The Press. — London, England, 1857-11-28 00:00:00

1146 than any one thoroughly conversant with the subject could allow. We do not, of course, mean to deny that any thoroughly vicious systei . of tampering with the medium of exchange would derange even a prosperous commerce. All experience proves that it would. Nay, we have no doubt that even the recently suspended Bank Act of 1844, just so far as it is grounded on an unreal and artificial principle, has tended in some degree to enhance the embarrassments of an already embarrassed commerce. But to seek in any system of currency that is not posi tively fraudulent for the origin of a general distrust and contraction of credit, is to suppose that the passive instrument of all credit can destroy what it is adapted merely to register and transmit—that the tokens by which you transfer wealth from hand to hand are more powerful to depreciate or enhance it than right or wrong judgment as to the sort of wealth that you produce. There can be no doubt—at least, since our currency ceased to stand for what it was not — in other words, since all paper money has been convertible on demand into gold—that no commercial crisis has been caused, nor in any very considerable degree augmented, by cur rency evils. It is a mere delusion to suppose either that the want or the superabundance of circulating medium gives rise to these com mercial crashes. These troubles are due to much more substantial causes—causes origin ating in the misemployment of capital, not in the undue extension or contraction of circula tion. Between the causes of the crisis of 1847 and of the present year there is no doubt much similarity; only then the evil was of English growth, while now it is of American growth. In both cases large amounts of capital which was used and was needed as float ing capital had been abstracted from productive employment to be sunk as fixed capital in railway enterprises. Now this capital pays, or ought to pay, a good profit, no doubt ; but, like all fixed capital, it pays annual profit only, and disappears itself in the course of the first con struction of the railway, whereas all floating capital reproduces itself year by year and pays a profit besides. The difference is the differ ence between burying your principal for ever in a perpetual annuity, and paying it in the shape of annual wages to labourers who annually return you its full value and some thing more, so that it both supports the labourer and remunerates the capitalist. It is obvious enough that the permanent sinking of capital in machinery of any kind tnay soon so increase the value of your property as to repay the temporary loss in the form of largely increased profit& But the more capital is thus sunk at the same time in any country the less likely will this be ; and in the case of railway invest ments a limit is soon reached beyond which it is quite clear that no such process can go without a great and terrible shock to the system of trade. Tempted by the hope of large dividends, people withdraw their capital from the regular permanent investments and sitik it in enterprises where, at best, only the interest is regained yearly, and the labour employed in the first construction is never employed again. Then comes the shock when the ordinary investments, drained of much of their floating capital, fail, and a general crash succeeds. Now, that this has happenel recently in America as it happened in 1845 and 1846 in England, no one who knows the system of American trade can doubt A net work of railways of enormous extent has spread like magic over that vast continent, and almost all the means of creating them was raised by loan on bond*. But the lenders even in America could not really afford to lend— they needed the capital for their own enter prises ; and they have sent their bonds over to Europe—to England and Germany—and so turned them into money. More than eighty millions of these railway bonds are believed to be in England alone. Hence the drain of gold that has flowed to America to pay for these often valueless securities. It is not for com modities, it is not for any excessive imports, that we have been paying. We have simply been buying t.iese American securities at a price generalky, we fear, far above their real worth. THE PRESS, NOVEMBER 28, 1857. Now, what currency regulations could have prevented a crash depending on causes such as these ? What limitation of note-issues or permission of unlimited note-issues could have obliged the Americans to have invested their capital wisely, or warned the English to have lent their money cautiously ? No doubt a sound currency theory is of vast importance ; but the soundest currency theory imagination can conceive is no more a sound theory of commerce than a good language is identioal with a good literature. The importance of the Bank Act of 1844 has been greatly exaggerated both for good and for evil. We believe it has twice enhanced the pressure of a commercial crisis in England, anti that is all. Twice when credit was very sensitive—when every one was in the excitement of suspicion—the fear that the Bank would be legally compelled to decline making advances even on the best security has rendered those who have feared they might need advances more anxious to provide against possible evils than they other wise would have been, and thus increased the internal panic. But the origin of all our distress, the American failures and the export of gold to pay for American securities, has been as completely independent of the Bank Act and of the theory of circulatioa as it has been of our system of weights and measures. There is a popular delusion abroad, which we hope to refute completely on a future occasion, that in these times of panic there is a demand for a larger circulating medium. There is another delusion, not so popular, but far more authoritative, that a forcible contraction of the circulating medium would prevent some of the mischief. We believe that both these notions are utterly unfounded. The circulat ing medium in the hands of the public