The Sun.
London, England, 1870-03-23 00:00:00

MONEY AND BUSINESS.

(From the Springfield Republican, March 5.)

The decline in gold has been the great event of the
week, but has had an inconsiderable effect on money and
business. Money is easier, if anything, than last week,
there being less disposition to use it in business in view of
the fluctuation in money. Many merchants who have
been holding gold for their own use and borrowing money
to carry it have been encouraged to "let it slide," under
the belief that they could get it at lower preinium, svhen-
. ver they should want it. It is rat w nearly six months
since the September panic located gold at 120 to 122.
What has occurred at the present moment to displace it
from that lodgment? The print-pal cause undoubtedly
is the improvement in the price of American bonds abroad,
and this is due again to the excellence of our credit,
the high rate of interest we pay, and the abundance
of money in Europe. The capitalists of England and
Holland and the more prosperous German States have
long feared the approach of the dreaded "stationary
state," when capital shall no longer be able to pay
any interest. The great preventive that has hitherto
staved, off such a condition of affairs has been the em-
ployment of capital abroad. A time has now arrived when
this truth is realised more than over. Europe made money
out of us during the war, and now, when business is
stagnant, does not know what to do with it. If she kept
it herself, the rate of interest would go below 2 per cent.
in England, and 3 to 4 per cent. on the Continent, and the
"stationary state" would be close at hand. Foreign in-
vestment is the only other resource, and foreign bonds of
first class description are consequently in demand. This
state of affairs renders the task of funding our debt much
less difficult than it seemed a few months ago, though
there is still quite a field for the appreciation of our pre-
sent issues of bonds before their price will justify an ex-
pectation of the placing of Four to Five per Cents. at par.
In regard to contracting a debt with foreigners, some
people are exhibitieg a squeamishness that would be
amusing if it was not frail. There is no reason why we
should not employ this European capital, especially since
it is cheaper than our own. Funding at 4 per cent. would
be a pretty costly policy if we had to put in our own
money. There are millions and millions of municipal and
corporate stocks in this country paying frotn 8 to 10 per cent.,
to say nothing of the rates of profit in ordinary business in
America. All through the West the "legal rate " of
interest is 8 to 10, and here in New England 6 per
cent. is entirely traditional, and less than can be
thought of, even where the security is first class mort-
gage. How, then, can American capitalists, with their
willingness to lie awake o' nights for a small pittance
and their ill appreciation of "long time," be expected to
invest in bonds bearing only 4 to 5 per cent., even though
they boar the image and superscription of liberty herself.
We cannot make a better trade than to keep our own
capital earning high rates, while our cheap work is done
by the sovereigns and thalers of the Old World, which
would otherwise lie idle, and are only too glad to find
such employment. On the other hand, so long as there
are so many profitable enterprises in this country, in
which foreign capital, from the nature of the case, cannot
or dare not invest, we may entertain no fears of being
" run into the ground" by European competition. Gold,
which in our last review we left!at I 174 (Wednesday), on
Thursday morning declined to 1164, and in the afternoon,
on the receipt of news of the Senate vote against infla-
tion, went down to 1164. On Friday, after a day of de-
pression, there was a rally to 117, occasioned by rumours
that the March sales of gold by the Treasury would be
small. The price broke again on Saturday to 1154, and to
115 on Monday. The last and most reliable announcement
of the Treasury programme for March provides for the sale
of $2,000,000 gold and the purchase of $5,000,000 bonds.
The small amount of gold named served to stiffen the
market on Tuesday to 1164 to 1161. New York is full of
rumours as to the formation of heavy combinations to bull
and bear gold, and one of the clique is said to have sent
an agent abroad to manipulate the bond market for a fall
in gold here, to be succeeded by a great advance. The
audacity of Wall-street operations has accustomed us to
almost anything in the way of "corners," but this is a
"little 2 much." Looking at the fray from a less metro-
politan standpoint, and from a region of purer air and less
mirage, we see no reason for introducing "combinations"
and wireworks, when all that has occurred thus far is
explainable on entirely "natural causes " and might
have been predicted to happen just as it has happened.
Given—a large supply of gold in the hands of the Now
York merchants, the prospect of more Government
sales and of the disbursement of the Ten-Forty interest,
and the inevitable rise of. bonds in Europe—and the
result of the problem would be just what occurred, a de-
cline in the price of gold. Whether it shall go down any
further also depends largely on the price of bonds. All
