Record  and





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June 32,1889





as no substantial or durable repavement of the streets can be effected
without tbem, would it not be better for the city to refuse to go
extensively into the business of repaving until it has the power to
construct these tunnels, and so to spare the pavements? Anew
.danger to the pavements has now arisen in the liberty given to tbe
street railroads to change their motive power. If the electric motor
becomes available this wiU not matter, but if cables are substituted
for horses the inti-oduction of them would require new excavations.
The companies should be forced to elect whether they will or wiU
not introduce a new motive power before any repavement is
attempted of the streets through which they run.

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The law regulating the lending of money on real estate by sav¬
ings banks certainly needs amending. Aa it stands at present,
these institutions are permitted to lend on real estate not more than
50 per cent, of its value, and there is no doubt that those who con¬
scientiously endeavor to live up to the letter of the statute are
unnecessarily hampered. The law, instead of working to the
advantage of depositors, works to their injury; for on the 50 per
cent, basis savings banks will find it either difficult to put out sur¬
plus funds on real estate or wiU have to lower their rate of interest
to the lowest point. A 60 per cent, limit would be quite low
enough. It would amply meet the intentions of the present law.
Indeed, in large cities, where the general course of the value of real
estate is upward, the loan limit might with safety be extended
sUghtly beyond even 60 per cent., though of course in this matter a
great deal depends upon what interpretation is put upon the word
"value." This "value" can be arrived at only by appraisement,
and there is no doubt that in appraisements for loans the "value"
arrived at often faUs very little short of the extravagant. Thus
loans on the 60 per cent, limit would average perhaps nearer to 70
than 60 per cent. But even with this the risk upon good city prop¬
erty is very slight, though in certain of the rural sections of the
State the 50 per cent, limit is none too low. The law should dis¬
criminate between rural and urban property, and in raising the
limit should define more clearly than it does what is meant by
"value."    The term is wide enough for a coach-and-four to go

tbrough.

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No one would expect that a city that prides itself upon its public

school system would have to refuse education to at least 15,000
children for want of sufficient aocommodation. Yet that is the
condition of affairs here in New York. Superintendent Jasper says
it is due to insufficient appropriations. This is very probably correct,
for while the appropriations for the Police Department have
increased about 30 per cent, since 1878, for the Health Department
85 per cent, and for election expenses 64 per cent., for the Board of
Education the increase has been only 18 per cent. The increase
merely of population would necessitate agreater increase than this,
and unless great economies have been effected it is difficult to see
how the old standard has been even maintained, leaving entirely
out of consideration the number of children whose parents have to
pay for the education for others' children which they cannot
obtain for their own. The Department of Education hi^.s always
been supposed to be exceptionaUy weU managed; but if this is the
result, what condition are the other departments in ?





An analysis of the vote of the Prohibition amendment in Penn¬
sylvania gives significance to the result in more ways than one.
On it may be founded arguments almost irrefutable in favor of a
local option law. Taking for the purpose the figures printed in the
Evening Post on Wednesday afternoon, June 19th, which, if not
strictly accurate, are nearly enough correct for the purposes of
comparison, it will be found that fully fifteen-sixteenths of the
majority against the Prohibition amendment to the Constitution
was picked up in Philadelphia, Alleghany, Berks, Lancaster and
Schuylkill coimties, which contain most of the large cities in the
State, while about seven-ninths of it came from PhUadelphia and
AUeghany counties alone, containing the three largest cities. Or,
looking at the question from another point of view, it was in the
argricultural regions, as distinct from the mining and manufact¬
uring, which gave Prohibition its support. If the counties,
instead of voting on a general amendment, had voted each separ¬
ately on their wish to wipeout indiscriminate liquor seUing within
their borders, thirty out of sixty-six, covering in area nearly if not
quite half the State, would have declared in favor of the change.
These figures bring out clearly the essentiaUy local bearings of the
question. It would be as ridiculous to pass a general law for¬
cing one county to submit arbitrarily to the will of another as it
would for a father to make his girls climb trees and his boys play
with doUs.





