1274





The  Record and Guide.





Decei.





tured goods in Central and South America will remain uncon¬
firmed, or if confirmed inoperative because of the failure of the
House to devise the necessary machinery for carrying them out, as
is the case at present with the Mexican treaty.

We have often urged in these columns that a certain proportion
of both the Senate and the Houae, say one-third of each body, should
be chosen by a vote representing the whole nation. We want
legislators in the Senate and House who will represent not Rhode
Island and Nevada, Podunk or Bunkum, but the whole United
States.    It is localities which are now deferred to, not the nation.

Then there is a growing feeling that executive authority must be
increased and legislatures stripped of much of their present power.
The business of the world is best transacted by presidents, governors,
mayors, rather than by hair-splitting and contentious lawyers
assembled in legislative halla. The powers given to the mayors of
NewYork and Brooklyu and taken from thejildermen of those
cities show the tendency of things. In the meandiDe the buyintsa
world must make up its mind that there ia no hope of beueficeut
1 egislation from Congresa during the present session.





Why Low Prices?

The Loudon (Ecgland) Timber Trade's Journal comments at
some length upon the controversj'' which the Northwestern Lum¬
berman has had with The Record and Guide on the subject of the
low prices now prevailing throughout the world. The Lumberman
took the very generally held view that the cause of the trouble
was overproduction, while The Record and Guide was of lhe
opinion that the depression was mainly on account of the shrink¬
age of tbe metallic basis of the precious metals which measure
prices.

A first and superficial view of things is very often incorrect.
Our senses tell us that the sun rises in the east and sets in the west,
while the earth to r 11 visual appearance is a flat surface; but an
instructed pereon knows tbat the earth is not fiat, but round, and
that it is the earth which rotates on its axis from west to east,
thus giving the impression that the sun moves in the opposite
direction. How natural then is it when we see elevators filled
with unsalable grain and warehouses stocked with goods for which
there is no market to say that there has been overproduction?
This explanation is so sirnpleand an obvious one that it is generally
accepted almost without question in business circles. Hence the
efforts to restrict production. There are coal combinations to stop
mining, mills cease running, furnaces are blown out, working
people are thrown out of employment at the beginning of winter.
and capita! accumulates at money centres becausa its owners will
not produce on a falling market.

But we have held that the trouble is not overproduction of either
food or clothing, for it is notorious that iu the best of times the
mass of the community have not more than they can eat or wear-
Empty stomachs and bare backs are alwaya plentiful in this
unhappy world of ours. There was never a time in the history of
mankind when there was more food or clothing than could have
been consumed if those who needed the gooda had money where¬
with to buy them, Tbis is our contention—there is not sufficient
money taking the whole world through to enable the working
classes to use up the store of food and raiment which are waiting
for a market.

We hold that the history of mankind shows that in every period
when money has been abundant that trade has been prosperous and
no one ever dreamt in these times that there was overproduction.
It is also true that when the money supplies have been cut off
that the trade of the world haa suffered and goods become unsala¬
ble as the masses of mankind were pinched because of the insuf¬
ficient supply of money rewards for their labor. To make this
matter plain we propound the following queries:

Ist. Is it not true as a matter of fact that dnring the reign of the
early Roman emperors the world was exceptionally prosperous,
and at the same time the amount of gold and silverier capita in
circulation was unusually large?

2d. Is it not also true that during the Middle Ages Europe suf¬
fered severely from extreme poverty? The religious infiuence of
the times was opposed to the mining of gold and silver and the
proportion of the precious metals fell off to about $11 per capita.

3d. Is it not also true that the only prosperous communities
toward the close of the Middle Ages were the commercial cities
Florence, Genoa, Venice, &c., which drew unusual supplies of the
precious metals from the East ?

4th. Did not an era of great prosperity follow the Spanish con¬
quest of Central and South America, which resulted in pouring
within a few years some $600,000,000 in silver into the channels
of trade? Was not the splendor of the reigns of Charles V. of Spain
and Queen Elizabeth of England due to the prosperous trade based
upon this addition to the money metals of the world?

5th. Did not the discovery of gold in Caiifornia and Australia
stimulate wonderfully the trade of the whole earth ? The papula¬
tions of every country were better employed and remunerated be¬





cause of the streams of gold which flowed through all the arteries
of commerce.

