The New York herald., 1873-11-10
FINANCIAL and COMMERCIAL
The Panic at Home
and Abroad.
THE BANK OF ENGLA
4 Few Facts Concerning Its Method Of
Treating Financial Disease.
CAUSES AND EFFECTS.
CAUSES AND EFFECTS.
Why We Are Slowly Recovering and
Growing Stronger.
THOSE GERMAN THALERs.
The Gold Speculation, Money Market and
Foreign Exchange.
STOCKS STILL UNSTEADY.
WALL STREET, l
SUNDAY. Nov. o. 1873. (

WALL STREET,
SUNDAY, Nov. Q, 1873. I
II is but natural that England, and, possibly,
portions OF the Continent should begin to feel the
influences Of our panic and give evidence Of being
materially afrected by shrinkage ofprices. What
people In Chrlstendom would hold our two thous-l
and millions OF securities, considerable part OF
which represents our railroads, and exhibit faith
that we ourselves do not exhibit Is even Great
Britain, with all its bank reserve and banking
power, able to Withstand the tremendous depres-
sion which, commencing here, has swept like
wave wherever, either as individuals or people.
we have given "promise to payr' True, the
distrust is but temporary and all past experience
win be at fault II the evil does not carry with it it's
own panacea; but meanwhile the rot has pene-
trated deep that it touches the very heart OF all
financial relationships at home and abroad.
A SUSPENSION or SPECIE PAYMENTS
by the Bank OF England took place between 1897
and 1919 period of twenty-five years. Alter 1873
the law required banking reserve to be main-
tanned. In 1874, however, the directors permitted
their stock OF bullion decline from f10 900 on
the oath Of December TO f1.2eo,0 600 on the same
date twelve months later. A tremendous panic
followed. Again, In 1S37-39, the Bank was COM
PEELED to borrow f2,0oo,0 900 from the Bank of
France; and even after this aid was rendered the
bullion was reduced to i2,404 600, causing intense
alarm. third trial occurred in lS47, when the
banking permitted to fail to s1 176 600.
Then, for ten years, there was period OF calm;
but In the fall OF 1857
ANOTHER DRAIN
was made. and in little more than six weeks the
reserve declined from f4,o2o, 600 to f957,000 The
bank was forced under letter OF license, to draw
upon Its currency reserve in aid Of the banking
serve. In 1860 the rule was adopted Of raising the
rate OF interest by steps OF per cent whenever
the object OF the rise made 1t necessary to affect
the foreign exchanges" This policy has since en-
abled England to sustain itself in periods or pro-
found depression. The drain Of silver from Europe
20 India, to pay for Indian cotton. between 1862
and 1866, was in this manner successfully with
stood. In 1856 failure OF Overend, Gurney &
Co. produced panic, the magnitude of which was
without parallel, and the bank reserve went down
70 nothing. Sincc that time, however there has
been an almost unbroken period OF calm in the
English money market until now, and II we may
Judge rom
THE HIGH RATE OF INTEREST
ct present existing, NOT even the worst OF our
American crises since the war has produced any.
thing like the alarm which seems to be thus indI-
Gated and foreshadowed. It has been stated that
the recent action Of the Bank OF England was pre-.
cautionary. This il undoubtedly true. 1t is easier
for that institution to protect its bank reserve
before q panic than to recover its money after
wards, while alarm is at its height England trades
on borrowed capital. II this be represented by
American, Continental or other securities that
have suffered great shrinkage the hiatus must
somehow be filled or failures will occur The Bank
or England must become a lender; but the midst
OF panic being the worst OF all seasons In which
to replensh BY the forced sales OF stocks
II necessarily follows that that reserve daily de-
preciates in volume, and In the same proportion
are
THE WHEELS OF COMMERCE BLOCKED
Whatever, therefore. may be the present strength
Of the bank, II terror or distrust compel a with
drawal OF deposits, and the latter not quickly
returned, even that institution must weaken un-
der the drain. Such condition OF affairs is
always anticipated by high rate OF interest,
operating In the character Of penalty for un-
reasonable tmdity and preventing idle borrowing
by those who do not absolutely require loans.
This, doubtless, is the process now going on, with
such notifications as the hour demands. We
infer It from the character OF cable dispatches re-
ceived on Saturday, rom the fevershness and
anxiety existing In certain quarters and from the
precautions observed by those who have business
connections with foreign firms. It is dinlcult to
conceive, however, why return OF confidence on
this side Of the Atlantic should not check
AFULLY DEVELOPED CRISIS
IN Europe. A panic cannot last forever, though
faith may travel never so slow. And while we
see all it, conditions existing in our midst it is
stnl easy to discover the source whence will
spring relief Our banks already afford tokens OF
renewing strength. We are importing scarcely
amy thing. We have curtaied our production OF
goods and In an equivalent degree checked the
necessity for additional obligations. Anomalous
as 1t may appear, although every muscle In the
arm of Q laboring man has Its money value, the
very idleness OF those muscles Is tor the moment
an indirect and negative force that Is working out
part OF the general result. The suspension OF
labor-of productive power, whether OF machinery
or men, In at all times terrible thing; but there
inevitably follows q contraction OF prices-an
augmentation of the purchasing power OF money,
and--what we so much need in America-the get
ting down to ''bed rockn after years Of unsound
and unhealthy innation. We believe that the pro-
cess Of recovery will be so rapid as that within
the next 40 or 90 days currency will
be drug In our market. Events all point in this
direction When that condition results, the rcstor.
alton ofthe monetary equilibrium between America
and England will be just as certain as that water
viii hnd Its level.
THE GERMAN THALERs m
Il was published during the past week that Ger
many had sold 2o,ooo.ooo OF thacrs to the govern
ment OF the United States, 1t being the highest
bidder for the same. The incident has provoked
much comment and surprise, and the only satis-
factory explanation thus far given is that the pur-
chase was the probable result OF an arrangement
between the syndicate and the German govern
mcnt. whereby the latter agreed to take our nve-
twenty bonds provided the United States would
recsive for the same their silver at the highest
pny Practically this would seem to be giving
gold for silver, inasmuch as the Secretary Of the
Treasury, when he calls in the equivalent In Six per
cont bonds. must pay for the same In gold. II this
view OF the transaction be the correct one, the
shrcwd German banker has simply outwittod
American speculators.
THE STOCK MARKEr
during M week Haa attsndad hx AfnrnAie