The Sun.
London, England, 1862-10-28 00:00:00

THE AMERICAN CURRENCY.

The predictions with regard to the American cur-
rency continue to be fulfilled. Another rise of 4
per cent. has carried the premium on gold up to 32,
and. as the rate for bills on London is quoted 147,
further heavy shipments of specie may be expected.
The fact that, although she sailed from Boston, the
present steamer has brought £55,000, indicates that
the next mails from New York direct would be
likely to take considerable sums. Everyone, how-
ever, has a sense that the state of affairs now observ-
able is slight compared with that which is to come.
Even in New York, where only a few weeks back it
was recommended that all men should be " marked
as traitors" who refused to consider Federal paper as
good as gold,and where a leading economical jour-
nal authoritatively assured the public that as soon
as a sufficient quantity of the postage notes could
be printed all demand for small change would cease
and silver would be back at par, some idea that the
United States are not exempt from the operation of
the general laws that regulate these matters in all
other parts of the world seems at length to be
making head. This feeling, however, appears thus
' far only to manifest itself in a vague consciousness
that everything is not quite right, and there is no
bold attempt to warn the public of what is actually
impending. Yet the inevitable results should be
plain to every one acquainted even with the rudi-
ments of financial science. There are three roads
open to the Federal Government. They may limit
their expenditure to the resources of the country—a
measure which would be tantamount to a with-
drawal from the war ; or they may adopt either of
the two alternatives of issuing fresh notes for all
their wants, or of raising money by loans. That
they will not abawdon the war is certain. An inde-
finite creation of notes or loans may therefore be
calculated upon, and in either case the consequences
can be seen with perfect precision. If, as will pro-
bably be the case, the system of unlimited issues of
paper be preferred, the depreciation will, of course,
go on until the experience of the French assignats
shall have been repeated. It was recently pointed
cut that so long as the new paper issues were merely
filling the vacuum occasioned by the hoarding of
the sixty millions or more of specie previously in
circulation, the progress of depreciation must be
slow, but that subsequently the rate would be alarm-
ing. This is now being witnessed, and for every
article of the value of £6B the Government have to
incur a liability of £lOO. But throughout there is
no commercial distress. On the contrary, it is one
distinction of this system of finance that it creates
ease and confidence in the money market. Being a
legal tender, although the value of the currency
may decrease, it answers just as well the purposes
of debtors, and meanwhile every fresh'creation is,
in proportion as the public attach faith to it, a crea-
tion of so much additional nominal wealth founded
on a pledge of the labourof future generations. The
other alternative of raising money by a creation of
1 public stocks, and allowing the currency to remain
without further inflation, would be more likely to be
iattended with occasional commercial inconvenience,
while its ultimate results would be nearly [
similar to
those of indiscriminate note issues. In obtaining
funds by this means the Government would occasion-
ally attract large amounts of the existing circulation
to its coffers, an
d would thus cause monetary pressure
until the total was again disbursed. Under either
system the grand consequence
would be identical.
Whether the expenditure of the country be kept up

... "" ^f notes, the exportation
by home loans or by issue.— -ors wili not
of specie must be the same. Foreigt..._

take either the bonds or the notes, and it is the co.
stant demand for gold to pay the balances thus due
which will regulate the relative quotations of gold
and paper. In the course of a certain time every
piece of hoarded gold that can be bought on any
terms will have been sent away, and then the
country will be forced to carry on the war solely
on the annual gains of its own industry, since it
will have nothing but these to barter for any articles
it may require to import. All the devices ever sug-
gested can never keep a people who are continually
expending more than they create from that con-
summation, and in time of war the process is short.
How short it is likely to be in the United States
may be estimated from the fact that with a falling
off of about 50 millions yearly in their productive
power (to say nothing of that which is caused by
the withdrawal of men from industrial occupations
to the army) they have augmented their scale of
expenditure by about £150,000,000. When peace
shall have been arrived at there will be a debt to
be met the magnitude and burden of which will be
is no way affected by the question as to whether it
is in the form of bonds or notes. If specie pay-
ments are then to be resumed the people will find
they are called upon to discharge their liabilities in
a metal which has totally deserted them, and it is
then that every debtor in the country will break
down. The break down, however, will be among
themselves, since all foreign credit, except of the
most temporary character, has necessarily already
been withdrawn.