The Portland daily press. [volume] (Portland, Me.) 1862-1921, 1879-08-28
The A B G of Finance.
The Money Question Made Clear.
New York Times.l

MORE MONEY MEANS POORER MONEY.
The first thought of men badly in debt usu-
ally is to borrow more money. Nations are
only men acting together. When nation
finds that its notes have become poor, and
therefore unequal to its wants, the first
thought always is to issue more notes. But
borrowing does not help q man out of debt, and
issuing more notes does not make the currency
any better Notes not redeemed are sure to
become poor, as has been seen, even when the
amount of them.s not changed But if more
be issued in answer to the cry which always
comes when the notes are poor, they are sure
to grow worse, and will lose in virtue even
more than they gain in volume. This is
proved by the history of note issues in all
lands, ancient or modern, civilized or uncivil-
lied, American, European or Asiatic, under
any form of rule from absolute despotism to
self-government. In these papers, however,
the aim is not to array mass of facts III bulk
so great that few can master them, but to
make clear the causes and laws which govern
the value of money in all human experience.
1t is q law of human nature, in all lands and
times that we give less for a thing i'll propor-
ton as it becomes plenty and easy to get.
When wheat was plenty, and cotton cloth was
scarce, bushel of wheat was worth only two
wards of fthe cloth. With the same supply of
wheat, cloth grew more plenty until bushel
of wheat was worth twenty yards. Then, cloth
being still plenty, wheat became scarce, until
bushel was worth forty yards OF the cloth.
Make anything more plenty, and the desire for
it grows less in comparison with the desire for
other things; that is its value falls 1t is SO
of gold. If it grows more plenty we give less
for it, that is, it buys less And exactly the
same is true of any kind of money; if it grows
more plenty, people want less OF it in compari-
son with other things, and give less OF other
things for it, so that it buys less. Everybody
knows that if there is big crop of wheat, each
bushel will buy less dollars. Everybody ought
to know that if there is q big crop OF dollars,
each dollar will buy less wheat.
Money is the buying tool. But great many
mistakes come from looking at money only as
a tool 1t is the only tool that does its work
the more poorly-loses part of its buying power
the more there is of it. If a farmer has use
for only one plough, it is waste to buy two,
for one will lie idle and rust, but the other Will
do its work as we'll as if he had only one. But
if the country has need of only one supply of
dollars, and keeps twice as many, all OF them
will be used in the buying, so that. each will
buy only half as much as it ought. This is the
only tool that grows duller because we have
too many of them. What sense is there III get,
ting more when the effect is to make them all
duller?- Dollars are like workmen. Ii the
work to be done in o shop or a mine is only
enough for 100 hands, but there are 700 at
work, each can get only half time, and Will be
worth only half pay. So If the amount OF buy
ing to be done is only enough for a certain
number of dollars worth 100 cents each, and
we send twice as many dollars to do that same
work each can only do enough to be worth 5O
cents 1t does not help at all to make the dol
lars legal-tenders Without breaking law, a
man can refuse to sell things at any price, pay
able in legal-tenders. LII he does not want TO
sell 100 cents worth of wheat for legal-tender
worth 80 cents, he will put up the price, and
ask 81 bushel instead of 81 bushel.
But the paper dollar is also n promise, as
well as a tool. The value of a promise depends
upon the power to pay that is behind it. The
thrifty Jones and the shiftless Smith each had
in his store goods worth $1,000. But it was
known that Jones had out only one note fol
81 900, which was worth that sum: Smith had
out five such notes, and men did not care tC
buy one of them for 5000. The power OF the
Government to pay its notes is the same after
the amount of them is doubled as before. But
each note then represents only half as much OF
that power.
Besides, distrust sets in. No one knows
what the government may be able to pay nor
ceipts for wheat in an elevator ought to have
behind them one bushel of wheat for each
bushel promised. Suppose there has been an
over-issue--that the elevator cannot deliver,
bushel for bushel, what the receipts promise
Perhaps there are twice as many bushels on
receipts afoat as there are of actual wheat IN
the bins; if so each receipt for 1,0OO bushels
really represents only 500, but no one can be sure
And the elevator may put tout as many more
receipts tomorrow. Faith is shaken. Holders
,I,n+ kt,Ar-a n nj
that are not redeemed. The one thing certain
is that the Government cannot pay dollar for
dollar. How much it can pay, none know.
How many millions more of notes it may put
out, none know.
Such notes lose part of their power to buy.
People refuse to give the same quantity ot
goods for them as before the larger issue. The
change is not instant, but it is sure. 1t is not
equally rapid as to. all things to be bought, and
thus does special wrong to labor, for wages go
up more slowly than prices. But soon the
whole scale of prices and wages alters; part
of the buying power of each dollar is lost.
Because there is dstrust, men put up prices as
far as they can. Because they expect another
issue still, SO that the dollars may soon have
still less buying power men put prices too high
for the amount of notes now in use. Thus 1t is
inevitable, from the laws of human nature
that the note loses not only that part OF It's
buying power which, in proportion to the
amount of notes already in use, it ought to lose
but larger part, from the fear that more notes
are to come. When every man is anxious to
make himself safe, some will overdo it, just as
boy, who tries to fill pail to the very brim
is sure to make it run over. This comes tG
pass: the double supply of 5o-cent dollars will
not do as much buying, at the new prices, as
the former supply of 100-cent dollars could dc
at the old prices. What then? The cry fol
more money is louder than ever. The need
for more money seems greater than ever. In
reality, the need for better money is greater
money means only further loss of its buying
power, deeper distrust, and greater mischief.
But no Government has yet been seen among
men, save that of these United States, which
has had the sense and the firmness to stop
after having fairly begun the issue of irredeem
able legal-tender notes. In those rapids many
nations have drifted toward the Niagara OF
bankruptcy. Only one has thus far escaped.