The Sun.
London, England, 1840-03-30 00:00:00

REGULATION of the CURRENCY.

On the principal question discussed by Mr. Gilbert,
in his pamphlet on the Money Market in 1839, namely,
the principle of regulating the issues of the Bank of
England by the Foreign Exchanges, we think it is right
to allow him to speak for himself. We lay, therefore,
the following extracts before our readers :
" The great objection to ths doctrine of regulating the
currency by the foreign exchanges is, that it causes a per.
petual fluctuation in prices. When the exchanges aro
favourable, more notes are thrown into circulation, and
prices advance. When the exchanges are unfavourable,
the notes are withdrawn, and prices fall. And, gentle
reader, mark you this—that if the increase of the notes in
circulation amount to, say one-tenth, it will cause an in
crease of more than one-tenth in the prices or commodi-
ties, and, on • the other hand, if the circulation be dimi-
nished one-tenth, the fall of prices will be more than one-
tenth. Thus, if the circulation be 20.000,0001., and it
be first raised to 22.000,0001 , and afterwards reduced to
18,000,0001., the scale of prices will vary over a wider
range, and from the highest to the lowest point the differ-
ence will be very considerable. Now mind, that in con-
tending that this doctrine must produce a perpetual fluc-
tuation of prices, as the exchanges may vary, we are not
ascribing to it any effects which its advocates do not ac-
knowledge. Nay, they contend that we ought to produce
these fluctuations—that when gold accumulates in the
Bank of England, we ought to put out more notes, for the
express purpose of causing en advance of prices, and thus
driving the gold out of the country ; and that when the
gold is going out of the country, we ought to pull in the
notes, for the express purpose of producing a fall in prices,
and thus of bringing the gold back again. And they con-
tend, moreover, that the plan of making prices rise and
tall in this way, as the exchanges may turn, is the best
possible way of managing the currency, and, in fact, the
only sounu principle' on which it can be managed.
" In all countries the amount of the currency will fluc-
tuate to a certain extent, in consequence of the increase of
trade, the increased quantities of commodities, the advance
of priers from scarcity, and other causes. The witnesses
from Scotland, who were examined before the Parliamen-

tary Committee of 1826, stated that the circulation of
Scotland increased regularly at fixed periods when certain
payments were mede. In the south of Ireland the notes
in circulation in the month of January arc considerably
more than the amount of those in circulation in the niontn
of July. This is occasioned by the corn, butter, and
bacon trade. In these cases the increased issue of notes
does not affect prices, and occasions no alteration in the
foreign exchanges.. Now if the currency is to be regu-
lated by the foreign exchanges, all these legitimate
changes in the amount of the currency must be counter-
acted. If the exchanges are unfavourable, the currency
must be reduced, though the state of trade may require its
extension. And, on the other hand, if the exchanges arc
favourable, the currency must be increased, though the
state of trade may not require it. The latter was the case
in the year 1837. It is obvious, from the circulation of
the country banks and from other circumstances, that the
state of trade in that year did not require an enlarge-
ment of the currency, yet as the exchanges wore favour-
able, the Bank of England increased her issues during the
whole year: The money was not absorbed by the trade of
the country, but accumulated in the hands of capitalists—
interest consequently fell—and to obtain higher interest,
the capital was ultimately invested in American Securi-
ties ; this was the first step towards producing the pres-
sure of 1839.
But we are told that were the circulation wholly metal-
lic, it would vary in this way so as to cause a perpetual
fluctuation in prices, and that hence a paper circulation
`ought to be made to vary so as to correspond. We dis
pute both the reasoning and the fact. Admitting the
fact, that a metallic currency would produce this et,rnal
fluctuation in prices, we contend that this would be no
reason for making a paper currency to fluctuate in the
same way. A paper currency is employed to obviate some
of the inconveniences of a metallic currency, and why not
obviate this inconvenience ? Will it be denied that a
perpetual fluctuation in the prices of all commodities is
an inconvenience ? And if a paper currency can be so
managed as to obviate this inconvenience, ought it not to
be done ? But we dispute also the fact. We do not ad-
mit that a currency, purely metallic, would fluctuate in the
mode described. If a large quantity of gold and silver
bullion were imported, it would not form part of the cur-
rency until it were converted into coin ; while in the
state of bullion it would have no more effect upon prices
than though it had existed in the form of gold watches
and silver spoons. To convert it into coin would occupy
time—and afterwards it must be diffused through the
country before it would cause a general advance of prices,
and before this was effected an unfavourable turn of the
exchanges might cause it to he again exported. But un-
der our present system. the gold and silver imported are
taken to the Bank of England, and instantly turned into
bank-notes. This has the same effect as if the bullion
n
could be immediately coined into sovereigns and sh;lli gs
and possessed also the rapidity of diffusion that is peculiar.
to paper money. It is clear, therefore, that to regulate our
paper money by the Foreign Exchanges, is
not to make
the currency fluctuate in the ame way as it would fluc-
tuate in case it was wholly metallic.
Again, we ask, whether this plan of issuing notes upon
deposits or purchases of bullion does not produce the same
effects as though the Bark should issue her notes
upon
lodgments of cotton, or silk, or tea, or any o
commo-
dity ? We should censure, and justly too, the conduct of
a country banker, who had commenced corn-merchant,
and inundated his district with notes issued in the pur-
chase of corn ; but would his conduct be at all more cen-
surable than that of the Bank of England, who inundate
the country with notes issued in the purchase of gold or
silver bullion ? It may be said that, when the country
banker's notes are presented for payment, be could not ho-
sour them until he had first sold his corn, white the Bank
of England, having not corn, but gold, could pay off her
notes when presented. Supposing this to be correct, this
would not counteract the evils produced by the excessive
issue. The notes would not be presented for payment to
the Bank of England until the Foreign Exchanges had
become unfavourable. But the mischief would then have
been done, and the prompt payment of the notes would
not counteract the evils produced by the high prices and
speculations that followed the excest.ive issues_ ; and let it
be observed that when the exchanges have thus been ren-
dered unfavourable, it. is by no means certain that the
I amount of notes for which gold would be demanded of
j Bank of England would be limited to the amount of the

