The Sun.
London, England, 1857-11-11 00:00:00

THE MONETARY

TO THE EDITOR OF THE SUN.

Sift,-A` panic was absolutely necessary to open
filo eyes of the nation to the absurdity of our
monetary laws. Our position reminds one of a
gentleman who, baying a litter of pups continuing
blind longer than usual, ordered them to be drowned
the next d.ly it they did not open their eyes ; and
asking his man afterwards if they bad opened them
Yes," said John, " but they were sinking first."
So it is with us.

Dreadful will be the suffering to individuals if
no relief be given ; yet here, as also in India, I
trust we may see ere long the hand of mercy--
"from seeming evil still educing good."
Continue, sir, to arouse and awaken the nation
to a sense of its folly, and ask them if, in assisting
America with the gold we can safely spare, we are
not helping ourselves in the most effectual way ;
for if the Americans cannot take our goods, what is
to become of our workpeople during the coming
winter.

You will oblige me by inserting, if you can find
room, the following extract from my pamphlet—
" The Bane and Antidote of our Monetary System"
—explanatory of the policy of permitting our spare
gold to be exported.-1 am, Sir, your obedient
servant,

HAMER STANSFELD.
The Grange, Burley, near Otloy,
Nov. 10, 1857.

7tb. That the Act of 1844, in seeking to maintain the
convertibility of the bank note into gold through the
means of pressure, by contracting the note circulation as
the gold flows out, raises the rate of discount, make■
money dear, and everything else cheap—and produces
incalculable mischief. The reputed author of the bill, S.
J. Loyd. Esq., now Lcrd Overstone, gave the following
opinion before the Lords' Committee, " I think that a
relaxation ought only to take place in the last extremity,
and when the inconvenience arising from the pressure has
produced all its legitimate effects in rectifying the ex-
changes and the danger of general confusion has become
imminent." In other words, that a panic should pre-
viously exist ; an opinion fraught with greater evils to a
commercial community was surely never uttered. It is
contended that there is no other way of bringing the gold
back and of maintaining the principle of the converti-
bility of the note, which is and ought to be, the basis of
onr monetary system. But gold, like water, will find its
level ; if it flows out too freely from this country it will
overflow in others, its valne will fall and rise here, and
it will then naturally return to the most profitable mar-
ket. It is only during its temporary absence that this
convertibility is endangered. This was fully admitted
by Mr. Morris in his evidence before the Commons'
Committee in 1348. He was asked—

"Q. Did you not say that there was a natural ten-
dency in trade to rectify itself l—Yes ; if a sufficient
period of time is allowed, there is a natural tendency in
trade to adjust itself ; but the rectification does not take
place so rapidly through goods and securities, as through
the medium of the precious metal,

"Q. But during the absence of the preoions metals,
might it not be advantageous to the country and pre-
ventgreat loss, if we had atemporary substitute for those
precious metals ?—lf you have a temporary substitute in
the absence of the precious metals, you do away with the
convertibility of the note ; I am always bearing in mind
the convertibility of the note.
•' Q. Then the price of the convertibility of the note,
under that state of things, is the disemployrnent of
lab nr and the ruin of the merchants of this country
—The pressure which the export of the precious metals
causes, naturally will cause failures of parties who may
have been over-trading, and will also cause a fall in the
price of goods.
" Q. And it will lead to a disemployment of labour I
—Probably for a time it may lead to a disemployment
of labour."

Now the danger to the convertibility which he appro.
hands may be averted, and the extreme fluctuations in
the rate of discount at the same time avoided, by granting
to England the same privilege which Scotland and Ire-
land possess, of using one p ,rind notes. By empowering
the Bank to substitute 30,000,0001. of notes for sove-
reigns—as circumstances might render necessary, dope.
siting one•third of the sovereigns as a guarantee for the
convertibility of the notes (admitted to be a safe propor•
tion), we should have a reserve of 20,000,000 wherewith
to protect the circulating medium against export, and
to keep steady the Bank rata of discount. Let the
Bank of England abide by its former rule cf never
discounting under 4 per cent. ; and when its reserve
is so much reduced by a drain of gold as to make
an advance to 5 per cent. necessary, let them avail
themselves of this power of issue, on paying interest to
the Government at the rate of 4 per cent.forthe advance
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for notes they would be able to add two t.orctuhl R
tampering with
he obtained without in the slightest degree
The market rate of interest would be left
the currency. the ealtrion woold
By this means a power of regulating
find its natural level, and the arbitrary interference
to
of aJoint Stock Company like the Bank of England
with the value of money would be counteracted. The
operation of this national resewrthvheiischwcoouduneldptreyrnedasenmudpboolenthtehtrhaset
of a reservoir for supplying canals during periods of
amTheeynts
between Exchanges,
dbraol
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of
p
would adjust themselves without the ruinous depreoia:
tion of prices entailed by the pressure of our present
system. If our imports exceeded our exports, say, by
5,000,0001., that amount of gold would probably have to
be sent from the Bank Reserve,—the balance due to
foreign countries would therewith be paid—the Exchanges
woul I be adjusted--and the vacuum in the Bank Re•

serve filled up by the mode suggested. When
of gold took place, which in the course of time would
naturally occur, and would be accelerated by the Bank
rate of discount being 5 per cent. (higher than rules,
generally on the continent) then the Bank Reserve would
be increased, and sovereigns instead of one pound notes
again be issued, as it would no longer snit the Bank to
pay 4 per cent, to Government for the acoomniodiktion.
Under such a plan gold could be exported as a com•
modity without diminishing the currency, and might
flow in or out of the country without creating any
greater anxiety or speculation than the import or export
of any other commodity to the same amount.