Economic circulation

“ But if, on the other hand, growth in the supply of money does not keep pace with the economy's current production, then prices will fall, the nations's labor force, factories, and other production facilities will not be fully employed, or both. ”

“ The problem is to reduce the volume of money in circulation so as to correspond to a decreased supply of commodities at the same time as we increase the amount of employment and services called for from the Nation. ”

“ The spread of the money economy was due to the gradual integration of the economic system, the establishment of local markets where small land holders could sell their produce for money. Until this condition was present, it was impossible to offer money instead of labor in payment of the customary dues; as soon as this condition was present, the greater convenience of the use of money made the commutation of services inevitable. ”

“ It is also a well-known fact that it is the progress of civilization, in its various forms, which gradually diminishes the proportion of currency necessary for the transaction of trade, by the extension of railroads and telegraphs facilitating the rapidity of circulation, by further developments of the clearing-house system, and so on. So that as we progress we may rely upon it that a less volume of currency will be needed as compared with the business transactions going on. ”

“ The circulation of every country must be in proportion to the industry of the inhabitants producing the commodities which come to market.... If the coin of a country, therefore, falls below the proportion of the price of industry offered to sale, inventions, like symbolical money, will be fallen upon, to provide for an equivalent for it. ”

“ Industry, commerce, shipping, and banking concentrated in the narrow area of less than 200,000 square miles, earned yearly returns equal as a rule to the total of the capital invested. Money changed hands rapidly, credits did the work of capital, and the rapid growth of population added large unearned increments to the fortunes of those who owned land or had established themselves in trade. ”

“ Capital offered facilities for the planting of new industries, the development of trade, and the opening up of mines and other natural advantages; so that the means lay at hand for promoting material progress of every kind. Hence new questions of economic policy came to the front. The efforts of traders were no longer confined to retaining exclusive commercial rights; but they began to consider how the various resources within a given area might be developed, so that by the interaction of different interests the greatest material prosperity might be attained in the community as a whole. ”

“ Trade had developed under the new rule, and had expanded with improved means of communication. Capital had begun to accumulate, and the moneyed classes were in favour of a government that would support public credit and refrain from extortion. The mass of the people were contented, prices being cheap, wages on the rise and employment brisk. ”

“ If every commodity on an average remained unsold for a length of time equal to that required for its production, it is obvious that, at any one time, no more than half the productive capital of the country would be really performing the functions of capital. ”

“ Since increase in trade tends to decrease the general level of prices, anything which tends to increase trade likewise tends to decrease the general level of prices. We conclude, therefore, that among the causes tending to decrease prices are increasing geographical or personal specialization, improved productive technique, and the accumulation of capital. ”

“ We propose to show what Labour can effect, and how it is to be encouraged and economized and rewarded: to treat of Capital, its nature and operation, and the proportions of its increase; and to exhibit the union of these two mighty agents of Production. Under the second head, Distribution, occur the great questions of Rent, Profits, Wages, and Population, the various modes of Interchange at home and abroad, including the consideration of all Monopolies, domestic and foreign. Under the third head, Consumption, are considered the modes of Demand and Supply, and of Taxation. ”

“ If the additional demand could continue to be supplied from the superior lands, by applying additional labour and capital, at no greater proportional cost than that at which they yield the quantity first demanded of them, the owners or farmers of those lands could undersell all others, and engross the whole market. ”

“ In the case of an altogether declining trade, in which it is necessary that the production should be, not occasionally varied, but greatly and permanently diminished, or perhaps stopped altogether, the process of extricating the capital is, no doubt, tardy and difficult, and almost always attended with considerable loss; much of the capital fixed in machinery, buildings, permanent works, &c. ”

“ The labourer may obtain greater comforts; wages in kind real wages may rise. Or the progress of population may force down cultivation to inferior soils, and more costly processes; thus raising the cost of production, the value, and the price, of the chief articles of the labourer's consumption. On either of these suppositions, the rate of profit will fall. ”

“ V.15 We see, then, that prices will tend to fall through increase in trade, which may in turn be brought about by improved transportation, by increased freedom of trade, by improved monetary and banking systems, and by business confidence. ”

“ In a word, domestic circulation should be clogged, and foreign circulation accelerated. When foreign trade again comes to a stop, then the former plan may be taken up a-new, and domestic circulation accelerated and facilitated, in proportion as the produce of industry and taste of superfluity require it.
III. A statesman ought carefully to distinguish between those branches of circulation which operate a vibration in the balance of wealth, and those 385which do not, in order to regulate the taxes which he may think proper to lay upon his people. ”

“ Capital is increasing faster than labor, and consumption is growing relatively more luxurious; dwellings, furnishings, equipage, clothing, and food are improving in quality more than they are increasing in quantity. Goods of high cost are predominating more and more, and the subgroups that produce them are getting larger shares of both labor and capital. Population drifts locally toward centers of manufacturing and commerce. ”

“ Because for a long period before the crash our production had been outrunning our consumption. The workers were producing more than they could buy with the wages they received. Our predicament is primarily due to the inequitable distribution of the earnings of industry as between capital and labor. ”

