THE ARENA.

EDITED BY JOHN CLARK RIDPATH, LL. D.

VOL. XVIII

July to December, 1897

published by
THE ARENA COMPANY
Boston, Mass.
1897

Copyrighted, 1897
by
THE ARENA COMPANY.

Skinner, Bartlett & Co., 7 Federal Court, Boston.

CONTENTS.

BOOK REVIEWS.

ILLUSTRATIONS.

THE ARENA.

THE CITADEL OF THE MONEY POWER.

I. WALL STREET, PAST, PRESENT, AND FUTURE.
BY HENRY CLEWS.

I.

The twenty-seven respectable citizens of New York who, in 1792, met under a buttonwood tree in front of the premises now known as Number 60 Wall Street, and formed an association for the purchase and sale of public stocks at a fixed and unvarying commission, with a proviso of mutual help and preference, committed themselves to an enterprise of whose moment and influence in the future they could have formed no adequate conception. At that date Wall Street was a banking district, small indeed when compared with its present condition, but important in its relations to the commerce of the nation. This transaction of the twenty-seven—among whom we find the honored names of Barclay, Bleecker, Winthrop, Lawrence, which in themselves and their descendants were, and are, creditably identified with the growth of the community—added the prestige and power of the stock exchange to those of the banks, and fixed for an indefinitely long period the destinies of the financial centre of the Union.

During the earlier part of this century the banking interests of Wall Street quite overshadowed those of the stock market. The growth of railway securities was not fairly under way until the opening of the fifth decade. Elderly men can recall the date when the New York Central existed only as a series of connecting links between Buffalo and Albany, under half-a-dozen different names of incorporation; and passenger cars were slowly and laboriously hoisted by chain power over the “divide” between the latter city and Schenectady. Since there were but few railways in the entire country, there were few opportunities for speculative dealings in their shares. These shares, too, were as a rule locally held, and were more frequently transferred by executors under court orders than by brokers on the stock exchange.

Prior to 1840 and 1845, however, the members of the stock exchange were not idle. Public stocks were largely dealt in. The United States government frequently issued bonds, and the prices of these bonds fluctuated sufficiently to afford tempting chances of profits. State bonds also were sold in Wall Street in larger amounts than to-day. About the year 1850 the sales of Missouri sixes and Ohio sixes frequently amounted to millions of dollars daily. During that uncertain epoch of finance when the United States Bank was both a financial and a political power, the shares of that institution were a favorite subject of speculative dealing. The shares of Delaware & Hudson, and of the original Erie Railway, the latter laboriously constructed over a rough, barren, and thinly settled portion of the State, partly by State funds, had also become actively exchangeable in the market.

During this period a relatively enormous quantity of banking capital had located itself in and near Wall Street. The Bank of New York existed before 1800, and later, although not long after, the Street witnessed the erection of buildings of a now obsolete, and yet at that time an attractive, style of architecture, devoted to the uses of the Manhattan Banking Company, the Bank of America, the Merchants, the Union, the Bank of Commerce, and others. Were it not that land in the banking district is so valuable, and that the need of upstair offices is so great, one might be tempted to regret the demolition of the graceful money temples occupied by three of these corporations on the north side of Wall Street. In each of them the entablature rested upon two fluted stone pillars with Doric capitals, in addition to the supports of the side walls. Between the steps and the doors of the temple extended a marble-paved court which often served as a convenient place of ‘change for borrowers and lenders. Entering the doors you found yourself in a large, airy, dome-lighted room, the sides of which were occupied by the clerks of the institution, guarded by high barricades from the intrusive eyes and feet of the general public. At the rear were the offices of the president and cashier. Throughout the entire building there reigned a solemn and semi-religious silence. One may witness something like this to-day in the Wall-Street end of the U. S. Treasury Building, and only there.

Up to the epoch of the rise of railway building and railway-share speculation, the main aliment of Wall-Street banks was the profit derived from the discount of commercial paper and from loans upon government and State securities. But when railway shares and bonds, based upon lines of road which were constructed through the rich regions of the Union lying between the Atlantic and the Mississippi river, came upon the market in large amounts, affording ample security for investment and loans, the great banks of Wall Street were quick to appreciate the advantages of loans made upon such undoubted values, which were at all times convertible into cash on the stock exchange. In times of pressure, commercial paper is an inferior asset for a bank, all of whose obligations are payable on demand. At such times notes become practically unsalable, and are not always paid at maturity. A failure of one firm brings down others, and renewals are urgently required from banks just when they are least able to grant them. Salable securities are on such occasions an ark of safety, and, dating from the early fifties, this class of securities has always been the basis of a large amount of the loans of the banks of Wall Street and their near neighbors of the same class in lower Nassau Street and also Broadway.

With the immense outgrowth of business consequent upon the discovery of gold in California in 1849, and the construction of the great railways of the Middle West, such as the Michigan Southern, the Northern Indiana (now the Lake Shore), the Michigan Central, the Galena & Chicago, the Rock Island, and others of like importance and real value, the banks and banking houses of Wall Street, and the stock exchange, grew into most important factors in developing the prosperity of the country. Enterprises were originated by able men acting under corporate powers, and when these were brought before the committees of the stock exchange and duly approved and listed, capital instantly flowed forth from its reservoirs in answer to the securities thus offered. And it may safely be said that but for the combined machinery of the New York banks and the stock exchange the actual developments of twenty years would have dragged laboriously through an entire century.

Amid so much progress and activity, speculation was not idle. Those were the days of many of our greatest railway operators, daring, able, enthusiastic men, who had the rare gift of imparting confidence to their followers and the public, and realized the fable of King Midas, whose touch transmuted all things into gold. Their careers were those of conquest and accumulation, like that of Napoleon; and, like him, they underwent, with few exceptions, their retreats from Russia and their Waterloos. Of such were Jacob Little, Daniel Drew, Anthony Morse, and others, to whom now the motto of Junius applies: Stat nominis umbra. Merely the shadows of their names reach over to us from the horizons where their suns set so long ago.

There was an epoch too in the Wall Street of the past when gigantic and deeply considered combinations were set in motion, entitled “corners.” As to corners, a word of explanation may not be amiss. There are always two factions in the stock market: the bulls, who want stocks to rise in price in order that they may sell out; and the bears, who want stocks to fall in price so that they can buy in. Contrary to the superficial belief of the public, the bulls are sellers and the bears are buyers. But in order to sell a commodity you must buy or borrow it; and in order to buy at a future date you must sell at a previous date; and thus the bull buys for the purpose of selling at a profit, and the bear sells something which he doesn’t own for the purpose of buying it at a lower price. The bull therefore hopes to push prices up so that he can sell his purchase at a profit, and the bear hopes to drag prices down so that he can buy what he has sold, also at a profit.

Meanwhile, the bear has delivered the shares sold by him, and in order to deliver them, has borrowed them, and given security in money at its market price. Here he has placed himself in danger, because the owner of the shares may at any time tender him this money and demand the shares, which the bear may not be able to provide himself with, except at the price which the owners choose to set upon them.

Thus a person might be under contract to deliver the shares of some corporation which might be absolutely worthless, and yet these shares might be so held that the holders could exact one thousand dollars a share. Given a railway with a share capital of ten millions, one person or knot of persons might own every certificate of its stock, and have it all loaned out to bears who had sold, borrowed, and delivered it. It is obvious that this person or club of persons could compel purchases of the shares which he or they alone possess, at whatever price he or they think proper to demand; and since such things can be done by skilful combinations under able generalship, they have been done, and were a favorite scheme during the eventful years between the sixties and the eighties. The corners in Harlem, Hudson, Erie and Northwest, in which Vanderbilt, Drew, and Gould achieved such success for themselves and their associates, have passed into history as a conspicuous portion of the great events of Wall Street. Their interest is chiefly historical, because of late years no comprehensive corners have been organized. Share capitals are so large that it is difficult for one man to control any one of them, and a divided corner is apt to fail. But in their day and generation they have offered brilliant illustrations of genius and strategic skill in financial warfare.

The system of selling short, however, which gave birth to the idea of creating corners, and which came into vogue in the fifties, has never ceased to be a leading factor on the stock exchange. It was the result of certain inflations of values which necessarily follow the construction of great enterprises. However high a valuation may be set upon any given commodity, there are always persons who expect a higher price. Early historical examples of this fact are the South-Sea shares and John Law’s Mississippi shares, over which England and France respectively went crazy in the last century. The loftier the figures to which these shares mounted, the greater was the eagerness of the public to buy them. But at that period the art and mystery of selling short had not been brought into practice, and when the bubbles collapsed there were universal losers and no direct winners.

During the latter half of this century there have been periods in the history of Wall Street when the prices of railway and industrial shares have been forced enormously above the standard of actual values, and innumerable persons have parted with good money in exchange for mere phantoms of imaginary values. At such times the short sales of discernment, directing the X rays of clear-sighted criticism into the swollen and opaque mass of financial carrion that is exposed for sale in the market, are of the utmost benefit to the public. The bear is then a benefactor to the community, and when he pulls down and tears to pieces the rotten carcass of some gigantic humbug, strewing the highway with its remains, we cannot praise his work too highly.

II.

The present condition of Wall Street is one of lassitude and expectancy. The great banks have an abundance, perhaps a superabundance, of money, their own and their depositors, which they are only too glad to lend on solid and readily salable collateral at low rates of interest, approximating the prevalent rates in London and Paris, where similar accumulations of idle capital exist. A large part of this money is deposited with them by local banks in all parts of the country, which recognize New York City as the financial centre of the Union, and are content with interest of from one to two per cent upon the funds which they are unwilling or unable to use safely at home. The stock exchange is also in a condition of quietude. The public are neither buying nor selling stocks in any large amount.

This state of things is the resultant of well-known facts. Numerous over-capitalized and badly managed railways have gone into bankruptcy, and either are in the hands of receivers or have emerged from such guardianship, and are painfully toiling along on the road to prosperity on the twin crutches of assessments upon stockholders and the withholding of dividends from the same long-suffering and patient class.

The transactions at the stock exchange at present average about two hundred thousand shares a day, exclusive of bonds, government, State, and railway; and a certain class of observers who like to subject circumstances to a minute analysis inform the public that the daily profits of the members of the exchange are about sufficient to pay the expense of office rent and clerk hire. This conclusion takes it for granted that these profits should be equally divided among the membership. This is not a reasonable supposition. Many of the members are such only in name, and rarely go on the floor. Others live during most of the time on their accumulations, and come into the market to buy or sell only when prices are abnormally low or high. The comparatively small busy portion manage somehow to keep fairly active, and are cheerfully looking forward to better times, through a vista from which the cloud of a change of the monetary standard has already passed away, and into which the genius of enterprise beckons them to enter.

III.

While in many respects the future is a sealed book, yet there is such a thing in the economy of nature as an absolutely accurate prevision of events, such as eclipses of the sun and moon, and conjunctions of the planets, and a relatively correct prevision of events depending upon the growth of enlightened communities. Since the incorporation of the Bank of New York, at the corner of Wall and Williams Streets, the banking capital of New York has increased more than sixtyfold, of which more than one-half is held and used in and around Wall Street, and the aggregation of deposited and loanable capital has grown from a few millions to over half a billion. If this has been the result during one century, what will take place in the same direction during the next century? The ratio of increase will not be kept up. A thousand dollars may be doubled in a day, but no such ratio as a hundred per cent a day can be predicated of a million. And yet it is certain that, under proper management, the million will go on increasing; and in the same manner will our half-billion increase by its own earning power, and by contributions from all parts of the Union. The development of the United States in the direction of population, agriculture, manufactures, and mines is so enormous and so steady that this nation will at some not distant period become the most opulent of all the nations of the planet, unless unforeseen and improbable political events happen by which our great commonwealth shall be disrupted or its financial stability overturned. Under a normal condition of things the capital of the citizens of the Union will continually increase, and the banks of the city of New York will be the depositary of larger and larger reserves of whatever capital is temporarily idle in the places where it is created. In due time the financial centre of the world will be shifted from London to our imperial city.

Such a destiny has been foretold for St. Petersburg, in view of the construction of the Siberian Railway and its branches, which in time will open up to industry an immense tract of productive soil in the most fertile parts of Asia, abounding in wheat and corn land, and full of superior water power. But in this superb rivalry between the United States and the colossus of Europe and Asia, the former nation has an immense start as to time, and a still greater advantage in the character of its population. And in addition to these we have the undoubted and constantly increasing supremacy of the English language. Just as during the Middle Ages Latin was the vernacular of the learned classes, and as to-day French is the language of diplomacy in Europe, so is English the common tongue in all the commercial localities of the globe. With English a man can commit himself to foreign travel anywhere, while outside of Russia there are few towns on the various continents in which Russian is not an unknown speech. These controlling conditions cannot be readily or easily changed, especially since no paramount reasons exist why they should be changed.

It is then a reasonable forecast of the future, that in due time the weighty import of the names of Lombard[1] and Threadneedle Streets will be transferred to the name of Wall Street, and the facts implied by such a transfer are of a dignity and power which it is impossible to estimate. The road leading to this great destiny can only be blocked by injurious legislation, and the good sense of our citizens may be confidently relied upon to prevent the creation of such a barricade against national prosperity.

II. THE TRUE INWARDNESS OF WALL STREET.

BY JOHN CLARK RIDPATH.

The organized powers of society are always anxious to conciliate public favor. They know that they exist by sufferance—by sufferance of a mightier than themselves. In proportion as they know themselves to be aggressors and spoliators their anxiety increases. Every abusive power in the world is thus driven to adopt schemes and devices—some dangerous and some merely ludicrous—to keep a footing at that silent bar of opinion before which all wrong must, sooner or later, quail and slink away.

The great concern called Wall Street is such an organized power in society. It exists as a fact in our American system, and would fain conciliate the favor of the public. Wall Street has become one of the most conspicuous features in our national life. Knowing that it is challenged by public opinion—knowing indeed that it is already under the ban and condemnation of the American people—it now seeks, after the manner of its kind, to save itself alive. It would go further than mere salvation; it would make mankind believe that it is a reputable part of the universal swim. Aye more; it seeks to ingratiate itself, sometimes by force and sometimes by gentle craft and stratagem, into the good graces of that civilization which it has so mortally offended.

To this end Wall Street strives to justify itself in periodical and general literature. No other power in human society to so great a degree and in so subtle a manner exploits its own virtues. Taking advantage of the well-known carelessness of American readers, and knowing full well how easily they are duped—how easily they are cozened out of their senses and led into false beliefs with mere plausibilities and sophisms—this imperial and far-reaching Wall Street, this elephantine fox of the world, takes possession of American journalism—owns it, controls it. It seizes and subsidizes the metropolitan press. It purchases newspapers and magazines by the score. It establishes bureaus; it buys every purchasable pen, from the pen of the gray philosopher to the pen of the snake editor. It overawes every timid brain, from the brain of the senator to the brain of the tramp. What it cannot purchase it terrorizes; and the small residue which it cannot terrorize it seeks to cajole: all this to the end that its dominion may be universal and everlasting.

In this work of gaining possession of public opinion and perverting that opinion to its own uses Wall Street employs all methods and uses all expedients. Wall Street deliberately marks its game; and we have to confess that the game generally falls at the first fire. We have heard, however, of a single case of a brave man, now dead, who, when offered ten thousand dollars for his voice against his conviction and his opinion against his soul, in the matter of electing President of the United States the man who was the candidate of Wall Street, told the subtle committee to make an immediate and expeditious visit to the bottom of the old theology.

