New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1878-08-27
"FIAT" MONEY And ITS EFFECT UPON

WAGES
The workingmen of the United States are
advised to vote for the indefinite postpone
ment of the resumption of specie payments
and for unlimited issues of irredeemabe
paper money by the Government, IN
order that all kinds of industries may be
stimulated. prices advanced and wages
increased. "The wheels of industry are
stopped" say the philosophers of this new
school, because the currency of the country
8" has been forcibly contracted until its vol
"ume is too small to meet the legitimate de-
"mands of trade. The result has been
"ruinOus decline in the price of almost every
thing produced in the United States the
destruction of capital and the distress Of
"labor. Issue more paper money and prices
" will begin to rise, production will be stimu-
''lated, labor will find employment at better
"wages and prosperity Will return"
The fundamental error in this argument is
the assumption that the price of anything de-
pends entirely upon the abundance or scarcity
of the currency. The effect of demand and
supply and cost of production, TO say nothing
of local and incidental causes, is entirely lost
SIGHT of A single example Will illustrate
tins. On the first Of September, 1873, No.
American pig iron was quoted in the New Ork
market at $44@$45 per ton, and printing
cloths at 6l2@65sc. per yard to-day, No
American pig IRON can be bought for $16 so
@$1S per ton, and printing cloths for 3l1l6c.
per yard Here is reduction of at least 60
per cent in the price of iron, and more than
AZ per cent in the price of printing cloths,
while the actual reduction in the volume of
A.. fl a
The supply Of iron and cotton cloths exceeds
the demand, and no artificial stimulus ever in
vented could permanently increase the price of
a commodity unless the demand for it were
simultaneously increased.
The truth is that our means for producing
the staples of trade, such as breadstuffs, iron
and cotton goods, exceed the demand for
them at old prices, but we have gradually re-
duced the cost of production so that the sur
plus Of our fields, mines and looms begins to
find market in foreign countries, and even Eng
land is alarmed lest American iron and cotton
goods shall successfully compete with her own.
Increased exports mean increased employment
for American labor, increased profits for CAPT.
tai aud increased wages for workingmen. Any
policy that tends. by increased cost Of pro-
duction, to close the doors Of foreign markets
10 American goods would be a calamity from
which labor would be the first to suffer.
But, admitting that initiation would cause a
temporary rise in prices and an increase in
the rates of wages, Common experience has
proved that the latteTtis never commensurate
with the former or wish the increased cost of
the common necessaries of life. Statistics re-
ferred TO by Mr.. George Walker III his testi-
mony before the Hewitt Committee yesterday,
show that during the period Of greatest
initiation in this country, and consequent Wild
est speculation, the cost of living increased
100 per cent when compared with what il
was in 1860. while the average advance in
wages was only about 60 per cent. In other
words, the wOrkingman had to pay 50 for
what cost him 81 in 1860, while he only
earned 81 go by the same labor for which he
received 81 before. Nor is this all. The rise
in wages does not come at once when the
prices of commodities increase The history
Of prices in this country during the war shows
that long time elapsed after the cost of the
common necessaries of life began to increase
before there was any perceptible advance in
the rates of wages.
The sufferings of the wOrkingmen of this
country cannot therefore, be permanently re-
lieved by an initiation of the currency. On
the other hand, any apparent benefit which
they might derive from the issue of irredeem-
able paper money would be more than Offset
by the additional burdens they would be
forced to bear. A sound stable cur
rency VIII tend to put business in