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

ON BANKING AND CURRENCY.

TO SIR ROBERT PEEL, BART., &c. &c.
beg most respectfully to call your attention to
some considerations connected with the currency—a suhtject
that I deeply studied, and wrote upon to the late Mr. Can-
ning and Mr. Huskisson.
I think that I have well digested the propositions you
have submitted to the House of Commons on the sub-
ject of banking, and which I clearly see will ultimately lead
to a centralised bank of issue, with the Government credit
as its capital. There can be no doubt of this result, in the
event of a general war in Europe, or a succession of bad har-
vests in the United Kingdom.
So far as your plan affects the Bank of England, it is good ;
and for the reasons that it is good every bank of issue over the
kingdom, beyond the limits of the Bank charter, should be
governed by the same principles ; their banking and issuing
departments should be distinct and separate ; their issues to
depend on the amount of money they would lend the Go-
vernment, or, what would be still better, on landed securities
mortgaged to the Government, and the amount of gold in
their coffers. What I mean by landed securities are mort-
gages now in existence on lands, or that may hereafter be
three years in existence on lands. The bank of issue in the
Isle of Man has vested such a security with the Government
for the payment of its notes; and such securities should be
made by law as easily transferable as an Exchequer-bill or
bill of exchange. The greater the number of banks of this
kind there would be profitable business for, the greater
would be the amount of employment, and the greater the
strength of the Government; besides which, there would be
confidence in every locality as to the intrinsic value of the
currency, the holders of Bank notes would know that these
tokens of value, or promises to pay, were not only founded
upon gold, which the exchanges make occasionally flitting,
but upon lands in their neighbourhood they know the value
of. Should adverse exchanges occur when banking was in
this state, the contraction of the currency would be gradual
and general, until increased exports from low prices would
turn the exchanges in favour of the country.
You will clearly see that from whatever circumstances the
exchanges might be deranged, the Government would have.
-no serious dangers to apprehend when a great number of
banks of issue were established, with the proposed publicity
of their operations and Government inspection ; but that the
Government would have serious dangers to apprehend from
adverse exchanges with only one bank of issue. A panic in
the latter case would not be likely to subside until the Bank
was drained of all its gold, and an Order in Council was issued,
as in 1798, to make its notes a legal tender ; whereas in the
former case, from local confidence in local banks, no such
effects from panic could arise; the labour of the country
would continue to be employed, with variations in its value,
according to the demand for it; and (as labour is wealth)
the less it would be interfered with by the sliding up and
down of the exchanges, political agitations, and panics, the
better it would be for the eommunity.—l hope you will ex-
cuse this liberty; and have the honour to be, &c.,
RICHARD DILLON TENNENT.
29, Berners-street, Oxford-street, June 3, 1844.