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the ports may
dise in the one instance, and with enhancement of the price of bul. lion in the other.
It is only while corn of every sort continues to bear a mean price, that the level of trade can be maintained ; and matters may proceed in an even course. Then and then only can the value of bullion and currency be the same; and the prices of the necessaries of life, and of merchandise adapted to exportation, be equable and uniform.
The subject has been thus far viewed as from a British station. The purpose of elucidation may be served by next contemplating it for a moment, as from a remoter and foreign point of view.
The value of British paper currency being referrible to definite quantities of corn, its worth in foreign countries is deducible from that of corn which can be sent thence to Great Britain. The foreign debtors of England, or the purchasers of its merchandise, can discharge their debts, or make good their purchases, with con tinental corn subject to the charges of transport, and worth in England more than the mean rate of the paper currency, whenever
for corn to be forthwith sold; but less than that rate, when import is admissible only for storing in granaries, to await during an indefinite term permission for the sale of it.
If the admission of corn for an immediate sale were a rare occur. rence, the remote contingency of its admissibility would greatly affect that result ; so as to do away perhaps the consequences of inequality. But, if admission be sa frequent as to be counted upon as a proximate event, the deduction to be made for contingency will be less considerable, and the value of the paper currency will more nearly approximate at all seasons to the cost of foreign corn sent from abroad to England.
When the ports of Great Britain are actually open, the value of the British currency in foreign exchanges must be governed by the cost of foreign corn sent to England. The purchaser of British commodities, or the debtor abroad, can liquidate the debt, or complete the purchase, with such foreign corn: and the value of the debt is no greater than the cost of so much as will serve to effect its discharge.
While the ports are closed to imported corn for immediate sale, the foreign exchanges must still be influenced by the cost of foreign corn, subject however to a deduction for the contingency of the early or distant admissibility of it.
The foreign trader then can estimate the British paper currency at no more than the cost of corn in a foreign market, whence he could cause a sufficient quantity of it to be conveyed to England
for the purpose of a remittance, subject to charges of transport as incident to such remittance, and subject likewise to a suitable deduction for the period that is to run before the remittance becomes effectual. That period is a short one when the ports of England are open to importation for immediate sale. It is longer, indefinite, and contingent, when they are closed.
Foreign exchanges must be influenced, if not primarily regulated, by the difference of the price of corn in Great Britain, and at the markets whence its foreign supply is · chiefly supplied.
It may be here remarked, by way of incidental observation, not however altogether foreign to the main subject, that the subsisting rules, which regulate the importation of corn in Great Britain, operate as a grant of a premium, and a very large one, upon imported corn, whenever the vend of this for domestic consumption becomes lawful. The cost of its production in foreign countries being much less than it is in England, the price at which it may be imported, so as to afford competent profit-in ordinary course,
much short of the rate which authorises the vend. The difference is a premium to the importer, shared between the British trader and foreign supplier. So much of it, as is obtained by the latter, is a tribute, which Great Britain pays to the foreign granary. So much as remains with the former, is an impost levied on the consumer for the benefit of the speculator.
Before we proceed to consider the probable effect of the same causes, as they will operate after the resumption of cash payments, it may be advisable to pause over a few observations concerning the necessary preparation for it.
To that end it is requisite, not only that the Bank should be provided with a sufficient fund of coined money to face the probable demand for it, upon ordinary estimates of banking, with reference to the quantity of bank notes to be kept in circulation; but it is likewise
necessary, that a sufficient amount of coined money should be further provided, to supply the general wants of circulation concomitantly with a currency of bank notes; and over and above the ordinary stock of bullion in hand, for the carrying trade of it, and for the supply of wrought gold and silver.
The amount, which will be now requisite for that purpose, must assuredly be greater than the whole quantity of circulating coin as current before the enactment of a restriction on cash payments. That has been estimated at twenty millions of pounds sterling : and it will not be thought an extravagant supposition, that half as much more, or thirty millions sterling of gold and silver, may be now requisite for the same purpose. Coined money must take the place, not only of notes of the Bank of England, but likewise
of notes of country banks in districts of Great Britain, where notes of the Bank of England have none or scarcely any circulation. The amount of coined money, which will be wanted, cannot therefore be estimated from the circulation of the Bank of England alone.
The smaller part of that amount will susfice for the banking stock of the Bank of England. The greater part is requisite for more general wants of circulation.
It is a mistake, and not an uncommon one, to suppose that, because the Bank has been a gainer by' the restriction of cash payments, therefore that body must be the loser by the resumption of such payment, and bear all the expense of it. No doubt the Bank must defray the charge of providing the quantity of specie necessary to the transaction of its ordinary business under the circumstance of renewed liability to a call for coined money. It is understood to have done so. But the expense of providing the quantity needed for general circulation must and will fall, as in justice it ought, upon
the public or the state. To replace its issues of coined money, after the restriction shall have been withdrawn, supposing bullion to exceed the mint price, the Bank has but to employ the means which it possesses, to leave no resource to its debtors, but payment in specie. It need but curtail the issue of notes for a while, after recalling a portion of outstanding notes by a sale of exchequer bills, or other securities held by it; and the rest of its debtors must find metallic money to make good their engagements.
Now it is clear, that the debtor, not the creditor, is the person who must sustain the loss incident to the provision of means of payment.
It is he who is to pay, not he who is to receive, who must bear the burden. The bank, it is true, must furnish coin in the first instance to pay its notes. upon demand. But the public must furnish coin in the next instance to pay the acceptances which the Bank holds, and to discharge engagements at their term. The Bank, as should be remembered, is more a creditor than a debtor. Its own notes are indeed payable át sight; and its purchased bills at dates. But these come in course of
payment faster than any run upon the Bank, which can be anticipated, could exhaust its funds for answering the call for coin.
What be the opinion of the directors of the Bank, in regard to the interests of that body, as concerned in the question of resumption of cash payments, the author has not any pretensions to know: but to his apprehension it seems evident, that the notions, with which this great national question has been taken up in a spirit of animosity against that body, are founded in error and prejudice.
Were-a metallic currency re-established, the Bank would probably be enabled to maintain nearly as great a circulation of its notes, as it has of late years done: and might be able to do so with
lion kept up:
less stock of bullion than it has been for some time provided with. The Bank now reaps a benefit from interest received upon an amount equal to the sum of outstanding notes, abating interest foregone upon the unprofitable amount of gold and silver in its coffers. It would reap a like benefit of interest upon the difference between the circulation maintained and the stock of coin and bula
As the Bank is understood to have a greater store than it would be necessary to retain as a current stock, that diffe
atters shall have got into a regular course, would probably surpass the actual excess.
A critical period must, no doubt, be gone through by the Bank, and by the public at large, while passing from a paper currency to a metallic one. The Bank howeve has nothing to apprehend from it, beyond a mere transitory occasion to forbear a portion of its accustomed gains. The public in general is likely to experience no small revulsion. Yet, as this must be encountered some time or other, if the country is ever to return to a wholesome metallic currency, it may as well be encountered now, as at any future moment, if the period be not especially unseasonable for the public interests. The Bank has not, as a distinct body, any separate concern in this matter.
Among those, who deprecate an immediate return to cash payments, some appear to rely on the argument of a supposed general scarcity.of bullion. Yet, if gold and silver be universally scarce ; which, considering the disturbed state of the countries in which the most productive mines of gold and silver are situated, and the consequent diminished supply of these metals, may not - improbably be true, the resumption of cash payments would but place England on a par with the rest of the world. A general reduction of prices must ensue, if a general deficiency of bullion exist. The main inconvenience, which must arise from England's participation, will be the contrast between British currency and that of other countries, with reference to corn, being thus ren. dered more glaring and more burdensome.
With no great depth of sagacity it is easy to foresee a future excess of supply, much surpassing the present defect. When tranquillity shall have been restored in Spanish America ; and when, as a consequence of its restoration, science with its modern improvements, with the steam-engine and with skilful metallurgy, shall have penetrated into the mines of Mexico and Peru, the supply of gold and silver will be as much too abundant, as it is now too scanty.
An eventful change in the value of silver and gold may be therefore anticipated, though its probable date cannot yet be assigned. Every thing must then become dearer, just as it now grows cheaper. It cannot surely be proposed to postpone a PC
turn to metallic currency in England, until that great revolution shall have commenced.
If, indeed, there be a prevalent scarcity of gold and silver at present in other countries, as in England unquestionably there now is, that scarcity, so far as England is concerned, must be in part ascribed to a hoard of bullion, withdrawn from commerce, and unprofitably laid up in the coffers of the Bank. Let that be thrown into the market, and the actual scarcity will be relieved by it: and most likely bullion may ere long be repurchased at more equal prices.
Much regret has been expressed repeatedly, and from divers quarters, that a large sum of coined gold should have been issued from the Bank, (no less than six millions sterling within the last three years, ) which instantaneously disappeared from circulation. The promptitude, with which it vanished, has indeed been not a little instructive. It has no doubt been exported for bullion. But surely it has not been therefore unserviceable. For it has gone towards the liquidation of an unfavorable balance. Had it remained in the coffers of the Bank, with the rest of the gold and silver provided as a preparative for returning to cash payments, just so much of the unfavorable balance would have continued undischarged, burdening the commercial relations of the country. The foreign exchanges would have so much the earlier grown to be still more disadvantageous to Great Britain.
That issue of gold coin did not serve, as must be confessed, the
purpose for which it was put forth—to commence a renewal of metallic currency. But it restored to the market gold which had been withdrawn from it, and which was needed in it, The supply did tend to keep down the price of bullion in the market ; which was a very desirable end, It enabled British purchasers of bullion abroad to obtain gold, for a while, at less advanced rates than they must else have given in the sterling or nominal designation of British currency.
of the present hoard of gold at the Bank been collected since that issue of gold coin began ?. Has none been accumulated during its continuance ? To that very issue of coin from the Bank, improvident as it has been deemed, must be mainly ascribed a prolonged moderation of the price of bullion ; during the continuance of which, requisite supplies were obtained from abroad ; and may or might have contributed to replace to the Bank that unavailing issue of coin.
The national loss attending the transaction has consisted in the
Has no part
See printed returns to Parliament. The amount scéms to be 6,227,345%. But there is some discrepancy in particulars.