DECEMBER 8. 1904
PAGE
BRYAN AND TOWNE
Democratic and Populist political Economy -Vatn
Vorhis Points to Some Errors
i
Oiffs That Last Forever!
X5jc Nebraska Independent
'IV
v ' Editor Independent: For centuries
1 exchange has been the subject of econ
omic thought and philosophy. Aris
totle said: "There would be no so-
( ciety If there was no exchange, and
'no exchange if there was no money; '
. The first part of this statement is no
doubt correct, but. whether thg second
"part is correct depends upon whether
the material thing commonly called
' money, or. the 'function -to be per-:
formed by it, is the subject of thought.
If that which is commonly called
' ' money is all that is meant it is not
?true. If by money anything is meant
that will perform the money func
tion then it is true. In any view ex
change and money are very intimately
' related. ' ,v
I do not desire either to construct
or repeat definitions, but I say, not as
.a definition, that "money is a medium
of exchange." Without asserting or
denying that money is anything more
it i3 certainly this, if viewed from
the side of that which is usually meant
by money. If, however, the word
money is used to express the general
idea of the function to De performed
a function that may be performed by
almost any material or thing then he
proposition that money is a medium of
exchange must be turned around, and
to express the whole truth be made to
- read, anything that acts as a medium
of exchange performs a money func
tion. Barter the exenange of one
'commodity for another does not dif
fer in economic principle from buying
and selling the exchange of a com
modity for money. Both are ex
changes. The quantitative theory, in
a comprehensive sense, must necessar
ily apply to the aggregate of all things
that, 'Under our conditions, act as a
medium to facilitate exchange by be
coming a part of it one side of it. It
must 1 apply to the aggregate of such
things used to malte it easier and more
convenient for the buyer to buy and
the seller to sell. If so, then in the list
of such things must be included,, not
only all money reported by the depart
ment, but all bank credits, commercial
credits, notes,i drafts, checks, bills of
. jMd?mr"accounts. and' any thing or
" . . . -,,!
device that manes Duying ana seinng
easier and increases commercial activ
ity. These different things, thus Added
to the volume of money reported by
the department, are frequently called
substitutes for money, and have since
1896 increased enormously the volume
of money equivalents in the - transac
tion of business.
No difference what they are called.
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waking up after several hours and then
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They mean that somewhere in the
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cells, somewhere in the blood vessels
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. i or the end may be worse than death.
Td right it, take Dr. Miles' Nervine.
. , Some other . symptoms of nerve trou
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Melancholy, Lack of Ambition.
They indicate diseases which may lead
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Nothing will give such quick and last
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they each and all perform, in some de
gree, the same office in Commerce,
that the money reported by the de
partment performs, except that in ulti
mate settlements they will not pay
debts if creditors elect to refuse them
and to demand "standard of payment"
money. '
The increase of bank loans and dis
countsto which I have before called
attention in discussing the money sup
ply as it is reported by the secretary
of the treasury, and the possible in
crease of demands against it are only
part of the enormous increase of the
volume of credits that are performing
the money: function In - commercial
transactions. - It is this tremendous in
flation of credits this large incrase of
money substitutes that accounts for
whatever increase of prices and in
crease in the activity of business we
have had since 1896. It Is in perfect
accord with ; the quantitative theory,
not. as applied to the small increase of
gold to which Mr. Bryan and Mr.
Towne have referred, but to that great
increase of the volume of everything
that performs a money function in our
economic affairs. --
It has been generally recognized that
evil results follow either the undue
contraction or the undue inflation of
the money volume, but it is not so
generaly understood that tinder our fi
nancial and commercial conditions
and for which unwise financial legis
lation and department constructions
are in large degree responsible-we
may have, and do now have, going on
at one and the same time a contraction
and an inflation; both dangerous, and
both pregnant with the posibilities of
disaster.
It is difficult to compress the dis
cussion of such a subject into the lim
its of newspaper articles and make
even the most intelligent readers, who
have had neither time nor opportunity
to study it, understand it; but it ought
to be easily understood that the larger
part of the danger of monetary con
traction grows out of existing debts,
and out of the increase in the volume
of debts in proportion to the amount of
legal debt-paying money. It ought not
to "require, much .economic . knowledge,
when the great volume of bank, com
mercial and corporate credits is known,
to understand that if every dollar of
the general stock of all kinds of money
reported in the circulation statement of
November 1 was, legal tender, and ev
ery dollar available, it is small dan
gerously small and rapidly growing
relatively smaller in comparison with
the rapidly increasing volume of debts
of credit substitutes for money
that may at any time, at the will of the
holders, turn themselves into demands
against the volume of money reported.
Without saying a word to detract
from any claim that can reasonably be
made of importance or usefulness of
bank credits, the fact remainsTthat any
financial system that permits and en
courages .such an inflation of bank
credits as has been going on since 1896
is dangerous. v
The last abstract of the condition of
national banhs issued by the comp
troller of the currency, and covering a
period of eighty-nine days, from June
9 to September 6, shows an Inflation
of loans and discounts, for these banks
alone, of $1,700,000 for every business
day during the time. 'Assuming that
the law has been complied with, this
means that during the short time not
less than $20,000,000 was added to the
reserves of the banks, while credit
substitutes for money were inflated
over $131,000,000. -
Alfred Rambaud, in his History of
France; says, that John Law was the
first to see the full' extent of bank
utility and to realize the importance of
credits.; Law wished to create a bank
in France that was to be the universal
regulator of credits. The interests of
the bank were to be associated with
those of the state. It was -to be the
depository ' of all money belonging to
individuals, and the cashier of the
kingdom. It was to be the great finan
cial monopoly of France. .The regent
of Louis XV authorized such a bank.
