CORRESP ONBENCE. 



413 



CORRESPONDENCE. 



THE PEOGEESS OF THE SILVER 

 QUESTION. 

 Editor Popular Science ifonthly : 



SIR: In your issue of July, 1891, the 

 writer ventured to predict, as " a coming 

 solution of the currency question," that a 

 " gold clause," requiring payment of mdebt- 

 edness in " gold coin of the United States 

 of the present standard of weight and fine- 

 ness," instead of silver, copper or fiat money, 

 would be inserted in future long-time mort- 

 gages, and that (the legal validity of such 

 clauses being unquestioned) the effect would 

 be to decrease very greatly the then exist- 

 ing pressure for a depreciation of the cur- 

 rency. For it would become a matter of 

 the greatest importance to any one who had 

 obligated himself to pay in gold that no 

 disturbance of the currency should take 

 place which would prevent him from doing 

 so. Various instances of importance, such 

 as railroad mortgages, were pointed out in 

 which financial caution had already resorted 

 to this expedient. 



It is interesting to note that this change 

 is taking place every day. Quoting from 

 The Honest Dollar of October 31, 1891 : 



" Inquiries which we have made of the 

 most prominent companies interested in the 

 negotiating of Western farm mortgages have 

 been met with the invariable answer that all 

 mortgages now placed have a clause inserted 

 that payment shall be made in the gold coin. 

 We have examined numerous bonds repre- 

 senting these mortgages, and in every case 

 the provision that payment is to be made in 

 gold is inserted, and thus not only respect- 

 ing the principal, but also the interest, the 

 gold clause being written or stamped upon 

 all the coupons. This applies not only to 

 Kansas, but to all Western and Southern 

 States in which the farm-mortgage business 

 has assumed large proportions. It is prob- 

 able that few farmers have seriously con- 

 sidered the effect of this clause, and, in fact, 

 many of them are doubtless not aware of its 

 presence in their mortgages. Yet the matter 

 is of immense importance to them. 



" Let us consider the effect of a gold 

 clause in connection with the theories of the 

 silver men and their opponents, and let us 

 take in first the statement of the silver men 

 that the free coinage of silver would not put 

 gold at a premium. Let us suppose, in 

 other words, that after free coinage had 

 been introduced the silver and gold dollars 

 still remain of equal value. In this case the 

 farmer has gained nothing by the free coin- 

 age of silver, and is not affected by it except 

 in so far as all the members of the com- 

 munity may be benefited or injured by the 

 change. But suppose, on the other hand, 

 that the opinions of the anti-free-silver men 



are right, what is then the position of the 

 farmer ? According to this supposition the 

 gold dollars will disappear from circulation, 

 and be worth a premium of, say, thirty-three 

 and a half per cent. But it is in these gold 

 dollars that the farmer must pay his mort- 

 gage and the interest thereon — that is, he 

 must pay in the current money one third 

 more than the face of his mortgage. It is 

 easy to see what this means. It means that 

 many a farmer who is comfortably off will 

 find himself very hard pressed, and that 

 those who now find it hard to make the two 

 ends meet will be utterly ruined. And this 

 will be true even if the farmer gets some- 

 what more dollars for his crops, for he will 

 not get enough more to make up for this 

 difference, and the balance of loss will be 

 enough to make the farmer's lot a direfuUy 

 hard one. No doubt the silver men tell the 

 farmer that the gold clause in his mortgage 

 does not mean anything. But the meaning 

 of the clause is perfectly clear in common 

 sense and common justice, and a properly 

 drawn gold clause has been held valid by 

 the Supreme Court of the United States, 

 from which there is no appeal. The gold 

 clause, moreover, is part of a contract pro- 

 tected by the Constitution of the United 

 States, and no State Legislature can impair 

 its validity." 



Thus the financial world is usurping the 

 functions of statesmanship, and preparing 

 for itself a solution of the most dangerous 

 problem confronting this nation. In the 

 course of a few years the great majority of 

 long-time borrowers will be on paper having 

 in it the gold clause, and will be aware of 

 the fact that their chances of payment de- 

 pend largely upon the maintenance of the 

 gold standard. The political force of the 

 movement for a cheap currency will thus be 

 largely removed. 



But there remains the law of 1890, under 

 which 4,500,000 ounces of silver must be 

 purchased monthly by the Secretary of the 

 Treasury and silver certificates issued for 

 the same. The Government buys 371 J grains 

 of pure silver for seventy cents and issues for 

 it a certificate for one dollar in silver ; or, 

 what is the same thing, it buys 530 grains of 

 silver for one dollar and issues a certificate 

 for 3Yli grains of this as legal tender for one 

 dollar. The force that sustains these cer- 

 tificates, and the silver dollars of which 

 they are equivalents, in the market as the 

 equivalent of the gold dollar, is the same 

 as that which makes one tenth of a cent's 

 worth of copper pass as one cent, or one 

 cent's worth of nickel pass as five cents. It 

 is their convenience as subaidiari/ coin, the 

 impossibility of getting any other, and the 

 limited number in circulation. Were the 



