Nashville union and American. [volume] (Nashville, Tenn.) 1868-1875, 1873-11-12
THE BANK OF ENGLAND's POLICY.

The Bank Of England has raised its
minimum rate of discount to nine per
cent, and in exceptional cases it has
discounted at ten and even thirteen per
cent. 1t is said that the bank has
hitherto found it necessary to adopt the
nine per cent. rate only twice foF thirty
years. viz: in 1857 and 1866, and that
both times it was the predecessor of
panic. Recent kilograms announce
several failures in London, and so late
as the 18th firm failed whose liabil-
ties were about four millions. If
panic is not brewing in England, GER
tainly a season of bankruptcy is at
hand. 1t is our opinion that there is
little danger of a panic, ominous as the
indications would seem to be. The
bank has strong reserve Of forty mil
lion dollars, which is equal to one
third of all its deposits, pub
lie and private. This reserve,
which is quite adequate to uphold pub
lie confidence, the bank seems deter
mined to keep on hand. The action of
the bank in raising the interest on its
loans. was taken, as We conceive, with
a commendable regard for the princi-
pies of economy. 1t was taken to pre-
vent an exhaustive drain upon its re-
sources for speculative purposes, and
other schemes Of uncertain issue. The
directors saw that the reserve Of the
bank had dwindled within a few weeks
from seventy million to forty million
dollars. They saw that there was an
undiminishing drain upon its re-
sources from all quarters, especially
from the United States, Canada and
Germany. To avert the panic which
would soon have followed upon an ex-
hausted till. the directors of the bank
wisely used their discretionary power
to raise the rate of discount and stop
the food-gate of its well-watched re-
serve. That this action on the part of
the bank will indirectly bankrupt many
business concerns can hardly be denied;
but this is the less of two evils which
were forced upon its choice by uncon-
troIlable events. Some of the panics
which the United States have expe-
rienced might have been averted by a
similar course of conservatism and
prudence. The following remarks from
the Nelc York Tribune in regard to the
management of the Bank of England,
viii not be unreasonable:
s.Now. the Directors Of the Bank OF Eng
land are, from the nature and magnitude
of the great establishment which they con-
troll vested with a power to increase or
diminish the value of money. to raise or
lower the rate of interest, to foster or dis
courage speculative enterprises, and, in
some degree, even to change the prices OF
commodities. Such a power as this the
present Administration Of our Govern
ment has essayed to build up for itself, and,
unfortunately, it has in a great measure
succeeded. The Board OF Directors Of the
Bank of England regulate the value
of money, and are the Senate of the
British financial world. That intense con-
servatism and appearance of solidity, with
which the English understand so well the
art Of investing their institutions, exist in
all their perfection about the Directors Of
the Bank. They act upon nothing but
what they consider the established princi-
pies Of sound financial doctrine. Since
power must exist in some shape and be eX-
ercised 10y somebody, it is preferable, in our
opinion, that the regulation of the currency
should be vested in a board Of merchants,
like the Directors Of the Bank Of England,
rather than in Unlearned and inexperienced
politicians of the type predominant OF late
years IN the United States