The Sun.
London, England, 1857-12-31 00:00:00

THU'IISDAr EVENING, DECE"Inft 21, 18:17

EXCHEQUER NOTES.

control were exercised over the issue of private
and joint 'stock banks. It was accordingly pro-
vided by the Act of 1844, " That no person, other
than a banker, who on the Gth of May, 1844, was
lawfully issuing his own notes, shall make or issue
bank notes in any part of the United Kingom."
The privilege of those issues was continued to
those persons; but the amount that may be issued
in each else, was restricted to the amount which
constituted their actual issues upon the average of
the two preceding years."
The notes not exceeding 14,000,000 might be prac-
tical, but the issue on the bullion is the question-
able part of this act. Its advantage to the Bank of
England is undoubted, because it gives the Bank
a double power over the rest of the nation, their
power of expansion is thus made doubly rapid,
but their power of contraction is equally so,
which is the very reverse of that which should
be beneficial to the nation. Of all things, to make
a law of such importance to be under the control of
one body corpoiate, is an evil of such magnitude,
that not a week ought to be allowed to pass with-
out its alteration. At the very time when gold is
wanted, notes are wanted still more, yet, by this
act, at the very time gold flows out of the coffers of
the Bank, notes are withdrawn from circulation to
just that very amount—at the very time they are
most needed they are taken away, as if by a con-
catenation of perverted ingenuity. The worst system
seems to be made the law of the land that could do
that land the most injury.
It might be thought, superficially regarded, that
the Bank would suffer the most, since her issue to
work with is doubly lessened and her means of
discount equally shortened, but that is no injury to
the Bank, since she can double her interest as
rapidly as gold diminishes from her coffers,
even in considerable anticipation of it, can she
benefit, before the gold is parted with, by raising
her rates as a precautionary measure. Not so with
the country merchants, manufacturers, and
agricultural producers, they have, during this
lessening of the means of conducting business, been
paying for their castigation, they are not only
made to pay the flagellator double ; the farmer
getting but half the ptice of his produce, the
labourer thrown out of work, and all for what 1
Not because there is less wealth and worth in the
nation, unless, by-the-bye,the Bank of England send
it out in barsi of gold without a quid pro quo
(a thing they are not quite in the habit of doing)
not because the merchant is overtrading, but, the
truth must come out, because the bankers find it
more profitable to be receiving high rates than low
rates of interest. Men of paper and nothing else
are encouraged, because they can get off a large
parcel of discounts, or can pawn their consignees'
dock warrants to within 15 per cent, of actual-
value. The high rates of interest tempt the
bankers to extend accommodation beyond prudence,
as it tempts them also to use deposits beyond the
limits of prudence and caution. But for whom is
all this kindness on their part ? Not for the honest
sons of toil, but for the fast stag, the go-a-head
man, caring but little what he pays, the large
supplies •of accommodation suit him and the
banker together.
The Government overlooked, or winked at the
fact, that by allowing gold to regulate the addi-
tional issue, they leave a power in the bankers' and
Bank of England's hands to cause a pretext for
raising discounts whenever they like. The Bank
has only to treat for large loans to Russia, Austria,
East India Company, or Sweden and Norway ; the
gold they themselves thus send from their coffers
by millions, whenever interest is likely to become
below their favourite price, is—the very facility
at the same time for raising rates—the high-
pressure valve, and is seen to work and indicate
danger. No matter ; before the Bank fail, the
Government and the country must. No matter
who sinks, they swim. Rates of interest must be
buoyant, uniformly high. Low rates now are only
exceptional. So says the Bank ; or, so acts the
Bank, at all events.
The crash of the banks of 1825 to 1826 was not
owing to the inability of the banks then, but to the
monetary laws. Sir H. W. Ridley declared, en 3d
June, 1828, in the3House of Commons, " that in
1825 and 1826 there were 770 country bankers,
and of these 63 had stopped payment, out of which
23 had resumed their payments of 205., and 31
were making arrangements for the payment of
their debts. The country bankers, at all events,
paid on an average 17s. Gd. in the pound. It is
evident they were perfectly solvent when the crash
commenced. It was brought about by the drain
of specie, and it might have been entirely avoided
by permitting the issuing of another species of pro-
perty to sustain the currency when the one on
which all depended was withdrawn." Exchequer
Notes would do this.

