Our National Debt-Habit

RALPH GORDON was standing in the directors’ room of the Commercial Trust Company of Beaver, intently watching the quotations of Union Pacific. He was not a speculator, had never been in a stock-broker’s office, and, indeed, rather prided himself on his unusual frugality and industry. Yet here he was in the unfortunate position of dependence on the stability of the price of this stock. A further considerable decline might threaten his solvency, or embarrass the Beaver Mills, in the management of which he had fallen into this predicament, or force his resignation from the directorate of the Commercial Trust Company. And yet, as the history of his management of the Beaver Mills passed rapidly before his mental vision, he was unable to detect any unwise course of action.

His position had come to him by inheritance. Ever since the Beaver Mills, located in the little town of Beaver, near Newburyport, Massachusetts, had grown out of the sewing-room used by Elizabeth Gordon, Ralph’s greatgrandmother, during the War of 1812, they had been in the Gordon family. In 1812 Elizabeth Gordon had supported herself anti her two children by spinning cotton upon an imported spinningjenny, and weaving it into coarse garments. The death of her husband at the Battle of the Thames in 1813 made it necessary for her to continue the work, and in due course her children succeeded her as primitive cotton-manufacturers.

The Gordons’ cotton business gradually expanded from room to room until it occupied nearly the whole house; and at last, the prosperity of our cottonmanufacturing business, which became so marked in 1875, resulted in the building of a cotton mill on the site of the old homestead. Ralph Gordon therefore felt a family pride in the mill, and managed it as a family institution, rather than with a view to great expansion or wealth. Moreover, he had succeeded his father, by courtesy of the other officers, as a director of the Commercial Trust Company, notwithstanding the fact that the family had long ago sold practically all its stock in the company.

Gordon’s position as head of the Beaver Mills thus carried with it some of the honors most valued in a small town, and for this reason he felt his present predicament the more keenly. He brought to his work all the frugal instincts of his New England ancestry, and when it became necessary — as it usually does in the conduct of a modern business — to contract debts, he did so only with reluctance and conservatism. Our modern debts, however, are so entirely different from the debts of his great-grandmother Elizabeth’s time, that Gordon found it not always easy to distinguish between the wise use of capital accumulated by others, and the over-expansion of credit.

Elizabeth had purchased her spinning-jenny partly on credit; but the debt, had soon been paid from the results of a short period of exceptional effort. Ralph Gordon, however, was competing with mills conducted by modern financial methods, and the modern or corporation method of buying that spinningjenny would have been to pay for it out of a ‘capital account’; issue bonds to obtain this fund account or capital; establish a ‘sinking fund,’ into which should be paid yearly sums to provide for the ultimate purchase and retirement of these bonds; and establish also a ‘ depreciation account,’ into which should be paid out of net earnings each year enough to keep the spinning-jenny in repair.

Gordon did not question the wisdom and utility of this modern method of providing plants and equipment with which to do business, but he found constant study necessary to distinguish between earnings and borrowed funds. If the funds in the capital account were not all applied to the purchase of equipment or permanent improvements; or if the sinking fund were not increased rapidly enough to purchase and retire the bonds as soon as the equipment bought with the proceeds of these bonds was worn out; or if the depreciation account were not large enough to maintain the plant and equipment in good repair — in any of these events, capital or borrowed funds would appear as earnings.

Modern financial methods had been first introduced into the Beaver Mills by Samuel Gordon, Ralph’s father, in 1902, under pressure of necessity. For two years the price of raw cotton had risen so much more rapidly than the prices of cotton goods, that the antiquated machinery in the Beaver Mills could no longer produce at a profit. The purchase of new machinery required a large outlay of new capital, and in order to secure the latter, the Beaver Mills had been incorporated for $300,000, and stock of that amount issued. The Gordon family at first retained a majority of the stock; but the equipment of the mill, and its enlargement from eight thousand to fifteen thousand spindles cost more than was anticipated, and four hundred and fifty shares, or $45,000 worth, were sold to James McConnell, the faithful old Scots superintendent, who had been in the service of the Gordons for a quarter of a century, and by wise investments had accumulated a small fortune.

