New-York tribune., 1878-03-02
TIE PROSPECT.

TIE PROSPEtI.
Yesterday the UnItcd States entered upon a
new era III lis history. Nine years ago Con-
grcss passed an act To sustain the credit of
the Government Vt that time Wc owed more
than We could pay, but with increasing power
OF borrowing. Now we owe more than We can
nav, and have enacted that We may be called
upon to pay more than can borrow. For
nine years we have labored TO lift our credit.
and to make borrowing easy. Now we decide
to depress our credit and to make paying
necessary. We are to get along as we can in
utter Indifference To tie opinion OF civilized
nations which have loaned us many hundred
millions. Congress has acted. Its decision
deserves calm and candid inquiry. If friends
of the silver Bill are right, and 10 serious
harm result, we shall most heartily rejoice
Within two weeks, ending on Wednesday
last, publicly recorded sales of Government
bonds III this market wero SlO.2jl 600.
During six weeks preceding public sales had
been 5,191. 600. Moreover, private sales,
not known to the Stock Exchange, have been
proportonatcy large. Though the increase
has been very remarkable since the passage
of the Silver Eli became probable, offers have
been met without much change of price.
Quotations here are III currency, and II the
price of god rises more than the gold price
of bonds abroad declines, buyers can profit.
Hence bonds returned from abroad have been
readily taken, and home capital to like
amount has been absorbed in the purchase.
This drain of capital must continue so long rs
there remains surplus capital here, and the
price OF gold is thought likely 10 advance as
much as the gold price of bonds abroad de-
clucs. Very large orders to sell bonds are
known to be in the market, but Will not bc
80 pressed as to prevent sales, or unnecessarily
dcprcsS prices.
The first feature of the new situation is
therefore practically unlimited demand Tor
uavnent Of foreign debts. Recently exports
have greatly exceeded imports, and sales of
bonds have changed hut little the price Of
GOLD. But the season Of large exports Is near
" over Cotton shipments begin 10 decline
grain and provision shipments will naturally
decline soon. Imports, on the other hand,
will be stimulated by the prospect Of selling
upon market of advancing nominal prices.
As soon IA the surplus Of produce exports
over imports falls below the demand for pay
mcnt of debts abroad, gold will begin to flow
out. This tendency will be greatly increased
if gold becomes less necessary for payment oil
duties.
Silver enough to meet all demands for duties
must be coined within five or ak months, and
NAV be coined within three months Secretary
Sherman has said that he will execute the
new act according to its spirit, and, if he
paws ont silver at the rate Of S3,O0O,O0O per
month, nearly the whole will flow back into
either legal-tenders or silver bullion remain
at a discount in gold. If the lcgal-tcnder i'll
which other taxes are paid is worth less than
the gold in which duties are paid, the
tendency will be to draw silver coin into the
Treasury for duties, IA fast as it may be
issued, while lcgal-tcndcrs must still be paid
in for internal taxes, but will not be paid out
for expenses A sharp contraction of legal
tenders must follow. Meanwhile, if gold is
largely needed to pay for bonds, the premium
may rise, and legal tenders and silver may
both decline in value.
The practical effects to be expected, then,
are CD large sales of bonds which will employ
our surplus capital, and tend to an advance
in the price of gold, or IL fall in legal-tendcrs;
(2) a tight money market indisp0siiion to i'll
vest, and withdrawal of loans from
commerce, industry and enterprise; CD
practical withdrawal of lcgal-tendcrs,
while the new silver dollars flow back into
the Treasury; and (D gradual exhaustion of
the gold reserve of the Treasury. No bust
ness man will need 20 he warned that these
are dangerous conditions; bat we are now
called upon to make the best Of them.
How far will uncertainty cease to crush en-
terprise and tradc9 Certainly, business has
been dull enough. II was thought exceedingly
stagnant last year at this time But the bank
exchanges for the month Of February at
twenty-one cities show decline in transac-
tions. in comparison with February of last
year. at every city except three, and III the
aggregate this decline is over 20 per cent.
Little as the country was doing III the crisis
of the Presidential struggle, 10 is now doing
one-ffth less Can it be hoped that greater
activity will now appearP Contraction of cur
rency we have not feared at any time when
all the capital of the world could be drawn by
our strong credit to meet any needs. But
contraction of great severity, at IA time when
capital cannot be borrowed, but by untold
millions must be paid abroad, does not seem
to us likely to make business active here
This, however, is the hope of the friends of
the Silver Bill-that it will revive business.
They prevail, and the country will not merely