and services , that determines its value.
Mouey hoarded , or held in bank vaults
as reserve , has no effect on its value.
This seems to be "a begging of the
question" the statement of what upon
its face is an evident fact , advanced as a
theory to explain and account for it.
The views of Mr. Mill are generally
accepted by all of the more modern
writers , unless we include as political
economists , such men as Senator Jones
of Nevada , Mr. Harvey of Coins "Fi
nancial School" notoriety , and Mr.
Towne of Minnesota.
DllVeronco Between Theories.
The difference between the theories of
Ricardo and Mill are important. That
of the latter could only coincide with
the former , when all of the money in a
country should be actually circulating ,
which is never the case.
Money Value ami Property Value.
The statement of Mr. Mill is undoubt
edly correct , but its meaning , I think ,
would be clearer , if he had said that the
value of all things bought and sold , is
determined by the quantity of money in
circulation , including as money all credit
instruments.
Whatever may indicate the value of
the property exchanged for money must
at the same time express the value of the
money exchanged for the property.
The two statements are identical.
When wheat is high , we may say that
gold is low compared with wheat , and
so on as to every commodity or all of
the commodities taken together , and
their prices averaged.
In the same manner , when we hear
talks about gold being appreciated in
value , it is only another way of saying
that the average prices of other things
than gold are lower.
But investigation will , I think , invar
iably show that the lowering of average
prices has been caused solely by circum
stances affecting the property and not
from any changed condition in the
money stock.
The quantity of money in circulation
under lower prices , is undoubtedly les
sened , but the deficiency in the ciroula-
tion can bo more easily explained by the
fact of the lower prices than the lower
prices can be explained by the deficiency
in circulation.
When prices are low , a less quantity
of money is required to make the ex
changes.
Cause of Lower Prices.
It is an axiom that prices are fixed by
the law of supply and demand , but there
are things back of both supply and de
maud , which limit and control them.
For instance , demand is influenced to
a. large extent , by the ability of the
intending consumer or user , to satisfy
the desire he bos' for the article which
is the subject of the demand.
We may all desire diamonds , but only
a few are able to possess them , and it is
a sad thing to bo obliged to admit that
ihere are times when there are many
who desire bread , who are not able to
obtain it.
A condition of general lowered prices ,
will be found attributable to some gen
eral inability to purchase on the port of
a large multitude of consumers and
users.
The searcher for truth , instead of fol-
.owing some will o' the wisp of his
Fancy concerning money for an explana
tion of lowered prices , should endeavor
to learn the causes operating upon the
bhings themselves , which produce the
lamentable result noted.
He will find , of course , that there is
less than the normal volume of money
in circulation , but he will not be justi
fied in assuming from this circumstance
that the stock of money is insufficient ,
when he clearly perceives and under
stands that the deficiency is not in the
stock itself but is in the quantity of that
stock or supply which is brought into
circulation.
An addition to the stock , no matter
how good the money added might be ,
would not help the situation , because
the addition would be subject to the
same influence which already affects the
unused stock.
Object Lessons.
In order to illustrate the fact here
stated , let us take two distinct epochs in
this country , which are very close to
gether aiid should serve as convincing
object lessons.
Conditions in 1800.
In the year 1896 the prices of nearly
everything sold were unusually low
business was stagnated production in
numerous channels had ceased entirely ,
and in others was restricted and limited
thousands of working men all over
the country were out of employment
and many were reduced to desperate
conditions.
This was clearly a condition of things
which could easily be designated as
showing an appreciation in the purchas
ing power of money.
Prices being low , gold was high. The
situation was utilized by the politicians
for all it was worth.
It was claimed that gold was high
because silver was demonetized , anc
that the way to cure the disorder was to
remouetize silver at a ratio to gold
which would make money plentiful
That prices then would rise which
would mean that gold would fall to the
coin value of silver.
Conditions In 1000.
Four years only have passed , and now
in 1000 , it is generally conceded , that a
change has occurred.
Prices generally have advanced busi
ness is good productive processes of
every description are in active operation
and the working men everywhere are
employed at remunerative wages.
This is a condition which in compari
son with 1806 , would be called a time in
which gold had depreciated , because
other things are higher.
It cannot be claimed that it is duo to
any increase in the money stock. The
lat money scheme was defeated in 1806 ,
and what increase there has been , is not
of an amount sufficient to affect prices.
Increased Circulation.
Everyone concedes that there is
greatly more money now in circulation ,
; hau there was in 1806.
The business now being transacted ,
could not possibly have been managed
with the attenuated volume of 1806.
Difference Between Periods.
The difference , then , between the two
periods as indicated in the money situa
tion , is the greatly increased volume of
money in circulation in 1000.
But it is also conceded that there is a
greatly increased ability on the part of
consumers and others to purchase what
they desire , which has enlarged de
mand , raised prices and increased pro
duction.
The one situation is plainly an index
to the other.
Without the increased ability there
would have been no increase in the
volume of money in circulation.
Increased Supply Without Increased De
mand.
An increased supply of an article
without on increased demand for it , will
not of itself add to the general ability to
satisfy desires.
Generous returns from seed time and
harvest , will only lead to lower prices
for agricultural products , unless there is
somewhere an increased ability to con
sume the excess. Good crops , there
fore , cannot alone explain the changed
condition.
The moving cause of the change must
be looked for elsewhere , and it concerns
capital.
Capital.
It is capital which employs labor
which carries on trade and commerce.
No one stroke is taken by labor ; not
a movement is made in trade , which is
not instigated by and is dependent upon
capital.
When capital is here mentioned , no
reference to individuals is intended.
Who Supply Capital ?
The Asters , Vanderbilts and Goulds
do not supply the power which runs our
factories and stores and business gener
ally. It is the capital of the great mid
dle classes and the savings of the work
ing classes , which turn the wheels of
commerce.
If individnalization was required , it
would be more easily found in the ranks
of frightened depositors who run a bank
in time of panic , than in the millionaires
