The Madisonian. [volume] (Washington City [i.e. Washington, D.C.]) 1837-1845, 1837-10-14

I OF Great Britain and The United States. The Bank
of England in l793, became seriously and alarmingly
embarrassed on account Of the immense reduction Of
| her bullion, and the heavy demands of deposiors,
the result of which was suspension OF specie pay
ments up to this time the bInk was not authorized
issue notes OF less denomination thai pounds
prevent driving from circulation coin of small de-
nominations The suspension was leglZed by'A
Of Parliament, and the bank to supply the vacuum
created by the withdrawal from circulation of small
coin which had been exported 10 the continent, was
authorized to issue notes OF e. and FL denomina-
lions. These notes were Issued TO large amount,
and circulated 10 great extent the result was, what
always viii be, the expulsion from circulation OF
nearly all coins of the same denominations. Such
were the effects of this act in charging the issues of
the paper medium of England and expelling It's bll-
lion that after many efforts, IN 1876 this law was re-
pealed, and the blnk required in 1922, TO re-
strict its paper To the issue Of is notes and
! over The effect of this repeal, has been
so to enlarge the specie to secure The convert
billy Of the paper circulation. The Bank OF France
is prohibited from issuing notes below hve hundred
4 franks, about 1893 of our money. This bank
chartered in 1900 and the Tetricon imposed in 1904
/ From that time to the present, notwithstanding the
! calameS Of war, two invasions, and several COM
mercial revusionS, the currency OF France has re-
manned sound and uniform and the paper of the
bank in good credit Austria and Russia, who are
/ making vigorous exerons To enlarge their com
merce have adopted the Bank OF France as model
1 for their imitation, and have incorporated banks
upon the same principle. II would seem To me, that
with such examples before us, there could be little
doub of the correctness of the principle of the bill,
which I propose. But, sir, will add TO this evil
dence by citing OF the opinions OF some OF the most
distinguished statesmen and fnanciers OF Great
Britain who were witnesses Of the operation OF the
bank restriction in England, and its injurious effects
upon the currency OF the country The celebrated
Edmund Burk, among the last letters which he ever
wrote, in one addressed to Mr. Canning, upon The
! ect Of the issuing of small notes, said: 1HH
Mr. Pitt that ifhe consents 10 The issue OF ONE POUND
NOTES, h. 'cW nerar see gai,ea again This
prophecy was well nigh being fulfilled, and was
prob bly, only prevented from uillment BY the re-
peal of the restriction. Mr.. Huskisson, one OF the
purest and of the ableSt of statesmen and of
the most sktu fnancers Of this or any other age,
in speech delivered in Parliament, on the 18Th day
Of February 1922 upon the agricultural dstresSes
| of Great Britain, said:
an England it still formed considerable part Of
our circulation there being then circulating paper
under fve and only to small extent, under pounds
The first effect Of this restriction 10 add TO the pa
per circulation by enlarged issues, only from the
1iona banks Of England and ireland, but also from all
the country banks. This addition continued gradually
to increase. and especially in the notes under f,e
pounds Every increase for the first two or three years
dimnnti0n in the value OF money, but not de-
probation. Whyl Because the gold left the country,
the paper became substitute, and by this process,
the exchanges kept at or near par The Ell
feet OF this expectation Of coin everywhere 10
lower hc value Of money, and by dong to keep
upon level with its diminished value in this country
ain the progress of this operation the United King
dom drained Of all Its gold There would. howev-
err have been real depreciation Of the paper substi
,uted in its stead IT, by imposing proper limits upon the
issues OF that paper the par OF exchange with oregn
countries (Which Is necessarily equivalent with the
standard Of the gold this country had been made
the criterion Of its value But the issues OF paper not
being confined within those limits, depreciation took
place.
1.-THE consequence therefore, of the bank restriction
o-fold first dimnution in the value OF mo-
generally, but without depreciation and second
w depreciation specially superadded in this country,
the degree Of which any particular period was the
difference between the standard and the market price OF
gold. BY the first result, the price Of commodities IN
Guiding Of all the productions Of the soil,
raised generally by the second this general rise
of prices carried still further in this country, IN pro-
portion to the depreciation The actual depreciation,
therefore, not the sole cause OF the rise OF
prices (speakng Of that rise only IN as lar as II was
Influenced by changes in tho value OF money! during
the war, II canot be taken as the measure OF the
fall Of prices 1919, unless could have got rid
Of the depreciation without recalling into use
a part Of the gold which had been exported, or in |
any degree diminishing the extent IN which credit had
become substitute for actual payments. That fall
must be still greater if instead of importing gold for
circulation here the greatest part OF has been with
drawn from circulation in other countries, to be buried
in the vaults and cellars Of the bank. The proportion
Of the of prices generally during the war. and OF fall
since the peace, England only, but in all other
cult to estimate but it must be considerable: and the |
more so, S other countries, well as England, had
also deprecated paper and have since endeavored to
replace il by metallic currency"
In a speech delivered by him on the 10Th day of
February, on the Bank charter bill he said
III they wished for proof Of the value Of steady,
Interchangeable currency they had in the example OF
France. That country had been twice invaded twice
had her capital been taken possession Of aud she had
pIH TO- St,,
foreign countries for But she had steady me-
tallc currency and however such vlsitaons might
have affected the great-however the extensive con-
tractor might have been injured or ruined-the great
body of the population remained unmoested The
storm which prooted the forest tree had passed
without inuring the humble reed and this mainly
to be attributed TO the permanent footing upon which
the currency of the country had been placed ~.
If the plan Of his righ. honorable friend was car
rcd execution, he satisfied 1t would have the
effect of making the country banker sensitive the
subject OF the exchanges, and watchul OF any unta
vorable turn which might take place in them, as the
Bank of England now was, He would carefully watch
the circumstances which calculated to bring gold
into or send Of the country and this caution be-
ing timely impressed upon him, the danger would, IN
measure be passed There would then be no fear OF
any agitation convuson in the country, as the lnte
rest Of every banker would compel him to provide
himself for any coming emergency; IN other words
every country banker would feel equal interest with
the Bank Of England in watching the state OF the cur
rrncy. and guarding against It's fluctuations
III them it was necessary, for the best interests OF
the country that the currency should be established
a sound and solid foundation, aud that the country
banks should be prevented from drawing the metallic
currency out Of the kingdom, by the issue OF these
small notes. the next question was-whether this was
proper time for carrying the into execution =
But before he touched upon this perhaps it would be
proper that he should make preliminary observation
ting the country banks He far from being
hostile to these banks On the contrary, he thought
they would be of great service to the country provided
49,. ,,o,o ,,acaJ nnd.r nroner rp upotions He wished