The Express.
London, England, 1866-07-09 00:00:00

HIGH WATER AT LONDON !EDGE

_—
TIM DAT —Morning, 111 b. 3m Afternoon. Ilk Sem.
To-YORROW—ltoraing, oh. Om /diatom, Oh. Dm.

LONDON, MONDAY, JULY 9.

THE past week has been fruitful of striking
events not only political but financial. The news
of the probable suspension of the war hardly a
fortnight after its outbreak has been followed by
the wildest fluctuations on all the Stock Exchanges
of Europe. In London we have seen the unexampled
rise of 15 per cent. in one day in Italian bonds.
An upward movement to this extent has never
before been known, although in the disastrous panic
of 1859 an eveugreater fall took place in some secu-
rities. If confidence is a plant of slow growth,
distrust on the other hand is quickly generated,
and is not easily cast aside. Hence, notwithstand-
ing that the increased value of public investments
shows to a certain extent a subsidence of the re-
cent panic, an equally strong proof that the dis-
turbance has not altogether gone by is afforded
by the state of the money market. If we have, at
all events, got rid of wild alarm, uneasiness still
prevails. None are disposed tolend, and all are bent
on strengthening their pecuniary position at any cost,
a course of action which is entirely fatal to credit.
And yet it requires but a slight impulse to bring
back commerce to its normal state. Unfortunately
the decision rests for the moment with those who
from want of prudent courage or ordinary ability,
or from the less worthy desire of securing momen-
tary gain, are unqualified to deal with a national
difficulty.

The Bank rate of discount remains at 10 per
cent., and there appears little probability that a
reduction will be made this week, and perhaps not
in the next. For two months, therefore, a pres-
sure will have been inflicted on commerce, the
effect of which is beginning to be thown in the
Board of Trade returns. Atiiongh the exports for
last May were considerably in excess of those in
the corresponding month of 1865, they exhibit a
marked diminution when compared with the,earlier
months of the present year. This unfavourable
movement will be more conspicuous in the future,
the effect of a panic being in these cages rather
prospective than instantaneous. Old engagements
must, of course, be fulfilled, but new enterprises
are rigidly shunned. Trade has been brought to a
comparative standstill, and our leading financiers
do little or nothing to bring about a revival, but
rather act in a contrary direction. The maintenance
of the Bank rate at a panic point is especially cal-
culated to perpetuate this want of confidence, as
everybody but the Directors is clearly able to per-
ceive. It seems strange that a fact so patent to
all should escape the notice of those who by their
official position have the best means of ascertain-
ing it. The dilemma remains, that the course of
action of the Bank is dictated either by want of
appreciation, or by the simple mercantile view of
getting out of the situation, regardless of others,
with the utmost possible profit.
The plea for not reducing the rate of discount
last week is of course the falling off in the reserve.
At the close of every quarter the Government
payments always cause a temporary decline in this
item, but it almost as speedily recovers. The
Dotes and coin that are withdrawn at these periods
return within a very short interval, and hence this
usual displacement of the circulation seldom or
never enters into the calculation on the expe-
diency of a rise or fall in the discount rate. At
the corresponding period of last year, for instance,
the minimum was as low as 3 per cent., and the
movements caused by the quarterly payments were
on a larger scale than on the present occasion. In
1864 there was nu great difference front 1866.
The following are the figures for the three years :
Decrease of Reserve. Decrease of Bullion.
1864 954,890
1865 1,429,527
1866 1,153,329

Now, the same argument that would be urged
against therelaxation of the present terms of 10 per
cent. will equally apply to an increase from 3 per
cent. in 1865, and from 6 per cent. in 1864. Yet,
in neither of these two years was it considered ne-
cessary to protect the reserve of the Bank by the
adoption of so-called restrictive measures. It
would have been felt that to do so would be
taking an unfair advantage of trade. In a similar
way to use the ordinary diminution at the end of
the quarter in the bullion and reserve as an ex-
cuse for continuing the present artificial pressure
in the money market is equally unworthy of a
national institution like the Bank.

But even this policy defeats its own object, if
the object is to increase the reserve. As long as
the distrust caused by 10 per cent. is allowed to
work its way, bankers and merchants will persist
in hoarding notes. The circulation in the hands
of the public is still about five millions in excess
of the ordinary amount, and it is hopeless to ex-
pect that any material proportion of this sum will
return to the Bank as long as confidence is prac-
tically non-existent. Let the causes which pro-
duce this abnormal desire to provide against

unknown and consequently magnified contVigensies
mem, and trade will soon expand 'es its former tit-
Zia
lume. The present state of ty 4411111/1/ 1
insuring British credit ab seer:-
quences week by week. 1, • of b -
tames, and the greater part of tlerffhlties we raiglve
from America and Australia are steadily taken for
exportation to the Continent. It is evident., how-
ever, that these importa.ase becoming inadequate
to the demand, and henCel there is reason to fear
- withdrawals from the Bank may at any
moment comment.. • The Directors probably see
that this result is imminent, but they also fail to
see that the remeiff "they adopt is precisely
etismisted to aggravate instead of to check the
evil.

OUR CONTEMPORARIES.
gals DAY. )

THZ NSW MINISTRY.

