used for the legal tender notes. Now is it not inconceivable that, in counterfeiting the 7-30 stamp the workmen should have so altered it, in minute particulars, as exactly to reproduce the greenback stamp? Moreover, this discrepancy would perhaps render it impossible that photography had been made use of. If, then, all these and other circumstances are brought strongly before a jury, would they not be justified in finding that the notes were issued through the fraud of some of the Treasury employees, and would not the Court hold that the Government must bear the loss resulting from the fraud of its agents in the regular course of their agency? OUR FOREIGN EXCHANGES SINCE 1861. In order to estimate the importance of the change in our financial relations with Europe effected by the war, it is necessary to trace the course of our foreign trade during the last five or six years. The less of the cotton crop, from the first outbreak of the war, involved an important diminution of our ability to pay for foreign products. This was naturally anticipated by our importers, and the importations were largely reduced; but the curtailment of our imports was not at all proportionate to the reduction in the exports. This was due in part to the fact that a large number of our producing population was taken into the army, thereby lessening the national yield of products; while, owing to the war consumption, we required more than the average supply of goods. Among the people also there was no disposition to economise; but, on the contrary, the effect of the increasing flood of paper money was to encourage the illusion among all of great prosperity, and thereby induce unusually large expenditures. Hence, although the war shut us off from communication with one third the population of the country, the importations were reduced only about 18 per cent. during the first year, and 24 per cent. the second year; while in the third, they were within $5,000,000 of the figures of 1860. The exports, however, from being 400 millions in 1859-60, fell to 226 millions (gold value) in 1861 -62, and even to 209 millions in 1864-65. Owing to the circumstance that the Custom House entries of domestic produce are given in currency, it is difficult to ascertain the gold value of the exports since the suspension of specie payments. By, however, carefully averaging the price of gold for each year, the value of this portion of the exports may be ascertained with a fair approximation to accuracy. The average yearly price of gold has been about as follows: in the fiscal year 1861-2, 102; in 1862-3, 146; in 1863-4, 160; in 1864-5, 200, and in 1865-6, 140; for the year 1866-7 it is unnecessary to strike an average, as in the official returns these exports are reduced to gold values. Taking these then as the correct averages, we will find that the gold value of the exports of the last six years compare as follows with the imports. According to these figures it appears that, for the six years ending on the 30th of June last, the trade balance against us was $256,000,000 in gold. We have no doubt that this exhibit omits an important amount of the exports, inasmuch as the shippers' manifests, as presented to the Custom House, are generally more or less incomplete. It is, however, impossible to form any reliable estimate of the proportion thus excluded from the official returns. But, on the other hand, the high tariffs of late years have induced a considerable amount of smuggling, and have tempted importers, in many cases, to invoice their goods below the true value. The Secretary of the Treasury, in his last annual report, estimates that for smuggiing, undervaluation of invoices and cost of transportation paid to foreign shipowners,20 per cent. at least should be added to the imports. With due respect to official opinion, we are disposed to regard this estimate as somewhat exaggerated; but be this as it may, it may perhaps be safely assumed that the under-statement of the imports fully sets off the omissions in the entries of exports; so that the above balance may perhaps be taken as about representing the result of our trading account with the rest of the world. To this trading balance, however, must be added, an important amount for interest occurring upon foreign investments in this country. At the beginning of the war, the aggregate of our State, municipal, railroad and other securities held in foreign countries was estimated to be about $250,000,000; which, some good judges believe, has since, through the shipment of bonds, been more than trebled. Assuming the accuracy of these figures, it could scarcely be supposed that the interest for the six years would be less than $125,000,000. Adding then, this interest ac count to the adverse trading balance, it would appear that, for the six years, we have incurred a total foreign indebtedness of $380,000,000. In this estimate we make no allowance for profits upon the invoiced value of our exports, nor for the sales of American vessels fo foreigners pending the dangers from Southern privateers, so that we may perhaps reduce this total to $350,000,000 as the best attainable estimate of the net adverse balance accruing on trading and interest accounts since July 1, 1861. These figures may appear startling, and may seem to countenance the idea entertained in some quarters that there is outstanding against this country a large open balance ready to be called home upon any financial or political emergency in Europe, and threatening an embarrassing drain of gold. An idea of this sort has been the nightmare of the Gold Room, and has created much, as it appears to us, unnecessary apprehension. We have little question but that nearly the whole of this balance has beeu set off by securities. It is not a supposition at all accordant with sound banking, much less with the caution with which financial operations have been conducted in Europe for the last eighteen months, to imagine that a balance running far up into the tens of millions would be allowed to accumulate here uncovered. With the constant danger of war in Europe, and the heavy losses connected with the cotton trade, it may be taken for granted that European bankers would not allow unusually large balances to remain here in the hands of their agents. Nor is there any palpable evidence that the foreign bankers of this city hold any such extraordinary balances as this supposition implies. If they were under advances to any very extraordinary extent to importers, banks or bankers, surely there would be more tangible evidence of the fact than is anywhere apparent. Nor is there any necessity for resorting to this extraordinary supposition; for it is not unreasonable to estimate that the Government and other securities