lower, and there may be soon a reaction. It is a significant fact that we are continually told in the daily papers that "gold is scarce for delivery," and would seem to indicate that some secret drain has been at work, and that the plethora produced by the heavy sales a few weeks ago of Government gold is ceasing to oppress the market with an excessive supply What amount of coin was sold by the Treasury broker we are not officially infor ned. It is, however, variously estimated at from fifteen to twenty millions. Another significant fact is, that the specie in our banks is steadily declining, as appears from our table in this article showing the movements of specie, although there is no export movement, foreign exchanges being in our favor. But whether or not, gold will soon tend upwards, the idea that we are any nearer specie payments because of the decline, is amusing. Gold is going down it is argued, therefore, the paper currency is rising in value, and the goal of resumption is in view. Just as well might you, on the hottest day of next July, immerse your thermometer in ice-water, and tell us, because the quicksilver was fallen, the heat was declining too. The cases are exactly parallel. Gold ceases to be the true measure of depreciated paper when its price is not free from foreign interference; just as the thermometer ceases to be the true register of the heat of your room when its bulb is tampered with. Hence, it was not because currency rose in value that gold recently fell, but because, by the government action, it was made to fall, in consequence of an interruption of its natural equilibrium. It is useless to try to measure the real depreciation of paper by the premium on gold, until the invading force is expelled, the equili brium restored, and the perturbation ended. So far from the government sales of gold helping to bring on a return to specie payments they may positively retard it. For what do we mean by a return to specie payments? Do we not mean that every paper dollar which the government has issued shall be able to command a dollar in coin? Now the government has 451 millions of greenbacks and fractional currency. Suppose, on the 1st of July next, we complete our arrangements, and try to resume. What would be the inevitable immediate result? Every greenback presented at the Treasury must command coin. Four hundred and fifty millions of paper currency issued by the government become payable in coin on demand. Gold and silver will being so pass current from hand to hand. And, just as happened in France after the revolution, the very novelty of the change, with the long habit of regarding coin as worth more than paper, will make coin for some years to be be more in demand among us than it ever was before the war. A large proportion of the 400 millions of greenbacks, will therefore, inevitably be converted into coin. How is the prodigious demand for specie to be met, but from coin garnered up beforehand in the Treasury. Is it not evident that before we can resume two things must be done? We must draw in the redundant part of our currency, and we must have in the National Treasury a sum of gold and silver amply sufficient to pay all greenbacks on demand. Now what is the direct result of the government sales of gold but to disperse the very store of the precious metals, which is an indispensable means of resuming specie payments? Without an ample supply of specie in the Treasury to meet the greenbacks and to pay them on demand any attempt to resume must be abortive, and would bring on such convulsions and disasters as would make the very idea of specie payments a terror for a generation to come. Some ill-informed persons have supposed that Congress would order the Secretary of the Treasury to sell more of the gold than he has already done Thre is no probability that Congress will adopt any course fraugh with such danger. Indeed it is urged that if we are to make any real progress towards specie payments the authority which the Secretary now has to sell gold should be considerably curtailed. For, on the 1st inst., the coin in the Treasury amounted only to $55.736,192, of which nearly 13 millions belonged to the holders of the gold certificates leaving ouly 43 millions of gold in the Treasury to meet the interest on the debt. How necessary is the keeping of this amount or more to secure the certain prompt payment of interest due to the public creditors whenever a falling off in customs duties may happen hereafter from revulsions or other causes is sufficiently seen from the fact that the gold interest on our debt now reaches the vast sum of 62 millions a year, and when the floating obligations of the Treasury are funded the annual interest to be provided for can scarcely be less than 150 millions. Surely then the Government gold should not be dispersed ; it is wanted for two objects: for the sustaining of the national credit by the payment of interest, and for a basis for the future resumption of specie payments. A superficial observer might suppose that when the Government wants gold for the purpose of resumption they can buy it. But where can gold be bought? Not in Europe? for at present a few successive shipments of gold to this country would produce a panic at the London Stock Exchange. Nor could the Treas ury suddenly buy gold at home, for, though the sale of 15 millions only put the price down 10 per cent. Mr. McCulloch could not perhaps get back 5 millions of it without putting up the price to 140 or higher. The only way for piling up gold for future specie payments is to gather it in by degrees. Nor is there any fear that we shall not be able to accomplish this, for our annual gold crop is or will soon be the largest gathered by any nation in the world. In view of the rapid prospective development in the gold producing facilities of this country it cannot be doubted that gold can be hoarded in the Treasury, within a short time, until we have enough to redeem 150 or 200 millions of greenbacks, and thus resume coin payments: but will not gold become scarce while the hoarding is going on? To this we reply as we began, that gold is scarce now. If the heavy Government sales fail after a few days to relieve the scarcity complained of, will the absence of such sales produce it; Gold becomes scarce very rapidly because, from the artificial depression of the price it is selling relatively below its value. The more the depression therefore, the greater the tendency to scarcity. The Treasury could not buy back to-day the 15 millions lately disposed of without paying a much greater price than that for which it was sold. Our gold reserve is easily dispersed but, like spilled wine, it is difficult to gather up again. Below we give the movement of gold through the month : The Treasure Movement at New York weekly, and the amount in Banks at the close of each week since January 1, has been as follows: 1866. week ending Jan. 6.. 