Read Ebook: My Queen: A Weekly Journal for Young Women. Issue 2 October 6 1900 Marion Marlowe's Courage; or A Brave Girl's Struggle for Life and Honor by Sheldon Lurana

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"Agitators and demagogues" indeed! Is it not monstrous that any intelligent man should believe the present frightful condition of the country to be due to the work of agitators and demagogues? Mr. Cleveland of course knows better; but many people have actually been convinced that some millions of our citizens would rather agitate than work; that thousands of them have deliberately and by preference forsworn business and become demagogues by trade. The thoughtful man knows that agitation is first a result and afterward a cause. It is a cruel as well as an ignorant thing for Mr. Cleveland and his disciples to cast into the faces of the suffering producers and workers of the United States, as a reproach, the fact of their discontent and complaining. Of course our people are in distress. Of course they are crying out against it. Of course they will endeavor to learn what occasions it. And of course when they have ascertained what the matter is they will agitate for relief. Substantially all men prefer to be busy about the ordinary and interdependent offices of social life. This is especially true of the great middle classes in the United States. Under just and rational laws they will be so. The absence of such a temper is ground for suspicion against the laws. Existing conditions confess their weakness and injustice when they revile admitted discontent. I would rather the cause I believe in sprang from suffering than that suffering should follow my cause.

But Mr. Cleveland made it known, through the subterranean channels of diplomacy, that, far from giving any support to silver, he was preparing to urge on Congress the repeal of the silver-purchase clauses of the Sherman act. Mr. Cleveland's intention became known in official circles in Calcutta. That this was the case I learned at the time and at first hand. The government of India believed that the cessation of all silver purchases in America would still further reduce the exchange value of the rupee, and therefore, in advance of the pending anti-silver legislation anticipated from Washington, the Indian mints were closed.

Mr. Cleveland may well be deified in the gold-standard cult, for clearly he has been the arch-enemy of bimetallism.

This is the attitude of nearly all the defenders of the gold standard who have the hardihood to say anything at all. Undoubtedly in many cases it is assumed because of ignorance on the merits of the case, so that nothing remains but to "abuse the other fellow." But occasionally this course is adopted by men who are well informed, and who know that the gold standard is incapable of meeting bimetallism in an honest contest of argument with any hope of success. The strategy of these, therefore, is to avoid fair discussion by so prejudicing the public mind against their opponents as to forestall a hearing.

The result has been surprisingly successful. In many localities, and in fact in nearly all localities in the East, the most intolerant spirit has been manifested by the most prominent persons in the community, who had never taken the pains to examine the subject on which they so violently and fanatically expressed themselves. To people of any acquaintance with the literature, the history, and the science of money, it has seemed most marvellous that business men of large affairs, of much general information, and of excellent natural abilities, should be content to remain absolutely ignorant of fundamental monetary principles and the overwhelmingly attested lessons of past experience. It is infinitely pitiful to see men of affairs led away in so-called "business men's sound-money associations" and other similar movements, when a knowledge of the conditions on which their welfare depends would send them in an exactly opposite direction.

Why? Because business men are men who do business, or at any rate who want to do business; and all legitimate business consists in the performance of some appropriate function in connection with the production or the exchange of commodities. It is apparent to even the dullest apprehension that whatever prevents or discourages production is destructive of business, and that a money system which provides a measuring unit that constantly demands, as an equivalent, an increasing quantity of everything produced, is the greatest burden on production that could possibly be devised. But it is precisely this kind of a unit that the gold standard furnishes. No one economic fact is so conclusively established and so generally conceded as that of the progressive fall of average prices throughout the gold-standard world during the last twenty-four years. This fall amounts to almost fifty per cent, and indeed, in respect to the great staple products of the country, exceeds fifty per cent; so that, to state the same fact in its converse, the purchasing power of gold has increased since 1873 one hundred per cent.

The significance of this awful fact is deftly obscured behind the deceptive and specious plea for "a dollar of the greatest purchasing power." This is one of those artful expressions that are used by the advocates of the gold standard as a kind of thought-deterrent. It seems so obvious, at the first suggestion, that the best dollar is the dollar that will buy the most, that it is hard for a man to get even a hearing who asserts that, on the contrary, such a dollar is the very worst dollar conceivable. But a moment's reflection will satisfy any sane mind that such is the case. The demonstration is so simple that one feels like apologizing for making it. Yet it is in respect to principles just as plain as this one that people are constantly allowing themselves to be taken in by the supporters of the single standard.

