PROSPERITY.

The periods of protection in the United States have been the periods of prosperity. The periods of prosperity have been those of protection. In the first half of the little more than a century of our existence under the Constitution protection and low tariff alternated at comparatively frequent intervals. In the second half protection has been the rule, low tariff the exception. In the 48 years from 1860 to 1908 there have been 45 years of protection and 45 years of prosperity, 3 years of low tariff and 3 years of adversity. To be sure, there were during the long period of protection certain financial disturbances, due to incidents and causes which had no relation to, and were not affected by, the system of raising of revenues, but these were exceptions which proved the rule of general prosperity as an accompaniment of protection.

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Measuring from 1812, the date of the first protective tariff, to 1861, the beginning of what may be termed the permanent period of protection, there were many experiments with free trade and protection. "During that long period," said the late James G. Blaine, in his celebrated reply to William E. Gladstone published in the North American Review in January, 1890, "free trade tariffs were thrice followed by industrial stagnation, by financial embarrassments, by distress among all classes dependent for subsistence upon their own labor. Thrice were these burdens removed by the enactment of a protective tariff. Thrice the protective tariff promptly led to industrial activity, to financial ease, to prosperity among the people; and this happy condition lasted in each case until illegitimate, prolific combinations precipitated another era of free trade. an offset to the charge that free trade tariffs have always ended in panics and long periods of financial distress, the advocates of free trade point to the fact that a financial panic of great severity fell upon the country in 1873 when the protective tariff of 1861 was in full force. The panic of 1873 was widely different in its true origin from those which I have been exposing. The Civil War had sacrificed on both sides a vast amount of property, a half million men had been killed, and a million more disabled; the public debt that must be funded reached nearly 3,000 millions of dollars; * * two great calamities in the years immediately preceding had caused the expenditure of more than two hundred millions of dollars suddenly withdrawn from the ordinary channels of commerce; the rapid and extensive rebuilding in Chicago and Boston after the destructive fires of 1871 and 1872 had a closer connection with the panic of 1873 than is commonly thought. Still further, the six years of depression from 1873 to 1879 involved individual suffering rather than general distress. The country as a whole never advanced in wealth more rapidly than during that period. The business distress was relieved and prosperity restored under protection, whereas the ruinous effects of panic under free trade have never been restored except under protection."

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This masterly analysis by Mr. Blaine of the relation of protective tariffs to prosperity and of great financial depressions in their relation to low tariffs has been fully justified by the events since it was written. The long period of depression which followed the return to low tariff immediately succeeding Mr. Blaine's defeat for the presidency continued during that entire period of low tariff and until relief was obtained by a return to protection. Following the reestablishment of protection in 1897 came an immediate restoration of prosperity, which continued steadily until the great disturbances in world finances resulting from the Boer and Russo-Japanese wars, and the local disturbances resulting from the great losses consequent upon the Baltimore and San Francisco disasters, which paralleled the Chicago and Boston disasters of 1871 and 1872, referred to by

Mr. Blaine as closely connected with the panic of 1873, and fully justifying his statement that financial depressions under protection are due to momentary causes and are but temporary in duration.

That the panic of 1907 was due to the great causes above referred to and to the lack of sufficient currency to finance the great undertakings consequent upon the tremendous prosperity which had come to the country under the decade of protection is now generally conceded, as will be seen from the quotations which follow from distinguished writers upon, and students of this subject. That it was merely a financial panic, temporary in its existence and not a great industrial depression reducing em-. ployment, wages, and prices of the products of labor, such as that accompanying the Wilson low tariff, will be equally apparent by a comparison of conditions in the summer of 1908, ten months after the panic of 1907, with those of the summer of 1896, after three years of low tariff and accompanying industrial, as well as financial depression. The public soup houses, the Coxey armies, the thousands compelled to sacrifice self respect and ask and accept charity and the millions unsuccessfully seeking employment, which characterized the industrial panic accompanying the low tariff period, 1894-7, contrast strongly with conditions to-day.

Business Improvements in 1908.

That business conditions have already greatly improved and that the financial disturbance of eight months ago is not to result in general business depression is now generally conceded.

