The Texas Miner, Volume 2, Number 13, April 13, 1895 Page: 5
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THE TEXAS MINER.
can put a Chinese wall around our country. All we have to buy
is coffee, tea and rubber. We are a little world extending from
the frigid to the torrid zone. We are not Sweden or Greece.
COIN'S FINANCIAL SCHOOL.
4¿nPHE ratio between silver and gold," said Coin, "prior to
1 1873 in the United States was fixed at 16 to 1, and for
the purposes of coining token silver dollars is still the ratio—that
is, the silver in a silver dollar is just sixteen times as heavy as
the gold in a gold dollar. Or to reverse it, the gold in a gold
dollar is just 1-5 ith the weight of the silver in a silver dollar.
"Up to 1834, when the ratio was 15 to 1, the gold in a gold
dollar was i-i6th the weight of the silver in a silver dollar.
When the ratio was changed to 16 to 1, the quantity of gold in
a gold dollar was lessened and made i-i6th the weight of the sil-
ver in a silver dollar.
"The quantity of silver in the silver dollar was not disturbed.
It being the unit, was respected, and remained the same. The
gold dollar was cut down from 24.7 grains pure gold to 23.2
grains pure gold. So that now it is one-sixteenth the weight of
the pure silver (371 1-4 grains) in the silver dollar. That is
what ratio means."
Lyman J. Gage, president of the First National bank, Chi-
cago, asked:
"How can you have, at any fixed ratio, the same commercial
value on two separate metals, that are from time to time varying
in the quantity of each produced ?"
"This is the 'stock fallacy' of the gold monometalists," said
Coin. "All commercial values are regulated by supply and de-
mand. The commercial value of any commodity depends on
supply and demand. If the demand for a particular commo-
dity is continuously rising and the supply does not increase, the
commercial value will continuously rise.
"When the mints of the world are thrown open and the Gov-
ernments say: 'We will take all the silver and gold that comes,'
an unlimited demand is established. The supply is limited.
Now with an unlimited demand and a limited supply, there is
nothing to stop the commercial value of the two metals going
up in the market, except the Governments saying: 'Hold on—
these metals are for money; we fix the value at which they cir-
culate. This unlimited demand is for silver at $1 for 371 1-4
grains, and $1 for 23 2-10 grains of gold—we stamp these into
dollars respectively in those quantities.'
"While an unlimited demand has been established, the point
at which the supply can take advantage of that demand is fixed.
And the demand pulls them both plumb up to that point. At
16 to 1 and 371 1-4 grains of silver as the unit, the commer-
cial value of 371 1-4 grains of pure silver is a dollar, and an
ounce of silver is worth $1.29 29-100, and 23 2-10 grains of
gold is worth a dollar, and an ounce of gold would be worth
$20.68 64-100.
"I will illustrate it," and as Coin said this he quickly drew on
the blackboard behind him the picture of two hands, each draw-
ing a cord through a hole in a beam of wood with blocks on the
ends of the cords.
"Now," said Coin, as he leaned over and borrowed from Mr.
Owen F. Aldis his cane, and, pointing at the drawing on the
blackboard, continued : "The hand drawing on the cord repre-
sents the power of unlimited demand—the beam represents the
price at which the demand stops—and the two little blocks on
the ends of the cords, as close up to the beam as they can get,
represent silver and gold.
"The demand 13 represented by the two hands; if the one on
the silver cord should relax its pull, the little block representing
silver would drop down. The unlimited demand for one metal
(silver) was taken away—the unlimited demand for the other
metal (gold) was continued. The whole disturbance since then
has come from the demand being taken away from silver.
"England demonetized silver in 1816, but as Germany,
France and the Latin Union and the United States had their
mints open to the free coinage of silver and gold, the demand
thus created was sufficient to maintain the parity (equal value)
of the two metals, and the action of England had no effect on
the price of silver.
"No one in England would part with his silver for less than an
equal value in gold, when he could cross the channel into France
and get an even exchange—so the price of silver as measured
in gold was during all the years prior to 1873 substantially at
par in England and the world over.
"The United States closed its mints to silver and made gold
the sole measurement of values in February, 1873.
