From all that has been said, it will be gathered that there has been an enormous increase in the precious metals, with the result that money has considerably depreciated. With the access of the metals, their value has diminished, and consequently prices in general have risen.

Money had a far higher purchasing power in past centuries, and with every increase of the metals, their purchasing power has lessened. And the prospect is that this depreciation of money will go on indefinitely. New mines will be opened, new stores of the metals will be discovered, and the demand, although increased by the growth of population and the extension of exchange, will not keep pace with the supply.

Effect of Depreciation on Society. Now, it may be asked: Is this constant depreciation of money a benefit or an evil?

To many economists it appears in the light of a benefit to society, because the good effects resulting from depreciation reach directly that large portion of society which is engaged in production and indirectly all the consumers as well, while the evils of depreciation develop only by the slow process of the evolution of economic laws. (Cf. Walker, Money, Trade, and Industry, p. 79. Cf. Denslow, Principles of Economic Phi·losophy, p. 360.)

There can be no doubt that a rise in prices has the effect of giving a stimulus to production. New enterprises are entered into, more capital is invested in existing and new projects, money that is tied up in bonds and other investments which pay comparatively small interest will preferably be invested in business ventures where the profits are greater.

The increase of productive industries brings about a greater demand for labor, and results in the betterment of the wageearning portion of society. The rate of interest on money is reduced, because of the abundance of money obtainable on demand. The burden of taxes is diminished, at least in so far as taxes go to pay the interest or principal of public debts.

A new impetus is given to business. There is in every community an ever-watchful class who are intent on employing

every scheme for the increase of wealth. As Newmarch has it: "There is at all times a profusion of enterprises to be undertaken, of experiments to be tried, of schemes to be worked out, of improvements to be made, of ingenious men to be set up with capital, of trade already profitable to be made more so by vast extensions." (In Walker, Money, Trade, and Industry, p. 85.)

Now, there are three classes of society which help onward the great tide of production: the capitalist, who furnishes the capital; the laborer, who furnishes the labor; and the business man or promoter or captain of industry.

It is the last mentioned who, possessed of technical skill, directive and administrative ability, and commercial knowledge, puts the capital to its best use and employs the labor of the workman to the greatest profit.

The man of business is incited to an increase of energy by the hope of profits, and this hope of profits exists when there is a rise in prices, consequent on the increased supply and the accompanying depreciation of money.

It may be said that the prices of all articles employed in production will rise together with the rise of the prices of products, and hence the profits of the producers will not be appreciably increased. But it must be observed that the rise in prices is not. spontaneous throughout, nor will it reach the raw materials of production until some time has elapsed. In the meantime, the chance to make increased profits exists and will be incentive enough to the producers to induce them to apply themselves with greater activity to production. (Cf. Walker, Money, Trade, and Industry, p. 97.)

Finally, the depreciation of money and the rise in prices is favorable to the whole debtor class. All who owe debts may pay their debts in the depreciated money and thus have remitted a portion of their indebtedness. The creditor class will suffer, and this class embraces a great portion of society.

As Walker says, the creditor class is composed of all owners of capital who are not also employers of labor." And he proceeds to enumerate the several members of the class;

1. Those who by age, sex, or infirmity are disabled from active occupation; retired business men; pensioners, annui

tants.

2. Those who live on their incomes.

3. Professional men who are not engaged in commercial business.

4. The laboring class in so far as they save and deposit their savings in banks.

All these are capitalists in the broad sense of the word, and rank as creditors, together with those who are owed money by others for commercial goods transferred. These creditors furnish much of the capital that is used in business. Returns must be made to them for the use of this capital by those who form the great debtor class of society, viz., the business men who are the employers of labor. These returns, which form the revenues of the capitalist class, will be decreased by the depreciation of money, whereas the business men, the debtors, find their debts lessened by the same cause.

The reasons advanced by those who regard this fact as a boon to society in general are various.

