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a decrease likely to produce such a fall of 50 to 80 per cent. in general prices as we see around us.' Then there arises the critical question-Have no forces come into play to counteract the tendency of a diminished supply to cause appreciation? 'Fifty-nine millions of gold were added to the banking reserves, which are specifically a support and stimulus to credit and trade." Other machinery also has been brought to combat the hypothetical increased value of the gold; other contrivances to perform the same work, so as to render nugatory the reduced supply. "In the United Kingdom there are several more bank offices now than in 1872. In the leading Continental countries the increase of such facilities has been far greater; and the same is true of all North, and of a large part of South America." A Parlimentary Committee, even under the authority of the Prime Minister, would have but scanty materials for establishing the fact of an appreciation of gold.

But a far stronger reason can be given for disconnecting a variation in the value of gold from the creation of the commercial depression which has so long prevailed. Granted, let us say, that there is appreciation-that gold is worth more of all other commodities-that all prices have dropped, because a smaller quantity of gold has the same power in exchanging that the larger previously possessed. What possible effect can such an event produce in engendering a long-continued commercial depression? The appreciation attacks all prices alike; all articles of every kind now sell for less, save where circumstances incident to the article itself battle against the fall of nominal value. All commodities, everything for sale, stand in identically the same position towards each other. The seller of tea, with less money received, can buy as much bread or clothing as before, for they too stand at a lower price. A universal reduction of all prices has no importance. A sovereign does its work with precisely the same efficiency, whether it is worth ten shillings or thirty. The change of prices creates no poverty; there is the same quantity of wealth in the country as before, save only in respect of the use of gold in the arts. Gold ornaments become dearer in the future; that is all. Commercial depression, we have seen, means diminished power of buying; who can buy one particle the less, because all prices have gone up or down? If a man sells at a smaller figure, he also buys at the same reduction. Trade can be, will be, so far, as brisk as ever, the artistic employment of gold excepted. Coin is only a tool. It brings no riches to a nation; no buying power. The great service it renders to men is to get over the difficulties of real barter. If appreciation or depreciation of gold drove society to barter, then the evil would be enormous; but a change of value acts only on the manner of using the tool of exchange. A greater or less weight of metal has to be employed, and there ends the matter. What conceivable depression of trade is found in altering the weight of a tool, however universal it be?

Nevertheless, a change in the value of the currency, especially if it is sudden and large, always produces very grievous havoc, but not commercial depression, It creates thorough disturbance in the rela

tions which debtors and creditors bear to each other. It benefits one class, and equally injures the other. The debtor who is pledged to pay a certain number of sovereigns, if there has been appreciation, is compelled to purchase those sovereigns with a larger quantity of his wealth: he loses. On the other hand his creditor is now able to purchase more goods with the same coin: what the debtor loses he wins. Thus great disorder arises, much suffering and unexpected gain. The National Debt then comes forward with great power. The taxpayers, who have to supply twenty-eight millions of sovereigns, or their worth, every year, are compelled to give more of their wealth to procure the means of paying their taxes; and their numbers render the accruing mischief very serious. Still, the point to be insisted on here is that no permanent commercial depression can spring from this source. There

is no diminution of the national wealth, no weakened power of buying in the aggregate. The means of one set of persons are reduced; those of another are proportionally enlarged. No explanation of a long commercial depression can be derived from an altered value in the currency.

