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thought, public aspiration, and public zeal for the common welfare begin to move in unison toward the sea, then, and not till then, shall we begin to carry our own commerce; then only shall we begin denying to England her tribute of three hundred millions a year.

I have already shown that the foundation of the colossal structure of England's ocean commerce is the English shipyard. I have pointed out also that the English shipyard can never be the foundation of an American ocean commerce. That must rest on the American shipyard.

It has been shown that England, under the direst distress for raw material, never dreamed of resting her sea power on foreign shipyards; that she drew her timber from foreign forests, her hemp from foreign fields, the cotton for her sails from foreign plantations, and her tar and resin from foreign pine woods; but she never drew a ship from a foreign shipyard except by capture in war! Even now she imports nearly all the ore used in making the mild steel of which her modern ships and engines are built.

But we need import no raw material. If the genius of our country should demand ships, we could build in a few years a fleet equal to England's in extent and superior to it in quality, without importing a pound of raw material; we could found a new commercial sea power wholly on the resources of our own domain. Therefore, situated and endowed as we are, the American shipyard is to any possible American marine of the future what the soil is to bread. The fertility is here; it only remains to sow the seed.

In that fact lies the significance of the legend which forms the title of this paper. It may-in fact it must-be taken for granted that the tribute of three hundred millions a year which we now pay to England through English shipowners, cannot go on forever. It must stop some time. It will stop whenever, through the usual channels of disseminating popular knowledge, a clear understanding of the state of things shall have been impressed upon the American people; whenever they shall have come to comprehend the relation of commercial seapower to the sum-total of their national prosperity; whenever they shall have gained a practical conception of the relations which now exist between the American producer or consumer and the English common-carrier.

Just how long it will take the mental processes of the American public to reach these perceptions cannot now be judged. But progress in that direction is apparent. Already many men to whom their neighbors look for guidance have perceived that so long as the English octopus has a tentacle fastened to every one of our seaports, sucking our financial life-blood, so long will legislation on tariffs and currencies be as futile to remedy the prevailing ills as tonics would to build up the system of a patient slowly bleeding to death from an opened artery!

Such a trend of thought and perception never recedes. It always advances. So, there is reason to believe that the time is not remote when ocean commerce will again engage the energies, stimulate the ambitions and attract the capital of Americans, as it did in the days of our intrepid grandfathers; when the desire to see our commercial flag in foreign ports will be not merely the patriotic sentiment of an occasional traveller, but an instinct of trade pervading a mighty nation. Then there will be an American merchant marine, and it will be erected upon the foundation of the American shipyard. Then will the American people realize, as the English people now do, the shipyard's commercial value.

LEWIS NIXON.

EFFECT OF THE NEW GOLD UPON PRICES.

BY CHARLES A. CONANT.

ONE of the most fascinating problems of economic science connected with the great gold and silver discoveries of the sixteenth and nineteenth centuries has been the effect of the new metal upon prices. The quantitative theory of money has been much called in question in recent years, but it was accepted almost religiously by many of the economists who wrote at the time of the great Californian and Australian discoveries. According to this theory, in its crudest form, prices were bound to advance in just the proportion which the new supplies of the precious metals bore to those already in existence. While this did not occur in any case, the changes in prices were sufficiently radical after the opening of the American mines in the sixteenth century to justify the opinion that they were due chiefly to the increase in the supply of gold and silver, and they were sufficient after the Californian and Australian discoveries to establish a reasonable probability that they were due in part to the same cause. It is an interesting question whether in our own time another revolution in nominal values is to be accomplished by the infusion of a great mass of new gold into the currency systems of the world.

It will be useful to lay the groundwork for an answer to this question by reviewing the history of previous great additions to the supply of metallic money and their supposed effect upon prices. The supply of the precious metals in the western world, both gold and silver, was greatly reduced during the barbaric ages by abrasion, the loss of hidden treasure, and the export of the metals to the East. The art of mining, by the separation of the precious metals from the ores and from the inferior metals with which they were mingled, was lost with the decline of the

Roman Empire; and, according to Mr. Jacob, a high authority on the subject, there was a decline in the visible supply of precious metals available for use as money from £358,000,000 ($1,750,000,000) in 14 A. D., to £34,000,000 ($170,000,000) at the time of the discovery of America, in the year 1492.

