Coserve that with a decreasing volume of money THERE IS FALLING PRICES. This results in a disorganization of production
and trade. See the shrinkage in bank clearings and the increase in bankruptcies. But with an increasing volume of money THERE IS
RISING PRICES, and this stimulates production and trade. The Volume of Money-the cause of "good times" and "hard times" except as
monopolies interfere-is controlled by the voters acting through Congress. From 1892 to 1897 there was A DECREASING VOLUME OF MONEY
AND "HARD TIMES," then from 1897 to 1900, AN INCREASING VOLUME OF MONEY AND "GOOD TIMES," but the Adminstration while heralding the
increase in the volume of money has concealed the decrease prior to 1896; and is also concealing the Falling Price Level since
April of this year, due to an insufficient supply of money.

depression, and then read the demand of the bimetallist for "more money" and the denial of the McKinley party that there was any need for more money. Then after 1896, when the volume of money is increased by causes over which the Administration has no control, BEHOLD IT PROUDLY POINTING TO THIS GREAT INCREASE AND THE ENSUING PROSPERITY AS PROOF THAT IN 1896 THE REPUBLICAN PARTY WAS RIGHT AND ITS

Expansion of Credit Caused by There has been a large increase in the volume of credits. This has been caused by the increase in the volume of money. It was this way: After the volume of money had increased to a considerable extent, and it appeared that there would be a much larger increase, it caused the farseeing business men to anticipate a rise in prices and they, therefore, began to buy property in expectation of reaping a profit from the expected rise. And the buying caused prices to rise. Much of the property purchased was not paid for with

OPPONENTS WRONG. In other words, the party that was against an increase in the volume of money four years ago, when it was shrinking, now points to the beneficent effect of an expanding volume of money. It also claims that the expansion and consequent prosperity demonstrate that the Republican party was right four years ago and that the bimetallists were wrong! Wonderful logic!

Increasing Volume of Money.

cash, but promises were given to pay cash at a later date; in other words, there was an increase in the volume of credit. With the expansion of credit, prices continued to rise and the volume of money also continued to increase. These changes in the volume of money and credit are shown to the eye in a diagram on page 7. The main point which it is desired to call to the reader's attention is the fact that the expansion of credit was preceded by the increase in the volume of moneyit was caused by the increase in the volume of money.

The average rise of prices in the United States was 34.4 per cent. This high point was reached during April of this year, since which time falling prices have prevailed.*

In England, France, Germany and the other gold standard countries there was a similar rise in the prices of products, such as wheat, corn, oats, cotton,

2.

**

*Index number of Bureau of Economic Research; to same effect is index number by Bradstreet & Co. and published in their weekly paper.

This is the most remarkable record that has ever occurred in gold min

. $ 99,116,000

1899

.more than 300,000,000

** World's Production of Gold: 1881-1885

ing. During the years 1850 to 1860 California and Australia poured their streams of gold into the mints of the world and it sent prices soaring and stimulated business in all directions; but during the past three years the world's annual production of gold is two and one-half times greater than was the yearly output in the '50s; but the proportion between the output and the total stock of metal money is about the same. We are experiencing, then, as tremendous a change in the world's output of gold as occurred during the '50s. It is manifest that the McKinley Administration is not the cause of the enormous increase in the output of gold; BUT IT IS TAKING TO ITSELF THE CREDIT THAT IS DUE TO THIS OUTPUT; it is endeavoring to appropriate everything in sight, just as the trusts are doing.

(2) During the outpouring of gold from California and Australia in the '50s, France had gold and silver money in circulation, with the mints open to the free coinage of both metals. The result was that as the outpouring of gold. increased it flowed into France, and the heaviest silver coins were culled from the circulation, melted and exported to India, A SILVER USING COUNTRY. This raised prices in silver using India along with the rise of prices in Europe and in the other countries that used gold. The statistics showing all this are not questioned by anyone, for they are set forth by Prof. Laughlin and all writers on money and prices.

But during the present increase in the outpouring of gold, SILVER HAS NOT BEEN DRIVEN ABROAD. The mints of France and the United States are closed to the free coinage of silver, and therefore the increase in the production of gold affects only the countries using gold-IT DOES NOT EXTEND OVER THE ENTIRE WORLD AS WAS THE CASE IN THE

'50s. This is an important fact-the present rate of production of gold tends to raise prices faster than it would

Changes in Currency and Banking Operations in Europe.

