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    L less of tobe successful Pebrttaby 28,1...

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    " Common Sense Of The Bank Chaktpp Quest...

    useless . A system of currency , to" | be successful , mast afford at all times and in all places the greatest possible facility to interchange . That is the ultimate test of its success , whatever elements may go to its Composition : no other test can be final , and if to apply this test be -within our power , it is idle to resort to any other . The most importaut step in effecting an interchange , whether of commodities , services , or privileges , is that of accurately measuring their respective values , _ Thus , in order to ascertain the total value of certain goods estimated by weight , wo may require to know , firstly , the . precise number of pounds avoirdupois they contain , and , secondly , the precise _ _ ^ _ _ _ A" _ ^ - ^ - ^ .... - . - \ . . ~ - . m _ W ¦ ¦ ' a v

    value of each pound weight of the commodity . "We cannot do this , unless for the first purpose we have an accurate standard of weight , and for the second purpose . an accurate standard of value . One is just as necessary to a correct result as the other—uncertainty in the pound weight could not more effectually vitiate the result than would uncertainty in the pound sterling . The like is equally true as to quantities ascertainable by measure—linear , superficial , or cubical . A piece of cloth may be measured for fifty yards , and the value of each yard be estimated at a guinea . We assume that we know the exact length of the yard measure , and the exact value of the guinea , and -we pronounce the cloth to

    be worth 50 guineas . Bat if any uncertainty attach either to tlie length of the yard measure or to the value of the guinea , the result must necessarily be uncertain . The complexity of many of our transactions spreads them over great lengths of time—annuities , rents , & c , are instances- —and any change ( intermediately ) in the value of the standard unit of the currency changes the virtual terms of all these contracts . It affects also all debts , taxes , salaries , -wages , & c . Lord Overs tone ' s plan has the grievous defect of neglecting this most important consideration . Lord Overstone seems to have been unaware that , whilst engaged in cementing the alliance between our paper money and its metallic basis , it was most important to guaTd against disturbing that basis

    itself . So far , indeed , from endeavouring .. to shield the metallic base of our currency from the disturbing influences by which it is liable to be assailed , or trying to break their force , if circumstances should rouse them into action , Lord Overstone expressly counts upon sudden , extensive , nay , even dislocating changes in , the value of our standard -unit , the pound sterling , as the necessary and proper means of carrying his purpose into effect . But if the coin change its value , so likewise must the Japer which is bound up with it ; his plan for preventing the paper from varying in value , therefore , defeats itself , like that of a mariner , who , in mooring his ship to a buoy , should so blunder in his mode of doing it as to loosen the moorings of the buoy itself .

    We charge Lord Overstone ' s plan with this grievous error , —an error , too , committed in the face of the success of the French , Scotch , and Irish systems , which , based upon sounder principles , and gifted with superior freedom of action ( though still far from perfect ) , had vindicated their superiority by their successful resistance to the commercial storms under ¦ which the English system of banking monopoly and legislative meddling had succumbed , and which again , in the great convulsions of 1847 , kept their ground firmly , although standing so close to England as necessarily to feel the throes by which she was then convulsed . Indeed , France and Scotland , so far from sharing the danger and difficulty into which

    England was then plunged , were able each to hold out a hand to extricate poor England from the slough into which she had fallen . England is accustomed to help others , not to ask for help herself ; nor would her case have been then so lamentably reversed but for her absurd bank-monopoly , and her blundering currency legislation . If the success of one set o principles , and the failure of another set , were ever placed in strong , unmistakable contrast , it surely was in tho year 18-17 , when wo witnessed the triumphant success of monetary freedom on the one hand , and the utter failure of monopoly , " central

    control , " and legislative meddling with mere trading operations , on the other . France , Scotland , and even Ireland , rnstly less wealthy , less advanced in civilization , greatly inferior in the means of making good any occasional breach in their resources , nowise Buporior—if equal—in industry , prudence , thought , and energy , but superior in monetary freedom , bore the commercial storm certainly without flinching , almost without feeling it ; whilst England , in the pride ol her wealth and power , was prostrated in the dust . But once let a man become fairly p < mv . $ > xd by u theory , and then , until it shall be exorcised , he will become blind and deaf to the most obvious facts that

    run counter to his prepossession 9 . Thus Galileo ' s opponents , even after they hud -witnessed the simultaneous fall of bodies of unequal weight from tho top of the leaning tower of I'isn , walked away , maintaining , as they ever had maintained , that heavy bodies nnist necessarily full at rates proportioned to their respective gravities a body twico as heavy as another , therefore , necessarily falling twi « o aa fust . A resolute theorist sets fuels at

