The Sun.
London, England, 1855-05-18 00:00:00

THE MONETARY SYSTEM.

A meeting of several gentlemen, specially invited by
the Mayor, was held on Tuesday evening, at the Ex-
change Nottingham, to confer with John M. Knott,
Esq., of Kenilworth, on the above important subject.
The Mayor, who took the chair, having requested Mr.
Knott to open the question, he addressed the meeting:, to
the following effect : —The period is at band on which
the Government should give notice regarding the discon-
tinuance of the Bank of England Charter Act ; and it be-
hoves all those who are most interested, including manu-
facturers, tradesmen, and professional men to be on the
alert to procure a supply of suitable money, and a suffi-
ciency of it, to !beet the requirements of production
and commerce, and to put an end to the pre-
sent fluctuating and crushing system—introduced
in 1819, and completed in 1844. It was affirmed
that our National Debt and large indirect taxation
do not consist with metallic money of intrinsic value
at the price of the world, and therefore the exist-
ence for many years in this country of Bank of England
and country bank notes. This principle of relief, it was
shown, had been so seriously obstructed by this tamper-
ing of public men in the periods referred to as to create
great pecuniary embarrassments. It was shown that the
proportions of currency to population in Great Britain
ranged thus in the years specified :

Popu- Bank of Eng- Country and
lation. land Notes. Scotch Notes. Total.
In 1818 14 millions. 28 millions. 23 millions. 51 mi lions
1854 21 millions. 20 millions. 11 millions. 31 millions.
Or about 31. 10s. each for a population of fourteen mil-
lions, and 30s. per head for a population of twenty-one
millions. Premising that the nature -of money used in a
country should be considered with reference to the prices
to be expressed—in our case combining large taxation
with natural value—the contractions we have suffered
in monetary affairs were shown to have arisen from the
attempt of theoretic legislation to render the bank notes
in circulation strictly conformable to gold ;—the at-
tempt was described as positively antagonistic with the
fair and just adaptation of prices to our highly taxed
condition in this country, and as clearly productive of
the commercial or rather monetary panics of 1822, 1825,
1836, 1839, and 1847 ; panics in which the property of
all men engaged in trade had been for the time of their
prevalence depreciated fully 30 per cent.—a state of
things from which this country is now only delivered by
arrival of metallic treasures from California and Aus-
tralia—which arrivals it was affirmed passed through
this country as through a sieve, leaving our monetary
circulation almost as sensitive and fluctuating as it was
before their discovery. Here illustration was afforded
by reference to the "Bank of England Barometer,"
recently published by Letts, which Mr. Knott stated
should be consulted by all persons likely to be affected
by the fullness or scarcity of money. The fact that
we never had in this country a period of sustained
remuneration in price when the Bank of Eng-
land note circulation was materially under 24 millions,
was placed in comparison with the much longer period
during which the commercial interests of this country
have been struggling with a sum under, rather than over,
20 millions, and this under the action of the Bank screw
—applied as it was— as the inevitable law of the existing
j system, to check the departure of gold in 1853—that is to
say, to force down the prices of this country so as to
render them cheaper for exportation than the gold neces-
' sary. to the convertibility of our paper money. The
action of this strange operation was shown by references,
to questions and answers of the governor and deputy-
governor of the Bank of England, on occasion of the
Commons' committee on commercial distress in 1848.
The answers adduced were those numbered 3,278 to
3,283 inclusive. The act of 1819 was declared to have
proceeded on the egregious error of Mr. Ricardo and
others, that its operation would not diminish
prices more than three or four per cent., while
it was soon admitted that by the fall in prices
it had aggravated the national debt and taxation
30 per cent., as proved by silver coins of that period,
produced by Mr. Knott, and showing that full difference
between the intrinsic value of the coinage as at that
time and at the present. Prices it was affirmed had
been reduced as much as the currency was appreciated.
No wonder, therefore, it was remarked, that the princi-
ple of the act of 1819 had, of necessity, been mitigated
in the years '22, '25, and '36 ; that this country had
never enjoyed a prosperity except in perisds of its prac-
tical suspension ; and no wonder that when, by the mis-
chievous legislation of 1844, it was rendered an inflexible
reality, it gradually prepared the way for the terrific
p alit of 1847. The attempt at gold convertibility was
shown in figures to be a mere fiction unworthy a great
nation like this. The attempt to erect the measure of
value of gold into a standard of value was denounced as
fraught with the depression of honest, but smaller capi-
talists, and with the comparative misery too manifest in
the working classes. Here a passage of a speech of
Lord J. Russell in the House of Commons in the year
1844 was read, in which he showed that, com-
pared with the last century, there had been a deplorable
diminution of the comforts and social condition of the
labouring classes, while luxury had overspread the more
wealthy portion of the population. A comparison was
drawn between the effect of the system of money which,
with all its defects, nourished industry during the long
Eurep.-an war, and that which now exists under conver-
tibility at a fixed price of gold. The seventy millions of
taxation paid cheerfully by a population rising to four-
teen millions only, was contrasted with the fretfulness
felt at a similar extent of taxation at this time, while the
seventy millions of loan during some years of the war
was adduced in proof of the prosperity afforded by the
monetary system of that day. It was alleged that this
action is essentially one to be fostered by credit ; that
credit is, in fact, a proper consequent of civilisation,
while it appears to be the object of some modern
statesmen to force us back to a condition of barter
and to disallow the working of our mines of coal,
iron, and lead—our mills and our machinery—in the
arts of life, unless we can first measure our operations
by the presence of a metal of foreign production. The
effect of panics was illustrated by the case of an indivi-
dual who he would suppose bad embarked a sum of capi-
tal, partly borrowed, say of 10,0001., in a business con-
sisting of plant, stock, and debts ; that, ao ing upon the
spirit of this commercial age—engendered by large capi-
talists—of small profits and quick returns, he had in-
curred a liability to the extent of some 20,0001. or 25,0001.
per annum, and was suddenly brought under the influ-
ence of one of our periodical panics. His banker, under
the pressure and alarm he felt, had unwillingly come to
the determination of diminishing the scale of his accom-

