THE STATE LESSON OF THE MONEY MARKET.
IF Peel had survived to this present year he would have had the finest opportunity that ever opened before him, grander even thee his acceptance of free trade or his adjustment of Conservative principles to progressive improvement. The qualities which he possessed beyond any statesman whom we have had were the capacity for grappling with strictly practical subjects and busi- ness questions, and the power of comprehending a more general- ized and elevated statesmanship. And for all his reserved intel- lect and strong feeling he had shown so large a power of self- development in the course of his political life, that we might have expected him to exhibit a faculty for the initiative that he had not hitherto exercised. Peel is the nearest representative of the statesman most wanted at the present moment—a statesman who, realizing the dreams of a Sully, a Turgot, or a Pitt, could base a national policy of statesmanship, and we might say of philan- thropy, upon the ground of actual finance. The condition of the world invites any such master mind, if it existed, to take posses- sion of Europe by holding its purse-strings and understanding how to guide its finance. Mr. Disraeli has made some pretensions on that stage ; opportunity confirms the claims of great minds ; and perhaps we can make some approach to showing how it might be used.
Shall we be wrong in saying that the condition of Europe at the present moment is wholly unlike any which the same collection of states has exhibited in past days ? To begin with our own country,—we have at the present hour a condition of the Money Market so unprecedented that short-sighted men are disposed to consider it anomalous ; although its causes and tendencies are as plain as the strata in a geological cutting. In fact the spectacle presented to us has been preparing for months past, and has al- most been predicted in our own pages. We have had an accumu- lation of unused capital. One of the most tangible results and symptoms of that condition is to be found in the glutting of the bank coffers. We have seen such accumulations before, as when the gold regions of California and Australia began to pour their new treasures into our banks ; but we have never before seen the reservoir cf gold rise to the same high level simultaneously with such flatness in the money market generally—such a "dulness," most especially in the share-market. We need not wonder at what we can account for so readily. The overtrading in Austra- lia,—the extravagant speculation, peculation, and sharp practice in the United States,—the degree to which our own men were drawn into that trans-Atlantic crisis,—the paroxysm of in- flated money operations based upon the encouragement which the Emperor Napoleon had given to increased commercial activity in France,—the jobbing in Germany on the new credit naobilier pattern,—the collapse after mismanagement in railways, —the general discovery that limited liability is principally pre- figured in the very narrow responsibility under which the director class seem to live,—all these circumstances account for the apathy with which men possessing money now abstain from any species of action, notwithstanding the fact that money is accumulating in such vast masses. "Nothing but Consols or land," such are the investments to which many moneyed men have limited them- selves. Meanwhile the Russian war is over ; the over-trading in Australia has a little worked itself off; America is recovering; the harvest is upon the whole fine in quality and sufficient in quantity, throughout most countries ; trade is reviving in Man- chester, and in Leeds, and if the iron districts still feel the ex- cessive depression of the railway market, work is done even there. Our recovery is the more substantial, although so little osten- tatious, because even during the last crisis we enjoyed all.the advantage of the comparative moderation taught to us by previous experiences. Free trade rendered this country an entrepOt for supplies even when other lands were in the agony of the most urgent demand, through famine, oidium, inundations, and other local troubles. If in divers countries there have been wholesale crashes, not altogether unrepresented in our Western. Bank of Scotland and our Liverpool Borough Bank, we can still boast of men whom misfortune has compelled to publish their ac- counts only to their own increased credit ; and this week we hare the announcement that the house of a John Denistoun and Co. 15 preparing to pay off the last claims under its immense habihties. Our condition, therefore, is solid, notwithstanding the apathy and the passive accumulation of means ; and it is undoubted that any reasonable guarantee, any just evidence of commercial soundness, or any improved method of management, is only needed to re.stnre a spirit of commercial enterprise, to set those reservoirs 111 circu- lation, and to place our wealth once more .in reproductive .action: The resolve of the Bank of England to lower its rate of discount to 2i per oent, may or may not take plaoe in a particular week. We are describing broad facts which cannot remain without their force, and which even the Bank must obey. The condition of France is even more instructive. A little while back, as the Journal des Aetionnaires remarks, " su- preme efforts were made by great capitalists to galvanize the Bourse," but the French Stock Exchange continued in a state of obstinate apathy. Nothing would rouse it. We see by the customs returns, that the trade of France has upon the whole. steadily increased during the years 1856-7, partly from the increased industry of the country, the larger consumption caused by growing wealth, and also stimulated by the Imperial encouragement, with some spice of overspecula- tic% There is, therefore, a certain degree of soundness in France,
the remarkable refusal of the Stook Exchange to
