THE ECONOMIC DISTURBANCES SINCE 1873. 13 



and that such deficiency — even if a much higher estimate than that of 

 Mr. Pixley's is adopted — has for each and every year for a considerable 

 period been far more than supplemented and made good by the reduc- 

 tion in the amount of capital, in the form of money, which the in- 

 creased facilities for doing business have permitted and effected, is a 

 proposition also which it would seem could not well be doubted.* 



The evidence, therefore, seems to fully warrant the following con- 

 clusions : that the tendency of the age is to use continually less and 

 less of coin in the transaction of business;! and that "so far from 

 there being any scarcity of gold, there never was a period in the 

 world's commercial history when the existing quantity was so large as 

 at present, in proportion to the necessity for its use or the purposes 

 it has to serve." 



It is also exceedingly interesting and significant to note here how 

 completely the most distinguished advocate of the desirability of en- 

 larging the function and use of silver in coinage has repudiated the 

 idea that the recent phenomenal decline of prices has been occasioned 

 by a scarcity of gold. Thus, under date of April 24, 1886, M. Cer- 

 nuschi thus writes in the London "Economist": "The fall of prices 

 which is complained of is not due to what has been called a scarcity 

 of gold — a scarcity which is purely imaginary." M. Sauerbeck, in 

 referring to this matter (" Journal of the Royal Statistical Society," 

 September, 1886), also says : "A scarcity" (of gold) "as understood by 

 bankers does not exist. Prices have fallen so much that scarcity is not 

 observable. As Mr. Giffen pointed out, there may be enough for pres- 

 ent requirements, and the scarcity will only be felt when prices rise." 

 But if prices have fallen through the ingenuity of man, will prices 

 return to their former level ? Certainly not, unless the coming man is 

 less ingenious than his present representatives, and Nature is to be 

 less generous in the future of her resources. 



* " The trade of the world is carried on by credit and capital, and any causes affecting 

 these essentials have infinitely greater effect on prices than a slight proportionate in- 

 crease or decrease in the production of gold. A merchant may not hold ten sovereigns, but 

 he may have capital and credit for ten millions. An ingenious statistician has calculated 

 the capital of the world in ISSO at £46,000,000,000 " (sterling— 8230,000,000,000), "and 

 if credit and capital have had the main voice in the question of prices, how minute must 

 have been the effect on the markets of an annual reduction in the production of floating 

 capital of ten (sterling) millions per annum, from a short period of most exceptional pro- 

 duction; especially when the falling off has been more than balanced by the increased 

 economy in the use of gold ! " — Nathaniel Core, " What is the Ti-ue Measure of the 

 Alleged Appreciation of Gold? " London, 1SS3. 



\ Repeated investigations made in England in recent years prove that only about 0"6 

 per cent of coin is used in settling the transactions of banks and bankers of that coun- 

 try ; and the results of an inquiry instituted by the United States Controller of the Cur- 

 rency in 18S1 showed that of all the receipts by 1,966 national banks in one day in that 

 year (June 30th), 95 per cent were made up of forms of credit, exclusive of even circulat- 

 ing notes; while for New York city the percentage was 98'7. At all the banks the pro- 

 portion of gold coin to the whole receipts was only "65 of 1 per cent. 



