Nashville union and American. [volume] (Nashville, Tenn.) 1868-1875, 1871-07-13
The Geld Premium,

The New York Financial Chronicle re-
CARDS the advance in the gold premium as
temporary. Until recently the decline
has been steady since 1869. The export
movement, which is an excuse for the ad
vance, IS that the Bank OF England now
increases its gold reserve to higher point
than ever before, and is still increasing.
June p the reserve was c26, 4GS .277.
against zig million last year, aad 1875 mil.
lion In 1869. There IL no evidence to
show that this increase is to be kent up.
and little doubt that such policy il nee
essary to the Bank of England, for the
safety Of that institution requires that il
should repose on a much larger basis Of
coin than before. 1t is the belief thai an
enlarged aggregate of specie will be he'd
by the bank, which has given, with other
forces, an impulse TO our gold market. Il
is argued that, in large part, the coin re-
quired is to be imported into ENGLAND from
this country. But there is no doubt that
this policy, which is attributed to the
Bank of England, would have no influence
OF oounteraction. Says the Chronicle:
For quarter of century the settled
practice has been that the bank shall not
60 abroad to buy gold, bat refrain from all
interference in that way with the regular
movements of commerce, which cause gold
to flow into or to flow out of the Golfers of
the bank. When the gold balance Of the
baak runs too low, the old plan was to
increase the rate OF interest, and to 90 on
increasing it antil gold began to flow into
the bank. On the other hand, when the
gold reserve was too large, the opposite
plan was adopted, and the ratio of interest
was lowered, the process being continued
until gold ceased to accumulate.
The Bank of France, by suspending spe-
Gle payments, holds its coin reserve of
twenty millions strerliDg qaise sloof from
the movements of commerce, and the in
ternational banking and commerce of Ell
rope are resting chiefly on the reserves of
the Bank Of England. Hence the infer
ence that thst institution, feeling its obi
cations, will strengthen itself, and will
raise its reserve 10 thirty-fve or forty mil
lions sterling. Such are the arguments
used in support OF the opinion that our ex.
port demand for gold Will increase rather
than fall off,
As to he rise in gold, based on the con-
dItIon CT our paper currency, it. IS almost
certain thatthe fifty millions Of bank notes
authorized at the close Of last session will
not all be issued. Up TO the present time
the applications for new banks viii barely
reach twenty millions of dollars. And
even If the whole should be issued, the
equilibrium OF tee currency will be kept
steady by the retirement and cancellation
of an equivalent amount of three per cent.
certificates. The aggregate of our paper
money circulation is toe large, and the ex-
cessiVe issues cause The existing deprecia-
ton. But il is also true that from the ex-
tension Of railroads, telegraphs and other
business fIclliies, tho country requires au-
nually a larger amount of money to carry
on its business. Thus we are growing up
to specie payments, and the progress OF the
country, North, South and West, on the
Atlantic and Pacific slopes and in the Mis-
sissippi Valley, is estimated to have so en-
larged the area for the use Of currency as
to be equivalent to a reduction of at least
% per cent. IN the premium during the
last five years. The true method to re-
dUce the gold premium undoubtedly is to
enlarge the field for tho use Of currency
by expanding the trade Of the country and
developing its industrial activity