The advocate and Topeka tribune., 1892-08-31
MONETARY COMMISSION.
Report OF the United States Monetary
Commission, Appointed by Act Of Con-
gress August 1B, 1876.

ing eTpedients and credits, go0erRed By
the UoIume of money.
1t is sometimes maintained that COM
pensation can be made for a shrinksge in
the volume of money by an increase of
such banking expedlents as checks, bills
Of exchange, and clearing houses. These
expedients are now resorted to, and, be-
cause profit Is found In their use, always
will be avAiled of e. the utmost possible
extent. 1t Is manifest, therefore, that,
whatever the proportion or percentage
they bear to the volume Of money, it can
not be increased except through an in
crease In that volume. And tits as mani
fest that, when the volume of money is
diminished, these expedlents must d.
minish, and prices must fall in corre-
spending ratio. Money is the primary
and governing force, whose functions
cannot be superseded by any device
whatever, aud whose volume or existence
does not depend on banking expedlents,
while these expedients grow out Of money
and could not exist without It. The
furthest extent to which they can be
used Is already practically reached, and
they can only increase, and must de-
crease, as the volume of money increases
or diminlshes.
This reasoning partially applies as to
the effect of credit on prices. II would
seem to be reversing the natural order of
things to maintain that prices are con-
trolled by the volume of credit instead of
by the volume of money. Without en-
tering into an elaborate discussion of this
intricate question, it may be said that
prices were affixed to property at the
time when the invention of money super
seeded barter. Credit, as Il is now under
stood, was impossible under the barter
system, and must have come into exist
enCe at some period after values were
measured through the medium of price.
Primarily, then, prices must have been
entirely controlled by the volume of
money, unaffected by credit.
Credit Is the explosive element in the
business of modern times. II 1t were ex-
tended upon property at such rating Of
prices as would be established through
money alone, and II the relation between
the volume Of money and population and
commerce remained steady, prices would
remain steady, and the great mass of
credits would rest upon a sound basis.
Even under such conditions there would
be speculative and unsound credits, but
these would be exceptional, and the In
jury caused by their collapse would be
local, individual, and temporary. There
never can occur a universal fall of prices
and a general withdrawal of credits with
out preceding decrease In the volume
Of money.
1t Is contended by many that credit Is
based on the combined volume Of prop
erty and money, and that diminution of
the volume Of money need not occasion
any greater withdrawal of credit than
such proportion as the dlminution would |
bear to the aggregate amount of property |
and money. But the amount of credit
which can be, or will be, extended upon
property depends upon It's price, which is
to represent the cash 1t can be |
sold for, and price depends upon the re-
lAtion between the volume Of money and |
other things. Property which might be
ample security for a given quantity of |