MY LORD,—As an Englishmen well acquainted
with, and taking a deep interest in, the condition end
welfare of Ireland, I cannot retrain from (5.0 grat ulatirK
your Lordship on the comparatively harpy 41,d pros-
perous state of that country under your Lordship's
vice-regal government. In daing this I do not for a
moment lose sight of the fact that there is vet ioueli
misery and suffering to be alleviated, many and great
grievances to be remedied, and a wide field tor the men-
tal and moral improvement of the Irish people. ye:,
my Lord, if we compare the present condition of Ire-
land with its state a few years ago, and regard without.
prejudice the facts which present themselves to our un-
derstandings, we cannot deny that a great improvement
has taken place—to whatever cause that amelioration
may be attributable—whether to the conciliatory course
of policy pursued by the existing government of this
country ; to the improved state of feeling which is gr6.,v-
ing up between the higher and the lower (lases of :0-
ciety ; to the superior treatment of the tenautr'
landlord or his agent ; or to the march of mind and de-
sire of improvement among all,
My Lord, I have travelled through most parts, of
Ireland, and have had ample opportunities of ebserv;ag,
its state both in the busy flourishing town, and the rt.-
muter parts of the country, where much wretchedness
presents itself. I have not, my Lord, been a superfi-
cial observer, nor have I made a tour through the
island for the fashionable purpose of writing a hr,ok.
But I have been led into the study of the state of Ire-
land by the duties of my profession—that of a land-
valuator and estate agent—an avocation which, from
the fact of its involving the value of property to a large
amount, allows not of superficial examination. I have
from time to time, within the last seven years, he.en
frequently called upon to value and dispose of a east
extent of landed property in various parts of Irelanit
and I have been delighted to trace the graduallv-i5-
creasing confidence in the safety of property in that
country, notwithstanding the assertion that in Ireland
there was no security either for life or property.

One of the most important improvements still to be
effected in Ireland consists in establishing a better sys-
tem in the cultivation of the land, which would inevita-
bly lead to an amelioration in the condition and habits
of the people. I have been much struck wit-h the im-
providence, bad management, and want of foresight
which characterize many of the Irish farmers. I have
found them and their families in a state of extreme po
verty and wretchedness, wholly destitute of the comforts,
and not unfrequently of the necessaries of life. On
questioning them as to their landlords, I have learnt
with surprise that they rented under the most liberal and
considerate men, and held their farms at a rate consi-
derably under a price at which they would have been
positively cheap with better management. This la-
mentable state of affairs, I believe, is mainly to be attri-
' hilted to intemperance. Brought, then, as lam to the coil-
, viction that to the habit of excessive indulgence in whiskey
drinking, which has prevailed to so fearful an extent in
Ireland, is attributable so large a share of the crime and
sufferings of the people, I cannot but express the satis-
faction which I have experienced in observing the
march of " tee-totalism," which has been so auspicious:y
commenced, and which cannot fail to be productive of
the most beneficial effects on the Irish peasantry. The
progress which it has made and is still making in Ire-
land is altogether unprecedented elsewhere, and the
name of Father Mathew, the apostle of abstinence in
that country, deserves to be handed down to posterity.
For his meritorious exertions in rescuing so many thou-
sands of his countrymen from the misery • conseqt*nt
upon habitual intoxication, cannot be too highly praised.
The effects of this modern remedy are already manifest :
and by some (the distillers) seriously and injuriously
felt, particularly in Cork, where numbers of whiskey
shops have been entirely shut up, while others have
been changed from spirit stores into shops for the sale
of bread and bacon, and the other wholesome necessa-
ries of life.

