The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1873-07-05
A Free Banking System
Suggested.
THE GERMAN GOLD COINAGE
The Return of the Bank OF
Prussia.
WALL STREET.

day. the foreign files received from England fur
nish food for thought to all who are interested in
the condition OF the markets on the other SIDE
One Of the chief themes OF discussion is the bill
by the Chancellor of the Exchequer for
authorizing, in certain contingencies, temporary
increase of the amount OF
BANK OF ENGLAND NOTES.
1t provides that whenever the First Lord OF
the Treasury and the Chancellor OF the
Exchequer, after communication with the
Governor and Deputy Governor Of the bank,
are satisfied that the minimum rate of interest
then being charged by the bank on discounts and
temporary advances Is not less than twelve per
cent. that the foreign exchanges are favorable to
this country, and that large portion OF the exist
ing circulation is rendered ineffective for Its ordi
nary purpose by reason Of internal panic, they may
empower the issue department OF the bank to
make in excess OF the authorized issue, special
and temporary issue Of notes, in exchange for an
equal amount of government securities, and that
the bank shall pay to the government the profit Of
such issue, which is in no case to be less than
twelve per cent per annum. subject to a deduction
OF two per cent, which may be allowed to the bank
for its expenses
The Investors Guardian, in its comments on the
foregoing proposition, contends that the bill
places restrictions and conditions upon the cXer-
else OF the reserved discretion OF the bank thereby
Gripping its action, with the possibility Of
making
THE POSITION OF THE MONEY MARKET
worse than before. Hence the suggestion that the
advice Of Lord Melbourne should be followed when
in doubt what to do-"Can't you let it alone Pr
Enlarging upon his subject, the writer says:-
1t has for long time been felt that in prosperous
seasons, and 80 long as all goes well, and the
savings OF the community all gravitate into the
bankers hands, and 80 ultimately go to swell the
Bank OF England reserve, the vast mercantile ma
chnery of the country works easily and smoothly
But 1t Is no less notorious and matter OF common
the ordinary tokens OF credit are dIstrusted then
the currency OF the kingdom Is manifestly made
quate duly to represent the transactions OF the
community In eject so long rs there is no demand
for the legal currency it is adequate to all pur-
poses; but the moment when, from ordinary or
special causes, the demand becomes intense, 1t Is
Immediately apparent that the entire legal cur
rency is ludicrousy inadequate to perform It's ap-
propriate duty OF representing and Becoming the
medium OF exchange for values. Thus in smooth
times the community mtruss it's surplus cash to
the bankers while In times OF stringency the banks
are wholly unable to extend the reciprocal favor of
lending out or paying out the same amounts. This
system tends to
PREcIPITATE PANICs,
which, when they arrive are met by the eXpedient
OF suspending the Bank act. There are several
Ways Of sae deuy FIRST the Bank
with power OF issuing bank notes to any extent
against adequate value, the only effect OF which
would be 10 place the command of currency and OF
markets In the hands Of the responsible ministry,
instead OF in the hands OF "a private banking cor
pOraton ruled by merchants In the city. Secondly,
every banker in London, both private and Joint
stock, might be authorized to issue his own prom
ises to pay in the shape Of his own bank notes,
ceive and deal In them. or, thirdly, the present
system might be continued, with an unfet-.
bank notes on the part of the Bank directors. 1t
Is quite clear that some Is requisite en-
large the scope of potential If not OF actual cur
rency, II
THE PROSPERITY OF THE NATION
ts to continue at its present rate OF progress Mr.
loves proposal Is not founded on any COmprehen-
sive or statesmanlike view and 1t embOdles no
large or enlightened policy in the matter. Like
his memorable eL luce hICeliunt experiment in
taxation 1t Is an attempt to extract small bene-
fit from conditions which admit OF none. At pres
ent, when the sound Judgment with which the
commercial finance OF the country Is regulated
yields to the pressure OF circumstances and Is
confessedly inadequate to cope with storm,
which, by bringing the credit OF the nation to the
relief OF the city, allays all apprehension and re-
moves the pressure which was at once its cause
and its effect in enhanced degrees.
These arguments are not unlike those employed
by our own fnanciers, who claim that America
also requires an expansion OF currency in order to
successfully carry out the great business enter
prises that have been inaugurated during the last
decade, and who are about to initiate a campaign
in favor OF
FREE BANKING SYSTEM
in the United states. The time is not yet at hand
u
that 80 radical change has been suggested with
reference to the stald old conservative Bank Of
England shows what tremendous revolution has
been wrought in the financial world within few
years, as the result OF enhanced wealth and
the movement Of large masses Of capital
between the civilized peoples OF Christendom.
The condition OF the London market, as reported
on the 2lst Of June was regarded as good An ac-
tive demand prevailed for money at about So per
cent, the terms Tor six months bills being ~ to 8
per cent. For advances on British government
securities from day to day 81 to per cent was
paid.
The bank return is again highly satisfactory.
The stock Of bullion has further increased AZ much
as f792, 662 and the reserve f924527. The proper
ton of reserve to liabilities is now about 1914 per
cent. The other securities have diminished by
f1,372,910.
The amount of notes in circulation is f2 s9l 200,
being decrease OF f13l $685. and the stock OF bull
lion in both departments il Ell, 1851, 190 showing
increase Of s7s2, ee2 when compared with the pro
ceding return. Az the infux Of sovereigns from
abroad during tho week was limited to $3.50, 900,
the sun Of f462,662 must have come in from the
home currency.
The amount Of the German gold coinage In the
week ending the 31st Of May was upwards of
1S 900 marks about 1880 making the total
to that date about E33, $50 900.
The Vienna papers of the 10th ut. contain an
advertisement Of the Board OF Directors OF the
Vienna Exchange Bank, stating that the bank Is
compelled by the present condition OF afrairs to
suspend payment In order TO preserve all its assets
for equal distribution among Its creditors. Prep
arations It is added, are being made to secure in
the shortest possible time, by voluntary liquida-
tion the payment Of every liability. For the share
holders the prospect appears bad.
The return Of the Bank OF Prussia for the week
ending the 14th IL again rather favorable the cash
having increased fa57, 900, and the discounts and
advances having diminished ESQ., 900. The circu-
lation has, however, increased fleS,o00 There Is
Also a larae change In the treaaurY balance which