The Express.
London, England, 1853-06-07 00:00:00

TO CORIMPON DENTS.

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HIGH WATIR AT LONDON BRIDGE.
Ti. D/11.411111168. n 2%. 41m.

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as. 14.

LONDON, TUESDAY, JUNE 7.

THE rise in the Bank rate of interest was not un-
expected. To suppose that the Directory of that
establishment will study the public interest, and not
that of its proprietary, is contrary alike to theory and
experience; and it is a sort of niaiserie to blame it
because it has not taken the former into considers-
Ulu. It is a mere joint-stock bank, which happens
to be the banker of the Government, and has some
exclusive privileges which no joint-stock or other
bank ought to have. It claims and receives these
not for the public advantage but for its own good, and
it does and will use them to this end. We cannot
explain its conduct by any reference to public or po-
litical principles ; it considers its connexion with the
Government in subordination to its own interest
just as any private trader might do in any other
trading transaction; and we must look exclusively
at that fact to comprehend its recent proceeding.
We have already pointed out in this journal that
the bulk of the Bank capital is already lent to the
I Government, and that what it has to lend to the
public mainly consists in the deposits it receives
from individuals, and on the Government deposits.
The relation between the sum of them and the sum it
has lent on private securities is the test of its ability
to make further advances with safety and success.
The amount of deposits in its possession, and of its
advances on private securities now and at this time
last year, compare as follows:

Amount of Public and Amount of Private
Private Deposits. Securities.
➢lay 28, 18.53.... £17,541,970 £14,021,714
" 29, 1852.... 18,748,681 10,704,646

£1,206,711

£3,317,069

Thus it has, in 1853,1,208,7111. of capital less at its
command, and it has advanced 3,317,0891. more than
in 1842. Clearly, therefore, its ability to lend now
with safety is 4,523,7801. less than it was at the cor-
responding period last year. In the face of a rise of
1 per cent. since that period in the rate of interest,
tho demands on it for loans amount to 3,300,0001.
more than then. The Bank returns, always a week
behind the time, tell us nothing of the operations of
this last week, and we have reason to know that very
large additional demands were made on it—in anti-
cipation, perhaps, of a rise in the rate of interest—
between last Monday and Thursday. It is probable
that the nut week's returns will show that it has
advanced upwards of 4,000,0001. more than last year.
The Bank, therefore, can lend almost any sum of
money it pleases at the present rate of interest; and
the experience of the last four months and of the last
week, shows that its customers are willing to pay for
the accommodation a still higher rate. Keeping its

own interest in view, therefore, it is bound to chirge
higher. The Bank accounts vary very much, as every
one knows, within each quarter, because it has at the
beginning to pay large sums for the Government, as
salaries and dividends, while the payments into the
Bank on account of the Government are continuous
and gradual through the quarter. As the rule, its
advances on private securities augment au the quarter
advances, and are paid back to it about the same
period as it makes large payments for the Govern-
ment. To have a fair view of its present condition
we must compare it with a similar part of the quar-
ter in relation to the payment of the dividends at
the end of February and the end of November.
The deposits were on _ _

February 26, 1853 £19,456,672
lioramber 27, 1854

The private securities were on

February 28,1853 £14,928,214
November 27, 1852

At the end of February, therefore, the des
were nearly 2,000,0001. more than now, though the
advances were almost 1,000,000!. more, and the differ-
ence is the measure of the lessened ability of the
Bank, in the present quarter, to lend. At the end of
November the deposits were upwards of 2,000,0001.
more than now, and its advances about 2,000,0001.
less, so that its present ability to lend, as compared
to the end of November, is less by 4,000,0001. In
the face of a rise in the rate of interest of 1 per cent.,
the Bank had advanced 8,000,0001. more in February
than in November. But between the end of February
and the present time there has been no advance, and
the position of the Bank, so much weaker in February
than in November, is still weaker at the end of May.
The rise in the rate of interest has not been sufficient
to replace the Bank in the position it occupied at the
end of the year.
Such being its comparatively weak condition at
present, and the privete deposits regularly decreasing
week after week from 14,933,8971. on April 9th to
11,936,5831. on the 28th ult., the Bank must have
been somewhat alarmed to find the public deposits,
which, at this period of the quarter, generally in-
crease at the rats of 600,0001. a week, suddenly and
most unexpectedly decrease, according to the returns
published last Friday, 209,0851., making in the week
a diminution of its customary loanable resources of
upwards of 700,0001. The source of this unexpected
decrease of the public deposits we are not acquainted
with, but probably it was payments on colonial ao-1
counts. ♦Ve remember that there was a similar un-
expected, and inexplicable decrease in the summer of
last year ; but, whatever its source, it must have been
very influential in the Bank parlour.
At present the public deposits are 5,608,4121.
against 5,668,2991. last year at this time. There is
no comparative deficiency in this portion of the re-
sources of the Bank, but there is the fart standing
before us that 3,116,0001., according to the
Economist, must be paid in money in a few days to
the holders of Exchequer Bills who have refused to
renew them on the terms offered by the Government.
The effect of this 0 will be to reduce by that amount
the balances in the Exchequer, which have for a
long time been inconveniently large," which is
another form of expression for reducing the Govern-
ment deposits in the Bank to that amount, and so
reduce its already crippled power to lend by 3,000,0001.
more. Besides this certainty of the Government
taking its money out of the Bank, there is a proba-
bility of the Government speedily wanting more
money, and new borrowers coming into the market,
of an increased demand for the purposes of trade ; and
all these circumstances justify the proceeding of the

Bank, sad we make it quite superfluous to seek for any
political causes for raising the rate of interest. Its
reseumes at present are insufficient to meet the pro-
bable demands en it, and it raises the terms on which
it will comply with them.
It must not be inferred from the conduct of the
Bank that the trade of the country either is or is
likely to be involved in difficulties. The position of
the •Bank in relation to the Government engaged in
an extensive and unsuccessful financial operation is
no citerion of the condition of trade. An immense
nutSber of bills fell due on Saturday, and they were
all leaclily met, a sure proof of the soundness of our
ocsoinerce. A rise has taken place, and is taking