Year: 1865

for the present. S.J.F.





High Prices-What Causes themP


In the very able and justly praised report of
the Secretary of the Treasury, recently pub
lished, Mr.. McCulloch says:


On the aOth of September last, the deposits of the
national banks alone amounted TO SOFA 1e4 their
loans, estimating their national securities as loan
60 the government) to s13046.62y; both of which
items must have been increased during the month of
October; while on the 31st of that month the circu-
a"t OF S s1s,d na1 @ reacnea the starting


is statement Is required to exhibit the present in
hation, or to erplaia the causes Of the current and


We have made the above quotation not for
the purpose, at the present time, of raising the
question whether the currency of the country
is or is not actually inflated; not to consider
how large volume of currency is demanded
for the purposes of business, or with how
small volume the business of the country
may be conducted, but our simple purpose at
the present time is to notice the language in
the above which we have printed in italics,
Mr.. McCulloch tells us, in substance, that the
great volume of currency is the cause.-the
sole cause-of the current and advancing
prices"


Is this so? Is it true that the abundance of
currency is the leading cause of high prices,
and that contraction of currency would be
sure to bring them down? That this is the
theory of Mr.. McCulloch seems plain. 1t is a
very popular theory. The able articles here
tofore published in these column, over differ
entsisnatures, generally have been based up
on this idea, and in the face of such authority
it may seem presumptuous and egotis.ical In
any one-particularly person who is neither
a financier nor an active commercial man-to
suggest so much as a doubt as to the perfect
sonndness Of this theory.


Far be it from us to say word disparaging
of theories theorists per Sc. A sound theo-
ry is of the first importance, though 1t should
be-if sound it aviu be-in perfect consonance
with facts, modified by them, and in no case
50 unbending as to refuse to admit their exist
ence or their force. We cannot intelligently
build an ediice, construct railroad, erect a
factory, put up telegraph, launch a ship, work
an engine, or till farm, without well-de-
fined theory, plan of operations, and this
theory or plan once settled understandingly,
should not be yielded up or deviated from in
any case, except for good and sufficient reason;
yet the man who would adhere doggedly to
theory when found in direct conflict with
known, existing and stubborn facts, would be
little better than mad man. Such facts of
ten show the defects in or exceptions to a
theory. The navigator who, running by his
observations, no matter how correctly made or
how perfect his instruments, refuses to change
the course indicated by these though granite
rock breaks the surface of the waters directly
in his pathway, would be no more inconsist-
ent or unwise than any other theorist, who in
sists upon making straight wake though a
fortress bristling with adverse and stubborn
facts looms up directly before him. Theories
are good in their place, ...st


''But facts are chiels that Wilma ding,


And downa be disputed"


1t seems to US the theory of high prices to
which we have referred, is built up in an en-
tire obliviousness of the great and almost if
not quite inexorable commercial law of demand
and supply. We do not dispute that pleth-
ora of currency may be favorable to a spec
ulating spirit; we only question the doctriue
that this plethora is the cause of, or necessa-
rily produces speculation. 1t may be the ally,
but we doubt if it is the parent of specula-
tion Money enables man to crafty his de-
sires, and though iBmay stimulate it does not
necessarily create those desires. A person
buys dinner, or railroad ticket, or a new
coat, not because he has money in his pocket
and knows Of no other way in which to spend
1t, but because he is hungry, or wishes to trav-
el, or needs-or thinks he does-the new gar
ment He may have cords of money and yet
meyer think of purchasing thing unless he
has a real or fancied need. rr


We may be teld that, if he had so much
money, he would buy up all the -four or the
wheat of the country, then raise the price,
and thus compel the people to suffer. But
would he do this if the -four or the wheat was
in abundance? With thousand barrels of
flour in the city and no demand for over five
hundred before new supply must arrive, Is 1t
possible, no matter how plenty the currency,
to get up speculation and enhance the
price? Who so anxious to burn his own
fingers that he win buy up the thousa nd bar
rels, knowing that with half of it remaining
unsold a new stock will be thrown upon the
market? On the other hand, suppose the city
to contain but five hundred barrels of -four,
when it is clearly apparent and reasonably
certain that one thousand barrels win be de-
manded before an additional supply can be re-
cieved, will efficiency of currency prevent
speculation or rise in prices VIII not hold
ers hold on with tight grip to the last mo
ment, or willnot other property be mortgaged,
IT necessary, to secure notes given for the pur-
chase OF this -four at high figure, that a still
higher figure may be realized as it is dealt out
for consumptionp ......s


As we have had occasion to remark on
former occasion, in discussing kindred ques
tion, if a hotel keeper had only fifty beds and
each night one hundred persons apply for the
occupancy of those beds, he win get high
nrice. and no amount of scolding will prevent
| Il and no matter how scarce the currency may
be- SO long as more men who have the requi-
| site amount Of currency want those beds than
they viii accommodate, the owner will get his
price. But suppose he has hundred beds and
only fifty applicants, all the currency in the