Savannah morning news. [volume] (Savannah) 1868-1887, 1883-03-23
Currency of England and the United


smile of S0undness. Money panics cause |
no distrust of the bank notes. AS the bank, |
besides doing general discount business, |
is the depository for all other banks, its |
money balance is the money balance of |
the realm, and to keep il in safe proper |
ton, is to regulate the money situation of |
the kingdom. 1t has also assumed the |
office Of stopping panics, which il eXer- |
cises by having the government suspend !
the restrictions on the issue and reserve. !
This queer feature has worked well, but |
it is Objectionable in that it leads TO the |
habit oftrusting TO government interven- |
ton to save men in rash ventures.
Yet the bank is owned and managed by |
private stockholders for their own profit. |
A government would hardly create such |
an anomaly all at once; but it has grown |!
so, and has been successful, and has |
gathered traditions of its own which are I
its unwritten law. 1t is the bank of banks |
in system under which the multiplica- |
ton of the service of money, and the car /
rying of an immeasurable volume OF trade |
and credit on a small volume of money /
have safely reached a higher degree than |
in any other country. This has demon /
strated that the notion of our able states |
men that the volume Of money must be |
expanded in proportion to the volume oil
trade, is very primitive idea.
In general the bank may be con sidered |
as two separate institutions: The issue |
department., whose issues are subject to |
certain government rules; and the bank, |
which is subject to no other law than |
private bank. A consideration IN the
early charters was a loan to the govern /
ment. 1t now amounts to f15,OOO,0OO, |
which is about the capital Of the bank. |
For this it receives public securities, for
which, when deposited in the issue depart
ment. the bank has the right to receive
an equal amount in notes. so much OF |
| the issue is, therefore, credit currency
The bank has the right to receive from
the issue department an unllmltea amount
| of notes in addition, upon depOsltlng an
equss amount in gold. Thus all the issues
over / 10, 000, 900 is representative of cur
rencv. The issue varies; last june IT was
| over EDS. 0O0. 900. The notes are legal-ten-
der, except by the bank.
The bank receives interest ON the Sc
1 curitles deposited for notes; but II renders
| great service to the public in various
| WAYS. 1t has the entire management OF
| the public debt, conversions, circulating
! exchequer bills, payment OF annultles,
&C., and it advances annually the amount
| of the land and malt taxes. Our govern
ment. with all its banks, was so lacking
| in fiscal agent, that, although 1t held a
| great reserve, it paid a commission ana
! double interest for three months for the
simple operation of changing bonds, al
though the holders of the old were anxious
| To swan for the new. Theoretically the
| giving away the profit of issuing notes as
| money is irrational, but practically the
! English seem to get more than they give
for the privilege of issuing only tlo,OOO'-
| 600 of credit currency. At any rate, our
national banks have received the privilege
of issuing without limit, and their issue
| is now over $3.50, 100000.
The bank also renders valuable service
by its custodianship OF the gold which IS
| represented by notes. As safeguard, 1t
/ does not reissue a note. This adds to the
expense of the note issue. 1t is required
to give sovereigns in exchange for bullion
! to all corners. receiving a small commits
| sion, There is no natural law which re-
| ouires the emission of Is, 900, 900 ofcredit
| currency. or limits to that sum. In emit
tingnOtes to increase the amount OF money
there is no end to the reason. This fea-
| t1re is in no way essential to the English
| system. and the only result is that it dis
| places so much gold, and in case the
finances were strained by great war,
| would be a weakness. The bank could
dispense with the credit currency feature.
The office which the bank has assumed
of stopping incipient panics may he shown
| by reference to the very severe panic of
1856 1t had drawn down the banking re-
serve OF the bank to below one million.
The Priyy Council suspended the act of
1874. By this suspension the issue de-
| partment was made part of the bank,
and its fla, 000, 900 of gold was added to the
| banking reserve. The restriction OF the
| issue of notes by the amount of gold de-
posted for them was suspended, and the
| directors might issue as they pleased,
| subject to the condition that they must
| maintain cOnVertibility. The act was
| also suspended in 1S47 and 1857. In these
cases an indemnity act by Parliament is
called for TO cover the breach OF law.
Estimating the average issue of notes
at e3S. 0O0. 900, the gold reserve of the issue
! department would be f23, 000. 000-abOut
| three-ffths of the amount of the notes. In
practice the proportion of gold is greater
than this This makes no account OF the
| banking reserve. The whole amount of
/ gold IN the realm is not easy TO md out.
| Estimating it at f60,0O0,0O0, makes 1t i'll
the degree Oftwo for one OF the credit cur
| rency: and the whole volume Of money,
in reserve and in the hands of the people,
| f75. 900. 600. Upon this comparatively
| small volume of money is carried on an
| industry and commerce reaching over all
the world, and which may be reasonably
estimated as double that of the United
States. 1t is wonderful development of
the methods of econOmiZing the use of
money by banking and the equivalents OF
trade by which the volume of trade of the
kingdom has multiplied prodigiously,
without any increase in the volume Of
money.
First, in the United States currency sys-
tenn are the United States notes green
backs }, the amount fixed at present at
$346, 6Sl, 016; a credit currency, legal ten
der for government. banks, and all.
Second, the national bank notes, which,
February /, were, in all, 1851, 459, 151.
These are a credit currency, secured by
deposit of national securities in the Treas
ury. They are payable on demand, but
Il - Il 60
pay them, this would put on the treasury
the demand for specie, If that should be
the call Third, the silver certificates,
which at the same dates amounted to $l2,-
745,4T0. These are representative cur
rency, representing silver dollars held by
the Treasury, which are now worth about
eighty-fve cents. They circulate as
equivalent to gold, and are so received for
customs, and the government practically
undertakes to keep them as good as tick
cts for gold. AS the coming of silver dol
lars is forced at the rate of about $2,50O,0W
a month, the silver certificates are in
creasing in the same degree. Fourth, gold
certificates, amounting at the same date
to $72. re, 040. The amount of silver dol
lars. February 1,was $135, 405, 900, of which
S97. $50, $40 was in the Treasury. The two
items of credit currency amounted to
S70S 140, 167; the two items of representa-
tive currency-silver and gold certificates
to $145, 521, $40; all the currency to $685.
661,6 77. In this comparison no account is
taken on either side Of the amount of cur
rencv in the bank reserve or in the Treas
ury. The amounts will be about equiya-
lent on both sides. The Treasury held at
the same date, in gold bullion and gold
coin. $175,317 1888; in silver dollars and bull
lion, SOL 292, 927; total, $976, $40, $50, being
about 80 per cent. of the currency, against
the English go per cent. Setting off the
silver dollar and the silver certificates, and
setting off SAT ,669, $40 in gold against that
sum II gold certificates outside, at the
same date, leaves the gold reserve of the
whole volume of credit currency at that
time-viz.: SOS, 40, 167-$l25, 64S, 693, be-
ing less than Is per cent.
The whole amount of gold in the country
is probably not over $400, 600, 900. Larger
estimates are made, but there are no signs
of such an amount in the hands ofthe peO-
ple as these have to allow, Assuming this
figure, the total of specie-gold and silver
lis. roundly. $685., 000, 900, against the
total currency of 1858, 900, 600, being in the
proportion of ten in currency to six in
specie, in the United States, against two
in specie to one in currency in England.
The silver part is a delicate matter, as
the practical reserve must be on top of
that.
This is an immense volume OF currency,
on such base, and is steadily increasing.
1t is three times as great as the currency
of England, which suftices for greater
business, and which has as much as three
times the degree of gold foundation, both