THEIR CAUSES AND EFFECTS. BY HENRY C. CAREY. PHILADELPHIA: INDUSTRIAL PUBLISHER, No. 406 WALNUT STREET. 1864. .Car FINANCIAL CRISES: THEIR CAUSES AND EFFECTS. LETTER FIRST. DEAR SIR.In your recent and highly interesting volume, which I have just now read, there is a passage to which, on account of its great importance as regards the progress of man towards an ultimate state of perfect freedom or absolute slavery, I feel disposed to invite your attention. It is as follows: "I am pained to hear such bad news from the United States-such accounts of embarrassments and failures, of sudden poverty falling on the opulent, and thousands left destitute of employment, and perhaps of bread. This is one of the epidemic visitations against which, I fear, no human prudence can provide, so far, at least, as to prevent their recurrence at longer or shorter intervals, any more than it can prevent the scarlet fever or the cholera. A money market always in perfect health and soundness would imply infallible wisdom in those who conduct its operations. I hope to hear news of a better state of things before I write again." Is this really so? Can it be, that the frequent recurrence of such calamities is beyond the reach of man's prevention? To admit that so it certainly was, would be, as it seems to me, to admit that Providence had so adjusted the laws under which we exist, as to produce those "epidemic visitations" of which you speak, and of which the direct effect, as all must see, is that of placing those who need to sell their labor at the mercy of those who have food and clothing with which to purchase it-increasing steadily the wealth, strength, and power of these latter, while making the former poorer and more enslaved. Look around you, in New York, at the present moment, and study the effects, in this respect, of the still-enduring crisis of 1857. Turn back to those of 1822 and 1842, and see how strong has been their tendency to compel the transfer of property from the hands of persons of moderate means to those of men who were already rich-reducing the former, with their wives and children, in thousands, if not even hundreds of thousands of cases, to the condition of mere laborers, while largely augmenting the number and the fortunes of "merchant princes" who have no need to live by labor. Look around you and study the growth in the number of your millionaires, side by side with a pauperism now exceeding in its proportions that of Britain, or even that of Ireland. Look next to the condition of the men who labor throughout the country, deprived as they have been, and yet are, of anything approaching to steadiness of demand for their services, in default of which they have been, for two years past, unable suitably to provide for their wives, their children, or themselves. Study then the condition of the rich money-lenders throughout the coun (3) try, enabled, as they have been, to demand one, two, three, and even four and five per cent per month, from the miners, manufacturers, and little farmers of the Union, until these latter have been entirely eaten out of house and home. Having done all this, you can scarcely fail to arrive at the conclusion, that unsteadiness in the societary movement tends towards slavery that steadiness therein, on the contrary, tends towards the emancipation of those who have labor to sell from the domination of those who require to buy it—and that, therefore, the question referred to in the passage I have quoted, is one of the highest interest to all of those who, like yourself, are placed in a position to guide their fellow-men in their search for prosperity, happiness, and freedom. The larger the diversity in the demand for human powers, the more perfect becomes the division of employments, the larger is the production, the greater the power of accumulation, the more rapid the increase of competition for the purchase of the laborer's services, and the greater the tendency towards the establishment of human freedom. The greater that tendency, the more rapid becomes the societary action. its regularity increasing with every stage of progress. In proof of this, look to that world in miniature, your own printing-office, studying its movements, as compared with those of little country offices, in which a single person not unfrequently combines in himself all the employments that with you are divided among a hundred, from editor-in-chief to newsboy. The less the division of employments, the slower and more unsteady becomes the motion, the less is the power of production and accumulation, the greater is the competition for the sale of labor, and the greater is the tendency towards the enslavement of the laborer, be he black or white. The nearer the consumer to the producer, the more instant and the more regular become the exchanges of service, whether in the shape of labor for money, or food for cloth. The more distant the producer and consumer, the slower and more irregular do exchanges become, and the greater is the tendency to have the laborer suffer in the absence of the power to obtain wages, and the producer of wool perish of cold in the absence of the power to obtain cloth. That this is so, is proved by an examination of the movements of the various nations of the world, at the present moment. Being so, it is clear, that if we would avoid those crises of which you have spoken-if we would have regularity of the societary movement—and if we would promote the growth of freedom-we must adopt the measures needed for bringing together the producers and consumers of food and wool, and thus augmenting their power to have commerce among themselves. The essential characteristic of barbarism is found in instability and irregularity of the societary action - evidence of growing civilization being, on the contrary, found in a constantly augmenting growth of that regularity which tends to produce equality, and to promote the growth of freedom. Turn, if you please, to the Wealth of Nations, and mark the extraordinary variations in the prices of wheat in the days of the Plantagenets, from six shillings, in money of the present time, in 1243, to forty-eight in 1246, seventy-two in 1257, three hundred and thirty-six in 1270, and twenty-eight in 1286. That done, see how trivial have been the changes of France and England, from the close of the war in 1815, to the present time. Next, turn to Russia, and mark the fact, given to us by a recent British traveller, that, in those parts of the country that have no manufactures, the farmer is everywhere "the victim of circumstances" over which he has no control whatsoever—the prices of his products being dependent entirely upon the greater or smaller size of the crops of other lands, and he being ruined at the very moment when the return to his labor has been the most abundant. Look then to the changes throughout our own great West in the present year-wheat having fallen from $1.30 in May to 50 cts. in July-and you will see how nearly the state of things with us approximates to that of Russia. Compare all this with the movements of England, France, and Germany, and you will, most assuredly, be led to arrive at the conclusion, that the stability whose absence you deplore, is to be sought by means of measures looking to the close approximation of the producer and the consumer, and to the extension of domestic commerce. Five years since, British journals nearly all united in predicting the advent of a great financial crisis, the seat of which would be found in France and Germany. More careful observation might have satisfied them that the tendency towards such crises was always in the direct ratio of the distance of consumers from producers, and that the real places in which to look for that which was then predicted, were those countries which most seemed bent on separating the producers and consumers of the world, Britain and America-the one seeking to drive all its people into the workshops, and the other laboring to compel them all to seek the fields, and both thus acting in direct defiance of the advice of Adam Smith. The crisis came, spending its force upon those two countries-France, Belgium, and Germany escaping almost entirely unharmed, and for the reason, that in all these latter the farm and the workshop were coming daily more near together, and commerce was becoming more rapid, free, and regular. Russia and Sweden have, however, suffered much—the crisis having become, apparently, as permanent as it is among ourselves. Why should this be so? Why should they be paralyzed, while France and Germany escape uninjured? Because, while these latter have persisted in maintaining that protection which is needed for promoting the approximation of producers and consumers, the former have, within the last three years, departed essentially from the system under which they had been so rapidly advancing towards wealth and freedom-adopting the policy advocated by those writers who see in the cheapening of the labor and of the raw materials of other countries, the real British road to wealth and power. Throughout Northern and Central Europe, there has been, in the last half century, a rapid increase in the steadiness of the societary movement, and in the freedom of man that increase being the natural consequence of increased rapidity of motion resulting from a growing diversification in the demand for human services, and growing competition for the purchase of labor. In Ireland, India, Spanish America, and Turkey, the reverse of this is seen-producers and consumers becoming more widely separated, and exchanges becoming more fitful and irregular, with growing competition for the sale of labor. Why this difference? Because the policy of the former has been directed towards protecting the farmer in his efforts to draw the market nearer to him, |