Northern Times.
Liverpool, Merseyside, England, 1857-11-09 00:00:00

THE RISE IN THE B 4.NK RATE OF DISCOUNT.

The knowledge for some days past that, no--
withstandieg the Egli rate to which the Bank had
raised the rate of discount, bullion has still been
leaving this count!), both fur the Continent and
the United States; the somewhat less favourable
aceoanta which the lest arrivals from America
have brought ; the feet that in some places on the
Continent, d especially at Ilinaburgb, the rate
of discount had reached nine per cent. ; and the
certainty that at lust for some time to tome the
drain of silver to the East, producing indirectly a
demand for gold here, wcu:d continue unabated,
had prepared the public for the further. rise of one
per cent. which was made on Thursday in the
minimum rate of Bank discount ; and which
now stands at nine per cent. The highest
rate ever before known in modern times was eight
per cent., at which it stood for four weeks, from the
23rd of October, 1847, until the 30th of November,
when it was reduced to swan per cent. In that
year, through the whole"of •the months of August
and September, and up to the middle of October,
the ra'c of disco Int was only 5- per cent ; and
when it is remembered how much more severe was
he pressure at that time than now, and how much
more detrimental and destructive to pri va te interests,
we havea striking example of the fact that it is not
a high rate of interest that creates panics and
distrust, though it may arise out of them. There
is no more reas m why a rate of discount of nine r
cent. should derange a trade otherwise sound,
however it may for the time somewhat diminish
its profits, than there is why a very high price of
grain for a a ason should ruin a nation otherwise
wealthy, though it may somewhat redu,e th,it
wealth. Beth must (-Tully be regarded as an
xceptional state of things, as evils less or more to
sufflred, but not to be evaded by aey tampering
with the laws of free supply and demand, without
the greatest risk, nay the certain•y, of aggravating
them. We are glad to see that the money-dealers
in Lombard-street and the joint-stock banks, who
have assumed the important p,sition of holders of
the spare floating capital of the aottutry seeking
employment, and who Lace thus become the
agents between the portion of the public
who are lenders and the portion who are
h Trow,rs, have acted promptly, and have
(some to the resolution of allowing 8 per cent. for
" mow!, at cell" This step is much mare important
than at first sight may be apparent. A Ilse in the
rate of discount leads to a fall in the price of
se -urities —and a fall in the price of securities
aft' )rds a new inducement for persons whose money
is lying '• at call" and availlble for trade purposes,
to withdraw it and invest it in securities. We have
heard mush of late of the public being free buyers
of Consols. But as it rarely happens that any
money is ae,tuAlly held in private hoaris in this
country, but is either placed wiih bankers or
with matey dealers, the purchase of securi-
ties means the withdrawal from those channels
of temporary investment. It is true that the
mere purchase of securities absorbs no capi-
tal in the fist instance. If there is a buyer
who pays his money, there is also a seller who
reeeives his money, and, so far, the eff. et upon the
money market should be nil. But at times like the
present, it frequently happens that the seller of
securities operates with .s now to sending hie

capital abroad,. either to .meet the demands, of
correspondents, ,or more frequently to profit by
investment on favourable terms in foreign stocks-
In that case the indirect effect of the pubic with-
drewingaheir money froth bankeis and' money-
dealers, in order to invest in Consols, is to enable
sales to be made here for the purpose of investment
abroad—transactions which lead directly to an
export .of gold. The only legitimate check which
can be put upon such operations, fair in
themselves, is that the inducement to continue to
keep mosey in the hands of bankers and money-
dealers should be maintained by a rate of interest
preportionate to the real value of money in the
market. We believe it would be very difficult to
estimate the full advantage which the country has
derived froth its comparatively new practice of
allowing a rate of interest ou "meney at call," fluc-
tuating with, but always closely approximating to,
the bank rate By it large masses of capital are
retained in channels of trade, which would other_
wise, and especially at such moments as the pre-
sent, seek permanent investments in firer securities
at home or abroad. The old fallacy is again revived,
as it always is at such moments, of a further
issue of paper money. This fallacy era
now, hare worn itself out, but for the unhappy
encouragementgiveh by the unspund theory upon
which the Bank Act of 1.844 attempted to base a
sound rule of practice for the Beek to follow.
Every one whose opinion is worth anything, now
admits that the Bork hes n a power to increase its
circulation of notes, so- beg es they are redeemable
in gold—the strongest advocates of the act of 1844
tell us, and tell us truly, that if the B ink had the
free power of issue at this moment, they could not
increase the circulation of paper by a single five-
pound note. An evening cotemporary says, and
says -truly, If the B tnk; of England were per-
suaded to extend its issues instead of raising its
rate of discount, what weuld be 'Abe - effect ?
Not a single five-pound note the more
would there be in the country. The
only difftrence would be that the gold would go out
of the island. to Europe and Arneric,- with an
increasing impetus." Now, this is, np doubt, per-
fectly true. But then if the bank cannot increase
the circulation, what is the value of the restriction
upon which the whole theory hangs? It cannot
lie said that Mein order to prevent the exportation
of g )Id, because the hank is left with full discretion
to discount as much paper as it pief,sesi and at
whatever rate it pleases, and thus to place bullion
at the command of exporters to any extent it
pleases. In these transactions it has only the
discretion of the directors to guide it, and that
that discretion has been exercised, for the
public benefit no one will deny. But how
has this been done ? By the only true
method of correcting adverse exchanges, and
preventing an undue abstraction of capital—
raising its price so as to take away the inducement
to export. Agreeing so much as we do, with the
general 'objects of thole who framed the net of
1844, we cannot but regret that the theory adopted
is so much calculated to give an importer ee to
Bank notes which they do not possess, and thus
to encourage the dangerous fallacy, that .a pressure
tor capital can be alleviated by additional issues of
paper. Any one who is aequainted with he oper t-
tions of the Bank of England,- must know • that
an enormous amount of notes flow out every
day, but flew back again in the shape o; depo-
sits of bankers or others ; and it must be plain
to the commonest observer that if the transac-
tions of the country really requite more than
are at pre sent in circulation, that additional
quantity' would be retained by the public to whom
they are advanced. What is really wanted at
such a time as the present is bullion, and not
paper. Of what service would bank no es be to
those who wish to make payments in New York
or on the Continent, except that they could ex-
change them for gold ? But if the bank is pre-
pared to part with its gold on terms that w:11 suit
the remitter, it can as well be obtained direct,
without the intervention of bank notes; and to
that the law offers no impediment. We do not
deny, on the contrary we have often urged, the
great economy which might be effected in the
circulation of the country by well-secured notes of
a lower deromination. Such-notes would perform
the same service as is now done by gold, and to
whatever extent they could be usefully and safely
rendered effective R 3 capital fer all the piirp'oses oil
trade abroad and at home. But let it never be lost
sight of, that at this moment the s:ruggle
which is really going on is one between different
countries for the possession of the precious metals,
in order to tide over a period when the us eel chan-
nels of credit are deranged by extraordinary and
temporary events. That this country is intrin-
sically better off al regards its obligations and
financial position than almost any other, we
believe there can be no doubt ; and the real ques-
tion for us to determine is this—shall we allow
others, in order to aid ti:eir ne7eseities, to outbid
ua in outs own market for our own money,
and perMit ourselves to be drained until our com-
merce is placed in tree same jeopardy and danger
as that of serne other countries which have been
less prudent or less fortuna`e ourselves? The
pressure 'which has already- been placed upon
the Bank, even at the high rate of 'discount now
charged, is best shown by the fact that the
advances upon private securities have increased
in eleven days by the large sum of £2,080,107.—
Economist.

