The Express.
London, England, 1863-05-04 00:00:00

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LONDON, MONDAY, MAY 4.

Ir has been apprehended by many persona of
sober judgment that the superabundant supply
of money which naturally attends the present dull
state of trade, and which is greatly increased by
the long-continued prostration of the cotton
interest, will not be worked off without a mans
of some kind. The course of the money market,
and the temper of the monied public, seem just
now to point rather distinctly in the direction of
inflation, and it is therefore desirable every now
and then calmly to review our general position,
with a view to keeping firmly before the pub-
lic eye the landmarks between legitimate
and illegitimate speculation. The Bank of
England rate of discount has once more fallen
to 3 per cent., and the general rate to
about 21. Whenever the market descends to this
low level experience has shown that a clams of
enterprise rises into prominence which, somehow,
cannot find the conditions pf existence at times
when capital is actively and remuneratively
employed. When only 2 per cent. can be got for
the large amount of loose money which is always
floating about, and the bulk of which finds occa-
sional lodgment with the batiks and discount este-
bliahments in the metropolis and provinces, its pos-
sessors become impatient, and, the supp'y of sound
mercantile securities being insufficient, encou-
ragement is gradually given to other invest-
ments, which, though less safe, for
that very reason hold out the attraction
of high rates of interest. Less discrimination is
exercised. People grow indiferent to a degree of
risk which in ordinary times would operate as an
effectual deterrent. Speculative securities thus
gain a freer circulation, and the large profits which
are almost invariably secured at the commence-
ment of a movement of the kind attract a con-
stantly increasing multitude within the charmed
circle. The wider the speculative field grows, the
faster and more exciting does the game become,
great support and encouragement being derived
from the hundreds of thousands of pounds
of fresh money which are constantly being
drawn into it, while the operators who were
the earliest on foot, and whose gains are therefore
the largest, stimulate the mania immensely by the
spirit with which, intoxicated by the sudden pos-
session of new wealth, they virtually double and
treble the amount of the stakes. All goes well
until the turn comes, precipitated perhaps by
some alarming political event. Then the longer
the speculation has lasted, and the larger the
number engaged in it, the wider is of course the
area of ruin. Where all had wished to buy all
now wish to sell, and fortunes collapse like a
home of cards.

It would be arrant presumption for anyone to
assert positively that a mania cud ultimate col-
lapse will occur within the next year or two. AU
that can be said is that the public have for some
time past shown an increasing disposition to em-
bark in foreign semi:ties of a highly speculative
character, and that within the last few days, sti-
mulated doubtless by the plethora in the money
market, the rush for them has been accompanied
by a degree of excitement unknown for years.
Home investments are firm, and advance gra-
dually, but the "run" is chiefly upon foreign
stocks, the peculiar feature being at the same time
presented that the demand is not for those which
pay dividends with regularity, but for a class of
paper which at present either pays no dividend at
all, or the condition of which is at best doubtfuL
In the former category are Spanish Passive Bonds
and Certificates and Mexican Bonds, and in the
latter are Tarkiah Consolidds. Since this time last
year Spanish Passive Bonds have assn from about
19 to 36, and Mex;can from 314 to 364 ; while
Turkish Consolidis, which some of the original
holders were glad to sell to this market at a price
but little over 20, now command 50. Another
illustration of the tendency of speculation is af-
forded by the course of the debt of one of the
most promising Spanish-American States--New
Granada. Since this date last year New Granada
Two per Cents. have risen from 26 to 334 ; the
Bonds with the coupons detached from 104 to 17,
and the Deferred Bonds from 5 to 10. The ex-
traordinary gains which have been realised by the
holders of and speculators in these and other
foreign securities furnish the key to the excite-
ment which now prevails in the market, and which
seems likely still to increase. Let us not be mis-
understood : we are not citing these as instances
of baseless speculation ; it is no part of our duty
to express an opinion as to whether the rise in
each instance is warranted by events or not. We
merely wish to illustrate some of the immediate
effects of the growing taste for foreign specula-
tions, seeing that, if a mania is really to arise,
this is probably one of the directions in which it
will tend.