The Express.
London, England, 1867-01-21 00:00:00

LS CIVIL

TEnt Erwanwo, THE riaFtZus. Mr. Widdloomb.—And
ROUGE ET ollL limn. ►acbler, Emery, Cowper. Moreland,
Yitzpatrkk. D.dt..n, Reynolds, Lonna Andrvw4, Price. ke. ;
Itra. L. Hurry, and Mimes Elenrade, Grattan, and C. Leclercy.

STRAND.
Ting Remit°, N EIGHBOURIL —After 'dila will be produced
• (rend Burk/qua, GUY IAWYLi.—And A BOIT OF
TWEELY3.

Houtowt:
Tats Evintion, MY TURN NEXT. Mr. Delmore: Mdse.
Foote and Lennoz.—And PLYING KULL Messrs. Yevlllo. Del-
more. Blake, YoDade, *c. • Madame If. Josephs, C. &launders,
Dessie Foote, Fiddes, Leon:,Raymond. de.

BRITANNIA.
TIM LIMNING, THE PRINCESA OF THE PEARL PILAND ;
OR, THE THILKE KINGDOMS Olf PEARL, GOLD, AND
lILLVEIL lin Lane and Miss Jacolm.—Yint-rate Pantomimist&
...And TUN Wink:TON CREW.

DION WATNE AT LONDON BRIDGE
21111 DAY —Moral's, 211. 29. Afternoon. 2n. M.
19410AnoW—Morning, 3h 18a Afternoon,

LONDON, _IPINDAY. JANUARY 21.

ANOTHER sudden change has taken place in the
money market. A week or two ago speculation
was busy as to which particular Thursday the Bank
rate of discount would be reduced from 34 to 3
per cent. The payment of the dividends, the in-
flux of coin from the provinces, and the steady
arrivals of foreign specie, all pointed to.this result.
On the other hand, a Russian loan had been nego-
tiated with unexpected success in London and
Amsterdam, but the sum subscribed here, perhaps,
barely sufficed to meet the balance of trade in our
favour, taking into consideration the licitly remit-
tances which are periodically made to England to
pay the dividends on the existing stocks. There
was likewise some revival in the demand for send-
ing money to the East, as exemplified by the
greater readiness with which the last tenders for
Government bills on India were absorbed, but this
movement was of no practical importance. The
downward tendency in the value of money
has been arrested almost solely by withdrawals
of specie for Paris, either to be retained there or
transmitted to other countries. It seems aing.dar
that it is worth while to undertake these opera-
tions. In London the rate of discount in the
open market is about 3 per cent., in Paris about
; why, therefore, should the law of supply and
demand be violated by buying gold in the dearer
market
in order to sell it in the cheaper? The
only answer is that it is so. If the supply o:
bullion in the Bank of France were defic,ent,some
reason might be shown for carrying out excep-
tional transactions which, as a matter of fact,
must involve a loss. It has occurred more than
once that foreign banks have adopted these con-
trivances for temporarily strengthening the" posi-
tion ; but the Bank of France stands in no need
of them, and has indeed abandoned them long ago.
The last accounta officially published in Paris and
London show the following amounts of bullion
held by the two national Banks :

Bank of Fromm ..
Bank of England

£26,1/40,000
19,t40,845

So that our neighbours have a stock of nearly
seven millions more than we hold. Coupling this
fact with the difference in the respective rates of
discount in the two capitals it is difficult at first
sight to discover any adequate commercial cause
for this renewed export of bullion from our side.
Perhaps in part it may proceed from the
somewhat defective yield of the harvest. No
surer reason for a drain of gold from the Bark
can be adduced than that of large imports of
foreign corn to be paid for in specie. This is
more especially felt now, seeing that half-civilized
countries like Egypt have occupied in a great de-
gree, or at least contested, the place hitherto held
by the United States. But at present our im-
ports are by no means excessive. At any rate
they can scarcely account for a large withdrawal of
gold at this time of the year, since, if there were
a real reason for this export, it would have taken
place long ago. In previous periods of scarcity
the shipments hero of corn have occurred much
earlier ; ordinarily in the autumn, and rarely so late
as the succeeding spring. This hypothesis may there-
fore be practically dismissed. If the export of gold
were for corn, it would have commenced some
months back, and have proceeded at a more
equable rate. The process would have been
gradual ; not, as in this case, spasmodic. Looking
round the general departments of trade, there
seems no reason why bullion should be taken
away at this particular conjuncture. We are not
reduced on a sudden to import cotton, or any
equally necessary commodity, from a new and un-
tried market, where our manufactures are com-
paratively unknown, and the precious metals only
taken in exchange. Still less are we lavishing
our capital in foreign enterprises. Yet there is
the fact that during the last week gold has been
unexpectedly taken from us, not in driblets, but in
comparatively large quantities.
From the considerations already adduced,
we can put aside all belief that the present
drain of specie is due to what may be
called natural causes. We are neither lend-
ing nor importing, still less investing in
foreign companies. Where then is the money
going T We hear that the cause is one that is
little complimentary to the knowledge of England
possessed by foreigners. It is assumed, we know
not with what degree of credibility, that French
and German bankers are withdrawing their balances
from this country and declining to employ capital in
English bills from fear of political danger. Our
free play of public liberties forebodes to some con-
tinental capitalists, who have the happiness of
living under more or less arbitrary Governments,
dangers which no sane Englishman can perceive.