modation to customers, and declined to discount in con-
tinuance the ordinary paper of this tradesman, which
did not exceed the usual dates of ,his trade. Rather
than resort to the Jew, and wrong his creditors
under usury, he stopped payment. His assets at once
became depreciated 30 per cent. ; and where was his
capital ? It had totally disappeared. He appealed to
his creditors ; they offered to accept 15s. in the pound.
His friends, sufferers already, dare not come forward
with the requisite security or means—arrangement could
not be effected—ruin succeeded, and in the midst of
panic, bankruptcy wound up with a dividend smell, in-
deed. This, it was observed, was a type of a deserving
and middle class or tradesman ; and on this class was
our monetary system now telling at the present mo-
ment, notwithstanding the Bank of England screw had
brought back three millions of gold to her coffers. The
increase from twelve millions had not enabled the pro-
ducers of the country to enjoy more than the addition
of a "million t 6 the circulation of Bank of England
paper ; 'each million of which withdrawn, or added to,
involved the destination or fate of the several millions
of bills of exchange they sustained. Mr. Knott said
he was not there to propose a substitute for the pre-
sent system ;—that end might be • effected in more
ways than one. But he would say this much, with
confidelice : Gold is mainly valuable to us in our fo-
reign exphange. Why not, then, at once solve the
difficulty by carrying out honestly and consistently the
principle of free trade, putting gold at its market price
in a suitable, sound, and sufficient paper money of the
realm, limited by Parliament, and receivable in taxes ?
He concluded by observing that it was the oppression
and inhumanity of the system that induced him to enter
into explanations like this, and this because under the
existing system we witness those who produce our wealth,
year by year, insufficiently fed, clad, and housed. He
desired to see such an alleviation in respect to prices,• of
our present erroneous system, as would secure " a fair
day's wage for a fair day's work," without plunging the
liberal employer and capitalist himself into bankruptcy,
At the conclusion, Mr. T. H. SMITH. put some ques-
tions to Mr. Knott, and particularly as to the working
of the proposed system in preventing imprudence. It
was replied that no legislation could prevent imprudence,
and that it carried its own punishment and correction.

Mr. WRIGHT observed, that if Mr. Smith's questions
implied that the present system tended to prevent im-
prudence, it should be considered that it was calculated
to create imprudence and foster speculation—rendering
money at one time a drug, and at another almost un-
attainable ; thus reducing commerce to a system of
gambling.

Mr. FELHIN said he bad listened with great attention
to Mr. Knott's remarks, and wished he had dwelt
more on the very important contrast he had drawn be-
tween the proportions of currency now, with those dur-
ing the war ; that he had long been convinced that some
great defect existed in the act of 1844, which -admitted
such enormous fluctuations in the value of money ; and
after entering at some length into the subject, proposed
that the Legislature should be requested to institute an
inquiry into the working of the act.
Mr. WRIGHT replied that Parliamentary inquiry had
already been made, and in vain ;--that the inquiry in.
1848 after the panic, when he was examined, had pro-
duced a large blue book, which no one read ;—that the
Report of the Lords' Committee was indeed a most ela-
borate and excellent one, declaring that the act of
1844 had produced the panic of 1847, and that, if
it hid not been suspended, the Bank of England itself
would have stopped payment ; that in the Commons, on
the other hand, it had been contrived that the Commit-
tee should in the majority consist of the originators of
the act, including Sir R. Peel himself, who passed a vote
that it was not expedient to make any alteration
liain.the
Houses act ; that the reports of the two . of
Parliament
thus neutralising one another, leg!
8i arelp, however,on had been
report,
avoided altogether; that the Lords'
remained a great fact—that it deservedtob eabtehteramanual
of all currency reformers, and that a useful
had been published by the Currency Reform Associa-
tion.
Mr. S,NOTT added, that the reapnodrt
inoft the e
teeth of Commonsth
drawn up in defiance of b
evidence,e
to which Mr. Knott
was a great discredit, and
the Legislature.
Mr. BIZASLT put some questions,
replied.
mto the effect of the pro-
e. ToMLINSON inquired as
posed system in case o
scarcity
and war ; when Mr.
Knott showed that the system he suggested would be
better in both cases, and that the gold, at presentlocked
up in domestic circulation being set at liberty, provision

• would be made for the purchase of corn without the
pressure now experienced.
legislative Mr. T
q.
11:-1:31!Tr or
had bbseeernved that a
defeated,
feate
d,s
heth the fair re
would propose
po
soef
that every eliolt should be made to prevent the act of
1844 being renewed.
After Rome discussion, it was resollvTEi, "Thatedonthe ourmo atiotn.
of Mr. FELKIN, seconded by Mr. SMITH,
tention having been directed to the fact that the Bank
Charter will, be continued in operation unless notice of
its discontinuance be given to the Government this year,
it is the opinion of this meeting that it would be both
inexpedient, unsafe, and unwise, to renew the Bank
Charter Act of 1844, and we resolve that we will do all
we can to resist its renewal by petitioning the Legislature
against it, as well as by calling public attention to its
evils."
The resolution having been put by the MAYOR, it was
carried unanimously.
Mr. FELKIN and Mr. SMITH then proposed and se-
conded a vote of thanks to Mr. 'Knott for his able and
interesting address ; and Mr. Knott having returned
thanks the meeting closed, with an understanding that
the gentlemen present constitute a committee to carry
out the object of the resolution.