The conduct of Father Mathew has Ity- seakee-lacea
ridiculed, and by - others vilified, while by a few Les
motives have, as I conceive, been most unjust;y caCed
in question. But although I do not approve of tke
doctrines cf that Church of which the Reverend Gentle-
man is a consistent member, I can conscientously bear
testimony to the uprightness of his character as A matt.
and his zealous and faithful discharge of the duties of
a minister of religion ; and I most firmly believe he Is
working out a great moral reformation among the vic-
tims of a most vicious habit. Of the purity of his
motives and the sincerity of his acts I am equally well
satisfied. His disciples, too, have been found to adhere
most scrupulously to the pledges they have entered into
for abjuring the use of ardent spirits ; pledges perfectly
unobjectionable in themselves, and of the highest moral.
tendency. I was present, me Lord, at a meeting for
the enrolment of members, and nothing could exceed
the order and propriety of the proceedings. Even the
most bigoted and fastidious cannot with m:son urge tine
shadow of an objection to a voluntary promise made to
abstain from a gross and demoralising propensity. .
Let it not•he supposed, my Lord, that I ant so great
an enthusiast as to expect that everything shall i,4 ef-
fected for Ireland through the instrumentality of teal-
perance alone. There will be much to be done i.'.tora
the people shall have become a sober and industrious
race ; and much room for alteration in the system of te-
nantry which prevails among them. The evils artsiog4
out of the objectionable practice of sub-letting are at-1'
knowledged on all hands to be great and grievous ; and
the only sure way of getting rid of these evils is euti:ely
to abolish the custom. It is well known that the drain= ,
ing and other improvements of estates are altogether out
of the question with sub-tenants, who, from the oppret- .
sion they suffer, are wholly destitute of the capital and
energy necessary to carry them into effect. I would sug-
gest that a reciprocity of interest should be encouraged
between landlord and tenant—their interests aro blended
—the tenant cannot suffer and the landlord escape ; for
if the former be reduced in circumstances so as to crip- ,
plc his means of cultivation, the latter must suffer even
to a greater extent than bis tenant. I can affirm
from my personal observation since the year 1833 that
the management and cultivation of land in Ireland
have been progressively improving. The tiuth of that
assertion is attested in my evidence before the Commit-
tee of the House of Lords ; and since that inquiry I
have experienced fresh proofs of the facts. I ant at
the present time negociating large loans at 4} per cent.
on Irish property : and recent purchases of extensive
Irish estates may be adduced as evidence of a similar
character. Lord Viscount Hawarden in January last I
purchased the estate of Glennough, county TipperarY,
about eight miles from Cashel, consisting of 2,600 /macs,
The estate had been advei•tised to be disposed of by
public auction on the 14th of that month, but his Lord-
ship purchased it by private contract the day before that
fixed for the sale. And still more recently the Earl of
Stradbroke has boqht for a large amount the Glenahirey
estate, the property of the late Lord Midleton, in :lie 1
county of Waterford. This also was purchased by pri- '
vate contract previously to the day appointed for the
sale. Much of this improvement has arisen from the
judicious encouragement given to tenants by their land-
lords, who, in making small advances for the purpose of
building houses and draining the lands, have contributed '
a good deal to induce a taste for those comforts which
lead to a love of civilization and order, and quicken the
spirit of industry.
These things are not, it may be urged, the work of
a day ; but it is only by constantly calling public atterr- '
tion to them that means will be devised for their ac-
complishment ; and surely there are too many circum-
stances in favour of Ireland for her countrymen or her
friends to despair of success. The gigantic and unri, '
valled power of steam has been called in to her aid,
joined
together England and Ireland are now, as it were,
together by a bridge of boats. The time w,fill, more- 1
ever, doubtless arrive when Ireland shall experienoe
the benefits of rail-road communication, connecting the
remoter parts of the country with her cities, towns.:
and ports. Should not, then, the great advances 4
which have been made already, when remembered irs
connection with what may still be effected, encourage
the friends of Ireland to use every exertion to raise her',
to a 1 levels
c opirfossyerhitayviwnigthttahkisengrethate libertyoountry ?
my Lord, to
point
out these
matters to your Lordship's notice shall be
t
the means of calling the attention of others to subjects
of O
I shall myself feel the highest,
Idgree much
of ,ceand know that I shall be Qxeusea
.satiimsfpaocrtitoann
by your Lordship. _
es

I am, my Loid,
Your Lordship's mcst obedient bumble servant,
W. W. SIMPSON,
8, Montague-place, Russell-square, Feb. 25, 1840.

•
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