THE EFFECT OF THE WAR ON THE MONEY MARKET.

Nelson Evening Mail, Volume V, Issue 234, 4 October 1870, Page 4

THE EFFECT OF THE WAR ON THE MONEY MARKET.

(From the Economist.') One effect of the war and of the excitement on the Stock Exchange consequent on it will be that the. dealing of foreign stocks will he rendered more healthy. A great number of new loans have lately been introduced iuto our money market, and all have leen received with a certain amount of public approbation. But all the stock represented by these loans has not yet sunk down to the public : some part — in many cases a very large part — still remains in the bauds of speculators in London, and is held by means of money borrowed in various ways. A considerable part of this money will now gradually be called in. After the rapid changes of last week, aud the impossibility of maintaining margins, the lenders do not like their security. Some borrowers are already in difficulties; more may be expected to be so ; and a larger number still wili after late events, only pay bsck the advances made to them on such terms as will leave them with very little, if anything. A considerable sum of money borrowed for foreign stock transactions will, we believe, soon be called in, and as this will come back to Lombard street ifc wiil tend to reduce the rate of discount on ordinary mercantile securities. In the course of the same process a certain amouut of inferior brokers and dealers will be weeded from the Stock Exchange, and this will be pure gain. The next monetary effect pf war will be to briug capital to this country for investment. Such has always been the effect of recent troubles on the continent. England as a rule, and especially in this case, stands aloof, is not at present involved in the coming hostilities, and can only be so in a remote manner. In consequence, the timid money, so to say — the money of apprehensive and careful persons — is likely fo be sent, at least for a time, to England, and this importation will for a time send down the rate of interest with us. But if the war should be prolonged, then a wholly different set of causes will begin to operate. Both France and Prussia will become borrowers in the money market, and borrowers upon the largest scale. And this will revolutionise the Stock Exchanges of Europe. Instead of lending the countries outside the line of full civilisation— to countries, in many cases, of very questionable credit— they will be lending to the central Powers of the world, who are " good for" any amount of money, and who will, "at a rate," be able to borrow almost any sum they please. They will be able therefore to subtract from the ordinary discount market an enormous sum, and the effect of this will probably be to raise the rate of* discount. Against this it is true we must get the capital set free by decreased trade and the capitai that remains uninvested owing to suspended new trade which would have begun but for the war, but which, owing to uncertainty engendered by the war, remains idle, and this will of course be considerable. Now that a first-class war has broken out, the first effect we may broadly say will, be to reduce the value of money by sending foreign capital here for security; and the second effect will be to raise the value by bringing into the market two immense borrowing nations, and at their respective times all other forces brought on by the war may be expected to be secondary lo these two.

The virtue of paganism was strength ; the virtue of Christianity is obedience. Small sands make the mountain, moments raake the year, aud trifles life. Douglas Jerrold said there was no finer sight thau a stream of human creatures passing from a Christian Church. A Yankee, describing an opponent' says, "I tell you what, sir, that man don't amount to a sum in arithmetic, add him up, and there's nothing to carry." A Country girl, coming frora the field, was told by her cousin that she " looked as fresh as a daisy kissed with dew," " Well, it wasn't any fellow by that name, but ifc. was £teve Jones that kissed me ; I told him that everyone ia Nelson would find it out.