ONE PEE CENT. 



75 



ONE PEE CENT. 



Br Prof. BONAMY PRICE., 



ONE per cent, has now reigned supreme in 

 the market for discount for the space of a 

 whole year. The Bank of England, indeed, has 

 thought it to be inconsistent with its dignity or 

 its policy to accept so mean a return for its favors 

 in lending, and has consequently laid down two 

 per cent, as its minimum rate for discounting. 

 By such a proclamation, it virtually announced 

 its intention of withdrawing from the ordinary 

 banking market, and the competition it involves 

 with private banks, so long as the present condi- 

 tion of the financial world continues : and it has 

 probably found compensation in applying its 

 funds to investments of a more permanent char- 

 acter. In the regular money-market one per 

 cent, has been only an average for the twelve 

 months. For a considerable time the rate for 

 lending sank to one-half per cent. ; and even on 

 such infinitesimal terms the bankers have at 

 times found it hard to reap any profit from their 

 deposits. 



Every one remembers the agitations associ- 

 ated with seven per cent. — the trepidation of 

 merchants, the apprehension of losses in business 

 through oppressive charges for interest, the 

 anxieties for what the future might still have in 

 store, the general uneasiness through the com- 

 mercial and banking communities. If only a 

 moderate rate could be reckoned on as steady, 

 how happy would every one have been! what 

 visions of good and stable profits would have 

 gladdened the mind of every trader! how deep 

 would have been the conviction that the country 

 was eminently prospering! The thought of a 

 continuous one per cent, would have been felt 

 too presumptuous to be indulged ; the contrast 

 with the feelings under seven was too violent. 



Yet what are the facts and feelings of to-day? 

 Is every merchant, every manufacturer, rejoicing 

 in the pleasant terms on which he obtains the 

 accommodation so necessary for his business ? 

 Are the reports from every great centre of indus- 

 try and trade full of exultation over the bright 

 days and cheerful sensations which gladden com- 

 mercial life ? Are our harbors thronged with 

 ships waiting to relieve the loaded warehouses 

 of their stores, and our railways distributing 

 swollen dividends, gathered from endless trains 

 distributing the countless products which an 



energetic and thriving industry is everywhere 

 creating? Are laborers asked for on every side 

 and every employer eager for some services which 

 will raise him to fortune ? And is the Chancel- 

 lor of the Exchequer panting to enjoy the envi- 

 able pleasure of developing a brilliant budget to 

 a delighted House of Commons ? Alas ! no such 

 sounds or sights meet our ears and eyes on any 

 side. The fond thoughts associated with an easy 

 money-market are found to be coupled with re- 

 alities of a very different order under the suprem- 

 acy of one per cent. In what quarter is there 

 rejoicing? What commercial town or manufact- 

 uring centre speaks of abundant orders, satis- 

 factory prices, busy workmen, and large profits ? 

 What bank is multiplying its clerks to wait on 

 the wants of thronging borrowers ? Commercial 

 depression is the universal cry — a depression 

 probably unprecedented in duration in the annals 

 of trade, except under the disturbing action of 

 prolonged war. The associations of a low rate 

 of interest are contradicted by the stern, real 

 facts of the actual world. 



This is a subject of which it is difficult to 

 exaggerate the importance. The diminution of 

 trade, the slackness of production, the low range 

 of prices, the consequent loss and suffering, are 

 facts only too certain : it becomes of the highest 

 moment to investigate their causes, and to dis- 

 cover a remedy if attainable. In any case, les- 

 sons of the highest value may be learned by 

 studying the path by which the commercial world 

 has reached this state : errors may be discovered, 

 very fatal in their effects, but yet admitting, 

 when distinctly known and understood, of being 

 largely if not wholly avoided. To suffer without 

 reflecting, only to relapse into the same courses 

 under similar temptations, cannot be described as 

 wisdom. Discount at one per cent., continuous 

 for a long period, of itself invites the sharpest 

 notice. The money-market is the focus of many 

 powerful influences which tell heavily on the 

 course which production and consumption follow. 

 If merchants and manufacturers can miscalculate 

 under the eagerness of speculative desires, so also 

 may bankers and their borrowers : both groups 

 are capable of inflicting much disorder on the 

 country. It is most desirable to ascertain the 

 true character of the actual situation. 



