The Liverpool Standard and General Commercial Advertiser.
Liverpool, Merseyside, England, 1848-10-31 00:00:00

" rudest system of barter

This argument may be summarily and conclusively re-
solved by asking the writer in the Economist this ques-
tion—With the interest of money settled at four per cent.,
what price would you think it reasonable to give for pro-
perty, whether household, railway, or any other, which
was as certain to yield an annual return of ten per cent.
as money was certain to remain at four per cent ? Any
tyro would answer " that the fair value of every £lOO. so
invested in such property returning ten per cent. per an-
num, would be exactly £250."
Again, supposing the property still to return with equal

certainty ten per cent. per annum, but that the interest of
money became settled at ten per cent. also, we ask the
same writer, what price would you now think it fair or
prudent to give for each £lOO of such property, though re-
turning still ten per cent. per annum ? The only answer,
of course, is, that the true value of such property now
would be exactly £lOO, instead of £250, for each £lOO in-

vested therein.
Here, then, is a fall of prices extending over the whole
fixed property of the country unconnected with any
chance whatever in the annual return or circumstances of

the property. property. but occasioned solely by an arbitrary varia-
tion in the value of the standard. A piece of cloth mea-
sured by a yard of seventy-two inches could scarcely con-
tain so many yards as it would if measured by a yard of
thirty-six inches. The quantity of cloth would truly be
the same ; but the loss of capital would be just fifty per
cent. to the seller by the long yard, who had bought by
+ha Qhnt.f. nnP_ And a house or railway stock, for which

LUC suui-b UM, .n.uu a uv.+.+.. • • -
£250 was paid, because money was at four per cent.,
would entail a loss of £l5O upon the buyer, if he were
afterwards compelled to sell at only £lOO, because money
had risen in the interim to ten per cent.
Now, under a state of barter, no fall of prices could ever
occur except through some natural variation of supply and
demand. If wheat, for instance, were a short crop, its
value would rise; that is, it would exchange for propor-
tionately greater quantities of all other commodities.
There would be no fall of prices of such other commodities
entailing an_ equal loss of capital. There would sim-
.

much fear, however, that the editor of t

not comprehend this truism—that a rise in one commodity
may occur, without involving, in the simple rise itself, any
fall of value in other commodities, unless that one corn-
nildity, as is unfortunately now the case, be the measure
or standard which determines the value of all others.

Quite consistent, however, with the errors of this writer,
is another allegation, " That the Bank of England has no
power over the circulation of its notes"—has no power
" to contract the circulation, so as to affect prices."
It certainly would be no easy task for a logician to cope
with an opponent, who, in a discussion on the prismatic
colours, should, under the powerful rays of a meridian
sun, assert as a first principle in the discussion that the
sun does not shine at all. But what are the facts here
denied by the editor of the Economist? First, by impli-
cation, that the Treasury letter of the 25th of October last
was a nonentity, although issued by the government to
enable the Bank of England to forbear the process, so fa-
tal to commercial credit and exchange, of contracting the
circulating medium by taking up its notes through the
sale of its securities, and by the refusal to issue notes in
discount to replace those called in by the Bank on the ma-
turing and payment of commercial bills from its portfolio.
Under this double process of contraction, (the act of 1844
preventing the re-issue of notes until its bullion returned,)
was anything more natural than the attendant panic
amongst other bankers, with the certainty staring them
in the face that whatever emergency or necessity might
arise, the process of contraction must go on to protect the
convertibility of the notes ? Or, under the assurance that
they would get no more notes, was it unreasonable that
those bankers should hoard all the notes they could keep
in their hands, thereby creating the greatest known scar-
city of such notes, even when the apparent circulation was
what is called a full one ?

Had the bank, then, "no power to contract the circu-
tion so as to affect prices ?" In other words, what was
the rate of interest (the measure and standard of the
value of all fixed property) before the contraction of the
circulation was relaxed by the issue of the Treasury
letter ? We give the reply in the words of the Econo-
mist : " Twelve per cent. was charged by the bank for
loans on the security of Consols and Exchequer Bills, and
the discount on bills ranged from ten to twelve per cent.
If such, then, was the frightful rise of interest, how
was it possible for the country to escape the depreciation
of property necessarily attendant upon the simple fluc-
tuation of its standard ? We entreat the writer of the
article under consideration simply to ask himself what he
would give for property yielding ten per cent. per annum,
with interest easy at four cent., and what he would give
for the same property with interest difficult even at twelve
per cent ? There can be no doubt that his own estimate
would be precisely similar to that of the public, under
which all property has fallen in so appalling a degree.
The result of this depreciation is a proportionate loss
of capital to every one holding such property ; and what
will yet be the consequence to the country of this state
of things remains still to be seen. But this is not the
only effect. The difficulty of obtaining money for long
periods during the contraction of the available quantity
of currency, and the subsequent alarm of the owners of
money at parting with it for long periods, have arrested
the usual progress of buildings, the railway works, and
those outlays of capital which afford employment to
artisans and labourers on a far wider scale than would
result to the manufacturing operatives from any ordinary
improvement of the foreign trade, a branch of domestic
industry to which, though even more important than the
foreign trade, the Economist seems to attach no impor-
tance whatever, although it is matter of indisputable fact
that when the creation and improvement of fixed pro-
perty is the most active, the demand for all commodities
of produce and manufactures is necessarily the greatest,
in consequence of the increased employment and income
of the population.
On the causes of the commercial and general distress,
we perhaps cannot do better than commend to the writer
in the Economist an unprejudiced perusal of a really prac-
tical and intelligent work on the subject, lately published
by Longman and Co., entitled "The National Distress;
its Financial Origin and Remedy ;" where, if we mistake
not, among other corrections of fatal economical errors,
will be found a complete refutation of that writer's impo-
sing theory of capital, in a section devoted to the consi-
deration of " The Transfer of Floating Capital to Fixed
Capital."

Among the addresses presented upon the accession of
James I. was one from the ancient town of Shrewsbury,
wishing his Majesty may live as long as the sun, moon,
and stars, endured. " Faith, man" said the King to the
person who presented it, " if I do, my son mast reign by
candle light."
A BOTTLE ANECDOTE.—The editor of the Dublin
World, relating some incidents of his passage to Liver-
pool recently, tells the following anecdote apropos to the
destruction of the Ocean Monarch :—" An intelligent old
naval officer told a curious anecdote of a bottle, to the
veracity of which he pledged his honour. Col. M`G—,
who holds a most onerous office at the head of an essen-
tially important public department in Ireland, was, in his
youth, one of a few despairing passengers on board a ship
that was burning in the Bay of Biscay. The colonel,
with the coolness and presence of mind that has never
deserted him, prior to plunging into the waves and secu-
ring there an escape from the most horrible fate that
awaited him in the blazing vessel, wrote, with a pencil, a
brief note addressed to his father, indicating the latitude,
the date, the calamity, and the utter hopelessness of him-
self and companions. This doleful missive had scarcely
been put in a bottle and consigned to the deep, when a
sail was observed bearing down upon the doomed vessel.
The colonel, with the others, was saved. Three years
afterwards he visited the Island of Barbados. One day
his negro servant, when swimming, espied an object, as
black as himself, at a little distance. Mungo secured the
prize, a bottle, and carried it home in triumph to his
master, who uncorked it, and found there his own letter,
which he had written under the appalling circumstances
mentioned. The bottle had boxed every point in the
compass, and travelled some thousand miles from the
spot where it was launched. Cast thy bread upon the
water,' said the old sea-captain, finishing his story, and
applying himself to some pale French brandy, and tl&u
shalt find it after many days.' "