(FROM A CORRESPONDENT.)

It appears that authorities upon the present
system of currency are somewhat at a discount when
such journals as the Times and Daily News seek cor-
roboration from the exemplary elect perpetrator of
slavery in order to justify their crotchet of 1844.
President Buchanan, the advocate of slavery, fur-
nishes these journals (at his eleventh hour of na-
tional calamity) with a grand sccpe for congratula-
tion, as if it were a new enunciation that banks
ought to be held responsible for their issue. These
journals exult over the triumph they have achieved
in finding the cowhide gentlemen proscribing the
banks of the United States unless they retain a
third of bullion to their issue. Do we require to go
so far to find advocates of sound principles, or must
we seek them (Italy among the pro-slavery Presi-
dents of America? I have no doubt in a year or
two we shall find these journals bolstering up their
usurious fraternity by referring to their much-
respected King of 0 ude, or some new King of Delhi.
After all, had the banks of America reserved only
one dollar in seven to their issue, upon bullion and
deposits, it would seem not to have much exceeded
some of our English and Scotch banks.
The whole of this loose system is to be repudiated
both here and in America. The advocates of an
alteration in the circulation are not to be associated
by these journals with the abuses of either America
or England. Certainly, they can form no connec-
tion with either, but they can deplore the ignominy
of both. All these disgraceful disasters have taken
place unconnected with our advocacy. The panics
and calamities have all taken place with the pre-
sent laws, which I, for one, repudiate and de-
nounce as impracticable and unjust.
It does not seem to answer the purpose
of certain journals to distinguish between
the advocacy of an extension of currency
and that of inconvertible issue. It would be an
insult to these journals to assign inexperience or a
want of knowledge of sound principle of action
for not acknowledging that an insufficiency of cur-
rency has at all times, and ever will, produce low
prices, and high rates of discount with the absence
of the usury laws.
It is an old editorial trick, practised now so
often, that the motive and object become promi-.
nently evident, when leaders of certain interests
associate something low with any principle in
which they do not find their present interests up-
held. It is a trick that comes from the bar.
It is quite evident that those who attribute the
evils of this crisis to what Mr. Buchanan called a
" vicious system of paper currency," like him
must have some sinister motive, for it is not true;
neither England nor America have increased in
paper currency ; the weekly returns of the proceed-
ings of the Bank of England prove the contrary
with regard to us, as do the accounts just received
prove the contrary in America. In 1852' the circu-
lation of America was in June 27,940,000 dols. ;
in September, 1857, it had diminished to
27,122,000. But between those periods we find
the capital of the New York banks had increased
from 59,705,000 dols. in June, 1852, to
107,507 dols. in September, 1857, having very
nearly doubled itself within five years. Specie
has also increased from 13,304,000, in 1852, to
14,321,000 in 1857. Deposits have increased from
65,634,000 in 1852 to 84,527,000 in 1857, whilst
their leans and discounts will be seen to have in-
creased only in proportion to the increase of their
capitaland specie, leaving their deposits untouched.
A sounder condition a country need not wish to be
in ; a panic need no more take place there than
here. England at the present time will ba found
to present a more satisfactory state of things ; and
nothing justifies the panic of 1857 which has arisen
not from want of wealth, nor on account of an
excess of issue, but because of the redundance of
accumulation of wealth on our part, it having accu-
mulated into too few hands, by which monopoly
can be exercised to their own advancement at the
expense of mercantile interests ; also because of
the bill of 1844 contracting theissue simultaneously
with the contraction of bullion, the working of
which I shall illustrate more fully shortly.
Bankers and money-lenders are the only inte-
rests some journals now openly advocate, as
if they felt quite secure in the continuance
of the plodding merchant, whose everyday toil
leaves him little time for reflection. But
when this journal finds its circulation growing
beautifully less, that it is forbidden to be brought
into their counting-houses, let them learn that the
British merchant is aroused.

