The Northern Daily Times.
Liverpool, Merseyside, England, 1856-11-27 00:00:00

THE CURRENCY QUESTION.

LETTER NO. XII.

TO THE EDITOR OF THE NORTHERN TIMES.

Sir,—l think it was Doctor Johnson who remarked, that
experience was the great test of truth, and that it was con-
tinually contradicting the theories of men. Tried by this
infallible test, I have proved to your readers, in my former
letters, that the theory of the bullionists is the very antipodes
of truth. What does it teach us? That gold or silver, and
promises to pay in these metals at a fixed price, are the only
instruments of commerce that can be relied on for performing
their work with certainty and safety. What has it done for us ?
According to the Times, it has brought upon us that which is
" equiValent to a great zietural disaster." It has produced a
greater amount of inconeenierce i!:an famine, pest, earth-
quake, floods conflagration, and shipwreck." There, says the
Times, "inflict local or personal injury," but "a high rate of
interest, in a country where such a thing is unusual," inflicts
greater injuries than these. "It affects the whole atmosphere
of trade." The princely merchant trading with his tens of
thousands, and the humble shopkeeper with his two or three
hundreds, are alike subject to its malefic influence. It may
prove equally fatal to both; Servo them right, says the Times.
" Of course a rise to seven per cent. must seriously affect
those firms that •carry on their trade with borrowed money,
and that have founded their calculations on five per cent."
"It is the present tendency of trade itself, in its most legiti-
mate form, to Lecorne more and more speculative. There is no
living to be got in a small way if you would not be smothered
by the leviathans of trade. you must compete with them."
It goos on to show that, for such competition, credit is
indispensable. But those who avail of it arc rightly served,
especially, if they have founded their calculations on a Ave per
cent. Such is the reasoning of the Times. Prudence requires
that the trader who would not be smothered by his great
competitors must do as they do, and borrow Money to extend
his trade, for, as it very truly says, " there is no getting a living
in a small way." But if they do so, yielding to:the demands of
prudence, though they may escape the smothering, they must
expect to be strangled by a rise in the rate of interest. The
fact is, as explained by the Times, there is a Scylla on that
side, and a Charybidis on this. It is imprudent to trade with
borrowed money, and it is imprudent to trade without it.
Why? Because without it, you Will be trodden under foot by
the increasing numbers of your competitors. And with it,
some day or other, you may be blown to atoms by a violent
contraction of the currency. It's very fine to talk about
prudent traders always haying a perfectly accessible reserve,
but the Times forgets, or wilfully conceals the fact, that a
perfectly accessible reserve, with money at five per cent , is
rendered entirely inaccessible, with money at seven. And it
is the theory of the bullionists embodied in the act of 1819 and
1844, and not the imprudence of traders, which ruins those
who have borrowed Money for the legitimate extension
of their business, and who have unfortunately founded
their calculations 'on a five per cent. late of interest.
For if they had founded their calculations on a higher rate of
interest, they must have founded them on a scale of profit
which competition would effectually prevent them from realis-
ing. No, it is not the imprudence of traders, it is the
destructive character of this commerce_blighting theory, of
which the Times is the champion, that brings upon us all those
evils which the Times would persuade us are " the sure opera-
tions of the laws of trade."
I have shown already, in my fourth letter, that for the
thirty-five years ending 17th May, 1839, the rate, which is so
imprudent to calculate on, was never exceeded—that until the
passing of the act of 1844 the minimum rate of discount was
never less than four per cent, and the maximum never more
than five. I have shown, on the other hand, that from that
period to the 18th of October, 1855, no less than thirty floe
alterations were made in it, ranging from 2 up to 91 per cent.
And since October, last year, it has been down to 41, and is
now again up to a minimum of 7 per cent; and some bills (as
good as gold), if having more than thirty days to run, are
rejected by the Bank (miscalled of England) as worthless
trash