Even this sale did not suffice to provide the necessary capital; and by the time Ralph was through college and ready to enter his father’s office, the Gordon family held less than $130,000 worth of the stock of the Beaver Mills, while McConnell and the Commercial Trust Company together held nearly $170,000 worth. Ralph did not share his father’s assurance that the control of the mill rested in the Gordon family; for while McConnell always respectfully obeyed the elder Gordon, he regarded the son as an unpractical student full of ‘new-fangled book notions of business.’ Young Gordon, on the other hand, regarded McConnell as not merely conservative, but stupidly old-fashioned; and in 1905, when Samuel Gordon’s health was failing, and his son more and more occupied his desk and represented his interests at the mill, this ill-concealed antagonism grew rather than diminished.

The difference between Ralph Gordon and McConnell represented the struggle between the new business methods and the old; and this struggle in the summer of 1907 was embittered by difficulties arising out of the rapid advance in the price of raw cotton. It had always been the practice of the Beaver Mills to purchase by far the larger part of its cotton in November or December, when large amounts are thrown upon the market by the Southern planters somewhat at the expense of prices. In November, 1906, however, the price of middling uplands cotton at New York had ruled at eleven cents per pound — a price above the average of any year since 1883, with but three exceptions; and of those three exceptions, 1904, the year of the Sully corner, was the only one when the Beaver Mills, by a little waiting, had been unable to buy cotton on the basis of eleven cents or better.

For these reasons McConnell insisted upon a waiting policy; but in the spring of 1907, the prices of cotton goods rose enough to compensate for the higher price of raw cotton, and in view of the prospect of a large volume of orders, it was finally decided to lay in nearly a year’s supply of cotton — even on the basis of nearly twelve cents per pound for middling uplands. This supply of more than forty-three hundred bales having been contracted for, at a cost of about two hundred and forty thousand dollars, Gordon wanted to protect the mill against any loss consequent upon a possible decline in price by the modern method of ‘hedging,’ or in other words, by selling cotton for future delivery, on the New York Cotton Exchange; and in July, when the price of ‘spot,’ or cotton ready for immediate delivery to the purchaser, rose to 13.55 cents, the highest price in decades, he became especially anxious to do so.

He reasoned with McConnell that by thus selling ‘options’ or ‘futures’ on the Cotton Exchange, the Beaver Mills would be fully protected against loss, since, if the price declined, the profits on the options would offset the loss in the value of the actual cotton owned; whereas if the price should rise, — which was quite improbable, — the profit on the actual cotton would offset the loss on the options, this profit of course being usually obtained by cotton mills through the sympathetic rise in the prices of cotton goods, rather than through the sale of the actual cotton held. By the middle of July the November option — namely, the option either to deliver cotton the succeeding November, or else buy in and cancel the contract to do so — was selling on the Cotton Exchange on the basis of twelve cents per pound; and Gordon argued that since this option would mature just as a large supply of cotton would be thrown on the market, its sale would be a particularly good protection against loss.

Gordon and his modern methods were right, for during the first week of November, the November option sold at ten cents, this being two cents per pound below its price the previous July, and representing a possible profit of nearly $43,000 on forty-three hundred bales. The Beaver Mills, however, had not sold the option, because McConnell would not listen to it. He maintained that selling cotton for future delivery was speculation pure and simple. Gordon replied that since they already owned the cotton, selling for future delivery was not speculation, whereas carrying a large supply of cotton without any insurance against depreciation in price was mere gambling; and there the argument ended.

In the subsequent drop of cotton prices, the supply held by the Beaver Mills depreciated in value to the extent of nearly $43,000, — a sum exceeding the company’s annual surplus earnings; and while this convinced Gordon that the Beaver Mills could not succeed unless more modern methods were adopted, it served only to convince McConnell that in years of high prices cotton should be bought as needed, as had been done in 1904 and in some other instances. It was clear to both men, however, that in the event of Samuel Gordon’s death, Ralph and McConnell could not possibly do business together.

In the early months of 1908, Samuel Gordon’s health failed steadily, and Ralph fully realized that he must soon be prepared either to buy out McConnell’s interest in the mill, or to face humiliation and perhaps failure. In this crisis, his knowledge of finance, acquired largely while in college, and his ability to distinguish between sound and unsound indebtedness, served him well. The country was then undergoing the trade depression following the panic of 1907, and Gordon well remembered how our greatest financiers staked their fortunes on the growth of the country, and especially on its ability to recover from the shrunken trade and low values and prices of trade depressions.

