Page:Forgotten Man and Other Essays.djvu/149

 PROSPERITY STRANGLED BY GOLD

OME of the silver fallacies were stated by Mr. St. John, in his address before the silver convention, with such precision that his speech offers a favorable opportunity for dealing with them.

He says that "it is amongst the first principles in finance that the value of each dollar, expressed in prices, depends upon the total number of dollars in circulation." There is no such principle of finance as the one here formulated. The "quantity doctrine" of currency is gravely abused by all bimetallists, from the least to the greatest, and it is at best open to great doubt. When the dollars in question are dollars of some money of account which can circulate beyond the territory of the State in which it is issued, the quantity doctrine cannot be true within that territory. It may be noted, in passing, that this is the reason why no scheme of the silver people for manipulating prices in the United States can possibly succeed. Silver and gold will be exported and imported until their values conform throughout the world, and prices fixed in one or the other of them will conform to the world's prices, after all the trouble and waste and loss of translating them two or three times over have been endured.

The quantity doctrine, however, means that the value of the currency is a question of supply and demand, and everybody knows that to double or halve the supply does not halve or double the value, or have any other effect which is simple and direct. If it did have such effect speculation would not be what it is. 141