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1914

SALLY DOUBLE

Then he buried his face in his hands and groaned in anguish, "Oh, what can I do? What can I say to the Sultan ?"

Since the dawn of Philippine history the Moro pirates have raided the towns of the Christian Filipinos and carried their wives and daughters off into slavery, torture, and spoliation. Politicians talk of Philippine unity, and of one legislature for all Filipinos, but the Macabebes know better than that. They would give the Mohammedan dogs laws of

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lead that they could understand. The Spanish friars conquered all of South America and seven million pagan Filipinos, but in three centuries of unremitting labor they never made a dent in Moro solidarity. The American soldiers have been fighting, persuading, educating, in Moroland for almost a decade and a half, but the sentinels must still keep watch for juramentados in Jolo; the fighting still goes on in the hinterland, and the pirates of Tawi Tawi are still unsubdued.

SALLY DOUBLE

A SERMON FOR CHILDREN

BY THE REV. HENRY S. COFFIN

AVE you ever met Sally Double?

No, she isn't a twin, although you might think so from her name; but there are two Sallys. When you meet Sally, you have a strange feeling that there is another Sally around the corner listening to the conversation; and the other Sally is always a great deal more interested in what Sally is saying to you than in what you are saying to Sally.

Sally is bright, and very entertaining. One of her mother's friends remarked the other day: "Sally Double is one of the cleverest girls I know; but what a pity it is that she knows it !" How do you suppose that Sally found out that she was clever? It was that second Sally, whom we never see, who eavesdropped on the Sally we know, and whispered to her: "Sally, you're a wonder !" Whenever Sally does anything, she appears to think that somebody is looking at her. She is really looking at herself. She divides herself, and puts a Sally Number Two in the audience to watch Sally Number One; and sometimes you think you can hear very loud hand-clapping. That's Number Two applauding Number One; Sally is very pleased with herself.

Sally doesn't have a very good time when she plays; she doesn't put her whole heart into the game; she keeps wondering whether she is enjoying herself or not. Some of her feelings are always busy feeling how the rest of her feelings feel; so she does not feel all the pleasure other boys and girls get out of the game.

She is a pretty girl, but you do not find her as attractive as you think she ought to be. She takes a long look at herself in the glass

before she leaves her room in the morning, and, although she is far away from the mirror now, she has not forgotten what she saw there. People who think about their looks always spoil them. I overheard a lady say that Sally was self-conscious. Her little brother told her that she was stuck on herself. The glue must be the "Vanity Brand," I think, and Sally is a good advertisement for its ability to stick tight, for she never becomes unstuck. She is fastened to herself all the time.

One of her small brother's friends remarked that he did not think that she had a

great deal to be stuck on. And he was quite right. Nobody has a very large self who thinks about himself. You know how the Bible describes an idiot; it says, "He is beside himself.' We say, "He isn't himself." Sally Double is seldom herself; she is "beside herself." It is not surprising that she does not do as well as she might; only half of her tries to do it, the other half looks on. If only all that is in Sally Number Two could be kept in Sally Number One!

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How often the Bible tells us that Jesus made people "whole"! God does not want fractions but units, whole men and women, boys and girls. And the way Jesus made people "whole was to tell them of their Father who watches them, thinks of them, loves them. They need never look at themselves, because God's eyes are on them. They need never applaud themselves; God will give them all the praise they ought to have. No one needs to be beside himself, because God is always beside every one of us.

COMMERCE AND FINANCE

A WEEKLY ARTICLE BY THEODORE H. PRICE

THE COTTON SURPLUS AND THE U. S. TREASURY

F

HOW THE PROBLEM HAS BEEN SOLVED

OR the second time in the history of the United States the cotton crop has become a politico-economic issue of the first magnitude. The Southern monopoly of cotton production and the belief that it could not be maintained without slavery led to secession and the war of the Confederacy. To-day it is a National question as to whether the Government should or should not do anything that will directly or indirectly sustain the price of cotton until the almost entirely arrested export demand for the article revives. Most people realize the importance of the subject, but are without an accurate knowledge of the facts in regard to it.

The twelve so-called Cotton States now produce annually about fifteen million bales of cotton, which, with the by-products derived from cottonseed, are worth about one billion dollars. About forty per cent of this production is consumed in the United States,

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and the remainder has hitherto been exported. Cotton is peculiar in that it is the only crop of importance all of which is sold by those who produce it. Only seventeen per cent of the corn crop, for instance, leaves the farms;" the balance is consumed or fed to stock by those who produce it. Cotton, therefore, generates directly an enormous commerce and provides a medium of exchange that almost entirely takes the place of gold in the settlement of our inter-State and international balances. The late William B. Dana, for many years editor of the "Commercial and Financial Chronicle," once said that cotton, being practically imperishable and always convertible, possessed more of the attributes of a legal tender than anything produced by human labor except gold. That it does take the place of gold in the settlement of American indebtedness to Europe is shown by the following summary of our entire foreign trade for the past five years.

