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The late news from Europe, of a sudden rise in the rates of interests at the great reservoirs of money, at a moment, too, of the realization of large harvests, admonishes the commercial world of the vast change which is taking place in the currents of commerce, and of the new condition of affairs that must result from a continuance of the present state of things for any length of time. Since the peace of 1815, the commerce of Western Europe has been immensely developed, and a material element of that development was the cotton drawn from the United States. Starting at comparatively small amounts, the purchases, mostly by England, rose to $200,000,000 per annum of cotton alone, and that cotton was paid for altogether by the manufactured goods of England and Europe. Suddenly the supply from the United States ceased; the demand for goods stopped with it, and great distress resulted. Still, cotton must be had, and during the two last years the supply has been furnished by other countries, who demand not goods, but coin in payment, and at exorbitant rates. The drain of coin thus occasioned is producing the serious results of which the indications have reached us during the last few weeks. The normal condition of commerce left Great Britain largely in the United States' debt. The quantities of corn, cotton, tobacco, etc., which she purchased more than paid for the goods she sold to this country, and thus there remained a large balance due to the United States. This balance was drawn against in favor of France, for silks, wines, etc.; in favor of China, for tea, and of Brazil and Cuba, for coffee and



payment for all of which bills ran on London.

With France and the continent the operation was the reverse. She sold to the United States large amounts of goods in excess of her purchases, and for these goods she had a balance of bills running on London. To illustrate, the trade of France with the United States in 1860 was a follows:


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France bought United States produce..
Sold to United States direct.......
Sold to United States via Europe....






Balance due France..

$19,363,673 Shipped in specie..

21,371,988 Thus, France in 1860 sold enough goods to the United States to pay for all the produce she bought of us, and received $21,371,986 in specie besides. In 1861 her purchases of cotton, etc., were as large as ever ; but in the summer and fall the imports of goods into the United States suddenly ceased. The consequence was, that instead of paying for the cottons as usual, in goods, she was compelled to pay in specie. Ivasmuch as she did not sell her goods, she was deficient $40,000,000 of bills on England, and in October, 1861, the Bank of France suddenly lost $15,197,581. To remedy this sudden loss, the Bank of France was compelled in the first week in November to raise its rate of interest to 6 per cent, as it has now done. The same cause which made money scarce in France made it cheap in England, and the Bank of France borrowed $5,000,000 at ninety days through the house of Rothschild in London, and $5,000,000 through the house of Baring. These amounts were drawn against, and carried the Bank over the exigency.

In regard to the United States, they had sold their cotton, tobacco, and rice, but did not buy the goods, consequently the import of specie was very large. The specie movement at New York for four years was as follows:

1862. Imports

$2,816,421 $8,852,330 $37,088,413 $1,311,964 Exports

69,715,866 42,191,171 4,236,250 61,872,391 Excess imports..

$32,852,163 exports.. $66,899,445 $33,338,841

$60,560,427 This table shows the great perturbation which the war caused in the specie movement. The regular current of exports was checked, and a large amount of coin came back. Fortunately for the United States, at the moment when this cotton fund which paid so much of our imports was cut off, the circumstances of the crops in England and France required a large amount of United States food. The export of breadstuffs stepped in to supply the lack of cotton, and the drain of gold from this country, that would otherwise have been excessive, was checked. Meantime the supply of cotton from other sources has grown up, and with it an intense demand for money. The course of this trade bas been rapid. Great Britain was the chief recipient of the cotton crops, and in 1861 purchased 1,262,607,800 lbs., for which she paid $190,000,000, mostly in goods. The largest portion of the cotton-80 per cent of the whole-was of United States origin, and was of a quality and cheapness that could not elsewhere be reached. Indeed, as long as the United States crop was in full supply, that of India, Egypt, Brazils, etc., was only in incidental demand, and at prices which barely remunerated the grower, since long transportation and shipping charges absorbed most of the proceeds. When the United States supply was entirely cut off the prices rose rapidly. The rates in Liverpool have been as follows for middling :


1860.... 1861.. 1862. 1863...

N. Orleans. E. Indies. Egypt.
13 cts. 84

21 121 20
554 317 49
55 39 521

Brazil. 16 201 51 554

The natural effect of this immense rise in price in the Liverpool már. kets was to stimulate production in every country where cotton will grow. It is an immense bounty held out to all the world to raise cotton for the English spinners. The effect of such a bounty cannot be realized for some years, since the means of planting and growing on a large scale do not exist. A drawback upon the effort to meet the demand exists in the uncertainty of its continuance, since a cessation of the war and a resumption of the growth on the part of the Southern States would gradually destroy the market for other cottons, as none of them can compete either in quality or price with the United States descriptions. It is also the case that where a new and large demand is made upon a country.for raw products the only means of payment is specie, because the markets for goods do not grow in the same proportion. The operation of the demaod is nanifest in the following 'table of the qantities and values imported into Great Britain from each country in the first seven months in 1861 and 1863 ;




Value. United States.. 758,881,000 $116,108,938 2,399,697 $997,770 Brazil....

7,450,100 1,304,099 15,850,350 6,521,079 Egypt...

28,802,700 4,867,529 63,108,337 26,345,455 East Indies.... 117,202,200 12,385,347 174,863,812 57,599,835 Other countries 3,734,775 532,932 48,231,225 17,778,999

Total...... 916,070,775 $135,198,845 304,353,421 $118,243,138 Decrease.

