In the closing section of the paragraph to which I have referred Mr. Wells makes a serious mistake in confusing the abundance of capital and a low rate of interest with an abundant supply of money. From the approving manner in which he quotes Lord Addington he seems to affirm that there can be no appreciation of the value of money so long as there is an abundant supply of capital and a low rate of interest. After all the discussion which has taken place in order to show that the popular use of the word “money" has two meanings, — the one referring to the quantity of the currency and the other to the abundance of loanable capital, it seems strange that an economist of his reputation should confuse the two. A low rate of interest indicates an abundance, not of money, but of capital seeking investment; and it is quite possible that a nation should have a plentiful supply of capital and yet have a decreasing supply of money. Capital may grow and interest may fall at the same time that money is becoming scarce. In what way would Mr. Wells account for the fall in currency prices at the close of the Civil War except by a change in the relation of the quantity of paper money to the volume of business?

But even on Mr. Wells' own basis there seems to have been an increase in the value of gold. He claims that there has been a reduction in the price of those commodities only which are now produced by improved processes. Another class of commodities, he thinks, has increased in price (page 191). This class is composed mainly of those articles which are produced by unaided labor under conditions similar to those by which the articles were produced in earlier times. Now, gold is a product of manual labor and belongs to the latter class, not to the former. Gold is obtained in the same way as formerly. There have been no changes in the methods of producing it. Hand labor still washes the gold from the sand, and its value must be determined by the value of labor. Labor having increased in value, as Mr. Wells claims (page 361), we should expect to find as a result that the value of gold in the market would be greater than formerly.

The challenge which Mr. Wells gives to his opponents, to show how a scarcity of gold can depress prices, affords the most favorable opportunity to compare his methods of reasoning with established economic canons. He is perfectly safe in asking for a concrete case of a particular commodity which has fallen in price from a scarcity of gold, because such a scarcity affects all commodities alike and does not furnish concrete cases. The chief difficulty with Mr. Wells is that he takes hold of this problem wrong end first. How prices are depressed is not an independent proposition to be treated alone. It can be solved only after knowing how prices are fixed. That the scarcity of gold lowers prices is a deduction from the well-known facts upon which the laws relating to the value of money depend. While the effect of a scarcity of gold in lowered prices may be disputed, no one yet has denied that the rapid increase of the gold supply since the discovery of America has raised prices. If an increase in the supply of gold will raise prices, it is certainly good logic to assume that a scarcity of gold will have the opposite effect. Perhaps, however, the best proof of the fact that a change in the quantity of money affects prices comes from the history of paper money. There is in this history an abundance of facts showing that the quantity of money is an important element in fixing prices, and Mr. Wells must transfer his battle to the causes fixing prices in these cases before the facts of his opponents can be called into question. He must, in the first place, give us a theory of fixing prices in which the quantity of money plays no part a theory making prices depend solely upon the abundance of capital, the rate of interest, the amount of credits or the quantity of circulating personal property. When such a theory is advanced by Mr. Wells or the friends from whom he quotes, they will find that their opponents have ample resources to sustain the position of the earlier economists.

The only strange thing is that he should suppose that the facts he presents are new to economic literature and hence can have an effect upon the theory of money. He talks of the different quantity of money needed by France and England to do

the same amount of business, just as though this fact was not illustrated and explained in every elementary political economy. He brings forward a table (page 222) to show that prices are not determined by the quantity of money, just as if the author of the laws of money was a mere theorist ignorant of commercial facts. While there has been an abundance of fault found with Ricardo's knowledge of industrial relations, no one has dared to question his thorough familiarity with money matters. He was a practical business man who appreciated fully all those conflicting surface currents which affect the money market. His success as an economist lies in the careful analysis he made of these conflicting causes and in the extent to which he revealed the laws upon which they depend.

