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    TOURENS OK THE ACT OF 1844. The Principl...

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    A Batch Of Books. Ceylon; Past And Prese...

    TIte Elah . " By Darwehd . ( Hardwieke ) . —We cannot describei or criticise this volume . It resembles a common-place book , being full of miscellaneous scraps on . an infinite -variety of topics—the Indian Archipelago , the Arabs , the Hebrew Empire , British India , the Recovery of Debts , and Colonel JVlaceroni . Where did Darwehd find the phrase " Butterflies like flowers jand flowers like butterflies" applied to Indian island nature ? He marks . as the seven great men of our day , Mazzini , Louis _ Tapoleoh , Sir James Brooke , Kossuth , General Walker , Omar Pacha , and Chevalier Eunsen . We cannot be angry when so enthusiastic a writer is rhapsodical-Some acceptable reprints lie on our table . The second and third volumes of Campbell's Lives of the Lori Chancellors < Murray ) , uniform with the cheap edition of Mr . Hallam ' s works ; two volumes of Charles Lever ' s popular novels ( Chapman and Hall ); the eleventh -volume of Chalmer ' s select

    • works—Church and College Establishments ( Constable ) \ and TFri / y / ifs Provincial Dictionaryi forming two volumes of Bonn ' s Philological JLibrary , a very complete and satisfactory production ; a second edition of Macncmght j > n Inspiration' ( Longman and . Co . ) . We have also four pretty volumes , in brown cloth gilt , of Hodgson ' s Household Novels—Stuart of Dunleath , by Mrs . Norton ; Arrali Neil , by G . P . R . James ; and The Scalp Hunters and Mijle Rangers , by Captain Mayne Reid . They are well got up and cheap . Jfules Gerard ' s Lion Hunting and Sporting Life in Algeria is reprinted by Messrs . Addey and Messrs . Lambert . Feniniore Cooper ' s admirable story , The Ckainbearer , forms the hundred and fifty-eighth volume of the Parlour Library ( Hodgson ) ; to which series Edgar Kuntley ; or , The Sleepwalker , by Charles Broekdea Brown , has also been added .

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    Tourens Ok The Act Of 1844. The Principl...

    TOURENS OK THE ACT OF 1844 . The Principles and Practical Operation of Sir Robert PeeVsActofl % 4 & Explained and Defended , By E . Torrens , Esq ., F . R . S . Longman and Co . There is one peculiarity in banking , as a subject of inquiry , in which it differsfrom all other subjects of social importance . Exceedingly simple in its main principles , , so that its rationale is apparent to plain common sense , it becomes excessively complex in its secondary principles , and in its application to the various circumstances of trade , society , politics , and the usages -of other countries . Hence , those who are better acquainted with it than most of us , are persons who are more lia"ble to go astray . Thus we see the jmo & t popular master of logic and political economy , John Stuart Mill , led into mistakes -which are palpable to the plainest understanding , as soon «

    ihe nature of the error is , explained . It is this which renders the controversy respecting the Bank of England and the renewal or modification of its charter so difficult and so likely to lead to bad practical measures . Hence the v ^ lue of labour performed by men that can handle the subject at once practically and theoretically . Lord Overstone , the practical banker , who » aa a command of theory , assisted in the deliberations upon which the present Bank Charter was arranged . On its last trial , Mr . George Arbuthnot , Peel ' s private secretary , comes forward to re-establish the main principle of that Act , and to point out some of the chief fallacies by which its most accomplished assailants were led away . Colonel Torrens , a master of theoretical economy , with a command of practical banking , eoniDletes the case ¦

    on this side of the question . Colonel Torrens las assisted in all the discussions that have aftected the position of the Bank , most especially the -discussions on the legislation of 1844 . In 1848 , Colonel Torrens produced A tract on the principles and practical operation of Sir Robert Peel ' s Acts of 1844 ; and the volume before us professes to be a second edition of that tract , but it is in fact a new work , of which that is the nucleus , and it now settles many a point recently unsettled . Valuable as it is for present purposes , the "book is interesting in itself :, it presents us the same man refuting fallacies in 1808 , and bringing back theory to a clear perception of common sense ; and then , half a century later , performing exactly the same service ^ vith exactly the same skill and perfection of discrimination . It would seem unnecessary at the present day to " refute the economists ' in showing that the agricultural is not the only source of wealth ; that division of employments is in reality a creative process , since it equally enables the manufacturer and the agriculturer to produce commodities on a . much

