years have been for the replacement of capital unproductively 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 owners 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 financial 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 insufficient to induce individuals to save it, especially in the form of its representative, 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 Chicago, 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 87½. The following is a transcript of the prices of various securities as quoted on the London market in 1871: German Confederation obligations, 5 per cents, 87; French national defense 6s, 87; Massachusetts 6s, 91; Georgia 7s, 78; Spanish 5 per cents, secured by a mortgage on the celebrated 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, 87¾; Japanese 9 per cents, 89; Panama Railroad 7 per cent general mortgage, 93; Michigan 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 2½ 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 1½ to 1⅝ 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 215per cent, while of the best (debenture) 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