Gold Hill daily news. [volume] (Gold Hill, N.T. [Nev.]) 1863-1882, 1864-11-18
The Causes of the Financial Panic
in England.

The financial crisis which has been precipl-
tated in England by the rumors OF peace
in the United States, affords another proof
of the estimate of commercial, and even po-
litical relationship that exists between the
two countries. The prosperity founded upon
high prices was SenslJly affected at the hrSt
peace rumors, and credit was speedily shaken
TO degree that now threatens the most seri-
ous disasters. At last accounts failures TO
the amount Of al least hundred millions Of
dollars had occurred, chiefly in the cotton and
American trade, with a probability of still
more serious crash. That this crisis will re-
act upon Us, and produce arrangement IN
our monetary affairs, is abundantly apparent.
A tight money market in England lnvari-
ably produces hard times in New York, and
the United States. l. is satisfactory, how
ever, 10 know that our merchants and capt.
talists were never in a better condition for
wea,hering storm. They prudently took IN
sail some time ago, and for months past all
transactions have been for cash. Ihere Is
very little Indebtedness among them, and lew
merchants and manufacturers can be found
with heavy stock OF goods Oh hand. Hence,
a return to something like specie prices would
produce a comparatively slight result o.
course, many fortunes would be swept away,
and Shoddy would be dethroned; but the
transactions would probably not be very Sc
we're on the great interests Of trade and COM
meree. The present panic in England will
serve as 4 warning against oYer-trading and
speculation; and prudent business men will
shape their affairs in reference to the return
of peace, which General Grants position, as
well as the temper Of the people, North and
South, indicate as probable much sooner than
Is generally expected. -.
But there is reason to believe that mucn OF
this English panic is due as much to the VI
cious banking system OF that country as to
any other cause. The BANK OF England Is
Obliged BY law to keep a certain amount OF
gold IN its vaults, in order to redeem its out
Standing notes. Thus, for every pound note
issued 6y the Bank golden sovereign must
be kept on hand to redeem it. When gold Is
plenty in the bank vaults money IS plenty and
times are easy with the people; while with
drawal of gold from any cause produces pre-
cisely the opposite results. This Is what Is
now occurring in England. Our American
war deranged commerce throughout the world
and attracted an influx Of gold to that coun-
try as the creditor nation. The Bank OF
England at once expanded on this gold re-
serve, and thus stimulated trade to unhealthy
degrees. Il became necessary, IN due time, 10
open up new cotton fields to supply the loss
OF the American import trade, and the result
vas luat SOL0 uOWtu out OF luuld, SuIudt
Egypt and other countries, to pay for the cot
ton needed for the home market. This drain
Of gold compelled the Bank to restrict its
circulation, by running discount up to ten per
eent-an enormous figure in England, and
price that annihilates commercial profits. In |
other words, the Bank, in place Of aiding its |
customers to bridge over the period interTen- |
ing before the arrival Of the cotton cron- cor.
spires to crush its customers before thew can |
possibly realize their investments. Under
such sy stem panics are inevitable. and
drag-ehain Is placed on ali commercial enter.
prise. It is based upon the old illusion tha,
prevails in this country, as in England. thar
gold is money in place Of being commodity.
the same as other products Of labor, such az
shoes, caps, hardware. A healthier and more
scientific monetary system will prevail in due
time among civilized nations, but during the
interval We must endure as best we may the
wrongs inflicted upon labor by the present
avs,em-N y Sun,