STABILIZATION OF MONEY
AN ADDRESS BY MR. P. A. O'FARRELL.
19th March, 1931
PRESIDENT STAPELLS introduced MR. O'FARRELL, who spoke as follows: It is a great pleasure to be present at the Empire Club this afternoon. My friend, T. P. O'Connor, has always spoken of me as the globe trotter, and I have been trotting over the globe for a little more than half a century. I was in Australia in 1877 when Mr. Balfour made what was, I think, the greatest speech of his life-his first great speech in the House of Commons. That speech was on the monetary problem. He was laughed at them--the public was against him--but he continued to plead the cause of monetary reform for fifteen years. Today the greatest problem before the human race is the stabilization of money; not only stabilization of silver-it is just as important to stabilize gold. There is no stable money today. What is called moneybank notes, treasury notes, silver and gold-is not real money; it is counterfeit. Call it credit money, since that is what is behind it. Forty-four billions of credit money is circulating about the worldpaper, debased silver, debased copper, and debased bronze. This is covered by eleven billions of gold, less than $5.50 for every human being. More than half of this credit money is pure inflation.
Sir Josiah Stamp, without question the greatest economist in England, and Deputy-Governor of the Bank of England, whom everyone respects for his tremendous knowledge, said ten days ago that the great disintegrating force today is the lack of a fixed standard of value. That statement does not come from a demagogue; but from a great banker and a great captain of industry. The interviewer asked: "How is it possible to speak of the lack of fixed standard of value?" and he answered, "That is at the bottom of all our troubles,, and unless it is remedied chaos will come." You have nothing in the world today but fluctuating money.
I know that one dollar in 1872 or 1873 would buy more than four dollars will buy today. Money has slumped to 33% of what it was 60 years ago. In 1920 money had slumped to 25%, but since 1920 the value of gold has been going up. It slumped 75 % in 60 years, but in the last five years has gone up 35%. England's national debt to the United States, as fixed five years ago, is thirty eight billions of dollars. France at the same time owed sixty billions of dollars, and the French Government and financiers said: "We can never pay sixty billions. It is impossible". They appealed to the people, who had loaned them this money to help win the Great War, and the people of France replied: "Most of that debt is owed to us, but we will sacrifice the entire debt to put France on her feet once more;" they cancelled forty-eight billions. They cancelled two hundred million pounds sterling in England. I leave you to decide whether France was right. Sterling was at a discount at that time. Ten bankers sat in conference, with one economist and a Treasury representative. The economist said
"Gentlemen, England never can pay. If you try to pay in gold, remember that you put yourselves out of the running as manufacturers competing against Germany, France, Belgium, and the United States. Do not attempt to pay thirty-eight billions in gold." But the ten bankers and the gentleman from the Treasury said: "England must pay in gold." It is true they forgave ten or twelve billion to the continent of Europe. This was splendid, but it put the burden on their own workmen who pay the taxes. I do not believe it is possible for England to pay that thirty-eight billions in gold even if she stays on the gold standard. England agreed to pay thirty-eight billions in gold five years ago, but the purchasing power of gold has gone up 3S % since then. Sir Josiah Stamp made the statement: "England's debt has increased in five years by twelve and a half billions. If the purchasing power of gold goes up another 20% England will be bankrupt, and the world will follow." Some people think that governments or bankers can create money. There is no other money but what nature provided for man. Money is a slang phrase for exchange. Money is not gold, silver, copper, platinum or any other valuable metal; money is the exchange value of one commodity for another. The man who says that you cannot have gold, silver, bronze, and platinum money, is not worth arguing with. (Laughter). I would like to see all precious metals stabilized. I am here to plead for the stabilization of gold, for if you cannot stabilize gold, then capitalism is doomed to die, and with it this civilization.
In Los Angeles a month ago I was asked: "Has Canada any better banking system than we have? In the last year 1300 of our banks were closed--(laughter)--and nine hundred million dollars of deposits were tied up." I had the pleasure of telling them that France and Canada had, I thought, the two safest banking systems that existed.
Colonel Winston, a great orator from the West, was at a convention in Washington as a candidate for Attorney-General. He was a brilliant speaker, and during his speech a gentleman asked if he might question Col. Winston. The Chairman allowed this. Now, Col. Winston was completely bald. The gentleman said: "I would like to ask Col. Winston to account to this Convention for the unequal distribution of wealth." The Colonel replied" "I would like the gentleman to account to this Convention for the unequal distribution of hair." (Laughter).
The bankers of Europe, led by the Governor of the Bank of England, made the statement that the world's woes today are caused by unequal distribution of gold. In my opinion they were as ignorant as the man who wanted Colonel Winston to account for the unequal distribution of wealth. Suppose another eleven billions of gold were discovered and distributed evenly over the world. This would not increase the price of a bushel of wheat in Saskatchewan. If your gold standard continues, the farmers of the United States and Canada will be selling their wheat for 50c. a bushel this year. When I was in the West I asked Mr. Pat Burns about the cattle trade. "We have more hogs than ever," he said, "but the old bull or the old cow is selling for $10.00 to make sausages." Ten or twenty years ago the hide of a cow was worth $20.00, and should be worth that today. They are raising cattle in the Peace River district and losing money on it. Money is lost on every bushel of wheat produced in Canada today, and this will continue. In the Orient millions of people are without proper clothing, food or shelter. Why? Because the white man has robbed the Orient. Robbery is a hard word, but one cannot speak gently of this situation. There are also fifty thousand people in Asia who are rich, but they do not know how long they will be rich. There are eight billion ounces of silver in Asia; some is in the shape of jewelry; more is hoarded away. The savings of Asia are almost all in silver-except in India, where a great deal of gold is hidden. Eight billion ounces of silver! The value of that silver when the white man came to Asia was over twelve billion dollars; today its value is two billion dollars. Ten billions of purchasing power taken from the people of Asia! Who did it? I am sorry to say that England was the leader.
Mr. Darling" the biggest banker in the Midland Bank, has made this statement: "Common justice and common sense urgently demand that the British Empire take the lead in restoring the equilibrium of gold and of silver on which the economical structure of the world rests." I would like some of your bankers to explain that sentence, and to explain Sir Josiah Stamp's view. They say, "Oh, they are talking through their hats." I am not talking through my hat. I know that the salvation of civilization depends on the stabilization of money. That is not a dream! The money of the world for several thousand years was stabilized metallic money, until the bankers of England scuttled the price of silver, and scuttled half of the money of the world; that is why you are all suffering today.
Gentleman, I regret that I have spoken too long, but I would like some other time to tell you a little more about this great problem of foreign trade and reformed money.
The President conveyed the thanks of the Club to the speaker for his address.