The Montgomery advertiser., 1903-03-22
FICTITIOUS PROSPERITY
"A GLOOMY WESTERN VIEW OF
 THE BUSINESS OUTLOOK.
Trusts and the Protective Tariff Which Has Developed Them at the Bottom of the Ursatis-
 factory State of Things.

Washington Special to New York Even
 ing Post.
 Among recent Western visitors to the East has been W. D. Washburn. Jr., of States Senator. and himself a welI-known business man and stalwart Republican. A summary of his observations in New York as stated to friend here on his way home, is not hopeful.
 Tn spite of a general appearance of prosperity" said he. 'the New York financial market is nervous and distrust- ful. Large firms suddenly disappear with hardly a moments warning. With any marked decrease in bank reserves. the whole line of stocks drops several points. and call money jumps up 15 or 70 per cent Order is then re-establlsned py concerted and gigantic efforts or the banks and the financial magnates who are now practically upholding the mar ket. It may be noted as factor or great weakness that the general public has almost entirely withdrawn from in- vestments in industrial stocks.
 Some of the conditions leading to this situation are clearly visible. Large vol umes of money which have heretofore gone to New York have ceased to flow in that direction. Western and Southern banks are holding their balances largely for the use of their own customers in legitimate business enterprises. which have expanded on sound lines. In the Northwestern States local capital has been largely withdrawn from local banks to embark in the great land movement which is taking place in Minnesota, the Dakotas, and the Pacific Northwest. Probably COCO settlers moved from the corn belt into this region last year; at least 100000 will change their residence during the present year. The amount of cash necessary to maintain this continued agricultural movement in the purchase of land, equipment, and stock, Is very large. At a moderate estimate s10o. 900. 600 st diuaFtad bv it from ordinary commercial channels in the last two years. Moreover, the banks in the West have grown reluctant to hold large balances in the East. For time i they were attracted by favorable interest rates. and kept their unemployed capital there: but the fluctuations of the stock market. the growing distrust of indus trial collaterals, and the frequently re- curing spectacle of call money at 15 or % per cent in New York, have chilled their ardor. Even the inducement of panic rates will no longer tempt them to risk large deposits where such abnor- nal conditions prevail. They have. there fore, gradually cut their balances down to a minimum figure. The large balances will probably never return to New York, as the West can now utilize Its entire cap ital at home with better security and at higher rates. Similar reasoning would ap- ply to other parts of the United States. so 1t is questionable whether the opera tions of Wall Street can ever hereafter be permanently sustained by capital with drawn from legitimate industries else where.
 Treasury Absorption of Money.
 '"The absorption of money by the United States Treasury far beyond the needs of proper expenditure also constantly con tracts the circulating medium to the great Injury of business. not only In New York, but in all parts of the United States. The defeat of the Aldrich bill adds to the general disuust;, It will now be impos- sible to provide for an elastic currency. to withstand a sudden business crisis, un- til the next Congress convenss. In the meantime. cash necessary to transact bus mess congests in the Treasury vaults. where 1t Is imuossible 70 dislodge 1t ex- cept by the purchase Of Government bonds. which in turn tends to decrease the circulat tion of national banknoteS. As was largely utilized as the basis of still greater speculative enterprises in Wal Street, the Treasury will hardly resort to such heroic treatment again. except ir the event of a national financial crisis The expenditure of vast sums in build ing enterprises. in the expansion of trac tion systems. and lastly, in extravagan living in New York and other EasterT trade centres, also tends to increase tht financial stringency.
 l-. Besides the surface causes. there arC neep-seated and radical reasons for the present unsatisfactory state of things 1HeSe l1NplNe IHe IdTlI ana the ITuSlS which have developed under it. The pro- tectiye tariff was erected by the Repub. lican Party for the legitimate purpose of defending our industries against Flu ropean labor and capital until these in- dustries could hold their own without as sistance. and with a fair profit. against the outside world. It was expected that this would render us independent of the European markets, and develop a large and thrifty class of American working. men, capable of sustaining a Government on our basis. It was expected. too. that this body of well-to-do lnboring people would afford a large consuming marke for the products of arother intelligent class, the agriculturists. who in turr would draw wealth from the soil in re. gions not adapted by nature to manufac turing enterprises Incidentally 1t wa! supposed that competition among homo manufacturers would provide all the peo pie with good articles at price assuring fair profits to capital and fair wages tt labor.
 .'of this system a Republican nigh