The Conservative *
culation abroad ; although Russia is the
only foreign country in which any con
siderable increase of circulation is
known to have been made. The calcu
lation seems to show conclusively that
the annual estimates of production have
been conservative , and those of indus
trial consumption liberal.
A scrutiny of the gains in Europe
shows that Russia and Austria-Hungary
have taken $415,824,890 of the total vis
ible increase , $515,094,090. Russia has
taken an average of about $50,000,000
per year for ten years for the purpose of
establishing its currency on a gold basis.
All of it was for the time withdrawn
from the world's use. Russia's mone
tary system is now established. The
great hoard , accumulated with remark
able persistency and sagacity , is now as
open to commercial uses as the reserve
of the Bank of England. M. do Witto ,
minister of finance , in his report on the
budget of 1898 , recognizes and comments
upon this fact in the following language :
"Some years ago the metallic stock of
the Bank of Russia , at least to a certain
extent , could not be affected by bad
harvests , an unfavorable balance of
trade , etc. ( Evils , real or imaginary ,
manifested themselves in the deprecia
tion of the credit ruble. ) On the other
hand , the circulation , composed exclus
ively of notes and of bullion , might re
main the same when the crisis was at its
height , and at a time of great commercial
activity. At present , when the bank re
deems in gold its notes without any lim
itation as to the amount , and may issue
oiilv 800.000.000 of rubles in notes un-
covered by metal , the metallic stock of
the bank , the gold in circulation in
Russia , the gold circulating in England ,
in Germanj' , etc. , the gold metallic
stocks of the banks of issue constitute a
system of communicating vessels. As
no chasm now separates Russia from
other prosperous countries , the general
movement of business will act on the
circulation of the empire and on the re
serve of the bank as it does elsewhere ,
neither more nor less. "
Austria-Hungary has also practically
completed the acquisition of the sum
needed for establishing its currency on
a gold basis. The artificial drain to
both Russia and Austria-Hungary is
therefore at an end ; and there are now
no other countries not on the gold basis
which have the resources to buy and
pay for that metal at the rate at which
those two have been taking it.
Wlmt ItoKiiltK May Ho Expected.
The natural influence in the business
world of the increased production has up
to this time been broken by this diversion
to the reorganization of monetary sys
tems. The gold that has been used to retire -
tire or cover paper has not enlarged the
monetary stock. But , from the time a
nation's currency is put on a secure basis ,
every reinforcement of its gold stock is
not only in itself an addition to the
stock of money , but , if held in reserve ,
will support , when occasion requires ,
a considerably larger addition of paper.
That stage has now been reached ; and
from this time forward the influence of
the tide of gold pouring into every mar
ket will be an interesting subject for
study. What will be the effect upon
property values , wages , industrial pro
gress , and social life ? Incidentally ,
what will be the effect upon the politi
cal situation in the United States ?
What will the advocates of the free
coinage of silver do in 1900 when they
find themselves confronted by a gold
output for that year of $350,000,000 , or
$400,000,000 ? The gold output of the
world in 1878 was $96,200,000 , and that
of silver , reckoning it at the ratio of 16
to 1 , $81,800,000 ; together , $178,000,000.
In 1896 , the combined output of gold
and silver , less the amount consumed in
the industrial arts , reckoning silver at
its full coining value under the ratio of
16 to 1 , was $818,587,876. So , when Mr.
Bryan comes into the field in 1900 , ho
will find the additional supply of money
for which he contended in 1896 fur
nished in gold. Will he go on affirm
ing that the supply of money has been
cut in two , and that there has been no
business revival since 1896 , or will he
embrace1 the fortunate opportunity
gratefully to drop the subject , on the
plea that the end he desired is accom
plished , and that the coincident revival
of prosperity has vindicated his theo
ries ?
If he and his party go on with their
demand for the free coinage of silver ,
they must do so without their old argu
ments. The supply of money never was
cut in two or reduced at all. The
world's stock of silver money has an
nually increased since 1878 , and more
rapidly than anybody in prior years
could have anticipated. But the new
output of gold has overwhelmed and
ended all contention on that point. If
they are going into a new campaign for
the free coinage of silver , it must be
made not in opposition to an appreciat
ing standard , but in frank advocacy of
a depreciating one.
The Quantitative Theory.
Much has been written in recent
years by gold standard advocates
against the quantitative theory of
money. In so far as their arguments
have gone to show that the quantity of
money in circulation is but one element
in prices , and is usually so obscured by
other influences that it can scarcely be
traced , they are good ; but I do not see
how it can be questioned that the quant
ity of gold available in the world affects
its exchange relations to other commod
ities. Its industrial use is limited , un
less we assume a decline from its pres
ent exchange value. Its monetary use is
also limited , unless wo again assume a
decline in value , so that more of it is
required to make the same exchanges.
The writer has before him a letter
from a newspaper editor who claims
that more gold is required to do the
business of the world , because the
standard of living is higher than form
erly , and people have more purchases
to make. It is true that people buy and
coupumo more ; but it is because they
produce more ; and that , in the main , is
due to the greater efficiency of labor. A
man obtains the products of others by
selling his own ; and the gain all round
comes by the steadily increasing output
per unit of labor. But , though each
man's product from the same amount of
labor should bo doubled , there is no ad
vantage in using a larger amount of
gold to effect the exchange of these pro
ducts. The most equitable basis for the
exchange of commodities is the amount
of labor in them ; and as labor is elimin
ated , the amount of money required to
move them 'is naturally reduced. Pur
chases of identical goods , with a stable
standard of value , require a constantly
decreasing amount of money ; and that
is only offset by the constantly increas
ing quantity of goods consumed. There
is in this no increased demand for gold ,
unless things are rated by a higher
scale i. e. , unless gold is depreciated.
If this view is correct , a large and
steady increase in the output of gold
beyond the growth of population and
wealth , such as trebling it in ten years ,
must depreciate its value. Wo may
reason from inference that this influence
is operative even when it cannot bo
traced. Prices may be falling when the
supply of gold is increasing , not because
this law is suspended , but becnuse the
counteracting forces are more powerful.
The new output of gold may or may not
cause an actual rise of prices. It will
mean a great and undesirable deprecia
tion of the standard , if the natural ten
dency to lower prices through new laborsaving
bor-saving processes be offset and
stopped.
With gold itself a falling standard ,
will Mr. Bryan and his supporters still
propose a blind leap to a lower basis , or
will anybody favor a lower or more rap
idly falling standard ? What reasons
can they offer for such a policy ?
The plea for debtors against a stan
dard alleged to be rising may be honor
ably and forcefully made ; but legisla
tion to degrade a standard already fav
orable to debtors would be an undis
guised swindle. Prices that rise merely
because money is depreciating bring no
legitimate advantages to anyone : for
when all prices are affected equally
every man's relative position in the ex
changes remains unchanged ; and if all
are not affected alike a manifest injus
tice is done. Nothing in [ political econ
omy has been more clearly established
by experieuco than that it is the more
uninformed and dependent members of
society who fail to get their dues in the
