The semi-weekly messenger., 1907-01-01
STRINGENCY IN THE MONEY
MARKET.

The money question as related 10
national affairs and the big commercial
Interests of the country is one We DO
mot profess 10 know anything . bout
There is one thing We do know from
our own experience and from thai Of
'many who have talked and written ON
the subject Of late, and that is that (
dollar IS worth a great deal more now
than il was a few years ago; in other
iwords. that Il dollar does not now rep !
resent the same amount OF necessaries
land comforts Of life as it did a while
back. There is something wrong wncn
the wage Garner is forced to Dor for
THE same daily or monthly comDensa-
itiOn now that he did wnen he could
Ibuy the same quality and amount Ct
flood and clothing for his wife and
jchildren at much less cost. Wages have
mot advanced in proportion to the ad-
vance in cost Of living. All experts
'and political economists tell us that
There is something wrong also in the
ybig money marts Of the country. That
1.-THE country needs financial relief is
,sh0wn by the existing conditions as
well as BY the efforts of the men sup
Iposed to best know the financial condi-
,tions and needs Of the people and 20 bel
Ibest qualified 10 suggest the proper
remedies for existing evils. All sorts,
oS,y c
plans for relief have been suggested
by the leading financiers Of the cCGn-
ttry. Congress during the approaching
session is expected to adopt some leg !
Iislation which will bring relief; what
lit will be no one knows.
| On the subject of the Stringency Of!
the money market, its causes ana
remedy, The Journal of Commerce Of!
the 9th has long letter from a cor-i
respondent who says in part:
| The rise of prices is not primarily
due to the mere increase Of the money!
volume. For instance the great moneys
ISupply of France seems to have mol
such effect towards raising prices.t
with US, the immediate cause Of thatI
continuous rise may Do attributed tOi
three Weu-knOWn factOrs-IabOr un-
lions, trusts and protective tariff. TheI
labor unions are ever trying for highi
| er wages, and the trusts tor higheri
iprices, and inasmuch as our prOtectVeI
ltarif largely excludes the POWERFUL
iIcEeling influence of foreign compet-l
ition, those combinations succeed inI
| their efforts. No doubt they Wefci
ihelped by our redundant and conStant-I
lily increasing money supply, otherwise
1thcir dOingS would have resulted in al
| still greater draft on the money mari
ket. and the latter would have eXperi-l
enced a collapse long before this, thusI
| ringing the endeaVOrS of the labor andf
thrust combinations to q sudden end.
The cause of the StringenCy has, byI
ImOSt Of our financial experts, been laidt
| TO the door of speculative Wall street.
tThe true cause, however, must bel
! found in the rise of all prices andi
wages, as pointed out in your leader;
lof December 21.
! And the remedy for this Strngency p
| Should We look for it only in the dill
ERECTION which you point out, namely.i
lar oscillation of business conditiOnsi
toward what they were in 1896? Thisl
IWOuld mean depression and stagnaiOnl
lof trade "a remedy whose severity
would be out of proportion to the dis
lease.
l Venture to suggest & more gentlei
remedy, on the following basis: Thel
istringency exists only IN the money!
lcenters, not in the channels Of indus-
TRY and trade. The money centcrs aIei
tdcpleted by the excessive number of
lnew enterprises, which abSOrb CaShI
capital faster than the saving process:
Jean build up new cash capital. If We
!COuld check, to some vXtcnt at least |
that disposition to 90 into new enter
priSeS, there WOnld not be so much del
mand for cash capital and the strin-
ISency would cease. The simplest and
most effective check in that direction
lis high rate Of interest. \ rate of
l. or per cent ruling for some n9Opths
in succession would induce many a |
railroad or industrial company To post
pOpe improvements and extensions UNI
til they can borrow the necessary fUndsi
on better terms.
The check here proposed is largely
automatic. 1t viii step III and assert!
itself whether we want il or not. Hut;
we can do much toward regulating this;
check and prevent those undue leaps,
and bounds in the interest rate which
We have witnessed for years. This can
De done by an emergency curf"nCN.j
taxed at or per cent. that il
cannot be Issued before IN" market rate
OF interSt rises 10 : ur 5 per cent
Thus there would be z limit IL the
excessive rise, but not To the fan Of The
rate.
such measure, ! am Well aware. haS
not been favored hy You - far. Butt
when recognizing the true cause Of thei
and considering the conf
Stant danger Of collapse which thel
imposes upon US. such
measure seems to be justified.
\ high rate of interest would notl
only put q wholesome check on thel
disposition for new enterprises, itt
would not only restore q letter equi-
lihrium, between the funds of the,
money market and the cash circulat-
ing in the channels of trade: it would
also prove a beneficial factor against
Wall street speculation.
a free bank note currency, such as
you have been advocating, would be
I'll right under normal conditions. but
lot where the three factors above men
ioned-labOr combinations, trust COM
1inatiOns and protective tariff-have
created a distortion in money condf-
ions never before witnessed in the
world. Easy money and an amount of
u III . I.o -