Democratic Sentinel, Volume 1, Number 25, Rensselaer, Jasper County, 3 August 1877 — THE BUSINESS OUTLOOK. [ARTICLE]

THE BUSINESS OUTLOOK.

Extract from the Quarterly Circular of Dun, Barlow & Co. <? The universal law of compensation must have its fulfillment; and for years of over-production, over-trading,’ and over-crowding all avenues of commerce, there must succeed'years of economy, of liquidation and adjustment to a smaller condition of things, such as is now being experienced. The mistake, since the panic of 1873 has been that the magnitude of the expansion, not only in this country, but the world over, has rarely been sufficiently appreciated; hence the false hope has been entertained of an early return to prosperity. The figures which illustrate most vividly the nature and extent of this expansion are those that relate to that most delusive yet most fatal of all experiences—the creation of debt. The charges which this debt involves, even when it is possible to pay all the interest, is an incubus that sorely taxes the industries and trade of the country; but when a large portion of the money invested is unproductive and yields no return, with no prospect of its repayment, it is a barrier which effectually retards the return of confidence and leads to endless complications. The figures most accessible show that the national debt, as compared with $64,000,000 in 1860, amounts to $2,220,000,000 in 1877; that the States’ debt amounts to $375,000,000, the municipal debt to $1,000,000,000, the railway debt to $2,300,000,000; the discounts and loans of national and other banks to another $1,000,000,000, and the loans by insurance and other mortgage machinery may be safely estimated at another $500,000,000. Grouping all these roughly together, the visible indebtedness, of which some financial conception may be formed, amounts to the vast sum of $7,375,000,000. The curious can calculate how far the interest on this sum, if regularly paid, would absorb the yearly product of the natural and other resources of the country. The rapid increase in debt-creating power which the above figures imply, in some measure indicates the expenditure for permanent purposes in the last fifteen years. To what extent that growth of expenditure is in excess of the growth of population, or the increase m consuming power, finds its fullest illustration in the number of enterprises now profitless, and especially those devoted to articles at the foundation of human wants, such as iron, coal, woolen and other textile fabrics, lumber, etc., etc. A leading economist in a recent article says: “The fact is now very generally recognized that the capital which '* * * ff as been invested in the United States since 1860 in iron works and woolen mills, and which represented the savings for years of a very large number of persons, has been in great part as much wasted as though destroyed by fire or sunk in the ocean.” In view of the enormous expansion which the above increase of indebtedness illustrates, is it any wonder that business is depressed ami slow of recovery? Applying the same principles to the community as to an individual business man, the inevitable result of such a growth of obligation, with such an inability to pay, is that disaster and a long process of liquidation is sure to follow. The growth of the country, the development of its varied resources, economy, and the steady application of conservative business principles, in time may profitably employ all the facilities the last ten years have created, and adjust this burden of debt so that it can be carried and eventually repaid. Only in proportion as that period is approached may a more healthy and prosperous condition be anticipated, but the immediate future possesses no such hopes more than it possesses ability to liquidate and make profitable the debt which years have accumulated with such fearful rapidity.

Meantime people must eat, drink and wear, and in the supply of these necessities a certain extent of trade is secure. And this trade ought not to be unsafe in sections of country mainly dependent on agriculture, which includes the great West and South, where the purchasing and debt-paying power is not so restricted as elsewhere. The chief difficulty is that the number engaged in a trade thus limited is so far in excess of its extent that the competition is destructive of profit. The evil is one which will, it is supposed, cure itself. Unfortunately the principal process by which this will be effected is that of failure, as the voluntary withdrawals, especially from retail trade, are very rare. The failure statistics are, therefore, likely to show a continued large number of casualties, but in this view may be more significant of health than disease. If a large proportion of traders who succumb could be kept out of business, and be provided with some other pursuit than that of helping to divide a small trade among large number, failures would not be an unmixed evil. But the facilities which wholesale merchants themselves afford for effecting settlements at fifty cents on the dollar and less, and which the national bankrupt law encourages, are not infrequently an effective premium to the greatest rascality and poorest capacity. But time curep all, and it is to be hoped that a business sentiment against compromises and in favor of an amended bankrupt law will be gradually developed, and be effective toward remedying existing evils.