The enterprise. [volume] (Wellington, Ohio) 188?-1899, 1895-08-21
A FALLACY
IN THEORY AND A FAILURE IN
PRACTICE
Is the Free and Unlimited Coinage OF Sill
ver-War Prices and the "Crime" of
'73-SOme Arguments in the
Interest of the Yellow


great deal of abstract speculation and
admit of but little positive proof. How
ever, believe that correct theory is good
practice, and that in this, as.in other pO-
litical problems, we may depend on the
bedrock principles which underlie the
whole science of economics. The stand
ard works upon the subject and the his
tory Of the leading commercial nations,
will bear me out in the assertion that bi-
metalism, with free and unlimited
coinage of both metals at fixed ratio, is
fallacy in theory and failure in prac-
tice.
GRESHAM'S LAW
Is as universally conceded and is as
clearly founded in reason as any ex-
pounded by Newton or Blackstone.
Briefly stated it is that under the free
coinage of the two money metals at
fixed ratio, the cheaper, that is the
one whose commercial ratio, is below
the coinage ratio, will eventually drive
the other from circulation. This rule
rests on the presumption that the people
using the money have an average amount
of common sense. 1t assumes that man
will not use 105 cent dollar, when
100 cent dollar will do just as well, and
that the producer of a money metal will
not send it to the mint to be coined when
its value as bullion is greater than its
nominal value when coined.
SOME HISTORY.
In 1892 the American congress estab-
lished the mint and provided for the free
coinage of silver and gold at the ratio of
Is to 1. The commercial ratio at that
time was about 1515 to /. Consequently
gold, which was undervalued, left the
country, or was sequestrated, and for
forty years we were on silver basis.
The silver dollar was the standard, not
because of any statute declaring it such,
but because of natural law which no
prince Or parliament has been able to
pervade.
In 1884 the ratio was changed to 16 to
for the express purpose of bringing
gold into circulation, as witness the Con-
gressional Record of that year. Here con-
gress made another mistake. The coin
age ratio, as usual, did not conform to
the commercial ratio, but this time silver
was underrated and the gold dollar be-
came the unit, as is evinced by the fact
that the silver dollar Of that period was
invariably quoted by the authorities as
above par. Our silver coins were
dumped into the melting pot, and during
the forty years preceding demOnitizatiOn
there were not as many silver dollars
coined as in one year under the Sherman
law.
In 1853 silver currency had become so
scarce that congress was forced to reduce
the weight of our fractional coins to keep
them in circulation.
THE LAW OF '73.
With these facts before it and in an
era of suspended specie payment, when
the act was least calculated to disturb the
money markets of the country, congress
edacted the law Of '73. 1t was submis-
sion to the inevitable. 1t was the recOg-
milton of a law, higher than legislative
enactment. 1t was demonetizatiOn, if
emitting to provide for the free coinage
of unit, which for forty years had
ceased to be unit, can be called demon
tizatiOn.
The allegation that this act was snap
shot legislation, railrOaded through by
English capital, is wholly unsubstanti-
ated by the evidence. 1t is the crOtchet
of political sensatiOnalists, who would
divert the public mind from a cool and
impassiOnate consideration of the sub
ject. Moreover, it would seem imperti-
nent to the real issue. That the law was
passed, is admitted, and now the Ameri-
can people are more deeply concerned in
its merits than in the manner of its
enactment.
The opponents of the law see in it the
cause of all the calamities of the age
They urge that it has brought the
country to the verge of financial ruin
and point to the decline of prices since
its enactment, as conclusive of the fact
The masses, always ready to believe thu
worst, with the high prices incident t,
the war fresh in their minds, and bur
dened with confused idea that higl
prices are indicative of prosperous times
are too often deluded by this show 0
logic.
l WAR PRICES.
. The prices of '73 cannot be excepted a
criteria. The destruction, during tn
war, of 100000 able-bOdied men and tn
manning of as many more, would hav
: an effect upon the price of labor, and
r rehectively on the price of every thin
f produced by labor; that eight years Q
s peace would but poorly suffice to allay
r Those high prices were made dOubly s
II by being computed in the depreciate
II currency of the day, and any argumer