ABSTRACT

IT may be recollected that on October 19th of last year (a Friday) the Bank rate was raised from 5 to 6 per cent., the reserve having been reduced to £18,861,000, in consequence of the extraordinary drain of gold to the United States. With a 4J per cent, rate this week the Bank return showed a reserve of £23,836,000, so that the situation remains very much better than last autumn. It is probable, though not certain, that half-a-million will be withdrawn for Egypt to-day. But, even so, the apprehension of a 5 per cent, rate need not be realised for some time, provided that no unforeseen disturbance of credit occurs. It must be confessed that the failures in Hamburg and New York are somewhat ominous. Of the situation in Amsterdam an interesting account from a well-informed correspondent on the spot will be found in another column. So far as can be judged, London is wonderfully sound, but our money market is, of course, extremely sensitive, and cannot be indifferent and unmoved if weaknesses that have been developing for some time should come to the surface in other centres during the next few weeks. Some relief was felt yesterday afternoon, when it turned out that the Bank of Germany had not raised its rate; for the position in Berlin has long been regarded with a certain amount of distrust and anxiety. The action of the Bank of England in taking surplus funds off the market is approved, but money is still fairly plentiful at 3 per cent. The effect of this policy on discounts, however, has been marked; for on Thursday and Friday the rate for three months' bills had risen to 4! per cent., which is nearly up to Bank rate. We should expect an upward tendency in the short loan market during the coming week. . . .