The Sun.
London, England, 1851-03-24 00:00:00

TO THE EDITOR OF THE S,

Sut,—The currency promises or threatens to be one
of the chief subjects, if not the principal, which will
shortly demand the attention both of th'6 Legislature
and the country. Your readers will approach this im-
portant question not altogether unprepared, thanks to
your kindness and the lucid explanations you have so fre-
quently given on this vital topic. I trust you will allow
me now to offer a further practical, and I hope clear,
exposition of the manner and degree in which all
classes have been affected by the workings, or rather
derangements of the existing system, founded on autho-
ritative and indisputable authorities and calculations.
I find in Mr. Johnston's' truly valuable work," England
as it Is," the following striking statement as to the in-
crease mado in the national debt and private debts by
the currency measures of 1819:
g‘
in stock for 584,000,0001. in paper money, and then the
Legislature made a change in the law which gave to
the whole of the outstanding stock the' value of gold
money. Thus the 57G,000,000/. of outstanding stock
was enhanced from 30 to 40 per cent., or, in other
words, in return for 396,352,207/., the net sum received
from loans from 1794 to 1817, the nation is now boand
in a sum equal to 768,000,0001. of the stoney in which
those loans wero contracted.

" The amount of private debt in the United Kingdom
of Great Britain and Ireland has frequently been es-
timated, or rather guessed at, and conketure seems to
range between the amounts of 1,000,000,0001. and
3,000,000,0001. To most persons this will probably
seem—at all events at the first glance—an incredible
magnitude of debt; but I think they who place the amount
somewhere between 1,500,000,0001. and 2,000,000,0001.
do not make an extravagant estimate. The amount of
fixed property—such as lands, houses, mines, quarries,
canals, railways, &c.—is actually returned to the Pro-
perty-tax Commissioners at about 90,000,000/. a year,
which does not include Ireland. But suppose we take
the income from fixed property at 100,000,0001. a year,
I believe it is not going too far to say that one-half of
it is tied up by mortgages, settlements, or incumbrances
of one kind or another; or, in other words, the nominal
proprietors of the property worth 100,000,0001. a year
have to pay away one-half, in the shape of interest, or
of annuities, to persons to whom they are, in some form
or another indebted. In this country a proprietor, until
absolutely compelled by the pressure of circumstances,
rarely transfers any part of his estate to those to whom
he is indebted, or to the children or other relatives
whom he may desire to endow with fortunes. He leave.
his estate nominally the same, but charges it with heavy
sums of money which remain as debt, and upon which
an annual interest or equivalent annuity is paid. Now
if half the income from fixed property be thus disposed
of, this 50,000,0001. a year may be considered to repre-
sent 1,500,000,0001. of debt or incumbrance, to say no-
thing of the large amounts which are lent upon personal
credit, upon stock in trade, upon goods in transitu, and
in all the various transactions of a treat commercial
country. I exclude credits from week to week, or day
to day, such as are adjusted by millions at the bankers'
clearing house' in London; but referring only to those
various debts, whether upon fixed or floating security,
, which pay interest, I apprehend it is not an exaggera-
tion to estimate them at nearer 2,G00,000,000/. than
1,500,000,0001. When we add this to the national
debt, we shall find an enormous sum of indebtedness of
a fixed amount of money, from which we may infer the
extreme importance to this country of any change in
the currency.
" Although they who took a principal part in the
great currency change of 1819 did not contemplate an
appreciation of more than 4 per cent., yet the result was
an increase in the value of money of not less than 33
per cent.; and supposing the private debts of that period
to have been 1,600,000,000/., the national debt being
half as much more, the effect of the change of 1819 was
to add to the actual amount of thee existing incum-
brance, public and private, as amount equivalent to the
whole national debt, that is 800,000,0301." s
Now, after perusing these very clear and distinct re-
presentations and calculations of Me.
Johnston, let us
look at the following statement as to
the increase of
wealth in some small classes, and growth of poverty and
suffering in the great mass of the People, which are the
natural consequence of the currency measure of 1819.
Those measures having, as shown by Mr. Johnston,
added not less than eight hundred millions sterling to
the public and private debts of the country, thus aug-
menting to that extent the property of the richer, or
creditor and smaller class, and imposing
that immense
amount of additional burden on the
poorer or debtor
classes, being the great body of the people,
including all
the agricultural, commercial, manufacturing, and labour-
ing classes and population. Extracted from that ad-
mirable work " England in 1815 and 1845," by Mr.
Alison, ono of the most distinguished
emi-
nent authorities of the day; writers and
publisheda by Messrs.
Blackwood:—
" What wo say is unparalleled in the history of the
world is the co-existence of so much suffering in one
portion of the people, with so much prosperity in
another; of unbounded private wealth, with increasing
public penury; of constant increase
the national re-
sources, with constant diminution in the comforts of a
considerable portion of the community;
of the utmost
freedom consistent with order ever yet existing upon
earth, with a degree of discontent which keeps the na-
tion constantly on the verge of insurrection;
of the most
strenuous efforts for the moral and religions improvement
of the poor, with an increase of crime
the same or perhaps any other period unparalleled at
in any civilized
state."

