The Record and Guide.





1077





. The  World  of Business.

The Latest Tlieory of Depression*

The nature and causes of commercial panic and depression haa been a
favorite study of economists, especially in modem times. The number of
theoriea which are evolved each year, thruat upon the attention of the
public and knocked out of shape by an unforaeen and unexpected turn of
affairs, ia something marvelous. One of the theories which has become a
favorite in certain quarters is tbat panics are governed by soms mysteri¬
ous law of periodicy. If oue must have a reason for everything, tbis
attempt to induce arithmetical formularies ou economic science is perhaps
as harmless as any tbat might be suggested, Aa a matter of fact the
relations between industrial agents and communities have become ao com¬
plex that the iuterp retail ou of phenomena and problems is an exceedingly
difficult matter. A war, a pestilence, a series of prosperous seasons, a
period of general dearth, may affect the economical condition of the world.
A new aud very ingenious theory as to tbe causes which lead to periods
of high prosperity and extreme depression was given to the public at tbe
recent meeting of the American Association for the Advancement of
Science by Mr. William Kent in the form of an elaborate paper entitled
"Irregularity in Railroad Building and Recent B.usiness Depressions."
Tbe paper has been briefly summarized as follows:

The author presented a table of statistics for each year irom I860 to 1883, inclu¬
sive, of miles of railroad built io the United States, of production of pig iron,
ir.oD rails, steel rails aoO of rolled iron other than rails, of rail importailons, of
prices of pig iron and of iron and steel rails and of immigration; also, a diagram
made from the flgures, which showed how the fluctuations in railroad building,
in production, importation and prices and iu iromigration coincide with each
other. The speaker divided the twenty-four years from 1860 to 1883, inclusive,
into four periods :

1. Tbe period of modern development, 1860-98, io which railroads built, pig
Iron and rails produced and number of immigrants all increased at an even
rate,

3.  The first pBTiod of violent development, 1869-73, inclusive, in which railroad
building, pig iron and rail production, importation and prices and immii>;ratlou
allenormously increased.

g. The period of depression, 1874-78, characterized by; diminifihed rate of rail¬
road buildiog, diminished production and. greatly diminished prices of pig Iron
and rails in almost absolute cessation oC importation of rails and in greatly
diminished immigratioa.

4,  The second periud of violent development, 1879-83, characterized b^ great
increase of railroad building, of production oC pig iron, of production and impor¬
tation of rails, of immigration and of prices.

It was shown that the actual cost of railroads built in 1875 was more than
$■200,OJO,QOO less than that of tbe railroads bnilt in 1873; that the cost of rails pro¬
duced in 1875 was over 847,000,001) less than in 1872; of rails imported J44,000.0u0
less, aud of pig iron produced 883,OuO,i:00 less. The decrease in expenditure for
railroad building of $^00,000,000 caused the throwing out of employment of many
thousands of laborers, the stoppage of mines, furoacea, milla and equipment
shoes of all kinds, diminished tne Incomes of remaining employed aud conse¬
quently their purchasing power. The effect was continued distress throughout
the whole commercial world,

Mr, Kent believes, therefore, that irregularity in railroad building is
the chief proximate cause of both the depression of business of 1873-78 and
that through which we are now passing. The present depression, accord¬
ing to Mr. Kent, is because too many miles of railroad were built in
1S79-S3, and too few will be built in 1384-85 to keep our furnaces and mills
(whose capacity can easily build 1^,000 miles per year) employed. In
other worda, the railroada are not built at tbe right time. The essayist has
agreat deal to say about the "Insanity of capital," which he defines as
"the spirit which takes a fever at one time and causes speculation and
overconfldence in the stability of ail thinga financial; at another it is in a
state of collapse and causes stoppage of the best investments, decline of
the best securities, want of confidence and panic" The "insanity of
capital," so ws are assured, "is ths ouly sipianation that cau be offered of
ths strange delusion which leads men to build railroads in the years when.
it costs the most to build them, and in not building tbem when they cost
least. In IHT? and 1S7S iron and steel of all kinds touched the lowest
figiires reached during the century, and tbe wages of'labor were lower
than they had been since the beginning of the war, Tbe country was then
really prosperous, and there was an abundance of money waiting for
investment. Vet in eacb of these yeara there were fewer miles of rail¬
road huilt than iu 187f}, and fewer than iu any of tbe six years from 1863
to 1873, inclusive, in which prices of iron aud steel were more than double
and wages of labor nearly double what they were in 1877 and 1878. In
1879 railroad building began again, and what might be called the rea¬
sonable number of 4,731 miles were constructed iu that year, but the
insanity of capital pushed the prices of iron and steel up to the extrava¬
gant figurea of February, 183ii, which should have checked every railroad
enterprise. But, instead of checking, the high prices seemed to increase
the fever, and, notwithstanding continued high prices, the insanity did
not reach its climax until it bad caused the building of 11,591 miles iu
ISS^,"—Age of Steel.

