The Liverpool Standard and General Commercial Advertiser.
Liverpool, Merseyside, England, 1833-01-22 00:00:00

THE LIVERPOOL STANDARD.

currency is gold, as silver can only be tendered to a limited ex-
tent. The circulation of paper money is, therefore, a measure
of optional expediency and convenience for facilitating pay-
ments, and supplying the want of a sufficient quantity of
gold to meet general payments. Inland bills of exchange, as
well as foreign, form an extensive and important branch of ac-
commodation in the larger scale of payments, but they are not
strictly to be included in our currency.
During the progress of the last war, although the trade,
commerce, and navigation of the country, became .in its pro-
gress more extended and beneficial than at any former period,
leaving annually a considerable balance of payments in our
favour, this balance was not only consumed in the payment of
large subsidies and loans made at different periods, to foreign
powers, together with the heavy expences incurred for the
support of our fleets and armies abroad, particularly of the
last in Spain and Portugal; but, further, large additional
sums were required to meet these disbursements, which were
provided for, first by the exportation of our stock of bullion,
and then of the chief part of the gold and silver that formed
our circulating medium; in consequence, the suspension of
cash payments by the Bank of England, was enacted for a li-
mited period, afterwards repeatedly extended, and their notes
made a legal tender in all payments, which was productive of
an extended creation and circulation of paper money,
.thus
encouraged and protected by the suspension of cash payments.

It is also well-known, that in the commercial inter-course
between two countries, the rates of exchange will be against
the one that imports more in value than she exports, and she
has therefore a balance of payments against her that must be
made in the precious metals, unless her trade with Other coun-
tries leaves a balance in her favour, which, in that case, is set
off to meet the
.deficiency; and, if sufficient to do so, she is
thereby enabled to retain her gold and silver; but if in her ag
gregate intercourse the balance is against her, it is only by
means of the precious metals she can provide for that balance,
and when these are exhausted, her imports must be limited by
the value of her exports. It is true, that at a certain sacrifice,
specie or bullion may be transferred from a country where it is
scarce, to another where it is more abundant and of less value,
for temporary speculative purposes, by influencing the ex-
changes; but this can only be persevered in for a limited period,
until the object of the parties has succeeded or failed ; and that
being to support an artificial state of exchange in the country,
which has a balance of payments to make good, it follows it
cannot be of long duration.
By our heavy national continental payments, England was,
as I have stated, thus drained of her bullion and metallic cur-
rency, and compelled to substitute a protected paper one in
its stead; but this currency could only be used for internal pur-
poses; and as the difficulty of meeting foreign payments in-
creased, the exchanges became more against us; as buyers
could not be found on the continent for bills drawn to make
them, the relative value of gold to our paper money was there-
fore enhanced, and as the demand for exportation and conse-
quent scarcity of gold increased, it—disappeared from circula-
tion, and in that manner and proportion, our-paper currency
was depreciated; the price of gold in paper greatly exceeded
the mint price owing to the heavy balance, of payments which
was to make good. •
In this state our currency remained until some time after the
peace 'took place, when these foreign national payments having
ceased, and the value of our exports 'continuing to exceed that
of our imports, the balance of payments was again turned in
our favour. From that period to the present time the balance
of trade has generally been so; in the interval considerable
foreign loans and speculative engagements entered into by in-
dividuals in other countries, together with extensive importa-
tions of foreign corn, made at periods of deficiency in our
home growths, have interrupted the accumulation of these an-
nual balances, yet their amount gradually increased, and as
bills on England in sufficient amount for remittance could. no
longer be found, the deficiencies were necessarily made up by
the transmission of gold and silver which filled our coffers, and
restored our metallic currency.

During the suspension of cash payments, and up to a late
period, the circulation of paper money, particularly of one and
two pound notes was permitted, and carried to a great extent.
The readiness with which these notes were received into circu-
lation, and the willing confidence placed in those who issued
them during the scarcity of gold, became unbounded on the
part ofithe public, the parties who issued them, thus encou-
raged by the protection given them from cash payments, and
tempted by the profits ; they considered they were receiving, be-
cause less scrupulous in their investigation of the nature
of the securities they received in exchange, and went on
increasing this circulation to an extent far exceeding the
amount of their available or convertible funds; thus spe-
culation of every kind was fostered and encouraged;—
paper money, as it became more and more abundant, fell in
price, as compared with goods or real property, which were
proportionately enhanced up to 1825, when speculation and con-
fidence in every form and shape reached its climax; then re-
flection interposed, confidence was shaken and withdrawn, and
the bubble burst which paper money had thus created. Near
one hundred country banks, as they were called, suspended
their payments; the securities they had received in exchange
for their notes were unavailing, and no funds were forthcoming
to pay them—in consequence great, general, and individual dis-
tress ensued; the value of goods and property became greatly
depreciated, that of money enhanced, and credit received the
severest shock ever experienced in the country from any previ-
ous commercial convulsion.

As the country recovered from this distressing and untoward
state, the change in the state of our foreign payments continued
to produce a regular and large importation of gold and silver,
which being sold to the Bank, and transferred to the mint, was
brought into the circulation of the country. This supply has
continued to go on, and has now been received in such quan-
tity as amply to supply the circulation of• England for all pay-
ments under five pounds, or for larger when required and preferred
to Bank notes. It is evident that in the present state of our fo-
reign commercial relations, gold and silver cannot be . experted
to any extent, because it is not required for foreign payments,
neither can it be allowed to remain unproductive of benefit in
large quantities in the coffers of the Bank, or Qf private indi-
viduals, and only a comparatively small proportion is required
by the working gold and silversmiths; the only vent and bene-
ficial employment is therefore converting it into current coin
at the mint price for circulation, which is the course adopted.
I find I have exceeded the extent of an ordinary letter, I
shall therefore conclude for the present, intending to resume
my subject for your next or following, publication.—Yours, &c.
January 21, 1833. MERCATOR.

CONSERVATIVE SOCIETY AT DOVER.—We have just seen
the prospectus for the formation of a Conservative society at
Dover, which has already received the sanction and support of
all the leading men in the place. This document states that,
in consequence of the inroads that have been made of late in
the English constitution, it becomes the duty of all good sub-
jects to unite in maintaining order in the state, and that, although
the members will readily obey that which is now become the
law of the land, they will steadily resist, and they call urn
their fellow-countrymen to do the same, all further innovations
in the national institutions, and all further attacks upon pro-
perty, that has been so severely shaken by recent measures.
Subscriptions are to be raised among the members in aid of this
establishment, one object of which is to assist deserving persons
among the operative classes; those, we should hope, only of
those classes who do not connect themselves with political
unions, or other lawless associations of the same nature. We
understand that similar associations are likely to be formed in
other parts of Kent.—Landon Standard.