The Express.
London, England, 1861-11-25 00:00:00

THE EXPRESS, MONDAY EVENING, NOVEMBER 25, 1861.

for many years. Bankers in the cmiatry, accord-
ingly, drew away the liberal balances which they
ordinarily leave at the disposal of their London
correspondents, or which they otherwise employ in
the metropolis. As the provn* increased they
went further, and instead of lending money in
London they borrowed to a considerable amount
in the metropolitan market, which was thus
quickly made to sympathise with the unfavourable
position of the staple interests of the country. It
IVIM to the foreign outlay for food, combined with
this pressure upon bankers, particularly in
the provinces, that the extraordinarily high value
of money which prevailed during the first seven
months of the present year was almost entirely
due.

We rejoice to perceive by the financial accounts
from most parts of the country that the effect of
these unpropitious circumstances is at last com-
pletely passing away. The rate of discount began
to break down early in August, directly the public
mind had received the confident assurance of the
satisfactory state of the crops ; but it required
from mouths to relieve the country banks 11
some the pressure to which they had been
subjected. Whilst the harvest was being got in,
the demands upon them were heavier than before.
But a decided change has taken place during the
last two months. The agricultural interest has been
again placed in funds. The grain crops wore
stored in such excellent condition that they were
immediately available for market. A very impor- '
taut effect was likewise produced by the immense
purchases of grain which were made in this country
for France, and partly on account of the French
Government. Foreign gold was sown broadcast
over whole districts. At a season when, if the
harvest is at all good, prices in the corn markets
ordinarily fall, they rose, under the force of the
French demand. At a time, moreover, when
there is not usually a free sale for the new sea-''
eon's produce, unless at a sacrifice, the markets
suddenly showed an almost unlimited capa-
city of isheorptieu. Without stopping to
inquire here into the question of the
probability of the country being required hereafter
to replace, by means of imports from abroad, the
immense quantity of food which it has parted with
out of a not too abundant stock, it will suffice to
remark that farmers quickly began to raise their
balances at their bankers to the accustomed point.
The country bankers, in their turn, paid off the
loans they had obtained, and poured their sur-
plus into the London market, causing the rate of
discount to descend to its present exceptional point,
and aggravating the glut in Lombard-street. A
little while ago metropolitan bankers were some-
what pushed to accommodate their coun-
try correspondents with money; their dif-
ficulty now is to accommodate them by
taking in the large sums they offer. In
many instances it has become impossible to do so,
and the country beaker is driven to look to the
Stock Exchange for securities wherein to employ
his funds.

