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

ON THE CURRENCY QUESTION

(FROM A CORRESPONDE/ii.)
It is rather surprising that the measures lately proposed by
her Majesty's Ministers for the future regulation of the cur-
aency should have been received with such general approba-
tion by all parties. We can only account for this favourable
reception of the Government 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
currency, this subject would command very general attention.
The Government measures have 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, &C. ; 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 8,000,0001. of Bank notes, and the consequent reduc-
tion of interest to 1 per cent. In times of scarcity, when gold
is leaving the country, and interest running at 5 per cent., or
above, we shalt be subjected to a violent contraction of the
Bank of England note circulation, thereby increasing the rate
of interest, and the 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
We see
Passed away. In the Govern-
lemaonenndt rt
contrary,
project
g augment
ejoedflnetdme;
oto.ipnnpesyot-re
thaudandoi
opportunity
agcheck upon this evil, on the
d
power of accommodating the public by liberal assistance, in
arlsaon,teilttoeatdhe
oßfanthkeofvaElunegd-
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 oar 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 circu-
lation of the country banks in England •alone 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 daring 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 is 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-
svuargeanatt
another. With
aint
jounseticte,imbeec,
aainisde
ist-eirsyf3ihmudrtefduluppornesa-
false assumption that the country bankers are answerable for
contrary exchanges, and able to counteract the stringent
measures of the Bank of England; whilst, if they were so,
the Scotch and Irish banks are entirely left out of the ques-
tion, as if they were beyond, the province of legislative in-
terference.

TO THE EDI7'OR OF THE Suit
Sin,—l agree 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,
relating to the Currency and Banking. I ask, will commer-
cial Britain allow this obstinate mad man to go on and in-
volve the country in the desperate ruin he is 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 pf 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 fromthe frightful mis-
chief that this measure involves in it. Your correspondent
hasre a a
mostati je it itstel f lunaticsytermedif the
we
ufreankr it to pass,
eer of it a " lunatic," but we
a•

Sir, yours respeeifu:in
Manchester, June 4, 1844. A MERCHANT.

CITARACTERISTIC.---At the review at Windsor, a
spectator, exulting in the magnificence of the warlike array,
exclaimed, " What does Old .Nick think of that ?" To which
irreverent se- e
vriennctegreatquestion,
a curiosity,Quak and who mistook Quaker •l ike personage, who neverthe-
less
the personage
referred to, replied with a groan, he feared " Old Nick would
be but too delighted with it.'