Mexico weekly ledger., 1895-03-28
Money, Currency and Banking.

WHICH JDah6S sliSST d iS-Stl tCtidcA
when silver is worth less than gold, to
those of it's people who trade with gold
countries? OF two communities one
is agricultural, let us say, and the 9TH
er is a manufacturing country. The |
people of the agricultural country con-
sumo one-third of what they raise.
They must go to the other community
for their clothes and implements. They
buy their clothes and implements with |
their surplus grain and other farm
products. If they bartered, they would
carry their products to the other COM
munity, and would receive the full
worth of their own goods, less the cost
of transportation both ways; for the
farmer sells and buys i'll the market of
his customer. But he does not barter;
he sells to buyer in his own COM
munity, who pays him in money.
Wheat is worth 800 hundred bushels,
for example. The farmer receives 500
in silver, silver being one-ha!f the val
ue of gold. He has been Taught that
II SuNef Is uldtS d IcSai ICAdCA hi'
prices will go up, and let us concede /
that $50 wheat viii bring ST5 in silver; |
but it will require 500 in silver, and
more, to buy $50 worth of clothes or
implements in the gold country, and
the farmer has lost by the transaction.
This is what cheap silver money means
to him. This whole transaction may
become very much involved. Before
the wheat reaches the tailor, or the
coat reaches the farmer, large num-
ber of persons may intervene. Event
ually the settlement may be made by
bill of exchange. In this way the
debt of one community to the other
will be paid off. All transactions be-
tween the people of one country with
the people of another are theoretically
settled in this way. But as one trans
action is governed by the same laws as
the sum of all transactions, We may
suppose that the farmer and the tailor
settle their trade by bill of exchange.
! If the tailor is in debt TO the farmer,
I ne 6ttl OittNt II Oiii "a AN44Oh NoNaiA
| tryman of his own drawn on debtor
who is a fellow-countryman of the
farmer. The order will be to pay the
| farmer $50, The farmer will receive
i'll the taiIor's country $50 in clothes
measured by gold If gold is worth
| twice as much as silver, the farmer
could have purchased twice as many
payment in gold. To make this clear,
| for it is commerce between nations
reduced to its simplest terms, and is
Important: Dakota, in the United
States, sells 500 bushels of wheat to
Threadneedle, in London, from whom,
in turn, Dakota desires to buy clothes.
The price of wheat i'll London is $3.50.
| Dakota lives in silver country, and
silver dollar is worth so cents. Thread
needle buys the wheat and sends bill
for $3.50 to Dakota. Dakota takes his
pay in silver. The clothes that he
buys froEl Threadneedle are charged
to him in gold prices, or if they come
to more than the wheat he must, in
order to pay for them, send bill to
London. But it must be gold bill.
His $3.50 in silver is worth only S125
in gold, and he will receive even less
than that, for he is charged for the
doubts and uncertainties prevailing in
London about the finances of his eoun
try, and therefore he receives less than
SIPS in clothes for his $3.50 worth of
wheat.
This is the result of muddling the
| financial question with cheap metal
and wild theory. The man who un-
dertakes to deal with gold country in
silver money must pay extravagantly
for his trading. If Dakota's country
had been gold country he would have
sold his wheat in London for its worth
in clothes or any other commodity that
he might desire. A good many per-
sons say that if this country will insist
on silver it is great enough to compel
Great Britain and the rest of the world
to abandon the single gold standard,
and to ''re- establish silver as coin
metal. There is no greater nonsense
than this. If we adopt silver basis
the gold countries will buy our pro-
ducts at half price and sell us theirs at
full price. While we may be great
enough and strong enough to stand
this without going into national bank
ruptcy, we are neither great enough
nor strong enough TO weary the for
eigners of this kind of trading.
Metal money is the basic money. In
speaking of bills of exchange | have
touched upon the subject of the rep
| resentatives of money, for money has
| its representatives, its agents that do
it's work for it, just as money itself
does the work for those who want to
trade off the goods they have for goods
that others have. Metal money is
often inconvenient. 1t is too heavy,
for one thing, to be used in large
quantities. When this is true it is open
to all the objections that are made
against barter. 1t will not serve for
currency i'll some transactions. By
currency, mean money and its rep
I-resentatives that pass from hand to
hand IN daily transactions. Suppose
for example, that a should purchase
property of B for $1,000 If A had
nothing but gold in which to pay B,
he would be obliged to buy wagon
and carry the price to in this expens-
i've and troublesome manner. Ifthere
were nothing but gold in the world,
the man who goes into the central part
OF this stats to buy butter and cheese,
or to the wheat farms of the northwest
would be. obliged to carry with him
chests of gold and an arsenal for his
protection against robbers. Therefore
paper currency and other representa-
tives of money have been invented.
And this paper is not confined to gov
ernment notes and bank notes. 1t
does not necessarily represent gold or
silver, but it must be good for every
dollar that it promises to pay, and,
more than that, it must be believed to