DURING the past month an important movement has been made towards the restoration of the national credit. We allude to the passage by the Legislature of Pennsylvania, of a bill not only to levy a tax of two mills upon all property before taxable for town and county purposes, and which is estimated in the aggregate at $550,000,000, and a tax of three mills upon salaries and personal property now first made taxable by this bill, but to appropriate the proceeds of these taxes exclusively to the payment of the interest on the public debt. The bill itself is believed to be efficient for the attainment of the great object, that of restoring the credit of the State. Of the bill, thirty-two sections are occupied with provisions for the sale of the public works in exchange for State bonds at a price of $20,000,000, should the people at their next election decide that they shall be sold. The progress of events is such, however, that there is very little prospect of their being able to sell the works, even should the people decide in favor of so doing. Since the passage of the tax-bill, the market value of the stock has advanced to such a degree as to preclude the idea of buying the works for cash, greatly less than the price fixed by law in bonds; and as the profit of the works is of a very precarious nature it is obvious that holders of the stock in receipt of five per cent. interest would rather retain it than part with it for the doubtful chance of obtaining the same revenue from the public works. The great difficulty under which the State of Pennsylvania has heretofore labored, has been, not want of laws levying taxes, but an inefficient mode of assessment and collection, which has prevented county of ficers from understanding and executing their duties. This state of things the new bill remedies, and prescribes clearly and peremptorily the duties of the officers and the penalties for their non-fulfilment. The law also contains a clause appropriating the full amount of the proceeds of the specified taxes exclusively to the payment of the public debt, and there is no doubt of the VOL. XIV.NO, LXXII,

42

sufficiency of the avails for that purpose. Hence Pennsylvania has virtually resumed her payments, being the first among ten dishonored States to do so. There is no doubt but that at the next session of the several Legislatures, others of the delinquent States will follow the example, and the foul blot of repudiation be removed from the fair fame of our republican institutions. In our former numbers we have noticed the negotiations going on in London on behalf of the State of Illinois for the procurement of $1,600,000 on pledge of her canal lands for the completion of that great work. The answer of the London creditors was to the effect that, if the representations of the Commissioners in relation to the value of the lands and the sum necessary to complete the canal should be borne out in the course of an investigation instituted by agents appointed by them, the required sum should be forthcoming. Ex-Governor Davis of Massachusetts, and Capt. Swift of the Engineer Corps, were appointed agents, and have made a report in London highly favorable to the views of the State; at that critical moment, however, when the confidence of European capitalists in republican honesty was rapidly returning and the Illinois loan about to be consummated, the disastrous news reached London of the adjournment of the Maryland Legislature without having made any movement towards redeeming its faith. The feeling of disgust for every sort of American security returned with redoubled force, and at our latest dates the Illinois negotiation was in danger of falling through altogether. In the meantime, however, the gratifying result in Pennsylvania is on its way, and will in all probability revive the drooping spirits of the friends of our country's credit, and possibly lead to such movements as may tend to hasten a resumption of dividends on the part of all the States. It is by no means, in ordinary times, a matter of rejoicing that money has been borrowed abroad; on the contrary it is subject of regret, because it seldom is the case that the money can be so em

ployed here as to produce its principal and interest in a given time and leave a profit to the operators here. In the usual manner of borrowing for 20 years at 5 per cent., double the sum is to be returned to Europe in 20 years.

Now, in agricultural operations in this country, a man cannot in twenty years buy land, support himself and family, and return double the amount he borrowed; nor will any other employment yield such a profit; yet $200,000,000 have, within a few years, been borrowed in Europe, in expectation of its producing such an effect. If it were possible that it could be done, the wealth of the country must increase 100 per cent. every six years; the impossibility of which is self-evident. Hence, when these sums of money are borrowed abroad, at these high rates of interest, they impoverish the country; because more capital must be sent abroad than the borrowed money has earned. The deficit is a tribute paid in actual labor to the creditor country. In the present cases of borrowing, a little means is absolutely necessary, judiciously applied, to some of the great works of public improvement, which have been constructed at such immense cost, in order to make them available, and by that means gradually, with the assistance of direct taxes, redeem the fair fame of the country, which is more valuable than money. It is for this purpose that the loan of Illinois is desirable. It will complete her great canal, and give activity to her internal trade, from which a partial revenue will be derived, and, added to the proceeds of a small tax, which will doubtless be imposed at the coming session, redeem her credit. In

Discount.

diana is similarly situated with the Wabash and Erie and Central canals, and to complete the latter, she has petitioned Congress for a grant of lands on its borders. This will afford her a means rather prospective than immediate. Indiana has already, of former grants and her share of distribution, more land than she can command the cash for. In order to extract means from it, she has violated the Constitution, and injured her own interests, by issuing script or paper money, redeemable in these lands. This paper is nearly identical with the old colonial bills of credit redeemable in lands, to guard against which the clause in the Constitution, forbidding States to issue "bills of credit," was expressly inserted. The amount of this paper circulating at a great depreciation is over $1,000,000, and exercises a most pernicious influence upon the resources of the State. The swelling tolls of the Wabash canal and other means are such, that, if paid in money and honestly appropriated, would nearly suffice for the payment of the interest. Some remedy for this state of things will be applied at the next session.

