The midland journal. (Rising Sun, Md.) 1885-1947, 1893-12-29
THE PLETHORA OF MONEY
Why it Accumulated in the New
York Banks.
From the National watchman.

reciprocally the supply of and demand for
each other. The demand for money grows
with the increase of population and the
extension of business. If the supply OF
money is reduced, or remains stationary
while the demand increases, the value or
purchasing power Of money advances; in
other words, decreasing supply of money
as compared with the demand appreciates
each dollar in circulation. When the
volume of money increases as rapidly as
population and business, stability in general
prices is maintained. If the volume OF
money increases more rapidly than the
demand, general prices will rise. If the
volume of money is diminished as compared
with the demand, general prices will fall.
The Philadelphia Ledger, of August II,
1898, while advocating the gold standard,
said
''With standard rising in value men do
not hesitate to lend or invest their money,
because they will get back more than they
put out"
In other words, when money is growing
more valuable men do not hesitate 10 invest
in money or bonds, which are money futures,
because they will get back more than they
put out. In the language of the street,
when money is going up" it is profitable
to so "long'' on money by investing in
bonds or other money futures" When
general prices are stable with slight adj
vance for term OF years, the general desire
is TO invest in property or to 60 "long' on
property. The only means OF going "long''
on money is acquiring and boarding money
or investing in bonds and other oblisa tions,
which are money " futures" Going "long''
on money produces no wealth, but absorbs
wealth already produced.
People go long, on property by invest
ing in property and by producing, property
with labor. When the community generally
is engaged in going '1ong' on property
there is IN opportunity for every willing
hand to find employment, and wealth and
prosperity are increased and advanced.
Soetbeer, the London economist, and all
other statisticians of recognized authority
agree that the average wholesale price O.
commodities has declined in the last twenty
years between 40 and so per cent or, wha
is the same thing, money has appreciated
about one half. This has caused people to
go "long" on money and money futures ant
to withdraw from investments in, or produc
ton Of property. 1t is difficult to find enough
money futures resting upon undoubtec
security to supply the market for investors
Consequently, ssbonds and other securities
have advanced in price until the margin o
profit from interest a lone is small. People
invest in bonds, because they are money
futures for the profit anticipated from the
appreciation of money.
The superficial observer regards the low
rate of interest on such Investments as an
evidence of the plethora of money, wherea,
it is the scarcity of money which appreciates
its value and induces the community to GO
''ong" on money by Investments 10 money
futures.
A very low rate of interest is accepted in
view of the increased value of money when
invested.
The owners OF property other than money
are always reluctant to yield to falling
prices. They dislike to sell for less than
cost. They hold on 10 the old prices as LONG
as possible. But as money appreciates it
becomes more and more difficult to sell
without loss. The producers of wealth are
the debtor class because they are usually
compelled to borrow to carry on their
enterprises. AS long as they can hold on to
their property, operations are continued,
frequently at loss, but finally the appre-
citation of money, or what is the same thing,
the fall in prices, compels them to surrender
and stop business. One great concern after
another is closed ON account of scarcity OF
money for business purpose until there
comes crash called panic. A large part
of the business enterprises of the country are
stopped others are curtailed and reduced
and prices fall. The panic which follows is
warning against pursuing productive
enterprises. People become alarmed and
discouraged they dare not borrow money
to put in property for fear of losing wha,
they have. The fate OF their neighbors
deters them from doing likewise. Bank
ruptcies and failures of corporations make
worthless much of the security which was
regarded as reliable money futures and
which are laid aside as memenloes of the
| past.
What money there is in the country flows
into the money centers waiting Investment
Good money futures cannot be found, anil
for time there appears TO be plethora Of
money in the country. But as it always
happens, panic reduces prices below what
might haYe been maintained with the
volume of money in circulation. The
market is glutted by the forced sale of the
property of embarrassed debtors, and specu-
lators who have money, reap harvest.
After the scare is over people gradually
commence to deal in property and lnau-
gurate new or relieve old enterprises. AT
first:prices rise. Comparatively good times
come. The idle money is gradually invested
in property. But if the volume of money
in circulation continues to decline, the idle
money is soon absorbed, and money again
commences to grow dearer. The community