    defiance , ot surely the insufficiency of the Overstone principles , and the sufficiency of the contrary principles , must have been admitted long ere this . The recent monetary misfortunes of France , too , contrasted with her long previous immunity therefrom , and coupled with the fact that within the last two or three years she has unluckily let go the safeguard which she had so long enjoyed ( apparently without perceiving its extreme value ) , would seem enough to startle even the hardiest theories . Lest I should here speak of what may not be generally known , allow me to explain that until recently , although the French legal standard money was of silver , gold might he legally tendered in payment , reckoned , however , at its ^ - _ ' ^

    market value in silver . Upon occasion , therefore , of a pressing demand for currency , the French were free to use gold , in any procurable quantity , —in aid of their silver , —thus dividing the pressure between the two metals , instead of alloioing ( as ive do ) its imbroken force to fall tipon one alone . Every one can judge of the comparative ease with which a divided force may be borne , even in cases wherein , if undivided , the force might prove overwhelming . Now this excellent plan , —by which , in times of necessity , the one precious metal could aid the other , loiik a complete avoidance , be it observed , of the evil of a double standard , —was denounced and resisted by Lord Overstone in his reply ( now republished ) to the " Merchants and Bankers' Petition-, " which complained that

    when in October , L 847 , we were scra , mbling for gold as for our lives , and an unusually large supply of silver came in from the Pacific ( which , by the exercise of a little ingenuity , might have been made of the utmost service in eking out the insufficient gold ) , it was found that the theorists had barred the way , and thus , even in the midst of our direst necessities , with the successful use by the French . of a similar remedy actually before our eyes , prevented our acceptance of the timely relief . Anil at last , as though to push absurdity to the uttermost , these same theorists , whilst refusing to issue notes upon the security of the silver so opportunely received , determined , to sanction their issue without the security of anything of any visible kind whatsoever .

    To return . As to the quality ^ which , before all others , a good currency must possess , the most important function . it exercises being that of measuring the values of all interchangeable articles , common sense must surely decide that iinchangeableiiess in , its oion value , i . e . . in the value of the gold of which its unit , the pound sterling , is composed , must constitute its cardinal excellence , as eliaugeablen . ess therein its worst fault . And next , as to its quantity , what has common

    sense to say ? How much ' currency is it best for us to have , if we can get it ? Lord Overstone everywhere confounds the ' quantity which would be most serviceable to us could we obtain it , with that which ( under his system ) we can get—two quantities no more necessarily identical , than is the quantity of food which the nation obtains identical with that which would most healthfully sustain its population ; quantities but too widely different , as millions of underfed creatures can sadly testify .

    We want currency to help -us to eilcct our multifarious interchanges ; the more interchanges we have to effect , therefore , the more currency we must require ; and the less interchange we have , the less currency we want . Count < tbr instance ) the respective quantities employed : first , at Wcyhill fair ; secondly , at Wcyhill market ; and , thirdly , at Wcyhill on an ordinary day . If Weyhill and its frequenters were confined to tlie latter quantity only , the additional interchanges of the market and of the fair could only be effected by barter . Enough currency , whether at Weyhill or elsewhere , therefore , is jn . it that , quantity which will render barter unnecessary . We want no more ; we can do with no less . If wo

    have more , the competition amongst us to get rid of our respective shares of the excess must needs lower the value of the whole , and thereby render it n false measure of the value of other things ; whilst , if we have less , tho competition amongst us to incrcaso our respective shares must needs raise the value of the whole , ami thereby render it a fal . se measure of the value of other things . Correctness of quality , as respects the currency , is therefore impossible , except in conjunction witli correctness of quantity ; understanding by correctness of quality , unv . hanije . nhlen . vaa of value , and by correctness of quantity , just as much as will effectually supersede barter , and no more . A successful system of currency must therefore supply

    us , or allow ?/ . s- tit nnjiply our . ir . lrrs , with this precise quantity . If our desilinjjs increase ? , it must allow us to increase our currency correspondingly , by a suitable addition of gold , silver , or paper money , as we may find most convenient ; : ui < l if our dealings fall o ( f | it must help us at once to get rid of the coin or notes thereby thrown out of use . Ho says common sense ; but to the Overstonc school the whole of this must sound lileo " flat blasphemy . " In conclusion allow mo to put a ease , as recently put in elfect by " l ' hilo-Mcreator . " First , suppoHo the ; country to be in an average stute both an to ordinary commodities and aa to currency , so that we

