The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1933-02-04


money were not burned or used to
paper barber shops finally were re-
deemed in 1890 at a penny on the
dollar.
The loose banking that had
sprung up in the states continued.
however. Paper money was issued
against anything. A bank failed
in Rhode Island, for example, with
only $34 of specie against $3.50 900
Of issued paper money.
But the men Of 1862 were not
listening. They had a war to win.
So, in February of that year the first
$150O00,0OO Of greenbacks as is
sued in the northern states-a pure
fiat money, acceptable at par on
government bonds but not redeema-
BILE in specie Additional issues
raised the total to S346,681 ,0O0
The money began depreciating
two months after the first issue. BY
July 81 1862, it took S1.20 Of paper
to buy 81 of gold. Two years later
dollar of gold cost S203 in paper.
Prices of food. clothing, and other
commodities went up with the gold
A barrel of flour that cost 1925 in
1860 cost $16.25 in 1866 A pound of
l7-cent butter cost S. cents in 1865;
an 11i2-cent pound of coffee, 40
cents. At the peak Of the movement
a paper dollar was worth about 35
cents.
Some Of the rise in prices and the
depreciation of money was due to
the war, Of course, but the train Of
consequences lasted until 1879.
A S was suggested earlier in these
L n articles, every man wants to
know what imitation will mean to
him. The green back imitation,
within reach of modern economic
method, offers the best chance of
finding out.
What does imitation mean to the
man on wage Or salary? A table
compiled by DR.. Richard T. Ely in
Outlines of Economics" shows that
in 1888, when the average retail
price of tWenty-one commodities
had increased 81 per cent, the aver
age wage had increased only 4 per
cent.
The Workingman was 27 per cent
behind in the race to keep up with
the cost of living. In 1865, when
retail prices reached a peak of 119
per cent above 1860 the average
wage had increased only SIS per cent.
The working man was 81 per cent
behind. The employer was paying
him $1.55 dollar; the grocer and
butcher were demanding a $219
dollar.
What does imitation mean to the
employer? Well, the employer had
all the best of it until 1869 when
wages and retail prices reached an
equilibrium, the retail index stand
ing 70 per cent above.
But from 1869 retail prices slowly
declined each year. They stood at
Isl in 1872, when wages stood at
1885 Retail prices stood at 14O in
1875; wages at 1853 And finally
when the government resumed
specie payments Jan. l, 1879, and
made the paper dollar worth 100
cents in gold, retail prices still were
% per cent above 1860, but wages
were 80 per cent above.
What does initiation mean to the
wholesaler? In 1864 wholesale
/ prices were 125 per cent up, when
retail prices had advanced only lis
per cent, and wages only 40 per
! cent
In 1865 wholesale prices again
had the advantage, 124 per cent
against 1l9 for retailers and 55 for
workers.
DUT from that time on. whole
I'D sale prices were constantly at
a lower level than retail prices, IA
compared with 155 in 1871; 134 COM
pared with 40 in 1875.
And in 1879, when retail prices
still were % per cent up, wholesale
prices were 7 per cent lower than in
/ 1867 per cent minus.
What initiation meant to short
term debtors is apparent A man
who borrowed $4,000 in 1860 could
pay it off in 1864 with $4,000 in
greenbacks, which were worth less
than 5000 in real money.
That taught large creditors les
son. Most of them would not get
caught such a way today. w. Ian
Mack has pointed out recently that
of the 100000 private and
commercial debt now standing, prob
ably three-fourths is payable not in
dollars, but in gold of specified
weight and flneness. Debtors re-
quired to pay this in gold would be