon gold, doubling or trebling the rate of its advancing value; and as
the privilege to use the cheaper metal then checked the advance of the
dearer and enhanced prosperity, we insist that the system of that time
shall be restored.
The subsequent figures are equally convincing. In 1861-65 the gold
products were 72.1 per cent. of the total, the silver 27.9 per cent., the
variation in ratio from 15.26 to 15.44. In 1866-70 the production stood
69.4 to 30.6, the variation in ratio 15.43 to 15.60. In 1871-75 production
was still 58.5 to 41.5, but the variation in coin value was from 15.57 to
16.62. That something had happened quite aside in its effects from
relative production was evident, but the people did not find out what it
was till late in 1875. At the time the demonetization act was passed, the
ratio was still 15.55 to 1, and one of the reasons given for the act of
February 12,1873, was that the silver dollar was worth $1.03 in gold; yet
before the close of that year, and before it was known that there was to
be any great increase in the product of silver, its relative value ran
down till it was below that of gold. Can any one doubt the cause? Surely
not if he observes the additional fact that the relative decline of silver
continued despite the greater value production of gold, and that 1882, ten
years after demonetization, was actually the first year since 1849 in
which the world's production of silver exceeded that of gold. What one
hundred and ninety years of continuous and often enormous relative
overproduction of silver had not done, ten years of demonetization had
accomplished, and that while the relative supply of gold was still the
greater. Is it possible to miss the real cause? Is there in Euclid a
demonstration more conclusive?
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