The Sun.
London, England, 1855-07-05 00:00:00

LITERATURE.

The Theory and Practice of Banking. By Henry •
Dunning Macleod, _ Esq. Longman, Brown,

Green, and Long,mans. -
In a country like ours, which has risen to an un- -
paralleled height in the scaie of nations, and which,
if it fell to-morrow, would leave behind it monu-
ments of its existence and beneficent sway greater
and more enduring than any history has recorded,
it might reasonably enough be expected that the
principles of that agency to whose operations its
position and influence are mainly to be ascribed
would long ago have been established beyond the
reach of cavil. So far, however, from this being
the case, it is Only comparatively of late years that
the true principles, generally speaking, of political
economy have been eliminated from the haze of '
prejudice which had so long obscured them, and
been marshalled into the order of a science whose
lessons even then it required much individual and
collective effort, and a lapse of years, systematically
to establish and have received with effect. To this
result the Anti-Corn Lzw League largely contri-
buted ; and though that organisation passed aye's)"
with the cause of its existence, there can be little
question that not the least important result of its
labours was the general reception of a safer and
more satisfactory, because scientific, direction
of commercial enterprise than before. The
knowledge of one branch of political economy,
however, the monetary system in general and the
banking part of it in particular, has not advanced
part passe with others. Though the subject is one
of general interest, and involves every one's wel-
fare, or, as we are told, because of these facts it
has been so obscured by passion and prejudice that
its true principles are still far from being generally
understood. To this state of things the desire of
many writers to popnlariso the science has largely
contributed. In their endeavous to facilitate vul-
gar comprehension they hive fallen into the errors
of being loose and inaccurate, not only omitting a '
strict definition of words they used in relation to
the subject, but also employing them in different
senses from the first and from one another. Under
these circumstances Mr. Macleod, justly appreciat-
ing the importance of the subject, has not erred in '
thinking " there was room for a work which should
endeavour to treat of it more as a science, and in
a more methodical and systematic manner than has
hitherto been done. Like every other science
whatever," he remarks, " the monetary system has
ideas and principles which are peculiar to itself,
and if these could be as thoroughly and carefully
investigated as is done in every other science, it
would necessarily assist in removing some of the
differences of opinion and contradictory views upon
the subject. It is because such care has been
taken in ascertaining and settling the elementary
principles of the physical sciences that they are so
well understood, and so few differences of opinion
prevail about them ; and it is because such care
and attention has never yet been bestowed upon
settling the definitive and elementary principles of
monetary science that it is still in so confused,
controverted, and unsatisfactory a state." The
truth and force of these remarks are self-evident,
and tend to impress the reader with a favourable
opinion cf a writer whose general aim is so definite
and practical—an opinion, we will here add, which &
careful perusal of the work will increase in the minds•
of many to confidence and respect. Mr. Macleoa.
evidently possesses a prehensile and logical mind
—conscientiousness, and a knowledge of his subject
and mode of dealing with it, which could only have
been acquired by laborious application ; and with
committing ourselves to a strict concurrence iffle
his views, we can have no hesitation in predicating
of his work, judging by what has appeared, that it
will prove a very valuable contribution to the
supply of a most important desideratum.
In pursuance of his object, and in perfect bar'
molly with the views previously quoted, the author
first examines the general principles on which
monetary science is based, and the fundamental
ideas involved in it; considering it simply as,,,
science ; and, these being established, proceeds f e
,„.° -
trace their gradual adoption and developmos„t
practice. The first chapter is devoted to settle
the definitions of the different expressions an
technical words, peculiar to monetary science ;
in order to secure greater accuracy and preci-
sion, the circumstances under which each tech-
nical expression —including the fundamental
one, the Currency—originated, and the wai3ts
it supplied are briefly and lucidly narrated. 13
the following we have what the author conceives
to be the most perfect idea of a currency :
" The use of a currency being to record an d
transfer debts, if we could imagine a great Public Book;
kept by the national authority, in which, every one wag
entitled to record his services, which should be valmed
at a certain amount in figures, it would present the twist
perfect idea of a currency. For any one who bad credit'
in that book might require the services of another person,
and give an order to the national book-keeper to transfer
the figures denoting their amount from his own to ,biLg
creditor's column. The book itself would be the record .
of the evidence of the debts, the total amount of the
futures at the credit of each person would be the total
amount of the currency in the country, and the tranlife-
rence of the figures from one column to another would be
the transference of the debt, and would denote an opera'
tion, just as the transference of money from one person
to another, and the amount of these transferences would
he the circulation."
The idea being established, the author proceeds to
consider the different kinds of currency, and what
is and is not currency, and to settle other defini-
tions. The reader, however, may wish to knot
what Mr. Macleod includes in the term currency :---'

" The amount of the currency in any country ig
the aggregate amount of it belonging to every individual•
Now, whatever represents the amount of debt due to auf
individual, overand above his possessions in commoditie Fp
in whatever form that debt be recorded, whether met:ll
or paper, or whether it exists simply as a debt, is 6l►e
amount of currency belonging to him. Whatever there•
fore confers the power of demanding services or cornrow
dities, or professes to confer the power of demanding
them, is the currency or circulating medium of any single
person : and includes not only the current coin of the
realm, but all its substitutes of every description, ana
whatever else represents or displaces it. Adopting this
definition, we may enumerate the different species of it
as fdlowW:-1. Coined money : gold, silver, and copper;
2. Bills of Exchange, including cheques ; 3. Promissory
Notes, including Bank Notes ; 4. The sum standing at
his credit in his Banker's books ; 5. Private debts due
to him."

Subsequently the opinion that a private debt is to
be considered as currency is maintained and de-
fended. The Theory of Prices, involving the much'
vexed question of the action of the issues of banice ,
upon prices, is next considered, and, to facilitate
comprehension, the causes which produced a change
of prices is carefully investigated, a few extreme
cases being taken—the causes which influence
prices in such particular instances being analysed,
with the following result :
" Price varies directly as the intensity of the ser-
vice rendered, and inversely as the power of the buyer
over the seller, which may be thrown into an arithme-
tical form, thus—
Price Intensity of service rendered.
Power of buyer over seller.
This expression properly interpreted will be found to be
of universal application, and to comprehend all transac-
tions of whatever nature they be, whether by way of
wages, rent, or price."
A number of examples and illustrations of this
general formula are given, and some principles of
preceding writers, including Ricardo and Adam
Smith, on the subject controverted. An accouo
of the different substances used as currency by dif-
ferent nations, and the different changes in weight
and fineness which the English currency has under'
gone, follows ; and the nature of Interest, the
causes which govern its rate, and the peculiar
method of Discount which bankers practise, the
whole theory of Credit and of Exchanges, are next
treated—the above six chapters in all embracia
the whole theory of the subject. In the seventhchapter the rise of Banking and the progress made
in it by the nations of antiquity, its revival in the
middle ages, and its rise and progress in Scotland'
_
with an account of the existing system in 00
country, are narrated ; the eighth and concluding
chapter of the first volume tracing the rise an',
progress of Banking in England. In a second
volume the subject, we are told, will be continued'
The functions of a bank are thus described : A
,4 The functions of a Bank, then, in the corninerciri
body resemble those of the heart in the human body'-
attracts to itself capital, the life blood of commerce, frora
every direction, in the minutest rills, and having
accai
mutated it in a great reservoir, propels it through as
the arteries and channels of commerce, vivifying an,.
nourishing it, and spreading vigour and health throug'
the whole commercial body."
With this imperfect notice we must content our'
selves for the present, intending to return
to
book on a ftiture occasion.

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