Norwich bulletin., 1909-10-22
FINANCIAL AND COMMERCIAL.
BANK OF ENGLAND'S INCREASE
 IN OFFICIAL DISCOUNT RATE
Absorbs Attention of the Financial WorId-Recovery in Wall Street.

New York, Oct. 21.-The attention of the financial world was focused on the Bank of England today again by a third weekly advance in the official discount rate, a full 1 per cent, to 5 per cent. On October 2 the rate was put at 3 per cent, after having stood at 2 1-2 per cent. since the first of April Today's per cent. rate there fore represents a rise of 21-2 per cent, doubling the bank rate in two weeks. Such drastic action is rare ex- cept jn panic times and must be &C., cepted as indication of extraordinary conditions. On October 31, 1907. the rate was raised to 12 per cent from 4 1-2 per cent, in response to the bank ing panic which had broken out in New York, On November 4 following the rate went to 6 per cent, and on No vember to 1-2 per cent. as a result of the acute demand from New York for rescue purposes. A closer paral- Tel to the present situation will be seen in the occurrences of the fall of 1906. when the bank raised it's rate to 4 per cent. September 13, to per cent October II and to per cent. on Octo- Der 19 The protective measures in that case were directed against the New York borrowing and the raid on London's gold supply. which was push ed through the medium of American finance bills floated in London. The huge borrowings on the part of New York at that time was connected di- rectly with the furious speculation go- ing on in the New York stock market That the present action of the Bank of England is directed in part against New York's speculative borrowers is affirmed in news advices from London, and is also indicated by the heavy sell ing of American securities for London account. which Is forced by the meas ures of the English bank These were again in heavy volume today and were attributed to the closing out of loans in London in which these stocks figur- ed as collateral. United States Steel was the most notable affected by this cause, although none of the stocks which have figured recently in the active speculation were entirely exempt from this pressure. It is obvious, how ever. that besides this influence on the London banking proposition there are other forces at work towards depletion on their supplies. Although the Bank of England secured the new supplies of gold in London on Monday and had made it's rate effective in the private discount rate, gold continues to go out to other points, and apparently Berlin threatened further large withdrawals. Even today's rise in the bank rate was
 
 exchange on London. although all other exchanges, including our own moved strongly in favor of London. In New York the advance in sterling exchange was so violent as to give rise to calcu- lations of the possibility of gold exports within a short time. The paying off of New York obligations to the Lon don money market must have gone on at a lively rate to judge from the act i've demand for cable transfers and sight drafts on London. What effect this may have on the loan account of American banks is the subject of prin- cipe interest here. The New York money market did not share in the sensational action of foreign money markets today. the call loan rate hold ing at 1-2 per cent. as a maximum and yielding to below that. The re- covery in the stock market was en- couraged by the tranquil tone of the local money market. There was evil dence also of the requirement from an uncovered short interest in stocks, left from the operations in anticipation of the advance in the English bank rate In United States Steel especially there were signs of a1 aggressive turn against the snort interest The vigor- ous strength shown by Wabash pre- ferred made 1t the subject of coniec- tures of part in another railroal deal The covering movement by the shorts made the closing tone strong Bonds were easy. Total sales. par value $2- 762,000 United States three registered declined Is, the fours registered IA and the tours coupon 14 per cent in the Did price on call.