The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1866-09-24
MONEY CRISES AND THEIR CAUSES.
French Opinion Of the Position, Action and
Effect Of the Bank OF England.

tfFOu the farE Sictie Sspt. %.
For more than three months, from the i2ih
Of Nay to tho 10th OF August, tho Bank OF England
maintained It's rate OF discount At the price "
lO per cent and during that period the capital Ia specie
remained completely deaf 70 that appeal The rate Of
10 por cent was not sufficient attraction, and tho Bank
being defedfed obliged n lower IT. terms during
the whole OF that tine the Bank OF France maintained
Its interest al and 3k, and its reserve already
very large did not 10 increase. The majority
OF the other large banks Of Europe followed tho example
oi that OF England and their diminish until
the day which they relaxed their rgor and reduced
Their rate Of discount II IL said with good that
gold and sver merchandise that their scarcity should
cause dearness aud that eheapnees onlv he pro-
dnced by abundance But high rats OF capital may be
determined by some other than s rarity anmey,
Ion toant Of guar1,te,s sesiritg who bank sud
denly raises It's terms FOR discount by two per
cent IN few days, as the Bank OF England did
rccentlv Il proelsims he aPpyonch n daager
and S0ndtsey ,cdm ~ socultiy, which drives
away capital The more Il raises the rate or discount the
more Il manfests that the guarantees offered II In
change Tor Its specie not proportion 10 tho risk "
must incur Capital Is then withdrawn and waits in the
hands OF us owners until the storm has passed over the
high price OF money docs not tempt them they pr eer
to gain less and 10 run fewer rsks The defenders of
hs nopiy pretended that banks should raise thersi
count 70 prevent the expectation o gold and sver they
athrmcd that, after certa period of dearnes the
changes became modified, and that there influx
OF specie from abroad. Yet the history OF the last
four months has proved that foreign countries
not concerned In the dsappar OF capital aud could
not have influence In its return An the great banks
o Europe, with tbs exception Of that OF Fmnce raised
Their rate OF discount ooncurrenty and gradually with
the Bank Of Englapd and all their metallic
diminish When the change took place and the English
establishment reduced its rate eight per cent a the
other banks also diminished their interest, and gold
again flowed In 10 them Il did 10 the Bank Of Eng
land Thus neither England exporting 10 the CONT
nent, nor the latter To England The panic had passed
away and the capitals were again seeking sure and
productive employ II the Bank consistent
with its promises IL would 20 continually
raising its discount according is became
hansted and is treasury would become impoverished
under tho pressure OF the panic which the bank had
Created but the bank stops people begin 10 breathe nj
their ease and " the directors Of the institution
skful they seize the moment TO relax the situation and
witt confidence gold returns " by euchannent But
u tho bank persists In ts the crisis continues Ia
definitely for three four months, haS just
IN England Wph liberty snch mistakes oad no occur
because tho Of all the banks would not dmiDs
at the time and the contents OF the different res
crvoirs which they would form would flow from
the other that the level would be ned almost
without variation