Let us now endeavour to trace out that over-consumption which is the true parent of the sufferings of the world. First of all, great famines have fallen on important nations. China and India have been plunged into misery too fearful almost to relate. England too has been visited with calamities of the same order. Six bad harvests in ten years count for much indeed of the acknowledged depression of the agricultural business. And what generates over-consumption comparably with a famine? The expenses of cultivation have been incurred; labourers have been fed and clothed; their families have been supported; horses have consumed hay and corn; ploughs, carts, and other machinery have been bought, and their wear and tear incurred; manures, coals, and other materials have been used up; the consumption has been vast. But when harvest-time came, if an ordinary season had met the rejoicing farmers, the gathered crops would have restored everything which had been consumed as capital, besides bestowing profits on the occupiers of the land. The stock wherewith to continue the production of wealth would have been restored undiminished, and a surplus, for enjoyment or for saving, would have gladdened the sons of labour. But what occurred in actual fact? The weather interfered, and no crop was won. The consumption of the tillage had been incurred, but it was unreplaced by fresh products. Capital was destroyed and lost; and if ruin did not overtake the cultivators, a second consumption of capital was necessary for one crop. Can it be a matter for wonder if such countries became poor-if their powers of buying, of exchanging, were shattered? India and China are grand customers of England, and the throb of agony propagated itself across the ocean to this little island. Lancashire and Yorkshire felt the weight of the blow: their people had to learn the fearful lesson, that they lived by receiving in return for giving, and that where there was nothing offered there could be nothing sold.

France, too, suffered agricultural disasters. Her beetroot and silk crops failed a few years ago, and the ravages of the phylloxera destroyed the capital which had been expended on the cultivation of her vines. The value of the wealth which thus perished has been estimated at many millions of pounds sterling--a large contribution to the creation of depression.

War, too, has exercised its peculiar function with great vigour in the causation of commercial distress and its attendant misery among great populations. War, economically, is pure waste; it does nothing but destroy. It calls away vast bodies of men from productive labour; it feeds, clothes, and maintains them, whilst they produce nothing to restore the consumption; it uses up immense supplies of wealth in military stores which are rapidly destroyed; it disturbs and arrests industry where its armies pass, stopping the traffic of railways and roads and other necessary instruments of industrial energy. Who can measure the waste inflicted on France by the Franco-German war of 1870, or the consumption of German wealth? Huge armaments now spread over many countries keep up the irrational and destructive waste, har assing people with severe taxation, which is paid with the wealth they produce and is consumed upon economical idlers who make no return for what they devour. Can any one feel surprised if trade languishes, and suffering weighs down great industries, when soldiers are extinguishing the wealth wherewith to buy?

America, too, writes a page in the melancholy history, and it is one which is singularly full of instruction. America opened the decennial period which occupies this discussion with a kind of over-consumption which not only annihilated the wealth on which it fell, but further engendered sources of additional distress which swept in everwidening undulations over the most distant lands. She created a most reckless and unjustifiable excess of fixed capital, without giving the slightest thought to the nature of the process she was practising, to its conditions and its consequences. She built innumerable railways, for the most part in wild regions where no trade or population as yet existed which called for such outlay and could restore the destroyed wealth by development of commerce.

It is of the highest importance to understand the conditions on which fixed capital is created. Unlike famines, it is an act of the human will: man sets up fixed capital at his own pleasure; he is responsible for its effects. Of all the causes which have generated the commercial distress, which is so wide and so enduring, fixed capital probably, in its various stages, and they are many, has exercised the strongest influence. Fixed capital consists of instruments required for production which do not replace all their cost at once, but only a portion of it each succeeding year. Thus a merchant-ship is fixed capital. It is supposed to generate a profit every voyage, a small part of which is assigned to the repayment of the outlay spent on building the vessel. It will require annual repairs for wear and tear; these are debited to the cost of working the ship. In the course of a certain

period of time all the original cost is repaid, the ship is worn out, and a new one is built. There will be a surplus advantage if after repayment of the cost of construction the ship is still efficient, and goes on working. It is now a tool that costs nothing.