Such is the result of the bullionists theory. Such is the
contradiction that theory receives from experiences. It was
to check improvident speculation. It makes trade in its most
legitimate form improvident. It was to secure the just
reward of industry. It taxes that reward, and compels it to
pay the tax in the product of a foreign soil. It was to prevent
fluctuations in money, and render panics in the commercial
world all but impossible. It makes money more fluctuating
than it ever was before, and as for panics, it renders them
impossible, only by familiarising us with the perils that produced
them. Did I say of this theory that it was contradicted by
experience? Even the Times itself proclaims its condemnation
to the world, it says "the distances of commerce are now so
great, and the returns so slow, that you must shorten the one
and anticipate the other by a free use of the discounters ; you
must either increase your business, or seo it shrink into
nothing." There is " Hobson's choice" for you merchants of
Liverpool. If you do a largo business, a long continuance of
the present rate must wholly destroy your profit. If you
are content with a small business, you must shrink into
nothing. This is the alternative placed before you
by the Times. And it is the only alternative
left you by the legislation of the bullionists. I
have subjected their theory to the test of experience. Ex-
perience has contradicted its most positive assertions. I have
brought it to the bar of history—to the bar of common sense.
At both of them it has had a fair and impartial trial. By
both of them it has been condemned as a monster, inflicting
more injury on:tbe commerce of a country, than either " famine,
pest, earthquake, floods, conflagrations, or shipwrecks." And
will the Times, after joining in this condemnation, stand up
in the face of the world to defend the criminal ? Will it dare
to shew cause why sentence of death should not be passed on
so great an offender ? Yes, it sticks at nothing to serve its
purse-proud clients. It sees the merchants and tradesmen of
this great nation writhing under the torture of the discount
screw, and while it trifles with their sufferings, and while it
feeds its mirth with their pangs, it dares to defend the wicked
laws that compel the Bank of England to apply it.
There was sonic excuse for Mr. Muntz imagining that it
had made some progress towards rationality in currency
matters, for in the leader which called forth the masterly reply
of that gentleman, the Times, by a singular lapsus penny
wrote that " gold is, after all, an article of commerce, and must
follow all its laws." As Mr. Muntz very justly observes, if
the writer had said that gold ought to be an article of
commerce, and should follow all its laws, every currency
reformer would have agreed with him. This is in fact the
he
bfl
y.
krosseit
uoyvatuotesli
udrnsr.
putting
he, of
imsswithout theat
humble
ifivscreteositaurdpcailnsoi
correspondent,
kiedoreneuognel
wefth:l
tdeaatdli
no:
acknowledgment,
radicaletej:journal
currencynda l:
Tinges
making,tnou bhs eta:i
tgi reformers
nsuhtsioitlseltyeaondwooi
own
so base a theft !

But the theory of the bullionists is not only contradicted by
experience, and condemned by history and common sense, having
first pleaded guilty in the columns of the Times, to the charge of
haying poisoned the whole atmosphere of trade, it has also its
contradiction and condemnation, in the fact, that it is impos-
sible to reduce it to practice.

Let us suppose that the present pressure should continue,
that the drain at gold should go o❑ a little longer—a contin-
gency by no means impossible—that the bullion in the Bank
should be reduced to about a million sterling,—an occurrence
which has once taken place, and may again; let us suppose
all this had come to pass, and what would then be the value
of the promises to pay in gold the £14,000,000 of its notes that
would still remain in the bands of the public ; against which it
does not hold—and never did hold—and never can hold, a
single ounce of that metal. Where, then, would be the
boasted convertibility of its paper ? 'What change would the
editor of the Times get for the note he got at the bankers, on
the 19th instant? Perhaps he would then tells us frankly, which
he liked best ; a note based on the wealth of the nation, or a
promise of the Governor & Co. of the Bank of England, to
give him a certain weight of gold ?
It is all very well to say, that Government would then step
in—after many a stately house of commerce was levelled to
the ground—and interpose the shield of an order in council,
between the Bank and the holders of its notes, authorising it to
dishonour all its promises—even tho ono which the editor
of the Times got at his Bankers, and held up to the admira-
tion of all men, and, as he thought, to the eternal confusion of
psor Mr. Muntz, as a specimen of the best possible currency
in the world, solely on the ground that it was always an
equivalent for a certain weight of standard gold.
No doubt such relief would he afforded to the Bank. But
then, what would become of the boasted convertibility of its
notes? What of the doctrine--that the promise to pay in
gold, is a tower of strength and a citadel of safety? And where
would the editor of the Times get five sovereigns for his
beautiful note ?

Every one must admit that such an interposition on the
part of the government, would amount to an abandonment of
the theory set up by the Bullionists, would, in fact, he equiva-
lent to a repeal of the law which has been founded thereon.
Under that law as it now exists, Fourteen Millions of
promises to pay, are made to rest on a foundation that renders
their redemption impossible, namely, on the emphatically
inconvertible basis of a non-transferable debt, owing by the
government to the Bank.
The remainder of its issues being based entirely on the
precious metals, and principally on gold, of which the
combination of a few capitalists may at any time deprive it ;
it is clear that the impracticability of the bullion theory, was,
to a certain and very considerable extent, felt and admitted,
by the framers of the law, or they would not have sanctioned
the issue of Fourteen Millions of promissory notes, which, as
such, are a great fraud on the public; it being, as we have
seen, utterly impossible for the Bank to redeem them under
certain circumstances, which have arisen in times that are
past, and may again arise at no distant day.
Indeed there never was a more ingenious myth, or, pelue
rihraopossn,ls;
shonld rather call it a more impudent falsehood, palmed as
gospel truth upon the credulity of the public, than the asser-
rt
real
asser-
tion, nel
d,thattype
pnd
e a t
ofhb that
tn
national
t is
of Englandna
I therefore,
wealth,
e atnh note
solelyt e
sai is, to
oa
on
alldtexceptintentsi s
account i
tand
e,
tp
e
a promise to pay in gold which can always be immediately purposes
a
ful-
filled,
quivalent
—gold.

The Times insultingly calls upon Mr. Muntz to hold up his
head; to look it in the face, and to answer its question. I
have not forgotten the question to which it demands a reply.
It was asked twelve months ago. What said the Times to the
currency reformers, " what are the few cabilistic words to be
Be nngtr,ayseadi
do n
tthhee poarpaecrl
there pray
words—l promise to pay £5 on demand, which will not be
isse tat] efotriic
ee ma
nadmsoinmgps
lti y2tyu
qne vtehse.