The Abbeville press and banner. [volume] (Abbeville, S.C.) 1869-1924, 1894-11-21
WHY COTTON IS LOW.
ASEcOND ARTICLE FROM LAWRENCE
YOUMANS.

YER, He Thinks, Is One Remedy for the
Trouble.
To the Editor of the State: In my
previous article l conclusively demon
strated that the great decline III the
price of cotton in 1919 was not due to
over-production, but to financial
changes which resulted in an enor,
nous contraction of the circulating
medium and effected the price of all
other commodities in the same ratio.
I also demonstrated that the rise in
price, from 1926 to 1886, was not at
all due to diminished production, as
the rapid advance took place in the
face, as Professor Sumner says, "of
increasing production, both here and
in India" but was the result of large
additions to the money volume both
here and in England. The heavy de-
cline which began in 1887 and ended
in 1S4S-prices falling from an aver,
age, in 1885. of II 1-2 cents to 1-2
cents in 1S4S, was not due to overpro-
duction, but to repetition of those
causes, which produced the decline
from 1919 to 1S26-financial changes
which wrought great contraction in
the volume of money. In 1929, Pres
ident Jackson began his war on the
United States Bank and, defeating
every attempt to renew its charter,
terminated it by the downfall of the
bank in 1886, when its charter expired.
In discussing his veto of the bill to re-
new this charter in 1882, the following
predictions were made:
Senator Clayton of Delaware, said,
in speech delivered July II, 1882:
"In less than four years the pecuniary
distress, the commercial embarrass-
ments consequent upon the destruc-
ton of the United States Bank must
exceed anything which has ever been
known in our history bankrupt
cies and ruin, at the anticipation of
which the heart sickens-must follow
in the long train of evils which are
assuredly before u.s."
Daniel Webster said: Works, vol.
3, page 49, II hesitate not to say
that as this veto travels to the West, it
will depreciate the value of every
mans property from, the, Atlantic
States to the capital of Missouri, its
effects will be felt in the price of lands,
the great and leading article of West
ern property; in the price of crops, in
the products of labor, in the repres-
sion of enterprise, and in embarrass-
ment to any kinds of business and
occupation"
In anticipation of a vacuum resulting
from the downfall of the United States
Bank, the local banks had been en-
couraged by the President to enlarge
their issues these notes. of questiona-
BILE validity, beginning to accumulate
in the government Treasury, whittier
they had found their way, in purchase
of the public lands, the President in
structed the Secretary of the Treasury
to issue the we'll known "specie circu-
lar" requiring all payment for public
lands to be made in the precious met
ais. This circular, reviving the de-
mand for gold and silver, destroyed
most of the banks which had not gov
ernment deposits at demand. The
subsequent demand for these deposits
in 1887, for distribution among the
States, as provided for by the act of
1886, completed the ruin of the pet
banks" The sudden calling in of
these deposits, which had been treat
ed by the banks as capital to be loan
ed, began the panic of 1887, which
fully verified the predictions of Sena-
tors Clayton and Webster.
In these pressing straits, the banks
and business firms of America drew at
long time, on their houses of credit in
Europe, and, failing to meet these OBJ
legations, fell, and as they succumbed,
pulled down with them nearly every
foreign house that dealt with the Uni
ted States. So great was the run upon
the Bank of England that it had to
sustain itself by loans effected with
some difficulty from the Bank of
France.
The situation was thus pictured by
Doubleday, in his Financial History
of England" pages 322, 1923: "a scene
of bankruptcy ensued that beggars all
descriptions y A panic took place
in England, in the course of which
nearly all the houses engaged in the
United States trade were swept away
Immense bales of American
paper securities. State stocks, canal
stocks, bank shares, railroad shares,
etc., were sent to Europe, pledged for
what they would bring, and the pro-
ceeds remitted in gold and silver across
the Atlantic to prop the tottering pa
per issuing establishments of the va
rious States Such at least was
the condition of the Golfers of the
Bank of England that she was re-
duced to beg the assistance from the
Bank of France; and the indirect aid
of that establishment alone saved her
from ruin"
Alison, in dealing with the same
crisis in his history of Europe, vol. 3,
2nd series, pages 314, 315 and 316 says: ::
Terror and distrust universally pre-
vailed; the machine of society, like
a huge mill turned by water, which
was suddenly frozen, came to a stand
~ "A universal run took place upon
the banks, which being in a great de-
gree unprovided with cash, in conse-
quence of its having been drained
away to the banks IN the West, were
unable to meet the demand for specie
Deprived of the wonted resource
of discounted bills to meet their en-
gagements, the greatest, as well as the
smallest houses, in all the commercial
cities became bankrupt. Two hun
dred and fifty houses in New York
stopped payment in the first three
weeks of April; and in Boston, Phila-
do1nhia Ra1timore and the other cities