The Sun.
London, England, 1838-02-07 00:00:00

MONEY MARKET.

(From the Morning Chronicle.)

Exchequer Bills are now at a premium almost without a
precedent in the annals of the finances of this country. The
present interest upon them is 2, d. per day, which is an annual
interest of 31. 16s.W. for 100/., being considerably above the
interest paid by the -Government upon the funded debt. A
very slight degree of calculation upon the comparative state of
the funded and floating debt will show any holder of Exche-
quer bills that it is a state of things which our Government in
its duty to the people cannot possibly allow much longer to
exist, as Exchequer Bills arc much better securities than any
other part of the national debt, as the capital contained in
them cannot be lessened, and is certain to be paid in full to
the holders, at the time at which the bills may expire. Con-
sols, on the contrary, are securities which the Government
is not bound to redeem, and there is in consequence no
guarantee whatever against a fall in the value of the
stock of the whole funded debt, and therefore Exchequer
Bills are a preferable investment, at a rate of interest
lower than the public securities, in Which the capital is ro
much less sure. Amidst this state of things it is clear
that the Government is not required to continue to pay any
interest which is so much too high upon Exchequer Bills ;
but, on the contrary, it is the unquestionable duty of the
Chancellor of the Exchequer to take measures for the reduction
of the interest upon the whole floating debt. There is no
profit whatever to the Government from a high premium upon
Exchequer Bills, and all that the Treasury has to attend to in
the matter is to take care that the interest paid he sufficient to
keep the Government paper in credit, rind at or above par;
and the higher the premium may ascend the more the interest
shOuld be reduced, on the principle of national economy,
by which the nation should derive the benefit of its
own credit in the monetary world. The rise in the
interest which took place in November 1836, was owing
to the depreciation of the floating debt to a discount of
several shillings per cent. ; and though the Government
was not compelled to pay higher interest in consequence
of the fall in price, it was judged expedient to do so in
order to relieve the distress and pressure upon the Money
Market at the time. At the present period, however, the
whole state of affairs has been entirely changed. Money is su-
perabundant ; and from a discount Exchequer Bills have as-
cended to a premium of nearly 31. per cent., being therefore
capable of a reduction of interest to a very considerable
extent. Indeed, in the present state of the Money Market
there is no doubt that the floating debt would find pur-
chasers and be maintained above par at a very mode-
rate rate of interest, and which would, in all probability, se-
cure it from discount for the space of at least one year,
during which period it is scarcely possible that any pressure
for money can arise, or that the present accumulation in the
vaults of the Bank of England can be seriously diminished. Ac-
cordingly the interest upon Exchequer Bills will be probably re-
duced from the sth of April next to sonic extent; probably
to the old rate of I,W. per day ; for the Chancellor of the
Exchequer has very judiciously reserved to himself the power
of effecting the reduction at that time, should the Money
Market render it expedient, as holders may remember, from
the tenor of the Treasury advertisement of November last.
That the reduction will and ought to be effected at the expira-
tion of the current half-year is apparent, not more from the
state of the Money Market, and the needlessly high premium
upon Exchequer Bills, than from the extreme saving of re-
venue which the reduction would effect. The whole floating
debt is usually about 54,000,0001. ; but allowing that
50,000,0001. be the amount upon which interest is paid at the
rate of 31. 16s. oi-d. per year, it follows that the present pay-
ment of interest is 1,900,0001. per annum ; whereas by the re-
duction of the interest to lid. per day, or 21. ss. 7id.
per annum, the payment would be only 1,140,0001,, being
a saving to the country of the sum of 760,000/. per
year. From all this it is clear that the Chancellor of
the Exchequer has the right to do so • and as a man
of intelligence in finance, and as a faithful steward
of the taxes of the country, must be supposed to have it fully
us view to effect the reduction, by which a sum of more than
three quarters of a million can be saved, from the expiration of
the present financial half-yearly term. We present these
views to the public as useful because brought forward in time ;
for as the intentions of the Government are yet unknown, and
two months of the present bills are yet unexpired, there is
an opportunity for reflection upon the wisdom or folly of driv-
ing up the market for the floating debt to prices which so sud-
denly and extensively may be changed by the announcement of
the intentions of the Government to effect a reduction of the
interest upon the floating debt.
(From the Times.)
•

The supineness of the Ministry in all that relates to the
trading interests of the country is an evil of which complaints
are to be heard on all sides in every commercial community.
That glaring instance of the proposed large increase of the duty
on linens and yarns by the French Government, and which
has been already adverted to, is giving rise to very irritated
feelings all over the manufacturing districts. The measure
of the French Government has one feature which carries
with it the absolute determination to injure our commerce as
much as possible, since it is intended to exempt the yarns and
linens of Belgium from the increased duties, if Belgium will
consent to lay the same high duties on the yarns and linens of
England. The proposed increase, it will be recollected,
is from 10 to 15 per cent. ad valorem above the pre-
sent duties on yarns, and from 40 to 50, per cent. on
manufactured linens,—duties which will be nearly Fohi-
bitory. It is the opinion of the French mercantile
houses that the proposed increase has the sanction of
the Government, and that it will be carried into effect. On
the faith, however, that the old duty would not be disturbed,
an immense amount of British capital has been laid out in
mills and mltchinery for the improvement of this branch of
manufacture for the supply of the French market. The num.
ber of persons employed in it is also very great. In Leeds
alone there were 7,000 or 8,000 hands thus engaged. Dun-
dee and Belfast also spin linen yarns for French consumption.
An eminent manufacturer from Belfast, writing on this sub-
ject says--.." The French are not satisfied with laying a prohi-
bitory duty on linen yarns, but are making terms with their
neighbours in the Netherlands to induce them to do the same.
This would be most injurious to the North of England, the
East of Scotland, and the North of Ireland; and if the Mi-
nistry pass it over they will prove themselves the weakest, as
well as the most wicked set of men that ever watched the des-
tinies of a commercial nation."

By the advices from Hamburg the price o f gold is 434 per
mark, which,- at the English Mint price of 3/. 17s. 10 d. the
ounce for standard gold, gives an exchange of 13. 91 ; and
the exchange at Hamburg on London at short being 13. 101,
it follows that gold is 0.35 per cent. lower at Hamburg than
in London.

The premium on gold at Paris is 81,- per milk, which, at
the English Mint price of 3/. 17s. lqd. the ounce for stan-
dard gold, gives an exchange of 25. 3Gb ; and the exchange
at Paris on London at short being 25. 50, it follows that gold
is 0 54 per cent. lower at Paris than in London.
The price of sovereigns at New York is 4.95, which estab-
lishes a par of exchange in paper of 111.37 per cent. The
course of exchange at New York on London is from 1091, to
110, which gives a mean of 1091 per cent. It therefore fol-
lows that the exchange is 1.62 per cent. against England.