Tbe Record of Failures.

The insolvency record of the passing year es compiled by the commer¬
cial agencies does not indicate tbat the country has yet passed out of the
trough of the sea of business troubles. Bradstreet's predicted early in the
year that the commercial mortality ■would be heavier than the year
before, and tbe results so far exceed its expectations. It ciphered out that
there was a likelihood of 10,400 business deaths within the current year,
but it now states that the number will probably reach ll,5(i0. The accel¬
eration of tbe downward tendeucy has beeu most marked in the last three
months. As business is now very quiet, and the hopes entertained during
the summer that good crops would give us a good fall trade are certaiuly
doomed to see their fulfillment deferred, it is not likely that the remaining
montha of the year will see any change for tbe better in these statistics.
Since 1880, when failures fell off, there has been a steady deterioration in
the solvency of our business concerns, and 1884 will be the worst of the
. last four years in that respect. The country can afford to bear the truth
about this, for it is in all essential pointa in a sound condition. Newspapers
might well hesitate to tell such unpleasant facts aa theae if there were
danger that tbe terrors of panic would be precipitated by their (ranltness.
But there is no panic in the air. We are passing through a crisis without
a panic. There is not an unliquidated speculation in the United States
to-day except in tbe case ot a few stock cliques and stock-clique
bauks in Wall street, for which the country at, large cares nothing.
All prices are low. There , is no widespread debt, Tbere has been no
real eatate,speculation, Tbe currency is sound and the banks are solvent.
That, all this being so, we should have had as many failures and aa mauy
breaks in pricea as have occurred in the last four years has been a genuine
surprise to the mo.^t careful observers. Not only were the shrewdest manip¬
ulators of Wall street caught off their guard by the reverses of the
market, but the thoughtful students of busioess problems were at fault in
theiroutlook. The commercial journals may be searched in vain for any
warnings in 1830 that the country was on the eve of so severe an ebb in the
tide of prosperity. Tbe millions on millions that have been dropped by
the leaders of Wall street—the richest and most powerful being as a rule
the heaviest losers—are proof enough of their complete misapprehension
of the tendencies of the last four years. As tbis crisis baa had its origin in
the excesses of the speculative spirit, and its most sensational caatrophea
have beeu furnished from the speculative centre, it is in that direction we
must listen for the last thunderclaps of thestorm. If there are stocks held
by cliques at prices above their real values, these must come down and





the cliques muat be swept away by the irresistible current of liquidation.
If there are banks in New York wbich are loaded up with poor securities
and bad loans, they must make up their miuds to write them off their
books. Apart from such speculative values as may still be sustained in
"New York, it is as nearly certain as anything can be that values at large
are at the bottom, and, with plenty and abundance on every hand, we
mayrationally look for a healthy revival in business and finance as soon
as the atmosphere is cleared of tbe shadows cast by the failures that really
occurred months or years ago, but are only now being announced. An
increase in the number of announcements this fall seems to be likely, but
no one need be frightened. The failures are really old; it is the announce¬
ment that is new,—Chicago Tribune.

The Greatest  Manufacturing  Ration.

The United States is now tbe largest manufacturing country on the
globe. This is shown by Mr. Nimmo in his annual report recently made
to the Secretary of the Treasury, The report just made shows that the
vabte of the products of the various industries of the United States is
seven times the value of the foreign commerce of tbis country, nearly
three timea the total value of the foreign commerce of G-reat Britain and
Ireland, aud five times the total value of the foreign commerce of France,
including both imports and exports. The total value of the industrial
products of tbe United States is shown \o exceed more tban twice the
total value of the merchandise of all tbe countries of Europe. As showing
the estent and value of our home markets, the report also shows that 09
per cent, of the coal mined here, 95 per cent, of iron and steel products,
95 per cent, of leather, 99 per cent, of wool ami cotton products, more
than 99 per cent, of silk manufactured, and 97 per cent, of our products of
glass, glassware, eartheuware and stoneware are consumed in the United
States. The value of products of American manufacture consumed at
home is more than fourteen times tbe value of the exports of manufac¬
tured products from France to ail other countries, and is five times the
value of the manufactured products of Great Britain and Ireland
exported to other countries, Tbis statement indicates tbe over¬
shadowing value of our home markets aud the enormous con¬
sumptive capacity of our population. In reference to periods
of depression and of prosperity which have succeeded each
other iu the biistory of our industrial and commercial growth-
Mr, Nimo-osays: ■'Experience has proved these fluctuations to be but
symptoms of an exuberant and uncontrollable spirit of enterprise, out-
ruuniog the possibilities of a healthy and well-proportioned development,
eveu iu tbis land of abounriing natural resources," We are now passing
through tho reactionary effects of this overflow of industrial enterprise,
and pending the adjustment between supply and demand, manufacturing
aud commercial interests are alike depressed. There is cause for just
pride, however, in the fact that the United States leads the world in the
extentof her manufactures, the largest part of wbich have beeu developed
withiu the last twenty years. At tbe beginning of that period the greater
part of our cutlery, irou, steel, glassware, woolens, cottons and silks were
imported; now home products supply the largest portion of houae markets,
and our gold is kept here instead of flowing abroad to pay for foreign
goods, Tke balance of trade is in our favor, and gold from Europe flows
to our shores. Our wealth consists not alone iu our soil and minerals—the
product of the forge and loom are also a great element in our prosperity.—
American Grocer.