Lord Derby's explanation to-night ought, the
Tines thinks, to be simple. He hs again called upon to un-
dertake the government of the country, because a liberal

administration has failed to command the united devo-
tion of the liberal party. Nevertheless, it would be rash
to conclude that the fate of this cabinet will be that of its
predecessors, for it is much stronger than they were, and
encounters a splendid opportunity. Lord Stanley is
scarcely in office before he is called upon to exercise his
discretion under the most delicate circumstances. The
mediation of the Emperor of the French between Prussia
and Austria can scarcely be conducted without some refer-
ence to England ; and, indeed, if we are not misinformed,
the French Emperor has already expressed a wish that our
good offices may be united to his. In the gun question,
too, the new administration may distinguish themselves
but it is matter of regret that the naval department should
not be more ably filled. It is perhaps true that no govern-
ment can live upon administrative capacity alone, but the
Taws believes it will be wise to abstain from any pre-
mature plans of action, and that neither parliament nor
the country will be disposed to press the new ministry for
pledges of future legislation.
The Herald dwells on the admirable way in which the
legal patronage of the new government has been exercised.
It is even willing to forget and forgive all that has been
said about Lord Chief Justice Lsfroy, now that he has
made way for Mr. Whiteside, in whom is found so con-
spicuously the clear intellect, the firm will, the rapid per-
ception, the unwavering constancy, the strict impartiality,
which go to make up the character of a pure and perfect
judge.

Having commented on the remarkable fact that Prussia
has been allowed for many years to have • monopoly
of the breech-loading rifle, and observed that if things had
been allowed to go on • little longer the Emperor of the
French would have been obliged to submit to whatever
Prussia should ordain till some similar weapon bad been
placed in the hands of his army, the Tines observes that
his Majesty, as it is, seems to have hit on the right
moment for intervention-each of the three belli-
grrents being probably in • state of mind which
tends towards pacific councils. There is some I
reason to fear, however, that the enormous favour which
France would bestow upon Italy in handing her
over Venetia will be counterbalanced by some equally
enormous advantage given to France as an equivalent in
the form of ceded territory. There is nobody to dispute
the claim, and there is a memorable precedent in the case
of Nice and Savoy. The crucial question would be the I
resolve of Prussia to place herself in • position which would
give her an indisputable predominance over the whole of
Germany. The proportion of the power of Prussia to the
power of France will thus be considerably augmented.
Will the Emperor of the French venture to apply to this
case the principles he applied in the case of Nice and
Savoy to Italy
The Daily Ners remarks that the delay arising from the
French offer of mediation will only be mischievous if it
should encourage the Austrian government to raise pre-
tensions which cannot be admitted. Prussia naturally
declines to place the advantages it has won at the hazard
of a verbal misunderstanding, and there is nothing un-
reasonable in the conditions which the King imposes as
an indispensable preliminary to an armistice. It
is to be hoped that the precautions he is I
taking may prepare the way for a durable peace. Another
great battle would be a less misfortune to the belligerents
than such a peace as that of Zurich, which settled nothing,
and condemned the neighbouring States to keep up enor-
mous armaments at a ruinous expense, merely to delay a
solution which everybody foresaw to be inevitable. The
Times would have the overtures of the Emperor Napoleon
supported by this country ; but a neutral government
should remember in what position it would be placed by
either the acceptance or the referral of what is practically •
summons to the successful belligerent to cease from follow-
ing up his advantage. What is taking place in Germany
is a great national revolution ; and it will be most hazard-
ous to attempt to check its development. The Emperor
of the French may desire to make the interest of France
the measure of the world's progress, but there is no reason
why we should join in his intervention and entangle our-
selves in the schemes of which the cession of Venetia to
France forms a part. No elaborate intricacy of devices
can obscure the fact that the mediation which gives, and
is designed to give, the use of a new army to an exhausted
belligerent, and snatches the prize of war from the victor,
lis for all practical purposes an alliance. Austria seeks by
I the very act of concession to defraud Prussia and degrade
Italy. The Kings of Saxony and Hanover might as well
have made their dominions over to the Emperor of Russia
on the outbreak of war, as Austria give Venetia to France.
Whatever others may do we ought not to be parties to a
policy so disingenuous and full of danger.
The Morning Putt comes to the conclusion that if the
Prussian minister can be content with a great gain of
power in North Germany the pending negotiations will
probably terminate satisfactorily. But if this will not
content him, then hostilities will be resumed, but on a
still greater scale than before. In the latter event Prussia
must be prepared to encounter the hostility of every state
which desires to preserve the European balance of power.

The Herald assumes that Prussia can retain her eon-
quests only on condition of ceding a large slice of them to
Franee, and if she does this Austria, as soon as she
had renewed her army, and provided them with a rifle
equal to the needle-gun, might renew the contest with the
hearts of all Germans on her side. The Herald hints that
in Italy the Emperor Napoleon may make the freedom of
Venetia the price of the independence of Naples.
The Standard continues to manifest hostility to Italy,
characterising her demand for • portion of the Quadri-
lateral as impudent, and describing her as a defeated
enemy.

The Telegraph points out that, abandoning the very
province for which he has fought two bloody wars, Francis
Joseph takes a spiteful pleasure in wounding where he
cannot strike. Smitten with judicial blindness to the very
last, he will not see that, as he must give up the prise,
mere common sense would teach him to do so with • good
grace, and to make ► friend of a sensitive but gallant foe.
The Star does not expect any demand for Italian annexa-
tions, though the Emperor possibly may demur to an
aggrandisement of Prussia, whether sanctioned by the
mechanism of a German parliament or any other machi-
nery, unless on condition that France shall receive some
territorial compensation from Germany. The Star much
doubts, however, whether the Emperor, whatever his in-
clinings, means to go to war in such a cause.