Delaware gazette and state journal. (Wilmington, Del.) 1883-1902, 1897-09-23
BANEOF ENGLAND ANDSILVER



Timesthat the Bank OF England was
about to announce its Willingness to
use silver as ons. fifth part OF the re-
servo bf its issue department has caused
much excitement both in England and
on tie continent. The report is not
confined, and, although not officially
denid. is now generally discredited.
Yet he belief remains that the bank
directors have had the QUESTION under
consideration, and that there ia party
in fivor OF that policy in the board OF
direction, as we'll as in the Salisbury
goprnment. In order to understand
what Is meant by the proposed action,
wenuHt go bnck to the Paris confer
en,e Of 1881, in which similar project
wis advanced. On that occasion the
representa- of Great Britain laid be-
fore the conference paper from the
hank, saying that its charter required
it to receive all the gold offered to it
aud give its notes therefor and to re-
deem all OF Its notes in gold on demand.
1t might also recsive silver and issue its
notes therefor TO the extent OF one
fourth Of the gold held liz its issue de-
psrtment--these notes also being re-
deomable In gold. The hank would
avail itself OF this provision of its char
ter provided the mints of "other coun-
tries" would return to such rules aH
would insure the certainty of the con
version of gold into silver and OF silver
into gold. This, the paper said, would
be indispensable to the resumption OF
silver purchases by bank OF issue
whose responsibilities arc contracted in
gold.
The bank is composed Of two depart.
ments as distinct from each other as
though they were two separate institu-
tinns. Tho banking department no.
ceives deposits and discounts CONNER.
Gial paper liio any other bank. 1t has
n capital wholly in this department,
amounting, with lis surplus, to about
500, 600, 900 Tho issue department is a
veFtahle automaton, 1t had notes out
standing at its lant return amounting
to $3.50, COO 600. These were the solo
liabilities of thut department. The AS
sets OF tho same department contested
of government debt $40 600, 600, "othor
securities" about s2S, 200, one, and gold
Sll7, 0O0, 900. Tho automatic action OF
tho hunk Ia shown in this statement.
The law authorizes the issue Of Il tiysl
amount OF notes about GIG, 800 0nO
| against securities and then requires the
| bhtih W BtNd us UUltS W tub IluDilG w
exchange for gold without any limit
whatsoever. This action of the bank
ia called. in the language of tho Btrest,
"huyiug gold" Ii is required to no.
deem all OF its notes in gold on demand.
The deposits in ita banking department
are also payable in gold on demand.
The greater or less amount Of notes
outstanding at any time depends upon
/ tho pillllIr nn1 HaUrnn
tire bank, since the latter must issue
ami redeem notes upon the conditions
named. The directors have nothing to
say about that part Of tho business.
The banks charter as passed in 1874
authorizes 1t to receive and hold siuor
in it's issue department to the extent Of
one.tifth OF tire total amount of its
metallic reserve in that department.
| At the time when the charter was
adopted silver was worth trihe mure
than gold at the French ratio Of l1la
10 |. England at that time had no
ratio; shs had been on single gold
STANDARD since 1916. This authori2a.
tion has never been availed Of, We be-
lieve, anil il would not he awaited of
now uGless some competent authority
should fix ratio at which silver should
be received. Even in that case-even
il a ratio we're adOntad corresponding
with the mercantile ratio, say IS to i.
we could only regard such step on the
part of tho bank AS evidence OF mental
unsoundneHs, leading also to financial
unsuundncss. since it would reduce the
reserves of the issue department by 20
per reut without any gam whatever
For all purposes of redeemlng it's
notes it might as we'll have an equal in.
voatment in pig iron. IL may he said
that the minta of tho other countries,
under the proposed scheme of 1881. will
always hand over their gold IN exchange
for tho bank's silver at tho agreed
ratio, hut who is TO guarantee thatr
an international agreement Suppose
the countries go to war and bluckade
each others ports Will France be
likely to hand over two or three hun
drsd million francs in gold Immediately
in exchange for silver? Both countries
in such II case will want all the GOLD
they can lay their hands on. and both
will leave for future adjustment my
question that may arise touching their
monetary agreements. Thus, in q con
GeivRble case, ono fifth of tho banks
metallic reserves may he no more avail
able than pig iron, hut even less since
and shell. In short, the banks sol
ycncy at a critical moment might de-
pend or Il foreign government.
1t should be added that tho bank g
proposal in the conference Of 1881 was
not accepted by any government repre-.
sentsd therein. 1t had bsen pro.
bounced unsatisfactory by Mr. Thur
man on behalf of the United States
even before il was received. IL wac
pronuuncod unsatisfactory by Mr.. Per
aon, himotallist delegate from the
Netherlands, after it was read. 1t was
not even noticed by the delegates Of
France, who were at that Tins OF tho
himetalist persuasion. No vnte was
taken on il. and tho conference adj
juurned on the third day after tho paper
WIS laid on it's table, and without any
genera! discussion of itH merits. Tho
retain was the same as that which letl
IL the rejection of all similar proposals
at the brussels conference 1t was
simp!y plan TO maks an artificial
market for silver--to bolster up the
priCo and help the owners uf mnGs.
Such u market could not be permanent.
snce any increase of price would neces
sarily he followed by an increase of tho
output, ami aH the market would not
lle an unlimited one, the price would
fall back as soon aH tho artificial do,
mand was satisfied. And then the bank
would be loaded with perhaps $50
900, 0UU of a metal that it could not pay
its debts with nor get rid OF except al
loss. The hank would be in the same
situation as thu United States govern.
ment 10 with itH new tangled Treasury
notes issunn against mig silver, Vhnt