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and slowly, it is true: but still the end is coming. International treaties of commerce are now the order of the day,-each country granting to the others mutual privileges, equal rights. And the natural end of this process is Free Trade in Europe: when all customs' barriers will be thrown down, and Europe will become a commercial commonwealth,-when goods of all kinds will circulate freely between country and country, and when the best goods (wherever produced) will win the day as surely as they already do in our great International Exhibitions.

But while these triumphs of peace and good-will among the nations are steadily going on, there is one great anachronism-one element of our civilisation which runs counter to this happy tendency of the age. At the very time when Trade is becoming freer in communities and between nations, a form of warfare has been devised, or at least has been resuscitated in new and more disastrous shape, which goes far to neutralise this good. While the war of Tariffs is subsiding, and the conflict of States is perceptibly approaching an end, a new kind of war, alike domestic and international, has arisen within the bosom of peaceful industry-a war which is as hostile to industry as the war of Governments is to the material wellbeing of nations. It does not affect territorial boundaries; it does not blazon its achievements in triumphal arches or imperial edicts; but it writes its dire effects in the commercial annals of every country which engages in the miserable strife. This warfare has a Gazette of its own. We see the record of its calamitous victories in the Board of Trade returns and in the statistics of the Court of Bankruptcy. It is a war in which no State, as a military or political power, takes part, but in which tens of thousands of the people are forced to engage, and to suffer the hardships and losses of the conflict. There is no escape from service in that war. The most peaceful merchant at his desk, or manufacturer in his mill, is forced into the turmoil. and losses of the fight whether he will or not. And for him-for all those reluctant and impressed recruits-there are no laurels. He has to fight, and comes out of the fight with his scars only-no medals, or ribbons, or promotion. And if maimed for life, as many are, there are no pensions for him--no Greenwich or Chelsea Hospital. The power which forces him into the fray cares nothing for his losses, does not even acknowledge him in its service. He is but "food for powder" in a contest waged against his will, yet in which he is forced to take part. What is more, the myriads of our workingclasses also are compelled to stand the brunt of this strange war. No triumphs for them: the issue is only loss-loss without a shadow of compensation either moral or material. They lose their wages, in whole or in part; they lose the employment which yields the daily bread to themselves and their families. It is a war, in fact, which

comes home to every counting-house and almost to every firesidewhich affects more or less the whole industrial classes of the community, and the only results of which are losses and misery and want. This strange new warfare-for it is a new warfare is the War of the Banks. Ever and anon the banks of Europe engage in a disastrous international struggle. Disastrous, but not to them. They need no declaration of war by the Crown,-neither do they wait for the sanction of Parliament. They declare war for themselves, and they raise "the supplies" out of the pockets of the community. The community at large, and especially the commercial and industrial classes, are but the pawns, common soldiers unpaid for their service, with which-i.e. at whose expense-the banks carry on the contest. Governments have an interest in avoiding war, because it impairs their resources; but the promoters of this new kind of international conflict have no such motive for keeping the peace. The Banks pay themselves for making others fight, and their gains augment in proportion to the severity and duration of the conflict.

Well, then, what is this war ? What is this form of international conflict into which we are now so frequently plunged? Banks are, of all institutions, those which we should hold as most peaceable. How comes it that they are now so belligerent? What is the nature of the conflict into which they plunge us? and what is its object?

Need we ask such a question? How often during the last few years have we seen this international warfare declared, this conflict waged, and the losses experienced? In 1857, in 1864, and again this year, in greater or lesser force, we have seen this strife carried on. In almost all cases the Bank of England assumes the initiative in the contest; the proclamation of war proceeds from the Bank-parlour in Threadneedle Street. The simple announcement that the Bank of England has raised the rate of discount, spread like wild-fire over Europe by the wires of the telegraph, makes every bank at once stand to its arms and engage in the conflict. A weak State, when menaced by its neighbours, may yield; but the Banks do not yield. They unfailingly accept the challenge, they at once engage in the war. Why should not they, when, whatever be the issue, the loss does not fall upon them?—and when the only certain result of the war is to augment their gains?

Let us take a case,-say that of 1857 or of any subsequent crisis. What is the mode of procedure ?-what is the form of the war? The Bank of England raises the rate of discount,-that is the first step, the declaration of war. Why does the Bank take this course? It does so, we are told, partly to prevent the export of gold, partly to bring more gold into the country. To retain or acquire a certain amount of gold-that is the motive for this international war of the banks. This European war is waged as keenly for the possession of

a hundredweight or two of the yellow metal as the Greeks and Trojans closed in mortal strife over the dead body of Patroclus. "Curst be the man who first loved gold," sang old Anacreon; and the auri sacra fames was deemed a bad sign of the times, a sad declension on the part of mankind, by the poet of the Metamorphoses in the Augustan era of Rome. Yet the worship of that canonised metal, discarded as an antiquated heresy in this country for a century and a half, has of late been revived in a more slavish form. ever and anon the Bank of England adopts the most extreme measures towards the community for the sake of wringing from other countries, or of preventing their getting from us, a portion of the yellow metal so insignificant in amount as hardly to equal in value the property of not a few private individuals amongst us.


Such is the casus belli. Let us next see how the war, thus declared, is carried on. The Bank of England, for the sake of keeping or acquiring a certain quantity of gold, raises the rate of discount: what follows? The banks of all other countries immediately follow suit. They also raise the rate of discount. They may have had no pressure upon them,—and this is usually the case; there has been no special demand upon them for money, either in notes or specie; but the moment the Bank of England raises its rate of discount, they also raise theirs. In some countries the bank-rate is usually lower than it is here,—in other countries it is usually higher. But whenever the Bank of England raises its rate, the rate is raised in all other countries likewise, France, within the last few months, furnishing a notable exception.

