ER USED AS MONEY, THE ANNUAL INTEREST ON FUNDED DEBTS, AND

AND NORTH AMERICA EACH YEAR SINCE 1845.

rate of Gold and Silver used as Mone

CHANGES IN THE VALUES OF THE PRECIOUS
METALS, AND THEIR EFFECTS ON PRICES
OF COMMODITIES.

UST at present the commercial and financial world

JUS

is perplexed with the causes of what is called the "low price of silver." Many are disposed to refer this almost wholly to the increase in the production of the metal; others more largely to the demonetization of silver in Germany; and still others claim that the decline in the value of silver, while it has been greatly increased by the above mentioned causes, was primarily an erroneous expression for a rise in the value of gold, this rise being shown not only in the decline in the gold price of silver, but of all commodities.

One of the most indisputable facts in connection with the vast increase in the production of gold from 1849 to 1854-5 was that it caused a general "rise of prices." I have made comparisons of the prices of a number of staple commodities in New York city in 1845 with those in 1854, and find that the average rise in that period was over 50 per cent (see tables of prices at the end of the book). This rise has been by some attributed to changes in the tariff, an assumption which I think is to a large extent erroneous. Aside from this there was no other feature of that period to which the rise could be attributed than the increase in the stock of gold in the world used as money. Professor Jevons compared the average of prices in 1849 with the average in 1865,

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.

AVERAGE PRICES OF LEADING ARTICLES AT THREE PERIODS (IN NEW YORK CITY).

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