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Leader (1850-1860), 20th November 1858, Edition 2 of 2, Page 26, GENERAL THADE UE^OBT. London, Friday Eve...

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    • O O M M ERGIAL
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      1266 Tub X, E A T> E Jl; __ I^:L 4 ^?. ?...

      1266 TUB X , E A T > E Jl ; __ I ^ : l ^? . ? .. ^ py BM 3 ? j B !] i 20 > 1858 .

      O O M M Ergial

      O O M M ERGIAL

      Tion. With Them Debts May Be Everywhere ...

      tion . With them debts may be everywhere paid , except at the Bank counter . They swell the nominal wealth of the establishment . Other bankers and discounters , the chief of whom keep an account at t he Bank of England , with all the persons in the empire who carry on any part of their business on credit , look at the-great reserve . The Bank has upwards of 18 , 000 , 000 / . of bullion , and upwards of 11 , 000 , 000 / . of notes , or of 29 , 000 , 000 / . of legal money lying idle . The consequence is that money appears extremely plentiful . It is the representative of capital , and , therefore , it is supposed that capital is equally plentiful , and the market for it , or the rate of discount , is kept proportionately low . ¦ -. .

      NOVr AND LAST NOVEMBER . THE ACT OF . 1 S 44 . At this period last year the Act of 184 ' ! had been suspended , and the Banfcof England had overstepped its provisions by issuing 2 , 000 , 000 / . in notes on securities more than the law authorised . Then the country was in the midst of a commercial convilsion , several banks had . stopped , and mercantile houses were falling in all directions . Ko branch of foreign business escaped the general catastrophe , and a stop had been put to an apparent prosperity

      iu which ail delighted ; confidence was for . the time at an : end , and mercantile men thought only of what they could save in the general wreck . To give new orders , or engage in new enterprises , was entirely oat of the question , and for a time , the otherwise ever and actively flowing stream of commerce seemed entirely stagnant . In the end this convulsion turned out to be a mere adjustment of credit to production , with a distribution of the assets as'far as they would § 0 amongst the presumed rightful owiiers . Alarming as it was , no one of the old and

      great productive businesses of society was injured . Only new and sometimes extravagant enterprises \ rere checked . The harvests were good , and all things essential to trade , except credit and confidence , were plentiful . The convulsion accordingly passed away without any serious losses , and without imposing any further check to progress than great additional caution . The effects of this were chiefly felt , but felt somewhat severely , by the new , young , active , and enterprising members of the mercantile community . Never was , we believe , a

      convulsion so widely spread which shook down so many paper edifices , destroyed so many towering hopes ,, and which was otherwise so little injurious . It put an . end to great expectations rather than realised wealth , and though it has leffc many a grieved and disappointed heart , it has not marred the fortunes of either individuals or the public . Now business is again reviving here and abroad , new expectations and new hopes are excited , and they will be more prudently indulged and more generally realised . The living race of mercantile

      men have had a memorable lesson impressed on them , and till another generation arises ignorant qf the lesson they axe not likely again to run into such extravagance as characterised 1856 and 1857 . That they may see as clearly as possible the proliable consequences of their confidence and their actions no artificial blind Should be drawn between them and the future . Their operations all have "their origin in commodities actually produced , they all terminate in the distribution o ( commodities for

      consumption , and all their profits , with the reasonableness of all the credit they take , depend on the relative cost of commodities , when and where produced , and on their value when and where consumed . Credit is , and must for ever be , proportionate to goods on their way to the market , or between , the producer and the consumer . By the Suantities and value of commodities it is in the end br ever adjusted j by them , therefore , which really and always give fixed laws to trade > must the conduct of . all merchants be regulated . Legislation

      accordingly should interpose no screen betwixt mercantile men and * the , natural results of their occupations . Perfectly free trade between individuals , whether living under the same Government ; and fellowcountrymen * or living under different Governments andi foreigners , to each ) others , is mot only as wo know eminently advantageous to nations , it iB essential in . a moral sense to the ' merchant , that ho may see hi * ¦ way and- § ruidb his conduct betwixt production and'consumption to a suooossful issue .

