New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1874-07-15
THE MONEY MARKET


In the fifth volume Of TOoke's History OF
Prices we find the following remark: There
"is no one general observation more clearly
"to be established by a reference to the most
"signal instances on record Ok commercial
"crses than that, in their earlier circum-
stances. they were characterized by more
" than ordinary facilities Of credit and Of bank
sing accommodation, indicated by tow rate Q
"interest' No sane person, accustomed 10
watch the course of trade and the fluctuations
of commercial credit, will dispute the truth OF
the above observation. Yet, if the observa-
ton be true it follows that moderate pen-
teousncss of money is better than an
excessive supply. 1t is also apparent to
all sensible men that the money markets
throughout the world. and particularly in this
country, are already beginning to be chnrac-
tcrizcd by those more than ordinary facilities
for Obtaining loans of money ut low rates
of interest which are referred to by MIR.
Tooke as being productive of those great eX-
pansions of credit and speculation which end
in commercial Crisis. or panic. At this point
we may meet an objection which the imitation
lists would probably persist in making, though
every postage stamp in the land should be made
legal tender for dollar. Money, they say, is
scarce. There is in Adam Smith a passage
on that sort of scarcity of money complained
of by the inflationists, which has been quoted
so often by subsequent writers as to have be-
come classical:
No complaint Is more common than that of scarcity
OF money. Money like wine, must always be scarce
with who have neither wherewha to buy it, nor
credit to borrow it, Those who have either will seldom
be in want either Of the money or OF the wine which
they have for. This complaint no OF the
scarcity OF money Is not always confined to mprovdent
speDdthrfts. 1t Is sometimes general through whole
mercantile town and the country in its neghOorhood
Oyer-trading is the common OF it. Sober men,
whose projects have been dspropOrOned to their capt.
tails likely to have neither wherewithal to buy
money credit to borrow 1t, prodigas whose cx-
pense has been dproportiOned to their revenue Before
their projects he brought to bear, their stock
captaD IL gone, and their credit with IL. They run
about to borrow money and everybody tells
them that they have none to lend. IL Is not
any scarcity Of gold and silver, but the difficulty which
such people find in borrowing, and which their creditors
lind getting payment, that occasions the general COM
plant Of the scarcity OF money
One form of Oyer-trading' which helped
to produce the panic of nine months ago, was
excessive railroad building. Farmers and 9th
crs put their money into the securities OF
these bubble" companies and lost it. Manu-
facturers, in order to furnish rails and rolling
stock, expended their capital III furnaces and
rollIng-mills for which there Is now no en-
ployment. If we remember that these opera
tons were conducted on a gigantic scale,
capital having been sunk to the amount OF
hundreds of millions, we ought not to be sur
prised to find that there Is still great deal
of that sort of scarcity of money so well de-
scribed by Adam Smith. 1t is this kind OF
scarcity which Congress has been so industrl-
ously employed in trying to cure. 1t might as
well have attempted to raise the dead. Mean
while, the waste of capital in unproductve
investments having ceased and much painful
economy having been practiced, we have, as
the result of this saving and of our abundant
harvests, already real superabundance of re-
sources, of which the growing plethora of
money to lend and the increased reserves OF
the banks are the outward and visible signs.
The reservoir is filling rapidly, and an outlet
must soon be found. What that outlet will
be it is too soon to tell, but it certainly will not
be the resuscitation of the railroad mania.