"December 2, 1865, Vol. 1, No. 23," Commercial and Financial Chronicle (December 2, 1865). https://fraser.stlouisfed.org/title/1339/item/558117, accessed on March 25, 2025.

Title: December 2, 1865, Vol. 1, No. 23

Date: December 2, 1865
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image-container-0 Iwto’ fedtc, Commercial limess, ilitilwiuj §)famtfor, awl fwmrance journal. A WEEKLY NEWSPAPER,, REPRESENTING THE INDUSTRIAL AND COMMERCIAL INTERESTS OF' THE UNITED STATES. VOL. I. SATURDAY, DECEMBER 2, 1865. CONTENTS. THE CHRONICLE. Payment of the Maturing Legal Tenders..." 705 A Rumored Foreign Loaij Strength and Weakness of Our Fi¬ nancial Systems United States, Mexico, and Franco Insurance Legislation Atenues of Transit for Internal 705 706 707 70S Commerce Finances of the City of Cincinnati Railway Analyses. No. 8....;... Southern Privateers Foreign Intelligence Commercial and News Miscellaneous THE BANKERS GAZETTE AND COMMERCIAL TIMES. Money Market, Railway Stocks, IT. S. Securities, Gold Market, For¬ eign Exchange, New York City Banks, Philadelphia Banks, Na¬ tional Banks, etc Sale Prices N. Y. Stock Exchange National, State, etc., Securities... Commercial Epitome. Exports and Imports 719-20 Cotton Trade Breadstuff's Dry Goods Trade ; Prices- Current and Tone of the .Market THE RAILWAY MONITOR AND INSURANCE JOURNAL. Epitome of Railway News 729 1 Railway, Canal, etc., Stock List. Railroad, Canal, and Miscellaneous Insurance and Mining Journal.. Bond List 730-31 | Postages to Foreign Countries.. ©Ije €IjrunicU. * 709 710 711 71*2 712 7P2 d9 721 722 723 726 The Commercial and Financial Chronicle is issued every Satur¬ - day morning with, the latest news by mail and telegraph up to midnight of Friday. A Daily Bulletin is issued every morning with all the Commercial and Financial news of the previous day up to the hour of publication. TERMS OF SUBSCRIPTION-PAYABLE IN ADVANCE. [Canvassers for Subscriptions are not authorized to make Collections.'] For The Commercial and Financial Chronicle, with The Daily Bulletin, delivered by carriers to city subscribers, and mailed to all others, (exclusive of postage) For The Commercial and Financial Chronicle, without The Daily Bulletin, (exclusive of postage) For The Daily Bulletin, without The Commercial and Financial Chronicle, (exclusive of postage) WILLIAM B. DANA & CO., Publishers, (Chronicle Buildings,) $12 00 10 00 5 00 60 William Street, New York. PAYMENT OF THE MATURING LEGAL TENDERS. The disbursements which began yesterday at the Sub- Treasury on account of the maturing five per cent two years notes, will probably average two millions a day during the next week, and will consist to a large extent of National Bank bills. This - sudden out-flow of 18 millions of active currency, even had there been a scanty supply available here, could scarcely fail to have a decided influence in giving ease to the loan market. But of scarcity of currency we have recently heard no complaint. For the drain to the South has stopped, and from the West greenbacks are coming this Way. Consequently the tendency towards ease might be expected to continue. But it is well known that, for an easy money market, ade- quate. capital as well as currency is necessary. To ren- r 9°connnodation easily accessible to borrowers, there tat be available capital unemployed, and the owners of NO! 23. that capital must have confidence and be willing to lend it. Now as to these points, there probably has not been a time when more capital was available, and waiting profitable in¬ vestment. The capital is here, the owners have the ability to lend, but in many cases the disposition to lend is wanting. There is a general incertitude. The numerous rumors as to our foreign relations, and the fear of contraction of the currency, tend with a multitude of other causes to increase this vague distrust, and thus keep the money market in a torpid condition. This inactiv¬ ity, however, cannot last long. Capitalists soon tire of losing the interest of their money. The policy of the government and the temper of Congress will soon be known. • And the next movements should therefore be toward greater ease, with a gradual approach to lower rates. Another result to be anticipated is that National Bank notes will for some time to come be copiously paid into our city banks and will again show a disposition to accumulate. Once again, therefore, the question of the Assorting house will no doubt be revived and the banks will have to choose, between the alternative of sorting and sending home these notes, or of paying them into the Sub-Treasury on ‘tempo¬ rary loan. The latter course is the simplest