is and remains just what is needed for the purposes of mutual exchange, no more and no less. It does not increase at a time of panic—nay, as less business is done, it often contracts. During the present crisis the bank-notes of the Bank of England in the hands of the public have been on an average just what they have been for years, namely, rather more than twenty millions. Indeed, between the 4th and 11th of November, at the very height of the crisis, their number actually decreased. The increase last week was caused simply by the desire of the country bankers, who dreaded a run, to strengthen their reserves; not in the least, pro bably, from any need on the part of the public for a larger circulating medium. The truth is that a medium of exchange is needed more or less precisely in proportion to the number of exchanges. No one desires exchange-medium unless he wants to effect exchanges ; and in the meantime he deposits it in a bank. In periods of commercial depression the public need less rather than more than is their wont. The great mistake of Sir ROBERT PEEL'S Act of 1844 was that it laid a completely mistaken emphasis on the question of bank-note circula tion. It has thus done more harm by con fusing the public mind, and exciting the foolish reactionary theory of the paper-looney party than its not very important provisions could ever have effected in themselves. It has sug gested many false principles, but its actively injurious effect has been slight. Recognising as it does the principle of absolute converti inlay, it could scarcely go very wrong in practice. Unfortunately, however, it has, perhaps on that very account, done more to maintain a false theory of banking than many a more mischievous measure. The good principle it recognised has too often recom mended the false theory it implied. LORD NORMANBY'S ATTACK ON HIMSELF. THE Whigs, for some time, seem to have de liberately taken to exposing the hollowness of their reputations. The star of Holland House has set in the unwholesome vapours generated by the late Lord HOLLAND'S post humous tattle. In writing dull memoirs of the dazzling CHARLES Fox, Lori JOHN firs- SELL has inflicted literary injury on himself, ahile his style of editing the journal of Tito ass MOOSE has damaged the personal repu- tation of his deceased friend. Lord NOR MANBY has now added another to the long catalogue df lost Whig stars. In various ways, his Lordship had or ganised a sort of showy reputation. He was once a noted man of fashion ; he played well in private theatricals; he biographised " Ma tilda," and brought her "out" at the circu lating libraries. lie aspired to sway the realms of dandyism like another BRUMMELL; and, under the auspices of the late Mr. DANIEL O'CONNELL, his Lordship got Irish popularity. Curvetting on a capering steed, and dressed in military costume, Lord NORMAN BY delighted to prance through the streets of Dublin, and astonish his mob of place hunters. It was truly observed of him that "he acted his part "at Dublin so well as to be mistaken for a "Count Phelim O'Mulgrave or Sir Corny " Fitzphipps." On the Viceregal boards he had strutted with immense applause from "the gods," though he played to empty boxes ; and, on leaving Dublin, the Marquis was as much regretted as if he sat for the picture in poet THACKERAY'S account of Tim Malony's grief : And will we no longer behould him, Sarrottndin . his carriage in throngs, As he weaves his cocked•hat from the windies, And smiles to his bould aid•de•congs. Then, when the Whigs were in a declining condition, the Marquis was placed in the Colonial-office; but he failed there in a few weeks, and had to leave that post. He then went to the Home-office, but he had no better success there, and it was discovered that he was only a theatrical mannerist. Sitting op posite to the Duke of WELLINGTON, the Duke of RICHMOND, Lord ELLENBOROUGH, and Lord LYNDHURST, and with Lord EROUGHANI dis charging a flank fire, it was soon found that, in the great battles of party, Lord NORMANBY was only fit for a subaltern's duty. He could skirmish smartly, but he was unequal to large operations. His rising reputation at Dublin had deceived the world ; when tried in the Senate, his Lordship was found to be neither a statesman nor an orator. When the Whigs returned to power, on the fall of Sir R PEEL, Lord NORMAN BY was sent as Ambassador to Paris, and his son got a place at Court. As affairs grew difficult and intricate at the Embassy, it was felt that more strength was required ; another Ambassador was substituted, and Lord NORMANBY migrated, for the benefit of his reputation, to an Italian climate. He would have been almost forgotten but for his own temerity in publishing " A Year of Revolution." Of the contents of that heavy performance this is not the department of our Journal in which its defects can be reviewed, but the clubs of Pall-mall have already anticipated the labours of the critics. It is felt that the Noble Marquis has given a finishing stroke to the remains of his ephe meral fame. _ . For nine years Lori NORMANBY has kept his work, and he has now produced it, as if for the purpose of showing the feebleness of his composition, when contrasted with the writings of LAMARTINE, LOUIS BLANC, and VICTOR Hvoo. Whether it was right for an English Ambassa dor to publish his journal of such recent events seems to us to be more than doubtful. We can understand how the chief performers in 1848 should be allowed to tell their story, but Lord NORMANBY was only an official spec tator ; and his utility at Florence as a diploma tist will be considerably diminished when it is found that his Lordship wishes to manufacture a book out of his opportunities. We should anticipate great evil to the diplomatic service but that there is no likelihood of the example becoming infectious. The fault has carried its own punishment. - The world's dread laugh " is a sufficient infliction to deter any other diplomatist from so exposing himself 'There is one brilliant association raised by Lord NOILMAI4Bra book. In trying to raid it