The Arizona sentinel. [volume] (Arizona City [Yuma], Yuma County, A.T. [Ariz.]) 1872-1911, 1879-05-03
The Advantages Of Cheap Capital.


cent. for the use of money on good Sc
curity naturally think the times are very
hard when they can get but four or flvt
per cent. Even in the West there is G
gradual reduction. though intere.t rates
in that section are yet much higher than
they are In the East. But this dsadvan.
tage to the money lending capitalist
works to the advantage of manufacturing y
capitalist, and to the still greater ad-
vantage of the laboring classes. In the
past there has been a continual clashing
of interests, as there will always be, be.
tween mOney-lenders and manufacturers.
Most Of the great corporations are either
directly or indirectly borrowers. Some
times they obtain accommodation upon
their own paper, and sometimes upon the
notes given by their customers, but, in
any event, the rate of interest paid by
them fixes the rate of dividend to be paid
to their Stockholders. The price of money
is as important to them as Is the price of
cotton or any other kind of material used
| by them, and there is as much gain to
them i'm the reduction of the interest rate
from eight per cent. to five as there is in
corresponding reduction III the price of
raw materials. In this way the capital
lists of the country, instead Of being unit
in purpose. seeking to enrich each other, rs
some disputants upon the labor question
would have us believe, are always hostile
to each other, and continually striving to
break each other down. At present, and
probably it will be so for a long time in
the future, the probability of success in
this contest is with the capitalists who
borrow, instead of the capitalists who
lend.
This, as we have already said, results to
the great advantage of the laboring
classes. 1t is certain that employers, in
the long run, will makc it their first Ell
deuvOr 10 get icnds on their -,.ei> IN
preference TO ndin@ 10 tic ae.d- Of
their employees IN such times as st.e
Of the past res Gears tnis Is not alva5.
The case, 70! ny manufacturer has
kept his esta ment in operation al q
loss ior The sake Of his wofkmen, but in
the cnd wages Will be placed at II puint
which will permit the employer to obtain
It profit upon his capital. The reduction
of The rate Of interest helps the employee
directly. Whatever saving there is 10 the
employer Il. this point tends to keep up
or increase his wages, by reducing the ex
penses of his emulover.
The decline in the cost of raw material
has an effect in the same dirccti IN, which
is generally unnoliced 1t reduces the
expenses Of manufacturing, hy reducing
the necessity for borrowing. A manufac-
turer, who had Il capital vi S2J0,OOO IL fow |
years ago, and WIS compelled to borrow
100000 to carry his stock, nov fluids that. |
owing to reduction in the cost of |
material, he is only Obliged to borrow
$4,000. This reduces his expenses Uy,
say $1,000 year, saying nothing of the
saving from the reduction of interest |
rates, and makes it possible for him to
pay larger wages than he could if his ne
cessitles as borrower were as they for
merly were.
Perhaps the most important result of
the reduction of interest rates, however,
is that il enables American manufacturers
to compete with European manufacturers.
For many years the difference between
European and American rdtes of inter-
est has been so great as to make such
competition di:ljcalt. The Ell .lsh man-
ufacturer borrowed moneJ at three per
cent, while the American paid from six
to ten per cent. The difference con-
sttuted, in itself, ii satisfactory dividend
for the Englishman, Even if the other
elements had been equal, this alone
wOnld have enabled the European manu-
factufer to undersell the American. But
all this is changed. Money is nearly as
cheap in the Eastern States in this coun-
try as it is in Europe, and tlI:s accounts
partially for the increase in the American |
exports of manufactured goods, and in :
the success of American manufacturers in 1
their attempts to compete with those
of Europe. The continuance OF low rates Z
of interest will in this way he of great
advantage to the manufacturing capital-
ists, and to the labUriny Glasses eny;rred L
in this description OF industries. s
1t is within tfe range Of POSSIBILITY, we :.