    are not either increasing out stock of gold at the expense of our other commodities , or increasing these at the expense of our gold ; next ( without any other change ) , suppose our harvest to fail to the extent of twelve millions' worth of corn : we should at once export in purchase of corn whatever we could best spare at home that -was likely to prove acceptable abroad . Gold and silver "being easily got hold of , light of carriage , and sure of acceptance , would probably go first , the merchants racing to get first into the foreign markets . Suppose that ten millions of sovereigns were taken out of our currency towards such purchase . Ought our dealings under these circumstances to decrease , and this to such an extent that we should feel no inconvenience from the

    abstraction of these sovereigns ? I believe both parties will join in saying no , though for wonderfully different reasons . Lord Overstone says that general prices at home ought to fall ( which could not be unless the circulation were felt to be insufficient ) , and that abroad they ought to rise , in order , by the joint operation of the two disturbances of price , to force back the gold forthwith . We deny the validity of these reasons ; for we regard the contemplated disturbance of the home standard , by reason of the insufficiency of the currency , as one of the greatest of commercial misfortunes , infinitely worse than that of our being obliged to make shift for a . time with ten millions' worth of

    paper money in place of tlie exported coin . And if the standard of the corn-supplying country be gold too , we regard its contemplated disturbance , by reason of the temporary glut of gold , as an almost equal misfortune to such country—a misfortune only to he averted by the withdrawal from circulation in such country of an equal quantity of paper money . The hasty expulsion of such a mass of gold from the foreign country , and the speedy recovery of it by ours , which , is the " fixed idea" of the Overstone school , would be dearly purchased by the distrust at home , endangering panic and the wild speculative excitement abroad , whicli the sudden twofold disturbance of prices must necessarily engender . Its effect , too , upon production : and consumption in both

    countries , would in tho main be p ? -ecisely the opposite of what any one in his senses could desire . Then in straitened . , circumstances ,.-as we should then be , we ought to produce more and to consume less , until the times should mend . But the general fall of prices at home would check production and stimulate consumption . On the other hand , the more prosperous foreigner might , not imprudently , increase his consumption , without working any harder than usual . But the general advauce of prices which he would experience would check consumption and increase production , by stimulating his domestic manufactures ; this last just at the time when such competition , would be the furthest from agreeable to us .

    Our reason , therefore , for concluding that our interchanges ought not to > bo lessened when food becomes scarce with us , is simply , that we regard it as our plain duty at such time to bestir ourselves to make up for the failure of our crops by redoubled industry : 1 st , in the cultivation of our lands for our next harvest ; and 2 ndly , in the production of anything and everything , by the sale of which we may in the meantime procure supplies from abroad . We say , " Let the hammer ring yefc more loudly on the anvil—let the ' rapid axle glow' with even a heightened velocity—let the shuttle fly backward ami forward with enhanced celority—let the plough cleave

    the glebe , ami the ship the wave , with a quickened speed—let idleness be banished and profusion be restrained . " lint how ? Do we invoke despotic power ? Do we ask a Cincinnatus to command awry one to his post ? No ; tho days of tlio Dictator , like those of chivalry , are gone . We ask only that the industrial nctivit }' , which alone can enable us to make good tho breach in our resources , shall not , out of deference to any man ' s theory , be thus paralyzed at the moment of our greatest need by an insufficiency in the supply of currency , tlie instrument -without whose help those r / ipid and multifarious interchanges , which are the life of the " division-of-labour" principle , must necessarily come to a stand .

    We point to the fact , that the members of the Overstonu school , so far from denying that in times of scarcity such paralyzing , such dangerous insufficiency must result from their plan , do actually speak of it as though it were a benefit . We are prepared to show the means by which , if allowed Kuillciunt freedom of action , we can safely effect the timely removal of those disastrous excesses in the currency which , when they occur , suddenly and unwarrantably raise prices , and thereby engender speculative excitement , and by which means also wo shall bo enabled , safely and promptly , to supply those still more disastrous insufficiencies which depress prices suddenly and unwarrantably , engender distrust , and endanger panic . We challenge inquiry , confident that what - \ ve havo to propose does not contravene any one of the great established economic principles . I urn , sir , yours respectfully , lCl > WJLN IIlIX .

    L Less Of Tobe Successful Pebrttaby 28,1...

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• Citation
  • Leader (1850-1860), Feb. 28, 1857, page 11, in the Nineteenth-Century Serials Edition (2008; 2018) ncse-os.kdl.kcl.ac.uk/periodicals/l/issues/cld_28021857/page/11/