June 2, 1888





Record  and   Guide.





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Basir/Ess Ai^D Theses OF GeHeRAI-IJ^f^f^EST





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Vol. XLI.





JTJNE 3, 1888.





No. 1,055





The financial situation ia anything but reassuring. Things seem
to be going from bad to wore^. Stocke are depressed in the face of
large money accumulations. Iron and steel are sluggish—the price
of tin has not revived; copper will be the next to experience a sharp
drop in prices ; wages are being reduced in every department of
industry, and the number of the unemployed steadily increasea.
Lower wages means heavy losses in the retail trade of the country
and final disaster to all wholesale busmess and manufactories.
The most hopeless sign of all is the stohd indifference of Congress and
the Administration to the depressed condition of the businesa of the
country. The farce of bond buying to release the surplus money in
the Treasury is stUl continued, but there is no real relief from that
source, as money is easy because uo one wants it for business pur¬
poses. What is needed is public eonfidence^some assui-ance that
new business enterprises would be profitable. This, however, is out
of the question while prices continue shrinking.





As the Financial Chronicle points out—a reduction in the revenue
by the passage of the Mills bill, or even au abohtion of internal
revenue taxes, would give no permanent rehef now. "What we
requu-e is the starting of the wheels of industry into motion again.
This could only be done by using the surplus in the Treasury pro¬
ductively ; that is, by river and harbor improvements, by reviving
our foreign commerce, by worka for harbor defenses aud the like.
Then we ought to add to the currency of the country to keep pace
with the rapid growth of our population and the resulting increase
of our business.    Ou this latter point the Chronicle says:

Reduciug annual expanses to about the minimum, we cannot, with the
shaking fund requirements continued, expect to bring the needed revenue
down at present very much helow ?300,000,000. That means the taking,
on the average, of $6,000,000 each week or 41,000,000 each working day, out
of the channels of commerce, and puttmg it into the Treasury vaults. One
may say fchat concuiTently another mill inn will come out on disburse¬
ments. Ent even admitting that, we have to remember that the payments
to the government have to be maiuly in currency—gold, silver certificates
or legal tenders. This is fixed by statute so far as customs dues are con¬
cerned, and consequently several miUions of ciurrency must be aU the fcime
occupied doing government work, and cannot be of the least use to the
money market. Besides, in practice, if disbursements are left to take theii-
natural course, a million does not come out when the same amount goes
in. The natui'al order would bring payments more in lumps. This is always
ti'ue of interest on the govei-nment debt—it is collected gradually during
three months and put out at the end of the time.





It follows that in estimating the amount of currency in the
country we must keep in mind the fact that the government ren¬
ders a certain portion of it inert. It is kept out of cu"Culation by
our sub-treasury system which locks the money up. In other
nations the surplus funds find their way into the national banks
and are immediately available for the purpose of trade. This sub-
treasuiy system was adopted when the mercantile business of the
countiy was very limited; it has now got to be enormous, and we
want all our funds constantly in the channels of trade. The
Chronicle hints that we ought to have a national bank as has other
nations, though it does not say so in so many words. If we had
such an institution the currency of the country would be always
available for the purposes of trade, and this would deprive the
Secretary of the Treasury of the monstrous power he now wields
over prices. It is at his personal option whether values go up or down.
Prices advance when he lets the Treasury money loose and are de¬
pressed when he retains the funds In the Treasury. Agaiu we
quote:

When the Independent Treasury law was pasaed, a few millions covered
the total receipts and disbursements of fche departmenfc for a twelve month.
Government operations were at tbe time only a side show; now the Treas¬
ury is the largest manipulator of money in the country. Since that period
too the volume of commerce has multiplied very many times; financial
operations have grown to reach what would have then seemed fabulous
figures; and all industrial interests have become emphafcicaUy one, tied
together by means of railroads aud telegi-aphs, and correspondiugly sensi¬
tive everywhere to even the fear of monetary disturbance.

