The Sun.
London, England, 1869-03-04 00:00:00

THE SUN, LONDON, 111-URSDAY EVENING,. MARCH 4, 1869.

CONGRESS.

HIGH PRICES IN AMERICA.

(From the Anglo-American Times.)

The Nation, on February 11, returned to a sub-
ect which has greatly occupied its attention—how
the high prices in America are maintained. The
statements of that paper are entitled to respectful
attention, however startling, for we know no other
more carefully written ; yet we find it difficult to
credit the truth of the conclusion at which it ar-
rives. Its opinion may be given in six words, " High
prices are due to speculation." " Speculation never
was so intense, so powerful, so wide spread, or so
dangerous to the public welfare as at the present
moment." Not the fitful fever of thoughtless
individuals risking their earnings on the ups
and downs of the Stock Exchange, nor of
professional speculators, living precarieusly by
forestalling the natural course of the markets,
but by a body of sudden growth as if by concert
organized, bold, able, and unscrupulous men of
wealth and prominence, who appear to control rail-
roads, banks, crops, real estate, gold, and Govern-
ment Bonds. The price of these they daily ad-
vance without reference to value or to the natural
tendency of the markets, holding possession by
main force until the public are compelled to pay
the price they demand. ThepuNic thinkin the price
too high abstain when possible from huyine ; the com-
bination say prices shall go higher and refuse to sell,
whence a deal lock, each striving to starve the
other out. Such a state of things extending over
so great a country we hold to he althost impossible,
and sure to end, even if successful for a short
time, in a result disastrous to all concerned. The
technical and suggestive term f,tr such a combina-
tion is a " corner" which means narrowed to the
point where two lines converge, and when men
make " a corner " of the Republic, we are re-
mind. d of BUTLER'S expression of "the United States
making a corner against the world." Let any one
try to realise the assertion of the Nation, and they
will see the almost imposqhle maenitude of such e
con-piracy. Of many staples, the United States i•
the grt west producer and exporter ; in two, the
amount iF prodigious. cote n and c ,rn ; in many,
immense, tobacco, p troleirm, rice, and dairy pro-
duce ; yet erand as is he scale oti which such pro-
ductions are rttised they furnish hut an item of the
operations of the seeculan Ts. The railroads of tb
Union exceed in mileaee these of Europe ;
the- teleeraph it is the Unite I States against the
world ; in personal property the am -unt is too
large for men readily to undersiaild it; so also in
manufactures, hankine, mining, anti joint-stock
enterprises of every description. Then fo low the
Gold, the Government Bonds, Federal and State secu-
rities, yet we are far from hiving ez -d the range
over which these operations are said to extend
Grain is bought up and stored for higher prices as
it: comes to market, and both it and floor are aceu-
tnuletingie stock, though verse's lie idle, and the Pso-
duce Exchange is almost deserted, and this after a
magnifice t harvest, while prices have scarcely de-
clined from the famine rates of last spring. For
weeks cotton has almost ceased to he an article of
trade, prices haying nearly d d within tne year
in the face of a good crop. In Liverpool this staple
is two or three cents cheaper than in New York ;
Manchester mills are on half time, and ships that
have sought a freight of cotton at New Orleans or
Savannah carry back lumber instead The stocks
are advancing as we:l as the price, and the trade is
at a standstill. The railroad properties, though ma-
terially reduced in value by the waste, mismanage-
ment, and fraud of the last two years, have been
doubled and trebled in stock without an additional
dollar having been expended on the roads, yet the
advance on a year ago is from 25 to 75 per cent.
Still the prices tend upwards, and even the gamble, s
ask bow much further can they go. " Most prudent
investors," says the Nation, "have sold out their rail-
way stocks, and purchased other property; never was
thereknown Belittle investmsutdemarel for securiti- s
of this class; never so little faith in their honest
management. The last quarterly statement of the
National Banks show, that they holl scarcely one-
half the amount of Government Bonds that they
held a year ago ; it is eotorions that many holders
have been sellers ; Europe is at present unwilling
to purchase more, has indeed not purchased any
for several months past ; the amount of bonds held
by spet Itl 'Aye dealers is very great, and there are
no huycis at present prices ; yet the prices keep
advancing still." We think the Nation is wrong in
supposing that Europe will take no more United
States Bonds, or is unwilling to do so at the
higher rare:, as the present rapid rise fully
proves. What Europe wants is confidence in
the security, and this is strengthening. Indeed we
are inclined to think that the speculative dealers are
rieht in holding for better prices in Federal Bonds.
Even the premium on gold, at that time 4 or 5 per
cent. higher than in December, has been influenced
by speculators, though more directly affected by the
export demand than anything else. The next subject
discussed in this article is real property in New York;
the rents of tenements for business purposes having
declined, as the demand for them had slackened
owing to the dullness of trade, yet the prices of
real estate are advancing rapidly, and the transac-
tions are so large as to recall the Bombay mania.
The Nation accounts for the ability of the specu-
lators to carry
on operations of such mag-
nitude by the increase of the currency, which has
multiplied ten times in amount since the war, though
two or three dines would have sufficed. One-half
not finding legitimate employment is forced on
speculators, who thus use it. The essential difference
between what is going on now in the United States
as described by the Nation and a mania, is that in-
stead of the people following the lead under a
general delusion they oppose it as a conspiracy
against themselves. Instead of the feverish acti-
vity pertaining to a mania, daloess is the prevail-
ing feature, there being no genuine buyers. What
goes on among the speculators is as if the London
Stock Exchange passed shsresand Bondsfrom jobber
to jobber,or Mark-lane transferred produce f rom mer-
chant to merchant, each transfer being accompanied
by and recorded as a rise in price, while the
public looked on, and abstained from buying except
when compelled. The only sensible reason for all
this is the abundance of money, which in itself
shows dulness of trade, and if trade be dull, prices
should decline. Abundance of money has generally
produced the same results. The holder is eager to
employ it to the best advantage; where much of it
competes for employment, the security is less closely
scrutinised, and the speculator can the more readily
get the advances, if he keeps his securities at the
highest figure. The cause is due, then, primarily,
to the effort of the capitalist to employ his money
at the highest rate ; but if the Nation beright, and
we say again it is a carefully-written paper not
striving for a sensational effect, it will inevitably
end, if continued, in the irretrievable confusion and
ruin resulting from sudden panic and collapse.
Panics generally result from periods of abundant
money, which capitalists in their eagerness to em-
ploy lend on bad security ; but it is instructive to
see how the keen shrewdness and business aptitude
of the American people protect them from the
machinations of the speculator.
If this little game
had been carried on in England, undersimilar circum-
stances of an inflated currency, numbers of old
maids, half-pay officers, and clergymen would
be rushing into pork and corn, to realize
some good things
p
under such leadership. The
would be left up to
his neck in a grain
" corner," and the old woman smothered in cotton,
while the speculators would be working as eagerly
to break down the market as they had been to build
it up, so as to profit alike by the rise and the fall.
In the United States, however, the speculators and
the lenders are likely to be the smothered parties,
and this is so remarkable a fact that we thus fully
allude to the article in the Nation. It may be taken '
also as a reason for dealing with caution in Ame-
rican Securities on this side.

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