There has been no diminution of the world's coined money within fifty years, but a steady and rapid increase of it. There have been fluctuations in the production of gold and silver such as belong to the production of all metals and are inevitable.
The Alleged Scramble for Gold.
There has been no "scramble for gold." Those who do not put any obstacle in the way of gold get more of it than they want. The Bank of England has had lately the largest stock of gold that it ever had, and complaints have begun to be heard of a glut. The gold-production in the last five years is the greatest ever known and there is no fear of any lack of it, whatever may be the sense in which any one chooses to speak of a "lack." There is not and has not been any "scarcity of gold." There is no such thing conceivable, except where paper has been issued in excess, so that it is hard to keep enough gold to redeem it with.
Proof that there has been no Scarcity of Gold.
There is one proof that there has been no scarcity of money for twenty-five years past which has not indeed passed unnoticed, but which has not received the attention which it deserves; that is the rate of interest. The rate of interest is normally due to the supply and demand of loanable capital, and has nothing to do with money. The value of money is registered by prices, not by the rate of interest. But whenever there is a special demand for money of account — that is, for the solvent of debts — the rate of interest on capital passes over into a rate for the solvent of debts. Banks lend capital in its most universal form, i.e., the currency or money of account, or bank credits. If credit fails, as in a time of crisis and panic,
