Kansas agitator. [volume] (Garnett, Kan.) 1890-1905, 1897-10-22
INFLUENCE ON PRICES
THE VOLUME OF MONEY AL
WAYS A FACTOR.
n All Goldbugs will Commit the Fol-
lowing to Memory They Need Not
Expose Their Ignorance-Money and
Prices.

ticle entitled Money and Prices, the
republication of which. in view OF the
recent talk about the separation In
price of silver and wheat, is most APP
propriate. Judge Hillyer then said
81 notice some confusion in drawing
conclusions as to what prices, at any
given time indicate, which seems to
make it worth while to restate what
every intelligent man knows and recog-
nizes when he stops to think. the
price or money value of any article de-
ponds invaribly on four conditions:
First, the quantity of the article for
sale; second. the demand for the ar
ticle; third, the quantity of money
available for purchase, and fourth, the
demand for the money. More succinct-
ly and with equal accuracy 1t may be
expressed by saying that prices depend
upon, first, the supply of any article
relative to the demand for such article,
and, second, the supply of money rela-
tive to the demand for money. These
four, or in the latter expression, two
factors, always operate concurrently,
termines at any given time the price
of everything which is bought and
sold. With money conditions I'M
changed, and the demand for any arti-
Gle remaining the same, its scarcity Will
always increase it's price, and the guam
tity remaining the same, an increased
demand for it will have the same effect.
So with conditions relating to the arti-
Gle unchanged; scarcity of money
while the demand remains the same
will reduce the price, or the money
quantity remaining the same, an in
creased demand for it will produce the
same result. The essential thing to
bear in mind is that however much
prices may fiuctuate from other causes,
the influence of monetary conditions
upon them is never absent or impaired.
Owing to insufficiency of supply to
meet demand, the price Of any one
thing may be higher although money
is scarce. but in every such case the
price would be correspondingly higher
if money were plenty. Take for an il
lustration wheat. Suppose, first, an
average supply and demand for it as
an article of commerce and that with
the worlds money supply of eight bill
lions of dollars in gold and silver
available for its purchase, its price is
one dollar per bushel. Now suppose
half crop for a year or series OF years
with the demand for it and money con-
ditions unchanged the price would rise
to two dollars per bushel. Then sup
pose double crop, with no increase OF
demand, the price would fall to fifty
cents. Now postulate the steady con-
tinuance of an average wheat crop, but
that by political action silver is de-
monetized, and the money quantity
available for it's purchase reduced to
four billions insteadof eight billions.
The demand for money being universal,
and therefore always equally operative,
the price of wheat will be fifty cents,
with half crop it would rise to one
dollar, and with a double crop sink to
twenty-five cents OF course, in actual
experience these fluctuations do not
occur with mathematical accuracy be-
cause the conditions are never as in an
abstract case absolute. But the law is
inflexible and the visible results are al
ways proximate."
At the time the above was written 1t
was, although suggested by furry
in the price of cotton and iron. sub
stantially the enunciation Of an alb
stract economical proposition. The oc-
casion seems now to have arisen for
its practical application. For many
years the variations in the price of
wheat or of most marketable articles
had cOincided quite closely with those
of silver relative to gold Now the
price of wheat has advanced. and at
the same time that of silver. as meas
ured by gold, has fallen. If any one
will carefully read the above state
ment as to the theory of prices and
also take accurate note of present con-
ditions, the explanation of this diver
gence will be very simple.
The demand for wheat has been alb
normally increased by deficient har-
vest both in the countries which usu-
ally produce a certain portion of their
supply, and also in those which are
usually competitors with us in supply
ing the deficiency. Contemporaneous-
", the demand for silver has been
weakened by the crop failure in India
cutting off grain exports and thereby
silver imports, and by the political ac
ton of japan N changing from lomi-
nal double standard and an actual sill
yer basis to half weight standard of
gold. The result is exactly in accord
ance with the well-established econom
ic theories recapitulated in Judge Hill
yer's former article. 1t is simply
stupid to suppose that it in the slight
est degree impairs the force of the
argument for silver restoration.