'flJi

They are unable to comprehend that sound and'
salutary constitutional changes can taki, place
without perturbations in which commerce must
necessarily suffer. Capitalists are proverbially timo-
rous, and not remarkable for political discernment,
and foreign capitalists are probably more timorous
than our own. Hence, when our political stagna-
tion begins to be ruffled a little, they draw in
their balances, abstain from holding bills of English
merchants—always in ordinary times a favourite
investment with continental bankers—and give as
little credit to our traders as possible. The same
mistrust was experienced during the late com-
mercial panic. At that time it proceeded from
financial, now from political influences. It will
be easily understood that these foolish apprehen-
sions will gradually wear off, but they have a cer-
tain effect for the moment.

It is, however, of very little consequence that
foreign capitalists should have misgivings about
English credit, if politics alone are in question.
The abundance of money is such, that whatever
sums they are enabled to draw away could hardly
raise the Late of discount one-half per cent. Sup-
posing that it were so, it would be no great tax
upon industry that bills could not be cashed on
less terms than 4 per cent. The whole effect
would be widely different from the experience of
the past summer, when ordinary woommo.
dation was not merely difficult but often
impossible to be obtained. There is a
broad interval between discredit caused by
actual financial difficulties, and that which pro-
ceeds from chimerical political apprehensions. The
maintenance of the Bank rate for more than three
months at 10 per cent. was an actual tangible
fact ; the nightmare of foreign ignorance and
timidity will vanish with the light. At all
events the question is of no great moment.
We owe so little to the Continent that if our
exports of specie are at all considerable, what-
ever may go there will rather represent loans
from our side than debts called in by foreign
creditors.

Taking all the circumstances into calculation it
may fairly be assumed that the course of the
money market will be rather towards a reduction
than an increase of the rate of discount. If
private discounters are ready to lend at
3 per cent., the Bank can scarcely continue
long to charge 37. Yet a reduction would
be of little value. If the Bank went to 3 per
cent. the private discounters would lower
their terms to 2i, and, indeed, they have taken
that price and 2& already. It is possible, of
course, that the withdrawals of bullion may con-
tinue on a scale sufficient to necessitate a rige to 4
or 5 per cent., but this event seems hardly likely.
Should it happen, the general market will follow
the course of the Bank as the rate rises, equally as
it disregards any tendency to a fall. If, to take
an extreme example, the Bank charges 10 per
cent., the open discount market stands out for at
least as much, and perhaps 11 or 12. If, on the
other hand, the official terms are only 3i per
cent., as now, private discounters are quite ready
to accept any reduction which the general state of
the money market may warrant. In this way the
effect of a high, and, nine times out of ten,
unnecessarily high, rate of discount may be
appreciated. Thus, during the late crisis, while
the Bank kept its minimum at 10 per
cent., the terms elsewhere were at least the same
—theorists will tell us, like Mr. DISRAELI, from a
deficiency of capitaL In a few weeks money was
at 5 per cent. at the Bank, and less in the open
discount market. According to the views of our
present CHANCELLOR of the EXCHEQUER, crpital
must have accumulated in the course of a month
to an enormous extent. How true this may be
can be easily determined by any man of business.
A financial contemporary informs the commer-
cial world that they do not understand the Bank
I Charter Act • that, in fact, a slight change in
• " in •
ladministration, not principle, would make it
" intelligible." So much has been written, said,
land, what is more to the purpose, experienced,
from the practical wo-king of this celebrated mea-
sure, that it seems strange there should be any mis-
understanding on the subject. The mercantile world
pretty well understand the effect of regulations that
especially deal with their own interests. They
I are quite competent to judge of the effects of a
high rate of discount—for instance, in stopping the
export of bullion or increasing the imports, and so
forth. They have the experience not merely of
last summer, but of former years besides. It
is wearisome to go over the same ground con-
tinually, while the supporters of an antiquated
system seem incapable of instruction by the logic
of facts.

OUR CONTEMPORARIES.
(THIS DAY.)