The Express.
London, England, 1862-11-03 00:00:00

MGR WATBR AT LONDON. BRIDGE

TIM DAT Morning. 11h. 50m......Altarumn. Oh. Om.
T..)-Moilow—Stonthm, Oh 13m. ..Afternoma. Oh. 350.

LONDON, MONDAY, NOVEMBER 3.

THE change in the money market has formed
the principal topic of discussion in financial circles
during the past week. Instead of adhering to
precedent, and raising the rate of discount half
per cent., as has always hitherto been done when
the market has been in a condition like the pre-
sent, the directors of the Bank of England have
preferred to wove at once from 2 to 3 per cent.,
without intermediate pause. This departure from
custom has been taken in ill part by some critics,
yet is easily explained. The truth seems to be
that the directors would have done better had they
raised the rate to 4 per cent. on theprevious Thurs-
day. It is believed that they refrained from acting
then because they feared that by an advance
iu their terms before the increase in the demand
foimoney had become fully pronounced, they might
risk losing that considerable portion of the current
business of the market which the Bank then en-
joyed, as a natural consequence of the close proxi-
mity of its terms to those prevailing amongst other
dealers in money. The event appears to show
that in the general interest the Bank makes a mis-
take if it fails to embrace the earliest decent oppor-
tunity of quitting the perilous ground betokened
by so low a rate as 2 per cent. Such a price for
the use of capital is extraordinary, and o!
ephemeral duration, because provocative of
many dangers and of much improvidence.
Many old-fashioned persons of good judg-
ment refuse even now to believe in the necessity
of the Bank of England charge ever being reduced
to so extreme a point ; they argue that to fix it at
2 per cent, merely gives a keener edge to the
competition of other money dealers at rates prac-
tically unremunerative, and thus tends to put the
general value of money even below what may
almost be considered an unnaturally low range.
Accordingly, when the Bank quits the dangerous
ground referred to, persons entertaining these
views feel a sense of relief. It is worthy of
remark that their feeling of satisfaction is
shared by other observers, who, unlike them,
contend that the Bank, like all other
money dealers, ought to be guided solely by the
general market, and by the state of its accounts,
and to fix its terms in strict accordance therewith,
no matter whether high or low. It is universally
felt that the excessively low rate lately current for
capital could not last long, for experience shows
that it proves the incentive to all kinds of finan-
cial recklessness. The sooner the value of money
mounts up to a point nearer to the average rate in
this country, the better prospect must there be of
the market remaining in a state favourable to
legitimate operations.
There is, then, nothing to regret in the mere
fact of the Bank's mirimum having been raised
to 3 per cent., although the directors may,
perhaps, be charged with a little miscalculation.
Had they moved to 2. on Thursday, the 23rd,
as many persons expected, and thence to 3 per
cent, on Thursday, the 30th, the financial commu-
nity would have accepted these steps, warranted
as they would have been by precedent, without
the smallest question, and the market would have
followed the lead of the Bank with its customary
docility, and with less disturbance than has actually
been witnessed, On Wednesday, the 29th, the
Bank directors betrayed signs that they were not
entirely easy in their minds, and that, in fact,
they almost repented of not having put the rate
at 2 per cent. on the previous Thursday. Per-
sons who sent in bills for discount on Wednesday, the
29th, experienced an unusual pause, and there
was more than one remarkable instance in which
applicants were informed on that day that the
lowest rate of the Bank was 3 per cent. The
recognised minimum being then only 2, and the
bills being in many cases of a character to warrant
their being taken on the ordinary terms, a more
significant indication of the change that was im-
pending in the policy of the Bank could hardly
be imagined, and such persons as heard of the in-
cident made up their minds at once that the Bank
executive were only waiting for the regular
court day to go to 3 per cent. To formally
raise the rate on any other day than Thursday, it
was probably argued, would needlessly excite
remark, and thus the Bank appears in a quieter
manner—that is to say, by asking advanced retes—
t* have endeavoured to protect itself upon the
occasion of such large applications being made
to it.

That many of these applications were made on