Combination between Bank of England and Treasury Department to depress the industries and cheapen the products of the United States,


Hon. William M. Stewart,

of Nevada,

in the


Tuesday, May 1, 1888.

William M Stewart
STEWART, William Morris, a Senator from Nevada; born in Galen, near Lyons, Wayne County, N.Y., August 9, 1827; moved with his parents to Mesopotamia Township, Trumbull County, Ohio; attended Lyons Union School and West Farmington Academy; teacher of mathematics at Lyons Union School; attended Yale College 1849-1850; moved to San Francisco, Calif., in 1850 and engaged in gold mining in Nevada County; studied law; admitted to the bar in 1852 and commenced practice in Nevada City, Calif.; district attorney 1852; attorney general of California 1854; moved to Virginia City, Nev., in 1860; involved in early mining litigation and in the development of the Comstock lode; member, Territorial council 1861; member of the State constitutional convention in 1863; upon the admission of Nevada as a State into the Union was elected as a Republican to the United States Senate in 1864; took oath of office on February 1, 1865; reelected in 1869, and served until March 3, 1875; did not seek reelection; chairman, Committee on Pacific Railroads (Forty-second Congress), Committee on Railroads (Forty-third Congress); resumed the practice of law in Nevada and California; again elected as a Republican to the United States Senate in 1887; reelected in 1893 and 1899, as a Silver Republican, and served from March 4, 1887, to March 3, 1905; chairman, Committee on Mines and Mining (Fiftieth through Fifty-sixth Congresses), Committee on Indian Affairs (Fifty-seventh and Fifty-eighth Congresses); declined to be a candidate for reelection in 1905; died in Washington, D.C., April 23, 1909; remains were cremated and the ashes deposited in Laurel Hill Cemetery, San Francisco, Calif.; remains removed and deposited in unknown location.

How Silver Bullion is Manipulated for the Benefit of England.

Mr. Stewart.  If the morning business is through I should like to call up a resolution that I heretofore offered.

The Presiding Officer (Mr. Dolph in the chair).  If there are no further current or other resolutions, the Chair lays before the Senate a resolution coming over from a previous day, which will be read.

The Chief Clerk read the resolution submitted by Mr. Stewart, April 30, 1888, as follows :

Resolved.  That the Secretary of the Treasury be, and he is hereby, directed to furnish the Senate with a statement of the amount of silver bullion offered to the Government each month since the passage of the act of February 28, 1878, under the provisions of said act, and by whom, and at what prices;  and also the amount of silver bullion purchased each month during such period, and from whom, and the prices paid therefor;  and, further, to inform the Senate if the quotations of India council bills in London enter into the determination to any extent of what is the market price of silver bullion in the United States.

The Presiding Officer.  The question is on agreeing to the resolution.

Mr. Stewart said :

Mr. President :  There are two theories of finance.  One theory is contraction and a single gold standard at all hazards and under all circumstances.  The other theory is the use of both gold and silver as a limitation of the quantity that shall be in circulation and such reasonable expansion as the precious metals will afford.

I do not propose to reflect upon the motives of the parties who are advocating either of these theories, but I wish to explain their acts and have them understood.

It has been alleged that there is a combination between the Treasury Department and the Bank of England which has existed since passage of the Bland act, to depress the price of silver, to bring that metal into disrepute, and to force this country to a single gold standard.

It will be observed, and ought to be known of all men, that the United States, or rather the Treasury Department, and the Bank of England are the principal purchasers of silver bullion.  In fact they purchase all except what is used in the arts.

The act of 1878 required the Secretary of the treasury to purchase at least $2,000,000 worth of silver bullion per month, not less than that, and not exceeding $4,000,000 worth.  It was contemplated by the act that circumstances would arise where it would be the duty of the Secretary of the Treasury to purchase more than $2,000,000 worth per month.

I propose to show that circumstances existed which made it the duty of the Secretary of the Treasury from the first to purchase $4,000,000 worth per month.  If that had been done silver would be at par to-day;  we would have about $300,000,000 more of circulation;  we would not have shrinkage of values, hard times, paralysis of business, general gloom, and low prices of wheat and cotton.  I shall show that it has been in the power of the Secretary of the Treasury from the beginning to rescue this country from the financial embarrassment under which it has labored fro the last fourteen years.

The Secretary of the Treasury having this power has combined with the Bank of England against the people.  The English Government collects its taxes in India in silver rupees—silver coin.  It draws what are called council bills against the India revenue and sells them in the market.  It has done that for many years.  It also buys what silver is used in India and issues therefor council bills.  It also buys with these council bills pretty nearly all the silver that is shipped to China and Japan, and consequently the price of silver depends upon these council bills.  Whenever the Bank of England wants to put down silver it lowers the price of council bills.  If anybody else attempts to ship silver to India the bank puts the council bills up so that the silver will be worth more in London than in India.  Several have tried it and failed;  it has been given up, and the world now has ceased to make any attempt to compete with the bank of England in the purchase of silver for Asiatic consumption.

The United States and Great Britain, or rather the treasury Department of the United States and the Bank of England, are the sole purchasers of silver, except what is used in the arts, and can put the price of silver where they please without regard to the laws of supply and demand.  Before I am through I shall show why England puts the price of council bill down and puts silver down, and I shall show that she does it for the purpose of obtaining cheap breadstuff from America and to give India the control of the cotton and wheat markets of the world, and also to enhance the value of bonds and other obligations for the payment of money.

With regard to the increase of these council bill since the passage of the Bland act I will give a statement from the American Interests, of December 15, 1886, published by Dr. Ivan C. Michels :


In dealing with the silver question it is most important to take into account the amount of India council bills drawn by the India office in England upon the Government of India.

India sends to England an annual tribute of about £15,000,000 sterling, the tribute representing the expenditure on Indian Government account made in England.  The manner in which these £15,000,000 sterling are transmitted to the India council is this :

The India council in England draws bills on the government of India, payable in silver at Calcutta, Bombay, or Madras.  These bills the India council sells in the London market for so much gold.  The purchasers are usually the Indian banks who have remittances to make to India.  Thus a banker, wishing to send money to India, can either buy as much silver and ship it, or forward a mercantile bill on India, or an India council draft.  An India council draft, therefore, is equivalent to so much silver deposited in India, and accordingly a strong competition always prevails between silver and India council drafts when remittances to India have to be made.

