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Page 9
The silent and insidious increase of their obligations, by reason of the
enhanced and steadily enhancing value of gold, has ruined many thousands
of business men who are even now unconscious of the real cause or of the
power that has destroyed them.
I may add in this connection that the three per cent. now paid on a United
States bond is worth about as much in commodities as the six per cent.
paid previous to 1870, and at the same time the bond has doubled in value
for the same reason; thus, calculated on the basis of twenty-five years,
the bondholder is really receiving, or has received, the equivalent of ten
per cent. interest.
DEMONETIZATION OF GOLD.
Gold has an intrinsic value, says the monometallist, which makes it the
money of the world. It is sound and stable, while silver fluctuates. See
how much more silver an ounce of gold will buy than in 1873, but the gold
dollar remains the same, worth its face as bullion anywhere in the world.
But suppose there had been a general demonetization of gold instead of
silver, how would the ratio have stood then? Would not the same reasoning
prove silver unchangeable, and gold the fluctuating metal?
Oh, nonsense! it is impossible to demonetize gold, because the civilized
world recognizes it as an invariable standard by which all commodities are
measured in value. The supposition is absurd. It would be very much like
deoxygenizing the air.
But, my dear sir, gold has been demonetized, and not very long ago,
either, and very extensively, too. It was deprived of its legal tender
quality by four great nations, comprising some seventy million people;
demonetized because it was cheap and because the world's creditors
believed it was going to be cheaper; the demonetization, so far as it
went, produced enormous evils, and nothing but the firmness of France and
the far-seeing wisdom of her financiers prevented the demonetization
becoming general on the continent of Europe, which would have reversed the
present position of the two metals in the public mind.
Of the many singular features in the present overheated controversy,
probably the most singular is the fact that comparatively few bimetallists
know of, or, at any rate, say much about, this demonetization of gold,
while the monometallists ignore it entirely, and many of them, who ought
to know better, absolutely deny it.
So extensive was this demonetization of gold, and so far-reaching were its
consequences, that it may easily be believed that it was the beginning of
all our misfortunes, and that the crime of the century, instead of being
the demonetization of silver in 1873, was really the demonetization of
gold in 1857; for that was the first general or preconcerted international
action to destroy the monetary functions of one of the metals and throw
the burden upon the other, and it first familiarized the minds of
financiers, and especially of the creditor classes, with the fact that the
thing might easily be done and that it would work enormously to their
advantage.
It may also be said that it led logically to the action of 1867, which was
but the beginning of a general demonetization of silver.
The history of gold demonetization is full of instruction and is here
given in detail.
In 1840-45 the world was hungering for gold. All the leading nations had
just passed through financial convulsions which shook the very foundations
of society. Several American states had either repudiated their debts
outright or scaled them in ways that to the English mind looked dishonest,
and there was a general uneasiness among the creditor classes of the
world. A universal fall of prices had produced the same results with which
we are now so painfully familiar. In the half century terminating with
1840 the world had produced but $529,942,000 in gold, coinage value, and
$1,364,697,000 in silver, or some forty ounces of silver to one of gold;
yet their ratio of values had varied but little, and the variation was not
increasing. Why? Monometallists have raked the world in vain for an
answer. Bimetallists point to the only one that is satisfactory, namely,
the persistence of France in treating both metals equally at her mints.
But there were grave apprehensions that France alone could not maintain
the parity, and so, as aforesaid, all the world was hungry for gold.
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