The New Gold and the Fall of Prices
Journal of Political Economy
JOURNAL OF POLITICAL ECONOMY equal power of every dollar at all times in the markets and in the payment of debts. With knowledge of these assurances, the people have received those coins and have relied confidently upon the good faith of their government, and the confidence thus inspired has been a most potent factor in the maintenance of the parity. The public has been satisfied that, so long as our present monetary system is preserved, the government will do whatever its moral obligations and
... ral obligations and express declarations require it to do, and, very largely in consequence of this confidence in the good faith of the executive authorities, the silver coins have not depreciated in value. It is not doubted that whatever can be lawfully done to maintain equality in the exchangeable value of the two metals will be done whenever it becomes necessary, and although silver dollars and silver certificates have not, up to the present time, been received in exchange for gold, yet, if the time shall ever come when the parity cannot be otherwise maintained, such exchanges will be made. It is the duty of the Secretary of the Treasury, and of all other public officials, to execute in good faith the policy declared by Congress, and whenever he shall be satisfied that the silver dollar cannot be kept equal in purchasing power with the gold dollar, except by receiving it in exchange for the gold dollar, when such exchange is demanded, it will be his duty to adofit that course. But if our present policy is adhered to, and the coinage is kept within reasonable limits, the means heretofore employed for the maintenance of the parity will doubtless be found sufficient in the future, and our silver dollars and silver certificates will continue to circulate at par with gold, thus enabling the people to use both metals instead of one only, as would be the case if the parity were destroyed by free coinage. THE NEW GOLD AND THE FALL OF PRICES. PROFESSOR J. CONRAD has renounced the view that the fall of prices since I873 has been due to a diminished production of gold. The fact which has led him to this change of opinion is that the recent large increase in the production of gold has not exercised any appreciable effect in retarding the continued decline of the price level. Professor Conrad's discussion of this question may be found in a recent article in Hildebrand's JahrNicher.