The Sun.
London, England, 1844-07-22 00:00:00

THE CURRENCY.

Mr. Loyd, in illustrating his principle that the Lames of
paper should be regulated by the stock of bullion, goes over
some historical ground, which well .deserves to be placed be-
fore the men of business of this City, all of whom are cog-
nisant, some of them painfully so, of his facts. Adverting to
what are termed the " panics" of 1825, 1832, 1837, and 1839,
he offers proof with respect to the first, third, and fourth
period, that the intensity of them at least was owing entirely
to the disregard A that principle ; and that in the second pe-
riod, that of 1832, the threatened consequences were averted
by an adherence, even though partial and in some measure
accidental, to that principle.
This may be shown in much less space than Mr. Loyd has
devoted to it, leaving those to consult his pamphlet who
wish a complete acquaintance with the details and the
figures, the utility of which there is no intention of dis-
paraging in this attempt at the brevity which we know to be
always acceptable to City readers where it can be attained.
His figures then show, with respect to the first period,
when no returns were made of the country circulation, that
the stock of bullion fluctuated as under :

February, 1824 ...
August, 1825 .. ...

Millions.
13i

Difference
and that the Bank issues were in

February, 1824
August, 1825

Millions.
194
19*

Difference .
That the Bank directors, in fact, paid no attention whatever
to the abstraction of their bullion, or (relying, perhaps, on
the "prosperity" doctrine of that time) thought it of no im-
portance to do so. The crisis which followed was the most
dreadful which has ever occurred.

Mr. Loyd's figures further show, with respect to the third
period, that of 1837 (and we purposely leave to the last that
of 1832, as forming the exception), that the stock of bullion
fluctuated as under : Millions.
September, 1833 ll
March, 1837 4

Difference 7
Yet, taking the aggregate of the paper circulation, the
country issues, as well as those of the Bank of England, the
following results are exhibited : Millions.
September, 1833..
March, 1837

Difference
And the consequence, as deduced by Mr. Loyd, was the
failure of some of the largest London houses, and the prostra-
tion for a long time afterwards of our foreign trade.
Mr. Loyd's figures further show with respect to the fourth
period, that of 1839, that the stock of bullion fluctuated as
under : Millions.
March, 1838
September, 1839 ,

. 2l

Difference
And with respect to the paper circulation, these were the
results— Millions.
March, 1838
September, 1839 29

Difference
This state of things led to the advance of the rate of inte-
rest to 6 or 7 per cent., to the loans from the banks of
France and Hamburgh, and to the prostration of the ra-
tional character, as well as that of mercantile credit. The
Bank had no control over the country issues, and did not
like to disturb their own, for fear of reducing the dividend
among the proprietors.
In the second period, that of 1832, something like an ad-
herence to Mn Loyd's principle was manifested, not im-
probably because the Bank were then engaged in a negotiation
for a new charter ; and these were the results :—The stock
of bullion stood in— Millions.
August, 1830
February, 1832

Difference
And the paper circulation, taking that of the Bank (for the
country returns had not then been established), was—
Millions.
21i

August,lB3o..
February, 1832

Difference
" On this occasion," says Mr. Loyd, " the drain upon the
bullion does not, as in all the other cases, terminate in a
crisis ;" and he cites the following remarks upon it from a
pamphlet of Mr. Horsley Palmer :--
"Although during this period the bullion in the Bank was
diminished from 12,000,0001. to 5,000,0001., yet in the pro-
gress of this reduction, as there was no excitement, and no
undue credit given by the banks in the interior of the coun-
try, the interest of money gradually rose from 2i to 4 per
cent. ; and, then, without discredit or distrust of any kind,
the bullion returned into the coffers of the Bank, and money
nearly resumed its former value."

We cannot help thinking the deduction made by Mr. Loyd
from these figures, which, in order to facilitate comparison,
we have simplified as much as possible, to be a sound one;
and that had a contraction taken place when the bullion
began to go out, the panics of 1825, 1837, and 1839 might
have been much mitigated in character, if not wholly averted.
This is the course to which the new Bill will compel the
banks. It is impossible under any state of the currency to
avert panics altogether, for merchants will ever trade when
they perceive a prospect of advantage in whatever medium
the goods are to be paid for; bait is probably the transi-
tion from peace to war, or the contrary, or extensive popular
commotions, which alone need be regarded with any serious
apprehension under the new system.—Tines.