The daily morning Astorian. [volume] (Astoria, Oregon) 1883-1899, 1895-06-12
LIQUIDATION BY GOODS.
lPrnf. LnllrhlinN

(Prof. Laughlln.)
The intermediary character of money Is
unconsclously recognized by all business
men. They know 1t earns nothing while
they hold It, So long as actual money is
kept In the safe or carried In the pocket
1t can bring in nothing. 1t is parted with
for that reason, for investment or use, as
soon as possible. The sale of goods, for
which gold is paid, is only one side of a
transaction. The commercial mind goes
Instantly to the other part of the trans
action. 1t goes to selecting instantly the
goods, or investments In goods and prop
erty, to obtain which was the purpose of
the original sale for gold. Either the
claim on gold Is deposited and no gold
Is actually used; or, II gold is paid, 1t
is at once deposited and a credit obtained
on goods In general What commonly
takes place is that goods and property
are sold for number Of dollars reprs-
sentlng their value then this claim on
gold, In form of check or bill, Is de-
posted In a bank and no money is car
rled about. But everybody does this very
thing. And just In proportion as banks
are generally resorted to these claims on
gold, representing goods. are put in the
very place where they are easily offset
against each other by clearing houses
The real and only security In all this
process Is that the operations are based
upon goods of value. The checks and
bills are based upon goods. The checks
represent goods to a given value. OF
course In any case like fraud or specula,
tlon, when checks and claims are not
based upon property OF value, and II
this Is general we have the material for a
crisis and consequent collapse. But In
II de
the basis of all legitimate exchanges,
which give rise to checks and bills; and
the important fact Of all this is that the
basis Of this check and clearinghouse
system is the volume of goods and not the
volume OF the circulation. The checks
and bills, or claims on value, arise only
from sales Of goods. They are the con,
sequence OF the sales. 1t Is, therefore,
| wholly contrary to the facts of trade 10
suppose that the goods cannot be sold
| until checks or bills, or credit money,
| has risen to n certain level to enable the
vast quantity of goods to go forward
| to be exchanged. This is not what must
| be waited for. The carloads of cattle,
| the tons OF coal, are first sold, and then
| checks and bills follow. Men do not
wait for certain volume OF circulation
before selling. Thsy first sell, and the
paper representing the property sold then
| goes on Its travels and enters the pro-
cess by which goods, or claims based on
goods, are offset against each ather. The
essential thing In 1t all Is goods not
the mecanlsm by which the goods are ex-
changed. The first is fundamental, the
second detail Of convenience. When
men are hungry they do not eat gold or
checks, but bread and meat, If they
labor and get claims on goods which
feed. clothe and shelter them, they care
precious little as to the exact medium
by which they get these wants supplied,
And yet all these transactions are
drawn In terms of money, even though
money Is seldom called for. And when
obligations mature these claims on valu>
able goods give every man q credit, by
which the values he owns are offset,
against those he owes, and all is satis>
factory. The fact that they are drawn
In terms OF money does not require ac-
tual money, even TO meet obligations. II
Is only In times OF fright, when some per-
sons fear that the claims on goods are
not based on saiable goods OF value, that
an attempt Is made to turn every claim
on goods into actual money. That is a
panic. Then, OF course, no one can get
any but small fraction. Just as when
everyone wishes a railway ride on the
same day. only a few can take one.
The situation is an abnormal and un,
natural one.
In ordinary business operations, when
men are honest, and claims are based on
actual transactions of salable goods, the
volume Of checks and bills and clear
ings rise and fall with the transactions;
and actual money is only needed TO pay
balances. The amount Of money carried
viii depend upon the character and
business habits OF the community. In
Great Britain and the United States bills
and checks are In universal use; but on
the continent OF Europe they are almost
not al all used. so that The amounts OF
actual money used In France vary wide
~ from those used IN the United States.
No comparison whatever can be drawn
from the continent which would hold for
the tnitcc states Experience Is the