With the restoration of credit among the delinquent States, there is no doubt but in the present state of affairs in Europe large amounts of money will come here for investment. Both on the Continent and in England, money has been cheaper for a longer period than ever before; and at the great points of accumulation it seems to be constantly increasing in amount. This is indicated in the leading features of the Banks of England and France, as follows:

absence of any active demand for commercial purposes. In Holland a government loan of about $50,000,000 was taken at less than 3 per cent., and in London, for the first time for over a century, the 3 per cent. consols were over par. This is a most singular state of affairs, and evinces the fact that all over the commercial world the amount of individual credits outstanding and maturing was never so small as now, while the accumulation of idle capital is greater. In England this is particularly the case. She draws from all the world tribute in the shape of interest, and for the reason above given, that a debtor country is impoverished by means of the interest it pays, so is England enriched at their expense by means of that she receives.

In spite of the adverse tariffs of the continent, and the small exports of the past few years, exchanges have been in favor of England, notwithstanding that a recent return shows that in France there are 66,000 English residents who draw from England, at an average of a dollar a day, $24,000,000 per annum, for their support. The present value of money, all over the world, has evidently fallen very low, because the amount to lend has accumulated, while from the cessation of war and other causes, the number of borrowers has greatly decreased: as some indication of the rate in which capital increases, we may refer to the amount of property which has paid legacy duty in England at different periods since the war.

It is evident that the value of this property varies from year to year with the general state of prices. From 1820 to 1843, however, the general increase was 33 per cent. In the last year the revenue derived from it was £2,239,768. The whole amount received by the government since 1797 from their duties is £66,835,959, a sum more than equal to the whole principle and interest of our war debt. These duties afford a good index of the progressive increase of personal property, or that capital which is constantly seeking employment in the market. The events of late years have operated to prevent that capital from seeking employment in foreign securities, hence, the immense rise in the English funds, assisted by the course of the Bank in making money plenty, in order to carry through the great operation of the government in reducing the interest on the 3 per cent stock. The danger now incurred is that the price of consols being so high, most of those capitalists of Europe who invested last year at rates under 90 may avail themselves of the rise, and sell out in order to employ the proceeds in railroads or other channels on the continent, which will yield a rate of interest better th hat now afforded by consols.

T

1843..

£41,092,660

40,441,678

41,476,521 .43,130,000

effect would be to turn exchanges against England, and favor the present policy of the Bank, which is, having perfected the operation of the government, that is to raise the value of money as speedily as possible, in order to maintain its own dividends. It is an axiom that a National Bank prospers only in periods of general distress. It is out of the necessities of borrowers that the most extravagant profits are realized. The operations of the Bank and the position of affairs now bear great affinity to that of 1825, which, according to official announcement, resulted in placing England within "twentyfour hours of a state of barter." After the Bank of England had recovered somewhat from its difficulties, growing out of the suppression of small notes in 1821, it lent its aid to government to bring about a conversion of 5 and 4 per cent stock to 4 and 3 per cent. Money became very cheap, and the price of consols rose from 82, in September, 1829, to 94 in August, 1825; in the same period cotton rose from 7d. to 13d. The high price of consols engendered great speculation in foreign stock, and the amount of money sent out of the kingdom added to the high pricef paid for raw material suddenly pros duced a drain upon the coin in Bank

which standing at £11,313,000 in November, 1824, ran down to £1,260,000 in the Fall of 1825, a period of eight months, and the Bank was saved but by a miracle. During the past two

years the same movement has been in progress.

The position of the Bank, in March, for three years, has been as follows:

12,003,000 13,924,000

The reduction of the price of money has been rapid, keeping with pace the rise of stocks. It was known that when money was at 5 per cent. in England and consols at 88, large sums went over from England for employment at those rates, and money so invested has yielded 9 per cent. per annum, assisting the advance in stocks. The immediate cause of the rise, viz. the measures to effect the conversion of the funds from a higher to a lower rate of interest having passed, there is very little probability of a further advance from general causes. The speculation in railroads, and the improvement in business on the continent, now affords room for employing the money, and the withdrawal of it may cause a fall in price, as well as a general stringency of the money market, produced by unfavorable exchanges. The past year of great abundance of

Price Rate of Bullion. Consols. Interest. 5,602,000 88 4 11,054,000 96 14 16,322,000 100% 11/1

money, during which it would have been easy to have restored confidence in American credit, has been lost, and with an increased value for money, the temptation to invest in American stocks, will no longer exist, even should the desire be restored.

Money in this market has somewhat declineď in value towards the close of the month, and may be had at 5 a 6 per cent. on stocks or on good paper. The banks of the city having made up their returns to the first of May, according to the requirements of the law, again were more lax in their movements. The influence of this state of affairs upon the stock market has been very perceptible, and speculation in those descriptions called "fancy," or nondividend paying, has run very high. The following table will show the extent and rapidity with which the prices of these descriptions have advanced :