The demonstration is this: whatever is bought by a dollar, itself buys the dollar. For example, when a dollar exchanges for a bushel of wheat, the dollar buys the wheat, and the wheat buys the dollar. To say, therefore, that a dollar that buys two bushels of wheat, being a dollar of greater purchasing power, is better than the dollar that buys one bushel, is to say that the dollar which it requires two bushels of wheat to buy is a better dollar than that which can be bought with one bushel. Consequently, to increase the excellence of your dollar all you need to do is to increase the scarcity of the stuff out of which dollars are made, so that each one shall constantly stand for more and more wheat, or, using wheat merely as representative of commodities in general, so that it shall constantly require more and more of all other things on earth to get a dollar. It is wholly credible that the man with dollars should profess this philosophy, but it is absolutely inexplicable how it should receive the support of men interested in getting dollars with things, who comprise about seven-eighths of society.

Now as it continually takes more products to get a given quantity of gold, is it not clear that the producer who becomes liable for taxes and gets into debt must constantly bear an increasing burden of taxation, and that his debt, payable in more commodities than it represented when he incurred it, needs only to run long enough to grow beyond the hope of his ability to pay it? Such a policy cannot but be fraught with certain ruin to producers. It is causing in the United States a condition frightful to contemplate. The mass of debts is piling up at a ratio that absolutely threatens, if a halt in the automatic process is not soon called, a universal insolvency. Indeed a general liquidation is already impossible. He is no alarmist who counsels a timely and rational remedy as not only demanded by justice, but as anticipatory of violent readjustment. Under such disquieting conditions is it not as criminal as it is unscientific for men to go about prating of the system that has occasioned these things as "honest money," and "sound money," and denouncing its opponents as repudiators and anarchists?

The speech of Mr. Carlisle was notable for stating his position more extremely than he had previously done since his apostasy. He boldly takes the stand logically demanded by consistency in the man who opposes silver coinage and denies the arguments based on the appreciation of gold. He comes out squarely for the gold standard and places bimetallism of any and all sorts under a common ban. But alas! what a sorry appearance he makes. Nowhere in our political history do I find quite so pathetic a figure as that presented by this once strong and virile champion of the people's rights in his contrasted role of defender of their oppressors. Where now is that compact and cogent argument, that sincere and moving eloquence, which made his forensic style so singularly effective; which marked him the parliamentary darling of his party, a predestined president of the republic? Shrunken to the dreary platitudes of the gold-standard catechism, babbling of "sound currency" and "intrinsic value."

This talk of intrinsic value was not confined to Mr. Carlisle. Mr. Patterson, of Tennessee, and Senator Caffery, of Louisiana, were likewise guilty of it. It is, indeed, the characteristic folly of their school. Having destroyed the money demand for silver while adding almost incalculably to that for gold, they have caused an increasing disparity in the values of the two metals; and now, when it is sought to restore the parity by restoring the equivalence of use and demand on which alone it depends, they pretend to have discovered some inherent perfection in gold and an original sin in silver which forbid all attempts to reconcile them. In the face of monetary principles whose nature has been understood for more than two thousand years, and of historic and economic facts which every college freshman knows, Mr. Carlisle has the appalling audacity to use the following language: "Natural causes have separated the two metals, and while it is possible that natural causes may hereafter change their present relations to each other, it is certain that these relations cannot be changed by artificial means."

