The Evening Star TUESDAY, DECEMBER 5, 1871.

Evening Star, Volume IX, Issue 2746, 5 December 1871, Page 2

The Evening Star TUESDAY, DECEMBER 5, 1871.

The loss of the mail at Galle is the heaviest misfortune of the kind that has occurred since the establishment of the Suez service, although there have been previous mishaps. No account has reached us as to the cause of the disaster, though it has probably happened through one of those periodical storms that accompany the changing direction of the monsoon. Much as such a misfortune is to be regretted on account of commercial loss and inconvenience, it is consoling to learn that the passengers and crew are safe, ihe loss of goods is more easily borne than the loss of friends and relatives. The meagre intelligence from Europe aflords little 100 m for comment. _ If one may judge by the trifle that is told, aflairs in the Continent appear slowly settling themselves into order, but it will be sometime before trade resumes its steady course. Society in France has undergone so complete a transformation, and there must have been so total a disorganisation of commercial matters that the surprise is we have not heard more of pressure in the money market there, than up to the last mail, had taken place. We are now told of “ a severe monetary crisis ” in Paris, consequent upon scarcity of specie. This is somewhat confirmed by the Bank of England rate of discount being quoted five per cent; an indication to all engaged in commerce at Home to expect temporary contraction of accommodation by bankers and bill brokers, and a consequent fall in prices. Under these circumstances it is hardly likely that the price of wool could be maintained, and therefore the fall of one penny per pound must be looked upon as so trifling, as to indicate a steady demand, and to point out that but for this specie panic, the quotations of last mail would in all probability have been sustained. It is satisfactory to know that these money panics, now that communication between countries is so rapid, very speedily correct themselves. In all such vicissitudes as those through which France has passed, the mass of the people lose confidence in the banks, withdraw deposits, convert them into specie, and hoard it Panei- monev is upon with o«o----picion, and everybody who holds it tries to get rid of it. The first severe monetary panic in our recollection was that of 1825, when the necessity for providing gold for their notes caused so large a number of country bankers to fail at Home. Perhaps at no previous time in the commercial history ef Great Britain did money pass no rapidly from hand to hand. People who owed money paid in bank notes, and people who received them got rid of them as fast as they could, either in payment of their debts, or in exchange for coin if they could get it. The pressure was thus indefinitely increased because confidence was gone. Bankers were anxious to maintain their credit byobtaining specie at enormous sacrifices ; and the people were anxious to protect themselves by converting all their floating capital into metal. There was a general scramble for gold and silver, and so when every body wanted it, its commercial value rose, and there was but little to be had. The consequence is plain to be seen : as money was scarce and goods plentiful, large stocks of goods were purchasable with small stocks of money ; wages fell, many merchants and manufacturers who held largely of goods or produce were ruined. There was plenty" of money in the country, but it was shut up useless in iron safes, in escritoires, in leather bags, or hid in old stockings in chimney corners; and was not brought out until the hoarders overcame their fears, and found more profitable occupation for their wealth than witholding it from circulation. This is pretty much the history of every specie panic. In all probability there is as much gold and silver in France as there was before the wav, but it lies useless in little heaps. It forms a very fractional part of the wealth of the country, but is necessary for daily use, and scarcity in the market there affords an opening for profitable export from Great Britain. In order to guard against too rapid a drain, the Bank of England has endeavoured to check it by raising rates of discount, and thus curtailing accommodation. Inconvenient as this is to the industrial world, it is one of the evils of the faulty banking arrangements of England. They do the thing better in Scotland. Panics there are comparatively" unknown, for there is no giant monopoly like the Bank of England, Although prices of goods in the North must be equally affected as in England, commercial credit is not so recklessly played with. Nor would the monopoly be tolerated long by the English were the subject understood thoroughly.

One of our best writers on finance ve r 7 aptly described the banking system of England as a structure in the shape of a wedge standing upon its small end. The small end or point is the Bank of England, and resting upon that point is the vast monetary, commercial, manufacturing, and industrial organisation of England, to which since that time, though less dependent for stability upon so small a base, must be added that of the Australasian Colonies. Unfortunately we in this distant (South are as powerless to control such arrangements as to prevent war or establish petco. Like other subjects of Her -Majesty, we can but grumble when wool or flax falls a penny a pound, because France wants specie, and England does not find it convenient to part with it. Our best remedy is to widen our markets and cultivate direct commercial relations with America.