MONTHLY FINANCIAL AND COMMERCIAL ARTICLE.

DURING the month which has elapsed since the date of our last, some degree of improvement has taken place in the prospect of commercial affairs. This has principally grown out of the nature of the news received from abroad. A great and important change had taken place in the tariff of Great Britain, by which the duties on most articles of American produce have been greatly diminished. This was received as an earnest of a greatly improved future trade between the two countries, and went far to revive expectations of returning activity in commerce; and being accompanied by indications that the political differences between the two countries were in a fair train of amicable settlement, a greatly improved feeling was produced in the markets, which might also in some degree have been ascribed to the opening of the canals in New York, releasing large quantities of produce, and carrying back a fair amount of merchandise-the spring purchases of the country dealers. These facts failed, however, to create any material rise in the prices of produce or goods generally; the demand for the former being scarcely more than sufficient to maintain rates in the face of receipts. The business doing is very healthy on a cash basis, but has been far from large.

Money with the banks has been plentiful, and they have with difficulty found the proper description of paper to employ their funds. Remittances from the country have, however, been procured with difficulty, and a vast number of debts have been compromised on the part of those merchants depending upon realizing their outstanding accounts. The exports of produce from the South have decreased, diminishing the supply of foreign bills, which has been very moderate, and the rates have consequently advanced. The transactions for the packet of the 16th were not large, in consequence of the great firmness of holders, and the indisposition of purchasers to meet the demands of drawers; and the rates closed firm at the following figures :

The disposition of

These are rates for 60 day bills, the interest for which period, added to the price, gives the true rate of exchange, which is about par on London. exchange to rise has induced caution among moneyed men to some extent. Several bank failures have taken place in different parts of the Union, two of them being free banks, and one Safety Fund of the State of New York. This is a natural and necessary consequence of the revulsion of business, and must continue until the redundant capital is purged from the banking business of the Union. In order to show the force of the storm which has overtaken the credit system, we have, with patient research, compiled a table of the capital of all the banks that failed through. out the year 1841, with the outstanding circulation and specie held by each at the time of failure. Although we denominate them all as failed, yet in some cases they have voluntarily wound up without dishonoring their liabilities. This has been the case with the United States Bank in New York, the New York Banking Company, the Bank of Attica, and one or two others. These banks have all stopped since the 1st of January, 1841, and in nearly every instance the capital has been entirely lost:CAPITAL, CIRCULATION, AND SPECIE OF BANKS THAT HAVE FAILED IN THE UNITED STATES

IN 1841.
Capital.

This gives the astonishing sum of nearly $70,000,000 of bank capital that has ceased to exist within the year, withdrawing from circulation in round numbers $24,000,000, and throwing into the channels of business $5,600,000 of specie. The circulation of all the banks in the Union on the 1st of January, 1841, including the free banks of New York and the United States Bank of Philadelphia, amounted to $121,465,198, and the specie $35,034,516. The circulation of the banks still in operation has been reduced about 10 per cent., and the specie remains nearly the same. This will give the following as the state of the paper currency of the Union at this moment :-

This table presents the fact that the circulation is less now than at any period since 1833, and the bank capital is nearly the same as in 1837. As circulation forms the chief medium of profit to banks, it is evident that, with so reduced a circulation, even the amount of capital now employed in banking must be far from profitable ;hence the great depreciation in the value of bank stocks in the market. If we suppose that all the banks in operation in 1836 paid dividends averaging 6 per cent., the amount was $15,000,000. The probability is that the gross dividends for the past VOL. X., No. XLVIII.-77

year have not exceeded $5,000,000. This loss of capital and the falling off of divi dends have dried up one source of the accumulation of funds in the hands of those capitalists from whom the demand for public securities is mostly derived, and therefore have had an influence upon their prices. The depreciation on the bank capital still in operation will average 30 per cent., equal to a loss of $87,600,000. In State stocks, the depreciation at the present market prices is $100,400,000. In company stocks of various descriptions it is $75,300,000, and in real estate it may be estimated at $300,000,000. These sums brought together make an immense item, as follows:Loss of bank capital by failure.....

46

Loss on State stock

depreciation..

.$66,936.245 $7,600.000 .100,600,000

In many cases these items run one into the other. For instance: the capital of the United States Bank was invested in State and company stocks and real estate, and the depreciation of those annihilated the capital of the bank. (While this operation has been going on, the profits of trade have been very small, and the accumulation of capital from all quarters has not been equal to the loss nominally sustained.) Yet, after all, the real wealth of the country is far greater at this moment than when those paper bubbles were in their prime. They were evidently the means by which the property of the producing classes was drawn into the coffers of the stockholders. As above stated, the dividends upon bank capital in 1836-7 was 15 to $18,000,000. This was ultimately actually paid by the working classes, who at the same time were paying $13,000,000 per annum interest on State loans, making the enormous tax of two dollars per head on every soul in the United States. From the bank tax the mass have in a great measure been relieved, and to some extent of that to meet State indebted. ness. The loss of paper wealth is therefore a gain to the country at large, but it operates immediately to prevent a demand for public securities, because there is no accumulation of capital in the hands of those who seek these investments. Hence the continued fall of stocks, and the difficulty of obtaining money on the most undoubted securities-even the 7 per cent. loan of the State of New York.

