FINANCES OF THE UNITED STATES. 



469 



express company. Then follow in order the 

 prices of sterling exchange, the price of gold 

 in paper, the price of silver. United States 

 notes receivable for duties, and of the Govern- 

 ment stock. The year opened with a reaction 

 in respect to the " balance of trade," on the 

 large imports of specie that were made in 1861, 

 as a consequence of the sudden stoppage of 

 importations of goods in that year, and ex- 

 change was nearly par at that time ; the 

 currency was then nearly on a specie basis. 

 A suspension of specie payments had indeed 

 taken place, but the banks were thus put with- 

 in the penalties of the law, and had reduced 

 their circulation, in the effort to resume as 

 soon as possible. Specie did not therefore rise 

 in value, and the Government 6 per cent, 

 stocks were at about par for a 7 per cent, stock, 

 and money in the open market was not abun- 

 dant, and specie did not rise in price. The 

 moderate importations of goods in the previous 

 year had caused a diminution of stocks on hand, 

 and the progress of the armies of the "West had 

 encouraged the hope of larger sales, while 

 there were fears of higher duties to be imposed 

 by Congress, which therefore promoted impor- 

 tations, that became considerable in March, 

 causing an outward flow of specie, which be- 

 gan to rise in premium in April, when the le- 

 gal tender notes of the Government made their 

 appearance. From that moment the metals, 

 exchange, and old demand notes receivable for 

 customs steadily appreciated, while gold flowed 

 in a broader stream out of the country. The 

 passage of the legal tender bill in Congress had 

 alarmed foreign holders of stocks,and these were 

 sent to Xew York for realization in considera- 

 ble quantities, the proceeds to be remitted in 

 specie. The imports of goods that had again be- 

 come small in June suddenly rose in July, in an- 

 ticipation of a new tariff, and the hope that the 

 advance in prices under the influence of paper 

 would prove remunerative. For the same rea- 

 son the exports increased, because the rise in 

 exchange favored the shipping of goods. Those 

 months in which the largest exports took place 

 are those in which the rates of exchange ruled 

 highest. A barrel of flour that sold in Liverpool 

 at 22s. 6rZ. in January, would at 10 per cent, ex- 

 change realize to the shipper $5. 50 in exchange. 

 At the same price for flour, when exchange 

 in July rose to 130, the shipper got $6.50 for 

 his bill, and in October, when exchange reach- 

 ed 150, he got $7.50 for his bill. Thus the 

 rise on exchange for the time was equal to an 

 advance abroad for the produce, but this move- 

 ment soon produced a rise in prices which 

 counteracted the exchange, and shipments fell 

 off rapidly in the last two months. It is to be 

 borne in mind that the import values are the 

 specie invoice prices, and the sum represents 

 the amount to be paid in specie; on the other 

 hand the exports are home values in paper 

 money, and represent a sum larger by the de- 

 preciation of the paper than will be actually 

 received. Thus in the month of November 



gold was at 133 premium, or the paper was 

 depreciated 25 per cent., hence the $14,390,681 

 of goods exported would realize in specie only 

 $10,793,011 abroad. The aggregate of the ex- 

 ports for the year by no means therefore repre- 

 sents the amount that can be applied to the 

 payment of goods, and the amount exported 

 declined. Toward the close of the year the 

 rise in paper prices here was to some extent 

 counteracted by the decline in prices of west- 

 ern produce abroad. 



The imports on the other had suffered a 

 grievous burden ; first in the higher duties, 

 second in the high premium on gold, or gold 

 notes, which were the only medium for the 

 payment of duties, and third, on the rise of 

 bills. An illustration is afforded in comparing 

 the imports of any month, November for in- 

 stance, with the same month of the previous 

 year, as follows : 



Thus the average expense of landing goods 

 this year in November was 80 per cent., against 

 24 per cent, same time last year. This advance 

 was very onerous, and exceeded the rise which 

 took place in the markets of sale, subjecting 

 the importers to loss ; as a consequence the im- 

 portations declined. The mere rise in the cost 

 of importations was not the greatest evil en- 

 countered, since none could tell what the cost of 

 landing goods already ordered might be. If the 

 Government continued to emit paper money 

 while it exacted duties in gold, the cost of im- 

 portation would rapidly rise, and when goods 

 arrived the expenses of entry might be 20 or 30 

 per cent, higher than when the goods were or- 

 dered. This was an evil against which no cal- 

 culations could guard, and importations became 

 a mere lottery. The time was approaching also 

 when the old demand notes would all be ab- 

 sorbed, and the duties would then be payable 

 in gold, which would involve an active demand 

 for that article on the part of importers to the 

 extent of $3,000,000 per month. 



While all these radical changes were taking 

 place in the condition of trade, the table on the 

 preceding page indicates that Government stocks 

 did not rise in any degree proportionate to other 

 articles. Thus in January the 3-year bonds, 

 which bear 7.30 interest, payable in gold, sold 

 at 99 for specie ; in December the price of the 

 same bonds was 101 f r PP er i 76 for specie 

 a decline of 22^ per cent. The 20 year bonds 



