The Liverpool Standard and General Commercial Advertiser.
Liverpool, Merseyside, England, 1854-06-06 00:00:00

Liberpoof fitanbarb.

TUESDAY 1lf01?NI11'G, JU_ATE 6, 1551.

THE CURRENCY, AND BANKING
ACCOUNTS.

THERE is perhaps no question upon which so
much has been said and written, and yet so little
to the purpose, as that abstruse and complicated
theme—the currency. Most of the mistakes com-
mitted arise from the erroneous notions entertained
as to the real position which money occupies, and
its relative value to other commodities in commer-
cial transactions and the ordinary affairs of life.
We are told of the great evils inflicted by the
Bank Restriction Act of 1844, although only once
since its passing has it been virtually in operation,
and of the compulsory contractions of the Bank
issues, although, with the exception of the instance
referred to, which occurred in 1847, the reserve of
notes in the Bank coffers has considerably ex-
ceeded the demands upon them. Let us .suppose
for an instant that the act of 1811 had not been
passed, ,and that the Bank had been free to issue
any amount of its own notes, it would still have
been restrained from any material increase by
motives of prudence ; and it would be difficult to
point to any period in which the issue would have
been greater, had it not been for the restriction
imposed by the act. Even in the instance referred
to, when the Government authorised the suspension
of the law, the difficulty was more imaginary than
real—it was one of feeling rather than of fact—for
the Bank had at that time a reserve of more than
a million of notes, and never exceeded its authorised
issue, even under the letter of license from the
Cabinet. We are also told that the actual circula-
tion, as judged of by the issue of Bank notes, is
now little or no more than it was many years since,
when neither the population nor the extent of trade
were nearly so great as they are at present ; and
it is immediately assumed that the circulation
restricted by the act referred to is therefore con-
siderably below the requirements of trade. This
assumption is based upon a total forgetfulness of
the change of circumstances and the modes of
transacting business, and is also founded upon the
erroneous notion that the circulating medium,
whether paper or metallic, is necessarily a repre-
sentative of material wealth, and a test of its extent
and importance. So far from this being the case,
it represents but a fraction of the amount of busi-
ness done, and, were it not for the convenience of
change and the settlement of small transactions,
might be, in a great measure, dispensed with.
Formerly it was the common practice to discharge
almost all obligations in money, and the amount

then in use was comparatively large ; but since
the introduction of joint-stock banks, which have
become pretty gperal over the country, most per-
sons in business keep a banking account ; and
cheques, by the aid of which payments have be-
come merely transfers from the account of one
person to that of another in a banker's books, form
a far greater proportion of the circulating medium
of the country than do bank-notes, so that the
necessity for the issue of the latter has gradually
become less, notwithstanding the vast increase of
trade, and the amount in circulation no longer
forms a test of the extent of business transactions.
Corns years since it was computed that of upwards
of a hundred millions, which was paid and received

by the bankers of London through the clearing-

house, not more thau two millions wos represented