BANK RATE 4 PER CENT.

Dominion, Volume 1, Issue 104, 25 January 1908, Page 4

BANK RATE 4 PER CENT.

The most- interesting 1 and the most satisfactory item in the cable messages published this morning is the announcement that the Bank of England discount rate has been reduced to 4 per cent. This is the third reduction •that has taken place in the rate in as many weeks. On New Tear's Day yhs rate was 7 per cent., on the following day it was lowered to 6 per cent., on the 16th inst. it was put back to 5 per cent., and on Thursday last the still more satisfactory rate pf i per cent, was imposed. A year/ ago at this date the rate ytas 5 per cent., and thei'6 was bo recession until about the middle of April, the London money market is, therefore, less stringent to-day than it was a year ago. The rapid decline in the discount rate has its significance. It shows at least that London has got clear of file American financial stringency. Even in the United States the economic conditions are apparently improving, and Mr. Cortelyou is calling in the deposits that were lodged with the national banks to tide them over the financial panic. Wall Street reports a plethora of money, and the call rate is riow down to less than 1 per cent. .Not so very long ago many Americans were talking in a bombastic manner and claiming that New York was rapidly becoming the financial centre of the world, and some enterprising banker actually wrote to the Premier of New South "Wales inviting him to place the next Slate loan in New York. It is a simple matter in times of financial calm to put forward claims to preeminence, but when thcre_ is financial stress and stringency, it is then thai there' is full acknowledgment that London is the financial centre of the world, and to London the financial cripples turn for assistance. The easing of the moaev market ought to put new life and vigour into the world's industries; but that will depend vipon whether or not confidence is restored, i'or after all it is not the aiaaimt oi money that is aw.Uald<v

but the measure of confidence, that exists that determines' the situation. It is hardly likely that borrowing on a large scale will l>e because it was tjie pressure of'borrowing, the extraordinary demand for credits, that upset 'the market. . The cheapening of money must do a certain amount of good, but it is doubtful whether the •boom conditions that prevailed prior to,, the American panic will be restored. Money is accumulating in London, and because of that the lending rate is lowered! The accumulation may be, possibly is, the result of a want of confidence.; At all-eyents we have to remember that the highest competent authorities assert that' trade is shrink-; '•ing, and we know thjit there are thousands upon thousands unemployedin the United States, in Germany;,and-in. Gpeat Britain. In the; shipbuilding du^try' of the United Kingdoifl', there is slackness, and ;op. the decision of: em-, ployers to 'reduce' pages' to 'conform" to the new condition of things there , was a stfike. Jt is impossible' that the, benefits of cheap money. can accrue, immediately ; we must wait to see a repewaj. of tliat'confidence that will permit of the accumulated funds finding an outlet in profitable ' enterprises. After the Baring Crisis the Bank, of England discount rats stood at 2 p ( er cent., for nearly,, if not .quite, thirty months, during which period, there wai a trade depression. The some tiling may b,s, witnessed again, but before that", comes abont there will probably be another crisis,. and.,this time. it may be. in Germany, where the economic and financial conditions .are far' from satisfactory.