The Express.
London, England, 1862-02-10 00:00:00

ONIIIWATIMI AT MMUS WOOS.

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LONDON, MONDAY, /88. 10.

Os the financial events of the past week the
OM which has attracted chief attention is tho very
peculiar operation just ►rranged by the French
4:overnment. tVo quite admit that foreign finance
is not to bo measured strictly by the Euglish
standard, and that, though insanity might almost
be imputed to an English Chancellor of the Ex-
chequer who, under like circumstances, should
propose to do what M. Form) is now doing, a
good deal of allowance must be made for the
present difficulties of the French Minister. But,
after making all possible allowance, the transaction

stands out as one tending to reduce still further the

low estimate entertained by the public of French
financial management. It is difficult to see on
what grounds it is to be justified. Sheer
necessity, we suppose, will warrant a Govern-
ment in borrowing anywhere, in order to tide
over pressing requirements while honest measures
are being adopted for putting matters on a straight
footing. But the intelligible plea of " impecu-
" Manly" has not been put forward by the French
Minister. For what purpose, then, does he require
the two millions or four millions (as the event

_
may prove) which he has just arranged to borrow
in London? The purpose is avowedly, by a deli-
cious and very French euphuism, to " faciliata
" the conversion" of the Four-and-a• Half per Cent.
Bastes into Three per Cents. For "facilitating the
" conversion" should be read, we fear, " rigging
" the market." The connexion of the French
Treasury with the Bourse—its liability to be
influenced by Boars views--has long been its
deep reproach ; and the more than suspicion which
is entertained that the money now sought here is
to be applied to illegitimate purposes is quite suffi-
cient to deprive the loan of all sympathy. The
advice' from Paris show clearly enough that the

proposed conversion is regarded with distrust by the
fundholders, so much so that, although it is pretty
well known that the Government means to keep

prices up until its immediate object is attained,
many of them have hastened to sell. It is re-
marked, however, that, doubtless by arrangement
with the Government, powerful bankers have con-
, stantly stood forward and have bought all the stock

offered. This, we suppose, reveal; the main pur-

pose for which the Government, lost to consider-
ations of dignity, has applied in so peculiar a
manner to the English market. True, according
to the version in some quarters, it is not that the
French Government borrows, but that English

capitalists lend. We will leave such hair-splitting
to those who relish it, merely remarking that the
French Government can probably, if it wishes,

find as many tools in England as in France.
Stripped of all transmarine disguise, and tested by

the cold light of common sense, the endeavour
of the French Government is to put a false face
upon the market, to make the public believe there
is a bonder response to its financial scheme, and
to spread an impression that fundholders and the
" high finance" of the capital have accepted it
. .

with alacrity. We can see plainly enough that
this is all deception—a deception of the more un-
grateful kind, because the Government is trying to
steal a march upon a class of people who have
always rallied round it in time of need, we mean
the class of small rattier:. These people are not
likely to meet with comments by impartial jour-
nals, and, scattered over the departments, have
little or no information respecting the Bourse
manoeuvres for which the Government gives
the signal ; yet the fact that stock from
these genuine sources is now brought forward
for sale seems to indicate that common
sense is not at fault. Government interference
in market matters is sufficient of itself to engerder
distrust. The fnudbolder may fairly argue that
if prices are only upheld now by official interven-
tion he had better sell, because they are very likely
to go lower as soon as the exceptional prop is re-
moved. The actiontaken with such peculiarprompti-
tudo by the Bank of France is calculated to con-
firm a distrustful view. The advocates of the
Government have been accustomed to declare that
the administration of that Bank has never been

