3 JULY 1858, Page 19

COMMERCIAL DEPRESSION.

Afaceles.field, 29th June 1858.

Sue—Subscribing to all that you say on the degradation of the mercan- tile and commercial character by the proceedings of the large joint-stock companies, I doubt if you assign sufficient value, in estimating the causes of the present stagnation in business, to the lessened ability to consume, on the part of the middle and working classes.

For some years everything had gone ahead,—was in a state of "pro- gress," to use the cant of the day ; joint stock-banks made money cheap and discounts easy, and thus every raw article rose iu value, and in an accelerating ratio, making fortunes as it went ; fostering luxury, and sti- mulating expenditure. During' this stage of the process it is called " spirit" and "enterprise." Thus in the two articles to which I especially confine myself, cotton rose about 50 per cent, and silk as much or more. But whilst this was going on, manufactured goods had kept creeping up, although never so as to overtake the raw material, and the buyers at the counter begun to limit their purchases,—the drapers, fearing a drop, did the same —the wholesale buyers were severely limited by their employers, who saw a cloud in the sky ;—stocks accumulated—prices took to falling— one sacrifice begot another, and in the end the working classes could only get half employment and at lower wages, and cotton and silk fell to the former prices. "Enterprise" had now, as on former occasions, become " over-trading."

Independently of the shock to credit, and all the contested results of the monetary system, the actual loss in the value of property is something terrific, and is only yet going through the process of realization. The easing of the money market enabled holders to get discounts and keep their com- modities out of the market for a time but the bills are now coming round, I

and the worst must be encountered. It is a very significant fact that, abun- dant and cheap as money is, in the market, that is not the case in trade; and any City warehouseman will tell you that he never knew money much scarcer, nor so small a proportion of accounts paid in cash. I am afraid of being too prolix for your space, and prefer hastening to a conclusion, perhaps at the cost of being illogical. I believe that in looking to the present state of the money market, in addition to the causes pointed out by you, sufficient importance has not been attached to the following considerations.

1. The effect on consumption of the stagnant condition of the staple manufactures from October to April last. Nor is this yet over. Although in the textile fabrics there is much more employment, we have not yet reached our normal state ; and in the different stages of the iron trade, and processes of the pottery manufacture, little improvement has yet been ex- perienced. 2. All these considerations apply to the numerous classes who employ the labourer, and all the auxiliary trades which hang on them. All are spend- ing as little as they can. 3. The limitation of business, and the reduction of values are requiring a much less amount of capital than when we were at the top of our pros- perity. I saw a letter from Shang-hai a month ago which spoke of a cer- tain quality of raw silk as being purchaseable to cost, in London, 13s. per pound—" last year," the writer added, " we were giving 27s. for the same article here."

4. And lastly, and it is perhaps comprehended in the former divisions, it has always appeared to me that in investigating the causes of great fluc- tuations, too much importance has been attached to the state of the money market, and too little to the effect of a stimulated or diminished consump- tion ; for by the latter all must stand or fall in the end. I could say much more, but a constant reading of near thirty years has instructed me in the value of your space. I have laboured like the poet, and