North Carolina Newspapers

3 . 1 THE INDUSTRIAL AND EDUCATIONAL INTERESTS OF OUR PEOPLE PARAMOUNT TO ALL OTHER CONSIDERATIONS OF STATE POLICY. Vol. 5. RALEIGH, N. O., SEPTEMBER 30, 1890. No. 31 THE NATIONAL FARMERS' AL LIANCE AND INDUSTRIAL UNION. President L. L. Polk, North Carolina, address, 511 9th St., N. W.f Washington, D 0 Vice-President B. H. Clover, Cain bridge, Kansas. t Secretary J. H. Turner, Georgia. Ad dress, 511 9th St., N. W., Washington, D. C. . Treasurer W. H. Hickman, Puxico, Missouri. Lecturer Ben Terrell, Texas. EXECUTIVE BOARD. 0. W. Macune, Washington, D. C. Alonzo Wardall, Huron, South Dakota. J. F. Tillman, Palmetto, Tennessee. JUDICIARY. R. C. Patty, Macon, Mississippi. Isaac McCracken, Ozone, Arkansas?. Evan Jones, Dublin, Texas. & 3RTH CAROLINA FARMERS STATE ALLIANCE. President Elias Carr, Old Sparta, ST.C. Vice-President A. H. Hayes, Bird own, N. C. . Secretary E. C. Beddmgfield, Raleigh, S C 'Treasurer J. D. Allen, Falls, N. C. Lecturer Thos. B. Long, Asheville, C " Assistant Lecturer R. B. Hunter, Hunters vill 3, N. C. Chaplain S. J. Veach, Warsaw, N C. Door Keeper W. H. Tomlinson, Fay- tteville, N. C. Assistant Door Keeper H. E. King, Peanut, N. C. Sergeant-at-Arms J. S. Holt, Chalk vel, N. C. State Business Agent W. H. Worth, "ialeigh, N. C. Trustee Business Agency Fund W. A. Graham, Machpelah, N. C. -XjEOUTIVE COMMITTEE OF THE NORTH CARO LINA FARMERS' STATE ALLIANCE. S. B. Alexander, Charlotte, N. C, Jhair-&an; J. M. Mewborne, Kinston N. 0.; J. S. Johnston. Ruffin, N. C. . THE SUB-TREASURY. An Unbiased Analysis of the Bill Bij a Successful Business Man Who is a Financial Authority A Strong Document Upon an Im 1 portant Subject. LAtlanta Constitution. The effort to belittle the Sub Treas ury plan presented by the Farmers Alliance has failed. No measure hs in years commanded so much atten tion in this State. In spite of the denunciation of those who pronounce it undemocratic class legislation, wild, impracticable, revolutionary and cal culated if passed to debase the cur rency, and the ridicule of those who declare they waat no money based on "pumpkins and corn shucks," it has won the support of the farmers to a remarkable degree. Neither denuncia tion nor ridicule has weakened its supporters. No mere absurd and ill timed proposition could mike such headway. The very reception of this measure evidences in a high degree that the conditions surromding the farming class demand improvement. But we have no need for evidence on this subject. EVILS OF CONTRACTION. That the -business of the whole country is suffering through the con traction of the currency is admitted by all parties. The recent silver leg islation is the direct outgrowth of this admission. From the very nature of their business the contraction of the currency bears with special weight upon the farmers. The leading prod ucts of their labor are harvested dur ing a few months of the year, while the whole year is necessary to their consumption. The year's supply of their products cannot be drawn out day after day, as with the manufac turer, but they must prepare and sow and cultivate and harvest, and then force their crops upon the markets of the country at a time when every line of business, stimulated by the market ing of these very crops, is most active. Thus the great bulls of their crops, gathered within three or four months, must be sold by the farmers, owing to the necessities of their conditions, at a time when money is most in demand, to those who are able to carry them until required for actual consumption. Ine result is a stringency in the money market, high rates of interest ana a corresponding depression in the prices of the productions of the farm and of nearly all ciasS9S of securities, in the midst of an era of great pros perity we have seen money lending within the last thirty days, in the city of New York, the financial cen of the country, at the rate of 188 Pe cent, per annum. The country tTs been saved from a panic, and ousands of honest business men Ir? 'ruptcy, only by the Secre wry ot the Treasury offering to pay r $40,000,000 of 4 per cent, bonds, principal and interest to date of ma turity, more than twelve months be fore they fall due, and by -offering to prepay a year's interest on all the public debt, aggregating more than $600,000,000. Several times during the past three years the Secretary of the Treasury has only prevented a panic by the purchase of government bonds at enormout premiums. Think of it, more than $50,000,000, in round figures, of the people's money have been paid as premiums on 4 aud 4 per cent, bonds, and this payment rendered necessary by the scarcity of money, in order to prevent bank ruptcy ! To meet the evils from which they suffer in common with all producers, the farmers have presented a remedy. Neither ridicule nor denunciation is the proper weapon for its discussion, but a "careful, patiens and thorough investigation, a calm and unprejudiced study. As I understand it, the farmers are allied to no special details; they want a flexible currency, issued by the Federal government that can be made to meet the increased demands of business due directly to the great staple crops being forced upon the market within a short period of lime. This is the great principle for which they contend. The method they sug gest for carrying this principle into practice, is to base any increased issue of currency upon the great staple crops, and to issue it, not arbitrarily by the government, but only upon the demand of those who will deposit ample security for it. They simply demand a safe, stable and flexible cur rency. Is that wild, or visionary, or impracticable? The method by which this eurrency shall be issued, the way in which it shall be secured, they have expressly declared a wil lingness to leave to the best sense of the whole country. Is that extreme, radical or undemocratic ?