The Sun.
London, England, 1869-05-05 00:00:00

that the E3tEnon would have recognized the in-
dependence of the Confederation bad not the Bri-
tish Government opposed it. It is a pity that Mr.
MOTLEY should be sent on an errand so fruitless as
be will find his mission to England ; but it is as
well that the refusal even to entertain the
demands about to be made should be couched in
courteous terms, accompanied with regret that the
negociations should have failed, and that this reply
be forwarded to Washington through such friendly
hands. -And it must not he forgotten henceforth,
by either England or America; that as the relations
between the countries will rest on an insecure basis,
they should be confided to good and well-tried
men, or those who have worked for the rupture
may find it burst upon them, like a tornado, before
they are ready. We still hold to the ol inion that
the extravagance of these demands is but a feint—
and that Mr. SUMNER'S real aim is the annexation
of the Canadas.

UNITED S7ATES CURRENCY.

The currency in the United States consists almost
wholly of legal- tenders, nick-named greenbacks, and
notes of the National Banks. Both were de-
signed by Chief Justice CHASE when Secretary of
the Treasury, under whose • auspices in 1861 the
bank-note circulation that then obtained currency
was converted into legal-tenders, and the Acts
were passed in 1863, which created the National
Banks and permitted their issues. The one system
was in a Ligh degree profitable to the State, as it
made money, au inconvertible legal-tender, out of
rags; the other was in a high degree profitable to the
proprietors of the stock, who through it received in
annual interest upon their capital 14 to 15 per cent.
The privilege of a National Bank is to issue in the
proportion of $90,000 in notes for every $lOO,OOO
in United States Bonds deposited in the National
Treasury, the extent to which this may be done being
limited by law. It follows that while the Bank draws
6 per cent: in gold on the Bonds it has deposited in
the Treasury, it is permitted to traffic with a sum only
fractionally less for its own benefit, obtaining thereby
dOuble interest. Such a privilege is worth having,
and that the people eagerly availed themselves of
it is evident from the rapid increase of the National
Banks. On the 25th Alarch, 1863, the law was
passed, and on the 20th June following the first
bank was organized. In October, 1864, there were
50' of these banks with an aggregate capital of
$86,782,802, and a year later they numbered 1,513
with a capital of $393,157,206, increasing so as
on Jan. 1, 1868, to exceed two hundred thousand
proprietors, with a capital of $120,073,415. The
system worked well, answering the wants of the
people at the time. The great crisis of the war was
tided over, and the monetary affairs of the 'nation
were placed on a more secure- foundation, as was
shown by the few failures and the small sums lost
to the creditors by the insolvent institutions. One
great advantage was that they facilitated exchange
as their bills were current in distant States, whereas
the old notes were only received in places far from
that of issue, at a heavy discount. The Senate has
lately passed a bill to amend these Acts, of which
the Fourth Section is important, as it provides for
a better distribution of the national banking cur-
rency. We do not say that the Senate therein acts
a like part to that CANUTE satirised when he placed
his chair on the shore, and, surrounded by his
courtiers, commanded the flowing tide to recede.
The section withdraws $30,000,000 from banks
having a circulation exceeding that provided for,
distributing the overplus aaoag the banks in States
wherein there is less than the authorized amount.
The law provides for a total of $300,000,000, and
the comptroller is to calculate on the basis of the
half, or $150,000,000, accorded to population, and
the other half, or $150,000,000, accorded to pro-
perty, real and personal; but he must so arrange
that the aggregate of circulation shall not at any
time exceed the whole or $300,000,000. The Fifth
Section is as follows :
"Sec. 5. And be it further enacted, that any Banking
Association located iu any State having more than its pro-
portion of circulation, may be removed to any State having
less than its proportion of circulation, under such rules
and regulations as the Controller of the Currency, with the
approval of the Secretary of the Treasury, may require."
Early last year, of all the 1,639 United States Banks,
New England possessed 490, with $83,000,000 of
deposits, $101,000,000 in circulation, and a capital
of $145,000,000. In the State of New York there
were 314 Banks, but their deposits swelled up to
$262,000,000, the circulation being $69,000,000,
and the capital $116,000,000. The three middle
States of Ohio, Indiana, and Illinois together had 290
Banks, with $48,000,000 of deposits, $39,000,000
of circulation, and $16,000,000 capital. All the
other States and Territories, excluding Pennsy-
lvania, had 342 Banks ; deposits, $73,000,000;
circulation, $42,000,000 ; and capital $67,000,000.
This distribution was not unequal, although
..the
single State of New York possessed little less in
deposits titan all the others put together. When
the rebellion ended, however, the South could have
neither greenbacks nor National Bank notes, while
whatever the Southerners had hoarded in gold, and
their.few stray legal-tenders, were expended at once
to keep them from starvation. On the Southern
States being re-admitted the distribution of the cur-
rency was in the highest degree unequal, as a large
section of the country had no money at all, nor
was it the intention of Congress that these "rebels"
should have any, as the Legislature ruled that it
served them right. But here we find the laws of
nature commencing their beautiful work of reno-
vation. The South bred in luxury, and trained to
squander, was taught by the results of the war
lessons of economy, which are now strangely react-
ing on the Union. Two bad harvests followed
wars devastations, then the tide of Southern luck
turned, the yield of cotton increased, as well as
the value, grain had been cultivated, and the
poverty,stricken Southerners, cured of their extra-
vacancies, ceasing to regard luxuries as necessaries,
and taught to practise economy, absorbed all the
money they got, sending little back to pay for
that which in olden days they had so freely con-
sumed.• • The South was like an empty reservoir,
into which poured sundry streams, but the water
remained, and will remain until it commences to over-
flow. The currency comes front the North, where
the drain begins to be felt, but it is in the
'West that the shoe pinches, as circumstances there
are the reverse of those in the South. The produce
of these States sold well during the war, the cur-
rency inflated prices, and the farmers, with an ex-
aggerated idea of their wealth, lived more expert.
sively. These conditions have lately changed, both
the farms and the value of their produce hav-
ing fallen, but the farmers refuse to accept the
fact, holding the grain iu conjunction with spec-
ulators, for higher prices, while they maintain
their style of living. Thus the South is not
spending money though making it, while the
West is not making money but spending it, the
East being merely the channel of trade. In con-
sequence currency has been flowing from the West
to the East to pay for 'the luxuries so freely con-
sumed, while that stream thence tends South in
payment for cotton and other Southern staples,
or is carried there in the pockets of settlers in
search of cheap estates. This is in obedience
to a very simple law of economy, which no
law of Congress can alter, or even modify: If
the West will buy Eastern produce, but will not
sell its own produce, it will be depleted of currency
to pay; and it is in vain for Congress to attempt

to supply the deficiency thus created, for it can
only be done by the Western citizens acting on the
plain rule of conzutning less and creating mole.
Nothing can be siwp!er than the economy taught
by ADAM SMITH, but the world will often persist in
looking on such questions as abstruse, and seek

3eep, fur c IIISC3 and remedies, while they lie on the

surface. If they be on the top, and Congress bur-
rows at lha bcittom, the deeper these wise Legisla-
tors get the farther they are from what they seek.

Nor is this Act grounded only on an economic error ;
for the Nation shows that it would in no way, even
temporarily, procure the object sought. Toe legi-
slatiin of Congress is intended to give a State the

privilege of obtaining currency on the pledge of
United States Securities in a limited proportion to
its population and property ; but is this privilege
beyond what each person possesses iu his own right ?
Any oue who has these securities can at any time
obtain greenbacks on them ; if they must gather