This train of thought rises vividly to mind when I consider the article of Mr. Henry Clews on “Wall Street, Past, Present, and Future.” This article came unsought and unexpected to the editorial desk of The Arena. I confess that I doubted its genuineness. For why should Mr. Clews address the public through the columns of The Arena? What has The Arena done to merit such distinction? Satisfying myself that the contribution was genuine, that it was not—and is not—a hallucination, I at once divined that it must be a sort of challenge to this magazine. I do the author of “Wall Street, Past, Present, and Future,” the honor to believe that he does not suppose The Arena to be sufficiently verdant to publish his adroit and well-covered apology for the great institution which he represents,—without knowing the sense and significance of it. If indeed the distinguished gentleman imagined that we could do such a thing here, then in good sooth he must be undeceived. Or if he supposed that a paper of the kind submitted would be rejected at this office because of our well-known antagonism to the fact which Mr. Clews defends, let him in that instance also be undeceived.

At the office of The Arena we take all challenges. Nor should our friends suppose or fear that the welcome admission of Mr. Clews’s article to the pages of The Arena implies timidity or some possible weakness in the presence of that gigantic institution known by the name of Wall Street. The fact is, that the nightmare which that power has been able to spread, bat-like, over the souls of men for a quarter of a century has about been dissipated; it is already the beginning of the end. It is the dawn; the day is not very far in the future when the American people, roused at last to the exertion of their majesty, will shake themselves from the dread of this incubus and spring up like a giant refreshed from slumber.

Mr. Clews’s article on “Wall Street, Past, Present, and Future,” is a most gentle and dove-like performance. It is not a paper intended to produce alarm, but to allay it. It is one of the finest examples of a literary opiate that I have ever seen. The bottom theme of the paper is that Wall Street is a natural growth, and is therefore inevitable. Wall Street has come by a gentle evolution. Good men and true have conspired with nature to bring it forth. Under natural and necessary conditions Wall Street has appeared in our American system, and under these conditions it flourishes. Whatever great fact in society has thus appeared has been born of necessity and out of the nature of things. If Wall Street have been born out of necessity and the nature of things, then it has come of righteousness, and is the child of truth. If of righteousness and truth, then Wall Street is good as well as glorious. That which is good and glorious ought to be admired and honored. Whatever is admired and honored, whatever is good and glorious, should have influence and power in society and state. Such a golden product of evolution is Wall Street; therefore the sceptre which Wall Street stretches forth over the prostrate Western world should be obeyed and upheld by the voice and hand of the American people.

Not only so, but the sceptre should be extended. The empire of Wall Street should become universal. It should be enlarged and confirmed until all outlying kingdoms and all islands of the sea shall pass under the beneficent sway of this monarchy of the world! Then with Mr. Clews we may well consider his “reasonable forecast of the future.” With him we shall be able to see “that in due time the weighty import of the names of Lombard and Threadneedle Streets will be transferred to the name of Wall Street.” With Mr. Clews we shall be able to see that “the facts implied by such a transfer are of a dignity and power which it is impossible to estimate.” Then, finally, with Mr. Clews we shall agree that “the road leading to this great destiny can only be blocked by legislation.” Mr. Clews says “injurious” legislation. Certainly; that is true—most true. The consummation hoped for by Mr. Clews can verily be blocked by legislation! But when it comes to the definition of “injurious” how fearfully do we part company! The writer of “Wall Street, Past, Present, and Future” flatters himself, in fine, with the belief that “the good sense of our citizens may be confidently relied upon to prevent the creation of such a barricade against national prosperity.” Oh, it is “national prosperity” then that we have in view! That is good. If there be anything under heaven which Wall Street adores and dotes on more than any other thing in the world it is national prosperity! When it comes to national prosperity Wall Street is always full-handed. With the mere mention of national prosperity Wall Street raises a shout of sympathetic enthusiasm which reverberates from Passamaquoddy to San Diego, and from the Florida everglades to the snow-capped shoulders of Shasta!

Let me, however, explain to Mr. Clews one thing, and that is that the blessed condition of universal society in which Wall Street, having absorbed Lombard and Threadneedle, shall be supreme over the nations will occur only when our free American institutions shall be crushed into fragments and when civil liberty shall lie bleeding among the ruins. It will occur then, and not before. It will occur when the residue of the old American spirit has been stamped out, and when a miserable, slavish subserviency shall have been substituted for the revolutionary freedom which our fathers won and made sacred with their blood on every patriot battlefield from Lexington to Appomattox.

Temperately and patiently I will follow Mr. Clews’s paper through. The writer of the article is a gentlemanly and able representative of that colossal power which he has helped to build up and fortify. From being a child of that power he has now become, in a most theosophical manner, one of the fathers of it! As such he has made himself the apologist of a gigantic and rampant beast on whose horns of hazard the values produced by the labor of seventy millions of Americans are tossed about as if the wreckage were so much waste excelsior thrown on the horns of a bull! Mr. Clews tells us that in 1792 twenty-seven gentlemen met under a buttonwood tree and formed the association known as Wall Street. The purpose of the association was “the purchase and sale of public stocks at a fixed and unvarying commission, with a proviso of mutual help and preference.” The result was the addition of “the prestige and power of the stock exchange to the prestige and power of the banks.” That indeed is a combination worthy to be considered! A consolidation of interests was effected between the exchange and the banks to purchase and sell stocks “with a proviso of mutual help.”

The organization thus created has existed for one hundred and five years. It has made a history. It has become ever greater and more firmly fixed in and on American society. It has made itself to be the foundation of all things financial and political in the United States. The story of the process by which this prodigious result has been reached is narrated by Mr. Clews in the manner of one who gives an account of the formation of a temperance society or a Sunday school! In the whole article there does not appear a symptom of a suspicion that the thing of which he gives the history is the most dangerous and abusive fact that ever threatened the integrity of a nation. The argument is that if twenty-seven gentlemen thus met and created Wall Street, then the result, being a natural product, is good and wholesome. But the inquiry at once arises whether it is valid logic to suppose that what men do is right, simply because they do it. The affirmative of such a proposition would make Aristotle stagger. It amounts to this, that whatever is is right; therefore, let it alone.

By this argument of Mr. Clews all the tyrannies of the past, all the horrors that have afflicted the human race, all the sufferings which men have endured from sword and pestilence, from servitude, from the butchery of war and the cruelty of the Inquisition, have been right merely because they have been natural. Under this rule every monster that has tormented society from the first day until now can find full justification for itself on the simple ground that it exists! Under such an argument a howitzer is as good as a plough, a sword is as good as a sickle, a pillory is as good as a baby-wagon. By such reasoning a shark is as useful as a horse. By this logic a boa-constrictor is as good as a reindeer, a tiger is as useful and salutary in his office as an ox or a St. Bernard, and a cancer is as beautiful as a blush. That is, everything is good, not because it is useful and just, but because it is.

Or again, Mr. Clews’s argument is this: that the men who created Wall Street were gentlemen; therefore their work was salutary. Just as though respectable people could not engage in a nefarious business. Just as though gentlemen could not, and would not, make a conspiracy to enslave the human race. The “gentleman” is a very uncertain factor in civilization; his devotion to right and truth requires always to be tested with a chemical and to be taken with the usual combination of chlorine and sodium.

Mr. Clews explains that the stocks underlying our old railroad properties in the United States were aforetime “held locally,” and that they were transferred “more frequently by executors than by brokers on the stock exchange”—as though that were an evil. Then “there were but few opportunities for dealing in shares”—as though that were an evil! It thus became necessary for Wall Street to get the old stocks belonging to the people out of the people’s hands and into the hands of the Street—as though that were a good. Our public improvements were in the first place made by the people, but the people were not fit to own them. Our railways were constructed with capital subscribed by the people, generally by those through whose country the given improvement was extended. The people themselves then owned their own, and controlled it. Until Wall Street reached out and clutched such properties—first putting down the prices of the shares to nothing and then pulling the given stocks to par—the people were able to protect themselves; but never afterwards.

The same was true of all other securities, whether public or private. Nearly all bonded debts were at first local; but the holding of securities locally has always been a thing abhorrent to Wall Street. The idea of the Street is that all stocks and all securities belong, not to the public, but to itself. Of course the money capital of the country belongs to the Street. And if, with the consent of public authority, the stocks of the country also can be held by the Street, then a humble peasantry, paying perennial rents and compound interest, can be created and kept under forever throughout the domains of the great Republic. It may ultimately require arsenals to do it, but these we can supply.

The next stage in the game was the creation by Wall Street of fictitious enterprises for the distinct purpose of getting possession of the stocks on which such enterprises were based, and of speculating in the shares of such properties. When the existing stocks of railways were not sufficient—when the bonds of States and of the general government were insufficient in quantity to fill the maw of the benevolent being called Wall Street—then an artificial supply must be created; that is, some scheme of debts must be invented by which the people might be made to pay tribute to the good Wall Street, and pay it still more abundantly.

Thus were invented new banks and new banking systems. Thus came the bull and the bear and the bucket-shop. Thus were projected a thousand railways and canals. Many of these were laid into impossible regions—all “for the benefit of the people!” Other enterprises which were not sufficiently stocked began to be stocked more heavily—this also for the benefit of the people. The plan of watering was invented; the method of “promoting” enterprises was perfected,—until, as early as the time of the Civil War, Wall Street had acquired the greatest skill in making debts, or, in the language of James Fisk, Jr., in “rescuing the property of other people from themselves.”

These beautiful processes are glossed over by Mr. Clews with a pleasant account of how, with the growth of business and the discovery of gold and the oncoming of the age of construction, great enterprises were “promoted” by Wall Street, and how “capital instantly flowed forth from its reservoirs in answer to the securities” that flowed thereto. The author of “Wall Street, Past, Present, and Future,” affirms “that but for the combined machinery of the New York banks and the stock exchange the actual developments of twenty years would have dragged laboriously through an entire century.” Permit us to say that it would have been better that such “actual developments” should have dragged through two centuries than that the United States of America should have been stocked and mortgaged and bonded and enslaved, under the tyrannous lash of debt, by such a master as Wall Street.

Mr. Clews next comes to the subject of corners. On this topic we doubt not that he speaks as one having authority. He tells us quite complacently that there was “an epoch in the Wall Street of the past when the gigantic and deeply considered combinations were set in motion entitled ‘corners.’” Then he goes on to explain what corners are. He does so without the slightest expression of criticism or aversion. He tells us of the bulls and the bears by whose agency a corner is conducted as though they were the friendly competitors in some great philanthropy! Instead of describing corners as so many carefully contrived schemes to rob the people of the proceeds of their labor by putting the prices of their commodities and securities down until such commodities and securities are taken from their hands, and then putting the prices up in order that the robbers may reap the harvest, he speaks of corners as offering “brilliant illustrations of genius and strategic skill in financial warfare!”

The fact is that the men who are reared in Wall Street, who from their youth are familiarized with its processes, and who are well set in the plastic age to consider human life as an auspicious opportunity for getting possession of something that does not belong to them, are fatally blunted in their sensibilities; the ethical quality in them is battered out—or at least battered; they come to regard the human race as an enormous ranch of sheep to be shorn at the pleasure of the shearers; they even grow to consider each other as so much mutton to be butchered and roasted by whoever is able to do it.

I notice with surprise that Mr. Clews in his sketch of Wall Street dwells not at all upon the benevolent agency of that power during the Civil War. This is an oversight which I beg leave to supply. There has never perhaps been an instance in human history in which a great power has so ardently devoted itself “to the preservation of free institutions” as did Wall Street in that epoch of mortal agony. Then it was that Wall Street engaged in the patriotic work, first of destroying the national credit, then of buying it up at half price, then of converting it into a bonded debt to be perpetuated for a full generation, and finally of compelling the people to pay it in a dollar worth four times as much as the dollar with which it was purchased. It was a beautiful scheme of devotion and self-sacrifice the like of which history has never before recorded. It was a speculation which involved the life of the American Republic. The Union was on trial. All nerves were strained, and all hearts were torn. The nation was bleeding at every pore. Every freight-train that came from the front brought back its loaded boxes of dead. Fathers and mothers gathered at the station, and each received his own. The rough coffin containing the body of the patriot boy who had given his life for the flag was taken by the silent father and mother to its resting-place under the apple trees. All true men had tearful faces, and a stern resolve in the heart. And while this was the condition of the nation and the people, the high-toned Wall Street was speculating on the life of the Republic. It bought and sold blood. It was a bull on disaster and a bear on victory. It established bureaus through which to falsify intelligence and to bring the nation to the verge of ruin. It had no compunction. It regarded the gore of battlefields as the rich rain and mould out of which its own harvest was to grow. The more blood the merrier. The more tears the richer the yield. The more war the more debt. The more depression of the national credit the more cheaply we shall be able to gather it up! The more grape-vine despatches the more distraction and the better opportunity for us. The more death the more millions. The more horror and devastation the heavier will be our coffers. The more the people groan the more we will shout. The more they die the more we will live. The more the flag is torn the more our damask curtains will flutter. The more liberty perishes and withers from the earth the more we shall plant ourselves and flourish and rule and reign over a nation that we have destroyed and a people whom we have enslaved. If Mr. Clews wishes any further outline of the history of Wall Street during our Civil War we shall be glad to contribute such a sketch as a reminiscence of a great fact which appears to be dim in his memory.

There is another almost fatal omission in Mr. Clews’s article. He says but little about the principal work in which Wall Street, historically considered, has been engaged during the last thirty years. I do not like the way in which this great section of the “Past” of Wall Street is glossed over. During the period referred to, that institution has had one bottom purpose and one reason of action from which it has never deviated. This purpose, this reason of action, has been the perpetuation of the national debt and the increase of its value by bulling the unit of money in which the debt is payable. Wall Street knows that the bonded debt of the United States is the basis, or central fact, in the whole system of bonds and stocks. Wall Street knows that the dollar is the central fact in the bond. It knows that if the bond can be made everlasting and the dollar can be increased in value until a single unit of it shall be equivalent to an acre of farming land, then the Street can own the United States in fee simple, and can presently annex the rest of the world.

I acknowledge a certain admiration when I consider this stupendous scheme. It is more than Napoleonic; it is continental, interplanetary, sidereal! I cannot recall another conspiracy in the history of mankind quite equal in colossal and criminal splendor to the profound and universal plot of Wall Street to make perpetual the national debt, to keep that debt the bottom fact in the banking system of the United States, and to bull the unit of money and account until it shall be worth four times as much, or perhaps ten times as much, as it was when the bulk of the debt was contracted.

The history of this scheme in its true inwardness is the history of Wall Street for the past thirty years. The details of the history relate to such small circumstances as the transfer of the government of the great Republic from the hands and control of the people to the hands and control of the Street. Of course no such scheme as that referred to could be carried into successful operation unless the national government could be delivered over to the keeping of the Street and be locked up, as it were, in the same vault where the national debt is deposited.

This feat, however, was easily accomplished. Wall Street reached out its hand and plucked down the American eagle from his perch. Wall Street got possession of the government. The coup was accomplished while the nation was asleep—else it never could have been accomplished. Wall Street climbed the Tarpeian rock in the night, and no goose cackled to give the alarm. Columbia had gone to bed. The keeper of her treasure-house had already given the key to the enemy. The keeper of the treasury was a part of the enemy. He gave up both citadel and city. In the morning the walls were placarded with lying posters which said that the delivery of the government into the hands of the Hessians had been rendered necessary in order “to preserve the national honor!” It was done in order to keep faith with those benevolent patriots who had bought the debt of the nation at less than fifty cents to the dollar, and who, not satisfied with bringing it to par, were now engaged in the honorable work of making it worth two hundred cents to the dollar. The fact that the industries of the people would be crushed and the people themselves be reduced to poverty by the transfer of the national sovereignty from the capitol to the stock exchange was nothing in comparison with the “preservation of national honor.”

