TOPICS OF THE DAY.
THE CONTINUANCE OF DEPRESSION.
WE cannot profess to be much interested in calculations as to the Budget of next April. Only one-half the financial year has passed, there is no certainty as to the prospective ex- penditure, and the calculations may have to pass through a mind differing greatly from Sir Stafford Northcote's. Even among Tories, every financier is not a smooth and educated Micawber. If there is a disaster in Afghanistan, we shall have a winter Session and a supplementary Budget ; and if we have not, the second half of the financial year may differ con- siderably, for better or worse, from the first one. The interest- ing fact of the Quarterly Revenue Returns is not the Chancellor of the Exchequer's disappointment, but the fall in the Treasury receipts from Customs and Excise, and the evidence contained in that fall that the people are not so prosperous as they were, that the " depression " continues, and that it has at length affected all classes but the very rich. A fall of half a million in the revenue from taxable articles means a great deal, for these are now all luxuries ; no duties have been remitted, and the English people, as financiers know by experience, never economise until they are compelled. It is clear, therefore, that they are,, as compared with former periods, suffering ; and we confess, with every wish, like the rest of the world, to believe that the suffering, will end immediately, we see no reason whatever for the belief. We rather think, on the contrary, that the depression will grow worse. It has now lasted five full years, and in every one of those years it has been alleged that the fall in profits, which is the princi- pal cause of the suffering, though there has been a decline of sales in some businesses as well, would speedily be at an end. A few weeks ago this cry was repeated with energy, and even now a spurt in the iron trade, no doubt important and beneficial to that particular industry, is made the text for a cry that the " tide is turning at last." Where are the signs of it ? It may be about to turn, for what we or anybody else know, for prospective finance is almost as unsatisfactory as prospective strategy ; but where is the con- clusive proof that it has turned ? The iron-founding trade is better, but the iron-mining is not, perceptibly, while the old mining industries, lead, tin, copper, and coal, are profitless, where they are not stopped,—copper, for example, does not pay diggers' wages ; the cotton and woollen manufactures have hardly ever yielded less—just read the returns of the co-operative mills ; and the great manufacture of all, that of food, will yield no profit at all, will, if the farmers may be trusted—though, no doubt, they exaggerate—over all England, taken together, result in an actual loss of capital. The classes connected with that industry are the greatest single order of buyers, and for months, certainly till next harvest, they will restrict their purchases to the'barest necessaries. We have not only to reckon up their losses, but the effect of the panic about those losses upon landlords', tenants', and country bankers' minds. They will buy as little as possible, they will " knock down " sellers as much as possible, and they will postpone every payment.they can by any contrivance avoid. The country bankers, at all events, know that this is true ; and so, unhappily, do the country tradesmen, who are at their wits' end, and grow per- fectly savage if even single customers are lured away by the attractions of the Stores. Agricultural wages cannot rise under such a position of affairs, and under such a condition of appre- hensiveness, the full result of which, it must be remembered, will only now begin to be fairly felt. There are no symptoms of ex-
pansion in foreign trade, except, no doubt, a strong spurt in tea, resulting from the country grocers having pushed caution too far, and from the clearing-out of some unsound dealers ; the civilised States are putting on higher duties—for example, the new German tariff scarcely tells yet—while the uncivilised seem to have no money. China is still not recovered from a famine which, slight as was the attention it excited in Europe, is believed by English officials on the spot to have. slaughtered eleven millions of people ; while India, worried with new wars, with reduced Public Works, with the effects of the past famine, and with what appears to be a crisis in agrarian finance—that is, in the position of the free peasantry towards the money-lenders, who hoard, and do not spend—is in no condition to send a large in- crease of orders. Neither in the Turkish Empire nor in Russia is there any spare money ; Central Europe is taxing everything to pay for more soldiers ; while in France—perhaps the richest country of earth—there is a bad harvest of cerea's„ a poor harvest of wine, and a disposition to use the savings of the past two or three fat years in a mad game of speculation,, which will end, and end perhaps speedily, in a crash. The rise of price in all investments has no reason for it, while of the scores of new Companies floated every month in Paris, and run up to a premium before they have done work,. not half can return a profit. How, under such circumstances,. is foreign trade to increase ?—and it is an increase, a large increase, that is required, the regular demand being amply supplied by men who, between over-production and competi- tion with each other, are working for bare -livelihood, or at a loss. As to the internal trade, a single fact is sufficient. The borrower does a favour to his Bank,, and money can be had for any reasonably colourable purpose of trade at less than one per cent. If it does not pay to take• up money to trade with at that price, irade is not flourishing. People talk of the millions in the Bank, and the " glut of money," and the " plethora in Lombard Street," but if new trade were stirring, or likely to stir, money would very soon- rise to its normal price, which, whatever it may be, is certainly not less than a third of interest on Consols. No doubt there is still very extensive trade going on, and the total volume of production, though it begins to decline, is not seriously reduced ;, but the quantity is kept up by competition, and the work is almost without profit, while it is increased trade sufficient to employ useless capital and keep up profit which is really; required.
