The Topeka state journal., 1897-09-11
GOLD IS SHAKEN.
Bank of England Consents to
Hold One Fifth
Of Its Reserve Funds in the
White Metal.
LONDON TIMES ROARs.
Styles the Move a Revolution
in Policy
And a Sop Thrown to the
American Commissioners.

morning in an article from a special
correspondent, in whose accuracy it
says it has reason to place confidence,
makes the important announcement
that the Bank of England directors
have consented to hold one-tenth of
the banks reserve in silver.
The Times commenting editorially on
what it calls Dramatic SURPRISES says
the astonishment of the public will be
immeasurably greater than at the ac-
ton of the Indian council.
The article, which is headed "a re-
u1OnStrance,' says:
Has the bank been well advised in
falling in with the suggestion pushed
forward by certain Americans that it
should hold fifth of it's reserve in sill
yer? Perhaps the assent was given in
very guarded terms; perhaps it was
done to oblige persons in high quart
ers; perhaps it was considered an act of
international courtesy There may
have been this or that reason to excuse
and extenuate; but the broad plain
truth is that in existing circumstances
the bank ought to set its face emphat-
icaly against such notion and it has
not done so. It is useless to contend
that such plan is stamped with the per-
mission of the bank charter act and the
authority of Sir Robert Peel. 1t is
equally useless to remember that at
the Paris monetary conference in 1888,
the bank, on the suggestion of Italy
and the United States gave some sort
OF promise that SnOuIQ internal D1n1St-
ailism be established it might allow the
temperance of silver bullion an
asset in the issue in the department of
the bank.
THE reasons which actuated Sir
Robert Peel are of no application in
present circumstance. 1t is important
to remember that the concession of 1881
was Immediately seized upon as an inn
portant British declaration in favor of
bimetallism and has been a handle of
annoyance against us ever since We
do not live in 1874 and we ought to
learn wisdom from the experience OF
1881.
Nowadays it would be as useless for
the Bank of England to keep seven
million pounds or eight million pounds
in the shape of silver reserve as 1t
would be for parliament to pass law
for the creation of rotten borOughs. The
Bank of England ought to have said
this, and it has not said this. Sir Rob
ert Peel explained in 1874 that it was
well to hold silver so as to be in a po-
SitiOn to enjoy the opportunity AFFORDED
US by bimetallic France to pay our
debts in cheaper metal. But what has
this to do with the present American
suggestion? The very point of it is
that our reserve is to consist perma-
nently in part of silver, so that we may
assist in raising the price of silver. That
we should dispose of it at profit to
France or America is the very thing
that under the proposed scheme of in
ternational binletallism we could not
do. The circumstances are quite diff
ferent Where Peel may have been
wise we could be exceedingly foolish,
for as the only dubious point in our
financial system is the very occasional
weakness of our gold reserve at the
bank why should we deliberately
choose to water that reserve by prac-
tically reducing it One-ffth?
Sir Robert PeePS other reason was
that a stock of silver might occasionally
be convenient to snip TO the far east
But since the telegraph was invented
that reason no longer exists. We can
order silver from anywhere in a few
seconds, and as London is the principal
silver mart of the whole world, we need
no stock at the bank.
This revolution in policy, for it is
nothing less that our respondent de-
scribes, applies to the stock of coin and
bullion held in the issue department as
security for the banks notes. PeePS
act forbids the bank to hold more than
one-fourth in silver. The business COM
munity will hope that the directory
may be able to show our informant that
he is mistaken. The silver would be
quite useless, for nobody, after wit
Messing the recent headlong fan in
price, would dream of regarding it as
anything but an eligible quantity in
such connection.
THE banks credit is certainly strong
enough to bear the additional strain
without even wincing; but why should
it be subjected thereto? If the govern
ment is responsible for the measure, it
might have found some less objection
able sop to throw to the American COM
rniSSionerS or the bimetalliStS among
the ministerial supporters, or whomSo-
ever it may be that has to be cOnciliat-
ed. 1t would have been preferable to
adopt the often repeated suggestion to
cease coming half sovereigES in order
to secure a greater circulation.
This would have been inconVenient,
but not positively harmful. The meas
ure now said to be contemplated can
only create a temporary vacuum in the
silver market, which will inevitably be
rapidly filled by the practically mex
haustible supplies availa BILE. 1t is
needless to deal with the mechanical
difficulties, such as the question of the
value of silver now standing in the
banks books, or the course to be pur-
sued when large Withdrawals of gold
raise the proportion of silver above one
fifth. These are mere details which
shrink before the Importance of the
principles involved. We hope the di-
rectOrs will speedily explain