May 33, 1891





Record   and   Guide.





SJ5





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Vol. XLVII





MAY 23,  1891.





No. 1,210





NOTICE OF REMOVAL.

Tne publication offices of The Record and Guide have been
removed to Nos. 14 and 16 Vesey street, over The Mechanics' and
Traders' Exchange, a few feet ivest of Broadivay.





THE stock market iias shown its dependence on European news
for ita moving influences. Tlie engagement of gold for
export, with accompanying rumors of trouble in one or the other
great capitals of tbe Old World, has been tollowed by selling and a
decline in values, while yesterday the expectation that the export
movement of gold was near its end caujcd an advance which had
some of the features of a healthy bull movement. In this connec¬
tion the most encouraging feature probably is the movement of
gold from Londou to Russia, as it helps to remove one of the most
threatening features of the situation. There couH be no satisfac¬
tory condition of the money market abroad so long as the great
centres—especially those belonging to nations upon which the
powers at St, Petersburg looked witli disfavor—were the deposi¬
tories of Russia's large gold supply, which could be tised aa a means
of disturbing their finances atany moment. Any movement toward
the lessening of London's and Berlin's debt to Russia to within
reasonable limits is, therefore, as encouraging abroad as is the
decline in gold esportations on this side. While the financial
atmosphere ia clearing, it must be remembered, however, caution
is still a virtue. We have this year shipped over forty millions of
dollars gold, and may have to send more this year, and cannot
hope for a return movement for some time; meanwhile the home
demands are likely to increase, with a tendency to create strin¬
gency in the money centres. This probability will tend to limit the
advance, and while there may be in the immediate future a rise
in values, consequent upon the more cheerful condition of things at
home and abroad, it is not likely to be great. The real bull market
everybody hopes to see is doubtless postponed until the effect of
our recent auriferous sacrifices has more certainly passed away, to
be followed by the more pleasing results of good harvests, or the
certainty thereof, accompanied by an increased European demand
for American cereals.





SINCE the interests involved in the rehabilitation of Argentine
finance are so enormous, and the bankers and others represent¬
ing these interests so powerful, it might have been supposed that
the action taken to secure the creditors would have been far more
energetic and effective than it has been. But those whose business
it is to move in the matter have been extraordinarily timid. Months
have now passed since tbe failure of the Barings and the constitu¬
tion of a committee to negotiate with the Argentine government;
and nothing but chaos still reigns in al! that appertains to Argentine
finance. Signs are not wanting that mauy of the creditors are
beginning to chafe under this tantahzing and possibly disastrous
inaction. Some of them are proposing that a commission of finan¬
cial experts from Europe, duly authorized to investigate all the
conditions of the problem and propose a well thought out scheme
by which Argentina could be placed in a condition to make a fresh
start unencumbered by the worry and annoyance incidental to the
tinkering policy which has been adopted. Others, particularly in
Germany, advocate a more vigorous hne of action. They want a
committee apjiointed to assume charge ot the finances of the
Argentine government for the purpose of working them in the
interests of the creditors—thus putting the country practically into
the hands of the receiver, and they want the European governments,
if necessary, to exert their influence in favor of such a plan.
Which of these measures will be adopted, if any, it is im¬
possible at this distance to make a plausible surmise;
but unless some decided action is taken the Argentines will con¬
tinue to flounder along until such remeslial measures may be too
late.    It will be remembered that the London Committee did not





propose to attempt the adjustment of any part of the debt except
the funded debt of the national government. The bonds of the
provinces, the Cedulas, the water-works company, the railroad
guarantees were all to be left to take care of themselves. If any
scheme could be proposed which would help to secure the payment
of these obligations also much futm-e trouble will be avoided aud
the country will be left far more free to develop without artificial
hindrances.





rriHERE seems to be, at all events, one practical method of doing
-*- this. All contracts with Argentina have been made in gold,
and the premium on that metal in the Republic approaches 300 ppr
cent. Now, as most of these debts were incuired when there was
little or no premium on gold, the calculations of all the borrowers
in the Republic have been thrown all awry, and their debts are
practically three times as heavy as they were svpected to be wheu
the money was borrowed. Thus, suppose a corporation sold
$10,000,000 of H per cent bonds in the London market for the
purpose of building a railroad. The company had calculated that
they were able, when the line was in good operating order, to earn
their expenses and some $700,000 a year—euffioieut, that is,
to pay their fixed charges. But, tneanwhile, the premium on gold
has risen to 300 per cent. If the company can earn the $700,000
that they expected to earn the money they will receive
will be, of course, the circulating medium of the
country; but since" the interest eliarges must be met
in gold, this $700,000 will mean only $330,000 in London.
The company would have to secm-e $1,800,000 in Argentine money,
or nearly thi-ee times tbat which they counted upon earning, in
order to meet its liabilities in gold. The main difficulty of the
situation lies obviously in this premium on gold ; and no practical
method of removing it has yet heen suggested. The European
creditors will certainly force Argentina to the wall if they stick to
the letter of the contract and try to coerce the country to pay just
what it bargained to pay. ' The Republic cannot do it; the
debt must be scaled down in some way. The most practicable
method of accomplishing this purpose would be to permit the
debtors to pay in silver, which they can obtain much more readily
than they, can gold. The demand for silver thus created would so
raise its price in the markets of the world that the difference which
the creditors would lose would be very small. To this it may be
answered that our own experience in borrowing, when gold is at a
premium, and repaying it when the premium had partially or
wholly disappeared, would seem to testify that the Argentine
Republic can do likewise. This analogy is fallacious. The United
States is a country of far more varied resources than the Argentine
Republic; and its inhabitants possess far more vitality and energy
than do the impulsive but lazy and unenterprising South Ameri¬
cans. The latter would become discouraged in endeavoring to cope
with their enormous debt; when they find it very onerous, they
will be more likely to make efforts to repudiate than to pay their
obligations. Since the crash, immigration to the country has
almost entu-ely ceased. If it is to begin again, and if the natural
resources of Argentina are to be developed, as they must be devel¬
oped in order that the load of debt can be carried, the Argentine
government and people must be granted more of a chance and
treated more leniently than the creditors as yet seem disposed to
treat them. It may be that the delay which has occurred and for
which the Rothschild committee is responsible has been allowed
to take place in order that weak and small holders might be dis¬
couraged into selling—thus permitting insiders to buy for the
purpose of averaging up. However that may be, the large bankers
will reckon witbout their host, if the Republic is not treated ten¬
derly. The flnal result of the experience will be to popularize
American securities abroad. As one prominent financier puts it,
London has practically made an assignment to J., S. Morgan &. Co.
Of the largest banking bouses in that city, all or nearly alt, except
J. S. Morgan & Co., with their followings, have been involved by
the crash ; and they have made their assets over to au American
house for it to realize upon the resources as best it can. Hence, it
is that Jobn P, Morgan, in spite of the enormous interests demand¬
ing his presence in this country, has been forced to go to London.
Tbe prestige of the firm and its followiug will thus be greatly
enlarged, while its main interests will still be in this country.
American securities will flnd increasing favor on the other side.





WHEN we speak of the population of a city we mean, of
course, the number of people dwelling within its municipal
boundaries. Yet since the municipal boundaries of a city do not
OJ any means include all the people who are dependent on its trade
for their living, its shops for their goods, its theatres for their
amusements, and who contribute to its prosperity aod progress,
this musfc always be a very arbitrary method of calculation and
one which will surely produce false impressions upon those who
take lists and tables afc their face value. To give but a single
instance ; a city like Chicago, which has incorporated all of its
suburbs aud aome prairie lands besides,  obtains in  this  way a