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 1872. 27 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.

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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 de

monetized 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

existence and operating to aid in the creation of the wealth to pay interest on the principal. The latter represents something that has been annihilated, the loss not being felt at once, but deferred and distributed over a number of years in the taxation to pay interest. It was this which, about 1872, began to make an increasing demand for the precious metals to reimburse capitalists for the cost of the wars. Philosophers may argue that gold and silver are only measures of values, and that one dollar of gold will measure a thousand dollars' worth of commodities as well as one, but it is also true that the desire for the actual possession of anything that seems to be getting scarce imparts to it an adventitious and phenomenal value. Such was the case in 1872–3, when capitalists began to doubt the ability of the nations to pay the greatly increased load of annual interest. It was this doubt which caused the first reaction, and the reaction once started, the cause reproduced itself and acquired momentum as it progressed. The first cause of the great reaction in 1873 was the immense load of war debts, but this has unquestionably been greatly aggravated in the last two years, and more especially in 1876, by the demonetization of silver.

The conclusion, then, is that the "decline in the value of silver" is in fact almost wholly the result of an equal divergence in the values of the two metals. The diminished stock of metallic money available in Europe, resulting from the demonetization of silver, has enhanced the value of gold and diminished the value of silver. Both metals have, for centuries, been maintained at an average value as money far above their intrinsic value as commodities. Money must be not only a standard of values, but a circulating medium,

Either increased use or diminished supply may cause a rise in the value of the thing used. Hence, if the work of $4,000,000,000 of gold and silver be delegated to $2,000,000,000 of gold, the gold will rise in value and the silver will depreciate. I conclude, therefore, that the change in the relative values of the two metals is due to the demonetization of silver; and that if gold, instead of silver, had been demonetized by Great Britain and Germany, the value of gold would have fallen and that of silver would have appreciated.

In March, 1876, a select committee was appointed by the British Parliament "to consider and report upon the causes of the depreciation of the price of silver.” The committee immediately began its inquiries and continued them about one month, during which they held six sessions, and called in for examination the following persons: Messrs. Henry Waterfield, Sir Hector Hay, Stewart Pixley, Robert Giffen, Frederick G. Wilkins, Patrick Campbell, Robert Wigram Crawford, Gustavus Peitsch, Samuel Seldon, William Robinson, Colonel Henry Hyde, J. T. Mackenzie, Ernest Seyd and Walter Baghot, all persons of high repute in matters of statistics relating to money and finance. The report of the committee, printed in July, made a large folio volume of two hundred pages, equal to probably fifteen hundred pages of an ordinary 12mo book, and containing an enormous mass of figures and estimates in the papers put in by the witnesses.

The substance of the information on the question. under consideration was, however, summed up in the following few paragraphs on page IV of the committee's report, viz.:

"Your committee are of the opinion that the evi

"dence taken conclusively shews that the fall in the "price of silver is due to the following causes:

"(1) To the discovery of new silver mines of great "richness in the State of Nevada.

"(2) To the introduction of a gold currency into "Germany in place of the previous silver currency. "This operation commenced at the end of 1871.

(3) To the decreased demand for silver for export

"to India.

"(4) That the Scandinavian governments have also "substituted gold for silver in their currency.

(5) That the Latin union, comprising France, Bel"gium, Switzerland, Italy and Greece, have since 1847 "limited the amount of silver to be coined yearly in "the mints of each member of the union, suspending "the privilege formerly accorded to all holders of silver "bullion of claiming to have that bullion turned into "coin without restriction.

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"(6) That Holland has also passed a temporary act prohibiting, except on account of the government, the coining of silver, and authorizing the coining of gold." "It will be observed that two sets of causes have been "simultaneously in operation. The increased produc"tion of the newly-discovered mines and the surplus "thrown on the market by Germany, have affected the "supply. At the same time the decreased amounts "required for India and the decreased purchases of sil"ver by the members of the Latin union, have affected "the demand. A serious fall in the price of silver was "therefore inevitable."

"It is, however, an important and remarkable fact, to "which it may be convenient to call attention at once, "that though the increased production of silver in the