Part 10

At the Christian era the metallic money of the Roman Empire amounted to $1,800,000,000. By the end of the fifteenth century it had shrunk to less than $200,000,000. During this period a most extraordinary and baleful change took place in the condition of the world. Population dwindled and commerce, arts, wealth, and freedom all disappeared. The people were reduced by poverty and misery to the most degraded conditions of serfdom and slavery. The disintegration of society was almost complete. The conditions of life were so hard that individual selfishness was the only thing consistent with the instinct of self-preservation. All public spirit, all generous emotions, all the noble aspirations of man shriveled and disappeared as the volume of money shrunk and as prices fell.

History records no such disastrous transition as that from the Roman Empire to the Dark Ages. Various explanations have been given of this entire breaking down of the frame-work of society, but it was certainly coincident with a shrinkage in the volume of money, which was also without historical parallel. The crumbling of institutions kept even step and pace with the shrinkage in the stock of money and the falling of prices. All other attendant circumstances than these last have occurred in other historical periods unaccompanied and unfollowed by any such mighty disasters. It is a suggestive coincidence that the first glimmer of light only came with the invention of bills of exchange and paper substitutes, through which the scanty stock of the precious metals was increased in efficiency. But not less than the energizing influence of Potosi and all the argosies of treasure from the New World were needed to arouse the Old World from its comatose sleep, to quicken the torpid limbs of industry, and to plume the leaden wings of commerce. It needed the heroic treatment of rising prices to enable society to reunite its shattered links, to shake off the shackles of feudalism, to relight and uplift the almost extinguished torch of civilization. That the disasters of the Dark Ages were caused by decreasing money and falling prices, and that the recovery therefrom and the comparative prosperity which followed the discovery of America were due to an increasing supply of the precious metals and rising prices, will not seem surprising or unreasonable when the noble functions of money are considered. Money is the great instrument of association, the very fiber of social organism, the vitalizing force of industry, the protoplasm of civilization, and as essential to its existence as oxygen is to animal life. Without money civilization could not have had a beginning; with a diminishing supply it must languish, and, unless relieved, finally perish.

Symptoms of disasters similar to those which befell society during the Dark Ages were observable on every hand during the first half of this century. In 1809 the revolutionary troubles between Spain and her American colonies broke out. These troubles resulted in a great diminution in the production of the precious metals, which was quickly indicated by a fall in general prices. As already stated in this report, it is estimated that the purchasing power of the precious metals increased between 1809 and 1848 fully 145 per cent., or, in other words, that the general range of prices was 60 per cent. lower in 1848 than it was in 1809. During this period there was no general demonetization of either metal and no important fluctuation in the relative value of the metals, and the supply was sufficient to keep their stock good against losses by accident and abrasion. But it was insufficient to keep the stock up to the proper correspondence with the increasing demand of advancing populations.

The world has rarely passed through a more gloomy period than this one. Again do we find falling prices and misery and destitution inseparable companions. The poverty and distress of the industrial masses were intense and universal, and, since the discovery of the mines of America, without a parallel. In England the suffering of the people found expression in demands upon Parliament for relief, in bread riots, and in immense Chartist demonstrations. The military arm of the nation had to be strengthened to prevent the all-pervading discontent from ripening into open revolt. On the Continent the fires of revolution smoldered everywhere, and blazed out at many points, threatening the overthrow of states and the subversion of social institutions.

Whenever and wherever the mutterings of discontent were hushed by the fear of increased standing armies, the foundations of society were honey-combed by powerful secret political associations. The cause at work to produce this state of things was so subtle, and its advance so silent, that the masses were entirely ignorant of its nature. They had come to regard money as an institution fixed and immovable in value, and when the price of property and the wages of labor fell, they charged the fault, not to the money, but to the property and the employer. They were taught that the mischief was the result of overproduction. Never having observed that overproduction was complained of only when the money stock was decreasing, their prejudices were aroused against labor-saving machinery. They were angered at capital, because it either declined altogether to embark in industrial enterprises or would only embark in them upon the condition of employing labor at the most scanty remuneration. They forgot that falling prices compelled capital to avoid such enterprises on any other condition, and for the most part to avoid them entirely. They did not comprehend that money in shrinking volume was the prolific parent of enforced idleness and poverty, and that falling prices divorced money capital, from labor, but they none the less felt the paralyzing pressure of the shrinking metallic shroud that was closing around industry.

