January 31, 1913] 



SCIENCE 



169 



were expressed in terms of the optional 

 multiple standard, which involves simply 

 a change of or a new definition of the dol- 

 lar. This would be the final result, long 

 anticipated by the economists. I quote 

 from Patron's monograph on the Bank of 

 France, prepared for the Monetary Com- 

 mission : 



The interesting evolution of exchange which we 

 are witnessing and which is familiar to everybody 

 seems to be leading us, after the well-defined 

 periods of barter and money, to a system of mere 

 clearing of balances. All exchange operations 

 would then be settled by simple book transfers. 

 Coin reduced to money of account, would cease to 

 play any real part. Economists are ever thinking 

 of a return to barter, which would complete the 

 cycle, bringing us back to the original state after 

 thousands of years and combinations of all kinds. 

 Such would be the course of this evolution. 



But, as changes in monetary standards 

 come very slowly, because men are unwill- 

 ing to change the old landmarks without 

 most careful investigations, we do not 

 anticipate that the vision originally seen 

 by Jevons will come to pass at once, 

 even though the economists are again dis- 

 cussing this question after the lapse of 

 many years. 



If prices continue to mount actively, the 

 agitation for such a change will occur with 

 increasing force. But, we must remember, 

 so far as the gold factor is concerned, that 

 there are eastern nations with vast popu- 

 lations, capable of absorbing large quanti- 

 ties of gold under the stimulus of the west- 

 ern learning which is working as a yeast 

 of progress among them. Further, we can 

 steady prices and produce a declining 

 tendency by requiring a larger proportion 

 of gold in the reserves of the banks. This 

 would at the same time strengthen the 

 whole credit system. If we should go 

 farther and require minimum flexible^* re- 

 serves, higher in dull seasons and lower in 



"Norton's "Statistical Studies in New York 

 Money Market," 1901. 



active seasons, and incidentally higher on 

 the average, as just suggested, a consider- 

 able fluctuating tendency would be elimi- 

 nated. 



After all, the Fabian policy lies before 

 us, and looking ahead, it is probable that 

 the agitation over this subject will be 

 largely influenced by the course of com- 

 modity prices during the coming two years. 

 This diagram discloses the quarterly fluc- 

 tuations of my new international index 

 number for the past five years. It is prob- 

 able that we have passed the high point for 

 two years or more, and that lower prices 

 are now in order. 



TABLE OF MONTHLY INDEX NUMBERS — NORTON 

 INTERNATIONAL SERIES 



Jan. to March, 

 April to June. 

 July to Sept... 

 Oct. to Dec 



129 

 135 

 132 



If this position shall turn out to be cor- 

 rect, we shall be in a better position two 

 years from the present time to estimate 

 whether the growth of population, the ab- 

 sorption of gold by eastern nations and the 

 higher level of prices shall have overtaken 

 the rate of increase of gold production 

 sufficiently to produce an era of falling 

 prices. When this occurs, as it will occur, 

 sooner or later, we shall have the reverse 

 agitation of the agricultural classes against 

 falling prices such as our country wit- 

 nessed in the Populistic agitations of the 

 early nineties. 



The money question, which has been a 

 political issue, constantly changing in form 

 and exceedingly disturbing to business, will 

 continue to be with us so long as the insta- 

 bility of the price levels continues. 



One result of the prolonged advance in 

 the cost of living has been to emphasize the 

 necessity of "economy," not only personal. 



