Rensselaer Republican, Volume 21, Number 10, Rensselaer, Jasper County, 8 November 1888 — THE FINANCIAL OUTLOOK. [ARTICLE]

THE FINANCIAL OUTLOOK.

New York Sun. * As I have several times already had occasion to remark, forecasting the financial future is like foretelling the weather. We are able to predict the course of the money market in a general way, just as we are able to say that the winter will be cold or the summer hot, but, as we cannot be certain how cold or how hot it will be at a particular date, so we cannot tels exactly when and how financial events, which we see to be impending, will take place, nor even to be sure that they may be averted by causes not yet apparent With this warning in advance, I desire to call the attention of my readers to some elements of the financial situation which, I think, indicate coming trouble. The chief of these unfavorable elements is our short crop of wheat, its consequent rise in price, and, as a further result, the diminution in the ol it exported. The Govern-1

ment bureau estimates the crop at semething over 410,000,000 bushels, against about 450,000,000 bushels last year, and the same quantity the year before. -tUnofficial estimates are higher, but not materially so. When it is considered that as far as 1882 the crop was over 500,000,000 bushels, that it was 512,090,000 bushels in 1884; and that our population is steadily increasing in numbers and in consuming power, this decrease to 410,000,000 bushels is quite sufficient to account for the rise in price without dragging in the operations of speculators like “Old Hutch,” who only take advantage of events which they have no lymd in producing. It is sometimes said that as the diminished crop brings at its high price the same amount of money as a full crop at a lower price, there is no loss for the diminution in quantity, but this is a fallacy. The producers may, indeed,'come off as well as usual, but the great army of consumers necessarily suffer. They have to ’give more of the results of their labor for their food, and thus have less to spend for other commodities. Moreover, the increased price of wheat does not fully compensate for the dimimshed amount to the exportable surplus, and thus make that surplus as valuable in payment for our purchases abroad. This is shown by the latest report of the Bureau of Statistics at Washington In the three months ending Sept. 30, our exports of wheat were of the value of only $14,684,138, against $28,843,283 in 1887, and of wheat flour $11,9. 6,275, against $13,520,930 in 1887. For the first nine months of the year, also, the total value of all kinds of breadstuff's exported was $81,259,789, against $19,802,624 in 1887. Here is a falling off of $48,632,835—n0t an inconsiderable sum by any means. How seriously this decrease in food exports affects the financial situation is manifest from the further fact that up to Sept. 1 the returns show a net diminution in the value of our exports of all kinds from $435,208,047 in 1867 to $402,969,821 in 1888. During the same period our imports increased from $279,807,277 in 1887 to $490,390,749 in 1888. The result is a balance of trade against us of $87,420,928 for the first eight months of this year, instead of $44,599,241 for the corresponding eight months of last year. If, as now seems very probable, the exports of wheat and of flour for the remainder of the year should continue to decline, this adverse balance will be larger still. The exportable surplus is 50,000,000 bushels less than it was last year, and at prevailing prices and freights Europe can be supplied with equal if not greater cheapness, from other sources than from this country. Already Hungarian wheat is pouring into France and Italy, and Russian wheat into Great Britain. Indian wheat has also begun to come freely to market, and it looks as though, notwithstanding our increased exports of Indian corn and of cotton, the balance of trade against us this year will .be at least $75,( 00,0C.0 larger than it was last year. How are we going to meets this balance—with securities or with gold? The question cannot be answered without considering the financial condit ion of Europe, and particular!y that of Great Britain, which, for the last two or three years, has been an excellent customer of our railroad stocks and bonds, both old and new. The crops in Great Britain have, like our wheat crop, been poor. It is estimated that she will have to buy abroad. 40,900,000 more bushels of wheat alone this year than she did last year, without counting other kinds of food. Since, as I have said, she will procure more of this deficiency from elsewhere' than from this country, she will have so-much the less surplus to invest here.

France, , too, has had a bad wheat harvest. In addition, her government is spending more than its income, and has been doing so for several years, so that her wisest financiers are seriously anprehensive of national bankruptcy. The failure, too, of the Panama Canal scheme, in which the French people are deeply involved, is daily becoming more and more imminent, and in view of it prudent French capitalists are reserving their means. Then, there is the great French copper syndicate, which is staggering under a load of 100,090 tons of copper costing at least $30,000,000, and the burden is daily increasing. The ultimate collapse of the speculation is as I certaih as was that of (lie lead syndicate last week and it may occur any day. When t does occur it will make a very unpleasant sensation.