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NOTE. During the fiscal year ending June 30, 1911, total exports included the following classes of materials, the value of which was in excess of $50,000,000: Cotton (including manufactured cotton goods valued at $28,844,627), $639,319,928; wheat and wheat flour, $142,407,631; cattle, meat, and dairy products, $132,926,979; iron and steel-manufactures of, $106,559,621; copper-manufactures of, $144,895,519; oils, $144,708,447; tobacco and manufactures of, $60,445,440; wood manufactures-timber and lumber, $66,953,878; coal, $59,921,013. Total, $1,498,138,456.

The foregoing figures will make clear the following important facts not generally understood:

1. That during the past five years a total foreign trade of over nineteen billions of dollars

has been "cleared" by the shipment back and forth of only $220,577,952 worth of gold and silver; which means that hardly more than one per cent of the balances arising from this enormous commerce have been settled in cash or bullion.

COMMERCE AND FINANCE

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securities held for investment and by the maturity of many short-time American obligations owned abroad and now due or shortly to become due.

The amount already owing and unpaid to Europe on account of the indebtedness thus arising is estimated at about $300,000,000, and our Stock Exchanges are being kept closed that Europe may be estopped from increasing this debt by further resales in the United States of the $4,000,000,000 of American securities assumed to be still held abroad. They are the only securities left for which there is a possible market, and the war need of gold is so great that their resale at very low prices is altogether likely if the markets are reopened.

In that case we should either have to denude ourselves entirely of gold in order to pay, or declare a moratorium in regard to foreign debts, as most other countries have done. If, however, Europe can be prevented from increasing the amount of American indebtedness upon which she is entitled to demand immediate payment, it is not impossible that her need of food will compel her acceptance of our cereal crops at prices which will liquidate a substantial portion of the amount now due, and that later on the balance due or to become due can be paid in cotton, which, next to wheat and corn, is the commodity that she will be the most in need of. If, however, in the interval, as a result of the congestion in the cotton market, the value of that article, as measured in terms of gold, shall be cut in half, it is perfectly evident that our debt-paying power would be reduced by fifty per cent, and our National solvency to that extent impaired.

It is plain, therefore, that the price of cotton is a matter of concern to the Nation at large as well as to those who are engaged in its production or manufacture, and it was in view of the broader and National importance of the question that the Secretary of the Treasury called into conference with him at Washington, August 24, one hundred representative Northern and Southern business men who, as producers, manufacturers, merchants, or bankers, were presumed to be qualified to advise upon the subject.

As the Southern men present were in numerical preponderance, it was agreed that tobacco and naval stores should also be considered, it being evident that any serious impairment in their value would jeopardize the financial strength of the section where the

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The problem before the gathering was how to avoid any unnecessary impairment of our debt-paying power as a Nation and the financial prostration of the South without involving the Government in an effort to support the price of any commodity by purchase, guarantee, or “valorization," which is the word that was coined to describe the futile attempt of Brazil to support the price of coffee by buying up the surplus supply.

At first there was a somewhat clamorous demand that the United States should buy up and hold the prospective excess of the cotton crop, but Mr. McAdoo promptly made it clear that no such proposition would be entertained, and thereafter the discussion was confined to devising methods which would enable the South to help itself, and so help the Nation.

After a two days' session of the Conference, the Secretary of the Treasury made an announcement reading in part as follows:

Among the eligible securities to be used as a basis for the issue of currency I have decided to accept from National banks, through their respective National Currency Associations, notes, secured by warehouse receipts, for cotton or tobacco, and having not more than four months to run, at seventy-five per cent of their face value.

In this statement Mr. McAdoo expressed the opinion that

This plan ought to enable the farmers to pick and market the cotton crop if the bankers, merchants, and cotton manufacturers will cooperate with each other and with the farmers, and will avail of the relief offered by the Treasury within reasonable limits.

The Secretary's announcement that he would accept warehouse receipts for cotton and tobacco as a basis for the issuance of emergency currency was followed by the publication of the report of a committee of Northern and Southern men appointed by him from among those present at the conference.

On this Committee the producers and manufacturers of cotton and tobacco were represented as well as the bankers, mer

chants, railways, and warehousemen who finance and handle these two great staples.

Mr. W. P. G. Harding, of the Federal Reserve Board, and Messrs. Brand and Carver, of the Agricultural Department, were designated to act in advisory co-operation with the Committee on behalf of the Treasury Depart

ment.

