Heft VI (1878). IV. Exzerpte aus Mann über Papiergeld, Kap. X-XIV

Nach der Handschrift, MEGAdigital (MEGA² IV/25).¹ Traducción al español

Ch. X Effects of an inconvertible currency on the Production and Distribution of Wealth.

Viele individuals bereichert durch den rise in price, aber nur weil der gain in price ungleich vertheilt, nicht weil addition made to the aggregate wealth of the country. In einigen Productionszweigen Industrie »temporarily stimulated« durch emission inconvertibler Noten. »The speculative class of the community is rapidly enriched by the operation, and its extravagance keeps pace with its riches.« Daher entsteht demand for Goods [von] Seite derer whose wealth so increased. Andrerseits die economies forced upon others by the gradual loss of purchasing power of their wages or incomes schneidet ab large demand v. diesen Quellen, so dass im Ganzen »the increased demand is confined to articles of luxury«; diese »supplied by an increased production of them«, die jedoch nur so lang dauert als »the inflation is in progress« u. when prices have culminated, production, so far from being further stimulated, is checked. (188)

Im Ganzen jedoch: the best energies der nation turned from production to speculation. When prices of all commodities were rapidly rising, profits were made more easily by buying commodities to sell again, than by engaging in their production. Ferner, da der advance in prices spasmodic, u. sudden reactions unterworfen, da die buying on speculation could sell more readily than those keeping on hand stocks sufficient to meet the demands of their customers, so gambling transactions weniger gewagt als legitimate business. Zugleich das häufige spectacle of fortunes rapidly acquired entflammte die imagination des Volks, desire of sudden wealth wurde universal. Multitudes were enticed into living by their wits instead of by labor … the number of middlemen u. distributors greatly increased. Die Preisschwankungen u. der discredit der currency enhanced the risks of trade. Dealers, daher, forced to charge prices high enough to insure themselves against these additional risks. Zugleich, gemäss der Natur des Detailtrade , they were enabled to fix for themselves the rate of this insurance, and to make it a source of profit. Obgleich individuals oft unfortunate, the aggregate of profits received by distributors as a class was largely enhanced, u. so capital u. labor unnaturally attracted from other more productive employments. Daher increase in the number of distributors u. middlemen; hence tendency der population, so constantly witnessed, to flow from the country to the cities. (189, 90)

Andrer effect der speculation: waste and destruction of capital. Capital invested in an entreprise which finally miscarries is destroyed, except that the portion of it expended for worthless lands or mines is transferred from one person to another without consideration. Alles davon, laid out for machinery or labour, without any productive result, is wholly lost. Immense capital so destroyed during the late war ; für Boston allein der amount berechnet auf $50,000,000, though the data for the estimate are not given. Das Eastern capital sunk in unproductive mines of gold and silver, principally in Colorado u. Nevada, würde hingereicht haben für Bau v. 1000 miles of railroad; that sunk in oil-wells noch mehr; kaum a strongbox in country welches nicht holds or has held, worthless certificates of stock in some high-titled petroleum or mining company. Etwas v. diesem loss would have occurred auch wenn gold the only money, aber der »wild excess of speculation justly attributed to inconvertible paper«. (190)

Grosser increase of banking capital folgte dem issue of greenbacks; aber contribuirte wenig zur production des country; grosser Theil davon absorbed by government loans; auch used to foster all manner of speculation, statt legitimate enterprises. Gambling transactions on the stock- u. cornexchanges were in better favour with the banks than the longer operations of commerce u. manufacture. (190, 191)

Greenbacks trugen auch bei zu wasteful consumption; habits of extravagance inseparable v. periods of speculation; riotous living; money easily won is recklessly spent; the illgotten gains of „shoddy“ are laid out to tickle a vanity for foolish display; a passion for horse-flesh begleitete the paper fortunes of the day. Fast driving seems … the only culture known to those who have drawn prizes in the lottery of speculation. (191)

Eben so schlimm, wenn nicht noch schlimmer, nach Aufhören neuer Notenemission, die umgekehrte Phase, wo Regierung alles that »arbitrarily to increase the value of depreciated money«. Sobald durch forcible withdrawal of treasury notes the prices of all commodities are steadily forced downward, u. die speedy elevation der currency to an equality with gold can be confidently relied on, dann every wise capitalist wird seine funds entziehn from investments likely to miscarry on a falling market, u. statt dessen seek inconvertible paper, soon to be transmuted into gold by the modern alchemy of contraction. Wenige investments sichrer u. profitabler als to buy treasury notes at 70 cents on the $, realize from them during a few months or years the ordinary rate of interest, and then sell them at par. Dies »contracting« der currency treibt daher Capital aus productive industries into call loans u. government securities. Treasury notes, as money, can only advance in value by a decline in the prices of the commodities exchanged for them. To buy commodities, or to invest capital in producing them, must then result in a loss of the rise in the value of the notes. Daher: the contraction of the currency, is a device to compel the hoarding of capital; macht es zum Interesse der capitalists to shun productive enterprises, u. keep their funds in the shape of money, or obligations to pay money. So lang diese Politik verfolgt stagnation steadily creeping over the land. Die changes im employment des capital, u. die natural reaction from war prices, would have disturbed the commerce and industry of the country in any event. Aber die addition zu diesen disturbing causes of »a steady withdrawal of the circulating medium« machte dass 1867 die » manufactures wellnigh came to a stand-still u. general depression came over the business des country.« (191) (192)

Seit the power to contract the currency has been repealed, industry u. commerce have taken a fresh start; people have adjusted their affairs to the actual condition of things, and production moves steadily on. (192) Jedoch immer noch cost of production vermehrt u. amount is verringert durch die insurance gegen die uncertainties der currency, which is added to everything bought u. sold, obgleich in sehr verringertem Umfang. Speculation entzieht capital u. labor noch immer den productive enterprises. Cry of a return to specie payments producirt periodisch a semi-stagnation, business halts zu sehn was der Congress thun wird mit der currency. Doch native resources of U. St. so gross, dass no financial blunders can do more than retard the progress of our wealth. In the Northwest, farms, within easy reach of railways u. of markets can be bought so low that one good crop at high prices will return the purchase-money; while, nearer the frontiers, „homesteads“ with soil … deep and rich … can be had by simple occupation. Thither the hardy peasants of Northern Europe are irresistibly drawn. (193)

Wells , Special Commissioner of Revenue in his several reports zeigt dass die Production of wealth has been materially retarded (1862–’72); dasselbe Grosvenor („Does Protection Protect?“ ch. VII) dass during the decade just closed (1871) increase of wealth nicht over one-third as great as during the preceeding decade. (194)

After an unequal distribution of property (producirt durch inconvertible paper), it is difficult to make a redistribution of it without an agrarian invasion of vested rights. (195)

