This section is from the "The Science Of Wealth" book, by Amasa Walker.
Unfavorable as the influence of mixed currency is upon all branches of industry, the agriculture of the United States is especially injured by it, because, as a people, we have a large surplus of agricultural products, that must find sale in foreign markets. Whatever such surplus is worth for export, determines the price of the whole crop; and the value or price is determined by the value or price of gold. Such products are virtually sold for gold. It is always a matter of choice with the merchant whether to send wheat,* for example, or gold, as a remittance. The produce of the farmer, then, must be sold at a gold standard; but all he purchases for himself and family is bought at currency prices. How much difference this may make is seen at the present time, when commodities in general are one hundred and twenty per cent above par, while gold is but forty.
The currency is now (1865) a credit, or inconvertible one; but we are to inquire whether the principle does not hold good at all times, under a mixed or partially convertible currency. We therefore refer to the statistical tables of the Financial Report of 1863, as heretofore, for prices, and construct a table which exhibits the price of flour and the price of cotton for fourteen years prior to 1860. We also give the general prices of certain commodities, as shown in our Table V., previously given (see page 178,) and also the volume of the currency, per capita, at corresponding dates: —
*Wheat may be taken as an exponent of all agricultural products exported.
Table IX., showing the Price of Flour and Cotton from 1846 to 1859, inclusive (14 Years), with the Currency per Capita, and General Prices at corrresponding Dates.
The foregoing table shows conclusively, that, while general prices conform remarkably to the existing quantity of currency, flour and cotton do not rise and fall with its fluctuations. Flour, for example, in 1846, with a currency of 9.94, was at $5.06; while in 1851, when the currency had risen to 11.86, an advance of twenty per cent, flour was at $4.50, a decline of ten per cent. Cotton was at 12 cents, under a currency of 10.39, in 1850, and but 9 cents, under a currency of 14.95, in 1854. But we need not point to these facts; they are quite apparent throughout the whole table, and show beyond cavil that the prices of agricultural products in the United States are not governed by its mixed currency, as other products are which the agriculturist must purchase for consumption. Hence he is always a sufferer, as compared with the manufacturer and all other classes whose productions are not exported; for the commodities of the latter, while they are advanced in cost by currency inflation, are also, unless they come especially into competition with foreign products, correspondingly enhanced in price in the home market.
Ordinarily, this operation of a mixed currency is not apparent to superficial observers; but the effects are, nevertheless, always as certain as at the present time, when they are seen by every one.
At the time we are writing, the people of the West are suffering prodigiously from the influence of a redundant currency. All they consume of purchased commodities they pay one hundred and twenty per cent advance upon; while their products, wheat, corn, &c., can only be advanced about forty per cent,—the premium on gold. They feel distressed, and clamor against the tariff, as they have much reason to do; but they suffer a loss of ten dollars from the currency, to one from the tariff. Whenever they see this, the evil will be remedied; for the agriculturists of the nation hold the political power of the country in their hands, and all this class of producers, East or West, North or South, in Maine or Texas, Florida or Minnesota, are alike interested in this matter.
Again, agriculture is more disturbed by speculative operations than other branches of industry. Its products are great staples, the necessaries of life. They are not subject to quick decay; hence can be monopolized and held for a rise of prices. The sudden and excessive expansions of a mixed currency afford great opportunities for operations of this sort; and no products, probably, are so much speculated upon as those of the farmer and planter. The profit of all this goes to those who can command the resources of the banks. The producers are far more injured than benefited by these unnatural disturbances of the market.