The Sun.
London, England, 1858-01-01 00:00:00

THE CURRENCY-REMEDY PROPOSED.

TO THE EDITOR OF SAUNDERS'S NEWS-LETTER.
SIR,—My former letters on this subject were
confined to a brief exposition of the grave errors of
our monetary system, and were intended to point
the attention of all, but of the industrial commu-
nity in particular, to the signal and disastrous
failure' after complete trial, of the Bank Charter
Act of 1844—a failure no less to effect that which
its authors designed than (which is of much greater
importance) to provide a medium by which the
exchanges can at all times be properly carried on.
It seems to me, sir, that there are two great vices
inherent in our present system. First, we affect
by law to have a standard of value (gold), the value
of which is constantly fluctuating with the inex-
orable law of supply and demand—our declaratory
act of Parliament to the contrary notwithstanding,
which attempts to fix it at a certain price—and is
therefore no standard at all, but operates in the
same manner, though to an infinitely more mis-
chievous extent, as if our yard measure were 36
inches to-day, 35 to-morrow, and 37 the day after.
Secondly, we have at all times an insufficiency of
legal tender money wherewith to carry on our pro-
duction and exchanges, to alleviate winch insuffi-
ciency we have a vast amount of auxiliary, or non-
legal tender currency, which being supplied on no
scientific principles is always liable to be, and very
often is, relatively, either in great excess, loading
to speculative excitement and absolute gambling,
or in great deficiency, leading to distrust and posi-
tive collapse of our productive and commercial
energies. The quantity of legal tender money,
too, is not at all times insufficient ; but the amount
of this insufficiency is always fluctuating, being
based on the demand and supply not only in our
own country, but in the world at large, of a single
commodity, gold. So that, no matter how largely
may have increased the supply and demand for any
or all other commodities in the realm, and, the:e-
fore, the want of the instrument, circulating me-
dium, to exchange them, the legal tender money,
on which that medium is based, may be greatly
decreased instead of increased, if the one commo-
dity gold shall happen to be in greater demand in
some other place than (at the fixed price) in the
Bank of England, and the exchange of these largely
increased commodities must be bi ought to a stand ;
or, a hich is worse, this seeminf, excess of goods
must be bartered to foreigners for less than their
ccst, in order to bring back the gold. If any of
your readers, sir, should dispute that this is so, and
attribute it to a fiction of my own creation, I will
afford him the direct testimony of the authorities
of the Bank of England itself before the Committee
of the House of Commons in 1818, which I only re-
frain from now quoting to avoid unnecessarily ob-
truding on your pages. Let the Times and other
organs of the " bullionist" school be honest, and
tell the producers of the country's wealth to what
they must periodically submit for the benefit of a
few "hard calculators." This demand for gold is,
too, very uncertain, as experience has taught us ;
and (as truly observed by Mr. James Taylor, writ-
ing on this sil-jut 30 years ago), " Uncertainty is
the field in which gambling sports, especially if the
principle which determines the game be only known
to a few : such a field the money system of Eng-
land at present offers. The Bank of England go-
verns the issue of money—the Foreign Exchanges
govern the Bank—the course of exchange is governed
by a few moneyed individuals—those individuals are
governed by self interest (though a mistaken one),
and that man is the deepest stock-jobber who can best
guess at the turn which it is the interest of those
individuals to give to the stock market. So long,
therefore, as the present money system continues
the pecuniary difficulties of the nation must con-
tinue, the public being subjected either to con-
tinued poverty, or relieved only by temporary
gleams of wealth, terminating in a season of accu-
mulated distre4s. While this continues the spirit
of gambling will be in active operation ; stop it,
and gambling ceases." "To get rid of such fluctua-
tions," (borrowing the language of a more recent
work*), " and thereby to destroy the pabulum of
our most extensive and most tempting speculations,
would obviously be no small moral gain, for the
pursuits of the mere speculator are, surely, any-
thing but favourable to the growth of a love of the
useful, the nobl2 and the good."
I will now, therefore, sic, as promised in my last
letter, lay before your readers a whichplan
n I d
o notmay
C tend to effect this change, premising that
pretend that it is either entirely original or the only
one suited for the purpose, but that it appears to me
that, whilst making an approach towards a really
scientific system of money, it will, on the one hand,
effect as little change in our present system as can
be expected to do any considerable amount of good,
it will, on other, be as great an amount of change as
from the want of knowledge and consequent u
pre-
j dice on the subject, the public will be inclined to
bear.

