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Leader (1850-1860), 4th June 1859, Edition 2 of 2, Page 19, money on deposit to lend, is now so univ...

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      27th Foot, And Paymaster Sewell Dth R»™ ...

      to obtain intelligence of M . Adolphe Schlagentweit ^ a German , ' and . a protege of Prince Albert , than of Connolly , Stoddart , or Wyburd . This has excited some indignation in India . A rich , yellow . shell marble at Agra has been brought into notice by Mr . : Gubbins . The carriage nuisance in Calcutta is likely to be amended , for with the growth of English enterprise , it is proposed to establish a Calcutta Suburban and Mofussil Omnibus'and'Carriage Company ( Limited ) .

      Commbbdaivj The Leapeb 703

      CoMMBBdAivj THE LEAPEB 703

      Commercial. _ : -A-

      COMMERCIAL . _ : -A-

      Money On Deposit To Lend, Is Now So Univ...

      money on deposit to lend , is now so universal a practice that it may be said to . be natural and necessary . As long as interest is paid on the use of money , all who have money will be desirous of sharing that interest , and there will be a similar competition to lend whenever ' money is abundant , lind a similar withdrawal from loans whenever apprehensions are entertained that money will be wanted ,, whether joint-stock or other banks be employed as convenient instruments for using the money . It could be easily shown , were it now necessary , that joint-stock bunks , with large deposits , can make more of money than individuals , and that it is really advantageous to them and- to the community , that joint-stock banks and other institutions like them should exist ; We must

      CHARGE AGAINST THE JOINT-STOCK BANKS . IT is said that the " action of the deposit-receiving joint-stock banks is of a character to aggravate the incipient mischief" in the money market at . a time of pressure . These " monied establishments " are accused of precipitating the late crash in the Stock Exchange by rigorously calling in loans on all descriptions of securities , 'while they are now in a peculiarly difficult position , overloaded with money , for which they have to pay interest , and cannot find safe customers . That banks should receive

      disposed to increase it , did he remai'k that it is one of the means by which a territorial aristocracy is subverted by a monied aristocracy , instead of . a healthy democracy . Old wrong is continued by a new , more subtle , " and more rapacious wrong . But the effects of legislation are generally different from the intentions of the legislature , and we therefore cannot' be surprised that the Parliament , without intending it , as it is much against the interests of its most influential members , should have contributed very much to the tendency of money to accumulate in masses . Let those who now declaim against joint-stock

      banks remember that they arc exclusively the offspring of modern legislation . Not that associations for the purposes of banking are essentially injurious . They have to a great extent existed almost as long as banking itself . The Bank of England is a joint-stock bank . All the Scotch banks of importance are joint-stock bank ? . Such associations are natural and . necessary , and they have long existed in England in the form of private banks , though they were restricted in the number of their ° partners , and hampered in their operations by the legal monopoly conferred on the Bank of England . After the great revolutionary war had driven all commercial transactions athwart thsir usual channels—after the Bank Suspension Act-had dcranrre'd the whole . monetary system , and

      tumbled all credit from its just foundation , some of the resulting disorders manifested themselves in our private banks . Of course , the Bank of England was sustained by legislation , and the whole power of the community guarded it from suffering . The calamity fell on the private banks ' ' on the community which sheltered the Bank of England from harm . Then , soon after the peace of 1815 , when hasty , illtimed , incongruous , and even scandalous legislation—such as corn laws—was the ordinary product of Tory and ¦ -aristocratic brains , before observation had found in commercial restrictions the pauses of ' the vast disorders which prevailed between 1815 and 1830 , an alarmed and ignorant public , led by journalists unacquainted with the lavs of social science , and a Parliament more eager to ant than to learn—for if it learned it would

      the same kind of panic- —particularly if it had no good foundation—as " the returning abundance of money may make us suspect , would have been felt by them all . We believe it would not . a false opinion or sentiment is liable to correction , in proportion as great numbers are affected by it , and . therefore we say ; that ' the best correction of money . panics , is to diffuse the _ resources of the money market amongst many individuals , exposing all to unrestricted competition , which will keep them all vigilant and all honest .

      Abstain from much action ^ - ran private banks , and a law was hastily passed to promote the establishment of joint-stock" banks . . They did not grow naturally iii their present forms , like private banks with numerous partners—which would have become joint-stock banks , had not the Legislature unwisely forbidden them , and very foolishly thought it could substitute something better—but were born of an net of the Legislature . On private banks , at the same time , several restrictions were laid . Now complaints are made that the joint-stuck

      banks , which only act vigorously on the lavs of competition—the supply of capital and the demand for it—are the sources of considerable disorder in the money market . We believe that ofhite their action has not tended to keep it steady . They have taken the character of an impelling power , while they should h-. ive been a guide—have been rather sails than the rudder , and have stimulated'the gambling and tho enterprise they should have checked . For this , however , the joint-stock banks are far less to be blamed than the law which ,

      in spite of experience ' , not only maintains tho monopoly of tho 'Bank of England , but hns done all it could to put down private banks , destroy their credit , and so prevent the healthy competition winch is as necessary in the capital or money market as in tho corn market . Tho Lpgirflnturo never effects any good—never effects ought but mischief when it makes regulations for trade , and therefore it should , us quickly as is consistent with safbtv—for it cannot oven do away with its noxious regulations without inflicting injury on aoi . no onerepeal all the laws now iu existence interfering with banking .

      Tho lato destruction of members of the Stock Exchange began with a panic , which was itsolf the ooiifiequenoe of a general speculation for a rise . By help of money borrowed from tho joint-stock banks and other bodies , Consols had boon forced up , or kept above their fair market , value . Whatovor might hnvo boon tho cause of tho panic it was ( Lilly shared by tho Bank of England , which raised its rate of discount 2 per . cent ., in ton days and by the joint-stock banks , which hastened to draw in then loans on stock , with what threatened to bean insufficient margin . Now it is not to bo supposed , if tho largo resources of thoso bodies had been dispersed through ton times ns many private banker ** , that

      therefore consider the aggravation they are said to cause of the evils of fluctuations in the money markets , as one of the sandbanks or rocks in the social ocean , warning us that we have taken an erroneous course . We cannot condemn taking interest on money ; we cannot condemn competition to make the best use of it ; we oarinot condemn joint-stock banks which answer these pur- ' poses ; we have rather to find out from the wreck how we have gone out of oiu * course . At New York , where the commercial community suffered from sudden expansions and contractions of the money market , and where both borrowers and lenders were jrreat sufferers , it was

      proposed in the early part of last year to place an artificial limit , by the joint action of all the bunks , both on thi' rate * at which money should be taken in on deposit and at which it should be employed to discount . But . this project , after receiving the ;• auction of nearly all the banks of that city , came to nothing , because all would not agree to it . In truth , to prevent competition in borrowing and lending money is impossible . Usury laws in England and in the United States , though agreeable to the popular sentiment , have failed to accomplish this object . We can entertain no rational hope oi settling such matters by positive regulations . Wo must trust to competition for settling them , and wo must remove all obstacles to the perfectly free

      pluy of its laws . One obvious source of mischief is the heaping up of money or credit in great masses , which places the control of the whole in the hands of a i . 'omj > aratively few individuals . Money , or credit , i * another name , for power , and the m , ore it is diffused , so that each individual shall have a

      reasonable share , tho greater its benefits . Heaped ui ) , like manure , it generates rank and weedy disorder ; spreads equally over tho field it fertilies every part . Modern legislation on this subject has generally tended to collect money in few hands , and much of the late and present disorder in tho market is probably the result of this legislation . As money makes money , it has naturally a great tondonoy to this form ; and ns the c ondition so fervently prayed for by tho prophet , neither " poverty nor . riches" is alike favourable to individual virtue and social welfare , this tendency ought , on no account , to bo incrca ' sOl by legislation . Nor would the refloating legislator bo

      Reduction In The Rate Of Discount. On Th...

