New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1919-01-02
The Nagaries of Imitation

single problem:
The Nagaries of Imitation
Because lumber and wood products
during the war rose on the average
only about 40 per cent, and metal
products only about so per cent, while,
for example, food products rose 200
per cent and more, and real estate
and some other things rose not at all,
but in some cases fell, great many
people find it very difficult to believe
, that an enormous inflow of gold and
credits have any close and causal rcla-
ton with prices. 1t is clear enough
that the momentary price of any given
article, as cotton or cheese, is deter
mined simply by the supply and de-
mand What seems hard for the ma
jority OF folk to understand is that
money also has value, relative value,
just like any other commodity; and
that as money and credit arc plentiful
or scarce, as the demands Of business
arc large or less, the relative value Of
money tends to rise and fall just as
much as cotton or cheese.
This means that in the price of every
single article there arc two factors:
the one direct, the other indirect; the
one the supply and demand for the
article, and the other tho supply and
demand for money and credit
Professor Irving Fisher remarked
recently that the Napoloonic wars
served to teach England, not only her
economists, but her bankers, her bust
ness men and her statesmen as we'll,
that a premium on gold really repro
scented a depreciation Of the paper cur
rency. What seems A 3 c to us now
was hard then to understand, or be-
llcve. We have got TO learn the
same thing now about credit-that q
too rapid expansion means a deprc-
citation Of the currency ard is meas
ured by 4 CORRESPONDING rise in The
general level Of priccs-tho average Of
all prices. We have cot to learn this
simple fact. or We arc going to pay for
our national ignorance very dearly.
We shall pay for it in our foreign
trade and in our own internal pros
pcrity.
Mr.. Vanderlip and others have pointed
out that there may be as large a pos
sibility Of further expansion (Which
means further inf1ation) OF bank cred
Its as Of Il severe contraction; and
that if thia expansion takes place there
Will be no fall in prices, but the re-
verse. l. We get wages and the cost
OF living so high in this country that
our merchants and exporters cannot
sell our surplus abroad at a profit our
Lex ,Aorchant marine will be idle, or
be carrying goods from other ports
than our own. That is why at this
moment q clear economic understand
ing or the part Of our bankers and
the controllers Of our credit system at
Washington is so needful.
Nor does the danger of further ex-
r&r5ioa lie wholly in renewed imports
Of gold. Il seems little generally
known how great ere the possibilities
Of still further imitation under the
terms OF the amended Federal Reserve
act Actually under that act, if it were
not Cor The conservatism of our bank
crs, the present volume Of credit
could be Nearly doubled upon the cx-
istnG basis OF gold, with a CORE
spending effect upon prices mot ncces-
sa,iy the individual price Of cotton
or cheese or real estate. but of the
general price ievcl)
Our Sick Horse
We have another problem that is
also to be solved. That is our sick
transportation system. Ten years ngo
James J. Hill said that our railroads
needed billion dollars year for
seven years TO bring them up 10 a
condition of proper service for the
business OF the United States. they
have never had an average OF much
more shan half billion. At prevail