The scheme was carried out. The methods by which it was carried out constitute the subject-matter of the true history of Wall Street during the past generation. Wall Street, from being a financial organization, became a political power. It took full possession of the executive and legislative departments of the government. It controlled them both. It promptly established and defended its ownership. It instituted one scheme after another. For the purpose of fortifying its usurpation, it learned to choose its men and to prepare its measures in advance. In 1884 it created an administration for its own purposes, and manned it to the same end. It forced its way into the House of Representatives and stood with a bludgeon behind the Speaker’s chair. It entered every committee-room and dictated every successful bill. The people’s bills all went one way. If by any chance one of the people’s bills got before the House the subsidized press, owned by Wall Street, raised against it a chorus of groans and catcalls; that was “an expression of public opinion”!

From that day forth the popular voice was strangled into silence. The next administration (that of 1888) was prepared in the same manner. Wall Street has no politics except the politics of the bond; it has no platform except the platform of cent per cent. It suffices that when a president is to be elected he shall be one of us. He shall not be a man of the people; else in that case he would be a demagogue, a windbag, a vox et præterea nil. Our man shall not even know the despised people. He shall not smell of the filthy ground, but must be “sound” on questions of finance. If he be not “sound,” we will make him so. We will teach him his paces. If the people conclude to change their government, we will see to it that the incoming powers are just like the outgoing. As for the “principles” on which the candidate shall be chosen, we will attend to that. We will make his principles for him. We understand principles perfectly. We will fix the platform; we know the carpenters. If the candidate and his friends have already fixed a platform before the date of the convention, and if it have been published everywhere as the decision of the candidate and his following, we will take that platform from the wires and will carefully revise it, to the end that the “national honor” shall be preserved. We will write it over again into new meanings. We will interpret it so that no harm shall be done to the “national credit.” We will make our candidate into a puppet. When we put our foot on the treadle his jaw shall drop and he shall utter many mocking words about the “national honor” and the “prospects of our glorious country”—signifying nothing.

All this we will do for the public good. We will say that we are striving for national prosperity. We will proclaim our candidate as the advance agent of prosperity—until after the election. Then we will say that prosperity will come with the inauguration. Then we will say that it will shine out promptly when Congress adjourns and ceases to menace the national credit. Then we will say that prosperity will reveal itself when the hot season is over. By this time the hoodwinked people can be coddled to sleep, or else set to dancing with rumors of foreign wars. To this end we will have our newspapers carefully promote our principles and studiously avoid all reference to those subjects in which the people feel the deepest concern. Finally, we will omit all these matters from our history of “Wall Street, Past;” we will proceed to speak of our “Wall Street, Present,” and will explain that it is in a state of “lassitude and expectancy.” Indeed “lassitude and expectancy” is good.

But there is still another yawning chasm in the history of “Wall Street, Past,” and that is Mr. Clews’s failure to discuss the transfer of the Treasury of the United States to the custody of the Street, and the consequent reduction of the Secretary of the Treasury to the rank of a clerk. This very thing has been most successfully accomplished. I believe that the Secretary still has an office at Washington, but that should be closed in the interest of economy and reform. To do so, we doubt not, would be a strong factor in the restoration of confidence. Perhaps the Washington office might be left in charge of a janitor, for it is understood that some official correspondence is still directed to the old address! The presence of the Secretary in New York, however, has become so essential to the proper discharge of his duties that the removal of his residence thither can only be deferred by an absurd deference to public opinion!

The results of the transfer of this vital function of the national government have, in the meantime, been so salutary as fully to vindicate the change. This was shown in 1893-94 when the Street, with a strong repugnance to investing money in useful enterprises, and having a prodigious accumulation of funds on hand, concluded that a sale of Government bonds was necessary for the “national honor.” To this end the managers began to pull the treasury. In that institution a large sum of gold was stored, wholly without warrant of law. The people needed the gold beyond measure—that is, they needed the money; and gold is one form of money. The industries of the people had been prostrated by an international conspiracy, and the nation was quivering on the verge of apprehended ruin.

In this crisis the patriotic Street devised the bucket-chain, the crank of which was in the hand of the Street, while the “chain” ran through the Treasury of the United States. Every bucket came out filled with gold. Lazard Frères emptied out the gold and shipped it abroad to their confederates. This created the necessity for buying it back with bonds. The people were stunned with the audacity of the thing—just as the unfortunate owners of a house in flames are stunned to see gentlemen of the profession rush in and empty the safe. Wall Street danced and shouted while the work was done. The bonds were “popular,” and the Street got them—got them for one price and sold them for another.

By this beautiful process the great American nation was literally held up and robbed of more than nineteen million dollars! No highwayman ever more successfully clutched the wizen of his victim than did the Street with its supple fingers around the white larynx of Columbia. The wheezing of the strangulated Republic could be heard from the St. Lawrence to the Rio Grande. The nation was thus “saved,” and the robbers took the money and went sailing away on summer cruises to Norway and Venice and the Cyclades. The “national credit” was preserved; Wall Street “rescued” us from dishonor! That part of the proceeds not consumed in yacht races, pyrotechnics, and balls was passed to the credit of the reform fund, needed for the restoration of prosperity in the fall of 1896! Certainly a history of “Wall Street, Past,” ought to contain some reference to these crimes.

Mr. Clews, turning to “Wall Street, Present,” tells the nation that now “the great banks have a superabundance of gold to lend on solid and readily salable collateral at low rates of interest, approximating the prevalent rates in London and Paris, where similar accumulations of idle capital exist.” This is a true statement of the facts. Mr. Clews has here spoken by the books. What he says signifies that Wall Street is now ready to go ahead and issue new mortgages on the American people. It is now ready to offer inducements to our fourteen millions of voters to sell themselves into another twenty-year cycle of bondage. If they will only be gentle and not interrupt us; if they will give us a true death-grip on themselves, on all they possess, and all they ever hope to possess, we will lend back to them a part of the very money which we have sucked up from their wheat fields and pastures, from their barns and potato patches, from their humble stores and markets, from their mills and their mines, and we will thus expedite them on the way to serfdom. Meanwhile we will continue to bankrupt their railways, to snatch their local stocks, to convert all shares in all enterprises into bonds, and to put the bonds into our safes to the end—that confidence may be restored and prosperity come back like the flowers that bloom in the spring.

For the time being we, the Street, are able to toss “two hundred thousand shares a day” on the horns of our bull, and to put the same amount of securities under the custody of our bear. “This conclusion takes it for granted that the profits should be equally divided among the membership.” Such are Mr. Clews’s very words. By the bond of my faith! there is nothing else so beautiful and magnificent as this among the arts invented by mankind! As for the people, one of your own kings, Messieurs of the Street, has very properly indicated your wish and purpose with regard to them.

Mr. Clews tells us that the “Future” of Wall Street is a sealed book; and yet we may allow that “there is such a thing as an accurate prevision of events.” Of this kind are eclipses, occultations, and tides of the sea. If the capital of Wall Street has, since the institution was founded, increased more than sixtyfold, as Mr. Clews declares, then we may expect it, according to his philosophy, to increase full sixty times sixty, until the world shall be swallowed up. Then, when Threadneedle and Lombard Streets shall have lost their sceptre; then, when Seneca’s forecast of the time to come shall have been fulfilled; then, when Macaulay’s New Zealander shall have made his sketch, not only of St. Paul’s, but also of the bank of England; then, when all the wealth, and all the power, and all the functions of civil society in the United States shall have been transferred to Wall Street; then, when nothing shall remain to the American people except their squalid huts and the sorrowful reminiscences of a great republic; then, when Wall Street in very truth shall have possessed itself of the earth and consumed mankind,—I suppose that the benevolent owners of the world will found a few libraries, build a few marble mausoleums for themselves, and sally forth to establish a stock exchange in Mars! That done, interplanetary wars may be engendered, bonds on the solar system may be issued and bought at half price, a gold standard of values may be fixed on the basis of the pound sterling good from the sun out to Neptune, and the inhabitants of the worlds, either by arms or by journalism, may become the helots of consolidated wealth enthroned as the governing power of the universe.

THE REFORM CLUB’S FEAST OF UNREASON.

BY HON. CHARLES A. TOWNE,
Chairman Provisional National Committee Silver Republican Party.

On Saturday evening, April 24, 1897, at the Waldorf Hotel, New York, there was held a political banquet intended as a most impressive function, but which has passed into history as a very ridiculous one. Big with self-complacence and puffed with pride, as it appeared in the brilliant lights and gorgeous appointments of the palatial supper-hall, within twenty-four hours the lacerating indignation of Mr. Watterson and the trenchant raillery of Mr. Bryan had let the tumid pretentiousness all out of it, and it had collapsed into a flaccid and “innocuous desuetude.” The “star-eyed goddess” turned her back upon it, the “wild-orbed anarch” snapped his fingers at it, and even everyday Mrs. Grundy laughed it to scorn. Projected with the most alluring and satisfying expectations, the feast has dwindled to the memory of a sad mistake in the mind of every man that assisted at it. Planned as a sort of coronation ceremony, its completed performance unaccountably wore the complexion of belated obsequies irreverently disturbed by the guffaws of the multitude.

But the aspect of this banquet as a piece of ill-conceived political strategy that never was formidable, or as a rite in the ceremonial of a hero-worship that is as inexplicable as inopportune, does not now so much concern me as does its office as a dispenser of misinformation and unsound philosophy, which are always dangerous. Many who condemn the folly of it as a move in practical politics nevertheless loudly commend the economic doctrines it contributed to spread. But inasmuch as, in my opinion, the science it taught is as bad as the politics it practised, I propose to call attention to a few of the arrogant assumptions and mischievous theories that found emphatic and repeated expression at this feast.

Did the purpose of this article permit, it would be interesting to make Mr. Cleveland’s speech the text of some examination into the ex-President’s peculiarities of style. It was Clevelandesque to the core. All his protuberant characteristics are there: the leviathanic egotism, the profound and tenebrous ponderosity, the labored intricacy of the commonplace, the pedagogic moralizing, the oracular inconsequence. How absurdly obvious it all is now, and how inexplicable that the glamour of high place should ever have clothed such matter as his with the seeming of philosophy and statesmanship! ‘Tis the very frippery and trumpery of the stage after the lights are out and the audience has departed.

In his opening Mr. Cleveland says: “On every side we are confronted with popular depression and complaint.” This language stirs an echo of the long ago. In his special message to the extra session of the Fifty-third Congress in August, 1893, he thus announced a similar condition: “Suddenly financial distrust and fear have sprung up on every side.” But he accounts differently for these two identical phenomena. The situation to-day he largely attributes to “the work of agitators and demagogues.” In 1893 he declared: “I believe these things are principally chargeable to Congressional legislation touching the purchase and coinage of silver by the general government.”

The ex-President’s explanations are both wrong, and nobody ought to know it so well as himself. His relations with the great gold bankers were exceedingly intimate in 1892 and 1893, and have been so ever since. It is notorious that the panic of 1893 was a bankers’ panic deliberately brought about by these men to frighten public sentiment into supplementing their demand for the repeal of the purchasing clause of the Sherman law of 1890. The agitation against that law was a whooped-up and manufactured agitation. No legitimate interest had suffered from its operation. On the contrary, the access of standard silver dollars coined under the laws of 1878 and 1890 had been of incalculable advantage to the country. In his annual message of December 2, 1890, President Harrison had thus referred to this fact: “The general tendency of the markets was upward from influences wholly apart from the recent tariff legislation. The enlargement of our currency by the silver bill undoubtedly gave an upward tendency to trade and had a marked effect on prices.” And again: “It is gratifying to know that the increased circulation secured by the act has exerted, and will continue to exert a most beneficial influence upon business and upon general values.”

Such an influence that circulation did indeed continue to exert. The comparative prosperity of the two following years, which, in contrast with the conditions of the subsequent period, causes 1892 to wear to wistful eyes so beautiful a hue in these unhappy days, would have been an absolute impossibility but for the silver legislation.

Nor was the credit of the government menaced. It was a malicious afterthought that represented the silver dollar as a charge upon the credit of the nation. That dollar was a standard dollar. It was never “redeemed” in anything but the money-work it did. There was no law for its redemption, and there was as yet no attempt, such as Mr. Carlisle in 1896 declared himself ready to make, to commit the crime of an administrative degradation of the circulating silver dollars into promises for the payment of gold. The Treasury Notes, issued in payment for silver bullion under the law of 1890, were redeemable in either gold or silver at the discretion of the Secretary of the Treasury; and inasmuch as there was silver behind every one of them, they could become a menace to the credit of the government only in case of the betrayal of his duty by that official.

But the contractionists looked with alarm upon the improving conditions of the country. Something must be done to discredit silver, or by and by there might arise such a demand for the full restoration of its mint privileges and money powers as could not be balked, as every similar demand had been balked since 1873; and in that event the slow villany of many years would have been fruitless and the contractionists’ occupation would be gone. Then was formed the deep design to compel the repeal of the purchasing clause of the Sherman law. The gigantic forces that had been behind Mr. Cleveland in the memorable campaign of 1892 had not lost their cunning or their power. They knew their implements, and they had had much experience. Their strategy was customary and it was effective. To-day Mr. Cleveland complains because the Republican party, having won the contest of last November on the money question, should have hurried into the current extra session on the tariff question. Let him recall his own course when, having carried the country in 1892 on the tariff question, he summoned the extra session of 1893 to consider the money question. Such a reflection might possibly assist him in fathoming the present motives of the men who won in 1892 to achieve the gold standard and in 1896 to preserve it.

For the election of Mr. Cleveland was a carefully executed move in an elaborate and merciless programme. The president of a national bank in North Dakota, a man of character and thorough reliability, has recently made public a conversation between himself and a prominent New York bank president, held not long after that election, in which the latter, whose institution was a member of the Associated National Banks, declared in substance as follows: “We have just elected Grover Cleveland President of the United States upon the express understanding with us that the policy of the administration shall be to uphold and advance the gold standard”; and he foretold, with startlingly faithful prevision, the repeal of the Sherman purchase law, the successive bond-issues, and the general and ruinous fall of prices, which seem to have evidenced the strict performance of the agreement by the party of the second part.

How persistently the power of the executive was used, and how carefully the offices were dispensed, to influence Senators and members of Congress against the Sherman law, were matters of ordinary comment at the time. Meanwhile the banks were putting in motion their peculiar and enormous persuasions. For months no man could go into any bank in any State of the Union for any purpose without having thrust under his nose, with a more or less pointed request for his signature, a petition demanding the repeal of the obnoxious statute. Then, in the latter days of April, 1893, on the stock exchange, there began that concerted onslaught upon stocks and values, vaunted as an “object-lesson” to the people, as a result of which within eight months six hundred of the relatively smaller banking institutions of the country went down, dragging with them fifteen thousand industrial and business enterprises, involving a total loss of seven hundred and fifty millions of dollars.

The object-lesson served its purpose. With the business world shattered into fragments, enterprise stifled, and credit dead, a terror seized upon the people. The opportunity for which the big bankers had been coolly waiting had come. Cunningly and in many places at once they started the cry that the Sherman law had caused all this havoc, and that the only hope for a return of prosperity lay in the immediate repeal of the feature providing for the purchase of new silver bullion. The clamor was eagerly repeated, and fear eagerly believed it. At precisely the right moment the President himself made official proclamation that the rumor was true, and summoned Congress in extra session to obey the mandate of the bankers. Under this spell Congress acted and the law was repealed. Thus was the country made dependent upon gold alone for its new supplies of full-power money, and thus, aided by similar action elsewhere, was inaugurated an era of accelerated fall of prices more pronounced than the world has known since the middle ages, and a precipitate decline of values more ruinous than any other chronicled in history.

