THE CAUSE NATIONAL DISTRESS BY CHARLES ENDERBY, F.R.S. AUTHOR OF “MONEY THE REPRESENTATIVE OF VALUE;’* “NATIONAL STORE AND DOCK BANKS;” ETC. ETC. LONDON: PELHAM RICHARDSON, 23, CORNHILL. 1847 . (Price One Shilling.) PELHAM RICHARDSON, PRINTER, 23, CORNHILL. OUR MONEY f ,v \ ( ' ETC. ETC. LAWS M I offer no apology for giving publicity to the remarks contained in the following pages on the present deplorable condition of the nation, its causes and its remedies, because in such circumstances of emergence every one who has reflected maturely on the subject is entitled to be heard ; and I trust, be- sides, I may claim some privilege for myself in this respect, from having predicted much of what is now in course of being verified, and from the circumstance that opinions to which I have con- sistently adhered during the last twenty years, and which I commenced publishing as early as the year 1837, are now beginning to command public attention. The publication in question, entitled “ Money the Representative of Value,” treated on various matters connected with the main subject of inquiry, but especially on the fallacy of the existing Currency Laws, and the evils to be anticipated from sanction- ing the construction of railroads by private com- 4 0.fVV&.(\ 4 panies, when sound national policy dictated that such works should be undertaken by the Go- vernment and made a source of revenue, there- by superseding a corresponding amount derived from taxes. This could have been accomplished by borrowing money at 3 per cent., funding the loans as railway stock at a fixed dividend, and carrying the receipts to the credit of the State. This suggestion, be it observed, was made at a time when there was scarcely a line of railroad completed, and all might readily have been brought within the control of Government. The opportu- nity, however, has been lost, and it is now useless to represent the evils which would have been averted by carrying out these great works gradually, at a rate which would have distributed the expenditure over a considerable number of years, and would not, therefore, have disturbed the ordinary transac- tions of trade. In a second publication, viz. “ Metallic Currency the Cause of the Money Crisis in England and America,” which also appeared in 1837, and as a second edition, with a postscript, in ] 839, I further pointed out the mischievous tendency of our Cur- rency Laws, and predicted that the nation could never expect to be free from the periodical recur- rence of a monetary crisis whilst the Act of 1819 remained in force. In 1841 1 put forth a third pamphlet, under the title of “ National Store and Dock Banks,” wherein I suggested the propriety of constituting docks banking establishments ; thus making, so to speak, the docks or national warehouses the safes of the 5 banks in which the depositors would lodge not only their money, bills of exchange, and dock-warrants, but also the goods themselves, that is, the actual wealth represented by the paper issues of the Bank. By this means greater public security and increased facilities to legitimate trade would be at one and the same time afforded. The advantage to the Bank would be increased security, since advances of money on bills would usually be accompanied by a collateral security on goods ; so that extended accommodation might be afforded to persons pos- sessed of actual wealth, whilst it would be withheld from those who sought advances on mere bills of accommodation. Between the beginning of 1842 and the present time I have ventured to put forth several other pamphlets and letters having reference to the state of our monetary and commercial affairs, amongst which I would refer to “ Currency : Inquiry soli- cited,” 1842 ; “ Letter to Sir Robert Peel on the meaning of ‘ a Pound,’” 1843; “ The Distress of the Nation; its Causes and Remedies,” 1844; “ The Fallacy of our Monetary System, as deduced from Sir Robert Peel’s definition of ‘ a Pound,’ ” 1847. Having now explained, and, as I trust, satisfac- torily, the grounds upon which I have again resumed my pen, it will be my endeavour, in as few words as possible, to aid in rousing public opinion to a sense of the fearful evils which have been already inflicted, by causes now in operation, and of those which must henceforth ensue, if remedial measures of a fundamental kind be not immediately adopted 6 to alleviate the distress in which the commercial, trading, and manufacturing community is plunged, and which reacts upon the industrial community at large. The distress from which the nation is suffering is entirely of our own creating, and as entirely within the control of human legislation. Divine Provi- dence has this year bountifully supplied us with all the necessaries of life, even to excess ; we have no real wants, and it would be both idle and profane to offer up prayers for the mitigation of our self- inflicted calamity. In the midst of plenty, we have misery and starvation ; labour, the producer of wealth, is suspended ; and the anomaly is exhibited of the nation seeking to rectify its position, not by industry, but by idleness ; that is, by compelling the producers of wealth to cease their labour. This used not to be the means of becoming rich, nor can it ever prove so ; and much blame must attach to any Government which permits a day to pass without instituting a thorough investigation into the causes of such a state of things, and attempting to alleviate their lamentable effects. We complain not of any scarcity of labourers; we seek not to increase our stocks of commodities ; but we are unceasing in our complaints of a scar- city of money, (of a medium of exchange,) to which cause we ascribe all our miseries. In a word, we impute these to the want of an adequate represen- tative of the wealth which labour produces. The advocates of the existing Currency Laws admit that an increased issue of money would operate to produce temporary relief. Now, the 7 proof of the issue being needed is that it affords relief \ but this, as now rendered, is liable at any moment to be withdrawn, whereas, to be effectual, it should be permanent. It is the Currency Laws themselves which prevent the relief from being permanent, and because it would be temporary, it is withheld altogether, if gold happen to be wanting. The effect of these laws is, first, to cause the Bank of England to extend its issues, either in Bank notes or coin, correspondingly with the amount of bullion in its possession, and so to raise prices ; and then to contract its issues and depress prices. In short, gold has been made the standard measure of value for no other apparent object than to derange the prices of every thing else, and thus to confer undue benefits on the capitalist and the non-producing classes at the expense of the rest of the community. Thus it is seen there can be no stability of prices, no permanent prosperity under the exist- ing Currency Laws. If the gold in our posses- sion be plentiful, this very circumstance induces a state of things which speedily causes it to leave us, and then, in order to fetch it back, every species of property is depreciated, unmerited suffer- ing entailed upon the producing classes, and ge- neral distress occasioned. It is further to be considered that the issues of Bank notes against gold are made wholly irrespec- tive of the source from whence, or the circumstances under which, the gold is derived. Now, it is obvious that all money invested by foreigners in English securities must, under the present mone- 8 tary system, be considered as loans to England of foreign gold, upon which increased issues of Bank notes are to be made, in accordance with the prin- ciple of the law of 1844, requiring that the currency shall expand and contract precisely as would be the case if it were purely a metallic one. The gold itself may remain a mere lump of metal in the Bank-vaults, (in which case it might just as well have continued buried in the mines,) or may be coined and put in circulation ; but in either shape it may be claimed at any moment by the parties who imported it, and exported by them with a profit. Let us suppose, for instance, foreigners to pur- chase, through the agency of the Bank of England, two millions in Consols, at the price of £80. That sum in gold would most probably remain in deposit at the Bank till called for, and meanwhile two millions of additional notes would be issued (on the strength of the gold) to the parties from whom the Consols had been purchased. That such would be the case we may be assured from the satis- faction which was expressed a few months since at the alleged intention of the Emperor of Russia to make such an investment, since it was avowedly regarded as a means of extending the