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THE OPERATION OF THWSCEEW.

Those who are familiar with the nomenclature of the money-market describe the action of the Bank of England,upon the currency in periods of pressure by three separate terms, descriptive of the extent to which the . Directors exercise their power on such occasions., The first stage, through which the country is now passing, is characterized, in the figurative lan- guage of the City, as "making money tight." Should that not produce a healthy state of the circulation, the Bank is obliged to put on "the screw"; the effect of which, on. highly sensitive commercial patients, is xrearlyas bad as that of the boot or any other old instrument of judicial torture,could possibly have been on the leg of a Covenanter. Last-of.all, thwextrseretneaanre to. which the Bank Direetors.are describedassestat-. ing iathatof," punishing trade,"—which is simplytthevintroneuremm raore turns of the screw, so as to cause a very greatiallAntinapriee,* commodities,- with a view to bring back the bullion whiclrhasTbaesalcez, ing. the country too rapidly. As we are now , in dangevokhavingitlea. " screw " applied, and as it is even not improbable that wensay reaolt.the third stage before the crisis passes away, it is worth:whlle to-study the description of the process, painful though it be,_ as given by one of the principal operators. Among the witnesses examined by the Secret Committee.ef. the Houee of Commons appointed in 1848 " to inquire into the eauaes.of,ther recent commercial distress, and how far it has been affected by _the laws for re- gulating the issue of bank-notes payable on..demand,"' were MrAtiorris, at that time Governor of the Bank of England, and who had been in the direction for twenty years, and Mr. Prescott, Deputy Governor, who had been in the direction from 1885. As reference had frequently been suede in the course of the inquiry to the effect which,raisurg the rate of in. terest has in correcting the exchanges, several questions were put to the two official; which led to the following explanation of the mode in- which the screw is applied, and for what purpose.

Mr. Cayley. "You have no doubt that a system of .eirculation varying precisely with the amount of the precious metals is the best possible system that can exist ?"—" I have no doubt of it."

"Under that system, a large importation of corn must necessarily cause great pressure ? "—" I do not see why a large importation of cora should cause a greater pressure under a metallic circulation than under any other." "Did not the Committee understand you to say that the pyoximate cause of the pressure in April last was the large export of the preciops metals?"

"Yes, occasioned by a considerable import of food."—(Mr. Prescott.) " large and unexpected importation of food."—(Mfr. Morris.) "And that, too, acting upon a previous state of high credit and speculation." "it is the interest of the Bank, is it not, to prevent the exportation of gold ?"—" The Bank has nothing specially to do with it, exoept as it affects the issue department ; the banking department is only affected by are export of gold in the same way as private banks are." "But, speaking of the Bank as the managers of the circulation, is it not the interest of the Bank to prevent the export of gold ? "—" The banking de- partment has nothing to do with the circulation; the circulation is regulated by the issue department ; over which we have no control."

"Why does the Bank, in its banking department, under such circum- stances raise the rate of interest ?"—" If the amount of circulation in the country is diminished by an export of bullion, the value of money rises ; and if the Bank, in common with all other bankers, did not take steps for the purpose of protecting their reserve, it would be acted upon in conse- quence of the additional demand arising from the greater value of money."

"But to protect their reserve, they endeavour to afford .an inducement against the export of gold ?"—" As far as the export of gold goes, we con- sider it merely as an indication that money will be dearer. I can only re- peat what I stated previously, that the effect of an export of bullion is to contract the general state of the circulation, and the value of money.rises; and unless the Bank, and all other bankers, took steps to raise the rate at which they employed their money, there would be an increased demand upon their reserves."

"If the reserve becomes very low, is it not necessary for the Bank to adopt rather stringent measures with regard to the rate of interest ?"— " Certainly." "When the Bank reserve is very low, under the export of geld, is itini- possible to afford an inducement for a speedy return of gold-without creating great pressure ?"—" The means of getting back the gold is by making money dear, and causing a fall generally in the price, of cemmoclities,, which will bring back gold.'

"Then the means of attracting gold back to this country afterlies gone out, is to lower prices ?"—" Prices will fall in consequence of the increased value of money." "Under a great fall of prices, the Bank is comparatively-safer ?"—" A great fall of prices has a tendency to bring capital into the country, and as bullion flows into the country, it acts upon the reserve of. the Bank, and of all private bankers." " But in order to attract gold back into the country, the more forced rates there are, and the lower the prices, the safer the position of the Bank is ?"— " The lower the prices of commodities, the greater will be the tendency to the increase of the importation of the ptecious metals, and of the. reacrye of the Bank, and of bankers generally."

"Under that state of things,—that is a pressure arising from a fallof prices in order to secure the return of gold,--does not any accommodation afferded to the public rather tend to obstruct the fall of prizes ?"—" Yes." "The leas accommodation under that state of things that is.afforded to the public, the safer to the system ?"—" The accommodation must of .necessity, under that state of things, be reduced."

