The Montgomery advertiser., 1907-12-25
FR0MAHGH EXPERT
CAUSES or rffn AMERICAN COL-
 LAPSE REVIEWED. CONTRIB y mEN0EvELY.

CAUSES Or run AMERICAN COL
 LAPSE REVIEWED. COMPHE- mENsIvELY.
 wkat started tAs naII Rsliias- -Capi-
 tal LebsR ena the Railways--a
 WsrA sa Prss1aent Roosevelt.
 sfr yss ysss HysnIss sss, Post, s.,oy .r,e.ul,eu. whose Art.cles of last July in the Eco. nomiste rranceis. on the. exhaustion of the worlds capital reserves, itai and indussry, HD,Vsi called ed sharp atten- tion to the state of affairs. which was elso in Europe. The same eminent ee ess na snasn H 0f the ents in America last October, which may be called, in part at least. the se- quel to the conditions regarding which he gave out his warning of last sum- nler. This Is his present view:
 Tt would be great mistake to sup pose, that the crisis in the United States originated solely. ors even originally, from lack of money in that country. banks. This erroneous conclusion is being asserted on every side. It is trre enough that lack of elasticity, in relation to note Issues by American National banks may have helped in the burden. and in certain measure have accentuated and given wider measure to the crisis. In the same way. the grave faults, the abuse of credits. the or trust companies. may have increas.
 "Neverthiess. the actual cause of the crisis Is something entirely different; over-expansion of industrial enter prise in the world and the con- sequent insuficiency of the world s supply of capital. But the principal cause+-of the crisis now oS. raging in the United States, and which has in a smaller measure touched Germany, ts snd 9f the Mei that capital limits industry. What has happened is that new enterprises have been started or old enterprises nave been enlarged In degree wholly be- capitaI--that Is to say, beyond the amount of capital actually produced by the savings of the whole' civilized
 The Limits of Expanston.
 The error of the public at large con. sists in believing that, even if there are manifest limits to. the financial op- srations of an individual or of an ii, in its to the financial activities of a na. ton, however great 1t may be, as " does the activity of one man, or of single commercial company.
 Now, capital consists by no means principally of circulating money, me- the sum total of all the wealth which has been laid by, of all /the reserve provisions which have been made, ana improvements which have been com pleted. It Is precisely these supplies of capital which have fallen short, quite as much as the circulating me- h- cf tha extravagant American demands The proof of this lies in the advancing price of everything. especially of raw materials--ali these have under: or 80 per cent. The industrial megalo | mania which has prevailed in the United States particularly but also to considerable extent in Germany It merely devoted itself to pushing up
 And the same thing is true of la. bor; the extravagant ideas of tn, touch with the realities in the mat | ter of wages of labor than they dit with the realities of capital; and thai | Is how the spectacle has been pre-. eight dollars day at San Francisco | and of other occupations approaching this in a good part of the country.
 The Debauch of Extrayngance. . | mics and the great American railway | which, beyond all others. have giver | themselves up to this debauch of ex' ! travagance. Everyone knows that ont l of the magnates of the railways late | ly mapped out program on the basi, l of which, during each of several years to come. $500. .6oo. 900 francs were tt existing raiiways, that is to say, 1T l the enlargement of terminals. in doub ling of the track. <and so on. At the same time contracts have been plac year of 1907. of i5,ooo miles of new rail way. which was about half the ex tent of the entire system of the Frehci railways in existence at that time such expenditures by issue of securi and this state of affairs In the ent came upon the credit markets with { force. and brutality which were fiati! | irresistible.
 Other Contributing Causes.
 Here. then, is the real cause of th' American crisis--and that cause is no the insufiiciency of banknotes or gov ernment papen or the insuficiency Q no doubt accentuated the debacle. l the fight of President Roosevelt against the trusts had not of itself beei be confessed that that certain exces sive demonstrations in that attacl and certain wholly eccentric financia penalties Imposed on the great com panies, have done their part in in tensifqing the mistrust of the publi against commercial or industrial com panies of every nation.
 'It Is our opinion that the Presi dent has been fundamentally right Il his campaign against the abuses of tn trusts and against the secret favor granted by the various railway compa nies to their powerful clients. Nev ertheless. his attack on these abuse might have been conducted. not onl with frmness but with a certain meas ure of restraint. It must be confess ed that when an ignorant and tmpres sionable public reads that the highes fpublic authorities of the country ar applying in their speeches to tn chiefs of commercial and financial en I terprises the appeIiation of robber: the public not only experiences dis trust, which, by itself, might be sal utary. but is brought into danger o general panic.
 But, after all, the truth of the whol matter is that in these panic days tn United States is simply paying tn penalty for its extravagant expansion and activity at a time when credi conditions were normal. A machin driven with the greatest conceivabl | speed cannot be stopped with the eas and convenience with which one tray cling at prudent pace can be brough to a halt" I