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and that such deficiency—even if a much higher estimate than that of Mr. Pixley's is adopted—has for each and every year for a considerable period been far more than supplemented and made good by the reduction in the amount of capital, in the form of money, which the increased facilities for doing business have permitted and effected, is a proposition also which it would seem could not well be doubted.[1]

The evidence, therefore, seems to fully warrant the following conclusions: that the tendency of the age is to use continually less and less of coin in the transaction of business;[2] and that "so far from there being any scarcity of gold, there never was a period in the world's commercial history when the existing quantity was so large as at present, in proportion to the necessity for its use or the purposes it has to serve."

It is also exceedingly interesting and significant to note here how completely the most distinguished advocate of the desirability of enlarging the function and use of silver in coinage has repudiated the idea that the recent phenomenal decline of prices has been occasioned by a scarcity of gold. Thus, under date of April 24, 1886, M. Cernuschi thus writes in the London "Economist": "The fall of prices which is complained of is not due to what has been called a scarcity of gold—a scarcity which is purely imaginary." M. Sauerbeck, in referring to this matter ("Journal of the Royal Statistical Society," September, 1886), also says: "A scarcity" (of gold) "as understood by bankers does not exist. Prices have fallen so much that scarcity is not observable. As Mr. Giffen pointed out, there may be enough for present requirements, and the scarcity will only be felt when prices rise." But if prices have fallen through the ingenuity of man, will prices return to their former level? Certainly not, unless the coming man is less ingenious than his present representatives, and Nature is to be less generous in the future of her resources.

  1. "The trade of the world is carried on by credit and capital, and any causes affecting these essentials have infinitely greater effect on prices than a slight proportionate increase or decrease in the production of gold. A merchant may not hold ten sovereigns, but he may have capital and credit for ten millions. An ingenious statistician has calculated the capital of the world in 1880 at £46,000,000,000" (sterling—$230,000,000,000), "and if credit and capital have had the main voice in the question of prices, how minute must have been the effect on the markets of an annual reduction in the production of floating capital of ten (sterling) millions per annum, from a short period of most exceptional production; especially when the falling off has been more than balanced by the increased economy in the use of gold!"—Nathaniel Core, "What is the True Measure of the Alleged Appreciation of Gold?" London, 1883.
  2. Repeated investigations made in England in recent years prove that only about 0·6 per cent of coin is used in settling the transactions of banks and bankers of that country; and the results of an inquiry instituted by the United States Controller of the Currency in 1881 showed that of all the receipts by 1,966 national banks in one day in that year (June 30th), 95 per cent were made up of forms of credit, exclusive of even circulating notes; while for New York city the percentage was 98·7. At all the banks the proportion of gold coin to the whole receipts was only ·65 of 1 per cent.