Year: 1868

the money market Will not last mucn
longer, but will be disturbed by vari-
GUS causes, and give way before long
to sharp spasmodic demand, with a
supply inadequate to that demand. n
is OF the highest possible importance
to have this matter cleared up. The
fortunes sofmultitudeS ofour shrewdest
and most energetic merchants, manu-
facturers and industrial workers de-
pend in part on the money market. II
then, at the heart of finance, every
thing is strong and healthy, the sound
ness and health pervades every part of
the financial organism.


Now let us see what ground these
prophets have for anticipating strin-
gency this fall. In the first place,
there is demand for currency for the
West. This outflow of greenbRcks
from New York does not usually begin
so early as the middle of August, but
occurs several weeks later. Nothing
is more certain than that in the past
week considerable shipments have
been made of currency to Chicago and
Milwaukee,, and smaller amounts to
Concinnau and st. Louis. Whether
this demand is merely temporary 1t is
too early yet to Judge. There
are in the West some speculative
causes at work which might easily ac-
count for an exceptional demand just
now. What we have to do is to watch
events carefully before making up our
minds.


Secondly, the activity of business
which is generally looked for will cause
a considerable demand all over the
country for currency. The limited bus
mess OF the last three or four years will
probably be followed and compensated
by very lively movement in almost
all departments OF legitimate trade. To
the many forces generally cited as OPP
Grating to this end may be added the
expansive and stimulating effect of the
repeal of taxation. 1t is law of fiscal
science, which has been but too extern
sively at work in this country, that
heavy taxes kill business. Would that
the converse of this law were also true,
and that the business which has
been killed by taxation revived
Immediately when the taxes were
repealed! Experience shows, however,
that while the killing process is swift,
that of TesuscitStion is slow. When
the commercial editice has been shaken
some time elapseS alter the removal oil
the noxious tax, and before the shatter-
ed fragments of the dilapidated, half
destroyed edifice can be brought to-
gether and made to assume their former
symmetry, order and beauty.


The Tribune the other day expressed
its regrets that the heavy war taxes had
not been continued up to this time.
We cannot sympathizs with this regret.
On the contrary, the taxes which have
been taken of have injured the country
to an extent beyond computation. They
are coEroding ulcers, and to have con-
tinued them would have been to per-
petuate and to extend the malady. To
remove them stops its further spread
and prepares the way for complete re-
covery. The trade of this country has
been weakened, and wearied, and de-
hU hRaF aFHn0 for EnVaFnI VRHT6- a
burden OF bad taXations But change
has been made and relief has come.
By the act of 18th July, 1866, this gall
ing load of taxes was taken of to the
amount of sixty millions. a further
tightening of the burden by the law of
I'd March, 1867, took of forty millions
more. The cotton tax repeal bill made
a further diminution of 23,769, 600, and
to complete the relief the act OF March
last repealed taxes to the amount of
S44, 500, 900.


VINO shall estimate the elasticity and
active renewal of business which Will
be developed by this repeal of almost
one hundred and seventy millions, and
the removal of SO much of the par
alysing weight which has crippled its
movements. And time has been given
for the change to work. a sufficient
interval has now elapsed. The results,
therefore, are looked for with no small
interest.


But it is this gratifying prosper of
resuscitating business which is being
converted into an argument that money
will probably be tighC, or at least there
will be very great activity with high
rates of interest. This, indeed, is the
main argument on which these gloomy
seers rest their uufavorable prophecies.
Their horoscope is worthy OF regard If
we do not accept it as more than par
tial and one sided.


The chief reasons for anticipating
stringency are thus founded on the In
creased demand. How about the sup
ply? If this keeps apace then there is
no fear of monetary trouble. In an
sWering this question we must discrim-
mate the supply of capital from the
supply of currency, each depending on
its own laws, and each being equally
necessary as a condition of monetary
ease.


As to the supply ofidle floating capI-
tai in such a form as to be available in
the loan market, never, probably, has
there been time when the Wall Street
reservoir was more full, and more ca
pable of commanding almost any in
crease that may be needed. CiTGum-
stances have placed, and will probably
keep, the European markets favorable
for US. Money is q drug there, and is
anxiously seeking investment here.





ing capital of this country is aceumu-
laiing very rapidly. It cannot invest
itself as heretofore in government bonds
Without displacing other capital, for
the government issues have stopped,
and few new bonds will be issued. The
reservoir of capital in the loan market
being thus SO amply supplied from for
eign and from domestic sources, we
have one of the chiet safeguards against
stFiDgency.


Let us next look tothe currency. Is
the horizon free in that direction from
probable trouble? Congress, before IT'S
adjournment, took measures To keep
the currency stable. The chief trouble
threatened, as is well known, was from
the Compound Interest Notes. These
are Just maturing, and as they perform
some of the functions of currency 70
pay OF twenty or thirty millions would
De equivalent to contracting the curren-
cy to that extent. This contraction IN
the month of June or July would not
be felt. But in the fall il might nave
serious results. To prevent these the
issue of three per cent. cestthcates was
authorized inst at the close OF tne ses-
sion. By these the currency Will De
kept free from perturbation so lar as
the redemption of the compounds Is
c0nceFuei, As to any disturbance OF
me currency by Mr.. McCulloch's sales
81 gold or of bonds, IL IL not 70 be
Thought OF. The Secretary will not It
Is believed, disturb the money market
intentionally, and he Is TOO sagacious
and experienced to do Il without intend
ing II.