The Wichita daily eagle. [volume] (Wichita, Kan.) 1890-1906, 1896-09-20


the Cost of Production Theory o.
Moneys Value, Which He AssaiIs. AND
to the Volume of Money Theory, Which
Pleases Him-He Then Deplores thu
Worries Nightly for Fear the Republic
May be SnufIed Out.
Chicago, ILL.,, Sept. Ex-Governor john
P. Altgeld delivered a speech tonight on
the currency question at Central MUSIC
hall. After an extended answer OF the
recent speeches of Carl Schurz and Hon
Bourke Cochran, Governor Altgeld
turned his attention TO the fundamental
theories of finance as held by the ad-
vocates Of the free coinage of silver,
continuing, in part, as follows:
I'm order to get a more comprehensive
view Of the whole subject, let us see
what are the fundamental laws govern
ing finance.
There are two theories at present
advanced in regard to the purchasing
power of money; one is what Is called
tne cost of production theory, under
which supply and demand have but lit
tie influence, and the other may be call
ed the cumulative, or volume Of money,
theory. This theory is based upon the
law of supply and demand.
COST OF PRODUCTION THEORY.
1.-The cost OF production theory has
been seized upon by the gold standard
advocates of this country and Is used
as the basis of their arguments. 1t
simply means that it takes on the aver
age a definite amount of labor to pro-
duce gold dollar and IT is the cost OF
this labor, the average cost of produc-
Ing the gold dollar. that fixes its pur-
chasing power, and after the dollar is
once in existence then its purchasing
power undergoes comparatively little
change 1t was always buy an amount
OF property that is equal in value 10 the
cost of producing the gold dollar and
the question Of supply and demand has
but little influence thereafter upon the
dollar. 1t is practically Interchangeable
and always the same, so say the adj
vocates of the gold standard. Under
this theory it does not matter whether
money IS plentiful liz the land of ex-
ceedingly scarce The purchasing
power Of the dollar is always about the
same. 1t does not matter whether
there a thousand men scrambling to get
the dollar because they must have it,
or WHISTLER there are only ten men
scrambling to get it, the dollar will re-
main practically the same. 1t will buy
no more property when a thousand men
are struggling to get it then it will
when ten men are struggling to get ii,
and, of course, IL this theory is correct,
then the demonstration of silver had
no effect upon the worlds prices OF
products and property. If 1T is cor
rect you can wipe out one-half of the
money that now exists in the world
and it will not affect prices The pur-
chasing power of the dollar being de-
termined by the cost OF production, It
continues to be the same ] ina CINE I
hear some man say; why, that theory
Is contrary to the experience of the
whole commercial world Well, nv
friend, that makes no difference; gold
standard advocates don't care about the
experience Of the commercial world. It
Is true that under this theory the gold
dollar should have become very cheap
IN recent years because there is scarce
ly an industry. scarcely a field of pro-
ducdon in which such tremendous i'm
provements have been made as in that
Of gold mining. The labor saving ma
chinery introduced in the last quarter
not greater than that applied to farm
ing. 1t is exactly the same as that ap-
piled to the mining OF silver. II costs
less on the average to mine a gold dollar
now than it ever did before, and yet the
gold dollar Will buy twice the product
and twice the property that ii did a
quarter Of a century ago. Let me say
In regard to this theory that the great
statesmen and the great finaucierS OF
Europe never entertained it for a mo-
ment; they brush IT aside with a wave
of their hand and look upon il as be-
ing ridiculous
VOLUME OF MONEY THEORY.
THE other theory rests chiefly on the
law of supply and demand Under it
the total amount of money in the world
forms the standard and measure of
prices. When there IS large amount
Of money in circulation among the peo-
pie prices are high; when money is ex-
ceedingly scarce among the people then
prices are low. Under this doctrine II
you wipe out one-half of the worlds
money prices fall correspondingly on
the average. If you double the volume
of the worlds money prices will on the
avearge double; that is, the general
tendency will be that way The price
Of any particular article or piece of
property viii again be affected by the
law of supply and demand as relates |
10 it. The volume of money forms |
what may be called the line for prices. |
1t is horizontal if money is steady; ii in |
clines upwards If money is increasing in |
volume: it inclines downward If money |
Is shrinking in volume and the general |
tendency OF prices will be 10 move along |
this line, but the supply and demand |
In case Of different articles viii cause /
the price Of those articles to from time |
to time either 10 come slightly above |
or drop slightly below this line. This |
theory, or law. like the law of gravita- |
ton in the physical world. is in har- |
mony with and explains nearly all finan- |
cial phenomena. When carefully stu |
died il will be found running through |
all the centuries and producing the same |
results everywhere Under this law !
the demonstration of silver had TO af- 1
feot general prices throughout the world !
That is. that il had 10 lower the general !
level Of prices and this was the view |
which nearly all the great statesmen /
and financiers of Europe took OF the |
matter at the time But that is not /
all Under this law TWO men require /
more money than one man, a thousand /
require more than fifty do.
INCREASE OF POPULATION.
IN other words. as popula ton in
creaSeS there must be a corresponding 1
Increase in the volume Of money or there /
will follow practical Shrinkage, that is /
there VIII be less money per capita. For
merly there was added every year not /
only all OF the gold but all of the sill
Yer. except what was used in the arts, \
the silver being about equal 10 the gold.
This in a measure kept pace with the In
creasing population so that the increase
in population would not necessarily az
feet prices, but now there is added an