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Page 23
In a former paper read in 1879 he had predicted the rise in the purchasing
power of gold, and in his paper of 1888 he said: "If the test of prophecy
be the effect, there was never surely a better forecast. The fall of
prices in such a general way as to amount to what is known as rise in
purchasing power of gold is, I might almost say, universally admitted.
Measured by any commodity or group of commodities usually taken as the
measure for such a purpose, gold is undoubtedly possessed of more
purchasing power than was the case fifteen or twenty years ago, and this
high purchasing power has been continued over a long enough period to
allow for all minor oscillations."
In 1871, when the discussion may be said to have begun, the French
economist Ernest Seyd pointed out very plainly that the adoption of the
gold standard by Europe and the United States would lead to the
destruction of the monetary equilibrium hitherto existing, and then added
this singular prophecy: "The strong doctrinarianism existing in England as
regards the gold valuation is so blind that when the time of depression
sets in the economic authorities of that country will refuse to listen to
the cause here foreshadowed. Every possible attempt will be made to prove
that the decline of commerce is due to all sorts of causes and
irreconcilable matters. The workman and his strikes will be the first
convenient target; then speculating and over-trading will have their turn;
many other allegations will be made, totally irrelevant to the real issue,
but satisfactory to the moralizing tendency of financial writers."
How literally has that been fulfilled in our sight. At this very time, the
monometallists of the United States are pointing to all sorts of causes
and irreconcilable matters to explain the ruinous fall in prices. They not
only allege all the causes here assigned, but many more peculiar to this
country; and, after the fashion of all who oppose any reform in the
interests of producing labor, they particularly and even savagely
deprecate agitation.
By the way, does not every clear-headed American, know that any system
that cannot stand agitation is totally unfitted to this country?
Agitation, investigation, public discussion in the papers and on the
stump, are the very life-blood of our institutions. And if our finances
were as they should be, the more thoroughly they were discussed, the more
warmly would the system be approved, and the more would investigation be
invited.
Hon. G. J. Goschen, former Chancellor of the Exchequer, pointed out as
early as 1883 that the enormous increase in the demand for gold consequent
upon the demonetization of silver was liable to create great evil. After
elaborating this subject, and saying that the fall in prices had already
produced serious evils, he added: "Some writers have appeared to show
something approaching to irritation at the view of the situation that gold
should have largely influenced prices. I scarcely know why, unless through
the apprehension that the bimetallists may utilize the argument." A little
later he said: "I must repeat that to my mind the connection between the
additional demand for gold and the fall of prices seems as sound in
principle as I believe it to be sustained by facts."
We might multiply at length quotations to show that opinion is unanimous
in England, regardless of party, to the effect that there has been a great
increase in the purchasing power of gold. As to the effect of this Mr.
Giffen says: "The weight of all permanent burdens is increased.... Our
people, in paying annuities or old debts, have to give sovereigns, which
each represent a greater quantity of the results of human energy. The
debtors pay more than they would otherwise, and the creditors receive
more. It is a most serious matter to those who have debts to pay."
Mr. S. Dana Horton says that on the basis of prices "The national debt,
regarded as a principal sum, has increased its weight upon the shoulders
of the British taxpayer between 1875 and 1885 by nearly two hundred
millions sterling, an amount nearly equal to the Franco-German war fine."
This gives us the explanation of the fact that the consols on which the
interest was reduced by Mr. Goschen, when Chancellor of the Exchequer, to
2-3/4 per cent., are now selling at a much higher premium than formerly;
the smaller amount of money paid in interest will purchase a very much
larger amount of commodities than the former larger interest did.
The matter is very clearly set forth by Hon. Samuel Smith, M. P.: "If the
question of protection is to be introduced into the discussion, then it
will be found to tell more forcibly against our opponents. What do they
seek for, but the protection of gold as against silver? They wish, as far
as lies in their power, to boycott silver and throw the world upon gold
alone, even though such a course should change the value of gold. In
trying to boycott silver, they are giving protection to the wealthy
capital class, just as truly as the old corn laws did to the landed owners
of this country. The only difference is that the amounts involved are much
larger and the protected class much richer and the confiscation of the
fruits of the toiler much greater than under the old system of the corn
laws. When the masses of this country awake as those of America have
awakened to the magnitude of this question, they will brush away this idle
talk that we are trying to restore protection." If Mr. Smith were in
Congress instead of Parliament, what a howl there would be about him as an
anarchist!
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