THE SUB-TREASURY PLAN. 341 



third of this product is used by agriculture for consumption and seed, 

 and that two-thirds, or two and one-half billion dollars' worth, of agri- 

 cultural products is marketed during the last three months of the year, 

 and that they only change ownership three times. The demand thus 

 created would be for the use of twenty billions of dollars, which, upon 

 the above basis, should be represented by the figure 40, and which, 

 added to the regular demand 40, makes the demand during that time 80. 

 If the volume remains the same throughout the year, it is fair to say that, 

 for nine months in the year, the relation of volume to demand is as 2 to 

 40, and during the other three months it is as 2 to 80. Of course this is 

 the -widest range in the relation of the volume, and it could not, in prac- 

 tice, be confined to any such lines. It must come and go gradually, but 

 the actual relative volume must be and is reduced, during the short term 

 for handling the crops, to one-half of its average during a part, at 

 least, of the balance of the year. This may be denied, on the ground 

 that a violent contraction of the volume of money to one-half of its 

 normal relative volume would depress prices in nearly the same propor- 

 tion. That is true ; but there are reasons why it does not have effect to 

 the full extent. First, the contraction produces an acceleration in the 

 speed with which the money circulates. Second, the inadequacy of the 

 volume, with the downward tendency in the prices of products, awakens 

 the spirit of speculation, which floats a substitute in the shape of credit 

 paper, which circulates as money. If the total amount of credit paper 

 issued and circulated for the purpose of handling the crop during the 

 short season will aggregate $250,000,000, as usually estimated, then on 

 the above basis, \ should be added to the ratio of volume, making it 

 2-J- during the short season, and making the ratio of volume to demand 

 throughout the year as follows : 



Long season, volume 2, demand 40. 

 Crop season, volume 2\, demand 80. 



This shows that the actual deficiency or contraction of the volume 

 during the short season equals five-eighths of the volume during the long 

 term, or 62.5 per cent. Third, there is an actual decline in prices, 

 equal to 40 per cent, during the short season, thus proving the demon- 

 stration to be correct. 



In support of this statement as to the fluctuation in price every year, 

 the reader is referred to Spofford's American Almanac, where figures are 

 given showing the fluctuations in price of many commodities for the 

 last sixty-two years. During the war the fluctuations were very great ; 

 the fairest and best period, therefore, to consider is since the war. The 



