The Sun.
London, England, 1857-12-22 00:00:00

EXCHEQUER NOTES.

In as short a space as shall be consistent with
the object in view, I forward you the reasons why
Exchequer notes will not be adopted by our
Government, constituted as it is at present. First
principles must be regarded and properly esti-
mated before that which would benefit the majo-
rity of the country will ever be the basis of legis-
lation.

1 Notwithstanding the increase of bullion is close
upon three millions, being 2,967,000 from the
lowest point when the Government letter was
issued; notwithstanding the increase of the reserve
of notes and coin in the Banking department make
together 6,282,2951., gold continuing to arrive
from various sources, the amount already received
from the United States found to be considerably
in excess of the amount shipped since the begin-
ning of the crisis, the Bank will not reduce the
rate until the directors feel quite confident that
they can safely return the two millions of addi-
tional securities to the Banking department.
Notwithstanding the-Bank con! I no longer pin
France to their high rates, the viEtter having re-
duced its rate to 6 per cent., the Bank of England
clings to her darling adopted 10 per cent., with
all the tenacity of a miser regardless of all else
but self, her much devoted Economist assigning
no other reason, de facto, for her doing so than
because " she can get it," we might be quite sure
her third-class principle of action will remain in-
violate as long as " she can get it"-10 per cent.

The words of the Economist are :—" As long
as the demand upon the Bank of England con-
tinues so great as to maintain the securities at so
high an amount, it would not ba a safe step to
haz ►rd any material reduction in the rate of dis-
count." This is a fine specimen of ambiguity, a
true genius for turning things upside down.
What a famous mountebank he would make, to
stand upon his head riding the horse of many
odours round the endless sing t
History furnishes us with the reason for all
this. Bankers have discovered that themselves
and the money dealers are benefited whenever
produce can be kept low, simply because then one
pound is the purchase power of thirty shillings'
worth of goods, when they were 50 per cent.
higher; that class of men having their money to
spend, expend less money when produce is low;
less money is in circulation among commercial
hands, hence more is in the bankers' hands.
High prices of produce, of course, produce the
contrary effect-. Now, of course, it is the busi-
ness of the Bank to retain money in their own
hands. They have two ways of doing so—one is
by keeping produce low, the other is by keeping
discounts high. Ever since 1819 they have acts('
upon that policy to the best of their ability.

During the wars from 1797 to 1815 the very
reverse of that policy was pursued. The other
extreme, we know, was practised. Paper was
the substitute for the precious metals—the issue
was inconvertible. The extreme of inconvertibi-
lity of that day enables the bullionist to refer to
it as an example and a specimen of such currency;
and although it brought the nation through
its dangers prosperously and triumphantly,
at a time when scarcely a guinea was
left in the country, a wanton reckless-
ness of Government brought the natiin into
an indebtedness beneficial to the money-dealers
only that survived 1825, at the expense of all
else. Now, because we then went to one extreme
of inconvertibility, it seems we must now go to
the other extreme of restriction ; as if a just
medium would not be as desirable now as then.
The error is as great now upon restriction as it
was then upon extension, but there is this fact,
that it opened the eyes of monetary men to the
side of policy which peculiarly benefited them.

A violent contraction or extension must ever be
attended with dangerous results. Hence the Bill
of 1819 furnished evidence of the evils resulting
from the sudden contractions, as 1797 did of ex-
tension ; but its duration was not so great, for in
1822 Government gave an extension to the cur-
rency for ten years, during which small notes
were to be retained in circulation.

Notice the lowering of all articles of produce
just in proportion to the currency in circulation.
In 1818 it was 48,278,0701.; in 1822 it Rai
26,588,0001. During this reduction the price of
all produce was falling pro rata till it reached 50
per cent. below the prices of 1818. Of course
the effects of the South American Revolution, re-
ducing the supply of the precious metals to a third
of its former amount, rendered the inopportune
Bill of 1819 more disastrous than it could have
been, had it not rendered paper the representation
of gold only—as if paper is not bona fide and
de facto a better currency when it represents re-
gistered property declared and published.