All wealth was expected to flow into it,
and all enterprise to proceed from it.
Law's scheme was . bajsed upon the
claim that, by .getting, all-money into
his .bank, he would" be able to place
credits to ten times the amount The
money of his calculations was silver
and gold. He succeeded in the infla
tion of credits and, by the use. of these
credits, to perform a money function,
the business of the kingdom was stim-
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ulated and greatly Increased in activ
ity The expansion of credits had no
limit, and the continued inflation broke
down and brought ruin to the bank
and to the country.
to Vailed trt ErrasD the fact that a-,
uan tuiivM . cd .
increase in credits that could be used
as money was, m ousmess, eiuivcixt
to an increase in the volume of money,
and necessarily decreased the value of
money, just as the value of a commod
ity is decreased by an increase of the
amount of it; and that this decrease
applied not to one. kind but to all
kinds of money. He failed to realize
that under the conditions and power
of the government the business value
of gold and silver within the realm de
creased and would seeK otner cuuu
tries where the business demand for
that kind of money was greater. He
failed to see that under such, circum
stances the volume of private credits
would cease . to perform the money
function and at once become a most
urgent demand against the diminished
amount of metallic money kept in the
country by royal decree against its ex
portation, and which was 'regarded as
the only possible "standard of pay
ment." John Law taught the world valua
ble lessons in private credits and their
use as money, that it is well to recall
now when a similar misapplication of
economic principles has been applied
in our banking and financial system
to that made by him in France. In
addition it ought to be understood and
remembered that it is not necessary
that bank credits have the form of
bank notes in order that they may
perform a money function. It is pos
sible, however, to issue bank credits
as bank notes, and then use this kind
of credit to inflate loans and discounts.
This is the project the eastern banking
interests now have in mind. If they
succeed in inducing congress to auth
orize the issue of a currency secured
only by the assets of the banks, there
will be.no limit to .the possible infla
tion of bank credits. John Law's In
flation In France will be Insignificant
compared with the inflation tliat will
be possible under such a privilege
given to our banks. ; i;
In the face of such a possibility as
this, and the consequent dangers, Mr.
Bryan tells us the money Question haa
"decreased in importance' and must
remain in abeyance until there Is ft
change in conditions."
(To be continued.)
FLA VI US J. VAN VORHIS.
Indianapolis, ind.
Theodora V. Barnea, Attorney
IN THE DISTRICT COURT OF LANCASTER
L'OUNTV, NEBRASKA
Jane Frost. Plaintiff vs. Catherine Rogers and
Thoraas Roarcn, Defendant.
The above name1 defendants are hereby noti
fied that the plaintiff on the5tb Ahj of Apr. 1904
Died her petition in the District Court ol Lancas
ter County. Nebraska, against them wherein fa
allege that defendants Rave five notes of $T0 00
each due on the 14th day of Dec. 1WX), 1M1, 1K92,
1893, and 1K94, with even per cent Interest Iron
the date of said notes. To secure said notes de
fendant executed their mortgage conveying th
property commencing at the sontheast corner
ol the west iractional northeast quarter oi ec
tion 30, township 11 ran?e 8, K. ol the 6th P. M.
thence north 2 rods; thence west 60 rods;
thence south 26 rods; thence east 60 rods to
place of beginning, same being also described as
lot eiaht, in the northeast quarter ( sec &),
twp. 11, r. 8. Lancaster Co. Neb. and that said
notes and mortgage have been assigned to
plaintiff and there is now due thereon the mm
oi 1495.00 with interest at seven per cent from
Dec. 14. 1903. No proceedings at law have been
bad to coliect said debt and the mortgaee in
recorded in J)ook 85, and at page 571. That
said propertv was assessed lor the years 18V2,
1893,1894,1895,1890,1897, 1SQ8 and was sold for
taxes oi said years to 8. L. Geisthardt Who as
signed said certificate of purcha-e to this plain
tlffi That more than two years hare elapsed
since the property wss bought for taxes and
that the time lor redeeming same h8sex(ired,
of which due notice was given. In said petition
the plaintiff prays for foreclosure ol said mort
gage and tax lien for said years and 1900 and
1901 which taxes were paid under certificate
and prays that said prop rty may be sold to
satisfy plaintiffs said several claims and the cosf
ot said suit You are required to answer said
petition on or before the 9th day of January,
19U5, or the same will be taken as true.
' . Jane Frost, Plaintiff,
By Theodore F. Barnes, her attorney. .
SHERIFF SALE
Notice is hereby given. That by5 virtue of an
order of sale issued by the clerk o. the. District
Court of the Third Judicial District ot .Nebraska,
within and for Lancaster County; In an action
wherein Henry J; Bannister is plaintiff, and
JobnM. Barber et al defendants. I will, at 2
o'clock, P. M., on the 10th day of January A. D.
1905, at the East door ot the Court Douse, in tbe
City of Lincoln, Lancaster County, Nebraska,
offVr for sale at public auction t e following de
sctibed Lands and Tenements, to-wit: Lots
thirteen (13) and fourteen (14) in Block twelve
(12) in Belmont addition to the City of Lincoln,
Lancaster County, Nebraska.
Given under my band this 8th day of Decem
ber A. D. 1904. v
MCHOLA8 RESSj Mierifr