Since the coinage act of 1873, which was enacted by Congress for the benefit of Great Britain, the amount of India council drafts sold in London has shown a remarkable increase.

In 1873 the amount of council bills drawn on India amounted to 142,657,000 rupees, or $68,475,360, while prior to that year, and for the six preceding years, the yearly average was only 82,876,029 rupees, or $39,780,499, rapidly increasing year by year until the enormous sum of 2,077,833,226 rupees were drawn against India from 1874 to 1885, inclusive.  If we consider that 2,077,833,226 rupees are equal to $997,359,948.48, or at a yearly average of $83,113,329.04, we find that the increase of drawing council bills on India has beyond cavil or dispute promoted the depreciation in the value of silver bullion.

Then the English commerce is left to itself.  The imports England takes from India are much greater than the imports which India takes from England, and a part of the balance has to be paid for in specie, the rest being settled in indirect ways.  But the increase in the council bills provided a competing remittence with silver;  if a merchant in England wants to make a payment in Calcutta ha has the choice either to buy council bills or send out silver, and of course so much less silver was sent.  The effect is the greater because the government of India must bring their money home from India, and therefore must sell their bills, whereas silver bullion, like any other commodity, may go to many markets, and may be held when its price falls.

This is the reason for saying that the price of council bills rules the price of silver—not the price of silver that of the council bills.  It is the price which the more anxious seller must accept that for the moment predominates, and not that which the less anxious can wait for.

Trade in Great Britain has been languishing for many years.  The demonetization of silver has precisely the same effect upon the agricultural interests of Great Britain as it has upon the agricultural interests of America.  Their manufacturing interests are also depressed.

In 1886 Great Britain appointed a royal commission to inquire into the cause of trade depression.  They took a large amount of evidence upon the situation and made a report about a year ago.

In 1887 another royal commission was appointed in Great Britain to inquire into recent changes in the relative values of the precious metals.  I have read these reports, and I will give a summary of the result;  and after that I shall read some of the evidence contained in those reports.  But I will give first what ascertained by the evidence, and I shall show to what the whole evidence tended.

The confirms substantially the fact that the depreciation of silver has been the result of legislation and not of production;  that the demonetization of silver by Germany and the Latin Union and the United States has caused the fall in the price of that metal;  that the depression of silver has produced depression in the price of all property from 33 to 35 per cent;  that the fall in prices, particularly of wheat is very prejudicial to agriculture in England and the United States;  but notwithstanding this, it is contended that the demonetization of silver has many advantages, so far as Great Britain is concerned, which overbalance the evil caused by it.  They say that England is a creditor nation, and that the demonetization of silver enhances the value of bonds.

They say that England has paid tribute long enough to American cheap lands and cheap produce, and that it is essential for them to build up India.  They say that they have already reached a point at which the wheat and cotton of India control the price of those staples throughout the world, and that manufacturers of England will ultimately be benefited by the development of the resources of India, because England has exclusive trade with India.  They tell the manufacturers of England they must submit to the present depression of trade for future advantages, when the resources of India are developed by cheap silver.  To the agriculturist they say:  “If your burdens are too great we will give you a tariff on wheat and corn.”

Their contention is that all the world is indebted to England;  the she is a creditor nation, and commands the trade of the world.  The whole world has to pay tribute to her.  She has been compelled to pay tribute to America for breadstuffs and cotton;  she proposes to develop the production of those articles in India, which can only be done by cheap silver.  Notwithstanding the depression of trade, notwithstanding the ruin of her agricultural interests in England, she will adhere to the single gold standard, enhance the value of bonds by contraction, and develop the resources of India by cheap silver.

These are the general conclusions which the testimony before the royal commission tends to establish.

The Secretary of the Treasury has at all times since the passage of the Bland act contributed to the extent of his power to aid the Bank of England to depress the price of silver.  In fact, he assumes that the arbitrary price fixed by council bills is the market value of silver, and purchases silver according to the quotation of council bills in London.  He never has in a single instance exercised the discretion given to him by Congress to purchase more than $2,000,000 a month, but has at all times purchased the least possible quantity, so as to leave as much silver as possible in the market and not interfere with the schemes of Great Britain to obtain cheap silver for the benefit of India.

I am aware that the system advocated by the Secretary of the Treasury, and to maintain which the whole power of every administration has been exerted since the demonetization of silver, is the policy of bondholders, creditors, and money dealer;  that they are in favor of the single gold standard because it embraces the value of all obligations for the payment of money, and makes money dearer and property cheaper;  that the present Secretary of the Treasury [Charles Fairchild, ’87-’89] is acting with the financial combination to which he belongs.  I have no fault to find with him personally.  He is simply the agent put into the Treasury Department to carry out the views of the money powers who placed him there.

I now call attention to some English views developed, by the royal commission.

Mr. R.H. Inglis Palgrave, Fellow of the Royal Society, was examined before the commission.  He is a man of great learning.  He exhibited some statistics as to the production of gold which I wish to call to the attention of those who desire to maintain the gold standard.  He gave the yearly average of the production of gold, according to Dr. Soetbeer, which is as follows :

1851-1860 ........................ £28,650,000
1861-1870 ........................ 26,600,000
1871-1880 ........................ 23,000,000
1881-1884 ........................ 19,500,000

Gold available for the supply of coin—estimates of yearly average, by Dr. Soetbeer:

1851-1860 ........................ £22,780,000
1861-1870 ........................ 14,060,000
1871-1880 ........................ 10,255,000
1881-1884 ........................ 4,050,000

From the above tables it will be seen that the product of gold is constantly decreasing, while the amount used in the arts is increasing, and that the policy of the single gold standard is perpetual contraction and constant fall of the price of property and rise in the value of money.