What is the consequence? Simply this, that the position of the various banks of Europe remains unaltered. The inducement to export or import gold, between country and country, remains exactly the same as before. The result of this international war of the banks is simply nil. It is a game of perpetual check. A game in which every move made by one player is given "check" to by the others. And the game goes on-the Bank of England taking the initiative, and being always met by "check "—until matters come to a deadlock; and the game ends by leaving the belligerents, as regards one another, exactly in statu quo ante bellum. They gain nothing from one another: the banks of one country do not attract a single ounce of gold from the other banks of Europe. The result of this belligerent policy on the part of the banks of Europe is, as we have said, as regards one another, simply nil. The process, so far as the international strife for gold is concerned, is absolutely useless.

This fact of itself suffices to condemn the policy recently pursued by the banks. The policy is useless to attain the object for the sake of which it is put in force. Instead of drawing gold from other countries, the inducement to export or import gold, as a question

between country and country, remains the same as before. Surely, then, it must strike every intelligent observer that this international war of the banks is a most preposterous thing. It is commenced by the banks of some country (usually England) which experience a casual and transient drain of specie, but as the banks of other countries now instantaneously raise their rate in proportion, nothing comes of it. Even in 1864 when our minimum bank-rate was raised to 9 per cent., no gold was attracted either from the Continent or from the United States of America: one small parcel of French coins (which would not circulate in this country until they were recoined) was all that arrived.

Why, then, is this war of the banks carried on? There is no doubt there must be some motive for it, and a motive which the banks, at least, think adequate. Let us explain this motive.

The banks do attain a great end, and gain for themselves by pursuing this policy. Their policy, as we have seen, is of no effect in drawing gold from one country to another. Nevertheless, there is another fact equally true, namely, that in consequence of this policy specie does accumulate in the banks-in all the banks of Europe. Although the raising of the bank-rate does not draw gold from the banks of other countries, its result is to make specie plentiful by repressing the ordinary demand for it. The war of the banks kills Trade, and thereby lessens the demand for Money. Cæteris paribus, the more trade, the more money is needed to carry it on. Check trade, and money at once becomes plentiful. This is precisely the principle upon which the banks now-a-days act. The raising of the rate of discount by the Bank of England, being met by a similar move on the part of foreign banks, is of no effect whatever in replenishing the Bank's vaults at the expense of its foreign neighbours; but it has a most potent influence in reducing the demand for money on the part of our own community. Gold accumulates in the banks because our merchants can no longer employ it profitably. The only—or at least the chief, the most important, the grand-use of gold is, as international currency, to settle the trade-payments which have to be made between one country and another. Kill Trade, and the amount of these international payments is at once diminished. The war of the banks does kill Trade; this is its only effect. And not in our own country merely, but in every country where a like policy is in vogue. Hence, every season of an exorbitant bank-rate is followed by a collapse of Trade; and specie thereupon accumulates in the banks simply because the ordinary demand for it has been checked. When the bank-rate is raised to 10 per cent., the industrial classes, whether merchants or shop-keepers or manufacturers, are ruined by scores. They have not only to pay an exorbitant rate for the discount of bills, by which so much of

our trade is carried on, but at the same time the markets are so depressed that they cannot make their usual sales unless by submitting to a depreciation of their goods to the extent of 20 or 30 per cent. Hence hundreds of them are ruined; and the rest contract their operations to a minimum. Trade is paralysed; and hence money accumulates in the banks simply because it can no longer be employed. The only use of Money is to carry on Trade: and by killing trade, the banks destroy the sole object for which money exists. They make money plentiful at such times in exact proportion as they render it useless. Instead of facilitating the expansion of trade, their great principle of action now-a-days is to keep it in check by repeated stranglings.

If the effect of this system pursued by the banks were to reduce the imports into any country while increasing the exports, it would at least be an intelligible policy. It would be a revival of the old "Mercantile System," which found favour in all countries in mediaval times. The avowed object of that system was to promote importations of the precious metals. That was the grand object of our legislators in olden times. The wealth of a country in their estimation could only be increased by an increased importation and accumulation of the precious metals. The amount of specie held by a country was regarded by them as the measure of its wealth. The larger the stock of gold and silver in a country, the greater the amount of its wealth and prosperity. That was the old doctrine-the principle of the "Mercantile System;" and in order to attain this end, imports were repressed and exports were encouraged. Our whole commercial legislation was directed to this end. Heavy duties were imposed upon our imports, upon all foreign goods brought to this country; while our exports were promoted by means of compulsory enactments upon our colonies, and in some cases, also, by an actual bonus paid by the State upon articles exported from this country. The Mercantile System has been exploded in principle for a century; and in recent times it has been repudiated and reversed in practice by the adoption of the entirely opposite system of Free Trade. But, strange to say, while this antiquated system has been not only repudiated but reversed in our commercial legislation, it has of late been practically revived in our monetary legislation, and still more by the system pursued by the Bank of England. The repeated raising of the bankrate to double its ordinary amount is not only justified but applauded on the very principle of the old Mercantile System—namely, because it tends to increase the import and repress the export of the precious metals! This, truly, is a strange anomaly. While wholly banishing the principle of the Mercantile System from our commercial legislation, we have revived it, to a greater extent than ever, in our Monetary System.

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