COMMERCIAL CHRONICLE AND REVIEW. GENERAL BUSINESS-RISE IN STOCKS-PRICES OF ARTICLES-RESTRICTIONS ON GOLD-STOCKS IN LONDON-COMPARATIVE VALUES-IMPORTS GOODS-INCREASED COST-GENERAL CAUSE-NEW ISSUES NEW BANKS-FIVE PER CENT LEGAL TENDER-RISE IN CERTAIN PRICES-COAL-EXPORTS -LOSSES ON PRODUCE-GENERAL STATE OF TRADE-MOVEMENT OF SPECIE-DECLINE IN BANK RESERVE RATES OF EXCHANGE-MONEY-UNITED STATES STOCKS. THE general activity of business that we noted as apparent last month has continued with considerable animation during the one which has now elapsed, and at the same time speculative tendencies, in many branches of merchandise, have been developed. The stock speculations, which had reached so high a point in August, have to some extent subsided, apparently through the impression that their values were exaggerated above those of most commodities. It was certainly the case that the high point which prices touched in August, at a time specie was at a very low point, caused a considerable importation of stocks from London, where they ruled much lower than could be realized for them in New York in specie. The same tendency caused an accumulation of securities in New York, while at the same time an active demand for merchandise sprang up, the prices for which rose very considerably. By referring to our number of February last, our readers will find a table of fifty-five articles, of which the comparative prices are given from the Prices Current, January 1st, 1862, and January, 1863, as compared with the price of gold. Bringing the table down to the present time, at different dates, and adding the quantity of Government paper outstanding, the results will be as follows: The prices of these articles have been governed by the values in paper, and those which form the exports of the country have been sold at specie prices abroad, but the bills drawn against them are sold for the Government paper. This business has been perfectly unrestrained, while that in gold has been subjected to restrictions imposed by Congress as well as by the State government. Those restrictions were designed to prevent a speculative holding of gold, and not to check its free exportation. Inasmuch, however, as the money under the law could not be borrowed on the gold, it was difficult to hold it. The prices may be supposed, therefore (as was the design of the law), to be less than it would have been without those restrictions. It is obvious that where the paper declines in value, it operates alternately upon commodities and gold. When the latter is in active demand the price rises. This rise causes exchange bills to sell higher, acting as a premium upon the export of produce, which being shipped, of itself checks the export of gold, and therefore lessens the demand for it. On the other hand, when gold falls in value it operates as a check upon exports and as a premium upon imports. In illustration, we give a table of the prices of stocks in London and New York, at different dates: Thus, in March New York Central was 65 in London, at which date advices there from New York gave gold 72 and exchange 89; consequently the price in New York should have been 121 to be equal to the London price of 65, at the then rate of exchange; but gold fell to 122 in August, giving exchange 135, which was equal to 100 for Central in Lon don, or a rise of 35 per cent, through the improvement in the value of the paper which constitutes the currency. As a consequence, the London and other markets were stripped of stocks to sell in New York. The following table will show the relative prices of stocks in New York and London at different rates of exchange: 85.. 106 110 1144 119 123 127 90. 112 117 131 126 95. 100. 131 136 140 144 152 157 130 135 139 144 148 153 157 162 1874 142 147 152 156 161 166 171 145 150 155 160 165 170 175 180 Thus, if Erie is selling at 85 in London, the relative price of the same in New York, with sterling exchange at 150, would be 127; or, if United States 7-30's, payable in gold, are in New York 1074, with exchange at 165, the equivalent in London is 65 cents per dollar, which gives an interest in gold of over 11 per cent per annum. The rate of exchange always follows that of gold, and is found by adding the premium on gold to the premium of the bills in gold. Thus, a shipment of gold produces 110 as the price of exchange. If gold is 50 per cent premium, 50 per cent must be added to the premium, which, being 55. 12, makes the exchange 165.37. This operation of the fluctuation of the paper values applies to all commodities, and, as a consequence, a rapid fall in gold is followed by large importations and a corresponding export of gold to pay for them. The fall in gold in August was, therefore, followed by increased importations of stocks and goods and increased sales from warehouses, while shipments. of produce were involved in loss. The importations at the port of New York for the month of September, were as follows: IMPORTS, PORT OF NEW YORK. --Entered for- Specie. Free goods. Consumption. Warehouse. Total. 7,872,539 3,657,775 12,037,846 11,461,572 3,454,530 16,370,524 9,493,830 6,456,208 17,385,315 7,980,281 5,437,404 14,324,923 6,328,581 5,377,885 12,597,426 683,880 9,080,210 4,227,265 14,173,600 509,781 10,004,580 4,409,891 15,038,129 786,864 11,203,535 8,431,310 15,499,940 .... 107,081 1,828,216 197,217 710,021 109,997 780,963 182,245 113,877 Total 9 months $1,288,121 66 1862.... 