Alma record. (Alma, Mich.) 1878-1928, 1894-05-04

the time when you purchase. During
that interval, il prices are falling, your
capital loses in valuation. To make IL
bring what ii cost you you must put
labor into il. To make ii bring more
you must pat more labor into it than
would have been needed had prices
bten steady or rising.
Also every business is affected more
or less with certain fixed charges, levy
ing upon it the burden Of an absolute
number of dollars. These burdens can
not be lightened when profits fall.
You continue liable to pay them dollar
for dollar, that is, immensely to over
pay them SO far as value is concerned.
no matter how much your income may
shrink.
An English Economists Views.
Samuel Smith, Nj. r., well explained
| TO the 1886 British commission on the
depression of trade and industry how
this principle work. He said; /,
"A prudent trader usually considers
it safe to trade considerably beyond his
floating capital, and to borrow, say 90
per cent on the security of his plant or
fixed capital. Now, the constant de-
cline of prices the last few years has
virtually swept away his own portion
of the capital, and only left HIM enough
to pay the loans and mortgages. For
instance ship or factory built at IA
cost of 100000, of which 100000 was
borrowed, is now worth only tl2,0OO,
or 40 per cent less; and so the mort
gage now represents tive-siXths OF the
value instead of half, the traders in
terest having sunk TO $4,000 instead OF
100000. Probably as trade is unprof-
liable he fails to pay the interest; the
mortgage is foreelosed, the property is
forced off at just sufficient TO cover the
loan and he is ruined.
1t is foolish reply 70 this that the ag-
gregate wealth of the nation is not
changed because it is only transfer
from one class to another. One might
as well say that the craft OF the pick
pocket or cardsharper is innocuous. be-
cause it only transfers wealth from one
pocket to another. The prosperity of
the nation depends upon the just dis
tribution of wealth and the security of
industry. Nothing affects it more VI
tally than unJust attention"
We see in the fall of prices and the
accompanying danger to business the
true cause of the movement all over
the world for trusts and what we should
once have called inordinate tariffs.
This movement marks the precise Pc
riod, since 1873, during which money
has been swelling in value and goods
losing in value. The parallel is more
than coincidence. Production is
now extra hazardous and needs insur-
ance.
Carnival Time for the Bondholders.
Falling prices (appreciating money!
not only discourage productive indus
try, but they set up a special and sepa-
rate motive for abstaining from such
industry, namely, the impulse to hoard.
Appreciation of money tempts holders
of money and of titles certain TO be paid
in money to cling to these and not in
vest in industry. 1t intensities the de-
mand for bonds and depresses that for
stocks. The present is the age of bond
holders galore. That all are anxious
for bonds is, from an industrial point
of view, an alarming symptom. If
there is anywhere TO be had "A mortgage
on wealth already realized everyone
rushes for it, while few undertakings
which would once have been thought
full of promise are avoided unless they
can be engaged under some special
shelter of guarantee like a trust or a
very high tariff.
This risk to industry from having to
produce against falling market, this
bondholder instinct, and this boarding
motive or impulse to clutch at gold and
gold-payable PAPER and not let 60 save
when return it kind is sure-these
things fundamentally explain, / believe.
why our banks overflow with funds
which they cannot loan and our streets
with hungry men willing to work but
unable TO find work to do.
Making all due allowance for incl
dental difficulties / believe that the rad
zeal trouble is the increasing scarcity of
full money, which forces property and
goods of nearly all sorts to be sold at