The sun. [volume] (New York [N.Y.]) 1833-1916, 1876-05-06
THE UNIvERsAL DEPRESSION IN
BUSINESS.
The Causes Evident, but the End Uncertain
A Serious Question.

From he London Times
The Directors Of the Bank of England
have reduced their rate OF discount to Q per
cent. 1t has never been lower, and II has very
rarely been a. low. The rates of interest al
lowed on deposits by the jont.stock banks are,
OF course, lower than the bank rate OF discount,
and money at call receives a return OF l per
cent. only. Concurrenty with this condition of
the money market, there exist, In almost every
department OF industry and Of commerce. great
sluggishness or absolute deafness OF enterprise
q limited extent OF production and correspond
ing contraction OF sales. The complaints are
universal that business Ia dun and profts are
low. The statistical returns OF the Board Of
Trade show that these statements are not ex-
pressiOns OF groundlcss discomfort, for they re-
veal great and for some time past a continuous
decline In the value and quantities. OF tho com
modities in which we deal with our foreign Gus
TONERS. 1t l. IN agreement with these facts that
ndvices from all the principal marts Of industry
tell us the same tale Of declining and unproata-
bic business.
n hero has been commercial dullness 10 the
United States for more than two years, and
Canada has for some time been afflicted by the
depression OF trade in the greatest customer of
tho DOminion-the neghbOring Republic. The
countries OF Europe which have any CONNER
cial character have been similarly affected; Ger
many most prominently, put France to a signill-
cant extent; ard II We carry our survey to tho
regions OF South America. to India. and even to
our Australian colonies, we shall be met by "a
painful iteration Of the same tale Of bad times,
though different reasons may be assigned in dif.
fcrent parts Of the world for the result. II will
probably be admitted that the low prevailing
rate OF interest and the contraction OF industry
are connected together as effects of the same
calsc-a decline In pre- is-though the unsettled
political CONDITION Of Eastern Euro has had
some influence on the interest Of money.
There Is at al times q cla.s among Us saving
money and looking out for modes OF Investing
II. ihe amount saved In the course Of a We r
varies considerably with the variations Of trade,
but sonnet hing. and that not an inc nsidelahle
amount, IL saved In the worst years, Of lgto
years a considerable proportion of tie amount
saved has found EMPLOYMENT In the new loans
which have been continuously launched In our
markets on behalf Of American railways and Of
STRUGGLING States. The decline OF trade In the
ure IN the payments Of iptcTest ON existing rail-
way securities, aud u has become Impossible to
cpnent OF rauwnys' while the bankruptcy Of
Turkey, the threatened bankruptcy Of Egypt,
and the unsettled relations OF the East have
Rent the lbOurscs clenr OF proposals for state
loans. The single apparent exccption-that OF
the Egyptian loan-servcd by its failure to prove
save money. and with all their Unfit are TEMPTED
by the high Interest VI those classes Of securi-
ties, are for the present frightened. They thcfe-
10 the depression OF the rate of interest
witch would have been decreased even
the pale Of Possible borrowers. But tn con.
traction OF trade consequent on a decline Of
profits Il the chief cause of the accumula Ion of
money, and tue real question Is why have profits
declined. The new fields Of industry on which
the Edinburgh Reviewer Gescanied remain
open, but the profits Of capital In them seem to
have fallen Of or ut all events are not RENTED
home TO the capitalist. IL is Obvious enough
that the Immediate PROFITS OF the employment
Of capital In the Western states of America
have been Over-esttmated. or rather that their
Capactty OF sustaining high rates II profit was
over-estimnted. lhis Is shown by toe falling Oh
upon the return OF tue capital which has been
sunk In industrial enterprises, such as Railways
In those states. People forgot how rapidly com
petition brings down the exceptional profits Of
virgin area. Tho wave has been sent ia X
upon US, and the present depression OF IT de Is
the counterpart Of It's recent activity. Seven
per cent. Ia. teen followed, by natural law, by
two per cent.
The interesting question. II We could solve e.,
would be how iOng the process of depression
NAV lie expected to endure ; but we are sorry to
say tn At no answer can be gtvgn to this inquiry.
The turn Of prosperity mainly depends upon
the 'tvelopmelt of the pro esses of Industry
which Is constantly going on so as to lessen the
GO at 4 production. The inhabitants OF the
state and colonies whose growth caused such
a remarkable increase OF trade at home over
estimated their powers until they found they
70 themselves. But we may be quite certain
that they Will soon be able TO prDduc III cir own
commodities more cheaply than they have done.
snd. as the cost Of production with them viii
diminish cOntemporaneously with diminutiOn
here, there VIII he on both grounds revival of
commercial Intercourse. No Que can tell now
long tins process Of rccOvery viii take. We may
from consideration of former periods OF de-
Preston Of u simlsr character TO the pfeso Mt
hazard conJectures a. to the duration OF the
present one, but guesses on the subject would
bc idle. it Is enough to kuow tbat the expe-
Of on ordered progress returning upon itself AS
surely as spring follows winter.