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Leader (1850-1860), 5th December 1857, Edition 1 of 2, Page 1164

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      bhe means of establishing our gold currency on a sure basis , and of securing the convertibility of the bank-note / By this Act he vindicated a great principle- —the restrictionof bhe issue of paper ; but there is abuiidant eyidence that he looked forward to a developinent of this principle , and to -further great changes that would necessarily follow from its adoption . : -.: .. -. ; .:, ' yy- : ; y- : -,:: ; '¦ - ' ¦ y ; ' y-y ¦ ' v-

      He would havedone more if hehad felt that he epuld then do so safely . He sagaciously contrived a scheme that at once ensured the object he ; had in view , and at the satn e time disarmed the opposition of various iuterests that were affected by the measure . Had he felt that he could do so , lie would hot only have limited the issues of country bankers , but would have provided for the gradual extinction of their paper . He looked forward to the time whenthere should be but one description of paper currency , viz ., that of a Central Government Bank but he felt that it had not then arrived . He looked

      ibrward to the time when the public would Entertain notions ohm to permit an anomalous issue of paper money by individuals * "while it rigidly restricted to the imperial ( 3-overntnent the power of coiiir ing the precious metals . In . his own " mind he would have : preferred Groyernment notes rather than Bank of "England notes , and he probably expected tliat by separating the issue from the banking department he was preparing the public mind for some greater change hereafter . : ¦ ¦''¦ V . - '¦' y ' - : : ' :- ^ : ' ' y ' ^^ y '' -

      The friends of the measure would do well to defen-d it in the spirit with which its author intrbdueied it . He v ? as careful not to raise prejudices by pusiiing forward his principles in a manner incompatible with the due consideration of private and personal interests . He acknowledged that he fellshort of the application of his own principles- —he looked to existing circumstances- —to the usages and habits of the community in the time when he lived— -he was careful to avoid practical evil "b y the premature and undue extension of theoretically sound principles .

      He knew where to stop and when to stop , and he rested where he did , because he intended -ultimately to go further ; in consequence , he carried ^ almost unanimously , a wise measure that would h ave provoked unlimited opposition had he pushed it further at the time . He conciliated the Bank of England , the joint-stock banks , the private bankers , the banks of issue , the powerful banking interest in Scotland- —interests as diverse as can well be conceived—at the same

      time that he secured for the nation at large a sound and practical system of currency . Fortunately the country has , at this moment , several able fi nanciers in the House of Commons ; men not only versed in the theory of banking , but living daily in the practical application of it . A . mong other subjects , the ¦ W eouelitts , the Olyns , the Hankets , the Lewiseb , the Gxajostones , and the G-ka-HAMB , will no doubt give their earnest attention to the question on which we now particularly dwell , because it greatly occu ^ pies the public mind , and because on it there exists considerable diversity of opinion , viz .

      whether it would "be expedient to increase the amount of hank-notes issued upon securities . There is of course no charm in the present amount , Fourteen Millions ; in 184 i 4 j it happened to be about the capital of the Bank of England—and it was observed to be within the lowest sum that the public bad ever held in their own hands at any one time . But no one can seriously contend that it ia the one and only sum that ought , under any conceivable circumstances , to bo unrepresented by bullion ; that any other amount , a little more or a little less , would not

      do equally well , or even better . There is a strong feeling that what was enough in 1844 may be inconveniently small for 1857 ; and . that as our trade has more than doubled , our requirement of bank-notes may have somewhat increased ; There is at least ground for inquiry , whether an extension be desirable , since it is well known that the circulation of 51 . and 102 . Bank of England notes has increased one seventh during the last six years ; that 10 , 680 jOOGZ . of these small notes are

      now in the hands of the public , in lie u of 9 , 300 , 000 ? . ' of small notes in 1851 ( our readers will observe that this is fully one-half of the usual amount of notes in the hands of the public ) ; that our gold circulation has also increased during the same time as much as 30 pier cent , ; that there has also beeii ail increase in the quantity of silver arid copper , proving : incontestably that the amount of money actually required for the daily settlement of the internal trade of the ~^ countiy is largely augmented . It is quite true that the

      total of bank-notes in the hands 6 f the public hast not sensibly increased ; although , as we have shown , the amp uiit pf s mall notes is no w so muchlarger ;( 1 , 300 , 0002 . ) ; but thia circumstance is accounted for by the admission of the jointrstpck banks into the clearing house , by trie increased rapidity of railwaycornmunicatioh ; and by the extension of banking faciiities generally— -all of which have tended to diminish the notes of larger denominations , so as to compensate for the increase of the smaller notes . In corroboration of this view

      it is urged that the principle tipon which fourteen millions was . selected in 1844 , would lead to the adoption of sixteen millions now—as yen this larger sum is within the mi nimum amount of bank-notes that the public have held since 1 $ 44 . It iai also felt that an adr ditional issue of notes on securities would enable the Bank to keep permahently a larger reserve of unemployed notes , and that we should never again see the pitiable balance