The report of this Committee, which was signed by Royal A. Ferris, of Texas; S. T. Morgan, of Virginia; W. B. Thompson, of Louisiana; J. O. Thompson, of Alabama; D. Y. Cooper, of North Carolina; Lewis W. Parker and R. G. Rhett, of South Carolina; G. Gunby Jordan, of Georgia; Wm. Elliott and B. L. Mallory, of Tennessee; F. G. Ewing, of Kentucky; Richard H. Edmonds, of Maryland, and Henry Walters and Theodore H. Price, of New York, contained among others the following important recommendations:

That it is the sense of the Committee that cotton, tobacco, and naval stores should be marketed as deliberately as possible until they can again be exported in normal quantity, and that when properly conditioned should be warehoused with responsible concerns, that they should be protected against weather damage, and be properly insured against loss or damage by fire.

That warehouse receipts for these commodities are proper collateral for loans by banks, and should be so accepted, with such limitations as to margin, inspection, and valua tion as conservative bankers may each in their discretion see fit to impose.

That the average market value of middling cotton for the past six years has been in excess of 12 cents per pound, that the Committee is informed that the cost of producing cotton averages throughout the United States about 91⁄2 cents a pound, that it is a rule of economics that the production of staple commodities will decrease if they continue unsalable at less than the cost of production plus a reasonable profit. That cotton does not deteriorate when properly warehoused, and is as good twenty years after it is picked as when it is first gathered; that it can therefore be carried over until the restoration of normal business conditions enables the world's consumption to absorb it. The Committee is therefore of the opinion that every effort should be made to assist the producers to hold their cotton for a price that will minimize their loss as far as possible until such time as the channels of foreign trade shall be reopened. That loans upon cotton made upon a basis of 8 cents per pound for middling, less such margin as the lender shall consider necessary, will afford reasonable protection to bankers, and will greatly facilitate the financing of our most

COMMERCE AND FINANCE

The quoted portions of Mr. McAdoo's announcement and his Committee's report indicate the essential elements of the unique expedient devised to meet an unprecedented situation.

The report of the Committee appointed by Secretary McAdoo is in effect a declaration of experts that loans properly margined, secured by cotton valued at 8 cents per pound, basis middling, are reasonably safe, and taken in conjunction with the Treasury announcement may be considered as suggesting that the currency issued against cotton warehouse receipts will be secured by cotton at 8 cents per pound, less the customary banker's margin and the further deduction of twenty-five per cent required by the Treasury under the law.

If the banker exacts a margin of only ten per cent, he will be loaning but 7.20 cents per pound on cotton, and the notes issued by the United States will be for only seventy-five per cent of this price, or 5.40 cents per pound, which is the lowest price at which cotton has sold since the War of the Confederacy, and practically the lowest price at which it has ever sold since the railway and telegraph made a broad market for the most generally used commodity in the world.

The delay in organizing the Federal Reserve Banks consequent upon the political wrangle over the appointment of the Federal Reserve Board has made it necessary to rely upon the Aldrich-Vreeland Act and the issue of currency which it provides. Since its passage this law has not been availed of until

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recently. Under its provisions banks collectively organized, as described in Mr. McAdoo's statement, may issue their own notes guaranteed by the United States to an amount equal to one hundred and twenty-five per cent of their capital and surplus. As security for these notes there must be deposited at Washington bonds or "other securities or commercial paper which the Secretary of the Treasury may accept at not exceeding seventyfive per cent of their face value. Of the circulation so issued not more than thirty per cent may be based upon commercial paper; the balance must be against "bonds or other securities."

The banks of the South have but few "bonds or other securities." Their assets consist chiefly of commercial paper or loans against merchandise. It follows, therefore, that a Northern bank having the necessary securities could take out circulation equal to one hundred and twenty-five per cent of its capital and surplus, but that most Southern banks could procure circulation equal only to thirty per cent of their capital and surplus.

The decision of Secretary McAdoo to accept warehouse receipts for cotton and tobacco as "other securities " will enable a Southern bank which is a member of a National Currency Association to increase its circulation by one hundred and twenty-five per cent of its capital and surplus; and though this currency cannot be counted as part of its legal reserve, it can be reckoned as reserve by most State banks, and is by common consent, though not legally, available for the payment of all private debts.

There is in certain sections of the country more or less criticism of the action that has been taken. This criticism emanates from those who assert that the law of supply and demand should not be interfered with, and that any increase of circulation that is not based on gold, or securities payable in gold, is inflationary."

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Adequate reply to these criticisms would require too much space. It may be said, however, that any legitimate application of the law of supply and demand presupposes a world in which the operation of economic law has not been, as at present, factitiously suspended by war and moratoria; and those who object to using stimulants to prolong commercial life and credit in the present situation could just as consistently object to the use of oxygen in case of pneumonia or

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