The New York herald., 1862-04-14


Since January 1....s7,s4l7 717 asse, ,2S2 l2os2,oss
II is generally understood that the banks have
sot been free sellers of their government stocks
within week. The supply of mercantile paper
having simultaneously fallen of, in consequence of
the prevailing stagnation in business it is expected
Mat the bank statement to be made up tomorrow
viii show falling Oh in loans. Last week the
loans stood at $l24, ATT ,4e4, which was decrease
Of $544 LAG from the week previous. This Is really
avery low figure for the bank discounts in this
eity, and it would argue . remarkable diminution
Of business if further decrease took place. Our
banks would consult their own interest it, instead
sf selling any more Of their government secnrities
hey lodged them with the Bank Superintendent at
Albany, and drew fresh circulation, especially
snes, twos and threes, which are greatly wanted
u Washington, in Virginia, and in Kentucky and
On the Mississippi. The bank expansion of cur
sency, from the best information that we can OBJ
hn, will amount by the LIST of June to $50 600 GOO
over and above the currency which was afoat on
The lst Of March. Every I've dollar note set
adoat by government requires fresh issue
Of five dollars in smaller notes by the banks.
it will be TO the public interest that
pur New York city banks, which are con-
Quoted honestly and are substantial institutions
should issue as large proportion possible Of the
aew notes. If they hold back, there viii be
tnormous issues of small notes by country banks
whose sovency and stability are and must be, mat.
krs Of grave doubt 1t is understood that the bank
deposits will show an increase tomorrow, and that
Abe specie average-whieh last week stood at
bs3, ,764 Ss2 being increase of 1922 $50 from the
week prevous-wiu likewise show an increase Of
1t least $500 600, thus swelling the bank average
70 over s34 500 600. This is o very handsome
'eserve for our banks. How much Of it belongs
exclusively to their special depostors does not ap-
pear however. The banks cannot legitimately
gain specie at the present time. Every dollar
added TO their reserve must either be special
deposit or purchase Of coin. The heavy drain
Of gold for export should admonish tie banks to
heep themselves as strong as possible, in order to
be prepared for all contingencies 1t is quite evi
dent that we shall send abroad this year as much
gold as we receive, and as much besides as we
book from California in the year 1861.
The week closed on very easy money market,
rates being about one per cent lower than they
we're week ago. Yesterday money WAS offered
very freely on call at per cent; bankers accept.
snces were quoted s, and good mercantile names
ba7. The advance in certificates of indie btedness
End checks to 81 q r. and the steady increase Of
deposits in the Sub.Treasury at per cent, are un
mistakable indications Of the tendency Of the
money market to lower rates. In fact, we are Just
Beginning for the first time, to feel the effect Of
The paper money in6ation about which so much has
been said. The sixty millions of demand notes
ssued under the act of August, 1851, produced no
snect on the money market because they only re-
placed poorer currency in the West, and added
nothing to the actual value of money in circula-
lion. They filed q void, and nothing more. II is
very different with the new legal tender notes,
which the government 10 paying out at the rate of
swo millions day more, with the certificates Of
Indebtedness, and with the currency which the
banks of the interior are pouring out with such
freedom; these are absolute additions TO the stock
>, currency or money afloat in the country, and
hey naturally produce their first effect upon
The New York money market The banks,
which see in the present condition Of the
country rare opportunity to make money by in
sreasing their circulation the contractors who are
receiving their millions from government, and the
bankers and others into whose hands the soldiers,
pay eventually finds it's way, are all seeking EN-.
ployment for their funds in New York. II ia the
opinion OF well informed persons that this current
Of capital must flow towsrdshis city until the war
snds, and that there must be such an accumulation
sere AZ TO cause the price Of money TO fal very
'ow, and to lead 10 considerable speculation.
These views are consistent with past experience.
Heavy issues Of paper money by governments
nave invariably led to these results: they have, in
he first place, cheapened the price Of money by
increasing the supply; in the second place, they
nave caused an advance in the price Of all articles
Of merchandise and property; and thirdly, they
have caused an advance in the price of specie. If
.lcse results have not yet been witnessed here,
he reason is not that the laws of political economy
and the teachings of experience are ursound, but
simply that the issue thus far made of paper mo.
aey has merely taken the place Of other paper
which has been withdrawn from circulation, and
20 are only now just beginning TO feel the first
slight effects Of the new financial system.
Foreign exchange closed yesterday at ll21S 9.
os BANKERS bills on London, and 500 q sos for
ranee, few commercial bills are in market AZ