13. 20. .. 27. $685,610 TREASURE MOVEMENT FOR 1866. Sub-Treasury In banks at close Receipts. Exports. Feb. 3.. 944,878 10. 1,449,074 17. 24. 1,209,048 Mar. 3.. 580,195 Since Jan 1... $8,494,606 $5,389,102 $35,632,419 $8,827,096 $31,979,26 $25,817,682 §............ The following is an official statement of the total amount of Gold Certificates Our foreign exchanges through the month have ruled very decidedly in our favor. It has been a mat.er of great susprise to many that this should be the case while we were importing so largely. For instance, the total dry goods entering this port during the first three months of this year has been $45,475.871, against $11,388,924 in 1865, $30 256,895 in 1864, and $19,501,619 in 1863. Below we give the imports of dry goods at New York for the nine months for a series of years ending march 31st: IMPORTS OF FOREIGN DRY GOODS AT NEW YORK FOR NINE MONTHS FROM JULY 1ST. From the foregoing it will be seen how largely our dry goods imports have increased over previous years. The imports of general merchandize at this point have also increased, while the exports from New York have by no means been as large as for some previous years. The secret, however, of the present condition of our foreign exchanges lies in the large amounts of cotton we have exported from Southern ports. The total exports of cotton from the United States since September 1st now reach 915,000 bales, which, at $200 a bale, gives the United States a credit of $183,000,000. This much needed staple is also still going forward in undiminished quantities. Below we give the course of Exchange for the month: Days. 1.. 2. 3. 4. 5 6. 7.. 8 9. 10. 11. 12 13. 14. 15. 16. 17.. 18.. 19. 20. 21 22. 23. 24.. 25 26. 27. 28. 29. 30. 31. Mar. Feb. Amsterdam. Bremen. 108%@108% 525 @518% 107%@107% 530 @522 40%@40% 771⁄4@78 107 @107% 530 @523% 40% @40% 77 @77% 106@108% 530@ 518% 40 41 77 @78% 35%% @36% 70% @7% 77 @79 35%@36% 70%@71% 78 @79%% 36 @36%% 71 @71% JOURNAL OF BANKING, CURRENCY, AND FINANCE. Allowing Interest on Deposits-City Deposits of Country Banks-Bank Returns of the Threa Cities, &c. Since the prodigious expansion of credits which our irredeemable paper money has developed in this country, the custom has become too general among our city banks of allowing interest on the deposits of country banks payable on demand. This practice is, ou many accounts, of very doubtful expediency; and is disapproved of by some of our most eminent financial men. Among other objections it is urged that by this means small banking corporations in the country are in. duced to accumulate heavier balances in New York than are required to provide for their current exchanges. And the obvious result is that they are tempted to weaken, in some cases, their home resources, which are unprofitable; in order that they may get interest on their city deposits. Undoubtedly the sound and safe policy for a country banker is to keep his city balances at no higher a point than is demanded by the claims of legitimate business. These balances form a part of the reserve required by law, which is expected to be kept unemployed and at instant call. The idea of making their reserve bear interest seems never to have entered, till recently, into the calculations of our banking institutions, who would no more have thought, in former times, of making a profit on the reserve than on the specie in their vaults. Whatever sum in excess of his wants is kept in New York by the country banker for the sake of interest, is really a demand loan; and must be subject to such risks as in time of panic or revulsion may be productive of grave anxiety or even worse trouble. Notwithstanding these and other dangers incident to this objectionable system, there is reason to fear that it is rather on the increase; and this fact accounts in part for the accumulation of funds at the commercial centres which has often been cited as one prolific cause of sharp sudden turns in the loan market. When money is easy the city banker who has to pay interest on balances is compelled to keep his deposits constantly employed, and under the pressure of necessity he sometimes goes further than prudence would justify. Hence, when the legitimate channels of employment for capital are filled up, he is apt to be induced to make such loans or investments as would not tempt him were he exempt from the heavy charges connected with the payment of interest to his depositors. The danger of this state of things is increased by the fact that this particular class of interest bearing deposits is peculiarly sensitive to the least fluctuation in the money market. When capital is abundant and difficult to employ to advantage, these balances increase, and the city banker incurs the heaviest charge for interest; but let fear of stringency supervene, or loanable capital become scarce, and these balances are rapidly drawn down just at the very moment when the city banker could employ them to advantage, and when he finds it most inconvenient to repay them. To such causes are to be attributed some of the severe symptoms which attend and give so spasmodic a character to most of the fluctuations which have occurred in our money market during the past two years. As we approach specie payments the wiser banking corporations in our country towns will do well to adopt the policy of keeping within narrower limits their city deposits; and of protecting themselves from probable trouble by holding an adequate reserve in their own vaults. It is hoped, indeed, that we shall reform our currency, fund our debt, and return to a specie standard without such revulsion as has invariably attended such a process in other countries. But nothing is more certain than that if financial panics and disasters should come, the chief sufferers among the country banks will be such as by having violated sound rules relative to their reserve have failed to take advantage of the safeguards which experience has shown to be the strongest protection against such disasters. Not much progress in multiplying National Banks has been made this year, as the limit was reached in most of the States during 1865. The circulation has |