The production of silver is not in excess of the present demand for that metal.  Mr. David A. Wells, the life-long monometallist, has at last discovered that there is no danger of a flood of silver.  In the May number of the Popular Science Monthly he says :

Something of inference respecting the economic changes of the future may be warranted from a study of the past.  It may, for example, be safely predicted that whatever of economic disturbance has been due to a change in the relative value of silver to gold will ultimately, and probably at no very distant period be terminated by a restoration of the bullion price of the former metal to the rate (60 to 61 pence per ounce) that prevailed for many years prior to the year 1873.  The reasons which warrant such an opinion are briefly as follows:

Silver is the only suitable coin medium for countries of comparatively low prices, low wages, and limited exchanges, like India, China, Central and South America, which represent about three-fifths of the population of the world, or about a thousand millions of people.  Civilization in most of these countries, through the advent of better means of production and exchange, is rapidly advancing, necessitating a continually increasing demand for silver as money, as well as of iron for tools and machinery.

Generations also will pass before the people of such countries will begin to economize money by the use to any extent of its representatives, paper and credit, under such circumstances a scarcity, rather than a superabundant supply of silver, in the world’s market, is the outlook for the future;  inasmuch as a comparatively small per capita increase in the use of silver by such vast numbers would not only rapidly absorb any existing surplus, but possibly augment demand in excess of any current supply.*  The true economic policy of a country like the United States, which is a large producer and seller of silver, would therefore seem to be, to seek to facilitate such a result, by removing all obstacles in the way of commerce between itself and silver-using countries, in order that through increased traffic and consequent prosperity the demand for silver on the part of the latter might be promoted.

* * * * * * * *

The situation suggests what is reported to have been contemplated, namely, the formation of a syndicate like the so-called recent French syndicate in copper, for intercepting the current market supplies of silver by speculative purchases and vast holdings, with a view of compelling an immense rise in the bullion price of this metal.


As to the imports of silver into India since the demonetization of silver in the United States, in 1873, the results are almost incredible.

According to the returns published by Hon. D. Barbour, financial secretary to the Government of India, hence an indisputable official authority, in his work on the “Theory of Bi-Metallism,” on page 108, the imports of silver into India were :  1872-’73, 7,000,000 rupees, increasing in 1873-’74 to 25,000,000 rupees, and so on until in 1878, when the purchase of silver bullion in the United States was made by law the “market value,” it reached the enormous sum of 147,000,000 rupees.

The official “Blue Book” of the British Government for India, page 25, gives the following imports of silver into India:

1881-’82 ...................... 64,663,889
1882-’83 ...................... 83,580,218
1883-’84 ...................... 74,085,065
1884-’85 ...................... 91,100,254
1885-’86 ...................... 101,212,496
Total for five years .......... 414,541,922 rupees
Equal to $198,981,122, or at an average of $39,796,225 per annum.

When we consider that during the same period of five years, 1881-’82 to 1885-’86, the production of silver in the United States amounted to $236,400,000, and India alone was able to absorb $198,981,122 worth, it is no wonder that the fight for the further depression of silver is so desperately carried on by the enemies of the country and to the profit of India and the British Government.  The profit alone to great Britain upon the imports of silver bullion at the average rate of $1.10 per ounce for these five years amounts to $30,681,122.

Nothing has been done in this country to relieve the contraction resulting from the demonetization of silver except the passage of the Bland act.  On the contrary, every effort has been made by the Treasury Department, or rather the gold syndicate through the agency of the Treasury Department, to manipulate the currency for the benefit of speculators and dealers in bonds.

I have prepared statements showing the amount of circulation to 1865, 1879, and 1888, which show enormous and continued contraction.  They are as follows :

Circulation of money in the United States June 30, 1865.
[From paper prepared by United States Treasurer for American Almanac, 1887, page 340.]

State-bank notes .................... $142,919,638
National-bank notes .................. 146,137,860
Legal-tender notes ................... 432,687,966
Demand notes ............................. 472,603
One and two years’ notes of 1862 ...... 42,338,710
Compound interest notes .............. 193,756,080
Fractional currency ................... 25,005,829
Total currency .............. $983,318,686
Add to this gold coined in United States—
1860 ................................... $4,351,576
1861 ................................... 47,963,145
1862 ................................... 30,036,808
1863 .................................... 3,340,941
1864 .................................... 2,888,267
Add to this gold and silver in circulation, Pacific coast (estimated) 40,000,000
Grand total ................ $1,112,902,423
In United States treasury ......... 858,309
Leaving in circulation .... $1,112,044,114

Population according to census, 35,000,000, of which 11,000,000 were in the Southern States;  hence 24,000,000 only.  The amount per capita equals $46.37.


Circulation of money in the United States June, 1879, the period of resumption :

State-bank circulation ................... $352,452
National-bank notes ...................... 329,691,697
Legal-tender greenbacks .................. 346,681,016
Silver certificates ........................ 2,466,960
Demand notes .................................. 61,470
One and two year notes of 1863 ................ 86,185
Compound-interest notes ...................... 259,090
Fractional paper currency ................... 39,360,529
Paper currency total ...................... $734,801,995

According to report of the Director of the Mint for 1879, page 198, Finance report, the amount of gold and silver in the United States was :

Gold ............... 286,490,698
Silver ............. 112,050,985
Total ............. $1,133,343,678

In United States Treasury September 30, 1879, including bullion fund ...... $145,108,037

Leaving the circulation ...................... 988,235,641

Population, 50,000,000—$19.76 per capita.


Metallic stock in bullion and coin according to Report of Director of the Mint for 1887, page 82:

Gold coin and bullion ......................... $654,520,335
Silver coin and bullion ....................... 352,993,566
Total ......................................... 1,007,513,901
From this deduct estimate for loss, abrasion, etc. .. 50,000,000
Revised grand total .......................... 957,513,991
Add legal-tender notes ....................... 346,681,016
National-bank notes .......................... 162,217,700
Representative of money in United States ..... 1,466,412,617
From this deduct locked up in the United States Treasury 394,759,560
Total ........................ $ 1,071,653,057
Population, 62,000,000—$17.29 per capita


In 1865 ............ $46.37
In 1879 ............. 19.76
In 1888 ............. 17.29

The $162,000,000 of national-bank circulation will soon be retired.  The question is already presented as to what shall take the place of the currency so retired.  The national banks want the public debt made permanent in order that they may control the circulation.  The people want both precious metals used and no more national-bank issues, and demand that the United States shall no longer surrender its sovereign power to issue money to private corporations.

