The Prince George's enquirer and southern Maryland advertiser. (Upper Marlborough, Md.) 1882-1925, 1896-09-11
FINANCIAL CATECHISM.
EFFECTS OF FALLING PRICES.

masses of the people?
A. AS prices fall it takes an in
creased amount of labor or its products
to pay fixed charges. TO illustrate
from actual experience: When products
were upon 100-cent basis, one bushel
of wheat would pay one dollars worth
of taxes or at eight per cent. the inter
est on twelve and half dollars, or the
freight say on ten bushels to market.
Since, through faulty financial sys-
TEN, prices have fallen to the fifty cent
basis it takes two bushels of wheat to
pay one dollars worth of taxes, while
bushel will only pay the interest on
six and quarter dollars or the
freight on five bushels to market. Un-
der this condition fixed charges eat up
the farmers profit and leave him but
little, if any, surplus with which to buy
of the products of the labor of others.
consequently the manufacturer expert
ences greatly reduced demand for his
products, the wage-earner loses en-
ployment and the merchant finds his
trade diminished and general stagna-
tion results. The capitalist also be-
60 ncS timid on account fthc increased
number of failures resulting from the
general depression. He draws in his
money and is Over-cautious about loan
ing it out. AS his money increases in
value in proportion as prices fall, he
prefers to let it lie idle, or to invest it
in absolutely safe bonds or mortgages.
No prudent capitalist cares to invest
money in any species of property which
is falling in value. He prefers securi-
ties which when prices are falling are
correspondingly rising in value.
Q. Can You quote authorities to
support this economic law that falling
prices bring distress?
A. Speaking of the, results of fall
in prices, Prof Marshall of Cambridge
University says:
\ fall in prices lowers profit and i'm
poverishes the manufacturer, while it
increases the purchasing power of those
who have fixed incomes SO, again, it
enriches creditors ut the expense of
debtors; for if the money that is ow-
ing to them is repaid, this money gives
them greater purchasing power, and
if they have lent it at fixed rate of
interest, each payment is worth more
to them than it would be ifprices were
high.
But for the same reason that it en-
riches creditors and those who receive
fixed incomes, it impoverishes those
men of business who have borrowed
capital, and it impoverishes those who
have to make, as most business men
have, considerable fixed money pay
ments for rent, salaries and other mat
terS.
The great Scotch historian, David
Hume, says: "A nation whose money
decreases is actually at that time weak
er and more miserable than another
nation which possesses no more money
but is on the increasing hand"
"All intelligent writer's on currency
agree" said w. H. Crawford. an ex-
secretary of the treasury, that when
it is decreasing in amount poverty and
misery prevail
AS all writer's agree to this simple
elementary proposition it is useless to
quote further. While, as Prof Mar
shall says, it lowers the profits and i'm
poverishes manufacturers and business
men it is still harder on the great mass
of primary producers who, under exist
ing conditions, must pay a heavy and
increased amount of fixed charges
which does not diminish with falling
prices. A ready solution ofwhy times
are hard may be found in the fact that
these charges must now be paid in
halfpriced products.
As to its effects on farmers especial
ly, Prof Brooks Adams, of Boston, in
his phamphlet on "The Gold Stand
ard,' says:
Perhaps no single force has wrought
so ceaselessly, and yet so subtly ON
man's destiny as that mysterious influ-
ence which causes variations in the
value of money with which he buys his
daily brea |. * ):
In short, between 1873 and the pres
elt time these economic phenomena
have been subjected to the most patient
scrutiny, and have been examined with
all the re sources of modern science; and
if any fact can ever be said to be &C.
tablished by observation, it is that gold
has increased very largely in its lur-
chasing power since 1873, while silver
remained substantially constant to the
end of 1892. In 1898 the repeal of the
Sherman Act and the closure of the
Indian mints caused profound dis
turbance of silver values, which it is
still too early to estimate. Nor, for
present purposes, is the position of
precious metal, the demand for which
has been artiticially destroyed, a mat
ter of great moment, the vital fact is the