Fifty years in Wall Street
There, as here, over-expansion in all directions had over-taxed the
money market and glutted the Bourse, the banks, and the speculative
capitalists with new issues of securities that were either unsalable, or
salable only at a ruinous sacrifice, owing to the heavy shrinkage in
prices, and the absence of demand at the low prices. This presents an
almost parallel case to our own, except as to the effect of socialistic
agitation.
We have too many blatant socialists here, but they are not planted in
congenial soil, and their demagoguery and schemes for the destruction of
society as it exists will yield no harvest, for in this great country,
where all are free and blessed with equal opportunities, there is no
reason, no just cause, or excuse for socialism. The agitation in favor
of socialism and its doctrines is not American. It is antagonistic to
American institutions, and comes almost entirely from those who have
fled from oppression and despotism in Russia and elsewhere in the Old
World to our shores, and who fail to see, as they should, that the
conditions which have given rise to socialism in Europe are entirely
different here. So socialism will never take root in the United States,
however much it may be agitated by those of foreign birth who
reciprocate our hospitality in giving them all the rights of citizenship
that we possess ourselves, by advocating the downfall and destruction of
our institutions and system of society, which has made this great nation
of free and independent citizens what it is to-day, the wonder of the
world.
The Bank of France has continuously felt, but resolutely fought against,
depressing foreign influences by tenaciously holding on to its gold, and
it attracted more of it recently from this country by paying interest in
transit. Both London. and Berlin have long been trying hard to get gold
from France, but without success. This determined policy, and refusal to
finance anything that would take money out of the country, is intended
to fortify the Bank of France and French investors against a possible
crisis due to their colossal holdings of Russian bonds. France is the
guardian and watch dog of monetary Europe.
While the situation in Germany is strained, that country is taking the
lead in European manufacturing enterprises, and it is forcing its trade
in all parts of the world. To its great expansion in industrial work,
the locking up of capital there, in industrial enterprises of all sorts,
is chiefly due. Tempted by great expectations capitalists have invested
in them very heavily, and induced by high rates of interest the banks,
and other large money lenders, have loaned enormously on industrial
securities for which there is at present little or no demand from
investors, and this conversion of their resources from a cash or liquid
form to a form much more fixed than they expected, has very largely
curtailed the supply of loanable funds to others, and caused or
aggravated the long existing monetary stringency in Berlin. Yet, strange
to say, Germany uses very few bank checks. The German Government,
however, is about to consider a plan for regulating their issue and use.
Even the Government salaries, aggregating $211,344,000, or 888 million
marks, a year, are paid wholly in specie. Here we see 18 million dollars
a month withdrawn from circulation, to return slowly. This is almost as
bad as our Sub-treasury system. No wonder Germany is pinched for money.
One indirect cause, hitherto overlooked, of the prolonged monetary
stringency in Europe has been the absorption of gold by Egypt, India and
China, and it has been sufficient to largely neutralize the effect of
the increased gold product of South Africa, Australia, America and other
countries. India has desired gold of late years, instead of silver
exclusively, as before, owing to the depreciation in value of the white
metal, and China has been secretly absorbing it for the same reason, and
with an ultimate view to placing that nation on a gold basis.
Egypt, however, for several years has been largely buying gold with the
proceeds of its large exports, which include a particularly fine quality
of long staple cotton that commands a much higher price than ordinary
cotton. This gold is extensively hoarded by the Egyptian capitalists
instead of being placed in the banks there, and entering into the
monetary circulation. The consequence is that it is lost sight of, and
lost to the world outside, for Egypt is not only distrustful of banks,
but imports very little in comparison with what it exports. So it is
enabled to keep what it gets in gold. This seems to me an answer to the
question, “What becomes of the new gold?”
The world’s peace in the future is more likely to be disturbed on the
Pacific Ocean side than on the Mediterranean. I predict that within the
next few years all the great European nations will combine, in friendly
relations, offensive and defensive, against the balance of the world,
which means against China, Japan and India, that represent two-thirds of
the world’s population. If the United States wants to stand aloof and
avoid being drawn in on one side or the other, the Philippines must be
parted with. The contest of the European nations will be for commerce in
the East, and the European powers, especially Russia and Germany, will
do all they can to breed trouble between the United States and Japan and
would be glad to have both nations crippled through a war. So long as we
hang on to the Philippines we will have a war cloud hanging over us.