      of a million to provide for all the contingencies of the liead office and twelve branches . At any rate , it is believed to be simply a matter of detail — - an open question even among those who in spirit are warm supporters of our present banking law . "Lord Overstone , indeed ~ -rno mean authority —considers that . ' such an . extension would be vicious ; that it would afford no relief to trade ; that an additional issue of two millions on securities would diminish the

      bullion reserve by two millions ; and lie regards this as a truth equally fundamental with a definition of Etjcled . But the public knows — and Lombard-street knows — that the extra issue of two millions did actually save the Bank of England from suspending its operations—did actually prevent a monetary convulsion unprecedented in history . Lord Overstone , like political economists in general , overlooks the fact that men are more frequently governed in times of difficulty by their fears than by cool judgment ; his reasonings might be sound if all men were

      cast in the same mould with himself , but they fail when he has to deal with the average of humanity . Bankers and merchants are men eminently practical ; in spite of all theories , they will provide large tills if they think they foresee a pressure—they will retain more bank-notes than they immediately require , iu order to make themselves doubly secure . The sixty London banks no doubt held at the very least an extra million of notes during the late pressure , in addition to their balances at the Bank of England ; and the thousand country banks held at least another million between them . Hero alone we have the

      extra and illegal issue of two millions of notes absorbed , without there being the slightest possibility of au unfavourable action

      on the foreign exchanges . These notes were not , ^ trictly speaking , in the hands of the public , but ready to be circulated in case they -were demanded ; and they will speedily find their way back to the Bank of England now that the pressure is past . Let us not be mistaken . "We are not asserting that the amount should be increased to sixteen . ' millions ,, we are simply stating some of the grounds why the public desire that the question should be earnestly reconsidered .

      Probably the immediate attention • ¦ ' of Parliament will be limited t p grantin g an indemnity to Lord PAiMERSTOisr for saving us from . a convulsion ; and that the question of an increased issue on securities will "he left for future discussion- —that there will not for present be any permaneiLt increase of bank- , notes—that it will be quite unnecessary--and that no further relaxing power will "be given . Meanwhile , the whole monetary question / will be ventilated , and the severe crisis through which we have passed will have left some

      goodr behind if it should induce the public generally to make themselves abquainted with the whole subject in all its bearings . We earnestly entreat ¦ them to recur again and agairL to the first principles of the seience — always to bear in mind its great primary truths , and , however svibtle may be the form of error that may he propounded , its sophistries will he at once apparent to the mm of those who keep always in view the few elementary ¦• ¦ truths on . which the whole science is based . ' "¦ A ; -V .- > -. ^ : : ¦ - : ' v -- ' . - ¦'¦ '¦ •' ¦ , " : ' .. ¦ ' ¦ ' ' ¦ ¦; - . - . ,

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      INDEA . ' AND THE DOUBLE GOVERNMENT . The necessity of a great chaiige in tlie administrative system of British India has been aypw ed by the ' - ' : Gabinet . -Por this aritiouncement our readers have long ; been prepared . Lord Pal > ierston' , soirie weeks ago , was known tp . be consulting with his collengues on . the sLibject . The announcements put forward last tone of

      week , however ^ m a authority , are not only premature but absolutely incorrect . The abolition of the East India Conipany has riot yet been determined upon , although a .. measure -with that object will shortly be laid before Parliament , witli the knowledge , if iiot Sanction , of the Gabinet . There must be , aud will be , a considerable interval of deliberation . But there can be no doubt that a

      new system of government will be established in India , gradually or otherwise . To frame and pass a bill clearing the whole ground duri ng the next session would be a policy of wild experiment . We do not believe that such a policy will be adopted . In the first place , the public opinion on the subject , although vigorous and progressive , is not ripe , The debate has scarcely risen above a cross-fire of proposals , and we hold it to be essential that the grand Eeform for India , to be declared

      law by Parliament , should in its origin be identified with public opinion . No question was ever involved in more difficulty ; yet no question was ever capable of easier solution b y the superficial . There are minds so audacious that they will offer , after a week ' s study , a stupendous i ) roject for maintaining the perpetual balance between commerce and currency . There are others , of equally rapid action , which , since Juno last , have traced the diagrams of a perfect machinery for India .

      The suggestions are various :- —abolish the East India Company ; appoint au Indian Secretary of State ; erect , in Xondon , a Legislative Council for India ; render the Government purely local ; place a Prince or Princess of the lloyal family upon a Calcutta throne ; allow the natives to return representatives to a Legislative ChanVber ; these , and numerous other ideas iloat through the press and tho inferior channels of political discussion . Some of thorn are

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  • Citation
    • Leader (1850-1860), Dec. 5, 1857, page 1164, in the Nineteenth-Century Serials Edition (2008; 2018) ncse-os.kdl.kcl.ac.uk/periodicals/l/issues/vm2-ncseproduct2220/page/12/