"Among the weightiest influences affecting the world's finances during the past decade have been the currency and banking The operations of Europe. effect of these operations can be seen by dividing the period since the year 1887 into three parts: First, the four years ending with 1890; second, the four years following 1890; third, the four years ending 1898.

"1. 1887-1890.-During the four years ending with 1890 the gold product of the world averaged $115,000,000 per year. Of this amount Russia, Austria-Hungaand ry, France Germany absorbed through home production and net imports $25,000,000 per year, leaving $90,000,000 per year, or $360,000,000 for four years, for the arts and other countries. "2. 1891-1894.-During the four years following 1890 the world's average product of gold had increased to $154,000,000 per year, but these four countries increased their absorption more than sevenfold, reaching the average of $180,000,000 per year, thus taking not only the ENTIRE product of the period BUT $26,000,000 PER YEAR IN ADDITION. This not only left nothing for the arts, which therefore had to draw from the world's stock, BUT ALSO DRAINED $100,000,000 IN

FOUR YEARS FROM OTHER COUNTRIES.

Effect in United States.

"This extraordinary absorption of gold by these continental countries explains the loss of gold by the United States, a

loss which was offered as an excuse for repealing the Sherman Act, WHICH WAS ADDING TO THE VOLUME OF MONEY, whereas, in the first period, 1887-1890, above mentioned, the United States imported $80,000,000 net and produced $130,000,000, making a net absorption of $210,000,000, yet in the period 1891-1894 the United States exported $160,000,000 net and produced $140,000,000, suffering a net loss of $20,000,000. The net ex-ports were about equal in amount to the treasury notes issued under the Sherman Act. Had this gold, when it went abroad, gone into circulation, it would have increased the money supply of Europe, and would have kept up gold prices; just as was done by American gold in 1861-65 when driven to Europe by paper money at home. As soon as prices had risen, this would have checked the export of gold from this country. But, instead, the gold went out of circulation, BEING ABSORBED BY THE THREE LEADING EUROPEAN POWERS, AND GOLD PRICES FELL 15 TO 23 PER CENT IN SIX YEARS. There was a scarcity of gold, because these four countries took not only the entire gold output, but also a large part of that exported from the United States, and locked it up in war chests and treasuries, or substituted it for paper money. Russia, alone, in ten years ending 1897, took $500,000,000 in gold and destroyed $500,000,000 of her paper money. Austria also displaced paper with gold, and France, Germany and England, in order to protect themselves, increased the gold reserves in their state banks far beyond what had been known before. From December, 1889, to December, 1897, the gold held by the five state banks of the leading countries increased from $830,000,000 to $1,382,000,000, an increase of $550,000,000. At the same time notes and deposits increased from $2,312,300,000 to $2,548,900,000, an increase of only $236,600,000. In other words, while in 1889 the gold reserves of the five state banks amounted to 36 per cent of the

notes and deposits, in 1897 the gold reserves had been increased to 54 per cent of the notes and deposits. The greater part of these increased gold reserves was, therefore, just so much extracted from commercial use and in effect represented to that amount a contraction of the world's currency.

"Beginning in 1897 exactly the opposite movement occurred:

"3. 1897-1900.-In that year Russia finally adopted the gold standard, and began paying out gold for paper. She continued, indeed, her heavy importations into the country, but the gold in her treasury fell off $300,000,000 from December, 1897, to September, 1899. Altogether the gold held by the five principal banks decreased $164,000,000 in the 21 months from December, 1897, to September, 1899. This is equivalent to an increase in the world's available gold supply of $95,000,000 per year. During this year the notes and deposits remained practically stationary, and the ratio of gold reserves fell from 54 per cent to 44 per cent.

"At the same time a new factor appeared and began to augment still further the gold supply. This was the enormous increase in the world's production of gold. The product of 1897 was double that of 1890; the product of 1898 increased $50,000,000 above that of 1897; and the product of 1899 amounted to about $315,000,000, which was an increase of $200,000,000 per year above the average product of 1897 to 1890. This astonishing production of gold, coupled with lessened absorption by the four continental countries, left a large surplus for other countries. The surplus in 1895 was $125,000,000, whereas there had been an average deficit of $26,000,000 for the four years preceding. The surplus in 1896 was $90,000,000; in 1897, $80,000,000; in 1898, $203,000,000. The average surplus of these four years (1895-1898) was $124,000,000 per year, against an average deficit of $26,000,000 per year for