The Sun.
London, England, 1860-04-05 00:00:00

PAPER CURRENY FOR

The Indian despatches which have just been
printed record another triumph of political eeono-
my. Practice istat length overtaking; theory, and
abstract principles, after having been allowed their
ordinary period of probation, are at length admitted
and applied without hesitation to the daily affairs
of mankind. Many years have elapsed since Mr.
Ricardo revealed to the world the true theory of
paper money, but it was not till 1844 that those
principles gained their final triumph in this coun-
try. Sound as are the doctrines on which the re-
gulation of the English currency is based, and
satisfactory as have been the results of that great
measure, it has, strange to say, remained hitherto
unique. Foreign countries have been ready enough
to imitate the device of a State bank of issue and
deposit, as a mask behind which to conceal ques-
tionable financial transactions ; there has been no
lack of readiness, either before or since the Act of
1844, to issue Government paper ; but the safe-
guards under which alone that paper can be safely
issued have been universally disregarded ; and yet
it is impossible to deny that the principles of cur-
rency contained in the act of Sir Robert Peel are
of universal application, and have no particular
relation to the commercial or financial state of Eng-
land any more than to that of any other country in
the world. This truth has tardily disclosed itself
even to those statesmen who had the most share in
assisting Sir Robert Peel to pass the Bank Act ;
but it is apprehended at last, and we hail the in-
tended establishment of a sound currency in India
happy result
of
ltalready produced by sending to
that country a gentleman who really understands
asthoa hasepricipe political economy which no at-
tentive student of that science ever dreams of
disputing.
How necessary such a mission was may be
easily judged by any one who will take the
trouble to read the letter of the Financial Secre-
tary of the Government of India with which
the correspondence opens. We had no reason
to suppose that the study of financial ques-
tions had made great progress in India, but we
certainly were scarcely prepared for such doc-
trines as the following :—" The objection to this
coarse" (that is, issuing notes by the Government)
" will in a great measure be met if the notes are
receivable at the option of the public and converti-
ble on demand. Generally speaking, it is in cases
in which notes are a legal tender, and thereby made
absolutely to assume the place of a metallic cur-
rency, that seriously evil results are to be appre-
hended," We presume that the Financial Secre-
tary of India never heard of the crisis of 1825 or of
the Act of 1844. Had he heard of the first he
would have known that notes receivable at the op-
tion of the public, and convertible on demand, can
be over-issued to any extent, and with the most
fatal consequences, assuming for the time, to all
intents and purposes, the place of a metallic cur-
rency. Had he heard of the second, he would have
known that, under proper safeguards, Government
can issue notes, which are a legal tender to every
one except the issuer, without any evil result at all.
Warned probably by the antiquarian style in
which the Financial Secretary treated the doctrines
of political economy, Mr. Wilson evidently thinks
nothing ought to be taken for granted, and com-
mences his minute by a complete synopsis of all that
we know of the principles of currency. We hope
that the Financial Secretary has studied the doctrine
laid down for his benefit, and that he is convinced
now that it is not the wisest and soundest policy
" to make as large a portion as possible of the me-
dium actually circulating metallic," but that he
Mint,that
economises "a p per
the cu
arhenoddludtsceeas:tihotifel ccl\oolisrnt., affords great facilities for remit-
tance,"weneacyr
and enables the Government to become,
without any pecuniary sacrifice, the holder of
a considerable portion of its securities." It
is not necessary to go through the elaborate
machinery by which Mr. Wilson proposes to adapt
the present system of currency in England to the
wants of India. The principles are identical with
the Acts of 1844, or where they differ they are even
more rigorous and scientific. Mr. Wilson dis-
penses with the agency of a Bank, and proposes to
intrust functions exactly similar to those of the
Issue Department of the Bank of England to a
Board of Government Commissioners in Calcutta.
With these he proposes to connect District Boards.
A portion, never to be less than one-third of the
issue of notes, is to be retained in coin, and against
the remainder of the issue Government securities
are to be purchased and held. The public Trea-
suries are to assist with their funds in case of any
sudden emergency. Of course, there is not in India
the same knowledge as has been acquired in Eng-
land of the amount of securities which may safely
be held against the issue of notes. The process
must in the first instance be tentative, and it is only
when confidence has been fully established that
Government can feel itself relieved from the neces-
sity of holding a much larger amount of cash than
would be thought requisite in this country. As an
additional precaution against forgers' the notes are
to be manufactured in England. They are to con-
sist of promises to pay 5, 10, 20, 50, 100, and 500
rupees ; that is to say, they are to range from 10s.
to £5O. The notes of the Bank of Bengal are to be
called in, and the circulation of that bank is to be
taken as a guide for the operations of the Govern-
ment. When the plan has been fairly launched at
Calcutta it is to be extended to Bombay, Madras,
the Punjab, Oude, and the North-Western Pro-
vinces. Two years will be required for the pre-
paration of all the notes, and by the end of that
time it is hoped the plan will be in full activity.
It is not often that we are able to speak of any
measure of Government in terms of such commen-
dation as of this wise and well-considered step.
Immense sums will be saved in the mere escort
and conveyance of bullion to those district Trea-
suries, where, according to their present antedilu-
vian system, the coin required for the payment of
the troops and officials is kept. An incredible
economy of time and labour will also be
achieved by avoiding the necessity of counting
every month hundreds of thousands of pounds ,
in two shilling pieces. A great temptation to
rebellion will be removed when the public trea-
sure shall be converted from cumbrous silver coin,
easy to be found and difficult to be carried away
into a roll of notes which can be placed in safety,
or, if necessary, destroyed, without any ultimate
loss to their possessor. The spectacle of a bullock
hackery guarded by a company of Sepoys dragging
a few' thousand pounds in rupees over an almost
impassable road to some out-of-the- way Treasury is
an anachronism which need not again be witnessed.
Nor is this all. The holders of the notes of the Go-
vernment will have a strong interest in its preser-
vation. So far from apprehending any danger to
nisosubeeottt'ernostteeps properly
secured,
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