In a former number we stated that many new loans were about to be put upon the market, viz., $3,500,000 of the $11,500,000 six per cent. loan of the Federal Government authorized at the present session of Congress, $1,000,000 of the $3,500,000 authorized at the late session of the State of New York, and a 7 per cent. city loan. For the U. States stock, after proposals had been advertised the legal time, it was found that no bids had been received except for about $400,000 on Boston account at near par. Of course, no other result could have been expected while the finances of the Government are in such confusion, with a revenue deficient near $10,000,000 per ann., no definite system adopted, and a powerful faction bent upon creating a permanent national debt by giving away the revenues from the public lands and diminishing the customs revenue by protective duties-at the same time that a N. York 7 per cent. stock was offering upon the market. The latter was taken up slowly by small capitalists to the extent of about $600,000, and the remainder was then taken mostly on foreign account by two leading Wall street houses. Of the remaining $2,500,000, $1,500,000 it is understood will be taken by the banks, in view of the temporary loan expired in March last. This state of affairs clearly shows how little money is seeking permanent securities for investment, while on the other hand there is every disposi tion to realize upon the stocks bearing low rates of interest, if it could be done without too great a sacrifice, an event not likely soon to happen-although, from causes hinted at in the fore part of this article, a nominal rise has been effected in some descriptions. In order to show the change which has taken place, we annex quotations up to the departure of the last packet, as follows:

PRICES OF LEADING STOCKS IN THE NEW YORK MARKET.

Rate. Redeemable. Aug. 30. Dec. 31. Feb. 15. April 1. May 1. May 14 United States......5......1814....100 a 100..96 a 97.96 a 97..90 a 95..93 a 97..96 a 97 ..97 a 973.97 a 99..90 a 97..97 a 97..98 a 103 New York State....6......1860....100 a 100..86 a 87.79 a 80..80 a 85..90 a 93..89 a 91

......6......1844..

64

66

66

66

66

City

66

Rate. Redeemable. Aug. 30. Dec. 31. Feb. 15. April 1. May 1.
May 14.
N. York State.......5..
9a 92.76 a 77 .71 a 73..76 a 78..83 a 85..85 a 85
....5......1845.... 93 a 95 ..85 a 86 .80 a 97..85 a 90..- a 90..88} a 90
....5......1846.... 93 a 95.85 a 86 .80 a 87..85 a 90..- a 90..88 a 90
....5......1847.... 93 a 95 ..85 a 86 .80 a 87..85
....5......1850.... 91 a 92 ..85 a 86 .68 a 71..78
....5......1855.... 86 a 87 ..76 a 77 .68 a 72..77
.5 ......1858.... 86 a 861..76 a 77 .68 a 71..77
.4......1819.... 75 a 77 ..70 a 75
..5.......fire..... 84 a 85..77 a 79 .72 a 76..77
...5 .....water... 84 a 85..76 a 771.77 a 78..77
bonds......6........ year.... a 100..96 a 97 .96 a 98..98
.90 a 92..90

.6

.1858.....
94 a
...1860..... 94 a

95.72

a 73

.44 a 49..32
.68 a 70..53
.67 a 68..52
.67 a 68..52
.67 a 68..52

a 78
a 99
a 95
a 33

a 90.. a 90..88 a 90
a 79.. a 84..82 a 83
a 77.82 a 83..82 a 83
a- .52 a 83..82 a 83
a.76 a 78.67 a 77
.83 a 84..79 a 80
.84 a 85..791 a 50

.-a 99..89 a 994

a 53. -a 72..76
a 63.70 a 71..75

a 78

a 77
a 77

5 ......1850..... 84 a

85 ..60

a 70

-a..75 a 77

a 70

Kentucky..........6

84 a

..40
a 50.50 a 55..50 a-
63..27 a 45 .35 a 45..-
57.19 a 26 .20 a 21..17
55.19 a 19.19 a 20..17

a-

-a-..50

8-

a 60

a-

a 17 19 a 19, 18

x 19

a 17.20 a 21..19

a 19

85 ..70
........6..bonds 4's..... -3 -
Alabama, dollar.....5...... 1866.....a
Arkansas,*.........6....25 yrs..... 59 a

Indiana, sterling...5

Illinois, sterling ....6......1860..

dollar, b'k l'n,6 ......1860..
sterling...... 6 ......1870.
dollar.........6......1870.

56 a 56.19 a 20 .a..20 a 22.
a- a..14 a 148.

--a

55 a 55.19 a 191.18 a 19..19) a 20..18 a 187.16} a 16}
Those States marked thus* have failed in their interest.

This presents a great rise in the value of stocks, from the lowest point of depression,
which was in the middle of February. The improvement is more particularly appa-
rent in the stocks of the State of New York, and has been on an average 15 per cent.,
with a firin market and still tending upwards. If we look back a little at the events
of the past year, we may clearly trace this improvement to the acts of the last legis-
lature of the State of New York. The list of prices given under date of August 30,
are those at which the values had been sustained, under the hopes that Congress at
the extra session would do something to relieve the indebted States. The great
movement to effect that object was the passage of the land distribution bill, which
was done during the latter part of August; no sooner, however, had that bill become
a law, than its utter inefficiency was felt in the market, and stocks began to decline,
until they reached the low rates quoted under date of Dec. 31. In that time New
York State stocks had fallen 10 to 15 per cent. under the heavy and constant sales
of stocks loaned to the Erie Rail Road-at home New York stocks are always the
most desirable, and when they fell to such a degree it is no wonder that other stock
felt the influence, even to a greater extent. On the 1st of January, six States became
delinquent in their interest. This had a prodigious effect abroad, where but little
distinction is made between the ability and willingness of the different States to pay.
Not only did all demand for American stocks cease, but a great disposition to sell
was evinced, and prices fell to the low rates quoted in the middle of February—about
that time, however, New York changed her financial policy. It was decided to issue
no more State stock than $3,500,000, a sum merely sufficient to discharge the claims
upon the State, and, notwithstanding the alleged sufficiency of the revenues, a tax
of one mill per dollar was levied to raise the additional sum of $600,000, in order that
the means of the State to meet all claims upon it might be beyond all cavil. Among
all the extravagance, accumulation of debt, repudiation, and dishonor, which had
overtaken the several States of the federal Union, this was the first indication of
ability and willingness to pay. Its effect upon American credit abroad and at home
was iminense. It burst like a ray of sunshine through thick mists of dishonor and
repudiation that surrounded and obscured our national credit, and revived the almost
extinguished confidence in American honor. Capitalists abroad could not be brought
to believe, that any member of a confederacy of which New York was one would
deliberately set aside its debts. They reasoned that when the panic supposed to
exist here, growing out of the breaking up of the iniquitous banking system, and
possibly influenced by war apprehensions, should have passed away, that the people
would recover their energy and sense of right, and pay their debts to the last dollar.
The example of New York was taken as the harbinger of such a state of things—

accordingly the next packet which reached our shores brought orders for investment in many of the stocks, particularly some Western stocks, and those of Ohio and Pennsylvania, which stocks have greatly improved, although their affairs were never m a worse condition than now. The State of Pennsylvania has nothing provided to meet its interest due in August. Its legislature is to meet in June, to make some provision if possible. The Western stocks, under the supposition that at some future period they will resume their dividends, are worth more than they now sell for. For instance, the bonds of Indiana have 28 years to run, and bear 5 per cent interest. If the dividend were to be renewed at the end of 10 years, and payable ever after, the present value of a bond would be $358, or about 36 per cent. The probability is, that at some distant date the payments will be resumed, although repudiation seems to be spreading. The Governor of Michigan has issued a proclamation repudiating some of the stocks of that State. The rapidly increasing wealth of the country under its release from the oppressive banking system will soon give the means of redeeming its honor, when it is not to be believed that the will will be wanting.

A great question of national interest, and one that affects the pockets of every individual, is the adjustment of the revenues of the government on a just and equitable principle. In answer to a call from the House of Representatives, the Secretary of the Treasury has proposed such alterations of the tariff as he imagines will meet the wants of the Treasury. It is assumed that the expenditures of the government cannot be reduced to less than $33,000,000 per annum for the next three years, including the payment of the debt. The following are the items of expenditure and receipts according to his estimates.

The revenues from the lands are retained as indispensably necessary. This is right. The Secretary feels justified in estimating the revenue from customs at $22,000,000, and proposes levying an average duty of 35 per cent. on all articles; and basing his calculation on the imports of 1840, estimates the receipts at $27,400,000. The duty is thus to be raised 75 per cent. higher than would have been the case according to the compromise tariff after June instant, and he supposes the full amount can be obtained, notwithstanding the immense reduction which has taken place in prices abroad, and in the paper currency at home. The probability is, however, that under existing circumstances many of the proposed rates will become prohibitive, and the people will pay enormous indirect taxes into the pockets of manufacturers, while the government remains impoverished and embarrassed. There is no other way, if reasonable revenue duties will not yield sufficient to supply strictly economical expenditures, than to levy direct taxes. The people will then know what they have to pay, for what it is paid, and by whom disbursed. The superior expense of collecting direct taxes is not equal to the amount paid by the people indirectly under heavy duties by a large per centage.

240