He recalled from his study of history how E. H. Harriman had built up the Union Pacific out of bankrupt railroads in 1897, and later, through the growth of our country, developed it into a rich and magnificent property; he reflected that there are in the Unified States $3,375,000,000 in railway stocks and bonds, earning and paying from three to seven per cent, or an average of about four per cent, and all representing railroads which were sold under foreclosure in 1896; and he concluded that he must buy an interest in his country and its future prosperity, and buy it at once while the trade depression lasted and the abnormally low values obtained.

After a careful study, in which he made the best use of his knowledge of finance, he decided that this could be best accomplished by the purchase of a railway stock; for cotton might be further depressed by an increase in production, while bank stocks were selling too high, and industrial and mining stocks were too speculative. Next he carefully analyzed the values and prospects of several leading stocks whose prices had declined enormously, and finally decided upon Union Pacific common. He found that the physical assets underlying this stock greatly exceeded its market price, that its surplus earnings amounted to about. 16.5 per cent on its par value, or 13.7 per cent on its current price of $120; that the company was free from serious competition; that its freight and passenger rates were high enough to insure low operating cost and largo earnings in the future, and that its geographical position, its location in states whose wealth and population were growing very rapidly, insured a large increase in gross revenues.

This scientific analysis led Gordon to the conclusion that there was no better way to secure an interest in the country’s future prosperity, and thus prepare himself for the coming struggle with McConnell, than by buying Union Pacific. Accordingly he went into debt, as Mr. Harriman and many another financier had done in the last business depression, and staked his success upon his country’s future. He mortgaged the Gordon estate, which included his father’s residence, for $75,000 and bought outright, through the Commercial Trust Company, six hundred shares of Union Pacific.

Not many months elapsed before the expected crisis came. As Gordon at his desk in the mill acted more and more upon his own initiative, and less upon his father’s instructions, the friction with McConnell increased; and when in the late summer of 1909 Samuel Gordon passed away, the crape had scarcely been removed from the door before McConnell delivered to Ralph a practical ultimatum to the effect that he must sell his interest in the mill, or buy McConnell’s, or fight for the control of the business.

McConnell had secretly hoped, with the backing of friends, forcibly to get control of the mill; but this attempt had been given up on account of the discovery that Gordon still held a ‘ call ’ on, or option to buy, three hundred shares of the Beaver Mills stock, owned by the Commercial Trust. Company. This ‘call’ Gordon had bought while still in college early in 1903, on learning that the shrewd old Scotsman had purchased a considerable interest in the mill. Nevertheless, McConnell still confidently expected to obtain virtual control of the mill, since he had the best of reasons for believing that Gordon was financially unable either to buy him out, or to endure a fight for control.

The latter, however, thanks to his foresight in buying the call on the mill stock and in making the investment in Union Pacific, was now in a position to buy McConnell out without, difficulty. The only question was whether he should sell his Union Pacific, which, at $200 per share, now showed him a net profit of $48,000, or use it as collateral for a loan. After consultation with President Vernon of the Commercial Trust Company, he decided upon the latter course, his own feeling being that Union Pacific, even at $200, was still a good investment in the future of the country.

Moreover, he recalled from his economic studies, that the great, declines in security prices, such as occurred in 1873, 1893, 1902, and 1907, had invariably been preceded by excessively high interest rates, denoting a great dearth of new capital and loanable funds, as well as by a general congestion of freight traffic, and of orders for manufactured goods, denoting an inflated condition of general trade. Now, however, both interest rates and the volume of trade were moderate, and the head of a leading bond house whom Mr. Vernon had consulted, advised that standard railroad shares be held, since railroad earnings were steadily improving, money cheap, and confidence stimulated by the final disposition of the Payne-Aldrich tariff bill.

The day when Gordon received from the Commercial Trust Company a loan of $96,000 on his Union Pacific stock, and handed McConnell a check for $60,000 in exchange for his four hundred and fifty shares of Beaver Mills stock was indeed a happy one. It was a master stroke — the culmination of years of industry and stratagem. Now at last Gordon felt secure in his control of the mill and his sound financial position. He felt that his energy was quite sufficient for managing the mill with the help of his able assistants; he would now receive practically the entire income, which formerly went to McConnell; and he now resolved to apply the entire increase in his income to the liquidation of his loan at the Commercial Trust Company. He would then own outright, not only his Union Pacific stock, but also the controlling interest in the Beaver Mills.

