import and export trade, expenses of Americans abroad, freights paid to foreign shipping, imports by smuggling, that inevitable concomitant of high tariffs, and, last, but not least, the interest which is compounding on our debts to foreigners, the annual deficit of the United States in their relations to the rest of the world, cannot be less than $200,000,000. Now all these things would in a very few years have resulted in draining all the gold, practically speaking, from the United States, and in a correction or reversal of this effect, were it not for the facility of borrowing in Europe, which resulted from the great profits on our government bonds, which occurred after the war to European investors. Whenever, from increasing stringency of money on the exchanges of Europe, this resource has shown signs of slackening, a fresh export of specie from our side has renewed the ease of money, restored confidence, and created a fresh demand for our bonds. This very year, a catastrophe of a threatening character has been averted from Great Britain, by the shipment of more than 12,000,0007. sterling in specie from New York. And the readiness to lend has, as usual, met with a corresponding eagerness to borrow. There seems to be with us, a sort of crude idea that it is absurd that a dollar should sell for a dollar and fifteen or twenty cents, and that if one can only give a promise to pay in the future, and sell it at the present premium, the amount of that premium is so much certain gain. Accordingly, states, cities, towns, and incorporated companies have vied with each other in getting into debt, not only in currency but in gold. Meantime the material which is to satisfy this indebtedness appears to be slipping away from us; by the latest account the treasury of the United States, after deducting certificates or receipts payable on demand, and also interest and principal of debt accrued but not paid, showed $5,000,000 in gold on the wrong side of the account. The national banks of the country, by their sworn returns of May 1, held about ten millions of gold, nearly all in the demand certificates of the treasury, a proportion to their total liabilities which reminds one strongly of that between the bread and the sack in Falstaff's famous account. That at some future day a sudden demand for gold from Europe will be met by a failure in the supply, that such failure will not only put a check upon lending, but cause increased urgency in the demand for cash, and that that demand will result in a gold panic in America, seems as certain as anything can be in the proverbial uncertainty of human affairs. And this leads us to the final topic of consideration, the prospect of the future. As to the funded debt of the United States, I cannot imagine that, without a deliberate intention to defraud, which I am sure is very far from the disposition of the people, there can be a shadow of doubt of the punctual payment of both interest and principal. That debt is really very small in comparison with the resources of the country. The Federal taxation is comparatively light and could probably be nearly doubled without producing severe distress or resistance. The mere fact that every European nation has to maintain from one to five hundred thousand of its male population in the shape of standing armies in unproductive consumption, while with us every man, speaking generally, is applying his utmost energy to the increase of the national wealth, is a sufficient guarantee of resources. The problem before us is not of debt but of currency, and here again the question is not of ability but of inclination. I have no doubt that the government, by the simple sale of six per cent. bonds at par, could, in spite of the disaster which would ensue, enforce such a contraction of the currency as would bring a return to specie payments within a few years. Of the inclination to attain this desirable result I cannot speak with such confidence. As far as practical influence is concerned, there is for the United States no such thing as financial history. There is an anecdote of a boy, who, when his father warned him how dearly he had bought his experience, replied that he would like to buy his own for himself; and the present generation of my countrymen appears to be in the same frame of mind. It was only when the prodigal son was reduced to the husks that the swine did eat, that he seems to have bethought him of repentance. And it is to be remembered that it is only within a very recent period that that the United States have passed from the first stage of inconvertible paper to that of great material prosperity. The rise of prices, the stimulus to productive enterprises as well as speculation, high wages of labour, these met with their first serious check in the autumn of 1873. It is true that for two years since there has been a great depression of trade and industry but the people are as yet far from convinced that this is owing to paper money, or of the nature of the true remedy. They have but one measure for the depreciation of the currency, the price of gold, and from the causes already noticed, this has, with little interruption, declined since the war. They do not yet see why the last 10 or 15 per cent. of premium should not gradually disappear as well as the other 25 or 50; and having perfect and just confidence in the solvency of the government, they fall into the common error of supposing there is not enough money instead of too much. Even those who insist upon specie payments, and the still smaller number who believe they must be arrived at through contraction of the currency, yet make it an essential condition that this shall not involve distress to the country. To those who are familiar with the process which, commencing in 1815, led up to cash resumption in England, I need not say how fallacious is this expectation. The end cannot be arrived at without severe suffering voluntarily encountered. But, whereas the English Government and the Bank of England held the power and used it in defiance of private interests, the power in the United States lies at present in the hands of 2000 National Banks, who are determined opponents of any measures which would endanger their assets in the shape of loans. Notwithstanding, therefore, the resolution of Congress to resume cash payments in 1879, I have no expectation of any serious steps being taken in that direction until the nation shall have been excited by violent fluctuations in the price of gold extending over several years to demand relief at any cost from such an intolerable evil. That the end will