The Stourbridge Observer, Cradley Heath, Halesowen & District Chronicle.
Stourbridge, West Midlands, England, 1887-01-01 00:00:00

AMERICAN TRADE AND FINANCE.

In these days, says the Daily News, distance being
annihilated, America is, for business purposes, a near
neighbour. if there is a substantial revival, we know
by previous experience of the great tides in American
trade and finance that it will not be easily crushed

back; rather it will pervade the whole continent from
Hudson's Bay to Mexico, and will tend to spread, as
American revivals have before spread, to the business
of all countries, however indirectly connected with
America. Just as the activity of any great industry
in England spreads by degrees to others—the better
profits and wages in trade A bringing a demand for
articles in trades B, C, and D, thence spreading down
the alphabet and back again—so the revival of busi-
ness in America stimulates trading exchanges between
many other countries, and the demon. Depression
is exorcised. :In considering American trade, it
can less "zhan any other country's trade be separated
from the kindred subject of finance. These two are
yoked in double harness ; unless, indeed, the latter
takes the lead, tandem fashion. Old-fashioned ideas
on our side of the Atlantic still fix our prejudices in
favour of the other order. English bankers think it
right, for instance, that a tradesman should have a
business before he can borrow money on his expecta-
tions. When it is discovered that a joint-stock com-
pany has been floated to acquire, not a valuable con
nection, but the mere hope or chance of a connection
—even less, the risk of working a venture—out
astonishment is endless. WLen we hear that an
American " wild-cat " railway is launched into a
forest occupied by that animal almost exclusively, we
are surprised to find, after a year or two, that the
forest is a populous settlement, that the railway
has been first " wrecked " and then " re-
constructed"—financially speaking, of course—
and that the financing of that line was
at least profitable to some of the shifters of the
scenes in the stock markets. We can never get it in

our tradition-ridden brains that finance paves the
way for what we continually catch ourselves calling
real business. Our idea is thatcommercial men must

swim before they get into the water; that commercial
actors must present a finished play before they are
entrusted with a theatre. This prejudice is no do.tbt
justified in old countries ; but it is not the Yankee
notion—not the procedure of the business of the
New World. "Give us the capital "is the cry of the
expanding population of America to the capitalist,
" and we will work it to advantage, paying you a
good, if variable, dividend for its use." Make rail-
roads for them, and they undertake that the rose
shall bloom in what were previously wastes and
wilderness. They can "grow up to" capital, if
judiciously planted, and have so grown up with
marvellous rapidity. Only " finance " them first,
and their trade will follow freely. Cart-before -the-
horse progress it may seem, but the last twenty
years have been so prolific of progress in America ;
in that astonishing country the ups have so
predominated over the downs, that the
older world has got resigned to the see-saw.
Experience rather than the understanding of these
methods, convinces us that a revival in the finan-
cial sections of American business heralds a turn for
the better in "real" business. Three years ago stocks
fell in New York. Then ensued a paralysis
of what may be called the enterprising trades of
America. Bonds and shares could not be freely ne-
gotiated, and the growth of the railroad system of the
country was checked. No more than a miserable
thousand miles or so per annum were added to the
mileage in existence; iron mills were closed; prices
fell in the commercial markets, as prices had fallen in
the stock markets, and there was "too much of
everything." Now the position has changed. New
railroad bonds have been this year easily placed
among the syndicates of bankers, financiers, and capi-
talists of New York, Baston, and Philadelphia; the
present rate of new railroad construction is nearer
10,000 miles per annum. Finance having led the way,
let us see the evidence of revival in trade proper.
In order to dispense with elaborate records, the
prices of American securities may be best shown by the
array of simple totals showing the values of given
representative railway stocks from time to time. The
folbwing values of leading American securities shows
the history of this sensitive market for two years
past :—Dec.„ 1884, £95 ; March, 1885,
"fib millions, June, 1885, £9ll millions; Sept.,
188 j, latio4 --'ion. • Dec., 1885, £llB millions;
March, 1880, Lll9
lions ; Sept., 1886, Ll 3-1?;
4.y-ire 1886 , £124. mil-
-1
oii
At the present moment the aggregate has slim's,.
Daok to a trifle under 130 millions, but yet a very
great advance is shown on comparison with the cor-
responding value of this group of bonds and shares
two years ago. "Values are still much nearer to the
top than to the lower extreme. A rise of prices
means increased borrcwing power under ordinary cir-
sumstances, and therefore increased power of specula-
tion and enterprise. So the enterprising trades of
America have been stimulated, the first propulsion
being in financial business, but not ending there,
All the chief cities of the United States. from
New York to San Francisco, and from Chicago
to New Orleans, are now not only well provided with
banks, but also with bankers clearing-houses. Aggre-
gating the transactions of these clearing-houses;
which amount to about three milliards (that is about
3000 millions) sterling per annum, the past 11 months
show an increase of 19 per cent. on the corresponding
aggregates of last year. Two-thirds of the total, and
three parts of the inerease, are apparent in New
York, where the speculative business in stocks and
shares in cotton and petroleum is of stupendous
magnitude. But it is satisfactory to note that after
eliminating New York returns, the other cities of
America maintain a substantial increase, the rate of
progress outside New York for the past 11 months
having been 15!2.- per cent. And whereas there was a
decline in the New York returns last month, suggest-
ing and corresponding with the brushing off of froth,
it is still plain that a substantial increase has taken
place in the volume of business in America this year.
From month to month the traffic revenues of the
American railroads which are in any way prompt in
publishing returns are published in the New York.
Chronicle. The aggregates are large enough to reflect
faithfully the general state of business in America.
It was not until the last quarter of last year that the
leading syndicate of American railroad men and
bankers bad put an end to the wars of rates previously
raging, and had given the railroads the advantage of
profitable rates by friendly arrangements among the
great trunk lines. Every increase now shown is due
either to the extended mileage or to an increase in
the volume of traffic on the mileage previously in exis-
tence. For the 10 months ended October last the
earnings of 82 American lines showed an increase on
those of the corresponding period last year of 20/
million dollars, being at the rate of 8 per cent.
Nearly half of this increase fell upon the New York
Central, the Grand Trunk, and (Aber lines concerned
in the carriage of through traffic from east to west.
It is known, too, that lines in other parts of the
country followed the example of peace, Fettled their
differences, raised rates, and so augmented their re-
turns; but the very fact that a complaint of wint of
cars and rolling stock has been widely raised shows
that the bulk of traffic upon the lines has swollen. In
short, conventions raising rates have not been the sole
cause of the great increase of traffic revenues, and
these returns are evidence of improvement in solid
business, the improvement itself being substantial
and likely to continue for some years.

, ...nil