TABLE XI.-Commerce of Italy. Total Value of Imports and Exports in 1858, or nearest Date of Returns previous to the Union (p. 219).

TABLE XII.-Commerce of Italy. Imports and Exports in 1861 (p. 219).

TABLE XIII.-Commerce of Great Britain with Italy. Trade and Navigation Accounts of the United Kingdom, for the Year ending 31st December, 1865 (p. 223).

Note. See Table IX, declared value of British and Irish produce and manufactures exported from the United Kingdom to each foreign country and British possession.

On the FREQUENT AUTUMNAL PRESSURE in the MONEY MARKET, and the ACTION of the BANK of ENGLAND. By W. STANLEY JEVONS, M.A., Cobden Professor of Political Economy in Owens' College, Manchester.

Ar the beginning of last October (1865), the commercial world of England was disturbed by a remarkable withdrawal of coin from the Bank of England, causing a great decrease of the loanable capital, and necessitating a corresponding rise in the terms of discount. The commercial editor of the "Times," writing on Saturday evening, 7th October, said—

"The Bank of England this morning made a further advance of I per cent. in their rate of discount, the charge being now 7 per "cent. The rise during the week has therefore been 24 per cent., a "movement unprecedented in so short a space.

"At no former period, except during panics or runs from political or "commercial disasters, has it ever been found requisite to advance "the rate of discount in the face of a prolonged favourable condition "of the foreign exchanges. For four months there has almost unin"terruptedly been a favourable balance week by week in the operations "of the bullion market, as regards exports and imports, and during "that time the home community have absorbed not only the surplus "thus left, but about 3,000,000l. from the Bank, in addition to an extra one or two millions in notes. As the amount of currency used for "internal purposes rarely experiences any great or permanent fluctuation, the Bank directors were entitled to assume week by week, as the absorption became more remarkable, that a turn must be "rapidly witnessed, and that the market would then be oversupplied "with the amounts that had been so strangely removed from it. "But there was a point below which, whatever might be their con"fidence as to the supply of money actually available in the country,

they could not allow their reserve of notes to fall, and that point having been reached ten days ago, the present measures commenced. "And here, again, nothing but abnormal results were witnessed. "With a rise of half per cent., the demand still increased, and an "additional movement of 1 per cent. seemed to have no restrictive "effect."

The commercial press were in considerable perplexity as to the cause of this demand for money. The "Times" of the morning of 7th October, had allowed that "the question is still unsolved as to "the causes that can have led to that excessive absorption of gold "and notes by the public to which, in the absence of any unfavour"able condition of the foreign exchanges, the existing pressure is "solely due. In addition to the influences of active employment "and high wages, it is suggested that there has been a partial drain " for Ireland, but the last published returns showed that the coin "held by the banks in that country was only 168,000l. in excess of "the total at this time last year."

In "Traver's Circular" it was remarked that "a further half million "sterling has been taken from the Bank by the public during the "past week, yet no additional suggestions have been offered to "account for this singular drain. Not only must the amounts with"drawn in August and September, in connection with election and "harvest payments, have been returned long ago to their natural "channels, but the sums withdrawn for autumn pleasure traffic must "now also be finding their way back to the banks. The absorption, "therefore, becomes every day more inexplicable."

By other papers or their correspondents the absorption of money was attributed variously to the large American purchases on credit, to extensive speculations in cotton at Liverpool, to the sinking of capital in joint stock enterprises, or to the Fenian conspiracy.

The remarks of the "Economist," though written during the progress of the pressure, appear to be substantially correct. In the issue of 14th October, the editor said, "The present rise in the value "of money is owing to the simultaneous occurrence of three causes. "There is a sort of tide in the cash transactions of the country which periodically empties and periodically fills the Bank till. At the close "of every quarter there is a strong outgoing current. The nonbanking classes then get their money. Salaries are paid, wages are paid, small dividends are paid; each of these transactions is very "minute, but their aggregate mass is very large. * ** Little "people are paid in actual cash; they take so much from the Bank "till. * * *Speaking generally, the middle of each quarter is "marked by an incoming current towards the Bank, and the close " of every quarter by an outgoing current from the Bank."

The periodical quarterly outflow of money from the Bank was

then, according to the "Economist," the chief cause of the pressure, aggravated, as it goes on to explain in this particular case, by two minor causes, the demand for coin for Ireland, and the creation of bills by large cotton speculations. A few weeks later the "Econo"mist" pointed out an unusual increase of the export and import trade of the country, revealed by the Board of Trade returns, as the chief aggravating cause.

It was, however, a correspondent whose letter, signed G. F., was inserted in the "Economist" of 21st October, who most correctly, as I think, attributed the pressure to an annual tide in the movement of money.

“Why," he says, " was the pressure in October, 1847, in October, " 1857, in October last year, in October this year, and more or less in "October every year? It is because there is an annual tide in the "cash transactions of this country, and I believe of all countries. "The currency generally, including bank notes of all our banks, gold "coin, and silver coin, expands from July to the end of October or "beginning of November; it contracts from the middle of Novem"ber to the end of March, and is on the whole stationary in April, “ May, and June. Such is the annual tide, "masked to some extent by the action of the quarterly tides. I believe that observations in the direc"tion I have indicated would be found to confirm the law of annual "tides arising from agricultural as distinguished from manufacturing causes; and to prove that they are a periodical source of disturb“ance in the money markets of the world, of greater force and importance than has hitherto been acknowledged."

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In these able remarks I thoroughly concur, and I think it therefore a work of interest to direct the attention of the Society to such analyses of the periodical fluctuations as G. F. suggests. It is the more needful because G. F. is not aware of the great peculiarity of the October drain, and even the "Economist" is so far from being quite accurately informed concerning these fluctuations that it considers the most serious demand for coin to occur in December.*

What I have to point out is, that in the beginning of October there are several concurring tendencies towards a drain of currency which render this by far the most critical period of the whole year. In September, 1862, I pointed out this tendency to an autumnal disturbance in the money market. In a paper read before the British Association in 1862, I said:

"Some, perhaps, would attribute the sudden changes in the rate "of discount, bankruptcies, and consols, to the occurrence of panics " during the months of October and November. It would be more

"Economist," 2nd December, 1865, vol. xxiii, p. 1453.