" It is evident that there is in our present state some
thing which demonstrates the existence of a great and
latent evil, which poisons, for a large Part of our people,
all our prosperity, and converts the fruits of industry
into the apples of Sodom."
That this great and latent evil bearing upon the great
body of the people, has its origin in the eight hundred
millions sterling, shown by Mr. Johnston to have been
added to their public and private burthens by the cur-
rency measures of 1819. there can be no doubt. And
this will be rendered still more clear, and the puzzling
contrarieties pointed out by Mr. Alison still more con-
clusively accounted for, when we consider that the
operation of our currency system has not been confined
even to the process, monstrous as it seoms, of one change,
adding eight hundred millions to
the debts of the
country, but that since the Bill of 1819 was
passed there
have been no less than six contractions and expansions
of the circulation; each altering tho value of money to
the same extent of 30 to 50 per cent., and we have now
just escaped from the sixth contraction, which took
place in 1847, and have entered upon a seventh expan-
sion, which has caused the present partial prosperity.
And now let us look at the following extracts from the
Report of the Manchester Chamber
of Commerce in
1839, showing fully and practically
the severe and
ruinous losses to which the commercial and manufac-
turing interests have been subjected by the fluctuations
in the currency amounting, as shown at one single fluc-
tuation on the production of cottons, Woollens, silks,
linens, and hardware alone, to not less than forty mil-
lions sterling, and the consequences that have followed
to the merchants, manufacturers, traders, and operatives,
and entirely confirming the statements of Mr. Johnston
and Mr. Alison:—
" By these forced expansions and contractions of the
currency, during the last three years, some of the most
prudent and wealthy of our merchants and manufac-
turers have incurred that ruin which in a more whole-
some and natural state of the circulating medium could
befall only the reckless adventurer and gambler. Under
such a state of things as has been described calculations
based upon the most enlarged experience afford no secu-
rity against loss and failure. The trader learns the fate
of his undertakings not in the markets of the world, as
influenced by the law of supply and demand, hut in the
acts of twenty-six irresponsible individuals conducting a
joint-stock banking association in the city of London.
"But the heavy pecuniary -losses incurred by our capi-
talists constitute a minor evil when compared with the
moral and social injuries inflicted upon the labouring
classes by the fluctuations in the currency. The board
have directed their best attention to this part of the
subject; the effects produced upon the condition of the
great mass of the peopl©, by the operations of the Bank
of England having hitherto been almost entirely over-
looked.
" The late panic, by causing a diminution of our ex-
ports in 1837, as compared with the previous year to the
extent of ten millions, and by curtailing proportionately
the amount of our home trade, was accompanied by a
corresponding cessation of the demand for labour. In
the spring and summer of that year vast numbers of the

* Mr. Henry Burgess, one of the best informed and ablest
writers on the subject, the Secretary to the Country Bankers,
stated, in a petition to the House of Commons, in 1849, the
amount of bills of exchange alone at four hundred millions,
representing of course a floating debt to that amount.

