The Press.
London, England, 1856-10-04 00:00:00

THE PRESS.

This comparison, like those for some weeks put, affords
strong evidence of the active demand for money last week.
The Private Securities, which sugmenled last week no
less than 1,367,2781., now show a further increase of
1,324,827 E., and they amount to the considerable aggregate
of 19,616,3841., or within 800,0001. of the amount at which
they stood in the corresponding week last year. To supply
this enormous demand the Bank has again lent out every
shilling of the deposits received on the public account,
and made one of the largest dips into the Reserve that
have occurred within the last twelve months. Of course
as the time approaches when the October Dividends will
be disbursed, a considerable balance of these securities
will run off. It is remarkable that for some weeks past
the Bank has not resorted to the sale of its stock in order
to obtain means to meet the demands upon it ; but to-day
some sales were effected, from which we infer that the
Reserve, by the demands of the current week, was in
danger of becoming inconveniently low. The falling off
in the Bullion is considerable. The whole stock is now
only 11,769,•3721., and we know that it has been diminished
largely since the present return was mad e up. On the
whole, this comparison shows the present return to be by
far the most unfavorable since the end of June, when the
rate of discount was reduced to four and a half per cent,
and that the time had arrived for the adoption of some re-
strictive measure.

The principal event of the week has been the advance
made in the rate of discount by the Bank of England from
four and a half to five per cent. This policy has met with
general approval under present circumstances, though the
trade of the country and the position of the Bank itself, if
they alone were to be regarded, would scarcely justify such
a measure. It has been the direct consequence of the
Bank of France having advanced its rates from five to six
per cent. The value of loanable capital was from one to
two per cent. higher upon the Continent before the change
was made, a rate of profit that was attracting very large
sums to Paris and Hamburg to be lent to the banks at five
per cent. It is estimated that one eminent house alone
was the means of absorbing fully 2,000,000/. out of this
market to be turned to increased profit in this way. At
the same time the bullion in the Bank had been since Satur-
day undergoing a diminution at the rate of from 40,0001. to
50,0001. per diem, most of which was applied in payment for
previous purchases of continental silver. Such was the state
of things, as far as regards the Continent, when the Com-
mittee of Treasury of the Bank Directors met on Wed-
nesday, and ordered the rate to be advanced. But
on that day there was another element to be considered
The Increased rates of interest charged all over Europe,
with the view of protecting themselves against the whole-
sale absorption of silver by the Indian, China, and Russian
demand, had produced a strong conviction here, especially
since Saturday, that the Bank of England, in order to in-
tercept the drain of bullion sure to arise in consequence,
would also be obliged to advance its rates. The only
question was as to the amount. Some thought it would
be only per cent., while others were under the im-
pression that it would be raised one per cent. at once ;
inasmuch as by such a course the previous relative con-
dition of the several banks would, in some degree, be pre-
served. This state of opinion produced the second
element in the case, in the shape of an extraordi-
narily active demand upon the Bank for advances and
discounts from all its best customers, who, naturally
enough, desired to supply themselves with ample reserves
of money against the 4th, when the mass of commercial
acceptances fall due, while it could be had at four and a
half per cent., before five, or possibly five and a
half, were charged. The amount of these applica-
tions was almost fabulous. On Tuesday alone they
were more than 1,000,0001. The houses that discount
with the Bank, and re-lend the money to the public, would
at such a time, if matters had been allowed to take the
ordinary course, have realised enormous profits, without
risk or trouble, at the expense of the Bank and the
public. But their objects were, to a great extent, de-
feated by the resolution by which the change was made
on Wednesday. Still these establishments had, as it
were, three or four days clear run at the Bank ; and there
is no doubt that they obtained from it, before the rate was
raised, larger discounts than they really required, conse-
quently the result to them, in the way of profits, now that
the rates in Lombard-street are about five and a half per
cent., or 4 above the Bank minimum, though not all
they expected, cannot but be satisfactory. But a new mode
of action has, by the circumstances of this week, been
suggested to the Bank, and, indeed, become a precedent
and a principle, by which it will more immediately exer-
cise its power of controlling the Money Market. It is that
in future changes in the rates charged for advances and
discounts may be made any day that they may be found
necessary without waiting for the meeting of the weekly
court on Thursday, or that of the Committee of Treasury
on Wednesday. Such a practice would assimilate the
business of the Bank in this important department to that
of the private discount and banking establishments; but,
on the other hand, it world practically vest the great
power which it implies in the hands of the Governor and
Deputy-Governor of the Bank. Indeed, they possess this
power already, though it has never yet been exercised that
we remember. That it will be exercised hereafter in cue
of need is now highly probable, of course subject to con-
firmation. The weekly court yesterday confirmed the
resolution of the Committee of Treasury. It was, indeed,
partially expected that they would direct an advance to
five and a half per cent., but they made no alteration,
owing to a fall in the exchange at Shanghai enough to
check to some extent the export of silver from this country
to China. But, as gold is going out much faster than it
is coming in—though large supplies are due—it would be
well to he prepared for a five and a half per cent. rate in
the forthcoming week.
Money was in rather less demand yesterday than in the
previous part of the week, but there was more inquiry
to day, particularly in Lombard-street. The rates average