The Sun.
London, England, 1864-09-19 00:00:00

The Rate of Discount,

.«~

The Passe, without entering into the question of
the causes which may have led to the recent rise in
the rate of discount in. England, gives some details
of interest on the situation of the Bank of Eng'ond
during am present year. It says :—" This crisis is
not, as is generally supposed, a mere passing
event;
for it began as far back as last year. In fact, if we
consult the table of the variations in the rate of
discount at the Bank of England, we shall see that
the year 1861 opens with the discount at 7 per
cent. ; that on the 20th January, it was raised to 8;
that it fell to 7 on the 11th Feb., and to 6 on the
25:11. Feb., it again rose to 7 on the 16th April,
to 8 on the 30th, and to 9 on the 2d May ; and that
after again falling to 8 on the 19th May, to 7 011
the 26th May, and to 6on the 16th June, it was
suddenly raised to 8 on the 1,.h August, and to 9
on the Bth Sept. In seven months the rate of die'
count at the Bank of England has varied eleven
times. Nothing more is required to show that there
is some organic defect, which, though it manifests
itself by fits and starts, has nevertheless an indis"
putable character of permanence. England is,
however, the country which best knows how to
attract the precious metals. Why, then, are crises
so frequent there ? Most people would be inclined
to seek the reason anywhere than in the simple
fact that the English look on bullion chiefly as an
object of commerce, that they treat it just the same
as merchandise, that they have long ceased to
regard it as a national instrument of exchange, and
that they will send it to any place where the
highest price can be obtained for it."

Turning to the situation of France, the article
observes :—" The stock of specie held by the Bang
of France has maintained during the last month
nearly the same level as in the two previous ones;
it may even be said to have attained its highest
figure; it was 266 millions on the 14th July ; and
on the Bth September, 281 millions—being an in'
crease of 15 millions, an amount not to be disdained,
especially when we see the alarm of the financial
world at the possibility of a decrease of 8 or 10
millions in the next return. (That just published
is meant.) The variations in the stock of specie
cannot have had any great influence in determine
ing the Bank to raise the rate of discount, as the
changes for some weeks past have been trifling ;
the stock was 280 millions on the 25th Aug., 279
millions on the Ist Sept., and, as already stated,
281 millions on the Bth Sept. It is said that the
Bank has only kept up its stock to that amount by
purchases of bullion. We are perfectly satisfied if
it is so; but we find nothing in the discount so
commodation and issue of notes to justify such an
operation and render it indispensible. The amount
of bills discounted has been progressively diminish'
ing for two months pasta fact sufficiently explained
by the dulness of trade. From 676 millions on the
30th June it fell to 642 millions on the 28th July
on the 18th Aug. it was 627, and on the 25th 612,
On the Ist Sept. it was barely 616, and 618 on the
18th September, The diminution since 30th June
is therefore 58 millions. It is pretended that the
Bank has made greater difficulties about discount'
ing, and been very particular as to the bills it re"
ceived. That was the means it iormerly emplo3ed
to render the public consenting to an increased rate
of discount. It is about to return to the sarae
system. The amount of notes in circulation Ilse
varied but little ; the average is 790 millions; but
the amount was only 752 on the Bth Sept. In short,
the returns of the Bank for the last month appear
to indicate that, in order to keep the rate of discount
below that of the Bank of England, there has been
a return to old courses which the public had reason,
to think definitively abandoned—the Bank world
seem to have purchased bullion and restricted the
issue of notes. We do not mean this as an expreed
sion cf blame ; we merely note a fact."