England, owing to her alliance with Japan, is in a better position to
take care of the Philippines than we are, and if we could make an
honorable deal with England to exchange them for her South American
possessions, it would be a good thing for us, as, when the Panama Canal
is built, those islands will be of much more advantage to us than the
Philippines, and by thus removing the bone of contention we would secure
permanent peace. The Philippines will be a great source of expense to us
without any possibility of obtaining corresponding advantages;
therefore, why retain what will keep a sore spot open as long as we hold
on? We are not a colonizing nation—we have territory enough of our own
within our own border, while England, on account of her meagre
dimensions, requires colonizing for self-existence.
I am inclined to think that it may turn out to have been a mistake for
Commodore Perry to have opened the ports of Japan to the world—a caged
lion being safer than one let loose. It resulted in Japan building
herself up as a power; then followed the war with China, which was
instrumental in breaking down China’s exclusive walled-in method of
existence. So that now China is also opened to the world like Japan; her
350,000,000 of people will get themselves on a war protecting basis,
which will naturally make an alliance with Japan a necessity, and such
an alliance will after a while require the European combination as an
offset; otherwise, sooner or later some of the European nations will be
apt to meet the same fate as old Rome at the hands of the
barbarians—simply wiped out of existence. China and Japan will fight for
their self-preservation and commercial interests. The 300,000,000 in
India will fight for release from Great Britain’s rule, and backed by
fanatical inspiration, under skilled leadership, will make a dangerous
foe sometime. Hence India’s natural desires will make her akin to China
and Japan, arrayed against any foreign foe. So India, China and Japan
and the rest of the Orient, when well disciplined and well equipped and
led by Japanese generals, will require the combined European nations to
hold them in check. The European nations have now had all the wars they
want and they have gained through them their present forceful positions
of independence, hence all future great wars will be to keep the
900,000,000 of people in Asia in subjection, and it will need all their
combined power to do so.
I will now come nearer home and glance at the rising star of the South.
The continued material prosperity of the South is one of the best signs
of the times, and it has given a legitimate forward impulse to the whole
country. This section of the United States is in its natural resources
more favored than any other, and presumably will ultimately become the
richest. That indeed is its natural destiny under the industrial and
agricultural development which will come from the growth of population,
the consequent increase in the supply of labor and the progress of
education. Here, indeed, you have a splendid prospect where distance
lends enchantment to the view, and in aiding, encouraging and
stimulating this development, on good business principles, none will be
able to render better service than you Southern bankers. Already the
South is progressing in actual agricultural and industrial wealth from
year to year, and day to day, at a rate that would have seemed fabulous
not very long ago; and the banker shares with the farmer this rapidly
increasing prosperity, especially if cotton is selling at more than
thirteen cents a pound, or even at ten cents. It is, therefore, to the
banker’s interest to co-operate with the farmer, for by so doing the
benefit becomes mutual. You gentlemen, as Southern bankers, are favored
by Providence in being where you have such a wide and splendid field for
doing good to others on a safe and conservative basis, at the same time
that you are building up the South, and doing good for yourselves in the
time-honored business of banking.
While the South is increasing rapidly in actual and substantial wealth,
it is a good sign that this wealth is not going into a few hands, but
being widely distributed among all grades of the population. The city,
the town, the village, the factory and the farm give equal and abundant
evidence that all are sharing this boon of material prosperity,
resulting from their own industry and the Southern country’s legitimate
development. You have, figuratively speaking, only to tickle the soil
with a hoe, and it smiles with a harvest.
The South produced last year crops and other raw products valued at two
thousand millions of dollars, or four hundred and fifty millions more
than all the United States, outside of the South produced in 1880; and
last year also its manufactured products were valued at two thousand
five hundred millions, or five times more than it manufactured in 1880.
This is the right kind of expansion.
Last year, too, the increase in the assessed value of property in the
South was eleven hundred millions, or three hundred and fifty millions
more than the increase between 1890 and 1900. Contrast the increase of
seven hundred and sixty millions in that ten-year period with the
increase of over sixteen hundred millions in the last two years—1905 and
1906.
Such growth is as phenomenal as it is gratifying, not only to the people
of the South but to the people of the whole United States, and it is not
a forced but a natural growth. We see it most conspicuously in the
development of its industries, for it has now two hundred and fifty
millions invested in cotton mills, an amount exceeding the capital
invested in cotton mills in all the United States in 1880. This alone is
a grand exhibit.
The South also is making pig iron at the rate of three million five
hundred thousand tons a year, more than all the rest of the country made
in the year 1880, and the capacity of the South for iron and steel
making is practically unlimited. Turning to bituminous coal, the South
mined eighty-five million tons of it last year, and in the last fiscal
year the foreign exports of all kinds from southern ports were valued at
seven hundred and thirty-four millions against only about two hundred