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    MERCANTILE AND COMMERCIAL.

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    public and the Legislature to be settled by the owners of the capital and those who expect to gain by borrowing it- The market for it , as for corn , should be perfectly free , and tlie owners or custodiers of the surplus capital , whether they be the Bank of England or other bankers , should , unbiased by any public interference , be left to their own discretion in lending it and in settling the terms of the loans with their borrowers . But we must remind the public that tin ' s capital , not being required for agriculture , manufactures , or interchange , is precisely that part of the national resources which can be devoted to new enterprises . It can only be

    employed in them . For the time being it is not required in any of the old occupations of society . Of late it has accumulated very rapidly , and seems likely to accumulate , unless employed in new enterprises . Hampered as all the ordinary and old industry of society everywhere is by fiscal and protective regulations , by restrictions and prohibitions , it can expand only very slowly , except as these be removed . But expand it must , growth is the law of its life , men are everywhere anxious to improve their condition . This capital , therefore , must be and will be employed , and the more it is accumulated by artificial restrictions on industry , or

    artificial impediments , the moire certain it is at some period to be misemployed or wasted , and cause commercial convulsions . As the capital must , and will be employed , and cannot be absorbed by the old industries of the world , from the produce of which it is saved , the grea t consideration is to employ it properly . Nqody can judge of the mode of employing it so well as the owners and borrowers . But it is impossible to make sure of the success of all new enterprises . Even with the utmost caution many will fail . This is the lot of humanity . It is no reason for stoDDiner them altogether , or condemning the

    enterprising and speculative spirit in which they originate , but an excellent reason for taking great care and for making a close examination of all the conditions on which success depends . To stigmatise all speculation is to stigmatise new undertakings ; and could it possibly stop speculation , it would stop progress and make the saving which is so earnestly and continually recommended a fruitless virtue . As mercantile men deal much in discount or use a portion of our accumulated capital , let us notice , to bring them within our description , that many o £ their undertakings are new enterprises . Every expansion of trade is a new business for somebody ,

    and trade is , as the rule , for ever expanding . Every cargo purchased abroad is a speculation . The profitable future sale depends on future conditions , which may be happily conjectured but cannot be accurately known . Merchants , therefore , make large claims on surplus capital , and there is an increased demand for it when trade is active , beoause they continually engage in new enterprises , the majority of which are successful . By employing capital in making railways , or erecting telegraphs , &c , it is not diverted from old industries to new industries , but a new industry is promoted or croated , and capital which would

    otherwiso bo unproductive finds profitable employment . It is quite an error to supposo that capital is diverted by speculation and new enterprises from legitimate to illegitimate undertakings , It is merely put into activity . Much as the surplus has accumulated in the last year , no legitimate and customary industry has been stinted of a duo supply . Tho vast accumulation , therefore , while every kind of productive industry has continued , leads to tho conclusion that capital is less necessary to industry than industry is to capital . "Without capital maw

    SURPLUS CAPITAL . —DISCOUNT SPECULATION . In November , 1857 , the bullion in the B ank of England was 6 . 4 millions ; a fortnight ago it was 19 . 5—difference , 16 . 1 . In the Bank of France last November , the bullion was 7 . 0 millions , now it is 22 difference , 14 . 4 :. In the banks of New York ,

    Philadelphia , Boston , and New Orleans , the bullion last November was 3 . 2 millions , now it is 13 . 4—difference , 10 . 2 . In these banks , therefore , the bullion in the autumn of 1857 was only 17 , 000 , 000 / ., now it is 55 , 000 , 000 / . —a difference of 38 , 000 , 000 / . ; all real capital , the produce of labour ; a vast sum , equivalent to half the annual revenue when the nation was taxed to pay for the Russian war .

    This , however , is not all . In the Banks of Hamburg , Frankfort , Vienna , &c , the bullion now is much greater than last autumn . We are not in possession of the particulars , but looking at the large increase in the Bank of Yienna , we may venture without exaggeration , and without making any claim to pedantic exactness on a point concerning which one or two millions is of no importance , to say that the bullion lying idle in the vaults of the several banks of the commercial world is now

    50 , 000 , 000 Z . more than at this time last year . Not taking into account the bullion won in the year by labour , and only to be turned into capital by saving , this 50 , 000 , 000 / . represents an amount of capital which last year was diffused amongst the industrious classes . How much of it might have been hoarded pannot be known , but probably rery little ; and this amount of capital , now lying idle , was then actively circulating . As long as it lies idle it is surplus , and the existence of this surplus capital is the fact to which we direct attention .

    proportioned to the risk run , er - stances . The reward in all the chief and established business of society and its quantity , with the amount of capital usually employed in it , are all liable to only small fluctuations , not greater than the fluctuations in the liaryests and the seasons against which human foresight' prudence provide ,. which are lessened , or even neutralised by commerce as it extends . The variations in the rate of discount , then , do not depend on variations in the quantity of business in society , nor are they connected directly with the rate of profit in business , or the rate of ' interest on perfectly good secur ities To show how little these variations are connected with actual trade we must remark that at the end of the fifth month of the present year the value of end