That greenbacks operated as a tax on each successive holder of them, so long as the decline in their value was progressing, is a fact … now … thoroughly learned. Jeder der passed them on to his neighbor can perceive that he was taxed to the amount of their depreciation while in his hands, as directly as if the government had taken a portion of his income. Scheint noch nicht understood, dass wenn der process reversed u. the value of greenbacks is steadily augmenting, a tax is equally imposed, not upon the holders of them, but upon those who have debts to pay with them. (195) When they (greenbacks) depreciated, creditors are taxed. When they are appreciating, debtors are taxed. (196)

Laborers:

Mit progressive emission of inconvertible paper, all prices advance, auch rates of wages; aber fast ausnahmslose Regel: that the prices of all the necessaries of life rise more than wages. (196)

Greenbacks gab artificial stimulus to speculation, letztre ran riot; markets filled mit buyers, confident of a further advance, eagerly bidding up prices; food u. clothes wurden subjects of the most active speculation. Aber »for wages there can be no speculative demand. The employers of labour, so far from speculating in labor, oppose every advance to the extent of their ability.« (197)

Arbeiter erhalten »a nominal advance of wages «, aber nicht sufficient to make up for the loss of purchasing power which money undergoes. The withdrawal of laborers in the army caused a scarcity of labor while the war was in progress, and concealed for a time this effect of the currency. With the disbandment of the armies, however, and the return of industry to its accustomed channels, the wrongs which the use of inconvertible paper in the payment of wages inflicts upon the labourers have been fully developed. (197)

Der Special Commissioner of Revenue (Wells), in seinem Report v. 1866, kommt zu conclusion: „The general result of an examination and comparison of all the statistics gathered leads, therefore, to the opinion that the average increase in the prices of labor since 1860 has been about 60%, and of commodities … about 90%.“ (citirt p. 198) Aber sagt Mann: In the Western States die Lage der laborers günstiger als in den Atlantic States; die prices of food waren lower, weil food is dorten das chief product; while in a new u. expanding country the demand for labor constantly exceeds the supply, and enables the laborer to sell his services on better terms. Die obige Citation dagegen richtig f. die relative advance of prices u. wages im grösseren Theil des Landes; aber it tells not the whole story. (198) Letztre erheischt specielles Auge zu haben auf Retail prices, wobei sich grössrer Verlust auf wages zeigt, als wenn gemessen an wholesale prices ⦗auf die sich Statistik meist bezieht⦘ (l. c.)

The retailers entitled, on account of this increase of the ⦗greenbacks⦘ money in circulation, to receive more for every thing they sold. Aber, in Folge der Art worin Detailhandel betrieben in diesem Land, wurden sie befähigt den Vortheil auszubeuten u. increase their prices far beyond any thing they were reasonably entitled to. Die retailers der U. St., never much restricted durch competition, have, by the aid of greenbacks, formed themselves in vielen localities into „rings“ for plundering the community. (199)

Verschiedne Ursachen, direct resultirend aus Natur des inconvertible paper money, tended to enhance Retailprices mehr denn wholesale prices u. zwar:

1. Solang emission der greenbacks in progress, keine perceptible limit für extent ihrer Depreciation; könnten möglicherweise become so werthlos wie assignats or Continental money; jeder added daher to the price des articles he sold an amount sufficient to insure himself against the risk of their further depreciation while in his hands. Gleichzeitig der Werth der Currency war beständig fluctuating u. damit variirten Prices of all commodities unabhängig vom state ihrer special markets; these fluctuations frequent u. extreme; f. ihre stocks suchten die retailers garanties gegen risks dieser fluctuations ⦗soweit sie downward⦘ durch addition to prices; aber »by tacit consent among themselves« sie machten »of this necessary insurance an additional source of profit. They fixed its amount themselves; were always sure to stretch it to the utmost limit. The public was at their mercy. The wholesale dealers in like manner added the same insurance to their prices, but, being subject to the competition of open market, they were unable to make of it so great a source of profit.« (200)

2. Matter of common observation, dass retail prices leichter steigen als fallen; they (die retailers) mark up their goods to correspond with every upward surge of wholesale prices; nehmen dabei als standard »the highest fluctuation der season in the general market, u. nicht the average for that time, or what their goods cost them. But when high prices have thus become established, and people have become accustomed to paying them, the custom is continued after the reason for it no longer exists.« (200)

3. This practice of insuring against the uncertainty of the currency, and the fluctuation in values, becomes prevalent in all commercial transactions. Every one must do it in self-defence. Hence, all the expenses, both of doing business and of living, are greatly increased. This circumstance, again, is made an additional pretext for enhancing retail prices, and the inability of the people to endure any further exactions becomes the only restraint upon retail traders . Gleichzeitig, der Theil der Community, der suddenly enriched by the transfers of property, extravagant; goods purchased simply on account of their dearness; the higher the retailers can put their prices, the better for such customers. But, in enhancing prices for this class, they enhance them also for the rest of the community etc ([200,] 201)

4. Andre »quality of our greenback« assisting »this process of retail extortion«. All coin, but debased copper or nickel, getrieben aus Circulation, durch paper ersetzt in the smallest transactions. »Small bills u. fractional currency issued to satisfy every demand for them«, sie werden »the most effective instrument in enhancing prices«. Sie are »crowded into circulation, and retailers are enabled to put up prices until such excess of currency is absorbed«. (201) All the evil effects of issuing small bills under a mixed currency are aggravated tenfold when the currency becomes inconvertible (202).

Folgt daher nicht dass alle retail traders sich bereichern unter diesem System; mit den extremely fluctuating prices, the risks of trade greatly increased; the apparent high rate of profit also causes business to be overdone; though gross amount of profit received by the retail dealers des Lands greatly increased, so aber auch die Zahl among whom it must be divided. Die »net profits« jedes einzelnen dealer insbesondre hängen also chiefly von 2 Umständen ab: 1) of his business overdone in his own locality; 2) ob er »fortunate« ist in making his purchases after a downward fluctuation in the markets. (202)

Während so die profits der retailers as a class sehr enhanced, the purchasing power of wages correspondingly diminished. Also die obige Angabe: Steigen der Wages 60%, der commodities 90% fails to show the real loss to the laboring class. Probable that at that time die commodities at retail had advanced über 100%, u. die purchasing power der wages in many parts des country had fallen nearly ½. Seitdem prices etwas reduced, aber die Lage derer who work for wages has not been restored to what it was before the war. (202) Prices at retail have fallen in a less degree than at wholesale. Public became accustomed to high prices; competition has less power than ever; the number of distributors bleibt excessiv, während ihre expenses but little diminished. (203)

Während so expenses of living are kept up nearly at war rates, wages have declined considerably; das disbanding der armies increased the supply of labor; während die disturbance of business, and diminution of production, which necessarily resulted from the decline in the prices of commodities, lessened the demand for labor. Gleichzeitig long steadily verfolgt die policy of contracting the currency, wovon die greatest sufferers die laborers; contractions verursachen hoarding of capital etc; bring production to a standstill u. daher deprives the laborers of employment; standing argument f. contraction, dass ultimately vortheilhaft f. diese who work for wages. But if they starve before specie payments are reached, the remedy must be pronounced more fatal than the disease. It is better for employed workmen to be partially robbed by paper money than to be left idle by a general stagnation. (203)