The statement that the circulation is increasing is a sad mistake, as will be seen by the foregoing tables.  It is constantly growing less per capita and dearer, while property is growing cheaper.  Much of the money outside of the Treasury is hoarded, because confidence in business is destroyed, money is growing dearer, and property cheaper.  Interest is also falling for want of confidence, and also because enterprising men dare not borrow money and invest it in property, which is shrinking in value.  Low rate of interest is an invariable indication that times are hard and confidence is weak.

Prudent men will not borrow money in times like these to engage in any kind of business involving the purchase of property.  Everybody knows that money and obligations for the payment of money, where security is undoubted, is the only profitable investment.

I propose now to give you English opinions of what we are doing.  I will first quote from a remark made in June, 1886, at an important meeting of the British and Colonial Chamber of Commerce, in London, at which there was an animated discussion of the silver question and its bearings upon the commerce of India, by Sir Robert N. Fowler, M.P., a London banker and an ex-lord mayor, who said—

That the effect of the depreciation of silver must finally be the ruin of the wheat and cotton industries of America, and be the development of India as the chief wheat and cotton exporter of the world.

I will read a few more extracts from the testimony taken by the royal commission.  I first read from the testimony of James Shield Nicholson, professor of political economy in the University of Edinburgh, and a very learned man, as his testimony amply attests.  He says :

First of all, with regard to the fall in the gold price of silver, will you state what in your opinion has been the cause of that fall ?

Briefly expressed, I should say it was due to the demonetization of silver by several nation.

That is to say, to a diminution of the demand ?

Yew.  I do not think—that is to say, that the exchange that has undoubtedly taken place in the supply would in itself have had any effect upon the ratio at all.

There has been some increase in the supply of silver ?

Yes, so I understand;  but still, judging from the effects, in former times especially, I do not think that the increase in production would have really had any effect in disturbing the ratio.

H.R. Grenfell, ex-governor and director of the Bank of England, was also examined and testified at great length, and displayed great learning and experience.  He was asked many question;  I will read a few extracts from his testimony :

At present gold is worth about twenty times as much as silver, and you propose by law to give it fifteen and a half times the value of silver.  Is not that going against the natural law ?

Before you can say what the relative value of gold and silver is you must demonetize gold, and when you have done that you will have some other thing than the money standard to tell you what the relative value is.  At the present time, the privilege of the law having been conferred on gold and taken away from silver, the ratio is 20 or 21 to 1, but you can not say what the natural ratio would be unless you demonetized gold first.

Again :

Well, then, since that time it is a fact, is it not, that the gold price of silver has gone down in the market ?


If that is so, how would you account for the fall in the price of silver ?

Because the demand for gold has been much greater.

But is not this demand for silver a very large one ?

The demand for gold is unlimited.  By the Bland act that of silver is limited.

He calls attention to the Bland act.  He explains the reason why the demand under the Bland act has not put up silver, because it is a limited demand.  If there is any left over, of course it would affect the market quotation.  The same witness again testifies :

I may take it, then, that you consider beyond doubt that prices are influenced by an expansion or contraction of the volume of legal-tender money, and that they would rise and fall with that volume ?

Yes, that is my opinion.

* * * * * * * * *

You said, I think, that you agreed with Mr. Gibbs, generally speaking, in his evidence:  therefore perhaps I need hardly ask you whether you trace the disturbance in values to the legislation of Germany and subsequent legislation abroad in demonetizing silver since 1873 ?

I closing the action of the closing of the mints to silver in France following on the demonetization in Germany was the main cause.

Then, as a matter of fact, in your opinion the entire scale of prices has been suddenly affected since 1873 by the fact of that foreign legislation ?


Again :

I think you said you had no fear whatever that the operation of the Bland bill was likely to be suspended ?

From what I hear I think it is almost impossible that it should be suspended.

But supposing it was suspended, do I gather from you that the effect of that suspension in your opinion would be to cause a still greater fall in the value of silver ?

Certainly, and in the exchange with India.

And that all the evils which arise from the present system, in your opinion, would be proportionately increased ?


Again :

I would ask you now, after looking at the figures that I have given you, to consider now you think it is that scarcity of gold, or the increased demand for gold, in proportion to the supply, has arisen ?

I would answer that I believe the scarcity of gold and the fall of prices to be absolutely convertible terms, and that there is no other meaning in the appreciation of gold and the fall in prices:  they appear to me to be absolutely synonymous.

Then I would ask you another question, whether prices do not depend on the quantity of the commodities, as well as upon the quantity of gold ?

That is quite compatible with the other;  all I mean to say is that the two things are absolutely the same.  The appreciation of gold and fall of prices are absolutely synonymous to me.

Again :

Q.  The amount of gold and silver which has been dug out of the earth.

A.  As long as the mints were ready to coin either metal it did not matter how the production varied.

Q.  Then you think that it would have made no difference if the foreign mint regulations had remained as they were:  that the production of silver in the world has increased from the date of the great gold discoveries from £8,000,00 to £25,000,000 a year, while the production of gold has fallen from £50,000,000 a year to about £20,000,000 ?

A.  Upon the figures you give me prices ought to have risen under the old arrangements.  The variations of the supply in quantity of gold and silver between 1873 and 1884 have varied much less than they did during the time that prices did not change at all.

Again :

Would the bi-metallic law, do you think, if it were introduced as we are proposing, won’t it have the effect of steadying that fall of wages ?

I think it would create a greater demand for labor in the manufacturing districts, and I think it would stay the fall in the agricultural districts.

Again :

Then I gather your opinion to be that the action of Germany and other countries which have adopted the gold standard has affected the relative values of gold and silver by increasing the demand for gold and decreasing that for silver ?

Yes, for the purpose of coinage.

