The watchman and southron. [volume] (Sumter, S.C.) 1881-1930, 1895-11-13
A Foreign View Of Our
Currency.


instructive series of articles upon the
current financial situation which Mr.
T. Lloyd, the editor Of the London
StotSst, contributes TO- the columns Of
that ioarnal The. .,geatlemau in ques-
ton is now devoting his attention to ao
exhaustive examination Of the influence
Of the gold discoveries Of the last few
years, and the results that have thus
far appeared. or are likely to ensue.
from the large increase in she output OF
gold from South Africa and other coun-
tries. It will be recalled that some weeks
ago the :Statist published some exceed
inely illuminating articles on the quan-
tisasive or per capita theory OF money.
The articles now appearing in its col
umos are supplementary to those upoo
.he quautitative theory.
Ia the present series the writer above
nsmed com bats the idea that it is the
large increase 10 the worlds stock, Of
gold which causes the prevalent low
rates = Of interest aud discount. On Che
contrary. be holds aud urges the op'u.
ion With great force that the fallaoy OF
the ouantitauve theory leads to the oop-
olusion that 40 addition to the supply
of money caunot directly AFFECT prices
Of commodities, rents, or the return on
,o.nohla can;tal It is credit which
determines these according to MIR.
Lloyd, who says 1.-The bimetallists
repiy that credit undoubtedly does play
an important part in all the great
markets., but that a maa may Insist If
he pleases upon being paid 10 coin. 10
which answer that a. mao who has
entered into a contract msy, ii he
pleases. call upon the courts OF law to
interpret that contract. and The courts.
if oeoessary, will employ soldiers and
police to enforce their judgment. 1t
would be just as reasonable. then, to
contend that all business of every kind
is form Of violence as to assert that
prices are determined BY the supply of
the precious metals. A man may. 1t he
chooses. have recourse to the Law courts
inst as be may iosiss upon being paid in
gold. But ueither fact affects the great
truth that it ia credit which determines
prices. Leaving the bimetaliists aside.
however, aud turning to the ordinary
com mercial commuuity-aud more ea-
pecial'y to baakers-I would point out
that the pleu.ifolness or scarcity of gold
only indirectly, aud after time, affects
the money market. Bankers are the
great lenders aud d,scouuters But
bankers rarely indeed use gold in either
leading or disoounsing: If they did so
to ary great extent their business would
ooms to an end Banking is based
ap,a the principle that a bark may
borr w from the public as much as it
can 10 tbs shape Of deposits. and that it
need hold in coin only a very small
proportion of those deposits. ;"
Here, aod in western Europe gen
erally," says Mr.. Lloyd. "eredit has
completely revived. Bot it has no:
recovered 10 North. South and Central
America 10 Italy, Portugal and
Greece ); 10 the Australasian colonies.
or in India Bankers, then, IN Eog:
land, aud 10 western Europe generally,
are in position to give immense ac-
commodation in credit. But their
customers are afraid to employ the
credits that they could have on easy
terms. in investing ia the countries
named. The refore there is a vast
scperabundauce of credit. aud conse-
oueptly rates Of interest and discount
are low" =.
..It is not surprising" the editor of
the Stat,st parsues, "thas the long con
sinuauce Of low rates should confuse
the judgment Of evea clear-m'oded
bankers. 1t is not unnatural that an
impatient banker should jump to the
conclusion that it is the great increase
in the gold supply that is taking away
profits. II bankers will overrule their
:npatieuce and look at the matter calmly
they will see that it is the state OF
credit. not the supply of gold, that is
affecting them, aud that the immense
addition that is being SO steadily made
to the gold supply is. instead OF being
a disadvantage to them, very great
advantage, for it lie preparing the way
for the adoption of meaures that Will
by-and-by restore credit everywhere.
LIE. us take the United States as an
illustration. A dozen years ago or
more the American people we're per-
suaded by the silver party that there
vas not enough of gold in the world to
supply all current requirements and
that, therefore, prices must continue to
fall uoless a considerable quantity OF
silver was coined Congress conse-
queusly passed the Bland act, and the
coinage of silver went on. Suose'