One article in the Economist last week, 26th
inst., is characterised by a much sounder tone,
more in keeping with the principles of the respected
Mr. Tooke. In an article, under' the heading,
" The American President on the American Crisis,"
it, does not fall into that wrong but popular error
that the evil of this panic was that which Mr.
Buchanan declared to be the " extravagant and
vicious systems of paper currency," while the
Economist shows that the real delinquents are in
the back-ground screened from- public gaze. But
it admits that when the act of 1844 was suspended
in 1847, Sir Robert Peel acknowledged " that for
the object of checking commercial speculations the
act of 1844 had failed." Unfortunately for the
country the cure was not then provided.
It would then, as now, be found in the re-
adoption of the usury laws limiting the interest t- 5
per cent., or in a check to excessive rates of discount
' by the issue of Exchequer notes up to the exact
amount of bullion going outof the Bank, which would
have a similar effect on the rate as that of the
Usury Law would, i.e.., she effect of keeping rates
low and more uniform, simply arising out of this
fact, that the country would not suffer from a loss
of circulation ; as bullion went out of the bank. No
greater demand would arise, because no depression
would be felt ; :since none would exist, no rise of
rates could take place. This would prevent
gold goingout into other countries. So much to
our inconvenience at home, because then as gold
went out Exchequer notes would go into circu-
lation, and would keep down rates of discount.
High rates of interest will always give rise
to excessive speculation, just as it assumes
the appearance of sopping it. The Bank's
putting up the rate of interest is only enabling her
to discount doubtful paper. High rates tempt the
banker to do doubtful bills, which at 3 per cent.
he would not think of. It answers the purpose to
lend gold to Sweden, Ise., and to raise discounts
at home; but such double policy is England's double
loss.

One question 1 ask in all sincerity—Are the men
tlkat are so in the habit of gambling on the Stock
Exchange day by day, jobbing and tricking in
monetary practices, till trick-my-neighbour ban be-
come the familiar object of their embrace, are they
, 'being educated in a fitting way on points of virtue,
sufficiently to become Bankers for the world Are
they men to be held paramount to all else—superior
to the producers of the earth, that yield yearly
300,000,0001., nearly twice as much as all
trading and manufacturing classes put together,
which in 1845 reached 180,000,C00/. Are laws
ever to be made especially to favour these sordid,
self-seeking, huckstering, money traffickers at the
expense of the whole nation besides ! The world
unt excluding ! Since the Bank of England has
forgotten the excessive advantages they enjoy
over all else to the extent of 14,000,0001. of issue.
Since they have converted that nationality into
personality, selfishly appropriated, let a check be
placed over them. Are first principles entirely to
be ignored in legislation, and secular principles to
be raised up as a standard of action ? For what,
then, have we a Government, if it but encourage
the secular and the vicious? As well might man
question his Creator as question first principles. Let
Sir Robert Peel's Bill of 1844, and his expediency
also, be hurled together into oblivion before secular
motives of action became the ruling power oft'te clay.
Lord Palmerston might have been entitled to
the best thanks of his country while the war lasted,
that might have been his mission then to be Pre-
mier ; but now that the war is over, him not
touch the currency, for as sure as be does he will
do harm—that is not his forte. It would be hon-
ourable in him now to resign and give place to
one that should be as efficient in currency as he
was in the War Department.
Now the remedy in the Bank Act of 1844 is to
be founded in this. Since a check to the Bank is
found to be more and more necessary every clay, let
another issue replace the issue withdrawn when
gold goes out of the Bank ; as gold is withdrawn
make Exchequer notes 'constitute the issue up to the
amount of bullion withdrawn from the Bank.
These Exchequer no4es always payable in taxes
and duties, the interest of the issue of which take
care is reserved for the Crown. The Bank cannot
complain of such a modeof stopping the fluctuations
and monetary convulsions that are now so dread-
ful to bear. This will prevent the sudden reduc-
tion of issue and gold at the same time, and keep
in circulation a steady and even supply of currency;
will endanger no inconvertibility, since no more in-
convertibility will exist then than now, all exche-
quer notes being convertible into taxes and duties
to the amount of the debt of 11,000,0001. The
Bank would have no inducement to advance larger
loans to Sweden and Denmark, nor to Norway, be-
cause by parting with money they would not have
the same power of raising discounts on what is left
Lehind at home as now. The pressure would never
be so great on the Bank for gold when another
convertibility was adopted, such as taxation, be-
cause fear and mistrust of the ultimate results of
stoppage in the Bank of England is now out of the
question, whether she; cap pay. in gold 101 s at one
time in Abe pound, or 10 at another. She is
always solvent, and no loss can ensue to the coun-
try ultimately. With a capital of such magnitude
she is always safe, but that is no guarantee that
she intends to keep to an uniform low rate of
discount under 5 per cent. ; au contraire par bloc.
I have taken great care not to be chimerical, and
have tested my views by introducing the best autho-
rities on the currency.

