The general price level fluctuated, but on the whole tended downward between 1884 and 1893 (the year of panic), and reached a minimum in the year 1895 in Germany, 1896 in England, and 1897 in America.  It is noteworthy that the very year 1896, which marked the height of the political agitation to abandon the gold standard for silver, saw the gold production for the first time in all history surpass the two hundred million dollar mark.  The gold output had caught up with, and began to surpass, the normal monetary demands of the world, meaning by that phrase, the amount of gold needed to maintain a stationary level of prices.

Sec. 12. #Rising prices after 1896#.  The whole character of the monetary problem then changed.  A period of rising prices set in, which has continued to the present time.  By 1913 prices had risen just about 50 per cent above the low level of 1896.  The rise has been, and still is, at the average rate of nearly 3 per cent each year.  This caused a reversal of the former positions of advantage and disadvantage on the part of debtor and creditor respectively.  The purchasing power of a 3 per cent annual interest on notes and bonds has been offset by the decrease in the purchasing power of the principal of the debt.  The burden of the average debt began relatively to decrease.  A wide field for enterpriser’s profits was opened up by the rapid displacement of prevailing prices in all quarters of the industrial world.  The price of manufacturer’s products rose in advance of the rise of costs of many raw materials and especially of the labor costs of manufacture.  The average enterpriser’s gain was the average wage-worker’s loss.  Wages (and salaries), as nearly always in the case of a change of price levels, moved more slowly than did the prices of most of the commodities which are bought with wages, thus causing great hardship to large classes living on comparatively slowly moving incomes.[19] Extremes meet, and these classes include both those living on passive investments, and those dependent on their daily labor for a livelihood.

Thus we escape the evils of a rising standard of deferred payments, only to meet those of a falling standard.  And as long as we have so fluctuating a standard these difficulties must arise again and again, continually repeated, causing unmerited gains and losses to individuals.  Let us conclude with a brief consideration of the fundamental principles involved in this problem.

Sec. 13. #Defectiveness of the gold standard#.  Money is, in general, for both borrowers and lenders the most convenient standard of deferred payments.  But from the usage of speaking of all things in terms of gold, arises the popular notion that the value of gold is always the same, while the value of other things changes.  In truth, a fixed objective standard of value is not possible of attainment.  Altho the value of gold is stable as compared with most things, it rests on the estimates made by men and