366 
DUTTON. 
plausible, but it is very fallacious. The fallacy consists in 
stating one half of the truth and leaving the other half un¬ 
told. • The sting of the fallacy is in the untold half. It is 
true that a large amount of money suddenly forced into 
circulation will be an apparent, though not a real, increase 
in the purchasing capacity of the circulation, for the avail¬ 
able things to be bought remain as they were before; still, 
for a short period there will perhaps be more buying and 
selling. It matters little how the money is paid out from 
the treasury, much the greater part of the money will be de¬ 
posited in the banks or in loan and trust companies or 
in some large receptacle of money within a week, and nearly 
the whole of it within a month, and it is the business of 
these depositories to find some use for it, generally in the form 
of loans. 
Sooner or later the money may (or may not) find bor¬ 
rowers who put it to use in increased purchases or invest¬ 
ments. Demand for goods now increases. It is followed by 
increased production and by a rise of prices. All things 
look well; business is active, manufacturers find it difficult 
to fill orders, and labor is well employed. Profits seem 
large, credit is easy, and people are pleased with their ap¬ 
parent prosperity. This is the rising side of the wave. It 
would be a great and general benefit if this were all real and 
permanent. Increased production and consumption mean 
a general improvement in the material well-being of a people 
and a higher and better scale of living; but this kind of 
wave has a descending as well as an ascending side, and the 
crest is followed by a trough. A mere increase of money 
suddenly forced into circulation carries with it at the start 
no corresponding increase in the other valuable things which 
constitute the wealth of a nation. It has merely increased the 
nominal lending capacity without increasing the borrowing 
capacity, and the nominal power of exchanging valuables 
without increasing the valuables to be exchanged. Thus 
debts have been increased without any corresponding in¬ 
crease of real assets out of which they must ultimately be paid. 
