COMMERCE, INTERNATIONAL. 



115 



against Italy, the growth being from 479 mill- 

 ion lire in 1861 to 1,216 millions in 1876, and 

 that of the imports from 821 to 1,329 millions. 

 This increase in exports is due in great measure 

 to improvements in agriculture. The exporta- 

 tion of raw silk was at a low ebb in the earlier 

 part of the period, the crop falling in 1864 to 

 1,731,000 kilogrammes ; but owing to the suc- 

 cessful treatment of the silk-worm disease, 

 which threatened to destroy the silk culture in 

 Europe, the crops increased to about 3 million 

 kilogrammes, until in 1876 and 1877 the re- 

 appearance of the malady, with unfavorable 

 weather, reduced the yield to one-third the 

 usual quantity in the first year, and one-half in 

 the second. 



A severe financial crisis experienced in Por- 

 tugal in 1876 was attributed by the British con- 

 sul-general to the large increase in the number 

 of banks, the nominal capital in joint-stock 

 banking institutes having grown from 26| mill- 

 ion dollars in 1871 to 63^ millions by the end 

 of 1875. There were large and reckless trans- 

 actions on the exchange in Spanish 3 per cents, 

 which led to a call on the banks for money, 

 which, after the suspension of one or two banks 

 in the north, changed to a panic and general 

 run on all the banks, which culminated on the 

 18th of August, some of the oldest and most 

 esteemed banks in the kingdom stopping pay- 

 ment. The Government then intervened with 

 an order delaying payment 60 days, and, with 

 repayments of advances and loans of additional 

 sums, it assisted the banks, and restored con- 

 fidence to a considerable extent. 



The causes of the financial crisis in Germany 

 and Austria, where the bursting of the bubble 

 of speculation and inflated values first occurred, 

 are not far to seek. The French Government 

 paid over to the German Government the ex- 

 acted war-indemnity with wonderful rapidity. 

 This amounted to 5,567,067,277 francs, less 

 325,098,400 francs, the purchase-money of the 

 Alsace-Lorraine railway. It was paid in drafts 

 on Frankfort and other German cities, Lon- 

 don, Holland, and Belgium, and German and 

 French notes and coin. This enormous amount 

 was applied in paying up the debts of the sin- 

 gle states, in building fortresses and ships, and 

 other military expenses, in paying war-claims 

 and donations, in establishing an invalid fund 

 of 187 million thalers, and in an entire recoin- 

 age, and the transformation of the currency 

 to a gold basis. The repayment of the public 

 debts and the displacement of other invest- 

 ments left great amounts in the hands of the 

 people, who, dreaming of a new industrial era, 

 invested them in newly-started manufacturing, 

 mining, and crdit establishments. The num- 

 ber of joint-stock companies was trebled. The 

 people were drawn in thousands to the fac- 

 tories, away from their useful agricultural oc- 

 cupations. A rage for building and specula- 

 tion in town-lots prevailed in all the cities. 

 On the bourses the wildest stock-gambling 

 helped to conceal the weakness of the thousand 



new companies, while sharp swindlers formed 

 more companies on paper, and palmed off their 

 bogus shares on the credulous public. Money 

 was in rapid circulation, and consumption was 

 stimulated and novel desires awakened among 

 the people. Large excesses of importations 

 appeared on the trade balance-sheet every year, 

 in part for plants and raw material for the 

 brand-new industries, but in great part also 

 for unaccustomed luxuries consumed by the 

 people. Then, to add fuel to the flames, the 

 German Government had inflated the currency 

 by issuing the new coinage faster than the old 

 had been withdrawn, this inflation amounting, 

 in October, 1874, to 254 million thalers, or 

 about 50 per cent, of the former volume of the 

 currency. The new gold coinage streamed out 

 of the country, the old silver being still legal 

 tender, while its bullion value was 3 per cent, 

 below par; but as many of the gold pieces as 

 the French received were sent back in pay- 

 ment of the milliards. The American consul- 

 general in Berlin, in tracing the history of 381 

 stock companies with an aggregate par capital 

 stock of 125 million dollars, established since 

 1870, which are quoted on the Berlin Exchange, 

 found that 210 of them had ceased to pay divi- 

 dends in 1874, and 260 in 1875. The average 

 dividends paid by 95 banks, whose stock was 

 quoted at 11 per cent, above par in 1872, and 

 whose average dividends in that year were 

 10 per cent., were, in 1875, 2.10 per cent., and 

 their quoted value 35 below par. The average 

 quotations of 58 mining and smelting com- 

 panies changed similarly from 1.17 to .28, and 

 their dividends from 10 to 1 per cent. The 

 market-price of the shares of 225 industrial 

 companies, of various characters, sank from 

 .97 to .26, and their average dividends from 

 10.38 to 1.36 per cent. The whole number 

 of stock companies founded in Prussia in the 

 three years 1871 to 1873 was 945, the greatest 

 number in 1872 ; their aggregate capital stock 

 amounted to 1,062 million thalers. The day of 

 reckoning was not brought about in Germany 

 by a general crash and epidemic bankruptcy 

 as in Austria, but when, in 1873 and 1874, the 

 inevitable period of contraction came, the ut- 

 ter uselessness of many of the new productive 

 concerns doomed them to a slow death, while 

 those which could survive were subjected to a 

 painful and struggling existence. 



The idle German capitals found in many 

 cases a vent in Austria, where the mania for 

 founding companies, and all the vices of stock- 

 jobbing, were already in full career ; they ar- 

 rived to stimulate the mad speculation which 

 had succeeded the war of 1866, and the infla- 

 tion of the paper currency, and to expand the 

 unsubstantial structure of a national industry 

 which only existed in the illusions of dreamers, 

 or, oftener, in the mendacious promises of 

 bourse swindlers, until, in 1873, a swift and 

 sudden collapse occurred, which shook the 

 whole financial world. The crisis began in 

 the month of May, between which date and 



