COMMERCIAL CHRONICLE AND REVIEW. COURSE OF BUSINESS-FALL OF PRICES-DEPRESSION-GOVERNMENT STOCKS-CURRENCY-EXPENDI TURES-APPROPRIATIONS-WAR BUSINESS-MASSACHUSETTS BANK COMMISSIONERS-ACCUMULATION IN BANKS-IMPORTS-CONSUMPTION OF GOODS-EXPORTS-BALANCE-GOLD MOVEMENTS— FALL IN PRICE-EXCHANGE-FEDERAL FINANCES-DEBT-PERMANENT INVESTMENTS—IMMENSE RESOURCES-FIRMNESS OF STOCKS-PRICES. THE Course of business in New York and the States generally has been one of contraction. The old regular orders for goods to supply the wellgauged regular demand for consumption in various parts of the Union, on terms of well defined credit, are no longer given, and a "hand to mouth" demand has existed for many months, gradually approaching a strictly cash basis-no one being disposed to hold stocks of goods. The fluctuations in values are such that no regular and safe calculation can be made, either upon the extent of the demand or upon the probable range of prices. Hence all business in excess of actual orders to be filled partakes of the character of a very hazardous speculation. The year commenced with rising prices, based on the very rapid depreciation of paper and a speculative demand for goods. These two elements reacted on each other. That the currency was rapidly depreciating was evident, and that goods were scarce, as measured by the usual rate of consumption, was equally apparent, so that dealers made haste to acquire stocks of goods. This movement naturally hastened the fall of paper as compared to goods. It was, however, soon discovered that the same influences killed also the demand for goods for consumption, sinch the high prices forced families very generally to reduce their rate of consumption. The expected demand did not therefore take place, and the speculation subsided. Since that time stocks of goods all over the country have continued to decrease even under the reduced demand from consumers, and, being disposed of on the cash basis, the paper money received for the goods has continued to accumulate at the financial centers, seeking employment in various ways. Prices, meantime, have undergone reaction, and in their fall have involved the trading community in losses that would under the old credit system have produced the most wide-spread panic and disaster. The current of money from shops to financial centers has enabled the government, through the machinery of its agents, to convert from $100,000,000 to $200,000,000 of paper into five-twenty stock, and has therefore ceased for the moment to increase the amount of paper outstanding-a circumstance which has helped the depression of values from the high points at the close of February. Holders of goods, under these circumstances, refuse to sell or to meet the market, being persuaded that the lowest point in the oscillation is reached. This state of affairs produces a very great depression in business transactions. The decline in the prices of produce has also a marked effect in reducing the purchasing power of the great mass of Western consumers of goods, who are food sellers, notwithstanding that it somewhat increases that of the city consumers of goods, who are food buyers, although this tendency is counteracted by the diminished employment of labor to some extent. The general tendency is a more rigid dependence for business upon the vast expenditures of government. The scale of their expenditures is best gauged by the appropriations for year and the actual outlay. These have been as follows: the * * The appropriations for the year are the sums authorized by various acts of Congress. The increase of debt and the sum of the customs and taxes represent the sum actually paid, being nearly $2,000,000 per day. With this large sum the government has stepped in and become the great employer. The operation is thus described by the Bank Commissioners of Massachusetts: "At the breaking out of the rebellion it was feared that the business of the country would be entirely prostrated, and the banks, which make their gains out of the activity of trade, expected to be the greatest sufferers. Neither of these fears have been justified by the event. * Seldom, if ever, has the business of Massachusetts been more active or profitable than during the past year. The war has brought into activity many mechanical employments for which there is little occasion in time of peace; for example, as the manufacture of arms and ordnance, camp and garrison equipage, saddlery and artillery harness, and military clothing and accoutrements. It has, also, greatly stimulated the manufacture of boots and shoes, and of woolen goods; while the subsistence of the army has furnished a constant and remunerative market for breadstuffs and provisions. There is hardly a branch of domestic industry which has not been actively employed. The cotton manufacture alone has been interrupted by the loss of the raw material, and has given less occupation to labor than usual; but there was never a time since this branch of industry established itself in New England, when the profits realized from it have been so considerable. * The necessity of transporting great bodies of troops from point to point along our seaboard, and of furnishing them subsistence, has called into the service of the government a vast fleet of transports, for the hire of which owners have received rates of compensation greatly exceeding the ordinary profits of commerce. Every steam vessel, capable of navigating either the ocean or harbors and rivers, has been thus employed, and many more, previously regarded as worn out, and no longer seaworthy, having been flimsily repaired, and made to pass through a hasty or