The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1857-12-03

not include city lots which run in the principal cities
from fifty dollars TO thousand dollars foot 'front.'
An estimate of the value Of the fee simple OF the city
OF Chicago, accepting the present prices at which
land is held there, win be found to reach one hun
dred and seventythree millions OF dollars, not in
cuding the buildings. There Is not one-tenth OF the
house lots sold in these cities that have even shanty
upon them there is not oneftieth Of the land sold
that is under cultivation.
Where did the money come from that must be kept
constantly floating over all this vast schemey To
the importers of New York, Boston and Philadelphia
may reply, that in some part II comes from Their
pockets. The buyers from the West bought goods
in the East on credit, sold them, and ran with the
proceeds into speculation in real estate In
their neighborhood, alleging. to the iobbers
here that they found it impossible to OBTAIN casn
from their customers. The jobbers were Obliged
to obtain time from the importers and the import
ers from the foreign manufacturers Had real estate
out West gone up, the buyers would have realized,
and would have made their appearance IN our mar
kets with the fruits of their speculation, taken up
their paper and made fresh purchases But 1t was not
So Real estate has not stirred for two years out West
Except small effort made in st. Louis last spring.
which faded off and faint attempt in Mnnesota).
Chicago has stood STILL Cincinnati has gone back.
So all moneys invested are held down tight and our
Western buyers, having no money, and having spent
all their credit keep away from this seaboard, and
we have had bad season.
This imitation Of the West is the remote cause Of
the present crisis. The immense prosperity and the
blooming picture afforded to the eyes of the world
some fifteen years ago, first deluded capital into sys
executed without much more Encouragement than
usual and seldom cost in the end more than three or
four times the original estimate with which money
was tempted into them. We do not speak in sar
casm; it has always been so, both here and in Eng
land. The main lines then constructed, as was the
case in England with the London and Birming-
ham and Manchester and Liverpool, were not
only good but paid fair dividends out of bona tide
6fc Ho1 ended
moved gradually, all might have been well to this
day; but with the example of the railway crash in
England under their eyes, the directors of similar
speculations here began in 1886 to enter the very
road to ruin clearly indicated to their avoidance and
the public, while reading the calamities abroad,
eagerly sought precisely the same sources of desruc
ton at home.
The success and soundness of the early main lines
were, Of course, used basis on which to build up
imaginary returns and to decoy spectators into IN
vestment.
Under the excitement of its presumed progress its
credit abroad, and its inflated value at home, the
West really believed in is own prosperity. The con-
sumption of imported goods was reckless, but it
served to increase and confirm confidence amongst
importers and manufacturers Who could suppose
that each man consumed for four? To these eviden-
of progress and prosperity the schemers from the
West pointed, while they invited capital to carry out
plans for railways over the uninhabited prairie and
between unbuit cities 1t would have been useless to
argue against the necessity OF railways on such
grounds for the West-like Aaddin's palace-was
to be built in night. The market was flooded with
railroad schemes stock was issued, money
raised, and the West was tapped at every
point, for it was rich enough to pour forth in
terminabe streams Of wealth at every pore. Greedy
of their profit competing tracks were built beside
the best paying of the original lines The western
made extravagant grants of their only tangible re-
sources, real estate, to excite speculation and thus
the railway mania reached its climax The old lines
became alarmed, and built branches on the smallest
creased in proportions: some jumped from five to
twenty millions in this struggle. The result exhi
bited itself in an early stage to the directors The
new schemes were rotten from the beginning: the
traffic was not up to their running expenses at any
time The old lines had been able to pay dividends
their original stock but their increase OF revenue
could not pay interest on the debts incurred through
competition.
Then commenced that system Of fnancerng
which has led 10 the present crisis. Loans were
contracted with banks this seaboard under repre-
sensations which directors knew to be untrue; and
which their property could never stand to. Even
the Illinois Central found that the sales OF its lands,
however forced, were insufficient TO make up the
deficit Of the road, and were obliged to borrow
money to pay interest and, falling that, TO go into
bankruptcy. At this juncture we have to record
bad feature i'm this history The schemers and di-
rectors laying their false statements before the com
mission agents who moved foreign capital in this
market, and under whose advice foreign investments
were made. offered these houses a certain bonus on
the loans they might obtain from their principals
abroad. Without hesitating to inquire INTO the
value OF these securities, or duly investigating the
truth of the representations to take the mildest
view of the case these commission houses either adj
vised or permitted large investments to come from
abroad and to be engulphed in our general ruin.
TO the destruction Of the credit OF the country and
TO our particular disgrace.
Thus, we perceive that the money which might
have been invested TO the great prosperity OF our
country in sound commercial and agricultural trade,
was directed into field Of extravagant enterprise
II was piled up on the great gambling table OF the
West cast recklessy into the construction OF wild
railway projects thus fulfilling no useful purpose and
representing no property Immediately productive
Such system must always, one day. by an inevita-
BILE law of things, come TO an end. No resources,
however aIfd in their growth and vigorous IN their
developement could sustain II. With US the end has
come. Undeterrcd by the warning voice OF the lead.
ing journals Of the country which clearly saw and
clearly pointed 10 this result, our banking insttu-
tons last May expanded beyond all justifiablc
bounds, TO enable importers here 70 provide lot de
mand which never came. Finding that In the fall
not only did the fabulous OF the West not
come on to make new purchases, but did not even
pay for those previously made; finding that railway
companies not only did not repay the advances made
to them. but were thirsting for fresh loans the
banks naturally took alarm and commenced con
tracing with hand as tight asst was open in ex-
panding in the spring. And with the contraction
came the crisis.
In 1914 the government of the United States bad
borrowed money for national purposes which II could
not repay, and we had national bankruptcy In 1887
the government had entered into kind OF general
financial partnership with the States; The govern
ment suddenly dissolved the firm and we had States
bankruptcy. In 1857 the people. deluded by the
popular idea that the expansion Of the Western coun
try justified great amount Of supplies and improve
ments. incurred large debt to Europe for importa.
tons 10 an extent not greater than the West called
for but far beyond their ability 10 pay for therefore
we are in the midst of our first mercantile bank
ruptcy. New York. Philadelphia and Boston are
agencies between Europe and the West, taking com
mission each way. The West has deceived us and
we have deceived Europe. The West alone has pro-
fitted by the affair. II possesses the railways, canals
and immigration, for which II never can pay. and the
imports Il has consumed. for which II never will pay
We can only hope that by the introduction Of regu
arty and prudence into its future expenditures II
may afford large market abroad, and instead OF
specializing what IT will be, il may apply is en-
ergies 70 develope its resources and show what IL
ought 20 be-a ready and punctual customer-in-
stead NJ what II IL. reckless insolvent.
To aggavate our condition the sugar crop Of the