circulation at a period of pressure. Here, then, we should have an increased circulation of £2,000,000, on a debt due to foreigners , producing, for the time being, all the good or evil of an in- convertible paper currency. The prices of all things would be enhanced, and Consols would perhaps rise to £90 ; whereupon the foreigners, not 9 seeking a permanent investment, but being merely desirous to “ turn a penny,” would naturally direct the Bank of England to sell their stock, and remit the proceeds. The £2,000,000 deposited in gold would, in consequence, be withdrawn, together with £250,000, as profit on the transaction ; and thus, as the amount of Bank notes must, in ac- cordance with the law, be correspondingly di- minished, we should be in a worse position than at first by £250,000, to say nothing of the serious mischief which must ensue from circumscribing the circulation to the extent of £2,250,000. The bul- lionists will tell us that, foreseeing this contingency, we ought gradually to contract our engagements, so as to be more prepared to meet it. But why should we be subjected to it at all ? Why should the means be afforded us of extending our under- takings, if these are afterwards to be thus wan- tonly suspended or destroyed ? The monstrousness of the case becomes still more apparent when it is considered that British merchants holding £2,000,000 in silver bullion would apply in vain to the Bank of England even for an advance upon it, although constituting as bond jide a security as the foreigner’s gold. The revival, at the present moment, of the an- nouncement before adverted to, that it is the intention of the Emperor of Russia to send a large amount of gold to this country, to be invested in Government securities, has been hailed by many with the same satisfaction as was originally mani- fested, because it is conceived the measure will restore confidence and commercial prosperity. It is not, however, for the reasons already stated, 10 to be lightly passed over, or made a matter of congratulation. It involves (under the existing Currency Laws) the nation in responsibilities from which it cannot emancipate itself without suffering ; since it subjects us to refund, probably when least prepared to part with it, the gold from the acqui- sition of which people are now anticipating so much benefit. At best it will prolong the system of living from hand to mouth, and prove as the straw to the drowning man. By a. strange incon- sistency, too, the very parties who see no impro- priety in the nation thus trading upon borrowed capital, loudly inveigh against individuals for doing the same thing ! Time was when the Continent was laid under contribution to England ; and, however great the losses sustained from the failure of some foreign States to fulfil their engagements in respect of the loans made to them, still, upon the whole of her transactions with the world, England was greatly enriched by such loans. The prediction, however, of the late Mr. Rothschild, to the effect that by restricting our circulation to a gold measure of value we should not be able to contract foreign loans, has been fully verified. Our position amongst the nations of Europe is changed ; our means are cramped, and we shall shortly become the debtors of foreign States. Thus, whilst Russia is growing rich and sending gold to England, she uses for her domestic currency paper-money inconvertible into the precious metals, except at their market- prices ; that is, she adopts the means of becoming rich which England adopted during the war, and prospers, as England did, in consequence. 11 Let us now take another case, and suppose the Bank of England to advance £2,000,000 to mer- chants upon the security of Consols, irrespective of gold in deposit. The same effect would be produced, with the same rise in prices, as in the former case, but with this difference, viz. that the foreigner would not be a creditor, and, conse- quently, could not demand from us any gold, nor subject us to the evils of reaction and low prices. These instances will suffice to shew the folly and mischief inseparable from the attempt to re- gulate the domestic currency of this country by the supply of gold, be the gold acquired through whatever source it may ; and the same objection applies equally to silver. Money, as its name (derived from the Latin word moneta, a token or sign, the derivation of which itself is monere , to admonish or remind) denotes, is that which serves to express in a tangible shape the value of all objects requiring to be represented : it is therefore the mere sign or substitute, and not the reality — the particular thing which men have agreed to recognise and use as the common medium of exchange. Hence, money , in the proper mean- ing of the term, is not value, but the representative or measure of value ; nor can the nature of money be altered, however its legitimate use may be perverted, by reason of any particular material of which it may happen to be composed ; for the essence of money is neither intrinsic nor conferred value, but value signified. It is impossible, therefore, to understand why the supply of money should be made contingent upon that of the scarcest and consequently the 12 most valuable material, viz., gold ; or why, when consisting of something else (as paper), money should be constituted such only in so far as it is exchangeable into gold at a fixed rate, — unless upon the erroneous supposition that gold alone is money, that is, the true and natural measure of value. The insufficiency of gold and silver for the purposes of money effectually disproves them to be money by any natural law. “ Money,” says Locke, “ is the measure of commerce, and of the rate of every thing, and therefore ought to be kept (as all other measures) as steady and invariable as may be.” Coin, though unquestionably money, has no more claim to be alone considered money than its material has to be alone considered capital or wealth. It is money, not in virtue of its intrinsic value, but from the stamp or authority which gives it cur- rency; and any thing else similarly impressed, but entirely devoid of intrinsic value, (as, for instance, paper,) is equally money and will pass as such, so long as confidence be reposed in its authenticity, which will be the case unless it ceases to enable its possessor to procure the value which it represents. Coin is, therefore, only one of the forms which money takes, the same as the “precious metals” are one of the forms in which capital or wealth reveals itself. The difference between metallic or stamped, and paper or inscribed money consists in this — that whereas, the first is both a commodity in circulation and coined money, liable to fluctuations from which the last is altogether free, so that it may be with- drawn at any moment for the sake of the material, without the least reference to its monied character, and, compared with paper, is therefore an imperfect 13 measure of value, being deficient in the first requi- sites, viz., stability and permanence. Hence, to make it imperative to have a circulating medium based exclusively upon, and exclusively exchange- able into, the “ precious metals,” is at once to deny the character of money , and to aim at a transmuta- tion which may be aptly designated the practice of alchymy on a stupendous scale, bringing ruin on those engaged in it. Without coin, every trans- action in which it is employed might equally take place ; but without money, as deduced from its etymology , we must resort to a state of barter. Persistence in the use of a metallic currency must eventually bring us, as in effect it already nearly has done, on more than one occasion, to that state, and the imminence of the danger was each time alone averted by an extension of paper issues. Thus, paper money has repaired the mischief which metallic money has occasioned ; while, moreover, if our experience of the first, from 1797 to 1824, be compared with that which we have had of the last, from 1825 to the present time, the contrast in favour of a paper currency becomes strikingly apparent. We know by what is at this moment going on around us, that a metallic currency cannot bear us through any circumstances of extraordinary diffi- culty, and the partisans of the system are them- selves compelled, however reluctantly, to admit that it could not in this country for a moment stand the test of war or political convulsion. These con- siderations suffice to show how fraudulent and illu- sory is the boasted theory upon which it rests. The object of constituting that the measure of value 14 which, from its nature, is the least fitted to be so, is, indeed, palpable enough : it is to make money dear, and thus enrich the few at the expense of the many; but the policy is short-sighted and suicidal, for dear money is incompatible with the maintenance of England’s commercial and manufacturing pros- perity — the main element of her wealth and great- ness. As money is the measure of value, so does it re- quire conventional terms to express the degree of value, as estimated in money, and for this purpose the adoption of an unit or integer is indispensable. These terms vary in different countries ; and in our own the mode of computation is by the pound of account and its fractional parts. £. s. d. are, there- fore, the representatives of money in the same way that money is itself the representative of value. The price of a thing is a specified sum of money : its value is the quantity of any other thing it will exchange for. Thus, when we say that a thing (a sovereign of full weight, for instance) is of the value of a pound — that is, is worth that quantity of money — we express ourselves intelligibly and rightly ; but when, instead of this, we define a pound to be a substantial reality, we attribute mate- riality to a shadow, subvert the real meaning, use, and action of money, and involve ourselves in an endless labyrinth of contradictions.