Here is Mr. Gibbs, another ex-governor and director of the Bank of England, a learned man, and his opinions may be of some value :

Will you tell the commission how you understand the Gresham law to operate in practice ?

If two kinds of money circulate in a country, the cheapest will drive out the dearest.  That is the “Gresham law.”  But what is meant by cheapest and what by dearest is not always clearly understood, nor how the driving out is to be accomplished, nor what is the effect on the country so situated.

Then he goes on to explain that when one country uses more silver or more gold in its circulation than another country the coin will flow from one to the other;  that which is undervalued will go to the country where it is overvalued.

Here is Professor Nicholson again, who was recalled :

I believe you are of opinion that a variation in the relative value of the two standards, such as has occurred in recent years, would give, for a time at any rate, an advantage to the producer in silver countries, and would especially affect industries in gold and silver countries which produce the same article for sale in the same markets ?

It seems to me it would be so, unless silver prices rose.

The variation would especially affect industries in the gold and silver countries which produced the same article for sale in the same markets ?


Is it your opinion that this variation in the relation between the two standards in recent years has been sufficient to relatively stimulate production in the silver countries and to cause a corresponding depression in gold countries ?

As far as I can gather, the prices in silver-using countries have not moved upwards, and therefore it would follow that the gold prices must have moved downwards, of these articles, and so there would be a depression in the gold-using countries from that cause through the fall in prices.

I suppose this relative stimulus and depression would only be temporary, and must cease if silver ceases to fall relatively to gold.

Yes, so far as that cause is concerned.

If silver continued to fall relatively to gold the stimulus and depression would continue as long as silver continued to fall ?

Of course silver can not go on being depreciated forever;  it must come to a stop some time, and then the stimulus and depression would cease.

And if silver rose relatively to gold you would have the opposite effect—a temporary stimulus in gold countries and a temporary depression in silver countries ?

Yes, that seems to me to follow.

I now call attention to a witness who has visited this country, and who has given great attention to the subject of finance, named J. Barr Robertson, and I call particular attention to his testimony, because it is so pertinent to the question.  He says :

Let me suppose now that two gentlemen each invested £100,000 in the period 1870-’74, but that the one invested in consols and the other bought an estate with a rental from crops corresponding to the purchase-money.  To-day the owner of the consols has his £100,000 intact, with a purchasing power over commodities as compared with the time he made investment of £143,000, and he has his £3,000 a year, with an increased purchasing power of £1,290.  On the other hand, the owner of the estate could not sell it for £70,000, and yet if the volume of money had been kept up from 1876 till the present time, as it was from 1866 to 1875, there can be no doubt that his property would, under average circumstances, have been worth £100,000 to-day, and would have been yielding a corresponding rental.  This amount of depreciation is due solely to the mediatization produced by a contracting currency, which has given to the owner of the consols part of the value of the other gentleman’s estate.

The farmer and manufacturer have had to accept continually over the last ten years lower and lower prices for the benefit of the owner of obligations in figures, to whom the farmer, the manufacturer, and the producer generally had to gradually give up their wealth and become themselves impoverished.

A careful investigation of this question would probably show that the mediatization of wealth from the producing classes and those allied them to the holders of securities and the possessors of mortgages, annuities, fixed incomes, etc., has taken place in the United Kingdom in the last twelve years to at least £2,000,000,000, equal to about $10,000,000,000.

Suppose two gentlemen in the United States in 1863-’64 each invested $10,000, one in a farm yielding net 6 per cent. per annum, and the other in United States bonds, at 50 cents on the dollar which would equal $20,000 in bonds.  The investment in bonds would have yielded $1,200 per annum for, say, fourteen years, making $16,800, and since the same was funded to the present time—ten years—$800 per annum ==$8,000.  Total interest == $24,800.  Principal $20,000, 26 per cent. premium == $25,200.  Principal, interest, and premium to date of the bonds == $50,000.  The man who invested his money in the farm and was subjected at once to contraction and hard times for the purpose of enhancing the value of his neighbor’s bonds, is very differently situated.  By hard work he has barely made a living, and is in the best of luck if he has not been compelled to mortgage his farm to support his family, and the value of the farm for which he paid $10,000 has been reduced by the process of contraction of the currency nearly one-half and could not now be sold with the improvements for more than $6,000.

This process has been going on until the wealth of the nation has been transferred from the people to the various classes of bondholders.

I desire to reproduce an extract from the St. Louis Republican read in the Senate a few days ago by the Senator from Texas [Mr. Coke]:

It would be instructive to have the exact figures showing farm mortgages in the United States.  There is no Federal law nor general law in the States for collecting the statistics, and therefore they can only be estimated.  A correspondent of the New York Times, writing from Gypsum City, Kans., taking for basis the recent statement that one-half the farms in Michigan are mortgaged, makes the following estimate for the ten leading Western States :

In Ohio ................ $701,000,000
In Indiana .............. 398,000,000
In Illinois ............. 620,000,000
In Wisconsin ............ 250,000,000
In Michigan ............. 350,000,000
In Minnesota ............ 175,000,000
In Iowa ................. 351,000,000
In Nebraska ............. 140,000,000
In Kansas ............... 200,000,000
In Missouri ............. 237,000,000
    Total farm mortgages in the ten States ............. $3,422,000,000

This aggregate is so enormous that we are inclined to think the respective sums in the States are overestimated.  Still, it is a well-known fact that in the older and more prosperous States of the West, every fourth or third farm is mortgaged, and, in the newer ones, two out of three are in that condition, and the bulk of these claims is held in the prosperous and rich industrial States of the East.  The insurance companies of the little city of Hartford, Conn., own $70,000,000 in Western farm mortgages;  and the loan companies of Boston hold $76,000,000 more.  Here is $146,000,000 in two cities to begin with, and it is certain that if complete returns could be had from all the nine industrial States the aggregate would be immense, probably one-half the assessed value of Western farms.

As the average annual net earnings of farming in the United States are only about 3¼ per cent. on the capital invested, while the interest charged on these mortgages is 7 to 9 per cent., it is clear that the mass of farmers can not pay their debts, and that, sooner or later, their farms will fall into the hands of their creditors, and the great money-lending corporations of the rich manufacturing States will own fully one-half the Western States.

