Wood River times. [volume] (Hailey, Idaho) 1882-1915, 1890-03-08


John Stuart Mill tells US that -
i "The value or purchasing power oil
money depends, in the first instance
on demand and supply.
The supply Of money, in short, is all
the money in circulation at the time.
IL The demand for money,
again, consists of all the goods offered
for sale. But in considering the re-
lation between goods and money, it
is with the. causes that operate upon
all goods whatever that we are es-
pecially concerned. We are com
pairing goods of all sorts on one side,
with money on the other side, as
things to be exchanged against each
other. + If the whole money
in circulation was doubled, prices
would be doubled. II it was only
increased one.fourth, prices would
rise one fourth. There would be
one fourth more money, all of which
would be used to purchase goods of
some description. When there had
been time for the increased supply of
money TO reach all markets, or lac.
cording to the conventions me taphor)
to permrate all the channels of cir.
culation, all prices would have risen
one fourth. But the general rise of
price is independent OF this diffusing
and eqnalizing process. Even if
some prices were raised more aud
others less, the average rise would b.
one-fourth. This is a necessary con.
sequence of the fact that a fourth
more money would have been given
for only the same quantity Of goods.
General prices, therefore, would in
any case he fourth higher. *
That an increase Of the quantity of
money raises prices and a diminution
lowers them is the most elementary
proposition in the theory of currency,
and without it we should have no KEY
to any Of thu Others"
All writers on political economy
substantially agree with Mr.. Mill as
to the effect OF All increase or d,min.
ut'on Of the volume of money upon
the general range of price, howev-,
much they may differ in given case
as to whether the rise or fall Of price
was due to the volume of money or
the cost of production.
Mr.. David A. Wells and others
who advocate adherence to the single.
gold standard contend that the de.
cline Of prices, amounting to about 80
per cent. in the last sixteen years, is
mainly due to cheaper and more
abundant production; that modern
inventions and superior skill in work.
manship have greatly reduced the
cost and increased the supply of com.
modties This, they claim. has pro-
duced notof
THE DECLINE OF PRICES
which Soetbeer, Plx'ev and other
s'atlsticlans inform US has taken
place.
! maintain that the annual supply
of money metal from the Hines, of
about two hundred millions, consist
ing OF gold and silver, was reduced
m' Re than one half by the demoneti.
eaton OF silver, and tina, such reduc-
ton of the supply increased the
demand for money, raised its value,
aud reduced the price of commodities.
This was substantially the conclusion
arrived II, by the BRUSH Royal Com
mission appointed to investigate thus
very question. 1t is true tue com
mission regarded increased production
as an element tending to reduce
prices, but found that the d-moneti-
cation of silver WAS the principal
factor. Ii it te true-and the general
proposition has not been questioned
that, other things being equal, an
increased supply of money will in.
crease prices and diminished supply
will reduce them, then reduction Of
one.ha'f OF the supply by the rejection
of silver must necessarily have had a
marked effect.
In view of the vast extension OF
credit to which | have alluded, taken
in connection with the continued de.
cline of prices, it is evident that the
creditor has been largely benefited
white the debtor has been injured by
this decline. The debtor is compelled
to exchange from so to so per cent.
more property to procure money with
which to pay his debt than the credi-
tor expended in obtaining the money
which he loaned. la other words, the
creditor, by reason of this decline Of
prices,
IN PAYMENT MORE vALU.
ABLE MONEY THAN he LOANED.
in addition to the interest stipulated
in the contract, because the value
of money has advan ,ed and the value
OF property has declined.
John Stuart Mills sells rs that
"When one person lends to an.
other, MS we'll as wh-m he pays wages
mr. rent IN auoi her uhut ha tr.c.{ar, |