    our exports was 15 . 7 per cent , less than at the of the fifth month of 1857 . At the end of the eighth month , the difference was only 10 . 7 , and at the end of the ninth month , only 9 . 8 per cent . The greater part of the reduction in value , as compared with 1857 , as we have shown iii a former article , was merely nominal —a change in price rather than a diminution in the quantities of articles produced and exported , and in the employment of the people . We know from the monthly poor-rate returns that the number of able-bodied paupers in the manufacturing districts has continually decreased since the spring . Thus we have the evidence both of them and the trade returns to show that since the spring the trade and business of the country have increased , but in the rate of the discount there , has been no

    and othcircum 88 f , and the rate of discount was 9 per cent . ; now the price is 98 £ , and the market rate of discount is not more than 2 i per cent ., the variation in the interest on Consols not- having been £ per cent ., while the variation in the rate of discount approximated to fourfold , or 360 per cent . The rate of profit made in business , too , unless on some special occasions like the gold discoveries or the introduction of some new and very useful invention , never undergoes such rapid and great variations as the rate of discount . On the whole , it is comparatively steady , particularly in old employments , custom having settled for each of them a different rate ,

    There is no reason to suppose , notwithstanding so much capital is idle , that much productive and necessary labour is anywhere suspended . Agriculture is , we know , extending , and more land will probably be cultivated in 1859 than in 1858 , or the land already in cultivation will be better cultivated . A few manufactures arc slack , the construction of new works and implements , including ships , is not active , and there might be less production in future were this inactivity to continue . There is , however , more work going on now than in the early part

    increase . By the end of the year we may expect that the diminution of our trade , as against 1857 , will be next to nothing , though so much capital has been lying idle , and the difference between the rate of discount now and last autumn is between 300 and 300 per cent . Variations in the rate of discount , then , are not due to variations in the actual trade and business of the nation . Last autumn , however , the surplus capital , as we have seen , was very small , now it is very large ; then the rate of discount was very high , now it is very low . Clearly , then , the rate of discount and the variations in it , and the amount of surplus capital ,

    of tho present year , when there was a less amount of capital lying idle . A part of the capital may be unemployed as the consequence of diminished trade , but not much , for trade , when confidence exists , is carried on with little capital beyond the ships and the warehouses which are its necessary instruments , and beyond tho merchandise including manufactured articles as woll as raw products , which it exchanges , and these arc as plentiful , as well conditioned , and as fully employed as last year .

    are connected with one another , and the variations depend on the rotations between the amount of surplus capital and the demand for discount . They arc not the consequences of changes in tho actual business of society . . In this surplus—because it is a surplus—tliorc may bo any amount of change without affecting the national welfare , just as there might bo any amount of change in the quantity of corn ovor and above an nmplo average supply without causing tho least inconvenience . The owners of the surplus corn indocd , and tho owners of tho surplus capital , with the persons who wish to borrow it , may suffer severely from changes in the relations between the supply and tho demand , but

    TCho great businoss of the merchant , tho more exchange of commodities , except in those cases in whioh he makes large advances , is carried on extensively by credit as contradistinguished from aocumulated capital . From these circumstances we may infer that tho ohiof purpose served by this surplus capital when actively employed is to pro . rn . oto now and speculative enterprises . Fqw of these boing now undertaken , this surplus capital is little required , andhonco it lios unemployed in , tho vaults of tho bunkers . From tho prioo of Consols not having fallen below 80 fpr many years , nor risen much above par , aud from tho , vato at w , hich money oau be borrowed on good landed soourity , . generally botwoon 4 and 5 per cent ., it is plain that tho rate of interest kcops tolerably stoutly . The rate of discount , however , and 1 ho hit crost of money borrowed for short periods , varies very much nnu very frequently . Tho prioo of Consols lust November was

    to tho rest of tho community—except us we arc all nfleototl by the well-being of ono another—theso relations aro unimportant . Far otherwise would it bo did tho rate ol" discount depend ou tho actual business of sooicty , or did it increase and decrease with tho quantity of employment and tho rate of profit , and wore in any decree tui index to social welfare Then wo should all be as deeply interested in it as aro now tho owners ol this surplus , and tho men who would borrow it aud employ it if they oonki . Now , becauso this capital is surplus , and tho rotations between it ami tho ralo of disoount are utterly unimportant- compared to the steady cmploymont of tho people , aud tho ineossant though quiet production of tho ncoossarics of lii ' o , theso relations may be left with muoh unconcern by tho

    can labour , all capital is the product of labour , but without labour capital is worthless , and it only bocomes profitable as it is used by labour . Lying idle it is utterly useless , and onl y atj it is brought into use by now undertakings is it distributed t ' vom hand to hand and begets much activity . TJio labour it then employs obtains wages , but tho now undertaking may lead to no oowcsMomling . increase ol production , and may in tho end diminish tiio fund out of whioh wages are piiiil , —an additional reason for great caution in tho employment ol capital , but none for huniporing tho emp loyment either by puoUo opinion or logishitivo restriction ,

    Mercantile And Commercial.

    MERCANTILE AND COMMERCIAL .

    Untitled Article

    * t n 4 , 4 . 9 October 30 . 18 B 8-1 THE 1 EABEB . 1167 ' .. ¦ i i ^^^^^^^^^^^^^^^^^^ ^^^^^^^^^^^^^^ jj ^^^^ j ^^ aa ^ iMW ^^ M ^^^^^^^^^**^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ ^^^^^

• Citation
  • Leader (1850-1860), Oct. 30, 1858, page 1167, in the Nineteenth-Century Serials Edition (2008; 2018) ncse.ac.uk/periodicals/l/issues/vm2-ncseproduct2266/page/23/