The above table must be exaggeration, but the lowest estimate I have seen of farm mortgages in the Mississippi Valley was the enormous sum of $1,200,000,000.

The mortgages are pressing very heavily.  The national debt is a very small part of the debt of this country.  The United States has in it more bonds of railroads than any other country ever had.  We have built railroads for the last twenty-five or thirty years with greater rapidity than any other country by our credit system with bonds.  The people are compelled to pay on their freight the interest on these bonds;  and by means of these railroad bonds and these mortgages and the national debt and State and corporation debts, and private debts, combined, more than half the property of the country has been transferred from the debtors to the creditors by the process of contraction, by the process of attempting to reach the gold standard.  Just look at the colossal fortunes held by individuals in New York—look at the Vanderbilts and Goulds and others who have accumulated hundreds of millions by manipulation of money and the contraction of the currency.

I will introduce a few more extracts.  I read from a gentleman who was examined before the royal commission, by the name of T. Comber, who was largely engaged in trade in Manchester and Liverpool and Bombay, and appears to be a man of great intelligence :

What are the reasons why the fall has especially stimulated the exports and imports of India and would not do so in other silver countries ?

In my opinion it has given the Indian producer an advantage over his competitors in other countries in this way, as the exchange falls the rupee prices, other things being equal, rise.  The cost of production which he incurs in consequence of the fixed settlement in India, or, in other words, the rent he pays, does not advance, and if he employs labor, the wages also are slow to advance, and as a matter of fact they have not advanced as much as the produce has.  Under those circumstances I think the producer in India is at a decided advantage over his competitors, whether in England or in America, and to that extent I believe that it has stimulated exports.

Again :

As a matter of fact, has the Indian price risen ?

Not much, but it is immaterial, I think, in his competition with other countries whether he has obtained a rise in price, or whether he has avoided a fall in price which his competitors have had to suffer.  I should like to quote the Viceroy of India dispatch on that point, if you would allow me.  It is dated the 2d February, 1886, paragraph 13.  I think it is addressed to Viscount Cross:  "We would call your lordship’s special attention to the fact that the Indian cultivator of wheat and cotton appears to have actually gained while the English and American producer of these commodities has suffered by the fall in the rate of exchange."

That is the view of the governing authority of the British mint.  I now quote from Mr. H.L. Raphael, a bullion broker and financier, and a very sharp witness :

Statistics would hardly forward us, because I think that every one will allow that, perhaps with the exception of coffee, which, owing to a special cause went up last year considerably from the fear of a short crop, every other article of food has been steadily and persistently declining;  and this decline has been contemporaneous with the decline of silver.  The cause of our agricultural distress, I believe, has been rightly ascribed to the competition of large tracts of land in the United States which pay no rent, but there is no doubt that, as regards the agricultural interest, the decline in silver has had a very damaging effect;  in fact, it has been the finishing stroke to a long course of suffering, originating in the competition from free land in the United States.  I do not question this agricultural distress being a serious matter for England, because in a political point of view it drives our laborers into towns, where they become enervated, and no longer form the back-bone of our fighting power.

However, it might be wise to take the duty off tea and put it on corn, but we are not here to discuss that matter to-day.  I only mention this point to explain what appears to me to be the absurdity, that in order to give relief to agriculture to a certain extent, we should adopt a supposed cure, namely, bi-metallism, which would raise the price, not only of wheat, but nearly every article 30 or 35 per cent.  But take wheat alone, which we are obligated to import in enormous quantities, you would adopt a ruinous course for the sake of relieving our agricultural population which might be relieved just as easily, say, by taking the duty off tea and putting it on corn.  But, however, whether you do that or not, in order to give a certain amount of relief, you propose to make the whole of the population pay considerably more for the food that they consume.

Now, the wealth of England, other than the accrued wealth, namely, the interest which she draws from her investments abroad, consists, as we all know, in her iron, her coal, and in the manufacture of iron and other metals, and in a great quantity of other manufactures, such as cotton, wool, jute, and the like.  If, by adopting bimetallism and paying foreign nations dearer for our food, which would be the inevitable result, is there such a certainty that they would buy more of our manufactures ?  If we paid America 8s. per quarter more for her wheat and corn, is it so certain that she would take more iron from us in return ?  Her manufactures, as you know, have been so stimulated by protection, which on iron is 50 to 60 per cent., that to-day she can manufacture for her own use the sufficient quantity.  But even if she is obliged to import, it does not follow that she will come to England because we paid her more for our food.

I think that is a very good lesson for Americans.  Again, I call attention to the testimony of Mr. Herman Schmidt, a discount broker, and a very intelligent man.  He says :

I do not quite understand your view of the origin of this disturbance and difficulty.  You say that it was due to what is called, whether correctly or not, the demonetization of silver by the Latin Union and by Germany, that made the value of silver lower ?  The demonetization of silver caused one portion of the demand to be dried up, to be closed, and a demand which always existed at a certain ration, and from that moment of course silver could fluctuate for anything.

Again :

Now, would you kindly explain to me in what way you consider that a fall to the price of silver affects the price of wheat in this country ?

Because wheat can be imported into this country at so much less;  can be laid down in this country at so much less.

He explains more at length how the fall in the price of silver benefits India, and builds up the resources of that country.

Here is the testimony of W. Fowler, author of a work on Appreciation of Gold :

I admit you have given a number of very powerful arguments against it.

That is against remonetizing silver.

I only want to arrive at the possible objections when it is done ?

I think, also, that it would tend to discourage the exports from India, and thereby lessen the power of India to take our manufactures, and so would materially injure a large class of our people.  According to the argument that I understand you to have used to-day, you lay great stress upon this export bounty.  If it be so, it leads to considerable increase of the exports from India, and therefore a large increase in the exports from England to India, and Mr. O’Connor says, if you have great export you must have great import, and that is the universal rule of commerce—goods go against goods.