The New York Journal of Commerce (Democratic) of June 1, 1908, announced the resumption of work on full time in large numbers of the New England cotton and woolen mills. The same issue reports from Paducah, Ky., the big hosiery mills of that city running day and night in the hope of catching up with orders.

The Philadelphia Ledger of June 2d reports the Coplin Cement Manufacturing Company as working day and night with its entire force, while large numbers of other industries were reported as increasing their force of employees and working on full time.

Dispatches from St. Louis published on June 1st, state that 17,000 names were on June 1st added to pay rolls in St. Louis and vicinity, and that $5,000,000 worth of goods had been sent from the St. Louis houses to manufacturers within a fortnight. The New York Evening Post (Democratic) of May 23d, commenting upon the improvement, says: "It is only fair to remember that the country has to-day in its sound currency and prosperous interior two factors making for recovery which did not exist in 1874;" and on June 1st publishes dispatches from many places, especially the New England cotton and woolen mills, announcing a return to full time.

The Washington Post (Democratic) of June 2d says: "June begins the real summer season with many signs of returning prosperity. Plentifulness of money and its cheapness have encouraged promoters of industrial enterprises and railroad builders to renew their plans of expansion. Some of the best informed railroad men foresee business that will tax the capacity of their equipment. Merchants are beginning to order for a busy fall trade. The country is all right."

R. G. Dun & Co. say in their Review that their figures of commercial failures for the month of May, 1908, present the most encouraging monthly statement as to the amount of defaulted indebtedness since July of last year and its total of 131⁄2 millions compares favorably with 20 1/3 millions in the best preceding month of this year. The New York Herald of June 1st says: "All the factors of production are with us in full blast, and with easy money and good crop prospects, to which the element of confidence is now added by the enactment of the currency law, the outlook is bright indeed for the highest measure of prosperity."

The New York Journal (Democratic) of June 2d says: "The country is waking up. Mills and factories that have been closed for months are again humming and whirring with action. Trade

is improving. New York merchants are reinstating employees that they were forced to dispense with last fall because of the flurry in Wall street. In Chicago commercial men are preparing for a prosperous season. In the great manufacturing centers of the East fears have fled from owners of plants and many chimneys that had long grown cold are now sending up their former volumes of smoke. There is money in the banks and the specter of distress is dimmer."

The New York Herald of July 26, says: From all over the land come the good tidings that an unmistakable and abundant wave of prosperity is sweeping along. To the Herald come dispatches from the great centers which prove beyond doubt that "good times" are here—and here apparently, to stay, Mills are running full blast, crops are bumper everywhere, the railroads are taking on men, and the entire nation, with one accord, gives vent to the expression that prosperous seasons are at hand. In the uplift of general industry from depression, following upon satisfactory harvests, no one can overlook the tremendous force of abundant and cheap money. While the vast accumulations in the banks of the country are in themselves the evidences and results of lessened activities of commercial life, the great accumulations of surplus funds gathered in the financial reservoirs provide the quickening of industry when the proper period for recuperation has run its course.

How vast a sum of reserve money has accumulated in the country in recent months can only be approximated. But in the national banks alone, under the call of the Comptroller of the Currency for their condition on May 14, there was no less than $861,326,450 of specie and legal tenders or reserve money. Of this sum $318,000.000 was in the vaults of national banks in New York City. The Comptroller of the Currency has just issued a call for the condition of the national banks as of July 15. The figures on this are not yet available, but the general impression is that, despite gold exports during the interval, the showing "legal reserve money" will have been augmented.

The total gold circulation in the United States, according to recent estimates, amounted to the huge total sum of $1,445,000,000, of which 36 per cent was held in the national banks of the United States and nearly 16 per cent in the banks of New York City, which is the central reservoir of the financial system. As already stated on May 14, the national banks of the country held $861,326.450, which was an increase of $73.000.000, as compared with the preceding call by the Comptroller of the Currency, that of February 14, and no less than $171,000,000 more than was held by the banks of the national association a year ago in May.

National Bank Conditions, May 14, 1908.

