TRE ECONOMIC OUTLOOK. 15 



years liave been for the replacement of capital unprodnctively 

 used up, or absolutely destroyed in war or military operations, 

 and notwithstanding the immense amount of capital that has 

 also been destroyed during the same period by the replacement 

 of machinery contingent on new, inventions, the vacuum thus 

 created has not only been promptly filled, but the competition 

 for the privilege of furnishing further supplies of capital for 

 similar purposes was never greater. 



Again, as capital increases and competition between its own- 

 ers for its profitable investment becomes more intense, and as 

 modern methods can bring all the unemployed capital of the 

 world within a few hours of the world's great centers for finan- 

 cial supply, the rate of profit, or interest to be obtained by the 

 investor or lender, from this cause, also necessarily tends to 

 shrink toward a minimum. Such a minimum will be reached 

 " when the returns for the use of capital become insufiicient to 

 induce individuals to save it, especially in the form of its rep- 

 resentative, money, and thus add to the available reserves by 

 which expanding industries can be supported." And to such a 

 minimum the financial world seems to be always moving by the 

 force of laws which no combination of capitalists can resist.* 



* Those not familiar with financial experiences can hardly realize the great decline 

 within the last few years in the price and profits of capital. Thus, the average rates of 

 interest in the cities of Boston, New York, Philadelphia, Cincinnati, St. Louis, and Chi- 

 cago, as computed from the record of public transactions, from 1844 to 1858, was 10"5 per 

 cent. In 1871 the London " Economist " estimated that the average rate of interest on a 

 majority of the foreign and colonial stocks and bonds at that time held in Great Britain, 

 amounting to not less than twenty-eight hundred and fifty million dollars, was equal 

 to six or seven per cent as a minimum. Up to 1871 the United States had not 

 been able to sell any portion of its funded debt, bearing 6 per cent gold interest in 

 European markets, on terms as favorable as par in gold. United States five-twenty 6s 

 being quoted on the London market in 1870 as low as 87^. The following is a tran- 

 script of the prices of various securities as quoted on the London market in 1871 : Ger- 

 man Confederation obligations, 5 per cents, 87 ; French national defense 6s, 87 ; Massachu- 

 setts 6s, 91 ; Georgia 7s, 78 ; Spanish 5 per cents, secured by a* mortgage on the cele- 

 brated quicksilver-mines of New Almaden, in addition to the faith of the Government, 

 76 and 77 ; Italian 6 per cents, secured by a pledge of the state revenues from tobacco, 

 87f ; Japanese 9 per cents, 89 ; Panama Railroad 7 per cent general mortgage, 93 ; Michi- 

 gan Central Railroad, first-mortgage sinking-fund, 8 per cent, 85 ; Pennsylvania Railroad 

 6 per cent general mortgage (sterling), 91. To-day the Governments of Great Britain 

 and the United States can readily borrow money at 1\ per cent ; all first-class railroad 

 corporations at 4 per cent ; while millions of money have been loaned in recent years on 

 real-estate security in the United States for 4 per cent, and in Great Britain for 3 per 

 cent. In Germany the market rate of discount for a considerable period in 1887 was as 

 low as from \\ to 1| per cent. Not many years ago the customary rate of interest allowed 

 by the savings-banks and trust companies of the United States was 6 per cent ; now the 

 former for the most part pay but 4, and the trust companies but 2 to 3 per cent, British 

 consuls in November, 1887, paid to the investor 2^^ per cent, while of the best (debent- 

 ure) railroad stocks of Great Britain none now return as much as 4 per cent on their 

 current market prices. The dividends of the Imperial (Reichbank) Bank of Germany in 