It is difficult to speak with becoming moderation of such stuff as this; and it is really pathetic to see the dominant opinion of whole sections of the country taking its cue from men who assume superior airs and rebuke the presumption of thinking on the part of some millions of Americans, while they peddle such insufferable nonsense as this just quoted from Mr. Carlisle. "Natural causes" indeed, when we can turn to the statute books of half the world and put our fingers on the "artificial means" whereby the hoarders of gold have legislated demand into one metal and legislated it out of the other. Let once a wrong be achieved by artificial means, and instantly those who profit by it represent it as the inevitable decree of evolutional forces. "Natural causes," we are asked to believe, have made gold dear and silver cheap during a period when the cost of producing gold has been cheapened more than any other mechanical process; when both metals have continued on substantially their old relative planes of use in every respect save as money; when their relative production has been from three to twenty times less disproportionate than at any other similar period in the past four hundred years; and when in actual weight the stocks of coin and bullion available for coinage have risen from a proportion of thirty-two of silver to one of gold up to that of sixteen of silver to one of gold coincidently with a fall of the so-called market ratio from fifteen and one-half to one, when the mints were open to both, down to thirty-three to one when only the one can be freely coined. It is simply an incredible and impossible proposition.

Intrinsic value is as unthinkable as intrinsic distance. Both distance and value are relations. Neither can exist or be stated except by comparison. The value of a thing is what it is worth; and it is worth what it will bring. Value in exchange is the only value that political economy knows anything about; and what a given thing will exchange for depends on the ratio of the supply of it to the demand for it. A piece of money is worth what it will buy. Other things remaining the same, it will buy more when the stuff out of which it is made is plentiful, and less when that is scarce. The proposition of the bimetallists rests on only time-honored doctrines of political economy as justified by the experience of mankind. We desire to restore the parity of gold and silver by perfectly "natural causes" set in operation by "artificial means." We propose to invoke the law to equalize their opportunity and to make them interchangeably and indifferently responsive to the same money demand.

Space has not permitted reference to all the errors committed at this wonderful banquet, nor a complete discussion of even those cited. I have endeavored only to point out the most glaring ones in the hope that some persons inclined to accept, somewhat carelessly, the assumedly authoritative statements of these eminent men, may be led to study this great subject whose proper understanding and wise management are of such vast importance not only in American politics but in the progress of the race. For the cause of bimetallism must commend itself to the intellect and the conscience of the country or it cannot win. Those who have spent some time in an earnest and thoughtful investigation of the matter and are convinced that the success of silver coinage is the first step in a series of rational, safe, and necessary reforms, are ready to be judged as much by the reasonableness of their doctrine as by the sincerity of their motives. They intend from now on to force the fight. The enemy will be sought out and assailed wherever found. No pretentious claims of infallibility will be accorded immunity from criticism. No authority will be permitted to shelter folly. It is time to expose the preposterous assurance of the gold-standard pundits. Nonsense will be called nonsense whoever utters it, and, what is more, it will be proved to be nonsense.

DOES CREDIT ACT ON THE GENERAL LEVEL OF PRICES?

BY A. J. UTLEY.

It is conceded by all standard writers on political economy that the value of money--that is, its purchasing power--is fixed and regulated by the amount of money available for use.

John Stuart Mill says:

This is known as the quantitative theory of money, and is recognized by Ricardo, Jevons, Macleod, John Locke, James Mill, John Stuart Mill, Senator John P. Jones, David Hume, William Huskisson, Sir James Graham, Prof. Torrens, Prof. Sidgwick, J. R. McCulloch, Mr. Gallatin, Prof. Fawcett, Prof. Perry, N. A. Nicholson, Earl Grey, Prof. Shield Nicholson, Lord Overstone, and, in fact, by all writers on political economy of any prominence since Adam Smith. Formerly it was supposed that the value of money depended upon the cost of production; that the reason why a dollar in gold or silver was worth 100 cents was because it took 100 cents' worth of labor to produce metal enough to make a dollar. This theory, however, has been abandoned by the best writers and speakers; in fact, by all economists of any standing, and it is now conceded that the cost of producing the metal has no influence on its money value, only as it may tend to increase or reduce the amount of money, and that it is the quantity of money, the number of units, available for use that determines and regulates its value; that is, if the quantity is increased its value will fall, and if the quantity is diminished its value will rise, and that it will fall or rise in value in a ratio exactly equivalent to the increase or diminution of the volume of money; and that if sufficiently reduced in volume, a dollar, whether stamped on gold, silver, or paper, would buy a plantation or pay a man for the labor of a lifetime. There can be no doubt as to the correctness of the quantitative theory of money.

