Yorkville enquirer. [volume] (Yorkville, S.C.) 1855-2006, 1922-02-03

prices we WOulu nave piOuuSSu 'S
than could be consumed. The board,
however, concluded that their arbitra-
nv action would be an Improvement
over natures processes, and ruthlessly
and suddenly forced liquidation, by the
autocratic rise in discount rates. There
was 81 shrinkage in one year OF BILL
lion and three-quarters in the volume
of currency, or what Is the same thing,
credits. There is no parallel in the
history of the world for such action.
This contraction was followed at
once by such fall in commodity val
ues that in many cases the collateral
held by banks was valueless and the
country was filed with financial
wrecks from the Atlantic to the Pa
cific.
Few people in business knew aught
of the fundamental principles of polit-
ical economy. Expansion or imitation
makes prices of products high and
contraction makes prices correspond
ingly low. The rise and fall or prices
depends upon the rapidity with which
the volume Of credits is expanded or
contracted. This is the fundamental
principle which directly affects prices.
Where the decrease in the volume OF
money is due to an abnormal outflow
as in 1893 or to unsound specula-
tive undertakings as in the panic or
1907, the equilibrium is restored by a
quickly returning wave of prosperity
as the cause of distrust is removed.
That is the meaning Of Mr.. Clevelands
famous expression, "Restore conn-
dence."
On the other hand, when the de-
creased volume of money is due 10
some arbitrary governmental action
like It was in 1920, the fall in prices IS
radical and will continue unless the
cause is removed. In the history OF
the world every great and general fall
in prices has been preceded by a de-
crease in the volume of money and
credits, and there has never been a re-
covery therefrom except through an
increase Of same.
While the volume of money IS de-
creasing the value Of each Individual
dollar is increasing in corresponding
ratio and property is falling IN price.
Those who are in debt find 1t con-
stantly becoming more difficult to meet
their obligations and all productive
enterprises are discouraged and stag
nate. because the cost Of producing
commodities today will not be covered
by the prices for them tomorrow.
Money in shrinking volume becomes
the paramount object Of commerce in
stead of its benefcent instrument In
stead of mobilizing industry it poisons
and dries up the life current. what a
fearful example OF its misd1recteo
power is the great and long continued
fall in prices in the United States; put
we believe that the tide has set the
other way.
There is every Indication that the
same forces which inaugurated the de-
clire, are now headed for an era OF IN
fiation, which if not overdone Will re-
store healthy prosperity. We venture
the prediction, based on the general
principles laid down above, that IN d
wear from now prices of all products
will he materially higher and business
booming.
1st. Public sentiment has crystal
lized against the action of the reserve
hoard and they are steadily lowering
the discount rates. In other Woros'
money is getting cheaper, ana tha'
means higher priced products with d
corresponding increase in the pur-
chasing power of the public.
2nd. All staple products are now so
low that distributors run very llttie
chance in stocking up. This means
an expanding market and Increased
confidence.
3rd. The constant importation into
this country of gold is the most force-
full kind of imitation. There Is NOW
about GO per cent of the available goid
sunplv of the world idle, and must DC
used either by letting other countries
have it or issuing currency against IT,
so either way it means expansion.
4th. European countries are largely
dependent upon us for their raw mate
rial particularly cotton. The increas-
ing scarcity of gold abroad is bringing
tho dollar into use over there instead
of gold. This means expansion wheth-
er we will or no.
Beyond this is the psychology OF the
American people. They are born
traders and spectators. They kno"
that the bottom has been reachea'
that America is fundamentally sounu'
and those with money are waiting 10
buv. and when they begin wheat cot
ton. steel, copper and stocks Will soar
Really the great danger is another
orgy of speculation, sure to be Hollow
cd nv another collapse. We do not
want that, but we do want money ana
credit, plenty of it to meet all Oh the
legitimate needs of trade.
c-,o,ol ,,;nicters and other proml-