The Sun.
London, England, 1847-04-16 00:00:00

Iteidins

LONDON. FRIDAY, APRIL 16, 1847.

The monetary state of the Bank of England is
every day provoking new observations. The remark-
able and successive fall in the Funds, and the constant
depreciation in other dividend-paying securities, are
in themselves sufficiently alarming. People in general,
guided by the lights of former experience, are at a
loss to divii.e the cause. We have seen in former
times, when the bullion in the Bank became reduced
to a low figure, that panic and al prehension has suc-
ceeded ; but the bullion now in the Bank is higher
than the average of the last twenty years, and the
state of things which prevail cannot be attributed to
that cause, since the Bank possesses more than half
its circulation in gold.
Not many years since the r~nin the Bank
was reduced below 3,000,000/., and yet no panic
prevailed. Neither does there now exist amongst the
public any mistrust whatever. The stability of our
internal credit, so far as the public is concerned,
never appeared to be better founded. The present
is purely a panic amongst bankers and merchant..
It is a curious anomaly that those who are most
interested in putting the best face on things should,
contrary to their nature, be the first to suspect our
unsoundness.

What seems still more strange is, it was asserted,
and we believe with truth, that there is an entire
absence of speculation. Prices of produce and manu-
factures are not inflated. Large quantities of corn
have, no doubt, come in and been paid fur, as the
reduction in the bullion shows. At least 3,000,0001.
to 4,000,0001. more m‘y still be required. A loan
has been contracted for Irish famine, yet in the state
of the revenue and the activity of consumption and
employment, can this be assigned as the cause of this
state of things ?

All these points have been carefully examined and
weighed separately, one by one, and
i viewed collec-
tively, yet, strange as it may appear n this world of

9,449,7601. 3,699,7101. It is this situation of the

Bank that causes all the alarm, that works such won-
derful effects on the stock and produce markets, that
raises the rate of interest, that makes discount

almost impossible, and cramps the energies of trade.
The Bank owes to private depositors above 9,000,0001.,
and to meet this all the ready money it possessed on
the 3d of April last was a little over 3,500,0001. It
cannot pay out its bullion to depositors, as this is
pledged for its circulation, and the only manner in
which the Bank can meet such demand upon it is by
a sale of its securities and the refusal of accommoda-
E tion. What effects this effort will produce can be
easily imagined; we have felt it in former times.
Will, therefore, the Bank be forced to decrease its
securities, and thus, by a violent effort, right its
financial position ?
Should the Bank attempt to do so, it will deserve
the severest censure for having, in the first instance,
yielded to the pressure, and by a foolish and criminal
attempt to regain its position, add tenfold to the
disaster, of having, in the first instance, by its
liberality induced a false confidence it only inspired
to destroy. The motives of such management will
become more than suspected.
The remedy pointed out by Mr. LAMIE MURRAY
appears to us, under the present circumstances, the
only practical one. It is to the law of 1844 princi-
pally we owe the embarrassment of the Bank. Let
the law, therefore, provide the remedy, and so let the
country be saved from a new calamity, which is
otherwise inevitable—a financial crisis. We quote
the plan proposed by Mr. LAMIE MURRAY in the
letter alluded to :

" It must be borne in mind that, although the sum of
14,000,000/. is all the Bank is permitted to issue on securi-
ties, yet the capital of the proprietors is actually, on the 3d
of April, 1847, 18,544,333/., including the proprietors'
capital, 14,553,500/, and the rest of 3,991,333/. The amount
of this rest is admitted on all hands as too large. It is equal
to near four years' dividend, at seven per cent., on the pro-
prietors' capital; while the principle seems now to be ad-
mitted, even in the oldest establishment, that a reserve fund
equal to two years' dividend is quite sufficient. Railway
bodies in general admit of no reserve fund, asserting, with
apparent reason, that each proprietor is the best guardian of
the profits on his own capital.
" I think, however, a rest not exceeding 2,000,000/., or one-
seventh the capital, would be amply sufficient for the Bank.
The suzgestion I would therefore make to the Government
is, that in order to overcome the exigencies of the present
moment, and enable the Bank to meet the future inevitable
demands upon it, a short Bill should be passed in Parliament,
enabling the Bank to capitalise 2,000,0001. of its rest, and,
with the 533,000/. surplus capital over the 14,000,000/. to
advance as a loan to Government, at two-and-a-half or three
per cent., the sum of 2,500,0004 ; or, in case the Government
should not require such loan, to empower the Bank to pur-
chase 2,500,000/. Government securities, and to fix the arbi-
trary point of issue on securities at 16,500,0001., instead of
14,000,0004, as at present.
" Against this plan I know of but two arguments that can
be used, and they are so weak that I have thought it scarce
worth while to notice them. The one is, Is it prudent to
increase the issues of the Bank at the moment when the
bullion is expected to flow from that establishment ? The
other is the illiberality that would deny a bonus to the Bank
proprietors, in allowing the Bank to add two millions to its
capital from the rest. This last deserves no special reply.
" To the first argument I would simply answer, that the
present is not a Bullion Panic., but one founded on the re-
duced amount of the reserve, and the inability of the Bank
to aid the public."