and the cheap¬ est, but the former is^the more conservativve. - The expected ease in money has already stimulated a certain degree of activity in the Stock Exchange where the disposition is as usual to “ discount” every foreseen change before it actually takes place. In mercantile circles ■there appears to be more languor and more caution. And it is evident that among conservative men in all departments of business white so many subtle forces are operating obscurely in different ways on the money market there cannot be too much vigilance or too much circumspection. A RUMORED FOREIGN LOAN. Tiie report is current that preliminary negotiations have been initiated by leading British capitalists for a loan to our government on long six per cent bonds. Probably these ru¬ mors are as yet premature. But it is urged that if a large loan were negotiated abroad it might strengthen our financial position, and aid us in making an arrangement for resuming specie payments. It would also diminish considerably the pressure incident to the payment of our three year Trea¬ sury notes. These are of two kinds, first compound interest notes, of which 145 millions fall due during the last half of the year 1867; and secondly, Seven-thirties, which matur* as follows : Aug. 15, 1867, 300 millions; June 15,1868, 300 millions, and July 15, 1868, 280 millions. .
image-container-1 706 THE CHRONICLE. [December 2,1866. But the difficulties in the funding of these notes may, per¬ haps, prove less than has been anticipated. Besides, it is doubtful whether we should act wisely, all things considered, to place a much larger amount of our debt in Europe than is already held there; but if, hereafter, we wish a loan of 100 million dollars or more we might rely on its being readily taken in London on terms advantageous to our government. The reasons for this opinion are first that a comparatively limited amount of our five-twenties are held by English capi¬ talists. Of the 300 millions which have been sent abroad the largest proportion are owned on the Continent and are likely to be permanently placed there. Moreover, at pres ent rates, our bonds offer an investment for British capital which pays better and is more safe than any of the numerous foreign schemes by which that capital is continually compe¬ ted for and absorbed. Our readers will remember, however, that on several try¬ ing emergencies during the war the expedient of a foreign loan was proposed again and again, but for reasons that were then approved by the public those schemes failed. Indeed, it has become the settled policy of this country to raise no loans except in its own markets, and to allow foreigners when they want our bonds to obtain them here through their agents in the regular course of business STRENGTH AND WEARNESS OF OUR FINANCIAL SYSTEM. The causes of that recuperative elasticity with which our monetary and industrial systems have responded to the pro¬ digious strain of the past four years, will furnish suggestive and interesting problems for future financial historians. We look back on the winter of 1861-2 with feelings of a widely different character from those that appalled the bold eat of us as we then paused in the midst of our hurried pre¬ parations for a war of unknown cost and duration, with our Treasury empty, our banks prostrated, specie payment sus¬ pended, and United States sixes selling at from 7 to 15 per cent discount. On the 25th February, 1862, we reluctantly yielded to necessity, and the legal tender act was passed with no small foreboding as to the future. This law was a war measure, justified only by the urgency of the situation, and by the supposed impossibility of otherwise avoiding Na¬ tional bankruptcy or worse evils. Whether the legal tender law was really inevitable is a question of the dead past. We do not propose at this time to exhume it. What is more to our purpose is the fact, which we thankfully contemplate, that its operation, though mischievous in many respects, has been productive of much less evil than was then anticipated; while it has thrown light on some important principles of monetary science, which, though heretofore too dimly per- oeived, may be of use to us hereafter. During the discussions which agitated the public mind at the time to which we have referred, we were assured by ex. periencdd men here and abroad that our irredemable paper money was without a foundation ; and that whether less or more were issued by the government, it would sink in value, depreciating ever more and more, till with the French as¬ signats and the Continental shinplasters, its value melted away like snow in spring time. Now a