The Indianapolis journal., 1897-01-18
BUSINESS in 1079AND 1897
SOME OF THE POINTS OF REsEM-
BLANCE IN THE TWO YEARS.
Doubt and Uncertainty in the Re-
sumption Year--The Real Change
Not Witnessed Before July.



have suggested analogies with 1879. Among
these points may be mentioned the fact
that i'm 1896 as in 1873. the balance of for
eign trade was enormously heavy in our
favor: that the steady outflow of gold has
been succeeded by a rather continuous in
flow; that the wheat crop has proved def
cient in foreign states while reasonably
heavy i'm this country, and that the vote at
the fall elections. in 1896 as i'm 1873. was
strongly confirmatory of a sound money
standard for our currency
These analogies are sufficient to show
that the situation does bear some strong
points of resemblance. Eighteen hundred
and seventy-nine was a memorable year in
the financial and commercial history of this
country. 1t is remembered not only as the
year or specie resumption, but as a period
when prosperity returned in a flood to the
United States, after five years of dull and
stagnant trade. In the fact that the pres
ent year follows anotiier such period of
liquidation. the comparison of 1897 IS inter-
esting. The year 1897 has, however, opened
so disappointingly in nearly all branches OF
trade that the mere comparison with 1879
has been discouraging TO business men.
Most people suppose, in a general way
that the nations commercial prosperity
eighteen years ago. began Immediately on
the first of January, when specie payments
We're by law resumed. Such people appear
to have expected precisely such a return
of trade-prosperity Immediately after the
sound-money vote of last November
Everybody knows how far such expecta-
lions have been disappointed as applied to
1897. 1t is not generally known however
that the disappointment was equally great
during the opening months OF 1879.
AFTER the resumption OF specie payments
In January, 1870. the stock market opened
with great buoyancy. The advance lasted
ABOUT as long, and was about as great. as
the advance in stocks based upon the No
Vember election last year. Meantime there
was no sign of favorable movement in gen.
eral trade. During January. 1879 COM
plants OF Improbable business and trade
American securities 10 New York; money in
New York was a drug because there was
absolutely no demand for commercial pur-
poses At the close of the mcnth. Ellison
q Co. s cotton circular described the condi-
ton OF the cotton trade in this country and
In Europe as so bad that lower wages for
cotton operators were predicted inevitable
During the early part OF January the Bank
OF Englands discount rate was high: it
ruled at D per cent. until the middle of the
month. as a result of which sterling ex-
change stood almost at the gold-shipping
point from New York. 1t will be observed
that in this particular also the record
duplicates the experience of 1897 The gov
ernment revenues were very deficient. In
the middle of February warnings appeared
In many publications that unless Congress
was careful "a heavy and disastrous deficit
might be looked for.
THE WHEAT SITUATION
IL is we'll known that the worlds wheat
situation. al the opening of 1879. was similar
TO that of the present year, and that the
later prosperity of 1879 was largely based
on the enormous foreign demand for Amer
lean grain. But it is an entire mistake to
suppose that this factor in the situation
was operative from the years opening The
wheat product of the world. at that time.
was very much below the present average.
The Argentine Republic for instance. was
exporting hardly any grain; Australia cut
no figure in the worlds export market.
Nevertheless. the price of wheat. No. ? red.
at the opening of January, was only 1882
cents per buShel In New York and the
January exports of bread stuffs as record
ed by the government authorities were be-
low the record for the month in 1873. in
February and March the shipments OF
grain were heavy, and the price advanced
eight or nine cents a bushel. This was
based upon rumors of Il deficient French
land.
But even while these reports were coming
exactly similar to the recent movement of
this seasons wheat market under some
vance i'm price. early in 1915. there was sud
den speculative selling. and the price once
more receded. BY April wheat was almost
down to the January level. In June came
the famous corner i'm Chicago wheat when
the New York price went up to 81 20 per
bushel, and the news at this time favored
such movement, for on the 9Th of JULY
people We're wearing winter oVercoats i'm
England. and heavy rains were almost de-
Stroylng the prospect of a harvest. Not
WithStanding this fact. the price of wheat
declined III New York city during the month
of July. to a figure lower than its price al
the opening of January. To this tact the
trade reports of that time are sufficient
witness. 1t was not until the last days OF
September that the wheat market really
seemed to take fire: II then advanced some
thing like 30 cents "a buShel within three
weeks. the exports becoming simply enor-
nous. The truth of the matter was that
Europe had deferred as long as it possibly
could its orders from America i'm the vain
hope that il might obtain its grain at easy
prices. When the consumers could hold of
no longer. the export movement began in
quantity. and the rush of rising credit was
felt throughout this country.
COMING OF THE REVIVAL.
But it was not until this month of Sep
tember. 1879. until very near it. that the
true change In the financial situation was
! appreciated by trade and finance i'm general
| As late i'm the year June. sterling ex.
change advanced to $S9Qi.9O for demand
and half a million of gold was shipped tC
| London. At that time the total export
trade of the country. since the opening OF
] the year. made smaller record than il die
for the corresponding period i'm 1873. The
| situation of foreign exchange had meantime
! caused great uneasiness at the treasury
| Secretary Sherman wrote To the treasury:
! London agent To inquire If IL was not pos
sIDle in some way To arrange for the con
troll of the sterling market by drawing OF
Europe through the establishment of :
! London credit: an operation which. if il haC
been attempted. might have foreshadowcC
the experience of 1895. The real change in
/ the situation did not come until the middl,
/ OF July. Up to that time the same I'M
/ certainty was expressed by business men
/ AS late as the opening OF March 1879 tn,
/ Financial Chronicle contained the followins
/ editorial remarks: we have now entered
/ upon our third month since the resumption
| OF specie payments Where is the pros
/ perity promised with that event? is tn,
/ question frequently coming 10 us. 'Whea
/ is no higher. Corn Is TO higher. There il
/ no money in any of the earth's products
/ Where is the promised prosperity
j In other words. as late as March, dis
/ couragement was general and as late al
| June actual alarm was felt over the situa
] ton. The stock market did indeed improv
/ from time TO time; yet in February. Londol
was heavy seller OF American securities
! in March the stock market broke repeated
! ly: in April. only professional speculator
/ were active. and they were putting III
/ cheap and worthless stocks.
In the middle of July. however. the heay.