The daily exchange. [volume] (Baltimore, Md.) 1858-1861, 1858-06-29
BALTIMORE.
TUESDAY, JUNE 90, 1853.

r,,o history Of Commercial revulsioLs in this
oonntrv reveals the remarkable fact, that incorpo
rated manufacturing companies nave usually "'e"
found less capable of withstandlng hn.'i'i'u p..
sure, than private individuals ehgageu III s'','i'"i
branches of trade 1t might reasonably nave peeh
cunnosed that the larger the capital empioyeu' anu
49,, rorfact the machinery in use, the greater
I'D no the annual profit of the business so con-
drcted while the danger of failure would be pro-
nort;onatelv lessened. The argument, though
nIousible. is proved by experience to be entlreiy
e,Iocious The temptati on to indulge IN over
trading is greater with incorporated bodies than
in simple co-partnership; because any stoppage
of the works involves the loss of interest upon the
capital employed, and because 1t is thought neceS
sarv 10 keep together the numerous operatives VINO
vould otherwise be scattered far and wide, ana
would be found difficult to recall when business
revived, and their services were again IN de-
mand. 1t is well known, moreover, that lncorpo-
rated companies, from the magnitude of their ope-
ratons, find it, generally, much easier to OBTAIN
loans from capitalists and banking institutions,
than Individual manufacturers and that the large
extent of their line of discounts, constrains the
banks to assist them still further, in emergencies,
from the fear of losing the heavy sums already adj
vanced. That the support, thus accorded to
tottering corporations, sometimes enables them
to recover from their financial embarrassments,
and to re-establsh themselves ON firm footing,
may be conceded; but the instances of recovery
are few; while the cases of failure are many. But
tnuc
relieved or finally become bankrupt, their extra
ordinary drafts upon extraneous capital work
serious injury to individual merchants, manufac-
turers, and traders, who also rely upon the same
sources for such temporary assistance as they may
require; but who find themselves thus deprived of
those discounts which, on ordinary occasions, they
have found available, and upon which they were
undoubtedly justified in basing their calculations.
1t is certainly safer for Bank to loan, in cases
of exigency, twenty energetic business men five
thousand dollars each, than to accommodate a
single corporation with one hundred thousand
dollars. This division of the loan into so many
separate parts is, moreover, of infinitely greater
advantage TO the community inasmuch rs its SUBJ
sequent distribution in still smaller sums, relieves
the necessities of much larger number of per-
sons, and thus enables each, in whole or in part
to meet accruing obligations. Nor, as general
thing are the loans made to incorporated bodies
based upon securities that equal, either in positive
value or in the opportunity for realizing them
those rendered by the merchant and the trader.
Stockholders only liable to the amount of their
investment, no matter what their private means
may be- while the extraordinary depreciation in
the value of manufacturing property, from the
constant fluctuations to which the more prominent
branches of trade subjected, we refer more
particularly to the cotton, iron, and wooden in
terests;-renders it peculiarly difficult for capital
lists and bankers to make their advances, with any
degree of certainty that the assets of the concern
will prove sufficient, in the event of stoppage
of the works, 10 cover its outstanding
debts There is no kind of real estate
whatever, that is more easily affected by CONNER
cial reverses, or by stringent money market than
mills, factories, and furnaces; inasmuch as their
value is dependent not upon the original cost of
the structures themselves, but upon the prosper
Gus condition of the business conducted by those
who own them, and the amount of certainty that
attaches TO its successful prosecution in the future
Statements, recently made, show that it is no I'M
common occurrence for cotton mills, costing $780,
900, to be sold, under forced sale, for less than
one-third of that amount; for furnaces to bring
under the auctioneers hammer not more than one
half the amount for which they had been mort
gagged, or for paper mill-aS was the case recent
ly at Lawrence, Massachusetts-to be offered for
sale at S25, 900, which cost a few years ago,
Sl45, 000 and to find no purchaser even at the
low sum the parties were willing to take for it
From these facts we may infer hat there is some
thing radically wrong in the manner in which in
corporated Companies are conducted. 1t is well
known that individual manufacturers frequently
succeed, while their better appointed and more i'm
posing rivals in trade become hopelessly bank
rupt. 1t is scarcely necessary to say that to the
difference in the amount of attention paid to the
details of the business must be ascrbed the success
of the one, and the failure of the other. The pri-
vate manufacturer exercises personal supervision
over every department of his business and en-
deavors to economist at every point where economy
will not work an injury to his fabrics, or impair
the perfection of his machinery. He limits his
production, as closely as he possibly can, to what
he Judges will be the extent of the demand and
employs as few agents possible for the dsposal
of his goods. Incorporated bodies operate through
agencies altogether; the stockholders through the
directors, and the Directors through salaried
subordinates, who having no interest in the bust
ness beyond the stipend they receive pay but little
regard to waste and leakage; work their hands on
full time, and, when they should cut down ex-
penses rely upon the capital of the Company and
upon the facilities it enjoys for obtaining loans, to
keep the mills constantly employed The conse-
quences of this reckless mode ofdoing business NAV
be readily conjectured. Goods are forced upon a
dull, or falling market. The jobbers to whom
they are sent are drawn upon for a portion of the
value of the consignment, and when the drafts fall
due, if the goods are unsold there remains no re-
course but to force them upon the market very
frequently at price ranging from fifteen to twenty
per cent less than the original cost of their pro-
ductlon. Is it any wonder, under these circum- |
stances, that the jobbers and the commission mer-
chants get rich; or that the incorporated companies
disastrousy fail? They manage these things bet
Ter IN Europe. There, nearly all the manufactures
are carried on, either by individuals or by partner
ships Individually liable. The personal response
ollly this involves necessitates personal supervi
sion, and the adoption of system which shall
guard-so far as it is possible-against all those
and fluctuations to which such in
dustrial enterprises are liable.
BY the last arrival from California we receive
the painful intelligence of another Indian battle in