Main currents in American thought An interpretation of American literature from the beginnings to 1920
the standard of deferred payments. Gold might remain as stable as
the eternal hills, but somehow all other commodities were shrinking
daily. “Them steers,” Solon Chase indeed said aptly, “while they grew
well, shrank in value as fast as they grew.” This remarkable result
was brought about, it is well to remember, by the plea for honest
money and the plighted faith of the nation. Keeping the public faith,
it would seem, meant permitting the creditors to change the terms of
their payments after the contract was made. “Who are these reasoners,”
cried Thaddeus Stevens, in disgust, “who talk so learnedly of the
laws of finance and the morality of human dealings, whose consciences
are so raw and stick out so far from their excited coverings that no
pharmaceutist can heal their inward wound?”[746]
As a debtor community the Middle Border felt the pinch of deflation
acutely, and in consequence the money question was thrust sternly upon
agrarian attention. On this issue it came finally to fight its great
battle, pitting its homespun experience against the authority of the
bankers and the teaching of the schools. To the bankers’ argument that
note issues should be taken out of politics and lodged in the hands
of business men, it replied that the issue of currency was a function
of sovereignty, and to surrender it to private corporations, as was
done by the National Bank Act, was undemocratic. The monetary system
of the nation must not become the football of class interests. To the
argument of the bullionists that gold was the only fixed and stable
standard for deferred payments, it replied that the gold standard was
too narrow a base on which to erect a monetary system for an expanding
country, that it was notoriously susceptible to manipulation, and that
it had been devised by Lombard Street in the interests of capitalism.
Since the days of the great struggle over the Bank a remarkable
change had come over the agrarian mind in its thinking on monetary
affairs. In their distrust of all banks and bank-issues Jackson and
Benton had swung sharply back to the bullion theory of money. They
were militant hard-money men. But in the intervening years a new and
revolutionary conception had been slowly making its way to recognition.
In the minds of obscure economists the quantitative theory of money
had risen to challenge the bullion theory. In unorthodox pamphlets and
newspaper discussion it was being pointed out that the value of money
is dependent on the amount in circulation, that gold and silver are
commodities fluctuating in value like other commodities, and that it
is the plain duty of the state to regulate the per capita circulation
in accordance with business needs. To allow the bankers to erect a
monetary system on gold is to subject the producer to the money-broker
and measure deferred payments by a yardstick that lengthens or shortens
from year to year. The only safe and rational currency is a national
currency based on the national credit, sponsored by the state,
flexible, and controlled in the interests of the people as a whole.[747]
By far the most suggestive of these obscure pamphleteers was Eleazar
Lord, a New York banker, who for thirty-five years was a propagandist
for a new currency system and who watched the bungling of the war
finance with acute concern.[748] With the undemocratic nature of
banknotes he was not concerned. As a banker he accepted them as
desirable and wished to establish them on a sound national basis. He
was in ardent sympathy with the patriotic nationalism of Henry C.
Carey. The loose system of state-bank issues seemed to him chaotic
and he was earnest in espousal of a common national system. Lord was
an acute and stimulating thinker on monetary matters. He was one of
the first Americans to understand the significance of credit, and he
was realist enough to foresee that the system of the future would
be a credit system. This was the clue to his dissatisfaction with
the bullion theory of money, which he attacked with vigor, and to
his acceptance of the quantitative theory.[749] He had the scantest
respect for Sherman’s dogma that gold is as stable as the eternal hills
because it is “labor and value itself,” or for Wells’s belief that the
law of supply and demand automatically produces gold enough to meet
the needs of business. He would treat gold and silver as commodities
varying in price with supply and demand, and make no attempt to
relate the money scale to their fluctuations. For years, he said,
America accepted the English “standard of currency, their aristocratic
definition of wealth, and their distinction between capital and
credit,” to its disaster.
The so-called specie basis, whenever there is a foreign demand
for coin, proves to be a mere fiction, a practical humbug; and
whenever, by an excess of imports, this pretended basis is exported
to pay foreign debts, the bank-notes are withdrawn from circulation
or become worthless, the currency for the time is annihilated,
prices fall, business is suspended, debts remain unpaid, panic and
distress ensue, men in active business fail, bankruptcy, ruin, and
disgrace reign.[750]
To provide a safe, flexible, and convenient currency, Lord proposed a
system of national banknotes, based on the wealth of the country and
responsive to the needs of a business world founded on credit.
