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on the circulation of the French and other foreign loans now in progress of negotiation, may have recourse to some measures of restriction, more severe than any yet resorted to, and thus put the whole of the trading and monied interests into a greater jeopardy than any they have before encountered. This terror is in itself a confession that there is something radically wrong at the bottom, for foreign loans are not now introduced for the first time. It would be fortunate, perhaps, for many of the subscribers to them that they had never been heard of at all, but the effect on the currency is a different question altogether, and it will be sufficient to show how false the present position of the Bank is, to state the fact that in 1823 and 1824 foreign loans were made to the amount of near £30,000,000, the greater part with English money, and yet gold came into the country upon balance. If a solution is sought in the city of the difference between that and the present period, no answer will be obtained but this—that the improvident and injudicious management of the currency by the Bank has crippled and deranged commerce, a healthy state of which would have carried it safely through greater dangers than this; that these evils now react upon the Bank, which has lost its best protector, and both suffer together. This is a most afflicting state of things for the commerce of Great Britain, and there is literally no man who knows how to shape his course through it.”
By this it appears, that the individual operations of two or three capitalists became a matter of national importance, and there seeins little reason to doubt, that at the time of the application to Paris for assistance, the capitalists alluded to could, if they had been so disposed, have brought the Bank of England to the necessity of com.
mitting an act of bankruptcy, by forcing them to suspend their cash payments. No one, certainly, will hazard the assertion, that the wants of trade had any relation whatever either to the French loan, the United States finance, or the want of confidence in 1797; it is, therefore, evident from all the above instances, that the principle embodied in the axiom, and the principle embodied in the Bill, cannot both be right. The Parliament and the public, therefore, must decide which is wrong. I shall now proceed to apply the same axiom to try the correctness of some opinions advanced in the debate, which also seem sanctioned by the Bill.
In this respect, if the axiom is correct, that the amount of currency ought to fluctuate with the wants of trade, then the assertion, that gold being an article of commerce was thereby the article best fitted to form the basis of the currency, is evidently untenable, because specie must be always subject as such to fluctuations quite unconnected with the wants of trade. This is admitted, when it is stated, that specie will always follow the same laws as other articles of commerce ; one of which most undoubtedly is that it will go to the best market. When, therefore, specie was worth in New York from 20 to 30 per cent. per annum, whilst here it was not worth more than 4 or 5 per cent., of course it would go there ; the contraction of the currency thereby occasioned must, like other contractions, produce a denial of discount, which under all circumstances is synonymous with distress, and bankruptcy, arising from causes totally unconnected with the state of trade. Nor is the liability of specie to be exported entirely confined to its being dearer elsewhere, as is stated in the debate ; for during an unfavourable exchange it will be exported when it will sell where it is sent to, only at par, because even at that, or even under par, it may be a more advantageous remittance than bills, if they become very scarce. So that here, again, the Parliament and the public must decide whether the principle in the axiom or the principle in the Bill is to be relied on, for they cannot both be right, and the same arguments will apply to any article as a measure of value which has any intrinsic value of its own, as all such articles must of necessity be articles of commerce, and will, therefore, follow the law of supply and demand, according to which they will become more or less valuable, and what is changeable in its own value cannot be an unchangeable measure of the value of other things. (No. 21.)
Thus, this single axiom, if true, would upset the very fundamental principle upon which the Bill is founded, and clearly points out, that nothing can be a steady measure of value that has any value beyond that which it shall derive from legal enactment, which is, in other words, a national inconvertible paper currency.
But here again another important principle is brought to bear upon the discussion, 'for, if No. 20 is correct, all danger of an inconvertible paper being over-issued is set aside, (see this case further argued No. 60,) for, if the principle here laid down can be relied upon, then an issue of inconvertible paper can be regulated by simply ascertaining what term and rate of discount will so limit its amount in proportion to the capital and commercial transactions of the country as shall maintain it upon a par in value with what the present gold standard is, which would be evidenced by its bringing the exchanges to par under ordinary circumstances when there is nothing either to depreciate or appreciate bullion, which being done, and
the same term and rate of discount maintained, and no forced issues permitted, the fluctuations in the amount of the currency will vary in conformity with the wants of trade, which is precisely the desideratum sought for, viz. a self-regulating currency.
It is not necessary to proceed further to show the importance of having axioms or propositions of admitted correctness to test the truth of all opinions and principles advanced. What has been said seems fully sufficient. It may not, however, be irrelevant to add a few observations upon the admissions which have been made, as well in the Bill as in the debates. It is now openly acknowledged that the convertibility of paper is no guarantee whatever against its over-issue-but the reason given for returning to cash payments in 1819 was that no other check would be sufficient to secure this identical object. Again, it (the convertibility of paper) affords no guarantee against contraction, for Mr. Horsley Palmer, in his pamphlet in defence of the Directors, acknowledges the contraction which had taken place had lowered the price of all sorts of commodities from 20 to 30 per cent., which is a convincing proof of tliat fact; here then let me ask, if the liability to pay in gold is neither a security against over-issue nor yet against contraction, why is it adhered to, when the denial of discount, (which must take place whenever any drain for gold from the Bank occurs,) is sure to occasion ruin and bankruptcy throughout the empire? Surely this is a most important question, and ought to be taken up most seriously. But it is further admitted in the debate that gold will go out of the kingdom upon any import of wheat whenever an unfavourable exchange renders it the most advantageous remittance ; this is most true ; but is it not rather a reason for rejecting
an article as a measure of value and medium of exchange which is thus liable most inevitably to be called away from its legitimate duties, than to be considered an argumen for adopting it on that very account. - It is admitted also, that by correcting the over-issue of an inconvertible currency, both in England, Scotland, and Ireland, the exchanges were brought to par, which is tantamount to saying that the inconvertible paper was thereby brought to be equal to the standard of our present currency, because that standard is calculated to correspond with the par of exchange. Can it be denied that this is so? Then why retain a convertible currency which can neither guard against over-issue nor contraction when it appears an inconvertible currency, under proper regulations, will guarantee us against both, and all bad consequences arising from either?—But this is not all; a convertible paper entails upon the public a payment to the Bank of three per cent. interest on eleven millions of debt, and also interest on three millions of Exchequer-bills, and at the same time they, the Bank Directors, receive 14 millions of paper gratis, upon the issue of which they again receive from the public, upon an average, 3 or 4 per cent, more, which is nearly a million of money, the greatest part of which would be saved and the debt cancelled by the adoption of an inconvertible paper, and the large sum of gold which would in that case be paid in in exchange for this paper in the payment of bills discounted would amount, perhaps, to a sum that would execute all the most important public works in the empire, yielding a double source of revenue in the direct return for the outlay, and in the increased prosperity of the country; besides the great emolument derived from the inconvertible paper in its issue, which is