"It is natural that disease and crime should follow
in the train of so much suffering and privation; and ac-
cordingly the reports of the several medical charities,
and the records of our *prisons, bear testimony to the
fearful injuries inflicted by the money crisis of 1837.
"It may be estimated, that in the production of the
five great manufactures, of cottons, woollens, silks,
linens, and hardware, capital, fixed and floating, is em-
ployed, amounting to a hundred millions sterling. The
rates of depreciation caused by the late panic upon all
those articles of production, may be gathered, without
difficulty, from the prices current of the spring and sum•
mar of 1837. They fell in price variously from 20 to 50
per cent. To estimate the amount of loss upon these
manufactures, they must also be followed into the hands
of the wholesale anti retail dealers, whose losses upon
stock, consequent upon the operations of the Bank of
England on the currency, are incurred simultaneously
with those of the first producers. Scarcely one of these
escaped in 1837, without the sacrifice of the whole of the
ordinary profits of the year's trade; and many lost, by
the fall i❑ the value of their stock, the whole of their
capital also. In proof of the latter fact it must be stated
that 1,839 fiats in bankruptcy were issued in 1837, the
average of the four previous years amounting to 1,266
only; whilst a proportioned increase occurred in the
number of private compositions. At a moderate com-
putation from twenty to thirty millions of capital may
be estimated to be employed by the wholesale and re-
tail traders engaged in the distribution of the five great
manufactures enumerated above. It has been shown
how the policy of the Bank of England affects the
foreign trader, by compelling him to import, at heavy
sacrifices, the bullion required to replenish its exhausted
coffers. Of all our produce and manufactures consumed
in foreign countries, the greatest portion is sent abroad
by British capitalists. Nearly the whole of our exports
to India and China; at least seven-eighths of the amount
shipped to South America, and a third of the exports to
the continent of Europe, with the whole of our colinial
trade, are forwarded by British capitalists. From
thirty to forty millions of British capital thus enumerated
are as follovvs:—

Employed in the production of the five
great articles of cotton, woollen, silk,
linen, and hardware £100,000,000
In the wholesale and retail distribution

25,000,000

of ditto
In the whole of the foreign commerce of
the country 35,000,000
" Without embracing the less prominent branches of
our domestic manufactures, including the trade in a
thousand articles of daily consumption, and omitting the
traffic in agricultural productions, all of which were
more or less affected by the revulsion of prices, reference
has been made to a capital of one hundred and sixty
millions, upon which we may trace a tangible loss vary-
ing from twenty-five to fifty per cent. by the depreciations
of value in the spring and summer of 1837. This sacri-
fice of forty millions at the least (and which constitutes
a fraction only of the losses simultaneously sustained
by the whole commercial world) was incurred in order
that the Bank of England might regain possession of six
or seven millions of specie, which had been previously
forced out of the country by the undue expansion of the
currency.
"Hitherto it has been too much the custom to consider
the question of the currency merely in its relations to
the banking interests; or, if viewed with reference to the
public welfare, it has been merely to guard against di-
rect losses by the failure of banks ; the far greater inju-
ries inflicted upon the community by the oscillations in
the amount and consequent value of a paper currency
will, it is hoped, henceforth engage that consideration
which they so strongly merit. "
To this testimonial we must add the statement of Mr.
Cobden, when examined as a witness before the Com-
mittee of the House of Commons, on banks of issue, in
1840, the spirit of which shows that he was fully con-
vinced of the sound principles contained in the Man-
chester report:—
" I believe great evils have been occasioned to the
trade and manufactures of this country in 1836 and 1837,
and in the subsequent period, by fluctuations in the cur-
rency—greater evils, pecuniary, social, and moral, than
by the direct failures of all the banks of issue since they
were first exhibited in this country."
We find the full confirmation of the statement of the
Manchester Chamber of Commerce, and the proof that
the evils of which they complained have been rather
aggravated than diminished, and the changes in the
value of money augmented, in the following extracts from
the Lords' Report on Commercial Distress, 1848:
" Mr. Cotton states (3,246) that in his commercial ex-
perience he never knew such a fluctuation in the rate of
interest as occurred in 1847.

" Your Lordships will bear in recollection that the
years 1837 and 1839 were years of peculiar pressure.
" The following table, extracted from the evidence of
Mr. Browne, exhibits the contrast between those years
and 1847:

Lowest rate. Highest rate. Difference.

