The Volume of Money.
The volume or quantity of money in circulation is always hard to determine, principally because banks, brokers and their allies in official and journalistic positions are generally interested in concealing or misstating the facts on purpose to mislead the public; so that, not infrequently, a period of financial disaster steals upon the people unaware and they are compelled to endure all the miseries of such an event without being able to detect the cause or apply the remedy. In such circumstances the masses may dimly perceive that they are being robbed, yet, unable to detect the means of their spoliation, they attribute it to every cause but the real one, and thus the spoliators are enabled to repeat their robbery again and again, undetected by any save a few whose complaints are regarded as the extravagances of uninformed or fanatic minds.
To fully comprehend how the exploiters of money may enrich themselves and impoverish others by merely manipulating the currency, it is necessary to understand the primary fact that an increasing volume of money brings rising prices and business activity, while a diminishing volume of money causes falling prices and business stagnation. Upon this proposition the following authorities are cited:
David Hume, the English historian, in his essay on “Money,” says:
“We find that in every kingdom into which money begins to flow in greater abundance than formerly, everything takes a new face; labor and industry gain new life, the merchants become more enterprising, the manufacturers more diligent and skillful, and the farmer follows his plow with greater attention and alacrity. The good policy of the government consists of keeping it, if possible, still increasing as long as there is an undeveloped resource or room for a new immigrant, because by that means there is kept alive a spirit of industry in the nation which increases the stock of labor, in which consists all real power and riches. A nation whose money decreases is actually weaker and more miserable than other nations which possess less money but are on the increasing hand.”—Essays and Treatises, vol. I, p. 283.
Henri Cernuschi, an ex-banker of Paris, and recognized as, perhaps, the most eminent of the French writers on finance, says:
“The value of money depends upon its quantity. It is the same with gold as with greenbacks. If the stock in circulation is augmented the purchasing power of every greenback is diminished; and so with gold and silver. The purchasing power is always in relation to the quantity of the money.”—Nomisma, p. 15.
“That commodities would rise and fall in price in proportion to the increase or diminution of money I assume as a fact that is incontrovertible. That such would be the case the most celebrated writers on political economy are agreed.”—Ricardo, Political Economy.
“If the whole money in circulation was doubled prices would double. If it was only increased one-fourth, prices would rise one-fourth. The very same effect would be produced on prices if we suppose the goods (the uses for money) diminished instead of the money increased; and the contrary effect if the goods were increased or the money diminished. So that the value of money, all other things remaining the same, varies inversely as its quantity; every increase in quantity lowering its value and every diminution raising it in a ratio exactly equivalent.”—J. S. Mill, Principles of Political Economy.
Wm. H. Crawford, Secretary of the Treasury, in his report, February, 1820, says: