25 May, 1867. N. 1239.

The State of the Money Market.

The savings of the country accumulate day by day , and unless there is a daily increase in the channel by which they are to flow out, they will encumber the market und bring down interest; a fortiori mit diminishing foreign trade. Generally, when money is cheap, credit is good. Dieß Jahr das Gegentheil. The railway scandals, the number of private ruins, or semi-ruins, going on all through the country, the disenchantment with old names by the fall der Overends, the alleged complicity of banks mit railway errors, tend to generate distrust. 1864 credit viel besser mit 8% als jezt mit 3. (und diese nur nominal)

The Causes of the Existing Depression.

Bankers can only lend to one set of customers the money left with them by another set … Trade is dull, losses heavy and general, and accumulation almost suspended.

Since Sept. 1866, average price of wheat over 60s., or 50% beyond the average price of about 40s., which had prevailed during the 4 years preceeding ’66. Corn dear all over West Europe. An advance of 20s. per qr on wheat means a home trade crippled in all its ramifications; and if an enhancement almost as serious extends to France and Germany, the effect is a similar falling off in the purchasing power of some of our best foreign .

Nach dem influence der harvest, condition des Cotton Trade. It is now ascertained that a large part of the activity of the cotton trade last year was premature and speculative. Goods were sent to India, Australia, and elsewhere, on manufacturers’ account, and have not been sold, if sold at all, at remunerative prices. In all these markets, therefore, there is more or less dead stock to be cleared off by such demand as may be stipulated by falling prices. Since the close of 1866 the manufacturers have by short time and total cessation of work reduced the production by about 1/5 und daher der price of middling Upland cotton has gone down von about 15d. to under 12d. a lb. The average price of middling Uplands in 1865 was 19d p. lb.; in 1866 151/2 d., or 18% less; the real revival of the cotton industry depends entirely on the re-establishment of a low price of the rawmaterial. The world cannot afford to buy anything like the same quantity of goods mit cotton at 19 or 15 or 11d. p. lb, as when at 7 or 6 or 5d. In order to employ fully our people, machinery, mills, warehouses, ships, all the industries set in motion by a large volume of export trade, die alten cotton prices nöthig.

The severe regimen of the past 12 months has brought down the cost of producing most of the great manufacturing staples of this country not much less than 30%, taking into account the fall in the prices of raw materials, and in the wages of labour.

In times of active prosperity our weekly accumulations probably 2 to 3 mill. l. Since May 1866 they have fallen short of that sum.

United States. Strikes. Taxation. Local War Taxes.

In April last addition to the Federal Debt of 5 Mill. l. St. The increase of debt to be entailed by the Volunteer Bounty Bill of last session will not be less than 20, may reach 40 mill. l. st. Under special arrangements, their will be two collections of income tax in the course of the present fiscal year.|

