Yorkville enquirer. [volume] (Yorkville, S.C.) 1855-2006, 1919-05-09
THE CURRENCY SITUATION
British Expert Discusses Subject
IniOrmlngly
Cause OF DROP In money VALUES

mere haS 6een moro depreciation
During tho Past Four Years Than
/ During Previous Four centuries-ln-
fiation a Leading cause-sugsestions
/ as to Possible Remedies.
New York Times.
At the bottom Of 80 per cent of
all the labor troubles and unrest of
1.-The day lies the currency problem.
Civilized countries must solve It on
new lines, for any rapid return to the
standard of value obtaining in 1914
kwould mean widespread bankruptcy.
This is the opinion Of Lord D'Aber-
'non, who as Sir Edward Vincent won
la worldwide reputation as q financier
Pby the success with which he managed
the public debts of Turkey and Egypt,
fand restored the finances Of the latter
country.
In a recent speech in the house of
Flords, Lord D'Abernon drew attention
Ito the condition of the currency. He
declared that although there had been
Ia steady depreciation in the value of
money for the last 700 years, the fall
during the four years Of war was
Eequal to that during the 400 years from
I1S00 to 100. and was much greater
than its fall from 100 to 1900.
In only two periods Of history, he
Fsaid. was there any financial phenome-
mon comparable to this, and that was
the depreciation which occurred be-
tween 1000 and 1910, after the dis
covery and opening up the silver mines
Fof Potosi, and the fall-much less than
Itoday's-which resulted during the
Napoleonic wars. This, he contended,
was the most alarming feature Of the
financial situation Of today. Asked by
1.-THE correspondent of The New York
Times to explain why this startling
change had come In the value Of mon
ley, and what were likely to be the re-
Esults, Lord D'Abernon said 1t was due
Ito the great increase during the war
lin the quantity of legal tender in cir
|culation. Paper currency-having the
power Of legal tender-in 1914 was es-
ftimated as amounting in the leading
ldduntries of the world to about R1.-
000, ,0O0, 900, but today 1t was probably
a6, 900, 100000.
THAT means" he said, that the
amount Of legal tender has increased
very much more rapidly than the
amount Of commodities In use, and
consequently, even If the quantitative
theory Of currency is not fully accept
eh, that must have very important
ehect on the level Of prices.
i"Take the United Kingdom, for ex-
anple. The amount Of legal tender In
cufatfon here is from two to three
times as great as it was in. 1914. In
France and in Germany there are still
greater increases. AS for Russia, the
increase is enormous. although 1t should
be noted that the precise effect on the
world increase Of prices Of a great rise
of local prices in any particular coun-
try is very obscure"
Lord dAbernon here pointed out that
in consideration Of the question OF
prices 1t was q great mistake to mix
up too closely the effects Of an In
crease in credit and an increase in cur
rency. Prices, he holds, depend far
more closely on the amount or cur
rency I'm circulation and the proper
ton between the demand for 1t and
the supply than on any question OF
credit"
"This vast increase in the quantity
of currency he continued" is quite
Unprecedented. England and the Eu-
ropean world generally, that Is, the
great powers Of Europe, have been ac-
customed to merely small fluctuations
in the supply Of money, and we have
been used to reckon the rise or fall IN
the standard Of value to the extent
of 20 per cent as almost q convul-
sion: but now we are confronted, and
have to deal with fall In the standard
of value of from so to go per cent.
Certain definite results must follow
from this. In the first place, 1t is ludi-
crous to suppose that such radicai
alteration in the value of the counters
in which financial transactions are
measured can be lived through without
radical readjustments. In the second
place, IL these fluctuations are to con-
time either upward or downward, IL
Is almost imperative to establish Slid
ing scale in accordance with which
financial obligations can be ad)usteo'
II 10 not of obvious advantage to ar
range such a scale in advance, TO De
applied automatically. rather than 10
hermit each fuctuation In the vaiue
of currency to fall on an unprepareo
world and to be followed by series
of strupeles between the parties 10
money agreements. in order to arrive
at a satisfactory settlement
Lord d'Abernon's attention was call
ed to the fact that the British govern
ment during the war adopted certain
sliding-scale arrangements, 80 as 10
correlate the wages in some Industries
to the cost of living. He replied:
"Such attempts have been only very
partial but are undoubtedly full OF ~
interest and instruction. You shou'o
note. however, that the sales adopteo
have always been based on the cost Oh
living, and not on the changes IN the
value of money, which would be the
more nearly correct method. The TWO
systems might produce much the same
results, it is true. but the one Is a true
basis, and goes to the root and cause
while the other is merely empirical ad-
iustment of the resultant.
"I am convinced, and cannot state
too strongly my belief, that 80 per
cent of our present industrial troubles
and our Bolshevism, which Is SO great
a. menace to Europe. are due to this
enormous displacement in the value OF
money. Changes in the value OF cur
rency in which wages, salaries ana