Amasa Walker sagt über condition of wages u. retail prices in Masssachusetts, in April 1867: „durch careful investigations made in this commonwealth … quite satisfactorily ascertained, that the average advance of labour in all departments, male and female, in shops and factories, on farms and in families, is near 50% in wages; but he must spend his wages for commodities, and these at the most moderate calculation have been raised in price at least 100% above the natural average.“ (p. 204)

In Revenue Commissioner’s Report Dec. 1868 folgendes statement:

„The result of long and careful investigations in respect to the retail prices of the leading articles of domestic consumption by operatives in the manufacturing towns of New England, the Middle and some of the Western States have afforded data for accurately estimating the increase in the prices of such articles in 1867 as compared with 1860–’61.“ (204) Danach folgende »conclusions«: „Die average increase in price of groceries u. provisions in 1867, vgl. mit 1860–’61, 88%; or, calculated on the basis of the quantity consumed on an average by a number of workmen, a little in excess of 86%; of domestic dry goods, including clothing, 86½ %; of fuel, 57%; of houserent, 65%.“ (204) Danach für 1867 u. erstes Halbjahr 1868 die „average increase aller elements“ constituting „the food, clothing and shelter of family, about 78%, as compared with the standard prices of 1860–’61“. ([204,] 205) Dagegen increase of wages f. 1867 vgl. mit 1860–61: „for unskilled mechanical labor 50%; for skilled mechanical labor 60%.“ „The fact, therefore, is established by incontrovertible evidence, that the condition of working men and women in a majority of the manufacturing towns of the U. St. is not as good at the present time as it was previous to the war, notwithstanding that their wages are greater, measured in gold, in 1867–’68 than they were in 1860–’61.“ (205)

In Rede v. Wells , at Chicago, May 5, 1871: „there was less coffee and sugar consumed last year per capita in this country (1870) than … 10 years ago … we are consuming a proportionally smaller number of boots and shoes, hats and cloth, to-day, than … in 1860; … we consume less of cotton, measured by the pound, in 1870, with 39 Mill. of people, than we did in 1860, with 30 Mill. of people.“ (205, 6)

Theil dieser effects natürlich zuschreibbar der taxation u. tariff; Mann hält aber currency für noch bedeutendere cause in dieser „Richtung“. (l. c.) Those who work for wages suffer the most severely from the use of an inconvertible currency. (206)

Profits of those engaged in agriculture: In country, wo raised a surplus of agricultural products, the price of the whole crop depends upon what can be got for the surplus; wird mehr v. einem article producirt als can be consumed at home, so kann its price fallen indefinitely, unless the superabundance can be exported. So in Illinois u. Iowa »Indian Corn« has been frequently used for fuel; aber wenn a part of any crop is exported, the price of the whole is regulated by the foreign markets, as there can be but one price, after allowing for the expenses of transportation. (206) There are times, it is true, when our markets control the foreign markets. We represent supply, and England represents demand. By controlling the supply, therefore, we can sometimes force up prices. »This power« haben wir jedoch nie, wenn am nöthigsten, nämlich »when our crops are largest.« (206)

Die prices unsrer meisten agricultural products müssen daher theilweise abhängen »on the price of gold«. Die »quotations in the European markets rule, and the premium on gold is added in arriving at the paper prices in our markets «. Daher, when the gold premium is depressed below the level of general prices, the farmers suffer. Sie »sell their products on the basis of gold and buy the greater portion of the merchandise they need for consumtion at inflated paper prices. When gold has advanced 40% and commodities 60%, or gold 10% u. commodities 25%, they lose the difference«. Ausserdem, »Agricultural products sold at wholesale prices, while the goods the farmers buy are at retail prices. Daher wenn the products they sell nur advanced 40%, die goods they buy sind really enhanced 75%, u. when gold is at 10 the difference is yet wider.« (206, 7)

Der volle effect des Papiergelds auf die agricultural class is only just felt. Successive short crops hatten so vermindert supply of breadstuffs throughout the civilized world, während 1866–’67 and 1867–’68, dass famine prices ruled, disguising the effects of our inconvertible currency, während owing to the short supply in our own market, die Preise vieler agricultural products were independent of the foreign markets, and of the premium on gold. Daher hatte Speculation, aided by its most convenient instruments, inconvertible paper, u. banks freed from the restraint of paying specie, full swing. Aber seit 1868 dies changed by the return unsrer soldiers to farming pursuits, and by favourable harvests, u. der evil effect der currency has begun to weigh heavily on the agricultural class. As there is a surplus of their products for export, the premium on gold has become a controlling influence in determining prices, and as it ranges constantly below the average of general prices, so sind agricultural products relativ sehr wohlfeil geworden. (207, 8)

So, in manchen der interior towns des Nordwest, springwheat 2. Quality, woraus der bulk der crop besteht, erreichend 65 cents in 1868 u. 1869 35 cents a bushel in current money. At this rate hat a bushel of wheat less power in exchange als je bevor in der Geschichte des Landes. 1870 u. 1871 wheat ruled higher, Dank dem europäischen Krieg; aber dagegen Indian corn u. hog products ruled unprecedentedly low. Zu 20 cents a bushel for corn u. 3 cents a pound a live weight for swine to the producers on their farms, haben diese Waaren weniger purchasing power als zu irgend welcher former period in this generation. Die farmers erhalten jetzt auch taste of the inequality u. injustice der greenback currency. Nach den poor harvests, it was made the instrument of enhancing the prices of the necessaries of life to the already overburdened laborers of the East. Now that the crops are superabundant, it is made the instrument of robbing the producers of a part of their just reward. (208) The increased use of machinery in agricultural operations and consequent decline of the cost of production have offset in part the evil effects of currency. (l. c.)

Capitalists: Obgleich diese nicht gain so much als wenn gold allein Geld, erhalten sie aber a greater relative share des wealth that is produced than before; a fluctuating currency verursacht stets viele »involuntary transfers of property«, aber »as a rule, capital can protect itself. Money, always a power, is more powerful than ever when its value changes daily.« (209)

Die »shares of wealth received by the several owners of capital under the operation of inconvertible paper are widely different«. Während des progress der depreciation, capital festgebunden in trust funds, od. bestehend aus debts payable at a future day, is steadily diminished; property jedes creditors dann theilweis ohne his consent übertragen auf his debtor. Widows u. orphans, u. die living on fixed incomes, then robbed by authority of law. Aber, dahingegen active capital, skilfully handled, kann keine bessre opportunity haben of increasing itself; zwar an increase of prices nicht = increase of values. Person, die hält dasselbe property bei end der inflation als bei beginning, would be no richer; aber property bleibt nicht ständig in selber hand. When prices begin to rise, people begin to buy in order to realize the increase. If they use their own money, they gain nothing, unless prices recede after they have sold. Aber, if they use borrowed money, they can sell at the advanced prices, repay the loan, and gain the difference. Commodities so bought on a margin, and by a rise the margin may be doubled. The apparent gain is nothing more than a depreciation of the currency. The money borrowed is repaid with money of less purchasing power. Das property des creditor transferred to the debtor. So, viele banks u. moneylenders, insurance and trust compagnies, obgleich sie just dasselbe nominal capital wie 1862 [haben], haben really lost a part of it, unless they have gained enough durch increased rates of interest to form a reserve. (209, 10)

