But the value of gold began to rise with the increase of traffic and debts. The change in the money standard of Great Britain to one of gold alone in 1816 had as yet produced but little effect on the world at large. But as great debts increased, and as immense sums began to be negotiated in London, this law of 1816 began to operate to increase the demand for gold to pay interest in the only metal that England recognized as the standard of values. The evidence of this advance in the value of gold is in the fact that it soon rose above that of 1 to 15 of silver. The lines of the two metals, as shown in the diagram, had crossed each other about 1850, and now again they crossed about 1862, indicating that the "golden era" had ended, and that the “ era of golden debt" had begun. The success of Germany in the war with France gave the former the means of attempting to follow in the footsteps of England. Germany demonetized silver, and depended upon the

this convention constituting the governments into a union for the purpose of establishing a uniform system of weights, measures and valuations and forms of currency.

The governments (Art. 2) contracted not to coin any gold moneys in any other denominations of coins than 1,000 francs, 50 francs, 20 francs, 10 francs and 5 francs, at the ratio of 1.612.90 grammes of standard gold (9-10 fine) to each 5 francs.

Silver coins of the denomination of 2 francs (or less) were made a legal tender between individuals in the state that coined the silver for sums of 50 francs; but in payments from individuals to the state which issued the silver the coins were made legal tender in any sum. It was provided that the national treasuries of the several countries should accept silver coined by any of the other states in the union to the extent of 100 francs. The convention, however, fixed the limit of total coinage of silver during the continuation of the union to its expiration in 1880. The amount allowed to be coined by each country for 1876 has been stated as follows, viz.:

$1,000,000,000 she was to get from France as a war penalty, for the means of substituting gold for about $300,000,000 to $400,000,000 of her silver currency. France was not only obliged to borrow gold of all the surrounding nations, but to hoard all she could to avoid being obliged to accept a metallic currency of silver which had become depreciated by the operation of the laws of England and Germany. Thus the appreciation of gold went on, but even yet was to a considerable extent held down by the use of silver in the larger part of Europe; but with the beginning of 1876, when the new laws in Germany went into full operation, and Germany began to sell off about $250,000,000 of silver, the two metals parted company. Silver declined until in July, 1876, it was nominally quoted as low as 46 pence per ounce, and gold was left as the only measure of values in the leading commercial countries of Europe, Great Britain, France and Germany. Debts and the interest on them are payable in those countries only in gold. In the United States they have been made payable (by the coinage law of February, 1873,) in promises to pay gold, viz.: in United States treasury notes. Thus this increased demand for gold, present and prospective, (made prospective in the United States by the specie resumption act of January, 1875,) has increased its value. Debts are paid with commodities, but not until the commodities have been exchanged for money-gold. The decline of prices since 1872-3 is explained by the increased value of gold. The first effect was to cause a collapse in "speculative securities," viz.: bonds of railroads, etc., which were based on the expectation of a continuance of high prices for commodities, or in other words, a low value for gold. The losses which followed

caused panic and a decrease in manufacturing industry and improvement enterprises. This diminished employment for labor and necessarily decreased the consumptive demand for all commodities. This again caused still further cessation of industry and a further decrease of demand for commodities. Theorists have been jangling for three years about the cause of the reaction which began in 1872-3, and the decline of prices which has continued almost without interruption since. These causes are, however, not obscure. The progress of the physical sciences and of labor-saving inventions has undoubtedly had an important tendency to reduce the prices of nearly all manufactured articles and, to a small extent also, the values of raw materials. But the increased burden of debt, the increase of traffic (thus requiring a larger volume of the circulating medium), and the demonetization of silver, have all contributed to increase the value of gold beyond its equitable value as a measure for values of commodities.

The era of golden debt, like the era of gold, has had its culmination, and the causes at work now are preparing the way for some new era in financial affairs which will, in all probability, be as unique as either of the two which have preceded it. No man can yet foresee what it is to be. It is, however, not difficult to distinguish a few tendencies that must continue to operate toward the new development. The first of these is the decline in the rates of interest for money in order to reduce the burden of funded and mortgage debt everywhere. This will be accomplished partly by the repudiation and complete loss of a very large portion of the existing volume of funded debts, and partly by the concentration of capital (seeking safety rather than

high rates of interest) on a smaller amount of debt. Another tendency that must continue, is the necessity for supplementing the stock of gold in the world with the stock of silver, and a universal recognition of both metals as money at about the same relative values they maintained prior to the era of gold. Until these things are accomplished, "prices" will continue to decline and the commercial world will be in distress. A great war in Europe would afford temporary relief by creating an extra demand for commodities, partly as munitions of war and partly to supply new stocks in place of those destroyed. But this would neither reduce the burden of interest on funded debts nor increase the stock of gold or silver, nor in any way decrease the demand for the precious metals. On the contrary, some nations would be obliged to pay interest in gold on the cost of the war, viz.: the value of the property destroyed and the industry diverted from its proper channels. Thus while a great war would temporarily cause a rise in prices, this would only be a reason for their ultimately declining to a lower point than before.the war. Financiers and statesmen have taken an exceedingly narrow-minded view of this era of debt. While they have not failed to call attention to the magnitude of debt, it has only been in a tone of reproach to the commercial and financial community for indulging in what has been termed an "inflation of credit." The truth, however, is that the greatest part of the present burden of debt was created by war. The four great wars since 1860 (viz.: the Italian, the Austro-Prussian, the American and the Franco-Prussian) increased the national, municipal and State debts of the countries involved about seven thousand millions of dollars, or over 30 per cent of the total

of present funded debts in the world. The increase of debt as the result of wars in the last sixteen years has been more than double the increase of debt from the expansion of the railroad system, and all other national and municipal improvements and enterprises in the same time. It is the war debts- not the debts of excessive enterprise that have created the present burden of annual interest. It is war debts also that are represented in all the inconvertible paper money now afloat in the world. Now, it is not to be presumed that the "reign of peace" has begun, or that it will begin any time in the next hundred years. In the last quarter of a century great wars have averaged less than five years apart. The wars of this period, also, have been more largely financial contests than ever before in the history of modern civilization. It is a trick of capital in all countries to persuade the people that their honor is at stake in the payment of all these war debts at the highest valuation the avarice of the holders may set on them. But it is plain that a few years more of such war experience as the last sixteen, would place the burden of annual interest and the redemption of the paper money beyond the ability of the people. Indeed, with gold as the exclusive standard of values, it is extremely problematic whether "specie payments" could be maintained even in all the countries that do now propose to pay interest and redeem paper money in gold. The countries that propose to do this are Great Britain, France, Germany and the United States. The aggregate of paper money in these is about $1,700,000,000, and the total amount of gold does not exceed $1,600,000,000. Assuming that an average reserve of 50 per cent would sustain the present volume of paper money-by con