THE SUB-TREASURY PLAN. 345 



single gold standard of money ; therefore the prices of the products so 

 estimated would be gold prices, and whenever the increase in the volume 

 of domestic currency augmented the general prices of commodities to 

 an exact equality with such gold quotations for these products, the equi- 

 librium of price would be established, and no more would be deposited 

 by the farmers, because any further additions to the volume of the circu- 

 lating medium would increase local prices in local currency, so that it 

 would pay better to sell than to deposit, and the products would come 

 out of the warehouses, and the money go into them, and consequently 

 out of circulation, thus automatically tending to establish and main- 

 tain the equilibrium of stable prices. Absolutely no emergency could 

 possibly arise that would depress such money below a parity with gold. 



But, in this connection, there is a still more important consideration. 

 If it be true that, of such products as are leading commodities of export, 

 the domestic price is regulated by the export market, then this sub- 

 treasury plan must be hailed as the discovery of a great economic truth. 

 Thomas Jefferson and Alexander Hamilton must long since have grown 

 restless in their graves at such economics and statesmanship as permit 

 this country to suffer from the evils of having the leading products priced 

 abroad, without claiming, at the same time, the natural benefit that should 

 flow from that condition. The price of these products being fixed by 

 the export price, it depends of course upon the supply of gold and the 

 demand for its use in such foreign countries ; therefore the fluctuations 

 here do not correspond with the general level of local prices expressed 

 in local money, and the producer and consumer are alike at the mercy 

 of the speculator. 



Nothing is plainer than the following : If domestic price is governed 

 by foreign quotations, then effective measures should be inaugurated for 

 preserving the same ratio between the supply and demand for money that 

 prevails in the foreign markets. This is effectually done by utilizing the 

 domestic product, which is priced abroad, as a basis for a domestic 

 issue of currency. This system says, practically : " We have been ham- 

 pered by having domestic prices of these products based on foreign gold, 

 and we now propose to utilize foreign gold as a circulating medium in 

 this country, for the purpose of handling these products which it prices." 

 Now, certificates are issued against gold and silver bullion deposited in 

 the government warehouses, while under the proposed system certi- 

 ficates would be issued against gold coin in circulation abroad but 

 represented by wheat and cotton deposited in the government ware- 

 houses here. This must fully demonstrate the wisdom and conservatism 

 of the system. 



