The Indiana State sentinel. [volume] (Indianapolis) 1868-1895, 1886-06-16
THE CAUSE OF THE sHRrNKAGE,

the greater the demand. The facts do not
bear this out, for the world several years
ago reached its highest consuming power,
and found itself totally inadequate to re-
duce stocks by an added demand. Instead of
this there has been strongly manifest re-
duction in consuming power, as the loss to
the great number OF producers whose pro-
ducts did not represent profit, has been
felt in restricting demand. This makes it
clear that there is something lacking
somewhere, and that the tendency OF
the present time is In the direction
of a general contraction OF powers
that no degree of expansiveness of product
has alone been able to counteract. Whether
the present puzzling condition of trade re-
suits from a slow but accelerating change in
the positions OF producers and consumers,
certain it is there is lack of adjustment
that the conditions themselves do not pro-
vide. Certain it is that the equalization and
dissemination of ability in production, that
has levelled conditions so that no principal
section has advantage in the costs of pro
duction, by general extension of the prin-
ciple of protection of home industry" has
at least destroyed commercial equilibrium,
| if it has not reduced the element of produc-
ton to the mere requirement of home con-
sumption. 1t is clear that the tendency of
this idea is leading to INST this point from
which there will be an inability to return.
Complimentary to the practical problem
of production lies the social one of expand
ing the capacity to consume, which in some
way is dependent upon an ability to ex-
Oh Inc, fOro p0fbar onH
a further ability to consume it. 1t is ques-
ton how far this expansion can be carried,
and the method of inducing it is yet social
riddle. Nature has set bounds to consuming
power. A given quantity of wheat or cotton
is required for actual use. If that quantity.
through an application of science or me-
chanics can be exceeded, the surplus will
be a waste and represent total loss of
labor. But as it is clear to everyone's ex-
perience that the world is far from living up
to its consuming capacity were there more
equitable and less costly method of effecting
exchanges, it is clear that the world has not
reached this condition of incurable over
production.
By all rules of finance and political
economy the world at present should be Iiv-
ing higher than ever before, and there should
be conditions of expansion of industry as
things grow cheaper, instead of the reverse
contraction of consuming power and COM
mercial energy. The practical bearings of
the case are to substitute condition of ex-
pansiOn for a condition of contraction, and
to this is united, in some way, the artificial
means by which exchanges are Affected
money. A writer in the Edingburg Review
in tracing the causes of periods of expansion,
finds them in the following: The first of
note was induced in the great addition to the
then Sixteenth Century, small amount of
money by the great additions made by Spain
from the New World that for two centuries
was en- level with or above the worlds COM
mercial activity and productive power. The
second dates from the great discoveries of
gold in California and Australia coming
opportunelyas the demands of increased pro-
duction, induced by machinery required it.
The third was induced by the great addi-
ton of paper money, which, while 1t repre-
sented many standards of value, as a medium
of'exchange induced the most powerful slim
ulous the world has ever seen, enabling us
to prosecute great war, people a continent,
duO CONcI IL Win WOIhbuOpo anu IdllIOdUs.
But the last decade has witnessed contrac-
ton; and there is no one who will not admit
that this has induced a real contraction of
consumptive power, that Immediately be-
came manifest in "overproduction."
The country has witnessed an attempt on
the part of large numbers to meet this by
cutting down production-in an attempt to
make eight hours days work But this re-
suited exactly contrary to what theory would
have demanded. ANY one can see clearly
that were prices advancing and energies ex
banding, that 10 reduce the supply by work
ing eight hours instead of ten would advance
prices and expand trade still more; but the
contrary being the case, and individual pur-
chasing power and general industries con-
tracing, it could only result that all the ten
denotes to remove the difficulty would con-
tract them still more, by reducing consump-
ton to the amount equal to the loss of prcs
duction.
Debts are the antithesis of consumption
and these have been artificially enhanced in
such degree that our national debt, at present
81. $50. 900 900. would require twice the pro-
duct to iquidate it now, than it would have
when it represented 50, 700, 600, 900; and this
is true of all debts, public, municipal and
private, contracted while the money of the
country was triple in quantity, ii shows
where and how the anomaly of contractile
industry has interveried during period of
industrial expansion. The contraction has
exceeded the expansion in almost the same
ratio that thu purchasing power OF our
national debt bears TO its face power when
contracted. In 1866 the national debt would
have purchased 20S 100000 barrels OF flour.
What remains of it to day would purchase
436,500,0O0 barrels, or more than twice the
quantity that the debt nearly double in
amount in 1890 would have purchased, The