Fort Worth gazette. [volume] (Fort Worth, Tex.) 1891-1898, 1891-07-12
BIO Houston Street,

ment is fixed). But it is not the VOL
ume of money alone that fixes the prize OF
products. 1t is the volume Of the circulat-
ing medium that acts and is used Is money
and in its place. that is by far the most i'm
portant element in fixing prices. And that
thing that acts in the place of and performs
all of the functions of money IS credit aud
Is not and has never and cannot become u
fixed volume.
viii make my meaning clearer by read
ing from the best recognized authority or
political economy, John Stuart Mil ''In
Il state of commerce in which much credit
IS habltuallv given, general prices at any
moment depend much more upon the state
of credit than upon the quantity of
money ''and person who having
credit avails himself OF it, in the purchase
of goods, creates lust as much demand for
the goods and tends quite as much to raise
their price as if he made an equal amount
of purchases with ready money
The credit which We are now called
upon to consider as a distinct purchasing
power. independent of money, is,
Of course, not credit IN its
simplest form, that of money, but by one
person 70 another, and paid directly into his
hands; for when the borrower expends
this in purchases he makes the purchases
with money, not credit, and eXerts no pur-
chasing power over and above that con-
ferred by the money.
The forms of credit which create the pur-
chasing power are those IN which no money
passes at the time, and very often none
passing at all, the transaction being in
Guided with mass of other transactions in
an account. and nothing paid but balance.
This takes place in Z variety of ways" See
book H. chapter Xi. section 8.
Again, when u bill drawn upon one per
sen is paid to another (or even the same
person. in discharge OF a pecuniary claim,
it does something for which, if the bill did
not exist, money would be required. 1t
performs the functions of money. This is I
use to which bills Of exchange are fire.
quently applied. See same book and chap
ter, section 4.
Suppose have no money in bank, but
my credit is good and so TO my banker and
say want to buy 5000 worth of cattle to
fatten and ship, and he agrees to honor my
draft for that amount and l come here to
Texas ana buy $1,000 worth of cattle from
A and give him my draft
upon my home bank for that
amount and he pays it to s
for $1,000 worth Of cotton and = pays it to
C for $1,000 worth of real estate and G de-
posits it with his banker in a small town
in the interior of your state, and that banker
sends it to his bank in Fort Scott
with which it does business, and
the Fort Scott bank sends it
10 his st. Louis banker, and that
the Fort Scott bank and the ST. Louis bank,
and the St Louis bank with this $1,000
draft balances or puts it on the account of
my home bank. With it, then, We see
that $1,000 has been added to the
circulation Of our country and not
one dollar of money has changed hands.
Transactions OF his and similar kinds are
taking place daily and hourly, and millions
and billions of dollars of credit are thus put
in circulation directly affecting prices, with
but few dollars of money passing from
hand to hand; in fact all Of the large bust
ness transactions of our country are carried
on in this way. The way the balances are
adjusted is by means of what are called
clearing houses which are very simple
in their operation, and can be made plain to
you by any good business man.
According to MIR. Locke Enquiry into
the Currency, page 81 the adjustment of
the clearing house, even away back in 1899,
amounted to s15,OC0,OO0 daily, while the
amount Of money passed was only one-ff-
tenth OF that amount.
Mil again says in the same book and
chapter, sec. 6, BY means of the various
instruments of credit which have now been
explained, the immense business of coun-
try like Great Britain is transacted with
an amount of money surprisingly Small,n
And in the United States the reports
made BY the bank examiners show that out
of every 500 that circulateS and thereby.
fixes prices, $3.50 Is credit and $50 is
money; that is, that twelve-thirteenths of
the circulation that fixes prices is credit,
while one-thirteenth is money
Mill again says, book III, chapter xii, sec
ton l: But we have now found that there
are other things, such as bank notes, bills
of exchange and checks, which circulate as
money and perform all the functions of it,
and the question arises, do the various sub
stitutes operate in prices in the same man
ner as money itselfi Does an increase in
the quantity Of transferable paper
tend to raise prices in the same
manner and degree as an in
crease in the quantity of money!"
His answer is plain and to the point.