The Sun.
London, England, 1834-12-10 00:00:00

B'ank, which is the only receptacle for gold in this

country, in order to escape from the degradation
brought upon it by over-issue; and if it cannot escape
degradation by coming into the Bank, which it cannot
do if the over-issue continues, it betakes itself abroad,
or is melted down, for which purposes the Bank is
drained of its gold, until by contracting its issues, the
exchangeable value of its notes is brought up to the
exchangeable value of gold, when the drain ceases.
The amount of the depreciation, while it lasts, is
marked by the foreign exchanges rising against this
country. But an error is committed in the mode of
estimating the exchangeable value of gold in different
places. Thus we find notices from time to time, in
the public prints, stating that the ounce of gold costing
so mtich per mark in Hamburg, and the price with the
agio being so much per mille at Paris, these at the
English mint price of 31.175. 102 d. the ounce, give an
exchange of so much at short, and the actual exchange
being so much more or less gold, is thus shown to be
dearer or cheaper at Hamburg and Paris than in Lon-
don, as the case may be. According to the latest of
these quotations which we have observed, gold has
been stated to be about 11/. per cent. dearer in Ham-
burg, and about 31. per cent. cheaper in Paris than in
London, a difference in the nature of things absolutely
impossible. But as we have already shown, there has
been no mint price here since the year 1816, and the
only way of ascertaining the prices of gold at any of
the three places, is to ascertain by the market price at
Hamburg, Paris, and London, how much silver is re-
quired to purchase an ounce of gold, adding in the
case of Paris the agio paid for gold, and if the same
quantity of silver at each of these places will purchase
an ounce of gold, then gold is of the same exchange-
able value at all of these places. If more of silver is
required to make the purchase at one place than at
another, then is gold at such place of more exchange-
able value than it is at the other ; and if less of silver is
required, then is gold of less exchangeable value, and
the course of exchange marks the difference. The
course of exchange, however, is also affected by mer-
cantile transactions; but Great Britain having a greater
number and quantity of commodities to exchange with
every other country than any other country has to ex-
change with her, more of gold and silver in exchange
for commodities comes into Great Britain than comes
into any other country. The mercantile exchange is
therefore always in favour of Great Britain, and it is the
fault of the Bank of England, through its over-issue, if the
money exchange is ever against her. But though adverse
exchanges thus show that our currency is depreciated---
that is, that Bank-notes are of less exchangeable value
than gold—and though it presents a limit, and affords
a check, to over-issue, yet adverse exchanges do not
prevent the over-issue which has produced them ; and
even when the check comes into operation, it may be
for the interest of the Bank to allow it for sometime
to work its consequences, because the Bank may have
at the time (as it had in 1814) an over-stock of gold,
of which adverse exchanges may be the most conve-
nient way of relieving it. But the subsequent con-
traction must be in proportion to the quantity of gold
thus previously taken from it, and the severity of loss
to the country must be in the same proportion.

Nevertheless, the check shows that the excess of
currency, that is, over-issue, is corrected by the course
and operation of things. Would not then the excess
be prevented by the course and operation of things,
if that course and operation were not superseded by the
sole and exclusive power of issue continued to the
Bank in the metropolis, and 65 miles around it? Is
there excess in Scotland, where the operation of this
exclusive privilege has never prevailed ? Is there any
excess in the country of England, where the operation
of that exclusive privilege does not now prevail more
than it does in Scotland, excepting to this extent,
namely, that general prices are raised by the over-issue
of the Bank of England, and the amount of the Bills
of Exchange discounted, the amount of the temporary
accommodations required, and the amount of the sums
paid on cash credits, are encreased in proportion to the
general rise of prices thus occasioned ? But this is a
consequence of the over-issue of the Bank. The mere
fact that the Bank issues are nearly double those of
the country banks, shows that the over-issue, and the
consequences of over-issue, must always be with the
Bank, and cannot be with the country bank. The
Bank may avoid over-issue, as the country banks
avoid over-issues, by not using their notes otherwise
than as instruments of exchange, and never as capital,
as the Bank now does. But an effectual check will
never be put to the over-issue of the Bank,
until it shall be subject to the same check
with that to which country Banks are sub-
ject,—namely, the issue of notes by other
Banking Companies in the metropolis. The total
amount of currency required, never can exceed the
amount necessary to put and keep the labour and
capital of the country in motion. Every country bank
takes care that any other country bank shall not have
more of this amount of currency by the issue of its
notes than any other bank can prevent ; and, therefore,
every country bank receiving the notes of another coun-
try bank, sends them into that bank for payment.
There is thus at no time more of currency in circula-
tion in the country parts of England than the labour
and capital of the country require. So the Bank of
England should not have more than its share of this
general circulation, and never could have it, if there
were other banks in the metropolis also issuing notes
there, because they would immediately send in to the
Bank of England for payment of the notes of this
bank which they received, and the Bank of England
would send for payment the notes issued by other
banks, as they would send to the Bank of England
and to each other. No more of currency then -could
ever remain in circulation, than the labour and capital
of the country required, estimated in gold. The ex-
changeable value of the currency actually in circulation
never can be more, for, as Mr. RICARDO has well
expressed it, " A circulation can never be so abun-
dant as to overflow; for by diminishing its value, in the
same proportion you will increase its quantity, and by
increasing its value diminish its quantity." We con-
tent ourselves for the present with the exposition. We
have given, and intreat the consideration of the Bank
Directors, and of every mercantile man, most earnestly
to it.