New-York tribune., 1895-06-25
THE QUESTION OF PRICES.

At the bottom OF all strife ana costly Dluhuer~
Ing about money is found the hoary assumption
that the quantity Of gold in Use As money deter
mines tho prices of commodities. Ages ago men
reasoned: Purchase * exchange ~ gold Tor
"commodl'ics and II there Is less gold In proper
'tlon 10 commodities prices will fall' II that
Is so as gold I'm use has not doubled while quan-
titles of products have more than doubled. prices
must fall pcrpciually. Some philosophers have
gone further. and have tried 10 show how the
increased quantity Of gold in circulation stimu-
latcs buying and thus advances prices. but they
have never explained how more gold produces
moro consumption per head. or how buying In
the long run can increase more than consunD-
ton Inrclsoning minds have been unable 10
20 beyond the ancient notion that more money
must make higher prices, ana so have clamorei
for more paper credit money. But the couil-
try had in circulation Sli per capita OF all Kinds
~ money In 1850 and In 1890 had S23 per capita
and nevertheless prices had fallen about 20 per
cent.
More recently It has been shown that the cost
In human labor ~ producing and Transporting
commt-litics has been vastly reduced that
every days work ought 20 be worth more bush
els. pounds or yards. Bui this does not touch the
question whether bushels pounds or yards ought
10 be- worth less money while labor II worm
more Indeed Mr. Edward Atkinson, In "The
Bankers Magazine suggests the question
whether gold and silver have both deprecated
.ln respect To commodities. and lost part of their
purchasing power" because 'thc quantity or
Goods placed upon the markers" having doubled,
had not The quantity of gold by which We rate
fine commodities In esilmating the prices also
douhlcd prices would have been reduced, and
m, such effect has occurred" He would have
pu, the ease more correctly. and might readily
hayn submitted Il demonstration instead ~ "A
oues,ion. II hr were entirely cmancpaed from
the notion that "thc quantity ~ the gold had
ANYTHING 10 do with the matter. Whether there
ar, 1000 yar,lsiicks at hand or only one, 3 feet
" cloth measure just the same.
The piece of paper or of silver that men read
ily accept in place Of gold represents the same
buying power that the gold itself represents.
II may be- private check. II may be an accepted
draft. II may be- n letter Of credit: all that any
body wants Is the buyin power. which the gold
represents often less safely or conveniently.
What fixes prices Is not the quantity OF gold any
where but the buying power. Of which part Is
represented by the check or letter Ancient the
orlcs are bloticd out by the enormous develop
mcnt OF currency banking and credit systems,
by which the volume Of money available at any
ordinary time has been made practically unlim-
tied The revolution In modes Of doing business.
II II has not altered the very nature Of transac-
tions has NJ least disclosed TO us that all unex-
pended wealth forms the buying power by which
prices Of commodities are determined, and not
that fraction OF 1t which may happen to be en-
bodied in any form Of money. A piece Of New
York Central n fraction Of an iron mine or cot
ton mill, can be used just as well as gold to buy
a thousand bushels Of wheat
Accumulated wealth has grown fourfold since
1860 In this country. But population has dou-
blcd and the productiycness Of each human
hand has much more than doubled. so that prod.
ucts to be bought have increased somewhat more
than wealth. and prices naturally fall. In other
countries population is nearly stationary while
accumulated wealth increases but slowly but
products Of labor have multiplied, so that the
same tendency toward lower prices prevails.
Gold Is nothing but an expression Of unexpcnded
wealth or buying power In one OF Its best and
most available forms. Hence 1t buys more things
than thirty years ago. not because there Is rcla-
lively less gold, but because the quantity OF
things to be bought has increased more than the
r.
Human hands have only doubled since 1850 In
this country. while realized wealth has increased
fourfold, and so wages Of labor have nearly
doubled The share Of uncxpended wealth which
wages represent determines consumption. bur
consumption limits the opportunity for invest
ment Of money in production, transportation or
trade and as It increases less rapidly than I'M
expended wealth, the interest on money neces-
sary falls
The quantity OF gold In use has nothing to do
with any Of these things, prices wages. consump-
ton or interest, except as 1t affects the certainty
that current representatives Of purchasing power
Will be instantly accepted. Wherever 1t does In
that way and no other abundance or scarcity Of
gold Affects prices. Modern commerce is abun-
dainty able to make all the buying tools 1t wants
for itself, each referring to gold as the unit of
value but It blunders fatally when It provides