, 1875-04-09

MilWAuke0 u st. Fnlil Railroads.
--.-..-.....--
INELATI0N AND PRICES.
hlr. WENDELL P1f111trs, in letter pub
lishcd In tho Boston Adrertiser, makes q
strong presentation Of tile argument TINT m
expansion or inilation Of the currency docs
not raise prices. In support Of this argu-
ment hc citca Prof. CA1rsEs, Mill, and
DovAMx Pn1cE. He quotes also from AMAsA
WALKER's table Of prices, md from CAREY, to
show how little the amount Of currency hna
to do with fixing prices. Flo presents tablo
of various foods, showing tie prices in 1859,
1860, aud 1871, Of mesa boef mess pork,
-four, Goldfish, corn, ten, sugar, saltad hides,
cotton, Smyrna wool, rico, and coffee, to
show that the average price Of each has been
about tho same, and that the aggregate aver
asa hns hardly varied during the last fifty
years. He maintains that this table shows
either that currency has nothing to do with
prices, Or that wo hayc not now any more in.
tlatod a currency than has been usual tho last
fifty years.
III support Of this argument ho quotes
largely from STEPHEN CoLwxL1., to tito point
TINT large issues Of bank notes do not noccs-
sari1y enhance prices. lie cites the feet TINT
}nrgo TRANSACTIONS wholesale business
dono By means Of checks and bills, which, he
clninls, arc 4 currency, whose expansion is OF
daily occurrence, and which lns no effect On
prices, autl uEon this point ndopte 31r.
cAREy's argument and figures by which the
"currency in ,,so is defined to be l. Frac-
tiona1 notes. increased from S27,0 900 in
1916 to $4t, ,OO0, 600 in 1874. 2. The legal
tender md bank note irculation-sGo0. .ouo,.
600 in 186G-to, say, s74o. 1000, 600 in 1875. ..
Tho bank currency >cheeks mud b;lls), cor
sequcnco Of borrowing money payable on de-
mand, to DO lent to others payable on de-
maud or short date, by which one dollar is
made to do tho work Of two or more. In
1865, tho bank loans on deposits were sae3,-
600, 900, which it il claimed created curren-
cy Of 37GG, ,o0o, 900 these bank loans in 1874
had reached S59l l,0oo, 600, aud tho currency
thus created is S1,1ss, 100000. These soyer-
al items of increase Is claimed to be inila-
tions, but have had no porcopublo effect on
prices.
S1r. PHILLIPS il combating the shadow and
not tho substance. Currency, whether issued
BY banks or the Government, or whether it Is
ut par or deprecated, cnnnot seriously affect
the gold value Of prices. Gold values of COM
moaitios aro determined by tho worlds aver
ago mnrlet prices, with, in somc cases, tho
thrift duty and charges added. All that VIC xN
abroad brings the foreign price, less the cost
OF transportation. What we hug abroad regu-
lates tho homo prices Of all similar comn,otli-
ties produced at homo. Tho gold price re-
,naina unaffected by tho character or quantity
of tho local paper currency. But when wo
uso deprecated currency the amount of tho
depreciation, with u margin for fluctuations,
is added to the currency prices. Thus $1.0o
gold vnlue may be represented by Sill,
'?1.16, at.90, $1.50, or oven 1900 in cur-
rency. The groat evil hero ia tho rapid, nu-
expected, and constant 1uctuation in tho
value Of tho currency dollar in purchasing at
The real or gold value.
BoNAsY pn1cE, quoted by 31r. PHILLIPS. Is
clearly right when ho says "wl.at raises
prices universally is dryiag" But Prof.
PR1cE, III 1ising the word "buying," only
tsea another form Ut expression for demand.
When men buy largely, and there III strong
competition for thu purchase Of commodity,
the tendency is to raise prices under tho in-
cruased demand; so When tlers in Ittle de-
usanl aud fcw ofrer to buy, thon tho tendency
Of prices is downward until they reacA
pofut Tint thew cou oxcite n ne,v ar snccu,o.
i've dou,and. viii, the ipcreaso NJ w,.i,b thev
ara;u rise with this. ordinarily tho nmount
Of .urron,v bnx 1itt,o tn do. Int t,,;a ~ dif.
fercut fron, e.cossiva or unccr1ot;vo hrv;no
which depends mainly on the aaxo of borrow.
ing. Men holding q denreo1atcd md tlnctnat.
ipg currency mora reaaily land II. tas;no
tho chances of additional nwo,ts by
its advance In value when repsil, Tho
borrower nyails himself Of an essv ,narl,ot
in money to purchase in tho hops Of making
speculative profits by q rise In tho selling
priceB. Whom ,nen can borrou rpaf1f,v thov
are moro mt to invest II in snocnlativo nn,,.
orty: and taev eon the mora raalllv sell II at