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 REAL CAUSE OF BUSINESS STAGNATION IN THE 
 
 UNITED STATES. 
 
 FiY 
 
 HENRY CAREY BAIRD, 
 
 AUTHOR OF 
 " rolitical Economy," '• lliiin of Bad Ciovcrnnu'iit," •• Credit System Wrong,'' 
 
 &c. Ac, Ac. 
 
 TO AN 
 
 ARTICLE IN SAINT JOHN 'TELEGRAPH/' 
 JULY 24TII, 1878. 
 
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REPLY. 
 
 To THE Editor of " The Da fly Telegraph." 
 Sir, 
 
 111 your paper of 24th July I find tlic following : — 
 
 "Tlie dullest luinds can, Jiowever, realize what would be the efTect 
 of a score or two of Coldbrook iron works instead of one. They can 
 understand how Protection operated on similar works in the United 
 States. Statistics show that on the 31st of December bust, of the 716 
 iron furnaces in that country only 270 were in blast, 440 bein^ 
 closed. Of 32 furnaces in Michigan, only 9 were in blast; of 33 in 
 V^irginia, only 5 were in blast ; and of 7 in North Carolina, all were 
 silent. Of Pennsylvania's 278 furnaces, J 47 were out of blast. The 
 })roductive capacity of the blast furnaces now in the United States is 
 about 4,000,000 tons, and this is about ten times as much as the 
 country re<piires. It is almost unnecessary to add that in no })art of 
 this continent is there so much distress, want and misery as amcmg 
 the employees in the highly protected iron, coal, and other indus- 
 tries of the United States. The same system has all but annihilated 
 the shipping of the United States, and nearly driven the Hag of tliat 
 country from the steam tonnage now traversing all the great oceans." 
 
 Permit me to reply to the foregoing. 
 
 The position you here take in regard to the effects of 
 protection in the United States — that of post hoc j^'ojytcr 
 hoc — is hardly a logical one, and you might with perfect 
 propriety be called upon for proof that the condition in 
 which our industries at present stand, and the policy oi' 
 protection, bear the relation to each other of effect and 
 cause. It may be claimed with equal force and fairness, 
 that free trade is the cause of the prostrate condition of the 
 'ron and coal industries of Great Britain, for certain it is 
 that there is there entire free foreign trade; ami we are 
 assured by Messrs. W. Fallows (fe Co. of Liverpool, that 
 
 "The history of the iron trade in 1877 is one continual chronicle 
 of depression, unrelieved by any silver lining to that dark cloud 
 
 which has himg over it for the last three years Wages 
 
 have been reduced to such an extent that, coupled with the limited 
 demand for lal)or, tlic iron workers, even in the best districts, have 
 been barely able to earn a living, wlkilst in some quarters there is 
 iwsitive destitution and poverty. This depression is mainly trace- 
 able to two causes — over production and forcif/n competition." 
 
Then the circular of C. E. MuUcr, Middleboroiigli, says: 
 " The iron rail trade is slowly dying." 
 
 The Secretary of the Britisli Iron Trade Association says : 
 
 "For a period now approaching, if not actually cxtontling over 
 three years, the metallic trades of this country liave heen parsing 
 through an ordeal a? severe and as prolonged as any that living 
 
 memory can recall Some doi)artmonts of the iron Iradf 
 
 have been seriously prostrated by the loss of certain markets in 
 which we had formerly been all but monopolists, and notably, the 
 markets of tlie United States." 
 
 Regarding the coal trade of 1877, the same author says : 
 
 " Coal owners have found the past year one of great anxiety and 
 loss. No trade lia.s been so seriously embarrassed, and no industry 
 has so greatly declined. Every evii and vicissitude that could tend 
 to make the trade ruinous appears to have been heaped ujwn it, until 
 the pressure has become well nigh intoleral/le." 
 
 To this, adds the Secretary of the American Iron and 
 Steel Association in his Report dated July 15, 1878 : 
 
 ** All the advices we have received since the close of 1877, rejirc- 
 sent the prostration of British industries to liave been greater tluis 
 far in 1878 than in 1877." 
 
 According to the London Times of Decend)er 30, 1877, 
 the condition of things in the iron and coal districts of 
 AVales is something appalling, and heart-rending in the 
 extreme. It is there stated, that 
 
 "At the Cardiif Docks there are now miles of laden coal wagons 
 waiting for shipment At Cardiff', owing to the large in- 
 crease in the number of able bodied men applying for relief, the 
 Guardians have been compelled, in consequence of the workhouse 
 being crowded, to open a stone yard for the employment of married 
 men, and the apj)licants are increasing at the rate of about fifty a 
 
 wOek Last week, a family consisting of seven persons 
 
 was found to have subsisted for days on a jiailful of brewers' grains, 
 
 which were intended for some pigs At Merthyr, the 
 
 Vicar hopes to open in a few days the drill-hall, where the children 
 will receive one meal a day. During 1875, lie fed in this way 5000 
 children daily, and there are many hundreds more now in a state of 
 semi starvation, who crowd along the streets ev^ery morning, turning 
 over *he dust boxes and refuse, to pick np anything of the nature of 
 food. So deeply is the distress felt outside the wovklionse, that the 
 (ruardians of the Crickhowel Union have resolved not to give the 
 inmates of the Avorkhousc their usual Christmas dinner, as manv bun- 
 
5 
 
 drccis of tradesmen and niechauiw*, who pay rates, are unable to pro- 
 vide a Christmas dinner for themselves. Mr. Hraehan, the Poor Law 
 Inspector for the distriet, is now on a visit to Honth Wales, to advise 
 the Guardians on the hest mode of meeting the demand for work- 
 liouse acconnnodation and outside relief, and he lias advised the 
 erection at once of temi)orary iron sheds in all cases where the work- 
 houses are filled." 
 
