Daily Nashville patriot. [volume] (Nashville, Tenn.) 1857-1858, 1857-11-19
Monetary and Financial.

monetary anu
From the London Economist, October "a.
It is some satisfac ton that, in the present juno
ture of sfars In the United States, recent change
of sound and rational character has been made
IN the French law as it relates the Bank of France
the effect of which will be to aid and not 70 neu-
frslize as It has done Cd former occasions the eff
forts Of the Bank of England. Before the renewal
of the charter of the Bank of France in the pres
eut year that establishment was prohibited by law
from charging more than six per cent. discount
What was the effect of that restriction? Was 1t
any advantage to the trade OF France? Money
being obtained upon lower terms in Paris than
elsewhere, a constant drain was kept up on the
Bank Of France, and gold supplied by iorced op
erations from the Bank Of England, ran through
the Bank of France, in a continuous stream-ano
thus indirectly in part neutraized, at the cost OF
the Bank of France, the natural effect OF the re-
strictive measures of the Bank OF England. NOW,
fortunately, that restriction is removed, ano the
Bank of France is left at full liberty to follow the
market rate of discount The effect is, that al
ready, short as the present pressure has BEEN the
rate of discount in Paris has been raised to y per
cent.
This wholesome change is to this country, at the
present moment, extremely important. Suppose
the French law to have remained unaltered; and
Ihe maximum rate of discount to have stood at SIX
per cent, certain that IN place OF 100000 OF
gold having been shipped to the United States in
the last week, very large sum must have gone,
and have reduced the bullion in the Bank OF
France, that a resort must have been had again,
and to a much greater extent, to those forced OPP
erations, by which gold could be obtained from
London, even though at large sacrifice; and thus
the efforts of the Bank of England, in order to
protect the bullion reserve against the present ar
tifcial demand in the United States, would have
been to some extent frustrated. As it is, the two
great banks, which in point of fact less or more
regulate the monetary transactions of Europe, will
now act in harmony, both following the natural
law of supply and demand, in fixing from time to
time the terms upon which they will do business.
If any proof were required OF the sOundness OF
these views we have only to point to the very in
considerable amounts of bullion which, both from
France and England, have thus far been shipped
90 the United States notwithstanding the very low
rates of the exchanges
But so far as regards the future, and the extent
to which it may be needfu to pursue those meas
ures of restrictive sefdefence, much, if not every
thing, depends now upon the turn affairs may take
in the United States. That is the point upon
which all eyes turned. Much has been said
upon the subject of oVertrading and al kinds OF
general reasoning has been adduced to account for
1t. On hand it is contended that too free
commercial system has induced to imports beyond
the means OF payment; on another side it is said
that unrestricted bank credits have done all the
mischief. We place very little faith in the latter
reason; none whatever in the former. We have
seen in this country, and in many others, periods
of great speculation, under all systems Of CONNER
cial law, and under every system of monetary law.
We have had monetary panics and commercial
crisis under under the strictest protective system
and under system of comparative free trade
under the Bank Restriction act of 1895, under the
Cash Resumption act of 1919 and severely even
under the Bank act Of 1874. Never was a whole
nation seized with a greater mania for rash and
improvident speculation than that which prevailed
in this country from l845 to 1S47. But this, at
least, can be said in favor of perfect freedom from
restriction; when a nation does make great mis-
take, it is more easily and more quickly remedied
shan when mems acts trameled with vexa-
tiOus interferences with the natural laws of com
merce.
In the case of the United States at this time, if
by overtrading is meant an undue conversion of
floating into fixed capital in the formation of rail-
ways and other public works. and an undue extent
of borro wing from foreign countries upon such So
curties and most of all extraVagant speculation
IN shares based upon borrowed capital, such we
witnessed in England in l646, then We have no diff
fculty in asserting to the charge. But if by
tracing is meant an excess of importations and
DO -lation, an excess of production and even
OF consumption, doubt if there is much,
If any ground for the assumption. Nor is it
any proof that such has been the case that numer-
GUS failures have taken place among importers and
other traders, even that prices are for the mo-
ment unnaturally depressed. How many in this
country in l647, who, as far their legitimate
trade was concerned, would have been wealthy and
far beyond the reach of the crisis were vet ruined
in consequence of their speculation in railways and
how much property shared in the depression caused
by the general pressure, which was not in excess
of the gitimate requirements OF the public. Look
ing only at the legitimate commerce of the United
States, We can discover no evidence of overtradng
in this Ofthe term; and this far as regards
the future prospects Of the commerce and manu-
features of this country is the essential point
for consideration. In 1885 and 1885, preceding
the crisis of 1887, the state of the trade between
the two countries in this respect was very different
At that time the value of exports doubled in lit
tie more than year. At this time there has been
no such sudden and speculative increase. It is
now some years since exports to the United
States reached the maximum Of e24, OOO, OOO-du-
ring the last two years they have been Ell 900 600
and e21 100000 respectively, and far as the
present year has gone, they promise to amount to
about e23, 900, 900.
Considering then the great increase of the real
productive population Of the United States, the
enormous increase within few years OF the pro
ducton OF cotton, grain, provisions, and the other
products of the soil, and the demand for them at
high prices in this and other foreign
countries; considering, too that the stocks of all
their chief article OF produce every where To-
and the means Of replenishing them, owing to the
bountfu character of the harvests unusually great,
there are no good grounds for believing in any
traction OF their consumption of foreign commodi-
ties, or 10 any dhculty In their means OF paying
for them. Indirectly all transactions must for q
time be disorganized, aud affected by the moneta-
~ difficulties but there is no reason that we can
discover for the belief that the substantial basis up
on which the legitimate trade between this coun-
try and the United States rests will be more than
shaken by the present crisis The los
Ses of the money dealers and share spectators in
New York and Philadelphia will have as little per-
mAnent effect upon the condition of the industri-
Ous millions, who the real consumers of Euro
pean goods, as those of stockholders in Capol
Court the productive energies of Manchester and
Leeds.