No. 2]
EDISON-FORD
COMMODITY MONEY
73
are fixed by Wall Street, or the Gold Barons, or the Republican Party, or the Federal Reserve Board, or anyone else against whom we happen to have a prejudice. As a matter of fact, the price of money depends mainly on the relation between the total amount offered and the total demand of responsible borrowers. In other words, the rate of interest, like the market price of rubber tires, is determined by the forces of supply and demand. When, as in I919, prices and wages are rising, and there is a general eagerness to buy goods, enlarge business operations and start new enterprises, there are unusually heavy demands for money on the part of borrowers. Interest rates go up. But when, as in 192I, prices and wages are falling, old loans are paid up and the demand for new loans falls off, interest rates go down. In short, they depend on the demand for loans in relation to the available supply. "The available supply! " That is exactly the trouble, according to the inflationist arguments. Says Mr. Ford: " The supply is inadequate. There is more wealth than there is money to move it." In his weekly paper, he draws a vivid picture of "the golden dam to the stream of prosperity." From a hundred quarters comes the demand for the Government to speed up the printing presses, in order to crush " the money monopoly," reduce interest rates, and make it easier for everybody to get money. Inflating the currency, however, though it enables people to get more units of currency, does not enable them to obtain more purchasing power, and it does not reduce interest rates. In all her history Germany never had so much money or as high interest rates as in 1922. In the United States, during the industrial activity immediately following the World War, interest rates went up while the volume of money increased. Then, after the break in prices, as the volume of money contracted, interest rates went down. Money, unlike other forms of wealth, is not easier to obtain simply because the total supply is increased. On the contrary, increasing the supply of money ordinarily increases the demand for money, and interest rates depend not on supply but on the relation between supply and demand. No plan is just which really provides free loans to any group of workers at the expense of their co6perating fellow workers in other fields. We are assured, however, that the [203]