1837
1839
1847
" lie adds, 'this does not give an accurate view of
what the interest of money was in 1847, because per-
sons frequently paid a commission, which made it amount
to 10, 20, and 30 per cent., depending on the time the
bill had to run, and the pressure of money at the mo-
ment. The commission charged in 1837 and 1839, was
by no means to the same extent. Tho Governor of the
Bank states, that on the 23rd of October, 225,0004 was
discounted by the Bank in the London market, at rates
varying from 5i to 9 per cent.' Afterwards he added,
in reply to the question, whether within his own expe-
rience, or within his own knowledge, he was able to
refer the Committee to any period when the variations
in the rate of interest were so considerable as they were
during the period to which his evidence apdlied, I have
no recollection of a period in which the variations in the
rate of interest have been so great.' "

"It is true that those who may have expected that the
Act of 1844 would effectually prevent a recurrence of
cycles of commercial excitement and depression, the
contrast between the years 1845 and 1847 must produce
a grievous disappointment. To these who anticipated
that the Act would put a check on improvident specula-
tion, the disappointment cannot be less, if reliance is to
be placed (as the Committee are confident it may) on the
statement of the Governor of the Bank, and of other
witnesses, that speculations were never carried to such
an enormous extent as in 1846 and the beginning of
1847. If the Act were relied on as a security against
violent fluctuations in the value of money, the fallacious-
ness of such anticipation is conclusively proved by the
fact, that whilst the difference between the highest and
lowest rate of discount was in the calamitous years
1837 and 1839 but 2/ to 24 per cent., the difference in
1847 rose to q. If it was contemplated, that the num-
ber and the extent of commercial failures would have
been lessened, the deplorable narrative of the Governor
of the Bank, recording the failure of thirty-three homes,
comparatively in large business, in London alone,
to the amount of 8,129,0001. is a conclusive reply. If
the enormous extent to which railroad speculation has
been carried be considered as an evil to which a sound
system of banking could have applied a corrective, such
a corrective has not been found in an Act, since the
passing of which, during a period of three years, an in-
creased railway capital of upwards of 221,000,0001. has
been authorised to be raised by Parliament ; and when
the enormous sum of 76,390,000/. is stated, on high
financial authority, to have been actually expended on
railways in two years and a half. If the power of ob-
taining banking accommodation on moderate terms were
considered to be promoted by the Act of 1844, it cannot
be said "that this important object has been attained,
since it appears in evidence that in 1847, in addition to
an interest of 9 or 10 per cent., a commission was also
frequently paid, raising the charge to 10, 20, or 30 per
cent., according to the time which bills had to run."
What commercial operations can bear such fluctua-
tions as those described; and what prudence can protect
the merchant against them, proceeding, as they do, from
changes in the value of money, and therefore entirely
beyond his control?
Now let us proceed to examine more in detail the real
effects of these alterations in the value of money thus
established and described by Mr. Johnston, the Man-
__

cheater Chamber of Commerce, and the House of Lords.
When it is remembered that the alteration of not less
than eight hundred millions shown by Mr. Johnston to
have been made in the real value of the public and pri-
vate debts of the country by the Act of 1819 has been
repeated at every fluctuation that has taken place, as
shown and proved by the statement of the Manchester
Chamber of Commerce in 1839, and the report of the
Committee of the House of Lords in IS47—when it is
remembered that this frightful and gigantic operation
has been repeated every time the currency has been ex-
panded and contracted, is there any reason to wonder
any longer at the strange calamities and contradictions,
the alarming contrasts of riches and poverty, which the
country presents? In 1822 the currency was contracted
—in 1824, expanded—in 1826, contracted—in 1834, ex-
panded—in 1836, contracted—in 1844, expanded—in
1847, contracted—and now again expanding.
At each of these changes an alteration of eight hun-
dred millions was made in the value of the public and
private debts of the country! ! ! Is there any longer
any reason for wonder at the astounding and portentous
features that have been manifested by a country and a
population subjected to such fearful operations ? And
when it is borne in mind that the debts of the landed in-
terest, consisting of mortgages and family engagements,
are the most permanent portions of the private debts of
the country, and that Sir James Graham has stated that
at least nine-tenths o' the landed property of the country
is thus encumbered, is there any reason for surprise that
the landed interest has exhibited since 1819 a downward
tendency the most decided, as it has suffered most severely
from the additional burdens thus inflicted ?
And is it possible that these dreadful oscillations can
be suffered any longer to continue ? Is it possible that
i
any Government, any Parliament, any individual Mem-
ber of Parliament, will bear the responsibility of suffer-
ing the continuance of these periodical revolutions of
property? for no less a name can be attached to changes
which at each ascent and descent affect the debts alone
of the country to the extent of eight hundred millions
sterling.
During the war, and with the currency of the war,