The Express.
London, England, 1863-01-26 00:00:00

Tux eeadition of the Money Market consider

in selation to the state of trade is sufficiently ano-
ankina, and deserves all the attention it receives.
Teri% instead of being active, is dull, yet the • ,
vales of money is rising. It is evidently not rising
up= any increased demand for capital for the pur-
poses of our home or internal commerce. More-
over, as the state of the cotton manufacture shows,
we have spent much leas than usual in at least one
of the moat important articles of foreign expendi-
ture. Yet gold leaves the Bank of England daily,
and the impression remains that, should the drain
continue, the rate of discount will be raised to 4} or
even 5 per cent. Now, the establishment of a 5 per
cent rate would be a some what anomalous occurrence
at a time when the trade of the country is con-
fessedly below its average volume. We have
often seen an active trade occasion an active de-
mand for discount and an advance in the value of
money ; but slackness of trade, accompanied with
• great rise in the value of money (a rise from
two per cent., the price three months ago, to, say,
five per cent., the charge to which mercantile ap-
prehensions now point), forma, we repeat, an
almost unprecedented phenomenon. Taking a
general review of the features now presented in
the money market, it will be seen that
the upward movement in the Bank's terms,
which have been advanced by two sac-
cessive leaps, from 2 to 4 per cent., arises not
from a demand for discount—that is to say, not

from a demand for money, in the ordinary mean-
ing of the term—so much as from a demand for
gold for exportation. To talk of a scarcity of
money would be perfectly absurd, for there is
plenty afloat, and the supply has increased since
the banks and discount establishments have begun

to offer higher terms for loans. Now that the
Bank minimum rate of disoormt is 4 per

cent., there is more money available for
commercial purposes than there was when
the minimum was 2 per cent. This, again, seems
contradictory; for if, as we nearly always find
is the case, the price of an article be deter-
mined by its comparative scarcity or abundance,
why should money which is now quite as abun-
dant as it was a few months ago, command •
much higher price? The joint-stock banks, in the
aggregate, show an increased amount of funds
lodged with them, the London and Westminster
of itself having been entrusted with the huge
sum of 14,000,0001. As to the Bank of England,
the amplitude of the private and bankers' balances
lodged with it may be gathered from the fact that
the last return but one stated the total
(styled other " deposits) at the unusually heavy
aum of 16,772,7821. It is true that some very large
draughts bays since been presented to the Bank,
bringing the total down to 14,993,2251., on Wed-
nesday last. ; but this sum is only 372,8561. less
than was held at the corresponding date of last
year, when the rate of discount was but 2} per
cent. The mercantile community thus appear to
be as well provided with funds as usual, and
bankers and discounters complain of no scarcity,
but affirm, on the contrary, that they find quits
sufficient for all requirements. Latterly their
balances at the end of each day have been in
many instances rather larger than they could
have wished. When we find the Bank of Eng-
land, in spite of these circumstances, threatening
to fix a still higher rate, and all other bankers
following steadily in the wake of the Bank of
England, and raising their terms in exact propor-
tion to the advance in hers, the situation may seem
to some minds rather perplexing.
Two or three simple considerations, however,
will serve to remove much of the perplexity which
is beginning to prev►il. The value of a thing, as
we all know, is just what it will fetch, and every
seller will try to get the highest price he can.
This is precisely the case with money now. When
the Bank of England seta the example of asking
mote, all other holders of money do the same, and
they will stand firmly to their position as long as
the bullion movement is of a character to denote a
continuance of the foreign demand. But, inso-
much as the present rise in the value of money