The Express.
London, England, 1857-02-21 00:00:00

the Levant, France joins Ramis, and we lapse into
the unenlightened and unwise policy of Austria. If
we persevere, we shall reap the results in becoming
the byword with every Eastern Christian. Identified
with all that is unpopular and retrograde, as well as
tyrannical, we shall take that place which we have
hitherto considered Runian, that of being the he of
all progress, and we shall leave to Ramis the ad-
vantage of coming forward as the pretended cham-
pion of nationality and progress.

Could we have embraced the Austrian alliance on
the condition of making our own idiom prevail, and
of inducing Austria to adopt our enlightened views,
instead of ourselves blindly taking up her • illiberal
ones, then indeed we might have made something
good out of a bad alliance. But uit is, England
seems tied at the tail of all that is most retrograde in
Europe, and we are dragged thereby through the
mire, to our present disgrace and, it is to be feared,
to our final discomfiture.

Wnaz the inquiry into the Bank Charter
Act is occupying so large a share of public atten-
tion in England, a discussion--searcely lees interest-
ing to us, and not less animated—is in progress on
the other aide of the Channel, with respect to the
modifications to be adopted in the oonotitntion
of the Bank of France. Gamed the proposi-
tions put forth are of a most dangerous and
visionary character, but all the disputants agree
se to the necessity of augmenting the capi-
tal, which now stands at 3,830,0001., a ram utterly
disproportioned to the vast and growing extent of
the Bank's transactions, its circulation and deposits.
And although mach divergency of opinion exists as
to the extent of the increase desirable, some asking
only that it should be doubled, others suggesting a
capital of 12,000,0001., it is chiefly respecting the
employment of this new capital that there is any
difference of opinion.
In considering this question, it is essential that
our readers should bear in mind the radical distinc-
tion which exists between the note circulation of the
Bank of England and that of the Bank of France.
The notes of the former are either bullion notes, that
is to say, notes issued in exchange for gold purchased
by the Bank, or they are security notes, represent-
ing the Government debt and certain other securities
lodged in the issue department. But the notes of
the Bank of France essentially represent commercial
paper, and commercial paper only, for the issues
. .

against deposits ofatock and shares most be considered
as temporary. They are represented by bills dis-
counted and lying in the portfolio of the Bank, and
the capital of the Bank of France, therefore, I the
patentee fund to which the holders of notes must
look, u a resoeree in the event of the different seen-
rities against which they are breed not being duly
met. But u all these notes are payable on demand,
the Bank retains such an amount of bullion in its
coffers as it finds by experience to be necessary, and
when, as has occurred recently, the demand for
cash is unusually active, it has to keep up that stock
of bullion at a considerable expense by indirect pur-
chases in the market. Nevertheless, the theory of
the Bank of France note circulation is this, that as
the bills in its possession arrive at maturity, the
notes are ipso facto cancelled, returning to its hands!,
in payment of the bills, so that within three'
months—that being the limit of its discounts—
its circulation could at any time be extin-
guished, did it cease to discount bills or make
advances. The importance of the capital being kept
at such an amount as shall be proportionate to its
discounts, and therefore to its note issue, I. obvious;
but while the latter has enormously increased with
the rapid growth of commerce in France, the former
has remained stationary since 1806. It I. true that
to the capital of 3,660,0001., the greater portion of
which is lent to the State, we should add the reserve
fund of 619,0001. invested in the funds ; but that part
of the capital lent to the State is not available, the
2,200,0001. still owing, being repayable in amounts of
200,000!. per annum ; so that the whole disposable
capital of the Bank may be set down as about
2,000,000!. invested in the funds.

With this amount of available reserve, the Bank
has in circulation about 23,000,0001, of notes, and its
discounts have increased from 64,758,0001., in 1846, to
130,480,0001., in 1835. The power of its notes to
circulate at par, and to perform the office of money,
depends of coarse on tho confidence reposed in
them; for the ratio of trillion held to the notes
issued is disregarded, the note, in circulation, in 18331
having been at one period 23,800,0001., while the
stock of bullion was only 6,500,0001. Seeing, there-
fore, the probability of an increased demand for dis-
counts, and a consequent extension of circulation,
the proposed increase of the capital would appear to
be reasonable. Now the principal suggestions as to
the employment of this new capital arc there : First,
that it should be invested in public securities ;
secondly, that it should constitute a fund for
making advances on stocks and railway shares;
and, thirdly, that it should be lent to the
Government, and employed in absorbing a por-
tion of the floating debt. The advocates of the first
and last of these mbssures anticipate that their adop-
tion would immediately strengthen the prices of the
funds. Those who advocate the second plan believe
that a wholesome stimulus would be given to the
share market by relieving it of a large amount of
floating securities. All commit the singular over-
sight of omitting to take into consideration the fact
that the money which is to form the increased capital
must either be withdrawn from its present employ-
ment on loan, or must be procured by realising stocks
and shares in which it is now invested. The addition
to the capital of the Bank will make no addition to
the floating capital of the country, on which the
price of stocks and shares is chiefly dependent.
To the second plan we have very strong objec-
tions. The existence of a permanent demand for ad-
vances on the shares of industrial companies is a di-
rect proof that they have been set on foot to a
greater extent than the surplus capital can justify.
It is no port of the duty of an institution like
the Bank of France to bolster up a surcharged market ;
nor is a bank of issue justified in issuing its notes
payable on demand, against securities which have
no fixed date of repayment, except so far as the
reimbursement of its advances may depend upon the
solvency of the borrower. For as a general rule
that solvency is contingent on the convertibility of
the shares, &e., pledged, and in a time of panic this
is precisely the class of securities which immediately
becomes unsaleable. Such operations afford a legiti-
mate employment for certain kinds of capital, but
not for the capital of a Bank ; and if it be desirable
to conduct them on a large scale, let a special com-
pany be founded for that purpose.
To the investment of the proposed additional
capital in government securities we see no ob-
jection, but we cannot see that each an opera-
tion would—especially at present —materially
strengthen the price of the funds. It would take a
given amount of stock off the market, but it would
at the same time take away a v....spending amount
of Seating capital, which the current rate of interest
shows to be somewhat rare, and one operation would
counterbalance the other. By lending the new
capital to the State, a precisely similar result would
be obtained; and the recent notice in the NoniSerr