America and France seem to have discovered,
that it is better to tempt the old lady by high rate',
and to get the gold from her, than allow England
to use it at home. After they have obtained which
they can be the first to relax the pressure, as they
have done, reduce the rates in their own countries,
while misery and ruin, areadful to contemplate, is
protracted here in England ; even during this
Christmas season when all should be joyous. For
the eleven months of this year the excess of imports
over exports of gold in France was 16,625,4241.,
that of last year, 13,470,000/., and in 1855,
8,041,644/.
In the same article in the Economist it will be
seen that the abuses that exist have n 9 connection
with any excessive issue of notes, corroborating all
my preceding remarks. "The error of confound-
ing capital with currency throughout all these vari-
ous efforts of legislation is now well understoot

Imprudent and extravagant credits which end in
ruin to all connected with them are at length seen
to have no connection with them, and entirely un-
aided at any particular time by excessive issues of
notes ;—it is seen that in places where the banks of
issue exist, and that with regard to banks of de-
posit only, the chief abuses have existed, and that
in Hamburg, where apurely metallic currency only
is in use, the crisis has been more severely felt than
in y other and now, at last, we are likely
to guye place;amore searching scrutiny." Much
as I find the above remarks in accordance

with my foregoing letters, I am sorry that I
cannot say, " the Bank has . been perfect,"
nor that we may expect more practical conclusions
from our closed doors instead of an open house.
We know an Act was passed in 1844 renewing for
ten years the charter of the Bank of England, but
as the particulars of the Act might not be quite
familiar to all, I will here adduce them, in order
that we may be agreed upon the principles.
" The privilege of issuing paper money within a
circle of sixty miles radius round London, was con-
tinued exclusively to the Bank of England, but
with the following restrictions :—The establish-
ment was divided into two departments wholly
distinct from each other, placed under sepa-
rate officers and keeping separate accounts.
One for the ordinary purposes of banking,
the other for the purposes of regulating
the issue of note 4, the amount of which Was

In concluding this letter, I quote Alison upon
the encouragement given to speculation :—" To
make paper plentiful when gold is plentiful, and
paper scarce when gold is scarce, is not only a dan-
gerous system at ail times, and under all circum-
stances, but is precisely the reverse of what should
be established. It alternately aggravates the dan-
gers arising from over speculation, and induces the
distress consequent on over contraction. The true
system would be the very reverse, and it would
prevent the whole evils which the preceding pages
have unfolded."

Exchequer notes should be based on the principle
of making paper a supplement to the metallic cur-
rency, and a substitute for it when required, not A
representative of Alison further says :—" Thus,
over speculation at one time, and monetary distress
at another, would be alike avoided, and an equal
circulation would maintain the health of the social

never to exceed fourteen millions, in addition to
the actual amount of gold and silver bullif,n, lodged
by the ban.lcing departmaiit in the department of
issue. This 14 millions is made up of 11,000,000,
the amount of capital which has been lent per-

iannlitie3l:otolymtoooGoofvie)runtimlicei
which the bank of issue is empowered to hold for
at 2 per cent. interest,
securities, bearing interest
that purpose. Porter himself could not refrain
from remarking, "It remains, however, to be
proved whether, under all circumstances that may
arise, the security of the public is thus equally well
attained. As respects the management of the cur-
rency, and there are not wanting men of great
practical experience in such questions, who have
expressed doubts upon this suljeet."
It must be evident that any attempt to regulate
the currency by controlling the issues of the Bank
of England, must fail of its object unless an equal

system, as it unquestionably does of animal life."
The important current of events of the. past
week ealling forth so many remarks, precludes the
possibility of my entering upon the statistics allu-
ded to in my last.

DANGERS OF THE RED PETTICOAT.—Three ladies were
last week v.alking on the Newmarket-road, two of
hem exhibiting the favourite under-garment of the
day, when the iro of a passing bullock was excited by
the glar'ng colour, and, he made a dash at the party. The
offending ladies succeeded in evading him, but their
companion, though in a more sombre garb, was lifted
upon a gate by the beast, but sustained no injury beyond
the fright.—Bury Poo'.