      REDUCTION IN THE RATE OF DISCOUNT . On Thursday the Bank of England reduced its minimum rate of discount from 4 J per cent . —to which it was raised on the 5 th ult . —to 3 i per cent . The abundance of money in the market , and the previous reduction of the rate by private bill discounters , fully justify the step . At the same time , these facts show that the Bank , vast as are its resources , does not really determine the rate of discount in the market , though it affects to do so . If there were any error in its conduct , it was in raising the rate so suddenly , on the 5 th ult ., aii additional . 1 " per cent . ; but it was then influenced by the sudden diminution of its resources , and the actual condition of the money market . All the dealers in money , whether borrowers or lenders , were frightened , and the Bank shared the general contagion . Whether the " present reduction , -which is justified by the circumstances of the moment , will continue , will depend on the fact of war absorbing loss of the resources of the world at its commencement than it throws enterprise into inactivity . It compels the suspension of much peaceful'industry , and so limits the demand for capital . At the same time Capital is required to carry on war . In the end , as it impedes reproduction , it will press , mbre and more on the comparatively diminished' resources of . society , and enhance the value . of capital . We anticipate , therefore , that the present reduction , though now justified by circumstances , will not be lasting . '

      Money Market & Stock Exchange

      MONEY MARKET & STOCK EXCHANGE

      Cily, Friday-15veiling-. In The Money Ma...

      Cily , Friday-15 veiling-. In the money market to-day the demand increased , hut only so much as to make the market less dull than before . Money is now taken on call by the joint-stock banks at 2 per cent , and 2 J per cent ., jind the best bills arc discounted at something below the Bank rate . The little increase in the demand did not alter the character of the market , which continues easy , and tit present there arc no indications of an adverse change . We have referred above to tho reduction by the Bank of England ofjhe rate of discount , and the accounts published below will show hi the increase of its resources tho ronsons for its conduct . The markets of the Stock Exchange , which have exhibited through tho week a rapid tendency upwards—Consols even rising on . Wednesday to an unwarranted height—have been dull to-day . They Avont backwards yesterday , and to-day opened at yesterday ' s prices—Consols 0 M . { to J , — -but notwithstanding tho prices from Paris lo-dny fame firm and improved Consols , and tho other funds receded . This was attributed to parties who had speculated for the rise having realised , and to political causes . More weight was attributed to tho urtiolo . of tho Auqaburah Gazette , published in tho Times , than it Ucs ' orves . It can only be considered as expressing tho wishes of tho heated and silly princes of Germany , not tho sentiments of tho people . The latter want political improvement at homo rather than war abroad . Tho fonnur would gladly excite an anti-revolutionary cry to scotiro thoir own powor . Woino weight was usorlboa to the presumed instability of our own ministry , and tho uncertainty whotber tlu-lr opponents uro in a condition to oflur to tho country tho guarantees of a strong government in room ot tlio one they aim at destroying . ThvBoaa ¦ . ««»« duoul groat ( fulness on tho Stock Market t < -d y , and Consols wore done after tho close at Ou'J to ) .., Llie price at present is probably somewhat ufllelod by property remitted from abroad , to bo placed hero In security , and Is , conse quently , quite as high us it is U 1 prus s ° i . i hft « announced a loan for about £ 2 , 500 ' , 000 , but as it will bo negotiated in Germany , it will not uftlot our market . Wo understand that tho failures in . Gonnimy continue , and that some of tho oldest houses in Auasmrg-li and other places aro mentioned as having

  • Citation
    • Leader (1850-1860), June 4, 1859, page 19, in the Nineteenth-Century Serials Edition (2008; 2018) ncse.ac.uk/periodicals/l/issues/cld_04061859/page/19/