The broad ax., 1896-05-16

The question before the Club was
VIII the prosperity Of the country De
promoted by the free and unlimited
coinage Of silver at the ratio OF 10 70 i.
Prosperity dependsupon the reward
OF production. II producers produced
only those things which they consume.
prosperity would depend upon produc-
ton itself. But under our complex sys.
tenn everything Is exchanged, through
the medium of money-hence. prosper
ity depends upon the reward OF produe-
ton, or the value Of products In ex-
change;-or, stated In its simplest form,
upon the price Of products
The common reply to this Is. that
price 10 immaterial. as rising or falling
prices are compensatory, and II the pro-
Queer receives q lower price he can buy
q corespondingiy larger amount, and
vice versa. While this statement II ap-
parently true. there are two fallaoies
concealed In It which entirely destroy
its value. Unfortunately our whole
economic system Is based upon credit
Debt is universal. Debts are nominally
fixed In dollars The value In exchange
Of dollars is determined by prices.
While q certain number Of legal tender
dollars will always liquidate any debt
expressed in that number, the amount
Of sacrifice and labor needed In ex-
change to obtain the dollars Is in
creased by lower-and decreased By
higher prices. So, in q country ii
which debt is the universal condition,
prices, instead Of being immaterial and
compensatory, are really the vital fac
tor In determining prosperity.
The second folly Is found In the fact
that low prices may wipe out the mar
gin Of profit In production. When this
In the case-when what he produces
costs the producer more in labor, sacri-
nee or money, than he can obtain for
It In exchange-though he may buy at
continually lower and lower prices, he
must eventually 60 to the wall.
So II remains absolutely true that
price Is the vital factor that determines
prosperity.
The law Of supply and demand De-
termines price. The old school Of
economists this law consisting Of only
two factors. the product and the need
for the product, assumed that where
the need for the product existed the
ability to obtain II also existed. The
later economists have discovered that
the law Of supply and demand consists
Of three factors. and that the third is
the controlling factor In fixing price,
viz: the produce. which is the supply
the need for the product which is
simply ineffective demand-and the
ability to purchase the product. or mon
ey. which transforms ineffective into
effective demand, though there may be
never so great need
Money does not escape the eontroli-
ing power of the law Of supply and de-
mand. Its value in exchange IL deter
mined by the law. Now, money, or
some accepted substitute for money, en-
tiers into every commercial transaction
every exchange. Hence II will be seen
that the demand for money is at all
times equal to the demand for all other
things. Hence. 1t must follow, by in
exorable logic, that the total supply Of
money at any given time, be II great
or small, must have a value In exchange
equal to all other things. From this
fact Is evolved the law Of the quaati-
tative power Of money. This Law is
an essential, integral part Of the law Of
supply and demand. It inheres In 1t. II
Ia its controlling factor In its power to
determine price. Formulated, this Law
1t is simply the law Of supply
and demand applied to money)-that IL
the mass Of money Is increased 1t win
for less products. In other
words, the quantity of money In rela-
ton to products determines prices This
law II inherent, and is as immutable in
its operation as the law OF srayitation.
Il Ii also vitality important In consider
tng the money question, and Is the key
20 most Of its intricacies and mysteries.
Money Is the creation of law, and of
law only. Its creation Is a government
Law determines today, an
the amount OF money that
the people may have with which to ef-
feet their exchanges.
Briefly formulated then, my answers
are as follows: Prosperity is deter
mined by the reward OF production, or
price.
Price Is determined by the law Of
supply and demand finding its express
sion In the relation Of the volume OF |
money to the volume Of exchangeabis
products.
The volume OF money 70 determined |
By law. Hence. price. or the reward Of |
productions. Il determined by law.
Hence, prosperity Is determined by
aw.
Ny conclusion. therefore, Is, that
has been destroyed By q con-
traction Of the volume Of money result
nc from the demonetizztion Of silver.
md can be restored only By the rsstora- |
L.. - III a. - -