The independent. [volume] (Lincoln, Neb.) 1902-1907, 1904-11-10

the money question is in allegiance, I'M
til it catches up? If the application of
the "quantitative theory" is to be lin
TIED to the increase of money shown
by the treasury repoTts-and said III
the editorial to be so per cent-there
never was a time in the history of
this country when the demand for
money was so far ahead of the supply
as now.
Even tyro in economic study ought
to fully understand that the "quanti-
tative theory is the application of the
universally admitted law of supply and
demand to money. 1t ought to be well
understood that one Of the greatest
demands for money grows out of the
existence of debts. 1t ought to be
easily understood that, everything else
being equal and remaining the same
an increase of debts means an increase
of demands for debt paying money.
and that, ii any supposed or real BUSH
ness activity, any increase of prices
is to he explained by an increase of
money coined or issued, then this in
crease must exceed the demand caused
by the debt increase. In other words,
the, "quantitative theory of money,
when applied to debt paying money, is
the relation which the whole amount
of debt paying money sustains to the
whole volume of debts to be paid.
If it is assumed that every dollar OF
the $2,835, 1888 .734 in existence on Oc-
tober l is available to pay debts-and
this can not be true. for $273, 134 PAS
of it is in the treasury. and not less
than 1854 ,631 $50 tied up in the bank
reserves-the increase Of debts has
been so great and so rapid that it
would be nonsense to suppose that the
increase of the money supply had been
greater than the demand.
The loans and discounts of national
banks alone. since December, 1896,
have increased about $4,000, 000,0 900, or
more than double the entire increase
of the STOCK of money. If to this is
added the increase of all other bank
| ing institutions. it is safe to assert
That the increase of bank short time
paper has Deen, not less than, four
times the increase Of the iiiU1ssJ vol.
ume. That there has been large In
crease of other interest bearing debts
since 1896 every intelligent man
knows
If, even the reported increase of
money had no other demand to meet,
that increase is not 10 per cent of the
aggregate increase OF debts. The in
creased demand for interest alone, to
say nothing of the payment of prin-.
cipal, is almost equal to the increase Of
money coined and issued In addi-
ton to these two demands for money,
we are tending towards gold stand
ard of payment when every creditor
will have the right to demand that Lis
debt be paid in gold When this is
reached, the amount OF debt paying
money will be less than half what it is
now. We are not now operating under
Ia gold standard Of payment" When
Mr.. Parker sent his famous telegram
he disclosed, no difference what may
be his other attainments. that his
knowledge of financial economies was
very defective.
| am an uncompromising believer in
the wisdom Of bi-metallism; that is,
so long as we have metallism, we
ought to have bi-metallism. | am
also thoroughly convinced that the
quantatitive theory of money is econ
omically correct and that this theory
will, when all the facts are considered,
explain whatever of business activity
we Ia 7sss-had since 1896 This theory
has. under present csnssasaic condi-
tions, double aspect and applicatlOA: 7
In one application we are going to-
wards a most cruel contraction. and
in the other towards most dangerous
imitation, and that together make the
money question ten-fold more import
ant to the American people than it
was in 1896 or 1900 l VIII try in an
other article, by your permission, to
make this clear
FLAVIUS J. VAN VORHIS.
Indianapolis, Ind.