better theory has possession of the public mind, and everybody is looking for¬ ward to specie payments, believing that our greenbacks have so permanent and stable a foundation, that in due time, by wise and gradual approximation, we shall make them equal in value to coin. The absurd theories of three years ago, however, were not all adverse to the legal tender act. It was one of Mr. Chase’s favorite notions, before the rude shocks which marked the close of his tenure of office in the Trea¬ sury, that he could issue any amount of legal tenders with¬ out depreciation, if he made them redeemable in United States sixes, the principal and interest of which was payable in gold. “ For ” said he to a deputation of remonstrating bank¬ ers on a memorable occasion, “ these government bonds are worth their face in coin; consequently the greenbacks into into which they are convertible, will be worth coin too.” The stern logic of events, however, by degrees dissi¬ pated these and similar fallacies, and proved that if an ex. cessive quantity of currency be afloat, no legal enactments no financial expedients will prevent its depreciation until, by withdrawing the superfluous issues, we contract the current of the circulation to its normal volume. The laws of gra¬ vitation are not more relentless in their operation than are the laws which regulate the value of the currency. A second fallacy which prevailed was that the issues of legal tender inconvertible paper money would inevitably lead to repudiation. The greenbacks we were told would become worthless, and as a necessary result our government bonds would become worthless too. It is, however, to be remarked that the masses of our people laughed at these opin¬ ions as the idle dreams of theorists or of impracticable capital¬ ists. 'While W all street was vocal with gloomy forebodings, the first issue of five-twenties was made, and the largest war loan ever negotiated here or in Europe in the same space of time, was issued at an unprecedentedly low rate of interest. Since then our people have responded patriotically, cheerfully and promptly to every successive appeal of the Treasury for ; taxes or loans, and soon the croakers were hushed in silence, and the spectre of repudiation ceased to trouble the govern¬ ment credit. But there was another point on which the opponents of our financial system laid great stress. An inconvertible cur¬ rency they said would cause the most ruinous fluctuations in the money market. At first the rate of interest might be lowered, but the tendency would ever be to stringency, to pre¬ vent which a constant clamor would arise for larger and lar¬ ger emissions of paper money, each issue being more mis¬ chievous than the last, while the spasmodic oscillations in the loan market would unite with other causes to derange busi¬ ness, and to spread consternation and ruin among all depen¬ dent on commerce or trade. Such were the predictions. But happily, none of* these troubles have come upon us. On the contrary, our money markets have been less disturb¬ ed by violent spasms during the last three years than previ¬ ously; and more than one severe panic has occurred in Eng¬ land without our being seriously affected by it. Meanwhile our agricultural, manufacturing and commercial interests have developed to a marvellous degree; all classes ©f the peo¬ ple have prospered ; and there has never been a time when the recuperative energies of our country have more conspi¬ cuously appeared. These facts as might be expected are awakening no small interest abroad. The London Times of the 16th November in an impartial editorial on our finances, tells its read¬ ers that “ the Americans are a wealthy people and an an en¬ ergetic people, and we are constantly assured that they are a people resembling no other on the face of the globe. It is possible therefore that they may support without injury a weight of taxation which would cripple or crush any ordinary community.” We repeat, then, that the causes which have produced such a wonderful series of financial triumphs con- r trary to all the inferences and analogies derived from former precedents and time-honored principles, deserve and will re¬ pay investigation. And we may perhaps find reason here¬ after to accord to Mr. Chase more credit for certain checks and corrective measures, Adopted or attempted in critical emergencies, than is commonly supposed. Far more, however, has depended on the energy, intelligence, resolute purpose and unswerving patriotism of our people;
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Date: December 2, 1865
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