THE FINANCIAL PROSPECT.

Evening Star, Issue 3642, 24 October 1874, Page 2

THE FINANCIAL PROSPECT.

{From Smith and Co.'s Investment Circular.) The raven always croaks and the financial alarmist never ceases to predict an immediate period of difficulty and distress. Our artizins will soon be* standing still in the market-place -j commerce will be crippled : tponey will be scarce ; credit will be destroyed by pmijj. Lately the alarmists have been exceedingly energetic, we have no doubt th-.t many timid persons have been frighteuod. For a moment, however, the alarmists are forced to croak in a whisper fbe splendid weather, the promise of an immense the prospect of a good autumn trade, and the marked revival in the United Nutts, are circumstances that compel the prophets of evil to lower their voices ; but their whispered words are not without influence, and as unbounded fear is both unpleasant and injurious, it may be well to take a survey of the actual situation. Oa one point we agree with the alarmists. A Bank of England 2or per cent, minimum rate of discount is not a matter of rongratulation. An obviously high rate, say 7or S percent., is indicative of an exc-ssive demand. consequent on over investment and the dis rust resulting from overdue anxiety We hear that, in Indian famine districts, some persons endeavor to procure a stock of rice in excess of their need, and when money' is at famine price, a scarcity that would be harmless is made disastrous by the efforts to provide against pressure a month or two hence. A bank rate of or 2 per cent, is a sure indication of wide-spread distrust. Money that should be earning a handsome dividend is wastefully kept in hand ; that is to say, is only lent on securities that can be immediately realis d without the risk of depreciation • a distinguished statesman said that "a short war was less disastrous than an armed peace,” aud we are of opinion a financial panic is not a greater calamity

thaa a long period of distrust and depression. When we inquire into the causes of the present low price of money, we find that it is not the result of any fal ing off in commerce. It is true that business is not so brisk as it has been, bnt the difference is to > small to account for the almost glut of capital seeking investment at starvation rates. The explanation is that our profits have not been duly invested in new enterprises But we fail to discover any valid reason for the distrust. Those who lent their money to Central American Governments, such as Honduras and Costa •, ioa, made a bad investment ; but investments in properties - manufactures, railroads, and telegraphs—have, with rare exceptions, been profitable. b»{ the concerns wound up ip Chancery, ninetenths were never fairly floated, and, in thp I majority of instances, were never worth • floating. We are confident that the risks of i joint-stock enterprises are much less than / the risks of gomiperge, The distrust that

has brought down the bank rate to a nonremunerative point, and has checked, almost stopped, the progress,, of jotut*at ck enterprise, is almost unfounded. But it may be asked if there is not some force in the statement of the alarmist, that our commerce must spee ily and seriously decline T Very likely but it is not certain ” e eßs ÜBl h - ' 88 done this year than m 1873 Commerce is liable to -frequent fluctuations, and there are cireum tanoes that may tell unf vorablyupon our trade. Foreign markets are tolerably well stocke d with our manufactures, and the strikes <■{ workmen including the strike of the coal miners have enhanced prices, and when our oo ls are dearer we sell less. We do not nonce 1 from ourselves that strikes a>e evil; but it is an evil that works its own cure. When our trade falls off, say in the aggregate. 5 per cent., the value of labor will fall, aud these who now clamor for higher wages will then be seeking employment at lower rates. The suggestion that our trade will be altogether lost may serve to frighten the dupes o the trades’ union agitators, bm. it will not impose upon our business men. Whenever the English manufacturer can sell cheapest—either in quality or lower pr ce—he wifi command the market.

There are no signs of hard times on the Continent or in our Colonies, and therefore we do not believe that any decline in our commerce will be considerable or lasting. On the other hand, we do not expect any immediate increase in commerce, and consequently there will not be an absorption of uou-in-iuvested capital. There is expectation of a plentiful harvest, so our fur breadstuffs lyill be less than usual. Our present capital available for inves mtnt will be therefore increased. We consider, then, that our financial prospect, is exceedingly promising, and there is no reason f it mercha ts hoarding or for the capitalists keeping their money at 2 per cent. We should be very gl dto see a e jmplete revival of trust, for there is always a danger that when nimiey has been for a long time lying idle it will at last be sunk and lost in wild-goose sp culations. We invite our readers to fol’ow our example, and take a survey of the-situation, for then they will treat the chronic croaking of the alarmist with merited and prudent contempt. «