      A-t present ? the Berate of England , which at this time last yearliud issued-2 , 000 , 000 / . more promises to pay than tteJaw allowed ^ and had only 6 , 4841 , 000 / . bullion in its . possess ion ,, with a reserve of notes of only 1 , 148 , 000 / .,, has regulated , its issue of notes py tup law , and has . in , its own . possession , a reserve of its own . promises to pay to , the amount of . ll , 897 f , 0 Q 0 A ( last week ' s return )* togethea with l & i 6 Q 2 , 00 Q & bullion , Now , this reserve ofl notes , though'they be only promises to pay by tho Bank ; , and ore in its own possession , aro by the law de > - dared to be legal tender , and aro as much the legal money of tho country aa tho sovereifrns in

      oircula-_ .,,,, ¦ I 11 the rate of profit , which is tolerably high in general business , neither here nor abroad is there any reason for such a low x-ate of discount as , no w prevails . The cliief reason for it is the abundance of legal money deposited in the Bank , aud at the command , on good securities , of all the hankers , merchants , and dealers in the country . The cifect last year of adding 2 , 000 , 000 / . to the legal money restore confi

      of the country was immediately to - dence , and almost immediately to . lessen the price of money . Of course a large quantity of legal tender must at all times have , pro taido , similar effects ^ and therefore , we say , that the present low rate of discount is , in a great measure , the consequence of the large quantity of legal tender which lies idle in the possession of the Bank . It is not the result of natural circumstances , and will be

      sure to mislead the mercantile commuiuty . _ , It must not be said that the rate of discount is almost everywhere equally low , for this would not be true , and recently there was a considerable rise abroad ; and , if true , -would be in part the . consequence of the undue creation of legal money here , and the great influence which our money market has on the money markets of the world . The quantity of gold and silver produced brought to is

      market , and by universal consent used as money , as much a portion of the great natural phenomena of production and consumption , by which the merchant must guide his operations , ns is the quantity of corn , of cotton , or of tallow . Our Government , taking this just view of tltc matter , professes not to interfere in any way with the quantity of bullion brought to market , or the quantity of com put into circulation . It merely certifies that the coin is of the ordained standard and weight . If the Government were to interfere with the quantity of bullion brought into or sent out of the country , or with the amount of coin in circulation , it would be immediately decried for interfering with and deranging commerce . But after it has discarded and wholly given up as injurious the old privilege and practice of regulating the quantity of coin and bullion in the country , tho Legislature , by the Act of 1844 , limits and regulates tho quantity of legal money . In 1857 tho law supplied a great deal too little , and was of necessity suspended ; in 1858 it ordains a great deal too much , and though nobody now asks for it to bo suspended , the law is equally injurious . Tho owners of capital , the value of which tho law now unjustly depreciates , find little employment for it , ana the law compels the Bank of England to buy it , issuing against it an equivalent in legal money . On looking at tho Bank returns it will bo seem that the notes created and issued last week amounted to 32 , 310 , 000 / ., of which , only . 21 , 820 , 000 / . wore in the huuds of tho publics , and the remainder , consisting of mere promises to pay , swelled tho reserve of tho Bank of England . By compelling the Bank to issue legal money proportionate to tho amount of gold deposited in U , and by compelling it to buy by issuing such legal tender all tho gold offered to it , tho law does more mischief now , though it bo not so immediately apparent , and will do hioro misohiof hereafter , than , it avowedly did in . 1857 ,. for doing which it was suspended .. ' Cleaultf the . law cauaoa 11 , 000 ; 000 / . oC redundant monoy to . bo oroatod wliqu , the prooioua metals , aro wauaually abundant hx the oauntryi and- so holp » to koepi down , tho rate of diacouut , and helps to mnko men imprudent and entoTnTiBo-hereafter unrnwceseful . Gold-vis a commodity subject to * all tho laws of production , distribution , and consumption : and it

