The Cecil Whig. [volume] (Elkton, Md.) 1841-current, 1891-05-30
THE MONEY QUESTION.


Iusions. The Effects of Financial Pie'h"
Increase of Prices Makes Money Lei
| Valuable.
The following paper from the pen O
Prof. Simon Newcomb of Washington,
the first of /, series of articles from tn
pen of that distinguished scientist ant
political economist written especially 70
the Baltimore Sun. The question dis
cussed is one in which everybody is in
terested, and the method of its treat
ment is so clear and forcibie that ever.
one may readily comprehend it:
There is story about certain king
named Midas which has ALWAYS seemed
| to me very instructive. Like many
other men he was very fond of money
and devoted great energy 10 the work o
getting rich. Being also very hosplt
able person, he once entertained a guest
high in favor with the gods sc royalty
that the gods offered to make him what
ever recompense he pleased. After due
consideration he concluded that there
was nothing he liked better than gold,
and nothing III the world would SUIT him
better than to have that metal i'll tho
greatest plenty, SO he asked that what
gold. His prayer was promptly granted
aud for time he was delighted with the
result. He at length sat down to his
midday meal. He very soon had golden
dishes to eat out of and a golden fork
in his hands, but the first mouthiul he
put into his mouth also turned into
gold. Then new light began to dawn
upon him; he saw that what he thought
would be a source of unlimited pleasure
was just the oppos lite; that in TACT he
had no prospect before him but that of
starving to death. He was glad to
hurry back to B icchus, and when, il
accordance with the directions of that
god, he changed himself back into an
ordinary man by bathing in the river
Pactolus, he found himself restored to
his former state with more pleasure than
he had experienced in getting out of it.
| call this story an instructive one
because the mistake made by old King
Midas is one the like of which men
have been subject to in all ages and
times, and in no part of the world have
men suffered from it more than in these
United States of America. Every
nation, when such a mistake is made,
hands down the recollection of it to its
posterity, so that the latter will avoid
it for coming generations Thus the
French nation had sad experience OF
the kind during the revolution. Moved
by the same arguments now advanced
by our Western farmers they did jus5
what those farmers now want done;
they issued money supposed to be secur-
ed by mortgage on land in immense
quantities. The result was financial
ruin-a series of disasters, the recollec-
ton of which has been SO well kept in
the national mind that the French
nation have submitted without a muir
muir to gold standard all through the
recent depreciation III the price of silver.
We have a notion that the experience of
our forefathers goes for very little, and
so we make no use OF the lesson 50
abundantly taught by all experience
that an increase in the volume % money
i'll circulation is only repetition OF the
experiment OF poor old Midas.
The notion of which | speak is SO wide
spread that it evens finds expression in
proverbs, for example: money makes
the mare GO" No, say that this pro-
verb, as commonly interpreted, is wrong.
1t is neither more nor less true than to
say that ink makes business go. You
if any body would propose to accumulate
a large amount of ink SO as to get more
business you would all laugh at him,
and yet he might make very good
argument against you by showing how
impossible it was to transact business
and get along without that Indispensable
commodity, so that you would be un-
wise in disocuragipg its manufacture.
But you may ask why is 1t that money
thus deceives people l reply
that universal experience shows that
there is IA curious paradox about money
which people will never believe until
they find it out by trial. This paradox
is that the more money you put into
circulation the Scarcer it is aud the
harder it is to get if you want to borrow
any. We had an instance of this during
our civil war. Ia the beginning the
government found it rather hard to Dor
row money; six per- cent. and even high
er interest had to be paid for it. SO
Congress and the Treasury Department
thought that if they issued a few hun.
dred million of legal tender notes these
notes would go around through the
banks, and the government would find
no difficulty in borrowing III the money
find that rhey did not get it back; SO the
issues were increased, and besides that
national banks were established with
authority to put still larger sums in Cir
culatlon. But all this only made the
matter worse. Prices kept going up so
that more money was wanted, two prices
had to be paid for nearly everything,
and government bonds deprecated to
such an extent that the government was
paying equivalent of ten, twelve or fif-
teen per cent. interest on all the money
it borrowed. Now, although this may
look paradoxical, if you would examine
the matter closely you would see that
there is good reason for it.
In the first place let us remember and
bear in mind that we cannot eat money
of any sort, nor wear it, nor use it in
any other way except to buy something
we want. We cannot buy anything
with money except under two oondi-
tions; there must be somebody who
wants to sell something to us, and that
somebody must be willing to sell it for
the amount of money we are willing to
offer him. Now the more money you
put into circulation the more money
everybody will want for his goods, SO
you have to pay more to get what you
want, and thus, SO far as mere buying is
concerned, you are no better off than
be fore. But you may reply, granted
that this is the case, do not see why it
should make money scarce. But you
can see why if you will consider little
further. When prices are going W
there ere thousand chances for people
-, L he