The Express.
London, England, 1857-11-04 00:00:00

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LONDON, IVEDNESDA7, NOVEMBER 1.

Tyr recent important rise in the teed*, in face of
a continued and severe monetary me m% has eli-
cited exclamations of eurpriae, even from pencils

who are generally too well informed to fall into the •
error of underrating the extent of the national re-
sources. These persons argued that the price of
Consols most necessarily be regulated to a consider-
able extent by the value of money, and that the
supply of stock which would be thrown upon the
market by bankers and other parties in absolute
need of money would infallibly keep the price dram
to a point lower than any witnessed of late
years. The result shows how shortsighted were
these views. The public hare availed themselves
of the recent fall to invest to such an extent
as nearly to clear the market of the supply of
stock afloat. In addition, they have absorbed
large quantities of Government stock deposited
in the hands of the Stock Exchange dealers
as security for loans obtained at low rates by
bankers, who themselves find ready employment for
the money at high rater. Through the support ac-
corded to the market by investors, bankers and
other dealers in money are at present under no ne-
cessity of selling their stock, since they can, if they
like, borrow money upon it at a very moderate rate—
d course reserving to themselves the power of ulti-
mately selling either the whole or part of their
stock, as they may find most convenient. During
the entire duration of the loan, be it remembered, the
banker who borrows upon stock remains entitled to
the accruing dividend. We will suppose the ease of
a banker who borrows at 3 per cent. on Consols for
a month, and employs the money at 8 per cent. in
securities maturing in about the same period—a
double operation which has been perfectly practi-
cable during the last fortnight, and which has been
actually carried out in numerous instances. On the
money employed the banker will receive at the
rate of 11 per cent. per annum—viz., 8 per cent. plus
3 per cent, per annum dividend. On the other hand,
he pays 5 per cent. for the loan of the money raised
on his stock ; so that the result of the operation is
his deriving a return at the rate of 6 per cent. per
annum free his Consols, instead of 3 per cent.; and
at the end of the period for which the loan was
made he may either renew it, if the general condi-
tion of the market remain the same, or he may sell
the stock outright, or pay off the loan and keep the
stock. In the latter ease, he of course re-
semen his original position. Should the public
continue to invest as eagerly as hitherto, the
position of the banker who holds stock might
become still more advantageous, for he might be
enabled to borrow money upon his stock at a still
lower rate. The fact that advantages like these are
occasionally presented to holders of stock mists hs
explaining the policy of bankers in keeping a eon-
inderable reserve of money in this description of se-
curity. The dividend, it is true, is only 3 per cent.
per annum, but the security can at all time, even
the most extraordinary, be instantly converted into
money : and if monetary pressure or political con-
vslaiot" is supervene, the wary banker has only to
bide his time, and to refuse to sell at a sacrifice, in
the midst of the first rapid fall in the value of all
classes of securities; for be may rely almost with cer-
tainty that the delay of a few weeks will induce such
an absorption of stock at the reduced prices by the
public, that the cry of the Stock Exchange dealers
will Infer more for stock than fur money. That is
the time when a banker may step in, as a borrower
of money upon stock, and find himself in a position
of real advantage at the very moment of need. And
here we may remark that similar advantages are
presented, though of course in less degree, to every
holder of Government stock to any considerable
amount.

Our principal object in drawing attention to these
(as they may almost be termed) minutia. of the
Stock Exchange and of the money market, is
to point out how readily the coaceeled but
inexhaustible spriag of the national wealth gushes
forth from the sinshaken rock of public credit at
the touch of necessity. During the last two ar three
weeks the fall in the funds has led to a species of
invasion of the City by Menton. Brokers in geed
practice have been seen entering the Stock Ex-
change with long lists of names for the owners el
which investments are to be made, the anscants 'say-
ing in each case from fifty pounds to thousands. The
clam of small stockholder, must undoubtedly be
rapidly increasing, for of late year, there has bees •
constant demand for stock—not for speculation, se
in France, but for lon,i fide investment—on the
part of what we have beard called the
lower order of the middle clue." Humble trader
men, either in or retired from business—men whose
homely appearance would sever he associated in the
mind of en observer with the remotest idea of Con-

sols—trudge into the City now-a-days and, to the
amusement of the broken, ask " what they will
" have to give for • quarter or halt a hundred of
" Consols," as if the subject of conversation were I
coals or groceries. The tenacity of these investors
is proverbial ; the stock, once bought, reTET re ap-
pears in the market until the death of one holder
induces the necessity of its formal transfer
to another equally tensciour. It is through invest-
ments of this description that money is drawn,
in times of national pressure, from the old stocking
or the broken tea-pot, and brought again to the
light of day and into use. In this way, a great
rally in the price of Consols may be readily otea-
aimed. at a time when the pressure brought to best
upon our money market, through foreign influence
may be utterly unrelieved. As we have already In-
.