The Northern Daily Times.
Liverpool, Merseyside, England, 1856-10-21 00:00:00

THE CURRENCY QUESTION

[LETTER V.l
TO THE EDITOR OF THE NORTHERN TIMES.

Sir,—lmmediately after the memorable meeting—with an
account of which my last letter concluded—his Majesty's
Ministers met the Governor and Directors of the Bank in
Downing-street, and placed in their hands the famous
Order in Council,which, according to the Times, sanctioned
" an act of national bankruptcy in a mitigated form ; " but,
according to Lord Castlereagh, "solved for the first time,
the problem of reconciling national prosperity to a state of
war, by supplying the country with a circulating medium of
undoubted cr'dit proportioned to its wants."

The eloquent historian of the French revolution describes
the suspension of specie payments, imposed by this
order on the Bank, as " the commencement of
a paper system in Great Britain, which enabled
the empire to carry on for so long a period
so costly a war, and to maintain for years
armaments greater than had been raised by the
Roman people in the zenith of their power, which brought
the struggle at length to a triumphant issue, and arrayed
all the powers of Eastern Europe against France, on the
banks of the Rhine."

Such testimonies to the value of the great national
restorative of national industry—a paper currency resting
on till credit and wealth of the nation—must make a
lasting impression on the minds of thinking men. At all
events, they tar outweigh the rash and unsupported
" ipse dixit" of your leviathan cotemporary.
The immediate consequences of the measure of relief
carried by Mr. Pitt, in 1797, were the restoration of con •
fidence, the revival of trade, the re-invigoration of the
fainting soul of enterprise, and the rushing in upon the
nation of an overflowing tide of commercial prosp-rity.

_
We were, not only furnished with the sinews of war
ourselves, but we were en 'bled to subsidize all the
sovereigns of Europe, whose cause we had e4poused.
We found no difficulty in importing, in Is3ll, 1,500,000 qrs
of wheat, to supply the deficiency of the preceding year.
All this we accomplished when guineas were a rare avis in
terris, paper having almost entirely superceded gold as an
engine of dim:nestle commerce.
To that measure of relief, which vested in the Bank of
England the power of expanding the paper circulation ix
PROPORTION TO TUE ABSTRACTION OF SPECIE, and to the
wants of the country, all our subsequent prosperity may
be traced.

To it, under Providence, we are unquestionably
ind-bted for all the victories of Wellington, for the
glorious termination of the war with France, and, indeed,
for the salvation of the empire. It was truly an act
which brought " healing on its wings" to all the suffering
interests of the state. By establishing the currency on
the solid basis of national wealth, it simultaneously
wreathed our brows with the laurels of victory, and
loaded our garners with the fruits of peace.
Such were the astonishing effects of the expansive
monetary system established in 1797.
There were, of course, occasional reverses, ebbs and
flows of mercantile activity ; but, from the adoption of
that system, to the close of the memorable battle which
restored the equilibrium of Europe on the plains of
Waterloo, adversity was the exception, and prosperity the
rule, of the intervening eighteen years. During that period
the checks to our prosperity were ephemeral and scarcely
perceptible. Not so in the years which followed the
resumption of specie payments, and consequent contrac-
tion of the currency by the bill of 1819. The disastrous
results which followed, from the adoption of that fatal
measure, are facts of- history with which we are all
familiar. "Perhaps," says Sir Archibald Alison, "no
single measure ever produced so disastrous an effect as
that has done. It has added at least a third to the
national debt, and augmented in a similar proportion all
private burdens in the country; while, at the same time,
it has taken as much from the remuneration of labour,
and means of paying it enjoyed by the community."
" Without pronouncing an opinion on abstract ground,"
says the same author, "on the expedience of these
changes,"—namely, the alterations effected in the
monetary system of the empire, by the Act of 1819—" it
has already (1849) been decisively proved that they
have added 50 per cent. to the weight of all debts ;
that they have extinguished, practically speaking, the
sinking fund, and rendered indirect taxes so unproduc-
tive, that a recurrence to direct taxation, even in a period
of profound peace, has become unavoidable ; that they
have compelled government to starve down the military
and naval establishments of the empire to a degree incon-
sistent with its security, and which may, ere long,
endanger its independence; and have rendered it more dif-
ficult now to raise £50,000,000 a-year from 28,000,00)of men
than, in the latter years of the war, it was to raise
£70,000,000 a.year from 18,000,000. And, if it be said that
these evils were unavoidable, and the price which the nation
pays for shunning the dangers of an unrestricted issue of
paper—the South American madness of 1824 and 1825,
followed by the dreadful monetary crisis in the close of
the latter years ; the joint-stock mania of 1835 and 1836,
succeeded by the severe and protracted depression from
1836 to 1843, and the railway mania of 1845, terminating
in the awful and protracted monetary crisis of 1847, suffi-
ciently demonstrate that the metallic system affords no
security against those dangers, but, on the contrary, by
rendering commercial credit dependent on the plenty or
scarcity of that most shifting and evanescent of earthly
things—a gold currency, in the highest degree aggravates
them."

