WHY THE TIMES ARE HARD.

New Zealand Tablet, Volume IV, Issue 185, 13 October 1876, Page 8

WHY THE TIMES ARE HARD.

From the middle of 1870 to almost the middle of 1871 there -was the Franco-German war. Then came peace — the indemnity of two hundred and twenty millions sterling paid to Germany, and the schemes of vast and rapid expenditure occasioned in that country by the sudden acquirement of so much riches. Two or three years previously Austria and Hungary had become one nation and had entered upon a free and constitutional life. Italy had become unified, and all over Germany there had been a removal of the obsolete and autocratic impediments to labor and skill. The Suez canal ■was opened at the end of 1869. Telegraphs -were being carried to the farthert parts of the commercial world ; and by successive inventions steam vessels had been brought to a point of economy •which gave them the command of the longest voyages. But besides all these influences — nearly all of them in their spheres and degrees revolutionary — the United States since 1867 had been constructing railways at a pace never before reached in that or any other region ; and not railways only, but canals, docks, wharves, •warehouses, and every sort of fiyed investment directed to the extension, of business, commerce, and manufactures. In Europe there had been since about 1862 the regular appearance as large borrowers of a group of half -barbarous states never before heard of in the money-market. Turkey, Egypt, Honduras, Peru, Eoumania, Venezuela, and the whole tribe of South American settlements obtained year by year tens of millions sterling, and applied at least some portion of the money to the purchase of English materials and labor. The effect of the war of 1870-71 in stopping nearly all productive labor and enterprise in France and Germany — the waste, in short, of gigantic hostilities carried on for a twelve-month — and the delirium of the peace and its accompanying ransom in the conquering nation threw upon this country in 1871-3 the task of supplying the urgent demands of no small part of Europe. To the fortunate persons who happened to be in possession of the means of Bupply — notably the owners of coal-mines and iron-works — the results were fabulous. As we all well remember, nothing was talked of but colossal fortunes made in a few months, and an advance of wages and prices beyond all example. The whole industrial and commercial machine was being driven with a velocity and subjected to twists and alterations it could not long endure. A. pause came in the summer of 1873. The panic in New York in September of that year told very plainly that in the United States the tension had become insupportable, that floating capital was exhausted for a time, and that cost of production had destroyed consumption. Exactly the same phenomena repeated themselves in Germany, Austria, Russia, Holland, and Belgium. In all these countries since the autumn of 1873 there has been a process of relapse and retreat from a state of things in which expenditure of all kinds had outrun the first income and then the floating capital ; in which wages had long exceeded the intrinsic value of the work performed in exchange for them, and in which the market prices of securities had been raised excessively by a belief in future profits very far larger than the community could furnish or afford. The case of the United States and of Central Europe ia in effect our own. The six years 1867-73 included, as regards commerce and manufactures, a great number of events and changes, each of them more or less revolutionary than any preceding period of the same length — events and changes, too, which affected a greater number of countries and regions. Considering the profound character of the disturbing causes, the wonder is that the reaction has not been even more disastrous than it has been and is ; and it is precisely the amplitude of the arresting and compensating forces now at the command of industry and commerce which affords the best reason for believing that recovery is certain, and perhaps not far distant.—' Pall Mall Gazatte. 5