The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1878-05-19
THE BANK OF ENGLAND IN DANGER
IFrom tho London World

We congratulate our youthful contemporary, tho
Stas on having had the courage to dverge from tho
routine OF ordinary city criticism and look facts
straight in tho face. We pointed In these columns
months ago tho nsullccncy OF the Bank OF Eng
lands reserve soeng that do duty
Thrcacncede street establishment alone, bat for all
the joint stock banks well, who expect the Bank
OF England to come to their help at pinch. Tho
Ssaist calls this, aud with ample Qualification .thc
Bank OF Engiand's danger" and ine 'danger is even
greater than It indicates, owing to circumstances to
which 1t does not alludc, but fshich must be takcn
into account II Ne would understand how things
really are. Tho Bank OF England has of late years
changed character and has become practically tho
bankers bank instead OF bank oil the nation Its
very much larger relatively to its liabilities
than those of other banks; and 1t would need DO;
for the joint stock banks have cash reserves
speak OIL relying they do upon the central insttu-
tion to which, therefore, we must apply
very different standard IRON what is applet
10 them. Tho cash balances of the world
we'll tnosc OF tho United Kingdom.
centre In London. should there be from any
cause n sudden demand Tor money for Tho Continent
the PROVINCES therc.is an instant drain upon tho
bll brokers and bankers OF the metropolis, who III
turn fa back upon the Bank England; and in an
emergency, such as might he caused by war with
Russia tie Bank act would have 10 DC suspended ana
there would be heavy OF the whole dclicatcly
tcrwoven network OF credit coliapsns like house OF
cards rings arc not as they were IN 1891 when tho
thoy ls47, 1857 and 1866, az each OF which
dates tho Bank act had to DO suspended:
transfer creds,s' by teiogralhic wiro and trans
atlantic cable unknown. II Is obvious
that the sudden with which demands tor
nc does not leave the time there for
merry OF meeting sudden strains upon
system OF credit No doubt tho telegraph fncilt
tatcs ready action tho OF tue bankers in self
defence rs we'll; put in case In y hch time IS abso-
lutey necessary to stave off danger vastly adds TO
the difficulty OF pulling through. The Bank oil Eng
iana mas virtually ceased 10 BIO the peoples bank;
and while there ~ seeming safety IN IT'S red,s-
counting the paper OF she bill brokers, credit
companies and joint siock banks, there Is
actual danger. Al one time The Bank
Bank a drawing account. There ought to be entire
dissertation OF the Old Lady from the other banks,
else all may 20 down together Until there Is tho
Bank OF England cannot become better than II is at
touai position and privileges IL has lost Its old
troll the money market and yet has TO bear all
centre OF our banking system. rhc consequence II
that week by week tho rosers is dwndllng away, anc
yet the Bank directors arc afraid 10 put up the
rate TO protect It, because the outside market would
not follow them and they might lose tho small
discount business thoy nave This regulation OF the
by reference to the Banks business position
another weak point Why should II not Insist upon
the joint stock banks helping to protect themselves
by keeping large amounts At their credit. and, by
thus Withdrawing floating capital iron tho market,
make money dearery The joint stock banks would
lose tho power OF discoueting largely
they now do aud therefore would lose some
portion OF their "bioated profits; but they would DO
all safer for the precauon, ami the pressure on
tho Bank oil Engiand would be lesscncd. rho Old
Lady OF Thrcnancede street has now ialen into tao
ways OF routine, aud acts too much likc mere huge
nachinc. None OF the sharon olicrs, with the single
exception OF Mr. Jones the Matchmaker OF the Strand.
who with tue zcal OF hts profession tries at every
meeting TO 'wind up the Bank, so that u NAV ego"
IN the right direction, takes part In tho proceed
ings at the periodical meetings, seem 10 In.
tcrcst themselves in the Banks anara