"March 10, 1866, Vol. 2, No. 37," Commercial and Financial Chronicle (March 10, 1866). https://fraser.stlouisfed.org/title/1339/item/558132, accessed on March 25, 2025.

Title: March 10, 1866, Vol. 2, No. 37

Date: March 10, 1866
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image-container-0 jmte’ fecttc, (SJamwwiat ftitMss, Railway ponitor, and i»su«an« journal A WEEKLY NEWSPAPER, REPRESENTING THE INDUSTRIAL AND COMMERCIAL INTERESTS OF THE UNITED STATES. VOL. 2. SATURDAY, MARCH 10, 1866. NO. 37. CONTENTS. THE CHRONICLE. Impending Changes in the Money The Loan Bill and the Comptrol¬ 289 The Tax on Distilled Spirits 290 ler of the Currency Fire Insurance Companies 292 The Cattle Plague 293 Analyses ot Railroad Reports ... 294 289 Domestic Gold and Silver 295 Operations of the New York Rail¬ roads for 1865 296 Literature Latest Monetary and Commercial English News Commercial and Miscellaneous News 298 THE BANKERS’ GAZETTE AND COMMERCIAL TIMES. Money Market. Railway Stocks, U. 9. Securities, Gold Market, Foreign Exchange, New York City Banks, Philadelphia Banks National Banks, etc Sale Prices N. Y. Stock Exchange National, State, etc., Securities. Commercial Epitome Exports and Imports Cotton 305 Breadstuffs 298 Dry Goods 296 296 303 308-04 307 301 Prices Current and Tone of the 302 Market 309 THE RAILWAY MONITOR AND INSURANCE JOURNAL. Railway News 312 Railway, Canal, etc., Stock List. Railroad, Canal, and Miscellane¬ 313 ous Bond List 315-15 Insurance and Mining Journal... 316 Advertisements 317-20 ®!)e (EfyronuD. 306 The Commercial and Financial Chronicle is issued every Satur- day morning by the publishers of Hunt's Merchants7 Magazine 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. Agents make no Collections out qf New York City. Money paid to them will be at the risk of the person paying it. For Thk Commercial and Financial Chroniclk, with Thr Daily Bull* tin, delivered by carriers to city subscribers, and mailed to all others,(exclusive of postage)...; For This Commercial and Financial Chronicle, without The Daily Bulletin, (exclusive of postage) For The Daily Bulletin, without The Commercial and Financial Chronicle, (exclusiveof postage) $12 00 10 00 5 00 Postage is paid by subscribers at their own post-office, it is, on the Chboni- ole, 20 cents per year, and on the Daily Bulletin $1 30 in advance. WILLIAM B. DANA & CO., Publisher*, {Chronicle Buildings,) 60 William Street, New York. IMPENDING CHANGES IN THE MONEY MARKET. Probably there never was a time when the capricious uncertainty of the money market was more strikingly exhibit- ed than at present. The delicate, if not menacing attitude of some of our foreign relations does not disturb our financial tranquility ; the efforts of Fenian agitators, of Mexican loan- mongers, and of anti-Gallic newspapers or orators to create a semblance of excitement fail to produce a responsive thrill in Wall street, where all goes on just as smoothly and placid¬ ly as if there were no Maximilian in Mexico, and as if neither our French nor our British ambassadors had any special despatches to reply to by every steamer, touching the most momentous interests, present and future, of the Ameri¬ can people. But it is evident that there is a positive improvement de¬ veloping in some departments of our monetary affairs. First, the rate of interest is declining, which is always a welcome sign. The rate is no longer seven per cent sharp. But every day brings to light an increasing volume of transactions on The accumulation of unemployed capital is so large that, as we recently predicted, lenders are weary of keeping it idle and unproductive. Accordingly, the applica¬ easier terms. tions for discount meet with more considerate reception, and the general tendency is towards a slight increase of relaxa¬ tion, especially for paper having a short term to run. This ease in the loan market has not unnaturally developed an increasing demand for government securities in our large cities and throughout the country. The Ten-forties and the compound notes have quite recovered from their recent de¬ pression ; while the Seven-thirties are increasing in favor with At the London Stock Exchange again our securities have almost reached 70, which is the highest point struck, we believe, since the depreciation of our currency by the passage of the Legal Tender Act, and the over-issue of small investors. paper money. Another point of interest is the decline in the price of gold. This is caused partly by the foreign exchanges, which turn strongly in our favor in consequence of the exports of cotton, and the attraction of foreign capital for investment here. In part, however, the fall in gold is due to local causes, and es¬ pecially to the