The Northern Daily Times.
Liverpool, Merseyside, England, 1856-12-18 00:00:00

PROSPECTS OF THE MONEY MARKET.

The prospects of the money market are decidedly
brightening. The position of the Bank of England is
daily becoming stronger; and the commercial demand
for money, though active, is merely that usually ob-
served at the close of the year. The impression is gain-
ing ground aniongst dealers in money, not merely that
the highest point has been reached, but that the existing
in
evitable
result cannot be maintained mach longer, An
result of this change in public opinion is an increased
desire on the part of capitalists, small and great, to
employ their money forthwith, lest they should lose the
e
chances of the market. Thus long-dated commercial
paper,
uount which
counted,
only a
nlesson
very
yew weeks agoonerousterms,conuolnot
wd
combmeadnidss-
in many quarters a preference over bills of shorter date.
The evident tendency of this state of things is a further
decline in the value of money. So long as distrust pre-
vails, coupled with uncertainty as to how high the rates
of discount may rise, many moneyed people refuse to
lend at all, except under such conditions as ensure them
the power of immediately withdrawing their funds.
They calculate, shrewdly enough, that they will secure
a highly advantageous position in the market by keeping
their capital at command, at a time when the demands
of borrowers are urgent and general. There are many
who make a practice, when their judgment tells them that
a period of monetary stringency is at band, of turning
into cash every description of joint stock and commercial
security held by them, and awaiting the course of
events. This wary policy doubtless tends to aggra-
vate the pressure so long as it lasts ; but directly
symtoms of a reaction become apparent, the downward
movement of the rates is greatly accelerated, by the
eagerness to lend shown by parties in this position. This
seems to be the prominent feature of the market at the
present moment, and we shall be surprised if it does not
quickly lead to its natural result—a further decline in
the rates of interest. An examination of the position
of the Bank of England will fully confirm the more
cheerful view now prevalent. Comparing the latest re-
turn with that for the week ending the Ist November,
when the Bank terms were 6 per cent, for 60 days, and
7 per cent. for 95 days' bills, a sensible improvement is
presented. The aggregate of deposits—Treasury and
" other"—exhibits an increase of £541,472 ; whilst the
total securities held in the banking department—Govern-
ment and the " other"—show the important decline of
1,760,705/. It is a favourable sign that 1,663,7311. of
this latter sum is in the "other" securities, the total of
which is now reduced to 17,389,7151., against 19,053,4461.
on the Ist Nov. The falling off in this item becomes the
more encouraging when we recall to mind the advanced
period of the financial quarter, and also the fact that the
Bank has resumed advances upon Government stock
during the shutting of the transfer books. Adding
together the two sums above enumerated, viz., 541,4721,
increase in deposits, and 1,760,705/. decrease in securities
we have a total of 2,302,177/., which prima facie may be
regarded as indicating a positive increase in the Bank's
means. Referring to the reserve of unemployed notes, we
find an addition nearly equal to this sum, viz., 2,207,7151.,
the reserve standing now at the satisfactory figure of
5,151,3801. against 2,943,665/. on the Ist ult. The
increase in the coin and bullion is also important, amount-
ing to 889,8711. It is symptomatic of the director's con-
fidence in the gradual subsidence of the recent pressure
that the last return, extending to the 6th inst., presents a
feature which has not been witnessed for many weeks,
viz., an increase of 186,000/. in the Government securities.
It is natural to Infer that this sum represents Government
stock pledged by the Bank in the Stock Exchange at the
commencement of the late monetary derangement,and now
withdrawn. Had the Bank left this stock in the market,
it would have been compelled at the Stock Exchange
monthly settlement of the 4th inst. to pay some 6 or 7 per
cent. per annum interest for the accommodation ; and as
raised
d
as
ai e
natural
ttouonrr could
as
i theco
na not e
consequence.
nictmes
.pwl
Future
withdrawal
ahr
wei higher et
returns
fromr rnast rates
theltlhe
probablymmn
aorkeeyt
exhibit further additions under the head of Government
securities, as the position of the institution becomes
stronger, and its available means increase. In several
well informed quarters we even hear the suspicion
expressed that the Bank has recently purchased stock
in the open market. We are unwilling to impute
blame unless upon very positive evidence, and will
therefore confine ourselves for the present to hinting
that the public would view with deep disapproba-
tion any undue tampering with the stock markets.—
The Bank could not be permitted to use its information
to cause changes in the funds for it own profit. Were a
system of this kind to be connived at, we might soon
be subjected to the scandal of seeing the Bank buying
or selling in the market, to the loss of less favoured
parties, and backing up its operations by alterations in
the rates of discount. We must refuse to believe that
the directors will attempt to employ in so questionable
a manner funds which would be inuch more legitimately
devoted to supplying the wants of commerce. Whilst
the Bank of England has thus materially strengthened
its position, the Bank of France has also made progress
in the same satisfaetory direction. The increase, shown
in the last return, of £1,388,000 in the coin and bullion,
accompanied by a decline of nearly half a million sterling
in the floating circulation, proves that the immediate
difficulties of the bullion drain have been to a consi-
derable extent surmounted, and warrants the hope of a
sounder state of the money market, But, above all,
confidence must be inspired by the wholesome
rigour with which the Bank has dealt with the
Bourse. On the 12th of June last the aggregate
of advances on Rentes and railway securities
was no less than £6,970,800. There has since
been a continual reduction, and the total is now only
£2,357,100. In thus adopting, regardless of' the appli-
cations, of the Bourse, the advice tendered to it by all
impartial observers, the Bank of France bas shown more
independence of action than most parties had looked for.
The restrictive process has now been carried so far as to
produce the expected favourable results, and the time
seems to have arrived when some relaxation may be
looked for. In so far as the Bourse is concerned, the
directors will do well to keep the reins tight ; but French
trade requires assistance, and most persons would rejoice
were measures in this sense to be immediately adopted,
The Bank of France seems to be waiting for the Bank of
England to move first; and indeed we see no valid
reason why the extraordinarily high rate of 64 per cent.
should be longer maintained here. In this wealthy
country, the best supplied with capital in the world,
seven and even six per cent. is an unnaturally high
value for money to bear; and experience proves that a
very exceptional state of things is required to maintain
such extreme terms. The more re-assuring aspect of
monetary affairs in France, despite the violent fluctua-
tions of the Bourse which arise rather from the monster
operations of individual speculators, than from
withany
legitimate action ; the more favourable movement of
the Chinese exchanges, which has somewhat checked the
flow of silver to that quarter; and the recent fall in the
price of silver in Loudon, form satisfactory features.
Doubtless large quantities of silver will continue to be
remitted by each mail to the East, and,
other influences, will tend to diffuse our fresh supplies of
gold over Europe, and to prevent money from becom-
ing cheap. But, we repeat, the existing high rates
cannot be much longer maintained, and a reduction may
now be looked for from week to week.—Daily News of
Yesterday.

LIVERPOOL CHEMISTS' ASSOCIATION.—A reference to our
advertising columns will shoW that a conversszione, &c., of
this society takes place this evening, which will
.be well
worthy of attending, as the proceedings will be varied and
interesting.