“Agitators and demagogues” indeed! Is it not monstrous that any intelligent man should believe the present frightful condition of the country to be due to the work of agitators and demagogues? Mr. Cleveland of course knows better; but many people have actually been convinced that some millions of our citizens would rather agitate than work; that thousands of them have deliberately and by preference forsworn business and become demagogues by trade. The thoughtful man knows that agitation is first a result and afterward a cause. It is a cruel as well as an ignorant thing for Mr. Cleveland and his disciples to cast into the faces of the suffering producers and workers of the United States, as a reproach, the fact of their discontent and complaining. Of course our people are in distress. Of course they are crying out against it. Of course they will endeavor to learn what occasions it. And of course when they have ascertained what the matter is they will agitate for relief. Substantially all men prefer to be busy about the ordinary and interdependent offices of social life. This is especially true of the great middle classes in the United States. Under just and rational laws they will be so. The absence of such a temper is ground for suspicion against the laws. Existing conditions confess their weakness and injustice when they revile admitted discontent. I would rather the cause I believe in sprang from suffering than that suffering should follow my cause.

The full magnitude of this achievement for the gold standard in the repeal of the law of 1890, will not be grasped unless we bear in mind that it occurred at a time when the indications were unusually favorable that an international bimetallic agreement, which the world had been trying to accomplish for nearly twenty years, might soon be secured on an acceptable basis. It has long been suspected that the strongest discouragement of this hope, and probably the determining factor in its failure, was the attitude of President Cleveland as quietly caused to be understood abroad. Very recently this well-grounded suspicion has been turned into certainty by the distinguished English bimetallist, Mr. Moreton Frewen, who, in a letter to the Washington Post, says:

But Mr. Cleveland made it known, through the subterranean channels of diplomacy, that, far from giving any support to silver, he was preparing to urge on Congress the repeal of the silver-purchase clauses of the Sherman act. Mr. Cleveland’s intention became known in official circles in Calcutta. That this was the case I learned at the time and at first hand. The government of India believed that the cessation of all silver purchases in America would still further reduce the exchange value of the rupee, and therefore, in advance of the pending anti-silver legislation anticipated from Washington, the Indian mints were closed.

Mr. Cleveland may well be deified in the gold-standard cult, for clearly he has been the arch-enemy of bimetallism.

One of the characteristics of the discussion now going on between the advocates of gold monometallism and those of bimetallism is the disingenuousness of the former. They will rarely consent to a clear definition of the issue, but seek to evade it both by preëmpting the use of moral labels and catchphrases which satisfy their partisans without inquiry, and by stigmatizing their opponents with such vile imputations and base epithets as seem to place them beyond the pale of moral and intellectual tolerance. “Sound” and “honest” they write above their creed. They pose as consecrated guardians of public honor and private property. We are depicted as dishonest and imbecile, repudiators of national and individual obligations, communists or anarchists bearing the torch and axe. This specialty is Mr. Cleveland’s long suit. Little wonder that his school should place him at its head. His preëminence in the field where self-admiration is a supreme virtue and ribald abuse passes for irrefutable argument will scarcely be denied by anybody who shall have read the following characteristic specimens from this Waldorf essay, carefully written down and calmly delivered: “We are gathered here to-night as patriotic citizens anxious to do something toward … protecting the fair fame of our nation against shame and scandal.” It is not recorded that anybody smiled at this. Indeed, the astonishing thing about this business is that these people seem able to impose successfully on one another. But Mr. Cleveland is even better at the other kind, as for example: “Agitators and demagogues,” “ruthless agitators,” “sordid greed,” “inflamed with tales of an ancient crime against their rights,” “unfortunate and unreasonable,” “restless and turbulent,” “reckless creed,” “boisterous and passionate campaign,” “allied forces of calamity,” “encouraged by malign conditions,” and so on ad nauseam.

This is the attitude of nearly all the defenders of the gold standard who have the hardihood to say anything at all. Undoubtedly in many cases it is assumed because of ignorance on the merits of the case, so that nothing remains but to “abuse the other fellow.” But occasionally this course is adopted by men who are well informed, and who know that the gold standard is incapable of meeting bimetallism in an honest contest of argument with any hope of success. The strategy of these, therefore, is to avoid fair discussion by so prejudicing the public mind against their opponents as to forestall a hearing.

The result has been surprisingly successful. In many localities, and in fact in nearly all localities in the East, the most intolerant spirit has been manifested by the most prominent persons in the community, who had never taken the pains to examine the subject on which they so violently and fanatically expressed themselves. To people of any acquaintance with the literature, the history, and the science of money, it has seemed most marvellous that business men of large affairs, of much general information, and of excellent natural abilities, should be content to remain absolutely ignorant of fundamental monetary principles and the overwhelmingly attested lessons of past experience. It is infinitely pitiful to see men of affairs led away in so-called “business men’s sound-money associations” and other similar movements, when a knowledge of the conditions on which their welfare depends would send them in an exactly opposite direction.

Why? Because business men are men who do business, or at any rate who want to do business; and all legitimate business consists in the performance of some appropriate function in connection with the production or the exchange of commodities. It is apparent to even the dullest apprehension that whatever prevents or discourages production is destructive of business, and that a money system which provides a measuring unit that constantly demands, as an equivalent, an increasing quantity of everything produced, is the greatest burden on production that could possibly be devised. But it is precisely this kind of a unit that the gold standard furnishes. No one economic fact is so conclusively established and so generally conceded as that of the progressive fall of average prices throughout the gold-standard world during the last twenty-four years. This fall amounts to almost fifty per cent, and indeed, in respect to the great staple products of the country, exceeds fifty per cent; so that, to state the same fact in its converse, the purchasing power of gold has increased since 1873 one hundred per cent.

The significance of this awful fact is deftly obscured behind the deceptive and specious plea for “a dollar of the greatest purchasing power.” This is one of those artful expressions that are used by the advocates of the gold standard as a kind of thought-deterrent. It seems so obvious, at the first suggestion, that the best dollar is the dollar that will buy the most, that it is hard for a man to get even a hearing who asserts that, on the contrary, such a dollar is the very worst dollar conceivable. But a moment’s reflection will satisfy any sane mind that such is the case. The demonstration is so simple that one feels like apologizing for making it. Yet it is in respect to principles just as plain as this one that people are constantly allowing themselves to be taken in by the supporters of the single standard.

The demonstration is this: whatever is bought by a dollar, itself buys the dollar. For example, when a dollar exchanges for a bushel of wheat, the dollar buys the wheat, and the wheat buys the dollar. To say, therefore, that a dollar that buys two bushels of wheat, being a dollar of greater purchasing power, is better than the dollar that buys one bushel, is to say that the dollar which it requires two bushels of wheat to buy is a better dollar than that which can be bought with one bushel. Consequently, to increase the excellence of your dollar all you need to do is to increase the scarcity of the stuff out of which dollars are made, so that each one shall constantly stand for more and more wheat, or, using wheat merely as representative of commodities in general, so that it shall constantly require more and more of all other things on earth to get a dollar. It is wholly credible that the man with dollars should profess this philosophy, but it is absolutely inexplicable how it should receive the support of men interested in getting dollars with things, who comprise about seven-eighths of society.

Now as it continually takes more products to get a given quantity of gold, is it not clear that the producer who becomes liable for taxes and gets into debt must constantly bear an increasing burden of taxation, and that his debt, payable in more commodities than it represented when he incurred it, needs only to run long enough to grow beyond the hope of his ability to pay it? Such a policy cannot but be fraught with certain ruin to producers. It is causing in the United States a condition frightful to contemplate. The mass of debts is piling up at a ratio that absolutely threatens, if a halt in the automatic process is not soon called, a universal insolvency. Indeed a general liquidation is already impossible. He is no alarmist who counsels a timely and rational remedy as not only demanded by justice, but as anticipatory of violent readjustment. Under such disquieting conditions is it not as criminal as it is unscientific for men to go about prating of the system that has occasioned these things as “honest money,” and “sound money,” and denouncing its opponents as repudiators and anarchists?

In the presence of epochal and fundamental disturbance, when men, patient beyond example and willing to argue the correctness of their claims, are crying out against the injustice of a money system that day and night and year upon year, with unerring and pitiless precision, takes from the producing many and hands over to the idle few that which it ruins those to lose and but pampers these to gain, our ex-President offends decency and insults millions of his fellow-citizens with this reference to their contention: “Honest accumulation is called a crime.” Where does he find anybody calling honest accumulation a crime? Men indeed stigmatize the maintenance of this odious money system as a crime, but only because of the things they claim it to be guilty of. Why does he not join issue on these? He knows that nowhere in all this world is there, or has there ever been, a more honest body of citizenship than the millions of Americans who to-day are toiling on the farms and in the workshops of the country and who demand from the laws they obey nothing but equity and justice. It was easier, and more pleasant to those who heard him, to wrong these men with a sneer than to answer them with an argument. He might possibly have done well to relinquish this task to one who sat near him, his ex-Secretary of the Treasury, who had himself, in 1878, discovered something that he thought a crime and had thus denounced it: “According to my views of the subject the conspiracy which seems to have been formed here and in Europe to destroy, by legislation and otherwise, from three-sevenths to one-half the metallic money of the world, is the most gigantic crime of this or any other age.”

The speech of Mr. Carlisle was notable for stating his position more extremely than he had previously done since his apostasy. He boldly takes the stand logically demanded by consistency in the man who opposes silver coinage and denies the arguments based on the appreciation of gold. He comes out squarely for the gold standard and places bimetallism of any and all sorts under a common ban. But alas! what a sorry appearance he makes. Nowhere in our political history do I find quite so pathetic a figure as that presented by this once strong and virile champion of the people’s rights in his contrasted role of defender of their oppressors. Where now is that compact and cogent argument, that sincere and moving eloquence, which made his forensic style so singularly effective; which marked him the parliamentary darling of his party, a predestined president of the republic? Shrunken to the dreary platitudes of the gold-standard catechism, babbling of “sound currency” and “intrinsic value.”

This talk of intrinsic value was not confined to Mr. Carlisle. Mr. Patterson, of Tennessee, and Senator Caffery, of Louisiana, were likewise guilty of it. It is, indeed, the characteristic folly of their school. Having destroyed the money demand for silver while adding almost incalculably to that for gold, they have caused an increasing disparity in the values of the two metals; and now, when it is sought to restore the parity by restoring the equivalence of use and demand on which alone it depends, they pretend to have discovered some inherent perfection in gold and an original sin in silver which forbid all attempts to reconcile them. In the face of monetary principles whose nature has been understood for more than two thousand years, and of historic and economic facts which every college freshman knows, Mr. Carlisle has the appalling audacity to use the following language: “Natural causes have separated the two metals, and while it is possible that natural causes may hereafter change their present relations to each other, it is certain that these relations cannot be changed by artificial means.”

It is difficult to speak with becoming moderation of such stuff as this; and it is really pathetic to see the dominant opinion of whole sections of the country taking its cue from men who assume superior airs and rebuke the presumption of thinking on the part of some millions of Americans, while they peddle such insufferable nonsense as this just quoted from Mr. Carlisle. “Natural causes” indeed, when we can turn to the statute books of half the world and put our fingers on the “artificial means” whereby the hoarders of gold have legislated demand into one metal and legislated it out of the other. Let once a wrong be achieved by artificial means, and instantly those who profit by it represent it as the inevitable decree of evolutional forces. “Natural causes,” we are asked to believe, have made gold dear and silver cheap during a period when the cost of producing gold has been cheapened more than any other mechanical process; when both metals have continued on substantially their old relative planes of use in every respect save as money; when their relative production has been from three to twenty times less disproportionate than at any other similar period in the past four hundred years; and when in actual weight the stocks of coin and bullion available for coinage have risen from a proportion of thirty-two of silver to one of gold up to that of sixteen of silver to one of gold coincidently with a fall of the so-called market ratio from fifteen and one-half to one, when the mints were open to both, down to thirty-three to one when only the one can be freely coined. It is simply an incredible and impossible proposition.

Intrinsic value is as unthinkable as intrinsic distance. Both distance and value are relations. Neither can exist or be stated except by comparison. The value of a thing is what it is worth; and it is worth what it will bring. Value in exchange is the only value that political economy knows anything about; and what a given thing will exchange for depends on the ratio of the supply of it to the demand for it. A piece of money is worth what it will buy. Other things remaining the same, it will buy more when the stuff out of which it is made is plentiful, and less when that is scarce. The proposition of the bimetallists rests on only time-honored doctrines of political economy as justified by the experience of mankind. We desire to restore the parity of gold and silver by perfectly “natural causes” set in operation by “artificial means.” We propose to invoke the law to equalize their opportunity and to make them interchangeably and indifferently responsive to the same money demand.

Space has not permitted reference to all the errors committed at this wonderful banquet, nor a complete discussion of even those cited. I have endeavored only to point out the most glaring ones in the hope that some persons inclined to accept, somewhat carelessly, the assumedly authoritative statements of these eminent men, may be led to study this great subject whose proper understanding and wise management are of such vast importance not only in American politics but in the progress of the race. For the cause of bimetallism must commend itself to the intellect and the conscience of the country or it cannot win. Those who have spent some time in an earnest and thoughtful investigation of the matter and are convinced that the success of silver coinage is the first step in a series of rational, safe, and necessary reforms, are ready to be judged as much by the reasonableness of their doctrine as by the sincerity of their motives. They intend from now on to force the fight. The enemy will be sought out and assailed wherever found. No pretentious claims of infallibility will be accorded immunity from criticism. No authority will be permitted to shelter folly. It is time to expose the preposterous assurance of the gold-standard pundits. Nonsense will be called nonsense whoever utters it, and, what is more, it will be proved to be nonsense.

DOES CREDIT ACT ON THE GENERAL LEVEL OF PRICES?

BY A. J. UTLEY.

It is conceded by all standard writers on political economy that the value of money—that is, its purchasing power—is fixed and regulated by the amount of money available for use.

John Stuart Mill says:

If the whole money in circulation was doubled prices would be doubled. If it was only increased one-fourth, prices would rise one-fourth. There would be one-fourth more money, all of which would be used to purchase goods of some description. When there had been time for the increased supply of money to reach all markets, or (according to conventional metaphor) to permeate all the channels of circulation, all prices would have risen one-fourth. But the general rise of price is independent of this diffusing process. Even if some prices were raised more, and others less, the average rise would be one-fourth. This is a necessary consequence of the fact that a fourth more money would have to be given for only the same quantity of goods. General price, therefore, in any such case would be one-fourth higher. The very same effect would be produced on prices if we suppose the goods diminished, instead of the money increased: and the contrary effect if the goods were increased, or the money diminished. If there were less money in the hands of the community, and the same amount of goods to be sold, less money altogether would be given for them, and they would be sold at lower prices; lower, too, in the precise ratio in which the money was diminished. So that the value of money, other things being the same, varies inversely as its quantity; every increase in quantity lowering the value, and every diminution raising it, in a ratio exactly equivalent.

