(such as from 1897 to 1915) has a trend upward.  This movement of readjustment would not go on indefinitely, even if the same trend of prices continued; for in the strict theory of the case the adjustment would be complete when the interest rate had changed by just the amount of the annual change in the level of prices.  For example, if 5 per cent is the static normal rate of interest, then when prices are falling 1 per cent each year, the adjusted rate of interest would be 4 per cent; and when prices were rising 1 per cent each year, the adjusted rate of interest would be 6 per cent.  Such adjustments serve to some extent to neutralize the effects of changes in the standard of deferred payments so far as concerns new loans made in view of just such a change and in expectation of its continuance.  But no one can foresee exactly, and most persons take little account of, such a change until it has continued for several years in the same direction.  The adjustment is therefore never very prompt or very exact.  In some years the general level of prices has risen more than 5 per cent, or more than enough to offset the entire interest received by most lenders.  A man with dollars to invest would have been as well off if he had kept them buried during that period.[14]

Sec. 9. #Notable changes in prices#.  In most cases the true effects of monetary changes escape recognition.  In a few cases, however, the change has been so great as to cause an economic revolution.  Such was the change in prices following the discovery of America, which occurred soon after the old feudal dues had come to be generally expressed in terms of money instead of labor services.  In modern times, since the mass of debts has become greater than ever before, such changes bring even graver economic consequence.  The increase in the output of gold in 1849-57,[15] caused what was the most rapid, if not the greatest money inflation that had occurred since the sixteenth century.  The substitution of gold for silver by some countries at that time, by making a great additional market for gold, helped to check the fall in its value.  Indeed, a considerable decline in the output of gold after 1870 combined with its widening use to cause in 1873 the beginning of a great fall of gold prices.  The resulting increase in the burden of outstanding debts was felt by all debtors, but particularly by great numbers of the agricultural classes both in Europe and in America.  Their tribulations were aggravated by the fact that at that time (especially from about 1873 to 1896) the prices of their products were falling much more rapidly than were general prices, as a result of the very rapid extension of the agricultural land supply.[16] There was complaint, agitation, and demand for relief on the part of many interests in France, Germany, England, and the United States.  As a result, the money question became in this country a leading political issue and continued to be such between 1873 and 1900.