Treasures of gold and silver were found almost as soon as America was discovered, but they were trifling in amount until 1545, when the silver mines of Cerro de Potosi were opened. Even this event did not increase the supply of the precious metals at a rate exceeding £2,100,000 ($10,000,000) annually, according to Mr. Jacob, but this was an increase of about six per cent. a year upon the scanty stock existing in 1492. The seventeenth century witnessed a farther increase in the annual supplies of the precious metals, chiefly by the opening of mines in Brazil, and the annual average production during that period is reckoned at £3,375,000 ($16,500,000).

Mr. Jacob made elaborate calculations for abrasion and export to the East, which were entirely too high, but as all the figures are estimates, it is not worth while to modify Mr. Jacob's computation that £297,000,000 ($1,450,000,000) of gold and silver remained in the western world at the end of the seventeenth century (1699) for monetary uses. The mines of Mexico became productive in the eighteenth century, and the visible monetary stock of the precious metals, in 1810, with deductions for losses and other uses than coin, amounted, according to Mr. Jacob, to £380,000,000 ($1,850,000,000). This is a little less than onequarter of the visible stock of metallic money existing in the world to-day.

Before dealing with the discoveries of the fifth decade of the present century, it will be well to investigate the effect upon prices of the infusion of new gold and silver into the scantily-fed channels of circulation of the sixteenth, seventeenth and eighteenth centuries. Spain was the first of European countries to feel the force of the new gold and silver, since it was mostly taken from her colonial mines and shipped to the government or to Spanish merchants at home. "In the chief towns of Spain," according to Mr. Cliffe Leslie, "prices seem to have risen even before the fifteenth century had closed." The influence of increased prices was not felt in England, according to Adam Smith, until about 1570. From that year until 1640 silver sank so rapidly in

purchasing power that corn rose in cost from about two ounces of silver per quarter to six or eight ounces. Fixed incomes shrank seventy-five per cent. in their power of purchasing the means of living, and pauperism spread rapidly in England on that account. "Nor is it improbable," says Mr. L. L. Price, "that the difficulties of Charles the First, and the eventful quarrel which followed, were partly due to the increased expenditure of the Court necessarily occasioned by the rise of prices." Mr. Hume computed that prices of all things had risen three or four times since the discovery of the West Indies, and Mr. Jacob computed the increase at the ratio of 470 to 100.

The early part of the nineteenth century was marked by an arrest in the increase of the supply of the precious metals. There was a considerable improvement in production after 1830, which by 1848 was sufficient to supply losses and afford a slight increase in the stock of metallic money. The entire production of gold from 1493 to 1850 was calculated by Professor Sootbeer at 4,752,070 kilograms, representing a value of about $3,168,047,000, while the production of silver was calculated at 149,826,750 kilograms, representing a value of about $6,292,723,000.

Upon these conditions came the great discoveries of gold in California and Australia. The production of gold rose at a leap from an annual average of $13,484,000, in the decade ending with 1840, to $36,393,000, for the decade ending with 1850, and to $132,513,000 for the five years ending with 1855. The yield of gold did not fall much below these figures until the fifteen years ending with 1885, when the annual average was only about $110,000,000. The production did not again show radical changes until after 1890, when a new era of progress set in as the result of the great gold production of the Witwatersrand region of South Africa. The effect of the Californian and Australian discoveries upon prices was spent before 1870, and the results of the South African discoveries belong to a later era.

We are now dealing with gold alone, and it was in gold that the great increase in production took place prior to 1870. As there is not occasion here to discuss the bimetallic problem, it will not detract essentially from the force of comparisons if the entire amount of metallic money computed by Mr. Jacob as existing in 1830-$1,500,000,000-is considered as consisting of gold,

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