The south-western. [volume] (Shreveport, La.) 1852-1870, 1868-02-05

We clip the following from the New Orleans Price
Current:
The general law Of supply and demand governs cur
reney in its relation to gold as well as commodities III
their relation to currency If three hundred millions
were required before the and six hundred ana nifty
millions are required now measure commodities IN
their commercial exchanges it is manifest that II the
amount we're increased tenold there would lneVlta-
by be large advance in prices In other words, the
purchasing pewer of the currency would be diminished
by the extent of the increase That IT, its excessive
supply over the previous demand would it 10 de-
cline in value, and its depreciation would be measured
by the enhancement in the price of commodities This
is the general law, and s safe guide so tar as gen.
eral laws can be relied But there no general
laws without their exceptions and this not singular
in that respect. Many disturbing causes may exist to
affect prices and interfere with the operation OF the
general law. Snch, for example, as scarcity OF any
particular article any number OF articles, whether
from an actual deficiency in the supply from large
amounts having been monopolised by spectators and
withdrawn from the market; such as protective or
class legislation; such oppressive taxation such as
political complications, peace, or the legislation
Of other nations affecting own interests.
During a suspension of specie payments-that is, |
during the period when arbitrary legislation has
changed the measure of value from one thing to
another-from gold to greenbacks-gold, which was
the former Of value ceased its functions as
such and became commodity, subject like all other
commodities to the law Of supply and demand. Under
the genere law it would rise in price in accordance
with the expansion of the circulating medium but not
in the ratio, because its advance might be either
accelerated checked by the perturbng influences We
have referred to. Thus, for example, in 1852, with
circulation of 2s9 millions, gold ruled in Wall street at
9 per cent. premium; year later with circulation
of 500 millions it 46 and in the ensuing year
when the currency reached $50 millions it advanced
to $50 81 SO in greenbacks for 81 90 in gold The
advance during this period was consequently in accor
dance with but not in proportion to the increase OF
the currency The exception to the general law is still
forcibly shown that when i'll 1865 the volume Of
the currency had been swelled to nearly 1000 millions,
gold had declined to Al premium.
These irregular economical phenomena have puzzled
some parties who seem to overlook in their discus
sions the subject that the article gold has ceased to
be measure of value and has become commodity, sub
ect like all other commodities to the law OF supply and
demand which will modify, disturb, check increase
the general effect of an increase in the currency. If
the balance of trade were largely against us, there
would be demand for some medium of payment If
there were medium of payment but gold, the price
of that commodity would rise in the market in
dance with the demand to a much greater extent than
would be justified by any increase at the time in the
volume of the currency If on the contrary there
other mediums for payment preferable to gold, then
there would be export demand tor the LATTER and
with limited demand for home consumption, it would
rule at much less than might be expected from the
movement of the currency. Had raised crop of
four million bales Of cotton and prices had been main
tained the exchange predicated upon it might have
extnguished our entire foreign Indebtedness and there
would have been no export demand for coin. There
would have then been demand for this auriterous
commodity excepting for exchanges at the custom
house and to supply the requirement of our mechanics
and manufacturers. Under these circumstances the
supply would have greatly exceeded the demand and
the price would have declined much larger
increase of the currency than has occurred. Gold
would in fact have become drug The market would
have been overstocked With a normal currency it
might have declined in value to the par Of greenbacks.
With redundant currency it declined nevertheless,
but not to the same extent. Now that which have
supposed might have been effected by the proceeds of
large cotton crop sold at high prices has been ac-
ually done by the export not of the products of the
SOIL but of the products of the Treasury Department
at Washington. The 5-20s have produced the very
consequences We have predcated on large cotton e3-
port.
1t is now estimated that there $50 millions of
United States securities in the European markets No
inconsderable portion of this amount is held for in
investment and will remain abroad as long as the par
ties have confidence in the preservation OF our govern
ment and It's fidelity to its pecuniary obligations. But
there is another part-probably than moiety OF
the whoe-which is afoat in the financial centres of
London and Frankfort sub to the current of supply
and demand When the former exceeds the latter,
whether from loss of confidence speculation or polit-
ical complications at home abroad, the 520's de-
cline on the London Stock Exchange to point which
leaves margin for their return to this country. They
are accordingly disposed of in the New York market
and the proceeds RENTED to London in gold or its
equivalent. OF course gold advances under the inhu-
ence of this new demand and must continue to rise,
unless its upward tendency be checked by some per-
turbing influence, until it reaches point at which
S-2Os can no longer be returned to without loss,
Then the current may possibly change There may
be rise in the London market and demand for our
securities in which case they would be rea1ported,
and thereby represent similar increase in our gold
supply. Gold being no longer in demand would natu-
rally fall in price, And it may be expected to os-
cillae as long have such enormous amount of
52Os aloat on the other side, and their value there
is subject to the disturbing influences which exist at
home, say nothing Of political movements abroad.
Gold is no unerring index of the value of
greenbacks than any other commodity; but like all
other commodities it will be influenced by expan.
sion or contraction of the former subject always to
exceptional causes which may be too strong for
the normal power of the currency movement.