The Express.
London, England, 1867-06-03 00:00:00

HIGH WAWA AT LONDONIIIIIDOZ.

TIM DAT —Monibm, Ili. 666:::::1beniemr. 2h. ?nua.
To-llowww—Monolag. 521. 63m....—After000n, 3h. 16m.

LONDON, MONDAY, JUNE 3.

Tae past week has been the moat important
as regards monetary affairs since the troubled
period, less than thirteen months ago, when the
entire commerce of the country was thrown into
confusion by the failure of OVERKND, Clumsy,
and Co. The course of events has been ana-
logous, although happily in a contrary direction.
While at that time the latent distrust which
had long been gathering at once culminated in
panic, now the revival of confidence, slowly
and timidly manifested for some weeks past, has
made a sudden and marked advance. It frequently
happens in financial affairs that the public in ad-
verse times are quick to take fright, but it is rare
to find a rapid and complete return to confidence
such as we have witnessed during the last few days.
Several causes have combined to produce this un-
expected result. The political atmosphere is com-
paratively clear. No one apprehends a Continental
war now that the Luxemburg difficulty is settled,
and as regards home affairs, there is no ground
for uneasiness, since the satisfactory progress of
the Reform Bill in committee. The financial
prospect is also good. Continued arrivals of
specie are reported from the United States, in
direct contravention of the law of exchanges,
which shows that these importations can only be
=Ade at a loss. The accumulation of bullion at
the Banks of England and of France is proceed-
ing upon an almost unprecedented scale, and the
money market both here and abroad is conse-
quently very easy. The public have been partially
appreciating these facts, but the final impulse was
given by the reduction in the rate of discount last
Thursday from three to two-and-a-half per cent.
All kinds of securities have since been in increas-
ing demand. Consols in one week have risen
about three per cent., a circumstance absolutely
unknown, except in periods of great political im-
portance, such as the unforeseen close of a war.
Railway stocks, foreign bonds, and miscellaneous
shares, which for various reasons have long been
discredited, have likewise participated in the
advance.

The reaction that invariably follows a finan-
cial crisis has now fairly set in. The con-
vulsion of 1866 differed in some important
points from those during the previous thirty
years. In the first place, it lasted very much
longer, and although more destructive to credit,
still trade was in so sound a position that scarcely
any mercantile failures were reported. Secondly,
the recovery has been unusually slow. On this
occasion it has taken a year to remove the distrust
which in 1847 and 1857 was accomplished in the
space of two or three months. The customary
phenomena have been witnessed of a sudden and
apparently unaccountable scarcity of capital, an
universal calling in of supplies from abroad, a cur-
tailment of general commerce, and a strong disin-
clination to embark in foreign loans or any kind
of joint-stock enterprise.

A heavy depreciation in the value of existing
securities is likewise an invariable accompaniment,
but the pressure once passed the rally has been
hitherto immediate. The crisis of 1866 has in
this respect been an exception to the general rule.
Although the rate for money has long been at a very
low rate, it is only within the last week that a
decided advance has taken place on the Stock Ex-
change. Consuls, it is true, had been previously
rising, but the improvement was comparatively
moderate. It seems that the public have almost
instantaneously arrived at the conviction that they
had a large amount of capital lying idle—hoarded
in the first instance to meet the necessities of a
financial pressure of which the probability had long
passed away, and then kept back owing to the
general distrust of nearly all kinds of investments.
The ordinary reaction has at length occurred, but,
instead of being spread over months, as in former
periods, it has been compressed within a few
days.

At the time when the prolonged maintenance of
the Bank rate for three months at 10 per cent.
caused the London Joint Stock Bankers to send a
deputation to the CHANCELLOR of the EXCHEQUER
on the subject, a favourite hypothesis was enter-
tained in some quarters that the then existing
monetary pressure was duo less to a deficiency of
currency than of capital. Hence it was argued, if
the capital be non-existent, it would be worse
than useless to adopt measures for its freer circu-
lation. Mr. DIMRAELI especially adopted that
view. Unluckily for his financial reputation, it
was conclusively disproved immediately after-
wards. The moment the Bank lowered their rate
the supply of money rapidly augmented. Week
after week a fresh reduction took place, and on
each occasion there were indications of increasing
abundance. It can hardly be said that the capital
of the nation received any considerable additions in
the short period that elapsed from the rate being 10
to only 5 per cent. The propounders of this
ingenious theory were in fact wise enough to see

the erroneousness of their own conclusions, and
quietly let it drop. The simple fact at that time
was, that, owing to the distrust created by 10 per
cent., capital was hoarded. The cause once
removed, this capital was brought at once into
use. A like event has occurred now. Investors
were thoroughly alarmed by the events of the past
year, and refused to purchase anything however
good, consequently it would have appeared at first
sight that capital was scarce. The upward movement
in the stock markets, however, has shown that the
one thing required was a return of confidence.
That has come, and there is consequently an influx
of purchasers, prices are rising, with hardly a
temporary check, and there appears every pro-
bability that under present circumstances they
will rise still more.

It is especially satisfactory to note the increase
of public confidence in railway property. We
have more than once had occasion to point out,
that because in some important instances serious
irregularities had occurred, that was no reason for
throwing indiscriminate discredit upon all the
railway lines of the kingdom. The wrong-doers, if
we may so call them, were at least but a small
minority. They have, nevertheless, done this
good : they have awakened shareholders to the
necessity of effectually guarding their own inte-
rests. The time is past for a placid acquiescence
in any proposal that a board of directors may
choose to make. Everything now must be tho-
roughly explained, not in the conventional manner
hitherto adopted, but so as to afford the proprie-
tors the fullest information. The financial crisis
of 1866, like all other misfortunes, has at least
brought with it one benefit. For many years
railway management has been a szaled book to
every one who, however deeply interested, did
not occupy some official position in the company.
The case is reversed now. Shareholders, instead
of being complacently domineered over, are asked
for their advice and assistance. A committee of
investigation, if pressed for, is granted as a
matter of course. It is only fair to admit that,
whatever mistakes may have been heretofore com-
mitted by directors, they are acting wisely in the
present conjuncture. The whole system of railway
management has, in fact, come to the deadlock that
was predicted in the press as far back as twenty
years ago; but it is creditable to know that no hesi-
tation is shown in adopting the proper remedy.
Both directors and shareholders have been brought
to see that their interests are common, and that
mutual co-operation and concessions are far better
than overbearing defiance on the one side and
unreasonable distrust on the other. The public
have not been slow to note this altered position
of affairs. There is nothing that has so much
weight in England as openness and plain speaking.
As regards railways this has been the exception
rather than the rule until the last year. There
can be no doubt that the public have been lately
induced to invest in these securities simply be-
cause they can at last tell what they are buying,
and are not embarking in an uncertain and per-
haps hazardous speculation.
The cheapness of money is pretty lure to bring
forward the usual crop of new loans. Spain is
about to effect an arrangement with her Passive
and Certificate creditors, but an indispensable ac-
companiment it may safely be predicted will be
raining more money in some way or other. It is
not improbable that Greece will try the same sort
of plan. As regards other likely borrowers, if
they see any chance of getting the money, we
should include two-thirds of the countries on the
globe. It is to be hoped that English investors
will exercise rather more caution than they have
hitherto done, and look less to high interest than
good security. lf, however, the lesson taught by
Venezuela has no effect, nothing can be done but
to leave the public to lose their money in the way
that beat pleases them.