Bth, Was not the demonetization of silver by Germany
and the United States in the spring of 1873 followed by a distress¬
ful panic in both countries m the fall of that same year? Other
nations were also injured by the fall in prices due to the fact that
gold was made the sole unit of value.

Tth. Is it not Irue there waa no recovery in values in the United
States until the Bland Silver Bill waa passed over President
Hayes' veto in the spring of 1878? This rendered possible the
resumption of specie payments in January, 1879, which added all
the gotd and silver in the country to the paper money previously
in circulation. Thia doubling of our currency was the prime fac¬
tor of the rise in prices and prosperous times which followed.

We might multiply queries like theae, but does not the merest
tyro in finance know that any addition to the currency of the
country enhances prices, while every reduction in the money
supply brings down values ? We have said nothing in the above
with reference to paper issues ; but is it not known to everyone
that periods of paper inflation, such as we had for instance during
the Civil War, give us for the time an active business and apparent
prosperity ? Is not the popular craze about greenbacks due to the
new businesa they brought the country in times of depression
and peril ?

On thia point let us not be misunderstood. We bplieve in gold
and silver money and in paper convertible into the precious metals.
These we regard as the solid food, the wholesome austainer of the
trade of the world. Irredeemable paper currency is an unwhole¬
some stimulant. It acta like the strong spirits which cause a
momentary elation to be followed by a painful depression.

The business distress the world over is due to two causes^one
natural aud the other artificial. The supply of gold has been
growing less year by year. This is the natural cause of the depres¬
sion in prices. The artificial cause is the demonetization of silver
by the commercial world. At a time in tbe world's history when
there is a prodigious expansion of trade and industry we have
cut off silver from the task of measuring prices and made our
steadily diminishing stock of gold lhe sole unit of value. Hence
the crash in prices, which is only auother way of saying that gold
has augmented enormously in value. Aud we are only in the
beginning of our troubles. Stopping production and starving the
working classes is not going to help us at all. If the consuming
classes, which are the bulk of our population, didn't have money to
purchase the goods produced a year ago they will have still less
money to buy goods nest year and the year after. All business
men and borrowers have reason to dread the future, for debts con¬
tracted in the past in a cheap currency will have to be paid in a
dearer cun-ency. A few days since w^e were told that Austria waa
about to resume specie payments on a gold basis. The next news
that came was of the failure of the Bohemian Mortgage Company.
A panic is shortly in order upon the Yienna bourse.

Our English contemporary wants to know what is the remedy ?
We answer, the remonetizing of silver by the commercial nations.
It is and always ha? been the favorite money metal of mankind.
It is almost the only money metal used in Asia and Central and
South America. It is the money of retail trade and of the poor in
gold nations. Its degradation by the nations has been a blunder,
and a continuance of this policy "will be a crime against mankind.

----------•-----—

One of tbe dangers of the telegraph system of the country being-
in private hands is that news may be doctored to affect the mar¬
kets. A short time since there were reports in the evening papers
that a panic was raging upon the Vienna bourse. This was denied
iu the morning papers ; but now comea report of an embezzlement
of over a million dollars in the Lower Austrian Discount Bank,
with au agitated feeling on the bourse in consequence. This is
published in all the papers, but the following paragraph is given
only in the Herald, being either suppressed by or not furnished to
the other morning journals :

"The Raubitsehek iron flrm haa failed with liabilities amounting to
£55,(jO0, Marco Cohen, of Braila, has failed, with liabilities of £iO,000.
His son, S, M, Cohen, of Bucharest, has also failed,"

The fact that tbe great Bohemian Mortgage Company had failed'
was allowed to be made known duriug the week and that thers"
was trouble among the savings banks in consequence.    The signifi¬
cance of tbis financial disturbance is that it followed fast upon the
announcement that Austria was in the market to purchase $250,-
000,000 of gold to resume on a gold basis.    Wt^ all recall the panic
wliich occurred in this country and Germany in 1873, within six
months after silver was demonetized  by ours and the German
government.    A first-class panic is in order in Austria, the effects'
of which will be felt throughout the commercial world and which
will add to the prevailing distress in the trade of the several nationa.
This will account for the suppression of the news by Jay Gould's
orders, who feared the effect upon stocks in this market.    For¬
tunately a new cable has been opened which is not under the
control of the Gould syndicate.     The Mackay-Bennetc company