AGEICULTURAL DEPRESSION, 1873 TO 1887 117 



Talue wliicli was attached to gold. Similarly, too, the most 

 prosperous era of the present century, 1854-73, synchronised 

 with a large increase of the precious metals consequent 

 upon the discovery of gold and silver mines. The presence 

 of this factor alike in adversity and prosperity suggests 

 that the crisis of 1873-87 is largely affected by questions of 

 the currency. The influx of gold raises prices because the 

 purchasing power of money is relatively diminished by its 

 abundance, and sellers benefit by the enhanced value of 

 their produce. But it also stimulates commercial activity, 

 and thus its tendency to raise prices is balanced by increased 

 pi'oduction and consequent cheapness. So, on the other 

 hand, the withdrawal of large quantities of precious metals 

 necessarily lowers prices, because the dearness of money 

 increases its purchasing power, and consequently buyers 

 gain by the seller's, loss. The passage from this broad and 

 simple principle to its detailed application is bewildering 

 in its intricacy. If, as appears certain, currency questions 

 enter largely into the present depression, it is greatly to 

 be regretted that those who speak with authority on this 

 most recondite subject have not translated their technical 

 language into a tongue which is more intelligible to ordinary 

 understandings. 



But it is not contended that the currency alone has 

 produced the present crisis. A glance at the history of 

 the past twenty years reveals, not only what has become of 

 the gold, but numerous concurrent causes of financial 

 depression. 



The failure of Messrs. Overend & Gurney in 1866 

 was the first symptom of the rottenness of our commercial 

 prosperity. Reckless trading had spread widely. Insol- 

 vent firms glutted the markets with goods in order to 

 manufacture credit, and deprived legitimate traders of 



