Sacramento daily record-union. [volume] (Sacramento [Calif.]) 1875-1891, 1890-10-03
THE DECLINE IN SILVER.

THE DECLINE IN SILVER.
The Aha of September 29th discusses the
fall of silver from 81 20 to 81 II per ounce
1t declares that auctuation to mean that
the silver bill passed by this Congress has
turned every dollar into stamped COM
modify, the value of which is subject to
such huctution as spectators may find
useful to their schemes.
We are disposed to think our contempt
rary mistaken as to the reason for the de-
cline. Legislation of this character is
experimental, and the RECORD UNION was
willing that an experiment should be made
in the direction of increasing the purchas-
ing power of silver. We think it is appa-
rent now, however, that the experiment
will be failure. AT the very outset it
was an attempt on the part of the Govern
ment to take piece Of metal, the bullion
value of which was less than the coinage
value to be stamped on its face, and By the
device of purchasing bullion, to so rein
force the market as to bring the bullion
value of the coin to par with its ostensible
stamped value. This was perhaps the
first time in the history of money when a
great nation concluded to cover into its
treasury enough of given metal to raise
its value up to given point, and to con-
tinue the purchases in sufficient volume to
maintain that value.
The silver legislation was based on an
ascertainment of the annual product of the
mines. Those who devised that measure
took the silver product for 1889, estimated
the various uses for silver, and finding
surplus of about 100000 ounces, pro-
vided by law for the purchase of that
100000 ounces at the market price.
Surprising that by this device they had
provided use or a market for the entire
surplus, the promoters of the measure con-
cluded there was no reason why the value
of the metal should not enhance In
practice it did enhance. Expectation
based upon confident prediction did much
TO increase the value of the metal, but
demonstration followed. In the first place,
the increased value Of the metal reduced
the mechanical and artisan demand for the
bullion, and, at the same time, energized
Its production. 1t brought silver out of
its hiding, thus classifying the statistical
facts on which the legislation was based.
The effect of the enactment was to disclose
more silver than anybody supposed to have
an existence; and thus new surplus, not
anticipated and for which no provision had
been made, became apparent.
1t is not little strange that the pro-
moters of this measure actually declared
that they were going to purchase
100000 ounces of silver per year in
order to encourage the production of that
metal, when it should have been seen from
the first that if the commercial value of
the bullion was to be influenced by the
volume of the purchase by the Govern
ment, provision should have been made for
the anticipated increased production of the
commodity. But before the bill has been
in existence a few months, it has become
apparent that the device Of buying large
quantity of bullion, placing it out of the
reach of other uses and thus withdraw
ing it from the market, will not main
tain the higher rate of the metal.
The first effect of the bill was to
start all the silver OF the world toward the
United States, the place of its greatest
purchasing power. The Government had
created market for about S60,000,000
worth per annum, and the producers Of
silver everywhere started the commodity
for that market. The prediction Of the
AhG that when the Secretary of the Treas
ury next month attempts to purchase the
100000 ounces required by law the ma
nipulators of the bullion viii raise the
price TO 81 20 may or may not be fulfilled !;
we have but thirty days to wait for its
failure or fulfillment. Even if this pre-
diction should come true it will prove
nothing beyond the present ability of the
holders of bullion to speculate in the
metal. The abandoned mines have not
yet started in to produce silver. The in
creased value has not established new ma
chinery in the mines of South America
and Mexico. Miners have preferred to
await developments as TO the effect OF the
silver legislation, so that it is not possible
at this time to determine from anything
that has transpired whether the legisla-
ton is to be permanently beneficial to the
price Of the metal.
Being willing that the experiment
should be trisd, we have refrained from
all discussion of the subject. We have
however, held steadily in view the expert.
enoe Of all legislation in all time-that
Governments cannot create a value in the
bullion they convert into coin, but that
the coin itself, to maintain its par value
must possess intrinsically the value
stamped upon it. Up to this tint
silver coin has maintained its pa
value simply because the Government
of the United States has treated
it as a promise to pay, and has given it ;
use as par value in the payment of custom
duties equal to S50O,0oo,oO0 per annum
Let the Government tomorrow decline tt
redeem silver at par, and every dollar il
circulation and in the Treasury will de