The Express.
London, England, 1862-01-27 00:00:00

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LONDON, MONDAY, JAN. 27.

Its ENT arrivals from America throw further
light upon the condition of financial affairs. The
subject is an important one, from its bearing upon
the great question of the ability of the North to
continue the war ; and than this there is no ques-
tion more interesting to our commercial com-
munity at the present juncture. It is frankly
admitted in recent advice. that the necessity under
which the New York and other banks and the
United States Treasury have at length found
themselves of suspending specie payments, though
it has long been regarded by many observers as
sure to result from the defective plans of finance
hitherto pursued, has produced a rather keen feel-
ing of disappointment in business circles. The
unfavourable impression is strengthened by a belief
which prevails extensively th►t, with better
financial management, this grave step might have
been averted. Several errors in the Federal system
of finance, long patent to us at a distance, are now
recognised. One of these consists in the slowness
with which Congress has addressed itself to the
important task of raising the scale of taxation to
a point commensurate to the national emergency.
The American people have been encouraged by
not a few of their leaders to believe that the
present great war of principles can be carried to
a successful issue without the strain being felt in
their homes and at their hearths. Easy-going
plans of finance have been all the fashion ; increase
of taxation has been neglected ; and a system of
wholesale loan-raising has been almost implicitly
relied on. The effect of these teachings—of this
negligence—is seen in the fact that, while the ex- ,
penditure of the Government is estimated to have
reached a total of at least 60,000,0001. sterling
for the year 1861, not more than 7,000,000/. of
that sum was derived from revenue, properly so
called. The simple fact is that taxation and all
other branches of revenue produced a sum equiva-
lent to only about one-tenth of the expenditure, all
thereat being provided by additions to the public debt
in some form or other. We have not been slow
to defend the American people and their Govern-
ment when they have been maligned, and we now
feel the more free, therefore, to express an opinion
that, making due allowance for the financial dis-
turbance incidental to the transition from a state
of peace to one of war, the fact above mentioned
fixes upon the Treasury department a deep re-
proach, in which both Congress and people must
be held to share. Under this system suspension
of specie payments by the United States Govern-
ment and by its bankers on the seaboard was
merely a question of time. Nay, an arithmetical
process could almost foretell its date, and for this
reason. The loans upon which the Government
relied almost exclusively for the means of carrying
on the war and the entire m►chinery of the State
were principally taken up by the associated
bankers and capitalists of New York and of the
Eastern States, while the Government expenditure
was going on all over the Union. The COMO-
quence was that the internal exchanges ware all
turned against New York, whence a stream of
specie has been constantly flowing into the inte-
rior. The banks in the interior having stopped
payment at the outset of the war, specie is much
valued there, and is hoarded. For a time the
influx of gold from California and Europe enabled
the New York banks not only to meet the internal
drain, but to obtain an accumulation of specie un-
precedented in their history. This movement was
promoted, as we have often shown, by America's
rejection of the commodities which she ordinarily
takes from Europe. All foreign superflui-
ties were cut off, and payment was re-
quired in cash for nearly everything ex-
ported. The extent to which this economy was
carried is illustrated by the statements of the im-
ports of "dry goods" at New York. The total
value in 1861 was (in round numbers) only
8,120,0001. sterling, against 20,300,000/. in
1860, and 22,500,0001. in 1839. In not one of
the last twelve years has America taken so little
as during the past year of war. Glancing back,
we find that the imports of " dry goods " were in
1838 (the year succeeding the commercial panic),
12,200,000/. ; in 1837, 16,500,000/. ; in 1836,
17,800,0001. ; in 1855, 13,300,000/ ; in 1854,
15,600,0001. ; in 1853, 18,700,0001. ; in 1852,
12,400,00 W. ; in 1831, 12,100,0001. ; and in
1850, 11,600,0001. The accumulation of gold
has also been largely increased by the immense
exports of American breadetuffs occasioned by the
deficiency of the harvest of 1860 in England,
France, and el s,where.
Within the last few months, however, the posi-
tion of affairs bas greatly changed. The food re-
quirements of Europe have much diminished;
and while the exports of American grain and flour
have latterly ►een almost stopped by the winter,
the retention of the cotton crop tends to keep in
Europe a sum of about 40 millions sterling which
usually goes to America. The exchanges have
accordingly moved against that country to a point
at which she is herself obliged to remit specie to
Europe. A foreign drain, combined with the in-
ternal one already described, was all that was re-
quired to apply the touchstone to the edifice
of the Federal finances. It collapsed, and
suspension of cash payments was the only re-
source. Had the whole country been laid
under contribution as quickly as the occa-
sion demanded, by means of a comprehensive plan
of taxation, it is certain that this event might
have been long delayed, and it is even possible
that the wnr would have come to an end before
cash payments did. This impression, as we have
said before, embitters the regret of the true friends