More than a year previous, when he had mortgaged the family estate in order to invest in Union Pacific, and in the future of the country, he had signed the mortgage note with a trembling hand; but the wisdom of that step had been demonstrated, and this new debt, entered into for the purpose of buying McConnell out, he now reasoned was perfectly sound, even had it not been necessary. He reflected that the debts which had resulted disastrously in the past, were those which anticipated earning-power; in other words, they were debts entered into with the expectation of developing an earning power which did not exist at the time the debt was contracted.

The excessive canal-building, for example, which was one of the contributory causes of the financial panic of 1837, represented an unsound form of debt, because these canals were built through virgin territory, where traffic enough to make them profitable was sure to be many years in developing. Likewise, the excessive railroad-building, which did much to bring on the panic of 1857, represented an outlay of capital, which, owing to the sparseness of population, did not even promise to pay its interest. There were more miles of railway built in the single year 1856 than in the decade ended with 1841, and more built during the five years ended with 1856 than in the entire two preceding decades of railway-building.

Gordon’s debts, however, represented investments in properties having actual and highly developed earning powers. His Beaver Mills stock in 1909 paid 12.5 per cent, and his Union Pacific 10, while his net income from the two was nearly 8 per cent on the capital represented, even after deducting from his gross dividends the amount of the interest on his mortgage and his loan at the Commercial Trust Company. The canal and railway builders had invested wildly in the remote future of their country, whereas Gordon had invested scientifically in the immediate future; and yet, reason as he would that his debts were sound, he still believed that he must have made some blunder, for here he was standing helplessly by the ticker and watching the approach of disaster.

Should Union Pacific go below $170, the Commercial Trust Company would call upon him either to take up a part of his loan, or furnish additional security, both of which were utterly impossible. The credit of the Beaver Mills had already been pledged in the purchase of raw cotton, and in the attempt to keep the mill running, maintain its good standing, and fill its contracts in face of rising prices for raw cotton and falling prices for the finished goods. It was now May, and since December, 1909, the price of the goods Gordon manufactured had fallen a cent a yard, notwithstanding that the price of cotton itself had risen nearly a cent a pound. The mill was barely paying its operating expenses, and unless the tide soon turned, it would have to close its doors.

On the third of June, Gordon was again standing over the ticker. Before ten o’clock he had been calculating how long he could operate the mill with his present resources, pending a rise in the price either of cotton goods, or of Union Pacific. It was now one o’clock, and the quotations of Union Pacific came out ‘ 100 shares at $170⅜, 500 at $170¼, 2000 at $170, and 1000 at $169⅞.’ Gordon threw the paper in the waste-basket and left, the room. This meant his resignation as director of the Commercial Trust Company; and he well knew that McConnell, who had invested his $60,000 in one hundred and twenty shares of the trust company stock, would succeed him. It meant also a receivership for the Beaver Mills, as he could neither meet his weekly pay-roll, nor pay for five hundred bales of cotton, a bill for which had come in the morning’s mail.

It was no longer a question whether he had made a mistake, but how he could undo the mistake which he now fully realized and understood. He had miscalculated in one point only — the same point in which probably a majority of our corporations, bankers, and municipalities have miscalculated. His own debts, considered in themselves, were indeed sound. In his three properties, the mill, the Union Pacific stock, and his home, he had owned an equity of 45 per cent, whereas the stockholders of the Chicago, Burlington and Quincy Railroad and of the Brooklyn Rapid Transit Company own equities of only 36 per cent, in their respective properties, and control is frequently held through much smaller equities.

Gordon’s blunder, however, lay in his failure to observe that millions of others, like himself, were investing in the future of their country. It was not his own debts merely, but the debts of the people of the United States, which ruined him. This it was which caused the decline in the cotton goods in face of great seeming prosperity, and the decline of Union Pacific in face of easy money and large earnings. Our per capita consumption of cotton, after increasing from twelve pounds in 1875 to nineteen pounds in 1897, and twentythree pounds in 1900, made a further increase to thirty pounds in 1905, and continued almost undiminished at this high rate for four years. This increase of 58 per cent from 1897 to 1905 in the quantity of cotton consumed occurred in face of an average increase of 17 per cent in the prices of cotton goods, and involved an increased expense of 85 per cent per capita, notwithstanding the growth of only about 14 per cent in wages.