The increased yield of the Russian gold fields in 1846 gave some relief and served as a parachute to the fall in prices, which might otherwise have resulted in a great catastrophe. But the enormous metallic supplies of California and Australia were all needed to give substantial and adequate relief. Great as these supplies were, their influence in raising prices was moderate and soon entirely arrested by the increasing populations and commerce which followed them. In the twenty-five years between 1850 and 1876 the money stock of the world was more than doubled, and yet at no time during this period was the general level of prices raised more than 18 per cent. above the general level of 1848.

A comparison of this effect of an increasing volume of money after 1848 with the effect of a decreasing volume between 1809 and 1848 strikingly illustrates how largely different in degree is the influence upon prices of an increasing or decreasing volume of money. The decrease of the yield of the mines since about 1865, while population and commerce have been advancing, has already produced unmistakable symptoms of the same general distrust, non-employment of labor, and political and social disquiet, which have characterized all former periods of shrinking money.

The time that has elapsed since that report was written has but served to verify and emphasize its statements.

THE FALL OF PRICES SINCE 1873.

It is a fact not disputed anywhere but universally admitted, that for many years past the prices of all articles entering into general consumption among the people have been steadily falling. It is obvious that the industrial conditions prevailing since 1873 are but a repetition of those above described as following 1809--with falling prices, constant unrest, and universal discontent.

The following table, compiled from figures published by the Bureau of Statistics of the Treasury Department, shows the average range of export prices of the articles named for each year since 1873:

Annual average export prices of commodities of domestic production for each year from 1873 to 1889, inclusive.

------+----------+----------+----------+--------+--------+-------- Year | Corn | Wheat | Wheat | Cotton | Leather| Illumi- ending| per | per | flour |(upland)| per | nating June,| bushel. | bushel. | per | per | pound. | oils, 30-- | | | barrel. | pound. | |refined, | | | | | | per | | | | | | gallon. ------+----------+----------+----------+--------+--------+-------- |Dollars.|Dollars.|Dollars.|Cents.|Cents.|Cents. 1873 | .618 | 1.312 | 7.565 | 18.8 | 25.3 | 23.5 1874 | .719 | 1.428 | 7.144 | 15.4 | 25.2 | 17.3 1875 | .848 | 1.124 | 5.968 | 15.0 | 26.0 | 14.1 1876 | .672 | 1.242 | 6.216 | 12.9 | 26.2 | 14.0 1877 | .587 | 1.169 | 6.488 | 11.8 | 23.9 | 21.1 1878 | .562 | 1.338 | 6.358 | 11.1 | 21.8 | 14.4 1879 | .471 | 1.068 | 5.252 | 9.9 | 20.4 | 10.8 1880 | .543 | 1.245 | 5.878 | 11.5 | 23.3 | 8.6 1881 | .552 | 1.114 | 5.668 | 11.4 | 22.6 | 10.3 1882 | .668 | 1.185 | 6.149 | 11.4 | 20.9 | 9.1 1883 | .684 | 1.127 | 5.955 | 10.8 | 21.1 | 8.8 1884 | .611 | 1.066 | 5.588 | 10.5 | 20.6 | 9.2 1885 | .540 | .862 | 4.897 | 10.6 | 19.8 | 8.7 1886 | .498 | .870 | 4.699 | 9.9 | 19.9 | 8.7 1887 | .479 | .890 | 4.510 | 9.5 | 18.7 | 7.8 1888 | .550 | .853 | 4.579 | 9.8 | 17.3 | 7.9 1889 | .474 | .897 | 4.832 | 9.9 | 16.6 | 7.8 ============================================================ Year | Bacon | Lard | Pork, | Beef, | Butter ending| and hams | per | salted, | salted, | per June,| per | pound. | per | per | pound. 30-- | pound. | | pound. | pound. | ------+----------+----------+----------+----------+--------- | Cents. | Cents. | Cents. | Cents. | Cents. 1873 | 8.8 | 9.2 | 7.8 | 7.7 | 21.1 1874 | 9.6 | 9.4 | 8.2 | 8.2 | 25.0 1875 | 11.4 | 13.8 | 10.1 | 8.7 | 23.7 1876 | 12.1 | 13.3 | 10.6 | 8.7 | 23.9 1877 | 10.8 | 10.9 | 9.0 | 7.5 | 20.6 1878 | 8.7 | 8.8 | 6.8 | 7.7 | 18.0 1879 | 6.9 | 7.0 | 5.7 | 6.3 | 14.2 1880 | 6.7 | 7.4 | 6.1 | 6.4 | 17.1 1881 | 8.2 | 9.3 | 7.7 | 6.5 | 19.8 1882 | 9.9 | 11.6 | 9.0 | 8.5 | 19.3 1883 | 11.2 | 11.9 | 9.9 | 8.9 | 18.6 1884 | 10.2 | 9.5 | 7.9 | 7.6 | 18.2 1885 | 9.2 | 7.9 | 7.2 | 7.5 | 16.8 1886 | 7.5 | 6.9 | 5.9 | 6.0 | 15.6 1887 | 7.9 | 7.1 | 6.6 | 5.4 | 15.8 1888 | 8.6 | 7.7 | 7.4 | 5.3 | 18.3 1889 | 8.6 | 8.6 | 7.4 | 5.5 | 16.5 ============================================================ Year | Cheese | Eggs | Starch | Sugar, | Tobacco, ending| per | per | per | refined, | leaf, June,| pound. | dozen. | pound. | per | per 30-- | | | | pound. | pound. ------+----------+----------+----------+----------+--------- | Cents. | Cents. | Cents. | Cents. | Cents. 1873 | 13.1 | 26.6 | 5.3 | 11.6 | 10.7 1874 | 13.1 | 22.1 | 5.7 | 10.5 | 9.6 1875 | 13.5 | 25.6 | 6.0 | 10.8 | 11.3 1876 | 12.6 | 28.0 | 5.4 | 10.7 | 10.4 1877 | 11.8 | 25.9 | 5.2 | 11.6 | 10.2 1878 | 11.4 | 15.8 | 4.7 | 10.2 | 8.7 1879 | 8.9 | 15.5 | 4.2 | 8.5 | 7.8 1880 | 9.5 | 16.5 | 4.3 | 9.0 | 7.7 1881 | 11.1 | 17.2 | 4.7 | 9.2 | 8.3 1882 | 11.0 | 19.2 | 4.8 | 9.7 | 8.5 1883 | 11.2 | 20.9 | 4.6 | 9.2 | 8.6 1884 | 10.3 | 21.2 | 4.5 | 7.1 | 9.1 1885 | 9.3 | 21.5 | 4.0 | 6.4 | 9.9 1886 | 8.2 | 18.3 | 4.1 | 6.7 | 7.8 1887 | 9.3 | 16.3 | 3.8 | 6.0 | 8.7 1888 | 9.9 | 15.9 | 3.5 | 6.3 | 8.3 1889 | 9.3 | 13.9 | 3.8 | 7.6 | 8.8 ------+----------+----------+----------+----------+---------

