Daily capital journal. (Salem, Or.) 1896-1899, 1896-08-21


1t was no. lee. in fact, that America
under the gold standard was on the
brinkOf bankruptcy; that bankruptcy
and suspension Of gold pay yment could
not be much longer postponed unless
one or two things occurred. Either
our foreign creditors must loan us the
money 10 pay them the interest on
their loans-a prospect at which they
have naturally taken alarm-or we
must do something that will raise
prices, 80 that our exports will go
further In settlement of our indebted
ness.
Under the gold standard, prices for
our products must go lower; so we
must continue to borrow and borrow
until our foreign creditors refuse
longer to loan, and then we must
acknowledge our insolvency to the
world. This is the fact that the
announcement Of the completion Of
arrangements 10y our exchange bank
ers TO borrow abroad during the next
two months s50,OO0,000 or more has
brought home to European investors
i'm American securities. No wonder
they should sell, not buy. And so,
under pressure to sell from abroad as
well as at home, prices Of railroad as
we'll as Industrial securities have
melted away. And why not? What
gives railroad securities their value?
Obviously OF their ability to earn and
pay interest on their bonds and div
idends on their stocks. And this
ability has been undermined by the
fall in prices; for as prices have fallen
the demand for their services has de-
creased, leading to increased competl-
tion among railroads and lower rates.
Railroads can prosper only when
those producers, farmer, manufacture
ers, miners, who have located along
their lines can buy literally Of the
products of others. This alone can
make frelghts. And obviously, when
farmers cannot sell at remuneratiye
prices, they cannot buy. Moreover,
what is true Of farmers is true of those
engaged in manufacturing. The fac
tory hand cannot buy literally of the
produce OF the farm save when em-
ployed at good wages, and employ
ment at good wages lie will not find
while prices are falling, for falling
prices sap the profits of industry and
lead TO curtalled production, which
means a falling of in the demand for
labor and consequently lower wages.
So falling prices have led to Il de-
creased demand for transportation
services, have undermined the earn
ings OF railroads, and thereby taken
away the basis on which the value OF
railroad securities is dependent. Con-
sequently II is only natural that rail-
road securities should have fallen,
for the power Of railroad corporations
TO earn and pay interest and diYidends
has been curtailed. The value of
railroad properties has been under
mined, and so the prices Of the securi-
ties that represent this value have
fallen away,
Thus it is that there is nothing to
cause surprise in the recent melting
away of prices for stock exchange Sc
cureties, But such fail has con-
founded the Vaccinations OF the
money cllques bent on making appar-
ent prosperity with the hope of divert
ing the attention Of American voters
from the consideration of the real
causes which have led up to the in
dustrial stagnation from which they
suffer.
The gold contractionists have, in
deed, succeeded in postponing gold
exports, in momentarlly checking the
drain on the gold reserve, and putting
off Il bond issue that must have been
a powerful aid TO blmetalllSts in rivet-
ing the attention Of voters on the
monetary question, But the gold
contractionists whose hopes OF success
rest In keeping those men with hon
est hearts and upright intentions in
ignorance as TO the true canse that is
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