The New York herald., 1871-10-23
ENGLAND.
The Advance Of the Rate Of Discount Of the
Bass Of England. sg


Tho Advance Of the Rate Of Discount Of she
Bass Of England. s.3
FrSm the London Daily News, Oct aI
There is no sronnd for surprise In tho Iact that
she Bapk oi England has raised its rate Of dis
count 70 nye nss cent Half the evils incident to
sucn changes are averssad when the event is
soreseen, ana the movements ~ tne mercan-
ule public since Wednesday evening have
shown that BY them, at least, the signs or
= coming cnange were understood. Early last
Eeek the money markst was comparatively easy,
the suspension 0f the German demand for gold hav
ing tranQuiized the apprehensions wnicn had pre-.
vl0usly prevailed, and in the open market u was
possible to borrow under the bank minimum. But
nnder these favorable appearances movement ad-
serse to the stability OF the bank rate was steadily
going on, and all the OLD anxiety retured
when the weekly banks return appeared
simultaneously with the announcement that
the Withdrawal OF gold for Germany had been
resumed. The bank reserve, 1t was found, had
been diminished 10 really serious extent. Private
and increased their discounts by f6q8 while the
government deposits had been diminished by
Ia way the peserye wcn 1ee ey
before had been lowered BY the very large amount
Of e., $4,000, was slll further reduced by more
aS o& he nsM same epos %s Se e. ceia ess
and bullion IN both departments, " whch the week
rer nan oy o ne stu
ire accustomed TO strong Internal demand Tor coin
~ this time Of the year. but such drain the lore
gong figures disclose would at any time be con.
Ndered serious, and 1t was doubly so, taking place
simultaneously with drain OF gold TO foreign
countries. fortnight last Thursday the amount or
the "otner private deposits showed an excess OF
f2600 600, as compared with the ''Other' securities;
Zoe seriuus Of Inc rSserve % %as no
sooner known than IL was followed by renewal OF
the strong demand for discount; and however
4 vnn a IN ondp frVf fhn
precautionary, tend TO aggravate the evil against
which they are designed TO guard yet under the cir
reasonable. It IS generally acknowledged that, stu-
Ated as the oank is only strong and DECISIVE mea-
p We SHAH see the
advanced 70 SIX per cent than 1t was q few weeks
ago. that the rate would be advanced to four.
lake eject without causing AsssS considerable lie
loss and Inconvenience; nevertheless, both
opinion Of the public accompanies and ratffies The
action OF the bank without permitting itself TO be
2nduy alarmed by precautions taken strictly Ia the
BANK rate wan mosl likey be condemned; for It wi
almost certainly bring about renewal, probably IN
alative buyers the stock markets the week before
ast but, as business men OF tins class have had the
tame warnings as others. their case need not ex-
:lte our cOmmiseratlOn.
There Is no room for mistake as TO the cause Of
our present financial situation. When all due allow.
ance has been made for the increased demand for
yOld ior the purposes OF home trade AUD industry
ona a. and Of
business It remains true that our monetary system
deransed BY tine ds aua sb OF gold ,Os
war va Indemnity. Although Germany has no
81 the war; yet Is In the power OF those who have
such claim on US TO transfer u 70 her or France 70
be handed to her. H s their interest 10 do so; they
are dong II upon large scale and they propose 10
10 II on scale still larger. As soon as 1t became
xnown that France had undertaken TO pay Germany
Inc enormous sum OF f200 000. .000-sn amount larger
man that OF any payment which one State had ever
eeen known to engage 70 MAKE 70 anotnerEH was
he obligation could not take place without seriously
disturbing every money market Of the world; but
he manner In which they would take e1ect was not
% easy 20 forecast AS the negotiations proceeaet,
ana IL was ascertained that Prince Bismarck mad
sea,s il seemed as II the worst danger was over It
was arranged hat the indemnity might De paid IN
~ noIeI or c or s 81 D
and men OF business not unreasonaDy believed
ihat by juoici0us use OF these diderent means OF
payment the danger OF Q drain Of bullion from any
one country would De obviated. And so II might
nad Germany government accustomed TO give
tner due place to the commercial and financial in
terests the world IN Its political estimates Most
governments, finding themselves in possession OF
nms o. money mucn al1er s tnan mn nsy & c9"d @ employ
securities known to the markets Of Europe. Had the
statesmen Of Germany done 80 their new fund would
have been Instantly converted into money to meet
sudden demand But, instead oil taking this
on the markets OF the world, the German govern
ment takes In gold aud does not pay any out. At
one time we are told it Is wanted for Inc military
chest which 1t is the iraditionary policy OF the
Kings OF russia to keep llled with hard cash. At
another the explanation is that the money wanted
any way, OF for Whatever ultimate purpose, It is
plainly the aim OF the statesmen OF Berlin
stocks 'e'",S Of gold there; and we A'e"e must be
prepared for further demands. The French govern
ment has bought bills on England anu pala them
of course, another SIDE 10 this fact The bills 50
bought cannot fulfil the functions which they would
have done In ordinary state OF things; they can
DOT be set or against bills due TO England, ana their
place must be supplied by our debtors in some
Dther way. There will thus be more bills TO us
tnan are due by us, anu tine CONNIE rcIal balance of
payments must be made good TO IN bullion, Tnus
in time the tendency oil the exchanges Will he IN cur
Al present, however, our policy is to attract
money to our shores. rms Is process wMcn we
nave always found practicable by the simple ex-
pedient oi raising rate OF interest OF ate NTH
ast Saturday, Continental countries have had NO
o M a' pas o can
suffce to draw gold hither under very peculiar
Snt we know that until the money is Iii =,
hand we are In weak position. Prince bismarck
Is, for the moment master S Of :. the financial
ialng due from day to day. and ne can require. II
pleases tnat gold shall be transmitted rom Lon
arge amounts were kept on order waiting for the
word from Berlin which should determine their
destination. TnAL WHICH mas uappeueO uut1n8 the
last month makes IL an interesting question wha',
Judging by present experience, are our pros
poets OF gettlnR money az reasonable rate
ior at present we have had only taste or the
consequence OF the payments from France tn
Germany. France has not yet paid Germany
more than G6O,OOOooo, parity IN cash. partly
IN bills, and partly by seton. No more Is strictly due
1nlll next May, when go 000,0o0 must be paid,
Between that time and the LIST Of March, 1874
france must nnd the other &f20000,000. The ques
hon H. II E6O OU00O0 could not be transferred IRON
france TO Germany without the perturoaions we
have experienced, what will happen when the
rest OF the money has 10 be foundY On the othel
hand, IL N 10 be remembered that, at the rais
u which France has hitherCo been paying
LaooOO, 900 m0nth--the balance would be PAID
~ ~ tne end OF 1874 so tnat the disturblnp
causes would operate over the whole treaty term
VI france. abandoning her pOlicy OF anticipating
pasmon,s snouid abide by the arrangements OF the
~, en inc pay nIents, instead Of reaching
Liawo,Vv. would not average quite "a. .760, 90 pei
monn' suss now, as III well known, M. Theirs n
trying 70 arrange terms for fne pay rpent OF tht