The Sun.
London, England, 1857-06-04 00:00:00

and si)ent--long ago by the Government, and, six
millions representing capit'ul (bullion). The basis
then of our monetary system; our legal tender
money, is not capital alone, but capital and credit.
Now, as the Act of 1844 not only re -tricts but
actually curtail; the quantity of notes issued
against credit, and prevents any addition to those
issued against bullion, inasmuch as the Bank of
England gains nothing by such issues—is it not
evident thAt, as the expansion. of trade requires more
bank-notes, the rat-11 for their use must advance
and money become dearer? You infer that be-
cause the notes in circnlat.ion in ~Turn and Octo-
ber, 1855, were nearly the same in amount, whilst
the bullion had diminished some seven millions;
and the rate of discount had advanced from 3i.•to
7 per cent. ; that the withdrawal of bullion was
the cause of the advance in the rate—true enough,.
because the legal tender notes: issued against bul-
lion were diminished to that extent, but the effect
on the rate of discount would have been just the
same had no decrease of gold taken place, if the
same amount of notes issued against securities had
been cancelled by some arbitrary law, like that of
1844; the supply of legal tender money would have
been equally diminished either way, and on the
deniand and supply of legal tender money, and
nut on that of capital alone, I submit, depends the
rate of discount.

With countries having a different monetary basis
no just comparison can be made; take Hamburg
for example, to which state you refer. The mone-
tary basis there, upon which their rate of discount
depenis, is silver alone ; this is deposited in the
vaults of the Bank by parties Opening accounts,
and discount transactions are effected by written
transfers from one to another without touching the
silver. Should, however, the silver, from any ex-
traordinary rise in price, be abstracted from the
vaults, the fund for discount is diminished, and the
rate rises. The same with Holland, whose mone-
tary basis is also silver, . whilst ours is a legal
tender money based on credit tenfold. In France
the notes of the Bank of France are not a legal
tender, but being convertible into gold or silver
on demand, the public receive them voluntarily
in discharge of debt. The monetary basis, there-
for, varies in different countries, and experience
I think will show that the broader and sounder
the basis in propoition to the transactions, the
steadier and lower will be the rate of discount.
In support of these arguments, to show that the
rate of discount does not depend solely on the de -
mand and supply of floating capital, I would ad-
duce the fact. that for 140 years previous to the Act
of 1844, the Bank of England, notwithstanding the
great vic.ssitudes in the supply and demand of
capital which must have occurred during that
period never raised their rate above 5 per cent.,
and, again, that when the Government letter in
the panic of 1847, authorised an additional issue
of; notes against securities, the rate of discount fell
without any increase whatever of floating capital
the country. Let me add to these arguments
and facts the opinion of Mr. Tooke, than whom no
higher authoriv on prices exists, who says in his
" History of Prices," vol. 5, page 573. "Indeed,
looking at the circumstances of the whole period
from January 1848, to the autumn of 1855, I am
strongly of opinion that the . uniform rate of
4 per cent. might have been preserved greatly to
the conven'ence not only of the mercantile and
banking community, but of the public generally."
I cannot conclude without expressing my grati-
fiCation at the protest in the money article of your
journal of the 23:1 May, against the needless pro.
tection to currency, and ;having myself for years
tried in vain to rouse the attention of the mercan-
tile community to the advantages of the trade in a
sound currency, adopting as a maxim, "Take care
of the quality, insuring the convertibility of the
note into gold, but leaving the quantity to. take
care of itself,'' I shall with pleasure anticipate
greater success from your powerful advocacy of
that principle.
I am, Sir, your obedient servant,
HAILER STANSVELD.
1857.
Burley, near Otley, May,

M. Carano, a Neapolitan officer, who distinguished
himself in the defence of Venice in 1849, has just pub-
lished at Turin a life of General Pepe, who died in exile
in August, 1855. •
ANOTHER " FRIAR B4ooN.”—Seine important experi-
ments have been lately tested at the Woolwich dockyard,
by direction of the Government, in the presence of the
authorities of that institution, to prove the value and
advantages of the invention of the Abbe Pauvert, for
producing steel of the be.t. quality from the most ordi-
nary cast and puddle iron, and indeed from pieces of iron
in any state. M. Pauvert has secured his invention by
a patent from the British Government, and- we under-
stand also over the greriter part of Europe. The advan-
tages of this invention may be gathered from the follow-
ing facts :—Steel of a _superior quality has beep fabri-
cated Swedish iron,
hitherto from which, according to
the current prices of the day, costs between 14/.los. and
161. 10s. per ton ; whereas, by the Abbe Pauvert's pro-
cess, the same is produced from British forged pig iron,
varying in price from 41. 10s. to Si. per ton ; and even
from old refuse or scrap iron. The manufacture of the
steel does not require the slightest change in the ar-
rangements of the smelting and elementary furnaces,
crucibles, or (Aber apparatus. The conversion of the
metal is simply effected by chemical ingredients and
electric agency, at a co,t not exceeding 1/, 4s. per ton,
nor is there any loss of material whatever, as one ton of
the worst iron yields one ton of raw steel. We have no
doubt but the vast advantages of this wonderful discovery
which have already been brought into operation, we are
informed, by the Messrs. de Beauchamp, Messrs. Beroit
de Asy, and other great iron masters in France, will be
fully appreciated in this country,