Sacramento daily record-union. [volume] (Sacramento [Calif.]) 1875-1891, 1882-01-31

LnaL cODulcE became KNOWN tHS H4iOGo Ia
ton at once and voluntarily set itself to
repair the disaster. The consequence was
an era of unprecedented thrift. Every
one was saving and every one was
working. Production and the accu-
mutation of capital went on at
an unexampled rate, and in seven years the
country had not only extricated itself from
its most pressing difficulties, but had
stored up an immense amount OF surplus
capital. When this state Of things was
realized the usual inclination for spscula-
ton began to be exhibited. At such times
the enterprising protector, whose name IS
Legion, brings forward the seductive
undertakings which he has been obliged to
put away during the period of depression,
and he at once finds it very easy to
"exploit his schemes. Then, too, come
the engineers, with their new railway, tele-
graph and canal systems, their irrigation
works and their manifold means of invest
ing capital. On the heels of these are
the financial calculators, who have thou
sand plans for making money earn twenty,
thirty, fifty, or a hundred per cent. All
these proposals are embodied in the most
adroit and alluring language, and sub
mitted to the public with consummate in
genuity.
And the public invariably invest.
What can they do when everybody is talk.
ing about booms in everything when
visions of financial prosperity are being
everywhere recounted when they see that
the first timid tentative efforts are rewarded
with such splendid returns? The fever
| rises. The lust of sudden wealth spreads
over the whole community. This was how
it began, as far back as 1878, in France.
and the Union Generate Bank was the
great focus Of the new gambling spirit.
1t was conducted in that magnificent way
which is so taking to the average mind.
In 1879 it increased it's deposits of p, 000,-
600 francs to 81, 900, 900 francs, and paid Is
per cent. dividends. Next year it doubled
its stock, earned nearly a hundred per cent.
on its paid-up capital, and distributed a
dividend of 80 per cent. Encouraged by
this run of good fortune it again doubled
its nominal capital in 1881 it extended its
operations to Austria and Hungary and
its stock rose from 960 at the end of 1880
to 5000 in November, 1881. By that time,
however, it had made many powerful enc
mics, and it had weakened itself by en-
gazing in all kinds of contracts for public
works and mining operations in distant
countries. As to the real condition OF
those investments it is of course impossible
to say any thing at present. All that it is
necessary to understand is that by epgag-
ing in them the bank crippled its resources,
and has been rendered unable to survive a
panic which demanded immediate realiza-
ton upon It's securities.
The panic once started, has gone the
usual course. 1t has probably been pre-
cipitated by an attack upon the Union
Generate, which was intended, not to
break the bank, but to change its control
ing influences. As has often occurred be-
fore, this attack has had wider results
than were anticipated. The general situa-
ton has been growing critical for some
time The wave of speculation had spent
itself, and the reaction was about to set
in. At such a juncture any Indication OF
weakness in the financial institution which
had previously upheld the whole market
was almost necessarily fatal. After the
Union Generate had begun to totter there
was desperate attempt to prop it up but
the impulse had been given, the less robust
institutions which had been leaning upon
it fell at once, and since then the panic has
only been rendered slower in its course,
but has not been really checked, by the
efforts of the financiers who, when it was
too late, sought to stem the current. The
Rothschilds on Sunday agreed, with other
leading bankers, to advance $50, coo. 900
francs in order to save the situation, but
this relief appears to have come too late,
and now that the Union Generate has
stopped payment it must be expected that
there will be general collapse in the
money market.
In these days of general and rapid inter
communication, a financial panic is never
wholly confined to one country. The Union
Generate has connections all over Europe,
and is doubtless more or less involved with
American houses. We have already seen
how the London Stock Exchange has re-
sponded to the furry on the Bourse, and
the Berlin and Vienna aud Hamburg
money markets are equally sensitive,
while that of New York cannot escape the
downward tendency, even though it should
avoid serious loss. 1t has been intimated
that American securities might find even a
broader market than usual because of these
events, but experience proves that when a
long period of excessive speculation is
brought to a close in this way, there is a
destruction of capital which for the time
being impoverishes the whole world, and
that no commercial country can hope to
come off scot free in such an emergency
The French financial panic is bad for
France, though by stopping wild specula.
ton it will eventually lead to better con.
dition of things But at such moments
the sudden decline of public confidence in
all investments always causes much suffer.
ing and entails great sacrifices. Even the
most substantial securities then become
worthless, and houses which have held up
their heads for generations may be over
whelmed by the lack of ability to realize
upon their property instantly. 1t is to be
hoped that the French financial situation
may prove better than we anticipate, but
the indications are certainly not of a kind
to encourage any hope that the panic will
be ephemeral or merely partial.
ITALY TO GERMANY.
The King of Italy st the beginning of
the year took position which makes it
olaar that he haa determined not To he