What wonder that the over-consumption of cotton goods was followed by falling prices? Gordon saw it all very clearly now. That 58 per cent increase in cotton consumption represented in part, the purchase of clothing on credit, and in part the expenditures, by wage-earners, for cotton goods, of portions of the immense sums borrowed by corporations, firms, and municipalities, and paid out largely as wages. Gordon reflected that of the $2,350,000,000 borrowed the past three years by our railways, fully half was ultimately paid out in wages either by the railways themselves, or by those from whom the railways bought their materials and equipment, and that about 13.5 per cent of these wage-payments, or nearly $160,000,000, of this borrowed money, was finally spent by wageearners for clothing.

Adding to this huge sum borrowed by our railroads in the three years ending with 1909, the still more excessive amounts of money put into building operations, the two billion dollars borrowed by industrial and manufacturing companies, the two-billion-dollar increase in bank loans, and the billiondollar increase in municipal indebtedness, Gordon discovered that the nation’s capitalization or debts during those three years had increased fully ten billion dollars — a sum larger than was the entire wealth of the United States in 1852.

Of this ten billion dollars of added indebtedness, fully $675,000,000 was presumably spent for clothing — and hence the over-consumption of cotton! Moreover, the debts of the people of the United States, according to Gordon’s careful estimate, increased fully four billion dollars in the single year 1909, whereas the amount of new capital saved out of earnings in an average year, and therefore made available for borrowing or for investment, scarcely exceeds one billion and a half. What wonder that Union Pacific went down, with borrowers clamoring for four billion dollars per annum, and the earners producing only a billion and a half to loan?

The debt-habit had outgrown our production of wealth, and the prices of both cotton goods and securities fell because the debtors were forced to curtail purchases, sell goods and securities, and reduce debts. That this great increase of indebtedness was perfectly natural, Gordon could nowsee clearly from his own experience. The rise in the prices of cotton goods had made it profitable to increase the capacity of the Beaver Mills by the use of borrowed funds; and the rise in the prices of all other products had likewise made it generally profitable to go into debt. Indeed, ever since 1897, when this general rise began money had been the poorest thing in the world to own, since its purchasing power had steadily decreased, while the values of practically all other kinds of property had steadily increased.

Hence the debt-habit, which prior to Elizabeth Gordon’s time arose out of the necessity of borrowing from the old world money, machinery, and supplies with which to develop our natural resources, was greatly over-stimulated during the past decade and a half. Indebtedness increased with the rise in the prices of commodities and merchandise, because this rise made it profitable; and hence began an endless spiral of higher prices — greater earnings— more capitalization or indebtedness—greater production and volume of business — larger wage-payments — more demand for goods—higher prices — and so on without any limit, until in 1909 the growth of indebtedness so over-reached the production of wealth that general liquidation became inevitable.

Gordon made the common mistake of accepting the valuations at the top of the spiral without discount. He had paid McConnell $60,000 for four hundred and fifty shares of stock in the Beaver Mills, which McConnell had bought in 1902 for $45,000,— notwithstanding that no physical improvements had been made in the mill in the mean time. Yet. the price McConnell demanded seemed reasonable, since the mill was earning 12.5 per cent on its stock, as compared with 8 per cent in 1902. Gordon well knew that, although the mill was capitalized at $300,000, it could be replaced for $240,000, but he felt that its capitalization was justified by its earning power. Here was $60,000 of ‘unearned increment’ — of wealth produced by no effort of the Beaver Mills, but solely by the greater demand for cotton goods and the higher prices.

This $60,000 represented wealth made out of no materials, out of no effort, and indeed out of nothing. It was fiat wealth, created by the dictum of the people that cotton goods should rule at high prices, and that their overconsumption should proceed at a high rate. This fiat wealth depended wholly upon this dictum, and was bound to vanish whenever the dictum should be repealed. But was there not fiat wealth in everything? Was not Gordon justified in regarding $300,000 as the real value of the mill, and $200 per share as the real value of Union Pacific? Even the stock of the Commercial Trust Company was selling at $500 per share, although the company’s combined capital, surplus, and undivided profits amounted to only $343 per share. This premium or fiat wealth of $157 arose out of the large deposits and the high earning power of the company.

