People's Pilot, Volume 3, Number 38, Rensselaer, Jasper County, 9 March 1894 — MONETARY SCIENCE. [ARTICLE]

MONETARY SCIENCE.

The Gauge by Which the Supply of Money Is Determined. General prices furnish a rule or gauge by which to determine whether the supply of money is sufficient, or otherwise. The volume of money in circulation, and all the property for sale, are reciprocally a supply and demand as to each other. If the averag'e price of commodities is stable, the proper volume of money is in circulation. All authorities agree that stability in general prices is the end and aim of monetary science. Any increase or dimininutioa in the supply of money produces a corresponding rise or fall in general prices. At the beginning of the sixteenth century, when there was only about $150,000,000 of coin in circulation in all Europe, general prices reached the lowest level in history. A hundred years after the discovery of gold and silver in Mexico and South America, the volume of metallic money was more than quadrupled, and prices greatly advanced. Between the years 1810 and 1850, the cutting off of the supply of the supply of precious metals, due to the Spanish-American wars, largely reduced the supply of money, as compared with property for sale, and prices fell over 50 per cent. The new supply of gold from California and Australia advanced prices, between 1850 and 1678, from 18 to 25 per cent. Since 1878, the reduction of the supply of standard money, by the demonetization of silver, has produced a fall in general prices amounting to fully 50 per cent. These practical examples are in harmony with the law of supply and demand. A supply of money, in excess of the legitimate demands of business, is not desirable, because it disturbs the equity of time contracts, and enables the debtor to discharge his obligations in money less valuable than the money in circulation at the time the contract was made. —Senator W. M. Stewart