* * “ The founder of Sparta made it a fundamental principle, that its money should not possess intrinsic value ; and it is notorious that, whilst its coin was made of worthless iron — iron purposely rendered worthless, by being deprived of its malleability — for which reason it was the scoff of surrounding nations, the people of Sparta 15 The surest means of arriving at a right perception of the monetary system adapted to our circum- stances is not by discussing abstract principles, how- ever plausible in theory, but by referring to the pages of history for information respecting as well the commercial difficulties under which the country has laboured at different periods, as the remedies they have evoked, and by endeavouring, from the knowledge thus obtained and the comparison of re- sults, to frame measures calculated to prevent, as far as possible, the recurrence of similar disasters, or at all events allay by their inherent efficacy the intensity of the suffering induced. The conclusion to which an impartial investiga- tion of this kind must lead us is that we have, so to speak, long since outgrown a system of currency which is regulated by the supply of the precious metals. Taking as a starting point the year 1793, (gold being, as now, the standard of value,) we find that in that year England experienced great commercial embarrassment, and one-third of the private banks were compelled to suspend payment. Only four years later (1797) the nation again became involved in commercial difficulties, and such was the demand were the admiration of the whole world, and so they continued for nearly 500 years ; but as soon as Lysander began to break through the severe prohibition of Lycurgus against the use of gold and sil- ver money, from that time historians date the commencement of her decline. The conduct of this ancient republic is the more remarkably in point, because whilst the use of metal for money was recognized by them, the inventing of money with intrinsic value was studiously avoided .” — What is Money ? 16 for gold (from its having been fixed as the standard of value) that it was found necessary to suspend by an Order in Council cash payments altogether; in fact, to abandon a system proved by experience incapable of being maintained. This measure was adopted by Mr. Pitt upon the recommendation of the Bank Directors, who alleged that if they were compelled to continue paying their notes in gold at the price fixed by law, they must either so contract their accommodation to the public as to occasion a considerable augmentation of distress, or stop pay- ment from necessity. The result of the adoption of the recommendation was at once to relieve the commercial classes from the pressure which weighed upon them. The country must, in fact, have suc- cumbed under its difficulties but for this bold policy, especially in the years 1800 and 1801, when such was the scarcity of corn that its price rose to 128,?. 6d. the quarter. Nevertheless, owing to a sufficient currency this high price entailed no pecu- niary embarrassment, and in 1802 the price of wheat fell to 7 6s. Cash payments were not resumed till 1822, the paper currency not based upon gold having mean- while effectually sustained the credit, and supplied the wants of the nation. It is true that towards the end of the year 1810 and beginning of 1811, distress prevailed amongst the trading classes, occasioned by the exclusion of our goods from the markets of the continent by the Berlin decrees, and their consequent undue accu- mulation in our warehouses, thereby checking em- ployment. The pressure was, however, alleviated, 17 as in 1793, by an issue of Exchequer Bills to mer- chants ; a fact which sufficiently denotes that the paper money was not in excess, and could not therefore have been depreciated ; unless, indeed, we choose to say that it was so with reference to gold, but then we ought equally to extend the comparison to wheat, since that also was a dear commodity. In 1825, that is, three years after the resumption of specie payments, another severe monetary and com- mercial crisis took place. This was succeeded by a further one in 1837, which, momentarily allayed, again broke out in 1839, and notwithstanding the experience we ought to have gained from these successive warnings, we are now (1847) suffering from similar calamities, which, prospectively, have no termination. Thus, from the year 1793 to 1797, and again from 1822 to 1847, together only a period of thirty years, the nation, by pursuing a system of cash payments, has been subjected to no less than six convulsions, being, on the ^average, one every five years; whilst from the year 1797 to 1822 (during the suspension of cash payments), a period of twenty-five years, and those the most mo- mentous of our times, with the transition from a war to a peace expenditure, the country experienced but one panic. This was produced by causes similar to those which arose on the termination of the American war in 1785, viz. the diminution of demand for the produce of labour on the part of the Government, and the throwing on the country a vast number of effective labourers previously em- ployed as soldiers, &c. Will, however, any one contend that the distress thus occasioned would not B 18 have been increased tenfold had a metallic currency been substituted for the paper one ? It is instructive to reflect, that on each of the above occasions, when distress has occurred under the system which maintains gold as the standard of value, and professes to make all bank notes redeem- able in that metal at a fixed price, viz. in 1793, 1797, 1825, 1837, 1839, and lastly in 1847,— a metallic currency has uniformly proved itself to be as destitute of remedial as of preventive powers, and that the mischief has invariably required to be repaired by recourse to paper money, in violation of the principle upon which the whole system of the metallic currency is based. Thus, in the space of thirty years, the fallacy of the theory of a metallic currency being the only true monetary system, has been demonstrated, in one instance, by the abolition of the law, and in five, by its evasion, not from choice but from necessity, and in each case the results have justified the pro- ceeding. Between the circumstances of the years 1793 and 1847 — the two extremes of the period of more than half a century embraced in this inquiry — a resemblance may be traced, telling little in favour of the wisdom of the theorists who seek to perpetuate our present monetary system. In Macpherson’s “ Annals of Commerce ” the fol- lowing passage occurs with reference to the occur- rences of the first of the above-named years, viz. — “ Of the wealth accumulated in nine peaceful years of successful commerce, a very considerable proportion was invested in machinery and inland 19 navigation ; objects which, though generally very productive in due time, require a heavy advance of capital, and depend for their productiveness en- tirely upon the general prosperity of the trade of the country. At this time also the concerns of both merchants and manufacturers were much more widely extended, and were much greater than at any former period ; a natural effect of increasing prosperity, and sometimes a cause of ensuing cala- mity. From the operation of causes which I shall not pretend to explain, the unprecedented number of bankruptcies in November, 1792, was prodi- giously exceeded in number and amount by those which took place in the spring and summer of this year; 105 in March, 188 in April, 