The Express.
London, England, 1861-01-07 00:00:00

L,G2il)O V, DAY, JAN. 7.

T •F. unfavourable predictions which have been
ear eased in many quarters during the last few
months respecting the course of the money market
unfortunately, been already to a consider-
abl • extent realised. The rate of discount has
nser to 6 per oent.—an unusually high point in
this country ; the market during the last two or
three weeks has been characterised by considerable
stringency ; and there has been a heavy draught
upon the resources of the Bank of England.
W, we see the private securities iu that este-
bleiliment—which represent chiefly loans and dis-
counts—rise to the extent of no less than
2,3!1,1111. within a single week, we may be sore
Vitt the state of the money market is such
as to deserve close study. Such a move-
mm+ suggests two conclusions—the first is, that
the demand on the part of the commercial public
is eetraordinanly pressing ; and the second, that,
from some cause, the other bankers and money
dealers are either unable or unwilling to afford the
accenimodation required, the result being that the
great bulk of the current business is turned upon
tile• (tank of England. From various indications
it I i to be inferred that uuvrillingumi rather than
is•ibiluty is, in the present instance, the primary
cane, ; and this unwillingness is based upon
eautieu. It is believed that at few former
periods have the various banks and 6nan-
chit establishments been better provided with
reams-ea, or better prepared to sustain any shock
that may arise, no matter from what cause or
quarter. The warnings sent forth to the financial
world during the last few months have, indeed,
been numerous and unmistakable ; and due ad-
vantage has been ta'seii of them. But even now
dna desire to observe extreme caution indisposes
nisey dealers in money from carrying ou business
with anything like their usual freedom. They see
that the market is tight, and that some disquietude
pica ails, which might soon ripen into a very un-
settled condition. If they lend freely now, they
see little probability of being able to supply them-
ealvee again, except at a considerable sacrifice, in
the• •ant of pressure arising. Moreover, it is the
buain.•aa of every dealer in money to get the best
peeehle price for his commodity—in fact, to sell it
ktgely at the very "top of the market ;" and, as
we one is bold enough to assert that there is no
Armee at present of the rate of money
wising further, holders cannot be blamed
for acting) upon what is unquestionably a
legitimate commercial principle. For these ma-
ss bankers' reserves are held with se unusual
degree of tightness. The instinct of competition
amongst this class of traders is for the moment to
a meat extent in abeyance. They are content to
let the Bank of England carry on an immense
business. This they can the better afford to do
because at times like the present the great mass of
the community are too glad of obtaining accom-
sedation to care about scrutinising the terms very
narrowly. Closener in this respect may be pur-
sued with safety when the market is settled, but,
pest now, the great body of traders who are not
customers of the Banl of England are perfectly
willing to pay a considerable advance upon the
Bank rate. Probably they tare no worse than
they would do had they a discount account with
that eetabilhment, for it must be borne in mind
that six per cent. is at present the init.:mum, not
the M 0.61.114101, rate there. The Beak of England,
too, like all other prudent bankers, will not ac-
commodate any customer beyond the extent which
they consider commensurate, not only with his
means, but with their own means. The Bank
of England of course, vast though their resources
are, cannot accommodate everybody. The effect is,
that although the other money dealers are at pre-
sent doing a relatively diminished business, it may
be a more profitable one than usual, inasmuch as
there may be a larger margin than ordinary
between the price which they pay for money and
that at which they lend it out. They can, there-
fore, 'I
as already pointed out, afford to retain what
may be termed an expectant attitude whilst the
Bank of England are extraordinarily busy.
This unusual diversion of business to the Bank
of England, however, promises to keep the market
comparatively tight for an indefinite period—as
long, indeed, as the existing causes of disturbance
remain in force. Its effect is to put the commer-
cial community deeply in the books of the Bank of
England; and as that institution has an unusual
degree of control over the market at =settled
times, it is easy to foresee what will happen. At
such periods the kind of monopoly en-
joyed by the flank—we use the term in no
invidious sense, but chiefly with reference to its
monopoly of the use of the public balanom—
stands out in stronger relief. The monopolist
establishment has really used a large portion of
the Treasury deposits in loans to the commercial
public ; but it has only used them for a safe period,
that is to say, until the 9th of January, when the
div:deuds must be paid. Consequently, on the
vcryday when the Bank will be called upon to shovel
out some millions of money as dividends, they will
rake some millions of this money beck again. The
result will be that the general market will derive
mach less than the aguel degree of relief from the
J-invary dividend payments. Bankers and com-
mercial houses n.un fulfil their obligations to the
Bank of England, and, when they have done that,
they will find their reserves brought down again
nearly to the amount which they consider it pru-
deet to retain permanently. The way will then
be prepared for renewed applications by the public
to the Bank. A lthoneka the dishiest:me of the
moues market arises primarily fa re, foreign causes,