Some time ago, the Economist drew attention to the remarkable demand for iron which has on several occasions been the precursor of seasons of commercial panic, and gave a warning that in all probability some such season would follow on the very remarkable state of the iron market which has prevailed in England for some eighteen months. It might have gone further, andsaidthatalarge surplus of revenue was an almost equally sure precursor of commercial disaster. The two in fact proceed from the same cause, a large stock of unemployed capital. After a series of p mus years, a superfluity of capital seeks to find employment, and one capitalist vies with another as to the terms on which he is willing to lend it out. The profits of trade naturally are cut down to the lowest limit, anda spur is thus given to production. The quantities of goods sent to market increase in such a proportion that the means of conveyance are found to be too limited, and schemes for improving these are set on foot. The capitalist. who finds he can get little profit from his money in the ordinary course of trade, listens to projects to which at other times he would turn a deaf ear; and as iron, in these modern days. is the main clement of construction, unusual demands are made on the' mines and the manufacturers. From each of these sources the Government derives a larger revenue, and hence the one is naturally correlated with the other. Unfortunately it happens that the spurt which takes place at such times is apt to carry on its initiators beyond the point that prudence would direct. It seems a pity to haul up sharp the vessel of credit, just launched so successfully, and the limit of safety is apt to be overshot and a reaction to set in. Such has been the regular result for the last thirty years, an alternation of periods of depression and seasons of unlimited credit. Situated as China is, at a distance from the centres of commercial activity, she has yet been more or less carried' into the vortex. Unlimited demands for the limited productions of the empire suited for foreign consumption lead to the gradual increase of prices. Tea and Silk go up in the China market as regularly as iron goes up in England, and from the same causes. For a time, the home markets keep pace with the supply, but the time comes when the stimulus of high prices succeeds in swamping the market. The tide once turned, the immediate revasion is sharp, far sharper than the rise, and commodities in consequence go down to prices ruinous to all. Such is the usual course of a panic, and it may be noticed that some of the usual symptoms have been presented for some time in England. One feature has, however, been absent. The money market has never been cheapened to such an extent as before previous panies, The rate of discount, notwithstanding the extension of trade, and the apparent recklessness with which prices have now run up, has kept at a high figure; and this proves, apparently, that in this case the increase in trade was consequent on other causes besides a plethora of unemployed capital. At any rate, judging from what news we can collect from home, there seems no dread of a return of such scenes as have marked the last three or four panies. A depression in trade after its unexampled increase is inevitable, but a sounder judgment seems to have been exercised than at former periods, and we may hope that the revulsion will in consequence be less severely felt.
Text read from the printed page and cleaned; old type leaves the occasional error.