corrupt inspection, have gone out laden with valuable property, or invaluable lives, to be wrecked or rescued, as the chances of the weather, or as skillful seamanship might determine. The shipyards, both public and private, have been worked to their utmost capacity, in the construction of iron-clad gunboats and other vessels of war; while machine shops, rolling mills, and foundries have been equally busy in building their engines, rolling their armor plates, and casting their guns. * The wants of the army have come in to make good the loss of the Southern market (for shoes,) and the government has been a liberal and sure, if not a ready * * * paymaster. Labor has been in great demand, wages have risen, and the trade is again in a high state of prosperity. Wealth has flowed into the State in no stinted measure, despite of war and heavy taxes. In every department of labor the government has been, directly or indirectly, the chief employer and paymaster. Vast contracts have been undertaken and executed with the use of no other credit than such as is based on government vouchers and certificates of indebtedness." The New England States have indeed been peculiarly favored by reason of the war expenditures, and yet every State has been a receiver, so that these vast sums paid out by government have been the vivifying influence in all sections. It is true that, where the regular course of trade exists, the purchasers give back equivalents. Materials and produce are received in exchange, and the individuals employed reproduce by various industries the capital they consume. Where the government is the purchaser and employer, however, it pays in one medium-that is, its own paperwhich is not absorbed or destroyed, but accumulates in large quantities, to be ultimately paid by taxation on industry. The mode in which this paper accumulates is apparent in the quarterly returns of the New York banks, which show means as follows: At the first two dates the banks paid specie. They then held of country bank balances, deposits, and notes, $116,460,000, and their loans were $127,000,000. At this moment the same items are $226,800,000, an increase of $117,400,000, while their loans have been reduced. The cash items or checks of other banks exchanged each morning at the Clearing House also largely increased, showing the increase of the stock and callloan business, while commercial business, as seen in the column of loans, has retrograded. In the meantime between the, so to speak, consolidation of the war business and the uncertainty as to the great changes that peace will produce, commerce seems to become more circumscribed. The imports at the port of New York have been as follows for six months comparatively: January.. March...... IMPORTS, PORT OF NEW YORK. Specie. -Entered for- Free goods. Consumption. Warehouse. Total. $101,906 $2,413,649 $8,741,227 $4,482,794 $15,739,676 107,061 1,328,216 9,493,830 6,456,208 17,385,315 April. .... $853,768 $7,345,216 $51,878,030 $31,428,967 $91,005,981 512,555 14,210,027 46,645,529 28,685,322 85,050,433 The quantity of goods taken for consumption in the month of June was quite small, notwithstanding that through the decline in gold the expense of landing them were very much reduced. The same circumstan ces, however, restricted trade, since it induced buyers to hold back for lower prices. Importers, on the other hand, rather sent the goods to warehouse than meet those views. The decline in the price of exchange did not, however, operate against the export of produce to so great an extent as was anticipated, since the prices of produce fell in a corresponding degree. The figures were as follows: EXPORTS, PORT OF NEW YORK. January. Specie. $73,111 $668,275 $14.829,398 $19,695,351 3,965,664 43,889 610,009 17,780,586 22,400,148 6,385,442 213,685 758,266 16,187,689 23,695,082 1,972,834 74,949 875,224 11,581,933 14,004,940 2,115,679 101,337 602,254 13,183,510 16,002,780 1,367,774 49,380 298,067 14,780,072 16,495,293 Total 6 months $20,631,967 $556,351 $3,312,095 $87,793,188 $112,293,601 66 1862.... 27,976,351 318,336 2,550,203 59,005,313 89,850,263 The sum of the exports of produce, corrected by the average rate of the price of gold, would be $63,000,000, and shows an advance balance on the six months' business. A good deal of gold went from San Francisco to Europe on New York account, however. The movement of specie and its price at the port of New York were as follows: Gold reached its highest price at the close of February, and during three months fluctuated at about 50 per cent, as the point of paper depreciation. Through the month of June it varied from 44 to 50, and under news of the retreat of the Confederate army and the fall of Vicksburg it declined, until the great insurrection in New York, causing a renewal of disquiet, gave a further downward impulse to it, and it fell to 224, at the same time that it caused large amounts to be shipped in the week ending July 18. These immense fluctuations in gold were very injurious to busiThese influences upon the exchange market are seen in the following table: ness. The operations of the Treasury have changed in character since the date of the last quarterly bank report in the foregoing table. The conversions of government money into five-twenty stock have been carried on to a certain extent. The government debt, July 1st, had increased to $1,100,836,348, and of this amount $407,854,456 is paper money; of the remaining $693,000,000, $400,000,000 is payable as follows: These figures of sums borrowed indicate the vast resources of the country, and the prodigality with which they have been placed to the service |