This is known as the quantitative theory of money, and is recognized by Ricardo, Jevons, Macleod, John Locke, James Mill, John Stuart Mill, Senator John P. Jones, David Hume, William Huskisson, Sir James Graham, Prof. Torrens, Prof. Sidgwick, J. R. McCulloch, Mr. Gallatin, Prof. Fawcett, Prof. Perry, N. A. Nicholson, Earl Grey, Prof. Shield Nicholson, Lord Overstone, and, in fact, by all writers on political economy of any prominence since Adam Smith. Formerly it was supposed that the value of money depended upon the cost of production; that the reason why a dollar in gold or silver was worth 100 cents was because it took 100 cents’ worth of labor to produce metal enough to make a dollar. This theory, however, has been abandoned by the best writers and speakers; in fact, by all economists of any standing, and it is now conceded that the cost of producing the metal has no influence on its money value, only as it may tend to increase or reduce the amount of money, and that it is the quantity of money, the number of units, available for use that determines and regulates its value; that is, if the quantity is increased its value will fall, and if the quantity is diminished its value will rise, and that it will fall or rise in value in a ratio exactly equivalent to the increase or diminution of the volume of money; and that if sufficiently reduced in volume, a dollar, whether stamped on gold, silver, or paper, would buy a plantation or pay a man for the labor of a lifetime. There can be no doubt as to the correctness of the quantitative theory of money.

John Stuart Mill says:

That an increase in the quantity of money raises prices, and a diminution lowers them, is the most elementary proposition in the theory of currency, and without it we have no key to any of the others.

Prices, however, are not fixed by the total amount of money in existence; only that part of the money that is available for use can act on prices.

Mr. Mill says:

Whatever may be the quantity of money in the country, only that part of it will affect prices which goes into the market of commodities and is there actually exchanged for goods of some description. Whatever increases this portion of the money in the country tends to raise prices. Money kept in reserve by individuals to meet contingencies which do not occur, does not act on prices. Money in the coffers of banks, or retained as a reserve, does not act on prices until drawn out to be expended for commodities.

It is also conceded that in fixing prices not only all the money actually available for use must be taken into consideration, but the rapidity of circulation must also be regarded; and due allowance must be made for the number of times commodities change hands before consumption.

The same dollar may, by passing from hand to hand, make a number of purchases, and the same goods may be sold repeatedly before consumption. It is, probably, correct to say, that the money available for use multiplied by the rapidity of circulation, or, as Mr. Mill expresses it, by its efficiency, equals the total money to be considered; and the commodities sold multiplied by the average number of sales equals the total commodities to be taken into consideration in fixing the general level of prices.

Are there any other elements that act on the general level of prices? Of course an abundant yield, or a short crop, or an over-production, so called, or under-consumption, of any particular commodity may depress or raise the price of that particular crop or commodity; but are there any elements other than those above enumerated that act on the general level of prices? I think there are none.

If, then, prices are controlled by the volume of money available for use; and if the general level of prices will rise as the volume of money is increased, and fall as the volume of money is diminished, and rise or fall in an exact ratio corresponding with the expansion or contraction of the volume of money, it becomes important to ascertain what money is, and also whether there is anything which can be used as a substitute for money in such a manner as to affect the general level of prices.

Senator John P. Jones, than whom there is no one better informed, says:

The money of a country is that thing, whatever it may be, which is commonly accepted in exchange for labor or property and in payment of debt, whether so accepted by force of law or by universal consent. Its value does not arise from the intrinsic qualities which the material of which it is made may possess, but depends entirely on extrinsic qualities which law or common consent may confer.

Aristotle says:

Money has value only by law and not by nature; so that a change of convention between those who use it is sufficient to deprive it of its value and power to satisfy our wants.

Adam Smith says:

A guinea may be considered a bill for a certain quantity of goods on all the tradesmen in the neighborhood.

Henry Thornton says:

Money of every kind is an order for goods. It is so considered by the laborer when he receives it, and it is almost instantly converted into money’s worth. It is merely the instrument by which the purchasable stock of the country is distributed with convenience and advantage among the several members of the community.

John Stuart Mill says:

The pounds or shillings which a man receives are a sort of ticket or order which he may present for payment at any shop he pleases, and which entitles him to receive a certain value of any commodity that he may choose.

Appleton’s Cyclopædia defines money in the following words:

Anything which freely circulates from hand to hand, in any country, as a common, acceptable medium of exchange, is, in such country, money, even though it ceases to be such, or to possess any value, when passing into another country. In a word, an article is determined to be money by reason of the performance by it of certain functions, without regard to its form or substance.

Francis A. Walker says:

Money is that which freely passes from hand to hand through the community in final discharge of debt and in full payment for commodities, being accepted equally without reference to the character or credit of the person who offers it, and without the intention of the person who receives it, to consume it, or enjoy it, or apply it to any other use than in turn to tender it to others in discharge of debts or in payment for commodities.

It has been contended by certain economists that bank checks and bills of exchange are money, or, at least, that they discharge the money function and act on prices the same as money; but this definition excludes checks and bills of exchange. A bill of exchange or bank check is not accepted without reference to the character or credit of the person who offers it. But Francis A. Walker leaves us in no doubt on this question. On page 123 of his work on “Political Economy” he says:

Money is a medium of exchange. Whatever performs this function, does this work, is money, no matter what it is made of, and no matter how it came to be a medium at first, or why it continues to be such. So long as, in any community, there is an article which all producers take freely and as a matter of course in exchange for whatever they have to sell, instead of looking about, at the time, for the particular things they, themselves, wish to consume, that article is money, be it white, yellow, or black, hard or soft, animal, vegetable, or mineral. There is no other test of money than this. That which does the money work is the money thing. It may do this well; it may do this ill. It may be good money; it may be bad money; but it is money all the same. We said all producers, since it is not enough that a thing is extensively used in exchange, to constitute it money. Bank checks are used in numerous and important transactions, yet are not money. It is essential to money that its acceptability should be so nearly universal that practically every person in the community who has any product or service to dispose of will freely, gladly, and of preference, take this thing money, instead of the particular products or service which he may individually require from others, being well assured that with money he will unfailingly obtain whatever he shall desire, in form and amount, and at times to suit his wants.

It appears from the accepted definitions that bank checks and bills of exchange are not money. They may to some extent, as other forms of credit may to some extent, add to or increase the rapidity of circulation; but, certainly, credit is not money nor does it possess the essential elements of money. I think it is an essential element of money that when used it closes the transaction between the parties to the transaction. In other words, money, when paid in the purchase of a commodity, closes the transaction, and neither party to the transaction has any further claim or demand against the other. Anything which does this (barter, of course, excluded) is money, and anything which fails to do this is not money. If a credit is given or a check received the transaction is not closed until the debt is paid or the check cashed. I do not find that any economist has made this distinction, in so many words, between money and credit, but I am satisfied that it exists.

Does all the money available for use act on prices? It is contended by a certain class of economists that only money of ultimate and final redemption—in other words, gold and silver, in countries where gold and silver are the standard money, and gold only, in countries where gold is the standard money—can act directly on prices, and that other forms of money can only act on prices in an indirect manner, and to the extent only that they may increase the rapidity of the circulation of redemption or standard money; that paper money, whether convertible or inconvertible, covered or uncovered, and token money, can have no direct influence on the general level of prices.

Is this contention true? We have already seen that money is a medium of exchange, a counter for reckoning, an order for goods, and that its value does not depend upon the intrinsic qualities which the material out of which it is made may possess, but depends entirely upon extrinsic qualities which law or common consent may confer, and that anything (barter, of course, excluded) that closes transactions between the parties to the transactions, is money; and also that the value of money, that is, its purchasing power, is fixed and regulated by the amount of money available for use. Why, then, should any part of the money that possesses and discharges all the functions of money be excluded? What peculiar property has money stamped on gold and silver that it only can act on prices?

John Stuart Mill says:

After experience had shown that pieces of paper, of no intrinsic value, by merely bearing upon them the written profession of being equivalent to a certain number of francs, dollars, or pounds, could be made to circulate as such, and to produce all the benefit to the users which could have been produced by the coins which they purported to represent, governments began to think that it would be a happy device if they could appropriate to themselves this benefit, free from the condition to which individuals issuing such paper substitutes for money were subject, of giving, when required, for the sign, the thing signified. They determined to try whether they could not emancipate themselves from this unpleasant obligation, and make a piece of paper issued by them pass for a pound, by merely calling it a pound and consenting to receive it in payment for taxes. And such is the influence of almost all established governments, that they have generally succeeded in attaining this object: I believe I may say they have always succeeded for a time, and the power has only been lost to them after they had compromised it by the most flagrant abuse.—“Political Economy,” Book 3, Chap. 13.

Mill further says that such inconvertible paper money will act on prices. And if inconvertible paper money will act on prices, why will not convertible paper money, that is, paper money convertible into coin on demand, also act on prices? Token money, especially if a legal tender, and whether a legal tender or not, if accepted without objection in the payment of debt, or if received in full payment for commodities, discharges the money function, and is to all intents and purposes money. It is not absolutely necessary that to make a thing money it should be a legal tender in the payment of debt. Anything which is commonly accepted in exchange for labor or property and in payment of debt, whether so accepted by force of law (that is, its legal tender property) or by common consent, is money. From 1861 to 1873 we had no gold or silver money in the United States, or virtually none. The official reports of the Secretary of the Treasury show that the gold and silver coin, including the gold and silver bullion in the United States Treasury during that period, amounted to but $25,000,000, and even that was not in circulation, except to a very limited extent on the Pacific Coast. Yet during that period prices reached the highest level ever attained in this country. Certainly, the level of prices during that period was not fixed by the gold and silver money available for use. In view of the foregoing facts I think it must be apparent that any money which is received in full payment for commodities, whether so received on account of its legal tender property or by universal consent, and whether it is gold, silver, paper, or token money, acts on prices, and tends to fix the general level of prices.

It is claimed by a great many writers on political economy that credit has the same influence in fixing the general level of prices that money has, and that an expansion or contraction of credit would inflate or contract prices in the same manner and to the same extent as would result from a contraction or expansion of money; that if credit is extended, if more commodities are sold on credit than formerly, such extension of credit will tend to raise prices in the same manner and to the same extent as would so much additional money; and that if credits are contracted, if less credits are given than formerly, such contraction of credits will tend to depress prices in the same manner and to the same extent as a withdrawal of a like amount of money from the channels of trade would depress them. At the head of this school of political economists stands John Stuart Mill. He says:

I apprehend that bank notes, bills, or cheques, as such, do not act on prices at all. What does act on prices is credit, in whatever shape given, and whether it gives rise to any transferable instruments capable of passing into circulation or not. (See Book 3, Chapter 12.)

Is this contention true? If so, then it is not true that the general level of prices is determined by the amount of money available for use; but is determined, rather, by the amount of credits available for use. The debts of the world (and the credits, of course, are precisely equal to the debts, as there could be no debt without a corresponding credit) amount, in round numbers, to $200,000,000,000, and the money in the world amounts in round numbers to $10,000,000,000. That is, there are twenty dollars of credit to one dollar of money; and if credit exercises the same influence in fixing the general level of prices that money exercises, then it is absurd to say that the volume of money available for use fixes the general level of prices, and at the same time to contend that credit, dollar for dollar, is an equal factor in fixing prices. If credit affects the general level of prices in the same manner and to the same extent that money does, then credit exerts an influence on prices twenty times greater than that exerted by money, and we should say: The general level of prices is fixed by credit, modified, it may be, to some extent by the amount of money in circulation.

The difficulty seems to be in distinguishing between money and credit. If we keep in mind the fact that anything which closes the transaction between the parties to the transaction (barter excluded) is money, and anything which leaves something still to be done is credit, we shall have no difficulty in making the distinction.

Can credit affect the general level of prices? One of the most familiar and common illustrations given by those who contend that credit will raise the general level of prices, is that of a man entering the market to buy cotton.

They say: “Suppose a person with $5,000 in money enters the cotton market, and with his money purchases $5,000 worth of cotton. His demand for cotton and his purchase of $5,000 worth will tend to advance or stimulate the price of cotton.” “Now,” they say, “suppose he has a credit of $5,000 and with this credit he purchases an additional $5,000 worth of cotton. The second purchase, made on credit,” they contend, “will tend to still further advance the price of cotton in the same manner and to the same extent that the cash purchase did.” Is this true?

Let us suppose that he purchased the second bunch of cotton on ninety days’ time. At the end of the ninety days he must pay for this cotton. If he draws the $5,000 with which he pays this debt from money invested in the cotton trade, the withdrawal of that sum from money invested in that industry will tend to depress the price of cotton to the extent that it was stimulated by the credit. If he withdraws it from the grain trade or from some other industry, the withdrawal of that sum of money will tend to depress prices in the industry from which it is withdrawn to the same extent as the cotton industry was stimulated by the credit. Whether the money to pay the debt is taken from the cotton industry or from some other industry, the general level of prices has not been raised. The purchase in the first instance may have temporarily stimulated the price of cotton, but if the payment of the debt is made from money drawn from that industry, it will depress the price of cotton to where it was before the credit purchase was made; and if the payment is made from money drawn from some other industry, it will depress prices in that industry to the same extent that the price of cotton was stimulated. In either event the general level of prices remains the same. It is like robbing Peter to pay Paul. It may make Paul richer, but how about Peter? There is no more wealth in existence than before the robbery was committed.

Again, it is claimed that credit stimulates prices by causing commodities which are sold on credit to be sold for higher prices than commodities of the same value are sold for when sold for cash. It is true that sales on credit are, as a rule, at a higher price than sales for cash in hand. Why is this so? For two reasons:

1st. Business done on credit is always attended with considerable risk. Even when the utmost caution is exercised, bad debts will be made, and a greater margin on sales is necessary.

2nd. When time is given a certain amount must be added to the price of the goods to compensate the seller for the use of his capital between the date of sale and the maturity of the account.

The additional price, thus received, is of no advantage to the producer or to the seller of the commodity. The addition to the price is consumed by losses from bad debts and in interest on capital. In fact, the additional prices charged, when properly analyzed, are not for the goods, but for the risk on the credit and for interest on capital. The net selling price of the commodity is not increased. Experience has proven that men who sell for the lesser price for cash in hand are more apt to succeed than those who charge the higher rate on the credit system.

Credit is always burdened with interest. If interest is not directly charged, the goods are sold at an advance on the cash price equal to the interest, which amounts to the same thing. Interest acts on commerce like friction on machinery. As friction absorbs a portion of the motive power, so interest absorbs a part of the value of all commodities sold on credit. Interest, the necessary accompaniment of credit, produces no wealth; but, on the contrary, absorbs wealth and tends to concentrate it in the hands of the few; and, necessarily, in the same ratio it takes from the masses the power to purchase the things they desire and would otherwise consume. Its ultimate result must be to lower prices. Credit burdened with interest, as it always is, may temporarily increase the demand for a certain commodity and consequently temporarily raise its price; but it must do this at the expense of other commodities. Like a stimulant administered to a human being, it may produce spasmodic results of extraordinary power; but when the stimulant has spent its force it leaves the individual weaker and in a worse condition than he was before the stimulant was administered.

Henry Thornton, an English economist, attempts to prove that a bill of exchange is money, and that, being money, it acts on prices. He says:

Let us imagine a farmer in the country to discharge a debt of £10 to his neighboring grocer by giving him a bill for that sum, drawn on his corn-factor in London, for grain sold in the metropolis; and the grocer to transmit the bill, he having previously indorsed it, to a neighboring sugar-baker in discharge of a like debt; and the sugar-baker to send it, when again indorsed, to a West India merchant in an outport; and the West India merchant to deliver it to his country banker, who also indorses it and sends it into further circulation. The bill in this case will have effected five payments, exactly as if it were a £10 note payable to the bearer on demand. A multitude of bills pass this way between traders in the country, in the manner which has been described; and they evidently form in the strictest sense a part of the circulating medium of the kingdom.