209 in May, 158 in June, 108 in July. Many houses of the most extensive dealings and most established credit failed ; and their fall involved vast numbers of their correspondents and connections in all parts of the country. Houses of great respectability and un- doubted solidity, possessing ample funds, which actually did in a short time enable them to pay every shilling of their debts, were obliged to stop payment ; and some bankers, who, almost imme- diately on recovering from the first panic, resumed the regularity of their payments, were obliged to make a pause. Many, whom the temporary assis- tance of even a moderate sum of money would have enabled to surmount their difficulties, could not obtain any accommodation ; for in the general distress and dismay every one looked upon his neighbour with caution, if not with suspicion. It was impossible to raise any money upon the secu- b 2 20 rity of machinery or shares of canals, for the value of such property seemed to be annihilated in the gloomy apprehensions of the sinking state of the country, its commerce and manufactures ; and those who had any money, not knowing whom they could place it with safely, kept it unemployed, and locked up in their coffers. “ In consequence of an interview of several of the principal merchants and traders with Mr. Pitt, the Prime Minister, a meeting was held at the Mansion House, April 23rd, to concert measures for putting a stop to this terrible calamity ; when the Lord Mayor, Messrs. Anderson, Bosanquet, Forster, Baring, Cheswell, Thornton, Harman, Winthrop, Boddington, and Hunter, after much deliberation, drew up the outlines of a plan for the revival of commercial credit and the restoration of confidence, by a parliamentary advance of Ex- chequer Bills, under proper regulations, to houses of real capital, a copy of which was immediately laid before Mr. Pitt. “ On the 8th May, in compliance with the recommendation of the Committee, this was agreed to, and the advances were to be made to such of the merchants, traders, bankers, See., as should apply for them in sums not under £4,000 on secu- rity approved, or on the deposit of goods of double the value of the sums advanced, at 5 per cent. This was not one of those officious and ill-con- certed interferences by which some governments ruin the interests of commerce while they profess themselves the protectors of it. The very first intimation of the intention of the legislature to 21 support the merchants operated all over the country like a charm, and in a great degree superseded the necessity of the relief, by an almost instantaneous restoration of mutual confidence. “ Some of the principal people of Liverpool had digested a plan for supporting the credit of the merchants and traders of that town, whose very extensive and complicated concerns had involved them in perhaps a greater share of the general calamity than any other place except London. This proposal was to issue negotiable notes secured on the estate of the Corporation, which is sufficiently ample, and to employ them in support of the credit of individuals, and it received the sanction of Par- liament, who authorised the Corporation of Liver- pool to issue notes to the amount of £200,000.” Of the sum of £5,000,000 voted by Parliament in the manner stated, it appears that only £2,202,200 was required to be advanced, which was all ulti- mately repaid ; and though 238 persons were assist- ed, only two became bankrupt. By the end of the year confidence was restored, and the facilities for raising money were as usual.* In a note appended to the foregoing extract, Macpherson remarks : — “ The writers of the times differ so very widely in the causes they assign for the commercial dis- tresses of the year 1793, that it seems better to leave them to the determination of a future age, when impartial documents, not now attainable, may Vide Francis’s History of the Bank of England. 22 be brought forward ; for sometimes truth cannot tread very closely upon the heels of time/’ The “ future age ” is surely come when we are ena- bled to elucidate the causes of the calamitous state of things which prevailed in 1793, if not by any more direct testimony respecting them than we have hitherto possessed, at least by a series of analogous occurrences of ulterior date, and of which those of the present day are, by far, the most lamentable and afflicting. It has been seen that the distress experienced in the above-mentioned year was alone alleviated by a measure at direct variance with the law which had made gold the standard of value and fixed its price. History also tells us that the recurrence of similar disasters in 1797 rendered indispensable the abrogation of the law before evaded, and that then a long course of commercial prosperity ensued. Lastly, we know that, since the re-enactment of that law, commercial distress has been again and again experienced, each time increasing in severity, and been either mitigated or augmented in exact proportion as the principle of the law was deviated from by the extension (as in 1825) and maintenance (as in 1837 and 1839) of the paper issues, irrespective of the supply of gold, or adhered to (as in 1847) by their contraction, correspondingly with the diminution of gold. When we connect and maturely reflect on all these circumstances, the conclusion is inevitable, that the commercial distress we have experienced at the various periods stated is mainly referrible to our monetary system ; and that similar periodical distress must continue to be entailed on us, so long 23 as that system is permitted to remain in force. Under its alternate action of expansion and con- traction of the paper currency, according to the supply of gold, stability of prices (and consequently of employment) is impossible. Money is forced upon the public when they do not want it, which has the effect of encouraging speculation and rais- ing prices ; and is afterwards withdrawn at periods when it is most needed, thereby tending to depress prices, injure labour, and produce distress. As regards the severe monetary pressure which commenced in April last, and has continued, with but little intermission, to the present time its course of wholesale devastation, it requires no great discernment to discover that it is mainly due — First, to the expansion of the currency, in ac- cordance with the governing principle of the law, at a period when this was uncalled for by the wants of trade (as evinced by the gradual lowering of the rate of interest by the Bank, from 1844 to 1846, until, in the latter year, it fell to 2§ per cent.) ; and, secondly, to the subsequent contraction re- sorted to (also in accordance with the same prin- ciple) to stay the mischief created by the previous untimely expansion, but in reality augmenting it. A few observations will suffice to make this obvious. In the latter part of 1844 the stock of bullion in the Bank vaults (which, in 1839, had been reduced to £2,887,000) fluctuated between £13,000,000 and £14,000,000, and inAugust, 1846, when the Bank reduced its rate of interest to 3 per cent., its stock of bullion had reached the unpre- cedented amount of £16,366,068. Now, as before 24 remarked, the absence of a demand for discounts, based on mercantile transactions, betrays itself in an unusually low rate of interest, and vice versa. As bills presented to the Bank of England for dis- count are for the most part based upon mercantile transactions, it follows that when their presentation does not keep pace with the increase of bullion, stocks of commodities must be low and trade stag- nant. It is therefore clear that there could have been no legitimate demand for discounts propor- tioned to the increase of bullion in 1846, for how, if the case were otherwise, is the necessity which the Bank was under of eventually reducing its rate of interest to 24 - per cent, to be satisfactorily ac- counted for? The fact of the concurrence of an unusually large amount of bullion and small stock of commodities, at the time in question, is incon- testable. Without pausing to investigate the cause of this effect (since that would involve too wide a digression from the main subject of consideration), it will be sufficient to observe that the excess of bullion beyond the usual average amount presup- poses the displacement of a corresponding value of imports of some kind : in other words, the conclu- sion is inevitable, that had trade been firm and active, there would have been less gold on hand and more of other commodities, and, consequently, a greater demand for commercial discounts ; so that this unusually large amount of gold and small stock of other commodities, so far from being, as Mercator , in one of his laboured effusions in The Times , would