Gordon had been caught with a typical pyramid of equities upon his hands. Even his Union Pacific Railway stock, which had been selected for its exceptional merits, had behind it only about $175 per share of actual assets. Hence, at $200 per share, there was $15,000 of fiat wealth in his six hundred shares of Union Pacific; and this, added to the $60,000 of wealth of a similar kind in his mill, and $15,000 in his estate, made a total of $90,000 of fiat wealth, or unearned increment, which was subject to almost instantaneous abolition — whereas his total equities amounted to only a little more than $195,000.

Nor was his situation materially different from that of millions of other people. The total debts of the people of the United States, including our net foreign debt, our municipal and other government debts, and our bank loans, amount to about $623 per capita, as compared with wealth of $1,430 per capita. In brief, at the values of 1909, Gordon owned average equities of 45 per cent in the properties in which he was interested, whereas the people of this country own an average equity of only about 56.4 per cent in their average per capita wealth, as compared with about 61 per cent in 1890.

Gordon felt a distinct sense of injustice in his failure and humiliation; for had the Beaver Mills been a great corporation, with widely scattered plants, and with assets which could not be definitely calculated, it might have survived its difficulties by an issue of notes, as has been done by many another corporation having a smaller proportion of assets to liabilities. Moreover, Gordon could not but feel that the appointment of McConnell as receiver for the Beaver Mills at the request of the Commercial Trust Company was an unkindness of fate; for why this good fortune should come to McConnell, who had had the audacity to buy stock of the trust company at a price 45 per cent in excess of its asset value, he could not reason out.

Gordon, however, was not the only sufferer, nor even the keenest sufferer, from the failure of the Beaver Mills; for the receiver found it necessary to close the mill for a time, awaiting a better condition of the cotton-goods market. Thus the mill employees were thrown out of work at the very time when it was practically impossible to obtain other positions; and, as is usually the case, it was the laborer who ultimately paid the chief penalty for the over-expansion of indebtedness. The capital invested in the mill remained intact, notwithstanding its change of ownership, and the income on this capital was only temporarily suspended. The employees of the mill, however, suffered more or less permanent injury — being subjected to actual want for a period of months, and obliged to accept inferior positions wherever they could be obtained.

When the Beaver Mills again opened their doors, and Gordon returned to work, it was not as treasurer and principal stockholder, but as superintendent, and his desk was that so long occupied by McConnell. Nor were his case and that of the Beaver Mills unusual, except in degree. He found some poor consolation in the thought that it was the growth of the debt-habit principally, rather than his own mismanagement, which had resulted in his humiliation. As he reflected that the average increase in the production of real wealth, namely, commodities and merchandise, was only about 20.4 per cent per capita from 1890 to 1909, as compared with a growth of 37 per cent per capita in ‘ wealth ’ as measured by market valuations, and with an increase of about 54.2 per cent per capita in debts, it seemed almost strange that he had not realized the situation in time to save himself.

In this error, however, he represented a general tendency, for he accepted the valuations at the top of the spiral of rising prices and growing indebtedness at par. Moreover, he reflected that our foreign debt, which already amounts to about $3,500,000,000, is increasing at the rate of more than $160,000,000 per annum; and that the growth of our municipal indebtedness has so far exceeded that of municipal revenues, that last year these revenues amounted to less than twenty-six cents per dollar of debt, as compared with more than thirty-nine cents in 1904. Our railways, in the past four years, have increased their indebtedness nearly 27 per cent, as compared with a growth of only 17 per cent in the tonnage carried.

Gordon, however, is not dismayed by his failure. As he mingles with his associates and fellow employees, he insistently advocates the accumulation of savings or ‘capital’ for future investment. He reasons that the spiral of rising prices, growing incomes, great extravagance, and increasing indebtedness has again reached a climax similar to those of 1808 and 1864. He is not a pessimist, but believes that the declines of the current year in the prices of cotton goods, commodities, and securities, occurring almost wholly from very excess of indebtedness, foreshadow a slower pace in both our manner of living and the expansion of our trade and commerce. His fixed business purpose is to accumulate savings for the day which he maintains is ultimately certain to come, when the pendulum will swing to the other extreme, and the market quotations of commodities, merchandise, securities, and other forms of property will fall low enough to more than wipe out the fiat wealth of 1909. It is his plan of recovery, upon that day, again to invest in the future of our country to the fullest, extent which his resources will permit; but upon the next rising tide of prosperity, optimism, and extravagance, he will realize upon his investments before the debt-habit, again outstrips the production of wealth.