Movements of this kind are full of instruction,
marking, as they do, the close relations which
mutually exist between the mercantile, agricultural,
and financial interests of the kingdom, and the
force with which the welfare or distress of one re-
acts upon the others. It is scarcely possible to
overrate the important* of the improvement now
in progress in the general condition of the country.
The eutini home trade of the kingdom must sooner
or later feel the benefit. When the agricultural
community are poor or under a cloud, every
country shopkeeper suffers, whether he deal iu
ironmongery, drapery, silks, lace, hosiery, provi-
nous, or aught else ; and when the retail trade
slackens, the wholesale trade immediately re-
sponds ; the manufacturer misses his accustomed
orders, and looms and workpeople stand idle
together. Money is now circulating more freely
in the provinces, and commodities which had been
dispensed with at a time of difficulty are once
more entering into consumption. The purchase
of the long-promised new silk dress for the
farmer's wife us but the type of the thawing of a
pent-up expenditure, the want of which has been
felt in the gigantic warehouses in Cheapsido and
round St. Paula, as well as throughout the manu-
facturing districts. The reviving prosperity of
the farming clams, and the stimulus which it has
given to the home trade generally, are the
more gratifying when we consider the ex-
ceptional distress which is overtaking the cotton
manufacturing interest through the high price and
scarcity of the raw material. It is some sands°.
tion to find that the depression observable in this
important branch does not extend, in anything like
an equal degree, to other departments of industry,
notwithstanding the trials to which the home trade
has latterly been subjected.
During the last few weeks large investments
have been made in government and other securi-
ties by some of the London joint-stock banks, and
it is chiefly through these operations that the par-
tial recovery in the prices of the funds has or
curred. It may be said, perhaps, that as long as
they invest in safe securities, the course pursued
1 by the banks is not open to objection. They
are naturally desirous of employing in remunera-
tive securities their surplus funds and interest-
bearing deposits. But the system has its incon-
venient side. It is not safe for banks to be virtually
speculating in public; securities. The balance-
sheets put forward by one or two of them—parti-
cularly the well-accredited establishment known as
the London Joint Stock Bank—have shown occa-
sionally some heavy loose attributed to " depre-
" elation of securities." This has proceeded to
such an extent that it has become requisite to
draw upon the reserve fund in order to keep up
the dividend. Bankers labour under this difficulty,
that a period when money is thrown out of trade
and lies idle on their hands, and when the rate of
discount is consequently low, is usually a period
when the prices of public securities range high.
It frequently happens therefore that bankers
invest in such securities at prices which do not
allow an adequate margin for the " chapter of
" accidents," particularly when it is borne in mind
that they will probably be desirous of withdrawing
their money from these investments just at the
time when trade becomes more active, when the
rate of interest rises again, and when prices in the
Stuck Exchange decline. Where a banker has
control of money ou which he allows no interest,
he is not under the necessity of entering the stock
market which is imposed on ono who has interest-
bearing deposits to employ. The latter is pre-
' eminently the case of the London joint-stock
banks. We have always regarded it as ono of the
weak points in the practice of these highly
esteemed establishments that they allow too high
a rate for deposits. It may be said, perhaps,
that the rate now offered by them is not high,
being only 2 per cent. But 2 per cent is high in
relation to the present rate of discount, which is
only 2/ on the best commercial bills. The mar-
giu between the price paid by the banks for de-
posits and that at which they can employ them is
now, and is almost always, insufficient. The con-
sequence is that, as upon that narrow margin
depends the tc7liinulation of the suns required for
the sometimes overstrained dividends which

the shareholders have been accustomed to ex-
pect, the banks cannot afford to keep their
funds lying idle. They err, in fact, in two re-
spects ; firstly in paying such high dividends, and
in making the accumulation of large reserved
funds a secondary consideration ; and secondly,
in giving a rate for money which makes it too
costly for thorn to hold it even for a short
time unemployed. It would seem very easy
for the banks and other financial establish-
ments to come to a common agreement to
modify the rate allowed for deposit; which is
now fixed by tacit consent at 1 per cent. below
the Bank of England minimum rate of discount.
When the directors of the Bank of England make
up their minds (as they will do, sooner or later)
to discontinue fixing the rate of discount at their
weekly court, the Joint Stock Banks will have
to agree to accept some other standard. They
might just as well do so at once, and in a
manner which, by establishing • more moderate
rate of interest on deposits in relation to the
current rate of discount, and by diminishing the
present competition for deposits, shall give them
freer scope for independent action, enable them
more deliberately to scrutinise the securities
offered to them, and remove the necessity now felt
by them of putting their customers' money in in-
vestments subject occasionally to heavy fluctua-
tions. We are convinced that the modification of
the arrangements of the joint-stock banks in
these points would promote, in the long run, both
their own interests and those of the public.
There has been quite a pause in the specula-
tion in the Liverpool cotton market during the
put week. l'rices are " irregular," which means
that the market, feeling that it is in a state of
extreme tension, hesitates. Prices are, in fact,
rather lower, and the sales have been limited, par-
ticularly during the last two or three days.
Holders in some instances have betrayed • desire
to sell, but produce, like every other article, ex-
cept, perhaps, Consols, is at all times more easily
bought than sold ; and at the present exorbitant
prices of cotton, sales of magnitude could not be
effected, unless at a great reduction. It is worthy
of remark that the stock of all kinds of cotton at
Liverpool is now computed to be rather larger
than at the corresponding period of last year,
being 684,000 bales, against 576,440 iu 1860.
The difference in price between the two periods
may be gathered from the fact that " middling
Orleans" is now quoted 11Sd. per lb. ; at this
time last year it was a fraction less than 7d.