The Dominion and the Antilles.

A commissioner, duly accredited by the local government of the island
of Jamaica, recently appeared at.Ottowa, Canada, asking tbat the island
be admitted' into the confederation of the Dominion. The proposition
was reijarded witb great favor by the members of the cabinet, but the
commissioner was informed that no action could be taken in the mat¬
ter till tho eonseut of tbe British government could be obtained. The
proposition to admit Jamaica into the Dominion confederation would
appear to be a desirable one to both parties. It is true that the island
is a long distance from any portion of Canada, but it is still further from
any portion of Great Britain. The trade between Jamaica and Nova
Scotia, New Brunswick and Prince Edward Island is now large and ia
constantly increasing. The people of the island that enjoya a tropical
climate desire the grain, meat and pine Inmber produced in Canada
and the fish that are caught along the coast. The Canadians wish tbe
tropical fruits, spices, coffee and ornamental wood that are produced in
Jamaica, The Canadians desire a winter resort that is under their own
government. The inhabitants of the heated islaud entertain similar
views iu relation to a summer resort. The people of Jamaica have for
some time past complained much'of their treatment by the British govern¬
ment. The feeling is that the island has been neglected during the
past few years. At one time it received much attention. All its prod¬
ucts found a ready market in England, At present England has so
many possessious iu ths tropics that the productions of Jamaica come
iu competition with thosa of many other countries. The people accord¬
ingly wish to establish close relations with a country that will afford a
better market for their products. It ia reported tbat most of tbe
work on the Panama canal is being performed by laborers from tbe
island of Jamaica. When tbe canal is completed, if it ever is, an
immense trade might be established between Jamaica and British Colum¬
bia, if both were under the same government. The productions of the
two countries are entirely dissioiilar. The voyage Irom Kingston to
Victoria would be comparatively short, and, owing to the peculiar prod¬
ucts of the two countries, cargoes could be obtained both ways. Gen¬
eral Grant, when President, strongly urged tbe annexation of one of the
Wesb India islands to the United Siates in tbe interest of commerce aud
our food supply. He believed that tbe island would soon be developed
by means of Americau enterprise and capital if our goverment waa
extended over it, Tbat both Jamaica aud Canada would be beneflted by
admitting the latter into the confederation seems probable.

Wheat in the British Possessions.

With the wheat market in the present condition it must be very dis¬
couraging to farmers to see the London Miller coming out with an illum¬
inated map of the great British Northweat, ahowing how a direct and
nearly all water route is to be opened up between Liverpool and 2li0,0i 0,000
acres of the finest wheat landa in tbe world, The records of tbe Hudson's
Bay Company sbow tbat navigation by tbe Hudson's Bay route to Eng¬
land ts open from the end of June to tbe flrst of October. From Fort
York on the west shore of the bay, the Nelson River is navigable for
light draft vessels hundreds of miles inland, and it ia believed that a
small expenditure would open it to vessels of the aize of a St. Lawrence
propeller. Iu other words, the wheat belt of the Manitoba region Is
practically within 400 miles of tide-water. A railroad is to be built
spanning this 4(i0 miles. The Canadian Pnciflc ia already taking in the
population destined to raise tbe wheat. A great network of lakes and
rivers navigable tor tows and barges cuts this blizzardoua region In
every direction. It is estimated that at least one-third of the wheat
area would be provided with tolerable means of transportation by the
construction of a single railroad from Winnipeg to Port York, the lakes
aud rivers acting as feeders to the railroad. The Canadian government
now has an expedition out making a survey of the Hudson Bay route
and tbis year witnesses considerable progress towards realizing the hope
oftbe Manitobaus. Aa the Miller remarks the great thing neceaeary to
lUe utilization of this enormous wheat belt is the boue and sinew to grow
the wheat. Settling a wilderness is a work of time, but the people of tbe
United Statea have their own example to prove that with good manage-