have us believe, the sign of a whole- some condition, must, on the contrary, be consi- 25 dered that of an unhealthy one. The high price which the funds attained during the same period is a further indication of the correctness of this view. Now, supposing trade to have been ordinarily active, and that, consequently, the supply of gold had been proportionately less — had not, for in- stance, exceeded the average of £10,000,000 or thereabouts, instead of amounting, as it did, to upwards of £16,000,000 — the result would have been* that, under the double calamity of last year’s deficient harvest and the drain from Ireland, the stock of bullion would have been reduced to so low an ebb, that, for the preservation of the remainder, either the whole industrial community must have been absolutely annihilated, or the law itself re- pealed. That the Currency Laws have been the real cause of the severe monetary pressure we are now experiencing, is manifest from the fact that the deficient harvest and the claims of Ireland were known or foreshadowed at the time when the Bank reduced its rate of interest to the lowest point — that is, at the time when it was still further stimu- lating railway speculation by increased efforts to get out against its bullion, in obedience to the law, the increased issues for which trade had no employ- ment. Had trade been sufficiently active to require those issues, it would doubtless have absorbed them, and have kept (to that extent) railway speculation in check, although, in this case, the consequences of the drain of bullion arising from the deficient har- vest, would, as before remarked, have recoiled with tenfold violence on trade itself. But such has been the calamitous effect on trade of the oscillations in 26 the supply of money, that no prudent merchant has considered it safe to engage in any extended mer- cantile pursuits. As in the fable of the old man and his ass, who could please no one, the merchants are, in the first instance, applauded for prudence, and afterwards blamed for not having embarked their capital in legitimate trade instead of rail- roads. Can injustice and inconsistency go fur- ther ? As it was, we find that railway speculation, stimulated to excess by the inactivity of trade, and the low rate of interest of money consequent on the strict adherence of the Bank to the rule prescribed for its guidance by the Currency Laws, was alone arrested in the end, by the occurrence of a deficient harvest, and it is difficult to foretel what would have been the ultimate result of persistence in the same course of action if this calamity had not su- pervened and stayed its further progress. True, it may be argued by the upholders of the Currency Laws, that these were the means of in- suring a large accumulation of gold wherewith to purchase the corn which required to be imported to compensate for the deficient harvest. To those who hold this argument it may be replied, that the resources and energies of this country are such that they would have equally had available an adequate supply of gold for the same purpose had gold been permitted to find, like any other commodity, its market value, instead of being fettered by a fixed price ; while, moreover, from this very circum- stance a less quantity would have sufficed, and a greater quantity of merchandize would have been ex- ported, in proportion as the value of gold increased. 27 Under our present system, we alternate, in regard to gold, between a festival and a fast; and what is worse, when we possess it we part with it (in periods of emergence) below its value, and then make the most costly sacrifices to fetch it back, inasmuch as the prices of our exports are suddenly and ruinously depreciated for the purpose, the industrial commu- nity being meanwhile laid prostrate. But apart from any considerations of the hctual mischief they have wrought, what reliance cah or should be placed on our existing monetary laws, when we find a Committee of the House of Com- mons stultifying themselves by such gross incon- sistencies as those manifested in the following pas- sages of the Report of the famous Bullion Committee which sat in 1810, whom, nevertheless, men seem to be expected to regard as oracles, and the sound- ness of whose doctrines we are even denied the right of questioning, by the “ theorists ” and “ philoso- phers ” who have caused them to be practically enforced ? “ Your Committee are of opinion that in the sound and natural state of the British currency, the foundation of which is gold, no increased demand for gold from other parts of the world, however great, or from whatever causes arising, can have the effect of producing here, for a considerable period of time, a material rise in the market price of gold.” — (p. 2.) “ But generally speaking, the price of gold, being itself measured and expressed in gold (how ?) cannot be raised or lowered by an increased or diminished demand for it.” . . . . “ An increased demand for gold, and a consequent scarcity of that article, will make it more valuable in proportion to all other articles ; the same quantity of gold will purchase a greater quantity of any other article than it did be- fore : in other words, the real price of gold, or the quantity of commodities given in exchange for it, will rise, and the money price of all commodities will fall ; the money price of gold itself (measured and expressed in gold ! !) will remain unaltered, but the prices of all other commodities will fall.’’ — (p. 5.) Thus, the Committee declare — First, that no cause can produce a “ material ” rise in the price of gold, here, for “ a considerable period and, secondly, that no rise can, under any circumstances, take place at all ! They also declare that the price of gold is “ measured and expressed in gold,” and cannot therefore vary ; and next, that the price of gold is not so measured and expressed, (as, ob- viously, it cannot be,) but by the quantity of com- modities given in exchange for it, which is correct, since the price of a thing is the mere expression for its exchangeable value. What the Committee mean by the real price and the money price of gold is too obscure to be even guessed at ; unless, indeed, we charitably suppose that they have unconsciously confounded value and price , as other parts of their argument would seem to imply. On all occasions subsequent to 1810, when Par- liamentary inquiries as to Banking have been granted, the Committees appear to have felt them- selves precluded from trenching upon any part of the subject which might tend to re-open the funda- mental question at issue between the bullionists and 29 their opponents, as though in truth it had been for ever set at rest by the former, and their Reports of 1810 and 1819 were henceforth to serve as mone- tary text-books. But how much more have we a right to feel surprise at this blind subserviency when, 34 years after the appearance of the first of the above Reports, we find the great bullionist leader of the day, Sir Robert Peel, differing not only from the views therein expressed, but also from himself, in reference to the primary articles of his monetary creed ! since, in his celebrated speeches on the Bank Charter Act of 1844, he declares : — 1st. That “ the origin of the term ‘ pound’ was this, viz. that in the reign of William the Conqueror a pound of silver was the pound of account ; the pound representing both the weight of the metal and the denomination of money.” 2d. That “ the only meaning of a ‘ pound ’ is a definite quantity of gold (123^ T grains) with a mark upon it to determine its weight and fineness.” Consequently, that a pound is not a pound accord- ing to its ancient definition. 3d. That “ the only meaning of an ounce of gold for £3:17: 10§ is simply this — that it is the rela- tion which silver bears to gold with respect to value.” Consequently, that £3 : 17 : lOj is not an ounce of gold, but a quantity of silver. 