- Now, as the evils of contraction confesseily exist, as every intelligent man admits them, and every business suffers from them, the part of wisdom is to stop denunciation and ridicule, to quit carping over and criticising mere details, and to unite all classes with the Alliance in a cordial effort to provide a remedy. As the fight against the farmers' measure has been directed chiefly against the methods they have suggested, I will pass to their consideration immediately, mere ly noting that I will reply later to the arguments against the principle of flexibility. The important questions which un derly the methods proposed are: THE PRINCIPLE OF THE SDB -TREASURY PLAN. 1. Can a safe, sound and flexible currency, which will readily pass on its parity with gold, be based upon the great staple crops ? 2. Is it possible to devise a method for the issuance of this currency that will be constitutional and in confor ance with the genius and spirit of our free and democratic institutions, which are opposed to all forms of paternal government, and to an increase be yond due limits of Federal patron, age ?. Pause and reflect upon these propo sitions. If these methods proposed by the farmers cannot be made to con form fully to them, they should not be adopted; if they can, do they not deserve, and should they not receive, the support of all classes ? At the fore front of the argument it is demanded that the proposed cur rency mast be sound and stable, and that it shall pass at all times on a gold basis; this is fundamental. The body politic abhors a depreciated cur rency. Business congests beneath its blighting influence, and serious finan cial catastrophies must follow in its baneful wake. No paper money can permanently perform useful service in the present condition of commerce and finance throughout trie world that does not pass readily on a parity with gold. If, therefor, it can be shown that money based upon the great staple crops will not so pass, there .is no further room for argument, and the whole fabric must fall; there would be no use to consider ways and means, government warehouses and Federal patronage. The whole fabri6 being viciously defective, it would make no difference how simple were the means of the execution, they ought not to be set in motion. But, on the contrary, if it can be shown that a sound and stable currency can be based upon the great crops which will, readily pass on a parity with gold, then we should look for the means by which it might be safely and wisely issued, even if the search were ardu ous and the best methods difficult to ascertain. It would be poor states manship to denounce a whole meas ure, the correctness of whose princi ples were admitted, simply because the means suggested for its execution were clumsy or defective. The wis dom and correctness of the principle once admitted, it becomes the duty of the legislator to find sone proper mode by which it may be carried out. During this part of the discussion, therefore, I ask my readers to dis miss entirely all questions as. to whether or not the plan proposd by the Alliance is practical, but simply to determine whether a sound cur rency can be based on the great staple crops. If they can be convinced of this proposition, the task of showing how it can be issued s easy. The main question, therefore, to repeat myself, is: CAN A PAPER CURRENCY BASED UPON THE GREAT STAPLE CROPS BE ISSUED BY THE GOVERNMENT That will readily pass on a party with gold ? To determine this we must consider the essential elements of paper money. Every one now concedes that it is not only more con venient .than specie, but in modern times absolutely necessary for the con duct of business. A great part of the money in the country to day, exclu sive of gold and silver certificates, consists of paper, and the silver cer tificate passes more readily than the silver dollar. There has been since 1878, in round figures, $346,000,000 Treasury notes in circulation, and dur ing that whole period they have readily passed on the gold -basis. In addition, there are millions of national bank notes, which in the financial analysis, are chiefly based on the gov ernment promise to pay; and theee. too, readily pass on a parity with gold. It is true that behind the na tional bank notes stands the bank is suing them and the government bonds deposited for their redemption, but behind the Treasury notes stands simply the plighted faith of the gov ernment to pay in coin on demand, und the coin reserved in the Treasury. Why do these notes pass on a parity with gold First, because the public has confidence in the government's ability to redeem them in coin at any time; second, because