"Germany followed and passed the same law in July, 1873.
The action of these two large nations caused a drop in the com-
mercial value of silver as measured in gold of 2 per cent, by
the end of that year.
France and the Latin Union closed their mints to the free
coinage of silver in January, 1874, and by the end of that year
silver as measured in gold had declined 4 per cent.
"Then came the gradual breaking down of the commercial
price of silver as measured in the new standard—gold—and acts
were passed tending to this end. Amona; them were the acts of
1876 stopping the coinage of the trade dollars by which we were
supplying China and the Orient with coin, and the law in 1878
authorizing and sanctioning notes, bonds and mortgages to be
taken payable in gold only. This latter is a clause in the
Bland-Allison act, a copy of which can be found in Coin's Hand
Book, or can be obtained from any of your Congressmen- It
discriminates against all our other forms of money and allows
the creditor to dictate that his credits shall be payable in gold.
••These acts have been followed up by the declared policy of
the government to redeem all other money, including silver, in
gold.
"The same class of legislation was simultaneously in progress
in Europe, so that by the summer of 1893 silver had declined
35 per cent. Then came the closing of the mints of India to
silver and the decline increased to 50 per cent.
[lessons to be continued.]
WHAT JAPAN HAS DONE ON A SILVER BASIS.
JAPAN'S currency system is on a silver basis, and eminently
satisfactory. Indeed, Japanese economists and all the En-
glish Consular officials, and Americans, too, agree that tlie fall
in the price of silver has been the preponderating factor in Ja-
pan's rapid commercial progress.
The Yokohama Chamber of Commerce, in its report last
May, states that at the end of 1893 there were 43,700 spindles
in the cotton spinning mills of Japan; in 1888, 88,140; in 1892,
4°3'3I4i an(3 in 1883 about 600,000, and a further rapid in-
crease expected. The Consular report from Kobe, for 1892,
shows that 21 mills in Osaka paid an average dividend of 18
per cent., and according to the Japan Gazette, eleven mills in
1892 paid an average dividend of 16 per cent, for the first six
months of 1894, as against 12 per cent, for the corresponding
semester of 1893.
The London Economist of February 17, 1895, sa.vs t'iat the
balance sheets of 93 spinning companies in Oldham, England,
show a net total loss of ^72,768, against a like net loss of
^104,664 in 1892. In 1891 Japan imported eleven times the
quantity of cotton imported in 1887, and since the same year
"her exports of fabrics manufactured in Japan have increased
nearly four hundred per cent. In the far East, Japau has now
become a competitor with England in certain lines of cotton
goods." This quotation is from the report of the Secretary of
the British Legation in Tokio.
The Consul at Hioga in 1892 says: "Nor do the Japanese
confine their rivalry with Europeans to cotton, much of which
goes to China to compete with us (England). They have suc-
cessfully introduced the manufacture of beer, gunpowder, sad-
dlery, cement, matches, printing paper, soap, bricks and leather,
besides minor sundries, with the result that imports of these
articles from Europe have practically died out, and they are
supplying goods of these classes to all the neighboring silver
countries." In Macao Japanese imitations of European goods
flood the bazaars.
Mr. Thomas Holyoake Box of Yokohama, states some of the
reasons for the growth of industries in silver-using countries, as
follows: "The continual rise in the value of gold, as compared
with silver, has changed everything. British goods get so dear
in their silver value that the Oriental was forced to make for
himself, and the decline in the value of the white metal has so
helped him in his work that he can not only make sufficient for
himself, but is able to export to advantage. The rise in the
value of gold has doubled the silver price of British goods in
the east, and has made their use almost prohibitive, while the
fall in the value of silver has brought down by over a half the
gold price of Oriential goods in gold-using countries, and is
continually increasing the demand for them. The conditions
are so unequal that it seems impossible to continue the struggle
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McAdams, Walter B. The Texas Miner, Volume 2, Number 13, April 13, 1895, newspaper, April 13, 1895; Thurber, Texas. (https://texashistory.unt.edu/ark:/67531/metapth200507/m1/5/: accessed July 18, 2024), University of North Texas Libraries, The Portal to Texas History, https://texashistory.unt.edu; crediting Tarleton State University.