The Liverpool Standard and General Commercial Advertiser.
Liverpool, Merseyside, England, 1847-08-31 00:00:00

Efir Etberpool &tanbarb.

Yearly Rubscription :
An /Advance, 15s. On Credit, 11s.

TUESDAY MORNING, AUG. 31, 1847.

"THE straw is beginning to move," we are
• nappy to say, in the right direction. The mann-
facturers throughout this district, amazed and
aghast at the results which are flowingfrom the adop-
tion of free trade, without a currency sufficiently
. expansive to work it, are beginning to examine the
soundness of the reasons put forth to account for
_their present severe suffering, with which they ap-
pear to be not at all satisfied. The Manchester
• Gmardian, one of the most persevering advocates
.ef Sir Robert Peel's currency measures, and a well-
known free trader, says that, " amongst other in-
timations" to this effect, he has received the fol-
lowing letter :

" Burnley, August 25th, 1847.
Sir,—A few of us who are regular subscribers to your
-valuable paper, read with interest your remarks upon the
-vast expenditure in railways ; yet at the same time we
-really cannot see how it should bear so hard upon dis-
counts, and cause that scarcity of money which is repre-
sented to exist. Indeed, we frequently discuss the mat-
ter over. I really wish you would again refer to this most
serious matter, and give us a little more insight into it.
We know that money is scarce, and we also know that
unless something is done, we must all sink. For this
reason, I think that if you can call the attention of the
public, it may tend to good results.—l am yours,
" A CONSTANT READER."
•
-.Our contemporary's reply to this straightforward,
home question we must content ourselves with giving
in substance only, with the exception of a few por-
tions, with respect to which we shall have to adhere
to the text.
The Guardian attributes the difficulty experienced
by the manufacturers in getting discounts, and the
general stagnation of trade, to the fact of there
having been too large an investment of the floating
capital of the country in railway undertakings.
"It is necessary," he says, "to recollect that a nation hag
-only a limited income, and must, sooner or later, be content
• with a limited expenditure. The income of an individual
we commonly regard as so much money ; and although
that is a loose mode of viewing the question, we need not
here attempt to correct it. But when we come to regard
the income of a nation, and to consider its distribution
end its consumption, we must abandon the use of ordi-
-nary conventional terms, and look a little closer at the
actual facts of the case. The annual income of a nation,
—that is, the amount of valuable commodities created by
the exercise of its labour and capital during one year,—is
always applied to several different purposes ; the first and
the most important of which is; to secure an equal or a
greater amount of production during the next year. The
farmer must retain in his possession, or at his command,
the means of feeding and clothing himself and his la-
bourers, of keeping his horses, of mending and replacing
damaged or worn-out implements, of purchasing cattle
and sheep for eating his green crops, and meeting all the
necessary expenditure for keeping up the cultivation of
• his land. This is properly his floating capital,—a capital
-which should always reproduce itself, with a profit, in
each year : that is, at the end of each twelve months, the
farmer should have at command as much of this capital,
so applicable to the purposes of cultivation, as he had at
the beginning ; or his farm will lack either labour, or im-
plements, or stock, and will be worse cultivated and less
• productive than it had previously been. This, then, is
the nature of floating capital, so essential to the due em-
ployment of industry, whether engaged in agriculture,
manufactures, or by any other pursuit, and which cannot
he greatly diminished, either by an individual or a whole
country, without producing serious evils."
We shall here examine only the main assumption
which the above paragraph contains, that the nation,
like an individual, having only a limited income,
Which is the amount of valuable commodities
azeated by the exercise of its labour and capital
-during one year," should expend of that income
-only so much as would leave a sufficient surplus to
carry on its ordinary business—agricultural or
commercial—which surplus he terms floating capi-
tal. The implication meant to be conveyed is that
we have expended on railway works, which are not
at present productive, more of that surplus than we
,guyht to have spent, and are suffering accordingly.
Now, what is the nature of the expenditure in
question, nationally considered ? It has been the
exchange, by individuals amongst the people con-
stituting the nation, of one sort of capital for ano-
• ther—of land, houses, mills, mines, labour, and
other valuable commodities for railways. Nation-
- idly, we are not poorer, and as individuals we are
not poorer. But we are deprived of the ordinary
means, by which such exchanges of valuable com-
modities are conducted. The currency laws tell us
that because a large portion of the gold upon which
our circulating medium is based, has gone out of
the country to buy grain, the Bank of England must
proportionately withdraw paper—'change—and re-
strict discounts. It is not because merchants and
manufacturers have not security to offer to a hun-
-sired times the amount required, or that railway
stock, although depreciated in nominal value by
the arbitrary operation of those very laws, that dis-
counts are not granted ; but that the bank has not
.-gold in its coffers, and dare not issue any other or
the ordinary medium in its stead to supply the
deficiency and keep the wheels of commerce and
industry in motion.
But the Guardian says that one great reason
why discounts, where granted at all, are high, is
that Railway Companies are scrambling with com-
mercial men for loans from the bank, and from
capitalists. Of coursethey are ; and the scramble
increases and decreases in proportion as the Bank
is compelled to tighten or relax the screw; in.other
-words, as gold goes out of or flows into the country.
.Railway Companies are driven to borrow, not be-
cause their shareholders are not possessed of the
capital required to fulfil their engagements, and to
iiay their calls, but because the Bank, by its exer-
t it tupon the currency, has rendered their property
unsaleable, except at ruinously depreciated rates ;
because, in the face of pressing demand for manu-
factured goods for export, although those goods
are stowed in the manufacturers' hands, the Bank,
by its refusal to discount the best paper, prohibits
_their being forwarded to the markets requiring
them. It is surely not the Railways which are in
fault here.
Our contemporary admits, with some hesitation,
that the present difficulties of the commercial world
" have been, to some extent, aggravated by an un-
favourable state of the Foreign Exchanges ;" and if
he will tell his Burnley correspondent when we
.shall be able, with gold as the basis of our cur-
rency, to carry out our one-sided system of Free
-rracte, and import largely of foreign grain, or any
other foreign commodity, without producing
an unfavourable state of our foreign exchanges,
he will be conferring a favour upon the com-
munity-. The assertion with which he con-
cludes, that " if our harvests had been the most
'abundant that ever were known, so that we had
',exported instead of importing grain, the pres-
:sure for loans, and the enhancement in the rate
of interest, which now prevail, • though somewhat
.diminished, would equally have existed," is one that
was well qualified by the addition, "either at the
-.present or at some future time." A few cases—
perhaps many—of individual and merited calamity
'would probably have resulted; but we should cer-
tainly not have seen the whole machinery of manu-
factures and trade as at present, at a dead lock.
'The innocent and prudent would not have been
-found, as now, suffering for the sins of the design-
ing and the reckless.

IT is stated publicly, we presume upon good
authority, that another bold movement' is about
-to be made at Birkenhead ; that the Docks there
are to be made free both for tonnage and cargoes,
for a period of eighteen months or two years, "in
order to ascertain how far trade is likely, under the
most favoured circumstances, to patronize the
Cheshire side of the river." This step is said to
be justified by the benefit which the opening of the
Docks to an active business would confer upon the
owners of land, buildings, warehouses, And rail-
ways in the locality, whose investments are stated
to amount altogether to a sum little short of
-..€1i,000,000 sterling.
Of course we have no right to dictate to the
,inanaissioners of Birkenhead the line of conduct