Morning journal and courier., 1885-10-23
Is There OverprOduction2 TFroIn the Nineteenth Century


 l People of little education are accounting
 for low prices on the hypothesis of general overproduction, but it is hardly necessary to
 point out that while overproduction in any
 particular trade is frequent and quickly ad-
 justs itself, general overproduction is impos-
 sible. What is really taking place at pres
 ent all the world over is a rapid readiust-
 ment of prices toward the point from which
 they were violently disturbed by the i'm
 mense gold discoveries of 1849 and the suc-
 ceeding twenty years. By the time that
 this readjustment is complete, if it is all
 lowed to continue so long, every trader who
 bought anything between the years 1855 and 1885, the years of cheap gold, and who adopted standard of living compatible
 with the profit percentage of those times,
 will find himself, from no mistake of judg- ment of his own, probably ruined, but cer- tainly the loser by twenty years of steady toil And of the possibility of this gold shrinkage we have been repeatedly warned both by geologists and political economists. The position that when the production of gold expands prices measured in gold will be high, and that when tie volume of gold con tracts prices will fall-this statement had only to be enunciated to be accepted as self evident. It is not necessary to illustrate the position further than to say that, should the output of gold now diminishing so steadily continue to decline until only five sovereigns remained to be measure of value for man kind, the fortunate possessor of one of these could buy, if he pleased, diamonds the size of the Koh-i nor for shirt buttons, so encr- nous under such conditions would s1e the purchase power of gold! Ard if we com pare a table of the prices of to day with the prices obtaining only five years since what q we fy.T12 Tbatp hau aa11 fo11 than twenty per cent. Instead, then, of an impossible position of general overproduc- tion, we have to consider a particular in stance of lessened production Prices all round are falling lower and still lower be- cause that circulating medium which meas ures values has diminished. If the worlds wheat harvest was failure the consumer would expect to pay famine price for bread. We are all consumers, 60 to speak, of gold, and we have in the measure of the respec- tive commodities which we exchange for gold to give more corn, more cotton, more
 land and more labor for gold, because the gold harvest is and has been for many years failure. The general range, therefore. of prices and wages established during tho years of cheap gold cannot be maintained if we
 are to measure prices by gold and gold only.
 In considering tlIe effect of gold prices it
 is thus far necessary to be careful to OUT conclusions. An abundant wheat harvest
 is followed at once by a season of low prices,
 but single year of increased gold produc,
 tion would not appreciably affect prices. It
 was not till ten years after the discoveries of
 gold in California and then of tho great gold
 fields in Australia that such masses of gold
 were accumulated as deranged prices, and
 induced in the western world the fata. be- lief that the volume of gold alone would supply for the future 2 stable standard of
 value. Just as prices went rapidly up, from
 1860 to 1874, on account of the discoveries 1864, so the decline in the ths output of gold,
 which commenced and has continued since 1865, has only the the last five yeaTs brought
 about collapse of prices, because not until
 about 1880 had the great aooumulations of
 the metal been absorbed into the arts, or
 been dissipated by friction.