4th. That “ there is no fixed relation whatever between gold and silver, silver having now 7 ceased to be a standard of value, the silver coin being a mere token and nothing else, and the value of silver varying from 62s. to 6Gs. per lb.” Conse- quently, that the “ meaning of an ounce of gold for 30 £3 : 17 : 10f is not the relation which silver bears to gold with respect to value.” Elsewhere in his speech Sir Robert Peel remarks, and correctly, that you can no more alter a ‘ pound’ than you can make a foot a foot and a half. But, as will have been seen, he destroys this proposition by his definition of a £ pound,’ for he constitutes that a pound the value of which is ever fluctuating, pretending, however, that he prevents such fluctua- tion by determining the weight of the coin denomi- nated a sovereign, and fixing the price of the mate- rial of which it consists. This will be obvious when it is considered that foreigners when they withdraw our coined gold regard it, not as money , but as merchandize equally with bullion ; and although it is true that the exchanges are based upon the precious metals, inasmuch as it is in these that, for greater convenience, the balance of inter- national trade is liquidated, still quotations of the exchanges are not, as Sir Robert Peel’s argument assumes, expressions for determinate quantities of the metals themselves, but their prices or relative values for the time being. If a ‘ pound ’ be, as the bullionists contend, a definite quantity of gold, then there could be no variation in the rates of the ex- changes : a ‘ pound ’ could not, under any circum- stances, be more or less than than I 23 - 2 T 4 grains of gold. Hence, any terms used to denote variations in the rates of the exchanges must disconnect ex- pressions of value from expressions of weight ; yet to bear out the theory of the bullionists there should be no distinction. Neither is their argument im- proved if they contend that the value of gold is 31 measured abroad by silver, since this implies that no fluctuations would take place in the rates of the exchanges if silver were substituted here for gold. The very paragraph, shewing the variations in the value of gold in different places, which heads the City article of The Times each day, gives the lie perpetu- ally to the line of argument that Sir Robert Peel lays down ; a circumstance of which it is difficult to ima- gine that he could have been aware, when he delibe- rately expressed himself as follows, in his speech, already quoted, of the 6th May, 1844, and recorded in the columns of that journal on the following day, viz. : — “ Then it is said — and this is repeated over “ and over again — and is one conclusive proof I have “ that he who says these things has no more concep- “ tion of the truth with respect to the measure of “ value than he has of any speculations in the most “ distant parts of the globe with which he is ivholly “ unacquainted — it is said what a monstrous injus- “ tice and folly it is to tie down the Bank to issue “ gold at the old price of f 3 : 17 : 10| an ounce. “ Now,” See. See. Do not his opinions, as hereinbefore set forth, when coupled with the miserable results of his monetary legislation, fully justify our retorting on himself his own words above printed in italics, and saying to him, whilst recalling them to his remem- brance, — Mutato nomine De te fabula narratur? The satisfaction is, however, but a sorry one for the mischief he has caused ! 32 Our modern political economists wholly disre- gard in their philosopy the instinct which consti- tutes the guide of the labouring classes, and teaches them that no circumstances ought to re- quire the suspension of their industry. Yet, as things are regulated, either their industry is stimu- lated to excess or they are forbidden to exercise it at all, because, as is alleged, there is over-produc- tion ; as though, in truth, there could be such a thing as over-production whilst they are suffering want ! But supposing that, momentarily, there be, this may be remedied, as easily as it might have been prevented, by enabling them to become indefinitely increased consumers. Let the nation only act on the principle of consuming or exchanging all that it produces, so that the necessity for re-production may at no time cease, and all will be well, for it is the course which nature and reason alike prescribe ; but, until this be done, the labouring classes must continue to be, first, oppressed, and then sacri- ficed. The labourer knows from experience that he is the producer of wealth, and that without his labour the land and the mines would be useless and valueless to their possessors. He therefore rea- sonably demands why he should be precluded from applying his labour to the cultivation of the soil or the working of the mines beneath it, because there is a deficiency of money , as constituted of one of the very metals (gold) which he is willing to produce? In vain, again, he inquires why it is deemed essential to the working of a gold mine, or to the carrying out of any other work, that there 33 must be already produced, in the shape of money, and therefore in excess beyond what is actually required for use as a commodity, that very gold which is sought to be produced ? In other words, he asks why gold should be considered necessary to produce gold, any more than was the case when gold was first discovered ? He also knows, from dear-bought experience, that he is subjected to poverty and distress in the midst of plenty — of the abundance of his own creating ; and from these premises he not incon- sistently argues that if his labour is thus to tell against himself — if its very fruitfulness is to deprive him of employment, it is better for him to destroy what he has produced, in order that there may be again a demand for his labour. Hence ensue those calamities so often witnessed — the destruction of factories and machinery, and incendiary fires — the work of misguided but suffering men, who only see, in the ruin they inflict on innocent individuals, the revenge of their own wrongs, and the means of future subsistence, in the reproduction of the wealth destroyed. The theorists, as before remarked, disregarding human instinct and the ordinary course of nature, proceed to account for, by some imaginary cause, the evils of which they are quite aware, and to remedy them . by narrowing the sphere of action to an arbitrary rule or measure ; and although quite incompetent to explain even the meaning of money, its origin or action, they are quite ready to sacrifice the nation to the maintenance of their doctrines. We are told by them that our present distress arises c 34 from the want of capital ; yet they forbid us to re- produce capital, since they enforce the suspension of labour, by withholding the means of its employ- ment ! ! An opinion is prevalent on the part of fund- holders, annuitants, and persons with fixed incomes or wages, that any interference with the currency must be with the intent to defraud them. They submit that, (during the late war,) on the faith of the nation, they had agreed to accept of certain annuities or payments in money, which money, it was understood, represented a definite quantity of gold. They complain that these engagements were not honestly fulfilled by those with whom they contracted them, and that the suspension of specie payments occasioned them serious loss, inasmuch as the money payments were made to them in in- convertible and greatly depreciated paper, with which they could not obtain so much gold, silver, or other produce, by 25 per cent., as they were justly entitled to by the engagement stated ; and, lastly, that if the payments in money had been in gold as agreed,' they could have exchanged guineas for the usual quantity of other produce, and the nominal price of twenty-seven shillings for a guinea would have covered the increased prices of other products. In the foregoing argument consists the secret of the opposition manifested to any proposal for re- vising our monetary system ; more especially as many of those who urge the necessity of a change are advocates for a paper circulation, which, of course, if not under proper regulations, must lead 35 to evils similar to those experienced in former times, in the paper issues of France, Russia, &c. These apparently reasonable arguments have their due weight ; but it must be remembered that there are two parties to every pecuniary contract — the payer and receiver. Now, in the case in ques- tion, the Government (not being in possession of money) enter into engagements to make certain payments, which they cannot fulfil without taxing the community to a corresponding extent. From what sources, then, is this tax to be levied 1 If on income, it is alike borne by the parties referred to, and those who are engaged in trading pur- suits, being then so much actually deducted from every pound they are entitled to receive. If the tax be on commodities, the revenue is collected from the community at large ; and an increased price (the amount of a war tax) has to be added to the previous cost of production. The tax, however, thus charged by the Government does not by any means meet the whole case. Suppose, for example, the usual price of cotton, delivered in England, to be 5d. per lb., and that a war ensuing, insurances rise 20 per cent. ; in such case it is certain that an additional penny must be added to the price of the cotton, otherwise it could not be imported without a heavy loss. Having thus paid one-fifth more for cotton the