THE DEPRESSION IN THE UNITED STATES.
AMONG the innumerable financial phenomena which have developed themselves contrary to expectation, during the course of the current year, none has deceived calculations more completely than the commercial temper of the American Republic. The extreme depression which ruled in the United States between the dates of the Chicago Convention and the Presidential election was natural enough ; the country was threatened with the domination of a new party supported by revolutionary forces, and the trading community was more than justified in going at half-speed under the circumstances ; but it was the general belief of observers, both English and American, who were best qualified to form an opinion, that the commercial position of the country was satis- factory enough apart from political complications, and that if these were once cleared out of the way, the path would be smooth and open towards a revival of buoyant prosperity. The Americans had already, long before the election, and partly owing to the apprehension connected with its approach, solved in a temporary manner one of their chief problems, the difficulty of keeping gold in the country, owing to the pressure of their enormous stock of redundant paper currency. By restricting their purchases of European goods and re- ducing the extravagance with which they had indulged in the luxury of European travel, and by forcing upon the European markets every commodity of any kind that would fetch a price, they had created a balance in their favour which had drawn-large amounts of European gold into their hands, and so had allayed for the time being the fears of gold shipments and the depletion of the Treasury reserve.
Several fortunate accidents had added to the chances in favour of commercial prosperity and activity in the United States. The rise in the price of wheat, and the coincidence of a fine American crop with scarcity in most of the chief wheat-supplying countries, and an improve- ment both in the value of and the demand for cotton, had brought back cheerfulness and hope to the American farmer—who had lately been counted on as the mainstay of the revolutionary party—promised fine traffic receipts to the railroads, and argued good trade for all the mer- chants and dealers whose business depends on the welfare of the agricultural and transport interests. It was not possible that these all-important departments of com- mercial life could do well without the whole community sharing to some extent in their prosperity, so that even those rho ventured to doubt whether Mr. Bryan's chances were altogether hopeless, readily admitted that, if and when he should be defeated, there would be at least a short spell of commercial activity, and probably also a wild outburst of speculation, through the length and breadth of the United States, which would react upon English trade, by reviving the energies of those industries which regard the Americans as their best customers.
These expectations have been disappointed in almost every respect. The political bogey was laid amid a deafening fanfare of trumpets, and for days and weeks the American people and Press seemed to devote their whole energies to patting themselves on the back, and vowing that they had won a great victory. These con- gratulations at last became so tedious that one of the London financial papers curtly suggested that it was time for the United States to" cut the cackle and get to business;" but so far there is no sign of their intention of doing so. Rumour spoke loudly, during the first few days after Mr. McKinley's election had been announced, of the large orders for British goods which had been received from America, large enough to turn the balance of trade again and bring some of our gold back again to London ; and yet the Board of Trade Returns for November told the same tale as those of previous months,—the low level of the sales of our staples to the United States had had a serious effect on the sum of our export trade. And not only are the Americans buying little abroad, but all the most trust- worthy indications show that their internal trade is equally stagnant and unsatisfactory. The railroad traffic receipts, as sure a test of trade as can be found, show decrease after decrease every week, and the figures of bankers' clearings furnish another proof of the inaction that still paralyses American commerce. As the result of their sales of wheat and cotton, the United States, or at least their monetary centres, are flooded with gold, and money is so plentiful that drafts on London are not forwarded for collection, but are held back by speculators in exchange, who can borrow money on their security. And yet this monetary plethora has put no heart into American commerce, which still lan- guishes just as dolorously as it did before the election. As far as puzzled observers on this side of the water can judge, the reasons for this continued despondency are chiefly political. In the first place, the silver bogey may have retreated to the shades before the crowing of the " sound-money" cock, but it is by no means laid and done with. Mr. Bryan when last heard of was lecturing on free coinage and receiving $50,000 a year for so doing. We mention this merely commercial detail because the Americans themselves will be the first to acknowledge that free silver cannot be dead as long as there are " dollars in it." Secondly, Mr. McKinley and his advisers seem to be convinced that they have done all that was needed in the interests of sound money by defeating free silver, and that the currency system, which has been the cause of so many and such disastrous crises and panics during the last few years, presents no opportunities for the exercise of reforming ingenuity. Mr. Hanna has publicly stated that, in his opinion, "there is nothing alarming in the currency position." This statement from the lieutenant should be inscribed and framed side by side with that of his chief, to the effect that " Trusts and corners are fostered by Free-trade." They are an instructive pair of obiter dicta from the lips of the two men who are believed to hold the chief control, for the present, of the political destinies of the United States. There is nothing alarming, says the chief wirepuller ; but the people are justified in their conviction that the magnificent natural resources of the country and the untiring energy and versatile enterprise of its citizens ought, if rightly directed, to be blest with steady prosperity instead of being harassed by constant kaleido- scopic changes from spasms of fitful welfare to paroxysms of crisis and depression. The persistence with which Mr. Cleveland and his able Fnancial Secretary have exposed in repeated Messages and statements the drawbacks of the present system—which makes the Government the keeper of the gold reserve, and yet leaves it helpless without any power to influence the money market or the foreign exchanges —has had some effect on the business community ; and it may be inferred from the continuance of commercial lassitude that public opinion was better informed than Messrs. McKinley and Hanna, and was waiting to see whether, besides the defeat of free silver, a genuine effort in the direction of currency reform might be expected. Instead of any such measure, " tariff first " is the order A the day, and trade is once more to be crippled and interfered with to suit the whims of the political bosses ; no man knows what precise shape the next measure of iscal reaction will take, whether it will pass the Senate, or now long, if it does, it will spend in doing so ; everything .s uncertain, except that the commercial sky is anything out clear, and that there are equally good reasons now, ss before the election, for traders to go at half-speed. During the last few days the Cuban question has be- lome acute. The Wall Street market took the action A the Senate's Foreign Relations Committee very seriously, receiving it, in fact, with a collapse in prices as severe as that which welcomed Mr. Cleveland's Venezuela Message exactly a year before. The London market made light of the matter, and pulled prices up %gain ; but it remains to be seen which market was right in its first impulse. The Cuban question, however, is one of scute panic, and so is beside that of the chronic depression with which we are dealing. If the Americans intend to plunge into the stress and expense of a war with Spain, the depression will be lost sight of in the panic ; but if this cloud passes by, the experience of the last seven weeks shows that commercial prosperity will receive American wooing coyly, as long as the belief prevails in influential quarters that " there is nothing alarming in the currency position."
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