The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1871-04-28
From the Nation, Apri c7.I

ACAt QudItcT Vi CcutuiJ lAdy w CApcStCu W pre-
vail throughout the United States for money loaned
on varying securities Is q question Of no little i'm.
p0rtance 10 eve ny business man, government fnan.
Cier or corporaton--banks railroad and insurance
companies neutrality-suspicious. money en-
gagements In which the future enters as an essen
tial element inasmuch as the condition or all bust
ness, at all times and places, hinges upon the price
or worth Of capital, or Its representative money as
much as upon any other one contingency. Having
ana thinking a Il the 'ns s snd
illusions arriye at may be worthy or the attention
q your readers aad tne public herewith submit
writers on potlco-ec0n0mlc science are generally
agreed that the principles which govern and deter
mon acoeptation OF the lerm the price at which
money can be hlred-are, IN the MAN, three:-Elrs
IL ~ employea; second, the supply ana demand Of
CAPITA tnird, the safety or hazard OF the capital
recognized authority on these pohticoeconomic
subjects, adds fourth, vN.:-rhy soundness of the
If these assumptions are correct it Is obvious that
The answer to the question as to the future rate OF
Interest In the United states must be sought in the
application e. the principles, above stated, to the
material ana social condition Of the country; and
WIN this view tt Is proposed to ask attention to
Euch an application somewhat In detail.--
]. Ptoducttveness or Labor fa ne Community
echere IS E'ap,oyed.-Caplta or Its representative
money-whicl commands all other forms OF CAPT.
tails essential to labor In The work OF production.
in productive power Of labor could be carried
put very little way Without capital; and therefore,
In every civilized community the two work together
or IN partnership and DIVIDE the profits from such
cording to which such division takes place Is vary
Ing one but 1t is clear that the greater the profit
which can AFFORD TO pay to capital lor It's use, and
generally the greater the amount OF capital which it
the da nc as Of s N9
suit OF the Industry OF the people, is greater than
N any otner country and consequently capital here
OBTAINS It's largest reward or rate Of interest; while
~ other countries, like France, Germany aud BEL
gium where the returns Of labor are small interest
ALI lnru Tln,t
oulturist OF Europe who BOTTOMS at five per
cent Is well content II the products OF his land ana
make good waste and pay the hire OF his capital;
put 10 the United States on the contrary, the agrl
cuiturlst who pays ten Or as Is sometimes the case
twenty per cent for his capital. not unfrequently
pays OIL all his Indebtedness with the proceeds or Il
to represent the profit resulting nom his labor and
tne use OF capital borrow ed &C what may seem an
cheap che Of es Te Ue eo Or
moment under this head, then, Is, how long will
sHppeea at the he Hony c 81 1nn o
Is TO make u an object Tor them to offer large In.
ducements Tor the loan and use OF capitals
That many of these natural resources WILL MIL
mately become impaired or exhausted cannot be
doubted; but thar any which now materially contri-
likely 10 be SO affected within The next quarter 81
nar century does NOT seem at all probable. Thus Of
the land available for the profitable growth OF ecot-
ton not three per cent has ever at any been
put under actual cultivation. or coal, the most |
United states greatly exceed the aggregate Of those
Of all other countries and, at tho same time are
value in quality. Our deposits OF the metals can |
scarcely be said to have peen us yet explored. our
AREA actual S ssiss ifs d free 70
Of thousand millions Of Of acres, s While
to insure the United States from what IN ali oiner
countries IS ever source OF anxiety VIZ, q de,
can be had Tor mers s. fertile land
chased by the acre Tor less than Q days wares.
naupcr labor, although much talked OF, can neither
exist in tue United states nor III any other country
under similar conditions, except through the igno
rance or inertneSs OF the masScs-swO qualities not
characteristic OF Americans and for the simple rea-
son that the possession and cultivation OF fertile
rOus support and when less IMAM thus Is Afforded
by other employments, the tendency. through 90.
ylous sefntercst VIII Dc 10 aoanuon tue a'tei anu
embrace the former. -,
II seems certain, then, that under the above and
other con litions The industry OF the Uned States
must as whole, continue for long time 70 be
more productive than that OF the older civilized anu
more fully occupied countries OF Europei that wages
cannot here fan below a comparatively high
standard, and that labor can continue 10 anoru 70
pay ran sSr Of The coansry are
the evidence complete that there can be no lint
taton within Inc next aur.er % 81 Of se opU
nifty to 1t under such conditions as VIII warrant
the continued payment OF al least the present
.. Sspptv and Denand.-Lct US next consider the
application OF the second principle 70 the material
and social condition OF the country,
, With ia Immense natural resources and powers
of production the United states. from the iist set
been able TO obtain from its own population sup
ply of capital adequate to its desires or Necessities
hut has drawn largely upon the accumulation OI
other and older countrles--the amount thus drawn
within the last ten years alone from Europe having
been at least 81 700, 100000. But, NOTWITHSTANDING
this immense amount supcradded 70 Whatever during
the same period may have resulted IRON the excess
OF domestic production over domestic consumption,
the supply Of active capital In the United States has
never been equal to the demand, aud no loans nave
been effected since soo ior any consderaps aou as
United States, less tnan six per cent; or by any
State, or by the national government, Tor lower
rate un.ess accompanied by some advan.
tage-such rs exemption FROM taxation, pay OF
interest gold, &c-equivalent TO IRON one 10 two
the loans made during the time indicated have
averaged nearer seven and eight rather tnan Elk
per cent. We have also shown thai the opportunity
to use capital advantageOusly III the United states Is
certain be fully great during the next twenty
nve years. at least, 1t has been al any time here
tolore and it is in the nature OF seevdent proro
sltion that when opportunity y presented 10Y sucn
uses the desire TO have With n view w use Will not
be wanting The question, Therefore that next pre-
gents itsolf Tor consideration IL FROM whence anu
on what our iuiure desired supply oil capital
Taxing Il Tor granted that the home supply, how;
ever much II may DC Increased ,hrouan increased na
prove sufficient Tor necessities IN the immediate
future it certainly has not 10 inc past me oh,y
Europe But the Accommodations OF Europe are not
unlimited, and have been drawn upon 10 SUCH an
extent within the last ten years that perlnahehe
rise In tho European rate interest for time l0ans
Is universally conceded, r. indeed, II has not already
taken place. Az sOiuc Va WY
recently made upon the loanlhle capital OF Europe,
It may be stated that tho asgrrga,e o. tue Uans
known to nave been negotiated IN Europe
during the year 1870 wa, was III exee g, y
more than onehalf was for reproductive
and useful purposes ana the balance on account o
war or military expenditures. Wills Tor inc present
year the requirements OF Francs for the payment ol
Indemnity, and oil France ana Germany alike for tue
replacement OF capital wasted Or destroyed BY war;
will independently neccssiiaie the raising OF sulns
equal To the aggregate OF the loans OF al europe o
any former equal period. we nave. therefore, II
these facts guarantee as u were, that the supply
OF capital from Europe for new investments Is no
for the immediate future to be Increased or the rat
of interest to be in any degree diminished; and !
these differences correct then the prevailing iat
Of interest in the United States lot money loaned y
twenty-five years than 1t has been during the las
quarter OF a century. -, .