The evening telegraph. [volume] (Philadelphia [Pa.]) 1864-1918, 1866-01-27


the act that abolished the usury laws, which had
fixed interest at Ave per cent. But high as the
rate is, the appearances are that 1t Is to go q
great deal higher ana twelve, fifteen, and twenty
per cent are regarded as the possibilities of the
Immediate future.
II is quite possible that England is come what
troubled at present by q real scarcity of money.
America, since the close OF the war, has drawn
money from continental Europe to a great ex-
tent, with but little other returns than Govern
ment securities Much that ordinarily goes to
England has thus been diverted, and much also
has been directly drawn from that country; in
deed, IT is to this cause that English writer's at
tribute the trouble they expect. II is all, they
say, because England has given such heavy
credits 10 America. There has been also great
activity in England in almost every branch OF
legitimate business, and a consequently great
demand for circulating medium. According to
a certain school of fnanciers on this side the
water, we have been in a dangerous condtuon
because the demands of business were not quite
up TO the amount OF money ahoat, and we nave
been tremendously urged to cut the amount
down by the most perilous OF means; and at the
same time, England has been distressed and her
trade cramped by the other extreme. rms
scarcity of money has doubtless influenced the
bank rate in its own degree, and those high
rates are burden on the poor, at least as posi-
tive as the burden of currency not equal to
specie in value.
But the mere scarcity of money does not sufi-
iently explain the already great rise in the bank
rate much less would it explain such rise as
English fnanciers expect. The high rates mean
The apprehension OF a coming storm. They
show how imminent the bank directors believe
financial crash to be. Speculation has gone to a
great extreme. In 1863 1864, and 1866 there
were eight hundred and thirty-two new joint
stock companies organized, and the aggregate
capital was f362, ,000,0 or nearly two billions
of dollars. Many of these companies we're the
emptiest possible schemes to make money, and
their number and hollowness show how blind
and widespread is the mania to get rich rapidly.
Large numbers of them took John Bull also in
q very tender point-his relations with the
United States. The eager purchaser of so many
pieces OF scrip In bran new blockade-running
company was not only to get rich in few days.
but he was also TO inflict great blow on Eng
lands great commercial rival. Here was double
happiness. So the mania grew. Now the mama
is Tor companies to develope the resources OF this
country. 1t takes still more substantial appear
ance, and the London Times declares that the
railway projects to be introduces into Parlia-
ment are more vast than on any previous occa-
sion within twenty wears.
Sucn maniaS precede financial smashes It is
this very rage of speculation that contributes
most to hurry on and render inevitable the disas-
ter whose Deeper cause is some grand financial
blunder of people. Englands great mistake
the greatest mistake ever made by purely
money-getting nation-was that she was on the
wrong side in our quarrel. She was on the side
that lost, and cannot pay. One OF the most vast
OF her financial ventures was an absolute failure,
and she cannot get over the blow. Stockholders
are the influence that is bringing the trouble out,
for stockholders unlike legitimate business men,
are demoralZed, so far as rates OF discount go.
They are not alarmed at any figure, but like true
gamblers make the venture greater, and thus
push rates to such point that all who are not
in sound condition must go down. England
feels that she is not prepared for any such trial.
and thus her fibarCial writers warn that while it
is idle to conjecture when the storm may come,
every man who pledges himself must expect that
1t may come at any moment.
In this connection, az crash In England will
l,lN
the suspension of the Columbian Insurance
Company, the other day, may have some unseen
relationship with what is to come and be more
general. But this is not probable. That sus-
pension evidently did not surprise every one as
it did the public. Certain inside men apparently
knew all about it, and Indicated lively desire
to stand from under. There was an unusually
large movement in the company's stock on the
| few days preceding the disaster. Six hundred
shares were sold, and nearly i've hundred more
| were offered for sale. The price of shares sold
| on January 13, II, and 20, ran from seventy -one
to ifty-four per cent. Perhaps this was the final
rush of the operators getting out after the green
| ones had been fairly gotten in.
| There is family likeness to the operations of
| the men who make corners. Corner men fix on
some obscure, deprecated stock; they quietly buy
! il up at its naturally low rate, slowing it away
| all the time until they have made it scarce.
| Then they begin to inquire for it, and the stock
! begins to go up. So carefully maneuvTing,
| they run it TO handsome figure. A case in
| the stock Of a Western railroad had been run
| up to eighteen per cent above its par value
| BY this time the gudgeons-eager to blte-aTe
| after it. Then the corner men sell, but always
very carefully, and get rid at high rate o.
| that which they bought at a very low one Sc
the operator makes his money at the expense
! of the public
The directors of the Columbian Company vii
! have to prove that they have not, by the use oi
! similar tactics, enabled certain insiders tC
| operate on the multitude. They adopted un
| usual means TO make their stock attractive
| They paid a great many dividends for a no
| very fourishing company. They had even ad
vertised dividend at the very last moment
1t has been suggested that this was only final
| one of many allurements to get outsiders il
and so help the insiders out. The law requires
that company shall stop when twenty-five pei
cent. of its capital is gone, and we may be sure
that the Columbian did not stop before it wa
necessary. But on the 23d OF December tht
| company announced that its capital was intact
II did this by advertising dividend-for it car
only pay q dividend when its capital is ali right
| Either, then, that dividend was Illegally pro
| missed, and was intended to deceive; or the com
pany lost one-tourth OF its whole capital in tn,
current month. The public can choose whicl
OF these it viii believes; but whichever it ma,
choose, neither can connect this suspension witt
those more legitimate troubles that will fal
upon us as a consequence of any great fnancla
1. he A II t,o