Year: 1878

NEwYoRK, Jan. IL, 1873.


We are continually making fresh discoveries
of ingenious devices whereby impecunious
debtors contrive to postpone the day of reckon
ing. The failure of one Dunning, note nego-
tiator, attracts public attention to system of
raising the wind which differs in kind but not
essentially in deceptiveness from the practices
of Meter and Bonner. Dunning's principals
make patches of notes and he uses them as col
lateral securities for loans. There is no end to
the quantity they can issue, nor any need of
limit as to the amount Of margin they shall
put up The whole business is done on that
theory Of indefinite expansion which is the IA
vorite remedy of the believers in illimitable
paper and bogus silver, for every age and stage
of financial distress. 1t works 80 well while it
lasts that the borrowers are able to keep afloat
till all their assets have vanished except
meagre stock in trade held at the expense Of
unwary creditors, and the lenders are lulled in
to placid sense of safety by the fact that their
debt is nominally covered in double the amount
of it. When some passing breeze of distrust
shakes the Elusive fabric Of imposture it crum-
bles into dust and everybody wonders that it
stood so long.


There are people, strange to say, who will be
illogical enough to deduce from an explosion of
this kind the conclusion that contraction is
bringing misfortune upon the country. 1t
seems to me to demonstrate with absolute cer-
tainty that contraction is working out the ma
tional salvation, and that just such processes
as these are necessary to the restoration
of health and strength to all kinds of
L.
sentative of false and pernicious method of
Solstering up bankrupt concerns. by the artifice
known in commercial nomenclature as Exit
ing." What he was undertaking to do on q
small scale is precisely the same thing that every
legislator who favors initiation in any form is
aiming at in larger way. The thing is i'm
practicable. There are natural laws that will
completely nullify statutes that defy common
sense and the principles Of political economy.
But the inevitable effect of every effort to turn
back the tide which is flowing in the direction
of Sound currency and honest debt paying, is to
retard the prosperity of the people,


The operation of liqui dation is progressing
with more and more velocity as it approaches
the end. The steadiness and strength with
which it is encountered show how much real
opulence existed amid the specious and decep-
tive valuations of the epoch during which nine
tenths of the inhabitants of the Republic i'm
agined they were increasing their means when
they were actually growing poorer all the
while. Our banking institutions stand the
shock wonderfully well. The losses are widely
distributed, and it is far more surprising that so
few rather than that so many succumb to q
pressure which their own imprudence has pre-
cipitated. Looking back now upon the busi-
ness of New York from 1861 to 1873, remember
ing what enormous rents were paid. what gi-
gantic expenses were incurred, what inordinate
risks were taken, cannot regard it otherwise
than as a proof of marvellous recuperative
power in the community, that so large pro-
portion of its merchants should have passed
through the fiery ordeal without being percep'
tibly scorched. An occasional illustration will
serve the purpose Of showing what changes
have occurred since the awakening to con-
sciousness which resulted from the panic.
In the spring of 1873 when the country
was on the verge Of bankruptcy, though
as yet its citizens neither knew nor sas-
pected it, a gentleman took lease of store
in New York from great landed proprietor
The term was five years; the annual rental
| $4,000. The tenant was responsible, and ha;
paid his rent regularly and punctually-$90, ,00(
more than the original cost of the property
and very much more than it would sell fol
to-day. He now makes a new contract from
the expiration of the present lease at 81 900 PEI
annum, which is fair rate. He has paid fo
| the use of the premises since he took posses
| sion $50,000 more than they were worth. Bu
| he is good yet and has abundant resources re
| naming Notwithstanding the penalty in which
| he was mulcted through excess Of faith 10 thu
| worth of real estate. There are innumerabl
| instances of similar kind. Sometimes tht
lessees have failed and left their landlords il
| the lurch. Sometimes they have struggled
| along and impoverished themselves in trying


to keep their engagements. Frequently they
have appealed to the mercy of their credito


and extorted from his magnanimity or his fea


a concession of part of the excess for which


they had incautiously bound themselves.


1t has not been in the matter of rent alon


that our. merchants have been foolishly im


provident. They have prscticed dangerou


prodigality in reference to numerous othe


forms of expense, such as keeping corps o


travelling statesmen on the road and of high


priced. clerks at their counters. 1t ia fac


susceptible of Authorization that dry good


jobbing house on Broadway with a capital Q


$225, ,0O0-chiefly special-were under an e1


pense in a single year of $25O,OOO. Is it any


thing to be astonished about that they ult


mately failed and paid nothing on the dolla
| or thereabouts?


The head of the largest mercantile house