The Democratic advocate. [volume] (Westminster, Md.) 1865-1972, 1896-09-05
FINANCIAL CATECHIsM.
BY JAS. W. WILSON,
In Farm, Field and Fireside.
EFFECTS OF FALLING PRICES.

ID. Admitting UudI Il ullHIuullOn Vi tile
mantity of standard money causes a fall
in prices, can you explain why falling
prices result disastrously to business, pro-
ductive industry and the masses of the
people?
4. As prices fall it takes an increased
amount of labor or its products to pay fixed
charges. To illustrate from actual ex-
perience: When products were upon a
lO0-cent basis, one bushel of wheat would
nav one dollars worth Of taxes or at eight
per cent the interest on twelve and half
dollars, or the freight say on ten bushels
to market. Since, through a faulty
financial system, prices have fallen to the
ffty-cent basis it takes two bushels of
wheat to pay one dollar worth of taxes,
while bushel will only pay the interest
on six and quarter dollars or the freight
on five bushels to market. Under this
condition fixed charges eat up the farmers
profit and leave him but little, if any, sur
plus with which to buy of the products of
the labor of others, consequently the manu-
facturer experiences greatly reduced de-
mand for his products, the wage-earner
loses employment and the merchant finds
his trade diminished and general stagnation
results The capitalist also becomes timid
on account of the increased number of fail
ures resulting from the general depression.
He draws in his money and is over-cau
tons about loaning it out. As his money
increases in value in proportion as prices
fall, he prefers to let it lie idle, Or to in
vest it in absolutely safe bonds or mort
cages No prudent capitalist cares to in
vest money in any species of property
which is falling in value. He prefers
securities which when prices are falling are
corespondingly rising in value.
Q. Can you quote authorities to sup
port this economic law that falling prices
bring distress?
A. Speaking of the results of fall in
prices, Prof Marshall of Cambridge Uni
yersity says:
A fall in prices lowers profit and impoy
erishes the manufacturer, while it increases
the purchasing power of those who have
fixed incomes. So, again, it enriches
creditors at the expense of debtors; for if
the money that is owing to them is repaid,
this money gives them greater purchas
ing power, and if they have lent it at u
fixed rate Of interest, each payment is worth
more to them than it would be if prices
were high.
But for the same reason that it enriches
creditors and those who receive fixed in
comes. it impoverishes those men of bust
ness who have borrowed capital and it
impoverishes those who have to make, as
most business men have, considerable fixed
money payments for rent, salaries and other
matters.
The great Scotch historian, David Hume,
says: "a nation whose money decreases
is actually at that time weaker and more
miserable than another nation which posses
SEES no more money but is on the increasing
hand.
IAN intelligent writers on currency
agree, said W II. Crawford, an ex-see
rotary of the treasury, ''that when it is
decreasing in amount poverty and misery
prevail. =
As all writers agree to this simple ele-
mentary proposition it is useless to quote
further While, as Prof Marshall says,
it lowers the profits and impoverishes manu-
facturers and business men it is still harder
on the great mass of primary producers
who, under existing conditions, must pay
a heavy and increased amount of fixed
charges which does not diminish with fall
ing prices A ready solution of why
times are hard may be found in the fact
that these charges must now be paid in
half priced products.
As to its effects on farmers especially
Prof Brooks Adams, of Boston, in his
pamphlet on ''The Gold Standard, says:
Perhaps no single force has wrought so
ceaselessly, and yet so subtly on mans
destiny as that mysterious influence which
causes variations in the value of money
with which he buys his daily bread. x x y
In short, between 1873 and the present
time these economic phenomena have been
subjected to the most patient scrutiny, and
have been examined with all the resources
of modern science; and if any fact can
ever be said to be established by observa-
ton, it is that gold has increased very
largely in its purchasingpower 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 minis caused profound disturbance
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 artiicially
destroyed, a matter of great moment, the
vital fact is the rise of the standard by
which property is measured, for this touches
the very life of the world
Within the last fifty years, since the
growth of America and Australia has made
London more and more the center of ex-
changes, and, as it were, the heart of the
economic system, gold and silver have
flowed thither to be sent back again to dis
tant communities which are in the process
of development, and the outflow largely
takes the form of loans. But these loans
have to be repaid principal and interest,
in gold, and as gold daily commands
ihS ei anu larger dihouit W Oouiihoheicos
the produce of the debtors fails to realize
the necessary sum and they become bank
rupt 4 j: X
Were the operation of an approaching
currency equal upon all men, little damage
might be done, but he perishes first who
is weakest, and by his ruin drags down the
stronger The farmer is the weakest of
capitalists, and therefore has the least
power of resistance, because he can not
suspend production. In like manner farm
labor is weaker than industrial labor, be-
cause it can not combine. Therefore,
agricultural prices are the most sensitive,
and it is only subsequently that manufac
turer suffer through the failure of de-
mand.
BENEFIT OF RISING PRICES.
Q. What are the substantial benefits
of rising prices.
A RISING ,ricas which follow an in