The daily morning Astorian. [volume] (Astoria, Oregon) 1883-1899, 1895-06-07
VOLUME OF CIRCULATION AND IN
TEREST.
(Prof. Laue,hlin1


II ought by this time to be unmistak-
ably clear that when a government de-
clares what money shall be q legal tender
ana when 1t fixes the coinage 1t does not
thereby determine how much the de-
mand shall be for that money and coin
age. II was explained that, although we
are now on a single gold basis, actual
transactions are llquidated by about 1
per cent or less Of gold coin. Making
gold the only material in our unit of pay
ment, capable OF unlimited legal tender
power. In 1873, has not, therefore, caused
gold to be the only money used in trade.
Why notI Because the actual use of any
particular way Of exchanging goods is
beyond the control of legislation, and Is
determined by the business customs and
habits of the community. When the gov
ernment by law establishes the unit OF
account and represents 1t by q given
weight and fineness Of gold, its work ends
there. 1t cannot control the value of that
gold, because 1t cannot control the
worlds supply Of and demand for gold
nor control the exchange relations be,
tween goods and gold. That is clearly
established. Nor can the government de-
termire the demand for gold by merely
making 1t the unit and stating 1t to be
legal tender because 1t cannot control
the business habits OF the country The
government In such a case determines
only the standard Of payment in which
prices will be expressed. 1t cannot even
insure the stability Of the standard
since goods may change In cost and
thereby change the ratio of the standard
to goods. But the government at least,
can always, and should always, set it's
a inf tret
to tlmper with the standard side of the
ratio. There are likely to be changes
enough rising from the goods side, not
to have more and artificial changes added
by racking up and down the standard of
money chosen by law. Trade and manu-
featuring demand order and certainty for
the future, SO that some provision for
coming work may be made.
Swelling the volume of circulation GER
tainly does not result In a better measure
OF value, because a measure changing up |
and down Is a veritable injury; swelling /
the volume OF circulation certainly does
not result In better medium of ex-
change, because exchanges to the |
amount Of % to % of their totals, are in |
fact performed by means other than ac-
tual forms Of money. Hence, we may
conclude that swelling the volume of cir |
culation, In favor Of which so much has |
been said, adds no more advantage than |
swelling a mans cheeks with wind adds
to his weight.
On this question: also, what are the
facts? Are times better when more cash |
is gathering In the vaults Of the banks?
No, quite the contrary. A time of de- |
preston is exactly the period when busi- !
ness Is poor and money is superabundant. |
A surplus OF money is no surety of pros /
perity at all. The actual number of legal |
tender notes or coins lying In vaults or
drawers or waiting for use cannot affect
production Of goods. They do not bring |
rain and insure wheat crop; they do not
prevent the frost which blackens the
young grain; they do not govern the COM
Ing OF the Hessian fly, which destroys the
farmers toll. How long will 1t be before
We can distinguish between two differ
ent ideas, production of goods and eX-
change of goods Money does not pro-
duce goods. The value of goods may
change Independently of money. Any
body with thimbleful OF brains knows
that the price of wheat has recently gone
up from IS or 60 cents to about 50 cents
per bushel for reasons affecting the pro-
duction OF wheat itself, not because there
has been any new supply Of money which
has suddenly fabricated the exchange of
goods. 1t Is high time to insist on refus-
Ing the name OF sense to any talk which
overlooks the distinction between pro-
ducton and exchange. II a man has
products he can exchange them for what
he needs easily enough. The main thing
is to get the products into existance
An additional volume of circulation
will not give the farmer credit who has
none now; It will not make an honest
man out Of deceiver; II II raises the
prices Of his products 1t raises the prices
Of what he buys equally; II his soil Is
poor, II his land Is In a region forsakcn
by rain. It will not give virtue 10 the soil
nor bring rain to his suffering crops.
And yet sensible people are constantly
talking IN the most absurd and Illogical
way, as II increasing the volume OF cir
culation would make crops and riches.
II is hallucination; vagrancy of the
kind that looks for sudden wealth TO
drop out OF the sky.
Increasing the volume OF the circulation
win not lower the rate OF interest to the
borrower. Circulation Is q means Of ex-
changing goods; It radically differs from
loanable capital. Money and capital are
far from being synonymous. Capital in
cludes all goods used in reproduction
money Is only the one kind Of article
forming the medium of exchange. When
a man borrows 1900 he borrows claim
on goods In general. and the money is
only a go-between. II farmer, he really
borrows seed. plowa lumber, food, etc.,
OF to whatever he devotes the 5000. And
what Affects the rate OF INTEREST," OBJ
viousfy the kind OF security and the
abundance Of loanable capital. lncreas-
ing printed paper or striking coins at the
mint does not change the credit or secur-
nor would they change The amount OF
loanable goods ready TO be consumed. IN
fact. increasing the volume OF circula-
ton on wildcat theories. Is certain "a
curtaii the amount q capital offered for
loan, because the owners have no desire