Every one is, of course, agreed that the depression must come to an end, and we at least have no intention of trying to dissipate a universal hope ; but the point is not whether a. change will come, but whether it will come immediately or. speedily. We can see no reason to believe that it wilt arrive before the next harvest has restored prosperity, or what is still more necessary, confidence, to agricul- ture. No State is likely to be cured of Protection before next autumn. It is hardly possible, humanly speaking, that the Asiatic populations, with war, or insurrection, or scarcity almost everywhere, should recover before that. We hear of no new discovery in the least likely to give a great impetus to any manufacture, nor if one were made, could its effects be seriously felt within less than a year's delay. The increase of population, always going on hardly catches up the increase of production, while its effect in driving down wages is limited by the recom- mencement of emigration to America. The shifting of capital from profitless to profitable industries, of which the old e'ono- mists used to write as a panacea, must, of course, go ; but the experience of the past five years shows that the process is. excessively slow, as slow in manufactures as it is in agriculture. There are profitable industries becoming visible, as, for- example, wheat-growing in America, and mining in many- parts of America and Farther Asia ; but the old economists- forgot one difficulty, the difficulty created not only by the mass of fixed plant which a modern manufacture developer„ but the mass of fixed habits and ideas. Men not actually in want, retaining their capital, though it is profitless, are• wonderfully slow to embark in new businesses for themselves, while the reluctance to trust capital out of their own hands, rather increases than diminishes. As we have so repeatedly pointed out, the supply of honest agency is indefinitely less than the world wants, and men fretting under 1 per cent. here will go on earning it, rather than send away money to distrusted agents to earn 20 per cent in Manitoba, California, or Japan. The transfer is slow, the water has to be pumped, instead of running naturally, and there is no reasonable ground for believing that the pace will be greatly increased within the next twelve months. And finally, there is no reason to believe that positive losses will be made up, that Spain, and Turkey, and Egypt, and the Spanish Republics will pay any great portion of what they owe, or that the immense " shrinkages," like the fall in the value of houses, farms, shops, and many articles of natural pro- duce, which are comparatively so little noticed, will be rapidly made up, still less that there will be an inflation of prices.
All that will certainly happen on thc good side is that the communities pressed by poverty, or, which is more effectual, by the alarm of poverty, will reduce wasteful expenses, will become thrifty both in business management and household expenditure, and will in that way heap up month by month a great volume of. savings. That process, which we have all witnessed in France since 1870, will make the reaction sharp when it does come, and strengthen all men's hands to use opportunities as they arrive ; but the process is slow, and when complete, the money may be used as now in France, for speculation, and not work. We can see no solid reason for hoping, much less expecting, that with Asia in turmoil, Central Europe and America inclining to Protection, an utterly bad harvest, and a Government which combines wastefulness and failure, the depression from which the country suffers will be over before the harvest and the general election of next autumn.
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