The Express.
London, England, 1867-06-17 00:00:00

IMITA vNIA.

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WXLOV, .111)V1)4Y, JUNE 17.

Tuts time last year the Directors of the Rank
of England were e11;•geil iii giving a fresh trial to
an old time-homairol policy, admirable in theory
but disproveil m practic,. They kept the rate of
disc tat 10 per cent in order to attract
bullion from countries where the current interest
was four per cent., i.e but little more ; neverthe-
less, for reamins which few commercial men (out-
side the It:ilik) cm fail to appreciate, gold went
out much faster than it came in. The inducement
of 10 per cent. proved utterly powerless. Probably
the terms were considered to be too high to be
compatible with good security. Events have
proved that this supp. Nit' was erroneous, but
there is no room to doubt that it existed at the time.
Be that as it may, it is evident that what 10 per
cent. could not accomplish in 1866, 2. per cent.
is doing in 1867. Geld appears to be attracted
here in exactly the inverse proportion that it is
wanted. The Atlantic Telegraph brings the con-
stant announcement that fresh shipments of specie
have been made front New York for England.
Australia is also sending considerable sums. It is
the same with nations as with individuals. In
either case, if money is really required, it is diffi-
cult, if not impound°, to obtain assistance. On
the other hand, laans are freely offered precisely
at the time when they are of least service. A
year ago the arrival of a few hundred thousand
pounds in specie would have been of almost incal-
culable value ; now it simply adds to our embar-
rassment in finding meats for the satisfactory
employment of our already redundant capital. If
trade were in a better position, the difficulty would
disappear at once. But unfortunately no per-
manent revival is shown in commerce,

The last Rank return gives an increase in the
stock of bullion of 376,0001., of which only a
small portion is represented by supplies from
abroad, the greater part consisting of coin with-
drawn from internal circulation. In this respect
we have the precise converse of the position of the
money market nearly two years back. In the
autumn of 1865, the close of the civil war in the
United States gave an extraordinary impetus to our
trade, and necessitated a comnpornling demand of
coin for actual use. Tho rate of discount was
then raised because money was legitimately re-
quired for the ordinary purposes of commerce.
Now it is low since trade is contracted, and there
is no demand in any quarter. One of the chief
defects of our Bank Act is thus exemplified.
When an increased supply of money is necessary
it is rigidly denied. On the other hand, facilities
are freely given precisely on those occasions when
no possible advantage can be taken of the con-
cession.

There is no doubt—in fact, every week proves
it—that the accumulation of unemployed capital
is proceeding at an almost unexampled rate. A
safe guide in this respect will be afforded by the
forthcoming accounts of the London joint-stock
banks. It is nearly certain that the deposits will
show a considerable increase, which can only sug-
gest the inference that traders have got larger
balances in hand than in their opinion they can
safely use. Admitting that commerce may be less
buoyant than a year or two ago, still the aggre-
gate of profits must, even at a period of compare.
tive depression, rise to a formidable total. As a
rule, the gains realized were in former days placed
in new investments. At one time foreign loans
have been subscribed, railways constructed,
mining shares taken, or, as within the
last few years, a host of all kinds of
joint stock companies for miscellaneous pur-
poses have been successfully established. Not-
withstanding some notorious examples to the con-
trary, the bulk of these last enterprises have been
generally advantageous. In many instances the
shares may be quoted at a discount, but as far
as actual income is concerned they are, on the
whole, remunerative enough. For the last twelve
months, however, no fresh means of investment
have been introduced of any consequence. One or
two foreign loans, as many new companies, and
an occasional issue of debentures for one of the
colonies, form the total. Perhaps these opera-
tions, taking them in all, have at the outside
absorbed ono-tenth of the capital that we are
annually creating. It is perfectly true that,
great as the resources of England may be, they
would be speedily exhausted if we were inclined
to entertain every project that might come for-
ward from foreign governments. It seems almost
incredible that countries like Spain or Greece
should really contemplate raising fresh loans in
London. There can be no doubt, however, of the
intention, and still less of the success they are
likely to achieve. Plenty of other comers are
stated to be on the point of appearing, some of
whom it is only just to admit ahow legitimate
reasons for requiring the aid of British capital.
As regards new companies, we may consider them
to be practically out of the question. A few may
be brought forward, of which the intrinaic value

S .1; tti St{ U.. 1411 14: be-
yond ,t:i umlertakiti43 would not
LC looked :it for a Hamm:tit.

'nuot brought face to Lee with the
old prob!em, t' h it ,•re %.c to do with our money?
It caanot • bv I-ft Even the
neest thnia 4-tpit dist will soener or later bee,ime
tired of getting no return la. Lis aectieinlatvd
Tw.• coarse., .ire 1111.•:l to Lint. Either he ,
most invest, or trust to an imiertain Lr per cent.
iii tan dish. irket. Th are • (VIII 4 hardly any
pnd•ability the 1-ate rising ;on the contrary,
it promises to be lower this year tit to within ally
known peri.al. If tb.: fa:els should he ele•sell or
railway stork,, the tranciaien would merely
involve the tr eviler of a certain MUM of money
from one hand to another, the actual supply re-
maining the s otm. ppar aitly some lam amounts
will Incr ah•:,,r1,c,1 for tat, new Indian railway pro-
jecta, and tie latter outlet couhl be devised. Thu
security is perf.,Aly safe, and the money is ex-
pended for a 1R41011:1:11 purpose. As regards this
country the existing plethora will have at least this
good effect : it will enable our own railway coin-
panics to carry out the financial reform which has
long lieen contemplated, but hitherto scarcely put
in act' . Thu upportanity is presented for ex-
tinguishing their floating debt, or debentures fall-
ing duo at periodical intervals, by converting
them into permanent stock. As yet the plan has
I met with no success Wlailt mentioning, for the
reason that the terms uttered were too low. A
debenture holder was naturally disinclined to take
a 4 or 41 per cent. stock at par in exchange for a
bend which must be paid in full at a certain date.
The stock :night very easily be depreciated in the
market, shonld he desire to realise, but at :ill
events there could he DO doubt of his ultimately
getting both principal and interest if ho clause
to retain his bond. However, the experience
of the past year is not likely to he lost upon
either railway directors or shareholders. They
have too good reason to see the nekessity of a
reform in the financial system of their several
companies, and may, perhaps, be brought to under-
stand that it is worth while to make a slight sacri-
fice of dividend in order to escape the possibility
of a discredit nearly tantamount to ruin.
In order to realise fully the contrast between
the present accumulation of money and the absence
of any adequate demand, it is only necessary to
compare the totals of the specie held by the Banks
of England and France, with the bills discounted.
They stand as under :

RAnk of France ..
Bank of Mug Lula

.k.i4,545,1X10
. 21,340,000

1.155,575,000

Bank of France .
Bank of England

.e19,:m0,n00
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