The representative. [volume] (St. Paul, Minn.) 1893-1901, 1895-04-24
THE BANK OF ENGLAND.
How 1t Is Saved From Ruin BY the
Unlimited Issue of Government
Paper Money.
WHEN THE CRISIS COMES
John Bull Drops His Hard.Money
Nonsense and Adopts Populist
Principles.
READ AND REFLECT.
From the Denver Roaj.1

- AOiiA eAC DOHNCT hOdu.J
Henry j. w. Dam, contributes an
interesting article to the April num-
Der of McClure's Magazine, one THE
Bank of England" A brief history is
given of the career of the bank from
its organization July 9th, 1894 to the
present day, and also an entertaining
description of the different depart
ments of the bank and their opera
tions as at present conducted.
Mr.. Dam certainly had no intention
of writing political article, but he
incidently brings out one or two
points of interest to students of finan-
cial systems.
Under the sub-head of "The banks
wholesome power in times Of panic"
Mr.. Dam says:
1.-THE essential point in the Bank of
England system is one which is even
now much debated, though bankers
generally aver that it has worked
we'll. This is the suspension by Parlia-
ment, when necessary, of the banks
charter, thereby allowing it to issue
any amount of notes, for which extra
issue the government, by its action,
becomes morally, if not legally re-
sponSible. This is safety-valve, the
calming effect of which, in a panic,
since panics arise largely from
lack OF ready money, is wonderful"
Ask any single standard man in the
United States what country has the
best financial system on EARTH and he
will answer promptly, England"
Yet 1T turns out that the safety.
valve" which makes it run smoothly,
the foundation which gives the Eng
lish system stability, is the power Of
the government to issue, through the
Bank of England, unlimited quanti-
ties of ''tiat money" Evidently
then, fiat money is not such bad
thing after ALL or else "the best fnan-
cial system on earth" would not de-
pend upon it to give that system STA
bility and find in it "a very present
help in every time of trouble"
The government officials evidently
have the authority, when necessary in
emergencies, to authorize the Bank Of
England to issue ''fiat money" Fur
ther along in the article, speaking Of
the great panic of 1866 in England,
the author says:
"In the midst of the madness which
followed the suspension Of Overend,
Gurney & Company [This company
failed for $4,000, goo. there came the
news that Gladstone, then Chancellor
Of the ExcheQuer, had suspended the
charter Of the Bank of England. This
was suspension of different char
acter, and merchants dropped on their
knees upon the pavements and thank
ed God for Gladstone and the bank.
All the money needed was at hand
and the terrible need was met. So
composing was the announcement
that not q single eIt1a note sCdS printed.
Confidence was restored, and the sue
ceeding failures were taken with COM
parative quietude.
Previous to this there had been
run on the Bank of England, over $6l,-
O00,0 having been withdrawn in five
days. In the Bank of England, con-
sidered as regulation bank, the peo-
pie had no confidence. But when the
government. through Mr.. Gladstone
said, in effect: "We, the people of
England, guarantee the Bank Of Eng
land notes, and also guarantee to sup
ply sufficient amount of them, il
proper security be given, to meet all
demands Of business" what is the re-
suit? Nothing more or less than the
consumation so devoutly longed for at
present in the United States Of
America but as yet unrealized-'Con-
tidence was restOred.'"
Yet there are millions of so-called
intelligent men in this country who
contend that government banking
the guarantee of every citizen back of
every bank note in circulation and
that note receivable for taxes-would
be visionary, impracticable and un-
stable financial system.