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gjanuary 80, 1892
Record and Guide.
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VOL. XL3X, JANUARY 30, 1892.
Benner's Prediction for 1892.
Editor Record and Gøide :
For the past three years, 1889, 1890 and 1891, I have predicted a
revival of speculation, good trade and high prices.
I now predict that the channels of trade 'will become stagnant—
general business 'will languish and low prices will prevail for the
next six years.
The cycle for high prices has passed, the opportunity is gone for
t general revival of business, and during the past tbree years we
bave not experienced great speculation in this country.
Why is this so ?
What was the " Reason Why 'i"
It could not be charged to resumption of specie payments.
" Booms" appeared under the specie basis before the late resump-
It was not for the want of the balance of foreign trade being
in our favor; the balance of trade had been in ourfavor continu-
ously from 1876 to 1888, sixteen hundred million of dollars.
It was not for the wanc of good crops at the beginning of this
cycle in 188!); the production of wheat and cora in that year
aggregated more bushels than in any year before in the liistory of
It was not for the want of a protective tariff ; our tariff has been
protective for a number of years.
My answer to this question is this: There was not sufficient
expansion and prospective inflation of the currency to produce and
stimulate great speculation.
Prior to the War of Rebellion a material rise in prices followed
the rapid increase in the niunbor of banks, and in the volume of
paper money, and in periods of great speculation the country was
flooded with a depreciated currency based on hard money. The
notes of banks could not be signed fast enough for the public;
banks ot issue under the old State bank system could then inflate
the currency to any required amount to stiiizulate trade.
Now we have a banking system which is not adequate to furnish
a sufficient vohime of currency to meet the wants of all the people
and to produce and stimulate great speculatioũ, and the people
The restrictions of the national currency laws—conflning circu-
lation to bonds deposited—and the provision which requires the
keepingof a certain amount of money asreserve against liabilities,
not only prevents inflation of the currency but also hinders banks
from extending accommodations to legitimate business interests.
Theoutput of silver certificates in excess of the contraction of
national bank notes and displacement of gold is a slow process and
isnot sufficient for the increasing needs of this growing country.
I can flx no other " honest reason wliy " there was no great
speculation in 1889, 1890 and 1691 than the lack of sufficient expan-
Bion of the ourrency.
One good reason for a thing issufficient without coUaterals.
Why do I predict poor trade and low pnces for the next six
One reason is thatthe cycle denotes it.
One cause will be the contraction of national bank cnrrency.
There has been during the past nine years a contraction of
national bank,notes to the amount of 190 milliuns of dollars—and
what is to be expected when the corporate existence of ninet_\-8ix
national banks expire in this year 1892?
What will be the controlling cause? Answer: Discarding silver
as a money metal by our government and other nations.
This controlling cause has been constantly opcrating to dopress
values and to restrain ihe expansive force of ovir industries—it has
discouraged speculation early in the late high-price cycle, and will
have a distressing and disastrous effect in the coming low-ijrice
The Coinage Act of 1873, which abolished the silver dollar, was a
monstrous wrong against labor and the industrial interests of this
The gold basis as a sole unit of value is a curse to the great
majority of the human race. Gold alone is too scarce a metal to
be the standard as the only measure and basis of all values ; and as
the commercial nations of the earth are drifting to the single
standard, aud in consequence of the growing scarcity of gold, it
will continue to appreciate, which will be apparent in the decline
of prices and depression iu trade.
We are now approaching a low-price cycle.
What is to be expected when the demonetization of silver hangs
over the flnancial heavens as a dark and threatening cloud.
The whole civilized world is suffering from the effects of a silver
panic ; prices are levelling down the world over, and in spite of
our protective tariff prices here are adjusiing themselves to the
lower plane of value in foreign countries.
To realize the fuU measure of thepresent flnancial drift and what
a low cycle means it will only be neceísary to givethe golden screw
a few more twists by fresli deiiionetization of silver in some other
countries, increasing the impoverishment and gloom of Europe,
stop the purchase of silver by our own goverumeut, without pro-
vision for plaeing more money at once in tlie channels of trade—
national bank currency continually decreasing—and then cap the
climax by the adoption of a " revenue tariff only," under the siugle
standard which is and will be a new element in tariff history for
depression, and the inevitable result wiU be that the industrial and
productive interests of this country will be struck with the mildew
Since the silver legislation and flnancial crisis of 1873, the most
remarkable increase in business activity and high price3 for iron
were in the high cycles of 1879 and 18o9 in a decreasiug ratio.
In 1879 resumption set free many millions of greenbacks, which
started a wave of prosperity—the highest prices for iron were lower
than in the former high cycle of 1873.
In 1689 there was no inflalion of the currency to give rise to
extraordinary movemenls in trade. The contraction of national
bank notes exceeded the amount of silver cerlificates issued
in that year. The highest prices for iron were lower than the
highest in 1879.
Why is it that the periods of speculation are becoming weaker ?
And why was il that after 1879 and 1 89 the advance in the price
of iron ceased and large enterprises of production became dis-
couraged before the years of the high cycle had expired ?
The cause of the whole trouble is to be found in —money.
Under the present gys^em of national banks and the gold unit of
value, periodg of great speculation will be out of the question.
The upward movements in trade wiU be of short duraiion, with
only ordinary advance in prices.
While on the other hand we can lcok forward to nothing else
but long periods of depression with iiîcreasing distress and prostra-
tion of all forms of industry, with lower prices for many products
and cominodities than ever known in the country.
The outlook for the growing winter wheat is unfavorable—the
fall and winter pastures the worst for many years—the people are
excited about our bountiful crops. Yei the crops of 1891 wlU melt
away as did Ihe big crop of 18t9 without much stimulation in
prices for iron and stocks, and should the crop condition in the