Wheeling daily intelligencer. [volume] (Wheeling, Va. [W. Va.]) 1852-1859, 1857-11-18
rFrom the London EcOnOmist.l
The Theory of EngIIsh Ripanees.
PoL1oY OF THE BANK OF ENGLAND.


The advance in the Bank rate of discounts to
s per ce"t. must not be regarded as an indica-
ton of any further pressure upon the money
market for domestic purposes, but as prote:-
ton against drain of our bullion which might
he induced by the low rate of the exchanges
with the United States. Every one, even those
who are not connected with that trade, can easl-=
" understand that the rate at which the bills re-
mitted from America can be turned into cash
,,,st he an important element in the calculation,
whether it will be profitable or MOTTO transmit
gold equal to the net amount which such oIlls
afford to the holders when reduced by the dis
count to be paid If house receive bills to
the value of :e100, 900, the exact quantity OF
gold which can be obtained for them must de-
pend upon the rate which is paid for convert
ing them into cash. At 8 percent. paid for
their discount, the quantity of gold which
would be obtained for them would represent,
supposing them to be two months bills, tlOO,
600. but at per cent. the amount OF gold
which would be obtained would represent only
EOS, 667. 1t must, then, be quite plain that, Ia
king the exchanges between the United States
and this country at any given rate the nam
question which must determine the profit OF loss
of transmitting gold must be the rate at which
gold can be obtained here in exchange for the
bills that are to be drawn or received against IT.
A rate of per cent discount may make tue
operation profitable; a rate of 8 per cent may
entirely suspend it. Looked at i'll this light, the
policy of the Bank of England during the last
three years, Of governing the rate OF interest by
the foreign exchanges, and the pressure when
exchange transactions, rather than domestic
transactions, have brought upon it, is ut once a
sound, and so far as the home trade is concern
ed, a truly conservative policy. 1t is of inti-
nitely less Importance to the home trade that a
| high rate of interest should be paid for time
| than that our resources should be drained so
| much to feed speculation in foreign countries
that the ordinary wants of our merchants and
manufacturers must be curtailed to an inconve-
nient and ruinouS extent. The loss accustomed
by the depreciation of property under such cir
cumstances would be much greater than from
| any difference in the rate of discount, even
when at the highest. We have seen the time
when bankers have nominaly fixed the rate OF
| discount at per cent, but when their sources
| of supply were nearly drietlup by foreign drains.
lat the present moment It would be but little
satisfaction to the home trade TO sec the rate OF
discount kept down at 5 or per cent, when
| the effect would be to drain our market OF bull
lion in order TO feed demand abroad TO oe
| a high rate of interest, like high price oil
commodities, is the only true correction of scar
lefty. As in the case of commodities, 1t acts as
security for the future in three ways-first, as
we have shown, it prevents the expectation OF
bullion; next, it encourages its importation; and
lastly, it tends to economZe the use of capital
| by modifying transactions already undertaken,
and, for the time, inducing too great caution in
entering into new. ones In every way an ade'
Quately high rate of interest is the best-nay
! the only real conscrvator of the home trade at q
time like the present, when, in almost every
great commercial country, enterprise and spec
ulaton have outrun the Legitimate means Of
conducting them. ..|