Coin's Financial School (Kindle Reader Edition Download)

An in-depth look at gold, silver and money.

Excerpt:
Page 49

It is impossible for the layman to evaluate the merits of this traditional case against the gold standard. But most economists who are familiar with macroeconomic developments have tended in recent years to minimize the effect of the bullion basis of money in the secular price decline, as compared with certain long-range changes that came with industrialism and improvements in transportation. The development of industry brought many long-range cost-reducing improvements. Massive investments in railroads and shipping, improvements in transportation facilities, the opening of the Suez Canal-such changes led to the rapid development of great tracts of virgin land throughout the world and the rapid shrinkage of the world into a single market.

The effects of such changes were felt with special acuteness by the farming populations, which found themselves competing in a crowded international market and victims of a common crowded agrarian depression. Studies in the history of the real money supply, moreover, indicate that changes in banking during this secular price decline were more and more detaching the real money supply from the rate of growth of the gold supply. The calculations of J. G. Gurley and E. Shaw for the United States, which take account of demand deposits and other sources of expansion, show a steady growth in the real per capita money supply for the decades from 1869 to 1899, and an annual rate of growth somewhat higher than in the years before the Civil War. The gold standard may well have aggravated the price decline but it cannot be assigned full blame.