When the men who manage the affairs of the Bank of England speak in so plain and precise a manner as to the steps which they are forced to take "for the purpose of protecting their reserve," it is no wonder that the commercial world should watch with nervous apprehension the gra- dual decline of that aurometer, upon whose fluctuations depend the for- tunes of so many thousands of merchants and manufacturers. When the reserve falls to a very low point, the only means of bringing back gold, as Mr. Morris admits, is "by making money dear, and causing a fall gene- rally in the price of commodities." With so plain a warning of what they have to look for when the stock of bullion goes down. too low, the main question for the public to consider is, whether the symptoms are such as to cause any alarm at present. Last week's account of the Bank of England showed that the reserve had fallen to 5,604,0894 a decrease of nearly 5,000,000/. since the beginning of January last,'iii spite of an advance in the rate of interest from 2 to 5 per cent. If that advance in the rate of interest has not been sufficient to check the drain of gold, is it not likely that the " screw " must be turned a little tighter? Had the harvest been abundant, things might have come round without much difficulty ; but when we find wheat at 70s. a quarter, with the certain prospect of a large importation of foreign grain, it is difficult to see how the Bank will be able to "protect its reserve" without raising the rate of interest considerably higher, and at the same time probably; reducing the amount of accommodation to the public in the discounting of bills.

THE SUGAR TRADE.

From a return, moved for by Mr. Wilson at the close of 'last session, and recently printed, we obtain a very complete view of the operation of the Sugar-duties, and of the movement of that large branch of our Fo- reign and Colonial trade during the twelve years ended 5th July 1853. The various tables contained in the return show the quantitiewof sugar and molasses imported annually front the West Indies, Mauritins, the East Indies, and Foreip countries; thetnrantities entered for home con-

99ptioa; the rates of duty chargeable throughout the whole of the twelve years; the average price of sugar in each. year ; and the annual „mount of revenue derived from_tha duties on sugar and molasses. As tete return includes several years during Awl:doh the duff on Foreign sugar, as the produce of free labour, was all but prohibitory, we are enabled ,1,0 glance to estimate the effect -which the introduction of Foreign sugar' od the great reduction of duty have bad in stimulating consumption. The most important table is the one which gives the aggregate consump- tion of sugar and molasses, molasses being converted into sugar at the rate of.3 pounds of molasses to 1 pound of sugar.

412.6/71TIES,OF SINJAR AND MOLASSES ENTERED FOR HOME CONSUMPTION.

. YeArS ended ' "4118V '

British Possessions Mundredweiebt.

Foreign. Total.

4,325,785 .... 2,189 .... 4,327,974 1813 4,089,593 • • - •

4,090,091 1844 4,145,014 .... 93 .... 4,145,137 1845 4,849,060 .... 34,584 .... 4,883,644 1846 4,985,792 .... 50,064 .... 5,045.856 1847 4,723,232 .... 1,256,421 .... 5,979,653 1848 5,003,318 .... 86.5,752 .... 5,869,070 1849 5,233,729 .... 1,021,065 .... 6,254,794 1850 5.570,461 .... 752,027 .... 6,322,488 1851 5,049,872 .... 1,522,405 .... 6,566,277 1852 6,115,210 .... 1,540,308 .... 7,655,518 1853 6,519,267 .... 1,033,095 .... 7,552,362

It will be seen from this table that a very large increase has taken place in the consumption of Colonial sugar. Instead of declining ender the influence of foreign competition, it is now upwards of 50 per cent above what it was in 1812. In the year ended 5th July 1853 we consumed 2,193,482 hundredweight of Colonial sugar more than we did when Foreign sugar was excluded ; and now, even when the duties have been almost equalized, the increased quantity of Colonial sugar taken for consumption is more than double the whole of the Foreign con- sumed last year.

The most notable feature in the table showing the annual amount of duty received from this source during the last twelve years is the rate at which the revenue has been maintained in spite of the large reduction of duty. Last year the aggregate amount of revenue from this source was higher than that of 1850, although the duty on Colonial muscovado bad been reduced 3s. and on Foreign muscovado 48. a hundredweight within that period.

AGGREGATE RECEIPTS OF DUTY ON SUGAR AND MOLASSES.

Tears-ended 5th July, British Possessions.

Foreign. Total.