attempts to determine the "normal rate" of gold by com-
paring the amount of it with the amount of. greenbacks
are useless, because there is another unknown factor—
the amount of fictitious business to which a variable
currency gives rise. People may as well give over talk-
ing al out what gold "ought" to be, and whether it is
lower or higher than tho normal rate. We shall have no
normal rate till Congress establishes a free banking sys-
tem, with the circulation redeemable abd instantly conver-
tible into coin. Such a circulation would be its own ad-
justment, like the governor ou a steam engine, and is the
only solution of the problem that will justify the applica-
tion of the word "normal " to any part of our finances
Governments have been more active in Europe than in this
country, and have been quoted as high as 901 in London
fur 18625. With the present quotations of exchange, this
is within one per cent. of par. Bonds in New York have
declined somewhat in sympathy with gold, but the long
Bonds of 1881 have been at times 11 per cent. above gold
and the issues of 1862, 1864, 1865, etc., on a par or nearly
so.. The two lines of quotations diverged a little more on
Wednesday with the higher rate of gold. State Bonds were
dull and depressed through the decline in gold, but came
up with it on Wednesday, New Virginias rose I per cent.
to 69 on " the announcement that the State debt will be
de reased by the payment of a large amount of it into
the State Treasury by new railroads now building."
Old North Carolinas rose 11 to 46, the New 1 to 25,
Louisiana Levee Sixes 14 to 70 5-6, and Levee Eights 1 to
80, Missouri Sixes being firm at 931, Georgia Sevens at
92, and Alabama Eights at 94. Old Tennessees were
exceptionally weak, falling 4 per cent. to 55, while ne
rose 4to 464. Stocks shared the depreciation with gold,
but are now recovering, The difference between the
quotations of Monday, the 21st ult. (Tuesday being a
holiday and Wednesday the first day of the panic), and of
Wednesday, the 2,1, show an average falling off of at least
3 per cent. Harlem fell off nearly 7, and the speculative
stocks generally suffered most, as will be seen by our tele-
graphic quotations. There has been considerable activity
in the Stock Exchange at Boston, where the Vermont
Central Bonds have been the fancy of investors for a few
days past, the first mortgage advancing from 80 to 834,
and the second from 41 to 431. Tt e Boston and Albany
-will issue one share of new stock to every five of old at
par to stockholders of record, March 2, payable 50 per
cent. on or before April 1, and the rest before October 1.
Stockholders who desire to anticipate the payment Of
the second instalment are to be allowed interest at 5
per cent. per annum. According to the Act of the last
Legislature all stock not taken after thirty days' no-
tice (which will be Aoril 1) must be sold at public
auction for the benefit of the company. It is understood
that this new stock will give the company about $3,000,000,
with which it is proposed to pay up their debts in Lon-
don, build new tracks, dtc. The Union Pacific wares have
become well wonted to the airof State sheet, and aremore
quoted there than at New York; the shares sell at 38;
the gold sixes, which with the decline in gold are not as
firm as the currency sixes, at 831 ; the land grant sevens
at 684, and the income los., the March coupons of which
are being promptly paid, at 77. Several important leases
have been consummated during the past week; among
them that of the Ogdensburg Railroad to the Vermont
Central and Vermont and Canada for 20 years, with roll
ing stock and equipments. This lease is a perfection of
the Vermont Central through line between Boston and
Ogdensburg and is a voluntary carrying out, as far as pos-
sible,of the consolidation sought of our. Legislature, last win-
ter. The Albany and Susquehannaßailroad,over which Fisk
and Ramsey had their rough-and-tunable fight, has been
leased to the Delaware and Hudson Canal 'Company,
which is said to be "powerful enough to protect
Troy and Albany look for cheaper coal as one result of
the lease. The lease of the Atlantic and Great Western
Railroad to the Erie has been approved by Chief Jus-
tice Thompson, of Pennsylvania, with the exception
f the clause r, (erring controversies to Mitch ell and
Robinson, of New York, which was struck out. This
was the last legal gauntlet which the lease had to
tun, and is supposed to settle its validity forever.
['he gold fiery has unsettled the new spring busi-
tess some whet, but there is considerable activity never-
heless. Cotton and breadstuffs are lower. Provisions
aave been more active, and prices a little higher fur beef
and butter, but lower for pork, with a dull business in
heese. Groceries, especially sugars and domestic ma-
'asses, a. e active, with a tendency to lower prices. To-
'acco was dull last week at a decline, the only sale of seed
[oaf at New York being 100 cases of Cllrio at 25c. In re-
tard to the dry go, ds trade the Financial Chronicle says :
The market, although not generally active, has pre-
.ented during the weak some features of unusual interest.
I'ho leading event has been the offering of certain makes .
of prints by A. T. Stewart and Co. and by H. B. Clan