A Treatise on Money and Essays on Monetary Problems (Paperback)

This historic book may have numerous typos and missing text. Purchasers can download a free scanned copy of the original book (without typos) from the publisher. Not indexed. Not illustrated. 1895. Excerpt: ... CHAPTER VII THE EFFECTS OF THE ANNUAL PRODUCTION OF THE PRECIOUS METALS 1. Effects--on the assumption that the ratio between gold and silver is fixed.--Assuming for the present that under any circumstances likely to occur the ratio, if fixed by international agreement within any reasonable limits, could be maintained--which was the unanimous finding of the Gold and Silver Commission--let us consider what would be the effect of a large increase in one or both of the two metals. The first thing to notice is that even if the annual supplies are largely increased within limits at all probable--if, for example, they are doubled or quadrupled in twenty years--still the effect, having regard to the total mass, will be comparatively small. The quality which pre-eminently adapts the precious metals for a standard of value is their durability, with the result that their total mass is always great compared with the annual supply. Secondly, we must observe that all the increase in production does not go to coinage, but some part and probably a large part will be used in the arts. Thirdly, as already explained under the quantity theory of money, the rise in prices will not be exactly proportioned to the increase in the quantity of metallic money. Fourthly, we must remember that under present conditions at any rate the civilised world is growing in wealth and population, and that in consequence there are greater demands on the precious metals. For reasons see essay on "The Stability of the Fixed Ratio between Gold and Silver under International Bi-Metallism," infra, p. 303. Thus on balance the conclusion appears to be that any increase in the annual production that is at all likely to take place would not so much tend to bring about an inflation of prices as to...