1842 £5,476,987 .... £8,026 .... £5,485,013 1843 5,176,631 .... 1,665 .... 5,178,296 1814 5,253,687 .... 319 .... 5,254,006 1845 4,955,221 .... 40,777 .... 4,995,998 1846 .. ..... 3,514,354 .... 70,335 .... 3,584,689 1847

3,326,947

.... 1,336,615 .... 4,663,562 1848 3,522,288 .... 877,378 .... 4,599,666 1849 3,430,527 . • • • 993,407 .... 4,423,934 1850 3,371,976 • • • • 699,969 .... 4,071,915

1,343,621 .... 4,137,518 1852 3,077,561 .... 1,276,042 .... 4,353,603 1853 3,281,142 .... 800,128 .... 4,081,270

After the 5th of July 1864, the duties on Foreign and Colonial sugar, then to be equalized, will be, on refined sugar 13s. 4d. a hundredweight, on white elayed 118. &I., on brown 10s., and on molasses 3s. 9d. Should the supply continue to increase at such a rate as to maintain moderate prices, the consumption may be expected to go on so fast as to bring up the revenue to its present point at least. If it rise much higher, there willsoon be a demand for another reduction of the duty, which is still nearly 50 per cent on the net price of the commodity. ,

The average price of West India brown sugar in 1842 was 37s. ; last year it-was 24a. 2d.—a difference of more than 50 per cent. When West India was 378.' the same quality of Havannah was only 19s. 7d. a hun- dredweight, thanks to the prohibitory duty of 668. 1 4-5d. on all Foreign sugar not the produce of free labour. Taking into account the difference in price- owing to the abolition of the West India monopoly and the re- duction in- the- sugar-duties, the total saving to the consumer is no less than 258. 4d. a hundredweight, which on last year's consumption amounts to nearly nine millions and a half sterling ; a much larger amount than the most sanguine advocates of free trade could have anticipated.

Thirteen years ago, the average consumption of sugar per head, in the ' United Kingdom was little more than 15i pounds a year. This was on 1 the supposition that the people of Ireland consumed as large a quantity in .

proportion to their, numbers as the people of Great Britain. Taking the I population of England, Ireland, and Scotland, in 1853, at 28,000,000, it ' appears that the average consumption is now upwards of 30 pounds per : head annually, or nearly double what it was in 1840. In France the ' consumption of sugar is about 8 pounds a year, in Prussia 6 pounds, I in Belgium 14 pounds, and in the United States 20 pounds per head. ■ Measured by the quantity of sugar consumed, there is no country in the world where the mass of the people seem to be so comfortable as in Great Britain. Tried by-the test of cheapness and abundance, the abolition of the Sugar-monopoly seems, at present, a much more successful measure I than the abolition of the Corn-laws. The only drawback to our satisfac- tion is the thought that so large a proportion of the public gain has been at the expense, in many eases amounting to ruin, of the West India Neuters.

SLOW DECREASE OF PACPERISAL—There was lately issued a return of the number of paupers of all classes in England and Wales, in receipt of relief, on the 1st of July 1852 and 1853 respectively. The decrease in the twelve months is much smaller than might have been anticipated, considering the very, brisk demand for labour and the prevalence of com- ffa.rt among all classes of the community for the last few years. In 1852, the number.. relieved at. Midsummer was 800,172; this year it was 74,3.639, a decrease of-71 per cent. The English counties in which the diminution of pauperism has been greatest are York, West Riding, 157; Rutland, 14.4k Lancaster, 13.2; Cornwall, 12-0: those in which there has been the smallest decrease are, Durham 2.1; York, North Riding, 2-9; Buckingham, 3.2. As regards ablebodied pauperism, the return is more satiefactory • although even there the decrease is at a very slow rate Compared with the increase which takes place when a reverse of trade comes. The total slumber of adult, ablabodied, in-door paupers, on the 1st of:July. 1452, was 13,449; on the same day this year, 10,981. Of adult, able-. !)944e.d,-out-door paupers, the respective numbers were—in 1852, 111,433; 4.1853, 96,899, showing a total decrease of 13.7 per cent. The counties widle the.denuuld ferlahonrfilars_abaorbed the la Teat amount, of ahlebodie4 pauperism are Hereford, 26-1 per cent; Lancaster, 25:4 ; York, West Riding, 25.3; Monmouth, 28'l; -Oxford,- 2213; Woreester, 22-5; West- morelind, 22-2. Thanks to Mr. Disraeli's prices, and other more-potent influences, Buckinghamshire Bra little above the average : but Devon- shire still 'maintains its unenviable notoriety' asthe most wretched county in England, by standing.at the very bottom of the Rat; the decrease in the number of its adult ablebodied paupers having onlyleen 4-0. The total number of that class of 'paupers relieved in Devonshire on the ht of July this year was 2985: the total number of paupers of all kinds in the same county appears to have been 28,119 ; which gives a per- centage of pauperism of nearly 4 to 1 in Devonshire above Lancashire, in spite of the very large influz of Irish poor into the latter couuty, by which the rates in Manchester and Liverpool have been swelled so enor- mously ever since 1846.