, 1873-07-16
MONEY AND COMMERCE
MONETARY,

MONETARY.
TUESDAY EVENING, July IT,
In the local market finances continue extreme
~ dull, and monoy abundant. Now York OF
chango continues firm at 25o ror IL 900 premium
showing tho disposition of Western banhs to in
croaao their Now York balances for tho suso O
tho per cent allowed there OH deposits il, prof
nfence to Offering tho money ut lower than Iii,
>lsual rates hero.
THE OUTFLOW OF BpEc1E.
Tho upward tendency In tho price Of golt
poems to havo takon tho Now York epeoulator
BY surprise, md many Of them arc prompt t.
hacrloe tho unexpected rise to manipulation
ana aaHcrt that tho heavy ehipments OF specie
naas Teek Wcro made by other spccuatoru fol
eho pu'poao of influencing the market
@hd advancing tho price Of gold. Thert
as curious idiosyncraay, characteristic
nl all sRocuatora, whether in New York or olso.
where, to look upon NIL fluctuations Of rricos aa
Tho result Of deliberate plaua on tho part OF poo
a'lo like themselves. In thus fixing thoir atten-
fton exclusively upon the movements Of thoir
OWN claas, they frequently overlook tho moro
gonoral aud important circumstances that
really govern the markets. Wo boliovo that,
In all markets and at all tincB, thero
lis loss plan, and TINT the fluctuations Of markets
slra Influenced lesH By nny deliberate intention,
flan ia generally supposed by spectators
themselves.
AS far as tho recent hoary exports Of spocie
arc concerned, wo should say 1t was rather tho
nocesBary result In tho domand for ster1ing or
aohango, than of any intention on tho part OF
Epoculntors to influence tho price Of gold.
Tho price Of exchange shows which
way money is disposed to movo. If
exchange, is in favor Of Chicago and against
New. York, 1t mny be presumed that money is
coming westward, and vice versa. II exchange
ia IN favor Of London and against Now York, 1t is
safe to assume tlat the hala,cc Of foreign trade
ds against tho United Statea, and TINT money il
flowing to foreign countries to adjust tho dit
ference.
As long as our exports of domestic products,
other than spoco, arc sufficient to balance our
imports Of foreign goods, sterling exchange re-
matnH at or below par. But just as soon as our
exports Of domestic products, other than sr,ecie,
arc insufficient to pay for the concurrent imports
OF Tors ign goods, there is demand for more
exchange on London than il being made by tho
ship'nonts Of produce. The price Of exchange con-
sequontly advances, and as specie can be exported
ut less percentage Of Its value for tho expense
or transportation than anything else it Ia shipped
to Europe for the purpose of making e1-
change. In other words, the balance Of foreign
trade against us in the exchange Of products is
paid III money. and ap specie Is tho only Kind Of
money available for this purpose, its export In
dicates an outflow OF moncy to pay our
indebtedness to foreign countries. Specie is tho
last thing to go, because all other products are
1!orlshablo and OF uncertain value to the pro-
ducora until sold, hanco thore iB necessity that
other products than the precious metals should
SO hrst: Tho outflow Of spoco, therefore,
ho, snowa snaE me exports OF other products has
anInS.,1, apf1sd, IN IT. tho present ipatance, it is
undoubtedly the payment OF tho July in
toreBt Oh Government bonds and other
american an 20 securities held IN Europe that
necessary. The som-annual interest on Amor
ican securities Of a1l kinds hold III Europe can-
not bo less than 500, ,000, 900. Formerly, when
thoye was a largo supply of Government bonds
still in tlla country, and while American railroad
bonds wore being freely taken in Europe. a
great portion Of tho accruing interest was
was thus dcfcrred by new promise -to-pay. Un-
dor the prcsont condition OF affairs however
wo must look for All outflow OF specie concurrent
with every period OF large interest payments.
ENGLISH AND AMERICAN DANK1Sa.
Mr. Wnltor Bagohot, London banker and
writer on finance, political economy, and abstract
philosophical subjects, has published little
book under tho modcat title Of Lombard stroet,
Al Description Of the n1onoy nIarkot." Mr.; Bag
to Lombard street., but diseaasas Ssa
banking generally, with that singular
somPrehenalyenoss Of view and yet accuracy Of
detall which laH nado him an authority in ab- |
stract questions not only OF finance but Of aomo
branches Of speculative philosophy Ho uses |
tho tito OF "Lombard street." simply to iluy- |
sTate t1's tue banking system Of England, and to
hl!ow M low London is the gront Clearing Houae
Of tho world. All the world borrows in London, |
The German Empire keeps large deposit there, |
since tho suspension Of spoeio payments by tllo |
Bank Of France, the only available large atook Of |
s.; gold IN existence is in the Bank Of England, aud
i M n1snp
Of Tie monetary transactions Of tile world. On
the bhnking system Of England, which is thus
connected with the credit operations Of all coun-
.rlob. rests . system OF domestic crodits OK
unless It DO III orr own country. Men who do
nllanoas Oh borrowed money in England arc
steadily increasing in number aud, according to
traol Mr naSehot t4 aro m driving tlo od-fashionod
not pleasant to contemplate, hut which re can
not here stop to notice. III tho constant borrow
ing which l. thus going OIL. London is tho 60
ootweon' Her banking System takes the money
borrowers who are seeking it, II is by ity hop
shat English capital runs aa surely and Instant
" where it IL most wanted, and where there il
moHt to bo mndo OF it, al wator runs to fnd liz
level"
Tho most striking fact in tho banking sys.em
OF England is itb combination OF enormous pow
Or with almost Incredible delicacy. About tile
beginning 81 this .yenr, tho deposits Of banks
"'tteA PHntnA t!ie1! AccouHtst III tho following |
named clt'ea, stood, aa quoted by Mr. Bagohot
Non Eoaa9n Vn,x .$to0 900 900
isH coy fofk 2o000O 900
f;ar,,, Galls. f,;:. 65oooo0O
ana tba unknown deposs-tio' icposits IL SsspS
which do not publish sheir accounts-aro in LonJon
much greater than those III any otssr OF these cities
In discussing the safe guard against unsound
oganki''g, the most prominent point made By
MIR. Dagohot against tho banking sygtem OF Enc
land is that tho reserves of ali tic banks, not
only OF London, but Of tho whole Of Great
Britain, are concentrated in tho Bank of Enc
land, and thas Tint institution, instead Of rooor~
nlzlng any peculiar ronponsbtlos AZ ettachi,Ig
to this important fact, loans itH deposits and OF.
panea its liabilities the samo al Other banks.
thus using tho reserves OF other bauka to al