New-York daily tribune. [volume] (New-York [N.Y.]) 1842-1866, 1857-11-21

il not mere supYositon. On October 80 i347,
tho reserve Of tho banking department. had sank
to fI6O0, 900 while tho deposits amounted 10
f13,oO0,o0o. With fsw moro days Of the pre-.
vailiDs alarm, which was only sllsyed BY fnsa-
cal corp detat on the part of the Government, the
Bank reserve would have been exhausted and the
banking department would have been compelled
to stop payments, while more than ai1 millions Of
bullion lay still in the vaults Of the ssung depart
ment.
II is self evident then, that tie drain Of bulGon
and the decrease Of the reserve of notes, act mu-
tuAuy on each other. While the withdrawal Of
bullion from the vaults Of the issuing department
directly produces decrease in the reserve of ths
banking department. the directors Of the Bank,
apprehensive lest the banking department should
be driven to insolvency, put on the screw and raise
the rate OF discount. But the rise in tho rate OF
discount induces part of the depositors to withdraw
their deposits from the banking department, and
lend them cut Ut the current high rate Of interest,
While the steady decrease of the reserve intimi-
dates other depositOIs, and induces them to with
draw their notes from the Same department. Thus
the very measures taken to keep up tue reserve,
tend to exhaust it. From this explanation the
reader will understand the anxiety with which ths
decrease of the Bark reserve il watched in EGG
land and the gross fsllacy propoundea in the money
article of recent number Of The London Times.
1t sbys:
The old oppoasnts Of the Bank Chatter Act beginning
point One Of Their src !. mode Of creating fright BY point
=. E late e. he .pf would 81 Be o. TO %
would be- in fact Obliged do But the f.c. is that che
counts on a. great scale as ever since their bills receivable
ss s . .H Is to S oa T9 could %
the scale, but viii suPPoss af with oontr.tion OF
natives"
The sleis ht Of hand on which this argument rests
ia this: that the depostors are deliberately kept out
of view. 1t needs no peculiar sIertion Of thought
to understand that if the baking department had
once declared itself bankrupt in regard to it, lend
err, it could net 90 on mailing advances BY way Of
discounts or loans to its borrowers. Taken al-in-
all, Sir Robert Peers much Wanted Bank lsw doss
not act at all in common times; adds in diff
cult times monetary panic created BY law to the
monetary panic resulting from the commercial
crisis ard at the very moment when, according to
its principles. its beneficial effects should set in it
must be susp ehded BY Government interference. In
ordinary times, the maximum Of notes which the
Bank may legally i,sue is reyer absorbed BY tho
actual circuation-a fact suf cisnty proved by the
continued exi.tence 10 such periods Of reserve OF
notes in the till Of the banking department You
may prove this truth by comparing tho reports of
the Bank Of Eoglsrd from l647 10 1857, or even by
comparing the amount Of notes which sctus!ly cir
culated from 1919 till 18i7, with that which might
have circulated according to the maximum legally
fixed. In difficult times, in l647, and at present
by the arbitrary and absolute division between the
two departments Of the same concern the effects Of
drain of bullion art6cally aggravated, the rise
Of interest is articay accelerated theprcspect of
insolvency is held out not in consequence Of the
real insolvency of the Bank but Of the fictitious 10.
solvency Of one oS its departments.
When the real monetary distress has thus been a.
grsvated by an artificial panic, and in it, wake the
sufficient numbtr of victims has been inundated,
public pressure grows too strong for tie Govern.
pent, and the law is suspended eIs,tly at the
period for the weatheripg Of which it was
created, and during the course of which it is alone
able to produce any effect at all. Thus, on Oct.
90, 1e47 the principal bankers Of London resorted
10 Downing street. there to ask relief By suspen-
sion Of Peel's Act. Lord John Russell and Sir
Charles Wood consequently directed letter to tho
Governor ard Deputy Governor Of the Bauk OF
En- gland, recommending them to enlarge their i'sue
of notes, and thus to exceed tbs legal maximum
Of circulation, while they took upon themselves the
responsibility for the violation Of the law of l344
and declared themselves prepared to pro-
pose to Parliament, on its meeting, bill of
indemnity. The same farce will be again en-.
acted this tims after the statc Of things hiss come
up TO the standard Of the week ending on Oct. 80,
1S47, when total suspension Of all business and Of
all payments seemed imminent. TIE only sdvAn
tage then, derived from the Peel Act is tina: that
the whole community is placed 10 thorough de-
penderce on an aristocratic Govsrnment-oa the
pleasure Of q reckless individual like Pa'merstos,
for instance. Hence the Ministerial predictions
for the act of 1874; investing them with an irAa.
erce on private fortunes they were n:ver before
possessed Of.
We have thus dwet on the Peel Act, because of
its resent influence this country, as well as its
probable suspension in Eusland; but, if the British
Government has the power Of taking off tie shoul
ders of the British public the difficulties fastened
upon them BY tbs. Government itself, nothing
could be fal.er than to suppose that the phenomena
we .hall witness on the London money mArkct-tte
ri.e AID the subsidins Of the monetary panic-will
cor s,tute true thermometer for the intensity of
the crisis the British commercial community have
to pass through. That crisis is beyond Govern.
rnept control