The Washington union., 1857-11-17
THE CAUSE OF THE PRESENT CRISIS.

has called forth is one which has recently appeared
in the city of New York under the modest title of
Z" The Present Crisis the Currency tract of the
times for every man who can read That read
ers may judge Of its merits and what conceive 10
be its true doctrines and timely suggestions we give
the following extract, which treats of the equation
of value between the whole currency and the whole
of that for which it is used the medium of ex-
change
There is always an equation of value between the farm
er bshel of wheat and the dollar whatever be Its
market price, which the miller pays for it, 1t Is in yir-
this equality in value between the two things that
the is be- currently exchanged for the other.
The equation evidently exists between every other
commodity that is bought and sold and the market price
that paid for it, Hence constant equation OF value
stands between the whole currency and the whole
amount of the commodities for which it is once used as
the medium of exchange But If the trade of any given
period of time be taken into account one and the
same dollar may the medium OF exchange for
a bushel of wheat hoe, string of fish, joint
of meat and for many other things OF equal
market value it can be used in purchasing while
il passes from hand to hand. For the trade oil a
whole year therefore the equation stands thus Let
equal the value of all the commodities exchanged let
equal the value of the whole currency by which they are
exchanged and the number of times this has passed
from hand to hand
That is to say there is a,rays equation Of re been The
hoe amount of The commodities exchanged J money gir
time and e tohoe Of the currency "a use niped by
the number Of times this has passed from hand 10 hand
This equation is unchangeable 1t is never affected
by any possible scarcity plenty OF money or goods
nor by the consequent fuctuation in market prices
IL the harvest and production in general be increased
or diminished to any conceivable extent and the GUAM
tity of the circulating medium remain unchanged
the value of all commodities falls or rises TO equal
the value of the currency by which it must be ex-
cha ia Ia Tho afpn
scarcity enhances and plenty brings down prices Con-
vcrsey, if production and consumption remain the
same-in other words, If the demand be neither IN
creased nor diminished and the quantity OF the circu
lating medium be expanded contracted-ths depre-
ciaes or is enhanced i'm value in AN equal degree to
equate with the value of the commodities which must De
exchanged by its Consequently the prices OF all
articles of commerce go up in the market from either OF
two causes- e. their scarcity the expansion OF the
currency and In like manner, they go down in the mar
ket from either OF two causes e. their plenty or the
contraction of the currency and always an important
question for the people when provisions are high whether
this s caused by actual nsuciency of supply to the de-
mand or by an expanded currency II the former the
evil is without remedy; and the rise OF prices is eg
mate and beneficial because promotes economy OF the
Inadequate supply and draws supplies from those places
where there is abundance to those where there is de
cheney But if the rise of prices be due to an expansion
of the currency then the people have reason to demand
increase of their wages and salaries Tor without
such increase of wages provisions may up to starvation
prces when there exists the greatest abundance of every
thing no less than from blighted harvests There has
been for years past ample sufciency in our markets 10
meet all demands, whether of home. consumption or
exporation vet the price of provisions has been mostly
on the rise We know therefore, that this is to be
erbed increase of the quantity OF the circulating
medium depreciating in value to eqlate with the com
modties exchanged by its means,
The knowledge of this equation is OF the great cen
trail lights of political economy 1t is the guiding clue
through all the nrcaces in the discussions OF the valid
ity of bank paper medium of exchange and it ex-
plodes a thousand popular errors and fallacies.
l. One of these is that banks make money plenty 1t
is true indeed that these increase the quantity of the
circulating medium but not it's value That, whether
the quantity be increased diminished to any extent
always remains equal to the value OF the commodities t.
be exchanged by its Consequently for every mil
lion of bank issues the currency in before is worth
just million less. And every dollar OF 1t Is depre
ciaed in its proportion that is to say 1T Will buy pro-
portionatey less than it would before 30 that pre-
cisey the amount by which the few persons to whom
the banks lend their money accommodated, the
whole community suffers by the consequent deprccia-
ton of the currency in use. But this loss falls with
most grievous weight upon all who i've ny Sed salaries
incomes and whose of living are barely adequate
to their necessitiesi Co. upon the poor for suppose
that the currency during the last ten years has been in
creased quantity and deprecated in value, to the
tent of thirty and third per cent this OF course
has enhanced the price of everything that bought and
sold and consequently of rents and provisions just one
third The cost of living is therefore one-third greater
than it ten years ago So that salary or income
thousand dollars IL worth thlee
three dollars less than then One of three hun
dred dollars is worth only two hundredi 1T will buy
no more than hundred would ten years ago. But if
be said that the rise of prices always tends to an in
crease of salaries and wages answer that the rise in
prices always precedes by months, and sometimes by
years that of wages this necessarily lags slowly behind
that A man with fixed salary Of two thousand dol
lars often suffers for years to heextent Of six seven
hundred of it, for other in the world but
bloated currency When it comes to be under
stood it is Just as certain any proposition in ge-
omctry that whatever is gained in quantity by bank
issues is lost in the value OF the currency. The
money plenty made by the banks is therefore pure fall
lacy.
q Another of these fallacies which this equation ex
podes is the idea that without banks there would not be
gold and silver enough to for medium of exchange
For the inevitable effect of these issues TO depecate the
value of the precious metals and thereby to drive them
out of the country They deprecated in all of the
three elements which go to make up their value @ For
whilst the paper continues at par its effect upon the value
of the precious metals is just the same as they were
increased in quantity by the amount of the bank issues
b that is say their use and the consequent demand
for them as money diminished precisely to the amount
of the bank paper which takes their place c) which, in
fine sets free greater portion of them for their uses IN
element Of their value The effect of bank issues
therefore, is to deprecate the precious metals in all the
elements which constitute their value.
And this depreciation for the time, and in the country
where the paper cculates at par is complete and eff
fectual in all its practical results it could be by alloy
with the base metals for banks cannot create value
that Is selfevdent to every mind that think and
because the value of the whole currency in USE what
ever be its quantity must remain in equation wthhat Of
the commodities exchanged by its means the in
of the quantity cannot fail propotonaey to de-
precate its value and cousequently of that portion of