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Retrospects And Prospects

( Originally Published Early 1900's )



STATEMENTS have been made by certain of my critics that I have been pessimistic on questions in which free trade theories were concerned. Such an opinion does not do me full justice. On the contrary, I have been optimistic regarding future prosperity. I have, for instance, been of opinion that the country, though seriously handicapped by free-trade theories embodied in law, might yet rise superior to them and grasp prosperity, though of course not to the same extent as under a judicious measure, affording protection to our industries and to the wages of labor. I am on record as having given free expression to such opinions on various occasions. I have professed only the capacity of reasoning regarding the future from observation of the past and present; a power which most people of ordinary intellect and education may possess in a greater or less degree, according to the closeness and accuracy of their observations. Napoleon said, "labor is genius," and it was a familiar aphorism of the old Latin writers that labor could conquer and surmount all obstacles. These are expressions of a solid truth in an exaggerated form, and simply serve to remind us of the inherent power of industry both mental and physical, at the same time affording us encouragement under apparent defeat, and showing us the fatuity of relinquishing hope under the most discouraging circumstances. Most of this world's progress is dependent upon hope. Impelled by laudable feelings of this nature, I wrote the following article, for instance, in January, I894, at the request of the proprietor of the New York World: "You ask my opinion as to the prospects of business for I894. You could not have put a question about which I should be less disposed to be prophetic. There is not much difficulty, perhaps, in making a diagnosis of the present condition of the patient, but if you ask me what is to be the course of his recovery, I must in return ask you, What are going to be the factors acting upon his enfeebled system during the process of convalescence? "We all know that the trade, the industry, and the finances of the country were, last summer and autumn, prostrated to a degree beyond all former experiences. But just what that portends as to the progress and the date of recovery is not to be determined off-hand. We are not to regard the panic of 1893 as one of the ordinary kind. It was not caused by industrial over-production, nor by financial inflation, such as comes, for instance, out of over-issues of securities for new railroads or other new enterprises; nor was it caused by over speculation and an excessive inflation of prices; nor by war, nor by sympathy with great European political complications. None of these ordinary causes of panic had anything to do with the great crisis of last year. The entire business of the country in all its departments of production, trading, financing, and credit was, as a rule, in a perfectly sound, conservative, and fairly profitable condition when the tidal wave struck us. It started and it progressed to its culmination under a sudden fright, lest the excess of silver introduced into our currency system might cause a run on the Treasury gold and compel a general suspension of gold payments, the fear being instigated by a sudden and very large export of gold. This blow at the credit of the government became, in its rebound, a still greater blow at the general credit system of the country at large. Lending at banks was suspended, and business had to be conducted on a cash basis, while sudden liquidation became universal, and failures were consequently unprecedented in number. "There was here surely havoc enough; never so much, never so cruel. But there is a most radical difference between a panic coming upon sound conditions and one precipitated by intrinsic rottenness; all the difference that there is between an accident to a man in vigorous health and to one weakened by constitutional disease. In one case, nature helps by a self-curative process; in the other, diseased organic conditions aggravate the mischief caused by the accident. For this reason, I look for a much more rapid recovery from the effects of the purely monetary causes of the panic than has followed our previous great crises; and, of course, the more so as the source of the silver alarm has been removed by Congress, and public opinion has shown its resolute soundness on that question. a " By this time, we should have witnessed a much larger measure of recovery than has actually appeared, had it not been for the intervention of a new disturbance of confidence arising from the introduction of measures for revolutionizing the commercial policy of the country. Without caring here to express my views either for or against the policy of the Administration in that matter, it is not to be denied that virtually our entire manufacturing industries earnestly regard the proposed large reductions of duty as vitally threatening their business, which is a most potential factor bearing on confidence, regarding which there can be no question that the interval of transition from the old conditions to the new could not be attended with anything short of widespread suspension of both manufacturing and trade; and, as a matter of fact, it is estimated by competent authorities that the retail business of the country is now curtailed to the extent of from 15 to 20 per cent. of its usual volume, while in most branches of manufacturing the contraction is double that proportion. " That is the condition of affairs now patent to everybody's eyes. It is so alarming that many cool-headed men even are scared out of all exercise of cool judgment, and ninety men out of every hundred are more or less hopelessly pessimistic about the future. I confess that I am unable to go to the full length of these forebodings. As a young country of marvelous wealth and unequaled powers of recuperation, we are capable of a rapidity of convalescence that can be matched by no other nation. As a largely self-dependent country, we are little exposed to suffer in sympathy with the causes that have prostrated the European commercial states and their colonial dependencies and trade connections. Europe is vitally dependent upon us; we can afford to be comparatively independent of Europe. In the next place, we have none of the debris of dry rot to get rid of. The equipments of our industries are fresh, complete, up to the most modern improvements, and only delayed by the getting up of steam, while capital is waiting in immense idle hoards to apply the impelling power, and the banks are prepared to afford as much support to business as they were giving on the eve of the unsuspected panic. These certainly are not the sort of conditions that are ordinarily found at this early stage after an ordinary panic; and for this, among other reasons, I do not expect recovery in this case to follow the pace of former tardy recoveries. " The most stubborn obstacle that now remains to be overcome is the suspension of business until the new tariff duties take effect. Here, also, I think the real probabilities are underestimated in the present gloomy public mood. We have already used up our stocks of merchandise to the verge of absolute exhaustion; our imports are declining to such an extent that the December arrivals of dry goods at New York were only one third of those of a year ago. With supplies in this condition, and with the current output of manufactures falling behind the requirements of consumption, it is not difficult to see that our closed factories must reopen long before the new tariff goes into operation; and, with the reduction in the prices of raw materials and the general concessions in wages that are taking place, there is no apparent reason why moderate profits should not be made upon an early resumption of operations. In proportion as work is resumed, labor will be better employed; and the better employment of labor will extend the market for goods. Under these conditions, the way seems clear to a gradual revival of business and a steady sliding into a healthier and more active condition of affairs. Any mere mood of feeling proves to be a transient sentiment among an active commercial people, and, in this case, we will soon recover our courage and cease to view the situation 'through a glass darkly.' By the close of I894, I expect to witness a degree of recovery far beyond what most of us now dare to predict. To that extent, I am willing to become a prophet." Now, this process of reasoning was based on a comparison of the past with the present, and the conclusions were drawn on premises that left out the surprises which never can be foreseen. Such results might have been as foreshadowed, even in the face of the semi-free-trade measure, had it not been for fresh agitation at the wrong time on the silver question in connection with the Sherman Act. Nobody can now dispute my right to reason on the practical consequences of the Wilson Law after it has cost the nation a positive deficiency debt of $200,000,000; to say nothing of the far greater loss in trade and commerce and the various national industries, together with the untold sufferings borne by the armies of idle laborers, the depressed and bankrupt condition of our farmers; and last, though not least, the business of Wall Street reduced to a state of stagnation never experienced prior to that time. I refer to the time between the passage of that measure and the inauguration of Mr. McKinley, and for a month or two after the latter event, while free-trade consequences were still at work and ably assisted in their depressing effect by obstructionists in the United States Senate.



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