The Sun.
London, England, 1857-12-18 00:00:00

GOLD AT THE MARBLY PRICE.

(FROM A CORRESPONDENT.)

The object of money is to act as a measure of
value in order to an interchange of property. As
men exchange their properties for equivalents, they
must first of all ascertain, by measurement, the
amount of valub on either side, before the exchange
can be made. As a yard measure is a measure of
length, a thermometer of heat, so is money the
measure of value. Now, in all cases it is essential
to a measure, that it be invariable. For example,
an elastic band, capable of extension, can be no
true measure of length ; a porous and absorbent
article, as sponge, is unsuitable for a measure of
weight ; on the same principle, the measure of
value, to be perfect, must be an article of determi-
nate and invariable value. Now, it has been a
source of perplexity in all ages to discover a suitable
substance having this quality. The precious metals
have usually been selected on the ground of their
portability, their incorruptibility, and their nearer
approach to a uniform value than anything else
that has been discovered. The definition of value
has itself been a source of perplexity ; but, without
discussing the nature of any other value than the
" value" of commerce, we submit that " value" is
composed of three ingredients, viz., cost of produc-
tion, supply, and demand. Now, in all these par-
ticulars it must be admitted that the precious metals
do vary, and to the extent of their variation are
they defective as a standard. If the Monu-
ment were measured to-day, and found to be
200 feet, and again to-morrow and found to be
250 feet, we should conclude that the variation was
not in the Monument, but in the measure. And
so it must be obvious that gold, in recording a
general variation in prices of things, known not to
have varied intrinsically, records, not their varia-
tions, but its own. If, then, the precious metals be
adopted as a standard, they can only be admitted
as confessedly imperfect, and in default of a
better.

But to argue from the general analogy of
standards and measures, we inquire whether a
similar variation is found in other standards, ren-
dering them defective ; and if so, by what means
the defect has been cured.
I answer that the defect in some such cases has
been cured, by introducing a second fluctuating
element varying in the inverse proportion. By way
of example, I will adduce a few instances. Tne
vibrations of a pendulum of a certain length fur-
nish a standard of time ; but whereas, the tempe-
rature dilates and contracts the metal, the pendulum
becomes variable, and thereby defective—Allow is
this cured ? By introducing a second element
varying in the inverse proportion ; viz., a column
of mercury ; and the mercurial pendulum is a per-
fect instance of this simple law, viz., that two incon-
stants, acting inversely and proportionally, form
one constant. The same principle may be observed
in chronometers having a compensation apparatus.
It may be observed again in the hydrometer. How
is the strength of spirits ascertained 1 By testing
the specific gravity. The stronger the spirit, the
lighter the fluid. Therefore plunge a graduated
staff, with a knob at the end, into the fluid, and
you may read off the strength. True, but the tem-
perature effects the specific gravity of the spirit, and
the bulb of the hydrometer, and the same spirit
would, therefore, exhibit different strengths ac
cording to the temperature. The thermometer
must, therefore, be introduced, and a sliding scale
graduated therewith, which shall act in an inverse
proportion with the hydrometer, and so a perfect
measure is obtained.
These illustrations will suffice to illustrate the
action of a most simple law, though many others
might be adduced. Let us apply this analogy to
gold, and start the inquiry—wanted a similar con-
trivance for rectifying the variations in the value
of gold. Mr. John Taylor, of currency renown,
seems to furnish a solution to this problem, in his
theory of the market price of gold. In 1797 the
Bank of England was really drained of its gold,
and was only saved from bankruptcy by a Govern-
ment order prohibiting cash payments, which order
was followed by the Bank Restriction Act, which
was repealed in 1819. In this interval, then, of

22 years, the bank note was not con vatible on de-

I wand into gold, but exchange against gold at the
market price, on the principle of quantum valeat.
True, this was not the intention of the rulers ;
their wish was that the pound paper should be as
good as the pound gold, and any shortcoming
thereof was regarded as a depreciation of the paper.
But we think Mr. Taylor has shown that this was
no depreciation properly so called, but simply the
general enhancement in prices, consequent upon
h
'
in which enhance-
ment,t e
taxationgold
being of
free the
to move, shared with all
other things ; and from the experience
of these 22 years, Mr. Taylor arrives at his theory
of currency, which may ba briefly stated as fol-
lows :—Let the Government be empowered to issue
notes to the amount of the annual taxation. The
form of the note would be, not "I promise to pay
51.," but " this note is to pass current for 5/." It
Nroisld be a legal tender between man and man, be•
tween Government and subject, and subject and

Government. If the amount corresponded with the
year's taxation, it would all return to the Exche-
quer in the year's course, and so could not be de-
preciated ; nor would it be described as au unli-
mited or enormous issue of paper, being strictly
limited and governed by rule. But here arisesthe
great question of Sir Robert Peel, which has sorely
perplexed many of the paper currency school t )
give a short and easy answer to. If the "pound"

IPe not a definite amount of gold, what is it ; is it
the ideal unit ? Tho answer is, that by Mr.
Taylor's plan, the note would always be convertible
into gold on demand, but not always at the same
rate : the rate would vary with the market, and
would be declared by the Bank at stated intervals.

The pound paper would therefore be the pouad
of account : it would always represent a definite
amount of gold, but not always the same amount.
And referring to the law of analogy with which we
set out, we submit that if gold have intrinsic
value, and vary in value, a uniform amount
of gold can naver continuously be the ex-
ponent of a uniform value, but a fluctuating
amount be, and if the fluctuation be inversely pro-
' portionate with the value, it certainly wilt be a
true and invariable measure of value. The plan,
therefore, seems to have this to recommend it—it
was practically in use for 22 years ; it seems to be
philosophically correct, and in analogy with other
standards ; and it renders us secure against panics
and frequent paralysis of trade, whenever, by the
operation of the exchanges, there is a drain of gold.
The obligation to pay in
gold at a fixed rate is toler
able only so long as the great majority of creditors
refrain from asking for it, but in times of panic,
either in this or any other country, it is a physical
and will always result in a desperate
struggle and competition for the precious metal
(only one form of wealth out of a million), to the
ruin of numbers of merchants, and to the advantage
of those who do nothing else but watch markets,
and fatten upon other people's disasters.
The bearing of this plan upon private banks is
simply that they would be bound to take up their
notes on demand, in the Government paper money,
or in gold at the market price, like the Bank of
England. Credit can do great things for a country ;
the most important form of credit is paper money,
and the present moment affords lamentable evi-
dence of the mischief which results from a curtail-
ment thereof. The subject is admitted to be per-
plexing ; and we do not pretend to have fathomed
all its depths, but we feel that a true theory of
currency, well e,tablished and well elucidated, is
a desideratum of the first class, and if we think we
see truths partially
and imperfectly, we also think
it may be advantageous to exhibit what light each
may possess, in the hope that some more powerful
mind may gather all the scattered rays into a focus
for the advancement of the common good.

ROYAL COLLEGE OF
SURGEONS. The following
members of the College having undergone the necessaryexammatiors, were admitted Icentiates in midwifery at
a meeting of the board on the IGth inPt. :—Mesers.
?Samuel Oliver, Guildford-atreet Ruvell-square; Charles
-.
1_): t-L id Doig, l 1
'--gate ; Thomas' Edwin Edwards,
Glocester-crescent, North, Westbourne•pa,rk ; Frederick
Thomas Wright, Assembly row' Mile-end ; Jarnef John
Beer, Holborn ; William Sly, Whicanton, Smnereet ;
and Charles Theophilus KF lland, Plaistow, Essex,