The Redwood gazette. [volume] (Redwood Falls, Minn.) 1873-1940, 1896-08-13

or implied obligation on the part OF
the State to make good the debt which
such currency really represents. In
it's representative character it does not
represent value, or anything but a
promise to pay. Now, the issue of
promises to pay is very delicate and
dangerous matter, as every one knows
who has had experience with them.
The point at which it seems to us
that Mr.. Mcleod leaves the beaten
path and fails to get at the bottom of
things is his belief, as we understand
him, that the volume of actual money
that is, money of full value-is in
adequate; and that, since we cannot
increase it at pleasure, we must exc
out the insufficiency by creating "rep-
resentative" money. We think that
if he ll.investigate this one point as
to the adequacy of money volume, his
conclusion will be different. All the
facts within our knowledge go to show
that money volume has increased at
rate greater, rather than less, than the
>the requirements of the world would
seem to indicate. Not only do the
tables of money in circulation in the
United States, from 1860 down to the
present time, show this, but it is prov
ed in much more conclusive way, as
we have already stated, by the fall in
the price of money. The price of
money is the interest rate. If there
is not enough of it the rate will go up,
just as sure as wages or any other
commodity rises in price when the
supply is too small. The decline of
interest rates all over the world, not
ably in the United States, is a measure
of the increasing volume of money
supply, as compared with money de-
mand. This is partly due, of course,
to the great multiplication of instru-
ments or credit, to which we imagine
Mr.. Mcleod does not give weight
enough.
The paper that goes through bank
clearing houses represents mercantile
transactions. Commodities have been
exchanged just as truly and their ex-
change has entered into the volume OF
business, if they have been paid for by
check or draft for ST. 900, as if ST. 900
in cash had passed from hand to
to hand. Now, since the volume of
these instruments Of exchange that
pass through the clearing houses
is from S5O,OOO,O0O,OOO to $6O,OOO,OOO,-
600 per annum it is obvious that they
are vastly more important than the
volume of money itself. What is
little expansion or contraction in say
81, 6OO,OOO,OOO, actually circulating
among the people, as compared with
contraction of $1O,OOO,OOO,0OO in
credits, which we have seen happen
as the only result of a panic about the
stability of our price of values.
Finally, if Mr.. Mcleod still fingers
over the idea that there ought to be
"a specific volume" of money, "bear-
ing certain definite relative ratio to
the population and business" of a
country, does he really suppose that
congress is the proper party to decide
when that ideal volume has been
reached? Would: he think it a good
idea to ask congress to decide at its
next session if there are enough
freight cars in this.country to carry
its products.to.and fro and to order
the constructionIof enough more cars
to bring the volume up to the require
ments of trade? Would he think
that congress was competent to say
how many doctors or lawyers are re-
CURED to minister to the needs OF our
people, or to declare that there should
not be less than so many electric
lights per Captain the country as a
whole? AS matter Of fact, it would
be infinitely easier to ascertain the
proper number and proportions of
these commodities than the requisite
amount of money. The only way in
which the. latter can be determined,
or ever adjust itself rightly to business,
is by permitting demand and supply
to fit themselves to each other here as
they must do everywhere else where
the wise course of nature is not inter-
fered with by misunderstanding laws.
If the agencies that deal with money
and through which the demand and