they are re ceivable for public dues, except duties on import, and are a legal tender for private debts. The annual demands of the government for which they are receivable at par with gold are very great. They combine in the highest degree two essential elements public confidence in their convertibility into specie, and receivability at par with gold in payment of enormous annual dues. The first e'ement of strength is doubtless founded in a large meas ure upon the second. But to what extent could they be increased ? Would an aroitrary increase of one thousand millions so shake public confidence and exceed public demands that they would fall below gold ? Certainly there is some point at which this would be the case. If this is true, can it be said that $500,000, 000 or $100,000,000 would not ex ceed public demand and shake public confidence ? If there is a point be yond which public confidence and the demands of business would not go, how is that point to be ascertained ? Here lies the greatest difficulty in the issue of paper money. Should the government arbitrarily issue so many millions of Treasury note3 and trust to luck not to exceed the demand, or should it devise some plan by which the supply can be regulated by the demand ? The latter is undoubtedly the correct method. "Currency," says Jevons, in his work on ' Money and the Mechanism of Exchange," "must be supplied l.ke all other commodities, according to the free action of the laws of supply and de mand." Page 23 In this view John O. Calhoun fully concurred. Perhaps the essential element of paper money weTe never more clearly seated than by him in his speech in 1837 on the bill to establish the Sub Treasury. He said: "On what, then, ought a paper currency to rest ? I would say on demand and supply simply, which regmates the value of everything else the constant demand " which the government has on the community for its necessary supplies. A medium resting on this demand, which simply obligates the government to receive it in all of its dues, to the exclusion of everything else, except gold and silver, and which shall be optional with these who have demands on the government to receive or not, would, it seems to me, be as stable in its value as those metals themselves, and be as little liable to abuse as the power of coin ing. It would contain within itself a self-regulating power. Is could only be issued to those who had claims on the government and to those only with their consent; an i, of course, only at or above par with gold and silver, which would be its habitual state; for, so far as the government is concerned, it wo;ild be equal in every respect to gold and silver, and superior in many particularly "in regulating the. distant exchanges of the country." PAPER CURRENCY REPRESENTS DISTRIBU TIVE MERCHANDISE. An important fact that is frequent ly overlooked is that paper currency, when sound and stable, must in its final analysis represent the distribu tion of merchandise. Mr. Poor, in his work, " Mney, its Laws and His tory," states this proposition most ad mirably. The fact is so important and Poor is so clear and forcible on the point, that I quote from him at some length, even at the risk of being tedious. In discussing the operation of a bank in the conduct of its busi ness and the issuance of its notes, he says : " The pivot upon which all these operations turn is merchandise. That provided, the instruments which represent it, and which entitle their holder to a corresponding amount of the same value, or to the proceeds of the same, and which, by their transfer, that which they repre sent, are paper money currency. As soon as they are issued their move raent commences automatically in their appropriate spheres, and continues un til they have accomplished their cir cuit and work. It is merchandise that calls them into being; it is mer chandise that gives them their value; it is merchandise that gives them their impulse, and it is merchandise that, by its purchase for consumption, re turns those who issue them, not to be re issued, but in making new loans. So far as merchandise is provided, they proceed noiselessly and benefi cently in their proper orbits. So far as it is not provided, their course is as erratic and destructive as would be that of the planets without the guid ance and control of that central mass around which they now so harmlessly move. All local currencies, therefore, are based, not on gold and silver coin, but on merchandise, for wh;ch they serve in the place of coin, instruments of distribution. Coin is itself money, and needs no symbol for its transfer or distribution. Except a small quan tity by way of change, the precious metals are no longer used as currency. They are held and used chitfly as re serves for the discharge of such paper currencies as are not discharged by merchandise in the manner described." As long as the notes issued by the bank represented merchandise, he shows that they would pass on a parity with specie: "The holders of mer chandise, therefore, would receive them equally with coin in its sale, as they would pay their bills equally with coin. As they would be accepted in the sale of merchandise equally with coin, they would be taken by the pub lie, the consumers of merchandise, equally with coin. As