PRINCIPLES OF TAXATION. 595 



United States it has been unqualifiedly asserted that, owing to 

 the remarkable decline in the average prices of general commodi- 

 ties (estimated at about eighteen per cent from 1867 to 1877, and 

 thirty-one per cent from 1867-'77 to 1886-'88), and which in turn 

 has been assumed to have been occasioned by the demonetization 

 of silver and consequent appreciation in the value or purchasing 

 power of gold, the burden of the national debt of the United 

 States and also all private debts, especially such as are in the 

 nature of mortgages on land or on other productive fixed capital, 

 has been greatly increased, inasmuch as a greater effort of labor 

 or an increased amount of the products of labor — typically cotton 

 and iron — had become necessary to liquidate such debts and the 

 interest thereon.* The error in such reasoning or assumption is 

 found in the circumstance that no consideration is given or allow- 

 ance made for the different results of labor at the periods of price 

 comparisons, and that the real cost of producing the staple com- 

 modities of the United States, or the effort needed to produce a 

 given amount of general merchandise, or the number of days' 

 work put into each piece of such merchandise, has on an average 

 decreased during these periods more than their market prices 

 have decreased, so that instead of the decline in the prices of 

 commodities under consideration having increased the burden 

 upon labor of national and other debts created before such de- 

 cline, the burden has been lessened to just the extent that the 

 average cost of producing commodities has declined to a greater 

 degree than their average market prices. Thus all authorities 

 are substantially agreed that there are few departments of indus- 

 trial effort in which the saving of time and work in the twenty to 

 thirty years next anterior to 1890 was at least forty per cent, and 

 in not a few instances has been much greater (in the manufac- 

 ture of boots and shoes, for example, eighty per cent). In North 

 Carolina the relative increase in cotton product and population 

 from 1870 to 1880 was as 4"5 to 1. With slight changes in the 

 relation of labor to product, the cotton crop of the United States 

 increased seventy-six per cent between the years 18G6 and 1872, and 

 forty-nine per cent between 1872 and 1886. Recent investigations 

 have shown, in the case of certain leading articles in hard- 

 ware, that a given quantity which represented a labor cost in 



* In 1885 a memorial signed by ninety-five members of the United States House of 

 Representatives of the Forty-eighth Congress and presented to the President of the United 

 States contained the following statement : " Eighteen million bales of cotton were the 

 equivalent in value of the entire interest-bearing national debt in 1865 ($2,221,000,000) ; 

 but it will take thirty-five million bales at the price of cotton now (1885) to pay the re- 

 mainder of such debt ($1,196,000,000). Twenty-five million tons of bar iron would have 

 paid the whole debt ($2,674,000,000) in 1865 ; it will now take thirty-five million tons to 

 pay what remains ($1,375,000,000) after all that has been paid." 



