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and concluded there had been a rise of about 21 per cent, and his opinion was that the real permanent rise due to the increase of gold was about 21 per cent. I do not see how it is possible to avoid the conclusion, after investigation, that this estimate of the rise of prices was too low, and I have prepared the following table of average prices of thirteen leading articles in New York city either about the end of December, or in the first weeks of January following, in each one of three years of each period. Thus, the average price of a ton of iron in the winters of 1845-6-7 was $36; in the three winters of 1854-5-6 it was $33; in the three winters of 1873-4-5 it was $28. Coal and iron were the only exceptions to the general rise of prices. But even including these, the general rise of prices in the period 1854-6 over 1845-7 was 58 per cent.


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Advance in 1854-6 over the average of 1845-7, 58 per cent.

In the period 1873-5 prices in gold were still 46 per cent above the average of 1845-7.

It is true New York was not the world; but its markets were governed by those of the rest of the world, and after making all due allowance for the effects of causes local to the United States (the tariff, the influx of emigrants, etc.), it is difficult to avoid the conclusion that the general rise of prices due to the increase of gold in 1854-6 was over 40 per cent. The values of the precious metals can be measured only by their exchangeable value for other commodities, and this general rise in the values of commodities was the index of the depreciation in the value of gold which Chevalier and others were predicting, but which in fact had already come while they were arguing about it. At the latter date, with which Professor Jevons made his comparison of prices, the average product of gold had decreased $25,000,000 or $30,000,000 per annum, and the excessive depreciation of its value was being recovered by reason of various causes. First of these was the vast increase of traffic, and the consequent necessities for the metal as a circulating medium. Second, the greatly increased use of gold in the arts. But in 1860 began a series of events which exercised an immense. influence to advance prices of commodities, independent of the recovery in the value of gold. The first of these was the war of Italian liberation in 1860; next the civil war in the United States, lasting from 1861 to 1865; next the Austro-Prussian war in 1866. These three wars caused an aggregate destruction of life and property in six years scarcely equaled by any preceding

period of twenty years; in fact, at the beginning of the Italian war the peace of Europe had not been disturbed by any great war since that in the Crimea, ending in 1856. These events were the main cause of a further advance in prices of commodities, which for a time concealed the rising value of gold. The waste of the wars and the diversion of industry had diminished the stocks of commodities, and their prices rose in proportion for some time after the destruction had ceased. The decline in prices of commodities was again deferred by the Franco-Prussian war, ending in 1871, the greatest effects of which, however, were apparently overcome by 1872-3. It was then that the effects of the diminishing stock of coin, the increase of obligations to pay money, together with the increasing stock of commodities, began to show themselves in various minor panics in Europe, preceding the culmination, in 1873, in the United States. From 1867 to 1872 there had been an average decline in the currency prices of all leading commodities in New York of from 30 to 35 per cent from the prices of 1867-8. This, it is true, was mainly the effect of the appreciation of the paper currency (which advanced from an average value of 70 cents on the dollar in 1867 to an average of 89 cents in 187227 per cent); but I think not wholly. The average of prices in 1875-6 was about the same as in 1851-2; but this latter period was before the whole rise caused by the increase of gold had been experienced. Prices had been much higher from 1854 to 1860.

It will perhaps be said that if the theory of a depreciation in the price of gold in the period from 1845 to 1854 was correct, it should have been shown in a rise in the gold value of silver. But this was prevented by

the fact that at that period silver was the principal metallic currency of Europe. Great Britain had demonetized silver in 1816, but the great bulk of the metallic currency of the continent was silver. The legal value of this as compared with gold being permanent, the value of silver as money was tied to that of gold, and fell with it. Or, viewing it from the opposite side, we may say that the depreciation of gold was greatly diminished by its fixed legal value relatively to silver. Had gold been the exclusive standard of values in 1854, the rise in prices of commodities would have been twice as great. The result of the severance of the two metals, by the demonetization in Germany, and practically in France, at a period when the stock of gold is diminishing, has been a decline in prices of all commodities—including silver, which has been largely reduced in some countries to the condition of a commodity.

The demonetization of silver is not, of course, the sole cause of the decline of prices in the last four years. The vast load of war debt accumulated in Europe and the United States from 1860 to 1871 was steadily increasing the rates of interest for money. During that period the United States, Italy, Austria and France were in the market for enormous sums. The capital or wealth which they borrowed was destroyed in the wars, but the taxes were increased to pay high rates of interest on what no longer existed, and therefore was no longer the means of increasing the wealth of the world. The difference between the effects of the agencies which have produced the railroad debts and those which have produced the war debts is apparent. The former class represents something that is still in

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