John Stuart Mill says:

That an increase in the quantity of money raises prices, and a diminution lowers them, is the most elementary proposition in the theory of currency, and without it we have no key to any of the others.

Prices, however, are not fixed by the total amount of money in existence; only that part of the money that is available for use can act on prices.

Mr. Mill says:

Whatever may be the quantity of money in the country, only that part of it will affect prices which goes into the market of commodities and is there actually exchanged for goods of some description. Whatever increases this portion of the money in the country tends to raise prices. Money kept in reserve by individuals to meet contingencies which do not occur, does not act on prices. Money in the coffers of banks, or retained as a reserve, does not act on prices until drawn out to be expended for commodities.

It is also conceded that in fixing prices not only all the money actually available for use must be taken into consideration, but the rapidity of circulation must also be regarded; and due allowance must be made for the number of times commodities change hands before consumption.

The same dollar may, by passing from hand to hand, make a number of purchases, and the same goods may be sold repeatedly before consumption. It is, probably, correct to say, that the money available for use multiplied by the rapidity of circulation, or, as Mr. Mill expresses it, by its efficiency, equals the total money to be considered; and the commodities sold multiplied by the average number of sales equals the total commodities to be taken into consideration in fixing the general level of prices.

Are there any other elements that act on the general level of prices? Of course an abundant yield, or a short crop, or an over-production, so called, or under-consumption, of any particular commodity may depress or raise the price of that particular crop or commodity; but are there any elements other than those above enumerated that act on the general level of prices? I think there are none.

If, then, prices are controlled by the volume of money available for use; and if the general level of prices will rise as the volume of money is increased, and fall as the volume of money is diminished, and rise or fall in an exact ratio corresponding with the expansion or contraction of the volume of money, it becomes important to ascertain what money is, and also whether there is anything which can be used as a substitute for money in such a manner as to affect the general level of prices.

Senator John P. Jones, than whom there is no one better informed, says:

The money of a country is that thing, whatever it may be, which is commonly accepted in exchange for labor or property and in payment of debt, whether so accepted by force of law or by universal consent. Its value does not arise from the intrinsic qualities which the material of which it is made may possess, but depends entirely on extrinsic qualities which law or common consent may confer.

Aristotle says:

Money has value only by law and not by nature; so that a change of convention between those who use it is sufficient to deprive it of its value and power to satisfy our wants.

Adam Smith says:

A guinea may be considered a bill for a certain quantity of goods on all the tradesmen in the neighborhood.

Henry Thornton says:

Money of every kind is an order for goods. It is so considered by the laborer when he receives it, and it is almost instantly converted into money's worth. It is merely the instrument by which the purchasable stock of the country is distributed with convenience and advantage among the several members of the community.

John Stuart Mill says:

The pounds or shillings which a man receives are a sort of ticket or order which he may present for payment at any shop he pleases, and which entitles him to receive a certain value of any commodity that he may choose.

Appleton's Cyclopaedia defines money in the following words:

Anything which freely circulates from hand to hand, in any country, as a common, acceptable medium of exchange, is, in such country, money, even though it ceases to be such, or to possess any value, when passing into another country. In a word, an article is determined to be money by reason of the performance by it of certain functions, without regard to its form or substance.

Francis A. Walker says:

Money is that which freely passes from hand to hand through the community in final discharge of debt and in full payment for commodities, being accepted equally without reference to the character or credit of the person who offers it, and without the intention of the person who receives it, to consume it, or enjoy it, or apply it to any other use than in turn to tender it to others in discharge of debts or in payment for commodities.

It has been contended by certain economists that bank checks and bills of exchange are money, or, at least, that they discharge the money function and act on prices the same as money; but this definition excludes checks and bills of exchange. A bill of exchange or bank check is not accepted without reference to the character or credit of the person who offers it. But Francis A. Walker leaves us in no doubt on this question. On page 123 of his work on "Political Economy" he says:

It appears from the accepted definitions that bank checks and bills of exchange are not money. They may to some extent, as other forms of credit may to some extent, add to or increase the rapidity of circulation; but, certainly, credit is not money nor does it possess the essential elements of money. I think it is an essential element of money that when used it closes the transaction between the parties to the transaction. In other words, money, when paid in the purchase of a commodity, closes the transaction, and neither party to the transaction has any further claim or demand against the other. Anything which does this is money, and anything which fails to do this is not money. If a credit is given or a check received the transaction is not closed until the debt is paid or the check cashed. I do not find that any economist has made this distinction, in so many words, between money and credit, but I am satisfied that it exists.

