The Sun.
London, England, 1853-09-02 00:00:00

INCREASED RATE OF DISCOUNT.

The Bank of England to-day have raised their rate of
discount to 4 per cent. This time last year the rate
was 2 per cent. It was advanced to 21 per cent. on the
6th of January, to 3 per cent. a fortnight afterwards,
and to 31 on the 2d June last. Within less than eight
months, therefore, it has been doubled. So rapid a
movement is without precedent since the passing of the
Bank Charter Act, in 1844, except during the panic of
1847, and even then, although the rise was practically
more considerable, inasmuch as it was from 4 to 8 per
cent., it was spread over a longer period.
There can be no question, however, that the Bank
have acted soundly. The propriety of their previous
steps in the same direction has been demonstrated by
experience, although on each occasion the public, who
were unaware of the immediate extent of the drain in
progress, were disposed, while they approved the prin-
ciple that had been pursued, to consider that it had been
carried out with almost undue promptitude. But the
steady diminution in the stock of bullion was the true
guide for the directors, and, by following it implicitly,
and thus giving the system of Sir Robert Peel its natu-
ral course, they have saved the commerce of the country
from any violent shock, and prevented an extension of
commercial speculation which it is now seen would have
ended disastrously.
Yet, while the necessity of a continuance of decisive
measures is admitted, there is nothing to create alarm.
The causes of the drain which has continued, almost
without interruption, for exactly 12 months, and which
has taken away upwards of 5,000,000/. of bullion, are
all perfectly distinguishable, although they have mostly
arisen from unlooked for casualties, and been protracted
beyond any period originally contemplated. These
causes have been-1. The shipments of coin and mer-
chandise to Australia, the merchandise being created
out of raw material imported and paid for in cash,
while the returns from the colony must involve the
lapse of a year. 2. The rise in wages and the
general employment of the working classes, so
that every family, including those that were previ-
ously destitute, have now perhaps on an average
two or three sovereigns in their possession. 3. The
demand for an increased circulation to meet the larger
payments caused by a rise of prices. 4. The heavy
draughts of the English and American merchants at the
Chinese ports on the London houses with whom they
have credits, such draughts being consequent on the in-
crease in the value of money in consequence of the
hoarding practised during the rebellion. 5. The aug-
mented demand for specie on the continent for the armies
set in motion on the Turkish question, which has caused
all available credits on this country to be used at Ham-
burg and elsewhere. 6. The considerable although not
excessive number of foreign undertakings in course of
completion by British capital, and lastly, the fears re-
garding the harvest, and the consequent enormous
speculations in wheat, under circumstances that have
been aggravated by the apprehension of equal or greater
deficiencies in France, Italy, and elsewhere.
Among this singular combination of powerful in-
fluences, those from the Chinese rebellion, the Turkish
dispute, and the deficient harvest have all been acci-
dental, while even the Australian speculation, inasmuch
as it has now been carried to a point that, notwith-
standing the favourable accounts hitherto received of
the markets, may warrant very great anxiety, is also to
be included as exceptional since it is strangely in con-
tradiction to the apathy at first exhibited. We have
here, therefore, three or four of the most important
elements of the whole movement, which are to be re-
garded as entirely of a temporary nature, and which
must all cease at certain limits, and be followed by a
proportionate reaction. The Chinese drain, serious as
it has been, must ultimately find a check in the ex-
hausted credits of the merchants, since, however tempting
may be the prices at which they can now buy tea and
silks for cash, the process will soon assume a specula-
tive character that will excite reserve on this side. The
Turkish affair seems already to have been removed from
the list of dangers, althouh the coin it has called into
employment
months.
A
mayns
regardsot
return
the
grain
oits
ordinary
speculation,ch anri
owinge channels
for
some
to the want of comprehensive statistics no reliable opi-
nion can be formed whether it has yet been carried be-
yond proper bounds, but is impossible not to see that
there have been for some time indications of an ardent ten-
dency in the market, especially when the rates of freight
are taken into consideration, such as usually end in par-
tial losses. At all events, although a question which
still depends in a great degree upon weather must be out
of the reach of argument, the turn which affairs will
take after the requisite supplies, whatever may be their
amount, shall have been obtained is a matter of certainty.
In none of these cases, therefore, is there any cause for
disquiet (such as arises from hidden processes which
seem to Vindicate some unsound condition of the coun-
try generally, and the end
of which cannot be defined.
They may continue longer, and operate, as they have
done already, to a greater extent than any one calcu-
lated upon, but they can lead to no destructive effects,
and the ultimate recovery of them is certain. In
the case of the Australian shipments the prospects of
an inevitable reaction is still plainer. If the hopes
of the exporters are realised, the homeward remit-
tances of gold must soon be continuous, and far ex-
ceed any that have yet been received. If, on the
contrary, accounts should eventually come of fail-
ing markets, the rage for sending goods will
be suddenly stopped, and the process of the past
year will be reversed, since, while we are receiving
payment, although perhaps, at depreciated prices, for
the supplies already sent, we shall be sending nothing
from this side, and thus the stream, instead of being a
comparatively exclusive one of merchandise from En g-
land to Australia at a heavy outlay, will be one of gold
from Australia to England, with little going hence in
return.

___.
The remaining circumstances that have operated on
the money-market, and which, unlike those just named,
were all foreseen, are such as are not likely to have much
further influence. The coin absorbed in consequence of
the improved circumstances of the poorer classes, will
not need any addition, since, after each family has be-
come provided, as is now the case, with sufficient gold
and silver for their current wants, all surplus accommo-
dations will find their way to savings-banks or general
investments. At the same time, the call for extra circu-
lie ata t
n has
oans
be
already
continued renderedread y
obviously
n e
onlyce s s a i necessary
thebbe ye
been
rise the
beyond
should higher
what can be ac-
go on ; and, as
prices of goods
counted for by the influence of the gold discoveries,
there would be no reason to suppose that this will be the
case, even if it were not rendered impossible by the pre-
sent movement of the Bank of England.
Under all circumstances, therefore, the conclusion is
evident, that the position of the country is safe in every
way, and that at no distant period a decided and steady
reaction from the existing condition of the money-mar-
ket is to be looked for. But this safety, and the early
prospect of greater ease, can be rendered certain only by
a vigorous adherence on the part of the Bank to the prin-
t ciple of letting the currency contract with the efflux of
bullion, so as to increase the value of the capital which
noam felt
isit of
is being extracted from us, until the inducement for the
drain shall be terminated by its becoming dearer here
than in other quarters. It may be hoped that the step
taken to-day will finallyansawtne,oratn sptdheaetdipiy be
purpose, but
tahneothhaerrymesotncituhemstiuosnt elapse,abteilnegastentire any
so
settl as to
doubt admit
before
ac thatofnufir, dt
further, ef
entrth
advance
di
revewas
nu
elcante
wbi
desired
will
l arrivedbe
should
adopted
without further hesi-
tation.—Times.

PRINCE OF WALES YACHT CLUB.—The committee of
the above club met last evening at the Craven Hotel,
Strand, to consider the protest of the owner of the Julia
against Mr. Walliss, the owner of the Valentine, for
having fouled him in rounding the steamer in the match,
last Monday, and also for using his foresail as a square-
sail. After receiving evidence, the committee decided
that the protest was valid, and Mr. Walliss was accord-
ingly disqualified. The first prize, therefore, goes to
the Britannia, the second to the Julia, and the third to
the Blue-eyed Maid.