It is clear from this analysis that there is over-consumption in the construction of all fixed capital. For a time, more or less long, more wealth has been consumed than is made; the difference is a diminution of means. The machine made, no doubt, restores that diminution, but only gradually. The maintenance of the workers who built the ship is gone: except the portions successively restored, this is clearly a loss of wealth. Bread and meat have been eaten, and there is nothing wherewith to buy more. But there are two very distinct kinds of over-consumption: one impoverishes, the other does not. Both use up wealth, and it disappears; but one kind destroys wealth which can be spared; the other lessens the stock of productive capital. Over-consumption, which lessens capital, generates poverty; that which uses up savings does no harm. The employer and the workman may dispose of their profits and wages in any way they choose, without injury to the public wealth. The capital is restored by the results of the business-the share of the things made accruing to each man lies, economically, at his absolute disposal. He can devote them to necessaries or to luxuries, or he may throw them into the sea; no harm to wealth thence arises. He remains where he was; not richer, but not poorer. Or he may save a part of his share of products which belongs to him; that is, he may convert them into capital by applying them as instruments for increasing industry. No impoverishment ensues; for they were his to fling away, if he chose. On the contrary, he enriches himself and his country. He has made the means of producing wealth larger; he has increased future wages and profits for himself and others; and he has done this with income which trade had given him to consume in any way whatever.

We are now in a position to perceive the magnitude of the blunder of which the American people were guilty in constructing this most mischievous quantity of fixed capital in the form of railways. They acted precisely like a landowner who had an estate of £10,000 a year, and spent £20,000 on drainage. It could not be made out of savings, for they did not exist; and at the end of the very first year he must sell a portion of the estate to pay for the cost of his draining. In other words, his capital, his estate, his means of making income whereon to live, was reduced. The drainage was an excellent operation, but for him it was ruinous. So was it with America. Few things, in the long run, enrich a nation like railways; but so gigantic an overconsumption, not out of savings but out of capital, brought her poverty, commercial depression, and much misery. The new railways have been reckoned at some 30,000 miles, at an estimated cost of £10,000 & mile; they destroyed 300 millions of pounds' worth, not of money, but of corn, clothing, coals, iron, and other substances. The connection between such over-consumption and commercial depression is only too visibly here that of father and sen.

But the disastrous consequences were far from ending here. The over-consumption did not content itself with destroying the wealth used up in making the railways and the materials of which they were composed. It sent other waves of destruction rolling over the land. The demand for coal, iron, engines, and materials kindled prodigious excitement in the factories and the shops; labourers were called for on every side; wages rose rapidly; profits shared the upward movement; luxurious spending overflowed; prices advanced all round; the recklessness of a prosperous time bubbled over, and this subsidiary overconsumption immensely enlarged the waste of the national capital set in motion by the expenditure on the railways themselves. Onward still pressed the gale; foreign nations were carried away by its force. They poured their goods into America-so overpowering was the attraction of high prices. They supplied materials for the railways, and luxuries for their constructors. Their own prices rose in turn, their business burst into unwonted activity, profits and wages were enlarged, and the vicious cycle repeated itself in many countries of Europe. Over-consumption advanced with greater strides; the tide of prosperity rose ever higher, and the destruction of wealth marched at greater speed.

England took a prominent share in the excited game. In no slight degree is she answerable for the American rush into railway construction. It was carried out by means of bonds, and England bought largely of those bonds. It has been asserted that she purchased these bonds to the incredible extent of 150 millions sterling. But with what did she pay them? With iron rails, locomotives, and other products of her industry. And what did she get in return? Pieces of paper, debts. Her wealth was diminished, and she paid, in addition, the same penalty as the Americans. Her manufacturers were stimulated by this artificial activity of trade to exaggerated production. Higher wages and profits were distributed over the nation, and an immense impulse was given to luxurious and needless consumption. The approach of the avenging depression was accelerated, it might seem, almost intentionally.

But these American operations did not satisfy English ardour. The passion for lending raged with great vehemence. England showered her loans over many regions of the globe; loans, be it repeated, always made in goods, in commodities produced at great cost, and lost to England in exchange for acknowledgments of debt. England lent ironclads to Turkey, military resources to Bosnia, articles for wasteful consumption to Egypt, innumerable gratifications to American Republics. Her colonies carried off rails and locomotive stores and clothing for their advancing populations--and no better application of wealth could have been made. Future customers for English trade were thus provided, men who would enlarge English industry with ever-expanding demands for its products, demands expressed in corn and wool sent across the ocean to pay with. Nevertheless, the fact remained always the same-England stripped herself of her wealth in exchange