Aber advance der prices nicht steady as emission of paper proceeds; die advance stets irregular u. spasmodic, bei jedem step begleitet v. reactions u. fluctuations. Daher unter all den Speculanten »only a few draw prices. All business becomes gambling, u. die most audacious oft the most successful.« Aber ferner: »in einem Markt heftigen u. gewaltsamen fluctuations unterworfen, those possessed of large capital have the most decided advantage over their less fortunate neighbours. A decline that ruins one operating on a narrow margin enables another having a large capital to buy at the reduced prices, and sell at the next advance.« The risk of such fluctuations macht a large capital nöthig to transact business mit Erfolg. (210) Credit also comes in to add to the inequality. The greater the risk of commerce, the more difficult für die, deren Credit nicht etablirt die requisite advances zu erhalten; dagegen die deren credit is of high standing enabled to profit by every fluctuation. Hence, under an inconvertible currency (sonst wohl nicht?) capital tends to be more and more to become aggregated. It concentrates itself in the hands of a few extremely rich men. Die effects der mixed currency auf solche concentration sind damit verglichen insignificant. Am stock-exchange this tendency is most plainly visible. (210, 11)

A few great operators have swallowed up successive shoals of small ones, until many of the railway corporations of the country have become the property of a few men … thus … rendered more powerful than the hereditary nobles of other lands. (211)

Selbe Tendenz equally manifested in andren departments of business. In den commercial centres werden die starken Häuser beständig stärker, während die weak ones swallowed up by the former, od. have perished u. disappeared. The tendency in commerce has been steadily toward the aggregation of a few immense fortunes, whose possessors can crush out their weaker competitors at a blow. (211) Solche Tendenz unzertrennlich vom paper money; die damit verbundnen risks u. fluctuations produciren nothwendig eine »unequal distribution of wealth« u. »thus divide society into separate classes« (211) Die schlimmste [Folge:] »those who gain the most wealth« vom use der greenbacks sind die »who render no equivalent services in return. The speculators are … enriched; those who use their capital and credit as instruments for gambling, and not as a means for adding to the production of the country. Under such a system, they receive the largest share of the products of labor who assist the least in creating those products.« (211, 12)

Speculators thrive nicht nur on the natural fluctuations of prices inseparable von a fluctuating standard of value, sondern auch fähig to create fictitious fluctuations, u. thus to prey upon the rest der community. Amount of legal tender money known quantity, nicht vermehrbar durch importations von abroad; hence, manchmal, durch withdrawing from circulation a few millions of greenbacks, at those seasons of the year when money is in active demand, können sie produce an artificial stringency in the loan market, consequent decline in the prices of securities, to their own profit u. derangement of the commerce des country to its remotest extremities. (212)

Effects of contraction – wie of inflation – the same; the speculators gain the most. Capital used as an instrument for gambling hat grosse Vortheile über Capital employed in legitimate commerce, sowohl on a falling wie on a rising market. Kaufmann der Waaren kauft, wenn Contraction die Preise niederdrückt, verliert bevor sein stock disposed of in the regular course of trade; speculator who stakes his capital on a bet that prices will be lower at some future day, stands a chance of gaining. Er hat ausserdem Vortheil dass er stets warten kann bis das bottom is reached, »and of then buying for a reaction«. Er kann advantage nehmen of falling wie rising market. (212, 13)

those who were shrewd enough to enrich themselves by speculation during the inflation, are the ones who will be most likely to display similar sagacity during the contraction. Ihre paper fortunes will be increased 30 or 40%, without any other effort on their part; ausserdem haben sie another opportunity for successful speculation. … The crime of inflation would be logically consummated by the crime of contraction. If such a course is pursued, it will be found that ten years of paper money are equal to a century of the law of primogeniture in producing an unequal distribution of wealth. (213)

Schon fängt an gehört zu werden »cry against a privileged class … called the bond-holding aristocracy ⦗weil dies particular species of property exempt from taxation.«⦘ (213, 14)

Diminution der purchasing power of wages hat selben effect on laborer, ob verursacht durch tax on consumption od. durch an »imperfect instrument of distribution« . Für ihn dasselbe, ob Preis eines Artikels increased durch duty on das raw material woraus er gemacht, od. durch an insurance imposed by the middle-man in order to protect himself against the fluctuations of the currency. In beiden Fällen kann er weniger davon kaufen als zuvor. (214)

Aber, in U. St. , gleichzeitig mit greenbacks a system of indirect taxes put in operation, welches, by diffusing taxes over an immense number of articles, instead of concentrating them on a few, has been rendered needlessly oppressive. Mit 2 solchen Systemen in operation at the same time … consumers … feel that the holders of property are having an unjust advantage in the accumulation of wealth. (214, 15)

Gegen das erste Uebel … speedy return to specie payments; gegen 2t: reform des System of Federal taxation u. concentration der taxes on a few leading articles. System of direct taxation unmöglich, wegen der provision der Constitution dahin: „That no capitation, or other direct tax, shall be laid, unless in proportion to the census or enumeration hereinbefore directed to be taken“, aber population kein test of the wealth of a country. Jeder Versuch so to apportion to each State its share of Federal taxes in accordance with the Census must fail. The only direct tax possible is that on income , which, though a direct tax in political economy, is not in Court. (215)

Greenbacks and economy (der Regierung) cannot coexist. The product of the printing press is always parted with more easily than the product of labor; and, when the currency is of fluctuating and uncertain value, a close calculation of expenditures is difficult. (216)

»The tendency … in a country, where manufacturing is the chief industry, for society to become divided into separate classes (sieh auch Tocqueville: „Democracy in America“ Part II, Book II, ch. XX), consisting of a few employers and many employed, between whom there is seldom any sympathy, and often ill-concealed hostility, is undoubted.« Kommt dazu noch »a financial system equally powerful in producing the same result, society divides itself into separate classes with great rapidity. The units of which the favored class is composed, it is true, are constantly shifting, but to the mass of the people who never enter that class this circumstance is of no benefit; while, as it prevents any concentration of hereditary culture, the community experiences all the evils of an aristocracy, without any of its corresponding advantages.« (216) Universal suffrage then ceases to be the means of producing equality, and becomes a blind for concealing a fraud. (216, 17)

The tyranny of capital over labor at the South has been destroyed by our armies. But against this gain may be set off the unjust advantage which capital at the North has obtained over labor. Already, in the older States, the inequalities of European Society are in process of being reproduced. While on the other side of the Atlantic the march is toward equality, on this side we are marching away from it. In these Northern States alone has the course of modern civilization been turned backward. (217)

ch. XI. The effects of an inconvertible currency on foreign trade, and the international exchanges.

