Purchase money

“ IV.6 It must be borne in mind that although business loans are made in the form of money, yet whenever a man borrows money, he does not do this in order to hoard the money, but to purchase goods with it. To all intents and purposes, therefore, when A borrows one hundred dollars from B in order to purchase, say, one hundred units of a given commodity at one dollar per unit, it may be said that B is virtually lending A one hundred units of that commodity. ”

“ But purchasing with ready money really gives you more money to purchase with; you can afford to have a greater quantity and variety of enjoyments. In the town, it will tend to hasten your pace along the streets, for the temptation at the windows is answered in a moment by clapping your hand upon your pocket; and the question; 'Do I really want it?' is sure to recur immediately; because the touch of the money will put the thought into your mind. ”

“ The people in his vicinity, in turn, purchase his goods on similar conditions, with this difference, that they often substitute for cash agricultural and other productions, which the merchant, at length, turns into ready money. ”

“ The value of money is in proportion to the quantity of the necessaries of life which it will purchase. ”

“ All these purchases have exactly the same effect on price, as if they were made with ready money. The amount of purchasing power which a person can exercise is composed of all the money in his possession or due to him, and of all his credit. ”

“ Money travels rapidly from hand to hand, from one pocketbook to another, from bank to bank, to borrower or drawer, in constant circulation.
"Has any one of your economists calculated how many times an active one-dollar multiplies itself in a year from the time it is first issued from the Treasury? How much does it earn in interest, compound interest, commissions, bonuses, dividends, and profit gain from constantly being shifted from person to person, bank to bank, and loan to loan? ”

“ It is for this reason they are made to bear interest: and there can be no doubt, that every man will prefer a species of money which answers all the purposes of a currency, and even, when lying idle, brings in a profit to the possessor. The same consideration will prevent the lenders recalling the old paper, at the quarterly payments; because they hold a more valuable property instead of it. ”

“ If he knows what he buys, and how to put it off, he buys a thousand pounds' worth of goods at once, sells them for less time than he buys at, and pays them with their own money. I might swell this discourse to a volume by itself, to set out the particular profit that such a man may make of his credit, and how he can raise what sums he will, by buying goods, and by ordering the people whom he is to pay in the country, to draw bills on him. ”

“ Seasonal calls on an inelastic money supply for actual cash to move crops and pay agricultural wages may make a real difference in the value of money; scarcity of money of the right denominations for retail trade may give an agio to such money, [550] but the money and credit used by specula [Pg 523] tors, bill brokers, dealers in foreign exchange, investment bankers, etc., increases, rather than decreases, the funds available for ordinary industry and commerce. ”

“ If you had no cash to spare, that did not matter. Your credit was good, and your note, as an acknowledgment of the purchase, and a formulary of trade [Pg 31] all that was wanted. To give a note of ten thousand dollars, to-day, for a piece of property that there was a fair chance of selling, in a fortnight, for twenty thousand, was, certainly, a temptation. Of course you had to sell, if you did sell, as you bought, for paper, not for cash. But that was nothing. Every body was getting rich, and, therefore, everybody was safe. ”

“ With one currency fit for paying bonds, customs duties, and foreign payments, and another not so fit, and therefore, of course, at a discount, we have a condition of affairs that is profitable to "money-sharks" and brokers alone. ”

“ Had we, as a nation, collected even fifty years ago—speaking of the transactions as a money speculation, in which view, according to the taste of the day, we must look at every thing—our purchases would now have been worth treble the first cost in money. ”

“ And this is not a question of any difficulty, when the illusion is dispelled, which caused money to be looked upon as a peculiar thing, not governed by the same laws as other things. Money is a commodity, and its value is determined like that of other commodities, temporarily by demand and supply, permanently and on the average by cost of production. ”

“ In a money economy those who have cash use it to pay their bills or settle their accounts.
Those who buy on credit pay interest to money lenders. The money lenders, later the bankers, make their profits by helping others to spend beyond their own means. ”

“ The Sources of Currency Supply.—It is, then, clear that the larger part of the circulating medium of society is not money; that not all of the money that there is is bullion money; and that not even all of the bullion money need be ultimate money—redemption money of the highest rank. The sources of currency in society are various—some of it bullion, with a cost of production limit upon its supply, some of it government paper, substantially free of cost, some of it banking credit with certain peculiar and appropriate costs attending its issue. ”

“ A widow, or a trustee, or other long-time investor, would prefer to buy bonds which guaranteed a regular yearly purchasing power over subsistence, rather than those which merely promised a given sum of money of uncertain value. ”

“ When buying by the pound, see that you get full weight; when buying by the yard or peck, see that you get full measure. The principal thing in buying is to get all that you pay for. In selling, the principal thing is to give full value for the money that you receive. ”

“ Is he bound to stop payment at the end of that partial experiment, and treat the problem as one therein solved? No. He may double his business and losses, and still keep right, in a familiar sense of that nice phrase. If he should trade to the extent of 2000l., and lose 1000l. upon it, he will be able to pay off the first credits out of the net proceeds of his second series of operations; and all the people who get their money—noticing, also, the activity of his business—will sound his praises as “a rising merchant,” “an upright man,” “a punctual tradesman.” ”

“ I think that bankers, brokers, and other business men who are interested in the general problems of money, trade, speculation and credit, will find the book of use. Naturally, however, it is my hope that the special student of money and banking, and the special student of economic theory will find the book of interest. ”

