The Yale expositor., 1895-11-22


commissioner of labor in his annual re-
port for that year QSS6) adyerted to
the same state of facts, and laid stress
upon the circumstance that while Eng
land had been the greatest sufferer, this
country stood second on the list in the
order and extent of the depression.
The most conspicuous feature of this
strange condition was the circumstance
denied by nobody that nearly all Of
the great staples of commerce had lost
about one-third of their money value.
This decline has continued until now
the wholesale prices of commodities in
general are from 40 to so per cent be-
low those of 1873. 1t surely requires
no argument to show that business de-
preston must inevitably follow a
steady and general fall of prices. The
orists may talk airily about the beauty
of cheapness. but no practical business
man ever yet gathered comfort from a
fall in the price of the goods in his
hands. Nor has any producer ever
been benefited by a cheapening OF his
product. A fall of prices means re-
duced profits. Reduced profits mean a
curtailing of expenses. This IN turn
means a discharge of employees, cut
ting of wages, and retrenchment in
every possible way. Discharged en-
ployes and those who have suffered n
reduction of wages, must themselves
economize, and in some cases they be-
came an actual burden upon others.
So the effects spread from one individ-
ual to another and from one industry
to another until the whole community
feels the blight. Sooner or later con-
stantly falling prices are certain to pro-
duce financial crash. All debts must
be ultimately paid out of products, and
II the prices fall too much the debts
simply cannot be paid. When the crash
does come it is bound to be a severe
one, because IL strikes people at time
when their ability to pay has already
been crippled by the low prices OF what
they have to sell. When the storm
finally clears away it is found that null
titudes Of struggling debtors have been
ruined, that tens of thousands OF small
estates have been wrecked, while a few
gigantic fortunes have been built up
at the money centers, which always
protect themselves at the expense OF
everybody else.
1t is worthy OF note in this connection
that the period from 1850 to 1870 was
one of almost universal progress and
haf TriRlC
upon an average, rose about 20 per cent.
But since then the whole aspect Of af-
fairs has been changed. Instead OF
continuing to rise, or even remaining
stationary, the trend has been ever
downward, the fall amounting to more
than 40 per cent.
Now, 1t is clear that about the year
1873 something took place that affected
values and business in an .extraor-
dinary way.
1t is equally clear that II must have
been something OF very general char
acter to affect so many different ma
tions and peoples so far removed from
each other. What was 1t? Was the
industrial system of the world revolu-
tionized by the invention OF machin-
cry? Certainly not. Everybody who
can read ought to know that inventions
and Improvements in machinery had
been going on with great activity for
more than half a century before that
date, and that the improvements have
been no greater since.
Were methods of transportation so
changed as to produce any marked ef-
feet? The answer must again be, No!
Even then we had nearly $4,000 miles
of railroad in the country, and the
ocean was bridged by lines of steamers.
The most rigid scrutiny will bring to
light just one thing that occurred in
1873 which was calculated to materially
affect the general business and finances
of the world.
The standard of value was changed
by the demonetization of silver.
No amount of 1ne-spun theories, spe-
cial pleading, or juggling with words
will dispose of the cold historic fact
that in 1873 the United States and Ger
many both demonetized silver and
adopted the gold standard. That such
action on the part of these two nations
largely increased the demand for gold
and correspondingly enhanced its value
must be obvious to any person who does
not blindly close his eyes to the great
economic law of supply and demand"
Gold being made the standard, and its
value rising under the increased de-
mand, other values which were meas
ured in gold fell in exact proportion.
Other nations followed the example OF
the United States and Germany, gold
rising higher and higher with the ever
increasing demand, and prices falling
lower and lower as gold went up.
In 1873 the Bland-Allison act was
passed, under which 100000 silver
dollars were coined each month. For
a time the fall in prices was checked.
but other elements of currency con-
traction were at work and the decline
soon began again. In 1890 the "Sher-
man lawi was passed, by which some
thing over si,O00.O00 was added to the
currency each month, and again came
q slight advance of prices. But finan-
cial troubles were abroad. The great