The Wheeling daily intelligencer. [volume] (Wheeling, W. Va.) 1865-1903, 1875-08-11
THE CONDITION OF TRADE.
4 Rapid Withdrawal OF Capital
From Active business.

From the NhiOn
The report OF commercial failures dur
ing the first half Of the year 1873 is not
altogether encouraging, In six months
1927 failures are rcported-a number ex.
cecdel in only seven full years ont Of the
last twenty. Unless the number during
the last half Of the year should be much
smaller, the aggregate for 1875 will cS-
coed that Of any year in our history eX.
cepl 1861. Comparison Of thiS report
with those Of previous years reveals some
very instructive facts.
To thOsc whs anticipated speedy relief
from the legislation Of last year, or uf
Congress at its last session, this report Is
especially Encouraging They believed
that disorder had been caused by de.
iciency of circulation, and clamored for
more money" Congress "unluckcd $40.
100000 according To Senator Morton's
theory, by aboli,hing the reserve against
circulation. They clamorel Tor "ircc
banking" and complained that States Of
the West and South were in distress be.
cause they had not ~ much bank circu.
latiOn per capita ~ the Eastern States.
Congress permitted, under the national
system, absolutely free banking, and I'M
limited issue Of currency. For more
than year we have enjoyed the manifold
blessings Of an unlocked" currency, and
for nearly six months the incalculablc
benefits Of free banking, But these six
months have brought more failures than
any six months Of our history, except at
the beginning Of the civil war. II inlla.
tionists could in any way be brought to
comprehend the first principles of finance,
this experience might convince them that
disorders Of industry exist which require,
not more currency, but more capital, and
that the mere possibility Of further inila.
ton has caused much capital to shrink
from risks and Withdraw from activ" en-.
ployment.
Indeed, far above the level Of the
granger, the Communist or the blatant
lemagoguc, there are practical men Of
business and writer's on financial topics
who do not fully realize the enormous
withdrawal OF capital and credit which
has occurred. 1t il generally assumed
that the average liabilities Of the thou.
sands Of firms that fail give an approx.
mate indication Of the average liabilities
of solvent firms. The failures represent
all classes, as to magnitude Of business,
mercantile business and supposed re.
sources. II the solvent firms enjoy larger
credit, Il may also he presumed that they
are more cautious and do not stretch il
TO the utmost. But the average liabilities
Of firms failing in 1875 have been only
s22,i9l, while the average liabilities OF
firms failing in 1873 were Si4,OSj. II we
NAV infer that the average liabilities Of
solvent firms has been reduced In nearly
the same proportion, II would seem that
nearly one.hali Of the Indebtedness borne
by the commercial classes when the di'.
order eliminated in 1873 has now been
discharged. In the lists from which rec.
ord. of failures are taken there are about
100000 solvent firms. II the average in.
debtedness Of solvent firms is not larger
than that Of those which have failed, the
aggregate liabilities OF commercial firms
in This country we're reduced from about
$4,000, 100000 in 1873 to about SO, TOO,-
100000 in 1874, and have been further re-
duced to about sl4,43O,OOO,OOO in 1875.
These figures serve to give an approx.
mate idea Of the current liabilities at
different periods, the aggregate indebt.
edness incurred during the year being
three or four times as great. But i near.
" Sl4OOO,0OO,OOO Of current liabilities
have been discharged since 1873, credit
and capital to that amount have been
Withdrawn from active employment.
In one point Of view this Ia healthy
symptom. Indebtedness IL being reduced
The proportion Of business done on a cash
basis has largely increased. The average
time Of commercial notes has been short.
ened. But there has nl'o been a great
shtinkage in business transacted, with.
dtawal Of many millions Of capital from
employment, and an increase in the mum.
Der of failures, notwithstanding the re-
diction Of Indebtedness and the greater
caution in transactions. This is the most
significant feature Of the report. The
following statement shows the number Of
failures in certain years, the amount Of
liabilities, and the average liabilities to
each failure, during the twelve months
ending September 80 Of the years named Z: