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August S4, 1889
Record and Guide.
De/oTED to f^L Estme , SuiLDI^Jc Afi.Cl<ITECTvJl^E .htoUSEl^OID DEQDI^nort.
BUsitJEss AiiD Themes of Ge^Jer^I 1;^t£i\est
PRICE, PER YEAR IN ADVANCE, SIX DOLLARS.
Published every Saturday.
TELEPHONE, ... . JOHN 370.
Hommuidcations should be addressed to
C. W. SWEET, 191 Broadway.
/. T. LINDSEY, Business Manager.
legitimate business. The exampie eet by the Spragues, years ago,
who had nearly all their capital in e-verythiug but their mills, has
this day many imitators throughout New England, all of whom are
paying the penalty which even the faro bauk gambler pays when
he attempts to play outside of his own game. However, the West
has always said, aud has always been correct in saying : "Give
us a good crop and we will come out all right." This is the key to
I the situation, and whatever brings the West out will do the same
for New Euglaud, and with these two parts of the country doing
well there is no danger of any financial trouble in any other por¬
tion. General business continues extremely good, and no bad sign
appears from any quarter, with the single exception of the money
market, ever which the Secretary of the Treasury has a vast power,
too vast to be wisely used by any one man.
AUGUST 24, 1839.
Ever since good crops have been assuied, the Wall street prophets
have one and all been decidedly bullish. There is hardly either a
flnancial paper or a financial writer on the other side of the market,
yet prices have not advanced in the way which one might have
exjiected from the unanimity of opinion. There is an old Greek
story of a man meeting an acquaintance and exclaiming, " Why, I
thought you were dead, I had the news from Zeno," " Well,"
retm-iied the other, " do I look dead?" " I do not know," replied
the first, "for I am sure that you are a great liar, whereas Zeno is
a man of veracity and wisdom." We must regard the stock market
very much as the hero of the above story regarded his dead-alive
acquaintance. We have been told that it must be bullish by men
of veracity and wisdom. If there is any tmth in human argumen-
tatiiiu in reference to the market, that " must" should be italicized.
Yet this view has not received any great support this week from the
course of events.
We print this week, in another column, a screed from "Our
Impartial Observer," sounding a note of warning on the financial
situation, which, in the opinion of Christopher Walton, business
men would do well to heed. While, as he points out, the reserves
of our city banks are low and tbe loans coiTcspondingly high, this by
itself, many will reason, is not a dangerous symptom. Unlike
former years, when a sharp crisis has occurred, the loans of the
banks now are on a very safe basis, and the excess over a conserva¬
tive and average amount is largely represented by government
bonds as security. It must also be remembered that our national
banka do not now show in their statements tlie actual condition of
our finances. Within the last few yeai's the growth of trust com¬
panies has been very great, and it is they who largely control the
funds which Wall street is always ready to bon-ow, and recently
has had at such low rates. On July lst of tliis year the twenty-
one loan, trust and safe deposit companies doing business in New
York City held over $178,000,000, on which interest was allowed.
No small part of this represented the deposits of capitalists who
put their money in the trust companies, content witli low rates of
interest, while looking around for a suitable investment. Naturally
the influence of these companies over the market for call loans is
great and increasing, as well as over the general loan market,
though in a lesser degree. The national banks and other simUar
institutions are affected, perhaps, more than has yet been estimated
by these new conditions created within the last few years, the more
so as the trust companies are further favored by lower taxation
than that which is exacted from them.
It is also difficult for an ordinary merchant to see how a serious
panic can occur to a nation which, however low the money reserve
of its banka temporarily may be, has a country full to overflowing
with everything which represents, and will bring, mouey—such as
wheat, oats, cotton, corn, hogs, and cattle, all in a greater abun¬
dance than even this country, rich and big as it is, has ever had
in any previous year. This will all be for sale, and, as far as
human foresight can tell, is likely to have a good market. Of
course a frost may yet occur wliich would reduce the corn crop
somewhat, but the average of the weather is more likely to be of a
kind that will increase rather than lessen it.
The portion of our mercantile community whence disaster
may probably come is New England, which has been more seriously
hurt by the collapse of the Western land boom and the stoppage of
railroad building than any other part of the country. Go where you
will through the West, and it is always New England money that you
find invested or sunk, as the case may be. Kansas City is full of it,
and many of the finest and largest buildings there are owned by
Eastern men and corporations, New England has not only for
years been parting with her young men, who have gone West, but
has sent capital very largely after them. A gentleman, who
recently had occasion to look over the assets of a defunct Boston
corporation, was amazed to find such a miscellaneous lot of assets
as were shown him, nearly all of which were entirely outside of its
The facts in the case of Watson against tbe Manhattan Company ^
should be interesting reading. In May last Judge O'Gorman
awarded the plaintiff $17,000 as compensation for damages done to
bis property. No. 121 West 53d street, by the elevated roads. Of B
tbis sum $5,000 was for loss of past rents and $12,000 was for ™
permanent injury done to tbe property. It would naturally be
thought that even a corporation would find it difficult to inflict
damages on a 35x100 lot with a stable on it to a greater extent than /
the property cost. Yet such it seems tbe ftlanhattan Company did.
The construction of their road not only wiped out the |7,000
expressed in the deed of the property filed on Aug-ust 16, 1880, the
value of the stable subsequently built at a cost of between $7,000
and $8,000, but did damage to tbe value of $8,000 on something not
represented by either land or building. The award of $17,000 on
property that cost $15,000 may, of course, have been warranted by
facts that do not appear on the surface ; but until these are made
clear there is excuse for thinking that if a judgment like this had
been given in favor of a corporation we should have heard a good
deal of the iniquity of corporations aud the suffering of the pubhc in
the press that is so ready to join in the cry of "stop thief," if only
it is raised by a " crowd."
It is said that the construction of some more big steamships is
talked of. This rivalry to '' lower the record " is all very well in its
way. It is interesting enough to read of these huge vessels plough- -
ing across the ocean almost stem to stera at the rate of twenty-five
miles an hour, and the excitement of racing, no doubt, adds a zest
to the Transatlantic voyage. But it is an enormously costly pastime,
and the important question, which so far does not seem to have
been very seriously considered, has yet to be faced: Does it pay?
No one but an expert should attempt to answer the question; and
it is doubtful whether even he would be able to do so satisfactorily,
for the matter is in somewhat of an experimental stage. It is, of
course, fair to suiJpose that when, for instance, the Cunard Com¬
pany built the Etrm-ia and the Umbria they were able to calculate
profit in the transaction, but these calculations, and the calculations
of other companies, ruu the risk of being falsified by the rapid con¬
struction of large "express steamers" by all the principal Trans¬
atlantic lines. Indeed, it is safe to assume that ma,uy of the new
boats have been constructed not so much to obtain any visible
profit as to meet competition, and to protect large existing interests
by the investment of a million dollars or so in a not too certain
enterprise. Of course, these fast steamers depend prixicipally upon
tbe passenger trade for their profits, and during several montlis of
the year this is too small to pay. All may go well this year, because
of the exceptionally large numbers of people who have gone to
Europe on account of the Paris Exposition; but it is exti-emely
doubtful whether the situation will be as satisfactory next year,
and especially in 1898, when our own Exposition wiU keep at home
thousands wbo otherwise would visit Europe. To'day few of
the Transatlantic lines earn the average interest on the capital
invested, and the pres^eut acute competition and the building
of steamers expensive in the flrst cost and expensive to run are not
likely to improve matters. It would not be at all surprising if the
companies were forced by competition into some sort of consohda¬
tion of a closer kind than the association which now exists for the
regulation of fares and freight rates.'
More than once the folly of supposing that Trusts are to be over¬
thrown by Free Trade has been exposed in these columns. We
StiU, occasionally, hear from the Evening Post that the Trusts iu
this country are due to the Tariff, but the argument is a " spoiled
one," and repetition shows only more clearly how ridiculous it is.
Now the Tribune comes forward to annoy common sense and runs
itsitepubhcan pen through the word "Fi-ee Trade" wherever it
appears in the argument and gives us the old story under a new
name : " Protection, the enemy of Trusts." This, of course, is only
the same folly shown the reverse side uppermost. It is, perhaps,
more ridiculous, because in this case it is supported by arguments
even weaker than those used by the Free Traders. The Tribune
quotes with approval the statement published in the organ of tho
American Iron and Steel Association, that: " the protective policy