notwithstanding trust to appearances. Quite lately, however, the French funds have put on a healthy appearance of the most cheering kind. The predictions that such would be the case pointed at once to the great European capitalists as the conjurors who had, somehow or other, managed that movement ; but it appears to be too decided and extensive for an explanation of that kind. No juggling could make the whole body of French fundholders admit that their pro- perty is worth 5 per cent more than it was five weeks ago. It cannot be alone the increased trade, which had been going on for three years ; nor the increased accumulation of bullion in the Bank of France, which had been going on for nine months. The com- mercial writer of the Times points to the actual reason in sentences studiously reserved, but intimating plainly that the beneficial change in the state of the French quotations arises from the cir- cumstance that the Imperial Government is understood to have cast aside, or been compelled to give up, some ambitious, danger- ous, aggressive policy which it previously had been supposed to cherish— "Neither speculation, money, or the cordialities of the British Cabinet have primarily had anything to do with the matter. All that we know is, that instead of our affairs in India going from bad to worse, as was antici- pated, the rebellion has been wonderfully quelled and our prestige placed higher than ever; that at the same time, owing to the patriotism of the alarmists, and the visit of the House of Commons to Cherbourg, England has been put in a good state of defence ; that all at once, under these cir- cumstances, things have become very bright and pacific among our neirh- boors, and that they seem to have arrived at an understanding by a sort of freemasonry that thoughts of aggression on the one side or of a coming hour of supreme humiliation on the other may confidently be dismissed, and that for the next twelve months, at all events, commerce, rentes, and shares will again be worthy of attention.
Here is the key to the politico-financial statesmanship to which we have adverted. Some uneasiness has been created by the sup- posed cession of Villafranea to Russia. But the slightest glance at the movements of great powers in Europe shows us how much they depend at present upon the condition of the purse. As we have already seen Russia has been unable to raise the capital for her grand trunk railway,—placing the South, Siberia, the Don, the Danube, the Euxine, all within practicable reach of official St. Petersburg,—except by bending her Imperial rails to the condi- tions and requirements of commerce. She has been obliged even to accept loop lines, with stopping trains for the purposes of local traffic ! Sardinia is supposed to have made a concession to Russia for the purpose of purchasing some counterpoise to the menacing military accumulations of Austria on the Piedmont,ese frontier ; but what is the position of Austria ? The latest story is, that she is compelled to reduce her army in order to diminish expense ; although the harvesting, which so commonly relieves the Austrian army at this period, must be now nearly over. The same Govern- ment has recently put forward a promise "to resume cash pay- ments in November," in order to facilitate the collection of a loan; her last loan, be it remembered, failing through the gene- ral mistrust of moneyed Europe. Imperial Austria, in fact, is obliged to conciliate the trust of the money market in order to carry on her high handed administration. Should there be any truth in the supposition that Russia is increasing her trade as a means of recruiting the Imperial Treasury, it still follows that she cannot do so without giving hostages to commerce, and there- fore hostages to peace. For there is only one form of Government which renders commerce self-supporting in the matter of defence and enables the national armament to be co-extensive with the commerce itself ; it is national freedom, which makes every citi- zen a volunteer in support of the Government ; and this is the sewer which England, or the American Republic, holds in any in- efinite extension of commerce—a power denied to absolutist Go- vernments, whose points of attack become coextensive with the field from which their revenue is drawn. After the struggle of the last few years it would seem the Go- vernments of Europe are forced to take measures for the recruit- 'neat of their finances. They can only do so through an exten- sion of commerce. It is the most intelligent capitalists of Wes- tern Europe,— assisted, no doubt, by the money dealers of Germany, to whom, however, they can dictate terms—who Preoccupy the lead in great enterprises. The commercial pheno- mena of the day, therefore, exhibit to us a state of things, precisely coextensive with the dominions of the most active and formidable Powers, in which ordinary statesmanship has become a beggar to finance. A real statesman possessing a mastery on that field would be able to in' fluence and guide the whole Government Os the whole world. The state of the money-market possesses the liveliest interest for all who have a trade to keep going, or „mmleY to invest ; but how much more interest does it possess for ulose men who have at heart the progress of Liberal opinions and the guarantees of peace! The high-minded minister of the
chivalrous Henry IV. pointed out the most certain, safe, and sub- lime greatness for France,—" To put herself in such a position as not only to be able to rely on her own resources, but to constrain the whole of Europe to feel the want of France." If every country. in Europe acted on this policy, peace would be assured beyond the power of infraction. It is reciprocal wants which have ren- dered national susceptibilities almost incapable of provoking war between England and America : a Peel might perhaps, in this glorious opportunity, confer the same grand blessing upon Eu- rope.
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