    larger scale . But the whole doctrine of protection was based upon the imperfect conception of the theoretical truth . It is true that when employments are divided between two sets of hands in the same country , the whole difference of augmented wealth created by the division applies to that -country . True , that if commodities be exchanged between two countries , the half of the increase accrues to the foreign country . But if the foreign country can produce a commodity more easily than the domestic producer , py setting free the domestic producer for Labour more congenial to the . native character and climate , the division of employments still absolutely -increases the domestic -wealth . Colonel Torrens shows in this paper that the trader who goes between the two is erroneously classed as a " nonproductive , ' since he ministers in the most positive and direct manner to increase production . In the same tract , the author proves that the evils Attending upon combination , like those iu smuggling , grow from the principle ofprotection . Leave trade free , be says , a « S the race of forestalls will < U 3 oppoar . It wee thirty-six years later that our best statesman hi _ i _ ,, _ ™ V

    Z ^ lT T ? i a sufficieQt comprehension of the full validity of ColoneM ^ J ^ f TJ ° i < S , J ^ ialftlioa * and ' sprinting the tract , !? K . ? ? i * ¥ OU } y fulfils his Proposed purpose of establishing his Sn ? oflaSti a - ° W P ° Rounderokhlcon-ected theory ibr an SabL Ldln ^ TtLt Mi f % £ P lrade ' P lesunt 8 U 8 wi t * ^ ad-Srfo ? r . SJSS ™ 1 f K atlon of tu ° *»««» i « which the most tangible . the A « &__ £ ' , * £ 5 S ^ £ &_ £ __ *_ £

    have supposed however , that even bank-notes are not money ; and ~ , 7 how practically such a theoretical question affects the preseAt _ Wi when we team that M . Michel Chevalier , the very Wg hS ^ no ^ cTg tellect in France , , who as now at the elbow of the' Emperor dicS th course of economical reforms says that « a line of demarcation , £ ? n distinct , has never been established between a bank-note and a bilL If * change /_ Colonel Torrens admirably works out the illustration of S fallacy He shows how a merchant with a slender amount of ori « in ., lpn {?? engaged m extensive transactions , and holding bank-notes in Ins hand S be able to close his engagements with ample profit ; while , with bills of ^ change m his hands , at a period ; of pressure , he might be unable to sell th ™ for notes , and would go into the Gazelle instead of continuing a n ., ' : , prosperity . It ishere that Colonel Torrens beats others in th ° same fiold he has the capacity of taking up a question at its simple origin _» fl «}> working it out to its most complex details ; having . fromi first to last til same clear-sighted perception which prevents him from falling infn thl blunders that have betrayed other intellects . : 9 ° Even Mr . Mill , although lie perceives that bank-notes havewhich hills M

    , exchange have not , the faculty of closing accounts , is led away into tC notion that they have something . in common from the fact that bills of e-x change may" affect prices . " The bank-note , when as in this country ale « Tl tender , but absolutely convertible into coin , is as literally money as thp sovereign ; while it is in many respects more valuable . In large sum ' s it is much more portable . It possesses , which coin does not , a peculiar guarantee for tracing and recovering it in case of loss-, if even it be destroyed its value may be recovered . These are qualities in which it is superior to the metallic currency . In Hamburg notes have to be" issued against a metallic deposit exclusively ; the efiect of which would be in this country to necessitate the lodging of fourteen millions in gold , in addition to the amount usnallv UAnari

    m bullion . This amount of bullion against which notes are issued may fluctuate to a very large extent ; it has never yet exhausted that 8 , 000 , 000 / . which is about the amount that may be considered the fluctuating superficies in the Bank , the body of water between high and low tide : the 14 ^ 000 , 000 * . is below the lowest neap tide . Were the Hamburg plan adopted , there would probably be 14 , 000 , 000 ^ . of gold slumbering in the coffers of the Bank , — so much actual property stowed away and useless . The act of 1844 releases the 14 , 000 , 0007 ., but retains for us the 8 , 000 , 000 /; , more or less , which" isthe working part of the stock of bullion available to secure convertibility . This argument is admirably -worked put in Colonel Torrens ' s volume . We the more insist upon it , since , even in the very latest discussion , we have seen Mr .-James Wilson , one of the ablest writers on the subject , influential and actually in the Government , insisting in the Economist that bank-notes are not an * 'important" element in the currency !

