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settlement of balances. Other commercial countries are always, too, adjusting balances at the same place. Imagine the magnitude of the world's volume of trade, and you will see that $8,000,000,000 of “real money” for such a purpose as “ultimate redemp

“ tion” would go but little farther than $3,727,000,000 of gold. Neither sum would do, and certainly that portion of either sum which the power of all trading nations, using all their forces, could collect for the purpose of “ultimate redemption " at any

” place or at any time would be insignificant when compared to the volume of business to be settled.

We must look upon redemption in prac- . tice not as it may be in dreams. Every day in the year, paper promises are being redeemed and new paper promises are being issued, and continuous redemption and continuous issue will go on, keeping pace with each other, everybody taking part as he can or as he sees fit. The sum of money in use in the world fairly well suits the business needs of the world, in the practical conduct of such business, the redemption that goes on all the time being the only possible kind of redemption. And if the world use less silver for the purpose than it should use, in order to comply with the Senator's views, that is the fault of silver or the fault of the Senator's views, not the fault of the world. People sell goods for checks, drafts, notes, etc., but have in mind the using of their receipts in the purchase of goods, the loan. ing of capital, or in the making of investments; to hold actual money or to keep a large sum credited at the bank meaning to lose interest. Assisted by financial facilities, always growing, extending, and improving, the world's trade and commerce have gone on increasing and expanding, and on the whole the world is doing fairly well, and nobody need be troubled long by the theory of “ultimate redemption.”

Note.-Of late years there has been economical progress even in the matter of bank credits or balances in bank. Clearing-house systems have been so extended that many transactions in stocks and merchandise which used to call for separate settlements are now nearly offset by each other, checks being needed only for resultant differences.

CHAPTER XII.

THE OLD VOLUME-OF-MONEY THEORY.

The theory that variations in prices and in industrial activities are due often or generally to variations in the volume of money, is so persistent that the hourly, daily, weekly, and yearly denial of this theory by the movements of prices, on the floor of every commercial or stock exchange in the world, does not suffice for a complete overthrow. In early life, we notice that the more money we have the more things we can buy, and the higher the prices which we can afford to pay. We place money and things in two opposing positions, money struggling to advance every. thing, while everything naturally tries to sink to a low level; and so when prices move upward or business is active we think that the supply of money is plentiful, and when prices move downward or business is

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dull we say that money is scarce. It does not appear to be important that hardly ever are movements in prices or changes in industrial activity accompanied by changes in the volume of money, nor does it affect the life of this old theory to show that a downfall in prices has occurred while the volume of money has been increasing ! The theory is bred in our bones and will live on!

During the past twenty years or so the prices of commodities in this country have fallen to the extent of an average of about thirty per cent., and business has been alternately slow and brisk, and brisk and slow, but, concurrent with this decline in prices and this undulatory movement of trade, there has been an increase in the volume of money, in circulation, to the extent of about ninety-four per cent., being an increase, per capita of population, of about twenty per cent., as shown by the following tables furnished by the Director of the Mint, Mr. H. O. Leech, to the Committee of the House on Coinage, Weights, and Measures, 1891.

“The following tables (page 186] exhibit the comparative amounts of the various kinds of money in actual circulation at different periods. The various sums stated in the tables are all exclusive of money in the Treasury. They represent, as nearly as is possible, the exact amounts of the several kinds of money in actual circulation among the people at the periods named.”

Accompanying the increase in volume of money and in sum per capita, and emphasizing the truth that money has not been really scarce, there have been a fall in the average rate of interest, an advance in the average rate of wages, an advance in rents, and an advance in the price of real estate. But in spite of all this the silver advocate points to the fall in the price of silver bul. lion, talks of the “demonetization ” of 1873, and reiterates the exploded volume-ofmoney theory, without stopping to consider that we now have a greater volume of money and more money, per capita, than ever before in the history of this country.

The erroneous notions of our day are similar to those which prevailed in the first

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