recent sales of government coin. The price yesterday rilted lower than^inCe Sept. 1863, if we except the week whieh immediately followed the final collapse of the re¬ bellion sin the middle of last May. But, notwithstanding these favorable circumstances, it is certain that in almost every department of business consid¬ erable anxiety exists as to the immediate future. The pre¬ vailing feeling, is, however, one of sanguine hopefulness. Still, those of our commercial and manufacturing community who are in debt, and are trading beyond their means, have good ground for caution, and some cause for fear. THE LOAN BILL AND THE COMPTROLLER OF THE CURRENCY. The letter on our finances from the Comptroller of the Currency, which we publish elsewhere, lencs another illus¬ tration of the wisdom of appointing an experienced well- informed financial man to fulfil each of the higher offices con¬ nected with the Treasury. The practical banking experience of Mr. McCulloch and of Mrt Freeman Clarke are likely to be of the very greatest use to the country in the fiscal efforts which will soon challenge us. This letter was evi¬ dently not designed to meet any eye but his to whom it was written. It bears internal evidence of being merely a sim-
image-container-1 290 THE CHRONICLE. [March 10, 1866. pie and earnest expression to a private friend of cherished opinions on the prominent financial topics of the day. As a few of these views are in apparent antagonism to some parts of the funding bill which Mr. McCulloch is supposed to favor, official etiquette might probably have prevented its publication at this moment by the friends of the writer, had not the newspapers given a very incorrect and injurious ver¬ sion of the letter, and represented Mr. Clarke to be opposed to contraction and favorable to expansion of the currency. As it is, the letter though published, we suppose, without Mr. Clarke’s knowledge or sanction, is undoubtedly authentic, and the opinions it expresses are so sound and judicious that we have no doubt the country will be gratified to see them put forth with so eminent an official sanction. The chief point which Mr. Clarke makes is that the fund¬ ing of our redundant currency need produce no panic in the money market, no disturbance of general business, no dis¬ quiet or distrust in the public mind; and that this work of funding, if carried on openly, gradually, cautiously, and with a due regard to the changing attitude of monetary affairs, oan be extended to all the floating securities of the Govern¬ ment until the entire mass of the short-dated paper is ex¬ changed for long bonds and withdrawn from the hands of the public. Secondly, Mr. Clarke very properly assumes that this work of funding can go on just as well if the loan bills now before Congress should fail to pass. The Act of June 30th, 1864, and of March 3, 1865, give all the authority which is necessary to enable the Secretary of the Treasury to ex¬ change the greenbacks for compound notes; and to fund the latter, with other interest-bearing securities, into long gold- bearing bonds. Mr. Clarke refers incidentally to some of the leading objections to the placing of further arbitrary power in the hands of the Chief of the Treasury Department; and his argument against a foreign loan, though not novel, is still worthy of consideration. As the funding bills will, perhaps, come up in a few days before Congress, it is of the very highest" importance that public opinion should be en¬ lightened and rightly directed on all the leading questions with which those measures propose to deal. THE TAX ON DISTILLED SPIRITS. It has been well said that “ internal taxes should touch but a few points of the industry of the country, inasmuch as it is impossible to calculate beforehand the repression and far-reaching mischief which a single bad tax may bringjn a series of years over the growth of the people in w^ftfmo¬ rality, and consequent power.” A pertinent illustration of this is found in the report just published by the Revenue Commissioners on “ Distilled Spirits as a Source of'Internal Revenue.” We offered some remarks cn this interesting paper last week, and, according to promise, we now resume our examination of it. One of the fundamental maxims of taxation is that we should first find out the proper place to apply the screw, and, having discovered .that place, tighten the pressure by de¬ grees. In seeming conformity with this rule, the excise tax on spirits has been gradually increased from 20 cents a gal¬ lon in 1862 to 60 cents in March, 1864; to 81 50 in June, 1864; and to $2, which is the present rate of duty, on the 1st January, 1865. The tightening of the pressure in this case, however, has been too rapid and too severe; and while flagrant evils have been produced by the encouragement of illicit traffic, by the ruin*of honest tradesmen, and by the de¬ rangement cf many branches of productive industry, the Go vernment revenue has not been increased proportionally to the enlarged rates of duty. For we find the amount pro-^d uced by this tax in the three last fiscal years reported as follows: 1S63. $3,229,990 Excise on domestic spirits.. “ “ imported “ .. “ “ Domestic wines. “ “ - “ Brandy Licenses for manuf. and sale 1864. 