The Express.
London, England, 1864-08-08 00:00:00

Elie errtfili.

PILINCZOS &

Tan 1•11111111. BORN TO .0001) LUCY. Mr. D. Murray.
And THE STREWS 07 LONDON. Mews. J. W. Bay, David
Maar, 1). Murray, J. Neloon, H. Forrester. sad H. Mellon
Mrs. H. Marston, Mimes Barnett and Gwynna.

WT.ueaw.

-TIDE ErErIRR. THE 81:11V1 Ul CRllll...Bloglag by
W. H. De Bream,. Mr. C. Mad, azi.l Mr. H. Bakar.—Dancias by
RIND, C. Stephen.—And THE LIGHT-HOUSE KEEPILKB
DAUGHTER.

ffiOa WATZZ AT LONDON 1.12D01
Tina DAT ILarateg, SA. MIL
To moaaow —lkeda& Sh. ..Allstuess. Q. sa.

LONDON, MONDAY, AUGUST 8.

Tee expectation that the Bank of England
might have to make a fresh rise in the rate of dis-
count has been speedily verified. On Thursday
last the minimum was put up from 7 to 8 per
cent., and there was a general belief in the City
on Saturday that a further advance to 9 percent.
would be adopted, if not on that day, at least early
this week. The inconvenience and loss to trade by
these sudden movements has been already pointed
out. Nor does there seem any probability that they
will not prove of constant recurrence. From
several causes the money market has been of late
exceedingly unsettled. The soundest calculations
are unavailable to point out how the price
of money—so important an element in
commercial business—is likely to be regu-
lated. Nowadays it is found that some ex-
traneous circumstance is constantly liable to occur
which will upset the views based upon apparently
trustworthy data. The evils that arise from these
constant oscillations are hardlyyet even adequately
felt, and at some future period will necessarily
result in a serious impediment to the successful
prosecution of foreign commerce.
At present one of the chief reasons for the rise
in money lies in the increased activity in trade,
especially in the manufacturing district& It is
noteworthy that although the demand in London
has been comparatively moderate, at the branches
of the Bank of England, in Liverpool, Manchester,
and the North the applications for discount have
been sufficiently heavy to cause a decline in the
reserve to a point lower than at any previous
period since the great panic of 1857. If this
increased demand arises from the revived ex-
tension of our manufacturing industry conse-
quent upon a genuine trade, it becomes more a
subject for congratulation than for dreary fore.
boding. The present year has been likened to the
delusive term of apparent prosperity which ended
in a commercial crisis some seven years ago, but it
is hard to say with what reason. It may be true
that we have now, as then, a number of un-
principled firma who, without capital, contrive to
carry on a large business on the strength of being
able to float an unlimited amount of accommoda-
tion bills. It is certainly not true that an impor-
tant portion of our exports are being sent to
markets already glutted, solely to keep up the
credit of already bankrupt houses. Of course,
individual instances of this description may at all
times happen, but we have no real grounds for
believing that the system is practised in the whole-
sale way illustrated by the disasters of 1857. In
point of fact, the revival of commerce sppearadue to
the natural reaction front the staguation of business
that followed the commencement of the American
war. The supply of cotton from the Southern
States having been almost completely cut off, our
traders were compelled to look on all sides for a
substitute. It is one thing, however, to find a
market in which to buy, and another to find a
market in which to sell. For a long time we have
been importing cotton from countries which would
accept little but specie in exchange. By degrees,
however, they have been induced to take instead
our manufactures in a steadily increasing ratio.
The general figures of the Board of Trade returns
are conclusive evidence on this point. That
a revival of our manufacturing industry isneceasarily
accompanied by an increased demand for capital
needs no argument. In one point, however, it
has an especial bearing. The high price to which
cotton, wool, and other raw materials have been
raised, obviously requires that the traders in those
articles and their products should have a corre-
sponding increase in the capital at their command.
The profits may but slightly exceed the return of
previous yecris, but the temporary investment is
doubly or trebly augmented. Where a thousand
pounds sufficed formerly for one operation, two or
three thousand, or even more, are now necessary.
Hence discounts are much larger than they used
to be ; and although is may be urged that thee.
retically this is a mere transference of credit, prac-
tically it results in the locking up of an increased
amount of the currency. For instance, a banker
as a rule keeps a certain proportion of
hie deposits in cash to meet daily re-
quirements. If a woolatapler leaves a
thousand pounds in his hands the banker can only
use, say, eight hundred in discounting. If ten
thousand, only eight thousand, and so on. Hence,
where there occurs • rise in the price of an ar-
ticle, unaccompanied by a corresponding profit to
the dealer, the result is naturally increased dear-
ness of money. After a time the thing rights
itself, but there is always a period of transition,
through which we appear to be now passing.
Again, there is to be considered the hardly ap-
preciated change in the money market caused by
the famous rule of the Bank of England to refuse
discounts to the disoount houses. The effect of
this provision, salutary as it undoubtedly is consi-
dered, is in the first instance to aggravate any
symptoms of pressure. Left to their own re-
source', with large sums entrusted to
them, not merely by country, but also
by London banks, when once the money market
begins to show adverse features, the discount
houses are obliged in self-defence to call in their
loans, to atop the chief outflow of their funds, and
iu fact to curtail, as far as they can, the facilities