The Evening Star. WEDNESDAY, MARCH 8, 1876.

Evening Star, Issue 4066, 8 March 1876, Page 2

The Evening Star. WEDNESDAY, MARCH 8, 1876.

The accounts from Home concerning the state of trade lead to the conclusion that the worst of the depression there has passed, and that, with returning spring, increased demand for manufactures will spring up. It by no means follows that there will be a sudden return to high prices. In fact, to excessive prices may be partly attributed the check which trade has been suffering from. We say partly, because many causes have combined to bring it about, a few only of which can be known by us in these far-off regions. Even those who live in the centre of the transactions which tend to commercial changes, cannot rightly estimate the effect of the smallest of the events affecting them- Who, for instance, could know the interweaving of debit and credit accounts in Wall street or in Lombard street, the amount of support given to large rail-

way* schemes in America, or to giant I r, I ,'? 11 ma*.uua«ti?rmg establishments in j Aleu whoso business it is to ileal with large discount accounts might have their suspicions of the . character of the paper by mean s of which the businesses were conducted; but when like suspicions are aroused it is commonly too late—the crisis has become inevitable. Or, who can, for certainty, predict the effect of a change frr,m a silver to a gold coinage in Germany ? The first process must undoubtedly be the withdrawal of gold from those countries in which it has long circulated, for the country making the change must pay for the use ox the metah There is every reason to believe that this explains the high rate of interest at the Bank of England that has prevailed for some time past. Without some such cause it is inconceivable that with so little demand for money for manufacturing and commercial purposes such heavy prices for its use could be obtained. The disturbances in the commercial world consequent upon what are termed “ these financing operations ” are the more annoying, because they might have been avoided. Never was a greater mistake committed by a nation than that of basing the world’s commerce upon the stability of an establishment trading in gold. During the discussions that took place in the British Parliament on the ill-conceived Baink Charter Act of the late Sir Robert Peel,, one statesman, not more wittily than aptly, compared England’s commercial interests to a wedge, on which the Bank of England, as the pointy balanced the vast widely spreading superstructure above it. We think he might, perhaps, in one view, still more correctly have described it as a spinning top, retaining its stability while all around was in active circulation, but becoming unsteady when checked, or when the motive power was weakened by friction. It is plain that as the chief depository of gold in the world, in whatever country a demand springs up for it, application is made at the Bank of England for a supply. It does hot matter in what shape the order is presented. It matters not whether it appears in instructions from a customer “Send per next ship” so many thousand ounces, or “ Pay to my order ”so many million sovereigns. The effect would be the same—the gold would be : withdrawn, and the Bank to that extent unable to sustain steadily the broad end of the wedge.. The point would be unsteady, the friction increase, and the circulation of the cone retarded. The direction must pare down cut off a portion of it—and be careful that it is not lopsided, or the whole machinery will topple over. But the paring down process means restriction of trade within narrow limits - compelling nations to sustain their populations upon less money. It is putting them upon short allowance—lessening the loaf and increasing competition to obtain a piece of it. As a consequence of the withdrawal of ample means for carrying on trade, everyone has to curtail his business. People tell us this is the consequence of over-trading, while in reality it is because of artificial interference between supply and demand. Virtually, when merchants have based their commercial arrangements on what they consider wellfounded expectation of the continuance of the credit hitherto accorded to them, it almost amounts to a breach of contract on the part of a banking establishment to withdraw it unless for very sufficient reason. Yet this is almost unavoidable, because it has pleased the Legislature of Great Britain to confer a grant monopoly upon a single establishment, and make it the gold depOt of the world. _ If a foreign demand springs up tending to withdraw bullion from the warehouse, prices rise and trade suffers. If demand is slack, any amount of credit is given, men are encouraged to use money, and when a check comes—say through a German change of currency—they are condemned for overtrading. General Grant is very aoxioua to withdraw greenbacks and return to specie payments. We trust he will effect it, if at all, in a very different manner from the like proceeding at Home in 1825. It was the last great direct calamity induced by the war for establishing “ the Divine right of kings ’’—and the rum was fearful. It it is done suddenly a similar result will follow in America, but it -anil not stop there. If wisely done it must be gradual, the operation spreading over years. Onr eyes must bo towards the States, and he who moat truly realises the situation will be in the best position to profit by it. He will have to make all snug in anticipation of a storm, which will wreck the fortunes of thousands ; and when the sky clears he will be in a position to clap on sail and press forward on his voyage to fortune.