The defects of Mr. Wells' point of view come out very clearly in discussing the future of silver. From what he says on page 459, it does not seem that he anticipates or even desires any reduction in the price of silver. He has no objection to the bolstering up of the price of silver, only the bolstering must be done by his method and not by that advocated by the bi-metallists. They would like to have our government keep up the price of silver by increasing the coinage of our country. This Mr. Wells does not wish to see done. He thinks the duty of upholding the price of silver should fall upon the less civilized races, for which a silver standard is in his judgment peculiarly adapted. Make them more prosperous and they will use more silver, and as a result the present supply of silver can be used up in their currencies. Accepting this way out, Mr. Wells wants governmental action as much as our bi-metallists, the only difference being in the line of action to be pursued. Mr. Wells' remedy is the one he applies to all industrial troubles that of the reduction of the tariff. Reduce the tariff and then, in his opinion, we can secure a market for all our silver in the less civilized nations with whom we trade. The error in this position lies in supposing that the American people are as a whole interested in a high price for silver. On the contrary, they are deeply interested in a low price for silver. Silver is a commodity which it

is a good thing for the American people to consume. It has

qualities which would make it especially useful to mankind if it could be cheaply produced. It will not easily tarnish and has a brilliancy and beauty that would cause it to displace, for many purposes, the cheaper metals which lack these qualities. Its clear, metallic tone makes its use for musical instruments very desirable. Silver ware also is of immense importance to the American people for household uses. We must therefore regard the interest of the American people as lying in cheap silver and not, as Mr. Wells supposes, in dear silver. The great advantage of a single standard of gold lies in the fact that it allows the use of silver as a commodity by the American people, instead of having it stored up at Washington, as the advocates of dear silver demand. In the end the American people will accept neither the solution demanded by the friends of silver nor that suggested by Mr. Wells. They will not pile up the silver in Washington, nor will they export the mass of it for the use of less civilized countries. They will retain it for their own use and consume it in a thousand ways that will add materially to their happiness and prosperity.

In the endeavor to restore the price of silver to its former level there is nothing akin to the doctrine of protection. It lies at the basis of all protectionist arguments that in the end the protected articles become cheaper to the public than foreign productions. Owners of iron and copper mines get their protection on the plea that it helps to cheapen the metals they produce; and they present a mass of facts which at least seem to show that protection has benefited the consumers of their products. The owners of silver mines, on the contrary, do not ask for a higher price of that product in order that it may in the future be permanently reduced to a lower price than ever before. They claim that a high price of silver is a benefit to the public, and they ask the government to lend its aid to their endeavors in behalf of a permanent increase of this price.

Butter-making is the only other industry which stands in the same position. The dairy men ask that the price of butter be restored to what it was before the manufacture of oleomargarine,

and they make no claim that this increase of price will lead ultimately to lower prices. The dairy men want "natural" production as badly as Mr. Wells does. He therefore deserves great credit for breaking away from his prejudice for "natural" production in this case. It is hard, however, to see why the "natural" production of butter should not have the same preference as that of sugar. If the cane is defrauded by getting sugar from a beet, certainly the cow is wronged by making butter from a hog.

A few more illustrations of the logic of Mr. Wells may profitably be selected from other portions of his book. His defective. reasoning comes out quite clearly in discussing the relation between wages and labor-saving machinery. He argues that laborsaving machinery must be beneficial to laborers because wages have risen since the introduction of improved machinery. In this matter his opponents presumably would not contradict any of Mr. Wells' facts. They would merely point out the defects in the conclusion. Wages may have risen, they would say, but not in proportion to the increase of productive power. If this is true there must be some cause for the deficiency-there must be some counteracting agency which has prevented the laborers from receiving a proper share of the increase of productive power. For those analyzing the present situation in this way, it is at least tenable to maintain that the one-sided industrial development of the laboring classes and the economy of skill resulting from the use of large quantities of machinery are the causes of the slower increase of wages as compared with the increase of productive power. The difference in the two positions, therefore, is not a question of fact as to the increase of wages; it is merely a question of reasoning as to what is the influence of the different agencies which are operating upon the laboring classes.

Another illustration of bad reasoning is to be found on page 370, where the author assumes that the absolute share of the product to both laborer and capitalist has been increased because of the increase of the total product. This theory overlooks the fact that the whole product of industry does not