The Carbon advocate. [volume] (Lehighton, Pa.) 1872-1924, 1880-01-17
FINANCIAL REVIEW.


Henry Clews & Co., bankers and members
of the New York Stock Exchange, IS New.
street, New York, issued January 7tl, 1880;
and which will no doubt prove interesting
to many of our readers
The year 1879 has been so remarkable in its
financial and commercial aspect that it may
be proper to devote this issue OF our Monthly
Circular to a review of Its principal features.
The six preceding years were occupied with
fundamental reaction from the unnatural
initiation to which the war, a diseased currency
system, and worldwide expansion of trade
had committed the nation. The main func-
tiOns of that reaction appear to have been, to
root out all unsound enterprises, to regulate
the extravaganza of consumption, to liquidate
insolvent credits, to diminish tho costs of pro-
duction, and to reduce prices to a natural
level. At the close of 1878, this work appears
10 have been very thoroughly accomplished.
Railroads capitalized at an aggregate of
about 1000, ,OOO, 900 had passed into liquidation
and been generally rchabilitated; and the
same fate had befallen every other form of
enterprise that was not selEsuppOrting. Con-
sumption had fallen to such a law point that
we had not only reduced our foreign imports
by about 500 OOO,0 900 a year, but had also in
creased our annual eXportable surplus of
home products to nearly an equal extent. The
| liquidatiOns of insolvent estates, as expressed
! in the usual reports of failures, had risen to
81, POS, 100000 for the six years. Wages had
been reduced to the level of ante-war times
and prices of commodities generally had also
! hon pI 10 bnf ctn ri
Thus, there existed, at the opening of 1879,
all the conditions necessary to a great revival
of business. The country was bare OF every
thing connected with domestic use, with man,
ufacturing appliances and with trausportH-
tion facilities. The one thing needed was the
word from capital to start the machinery Of
production to its full capacity, and trade must
Mt cnce bound into an almost unprecedented
activity. Capital, however, had itselfbe
paralyZed by six years of shrinkage and eau
tlon, and needed some commanding assurance
before it would act. That stimulus was ap
piled, first, by the resumption of specie pay
ments, under conditions of strength that dis
sipated all the misgivings about the act that
had previously been entertained. Next came
Il series of refunding transactions by the Unit
cd States Government, through which s542,
100000 of six and five per cent, obligations
were transmitted into four per cents. Capital
lists, receiving this conclusive evidence tina
they must accept thencelorth a lower rate o.
interest than formerly, at once beganto inves
in whatever afforded reasonable prospect o
yielding a return somewhat above the ney
standard established by the Government
This led to n universal rise in the prices of al
kinds Of corporate investments, and especial
= ly the bonds and stocks ofrailroads. The ad
vance in the latter was largely stimulate
through facts connected with the condition q
the roads. After long series of difficult ne
gotiations, the leading railroads succeeded il
, forming alliances for the "pOoling" of thei
a business and the regulation of freight charges
S which were regarded as giving them the pow
. er 10 control competition and avoid the freigh
, wars that had so seriously reduced their pas
earnings And, added to this, came harves
which gave promise of the West being able {
! send to the coast 90 600 600 bushels more graf
S for export than in any previous year. Neve
= before In the history Of our railroads had ther
d been such combination Of powerful infil
10 ences calculated to enhance the value Of the
shares and bonds. At the same time, theI
was some 25, 900 miles Of lately bankrupt roa
for which the growth of population had ,
e last provided some use and this road, ha
6 ing been acquired at very low cost uudC
J. foreclosures, was Immediately rehabllitateC
&c and large amounts Of the new securities tn,
issued were placed upon the market. In son
conspicuous Instances, these reconstruct
roads have been associated with older ones,
Is as TO constitute new systems or routes mater
!" ally affecting the prospects of the older one
+ and thereby creating extensive changes in Il
,o ownership of stocks These conditions pr
"a duced a rise in the price Of nearly eve
stock represented on the exchange, n ri
III which experienced little or no check uni
:; about seven weeks befoFe the close of she yea
ne The rapid advance in prices, ofcourse, induce
~ immense speculative transactions, and Il
j, years record shows that the total sales
stocks alone, to say nothing Of the unpret
dented transactions in mortgage bon
CT reached 73,sl2,oOO shares, against 8
ho $4,000 shares for the year preceding. T
ch following comparison shows tie opening prit
les on January !, 1879, and the closing prices
December 81, Of the leading stocks, and al
the years sales Of each stock: