The Press.
London, England, 1858-10-09 00:00:00

Montg 4lathet anb 6itg patiugence.

FRIDAY Ev NINO.
THE return of the Bank of England for the week
ending Wednesday last, the 6th inst., shows the
following changes compared with that for the week
preceding :---

Increase in Circulation
Decrease in Public Deposits
Increase in Other Deposits
Increase in Government Securities
Decrease in Other Securities
Increase in Bullion
Increase in Rest
Decrease in Reserve
Bullion in both Departments 19,526,475
Circulation, including Bank Post
Bills 21,635,717
The statement that the Bullion has increased only
235,9961. appears inconsistent with the fact that the
Bank has during the week purchased gold to the
extent of between 600,0001 and 700,0 )0/. It admits,
however, of a simple explanation. The payment of
Government salaries at the end of the quarter has
absorbed a large amount of coin, which in its turn
accounts for the decrease in the Government
Deposits. The Reserve has also been somewhat
diminished, partly by these payments and partly by
the addition which the Bank has made to its stock of
Government Securities. A considerable portion of
the sums paid for the purchase of gold appears to be
retained in the Bank under the head of Private
Deposits. It is owing to the gradual running off of
its discounts and advances that the Bank is enlarging
its Public Securities ; and we should not be surprised
to see a further amount taken from the Re serve for
employment in this way.
In the course of the week provision has had to be
made for the retirement of the commercial bills at
maturity in the beginning of the month ; and owing
to this circumstance there was a comparatively active
demand for money on Monday and Tuesday. The
pressure, however, proved as temporary as possible ;
indeed, while it lasted it was only partially felt,
Since then the market has relapsed into a quiet,
steady condition, with a comparatively limited amount
of transactions, the mass of which are taken to Lom-
bard street and the Joint-stock banks. Owing to its
terms being fully a ha'f per cent above those required
in the open market, the Bank has done very little busi-
ness ; nor are its dealings likely to increase at present,
unless the rate of discount ue reduced. It was expected
that this policy would be adopted yesterday, but no
change was made. There are many persons, advo-
cating rival interests, who profess to feel astonish.
ment at the perseverance of the Directors in main.
taining the three per cent rate, seeing that it is now
prohibitory of discount transactions, while the means
from which those transactions are profitably con-
ducted remain both unemployed and increasing. We
are no indiscriminate supporters of Bank policy,
which sometimes is puzzling enough; but we think
we can see sale reasons for abstention from a redac-
tion. They are not to be found wholly in their desire to
prevent inflation, nor in a disregard of the interests
of their proprietors ; but, if our view be correct, in a
prudent forecast of what may occur some months
hence. At the same time it is possible that by re-
ducing next week or the week after, the Bank
Directors may upset our theory, for in finance as well
as in law there is often a " glorious " state of uncertainty.
Our present impression, then, is, that the Directors
will not be prevailed upon to reduce, even after the
dispersion of the dividends has produced its usual
effects. That operation is expected, on almost all
sides, to produce such a sense of abundance, both in
the Money Market and among the public, that it
will, or rather may, induce a period of reckless
speculation, of wild enterprize, and of unsound
investment. Mid it is said that, even if these events
do not supervene, money will be so abundantly placed
with the banks and discount houses that they may,
from the very abundance, be compelled to offer still
lower terms to obtain employment for it; so that the
Bank, amidst the competition of capital, will be
forced to reduce in order to preserve the remains of
its business. We cannot coincide in these views,
which, we think, have been rather hastily adopted.
In the first place, it is in a period of abundance, and
when we are upon the brink of an inflation, that the
correcting power of Bank administration ought to be
felt. If there is danger of the inflation degenerating
into recklessness and imprudence, it is the office of
the Bank from its position to warn the commercial
community by its attitude that peril is impending.
The only way in which this attitude can be taken is
through the medium of its charge for discounts, and

