The silver state. [volume] (Winnemucca, Nev.) 1909-1925, 1920-11-30
M'FADDEN DEMANDS
BONUS FOR MINERS

MuCu INTEREST IN the NC
Fadden gold bonus bill during tn,
recent political campaign In Nevada
The statement of Congressman Louis
T. McFadden, chairman of the bank.
ing and currency committee of the
House of Representatives, presented
before the recent forty-sixth annual
convention of the American BANKING
Association, held at Washington, DC.
is a sound and thoughtful discussion
of fundamental monetary economics
and remarks Of the Engineering and
Mining Journal relative thereto are
quoted for the benefit of interested
citizens of Nevada.
Concerning the ACCESSIBILITY of a
bonus to gold miners, as proposed by
Mr.. McFadden, bankers are by no
means in agreement. There are two
mutually dissenting parties. as there
are outside the banking world. Nc
Fadden's argument is directed against
the report of a certain gold commit
tee appointed by the American Bank
ing Association, which rendered an
adverse report on the bill; but this
committee is held by sponsors of the
bill to represent a minority, and it is
certain that some important banking
interests remain SO much In favor of
the bill that they have included q
statement of their support in their
newspaper advertisements.
Now the proposition, If it is to
stand, and II it should stand, must be
shown to be desirable, first and last,
on the basis of national welfare.
While the mining industry naturally
has its cause very much at heart, it
would be not only unfair but suicidal
by miners which. though it would res
u the gold-mining industry from
disaster, would depress the prosperity
of the remainder of the country and
delay the natural healing process
necessary for the industrial wounds
of war. 1t is on this broad basis of
national welfare, and no other, that
the measure Is presented, and on
which we support it, says the journal
mentioned.
Those bankers who oppose the bill
are misled in some cases, it appears,
by some elementary knowledge of
economics, proving anew that a little
knowledge is a dangerous thing. Mr..
McFadden. for example, combats the
statement of the gold committee that
Increased gold production in a period
of low prices and low costs makes 1t
easier for prices to rise again, while
diminished gold production in periods
of high prices and costs tends to re-
duce prices and costs"
Here. in a way. is a true and funda-
mental statement; and yet 1t is abso-
lutely inapplicable to the present
case. 1t Is evident that with gold. or
silver, or anything else, as a medium
of exchange. the greater the supply
Of the standard the cheaper it will
become, and the less it will purchase;
In other words, the prices of other
commodities will rise in terms of gold
or silver, as the case may be. This
was illustrated by the discovery of
the great Valenciana silver mine in
Mexico, in the sixteenth century. The
flood of silver caused a rise of COM
modify prices throughout the civilized
world.
The absolute inapplicability of this
law to the present world monetary
conditions lies in the fact that u
basis of exchange is o not gold and
silver, but so-called money which is
mostly paper with a minimum and
quite insufficient security of gold
and silver. Therefore it is now and
long will be the case that the none
tary control of prices (there are of
course other factors) follows the law
that commodity prices will tend to
increase as the ratio of paper to
metal (gold) increases; that they will
rise with the imitation and diminish
with delation. Denation means a di-
minished ratio of paper TO gold; and
there are two ways of accomplishing
it--one by decreasing the amount of
paper. the other by increasing the
amount of gold. The latter is what
the McFadden bill proposes to do.
A more astonishing economic view,
urged by a great ~financier against
the McFadden bill. that it is inadvis-
able to increase the gold reserve, as
that would mean more credit based
upon the increased gold, and so fur
Their credit. and so further imitation!
1t is difficult to argue concerning this
warped point of view. as it assumes
the fundamental depravity of Ameri-
IA bankers-which may or may not
be true. Certainly. the financier who
uttered this objection should know