THE MONEY “RIG.”

New Zealand Times, Volume XXXIII, Issue 5540, 30 December 1878, Page 3

THE MONEY “RIG.”

(From the Australasian Insurance Record.) The Economist has for several years endeavored to impress upon the Bank of England the necessity of maintaining an adequate reserve. In any case, it has argued the reserve should never be permitted to sink below ten to twelve millions. The Statist now, after a practical endorsement of the Economist's theory, points out “ the Bank of England’s danger” of a possible “ corner,” gigantic, but practicable, with a reserve of no more than ten millions. It gives an illustration of how the operation could be carried out, and promises on some other occasion to show the remedies which may be applied by the Bank of England, or, failing it, by our other banking institutions. v

The procedure is to be as follows : One or two millionaires, or even one only, wanting to give an interest to life, and to add to his millions as well, could easily make a great coup. They have only to realise ton millions of securities, which not only a Rothschild, but one or two more could easily do, and the market is at their mercy. They need not realise at once, but only very gradually, the proceeds of the sales being distributed all over the. market, on deposit with this bank and that, or with the bill-brokers, or lent entirely npon the Stock Exchange, so that ho one could guess what was intended or had become possible. They could then become “bears” in the Stock markets to a largo extent, and await the suitable moment (most probably some November when business has been inflated, and the reserve is weak from other causes well foreseen) to strike their blow. , They would call in their balances from, the Stock Exchange and the bill-brokers, and withdraw the sums so called in and their deposits with the banka in specie, so that in a moment money would be tight, the reserve in the bank would sink rapidly below ten millions, and the fear of a catastrophe would be general. ProbablvJnothing more need be done, apprehension and panic doing the v . rest; but, in point of fact, such a capitalist would be able to shut the doors of the banking department, unless some desperate measure, like a suspension of the Bank Act, or a sudden borrowing of a few millions from the Bank of France, were resorted to. In any case the fall in securities would probably be such that the bare account would probably be covered, and a re-purchase of what had been sold gradually could be made at a cheap rate. Some day or other we may have Jay Goulds among us who have the skill and daring and resources necessary for the operation, and its possibility should not be pooh-poohed. The Bank England should never be so weak as to give .ja‘i chance to unscrupulous operations of the sort described. Where the weakness is so greafcj the ordinary and probable incidents of'"the market cannot be sufficiently provided for, •