The Yakima herald. [volume] (North Yakima, W.T. [Wash.]) 1889-1914, 1912-08-07


value Is to refer 1t to all other COM
modities and that We cannot ordina-
rily do. When We take advantage os
the index numbers which Bradstreets,
or Duns, or the Bureau of Labor have
constructed for us by comparing the
amounts of many commodities which
a dollar would have purchased last
year or sixteen years ago we can then
see whether our dollar has preserved
its value. Reference to these in
dex numbers shows that during the
period mentioned, according to Brad
streets, tn dollar has lost about 40
per cent of its value. To put it an
other way, sixeen years ago a man
could buy for 62hc what it takes "a
dollar to buy now, or what he paid
a dollar for then he would now have
to pay $3.50. Some commodities have
gone up more than this, some have
fallen in price, but on the whole the
above represents the average
What have been the chief causes of
the loss of value in the dollar? First
of all there is the actual increase in
the amount of gold in the world.
This has tended to lower its value.
But 1t takes demand as we'll as sup
ply to exect value and the demand
for money has enormously increased
during the period in question. Proc
ably the increase in the demand for
money due to expansion of business
has more than absorbed the increase
of gold itself and if there were no
other force at work the value of gold
may have remained stationary or
even fallen. The value of money like
that of some other things is peculiar
in this that II you increase its eff
cheney you decrease it's value, that Is
the value of given amount of it. II
one grindstone can do work for only
one farmer in the neighborhood, the.e
will be a great demand for grind
stones. Every farmer will want one.
Consequently the value Of individual
stones Will be high. But If one grind
stone can circulate for the whole
neighborhood, there will be little de-
mand for grindstones and their value
will be low, although the efficiency
of the single stone will be many times
increased. 1t is so with money, and
there are modern devices which have
vastly increased the efficiency of the
dollar. The chief modern device eff
fecting this result is credit. Ninety
five per cent of exchanges effected
through the New York Clearing
House are effected without the ex-
change Of a single dollar Of real
money. A banker in this city thinks
that would mot be too high an aver
age for our own city, though II
might be too high for the country
generally. While 1t is true that a good
deal of gold must be on deposit to
back UP all these transactions, still
it is really marvellous the amount OF
work a dollar can be made to do I'M
der our modern banking system. The
rate at which exchanges are effected
also has much to do with the eff
cheney of the dollar. If ten ex.
changes take place in one spot in.
volving 500 1t will take only ten dol.
lars to do it. If only one exchange
involving $40. it will take ten dol
lars to do it. Then there is another
| thing to be remembered. If you in
crease the actual supply of gold by
5 per cent under modern conditions
you not only increase the money sup
ply by per cent but by as many per
cents as the machinery of commerce.
through credits and other means, is
able to increase the efficiency of the
dollar. All this has the effect of de-
stroying the value of the money unit
by reducing the demand for it.
This believe Is the main cause fol-
the rising prices which have been
characteristic of the past sixteen
years. Money itself has fallen great
ly in value, hence 1t takes more of II
to purchase the things needed its
effect ON various classes in societ,
will be the subject for further discus.
| sion.