      fcring with the . quantity of the metallic currency . Some half-informed political economists , some selfish and timid bankers , aud Ministers even more ignorant than their advisers , then thought that the principles , of free trade , which they praised andmloptcd , were not applicable to bullion and to bankim , vaiul so they established as a rule that the quantity of legal tender of nimiey should vary ¦ with the bullion in the . JBa-nk of England . To clleet this , they ordained that the Bank should Imy all the gold offered it , issuing notes to pay for it , ' aud cancel its notes as the bullion was withdrawn-. The consequence , we now see , is that there is a great and useless surplus of legal money in the country , \ yliich beats down the rate of discount as much below its natural level

      is the only one in which our law compels a parti cularbody to deal , and compels it to give for cold -i certain amount of what it ordaius shall be moiicvand which liquidates its taxes . Of all other commodities the law leaves the sale , the price aud distribution perfectly free and uucloqgcd . ' Not only is this proved to be advantageous , ? t ° is actually necessary , that society niay be fed , clothed and otherwise provided for . Sonic reason therefore of overwhelming force and equal plainness should exist to justify the departure in the case of gold from this universally valid principle . No such reason exists The law of ISAl is merely the result of an old and discredited prerogative , which is most improperly extended in modern times to the credit notes of bankers after the Government has given up

      iutcras the restriction on the supply raised it at this time last year ,-and . compelled the Legislature with disgrace to set aside iU own enactment .

      General Thade Ue^Obt. London, Friday Eve...

      GENERAL THADE UE ^ OBT . London , Friday Evening . Judging by the reports from the country markets it would seem that the price of corn has at present reached the lowest point , but to-day the market in Mark-lane ' was , on the whole , dull , '• though some species of grain fetched' prices rather above those of last week . The consumptive demand continues very great , and those most deeply engaged in the trade make no complaints . Tlie other produco markets—sugar , winch is u . I .

      dearer , tea , which is firm , coffee , which is stationary have about them nothing remarkable . In general there is no speculative business whatever going iorwarc ] , and the opinion begins to prevail tliat there will be no animation before- the k >» m » nig of anotlier year . It is noticed th . it the prices of commodities aro higher in the places of production than in those of consumption , which indk-ato only losses to t merchants and paralyse trade . Clearly the rerae y for this ia increased ' consumption , and increased consumption can only bo expected from the pcoplu tuning increased employment . Tho necessities ot the c . e would , therefore , imply that there must spee 7 cnstie , In some direction or other , nn increase ol . uu

      einess and an increase of consumption . From tho various manufacturing districts our wi vices are nearly of tho same tenor : —trade mi , but extending ; prices will , a ^ nro marg . no proi j but steady . Tho rcqc . it letters from U inn nuu India nrc regarded as not encouraging . I " 1 * ' trade at Liverpool , for this period ot tlic J ^' J been good , and , contrary to expectation ,, t * uJ J after it was ascertained tlmt the crop this j r « be larger - than estimated , tho price h ^ nearly Ad . The shipping trade , wli eliit Ik c 111 Ueniosse co

      plaints of shipowners assert ia a tion , ia likely to sustain further loss iron tht cj petition of voasols from Hultio ports , as I ¦ «¦>« ; - of tuo weather is rapidly closing tho northem Iw of Europe , to trnfliu for the winter , nijil > c , practice of Prussian , Swedish , « nd othe jjj Ins toad of lying icebound in their own P" ^ i ' | l £ 8 spring , to como over hero and compote <> ' ' f V at a figure which enables them just to iw '| eh penaos of wages and current chnrgos—a nt"r ^ of course our own shipowners cannot ivtc ^ . " | | Wter

      KJlniThn . *« £ toiorably brisk , ^ j ^ rdK mado exertions to got oil' wlnlor ft ' a export good » before tho- » iiteh ana , ports aro closed by the ice . : i ho ™ ° T y sl > o « ' " intelligonco is that tho frost has ^ " ^ JtvioW itself in . tho Elbe . From tlio iron * , ul-r tho Midland Oountios ftnd Wales , 0 P « „ varktion in tho state of tmdo is renorteci .

  • Citation
    • Leader (1850-1860), Nov. 20, 1858, page 26, in the Nineteenth-Century Serials Edition (2008; 2018) ncse-os.kdl.kcl.ac.uk/periodicals/l/issues/cld_20111858/page/26/