VI. Bimetallism.
Bimetallism was eagerly taken up by writers as a means of increasing what was once regarded as a deficient supply of the world's metallic circulation. The decline of prices,—which in this country began in 1866 and not in 1873—was attributed to a scarcity of 'money' throughout the world. Therefore, if silver could be added to, or retained with, the circulation of gold, the larger quantity of metallic money would, it was believed, support, or even raise, the general level of prices. The theory of prices, assumed as a matter of course in this exposition of bimetallism, was the quantity-theory.
Throughout the recent writing and speaking on monetary topics, in both Europe and America—if not also in Asia—there has been a very general subsidence of interest in bimetallism. The demand for silver has been believed to be unnecessary because of the enormous production of gold in recent years. That is, by the old quantity theory on which bimetallism was based, some authorities—and more politicians—have saved their consistency by accepting the gold standard.
The logic and character of bimetallism can not escape so easily. If the quantity-theory falls, the whole artificial structure of bimetallic argument falls; and the gold standard can not possibly be supported by intelligent minds on any such basis of theory. The facts are too ugly. In the accompanying diagram it must appear to the most casual student that if the fall of prices on or about 1873 was due to a scarcity of gold, then not only because the supply of silver has been greatly increased, but especially also because the supply of gold has been about quadrupled since 1850, we ought to have witnessed a phenomenal rise of prices in the last decade or two. The movement of prices on the diagram, however, has been generally downward, or at least not seriously rising, during all the ^years when the production of gold has been so astonishingly large. The facts oblige us to question a theory which presents such evident disparities as this; and one is obliged, in all fairmindedness, to accept the truth that many other and potent influences, besides the quantity of the media of exchange, have a powerful effect upon the price-level. When this admission is made, then the investigator is in a position to understand the remarkable influences of the great industrial revolution of the last thirty years upon the expenses of production of all articles, and hence upon their market prices. Thus, the sweep of economic forces, in the natural tide of events, is bringing us to a saner and very different point of view than that of the scientific bimetallist of past years.
VII. Stability of Exchange.
Consistency is a jewel; but it may be questioned whether it is always worth the price. The escape from the pitfalls of bimetallism
