semer-steel rails, which commanded £4 55s. in Great Britain in 1886, sold in Belgium in June, 1887, for £3 16s.; sugar, which was thought to have touched the lowest possible price in July, 1886—2·92 cents per pound in New York (for fair refining in bond), sold in July, 1887, in the same market, for 2·371 cents; Western (United States) creamery butter which brought 271 cents in November, 1886, declined to 19 cents in July, 1887; while sulphate of quinine, which sold in 1885 for 2s. 6d. per ounce (60 cents), in 1887, owing to continued cheapening in the production and transportation of cinchona-barks and improvements in manufacture, by which more quinine can be made in from three to five days' time than could, a year or two ago, be produced in twenty by old processes, sells for 1s. 8d. (40 cents), and one of the largest of the world's manufacturers of quinine, under date of September, 1887, writes, "No one can predict the future of this product, as all past experience goes for naught."
But a more interesting question, and one more pertinent to this discussion than any other, is: has gold, in recent years, as an instrumentality for effecting exchanges (by measuring the relation between the various commodities and things exchanged), really become scarce—at least to the extent of occasioning, through its increase of value or purchasing power, a considerable fall in the prices of all commodities? And on this point the following is a summary of the evidence in favor of and in contravention of such a supposition. The position taken by the advocates or believers in the gold-scarcity theory, is, in brief, that the production of gold in recent years has largely fallen off and become wholly inadequate to meet the demands for coinage contingent on the increase in the world's trade, wealth, and population; and further, and as a direct consequent, that trade everywhere has been obstructed and depressed; that prices, profits, and wages have fallen, and the burden of public debts and of taxation in general has been augmented.
That the world's annual product of gold—consequent mainly upon the exhaustion of the mines of California and Australia—has largely diminished in recent years is not disputed. Opinions as to the extent of this reduction of supply are, however, widely at variance. This is illustrated by the following tables presented in the "First Report of the British Commission on the Recent Changes in the Relative Values
- To avoid confusion of ideas on this subject, it is desirable that the reader should keep clearly in view that price is the expression of the value of a commodity in terms of money, and that the expressions, "fall in prices" and "appreciation of gold," for purposes of the present discussion, mean really one and the same thing. "If you have a fall in prices, you have an appreciation of gold; and if you have an appreciation of gold, you have a fall in prices." The problem presented is, therefore, not has gold appreciated in value or purchasing power—for, a fall in prices being admitted, such a result becomes inevitable and coincident—but has its appreciation been due to something that has befallen commodities, or something that has befallen gold itself, such as scarcity of supply or extraordinary demand?