Year: 1872




the Policy Needed.


The brief cable telegram from London
we published yesterday, stating that the rate
of discount of the Bank of England had been
advanced to six per cent but that this had no
effect on the price Of American securities, il
very suggestive. It is evident that the vast
influence this great institution exercised SO
long over the financial affairs of the world il
declining. The world is fast getting out Of
the leading strings of this guardian in Thread
needle street. Even in England, where its
influence is greatest, the other banks and the
great capitalists are less under it's power than
formerly and act more Independently This
has been frequently seen of late and ia
shown by the fact mentioned just
now, that while the Bank of England
rate of discount Is six per cent the
rate in open market was only five to five and q
half per cent But what concerns ussmore
Immediately is that the action of the bank has
had no effect upon American securities This
proves that the credit of this country is firmly
established, that we are becoming independent
OF foreign control and that capitalists abroad
begin to understand the boundless resources
and wonderful future of the United States.


The course of the Bank lately in raising the
rate Of discount step by step, till it has reached
o point that only war or some other extraor-
dinary cause heretofore has brought it,
shows also that the money power is passing
from England. There is no unusual event,
nor any apprehension of one, either in the
political affairs Of Europe or in the currents Of
trade or commerce to disturb English finances
With some few exceptions, such as the ap-
pretended deficiency in the coal supply, the
strikes and rise in wages, and the general
advance of prices England is prosperous, full
of aggregated capital and never had such q
vast commerce as at present To the ordinary
observer, therefore, this action OF the Bank,
showing apprehension must appear strange
We think it is the desperate struggle Of that
institution to maintain its power under the
changing financial situation of the world and
to check the transfer of capital to other coun-
tries. Almost every week we are informed Of
the drain Of specie from the Bank, and this, of
course, is the immediate cause of its action in
raising the rate of discount. This is its long
established practice under such circumstances.
The specie has gone principally to the Cont
nent Of Europe to meet the French war indem-
nifty to Germany. While the Bank of England
has been undergoing process of depletion the
Bank Of France has been receiving an increase
Of specie.


1t is curious fact that France, notwith-
standing her terrible war disasters and enor-
nous weight Of debt, not only maintains
her credit but is able to draw to
herself such vast amount of the precious
metals. Doubtless this arises chiefly from her
surprising manufacturing and industrial
resources and the admirable management Of
her finances. Then Germany, under the
fresh impulse it has received since the war
and the establishment of the Empire, is
becoming a greater commercial power and
much stronger financially. England conse-
quently, has more formidable commercial and
financial rivals than she had some years ago
in Europe. But another and more impor-
tant cause, perhaps, operating to alarm the
Bank of England, is the large and steady
transfer Of British capital to the United States,
together with the great increase of exports
from this country. The opportunities for
profitable investments here and the high rate
Of interest money brings necessarily attract
British capital. The shrewd moneyed men of
England cannot help foreseeing the wonderful
future Of this country, as they have seen that
the most terrible and costly civil war of
cfo itc
ress or impair its credit They per-
ceive too, that with all our extravaganza
and vast importations the productions and ex-
ports Of the country are increasing so much
that it will not be long before the balance of
trade will be steadily and generally in our
favor. Such is the prospect before us, and
such is the effect which we begin to see already
upon the financial affairs Of England and in
our financial relations with other countries.


The strides the Republic is making in wealth,
the establishment Of its credit on a solid basis
and the general prosperity must not be attrib-
uted to the policy or management Of the gov
ernment. In fact, these results have been at
tanned in spite of weak policy and much mis-
management. Our boundless natural resources
and the industry and enterprise Of the people
have proved superior to q defective policy
and o bad administration Of the national
finances. This fact has not escaped the
notice of able fnanciers and political
economists abroad. Mr. Boutwell, imag-
incd that raising an enormous surplus
revenue and paying off the debt at the rate Of
hundred millions year would raise the
credit of the government, and, as consc-
quence, had the utmost confidence of funding
the whole debt at lower rate Of interest. We
fear, however, that his object was principally
political and that he looked more to the imme-
diate popular effect than 70 sound financial
principles or the future. Had the burden q