St. Paul daily globe. [volume] (Saint Paul, Minn.) 1884-1896, 1896-01-30
CAPITAL IN BUSINESS.

L llS IdSL VI bTduStleelS cOu-
tains an interesting and valuable analy-
sis of business failures in the United
States during the year 1895. OF the
1883 failures in this country in the
last twelve months, 4,305 are assigned
to lack of capital as their producing
cause. Of the 1916 occurring in the
Dominion Of Canada and New ENGLAND,
1857 are said to have been traced to
insufficient capital Thus it appears
that over SO per cent of the number of
failures in the United States, covering
more than rs per cent of the entire
liabilities, grew out of a want of the
necessary money to push the business
to paying point. The same is true of
more than II per cent of the failures
In Canada. representing over CT per
cent of the entire liabilities. Of course,
these statistics are hot absolutely in
fallible, because concerns that become
1nsolvent naturally assign for their
misfortune, if the occasion of it is not
obvious, such reasons as will reflect
least discredit upon themselves De-
f1cient capital is convenient excuse
for business reverses; and this is, no
doubt, often named when the real cause
of difficulty is something else. At the
same time, the statistics in question
are compiled by the Bradstreet agency,
which has means of ascertaining the
actual facts in nearly all cases.
We may assume, therefore, that,
within very narrow margin Of error,
the relation Of deficient capital to bank
ruptcy is as stated in these reports. A
slight acquaintance with business oper-
atoms bears out the assumption. No
one who has been engaged in business
is unaware Of the Importance of ade-
quate cash capital when unforeseen re-
verses arise. Thousands Of otherwise
solvent concerns are carried down bv
their inability to command additional
resources in a time of panic, or when
some unexpected loss draws upon their
reserves Institutions that are doing
fourishing and remunerative bust
ness, and that see clear sailing ahead
and large dividends in prospect for a
term Of years, are obliged t. 60 to the
wall because they are called upon to
face such an emergency, and their CAP
1tal is inadequate. 1t is therefore true
Of the past, and will undoubtedly con-
tnue to be true for all time to come.
that the ability to command capitaI
for business operations is the crucial
test Of commercial prosperity.
The Importance of this well-estab-
hshed fact lies in its bearing upon the
common assumption that CAPITAL is an
enemy of the public; and particularly
upon that view of public policy and Of
legislatMn which assumes that this
country could get along admirably
without any investment from the out
side. 1t strikes directly upon the poll
icy tersely expressed by Republican adj
Vocates of prohibitory protective tariff
in the question: what have we to do
with abroad?' 1t has a more impor-
tant relation to proposed financial pol
icies, whose inevitable effect is to drive
out foreign capital from this country.
ana TO discourage future investments
mere. 1t has become the fashion to de-
clare that the foreign lender is our in
veterate foe, and that anything which
we can do to disturb and distress him
is legitimate. The whole theory of
those who espouse the cause Of the sill
yer standard is that the United States
can afford to stand independent of the
rest of the world, and to adopt a mon
etary system which it has rejected.
Now, we know that at least one effect
Of this would be to Danish from this
country the millions of foreign capital
which have hitherto been EMPLOYED in
the development of our resources and
building up our industries
That effect has already been largely
produced by the threat of depreciating
our currency. Hundreds of millions of
dollars have been drawn out of this
country and sent back to Europe to
await more settled condition of af-
fairs. The statistics furnished by
Bradstreets show that one sure effect
Of this is an increase in the number of
business failures. Since lack of capital
is one of the most potent causes of
business mortality, it follows that the
withdrawal Of capital hitherto invested
in productive enterprises in the United
States must result in the collanse of a
certain number of them. To this causa
beyond question, we owe q consider
able number of business reverses that
swelled the list Of failures in 1895. In
all consideration of our future policy.
it VIII be Well for sensible men to re =.
member that we can do nothing to
drive foreign capital out of this coun-
try, or to discourage the investment
Of domestic capital in business con-
Germs in this country, without contrib
uting to the increase of failures and
an injurious and continued disturbance
Of trade.
BEGINNING TO BEAR FRUIT.
ReDOrtS ara hacinnipo to ooroa 4,