Fort Worth gazette. [volume] (Fort Worth, Tex.) 1891-1898, 1891-07-05

to details. If details could have been
avoided. mankind would long ago have nav
igated the air
The world is full of beautiful projects
which crumble when you attempt TO put
them into practice. Essential details can
never be ignored.
Among the products named in the sub
treasury bill, cotton is the one most univer-
sally planted in Texas, and hence cotton
will be taken by me as the basis for illus
tration. The great central idea Of the sub
treasury is TO hold the cotton. Suppose the
farmer is in a position 10 mold his cotton,
and puts it in the sub-treasury for that pur-
pose. He certainly saves nothing IN ware
house charges, because it will cost just as
much for insurance, weighing and storage
IN government warehouse as II does now
at welgher's yard.
Does it help him in the item of INTEREST,"
Clearly not; for no farmer would be guilty
q the folly of drawing 50 per cent OF the
value, OF his own cotton and paying interest
on 1t, Wien he could sell the cotton and use
the 50 per ceuy without paying any interest
at all.
1.-THE sub-treasury advocate will say that
the expected benefit viii not come from
low warehouse charges or rIv interest
alone, but it will come from the increased
price OF the cotton to be gained BY holding
In other words, that the cotton Is lower in
the fall and winter than in the spring, and
II the farmer was able to hold he would al
ways get a better price. II cotton always
advanced later in the season this would be
sound tnanciering, but the experience OF
the very season just passed demonstrates
that there is no certainty in such calcula-
tions.
If farmer had put cotton in warehouse
in October last and held it there until now,
the cotton would not sell for the 50 per cent
which he drew on it. Statistics show that
during some years cotton is higher in the
early part of the season, and in other
years higher in the latter part OF the sea
son, aud the chances one way or the other
are entirely too predetermined 10 warrant
the founding of an expensive and untried
system upon them.
Indeed, the most successful farmers of
my acquaintance tell me that they have
watched the market for years, and found it
to be the best to sell cotton as soon as il IS
ready and take no chances on a rise of
price.
When the sub-treasury advocate finds
that these propositions press him too closely
he usually takes refuge in the argument
that though all tins may now be so, 1t will
not be that way under the conditions which
the Sub-treaSury will create.
The argument is stated as follows IN the
sub-treasury newspaper, the Nation Econ
omist: Whenever the crop harvesting
season produced u sufficient scarcity OF
money to depreSs general prices and there
by increase the purchasing power of the
dollar, cotton quoted on gold basis at 10
cents, could only be exchanged for cash at
9 cents on account of local scarcity of
money, but it would 90 into the sub-treas-
Ury at 10 cents and be attended with ali ad-
vance of cents, and every bale that went
in would increase the local supply OF money
and thereby decrease its purchasing power.
Now suppose that large amount deposited
in one day should augment the local supply
of money so as TO decrease its purchasing
power 10 per cent, the result would be
next day that cotton quoted at 10 cents is
selling for spot cash under the local condi-
lions at II cents, and those who deposited
in the warehouses only get cents adj
vanced. 1t is then manifestiy to the inter
est Of those having cotton to market to sell
il and not deposit, and enough VIII imm6-
diately come out OF the warehouse and sell
to reduce the volume of money, so that its
purchasing power shall exactly correspond
with gold
Now put this reasoning to the test OF
analysis. Who is it that finally pays Tor
our cotton? Undoubtedly the manufacturer
in England and America. The farmer sells
to the merchant, the merchant to the spin
ner, buyer or cotton broker. and the cotton
broker to tho manufacturer. Now clearly
the merchant would not be foolish enough
to pay the farmer more cash than the cot
ton broker would pay the meCchant-and
the cotton broker, Ill turn, would De sane
enough not to pay more than he could get
from the manufacturer. Remember the
merchant is looking at the drift Of things as
well as the farmer.
When the cotton runs up to II cents the
merchant knows that the local money sup
My is augmented" He can see far enough
ahead to comprehend that the II cent price
will stimulate Withdrawals from the ware
houses" and cheaper the cotton by con-
tracing the local supply Of money. lie
knows that if he buys to-day at 1i-cGnts,
tomorrow he can sell for only 10 cents.
His only chance TO come out even would be
to sell quickly TO somebody else. But as
everybody else sees the consequences as
plainly as tie merchant, he is not able 10
dispose of the cotton at the high price.
The result is he does not buy The cotton
from the farmer at IL cents-the cotton
don rise to II cents-and the whole plan
tumbles to nothing. The error in the
theory consists in q mistake OF fact. Sub
treasury advocates talk about the increase
of prices produced by an abundance of
money. This may or may not be true in
any given case. A permanent abundant
circulating medium increases prices, but an
abundant money supply which is subject to
sudden and speedy contraction does not in
crease prices. Bear in mind it is not the
money in a country, but the money in Cir
culation, V hich helps prices. When con-
traction is certain, money is boarded; men
know that The value Of their money viii
rise and instead of investing it they hold it.
So, if we could imagine the Csc men-
toned when the cotton rose to IL cents, the
buyer would not take S605 in money anu
Spend it for eleven bales Of cotton at IL
cents per pound, but he would hold his
money u few days until the cotton ran
down to 10 cents, and then he could buy
twelve bales with the same money and
have 50 left over.
The only result OF the suD-treaSury would
be that every body would calculate for the
expected contraction; the price OF cotton
would be scaled by the buyers so as to
guard against its probable effects, and
there would be general timidity In bust
ness operations which would amount al
most to paralysis.
What the farmers of the country need is
not "sub-treasury" to enable them to
raise money upon a cash product like cot
ton, but some sort of credit currency which
Will be more abundant ana helpful at the
season OF the year when they have no
salabe products on hand.
There are many other sound objections to
the sub-treasury. The initiatory step
under the law would be the donation by the
farmers of ground on which to build the
warehouses. \ convenient situation for
this purpose would in many cities cost
thousands of dollars.
It is reasonably clear that the section pro-
viding for the election of the managers of
the warehouses by the voters of each
county would fail to the ground under
IF. no constitution and