Esel J. St. Mill [meint], dass emission of inconvertible paper nicht afficirt auswärtigen Handel des Landes, wo es circulirt. „The imports and exports“, sagt dieser Weise, „are determined by the metallic prices of things, and not by the paper prices.“ (Principles. Book III, ch. XXII, sect. 3.) ⦗Mill giebt als Beispiel ein Engl. article, kostet während metallic currency 5£, wird sold in France für £5. 10s., the difference covering the expense and risk, and affording a profit to the merchant. In Folge v. depreciirter currency kostet article jezt in England 6£, kann aber in Frankreich nur zu 5£. 10 verkauft werden; dennoch dauert sein Export fort. Warum? die £5. 10 die der exporter in France erhält, sind nicht depreciated paper, sondern gold or silver; „ and since in England bullion has risen in the same proportion with other things, if the merchant brings the gold or silver to England, he can sell his £5. 10 for £6. 12s., and obtain, as before, 10% for profit u. expenses … thus … a depreciation of the currency does not affect the foreign trade of the country … is carried on precisely as if the currency maintained its value.“⦘ [(218, 19)]

Wären die Prämissen richtig, so Schluss: Premium on gold würde added to the quotations for bills of exchange u. die increased prices wozu die importers would sell their goods would be exactly equalled by the increased cost of bills of exchange; od. wenn practice prevailed of dealing in exchange for coin only, wie has happened in this country, the importer would pay for the coin with which to buy his exchange, a premium exactly equal to the increased price at which he had disposed of his goods, and the trade balances would be unaffected by the substitution of paper for gold. (219, 20)

Aber Falschheit der Mill’schen Premissen gezeigt durch Erfahrung der U. St. since 1862. Seit der issue der greenbacks, gold has never risen or fallen „in the same proportion with other things“. The premium on it has never at any time been a correct measure of the depreciation of the currency, as marked by the prices of commodities in general. (220)

1. Steigt Premium auf Gold rascher u. höher als Waarenpreise, so Einfuhr v. fremden Waaren vermindert; der importer verkauft dann zwar seine goods zu erhöhten paper prices, aber gezwungen das gold (for remittance) zu kaufen at very much higher rates; so his profits are wholly cut off in making the remittance. Umgekehrt: Exporter zahlt goods in paper, sells them for gold, befähigt to dispose of the gold at home for a large profit in paper; ebenso der foreigner, der gold einführt to buy goods, sells it for paper, mit dem latter buys a larger amount of commodities als früher. Unter solchen Umständen das Land des inconvertiblen Papiergelds wird a good country in which to buy; seine Imports lessened, seine exports increase wenn es hat a surplus of products for export. (220, 21)

2. Fällt Premium auf Gold unter average of general prices, so der process is reversed. Der importer v. Waaren sells for high prices in paper, kauft das Gold for remittance at a much lower rate, finds a broad margin for profit; das Land des inconvertible paper wird so good country in which to sell; foreigners verschiffen dahin in increased quantities, dagegen Verschiffung seiner eignen products for sale abroad are diminished. (221)

internal taxation u. oppressive tariff haben natürlich zu thun mit »the present derangement of manufactures in this country«, aber »the more serious evil … paper money«. Die costs of production dadurch increased. Unsere manufacturers undersold at home (durch foreign manufacturers) od. aber »in supplying the wants of distant lands«. Namentlich when the field of competition [is] a foreign market, obvious die Nachtheile die die currency ihnen zufügt. (221)

Manufacturer hat zu zahlen – ausser general advancement of wages – increased price ⦗mit dem insurance price gegen monetary fluctuation⦘ for every article he uses in business … er selbst fügt den Preisen seiner Waaren insurance item zu um sich zu schützen from loss by sudden depreciation; oder wenn shipping his products abroad, against the fluctuations on the premium on gold. His standard of profit so raised zugleich mit seiner cost of production. In foreign markets, wo international underselling, the (most) »minute variation in the margin of profit will frequently drive one of the competitors out of the market« . Unsere manufacturers so disqualified from competing in foreign markets on equal terms. (221, 22)

Die excessive depression des premium on gold since 1865 war noch grösserer disadvantage für sie in Concurrenz mit ihren fremden Rivals. Die goods, die sie exportiren, verkaufen sie für Gold, das Gold verwandeln sie in greenbacks, at the current rate of premium; ist Gold price aber nur advanced 40%, dagegen average price of commodities 60% od. 70%, od. Gold 10% u. Waaren 25%–30%, so American made goods – ausser denen worin wir peculiar advantages – nur mit Verlust verkaufbar in fremden Märkten. Preis des finished produce, hat in solchem Fall, nicht advanced mit cost of production. Sieh statistics of our trade, bes. die reports of Wells , zeigend, in marked manner decline in Ausfuhr of manufactured articles seit decline of the gold premium in 1865. (223) Andrerseits, American producers undersold at their own doors. The main thing in favour der fremden manufacturers ist low premium on gold. Die difference zwischen price of gold u. increase der Productionskost in den U. St. ist für sie Quelle v. Profit u. befähigt sie beständig ihre goods to sell at a less price in greenbacks als die Americans … Um wirklichen Schutz zu gewähren, müsste »Tarif noch genug sein to make up for the low premium on gold« u. »the heavy taxation« u. »such a tariff would tend strongly to defeat itself«. (223, 24)

Effect der currency on our commerce noch more disastrous als on manufactures. Decline of über 50% in tonnage of American sailing-vessels registered for foreign commerce; allerdings steamboats haben largely superseded sailing vessels in foreign commerce; 1859 aber in Boston harbor oceansteamers built, away from the centre of our iron industry, so cheap wie on the Clyde in 1871. ( D. A. Wells ) (225)

Our imports of coffee, tea, spices u. other commodities we cannot produce at home, paid for with bills on London, which we buy with our agricultural products (wovon die 5 Hauptarticle: raw produce, cotton, petroleum, bread-stuffs, tobacco u. provisions in welche letztre included: „hog products“ u. cheese), gold u. bonds u. die markets f. manufactured articles left open to the English. We very nearly fill, in general commerce, the same place as our semi-civilized neighbors of South America – as exporters of the products of unskilled labor. (226)

Folgende Tabelle zeigt wenig Progress seit 1854 u. material decline measured per Kopfzahl der Bevölkerung.

Table of U. St. Export of manufactured articles at gold values (fractions of millions omitted)

Die increase (1871) wholly due to shipments of arms u. ammunition, wovon large part kam aus government arsenals.

Table of imports of dry goods at gold values.