Any accident happening to the supplies of gold
now produces the same effect upon us as did the
South American Revolution—in fact, a temporary
and comparalivdy small withdrawal of bullion now
produces a panic of overwhelming magnituth
showing how highly sensitive aro we become now
by the restriction of 1844, and for want of a cur
rermY independent and unconnected with gold,
that now Bo fluctuates in supply and demand.
Taxation issue
would leave none of these fluctua-
tions of 1 supply, and would form a batter conver-
tibility than gold
on that account. Whilst no
better security
cart ex;et than property, gold cer-
tainlyis not better. Exchequer notes, uncon-
nected the Bank of England, would keep 1
the latter
'a wbolebome cl
peck, anl prevent many

of the tricks that a gold convertibility now facili-
tates. This is the very reason why we are not
likely to obtain it, as our Government is at pre.
sent constituted. The banks do not intend to
have any alteration to the facilities they now pos-
sess in turning every monetary change to their
own advantage ; they do not intend to forego the
great advantages of buying produce for little of
that money, and, at the same time, charging
double for their contracted currency—certainly a
very fine game for the banks to play ; but in just
the proportion is it as ugly a game for pro-
ducers and commerce to play.
Certainly every reflective mind must discover
that an insufficient circulation must enhance the
price of its interest, as it must also lower
the price of produce in general ; great care do
the bankers take, therefore, to perpetuate this
state of, things—the best of all reasons why we
shall not have Exchequer notes, if they can
help it.

If any yet doubt that a contracted currency
has the effect of reducing the price of produce, I
refer them to Alison's History, from 1815 to
1852, vol. 3d, page 6;1, dm, also to Porter, 3d
edit., 359; also to Tooke on Prices, vol. 2d, 390,
401.

It is said by the supsrficial observer, " so much
the better, the lower the prices the less we have
to pay, and the better position are we in to ex-
port ;" but they forget that that is the language
the bankers can use with satisfaction to them-
selves, but not at all compatible with the pro-
ducer's living by his produce, whether manufac-
tories or otherwise. It is never beneficial to in-
dustry to receive half its reward.

The Malthusian advocacy must to every pro-
gressive mind be seen to be so deficient that I
shall not waste time here to disprove it. Stimu-
huts to industry I have always found to be com-
patible with high prices. As we pay our best
and most skilful hands the most money, the least
skilful the least wage, so it is with the nation—
improve the price of produce, and all producers
are benefited by it, since it is their article of
commerce, their only representation of payment's
measurement. The horrid Malthusian idea that
" goad a man to starvation, and you drive him
to industry," has been pretty well illustrated of
late by the ticket-of•leave men. Goad men to
starvation, and you force them to rob ; encourage
them by remunerating pay, and you find
them improving mentally, morally, and bodily.
Now for exports—it is said that we by low prices
extend our exports ; how is it Germany does not ,
carry the export trade before them ? Or France
Or America ? The question must be answered
Countries that are increasing in wealth so rapidly
as those to which we export prefer quality and
elegance to cheapness (nearly all except the Cape
do) ; the best brands are the goods that pay the
best ; the best marks of manufactures the same.
But of greater importance than all is the capital
among the producers, the greater their capital, the
greater their command of exports—reduce their
capital and you reduce the source of industrial em-
ploy ; by a contracted currency you endanger
both these advantages. As colonies and countries
improve in means, so quality and elegance are esti-•
mated more and more. Now the contracted
view of the Bank of England not only fetters
England, but affects all the world more or less.
Merchants everywhere are liable to their sudden
changes of tact, and, consequently, its ruinous in-
fluences, wherever man has set his foot.
It must not, therefore, be overlooked that if
prices of produce range high in England, they
will elsewhere. The little timid manufacturer
partaking alittle of the Jewish tribe fancies his only
chance is low prices; while the larger manufacturer
renowned for his quality and style, relies impli-
citly upon both the quality and style for his vast
demand. All merchants know well the producer
and manufacturer of brand and mark compose the
grand bulk of exports in amount. The timid
little traders, at low prices, are merely exceptional.
I assert, therefore, that our exports depend more
upon our prestige, than upon our price, as the
world happens now to roll over.

