Omaha daily bee. (Omaha [Neb.]) 187?-1922, 1906-08-05
FINANCE AND PROSPERITY
Apparent Paradox Made Clear in Brio,
Paragraph.
JOHN SHARP WILLIAMS TO Or, MILLER
Exchange of EpistIes Brings About n
Better Understanding and an
Interesting Note TO the
Public.

OMAHA, Aug. ITO the Editor OF The !
Bee: Perhaps many readers of The Bee
might be interested in a letter recently
received by me from John Sharp williams,
the distinguished minority leader of the
house, in reply to a friendly criticism on
what he had said on the floor in regard
TO the panic Of 1898. Mr.. Williams ascribed
1t to a contraction OF the volume OF the
currency. 1 ventured TO insist, on the con-
trary, that It was due TO a contraction Of
confidence and expanded credits. Over
tradings, speculation and debt caused the
panic of 1898. 1t was not a contraction
OF the volume Of money, but a contraction
of its use In business that caused calamity.
AS will be seen, Mr. Williams does not
attempt to controvert this view of it in
his letter, which is both interesting and
important from what he says of the
causes and consequences of panics In gem
eral, and also from what he says OF the
Bryan idea OF the cumulative theory of
money, which is an implied excuse for
the false position OF democrats on the
money question. After declaring that pam
les come under both high and low tariffs,
Mr.. Williams says:
The paradox Of economies is this: Pro-
posed prosperity pronounced prosperity is
evidently meanD, produces expansion of
credits Extension OF the credit system
Speculation, in turn, stretches the specu-
lation system (credit SYSTEM to the
the panic comes lack Of confidence sets in:
people try 10 get on a cash basis; lind Il
impossible 10 collect things, they have gone
too far and panic bursts upon the country.
In most instances not upon one country
but as in 1881 and 1893, upon all countries.
After the panic things get upon cash
basis; a period, more or less long, OF de-
preston succeeds, but right business meth
DDS, after the wrecks are cleared away,
iNuH ri In
turn, leads again TO speculation; the eX-
tension of the credit system TO the bursting
point and so on. me everlasiing paradox
tence: Prosperity breeds panics a panic,
in turn, breeds healthy and normal busi-
ness methods,
Eject of Expansion.
This is a fine statement about the causes
and consequences OF panies.
| ENcusing the attitude OF more money
democrats in 1898, Mr.. Williams has this to
say:
We were right this far, that u Ii were
/ the thing TO do TO contract the volume, II
was the wrong thing TO do It at the very
point of exploding ana when all credits
were being contracted
And here we have the cid Gelusicn Of the
cumulative theory Of money-"a popular
delusion" says Carl schurz in his Life OF
Henry Clay, that riches can be created
dnC happiness hCQulItu Dy premium ust
OF paper money and an artificial imitation
Of prices. The consequence was tin Ken
lucky and everywhere else) what It always
is. The more plenty the paper became III,
more people ran into debt" And Mr.
schurz might have truthfully added, IN,
greater the imitation Of prices the more
certain and crushing would be the col
lapse Any issue OF paper money as
remedy COR preventive Of the panic Of ls9
would have made matters worse before anC
utterly useless after II. And why? Be
cause, and only because, of the destruction
/ OF confidence and consequent universe
commercial and Industrial paralysis. Tn
creditor class did not want 70 use an!
money. They were demanding payment
The debtor class could not have obtaine,
any money II a thousand millions OF add
! tional paper money had been issued, An
why again? The simple answer Is. they ha