The eame authority does not think that even if the revenue from





the tariff should be cut off by seventy-five milhons that there would
be much diminution of the permanent government income, for the
experience of all growiug modern nations is that lower duties
eventuaUy involve larger miportations and a corresponding increase
in the revenues. The surplus will still continue to be a standing
menace to business even should the tariff and tax imposts be
reduced this session. Hence what we really need is a wise system
of expenditure for pubhc improvements which affords the most
sensible outlet for any sui-plus' in the Treasury. There are
thousands of worthy objects upon which to spend the Treasury
accumulations, but the countiy should mianimously declare that
there must be uo more swiudhng pension appropriations, and that
the Ti-easm-y Depai'tment must at once put a stop to the supremely
i-uinous pohcy of making a gift of the Treasm-y surplus to the rich
corporations and wealthy owners of our government securities,





The readers of the daily papers must have noticed that very little
is now said about silver coinage driving gold out to Europe.
The Times, Tribune, Herald, Evening Post, Commercial Advertisei-
and all our financial jom-nals predicted that the Blaine bUl, so caUed,
if made a law would ruin our national credit and expel what httle
gold we had out of the country. These statements were made day
after day from 1878 up to about 1885. Yet, in the fii-st year our
government bonds yielded 6 per cent, to their holders, while in the
latter year they returned barely 3 per ceut. In 1878 the store of
gold in the country was about two hundred milhon. According to
the last mint report it is now over seven hundred and eleven miUion.
It was idle to point out our growing store of gold to these alarmist
editors, aud they were backed up in then- gloomy forebodings by
such auihorities as Senator John Sherman, and by, everybody in
Wall street. To dispute the fact that the coinage of silver meant
ruin seemed to the average reader of our daily papers like question¬
ing the law of gravitation. Even President Cievelaud was so
impressed with the impending calamity that he went out of his
way to implore the Democratic majority in Congi-ess to abrogate
the silver coinage act and so save the community from a disastrous
panic. This was before he took his seat in the White House. But
the majority in Congress was wiser than President Cleveland. The
New York editors and all our bank officials refused to demonetize
silver completely, and then we had a revival of business, which
commenced in the summer of 1885 and continued for two years,
our gold store steadily accumulating aU the while and our national
credit getting better and better, as was shown by the advanced
price of our Federal securities.





The only New York jomiial which showed a glimmer of sense on
the silver question was the Sun, but, like the other papers, it was
under the haUuciuation that we were on the road to a silver basis,
whicii it thought would be a good thing in itself. Yet. as the figures
proved, wlule we were accumulating our gold we were steadily
exporting our silver. We pointed out frequently that if we
were to have a single unit of either of the precious metals gold
would be prefei-able to silver, as we had nearly two doUars of tbe
yeUow metal to oue of the white. A demonetization of the superior
metal would involve a frightful contraction. Our contention
always was that the growing commerce of the world requh-ed all
its gold and aU its silver and all the paper that could be convertible
into the precious metals, and that any one who advocated a single
unit of gold or of silver was an enemy of the human race, for
mankind would be steeped to the hps in misery if either one or other
of the precious metals were demonetized. The Sun now comes to
the front with the foUowing amazing statement. Speaking of the
copper syndicate it says:

The bimetallists propose tbat the great commercial countries of fche world
shall enter infco a syndicate fco buy aD the silvei- fchafc can be produced at a
fixed price in gold, say oue-sixteenth of au ounce of gold for au ounce of
silver, the market price now being one twenty-second or one tweuty-thij-d
of an ounce of gold for an ounce of silver. So long as the syndicate
held together it would keep the price up to whatever peg it fixed, but the
enhancement of fche price would so diminish consumption aud increase pro¬
duction that the silver syndicate would in the end, like the tin and the
copper syndicates, flud itself loaded up wifch a commodity for which there
was a I'esfcricted demand. Gold mines would he closed and sUver mines
would be opened just to the extent that it would be cheaper to mme silver
and buy gold with it than to mine gold dh-ectly.





Of course this scheme was evolved from the inner consciousness
of the Sun writer. There has beeu no proposition to buy up the
surplus sUver of the world, unless it might be by some inmate of a
lunatic asylum. Wliatthe bimetalhsts ask for is a return to the
state of things which existed for seventy odd years, before Bismarck
demonetized sUver in Geiinany wheu he was in receipt of the enor¬
mous indemnity from France, which he took mainly in gold.
Under the old state things on the continent of Europe thei-e was a
free coinage of silver as well aa of gold, the ratio between the two
being fif teen-and-a-half of silver to one of, gold. Under this free
coinage something over a thousand miUion of silver was coined iu
Western Eturope.   England adopted the t^,old unit for the British