The Sun.
London, England, 1855-10-19 00:00:00

BANK OF ENGLAND.

ADVANCE OF THE RATE OF DISCOUNT.
The measures of the Bank of England yesterday are
rather more stringent than was expected, but although
they will cause the financial course of the country during
the next two or three weeks to be regarded with the
most unparalleled watchfulness, they have excited
neither dissatisfaction nor alarm. It is assumed that the
next Gazette return will exhibit a farther large decrease
in the bullion, and apart from this the fresh step taken
by the Bank of France confirms the necessity for increased
caution.

The total absence of commercial distrust is as marked
as ever, and apparently the only point for dread is, lest
the public, unaccustomed as they are to such a rate as
6 per cent., should suffer themselves so suppose that it
necessarily involves something terrible. " What are
to be the consequences I" is a question passed from •ne
idle person to another. The real features of oar
position, however, owing to the indisputable health-
fulness of trade, admit of being summed up with
more than ordinary precision. One principal matter
which the public have yet to learn is the vast effect
of a very moderate withdrawal of bullion. During
each of the last seven weeks the average drain from
the Bank, which has been accompanied by a series of
advances in the rate of discount until from 8i it has
reached to 6 per cent.,. has been about 550,0001.—that
is to say, the Bank have raised their rate 4 per cent. for
every 700,0001. or 800,0001. lost. The singular delay in
the Australian arrivals which has again become notice-
able is therefore nearly enough to account for the in-
creased pressure of the last week or two. According to
sound estimates at least 1,000,0001. is now overdue,
and some persons set the amount at 1,500,0001. The
absence or presence of this latter total might have made
a difference of 1 per cent. in the Bank rate. Again, the
more recent reports from France of a deficiency of at
least 3,500,000 quarters of wheat and a like quantity of
rye have given a new impulse to our orders for grain.
These imports are not required for our own use, and
consequently are as good to us as gold, except that they
involve delay before we can convert them, and mean-
while the pressure is just as great as if the gold they
are ultimately to repay would never reach us. Hence
there are influences amply to account for all the dis-
turbance now experienced, in addition to that origi-
nally created by the withdrawals on the part of the
Bank of France. 'lt is true a cause of perplexity
remains in the fact that if, by the reaction from the re-
cent measures of the Bank of France, coupled with ship-
ments of grain to that country, things arrive at a point
which would draw gold back from Paris, the difficulties
on that side may involve the adoption of new plans to
obtain a further artificial supply from the Bank of Eng-
land, but there is a limit to such operations. The con-
tinental markets having been once cleared of bills can
only thenceforth furnish the natural daily quantity
created by the regular operations of commerce, while
with regard to the use of accommodation paper, or the
obtaining of money on the deposit of foreign securities,
there can scarcely at present be much apprehension. It
is to be remarked, moreover, that while the public gene-
rally fail to estimate the momentary effect of the loss even
of a moderate sum of bullion, they also, on the other
hand, never attach sufficient faith to the effects of an
increase in the rate of discount. In 1847 it was oarried
as high as 8 per cent., the Bank bullion having fallen
to 8,312,691/., and in a month from that time a
reaction commenced, until within a year it was as
low as 3 per cent., and went on unchecked until it
had declined to 2 per cent. There is no reason to
suppose that in the present instance the measures adopted
will prove less efficacious. Indeed, as the drain has
been much more sudden now than then, there might,
perhaps, were it not for the Turkish Loan, .be an expec-
tation of a still more rapid reaction, as soon as the final
point of pressure shall have been reached. Already
there are indications that strong effects have been pro-
, doted. From Hamburg it is said gold could now be
sent both to Paris and London. The demand for specie
for India has subsided, and, although the next steamer
will take out probably 300,0001., it will chiefly be for
contracts previously entered into.
But will even the certain prospect of mitigation be
sufficient meanwhile to sustain confidence all over the
country ? Hitherto everything has tended to that con-
clusion, and among the banking and other financial
establishments in London not a shadow of distrust in its
accuracy is observable. The great addition made by the
Bank in their charge for bills having more than 60 days to
run will probably affect more than a third of the paper in
circulation; but one object of that step was, doubtless, to
throw the demand from the Bauk, where it had lately
been too much concentrated, to the discount houses,
who have been cautiously holding back until they could
feel moderately certain that the highest point had been
reached. Should they now entertain that conviction—
and, inasmuch as 7 per cent. is within 1 per cent, of the
highest rate known in modern times, the supposition
that they will do seems reasonable—they will be pre-
pared to act with more boldness, and the market may
assume, from the absence of uncertainty, a degree of
soundness greater than previously prevailed. If this
hope be realised, and all should go well during the next
month, the advantage to the country will be incalcu-
lable, from the demonstration that will have been gained
of the possibility under the Bank Charter Act of our
passing through a period of trial without falling into
senseless panic, while it will also afford a lesson to Rus-
sia and her friends as to the actual solidity of that com-
merce to which we look for the means to meet any
struggle, however protracted, that may be necessary to
accomplish all that we have resolved upon.—Tinies! City
At-title.

REMEDY FOR THE MONETARY CRISIS.