These are not merely Sir Archibald's opinions, they are
historical facts, and if " history is philosophy teaching by
example," they ought to command our most serious atten-
tion, especially at such a time as this, when, according to
a writer in the NORTHERN TIMES of the 13th inst., there
is nothing that " can check the demand which is absorbing
all the gold and silver of England and France," but " An
immediate suspension of specie payments."

Nothing, that can "restrain within due bounds the spirit
of speculation," but " A minimum rate of interest fixed by
law," to continue in force until the resumption of specie
payments. J. W.
Liverpool, October 14, 1856.

TO THE EDITOR OF THE NORTHERN TIMES

Sir,—What is currency ? If we were to look for the
solution of this question in what is seen around us, the
answer might resolve itself into a tirade of sarcasms.
At present, however, I restrict myself by saving that
currency, as known amongst us, is but nominally the
beautiful, useful, elastic agent required ; for although
itleertainly is a medium of exchange, yet it is very far
from being a just standard of value, and in the measure
in which it comes short of that, so must its efflcieucy be
crippled.

By the term currency, in its common acceptation, is
understood money ; and in this country we have come to
find it hard to divest our minds of the notion that currency
is synonymous with gold and silver, or else we go to the
other extreme, and picture to ourselves the floating paper
of insolvent states or of bubble banks.

If the wealth of a nation consisted solely or chiefly of
the precious metals, there might be some reason in foster-
ing such notions, but as that fortunately is very far from
the case in this indefatigably energetic, commercial,
manufacturing, agricultural, and delving community, it. is
to be feared that we have all, more or less, allowed our-
seves to be cajoled out of our propriety by a narrow-
mindedness on this one point, which is unworthy of the
liberal and enlarged views of the nation on most other
social subjects, and we bring the eye of the miser and
commercial ignorance—worthy only of the rudest age—to
assess our wealth and our well-being, which we measure
just after the manner of such persons and times.
But what, then, is currency ? In England, legally, it
is limited to gold sovereigns, silver shillings, and copper
pence, somewhat swollen if you will in practice by Bills of
Exchange, which, at times, are almost unnegociable, and
a small proportion of unbullioned balik notes.
Passing by the distinctions from this definition in other
European countries, we note that in some parts of Africa
it consists of a certain description of small shells, pieeos
of iron, and such like things, of little or en vale"
answering all the purl/44cl for which It is re'
into food and 010., yet
.itered, viz.,
to facilitate the exchanging of v.-a-
ous commodities—to
convert the fruit of the -
f'eul into manufactures,i and lab
ii'aing—t-he necessaries of lifeto luxuries
—the 118611!.. into the ornamental—and the surplus of these
!no' *articles of taste and vertu. But what, then, should
be currency ? Which is the preferable thing?—the gold
or the cowrie?—the thing of intrinsic value, or the thing
of merely nominal or representative value ? Why, both
do the same work—their object is one ; and, admitting for
argument's sake, that their results are the same,
and that both are equally efficient to the extent
of their respective capabilities, the employment
of the thing of intrinsic value is clearly superfluous,
because not necessarily requisite ; and hence we may
fairly conclude, need not consist of any material of
intrinsic value, since, legitimately, it is but a medium of
exchange—an assessor and representative of wealth, not
itself the wealth, and he who has the heart or taste of the
miser may hoard up gold to his heart's content, let our
currency be what it may.

How we are to establish such an intrinsically invaluable
medium that will be perfectly secure.—how we are to
arrive at a sound and unflinching standard of value, are
points which do not belong to this stage of our enquiries.
We must make sure our premises ere we elaborate into
details.

--____
Be it so, then, that currency is simply a medium of
exchange, for we think that no commercial man will
dissent from this. Now, a medium of exchange, in its
application, should be as the worthless iron weight in the
ge—unchangeable
a n i
—not
scales, which serves to assess the value of your bag of
standard gold, that may be worth .£5.000-
It should be as the equipoise between value and value—.
u natis
adjusting the weight of flour to the measure of wine or
oil—in short, it should be an unquestionable standard of
va lu e
u cwt ue lalt iang u
nd es a medium
but constitutionally so—not by a law of the land, but
by a law of nature and reason, being itself its own
adjuster.
Such a currency we certainly do not possess
rall
e i
r oe f u
m e xs
tcahnacne s
arbitrarily
, for while
an arbitrary fixed value is by law given to it nominally,
its relative value fluctuates just as any other
article of
commerce, being equally, if not more sensitively,
suscep-
tible to the incessant fluctuations of demand
Be it observed that the immediate • and supply.
question at issue is not
as to the possibity of our arriving at such a perfect state
of things, but simply, is
Igsuch required ? is it desirable ?
y opinion is
most unquestionably •
I contemplate advanta . in favour of it, as in it
ges that will, it establish
as were,
peace in commerce , and natural honesty
in the fluctuations
of prices, which cannot possibly be the case under our
present system.

t
o cr u b
aet i vm e
made
ee
r a t
- We are free to admit that a great change may have
toi 0
nosb, t
ba
vi n h
asvuicol:
tao
gel tvi re r eunpc y —that some
their present
fewindividuals may be thrown out of a course) of very
usurious transactionsLbut the nation at large would be
relieved from monetary commotions, and trade would no
longer be dependant on that winged, slippery thing, called
money, which is neither the wealth of the country nor its