The Sun.
London, England, 1836-12-02 00:00:00

MONEY MARKET.

We have to notice to-day (Thursday) one of the most
remarkable incidents that perhaps, taken in itself, and its
probable consequences, has ever occurred in the money mar-
ket. The Directors of the Bank of England have been
appealed to on behalf of a very large joint-stock bank to in-
terfere and save them from a stoppage, which, after much
deliberation has been agreed to ; one of the principal con-
ditions, however, being this—that the bank in question should
withdraw all their own notes as soon as possible, adopt the
paper of the Bank of England, and wind up business alto-
gether with respect to the greater part of the branches.
That other joint-stock banks are in similar difficulties, and
will be driven to the same remedy, that is, if the London
bank shall consent to apply it, cannot be doubted. That
the Directors of the Bank of England have had merely a choice
of evils in the instance referred to, and have incurred great re-
sponsibility by the course they have taken, may be safely as-
sumed as certain. No bank could be in a situation to make so
humiliating an appeal for assistance, without having previ-
ously incurred great losses, and done an enormous amount
of what is called " bad business ;" all the consequences of
which, in coming forward to sustain its credit, must be met
directly or indirectly by the Bank of England. The long
deliberation of the directors before agreeing to it proves
that they justly estimated those consequences ; but it was
demonstrated to them, we believe, that the consequences
of a refusal might be much more serious, and on that
ground principally they agreed to the proposition. Some
of the best bills in London and other places were held, it
seems, by the Bank in question, but its endorsements, on
account of issuing its own notes, bringing them within the
interdict of the Bank of England, and other parties not
having funds sufficient for the purpose, names of the first
class could not, for a time, command discount in any
quarter. The evil, therefore, of allowing this bank to
stop would have extended far beyond the parties actually
engaged in it, and the conviction of this led, as we have
stated, to the final decision of the Bank. Those who were
in the secret of what was then going on, confess that the
period during which the determination of the Bank re-
mained uncertain was one of the most painful anxiety, and
there is but one feeling among them of satisfaction for the
timely interference which has now taken place. The mis-
maaagement of one large joint-stock bank might have
brought on, and was on the point of doing so, a great com-
mercial crisis, in which numerous other parties, perfectly
innocent and solvent parties, would have been involved.
The extent to which assistance has been afforded is variously
spoken of, some stating it at '200,0001., others at 500,0001.,
the latter being, as we are told, the correct sum ; the prin-
ciple involved in the transaction is, however, the really im-
portant part of it. The position in which it places
the Bank is that of taking the first step towards
the realization of Mr. Horsley Palmer's great project
of commanding the whole paper circulation of the coun-
try. To carry this point, the Bank would gladly have
brought down the whole of the joint-stock banks of
issue ; but by a very singular contradiction it happens
that they are compelled to assist the very first of them
that is brought into jeopardy, in order to prevent worse
consequences to the rest of the community. Supposing
this system to be followed up—and that abundant reasons
will be found for it no one denies—the very important
question arises, how far the Bank of England in its present
situation is able to bear the brunt of all the injudicious
joint-stock banking which the late mania has brought into
action. That is the first and most formidable danger,
but there are many who think that a monopoly of the
whole paper circulation is by no means a desirable thing
for the Bank of England, and that they would be more
vulnerable then in the event of a run than they are present.
As leading to a new era in banking affairs, the circum-
stances just related are occupying a very prominent place
in the discussions of the higher monetary circles. The
decision in this case is applauded as a generous risk incur-
red for the public good.—Times.