MODIFIED GOLD AND DOLLAR STANDARDS (2)

Moreover,the price level was at the mercy of the happenstance of gold discoveries . If world physical output (GNP) was increasing in the years 1875 to 1895 at the rate of 5 per cent per year ,the gold supply would-according to the crude Quantity Theory of money-have to increase by 5 per cent per year to keep prices stable .but mines ,because of the ending of the Californian and Australian gold rushes,were not producing this much gold then; and as a result ,price levels were sagging all over the world in the last third of the nineteenth century.
this gives rise to much social unrest . In an ideal world of perfect price and wage flexibility, where the Quantity Theory worked smoothly both down and up ,falling prices should not have mattered much.but, as Hume himself insisted ,prices and wages tend to be sticky downward ;and falling price levels tend to lead to labor unrest ,strikes,unemployment, and radical movements generally . Precisely that happened in the United states and other countries during the 1875-1895 era of populism .Since gold seemed to be squeezing prices downward ,there was a clamor on the part of farmers and workers for use of silver to supplement gold .This culminated in the historic speech by William Jennings Bryan in favor of " bimetallism " at the 1896 Democratic Convention , where the Boy Orator of the Platte warned against crucifying mankind on cross of gold.