THE PROGRESS OF THE SILVER QUESTION.
Editor Popular Science Monthly:
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 indebtedness in "gold coin of the United States of the present standard of weight and fineness," instead of silver, copper or fiat money, would be inserted in future long-time mortgages, and that (the legal validity of such clauses being unquestioned) the effect would be to decrease very greatly the then existing pressure for a depreciation of the currency. 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 representing these mortgages, and in every case the provision that payment is to be made in gold is inserted, and thus not only respecting 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 probable that few farmers have seriously considered 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 coinage of silver, and is not affected by it except in so far as all the members of the community 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 mortgage 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 somewhat 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 direfully 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 protected 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 depend 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 371¼ 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 371¼ grains of this as legal tender for one dollar. The force that sustains these certificates, 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 subsidiary coin, the impossibility of getting any other, and the limited number in circulation. Were the