 Will you now kindl)^ inform me, Mr. Editor, how the fore- 
 going statements harmonize with your view that protection 
 has caused the ruin of our industries ? Can it be possible 
 that in one country a result has been brought about by this 
 ])olicy, and in another that the same result has been pro- 
 (luced by a diametrically opposite one? 
 
 Further, you say, " The productive capacity of the blast 
 furnaces now in the United States is about 4,000,000 tons, 
 and this is about ten times as much as the country needs." 
 According to the Keport of the Secretary of the American 
 Iron and Steel Association, the production of pig iron 
 ill 1877 was 2,314,585 net tons, and the consumption 
 2,418,216 net tons, or more than six times your estimate of 
 the needs of the country ! While too the stock of pig iron 
 on hand in tlie United States had declined from 686,798 
 net tons in December 1876 to 642,351 net tons in Decem- 
 ber 1877, the stock in Scotland and the north of England 
 had risen from 545,541 gross tons in 1876 to 809,797 gross 
 tons in 1877. A production of 400,000 tons would be 
 inadequate to tlie production of our Bessemer steel, now 
 amounting to 560,000 tons j^er annum, against 750,000 
 tons in Great Britain ; and it pays its producers too. 
 
 As regards our shipping, and es})ecially that of steam, 
 it should be said, our difficulties, so far from being due to 
 protection, are to be attributed rather to the absence of that 
 protection which Great Britain has so liberally given to her 
 own steam marine in the form of subsidies for mail service 
 during nearly forty years. But, in spite of this .illiberal 
 and ill advised policy of the Government of the United 
 States, we have 542 steamers of 674,036 tons, out of a total 
 of 5,471 steamers of 5,510,816 tons in the entire world, and 
 we have jiow far more steamers engaged in foreign trade 
 than we had in 1860 during free trade. But is there, let 
 me ask, any other branch of trade in Great Britain to-day 
 
6 
 
 whicli is ill a more ruinous state of (Icpression fliid decay 
 tliau that of steam nliipping? I believe not. 
 
 We now conic to a consideration of tlie real cause of the 
 l)usiness depression in the United States, It will be found 
 always and solely in the coniraeiion of the currency. At the 
 close of the war in 1865, there were outstanding, of legal 
 tender money, bank notes, and that which served as bank 
 reserve, over $1,900,000,000, while to-day there are but 
 abont Sfi50,000,000. The effect of this contraction, which 
 was commenced in 186(), soon began to l)e felt upon ])usi- 
 ness and our productive industries, and by 18H<S it had 
 ])ut a stop to almost every description of new enterjuvise. 
 However, there was one branch of business which need not 
 be stopped, as it could be fed by the proceeds of bonds 
 sold in Europe, and tiiat was raih-oad building. This com- 
 menced in earnest in 18()7, and the result is, we have more 
 than doubled the number of miles in operation between 
 1807 and 1877, they having run up from 89,250 in the for- 
 mer year to 79,208 in the latter. Hence the stimulation of 
 the iron business and all others which ministered to rail- 
 roading, out of harmony with others. The result is, that 
 these are more depressed than probably any others in the 
 country. 
 
 That our present depression is owing to contraction, there 
 is a great and steadily growing body of our people fully 
 convinced of, and that the oppo.sife policy^ of e.rpaimon,%mll 
 prevail, is the mod certain event in, the future hidory of this 
 country. The ])eo|)le are rapidly learning that an inade- 
 quate supply of money means an inflation of credit, to end 
 in a financial crisis, 'iliey have seen its effect in Great 
 Britain, with its crises of 1825, 1887, 1847, 1857, 1866, 
 1875, and they have studied with an intense and absorbing 
 interest, the more than marvellous stcn'v of the industrial 
 and financial triumphs of France from 1871 to 1878, after 
 seventy-five years of [)ersistent protection, and with the 
 largest volume of money in use by such a t)opulation in the 
 world to-dav— $2,200,000,000 of gold, silver, and paper 
 money for 86,000,000 of people! and if there be anything 
 more sure than another in i\\i) future of the p.oople of tiiis 
 country it is, that they mean to have done with UU inflated 
 
hank, pcrson»al aiul corporate credit system, an a substitute for 
 "current money of the realm." While the believers in the 
 dogmas of English jiolitical economy, the "dismal science" 
 of Carlyle, tlie science based on the assumptions of Mill, are 
 speculating about " over production" amid a starving peo- 
 l)le, as a cause of depression, our j)eople arc at work organ- 
 izing a victory for the amelioration of mankind such as has 
 no parallel in the annals of the world. I liesitate not to 
 affirm that never before was there a i)eople who had gotten 
 such a firm grip upon true, sound, living economic doc- 
 trines, as well as to tariffs as to money, commerce, trade, 
 and labor, as this people has to-day. I earnestly invite 
 you, as well as your readers, to study and watch this grand 
 movement and its outcome, as one of the most interesting 
 in the history of the human race. Our ])eople arc weary 
 of the life of brutalization, starvation and misery, which 
 they have seen to be the lot of the mass of the workers, — 
 the wealth i)roduccrs, of all time, jiud of every clime ; and 
 they now mean to reform this great wrong, and bring about 
 the greatest moral revolution ever yet accomplished, a7id 
 they ivill do it. The overthrow of African slavery in this 
 country was nothing to the overthrow of the slavery of 
 whites and blacks, arising out of a monopoly of money, the 
 instrument of association and distribution, which this people 
 is jn-eparing to accomplish, and will make complete and 
 overwhelming. 
 
 HENKY CAKEY BAIRD. 
 
 Philadclplim, July 29, 1878.