manu- facturer adds this (independent of any additional new duty) to the price of the manufactured article, and unless the nation ceases to import any thing for which payment in some shape must be made, (that is, unless it entirely gives up foreign trade,) the c 2 36 cotton goods are exported to India, China, Africa, or the South American states, subject to the same rate of insurance as before, with increased rates of freight to cover the increased insurance on the vessel. It is obvious that our ceasing to import must cause the prices of all things to be greatly enhanced. Let us now further suppose these goods to be landed in Brazil and deposited there side by side with goods in all respects similar, imported from the United States of America, not at war , and where, consequently, no rise has taken place in the price of the raw material, and no increased insurance of 20 per cent, has been added to the manufactured article. These commodities, then, lying side by side in Brazil, have, in the one case, cost the Eng- lishman £100, and, in the other, the American but £80. Now, it is quite certain that the Brazilian purchaser will not give a greater price for the one than for the other. He knows nothing of pounds, shillings, and pence, or of dollars and cents, and it is profoundly indifferent to him to hear the price of the commodities so expressed. All he knows is, that he has been accustomed to give (say) 20 ounces of gold for the same quantity and description of goods, and he is still ready to do so. Thus, it would appear that the Englishman has bought 20 ounces of gold for £100 value, which have not cost the American more than £80. To the price, however, already paid by the former for the gold, he has yet to pay 20 per cent, more for insurance (besides in- creased freight) before he can get it lodged in the Bank of England. If, therefore, the nation is to adhere to its present monetary system, or to any 37 other which still makes gold the standard of value, the gold imported under the circumstances stated, must be sold at the price fixed by the law, just as it no such extra charges as those indicated had been incurred. Neither is the case altered if, instead of estimating the charge of insurance as adding to the cost of commodities, we abstract one-fourth of the produce and consider it as either captured by fo- reigners or handed over to underwriters. The effect, however, of the law remaining unchanged, would be to exclude the gold altogether, as no mer- chant would import it without the certainty of being able (as in the case of the raw cotton) to add to its price, and the trade of the country must suffer in proportion. It may be contended that the neutral American might send the gold to England at £3:17: 10| per ounce. As, however, the Americans would not give us their gold, it is very certain they would have to purchase some commodity with it, and this, from the increased charges, it would not be advan- tageous to them to do. The Englishman might yet estimate his goods at £100, and gold at £4 : 10 per oz. ; whilst the American might not rate the goods at more than £80, and his gold at £3 : 17 : 10^. I would merely further observe, that merchants, fundholders, and landed proprietors, are all equally liable (according to their means) to the charges of whatsoever kind, incidental to a state of war, whe- ther levied in the form of direct taxes, or levied in any other way. The instance adduced of a mer- chant being subject to an insurance of 20 per cent, upon his goods is, as regards him, a case in point. 38 It is not a charge of so much on his income ; it is a positive deduction of one-fifth of his capital, and but for his recovering a part of it back, by being permitted to put an additional price on his commodities, he would be speedily ruined. Thus it is clear that the evils we already experience in time of peace, from making gold at one and the same moment the basis of the circulation, at a fixed price, and the only untaxed article of merchandise, would be greatly in- creased during a period of war. What conceivable advantages have we to expect from a fixed standard measure of value, other than uniformity of prices as regards both the wages of labour and all the productions of labour? Those with fixed incomes, or who have payments to make or receive, are reasonably desirous that there should be some uniformity and steadiness in the prices of all things. But how is this to be accomplished by constituting any commodity, and least of all a foreign one, (gold,) itself liable to fluctuate both in quantity and value, the standard measure where- by to compute the value of all other commodities? An influx of gold — of this selected standard of value, — say to the extent of five millions, would probably raise the prices of the public securities and of commodities 20 per cent., and thus the standard measure of value would itself occasion an increase in the value of the national property to the extent of one thousand millions ! On the other hand, the withdrawal of a similar amount of gold from circulation would cause a corresponding dimi- nution of value ; while in point of fact, even an insignificant addition or subtraction of gold pro- 39 duces the most violent convulsions in the prices of all things, so that our standard measure of value renders it impossible for us to estimate relative values with any degree of certainty for a single day! In conclusion, the measures I would suggest as the basis of our future monetary system are, — 1. The abolition of the gold standard, and the convertibility of the paper currency into the pre- cious metals at their market price. 2. The limitation of the issues to one, or, at most, three banks, (that is, one for each of the three kingdoms,) and the regulation of those issues by a fixed rate of interest, say four per cent. I propose neither an unlimited issue of paper money, nor issues that are not based upon secu- rities. It is not the use, but the abuse, of that species of currency which occasions insecurity ; and we have the prosperity attained by this country during the war, through the medium of a paper currency (although occasionally mismanaged) to oppose to the objections which may be made to the re-adoption of that system. If, in other countries, as France, Russia, and the United States, paper money has, at different periods, produced a con- trary effect, this has arisen from the circumstance that it was not subjected there to the control of which it is susceptible, the issues which took place not being based upon securities, and being in ex- cess of all fair and reasonable demands. In proof that paper money not resting on a gold basis is susceptible of management, it may be suffi- cient to refer (although to do so is to cite a case of 40 monstrous hardship and injustice) to the period between the termination of the war and the re- sumption of specie payments, when, owing to the powerful action brought to bear upon the paper currency, for the purpose of establishing the gold standard, the prices as well of labour as of pro- ducts were reduced fifty per cent., gold amongst the rest declining from £5:4 :0 to £3: 17: 10i. Here, then, we had (so-called) inconvertible paper-money increasing in value, (as measured by the increased rate of interest it commanded,) whilst gold, in common with every other commodity, was decreasing in price; facts which, viewed in conjunction, shew the expres- sion ‘ pound’ to be, as before remarked, a mere conventional term — a number — unaffected by any- thing in use as money , or by money being either abundant or scarce. It is indisputable, from the circumstances stated, that a paper currency, based upon securities, is not , as some imagine, beyond the reach of regulation ; although, (as in the case adduced,) the power may be wielded for the purpose of effecting a pernicious object. I do not recommend any alteration or contraction of the coinage, other than that the Government should charge a sufficient sum to meet the Mint expenses. The gold coins, however, should merely be what the silver and copper coins now are, viz. tokens ; and if we consider how many of the sove- reigns actually in circulation are short of the stan- dard weight, and in fact not, therefore, worth more than 196*. 6d. or 196'. 