A glorious festival has been held in the capital of
Prussian Germany—a festival more glorious and
propitious than any which has ever before gladdened
the hearts of that heroic people. About midday of
Sunday, the 11th of April, 1847, the United Diet of
Prussia was solemnly inaugurated in the White
Saloon of the Castle of Berlin. It was by a beauti-
ful and appropriate selection that the Chambers of the
new Parliament were convened upon a day peculiarly
consecrated to the religion. The constitution just
given by FREDERICK \b ILHELM IV. to his subjects
was thereby sanctified as it were—sanctified as as-
,uredly as the head and the hands and the bosom of
FREDERICK WILHELM IV. were anointed with the
sacred chrism at his coronation. " That man is little
to he envied whose patriotism would not gain force
upon the plains of Marathon, and whose piety would
not grow warmer among the ruins of lona." Such
was the exclamation of our greatest moralist when
treading the shores of the Hebrides. Such would be
our exclamation now, as applied to the venerable hall
in Brandenburg in which the hereditary princes and
the popular representatives of northern Germany
were welcomed by their paternal and enlighted SOVE-
REIGN, but that we are satisfied the heart of every
true lover of his kind will thrill with a sympathetic
enthusiasm. Never before was a spectacle more remark-
ible witnessed, whether we look to the days of
incient heroism or of the most recent civilization.
King FREDERICK WILHELM IV. has offered a tribute
to his people such as monarch never tendered spon-
taneously before. Without the physical influence of
a reyoluti,on, without indeed any direct moral influ-
ence such as would have been visible in a pacific
agitation, the Prussian SOVEREIGN has granted
his kingdom a representative constitution—un-
asked and unexpected ! He has rapidly
lo wed up his original announcement by
opening the liberal Legislature in person, by
opening it with an harangue most auspicious in the
policy VA hick it unfolds, by opening it with a
pageantry befitting an occasion so unprecedented and
memorable.

Among the almost innumerable advantages which
the United Diet will confer upon the population of
Prussia, there are three which cannot be overlooked.
They are proclaimed in the inaugurative address de-
livered by his MAJESTY. There is to be a perfect
religious toleration to persons of all creeds and deno-
minations, and FREDERICK. WILRELm utters that
great principle while he avers his own belief in the
GOD of Galilee. Standing up before the assembled
multitude, with his right hand raised to Heaven, the
KING, in one sublime sentence, declares his unalter •
able adhesion to the faith of Christianity :
" I AND SLY HOUSE, WE WILL SERVE THE LORD !"
Those words remind us of the solemn and condensed
language of MARTIN Lc-FILER ; they testify that
there may be a complete faithfulness to the creed of
our forefathers, without a bigoted and unbending
fanaticism. Beyond religious freedom Prussia is to
witness the immediate emancipation of the press, and
the secrets of those civil and criminal courts of jus-
tice, which have hitherto been concealed from general

ii,pection. What vast power is hereby conferred

upon the people ! what enormous authority is con

fided to their keeping! Truly, as King FREDERICK
\VILHELM said to them, on the ever-memorable 11th

of April, his MAJESTY has intrusted to the nation

" the costly jewel of freedom." Such generosity,
such magnanimity, such a deliberate and willing
resignation of those prerogatives of his Crown which
have hitherto been regarded as prescriptive and in•
alienable, cannot but elicit the admiration, the gra-
titude, and the affection of the Prussian race. King
FRFDERICIC WiLnELNI has strengthened the founda-
tions of his throne by those magnificent concessions;
he has ensured to himself admiration, gratitude, and
affection in perpetuity. Moriamur pro Itege No8tro!
will henceforth be the watchword of his people, and
it will be the watchword, not because they regard him
magnifyingmdiiinimhiof a "
isnth
eptrivminoesittiiglhluts::
butthro
becausee t they recognise

trious benefactor, because they see in him the realisatijn

of that patriot KING whose bare ideal fascinated the
imagination of the great BOLINGBROKE. Yes, the
Prussians are grateful, and, as the KING says, " Noe
to him who shall dare to dash their thankfulness with

I bold, opinion and bolder assertion, no one has blamed
any one or all of them for the present posture of
affairs.

Our eyes are turned towards tne Bank of England,
our attention is awakened, and our sensibilities pain-
fully excited, as we contemplate the sapid changes
taking place in that establishment from week to week.
The Bank is powerless in presence of the law of
1844. If, to arrest the drain of gold and the effects
of a demand for corn, it has attempted to interpose its
credit, it does so at the risk of its own security ; nor
is the public helped by the process. The public
suffers from the exhaustion of the Bank and the ca-
price of the law. There is no doubt the banking re-
sources of this great establishment are reduced to the
most feeble and alarming amount. This is a fact un-
disputed, and becomes at once an hypothesis on which
we can reason with common accord.
Is this exhaustion then the result of imprudence,
or the state of the law ? This is the real question.
On this subject we entirely agree with the views
contained in an able letter to the Chancellor of the
Exchequer, by Mr. I,AmrE MURRAY. The Barak
has not acted on the law of 1844. It has increased
its securities above 6,000,0001. since the 29th of
August last, in the teeth of a drain of bullion to an
equal amount. It has, therefore, reduced its reserve
of notes in the banking department, or, in other
words, its power of affording accommodation from