sent abroad have realised sufficient to offset the balance against us. It is now very generally estimated among foreign bankers that the amount of United States bonds held in Europe cannot well be less than $550,000,000. Of the whole issue of $515,000,000 of Five-Twenties of 1862, probably there are at least $450,000,000 in foreign hands, judging from the scarcity of the bonds in this market, notwithstanding they command 3@4 per cent more than other 6 per cent. bonds; and it cannot be an outside estimate to suppose that of Sixes of 1881, and Five-Twenties of 1864 and 1865 there is $100,000,000 more held abroad. If to this $550,000,000 of Government bonds we add say $50,000,000, as a probable estimate for all other securities exported during and since the war, it would appear not improbable that we have sent out, as an offset to this balance, about $600,000,000 of securities. What the export of these securities has realised we have no means for knowing. In order to cover the adverse balance, they would require to have realised upon an average sixty cents on the dollar, in gold; which is perhaps just about the figure at which most parties familiar with the course of the foreign bond market would estimate the average cost of our securities to European holders. We make no pretensions to precise accuracy in these estimates, for, in the absence of records, precision is out of the question. If we have succeeded in giving very probable guesses, then we have contributed something toward divesting a very important question of much vagueness and misapprehension. THE ROUTES OF THE PRECIOUS METALS. Considering the close economy which regulates the movements of the precious metals, it is remarkable that bankers have never yet attempted to remedy the losses arising from the circuitous routes by which gold and silver find their way from the countries in which they are mined to their final reservoirs. At the present time London is the great distributing centre. She has received for the last two years, chiefly from California, Mexico and Australia about $135,000,000 of gold and silver, and of that amount has exported about $90,000,000, or two-thirds. The ultimate destination of a large portion of these exports is the East, part being shipped direct from London, and part by way of Mediterranean ports. During the last two years, the specie shipments from Southampton and Marseilles, by the steamers of the Messageries Imperiales and of the Peninsular and Oriental Steamship Company, have averaged $60,000,000, an amount much below the average of the five preceding years. Of this amount more than one-half has gone to India, one-fourth to Egypt, and the remainder to China and other minor points. The East is thus swallowing up nearly one-half of the current production of the precious metals. It is of course a matter of much consequence to the foreign banking interest at large that this immense amount of gold and silver, by which Eastern products are paid for, should be removed from the point of production to its final destination at the lowest possible cost, and with no unnecessary loss of time. According to the present route of distribution, California gold is shipped from San Francisco to London, partially direct and partially by way of Panama and New York, and then from London to the East--a strange and costly zig zag, passing through 100 degrees of longitude and 200 of latitude. The Australian product is shipped chiefly to London direct, and thence takes the eastern direction; the route from the mines to the final reservoir, being in this case through 230 degrees latitude and 120 of longitude. Now, between Melbourne and Madras a direct route covers only 60 degrees latitude and 50 longitude; while a direct route between San Francisco and Madras would pass through 160 degrees latitude and 28 degrees longitude. The distances of the present indirect route and of a direct route, between Melbourne and Madras, and between San Francisco and Madras, respectively, therefore compare thus: Direct Indirect route, route, degrees. degrees. A mere glance at these figures will show that he present routes of distribution involve a very heavy loss in the costs of transportation and of interest, as compared with what would obtain in the event of the adoption of the more direct lines of shipment. Until now, the direct route between California and the East has been unavailable for European remittances, from the lack of adequate transportation and telegraph facilities. The Atlantic Cable and the opening of steam navigation between San Francisco and Hong Kong have totally changed the conditions of this question; and we cannot see what reason can be assigned why that portion of the California product which has usually gone to Europe should not take a direct route to the East. The steamers of the Pacific Mail Steamship Company now make the voyage to Hong Kong in about 25 days. A banker in London or Paris has but to transmit an order by cable to his agent in New York to remit gold on his account to, say, Madras; the New York house may telegraph to its agent in San Francisco to make the remittance to Hong Kong by steamer, en route to Madras; the gold is taken by the next steamer from Hong Kong to its destination; and is in the hands of the receiver within forty days from the date of the order for remittance. We think it is demonstrable that remittances made in this way would be attended with a very large reduction in expenses. As nearly as we can ascertain, the following would be the chief items of expense in the transportation of silver by the respective routes : SAN FRANCISCO TO INDIA VIA LONDON. Freight from San Francisco to London. 1.96 per cent. 90 66 Total costs.... SAN FRANCISCO TO INDIA VIA HONG KONG. Freight from San Francisco to Hong Kong... 66 Insurance 66 6.01 per cent. 1.57 per cent. 79 66 66 Total from San Francisco to India..... Deduct interest for difference in time.... Total. 1.18 There is a slight difference in favor of London in the cost of refining: allowing for which, it would appear that the balance in favor of direct shipment is about 2.97 per cent. Had the comparison been made between direct shipment and the Panama, New York and London route, which is the most general line of treasure transportation, the difference would have been stiil greater in favor of New York. We cannot but think that the intelligent economy of foreign bankers will soon cause them to appreciate the great advantage opened through the connecting of Great Britain and the Continent with the East by telegraph and steamer. Already there are symptoms of an inclination to try the direct route. The steamer sailing from San Francisco to Hong Kong, Sept. 3d, took out $980,000 in treasure, and that sailing on the |