945,577 $9,325,831 $81,666,355 $45,327,510 $137,547,817 18,809,755 82,625,172 85,475,891 137,856,895 The quantities taken out of warehouse in the last sixty days have greatly exceeded the entries. The quantities put upon the markets have been, therefore, much greater than the figures for the arrivals. The absorption of these goods by the retailers and consumers has been very active, as well in consequence of the previous great economy in consumption, which left the public bare of goods, as by reason of the increasing cost of labor and materials, which make the cost of manufactures higher and the rise in exchange and gold, which so rapidly swell the cost of importation. The great general cause which underlies this rise, is the increasing abundance of paper. As seen in the above table, there is on the part of the Government now outstanding $446,000,000. Besides this, there will be emitted in November $50,000,000 of five per cent legal tender small notes, which were sold to the banks last month. The question has been raised whether these notes will increase the currency or be taken for investment. It is very probable that they will have both effects. The associated and other banks hold some $50,000,000 of "greenbacks" in reserve. These will be supplanted by the new notes, because the latter bear interest. The $50,000,000 reserves thus released will come more actively into circulation. During the month the New York Court of Appeals has decided in substance that the banks are not held to payments in specie under the New York constitution. The consequence of this is seen in the bank tables on another page, where the circulation, after a long period of contraction, has begun to expand. The new banks, under the national banking law, now amount to 105 in number, and are about to receive their circulating notes from the controller. These will be about $12,000,000, and will rapidly increase. The old country banks are also expanding their circulation to meet that demand for currency, which, by a sort of paradox, always attends rising prices, caused by redundant circulation. From these three sources, therefore-new legal tenders, new banks, and old banks-the circulation is in process of expansion, and consequently all prices are advancing. We may quote several here: Many other articles are now beld for an advance. All are affected by different circumstances, but primarily by the same cause. stance: The quantity mined this year to date, is.... tons Increase.. Coal, as an in 7,657,526 6,212,865 1,444,661 Notwithstanding the scarcity of labor that has caused the cost of mining to be largely increased, the quantity mined has been swollen, but not enough to meet the demand, which is mainly from the Government, and paid for in "greenbacks." One million tons of coal for iron clads, that cost the Government last winter $4,500,000, now costs it nearly $10,000,000. The duties and exchange rise in proportion to the advance here, as is the case with sugar and other articles of import. The.general prospect of a further increase of paper induces holding, to avail of the advance. The exports of produce in the month of September were, to some extent, larger than in August as follows: April. 375,224 May June July 448,601 August. September 1,972,834 74,949 11,581,933 14,004,940 Total 9 months $32,846,494 $779,798 $4,231,442 $125,475,981 $163,333,175 66 1862.... 42,843,139 2,520,616 3,829,403 100,837,192 130,487,221 The price of exchange in September was about ten per cent higher than in August, which is about the extent to which the value of the domestic exports increased. On the other hand, there was a decline of prices in England that involved shippers in loss. The general result of business for the nine months has been as follows: Imports from January 1 to October 1........ $137,547,817 Exports of goods... Corrected by exchange... Net exports.... Excess of imports.. Specie exported... Adverse balance....... $130,486,681 33,495,560 96,991,121 $40,556,696 32,846,494 $7,710,202 With the increased imports that followed the fall in gold in August, the outward movement was resumed as follows: 285,394 585,236 1,243,551 1,377,016 39,512,256 71 a 72 738,643 477,335 3,540,550 712,275 66 9. 484,019 1,574,166 205,057 604,682 1,093,031 938,032 258,570 39,705,089 52 a 53 36,110,085 b4 a 541 540,968 249,514 1,201,907 83,955,122 53 a 54 779,564 159,105 1,050,156 34,317,691 41 a 42 673,826 250,778 478,885 84,257,121 53 a 54 1,505,728 250,728 607,059 35,406,145 46 a 52 693,436 217,602 158,487 86,761,696 52 a 534 1,151,300 256,604 629,855 37,175,067 47 a 51 294,998 36,846,528 48 a 50 451,827 88,102,633 58 a 47 661,996 $8,556,552 49 a 49 438,745 88,544,865 484 a 49 279,994 87,632,634 444 a 447 411,488 87,241,670 46 a 461 235,364 37,884,128 48 a 488 522,147 38,314,206 42 a 43 134,432 38,271,702 46 a 464 347,807 88,802,826 44 a 441 401,936 88,712,397 32 a 321 2,190,781 38,254,427 23 a 23 35,910,227 26 a 261 It will be remembered in this table that, notwithstanding the rise in gold, the quantity in bank has steadily declined. The Treasury paid out some $3,000,000 in the first week in October for interest, notwithstanding which the banks had lost $10,329,924 since July 11-little more than three months. This continued drain, no longer replenished from the interior, diminishes the available quantities at the command of shippers and renders the exchange market very firm. It was the case, however, that when exchange was low in August many speculators bought and importers took options of exchange for 60 days. These were realized toward the close of October, making the market weak. The rates have been as follows: |