The Sun.
London, England, 1844-06-07 00:00:00

ON THE CURRENCY QUESTION

(FROM A COREESPONDELIT.)
• It is rather surprising that the measures lately proposed by
her Majesty's Ministers for the future regulation of the Cur-
tkency should have been received with such general approba-
tion by all parties. We can only account for this favourable
reception of the
.Gevernment project by supposing that few
persons are disposed to go very deeply into currency ques-
tions at all. If, hoWever, it was more generally known that
the,property of all men fluctuated with the variations of the
curiency, this sdbject would command very general attention.
The Government measures' hare' been so fully discussed in
the newspapers that it would be quite superfluous to go
through them again in detail. The chief subject, however, under
consideration must not be omitted—the note circulation. This
resolves itself into two divisions—the note circulation of the
Bank of England, and the note circulation of private and
joint-stock banks. The former is now to be limited to
14,000,0001. upon securities, and to an additional sum vary-
ing with the deposit of bullion in possession of the Bank.
This deposit of bullion at the present time is about
16,000,000/. ; therefore, the Bank of England, under
the new regulation, may issue notes to the 'amount
of 30,000,0001., or about 8,000,0001. above the present
amount of its circulation. The bank of issue is to
be distinct from the general banking department, and the
profits of the circulation above 14,000,000/. are to accrue to
Government, and the general banking department must hand
over bullion to the bank of issue for all notes it requires be-
yond the sum of 14,000,000/. We have here an attempt at
providing for the exigencies of the country, and a security to
the public for all notes issued by the bank, in the shape of
a deposit of bullion, ; but, in case of the withdrawal of
that bullion, a corresponding contraction of the Bank of Eng-
land notes. Let us examine the natural results of this ar-
rangement. In times like the present, when we are suffer-
ing from an abundance of money, with interest running at
2 per cent. in the London market, we are liable to the further
issue of 8,000,000/. of Bank notes, and the consequent reduc-
tion of interest to 1 per cent. In times of scarcity, when gold
janeedtedintteoreastvriuolnennint gcoanttsrapcetironceonft.,thoer
circulation, thereby-increasing the rate
aiosbf Bankoiivitee,
orwfe leavingsEet
interest,
hhagenal
aldclnotabuh
enentorsylui
note circulation,
difficulty of obtaining discounts, and pro-
ducing failure and distress throughout the whole country.
This, then,. is the necessary operation of the new Govern-
ment measures regarding the Bank of England note circula-
tion. By all sound writers on the currency, it has been
plainly shown, that the Bank of England has erred
most during times of a full currency add favourable ex-
changes, by increasing her circulation of notes, and lending
money at very low rates of interest, instead of contracting
her accommodation, and retiring from the money market
until the glut of money had passed away. Ia the Govern-
ment project we see, instead of a check upon this evil, on the
contrary, a decided opportunity granted to the Bank of Eng-
land to augment it. We see, also, instead of the valued
power of accommodating the public by liberal assistance, in
times of scarcity, an absolute, withdrawal of that power in'
direct proportion as it is most likely to be required. Having
said thus much on the subject of the Bank of England cir-
culation, we come to the second division of our subject—
the circulation of the country bankers.
Here we are, indeed, at a loss to imagine why the banks of
Scotland and Ireland are wholly omitted from the regula-
tions which are proposed for the English banks of issue. If
the object of Government is this, as nearly as possible to
assimilate the currency of the country at large to a metallic
currency, the first step should undoubtedly have been, that
of withdrawing the small notes still in circulation in Scot-
land and Ireland; but, instead of this measure, the circa=
lation of the country banks in England alone is to be
subjected to an arbitrary limitation, taken from the
average of the last two years' circulation—a period
showing an average the lowest that could possibly be
found! We object, in toto, to the charge made by
the Government against the country banks of issue,
that they constantly augment their notes, when the Bank of
England is endeavouring to contract, her's. If they were
guilty of this practice, they would certainly afford the coun-
try some relief during a period .of commercial pressure and
difficulty ; but the circulation of country notes (not payable
in London) has been shown to depend upon a certain local
demand, which is regulated by the prices of agricultural and
other produce, and by the payment of rent, taxes, &c, and
has nothing whatever to do with the operation of Bank of
England paper, which alone finds its way into the centre of
trade and commerce, and adjusts the balance of all large pay-
ments in London, or throughout the provinces. A contrac-
tion of the circulation of Bank of England notes, by causing
a general fall in prices, will speedily, reduce the circulation of
country notes; but, above all, it should be borne in mind,
that the regular exchange of country notes between banker
and banker, and the general practice of allowing interest on
all deposits in the country; alone prevents a country bank
note from circulating any length of time. Viewing, then,
the Government scheme as a whole, though attended with
some advantage, we cannot but see that it its fraught with much
danger and some injustice. With danger, because it will
have a tendency to increase the fluctuations of interest, from
extremely low to extremely high rates ; also to afford extra-
vagant accommodation at one time, and very hurtful pres-
sure at another. With injustice, because it is founded upon a
able to counteract the stringent
false assumption that the country bankers are answerable for
contrary exchanges, and _
measures of the Bank of England , whilst, if they were so,
the Scotch and Irish banks are entirely left out of the ques-
tion, in-
terference.
as if they were beyond the province of legislative

TO THE EDITOR OF THE SUN.
SIR,—I
tko, go on and
will commer-
cial with every word which your sensible and
pithy correspondent "Common Sense," has written on the
the subject of the wicked as well as stupid measure of Peel,
andaninkiand man
Banking. ias
rceialattßinrgitationthaleloCurrwtbeny
obstinate
isc-
in-
volve the country in the desperate ruin heir preparing for it ?
Are we to have a repetition of the scenes and miseries of
1825, and nothing done to stop him in his cruel career?
What, Sir, are the merchants of London about ? Why do
they not instantly meet and enter their indignant protest
against a measure, the miserable consequences of which, if
carried, no one at present can justly estimate? It really is
appalling. to think of what awaits us, and yet to witness the
besotted indifference that seems to have seized upon the pub-
lic mind with regard to it.
I earnestly entreat you, Mr. Editor, to try by your power-
ful pen to awaken the whole mercantile body of this country,
and endeavour, if possible, to save us from the frightful mis-
chief that this measure involves in it. Your correspondent
has most justly termed the framer of it a " lunatic," but we
are a nation of lunatics if we suffer it to pass.
Sir, yours respectfully,
Manchester, June 4, 1844. A MERCHANT.

„
CIIARACTERISTIC.--ALne review at Windsor, a
spectator, exulting in the magnificence of the warlike array,
exclaimed, ” What does Old Nick think of that ?" To which
irreverent question, a Quakelike personage, whofneverthe-
less evinced great curiosity, and who mistook the personage
referred to, replied with a groan, he feared " Qld Nick would
be'but too delighted with it,"