611,717,354 16,955,707 This is a curious result. In the present year England has procured only one-third of the quantity of cotton which she purcbased in 1861, yet she has offered nearly three times the prices for it. In other words, the average price in 1861 was 14 cents, and in the present year 384 cents. The result of the demand is, that Brazil has received four times as much money as in 1861; Egypt, six times as much ; India, nearly five times as much, and many minor sources of supply have increased some $17,000,000 in value. The amount of it all is simply thisEngland has paid nearly as much in 1863 as she was called upon to disburse in 1861, but has got only one-third the cotton for it, and, what is of still greater importance, in the former year she paid mostly in goods, but this year she has been required to pay in the precious metals, or thus :


1868. Paid United States in goods.

$116,108,938 $997,770 Paid other countries in specie.....

19,089,907 117,245,368 The payment of this large amount in specie bas been possible only by reason of the supplies of the metal durived from the United States, which in ceasing to supply cotton sent the gold to buy it elsewhere, and also food to make good the short harvests of England and Western Europe. The wealth thus conferred upon those comparatively poor and remote nations, at the expense of the wealthy central nations, will doubtless result in causing a greater growth of commerce with them hereafter. The capital, so planted, will doubtless become prolific of new industries when the usual course of trade in America, being resumed, shall have again caused their cotton industry to decline. The wants of the world are, however, so rapidly outgrowing the capacity of the United States to supply the cotton demand, that many years must elapse before, if ever, the old price is reached.

Meantime, the high prices of cotton, which have brought out these large supplies that are to be paid for in specie, continue to operate. The quantity arriving in England is increasing, and, as a consequence, the sum of coin to go becomes greater. For nine months, last year, the sum was £11,000,000, this year it is £26,000,000 ; next year, the amount may be again doubled, and the figures become formidable. Already they exceed the sum of the joint production of California and Australia. At the same moment, the political differences in Europe Lave caused much hoarding of gold, and the exports of the metals from England, for nine months, have been as follows:


Total. To Europe...

$7,689,620 $38,583,375 $46,272,995 To India, etc....

31,736,970 15,817,650 47,554,620


Total .....

39,426,590 54,401,025 93,827,615 This drain of specie, added to the boarding in Europe, has now produced pressure in Europe and England, both. The losses of the Bank of France compelled her, some time since, to raise the rate of interest to five per cent, and this was suddenly followed by the Bank of England on the 3rd to five per cent, and on the 5th to six per cent. The Bank of France immediately put the rate up to six per cent, and money rose in value in most other cities.

This has taken place, notwithstanding that the crops were never better than this year. Probably the crops are $300,000,000 better in England and Western Europe than last season, and very fortunately so, since if they were compelled to purchase goods as largely as last year, the crisis would be greatly intensified. As far as England goes, it appears to be more a demand for money than capital, since the latter seems to be very

abundant. That abundance, however, it must be borne in mind, is born of the great plenty and cheapness of money during the last two years, in which, although there has been much suffering among operatives for want of work, the manufacturers and holders of goods have realized fortunes in the rise of prices, which the forced diminution of production brought about. The reverse of the picture is now at hand: money is becoming very dear, goods hereafter can be produced only at enormously increased cost, the consumption will be, of course, reduced, and ability to export on former terms greatly lessened. She will be obliged to pay coin for materials, and compelled to sell her goods very cheap to get that coin. Other nations will be able to compete with her on better terms. Another year, too, may find her harvests deficient, and the chances are that the commercial preponderance of England may pass away amidst a suspension of specie payments brought about by the causes to which we have alluded, and which are daily being developed.


Of the fluctuations that take place in the value of money, those which occur during limited periods and are governed by the greater or less emissions of paper money are the ones chiefly occupying the attention of merchants and bankers; and yet such fluctuations are by no means confined to a paper currency, nor restricted within the limit of a few weeks or months.

The ease with which paper may be put out or retired make the changes in prices dependent on its action more frequent and marked than those which attend the far more important, though slower, mutations in the value of the metallic currency recognized among all civilized nations. As these usually extend beyond the limits of a life-time, and produce results only in the lapse of generations, they interest less individuals engaged only in looking after their individual fortunes than they do the statesman who has, with a wise forecast, to care for the future of the nation over whose councils he is called to preside. Hitherto, in the experience of the world, money has been formed of the precious metals, because its value is very generally recognized, because it has an intrinsic value, and because that value has been more stable than that of most other commodities. Much discussion bas, bowever, arisen of late as to the probable effect of the greatly increased supply of gold-whether it will not and has not caused a corresponding depreciation in the value of the precious metals In a former number of the magazine we gave our reasons for believing that, compared with silver, gold would retain its relative value. We now propose, by very briefly tracing the bistory of the precious metals and their fluctuations, to show that, notwithstanding this wonderful increase in the production of gold, there is no reason for concluding the precious metals will depreciate. There will be, as there has been heretofore, fluctuations in its value-seasons of abundance and scarcity—but no permanent depreciation.

And in this connection it is important to remember that the fact that gold and silver have been used as currency constitutes, in a great measure, their intrinsic value. It is no doubt the case that a great deal of time, labor, and expenditure of capital are required to produce gold; but that expenditure is incurred because the gold is the universal currency. Take that function from it and one year's product in California would glut the markets of the world, and gold would be a very cheap metal. In the early ages of commerce, however, there was no California, and gold was supplied no faster than the comparatively limited numbers of the people and commerce of the world required. With the rising power of the Roman empire, absorbing the vast commerce of Carthage and adjoining States, the wealth and coinmerce of the world were concentrated, and the supplies of the precious metals governed prices in imperial Rome. The military operations of the empire required large expenditure, which were gathered from the lands and producers of that day. The taxes so imposed were proportioned to the prices which commojities commanded in the currency of that age. But the Roman world was surrounded with populous but barbarous nations, which were to be civilized and taught the arts of peace through the power of the Roman arms. Just so fast as new nations made progress in the production of wealth, and consequently in commerce, just so fast they required a portion of that gold currency which had theretofore only sufficed for the

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