The Liverpool Standard and General Commercial Advertiser.
Liverpool, Merseyside, England, 1855-12-25 00:00:00

TUE CIRCUL A. TI:I_TG MEDI Ult.

Ais energetic discassioniisgoing on in Lersaon,trai
the-important question ,of ttthe extension of the,eur-
i'rency, in which, as is net '-iinttsual in such oases, the
iargrament is cousiikrahly F.,averstated on each side.
The opponents of the present system advocate -such
:Inn extension of issues as *ill provide, not only -for
the wants of commerce, but at the same time fmtvish
fall employment for allakind of wholesale :creation
(of money, and *hid' is met by the Times -mid its
correspondents with the 'pertinent question: as-to the
meaning of the 'words's" I promise to pay,"..;if the
proposed note is mot' td be convertible into goldeAt the
pleasure of the holder ; ~.and if it is to be :sot convertible,
then it is askea :howie,-Sue demand to be met, unless
the issue of the .notes be limited to the ,amount of
gold of which they vrefess to be -repeeseetatizms, and
which should be . in: reserve to meet lhe.aatiaipated
demand. A. .consideration of the sw4jett, -.free from
the bias of preeonoeived notions, serve to show
that a concession of the first proposition tunder proper
conditions is 'by 'no means incompatibles ciith the
position assumed -,lay -the opponents. ;It is of course
alt imitspupsalile oanilition of any safe ,systeui,s.f paper
currency, that there should be a oarkgbiliby of per-
forming the Obligation undertaken on tivaGee of the
note ; but the :extent to which such eapaliilits should
be obligatory - ought to have some :ram-elute to the
reasonable probability of requirements, •so that the
stock of gold may: net be needlesslyang,mented, and
inconvenience thereby occasioned to the ‘mercantile
community ,by \-restrictions on the amount ,of accom-
modation recpiireet far the legitimAepurposes of trade.
By the act of X 1844, -the limit of issue irrespective of
gold is fixed at Fourteen Millions, .andla4 lately been
increased to ?the extent of something less :than half a
million; but ,expeiience has shown tthat, notwith-
standing the ,many impediments .which k'have been
thrown in the may tot extension, owing terthe restric-
tion referred to,' the actual circulationlateTerely been
below Twenty Millions, and might, :no 'doubt, have
been still larger, :;had the issues :kopt7.pace with
the great increase twhich has taken •place in com-
mercial transactions. It becomes, therefore, a ques-
tion for serions,ceneitleration, why the limit4hould be
placed so far below Lthe almost pos4ble 'necessity ; or
rather, why an amount of gold should be<compulsorily
retained as stook, *liieh, by no probability,: will ever
be required to meetihe demand for notes imcircula-
tion. If, insteactOrTeurteen Millions and-az-Mlf, the
limit were raised to ',Twenty Millions, the -surplus
twhich the Directors of -the Bank of England would
;always retain for !their own safety would .be amply
-sufficient to meet .anyamexpected contingency,,while
the freedom which it would necessarily give Ito their
,:enenetary operations, in increasing the facilities for
ldiscounts, would of itsP..lf so augment the .ordinery
.average of circulation, ask-to render the supply otgeld
abundant. All that B.reJjy required is the,capability
.cf> being able to fulfil thezprouneo to pay, and public
<3ol.llldence in the existence of that capability:,
-these conditions might 'be .sreadily attained by -the
extenigon we have suggested, and the mercantile
community be thereby -relieved from the present
needless and unjustifiable pressure.
The-large supply of gold from California and Aus-
tralia has necessarily been taken into the consideration
of this question, and the suggestion naturally made as
to what might have been the present state of monetary
affairs, halal° such extraordinary .sources of metallie
supply existed. The inference drawn is that we should
have been :in.a state of collapse; ender en the question
is asked as -teithe possibility of retaining the present
system under such circumstances, *he Times meets
the difficulty by ;slating it to be one of ;the necessary
consequences .of lvar, the penalty which roust perforce
be paid for vindicating the national honour in the
resistance to Russian aggression. In other words,
commerce may be ,ruined and the nation bankrupt, so
long as the pet scheme -of Sir ROBERT PEEL ,is pre-
served intact. The very fact that, notwithstanding
the enormous additional supplies of gold, we have now
to suffer from a long-continued pressure, exorbitant
rates of interest, and restricted accommodation, is one
of the best proofs that could be afforded of the imprac
ticable nature of the system which was legalized in
1844. If, with all the fortuitous eircumstances in its
favour, more than sufficient to compensate for the ex-
traordinary demands for the purposes of war, it has
landed us in such a state of difficulty, the inference is
obvious that the system itself is at fault, and the
necessity for a change has become urgent. There is
no real deficiency of the circulating medium but that
which is created by the law ; and if even the mischief
should arise which the defenders of the Bank Act
point at, of an impossibility of maintaining the conver-
tibility of Bank notes into gold, owing to a still greater
drain, it might be met by reducing the amount of the
note, which would at once set free an enormous amount
of sovereigns. By far the greatest restriction is that
on the amount of the note, and this, in combination
with that on the extent of issue, creates the pressure
which under a more judicious system would not exist.
The remedy, therefore, is in the power of the legisla-
ture, and as it may be applied without in any way
injuring public credit, it ought to receive early atten-
tion in the next session of Parliament.