Mill in his “Political Economy” quotes this illustration with approval. Is the conclusion arrived at correct?

Suppose that instead of a bill of exchange for £10, a horse worth £10 had been made use of, and the farmer had delivered the horse to the grocer in satisfaction of his debt, and the grocer had turned it over to the sugar-baker, and the sugar-baker to the West India merchant, etc. The horse would have paid the five debts in precisely the same manner that the bill of exchange did, but would such a use of the horse have made the horse, in the strictest sense of the term, a part of the circulating medium of the kingdom? I think not! A bill of exchange is not money, but an order for money, and would be valueless unless honored by payment on presentation. From the time the bill was drawn until finally paid an amount of money equal to the demand of the bill must be held out of circulation for its payment. It adds nothing to the circulation, and in no sense does it constitute a part of the circulating medium. It may, possibly, increase the rapidity of circulation, but it is difficult to see how it could do even this. The £10 held out of circulation for the payment of the bill would have paid the debts in the same manner that the bill of exchange did, and I fail to see why they would not have made the circuit as quickly. If a horse had been made use of in the settlement of the debts mentioned by Mr. Thornton, it would have been barter, pure and simple, and not a money transaction.

That the contraction of the volume of credit will not tend to depress prices in the same manner and to the same extent that a contraction of the volume of money would will be apparent from the following illustration.

The most conservative estimates place the national, municipal, corporate, and individual debts in the United States at $30,000,000,000. The Secretary of the Treasury estimates the amount of money in circulation at $1,600,000,000. There is not, in fact, one-third of the amount available for use; but for the purpose of this illustration we will take the Secretary’s estimate as correct. Now let us suppose that the volume of credit should be reduced to $28,400,000,000, either by the payment of $1,600,000,000 of the debt or by bankruptcy proceedings or in some other manner. If that amount of the credits were extinguished by payment, business would be stimulated. That sum of money, or at least a considerable portion of it, would pass into the hands of the creditor class, where it would seek investment, and the tendency would be, not to contract, but to expand prices. If that amount of the credits were extinguished by bankruptcy proceedings in which no money passed in either direction, such an extinguishment could not depress or expand prices; it could have no influence upon them.

Now suppose that $1,600,000,000 of the money, every dollar now claimed to be in circulation in the United States, should be withdrawn from the channels of trade, it would not be difficult to see that prices would fall; would, in fact, be completely annihilated. There would be no money with which to make purchases or to pay debts, civilization would go backwards, and universal bankruptcy and ruin would ensue. Suppose that only one-half or one-third of the money available for use should be withdrawn from circulation; even then business would be paralyzed, the money remaining would be hoarded or would be collected in the great money centres, prices would fall, and business men all over the country would be forced into bankruptcy. I think that it must be perfectly apparent that a contraction of credit does not act on the general level of prices in the same manner and to the same extent that a contraction of the volume of money does; that, in fact, it does not act on the general level of prices at all.

I, therefore, conclude that money, and money only, acts on the general level of prices, and that credit does not and cannot act on prices except only as it may increase the rapidity of the circulation of money; and even then it is the greater efficiency of the money, and not the credit, that stimulates prices. Credit may temporarily stimulate the price of the product of some particular industry, but to do this it must attract money from some other industry, and the stimulation will be at the expense of a corresponding depression in prices in the industry from which the money is attracted.

Los Angeles, Col.

POINTS IN THE AMERICAN AND FRENCH CONSTITUTIONS COMPARED.

BY NIELS GRÖN.

There are several reasons why, particularly in the light of what is going on in the two countries, a comparison between certain points of the constitutions of the French and United States republics should be of more than passing interest. Successive ministerial crises in France threaten the stability of the republic; here, while political conventions representing millions of people meet and produce radical platforms, nobody is apprehensive of revolution or trouble. The constitution is a bulwark against sudden change; its wisdom is believed to be guarded by impregnable security against caprice or panic.

One in the Eastern hemisphere, the other in the New World, the two countries are the only great republics; both are watched by monarchies with invidious eyes, and, as before suggested, both have passed through, or are passing through, interesting not to say exciting experiences. American admirers of the republican form of government believe that the cause of human liberty would be seriously injured were the French Republic to cease to exist; they go further, and say that the death-knell of civil freedom would be sounded the moment the American republic became a failure. Something like a crisis is seen in the United States to-day, brought about by a whole series of concomitant causes, such as business depression, bank failures, industrial disputes terminating in strikes and lockouts, Coxey armies, panicky people, and unsettled views regarding commerce and finance, this last cause predominating.

Though France has her difficulties about raising sufficient money to carry on the administration, and an income tax is just as unpopular there as it would be here, nevertheless the chief cause of her trouble is to be traced, not to financial, but to constitutional sources. The country is very rich, and its ministers probably will always find some means of raising enough money to pay the cost of administration. Quite true, it is a sore point for a proud country which yearns for revenge upon Germany and longs for large colonial possessions, that its population does not increase, while the populations of its enemy, Germany, and of its well-wisher, the United States, go up by leaps and bounds. True, there are economic writers who regard the dearth and even the decrease of population in France as an advantage to the country. But these need not be considered in this inquiry, for it is quite obvious that any country which really aspires to be numbered with the great powers, and effectually wishes to own important colonial possessions, must have a stalwart and increasing people. And it is a real source of weakness that there should yet be in France so many Royalists constantly on the alert and hoping always for a change in the existing form of government.

Happily, on the contrary, no matter how widely the Western American may differ from his friend in the East, or how keenly the ex-Confederate may feel over the “lost cause,” the warm-blooded son of Kentucky will fight as bravely under the flag of the republic as will his frozen-featured brother from Minnesota, and the dreamy individual who gazes poetically upon the placid waters of Puget Sound will shout as loudly for one country, and one allegiance to its glorious emblem, as will the gilded youth whose republicanism is artistically refreshed by a constant vision of the Statue of Liberty triumphantly standing in New York harbor.

Royalism, conservatism, concentrationism, moderate republicanism, opportunism, radicalism, ultra-radicalism, socialism, and heaven knows how many other “isms” besides, exist in France to-day, and make it hard for any ministry to carry on the government. Numerous disintegrating influences are ever present, and political convictions are seldom sufficiently decided for any ministry to form a stable majority.

Though France has had the experience of two previous experiments in republican forms of government (the one set up in 1792, and the second established in 1848), they were such mere makeshifts and so very short-lived that they could not have taught the country very much of the real genius of republican institutions. The centralization and tyranny of centuries brought revolt and hatred of the past, but did not prepare the people for self-government; while here the principles of civil liberty, transplanted from the mother country and flourishing in congenial conditions under colonial administration, found apt and natural expression in the Declaration of Independence and the Constitution. The event of republican institutions twice tried in France failed to show that even the leaders understood the principles of liberty as they were understood by the fathers of the American system of government, and enthusiastically adopted by the people, as the crystallization, so to speak, in definite terms, of what they had long enjoyed. Short-sighted acts of tyranny, exercised by George III and his ministers, were regarded, and justly so, as mere accidents of the time and as innovations to be resisted and overcome. The outcome was the vindication of the principles of government founded by the countrymen of King Alfred the Great, their expansion, and the invaluable expression of those principles in the Declaration and the Constitution.

Some of the bravest and best under the French monarchy helped to establish the reign of popular liberty in the United States, and there can be no question but that the French Revolution was accomplished in part as a result of what had been seen and done on this side of the Atlantic on behalf of the civil rights of the people; but the founders of the first republic in France had no complete foundation on which to build a fabric firm and lasting. It was not easy for a venerable European nation, intrenched within its own regal institutions, in shaking off the past to begin a future of popular sovereignty. Much was gained by sweeping away the worst abuses of the past, but reaction came, succeeded, after a long lapse of time, by a second attempt to establish a republic, again to fail, until the collapse of the power of the adventurer whose election to the presidency was the beginning of the end of the republic of 1848, led to the third experiment, the permanent success of which we all hope for.

If—much virtue in an “if”—the leaders of the first French Republic had been thoroughly masters of and thoroughly imbued with the principles of American liberty, it is possible they might have so instructed and led a bright and capable people as to lay a sure foundation for the future. But even this modified statement is open to question. While it may be regretted that the American Constitution was not copied in the establishment of the successive French republics, it is by no means certain that this matchless paper would have been so far appreciated in its recognition of the great principles underlying it, as to insure success. Some of the South American republics have the American Constitution, more or less, but are not shining examples of republican success. No one can question that monarchies like the United Kingdom and Germany enjoy a larger diffusion of civil liberty than they.

Taking the French system, however, as it exists to-day, there can be no question that it would be vastly improved by copying the American model. It seems to have been founded with a view to the possibility of restoring the monarchy, and, this being so, the men who created it had no object in studying the American Constitution with a view to preventing those ministerial crises which threaten the destruction of the third republic. It will not do to attribute these crises to the unstable character of the fiery Frenchman, nor can the difficulty be disposed of by saying that a French minister will create a crisis for the sake of a pleasing bon mot or a sprightly paradox. A crisis supposes something outside of, or above, or beyond the ordinary, but French ministerial crises have become so common that they are the laughingstock of the nations, and may be said to be almost the normal condition of the legislative assemblies of France. So long as such critical situations can be thus easily brought about there cannot be that continuity of policy which is essential for carrying out great projects. The problem to be solved is a constitutional one,—a statement, I think, easily proved true.

Article Six of the constitution of 1875 reveals the real cause of ministerial crises in France: “The ministers are in a body responsible to the Chambers for the general policy of the government, and individually for their personal acts.” This article obviously leaves the respective powers of both houses very undefined. Which chamber is the superior? To which of them are the ministers in fact responsible? The ministers may have a majority in the Chamber of Deputies, and may be in a minority in the Senate. Then there is a crisis. The Senate blocks the way and will not allow the government to go on, for it claims that it is the superior body. This absence of the proper demarcation of the powers of the Senate, of the Chamber of Deputies, and of the ministers necessarily leads to conflict; conflict is but a step from instability, and instability is a crisis which threatens revolution.

The remedy for these oft-recurring ministerial crises in France is to be found in the American Constitution. The French Constitution should be revised and changed at the part quoted and all parts relating to it, so as to provide against ministerial crises; and the instrument presenting a sure guide in the performance of this necessary work is the American Constitution. It has been in operation over a hundred years and has been found to be an admirable working document, affording ministerial stability to its cabinets for over a century. Such a document is surely worthy of the closest study by the public men of the sister republic. It was inevitable that in so long a time some amendments should have become necessary; but for a long period it has undergone no change, save such as noted, and formulating the results of the civil war. Now and then are heard murmurings which claim the necessity of a sixteenth amendment, to the effect that the name of God should be put in the Constitution. The obvious answer to this is, that in the official life of the United States there is a more real acknowledgment of the Divine Being than there is in the official life of any other country, and it is better to have the name of God impressed upon the hearts of the people than upon even the best official document ever drawn up.

It would not be correct to say that no attempts have been made to bring about a ministerial crisis in the United States by encroachment upon the rights of the Executive. Only once, however, when Andrew Johnson was President, has the action of the Executive been seriously hampered. Professor Bryce’s remark may be applied to all other attempts. He writes: “Congress has constantly tried to encroach, both on the Executive and on the States,—sometimes like a wild bull driven into a corral, dashing itself against the imprisoning walls of the Constitution.” There is the secret. The “imprisoning walls” of the American Constitution keep contending powers in their proper places. The Constitution is so well drawn up that a deadlock is an impossibility, the equilibrium of concomitant powers is easily maintained, and the sovereign will of the people has a fair opportunity of finding a natural exponent.

In the United States the Senate and the House of Representatives are coördinate bodies; in the French Republic each claims superiority over the other. In the United States bills are never introduced by the Cabinet, all bills must originate either in the Senate or in the House of Representatives; such is not the case in the French Republic. In the United States the chief duty of the President is to see that the laws are faithfully executed; the Cabinet administers; its members are rather the aids or secretaries of the chief magistrate of the nation than otherwise. They are his advisers and helpers. During the four years for which the President of the United States is elected, the limitations of his authority are so remote and theoretical that, for practical purposes, it may be stated that he always serves out his full term of office. On the contrary, Presidential resignations are not unknown in the French Republic. France elects her President for seven years, yet Thiers, MacMahon, Grévy, Carnot, Casimir-Périer, and Faure make a list longer than that of the names of the men who have lived in the White House during the past quarter of a century. In the United States, the Cabinet lasts as long as the President’s term of office; in the French Republic, the Cabinet sometimes goes to pieces in four months. Briefly, it is quite clear that in the United States there can be no ministerial crises, since the President’s chief duty under the Constitution is to see that the laws are faithfully executed, and the members of his Cabinet do not introduce bills, even for finance or supplies, but act as his aids. As previously intimated, the difficulty with the French legislative bodies is that royalistic precedents and rules run side by side with republican principles, and the result is a mongrel institution divided, too often, against itself. When matters shall be so arranged that the French President will have to fill out his full term of office, and French ministers will not be permitted to originate legislation, and cabinets shall be selected to serve as long as the Presidential term, then the French Republic will enjoy the same ministerial stability as that of the United States.

It were hard to say that the French method of electing a president is any better or any worse than that of the United States. The President of the French Republic is elected by the majority of the votes of both Chambers. This plan does not seem to remove him further from the people than does the system of electing a president by electors, as in the United States. As human ingenuity has not yet succeeded in creating the ideal republic, wherein, according to Ouida, there would be no president, some system of election must be followed. The question is not a burning one. There is notable, however, a growing tendency in France in favor of electing the president directly by the votes of the people. The seven-years’ period for which the French president is elected is considered by many to be an excellent provision; but it loses half its excellence by reason of the fact that the president has the power to initiate laws, this and other things concurring to make his resignation a possibility, and not a remote one.

That the office of vice-president does not exist in France seems to be of no great consequence. In the history of the American Republic there have been five vice-presidents who have been called upon to step into the Presidential chair by the deaths of presidents. According to the French Constitution, in case of a Presidential vacancy, whether from death or any other cause, the two Chambers proceed immediately to the election of a president. In the interval the ministers are invested with executive power.

What I have written regarding the growing tendency to think it would be better to elect the president directly by the votes of the people, applies with a little more force to the election of senators. In France the municipalities elect the senators, as do State legislatures in this country. It is held by some who have discussed the question that it is much more in conformity with the genius of republican institutions that the people express their will directly by ballot rather than through the votes of municipal councils, as in France, or of legislatures, as in the United States. I cannot see that the difference of terms, that of French senators being nine years, and of American six, is of practical consequence. While both republics are at one as to the necessity of a second chamber, providing thus a check to hasty and unconsidered legislation, many thinkers in both countries agree that some change is necessary to make it possible for others than millionaires to be elected senators.

If I were a Frenchman and had the power, I should get every newspaper throughout the land, and every public man and influential citizen, to enter upon a crusade for the purpose of impressing upon the minds of the whole people the following extract from the Constitution of the United States:

Congress shall make no laws respecting the establishment of religion, or prohibiting the free exercise thereof.

In France, there are constantly continuous and unseemly clashes between church and state. No matter what complications may exist as results of the past, surely it would be better for all concerned to leave the churches to be sustained by the voluntary contributions of the people. In the United States churches seem to live and thrive under this system of noninterference by the state in religious matters, and voluntary support. The more than eighty thousand clergymen are provided for. In the French Republic one reads everywhere, on the walls of churches and of schools, the words “Liberté, fraternité, égalité,” while there seems to be a serious disagreement between Clericals, on the one side, and Radicals, on the other, as to the meaning of these words. To effectually put an end to this strife, the adoption of the clause I have quoted would be sufficient.

