35.625d., the difference being 24.6875d. per ounce, or nearly 41 per cent. In the interval the fluctuations have been almost incessant. Now it is obvious that the descent may be described either as a fall in the gold price of silver, or a rise in the silver price of gold. It signifies depreciation of the one or appreciation of the other, according to the point from which the change is viewed. The question whether silver has declined in value or gold has risen is, therefore, so far indeterminate and indeterminable. It is clearly a question which can only be settled by comparing the ratio of exchange between each metal and a sufficient number of other commodities. If it be found that in relation to these, as well as to gold, the value of silver has fallen, then there can be no doubt that silver has depreciated. If, on the other hand, it should appear that this is not the case, but that, on the contrary, the fall in the gold price of silver is accompanied by a fall in the gold price of other commodities, it will be beyond question that gold has appreciated.

Evidence of a very great decline in the prices of commodities, as stated in terms of gold, since 1873 is so abundant and conclusive that it is practically undisputed. The separate report of the six "monometallist members of the Royal Commission of 1887-88 says:

There can be no question that the gold price of many, and probably of most commodities has fallen during the last fifteen years. In relation to these commodities it may, no doubt without inaccuracy, be said that gold has appreciated. That is another mode

of expressing the fact that their price is lower.

And after some reference to the now wellunderstood method of ascertaining general movements of prices by comparison of index numbers, the six Commissioners further observe:

If we turn from these general index numbers, and examine the index numbers of the several commodities which have been taken into account in arriving at the general index number for the year, it cannot be doubted that a fall has taken place, especially in the most recent years, in the majority of the commodities in common use, and that in some cases the fall has been very heavy.

Later on they say they do not think that there is any "conclusive evidence of a substantial appreciation of gold" to be derived either from a review of the variations in prices or of the circumstances relating to the production and use of that metal. At the same time they are far from denying that there may have been, and probably has been some appreciation." They add that, in their opinion, the sounder view is that the greater part of the fall has resulted from causes touching the commodities rather than from an appreciation of the standard.

I do not wish to insist too strongly upon the want of correspondence between this conclusion and the previous one already quoted, viz. that to say that gold has appreciated is merely a mode of expressing the fact that prices of commodities are lower. It is, however, very important to keep firm hold of this undoubted and indeed self-evident principle, which is a necessary inference from the definition of "value," viz. that it is the expression of the ratio in which anything is exchanged for another thing. When a larger amount of commodities is given in exchange for a certain amount of gold-that is to say, when prices are lower— it is obviously all the same whether the change is described as a fall in the prices of commodities, or a rise, an appreciation, in the value of gold. To affirm, therefore, or to deny that a general fall of prices in this country is "due to" an appreciation of gold is simply equivalent to affirming or denying that an appreciation of gold is "due to" gold becoming dearer. In either case the proposition is meaningless. It is, no doubt, an interesting question how far the decline of prices can in any particular case be traced to increased production of commodities, and with this aspect of the subject I shall deal presently. But we are considering a condition of things in which-to use the words of the Commissioners-the prices of "the majority of

the commodities in common use" have greatly fallen, and I think I shall be able to adduce strong, if not absolutely conclusive, reasons in support of the proposition that no changes in the amount, or the cost of, production has had, or could have, any appreciable influence upon the general level of the prices of the great mass of such commodities.

D

CHAPTER V

DOES INCREASED PRODUCTION OF COMMODITIES

LOWER GENERAL PRICES ?

IN an important and interesting section of their report, the six mono-metallist Commissioners call attention to the fact that the fall of prices has been neither universal nor uniform. This is not held to be a proof that gold has not risen in value. On the contrary it is pointed out that, as Professor Cairnes and others have shown, when gold fell in value after the great gold discoveries in California and Australia, the rise of prices was by no means uniform, and the Commissioners might have added that it was not universal either. They say, however, "A careful survey of the varying prices of commodities at once suggests that, even if there has been an appreciation of the standard, some other causes must have been at work affecting particular commodities so as to depreciate them in relation to gold."

Now, it cannot be doubted that the Commis