The Sun.
London, England, 1863-11-23 00:00:00

SPIRIT OF THE PUBLIC JOURNALS

SATURDAY REVIEW.—The pcsition of monetary
affairs, though free from any immediately alarming
symptoms, has attained a gravity which was scarcely
appreciated when the sudden rise in the Bank rate
of discount took place. The general idea that pre-
vailed at the first moment was that a merely local
deficiency of bullion would be speedily made good
under the influence of higher prices, We know now
thee the disturbance is of a more general, and there-
fore of a more important character, and that there
is no probability of an early return to the easy rates
which prevailed a month ago. As yet, the measures
of the Bank of England have not done more than
enabled it to hold its ground, and no other result
could be looked for when the pressure for money is
more decided in many foreign capitals than it is in
London. At Frankfort, the rate of discount has ad-
vanced 3 per cent. in a few weeks. The Bank of
France has long been losing money at a serious rate,
and is charging 7 per cent. At Turin, the same
terms are demanded, and in all the German markets
a similar tendency is not less distinctly visible. To
a certain extent, the speculations as to political pro-
spects may have added their influence to aggravate
the rise in the value of money, but, as on most other
occasions, it will probably be found that the terms
on which business is conducted are mainly governed
by commercial considerations. When the Emperor
of the French is unusually active in the pursuit of
universal peace, and the Northern Americans are
more eager than ever in their peculiar efforts to
establish fraternal union, it is not wonderful that
the world should feel uneasy, or that the prevalent
anxiety should be reflected in the action of the
money market. Still, the main cause of a general
increase in the demand for money must lie deeper
than any of those vague apprehensions of future
trouble from which we have seldom been free since
the restoration of the Bonaparte dynasty. And it is
not surprising that money should be scarcer than
it was, notwithstanding the steady supplies of gold
that continue to pour in from Calfornie, Australia,
and Columbia. Almost every country in Europe
has been spending unwonted sums upon military
preparations, while in America the great greenback
revolution has probably set free less of the precious
metals than a gigantic war and an artificial pros-
perity have absorbed. Not only gold, but—what is
far more important—capital, is being squandered,
in the unproductive outlay of war and preparations
for war, with a lavish recklessness which has per-
haps never been surpassed. At the same time, a
great expansion of trade has taken place, which
may be traced as visibly in the Customs returns of
France and other countries as in our own. Cotton,
it is true, is not imported in much more than halt
the quantities to which we were accustomed before
the interruption of the American supply, but it needs
more capital to deal in 2,000,C00 bales at 2s, a pound
than in 4,000,000 at a quarter of that price. Nor is
this the whole case, for it is beyond a doubt that,
tide by side with a very vigorous activity in the
formation of new companies, and an unusually
strong disposition to invest in foreign stocks, there
is going on a serious amount of gambling in the
cotton market. In the earlier railway days, one of
the favourite forms of commercial speculation was
the purchase and sale of imaginary iron. Contracts
to deliver a certain number of tons of rails were
bought and sold, again and again, by operators
who had no more desire to be the possessors of that
useful description of goods than to sink their capital in
wooden nutmegs. The same kind of transactions
ware resumed during the Irish famine in the form
of purchases of grain, and it appears that enor-
mous transactions are now going on in contracts
for the purchase of cotton to arrive. In all these
cases, just as in the ancient tulip mania, the sub-
ject of purchase is valued only for its capacity of
fluctuation. Anything which rapidly changes its mar-
ket value will serve equally well as the vehicle for
speculative dealings, whether it is bulb or a share,
an iron rail or a bale of cotton. For the present,
cotton is king of the speculative market, and, in
addition to the necessary absorption of capital by
reason of the high prices of the commodity, we have
an aggravation of the evil in the spurious demand
for mere gambling purposes. The wholesome ac-
tivity of some branches of trade and the unhealthy
development of others combine to swell that gene-
ral demand for money which is sensibly felt
throughout the world. It is not likely that these
, tendencies will change very rapidly unless the pres-
sure should be greatly increased; and there is yet
another circumstance to be borne in mind which

points still in the same direction. The most im-
portant addition to our transactions at the present
time is, perhaps, in the Indian trade, and, from the
nature and habits of the people of India, that is a
branch of commerce which locks up more money
than almost any other. India is a growing coun-
try as well as a hoarding country, and on both ac-
counts it has a tendency to retain a very large pro-
portion of the bullion that flows into it. More
money is really wanted t,-iere to keep pace with the
increase of business, and what money India has is
not economised as it is in more highly civilised
countries. It would be curious if we were able to
measure the comparative amount of work done by
equal values of specie in different parts of the globe,
but, though no approximation to an exact estimate
can be made, it is certain that the transfer of bul-
lion to a country like India effects a great diminu-
tion in its efficiency, and is precisely equivalent for
the time to the total destruction of a certain per-
centage of the precious metals available for the use
of the world. With so many forces at work in one
direction, it is no wonder that one national bank
after another should be compelled to raise its rate
of discount, and it would be unreasonable
to expect any very early or rapid recovery.
We have been anxious not to underate the real gra-
vity of the existing state of affairs; but at the same
time there are reassuring circumstances which en-
courage the expectation that England will not be
the first to feel any serious increase of pressure
which may possibly be impending. If the general
character of trade throughout the world is on a
reasonably sound basis, the mere fact that the rate
of interest is higher than usual will cause no im-
portant mischief. We have seen the Bank rate rise
to 8 per cent. and recover itself in a comparatively
short time, not only without suffering but without
alarm, and the only thing which ever warrants
anxiety on this ground is the possibility that some-
where among the wide ramifications of commerce
there may be a rotten spot capable of spreading itso
contagion through the world. On the occahsinotnthef
the last serious crisis, it was from
.America
infection spread, and it is so far satistacftory tot know
otton must
that the war which has deprived u
eerican
have so limited our transactions wshe
itte manyisk of
continent as to remove to a. r
a recurrence of the same upointed at just now
eh eovaillgl i
ben
eaflt eexn ce Nor is there
any other country
ah Ise
as likely to converwt.slight scarcity of money into
the dimensions of a panic.
anything approaching
there is the great fact of a
And. beyond all this
ma,,nificent harvebt to counteract, in this country,