The evening bulletin. [volume] (Maysville, Ky.) 1887-1905, 1896-09-12
Interesting Paper Read Before
the Bryan Club by Prof.
L. Swift.
The Per Capita Of Circulation Has De-
creased and Carried the Prices
of Products With Ii.

as debt-paying power or legal tender.
PRINCIPLE l.
The rol,me Of nations money in circulation should
be proportional to the nations production Of peaih in
order that prices maybe The same or that the dollar may
hare The same purchasing po,cer
In other words, the amount of money in cir.
culation should sustain the same ratio to produc-
ton from year to year, otherwise. prices of all
commodities must rdrg The same ratio of money
to production will not, OF course, prohibit
fluctuations brought about by local causes,
above or below a normal price, but what is meant
is this that 81 900 will buy as much OF fifty of the
staple products of trade at one time as at
another. A few of those products may be
unusually high, owing to scarcity or other cause,
and few may be unusually low, owing to over
production; butt could not be possible, If the
money in circulation kept pace with production,
tor them all to be unusually high, or all unusually
lolC, as is now the case.
This principle in the control of prices believe
is generally taught by political economists,
though it may not be stated in the same
language. The following l give as references
John Locke, John Stuart Mill, Sir James Graham,
]. L. Laughlin and A. L. Perry. Ricardo states it
this way: THAT commodities would rise or fall
in price in proportion to the increase or diminu-
ton of money assume as fact that is incon-
trovertible."
Men and governments have sought to control
the circulation OF money by the per capita, or so
many dollars to each person This worked very
well until about fifty years ago, when the use Of
machinery greatly multiplied the power of
production. Before 1910 the ratio of production
to population was always about the same: now
one worker will average by help of machinery
about five times the production that he did fifty
years ago.
Since our prices are all unusually loo the logical
conclusion must be that our circulation of
money has fallen of, in proportion to the produc-
ton. Now let us investigate the facts and see if
they will sustain the conclusion.
From 1873 to 1896 our production of wealth in.
creased l72 Per cent, while our circulation of
money increased only so per cent, as reported
by our secretary of the Treasury and our money
in circulation has actually diminished over
S5iOo0,OOO in the last three wears, and the per
capita circulation has fallen from s2i2S to S2l TO-
Up. 81, Treasury Circular No. 123) a diminuton of
S3.1s. But 32l 10, though reported by the treasury
is not the actual amount of money in circulation,
for ii it is legitimate to deduct the reserves OF the
United States Treasury it is also fair to deduct
the reserves OF the National banks, private and
savings banks, and loan and trust companies for
these reserves are perpetual and do not cir
culate. The reserves of the 3,712 National banks
September 2S, 1895, amounted to S3i0,OOOtO and
counting 10 per cent. OF the deposits for the
reserves OF the 56S5 State, saving private banks,
and loan and trust companies ii gives S307 0i6 26S
The Director of the Mint, in his report on the
production OF gold and silver for 1885, p. 42 says:
"At present there are at least S275 100000 OF the
total gold coin that cannot be accounted for"
Part OF this had probably been carried out OF the
country by tourists and the rest used in the arts
This, too, should be deducted from the reported
circulation Taking out these bank reserves and
this loss OF gold it leaves less than $40 per capita
in circulation. Senator George q. Vest, in a
speech delivered at Fayette, Mo-, October II,
1895, makes other deductions for losses not in
cluded in the above, and says that there could
not have been more than SG.5l per capita in
actual circulation in 1898.
The result has been that the general average OF
fortyfye of the leading articles OF production
has fallen in price since 1873, IS per cent. This is
taken from the Royal Statistical Society of Lon.
don. 1t takes the average OF forty-fve leading
articles OF production for twenty-five years--from
1883 to lS77--as a standard of comparison. Ac-
cording To this standard prices reached the
highest average in 1878 for the past fifty years
and the lowest in 1896. So it seems that the facts
completely justify our conclusions. This con.
dition of low prices is not peculiar to this couu
try but is true Of Crery gold standard country in the
corld, whRe The same is not true Of siirer standard
countries, Their prices have not fallen as ours
have. The facts are, according to the principle
stated above thatwe have 500 600 900 less money
in circulation than we ought to have, and,
counting out the gold that cannot be accounted
for and other losses on currency not taken into
account by the treasury report about $500, 100000
less than what the business interests of the
country demand
Beside low prices we have enforced idleness
and reduction of wages. Low prices and high
wages are impossible for any length of time and
those occupations where the wages have not yet
been reduced must be reduced ultimately under
the present gold standard. 1t is, indeed,
peculiar condition of affairs at present, want in
the midst of abundance and to spare. The
following will illustrate and enforce our present
financial and industrial condition and the use
and need of money as medium OF exchange
thresher with 2l-inch cylinder run by
horse power will hull 100 bushels OF grain an
hour when running at its normal capacity. 1t
will take four wagons and teams and seven men
to haul the grain from the field to the machine,
and one man to sack aud two men and team
and 100 sacks to remove the grain to market or
storehouse. Sacks here represent money
medium of exchange-grain, production; un.
thrashed grain, raw materially Now suppose
we change the thresher from a 2i-inch cylinder
to one OF 80 inches and run by steam power, in
stead of horse power, This new machine has a
panaQitV 0f I'M buShalS a hOnr or 1nnhla "a
other. Now, instead of four wagons and teams
and seven men, you will need eight wagons and
teams and fourteen men to keep the machine
running at Its normal capacity. You have the
men and the teams and wagons and everything
necessary but sacks, and of these you only haze
100, when you need 200. Now what will be the