Fort Worth gazette. [volume] (Fort Worth, Tex.) 1891-1898, 1891-09-10
A DELUSION.
SuB-TREASURY CHEAP MONEY
PLAN.
The Most Extreme Form of Paternalism
Ever Proposed In This Country-How
the Scheme Would Work.
Century Magazine, September.

/ AIILlnCe Is IN many respects the nOSl SA-
IRENE form in which the cheap money de-
| fusion in this country has manifested itself.
| 1t is so extreme. in fact, that many of the
| Alliance leaders have refused from the out
| set 10 give II their approval, and others OF
! them VINO at first viewed it with favor,
| after examination and discussion of its pro-
| visions, have withdrawn their approval. At
| first it made great Roadway in the South,
| but earnest, Intelligent and courageous eX-
| posture of its dangerous fallacies by leading
| politicians and newspapers has so Tar edU-
, Gated the people upon the economic prlncl-
| pies involved that it has been losing ground
| percepubly during the past three months.
| = verltable campaign OF education has been
| in progress in several Southern states,
| with this scheme as the text of public dis
| cussion, and the beneficial results afford q
| striking illustration Of the high patriotic
service of courage and conviction in politics
| and journalism.
| The sub-treasury scheme made its appear
| ance in the last congress, when bill en-
| bOdying its principles was introduced in
| both houses, having been prepared by the
| national Legislative committee OF the Farm
ers' Alliance. Briefly summed up, it pro-
| vided for the appropriation by the govern
| ment of $4,000, coo to be used for the cree
| ton of warehouses in various parts OF the
| country for the storage OF cotton, wheat,
| oats, corn and tobacco. Every county which
| exceeding 100000 in gross value was TO be
| entitled to a warehouse. A petition was to
| be sent to the secretary of the treasury ask
| ing for its eStablishm mt accompanied by
| the title of a suitable site to he given to the
| government. The secretary OF the treasury
! was to appoint q manager who should give
| bonds for the faithful performance OF his
| duties, and should receive a salary of not
| less than SlOG0 and of not more than $500,
proportionate to the business done. ANY
owner of cotton, wheat, corn, oats, or to-
bacco might take his crop 10 the nearest
warehouse, deposit it, and receive in return
so per cent of its market value in trea-
sury notes, the manager deciding what that
market value should be. These treasury
notes were to be specially issued for this
purpose by the secretary, no note to be less
than 81 nor more than s 800, to be legal ten
der for all public and private debts, and good
as part of the lawful reserve of national
banks. The manager WAS to give a receipt
for every deposit OF produce, showing its
amount, grade or quality, value at date Of
deposit, and amount advanced upon it, with
rate of interest per cent per annuIn, and
with insurance, weighing, wurehOusing,
CHASING and other charges deducted These
receipts were TO be negotiable by in2OrSc-
ment Produce deposited might be re-
deemed at any time by return of the re-
ceipt and money advanced Oh interest, AMI
the payment OF all warehousing charges.
The money returned was TO be destroyed by
the secretary of the treasury. II there
were no redemption OF a deposit Wirrrn
twelve months, sale was to be ordered Tor
the reimbursement OF the government.
Let us see how this would work in pr1c
tice The warehouse managers, who are to
decide npon the market price Of the pro-
duce, would, in nearly all instances, be APP
pointed through political influence, which
is tantamount to saying that they would
have little expert knowledge of the duties
they were to perform. These men would
have absolute power to decide upon the
sums of which the government was to adj
vance so per cent. There are, for example,
eleven fLll grades of cotton and about as
many half grades, and there are about
thirty grades of wheat. The manager must
decide not merely the grade, but the price
as it is fixed in the markets of the world at
the time. If he is an honest man and fairly
capable, the opportunity for serious blum
ders would be very great, If he is ads
honest or ignorant or prciudiced or mali
ciouS man, can any one estimate the evil
and injustice of which he might be capable2
lie could overrate the produce Of all his po-
litical and personal friends. and underrate
that of all his enemies or rivals, and there
would be no appeal from his decisions. The
impossibility of having just and uniform
basis for the so per cent advance in all the
warehouses; or even in one of them would
from the outset throw fatal doubt upon the
value both of the treasury notes and of the
certificates of deposit, giving them at once
deprecated and uncertain standard.
The farmers who are misled into favoring
the scheme think that they will receive at
once loan of 50 per cent of the full value
of their crop at only per cent interest, but
they would pay much more than that. The
warhousing, insurance and other expenses
for cotton, for example, are usually be-
- n e
would have to be paid to the government,
and would bring the interest up TO or 10
per cent. On wheat and other products
there would be similar expenses, which
would raise the interest on deposits of them
to nearly or quite the same limits. The
rate of interest, therefore, is not low
enough to be beneficial to farmers who hope
by this means to puy off existing debts at
legal rates of interest What a farmer
would receive would be loan for one year
from the government at the rate OF 9 or 10
per cent of sum amounting to four-ffths
of the total value of his crop, paid to him in
money Of uncertain value. For the re-
naming fifth he would receive q certificate
whose value would depend entirely upon
what he got for it in open market No
buyer would ever offer him the full price as
fixed by the warehouse manager, for there
would be too many uncertainties about the
crops redemption to make the certificates
safe Investment for anybody. They could
only be negotiated At heavy discount at
best, and in many instances would scarcely
be negotiable at all.
If warehouses were established, there
would be tendency among all farmers
seeking an immediate market to put their
produce into them. One of the advocates
of the scheme estimated before a committee
Of the senate that the deposits woulu be so
large as to require an addition of one thou
sand millions of dollars to the currency in
January and February of each year This
flood of currency, all Of which would be
based upon uncertain and varying bases of
valuation, would be accompanied by another
food of certificates of deposit The govern
ment would turn out these notes and certfi-
Gates, and their receivers would at once put
them into circulation. Their value would
depend entirely upon the popular estimate
which should be made of their purchasing
power. The fact that the notes had been
declared legal tender would not add par
ticle to their value. The people would
make their own estimate of the prospect for
the fulflment of the promise upon which
they Were based, and their estimate would
FIX their value.
What would be the prospect for this
promise to be fully keptl II prices went
down after the deposit, the produce would
be left there till the very end of the year
and sold for what it would bring. The eff
feet of throwing great mass Of produce
upon the market at one time would be to
lower still further the price, and the result
would be great loss to the government,
which must be made good by taxation. AS