990

of making that charge so well known that all who
run may read. If the Bank say that throe per cent.
ought to be the minimum, the financial pru
deuce of our great establishments, who have
so much at stake, will do the rest. Under such
circumstances as the present, it would be the wildest
conceivable folly for the Bank to say they would dis-
count at the ordinary market rate ; for the com-
petition, as we are placed now, would infallibly end
in precipitating the very evil which of all other men
the free traders in money are anxious to avoid. Then
as to the interests of the Bank as a proprietary com-
pany. Is it so certain that the maintenance of the three
per cent. rate is really injurious to their prospective
dividends? We see no evidence of it yet. The half-
year is but slightly advanced, and towards Christmas,
w before, money is usually wanted—a want which
often extends into February and March. Produce
and raw materials are hardening in price while the
demand for manufactures is increasing, and must
increase as India becomes more pacified, China more
opened, and the now gold regions more developed.
They will, therefore, probably create some additional
requirements for the employment of capital, in a
natural and regular way, without capital being
.orced upon them (in which lies the true
danger cf inflation), and such requirements
will be legitimately met. We have not space to fill
up the brief outline here sketched as the ground-
work and basis of our belief that for the present a
reduction in the Bank rate is scarcely to be ex-
pected. We state it only very generally, and of
course with due reserve, as it is understood the
Bank Directors themselves are not perfectly unani-
mous in their present policy. The strongest argu-
ment for a change is the fact of the dividends being
about to be paid, the effects of which may be felt
for a month or six weeks. On that point we say that
it is the duty of the Bank not to be led away by tem-
porary and passing circumstances, the more espe-
cially as either simultaneously or immediately after-
wards there is likely to be a brisk legitimate demand
for money from the natural extension of commercial
operations and the known incidents of the season
which is approaching.
Large arrivals of gold have been reported since
our last. On this day week and on Saturday they
exceeded 900,0001. In consequence of this enormous
receipt, the Bank has received very heavy additions
to its stock of bullion—upwards of 700,0001.—though,
from incidents stated above, the full amount does not
appear. In a few days more than 100,0001. will be
due from the United States, while Russian supplies
are coming in largely, and the Australian telegram is
momentarily expected with intelligence of the depar-
ture of several gold-laden ships from Melbourne.
The Funds and most other descriptions of securities
have been dull and inactive this week. 'As far as
regards Consols, the approach of the settlement, added
to a cessation in the public demand pending the
payment of the dividends, explain the languor of the
market; while as to railways, they have been
adversely affected by sales on Scottish account, pre
sumably in consequence of an enormous call of
1001. per share upon the unfortunate shareholders in
the Western Bank of Scotland.
Consols have stood nearly all the week at one
price—at least the variations have been unim-
portant—from 981 to 1 to 981 to 1. The first making.
up day, in preparation for the account, was to day.
The closing price was 981 to 1. For the greater part
of the day the market was rather firm than otherwise,
Foreign Securities have also been quiet, without
much change. Turkish New Scrip is lower, from
sales.

Railway Shares have not very materially changed,
notwithstanding the circumstances referred to above,
but the market to•day was dull and rather heavy.
Atlantic Telegraph Shares were dealt in to day at
400, Red Seas are quoted at 1 prem., and Indian
and Australian at to prem.
Banking and Miscellaneous Shares have been
very quiet.
Exchequer Bills remain at last Friday's prices.
The Continental Exchanges continue steady in
favour of this country.
The Submarine Telegraph Company have issued
proposals for 150,0001. additional capital in paid-up
shares of Mi. each. The object is to lay down a
cable from Hull to Embden, in Hanover, and another
from Hull to Terming, iu Denmark, under conces-
sions which have been obtained from the respective
Governments.
The Provincial Trade Reports are perhaps slightly
less favourable this week than last, but business is
not really less, though the transactions in the cotton
and linen trades have been fewer, owing to manu-
facturers refusing to concede lower prices. In the
woollen branches the activity is undiminished, and
generally the main industries of the country are fully
employed. From Birmingham and the iron and
hardware districts the accounts are decidedly better.