Columbia University Libraries Digital Collections: The Real Estate Record

Real estate record and builders' guide: v. 49, no. 1246: January 30, 1892

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gjanuary 80, 1892 Record and Guide. 163 # \ ESTABLISHED -^ W.RRPH ílií"^ 1868. De/oTEŨ ĨO f^L ESWE BuiLDIf/G ĩ^RCKlTECTai^E .HoUSEHOLD DEGOf^TlOll. BaSir/ESS AltoTHEMESiOrGEHERA^ 1;JT£I\ESÎ PRItE, PER lEAR l.\ ADVAXCE, SIX DOLLARS. Published every Saturday. TKLEPHONE ... - CORTLAXDT 1370. Communications should be addrcssed to C. W. SWEET, 14 & i6 Vesey St. J. 7. LINDSEY, Business Manager, "Entered at the Post-offlce at New Tork, N. Y., as second-class matter." VOL. XL3X, JANUARY 30, 1892. No. 1,246 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- tion. 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 this country. 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 know it. 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 yeara? 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 cycle. The Coinage Act of 1873, which abolished the silver dollar, was a monstrous wrong against labor and the industrial interests of this country. 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 of stagnation. 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