154 MONEY AND CREDIT 



when the redemption bureau was actually opened, scarcely any gold 

 was called for. But the danger which menaced the cause of sound 

 money during the interval (1871-1879) was not economical. The 

 real danger was that public opinion would demand, and Congress 

 would vote, an addition to the volume of greenbacks. And if Con- 

 gress should vote for one such increment, there would be no assign- 

 able limit to future additions. 



Specie resumption was followed by a period of great prosperity, 

 which would soon have extinguished all differences of opinion 

 touching the definition of the dollar and would have brought about 

 the desired equilibrium in 1879, but for an unexpected circum- 

 stance. Between the passage of the Resumption Act and its execu- 

 tion, the gold price of silver fell ten per cent in the market. 



This was an unheard-of phenomenon in the modern world. Vari- 

 ous causes were assigned for it by experts and ignoramuses, by 

 economists and politicians. Some said that it was due to the great 

 output of silver from the Comstock mines; others, that it was a 

 consequence of the lessened demand for silver in India. Still others 

 thought that it was caused by the demonetization of silver by Ger- 

 many. Some even contended that our Demonetization Act of 1873 

 was at the bottom of the trouble. Official investigations were made 

 in various countries, including our own, which yielded scanty results. 



We can see now that all of the foregoing reasons were either half- 

 truths or wholly erroneous. Forty per cent of the product of the 

 Comstock mines was gold. The surplus of silver was, therefore, 

 only twenty per cent of the total output. The difference was too 

 small to account for the disturbance. 



The demonetization of silver by Germany was not a vera causa. 

 It was itself the result of something else. A nation does not take 

 the trouble to change its standard of value without good reason. 

 It does not incur the expense of re-coinage and suffer heavy loss by 

 the sale of the discarded metal from mere caprice. The lessened 

 demand for silver in India was likewise an inadequate explanation. 

 If it were due to a gradual substitution of gold for silver, both for 

 money and for ornaments, it was akin to what was going on in Ger- 

 many, i. e., it signified a change in the public demand and the public 

 taste. If due to a bad harvest and consequent poverty, these were 

 events of frequent occurrence in India. Why had they not affected 

 the relative values of the two metals before? As to our own Demone- 

 tization Act, we had no silver at that time to demonetize and throw 

 on the market. Moreover, the passage of the Act was not generally 

 known until after the great decline of silver had taken place. It was 

 the latter event that first drew attention to the former. 



Looking at the phenomenon from the superior standpoint of the 

 present day, we can see that the great decline of silver that began 



