118  THE  PROBLEM  OF  THE  UNEMPLOYED

§  5.  Does  a  Fall  of  Prices  Come  from  Increased
Supply  or  Restricted  Demand?
Since  a  continuous  fall  of  prices  means  nothing  else
than  an  actual  excess  of  supply  over  quantity  demanded
at  former  prices,  it  may  be  explained  either  by  the  operation ­
  of  forces  which  feed  Supply  without  stimulating
Demand  to  a  corresponding  extent,  or  by  the  operation
of  forces  which  act  primarily  as  a  restriction  of  demand.
Since  bimetallists  repudiate  the  explanation  that  the  fall
of  prices  since  1873  is  due  to  a  cheapening  of  “cost”  of
production  which  has  enlarged  supply,  they  are  driven  to
the  alternative  admission  that  the  result  of  an  insufficient
supply  of  money  is  to  restrict  demand  for  goods.  This
admission  is  seldom  made  in  so  many  words  because
currency  men  often  seem  to  lose  sight  of  the  principle
that  price-change  always  means  in  the  first  instance  a
change  in  the  quantitative  relation  of  supply  and  quantity
demanded  at  a  former  price.  But  the  bimetallist  position
clearly  rests  upon  the  assumption  that  an  insufficient
supply  of  money  disables  purchasers  from  buying  as  much
as  they  would  otherwise  have  done.  The  two  explanations
of  falling  prices,  an  enlargement  of  supply  and  a  restriction  of
demand,  form,  it  is  true,  no  logical  antinomy  ;  both  forces  may
be  operative  in  different  degrees  ;  but  for  testing  the  truth  or
falsehood  of  the  financial  explanation  of  depressed  trade,
we  may  treat  them  as  alternatives.  Our  position  is  that
the  forces  which  depress  prices  have  in  fact  operated  by
enabling  larger  quantities  of  goods  to  be  added  to  supply
at  less  labour-cost,  and  that  in  order  to  effect  sales  the
owners  of  these  goods  have  been  constantly  obliged  to
lower  prices.