The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1857-12-05

point afts all is simply that OF It's converbiliy
tain latitude Of action becomes admissible. So long
is morally certain that any holding Rank Eng
note obtain ts full value in gold for dc
mand herrpcipc OF convertbility maintained and the
transactions OF the country are, in reality regulated and
protected by a gold standard, whatever may be the
amount Of currency introduced for the sake Of con-
venience.
What then s the amount Of notes which the Bank of
England should be permitted 10 issue and above the
amount representing an equivalent bullion actually pos
sessedY This amount has been fixed and now stands at
f!4 GOO Goo has been considered that the bnnk might
safely its TO this amount without any danger To
their convertbty value lts credit would never De
likely be far impaired its stock Of gold far d.
mpehcd, that could not within these limits find cash
for s notes when presented This point OF the case IN
deed suggests argument H is not affirmed that the
limit is too LIBERAL that the excess Of notes thus per
med over gold rs too great The cry against the Bank
Charter actor the act embodying these provisions
has always assumed opposite character, and has
been eveed not at the magnitude Of the paper Issues
sI4 600 oco which il complained Of and which il said to
keep the country so short and tO make money from the
scarcity thus prevailing dear, that at the first moment
Of pressure the system breaks down, the Bank Charter
has O be suspended and the artificial limit imposed
upon its paper issues has to be removed Such, indeed
the result in 1s47 and the occurred last
week The week after Parliament will meet
slider the whole question: and the circumstances by which
II has thus been opened
The first question IL purely of principle.
Very possibly the limit Of Ella 900 900, which
must needs have been somewhat arbitrarily fixed,
minor consideration altogether Whether the amount he
settled at fourteen, fifteen sixteen millions signifies lit
sonabe in itself and the principle Of converbiy main
tanned. 1t is nothing less that this very principle which
is mpugned by the thorough going opponents Of the Bank
Charter act They know that if bank lies under the
constant obligation to find gold for is notes these notes
must he limited in amount though the limitation may be
less severe and they contend therefore, for in
converhilty indefinite increase IN the note crcu
ation, irrespective of any gold equivalent But
would such a system either obvate commercial
panics or the real wealth Of country, or
even facilitate tradcY There IL not the smallest
ground for assuming that il would insure anv
mo "A pGnt fhn Inv avn nmnln
before eyes absolutely decisive OF the whole ques
ton that not word need be added to it. II Unlimited
porer issues could prevent lanics there uoad be an,cs
America, for there ere,y STATE odcd tc,th paper
monty and vet thus chronc inundatioa Of dos
conclusions than oar oun Fer the second, national
wealth cannot be created by mere limitations of the rca
y Unless the paper circulation represents something
which, like gold, possesses essential and universal value
II will never be really equivalent 70 money This point
also needs no argument. The French government
of 1890 it at rest forever But would the
transactions Of commerce be facilitated by a
greater abundance OF notes In circulation This
question is answered in the last Unless commerce is
conducted with sound currency il cannot be safely
Quoted at all II more notes were in the market they
would doubtless be readily obainable gut would
make them cheaper IL does all other things and
ders might get furnished with accommodation easier
terms; but this would not be cheap money, ii would
merely be cheap paper, and upon the first rush TO
change sham money for real money the crash would be
times than before. Either the notes being
mipally convertible, but not really covered by gold
would be presented in such numbers that the bank,
able to cash hs would be bankrupt or being legally
nconvertblc, would deprecate value like the French
assgnats The risk Of panics and the evils Of pancs
themselves, would simply be increased together.
But there Is another question Of very great importance
What have been the circumstances attending these
pancs, and especially that subsiding2 We heard
day, after day, Of the stopping Of large bank
ing establishments in Scotland, for example, but we
have not heard enough Of the system practices
under which these catostrophes became producibe and
which seem likely to be resumed with the liabilities
as before No arrangement system Of any kind
sistent with active commerce or the profitable employ
ment Of money can be proof against the effects of
panic wht created. If bank for example, Is to
give class Of its interest their deposits
and provide another class with pccunary accommo
dation by OF these deposits thus obligng
two parties at once clearly be able
the whole Of these deposits at q given moment This IL
the strongest OF the necessity Of credit but there
countless others OF different kinds Credit in fact must
enter into the dealings Of country like well
money itself, and coWmercia panic simply means the
depreciation Of this credit for the time Gold and
be kept In sufficient quantities Ia satisfy every
obligation outstanding In every part OF the kingdom for
the gold not to be had, and the multiplication OF
otherwise than gold basis would simply destroy their
value proporonaly and prevent them from going far
Five pound might bc increased any imaginable
number, but the only end would be that would
take hatull Of them to buy sovereign. The question
al this point whether dscoverabe features In tho
prevailing system of trade will aii for
currence Of panics which produce much misery and
alarm There Is Brima fdcie established against
any system Of currency by the fact Of panic pancs
under all. Advocates the other side would
system Of trade and this might allow but source
OF mischief is at least as likely 10 lie this side
the other, and We hope 10 corresponding scrutiny
applied