Does all the money available for use act on prices? It is contended by a certain class of economists that only money of ultimate and final redemption--in other words, gold and silver, in countries where gold and silver are the standard money, and gold only, in countries where gold is the standard money--can act directly on prices, and that other forms of money can only act on prices in an indirect manner, and to the extent only that they may increase the rapidity of the circulation of redemption or standard money; that paper money, whether convertible or inconvertible, covered or uncovered, and token money, can have no direct influence on the general level of prices.

Is this contention true? We have already seen that money is a medium of exchange, a counter for reckoning, an order for goods, and that its value does not depend upon the intrinsic qualities which the material out of which it is made may possess, but depends entirely upon extrinsic qualities which law or common consent may confer, and that anything that closes transactions between the parties to the transactions, is money; and also that the value of money, that is, its purchasing power, is fixed and regulated by the amount of money available for use. Why, then, should any part of the money that possesses and discharges all the functions of money be excluded? What peculiar property has money stamped on gold and silver that it only can act on prices?

John Stuart Mill says:

Mill further says that such inconvertible paper money will act on prices. And if inconvertible paper money will act on prices, why will not convertible paper money, that is, paper money convertible into coin on demand, also act on prices? Token money, especially if a legal tender, and whether a legal tender or not, if accepted without objection in the payment of debt, or if received in full payment for commodities, discharges the money function, and is to all intents and purposes money. It is not absolutely necessary that to make a thing money it should be a legal tender in the payment of debt. Anything which is commonly accepted in exchange for labor or property and in payment of debt, whether so accepted by force of law or by common consent, is money. From 1861 to 1873 we had no gold or silver money in the United States, or virtually none. The official reports of the Secretary of the Treasury show that the gold and silver coin, including the gold and silver bullion in the United States Treasury during that period, amounted to but ,000,000, and even that was not in circulation, except to a very limited extent on the Pacific Coast. Yet during that period prices reached the highest level ever attained in this country. Certainly, the level of prices during that period was not fixed by the gold and silver money available for use. In view of the foregoing facts I think it must be apparent that any money which is received in full payment for commodities, whether so received on account of its legal tender property or by universal consent, and whether it is gold, silver, paper, or token money, acts on prices, and tends to fix the general level of prices.

It is claimed by a great many writers on political economy that credit has the same influence in fixing the general level of prices that money has, and that an expansion or contraction of credit would inflate or contract prices in the same manner and to the same extent as would result from a contraction or expansion of money; that if credit is extended, if more commodities are sold on credit than formerly, such extension of credit will tend to raise prices in the same manner and to the same extent as would so much additional money; and that if credits are contracted, if less credits are given than formerly, such contraction of credits will tend to depress prices in the same manner and to the same extent as a withdrawal of a like amount of money from the channels of trade would depress them. At the head of this school of political economists stands John Stuart Mill. He says:

I apprehend that bank notes, bills, or cheques, as such, do not act on prices at all. What does act on prices is credit, in whatever shape given, and whether it gives rise to any transferable instruments capable of passing into circulation or not.

Is this contention true? If so, then it is not true that the general level of prices is determined by the amount of money available for use; but is determined, rather, by the amount of credits available for use. The debts of the world amount, in round numbers, to 0,000,000,000, and the money in the world amounts in round numbers to ,000,000,000. That is, there are twenty dollars of credit to one dollar of money; and if credit exercises the same influence in fixing the general level of prices that money exercises, then it is absurd to say that the volume of money available for use fixes the general level of prices, and at the same time to contend that credit, dollar for dollar, is an equal factor in fixing prices. If credit affects the general level of prices in the same manner and to the same extent that money does, then credit exerts an influence on prices twenty times greater than that exerted by money, and we should say: The general level of prices is fixed by credit, modified, it may be, to some extent by the amount of money in circulation.

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