COTTON AND SILK FRAUDS IN CHINA.

The Chinese, says a Shanghai exchange, have discovered a very admirable and simple method of making money. Everything being sold by weight, and water possessing a definite specific gravity, they have found it a desirable plan to add that element to produce of all descriptions; as, on account of its comparative cheap. ness, it shows a handsome profit if sold at the market price of any article whatever. As many of our readers know to their cost, picul upon picul of water bas been sold as cotton, as sugar, as hemp, as seaweed, and indeed in the form of almost every article of produce in the country. It is chiefly, however, in the shape of cotton that the greatest trade in water has hitherto been carried on. Though people grumble a good deal, they went on buying their 93 catties of cotton and seven catties of water at market rates pretty freely; but in the course of time they got more cautious, as sundry cargoes instead of arriving the spotless white substance they were shipped, turned out the equally useful but less customary color of black. The plea always set up by the Chinese dealers was, that it was utterly impossible to obtain dry cotton, because the countrymen who sold it in small quantities, commenced the process of wetting it almost as soon as it was picked. This statement, we have good reason to believe, was true up to a certain point; that is, the countrymen did wet cotton to an extent; but while dilating this circumstance, the honest dealers forgot to mention that they themselves added a reasonable amount of water on their own account. The cessation of demand for this staple among foreigners has made it difficult to ascer. tain whether it be possible to obtain from the Chinese positively dry cotton; but, anyhow, an improvement was effected when the foreign merchant discovered that in buying wet stuff he was not only submitting to a fraud, but ran the risk of having his whole cargo so much damaged as to become almost unsaleable. The Chinese were considerate enough to reduce the wetting down to a safe shipping point: that is, to some four or five catties in a picul; thus clearly proving that it was not the countrymen alone who were responsible for the previous more serious adulteration. We believe we may state with safety that scarcely any cotton has been shipped from this port not containing from four to five per cent. of water. That is, in other words, a merchant nominally buying 1,000 piculs of cotton, in reality purchased 950 piculs of the staple and 50 of water; and his invoice if strictly made out, at say 20 tls. per picul. should have run-" Cotton, raw Shanghai, 950 piculs, at 20 tls., 19,000 tls; water, Shanghai unfiltered, 50 piculs, at 20 tls. 1,000 tls." But as this was generally considered an unnecessary amount of commercial purism, and might have been looked upon as pedantic, the cotton and the water were lumped together and the difference appeared in the account sales, either in lowness of price or loss in weight. Last season, however, complaints were made that this ingenious principle in Chinese trading was applied to raw silk; and, although it was not considered very much out of the way to buy water in bales of cotton at 20 tls. per picul, people began to think the article a little dear when it was offered them in bales of silk at a cost of over 400 tls. The silk inspectors addressed a letter to the Chamber of Commerce, complaining of the Chinamen having sold them water at so high a figure, but the chamber did not perceive that the silkmen had been absolutely called upon to take it. Grave fears were, however, expressed that the attempt to wet silk might be renewed this season; and as the possibility of such an occurrence taking place is a serious consideration, it is certainaly desirable that merchants should, at the outset, be on their guard and not allow the commencement of a similar system with regard to silk as that which proved so fruitful a source of loss, and of disputes with reference to cotton.

COMMERCIAL CHRONICLE AND REVIEW.

Public Debt for March-Business this month-Rate of Interest-Course of Gold, Exchange, &c.-Five-twenties, &c., at London-Price of United States Bonds for March, &c.

The statement of the public debt for March, which we publish this month, is the most favorable in all respects that we have been able for a long time to lay before our readers. In consequence of the falling off in the internal revenue there is but little diminution of the net aggregate, which is 2,523 millions, against 2,530 millions a month ago. The decrease of seven millions has been made by the sale of between five and six millions of gold. This small diminution of the total of the debt is regarded as a point of less importance by the public than it was some time ago. Experience has shown us that until our internal taxation is better adjusted, and more skilfully distributed, a needless oppression of the productive power of the country would be induced by the attempt to pay off from this source any considerable amount of the public obligations. The voice of the country is for reducing taxation to such limits as will pay the expenses of the Treasury and meet the interest on the Government bonds. When by careful adjustment we find out at what points the pressure of taxation may rest with the least injury to the country, increase the pressure and tighten the fiscal screw as the gradual recuperation and growing strength of the tax-paying power of the country may justify. In this point of view, then, Mr. McCulloch has met the wishes of the people.

But although so small a reduction of the debt has been made, the changes effected have all been in the right direction. In the first place, the currency balance in the Treasury has fallen to a lower point than for many months past. No less than eighteen millions of this idle money have been used to pay off interest-bearing securities of short dates. In making this reduction Mr. McCulloch has been obliged to draw down the balances in the National Banks to an unusually low point. A stringency of limited extent and brief duration has resulted from this withdrawal of balances. For the banks, although they pay no interest on the Government balances, are tempted to lend them to their dealers in order to gain interest. At this time of the year there is always a great pressure on the financial machinery of the country in consequence of April payments in the agricultural districts, and this pressure cannot fail to be increased by the sudden taking away of heavy Government deposits. The trouble and embarrassment hence resulting would not, however, have been so serious had not the preparations the banks found to be necessary for their quarterly statements, been making just at the same critical time. From the mischievous, and, to some extent, unexpected results which have come from this untoward combination of forces acting together on the money market, at a time when it was from other causes in a state of extreme sensitiveness, we may derive new confirmation of the often proved remark that the Government deposits are an injury to business, and a snare to the banks. Now, that these mischievous deposits are removed, we trust they

will not be allowed again to accumulate in so inordinate a degree as has been but too frequent in the past.

Then, again, Mr. McCulloch has acted in the difficult duty of contraction with all the caution that could be desired. Under the act of April 12 he is bound to withdraw greenbacks if in his opinion it can safely be done. But the monthly maximum is not to exceed 4 millions. Under existing circumstances he has very properly refrained from contracting more than about one-fifth of this amount or $818,378, which represents, we presume, the mutilated notes which have ceased to be fit to pass current and have come in for redemption. For the same cause the fractional currency has declined $297,228, so that the volume of the currency has been contracted by a little more than one million of dollars. Probably the most suggestive and gratifying feature of the report, however, is found in the short date obligations which have caused so much apprehension. Of these no less than 54 millions have been paid off, 50 millions being the amount of the Seven-thirties alone. If we mistake not the aggregate of the Seven-thirty notes has never before suffered so large a reduction in any one month. It is now reduced to 582 millions; of which less probably than 100 millions fall due in August next. The embarrassment which the Treasury has looked for from these notes is now, therefore, at an end, and the rapid acceleration of the rate of conversion fully confirms the opinion we have ventured to express that if vigorous efforts are made by the department and its agents the Seven-thirties, the compound notes, and all other short obligations outstanding can be so far funded before the time of maturity that no trouble need be apprehended from this cause. If Congress will resolutely refuse to add to the existing debt, and will turn a deaf ear to all the schemes which are concocted for that purpose, the existing debt, whether floating or semi-funded, will easily be provided for.

As to the gold-bearing bonds, there is little to be said. The Five-twenties have been increased $34,723,000. From the defective way in which the statement is made out we are unable to say what proportions of these Five-twenty bonds belong to each of the four issues. The impression prevails very extensively, however, that there has recently been an emission of several millions of bonds of 1864, the aggregate of which was one hundred millions originally. No notice has been given to the public of any such issue, the understanding being that no Five-twenties of any sort are now being put out, except the fourth series, the interest of which is payable in January and July. It is very important to holders of securities, whether of the government or of private corporations, that no secret issues should be made, but that all new emissions of bonds should be made with as much publicity as possible. The propriety of this rule is seen at once, if we remember that the quantity of any species of bonds, pressing on the market at a given time, forms an important element in regulating the market price. Hence a secret issue of any securities is regarded (as an injury to the holders of such securities. By parity of reasoning the buying up of any such securities should be public. Accordingly, the British government, when pur chases are made of consols, on account of the Sinking Fund announces the fact, and the amount of the purchase is on the same day made known at the Stock Exchange, and in the money articles of the London journals. This principle of publicity is of greater importance than has been supposed; and now that there

is an end of all the reasons for it, which originated in the exigencies of the war, this principle should be adopted in all the negotiations of the Treas. ury.

The course of business during March has shown some symptoms of improvement. While trade cannot be said to have been healthy, it has yet perhaps realized, in respect to activity, all that was anticipated at the opening of the year. In most branches of merchandise the supply of goods appears to have been in excess of the demand; and hence, as a rule, holders have found it neces sary to concede a steady reduction of prices, and both manufacturers and importers have found the result of their operations far from satisfactory. The manufacturers of cotton and woolen goods have not produced to the full extent of their capacity; but the limitation of the supply of fabrics appears to have had no other effect than to partially arrest the downward course of prices. The importation of dry goods from January 1st to the close of March aggregates $30,223,631; which though $15,150,000 less than for the same period of last year, is yet $19,770,000 mor› than during the first quarter of 1865; and in the present depressed condition of the trade of the country, must be considered an excessive supply. This large supply of foreign fabrics, selling in many cases: much below cost, has of course produced an active competition with domestic goods, and fostered the prevailing depression in the home market. The backwardness of collections in the West, and the unsatisfactory accounts of business. given by buyers from the interior generally, indicate that the burthens of taxation and the inflation of prices and of rents are at last seriously limiting the ability of consumers to purchase, and clearly show that, unless the case be met by carefully adjusting the supply to the demand, both manufacturers and importers must suffer heavy losses upon their operations.

Monetary affairs have been generally dull throughout the month. The loan market has been, upon the whole, qujet; though the rate of interest on demand loans has not ranged below 6 per cent. on stock collaterals. An unusually large amount of stocks are at present held by brokers, who have to depend upon the banks for carrying them; and this fact, rather than any activity in loans, has steadily sustained the rate of interest. Toward the close of the month, the preparations of the National Banks for their quarterly statement, required to be made up on the first Monday of April, caused a general disturbance of deposits and of loans, and produced. during the last few days, a firm 7 per cent. market. Although it is for many reasons important that the banks should make frequent exhibits of their condition, yet the existing plan of making a return on a day foreknown to the banks, is really of little value as a means of ascertaining their condition, while it is productive, every three months, of much inconvenience to business. The banks temporarily shape their accounts for the occasion, and in-. stantly relapse into a condition which they had deemed unfit for a public exhibit. In the discount market there has been a decided recovery of confidence. Really prime paper has been in active demand at 61@7 per cent., both from the banks and private investors, but lower grades have accumulated in the hands of dealers, and have been negotiated at high rates.

The following are the rates of loans and discounts during the month of March:

The course of stock operations has not varied materially from what is usual at this season of the year. Operations have been principally on brokers' own account, and the prevailing temper of the market has favored lower prices. Dur ing the latter half of the month, the anticipation of the usual Spring campaign caused some of those who had been operating for a decline to become buyers of stocks, and gave a firmer tone to the market. The total transactions in stocks at both boards, for the month, amount to 1,825,802 shares, against 1,968,839 for the same period of last year. The volume of shares sold at the boards in January, February and March, and the total since Jan. 1, is shown in the following statement :

United States securities have been upon the whole inactive, and have reacted from the high prices reached at the close of February. While there has been no foreign demand, and the price of gold has declined about six points, there appears to have been a steady flow of bonds out of the hand of traders, compelled probably by the pressure of the times; and these circumstances appear to have chiefly contributed to the fall, ranging from 1 to 1 on the several classes of bonds; the only exception being in the case of the new Sixty-fives. The amount of Government bonds and notes, State and city bonds and company bonds, sold at the Regular Board, in the last three months, compare as follows: