The Express.
London, England, 1847-10-28 00:00:00

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THE CURRENCY.

Sta,—Many hare doubtless, like myself, waited in
expectation that " Spectator" would continue to enlighten
the readers of the Times with his notions of currency. A
reply to the numerous exposures of the sophisms in his letter
which its appearance called forth war, perhaps, not to be ex-
pected. Bus it was reasonable to suppose that he would at-
tempt to show some of the workings of his problem ; and,
since he bee not done so, allow me to do it for him.
All that has been published on the passing of the Bank
Charter Act shows that its probable effects were from
the commencement foreseen by its authors, even to the

necessity of speedily revising it. The piovision made
by one clause in the act for the contingency of a short
smunielyooff
ithnteerrinulgating
uphold credit wtltitchh pa
nowribe 'bete to ump
adopted by the government, showed that a scarcity of money
in all probability would be • consequence of the limitation
of paper issues. The division of profit clause shows
that ita framers expected • rise in the interest of money to
follow the anticipated pressure. The Governor of the Bank,
in his letter to Mr. Goulburn, of the 30th April, 1844, does
not, indeed, seem so sanguine as the Chancellor of the Ex-
chequer as to the expected profits. Indeed, his doubts in to
the prudence of the measures of government are signifi-
cantly expressed in the demand to fix • smaller sum as the
annual payment for the privileges of the charter than was
paid by the Bank during the preceding term. This
prayer he only withdraws from a desire to remove all
difficulties towards making an arrangement. The Governor
of the Bank, as might have been expected, proved right in
his view of the proposed measures, and the Chancellor was in
the wrong. But before showing the grounds which sup-
ported either view of the case, it may be well to explain why
the Bank officers, with all their experience and the con-
fidence of the trading world to back them, assume • subser-
vient tone in their correspondence with Downing-street. Oa
all renewals of the charter the Bank has been mulcted of •
heavy sane, as it is supposed, for the benefit of the public.
This being • matter of arrangement between the contract-
ing parties need concern no one until, as on this last
occasion, in order to secure the supposed profits for
which it was to pay, the Bank became • party
to a scheme of which it disapproved, and from which, on the
showing of the governor and deputy-governor, it anticipated
a loss. When the charter thus notoriously constituted a
monopoly which it was worth while to pay for the privi
lap of carrying on, even to the disadvantage of the public,
it beam the duty of every Englishman to proclaim the mis-
aide the precedent, and the protests were neither few
seer gentle which the transaction called forth. The Bank
directors feu on these occasions a fall in the market price
of their stock, which government can at any time pay off
at par.
It hittinge that the Bank, which in 1844 evidently fore-
saw the manner in which the proposed experiment most
work, had not the courage to throw itself upon the cosaMy,
sad, claiming the then unimpaired right of Englishaemile
bank as well as to carry on any other trade, reject the_preimed
charter. We will venture to say that no House of Commies
could have been persuaded to enaction a withdrawal of theme.
nagement of the public balances, and the establishment el •
treasury bank, unless it were 'hewn that malpractices hrelheen
discovered inn the Bank of England agency, and that a bear
and cheaper mode of transacting the mosey baiter of go
vernment could be devised. To the atlelYsbi it mai MIS
that the Bank derives credit from its memesies IMO
meat. Bat all who know anything et_bembig am Sat,
on the contrary, the Bank is egiseast with romemibilidee
and expense by its inexperienced pertain In Dewolog-street.
Of this fact I propose giving instances in my next letter.
Assuming this fact as a basis of calculation, it must have
been easy to fix the term when a pressure upon trade,
caused by a contracted currency, would be more disad-
vantageous to the Bank of England than any temporary
check to its prosperity, arising out eta caseation of its con-
nexion with government.
To explain my meaning more hilly, the alternative which
I desire to put is, that the menaced repayment of the loan
of eleven millions by government under circumstances that
constituted the Bank of England the champion of the trading
rights of the subject, and averted the pressure under which
the country has suffered so much, would, in all prebabolity,
hLre.e.. placed the Bank higher in public opinion, than its un-
• to waist in carrying out a scheme which has shaken
eiTesal: credit, and nearly caused • ran for gold which
add oily have been met by a Bank restriction act. The
Met of the two lines of conduct would be the price of Bank
Stock in the market under either case.
Bank Stock was worth, in 1844, 211 per 1001. stook. Is
large a ram as eleven millions sterling would not have bum
paid off by government to try an experiment of sub dubi-
ous policy as the recasting of all the monetary machinery of
the kingdom without producing • rapid fall in the funds.
The fall would have been augmented by the withdrawal of
capital from other investments to lend to government to pay
the debt with. Consols, which then stood at 95, would in
all probability have fallen to 75, at which figure the
eleven millions paid at par might have been reinvested.
Then, instead of the present 330,0001. interest paid
by .vernment, the receipts would be 440,0001., ass
110,i k it. per annum more than before. If this sm..l
nual sum be compared with 120,0001., the mu suit
by the Chancellor of the Exchequer for the samengt•lMß
of the public debt, no doubt ma be eMeetmied w Ihe
subject of the vantage ground belil Metilemit, mid a lie
great gain that woald bat nesened to the peoprietary
their accepting the mm erne them, and then competing
with other parties hien igen marketand without a charter,
for the maaesemele of dm public business. But if by wadi
a step all Or desseeeme eitninquencesi that have ensued finl
the CbariwAt* imlibmwmarted, and ludo been
and the MAW to bear the drain for bullion
taken plonk 3gSl the Bank would again have largely pro-
fited by inermeed ta. With a much increased divi-
dend, people would elm vary little whether the Bank was in
'alliance with (overspilling or not. The price of its shares
I would not be d for want of a charter, and must
have risen is he the profits divided.: Before
the recent taYls Oe ea I have given might have
been deemed obiaterioal. Facts have now shows that, in a
I very modified shape, the attempt would have been advaata-
, Neoax for the Bank proprietary, whose stock is now down to
180, being a fall of full 311. per 1001. stock, while the divi-