772 REPORT — 1895. 



their landed investments and withdraw from them as they are able, yet they have 

 been, and are, largely interested in the fortunes of landed property, and perhaps 

 especially in the rentals of landlords, on tbe security of which they have made 

 advances. With the stability of the insurance companies is linked tbe preserva- 

 tion of perhaps the bulk of the savings of the professional classes. In short, in an 

 old country a strict separation between the interests of different classes is only true 

 with large deductions. 



III. But economics also raises and solves the doubt whether depression in agri- 

 culture can be attributed to foreign competition alone. It is a significant fact that, 

 according to authoritative accounts, many of the competitors of the English farmer 

 have not escaped the distress from which he has suffered ; and in England the 

 depression, in spite of constant reductions and abatements, has exerted an influence 

 on profits scarcely less grievous than that on rents. These circumstances certainly 

 lend weight to the contention that the fall of prices, which is not peculiar, though 

 perhaps especially discouraging, to agriculture, is parth^ due, to state the matter 

 in the least controversial shape, to a change in the general relation between the 

 supplies of gold and the monetary work that it is required to perform. To the 

 discovery of a cause like this, hidden from superficial view, and to the indication 

 of the manner in which it may affect the position of agriculture and other indus- 

 tries, economics, by virtue of its mission to discern the unseen, is peculiarly com- 

 petent. I do not propose to enter now at any length on the vexed question of the 

 currency, but it is certainly a prominent practical question of tlie day. It is a 

 question on which the economist may claim to speak with authority^, and the 

 practical man may demand, as he maj' be expected to follow, the definitive guidance 

 of expert opinion. On this question, perhaps, in particular, the unassisted vision of 

 the naked eye may form erroneous conclusions, and derive no little profit from the 

 use of the optical instruments provided by the economist. 



I cannot prelaee what I propose to say more appropriately than by a quotation 

 from Jevons. In that pamphlet on ' A Serious Fall in the Value of (iold ' ' Avhich 

 has attained the rare dignity of an economic classic, commenting on the alarmist 

 anticipations of Chevalier and Cobden, he remarks that the alteration in the value 

 of gold consequent on the discoveries in California and Australia would probably 

 be ' most gradual and gentle.' ' Far from taking place with sudden and painful 

 starts, flinging the rich headlong to a lower station, and shaking the groundwork 

 of society, nothing is more insidious, slow, and imperceptible. It is insidious 

 because we are accustomed to use the standard as invariable, and to measure the 

 changes of other things by it ; and a rise in the price of any article, when observed, 

 is naturally attributed to a hundred other causes than the true one. It is slow 

 because the total accumulations of gold in use are but little increased by the 

 additions of any one or of several years. It is imperceptible because the slow rise 

 of prices due to gold depreciation is disturbed by much more sudden and con- 

 siderable, but temporary, fluctuations which are due to commercial causes, and are 

 by no means a novelty.' I propose to apply briefly these remarks of Jevons to 

 some aspects of the controversy which has arisen on the cause of the fall of prices 

 of the last twenty years. 



It is, for example, sometimes asserted that the influence of credit on prices is so 

 considerable as to reduce to unimportance a decrease in the available supplies of 

 gold. It may at once be admitted that the modern extensive development of 

 credit obscures the relation between the metal and prices ; but it does not destroy 

 it, and, according to the view we have been trying to emphasise, the mission of 

 economics is to remove this veil of obscurity. In this instance it may show that 

 the relation is not unreal because it is indirect ; that credit, expanding and con- 

 tracting of itself owing to increasing or diminishing speculative activitj', is yet 

 limited and controlled in its movements by the changing dimensions in the basis 

 of cash on which it rests ; and that, through the bank reserves meeting or restricting 

 the demands for petty cash and permitting an expansion or causing a curtailment 

 of credit, the supplies of the standard metal exert an important influence on prices.^ 



' Cf Inrcatuiatlotist in Currencij and Finance, pp. 78, 79, 

 '•' Cf. Gifiens A'ssai/s in Finance. Second Series, II. 