Mit Bezug auf diese Importliste: Von 1861–64 the premium on gold, being in advance of general prices, acted as a most effectual protective tariff. July 1864 gold touched 285½ , the highest quotation given; generally über 200 f. den remainder of 1864 u. Jan. u. Febr. 1865; declined steadily durch März u. April 1865, bis es gefallen in Mai (1865) auf 130. Der effect dieses sudden decline des Premiums on gold zeigt sich durch increase beginning in August, 1865, most marked in Jahr 1866. Seit der Zeit Gold beständig rascher fallend als andre Waaren, stimulating importations on a large scale, so dass Werth der foreign dry goods brought into the Country 3 × greater Ende der Decade als an ihrem Anfang. (228) Also nach dieser Theorie: the derangement of our foreign trade chiefly daher that the gold premium does not equal the depreciation of the currency. (228)

In seinem Report v. Dec. 1868 sagt Wells (statements ihm as Commissioner furnished by a manufacturer of furniture in one of the Middle States, der vor dem Krieg had built up an extensive export business to the West Indies, Central u. South America, of a variety of „cane-seated“ and „cane-backed“ furniture suited to warm latitudes) Nach diesem statement also:

1st March 1861, gold u. currency at par; 1$ in gold sufficient purchasing power to obtain for the South American importer 111 1/9 dozen of what termed in the trade „ordinary square-post cane-seated chairs“.

About 1st Jan. 1862 gold began to command premium, advanced sehr rasch während der nächsten 3 Jahre. Dies movement, Anfangs nicht participirt, to any considerable extent, by either labor or commodities; hence, the purchasing power of gold greatly increased, so dass:

1st July 1864 the $ gold bought 143 dozen chairs. Unter diesen circumstances trade increased, weil der foreign purchaser found the American market by far the best for his interest, aber von:

July 1864: a movement in an exactly opposite direction, gold receding, labour u. commodities advancing in very unequal ratios. So:

Von diesem Punkt aus the purchasing power has gradually increased u. blieb für 1868 – at the rate of about 102 dozen, 9 less than could be bought mit demselben Geld in 1861.

„The result (sagt Wells ) has been that the foreign purchaser now goes to France or Germany, while the products of American industry, in the form of furniture, nicht länger available to exchange for sugar, spices, or dyewoods, gold has necessarily been substituted.“

Da gold nur zu brauchen für purchase of chairs nachdem erst turned into greenbacks, evident that the principal cause in determining these variations of its purchasing power war der amount des Premium. The lower the premium on gold, the less is the purchasing power of gold in our markets; so Gold quoted 1st July 1864 at 250; January 1865 fiel unter 220, Feb. ’66 ranged etwas unter 140, Jan. 1867 just below 135; in 1868 it averaged about 140. (229, 30)

In seinem Report v. 1869 (December), sagt id. Wells : „Gold is relatively the cheapest commodity we have to export … cheaper than the products of our domestic manufactures“ (231)

Selbe Wells in seinem speech at Chicago, May 1871: „the export of many of our domestic products was stimulated during 1864 u. part of 1865, to a very great degree, durch die increase des premium on gold, which often rising v. 50 to 100 od. 150% über die advance … experienced in labor and wages, increased, as it were, the purchasing power of the foreign consumer, or decreased the relative cost in our own markets of such articles of domestic product as were available for exportation and sale in foreign countries. F. e., export of bacon rose im Jahr 1864, vergl. mit 1860, von 4 zu 10 Millions; tobacco v. 15 auf 40; cheese v. 2½ auf 12; butter v. 1½ auf 7; while of many other articles, the increase of our exports was v. 50 to 100; and sometimes 300%.“ (232)

Gold amount held by the banks nach statement of June 1871 $19,924,955 gegen $83,594,537 in 1860. (235)

Portion of the (American) silver coin has found its way to Canada; the discount on American silver in that country marks its excessive supply … the small change, formerly circulated here through the channels of retail trade, has been sent thither to be made useful. The late excessive accumulation of gold coin and bullion in the B. o. E. u. B. o. France may be attributed in part to the same cause. The disuse of the precious metals in this country has driven our share of them to countries ⦗France wo inconvertible notes?⦘ where they can fill their proper office, and the stock in European countries, accordingly, has become over-abundant. (235, 36)

In Hunt’s Merchants’ Magazine for Jan. 1869, der stock of coin u. bullion then „in the States where resumption is to take effect“ computed at $150 Mill.; ferner, this stock was diminishing at about the rate of $20 Mill. a year, obgleich exports of gvt. u. railway bonds are delaying the drain of specie. (236) neutralized in part »by the flow of capital to this country for investment in railway securities and government bonds« (237)

In California … specie is the only standard, it has remained unaffected by the currency … the advantage of using a stable currency … operates strongly in their favor (Californiens u. der Pacific States), and has already stimulated manufactures to some extent, narrowing thereby the markets for the products of the Eastern States. (237, 38)

The greatest material benefit conferred by the Federal Union is free trade over a whole continent. That benefit partially weakened by the use of different currencies, wodurch der trade mit den Pacific States assimilated to foreign trade. (238)

Ch. XII. The relative effects of the tariff and the currency on prices.

Wird behauptet: »that the amount of depreciation which our paper money has undergone in excess of the percentage represented by the premium on gold, must be ascribed to the accumulation and duplication of taxes. Prices of commodities, in general, it is inferred, have been enhanced by the increased cost of production which results from increased taxation. This view is erroneous. Taxes, no matter how imposed, cannot add jota to general or average prices. (!?) Taxation changes the natural relations of prices to one another. It causes a redistribution of prices, but it cannot increase them in the aggregate.« (239) ⦗Dies chapter später wieder anzusehn mit Bezug auf Preise u. Steuern⦘

»He (der workman) cannot escape his share of taxes on consumption. He is fortunate … if he does not pay a greater share of them, in proportion to his means, than any other member of society.« (245)

Even the gatherers of ice might claim with reason that the expenses of their business have been increased 30% by the use of paper money, and that, as the premium on gold makes good 10% of this difference, they are entitled to a duty of 5 to 10%, sufficient, when added to the cost of transportation, to prevent their Canadian neighbors from underselling them. (252, 53)

When we have learned to obey it (viz. the law of the circulation of the precious metals), we shall gain the leadership of the commerce and manufactures of the world, and make England as much a commercial appendage of the U. St. as Canada now is. (254)

»It (paper money) increases the cost of production, causes prices to fluctuate, and renders credit less accessible. Greater capital is thus made necessary in business operations, and the natural advantages of the larger capitalist over the smaller are doubled. Paper money makes it more easy to swell great fortunes, and less easy to found small ones. It benefits only the rich. It is the poor man’s curse.« (257.)

ch. XIII) The immoralities of an inconvertible currency.

