The farmer and mechanic. [volume] (Raleigh, N.C.) 18??-19??, 1902-11-25

IL Europe has called her loans for Anne
rlcan account? That is a pertinent
question, and we do not pretend TO be
III a position to answer it categoricaliy.
We make one suggestion, however. The
Lanklng situation CT New York is large
~ controlled by the fnanciers who have
negotiated the present heavy floating
Indebtedness of this country to Europe
IL may be suspected that in an emer-
sency these men would be given a pref
erence IN dispensing accommodation. IN
snort, the thought naturally forces itself
upon the mind Of one who has followed
the situation carefully, that perhaps the
recent selling in the stock market by
the big, irresponsible gamblers has beer
the forced result of calling loans, in or
der to provide funds to take care Of the
maturing loans in Europe of our real
"barons Of finance" This view is. Of
course, advanced in a purely conjectural
manner. One generally does not see
smoke unless there is a fire, and the
nnanclal community Of the United States
has not listened for weeks past to all the
talk regarding the desire OF Europe TO
see once more the money loaned on short
time b1llS to the United States, without
a deep-seated suspicion that some one
must be RENTING rather heavily about
this time.
BURDEN on LEADERS OF FINANCE
Apropos of our previous remark, that
you cannot keep up steam after your
fuel is exhausted. one can reflect very
rroftably for q few moments on the
recent Trust Company of the Republic
episode. We need hardly recall the facts.
1t is sufficient to say, that certain Paris
underwriters of 1850, geo of the capitali-
Zation of the steamship building trust
declined, at the last moment, it is al
legged, to pay up, and the Trust Com
pany of the Republic, which seems to
have been closely identified with the
promotion of the combine, had to step
forward and put up the cash, in order
that the scheme might go through. The
result was witnessed in a drop of the
shares of the Trust Company of the Re-
public from 800 to no., and it was found
necessary, recently, to organize a Syndf-
cate to relieve the trust company of the
burden thus acquired, A good many in
teresting points arise in ones mind in
connection with this affair. In the first
place, it was apparently found necessary
at the start to invite Europe to take a
large part in the underwriting, which
establishes the presumption that capital
for such purposes was growing scarce
in this country. In the second place, the
fact that the promoters selected as
French underwriters men who deliber-
atcly went back on their word, seems
to Indicate that reputable European
fnanciers some time ago may have con-
cluded to have nothing more to do with
"recapitalizing the future" of American
industry. In the third place, it looks
as if even those European fnanciers
whose word is not "as good as their
bond" nave at last become conservative
in the matter of putting up money on our
combines" And in the fourth place,
the fact is emphasized anew that Ameri-
can investors have had practically no
desire to relieve trust underwater by
absorbing the securities which they have
had to take so unwillingly. This par
ticular instance illustrates perfectly our
theory that you cannot keep up steam
after your fuel is exhausted. But just
here an interesting question arises:
What will happen if our 'barons of
finance do not keep up steam? That
is really an exceedingly disagreeable
question. We have pretty tangible evil
dence that the underwriters have prac-
tically all the securities of the ship
building trust. But Mr.. Morgan has also
his ocean steamship trust to float, and
there is little doubt in any ones mind
that the securities of this combine will
have to be laid on the shelf besides
those of the ship building trust. How
many more trusts there are whose Sc
curities are reposing on the shelf, it
would be impossible to state with any
accuracy; but the number is probably
very large indeed. This is a very serious
matter; for it implies the locking up of
$500 ~ +L@ 70
sources of our 'barons of finance which
they may need now, or a little later,
for the purpose of bolstering up the
general stock market. Heretofore, the
market has relied on the ability of a
coterie of great fnanciers to come to its
| rescue whenever the sky became black.
These men have had almost unlimited
credit at home and abroad. and it is
to them that our thoughts instinctively
turn when the gain from a more perfect
mobilization of capital is talked about.
But if these people are going to have one
unstable combine after another come
back on their hands, does it not follow
that eventually their ability to come to
the rescue of the financial situation in
critical moments must be greatly i'm
paired? The immense financial activity
of this country in the last few years
mas DGGn largely DullI up Oh al Ill
and it is highly important that that
name should lose none of its prestige.
HOW THE END WILL BE REACHED
We might go on multiplying reasons
why a recession in our industrial pros
perity may be looked for, but those al
ready mentioned are sufficient. Prices
Of commodities have outstripped pur-
chasing power, and the supply of capital
for huge enterprises has been practically
used up. The one cause ought to be Suf-
fccnt without the other to produce q
certain amount of economic revulslon
We have already very clearly implied
that neither cause can be easily got on
of the way. There is bound to be a fal
in commodity prices, rather than a rise
in incomes. And as regards the supply
of capital available for large schemes
it will be necessary for our fnanclerS tt
wait for new wealth to be created, be
fore embarkinG on any more schemes