LATEST INTELLLUENCE.

it is evident that both vowels suffered the penalty
of their rashness in endeavouring to infringe the blockade.
The French war vessel Peony made one of the first division
of the imperial fleet despatched to the North American
waters immediately after the breaking out of the rebellion
in the United States. Major-General Halleck, who lately
arrived from California, has been appointed to the
command of the Military Department of the West, in
place of General Fremont, and General Buell, of Ohio, an
efficient army officer, has been put in charge of Kentucky in
place of General Sherman, resigned. Those two men are
in tho prime of life—about 40 years of age—and their an-
tecedents warrant the expectation that there will he no
more mistakes in the western section. A despatch, dated
yesterday, from Gallipoli', Ohio, states the town of
Guyandotti, on the Virginian bank of the Ohio
river, was attacked on Sunday night by 600 rebels,
and that out of 150 Union troops stationed there, 100 were
killed or taken prisoners. It was said that the rebels, both
male and female, fired on our troops from the houses. Later
news, however, states that only eight of our men were
killed, but that a large number were taken prisoners or
wounded. It ►ppars that the rebel portion of the inhabi-
tants were aware of the intended attack, and had prepared
a supper for the rebel cavalry on their arrival. Colonel
Zeigler, with the Fifth Virginia Regiment, arrived soon
after the rebels left and set fire to the town, the greater
pert of which has been reduced to ashes.

Amounts by mail confirm the defeat of General
Williams' men by General Nelson's Federal forces
at Pikestown, the capital of Pike county, Ken-
tucky. The battle lasted the Bth and 9th. The
victory was complete. Generals Williams and
Howes are among the prisoners. The secessionists
lost 400 killed and 1,000 prisoners.
The President's Message to Congress was in
course of preparation.
The World's Washington despatch says that
General M'Clellan has re-organised the spy
department, and that he now receives reliable
information of the enemy's strength and move-
ments.

The same journal states that the President will
not pardon Captain Gordon, the slaver.
The special correspondent of the New York Herald,
at Washington, says :
The government has issued p►rmits to parties in Rhode
Inland to trade with loyalists along our southern coast.
Vessels are now fitting out for that purpose, loaded with
supplies of various kinds, among which is salt, clothing, and
other articles of prime necessity, which, it is expected,
will be at once exchanged for cotton. This is a new feature in
government policy and war, and may lead to important results-
SenatorSimmon a of Rhode Island,it is said, has been the prin-
cipal mover in this matter. It may be, however, that these
vessels, and others now fitting out will also follow the ex-
pedition, and as soon as an opening is made by the expedi-
tion, and a permanent footing obtained in South Carolina
or Georgia, cargoes of cotton will be at once shipped to
Liverpool and other points. This is very important, and
has the full sanction of the government.

The New York Times makes the following remarks
on the above scheme :
The license of the government to northern shippers to
trade in salt and shoes, &c., with loyal citizens of the
Southern States, spoken of by a morning paper, is likely to
teat the honesty of the parties so engaged. Suppose, when
the vessels get into southern waters, a rebel citizen offers a
better price for the cargo than the loyalist, what will hap-
pen? This query will probably dispose of the whole ques-
tion whether such licenses are to be issued or not.

A Philadelphia despatch states that the steamer
Bermuda ran the blockade of Savannah on the
night of the 2nd of November. She was loaded
with 2,000 bales of cotton for Liverpool.
Advices from the frigate Niagara to the 24th of
October say nothing about the alleged capture of
the privateer Sumter.
It is stated that the Custom-house in Norfolk,
Virginia, was burnt on the 10th, with a large
amount of stores.

The British schooner Addeo, which brought a
cargo of naval stores out of Wilminiton, North
Carolina, and put into Newport, Rhode laLsnd,
in stress, had been condemned, together with
her cargo.
San Francisco advice' by telegraph are to the
11th of November. The market is dull. Pig
iron was scarce. The steamer Sonora, from
Panama, left ou 11th instant, with 970,000 dollars
in treasure.