The daily morning journal and courier., 1902-02-05

l9OO. The economic position was a
 strong one at the opening of 19O1 and | the developments in vorious lines of
 businessespecially the prospect of large IeXports of manufactures-gav conf
 dent tone to American predictions | Hence belief that the United States is
 about to engage in an aggressive eco-
 homie interference with other countries
 and talk on the continent about an in
 ternational combination to ward off an | Iapprehended American invasion"
 Great as we are, still, the Times ven- lures to assert, we are mot exempt from the laws of nature" There is an ebb as we'll as flow in our affairs. The
 structure of our business prosperity, though really of vast proportions, is af-
 ter all not infinite. We are not, for eX-
 ample, the creditor nation" we sup
 posed we were at the beginning of 1901.
 Our enormous balance of trade has not,
 as we expected materialized at the
 need of our money market, in an influz
 Of foreign gold. We bought back, it is true, large volume of American secur- l ities held abroad, but were heavy bor- rowers. Our large trust organizations
 were financed largely with foreign mon ey. Prices of American stocks remain
 high because earnings in most cases have been good, but in view of the fact that waves of prosperity are short lived, the Times suggests that they are
 perhaps d little too high. The recent collapse of various trusts and reduc-
 tons of dividends may be cited by way of caution. 'Over- investing" says our London contemporary, lis usual in the
 United States during prosperous times.
 When the American people have made 8 large sum they first clear themselves from debt, as the western farmers did
 between 1896 and 1898, and then in the enthusiasm bred of success invest the remainder in whatever speculation seems most promising at the moment. Those who are in a position to do so borrow as much more as they can and invest that too. While the hot fit is on they think little about keeping cash reserve or even of keeping securities that can costly be turned into cash. This is one of the reasons why there are such great vicissitudes in the economic condition of the United States" We take chances. Tn hard times we cheer fully wear out our old shoes" but we do not hesitate to borrow freely when times are good. Tt does not matter to an American business man whether he borrows in New York, New Jersey, London or Paris, if he can only employ tGe money profitably. And no banker willrneglect a customer with such mar vicious energy and resource so long as the latter is not obviously tnrusting out his arm farther than he can draw it back"
 But America has already gone far enough in employing her credit, the Times thinks, if not too far. Over-in- vesting tends to reduce our cash re- {. serves below the safety point. The danger. resulting from this state of things is all the greater it Is held, "be- cause the American banking system is bad as all good judges, even in the United States, from MT. Gage down. ward, admit That system is fatally wanting in elasticity; it does not allow of an utomatic expansion and con- traction of bank-note circulation, and, | on the other hand, it does admit in bad l times of serious depletion for export purposes of the treasury's stock of gold. | At the present moment the prevailing 1 belief Is that this is q contingency l which can be ignored, owing to the | heavy balance of trade in favor of the | United States; but, as has been demon l stra ted ad nauseam, this supposed bal | ance of trade is good reason to think | that, after necessary corrections have | been made in the declared values of inn | ports and exports, the balance is slight l ly the other way. America would be | more accurately described as country with a big income from fixed capital, | the proper capitalization of | which different people take very difer- ant views, than as a country with a large immediately realizable capital" Our prosperity at present is indisputa- ole, but we are tat the top of the wave,'' IS is shown by the fact that the Ameri- ,an public has never recovered from the fright of May last No immediate col apse seems probable, The situation is still good. But there are, nevertheless, f the Thunderer holds, good reasons for caution. Baltimore Sun.