STATE FINANCES.
Since the settlement of the debt created by the old railroad bonds that I have heretofore mentioned, the finances of the state have always been in excellent condition. When the receipts of an individual or a state exceed expenditures the situation is both satisfactory and safe. At the last report, up to July 31, 1898, the receipts of the state from all sources were $5,429,240.32, and the expenditures were $5,208,942.05, leaving a balance on the right side of the ledger of $220,298.27. To the receipts must be added the balance in the treasury at the beginning of the year of $2,054,314.26, which left in the treasury on July 31, 1898, the large sum of $2,184,612.53.
The original indebtedness arising from the adjustment of the state railroad bonds was $1,659,000; other bonds, $300,000.00. This indebtedness has been reduced by payments to the sum of $1,475,647.22, on July 31, 1898, the date of the last report. If this debt had matured, it could at once be paid by the funds on hand, leaving the state entirely free from all indebtedness.
The taxable property of the state by last assessment, in 1897, including real and personal property, was $570,598,813.
THE MONETARY AND BUSINESS FLURRY OF 1873 AND PANIC OF 1893.
It has been customary in the United States to expect a disturbance in monetary and business affairs about once in every twenty years, and the expectation has not been disappointed since the panic of 1837. I have described the effect of the panic of 1857 on the Territory and State of Minnesota, and the difficulties of recuperating from the shock. The next similar event was not due until 1877, but there is always some special disaster to precipitate such occurrences. In 1857 it was the failure of the Ohio Life Insurance and Trust Company, and in 1873 it was the failure of Jay Cooke & Co., of Philadelphia. This house had been very prominent in placing the bonds of the Northern Pacific Railroad Company, and in the construction of the road, and was relied upon by many classes of people to invest their money for them, and when their failure was announced, its effect in the East was disastrous, but here in Minnesota it only affected us in a secondary or indirect way, in stopping railroad building and creating general alarm in business circles. We had been diligently at work for sixteen years, endeavoring to recuperate from the disaster of 1857, and had to a great extent succeeded. Real estate had partially revived, but had not reached the boom feature, and the state was on a sound financial basis. Fortunately we had not recovered sufficiently to become investors in railroad securities to any great extent, and land speculation had not reached its usual twenty years' mark. We had, also, on hand a local affliction, in the presence of grasshoppers, so that, although it disturbed business generally, it did not succeed in producing bankruptcy, and we soon shook it off.
This periodical financial disturbance has been attributed to various causes. From the regularity of its appearance, it must be the result of some impelling force of a generally similar character. My opinion is, that the period of twenty years being the average time of man's active business life, the actors of the second period have not the benefit of the experience gained by those of the previous one, and they repeat the same errors that produced the former disasters; but be that as it may, when the period extending from 1873 to 1893 had passed, the same result had occurred, and with quite as much force as any of its predecessors. Land speculation had reached the point of absolute insanity. Everybody thought he could become rich if he only bought. Values, already ridiculously expanded, continued to increase with every sale. Anyone who had money enough to pay down a small amount as earnest and intelligence enough to sign a note and mortgage for the balance of the purchase price became purchasers to the limit of their credit. When a party whose credit was questioned needed an indorser, he found many requiring the same assistance who were ready to swap indorsements with him. Everyone became deeply in debt. The country was flooded with paper, which was secured on the impossibility of values continuing. The banks became loaded with alleged securities, and when the bubble was strained to the bursting point, and some one of supposed financial soundness was compelled to succumb to the pressure, the veil was lifted, which opened the eyes of the community and produced a rush for safety, which induced, and was necessarily followed, by a general collapse. In 1888 and 1889 banks suspended, money disappeared, and in 1893, in the expressive language of the West, everybody who was in debt, and all stockholders and depositors in defunct banks "went broke." Had the cities of St. Paul and Minneapolis been captured by an enemy and a ransom of ten million dollars been demanded from each, paid and carried away, the consequences upon business would not have been worse. It was much the same in all the large cities of the state, as land speculation was more active there than in the rural districts, and no matter what may happen, some value always remains to farm lands, while under such a collapse as that of 1893 the greater part of city property becomes utterly valueless for the present, and much of it forever.
There was, however, a great difference between the consequences of 1893 and the previous disasters of 1857 and 1873. Although the disturbance was great, we were better prepared to meet it. Population had increased immensely. The area of civilization and production had kept pace with immigration. Manufactures of many kinds had been introduced, and although we were seriously wounded, our hopes of recovery had solid grounds to rest upon, and we were not dismayed. The only remedy in such cases—industry and economy—was applied, through necessity if not from choice, and recovery has been slowly progressing up to the present time (1900), when we may be classed as convalescent.