“=Why Silver is Cheap.=
“In 1873 the total product
of silver in the world was 61,100,000
ounces, and the silver in a dollar was worth $1.04 in gold.
“Last year the world’s
product of silver was 165,000,000 ounces,
and the silver in a dollar was worth only 50.7 cents.
“In 1894 the potato
crop of the United States was, in round
numbers, 170,000,000 bushels, and the average price 53c.
“In 1895 the estimated
potato crop was 400,000,000 bushels, and
the average price was 26c.
“The fall in both cases was due to the same cause.”
Observe the assumptions: 1. That the output of one year determined the value of silver as the crop of potatoes does their price for that year! The schoolboy who does not know better deserves the rattan. If the theory were correct, gold in 1856 should have been worth but a fourth what it was in 1848, whereas the largest estimate of its decline in value puts it at 25 per cent.
2. That the increased silver production of twenty-two years would reduce its value in the exact mathematical proportions of the increase. This theory ignores the two most important facts determining the value of money: that the silver or gold mined in any one year is added to the existing stock, to which it is but a minute increase; and that wealth, population, and production are also increasing rapidly, relative to which the increase of silver is but a trifle indeed. The yield of the Monte Real a thousand years ago may have cost five times as much labor per ounce, and that of Laurium ten or even twenty times as much; but all of both which is not lost goes with the last ounce mined into the general stock, which is now about $4,000,000,000 in coin alone. The greatest annual production has in but a very few cases added so much as 3 per cent. to the stock on hand, and about half of it is consumed in the arts. If the increase of the annual production of silver by 2-3/4 to 1 in twenty-two years reduced its value one-half, will the Times tell us what should have been the reduction in the value of gold when this product increased by fivefold in eight years? It should further be noted that the discovery of a “Big Bonanza” is an event so rare that it has not happened, on an average, more than once in three centuries since the dawn of history, and that since 1873 the growth in the world’s production and trade has been, relative to former times, even greater than the increase in the production of silver.
Consider the following facts, which I have condensed from Mulhall: In 1800 the total yearly international commerce of the world was estimated at $1,510,000,000. Forty years later it had only increased 90 per cent., amounting in 1840 to $2,865,000,000, and in that year there were in all the world but 4,315 miles of railroad and no electric telegraph. The total horse-power of all the steamships of the world was but 330,000,