Farmers and Free Silver

[This was originally published by the New York Times, in 1893, by Secretary of Agriculture Julius Sterling Morton.]

Washington, June 23—Secretary of Agriculture Morton is a Western Democrat who is not afraid of Western demagogues nor of his own convictions.  When he talks he habitually says something.  This has come of a mental habit of independent thinking, and it does not suit a great many of his fellow-citizens in Nebraska, who mistake talk for thought.

Mr. Morton has been talking freely with a reporter for the Star.  It is his opinion that the Populist Party is disintegrating.  The election of Mr. Cleveland, he says, meant the condemnation of laws making artificial prices of wool or metal, tin or silver, a protest that the Government should not be forced to be a buyer of a free coiner of silver, an appeal to the average citizen, “who will not long follow the disgraced demagogues discharged from the two national parties.”

Do you think the advocates of the repeal of the Sherman law will have to accept a compromise?, asked the reporter.

I do not know about that,” answered Mr. Morton.  “I am a little uncertain as to how congress will stand on that question.  I am hopeful of the repeal of the Sherman law, and think it may be repealed, though there is an element of doubt.  I have no objection to the repeal of the 10 percent bank tax as a means of supplying the increased currency which it is claimed is needed.  I am opposed to that tax [...] because it was levied under false pretense and has no right to exist.

It is prostitution of the taxing power, because under the pretense of raising revenue it was never intended to raise revenue, but the prevent the issuance of State bank currency.  I do not think there is a danger of wildcat banking, for only that currency will circulate that is based on sound security, unless it is in the locality where issued, and nowhere can it be forced into circulation, for no State can give its currency a legal tender quality.  The National Government alone can make a currency legal tender.  I see no objection to the tax law as a compromise with those who want more currency.

Under one condition the absolutely free coinage of gold and silver alike might be agreed to as a compromise—that is, if they both were deprived of their legal tender quality.  The stamp of the Government would then signify no more that the coin was of certain weight and fineness, and the people could take which coin they pleased, and refuse either if they did not like it.  The two sorts of coins would then be placed on their merits and we could soon find out what the people wanted.

The bullion value of gold and its coin value are both the same.  A twenty dollar gold piece is $20 worth of bullion.  The bullion value of silver is 84 cents an ounce.  The coin value is $1.29 an ounce.  Twenty dollars in silver is worth 45 cents less per ounce as bullion than it is as coin.  To every ounce there is 45 cents of fiat or fictitious value.  Twenty silver dollars represent an actual value of a little more than $12.

Without the legal-tender quality, deprived of that element, silver would have to depend on the proper measure of supply and demand for its value, and it is not be difficult to judge which metal people would want so long as the difference between the denomination value and the bullion value of the coin is so great.

I think the farmers are beginning to realize that they are being required to exchange their products, produced at the cost of great labor, for a product costing much less labor, and possessing, therefore, a less intrinsic value at the ratio of their exchange than their wheat and their corn.

Here is a proposition:

What is silver?

An earth product dragged out by human effort.  The Granite Mountain Mining Company produced refined silver in the year 1887, or 1888, according to the report to the Secretary of Treasury, to the amount of nearly 8,000,000 ounces at a cost for refined silver of 12 cents an ounce.  The whole output cost that year in all $368,000.  Coined at 412½ grains to the dollar, it would make over $3,000,000 of legal tender, for over three million bushels of wheat, the labor cost of which is over $300,000.

That is, by free coinage, under the law, $368,000 of mine labor is made and forced to an equality with $3,000,000 of farm labor cost.  By law this free-coined silver will, when it represents only $36,800 of mine labor in Montana, be made exchangeable for $300,000 farm labor in Nebraska.  Is this right?  Will Nebraska and other farmers hurrah for this enormous swindle of their toll.

There is no advantage to the farmer or the laborer in a redundancy of cheap money.  It raises the cost of the farm products in cheap money, cutting off the export trade and narrowing the market.  With a fictitious price put upon wheat through the cheapness of money with which it is purchased, the foreign purchaser cannot afford to deal with our farmers, but goes to India, Russia, and Argentina for his wheat.

The consequence of this is hard times here and the export of gold from the country.  As soon as our wheat goes down to a price where it can find purchasers abroad, as soon as we begin to sell to foreign purchasers, the supply and demand alone regulating the price, the gold begins to come back to us.  The turn in the tide of gold noticeable within the past few days was due to the sales of wheat which had been brought about by necessity the holders were under to raise money.