be finally accomplished, I think the result of the slavery problem and of our civil war gives every American the right to assert with reasonable confidence. By what process the inevitable suffering may be mitigated, and the maintenance of the specie basis be ensured for the future, I shall not attempt to point out. But I have a strong conviction that the most available method, would be found in the principle of the Act of 1844, the separation of Currency from Banking, the former to be issued upon a secure basis of specie by the Government, or a corporation chartered for the purpose, with the remission of banking to the control of the states. If in the address which I have had the honour to present to you, I have stated many things as matters of fact, which may be thought to be matters of opinion, I beg now once for all to offer an apology. I am well aware that, with the exception, perhaps, of theology, there is no science in respect to which more differ so categorically, both as to the facts and the inferences to be drawn from them, or in which opinions are held with more tenacity than finance, especially in its relation to currency. But for that very reason, I have thought it best, instead of attempting to conciliate opinion, to state frankly the results of my own experience and observation, leaving to others to correct them by the different teachings of their own. Foreign Loans, their introduction to the Public, and admission to the Stock Exchange: in connection with the recent Report of the Select Committee on Foreign Loans. By LIONEL LOUIS COHEN. TH HE various questions connected with Foreign Loans, their introduction to the public, and their settlement and quotation on the Stock Exchange, have engaged so large a measure of public attention, through the report of the Select Committee on Foreign Loans, and the interests involved are so intimately connected with the true economy of finance, and with International trade, that it seems to me highly desirable to examine critically the specific conclusions of the report, and to present a few observations on the general subject of foreign loans. The particular loans, of which the introduction and subsequent default led to the appointment of the Select Committee, do not come within the scope of this paper. However reprehensible the practices connected with the issue of some of them may have been, they have, except by way of illustration, no more direct bearing on the legitimate introduction of a loan, than the recent extensive circulation of unsound bills had on the commodities, the transactions in which they purported to represent. In the case of those bills, the discovery of their true nature, and the consequences of that discovery cleared the mercantile horizon and paved the way for a restoration of confidence, while with respect to foreign loans it undoubtedly appears, that the public erroneously imagine almost every loan to have been more or less introduced, directed, and applied in the same way as the Honduras Loan, and overweening confidence has given way to unreasoning timidity. When the bias created by malpractices in individual cases has been corrected, it will be found that many false theories have obtained credence, which, perhaps, will then be easily demolished. To some persons it may appear disappointing that any economic evils should exist, to which it is difficult to apply a legislative remedy. But let me illustrate by a homely illustration the ease with which dependence is artificially fostered when once called into existence. The poor man's child, unaccustomed to the watchful eye of a nurse, roams in safety through a crowded thoroughfare; but a child trained to be looked after, becomes in great danger the moment it is left to itself. Experience has made the one safe; the want of it has placed the other in danger. Similarly it is in accordance with the teachings of commercial experience, that the oscillations of the public mind from the extreme of rashness to the extreme of mistrust, and the swing of the pendulum in the opposite direction, both which movements are the mainsprings of speculative mania, should be corrected and adjusted by the teachings of experience, rather than by the tutelage of positive enact ment. It is doubtless this excitability of the public mind, fostered, as in recent times it has been fostered, by the agency of the telegraph (that brings home to every door at almost every hour of the day the pulsation of the stock-markets throughout the entire world), which created that opportunity, the use or abuse of which, according to the point of view from which it is regarded, has caused the recent immense expansion of the funding system. A loan is in itself a perfectly legitimate transaction. For the furtherance of those great public works which are at once the wonder and the pride of modern times, even a wealthy country finds it advantageous to have recourse to credit; while to many states even thoroughly solvent, the execution of such works, without the concentration of capital created by loans, would be absolutely impossible, in an age when all labour must be hired and not commanded. The development of a nation, of a city, even of a commune, needs the operation of credit to foster and to stimulate it. In the present time, and at a meeting like that of the Social Science Congress, it may be considered a work of superfluity to urge that there are frequent instances, in which the raising of a loan might be a more provident measure than the reimbursement of one. It is purely a question of circumstance, of condition, and of management. Circumstances should justify the loan, the conditions offered should be such as may be reasonably expected to be fulfilled; and of course the funds raised must neither be misappropriated or misapplied. It is one of the main objects of this address to show that these three essentials can be attained by the watchfulness of the public acting under the guidance of the ordinary levers that stir public opinion; and that they cannot be attained through the provisions of any laws; or, at least, that their attainment by legislation would be so costly as infallibly to induce a speedy repeal of the laws passed. The controversy between the supporters of what I may call the nursery system, and the advocates of unrestricted trade is an old one; there seems now reason to apprehend that, smarting under the sense of recent disclosures, the more general opinion now prevalent, will be in favour of an appeal to the legislature for protection. In times of fear, the mind loses its balance, and forgetful of the teachings |