Neither from Great Britain nor from France, therefore can we expect any inci eased demand for our securities, and both are likely to waut gold. The stock of the metal, in the Bank of England is the smallest it has been for years, being leea than $100,000,000 and the drain upon it by Russia and Germany has just compelled the bank to advance its rate of discount to 5 per cent. Fftr the last few days the rate in the open market has fallen much below this, but the Times says that it is the result of stockjobbing manipulation. The Bank of France has stopped paying out gold, and even sells it only in small quantities. Germany is taking gold for export to South America, and Russia for a basis of an increased paper circulation. The political condition of Europe is likewise disquieting. years have elapsed since thF last European war, and it is time io expect

another. France is smarting under her defeat by Germany in 1870.«nd burning to recpver her lost territory. Germany has a young, ambitious, and warlike Emperor, only too willing to seek the bubble reputation at the cannon’s mouth. Austria and Russia keep watch upon. Turkey and up'on each other, waitihg only the propitious moment to go to war Qver their prey. Great Britain, which has so long been the preserver of the peace on the Continent, is crippled, -if not made powerless, by the troubles in Ireland, and by the growing discontent of her laboring people. Thiis,' the political elements abroad ate in what the chemists call an unstable equilibrium, which may at any day become a rearrangement. During this process there will be more or less collision, and, if not actual w’ar, an amount of preparation for it which will be nearly as costly. That it will for the time upset the financial ■ ■world, and cause a withdrawal of funds from peaceful industries, all experience, teaches. I am inclined to think, therefore, that a considerable export of gold in the .course of the winter is more than possible, and, though «it ought not to have an unfavorable effect upon our money market, yet such is the constitution of human “nature that it will. The Treasury has $200,000,000 of disposable gold, which is equal to the combined stock of the Bank of England and the Bank of France. The banks of this and other cities have $109,000,000 more in their vaults, there are some $300,000,000 in the hands of the public, and we produce from our mines a surplus above consumption in the arts of $15,000,000 annually. It would seem that we might spare out of this immense stock $50,000,000 or even $100,000,000 without inconvenience, but I am sure that the exportation of even $100,000,600 would make most people uneasy. In financial affairs, as in religion, faith is everything, and when confidence is gone little else remains. lam not one of- those who worship gold and lo_ok upon it as a palladium of financia prosperity. It is a commodity like any other product of human labor, and when it may be profitably exchanged for other commodities or employed in the payment of debts, there is no harm in parting with it. Still, I recognize the effect which its loss by a country has upon the imagination and advise my readers not to disregard it. Great hopes are entertained of improved earnings by our Western railroads, growing out of an. expected increased transportation of Indian corn. Certainly something is needed to arrest the downward tendency of this species of property under-the combined forces of competition and of the inter-State Commerce law. Three already of the most prominent railroad companies of the West have been compelled to reduce their dividends to a nominal rate, and more will have to follow unless something occurs to prevent it. As yet the best judges see no grounds for counting Upon such good fortune, and say that no increase of business under present conditions will yield any important increase in net earnings. If this be so, the prices of Western railroad'stocks must decline still further, and with them those of other securities. The recent report of the Baltimore and Ohio Railroad Company brings the possibilities Of disaster uncomfortably near home also, and w’bile its immediate effects are limited, the shadow of it spreads widely around. The one favorable element in the situation is the prospect of further bond purchases by the Treaury and the consequent liberation of large sums which will have to seek other forms of investment. Already these purchases have led to the absorption of little blocks of choice securities which have lately been put on the market, and this in turn has released money which will be employed in 'hew purchases. The sinking fund alone will require trie expenditure of $48,000,(MX) during the coming year, and this, in view of the possible cessation of new railroad construction, will go far to relieve the borrowing community. Still, the condition of the Treasury is not so good as it was. In the coming year its revenues and its expenditures will much more nearly balance one another than they have for a long time, and no purchases of bonds can be looked for beyon those necessary for the sinking fund. If any kind of a revenue reform bill should be passed next winter this probability will become a certainty, and the compulsory economy of the nation, which has hitherto led to the accumulation of so many hard millions, will come to an end. When this happens we shall be made painfully aware of the service which has been rendered to the country by the much abused surplus. t Matthew Marshall. The following is from a iGrass Lake (Mich.) daily: “Last Monday morning while a small knot pf men were talking together at the Central depot, in Jackson, the peep of a chicken was distinctly heard. Thereupon one of the number his vest, and in an inner pocket : was revealed a chicken just hatched and I still partly- ia the- shtelk" -He reported that he had carried an egg for twenty“one days on a sl6 wager that it would i hatch from the natural warmth of his body.” _____ A little petroleum added to the water with which waxed or polished floors are washed improves their looks.