The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1866-04-14
NJ EMILE PEREIRE ON FINANCIAL CRISES.
Influences Of Discount and Tx
change Between the Banks Of
England and franco.
Pho Bills Of Exchange Of IAN Europe in a
Great Part Centralized" in Paris
Cotton Trade and Food and Bull
lion Exports.
n. IL. te.

~
has been examined before the Bank Inquiry Commits
sn the last
Il HUsRRr- DsIIHK asked how-the mutual depend
snce OF the Banks Of England and France be ng admit
Of = to the ap OF
land when the rate OF discount Is higher In the latter
than the former except by raising the rate in France
the stock OF coin and bullion Of the Bank Of France
two distinct things When people owe they must pay
be paid for II Il cannot &c paid With fabrics
uAer productions must be paid iUh coin, tedse BE-
toye al Min9' ne raw natsias Is S sanisd al that Is
England that wants the cotton, and not France,
Why should France empty her Golfers TO oil those Of the
Bank Of England The bill OF lS4S has not for effect to
prevent coin from arriving or leaving; is limitation
& notes and not OF CON- Because the Bank Of England
without corresponding value in coin and bullion, can,
not be superior to the f 600 sterling Of government
stock which forms Its capital and that then II for want
Of notes the Bank obliged 70 raise It's discount TO Ave.
being here three or four money viii go to Eng
% II we are not the debtors Of England.
PHEsrDnsr IN Rouher}-That Is tie great point You
n EXILE PsRnRE-I will be clear and precise take
1he example in all Its vgor-the Bank OF England puts
Il is commonly said .'snce our discount is at three
will send all money TO England 70 employ II nj
But mot rs y n 70 40 na 70
can DO taken and kept in the portfooin that the
Aiscount Of per cent secured without any dis
SoS cannot leave France unless the exchange on London
amounts TO 25fr 87kc, in which case the banker
cen. would have had besides The profit coming from
tho rise in the exchange But in such circumstances
sss in 9e exchange s not 70 30 feared 1 SS ~ e.
and thence they 60 in different directions consequently
ono can nd at Paris a. much paper on London a one
wants. especially when repeat France for the balance
OF her exchanges not the debtor Of England. II
that operation taking place at this momentf There 10
tween the Of discount Of the Bank OF France and
chat OF the Bank Of England 30 that according 70 the
eenco Of two pcr cent to empty the M q the Bank Of
France and oil that Of the Bank OF England But that
not done There does not go and there cannot
n 25'r 22hc II is impossible to send gold from here
70 London, and yet there difference Of two per cent
b because the question IS very important and one
with which am very familiar Ask the nrst bill bro
the sovereign sterling in .hor paper London is bought
q Paris at 2sr 22c and In paper Of three months At
3sf TMs less the discount Of seven Per t Ssns
when il is hns II order to obtain . higher dis
shree and true for four do not shy that the Same
would be the for ten or twenty-five must not push
ven, speak Of tho maintenance Of the discount al
ee per cent BY the Bank Of France and the elevation
q Of S 'n which BE- and
eapld not be continued long Bot how would u be
rood, Would be y soS leaving the Bank q France
Shanpelsf You shall II. during month
svo that stats Of things were 70 sxist.money
land coplnned 70 discount at seven per cent
me result would BE- such an advantage in
would be presented the Bank Of England which would
permit that bank 10 yeconsttutc q notes by the
d: q @ 2 e SS ssd .ss thu: Of AS b sa yasr
isas in tho world producing the l Of the Bank q
:. ; az sSs j s.sseis sS, Ike ss q .s
snta,s. n &c Sck The same law s that sas
paeine capital " he single tuc' tAe tspOray renson
fa s @ ?, ,s Y =. ., sS.r e is.. ,o,,
yendence Of the two countries regards the rate Of dis
What does he tell usf Thu; II the discount DO ut
sree per cent at Paris and at seven al London bankers
viii hasten at Paris which the great market Of e.
changes take bills London; they will cell their secu-
rifles and receive In exchange paper on Pars with wnlcn
All the bills that have on London send to Lon
don, and realize my capital to buy bulls on Psrs Inc
effect OF the difference OF the rate OF interest, when
higher London than at Paris Is then TO keep out OF
England by the attraction OF Oh interest," bills OF ex
change which but for that would 60 TO be negotiated at
London.
n Emz PnKns-By tho Bank Of England'
n DEIcHrHAr-By the Bank Of England and that
would place IL under the ncccss ty OF increasing It's
What docs the Bank Of England do In raising is
Of discount compcls all bills which would be
presented 70 be discounted TO remain ON the Cont
nent and that renders money less rare In England, and
dear in France. You mutually DEPENDENT and IN
chat state Of things the exchange necessarily rises
Such is the inevitable result OF the situation which n
Perere has so well explained. No, u Is not necessary
dcarer among neighbors II you do not dctan Il in
France they will come TO take IL or In 9th terms, tho
debt which England has contracted remains In your
banda and It is your capital which pays the goods Eng
land has bought You have no cotton TO buy in Esyp.
you say. Granted; bat the ddt Of Engiand eomss into
NJ Enir PsnfIsI-we lend TO England We give her
credit for the amount Of our productions Tor those
which we have exported; but We do not lend her
money. There is consequently no danger for our me-
aallic
M DEIunmAI-Yes l~d 10 Esoland That Is the
ccaest explanation that has ever been gwen The adj
ver.aries OF NJ Perere's opinion mover said anything
clearer decisive than what ne has just said No,
~ l. possible for interest TO remain high IN England
and low In France assimilation must necessarily take
place and II you have the imprudcnce not TO submit 70
Una, law these days when the conveyance Of capital
is 80 easy you render your position dangerous
the hcit Of will be manifested not little oy little,
but all at once because without warming hose who SO
speak do not occupy themselves with what % taking
place, who are absorbed by their business, will believe
that the situation continues 70 be like what was whilst
IN reality capital has become rarer; aud So instead OF
seeine successive the rate OF discount which
would permit them TO reduce their operations they will
be exposed 70 sudd and important dercncesto those
Jumps In the Of interest Of which
plains loudly. The Bank Of England has been blamed
here for going too fast but can declare that all men
who are acquainted with business IN England reproach
the bank not with acting too quickly but with not act
ing quickly enough repeat that NJ Percre has pre-
sen,ed situation In the cleares and convincing
terms for all rejecting men,
M EnE PKRnRE-You have too much experience Of
banking business MAINTAIN that when English com
merce is debtor foreign countries for very large
sums elevation Of the exchange ON London " 10 be
feared at Paris IL Is the contrary that takes place II
England q great deal Tor the cotton, wool wheat
and cattle she imports that must augment the number
OF the bills Of exchange drawn on her fnose o'an y,
rr,np az Fdris ldrgr ggdnsfies mud trtng down ne
erkdnge and not MAKE rte Now, the fall OF the er
change prevents the sending away OF gold
NJ. PAsrw-Do you believe that the exchange plays
the part you indicator For my part, think that the
exchange Is not at all determining element In Inoia
the interest fourteen to fifteen per cent The ex
change indicates q very tri1ng pront but az the dis
CONT al fourteen and fifteen per cent masses, not OF
gold, but 81 silver, are sent TO India
hsik PkRuRE-It Is not for the purpose OF making
investments that silver sent 10 India, but principally
Tor the balances IN purchases OF raw materials You
know very well that when purchases Of cotton have 10 be
made In India or In Egypt Is not difference Of
fvo cent in the interest bill of which