The latest report of the Comptroller of the Currency on the operations of the National banks of the country shows that their condition had nearly returned to that of the corresponding date in 1907, a period of high tide of prosperity, and was in marked contrast with conditions in March, 1897, the month of the inauguration of William McKinley, and the approximate end of the Wilson low ariff period. The capital stock paid in of the National banks of the country on May 14, 1908, was 912 million dollars; on May 20, 1907, one year earlier, 884 millions, and on March 9, 1897, was but 642 million dollars, showing an improved condition as to capital stock when compared with that of one year ago, and an increase of nearly 50 per cent when compared that of the corresponding date of 1897. The surplus fund on May 14, 1908, was 555 million dollars, against 535 millions on May 20, 1907, and but 247 millions on March 9, 1897. The undivided profits, less expenses and taxes paid, were on May 14, 1908, 203 million dollars, against 186 millions May 20, 1907, and but 861⁄2 millions on March 9, 1897. The individual deposits on May 14, 1908, were 4,313 million dollars, against 4,323 millions on May 20, 1907, and but 1,669 millions on March 9, 1897, the individual deposits on May 14, 1908, being thus practically as much as one year ago, and over 21⁄2 times as much as in 1897. The loans and discounts, which are a measure of industrial activity,

were on May 14, 1908, 4,528 million dollars, against 4,631 millions on May 20, 1907, and but 1,886 millions on March 9, 1897, being thus but little below the conditions of that high water mark of prosperity one year ago, and more than 21⁄2 times as much as in March, 1897.

Money in Circulation, July 1, 1908.

The money in circulation in the United States on July 1, 1908, was $3,045,257,289, against $2,772,956,455 on July 1, 1907. the year of high-water mark of prosperity, against $1,506,434,966 in 1896, the year of low-water mark of Democratic adversity, and the year in which William Jennings Bryan was telling us that prosperity and sufficient money to produce prosperity could only be had by the free and unlimited coinage of silver. The per capita circulation July 1, 1908, was $34.81, against $32.22 on July 1, 1907, and $21.41 on July 1, 1897, the per capita of money in circulation on July 1, 1908, being thus 8 per cent more than in 1907 and 60 per cent more than in July, 1896, the low-record year of the Wilson tariff period. One interesting feature of this tremendous increase in the amount of money in circulation in the United States in 1908 as compared with 1896, when we were told that increased currency could only be obtained by the free and unlimited coinage of silver, is the fact that the gold and gold certificates in circulation (the latter being, of course, the equivalent of gold, since they represent gold deposited in the Treasury) aggregated on July 1, 1908, $1,403,017,937, against but $497,103,183 on July 1, 1896, or nearly three times as much gold in circulation in 1908 as in 1896.

Prices of Farm Products, 1908.

Another evidence that the financial disturbance of 1907 has not seriously affected the masses or their purchasing power and has not brought to the great agricultural population the terrible depression which characterized the low tariff period is found in a comparison of prices of farm and other products prevailing in the markets to-day with those of 1896. A little table below compares prices of a few representative articles in the first week of June, 1908, with those ruling in the first week of June, 1896. It will be seen that the price of wheat in New York, which in the first week of June, 1896, was 694 cents per bushel, was $1 per bushel in June, 1908; corn advanced from 334 cents per bushel in June, 1896, to 78 cents per bushel in June, 1908; oats, from 224 cents per bushel in June, 1896, to 532 cents per bushel in 1908; lard, from 4.4 cents per pound to 81⁄2 cents; mess pork, from $8 per barrel to $14.50; wool, Ohio XX, from 17 cents per pound to 30 cents; and cotton, from 734 cents per pound in June, 1896, to 11.4 cents per pound in June, 1908.

Wholesale prices at New York of representative articles of farm production, 1896 and 1908.

Evidences of Industrial Activity.

One further evidence of the slight effect upon our industries of the financial panic of 1907 when compared with the industrial panic of 1894, 1895 and 1896, which followed the enactment of the Wilson law, is found by a comparison of the imports of manufacturers' raw materials at the present time with those