The Portland daily press. [volume] (Portland, Me.) 1862-1921, 1875-11-23
Our New York Letter.
The Resumption of specie Payments--
Mercantile Failures and their Cause
Drummers and their Abuse--Prepar-
ing the WAY,

NEW YORK, Nov. 90, 1876.
We are now experiencing the painful and
tedious shrinkage Of values which is simply the
natural reaction from the Fictitious prosperity
which followed the departure from sound prin.
ciples of finance, of which the exigencies of
war were the cause. The legal tender act was
claimed to be necessity. Perhaps it was. It
would be pr0ftless to discuss that question
now. But its most pertinacious defenders
must acknowledge by this time that it was IA
tai mistake to have adhered to it so long after
the emergency which suggested its adoption
had passed away. Every hour that was lost in
setting about restoration of specie basis, af-
ter the rebellion was subdued, only served to
make the task more difficult. The way to re.
sumption was far less perlous ten years ago
| than it has been at any time since. As mat
ter of course it was step to be dreaded. 1t in
volved apparent sacrifices. A revision and re-
ducton of estimates, q curtailment of expendi'
lures and falling off In the volume and profits
of business were consequences from which
there was no escape. But if they had been
met then with manly fortitude, the tribulations
they would have occasoned, would have been
trifipg in comparison with those which are OBJ
servable now.
At length the day of reckoning has ceme,
not because people became sensible and deter
mined to meet it bravely, but because the lines
| of expansion had been stretched so far that
| they could not bear the strain any longer. tis
astonishing how slow men are to heed warn.
| ing even when it is pronounced with such ter
rife emphasis as marked the panic of 1873
hpa for too oh vl<oJ
in the contemplation of their own embarrass-
ments to philosophize about the matter. But
great many who were not so seriously affected
took an extremely superficial view of the situa-
tion and thought it might be relieved by resort
to make shifts and expedients. We all know
what mass of incongruous contrivances were
invented for tying up the storm. Every one
of them necessarily proved worthless because
each was based upon the fundamental error Of
providing that the debt should be made larger
when the first essential Of any practical scheme
of alienation was that it should be diminished.
The fact is, the dilemma was altogether too
grave to admit of any extrication from it,
through the arts OF legislative charlatanry.
Consequently not one of the multitude of art
full projects-which may properly be grouped
together under the generic name of initiation
that have been conceived by fertile but visiona-
ry brains during these last two years of depres-
sion and subsistence, could possibly have served
any useful purpose. Happily, they have not been
subjected to experiment. Nature, which on the
whole operates far better than any other cura-
tive agency has been gradually working out an
effective regeneration. Her processes are more
remarkable for rigidity than gentleness. She
disdains the employment of dalying palliatives
and refuses to be turned aside from her de-
signs by the remonstrances of nervous patients.
Her laws are infexible, and she publishes ev-
cry infraction of them with exact impartiality.
As in seasons Of ostensbe prosperity the
dwelers in large cities are the nearest witnesses
OF or the greatest participants in the general
thrift so during periods of visible adversity
many of them feel and all of them see the
most disastrous results Of the untoward reaction.
During the legal tender decade the metropo-
| lis was one continuous carnival of pleasure
seeking and wasteful extravaganza. Gigantic
| speculations in stocks, merchandise and real
estate entirely eclpsed the old d-fashoned, palms.
taking and cautious methods of doing busi-
ness. Large areas of unimproved and unpro-
ductive land were bought and sold at constant
| ly augmenting prices. The purchasers paid as
little ready money on them as possible. giving
mortgages for the residue. Besides the accru-
ing semi-annual interest and the annual taxes,
there were enormous assessments levied upon
them for the opening, grading and paving of
streets, so that ten per cent. was added to their
| cost every year. Still the nomin al values in
creased more rapidly than the expenses of hold
| ing, and the buyers outnumbered the sellers.
The prices finally attained such prodigious
height that when the crash came two years ago
the decline was SO swift and severe that even
the mortgages trembled for the safety of their
investments. As for the owners, they had but
one chance of success, and that was-infia-
| tion! 1t wouldn't have helped them, but in
their strait they were perhaps excusable for
thinking it might. In moments of despera-
ton men are not apt to reason profoundly.
| To make matters worse, the city had been
burdened with stupendous debt by the gang
who were busy in robbing it, while their un-
observant constituents were engrossed with
their own affairs Of pleasure or business. The
incubus OF taxation to meet the interest on
this Indebtedness, to prosecute the street i'm
provements projected at the instance of these
| adventurous property holders, and to defray
the current expenses of the municipality, fell
with excessive severity upon the landed pro-
| prietors. The estimates of personal estates
had shrivelled immensely uuder the crucial
test of the panic. But real estate Is a tangible
| object of assessment, and cannot escape the
eye of the tax-gatherer
| The dealers in lots are entitled to precedence
in an enumeration Of the victims of the execu-
L - Iar1 Ill
assure to infiict on all transgressors. But the
tradesmen come next in order. In too many
cases the two classes are identical, for it has
not been an uncommon thing to find merchants
taking ventures in land. A house failed not
long ago, the senior partner Of which derived
a profit of a quarter Of a million dollars from
a single sale of real estate. Possibly that
lucky turn may have tempted him into fresh
| enterprises which not only swept away all the
| gain made in that transaction, but left him SO
pitiably ihsolvent that his unfortunate creditors
will not get 20 per cent. Of the debts he owes
| them.
However, it is not requisite to look fer out
| side causes to account for the extraordinarily
| large numbers of failures which are occurring
Trade in all branches has been largely overdone
| BILE have been erected, for which corresponding
rents have been paid, and the expenses of do.
ing business have been so great that single
year of misfortune has irrecoverably impaired
the capital of concerns of moderate means. A
dry goods jobbing house which failed not long
ago,was discovered to have expended $3.50, ,0OO,in
the prosecution of its business for a twelve
month. Its entire capital was only S225, 900 and
the bulk of that was borrowed from special part
| ners. Half of this enormous outlay was to
pay the expenses of travellers in distant states,
sent thither to drum up customers Probably
if the truth were known this business resulted
in loss by bad debts far exceeding the sum il
cost to solicit it. The theory of commerce is
that it a trader wishes to supply himself with
goods, be proceeds to the market where they
are to be found most abundantly and cheaply,
makes his purchases with prudence and dis
crimination-if on credit, establishing his abil-
ity to meet his obligations when due-and
maintains such relations with his creditors
that they can have reasonable means of judging