In writing thus freely of the French Republic I am free, I trust, from the spirit of the carping critic delighting in comparisons to the advantage of his own country. I appreciate the splendid literature, the brilliant art, the advanced civilization of the France of to-day. I recognize with gratitude the debt which the United States owes the gallant Gallic people for sympathy and material aid in her struggle for independence. It is now only necessary to be in France on the Fourth of July to realize the reality and depth of the friendship which exists between the sister republics. But I do think that until France shall copy more closely the Constitution of the United States, the stability of the third republic cannot be regarded as assured.

HONEST MONEY; OR, A TRUE STANDARD OF VALUE:
A SYMPOSIUM.

I. BY WILLIAM JENNINGS BRYAN.

We hear much about a “stable currency” and an “honest dollar.” It is a significant fact that those who advocate a single gold standard have for the most part avoided a discussion of the effect of an appreciating standard. They take it for granted that a gold standard is not only an honest standard, but the only stable standard. I denounce that child of ignorance and avarice, the gold dollar under a universal gold standard, as the most dishonest dollar which we could employ.

I stand upon the authority of every intelligent writer upon political economy when I assert that there is not and never has been an honest dollar. An honest dollar is a dollar absolutely stable in relation to all other things. Laughlin, in his work on “Bimetallism,” says:

Monometallists do not—as it is often said—believe that gold remains absolutely stable in value. They hold that there is no such thing as a “standard of value” for future payments in either gold or silver which remains absolutely invariable.

He even suggests a multiple standard for long-time contracts. I quote his words:

As regards national debts, it is distinctly averred that neither gold nor silver forms a just measure of deferred payments, and that if justice in long contracts is sought for, we should not seek it by the doubtful and untried expedient of international bimetallism, but by the clear and certain method of a multiple standard, a unit based upon the selling prices of a number of articles of general consumption. A long time contract would thereby be paid at its maturity by the same purchasing power as was given in the beginning.

Jevons, one of the most generally accepted of the writers in favor of a gold standard, admits the instability of a single standard, and in language very similar to that above quoted suggests the multiple standard as the most equitable, if practicable. Chevalier, who wrote a book in 1858 to show the injustice of allowing a debtor to pay his debts in a cheap gold dollar, recognized the same fact, and said:

If the value of the metal declined, the creditor would suffer a loss upon the quantity he had received; if, on the contrary, it rose, the debtor would have to pay more than he calculated upon.

I am on sound and scientific ground, therefore, when I say that a dollar approaches honesty as its purchasing power approaches stability. If I borrow a thousand dollars to-day and next year pay the debt with a thousand dollars which will secure exactly as much of all things desirable as the one thousand which I borrowed, I have paid in honest dollars. If the money has increased or decreased in purchasing power, I have satisfied my debt with dishonest dollars. While the government can say that a given weight of gold or silver shall constitute a dollar, and invest that dollar with legal-tender qualities, it cannot fix the purchasing power of the dollar. That must depend upon the law of supply and demand, and it may be well to suggest that this government never tried to fix the exchangeable value of a dollar until it began to limit the number of dollars coined.

II. BY M. W. HOWARD.

The term, “a standard of value,” so often used, is erroneous and misleading. There can be no fixed standard of value, and the student who wishes to delve into our financial problems should clear his mind of such a fallacy at the very threshold of his investigations.

Money is a commodity; it is regulated by the same laws of supply and demand which regulate the price of corn, cotton, wheat, land, labor, etc. If the wheat crop is short, wheat will be dear; if abundant, it will be cheap. So with money. If the money supply is not sufficient to meet the demands of business and commerce,—if the money crop is short, in other words,—the money will be dear; it will command too high a price, its purchasing power will be too great.

On the other hand, if the money supply is abundant, sufficient to meet all demands upon it,—in other words, if there is a bountiful money crop,—it will be cheaper; it will not have such a large purchasing power; it will be worth less when measured by our labor, our lands, and the products of our labor.

I oppose the single gold standard because it makes the money crop short, gives us a small circulating medium, and hence enhances the value or price of money.

We have a certain demand for breadstuff, which is constantly increasing as our population multiplies; suppose that we cease producing corn, and find no substitute for it, would not the price of wheat be greatly enhanced, providing there is no increased wheat production? So with the money supply. There is a certain demand for money, ever increasing as population grows. How shall we meet it? By producing more money, or by destroying one-half of that which we now have, by eliminating one-half of the base of future supplies of money?

The latter is now the policy of this government, and as a consequence the price of gold has been greatly enhanced, and its purchasing power has increased each year, and will continue to do so.

The advocates of the gold standard call this “honest money.” Their idea of honest money is money that ever increases in purchasing power because of its ever-increasing scarcity.

My definition of honest money is: “A sufficiently large circulating medium, whether of gold, silver, or paper, to bring down the price of money so that we shall obtain fair prices for all labor and products.” Then as population increases and as the demand for money becomes greater, let the government meet that demand from time to time by enhancing the money supply.

III. BY WHARTON BARKER.

The true test of an honest dollar is its purchasing power, and that dollar, and only that dollar, is honest that does exact justice between creditor and debtor. The gold monometallists harp on the injustice of a depreciating dollar, but they ignore the injuries inflicted by an appreciating dollar. They tell us that a depreciating dollar defrauds the creditor, but just as a depreciating dollar defrauds the creditor, an appreciating dollar defrauds the debtor, and it is not one whit worse to defraud the creditor by obliging him to accept a depreciated dollar from his debtor than to defraud the debtor by obliging him to pay in a dollar made artificially scarce and dear.

An appreciating dollar works injustice to the debtor just as a depreciating dollar works injustice to the creditor, but an appreciating dollar is many fold more injurious to trade and industry, for while the depreciating dollar taxes the creditor for the benefit of the debtor, the appreciating dollar takes from the debtor, from producers in general and the industrious classes, and gives to the creditor classes, the drones of society, a larger and larger share of the products of labor, which of necessity discourages industry. Under a depreciating standard the recompense of the producer becomes greater and greater, the creditor classes receive a smaller and smaller portion of the products of labor, the profits of industry increase, and consequently production is encouraged and trade and industry are stimulated. But under an appreciating standard the recompense of labor becomes smaller and smaller, and the share of the products of labor absorbed by the creditor larger, which tends to discourage industry and stifle enterprise.

IV. BY ARTHUR I. FONDA.

The value of any commodity is measured by what it will exchange for. It is in fact its purchasing power, or power in exchange. This in substance is the concrete definition of value given by all economists, and they all unite in stating that value is determined by the supply of a commodity relative to the demand for it; all other factors affecting value being secondary and acting through their effect on either supply or demand.

Since both the supply of and the demand for every freely produced commodity is variable, and since a true standard of value, like a true standard of weight or length, must be invariable as regards that which it measures, it necessarily follows that no single freely produced commodity can be a true standard of value. But while it is true that every single commodity must vary in value, it is also true that all commodities taken together cannot do so. This principle is also accepted as correct by all economists.

It is evident then that a true standard of value can only be found in a composite unit containing a definite quantity of every commodity, or practically speaking, a definite quantity of each of a large number of the most important commodities. This is what is known as the “multiple standard,” or the “commodity standard,” and has long been in use by economists in the form of tables of index numbers to show fluctuations in general prices, or what is the same thing, changes in money values.

The only function of money is to facilitate the exchange of goods. In doing this it acts directly as a circulating medium, and the demand for it for this purpose, relative to the supply, determines its value; for money, whether of coin or paper or both combined in one circulation to meet one need, is subject to the same law of supply and demand which governs all commodities, and which indeed is as universal in the economic world as the law of gravitation is in the physical world.

Incidentally the value of money fills the important function of serving as a measure of the values of goods transferred without the direct use of money, both immediate and deferred. This, however, has no effect on the demand for money or on its value.

The people are accustomed to regard money as of constant value, and an honest money must necessarily conform to this belief. If money varies in value, the people are deluded, and many are wronged if they are unaware of the fluctuation. If they become aware of it,—as they generally do by a bitter experience,—they are confronted with an uncertainty that is most detrimental to any business or enterprise. Imagine what our business would be with our measures of weight, length, and capacity all variable! Yet such a condition would be less disastrous than a fluctuating money value when it became fully known that it was so.

The demand for money varies from many causes, chief among which are changes in the quantity of goods exchanged, the extent to which other credit instruments take the place of money in such exchanges, and the activity of money, or the extent to which it is hoarded, all of which are entirely beyond control. The supply of money, however, can be controlled, and to maintain money at a constant value the supply must be constantly adjusted to the ever-varying demand, so that its general purchasing power may remain the same. The test of a constant money must be a constant general level of prices; and this must be judged by the prices in the open market of those principal commodities which would be selected to constitute the standard of value, the quantity of each being proportioned to its importance in trade.

The only function of gold and silver in a monetary system is to limit the volume of the money, either by their scarcity when freely coined, or by the laws limiting their coinage. And as this limitation of the supply bears no definite relation to the demand for money, the value of the money necessarily fluctuates. Our industrial system is constantly growing more sensitive to even slight changes in money value, owing to the greater diversification of industries and the greater division of labor, and the need for preventing such changes is constantly growing more imperative.

When the people arrive at a clearer perception of these facts and principles they will understand that the chance production of gold and silver is too clumsy a contrivance to properly control so delicate a matter as the value of money under modern industrial conditions, and I believe they will substitute for the present system a circulating medium of paper money, properly guaranteed, and susceptible of prompt and certain increase or decrease of volume to meet every possible variation in demand, and rigidly controlled to conform in value to a true standard of value, a standard composed not alone of gold or silver or both combined, but of all the leading commodities.

In short, they will separate the standard of value from the medium of exchange, demonetizing both gold and silver as to the latter function, but using both and many other things in conjunction therewith for the former function.

V. BY A. J. WARNER.

From whatever side the question is approached, in the last analysis the value of money of any kind is found to depend upon its quantity, and not upon color, or ductility, or malleability, or any other particular quality of the thing upon which the money function is impressed. There can be therefore, in fact, no other standard of value, or money standard, except the quantity of whatever is used as money. When gold and silver are used, the value of each unit of money depends upon the number of such units, and these in turn depend upon the quantity of the metal from which the money is made. Any cause, therefore, which restricts, limits, or contracts the quantity of any kind of money, increases the value of each unit. On the contrary, causes that operate to increase the supply of money have the opposite effect.

Hence, only that currency can properly be called “sound” currency which is made to maintain stable relations to things to be bought and sold. In other words, general prices are determined by the proportion between money on the one side, and things offered against money on the other side. Such money only is “honest” money.

The whole question, therefore, of money standard is a question of money supply; for, as the price of single things, money being constant, depends upon supply on the one hand, as against demand for it on the other, so, in general, prices depend on money supply on the one hand, and things to be bought and sold on the other. This I believe to be the fundamental law of money.

THE NEW CIVIL CODE OF JAPAN.

BY TOKICHI MASAO, M. L., D. C. L.

Ever since the establishment of the present imperial government in 1868, the one unceasing aim of Japan’s foreign policy has been the abolition of the extra-territoriality régime, under which certain quasi-judicial functions are exercised on the Japanese soil by the ambassadors and consuls of the Occidental nations. This anxiety on Japan’s part to rid herself of this shameful régime imposed upon her against her will, will not appear surprising when the fact is learnt that one Occidental nation went so far as to call her consul at Yokohama, “Her Britannic Majesty’s the Most Honourable Court for Japan”—a name almost enough to imply that Japan was a British province. Extra-territoriality rests upon the assumption that the laws and procedure of the non-Christian nations are so unlike to and different from those of the Christian nations that without the protection of this system the safety and well-being of the subjects of the latter sojourning in the territory of the former would be placed in constant jeopardy. Accordingly in the early seventies Japan came to the conclusion that the only possible way of emancipating herself from the disgraceful yoke of extra-territoriality was to adopt one of the systems of law obtaining in the Christian world and compile a code of law based upon that system, and applicable alike to the Japanese and to the foreigners residing in Japan.

There were three such systems—the Anglo-American, the French, and the Germanic Roman—each offering itself for adoption. Mr. Yeto Shimpei,[2] who became the Minister of Justice in 1872, seems to have had a personal preference for the French system. He called to his assistance some of the most eminent jurists of France and entered upon the work of drafting a code. At the same time he established in Tokio a law school known as the “Department of Justice Annex Law School,” in which French law was taught by those same jurists whom he had called from France. About this time there was also established in the University of Tokio a law school in which instruction was given chiefly in English law. It was while teaching in this university law school that Mr. Henry T. Terry (a New York lawyer and an alumnus of Yale College) wrote his memorable book on English law, designed especially for the use of Japanese law students. From henceforth “Terry’s Leading Principles of Anglo-American Law” became as familiar to them as are “Blackstone’s Commentaries” to the law students of this country.

Thus, side by side there existed in Tokio two law schools in which two distinct systems of law were taught—the English and the French. The primary object of the Department of Justice in establishing the French law school being to make it a training school of judicial officers, the students of that school were, upon graduation, to render, for a limited number of years, an obligatory service to the government in the various capacities of judges, magistrates, and prosecuting attorneys. On the other hand, the University of Tokio being a strictly independent institution in which learning is pursued for the sake of learning, the graduates of the university or English law school were at entire liberty in their choice of professions. Naturally enough the majority of these did not wish to enter the same service which the graduates of the other school were obliged to enter as a matter of fulfilment of contract. Thus it happened that the bench was recruited from the French law school, while the bar was recruited from the English law school. This state of affairs lasted for about twenty years, during which time there was also established a German law school in the University of Tokio. Those who know something about the rivalry that existed in ancient times between the Sabinians and the Proculians, or even about the rivalry which exists to-day between the Yale method and the Harvard method, between the Waylandians and the Langdellians, can readily imagine what intellectual competition was carried on between these three Japanese law schools representing three distinct systems of law.

After twenty years of assiduous labor the Code Commission submitted a draft of a Civil Code to the two Houses of Parliament in 1890, accompanied by the recommendation from the Bureau of Legislation that the draft might receive the parliamentary sanction in such a manner that it might be possible for it to be put in effect by the year 1893. As might have been expected from the personnel of the Commission, consisting, in its conception, of Mr. Yeto Shimpei and the eminent French jurist Prof. Boissonade, etc., the draft was a genuine French code, being almost a literal translation of the Code Napoleon in all its parts excepting the part dealing with the Law of Persons. The question may well be asked why it took the Commission twenty long years to produce this imitation draft code when we know that the draft of the Code Napoleon itself was completed within the short period of four months. The answer seems to be that the Commission spent almost this entire time in their efforts to reconcile the principles of the French Law of Persons with the Japanese laws and customs bearing on that subject.

