Memphis daily appeal. [volume] (Memphis, Tenn.) 1847-1886, 1882-04-11
MEMPHIS APPEAL
TUESDAY, APRIL IL, 1859
DECREASE IN ACTIVE RAILROAD
CONaTRUETUnR

, In business 1t Is always an important mat
Ter to avoid investing in such way as to al
low the proportion of fixed capital to be so
extended as to intrench upon the due amount
OF circulating capital. Every business firm
has certain amount Of capital invested in
the goods 10 which it deals, so as to be able
to replace the stock sold by new stocks, for
which there is cash enough within control
to pay. This portion Of the capital is thus
always kept in motion. 1t goes out for
stock, the stock is sold and the capital comes
back, bringing NTH it the profits to obtain
which is the object of the enterprise If the
hrIn invest 10 more attractive fixtures,
counters, shelves, Windows or building i'm
provements, the capital 20 expended does
not come back in the same way as when in
vested in stock; it may pay inter-
est, but il has become fixed and is no
longer under control like the movable or
circulating capital. Should the amount Of
capital so fixed intrench upon the circula-
ting capital TO an amount that limits the
power to buy necessary stock, it is evident
that the sajes, aad consequently the profits,
will be curtailed, and perhaps serious en-
Darrassment or possibly failure may result.
Many commercial concerns have been broken
up from mistakes respecting the proportion
between their fixed and their floating CAPT
tai, or from altogether disregarding it.
Want of attention to this same principle acts
still more widely, and at times results in |
national disaster and panic. A certain |
amount of floating capital is required to |
carry on the mass of a nations business |
Should an undue proportion of the whole |
income of the ommercial part of the nation |
be distracted from the circulating capital and |
become fixed capital, even though the invest |
ments may have been good in themselves, |
it is evident that the same embarrassment |
must ensue as in the case of an Individual |
firm. The due proportion between liked and
circulating capital has not been observed |
OF late years railways, more than anything /
else of commercial character, have occa-
stoned the transgression of this cardinal rule /
of business, and recently there has been signs
in this country OF repetition of that kind
of error. Money invested in railroads is alb
stracted from the capital required in the act
i've operations OF trade, and becomes fixed.
Alc lmLucust IdllNdy sCueul65 Indl nave
been projected, added to those already carry
ing out, have threatened 10 disturb seriously
the equilibrium that should be maintained |
between fixed and circulating capital. For
tunately, however, the exigences of trade are
curtailing the means within the reach Of
projectors, and many of their projects are
delayed or suspended. A large proportion of
the Bessemer steel rails recently received in
New York have gone into the customhouse
stores, the corporations ordering them not
being able to sell their bonds rapidly enough
to keep up the full tide of construction.
Those bonds have shrunk in value, in many
instances, in the market, by which the power
to borrow is curtailed. Other orders yet TO
arrive are expected in the same way to be
left in bond. 1t is also stated that the con-
tract time of large amount of railway iron
ordered of our home manufacturers has
been protracted for the reason named above
In some cases, even, it is asserted rails re-
ceived have been resold at loss. The sus-
pension of important works, their slower
progress, is unfortunate in some respects, but
the delay is happy thing on the whole, for
it keeps down al undue draw upon the cir
culating capital of the country, and reduces
that draw to a rate commensurate with cur
rent profits. 1t will cause some temporary
but the result will be safety
TO the general business interests OF the coun-
try.