The Liverpool Standard and General Commercial Advertiser.
Liverpool, Merseyside, England, 1847-08-17 00:00:00

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TUESDAY MORNING, AUG. 17, 1847.

THE organs of the Bank, or monied interest, as
contra-distinguished from the Industrial and Com-
mercial Interests, are at length attempting to reply
to the arguments used by those who attribute the
bulk of the pressure, at present and recently felt in
money for commercial purposes to the action of
the present Currency Laws. Foremost amongst
these authorities is the writer of the city article of
the London Times, Irslho takes upon him to school
the trading world for having brought upon them-
selves the evil under which they are suffering, by
neglect of his cautions against the excessive pro-
jection and prosecution of Railway schemes.
" Panics in the Money Market," he says. " come and
go,but, unfortunately, they leave no lesson behind. At
the beginning of April we witnessed a pressure long fore-
told from certain existing causes, but which, for any wis-
dom it imparted, was apparently suffered in vain. Scarcely
three months have elapsed, and now we again find our-
selves in the midst of similar disturbance, only, it is to
feared, to pass again to the same result of temporary re-
action and immediate disregard of all that it might have
taught us.
" The causes assigned for the predicted pressure, which
should have commenced with gradual severity at the be-
ginning of the year, but which was retarded by the Bank
until we had the substituted panic in the spring, have been
repeated so often that, but for the apparent incapacity on
the part of the public of receiving or retaining them, it
would seem idle to touch upon them more. But the cry
must be repeated until men, from habit at all events if
not from reflection, shall come to recognise that there
must be something in it. Railway expenditure, free
trade, and deficient harvests, each constituted grounds to
beget a certainty of monetary peril—the first as a gigan-
tic madness, paralyzing all the ordinary industry and con-
sequent resources of the country ; the second as inducing
changes which, however wise and beneficial, must, like all
revolutions, bring about disturbance until we shall have
adapted ourselves by experience to its new relations ; and
the third as involving an immediate loss of wealth, which
would necessitate economy and hard labour until it should
be repaired. Of these three causes the last and minor
ones were beyond our power of control, and all that was
requisite was that they should be prudently recognized;
but railway expenditure was at our own option, and it
was here that warnings were to be raised. These warn-
ings, however; although they may have saved individnals,
were, of course, ineffectual to stem the rushing mania of
a nation. Experience could only effect that object. The
word Would not do without the blow, and in April the
country reeled under its infliction."
We are perfectly ready to admit the truth of the
facts stated.in the former of the above paragraphs,
—that " panics come and go" and seem to leave
little impression upon the public to induce subse-
quent caution, And this is because the community
possess absolutely no control over the machinery
by which those panics are caused, and because the
-bulk of our population cannot or will not see what
a panic is. We had what our contemporary calls
a panic in April last. We cannot consent to give
it that name. It was nothing more than the or-
dinary operation of our monetary system, which
compels us to check the progress of our industry
and commerce and which virtually confiscates, or
at least renders unsaleable, except at a vast de-
preciation, every description of product or property,
whenever any large portion of the metallic basis of
our currency is withdrawn for the purpose of
foreign operations. Under' any other circum-
stances—if arising from over speculation merely,
from the fear of the result of such over specula-
tion upon the credit of individuali, from the mea-
sure of Free Trade, per se, or from the necessity of
large importations otforeign breadstuffs—we quite
agree with the writer in the Times that the pressure
"should have commenced at the beginning of the
year," for most assuredly we were then in the full
knowledge of all these circumstances. The potato
rot of last year and the deficient harvest, were
patent facts, We were aware that we must supply
ourselves from the granaries of Europe and America.
But immediately that we had made preparations to
do this, our Currency system interfered and virtu-
ally said " You may have food ; but, whilst sup-
plying yourselves, the hands of industry must be
tied up ; " you may draw ten or twelve millions of
gold to pay for that food, but you must at the
same time strike off £200,000,000 sterling from the
market value of your lands, your mills, your mines,
your railway shares, and your manufactures, the
latter of which we shall take away from you the
means of transporting to foreign markets in ex-
change for the bread you want to feed your people."
Hence it was that the so called panic, which was
in reality onlya money famine, did not begin when
it ought to have begun ; did not in fact begin
in April, when the Bank began its contracting pro-
cess, and never would have begun, had we possessed,
a currency more capable of regulating itself to the
continually changing circumstances of the country.
Again, the Times says that this panic, which ought
to have begun in the commencement of the year was
" retarded by the Bank" until the spring. Of
course it was. That institution threw their dis-
counts into the market with a lavish hand so long
as they were able, anxious to make the most of the
supply of. gold which they must have known was
only temporarily in their hands. Such is the
natural operation of the system to which it is
itself subjected, and which constitutes it a machine
which must alternately feed speculation and put
the screw upon legitimate commercial operations.
But the Times says—and it is his favourite hobby
—we might have protected ourselves from a large
portion of the mischief, if we had not rushed into
the mania for making railways. What, however,
we ask, encouraged that mania? Why, a tempo-
rary redundancy of currency,—the other end of
the pendulum, which provides that " panics come
and go ; " that we shall ever be oscillating between
inflated prosperity and inordinate suffering. Will
the Times tell us that we had not capital to make
all the railways likely to be sanctioned by Parlia-
ment ? Assuredly we had. The difficulty was
that when our operations for procuring a supply of
food withdrew from circulation our gold, we had
no longer a currency to represent our capital. We
had produce and manufactures in our warehouses
sufficient to pay for twenty times the corn we re-
quired ; we had that corn to pay for and to feed the
labourer required to construct our railways; but
we had no longer a circulating medium to enable
us to conduct these operations. We were at a
dead lock : and had every railway work throughout
the empire been suspended it would not have per-
ceptibly relieved us as a nation, however much a
few individuals might have been temporarily con-
venienced.
The Times continues :
" The first effect of the panic was to lock up money and
send down prices. Importations were for a moment
checked, and foreigners came in to purchase our depre-
ciated securities; general transactions all over the coun-

try were suddenly reduced, and coin, in consequence,
,flowed back into the Bank. With this came a revival of
confidence. Scarcely a dozen railway schemes of any
magnitude had been abandoned ; no relaxation of the
caution necessitated by free trade could be warranted ;
no prospect that food deficiencies were at an end had been
announced. All the causes which had produced the evil
were still in unmitigated force, but there was a reaction
in the money market, and that was enough. Consols
rose 3 per cent., railway shares recovered in great measure
from the fall they had sustained since January, Bank Di-
rectors talked openly on 'Change of reducing the rate of
discount to 44 per cent., and at London and at Liverpool,
and all the share exchanges of the country, engagements
were eagerly extended, and the assurance was universally
repeated that ' the worst was over.' "
We might go a little further than this, and add
that, as the result of the revival of confidence—
mind, in the power of the Bank to provide the
means (currency) by which the commercial and in-
dustrial operations of the country could be carried
on—the spirits of our manufacturers began to re-
vive, mills that had been entirely stopped, or work-
ing half time only, began to resume their wonted
activity, and the operative manufacturing popula-
tion began to have hopes of being fed. This,
.moreover, was not merely speculative feeling. On
the contrary, there was every prospect of a good
demand before them. The foreigner was short of
and wanted our goods in return for the grain which
he had sent us. Orders had already poured in
upon the manufacturer, which the improvement in
the position of the Bank held out the prospect of
his being able to execute. Yet what is our present
condition ? We have almost the certainty of an
abundant harvest, both at home and throughout
Ahe world, Our fears for the potato crop are 41mo§t