    Colonel Torrens gives an excellent account of the panic of 1847 , -which was so severe a trial to a new system at the Bank ; and he then remarks : It would seem to be a self-erident conclusion from these facts , tliat the commercial revulsion was not caused by a contraction of the circulation . On the 13 th , 23 rd , aad 30 th of October , during the greatest intensity of the monetary pressure , the circulation in the hands of the public -was respectively 20 , 394 , 000 ^ ., 19 , 359 , 000 ^ ., and 20 , 309 , 000 ? ., being equal , to within about 200 , 000 / ., of the actual circulation during the coi-responding -weeks of January before the commercial pressure had commenced ; while - the private securities which represented the extent of the advances of the Baixk in support of commercial credit , and which had been only 12 , 700 , 000 / . in the three last weeks of January , swelled to 19 , 900 , 000 ? ., 18 , 000 , 00 0 ^ , and 19 , 400 , 0 00 ? ., in the corresponding weeks of October .

    It has been contended that , although the circulation in the hands of the public , and the aid afforded to commerce by the BaiVk , were greater during the intensity of the pressure than they had been in periods of high confidence , yet that that pressure was materially aggravated by the knowledge on the part of the public , that as the Bank could no longer meet the demands on its deposits by unlimited issues , it was deprived of the power of supporting commercial credit by indefinite advances . But it must fce apparent , upon a dispassionate review of the facts , that the knowledge on the part of the pjiblic and of the Bank directors that unlimited issues and indefinite advances ¦ were no longer practicable , so far from having increased the monetary pressure , savei the Bank of England from insolvency , and the country from the ' disgrace and the anarch

    y which that insolvency would have involved . Had the Bank retained the power of recruiting its reserve by increasing its issues upon securities , it could not , by any possible exercise of that power , have maintained the circulation at a higher , amount than that determined by the monetary equilibrium of tho commercial world . Thosole result , as far as regards the amount of the circulation , would have beim that the issues upon bullion would have decreused as the issues upon securities increased . Had the Bank persisted through the month of April in tho course which it hnd steadily pursued from January to that time , the result here stated must have ensued . The "bullion would have all disappeared , and suspension would have become inevitable . That the Bank did not so proceed , and that suspension did not occur at the end of April , or in tlie course of tho following month , is solely attributable to the Act of

    1844 . The course taken by Lord John Russell and Sir Charles Wood , as Prime Minister and Chancellor of the Exchequer , in recommending an mcruase of the circulation beyond 14 , 000 , 000 / ., is truly characterised as " a masterly and successful stroke of policy ; " but it wan not an act of banking , it was proper for the Government to strike out at the day ; it would be most Improper to contemplate it as a prospective " relaxsition ; " it was a < : o / ij > ( V < Uut , and no bank charter should contain a cluurfe with provisional authority for a prospective conp cVctat . The crisis of 1847 has been a liivouriUs point with the of

    opponents the Act . Mr . Mill and other writers hav ^ always treated it with some striking suppressio veri ; they have , for instance , overlooked tho fact that " previous to the Act of 1844 , tho Bank , wliilo prolonging tho periods of speculative excitement , and intensifying the severity of subsequent recoil , endangered tho convertibility of the noto circulation , and so far from having been ahlo ' to render invaluable service during a revulsion ,-by coming forward with advances to support solvent firing when all other paper and p . hno 6 t nil mercantile credit , had become comparatively valueless , ' the Bank itself became included in the list of linns verying on insolvency /'

    Another striking example of fallacy is the assertion that under the Act of 1844 the Bank is reduced to the compulsory function of issuing notes against bullion , and that it has no power of increasing the currency suvo by

• Citation
  • Leader (1850-1860), March 14, 1857, page 18, in the Nineteenth-Century Serials Edition (2008; 2018) ncse-os.kdl.kcl.ac.uk/periodicals/l/issues/cld_14031857/page/18/