The same person … at one time means by dollar the name merely, but, when his interest in the question is changed, insists that a dollar is one particular thing, to wit: a certain amount of gold, and that the name can mean nothing else. (259)

Capitalists holding treasury notes, soon to become equal to gold by operation of law, would not sacrifice the premium by converting them into gold immediately. On the contrary, they would turn gold into greenbacks, and loan the latter, in order to obtain a transfer to themselves, under color of law, of the property of their debtors. Measured by its effects, the policy of elevating a depreciated currency to the standard of gold is more immoral than the opposite policy of depreciating it. (272, 273) resume specie payments by settling past debts according to the value of the money in which they were contracted. (274)

» This haste to be rich is at the bottom of the political corruption of the times. When speculation pervades all business, it stalks boldly into the public offices, and our legislators and tax gatherers, instead of laboring for the good of the people, make their positions mere stand-points for jobbery, and moneygetting; while the public morals having fallen to the Spartan level, we blame our officers, not for stealing, but for being caught.« (276, 77)

Politicians take advantage of the preoccupation of business men in money-getting to transfer the government to the scum of a great city, and the frauds which are bred in one class are duplicated in the other. While the leaders of Wall Street make over-issues of stock , the representatives of the Five Points forge vouchers. … On the stock exchange the worst scandals have transpired. In the whirl of moneygetting, nothing succeeds like success. The means employed are immaterial. (277[, 78]) ⦗fährt direct fort:⦘ »In the general corruption that prevails, courts and legislatures uphold the one who wins. He is the best „operator“ who can steal a railway, and buy a judge. Nor are the Erie Frauds without a parallel. … issued new stock so as to depreciate the value of that outstanding … necessity compelled the directors of the Erie Railway to keep their offices, by printing certificates to vote on, and thus robbing the other stockholders … The „Erie Ring“ … tampered with our judges to sustain a fraud etc« ⦗Er sagt alles das immer hinweisend dass U. St. Government selbiges that mit seinem paper money.[⦘] (p. 278)

ch. XIV. The remedies for an inconvertible Currency

1. Contraction »resumption by the reverse process of diminishing the amount of issues« … »by arbitrarily withdrawing treasury notes from circulation«. (281)

Giebt paper money in circulation (compound interest notes, national banknotes, the 3 per cent. certificates u. part of the bank reserves included during the war years) von 1834–1868 , da the amount of paper circulation nearly stationary since 1868.

Table of papercirculation ⦗included vor 1862 convertible paper⦘ v. 1834–1868.

Average bank circulation während 26 years vor 1860 less than 139,000,000 . Rechnet zur circulation von 1861 (u. denkt dies [ist] mehr als development v. industry u. commerce seitdem erheischt) 50 millions; ⦗Expansion, sagt er of banknotes to 217 Mill. in 1857 ended in panic and general suspension of specie payments⦘, also als Maximum des papers das die natural circulation erheischt, 250 mill. Fragt sich dann, wie contrahiren 700 Mill. (in round numbers) auf 250 convertible notes? ([283–]285)

Glaubt dass nicht Gold dafür genug in U. St. (waren da (exclusive of Pacific States) vor dem Krieg 200–250 millions). Policy of contraction zieht nicht precious metals an, sondern will drive off another part of that which remains. The premium on gold would be constantly depressed durch general belief that treasury notes soon raised to par, selbst wenn government abliesse v. seinen artificial means to increase the depression; Dank dem fact der surplus currency werden andrerseits die commodities in general continue to be appreciated (?); premium on gold would continue to range lower than general prices; gold would be the cheapest article of export u. remain so, bis contraction, by bankrupting those in debt, had reduced general prices to panic rates. (285, 86)

Alles Geld in circulation vor war, coin u. paper, about 400 Mill. $; say now was necessary 50 Mill. more of paper u. 25 Mill. of specie, dann = 475–500 mill. Wenn die redundant paper currency dann contracted v. 700 mill. of paper to 475 od. 500, there would be little or no premium on gold. Aber doch specie payments nicht resumirbar. Denn sobald greenbacks redeemable on demand, 275 mill. of coin would be added to the circulation, dann = 775 Mill., 75 mill. more than before resumption was attempted. Weitere Contraction nöthig dann bis beträchtlich weniger als 500 mill. left in circulation. Aber da 500 mill. the natural and necessary circulation des country on a specie basis, when the inconvertible paper was reduced below it, there would not be enough left to effect exchanges, except at a very low range of prices. Prices würden nothwendig fallen below the specie standard; dies würde schliesslich ziehn specie ins Land von abroad; aber dann wieder the total circulation more than 700 mill. etc

A reduction der currency unter its natural amount in England, bei Schluss der Napoleonic wars, u., by causing a decline of prices, it rendered possible the resumption of cashpayments; so in U. St. after revulsions of 1837 u. 1857, cause of the stagnation which followed those years. Aber jetzt das inconvertible paper so viel mehr excessiv, dass repetition of the process impossible. (287, 88)

Hoarding specie in the Sub-Treasury, while contraction in progress, u. nach bedeutender Verminderung v. treasury notes in part (at least 50 v. den 300 millions national banknotes) u. sufficient specie collected, so dass remainder of notes could be redeemed in coin on demand, the whole supply of gold in the country (wenn davon genug da) would be tied up, and the premium (on gold) would rise to unheard-of figures. [(288, 89)] ⦗A high premium would keep up the prices of those articles whose prices follow that of gold, and as more money is necessary to effect exchanges at high than low prices, the steady diminution of the volume of the currency would be more keenly felt in excessive stringency in the money market. (286)⦘

This is simply a scheme to compel the Treasury to „corner gold“. (289)

Wenn contraction der legal tender notes is enforced, a triple contraction der instruments of exchange will take place. Greenbacks, banknotes u. bank deposits will be contracted together; ausserdem all instruments of credit used as currency will be diminished. Bank loans u. discounts würden fast aufhören; alle resources der bank wären nöthig to protect their own notes u. demand liabilities; wären ohne dem abgeneigt to make loans to merchants u. business men, die candidates for bankruptcy. Government bonds would afford an investment for all their loanable funds, mit high interest u. no risks. Wenn eine ordinary bankcontraction von wenigen millions results in a panic u. general ruin, schwer zu estimate the ruin which a government contraction of hundred of millions, protracted through a series of years, would produce. (289, 90)

Die contraction 1866–’68 no safe criterion. Nach close of war, withdrawal of the government from the markets as a purchaser, change of employment, universal belief in a speedy return to specie – war general decline of prices inevitable; dadurch a portion of money thrown out of employment; the necessary exchanges could be effected without it. The contraction of the legal tender notes was made at this time u. absorbed nur this surplus currency, for which there was no further use. Die stagnation in Folge dieses Processes resultirte von keinem want of currency, sondern v. der Tendency to hoard treasury notes so as to secure the rise in their value. Die contraction ging nie so weit to affect the circulation der banks; the full limit of 300 Mill. of national banknotes allowed by law was filled when the contraction of greenbacks ceased. The banks had increased their issues during the process, instead of curtailing them. Der full effect der measure hätte sich nur gezeigt, wenn die contraction of treasury notes soweit gegangen wäre to compel the banks to contract their notes, and consequently their loans, dann » the whole machinery of exchanges will come to a standstill« (290) u. folgt darauf der Satz: »The injustice of enhancing the standard of value so as to affect past debts will become painfully manifest, and, in the reaction that would follow, creditors would be more likely to suffer than debtors.« (290, 91)