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Der Standard Kerl fährt fort in seinem Brief vom 7 May: „Whatever may be the causes of the movements among the working men of Europe, the agitation among the working classes in the U. States is due to the increased cost of living produced by the great and growing taxation. The struggle is not for political advancement, nor for social recognition, for the labourer has as many political privileges as the millionaire, saving only the power to purchase votes; and, outside of the cities, there are practically no distinctions of class. On Dec. 1, 1860, the debt of the State of New York was 34,182,975 dls, and on Dec. 1, 1866 it was 51,753,082 dls. It has been increased some 10,000,000$by the legislation of past winter. The debts of the Counties and Towns of New York State have grown in the same proportion, so that the total State, County, and Town Debt of New York certainly not less than 90,000,000$. In Massachusetts the increase has been greater; its state and local debt was in 1860 about 12 Millions $; now it is in round numbers 55 Mill.$, and will soon be increased by 15 Mill. $. Rhode Island was free from State Debt in 1860, and her County and Town indebtedness was small; now her State debt alone is 3,626,500$. |135 Vermont had no State debt in 1860; it is now 1,567,500$. The State debt of Connecticut was, in 1860, about 50,000$; now it is something over 10 Mill. New Hampshire, in 1860, had State debt of 82,000$, now it is 4,169,818$. In some of the Western States the increase has not been so great. Iowa statedebt has grown from 322,000$to 622,000$; in Missouri from 23 Mill. $to about 38 Mill.$; in Wisconsin from 1 Mill. $to 2 Mill. In mehren states the Town und County Debts have increased much faster than the state debts; in other States they include State debts – viz., debts incurred by the States in aid of Counties and Towns have been transferred. The Municipal Debt of New York (City) about 22 Mill.$. The County and Town debts were incurred principally, in the effort to meet the demand of the Federal Gvt. for troops. Under the threat of conscription, the people offered enormous bounties for volunteers; in some localities as high a sum as 3000$paid to each volunteer. Of course the only method of equalising this forced loan was by taxation. It is probable that the Federal Gvt. will in time assume all the debts incurred in carrying on the war – State, County, and Count Town debts. In fact, Congress has already established a precedent by assuming the war debts of several of the States … Our working men may strike therefore, and strike till doomsday; they cannot remove one atom of the burden of taxation. They have a remedy in their hands. All other means of relief exhausted, they, the majority, will surely use it. That remedy is repudiation. Just here speaking of the debt and of the working men’s movements, I may cite the opinion of (of Boston), who will be recognised in Great Britain as a good authority. He says: ‚The condition of the poorer kind of mechanics is lower than before the war. They are bleeding at every pore. They are falling into the wretched tenement life.‘ Daily News New York Correspondent, d.d. 7 May 1867 says: „The Labour strikes still continue all over the country … The cause of all the trouble is, of course, the excessive lowness of wages. I doubt if in the history of the country wages have ever been so low, estimated as they ought to be, ⦗Currency more than 1/3 depreciated⦘, in food and clothing, and house rent, and not in money. The harvest last year was bad, and daher flour, which usually sells at 9 or 10$ a barrel, has been 18$throughout the winter, and is now 21. In fact, the dearth so great that the Northern States have been importing wheat and the demand has been so great that it has actually paid to send it from San Francisco round the Cape to New York. Until the last year or 2 California has never been able to supply her own wants. The consumption and waste of Cattle during the War has also been severely felt in the markets. Beef and Mutton are double their old price, and show no sign of falling. The high tariff and heavy internal taxation keep up the price of clothing. A coat costs more in this country now than a whole suit used to cost 4 years ago. The abrogation of the Reciprocity Treaty with Canada, which the protectionists were able to secure by the aid of the hostility towards the Canadians, bred by their conduct and language during the War, at once nearly doubled the price of timber, as the greater portion of the timber to be found in the market in this part of the country has for many years been drawn from the great Canadian pine forests. As most houses in America, outside the large cities, are built of wood, this rise has put almost a stop to house-building. It is safe to say that it now costs 3 times as much to construct a house in any material as it did 3 years ago. Of course, people must have shelter, and the population is growing as rapidly as ever; consequently house-building would go on as of yore at any price, if there were no fear of a fall. Aber keiner glaubt that the present state of things will last, daß vielmehr either on the resumption of cash payments, or at some period not very remote, prices will come back, if not to the old standard, to one very near to it. Consequently, there is a general reluctance to fix capital in any way that can be possibly avoided. Men do not like the idea of putting 10,000$ into a thing which in 3 or 4 years may sell for, or yield them interest on, 5000. There has accordingly been an almost total cessation of housebuilding for the last 3 years. This is no exaggeration. In the large cities wealthy men, who will be comfortably lodged, and to whom the price of any house is but a trifle, have every year been building themselves a few dozen mansions in each of the great towns; but it is safe to say that the increase in the number of houses for |136 for the class of moderate means, or for the working class, have not been 1/20 part so large as the increase of population. In New York the state of things is rather worse than elsewhere; rents here have more than trebled since 1863; but all over the country there is a positive distress for house room. People of small incomes are compelled to deny themselves all their luxuries, and many of their comforts, in order to keep a roof over their heads; while the working men are crowded into miserable lodgings, or find themselves forced to choose between absolutely bad food and bad clothing and the surrender of their homesteads … During the War, the excitement, the steady rise of prices under the expansion of currency, and the great demand for labour kept up by the enormous drafts made on the Market by the Army and Gvt. Orders, kept the labouring classes in good spirits; but they now find themselves down upon what the goldminers call the hard pan, and they can think of no mode of relief but a rise in wages. The Manufacturers go to Congress every year, and plead the dearness of labour as a reason for asking for higher protection; this raises prices, and the labourers in their turn go to the manufacturers, and plead the dearness of living as an excuse for asking higher wages, and so on, in one unvarying round. The manufacturers, of course, find trade extraordinarily dull; there is no demand for anything; and yet prices remain high as ever. Many of the great mills and workshops are kept going merely to keep the operations together, and prevent suffering. Daher strikes besonders irreasonable und less likely to produce a result than at this moment; and yet strikes are the order of the day. There is no trade in which a strike is not raging. The Trades Unions are not here the perfect organisation as in England. The country is too large, and the working men are too little of a distinct class, and are largely divided by difference of origin and religion into too many distinct sects, for any Union to secure the wideness of ramification or perfection of discipline secured by those of England. The consequence is that strikes are partial, isolated, and desultory; but they are incessant. They are at this moment more general than they have ever been and there is no immediate prospect of their termination. The 8 hour law, passed by the Illinois Legislature last winter, and which has just gone into operation, has thrown the large towns in the State into commotion, and given the Striking Mania in the West a violence which it does not display in this part of the world. Absurd this 8 Hours’ Agitation. It was begun by some of the better class of the workmen, believing in its salutary effects on the moral and physical condition of the labourers. Owing to the enormous profits which the manufacturers were making 2 years ago, the economical objections to the scheme made little impression on the agitators. They denied that a reduction in the hours of labour would materially diminish production, and maintained that even if it did it ought not to cause a restriction in wages, as long as capitalists were making, as many of them were, 100%. All that would happen, if 1/5 were taken off the working hours, would be that the enormous gains of the employers would be slightly diminished, while the condition of the whole working class would be greatly improved. The argument drawn from these large profits has of course since lost all its force. They have disappeared. The reduction of 1/5 labour would be = reduction of 1/5 production, und daher an increase of prices. But, unfortunately, by the time this demonstration of the absurdity of the movement was ready, the rank and file of the Irish, and other foreigners, ignorant and bigoted, had entered into it with zeal; politicians had got committed to it, and it has raged on without rhyme or reason, until it has at last got an act passed in Illinois, and has come near doing so in Pennsylvania and some other States.“