“ A legitimate, useful, profitable use of money is to accommodate strangers who come with money that will not circulate in the country. The exchanger gives them current money; they pay a consideration for the convenience; and out of this comes the legitimate profit to be divided between lender and borrower. The rule which applies to one fruitful use of money will apply to a thousand, and, between wise lending and honest borrowing, swamp and forest become field and garden, and mountains wave with corn. ”

“ But we may affirm this much, that just as true paper money takes its rise in the function of money as the circulating medium, so money based upon credit takes root spontaneously in the function of money as the means of payment. ”

“ The lender might himself use the money to gratify his own desires. It is his money; he may use it, as he pleases, for his own gratification. Or he may himself employ it productively, and, at the end of the period, receive back his principal with the customary rate of profit. ”

“ He will most require this aid in the making of leases, deeds, agreements, and other legal instruments.
The balance of cash, which may often be considerable, ought not be allowed to lie idle in the house. All money is part of the vital blood of society, and should be kept in circulation. ”

“ IV.15 We next observe that the rise in prices—fall in the purchasing power of money—will accelerate the circulation of money. We all hasten to get rid of any commodity which, like ripe fruit, is spoiling on our hands.*46 Money is no exception ”

“ Bank bills, treasury notes, bills of exchange, and all kinds of commercial paper are only valuable as the representatives of money. The fact that they are expected to be converted into money gives them their [Pg 215] value in the market. Let it be understood that they cannot at some future day be collected in money, and their commercial value ceases. ”

“ Money, which is so commonly understood as the synonyme of wealth, is more especially the term in use to denote it when it is the subject of borrowing. When one person lends to another, as well as when he pays wages or rent to another, what he transfers is not the mere money, but a right to a certain value of the produce of the country, to be selected at pleasure ”

“ We should, of course, remember that many occupations which seem at first sight to be concerned simply with money-making have a significance which transcends this. The business of stockbroking, for instance, does not have money-making as its end-all and be-all. ”

“ Money, in one character, is an instrument of private exchange: in its other character, to mercantile men more familiar, it is an instrument of commercial exchange. In the one, it represents use value to the particular owner, more or less to him than it would be to some other owner: in the other, it represents market value, the same to all at the same time.
6. Leo X. in the Fifth Council of Lateran, 1515, ruled that—"usury is properly interpreted to be the attempt to draw profit and increment, without labour, without cost, and without risk, out of the use of a thing that does not fructify." ”

“ We look with new confidence to bank interest, or the still better interest of a vested loan, than to a return of profit from what is wholly given away.—Wardlaw.
Men take care how to use their money to the best advantage by sea, by buying land or cattle, or by usury, an easy trade ”

“ My Legacy The business man the acquirer vast, After assiduous years surveying results, preparing for departure, Devises houses and lands to his children, bequeaths stocks, goods, funds for a school or hospital, Leaves money to certain companions to buy tokens, souvenirs of gems and gold. ”

“ Again, if I were a lawyer, a doctor, farmer, bricklayer, engineer, musician, or painter, my services would be wealth because I can sell them or exchange them for money. Again, there is still another kind of wealth that may be described by the single word "rights," such as mortgages, bonds, stocks, bank notes, checks, drafts, bills of exchange, copyrights, patents, good will of a business, etc., all these various things are also wealth because they can be exchanged for money. They can all be bought and sold. ”

“ Although every buyer and seller who bids or offers a price for a particular commodity tacitly assumes a given purchasing power of the money bid or offered, he is usually as unconscious of so doing as the spectator of a picture is unconscious of the fact that he is using the background of the picture against which to measure the figures in the foreground. ”

“ It follows that money stands on the same footing with all other values,—that its use, therefore, is a marketable commodity, varying indefinitely in its fitting price, according as money is abundant or scarce, the loan for a long or a short period, and the borrower of more or less certain solvency. ”

“ You must understand that only a small part of our business is done by means of cash payments, whether in gold or silver or paper money. Close to 99% of our business is done by means of credit, and this introduces into the process a psychological factor. The business man expects certain profits, and he capitalizes these expectations. ”

“ The place in which to finance is the shop. It has never failed us, and once, when it was thought that we were hard up for money, it served rather conclusively to demonstrate how much better finance can be conducted from the inside than from the outside. ”

“ The fact that the borrower pays interest while the bank undertakes a noninterest-bearing obligation, or pays relatively low interest, explains in the main the gains attending the business of commercial banking. ”

“ The usual course of development is this: among an advancing people, the number of money transactions increases at first; later, when education has become general, and the people have grown habituated to the giving and receiving of credit, the circulation of money is accelerated, and an increase of the substitutes for money effected. ”

“ The last, accordingly, wound up their business, and, in the language of the day, “went on to the street,” and made their living by selling on time what they did not possess, and buying on time what they never expected to receive, and reckoning profit or loss according to the difference in prices growing [71] out of the fluctuations of the currency between the day of buying or selling, and the day of receiving or delivering. ”

“ Money in this shape, one would almost think, is of a different value from money in any other: the exchange it bears against cash in business, or cash in the prospect of him who knows he can win it, is prodigious. At the very lowest computation, a thousand pounds in the purse of a young lady is worth ten thousand in the stock of a man of trade. ”

“ Do you think he might get his meal cheaper by going to another shop and paying for it in cash?-He might, or he might take better care of his money, and manage to spin it out more.
7935. I suppose a merchant like yourself, if you were giving long credit in that way, would require little more profit on your goods?-Of course.
7936. But you can afford to sell cheaper because you are paid in cash?-Yes; and I think it would be better for the public in general if all payments were made in cash.
7937. Do you employ some men in your curing business?-No; I just do it with my own family. ”