The morning news. [volume] (Savannah, Ga.) 1887-1900, 1892-01-04
BANKER CLEWs VIEWS.
What Ee THINKS OF the Financial Gu;
look.

VIII promising u4AL-slAA ts4ysE'7CL7 All A--p
United States. aud yet with some legacles
of Misfortune from 1891 which are caleb
lated to qualify our hopes.
II the past year has been one Of unpre-
cede1tsd hervests and. as such. has con-
ferrod inestimoh'e benefits upon our long
depressed agricultural interest, ~ has also
been one Ct check, reaction and dU.lness to
most Of our manufacturing industries. Con
shutting as we do an iusspsraDle part OF
the community Of nations, i5 has been in
possible for US to wholly escape the effects
Of the European reaction that set IL with
the crash Of the Bar.ugs. That
great failure was but the culmi-
nation, ID the case Of a single house.
OF "A system OF wild adventure and loose
fipancierinZ which had affected every money
center Of the old world and had brought
Europe TO the verge Of a financial uphesval
exceeding in gravity anything IN the
worlds previous experience. The Bank Of
Englands guaranteeing the estate OF the
Earrings, not to save and perpstua6e the
house, but 70 avert the universal crash
which Its unchecked downfall would in
volve, and the Borrowing Of large sums by
that bank from the Bank Of France, tolls
more emphatically than can any words how
deep was tho chasm on which British finance
verged A. hat moment. Aud she situation
thai thr-at sned London, subsequent events
have proved, was duplicated IN the case
Of Paris, Berlin. Rome, Madrid
and almost every other European
capital The elimination showed hat the
financiers Of evsry nation had, for ten to
fifteen years. been employed ia launching
enterprises the world over, which were not
only grossly inflated in their capitalization,
but also devoid Of any sound basis Of per-
manent selt-suppOrt. Ia this way, the
capitalist force, had beooms pledged to an
extent that made 1t impossible to satisfy the
demands Of legitimate business under a
period Of pressure, and hence there was, on
every money market Of Europe, q sudden
precipitation Of doubtful OF rotten securities
for realization. The consequence of this
has been a decline Of ~ to 50 per cent in
the market value of most of the corporate
Issues put out within the last ten years.
1t hardly needs to be asked, What must
be the effect upon credit, industry, COM
merce and investment Of such a vast coll
lapse in the value of securitiesg The pres
ent depression among all European nations
only partially expresses those results; the
paralysis is destined to continue for months
and possibly years to come. The question,
however, lie worth the asking, How comes
1t to pass that such an immense proportion
of the worlds accumulated savings has
been diverted into unsubstantial i'll
veStmentsq 1t is clear that the
amount Of the savings has been i'm
nense, and that is evidence that the last
decade has bean one of great aud general
commercial prosperity; but why should
this capital have gone into rotten invests
ments rather than sound ones3 The i'm
portaDce OF the question lie equal to the
difficulty Of answering it. It is not sufTi.
Gent to say chat promoters and 6nanciers
have preferred weak to sound enterprises
Tor IL ia always easier and more profitable
for them to float meritoTious schemes than
dubious ones. The facts seem to suggest, as
probable explanation. that for some time
past the earnings of business have exceeded
the opportunities for prohtably re-employ-
ing them in legitimate undertakings That
Is very much like saying that the wealth Of
the world is growing faster than it's wants,
and faster than the resources for employing
thet wealth. Such a condition is not
an impossi bility; and the condition
10 susceptible of material prolongation; but
it must sooner or later work out social read
lustments which, i'll the long run, would ex-
tend the range of the community's wants
and find new aud enlarged employments
for accumulated wealth. But, for a time,
the condition Of things here supposed would
mean reduced earnings upon European
capital and an era of lower rates of interest
upon permanent investments. Equally, it
Is TO be anticipated that the sort of reaction
here indicated would induce among EurO-
pean lenders preference for Investments
in young countries which, while able TO
pay full rates of interest, are yet teeming
with sources of safe and re-
munerative employment for capital.
and which also afford all
the attractions Of social order, stable gov
eminent and high civilization. If this
superstition be we'll founded, is implies that
the present reaction from bad investments
aud dubious enterprises in Europe is des-
timed to result in a future increased demand
for American securities, and especially so If
those Of our financial houses who launch
our new undertakings maintain q strict
outlook upon their solidity and merits.
This, we venture to suggest, Is one of the
lessons that Americans may be allowed to
draw from the past twelve months Of
European extraordinary financial expert
anca.
This advantage, however, is to be regarded
as rather future than immediate. Looking
forward merely to the next twelve months
there seems to be little reason TO expect any
| important European demand for our securi-
ties; for the reason that business there is
not likely to yield the usual amount of
| profits for reinvestment. The political con
| ditions, too, are fraught with dangers that
are calculated to keep enterprise in check.
| IL may be said that distrust from the latter
| cause would be calculated to create a de-
HlttiiO LOE bD6 lSbuSS u Il Country HniC0 ls
exempt from European embroilments; and
that is undoubtedly true; but at the same
| time it is to be kept in mind
1 that, In the present condition
| OF the foreign money markets
controlling flnanciers will do their utmost
to discourage the outflow, of capital, while
the very low prices at which a large mas.
of recent issues are selling would act as
reason against exchanging them for Ameri-
| caus. But, on the other hand, ii seems
quite safe to anticipate exemption from any
important return of our stocks or bond.
from across the Atlantic. That process has
run its course during the last twelve
months; and although there remain enough
| securities to admit of a large refIux, vel
there is no prospect Of conditions occurrine
that would force them back upon us.
There is, however, one possible conting-
ency which. should 1t arise, would very me-
terially modify ali the probabilities above
considered. II we may give full credit {,
what is reported from Washington as to IT,,
governments sdvices fromits agents daput
ed TO ascertain the feasibility of assembling
a congress to re-establish silver upon an in
ternationAl basis there is a very unexpected
disposition, amounting almost to anxiety
on the part Of European governments, in
Guiding England, TO consider such proposals
and the overtureS openly made by Chancel
lor Gosobeu certainly give not a little credi
btllty 70 these reports. Should ie turn GU
within the next few months that the priuci
pal nations are willing to bind themselves
along with the United States, to coin silve
without limit as to amount, at Ia,
ratio of 49, to l. and &
constitute such coin legal tender equally