The Evening Star MONDAY, SEPTEMBER 13, 1875.

Evening Star, Issue 3917, 13 September 1875, Page 2

The Evening Star MONDAY, SEPTEMBER 13, 1875.

The news by the San Francisco mail is calculated to create uneasiness in the minds of those largely engaged m commerce, for it tells of failures of immense establishments, with no apparent justifying cause. It becomes therefore a duty to endeavor to understand why these events have happened, in order that we may rightly estimate our own position, and satisfy ourselves that we are safe from being drawn deeply into the whirlpool that is swallowing so many hitherto wealthy firms. Those who have attended carefully to the course of this adverse commercial current will have noticed that its source is in the United States. There the failures have been the heaviest and the first. A s usual, many will satisfy themselves withthatmost unsatisfactory of all reasons for commercial disasters, “overspeculation others will attribute them to railway construction overdone; while some will solve the difficulty by pronouncing oracularly a condemnation of Tammany rings and American unscrupulousness. But very few will look far enough into the matter to see that the root of the difficulties in which the United States is involved is a very dose approximation to national iusc.' „y : the financial affairs of the 'jounfrv have been so mismanaged that it is unable to meet its engagements. To those who have regarded the United States as a model for imitation in government and federal institutions, this statement will sound startling and wild, and appear to them ridiculous. But we think it quite capable of being proved. The beginning of the financial troubles of the United States was thj

first shot fired at Fort Sumter in 1801, At tliat time their trade with other countries was profitable and the balance in their favor. The exports wore mud) greater in value than the imports : American shipping was engaged largely in the carrying trade ot the world ; there was comparatively no national 'debt; and the population being chiefly composed of, and increased by adult immigration, was in trie best position for advantageous industry, Everything was favorable to acquisition of wealth and prosperity. The civil war changed all this. We believe that suicidal war to have originated in the Morell tariff passed in 1861, intended to “protect native industry,” but really arraying North against South. At that time the National Debt was about £4,000,000, so that no export of industrial produce was needed to adjust the balance of trade with foreign countries, In fact, the exports exceeded the imports by about £9,000,000, and most probably the tr’llbig amount of Government stock was held in the country, so that there was no outgoing tor payment of interest. The first effect of the war was to change the commercial position of 1 lie States in relation to other countries. The cotton trade was ruined, the mercantile marine was destroyed, £100,000,000 was borrowed by the Northern States in Europe for prosecuting the Avar ; while an equal, if not a greater expen ditnie Avas ..marred by the South, and L2G,000,000 annually h»A 7 e now to be sent out ot the country for interest on borrowtdiiiom yarn! other incidental expenses, beside.an additional £9,000,000 for adjustment of an adverse balance of trade : the average amount of imports over exports for the last five years having reached that heavy sum. There are many who can see no difference between debt incurred for war purposes and for investment in national industrial plant, tending to cheapen production and increase facilities for competition in the country’s products in the world’s market. With them debt is debt. Had, however, the United States’ national debt of £447,000,000 been invested in raihvays instead of being wasted on war, it would have had x very different effect cn the fortunes of the country and the world. It would have cheapened production, increased trade, distributed comfort, conserved the industrial powers of the hundreds of thousands of adults sacrificed in battle, and returned the interest in revenue. Debt incurved for war is absolute waste and destruction ; debt incurred for judicious national machinery is a profitable investment. Both may be overdone. The first invariably and with a long train of evil results : the last with temporary inconvenience, but ultimate and enormous profit. It is unfortunate that the sin of civil war should bo visited on the innocent as well as the guilty; but so it is. No section of the ciAulised human race can suffer by itself. The errors in policy and finance of the United States are seriously affecting England, and we cannot wholly escape in New Zealand. They may influence prices of our produce, and tend to curtailment ot credit ; but, byyoud a shortlived pinch, no serious clanger need be apprehended. There are those who will dispute our views as to the causes of the disastrous failures at Home. In political economy us in other matters all do not sec xhxe : but in support of our theory we have the latest and perhaps best writer on political economy, J. E, Caiknes, M.A. On this subject his Avords are almost prophetic. His work was written in JSG3. and published last year, and in it. af„er revr. .vmg the financial position of the United States, he says that the balance of trade in their favor can only be efleaed by a considerable fall in prices there, or a considerable rise in Europe, not shared in by the States. The latter is not taking place, and the result he predicted is in course of accomplishment. His words are ;

A considerable fall of general prices, however, is a remedy to which manufacturers and merchants will only submit when pushed to extremity. It will, therefore, only con.e when credit has been strained to the utmost, and a catastrophe is seen to be inevitable; and then it will probably come with a crash. For these reasons I should be disposed to look forward to the immediate future of American trade as a period of much disturbance and flue-nation, culminating, ii is possible from time to time, in commercial crises.