Sacramento daily record-union. [volume] (Sacramento [Calif.]) 1875-1891, 1881-08-13

tirely of that spirit that seizes opportunities
| and is ready to risk where it may gain, and
| the energy that presses forward in new and
| greater enterprises would be gone. Nor
would such community be able to provide
! for the contingencies involved in the varying
character of the seasons, the alterations in
trade, and the vicissitudes to which all things
human are liable. For the Spectator
is often the economizer and proyider,
as he is the inventor and pathfinder.
He, for instance, who, in time
of plenty anticipates time of scarcity, and
buys breadstuffs for an advance, it was once
the fashion to call forestaller and monopo-
lizer. But he is really doing for society what
people of Egypt, when during the seven pros.
porous years he stored up the surplus of
| abundent crops against the famine years that
were to follow. Whatever enhancement OF
price the operations of such Spectator may
| in the first place cause, will to the community
at large be amply compensated for by the
subsequent effect in keeping prices down.
| By causing economy he prevents distress
| and whatever profit his forethought may
bring him is but small part of the gain
which that forethought secures to the COM
Inunity.
But speculation which is legitimate sind use
full passes easily into
| SPECULATION WHICH IS ILLEGITIMATE AND
HARMFUL.
1t is not easy to draw the line at which the
transition takes place ; it is quite impossible
to fix it by statute or commercial regulation
vet there is distinction that should be
recognized, and especially by bankers, who
are the conservators of the financial system.
And while even legitimate speculation may
become so reckless as to be injurious, there is
a species of speculation sure to have that
character. 1t is, if 1 may coin phrase,
speculation on speculation-that is to say,
| speculation in which the venture is not
based upon production or the condi-
tions of production, but upon the dis
position of people to speculate. Speculation
of this kind is gambling pure and simple. 1t
has no useful purpose or redeeming feature;
but is the most insidious and demoralizing
form OF gambling, as it is apt to extend
among classes who would revolt from the
grosser forms of gambling.
WHAT HURT CALIFORNIA.
1t is speculation of this kind, to which all
times of continued prosperity offer great
suits in California. The richness of the
Comstock deposits, the sudden wealth they
brought to many, would have affected the
| imagination of even the most staid and con-
sentative of peoples, and their effect upon
population drawn from the most active and
enterprising of all countries. and among
whom the traditions of the golden days, when
fortunes were easily won and lost, were yet
strong, hardly needs to be described. AT
first the silver mines were subdivided into
feet leach location, under the mining regula-
tons. being allowed SO many feet along the
| ledge), but Incorporated companies, with
nominal capital divided into shares, were
soon found to give greater facilities for sales
and assessments, and before long the stock
boards established in San Francisco for
operating in these shares began to do bust
ness which, considering the population and
capital of the respective communities, threw
that of the New York Stock Board into the
shad,.
| OF course the intrinsic value or real pros
poets of a mine soon became Of secondary
consideration, compared with popular expec
| tation, as shown by the fluctuations of the
stock market, and mining speculation passed
into speculation upon speculative tendencies
the real thing taken into account being the
prospects OF
THE RISE AND FALL OF STOCK
Prices, rather than the prospects of yield.
Thus the locating, opening and operating OF
mines went on to a large extent with refer
ence merely to the Stock Board, the pur.
chasers and holders of shares caring little for
the prospects and management of the mine,
but looking rather for their gain to the rapid
fluctuations of the stock. The shareholder,
who bought merely for the purpose of quickly
selling again, might know that an assessment
was levied for useless, or even for fraudulent
purposes, but SO long as he thought the spec
ulative mania might enable him to sell his
stock, he would pay it without hesitation.
The hopeless locations made, the useless
work performed, the wasteful management
epgendered, constituted but part of the loss,
which, though it might be hidden for awhile
by the initiation of nominal values, must at
length be felt. The spirit of gambling spread
through the whole fabric of society. Bank.
ers, merchants, lawyers, doctors, clergymen,
manufacturers, farmers, mechanics-even day
laborers and domestic servants, risked means,
large or small, upon the fluctuations of the
stock market, and watched its quotations with
feversh anxiety. That waste of tina and
resources, that strain upon energy and morals,
which is involved in the grosser forms of
gambling, took place upon grand scale, and
the dissemination through the community of
SO much fictitious wealth, which its holders
regarded as real, fostered everywhere the
greatest extravaganza.
THE sHRINKAGE OF NOMINAL VALUES
Which followed the elimination of specnla-
ton and the decline in the production of the
I Comstock, was the pricking of a bubble that
brought the realization of poverty to thou
sands who had INDUCED in fancied pos
session of wealth, and the tragedy which at
tended the closing of the doors of one of our
prominent banks was but a striking instance
of the wide spread disaster and ruin that &C
companied the steady decline of stock values.
The following figures give an idea of the
shrinkage in stock values, though it must be
remembered that many minor stocks which
their owners fondly believed to have consid-
cradle value, and in which there were many
private transactions, never figured in the
Board lists. Highest prices were reached in
January, 1875, although the production of
the Comstock did not attain its maximum
until 1877. The protracted character of the
depreciation, marked as it has been by tenn
porary pauses and revivals of speculative
hopes has made the strain all the harder
Aggregate value Of mining stocks on San
Francisco Board, January 1875. $685., 3o5, 4oi
Aggregate value of mining stocks on San
Francisco Board, July, 1881. ........ 10000
Shrinkage 1924, 402, 7oi
highest value Con. Virginia, January,
Value Con. Virginia, July, 1SS1........ 945,O0o
shrinkage. ........................ s7l, 655, 900
Highest value California January 1875. s84 100000
Value of California, July, 1851 35l, 600
shrinlage. sss, 1856, 600
Highest value Sierra Nevada Septem-
Der, 1873 ....................S 100000
Value of Sierra Nevada July, ISL. SIS, 900
Shrinkage .............,..''.......- Sz6,lI5,ooo
Yet nothing better shows the stable char
acter of the business and financial system of
California, than the fact that greater disor-
ganization was not produced, and the natural
depression would doubtless have passed away
without attracting much attention from
abroad, but for circumstances which unfortu-
nately gave political expression to the feelings
of discomfort which the reaction from q sea-
sou Of wild speculation is sure to engender.
Men who awake from dreams of wealth to
the realities of poverty, are apt to blame any,
thing or anybody, rather than their own dis
regard of prudent counsels, and when large
proportion of the whole community find
themselves sggrieved in this way, the time is
! happy one for the demagogue.
POLITICAL DEMAGoGUEs.
! The demagogue was not absent in Cali
fornia. But the loud and reckless agitation,
which, under the name of the Kearney or
| Workiugmans movement, gave to California
such an unenviable notorietY, was not due to
| individuals, SO much as it was the expression
of the angry and unreasoning feeling which
the reaction from wild speculation always
begets and this example of how the discon-
tent produced by want of financial prudence
NAV find expression in ill-advised political