To show from another source the same general fact of the decline of prices, I quote from an article published in the New York Tribune early in 1886.

The New York Tribune is pretty good authority. These figures are undoubtedly from the calculations and from the pen of Mr. Grosvenor, of the editorial staff of that able journal, formerly editor and proprietor of the "Public," whose estimates of prices have, in my judgment, been more correctly made than those of any other statistician in the world. The article is as follows:

Quotations of about two hundred articles are compared since 1860, and the amount of money is ascertained which would purchase, at different dates, of these various articles, quantities corresponding as closely as possible to their ascertained consumption in 1880, the date of the last census. Among the articles compared are wheat, corn, oats, rye, barley, beans and pease, mess pork, bacon, ham, live hogs, lard, fresh beef, tallow, live sheep, poultry, butter, cheese, eggs, milk, hay, potatoes, turnips, cabbage, onions, apples, raisins, sugar, brown and crushed; molasses, coffee, tea, tobacco, whisky, malt and hops, mackerel, codfish, salt, rice, nutmegs, cloves, pepper, cotton, print-cloths and standard sheeting, wool of different qualities, blankets, carpets, flannels, leather, boots, shoes, hides, silk, India rubber, iron (pig and bar), nails, steel rails, coal, oil (crude and refined), tin and tin plates, copper, lead, hemp, lumber, spruce and pine, oak, ash, walnut, and white wood, lath, brick, lime, turpentine, linseed oil, soap, glass, paper, white lead, and twelve other kinds of paints, fertilizers, and over fifty kinds of drugs and chemicals.

Cost of products at different dates.

---------------------+-----------+----------+--------- Dates. | Cost in | Price of | Cost in | currency. | gold. | gold. ---------------------+-----------+----------+--------- 1860, May 1 | $100.00 | $100.00 | $100.00 1865, November 1 | 174.77 | 145.87 | 119.81 1866, May 1 | 157.60 | 125.12 | 126.04 1866, November 1 | 170.31 | 146.25 | 117.82 1871, November 1 | 122.03 | 112.00 | 108.95 1872, May 1 | 137.13 | 112.50 | 121.81 1873, November 1 | 115.14 | 108.50 | 106.01 1874, May 1 | 122.77 | 112.87 | 108.77 1875, January 1 | 113.01 | 112.37 | 100.37 1876, October 1 | 97.30 | 110.00 | 88.45 1877, May 1 | 99.29 | 106.75 | 93.01 1878, May 1 | 82.09 | 100.37 | 81.81 1878, October 18 | 77.94 | 100.37 | 77.65 1879, November 1 | 93.48 | -- | -- 1880, January 1 | 103.42 | -- | -- 1881, January 1 | 95.98 | -- | -- 1882, May 16 | 106.59 | -- | -- 1883, March 13 | 97.82 | -- | -- 1883, November 1 | 88.71 | -- | -- 1884, January 1 | 88.37 | -- | -- 1884, November 21 | 78.47 | -- | -- 1885, January 1 | 79.66 | -- | -- 1885, May 9 | 80.22 | -- | -- 1885, August 22 | 74.56 | -- | -- 1885, November 1 | 75.35 | -- | -- 1885, Close | 78.53 | -- | -- ---------------------+-----------+----------+---------

It is not only clear from this comparison that the prices of 1885 have been the lowest in our history for twenty-five years, but that there has been a general tendency toward lower prices. From 1866 to 1871, and again from 1872 until 1885, prices fell quite steadily. Indeed, had not the short crop of 1881 caused a temporary advance in the spring of 1882, the range of January, 1880, would have been the highest of the later period, and it might have been said that the present era of declining prices had continued with little intermission for six years. None will fail to observe how swift and sharp the advances have been--about 12 per cent. from November, 1871, to May, 1872, and 25-1/2 per cent. from October, 1878, to January, 1880. But these spasmodic advances, by which the general tendency downward is interrupted, only serve to make it more clear that prices have been tending irresistibly toward a lower level than that of 1860, not only during the period of paper depreciation, but since gold has been the measure of value.

In order to show that the United States are not alone in their complaint of falling prices, but that the complaint is universal, and in order that we may have before us a broad view of the field of general prices, I submit a table showing the relation to each other of the range of prices from 1809 to 1849, by decades, based on the prices of fifty leading articles of commerce, prepared by the distinguished Professor Jevons and published in the London Economist for May 8, 1869.

Taking the range of prices of 1849 as a datum line (the range for that year being the lowest of the century) Mr. Jevons works backward to 1809, when the revolt of the South American colonies against the authority of Spain shut off at a blow the supplies of the precious metals, and set on foot a money famine from which the world knew no relief till the discovery of the mines of California and Australia.

Professor Jevons's figures are as follows, the prices of 1849 being represented by 100:

Relation of prices, 1809 to 1849, by decades, those for 1849 being rated at 100.

1809 245 1819 175 1829 124 1839 144 1849 100

From these figures it will be observed that the fall from 1809 to 1849, a period of forty years, was as 245 to 100, or 59 per cent.

By the next table which I submit, that of Dr. Soetbeer, it will be seen that the general range of prices rose gradually from 1849 to 1873, in the last of which years the figures bore to those of 1849 the relation of 138 to 100. It has never been denied that this rise was due to the increase in the world's money supply by the yield of the precious metals from the mines of California and Australia, the effects of which, however, as will be seen by the table, were not felt on prices till 1853--five years after John Marshall's discovery of the yellow metal in the tail-race at Sutter's mills. Yet, because it interferes with the pecuniary interests of a large and influential class, it is vehemently denied that the fall of prices since 1873 is due to a decrease in the volume of the money caused by the demonetization of silver in that year throughout the western world.

From and after that year, as will be perceived by an examination of the figures; in other words, from the year when one-half the world's money supply was deprived of the money function, we find an almost uninterrupted decline of prices. The figures of 1873 and 1885 will be seen to bear to one another the relation of 138 to 108, or a fall of 22 per cent. in twelve years. Should the fall continue at that rate without interruption--and there is no reason apparent why it should not, we shall in forty years have witnessed a decline of 72 per cent. in the general range of prices--a decline considerably greater than that from 1809 to 1849. And these are not the figures of bimetallists or silver "theorists," but of pronounced advocates of the single standard of gold. Where, I would inquire, is the fall of prices to stop?

Dr. Soetbeer's table represents the general average price of one-hundred leading articles of commerce each year for a period of nearly forty years. He takes as a basis the general range of gold prices prevailing between 1847 and 1850, and calling that range 100, shows the relative standing toward it of the general range of prices for subsequent years, up to 1885.