THE FARMKK AND THE CURRENCY. 355 



the future. When this fails the stock of money is also locked 

 u[), and we say that money is scarce, when there is nearly as 

 much money as ever. Money alone, however, will go but a 

 very little way towards transacting the business of the world. 

 When we say that money is scarce, what we really mean is 

 that it is generally thought that a great many people are not 

 going to be able to pay their debts, and that consequently 

 immense quantities of property are going to come on the 

 market, for much of which, at least for a time, there will be 

 no profitable nse. Those who owe money, therefore, hoard it, 

 in order to pay their own debts in case they fail of collections, 

 or for fear they will lose it if lent, and those who desire to 

 borrow are unable to get either money or credit. Of course, 

 under such circumstances, money is as plenty as before, per- 

 haps more plenty, since all who have the power will call it in 

 from other countries, but it can not be borrowed. As the 

 greater part of the commercial business of the world is done 

 on borrowed money or credit, business tends to stop and prices 

 to fall. When the alarm is acute and excessive, there follows 

 what we call a panic, when everybody tries to collect every 

 dollar that is owing to him and hoard it. 



But while credit, more than money, fixes the prices of 

 commodities, the volume of money is so large that in the 

 long run as money increases prices tend to decrease. Money 

 never decreases, except by the withdrawal of inconvertible 

 money from circulation, or by the loss of purchasing power of 

 some part of it. When this occurs there is a depression of 

 prices, subsequently, if the loss is local, by withdrawal of 

 irredeemable money, made good by the inflow of other money. 

 If the depression is severe, and accompanied by a loss of credit, 

 this may take a long time. If by loss of purchasing power of 

 international money, the effect is world-wide. 



I have hitlierto treated gold and silver as of equal impor- 



discounted by more acute and better-infonned men, and the fanner pays hiii;b 

 prices for merchandise sometimes before he gets high prices for produce, and 

 continues to pay high prices after produce begins to fall. None suffer from an 

 unstable currency so severely as the farmer. 



