The Sun.
London, England, 1856-01-01 00:00:00

REVIEW oF TUE MONEY MARKET.

(Frans the Times' City Article.)

Monde) Evening.
The financial experience of the past year, like that of
its predecessor, has justified the reliance expressed at
its commencement. The chief question then was, whe-
ther the Government would resort to loans instead of
prejudicing the war by adding too heavily to its bur-
dens. Sound policy prevailed, and the country has not
only been able to meet satisfactorily all other sacrifices
required of it, but has maintained a eeurse of commer-
cial prosperity fully equal to the average of ordinary
times, and far greater than has been witnessed else-
where, even among those nations that have remained at
peace.
This result, moreover, has been arrived at in the fans
of attempts to create a commercial panic similar to those
vainly employed in 1854. Although Consols, which
were then driven down to 851, have this year, in like
manner, touched 86/, the general range of prices has I
shown remarkable firfunees. Confidence, also, has cha-
racterised the money-marlset, since, while the rate of
discount during the concluding three months has stood
at a point rarely reached, there has been an almost totals,
absence of any exclusively domestic cause for the alte-
ration,
consequently been followed by few
. go
to indicate that anything unusual has taken
pl
ace. The demand for gold in France and coins parts
s and it has
of Germany to pay for food, and the unexpected and
sudden measures taken to obtain it, created a cor-
responding movement in all quarters. As regards
her general position, however, England stood in just
the same relation to other countries before it occurred
as she occupied afterward. Its effects, therefore, were
relatively unitnportant, and enough has since been wit-
nessed to demonstrate that in the absence of any abnor-
mal influences there eras little in the state of English
commerce to lead to pressure of any kind. Indeed, se
long as the rise is universal, and we are not placed at a
comparative disadvantage by it, there will be national
cause for alarm, whatever point may be reached. The
experience of America and other countries where the
rate has been commonly from 8 to 15 per cent, shows
the conditions to which, under certain circumstances,
trade can healthily adapt itself.
With respect to the future, this solidity of our com-
merce is sufficient to dispel all anxiety, and there is no
reason to regard the third year of the war with any di-
minution of the trust rightly entertained at the com-
mencement of the preceding two. Happily, the public
are being gradually disabused of the vague terror that
war and financial contusion are inseparably connected.
A grt at nation making enormous annual additions to its
capital from the profits of an undisturbed trade, can
carry on hostilities for any number of years without
necessarily experiencing a moment of monetary difficulty.
Of course, it is deplorable to sink in this way what
might be applied to our material progress, but even in
that respect regret is diminished by the fact that, instead
of so applying it, we usually squander it in foreign
loans or schemes whicll are ultimately repudiated or
broken up.
All that is requisite to insure safety is that the
Government should resolutely limit its expenditure
to a point which will not cause the annual efflux of
bullion to exceed the realised surplus at our disposal ;
and, as the circumstances necessitating that precaution
are inexorable, there can be no pardon for inattention
to it. Whatever devices may be resorted to—unlimited
issues of paper, suspension of specie payments, or even,
as in Russia, a prohibition of the export of gold—no-
thing can do away with the annual requirements for bul-
lion to meet all the excessive imports the war occasions.
Hence our power of continuing the war must depend
exclusively upon our Power of getting gold. As we
possess this power, however, to a greater extent than
any other country,
such a condition should not be con-
sidered a hard one. We have the certainty that in
fighting tipon these terms there are none who can hold
out so rang, and that it is the consciousness of this fact
where inspires awe,
,• , that every
That in the present state of our trade our annual gains
are amply sufficient for an expenditure which no other
country can rival bee been shown by the results of the
past year. Notwithstending the prodigality of our di-
rect outlay, the grant of loans to Sardinia and Turkey,
and the continual disbursements for public works in In-
dia, Canada, and elsewhere, to which we had committed
ourselves before any Peril was apprehended, the specie
at the Bank of England is only 1,600,0001. below the
stood
two months after the declaration
quantities held by the other establish-
pofoiwnatra,tvewhliiliechthite
t
establish-
ments in the United Kingdom are in excess of their
usual aggregate.
If, however, our expenditure had been carried greatly
beyond these limits, what would have been the result i
A Bank Restriction Act and an issue of irredeemable
paper would render the coin now in circulation available
for export, but half of it would probably be hoarded, and
after the other half—amounting, perhape,to4o,ooo,oool.
—had been sent away, we should find ir. the succeeding
year that the limitation of expenditure by which we
might voluntarily have preserved the credit of the coun-
try would be forced upon us in the midst of disaster and
confusion. When in Our prodigality we had parted with
all we possessed, and had injured our commerce in the
ac`,, we should learn that upon that commerce for the
future our only supplies depend.
It is true that in case of mismanagement on this point
one legitimate palliative is open to us, and it is well that
such is the fact, since it is impossible to foresee into
ent may yet be led by the fre-
quent
Government may
that in the conduct of the
struggle
to be considered, and that it re-
mainswhat rntr moneyol:Ptkie
be seen
o 0
G howerøt far the maintenance of specie pay-
ments is compatible with a state of war. These cries,
like those of the currency theorists', would beget an
impression that, owing to our credit, our means are
illimitable, and that, at the worst, all that a Minister
create Console for what he wants
or
the gold question, how-
has to
impose do
firses tho
taxes.
In
how-
ever, neither a creation of Consols nor the heap-
ing on of taxes can help us. Foreign merchants
will not take securities in paymeet for their goods any
more than they will take hank-notes. To meet that
of the expenses of a war which repre-
slaerogtos
tho proportione
s ra ord
rY profits of contractors, shipowners,
&c., and which, involving merely a transfer of money
from the community at large to certain individuals of
their body, terminates in no actual loss to the nation,
loans are the true resource ; but for anything beyond
they are a delusion. Satisfaction, therefore, may be felt
that, in the unlikely event of the Government being
rash enough to bring this truth to a practical test, there
would still be a means of averting the peril that would
ensue and of giving them time to return to a wiser
coarse. The present constitution of the currency leaves
us always with a magnificent expedient for any sudden
emergency. An issue of 11, notes might set free, at any
time, probably not less than 20,000,000/. of bullion.
Like ad such aids, however, it would admit of no repe-
tition, and should therefore be held up merely for the in-
struction of our enemies, as showing the extraordinary
reserves that must be exhausted before they can hope to
see us even approaching the premonitory symptoms of a
state of real difficulty.
The belief ig, consequently, warranted that with