The fact then is established, that high prices of
produce benefit the producers nationally and mer-
cantilely ; the only men that would not, to the
same extent, be able to make their fortunes at
the expense of all commerce, would be the bankers
and money-lenders; that is why we do not have
exchequer notes

Nothing can more fully corroborate the prin-
ciple, that prices are regulated by the extension
or contraction of the currency, than the statistics
furnished by Alison's History from the year 1820
to 1824, in reference to stamps for country bank
notes issued on 10th Oct., and the average price
of wheat—

Average price of
wheat per qr.
Year 1820 £3,574,894 s4s 6d
" 1821 3,987,582 . 49s Od
" 1822 4,217,241 3Bs lld
" 1823 4,657,589 s2s 8d
" 1824 4,822,174 64s 3d
Justly then, the notes issued from 1820 to
1822 indicat,. the struggle the country banks had
in maintaining issue enough for commerce till
1822, when the extension of the currency had the
effect of immediately raising the price of wheat,
which- n 1822 was 38s 11d. per quarter, in 1823
to 525. Bd., and in 1824 to 645. 3d. (All these
effects were produced by an extension of issue.
Much more remarkable are the frets of the Bank
and the bankers' notes in circulation, the paper
under discount at the Bank. In 1815, when
paper had not arrived at its climax of issue, when
Bank notes were 27,261,6501., country ditto
19,011,000/.—total, 46,272,6501.; paper under
discount, 20,660,6941.; price of wheat, 555. 71
The following year paper had arrived at its clinaf.x
—that is, the paper under discount was reduced
from 20 millions to 11,182,1091., and the price
of wheat 103 s. 7d. per quarter.
This fully proves that according to the exten-
sion of issue, less paper is under discount, and
the higher the price of wheat it becomes the then
staple article of produce.
It must be so ; this diminution of paper under
discount continued till 1821. Of course the im-
mediat3 effect of an Act of Parliament is not
always felt or exhibited in figures the same year,
nor sometimes in the following year, but the
minimum quantity of bills under discount in 1821
was 2,722,5871.
Compare this with that under discount in the
year 1815, when it was 20,660,694. We shall
soon discover the cause of so much paper under
discount at the present day, when, jointly, the
bills of 1819, 1825, and 1844 combine to lessen
the currency during the times of an extended com•
merce, doubling and quadrupling itself in amount.
Paper would not now be under discount to such
au extent were the circulation commensurate
with the increased commerce. Without much
further investigation, discounts can be proved to
be caused by an insufficiency of circulating me-
dium. But this need not be proved to the
bankers, they are too well aware of the fact, as
are the bullionists. This deficiency of medium
in currency causes most men doing business to
any txtent to discount with his banker, that is
as safe as the Bank of England, but is too much
occupied to investigate the principle which regu-
lates currency, and, in good faith, take for
grarited these great 111911 of money-power are doing
what is right and best for the nation. 1 find that
I have exceeded the limits of a letter. In my
next I will bring the proofs forward, up to the
present time, that will furnish ample evidence
that excessive paper under discount is the result
of an insufficient circulating medium.

Air Exeell-ncy the Persian Atoh3.9sador, accompanied
by the members of Liu suite, and attundad by Cal,tain
left Clarilge's Hotel, last oveuing, on a visit to
tier et Windsor Castle.
The Duchess of Aihole hai left the St. George's Had
for Dunkeld House, N.B.
The MarquiA and vlarchioncss of Ailesbury, accom-
panied by the Marchioness (Nl4ria) of Aiksbury, were
to leave Severnoke Lodge yesterday, on a visit to the
Right Hon. Sidney and Mrs. Herbert, at Wilton
_House.

The Earl and CJuntess Granville left town yesterday,
on a visit to the Right Hon. Sidney Herbert and Mrs.
Herbert, at Wilton House, near Salisbury.
The Countess of Powis and the Ladies lierbeit
have returned to Powis Castle from a tour of visits.
The Earl of Shelburne will leave Lansdowne house
to•day fc.r ILwued.