How to Get Poor and Rich at the Same Time.
Mr. St. John tries his hand at the relation between prices and interest in connection with our subject. He says: “If the dollar can be cheapened by increasing the number of dollars, so that each dollar will buy less wheat, the increasing price of wheat will increase the demand for dollars to invest in its production.” Evidently he fails to distinguish between the rise in price of wheat from one gold dollar to two gold dollars per bushel, and the rise in wheat from one gold dollar to two fifty-cent silver dollars per bushel. The former would undoubtedly stimulate production. The latter would do so also, among farmers who shared Mr. St. John’s confusion on this matter. There would be many of them. They would imagine that they were getting rich by raising wheat to sell at two silver dollars, or five, ten, fifteen, or twenty paper dollars, as depreciation went on. Hence, as he says, they would pay a banker eight, ten, twelve, or fifteen per cent, in the depreciated dollars, in order to get “money,” as he calls it, with which to raise wheat. Mr. St. John thinks that this would mean that farmer and banker were both magnificently prosperous. It would mean that the real value which came in was steadily growing less than that which went out, so that the capital was being consumed. Hence the high rates of inflation times, and the disaster which follows when the truth is realized. They told a story in Revolutionary times of a man who invested his capital in a hogshead of rum which he sold out at an enormous advance—in Continental paper; but when he went to buy a new supply, all his “money” would only buy a barrel. This he retailed out at another enormous advance—in Continental—but when he went to buy more he had only enough money to buy a gallon. If he had borrowed his first capital he might have paid twenty per cent for it—in Continental—but the banker would hardly have made a good affair.