I more extract and I am done, and to this I wish to call particular attention.  It is the testimony of Mr. Daniel Watney, who has given special attention and written on the subject of the relations of the two metals, and I call the particular attention of Americans to this testimony.  It is short and pointed :

Why should a bimetallic convention say, at 20 to 1, it would break down, if all the important nations joined in it ?

I should have to suppose that everybody is wise to suppose that it would remain.  I can not suppose that everybody is wise.  Just think of the folly of the United States when they were a debtor nation in adopting a gold coinage.  They knew nothing about currency matters;  they did not know that it was going to increase their debt enormously.

Is the United States a debtor nation ?

I call it so.

What leads you to suppose that ?

Well, I believe there are enormous quantities of stocks held in this country for railways and all sorts of industrial enterprises for which dividends are received in this country.  Besides, if you look at their imports and exports you will find that invariably they are a greater exporting than an importing nation.

You are aware that almost all her public debt is held in America ?

Oh, but that is very small in comparison with the other debts of the United States, so I believe.

Now, I want to call the attention of the Senate to the effect of the demonetization of silver on some of our industries.  I am aware of the fact that when I speak of its injury to the silver interest the enemies of silver appear to take great pleasure, and say, "Of course he is a silver man," and consequently I have left that question out of my argument invariably, and have confined myself to showing how it injures other interests;  but I think that in the greatest silver-producing country in the world I might say one word against the robbery of the silver miners.

The silver miners of the United States have suffered a loss on discount by the demonetization of silver of over $80,000,000.  This terrible and unjust tax has been imposed upon them to satisfy the greed of the creditor class, and it is refreshing to note with what complacency opulent members of the gold ring endure the disasters which they have brought upon their neighbors.

In 1873 and prior to the demonetization of silver, the silver dollar, since its first coinage in 1793, was always at a premium;  in 1874 it was at par.  Since 1874 the losses to the silver miners were as follows :

Year.Production.Average price
per ounce.
1875.............. $ 31,700,000$ 1.27  $ 712,000
    Total ......... 646,336,074..........80,679,974

By this loss of $80,679,974 to the miners of silver in the United States the United States Government has profited by purchasing silver bullion at market value $36,152,332.

I now call attention to the tremendous loss of the wheat and cotton producers of the United States occasioned by the demonetization of silver.

Decline in prices for wheat and cotton since the demonetization of silver in 1873.
[Export prices from 1872 to 1879, the resumption of specie payments, reduced from currency to coin prices.]

per bushel.
per pound.
1872................$ 1.47$ 0.19½

In 1872 we exported 1,957,314 bales of cotton, equal to 782,925,600 pounds, for which we received $152,670,492;  while in 1887 we exported 4,477,582 bales, or 2,161,435,833 pounds, for which we received $204,423,785.

We therefore gave 1,478,510,233 pounds more cotton in 1887, yet we received only $51,753,293 more than we did in 1872, prior to the demonetization of silver in 1873.  In fact these 1,478,510,233 pounds of cotton which we have in excess exported are in reality double the quantity of the whole amount exported in 1872, and yet instead of $278,309,495 in excess of 1872 we have received only $51,753,293 more than in 1872, thus leaving a loss to the planter and exporter of American cotton of $226,556,202 on one year’s crop.

To understand this loss more clearly, it becomes necessary to compare the prices paid in India for cotton with those of the United States. The first authentic export prices from official returns are those of 1874.

per cwt.
Per ounce
Per pound.

From the foregoing table it will be seen that the silver rupee has not depreciated in India, but as the market value in London for silver is regulated by the price at which council bills on India are issued in London, with the decline in silver in England the price for cotton declines in the United States.  As to wheat the same causes produce the same effect on our prices.

par cwt.
Per ounce,
Per bushel.

Average price for wheat in India for the twelve years equal to 4 rupees 2½ annas per hundred weight, and if silver at par is equal to $1.76 per hundred weight of 112 pounds, or $1.05½ per bushel of 60 pounds;  but in that period council bills were issued at an average of 1s. 6d. per rupee, which reduced the price equal to $1.33 per hundred weight of 112 pounds, or the bushel of 60 pounds equal to 79¾ cents.

The exports of wheat from India since the demonetization of silver in 1873 have advanced from 735,485 bushels in that year to 41,588,235 bushels 1887;  while the United States since the enactment of the law of February 28, 1878, which provides that the purchase of silver bullion shall be at the market value of silver in London, our exports from 153,252,795 bushels in 1878-’79, have dwindled down to 57,759,200 in 1885-’86, while during the same period India has increased her exports from 4,109,495 bushels to 39,312,969 bushels—almost 900 per cents.

I have read the testimony taken before these royal commissioners, and it all tends to the same point, and every sensible man will admit that the fall in the price of wheat and cotton was produced by the demonetization of silver.  Last year the cotton planters lost on their crop by this demonetization and this fall in the price of cotton $226,556,202, as is already shown.  The table also shows the decline of the wheat interest of the country year after year with the decline in the price of silver side by side, and the price of wheat and cotton have gone down with the price of silver until the exportation of wheat and cotton from the United States have dwindled down both in price and quantity, to such an extent as to prostrate those industries.

While the exports of the United States have diminished, as these tables show, the exports of wheat and cotton from India have increased, so that they command the market and fix the price of those articles in Europe, as we have seen from the testimony I have read.

We have a country with boundless resources, but no money.  We have lower prices for wheat and cotton than have prevailed for one hundred years.  We have built up colossal fortunes by the enhancement of bonds.  Our rich men are as opulent as any on Earth, while our farmers, mechanics, and laborers have lost much of their thrift and independence.

If the Secretary of the Treasury had bought $4,000,000 a month of silver since the passage of the Bland act all this would have been averted, and that is easy to demonstrate.

India imports over $39,000,000 of silver per annum.  The United States produces in round numbers about $50,000,000.  The Secretary of the Treasury purchased last year $24,000,000 worth of silver bullion at the market price.  It required over $30,000,000, nearly $34,000,000, at the standard value of silver, to supply the amount purchased with the $24,000,000, on account of the discount.  We exported about $20,000,000.  If the Secretary of the treasury had bought $4,000,000 a month it would have been necessary to have imported into this country from $8,000,000 to $14,000,000—$14,000,000 if the price had not been raised.  What a boon that would have been, and how it would have revived the drooping industries of the country !  The Secretary of the treasury well knew, but he would not heed.  Why did he not, when he saw the distress, buy more silver and put up the price ?  No;  he did not do that.  He allowed England to fix the price by her council bills.

