The Sun.
London, England, 1866-08-04 00:00:00

American Money Matters.

(From the Money Market Review.)
If in this country it is, among other things, the
mission of the Bank of England to regulate the ex-
changes, it may be useful to show how, in the United
States, the exchanges control themselves, without
pressure and prostration, or a minimum Bank rate
of 10 per cent. _ . _

We quote from a New York banker's circular
of July 6 :—" The heavy specie shipments to Europe,
which were going on on at the date of our last cir-
cular, June 6, suddenly ceased at the close of the
succeeding week, and have since been not only mode-
rate in amount but less than the current receipts
of gold and silver bullion from California." In
other words, :the drain of specie from the
United States to Europe has been checked
by the changes in the price of gold, which
on the sth June was 146, and on the sth July 153,
per cent. A fluctuation of 7 per cent. apparently
separates the two periods— the one of effiux,
and the other of stagnation. How happens this,
with no contraction of notes, no action on prices,
and no parliamentary or other generalship to
balk the enemy? The answer is, that the drain of
specie stopped because there is no Act of 1844 in the
United States, and no legislative or other interfer-
ence with the movement of the precious metals.
The recent specie movement from the United
States dates from the Ist May. On that day, it
may fairly be assumed, the tenour of the advices
from this side of the Atlantic altered, and the first
notes of alarm were sounded in private letters.
But the United States Treasury was then well
stocked with specie; so well that $35,000,000
were freely given—in fact, thrown on the market,
in response to the demand. Parting with that sum,
the United States Treasury withdrew from the
" Gold-room," and left the continuing wants of
commerce to be provided on the usual terms of de-
mand and supply. From 1251, at the opening of the
" Gold-mom" on the Ist May, the price was carried
to 1681 on the 18th June ; to recede, however, as
before stated, to 153 on the 6th July. Accumula-
tion of coin will doubtless again proceed in the
United States Treasury, until, it may be, some new
demand arises, or until the intention of resuming
specie payments has few seeming obstacles in its
way. Thus the precious metals were acted on in
the United States as mere articles of commerce—
as wheat, flour, or freights would have been in
other circumstances. They were required and parted
with on terms fixed between the buyers and the
sellers.

And this has been the practice of the United
States always, as distinguished from our own, un-
less during the operation of the short-lived acts
which inexperience and alarm framed in the darkest
hours of the late war. The first of these acts,
passed by the Legislature of the State of New York
(Feb 18, 1863), prohibited loans on gold coin or
bullion ; the second, passed by Congress (March 3,
1863), restricted the sale and price of gold ; and the
third, passed by Congress (July 17, 1864), abso-
lutely prohibited in certain cases the sale of gold.
What the effect of this exceptional and ill-judged
legislation was will be long remembered ; it so de-
feated its intended object that the third act was for-
mally repealed on the 2d July, 1861—fifteen days
after its enactment. Previous to the war, and as far
back as there is trustworthy information on the sub-
ject, the practice was precisely that which recently
and still obtains—coin and bullion were commo-
dities which might be exported without bank-note
contraction, or imported without bank-note expan-
sion. Indeed, at no period whatever have bank-
notes and coin in the United States stood in any-
thing like the relation which is maintained in this
country.

So, obviously, the exchanges control themselves
in the United States ; their favourable or adverse
position is accepted in the same matter-of-fact
manner as rain and sunshine, or the seasons. The
American practice is the very antithesis of ours.
With an adverse exchange, the reserve and trea-
sure of the Bank of England may be reduced
until the commercial credit of the nation
has been compromised, if not wholly ruined.
:With us, the precious metals are the life-
blood of commerce, and those withdrawn there
is collapse. The Americans are more practical ;
and they have a right to boast that banking in the
New England States has been always as creditably
conducted as banking anywhere, and that ,banking
in New York has been deliberately accepted by
Congress and the American public as the model for
the national banking system.
That there have been panics and revulsions in
America as well as in England is well known, and
that there, as elsewhere, similar occurrences will
arise in future is highly probable, nay, certain.
But panics and revulsions in the United States
have seldom or never, as in England, arisen from
the character of the bank-notes ; they have origi-
nated in the abuse of the deposits entrusted to
bankers, or in disappointments from the seasons.
No do übt,under the old American banking systems
the notes of some of the suspended banks became
worthless ; but it is equally true that the amount
of such notes in circulation formed only a fraction
of the aggregate liabilities of the suspended banks.
And it may with truth be said that the observation
of this fact—the fact that imprudent investments
on the part of bankers are a more serious evil than
even imperfectly secured bank-notes—•has contri-
buted more to American disregard of fluctuation in
the bank-note price of coin than even, probably,
some Americans would allow. We shall not at
present direct attention to the checks which have
been long imposed on New England bankers in
the use of the deposits entrusted to them ; neither
shall we mention the free tendency which such
checks exercise in attracting capital to the pursuit of
banking. We have merely, in conclusion, to chal-
lenge the disproval of the fact, that the recent drain
of specie has been followed in the United States by

no kind of evil. It has left the industry and the
commerce of the United States undisturbed. The
exchanges in the United States control themselves,
and exercise no influence whatever on the amount of
notes in the hands of the public; while in England
the precious metals are in the artificial condition in
which corn used to be under the sliding scale of
duties—in other words, they are obtainable only
under fluctuating rates of discount lest a drain
of coin should also deprive us of our bank-notes.
Is it to be wondered at that the absurdity of our
position should have turned against us, from the
other side of the Atlantic, the same sneers which,
not many months ago, were very generally directed
by Englishmen against America and their money
matters ?

RAILWAY nTELLIGENCE.

NORTH STAFFORDSHIRE.

The directors of this company have decided on
recommending the shareholders to declare a dividend
at the rate of 4 per cent. per annum for the half-year
ending June 30 last, leaving a balance of over £4,000
to carry forward.