Blackwood´s Edinburgh Magazine, Vol. 79
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Produktbeschreibung
Excerpt from Blackwood´s Edinburgh Magazine, Vol. 79: January June, 1856 Let us mark the origin and progress of the Monetary Crisis of 1855, - the last of a dread series which, we trust, will now at length be brought to a close. In the "merry month of May" last, all was sunshine in the world of trade and commerce; and people stood astonished to see the rate of discount, which had risen so high in the previous year, falling again as rapidly as it had risen. War, it was thought, had changed its character: and the fact of our commerce being little affected was held as a proof that a state of hostilities with so isolated and semi-barbarous a Power as Russia would be attended by none of the aggravations experienced in former wars. And these inferences would have been well-founded, but for one important exception overlooked - namely, the operation of the Gold - Screw. In that same month of May, the final rupture of the negotiations at Vienna, and the contemporaneous announcement of a loan to Turkey, were a sufficient warning of what was coming, to those who understood the workings of our currency-system. Such persons could foresee a coming rise of interest quite as easily as they understood the cause of the low rate then current. They knew that the recent fluctuations in the money-market had been due solely to the operations of the Bank, acting in accordance with the regulations imposed upon it by the Act of 1844. By that Act it is provided that in proportion as the stock of gold in the Bank diminishes - either by an internal panic, producing hoarding, or, what is usually the case, by an efflux of gold to pay for goods in other countries - the bank-notes in circulation must be likewise diminished. This the Bank does by selling portions of its Government Stock, and cancelling the notes received in payment, - and also by raising its rate of discount, and, either directly or indirectly, refusing to accommodate the trading-classes to the same extent as formerly. The effect of these proceedings is, by making money scarce and consequently more valuable, to lower prices; whereupon it becomes profitable for foreigners to make large purchases of stocks and goods of all kinds in this country, - and so the gold again returns to us in payment of these purchases thus made to our loss. This took place in the course of the winter of 1854-5. Foreigners then preferred taking our goods to taking our gold; and accordingly, last spring, the Bank found its coffers filling with gold, - while its circulation of notes, in consequence of its previous pulling-in of them, was at a comparatively low ebb. Now, the greater the amount of gold in the Bank, the greater the expenses of that establishment, - every million of gold lying unproductive in its vaults, being, at 5 per cent, a loss of £50,000 a-year. As this store of bullion mounts up, therefore (and the Bank has no power to prevent the increase, being bound to give £3,17s. 10 1/2d. the ounce for it, whether they want it or not), the Directors seek to reissue their notes in similar proportion, with the view of deriving that profit from their paper-money which they cannot get from their locked-up gold. But here the Directors encounter a difficulty. By their previous contraction of the currency and high rates of discount, they have checked enterprise in the country, and when the gold comes back to them again, they usually find that the demand for monetary accommodation is not in proportion to the increase of their profitless bullion. About the Publisher Forgotten Books publishes hundreds of thousands of rare and classic books. Find more at www.forgottenbooks.com
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