The morning call. [volume] (San Francisco [Calif.]) 1878-1895, 1892-09-22
COMMERCIAL DEPRESSION ABROAD.

Considerable uneasiness appears to pre-
vail in Europe over the financial situation.
Great Britain's exports have fallen off
heavily. The decline this year is said to
be something like $500, 100000 as compared
with 1891. A number Of small failures are
reported. and in some important branches
of industry-lke shipbuilding and IRON
making-dullness almost amounting to stag
nation is said TO prevail. Observers are
casting about for reasons for the situation.
and SEINE Of them are ludcrously wide OF
the truth in their theories.
TIE simple fact is that the credit system
in Europe has been strained, and that
point has been reached when relief can
only be obtained through liquidation.
When a great corporation fails with thou
sands of stockholders and thousands of
creditors, its rayageS are seldom realized by
the casual observer. The fact Is that thou
sands of people of whom no one hears any
thing lose their all and drop ont of the
financial world, and thousands of others,
scared by the catastrophe, withdraw their
funds from use and cripple those who
traded on those funds. The Panama canal
scheme, for instance, Impoverished multi
tnde of Frenchmen whose names have never
appeared in the papers. Ii drove people
who used to be active members of the finan-
cial world into enforced retirement, and
compelled those who depended upon them
for capital to liQuidate. So in England with
the Barring failure. The effects Of that dis
aster have been losses distributed through
out the British Islands When the Bank of
England relieved the Barings of their Ar
gentine and Uruguay securities. the calcu-
lation was that they could be resold TO the
small investors within briet period But
it seems that the small investors had already
bought all they could pay for. In the last
six months the bank has only been able to
unload 5000, 600 out of S16,0O0,00O of Uru-
Euays, and S6,500,000 out of S24.o0o,000 or
Argentines.
The broad effect of liquidation thus far
has been to engender general distrust,
which has checked enterprise and driven
capital into hiding-places. Exports are fall
ing off because manufacturers are less
willing than they were TO supply cut
lying countries ON credit. Shipbuiding
is checked because capitalists are more
chary than they were Of putting
funds into ships which might or might
not earn charter money. Iron and
steel works are running on short time
because their owners are afraid Of selling
their finished products TO foreign countries
which may or may not be able to pay for
them South America, which used TO be
England's dumping-ground, is getting to be
an unsafe place to trade with on credit.
Venezuela is in the throes of civil war.
Brazil has just gone through revolution.
SO has Chile. Argentine and the river
States are all bankrupt. It is no wonder
that the English are curt1iling their business
with that continent and that the curtail-
ment leads to a general depression or trade
which has got TO work out It's destiny by the
road of prolonged liquidation.
Great Britain has swelled her volume OF
foreign commerce 10 prodigious figures by
the use Of the credit system. 1t has con-
quered the markets of the world by supply
ing them with goods which were not to be
paid for till they were resold. The plan
works well enough so long as the skies are
serene. On the average, men pay their debts
and those who trust them lose nothing. But
when disasters befall, the debtor cannot pay
if be would and the loss OF the creditor may
be fatal if it exceed the capital available TO
meet such accidents. The merchants of
Buenos Ayres may be types of mercantile
probity, but when the financial crisis over
took their country it was impossible for
them 10 protect their acceptances and the
people in England who held them had to
charge them off to profit and loss. This
clouded the whole kingdom with dark pail
Of distrust and disinclination TO trade.
These disasters are periodical in COM
mercial countries. Still it is to be observed
that commerce RECEIVERS with more difficulty
from each successive disaster, as merchant
who fails frequently finds il harder each
time to make a settlement with his cred
itOrs. The credit system is an excellent
thing. but where it is retained it leads to
catastrophes which might not have occurred
If it bad been restrained within the bounds
of prudence