Interna tation of yarns, owing to the contraction of the trade with India, Japan, and Germany. In iron and steel the expansion has been general, there being some increase of exportation even to the United States; but the fact that the metal exported in the month of March exhibited an increase in quantity of 25 per cent., while the increase in value did not exceed 4 per cent., affords evidence of a very considerable reduction in the prices we are enabled to realise. It is difficult to ascertain with accuracy how far the fall in price has been compensated by the reduced cost of raw material and wages. This subject will be examined in detail in the succeeding chapter. In this rapid survey of the commercial situation, we have noticed some encouraging features. The fact, however, remains that with an increasing population, the growth of trade has been arrested. Employment is scarce and business unprofitable. The effects of the depression extend far beyond the classes directly engaged in productive industry. It is therefore a problem of national importance to discover, and if possible remove, the causes which have led to the present melancholy posture of affairs. In that interchange of commodities, of which comtional par- merce consists, the misfortunes of every country are in misfor- shared, more or less, by the other members of the ticipation tune. family of nations. There is an international participation in the happy fortunes of a thriving people; and, on the other hand, we cannot be indifferent spectators of the devastation of a neighbouring territory by war. When a vast population is decimated by famine, or the resources of other countries shattered by commercial disaster, we know that the effect of those reverses will be felt more or less by ourselves; and in seeking for the causes of the crisis from which we are at present suffering, our inquiry must be extended beyond our own borders. ciation of The fall in the value of silver is the first subject The deprewhich demands attention. The following particulars silver. are extracted from an article by Mr. Patterson, contributed to the Contemporary Review' in April last. From 1855 to 1875 the aggregate exports of merchandise from India amounted to 933,813,000l. The value of the imports was 544,207,000l. The trade balance in favour of India amounted to 388,500,000l. sterling; and in the earlier years of the period under review this enormous deficit in our exports, as compared with our imports, was covered by remittances. of silver. During the latter years, however, of this period, the financial balance turned heavily against India; the bills drawn by the Home Government upon the Indian Government amounting in the aggregate to 112,000,000l. A smaller quantity of silver was required for payments in the East, and the value was proportionately affected. For upwards of twenty years, subsequent to 1850, the price of silver stood considerably above its old value-rising from 593d. per ounce to 62d.-and then declining to its old value, or a fraction below it, viz., 591d. in 1873. The depreciation of silver is due to another cause, to the determination of France and Germany, the one with sixty millions and the other with eighty millions Trade with India and China. State of of silver, to establish a gold currency. The trade with India and China has materially suffered from the depreciation of silver, and still more from a pernicious system of long credits, and the reckless competition for business on the part of discounting financial and banking institutions. The recent revelations in connection with the Glasgow Bank have brought to light abuses, which have long prevailed, and have been widely extended. An almost incredible amount of overtrading must have been carried on, if, as the representative of a single firm admitted, his losses had exceeded 2,000,000l. within the space of some ten years. Previous to the outbreak of the Civil War, the people of the United States were by far the most extensive consumers of our manufactured products. The vast expenditure caused by the war led to an increase of taxation, and to the imposition of prohibitory tariffs on foreign importations. The sudden exclusion of foreign goods naturally caused an advance in prices at least equal in amount to the duties imposed. The issue of an inconvertible paper currency, as pointed out by the late Professor Cairnes, powerfully accelerated the upward movement. Large manufacturing industries were developed to an inordinate degree by the sudden but ephemeral prosperity, which followed upon a narrow and unwise course of legislation. Railways were extended beyond the requirements of traffic, and the productive capacity of mills, factories, and ironworks was multiplied tenfold. The dearness of labour gave a renewed impulse to the American genius for inventing labour-saving machinery, the effect being to aggravate that tendency to over-production, originated by other causes. It has been calculated by Mr. Wells that, while the increase in population in the United States from 1860 to 1870 was less than 23 per cent., the gain in the product of the manufacturing industries during the same period, measured in kind, was 52 per cent., or nearly 30 per cent. in excess of the gain in population. of the market. The American manufacturers, under a rigid system Collapse of protection, cannot produce cheaply. They may American revel in the monopoly of their home market, but they cannot compete in neutral markets with a country which has adopted a Free Trade policy. When, therefore, the home consumption falls away, a collapse ensues. In the United States the power of production had been increased to such an extent, that it would have been impossible for manufacturers to find a market for their goods, even if the former demand had been sustained. But consumption was reduced, owing to the rapid fall in wages, and the diminished incomes of holders of railway and other securities. The import trade was prejudicially affected by the same causes. low's ex In an article contributed to the Atlantic Monthly' Mr. Bigein October 1878, Mr. Erastus Bigelow gives a lucid planation. explanation of the depression of trade in the United States. All departments of business had been affected by certain general causes. Mr. Bigelow starts with the axiom that, whenever the amount of capital employed is proportionate to the amount of business done, and the credit employed is in proper proportion to the capital, then business affairs assume their normal Fall in price of cotton. Decrease of British exports. condition. It is only when the intricate machinery of credit is run at undue speed that over-production and over-trading ensue. The demand created by the Civil War for hundreds upon hundreds of millions of dollars' worth of commodities was superadded to the normal wants of the people, and had the same stimulating effect on the business interests of the country as though that demand had come from abroad. The panic of 1873 disclosed the actual state of affairs. It was then seen that the capital and labour of the country had been largely misapplied; that railroads had been built which were not needed; that the machinery of production had been increased beyond the legitimate demand. Mr. Plunkett supplies some extraordinary instances of the fall in prices in the United States through the excessive production of manufactured goods. A correspondent in the dry-goods trade in New England had informed him that cotton had risen during the war to a dollar per pound, fine bleached cotton to 75 to 85 cents, and printed calicoes to 50 cents per yard. Goods of the latter description had since fallen to 6 cents per yard, the cost of manufacture remaining the same. The Commissioners of Customs give statistics showing the decrease in the value of our exports to the United States. In the year 1864 the value of the British exports to the United States was 16,708,5057. In 1872 it reached the highest sum in our records, namely, 40,736,5977. From that year the value has been on a rapidly descending scale. |