Northern Times.
Liverpool, Merseyside, England, 1857-11-23 00:00:00

THE TIMES ON OUR CURRENCY SYSTEM

It is a true saying that an injudicious friend is
more dangerous than a❑ inveterate enemy. This
has been amply verified in the part which thp
Times has taken in defending the Bank Act of
1844, and of holding up the present currency
system. We had th3ught that the suspension of
that measure would have sufficed to put an end to
those strange vagaries which our cotemporary has
indulged in for some time past ; but we were
mistaken it seems, for in the Tuesday's impression
of that journal the climax of absurdity appears to
have been reached. The question is far too im-
portant to allow the Times to propagate its opinions
as if they were beyond dispute ; and the danger
of allowing them to pass uurefuted is in proportion
to the influence which a journal SD powerful
exercises in circulating them. We shall not,
however, shrink from our duty, nor fail to demon-
strate that the opinions of the Tinirs upon the
present currency laws are of the most fallacious
character ; and that they are not only calculated to
mislead the public, but to throw obstacle 3 in the
way of improvement of the most formidable kind.

The Times starts with the broad proposition
12a`.—

" When the Bank Charter Act was established
it placed England upon the footing of having an
entirely metallic currency."
This assertion is made in such a bold manner
that it may, perhaps, intimidate those who would
not dare to queslion the accuracy of the 7irnes
newspaper ; but, labouring under no such appre-
hensions, we. shall not:hesitate to show that there
is nothing but the bare assertion of the writer to
establish the fact. But let us see how the Times
reasons to prove what it states. It tells us that
the " total circulation was about £30,000,000, and
thenceforward no addition made to, or subtracted
from, that amount could Sake place, except precisely
in accordance with the national flow or eflux of the
chosen metal "—Gold. " Here,' says the Times,
"was something apparently inviolable.' We do
not pretend to understand this phrase, but we
proceed to what follows :

"It made no difference that the £39,000,000 com-
prised certain existing notes, namely £14,000,000
of those of the Bank of England, and £8,000,000
of the country hankers; and that these, instead of
being representatives of gold in hand, merely repre-
sented credit. It was enough that an assurance was
given that this element of credit would remain at
the point fixed, and would never henceforth be
allowed to fine,tuate. The movements of gold for
the future would exclusively regeate any transaction.
Hence this act placed us virtually in the happy
position of a nation with a pure currency, subject to
no disturbance or caprief s, injustice, or exigencies
of Governments, and varying only in accordance
with its natural supply."
This is the style of reasoning put forth by the
Times to prove that England has an `• entirely
metallic currency."
We will now endeavour to show how far this
assumption is borne out by facts at our command ;
and in order to do so we shall take the last returns of
the note circulation from the London Gazette, deal-
ing first with the Bank of England The form in
which these returns are made out, are not such as
can be readily understood by those uninitiated in
bank mystery; for although the Bank professes to
issue £14,475,000 without any gold to represent it,
it has the impudence to take nearly all the gold
from the other department to balance that amount,
leaving the current liabilities of the Bank only a
few hundred thousand pounds in specie as security.
We find by these returns to the 11th of Novem-
bet•, that the power of issuing notes extended only
to £21,141,005, but as the banking department had
in reserve £957,710, the actual circulation beyond
the walls of the Bank was £10,183,355. Now the
total amount of specie in both departments to the
same date was only £7 170,508, or less than one-third
of the note circulation, or about Gs. in the pound.
If we take the banking department by itself, we
find the total liabilities £37,020,434, with specie
amounting to £504 413, or about threepence in the
pound.

- Let us now take the
and the liabilities and a
LIABILITIES.

,wo d.'partments together.
;sets will stand thus :
ASSETS.

Bank Stock . 1Z,553 000
Best 3,364,356
-Notes in circula-

Government Se-
curities 14,475 600
Do. Do. 9,444 828
Other Securities 26,113,433

tion 20,183,355
Public Deposits 5,314,659
Private Ditto 12,035,344
7 Day tnd other
8i115...... 853,075

Total

50.033,281
Bullion & Specie 7,170 508

57 203,789

These figures show that on the 11th day of
November last the Bank owed £57 203,789 ; that it
held against it £50,033,281; in securities, of which
14,000,0001 were wholly unnegotiable ; and that it
had in specie ot,ly £7,170,508 amongst itself and
twelve branches, or rather less than two shiillinys
and sixpence in the pound ; so much for the
" en irely metallic cutrency," of which the Times
boasts, as far as regards the Bank of England. We
should like to know by what process of calculation
the Bank of England could at any time pay its
depositors and note holders twenty shillings in the
pound in specie on deavind.

But the Times does not rest here; it endeavours
to show that all other banks issuing notes have the
same pare currency. "It made no difference that
£36,000,000 ccepotised certain existing notes,
namely £14,000,000 of those of the Bank of En
gland, awl £.,000,000 of those of country hankers,"
says the Times, "instead of being actually repre-
sentatives of gold in hand, merely repte3ented
credit." Sagacious reasoning this, indeed. It has
been left for the Times alone to propogate the
strange doctrine that whether £30,000,000 notes
are put into circulation representing gold or credit
it is one and the same thing.
We shall now show how the question stood with
all the banks of issue from the last official returns
made. The total issues were as follows:

Actual Circulation

Bank of England
Private Banks ....
Joint Stock Banks
Irish Banks
Scotch Banks

. 20 183,355
3,760,596
3,104,485
7,261 959
4,948,221

Total ..... .......... ...... £3B 558,616
Against this amount of paper circulation the
following sums of specie were held :

Bank of England 7,170 508
Irish Banks . 2,282.030
Scotch Banks

£11,128,323
As far as the public have any means of knowing,
the above comprised the total amount of specie
held against paper by the issuing banks of the
United Kingdom, exclusive of the private and Joint
Stock Banks of issue, which make no returns; but
allowing them to have in hand one-tenth part of
their issues in specie, there would be an additional
sum of £686,500, making the total amount of specie
held by the issuing banks £11,814,823, or about
one third. As, however, the banking system of the
United Kingdom is not formed on the same basis,
the power of paying notes in specie differ mate-
rially in each country, which may be sewn by the
following statement: .

Specie Assets
s. d.
Bank of England 7 0 per
Private Banks.
Joint Stock Banks 2 0
IriEh Banks.... 6 3
Scotch Banks ..... 7 10
This shows that as far as the circulation' of paper
money is concerned, the power of paying in specie
is not based upon the precious metals, but upon
credit ; and as th se metals Pre withdrawn
from the Banks, more particularly from the Bank
of England, credit must be diminished, to
enable the Banks to maintain their position. To
avow the currency thus created is "entirely metallic,"
is false upon the very face of these facts.
But the Times does not rest contented in affirm-
ing that the note circulation is a "pure currency;"