The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1854-12-07


Non hs nd years 90, people said that pros
perity was to Is tor ever. Staid sober men
deliberately decla ed their cow ction that the
dis ov'ry of Cal rnian gold, combined with
other cause VS. create an era o. CONNER
cial enterprise and Gee unparalleled in his
tory: and there being few like de Quincy to
detect he fallaty, and fewer sill 10 remind
mankind hat in commercial communities peri
Odical crses, embarrassments, md monetary
disasters IRE cessary and inevitable, the dan
gerous te'us o. wa, generally believed. An
enormt u imitation of credit and expansion of
pepper money followed. An increase Of fifty
millions in the circulation Of the banks based
on an incr ase Of ten millions in specie, afford
ed unusua facilities trade. Railroads were
project, d on the strength Of increasing popula-
ton, and rapidly developed resources, and
built with M Dey borrowed on most disadvan-
tageous ter 3. Merchants imported more than
they could SELL retailers purchased more than
they could dispose of: private individuals or
deIed more han they cou'd pay for. Every
one, from he corporation of millions to the
small tradesman, increased their undertakings
in the squsre OF the increased prosperity of the
nation; rely ng on the constant progress of the
latter to help them out. Thus it was that the
Eiie Railroad borros money to pay its
diyidtnds, and suppressed bagatelle
of million and over in its accounts:
thus the merchant who could afford q
cottage at Brooklyn, hired house in Fifth
avenue: thus new theatres were built, new ships
launched, new villages laid ont, and general
plunge made by society into extravaganza Of
the most reckless order. The expansion of
corporate, banking, railroad and private credit
led to a general rise in prices Real estate,
farm produce, labor, and all the products of
industry were enhanced from twenty five to
one hundred per cent in value.
All this commenced four or five years ago,
and reached the climax at the close OF 1853
At the beginning OF the present year reaction
began to take place. 1t then became apparent
that though the country was prosperous, its
prosperity lad been grossly misused: and that
more ,ban half the private undertakings and
public enterprises in progress depended for
their success and completion not on the con-
tinued yield Of the earth or its Inhabitants, but
on the maintenance of a system of commercial
credit. The moment this discovery Was made,
The decline commenced. When people learned
that they had no other guarantee for the pay
ment Of their claims on each other than the
duration of tie credit system, they began to
question the solidisy of that systenl--a thing
they had pever done beforehand sought more
substantial security. Each man acting upon
this policy, the credit system vanished. Hence,
new enterprises were checked, old ones hamper
3D. and general desire for settling accounts
began to manifest itself auon, merchants The
consequence was that rs two-thirds of the
schemes in action were solely predicated on the
continuance Of easy times, and were not in
tended to pay for the first three or four years,
severe disasters occurred Stocks fell in price.
Real estate declined. Houses could not be let
Ships lccame drug. Goods were sold below
cost at auction. Railroads passed their disi-
dends. aukruptcy threatened corporations
and individuals alike.
There was nothing strange or unusual in
this. 1t was the natural inevitable conse
u
spcculation: nothing more than one OF those
periodical reactions which occur in every CON-
mercial community at certain intervals: and
which, after causing much individual suffering,
purge the community, and leave the country
better off than before.
One Of the incidents Of the reaction Of 1854
has been the large export of god. We have
sent abroad nearly forty millions of specie, and
have only received about thirty-six from Cali
fornia. People who do not understand pOliti-
cal economy or finance have supposed lat this
excess Of cur exports over our imports Of spe-
Gle caused tie present depression and suffering.
1t ,uiices 10 note the figures to prove the con-
tIary. The decline OF value III railroad stocks
and bonds alone during this year exceeds
thirty millions Of dollars: that in real estate is
probably far beyond this figure: altogether we
might safely say that upwards of two hundred
millions Of dollars have been taken out of the
pockets of the people by the decline in
values during the year. BY SO much
is the country poorer. In assuming the es-
Inmates in the Treasury Report to be near
the truth. the country contains over
$40, 100000 in specie at the present moment
$60,000,Oo0 Of which is in the banks. To sup
pose that the disasters of the year are caused
by an export OF S40,O00,0OO against an import
OF $36.000,000, when the country contains
S2iO, 600, 900, safely stored up in various places,
is quite gratuitoua
The gold export is one of the effects, not the
cause Of the trouble. Gold goes abroad be-
cause it is worth more in England than here
just as -four, cotton and tobacco do. When gold
ceases to be worth more in London than it is
here, it will cease to be exported. But whether
it goes or remains, the effect will only oe felt
by very small portion Of the country. The
real source of the suffering in the commercial
world lies far deeper.
Nor can that suffering be cured by any le-