“ As a consequence we everywhere find large additions to the population of our commercial cities, an increase in the number and cost of the buildings devoted to banking, brokerage, insurance, commission business, and agencies of all kinds, the spirit of trading and speculating pervading the whole community, as distinguished from the spirit of production. ”

“ The inevitable result was to check production, and this check to production propagated itself in a cessation of demand, which checked production to the furthest verge of the wide circle of exchanges, operating with accumulated force in the centers of the great industrial commonwealth into which commerce links the civilized world. ”

“ In England the great emigration of capital, and the almost periodical occurrence of commercial crises through the speculations occasioned by the habitually low rate of profit, are indications that profit has attained the practical, though not the ultimate minimum, and that all the savings which take place (beyond what improvements, tending to the cheapening of necessaries, make room for) are either sent abroad for investment, or periodically swept away. ”

“ When the progress of accumulation has reduced profits either to the ultimate or to the practical minimum,—to the rate, less than which would either put a stop to the increase of capital, or send the whole of the new accumulations abroad ”

“ Has the progress of wealth and industry no effect in regard to cost of production, but to diminish it? Are no causes of an opposite character brought into operation by the same progress, sufficient in some cases not only to neutralize, but to overcome the former, and convert the descending movement of cost of production into an ascending movement? ”

“ He will also without difficulty understand that the more limited the market is, the more easily will it be glutted, and the more subject will industry be to periodical stagnation; and that, on the other hand, the wider the market is for the products of labor, the more constant will be its employment. ”

“ Production had been overdone by most of the employers using their best efforts to keep their hands at work in the face of a falling market, or no market at all. Shelves were packed with goods everywhere. We were on the eve of a great change, and it would be some time before values would become stable again. If the balance of trade (high-sounding, but imperfectly understood term) could once more turn in our favor; if we could export our surplus goods, and find new markets,—as no doubt we would,—every shop and factory would soon be ringing with the cheerful sound of labor. ”

“ The development of industrial production has had the result of an increase in the volume of commercial transactions. These continue to look after themselves and, for the most part, they are on a cash basis. ”

“ Saving up and borrowing were both more practicable. More capital was now in existence and more persons could obtain the use of it. As a result, manufacturing, trade, and even agriculture could now be conducted on a more extensive scale, changes could be introduced, and production was apt to be profitable, as prices were increasing and returns would be greater even than those calculated upon. ”

“ The moment a branch of national industry has completely conquered the home market, that moment exportation becomes a necessity to it, Under capitalist conditions, an industry either expands or wanes. A trade cannot remain stationary ”

“ Wages and interest rise and fall together. Labor moves for higher wages where capital flows for higher interest. Wages are high in new countries where capital is scarce, and low in old ones where it is abundant. This fact is generally noted by economists, but it is explained by them as due to the relatively greater production of wealth in new than in old countries. ”

“ Rates of pay, prices, hours of labour, qualities, and kinds of output were all fixed by custom and tradition which often received the sanction of the law of the land. Gradually the market grew and demand became less easy to gauge. ”

“ The circulating medium existing in a country at a given time, is partly employed in purchases for productive, and partly for unproductive consumption. According as a larger proportion of it is employed in the one way or in the other, the real capital of the country is greater or less. ”

“ The production of all these has met the demand, and we have realized fair prices.
And, as a natural consequence, there has been no stagnation nor depression in our trade. Our farmers and small town and village mechanics, and our small retail stores, have had all the necessaries of life in abundance, and not a few of the comforts. Mortgages have been lifted, improvements have been made, surplus cash is in all our savings-banks at four per cent, or less interest to the depositors. Our trade centres, doing the honest business of first-hand traffic, are prospering. ”

“ Increased activity in industry, with its welcome attendant—a larger employment for labor at higher wages—gives to the body of the people a larger power to absorb the circulating medium. It is further true that year by year, with larger areas of land under cultivation, the increasing volume of agricultural products, cotton, corn, and wheat, calls for a larger volume of money supply. ”

“ When the capital accumulated is so great and the rate of annual accumulation so rapid, that the country is only kept from attaining the stationary state by the emigration of capital, or by continual improvements in production ”

“ If the quantity of labour realized in commodities, regulate their exchangeable value, every increase of the quantity of labour must augment the value of that commodity on which it is exercised, as every diminution must lower it. ”

“ As the price or exchangeable value of every particular commodity, taken separately, resolves itself into some one or other, or all of those three parts; so that of all the commodities which compose the whole annual produce of the labour of every country, taken complexly, must resolve itself into the same three parts, and be parcelled out among different inhabitants of the country, either as the wages of their labour, the profits of their stock, or the rent of their land. ”

“ With the emergence of modern industry, and its production of large amounts of surplus commodities, important industrial groups like Britain and Germany which depended for their prosperity on their ability to find foreign markets for their surplus commodities, have been driven to a fierce struggle for these markets. ”

“ If the working CLASS is able to force up wages two dollars a week for every man and woman, will they spend the increase on automobiles, trips to Europe, or upon more and better clothing and food?
What happens when there is a sudden increased demand for a commodity? ”