14 THE POPULAR SCIEXCE MONTHLY. 



The answer of ]Mr. R. Inglis Palgrave, an English economist of 

 repute, who has recently published extensive memoranda on prices, to 

 a question put to him by the British Gold and Silver Commission (1886), 

 as to "how far the drop in prices is attributable to the alteration in 

 the use of the gold standard," is also worthy of note, and was as fol- 

 lows : " In my opinion it is only a small part of the drop in prices 

 which is attributable to the appreciation of the standard." The 

 present and rapidly increasing indifference of the business public, 

 alike in Europe and the United States, whose interest in this subject 

 is mainly practical, is also significant, as indicating that the importance 

 formerly conceded to the gold-scarcity theory has not been con- 

 firmed by experience. 



It will be further relevant to this discussion to call attention here 

 to the manner in which certain admitted facts touching the recent fall 

 in prices have been misunderstood, and, more especially, have been 

 perverted, with a view of sustaining this same theory and of creating 

 exaggerated ideas respecting impending disasters, and the power of 

 legislation to provide remedies. Thus, in illustration of the assump- 

 tion that the quantity of gold in the world, available for use as money, 

 mainly regulates prices, and that, prices having fallen by reason of a 

 scarcity of gold, the ratio of debts to assets, or the burdens upon 

 debtors, has been increased, Mr. Moreton Frewen, of England, has 

 frequently in recent years made the following statement : Premising 

 that the national debt of the United States was £600,000,000 sterling 

 ($3,000,000,000) in 1866, and £220,000,000 ($1,100,000,000) in 1887, 

 he says : 



" Six hundred millions sterling owing in 1866 represent 18,000,000 bales of 

 cotton, or 25,000,000 tons of bar-iron. But at the prices of to-day, only £220,- 

 000,000 sterling is represented by some 26,000,000 bales of cotton, or 29,000,000 

 tons of bar-iron." 



Therefore, the burden of the national debt of the United States 

 has been increased, as a greater effort of labor, or an increased amount 

 of the products of labor, is noAv necessary to liquidate it than when 

 the purchasing power of gold had not been appreciated through its 

 scarcity ; and, as with public debts, so also with private debts, espe- 

 cially those in the nature of mortgages on land, or other productive 

 fixed capital. 



Now, in reply to this it is to be said, first, that the basis assumed 

 for this comparison of prices, in the case of cotton, is entirely unfair 

 and unnatural — the gold price of this commodity in the year 1866, 

 owing to a scarcity occasioned by war, having been more than 250 

 per cent higher than the average prices in 1860 before the war ; while 

 the price of iron for that same year in the American markets was also 

 inflated on even a gold basis ; and, secondly, that no consideration is 

 given, or allowance made in the above comparisons for the results of 

 labor at the two periods of 1866 and 1887 ; not more, and probably 