As has been the case with many other draft codes this draft Civil Code of Japan was destined to go into oblivion. As soon as it was submitted to the Parliament there ensued a most desperate fight against its adoption. As figuring most prominently among the champions of the opposition I may mention the names of Mr. Kazuo Hatoyama, the present Speaker of the House of Commons of the Imperial Japanese Parliament, and His Excellency Mr. Toru Hoshi, the present Japanese minister at Washington.[3] Inspired by these and other eminent jurists of the English school the entire bar was set against the adoption of the draft code. This was not a case of a bar accustomed to one set of rules and formulas opposing the adoption of a new code for fear that they might be compelled to learn a new set of rules and formulas. On the contrary, the bar was composed of men who had studied law as a science, and science for the sake of science. The spirit of their opposition was very plainly shown by the objections they raised against the code. They said:—“The draft Code was a blind imitation of a foreign Code which itself was far from being free from defects. It abounded in definitions, illustrations, and examples, and presented an appearance more becoming to a text-book of law than the Civil Code of a great nation. It went into too minute details and left too little room for voluntary development of jurisprudence. It incorporated, like the French Code, the law of evidence into the body of the Civil Code, which was totally at variance with the modern theory of evidence, being a failure on the part of the Commissioners to distinguish adjective from substantive law. It made too many innovations upon the Law of Persons hitherto obtaining in Japan. It changed the Family Law of the Japanese from the foundation, which was a gross disregard of the historical principle of jurisprudence,” etc., etc., etc. Such were some of the grounds upon which they opposed the adoption of the draft code, reminding one of the fight in Europe between the historical school and the analytical school, between the jurists of France and those of Germany; of the fight in Germany between the Code party and the anti-Code party, between Savigny and Thibaut. Who can say, then, that the Japanese are childish imitators of anything that looks well? The fact is that this sort of conflict between the more conservative and the more radical, the more scrupulous and the more unscrupulous, the more positive and the more speculative, is going on all the time.

At last in 1892 the Parliament passed an act deferring the taking effect of the code till 1897 and ordering in the meantime a careful revisal of the draft. A new Commission was appointed which consisted of three most eminent professors of law in Japan, each representing one of the three systems of law recognized there.[4] These Commissioners, aided by a number of efficient assistants, looked into the codes and laws of some fifteen leading American and European states. As representing the French system they consulted the codes of Louisiana, Belgium, France, Holland, Italy, Portugal, and Spain. As representing the German system they consulted the codes and laws of Austria, Montenegro, Prussia, Saxony, Switzerland, and the draft Civil Code of the German Empire. As representing the English system they consulted the leading American and English reports and treatises, the draft Civil Code of New York, and the codes of California and British India.[5]

After four years of the most constant application the Commission submitted in 1896 a revisal of a part of the original draft. Had the Commission had the entire code revised they could not have shown greater wisdom. For the parts incomplete were those dealing with the Family Law and Successions, and the Commission remembered that these were the parts that occasioned the most vital objections to the old code. The Parliament referred the revised draft code to a Committee of their own, of which Mr. Hatoyama, the present Speaker, was made the chairman. After making a careful examination and some important modifications, Mr. Hatoyama reported favorably to its adoption. The Parliament acted according to his advice, and the draft became the law.

In its general arrangement the new code follows what the German jurists call the Pandekten system. It is divided into five general parts. Part I is called “Sōsoku,” or General Laws, and deals with persons, natural and artificial, as the subjects of rights; with things as the objects of rights; and with juristic acts as setting rights in motion. One cannot help being astonished at and gratified with the remarkable extent to which Prof. Holland’s views as expressed in his book on jurisprudence seem to be adopted in this part of the code.[6] Part II is called “Bukken,” or Jus in Rem, corresponding to the Sachenrecht of the German code, and dealing with Possession, Ownership, etc., etc. Part III is called “Jinken,” or Jus in Personam, corresponding to the Forderungsrecht of the German code, and dealing with General Law of Obligations, with Obligations arising ex contractu, quasi ex contractu, and ex delicto. The General Law of Obligations is taken largely from the Forderungsrecht of the Swiss code. The law of Contracts and Torts is taken entirely from the English law. Parts IV and V, dealing with the Family Law and the Law of Successions respectively, have not as yet been published, for reasons already indicated.

Such is the new Civil Code of Japan, adopted by the Imperial Parliament in its session of 1896. Truly, the year 1896 has been an eventful year for Japan. The war with China had brought glory to her arms. Formosa and numerous other islands had been added to her possessions. The insurgents of Formosa had been pacified. The treaties with the leading nations of the world had been revised, providing for the abolishment of the disgraceful extra-territoriality régime in Japan, to take effect, however, upon the taking effect of the new Civil Code. The last and greatest event of all, the new Code was adopted. With equal propriety, then, the Emperor Mutsuhito might have joined Justinian, in proclaiming:—“Imperatoriam Majestatem non solum armis decoratam, sed etiam legibus opportet esse armatam, ut utrumque tempus et bellorum et pacis recte possit gubernari!”

JOHN RUSKIN:
A Type of Twentieth-Century Manhood.

BY B. O. FLOWER.

The name John Ruskin is justly entitled to a foremost place among those of the builders of twentieth-century civilization. In him we find a rare combination of genius, culture, and refinement, blended with a tender concern for all earth’s unfortunates. He is at once artist, philosopher, and philanthropist; but he is more than these; there is much of the austere religious reformer, giving a serious gravity to all the utterances of the glad-souled artist, a mingling of the spirit of a Savonarola with the imagination of a Turner.

John Ruskin, more than any other man of our time in like station of life, stands for the civilization which we believe is destined to glorify the coming century, for in his life all thought of ease, fame, and preferment,—all consideration of self,—is overmastered by his love for others. Endowed by nature with the imagination of a poet, the eyes of an artist, the brain of a philosopher, the soul of a prophet, and the heart of a man, he has conscientiously employed all his gifts as a sacred trust given to him that he might bless and enlighten his day, and ennoble his civilization for all time.

He was born amid affluence, and received the best educational advantages the age afforded. After graduating from Oxford in 1842, he studied painting under Copley Fielding and J. D. Harding. Subsequently he spent some time in Italy, finishing his art education in the land of earth’s greatest painters.

While in college he composed many poems, but on leaving the university he turned his attention to art and prose composition. His “Modern Painters” was justly hailed as one of the noblest works of the century, and instantly placed its author in the ranks of the foremost art critics of the world.

Few if any of his admirers will agree with all his critical views. He not infrequently falls into those errors which we naturally expect to find in a man of intense feeling, of strong conviction, and of vivid imagination. If a positive idea takes possession of his mind, it is liable to give a strong bias to his thought, and in a degree interferes with that nice sense of proportion so essential to a great critic. On more than one occasion Mr. Ruskin has frankly admitted that his views and opinions were erroneous owing to being based on a partial appearance or influenced by pernicious ideas. A notable illustration of his thought being biassed by preconceived ideas is found in the religious opinions put forward in the early edition of parts I and II of “Modern Painters.” And in a preface written in 1871 for a revised edition of his works, the philosopher calls attention to his early views, declaring that he was “wholly mistaken” and continuing: “I had been educated in the narrow doctrine of a narrow sect, and had read history obliquely, as a sectarian necessarily must.”

Such are the blemishes which occasionally creep into the works of this master mind. They are, however, merely spots on the sun, which do not appear frequently enough to seriously dim the splendor of a critical work which in my judgment surpasses in real value that of any English scholar of the century. “Modern Painters,” “The Stones of Venice,” “The Seven Lamps,” and his other works dealing with art are far more than criticisms; they touch the sleeping soul, they fire the spirit and awaken the conscience. They make the reader feel a new love for nature and art alike, and with this pure and inspiring love comes the desire for more knowledge. They appeal to the spiritual aspirations even more than to the artistic impulses or the intellectual apprehension. The moral exaltation which pervades his writings springs from his profoundly philosophical and religious nature. In all his work, as in his noble life, he has ever been moved by an intense desire to uplift and dignify humanity and to impress upon the public mind the subtle but positive effect for good exerted by true art. “I have had,” he tells us in “The Two Paths,” “but one steady aim in all I have ever tried to teach, namely, to declare that whatever was great in human art was the expression of man’s delight in God’s work.”

With Ruskin, life is august; its possibilities for good and evil are never forgotten.

“Remember,” he urges, “that every day of your life is ordaining irrevocably for good or evil the custom and practice of your soul; ordaining either sacred customs of dear and lovely recurrence, or trenching deeper and deeper the furrows for seed of sorrow. Now, therefore, see that no day passes in which you do not make yourself a somewhat better creature…. You will find that the mere resolve not to be useless, and the honest desire to help other people, will in the quickest and delicatest ways improve yourself.”

The pleasure which springs from loyalty to duty is strenuously insisted upon by Ruskin, and he, more than any other illustrious man in our time, has reached such heights of unselfishness as to enable him to fully appreciate the unalloyed pleasure which flows from a life of sacrifice. If he is austere, he is also very humane. The fountains of pleasure that he would have us drink deeply from would leave no bitter aftertaste. He delights in no pseudo-pleasure; faithfulness to the highest ideal, untiring effort at complete self-mastery, a settled determination to work for the good of all and to be ever on guard lest by some inadvertence we injure some other living creature,—such are some of the lessons upon which our philosopher insists as essential to man’s happiness.

“If,” he urges, in writing for the young, “there is any one point which, in six thousand years of thinking about right and wrong, wise and good men have agreed upon, or successively by experience discovered, it is that God dislikes idle and cruel people more than any others; that His first order is, ‘Work while you have light;’ and his second, ‘Be merciful while you have mercy.’ ‘Work while you have light,’ especially while you have the light of morning. There are few things more wonderful to me than that old people never tell young ones how precious their youth is…. Remember, then, that I, at least, have warned you, that the happiness of your life, and its power, and its part and rank in earth or in heaven, depend on the way you pass your days now. They are not to be sad days; far from that, the first duty of young people is to be delighted and delightful; but they are to be in the deepest sense solemn days. There is no solemnity so deep, to a rightly thinking creature, as that of dawn…. You must be to the best of your strength usefully employed during the greater part of the day, so that you may be able at the end of it to say, as proudly as any peasant, that you have not eaten the bread of idleness. Then, secondly, I said, you are not to be cruel. Perhaps you think there is no chance of your being so; and indeed I hope it is not likely that you should be deliberately unkind to any creature; but unless you are deliberately kind to every creature, you will often be cruel to many.”

Ruskin is often disquieting to conventionalists; he is too candid to be popular with those who make long prayers and descant on charity while they ignore justice. He puts questions to them which they do not want to consider themselves, or to have others consider. By insisting on the substitution of justice for charity, and by taking the teachings of Jesus seriously, he offends the sleek money-changers who occupy choice pews in the modern palaces of ease dedicated to the lowly Nazarene. Such expressions as the following from the magnificent lecture on “Work” prove far less satisfying to this class than the popular sermons they are accustomed to hear:

“It is the law of heaven,” says Ruskin, “that you shall not be able to judge what is wise or easy, unless you are first resolved to judge what is just, and to do it. That is the one thing constantly reiterated by our master—the order of all others that is given oftenest: ‘Do justice and judgment.’ That’s your Bible order; that’s the ‘service of God.’ The one divine work—the one ordered sacrifice—is to do justice; and it is the last we are ever inclined to do. Anything rather than that! As much charity as you choose, but no justice. ‘Nay,’ you will say, ‘charity is greater than justice.’ Yes, it is greater; it is the summit of justice; it is the temple of which justice is the foundation. But you can’t have the top without the bottom; you cannot build upon charity. You must build upon justice, for this main reason, that you have not, at first, charity to build with. It is the last reward of good work. It is all very fine to think you can build upon charity to begin with; but you will find all you have got to begin with begins at home, and is essentially love of yourself.

“You well-to-do people, for instance, who are here to-night will go to ‘Divine Service’ next Sunday, all nice and tidy, and your little children will have their tight little Sunday boots on, and lovely little Sunday feathers in their hats; and you’ll think, complacently and piously, how lovely they look! So they do; and you love them heartily, and you like sticking feathers in their hats. That’s all right; that is charity; but it is charity beginning at home. Then you will come to the poor little crossing-sweeper got up also—in its Sunday dress—the dirtiest rags it has that it may beg the better: we shall give it a penny, and think how good we are. That’s charity going abroad. But what does justice say, walking and watching near us? Christian justice has been strangely mute, and seemingly blind; and, if not blind, decrepit this many a day: she keeps her accounts still, however—quite steadily—doing them at nights, carefully, with her bandage off, and through acutest spectacles (the only modern scientific invention she cares about). You must put your ear down ever so close to her lips to hear her speak; and then you will start at what she first whispers, for it will certainly be, ‘Why shouldn’t that little crossing-sweeper have a feather on its head, as well as your own child?’ Then you may ask justice, in an amazed manner, How she can possibly be so foolish as to think children could sweep crossings with feathers on their heads? Then you stoop again, and justice says—still in her dull, stupid way—‘Then, why don’t you, every other Sunday, leave your child to sweep the crossing, and take the little sweeper to church in a hat and feather?’ Mercy on us (you think), what will she say next? And you answer, of course, that you don’t, because everybody ought to remain content in the position in which Providence has placed them.

“Ah, my friends, that’s the gist of the whole question. Did Providence put them in that position, or did you? You knock a man into a ditch, and then you tell him to remain content in the ‘position in which Providence has placed him.’ That’s modern Christianity. You say, ‘We did not knock him into the ditch.’ How do you know what you have done or are doing? That’s just what we have all got to know, and what we shall never know until the question with us every morning, is, not how to do the gainful thing, but how to do the just thing.”

These thoughts suggest to us Ruskin, the social economist, for we must not lose sight of the fact that this greatest of all art critics, this strong, sane ethical philosopher who has emphasized so forcibly the possibilities, duties, and responsibilities of the individual in all his complex relations, is also one of the most enlightened and broad-visioned economists of our wonderful age. By treatises, essays, and letters he has striven for a brighter day for the breadwinners. He has sought to elevate the ideals and tastes of all toilers, while he has labored unremittingly to secure for them that meed of justice which is their right, but which has so long been denied them.

So far back as 1868, when few people of position dared advocate so sane a proposition as the governmental ownership of “natural monopolies,” John Ruskin published these bold and thoughtful words in the London Daily Telegraph:

The ingenious British public seemed to be discovering to its cost, that the beautiful law of supply and demand does not apply in a pleasant manner to railroad transit. But if they are prepared to submit patiently to the “natural” laws of political economy, what right have they to complain? The railroad belongs to the shareholders; and has not everybody a right to ask the highest he can get for his wares? The public have a perfect right to walk, or to make other opposition railroads for themselves, if they please, but not to abuse the shareholders for asking as much as they think they can get. Will you allow me to put the real rights of the matter before them in a few words?

Neither the roads nor the railroads of any nation should belong to any private persons. All means of public transit should be provided at public expense, by public determination, where such means are needed, and the public should be its own shareholder. Neither road, nor railroad, nor canal should ever pay dividends to anybody. They should pay their working expenses, and no more. All dividends are simply a tax on the traveller and the goods, levied by the persons to whom the road or canal belongs, for the right of passing over his property, and this right should at once be purchased by the nation, and the original cost of the roadway—be it of gravel, iron, or adamant—at once defrayed by the nation, and then the whole work of the carriage of persons or goods done for ascertained prices, by salaried officers, as the carriage of letters is done now.

Happily these suggestions of the distinguished Englishman have been followed, in part at least, by several enlightened nations, but to the disgrace of our republic, and to the great cost of the producing and consuming masses, we are lagging behind in these respects, becoming a camp-follower instead of a leader in the march of progress, because of the influence exerted by a small class, who have grown so powerful through special privileges given to them by the nation that they now assume to thwart beneficent legislation in order that they may continue to grow richer through this vicious form of governmental paternalism, which places the multitude in the power of a few.

Ruskin’s views on money are as disturbing to the usurers and those who through special privileges in money have amassed fortunes of unearned wealth as his sound position on railroads is distasteful to the monopolists who impoverish the producer and consumer by exorbitant rates on transportation.