, 1872-11-07

are still very large crops Of wheat in Iowa and
Minnesota to come forward, and it is possible
that the banks Of this city will be called upon
to carry 100000 bushels more grain
much lower prices now than then. the amount of
money required will probably be hut little great
er- It seems quite certain that tho mercantile
community will be applicants for good deal
more bank aid this winter than during any pre-
vious one. But the increased storage capacity
of the city will aid the movement Of grain in the
country, as country g-ain-buyers will not be
compelled to hold their grain in the country
warehouses to as great an extent as last winter.
The small amount Of grain at Underwater will
also favor movement eastward, all winter, to
the full capacity of the railroads.
=. New York exchange was firm to-day at Csc to
Soc per 81, 900 premium for sales between
banks.
Tho reelection Of the Administration has not
made any perceptible difference in prices Of gold,
bonds, or railroad stocks.
THE DANGER TO THE BANK OF ENGLAND.
A week or ten days ago gave some Of the
particulars Of the situation in the London
money market, which seemed to threaten drain
Of specie to Germany, and in view Of which the
Directors Of tho Bank Of England had raised
their rate Of discount from time to ti1no since
Oct l, thereby preventing the negotiation of
American securities, and exercising an influence
on American enterprises and money markets
generally. In the London Daily Netos of Oct.
- We ind g lengthy communication from . Lon
don banker, reviewing the whole situation, in
which he corroboratcs our statements made
week ago, and points out wherein the present
defective system Of the Bank Of England per-
mits danger Of financial panic every fall.
The correspondent of the .Ne,cs states the situa-
fion as follows: SIN transferring from Trance
to Germany the scores OF millions sterling con-
shutting the treaty ransom. the former country
purchased in the Continental markets bills on
England to the amount of some millions ster-
ling, and handed them to tho Berlin Govern
!ment' who remitted them to their agents
collect the several sums as they ma
tured. and hold the proceeds on deposit till
requested to remit them to Berlin. OF
the total amount of the funds thus accumulated
there is no certainty. Some months asoit might
have been ten nillions sterling; at this time it
is probably less than four It is the policy Of
the new German Empire to set up gold cur
so far the Berlin Mint has actually coined about
fifteen millions sterling Of the new pieces, and
holds them in it's oTn custody until the quantity
shall reach, it is said, twenty millions, when
mence. To maintain the flow Of this
coinage tho Berlin functionaries supply
themselves with gold as best they can
and notably they direct from time to time
custodians in London Of the cash deposits we
have described. Everybody has known for the
last nine months or more that heLondon money
market has been largely supplied with money
have been lowered by the presence and employ
meut of that money, mud NE have reaped Whist
ever advantage has thence arisen. But then
comes the difficulty. In the carly autumn OF
Bank Of England into the English counties and
into Scotland and Ireland, OF gold and silver
coin, and bank notes, to supply certain
necessities Of the internal circulation arising
cu1rence Of Mlchaelmas Term for paying rents.
dues, interest, stipends, etc. This autumn demand
1or coin and bank notes IS no more q novelty,
at least in modern times, than the feast Of MI
chaelmas itself. But every year it becomes lar
ger, and naturally 80 as population, wealth,
and habits OF 1ocomotion increase. This year
the internal drain Will be hardly less than e.
100000. few years ago it was less than :e2,
tide begins to tu1n and by the end OF the year
nearly the whole OF the autumn swell in the
metallic and paper circulation has subsided."
This beir5 the situation the London banker
Shows We think conclusively, that the present
system Of management of the Bank Of England
is not adequate to its eNgencies, VIZ:
+" By an act Of Parliament, passed with the
best intentions and By very able men so long ago
issue and banking department., and the total !
bullion reserve (at this moment twenty mil]ions)
held By the establishment as whole is appor- |
toned twelve millions to the issue and eight |
millions to the banking department and it is |
the very essence Of the scheme that for every I
extra bank-note which goes into circulation an |
extra sovereign shall pass from the banking |
TO the issue division. In 1871 the computation
Of the trainers OF the scheme IVES that the issue |
reserve would vary between five and seven mil
Mcns sterling. At this moment it is nearly
twelve millions, and for several years it has been
rarely less than ten. The pressure thus falls
upon the banking division, and falls upon it with
Increasing severity every year, and for q reason
very plain to any person who will observe, even
casually, what is going on about him.
Every London bank has ali account with the
o$ -@F
upon which it gives order for Clcaring-Hous
settlements, and with which it maintains such |
credit balance as is necessary to fur
a5d ash eo5 ha eo Ge onaon OF 1a9a Banker notes Is
quite as desirous IS his Provincial brother to
Keep his premises as clear as possible OF large t
quantities of gold and silver, and hence it comes
20 pass That tie 50 OcO 600 of treasure at this mo-
ment in the banking department the ult-
mate point-the sole ultimate reserve, first, OF |
the London bankers second, through them of |
the Loudon merchants and Provincial bankers !
and third, through these last, Of the general
trade OF the country. In point Of fact, it might |
,oe shown beyond dispute, that If the London
bankers were to withdraw their balances from
the banking department. the residue represent
ing the reseryc against the deposits held by the |
DEPARTMENT itself would be SO small rs to be RI
dculoua.
.:Here, then, was the root of the present and of
former similar evils. The ultimate cash reserte
Of the banking department. is too sman for the
functions it has 10 perform, and il becomes
smtl!e' and smaller ere'y gear IN I've Jace Of the
groaring ,rcalh, population, trade, and enter
prise Of the country.
AT tie close OF August last the banking re-
serye was barely ;sl2, O00: 600. It WAS then
known that several millions of German money
was in London and would be speedily taken away
as bullion. 1t was also certain that the autumnal
interest drawn would carry away e3. ooo, goo Or
$4,000 900 asusaa and al this out Of 9l2 ooo
the panic point of the banking reserve being
IS. 600, ,000." 49,.
the recent pressure in the London money market
was merely the latest INSTANCE OF the ext5eme
and growing danger to the industry and trade OF
she Country Of the inadequacy Of the cash re-
serve Of the banking department, to meet the
fluctuations, internal and external, in the de,
uanl for gold and bu1lion-'Eholeson,e@ anu anu
profitable in themselves, and lnseparano 3r1nl