The midland journal. (Rising Sun, Md.) 1885-1947, 1889-02-22
CECIL COUNTY, MD, FRIDAY, FEBRUARY g. 1889

among the commission IN summing up
the testimony as to the cause Of the fall
in the gold price of silver.
Low RATE OF INTEREST MEANS DEAR
MONEY.
The fact that United States 4 per
cent bonds, having eighteen years to
run, are selling in market at 2s4 per
cent premium establishes beyond con-
troversy that money is scarce and dear.
The Secretary of the Treasury reports
the purchase of $l0l, Jos, 500 of bonds
since April last at prices which saved
to the Government less than per
cent annually between the date of pur-
chase and the maturity of the bonds.
The Secretary bought these bonds at
the market price, which proves that
the rate Of interest in the United States
for long term on perfect security is
less than 2 per cent. Superficial think.
ers have suggested that low rate of
interest indicated abundance Of money,
but a moments reflection will satisfy
any man Of sense that low rate of in
terest indicates depression Of business
want of security, and few responsible
borrowers. To borrow money and go
in debt is analogous to sshort'' sale
Of stock. 1t is an agreement to deliver
at future day what the promisor does
not possess at the date of the contract.
A wise operator will never sell stock
"short" unless he is confident it will
decline IN price at the date of de-
livery. In like manner prudent bus.
mess man will decline to borrow money
to invest in property when money is
growing dearer and property cheaper.
Enterprising business men who use
money in the development of the re.
sources of the country are cautious and
will not borrow money at any rate Of
interest to invest in property while
prices are declining, as they have been
for the last fourteen years. The Royal
Commission of England investigated
this question Of interest and came to
the conclusion that a low rate of inter-
est indicated a scarcity of money
They said:
"The rate of interest on permanent
investments is also declining for reasons.
it is urged, similar to those which have
been described above as affecting the
rate Of discount. When gold is scarce
and commercial activity is checked by
the resulting fall of prices, the demand
for permanent investments increases
and the price Of such securities rises.
Owing either to the actual or the ap-
pretended scarcity of gold there is a
tendency to invest in securities bearing
a fixed interest payable in gold, which
raises their price and reduces the net
return obtainable from them"
Occasional fluctuations in prices re
sulting from an incseased production
of particular article have very little
significance as indicating the supply of
money, but general decline of prices
for period Of fourteen years was never
known to occur when there was an ad-
equate supply of money. When busi-
ness is active and the prices of COM
modities is advancing, furnishing a
reasonable prospect of profitable invest
ments, men of enterprise borrow money
and pay fair rate of interest with
firm confidence that they can return
the money with interest and make
profit for themselves. But in times of
stagnation and depression safe borrow.
ers are few. Money lenders are then
forced to seek investments in Govern
ment bonds or let their money lie idle.
The obscure, tangled, and uncertain re.
ports as to an increasing volume of the
circulating medium have no tendency
to satisfy the public that money is
plenty when prices are falling, business
stagnant, and prudent men preparing
for crisis.
COIN TOO SCARCE TO BUY FOREIGN
GOODS.
A proposition to reduce the tariff at
this time, of all others, is most uu-
reasonable. The balance Of trade is
now against the United States. The
immediate effect of a reduction of du-
ties would be more importations and
more money sent abroad to pay for
them. 1t would be the bitter exper.
fences of 1887 and 1851 over again on
a loroor aroIo II "a uneaf "a N antic;