Baltimore commercial journal, and Lyford's price-current. [volume] (Baltimore, Md) 1840-1849, 1847-02-13
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Financial Crisis-In the Commercial Jour-
nal of 23I ult. we published, from the New York |
Courier Etnt Jrnjs, what was termed the "Dan-
Ger Of a Financial Ciisis:" the following, from
London paper, is explanatory:
In the foreign exchanges to-day, generally |
speakinr the demand exceeded the supply ot
hills. and in consequence the rates for paper upon
Holland, Hclgium, Hamburg, and France were
rather lower than last post.
From various paragraphs during the last few
DAYS both in the London and continental papers,
on the present condition OF the Bank of France,
an IMPRESSION seems generally to prevail that in
the wear 1899 the Bank of England obtained re-
lief from danger by loan from that institution.
and opinions are consequently expressed lhai II
similar aid should now he required IN return, II
could not with proprirty he refused. The idea,
however, of loan having at any time been MADE
nv the Bank of France to the Bank of England
is altogether erroneous. In July, 1888, tAe uuI-
lion in the Bank of England had fallen hcl""
.G3 600 Geo sterling, while It's rate "i hiS."u",
was MS hinh as 5 l-2 per cent. 1t was evident
that the causes for the existing drain consisted
more in dstrust abroad, founded on belief that
the Bank of England could rot long continue
specie payments, than in an uniavurahle balance
of trade or a run for sovcreigns To hoard at home
Parties on the continent drew out all their balan-
ces here, and much more as their corrtspoh-
dents would give them credit for, discounted the
acceptanccs in London, and, in the absence OF
foreign bills, took gold from the Bank OF England.
Under these circumstances 1t was Impossible mat
exports of produce and manufactures from Eng
land could take place Immediately to sufficient
extent 10 couuterac the evil; but it was seen that
the difficulty would he met if temporary creation
of bills on the continent could I've elected. WIN
this view, the Bank of England engaged to trans
fer English securities as a guarantee to MesSrs
Barring Brothers q CO., or those whom lhry
should name, and this house arranged to ORA"
three months bills for 10000 600, on various
houses in Paris These bills. which Barring Bro
theirs g. Co. negotiated upon Change lpayl"g
the proceeds into the Bank, as gradually TO act
upon the circulation), fully supplied the trade
demand for rcmilances hence. and equally served
10 meet all paper England RENTED here Tor
returns as they proved better return than gold
At the end ofthrce months, when the accept 'ncts
fell due the same amount was r. drawn, so as 10
cover each acceptor 10y bills on his neighhor' mus
prolonging the operation to SIX months; but, De-
fore the expiration of this period, the supply OF
the regular rrmitances of commerce had been
such as to enable Elessrs. Barring to liquidate all
the engagements in Paris, and to restore the
pledged securities to the Bank of Eng land. -.
From this statement the Bank OF France will
appear TO have had nothing to do with the oprr- |
alton: but a mode by which they facilitated IT'S
progress, and which, doubtless, gave Use to the
erroneous suppositons which have since been
entertained on the subject, remains to be men |
toned. The dlaughts drawn by Messrs: Barring
on the various French houses were, OF course,
liable to be presented Tor discount to the Bank Of
Frarce and as these firms. espectivey, had crt d.
its only to certain limit with that lnsIlutIoh,
there was possibility that their rejection might |
become necessary, owing to such limits btlngcN-
ceeded. This difficulty was calculated TO produce
an injurious effect, aud application was therefore
made to the Bank of France, in order that II |
might he overcome. An understanding was &C.
cordingly enter d into by the Bark of France, |
that the draughts, in case they should make their
appearance, should be discounted without regard
to the limits in question. Ills precautionary !
arrangement, ho ever, proved to have been
scarcely essential, for the draughts being of tie
first character, and the rate of discount ut the |
Bank of France being somewhat higher than the |
market rate, they were readily discounted out OF
doors, and hence it is believed that but very |
small proportion found their way into that estab-
lshment.
The only claim, therefore, that can be urged |
upon the Bank of England in the way OF reclpIo- |
city is that supposing the Bank of France should
now, for the purpose of purchasing silver IRON
US, adopt method analogous to that just desert
bed, the facilities of discount should be al
forded with regard to the parties upon whom they
might procure bills. These would, doubtless, |
consist of leading houses, whose accCptances |
would at all times be received with avdlty by the |
ordinary money-lenders, and such an engagement
on the part of the Bank Of Eng land would there
fore involve great stretch of generosity
From the present aspect of affairs 1t seems by
no means improbable that some measure of this
description will be resorled to by the Bank OF
France, and 1t Is important to recognise that II
such should be the it must cause an Imme-
dlate rise IL the discount market. demand
from a new source for two millions, even Tor
only one million, could not come suddenly upon
US without producing decided increase III the
prevailing rates, and thus another is added TO the
numerous reasons which already exist 10 call iOr
the exercise Of caution.