European nations, and we trade mostly with them, or when trading with others, we necessarily, as a rule, agree to pay or to accept payment in London exchangethat is, we trade on the gold base. Gold has proved itself a more stable base than silver; and what can be more important to our stupendous superstructure of credit than an immovable foundation ? Do we prefer to build upon quicksand? Or, in broadening the foundation of a structure, is it well to use rock for one portion of the foundation and sand for another portion? No stronger proofs of the height of civilization in this country can be offered than that we use financial contrivances so extensively, and that gold itself is not used to the extent, possibly, of even one per cent. of our volume of business, although in every transaction the buyer and the seller, when stopping to think at all, think of the gold value of the money mentioned. Is it the duty of Congress, then, to say to the people: All this is wrong; you must carry more paper and silver in your pockets you must use checks and drafts less, and

you must use silver more; you must consider the condition of our silver miners, and favor our being upon a wabbling base— part gold, part silver? Rather, is it not the duty of Congress to recognize that nearly all the business of this country is, and necessarily must be, carried on by means of some form of credit, and therefore it must be of the greatest importance to everybody to be able to feel that the firm foundation of gold-measured or gold-valued wealth is beneath it all? Congress cannot cause us to be born again, and into the Hindu, Chinese, Japanese, or even into the Mexican or South American silver-handling type; but, through the operation of laws which favor silver, so much of the kind of money which is in every way unsuited to us may be forced into the foundations of our banking and credit system, that there may be shaken or overthrown this marvellous structure, which now so well serves our vast and intricate exchange of commodities,

1896. The United States Government strained its credit, in favoring silver for fifteen years, to November, 1893, but created no silverhandling habit among the people.

CHAPTER II.

THE MOVEMENTS OF PRICES.

THE upward and downward courses of trade and prices, recurring not with regu larity but with sufficient certainty to form a basis for shrewd guessing, are yet considered inexplicable, at least by one of our greatest political economists. According to Mr. David A. Wells,1 if I draw a correct inference, everybody is cognizant of the undulatory character of trade and price movements, but nobody can account for it. The what-has-been-must-be theory is the sum of the general knowledge that buoyancy follows depression, or vice versa, and that a panic is apt to come after a period of over-confidence. "Neither can it be conceived how periodical changes in prices can result from any possible law of nature, unless it can be shown that such laws exist

1 Recent Economic Changes.

23

and operate with uniformity on the human mind and on the development of the human intellect, which has not yet been done."

I feel reluctance in stating that I do not agree with Mr. Wells, but I think it important to show, if I can, that such a "law of nature" is exactly what Mr. Herbert Spencer discovered and fully explained.1 The great philosopher pointed out the undulatory character of all motion, with numerous illustrations from the fluttering of a vessel's pennant to the course of a planet or to the rises and falls of activities in the human body. Mr. Spencer says: "Passing from external to internal changes, we meet with this backward and forward movement under many forms. In the currents of commerce it is especially conspicuous. Exchange during early times is almost wholly carried on at fairs, held at long intervals in the chief centres of population. The flux and reflux of people and commodities which each of these exhibits becomes more frequent as national develop

1 First Principles, chapter on The Rhythm of Motion.

ment leads to greater social activity. The more rapid rhythm of weekly markets begins to supersede the slow rhythm of fairs. And eventually the process of exchange becomes at certain places so active as to bring about daily meetings of buyers and sellers a daily wave of accumulation and distribution of cotton, or corn,1 or capital. If from exchange we turn to production and consumption, we see undulations, much longer indeed in their periods, but almost equally obvious. Supply and demand are never completely adapted to each other, but each of them from time to time in excess, leads presently to an excess of the other. Farmers who have one season produced wheat very abundantly, are disgusted with the consequent low price; and next season, sowing a much smaller quantity, bring to market a deficient crop, whence follows a converse effect. Consumption undergoes parallel undulations that need not be specified. The balancing of sup plies between different districts, too, entails analogous oscillations. A place at which

' In England corn means wheat, rye, barley, and corn (maize).