My resolution is to call for the exact information.  He allowed them to depress our wheat, and our cotton, and destroy our industries and impoverish the producing classes of this country.  He allowed England to fix the price of silver without attempting to raise his hand, but bought only the minimum, accumulated the funds in the Treasury, and complained of the surplus.  When the President’s message came it was suggested that the power to purchase bonds being in an appropriation bill, it was desirable to have Congress express itself affirmatively on the subject.  A bill for that purpose passed the House and came to the Senate.  The Senate said, yes, you can buy bonds;  but if you do and the national-bank currency is retired thereby, you shall buy silver, so as to prevent further contraction.

That bill was returned to the House of Representatives with a request for a conference on the amendment, but no notice has been taken of that request.  We have never heard from it since;  but we did see go through the other House a resolution saying that it was the opinion of the House that the President had the power to purchase bonds, and with that indorsement, without any new law, the Secretary of the Treasury is to-day purchasing bonds at from 25 to 26½ per cent. premium.  He is giving to these people who bought bonds at 50 cents on the dollar and have received in interest about 130 cents on the dollar, not only the principal, but $26 on the hundred premium, all in gold.  These bonds were originally payable in lawful money, but afterwards made payable by legislation in coin, and by the demonetization of silver made payable in gold.  The effect of these purchases is to contract the currency by retiring the national-bank notes, making times more and more stringent while he refuses to exercise his power to buy silver and relieve the money market.  Would he do this if there was any danger that the great money trust of New York would be unable to dictate the Presidential nominee in both political parties and thereby deny to the people the right to vote upon the question of gold and silver and prosperity, or gold alone and hard times ?

He has had the power all the time to relieve the money market by buying silver, but he had not exercised it.  On the contrary he has exerted every power conferred on him by legislation, dictated by a great money trust, to confer enormous privileges on a favored class of money changers.  No class of men on Earth ever possessed such privileges before.  To-day the national banks are using over $60,000,000 of the people’s money without paying a cent of interest.  The Administration speculates in bonds, putting up the premium, while the farmers are crushed to the earth without money to pay their mortgages.

I want to avoid saying anything unkind of this Administration.  It is following in the footsteps of republican administrations.  It has been the policy of the gold-contraction party, the bond absorption party, the grand money trust of this country, which dominates both political parties, to contract money, to enrich the bondholders and impoverish the people.  It has been the policy of the Administrations, whether Republican or Democratic, from the beginning.  The time will come when the voice of the people will be heard and somebody except an agent of an overgrown monopoly will be in the Treasury Department to act for the interest of the people of the United States and not to do the bidding of Great Britain to destroy our prosperity, to ruin our products, to depreciate everything produced here, to increase the wealth of bondholders in England and bondholders in the United States and to augment the wealth of England’s possessions and break down our own.  We will some time—when it will come I do not know, but the time will come when we shall have an American policy, when we shall have somebody at the head of affairs who will hear the voice of all the people.

Ever since the passage of the Bland act there has been a majority in both Houses of Congress in favor of the complete and absolute remonetization of silver, but it is stopped at the other end of the Avenue.  Presidential vetoes and Federal patronage stifle the voice of the people’s representatives in Congress.  The Bland act alone triumphed over a veto, but it has been robbed of nearly all its virtue by the refusal by the Treasury Department to execute it fairly according to the intent and meaning of Congress.  We have agents sent to Europe to enquire what the bondholders there want;  and who bring arguments from the for American consumption.  The arguments our agents claim they make are not the same that we find in the testimony they give when testifying before their own commissions in their own country, as I have shown.  They admit that their policy is destructive of us.  They say that is their purpose;  that they will destroy their own agriculture or protect it by tariffs for the purpose of putting down wheat and cotton they are forced to buy from us, and that they will build up India, open up trade there, and benefit their own manufacturers in that way.

It is incredible to me that any man born on American soil or naturalized under American law can be so perverse, so deaf to the voice of the people, the voice of the two Houses of Congress, the voice of common justice, as to deny to the people of the Union both silver and gold without limit and without stint.  I do not wish to cast special reflection upon anybody.  I am dealing with a system that was inaugurated years ago.

From beginning to end I am at war with that policy, and I want a representative in the White House with an American policy, who is in favor of American industry, of equal rights, a campion of the people and not of the bondholders or English monopolists.

The Presiding Officer.  The question is, Will the Senate agree to the resolution.

Mr. Cullom.  I should like to hear the resolution read.

The Presiding Officer.  The resolution will be read.

The Chief Clerk read as follows :

Resolved.  That the Secretary of the Treasury be, and he is hereby, directed to furnish the Senate with a statement of the amount of silver bullion offered to the Government each month since the passage of the act of February 28, 1878, under the provisions of said act, and by whom, and at what prices;  and also the amount of silver bullion purchased each month during such period, and from whom, and the prices paid therefor;  and, further, to inform the Senate if the quotations of India Council bills in London enter into the determination to any extent of what is the market price of silver bullion in the United States.

The resolution was agreed to.


* According to statements submitted to the royal (English) commission on trade depression, “The quantity of pure silver used for coinage purposes, during the fourteen years ending 1884, was about 18 per cent. greater than the total production during that period;  and there are other estimates which place the consumption at a still higher figure.  It is to be remembered that the coinage demand is fed from other sources than the annual output of the mines.  It is supplied to some extent by the melting down of old coinage.  Allowing for this, however, the evidence of statistics goes to show that the coinage demand for the metal is, and has been, sufficient to absorb the whole of the annual supply that is left free after the consumption in the arts and manufactures has been supplied;  and this conclusion is supported y the fact that nowhere throughout the world has there been any accumulation of uncoined stocks of the metal.”—London Economist.