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THE MUSIC TRADE REVIEW.
MON£Y AND
A POINTS OF SUPERIORITY
THE
CURRENCY, ^ OF
—~
Jtye Silver Cau/s f/ot tye ^aus
Scarcity of (Jold Oi?e Clause.
£jj*HOSE who are saying- that the present panic
^29 is due to the silver laws of 1878 and 1890,
especially the latter, ought to remember and
consider that the panic extends to countries
where the silver laws do not operate. In Aus-
tralia, 10,000 miles away, they have a panic
worse than in the United States. It commenced
there by the failure of all the banks. The peo-
ple withdrew their deposits and would not trust
them, although they were on a gold basis and
no silver laws had been made. The real truth is
that the panic commenced in Australia, then
extended to England, then to the United States.
Whatever produced it in one country may be
said to have produced it in the others. We
must find a cause that works in all the coun-
tries.
The silver law of 1890 was a Republican
measure, writes John S. De Hart in the Com-
mercial Advertiser. It was passed by Repub-
lican votes in the Senate and House and ap-
proved by a Republican President. If the Dem-
ocrats can show that it has produced the panic
they can make a point against the Republican
party. This is one reason why we hear so much
about the law. The Democrats, not having
voted for it, are at liberty to say all manner of
evil things about it, with or. without reason.
The man after whom it was named, Senator
Sherman, is in favor of its repeal. Having
a father nominally, it has no real father. The
Democrats, in their national convention last
year, denounced it as a " fraud." The law has
become so mixed up with other political
schemes that it has not had a fair chance on its
merits before the people. It ought to be dis-
cussed as it affects the currency, not as it affects
the fortunes of political parties or the price of
silver in the market.
They call it Senator Sherman's law, when, in
fact, he had nothing to do with it except to vote
for it in the Senate. He did not introduce or
champion it; he simply voted for it as a choice
of evils. Secretary Windom drafted the origi-
nal and sent it to the House, where, after some
modification, it passed. It then went to the
Senate, and, after further modification, it passed.
The two Houses not being able to agree, it went
to a Conference Committee, and Senator Sher-
man happened to be on the committee. This
was the sum total of his activity in connection
with the law ; and yet they call it " Sherman's
law." He does not say whether it is his law
or not. He merely says that he has always
been ready to vote for its repeal, and that it did
not raise the price of silver as he expected. He
we^nt so far as to offer a resolution in the Senate
to suspend the purchase of silver under the law.
Since that time it has become common to talk
about repealing .so much of the law as author-
izes the purchase of silver. If this should be
done there would be nothing left of the law.
Its title is, "An act directing the purchase of
silver bullion and the issue of Treasury notes
thereon, and for other purposes." The " other
purposes " are nothing except incidental. The
more we examine the law and the more we hear
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people talk about it, the more we are satisfied
that the law is not understood and that some-
body is interested in having it misunderstood.
The law has never done anything except to
furnish about fifty millions a year of new paper
money in place of national bank notes retired. If
such a law can produce a panic it is a new ex-
perience. Heretofore, in the history of the
world, a new lot of paper money, when issued
on top of other money, not in lieu of other
money retired, has produced, first, high prices,
then an extraordinary amount of imports of for-
eign merchandise, then an extraordinary ex-
portation of gold, then a fall of prices. Now
we have, under the Sherman law, a new lot of
money in lieu of other money retired, no rise of
prices, no excessive importations of merchan-
dise, but an exportation of gold, and we are
told that the exportation of gold and the panic
are due to the silver law. If the silver law had
produced higher prices here, which it has not,
excessive importation of foreign merchandise,
which it has not; and exportation of gold to
pay for the imports of merchandise, then falling
prices and a panic, there would be some force in
the reasoning. We admit the exportation of
gold, which has been going on since last De-
cember, but we have not had the high prices
which precede the exportation of gold and of
panics. The panic commenced here this time
by exportation of gold only. This alarmed our
bankers and business men, because it came un-
connected with the usual phenomena that attend
a panic. Whatever, therefore, explains the out-
flow of gold will explain the present panic ; at
least give us one element of cause. They tell
us that gold goes out because silver comes in,
or the paper money in purchase of silver. We
admit that the paper money comes in, but it
does not follow that gold goes out because sil-
ver or paper comes in.
The United States and Australia lead the
world in the production of gold. They each
produce about one-quarter of the world's annual
supply ; each about thirty million dollars in
gold, both together sixty millions, which is
about half of the world's production. Naturally
they would each export gold ; but inasmuch as
Australia has a panic on her hands, such as we
had here in 1837, when all the banks failed and
there was no money except a little gold and
silver, she will be obliged to hold her gold for
money purposes for a year or two. This leaves
the United States to supply England, France,
Germany and Austria with gold, and necessi-
tates unusual exportations from here. Although
Australia is ten thousand miles away from us,
nevertheless it is easy to see that her financial
condition would be felt here and in Europe.
The currencies of all these countries is bottomed
on gold, and whatever diminishes the gold sup-
ply shakes the debtor and creditor system, the
banking system of them all. It is more of a
bank panic than anything else. The business
of the country is in a healthy condition ; there
has been no wild speculation except in spots.
For fifteen years prices have been tending down-
ward and nobody expected a panic, and panics
always come after excessive high prices and
excessive exportations of gold in countries
where the currency is based on gold. When we
consider that the banking systems of Europe
and the United States are bottomed on gold,
and that there is a very short crop of this article
for the commercial world, it is enough to ac-
count for the panic.
130 Fifth ATennct o*mer z8tb Street* New York.
NEW YORK,
CHICAGO.