The Fargo forum and daily republican. [volume] (Fargo, N.D.) 1894-1957, 1913-04-17
Is the Cost Of Living SWelled
by Shrinking the Dollar

permit Of the profitable workings of
these ores.
Professor Keyes and many other
eminent biologists believe that gold
may become one of the cheapest of
metals, as cheap, say, as copper or
nickel is now. In the last sixteen wears
we have had what may be termed a
flood Of gold, There is at, least in
the minds of some very able men a, fair
prospect that this will become a de-
luge.
But if Mr.. Bryan in '96 was mainly
right. n If the increase in gold pro-
duction has been the cause of rapid
rise in the cost Of living since that
time, how does it come that his adj
yersaries were so blind as to deny the
truth of the quantity theory" even
in the heat of controversy? Did Mr..
Bryan see all of the truth or only a
part? And why "a we pretend to
n more certain knowledge o than
they had in 1896?
The answer is that in go Mr.. Bryan
did not see all the truth, and that it Is
since 1895 that the seemingly inter
minable money question" has been
solved, J.. e., reduced to a scientific and
mathematic basis.
By the money question" I mean
the relation Of money and prices, for
that Is about four-ifths of what is
usually meant by the money ques-
ton"
Is the "Money Question" Solved?
h theory Of money and prices was
worked out by Simon Newcomb, a
mathematician and astronomer, and
one of the two greatest minds that the
new world has yet produced. He pub
Iished his book, the Principles of Po-
litical Economy, in 1885,
Because he was not a professional
teacher upon this subject in Croesus
university or some other seat of vast
mislearning his book was completely
Ignored for a full generation. That
by the way, is exactly what happened
to Newton and his law Of gravitation
two centuries ago. The scholastic or
collegiate mind has not sensibly
changed. . .--s ... -- -
Professor Newcomb's theory was
taken up about a quarter of a century
later, and placed upon a mathematical
or statistical basis by Prof. E.. w.
Kemmerer, now of Princeton univer-
sity, and by Prof. Irving Fisher of
Yale. Professor Kemmerer's admira-
BILE little volume was entitled Money
and Credit Instruments in Their Re-
lation to General Prices, and pub
lished in 1905. ~
Professor Fishers larger work. a.
VI 0uSl Anu CledI
thinking, was entitled The Purchas-
Ing Power of Money, and appeared in
1911.
In these volumes the inquiring read
er may learn as much of the new
Ideas as he likes. I am not going 10
tell m more of them here than to
offer an illustration, which seems to
me TO give in a very vivid way the
essence of the theory.
| Here on a. railroad fraclr is n fro;oL+
train standing still. 1t is loaded with
goods and products. But so long as it
STANDS still 1t is doing no work. To
perform its appointed function, that
Is TO transport goods, the freight train
must move. And the amount of work
1t can do is measured by the capacity
Oh n cars and their average rate of
movement per day.. If the cars on
the average move only ten miles Der
day, 1T is evident that they will do i'm
a year only half as much work as if
they moved twenty miles per day.
In other words, if they move twice
as fast, 1t would take only half as
many cars to do the same amount of
work. &c.,. ...... -.
If you think about it a moment Won
WIN see that the main business Of a
railroad is as a medium of exchange.
Ihat is also the function of money. 1t
is simply a means of barter and trade.
1t has no value in itself,
The business of a railroad and the
functions of money are practically
identical. NH
Mr.: Bryan and most everyone be-
tore him thought of money as a rail-
road train standing still. He had
what might be called a static theory
as opposed to the kenetic theory.
But money doing work is money in
motion: 1t must pass from hand TO
hand, from bank to bank. The faster
II goes the more work it does.
IL you can make it go twice as fast
change hands twice as many times
in a year-then you only need half
as much money to transact the bust
ness of a country.
Now When business is brisk money
goes faster from hand to hand: and
II there is. plenty of money in circuia-
ton people will buy more, and the
result is that prices will rise.
w Factors: Quantity and Movement.
You get the. same effect If you in
crease either the speed or the guam
tity.
Mr.. Bryan and his antagonists alike
saw only the n factor. And because
there have been times when, through
the development of banking, prices
have zone up eVen though the uuan-
NNS - AAON lAlCICdSS SOulQ
money folk were led to deny the guam
tity theory. And in a narrow way
they were right.
The main channel by which the
work that money can dc can be in
creased Is in the development of bank
ing. In point of fact more thar 80 per
cent of the actual exchanges of bust
ness are now done with checks, and
not with real money at all.
A bank account subject to check is
to all intents exactly the same as an
equivalent amount of money. And If
through increased use of checks you
double the number of times that the
average account is checked out in a
year, you double the amount. of work
this kind of money, credit money, can
do.
1t is just the same with your rail-
road train, The more cars it takes.
and the faster those cars have got to
move in order to do a given amount OF
work, the higher will be the. cost, and
hence he's average freight rate.