The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1857-12-27

specie to cause run upon and to threaten the in
suh,ciency OF so feeble a metallic reserve.
BesAies, OF what use could the values which the
banks had on deposit prove in such an emergency
The first eject Of the crisis TO render il impossi
BILE for them TO realise those values. They were
therefore inevitably condemned to forfeit the essen
tal conditions of their existence and to suspend the
payment of their bills.
From whence did the embarrassnients which pre-
cipitated the catastrophe arise? That which al
ways happens when one misuses the facilities
Of credit occurred in this case. SpecuIations
plunged headlong into enterprises. Landwas specu-
lated on for the sudden creation Of new cities. Rail
roads were specnlated in on still wagner chances OF
profitable return Immense lines Of railways, through
desert countries established for agriculture
and population which did not exist There is not in
the United States as here, a moder9tivc govern
ment influence which studying constantly the gene
raj condition Of resources, stimulates or tempers the
spirit of enterprise and grants or adjourns conces-
sions Of public works according to the unem-
ployed capital Of the country. On the other
side of the Atlantic everything is left to the ap
probation too often blind of individual initiation.
Speculations in railroads were therefore not amongst
the elements wanting to fever excited by the exag-
gerations of credit In the rich and thicky populat
ed regions communications leading to the same point
were multiplied without any attention being paid to
the fact that two three or four opposing lines might
cause tie ruin Of each other In the Western States
and Territories the formation of companies was en-
coumged by large concessions Of Lands made along
roads which were to be built through arid and sterile
countries 1t was in fact delirium which could
only end in a catastrophe.
Gigantic works were undertaken-but with what
means? The companies had not the CAPT
tai needed to execute and finish them.
They scarcely possessed any more than that
which they had obtained by disposng of their shares
in foreign markets, principally in England, which
now suffers the consequences Of her creduty What
course did they then pursue? They had resort to
the system Of borrowing, which constitutes in fact,
the financial system Of American society and which
it practices upon large scale. To give idea Of the
extent to which these companies made use OF It, II Is
sufficient to state that they now laboring under
the weight Of floating debt amounting to the enor-
nous sum Of Of eight hundred millions of dollars.
But in regard to credit. there always
| comes a trying moment-that when accounts
have to be squared. When all this mass
| of railroad stock encountered the market people
ended by that with which they should have begun
namely, by inquiring what the stock really repre-
sented. What has resulted from that tardy invest
cation? The discovery of cruel receptions. As to
| the railways in working state, it has been found
that in consequence of the multiplicity of the lines
and the competitions between them thoir traffic has
| been progressively reduced while the continual in
crease Of the prices Of labor and Of materials has
added 10 the expenses Of the companies 80 much
so that many Of them NPy not obtain, in 1858, re-
cepts enough to cover the cost ofworking eirroads
and Of keeping them in order. As to the
companies constructing railways in desert regions,
it found that with all their concessions of lands,
they possessed an estate which might bring up some
thing in twenty thirty years, but which at present
is not likely to yield anything. From the moment
| tnat Tue imaginary VI SpcCuldtOu WuS AUdu
doned, and realities were arrived at. all the
railroad stocks were doomed to fall, and fell in
deed to their true value Only as is usually the case
after great financial decisions, the awakng was sud-
! den and the fall instantaneous.
1t was then by the discredt of railroad stocks that
the evil commenced II then spread itself from point
TO point and with an irresistible force from the very
% Credit the in 0grn1 ancient E wSa
ever may be the extent of its diffusion.
rests always upon something positive, and as last
basis upon specie. In the commercial community of
the United States the credit of one nyrestsupon the
credit of Others and it il therefore enough that
fdence should be lost in one branch of national act
witty to put stop to the credit of the whole. Not
being any longer able to negotiate for cash their
shares and bonds to get them received "a guaran
tees Of loans, the banks and companies Of all des-
crptions found themselves with portfolios filed with
inconvertiblc values and il has proved impossible
for them to meet their engagements. The banks
have therefore been compelled to suspend the pay
ment Of their bills. Failures have taken place
after the other in the different branches of bust
ness first in the great railroad companies such as
the Illinois Central. the Erie, and the Michigan Rail-
road, Of which the capitals respectively thirty,
thirty and fourteen millions OF dollars; after.
wards in the large manufacturers then in the retail
trade. The catastrophe has become general, and we
now find the Western markets OVERLOOKING with agri.
cultural produce the sale Of which il stopped by
the difficulty Of procuring drafts, which even on the
best houses Of Europe can only be negotiated Mt q
loss Of IL per cent, and even these only for small
amounts.
Such is the balance sheet of unlimited liberty en-.
joyed by the United States in industrial matters.
No doubt they will recover Themselves but al what
price? Only by general liquidation. which must
come sooner or later. The banks founded on mere
credit must lie dissolved the companies which have
laid down rails bought with borrowed money must
give up the lines TO companies free from deb, and
the spectators who have been over adventurous
must submit to bankruptcy. This is an imperious
necessity. to which, in spite Of all expedent- they
must come.
And now in preeence of tb;s ,rnoxS have NO NOT
reason to congratulate ourselves that are not sub
ected to regime which encourages such excuses. II
freedom of labor isaso the principle OF our industrial
constitution, TO this liberty. TO all others,
knowledge and set a limit-thc general interest of
the country Of which the State j. representative.
We regulate II, and We even make II relax when that
interest demands IT, For instance. while giving the
monopoly Of bank Of issue 70 o great establish.
neDt, regulate the circulation. avoid the abuses
Of exrayagant credit. and are able TO meet difficult
ties without resoring to any empirical extra legal
means. Again, the intervention Of government in
the construction Of railways enabled to group the
concessions pursuant 20 a general system TO avoid
wasteful expenditure and runous opposition, and to
keep the quantity Of work done in each year within
the limits Of our disposabe capital.
Our system II IL true. u not 50 facie in practice
a. that Of the United States. What convenient
for government Ia it, arms and let every
individual do as IL may seem good for his own in.
terests! But we expect our government, while main
tani the night Of every one to employ his capital.
his Intelligence and his labor in such way may
best suit him 10 interfere when tho public interest
requires ii. This IL a delicate task which often
poses the government 20 the Charge Of interfering
TOO much or too little. What outcry was made.
for instance, by certain spectators when the decree
Of 9th March appeared, just after the peace an.
nouncing that the government had resolved not to
make any new concessions Of railways for some time
10 come! But how entirely was the wisdom OF this
course justified by the event Where should we be
now IT, following the example Of the United States.
We had placed no check upon the spirit Of cptprprzel
II IL the Intervention OF our government exercised
with the fullest appreciation Of the wants OF the
country, which has protected commerce and
finances by apportionng IN the interest Of oil the
due action Of those two principles often ia con-
dict-libcrty and authority.
Prem the Paris Pays, Dec. s..
The last news from New York shows great inn
provement in financial Affairs. Money had reap.
peared in large quantities. the stocks have improved
IL, In ,..I. ~.