Matthew Marshall, in the Sun, has sounded an alarm against the
increase of speculation in the "Trust" stocks, which lately has
been so prominent a feature of the stock market. He rightly con¬
siders them to be one of the most dangerous class of secm-ities on
the market,   Iu the first place the public really knows notlupg





about them. They render no reports. If they pay dividends,
nobody can tell how far they are earned ; if they do not pay
dividends, no one can tell how far the certificate holders may not
have been swindled. In other words, tbe investor is completely in
the hands of the managers of the combination, and there is no
more reason for assuming that these gentlemen will ignore this
advantage than we have for assuming that a cow will ignore cow-
feed. The experience of the buyers of railway securities in the
Northwest does not encourage a would-be investor to place any too
much confldence in the conductors of great business enterprises.
How very blind the buying and selling of these securities is may
be illustrated by the case of cotton-seed oU, which has fluctuated
from over 60 to under 30 without anything certain having been
known meanwhile as to any change in value of the security. But
there ai'e other objections equally weighty against this too indis¬
criminate speculation in trust stocks. These combinations are
simply business experiments. Tliey have not only against them all
the ordinary perUs of a business venture, but these perUs are com¬
plicated by the fact that they are always in danger of adverse legis¬
lation. The proper position for a conservative investor to take, for
the present at all events, is " hands off."





Two Popular Errors,

The Commercial Advertiser, of Buffalo, is surprised that the
French " could sink " $300,000,000 in the Panama Canal and neai-ly
$100,000,000 in the copper syndicate, and yet not suffer from a
widespread panic and commercial paralysis.

This surprise is due to a misconception.

The Commercial Advertiser evidently shares the popular idea
that every financial disaster destroys wealth that previously
existed ; that when, for instance, a large cotton or iron mill faUs,
say for three or four miUions, there is so much less of some¬
thing in the country. Nothing of the kind occurs. The "loss"
which is spoken of in connection with such affairs is relative,
not absolute; personal, not national. The price of the pig ii-on
owned by the mill maj' suddenly decline several cents and thus
involve the company in financial difficulties. Their "loss" may
run up into the hundreds of thousands of dollars; but there will
be jiist as much material wealth in the country, just as many
tons of iron, possessing the same degree of utUity as when
the company was considered solvent and prosperous. It may pass
into the haads of otber people, but it exists. Tbe liabilities involved
in the failures in the United States last year amounted to
$123,829,000 ; but that amount cf wealth was not destroyed.

Or, to show tliis matter in another light, suppose new coal fields
so marvellously rich and accessible were discovered to-morrow that
the price of coal should decline one-half, the probabihties are that
many of the present mine-owners would be financially "embar¬
rassed," and we should hear of theu- immense " losses ;" but it is
easy to see that in such a case the real wealth of the country would
be unaffected by these losses to individuals.

So it is in the case of France. There has been no commercial
paralysis in that country; it is as prosperous to-day as it was
yesterday, despite the " loss" of $400,000,000—because the coimtiy
has suffered no such real loss whatever may have happened to
certain individuals.

ParaUel to this error—the reverse of it—is the belief that an
advance" in prices means an increase in wealth. It is true some
individuals are advantaged; but the nation is no better off. If the
price of every commodity were to be doubled to-morrow, would
there be twice as much wealth in the country as there is to-day?
No one will maintain this. Stated in this way the fallacy of the
idea becomes clearly apparent.

The advance in the price of wheat last summer did not increase
the wealth of the country, for if the contrary is held it must be
admitted that it is in the power of a non-producing class, such aa
Exchange speculators are, to double and quadruple the national
wealth ; and a man like " Old Hutch" becomes a more importaut
factor in creating wealth than thousands of toUers in farm and
field.

A decline in prices is often regarded as a calamity, whereas it is
often a blessing. Low prices usually mean ease of production,
abundance, and consequent increase of wealth. If the corn acreage
should yield double this year the wealth of the country would be
increased by the equivalent of about §900,000,000; but corn would
be very much cheaper than it is, and so would meat, poultry, eggs,
lard, alcohol and other provisions.

Every discovery or new invention that increases or cheapens pro¬
duction tends to lower prices. The ideally wealthy state is the one
in which the object of every human desire is as plentiful and as
easily obtained as the air breathed, and consequently is without        i

price.    Yet the pubhc usuaUy hail every advance tn prices as a gain    M^
to the nation, as an indication of gi-eater prosperity I                             ■

We shall have truer ideas of wealth and prospei'ity when we
cease to estimate them by a monetary standai-d, and instead
measure them with the yard-stick and the scales. When a nation
J8 produging aad using mwe tpns of wheat, iron, cottonj more food