Seit repeal des law authorizing den Secretary of Treasury to contract the legal tender notes, the policy of contraction apparently abandoned; aber among its advocates are still numbered nearly all the leading men of the nation, who claim to be versed in political economy u. finance. (291)

2. The scheme for escaping, by further inflation, the injustice of enhancing the standard of value, is not worthy of serious discussion. Though it is just to pay debts with money of the same value as that in which they were contracted … it is not just to still further depreciate money already depreciated … Such proceeding jedoch wäre »strictly in accordance with the „theory of greenbacks“, the decisions of the courts of fifteen States, ending with the Supreme Court of the U. St., and the precedents established by all the States but Massachusetts in paying their funded debts«. Die citizens des State of New York z. B. könnten reasonably nichts einwenden gegen a measure in strict conformity to the decisions of their highest tribunal u. their own practice. (294)

Pretext worauf demand for further issue of treasury notes based, ganz untenable; [es wird] behauptet more currency sei nothwendig to transact the business of the country; man mistakes increase of paper money for increase of capital; was wirklich nöthig ist more loanable capital; dies jedoch Product nicht der printing press, sondern of labor. (294)

No particular sum of money nothwendig to effect the exchanges irgend eines Landes. The amount required is purely a question of prices, the rapidity of circulation being considered constant … Hauptsache, that prices in each country should bear a proper relation to prices in every other country … When gold is the basis of the currency, prices are regulated by the laws of trade, and of the circulation of the precious metals. When the order of Nature is not interrupted by foolish legislation, the amount of money in a country is self-adjusting. It adapts itself in accordance with natural laws to the capital of the country and the amount of exchanges to be effected. (295)

As capital accumulates, the amount of it which takes the form of money is increased, und in proper proportion all the other instruments of exchange. (l. c.)

3. If a debtor owes 1000$, payable in treasury notes worth 80 cents on the dollar, his creditor is equally well off, whether he receives 800$ in gold, or 1000 in paper. The way to specie payments, then, is to settle all obligations incurred under the legal tender act, according to the value of money in which they were contracted, and to restore to contracts, made before the passage of that act, their original standard; to abandon the attempt to elevate greenbacks to the level of gold, and to withdraw them from circulation, without increasing their value. (296)

Wahrscheinlich »recurrence ⦗dies 1872 geschrieben⦘ of one of those periodical upheavals in commerce which seem inevitable to nations in a progressive state of wealth «. Ursache at bottom of commercial revulsions … gewöhnlich eine accumulation of capital in the loan market u. a decline of rates of interest. Dies leads to visionary investments in speculative enterprises in the course of which vast amounts of capital destroyed, oder, being changed from the circulating to the fixed form, are no longer loanable. Andre Ursache, die mindestens in U. St. stets on the surface solcher occurrences erschien – is a defect in the machinery for effecting exchanges, which has stimulated an increase of bank loans, and an expansion of banknotes on a market already ripe for them. In the historical crises of 1837 and 1857 both of these causes combined. (296, 97) Gegenwärtig both (causes) again at work. Production des Reichthums u. Accumulation v. Capital in U. St. zwar vermindert durch die losses of war u. die needless burdens imposed by a barbarous system of finance. Aber diese selben Ursachen haben changed the distribution of capital; it has been concentrated at the financial centres, and brought under the control of speculative operators to an extent never before witnessed. Gleichzeitig, in England u. Deutschland, scheint an unusual accumulation of capital u. consequent lack of paying investments at home. Bubble enterprises of various kinds ready for the market, in addition to which large transfers of funds to this country are taking place … These transfers of foreign capital are likely to stimulate our loan markets, while the defects in the machinery for effecting exchanges are ready prepared to aggravate a speculative fever, and to make more fatal the resulting collapse. Our banks are freed from the restraint which paying specie imposes, and the legal restraints it has been attempted to substitute are of doubtful efficacy. (297) Gleichzeitig the decline of the premium on gold carrying with it the prices of large classes of commodities has set free currency which must be absorbed in use, and that use may be as a reserve for bank expansion. If these causes lead to excessive investments in mining shares, railway enterprises, or real estate at inflated prices, the usual collapse will follow. Then the evil effects of inconvertible paper will be fully felt.

In 1857–’58 the decline of gold prices made this a cheap country in which to buy. Production was vastly stimulated thereby, and in the years 1859 u. 1860 the results of labor in producing wealth were more satisfactory than in any other years of our history. But if such a crisis occurs during the era of greenbacks, the increased cost of production, and the uncertainty of the future which they create, would seriously impair the efforts of capital to retrieve the disaster by engaging in legitimate production. (298)

Owing to the curtailment of credit in commerce, the diminution of the use of options on the stock-exchange, and the absorption of currency in retail prices, more currency is now used than would be possible in a natural state of things. (299)

Paper money has only a local value. Its quantity cannot be diminished by shipments to other countries, nor does the practice of hoarding it ever become general. The amount of it to be circulated remains the same at all times, independent of the exchanges to be effected with it. It accumulates, therefore, at the centres of trade at some seasons of the year, to be used in stock-jobbing, and at other seasons a scarcity of it arises. This scarcity also is frequently increased arbitrarily by those interested in a decline of prices. (302)

4. Einige schlagen vor: making treasury notes convertible into bonds, and bonds reconvertible into treasury notes, at the pleasure of the holders. Dieser Irrthum des plan beruht auf Unterstellung, dass exchange value of money, as marked by prices, and the rates of interest paid for the use of capital, are directly dependent. Aber prices vastly more powerful than rates of interest. Z. B. Fällt Preis einer Waare in a short space of time auch nur um a few cents, kann die decline sein at the rate of 50% per Jahr, od. a rise to the same extent kann sein = 100% p. a. Daher können holders of commodities exorbitante Zinsraten zahlen in order to prevent prices from declining, or to cause them to rise. Präcis dasselbe Phänomen sehr oft witnessed on stock exchange, wo Commissions of  1/16, ½, u. ebenso hoch als ¾ of 1% per Tag manchmal bezahlt werden for „turning stocks“. Wären also bonds convertible in treasury notes at the pleasure of the holders up to a certain limit, those speculating for a rise of prices werden wahrscheinlich rates of interest zahlen hoch genug to induce the holders of bonds to convert them into money; and the result probably would be that the limit would be always filled. The amount of capital that naturally seeks investment in gvt. securities at low rates of interest is comparatively small, and is daily invested in that manner by the purchase of bonds. To make bonds reconvertible into money would not increase the amount of such capital. (302, 303)

(Fortsetzung p. 78)

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1. Text nach MEGAdigital (Berlin-Brandenburgische Akademie der Wissenschaften), MEGA² IV/25, Lizenz CC BY-SA 4.0 (https://creativecommons.org/licenses/by-sa/4.0/); der editorische Apparat der MEGA ist nicht wiedergegeben. ↩