It altered only the division of these commodities and

services among the various classes that shared in them.

Those persons whose money incomes had not advanced pari

passu with prices received a less proportion than before,

and those whose money incomes had increased more rapidly

than prices commanded a larger proportion. But it was the

former distribution of wealth that was the outcome of the

138 History of the greenbacks

existing economic conditions. The change in the distribu-

tion, caused by depreciation of the standard of values, was

from the standpoint of the situation before suspension an

artificial disturbance. Under the operation of free competi-

tion, a readjustment of the nominal amounts of money pay-

ments the mechanism by which real income is distributed

was therefore to be expected, in the direction of restoring

the relative distribution of wealth between different classes

prevailing before the disturbance had occurred.

A further consequence of depreciation, therefore, was to

start a readjustment of money incomes, whether derived from

rents, interest, or wages. But this process of readjusting the

whole system of money payments so as to restore real incomes

was certain to encounter serious obstacles.

1. At any given time business men are bound to a con-

siderable extent by legal contracts calling for the payment

or receipt of specified sums for specified goods or services.

They are under engagement to pay set amounts for rent

and interest ; they owe others and others owe them accounts

payable in legal money ; they have agreed to buy materials

at fixed prices, or to supply others with their own products;

they have borrowed and lent money; when due the loans

are to be paid in the standard currency ; they have contracted

with others to give or receive their services at certain

salaries, etc. Whether the purchasing power of dollars

rises or falls, such contracts are fulfilled by the payment of

the specified number of dollars. Until the termination of

the contracts there is no alteration in the nominal amount

of the money to be paid. In this way the scale of money

payments existing before depreciation is legally petrified

and enforced for a while in the new situation where the same

sum of money means less economic satisfactions.

2. Rapid readjustment is further hindered by the fact

that the nominal amount of many money payments is a con-

ventional sum, not subject as a rule to bargaining between

PRELIMINARY SKETCH 139

the parties. The fee of the bootblack, the barber, the notary,

the physician ; the price of a newspaper, a cigar, a ride in

the street-car, in some places the monthly wage of a farm

hand these and many other payments are not easily changed

in amount.

3. Even where legal contracts are not in the way, and the

prices paid are mostly the subject of bargaining, the change

in the amount of payments produces friction. The complex

system of money payments, by which the distribution of

wealth is effected, is an organic whole, and a change in one

part encounters serious opposition unless all the other parts

are similarly altered. A change in the scale of money pay-

ments that affects all simultaneously and in the same propor-

tion would proceed smoothly and work hardship to no one.

But changes do not occur in this manner. They always start

somewhere, and extend spasmodically over the rest of the

field. Persons whose products or services do not at once

rise in price, oppose, so far as they can, changes which