The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1874-04-16

fnan aiteen or twenty per cent. specie rs . CIR
cuatlng medium, had nearly wholly disappeared
the only medium OF circulation IN commercial
transactions and dealings OF AL kinds was paper
currency. Gold AZ heavy premlum pro-
digIous and distressing rise mad taken place IN the
nr1ce OF Ali commodities This rise nad proceeded
in q much higher ana more RAPID proportion OF
increase during the zen plecsH,nx year. ana an
rms rise in prices, depreciation in the value OF
paper currency, the public finances were as much
Jesse ned in their vaue those OF individuals. Mr..
FRANCIS lorner. a dstln uished writer on political
ECONOMY brought this question before the House
of Commons and moved for the appointment oil
tee 10 inquire into the state vi the crcullt-
ing medium and bullion trade. Mr.. William Hus-
klsson and Mr.. samuel Thornton THE latter Tor
were associated with Mr.. Horner in the committee
appointed.
These gentlemen, after patient ana laborious
inVestig atlon were decidedly OF opinion that the
evils into the causes OF which they were commits
stoned to inquire were to be attributed to an
excessive issue and circulation OF Bank Of England
paper. "A general rise OF all prices, rise in the
exchanges win be the effect Of an excessive guam
tity OF circua ting medium in q country when has
adopted currency not exportaOe to other coun-
tries or not convertible at Will INTO coin or coin
that il convertble.n But though the Bank OF
England notes were In reality at Q discount, that
not arise from want Of credit or confidence in the
funds and stability Of the bank, but merely from
q THE REMEDY PROPOSED
BY the committee for the unnatural and distressing
state OF AFFAIRS was stated, In the nrst place. TO DC
payments OF the Bank OF England. In enecting so
important change the committee were OF
opinion that some difficulties would be encoun-
tered, and that there were some contingent dan
gers TO the bank against which II ought TO be
most caTsn guarded e Nv S1 ~ .9ose may De
erection OF the bank itself the charge OF conducting
and completing the operation, and by allowing 70
the bank so ample period OF time Tor conducting
IL as viii be more than sufficient TO effect its COM
pletionn The directors OF that great institution,
Tar rom making themselves party MIN taose
viii take o much longer view oil the permanent In
terests OF the bank as being indissoluoly blenaed
with those OF the public. The particular mode OF
gradually affecting
III THE RESUMPTION OF SPECIE PAYMENTS
ought, therefore, to be lett ia great measure to
to do little more tnan to fix definitely the time at
which cash payments a are 70 become, as before re-
ample, in order that the directors may feel their
way, and that. having constant watch upon the
steps slowly, and may preserve both the course OF
their own affairs and that OF public and CONNER.
cai ere mt not only SAFE, put unemoarr s
restriction on specie payments could not safely DC
removed at an carrier period than two years; but
they were OF opinion that early provision should De
made by Parliament for terminating at the explra-
ton Of that time the operation OF the several sa
utes which imposed and continued the restriction.
In suggesting Elk
THE PERIOD OF TWO YEARS
the committee did not overlook the clrcum.
compelled TO pay in gold ana silver at the end OF
six months alter the ratification OF o definite
treaty OF peace But II peace were Immediately to
be ratified the committee were OF opinion 1T would
be most hazardous TO compel the bank to pay cash
IN SIX months. They were OF opinion that, even II
peace should intervene, two years should be given
but that II the war should be prolonged
specie payments should be resumed az the END OF
that period. They mad not been Indifferent to the
consideration OF the possible occurrence OF political
circumstances which might furnish an argument
in favor or some prolongation OF the proposed
ragUmlnD
OF new law for their temporary restriction aIuer
the bank shall have opened. They were however,
far from ntcipating o necessity even In any case
OF returning 10 the system then existing. The
anticipation OF the time when the bank will be
tripnfe TO the Improvement OF the exchanges;
whereas postponefnent OF this era in the event
OF exchanges continuing to fall (Which more and
more would generally be perceived TO arse from
an excess OF paper ana o consequent depreciation
of III might lead under an unfavorable state Of
public anairs to sucn failure OF confidence
Especially among oreigners) IN the determination
OF Parliament TO enforce a return to the protested
standard OF the measure OF payments as may serve
to precipitate the further fall OF exchanges and
lead TO consequences at once the most discredit-
FALLACIous THEORY RxrosED.
The committee IN the course o. their report called
attention to a topic which was brought under
bank directors as wen as some OF the merchants,
showed great anxiety to state doctrine OF the
truth OF which they protested themselves TO be
most thoroughly convinced-namely, that there
can be no possible excess in the issue OF Bank or
England paper so long as the discount OF mercan-
solidty arising out Of real Commercial iransac-
lions and payable at short and liked periods That
the discounts should be made on bills growing out
OF real commercial transactions and falling due in
a fixed and short period are sound and well estab-
llshed principles. But, said the report, tnaI while
there need be other limits to the issue OF their
paper than what are fixed by such rules OF dis
ments the discount OF good bills falling due at
short periods cannot lead to any excess TO the
amount OF paper in circulation, appeared to the
TO be q doctrine wholly erroneous in
principle and pregnant with dangerous conse-
quences in practice"
DHFICuLTIEs IN ESTIMATING THE NECESSARY
AMOUNT OF CURRENCY.
The suspension OF cash payments has had the
effect OF committing into the hands OF the directors
discretion, the important charge Of supplying the
country with that quantity oil circulating medium
occasions Of the public. The committee CON
sidered this trust which Il was unreasonable
TO expect that the directors could be ever able to
discharge. The most detailed knowledge OF the
actual trade OF the country, combined with the
profound science in all the principles OF money and
men TO adjust and keep always adjusted the right
proportion Of circulating medium In a country to
the wants Of trade. When the currency consists
entirely Of the precious metals, or OF paper con-
vertibie at VIII into the precious metals, the natu-
raj process OF commerce, by establishing exchanges
among ali the dlferent countries OF the world, adj
Juss IN every particular country the proportion Of
circulating medium TO It's actual occasions. The
proportion when Is thus regulated cannot
be maintained by any human wisdom or
skin. II tue national system OF currency and cir
cuation be abandoned ana discretionary issue OF
paper money substituted in It's stead Is vain TO
think that any rules can be devised for the exact
exercise OF such discretion. The committee
take occasion, again, to condemn the doctrine ad-
vanced by some OF the witnesses examined. They
say, when they consider that the power of sup
plying the people with circulating medium was ex.
ercised under an opinion that the paper could not
be issued IN excess II advanced In discounts to
merchants in good bills, payable at stated periods.
and likewise under an opinion that the price OF
bullion nor the course OF exchanges need be taken
into consideration as anording any Indication OF
the value OF such paper.
The committee concluded their report by recon-
mending that the bank be permitted to issue notes
under the value OF f5 for some little time after it
resumed payment IN specie. 1t was also thought
to be convenient tnat the chartered banks of
Ireland and Scotland and all the country banks
should not be compelled to pay in specie until
some time after the resumption Of payment in
cash by the Bank or England but should continue
q snort period OF being liable to pay their own
notes In Bank OF Eng. land paper.
ahrxyn do nf nf thn D,kS