Necessity must teach us whether we can and must have a currency of
purely representative value, wholly disconnected from the precious
metals, as a basis and standard, or prolong the conflict between
coin and paper, commerce and exchange. The existing theory on the
subject is too firmly fixed by education, prescription, prejudice
and interest, to be overthrown.... Such words as _safe, secured,
national, uniform, economical, inalienable_, when predicated of
any thing but gold as currency, are to the specie-paying theorist
mere sounds devoid of significance.... Credit must triumph. Can any
one blame the well-meaning theorist if he manifests some degree of
doubt and alarm in view of the extent to which the actual use of
credit, and of the confidence in the use of credit, has already
attained?[751]
In the writings of these obscure economists are to be found the seeds
of the later agrarian program. Some of them were clear-headed and able
men, but they underestimated the power of the banking group. They
failed to realize that in a capitalistic society no monetary system
would be tolerated that was not to the bankers’ liking, and that if
it were to their liking they would easily convince the public that
it was the only honest and just system. It was this lesson that the
Greenbackers and Free Silver men were to learn. No sooner was the issue
joined between paper money and the gold standard than a scurrilous
hue and cry was raised by the “sound-money” men. The bitter dispute
that marked American politics for more than a score of years is a
classic example of the distortion of fact for partisan ends that seems
to be an inevitable consequence of referring a matter of policy to a
democratic electorate. Denunciation took the place of exposition, and
hysteria of argument; and in this revel of demagoguery the so-called
educated classes--lawyers and editors and business men--were perhaps
the most shameless purveyors of humbuggery. Stripped of all hypocrisy
the main issue was this: Should the control of currency issues--with
the delegated power of inflation and deflation--lie in the hands of
private citizens or with the elected representatives of the people?
It is a question on which wide disagreement may well exist, for it
involves important differences of social and political theory. But
the significant thing is that throughout the years when the subject
was debated in every newspaper and on every stump the real issue was
rarely presented for consideration. The bankers did not dare to present
it, for too much was at stake and once it was clearly understood by a
suspicious electorate their case was lost. Hence the strategy of the
money group was to obscure the issue, an end they achieved by dwelling
on the single point of inflation and charging the agrarians with a
dishonest policy of repudiation.
Certainly in the minds of many conscientious men the fear of
repudiation was very real and acute, and their fears made timid souls
panicky. The newspapers took their cue from this bogey and beat the
drums so loudly in the cause of “honest money” that all hope of
calm discussion was lost. The issue became so distorted from class
feeling that later historians find it difficult to view the question
dispassionately. So late as 1916 Joseph Gilpin Pyle in his _Life
of James J. Hill_ could still speak of the Greenback movement as a
vicious scheme of “inflation, the boon of the demagogue and the dream
of the great debtor class in this new country,” who “increased ... by
the opening up of the West on borrowed capital, welcomed any measure
that might give them a specious justification for discharging their
obligations with something worth less than what they had promised to
pay.” Describing the genesis of the free silver movement, he said:
Hence grew up a formidable coalition between mine owners, debtors
unable or unwilling to pay, ambitious politicians, honest theorists
led captive by barren and unpractical abstractions, and a host of
men too ignorant to inform themselves, too impassioned by what they
heard to wish to know the truth.[752]
Obviously it was not so simple--or so wicked--as that. To determine
the justice of the charge of repudiation certain facts must be borne
in mind. The gist of the money problem pressing so heavily on the
Middle Border was the question of stabilizing the currency with a view
to stabilizing prices. Under the prick of war-necessities a sharp
inflation of prices had taken place. With the drastic contraction of
the currency following the war, prices fell as sharply. From 1873 to
1896 a world-wide appreciation in the value of gold, aggravated by
recurrent economic crises, further depressed the market values of
commodities, rendering the question of the solvency of the Middle
Border increasingly doubtful. Falling prices are only the obverse of
rising money-values, and to stop the one it was proposed to cheapen
the other, either through the issue of greenbacks as proposed by the
Greenback party, or through the free coinage of silver as proposed in
the plank of the Democratic platform of 1896. It was not a question of
repudiation in favor of debtors, but a question of correcting an unjust
deflation that favored the creditor class.
IV • Greenbackism and Peter Cooper
The opposition to the program and methods of the rising plutocracy was
not confined to the farmers of the Middle Border. It was nourished by
a widespread distrust of banks and bank-currencies that was a heritage
of the Jacksonian struggle. Amongst the leaders of the Greenback
movement were many eastern men, some of wide industrial experience,
whose economic views and prejudices were a hold-over from the days
of John Taylor, and who discovered in the post-war finances the same
class manipulations of public credit that marked the funding operations
of Washington’s administration. Men as dissimilar as Horace Greeley,
Thaddeus Stevens, Wendell Phillips, Henry C. Carey, and Peter Cooper,
made common cause with the western farmers in seeking to wrest control
of government from the bankers, and establish what they conceived
to be a just democratic economy. Picturesque militants grown old in
warfare, they were of an earlier generation, inheritors of the ideals
of simpler times before production for consumption had been superseded
by consumption for profit, ardent equalitarians who would not see their