The Saint Paul globe. (St. Paul, Minn.) 1896-1905, 1897-06-14
WHAT FIXES VALUES.

The Cresco Oo) PIaindealer takes an
editorial from the G l o b on the uni
versatility and impartiality Of the work.
ing of economic laws on all prices,
whether products of the farm and shop,
or those charged for the use Of money,
as we'll as returns on invested capital,
as the text for what it is doubtless
pleased to consider a chain Of reason
ing that connects this general shrink
age with the crime of '73" as it's
cause. We will not stop to quarrel as
to causes as long as we agree on eff
fects, because if it be true that the act
Of 70 was the outcome of a conspiracy
Of the money power" We both agree
that the money power is catching it"
quite as severely as the other powers"
In fact, in the permanency of the fall
In the return Of invested capital and
the rise, say, in the price Of beeves,
the farmer power appears to be some
times the winner in the game after ALL
But let that pass.
1T is pertinent to note" says the
Pleindealer. that the decline in the
earnings OF railroads began with the
Hateful year 1873, when, by the demone-
tization," and so on. If the general
shrinkage, including railway earnings,
began in 1873, then there might be
ground for the usual assumption of the
relation Of cause and effect. If it be-
gan long prior, and has since contin-
ued, then no such relation could exist
but other forces were and are in op-
GRAFTON. 1t is, therefore, pertinent to
call the attention Of our contemporary
to the fact that the decrease in rail-
way earnings began with the decrease
In their freight charges which began
ten years before 1873. At that time
the all-ral charge for carrying 100
pounds Of wheat from Chicago to New
York was 60 cents. By 1857 it had fall
len to IS cents, to SO cents in 1868 and
to 335 in 1872. No comprehensive sta
tistics are attainable prior to 1871 from
which to gather data as to dividends.
ton-mile rates and others, such as
were noted in the article on which tbe
Plaindealer comments; but as dividends
and ton-mile rates depend on freights
1t is evident that the data, if procur-
able would indicate decreases propor-
tional to the fall in freight rates
The further argument Of our contem-
porary discloses what we regard az q
fundamental misconception of what Is
the determining factor in fixing the
price of anything. Money" It saws
II worth a given rate Of interest
fixes the values of farms, bonds and
securities upon that basis From this
arbitrary rule there is no escape. and
losses are inevitable, because, If pro-
ducers. whether farmers or manufac-
turers. cannot earn interest on bor-
roWed capital they cannot forever go on
paying IL" Whether this proposjtion
Is Or is not sound depends entireJv
upon the "if' upon which it is based
But money is never worth anywhere nv
at any time given" rate Of interast
While the general function Of money ,s
to exchange commodities and state
their values, to the individual If 10
merely a commodity, or, more aeon
rately, the representative Of commod,-
ties produced and sold. Like otbar
commodities, a surplus beyond needs re
susten2nce is useless unless If can he
put to work. A thousand dollars of
Idle money is just as useless as +bou
sand bushels Of wheat in a farmer.
granary. To be Of use, both must ba
earning something, the money invested
and the wheat sold and turned into
something productive. AS q. commoditv
the price Of its use, the interest rate
depends upon the same relative condi-
tons CT demand and supply that fig
the price Of any other commodity and
these vary greatly everywhere and Of
all times. The rate depends on the COR
tainty Of return Of capital. the length
OF term Of loan, the chances of gain or
loss, often the personal character of
the borrower, and on the market con-
ditions that produce a surfeit or scar
city OF money.
Is it true also, that the rate Of in
terest fixes the value Of farms. bonds