The Press.
London, England, 1856-11-15 00:00:00

illoneg glarket anb piltg

FRIDAY EVENING.
THE return of the Bank of England for the week ending
the tith inst. shows the following ci.anges compared with
that for the week preceding :
Decrease in Circulation ..
Decrease in Public Deposits
Decrease in Other Deposits
Decrease in Government Securities 14.5,102
Decrease in other Securities
Decrease in Bullion . .
Increase in Rest
Increase in Reserve
bullion in Both Departments
Circulation, including Bank l'ost
Bills 21,119,214
Although the Bullion still shows afalling off, and although
it is only just above 8.900,0001. exclusive of the coin in
reserve, the general features in this return are good enough
to satisfy us that the position of the Bank is rather better
than worse iu comparison with its state last week. Thee
main improvement consists in the addition to the Reserve,
combined with the diminished amount of Private Securi•
ties. The unfavorable aspect of it is the fact that in
order to maintain its reserve the Bank has been obliged to
sell securities. The Public Deposits show a decrease ;
and the continued demand for money is still making
serious inroads upon the Private Deposits. The profit to
which money can now be turned out of doors, by lending
it at call, will, we anticipate, farther reduce this item next

NOVEMBER 15, 1856.

week. In the meantime, we may just observe that it is a
great many years since the Bank of England, the great
depository for so many rich corporations, found its Private
Deposits so low as 9,600,0001,
The events of this week in the Money Market have
shown that our fears that we had not passed the worst were
well founded. We have not only had a tight and unsatis-
factory market, but the Bank of England has found it
absolutely necessary, in order to correct the exchanges and
to protect its diminishing stock of bullion, to give another
turn to the screw by increasing the rate of discount on
short bills from six to seven per cent., and by refusing al-
together brokers' bills having more than thirty days to
run. Practically, therefore, long bills, by which the mass
of the trade of the country is carried on, are refused, while
short paper can only be done at a minimum of seven per
cent. It was only on the 6th of October, rather more
than five weeks ago, that the Bank of England, seeing how
matters were going on upon the Continent, was obliged to
raise its previous rate of discount to six per cent. upon two
months' hills and to seven per cent. upon three months'
paper. Now the rate is uniformly seven per cent., but
with this essential difference, that long paper can scarcely
be done at all, while the ratio of advance upon short paper
is one per cent. It remains to be seen what effect this
change will have upon the trade of the country, which has
already suffered an enormous diminution in its profits by
the dearness of money. The demand during the week has
been very active, particularly from the bill brokers and
country bankers. for the former have found their supplies
on call falling off owing to the continued investments of
the public in public securities at cash prices, while the
latter have been obliged to put out paper in order to
supply the commercial wants of their respective districts.
It is more than probable that a large proportion of this
demand was caused by those prudent preparations which
ever)body will naturally make when he expects a period of
pressure and difficulty. Last week there certainly was a
decided impression that the unfavorable state of the
exchanges was not likely to be mitigated, while it was well
known that the continental demand for gold was showing
signs of increase : under these circumstances it was felt
to be impossible that money could either be cheaper or
more plentiful. The demand consequently increased
from all parts of the country, but particularly from the
north ; and now we have the result in higher rates and
reduced supplies. It is earnestly to be hoped that as the
causes of the existing pressure are thoroughly well under-
stood, it may be borne with patience and without creating
alarm. The Bank directors are only obeying a law of
necessity in again tightening the screw, and they can have
no interest or motive in continuing it so tight one moment
beyond the disappearance or mitigation of the motives
under which they have acted. Indeed they have every
interest in relaxing it at the earliest possible moment. We
need not suggest any of the reasons which must compel
them to make a change as soon as prudence will admit, as
they will occur at once to our readers. Whether that
period will arrive speedily or be delayed for a time
depends upon circumstances not within our own control ;
but the measure now adopted is, from its nature, calcu-
lated to hasten it, and this consideration should induce
us to bear it with something like calmness, however
temporarily severely its practical operation may be.
The question now arises, what will the Bank of France
do under these circumstances? The bills by means of

which most of the recent great bullion operations have
been conducted come within the class mainly affected by
the advance just made. Will the process then be discon-
tinued ? Will it be persevered in ? We are sure that the
internal and external drain for gold upon the Bank of
France is still active ; and there is every reason to believe
that in the interval between the publication of the last
monthly return and that issued this morning gold has been
bought at a premium by that establishment to the extent
of 6000,0001. Can a drain of this magnitude possibly be
continued much longer? Assuming that the supplies are
equal to it, can the Bank of France, or, in other words, the
legitimate trade of France, bear the enormous burden
month after month which it necessarily implies? We say
not. It is impossible to accede to such a supposition.
The question is, therefore, revived, what will the Bank of
France dc, under such circumstances, now that the Bank
of England is showing a resolute determination at any
cost to carrect the exchanges and to arrest the outflow of
gold? There is but one course practicable. Already we
see hints and suggestions and rumours that the statutes
of the Bank of France are to be revised and the Governor
to be changed ; and we have ourselves received a letter
from a gentleman in connection with the establishment
stating that the reluctance of the Emperor to consent to a
suspension of specie payments has been overcome. This,
then, is the only course open to the Bank of France—a
course to be lamented, no doubt, as it involves a departure
from a great principle, but one that is inevitable. If the
straggle for gold continues, as it must, between the Banks
of England and France, this is the only alternative. Now,
if prudently managed, we do not see that any great harm
can follow to France or to French trade. But the rate of
discount must be kept sufficiently high to promote
economy and check speculation, so as to prevent adverse
trading balances with this and other countries. By this
means the note circulation might maintain its par value,
and after a time a resumption would be practicable.
But everything would depend upon speculation being re-
strained. If it be not, there would be a collapse from
which we ourselves should vastly suffer; but if it be,
France would soon be a recipient of specie in the ordinary
course of trade. What would be the effect of a suspension
of specie payments upon this country? In the first place,
the artificial purchases of gold which the Bank of France
is now compelled to make would cease; our discount
market would be gradually eased ; and things would
gradually return to their natural course.
The discount-houses have advanced their rates fur
money at call from five to six per cent.; and the joint-
stock banks have increased their allowance for deposits to
six per cent.