the object of all currencies, no matter the form or material of which they may be com posed, is to reach by their exchange some other article or articles, the holders of the notes and credits of a bank would have no adequate motive to exchange, nor would they exchange them for the coin to be used as cur rency, so long as they would perform, as currency, all the functions of coin. Producers consequently, in whose favor the bills were discounted, would, fronTthe greater convenience of their use, prefer to receive in their dis count, notes and credits vto coin, as they would pay them out equally with coin in the purchase of labor and ma terial, in the prosecution of their in dustries, to the very parties who would be the consumers of the mer chandise which they had produced and put upon the market." Again, after discusing the causes of the failure of all banks which have issued currency based on real estate, he says: " From what has preceded the reason of the failure of all banks, the capital or reserves of which have constituted of real estate or securities, will have been made sufficiently evi dent. All currencies, to be accepted as such, must be instruments for rep resenting and serving for the distri bution of merchand se. If they will not secure to their owner merchandise, their eqivalent in value to coin, they will always be immediately drawn, or attempted to be drawn, in coin. The holder of a note issued by a real estate bank does not want that which it rep resents, but merchandise, or the ab sence of merchandise, coin. Such a bank has neither. Should it seek to discount nothing but busine3spaper, an impossible supposition (for all such banks are got up to supply the lack of business paper, that is, of merchan dise, he basis of business paper) no one would take its notes and credits to any considerable extent, as it would be seen by all that no proper provision had been made to carry forward its operations or to meet the losses to which it would be subjected. Such banks, therefore, from the very nature of things, have never been ab'e to make even the fir3t successful start. The moment they have attempted to issue notes and credits as currency, these have always been presented for immediate redemption in coin. As they can pay neither merchandise nor coin, they have no other alternative but to go into immediate liquida.ion. " That a currency may at all times be convertible, the means of its re demption must always be provided previous to its issue, not by the bank, but by the public, the producers of merchandise. With such provis on, the currency from the moment of its issue would take care of itself. The attempt to make such provision after issue would be certain to aefeat itself. When merchandise is provided, the necessities of consumers compel them to purchase it. piece, by piece, for consumption. Their necessities and purchases will have the effect to main tain i s price, so as to render it ade quate to the discharge of the currency issued against it. But neither real estate nor securities can be taken for consumption, piece by piece; they must be sold in gross, or not at all." Real estate and securities, he ably shows, can be neither eaten, drank nor worn, and cannot, therefore, form so safe or stable a basis for currency as merchandise, which is daily and hourly distributed throughout the country for consumption. ESSENTIALS OF SOUND PAPER CURRENCY. Now, let us briefly sum up the esr sen'ial elements of a sound paper cur rency: 1. It must be backed by the public con ad en ce that it is at all times con vertible in specie of its equivalent. 2. o secure this confidence there must be such constant public demands, for which it is receivable on a par with spcc"e, as will enable its prompt convertibility into specie, or its equiv alent. 3. To insure this, its volume must be regulated by supply and demand; anJ 4. This can only be acsomplished by making it the representative of the distribution of merchandise for con sumption, which would prevent its volume from ever reaching a point beyond which it could not be imme diately converted into specie or some necessary article of merchandise on a specie basis. TREASURY NOTES SECURED BY STAPLE CROPS. The plan of having the federal gov ernment issue treasury notes basad upon the great staple crops fully meets these prerequisites to an in creased issue of paper money. For every dollar of treasury notes to be issued by the government, the farmers 'propose, in some form, to pledge their cotton or wheat to the extent of only 80 percent, of its actual market value. This creates a debt on these staple crops, the whole, or nearly the whole of which is con sumed within each year. For the payment of this deot the treasury notes issued by the government would be accepted by the government on a parity with gold. The notes which would be issued upon the crops could be made similar in all respects to the present treasury notes. They would perform all the functions performed by the present treasury notes, would be receivable for the same class of public and private due3, with the ad ditioLal strength that, by their very issuance, another use for them woul i have been created, to-wit: the payment of the debt created by their is me. Now, the great staple crops are sold upon a gold basis. Wheat and cotton especially form our leading articles of export; their price is fixed on a gold basis in Liverpool and London, and, therefore, as the product on which the treasury notes would be issued, would have to be sold on a gold basis. The notes issued on them, which would be accepted by the government on a parity with gold, would necessarily pass on a gold basis. Again, as their issuance would not be arbitrary on the part of the government, but only upon demand and the pledge of the crop, no note would pas3 out of the treasury except on a gold basis. If it could be conceived that these notes would de preciate at all, their depreciation would necessarily-occur at the point of time when most of them were outstanding, and as there would be a gradual con traction of the currency as the yearly consumption of the crops took place, no man would be fool enough to take from the government on his crop a depreciated currency a dollar that would not piss on a parity with gold when his cotton or wheat had to be sold in the markets of the world on a gold basis, and the debt he owed to the government paid after the volume of currency outstanding had been con tracted by the consumption of the verycrops themselves. COTTON AND WHEAT SAFER THAN SILVER BULLION. Which is the safer currency, that based upon cotton and wheat, which must be consumed within a year, on a gold basis, to only 80 per cent, of their value, or that based upon silver, purchased in the open market at the fixei rate of about $70,000,000 an nually, and stored in the treasury, where it can be neither consumed nor distributed? H is clear that in the case of the en rency based upon cot ton or whea , an equivalent in gold or the currency itself issued on the wheat or cotton would flow back into the treasury as the wheat and cotton were consumed, and that gradual expansion and contraction would result; while in the case of silver, an arbitrary expan sion takes place yearly while the commodity- accumulates in the treasury. t the end of a decade thee will be outstanding about $700,000,000 of silver cer.ificates based upon a com modity whose price has been advanced and regulated by the government's o wn purchases, and which, if the gov ern nent undertook to sell, would en ormously depreciate. In the one case the holder of the government's note would know that within a short time gold or its equivalent would pass into the treasury; in the other, he would know tl at there was a comodmity steadily accumulating in the treasury, which, by the very law under which the note he held was issued, was scarcely any farther advanced towards consumption or distribution than it was when unmined in the western hills. ; It may -be safely assumed that no paptT currency in the world would be more stable, more sound, or more cer tain to pass on a parity with specie, than the treasury notes of the United States Government based upon the great st iple crops, provided the method of their issuance was properly hedged about and protected. It is impossible ,o present all the arguments in sup port of this position in an article neces sarily limited in space, but before passing from this branch of the sub je3t under discussion, there is one other point to which attention should be called. As has been before s'a'ed, more than $356,000,000 of treasury notes now pss readily at par with gold, with nothing behind them but the government's promise to pay. Why then would not additional'nous of the same character, secured on the great crops, representing their dis tribution for consumption, and issued only to those who accepted them voluntarily on the gold basis, continue to pass readily on a parity with gold? That eminent Georgian, Judge Crisp, who has so ably represented the S.ate in Congress, in his letter to the farm ers on the sub-treasury plan, declared himself ur qualified ly in favor of an increase of treasury notes. To this position the Democratic leaders have been committed for more than twenty years. How is it more conservative and more safe to issue these treasury notes - arbitrarily, and without any security pledged for their payment, than it is to issue them voluntarily on demand with the great staple crops pledged for their payment ? FLEXIBLE CURRENCY DESIRED. But it has been contended that flexibility in the volume of currency would tend to disturb business inter ests, and render uncertain business obligations. There is an apparent plausibility in this argument. But it is based on a missonception, and evidences great ignorance, of the real conditions surrounding commerce. Nothing would tend to render prices so stable or business obligations so sure, as the certainty that the supply of money would exactly correspond at all times to the volume and require ments of trade. If it were possible to perfect a system of finance under which this would be the case, the cost of money, interest, would always re main the same, and two important elements of uncertainty possible stringency in the money market and varying rates of interest would be removed from commerce. Stability in prices, therefore, is promoted to elasticity in the volume of currency, and not by rigidity, that allows for ao expansion and contractions in accord ance with the demands of trade. CONTINUED ON FOURTH PAGE. V