The daily gazette., 1878-07-26
The Purchasing Power Of
| Money

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There Is a strongly prevalent idea that
flush supply of money, nominal or real
paper or com, must necessarily be At
tended by an active movement in all
forms of business, productive, mapufact-
uring, and commercial, and it is urgently
asserted by the Western~ financiers that
an abundant currency would "set all the
wheels OF industry in notion" In sup
port OF this idea they quote the flush
times Immediately following the war. the
full employment and the high prices of
labor which then obtained, and the cor
respondingly high prices of all the pro-
ducts of the mine, the farm. and the
workshop. The conditions obtaining from
1850 TO 1873 are quoted as proving this,
the present depression, lasting through a
painful series ofyears, is also quoted as
the result of contraction and prospective
resumption. The argument thus stated
has had strong hold upon others than
the dupes of the political thinkers of fl
nance of the Ohio school. 1t has been Ia
ken for granted that the main postulate
was correct. A flush currency would
necessarily bring high prices and rapid
interchange in business.
1t may be said that such was the gen.
eral belief, and the reply made to the in
ilatlonlsts admitted the postulate and an
swered by calling attention to the obvi-
ous fact that there had been no reduc-
ton in the volume of the currency, that
there is now as much or more money
seeking investment as there was prior to
1873, but that for some reason it does not
come out and lend itself TO the promo
ton of industry. 1t is said that the life
giving currency is boarded by the banks.
1t would be nearer right to say that it
lies in the banks subject to the control of
the depositors whOput it there.
But further investigation shows that
there is no close or real relation between
the volume of the currency and t ie ac.
tivities OF commerce. The Treasury has
recently issued a statement showing for Il
succession OF eighteen years what has
been the volume and the value of the
paper currency of the country, based on
I he price Of the 1st of July OF each vear
from 1860 to 1873, inclusive. The table
omlts all mention of coin as a part of the
currency, for the reason that 1t passed
out OF general circulation in 1862 and
has not yet appeared in common use, ex
cept as subsidiary silver has taken the
place of fractional currency to TIE
amount Of about $4,000, 900. The obie,
| of the table is to show the gold value vi
the paper now atioat or available in com
| merce. TO reach this it is only necessal '
| to compare the volume of bank notes aud
legal tenders with the price of gold OF
each succeeding 1st of July.
For the sake of simplihcation and con
venience we omit the separate statements
| of bank notes and legal tenders from the
columns. In 1866 the bank notes were
500 ,l02, ,447. In 1861 a little less. H.
1928 legal tenders came in, and will
them the national bank notes. The CIR
culation run up to its highest point in
1865, when (July j. the paper a1loat ag
gregated S9S3,3lS, ,6S6 with a gold value 0i
s692, 256, 1856. In 1873 the paper aggre
gate was S6SS, ,597 ,275; the purchasing
power, gold value, was S6S4 ,465, ,692-a
close approproximation to par. The fol
lowing is the tablet