Since I last addressed you, sir, we have stated on
authority
double roaponidbility for the
good government of our Indian empire is to be got
rid of. In like manner, sir, let us abandon the far
more mi,ohievous attempt at a double responsibility
for the due supply 9f our legal tender money, and
let it be assumed in all its fulness by the Crow;
under the supervision of Parliament.
I propose : First—That the Bank of England
shall have the proper legal notice of the termination
of its present privileges, so far as its note issues
are concerned and which to the extent of
14,475,0001. are founded on the debt due by the
government to the Bank. Secondly—That in like
manner all other banks of issue in the United King-
dom shall have notice, that after a day to be named
'heir privileges in respect of note issues will
also terminate, giving them, however, such com-
pensation as may be shown to be just and equitable
Thirdly—That there be established by the authority
and under the control of Parliament an Imperial
Bank of Issue, which shall be the only bank of
issue, and the issues from which, together with the
coin, shall be the wily legal tender money in the
United Kingdom. Fourthly—That the powers of
the Imperial Bank be confined to the one simple
office, under a sound, and in some sort, self-regula-
ting principle, apart from, and from under the con-
trol of, the bank itself, to expand and contract the
legal tender currency to suit the ever-varying ex-
igencies of the community, of which themselves
will be the judges. Fifthly—That for this purpose
the bank be empowered to issue notes of various
denominations, from one pound upwards—to suit
the convenience of the receiver—on the deposit of
government stock, taking the Three per Cent. Con-
sols at par, and other stock in the same proportion,
and to re-issue stock on receipt of its equivalent value
in hank notes. The interest accruing on the stock
whilst in possession of the bank to be carried to its
c redit, and any surplus,after providingfor all expenses
ofmanagement, &c., to go to the credit of the Imperial
Exchequer. Sixthly—That for the sake of conveni-
ence, the bank be also bound to purchase and sell
gold (and if thought expedient, silver) at its market
price, in exchange for its notes; and in order to de-
termine and fix the market price the officials at the
bank do at determinate periods give notice in the.
Gazette of the price at which they will buy or sell,
such notice to continue iu force until the stated pe-
riod for its renewal. And as gold and silver in
quantities would be chiefly required for foreign
purposes, a useless expense in coinage might be
saved by having bars of definite weight duly as-
sayed and stamped at the Mint.
I submit, sir, that under these simple regulations
we should derive the following among other bene-
fits-1. A legal tender currency perfectly safe, being
tam vereible at Um will of the holder into au interest-
paying Government stock, guaranteed by the entire
property of the nation, or into gold or silver at the
market price. 2. A fixed and invariable standard
of value—the pound in account, in which our 800
millions ofdebt has beenaccumulated, liable to none
of those oscillations to which gold is subject,
and securing an equity between debtor and creditor
the former having to pay at the termination of his
credit no greater or loss value than was implied in
the pound of account when this debt was contracted.
3. A legal tender money much more adaptable in
quantity to our ever-varying wants than the present
one, which is expanded and contracted with the in-
flux and reflux into one establishment of a single
commodity—gold—giving us a currency at one time
(spe iking relatively) in superfluity, and at another
cr eating a dearth. Under the proposed system, when
money became scarce, and its value more than the
fixed rate of interest on Government stock, via., 3
per cent., stock would be taken to the Imperial Bank
in exchange for notes ; and on the other hand,
when money bad a tendency to become super-
abundant
(indicated by the fall in its value for use),
the notes would flow into the Bank in exchange for
the 3 per cent. interest-bearing stock. 4. By
this self-regulating principle the value of money
would be kept, as for 140 years prior to the act of
1344, much steadier, ranging, probably, some-
where between three and five par cent, with very
slight and infrequent fluctuations, whilst every-
thing like gambling speculation in the public funds
would be put an end to—in itself no slight benefit
t) tens of thousands, though no doubt it would be
ti treely opposed by the gamblers and brokers. 6
The much greater facilities for obtaining an abuu-
dance of 1- gel tender money based on real property,
together with the steady rate of interest charged
for loans, would prevent a vast amount of that
`over-trading' and reckless speculation, which is
one of the curses of the present system. The ho-
nest and prudent would have facilities for convert-
ing their own capital into money, and this being
known to all those who had money to lend,
would make them more cautious as to the charac-
ter of the parties with whom they dealt, and thus
that false, because baseless superstructure of accom-
modation paper would have little or no existence.