The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1851-09-20

Hns Recent Tsilures and On. Condition OF
our Commerce.
From the London Economist, August 30
1t is just four years since the commercial crisis Of
1SH shook trade and credit to the root Firms,
which but few years before were known to have
possessed princely capitals, succumbed befsre the
storm. OF those firms, one known to have
possessed at one time bona tde capital of nearly
half million, another had possessed capital little
short ola million, and third could have boasted
of single partner with possession of upwards OF
one million On the second OF October OF that
year We endea vored to direct the attention Of
the commercial public to the true cause of the
embarrassment and ruin of those firms. 1t ap.
peared beyond doubt that it was chiefly to be attri-
buted to the neglect of what constituted proper
mercantile security, and to the ignorance, or least
the disre gard, of the difference between hxed ana
floating capital. The mistake which bankers had
formerly made in locking up their capita. in mort
cages ard other fixed securities, which wers una
vailable at a moment of difficulty and pressure,
merchants had then committed in making advances
upon plantations in the colonies and other distant
possessions In the island OF MauTislas alone, '9ree
Messrs. Cockerell and Co, and Messrs Cover,
Nephews and Co., had sunk in sugar plantations
sum not much, if it ALL below one million sterling.
IN the article TO-, we pointed out, at great
length, the necessary characteristics Of a proper
commercial security, to which, if the houses alluded
to had paid the smallest attention, there is no
son for believing that they might not to this day
have eric yed the same eminent position that they
so long did, much to their own credit, and to the
benefit of an extensive list of correspondents
throughout the world.
We have no reason for suspectipg that the great
lesson taught in 1917 has been forgotten neglect
ed. Since then, tho difference between floating and
fixed securities has been better understood, as well
as the danger of investing CO nmercial capitals ia
the latter The great drain upon the floating CAPT
tai Of this country made by the investments IN rail
ways from 1874 to lSi7, and The losses of the latter
year, has long since been more than repaired, partly
by the great amount Of foreign capital, which, like
foreign sub jects found safe asylum in this country
from the destructive revolutions which have vept
tbe surface of Europe since 1913, aud partly by the
great prosperity which has, during the last three
years in parti ular attended most branches of our
commerce Capital, therefore, has been obtainaDe
for all legitimate purposes, on terms as easy as az
any former time. But though its investment IN ~
have been made in more iegi Innate way, and al
though business has been conducted, as whole, on
principles correct theoretically, and with
greater prudence practically, yet the recent large
failures have proved, that while the principle
of fair commercial security has been adhered
to, practices Of an imprudent character have
arisen-Aot new, it Is true--whch have proved
ruinouS to some firms known to have pos
sessed large capitals within moderate period Ohe
Arm which has suspended pay during the pre-
gent week is said to have possessed capital, at the
beginning of this year, Of about Gl0J 000 its credt
was unGoubted to the last, and tn individual par
tes have stood equally high fer their character as
men, ana their ability as traders That such
occurrences should shake genera credit, cannot be
matter OF surprise Some OF the recent failures IN
again forces itself upon the country, when men OF
capital Of character, of ability, and Of we'll known
business habits, are reduced TO ruin, does COM
mcrce necessarily imply such risks! We do not
believe it. We are satisfied that, in every such
case weirecognised principles have been neg ected,
or have been acted upon without regard to pru
derce. No doubt there has been great decline in
the price of OF the leading articles of trade
Gotten, sugar, coffee, sc during tho present year.
But still We contend, that consider able as that de-
cline has been, 1T is not sufficient to account for
such losses as would lead q we'll managed, legiti-
mate business, with fair capital, to insolvency
There have, however, some practices arisen in
the mode Of conducting business, in the extent TO
which advances are made as well as in the forms
making them, on imported produce, and on ex-
ported manufactures, which, necessarily, not alone
expose those Immediately engaged to extensive
losses, but which involve others who are not imme-
datey parties to the transactions, but who dispose
of their goods in tie most legitimate way The
subject OF advances upon produce imported, and
upon consignments of manufacturers exported, is
oae which has not yet been sufficiently considered,
ard which demands more attention than 1t has re-
ceiyed In itself most legitimate mode Of employ
ing capital when kept within fair and proper rules,
il nevertheless becomes one of the most fruitful
sources OF overtrading, speculation, aud ultimate
LOSES, when suffered to 60 beyond. Fro Liver
pool we learn that "upon an investigation of the
affairs of several houses who have lately suspended,
enormous losses are sho wn upon their consgnments
10 India AMI this SUN GENTLY accounts Tor that
market being oyerstocked. These shipments have
generally been made with the view of riisnS
money to carry on their other trade-buying goods
on .ong credt, ard obtaining advances there On to
the extent oftwo thirds three-fourths the amount
Of the invoice. Other than disastrous results could
not have been anticipated One house shows Losses
in this way to the or ormous extent OF C1O, 600"
This is an old abuse Of practice but II is not the
only form in which that practice Is prejudicial to
the bes. interests OF al engaged in commerce.
Ii is our intention, in an early number, to pursue
thi; subject Of advances on cousignments; with
view to consider the extent to which 1t can safely
ard fairly be acted upon, and, ut the same time, to
point out the numerous ways in which 1t is exposed
10 atuse, and in which IL leads to serious losses,
ard too frequently to ruin.
But while cases like those referred to are numer-
Gus, yet there every ground for believing that the
general trade ofthe country Is conducted upon the
most legitimate principles. Credits are shorter
then at any former time. The practice of cash
payments Is more general. stocks in all hands
are, as a rule kept lower. In the manufacturing
districts they have seldom been known to be so low.
The supply Of all the lead ng raw materials Is good
and the ilrces such as not to induce any appro-
hcpson OF any material reduction. Commercial
capital has been kept generally 10 legitimate COM
.nercial objects. Individual cases OF speculation
especially in cotton and some other articles OF
feieign produce, existing some months ago. but the
losses which have been suffered can have bus o
limited and local influence. There appears, there
fore, ut present no general cause for any appre-
hensiCn Us TO the soundnes5 OF the trade Of the
country; and the great abundance which 1t IL now
certain will exit for long time in articles Of food
ms well as in those which constitute the chief raw
materials Of our industry, il the best security for
sbo nd thq Qf lla lrol af 10