The Express.
London, England, 1847-05-25 00:00:00

THE CURRENCY.

Much of the erroneous reasonings and false conclu-
sions, which are observable in the speeches and dissertations
en this subject, arise from using the sane word in dill'. rent
senses. Thus the word " money " sometimes is employed
to denote coin, which is not only the sign but the pledge
sad reeresentation of wealth ; sometimes to denote hank
notes, which are only the sign, and not the pledge and re-
presentative of wealth ; and sometime, to denote capital, as
when we lay the interest of money, instead of which we
ought to say the interest of capital. By banishing for a
cement the word money, and using the words, coin, balk
notes, and capital, we eau reopen more easily and correctly.
Again, the word pound, or pound sterling, occurs to tae
mind as sbmo substantive entity, not connected with or de
pendent on soother, whereas when analysed and examined, is
in found to be an aliquot pert, that is 160'623r,1a of an ounce
of gold of standard fineness. If we ware in monetary ques-
tions to substitute for the word pound, the word aliquot,
we should avoid much confusion. Toe very expression brings
instantaneous conviction, that although gold may alter its
value, relatively to other co nmodities ; se, for instance, re-
latively to silver ; the pound sterling cannot be dear or cheap
relatively to gold.
Another source of confusion arises from not clearly appre-
hending the true sense of the word currency. That means
the measure of value current and adopted within a certain
sphere. If the sphere is a single country, then tie, currency
is composed of coins or bank notes. If the sphere extend*
to several countries, then the currency is no longer local, but
general. It is composed of bullion, or of coin considered en
mere bullion. Thus we have two currencies—toe one local,
which we may call municipal currency ; the other universal,
which we may call international currency. The error of he
act of 1844 lies in this, that it supposes the movement of the
international currency will aft. et the municipal currency,
whereas they are entirely independent of each other. As
the source of the present mischief is to be found in this error,
we shall develope it at length.
The quantity of municipal currency in s country must
vary with prices and the number of transactions; but, in
the absence of other iiiformation, and for the purpose of
general reasoning, we may suppose that the average qoantity
will correspond to the rental of the country. Ant this is
found to be nearly the case at present in the United King.
dem. In like manner, theinternational currency must vary
with prices and the extent of transactions. It must vary
also with the facility, rapidity, and cost of triinsuiission.
Steam navigation must, consequently, have greatly aug-
mented the quantity of international currency.
Now, the authors of the act of 1844, say the abstraction
from the Bank of a million of ounces of gold, fir the pur-
pose
of being used as international currency, that in, of lining
expnrterl, and making s payment in a foreign country, in-
dicates that there is a corresponding redundancy of munici-
pal currency. We affirm it indicates nothing of the kind.
The rate of exchange will depend on the quantity of buyers
or sellers of bills of exchange. If this rate varies from par,
above the expense of transmitting the international currency,
bullion will be transmitted; if under, it will not, generally,
but bills brought and remitted. We say generally, becau-e
there will be occasions, when a merchant, rather than sub-
ject himself to the risk of bills, and to an exposure sf the
transaction he is engaged in, will rather transmit bullion
than remit bills of exchange, although the coot is greater.
Let ue suppose, then, that the million of ounces of gold are
abstracted from the Bank, by means of Bank notes paid in,
and consider what will take place. The gold i exported as
international currency. It will not remain in the foreign
country, which it first reached, but pass current to another' •
and eiter the same gold, nr an equal quantity, will return
to the country from which it originally issued. That will
readily be admitted; but, it will be said, length of time may
be requisite for the return; and in the mean time there is a
scarcity, and, what is consequential in scarcity, rise of price,
that is, alteration of value relatively to tome other commodity,

as to silver. The relative value of gold and entre: will be
Melva at Paris and London. If ars, it is evident this!. goid
will be purchased with 'Bets. at Paris, and sent to London.
An interval of a few days will suffice to restore the equilis
brium and cause a return of the previously exported bullion,
or of an equal quantity to London. la the intermediate
time the contraction of the circulation, by the paid-in notes,
for the million of ounces of gold, will have distraseed the Lon-
don hankers. They will eagerly get hold of the returned
bullion, in order to get notes (or their reserves. Matters
will then have returned to where they were ; but during the
time which ha. inrerrenodbetween the t fflux and the influx
of guld, the amount of discounts will have been lessened, and
commercial suffering produced.
In corroboration of what we advance we have to state
that by the evidence before the parliamentary committee of
1840 it appears that betw,,n October 1833 ..a March 1835,
the drain of bullion amounted to 41 milliner, wt. de during
all that time the market price of gold was 3/. 17a. 9J., the
Mitt price being 3!. 17s. 101 d. The Bank sold at the Mint
price, and they had the power of purchasing at the market
price. The comparison of the two prices shows at the same
time that during thin efflur of gold from the Bank, the
Bank note, instead of bring depreciated was appreciated
' nearly to the extent of half a farthing in the pound, or,
otherwise emu cl, a bank-note. of 501. was worth 6d. more
than 50 sovereigns.
We shall enforce what we have said by the authority of
Mr. Tooke : "There may be a very considerable demand fur
the export of the peed •us metals, without any ground of in-
ference that the originating cause of it has been any excess
in she circulation of this country. With a sufficient reserve of
bullion on the part of the Bank, the prob.,bility is that the
gold would in such casts return, and that there may have
been no intermediate di.turhance of that uenount of the cir-
culation, which was previously nut in excess. as compared
with the ordinary transactions of the country."
To conclude, we repent that while there is eonvertibilty,
the efflux or influx of bullion from or inro the Bank, ought
not to regulate the contraction or expansion of the currency.
We shall at a future d ty show what ought to regulate them,
and what measure onqht to be substituted for the act of
1844. Stows.