28,431,797 176,088 28,302 1866. 15,996.701 252,690 43,216 10,506 2,715.288 8,823 i *946,541 1,847,350 $55,185,354 80,633,487 19,017,391 For the first quarter of the fiscal year 1866 the receipts were only 81,085,031, against 83,501,071 for the corres. ponding period in 1865. From these official figures we see that the increase of the duty beyond a certain point has re¬ sulted in a decrease of the revenue. The public generally, however,.were not less the losers by the tax, for the addi¬ tions to the rate of duty caused a heavy advance in the price, which brought into the pockets of a few shrewd speculators no less a sum than 853,000,000. Such, at least, is the esti¬ mate of the Commissioners, who refer to it in the following terms : “The immediate effect of the enactment of the first three and suc¬ cessive rates of dnty wa9 to cause an almost entire suspension of the business of distilling, which was resumed again with grtat activity as soon as an advance in the rate of tax in each instance became probable. The stock of whiskey and high-wines accumulated in the country under this course of procedure was without precedent; and Congress, by its refusal to make the advance in taxation, in arty instance, retro-active, virtually legislated for the benefit of distillers and speculators rather than for the Treasury and the Government. The profits realized by the holders of stocks, thus made in anticipation of the advance in taxation, has probably no parallel in the history of any similar speculation or commercial transactions in this country, and cannot be estimated at less than #50,000,000. If to any this estimate should seem exaggerated, we will simply state that there was, in all probability, on the 1st July, 1864, a stock of hijh-wines and whiskies, previously made in anticipa¬ tion of the tax, sufficient to meet all the requirements of the country for a period of from 12 to 18 months, and on each gallon of this quant¬ ity a premium has been realized, owing to the advance of the tax from 60 cents to #2, of from 90 cents to #L 40 per gallon. As an illustra¬ tion of the profits realized in particular instances, it has been stated to the Commission that one firm manufactured or received under contract for a period of several weeks prior to the #1 60 tax an average quant¬ ity of 30,000 proof gallons per day, the major portion of which was held and sold after the advance of the tax in January, 1865, to $2 per gallon.” With a view to show the gradual effect on the price of proof spirits, we give the following table of the wholesale price of whisky in the New York market for the years 1858 to 1864, inclusive : Year. Average price. Highest. Lowest 1 8 5 8 1 8 5 9 1S60 ? 1861 1 8 6 2 . 1 8 6 3 1 8 6 4 24 * 29 21 27 31 * 25 22 27 17 18* 21 14 29 39 20 58 96 ... ” 39* #1 45 ■ 2 24 80 It will thus be seen that for the first five years, included in the above table (1858-62), the years before the tax be¬ came‘operative, the average price of whiskey in the New York market was about 24 cents per gallon, or about -J- part of the present rate of duty. It is, however, somewhat re¬ markable that during the greater part of the year 1865 the market price of distilled .spirits (proof) was less than the cost of manufacturing with the tax of 82 per gallon added, the quoted rates for a short period having been as low as 81 95 per gallon. These prices have generally been regarded by the public as prima facie evidence of fraud ; but the bulk of the spirits sold at this under-valuation was derived from the enormous stock manufactured prior to the imposition of the 81 50 tax of July 1, 1864, and was held by speculators and others, who were desirous of realizing, and were content with the then accrued profits. As to the repressive and mischievous effects of the tax on the production of distilled spirits, we find that in the year 1860 the product was 90,412,581 gallons, while in the cur¬ rent year the product is estimated to have fallen to less than one half, or 42 to 45 millions of gallons, and this diminution involves a corresponding decrease in the demand for western
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Date: March 10, 1866
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