St. Paul daily globe., 1894-02-12
THOUGHTS ON CURRENCY.
Written for the Globe.1
CHAPTER VII.
''DEMONETIZATION" AND "REMONETI-

long period. is measured by the cost OF
production, it now becomes clear that
so-called Recommendation" did not. and
in the nature of things. could not cause
the great fall IN the price of silver that
has occurred in the last twenty years.
In fact. characterization" did not to
anv great extent diminish the amount
of silver coins In use. In some coun-
tries it stopped the further increase of
those coins, but it did not "driVe silver
out of circulation" as some people are
SO loudly proclaiming.
In the United States, at least, it did
not stop the minting of silver. That
was practically stopped i'll 1884, except
for subsidiary coins. In that year con-
greSS changed the ratio of gold to silver
in our coins in snch way that the mar
ket value of the gold in the gold dollar
was less than the market value of the
silver in the silver dollar. Gold was
coined and used as money. while silver
was usedf for other purposes, because it
was worth more used in that way than
for money. The gold dollar was then
the cheaper dollar.
The great discoveries of gold in Cali
fornia. Africa and Australia kept the
value of the gold dollar less than the
value of the silver dollar, until the
mines of Colorado, Montana and the
other Rocky mountain states be IAN to
pour their floods Of silver upon the mar
ket. Then the cost of producing silver
fell, and consequently the value of the
silver dollar fell.
The fact that so-called ''demonetiZa-
tioD'' took place about this time, or a
few years thereafter, has caused many
people to jump to the conclusion that
"demonetiZatlon did it." when, in fact.
the fall in the price of silver was due 10
natural law as unyieldlng as the law
Of grayitation.
The cost of producing silver was re-
duced, therefore the price fell.
Nor could RECOMMENDATION" Derma-
manentIy increase the price of silver.
If silver is now below the cost of pro-
duction, enough mines will temporarily
close to diminish the supply to such an
extent that the price will rise until the
cost of production can be realized.
All that RECOMMENDATION" could pos
siblY do would be to carry the price
temporarily somewhat above cost. Then
production would increase, the added
supply would be thrown upon the mar
ket, and down would come the price
again.
In the light of these facts, then, who
is to be benefited by RECOMMENDATION"
First. the mine owner. to the extent
that it might temporarily carry the
price Of silver above the cost of produc-
ton.
Second, the mine owner, to the eXten,
= that it might permanently increase the
demand for silver at the cost OF produc-
ton.
Third, it would enable certain debtors
to legally pay their debts by giving
money of less value than they would
otherwise be obliged to pay with.
Let lis look into this question of debt
ors. Most existing mortgages ana bonds
are made payable in dollars of gold
value by specific contract. Of course
The Introduction of a cheaper dollar,
such as the ''remonetiZed" silver dollar
would be. could not help this class of
debtors al ali.
The only debtors. therefore, that
could he helped by a cheaper dollar are
those whose debts are not made payable
at gold values.
But for every such debtor there is a
creditor who is equally entitled to con-
SideratiOn.
BY just so much. therefore, as we per-
mt the debtor to gain by giving him a
cheaper dollar to pay with. by that same
amount we compel the creditor to lose
by forcing him 10 accept cheaper dol
lar than was due him.
But suppose, as some contend, that
RECOMMENDATION" would bring silver
proved conclusively that it would not,
and, in the nature of things, could not
do it-but suppose it would, who. then,
would be the gamer?
Why, nobody but the silver mine owner
Not even single debtor, then, would
be able to rob his creditor to the extent
OF single cent. 1t would cost just as
much 10 buy the silver dollar, then, as
to buy the gold one.
1t might be interesting to find ont who
are the debtors and who the creditors
to learn whether the debtors are all
poor and the creditors all rich-to point
out the rich bankers and corporations
who are heavy debtors, and the poor
depositors and small stockholders who
are creditors; but that would in no way
change the right and wrong of the
matter.
But" says the debtor. "the value of
gold has gone up; our debts have been
increased by just that much; and now
we demand cheaper dollar to bring
those debts back where they belong"
Yes, it is probably true that gold has
gone up in value. and that debts have
been unjustly increased on that ac-
count; yet, is the introduction of a
cheaper dollar fair and honorable
method for bringing those debts "back
where they belong?"
Most emphatically no.
If all debts had been contracted at the
same time-if all had been increased in
exactly the same proportion by the rise
of gold-and if your cheaper dollar we're
just enough cheaper to exactly compen-
safe for the increase of debts--then it
might probably be worthy of considera-
tloH. But debts have been running for
varying lengths of time-some were
contracted twenty years ago, some ten,
some two, some few days ago. Sup
pose it would be fair to pay the debts of
twenty years ago with silver dollars Of
the present market value-someWhere
about fifty cents each-how about the
debts of year or months standing?
Admitting that debts have been un-
justly increased by the rise of gold-ad-
mitting that such debts ought to be
scaled down to their original value,
don't you see how utterly inadequate
your cheap dollar is to effect the Justice
you demand?
Admitting that these debts ought to
be scaled down, how can that be justly
accomplished?
Why, only by imposing upon the
courts the duty of inquiring into all
cases brought before them, to deter
mine the value of each debt at the time
1t was incurred, and to authorize each
debtor to tender value equal to the
original value of his debt, and thus
legally cancel his obligation.
do not advocate this plan. 1t would
probably be cheaper to pay the debt,
even at its increased value, but l insist
that it is the only Just method of "bring-
ing debts back where they belong" ANY
attempt to do this by coming a cheaper
dollar would only substitute a greater