The answer of Mr. R. Inglis Palgrave, an English economist of repute, who has recently published extensive memoranda on prices, to a question put to him by the British Gold and Silver Commission (1886), as to "how far the drop in prices is attributable to the alteration in the use of the gold standard," is also worthy of note, and was as follows: "In my opinion it is only a small part of the drop in prices which is attributable to the appreciation of the standard." The present and rapidly increasing indifference of the business public, alike in Europe and the United States, whose interest in this subject is mainly practical, is also significant, as indicating that the importance formerly conceded to the gold-scarcity theory has not been confirmed by experience.
It will be further relevant to this discussion to call attention here to the manner in which certain admitted facts touching the recent fall in prices have been misunderstood, and, more especially, have been perverted, with a view of sustaining this same theory and of creating exaggerated ideas respecting impending disasters, and the power of legislation to provide remedies. Thus, in illustration of the assumption that the quantity of gold in the world, available for use as money, mainly regulates prices, and that, prices having fallen by reason of a scarcity of gold, the ratio of debts to assets, or the burdens upon debtors, has been increased, Mr. Moreton Frewen, of England, has frequently in recent years made the following statement: Premising that the national debt of the United States was £000,000,000 sterling ($3,000,000,000) in 1866, and £220,000,000 ($1,100,000,000) in 1887, he says:
Therefore, the burden of the national debt of the United States has been increased, as a greater effort of labor, or an increased amount of the products of labor, is now necessary to liquidate it than when the purchasing power of gold had not been appreciated through its scarcity; and, as with public debts, so also with private debts, especially those in the nature of mortgages on land, or other productive fixed capital.
Now, in reply to this it is to be said, first, that the basis assumed for this comparison of prices, in the case of cotton, is entirely unfair and unnatural—the gold price of this commodity in the year 1866, owing to a scarcity occasioned by war, having been more than 250 per cent higher than the average prices in 1860 before the war; while the price of iron for that same year in the American markets was also inflated on even a gold basis; and, secondly, that no consideration is given, or allowance made in the above comparisons for the results of labor at the two periods of 1866 and 1887; not more, and probably