controlled in any way beyond an occasional "re-
" commendation," or something of th►t kind. In
its haste to bolster up the financial scheme now
[ hanging in the balance, the Executive has
betrayed the fact that its recommendation
is such matters is as potent as a similar
intimation from the ruling powers is in
Ennis Beall. Were the Government actuated by
a desire to carry through a simple plan for re-
' clueing the rate of interest on a portion of the
debt from 4i per cent. to 4, in the same way in
which, a few years ago, it reduced the rate on
this same debt from 5 to 4i, thereby effecting a
legitimate annual saving, some persons might per-
haps be disposed to look with a degree of leniency
on the machinery employed, forgetting the essen-
tial unsoundness and insecurity of the plea that
the end justifies the means. But on the present
occasion even this poor plea cannot be urged in
extenuation of the course pursued. The object
of the Government in pushing forward the con-
version scheme is evidently to clutch the
6,000,0001. or 8,000,0001. sterling or upwards,
which it proposes to make the Four-and-a-Half
per Cent. rentierd pay for the privilege
of obtaining an equal amount of income
from the Three per Cents. The project
is purely one for getting a loan in a hole-and-
corner way, and is not framed in a statesmanlike
manner. lu the permanent interest of the nation,
to which the Finance Department ought to act as
• faithful steward, it is not advisable that the con-
version should be effected. In the course of the
present year, the State, by the terms of the original
contract, fairly acquires the valuable right of cut-
ting down the Four-and-a-Half per Cents. to a
lower denomination of interest, the holders, of
course, always retaining their right of claiming pay-
ment in money at par instead of stock bearing a
reduced rate. This is the plan to which the
Government ought to have directed its attention
at the first favourable opportunity, and, mean-
while, it ought to have endeavoured, by
legitimate means, as distinguished from
those savouring of charlatanism, to inspire
that confidence which would enable French
Four per Cents. to float in the market above par,
as Dutch Four per Cents. do. A plan of this sort
would have entailed an annual saving of about
three-quarters of a million sterling per annum,
instead of the economy of one-third of that sum,
in the cost of the floating debt, which—as we be-
lieve, delusively—is put forward by the Govern-
ment as a main justification of its policy. In the
former instance the large saving would have been
of a permanent character, and future generations
would be saved from the enormous addition to the
nominal amount of the national debt entailed by
the present plan. But all experience shows
that the Imperial Government cares little for
what may come after it. Carpe diem has always
been, practically, its motto, and posterity has
been left to take care of itself. How else could
the amount of the national debt of France have
risen so enormously during the last ten years
A project merely for the reduction of the Fear-
,
and-a-Half per Cents. into Fours could not be
carried out until French finance gets into a
sounder and more creditable position, and, as
compared with the present scheme, would have
the fatal disadvantage of not contributing a few
millions of ready cash to relieve the immediate
wants of the treasury.
The fact that the new plan involves a vast addi-
tion to the national debt of France (though not to
its annual cost) is, we think, sufficient to ensure
its condemnation by sound economists. There is
no mistake about the proposal, as wham the fol•
lowing description given of it by M. Gooriv, the
official reporter on the scheme before the Chamber,
and himself a financial authority ;---" In exchange

" (says M. Gomm) for his security of loof. of '
" nominal capital, producing 4f. 50e. of interest
" per annum payable half-yearly, the Government
" offers the reislier a new security, also producing
" 4f. SOc. of interest, and representing a nominal
" capital of 150 f., since that security will be
" 4f. 50c. of Three per Cent. 'tante instead of
" 4f. SOc. of Four-and-a-Half. The interest will
"be paid quarterly, and the fear of a reduction
1" in the dividend will completely disappear, as
" the Government can only effect a reduction by
" offering the integral reimbursement of the nomi-
" nal capital, or loof. for 3f. Bente."
It is impossible to help forming a very
poor estimate of French financiers, as well
as serious forebodings respecting the future
of French finance, when we find an impolitic
scheme of this kind sought to be justified by a
jargon such as we should have thought could
have imposed on no one. Of this nature is the
argument put forward in defence of the Govern-
ment proposals, that the existing Four-and-a-Half
per Cent. Stock " participates in no way in the
" elasticity of credit." Elsewhere it is repeated
that that stock is "completely beyond the action
" of credit ;" and, finally, as the greatest recom-
mendation of the new plan, the committee repre-
sented by M. Goya alleges " the amelioration
"which will arise from the elevation of public
" credit." We confess that, in our dull English
way, we do not see where this " eleva-
tion" is to come from. We should have thought
that a Government wishing to " elevate " its
credit would abstain from "rigging" the market,
and from going, cap in hand, to foreign bankers
for temporary loans at high rates of interest, and
that a policy which at a stroke of the pen adds
50 per cent. to the nominal amount of a large ,
portion of the National Debt would have been
severely condemned. But they manage these
matters differently in France, where the Govern-
, ment trumpet is always blown the loudest when
correct principles of finance are most flagrantly
defied.
We have only space to refer briefly to another
. .

subject, a painful one, on which it is important I
that public attention should be kept steadily fixed.
The distress in the cotton manufacturing districts
is increasing, and bids fair soon to prove a severe
weight on the local resources. Disasters to manu-
facturing capital and intense suffering to the vast
mass of the operative population form the burthen
of the trade reports. This cannot be wondered at,
for, while some estimates put the decline in the
production of yarns and goods at one-half, others
fix it as high as 60 per cent. There seems to be
little doubt that the total amount of money
paid weekly in the cotton districts is now less
than half what it was six months ago. Corrobo-
rating what has been before stated in these
columns, it is remarked that, while each advance
in the price of raw cotton closes many mills, and
extends the system of short time in these which
continue to work, each rise in the prices of yarns
and goods likewise checks the small demand now
experienced for them, and makes spinners and
manufacturers the less inclined to work "to stock."
Meanwhile, at such high prices, little can be done
for foreign markets, and, overstocked as they are,
the only way to relief seems to be by a severe re-
pression of shipments. This is a kind of relief
which means stagnation of trade at home.