The great West. [volume] (St. Paul, Minn.) 1889-18??, 1890-03-07

labor and production decreased to such an extent
that the country which should have been the great
food producing country Of the world became an
importer of breadstuffs
The balance OF trade had been for long time
favorable to Europe and against the United States
and also In favor Of the commercial cities Of the
seaboard and against the interior but a vicious
system Of credits prevented the prompt settle
ment OF balances The importers established large
circuits abroad, by means Of which they were cna-
bled to give favorable terms to the jobbers The
1obbers in turn were thus, and by liberal accom-
modations from the banks. able to give their own
time to country merchants, who In turn sold to
their customers on indefinite credit. It then
seemed to be more reputable to borrow money
than to earn it, and pleasanter and apparently
more profitable to speculate than to work. And
30 the people ran headlong into debt, labor de-
creased, production fell OF and ruin followed.
This was, Of course, a panic sharp and ter
rifle, but it was of short duration. It was
soon followed by lethargy under which all
the springs Of enterprise and hopefulness
were dried up. To prevent the sacrifice of
property under judicial DEGREES, stay laws
and appraisement laws were enacted by many
OF the states, which only aggravated the
trouble. For long weary years the lethargy
continued. There was no demand for any
thing except the necessaries of life, and all
these, except clothing, were sold for scarcely
enough, and in some cases not enough, to pay
the expenses Of taking them to market /
witnessed a sale in 1889 to the keeper of a
hotel in Indianapolis of oats at 10 cents a
bushel and fine chickens at 50 cents dozen.
The same year l saw thousands of barrels of
-four under the sheds of Suydam, Sage &
Co. in New York which they were Offering
at $3.50 a barrel. Fat cattle were selling at
SO low price-$10 and $l3 head-that my
brother thought that he would pack a few
barrels of beef at Fort Wayne for the New
York market. He did SO, and was drawn
upon by his consignees for part of the ex-
penses of transportation not covered by the
sales. From 1887 to 1641 there was nothing
to break the stagnation but the political
campaign of lS40, in which everybody be-
came enlisted for want Of something else to
do. In the fall of 1871 a reaction began to
appear. This became decided in 1S42, before
the tariff of that year went into operation,
and in lS45 the country, chastened by adver-
sity, was in the full tide OF healthy and
wealth producing industry and enterprise.
This continued until credits became again
unwisely expanded and speculation became
rife.
THE PANIC OF 1857.
In 1857 was the president of the bank in
the state of Indiana, and this is O part of
what said about the financial troubles of
that year in the report from which I have
quoted:
The financial crisis of 1857 was the result of
similar cause to that of 1887 namely, the unhealthy
extension Of the various forms Of credit. But as
In this case the evil had not been long at work,
and productive industry had not been seriously
diminished, the reaction, though sharp and de-
structive, was not general nor were the embar
easements resulting from it protracted Now, in
both instances the expansion occurred while the
business Of the country was upon specie basis,
but it was only nominally SO. A false system Of
credits had interviewed, under which payments
were deferred and specie as q measure of value
and regulator OF trade was practically ignored.
Everything moved smoothly and apparently pros
perously as long as credits could be established
and continued, but as soon as payments were de-
manded and specie was in requsition distrust COM
menced and collapse ensued. In these instances
the expansions preceded and contraction followed
the SUSPENSION but it will be recolected that while
the waves were rising specie ceased to be regu-
lator by reason of credit system which prevented
the use of it.
Now, with all due respect to Mr.. Blaine, l
express the opinion that the apparent pros
perity which preceded the revulsion of 1887
and the real prosperity which preceded the
crisis of 1857 were not caused by the tariff,
and that the reverses which followed were
not attributable otis reduction. If the tariff
was in any measure instrumental in produc-
ing the changes it was in stimulating the ex-
pansion which terminated in disaster In 1857
was believer in the tariff, and it never en-
tered my head to attribute the financial
trouble of that year to the changes to which
it had been subjected
THE FINANCIAL TROUBLES OF 1873.
The most pressing duty which had to per-
form when became secretary of the treasury
in 1865 was to provide the means to pay the
soldiers and to meet other pressing demands
upon the treasury. This was done in the only
way it could he done-by the sale of tempo
rary obligations which had proved to be at
tactive to investors After this had been
accomplished the work Of funding these obi
cations was commenced and carried success
fully on until the whole amount,-some thir-
teen hundred millions of dollars-were con.
verted into bonds. While this work was
going on was under constant apprehension
of financial crisis before it could be com.
pleted My apprehension was unfounded,
but only as to time. The crisis was postponed,
and for SO long period that the opinion
generally prevailed that the vitality and pro-
ductive power Of the country were SO great
that the most expensive war that had ever
been waged could be concluded and great ex-
pansion Of credit could be checked and
abridged without financial disturbances. l
have to confess that this was my own opin-
ion, but the same causes which produced the
crisis Of 1857 were at work, and, as had al
ways been the case, the revulsion came when
least expected.
When left London in September, 1873, to
come to the United States, the financial skies,
il not cloudless, were not threatening. The
letters which were received by the London
firm from its New York partners were en-
couraging; and l had no reason to expect
anything but a pleasant visit to my old home,
and return to London under suspicious cir.
cumstances. But on the arrival of the steam
SHIP in the outer harbor / was met by the
stunning intelligence that my American part