The capitalist class is better able to suffer the loss than others. Those who belong to that class should feel that they are parasites, and should endeavor to take a more active part in the upbuilding of the prosperity of their country. (Cf. Gide, Principles of Political Economy, p. 231.)

It is not right that the present generation, the debtors, should bear all the undiminished claims of the past, the creditors.

When it is asserted, then, that the creditor class will suffer by this depreciation of money, and that they will receive but a portion of what is justly their due, it may be pointed out that the depreciation, as it has been under discussion, is brought about not by any act of government, "not by confiscation and repudiation, the work of man, carrying with it the sting of injustice, and bringing retribution after it, but by a purely natural process, in the discovery of new stores of the precious metals, or through improvements in the chemical and mechanical arts.

of mining." (Chevalier, in Walker, Money, Trade, and Industry, p. 96.) It is brought about by natural causes, having influence on prices similar to the influence on business exerted by the introduction of machinery, by the opening up of new markets, and other such causes which form part of the onward progress of mankind in commercial pursuits. Moreover, the causes in the present instance work only very gradually, and extend their operation over long periods of time, and thus produce their effect without any very sudden or severe shock.

Instances in History of Great Increase of Money. There have been two instances in history of a great inflow of the precious metals on the world, with a consequent notable depreciation in the value of money and a rise in prices.

The first took place in Europe in 1570-1640, upon the discovery of the New World, when vast silver mines were found in South America. It took some time before the metal, shipped by way of Spain, could reach the marts of Europe and be distributed so as to exert an influence on trade and prices. The effects of this flood of metallic money upon the world were very great, because of the small amount of money then in existence. The evils of depreciation were intensified because of the suddenness and the greatness of the increase of money. But the beneficial effects were no less marked. New life and energy were injected into the cultivation of land by the prospect of the gain the higher prices afforded. Productive industries awoke from the lethargy in which they had long reposed. The maritime power of England sprang into existence, oriental trade expanded, and the whole of society received a new impetus that was to carry it far in commercial development. (Cf. Walker, Money, Trade, and Industry, p. 102.)

The second instance was the discovery of gold in California and Australia, in the years 1848 and 1851 respectively. This increase of money did not produce so marked a change as did the former, because the amount of existing money was already great, and the new increase, though large, produced but a comparatively slight effect.

III. MULTIPLE TENDER

Money as a Standard of Deferred Payments. - The question just discussed will make manifest the inherent defect of the precious metals as money. As we have seen, there are three functions of money. It serves as a medium of exchange, a measure of value, and a standard of deferred payments.

While the metals perform well the first two functions, they fulfill but very inadequately the third function, viz., that of serving as a standard of deferred payments.

A person who receives $1000 in 1860, and cancels his debt in 1900 by paying $1000 in the lawful money of the country, does not pay to his creditor the full value of the money he received in 1860. The purchasing power of the $1000 is not the same in 1900 as it was in 1860, because of the depreciation money has undergone during the intervening forty years.

The creditor is made to suffer great hardship by this changeableness in the value of money. One can easily see what a loss would be suffered by a creditor who in 1560 had loaned $100, and at the end of twenty years received back merely his $100 in metal money. In the interim, metallic money had depreciated nearly two thirds in value.

To come nearer our own times, it has been computed by Stanley Jevons that the value of gold fell 46 per cent between 1789 and 1809; from 1809 to 1849 it rose 145 per cent, and between 1849 and 1874 it fell again at least 20 per cent. (Walker, Money, Trade, and Industry, p. 68.) Contracts extending over such periods would, it is evident, be very materially affected by these fluctuations in money value.

Remedy Proposed: Multiple Tender. No remedy has yet been adopted to avoid the undeserved losses which result from the changes in the value of the precious metals through long periods of time. A scheme suggested by Lowe and Scrope in England, and Count Soden and Professor Roscher in Germany, would, in the opinion of such men as Jevons and Walker, prove satisfactory in long-term contracts.