The Sun.
London, England, 1862-07-07 00:00:00

AMERICAN FINANCE.

The following letter on American finance calls
attention to a point which may become of import-
ance in case the Washington Government should be
led into a belief that it is in the power of a military
despotism to control even the course of theprecious
metals. At the same time, although the reasoning
of the writer is in the main sound, he is evidently
a partisan of the South, and his estimates, there
fore, may require to be received with some allow
ante

" London, July 4.
" Sir,—Attention has been drawn to a branch of
Northern finance which has not been dilated upon

by any of the political economists—viz., the very
large American commercial indebtedness to Europe,
at all times floating, and estimated at 200,000,000
dols., as will presently be shown. This stupendous
amount has been entirely hidden from view by the
ramifications of trade ; but should the Washington
Government be insane enough to prohibit the ex-
portation of specie, it will soon be exhibited. Every-
' thing America sells to Europe she receives the cash
for at once, the 60 days' sight bills of exchange
being merely an accommodation to the foreign
(European) factor, while everything that America
buys from Europe is on a credit of four months.
Assuming that these purchases are of the value of
of 20,000,000 dols. per month, this credit would give
her 80,000,000 dols. worth of property, which
amount is increased by a system of accommodation
bills and other means of finance adopted by the
European agencies of New York firms to the extent
of 40,000,000 dols., making 120,000,000 dols. In
addition to this the American bankers have their
accounts overdrawn at all times on their correspon-
dents in Europe to the extent of current transac-
actions, say 80,000,000 dols., thus augmenting the
figures to the estimate of 200,000,000 dols. The
draughts of these bankers being at 60
days' sight, they remit other 00 days' (produce)
bills or gold in time to retire them at
maturity, and so the machinery of finance
is kept going from month to month. It
will, therefore, be better policy for the Federal
States to pay out their last dollar than to stop the
legitimate outflow of gold, and thereby preserve
tbcir credit of 200,000,000 dols ; but with the cessa-
tion of the shipments of specie all commerce
between them and other countries will be at an
end. It is quite natural that so large an amount
of European Capital should have been used in
America, the rate of interest there averaging so
much higher than here. The Southern States have
no commercial indebtedness to Europe ; their money
matters have always
been arranged through Wall-
street. The productions of the South have been the
great source of wealth to the North, the latter
having acted as banker, commission merchant, and
broker to the former. The earnings from the
Southern business have been invested in a charac-
ter have based
of securities the valued
of
with its declineeen largea
upon that very trade, au
depreciation must be expected. The Northerners
since Juy,
had an exceptional advantage
, the excess 1860
of which
the shipments of breadstuffs
in amount over their customary exports will
average, including the net Ocean freights, about
6,000,000 dols. per month, or 138,000,000 dols.
this advantage is not lost to them,
their crops of
wheat and maize will be small in consequence of the
late spring, and so many hands taken from agri-
cultural pursuits into the military service. or
have the prices that have ruled
named been sufficiently within the period
remunerative to be tempt-
ing to the producer to cultivate largely, the sea-
board quotations being eaten up in a great measure