CHEAP MONEY AND COMMERCIAL STAGNATION.

Press, Volume XII, Issue 1543, 17 October 1867, Page 3

CHEAP MONEY AND COMMERCIAL STAGNATION.

[From the " London Times," August 2.] It is a word so often used as almost to have lost its force, but it is nevertheless literally true, that the present Btate of the money market is " unprecedented." It is true that twice since the passing of the Bank Charter Act the Bank rate of discount has been as low as it is now, but instead of its falling to 2 per cent, within a twelvemonth of the panic, as it has just done, that depth was only reached in five years after the panics of 1847 and 1857. The is now five millions more bullion in the Bank than on the last occasion when the rate of discount was as low, and three and a-half more than at the previous period. Ten yearß ago there was a repletion of money, and a depletion of the nervous power requisite for its use. That disproportion is now aggravated to the extent of five millions of bullion in the Bank of England and three millions of " rest." But the Bank of England is only one of many capitalists and money-lenders, and all the others are underbidding it for custom, not to have their money lie idle in their coffers. It is the case of Midas —gold all around and no power to use it. But it is the same everywhere. Meanwhile companies without number, and with nominal capital which it is difficult to estimate, and scarcely possible to overstate, are insolvent, and unable to get loans on any terms. The more they ask the less they get, and the old stock picture, so much employed by the League, of huge granaries crushed to the earth, with corn spoiling as it lay in the midst of a starving population, as applicable to the London Banks. Never was there so much money. Never such a want of it. Many thousands of well-to-do people are at their wits' for the money which they possess in some

nominal form, ..but which they cannot solidify by any process, and reduce to an available form. The more there is the worse for those who haven't it. So they think, at least.

People are all asking the reason of this, state of things, as well they may. If a reason can be discovered, a remedy also may be 'discovered ; or it may be shown that the complaint is imaginary, and the disorder has no real existence. Perhaps it is the apprehension of war. Certainly he would be rash who undertook that there shall not be war in this or next year. There are so many people just now who would like France to go to war with Prussia, that perhaps the wish is only father to the thought • j or perhaps so many ill-wishes amount to a good;opportunity,orperhaps a wilful | world will have its way, and neither Prance nor Prussia can help itself. But as it seems to us, there is no need at all to speculate on the chances of war, and the question before us is of a more everyday and homely character. We need not look across the Channel, unless curiosity or self-complacency should lead us to inquire whether our neighbours are not very much like ourselves. The plain fact is that the British public, which has always undergone ebbs and flows of confidence, has now lost it altogether."""One has read in old books of the Thames having occasionally ebbed so low that people could walk across at the bridges. Had the river ebbed so fast that this could be done an hour after high water that would be a fair emblem of our present state. The bed of the treat commercial current is absolutely ry. It was a mountain torrent only a year and a-half ago, it is now mud and stones, the debris of a thousand disasters. But the element is moral, not material, and when we look about for the region where the element of confidence is to be found, we must look rather wide, and perhaps we ought to add rather low down, for the stream that rises and falls, and that gives once in ten years an inundation, once in ten years a drought, but which a certain class of engineers know so well how to utilise.

There is no chapter of our history and condition so sad and so painful to be told. "We shall not pretend to enumerate the classes—they have often been enumerated, and the enumeration has been tested and proved by many a list of ruined shareholders. The fact itself is enough. A very large proportion of our wise, prudent, moderate, contented, and most Christian countrymen and countrywomen don't object to a little risk for a somewhat better interest on their money than they can obtain from that close fisted functionary, the Chancellor of the Exchequer. Whatever they have, they want a little more—just a little more for charity, then a little more for themselves, and so on. But they must fun a risk, and place confidence in somebody. If their friends .recommend prudence — and friends don't always do so —they look out for somebody else to give them advice more in accordance with their own inclinations, and they seldom fail to find one. But how should they know anything, poor things—and poor things they are indeed, if they did but know it—about railway, with a dozen extensions, a dozen or more Acts of Parliament, and a dozen varieties of capital? How should they know anything about foreign loans, about foreign city improvement companies, about mines, home or foreign, about hotel companies, about foreign irrigation or canal companies, about packet companies, about finance companies, and banks with branches all round the world ; and how can they measure the special circumstances under which a company which has issued all the shares it can under, a dozen different names is induced to offer nearly twice as high a rate of interest as the Chancellor of the Exchequer gives ? Private people, as a: rule, cannot possibly know anything about these things. AH their occupation a of mind and body, heart and soul,- are adverse to the close and suspicious scrutiny necessary for large and hazardous mercantile transactions. If they have heada for them, by all means let them give the nation as well as themselves the benefit of them, for we have not too many in this country who understand, we will say, the affairs of the London, Chatham, and Dover, or the North British, or even the Great Eastern. But the very best heads in the country, whether in Lords or in Commons, or in our courts or in the city, confess themselves unequal to the work of understanding; these companies, and restoring them' to life and order. These, are tbe classes —we must not specify them nor need we—they are the origin of this confidence that ebbs and flows so marvellously. Just now, it must be added they have spent most of their money or compromised it, and even if they had " dreams beyond the reach of avarice," they could not be again the victims of excessive or misplaced confidence. But there is money ? There is all this money in the Bank and in the City—nay, many millions more than at any former crisis of this kind? Yes, there is; but we venture to submit that the greater part of this central accumulation belongs, not to the poor dupes ready to fling away their savings on any venture however out of their own line and past their understanding, but to those whose experience I and opportunities enable them to take a wiser and safer position in such speculations. This, however, they cannot do unless the confiding public— consisting of the classes we do not and need not specify—will come forward. It is they who create the harvest for the professional capitalist. At present they are prostrated and exhausted. They have neither money nor courage. They are disabused of their old dreams, and have not spirit or the means for more. So, as they will not and cannot lead the way, everything is at a stand, and we must wait for that fatal and almost invariable decennial period which is to restore all our private capitalists, male or female, old or young, to funds and confidence, and to culminate in another fever, another sudden collapse, and and another state of things like we now see around us.