The Superior times. [volume] (Superior, Wis.) 1870-1912, 1896-08-01
Exchange


" until 1879. when the fall of exchange
began. Before 1915 they differed on the
average by . per cent. on The principal.
while the average difference beginning
in 1870 was q par cent. From 1873
the exchange fell more rapidly, and the
difference in the two interest rates rose
further, amounting in one year 70 IL
per cent. The two bonds are issued by
the same government, possess the sa me
degree of security, and are quoted side
ny side on the London market The diff
ference in the two rates means that in
vestors will pay higher relative prices
FOR gold bonds than for silver bonds,
whose principal shows a tendency to
depreciate If we in America should
adopt the silver standard our bonds
held in London would be treated in pre-
cisely the same way.
In our own country special emphasis
may he given TO the period 1879. dur
ing which time resumption of specie
payments was being accomplished and
prices were falling with great rapidity.
The rate of interest In New York was
then lower. not only than before 1879.
but even than after 1879 in spite Of the
steady inflow of foreign and growth Of
native capital.
In short, all the facts 60 to show that
the rate Of interest tends TO adjust it
self to the appreciation or depreciation
2fa R rs Is 6r StfPda 81 in n T4Gh
~ inc -,
parties. which would otherwise arise
from variations in the purchasing pow
or of money.
To see the influence of changes in the
purchasing power of money we suppose
q One-year debt contracted and paid
within the period Of 1881 For every
81 900 the borrower repai. at the end
Of the year 81. 052. hut owing to the fall
Cf prices during the year. if the 81 900
at the beginning would buy ! 900 units
Of (wholesaleD commodities, the 81 .O52
ct the end would buy 1913 units In
1S49-57. for 81. 900 he returned a wear
later 81 .0S2, which, owing to the rise in
prices. was as if for 900 units of com
modities he had paid back .041 units.
This would look as If the borrowers
lot were harder during recent years
than before the war, in spite of the re-
duced interest. This would he the case
If the cost of producing commodities
had not changed The borrower in the
period 1871, for a loan worth 1000
days labor, had to pay back year later
the equivalent of 1.04S days labor.
while a borrower in the period 1857.
for 1000 days labor paid back 1910
days labor: that is. the debtor during
the period 1871 repaid his loan with
less of human effort than in the earlier
period.
The main point, however. is vet to he
mentioned The full benefit Of the gold
standard in reducing interest is not en-
toyed by the American debtor for the
simple reason that he allows that stand
ard TO be in debate The silver agita
ton has become a most powerful agent
in raising the rate Of interest against
him. No one need be reminded that our
government was recently offered a loan
of 80 odd millions a Per cent. if gold
We're expressly stipulat ted. hut at 80,
per cent. if the repayment were prom
Iscd in coin" Congress refused 10
make the bonds payable in gold, and by
so doing added l6 millions in interest 10
our national debt. This is but a sample
CT the manner in which the would-he
champions Of the oppressed debtor are
doing everything in their power to add
TO his burdens. The city of Cincinnati
more recently furnished a similar ex-
ample in funding a loan. In fact, II was
we'll known that municipal bonds not
specifically payable in gold can he dis
posed Of only on terms diSadvautageous
TO the city. The very existence of the
gold clause IS proof positive that invest
ors are willing 10 pay something for IT,
If Congress should pass a law commit
ting this nation 10 a gold standard they
would at one stroke cut down the inter
est on new contracts Of all kinds. No
means of helping the debtor class could
be surer or more speedy than this.
Gold Clause Becoming Popular.
There were two interviews printed
in the News yesterday which ought to
set people thinking Il was shown in
one Of these interviews that the banks
are already beginning TO call in their