THE A CCID ,NT AT TILE ATTEMPTED I ATINCIL -- John
D.movan, one of the four men so severely hurt at the
windlass, on Tuesday last, died on Friday morning, of his
in juriz s
ME MINISTERIAL CRISIS IN BEYEA,ILTM. Friday's Inde-
pendance says, we are in a position to announce ihat M.
Charles Roger ham been this day sent for, and had an
interview with His Majesty.
TEnTco um, oro UNION OF EUROPE AND A F RICA. —The
llfoniteur contains an announcement lhat from the 3rd of
November telegraphic despa'ches may be sent direct from
France to Africa, by the Submarine Mediterranean tele-
gr ph.
- _ _

soldi' is belonging to the Prince Royal's Regi-
ment, in garrison at Munich, ries, rtizal in the night of Oct.
19. It was f ared that a miitary cocsoiracy must exist,
for many deftitlons have lot lr taken pl..ce situ :ltareously
in towns wide apartaparr from each other.
Mr. Jai.. P,,wer, tie reprcserrati, e o! the Med.terranean
Submarine Tol, grap'i C inpany in Paris, unces in the
Presse that private dosp itches for Algi rs and 311 towns in
Algeria wi 1 row be roc-iv dat the offle,si f the company,
and re wanted iturae,ii,itely to Th-2ir dosination.
Some VRax OLD cotempoiary, ►t-t'• d2scrib-
ing the [nattily in Bengal as " thv hydra, rising, in point
of fact, of he whole regular native armj of Bengal, an
army consicing at the moment of ,eventy-f,ur regiments
of infin,ry, ten re4itwnts of cavalry, nine .battiliona of
foe', and three bricades of horse artillery," goes on to
s'a'e : " It was the res,dutionary outbreak, in print of
tact, of a hundred thousand 11,d veterans—the Bengal
Seooys—tho men, the very Itien under the ban-era
of Porus, co :'ended, now two thousini years ago, with
the w rriors of Alex rider. It is hi. De VA I^z, n who
ape ki--' Co soot los hommes,' he exl'aims ( n his
ni,ns wont L-s Anglaie et l'lnde,' p. 98), les reeves
hommos qui, sou; lee drapeaux du Rol Portia, combattaient
it y a deaux mille ane, lee gu rriere o'.ilaxtridre.'" If
th, Mutineer are " the very men" who fought against
Al xandi r two thoneand rears age, old Parr was a j .ke to
them. In that Clq9 the travels of the ingenious Mr.
Gu liver are no fiction, for here we hove an army of Strut-
brigs.
Escape or Two CoNy era FROM A ItArtwAv
About one e'cloCk on Tuesday morning, as a number of
convicts were b..ing conveyed from Glasgow to Londoo by
the mail tr.in which loft the former city about twelve
minutes prat eight on Monday evening, during the re.*
moments the train, stopped at the Penri,.h sts'ion, on the
Lilncoster and Cleiale Ra 7wiy, about the time framed,
two of their number, t lthough chAined and guarded in the
ordirary way, manag d to escap) by jumping out of the
carriage iu which they were confined on the offside of the
railway. Ia a veond or two afterwards, just before the
train. was aga'n s arted, the perstrs in cbarge of the
missel the two renega&s, and instantly gave the
alarm. Several persons we e &Nip/robed in different
directions in search t, f the mr n, while otters made a
minute examinati,n of the premises at the station, during
which they found, not the c nviets, but the. chains by
which they had been pinioned t ,geth r. Desdtte the most
vigllant search during the day, nothing was either seen or
hea-d of the missing convicts. We are informed, on
authority, that several of the other convicts became dis-
gusted at their position, and of erwarda attempted to follow
their self-liberated companions, but fortunately they
were pronated by the authorities.