The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1866-08-11
Tho financial Situation in England.


There must be some powerful motive, which
ordinary observers may not Sec for the action
Of the Bank Of England In maintaining the rate
Of interest at ten per cent This rate was
established months ago, under the pressure Of
one Of the most extraordinary financial difficult
| ties that ever occurred in Great Britain. It
| was az sudden as severe. Some Of those which
were the oldest and most substantial banks
and houses previously fell under the shock.
The Bank, besides raising the rate Of interest
to ten per cent, was compelled to call upon the
government for extraordinary measures of pro-
lection. This was when the crisis was highest,
when oil Europe appeared to be resting on
volcano, and when feeling of doubt and I'M
certainty pervaded the whole continent With
the actual commencement Of war, when people
could begin 10 see something Of the extent and
limit Of the danger, the fever OF the crisis gra-
dually subsidized in England. Expectation was
then raised that the Bank would soon lower
the rate Of interest Week after week passed
away and the interest was not reduced. 1t Is
ten per cent to-day, while In Paris, just across
the channel, money il only three and half
and four per cent. Yet England il not engaged
in the war, and not likely to be. Some persons
anticipate o reduction to five per cent shortly;
but, judging from information we have re-
ceived from high authority on the subject, we
do not think this will take place so soon.
People, and business men In particular,
naturally ask what can be the cause Of
this state Of things-of this prolonged high
90 10 lHlA IT, mad anl II
we must 60 back TO the original cause
Of the crisis The war in this country and the
consequent blockade Of tho Southern ports, cut
of the supply OF cotton from England. This
was terrible blow, as every one must under
stand who contemplates the magnitude OF the
cotton manufactures and trade Of that country.
Cotton Is the Likelihood Of England. In her
distress from tho want Of this product her CAPT
talists turned their hopeful eyes to other
regions Of the world-to Egypt, India. Africa
and other parts. Vast sums Of money were ex-
pended to stimulate the production Of cotton,
and the government gave oil the aid II could
to this object. These efforts failed, however.
because there is but one country In tue world
where the laws Of nature favor the production
Of the long staple cotton Of commerce. Our
soil, climate and labor, and above all. that
wonderful river in the ocean which sweeps
round our Southern coast make this country
alone the producer Of that beautiful article
that clothes the civilized world and regulates
the trade OF ell commercial nations. The high
price Of cotton during the blockade did create
O sort OF unnatural stimulus TO Its culture else
where, and led many into speculations which
afterwards proved ruinous. The war ended,
the ports OF the South were opened, and there
came out over two millions OF bales Of cotton
The price consequently wen, down, and this
lief, large class Of spectators and capitalists
abroad in q bankrupt condition. AZ the same
time that they were ruined we were saved;
for had Il not been for the supply OF this
valuable material, worth more than ten
years crop of California gold, the
burden Of our war debt and taxes
would have thrown The whole country into
bankruptcy and widespread suffering. But the
sudden introduction Of our cotton into England
at the close Of the war gave new life 10 enter.
prise and speculation. II acted like new Gre
alton and diffusion OF hundreds OF millions Of
money, something a. the extraordinary issue
| OF the fhmous South Sea stock did In Laws
time. Railroad enterprises and speculations,
/ sneh A those Of AR Morton Psto. sprunq nm.