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

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-