9 d. each, we shall at once perceive that our gold coins pass current at this moment for more than their real value — a circuin- 41 stance of which we were lately reminded when a cry was raised of “light gold.” On the other hand, if the price of gold should rise so that the sovereign were worth, for instance, £1:0:3, and, small notes being issued, speculators should avail themselves of them to purchase gold for the purpose of exporta- tion, such exports, in the ordinary course of trade, must necessarily be confined within very narrow limits, for in what could other nations pay for our whole stock of gold in circulation (£35,000,000), supposing they desired to purchase it? or how could they hope permanently to retain it ? The effect of continuous large exports must be to de- press the price of gold in the market to which we sent it, and consequently the gold would come back again and be paid for in our goods without the process entailing any such sacrifices as it in- volves under the present system. Now, the object being that the rate of interest should regulate the supply of money, without refer- ence to the precious metals (which should be treated the same as other articles of merchandize), and not the supply of money the rate of interest, it is ne- cessary that the rate of interest at which the banks of issue should advance their notes be fixed, and I consider that four per cent, would be sufficient to insure the object aimed at. Whilst the rate of interest is fixed the value of money is unchanged ; there may be speculation, and losses may occur (as must be more or less the case under whatsoever system) ; but should they happen, they will not, at least, be attributable to too great a facility in obtaining money ; while, 42 at all events, neither speculation will be so great, nor the losses it may entail so severe, as has always been the case under a fluctuating rate of interest, and a metallic currency. The advances by the issuing banks should be on bills or other securities, not having more than three months to run, which bills should be as equally distributed as possible over the whole period, so that by their being gradually in course of liquidation, the circulation would always regu- late itself. The Bank Directors would, doubtless, be desirous to extend the circulation of their notes ; but they would not be less scrupulous than at present in looking to the nature of the securities on which they are to make advances : their issues, therefore, would be regulated by prudence and the v nts of trade. Whilst money is scarce , the issuing Banks would continue to make advances; the moment, however, the market became sufficiently charged with notes, the fact would betray itself by an excess of money, in the hands of bankers, bill-brokers, &c., who would be willing to advance money (that put in circulation by the issuing bank or banks) at a re- duced rate of interest. From this period, there- fore, any further extension of the currency would be arrested ; and a daily contraction of the circu- lation would be effected by the securities running out on which the Banks had made advances, and the corresponding issues being returned to be cancelled. The bankers and bill-brokers, not being restricted in their rates of interest, would generally be able 43 to obtain higher rates than the bank of issue, since they would have the opportunity of advancing money on bills at longer dates than three months, and on dock warrants, &c. Let us not delude ourselves with the belief that the country can be extricated from its difficulties by any such temporising expedient as that lately resorted to by the Government, in allowing the Bank of England to extend its issues beyond the “ golden limit,” at the minimum rate of interest of 8 per cent. ; for the only practical value of that measure is, that it virtually recognises the impossibility of maintaining the present money laws. By inroads on their capital, the merchant, the manufacturer, and the trader may contrive to pay 8 per cent., or even a greater amount of interest for loans, to enable them to save their credit ; but they will be compelled correspondingly to contract their business, and entirely to abstain from any new engagements. Hence, so far from this tardy and qualified relaxation of the Bank Charter Act of 1844 affording any effectual relief, the pressure which it professes to avert will be, in reality, in- creased, since it will be shifted from the shoulders of the employers of labour to those of the em- ployed, who are the less in a condition to endure it from their having already been the greatest sufferers from its long protracted effects. The distress under which the working classes are suffer- ing can, in fact, alone be remedied by measures which will stimulate, in lieu of check, production. The industrial power of the people is equal to any emergency, provided it be duly and timely 44 nourished ; and how capable it is of recovering its elasticity under circumstances of depression, if the proper remedies be applied, has been already demonstrated. It is no argument against the use of a paper currency to say that it is liable to abuse. The project of the famous John Law, a native of Edin- burgh, in the year 1716, for the establishment of the Mississippi Bank in France, had in it the elements of good. It produced for a long period, as is universally admitted, a degree of prosperity quite unparalleled ; and although it ultimately involved the nation in the greatest distress and difficulties, still this was not ascribed to any other than a purely inferential cause, viz., the fallacy of attempting to create wealth by means of fictitious capital. The real cause, however, of the miscar- riage was that the issues, like the subsequent issues of assignats in France and paper rubles in Russia, were made without control, and were not based upon securities ; they were, in fact, mere issues of expenditure, and differed, consequently, in a very essential respect from those of a Bank — such, par- ticularly, as the Bank of England, whose notes are applied for because money is wanted, but cannot be obtained unless security of some kind be lodged. If, instead of this, Bank-notes were made issues of expenditure — each Director, for example, being at liberty to appropriate a bundle of them to himself — the result would be the same as in the case of the issues of Law’s paper, the assignats, and the paper rubles. There are many, perhaps, to whom the name of 45 this celebated financier of the eighteenth century, and the mere mention of his scheme, may prove a bugbear ; but it will be found, upon an impartial examination, that there is far less cause to attach odium to his memory for any evils he may have inflicted on his adopted country, than to heap it upon the head of England’s chief living financier for the perilous condition in which he has placed his own country by his nefarious Currency Law of 1819, and its “ complement” of 1844. Let it not be imagined that I am advocating the revival in this country of any such project as that of Mr. Law ; still there is no reason to infer from its miscarriage that a paper currency is not susceptible of control. At all events, Peel’s plan has proved itself but little better calculated than Laws , either to prevent excess of speculation or remedy its consequences. Let it be ascertained that a regulated issue of paper money can be made to stimulate production ; that gold itself may be produced from the mines without the intervention of a gold or silver cur- rency; that cities may spring into existence through the instrumentality of a paper circulation,- and that general prosperity may be induced by it, if only for a time — let these points be determined ; and then let us satisfy ourselves as to whether there really be any attendant evils of a nature to neutralise such advantages. In the case of Ireland, for instance, let us ask our- selves, if any change in our system of currency could possibly create a worse state of things in that un- happy country than actually prevails there ? Of the 46 large sums of metallic money which have been sent to Ireland for some time past, it is understood that but a small portion has been returned to England ; and as this money does not appear to be in circu- lation in Ireland, the conclusion is unavoidable that it has been hoarded. • This would have been com- paratively unimportant had the advances to Ireland been made in paper money, in accordance with the plan of a paper currency, and as was the case during the last war. As it is, however, England, who has already made such heavy pecuniary sacri- fices for Ireland, is herself disabled by severe mo- netary pressure, which has laid prostrate the com- mercial and trading community, and thrown the labouring population out of employment. How, then, under the existing Currency Laws, is she to aid Ireland with further supplies of money ? and what is to become of Ireland unless so aided ? This is a feature of the currency question which may possibly facilitate its solution in the Hou&e of Com- mons : the pressing wants of Ireland may prove the means of justice being done to England sooner than might otherwise be the case. THE END. PELHAM RICHARDSON, PRINTER, 23 , CORNHILL.