The Express.
London, England, 1860-10-01 00:00:00

RION WATER AT TAWDON 111/DOL

rig DATliii.WiliTsrap7.7.—...isr7s7vl. tb. saw
I,..iusauw—lllonft, 8.......A.antraa. 3k. Ma.

LONDON, MONDAY, OCT. L

UNTIL the rottenness in the leather trade was
brought to light the commercial world had been
for some time past remarkably free from failures.

The development of the transactions between
Mews. Srasarrsit.n and Co. and the dependent
houses led many cautious men of business to the
conclusion that trade generally is less sound than
it appears to be; that the operations carried on
are, in many instances, out of proportion to the
capital embarked ; and that the ramifications of a
false system of credit have extended far too widely.
It was thence inferred that the embarrassments in
the leather trade would be followed quickly by
difficulty in other branches of business. This an-
ticipation, wherever it was expressed, was com-
batted. It was argued that the crash amongst
the leather houses was due to excep-
tional causes ; that other trades, being ex-
empt from influences of a similar character,
would be in no way affected, and that the lopping
off of the unsound branches would give fresh
vi4olir to the tree of commerce. This view, how-
ever, has proved to be too sanguine. The difficul-
ties alluded to have not been confined to the
lather trade. On the contrary, since Messrs.
Strtatfeild's failure, not a week has passed without
the announcement. of mercantile stoppages. In

the list are included, beaides many leather factors
and tanners, corn factors, millers, linen factors,
distillers, brewers, houses in the 31anchester, lace,
and Indian trades, warehousemen, exporters of
boots and shoes, iroumasters, straw-hat ma-
nufacturers, silk manufacturers, and provision
merchants. In the majority of instances the
amount of the liabilities is very moderate, a
cir•umatance which encourages the satisfactory
inference that there is too stsoog a disposition
towards caution for mischief to extend very
far. Still, the aggregate of the liabilities of the
houses that have stopped is very considerable ;
and it is not inappropriate to inquire how it happens
that Mews. STIMATFLILLAI failure has proved to be
only the first of a series extending into a variety of
departments of trade with which neither Messrs.
ST IMATIMILLMOr any of their aaeociates had anything
to du, fronmasters, distillers, linen factors, and
war•houamen, for example, who have not the
slightest connexion with leather factors and tanners,
yet follow suit upon the failure of the latter.
Why r this, seeing that there is no panic in the
money market, leading of itself to any wide-spread
embarrassment T

It is not difficult to answer the question. Fea-
tures of a precisely similar character have been
presented upon former occasions. It is a ques-
tion of an illegitimate extension of credit. Credit,
ad we know, is an excellent instrument ; the vast
tride of this country could not be carried on with-
out its aid. Hut credit, like many other good
things, may be abused, and turned to evil. Com-
merce receives periodical warnings. She had a severe
one in 1847, and was much impressed by it, feeling
her way very cautiously for several years alter.
But she gradually forgot it, launched outagain in her
old mune, and received another terrible lesson in
1857. Fora year or two after that period there
was the usual excess of caution. The long credit
system went out of fashion, and an unusual pro-
portion of the business of the country was trans-
acted for ready money, or at very short credit.
But there are numerous signs that, as trade moves
more swiftly, the community press forward eagerly
into the path which leads to the usual decennial re-
vulsion. The interval between each may prove
hereafter to be of less than ten years' duration,
fur everything moves more quickly now•a-days.
flood may be extracted from every evil. The
collapse in the leather trade has proved useful
by setting people thinking. One house after
another is compelled to submit what is by
courtesy called its balance-sheet to the public eye,
and these documents are found to present a strong
family likeness. The prominent features are—
little or no capital, combined with extensive trans-
actions, and a very liberal manufacture of paper.
If no business were done except for ash, there
could be no over-trading. for every man's transac-
tions would be Ark* regulated by the amount of
his capitals and it hiecapital were trenched upon
by leans, his leamactions would necessarily
be reduced in proportion. But we can-
not look for a commercial Utopia. We
cannot dispense with the credit system ;
and, this once admitted, it is very difficult to neer-
taM where it is being only properly used and
where abused. A trader who has lon all his
capital, or who starts without any at all—the chance
Ut profit his, the risks other people's, pnisieely
upon the principle of " Heads, I win ; tails, you
" lose !"—soy, by mean of a fictitious system of
credit, live upon the solvent portion of the com-
munity at a famous rate for years. No one knows
the secrets of his paper business. As long as be
has tact enough to stand well with the purveyors
of money, and to play his game so that he shall
always get enough out of one est of bills
to meet another set, as they fall due,
he retains boldly his position on 'Champ
and who shall dare to point a finger at
hue f At last, the concern ben ne, top-heavy,
and falls, and it is then found that he has columned
other people's capital to an amount in proportion
W the degree of opportunity or of prestige which
he enjoyed.
In legitimate commercial circles there is no
cause for gloom in all this. We may regret that
Lich speculative developments should have been
piesibie amongst us, but we must derive consola-
tion from the knowledge that in proportion as
they are dragged to light, the ciontuercial atmo-
sphere is punned. The huge speculation in the
leather trade excepted, the condition of business
generally denotes that the unsoundness is only
p.irnal. The more swiftly it is eradicated the
I. rte,r. The process is painful, bet wholesome.
.11theugh the return of unsettled weather, CUM.