The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1864-07-29
FINANCIAL AND CONNER ClAL.
THURSDAY, July as-e r. NJ

o.. auen for snbscrip,ous to the new loan, inquiry
into lie probable present and prospective eoi upon .ns
money Market the value OF national SECURITIES ana u'
currency and the price Of commodities cannos DC WIN
OUT interest 10 the people We therefore propose to show
briefly the influence will be likely 70 exert IN nsse I'm
portant monetary and commercial channels.
IL has been stated BY various newspapers which en-
dOrse che acts Of the administration Unfortunately that
tho polioy now being pursued BY Mr. fessenden
tends 20 the contraction of the currency, in con-
sequeui improvement In value, aud the lowering
or priccs for whatever money can purchase.
That this what the country needs cannot DO ques-
toned bat that Mr. Fessencens policy thus far tends TO
produce this desirable state OF things more than doubt
ful.
The prospect OF this Treasury note loan being put
the market at par resulted In the banks Strengthening
themselves meet the run their deposits to which
they say will lead, to greater less extent, by chr
failing loans and discounts and giving the usual ten
days notice OF their intended withdrawal OF large sum
temporary deposit with the Treasury The srngenoy
thus produced untitled the money market 10 respond 70
the oan which could only be successfully hoated on an
easy market, while the call for the return OF the tempo
rary deposits found the Treasury unable 70 meet It
unless bv the Issue OF new currency. In this
manuer net increase OF $40 965 1877 made to the
volume the currency, cheay in the form Of compound
cent notes. the week ending the 2eth inst
and in all probability we shall see further withdrawal
temporary deposits and another addition to the legal
tender issues in the next weekly statement the public
odebt.
10 this case the temporary deposit system, by giving
tue banks control (and the latter and the government
oconpy somewhat antagoulsic positionsl, compelled
further imitation the part OF the government. But
even had not and the necessities OF the Treasury for
10 public creditors had not required fresh issues
OF legal tenders, the state or the money market
such that 1t would have been forced to resort to the hurt
full palliative OF further imitation In order to give the
loan the least chance a Moreover, before
could DO worked off TO any considerable extent rise 10
the market value Of the interest in gold bearing bonds
was requisite subscriptions at par TO loan paying
only and three tenths interest in currency for
three years could not be expected any but patriotic
grounds while the bonds selling SO low.
The new loan having been officially advertised, and
the money market being eased by the Treasury dsburse
ments Of legal tenders, this rise in bonds--the pre-.
OF subscriptions to the Treasury note loanhas
begun and will be likely TO steadily continne (unless
II receives temporary check from adverse in,eli-
geuce respecting the Potomac rad) till they
IRE sufficiently high to place the loan on something
like equality with them. The strong demand for
gold bearing securities IN Germany and other parts Of
Europe arising from the high OF exchange in favor
OF foreign buyers Ia likely to continue, and win pro-
badly increase and their price being thus advsnced they
will no longer constitute an obstacle In way Of an
inferior currency paying loan at par.
The present loan is obviously financial mistake, tend
ing, have eudeavored to show directly to the do
probation OF the currency by forcing the government
stimulate the money market by additions to tho bulk OF
paper money in order to float It at the price
fixed A loan Of this kind is a parasite, depend.
ing for It's support the currency, which IL
weakens in proportion to Its own weight; and this is an
evil which would be likely to increase in compound
ratio with every succeeding loan at fixed price, II is
mistake 10 respect Of Its Offering less nduccnens
10 buyers than the public securities already In the mar
ket which has rendered necessary to the money
market to stimulate advance 10 Thorn preparatory to
receiving subscriptions to the seven.thrties.
The proper for the Treasury TO have pursued
II stoppage Of further imitation Of the currency
was the end sought, would have been TO place the
loan on the market at whatever price II woald
sell for it being undoubtedly better for the government
10 receive less for Its loans and for it's currency
than the reverse. By the policy has adopted It will
lose far more than II will gain, and IL will make the
people sharers In It's own losses. Let suppose, for
instance that the government received only ninety in
stead OF par for new loan. II would evidently 10
loser 10 the extent Of the difference far but the gov.
ernmen great purchaser and H. by receiving ninety
instead Of hundred for ts loan contract the cur
reny or at least prevent further nfatlon and reduce
or hsok an advance Of the prcs Of everything OF which
u is consumer by lessenips the premium on gold
or preventing It's further rise, the lost tho loans
would be far less than that disbursements be
sides which the people at large would profit by this
course equoiy with the government every mans dollar
being worth more 10 him than 1t assuredly would be
the policy Of consulting the price OF loans of the
currency next was persevered in.
Had the Treasury not resorted TO further Issues OF
paper money In this case the prior existing s.rgeucy
would have prevented the loan from being taken al all
at the price liked
Tho argument may bere be advanced that, 10 the
face OF the Increase to the currency Of las, and
further issues IN prospect. gold, the true standard
Of vaiues has decliued bu, this does diminish the
force OF what have said in the least Special causes
msy prevent gold from experiencing tho eec, OF fresh
issues OF paper money immediately, Just special
causes might induce spasmodic rise in the face OF
contraction but sooner later within time sufficient
20 allow OF ew revolutions Of the wheel OF commerce.
gold will become the indicator the value Of the
currescy. The special referred operating
keep down the premium at present easily dscovera-
BILE n the unusually large exports Of native and exports
Of foreign products and the diminished imports wh ch
~ ooos lessen the demand Tor shipment aud customs
antiss whe, 70 add TO these have the large foreign
demand for our gold bearing Securities which dispense
with proportiosats amount Of exchange
Win regard 70 working on the present loan, u promh@
q better result than has attended the preparation Of
the way for IL. me probability 10 that ~ the gold
bearing securities rise Ia her market value the dsposi
sion 10 invest In the Treasury will inoreass through
out The sountry for the dproporos In value between
The two will be covered By the difference 10 price, and
large amount Of currency which hes been bid
away 10 Wall street for lesg time win the light aod
nnd Ne way 70 the great porssary Tue msuey
thus paid into the haoes Of the govsrnmeut win be a
rapidly dsoursed, and 90 tight money marks, viii b.
avoided The subscrp,icrs being gradual thsa
tsa millions noed b. hold any time from the people
and banks and under tie present policy II tho Treasury
viii be 10 ss n.orsst 70 pay s receipts quickly
70 order " guard against stsingspey much posi-
be- aud 90 both keep the way open for nsx subscrp-
tops and prsvsrt the banks from rghdraw,ps
sheir temporary deposas, tho result Of ws,ch
would be n nepcsitina II the exn rhieh .Adaa su..,-