MONETARY OPERATIONS. [From the Daily News, January 24.]

New Zealand Spectator and Cook's Strait Guardian, Volume IX, Issue 921, 31 May 1854, Page 4

MONETARY OPERATIONS. [From the Daily News, January 24.]

The Bank of France, finding, like some other banks, that the precious metals were continually flowing out of its coffers, has raised the rate of disconnt from 4 to 5 per cent. The latter continues to be the minimum rate of the Bank of England, and there is no tendency to a lower rate. For the moment, in consequence of the payment of the dividends and the payment of the dissentients from Mr. Gladstone's plan of conversion by Exchequer bills, money is abundant 5 but, from the prevalence of a general expectation that it will be more rather than less in demand, the owners of money are very unwilling to lend it at the present rates, except for very short periods. The only important check which trade has yet received is from the great advance in the prices of food, which requires at once greater advances of capital, and increases* the probability of money being dearer hereafter, Such is the assigned cause for the rise of the rate of interest in France. The large sura paid for corn sends the gold stream into

the new countries of the far West of America, and into the old but backward countries of the East of Europe and the West of Asia. It will necessarily beget amongst the inhabitants of those districts an increased demand for colonial luxuries and the manufactures of the West of Europe, so that the present chuck to trade, which is increasing the value of money, will tend to increase the demand for it hereafter. There is no diminution in the Australian trade. The great trade with the United States is rapidly extending, induutrious undertakings are increasing in Holland, in Belgium, fend in Germany ; the check trade has received in France is obviously temporary; and nowhere that we can see is there any signs that production and traffic will be lessened, and the demand for money decline. The present rate of 5 per cent, is paid on the very best bills. It is the value of money loaned with almost a certainty that it will be repaid in a short time. In fact, the rate is in reality higher than is expressed, for the discounter takes his 5 per cent, on the £100 ha advances, and really lends only £95, so that the actual rate of interest on the best bills is £5 ss. per cent. ; on any worce security than a good mercantile bill having (50 or 90 days to run a higher rate of interest will be required. As the Governments of Russia, of Turkey, or Austria, and several other countries are by no means safe, as the pledges of such Governments cannot be relied on, they will be obliged to give for loans for long periods, with a probability of the interest not being punctually paid, end of the capital never being repaid, a considerably higher rate tbatsSs percent, to obtain money —even if they can find people foolish enough to lend them money at all. Tba liability to borrow except on vsry high terras will be a great rsstraint on the warlike propensities of the Czar. We doubt whether even his religious enthusiasm will not evaporate with an empty exchequer, and no loans to replenish it. Amongst the many benefits we derive from extended and free trade, we may reckon the dearness of money, which imposes a restraint on the imperial power to borrow, and if it cannot prevent the madman from setting fire to j Europe, will contribute speedily to extinguish the conflagration. For the extended demands of industrious peace, and for any great and new demands of destructive war, the loanable capital of the world is insufficient, and the more the former be enlarged, the less means remain for supplying the latter, From the great sums of money amassed at the beginning of the revolutionary war, and in other wars, by loan contractors, an opinion prevails that monied men grow rich by wars, and are, therefore, not indisposed to encourage them. None of the monied men of the present generation, who have acquired their great wealth by ministering to the enterprise of the people by bringing together the means for constructing railways, bridges, docks, canals, working mines, &c, &c, can entertain such an opinion, but as it still lingers in some classes, wd* may remind the public that all the Joint-stock Bauks of which the accounts are yet published, show — as we stated oa the last day of the year they would show — increased dividends as compared to the last year. The Westminster Bank announces a dividend of 10 per cent,, and the London Joint-stock Bank a dividend ofupv/ards |of 13 psr cent.' This is quite equal to the rate I of interest paid in Araerica ; it is obtained in ! peace and safety, from contributing to the success of traflic ; and must satisfy the public, including the mass of rooiued rsen, that if one or two of their clas3 can by successful bits make large sums by war, their interest as a whole is much more promoted by the successful industry of peace than by loans which feed the instruments oi war. In war accumulation is retarded, aud batb ths rate of interest and the sura on which it is paisl are cornparativsly diminished. Monied men throughout Europe, therefore, having a. duo regard to their own advantage, present and future, must now charge a very hi^h rate for loans to enable the Czar to carry oa b. s aggressive war, There is indeed one element of a decreasing value in money — much incisted on by some per1 sons — which we must notice. The demand for cilver for China and India has diminished, and in consequauce the price of silver has fallen in oar market. Silver, too, which was very scarce in the united States, as well as in Europe, is becoming plentiful there, and the last advices slate that the mint at Philadelphia had about cne million silver dollars coined ready to be issued, and waiting the demands of the public. Now as much of the recent supplies of gold from Australia hava been used in buying up cilver throughout the continent of Europe, and sending it to India and j China, where it vasts £t a high premium — gold having displaced silver in France and other countries — as the demand tor silver for the East has diminished, silver and gold too will become more plentiful in Europe, and money will become more abundant and cheaper. As it tails in value loans will be more easily obtained. But it must be remembered that the influx of the precious metals was one of the stimulants to increase of trade, that numerous enterprises are always ready to start into existence as money becomes plentiful, and that the probabilities are — the wants of the industrious community are now so great — that trade will be beforehand with borrowing Governments, and will expand quite as fast as money can be i supplied, keeping up the demand, and preventing any considerable fall in its value. It is estimated that very nearly £30,000,000 of bullion has been absorbed chiefly as currency by the expanding and industrious community ot the United Slates since tbe discovery of gold in California. Twice that sum has been in the same period absorbed by other countries, and it is not in excess. The few millions of pounds sterling of silver that may now come back from India can have only a trifling influence over the value of all the precious metals in Europe and America, and will be as efficacious in stimulating trade as in making money cheap. We must mention that one cause of this change in the direction of the stream of silver is the political arrangements of tbe East India Company. Its revenues exceed its disbursements, and they ore -ah collected in silver. It bas refused to receive gold. It maintains, perfectly in opposition to the English practice, silver as its exclusive standard. Either Sir Robert Peel and the English Parliament, or the Indian Company, must have been in error in choosing the different metals for an exclusive standard, unless indeed b^th were wrong, which is probably the truth. The Company, however, has abstracted some £16,000,000 in silver from tbe general circulation of the world, and hoarded it up in its own coffers. It has now got as much as it can keep ; it begins

to use its hoards to pay its debts ; they will he diminished, the demand for silver will cease, and more of that will be put into circulation. The Indian Government, therefore, has contributed to derange the money market of Europe. It has caused unnecessary silver to be taken out of circulation in Europe ; it has enhanced the value of silver in India, and lowered the value of gold. Silver has, in consequence, gone from Europe to India, to satisfy its regulations, and gold has come from India to Europe, or, which is in substance similar, had not gone to India from California and Australia, and the relative and positive commercial valne of the two metals has been disturbed in different places, and trade has been perplexed by the East India Company's regulations. In England, the value of gold is enhanced ; in India, it is decreased by monetary laws, which in both places are at variance with the laws of trade. The latter, it is clear, assign a value to the precious metals different from that assigned to them by the laws of Parliament and the laws of the Company; and if these latter laws did not exist, the precious metals would be distributed in a different manner, increasing traffic and increasing wealth both in India aud in England. From the present overflowing of the Indian reservoir we expect rather increasing trade than a cheaper money market.