The Sun.
London, England, 1848-08-09 00:00:00

THE CURRENCY.

The Lords' Committee, reporting on the Currency
Act of 1844 (which Sir R Peel called " the complement
of the Act of 1819"), describe it as " an attempt to en-
force by law, under all circumstances, one fixed and in-
flexible rule for the management of a National Bank of
Issue." This attempt, they say, " seems inconsistent
with the best written authorities, with the general prin-
ciples of economical science, as well as with the testi-
mony of many witnesses of practical knowledge and
experience." The Committee are, however, not content
wiat merely describing the Act of 1844 as a failure, in
so far as it might have been expected to carry into effect
an important and beneficial principle. They speak
strongly of its injurieus operation. "It can hardly
tail," they say, "to be productive of most serious
evils, more especially when a contraction of issues,
indispensable in a state of adverse foreign ex-
changes, is rendered imperative, as it is by the Act of
1844, under circumstances which may be wholly oppo-
site." It has been shown, they affirm, that "an enlarge•
rnent of the issues of the Bank under a favourable
foreign exchange would frequently be expedient at times
when, under the provisions of the Act, no such enlarge-
ment wonld be possible, and even in cases where, by the
Act, a compulsory contraction would be enforced.' We
ourselves have, we must confess, no great confidence in
what are called the " best written authorities ;" nor are
we very deeply moved by an appeal to the " general
principles of economical science." All this is
well enough if it be absolutely necessary to fall
in with the new-fangled views and political
pedantry of the day, but we do not think it is. We
are of opinion that the good or ill effect of a currency
system should be tested, not by written theories, or by
the assumed principles of what certain persons presume
to describe as " political science," but by the effect which
e?cperlence shows the system to have had upon the ope-
rations of commerce and the general condition of the
people. All the theories and all the scientific principles
(which are in truth not scientific principles at all, but
mere assumptions,) that can be appealed to in respect to
the Act of 1844 are mere " leather and prunella, ' com-
pared with the one striking fact that a terrible monetary
pressure came, notwithstanding the existence of that Act,
and that when it did come there was no way to stop the
tremendous tide of ruin which was spreading over the
commercial world but by a suspension of the law of
1844, upon the authority of Government. There:
fore, though there are many things in the report of
the. Lords' Committee with which we cannot have the
satisfaction of recording our concurrence, we do per-
fectly agree in what they say of the testimony against
the Act of 1844 which was afforded by the authoritative
suspension of it in October, 1847. It is difficult, they
say, in the judgment of the Committee, " to appeal to
more demonstrative evidence than is to be found in the
Treasury letter of the 25th of October. That letter was
a practical repeal, by an act of authority, of the restric-
tive clauses of the Act. It appears impossible at once
to defend the restrictive provisions of this Act, and to jus-
tify the letter which in this respect abrogated, or, at least,
suspended, those very restrictive provisions. The Commit-
tee consider that those restrictions materially aggravated
the pressure, and produced the panic of October, 1847.
But, even if those restrictions were originally defensible
when enacted, their hold on opinion, as well as their
authority in practice, have been materially impaired by
the letter by which they were superseded—by its ac-
knowledged necessity, and by its undeniable success.
The precedent is established, and its application will in-
evitably be called for on other occasions, and it may so
happen that the principle of relaxation will be applied
under circumstances less urgent and less justifiable than
those which occurred in 1847. The Committee are
therefore of opinion that it is expedient for the Legisla-
ture to provide specifically for the manner and the re-
sponsibility of relaxing these restrictions in times when it
can be done consistently with the perfect convertibility
of the note—an obligation which should never be for-
gotten." Such of our readers as have taken the trouble to
attend to the arguments which we have from time to
time laid before the public on the great monetary ques-
tion will not require to be informed that our views upon
the subject of the "convertibility ". of hank notes are
not similar to those avowed by the Lords' Committee.
But we cannot expect that they who regard with defer-
ence the assumptions of a theorising school, and who call
those assumptions by the name of " the principles of
economic science," should agree with us upon the main
point of the currency question. The time, however,
we believe will come when these assumptions will be
treated as they deserve, and when the lessons of experi-
ence will be appealed to (as they always'ought to have
been), in order to decide what description of money is
most convenient for this nation, and most conducive to
the general prosperity of the industrious classes. When
,hat time arrives the only sort of convertibility
of the bank-note that will be cared for will be its con-
vertibility into the commodities which an owner of
money may desire to purchase. Gold coins and gold
spoons will then be regulated in price by the supply of,
and the demand for, the metal of which they are manu-
factured, and the skill required in their manufacture.
Money will not be subject to the fluctuations of an article
of merchandise, but will be carefully given out and drawn
in by the State, according to the exigencies of the people
and the course of commerce and of credit for the time
being. But nothing can, we think, be more absolutely
incontrovertible than the proposition enunciated by the
Lords' Committee, that it is impossible at once to
defend the restrictive provisions of the Act of 1844,
and to justify the act of the Government in
October last, which abrogated or suspended those provi-
sions. No one can pretend that the fact of the Govern-
ment having to suspend the action of an Act of Parlia-
ment, without the authority of Parliament for so doing,
is by itself a good thing. If the suspension of the Act
was wise and necessary, then it is to be regretted that a
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sidiary authority in the realm could do What was politic,
and wise, and necessary, without a violation of the law,
or, what amounts to the same thing, a sanction of the
Executive Government to the violation of the law if a